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Unit 2 Finance

Total questions: 30

Worksheet time: 18mins

Name
Class
Date
1.
Which of the following best describes finance?
a)
Funds for a business
b)
Customers for a business
c)
Profits for a business
2.
What is the most likely source of finance for a small firm?
a)
A debenture (loan)
b)
Issuing shares
c)
A bank loan
3.
What is the most likely source of finance for buying premises?
a)
Mortgage
b)
Factoring (sell their invoices to a factor such as a bank)
c)
A bank loan
4.
Which of the following options is a source of internal finance?
a)
Selling assets
b)
Trade credit
c)
A bank loan
5.
What do lenders ask for as a guarantee that a loan will be repaid?
a)
Interest
b)
Collateral
c)
References
6.
What is someone who lends money called?
a)
Borrower
b)
Debenture
c)
Creditor
7.
Where do grants usually come from?
a)
Private companies
b)
Charities or the government
c)
Stakeholders
8.
Which of the following is a start up cost?
a)
Staff Wages
b)
Electricity bill payment
c)
Purchasing a van
d)
Break Even
9.
What is a fixed cost?
a)
A cost that changes depending upon output
b)
A cost that is paid to your friend
c)
A cost that stays the same regardless of output
d)
Money received through the selling of products
10.

What is a variable cost?

a)

Salaries

b)

A cost that changes depending upon output

c)

Rent

d)

Purchase of a computer

11.

What is the formula for Total Costs?

a)

Sales x quantity

b)

Fixed cost + variable cost

c)

Semi variable costs + variable costs

d)

Current assets - current liabilities

12.
Which of the following are not a source of revenue
a)
Interest payments from savings
b)
Purchasing of stock
c)
Selling of products
d)
Credit sales
13.

What is the formula for revenue?

a)

Sales - cost of sales

b)

Gross Profit minus expenses

c)

Total costs - variable costs

d)

Units sold x price

14.

What is the formula for gross profit?

a)

sales - cost of sales

b)

Units sold x price

c)

Net profit - expenses

d)

Sales - expenses

15.
Which is an example of an internal source of finance?
a)
Bank loan
b)
Friends & Family loan
c)
Retained profits
d)
Trade credit
16.
What is an advantage of a bank loan?
a)
There will be little or no interest
b)
You can pay in smaller installments
c)
They are quick and easy to arrange
d)
You don't have to pay it back
17.
What is an advantage of owners' funds?
a)
There will be little or no interest
b)
You can pay in smaller installments
c)
They take a long time to arrange
d)
You don't have to pay it back
18.
Buildings and storage is a type of
a)
Fixed cost
b)
Running cost
c)
Asset
19.
Fuel is an example of a
a)
Running cost
b)
Fixed cost
20.
Which of the following is the best definition of PROFIT?
a)
The total amount of income a business makes from selling products or services
b)
The amount of money a business has left over after paying for their costs.
c)
The total amount of money a business spends.
21.
When is a business making a loss?
a)
When revenues are higher than costs
b)
When revenues equal costs
c)
When revenues are less than costs
22.
Which of the following is true about cash flow?
a)
It is the same as profit
b)
It is different from profit
c)
It is the same as revenue
23.
Which of the following is an example of a cash inflow?
a)
A new bank loan
b)
Payment of a gas bill
c)
Offering trade credit to a customer
24.
If the opening balance is £5,000, total receipts are £4,000 and the closing balance is £3,000 then total payments are:
a)
£4,000
b)
£5,000
c)
£6,000
25.
What does a positive cash flow mean?
a)
The business is making a loss
b)
The business is making either a profit or a loss
c)
The business is making a profit
26.
What is the correct definition of Sales Revenue?
a)
The income received from selling goods and services
b)
The total net cash flow
c)
Amount of returns by customer
d)
Number of items sold by a company
27.
Select the example of a variable cost from list below
a)
Rent
b)
Insurance
c)
Raw materials
d)
Bank loan repayments
28.

Which of the following is NOT a reason why a business needs money?

a)

To start the business

b)

To expand the business

c)

To deal with negative cash flow

d)

to increase price of products

29.

A flower seller plans to increase stocks of plants before a major festival. Which of the following is the most likely source of finance?

a)

bank overdraft

b)

leasing

c)

share issue

d)

debentures

30.

What is liability?

a)

money

b)

the owner

c)

being responsible for something

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