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 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 9 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Convertible debentures offer investors the option to: A) Convert shares into debt. B) Convert debentures into equity shares. C) Convert equity into cash. D) Receive fixed dividends. Show Answer Correct Answer: B) Convert debentures into equity shares. 2. Under the factoring arrangement, the factor A) Produces and distributes the goods or services. B) Makes the payment on behalf of the client. C) Collects the client's debt or account receivables. D) Transfer the goods from one place to another. Show Answer Correct Answer: C) Collects the client's debt or account receivables. 3. Finance departments record all transactions such as what? A) Payments and revenue. B) Transport and Infrastructure. C) All the above. D) None of the above. Show Answer Correct Answer: A) Payments and revenue. 4. Cost of sales is the same as: A) Average costs. B) Variable costs. C) Total costs. D) Fixed costs. Show Answer Correct Answer: B) Variable costs. 5. Abel and Sonya are in partnership. They own a pizza takeaway business. They need $ 10 000 to purchase new ovens so that they can expand their business. They rent their premises. Which of the following sources of finance should the partners use to finance the purchase of their new ovens? A) Share issue. B) Debenture. C) Sale of non-current assets. D) Hire purchase. Show Answer Correct Answer: D) Hire purchase. 6. 3 Which of the following is an example of internal finance for a limited company? 1) Selling shares 2) Selling debentures 3) Obtaining a loan 4) Selling off inventories A) . B) . C) . D) . Show Answer Correct Answer: A) . 7. When a business makes a profit, it can use it as a source of finance. This is known as: A) Retained profit. B) Borrowed capital. C) Operating expenses. D) Sales revenue. Show Answer Correct Answer: A) Retained profit. 8. Which one of the following is the external source of finance A) Preferece shares. B) Debentures. C) Retained earning. D) Equity shares. Show Answer Correct Answer: B) Debentures. 9. Is the cash a business has for its day-to-day spending. A) Working capital. B) Current assets. C) Current liabilities. D) None of the above. Show Answer Correct Answer: A) Working capital. 10. What is a disadvantage of a friends and family loan? 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: B) It can lead to personal conflicts. 11. ADRs stands for-? A) American Depository Receipts. B) American Direct Receipts. C) American Domestic Receipts. D) American Domestic Revenue. Show Answer Correct Answer: A) American Depository Receipts. 12. Which of the following is a permanent source of finance? A) Sale of stock. B) Long-term loan. C) Overdraft. D) Retained profit. Show Answer Correct Answer: D) Retained profit. 13. What do you mean by business finance: A) It is the requirement of customers by business to carry out its various activities. B) It is the requirement of profits by business to carry out its various activities. C) It is the requirement of funds by a business to carry out its various activities. D) It is the requirement of liabilities by a business to carry out its various activities. Show Answer Correct Answer: C) It is the requirement of funds by a business to carry out its various activities. 14. What is the primary goal of financial management? A) Maximizing the number of employees in an organization. B) Maximizing the use of physical assets. C) Maximizing the organization's financial performance and value. D) Maximizing customer satisfaction. Show Answer Correct Answer: C) Maximizing the organization's financial performance and value. 15. What is the role of financial institutions in business finance? A) To provide short-term loans only. B) To conduct market surveys. C) To offer long-term and medium-term financing. D) To manage company assets. Show Answer Correct Answer: C) To offer long-term and medium-term financing. 16. Trade creditor is a person or business to whom your business owes money, this is a A) Medium term source of finance. B) Long term source of finance. C) Short term source of finance. D) None of the above. Show Answer Correct Answer: C) Short term source of finance. 17. An investor with least risk taking ability must go for ..... A) Equity Shares. B) Preference Shares. C) Debentures. D) None of these. Show Answer Correct Answer: C) Debentures. 18. What is Financing? A) The act of borrowing funds. B) The act of providing funds for business activities. C) The act of operating cash. D) The act of receiving investment from owners. Show Answer Correct Answer: B) The act of providing funds for business activities. 19. 8 An advantage to a business of leasing computers rather than buying them outright is that:1) the loan never has to be repaid 2) the computers will never go out of date 3) the total cost of leasing is always cheaper than buying the computers 4) the company does not have to find a large cash sum to buy the computers A) . B) . C) . D) . Show Answer Correct Answer: A) . 