Sources of Finance Quiz

What is retained profit?

• Profit distributed to shareholders

• Profit kept in the business after costs are paid

• Money borrowed from a bank

• Funds raised by selling shares

Which of the following is an internal source of finance?

• Loan

• Sale of assets

• Overdraft

• Trade credit

What is a disadvantage of owner's capital?

• Requires interest payments

• Risk of losing personal funds

• Reduces control of the business

• Limited to short-term use only

Which source of finance involves paying for equipment over time but not owning it until fully paid?

• Leasing

• Hire purchase

• Trade credit

• Overdraft

What is a key advantage of crowdfunding?

• Guaranteed funding

• Raises awareness and funds simultaneously

• Provides a large amount of money quickly

• No fees involved

What type of business can issue shares to raise finance?

• Sole traders

• Partnerships

• Limited companies

• Public sector organisations

Which of the following is most suitable for a business needing immediate cash for short-term expenses?

• Venture capital

• Overdraft

• Grant

• Share capital

Which external source of finance does not require repayment?

• Loan

• Trade credit

• Grant

• Hire purchase

What is a disadvantage of selling assets to raise finance?

• It increases long-term liabilities

• It reduces the business’s future capacity

• It requires paying interest on the funds raised

• It leads to loss of ownership control

Which of the following is a long-term source of finance?

• Trade credit

• Overdraft

• Venture capital

• Retained profit