NCERT Solutions for Class 11 Business Studies – Chapter 8 – Sources of Business Finance

NCERT Solutions for Class 11 Business Studies – Chapter 8 – Sources of Business Finance

NCERT Solutions for Class 11 Business Studies Chapter 8 has answers to all the textbook questions given at the end of this chapter. Since solving questions given at the end of chapters of NCERT textbooks is an essential part of a student’s preparation, these resources can be very helpful. To get the best out of these resources, students should  first go through the NCERT book and then , attempt the questions given at the end on their own, and then cross  check using the solutions prepared by Extramarks  subject experts. These are also of great help  for last-minute preparations and revisions especially for students who study on their own.

Class 11 NCERT Solutions Business Studies – Chapter 8 

Access NCERT Solutions for Class 11 Business Studies Chapter 8 – Sources of Business Finance

NCERT Solutions for Class 11 Business Studies Chapter 8 Sources of Business Finance

Finance is one of the most important topics covered in Business Studies. A business, at the end of the day, must be able to raise money for the investments and projects that it wants to undertake. In this Chapter, students will learn about the various sources of finance for an organisation including equity and debt, the merits and demerits of all these sources, and what factors do businesses need to consider when raising capital through a specific source of finance.

Objectives of Learning The Chapter 8 Business Studies Class 11

After going through Chapter 8 of NCERT Business Studies Class 11 textbook, students should be able to do the following:

  • Give a definition of business finance, as well as its nature and relevance.
  • Classify the various sources of business capital and evaluate their benefits and drawbacks.
  • Students should also be able to recognise international financial sources.
  • Discuss the elements that influence the selection of a suitable source of funding.

Students can leverage NCERT Solutions for Class 11 Business Studies Chapter 8 by Extramarks in order to get a better understanding of these topics and how they can frame solutions to questions asked from these topics.

Concepts covered in this chapter

  • Introduction
  • Meaning, nature and significance of business finance
  • Classification of sources of funds
  • Period basis
  • Source of generation basis
  • Sources of finance
  • Retained earnings
  • Trade credit
  • Factoring
  • Lease financing
  • Public deposits
  • The Lessees

Role of Extramarks in The Success of Students

Extramarks believes in in-depth learning and comprehension in a world of stiff competition.  Students  will be confident  in the subjects they’ve studied if they learn by understanding the concepts completely. Another important factor in every subject  requires  tremendous practice to master the topic. 

Students will notice that each chapter concludes with some exercise  questions. Fill-in-the-blanks, true or false, one-word replies, and descriptive inquiries are some examples. Students must be thorough when answering these questions because some of them can be tricky and may appear on the CBSE board exam question paper.

Here at Extramarks, the CBSE curriculum is taken into consideration when creating NCERT Solutions by the subject experts. They provide students with in-depth understanding of each subject, topic, and concept, allowing them to learn more effectively. Direct and indirect questions from NCERT books and NCERT Solutions are also included in the CBSE board exam question paper.

Related Questions

  1. State the advantages of the issues of  debentures  provided  over the issue of equity shares?

Debentures are unsecured debt instruments that allow companies to raise long-term capital for investments and projects at a fixed rate of interest. Since they are a kind of debt instrument, they do not involve any dilution of the ownership of the company.  On the other hand, raising capital through issue of equity shares involves selling part ownership in the company to other investors, which means dilution of shareholder’s equity.

Also, since the interest payment on debentures is tax deductible, the cost of issuing debentures is much lower than that of issuing equity shares.

  1. What are the merits and demerits of public deposits? 

Public deposits are a source of business finance wherein companies invite the general public to deposit their savings with them. In return, the company pays a fixed rate of interest on those deposits, which is usually higher than that provided by commercial banks.

The merits of public deposits are as follows:

  • The procedure of obtaining public deposits is a lot simpler than most of the other sources of finance
  • Cost of public deposits is generally lower than the cost of borrowing funds from banks
  • They do not lead to any dilution of the company’s equity 

The demerits of public deposits are as follows:

  • For a company to be able to raise funds through public deposits, it must have a good market reputation for the people to trust it with their money. For this reason, new companies find it difficult to raise funds through this source
  • Collection of public deposits can be challenging especially when the amount of money to be raised is high

FAQs (Frequently Asked Questions)

A trade credit is credit extended to a buyer of commodities by a supplier of goods. Because the buyer does not have to pay in cash, trade credit aids in the promotion of service and product sales. Trade credit is only given to exceptional or creditworthy customers. The following factors determine the amount and duration of trade credit:

  • Past payment history
  • The financial situation of the seller
  • Purchases in volume

Bank credits are essentially loans granted by commercial banks for a variety of purposes and for varying lengths of time. Cash credits, overdrafts, and discounting debts are all examples of bank credit.

It is critical for anyone who wishes to establish a business to be aware of the many funding options available. The need for finances in a firm to carry out its varied activities is known as business finance. Retained earnings, trade credit, factoring, lease financing, public deposits, commercial paper, issue of shares, debentures, and commercial banks, among other financial institutions, are all sources of company finance.

A firm cannot function or be managed properly unless and until sufficient money is made accessible to it. Most of the time, the amount of initial capital given by the entrepreneur is insufficient to cover all of the business’s financial needs. As a result, it is critical for a businessperson to hunt for alternative sources of funding. This is where the idea of company finance enters the picture. Click Extramarks NCERT Business Studies Class 11 Chapter 8 Solutions to learn more. On the Extramarks website  NCERT solutions for Class 11 business studies Chapter 8 are available. 

A company’s financial requirements can be divided into two categories: working capital and fixed capital. Funds are required to start a firm and to purchase fixed assets such as land, machinery, furniture, and other fixtures. This is referred to as a new business’s fixed capital requirement. Regardless of how small or large a company is, it requires finances to run its day-to-day operations. This is referred to as an organisation’s working capital.

Internal sources of business finance are those that come from within the company, For example, by speeding up the collection of receivables, selling surplus inventory, and using the profit as a source of business finance, an individual can create all of the monies needed internally. In every business organisation, determining the financial demands and various sources of funding is critical.

At Extramarks NCERT Business Studies Class 11 Chapter 8 Solutions,  answers all of your doubts about this chapter. To summarise, each business effort necessitates some level of investment. The company also needs funding for maintenance and day-to-day operations. It is known as Business finance.  Business financing can come from a variety of sources.. This chapter delves into this and much more. 

 Money is needed to carry out the organisation’s responsibilities and keep the business running, which is why it’s called business finance. The following are some of the reasons why firms require funds:

  • Funds are required to purchase the setup that an organisation requires, such as furniture, machines, a building, and other necessary items. Fixed capitals are this money, and the amount fluctuates depending on the sort of firm.
  • The amount of money needed to run day-to-day activities in a firm, such as purchasing raw materials, is referred to as working capital.

Long-term financing can be obtained from a variety of sources, including:

  • Shares of stock
  • Bank loans are available.
  • Shares of preference