Question : Questions : Business Finance and Its Meaning
Statement 1: Need for business finance arises due to various risks and uncertainties in business activities.
Statement 2: Financial planning eliminates all uncertainties in business operations.
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 often arises due to various risks and uncertainties associated with business activities. Risks such as market fluctuations, economic changes, competition, regulatory changes, and more can impact a business's financial stability and necessitate financial planning and management to mitigate these risks.
Statement 2 is false. Financial planning aims to manage and mitigate risks but does not eliminate all uncertainties in business operations. While it helps in forecasting, budgeting, and strategizing to minimize risks, it cannot completely eliminate uncertainties, as the business environment is dynamic and subject to various unpredictable factors.
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