6. Finance

Which of the following is an example of an internal source of finance?

• Selling unwanted assets

• Issuing new shares

• Hire purchase

• Loan from family and friends

Which of the following potential problems might a business start-up encounter when trying to organise a bank loan?

• The loan would need to be repaid in a lump sum

• The bank will offer advice to the entrepreneur

• Banks may require an asset as collateral

• No interest would be charged on the loan

Which of the following legal structures could finance expansion by issuing new shares via the stock market?

• A sole trader

• A partnership

• A private limited company

• A public limited company

Which of the following is another name for an outflow in a cash flow forecast?

• Receipt

• Payment

• Deficit

• Surplus

An extract from a firm’s cash flow forecast for April is shown in the table above. Based on this information, its closing balance for April is:

• £47,726

• £52,497

• £57,268

• £102,774

When running a business, which of the following statements is true?

• Profit is more important than cash in the short term

• Cash flow forecasts predict the profit available to spend in a business

• Profits can be used to reward the owners of a business

• An unprofitable business cannot survive in the short term

Which of the following would appear in the equity section of the statement of financial position?

• Share capital

• Tax due

• Revenue

• Overdraft

An individual or an organisation that owes a business money is called a:

• Payable

• Receivable

• Creditor

• Debtor

An extract from a firm’s income statement for last year is shown in the table below. Based on this information, its gross profit margin for last year was:

• 62.5%

• 45%

• 37.5%

• 17.5%

On an income statement, which of the following is another name for an overhead?

• Outflow

• Receipt

• Expense

• Payment