Sources of Business Finance Test

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Sources of Business Finance Test - 40

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Weekly Quiz Competition

Question 1
1 / -0

Commercial papers represent a new financial instrument issued for the purpose of _______________.

A
Project financing

B
Working capital

C
Leasing of plant and equipment

D
Import of capital goods

Solution

Commercial papers are short-term debt, unsecured instrument which is issued by the companies to meet their short term obligations that is to meet their working capital requirements. They are usually issued for 15 days to 1 year.
Question 2
1 / -0

Articles of unlimited company having share capital is included in_______.

A
Table I

B
Table G

C
Table H

D
Table F

Solution

Articles of unlimited company having share capital is included in Table I. An unlimited company refers to that company where the liability of the shareholders is not limited.
Question 3
1 / -0

Which of the following does not constitute a source of medium term financing?

A
Issue of equity shares

B
Issue of preference shares

C
Term loans from banks

D
All the above
Question 4
1 / -0

Which of the following statements is true?

A
A person having share warrant is a member of the company

B
A person having share warrant is only a shareholder of the company and not a member

C
A legal representative of a deceased shareholder is not a shareholder of a company

D
All of the above

Solution

Share warrant is a bearer document of title to shares and can be issued only by public limited company against fully paid shares. It is a negotiable instrument which is transferable from one person to another by mere delivery. On issue of warrant, it is mandatory for company to strike off name of member from its register of members and holder of warrant is merely a shareholder to the company and he is the one who not only faces the risk of losing the warrant but also enjoys benefits arising out of it.
Therefore, A person having share warrant is only a shareholder of the company and not the member.
Question 5
1 / -0

Preference shares carry preferential rights with respect to _____________.

A
Payment of dividend

B
Repayment of capital

C
Both (A) & (B)

D
Neither (A) nor (B)

Solution

As per companies act, 2013, preference share capital is defined as instruments which have preferential right with respect to dividend payment (fixed/ on percentage basis) and repayment of capital during winding up of the company.
Question 6
1 / -0

A company with a paid up Capital of 5,000 equity shares of Rs.10 each has a turnover of four times with a margin of 8% on sales.
The ROI of the company will be______.

A
28%

B
32%

C
35%

D
42%

Solution

ROI= margin of 8% on sales * 4 = 32%
Question 7
1 / -0

The balance of the Debentures Sinking Fund after redemption of debentures is transferred to____________.

A
Profit and loss A/c

B
General reserve A/c

C
Debenture A/c

D
Cash A/c

Solution

The balance of the Debentures Sinking Fund after redemption of debentures is transferred to General Reserve account. It is the amount which is kept separately out of redeemed amount from debentures, that is why it is transferred to general reserve account.
Question 8
1 / -0

To guard against the dangers of excess payment arising out of double insurance or over insurance made by the insured, insurance companies provide in their agreement _________________.

A
Average clause

B
Subrogation clause

C
Risk clause

D
Indemnity clause
Question 9
1 / -0

The ending balance of owner's equity is Rs.21,000. During the year, the owner contributed Rs.6,000 and withdrew Rs.4000. If the firm had Rs.8,000 net income for the year what was the owner's equity at the beginning?

A
Rs.23,000

B
Rs.21,000

C
Rs.19,000

D
Rs.11,000

Solution

Owner's equity at the beginning= ending balance of owner's equity - net income + withdrawal amount - contributed amount = 21000-800+4000-6000 = 11000.
Question 10
1 / -0

Debentures redeemable after 10 years of issue are shown as___________.

A
Long-term borrowings

B
Other long-term liabilities

C
Short-term borrowings

D
Other short-term liabilities

Solution

Debentures redeemable after 10 years of issue are shown as long-term borrowings since debenture holders invest for a long period of time. Debentures refer to the liabilities of the company that will not become due within one year.

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Re-Attempt Weekly Quiz Competition

Sources of Business Finance Test - 40

Result

Sources of Business Finance Test - 40

Score

-

Rank

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SHARING IS CARING

Question 1

Project financing

Working capital

Leasing of plant and equipment

Import of capital goods

Solution

Question 2

Table I

Table G

Table H

Table F

Solution

Question 3

Issue of equity shares

Issue of preference shares

Term loans from banks

All the above

Question 4

A person having share warrant is a member of the company

A person having share warrant is only a shareholder of the company and not a member

A legal representative of a deceased shareholder is not a shareholder of a company

All of the above

Solution

Question 5

Payment of dividend

Repayment of capital

Both (A) & (B)

Neither (A) nor (B)

Solution

Question 6

28%

32%

35%

42%

Solution

Question 7

Profit and loss A/c

General reserve A/c

Debenture A/c

Cash A/c

Solution

Question 8

Average clause

Subrogation clause

Risk clause

Indemnity clause

Question 9

Rs.23,000

Rs.21,000

Rs.19,000

Rs.11,000

Solution

Question 10

Long-term borrowings

Other long-term liabilities

Short-term borrowings

Other short-term liabilities

Solution

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