11.7 Finance Review

What is the main disadvantage of debt finance?

• It does not have to be repaid

• Interest payments increase the amount repaid

• It provides full control of the business

• No taxation benefits

Debt finance allows a business to claim interest payments as a tax deduction.

• True

• False

Which of the following is an example of short-term debt finance?

• Mortgage

• Debentures

• Overdrafts

• Equity shares

A business that sells its accounts receivable to a specialist firm for immediate cash is using _________.

The funds contributed by the owners of a business are referred to as _____________.

Which type of finance is considered internal?

• Commercial bills

• Crowdfunding

• Venture capital

• Owner's equity

Match the following terms with their descriptions:

• Bank overdraft

• A short-term facility to overdraw from a bank account

• Leasing

• Funds reinvested into a business for future projects

• Mortgage

• A long-term loan secured by property

• Retained profits

• A business pays regularly for the use of equipment