CBSE Class 11 Business Studies Sources of Business Finance MCQs Set 02

Question: Full form of GDR is:
a) Global Decomposite Receipt
b) Global Depository Repayment
c) Global Direct Receipt
d) Global Depository Receipt
Answer: b

Question: The Financial Institutions are established by:
a) Both State and Central Govt.
b) State Govt.
c) Central Govt.
d) Municipal Corporation
Answer: a

Question: Which one of the following is not the feature of preference shares:
a) Provides fixed rate of return
b) Provides voting rights
c) Get Preference over equity shares
d) Part of owner's capital
Answer: b

Question: The partnership deed generally includes the following
a) Name of firm
b) Nature of business
c) Location of business
d) All of the options
Answer: d

Question: A person who purchases common stock of a corporation is known as:
a) Preferred stockholder
b) Creditor
c) Bond holder
d) Common stockholder
Answer: d

Question: The person holding share of a particular company is called as________of that company:
a) Shareholder
b) Debentureholders
c) Debtors
d) Creditors
Answer: a

Question: The_______shareholders enjoy a preferential position over_________shareholders:
a) Equity; preference
b) Preference; equity
c) Debenture; equity
d) None of the options
Answer: b

Question: GDRs can be converted into shares _________
a) At any time
b) After 5 years
c) After 10 years
d) After one year
Answer: a

Question: Which of the following is included inowner’s fund :
a) Capital
b) Profits reinvested in business
c) Retained earnings
d) All of the options
Answer: d

Question: Hindu Succession Act was passed in_______
a) 1960
b) 1956
c) 1952
d) 1932
Answer: b

Question: Borrowed funds include which of the following
a) Retained earnings
b) Trade credit
c) Equity shares
d) None of the options
Answer: b

Question: Unit Trust of India was established by
a) ICICI
b) State Bank Group
c) Indian Government
d) HDFC Bank
Answer: c

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: The term ‘redeemable’ is used for
a) Preference shares
b) Commercial paper
c) Equity shares
d) Public deposits
Answer: b

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 options
Answer: d

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 life of sole proprietorship business is …………….
a) Very short life
b) Stable
c) Long life
d) Unstable
Answer: d

Question: Which one of the following is the CORRECT sequence of stages in the formation of a company?
a) Promotion, incorporation, capital subscription, the commencement of business
b) Incorporation, capital subscription, promotion, the commencement of business
c) Promotion, the commencement of business, incorporation, capital subscription
d) Promotion, Incorporation, Certificate of commencement, capital subscription
Answer: a

Question: Which type of funds are equity linked debt securities that are to be converted into equity or depository receipts after a specific period
a) Foreign currency convertible bonds
b) ADR
c) Equity shares
d) GDR
Answer: a

Question: ________holders do not receive a fixed amount of dividend, whereas________holders receive a fixed amount dividend:
a) Equity share; preference share
b) Preference share; equity share
c) Debenture; equity shares
d) Preference shares; debenture
Answer: a

Question: Which of the following contract is signed by the promoters with the third party on behalf of the proposed company?
a) Preliminary contracts
b) Provisional contract
c) Prospectus
d) Memorandum of association
Answer: a

Question: Retained earnings is also known as:
a) Residual owners of the company
b) Loan capital of the company
c) Short term capital of the company
d) Ploughing back of profits
Answer: d

Question: On the basis of period funds are classified into_____types:
a) 3
b) 2
c) 4
d) 5
Answer: a

Question: 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
Answer: d

Question: Every partner is both an agent and a principal. Identify the characteristic of the partnership being referred here.
a) Mutual Agency
b) Risk Bearing
c) Membership
d) Formation
Answer: a

Question: Sources of finance can be categorised as _________
a) Source of Generation Basis
b) Period Basis
c) Ownership
d) All of the options
Answer: d

Question: For the approval of name of the company is applied to :
a) SEBI
b) Registrar of company
c) Indian Government
d) Concerning state government where company is to be registered.
Answer: b

Fill in the Blanks:

Question: Debentures are an important instrument for raising _________ term debt capital.
Answer: long

Question: Retain earning does not involve _________ cost in the form of interest, dividend or floatation cost.
Answer: explicit

Question: Loan from bank is a ________ source of finance.
Answer: Flexible

Question: Payment of _________ to the shareholders is not compulsory.
Answer: dividend

Question: External sources of funds include those sources that lie _________ an organization.
Answer: outside

True / False:

Question: A GDR holder can at any time convert his holdings into the number of shares it represents.
Answer:True

Question: Debentures carry voting rights
Answer:False

Question: Financial Institutions are also known as Development Banks.
Answer: True

Question: The rate of interest charged by banks depends on various factors such as the characteristics of the firm and the level of interest rates in the economy.
Answer: True

 Question: Debentures don?t put a permanent burden on the earnings of a company.
Answer: False

Match the following:

Question: Match the following sources of finance on the basis of sources of raising funds:
         SIDE A                                                                       SIDE B
1. Equity shares and retained earnings                       a) Long term source of finance
2. Equity shares and preference shares                      b) External source of finance
                                                                                     c) Owner‟s funds
Answer: 1-c, 2-a

Question: Match the following stakeholders on the basis of benefits they enjoy:
      SIDE A                                                                 SIDE B
1. They enjoys a preferential right                      a) Equity shareholders
2. Residual owners of the company                   b) Preference shareholders
                                                                           c) Creditors of the company
Answer: 1-b, 2-a

Question: Match the following terminologies on the basis of meaning :
      SIDE A                                                                                                                         SIDE B
1. External sources of funds include those funds that lie outside the business           a) Working capital
2. The capital which is required for day to day operations of the business                  b) Fixed capital
                                                                                                                                     c) Issue of shares
Answer: 1-c, 2-a

Question: Match the following terms on the basis of meaning:
        SIDE A                                                                                                SIDE B
1. The ploughing back of profits in the business                                      a) Share
2. The capital of the company is divided into small units                         b) Shareholders
                                                                                                                 c) Retained earnings
Answer: 1-c, 2-a

Question: Match the following financial instruments on the basis of features:
   SIDE A                                                                                                       SIDE B
1. Democratic control over the management of the company               a) Retained earnings
2. Do not enjoy the voting rights                                                            b) Equity shares
                                                                                                               c) Preference shares
Answer: 1-b, 2-c

Pictorial Questions:

Question: Identify the source of finance by opening up the economy and operations of the business becoming global?

Answer: International Finance

Question: Identify the financial instruments used by the business from the organizations depicted in the given picture?

Answer: a) Bank Loan , b) Shares , c) Debentures , d) Public Deposits

Question: Identify the capital which is required for day to day operations of the business?

Answer: Working Capital

Question: Identify the internal source of finance when the company plough in excess profits in the business?

Answer: Retained earnings

Question: Identify the capital which is required to purchase fixed assets?

Answer: Fixed Capital