Unit 2 - Past Exam Questions 2

Select one type of expenditure for a scarf shop.

• Taking out a bank loan

• Paying wages to staff

• Selling scarves to customers

• Displaying accessories

Identify one source of business revenue.

• Electricity bills paid for running the business

• Wages received by staff for work they do

• Payments received from customers

• Purchase of inventory (stock)

Select two examples of external finance that could be used to expand a small business.

• Mortgage

• Bank loan

• Owner's funds

• Retained profit

Rowan produces souvenir toys.

His direct costs are £2548.

The indirect costs for producing the toys are £1795.

Calculate Rowan's total cost for making toys.

• Direct costs + Indirect costs = Total costs

  2548 + 1795 = 4343

• Direct costs + Indirect costs = Total costs

  2548 + 1795 = 4340

Select on example of a cash outflow.

• Product sales

• Sale of assets

• Stock purchases

• Receipt of a loan

What are debts owed by a business that are due to be repaid after a year?

• Current liabilities

• Long-term liabilities

• Current assets

• Fixed assets

Jean owns a business making baby clothes. Identify two variable costs for Jean's business.

• Wages for the staff

• Insurance for the business

• Salary for the production manager

• Materials for the baby clothes

• Rent for the factory

Scott runs a small barber shop. He has carried out a breakeven analysis.

One benefit of this is that it shows Scott the margin of safety for the business.

Select two other benefits to Scott of using breakeven analysis.

• Identifies sales a business needs to make a profit.

• Calculates the profit/loss at a given level of output.

• Predicts future cash inflows and outflows.

Identify two start-up costs for a manufacturing business.

• Paying electricity bills

• Purchasing a new piece of machinery

• Replacing stock used to produce goods

• Buying a factory to locate the business

• Giving staff commission on sales

Identify two examples of a fixed asset.

• Vehicle

• Building

• Cash