Which term refers to finance sources that come from within the business itself?

Study for the NCEA Level 1 Business Studies Test. Engage with interactive questions, complete with hints and detailed explanations. Prepare effectively for your exam!

The term that refers to finance sources that come from within the business itself is internal finance. This concept encompasses profits generated by the business and retained earnings that can be reinvested into the company's operations. Internal finance is significant for a business as it allows for funding without the need to borrow or seek external investors, thereby avoiding interest payments and maintaining control over the business.

In contrast, external finance involves funds sourced from outside the business, such as loans from banks, investments from shareholders, or grants from government entities. Direct finance typically refers to the situation where companies obtain funds directly from investors through the issuance of shares or bonds, also an external source. Corporate finance is a broader term that encompasses all financial activities related to managing the money of a company, including both internal and external sources.

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