Question : Questions: Business Finance and Its Meaning
Statement 1: Need for business finance arises due to uncertainty and risk associated with business operations.
Statement 2: Financial planning eliminates all forms of business risk and uncertainties.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statements 1 and 2 are true.
Option 4: Both statements 1 and 2 are false.
Correct Answer:
Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.
Statement 1 is true. The need for business finance does arise due to uncertainty and risk associated with business operations. Businesses face various risks, such as market fluctuations, economic changes, competition, and operational challenges, and finance is essential to manage and mitigate these risks.
Statement 2 is false. Financial planning and management can help mitigate risks to some extent, but they cannot eliminate all forms of business risk and uncertainties. Risks are inherent in business, and complete elimination of risk is not possible. Financial planning helps in risk management, decision-making, and minimizing potential losses, but it cannot completely eliminate uncertainties associated with business operations.
