[Business Studies MCQs, Business Finance, Financial Management, AHSEC, CBSE, Class 12, Objective Questions and Answers]
Business Studies Class 12 MCQs
Chapter 9: Business Finance
Multiple Choice Questions and Answers
OBJECTIVE
QUESTIONS (1 MARK)
1. Define
Financial Management.
Ans: Business Finance or Financial management
refers to that part of the management activity which is concerned with the
planning, raising, controlling and administration of the funds used in the
business. Its main objective is to use the funds of the business in the most
appropriate way.
2. What is
meant by Financial Planning?
Ans: Financial Planning is the process of
estimating the capital required and determining its composition. It is the
process of framing financial policies in relation to procurement, investment
and administration of funds of an enterprise.
3. What
are the two types of capital?
Ans: Fixed Capital and Working Capital
4. What is
Working Capital?
Ans: The capital required for day to day
operations of the business is called Working capital.
5. State
the difference between gross working capital and net working capital.
Ans: Gross working capital is the sum/
aggregate of the current assets, whereas Net working capital = Current assets –
current liabilities.
6. How is
working capital determined? 2022
Ans: Working Capital is calculated as: Net
working capital= current assets – current liabilities. If current liabilities
are more than current assets then working capital becomes negative.
7. Give
the second name for fixed asset management.
Ans: Investment Decision or capital budgeting
decision
8. Mention
two components of ownership funds.
Ans: Share Capital and Reserve & Surplus.
9. A
decision is taken to raise money for long term capital needs of the business
from certain sources. What is this decision called? 2018
Ans: Finance decision
10. Name
the concept which increases the return on equity shares with a change in the
capital structure of a company.
Ans: Trading on Equity
11. State
why working capital needs for a ‘service industry’ are different from that of a
manufacturing industry?
Ans: Service industry need short term capital
while manufacturing industry need long term capital
12. A
decision is taken to distribute a certain portion of the profit after tax among
the shareholders. What is this decision called?
Ans: Dividend decision
13. Name
the financial decision which affects the liquidity as well as profitability of
a business.
Ans: Short term investment decision
14. “Fixed
capital decisions involve more risk”. How? 2018
Ans: Because it is invested in depreciable
fixed assets.
16. Which
is the most costly capital for a company?
Ans: Working Capital
17. A
decision is taken to raise money for long term capital needs of the business
from certain sources. What is this decision called?
Ans: Capital Structure Decision
18. What
is the other name of long term investment decision?
Ans: A long term Investment decision is called
capital budgeting decision.
19. State
the decisions involved in financial management. 2015
Ans: a) Investment decision b) Financing
decision c) Dividend decision
20. State
the primary objective of financial management.
Ans: To maximize the shareholders wealth.
21. What
is meant by capital budgeting decision? 2017
Ans: A long term Investment decision is called
capital budgeting decision.
22. State
twin objectives of financial planning.
Ans: a) to ensure availability of fund
whenever required. b) To see that the firm does not raise funds unnecessarily.
23. What
is capital structure?
Ans: Capital structure is the relative
proportion of different sources of long term finance.
24. What is disinvestment? 2013, 2014
Ans: Disinvestment means government
selling its profit or loss making venture's stack to public through an IPO or
to private company on auction basis.
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ALSO READ (AHSEC ASSAM BOARD CLASS 12)
1. AHSEC CLASS 12 BUSINESS STUDIES CHAPTERWISE NOTES
2. AHSEC CLASS 12 BUSINESS STUDIES QUESTION PAPERS (FROM 2012 TILL DATE)
3. AHSEC CLASS 12 BUSINESS STUDIES SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)
4. AHSEC CLASS 12 BUSINESS STUDIES IMPORTANT QUESTIONS
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