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B Com Exam  >  B Com Tests  >  Test: Sources of Business Finance - 1 - B Com MCQ

Test: Sources of Business Finance - 1 - B Com MCQ


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10 Questions MCQ Test - Test: Sources of Business Finance - 1

Test: Sources of Business Finance - 1 for B Com 2024 is part of B Com preparation. The Test: Sources of Business Finance - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Sources of Business Finance - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Sources of Business Finance - 1 below.
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Test: Sources of Business Finance - 1 - Question 1
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What is the primary characteristic of equity shares?

Detailed Solution for Test: Sources of Business Finance - 1 - Question 1
Equity shares represent ownership interest in a company. Unlike preference shares or debentures, equity shareholders have a say in the management of the company and may receive dividends based on the company's profitability. They do not have a fixed rate of interest, and their returns depend on the company's performance.
Test: Sources of Business Finance - 1 - Question 2
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What is the key preference associated with preference shares?

Detailed Solution for Test: Sources of Business Finance - 1 - Question 2
The primary preference of preference shares is that they receive dividends before equity shareholders. This means that when the company distributes profits, preference shareholders are entitled to their fixed dividend payments before anything is paid to equity shareholders.
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Test: Sources of Business Finance - 1 - Question 3
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Which type of shares typically carry the highest risk in terms of dividend payments?

Detailed Solution for Test: Sources of Business Finance - 1 - Question 3
Equity shares typically carry the highest risk in terms of dividend payments. Unlike preference shares, which have a fixed dividend rate, equity shareholders' dividends depend on the company's profitability. If the company doesn't make profits, equity shareholders may not receive any dividends.
Test: Sources of Business Finance - 1 - Question 4
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What is the main purpose of issuing sweat equity shares?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 4
The main purpose of issuing sweat equity shares is to reward employees for their contributions to the company. These shares are typically issued at a discount or for non-cash considerations to motivate and retain key employees.
Test: Sources of Business Finance - 1 - Question 5
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What type of shares can be issued with differential rights as to voting, dividend, or other matters?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 5
Equity shares can be issued with differential rights as to voting, dividend, or other matters, as permitted by the Companies Act. This allows companies to tailor the rights associated with their equity shares to meet specific needs or goals.
Test: Sources of Business Finance - 1 - Question 6
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What is the primary difference between debentures and equity shares?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 6
The primary difference between debentures and equity shares is that debentures receive priority in dividend payments. When a company distributes profits, debenture holders are entitled to their fixed interest payments before anything is paid to equity shareholders.
Test: Sources of Business Finance - 1 - Question 7
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What kind of charge is typically associated with debentures?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 7
Debentures are typically associated with a floating charge on a company's assets. A floating charge is a security interest over a class of assets, which allows the company to continue to use and dispose of these assets in the ordinary course of business.
Test: Sources of Business Finance - 1 - Question 8
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In which country can no par stock shares be issued?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 8
No par stock shares can be issued in the United States. These shares have no fixed face value and are issued with a focus on the real net worth of the company.
Test: Sources of Business Finance - 1 - Question 9
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What is the key advantage of issuing shares with differential rights?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 9
The key advantage of issuing shares with differential rights is that they offer flexibility in tailoring shareholder rights. This allows the company to customize the rights associated with different classes of shares to meet specific objectives or requirements.
Test: Sources of Business Finance - 1 - Question 10
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What is the significance of issuing sweat equity shares to employees?
Detailed Solution for Test: Sources of Business Finance - 1 - Question 10
The significance of issuing sweat equity shares to employees is that it rewards and motivates employees for their contributions to the company. It serves as an incentive for employees to work towards the company's success.
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