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 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 11 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which one of the following sources of funds is convertible into equity shares? A) Loans from commercial banks. B) Inter corporate deposits. C) Bonds. D) Debentures. Show Answer Correct Answer: D) Debentures. 2. What is a smallest unit in which the total capital of the company is divided? A) Booty. B) Capital. C) Money. D) Share. Show Answer Correct Answer: D) Share. 3. Business finance? A) A.business activity which is concerned with the acquisition & conversation of capital funds in meeting the financial needs & overall. B) B.Advantages of Short term FinanceMaintain uninterrupted flow of productionc,. C) C.non of them. D) None of the above. Show Answer Correct Answer: A) A.business activity which is concerned with the acquisition & conversation of capital funds in meeting the financial needs & overall. 4. What is a feature of bank overdrafts? A) Flexible borrowing amounts. B) Fixed interest rates. C) Long-term financing. D) No interest charges. Show Answer Correct Answer: A) Flexible borrowing amounts. 5. What is the main advantage of leasing as a source of finance? A) The business can overdraw their accounts to a greater value than the balance in the account. B) The total cost of leasing may end up higher than the purchasing of asset. C) The maintenance of the asset is done by the leasing firm. D) The business can benefit from the asset without purchasing it. Show Answer Correct Answer: C) The maintenance of the asset is done by the leasing firm. 6. What are the main sources of equity financing? A) Venture capital, angel investors, IPOs, and private placements. B) Stock options, mergers and acquisitions, debt financing. C) Grants, government subsidies, personal loans. D) Bank loans, personal savings, crowdfunding. Show Answer Correct Answer: A) Venture capital, angel investors, IPOs, and private placements. 7. Which of the following best describes working capital? A) Capital needed to start a business. B) Capital needed for capital expenditure. C) Capital spent on wages. D) Capital needed for day to day expenditure. Show Answer Correct Answer: D) Capital needed for day to day expenditure. 8. Which external source of business finance involves obtaining funds from investors in exchange for equity in the company? A) Equity financing. B) Venture capital. C) Savings account. D) Debt financing. Show Answer Correct Answer: A) Equity financing. 9. What does debenture holders get in return of their debt in comapny A) Interest. B) Dividend. C) Profit. D) Loss. Show Answer Correct Answer: A) Interest. 10. What is the advantage of retained earnings as a source of long-term finance? A) Involves no cost of borrowing. B) Easy to obtain. C) Provides ownership to debenture holders. D) Low risk to shareholders. Show Answer Correct Answer: A) Involves no cost of borrowing. 11. Which source of finance below would best be described as loan capital? A) Debt factoring. B) Ordinary share capital. C) Debentures. D) Equity finance. Show Answer Correct Answer: C) Debentures. 12. Limited companies sometimes need large amounts of capital in order to expand their businesses. Which of the following is most likely a disadvantage of issuing new shares? A) Money has to be paid back. B) You have to share profits (dividends) with shareholders. C) New share issue can raise the profile of the business. D) Interest payments can reduce profits. Show Answer Correct Answer: B) You have to share profits (dividends) with shareholders. 13. Which one of the following is the first global company who issue IDR in India? A) HDFC. B) HSBC. C) Reliance. D) Standard Chartered PLC. Show Answer Correct Answer: C) Reliance. 14. In a statement of comprehensive income, all of the calculations are subtractions? A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 15. What are the main responsibilities of shareholders? A) To receive payment as agreed. B) To receive interest payments as laid down in the loan or overdraft agreement. C) To attend the AGM and vote, e.g. on election of directors. D) To provide regular statements of amount owing and terms of repayment. Show Answer Correct Answer: C) To attend the AGM and vote, e.g. on election of directors. 16. Equity Capital is A) Money borrowed from external sources and must be repaid with interest. B) Money received by selling shares. C) All the above. D) None of the above. Show Answer Correct Answer: B) Money received by selling shares. 17. The ease with which an investment can be turned into cash is? A) Exchange Rate. B) Risk. C) Liquidity. D) Solvency. Show Answer Correct Answer: C) Liquidity. 