Unit 1: Nature and Purpose of Business
MCQs
- Business activities are primarily divided into:
a) Economic and non-economic activities
b) Trade and commerce
c) Profit-making and non-profit-making activities
d) Primary and secondary industries
Answer: a) Economic and non-economic activities - Which of the following is NOT a characteristic of business?
a) Profit motive
b) Risk involvement
c) Manufacturing only
d) Economic activity
Answer: c) Manufacturing only - The primary objective of a business is:
a) Gaining monopoly
b) Maximizing profits
c) Serving society
d) Employee satisfaction
Answer: b) Maximizing profits - Which is an example of an economic activity?
a) Playing for leisure
b) Teaching in a school for salary
c) Cooking for family
d) Volunteering at a charity
Answer: b) Teaching in a school for salary - A person who runs a business for profit is called:
a) An employee
b) An entrepreneur
c) A consumer
d) A trader
Answer: b) An entrepreneur - Which of the following is a feature of commerce?
a) Manufacturing goods
b) Risk-free operations
c) Exchange of goods and services
d) Agricultural activity
Answer: c) Exchange of goods and services - Commerce is divided into:
a) Primary and secondary sectors
b) Internal and external trade
c) Industry and business services
d) Banking and manufacturing
Answer: b) Internal and external trade - Internal trade includes:
a) Import and export
b) Wholesale and retail trade
c) Manufacturing and distribution
d) Banking and insurance
Answer: b) Wholesale and retail trade - Which of the following is an auxiliary to trade?
a) Manufacturing
b) Farming
c) Insurance
d) Construction
Answer: c) Insurance - The primary industry involves:
a) Mining and quarrying
b) Manufacturing steel
c) Selling groceries
d) Providing IT services
Answer: a) Mining and quarrying - Which of these is NOT a type of trade?
a) Wholesale
b) Retail
c) Manufacturing
d) External trade
Answer: c) Manufacturing - Business activities include:
a) Providing goods and services to satisfy human needs
b) Always working for charity
c) Involvement in criminal activities
d) None of the above
Answer: a) Providing goods and services to satisfy human needs - What differentiates business from profession and employment?
a) Higher income
b) Ownership and profit motive
c) Regular work hours
d) Lack of risk
Answer: b) Ownership and profit motive - Business risks arise due to:
a) Certainty of profit
b) Factors beyond control
c) Government guarantees
d) Fixed demand
Answer: b) Factors beyond control - “Auxiliaries to trade” include all EXCEPT:
a) Insurance
b) Transportation
c) Manufacturing
d) Warehousing
Answer: c) Manufacturing - The primary objective of a business is to:
a) Help the environment
b) Create employment
c) Make profit
d) Provide free goods
Answer: c) Make profit - Commerce can be broadly classified into:
a) Production and consumption
b) Banking and warehousing
c) Trade and auxiliaries to trade
d) Goods and services
Answer: c) Trade and auxiliaries to trade - Business ethics is related to:
a) Maximizing profits at all costs
b) Maintaining honesty and fairness in business
c) Avoiding risk altogether
d) Providing cheap products to consumers
Answer: b) Maintaining honesty and fairness in business - Risk is an essential characteristic of business because:
a) It ensures consistent profit
b) It involves uncertainty
c) It eliminates competition
d) It guarantees success
Answer: b) It involves uncertainty - The role of profit in business includes:
a) Indicating efficiency of operations
b) Serving as a measure of wealth
c) Encouraging unethical practices
d) Ensuring customer satisfaction
Answer: a) Indicating efficiency of operations
Unit 2: Forms of Business Organizations
MCQs
- The simplest and most common form of business organization is:
a) Partnership
b) Sole proprietorship
c) Cooperative society
d) Company
Answer: b) Sole proprietorship - The main feature of a sole proprietorship is:
a) Limited liability
b) Single ownership
c) Separate legal identity
d) Perpetual existence
Answer: b) Single ownership - What is a major limitation of sole proprietorship?
a) Lack of direct control
b) Complex decision-making process
c) Limited capital
d) Heavy government regulations
Answer: c) Limited capital - A partnership is formed by:
a) Written agreement only
b) Oral or written agreement
c) Government authorization
d) Automatic consent
Answer: b) Oral or written agreement - The minimum number of partners required to form a partnership is:
a) 1
b) 2
c) 5
d) 7
Answer: b) 2 - In a partnership, the liability of partners is:
a) Limited to their investment
b) Unlimited
c) Limited for active partners only
d) Limited for sleeping partners only
Answer: b) Unlimited - A partnership registered under the Indian Partnership Act is:
a) A private company
b) A public limited company
c) A legal entity
d) Not a separate legal entity
Answer: d) Not a separate legal entity - Which type of partnership is formed for a specific purpose or time?
