which of the following is not a clear difference between debenture holders and shareholders of a company
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Specialty
11th -
12th
Specialty 11th - 12th 3.1 Source of finance
Mohd Ismail 652 plays
20 Qs
Show Answers See Preview 1. Multiple-choice 30 seconds 1 pt Q.
Which of the following is the most suitable reason for using personal finance?
answer choices
Insufficient internal sources of finance
Insufficient external sources of finance
There is no interest obligation
To please the owners (shareholders) of a company
2. Multiple-choice 30 seconds 1 pt Q.
Which of the following is not a feasible source of finance for an ordinary partnership?
answer choices Secured bank loans Sale and leaseback Debt factoring
Initial public offering
3. Multiple-choice 30 seconds 1 pt Q.
Advantages of internal finance do NOT include
answer choices
Greater flexibility in the use of finance
Greater choice of finance
No need to go through administrative procedures
Tax concessions for the use of internal profit
4. Multiple-choice 30 seconds 1 pt Q.
Which of the following is the most feasible advantage of using internal funds to purchase a new office building?
answer choices
Limited impact on the firm's working capital
Lower level of gearing
Dilution of ownership
Increased value of fixed assets
5. Multiple-choice 30 seconds 1 pt Q.
Businesses might choose to use external sources of finance because
answer choices
There are no interest charges
Potential cash flow problems are avoided
There is insufficient retained profit
There is an expected rise in interest rates
6. Multiple-choice 30 seconds 1 pt Q.
Which of the following is NOT a source of external financing for a public limited company
answer choices Overdraft Debentures Retained profits Share capital 7. Multiple-choice 30 seconds 1 pt Q.
Advantages of funding growth through a share issue in all those listed below EXCEPT
answer choices
An extra source of finance
Less financial risks due to the spreading of risks amongst shareholders
Control of the company is diluted
It acts as a form of motivation for employees who own shares in the company
8. Multiple-choice 30 seconds 1 pt Q.
Which of the following is a drawback to a business that issues debentures
answer choices
Lenders do not have any voting rights
There is dilution of control
There is a dilution of ownership
The value of liabilities increases
9. Multiple-choice 30 seconds 1 pt Q.
Debenture holders
answer choices
own a part of the company in which they hold debentures
Are paid a return from the profits of the company
Receive payments from companies before any shareholders
Are represented as current liabilities on the company's balance sheet
10. Multiple-choice 30 seconds 1 pt Q.
Debentures can best be described as a form of
answer choices
short-term loan with variable interest rates
Medium-term loan with variable interest rates
Long-term loan with a fixed interest rate
Long term security giving the holder part ownership of the business
11. Multiple-choice 30 seconds 1 pt Q.
Which of the following is NOT a clear difference between debenture holders and shareholders of a company
answer choices
Voting rights in the company
ownership of the company
Interest and dividends as a form of financial return
Impact on the company's working capital
12. Multiple-choice 30 seconds 1 pt Q.
Which of the following is the least likely source of funds for a non-profit organization?
answer choices Fund-raising events
Charitable donations
Brand recognition Sponsorship deals 13. Multiple-choice 30 seconds 1 pt Q.
Which of the following best describes hire purchase?
answer choices
Hiring of equipment for a period of time
Repaying loans by making fixed regular payments
Hiring out equipment as a source of finance
Differs from leasing in that ownership occurs with the last instalment
14. Multiple-choice 30 seconds 1 pt Q.
The contract used to raise finance by selling the freehold of an asset and then renting it back immediately on a long-term basis is known as
answer choices Working capital Sale and leaseback Fixed assets Trade creditors 15. Multiple-choice 30 seconds 1 pt Q.
Which statement does NOT apply to the use of sale and leaseback?
answer choices
The firm can continue to use the asset it has sold and leased back
The value of fixed as remains unchanged since the firm keeps use of the asset
The firm can carry on trading as if nothing has happened
The finance released through the sale improves the firm's liquidity position
16. Multiple-choice 30 seconds 1 pt Q.
The debt factoring service that allows the client to be protected against bad debts is known as
3.1 Sources of Finance Flashcards
Study with Quizlet and memorize flashcards containing terms like which of the following is the most suitable reason for using personal finance? -insufficient internal sources of finance -insufficient external sources of finance -there is not interest obligation -to please the owners (shareholders) of a company, which of the following is not a feasible source of finance for an ordinary partnership? -secured bank loans -sale and leaseback -debt factoring -initial public offering, advantages of internal finance do not include -greater flexibility in the use of finance -greater choice of finance -no need to of through admin procedures -tax concessions for the use of internal profit and more.
3.1 Sources of Finance
Term 1 / 20
which of the following is the most suitable reason for using personal finance?
-insufficient internal sources of finance
-insufficient external sources of finance
-there is not interest obligation
-to please the owners (shareholders) of a company
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Definition 1 / 20
there is no interest obligation
Click the card to flip 👆
Created by Jayme_Coon
Terms in this set (20)
which of the following is the most suitable reason for using personal finance?
