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 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 5 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A portion of the net earnings may be retained in the business for use in the future is called A) Equity shares. B) Debentures. C) Retained Earnings. D) Preference shares. Show Answer Correct Answer: C) Retained Earnings. 2. A business that fails to pay back loans will have A) A good credit rating. B) A poor credit rating. C) All the above. D) None of the above. Show Answer Correct Answer: B) A poor credit rating. 3. Is the money invested into a business either by its owners or by organizations such as banks. A) Non-current Asset. B) Capital. C) Loan Capital. D) Share Capital. E) Asset. Show Answer Correct Answer: B) Capital. 4. Where do buyers and sellers trade financial instruments like stocks and bonds? A) Financial Statement. B) Financial Institution. C) Financial Plan. D) Financial Market. Show Answer Correct Answer: D) Financial Market. 5. When a business uses its own profits to finance its operations, it is an example of: A) Self-financing. B) Equity financing. C) Debt financing. D) External financing. Show Answer Correct Answer: A) Self-financing. 6. GDRs can be converted into shares ..... A) After 5 years. B) After one year. C) At any time. D) After 10 years. Show Answer Correct Answer: C) At any time. 7. Which of the following is not true of a debenture? A) Debenture holders get a fixed rate of return. B) They must be repaid on an agreed date. C) All businesses can have debenture holders. D) Debenture holders are creditors of the company. Show Answer Correct Answer: C) All businesses can have debenture holders. 8. Which of the following is a permanent source of finance for a company? A) Long-term bank loan. B) Share capital. C) Creditors. D) Overdraft. Show Answer Correct Answer: B) Share capital. 9. What is a bank loan? A) A one-off grant that does not require repayment. B) Money lent with fixed repayments over time. C) Money borrowed from customers. D) A type of share sold to investors. Show Answer Correct Answer: B) Money lent with fixed repayments over time. 10. ..... Is a financial instrument created by an Indian Depository to enable a foreign company to raise funds from the Indian securities market. A) Foreign Depository Receipt. B) European Depository Receipt. C) Indian Depository Receipt. D) American Depository Receipt. Show Answer Correct Answer: C) Indian Depository Receipt. 11. Which of the following sources of finance for a non-current asset would not result in a business owning said asset? A) Hire purchase. B) Leasing. C) Long-term bank loan. D) Mortgage. Show Answer Correct Answer: B) Leasing. 12. Which factor is NOT affecting the choice of source of finance A) Control. B) Risk profile. C) International capital markets. D) Purpose and time period. Show Answer Correct Answer: C) International capital markets. 13. Case study:the Business Incubator team 'TradeTools'-an online platform connecting neighbors who want to rent tools with neighbours that own them. They will pitch their business concept in May-what would be the most appropriate source of finance for this new, untested idea? A) Bank loan. B) Personal savings. C) Credit cards. D) Angel Investor. Show Answer Correct Answer: D) Angel Investor. 14. What does the acid test ratio measure? A) Current assets-Inventory/Current liabilities. B) Current assets/Current liabilities. C) Net profit/Sales revenue x100. D) Total assets-Total liabilities. Show Answer Correct Answer: A) Current assets-Inventory/Current liabilities. 15. When a business is allowed to spend more than it holds inits current bank account up to an agreed limit. A) Overdraft. B) Venture Capital. C) Creditors. D) Bank Loan. E) Government Grant. Show Answer Correct Answer: A) Overdraft. 16. Which of the following is a feature of preference shares? A) They have voting rights. B) They are riskier than equity shares. C) They are repaid before debentures. D) They provide fixed dividends. Show Answer Correct Answer: D) They provide fixed dividends. 17. Which is a disadvantage of share capital? A) It reduces the risk of takeover. B) Shareholders cannot vote. C) Shareholders cannot sell their shares. D) It dilutes founder control. Show Answer Correct Answer: D) It dilutes founder control. 18. Retained earnings are profits that have not been paid to owners, which improve the business is called ..... A) Balance Sheet. B) Working Capital. C) Growth profit and EBIT. D) Profit and Loss Statement. Show Answer Correct Answer: B) Working Capital. 19. The term 'redeemable' is used for A) Equity shares. B) Public deposits. C) Commercial paper. D) Preference shares. Show Answer Correct Answer: D) Preference shares. 20. Name the investors who get priority over equity shareholders while paying dividend and repayment of capital A) Debentureholders. B) Equity shareholders. C) Retained earnings. D) Preference shareholders. Show Answer Correct Answer: D) Preference shareholders. 