Finance is an important subject of ASSEB/AHSEC Class 11 Commerce Stream Which helps us understand the role and management of money in our personal lives, businesses, and investments. For Class 11 students under AHSEC/ASSEB Chapter 1, Basics of Finance, serves as the foundation for grasping fundamental financial concepts.
![Class 11 Finance Chapter 1: Basics of Finance MCQs - [For AHSEC/ASSEB 1st Year]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEju-gTaS2H7NYTFDtaX7b-HKpsTYoz7uA0JTkeZIK9EALz_KfbQYMhc5fTG5nan9CS3su107MMnnqaynN_OkJiuAEFIYluzi9Bli0gphs7AraRWm8FN3mcs1fbtnSs5XuKAgGFxwrvBrJBS3DPyHuADMbnV_T1h8xPw_GyxMCllKDxvGER_RWOpBSdfyrBr/s16000-rw/Class%2011%20Finance%20Multiple%20Choice%20Questions%20MCQs.webp "Class 11 Finance Chapter 1: Basics of Finance MCQs - [For AHSEC/ASSEB 1st Year]")
In this post, we have compiled a set of important multiple-choice questions (MCQs) from Chapter 1. These questions are designed in accordance with the updated exam pattern, which includes a 40-mark objective section to be answered using OMR sheets. Practicing these MCQs will not only enhance your preparation but also deepen your understanding of key topics, enabling you to perform well in your exams.
AHSEC/ASSEB Class 11 Finance Chapter 1: Basics of Finance multiple-choice questions
What is finance often referred to as in a business concern?
a) Profit Maximization
b) Life Blood
c) Internal Control
d) Financial System
Answer: b) Life BloodWhich of the following is not a feature of finance?
a) Flow from surplus to deficit areas
b) Composing elements include markets and services
c) Always free of cost
d) Optimal mix of funds
Answer: c) Always free of costWhat does short-term finance generally cover?
a) Working capital requirements
b) Long-term investments
c) Debt repayment plans
d) Equity finance
Answer: a) Working capital requirementsWhat is a financial system primarily concerned with?
a) Resource destruction
b) Fund transfer
c) Production management
d) Loan defaults
Answer: b) Fund transferWhich of the following is an internal source of finance?
a) Venture capital
b) Retained earnings
c) Debentures
d) Bonds
Answer: b) Retained earningsWhat is 'equity finance'?
a) Borrowed money
b) Owned capital
c) Loan from banks
d) A government grant
Answer: b) Owned capitalWhat type of finance is required for more than five years?
a) Short-term finance
b) Medium-term finance
c) Long-term finance
d) Working capital finance
Answer: c) Long-term financeWhich of the following is not a function of finance?
a) Acquisition of funds
b) Channelization of funds
c) Increasing the cost of capital
d) Maximization of profit
Answer: c) Increasing the cost of capitalWhat is public finance primarily concerned with?
a) Individual savings
b) Government income and expenditure
c) Private firm financing
d) Household budgets
Answer: b) Government income and expenditureWho defined finance as “the provision of money at the time it is needed”?
a) Howard and Upton
b) Guthmann and Dougall
c) Bonneville and Deway
d) None of the above
Answer: d) None of the aboveWhich source of finance involves the issue of debentures?
a) Internal sources
b) Borrowed capital
c) Owned capital
d) Retained earnings
Answer: b) Borrowed capitalWhat type of finance is cash credit an example of?
a) Short-term finance
b) Medium-term finance
c) Long-term finance
d) Corporate finance
Answer: a) Short-term financeWhich of the following is a feature of a financial system?
a) Increases income disparity
b) Establishes linkage between savers and investors
c) Reduces liquidity in markets
d) Only supports private entities
Answer: b) Establishes linkage between savers and investorsWhich classification of finance includes venture capital?
a) Short-term finance
b) Public finance
c) Long-term sources of finance
d) Internal finance
Answer: c) Long-term sources of financeWhich of these is not an advantage of equity finance?
a) No interest burden
b) Reduces risk of bankruptcy
c) Regular payment of dividends
d) Long-term availability
Answer: c) Regular payment of dividendsWhich term refers to a short-term loan secured against invoices?
a) Factoring
b) Hire purchase
c) Lease finance
d) Overdraft
Answer: a) FactoringWhat is the primary objective of finance?
a) To create surplus funds
b) To help manage and raise money
c) To eliminate liabilities
d) To generate higher inflation
Answer: b) To help manage and raise moneyWhich type of finance is most commonly used for infrastructure development?
a) Short-term finance
b) Medium-term finance
c) Long-term finance
d) Private finance
Answer: c) Long-term financeWhich classification of finance is concerned with loans from financial intermediaries?
a) Direct finance
b) Indirect finance
c) Owned capital
d) Debt capital
Answer: b) Indirect financeWhat ensures the smooth functioning of a financial system?
a) High inflation
b) Well-integrated financial sub-systems
c) Deficit in financial resources
d) Elimination of all credit systems
Answer: b) Well-integrated financial sub-systemsWhat is the primary purpose of finance?
