Business BTEC Unit 3 - Aim D
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
Internal sources of business finance - Answer: 1. Retained profit
2. Net current assets
3. Sale of assets
External sources of business finance - Answer: 1. Owner's capital
2. Loans
3. Crowd funding
4. Mortgage
5. Venture capital
6. Debt factoring
7. Hire purchase
8. Leasing
9. Trade credit
10. Grants
11. Donations
12. Peer to peer lending
13. Invoice discounting
, What is retained profit? - Answer: Profit that can be taken out of the business or reinvested in it,
by the owner
Pros of retained profit - Answer: - no interest charged
- doesn't need to be repaid
- no loss of ownership
- available immediately
- only available up to the amount the business has, help avoid debt
Cons of retained profit - Answer: - amount available may be limited
- reduce payments to shareholder, which can cause dissatisfaction
- once used, it is not available for alternative purposes
Net current assets - Answer: Money immediately available to the business Current assets
owned by the business can be turned into cash
How is net current assets calculated? - Answer: current assets - current liabilities
Pros of net current assets - Answer: - encourage business to manage cash flow effectively
Cons of net current assets - Answer: - shorter credit term offered, putting pressure on
customers
- lower stock holdings affect ability to meet customers' needs
What is sale of assets? - Answer: Asset is something of value, which if sold will give instant cash
injection (e.g. vans, machinery owned by the business)
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
Internal sources of business finance - Answer: 1. Retained profit
2. Net current assets
3. Sale of assets
External sources of business finance - Answer: 1. Owner's capital
2. Loans
3. Crowd funding
4. Mortgage
5. Venture capital
6. Debt factoring
7. Hire purchase
8. Leasing
9. Trade credit
10. Grants
11. Donations
12. Peer to peer lending
13. Invoice discounting
, What is retained profit? - Answer: Profit that can be taken out of the business or reinvested in it,
by the owner
Pros of retained profit - Answer: - no interest charged
- doesn't need to be repaid
- no loss of ownership
- available immediately
- only available up to the amount the business has, help avoid debt
Cons of retained profit - Answer: - amount available may be limited
- reduce payments to shareholder, which can cause dissatisfaction
- once used, it is not available for alternative purposes
Net current assets - Answer: Money immediately available to the business Current assets
owned by the business can be turned into cash
How is net current assets calculated? - Answer: current assets - current liabilities
Pros of net current assets - Answer: - encourage business to manage cash flow effectively
Cons of net current assets - Answer: - shorter credit term offered, putting pressure on
customers
- lower stock holdings affect ability to meet customers' needs
What is sale of assets? - Answer: Asset is something of value, which if sold will give instant cash
injection (e.g. vans, machinery owned by the business)
