This quiz works best with JavaScript enabled. Home > Cbse > Class 11 > Commerce > Business Studies > Class 11 Business Studies Chapter 7 Sources Of Business Finance – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 10 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. State the advantage of Owners savings A) No interest is paid. B) This makes better use of the capital tied up in the business. C) Permanent source. D) None of the above. Show Answer Correct Answer: A) No interest is paid. 2. A technique uses in comparative analysis of financial statement is A) Graphical analysis. B) Preference analysis. C) Common stock analysis. D) None. Show Answer Correct Answer: C) Common stock analysis. 3. Which is an advantage of share capital? A) Shareholders can demand refunds. B) No dividends must be paid in a poor year. C) It guarantees profit growth. D) It increases founder control. Show Answer Correct Answer: B) No dividends must be paid in a poor year. 4. A break even chart does not show what? A) The margin of safety. B) How much output a business has to produce to break even. C) How much money a business will make at the break even point. D) Costs, revenue and profit at different levels of output. Show Answer Correct Answer: C) How much money a business will make at the break even point. 5. What are the advantages of debt financing? A) Debt financing increases the risk of bankruptcy for businesses. B) Debt financing leads to higher interest rates for businesses. C) Debt financing limits the flexibility of businesses to make financial decisions. D) Debt financing allows businesses to access funds without giving up ownership or control. It provides tax advantages through deductible interest payments and can help build creditworthiness. Show Answer Correct Answer: D) Debt financing allows businesses to access funds without giving up ownership or control. It provides tax advantages through deductible interest payments and can help build creditworthiness. 6. Classify each source of finance as either internal or externalOwners' savings A) Internal. B) External. C) All the above. D) None of the above. Show Answer Correct Answer: A) Internal. 7. Which type of finance is most suitable for a business facing a liquidity crisis but has high-value fixed assets? A) Mortgage loans. B) Debentures. C) Public deposits. D) Lease financing. Show Answer Correct Answer: A) Mortgage loans. 8. The length of a bond A) Maturity. B) Par Value. C) Yield. D) Coupon Rate. Show Answer Correct Answer: A) Maturity. 9. Money needed to function from day to day =??? A) Working capital. B) Dividends. C) Gross profit. D) Working growth. Show Answer Correct Answer: A) Working capital. 10. Trade credit is a medium-term source of funds A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 11. Which of the following would be the most appropriate source of funds for a new business (which is just launching) that makes mobile phone accessories? A) Trade Credit. B) Sale of Assets. C) Share Capital. D) Retained Profit. Show Answer Correct Answer: A) Trade Credit. 12. Which capital is used for buying current assets? A) Fixed capital. B) Working capital. C) Both. D) None of thes. Show Answer Correct Answer: B) Working capital. 13. Which of the following is a reason why a new business start-up would need finance? A) To pay for replacement equipment. B) To pay a deposit for a premises. C) To fund expansion. D) To carry out maintenance on a new piece of machinery. Show Answer Correct Answer: B) To pay a deposit for a premises. 14. What is the name of the type of capital which is obtained by people buying a part of a company? A) Share Capital. B) Spare Capital. C) Owners' capital. D) None of the above. Show Answer Correct Answer: A) Share Capital. 15. Funds that are required to purchase fixed assets like land and building, plant and machinery, and furniture and fixtures is known as A) Fixed capital. B) Working capital. C) All the above. D) None of the above. Show Answer Correct Answer: A) Fixed capital. 16. Which affects the choice of finance source? A) Market competition. B) Employee preferences. C) Purpose of funding. D) Customer location. Show Answer Correct Answer: C) Purpose of funding. 17. Using Credit cards can be an expensive way or raising funds for a business. Why do you think this is? A) Credit cards provide free payment plan which affects the user in what they do with the money. B) Credit cards have very high interest (Riba) rates which always go up if payment is not made. C) Credit cards are not easy to get, and can easily be used to pay for anything online or in a shop. D) None of the above. Show Answer Correct Answer: B) Credit cards have very high interest (Riba) rates which always go up if payment is not made. 18. 5 An advantage that an overdraft has over a bank loan is that:1) it has a fixed rate of interest 2) it is paid back over a fixed time period 3) no dividends have to be paid to shareholders as with a loan 4) the size of the overdraft can vary with the needs of the business A) . B) . C) . D) . Show Answer Correct Answer: A) . 19. Which of these is included in owners fund A) Loan from sbi. B) Equity shre. C) Trade credit. D) Debentures. Show Answer Correct Answer: B) Equity shre. 20. Internal sources of finance do not include A) Better management of working capital. B) Trade credit. C) Retained earnings. D) Ordinary shares. Show Answer Correct Answer: B) Trade credit. 