Lesson 6.1.1

6.1.1 Funding Types Quiz: NCFE Business & Enterprise, Unit 6

20 questions · by Revision Ninja

In partnership with Revision Ninja

This free Funding Types quiz has 20 multiple choice questions for the NCFE Level 1/2 Technical Award in Business and Enterprise (NCFE Business & Enterprise), Unit 6: Finance. It covers lesson 6.1.1, Funding Types, one of the ready-made revision sets written with Revision Ninja and organised by unit on Qwiz Rush.

Use it as a starter, a plenary or an end-of-unit check: host it live on the board and students join with a game code on their own devices — no student accounts and nothing to install — or set it for independent revision with Free Play, where each student works through the questions alone.

Every question runs on a 20-second countdown and the fastest correct answers score the most. All the questions and their choices are listed below so you can see what the quiz covers; the answers are revealed in the game. Want to change something? Make your own copy and edit it in your library.

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All NCFE Business & Enterprise quizzes

The 20 questions

  1. Why do businesses use short-term sources of finance such as overdrafts?

    • To repay long-term bank loans
    • To cover everyday running costs
    • To buy a new factory building
    • To fund a five-year expansion plan

  2. A bakery takes delivery of flour today and pays for it in 30 days' time. What is this an example of?

    • A short-term bank loan
    • Trade credit from a supplier
    • A bank overdraft facility
    • Debt factoring of an invoice

  3. Why might a business that is waiting on many customer invoices use debt factoring?

    • Borrow against the value of stock
    • Delay paying invoices for 90 days
    • Write off the invoices as bad debt
    • Sell the invoices now to raise cash

  4. A shop's bank balance dips below zero for a few days each month before takings arrive. Which source of finance fits best?

    • Selling shares to new investors
    • A five-year bank loan
    • An arranged bank overdraft
    • A ten-year commercial mortgage

  5. What is the main drawback of a business relying on a credit card to fund purchases?

    • Interest is high if the balance is not cleared
    • Repayments are fixed for the next five years
    • Assets must be given to the bank as security
    • The bank takes a share of future profits

  6. Which of these would a business normally pay for using a long-term source of finance?

    • Covering an unexpected repair bill
    • Buying a second factory building
    • Paying next week's wage bill
    • Restocking shelves for the weekend

  7. What is one advantage of a sole trader using personal savings to start up?

    • There is no interest to pay a lender
    • The risk is shared with a bank or investor
    • It brings in outside business expertise
    • The money is topped up by the government

  8. Which statement describes how a business repays a long-term bank loan?

    • By issuing new shares to the bank yearly
    • In one lump sum whenever profits allow
    • By paying the bank a dividend out of yearly profits
    • In regular instalments with interest added

  9. Why might a new gym lease its running machines rather than buy them?

    • It avoids paying a large sum upfront
    • It works out cheaper than buying overall
    • The gym owns the machines straight away
    • It raises long-term capital for the gym

  10. Why is a government grant attractive to a business starting up?

    • The money does not have to be paid back
    • It provides a regular monthly income
    • It can be spent on anything the owner likes
    • Interest is charged at a very low rate

  11. Priya is a sole trader. She needs £20,000 to fit out a second shop and will repay it in fixed monthly instalments over five years. Which source of finance is she using?

    • Trade credit
    • Bank loan
    • Business grant
    • Bank overdraft

  12. Grafton Ltd needs £500,000 to buy a factory building. It wants to spread the cost over 20 years and keep the current owners in full control. Which source of finance fits best?

    • A commercial mortgage
    • Venture capital
    • A bank overdraft
    • Issuing new shares

  13. An online retailer is owed £40,000 by customers who pay 60 days after being invoiced, but it needs that cash now to pay wages. Which source of finance would release the money quickly?

    • Trade credit
    • Bank overdraft
    • Retained profit
    • Debt factoring

  14. A private limited company needs £1m to expand. It does not want interest charges or repayments, and is happy to bring in new part-owners. Which source of finance is it choosing?

    • A long-term bank loan
    • Hire purchase
    • A bank overdraft
    • Selling new shares

  15. A new gym pays a monthly fee to use £30,000 of running machines and hands them back after three years, never having owned them. Which source of finance is this?

    • Trade credit
    • Leasing
    • Hire purchase
    • Bank loan

  16. Which of these is an internal source of finance for an established business?

    • A government grant
    • A bank overdraft
    • Retained profit
    • Trade credit

  17. A freelance designer will be short of cash for two weeks until a client pays. Her bank lets her go up to £2,000 below zero, charging interest only on the amount she actually uses. What is this?

    • A bank loan
    • Debt factoring
    • Trade credit
    • An overdraft

  18. Why might a profitable business choose to fund its expansion from retained profit rather than a bank loan?

    • It brings in outside expertise
    • The cost is spread over years
    • It builds a credit record
    • No interest has to be paid

  19. An entrepreneur raises £15,000 online from hundreds of members of the public, each pledging a small sum in return for an early version of the product. Which source of finance is this?

    • Venture capital
    • Crowdfunding
    • A bank overdraft
    • A business angel

  20. A community charity is awarded £10,000 by the local council to run a youth club. The money is not repaid and no ownership is given up. Which source of finance is this?

    • Grant funding
    • A bank loan
    • Share capital
    • Crowdfunding