Finance Sources Quiz

What is the main advantage of using retained profits as a source of finance?

• Cost-effective and non-debt financing option

• Limited flexibility in using retained profits as finance

• Increased risk of bankruptcy with retained profits

• High interest rates associated with retained profits

Fill in the blank: A loan from a bank is an example of _______ finance.

• debt finance

• angel finance

• venture finance

• equity finance

Which source of finance involves selling shares in the company?

• Venture capital

• Equity financing

• Debt financing

• Crowdfunding

State one disadvantage of using a bank loan as a source of finance.

• Limited loan amount available

• Requirement to pay interest

• Risk of asset seizure in case of default

• No flexibility in repayment terms

What is the term for money received from family and friends to start a business?

• startup cash

• family funding

• seed funding

• friendship investment

Which source of finance does not require the business to repay the money?

• Crowdfunding

• Debt financing

• Equity financing

• Venture capital

What is the term for money obtained from selling assets?

• capital

• proceeds

• revenue

• earnings

Fill in the blank: A hire purchase agreement is an example of _______ finance.

• installment

• credit

• lease

• mortgage

State one advantage of using venture capital as a source of finance.

• Increases personal liability for the entrepreneur

• Requires immediate repayment with high interest rates

• Limits control over decision-making

• Provides expertise, mentorship, and networking opportunities.

What is the term for money obtained by delaying payment to suppliers?

• cash flow

• accounts payable

• accounts receivable

• inventory turnover