21. An increase in fixed costs will do which of the following A) Make the total cost function flatter. B) Make the total cost function steeper. C) Shift the break even point to the left. D) Shift the breakeven point to the right. Show Answer Correct Answer: A) Make the total cost function flatter. 22. What is sale and leaseback? A) Selling inventory at a discount. B) Selling assets and leasing them back. C) Short-term loan arrangement. D) Trading shares. Show Answer Correct Answer: B) Selling assets and leasing them back. 23. What is an advantage of trade credit? A) No interest payments required. B) Immediate cash availability. C) Long-term financing option. D) Provides ownership rights. Show Answer Correct Answer: A) No interest payments required. 24. Which production method involves employees being organised into multiskilled teams, each responsible for a particular part of the process? A) Batch production. B) Job production. C) Cell production. D) Flow production. Show Answer Correct Answer: C) Cell production. 25. Working capital is sometimes called as ..... A) Life of money. B) Life of soul. C) Life of blood. D) Life of human. Show Answer Correct Answer: C) Life of blood. 26. A part of the total profit kept undistributed for the purpose of meeting future contingencies is termed as A) Debenture. B) Preference Share. C) Equity Share. D) Retained Earnings. Show Answer Correct Answer: D) Retained Earnings. 27. What is the cost of producing one unit called? A) Budget. B) Gross profit. C) Sales revenue. D) Average cost. Show Answer Correct Answer: D) Average cost. 28. Refers to the purchase of items such as fuel and raw materials that will be used up within a short space of time. A) Capital Expenditure. B) Revenue Expenditure. C) Statement of Financial Position (used to be called Balance Sheet). D) Income Statement. Show Answer Correct Answer: B) Revenue Expenditure. 29. Which type of share guarantees a fixed dividend to the shareholders? A) Debentures. B) Public deposits. C) Preference shares. D) Equity shares. Show Answer Correct Answer: C) Preference shares. 30. Classify these main benefits and limitations as belonging to either debt finance or equity financeThe amount raised does not have to be repaid; if losses are made then dividends do not have to be paid; and there is no ongoing cost A) Benefits of debt financing. B) Benefits of equity financing. C) Limitations of debt financing. D) Limitations of equity financing. Show Answer Correct Answer: B) Benefits of equity financing. 31. What are the advantages of internal sources of business finance? A) Higher cost, limited control, and inflexibility in decision-making. B) Limited availability, higher cost, and lack of control. C) Lower cost, greater control, and flexibility in decision-making. D) Higher cost, limited availability, and lack of flexibility. Show Answer Correct Answer: C) Lower cost, greater control, and flexibility in decision-making. 32. Find out the method of factoring A) Resource. B) Non-resource. C) Recourse. D) All the above. Show Answer Correct Answer: C) Recourse. 33. Who is the owner of the company A) Directors. B) Preference share holders. C) Equity share holders. D) Debenture holders. Show Answer Correct Answer: C) Equity share holders. 34. Which source of finance is considered an internal source? A) Bank loans. B) Public deposits. C) Retained earnings. D) Debentures. Show Answer Correct Answer: C) Retained earnings. 35. What are the disadvantages of internal sources of business finance? A) Limited funds, potential strain on cash flow, and lack of external expertise or resources. B) Difficulty in obtaining large amounts of capital, increased financial burden, and limited access to new ideas or innovation. C) Lack of diversification, limited growth opportunities, and potential conflicts of interest. D) High interest rates, limited flexibility, and increased risk. Show Answer Correct Answer: A) Limited funds, potential strain on cash flow, and lack of external expertise or resources. 36. ADRs can be listed and traded on a Stock Exchange of A) USA. B) Russia. C) India. D) England. Show Answer Correct Answer: A) USA. 37. Retained Profits is an example of: A) Unsensible Finance. B) External Finance. C) Internal Finance. D) Long-Term Finance. Show Answer Correct Answer: C) Internal Finance. 38. Which of the following is an appropriation of profit A) Dividend on shares. B) Interest on Loan. C) Salary of employees. D) Depreciation on fixed assets. Show Answer Correct Answer: A) Dividend on shares. 39. Which of the following is an example of an external source of business finance?a) Selling company sharesb) Using retained earningsc) Reinvesting profitsd) Selling company assets A) Using personal savings. B) Selling company shares. C) Issuing corporate bonds. D) Taking out a bank loan. Show Answer Correct Answer: B) Selling company shares. 40. Which of the following is the least likely source of funds for a non-profit organization? A) Fund-raising events. B) Charitable donations. C) Brand recognition. D) Sponsorship deals. Show Answer Correct Answer: C) Brand recognition. 41. Which of the following is a source of borrowed fund? A) Indian Depository Receipts. B) Inter Corporate Deposits. C) Equity shares. D) Global Depository Receipts. Show Answer Correct Answer: B) Inter Corporate Deposits. 