Sources of Finance Quiz - CBSE Class 12 Business Studies

Free practice quiz: Sources of Finance (CBSE Class 12 Business Studies). 19 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

This CBSE Class 12 Business Studies practice quiz has 19 multiple-choice questions on Sources of Finance, and 19 of them come with an explanation. Try the 5 sample questions below (tap an option to check yourself), then play the full quiz online. No sign-up needed.

Sample questions

1. Which of the following is a primary source of finance?

   1. Bank loans
   2. Equity shares
   3. Debentures
   4. Public deposits
   Show answer

   Answer: B. Equity shares

   Equity shares are a primary source of finance as they involve raising funds directly from owners of the business, while the other options are forms of borrowed or secondary sources of finance.

2. What is the primary advantage of using retained earnings as a source of finance?

   1. No dilution of control
   2. Immediate availability
   3. Tax benefits
   4. Secured funding
   Show answer

   Answer: A. No dilution of control

   Retained earnings allow a business to use its own profits for funding without diluting the control of existing shareholders.

3. Which source of finance does not incur any obligation to repay?

   1. Loans
   2. Equity share capital
   3. Debentures
   4. Trade credit
   Show answer

   Answer: B. Equity share capital

   Equity share capital represents ownership in the company and does not require repayment, as opposed to loans and debentures which are obligations.

4. What is a characteristic feature of public deposits?

   1. They are negotiable instruments
   2. They attract a high rate of interest
   3. They are always secured
   4. They have a fixed maturity
   Show answer

   Answer: D. They have a fixed maturity

   Public deposits usually come with a fixed maturity period wherein the organization agrees to repay the depositors at a specific time.

5. Which factor is crucial in choosing a source of finance?

   1. Control of ownership
   2. Interest rates
   3. Funds required
   4. All of the above
   Show answer

   Answer: D. All of the above

   When selecting a source of finance, businesses must consider various factors, including control of ownership, interest rates, and the amount of funds required.

More questions in this quiz

Answers and explanations are in the full quiz.

1. What are debentures primarily used for?
2. Which of the following is considered a short-term source of finance?
3. What is the cost of equity in finance?
4. Which source of finance requires regular interest payments?
5. What is venture capital?
6. What is the term for the potential loss of control when using external finance?
7. Which financial source would typically have the highest cost?
8. In financial management, which concept refers to funding for projects that yield benefits over time?
9. Which of the following reflects a long-term source of finance?
10. Which of the following options is not generally a source of short-term finance?
11. Which type of financing allows firms to increase their purchasing power?
12. What distinguishes a financial lease from an operating lease?
13. Which of the following is a drawback of equity financing?
14. What is the primary disadvantage of raising funds through public deposits?

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