CBSE Class 11th Business Studies Worksheet - w7a

Free Business Studies - Class 11th (CBSE) - Worksheet - w7a - Sources of Business Finance

Students often neglect multiple-choice questions (MCQs) while studying Business Studies for class 11th. They emphasise case studies and theory-related questions.

However, Business Studies is a subject that requires a balance among objective-type questions, case studies, and theory-related questions.

Hence, we are providing the best questions to you to practice and gain excellent marks in CBSE class 11th.

Here are the quick details:

• Subject: Business Studies
• Class: 11th (CBSE)
• Chapter Name: Sources of Business Finance

Objective Type Questions/Multiple-Choice Questions (MCQs)

Carrying 1 mark each

Q1. Which of the following statements is not true in the case of debentures?

1. It is an instrument to raise long-term debt capital.
2. Payment of interest on debentures is compulsory.
3. Debenture holders carry voting rights.
4. Issue of debentures creates a charge on the assets of the company.

Q2. Which financial instrument saves tax?

1. Equity shares
2. Debentures
3. Retained earnings
4. Preference shares

Q3. Which of the following statements does not hold true in the case of equity shares?

1. It is suitable for cautious investors.
2. It is a permanent source of capital.
3. It does not create a charge on the assets of the company.
4. The liability of equity shareholders is limited to their share capital.

Q4. Which of the following is never redeemed during the lifetime of the company?

1. Equity shares
2. Preference shares
3. Debentures
4. Both (a) and (b)

Q5. The deposit made by one company with another company is called

1. Public deposits
2. Inter-corporate deposit
3. Loan from a commercial bank
4. Loan from financial institutions

Q6. The fund required to purchase current assets is an example of

1. Fixed capital requirement
2. Ploughing back profits
3. Working capital requirement
4. Lease financing

Q7. FDI means

1. Foreign Direct Investment
2. Free Direct Investment
3. Forestry Deposit Investment
4. None of the above

Q8. Fixed Capital requirements of a manufacturing concern are usually

1. Same as that of a trading concern
2. More than that of a trading concern
3. Less than that of a trading concern
4. None of the above

Q9. ______ are the unsecured short-term deposits made by company with another company.

1. Indian Depository Receipts
2. American Depository Receipts
3. Global Depository Receipts
4. Inter-Corporate Deposits

Q10. In rural, backward, and hilly areas, special financial assistance is provided by

1. Money lenders
2. Commercial Banks
3. Regional Rural Banks
4. All of these

Q11. Which of the following is a merit of retained earnings?

1. Economical
2. No charge on assets
3. Enhances the market value of shares
4. All of these

Q12. The working capital requirements of a business that sells goods on credit are usually:

1. More than that of a business selling goods only on a cash basis
2. Same as that of a business selling goods only on a cash basis
3. Less than that of a business selling goods only on a cash basis
4. None of these

Q13. Who are the primary risk bearers of the company?

1. Equity shareholders
2. Debenture holders
3. Preference shareholders
4. Creditors

Q14. ______ is commonly used by business organisations as a source of short-term financing.

1. Lease financing
2. ADRs
3. Trade Credit
4. None of these

Q15. The preference shares, which carry the right to accumulate unpaid dividends in future years, are known as

1. Non-cumulative Preference shares
2. Cumulative Preference shares
3. Participating Preference shares
4. None of these

Q16. The working capital requirements of a business are high if

1. The sales turnover of the business is high
2. It sells goods on credit
3. It has an expansion plan
4. All of the above

Q17. The term ‘redeemable’ is used for

1. Preference shares
2. Commercial paper
3. Equity shares
4. Public deposits

Q18. Which of the following is a short-term source of finance?

1. Shares
2. Trade Credit
3. Public deposits
4. All of these

Q19. The fixed capital requirement of a business is low if

1. It plans to upgrade the technology
2. It plans to shift the business to a new location
3. The business is operated on a large scale
4. None of the above

Q20. Finance received on the issue of shares is a

1. Short-term
2. Medium-term
3. Long-term
4. Very short period

Q21. Which of the following is a limitation of equity shares?

1. Permanent burden of interest
2. Charge on assets
3. Danger of over-capitalisation
4. Repayment of obligation

Q22. Which one of the following is known as ‘Risk capital’?

1. Debentures
2. Preference shares
3. Equity shares
4. Retained earnings

Q23. An undistributed portion of net earnings in the business is known as

1. Ploughing back profits
2. Self-financing
3. Retained earnings
4. All of the above

Q24. Which of the preferential rights is enjoyed by preference shareholders over equity shareholders?

1. Voting right
2. Right to receive a fixed rate of dividend
3. Right to receive repayment of capital
4. Charge on assets

Q25. ______ are debt instrument that does not carry a specific rate of interest, but issued at a heavy discount.

1. Debentures
2. Equity shares
3. Bonds
4. None of these

Q26. The capital of the company is divided into a number of parts, each of which is called

1. Dividend
2. Profit
3. Interest
4. Share

Q27. Which of the following statements pertain to public deposits?

1. It is easy for the new companies to raise funds through public deposits.
2. Public deposits create a charge on the assets of the company.
3. The depositors have voting rights.
4. None of the above.

Q28. Debentures represent

1. Fixed capital of the company
2. Permanent capital of the company
3. Fluctuating capital of the company
4. Loan capital of the company

Q29. Which one of the following is NOT a limitation of raising funds through debentures?

1. No dilution of control
2. Charge on assets
3. Fixed obligation
4. All of the above

Q30. Which of the following businesses requires a higher amount of working capital?

1. Figure A
2. Figure B
3. Both A and B
4. None of these

Q31. Identify the different sources of finance traded in the organisation shown in the picture.

1. Shares
2. Debentures
3. Both A and B
4. None of these

Q32. Name the kind of return on investment given to the investors shown in the given picture.

‘Shall we allow a near-term consideration of ethics to overwhelm higher profit margins? Ladies and gentlemen, I think we’re better than that.’

1. Commercial paper
2. Retained earnings
3. Dividend
4. Trade credit

The End

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