42. Which of the following is not a limitation of Commercial Banks as a source of finance? A) Funds are generally available for short periods. B) Procedure of obtaining funds slightly difficult. C) Charge on assets. D) Complex procedure. Show Answer Correct Answer: D) Complex procedure. 43. Which of the following is NOT a reason why a business needs money? A) To start the business. B) To expand the business. C) To deal with a negative cash-flow problem. D) To increase prices of its products. Show Answer Correct Answer: D) To increase prices of its products. 44. How is capacity utilisation calculated? A) (Maximum output / Current output) x 100. B) (Current output / Maximum possible output) x 100. C) (Number of employees / Total output) x 100. D) (Total sales / Total costs) x 100. Show Answer Correct Answer: B) (Current output / Maximum possible output) x 100. 45. The financial institutions are established by A) State govt. B) Central govt. C) Both state and central govt. D) Municipal corporation. Show Answer Correct Answer: C) Both state and central govt. 46. Which of the following enjoy voting rights on various issues of the company? A) Debenture Holders. B) Account Holders. C) Equity Share Holders. D) Preference Share Holders. Show Answer Correct Answer: C) Equity Share Holders. 47. A person who is not necessarily the owner of the business but has a stake on how the business is performing is called ..... A) Partners. B) Manager. C) Stakeholder. D) Stockholder. Show Answer Correct Answer: C) Stakeholder. 48. Name the concept that is termed as 'Ploughing back of profit' and regarded as important sources of owner's fund. A) Retained Earnings. B) Debenture. C) Zero Coupon Bond. D) Preference Share. Show Answer Correct Answer: A) Retained Earnings. 49. Are short-term debts of a business, usually repaid within one year. A) Working capital. B) Current assets. C) Current liabilities. D) None of the above. Show Answer Correct Answer: C) Current liabilities. 50. What is the difference between long-term and short-term financing? A) Long-term financing is used for immediate financial needs, while short-term financing is for future financial needs. B) Short-term financing is for a longer duration than long-term financing. C) Long-term financing is for a shorter duration than short-term financing. D) Short-term financing is used for immediate financial needs, while long-term financing is for future financial needs. Show Answer Correct Answer: D) Short-term financing is used for immediate financial needs, while long-term financing is for future financial needs. 51. Debenturs represent A) Loan capital of the company. B) Fluctuating capital of the company. C) Permanent capital of the company. D) Fixed capital of the company. Show Answer Correct Answer: A) Loan capital of the company. 52. What do you mean by retained profits? A) Profit which occur during the year. B) Profit kept in the business after the owners have taken their share. C) All the above. D) None of the above. Show Answer Correct Answer: B) Profit kept in the business after the owners have taken their share. 53. What is a key disadvantage of venture capital? A) It reduces the founder's control. B) It does not provide guidance. C) It is interest-free. D) It requires no risk from the investor. Show Answer Correct Answer: A) It reduces the founder's control. 54. Are individuals or organizations to whom the business owes money. A) Venture Capital. B) Overdraft. C) Creditors. D) Government Grant. E) Bank Loan. Show Answer Correct Answer: C) Creditors. 55. Which of the statements about retained profits is false? A) You have unlimited amounts of money available. B) Shareholders and employees could be frustrated because there is less profit to be 'shared out'. C) You do not have to pay interest. D) You are free to use it for any purpose. Show Answer Correct Answer: A) You have unlimited amounts of money available. 56. What is a key feature of microfinance? A) Only available to large corporations. B) Requires substantial collateral. C) Provides small sums to developing businesses. D) Only offers long-term loans. Show Answer Correct Answer: C) Provides small sums to developing businesses. 57. Money received from the goverment, local authority or EU to fund a project A) Mortgage. B) Debenture. C) Venture Capital. D) Grant. Show Answer Correct Answer: D) Grant. 58. Is a sum of money given to entrepreneurs or businesses for a specific purpose. A) Overdraft. B) Venture Capital. C) Government Grant. D) Bank Loan. E) Creditors. Show Answer Correct Answer: C) Government Grant. 59. IDRs are issued in A) India. B) China. C) Canada. D) America. Show Answer Correct Answer: A) India. 60. What are the disadvantages of debt financing? A) Interest payments, limited financial flexibility, legal consequences. B) Higher interest rates, decreased credit rating, increased financial risk. C) All the above. D) None of the above. Show Answer Correct Answer: A) Interest payments, limited financial flexibility, legal consequences. ← PreviousNext →Related QuizzesCommerce QuizzesClass 11 QuizzesClass 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 1Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 2Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 3Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 4Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 5Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 6Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 7Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books