A level business edexcel year 1 revision

Why is stock (inventory) excluded from the acid test ratio ?

• it is easy to sell at full value (quickly)

• it makes the calculation difficult

• it cannot be valued

• it may not be easy to sell at full value (quickly)

Why are receivables included in current assets ?

• They are customers who will pay soon

• They are suppliers

• They are long-term loans

• They are returned stock

Why are payables included in current liabilities ?

• They are long term loans

• They have to be paid within the year

• They have to be paid after the current year

Price elasticity of demand topic:

If PED = -0.5, then

• a 10 % price change causes a 20 % change in demand

• a 10 % price change causes a 10 % change in demand

• a 10 % price change causes a 5 % change in demand

Breakeven topic:

Why is the fixed cost line horizontal ?

• because it is easier to draw that way

• because it always starts at 100

• because fixed costs are unaffected by output changes

• because fixed costs are affected by output changes

Why might a business loan be preferred to selling shares as a source of finance ?

• loan repayments only made if profit made

• loan repayments are forever

• loans have an agreed end date

• the business is very risky

Why is the average cost of production reducing ?

• selling price is reducing

• demand is falling

• fixed costs are spread over a smaller output

• fixed costs are spread over a larger output

Missing term =

• Operating expenses

• Cost of goods sold

• Interest charges

• Current assets

• breakeven = 200 units of output

• breakeven = 300 units of output

• breakeven = 400 units of output

• breakeven = 600 units of output

• Selling price = £20 per unit

• Selling price = £30 per unit

• Selling price = £25 per unit

• Selling price = £50 per unit