CLASS 11- BUSINESS STUDIES
Chapter 8-Sources of Business Finance
(Question 1 to 7 carries one mark and question 8 to 11 carries four mark each)
1.XYZ limited company is going to issue a type of security that does not get fixed earnings but
is paid on the basis of profits of the company. The investors of this company are referred to as
residual owners since they receive what is left after all other claims of the company's income
and assets have been settled. Name the security to be issued by the company in this case
a. Equity shares
B. Preference shares
C. Debentures
D. None of the above
2. Renuka Private limited is availing such type of credit facility from its suppliers which is
generally extended by one trader to another for the purchase of goods and services. It facilitates
the purchase of supplies without immediate payment. Such credit appears in the record of the
buyer as goods as sundry creditors or accounts payables. Identify the source of finance by the
company
A. Retained earnings
B. Trade credit
C. Public deposits
D. Inter corporate deposits
3. Which of the following is not true in case of debentures?
A. It is an instrument to raise long term debt capital
B. Payment of interest on debentures is compulsory
C. Debenture holders carry voting rights
D. Debentures create a charge over the assets of the company
4. Which financial instrument helps to save taxes?
A. Equity shares
B. Debentures
C. Retained earnings
D. Preference shares
5. The government has established a number of fund providers all over the country to provide
finance to business organizations. These are established by central as well as state
governments. In addition to providing financial assistance, these institutions also conduct
market surveys and provide technical systems and managerial services to people who run the
enterprises. Name the source of finance to be made available in the above mentioned case by
the fund providers.
A. Retained earnings
B. Loans from commercial banks
C. Bank overdraft
D. Loans from financial institutions
6. Which of the following statements do not hold true in case of equity shares?
A. It is suitable for cautious investors
B. It is a permanent source of capital
C. It does not carry charge over assets
D. Equity shareholders is limited to the share capital
7. The undistributed portion of net earnings in business is known as………….
A. Ploughing back of profits
B. Self financing
C. Retained earnings
D. All of the above
8. Joseph wants to set up a business of manufacturing stationery items. But he is an amateur in
the field of business and does need to use the services of a consultancy firm. This firm helped
Joseph in preparing a blueprint for his proposed business idea. This led Joseph to know about
his financial requirements of the business. The consultancy suggested Joseph to meet the
financial requirements of business by introducing his own funds and taking a loan from a
banking institution.
On the basis of the given information about Joseph answer the following questionsA. What is business finance? Explain in brief the need of business finance for a business firm
B. Identify and explain two categories of fund suggested by the consultancy firm
9. Intex limited is a well known company engaged in manufacturing packed frozen ready to eat
items. The company is committed to take proper precautions against malpractices like
adulteration, poor quality and miss leading advertising. The company has followed the rules and
regulations of the country and it also does pay a due amount of taxes regularly. The company
has created proper safe working conditions. The company maintains proper financial records
and aims to ensure efficient utilisation of funds. The company has taken reasonable steps to
protect the natural environment and avoid any type of pollution.
By quoting the lines from the given paragraph identify the different interest groups towards
which the companies are fulfilling their social responsibilities.
10. Build well Ltd. Is a real estate company in India.The Activities of this company are
governed by values of truthfulness, respect, justice, commitment, trust and citizenship. The
company has 6 branches across the country.
What are these socially determined values known in this given case? Also explain its elements
in detail.
11. Emami paper Mills, a part of Emami group, specializes in the manufacturing of new sprint
writing and printing paper and multi layer coated group. Emami paper Mills has been successful
in increasing the capacity of multi layer coated board manufacturing units in Odisha at an
estimated cost of 650 crores. Encouraged by good market response and growth in the
packaging sector the company is now conceptualizing another big ticket expansion in the form
of a similar plant in Balasore with somewhat similar capacity. To meet the financial requirements
for the period of around 3 years the company is looking for a suitable source of finance. The
company does not want any kind of charge over its assets in such a kind of source of finance.
On the basis of the given information answer the following questionsA. Specify the most suitable source of fund for meeting the financial requirements of emami
paper mills
B. State any two merits of raising funds through this source of finance
C. State any one limitations of raising funds through this source of finance