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 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 4 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which one of the following is not the feature of preference shares A) Provide fixed rate of return. B) Part of owner's capital. C) Provide voting rights. D) Get preference over equity shares. Show Answer Correct Answer: C) Provide voting rights. 2. The profit available for ploughing back depends on? A) Net banking, e-banking, bank transfer. B) Loans. C) Net profits, dividend policy, age of organization. D) Father in laws property. Show Answer Correct Answer: C) Net profits, dividend policy, age of organization. 3. Which is a key feature of debentures? A) Debentures are only issued for less than one year. B) Debentures do not have a fixed interest rate. C) Debenture holders are creditors of the company. D) Debentures represent ownership in a company. Show Answer Correct Answer: C) Debenture holders are creditors of the company. 4. What are the advantages of equity financing? A) Equity financing allows businesses to raise capital without incurring debt and provides access to a larger pool of funds. B) Equity financing increases the risk for the business as it involves sharing ownership and control. C) Equity financing is only available to large corporations and not to small businesses. D) Equity financing requires businesses to pay interest on the funds raised. Show Answer Correct Answer: A) Equity financing allows businesses to raise capital without incurring debt and provides access to a larger pool of funds. 5. Retain earnings does not involve any explicit cost in the form of A) Interest. B) Dividend. C) Floatation cost. D) All of the above. Show Answer Correct Answer: D) All of the above. 6. Whichtypeoflegalstructure isusedwhentwoormorepeoplejointogethertostarta business andhave unlimitedliability? A) PLC. B) Partnership. C) LTD. D) Soletrader. Show Answer Correct Answer: B) Partnership. 7. What is the importance of a business plan in raising external finance? A) It guarantees the success of a business. B) It provides evidence that the business managers have thought about and planned for the future. C) It increases the chances of avoiding failure. D) It forces the owners to think long and hard about the proposal. Show Answer Correct Answer: B) It provides evidence that the business managers have thought about and planned for the future. 8. When a business's expenses are greater than the revenue, it is called ..... A) A cash reserve. B) A cash preserve. C) A net storage. D) A net loss. Show Answer Correct Answer: D) A net loss. 9. What type of finance involves less profit going to the owners? A) Retained profit. B) Overdraft. C) Bank loan. D) Sale of assets. Show Answer Correct Answer: A) Retained profit. 10. ..... can be issued only to American citizens and can be listed and traded on a stock exchange of USA. A) Indian Depository Receipt. B) Foreign Depository Receipt. C) American Depository Receipt. D) European Depository Receipt. Show Answer Correct Answer: C) American Depository Receipt. 11. It is the money raised from the business's own assets or from profits left in the business. A) Internal. B) External Financing. C) External. D) Debt Financing. Show Answer Correct Answer: A) Internal. 12. Which type of business would venture capitalists be usually interested in investing funds? A) An established private limited company. B) A small business with slow sales growth potential. C) A well-known franchise operation. D) An entrepreneurial start-up with the possibility of high profits. Show Answer Correct Answer: D) An entrepreneurial start-up with the possibility of high profits. 13. Investors who want steady income may not prefer ..... A) Debentures. B) Equity Shares. C) Bonds. D) None of these. Show Answer Correct Answer: B) Equity Shares. 14. A loan that is secured on a property is called a A) Mortgage. B) Government Grant. C) Credit Card. D) Overdraft. Show Answer Correct Answer: A) Mortgage. 15. Preference shareholders get preference over equity shares for A) Payment of dividend. B) Voting. C) Participation in management. D) None of these. Show Answer Correct Answer: A) Payment of dividend. 16. Which of the following is an example of a cash outflow? A) Cash from trade receivable. B) Interest Received. C) Payment for raw materials. D) Fresh injection of capital. Show Answer Correct Answer: C) Payment for raw materials. 17. What is the most likely source of finance for buying a new IT system? A) Mortgage. B) Factoring. C) A bank loan. D) None of the above. Show Answer Correct Answer: C) A bank loan. 18. What is an example of an internal source of business finance? A) Crowdfunding. B) Bank loan. C) Retained earnings. D) Venture capital. Show Answer Correct Answer: C) Retained earnings. 19. Which of the following constitute a source of long term finance A) Equity shares. B) Debentures. C) Retained earnings. D) All of the above. Show Answer Correct Answer: D) All of the above. 