Sources of Finance Quiz

Which of the options shows a source of owners capital?

• Bank loans

• Selling non-current assets

• Personal savings

• Interest-bearing loans

What is retained profit?

• Money borrowed from a bank

• Selling non-current assets

• Money reinvested from business profits

• Money obtained from family and friends

When a business sells products it owns, what source of finance is used?

• Trade credit

• Retained profits

• Bank loans

• Selling assets

Where do external sources of finance come from?

• Owners capital

• Personal savings

• Selling assets

• Bank loans

What is an overdraft?

• Money borrowed from family and friends

• Reinvesting business profits

• Using more money than available in a bank account

• Selling business assets

What is a potential drawback of using overdrafts?

• Expensive due to high interest rates

• Only available to low income groups

• Reduces the value of a firm's profits

• Paid back with dividends

Under what category of finance does trade credit fit?

• Selling assets

• Internal sources

• External sources

• Non-interesting bearing

Which source of finance is most likely to involve low or zero interest?

• Overdrafts

• Funds raised from family and friends

• Non-current liabilities

• Loans borrowed from a commercial bank

What does a share issue involve?

• Issuing shares to raise capital

• Obtaining goods on credit

• Reinvesting business profit

• Selling non-current assets

What is the primary motivation for business angels to invest in a new or growing business?

• To reduce risks of conducting business

• Share of ownership and profits

• To invest in a business without having any direct input

• Corporate social responsibilities