a) Active partnership
b) General partnership
c) Limited liability partnership
d) Particular partnership
Answer: d) Particular partnership - A dormant partner is also known as:
a) Active partner
b) Nominal partner
c) Sleeping partner
d) Secret partner
Answer: c) Sleeping partner - The Hindu Undivided Family business is governed by:
a) Hindu Marriage Act
b) Hindu Succession Act
c) Indian Companies Act
d) Indian Partnership Act
Answer: b) Hindu Succession Act - The person managing the Hindu Undivided Family business is called:
a) Managing Director
b) Proprietor
c) Karta
d) Trustee
Answer: c) Karta - Cooperative societies are based on the principle of:
a) Profit maximization
b) Voluntary association and service
c) Private ownership
d) Individual decision-making
Answer: b) Voluntary association and service - A cooperative society is required to be registered under:
a) Companies Act
b) Cooperative Societies Act
c) Contract Act
d) Partnership Act
Answer: b) Cooperative Societies Act - The liability of members in a cooperative society is:
a) Unlimited
b) Limited to their capital contribution
c) Joint and several
d) None of the above
Answer: b) Limited to their capital contribution - A private company must have a minimum of:
a) 2 members
b) 5 members
c) 7 members
d) 50 members
Answer: a) 2 members - The maximum number of members in a private company is:
a) 20
b) 50
c) 100
d) 200
Answer: d) 200 - A company that has a single owner and acts as a legal entity is called:
a) Public company
b) Private company
c) One Person Company
d) Partnership firm
Answer: c) One Person Company - The process of forming a company does NOT include:
a) Promotion
b) Registration
c) Memorandum of Association
d) Partnership deed
Answer: d) Partnership deed - Which document defines the scope of a company’s operations?
a) Articles of Association
b) Memorandum of Association
c) Prospectus
d) Share certificate
Answer: b) Memorandum of Association - The choice of business organization depends on factors such as:
a) Market size only
b) Capital requirements and risk involvement
c) Government rules only
d) The number of employees
Answer: b) Capital requirements and risk involvement
Unit 3: Public, Private, and Global Enterprises
MCQs
- A public sector enterprise is owned by:
a) Private individuals
b) State or Central Government
c) Foreign investors
d) Partnership firms
Answer: b) State or Central Government - Which of the following is NOT a feature of a public sector enterprise?
a) Government ownership
b) Profit-oriented motive
c) Public accountability
d) Service motive
Answer: b) Profit-oriented motive - The main objective of private sector enterprises is:
a) Providing public services
b) Profit maximization
c) Reducing inequality
d) Promoting social welfare
Answer: b) Profit maximization - The key characteristic of a departmental undertaking is:
a) Autonomy in decision-making
b) Owned and managed by a ministry
c) Limited government control
d) Existence as a separate legal entity
Answer: b) Owned and managed by a ministry - Which of the following is an example of a departmental undertaking?
a) Indian Railways
b) ONGC
c) Life Insurance Corporation (LIC)
d) Tata Steel
Answer: a) Indian Railways - A statutory corporation is established under:
a) Company law
b) A special act of Parliament or State Legislature
c) The Partnership Act
d) Cooperative Societies Act
Answer: b) A special act of Parliament or State Legislature - Which of the following is a statutory corporation?
a) Indian Oil Corporation
b) State Bank of India
c) Air India
d) Reserve Bank of India
Answer: d) Reserve Bank of India - A government company is defined under:
a) Companies Act, 2013
b) Partnership Act, 1932
c) Contract Act, 1872
d) Cooperative Societies Act, 1912
Answer: a) Companies Act, 2013 - The minimum government shareholding in a government company is:
a) 25%
b) 50%
c) 51%
d) 75%
Answer: c) 51% - The main feature of a global enterprise is:
a) Limited geographical presence
b) Operating in multiple countries
c) Sole ownership by the government
d) Focusing only on local markets
Answer: b) Operating in multiple countries - Which of the following is NOT a feature of global enterprises?