20. What is the term used for the money left over after all expenses have been paid? A) Revenue. B) Debt. C) Loss. D) Profit. Show Answer Correct Answer: D) Profit. 21. Which of the following is not a working capital requirement: A) Fund required for purchase of Long Term Assets. B) Fund required for purchase of raw material. C) Fund required for payment of salary to employees. D) Fund required for purchase of stock. Show Answer Correct Answer: A) Fund required for purchase of Long Term Assets. 22. What is a key factor affecting the choice of finance source? A) The cost of procurement and utilization of funds. B) The location of the business. C) The number of employees. D) The color of the company logo. Show Answer Correct Answer: A) The cost of procurement and utilization of funds. 23. Which ource of finance is preferred by investors who want fixed income at less risk A) Equity shares. B) Debentures. C) Preference shares. D) Bank loan. Show Answer Correct Answer: B) Debentures. 24. Which of these sources of finance is internal? A) Venture capital. B) Crowd funding. C) Mortgage. D) Retained profit. Show Answer Correct Answer: D) Retained profit. 25. What is an advantage of friends & family loan? A) There will be little or no interest. B) You can pay in smaller installments. C) They take a long time to arrange. D) You don't have to pay it back. Show Answer Correct Answer: A) There will be little or no interest. 26. What are internal sources of finance? A) Selling company assets. B) Funds generated within the organization. C) Borrowing from external sources. D) Donations from customers. Show Answer Correct Answer: B) Funds generated within the organization. 27. What is the ability of a firm to meet its short term debts known as? A) Running costs. B) Liquidity. C) Working capital. D) Capital expenditure. Show Answer Correct Answer: B) Liquidity. 28. What is the main disadvantage of trade credit as a source of finance? A) May lead to shortage of stock and loss of sales. B) Costs related to storage of stock is reduced. C) The business may not have any old or obsolete assets. D) The business may not get cash discounts. Show Answer Correct Answer: D) The business may not get cash discounts. 29. A stockholder's share of the company's profit A) Yield. B) Dividend. C) Par Value. D) Share. Show Answer Correct Answer: B) Dividend. 30. Which of the following is an example of revenue expenditure? A) Purchasing a machine. B) Buying a new truck. C) Paying staff wages. D) Extending the factory. Show Answer Correct Answer: C) Paying staff wages. 31. What is debt financing? A) Debt financing is a method of raising capital by receiving grants from the government. B) Debt financing is a method of raising capital by borrowing money from lenders or issuing bonds. C) Debt financing is a method of raising capital by selling company shares. D) Debt financing is a method of raising capital by investing in stocks. Show Answer Correct Answer: B) Debt financing is a method of raising capital by borrowing money from lenders or issuing bonds. 32. This source of business finance is the portion of profit which is invested in business, rather than distributing is as dividend to shareholders. A) Debentures. B) Preference Share. C) Retained Earnings. D) Equity Share. Show Answer Correct Answer: C) Retained Earnings. 33. ..... are unsecured short-term deposits made by a company with another company. A) Corporate Deposits. B) Public Deposits. C) Fixed Deposits. D) Inter Corporate Deposits. Show Answer Correct Answer: D) Inter Corporate Deposits. 34. It is profit kept in the company rather than paid out to shareholders as a dividend. A) Net Profit. B) Retained Profits. C) Overdraft. D) Venture Capital. E) Operating profit. Show Answer Correct Answer: B) Retained Profits. 35. KINDS OF BUSINESS FINANCE A) A.FIXED CAPITALACCUMILATED CAPITAL. B) B.CURRENT CAPITAL ASSET ACUMULATED. C) C.NON OF THEM. D) None of the above. Show Answer Correct Answer: A) A.FIXED CAPITALACCUMILATED CAPITAL. 36. Retained Profits, Sale of Unwanted Assets, Sale and Leaseback A) Internal sources of finance. B) External sources of finance. C) All the above. D) None of the above. Show Answer Correct Answer: A) Internal sources of finance. 37. The ordinary shares of a company are delivered to the depository bank, which in turn issues the depository receipts, known as ..... A) Commercial banks. B) ADR. C) None of these. D) GDR. Show Answer Correct Answer: D) GDR. 38. Which of the following is a stable source of business finance: A) Preference Share. B) Equity Share. C) Bonds. D) Debentures. Show Answer Correct Answer: B) Equity Share. 39. When a business sells its old machinery to raise funds, it is an example of: A) Revenue. B) Investment. C) Sales of Assets. D) Leasing. Show Answer Correct Answer: C) Sales of Assets. 