Question

Statement 1: The net result of internal expansion is the increase in business activities and the broadening of the present capital structure.

Statement 2: A business may buy more machines or merge with another business which has the latest technology if it wants to expand internally.

Options

• Statement 1 is true and Statement 2 is false.

• Statement 1 is false and Statement 2 is true.

• Both statements 1 and 2 are true.

• Both statements 1 and 2 are false.

Answer 1

Statement 1 is true and Statement 2 is false.

Explanation:

Internal expansion means a business grows from within by increasing production capacity, launching new products, or entering new markets on its own, not by acquiring or merging with another firm.
Statement 1 is true because internal expansion does increase business activities and broadens the capital structure.
Statement 2 is false because merging with another business refers to external expansion, not internal.