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B Com Exam  >  B Com Tests  >  Test: Sources of Finance - B Com MCQ

Test: Sources of Finance - B Com MCQ


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10 Questions MCQ Test - Test: Sources of Finance

Test: Sources of Finance for B Com 2024 is part of B Com preparation. The Test: Sources of Finance questions and answers have been prepared according to the B Com exam syllabus.The Test: Sources of Finance MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Sources of Finance below.
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Test: Sources of Finance - Question 1
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Which of the following terms is used to describe the finance needed to acquire land, buildings, and other fixed assets of a business concern?

Detailed Solution for Test: Sources of Finance - Question 1
Long-term financial requirement, also known as fixed capital requirement, refers to the finance needed to acquire fixed assets like land, buildings, and machinery. It is used for capital expenditures that are essential for the business's operations in the long run.
Test: Sources of Finance - Question 2
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What is the primary characteristic of equity shares?

Detailed Solution for Test: Sources of Finance - Question 2
Equity shares provide the shareholders with voting rights in company meetings, allowing them to participate in important decisions related to the business's operations and management.
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Test: Sources of Finance - Question 3
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Which type of preference shares gives shareholders the right to claim dividends for unprofitable years in the future?

Detailed Solution for Test: Sources of Finance - Question 3
Cumulative preference shares allow shareholders to claim dividends for years in which the company does not earn profits. If the company earns profits in the future, these shareholders can receive the accumulated dividends from previous unprofitable years.
Test: Sources of Finance - Question 4
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What is the primary purpose of raising debentures?
Detailed Solution for Test: Sources of Finance - Question 4
Debentures are a form of loan finance raised by a company to obtain long-term funds from creditors. They provide a fixed interest payment to the debenture holders, and the company is obligated to repay the principal amount at maturity.
Test: Sources of Finance - Question 5
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Which institution is responsible for providing short-term finance that is repayable within a year?
Detailed Solution for Test: Sources of Finance - Question 5
Commercial banks offer short-term finance, including working capital loans, overdrafts, and short-term advances, to meet the immediate financial requirements of businesses. These loans are typically repayable within a year.
Test: Sources of Finance - Question 6
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Which internal source of finance is created by setting aside a portion of the company's profits for future use?
Detailed Solution for Test: Sources of Finance - Question 6
Retained earnings are funds generated from the company's profits that are retained within the business for future use. These earnings can be used for expansion, diversification, or other financial requirements.
Test: Sources of Finance - Question 7
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Which type of debenture holders have the option to convert their debentures into equity shares after a specific period?
Detailed Solution for Test: Sources of Finance - Question 7
Convertible debenture holders have the option to convert their debentures into equity shares after a specific period. This allows them to potentially benefit from the company's growth and increase in share value.
Test: Sources of Finance - Question 8
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What is the primary disadvantage of using retained earnings as a source of finance?
Detailed Solution for Test: Sources of Finance - Question 8
Using retained earnings may lead to a lack of financial flexibility, as these funds are tied up within the company and cannot be used for other investments or financial requirements.
Test: Sources of Finance - Question 9
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Which type of preference shares do not have the right to claim dividends for unprofitable years?
Detailed Solution for Test: Sources of Finance - Question 9
Non-cumulative preference shares do not have the right to claim dividends for unprofitable years. They only receive dividends if the company earns profits during the specific year.
Test: Sources of Finance - Question 10
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What is the primary role of financial institutions in the context of business finance?
Detailed Solution for Test: Sources of Finance - Question 10
Financial institutions play a crucial role in mobilizing long-term funds for businesses. They provide various types of financial assistance, such as loans and debentures, to meet the capital requirements of companies for their growth and operations.
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