Quiz on Sources of Business Finance

What is the primary purpose of business finance?

• To procure funds for business operations

• To pay taxes

• To increase employee salaries

• To invest in real estate

Which of the following is a long-term source of finance?

• Trade credit

• Commercial paper

• Debentures

• Bank overdraft

What type of capital is required for purchasing fixed assets?

• Retained earnings

• Fixed capital

• Equity capital

• Working capital

Which source of finance is considered an internal source?

• Public deposits

• Retained earnings

• Debentures

• Bank loans

What is trade credit?

• A loan from a bank

• Credit extended by one trader to another

• Investment in shares

• A type of lease agreement

Which of the following is a characteristic of equity shares?

• No voting rights

• Guaranteed returns

• Ownership in the company

• Fixed dividend payment

What is a major limitation of retained earnings?

• It is a guaranteed source of income

• It may cause dissatisfaction among shareholders

• It is easy to access

• It is a permanent source of funds

Which of the following is a short-term source of finance?

• Commercial paper

• Public deposits

• Lease financing

• Equity shares

What is the main advantage of factoring?

• It is a government scheme

• It provides long-term financing

• It helps in debt collection

• It requires no documentation

Which of the following is NOT a source of borrowed funds?

• Retained earnings

• Trade credit

• Bank loans

• Debentures