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CUET Business Studies 2022 PYQs20 Aug Shift 1. Free, no login required.

Business Studies

past year questions, CUET Business Studies 2022 20 Aug Shift 1

Business Finance

past year questions, Business Studies, CUET Business Studies 2022 20 Aug Shift 1

Easy

"A company has the policy of giving liberal credit to its customers in order to increase the sales."

Identify the factor affecting working capital requirement in the above situation.

Solution

✅ Correct Option: 4

Credit Allowed refers to the credit terms that a company offers to its customers. If a firm has a liberal credit policy (allowing more credit to customers), it increases accounts receivable and thus increases the working capital requirement. Hence, the factor here is Credit Allowed.

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Match the following factors affecting the working capital requirement:

LIST-I (Factors)LIST-II (Explanation)
A.Level of CompetitionI. A firm allows credit to its customers. It may also get credit from its suppliers.
B.Credit AvailedII. A liberal credit policy results in a higher number of debtors, increasing the requirement of working capital.
C.InflationIII. May necessitate larger stocks of finished goods to meet urgent orders from customers
D.Credit AllowedIV. Larger amounts are required even to maintain a constant volume of production and sales.

Choose the correct answer from the options given below:

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CUET Business Studies Past Year Questions (Topic-Wise)