21. Which is a common disadvantage of overdrafts? A) No repayment required. B) Fixed interest rates. C) High interest charges. D) Loss of ownership. Show Answer Correct Answer: C) High interest charges. 22. Which of the following is a type of security that signifies ownership in a corporation? A) Stocks. B) Bank. C) Non-bank. D) Bond. Show Answer Correct Answer: A) Stocks. 23. How is 'profit for the year' or 'net profit' calculated? A) Total assets-Total liabilities. B) Net profit/Sales revenue x100. C) Operating profit-interest. D) Current assets-Inventory/Current liabilities. Show Answer Correct Answer: C) Operating profit-interest. 24. When a business cannot pay its debts it is said to be? A) Overheating. B) Overtrading. C) Liquid. D) Insolvent. Show Answer Correct Answer: D) Insolvent. 25. What source of finance could lead to an unwanted takeover of the business? A) Sale of assets. B) Owner's capital. C) Share issue. D) Trade credit. Show Answer Correct Answer: C) Share issue. 26. Which source of finance is usually secured against an asset that could be seized if the loan is not repaid? A) Crowd funding. B) Overdraft. C) Share capital. D) Loans. Show Answer Correct Answer: D) Loans. 27. Renting an asset over a number of years while making fixed regular payments A) Bank Overdraft. B) Leasing. C) Medium term loan. D) Hire Purchase. Show Answer Correct Answer: B) Leasing. 28. What does 'variance analysis' show? A) The difference between budgeted and actual figures. B) The cost of producing one unit. C) The movement of cash into and out of a business. D) The amount of income from sales. Show Answer Correct Answer: A) The difference between budgeted and actual figures. 29. What are unsecured loan certificates issued by a company, usually with a fixed rate of interest and a set date of repayment, called? A) Mutual funds. B) Bonds. C) Stocks. D) Debentures. Show Answer Correct Answer: D) Debentures. 30. What is the full form of IDR: A) Indian Depository Receipt. B) International Direct Receipt. C) International Depository Receipt. D) Indian Direct Receipt. Show Answer Correct Answer: A) Indian Depository Receipt. 31. Which is internal source of business finance A) Debentures. B) Retained earnings. C) Trade credit. D) Loans from commercial banks. Show Answer Correct Answer: B) Retained earnings. 32. What is the primary risk of debt financing for a business? A) No voting rights. B) Obligation to repay with interest. C) Ownership dilution. D) Tax benefits. Show Answer Correct Answer: B) Obligation to repay with interest. 33. ..... shareholders get voting rights in a company A) Equity Shareholders. B) Preference Shareholders. C) Both (a) and (b). D) None of the above. Show Answer Correct Answer: A) Equity Shareholders. 34. Which of the following best defines "internal finance" ? A) The raising of capital/cash from within/inside the business, such as owner's capital, personal savings, and retained profit. B) Money raised from outside the business. C) A sum of money given by a government or other organisation. D) An external method of finance borrowed from a bank. Show Answer Correct Answer: A) The raising of capital/cash from within/inside the business, such as owner's capital, personal savings, and retained profit. 35. A financial statement that records the assets and liabilities of a business on a particular day at the end of an accounting period. A) Capital Expenditure. B) Revenue Expenditure. C) Statement of Financial Position (used to be called Balance Sheet). D) Income Statement. Show Answer Correct Answer: C) Statement of Financial Position (used to be called Balance Sheet). 36. Ordinary shares in limited companies A) Have a limited life, with no voting rights but receive dividends. B) Have an unlimited life, and voting rights but receive no dividends. C) Have a limited life, and voting rights and receive dividends. D) Have an unlimited life, and voting rights and receive dividends. Show Answer Correct Answer: D) Have an unlimited life, and voting rights and receive dividends. 37. There must be sufficient finance to pay for the daily running of the business. This money is known as A) Retained profit. B) Work-in-progress. C) Buffer stocks. D) Working capital. Show Answer Correct Answer: D) Working capital. 38. The word 'redeemable' is related to ..... A) Equity Shares. B) Debentures. C) Trade Credit. D) Retained Earnings. Show Answer Correct Answer: B) Debentures. 39. Full form of GDR is: A) Global Depository Receipt. B) Global Decomposite Receipt. C) Global Depository Repayment. D) Global Direct Receipt. Show Answer Correct Answer: A) Global Depository Receipt. 40. 14 Which one of the following factors should be considered by a manager when planning finance for an expansion programme? 1) The legal form of the business 2) The location of the planned expansion 3) The number of workers employed 4) The time of year the expansion is planned for A) . B) . C) . D) . Show Answer Correct Answer: A) . 