Business finance - class-XII

Question 1 Multiple Choice (Single Answer)

Financial planning arrives at __________________.

Minimising the external borrowing by resorting to equity issues
Entering that the firm always have significantly more fund than required so that there is no paucity of funds
ensuring that the firm paces neither a shortage nor a glut of unuable funds
doing only what is possible with the funds that the firm has at tis disposal

Question 2 Multiple Choice (Single Answer)

The difference between current assets and current liabilities is:

Gross working capital
Net working capital
Permanent working capital
Temporary working capital

Question 3 Multiple Choice (Single Answer)

Plans made for a period of _____ year or less is termed as budget.

one
two
three
four

Question 4 Multiple Choice (Single Answer)

________ funding is almost as bad as inadequate funding.

Limited
Short
Excess
Long

Question 5 Multiple Choice (Single Answer)

Financial planning usually begins with the preparation of a _______ forecast.

purchase
sales
cash
budget

Question 6 Multiple Choice (Single Answer)

Financial planning helps in coordinating _________ business functions.

one
two
various
three

Question 7 Multiple Choice (Single Answer)

Financial planning tries to link the ______ with the ______.

future, present
present, past
present, future
past, future

Question 8 Multiple Choice (Single Answer)

_________ plan of action prepared under financial planning reduces waste, duplication of efforts, and gaps in planning.

Detailed
Short
General
Basic

Question 9 Multiple Choice (Single Answer)

Working capital is _______________.

net current assets
net working capital
gross cash inflow
Either (a) or (b)

Question 10 Multiple Choice (Multiple Answers)

Working capital is _________.

gross cash inflow
net cash inflow
gross cash outflow
net cash outflow

Question 11 Multiple Choice (Single Answer)

Working capital is the difference between

Inflow and outflow of funds
Inflow and outflow of savings
Internal and external capital sources
Gross cash flow and net cash flow

Question 12 Multiple Choice (Single Answer)

Financial leverage is

The process of using debt capital to increase the rate of return on equity
The utilisation of current assets to effect disproportionate changes in income
Both (a) and (b)
A relationship between preference share capital and securities

Question 13 Multiple Choice (Single Answer)

If on account of inadequacy of profits, a company wants to pay dividends out of previous year's reserves, it has to follow the rules made by

Central Government
State Government
Articles of Association
Memorandum of Association

Question 14 Multiple Choice (Single Answer)

Choose the correct answer:
(a) Working capital management is an integral part of overall corporate management
(b) There are four tests of working capital policy

Both (a) and (b) are true
(a) is true, (b) is false
(a) is false, (b) is true
Both (a) and (b) are false

Question 15 Multiple Choice (Single Answer)

Accumulated profits

Are the profits possessed by the company on the date of liquidation
Include the amounts of Development Rebate
Are the profits in the hands of the company at the time of distribution of payment
All the above

Question 16 Multiple Choice (Single Answer)

Factors determining working capital:

Nature of Industry and the nature of business
Demand of creditors and volume of sales
Cash requirements and inventory turnover
All the above

Question 17 Multiple Choice (Single Answer)

Cash dividends are ordinarily paid from _______.

current earnings
retained earnings
paid-in-surplus
capital surplus

Question 18 Multiple Choice (Single Answer)

______ means pre-estimating financial needs of an organization to ensure availability of adequate finance.

Financial planning
Material planning
Value chain planning
Capital structure decision

Question 19 Multiple Choice (Single Answer)

What are the twin objectives of financial planning?

To ensure availability of funds whenever require
To see that the firm does not raise resources unnecessarily
Both a and b
None of the above

Question 20 Multiple Choice (Single Answer)

The twin objective to ensure availability of funds whenever required, includes a proper estimation of the funds required for different purposes such as for the purchase of _______ assets or to meet day-today expense of business.

short-term
long-term
current
non-current

Question 21 Multiple Choice (Single Answer)

The process of estimating the fund requirement of a business and specifying the sources of funds is called ____________.

working capital
financial planning
capital structure
working structure

Question 22 Multiple Choice (Single Answer)

Financial planning is done for ______ to _______ years.

One, two
two, three
three, five
five, ten

Question 23 Multiple Choice (Single Answer)

Avoiding business shocks and surprises and helping the company in preparing for the future is the _________ of financial planning.

factor
objective
importance
disadvantage

Importance of financial planning

Income: It's possible to manage income more effectively through planning. Managing income helps you understand how much money you'll need for tax payments, other monthly expenditures and savings.
Cash Flow: Increase cash flows by carefully monitoring your spending patterns and expenses. Tax planning, prudent spending and careful budgeting will help you keep more of your hard earned cash.
Capital: An increase in cash flow, can lead to an increase in capital. Allowing you to consider investments to improve your overall financial well-being.
Family Security: Providing for your family's financial security is an important part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for you and your loved ones.
Investment: A proper financial plan considers your personal circumstances, objectives and risk tolerance. It acts as a guide in helping choose the right types of investments to fit your needs, personality, and goals.
Standard of Living: The savings created from good planning can prove beneficial in difficult times. For example, you can make sure there is enough insurance coverage to replace any lost income should a family bread winner become unable to work.
Financial Understanding: Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood, and results reviewed. Giving you a whole new approach to your budget and improving control over your financial lifestyle.
Assets: A nice 'cushion' in the form of assets is desirable. But many assets come with liabilities attached. So, it becomes important to determine the real value of an asset. The knowledge of settling or canceling the liabilities, comes with the understanding of your finances. The overall process helps build assets that don't become a burden in the future.
Savings: It used to be called saving for a rainy day. But sudden financial changes can still throw you off track. It is good to have some investments with high liquidity. These investments can be utilized in times of emergency or for educational purposes.
Ongoing Advice: Establishing a relationship with a financial advisor you can trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan customized for you.

Question 24 Multiple Choice (Single Answer)

____________ means pre-estimating financial needs of an organization to ensure availability of adequate finance.

Financial planning
Material planning
Value chain planning
Capital structure decision

Question 25 Multiple Choice (Single Answer)

The working capital term loan representing excess borrowings

Should be gradually reduced
Should be allowed to go up
Should not be allowed to go up
Both (a) and (c)

Business finance - class-XII

Questions