Observation

 

A good proportion of the candidates attempted this question, majority of whom scored relatively high marks. Candidates were required to define funding and explain four sources of funding a leather goods business in the (a) and (b) parts of the question respectively. Only few candidates could not adequately explain the sources of funding a leather goods business. The overall performance of candidates in this question was quite impressive.
These candidates were expected to state thus to score maximum marks in this question.
(a)      Funding is the act of providing money or financial resources to run and expand a business OR it is an act of sourcing and making money available through several ways to ensure successful running of a business.
          
(b) (i) Equity: This is the type of funding that involves investing shareholders’ money in a business thereby making them part owners.

    (ii)  Personal savings: A leather goods business can also be financed through personal savings of the owner(s).

    (iii) Ploughed back profit: These are profits made by the business that are reinvested back into the business.

   (iv)  Loans from banks: Obtaining bank loans involves borrowing money from the bank with the intention of paying back with interest. It remains an option by which an entrepreneur can fund his business.

    (v)  Trade credits: Where there are not many goods for the expansion of the trade, the entrepreneur looks for where there are credit facilities and takes advantage of them.

    (vii) Deposits from customers: Deposits are advances paid in anticipation for the purchase of goods from producers. Moneys deposited are often used by the entrepreneur to expand the business.

    (viii) Hire purchase: Equipment could be bought on the basis of hire purchase to ease business finance if the total cost of goods is not readily available.

    (ix) Leasing financing: Tools and equipment could be rented out to earn money for financing the business.

        (x) Disposal of some assets:  Some assets like land, car, house etc, could be sold to finance a business.