Chapt 19 - Finance Concepts Quiz

What is meant by "startup capital"?

• Money used to pay for interest on bank loans

• The profit made during the first year of a business

• The money required to start a new business

• Income from sales during the early stages

What is "working capital" in a business context?

• The total amount of loans a business owes

• The amount of money invested in fixed assets

• The capital used to finance marketing campaigns

• The capital available to pay day-to-day expenses

Which of the following best describes "non-current assets"?

• Assets expected to be used or held for more than one year

• Cash and inventory held by the business

• Short-term investments and bank deposits

• Assets that are quickly turned into cash

What is meant by "capital expenditure"?

• Money spent on everyday business operations

• Money paid to shareholders as dividends

• Money spent to acquire or upgrade non-current assets

• Money used to repay short-term debt

How is "finance expansion" best defined?

• The process of increasing employee salaries

• Funding used to help a business grow and develop

• Cutting costs to improve profit margins

• Managing the capital needed for daily operations

Lina wants to open a small bakery in her neighborhood. She needs to buy ovens, display shelves, and ingredients. Before she can begin operations, she’s calculating how much money she needs to cover all her initial costs. What type of funding is Lina trying to calculate?

• Working capital

• Startup capital

• Revenue

• Capital expenditure

A clothing shop has a large amount of cash in the bank and stock ready to be sold. It also has some outstanding bills it needs to pay to suppliers within the month. What is the term for the money the shop has available to cover its short-term costs?

• Startup capital

• Non-current assets

• Working capital

• Revenue income

A construction company recently bought new trucks and heavy machinery. These items will be used for many years and are not intended for resale. What are these items an example of?

• Non-current assets

• Working capital

• Current liabilities

• Capital income

An IT company has decided to invest in a new office building and upgrade its computer servers to improve its long-term operations. The money spent on these upgrades is considered:

• Revenue expenditure

• Capital expenditure

• Startup capital

• Marketing budget

A local cafe has become popular and wants to open two more branches in nearby towns. The owner is considering applying for a business loan to help cover the costs of hiring new staff and renting new premises. The loan would be an example of what type of financial activity?

• Reducing working capital

• Managing cash flow

• Financing expansion

• Paying dividends