Test: Social Responsibilities Of Business And Business Ethics - 3 - Commerce MCQ

Explanation:
Public deposits are a type of deposits that are directly raised from the public. Let's break down the options provided:
A. The public: This option correctly identifies that public deposits are raised from the general public. Individuals, organizations, and other entities can deposit their funds with banks or financial institutions.
B. The auditors: Auditors are professionals who assess and verify financial records and statements. They do not directly raise deposits.
C. The directors: Directors are individuals who oversee the management and operations of a company. They do not directly raise deposits.
D. The owners: Owners of a company or business may invest their own funds into the business, but public deposits are not directly raised from them.
Therefore, the correct answer is A. The public.

Business people have the skill to involve in some social problems.
Explanation:

Business people possess a set of skills and abilities that enable them to contribute to and address various social problems to a certain extent. While they may not have expertise in all areas, their skills and resources can be utilized to make a positive impact on some social issues.

Reasoning:

The answer is option A because:

- Business people are often well-connected and have access to resources and networks that can be mobilized to address social problems.
- They possess skills such as leadership, problem-solving, and strategic thinking, which can be applied to analyze and find solutions for social problems.
- They have the ability to influence and advocate for change within their organizations and communities.
- By engaging in corporate social responsibility initiatives, business people can contribute to solving social issues such as poverty, inequality, and environmental sustainability.
- While they may not be able to address all social problems, their involvement can make a significant difference in some areas.
Conclusion:

Business people have the potential to play a significant role in addressing social problems. While they may not have the ability to solve all social issues, their skills, resources, and influence can be utilized to make a positive impact on some problems.

The abbreviation ADRs stands for American Depository Receipts. They are receipts of companies based in the US and are traded like only other securities. However, such trading is restricted to the market of Us only. They can be sold only to American citizens. 

Social Responsibility and Legal Responsibility
Social responsibility and legal responsibility are two distinct concepts that are often intertwined but have different scopes and implications. Here is a detailed explanation of the relationship between social responsibility and legal responsibility:
1. Social Responsibility:
- Social responsibility refers to the ethical obligations and duties that organizations and individuals have towards society and the environment.
- It goes beyond legal requirements and encompasses actions and initiatives taken voluntarily to promote the well-being of society.
- Social responsibility involves considering the impact of business activities on various stakeholders, such as employees, customers, communities, and the environment.
- It includes actions such as philanthropy, ethical business practices, sustainability efforts, and community engagement.
2. Legal Responsibility:
- Legal responsibility refers to the obligation of individuals and organizations to comply with the laws and regulations of the jurisdiction in which they operate.
- It involves following the established legal framework, including labor laws, environmental regulations, tax laws, and consumer protection laws.
- Failure to meet legal responsibilities may result in legal consequences such as fines, penalties, or legal actions.
Comparison:
- Social responsibility is broader than legal responsibility as it encompasses not only legal obligations but also ethical considerations and voluntary initiatives.
- Legal responsibility is the minimum standard that organizations and individuals must meet to comply with the law, while social responsibility goes beyond legal requirements.
- Legal responsibility is enforceable by law and has legal consequences for non-compliance, while social responsibility is driven by ethical considerations and societal expectations.
Conclusion:
In conclusion, social responsibility is broader than legal responsibility. While legal responsibility focuses on complying with the law, social responsibility encompasses ethical considerations, voluntary initiatives, and the overall impact on society and the environment. Organizations and individuals are expected to meet their legal responsibilities but are also encouraged to go beyond the minimum requirements and actively contribute to the well-being of society.

Permanent Capital: The equity share capital represents permanent capital of the company. There is no obligation on the part of the company to pay the capital during the life time of the company. The equity shares are irredeemable. The shareholders may get their funds back on the winding up of the company.

Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days after which it has to be redeemed..

