CBSE Class 11 Business Studies Sources of Business Finance MCQs Set 01

Question : Which of the following statement is TRUE regarding debt?
(a) Debt is an ownership interest in the firm.
(b) Unpaid debt can result in bankruptcy or financial failure.
(c) Debt provides the voting rights to the bondholders.
(d) Corporation’s payment of interest on debt is fully taxable.
Answer : B

Question : Dividend is paid only on _____
(a) Loans
(b) Debentures
(c) Bonds
(d) Shares 
Answer :  D

Question : Funds raised through loans or borrowings are _____
(a) Borrowed funds
(b) Owners Equity
(c) None of these
(d) Share Capital
Answer :  A

Question: Internal sources of capital are those that are
(a) generated through outsiders such as suppliers
(b) generated through loans from commercial banks
(c) generated through issue of shares
(d) generated within the business
Answer :  D

Question : If a firm’s debt ratio is 45%, this means _____ of the firm’s assets are financed by equity financing.
(a) 50%
(b) 55%
(c) 45%
(d) Cannot be determined without more information
Answer :  B

Question : Industrial Finance Corporation of India (IFCI) was established in ____
(a) July 1948
(b) July 2001
(c) July1956
(d) July 1991
Answer :  A

Question : The term 'redeemable' is used for
(a) Preference shares
(b) Commercial paper
(c) Equity shares
(d) Public deposits
Answer :  A

Question : Money obtained by issue of shares is known as _____
(a) Debts
(b) Share Capital
(c) Loans
(d) Reserve Funds
Answer :  B

Question : Which of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods . . . .
(a) Ordinary annuity
(b) Annuity due
(c) Perpetuity
(d) A and C
Answer :  A

Question: Under the lease agreement, the lessee gets the right to
(a) Share profits earned by the lessor
(b) Participate in the management of the organization
(c) Use the asset for a specified period
(d) Sell the assets
Answer :  C

Question : The ordinary shares of a company are delivered to the depository bank; which in turn issues the depository receipts; known as ____
(a) Commercial banks
(b) ADR
(c) None of these
(d) GDR
Answer :  D

Question : Debentures represent
(a) Fixed capital of the company
(b) Permanent capital of the company
(c) Fluctuating capital of the company
(d) Loan capital of the company
Answer :  D

Question : Under the lease agreement, the lessee gets the right to
(a) Use the asset for a specified period
(b) Share profits earned by the lessor
(c) Sell the assets
(d) Participate in the management of the organisation
Answer :  A

Question : Under the lease agreement; the lessee gets the right to
(a) Share profits earned by the lessor
(b) Participate in the management of the organization
(c) Use the asset for a specified period
(d) Sell the assets
Answer :  C

Question : In which form of Business, owners have limited liability.
(a) sole proprietorship
(b) partnership
(c) joint stock company
(d) none of the above
Answer :  C

Question : An individual authorized by another person, called the principle to act on the latter’s on behalf is known as . . . .
(a) Agent
(b) Servant
(c) Subordinate
(d) Assistant
Answer :  A

Question : Public deposits are the deposits that are raised directly from
(a) The public
(b) The directors
(c) The auditors
(d) The owners
Answer :  A

Question : Which of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods?
(a) Ordinary annuity
(b) Annuity due
(c) Perpetuity
(d) None of the given options
Answer :  A

Question: Funds required for purchasing current assets is an example of
(a) Fixed capital requirement
(b) Ploughing back of profits
(c) Working capital requirement
(d) Lease financing
Answer :  C

Question : Which of the following factors that are considered to solve the financial problems of business organizations are- i. Cost of Capital Supply ii. Importance and Objectives of capital iii. Different types of benefits
(a) i and ii
(b) i and iii
(c) ii and iii
(d) i, ii and iii
Answer :  A

Question : ______ was the first company in India to issue convertible zero interest debentures in January 1990
(a) Mahindra and Mahindra
(b) Adani Enterprise
(c) Tata Motors
(d) Reliance Limited
Answer :  A

Question : Which of the following is a commercial bank?
(a) Punjab National Bank
(b) Canara bank
(c) State Bank of India
(d) All of the above
Answer :  D

Question : In which form of Business owners have limited liability is . . . .
(a) Sole Proprietorship
(b) Partnership
(c) Joint Stock Company
(d) Entrepreneurs
Answer : C

Question : Which of the following ratios are intended to address the firm’s financial leverage?
(a) Liquidity Ratios
(b) Long-term Solvency Ratios
(c) Asset Management Ratios
(d) Profitability Ratios
Answer :  B