Tag: elements of business

Questions Related to elements of business

A trading concern for example, may require ____ amount of fixed capital as compared to a manufacturing concern.

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. Large

  2. Small

  3. Fixed

  4. Half

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Correct Option: B
Explanation:

A trading concern for example, may require small amount of fixed capital as compared to a manufacturing concern since trading does not involve physical assets for production purpose. Whereas, manufacturing sector requires huge amount of investment.

Which is of the following is / are false?

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. In the FIFO method the issue is in the order of receipt.

  2. In the replacement method the current realizable value is taken for pricing the issues.

  3. In the weighted average method issue price is the weighted average of quantity and price and the weight being the percentage of value of each lot in the total stock.

  4. Under inflationary conditions LIFO method will show low value of inventory.

  5. Both (B) and (D) above

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Correct Option: C
Explanation:

In the Weighted average cost method the pricing of the materials is done on weighted average basis and the weights will be based on the quantity.

A stock dividend is paid out of ________________.

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. current earnings

  2. retained earnings

  3. capital surplus

  4. paid-in-surplus

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Correct Option: B

Which of the following is/are the source(s) of short term finance?

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. Trade Credit

  2. Cash advance loan

  3. Short term Borrowings

  4. All of the above

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Correct Option: D
Explanation:

Short term finance is type of business financing where it is obtained for a year or less. The sources of short term finance are: trade credit, cash advance loan and short term borrowings.

In each bank, within a credit-rating scale, borrowers are classified into _____________________.

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. Excellent, Good and Average

  2. Below Average or Unsatisfactory

  3. Excellent and Below Average

  4. Both (a) and (b)

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Correct Option: D

Which of the following will result into sources of funds?
(i) Increase in current assets
(ii) Decrease in current assets
(iii) Increase in current liabilities
(iv) Decrease in current liabilities

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. (i) and (iv)

  2. (ii) and (iii)

  3. (i) and (iii)

  4. (ii) and (iv)

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Correct Option: B

The increase in profit return resulting from borrowing capital at a low rate and employing it in a business yielding at a higher rate ____________.

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. Operating leverage

  2. Trading on equity

  3. Asset leverage

  4. Return on investment leverage

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Correct Option: B

Business incubators (or "accelerators") generally focus on the high-tech sector by providing support for new businesses in various stages of development. 

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. True

  2. False

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Correct Option: A
Explanation:

Business incubators (or "accelerators") generally focus on the high-tech sector by providing support for new businesses in various stages of development- this is a true statement. Business incubators mainly help start-up companies by providing management and other facilities.

State the following statement is True or False:
A letter sent to the applicant to whom shares are not allotted is known as Letter of Allotment.

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. True

  2. False

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Correct Option: A
Explanation:

A letter sent to the applicant to whom shares are not allotted is known as Letter of Allotment- this is a true statement. The letter of allotment is mainly useful to the buyer. It contains the details regarding the purchase or sell of the shares.

Shareholders are the owners of a company.

elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

  1. True

  2. False

Show answer
Correct Option: A
Explanation:
A shareholder, commonly referred to as a stockholder, is any person, company, or institution that owns at least one share of a company’s stock. Because shareholders are a company's owners, they reap the benefits of the company's successes in the form of increased stock valuation. If the company does poorly and the price of its stock declines, however, shareholders can lose money.
Although they are owners of the company, shareholders do not manage operations.  A board of directors is appointed to govern the activities and operations of the company.