20. ..... is not included in owner's capital A) Long term debt. B) Retained profit. C) Preference share capital. D) Equity share capital. Show Answer Correct Answer: A) Long term debt. 21. Which of the following comes under the category of owner's funds: A) Equity shares. B) Retained earning. C) Both Equity & retained earning. D) None of the above. Show Answer Correct Answer: C) Both Equity & retained earning. 22. Life insurance corporation was set up in ..... A) 1956. B) 1985. C) 1975. D) 1965. Show Answer Correct Answer: A) 1956. 23. Debentures represents A) Fixed capital of the company. B) Loan capital of the Company. C) Permanent capital of the company. D) Fluctuating capital of the company. Show Answer Correct Answer: B) Loan capital of the Company. 24. Which sahre have prefential right in the payment of annual dividend A) Equity share. B) Preference share. C) Right share. D) All of the above. Show Answer Correct Answer: B) Preference share. 25. Examples of owner's fund include equity and preference share capitals and retained earnings. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 26. Complete the following statements with appropriate word(s) in the blank spaces:4. The providers of ..... fund have control over the management of business. A) Owners. B) Borrowed. C) All the above. D) None of the above. Show Answer Correct Answer: A) Owners. 27. Which of the following is a type of short-term external source of funds? A) Mortgages. B) Leasing. C) Overdraft. D) Debentures. Show Answer Correct Answer: C) Overdraft. 28. What is the main disadvantage of long-term bank loan as a source of finance? A) The business can overdraw their accounts to a greater value than the balance in the account. B) The business can benefit from the asset without purchasing it. C) The business can meet its short-term liabilities by writing cheques to the extent of limit allowed. D) The business has to pay an interest on the borrowing. Show Answer Correct Answer: D) The business has to pay an interest on the borrowing. 29. Excess of current assets and current liabilities is termed as A) Fixed Capital. B) Gross Working Capital. C) Net Working Capital. D) Both (a) and (b). Show Answer Correct Answer: C) Net Working Capital. 30. Complete the following statements with appropriate word(s) in the blank spaces:9. Under ..... a company borrows money from the public for a definite period at a pre-decided rate. A) Trade Credit. B) Public Deposits. C) All the above. D) None of the above. Show Answer Correct Answer: B) Public Deposits. 31. Into how many broad categories sources of finance be categorised? A) 2. B) 3. C) 4. D) 6. Show Answer Correct Answer: B) 3. 32. Which external source of business finance involves obtaining funds from individuals or institutions in exchange for a promise to repay the amount borrowed, along with interest, at a specified date in the future? A) Equity financing. B) Debt financing. C) Crowdfunding. D) Venture capital. Show Answer Correct Answer: B) Debt financing. 33. Is any item owned by a business that can generate an income for the enterprise. A) Capital. B) Share Capital. C) Non-current Asset. D) Asset. E) Loan Capital. Show Answer Correct Answer: D) Asset. 34. One of the responsibilities of a financial manager is to find additional sources of funds. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 35. Preference shares are referred as hybrid security because they have features of both ..... & ..... A) Equity shares, debentures. B) Retained earnings, equity shares. C) Equity shares, public deposit. D) Retained earnings, debentures. Show Answer Correct Answer: A) Equity shares, debentures. 36. What is an advantage of internal finance? A) Always available in large amounts. B) No external control issues. C) Fixed interest rates. D) Guaranteed approval. Show Answer Correct Answer: B) No external control issues. 37. The cost of ingredients used to make cakes for a bakery would be a ..... A) Running Cost. B) Fixed Cost. C) Start Up Cost. D) Baking Cost. Show Answer Correct Answer: A) Running Cost. 38. What is the merit of retained earning? A) Permanent source of funds. B) Continuous source of funds. C) Brother in laws funds. D) None of the above. Show Answer Correct Answer: A) Permanent source of funds. 39. Assertion:Borrowed fund holders have a legal right to get fixed return on their investment.Reason:They have the complete control over companies affairs. A) Both assertion (A) and reason(R) are true and reason(R) is the correct explanation of assertion. B) Both Assertion (A) and Reason (R) is not the correct explanation of assertion (A). C) Assertion (A) is true but reason (R) is false. D) Assertion (A) is false but reason (R) is true. Show Answer Correct Answer: C) Assertion (A) is true but reason (R) is false. 40. Shares which have a fixed rate of return but have the option of participating in profits. A) Equity share. B) Debentures. C) Convertible preference share. D) Participating preference share. Show Answer Correct Answer: D) Participating preference share. 