LO7

Question 1

Give 2 reasons why Businesses fail

Answer 1

1) poor financial control

2)lack of knowledge

Question 2

Explain why the bank might chedck a business plan before agreeing a overdraft.

Answer 2

The bank might have used the business plan to decide whether the business is likely to pay back overdraft by checking first year targets

Question 3

Which of the following is a likely impact of automation on employees

Answer 3

reduced job security

Question 4

owners saving:
internal or external?
short or long term?

Answer 4

1)short and long
2)internal

Question 5

Reserves
(retained profits)

short or long term?
external or internal?
avaliability to forms of business ownership?

Answer 5

1) long term
2) internal
3)all businesses

Question 6

Define trade credit

Answer 6

Trade credit is the extension to small businesses by suppliers that effectively allow them to buy material now and pay later

Question 7

Trade credit
short term or long term?
internal or external?
what form of business ownership?

Answer 7

1)short
2)external
3)all businesses

Question 8

Define hire purchase

Answer 8

Hire purchase is the when you put a deposit down and pay it in monthly installments

Question 9

Hire purchase
long term or short term?
external or internal?
what form of business

Answer 9

1)short term
2)external
3)all businesses

Question 10

credit card
short term or long term?
external or internal?
what form of business ownership?

Answer 10

1)short term
2)external
3)all businesses

Question 11

overdraft
short term or long term?
external or internal?
what form of business ownership?

Answer 11

1)short term
2)external
3)all businesses

Question 12

Loan
short term or long term?
external or internal?
what form of business?

Answer 12

1)long term
2)external
3)all businesses

Question 13

morgage
short term or long term?
external or internal?
what type of ownership?

Answer 13

1)long term
2)external
3)all businesses

Question 14

Venture capitalistic
short term or long term?
external or internal?
what form of business?

Answer 14

1)long term
2)external
3)all businesses

Question 15

Share issue
long term of short term
external or internal
what form of busienss ownership

Answer 15

1)long
2)external
3)companies only

Question 16

Crowd funding
short term or long term?
internal or external?
what form of business ownership?

Answer 16

1)long term
2)external
3)all companies

Question 17

Owners’ savings - advantages

Answer 17

1)no need to repay the money

Question 18

Owners savings - disadvantages

Answer 18

1)owners may not have enough savings

Question 19

reserves - advantages

Answer 19

1)low costs, no interest to be paid

Question 20

Reserves- disadvantages

Answer 20

1)not avaliable to new businesses in their first year of trading

Question 21

Trade credit- advantage

Answer 21

1)improves cash flow

Question 22

Trade credit - disadvantages

Answer 22

1)interest charged if not paid within the timescale

Question 23

Hire purchase - advantages

Answer 23

1)payments over period of time

Question 24

Hire purchase - disadvantages

Answer 24

1)interest and additional charges make it expensive

Question 25

credit card - advantages

Answer 25

1)if repaid within the payment period, then borrowing is free

Question 26

Credit card - disadvantages

Answer 26

1)interest charged if not repaid within the interest-free period

Question 27

overdraft - advantages

Answer 27

1) can help with short-term cash problems

Question 28

Overdraft - disadvantagers

Answer 28

1) prolonged use makes it expensive

Question 29

Loan - advantages

Answer 29

1)fixed instalments helps with cash flow management

Question 30

Loans- disadvantage

Answer 30

1)the length of the loan and the interest rate can make it expensive

Question 31

Mortgage - advantages

Answer 31

1) can obtain premises that could not be afforded otherwise

Question 32

mortgage - disadvantages

Answer 32

1)can only be used to purchase a property

Question 33

venture capitalist - advantages

Answer 33

1)finance and advice

Question 34

venture capitalist - disadvantages

Answer 34

1)equity funded - the venture capitalist becomes an owner

Question 35

Share issue - advantag

Answer 35

1) no need to be pay interest

Question 36

Share issue - disadvantag

Answer 36

issuing more shares may dilute the control of exisiting shareholdersders need to be paid dividends out of profit

Question 37

Crowdfunding-advantages

Answer 37

1)finance and promotion of business
2)avaliable to businesses struggling to secure funding by convectional methods

Question 38

Crowdfunding - disadvantages

Answer 38

1)cost of providing appropiate rewards to investors
2)business intentions made public, so may be copied