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CBSE Questions for Class 10 Elements Of Business Sources Of Business Finance Quiz 2 - MCQExams.com
CBSE
Class 10 Elements Of Business
Sources Of Business Finance
Quiz 2
Shareholders are the owners of the company.
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True
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False
Explanation
Shareholders are the ultimate owners of a corporation.
They have the right to elect directors, vote on major corporate actions (such as mergers) and share in the profits of the corporation.
Equity shareholders are called ________.
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Owners of the Company
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Partners of the Company
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Executives of the Company
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Guardian of the Company
Explanation
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.
Operating cycle can be delayed by ________________.
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Increase in WIP period
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Decrease in raw materials storage period
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Decrease in credit payment period
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Both (A) and (C) above
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Both (B) and (C) above
Explanation
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.
Shelf stock refers to ______________.
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Perishable goods
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Items that are to be packaged and sold
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Items that are stored by the firm and sold with little or no modifications
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Accessories which are not part of the standard equipment
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Stock which is to be stored for more than one year.
Explanation
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.
State the following statement is True or False:
A letter sent to the applicant to whom shares are not allotted is known as Letter of Allotment.
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True
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False
Explanation
A letter sent to the applicant to whom shares are not allotted is known as Letter of Allotment- this is a true statement. The letter of allotment is mainly useful to the buyer. It contains the details regarding the purchase or sell of the shares.
Hence the statement is true.
Shareholders are the owners of a company.
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0%
True
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False
Explanation
A shareholder, commonly referred to as a stockholder, is any person, company, or institution that owns at least one share of a company’s stock. Because shareholders are a company's owners, they reap the benefits of the company's successes in the form of increased stock valuation. If the company does poorly and the price of its stock declines, however, shareholders can lose money.
Although they are owners of the company, shareholders do not manage operations. A board of directors is appointed to govern the activities and operations of the company.
On the basis of period, the different sources of funds are ______.
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Medium-term sources
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Long-term source
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Short-term sources.
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All of the above
Explanation
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.
On basis of time period, the different sources of funds can be categorized into _____ categories.
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Two
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Three
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Four
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Five
Explanation
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.
State the following statement is True or False:
A minimum amount of capital to be collected by company at initial stages is minimum subscription.
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True
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False
Explanation
A minimum amount of capital to be collected by the company at the initial stages is a minimum subscription- this is a true statement.
The minimum shares the company needs to get from the public out of the total issue by the date of closure is known as a minimum subscription.
Hence the statement is true.
Classification on on the basis of ownership basis includes ___________.
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Owner's funds
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Borrowed funds
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Loan funds
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All of the above
Explanation
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.
The sources of funds can be categorized on the basis of _______________.
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Time period
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Ownership
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Source of generation
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All of the above
Explanation
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.
Public investment in a company is generally in the form of:
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Shares
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Debentures
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Deposits
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Any of the above
Explanation
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.
Which of the following will result into sources of funds?
(i) Increase in current assets
(ii) Decrease in current assets
(iii) Increase in current liabilities
(iv) Decrease in current liabilities
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(i) and (iv)
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(ii) and (iii)
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(i) and (iii)
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(ii) and (iv)
Long-term financing is generally required for the acquisition of _________.
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Current assets
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Fixed assets
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Fictitious asset
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All of the above
Explanation
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.
Call is the opposite of ___________.
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Equity
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Bid
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Ask/offer
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Not equal
Funds required for period exceeding 5 years is _______.
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Long-term financing
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Short-term financing
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Medium-term financing
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All of the above
Explanation
The funds that are required for a long period of time are known as long-term financing. These types of financing is required for a period exceeding 5 years.
Short-term financing is most common for financing of ____________.
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Fictitious assets
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Current assets
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Fixed assets
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All of the above
Explanation
Every business needs to invest into in current assets. These assets are also known as working capital to facilitate smooth working of day-to-day activities.
Short term financing is raised to cope up with these day-to-day activites to run a business and has to be repaid within a year's time.
Sources of funds for a short duration are ______________.
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Trade credit
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Loans from commercial banks
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Commercial papers
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All of the above
Explanation
Sources of funds that provide funds for a duration of less than one year are:
Trade Credits
: These are the credits granted to manufacturers and traders by the suppliers of raw materials.
Loans from commercial banks:
Commercial banks grant short-term finance to business firms which is known as bank credit
Commercial papers:
Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations
M
edium-term sources of finance include __________.
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Loans from financial institutions
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Lease financing
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Public deposits
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All of the above
Explanation
Medium-term sources of funds are usually for a period of more than one year but not exceeding five years in duration. These finances include, loan from commercial banks or financial institutions, lease financing, public deposits, etc.
The funds required for a period of less than one year are called ___________.
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Long-term finance
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Medium-term
finance
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Short-term
finance
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All of the above
Explanation
The funds that are borrowed for less than a year's period of time are known as short-term finances. Some of the sources of short term finances are trade credits, bank credits, customer's advances, cash credit, overdrafts, etc.
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