Category: Business Studies

Which of the following services is least likely to be offered by a factoring company to its client?

Select ONE answer:

1. Provision of finance by advancing 80% of invoice value immediately, and the remainder on settlement of the debt by the client’s customer
2. Taking over responsibility for administration of the client’s sales ledger
3. Deciding what credit limits the client should give customers
4. Taking over responsibility for irrecoverable debts

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Deciding what credit limits the client should give customers.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Keith is a financial consultant and has made the following statements about overdrafts to his clients in a newsletter:

Statement 1 Interest is paid on the full facility
Statement 2 Legal documentation is minimal in comparison with other types of loan
Statement 3 The facility is repayable on demand
Statement 4 Assets are not normally required as security

Which of these statements are true?

Select ONE answer:

1. Statements 1, 2 and 3 only
2. Statements 2, 3 and 4 only
3. Statements 1, 2 and 4 only
4. Statements 1, 3 and 4 only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Interest is only paid on the amount borrowed, not on the full facility.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which of the following statements about venture capital is most valid?

Select ONE answer:

1. Venture capital is a low risk and low return form of finance
2. Companies listed on major stock exchanges normally use venture capital to raise new finance
3. Venture capital can be appropriate for a management buyout
4. Venture capital normally takes the form of debt finance

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Venture capital can be appropriate for a management buyout. Venture capital is high risk and is not normally available to listed companies. It normally takes the form of equity finance, although it MAY take the form of debt finance.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.