18. Which factor would make a bank more likely to lend money? A) Hidden existing loans. B) Verbal business plans. C) No collateral available. D) Presenting a cash flow forecast. Show Answer Correct Answer: D) Presenting a cash flow forecast. 19. Which source of business finance involves ownership dilution? A) Equity financing. B) Debt financing. C) Venture capital. D) Angel investing. Show Answer Correct Answer: A) Equity financing. 20. The main aim of the business finance is ..... A) To earn more profit. B) To organise more companies. C) To carry out their day to day operations smoothly. D) For an entertainment. Show Answer Correct Answer: C) To carry out their day to day operations smoothly. 21. 4 Which of the following is an example of external finance for a limited company? 1) Retained profits of the company 2) Selling shares 3) Sale of assets no longer used in the business 4) Selling off inventories A) . B) . C) . D) . Show Answer Correct Answer: A) . 22. Venture capitalist was originated in ..... A) INDIA. B) ENGLAND. C) AMERICA. D) JAPAN. Show Answer Correct Answer: C) AMERICA. 23. What are external sources of finance? A) Personal savings. B) Selling company assets. C) Government grants. D) Bank loans, venture capital, issuing bonds. Show Answer Correct Answer: D) Bank loans, venture capital, issuing bonds. 24. Which of these sources of finance would you use to start a business? A) Bank Loan. B) Money from Friends & Family. C) Overdraft and Credit Card. D) Savings. Show Answer Correct Answer: D) Savings. 25. What is the main purpose of financial planning for business activities? A) To ensure the availability of funds for business activities. B) To reduce the cost of production. C) To increase the number of employees. D) To expand the business to new locations. Show Answer Correct Answer: A) To ensure the availability of funds for business activities. 26. The long term source relate to the financial requirements of an enterprise for a period more than ..... years. A) Ten. B) Two. C) One. D) Five. Show Answer Correct Answer: D) Five. 27. ..... are generally available for short periods and its extension or renewal is uncertain and difficult A) Banks. B) Funds. C) All the above. D) None of the above. Show Answer Correct Answer: B) Funds. 28. ..... are equity linked debt securities that are to be converted into equity or depository receipts after a specific period. A) European Depository Receipt. B) Foreign Depository Receipt. C) Foreign currency convertible bonds. D) American Depository Receipt. Show Answer Correct Answer: C) Foreign currency convertible bonds. 29. Short-term assets and short-term liabilities are referred to as the firm's: A) Working capital. B) Capital structure. C) Capital budget. D) Cash flow. Show Answer Correct Answer: A) Working capital. 30. The holder of equity shares is sure of his return on investment. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 31. What is working capital primarily used for in a business? A) Purchasing fixed assets. B) Day-to-day running expenses. C) Issuing debentures. D) Long-term investments. Show Answer Correct Answer: B) Day-to-day running expenses. 32. True or false-crowdfunding is usually only used for new business start-ups/concepts and is therefore inappropriate for existing large, profitable businesses A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 33. State Industrial Development Corporations were established by ..... A) Ministry of Finance. B) Central Government. C) Different States. D) None of these. Show Answer Correct Answer: C) Different States. 34. What is the main use of medium/long term finance? A) Shorten amount of time customers have to pay. B) Buy capital/fund expansion. C) Cash flow/meet day to day running costs. D) Reduce stock held. Show Answer Correct Answer: B) Buy capital/fund expansion. 35. Which of the following best defines 'profit' in business terms? A) Is recorded straight away after sales. Total revenue-total costs. B) The ability to pay bills in cash when they fall due. C) Debts owed by a business to lenders and suppliers. D) A charge made by governments on activities, earnings and income. Show Answer Correct Answer: A) Is recorded straight away after sales. Total revenue-total costs. 36. ....represents the ownership capital of a company. A) Debentures. B) Preference share. C) Bonds. D) Equity share. Show Answer Correct Answer: D) Equity share. 37. Wealthy individuals who invest in high-potential businesses are ..... A) Crowdfunders. B) Shareholders. C) Banks. D) Angel Investors. Show Answer Correct Answer: D) Angel Investors. 38. Finance is needed under which of the following stage ..... in a business? A) Promotion. B) Incorporation. C) Expansion. D) All of the above. Show Answer Correct Answer: D) All of the above. 39. When using which of the following sources of finance would interest always need to be paid? A) Share capital. B) A loan from family and friends. C) Overdraft. D) Venture capital. Show Answer Correct Answer: C) Overdraft. 