a) Huge capital investment
b) Centralized management
c) Use of advanced technology
d) Restricted to one country
Answer: d) Restricted to one country - Which of the following is an example of a global enterprise?
a) Infosys
b) Apple Inc.
c) SBI
d) Dabur
Answer: b) Apple Inc. - A joint venture is formed when:
a) One company acquires another
b) Two or more companies collaborate for a common goal
c) A company goes public
d) An enterprise is run solely by the government
Answer: b) Two or more companies collaborate for a common goal - Which of these is NOT an advantage of a joint venture?
a) Sharing of resources
b) Limited risk
c) Full control by one partner
d) Access to new markets
Answer: c) Full control by one partner - Public-Private Partnership (PPP) aims to:
a) Reduce private sector involvement in infrastructure
b) Increase public sector monopoly
c) Provide better services through shared responsibilities
d) Eliminate government participation in businesses
Answer: c) Provide better services through shared responsibilities - Which of the following is a key feature of a Public-Private Partnership?
a) Complete private ownership
b) Risk-sharing between public and private sectors
c) No involvement of private investment
d) Sole focus on profits
Answer: b) Risk-sharing between public and private sectors - A drawback of public sector enterprises is:
a) Low social accountability
b) High operational efficiency
c) Bureaucratic interference
d) Lack of infrastructure
Answer: c) Bureaucratic interference - Which of the following is NOT a public sector objective?
a) Providing essential services
b) Generating employment
c) Ensuring regional balance
d) Maximizing profits
Answer: d) Maximizing profits - The private sector plays a key role in:
a) Providing free public services
b) Driving innovation and competition
c) Enforcing government policies
d) Ensuring social welfare
Answer: b) Driving innovation and competition - Public sector enterprises are criticized for:
a) Efficient management
b) Quick decision-making
c) Red tape and inefficiency
d) Generating high profits
Answer: c) Red tape and inefficiency
Unit 4: Business Services
MCQs
- Business services primarily deal with:
a) Manufacturing products
b) Providing support and facilities to businesses
c) Agricultural activities
d) Mining and extraction
Answer: b) Providing support and facilities to businesses - Which of the following is NOT a type of business service?
a) Banking
b) Warehousing
c) Insurance
d) Farming
Answer: d) Farming - Which of the following is a feature of business services?
a) Tangibility
b) Inseparability
c) Ownership transfer
d) Homogeneity
Answer: b) Inseparability - The main role of banking services is to:
a) Manufacture goods
b) Facilitate trade and commerce
c) Provide farming tools
d) Manage transportation
Answer: b) Facilitate trade and commerce - Which type of bank account is most suitable for frequent transactions?
a) Fixed deposit account
b) Recurring deposit account
c) Current account
d) Savings account
Answer: c) Current account - A recurring deposit account is primarily used for:
a) Daily transactions
b) Large deposits
c) Saving fixed amounts periodically
d) Obtaining loans
Answer: c) Saving fixed amounts periodically - Which of the following is an advantage of e-banking?
a) Manual banking processes
b) Limited accessibility
c) 24/7 service availability
d) High operational cost
Answer: c) 24/7 service availability - What is a key feature of insurance services?
a) Transfer of risk
b) Guaranteed profit
c) Risk creation
d) Ownership transfer
Answer: a) Transfer of risk - Which of the following is NOT a principle of insurance?
a) Utmost good faith
b) Insurable interest
c) Doctrine of indemnity
d) Unlimited liability
Answer: d) Unlimited liability - The principle of indemnity applies to:
a) Life insurance
b) Marine insurance
c) Fire and general insurance
d) All types of insurance
Answer: c) Fire and general insurance - Marine insurance covers:
a) Risks related to air transport
b) Risks related to sea transport
c) Risks related to agriculture
d) Risks related to factories
Answer: b) Risks related to sea transport - The principle of utmost good faith in insurance means:
a) Insurer can hide important details
b) Policyholders must disclose all relevant information
c) Risk is borne only by the insurer
d) Premium is fixed arbitrarily
Answer: b) Policyholders must disclose all relevant information - Postal services include:
a) Manufacturing goods
b) Registered post and speed post services
c) Providing bank loans
d) Offering insurance policies
Answer: b) Registered post and speed post services - Which of the following is NOT a type of digital payment?
a) UPI
b) Debit card
c) Fixed deposit
d) Mobile wallets
Answer: c) Fixed deposit - Warehousing provides which type of utility?
