sources of finance

Question 1

retained profit

Answer 1

profit is kept in the business and used to purchase things that will benefit the business

Question 2

sales of assets

Answer 2

where a business sells something they already own

Question 3

Mortgage

Answer 3

long term method of borrowing money on a building- needs high level security and must be paid back with interest

Question 4

overdraft

Answer 4

allow bank account to go into minus figures

Question 5

grants

Answer 5

money awarded by governments for specific purposes

Question 6

owner investment

Answer 6

existing owners of the business may invest money into it

Question 7

Cash in bank

Answer 7

money owned by a business and built up overtime

Question 8

share issue

Answer 8

used by limited companies to raise finance in return for a share of the business

Question 9

Bank loan

Answer 9

an amount of money borrowed from a bank which a business will have to pay back overtime with interest

Question 10

leasing (renting)

Answer 10

a business pays monthly to used certain resources (building/ vans)

Question 11

hire purchase

Answer 11

business pays monthly to use certain resources before a final payment is made- where the business is able to keep the resource

Question 12

taking a new partner

Answer 12

partners can obtain additional finance by selling parts of the business to a new partner

Question 13

trade credit

Answer 13

when a business doesn’t pay their supplier back immediately and instead pays for goods within 30, 60 or 90 days