Skip to content

Identify the… (Class 12 Business Studies SQP 2024-25, Q11)

questionbuddy.in/q/cbse-12-business-studies-2024-25-sqp-q11-identify-incorrect-respect-investment-decision

Business StudiesCBSE Class 12 · Sample paper, session 2024-25 · 1 mark · MCQ

CBSE Class 12 Business Studies sample paper 2024-25: question 11

From the official CBSE sample question paper for 2024-25, section A, question 11, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q11 · 1 mark · MCQFinancial Management

Identify the incorrect statement with respect to 'Investment decision':

  1. (A)Net working capital refers to excess of current assets over current liabilities
  2. (B)Current assets are those assets which get converted into cash within one year
  3. (C)Capital budgeting decisions are irreversible.
  4. (D)Size of the assets, Profitability and competitiveness are not affected by capital budgeting decisions.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

Open one hint at a time and try again before the next.

Hint 1

Look for the statement with "not".

Hint 2

Why are capital budgeting decisions called crucial?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. A, B and C are correct: net working capital is current assets minus current liabilities; current assets turn into cash within a year; capital budgeting decisions are irreversible except at a huge cost.

  2. D is incorrect: capital budgeting decisions affect the size of assets, profitability and competitiveness. Option (D).

    1 mark

Answer: (D) Size of the assets, Profitability and competitiveness are not affected by capital budgeting decisions.

Where the marks are

  • Capital budgeting affects size, profit and competitiveness (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2024-25: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.