a) Form utility
b) Place utility
c) Time utility
d) Ownership utility
Answer: c) Time utility - A cash credit facility is provided by banks for:
a) Fixed deposits
b) Short-term working capital needs
c) Personal loans
d) Long-term investments
Answer: b) Short-term working capital needs - Which of these is NOT a type of insurance?
a) Life insurance
b) Health insurance
c) Product insurance
d) Fire insurance
Answer: c) Product insurance - E-banking involves:
a) Use of digital platforms for banking services
b) Manual handling of cash transactions
c) Paper-based transaction methods
d) Banking without any technology
Answer: a) Use of digital platforms for banking services - Business services are crucial for:
a) Production of goods only
b) Facilitating trade and commerce
c) Employing labor directly
d) Limiting business risks
Answer: b) Facilitating trade and commerce - A key role of transportation in business services is to:
a) Store goods
b) Reduce demand
c) Deliver goods to the market
d) Manufacture products
Answer: c) Deliver goods to the market
Unit 5: Emerging Modes of Business
MCQs
- E-business refers to:
a) Traditional business methods
b) Conducting business using the internet and digital platforms
c) Manufacturing electronic products
d) Using physical stores for sales
Answer: b) Conducting business using the internet and digital platforms - Which of the following is NOT a characteristic of e-business?
a) Global reach
b) Reduced transaction cost
c) Limited to local markets
d) Convenience
Answer: c) Limited to local markets - The primary advantage of e-business is:
a) Higher operational costs
b) Limited customer access
c) Increased convenience for customers
d) Dependency on physical infrastructure
Answer: c) Increased convenience for customers - Which of the following is an example of e-business?
a) Retail store sales
b) Online shopping platforms
c) Factory production
d) Paper-based inventory management
Answer: b) Online shopping platforms - B2C (Business-to-Consumer) transactions are exemplified by:
a) A wholesaler selling to retailers
b) A manufacturer selling directly to consumers online
c) Two companies collaborating
d) A supplier providing raw materials to a factory
Answer: b) A manufacturer selling directly to consumers online - B2B (Business-to-Business) e-commerce involves:
a) Selling products to end consumers
b) Transactions between two businesses
c) Government-to-business interactions
d) Employee-to-business transactions
Answer: b) Transactions between two businesses - Which of the following is NOT an example of digital payment?
a) UPI
b) Credit card
c) Cash on delivery
d) Mobile wallets
Answer: c) Cash on delivery - E-procurement involves:
a) Online purchasing of goods and services by businesses
b) Manual ordering of supplies
c) Delivering goods physically to customers
d) Cash transactions at a retail store
Answer: a) Online purchasing of goods and services by businesses - What does e-tailing refer to?
a) Online retailing of goods and services
b) Selling through physical stores
c) Import and export of goods
d) Wholesale business operations
Answer: a) Online retailing of goods and services - Which of the following is a limitation of e-business?
a) Limited market reach
b) High cost of digital transactions
c) Dependency on technology and internet connectivity
d) Lack of flexibility
Answer: c) Dependency on technology and internet connectivity - Which of the following is an ethical concern in e-business?
a) Increased competition
b) Privacy and data security issues
c) Faster delivery of goods
d) Lower operational costs
Answer: b) Privacy and data security issues - A payment gateway is:
a) A bank providing loans
b) A service that facilitates online payments between buyers and sellers
c) A physical transaction method
d) A form of digital currency
Answer: b) A service that facilitates online payments between buyers and sellers - E-business helps reduce operational costs by:
a) Increasing the number of physical stores
b) Eliminating intermediaries and paper-based processes
c) Increasing inventory size
d) Decreasing the quality of products
Answer: b) Eliminating intermediaries and paper-based processes - A key feature of e-business is:
a) Limited operational hours
b) High dependency on cash
c) 24/7 availability
d) Localized sales
Answer: c) 24/7 availability - M-commerce refers to:
a) E-commerce conducted using mobile devices
b) Manufacturing commerce products
c) Manual commerce processes
d) Government regulations for businesses
Answer: a) E-commerce conducted using mobile devices - Which of the following is a benefit of e-business?
a) Time constraints
b) Increased geographical reach
c) Limited customer interaction
d) High transaction cost
Answer: b) Increased geographical reach - C2C (Consumer-to-Consumer) e-commerce is best demonstrated by:
a) A company selling directly to customers
b) Customers selling products to other customers via online platforms
c) Business-to-government transactions
d) Large-scale wholesale operations
Answer: b) Customers selling products to other customers via online platforms - Which of the following is an example of outsourcing in e-business?
