Chapter 18 of 22
Revision Notes
Sources of Business Finance — Revision Notes
ICSE · Class 12 · Business Studies
Sources of Business Finance revision notes for ICSE Class 12 Business Studies: 4 topics in quick points. Includes Classification of Sources of Business.
70 questions35 flashcards5 concepts
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Key Topics to Revise
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1. Classification of Sources of Business Finance
- Sources of business finance are broadly divided into owned funds and borrowed funds.
- Owned funds include equity shares, preference shares, retained profits, global depository receipts, angel investors, venture capitalists, crowd funding, and peer-to-peer funding.
- Borrowed funds include debentures and bonds, loans, public deposits, bills discounting, and trade credit.
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2. Equity Shares and Preference Shares
- Equity shares are ordinary shares with no preferential rights in dividend payment or repayment of capital.
- Equity shares are issued before any other type of shares.
- Dividend on equity shares is paid after preference share dividend and is not fixed.
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3. Debentures and Bonds
- A debenture is a document or certificate issued by a company under its seal as an acknowledgement of debt.
- Debentures and bonds represent borrowed funds.
- Interest on debentures is paid at a fixed rate and is payable every year even when the company suffers loss.
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4. Retained Profits
- Retained earnings or ploughing back of profits means retaining part of net profit year after year and reinvesting it in the business.
- Retained profits are also called self financing.
- This is an internal method of finance.
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Full NotesKey Concepts
Equity shares are ordinary sharesPreference shares carry preferential rightsA debenture is a document underRetained profitsLoans are obtained from financial institutions
Frequently Asked Questions
What are the important topics in Sources of Business Finance for ICSE Class 12 Business Studies?
Key topics in Sources of Business Finance include Classification of Sources of Business Finance, Equity Shares and Preference Shares, Debentures and Bonds, Retained Profits. Study these first, then practise questions on each for the ICSE Class 12 board exam.
How should I revise Sources of Business Finance for the ICSE Class 12 board exam?
Learn the core ideas first, then work through the 70 practice questions on Sources of Business Finance. Revise definitions regularly and use flashcards for quick recall before the exam.
Sources & Official References
Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.
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