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 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 6 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is an advantage of a loan from friends and family? A) No interest will need to be paid. B) Arguments of the money could occur. C) All the above. D) None of the above. Show Answer Correct Answer: A) No interest will need to be paid. 2. The financial needs of a business can be categorised into ..... categories. A) 4. B) 2. C) 3. D) 6. Show Answer Correct Answer: B) 2. 3. What is capital expenditure? A) Money spent for fixed assets which last about 6 months. B) Money spent on a day-to-day basis. C) Money spent per hour rate. D) Money spent for fixed assets which last about for more than a year. Show Answer Correct Answer: D) Money spent for fixed assets which last about for more than a year. 4. A sole trader wants to increase the stock of products in his shop. The best source of finance is likely to be: A) Debentures. B) A long term bank loan. C) Trade credit. D) Mortgage. Show Answer Correct Answer: C) Trade credit. 5. What are ' Development banks ' also know as? A) Financial instituions. B) Custodian. C) Commercial Banks. D) Depository. Show Answer Correct Answer: A) Financial instituions. 6. Which of the following is an internal source of finance? A) Bank loan. B) Trade credit. C) Debentures. D) Retained earnings. Show Answer Correct Answer: D) Retained earnings. 7. What is the main use of short term finance? A) Cash flow/meet day to day running costs. B) Reduce stock held. C) Shorten amount of time customers have to pay. D) Buy capital/fund expansion. Show Answer Correct Answer: A) Cash flow/meet day to day running costs. 8. Refers to the funds raised through loans A) External sources. B) Debentures. C) Equity shares. D) Borrowed funds. Show Answer Correct Answer: D) Borrowed funds. 9. Full form of ICICI A) International Credit and Investment Corporation of India. B) Indian Credit and Investment Corporation of India. C) Industrial Credit and Investment Corporation of India. D) None of these. Show Answer Correct Answer: C) Industrial Credit and Investment Corporation of India. 10. A company wants to raise money by issuing new shares to investors. What is this method called? A) Grant. B) Leasing. C) Overdraft. D) Share capital. Show Answer Correct Answer: D) Share capital. 11. Financial Market that deals with short term securities is called A) Secondary Market. B) Capital Market. C) Stock Market. D) Money Market. Show Answer Correct Answer: D) Money Market. 12. Cash and profit are different because ..... A) Companies might buy fixed assets. B) The opening balance at the start of the year is zero. C) Owners put more money into their business. D) Some goods are sold on credit. Show Answer Correct Answer: B) The opening balance at the start of the year is zero. 13. Is funds, in the form of a mix of share and loan capital, advanced to businesses thought to be relatively high risk. A) Bank Loan. B) Venture Capital. C) Creditors. D) Government Grant. E) Overdraft. Show Answer Correct Answer: B) Venture Capital. 14. 11 Which of the following sources of finance is most likely to be used by a company planning to take over another business? 1) Bank overdraft 2) Leasing 3) Share issue 4) Trade credit A) . B) . C) . D) . Show Answer Correct Answer: A) . 15. Complete the following statements with appropriate word(s) in the blank spaces:5. In the absence of ..... it is not possible to conceive of a company. A) Debentures. B) Equity shares. C) All the above. D) None of the above. Show Answer Correct Answer: B) Equity shares. 16. Trade credit allows a business to: A) Borrow money from customers. B) Buy now and pay later. C) Sell shares to suppliers. D) Avoid paying for stock altogether. Show Answer Correct Answer: B) Buy now and pay later. 17. Which of the following is NOT a long-term source of finance? A) Term loans. B) Trade credit. C) Equity shares. D) Debentures. Show Answer Correct Answer: B) Trade credit. 18. Complete the following statements with appropriate word(s) in the blank spaces:6. The rate of dividend is pre-decided on ..... A) Equity shares. B) Preference shares. C) All the above. D) None of the above. Show Answer Correct Answer: B) Preference shares. 19. When one party grants the other party the right to use the asset in return for a periodic payment, it is known as ..... A) Debts. B) Public Deposits. C) Factoring. D) Lease Financing. Show Answer Correct Answer: D) Lease Financing. 20. An external source of finance that is not available to unincorporated businesses A) Retained profit. B) Share issue. C) Overdraft. D) None of the above. Show Answer Correct Answer: B) Share issue. 