Sources of Business Finance Test

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Sources of Business Finance Test - 22

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Weekly Quiz Competition

Question 1
1 / -0

When a company is not earning profits, then which of the following securities proves a burden on the finances of the company?

A
Equity Shares

B
Preference Shares

C
Redeemable Preference Shares

D
Debentures
Question 2
1 / -0

Which of the following is true with regard to 10% Debentures issued at a discount of 20%?

A
The carrying amount of debentures gets reduced each year at a rate of 20%.

B
Issue price and the carrying amount of debentures are equal.

C
At the time of redemption, the debenture holder will be paid the issue price.

D
The face value and the carrying amount of debentures are equal.
Question 3
1 / -0

The means of obtaining financial resources that involves the sale of part of the ownership of the business is called ______.

A
bankruptcy

B
equity financing

C
commercial loans

D
debt financing

Solution

Equity financing is the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.
Question 4
1 / -0

The basic assumption made for using "forced distribution method" is that employees are distinguishable as outstanding, above average, average, below average and poor; and their number conforms to a normal frequency distribution.__________ each in the highest and lowest categories, _________ each in the above average and below average categories, and _________ in the average category.

A
20%; 30%; 50%

B
10%; 60%; 40%

C
10%; 20%; 40%

D
40%; 20%; 10%
Question 5
1 / -0

"Business finance includes those business activities which are concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of business enterprise." This definition is given by _____________.

A
B.O. Wheeler

B
Howard and Upton

C
ICSI

D
ICAI

Solution

According to the Wheeler, “Business finance is that business activity which concerns with the acquisition and
conversation of capital funds in meeting financial needs and overall objectives of a business enterprise”. According
to the Guthumann and Dougall, “Business finance can broadly be defined as the activity concerned with
planning, raising, controlling, administering of the funds used in the business”.
Corporate finance is concerned with budgeting, financial forecasting, cash management, credit administration,
investment analysis and fund procurement of the business concern and the business concern needs to adopt
modern technology and application suitable to the global environment.
Question 6
1 / -0

Which of the following is said to be the lifeblood of an organization?

A
Debentures

B
Finance

C
Material

D
Goodwill

Solution

Finance is regarded as the lifeblood of a business enterprise. It is the basic foundation of all kinds of economic activities. Finance is the master key that provides access to all the sources for being employed in manufacturing and merchandising activities. The success of an organization largely depends on the efficient management of its finances.
Hence, option (B) is the correct answer.
Question 7
1 / -0

Equity share holders may receive ___________ on their investment.

A
Interest

B
Dividend

C
Bonus

D
(B) and (C)

Solution

Equity shareholders may receive dividends and bonus on their investments. A dividend refers to the sum of money which is paid out of the total profits and a bonus refers to the one-time payment.
Hence, option (D) is the correct answer.
Question 8
1 / -0

________will be entitled to receive arrears of their dividend.

A
Cumulative Preference Share

B
Non-Cumulative Preference Share

C
Convertible Debenture

D
All of the above

Solution

A preference share is said to be cumulative when the arrears of dividend are cumulative and such arrears are paid before paying any dividend to equity shareholders including those that were omitted in the past, before the common shareholders are able to receive their dividend payments.
Question 9
1 / -0

Every business enterprise must undertake such business which is_________________.

A
Unlawful

B
Lawful

C
Illegal

D
All of above

Solution

Every business enterprise must undertake such business which is lawful. All business organizations should adhere to the law of the country to ensure peace and order. Illegal and unlawful business organizations should not be undertaken.
Hence, option (A) is the correct answer.
Question 10
1 / -0

Share capital, banking and other financial institutions and unorganized capital markets are____________.

A
Marketing Resources

B
Financial Factors

C
Human resource

D
All of above

Solution

Share capital, banking, and other financial institutions and unorganized capital markets are financial factors. These capital markets help to provide financial assistance to the company mainly. These institutions also perform certain secondary functions as well.
Hence, option (B) is the correct answer.

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Re-Attempt Weekly Quiz Competition

Sources of Business Finance Test - 22

Result

Sources of Business Finance Test - 22

Score

-

Rank

-

SHARING IS CARING

Question 1

Equity Shares

Preference Shares

Redeemable Preference Shares

Debentures

Question 2

The carrying amount of debentures gets reduced each year at a rate of 20%.

Issue price and the carrying amount of debentures are equal.

At the time of redemption, the debenture holder will be paid the issue price.

The face value and the carrying amount of debentures are equal.

Question 3

bankruptcy

equity financing

commercial loans

debt financing

Solution

Question 4

20%; 30%; 50%

10%; 60%; 40%

10%; 20%; 40%

40%; 20%; 10%

Question 5

B.O. Wheeler

Howard and Upton

ICSI

ICAI

Solution

Question 6

Debentures

Finance

Material

Goodwill

Solution

Question 7

Interest

Dividend

Bonus

(B) and (C)

Solution

Question 8

Cumulative Preference Share

Non-Cumulative Preference Share

Convertible Debenture

All of the above

Solution

Question 9

Unlawful

Lawful

Illegal

All of above

Solution

Question 10

Marketing Resources

Financial Factors

Human resource

All of above

Solution

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