This quiz works best with JavaScript enabled. Home > Class 11 > Class 11 Business Studies Chapter 7 Sources Of Business Finance – Quiz 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 18 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Advantages of funding growth through a share issue in all those listed below EXCEPT A) An extra source of finance. B) Less financial risks due to the spreading of risks amongst shareholders. C) Control of the company is diluted. D) It acts as a form of motivation for employees who own shares in the company. Show Answer Correct Answer: C) Control of the company is diluted. 2. Which will NOT be considered by a firm before deciding on a suitable source of finance to use? A) The purpose of the finance-what it will be used for. B) How long the finance is used for. C) The rate of interest on loans. D) The views of the workers. Show Answer Correct Answer: D) The views of the workers. 3. ..... are 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) Preference shares. B) Debentures. C) Equity shares. D) Inter-corporate deposits. Show Answer Correct Answer: A) Preference shares. 4. The organisations, which require large amount of fixed capital are A) Trading concern. B) Manufacturing concern. C) Service sector. D) All the above. Show Answer Correct Answer: B) Manufacturing concern. 5. What type of expenditure is associated with fixed assets? A) Revenue expenditure. B) Working capital. C) Capital expenditure. D) Current expenditure. Show Answer Correct Answer: C) Capital expenditure. 6. Borrowed funds need not be repaid with an interest rate. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 7. Who controls company? A) Debenture Holder. B) Employees. C) Share holders. D) None of these. Show Answer Correct Answer: C) Share holders. 8. Which of the following business decisions is likely to need long-term finance? A) Increasing stocks of goods for the summer season. B) Hiring a car for the sales manager. C) Building a new factory. D) Paying creditors for goods supplied. Show Answer Correct Answer: C) Building a new factory. 9. Which are the internal source of finance A) Sales of inventories to reduce inventory levels. B) Issue of shares. C) Bank loan. D) Selling Debentures. Show Answer Correct Answer: A) Sales of inventories to reduce inventory levels. 10. ..... provide long term finance A) Equity shares. B) Shareholders. C) Financial institution. D) Debentures. Show Answer Correct Answer: C) Financial institution. 11. What is the term used for the funds invested in the business by its owners? A) Owners' equity. B) Shareholder debt. C) Company assets. D) Business liability. Show Answer Correct Answer: A) Owners' equity. 12. Which ONE of the following relates to the ability of a business to pay its debts as they fall due? A) Growth. B) Liquidity. C) Efficiency. D) Profitability. Show Answer Correct Answer: B) Liquidity. 13. The formula for calculating gross profit is: A) Net profit + sales. B) Sales-expenses. C) Sales-cost of goods sold. D) Cost of goods sold-sales. Show Answer Correct Answer: C) Sales-cost of goods sold. 14. ..... is called the lifeblood of any business enterprise: A) Profit. B) Loss. C) Finance. D) Assets. Show Answer Correct Answer: C) Finance. 15. A business with unpredictable cash flows is least likely to prefer which of the following sources of finance? A) Retained earnings. B) Equity shares. C) Trade credit. D) Bank loans. Show Answer Correct Answer: D) Bank loans. 16. What are the advantages of debt financing for a business? A) It does not require repayment. B) It allows the business to maintain full ownership and control. C) It does not involve interest payments. D) It provides tax benefits and does not dilute ownership. Show Answer Correct Answer: D) It provides tax benefits and does not dilute ownership. 17. This refers to funds raised through borrowing and loans from financial institutions or banks and must be repaid with an interest rate. A) Owner's Fund. B) Borrowed Fund. C) Both (A) and (B). D) None of the above. Show Answer Correct Answer: B) Borrowed Fund. 18. It is a document which the borrower gives to the lending institution in exchange for the money he borrowed is called ..... A) Gift certificate. B) Check. C) Collateral. D) Promissory note. Show Answer Correct Answer: C) Collateral. 19. Which capital is used for buying assets? A) Fixed. B) Working. C) Both a and b. D) None of these. Show Answer Correct Answer: B) Working. 20. A firm with a high debt-equity ratio wants to expand. Which source of finance would most likely improve its financial structure? A) Preference shares. B) Debentures. C) Retained earnings. D) Bank overdraft. Show Answer Correct Answer: C) Retained earnings. 21. This is the cash that is generated by the business when it operates successfully A) Retained profits. B) Share capital. C) Angel investor. D) Owner savings. Show Answer Correct Answer: A) Retained profits. 22. Preference shareholders get prefernce 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. 23. What is the main characteristic of "retained profit" as a source of finance? A) Money borrowed from a bank. B) Profit re-invested back into the business and not paid as a dividend. C) Money raised from selling new shares. D) A sum of money given by the government. Show Answer Correct Answer: B) Profit re-invested back into the business and not paid as a dividend. 24. Capital obtained by issue of equity shares is known as-? A) Loans. B) Share capital. C) Debts. D) Reserve funds. Show Answer Correct Answer: B) Share capital. 25. Which of these is a short term source of finance? A) Mortgage. B) Share capital. C) Venture capital. D) Bank overdraft. Show Answer Correct Answer: D) Bank overdraft. ← PreviousNext →Related 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 8Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 9Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books