40. What is the term for long-term bonds issued by a company to raise funds? A) Retained earnings. B) Debentures. C) Equity shares. D) Term loans. Show Answer Correct Answer: B) Debentures. 41. Which of the following factors primarily affects the decision between issuing debentures and raising equity? A) Liquidity position. B) Tax benefits. C) Market conditions. D) Ownership dilution. Show Answer Correct Answer: D) Ownership dilution. 42. Which of the following sources of finance is likely to involve the highest cost for a business? A) Equity shares. B) Debentures. C) Public deposits. D) Bank loans. Show Answer Correct Answer: A) Equity shares. 43. Which is a disadvantage of crowdfunding? A) All ideas easily reach funding targets. B) It cannot be used by start-ups. C) Investors demand full control of the business. D) Only appealing ideas attract enough investment. Show Answer Correct Answer: D) Only appealing ideas attract enough investment. 44. What kind of instruments ADRs and GDRs are A) Shares. B) Debentures. C) All the above. D) None of the above. Show Answer Correct Answer: A) Shares. 45. The cost of which type of financing is generally the lowest? A) Preference shares. B) Equity. C) Public deposits. D) Debt. Show Answer Correct Answer: D) Debt. 46. 6 An advantage that share capital (equity capital) has over long-term loans is that:1) the capital never has to be repaid 2) the rate of interest on shares is fixed 3) the balance of control in the business will change if more shares are issued 4) dividends are paid on long term loans but not on shares A) . B) . C) . D) . Show Answer Correct Answer: A) . 47. A mortgage is a long term source of finance. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 48. Which of the following statements about bank loans is not true? A) Usually used for large amounts of money that need to be paid back over a longer time-frame. B) Interest rates make the loan more expensive. C) Easy to get. D) Usually cheaper than consistently using a bank overdraft. Show Answer Correct Answer: C) Easy to get. 49. What is short-term finance mainly used for? A) Paying shareholder dividends. B) Funding long-term expansion. C) Maintaining positive cash flow. D) Buying new buildings. Show Answer Correct Answer: C) Maintaining positive cash flow. 50. Euity shareholders are called? A) Owners of the company. B) Partners of the company. C) Excecutives of the company. D) Guardian of the company. Show Answer Correct Answer: A) Owners of the company. 51. The purchaser pays regular fix payments until the full amount is paid and then ownership is transferred A) Leasing. B) Venture Capital. C) Hire Purchase. D) Bank Overdraft. Show Answer Correct Answer: C) Hire Purchase. 52. What is trade credit? A) A loan from a bank. B) Credit extended by one trader to another. C) A type of lease agreement. D) Investment in shares. Show Answer Correct Answer: B) Credit extended by one trader to another. 53. Which of the these sources of finance is least useful for dealing with cash-flow issues? A) Crowdfunding. B) Overdraft. C) Owner's Capital. D) Trade Credit. Show Answer Correct Answer: A) Crowdfunding. 54. Which of the following sources of finance does not have interest added. A) Overdraft. B) Bank Loan. C) Mortgage. D) Owners' Capital. Show Answer Correct Answer: D) Owners' Capital. 55. Which of these sources of finance is likely to charge the most interest? A) Retained profit. B) Overdraft. C) Trade credit. D) Bank loan. Show Answer Correct Answer: B) Overdraft. 56. What decision involves make-up of the right-hand side of the balance sheet A) Asset management. B) Investment. C) Financing. D) None. Show Answer Correct Answer: C) Financing. 57. The act of receiving investment from owners. A) Bank overdraft. B) Bank loans. C) Equity financing. D) Debt financing. Show Answer Correct Answer: C) Equity financing. 58. Is an amount of money provided to a business for a stated purpose in return for a payment in the form of interest charges. A) Government Grant. B) Venture Capital. C) Bank Loan. D) Overdraft. E) Creditors. Show Answer Correct Answer: C) Bank Loan. 59. Short Term sources of finance usually require money to be repaid within ..... A) 1 year. B) 1 month. C) 1 week. D) 6 months. Show Answer Correct Answer: A) 1 year. 60. 7 Which one of the following is an advantage of micro-finance for an entrepreneur setting up a business? 1) There are no interest costs so the business will be more profitable 2) Very large loans can be obtained 3) The finance does not have to be repaid 4) Finance is provided to people who could not usually obtain a bank loan A) . B) . C) . D) . Show Answer Correct Answer: A) . ← 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