IB Docs (2) Team
3.1 Sources of finance - Question bank
3.1 Sources of finance - Question bank
Test your understanding of this topic in the IB Business Management syllabus by answering these questions. This is a "dynamic quiz", so feel free to revisit this page regularly as the questions are updated each time you take this quiz. There are over 50 questions in total for Unit 3.1 in the InThinking Business Management question bank.
Fill in the missing parts in the following text:
- Also known as debt capital, this refers to borrowed funds from financial lenders, such as commercial banks.
Type in the key term from the definition below:
Money spent on fixed assets that will last for more than one year from the balance sheet date. expenditure
Capital expenditure
Spending on which of the following is an example of capital expenditure?
The spending on Raw materials, wages, salaries and buildings insurance are example of revenue expenditure. Capital expenditure includes the spending on vehicles and other fixed assets of the organization.
Drag the text boxes to fill in the missing parts in the following text:
angelsgrowthentrepreneurs corporate medium revenue large business
are wealthy who risk their own money by investing in small to sized businesses that have high potential.
Business angels are wealthy entrepreneurs who risk their own money by investing in small to medium sized businesses that have high growth potential.
Fill in the missing parts in the following text:
sources of finance - Finance that come from within the organization, from its own resources and assets without the help of a third party provider.
Fill in the missing parts in the following text:
- Also known as ploughed-back profit, this is the surplus funds that are reinvested back in the business, rather than being distributed to the owners.
Which of the following is not classified as capital expenditure?
Spending on raw materials is classified as revenue expenditure, rather than capital expenditure.
Which of the following sources of finance is not available to a sole trader?
Sole traders are businesses owned and run by an individual. Issuing shares is only available to private and public limited companies, not to sole traders.
Which of the following is not applicable to the use of an overdraft?
An overdraft is a short-term source of external finance that can be useful to cover unexpected shortfalls of cash. Overdrafts often incur high interest rates which are compounded daily, as there is no collateral (security) attached to the borrowed funds.
Fill in the missing parts in the following text:
- The process involving a public limited company selling additional shares in order to raise finance.
Drag the text boxes to fill in the missing parts in the following text:
externalpurchase internal assetshireinstalment owed owned
is an source of finance that enables firms to use without having to pay for them in one lump sum. Once the final repayment (or ) has been made, the asset is then legally by the business.
Hire purchase is an external source of finance that enables firms to use assets without having to pay for them in one lump sum. Once the final repayment (or instalment) has been made, the asset is then legally owned by the business.
A financial arrangement where a business gives responsibility for collecting its debts to a finance company is known as what?
Debt factoring occurs when a business gives another business (a finance company) the responsibility to chase up its debts, in return for a fee.
Fill in the missing parts in the following text:
The value of goods and/or services sold to customers. It is calculated using the formula: Price × Quantity.
Fill in the missing parts in the following text:
- Wealthy and successful private individuals who risk their own money in a business venture that has high growth potential.
What is the term used to describe expenditure used to acquire fixed assets?
Capital expenditure is the investment spending on acquiring fixed assets such as machinery, tools, equipment and capital equipment.
Which of the following is an internal source of finance?
Accumulated retained profit is generated by and within the firm itself, so is classified as internal finance. By contrast, the use of mortgages, debentures and overdrafts rely on external stakeholders so are classified as external sources of finance.
Drag the text boxes to fill in the missing parts in the following text:
currentfixedexpenditure revenue labour stocksland variable capital shares
is the spending on items considered as assets (such as , buildings, machinery and motor vehicles) rather than on assets (such as or inventories).
Capital expenditure is the spending on items considered as fixed assets (such as land, buildings, machinery and motor vehicles) rather than on current assets (such as stocks or inventories).
Fill in the missing parts in the following text:
- The value of a firm’s earnings after all costs are paid (including interest and tax) and shareholders have been compensated (dividends).
Drag the text boxes to fill in the missing parts in the following text:
internal ownershipfixedpayment short longexternal shares dividend interestdebentures variable
are a term source of finance, providing the investors with a rate of return (annual payments), but without any or voting rights to the business.
Debentures are a long term source of external finance, providing the investors with a fixed rate of return (annual interest payments), but without any ownership or voting rights to the business.
Fill in the missing parts in the following text:
- Type of financial aid for businesses, paid as a lump sum from the government, which does not need to be repaid.
Return to the Unit 3.1 Sources of finance homepage
Return to the Unit 3 Finance and accounts homepage
Twitter
Facebook
LinkedIn