Theme 1 Edexcel Business Key terms

What is the term for the difference between the cost of materials to make a product and the price charged for it?

• Breakeven

• Added value

• Cash flow

• Competitive advantage

Answer explanation

The term 'added value' refers to the difference between the cost of materials and the selling price of a product. It represents the value that is added to the raw materials through the production process.

What does a business plan typically include?

• A list of competitors

• Details of products, resources needed, and financial forecasts

• Employee salaries

• Customer demographics

Answer explanation

A business plan typically includes details of products, resources needed, and financial forecasts, which are essential for outlining how the business will operate and succeed. Other options are important but not core components.

What is the definition of cash inflow?

• Money leaving the business

• Money coming into the business

• The amount of money left at the end of a period

• The total revenue of a business

Answer explanation

Cash inflow refers to money coming into the business, such as revenue from sales or investments. This is the opposite of cash outflow, which is money leaving the business.

Who is considered a consumer?

• The person who buys the product

• The person who uses the product

• The person who sells the product

• The person who manufactures the product

Answer explanation

A consumer is defined as the person who uses the product. While buyers purchase items, it is the users who derive value from them, making them the true consumers.

What is crowdfunding?

• A method of selling products online

• A large number of individuals investing in a business project

• A type of business loan

• A government grant for businesses

Answer explanation

Crowdfunding is defined as a large number of individuals investing in a business project, allowing entrepreneurs to raise funds from the public rather than relying solely on traditional financing methods.

What is the term for goods and services that are bought into one country from another?

• Export

• Import

• Domestic trade

• Local purchase

Answer explanation

The term for goods and services brought into one country from another is 'Import'. In contrast, 'Export' refers to goods sent out of a country, while 'Domestic trade' and 'Local purchase' pertain to transactions within the same country.

What is the cost of borrowing and the reward of saving, which can be fixed or variable?

• Inflation

• Interest

• Insolvency

• Investment

Answer explanation

The cost of borrowing and the reward of saving is referred to as interest. It can be either fixed or variable, affecting how much one pays to borrow money or earns on savings.

What is the term for a business organization that is usually owned by 2-20 people, who have unlimited liability?

• Corporation

• Partnership

• Sole proprietorship

• Limited company

Answer explanation

A partnership is a business organization typically owned by 2-20 individuals who share profits and have unlimited liability for the business's debts, making it the correct choice for this question.

What is the term for the amount left from revenue after costs have been paid?

• Revenue

• Profit

• Loss

• Expense

Answer explanation

The term for the amount left from revenue after costs have been paid is 'Profit'. Revenue is the total income, while Loss refers to negative profit, and Expense represents costs incurred.

What is the term for a product which is out of date and no longer used?

• Obsolete

• Vintage

• Modern

• Current

Answer explanation

The term 'obsolete' refers to products that are out of date and no longer used. In contrast, 'vintage' implies something old but valued, while 'modern' and 'current' refer to contemporary items.