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- 1. Multiple ChoiceWhich of the following is NOT a reason why a business needs money?to start the businessto expand the businessto deal with a negative cash-flow problemto increase prices of its products
- 2. Multiple ChoiceWhich of the following is an example of revenue expenditure?paying staff wagesbuying a new truckextending the factorypurchasing a machine
- 3. Multiple ChoiceWhich of the following is an example of internal finance for a limited company?selling sharesselling debenturesobtaining a loanreducing stock levels
- 4. Multiple ChoiceWhich of the following is an example of external finance for a limited company?retained profits of the companyselling sharessale of assets no longer used in the businessreducing stocks
- 5. Multiple ChoiceAn advantage that an overdraft has over a bank loan is that:it has a fixed rate of interestit is paid back over a fixed time periodno dividends have to be paid to shareholders as with a loanthe size of the overdraft varies with the needs of the firm
- 6. Multiple ChoiceAn advantage that share capital (equity capital) has over long-term loans is that:the capital never has to be repaidthe rate of interest on shares is fixedthe balance of control in the business will changedividends are paid before tax
- 7. Multiple ChoiceAn advantage to a business of leasing computers rather than buying them outright is that:the loan never has to be repaidthe computers will never go out of datethe total cost of leasing is less than buying the computersit doesn't have to find a large cash sum to buy computers
- 8. Multiple ChoiceWhich of the following business decisions is likely to need long-term finance?increasing stocks of goods for the summer seasonhiring a car for the sales managerbuilding a new factorypaying creditors for goods supplied
- 9. Multiple ChoiceA flower seller plans to increase stocks of plants. Which is the most likely source of finance?bank overdraftleasingshare issuedebentures
- 10. Multiple ChoiceWhich sources of finance is most likely to be used by a firm planning to takeover another firm?bank overdraftleasingshare issuetrade credit
- 11. Multiple ChoiceWhen a bank asks for ‘security’ before agreeing to a bank loan it means that:the offices must be securely locked at nightfirm assets will be sold by the bank if the loan isn't paidthe assets purchased must be insured
- 12. Multiple ChoiceWhich will NOT be considered by a firm before deciding on a suitable source of finance to use?the purpose of the finance – what it will be used forhow long the finance is used forthe rate of interest on loansthe views of the workers
- 13. Multiple ChoiceWhich of the following is a permanent source of finance for a company?long-term bank loanshare capitalcreditorsoverdraft
- 14. Multiple ChoiceA firm has applied for a bank loan. The manager will ask all of the following questions except:How big is the loan needed?How liquid is the business?How long will the loan be needed for?How powerful are the computers?
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