This quiz works best with JavaScript enabled. Home > Class 11 > 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 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. This is the cash generated by the business when it operates successfully A) Retained earnings. B) Share capital. C) Angel investor. D) Owner savings. Show Answer Correct Answer: A) Retained earnings. 2. Internal sources of capital are those that are A) Generated through outsiders such as suppliers. B) Generated through loan from commercial banks. C) Generated through issue of shares. D) Generated whithin the business. Show Answer Correct Answer: D) Generated whithin the business. 3. Preference shares A) Are not part of a company's share capital. B) Receive dividends. C) Have no voting rights. D) Are not allowable for corporation tax. Show Answer Correct Answer: C) Have no voting rights. 4. Assertion:the importance of business finances increased tremendously these days. Reason:goods are produced on large scale and capital intensive techniques are used. 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: A) Both assertion (A)and reason(R) are true and reason(R) is the correct explanation of assertion. 5. Complete the following statements with appropriate word(s) in the blank spaces:7 ..... are creditors of a company. A) Debenture holders. B) Shareholders. C) All the above. D) None of the above. Show Answer Correct Answer: A) Debenture holders. 6. What is the main advantage of bank overdraft as a source of finance? A) No interest has to be paid. B) The business can benefit from the asset without purchasing it. C) No need for collaterals or security. D) More flexible and the overdraft amount can be adjusted every month according to needs. Show Answer Correct Answer: D) More flexible and the overdraft amount can be adjusted every month according to needs. 7. An advantage that share capital (equity capital) has over long-term loans is that: A) The capital never has to be repaid. B) The rate of interest on shares is fixed. C) The balance of control in the business will change. D) Dividends are paid before tax. Show Answer Correct Answer: A) The capital never has to be repaid. 8. Public deposit is a cheaper source of finance A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 9. Which type of funds are equity linked debt securities that are to be converted in to equity or depository receipts after a specific period A) Foreign currency convertible bonds. B) ADR. C) GDR. D) Equity shares. Show Answer Correct Answer: A) Foreign currency convertible bonds. 10. If you hear the word "finance", what comes into your mind? A) Bank. B) Treasurer. C) Money. D) ATM. Show Answer Correct Answer: C) Money. 11. The oldest bank in India is: A) SBI. B) Canara Bank. C) PNB. D) RBI. Show Answer Correct Answer: A) SBI. 12. Which of the following statements about overdrafts is not true? A) Short term source of finance. B) It's really a small, short term loan. C) It's flexible, in that it can be used whenever it is needed. D) Cheap-the interest rate is usually lower than that of a long-term bank loan. Show Answer Correct Answer: D) Cheap-the interest rate is usually lower than that of a long-term bank loan. 13. Which source of business finance involves borrowing funds that need to be repaid with interest? A) Equity financing. B) Venture capital. C) Angel investment. D) Debt financing. Show Answer Correct Answer: D) Debt financing. 14. Which of the following denotes the feature of Indian Depository Receipt: A) It is issued only to American citizens. B) It is purchased and sold only by NRI's. C) It is traded in American Stock Exchange. D) It is issued to Indian citizens only. Show Answer Correct Answer: D) It is issued to Indian citizens only. 15. Which source of finance involves the entrepreneur using their own money? A) Venture capital. B) Personal savings. C) Share capital. D) Bank loan. Show Answer Correct Answer: B) Personal savings. 16. Classify these main benefits and limitations as belonging to either debt finance or equity financeOwnership and control are diluted; and it can be expensive to raise finance this way A) Benefits of debt financing. B) Limitations of debt financing. C) Benefits of equity financing. D) Limitations of equity financing. Show Answer Correct Answer: D) Limitations of equity financing. 17. A company issues equity shares during a recession. Which of the following challenges is most likely to arise? A) High dividend obligation. B) Difficulty in raising sufficient funds. C) Risk of ownership concentration. D) Reduced cost of capital. Show Answer Correct Answer: B) Difficulty in raising sufficient funds. 18. Why is retained earning an uncertain source? A) Profits are fixed. B) Profits are fluctuating. C) Shareholders are dissatisfied. D) Profits are less. Show Answer Correct Answer: B) Profits are fluctuating. 19. Which source of short-term finance allows a business to borrow only when needed? A) Venture capital. B) Retained profit. C) Overdraft. D) Share capital. Show Answer Correct Answer: C) Overdraft. 20. A rise in the general level of prices is called? A) Inflation. B) Deflation. C) Recession. D) Regression. Show Answer Correct Answer: A) Inflation. 21. What is the importance of working capital for a business? A) It is more than just cash and is needed to pay short term debts. B) It includes debtors and stock. C) It allows businesses to pay for operations and to reinvest in their growth and development. D) It provides an indication of the health of the business. Show Answer Correct Answer: A) It is more than just cash and is needed to pay short term debts. 22. If variable cost is £10 per units and fixed costs are £400 000, what is the total cost of producing 50 000 units? A) £900 000. B) £450 000. C) £4 0000 0000. D) £50 000. Show Answer Correct Answer: A) £900 000. 23. Which business firm will require more working capital, the firm having slow sales turnover or the firm having high sales turnover? A) Slow sales turnover. B) High sales turnover. C) All the above. D) None of the above. Show Answer Correct Answer: A) Slow sales turnover. 24. Which type of source of business finance is typically used for short-term needs? A) Venture capital. B) Trade credit, bank overdrafts, short-term loans. C) Long-term bonds. D) Mortgage loans. Show Answer Correct Answer: B) Trade credit, bank overdrafts, short-term loans. 25. The credit extended by one trader to another for purchasing goods or services is known as A) Trade credit. B) Business credit. C) Commerce credit. D) Cash Credit. Show Answer Correct Answer: A) Trade credit. ← 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 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 10Class 11 Business Studies Chapter 7 Sources Of Business Finance Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books