Finance — sources of finance
AQA GCSE Business Studies revision on Finance — sources of finance. Aligned to the AQA GCSE Business 8132 specification. This bank has 10 practice questions on this topic.
Sample questions (3 of 10)
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Question 1
Which of the following is an example of internal finance for a limited company?
- A) Bank loan
- B) Retained profit
- C) Venture capital
- D) Trade credit
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Answer: Retained profit
Internal finance comes from within the business itself, meaning no external party needs to be consulted. Retained profit is the most common form of internal finance as it represents the surplus cash generated by the firm's trading activities that has been reinvested.
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Question 2
What is the term used to describe the money owed to a business by its customers who have purchased goods on credit?
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Answer: Trade receivables
When a business allows customers to pay after delivery, this creates trade receivables. Managing these effectively is crucial for cash flow, as the business is waiting on money that is technically already earned.
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Question 3
Which source of finance involves selling a stake in the company to an external investor, usually in exchange for expert advice and capital?
- A) Overdraft
- B) Share capital
- C) Venture capital
- D) Debentures
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Answer: Venture capital
Venture capitalists often target start-ups or expanding firms that might be too risky for traditional bank lending. In return for the cash injection, they acquire a percentage of ownership and often take a seat on the board to influence strategic decisions.
Want to test yourself on the remaining cards for this topic?
7 more questions on Finance — sources of finance — plus mistakes tracking and spaced repetition across the whole Business Studies spec.