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Sources of Business Finance Test 3

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Sources of Business Finance Test 3
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Equity shareholders are called ________.
    Solution
    Equity shares represent the ownership of a company, hence the capital raised by issue of such shares is referred to as ownership capital and shareholders are called owners of the company.
  • Question 2
    1 / -0
    Operating cycle can be delayed by ________________.
    Solution
    Operating cycle period = Raw material storage period + Conversion period + Finished goods storage period + average collection period - average payment period.
    An increase in WIP (or conversion) period will increase the operating cycle period and this will lead to a delay in the operating cycle.
    Hence option (D) is the correct answer.
  • Question 3
    1 / -0
    Shelf stock refers to ______________.
    Solution
    Items that are stored by the firm and sold with little or no modifications are called shelf stock.
    Hence, option (C) is the correct answer.
  • Question 4
    1 / -0
    On basis of time period, the different sources of funds can be categorized into _____ categories.
    Solution
    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.
  • Question 5
    1 / -0
    On the basis of period, the different sources of funds are ______.
    Solution
    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.
  • Question 6
    1 / -0
    Classification on on the basis of ownership basis includes ___________.
    Solution
    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.
  • Question 7
    1 / -0
    The sources of funds can be categorized on the basis of _______________.
    Solution
    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.
  • Question 8
    1 / -0
    Public investment in a company is generally in the form of:
    Solution
    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.
  • Question 9
    1 / -0
    Long-term financing is generally required for the acquisition of _________.
    Solution
    Long-term finance is that which is required for a long period of time, i.e. no less than 5 years . These long-term sources are generally required for the acquisition of fixed assets as these fixed assets are purchased for a long period and are also very expensive than current assets. 
  • Question 10
    1 / -0
    Call is the opposite of ___________.
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