KSEEB Solutions For Class 9 Social Science Chapter-2  Financial Management

KSEEB Solutions For Class 9 Social Science Chapter 2 Financial Management Points To be Remember

• Finance is the acquisition of funds and their effective utilization, keeping in mind the overall objectives of the concern.
• Guttmann and Douglas defined business finance as “the activity concerned with planning, raising, controlling and administering of the Finds used in business”.
• Finance is the lifeblood of every business. Without finance no business activity is possible.
• Finance helps with the modernization, diversification, expansion, and development of an enterprise.
• Finance is essential to undertake research, market survey, advertisement, and publicity for effective marketing of the products.
• Business organizations generally require two types of finance on the basis of the term for repayment. They are
  1) Short-term finance
  2) Long-term finance
• Finance that is required for day-to-day work is called Short term finance.
• To fill the financial gap between these two processes namely sales and receipt of sale proceeds sufficient funds are required. Hence there is a need for short-term finance.
• The important Sources of Short term finance are
  1) Trade credit,
  2) Bank credit or Bank loan,
  3) Advance from customers,
  4) Short-term public deposit or installment credit
  5) Loans from indigenous bankers

• Long-term finance is raised by Joint Stock Companies, through the issue of shares and debentures.
• The capital of a joint stock company is divided into small units called Shares.
• Debentures are the debts or loans borrowed by the companies
• The Industrial Finance Corporation of India (IFCI) was set up in 1948 under the act of Parliament to provide long-term financial assistance to the industry.
• State Finance Corporation Act was passed in 1951 by the Parliament to enable the
• State governments to establish State Finance Corporations.

KSEEB Solutions for Class 9 Social Science Chapter 2 Financial Management

• The Industrial Development Bank of India (IDBI) was established in 1964 under the Industrial Development Bank Act 1964.
• EXIM Bank is the export and import bank of India which was set up in 1982.
• Venture capital is a source of funds used to finance new projects involving new technology on production which has high risk but has the potential for high returns.
• A specialized marketplace that facilitates the exchange of securities that are already in existence is known as Stock Exchange or Stock market.
• Shareholders have to open a separate account to buy and sell shares is called a Demat account.

Financial Management Textual Questions And Answers

Fill in the blanks with appropriate words in the following statements.

1. Business enterprises require two types of finance, they are long–term loans and short-term loans.
2. The suppliers of goods raise credit from the buyers,’ it is called Trade credit.
3. The business concerns raise credit to carry out day-to-day affairs and is called Short term finance.
4. For immediate needs the business institutions get credit from Indigenous bankers.
5. The capital of joint-stock companies is divided into small units. They are called Shares.
6. The bank that supplies credit to import and export trade is called EximBank.
7. The IFCI was started in the year 1948 AD.
8. The first share market in India was started in Mumbai.

Financial Management Answer the following questions in two to three sentences each.

Question 1. What is the meaning of financial management?
Answer: Financial management is the process of raising, providing, and managing funds in the business.

Question 2. Which are the two types of finance required by the business concerns? Give examples.
Answer: Business organizations generally require two types of finance on the basis of the term for repayment. They are
1. Short-term finance:-Trade credit, Bank credit or Bank loan, Advance from customers, Short-term public deposit or installment credit, Loans from indigenous bankers
2. Long-term finance: –Ex. Issue of Shares Debentures

Class 9 Social Science Financial Management KSEEB Notes

Question 3. Mention any four sources of short-term credit required by business concerns.
Answer: The main sources of short-term credit required by business concerns?

1)Trade credit
2)Bank credit or Bank loan
3)Advance from customers
4)Loans from indigenous bankers

Question 4. Why do business concerns require short-term finance?
Answer: The business concerns require short-term finance because

• It is required to meet the working capital needs. i.e. to purchase raw materials, pay wages and salaries, to meet the marketing and administrative expenses.
• To fill the financial gap between these two processes namely sales and receipt of sale proceeds sufficient funds are required.

Question 5. What do you mean by long-term finance?
Answer: Long-term finance refers to finance required for the development programs such as the expansion of the level of Long term finance refers to finance required for the development programs such as the expansion of the level of production, modernization of production methods, etc.,

KSEEB Class 9 Social Science Chapter 2 Question and Answers

Question 6. Give the names of any three organizations in the field of mutual funds
Answer: Unit Trust of India (U.T.I.), S.B.I. Magnum equity fund, LIC growth fund, UTI Market plan, Prudential ICICI balance fund, HDFC income fund, Bajaj alliance, etc., are in the mutual fund field.

Financial Management Answer The Following Questions In About Eight To Ten Sentences

Question 1. What is the role and importance of finance to business concerns?
Answer: The role and importance of finance in business organizations are
1)Finance is the lifeblood of every business.
2)It helps to obtain resources that are required in the process of production and marketing of goods and services.
3) It integrates the various segments of business enterprise for the smooth running of the business in the direction of attaining the organizational goals.
4)It guides and regulates investment decisions and expenditures.
5) It helps for modernization, diversification, expansion, and development of an enterprise.
6)It is essential to undertake research, market survey, advertisement, and publicity for effective marketing of the products.
7) It is required to develop industries in backward areas.
8) Its stability will enhance the creditworthiness of the concern.

