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AS Level: 29 - Business Finance

Total questions: 25

Worksheet time: 6mins

Name
Class
Date
1.
What is the primary purpose of start-up capital?
a)
To buy machinery & equipment
b)
To pay employee wages
c)
To cover legal expenses
d)
To pay dividends to shareholders
2.
What is working capital used for?
a)
Long-term expansion
b)
Buying new machinery
c)
Day-to-day expenses
d)
Paying off long-term loans
3.
What is the formula for working capital?
a)
Current liabilities - current assets
b)
Current assets - current liabilities
c)
Fixed assets - current liabilities
d)
Fixed assets - long-term debt
4.
Which of the following is an internal source of finance?
a)
Retained profits
b)
Bank loan
c)
Trade credit
d)
Issuing debentures
5.
A business sells an unused warehouse to raise funds. What source of finance is this?
a)
Trade credit
b)
Sale of assets
c)
Leasing
d)
Bank overdraft
6.
A business delays payments to suppliers to improve cash flow. What is this called?
a)
Trade credit
b)
Hire purchase
c)
Debt factoring
d)
Equity financing
7.
Which financing method allows a business to sell trade receivables to a third party for immediate cash?
a)
Bank overdraft
b)
Leasing
c)
Debt factoring
d)
Trade credit
8.
A business rents equipment instead of purchasing it. What is this financing method?
a)
Hire purchase
b)
Leasing
c)
Debt factoring
d)
Equity financing
9.
A company pays for equipment in installments over time, gaining ownership after the final payment. What is this method?
a)
Leasing
b)
Hire purchase
c)
Trade credit
d)
Bank loan
10.
A business issues shares to raise long-term funds. What type of financing is this?
a)
Debt finance
b)
Equity finance
c)
Trade credit
d)
Bank overdraft
11.
Which of the following is an advantage of retained profits?
a)
No interest payments
b)
Immediate cash availability
c)
No impact on shareholders
d)
Increases company liabilities
12.
What is a major risk of bank overdrafts?
a)
Low-interest rates
b)
Long-term commitment
c)
The bank can demand repayment anytime
d)
Requires issuing shares
13.
A business takes a long-term loan to fund expansion. What type of finance is this?
a)
Short-term finance
b)
Internal finance
c)
External finance
d)
Equity finance
14.
What is a debenture?
a)
A type of short-term loan
b)
A long-term bond issued by a company
c)
A form of government grant
d)
A type of lease agreement
15.
Which financing method does not require repayment?
a)
Bank loan
b)
Equity finance
c)
Trade credit
d)
Hire purchase
16.
What is a potential disadvantage of issuing shares?
a)
Increased debt
b)
Loss of business ownership
c)
High-interest costs
d)
Immediate repayment required
17.
Which financial method best suits a short-term cash flow problem?
a)
Bank loan
b)
Leasing
c)
Retained profits
d)
Bank overdraft
18.
Which of the following sources of finance is most suitable for a start-up business?
a)
Bank loan
b)
Retained profits
c)
Trade credit
d)
Sale of assets
19.
A company wants to raise permanent capital without taking on debt. Which option is best?
a)
Leasing
b)
Issuing shares
c)
Bank loan
d)
Debt factoring
20.
A company decides to sell more shares to existing shareholders at a discount. What is this called?
a)
Public issue
b)
Trade credit
c)
Rights issue
d)
Retained earnings
21.

What is venture capital primarily used for?

a)

Funding large corporations

b)

Supporting startups and high-risk businesses

c)

Providing personal loans

d)

Financing public sector projects

22.

Which of the following best describes microfinancing?

a)

Large-scale business loans

b)

Small loans given to low-income entrepreneurs

c)

A form of trade credit

d)

Short-term overdraft financing

23.

Crowdfunding is most suitable for businesses that:

a)

Need capital but may lack business experience

b)

Want to issue shares to the public

c)

Need to improve cash-flow

d)

Have large existing debts

24.

Which of the following is NOT A MAJOR a factor affecting financing decisions?

a)

Purpose of the finance

b)

Existing borrowing and liabilities

c)

Owner’s personal preferences

d)

Risk involved

25.

Which of the following IS NOT a reason businesses need finance?

a)

To fund R&D

b)

To fund profits

c)

To fund start-up costs, operations, and expansion

d)

To fund mergers & acquisitions

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