Equity shareholders are called owners of the company.
Equity shareholders are individuals or entities who hold shares in a company. These shareholders have certain rights and responsibilities within the company. Here is a detailed explanation of why equity shareholders are called owners of the company:
1. Ownership: Equity shareholders have ownership rights in the company. By purchasing shares, they become partial owners of the company and have a claim on its assets and earnings.
2. Voting Rights: Equity shareholders have the right to vote on important matters related to the company, such as the appointment of directors, major business decisions, and changes to the company's constitution. This voting power gives them a say in the company's operations, making them owners in a practical sense.
3. Dividends: Equity shareholders are entitled to a share of the company's profits in the form of dividends. This distribution of profits further establishes their ownership position in the company.
4. Residual Claims: Equity shareholders have the highest level of risk and return in the company. In the event of liquidation, they have a claim on the remaining assets after all other creditors and stakeholders have been paid. This residual claim signifies their ownership interest.
5. Control and Decision-making: Equity shareholders have the power to influence the strategic direction of the company. They can participate in annual general meetings, express their opinions, and elect the board of directors. This control over decision-making processes further highlights their role as owners.
6. Capital Appreciation: Equity shareholders benefit from the capital appreciation of their shares. If the company performs well and the share price increases, the value of their ownership stake also increases.
In conclusion, equity shareholders are called owners of the company because they have ownership rights, voting power, entitlement to dividends, residual claims, control over decision-making, and the potential for capital appreciation. These factors establish their position as the true owners of the company.

An effective pollution control management system will always lead to cost saving because an improper system
results into greater waste and higher cost for waste disposal.
Due to good pollution control management system there will be less pollution which will help in improving the environment quality hence reducing health hazards.
Having a proper functioning pollution control system will reduce the risk of any legal action against the business therefore keeping the business out  of any liability.

Explanation:

Funds required for purchasing current assets are known as working capital.

Working capital:
- Working capital is the funds required to finance a company's day-to-day operations.
- It represents the difference between a company's current assets and current liabilities.
- It is used to cover short-term expenses such as inventory, accounts receivable, and operating expenses.
- Working capital is necessary to ensure smooth operations and meet short-term financial obligations.
Other options:
- Fixed capital refers to the funds used to purchase long-term assets such as land, buildings, and equipment.
- Lease financing is a type of financing where assets are leased instead of being purchased outright.
- Retained earnings refer to the portion of a company's profit that is reinvested into the business rather than distributed to shareholders.
Conclusion:
The funds required for purchasing current assets are known as working capital, which is essential for the day-to-day operations of a company.

Trade Credit as Short Term Finance
Trade credit refers to the credit extended by suppliers to their customers for the purchase of goods or services. It is a common form of financing in business transactions and is typically used for short-term financing needs. Here's why trade credit is considered an example of short-term finance:
1. Nature of Trade Credit:
- Trade credit is provided by suppliers to their customers to facilitate the purchase of goods or services.
- It is usually granted for a specific period, such as 30, 60, or 90 days, after which payment is expected to be made.
- The short-term nature of trade credit reflects its purpose as a financing tool for immediate business needs.
2. Working Capital Management:
- Trade credit is an effective tool for managing working capital, which refers to the funds required for day-to-day operations.
- By allowing customers to buy goods on credit, businesses can maintain sufficient cash flow and liquidity to meet their short-term obligations.
3. Flexibility and Convenience:
- Trade credit offers flexibility to businesses as it can be negotiated based on the relationship between the supplier and the customer.
- It provides convenience to customers by allowing them to defer payment for a certain period, aligning with their cash flow cycles.
4. Short-Term Financing
- Trade credit is primarily used for short-term financing needs, such as purchasing inventory, raw materials, or other immediate business requirements.
- Unlike long-term financing options, trade credit does not involve interest charges or formal loan agreements.
In conclusion, trade credit is an example of short-term finance as it provides businesses with a flexible and convenient way to meet their immediate financing needs, manage working capital, and maintain cash flow.