16 Questions
What is the term used for the money required to run a business?
Capital
Why is finance considered the lifeblood of a business?
To ensure smooth day-to-day operations
What is the term for the funds required by a business to purchase land, building, and machinery?
Fixed Capital Requirements
What is the term used for the sum of money invested by an entrepreneur in a business?
Capital
Which activity is undertaken with a motive of serving the society and profit earning in the long run?
Continuing the business for a long period of time
What is the term used for the funds required by a business to purchase furniture, fixtures, etc?
Working capital
What is the definition of working capital requirements?
Funds used for day-to-day business operations
Which of the following is an example of short-term funds?
Loans from financial institutions
What are the sources of long-term funds?
Shares and debentures
Which source of funds includes profits that are reinvested into the business?
Retained earnings
What are external sources of financing?
Borrowings from commercial banks, accepting public deposits
What does retained earnings represent as a source of finance?
Permanent source with operational flexibility and no explicit cost involved
What is the limitation of retained earnings as a source of finance?
Excess retention of profits may lead to a decrease in market price of equity shares
What is the basis for classifying sources of funds as short term, medium term, or long term?
Period for which funds are required
Which is an example of an external source of financing that fulfills large money requirements?
Issue of debentures
What is one advantage of internal sources of funds compared to external sources?
Cost-effective and fulfills limited needs
Explore the meaning and nature of business finance in this revision quiz for Class 11 Business Studies, Chapter 8. Test your understanding of the sources of business finance and the concept of capital investment.
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