6.1 - Sources Of Finance

Question 1

Finance from family & friends

Answer 1

Asking from friends & family is a quick & easy place to get funds from

Question 2

What is retained profit

Answer 2

Retained profit is profit that has been earnt by a business from a previous year.

Question 3

What is a loan. Is it external or internal source of finance

Answer 3

A loan is an amount of money borrowed from a bank for a fixed amount of time
A loan is an external source of finance

Question 4

What is a mortgage. Is it an external or internal source of finance

Answer 4

A mortgage is a longer term loan. Usually used to buy propety/premisis
It’s an external source of finance

Question 5

What is sale of assets. Is it internal or external source of finance

Answer 5

A business may decide that they have machinery/resources that are no longer needed. Can also involve factory or building

Its an internal source of finance

Question 6

What ae overdrafts. Is it external or internal source of finance

Answer 6

Overdrafts are external source of finance.
Businesses may need extra cash to tide over. Short temr lending of small amounts of money

Question 7

What is trade credit. Is it external/internal source of finance

Answer 7

External source of finance
Trade credit is where business goes to a supplier to buy stock