Sources of Finance - N5

If you were starting your own business, which of the following is a common way to find the money needed to begin?

• Taking out a loan from a bank

• Waiting for the business to make money on its own

• Ignoring the need for money

• Closing the business before starting

Which of the following is a source of finance available to businesses?

• Bank Loan

• Product Warranty

• Customer Feedback

• Employee Training

Which of the following is NOT listed as a source of finance for businesses in the diagram?

• Share Issue

• Mortgage

• Government Grant

• Market Research

A business wants to expand its operations without taking on additional debt. Which source of finance from the diagram would be most appropriate?

• Retained profits

• Bank Loan

• Mortgage

• Hire Purchase

If a business needs short-term funding to cover temporary cash flow problems, which source of finance from the diagram is most suitable?

• Bank Overdraft

• Mortgage

• Share Issue

• Government Grant

Which of the following best describes a bank loan as a source of finance?

• Money borrowed from the bank which is repaid with interest

• Money received from the government which does not need to be repaid

• Money given as a gift by a friend

• Money earned from selling products

What is a key characteristic of a grant as a source of finance?

• It must be repaid with interest

• It is received from the government and does not need to be repaid

• It is borrowed from a bank

• It is paid back in installments

Which of the following is a possible disadvantage of receiving a grant?

• Interest is payable on the amount borrowed

• It takes a long time due to paperwork

• It must be paid back in installments

• It is only available from banks

Which of the following is a characteristic of an overdraft as a source of finance?

• You can take more money out than you have in your account

• It is only suitable for long-term investments

• It always requires collateral

• It is interest-free

Why is an overdraft considered suitable for businesses?

• It is suitable for short-term cash flow problems

• It is used for buying fixed assets

• It is a long-term source of finance

• It increases the amount available for dividends