Finance Quiz

Why do businesses need finance?

• To improve employee motivation

• To hire employees

• To pay taxes only

• To increase prices

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

• Share capital

• Bank loan

• Trade credit

• Retained profit

What is capital expenditure?

• Spending on fixed assets

• Spending on stock

• Spending on wages

• Spending on marketing

Which source of finance involves selling ownership in the company?

• Bank overdraft

• Trade credit

• Share issue

• Debentures

A bank overdraft is best suited for:

• Launching a new product

• Temporary cash shortfall

• Buying a new factory

• Advertising campaign

Which of the following is an internal source of finance?

• Share issue

• Government grant

• Bank loan

• Retained profit

Which is NOT a long-term source of finance?

• Share capital

• Bank overdraft

• Debentures

• Hire purchase

Which of these is a reason for needing long-term finance?

• Buying raw materials

• Paying utility bills

• Buying machinery

• Paying suppliers

What is the major disadvantage of issuing more shares?

• Lower cash inflow

• Dilution of ownership

• Higher interest costs

• Need for collateral

Leasing is best described as:

• Borrowing money to buy an asset

• Purchasing and reselling an asset

• Owning an asset with monthly payments

• Renting an asset without ownership