a) To increase debt
b) To manage, save, and raise money
c) To eliminate ownership
d) To create barriers for investors
Answer: b) To manage, save, and raise moneyWhich feature of finance refers to its flow from surplus areas to deficit areas?
a) Resource management
b) Flow of finance
c) Optimal mix
d) Internal controls
Answer: b) Flow of financeWhat is a defining characteristic of short-term finance?
a) Duration of less than one year
b) Borrowed capital
c) Venture capital
d) Tax-free income
Answer: a) Duration of less than one yearWhich of these is NOT classified as a source of owned capital?
a) Equity shares
b) Retained earnings
c) Debentures
d) Convertible debentures
Answer: c) DebenturesWhat type of finance is used for purchasing raw materials?
a) Medium-term finance
b) Long-term finance
c) Short-term finance
d) Equity finance
Answer: c) Short-term financeWhat is an example of internal financial control?
a) Taking loans from banks
b) Monitoring policies and procedures
c) Issuing debentures
d) Acquiring fixed assets
Answer: b) Monitoring policies and proceduresWho defined finance as “the arrangement of cash and credit”?
a) Howard and Upton
b) Bonneville and Deway
c) Guthmann and Dougall
d) Robinson
Answer: a) Howard and UptonWhich type of finance involves funding through the sale of securities directly to lenders?
a) Indirect finance
b) Direct finance
c) Equity finance
d) Public finance
Answer: b) Direct financeWhat does public finance focus on?
a) Individual borrowing
b) Government income and expenditure
c) Corporate funding
d) Family savings
Answer: b) Government income and expenditureWhat is an example of a financial market instrument?
a) Equity shares
b) Financial controls
c) Tax planning
d) Retained profits
Answer: a) Equity sharesWhich of the following is a feature of finance?
a) Irregular flow
b) Independent of economic theories
c) Includes financial institutions and markets
d) Limited to internal resources
Answer: c) Includes financial institutions and marketsWhat is the primary role of a financial system?
a) Stabilize inflation
b) Channelize funds
c) Eliminate markets
d) Reduce taxation
Answer: b) Channelize fundsWhat kind of capital involves issuing equity shares to the public?
a) Borrowed capital
b) Owned capital
c) Internal finance
d) Long-term finance
Answer: b) Owned capitalWhich source of finance is based on generating funds through financial intermediaries?
a) Direct finance
b) Indirect finance
c) Debt finance
d) Public finance
Answer: b) Indirect financeWhat type of finance is a loan secured by inventory?
a) Long-term finance
b) Indirect finance
c) Short-term finance
d) Internal finance
Answer: c) Short-term financeWhich of the following is an example of external finance?
a) Retained earnings
b) Venture capital
c) Internal savings
d) Sale of assets
Answer: b) Venture capitalWhat ensures a business’s long-term financial stability?
a) Borrowing only short-term loans
b) Using optimal mix of funds
c) Eliminating taxation
d) Selling physical assets
Answer: b) Using optimal mix of fundsWhich of these is a function of finance?
a) Asset acquisition
b) Eliminate liabilities
c) Resource destruction
d) Fund misallocation
Answer: a) Asset acquisitionWhich classification includes preference shares?
a) Short-term finance
b) Medium-term finance
c) Indirect finance
d) Internal finance
Answer: b) Medium-term financeWhat does “retained earnings” refer to?
a) Debt capital
b) Profit held for future use
c) Loan from financial institutions
d) Sale of securities
Answer: b) Profit held for future useWhich of the following is NOT a type of financial resource?
a) Bonds
b) Loans
c) Misallocated funds
d) Equity shares
Answer: c) Misallocated fundsWhat term describes funding raised through financial markets?
a) Equity finance
b) Direct finance
c) Public finance
d) Indirect finance
Answer: b) Direct financeWhich of these is NOT a purpose of finance?
a) Resource management
b) Increase liabilities
c) Channel funds
d) Support economic activities
Answer: b) Increase liabilitiesWhat does debt finance represent?
a) Borrowed funds
b) Owned capital
c) Retained profits
d) Sale of assets
Answer: a) Borrowed fundsWhich feature of finance involves efficient allocation of funds?
a) Flow of funds
b) Internal control
c) Composing elements
d) Debt management
Answer: a) Flow of fundsWhich is NOT a form of owned capital?
a) Retained earnings
b) Venture funds
c) Borrowed loans
d) Equity shares
Answer: c) Borrowed loansWhat is the primary objective of corporate finance?
a) Debt management
b) Maximize shareholder value
c) Minimize equity capital
d) Raise only short-term funds
Answer: b) Maximize shareholder valueWhich type of finance is preferred for acquiring fixed assets?
a) Short-term finance
b) Medium-term finance
c) Long-term finance
d) Public finance
Answer: c) Long-term financeWhat type of finance is primarily sourced through commercial papers?
a) Indirect finance
b) Short-term finance
c) Debt finance
d) Owned capital
Answer: b) Short-term financeWhat is the significance of financial intermediaries?
a) Eliminates taxation
b) Provides indirect finance
c) Reduces ownership dilution
d) Increases liabilities
Answer: b) Provides indirect finance.
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