CAM UNIT 5 AS (part 1)

What is start-up capital?

• The money needed to expand a business
• The money required to begin operating a business
• The profit earned by a business
• The revenue generated by a business

Which of the following is a reason a business might need finance for growth?

• To pay wages
• To purchase additional premises or equipment
• To cover daily operating costs
• To pay utility bills

What is overtrading?

• Expanding too quickly or experiencing a downturn in sales
• Making excessive profits
• Paying off all debts
• Reducing production costs

Which of the following is a short-term need for finance?

• Purchasing new machinery
• Paying wages or utility bills
• Developing a new product
• Expanding into new markets

What is the main difference between short-term and long-term finance?

• Short-term finance is repayable within 12 months
• Long-term finance is repayable within 12 months
• Short-term finance is used for capital expenditure
• Long-term finance is used for daily operating costs

Which of the following is an example of a long-term need for finance?

• Paying wages
• Purchasing raw materials
• Developing a new product
• Paying utility bills

What is the primary purpose of start-up capital?

• To pay dividends to shareholders
• To cover initial costs such as premises and equipment
• To generate profit
• To reduce production costs

Which of the following is a reason a business might need finance for survival?

• To expand into new markets
• To avoid bankruptcy due to overtrading
• To purchase new machinery
• To increase shareholder dividends

What is the main difference between cash and profit?

• Cash is the surplus after costs, while profit is daily money flow
• Cash is daily money flow, while profit is the surplus after costs
• Cash is used for long-term projects, while profit is for short-term
• Cash is recorded in the balance sheet, while profit is in the income statement

Which of the following is a consequence of running out of cash?

• Increased profits
• Business failure due to inability to pay expenses
• Higher shareholder dividends
• Increased market share