41. An internal source of finance that is generated from business activity A) Retained profit. B) Share issue. C) Overdraft. D) None of the above. Show Answer Correct Answer: A) Retained profit. 42. What is the main characteristic of debt financing? A) Investing in stocks and bonds. B) Using personal savings to fund a business. C) Receiving donations from investors. D) Borrowing money that must be repaid with interest. Show Answer Correct Answer: D) Borrowing money that must be repaid with interest. 43. Which type of preference share can accumulate unpaid dividends in future years A) Participating. B) Non-participating. C) Cumulative. D) Convertible. Show Answer Correct Answer: C) Cumulative. 44. ROCE will be used by? A) Shareholders. B) Potential investors. C) Managers. D) All of the above. Show Answer Correct Answer: D) All of the above. 45. What does external source of finance mean? A) A source from within the business. B) A source from outside the business. C) All the above. D) None of the above. Show Answer Correct Answer: B) A source from outside the business. 46. Which holders do not enjoy voting rights A) ADRs. B) IDRs. C) GDRs. D) None of the above. Show Answer Correct Answer: C) GDRs. 47. Which of the following statements best describe debentures? A) Short term loans by banks to businesses. B) Long term bonds issued by businesses. C) A loan that is secured against an asset. D) A type of overdraft. Show Answer Correct Answer: B) Long term bonds issued by businesses. 48. Which of the following statements about personal sources of finance is false? A) Often cheaper in the long-term. B) Less personal financial risk for the entrepreneur. C) Less 'red tape' or delay in getting the cash. D) May be harder to raise large amounts. Show Answer Correct Answer: B) Less personal financial risk for the entrepreneur. 49. What of the following is a source of internal finance? A) Selling assets. B) Trade credit. C) A bank loan. D) None of the above. Show Answer Correct Answer: A) Selling assets. 50. Which of the following is not a limitation of equity shares as a source of finance? A) Dilutes the voting power. B) No explicit cost. C) Costly source. D) Fluctuating returns. Show Answer Correct Answer: B) No explicit cost. 51. Which of the following is not a feasible source of finance for an ordinary partnership? A) Bank loans. B) Sale and leaseback. C) Debt factoring. D) Initial public offering. Show Answer Correct Answer: D) Initial public offering. 52. Which of the following is a long-term source of finance? A) Trade credit. B) Commercial paper. C) Bank overdraft. D) Debentures. Show Answer Correct Answer: D) Debentures. 53. Which of the following is an advantage of equity financing? A) It never has to be repaid. B) Finance can be raised very quickly. C) Interest rates are very low. D) It does not change the ownership of the business. Show Answer Correct Answer: A) It never has to be repaid. 54. Which is an example of a fixed business cost? A) Wages to production workers. B) Raw materials. C) Packaging. D) Interest Payments. Show Answer Correct Answer: D) Interest Payments. 55. Contribution (in Break even analysis) is calculated as Selling price-variable cost per unit A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 56. Long term finance is usually repaid A) 1 to 3 years. B) 1 to 5 years. C) 6 months to 1 year. D) 5+ years. Show Answer Correct Answer: D) 5+ years. 57. ..... Issued to general public with a preferential right to fixed rate of return payable as dividend and repayment of capital at the end of specified period or liquidation whichever is earlier A) Inter-corporate deposits. B) Debenture. C) Equity shares. D) Preference shares. Show Answer Correct Answer: D) Preference shares. 58. What is retained earnings? A) Funds borrowed from banks. B) Profits reinvested in the business. C) Funds raised through issuing shares. D) Trade credit extended by suppliers. Show Answer Correct Answer: B) Profits reinvested in the business. 59. A portion of the net earnings may be retained in the business for use in the future. It is a source of: A) Retained financing. B) External financing. C) Selffinancing. D) Publci financing. Show Answer Correct Answer: C) Selffinancing. 60. Five sources of external finance for business are A) Issuing sharesbank loanssale of debenturesfactoring debtsgrants or subsidies. B) Microfinancebank loans government bondsinvestorsretained earnings. C) Crowdfundingmicrofinancebank loansissuing sharessale proceeds of a business building. D) Savings from laying off staffbank loanscrowdfundingprofits and retrained earningsowner's investment. Show Answer Correct Answer: A) Issuing sharesbank loanssale of debenturesfactoring debtsgrants or subsidies. ← 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 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