36 exam-style questions on Sources of finance — topic 3.2 of Finance and accounts in the IB Business Management syllabus — with answers and explanations. Samples below; the full set is free with an account.
State which of the following is an external source of finance for a limited company.
Answer: A bank loan
A bank loan comes from outside the business, making it an external source; retained profit and asset sales are internal sources.
A business wants to obtain the use of a delivery vehicle without paying the full purchase price upfront and without owning it. Determine the most suitable source of finance.
Answer: Leasing
Leasing allows a business to use an asset in exchange for regular payments without buying it outright, which suits this need better than the other options.
A sole trader wants finance but is reluctant to lose control of the business or take on repayments. Determine the most appropriate source.
Answer: Retained profit
Retained profit requires no repayment, no interest and no loss of control, making it ideal for an owner who wants to avoid debt and keep ownership.
State which source of finance involves obtaining goods or materials from a supplier now and paying for them later, typically within 30-90 days.
Answer: Trade credit
Trade credit lets a business buy stock and delay payment, improving short-term cash flow at no direct interest cost.
A firm sells machinery it owns for $30 000 and immediately leases the same machinery back from the buyer. Determine which internal source of finance this raises.
Answer: Sale of assets
Selling an owned asset to raise cash is an internal source (sale of assets); leasing it back lets the firm keep using it, so this is sale and leaseback.
A social enterprise seeks small donations from many individuals online to fund an ethical new product. Determine the source of finance being used.
Answer: Crowdfunding
Raising small amounts from many people via an online platform is crowdfunding, often used by ethical or start-up ventures.
That was 6 of 36 Sources of finance questions.
Practise all 36 freeStateAO1 · 2 marks
One word or one short sentence. No explanation, no working: the mark is for the fact itself.
DistinguishAO2 · 4–6 marks
Make the difference clear for BOTH terms — a definition of one of them is only half an answer.
OutlineAO1 · 2 marks
A brief account or summary: the main points in two or three sentences, no evaluation.
36 Sources of finance questions — free with an account. Spaced repetition, streaks and full exam simulations included.
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