Lesson 1.3.4b
1.3.4b Long-term sources of finance for a start-up or small business Quiz: Pearson Edexcel Business, Unit 3
20 questions
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Lesson 1.3.4b, Long-term sources of finance for a start-up or small business: 20 multiple choice questions for the Pearson Edexcel GCSE Business (1BS0), Unit 3: Putting a business idea into practice, written with Revision Ninja.
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The 20 questions
-
Which of these is classified as a long-term source of finance?
- Bank loan
- Trade credit
- Unpaid invoices
- Bank overdraft
-
What is venture capital?
- Bank overdraft
- Equity investment
- Trade credit
- Government grant
-
Which long-term finance source does NOT involve giving up ownership?
- Crowdfunding shares
- Share capital
- Bank loan
- Venture capital
-
Which long-term finance source involves the business owner investing their own money?
- Trade credit
- Personal savings
- Bank overdraft
- Commercial loan
-
Which long-term source best funds a £60,000 premises fit-out?
- Trade credit
- Daily cash sales
- Five-year bank loan
- Bank overdraft
-
What is the primary feature of share capital?
- Fixed interest rate
- Short-term borrowing
- Ownership stake
- Government backing
-
How is retained profit best defined in a business?
- External debt
- Reinvested earnings
- Borrowed capital
- Dividends paid
-
What does crowdfunding typically involve?
- Trade credit
- Online public contributions
- Venture capital
- Bank loans
-
Which finance method raises £500,000 without borrowing or debt?
- Overdraft facility
- Issue new shares
- Bank loan
- Trade credit
-
What is the main advantage of using retained profit?
- Dilutes owner control
- No interest cost
- Extends trade credit
- Increases bank debt
-
What is a key disadvantage of raising venture capital?
- Short repayment terms
- High interest charges
- Fixed dividend rates
- Loss of control
-
What is the main disadvantage of a long-term bank loan?
- Interest payments
- Short repayment window
- Unsecured borrowing
- Loss of ownership
-
What is a major advantage of raising share capital instead of a bank loan?
- No shared ownership
- No interest charges
- Guaranteed profits
- Fixed repayment date
-
Which long-term finance source requires no collateral assets?
- Bank loan
- Mortgage
- Crowdfunding
- Debenture
-
Which type of finance best suits a five-year product development project?
- Short-term loan
- Overdraft
- Trade credit
- Long-term finance
-
A business gets a £20,000 bank loan at 8% interest over 2 years, repaid in equal total amounts. What is the total interest paid over the loan if simple interest is used?
- £3,200
- £4,000
- £1,600
- £8,000
-
What is a key disadvantage of issuing shares to raise finance?
- High interest costs
- Mandatory collateral
- Diluted ownership
- Fixed repayment dates
-
Using retained profit and personal savings means a firm relies on what type of finance?
- Debt capital
- Internal sources
- External sources
- Borrowed funds
-
Why might a business choose a bank loan rather than issuing shares?
- To retain ownership
- To avoid interest
- To gain voting rights
- To increase dividends
-
What is a potential disadvantage of a crowdfunding campaign?
- Paying interest
- Failing target
- Losing control
- Selling shares
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