21. What is the primary role of financial management in an organization? A) Managing Human Resources. B) Managing Financial Resources. C) Managing Marketing Resources. D) Managing Physical Assets. Show Answer Correct Answer: B) Managing Financial Resources. 22. Which is the back bone of business? A) Finance. B) Assets. C) Place. D) Liablities. Show Answer Correct Answer: A) Finance. 23. Which of the following is NOT usually considered a personal source of finance. A) Credit card. B) Savings. C) Redundancy payments. D) Crowdfunding. Show Answer Correct Answer: D) Crowdfunding. 24. 2 When a business expands it usually needs finance for which one of the following reasons? 1) To pay for increased working capital 2) To pay back shareholders 3) To pay the government a grant 4) To provide a loan to the bank A) . B) . C) . D) . Show Answer Correct Answer: A) . 25. What is the primary function of a financial institution? A) Issuing stocks. B) Analyzing market trends. C) Regulating financial markets. D) Providing financial services. Show Answer Correct Answer: D) Providing financial services. 26. What is a disadvantage of using owners' funds? A) It means you have no savings. B) It can lead to personal conflicts. C) It can take a long time to arrange. D) They can be recalled immediately. Show Answer Correct Answer: A) It means you have no savings. 27. ICICI was established in ..... A) 1975. B) 1965. C) 1955. D) 1985. Show Answer Correct Answer: C) 1955. 28. What makes shareholders more likely to invest? A) High staff turnover. B) Low profit margins. C) Decreasing share prices. D) Increasing dividends. Show Answer Correct Answer: D) Increasing dividends. 29. Which is an example of an external source of finance? A) Sale of assets. B) Hire Purchase. C) Owner's capital. D) Retained profits. Show Answer Correct Answer: B) Hire Purchase. 30. Sources of funds can be categorised as: A) Period basis. B) Source of generation basis. C) Ownership basis. D) All of these. Show Answer Correct Answer: D) All of these. 31. Trade credit is generated to those customers who have reasonable amount of A) Funds in their bank. B) Financial standing and goodwill. C) Weakness. D) Zero balance in their a/c. Show Answer Correct Answer: B) Financial standing and goodwill. 32. Which of the following is not an external source of finance? A) Issue of debentures. B) Retained earnings. C) Accepting public deposits. D) Borrowing from commercial banks. Show Answer Correct Answer: B) Retained earnings. 33. What the Finance Department not do? A) Forecasting cash flow. B) Producing accounting information for managers. C) Take important decisions of finance. D) Hold Annual General Meetings. Show Answer Correct Answer: D) Hold Annual General Meetings. 34. Which of the following is an example of debt financing?a) Selling company sharesb) Taking a bank loanc) Using personal savingsd) Reinvesting profits A) Using personal savings. B) Reinvesting profits. C) Selling company shares. D) Taking a bank loan. Show Answer Correct Answer: D) Taking a bank loan. 35. What capital out of the following is better with reference to control A) Equity share capital. B) Preference share capital. C) Debt capital. D) None of these. Show Answer Correct Answer: C) Debt capital. 36. Debentureholders are called as? A) Employees of the company. B) Owners of the company. C) Creditors of the company. D) None of these. Show Answer Correct Answer: C) Creditors of the company. 37. Which one of the following expressions is true? A) Profit = TC+TR. B) TR = P x FC. C) Average cost = FC /Q. D) Profit = TR-TC. Show Answer Correct Answer: D) Profit = TR-TC. 38. Net cash flow is calculated as Total outflows minus Total inflows? A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 39. What is the other name for Retained Earnings? A) Internal financing. B) Ploughing back of profits. C) Self financing. D) All of these. Show Answer Correct Answer: D) All of these. 40. An Internal source of finance is A) A type of funding received from other businesses and financial institutions. B) Finance which comes from a business's own resources. C) All the above. D) None of the above. Show Answer Correct Answer: B) Finance which comes from a business's own resources. 41. Which of the following is an example of equity financing?a) Bank loanb) Venture capitalc) Trade creditd) Retained earnings A) Trade credit. B) Venture capital. C) Retained earnings. D) Bank loan. Show Answer Correct Answer: B) Venture capital. 42. Which sort of finance no need to be repaid A) Grants. B) Retained profit. C) Leasing. D) Bank overdraft. Show Answer Correct Answer: A) Grants. 43. Why is the national minimum wage important in a business context? A) It protects consumers from unfair selling. B) It prevents environmental damage. C) It is illegal to pay below this wage rate set by the government. D) It determines market structure. Show Answer Correct Answer: C) It is illegal to pay below this wage rate set by the government. 