Business Finance Basics Quiz

What is the primary purpose of start-up capital in a business?

• To purchase fixed assets that last for more than one year

• To pay short-term debts

• To start a business and purchase goods before it opens

• To expand the business by taking advantage of economies of scale

What is the formula for calculating working capital?

• Current Assets + Current Liabilities

• Current Assets - Current Liabilities

• Total Assets - Total Liabilities

• Fixed Assets - Current Liabilities

What is short-term finance typically used for in a business?

• To purchase fixed assets

• To fund day-to-day purchases that don’t involve long-term assets

• To expand the business

• To pay off long-term debts

What is long-term finance used for in a business?

• To pay short-term debts

• To purchase fixed assets that will last for more than one year

• To cover daily operational expenses

• To fund micro-finance initiatives

What is another term for short-term finance used for day-to-day purchases?

• Capital Expenditure

• Revenue Expenditure

• Working Capital

• Start-Up Capital

What is another term for long-term finance used to purchase fixed assets?

• Revenue Expenditure

• Start-Up Capital

• Capital Expenditure

• Working Capital

What is an example of internal finance?

• Bank loan

• Retained profit

• Issuing shares

• Government grant

Which of the following is NOT an example of internal finance?

• Sale of existing assets

• Using existing stock without replacing it

• Retained profit

• Borrowing from creditors

What does "retained profit" refer to in the context of internal finance?

• Profit distributed to shareholders

• Profit reinvested back into the business

• Profit used to pay off loans

• Profit used to purchase new stock

Which of the following is an example of using existing stock without replacing it?

• Selling unused equipment

• Using old machinery for production

• Borrowing money from a bank

• Issuing new shares