Table of Contents

ISC Commerce 12 Sources of Finance MCQs with Solved Answers

1. Sources of Finance for a Sole Proprietors Business include…

(a) Capital provided by sole trader(owner)

(b) Trade credit from creditors

(d) Loan from commercial Banks and Financial Institutions

(e) All of these

2. Sources of Finance for a Partnership Business include…

(a) Capital provided by Partners

(b) Investment of part of the profit earned

(d) Loan from commercial Banks and Financial Institutions

(e) All of these

3. Which of the following is not Sources of Finance for a Joint Stock Company ?

(a) Share capital

(b) Retained Earnings

(d) Public Deposits

(e) Borrow funds from relatives

(f) Inter-corporate deposit

4. Which of the following does not include Borrowed Funds (Sources of Finance for a Joint Stock Company) ?

(a) Loan from Commercial Banks and Financial Institutions

(b) Instalment credit

(d) Public Deposits

(e) Customer Advances

(f) Debentures

5. Which of the following is include Owned Funds (Sources of Finance for a Joint Stock Company) ?

(a) Equity Share Capital

(b) Retained Earnings

(d) All of these

Note: Answers are given below at the end.

ISC Economics 12 Demand MCQs With Solved Answer

ISC Commerce 12 Sources of Finance MCQs with Solved Answers

(Question 6 to 10)

6.Higher debt equity ratio (Debt/Equity) results in:

(a) Lower financial risk

(b) Higher Earning Per Share

(d) Higher degree of financial risk

7. Which source of finance leads to dilution of management’s control over the business?

(a) Retained Earnings

(b) Preference Share

(d) Equity Share Capital

8. Net working capital refers to:

(a) Current Assets – Current Liabilities

(b) Current Liabilities – Current Assets

(d) Fixed Assets + Current Liabilities

9. If an organisation collaborates with another organisation, then it requires:

(a) More Fixed Capital

(b) Less Fixed Capital

(d) No Working Capital

10.Amount which is invested in fixed assets of the business enterprise, is called:

(a) Fixed Capital

(b) Working Capital

(d) Net Working Capital

Note: Answers are given below at the end.

ISC Commerce 12 Business Environment MCQs with Solved Answers

ISC Commerce 12 Sources of Finance MCQs with Solved Answers

(Question 11 to 15)

11.Fixed capital is also known as :

(a) Block capital

(b) Working Capital

(d) Net Working Capital

12.Working capital is also known as :

(a) Block capital

(b) Fixed Capital

(d) Reserve Capital

13.Those shares which are issued out of accumulated or undistributed profits of the company, free of cost, to the existing shareholders, is called…

(a) Equity Shares

(b) Bonus Shares

(d) Sweat Equity Shares

14. Share issue by a company to its directors and/or employees at a price less than the market price, for consideration other than cash, is called….

(a) Equity Shares

(b) Bonus Shares

(d) Sweat Equity Shares

15. The process of retaining a part of net profits over years and reinvesting the same is:
(a) Public deposits
(b) Retained earnings
(c) Factoring
(d) Capitalization of reserves

Note: Answers are given below at the end.

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ISC Commerce 12 Sources of Finance MCQs with Solved Answers

(Question 16 to 20)

16 A company can raise fixed capital in the form of:
(a) Equity shares
(b) Cash credit
(c) Factoring
(d) Bank overdraft

(e) Preference share

(f) a and e

17. Working capital has two concepts, gross working Capital and:
(a) Zero
(b) Net working Capital
(c) Cumulative working Capital
(d) Outstanding working Capital

18. Requirement of More working capital in case of ….

a) Trading concern
(b) Manufacturing concern
(c) Small scale operations
(d) Lean season,

19. Requirement of Less working capital in case of ….

a) Trading concern
(b) Manufacturing concern
(c) Large scale operations
(d) Peak season

20. True/False, give reason in support of your answer.
(i) Companies with higher growth potential pay lower dividends.
(ii) An ‘Advertising agency’ needs to have large fixed capital.
(iii)Trading on equity takes place when ROI is less than the rate of interest.
(iv) Capital budgeting decisions are very crucial for any business.
(v) If cash flow position of a company is weak more debt financing is not
recommended.

Note: Answers are given below at the end.

ISC Final Accounts of Companies MCQs With Solved Answer

Answer – Question Number 1 To 10

1. Answer- (e) All of these

2. Answer- (e) All of these

3. Answer- (e) Borrow funds from relatives

4. Answer- (c) Preference Share Capital

5. Answer-(d) All of these

6. Answer- (c) Higher Earning Per Share

7. Answer- (d) Equity Share Capital

8. Answer- (a) Current Assets – Current Liabilities

9. Answer- (b) Less Fixed Capital

10. Answer-(a) Fixed Capital

ISC Commerce 12 Sources of Finance MCQs with Solved Answers

Answer – Question Number 11 To 20

11. Answer-(a) Block capital

12.Answer- (c) Revolving capital

13. Answer- (b) Bonus Shares

14. Answer- (d) Sweat Equity Shares

15. Answer- (b) Retained earnings

16.Answer- (f) a and e

17. Answer- (b) Net working Capital

18. Answer- (b) Manufacturing concern

19. Answer-a) Trading concern

20. Answer-

(i) True because it needs funds for expansion/growth of company.
(ii) False because it is a service Co. & need not maintain any inventory.
(iii)False because E.P.S. will be low. ROI should be more than rate of interest.
(iv) True because they are irreversible.
(v) True. It will be difficult for a company to pay interest on time, hence more
risk.

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