-insufficient internal sources of finance
-insufficient external sources of finance
-there is not interest obligation
-to please the owners (shareholders) of a company
there is no interest obligation
which of the following is not a feasible source of finance for an ordinary partnership?
-secured bank loans -sale and leaseback -debt factoring
-initial public offering
initial public offering
advantages of internal finance do not include
-greater flexibility in the use of finance
-greater choice of finance
-no need to of through admin procedures
-tax concessions for the use of internal profit
greater choice of finance
which of the following is the most feasible advantage of using internal funds to purchase a new office building?
-limited impact on the firms working capital
-lower level of gearing
-dilution of ownership
-increased value of fixed assets
lower level of gearing
businesses might choose to use external sources of finance because
-there are no interest charges
-potential cash flow problems are avoided
-there is insufficient retained profit
-there is an expected rise in interest rates
there is insufficient retained profit
which of the following is not a sources of external financing for a public limited company
-overdraft -debentures -retained profit -share capital retained profits
advantages of funding growth through a share issue include all those listed below except
-an extra source of finance
-less financial risks due to the spreading of risks amongst shareholders
-control of the company is diluted
-it acts as a form of motivation for employees who own shares in the company
control of the company is diluted
which of the following is a drawback to a business that uses debentures?
-lenders do not have any voting rights
-there is dilution of control
-there is a dilution of ownership
-the value of liabilities increases
the value of liabilities increases
debenture holders
-own a part of the company in which they hold debentures
-are paid a return from the profits of the company
-receive payments from companies before any shareholders
-are represented as current liabilities on the company balance sheet
are represent as current liabilities on the company's balance sheet
debentures can best be described as a form of
-short term loan with variable interest rates
-medium term loan with variable interest rates
-long term loan with a fixed interest rates
-long term security giving the holder part ownership of the business
long term loan with a fixed interest rates
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Verified questions
Finance
On January 1, 2018, Vacation Destinations issues
40 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
40millionofbondsthatpayinterestsemiannuallyonJune30andDecember31.Portionsofthebondamortizationscheduleappearbelow:
\begin{matrix} \text{(1)} & \text{(2)} & \text{(3)} & \text{(4)} & \text{(5)}\\ \text{ } & \text{Cash Paid} & \text{Interest} & \text{Increase in} & \text{Carrying}\\ \text{Date} & \text{for Interest} & \text{Expense} & \text{Carrying Value} & \text{Value}\\ \hline \text{1/1/2018} & \text{ } & \text{ } & \text{ } & \text{$\$ 37,281,935$}\\ \text{6/30/2018} & \text{$\$ 1,400,000$} & \text{$\$ 1,491,277$} & \text{$\$ 91,277$} & \text{$37,373,212$}\\ \text{12/31/2018} & \text{$1,400,000$} & \text{$1,494,928$} & \text{$94,928$} & \text{$37,468,140$}\\ \end{matrix}
Differences between shareholders and debentures holders
A shareholder is the joint owner of a company; but a debenture holder is only a creditor of the company
Differences between shareholders and debentures holders
A shareholder is the joint owner of a company; but a debenture holder is only a creditor of the company
January 01, 1970 5:30 IST | India Infoline News Service
Listed below is a comprehensive picture of the major difference between shareholders and debenture holders:
A person having the debentures is called debenture holder whereas a person holding the shares is called shareholder.
A shareholder subscribes to the shares of a company. Shares are the parts of share capital. On the other hand, debenture-holders are the subscribers to debentures. Debentures are part of loan.
A shareholder or member is the joint owner of a company; but a debenture holder is only a creditor of the company.
Shareholders are invited to attend the annual general meeting of the company. Debenture holders are not invited, unless any decision affecting their interest is taken.
Shareholders control the affairs of the company. It is managed by the Board of Directors, the elected representatives of the shareholders. Debenture holders are not concerned with the management and regulation of the company.
Shareholders receive copies of the Annual Report containing the Balance Sheet, the Profit & Loss Account and the Auditor’s Report.
Interest on debentures is payable whether there are profits or not. But dividend on shares is to be paid only when the company has earned profits. Interest on debentures may be paid out of capital but dividend on shares can never be paid out of capital.
Rate of dividend on equity shares is not assured, whereas rate of interest on debentures is assured.
Shares cannot be converted into debentures whereas debentures can be converted into shares.
Convertible debentures which can be converted into shares at the option of debenture holder can be issued, while shares convertible into debentures cannot be issued.
Debentures are generally secured and carry a charge on the assets of the company, whereas shares have no such charge. The debenture holder, being a secured creditor of the company, is paid-off prior to a shareholder in the event of winding up of a company.
Share capital is not returned except in case of redeemable preference shares. Debentures being loan is repaid by the company.
Debentures can be issued at a discount, whereas shares cannot be issued at a discount except as provided under Section 79 of the Companies Act.
There can be mortgage debentures i.e. assets of the company can be mortgaged in favor of debenture holders. But there can be no mortgage shares. Assets of the company cannot be mortgaged in favor of shareholders.
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