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Worksheet: Sources of Business Finance | Business Studies (BST) Class 11 - Commerce PDF Download

Multiple Choice Questions

Q1: Which of the following is considered a long-term source of business finance?
(a) Trade Credit
(b) Commercial Paper
(c) Issuance of Shares
(d) Bank Overdraft

Q2: What is the primary purpose of retained earnings in a business?
(a) To pay dividends to shareholders
(b) To reinvest in the business
(c) To purchase fixed assets
(d) To repay loans

Q3: Which source of finance is typically used for short-term requirements?
(a) Equity Shares
(b) Debentures
(c) Trade Credit
(d) Retained Earnings

Q4: Which of the following is NOT a factor influencing the choice of finance source?
(a) Cost of funds
(b) Control over business
(c) Number of employees
(d) Purpose of funds

Q5: What type of financing do commercial banks primarily provide?
(a) Long-term financing
(b) Equity financing
(c) Short-term financing
(d) Merchant financing

Fill in the Blanks

Q1: The financial requirements of a business for day-to-day operations are known as __________.

Q2: __________ refers to funds raised through loans from banks and financial institutions.

Q3: The capital raised by a company through the issuance of shares is termed __________.

Q4: __________ financing involves renting an asset instead of purchasing it outright.

Q5: __________ are issued in the money market for short-term financing needs.

True or False

Q1: Owner’s funds include retained earnings.

Q2: Trade credit is a long-term financing option.

Q3: Debenture holders have voting rights in the company.

Q4: Factoring is a method to improve cash flow by selling receivables.

Q5: Public deposits are an unreliable source of finance for new companies.

Match the Following

Worksheet: Sources of Business Finance | Business Studies (BST) Class 11 - Commerce

Short Answer Questions

Q1: What is business finance and why is it important?

Q2: What are the two main types of capital requirements for a business?

Q3: What is trade credit?

Q4: What is retained earnings?

Q5: Why might a business choose to get a loan from a bank?

Long Answer Questions

Q1: Discuss the various sources of business finance available to entrepreneurs looking to start or expand their businesses. Include a detailed explanation of the advantages and limitations of at least three different sources.

Q2: Explain the factors that influence the choice of source of finance for a business. Provide detailed explanations for at least five factors that entrepreneurs should consider.

The document Worksheet: Sources of Business Finance | Business Studies (BST) Class 11 - Commerce is a part of the Commerce Course Business Studies (BST) Class 11.
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FAQs on Worksheet: Sources of Business Finance - Business Studies (BST) Class 11 - Commerce

1. What are the main sources of business finance?
Ans. The main sources of business finance can be categorized into internal and external sources. Internal sources include retained earnings and personal savings, while external sources consist of loans from banks, issuing shares, venture capital, trade credit, and crowdfunding.
2. How do businesses choose the right source of finance?
Ans. Businesses choose the right source of finance based on several factors, including the amount of capital needed, the purpose of the financing, the cost of financing, the repayment terms, and the level of control the owners wish to maintain. A thorough analysis of these factors helps in making an informed decision.
3. What are the advantages of using personal savings as a source of business finance?
Ans. Using personal savings as a source of business finance has several advantages, such as no interest payments, full control over the business, and a lower risk of debt. It also demonstrates commitment to potential investors or lenders, as it shows that the owner has invested their own money in the venture.
4. What is the difference between debt finance and equity finance?
Ans. Debt finance involves borrowing money that must be repaid over time, usually with interest, such as bank loans and bonds. Equity finance, on the other hand, involves raising capital by selling shares of the company, giving investors a stake in the business but also requiring sharing of profits.
5. Can crowdfunding be a viable source of business finance?
Ans. Yes, crowdfunding can be a viable source of business finance, especially for startups and small businesses. It allows entrepreneurs to raise small amounts of money from a large number of people, often through online platforms. It can also serve as a marketing tool and help validate business ideas.
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