NCERT Solutions For Class 11 Business Studies Sources of Business Finance

Free PDF download of NCERT Solutions for Class 11 Business Studies Chapter 8 Sources of Business Finance solved by Expert Teachers as per NCERT (CBSE) Book guidelines. All Chapter wise Questions with Solutions to help you to revise complete Syllabus and Score More inations.


I. Multiple Choice Questions Tick (?) the correct answer out of the given alternatives: Question 1. Equity shareholders are called: (a) Owners of the company (b) Partners of the company (c) Executives of the company (d) Guardian of the company Question 2.The term ‘redeemable’ is used for (a) Preference shares (b) Commercial paper (c) Equity shares (d) Public deposits Question 3. Funds required for purchasing current assets is an example of (a) Fixed capital requirement (b) Ploughing back of profits (c) Working capital requirement (d) Lease financing Question 4. ADRs are issued in (a) Canada (b) China (c) India (d) USA Question 5. Public deposits are the deposits that are raised directly from (a) The public (b) The directors (c) The auditors (d) The owners Question 6. Under the lease agreement, the lessee gets the right to (a) Share profits earned by the lessor (b) Participate in the management of the organization (c) Use the asset for a specified period (d) Sell the assets Question 7. Debentures represent (a) Fixed capital of the company (b) Permanent capital of the company (c) Fluctuating capital of the company (d) Loan capital of the company Question 8. Under the factoring arrangement, the factor (a) Produces and distributes the goods or services (b) Makes the payment on behalf of the client (c) Collects the client’s debt or account receivables (d) Transfer the goods from one place to another Question 9. The maturity period of a commercial paper usually ranges from (a) 20 to 40 days (b) 60 to 90 days (c) 120 to 365 days (d) 90 to 364 days Question 10. Internal sources of capital are those that are (а) Generated through outsiders such as suppliers (b) Generated through loans from commercial banks (c) Generated through issue of shares (d) Generated within the business Answers: 1. (a) 2. (a) 3. (c) 4.(d) 5.(a) 6. (c) 7. (d) 8. (c) 9. (d) 10. (d)

NCERT Solutions For Class 11 Business Studies Sources of Business Finance

II. Short Answer Type Questions Question 1. What is business finance? Why do businesses need funds? Explain. Answer: Business is concerned with production and distribution of goods and services for the satisfaction of need of society. A business cannot function unless adequate funds are made available to it. The need of fund arises from the stage when an entrepreneur makes a decision to start payday loans ND a business. Some funds are needed immediately. The financial need of a business can be categorized in the following ways:

  • Fixed Capital Requirements: In order to start business, funds are required to purchase fixed assets like land and building, plant and machinery, and furniture and fixures. This is known as fixed capital requirement of an enterprise.
  • Working Capital Requirements: The financial requirements of an enterprise do not end with the procurement of fixed assets. No matter how small or large business, it need funds for its day-to-day operations. This is known as working capital of an enterprise which is used for holding current assets like stock, bill receivable, current expenses etc. Therefore, a business needs funds to meet its fixed as well as working capital requirements.

Question 2. List sources of raising long-term and short term finance. Answer: Sources of raising long term and short term finance are shown in the chart given below: