It is a negotiable instrument and can be traded freely like any other security. Business finance refers to the money required for carrying out business activities. Underutilized cash Answer: They are given some preferences because they are not given voting rights. IAS 1 sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. Answer: Nature of business and speed of sales turnover. Answer: WIPRO and ICICI, Question 14. Who regulates the acceptance of public deposits? ... Low is referenced relative to the average fund balance. A cash flow statement is designed to report the actual inflow and outflow of cash during a given time period for a person; it includes current income and cash payments. There are four factors required for any production: land, labour, capital and entrepreneur. Question 16. Question 3. assets of the company can be mortgaged in favor of debenture holders. (c) Fluctuating capital of the company (d) Loan capital of the company Explain trade credit and bank credit as sources of short term finance for business enterprises. Classes of Mutual Fund Shares Many mutual fund shares are classified according to the services provided the shareholders or distribution arrangements, with different fees and expenses and a different payment schedule that apply to each class . Discuss its merits and demerits. They receive annual interest/ benefits (VIP status or free passes) regardless of whether or not the business is making money. Write a note on international sources of finance. What do you mean by discounting of bills of exchange? Question 21. It provides added service: maintenance and upgrading. It is the basic distinction between a debenture and a share. Definition: Replacement cost is the amount of money required to replace an existing asset with an equally valued or similar asset at the current market price. Answer: (a) Fixed Capital and Working Capital Answer: The Lessors. It never makes lessee the owner of the asset. Short term lending may be in the form of: The rate of interest charged on medium-term bank lending to large companies will be a set margin, with the size of the margin depending on the credit standing and risk of the borrower. That is, how efficiently a business utilizes its short term assets to meet its day-to-day cash requirements. This is considered the "Purchase Method" whereupon fund balance is reserved for the amount of inventory. Equity is the source of the funds required to create assets to run and grow a business. (c) Executives of the company (d) Guardian of the company Answer: Given below are three financial institutions along with their objectives: Question 6. Simple documentations makes it easier to finance assets. Answer: Different types of preference shares are discussed below: Question 2. The Capitalization Limit. (b) Participate in the management of the organization (a) Fixed capital of the company (b) Permanent capital of the company However, it is true that the use of retained earnings as a source of funds does not lead to a payment of cash. In lieu of these preferential rights, their voting rights are taken i.e. It is calculated by dividing the total value of all the assets in a portfolio, minus all its liabilities. It is a medium term fund. Used to fund long-term or future needs. It reduces initial capital for (new) businesses. New companies need expensive equipments to run the business: office, equipment leasing from larger companies like Apple. (d) Transfer the goods from one place to another Explain different types of preference shares which can be issued by a company. Question 3. Question 5. The following are a few major types of assets. It does not have any flexibility with regard to repayments. What are retained earnings? Finance is called ‘life blood of a business’. Typically only companies with high credit ratings and creditworthiness issue commercial paper. An asset is a resource that you own or control that is expected to produce future economic value. List sources of raising long-term and short term finance. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Short Answer Type Questions Without non-recourse factoring, the company will still have to absorb losses. Identifying non-operating assets is an important step when determining the current value of a company since such assets are often left out when calculating the net worth of a business based on its earnings potential. A lessee agreement imposes restrictions on usage of assets. Activities involving obtaining necessary funds to purchase long-term assets, repay existing obligations, and provide a return for owners are referred to as: A) financing activities B) operating activities C) investing activities D) planning activities Answer: A Difficulty: Easy 10. (a) The bank performs three types of functions namely, assistance to other financial institutions, direct assistance to industrial concerns and promotion and coordination of financial technique service. Under the factoring arrangement, the factor ‘ risk capital as it bears maximum risk fees when you buy and sell shares cost! Loss incurring firm has no source called retained profits if there are four factors for... ’ success to reuse it ’ s investment adviser assets or resources controlled by the directors and gives you access! Of the company, the asset is equal to the economic impact of.... 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