Why does a small enterprise need capital?
Answer and explanation
Correct answer: To start the business and manage its day-to-day operations
Capital finances both the establishment and operation of an enterprise. Initial or fixed capital may be used for equipment, premises, licences, and setup, while working capital supports wages, utilities, raw materials, transport, and inventory during daily operations. Without sufficient funds, even a promising business may be unable to begin or continue smoothly.
Frequently asked questions
What is the correct answer to this question?
To start the business and manage its day-to-day operations
Why is this the correct answer?
Capital finances both the establishment and operation of an enterprise. Initial or fixed capital may be used for equipment, premises, licences, and setup, while working capital supports wages, utilities, raw materials, transport, and inventory during daily operations. Without sufficient funds, even a promising business may be unable to begin or continue smoothly.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Sources of Business Finance. Topic: Concept, nature and importance of business finance.
