Sources of Finance- Retrieval Quiz

Which of the following is an internal source of finance?

• Retained profit

• Overdraft

• Bank loan

• Trade credit

Which of the following is an example of an asset a business could sell to raise finance?

• Family and friends

• Delivery van

• Overdraft

• Employees

Which of the following is an advantage of gaining finance through a bank loan?

• Money is paid in a lump sum

• The business pays interest

• Strict conditions are imposed

• Increases retained profit

Identify two reasons a business may require long-term sources of finance.

Explain one advantage of using retained profit as a source of finance.

Explain one disadvantage of selling shares as a source of raising finance in a private limited company.

Which of the following is a benefit of using retained profit as a source of finance?

• No interest payments

• Increases debt

• Requires collateral

• Strict repayment terms

Which of the following is a disadvantage of using trade credit?

• Immediate cash flow improvement

• Potential damage to supplier relationships

• No interest charges

• Increased retained earnings

Which of the following is an example of external finance?

• Sale of assets

• Retained earnings

• Bank loan

• Owner's capital

Which of the following is a disadvantage of using a bank overdraft?

• Immediate cash flow improvement

• Potential damage to supplier relationships

• High interest charges

• Increased retained earnings