SSLC Class 9 Social Science Chapter 2 Solutions Karnataka Board

Question 2. Explain briefly the purposes for which long-term finance is required by business concerns.
Answer: Long-term finance refers to finance required for the development programs such as the expansion of the level of production, modernization of production methods, etc., This type of finance is also required for financing the fixed capital of an undertaking. Ex. To procure fixed assets, establishing new undertaking,s, etc.

Question 3.“Issue of shares and debentures play a very important role in long-term credit.” What are they? How do they help?
Answer: The capital of a joint stock company is divided into small units called Shares.
Debentures are debts or loans borrowed by companies.

The shares and debentures are helpful in many ways they are

• Whenever they need additional capital for a long-term purpose, the companies raise the funds through the issue of shares to the public
• The joint-stock companies are empowered to borrow finance for meeting long-term financial requirements through the issue of Debentures.

Financial Management Class 9 KSEEB Important Questions

Question 4. What is the part played by Industrial Finance Corporations (IFC) and State Finance Corporations (SFS) in financing business?
Answer: The part played by (IFC) and (SFS) in financing businesses are

• The Industrial Finance Corporation of India (IFCI) was set up in 1948 under the act of Parliament to provide long-term financial assistance to the industry. The Corporation grants loans to public limited companies and to cooperative societies. State-owned public limited companies can also borrow funds from the corporation.
• The main objective of State Finance Corporations is to provide long-term finance to small and medium-scale industries in their respective states

Question 5. What are long-term public deposits and what are their advantages to the public?
Answer: Long-term public deposits which a company can accept public deposits to meet long-term financial needs.

The advantages of long-term public deposits to the public are

• The procedure to get these deposits is simple and does not involve many formalities
• A company can accept these deposits for a period not exceeding 5 years (60 months)
• The deposits are unsecured and 8% to 10% of interest is allowed
• The maximum amount that can be raised under public deposit shall not exceed 25% of the paid-up capital of the company.

Question 6. What do you mean by Money market and how is it different from the capital market?
Answer:

• The term money market is used in a sense to mean a financial institution that deals with short-term funds in the economy
• The money market arranges funds for working capital
• The rate of interest is high, compared to the institutions of capital market
• The funds can be borrowed under the money market for a short period whereas the capital market long term
• Commercial banks and Indigenous bankers also play an important role in the money market.
• Financial institutions, finance corporations, investment trusts, mutual funds, etc. are the leading financial institutions in the capital market.

KSEEB Class 9 Social Science Financial Management Summary

Question 7. Explain in brief the part played by the stock exchange in financial matters of business
Answer: The part played by the stock exchange in financial matters of business is

• Stock Exchange is one of the constituents of the capital market
• The Stock exchanges regulate and control businesses in buying, selling, and dealing in securities.
• They are regulated by the government
• They do not engage only in the purchase and sale of securities but provide a place where members can carry out their business on their own account under codes, rules, and regulations.

Financial Management Additional Questions And Answers

Choose the correct alternative and write the complete answer along with its alphabet in the answer sheet provided

Question 1. The First Stock Exchange was started m India in the year

1. 1875 AD.
2. 1892 AD.
3. 1885 AD.
4. 1888AD.

Answer: 1) 1875 AD.

Question 2. The bank which is functioning as an autonomous body is

1. EXIM Bank
2. Industrial Development Bank of India
3. Industrial Financial Corporation of India
4. State Finance Corporation

Answer: 2) Industrial Development Bank of India

Question 3.The bank which was a fully owned subsidiary bank of R. B.I till 1976 is

1. EXIM Bank
2. Industrial Development Bank of India
3. Industrial Financial Corporation of India
4. State Finance Corporation

Answer: 2) Industrial Development Bank of India

Question 4. The First Stock Exchange was started in India at

1. Mumbai
2. Kolkata
3. Bangalore
4. Delhi

Answer 1) Mumbai

Question 5. EXIM bank was set up in the year

1. 1982 A.D
2. 1985 A.D
3. 1989 A.D
4. 1999 A.D

Answer: 1) 1982A.D

SSLC Class 9 Social Science Financial Management Notes PDF

Question 6. The State Finance Corporation Act is applied to all the states except

1. Karnataka
   
2. Delhi
   
3. Jammu and Kashmir
4. Mumbai

Answer: 3) Jammu and Kashmir

Question 7. The capital of a joint stock company is divided into small units called

1. Debenture
2. Shares
3. Mutual funds
4. Credits

Answer: 2) Shares

Karnataka State Board Class 9 Social Science Chapter 2 Explanation

Question 8. The credit obtained by the suppliers of goods is called

1. Advance from customers
2. Bank credit
3. Trade credit
4. Loan from indigenous bankers

Answer : 3) Trade credit