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SOURCES OF BUSINESS FINANCE TEST

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Sriram Swaminathan
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105 views5 pages

SOURCES OF BUSINESS FINANCE TEST

Uploaded by

Sriram Swaminathan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SOURCES OF BUSINESS FINANCE -MCQ’S

Q1. What is a source of internal financing or self-financing?


a) Trade Credit b) Factoring
c) Retained Earnings d) Lease Financing
Q2. Which one of the following is a short-term source of finance?
a) Debentures b) Commercial Paper
c) Equity Shares d) Loans from financial Institutions
Q3. __________ is an unsecured promissory note issued by a firm to raise funds for
a short period, varying from 90 days to 364 days.
a) Bill of Exchange b) Bond
C) Debenture d) Commercial Paper
Q4. 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
Q5. Which one of the following is included in the category of Owner’s Funds
a) Debentures b) Loans from Banks
c) Equity Shares d) Public Deposits
Q6. Long term sources fulfil the financial requirements of an enterprise for a period
exceeding
a) 5 yrs b) 4 yrs
c) 3 yrs d) 2 yrs
Q7. 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
Q8. 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
Q9. Funds that are provided by the owners of an enterprise are known as
a) Debentures b) Deposits
c) Owner’s Funds d) Borrowed Funds
Q10. 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
Q11. 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
Q12. 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
Q13. 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
Q14. External funds may be ___________ as compared to those raised through
internal sources
a) Cheap b) Costly
c) Large d) Small
Q15. 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
Q16. Retained Earnings is a ____________ source of funds available to an
organization
a) Temporary b Short-term
c) External d) Permanent
Q17. ADRs are issued in
a) Canada b) China
c) India d) USA
Q18. 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
Q19. Excessive ploughing back may cause dissatisfaction amongst the
______________ as they would get lower dividends
a) Debenture holders b) Shareholders
c) Lenders d) Suppliers
Q20. 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
Q21. 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
Q22.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
Q23. A financial service under which the ‘factor’ renders various services is called
a) Trade credit b) Factoring
c) Bills of Exchange d) Public deposit
Q24. In lease financing, the owner of the assets is called the
a) Lessee b) Lessor
c) Lender d) Buyer
Q25. The redeemable is used for
a) Preference shares b) Commercial Paper
c) Equity Shares d) Public Deposits
Q26. Public deposits are the deposits that are raised directly from
a) The public b) The directors
c) The auditors d) The owners
Q27. 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
Q28. Companies generally invite public deposits for a period upto
a) 2 yrs b) 3 yrs
c) 1 yr d) 4 yrs
Q29. The acceptance of Public Deposits is regulated by
a) RBI b) SBI
c) UBI d) PNB
Q30. Which companies can raise funds through Public Deposits?
a) Public Companies b) Old Companies
c) New Companies d) Both b and c
Q31. Regulation of Commercial Papers comes under the purview of
a) Central Govt. b) State Govt.
c) RBI d) SBI
Q32. Which companies can raise money through Commercial Papers?
a) Public Companies b) Pvt Companies
c) Highly rated firms d) None of these
Q33. Who enjoys the preferential position over equity shareholders are
a) Preference shareholders b) Debenture holders
c) Both a and b d) None of these
Q34. If an investor wants steady income, he/she will prefer
a) Equity shares b) Trade credit
c) Preference shares d) All of these
Q35. 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
Q36. 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
Q37. Who are termed as creditors of the company?
a) Equity shareholders b) Preference shareholders
c) Debenture holders d) All of these
Q38. What is the full form of GDRs?
a) Global Depository Receipts b) Grand Depository Receipts
c) Global Deposit Reserve d) Grand Deposit Reserve
Q39. International Agencies that have emerged over the years to finance
international trade
a) International Finance Corporation b) EXIM Bank
c) Asian Development Bank d) All of the above
Q40. Life Insurance Corporation of India (LIC) was set up in
a) 1955 b) 1956
c) 1957 d) 1958

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