Tag: sources of business finance

Quizzes (26) Questions (36)

Questions Related to sources of business finance

Multiple choice long-term and short-term finance sources of business finance business studies

Of the total ________ term finance, the proportions to be raised by way of debt and/or equity is also a financial management decision.

  1. short

  2. medium

  3. long

  4. both a and b
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Financial management, among others, involves decision about the proportion of long-term and short term funds. An organisation wanting to have more liquid assets would raise relatively more amount on a long-term basis. There is a choice between liquidity and profitability. The underlying assumption here is that current liabilities cost less than long term liabilities.

Multiple choice long-term and short-term finance sources of business finance business studies

Which of the following are factors affecting the choice of source of funds?

  1. Cost

  2. Purpose and time period

  3. Risk profile

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A business cannot function smoothly unless it has adequate funds are made available to them. The need of funds arises from the stage when an entrepreneur decides to start a business. The factors affecting the choice of sources of funds are the cost that it will incur to raise funds, the purpose and the duration for which the funds are to be raised and the risk that a company has to bear to raise those funds.

Multiple choice long-term and short-term finance sources of business finance business studies

There are _______ types of cost that should be taken into account while deciding about the source of funds to be used for an organisation.

  1. two

  2. three

  3. four

  4. six
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

There are two types of cost that should be taken into account while deciding about the source of funds to be used for an organization. The two types of cost include explicit and implicit cost of the organization.

Multiple choice long-term and short-term finance sources of business finance business studies

The ______________ of a business is a key determinant.

  1. cost

  2. financial strength

  3. legal status

  4. control
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The financial strength of a business is a key determinant as finance is the life blood of any business. Finances are required by a company to carry out various activities. They can be classified into long-term capital needs and working capital needs.

Multiple choice long-term and short-term finance sources of business finance business studies

___________ borrowings offer the benefit of reduced cost due to reduction of idle capital.

  1. Short-term

  2. Long-term

  3. Medium-term

  4. Both a and b
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Short term borrowings offer the benefit of reduced cost due to reduction of idle capital. Short term borrowings refers to the debt which is obtained for an year or less than a year.

Multiple choice long-term and short-term finance sources of business finance business studies

____________ borrowings are considered a necessity on many grounds.

  1. Short-term

  2. Long-term

  3. Medium-term

  4. Both a and b
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Long-term borrowings are generally used for fixed capital needs like plant & machinery, buildings and projects. They are borrowings which exceed 5 years or more. Hence, long-term borrowings are considered a necessity on many grounds.

Multiple choice business studies sources of business finance internal & external stakeholders and distinction between shareholders, stakeholders and customers stakeholders in commercial organisation stakeholders
The stakeholders of the company include  ___________.

  1. shareholders

  2. government authorities

  3. employees

  4. All of above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
A stakeholder is a person which has an interest in a company that he/she deals with and can either affect or be affected by the business. Thus shareholders, government authorities, employees etc are stakeholders of the company.
Multiple choice business studies sources of business finance internal & external stakeholders and distinction between shareholders, stakeholders and customers stakeholders in commercial organisation stakeholders

Communities and governments are closely tied external stakeholders.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Communities and governments are closely tied external stakeholders- this is a true statement.External stakeholders belong to the entities outside the business organization. Officials and suppliers are also external stakeholders.

Multiple choice business studies sources of business finance internal & external stakeholders and distinction between shareholders, stakeholders and customers stakeholders in commercial organisation stakeholders

________ contributes asset in a form of capital or equity.

  1. An investor

  2. A Creditor

  3. Employees

  4. Managers
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 An investor contributes asset in a form of capital or equity. Investors invests capital or wealth in any company or financial market to receive some financial gain in return.

Multiple choice business studies sources of business finance internal & external stakeholders and distinction between shareholders, stakeholders and customers stakeholders in commercial organisation stakeholders

Maximizing shareholder value is a very limited concept and distracts everyone from what the purpose of a company is or should be.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Maximizing shareholder value is a very limited concept and distracts everyone from what the purpose of a company is or should be- this is a true statement. Maximizing the number of shareholders should be the purpose of a company.