What does sources of finance mean?
How businesses gain additional money when they are in financial difficulty
Where businesses get money from to fund their business activities
How businesses promote and advertise their business activities
What are the two main categories of sources of finance?
Internal and external
Short-term and medium-term
Money and capital
Which of these is the correct definition of trade credit?
Trade credit is where a business can spend more money than it has in its bank account
Trade credit is money the business owners have invested through their own savings
Trade credit is an agreement with a supplier to pay bills at a later date
Which of the following is a disadvantage of an overdraft?
Offers flexibility
Usually has a high interest rate
Interest is only paid on the amount used
Which source of finance leads to a dilution of ownership?
Personal savings
Share capital
Bank loan
Which of the following sources of finance incurs interest?
Retained profit
Which type of finance is not appropriate for a new start-up business
Government grants
Owners capital
Share issues
What is retained profit?
Where business profits are reinvested back into the business
Where business profits are taken out to pay shareholders
Where a business fails to make a profit
Which of the following is not a type of internal finance?
Selling assets
Family and friends
What is an advantage of a bank loan?
Can get a significant amount of money at one time
Paying interest
Money must be paid back