Subject : BUSINESS STUDIES Assignment No : 1

Topic : CHAPTER 7 ( SOURCE OF FINANCE) Class:

Q1. Funds required to purchase fixed assets like Land and Building, Plant and Machinery and Furniture and
Fixtures are called
a) Business Finance b) Working Capital
C) Fixed Capital d) Commercial Paper
Q2. Which one of the following is included in the category of Owner’s
a) Debentures b) Loans from Banks
c) Equity Shares d) Public Deposits
Q3. Long term sources fulfill the financial requirements of an enterprise for a period exceeding
a) 5 yrs b) 4 yrs
c) 3 yrs d) 2 yrs
Q4. Where the funds are required for a period of more than one year but less than five years, which sources are
used
a) Long term sources b) Medium term sources
c) Short term sources d) Very short term sources
Q5. What are the important sources from where owner’s funds can be obtained
a) Preference Shares b) Equity Shares
c) Retained Earnings d) Both b and c
Q6. Funds that are provided by the owners of an enterprise are known as
a) Debentures b) Deposits
c) Owner’s Funds d) Borrowed Funds
Q7. Short term funds are those which are required for a period not exceeding
a) 1 year b) 6 months
c) 9 months d) 1 yr 6 months
Q8. Which of the following is/are the sources for raising borrowed funds?
a) Retained Earnings b) Issue of Debentures
c) Public Deposits d) Both b and c
Q9. A fixed rate of interest is paid by the borrowers on such funds……
a) Owner’s Funds b) Borrowed Funds
c) Both a and b d) None of These Q10. A business can generate funds internally by
a) Accelerating collection of receivables b) ploughing back its profits
c) Disposing of surplus inventories d) All of the above
Q11. External funds may be as compared to those raised through internal sources
a) Cheap b) Costly
c) Large d) Small
Q12. A portion of the net earnings may be retained in the business for use in the future. This is known as
a) Interest b) Dividend
c) Retained Earnings d) None of these
Q13. Retained Earnings is a source of funds available to an organization
a) Temporary b Short-term
c) External d) Permanent
Q14. ADRs are issued in
a) Canada b) China
c) India d) USA
Q15. Which funds put a lot of burden on the business as payment of interest is to be made even when the earnings
are low or when loss is incurred
a) Borrowed Funds b) Equity Shares
c) Retained Earnings d) Owner’s Funds
Q16. Excessive ploughing back may cause dissatisfaction amongst the as they would get lower dividends
a) Debenture holders b) Shareholders
c) Lenders d) Suppliers
Q17. If the credit is extended by one trader to another for the purchase of goods and services it is called
a) Trade Credit b) Loan
c) Debt d) Asset
Q18. A merit of retained earnings as a source of finance is that it may lead to in the market price of equity
shares of a company
a) Increase b) Decrease
c) Fall d) None of these
Q19.Trade Credit is commonly used by business organizations as a source of financing
a) Long-term b) Short-term
c) Medium-term d) None of these
Q20. A financial service under which the ‘factor’ renders various services is called
a) Trade credit b) Factoring
c) Bills of Exchange d) Public deposit Q25. In lease financing, the owner of the assets is called the
a) Lessee b) Lessor
c) Lender d) Buyer
Q21. The redeemable is used for
a) Preference shares b) Commercial Paper
c) Equity Shares d) Public Deposits Q27. Public deposits are the deposits that are raised directly from
a) The public b) The directors
c) The auditors d) The owners
Q22. Rates of interest offered on public deposits are usually than that offered on bank deposits
a) Lower b) higher
c) Equal d) none of these
Q23. Companies generally invite public deposits for a period upto
a) 2 yrs b) 3 yrs
c) 1 yr d) 4 yrs
Q24. The acceptance of Public Deposits is regulated by
a) RBI b) SBI
c) UBI d) PNB
Q25. Which companies can raise funds through Public Deposits?
a) Public Companies b) Old Companies
c) New Companies d) Both b and c
Q26. Regulation of Commercial Papers comes under the purview of
a) Central Govt. b) State Govt.
c) RBI d) SBI
Q27. Which companies can raise money through Commercial Papers?
a) Public Companies b) Pvt Companies
c) Highly rated firms d) None of these
Q28. Who enjoys the preferential position over equity shareholders are
a) Preference shareholders b) Debenture holders
c) Both a and b d) None Q35. If an investor wants steady income, he/she will prefer
a) Equity shares b) Trade credit
c) Preference shares d) All of these
Q29. The cost of equity shares is generally as compared to the cost of raising fund through other
sources
a) More b) Less
c) Equal d) None of these
Q30. Which source of finance doesn’t affect the control of equity shareholders over the management of
company?
a) Public deposits b) Preference shares
c) Trade credit d) Commercial Papers
Q31. Who are termed as creditors of the company?
Equity shareholders b) Preference shareholders
c) Debenture holders d) All of these
Q32. What is the full form of GDRs?
Global Depository Receipts b) Grand Depository Receipts
c) Global Deposit Reserve d) Grand Deposit Reserve
Q33. International Agencies that have emerged over the years to finance international trade
International Finance Corporation b) EXIM Bank
Asian Development Bank d) All of the above
Q34. Life Insurance Corporation of India (LIC)was set up in
a) 1955 b) 1956
c) 1957 d) 1958