Tag: commerce

Questions Related to commerce

Which of the following is NOT the essential requirement for the endorsement as per Negotiable Instrument Act, $1881$?

meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

  1. It should be on the instrument.

  2. It should be made by the holder on the maker.

  3. Signatures should be in ink and not by pencil or rubber stamp.

  4. It should contain unconditional order.

Show answer
Correct Option: D
Explanation:
In the words of Section 15, of the Negotiable Instruments Act, 1881 endorsement is defined as when the maker or the holder of a negotiable instrument signs the same otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, he is said to endorse the same and is called the endorser and the person to whom the instrument is endorsed is called the endorsee. The requirements for endorsement under the act are:
  • It must be on the instrument. The endorsement may be on the back or the face of the instrument and if no space is left on the instrument, it may be made on a separate paper attached to it called along.
  • It must be an endorsement of the entire bill. A partial endorsement that is which purports to transfer to the endorse a part only of the amount payable does not operate as a valid endorsement.
  • It must be made by the maker or holder of the instrument. A stranger cannot endorse it.
  • It may be made either by the endorser merely signing his name on the instrument or by any words showing an intention to endorse or transfer the instrument to a specified person.
  • It must be signed by the endorser. It is not necessary to write the full name initial may be sufficient. Thumb- impression should be attested.

The Negotiable Instrumentals Act, $1881$ extends to the ______________.

meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

  1. whole of India excluding state of Jammu

  2. whole of India excluding state of Jammu and Kashmir

  3. whole of India

  4. whole of India excluding state of Goa

Show answer
Correct Option: B
Explanation:

The Negotiable Instruments Act was enacted, in India, in 1881. Prior to its enactment, the provision of the English Negotiable Instrument Act were applicable in India, and the present Act is also based on the English Act with certain modifications. It extends to the whole of India except the State of Jammu and Kashmir.

The Negotiable Instruments Act, came into force on the ________.

meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

  1. $1.1.1881$

  2. $1.2.1881$

  3. $1.3.1882$

  4. $1.12.1981$

Show answer
Correct Option: C
Explanation:

The Negotiable Instruments Act, 1881 is an act legislated by the Imperial British Government which was passed on 9th December 1881 and commenced or came into force on 1st March 1882.

Financial planning arrives at __________________.

commerce business finance financial planning financing financial management

  1. Minimising the external borrowing by resorting to equity issues

  2. Entering that the firm always have significantly more fund than required so that there is no paucity of funds

  3. ensuring that the firm paces neither a shortage nor a glut of unuable funds

  4. doing only what is possible with the funds that the firm has at tis disposal

Show answer
Correct Option: A
Explanation:

Financial planning aims at ensuring that the firm faces neither a shortage nor a glut of unusable funds. If there is shortage of funds then the firm will not be able to carry out its planned activities and commitment. On the other hand if there is excess funds available then it adds to cost of business which encourages waste of funds. Thus, financial planning focuses on ensuring the availability of just enough funds at right time.

The difference between current assets and current liabilities is:

commerce business finance financial planning financing financial management

  1. Gross working capital

  2. Net working capital

  3. Permanent working capital

  4. Temporary working capital

Show answer
Correct Option: B

Plans made for a period of _____ year or less is termed as budget.

commerce business finance financial planning financing financial management

  1. one

  2. two

  3. three

  4. four

Show answer
Correct Option: A
Explanation:

A budget is a financial plan for a defined period of time, usually a year.

A budget is the sum of money allocated for a particular purpose and the summary of intended expenditures along with proposals for how to meet them. It may include a budget surplus, providing money for use at a future time, or a deficit in which expenses exceed income.

________ funding is almost as bad as inadequate funding.

commerce business finance financial planning financing financial management

  1. Limited

  2. Short

  3. Excess

  4. Long

Show answer
Correct Option: C
Explanation:

Excess funding is almost as bad as inadequate funding. Funding involves cost like interest on loans which is a burden on the company.

Excess funding will result in excess interest on capital which is a negative impact on the company's financial position.

Financial planning usually begins with the preparation of a _______ forecast.

commerce business finance financial planning financing financial management

  1. purchase

  2. sales

  3. cash

  4. budget

Show answer
Correct Option: B
Explanation:
Financial planning usually begins with the preparation of a sales forecast.
It starts with an estimate of the sales which are likely to happen in the next five years. Based on these, the financial statements are prepared keeping in mind the requirement of funds for investment in the fixed capital and working capital. Then the expected profits during the period are estimated so that an idea can be made of how much of the fund requirements can be met internally i.e. through retained earnings. This results in an estimation of the requirement for external funds. Further, the sources from which the external funds requirement can be met are identified and cash budgets are made, incorporating these factors.

Financial planning helps in coordinating _________ business functions.

commerce business finance financial planning financing financial management

  1. one

  2. two

  3. various

  4. three

Show answer
Correct Option: C
Explanation:
Financial planning is an important part of overall planning of any business enterprise. It aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds and helps in smooth functioning of an organisation.

Financial planning tries to link the ______ with the ______.

commerce business finance financial planning financing financial management

  1. future, present

  2. present, past

  3. present, future

  4. past, future

Show answer
Correct Option: C
Explanation:

Financial Planning is the process of estimating the capital required and determining it’s competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise. Financial planning relates present financial requirement with future requirement by anticipating the sales and growth plans of the company.