Which option refers to funds raised from outside the business?

• A. Internal sources of finance
• B. Cashflow
• C. Retained profits
• D. External sources of finance

Answer: (D)

When a business needs money, it can get it from inside the business or from outside. Funds raised from outside the business are external sources of finance. This includes things like bank loans, issuing shares, venture capital, or government grants. Internal sources come from within the business itself, such as retained profits or selling unused assets. Cashflow isn’t a source of funds—it’s about the timing of cash coming in and going out. So the term that means funds raised from outside the business is external sources of finance.