[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?
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.
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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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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.