a) Developing software in-house
b) Hiring external IT services for website maintenance
c) Building physical warehouses
d) Delivering goods through personal vehicles
Answer: b) Hiring external IT services for website maintenance - E-business eliminates the need for:
a) Internet services
b) Physical infrastructure for storing data
c) Face-to-face interaction in transactions
d) Technology investment
Answer: c) Face-to-face interaction in transactions - E-business differs from traditional business in terms of:
a) Focus on physical stores
b) Dependency on paper-based processes
c) Utilization of electronic and online channels
d) Limited customer reach
Answer: c) Utilization of electronic and online channels
Unit 6: Social Responsibility of Business and Business Ethics
MCQs
- Social responsibility in business refers to:
a) Maximizing profits at all costs
b) Legal and ethical obligations towards society
c) Increasing production only
d) Avoiding government regulations
Answer: b) Legal and ethical obligations towards society - Which of the following is NOT a reason for businesses to adopt social responsibility?
a) Social expectations
b) Profit maximization
c) Ethical obligations
d) Sustainability concerns
Answer: b) Profit maximization - Businesses are expected to protect the environment by:
a) Increasing industrial pollution
b) Implementing eco-friendly practices
c) Ignoring environmental laws
d) Reducing costs at the expense of nature
Answer: b) Implementing eco-friendly practices - Social responsibility towards employees includes:
a) Increasing working hours without benefits
b) Providing fair wages and safe working conditions
c) Exploiting their labor for higher profits
d) Reducing wages to minimize costs
Answer: b) Providing fair wages and safe working conditions - A business shows responsibility towards consumers by:
a) Misleading advertisements
b) Ensuring the quality and safety of products
c) Exploiting customers for profit
d) Ignoring customer complaints
Answer: b) Ensuring the quality and safety of products - Responsibility towards the government involves:
a) Evading taxes
b) Following laws and paying taxes regularly
c) Avoiding regulations
d) Reducing transparency
Answer: b) Following laws and paying taxes regularly - The primary role of business ethics is to:
a) Maximize business profits
b) Ensure fair and honest practices in business operations
c) Reduce competition
d) Promote unethical behavior
Answer: b) Ensure fair and honest practices in business operations - Which of the following is an element of business ethics?
a) Cheating customers
b) Transparency in operations
c) Corruption
d) Tax evasion
Answer: b) Transparency in operations - Businesses should prioritize social responsibility to:
a) Gain public trust and support
b) Reduce operational costs
c) Avoid paying taxes
d) Eliminate competitors
Answer: a) Gain public trust and support - Social responsibility towards the community includes:
a) Generating employment opportunities
b) Ignoring local issues
c) Polluting the environment
d) Avoiding social welfare activities
Answer: a) Generating employment opportunities - A business is fulfilling its ethical responsibility when it:
a) Produces low-quality goods
b) Reduces prices through unethical means
c) Adheres to fair trade practices
d) Engages in false advertising
Answer: c) Adheres to fair trade practices - Business ethics is based on:
a) Profit-only motives
b) Legal obligations and moral principles
c) Avoiding transparency
d) Exploiting natural resources
Answer: b) Legal obligations and moral principles - Which of the following groups is NOT a focus of business responsibility?
a) Consumers
b) Competitors
c) Employees
d) Investors
Answer: b) Competitors - Ethical business practices benefit the organization by:
a) Reducing trust among stakeholders
b) Enhancing the company’s reputation
c) Decreasing employee satisfaction
d) Increasing corruption
Answer: b) Enhancing the company’s reputation - Environmental protection as a responsibility of business includes:
a) Increasing carbon emissions
b) Promoting renewable energy use
c) Avoiding waste management practices
d) Ignoring climate change
Answer: b) Promoting renewable energy use - Social responsibility towards investors includes:
a) Hiding financial information
b) Providing accurate and transparent financial reports
c) Avoiding dividend payments
d) Misusing investor funds
Answer: b) Providing accurate and transparent financial reports - Which of the following is NOT a benefit of fulfilling social responsibility?
