Tag: organisation of commerce and management

Questions Related to organisation of commerce and management

Identify the merit(s) of Trade credit.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. It reduces the capital requirement.

  2. It helps the business focus on core activities.

  3. It does not require any negotiation or formal agreement.

  4. All of the above

Show answer
Correct Option: D
Explanation:

Trade credit can be defined as delay of payment permitted by the creditor or supplier of raw materials, consumables etc. against the goods purchased from him. Merits of Trade credit are:a) It reduces the capital requirement.b) It helps the business focus on core activities.

c) It does not require any negotiation or formal agreement.

Likely disadvantage(s) of using trade credit include ___________.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Loss of goodwill

  2. Higher prices of raw materials

  3. The opportunity cost of discount

  4. All of the above

Show answer
Correct Option: D
Explanation:
Trade credit is issued when goods and services are traded on credit. It is offered by one seller to the other.Disadvantage(s) of using trade credit include:a) loss of goodwill
b) higher prices of raw materials
c) the opportunity cost of discount.

Trade Credit is a major source of _____ finance for most business whether small or big.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Receivables

  2. Fixed capital

  3. Working capital

  4. None of the above

Show answer
Correct Option: C
Explanation:

Trade credit can be defined as delay of payment permitted by the creditor or supplier of raw materials, consumables etc. against the goods purchased from him. Trade Credit is a major source of working capital finance for most business whether small or big.

Trade credit as a source of funds has certain limitations, which is/are ______________________.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Only limited amount of funds can be generated through trade credit.

  2. It is generally a costly source of funds.

  3. Availability of easy and flexible trade credit facilities may induce a firm to indulge in over-trading.

  4. All of the above

Show answer
Correct Option: D
Explanation:
Trade credit is issued when goods and services are traded on credit. It is offered by one seller to the other.a) Trade credit as a source of funds has certain limitations, which are:b) limited amount of funds can be generated through trade credit.
c) It is generally a costly source of funds.
Availability of easy and flexible trade credit facilities may induce a firm to indulge in over-trading.

Match the items of List-I with the items of List-II:

List-I List-II
(a) Trade credit and other payables that arise in the firm's day-to-day operations (i) Maturity Financing
(b) Financing and asset needs over time (ii) Factoring
(c) A tool for accelerating the collection from the customers (iii) Spontaneous financing
(d) Seeking financial service to finance on its debtor's balances (iv) Lockbox system
organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. $(a) - (iv), (b) - (iii), (c) - (ii), (d) - (i)$

  2. $(a) - (iii), (b) - (ii), (c) - (iv), (d) - (i)$

  3. $(a) - (ii), (b) - (iv), (c) - (i), (d) - (iii)$

  4. $(a) - (i), (b) - (ii), (c) - (iii), (d) - (iv)$

Show answer
Correct Option: C

Trade credit is commonly used by business organisations as a source of ___________ financing.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Short-term

  2. Long-term

  3. Medium-term

  4. Both A and C

Show answer
Correct Option: A
Explanation:

Trade credit is commonly used by business organisations as a source of short-term financing. Trade credits are generally a small amount of finances that are provided by the traders to another trader or a company to ensure smooth flow of trade cycle in the supply chain.

Trade credit is the credit extended by one _________ to another for the purchase of goods and services.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Retailer

  2. Wholesaler

  3. Customer

  4. Trader

Show answer
Correct Option: D
Explanation:

Trade credits are the credits granted to manufacturers and traders by the suppliers of raw materials. These credits are given to a trader from another trader to ensure the smooth running of trades in a business supply chain.

Trade credit is a convenient and continuous source of funds, which is one of the __________ of trade credit.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Limitations

  2. Merits

  3. Functions

  4. Objectives

Show answer
Correct Option: B
Explanation:

Trade credit is a short term source of finances where a trader credits finances to another trader for the smooth flow of business. Trade credit is a convenient and continuous source of funds as it is a short term credit and has a low amount value hence can be taken without long term financial plannings. This is one of the merits of trade credit.

Trade credit is needed to promote the ________ of an organisation.

organisation of commerce and management sources of business finance - 2 commercial paper non-institutional sources - short-term short term sources of finance

  1. Purchases

  2. Sales

  3. Drawings

  4. Capital

Show answer
Correct Option: B
Explanation:
Trade credit is commonly used by business organisations as a source of short-term financing. It is granted to those customers who have reasonable amount of financial standing and goodwill.If an organisation wants to increase
its inventory level in order to meet expected rise in the sales volume in the near future, it may use trade credit to, finance the same.

Global market leader is an organization which _________.

organisation of commerce and management multinational corporations global enterprises meaning and features of mncs public sector undertakings & global enterprises

  1. has more than $50\%$ global market share.

  2. is recognized as being ahead of the rest in terms of market share

  3. is ahead of the competition in terms of global innovation

  4. has the monopoly over several foreign markets

Show answer
Correct Option: B
Explanation:

Global market leader is an organization which is recognized as being ahead of the rest of the organizations in the global market in terms of the market share of the organization.