40. Companies generally invite public deposits for a period up to: A) 4 years. B) 10 years. C) 3 years. D) 5 years. Show Answer Correct Answer: C) 3 years. 41. What is the most likely source of finance for buying property? A) Mortgage. B) Factoring. C) A bank loan. D) None of the above. Show Answer Correct Answer: A) Mortgage. 42. Complete the following statements with appropriate word(s) in the blank spaces:2. The requirement of finance for the purchase of land, building, machinery etc. is known as ..... fund. A) Short-term. B) Long-term. C) All the above. D) None of the above. Show Answer Correct Answer: B) Long-term. 43. Which of the following is NOT a feature of equity shares? A) Permanent capital. B) Higher profits in good years. C) Fixed rate of dividend. D) Voting rights. Show Answer Correct Answer: C) Fixed rate of dividend. 44. Which of the following is not a long term source? A) Equity Shares. B) Public Deposits. C) Debentures. D) Financial Institutions. Show Answer Correct Answer: B) Public Deposits. 45. What is the primary purpose of business finance? A) To invest in real estate. B) To procure funds for business operations. C) To increase employee salaries. D) To pay taxes. Show Answer Correct Answer: B) To procure funds for business operations. 46. Which type of budget allocates no money for spending unless it has firstly been justified? A) Zero based budget. B) Favourable variance. C) Historical budgeting. D) Operating profit. Show Answer Correct Answer: A) Zero based budget. 47. State the source for finance that can be used by the company to avail the benefit to tax saving. A) Equity. B) Preference. C) Debentures. D) None of these. Show Answer Correct Answer: C) Debentures. 48. Businesses need finance for different reasons. Payment of day-to-day expenses is one of these reasons. What is this finance called? A) Cash flow. B) Capital expenditure. C) Start-up capital. D) Working capital. Show Answer Correct Answer: D) Working capital. 49. A short-term source of finance from a bank that usually is only used in an emergency/when needed A) Credit card. B) Loan. C) Overdraft. D) Share capital. Show Answer Correct Answer: C) Overdraft. 50. ..... are partly equity shares and partly debentures. A) Trade credit. B) Financial institution. C) Preference shares. D) None of these. Show Answer Correct Answer: C) Preference shares. 51. Raising funds from a wide variety of small investors by publicising an idea on the internet is called: A) Venture capital. B) Crowdfunding. C) Personal savings. D) Trade credit. Show Answer Correct Answer: B) Crowdfunding. 52. An external source of finance often used to meet short-term cash shortages A) Retained profit. B) Share issue. C) Overdraft. D) None of the above. Show Answer Correct Answer: C) Overdraft. 53. Debentures can best be described as a form of A) Long term security giving the holder part ownership of the business. B) Medium-term loan with variable interest rates. C) Long-term loan with a fixed interest rate. D) Short-term loan with variable interest rates. Show Answer Correct Answer: C) Long-term loan with a fixed interest rate. 54. Long-term sources of business finance are usually used for? A) Covering day-to-day operational expenses. B) Funding short-term projects. C) Funding investments that will benefit the company over an extended period. D) Paying short-term debts. Show Answer Correct Answer: C) Funding investments that will benefit the company over an extended period. 55. Preference shares that can be converted into equity shares within a specified period of time are known as A) Participating preference shares. B) Convertible preference shares. C) Cumulative preference shares. D) Non cumulative preference shares. Show Answer Correct Answer: B) Convertible preference shares. 56. Complete the following statements with appropriate word(s) in the blank spaces:10. Payment of dividend to the shareholders is not compulsory. A) Equity. B) Preference. C) All the above. D) None of the above. Show Answer Correct Answer: A) Equity. 57. Share, regarded as those shares which will get dividend and repayment of capital only after settlement of the claims of preference shareholders is termed as A) Preference Share. B) Debenture. C) Equity Share. D) Bonus Share. Show Answer Correct Answer: C) Equity Share. 58. What is a one-year accounting period called? A) Operating Cost. B) Fiscal Year. C) Financial Finnish. D) Financial Forecast. Show Answer Correct Answer: B) Fiscal Year. 59. Which of the following is a commercial bank? A) Canara bank. B) Punjab National Bank. C) State Bank of India. D) All of these. Show Answer Correct Answer: D) All of these. 60. Which ONE of the following items would be found in the income statement of a business? A) Accounts payable. B) Equipment. C) Investments. D) Gross profit. Show Answer Correct Answer: D) Gross profit. ← 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 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 8Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books