Internal sources and there examples.

Question 1

What is internal sources?

Answer 1

Are sources of money from within the business, from the owner or from previous business income.

Question 2

1. What is a owners fund?

Answer 2

Money that is put into the business from the private savings of the owners.

Question 3

Two advantages of the owners fund.

Answer 3

1. There is no need to pay interest or even repay finance.

2. Retention of ownership by the individual

Question 4

Two disadvantages of owner funds.

Answer 4

1. Amount available may be limited

2. Puts stress on the day to day finance of the individual

Question 5

Retained profits

Answer 5

Are sources of money from outside the business, from other people putting money into business.

Question 6

Advantages of retained profits

Answer 6

1. Internal, therefore no need to repay
2. Instantly available
3. Does not incur additional costs such as interest payments
4. Control is not lost

Question 7

Disadvantages of retained profits.

Answer 7

1. May be limited funds available
2. Shareholders may prefer to see short term returns on their investment
3. Not an option for a start up business

Question 8

Sale of an asset.

Answer 8

Some businesses will have possessions that they no longer need, which can be sold off if needed for other investments.