Question detail
FreshFork serves price-sensitive customers while using retained profit; the case evidence includes break-even output of ?6,573, sales of 868 units, and a 40% change in costs or demand. Which option best applies Explain internal and external sources of finance, including family and friends, retained profit, share issue, loans or mortgages, selling assets, overdrafts, trade credit, hire purchase and government grants?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Sources of finance
Question
- A. Use assets, government grant, share issue, trade credit to judge cash inflow, suppliers impact, and the business objective in Finance sources and suitability.
- B. Give only a definition of Sources of finance without using the case evidence.
- C. Treat gross and net profit as identical and ignore the effect on suppliers.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use assets, government grant, share issue, trade credit to judge cash inflow, suppliers impact, and the business objective in Finance sources and suitability.
Explanation
This is the best-supported choice because Use assets, government grant, share issue, trade credit to judge cash inflow, suppliers impact, and the business objective in Finance sources and suitability. The case evidence gives ?8,073, 868 units, and 40%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse gross and net profit, miss the suppliers, or ignore the business objective.
Common mistake
Finance sources and suitability common mistake 1
Giving a vague answer instead of directly addressing: Explain internal and external sources of finance, including family and friends, retained profit, share issue, loans or mortgages, selling assets, overdrafts, trade credit, hire purchase and government grants..
Answer by clearly explaining how to explain internal and external sources of finance, including family and friends, retained profit, share issue, loans or mortgages, selling assets, overdrafts, trade credit, hire purchase and government grants..
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