Quiz

Level 10 · Finance

Try each question before you open the answer. The quiz is for your own learning: it is not marked and nothing is stored.

1. Question 1

   What is working capital?

   1. The money to buy a building
   2. The money that pays day-to-day costs while you wait to be paid
   3. A government grant
   4. Profit
   Show answer

   Answer: B. Working capital covers costs for the whole cycle between spending and being paid.

2. Question 2

   Why do many small businesses struggle even when they sell well?

   1. They sell too much
   2. They underestimate the working capital they need
   3. They pay too little tax
   4. They sell the wrong colour
   Show answer

   Answer: B. If cash runs out before payment arrives, the business cannot buy the next batch.

3. Question 3

   How should you work out the cost per unit?

   1. Divide the total cost by the units made
   2. Divide the total cost by the units sold in good condition
   3. Use the raw material cost only
   4. Use the price of a competitor
   Show answer

   Answer: B. Spoiled or unsold units cost money but earned nothing.

4. Question 4

   A cash-flow plan shows cash below zero in week 3. What is a sensible response?

   1. Ignore it
   2. Plan how to cover the gap: part-payment in advance, smaller batches or shorter payment terms
   3. Borrow from anyone offering
   4. Stop keeping records
   Show answer

   Answer: B. A plan lets you act before the gap happens.

5. Question 5

   Before taking a loan, what should you ask for?

   1. Only the monthly payment
   2. The total amount repaid, all fees, due dates and what happens if you are late
   3. Nothing, the lender knows best
   4. The lender's phone number only
   Show answer

   Answer: B. The full cost in writing lets you compare offers and avoid surprises.

6. Question 6

   Which is a warning sign when borrowing?

   1. The lender explains all costs clearly
   2. A request for a fee before the loan and pressure to sign at once
   3. The lender is regulated
   4. You are given time to think
   Show answer

   Answer: B. Upfront fees and rushed decisions are reasons to stop and ask for advice.

7. Question 7

   Explain in your own words the difference between profit and cash flow.

   Show answer

   Model answer: Profit is what remains after costs over a period. Cash flow is the actual money received and paid, and when. A business can be profitable but still run out of cash if payment arrives after the costs fall due.

8. Question 8

   Why should you count your own labour as a cost?

   Show answer

   Model answer: Your time has value and you need to live from the business. If you leave it out, the cost looks lower and the price may be too low to sustain you, so the business looks better than it is.

← Back to this level