a) Enhanced brand image
b) Increased consumer loyalty
c) Higher costs due to ethical practices
d) Better employee retention
Answer: c) Higher costs due to ethical practices - Ethical businesses ensure their activities:
a) Exploit customers
b) Harm the environment
c) Benefit society and stakeholders
d) Are profit-driven only
Answer: c) Benefit society and stakeholders - Social responsibility helps businesses in:
a) Ignoring public concerns
b) Strengthening community relations
c) Reducing market competition
d) Avoiding ethical concerns
Answer: b) Strengthening community relations - The ultimate goal of social responsibility and ethics in business is to:
a) Maximize short-term profits
b) Promote sustainable growth and social welfare
c) Exploit natural and human resources
d) Ignore stakeholder interests
Answer: b) Promote sustainable growth and social welfare
Unit 7: Sources of Business Finance
MCQs
- Business finance refers to:
a) Managing business operations
b) Funds required for carrying out business activities
c) Creating new business ideas
d) Developing production techniques
Answer: b) Funds required for carrying out business activities - The capital contributed by owners in a business is called:
a) Borrowed funds
b) Retained earnings
c) Owner’s funds
d) Trade credit
Answer: c) Owner’s funds - Borrowed funds refer to:
a) Funds raised from the public
b) Funds obtained from external sources with an obligation to repay
c) Equity capital
d) Capital invested by promoters
Answer: b) Funds obtained from external sources with an obligation to repay - Which of the following is NOT an example of owner’s funds?
a) Equity shares
b) Preference shares
c) Retained earnings
d) Bank loans
Answer: d) Bank loans - Debentures represent:
a) Ownership capital
b) Borrowed capital
c) Reserves of the company
d) Working capital
Answer: b) Borrowed capital - Which of the following is a feature of equity shares?
a) Fixed rate of dividend
b) Voting rights
c) Redeemable after a fixed period
d) Priority in repayment during liquidation
Answer: b) Voting rights - Preference shares are called so because:
a) They are issued to preferred customers
b) They get preference in dividend payment and repayment during liquidation
c) They are always non-redeemable
d) They have the highest risk
Answer: b) They get preference in dividend payment and repayment during liquidation - Retained earnings refer to:
a) Dividends paid to shareholders
b) Profits reinvested in the business
c) Funds borrowed from banks
d) Cash held for emergencies
Answer: b) Profits reinvested in the business - Which of the following is NOT a source of borrowed funds?
a) Debentures
b) Public deposits
c) Loans from financial institutions
d) Equity shares
Answer: d) Equity shares - Trade credit is typically used for:
a) Long-term investments
b) Purchasing goods on credit from suppliers
c) Paying dividends
d) Buying fixed assets
Answer: b) Purchasing goods on credit from suppliers - Public deposits are:
a) Deposits made by the government
b) Loans raised from the general public by businesses
c) Capital invested by shareholders
d) Short-term funds provided by financial institutions
Answer: b) Loans raised from the general public by businesses - A loan provided by a financial institution is categorized as:
a) Owner’s funds
b) Borrowed funds
c) Retained earnings
d) Trade credit
Answer: b) Borrowed funds - Inter-Corporate Deposits (ICDs) are:
a) Loans extended by one company to another
b) Deposits made by customers in banks
c) Deposits held in savings accounts
d) Government grants to businesses
Answer: a) Loans extended by one company to another - What is the major advantage of equity shares?
a) Fixed dividends
b) Voting rights for shareholders
c) Priority in repayment
d) Tax exemption
Answer: b) Voting rights for shareholders - The interest on debentures is:
a) Paid only in profitable years
b) Compulsory, regardless of profits
c) Decided by shareholders
d) Not mandatory
Answer: b) Compulsory, regardless of profits - Which of the following is a long-term source of finance?
a) Commercial paper
b) Bank overdraft
c) Equity shares
d) Trade credit
Answer: c) Equity shares - Public deposits are more suitable for:
a) Large-scale industries requiring short-term funds
b) Small businesses with minimal capital requirements
c) Non-profit organizations
d) Private loans for individuals
Answer: a) Large-scale industries requiring short-term funds - Borrowed funds typically carry:
a) Voting rights
b) Obligation to pay interest
c) No repayment obligation
d) Higher dividends
Answer: b) Obligation to pay interest - The primary benefit of retained earnings is:
a) No obligation to repay or pay interest
b) High costs of procurement
c) Reduction in ownership capital
d) Fixed rate of return
Answer: a) No obligation to repay or pay interest - Which of the following factors influences the choice of a financing source?
a) Cost of funds
b) Nature of the business
c) Risk involved
d) All of the above
Answer: d) All of the above
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