Tag: elements of business

Quizzes (65) Questions (802)

Questions Related to elements of business

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Public investment in a company is generally in the form of:

  1. Shares

  2. Debentures

  3. Deposits

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

The process of estimating the fund requirements for a business and specifying the sources of funds is called the financial management for a business. The main sources of funds available to a business are shareholder funds and borrowed funds. The public investment in a company can be done by accumulating capital through equity issue to the public or borrowed funds by issuing debentures and public deposits.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

State the following statement is True or False:
A minimum amount of capital to be collected by company at initial stages is minimum subscription.

  1. True

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

A minimum amount of capital to be collected by company at initial stages is minimum subscription- this is a true statement. The minimum shares the company needs to get from the public out of the total issue by the date of closure is known as minimum subscription.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Classification on on the basis of ownership basis includes ___________.

  1. Owner's funds

  2. Borrowed funds

  3. Loan funds

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

The classification of funds on the basis of ownership of funds raised by a business or a company are: 

Owner's Funds: The funds raised by the owner of the company or business are known as owner's funds
Borrowed Funds: The funds raised by borrowing from the public or investors are known as borrowed funds.
Loan Funds: The funds that are raised on the basis of a loan taken from the bank, government or investors are known as loan funds.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

The sources of funds can be categorized on the basis of _______________.

  1. Time period

  2. Ownership

  3. Source of generation

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

The sources of funds can be categorized on the basis of:

Time period for which the funds are borrowed.
Ownership of the funds that are raised can be public or investors or shareholders.
The sources of funds are the category by which the funds are raised largely categorized into two i.e shareholders funds and borrowed funds.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Medium-term sources of finance include __________.

  1. Loans from financial institutions

  2. Lease financing

  3. Public deposits

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

Medium-term sources of funds are usually for a period of more than one year but not exceeding five years in duration. These finances include, loan from commercial banks or financial institutions, lease financing, public deposits, etc.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Short-term financing is most common for financing of ____________.

  1. Fictitious assets

  2. Current assets

  3. Fixed assets

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

Every business needs to invest into in current assets. These assets are also known as working capital to facilitate smooth working of day-to-day activities. Short term financing  is raised to cope up with these day-to-day activites to run a business and has to be repaid within a year's time.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Sources that provide funds for a short duration are called ______________.

  1. Trade credit

  2. Loans from commercial banks

  3. Commercial papers

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

Sources of funds that provide funds for a duration of less than one year are:

Trade Credits: These are the credits granted to manufacturers and traders by the suppliers of raw materials.
Loans from commercial banks: Commercial banks grant short-term finance to business firms which is known as bank credit
Commercial papers:Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations  

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

 The funds required for a period of less than one year are called ___________.

  1. Long-term finance

  2. Medium-term finance

  3. Short-term finance

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

The funds that are borrowed for less than a year's period of time are known as short-term finances. Some of the sources of short term finances are trade credits, bank credits, customer's advances, cash credit, overdrafts, etc.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

On basis of time period, the different sources of funds can be categorized into _____ categories.

  1. Two

  2. Three

  3. Four

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

Sources of funds can be classified into three categories on the basis of the duration of the financing available. They are : 

Long-term sources: These are for a long period of time, exceeding 5 years.
Medium- term sources : These are for a medium period of time, i.e more than a year and less than 5 years.
Short- term sources: These are for a short period of time, i.e not exceeding one year.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

On the basis of period, the different sources of funds are ______.

  1. Medium-term sources

  2. Long-term source

  3. Short-term sources.

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

Sources of funds can be classified into three categories on the basis of the duration of the financing available. They are : 

Long-term sources: These are for a long period of time, exceeding 5 years.
Medium- term sources : These are for a medium period of time, i.e more than a year and less than 5 years.
Short- term sources: These are for a short period of time, i.e not exceeding one year.