Multiple Choice
Which of the following best describes organizations that invest in equity capital not traded on public exchanges?
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7. Receivables and Investments
Introduction to Investments in Securities
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Conversations with people who start their own business often reveal that:
A
They frequently invest their own savings as initial capital.
B
They never consider external investors or securities for financing.
C
They rely exclusively on government grants for funding.
D
They typically avoid any form of personal financial risk.
Verified step by step guidance1
Understand the concept of 'initial capital' in financial accounting, which refers to the funds invested by the owner(s) to start a business. This is often recorded in the owner's equity section of the balance sheet.
Recognize that entrepreneurs frequently use their own savings as initial capital, which demonstrates personal financial commitment and risk-taking. This is a common practice in small businesses or startups.
Clarify that external investors or securities are not always considered in the initial stages of a business, especially for sole proprietors or small-scale entrepreneurs.
Explain that government grants can be a source of funding, but they are not typically relied upon exclusively. Grants often come with specific eligibility criteria and conditions.
Highlight that avoiding personal financial risk entirely is uncommon for entrepreneurs, as starting a business inherently involves some level of risk, including the use of personal savings or taking on debt.
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