Which of the following is not considered an external source of finance?

The reason why family savings is identified as not being considered an external source of finance lies in the concept of internal versus external sources of finance. Internal sources refer to funds that come from within the business or the personal resources of the owner, such as generated profits or savings. Family savings fall into this category as they involve the personal assets of the owner or entrepreneur that are not sourced from outside the individual or business.

In contrast, bank loans, investor contributions, and supplier credit are all forms of finance that originate from external parties. Bank loans are provided by a financial institution, investor contributions come from individuals or groups outside the business who provide capital in exchange for a stake or return, and supplier credit (or trade credit) involves suppliers extending time to pay for goods and services, which is also an external arrangement. Understanding these distinctions is crucial for managing financing effectively in a business context.