44. Company has to pay only fixed rate of interest on the funds borrowed through issue of this source of business finance: A) Preference Share. B) Debentures. C) Retained Earnings. D) Equity Share. Show Answer Correct Answer: B) Debentures. 45. What is Finance? A) The study of science that deals with money. B) The management of revenues; the conduct or transaction of money matters. C) The art of recording, classifying and summarizing. D) None of the above. Show Answer Correct Answer: B) The management of revenues; the conduct or transaction of money matters. 46. Which of the following is an example of using internal sources of finance to expand a business? A) Taking out a loan from a bank. B) Using retained earnings to fund expansion. C) Selling company stocks to raise capital. D) Borrowing money from friends and family. Show Answer Correct Answer: B) Using retained earnings to fund expansion. 47. Businesses might choose to use external sources of finance because A) There is an expected rise in interest rates. B) There is insufficient retained profit. C) There are no interest charges. D) Potential cash flow problems are avoided. Show Answer Correct Answer: B) There is insufficient retained profit. 48. Japan increased its tariff on U.S. made cars by 50%. The U.S. raised the tariffs on Japan's products such as cameras. Which of the following would result from the change in tariffs on cars and cameras? A) The standard of living would remain the same. B) The standard of living would decrease. C) The standard of living would be unpredictable. D) The standard of living would increase. Show Answer Correct Answer: B) The standard of living would decrease. 49. Which long-term source of finance is most likely to slow down decision-making? A) Share capital. B) Trade credit. C) Personal savings. D) Overdraft. Show Answer Correct Answer: A) Share capital. 50. What is a disadvantage of issuing shares? A) Interest payments required. B) Immediate repayment needed. C) Ownership dilution possible. D) Short-term financing only. Show Answer Correct Answer: C) Ownership dilution possible. 51. Internal source of capital are those that are: A) Generated through outsiders such as suppliers. B) Generated through issue of shares. C) Generated through a loan from commercial banks. D) Generated within the business. Show Answer Correct Answer: D) Generated within the business. 52. Preference shares have preference rights over the equity shares as to A) Payment of dividend. B) Repayment of capital. C) Both (a) and (b). D) Voting for all matters. Show Answer Correct Answer: C) Both (a) and (b). 53. An amount of money that is paid back within an agreed amount of time, with interest A) Overdraft. B) Retained profit. C) Angel investment. D) Bank loan. Show Answer Correct Answer: D) Bank loan. 54. What source of finance will lead to the owners taking a smaller share of the profits? A) Trade Credit. B) Taking on a new partner. C) Bank loan. D) Crowdfunding. Show Answer Correct Answer: B) Taking on a new partner. 55. A firm should select capital structure that A) Produces the highest cost of capital. B) Minimises taxes. C) Is fully unlevered. D) Maximise the value of the firm. Show Answer Correct Answer: D) Maximise the value of the firm. 56. Money invested into the business by its owners in return for a dividend (portion of the profit) A) Grants. B) Share Capital. C) Debentures. D) Mortgage. Show Answer Correct Answer: B) Share Capital. 57. Who among the following gets a priority over others in receiving a fixed rate of dividend out of the net profits of the company A) Equity shareholders. B) Preference shareholders. C) Debenture holders. D) None of the above. Show Answer Correct Answer: B) Preference shareholders. 58. Which of the following is a benefit to a private limited company of using retained profit to finance its growth? A) The amount available will always match fully the company's requirements. B) The business will not be required to pay dividends to its shareholders. C) The amount will not need to be paid back. D) The business will pay less tax on its profits. Show Answer Correct Answer: C) The amount will not need to be paid back. 59. Adverse Selection: A) B.Before transaction occurs. B) C.After transaction occurs. C) C. both of them. D) None of the above. Show Answer Correct Answer: A) B.Before transaction occurs. 60. The full form of ADR is A) American Dividend Receipts. B) American Depository Receipts. C) African Depository Receipts. D) None of the above. Show Answer Correct Answer: B) American Depository Receipts. ← 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 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