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Sources of Business Finance Test - 8

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Sources of Business Finance Test - 8
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The shares that are offered to the existing shareholders to subscribe at discounted price are called ______________.
    Solution
    A rights issue is a right, but not an obligation, given to the existing shareholders to purchase additional shares of the company from the new issue of equity shares. Such shares are known as Right Shares.
  • Question 2
    1 / -0
    Debenture holders are called ________________________.
    Solution
    Debentures are instruments for raising long-term debt capital. Debentures are called creditorship securities because debenture holders are called creditors of a company.
  • Question 3
    1 / -0
    Trade credit is the example of ___________.
    Solution
    Trade credit refers to an arrangement whereby a manufacturer/trader is granted credit from its supplier of raw materials, finished goods, etc. The suppliers allow their customers to pay their outstanding balance within a credit period. Generally, the duration of trade credit is three to six months, and thus, it is a short-term financing facility.
  • Question 4
    1 / -0
    Which of the following is an example of a short term finance?
    Solution
    Trade credit refers to an arrangement whereby a manufacturer/trader is granted credit (payment lag) by the supplier of raw material, finished goods, etc.
  • Question 5
    1 / -0
    Debenture represents ______________.
    Solution
    Debentures are instruments for raising long-term debt capital. They are called creditorship securities because debenture holders are called creditors of a company.
  • Question 6
    1 / -0
    What are the preferences given to preference shareholders?
    Solution

    Preference shares are those shares that get preference over equity shares in respect to:-

    1. The payment of dividend
    2. The repayment of capital during winding up.
  • Question 7
    1 / -0
    Which of the following instrument results in tax savings for the company?
    Solution
    The interest paid to debenture holders is considered an expense of the company. Interest is deducted from the total income of the company before calculating income tax. So the tax liability of the company reduces.
  • Question 8
    1 / -0
    People deposit their money in the banks as _____ .
    Solution
    People deposit their money in the banks as it earns interest and money deposited in the banks are secured.
    Money can be withdrawn any time by the customer on demand.
  • Question 9
    1 / -0
    Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called ________.
    Solution

    People deposit their savings in banks. They can withdraw their money whenever required. 
    Because the deposits in the bank account can be withdrawn on demand, these deposits are called demand deposits.



     

  • Question 10
    1 / -0
    A paper instructing the bank to pay a specific amount from the person's account to the person in whose name it has been made.
    Solution

    A cheque is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued.
    The person writing the cheque, the drawer, has a transaction banking account (often called a current, cheque, chequing or checking account) where their money is held.
    The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

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