41. What are the disadvantages of equity financing? A) Higher interest rates, limited access to funds, increased debt burden. B) Difficulty in attracting investors, limited flexibility in decision-making, potential legal issues. C) Loss of control, sharing of profits, potential conflicts with investors, and dilution of ownership. D) Decreased profitability, limited growth opportunities, increased financial risk. Show Answer Correct Answer: C) Loss of control, sharing of profits, potential conflicts with investors, and dilution of ownership. 42. Which is a disadvantage of loan? A) It can be repaid over a long period of time. B) Interest has to be paid in addition to loan amount. C) It can be arranged quickly. D) None of the above. Show Answer Correct Answer: B) Interest has to be paid in addition to loan amount. 43. Preference shares have some characteristics of both ..... And debentures A) Equity shares. B) Prefrence shareholders. C) Debentureholder. D) None of these. Show Answer Correct Answer: A) Equity shares. 44. The most dependable source of fund is? A) Debentures. B) Equity shares. C) Preference shares. D) Reatined Earnings. Show Answer Correct Answer: D) Reatined Earnings. 45. A business organisation that is similar to a sole proprietorship but has two or more owners is called a: A) Limited liability company. B) Dual company. C) Partnership. D) Corporation. Show Answer Correct Answer: C) Partnership. 46. Which of the following is a drawback to a business that issues debentures A) There is dilution of control. B) The value of liabilities increases. C) Lenders do not have any voting rights. D) There is a dilution of ownership. Show Answer Correct Answer: B) The value of liabilities increases. 47. The amount of finance or funds required for the purpose of procuring fixed assets and in long term projects is termed as A) Fixed Capital. B) Working Capital. C) Retained Earnings. D) None of the above. Show Answer Correct Answer: A) Fixed Capital. 48. Which source of finance is most suitable for covering sudden shortfalls in cash? A) Venture capital. B) Crowdfunding. C) Overdraft. D) Share capital. Show Answer Correct Answer: C) Overdraft. 49. An advantage to a business of leasing computers rather than buying them outright is that: A) It doesn't have to find a large cash sum to buy computers. B) The computers will never go out of date. C) The total cost of leasing is less than buying the computers. D) The loan never has to be repaid. Show Answer Correct Answer: A) It doesn't have to find a large cash sum to buy computers. 50. Public deposits are raised directly from: A) The general public. B) Shareholders. C) Financial institutions. D) Banks. Show Answer Correct Answer: A) The general public. 51. A business can generate funds internally by ..... A) Accelerating collection of receivables. B) Disposing of surplus inventories. C) Ploughing back its profit. D) All of the above. Show Answer Correct Answer: D) All of the above. 52. Which of the following affects the fixed capital of the business A) Size of the business. B) NAture of the business. C) Both 1 and 2. D) Neither 1 nor. Show Answer Correct Answer: C) Both 1 and 2. 53. Which of the following is an example of internal finance for a limited company? A) Selling shares. B) Reducing stock levels. C) Selling debentures. D) Obtaining a loan. Show Answer Correct Answer: B) Reducing stock levels. 54. Which period of term finance which will. Not exceed more than a year A) Short term. B) Ultra long term. C) Long term. D) Medium term. Show Answer Correct Answer: A) Short term. 55. Which of the following would be the most appropriate source of finance for a new business (which is just launching) that makes mobile phone accessories? A) Retained Profit. B) Sale of Assets. C) Share Capital. D) Friends and family. Show Answer Correct Answer: D) Friends and family. 56. This results when a business' expenses are greater than its income. A) Profit. B) Loss. C) Revenuerevenue. D) Income. Show Answer Correct Answer: B) Loss. 57. WHAT ARE THE THREE BUSINESS FINANCE? A) A.LONG TERM ASSET SHORT TERM ASET MEDIUM ASSRT. B) B. LONG TERM FINANCE MEDIUM FINANCESHORT TERM. C) C, NON OF THEM. D) None of the above. Show Answer Correct Answer: A) A.LONG TERM ASSET SHORT TERM ASET MEDIUM ASSRT. 58. Which of the following is an example of a cash inflow A) Rent. B) Interest paid. C) Wages. D) Cash sales. Show Answer Correct Answer: D) Cash sales. 59. What is a major limitation of preference shares? A) They are suitable for high-risk investors. B) They provide high returns. C) They dilute equity shareholders' claims. D) They have voting rights. Show Answer Correct Answer: C) They dilute equity shareholders' claims. 60. Is money invested by a business as a result of borrowing. A) Non-current Asset. B) Capital. C) Loan Capital. D) Asset. E) Share Capital. Show Answer Correct Answer: C) Loan Capital. ← 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