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WorksheetsNational 5 Bus Mgt Finance
Total questions: 60
Worksheet time: 30mins
Name
Class
Date
1.
Which source of finance is NOT available to ALL types of business organisations?
a)
Selling shares
b)
Selling unwanted assets
c)
Grants
d)
Leasing
2.
Which source of finance is ONLY available to an Ltd or PLC company?
a)
Selling shares
b)
Bank loan
c)
Grants
d)
Retained profits
3.
What is the name for a large amount of money borrowed from a bank to pay for property/premises?
a)
Overdraft
b)
Loan
c)
Mortgage
d)
Debt
4.
Grants - which statement is false?
a)
Grants are only given out if criteria has been met
b)
Grants do not need to be repaid
c)
Grants only have a low rate of interest applied
d)
Grants are mainly issued by local and national Government and the EU
5.
What name is given to the monthly amount of money paid back after a bank loan has been taken out?
a)
Deposit
b)
Withdrawal
c)
Instalment
d)
Standing order
6.
Which source of finance involves getting rid of unwanted items that the company owns?
a)
Sale of liabilities
b)
Sale of assets
c)
Jumble sale
d)
Sale of equity
7.
Name the person who likes to take on risky investments in return for part ownership of the business?
a)
Adventurer
b)
Investor
c)
Donor
d)
Venture Capitalist
8.
Which source of finance is only available to organisations in the public sector?
a)
Grants
b)
Selling shares
c)
Taxes
d)
Hire purchase
9.
What source of finance involves paying a deposit for an asset then making monthly payments, after which you own the asset outright.
a)
Leasing
b)
Renting
c)
Hire purchase
d)
Savings
10.
What is NOT a benefit of leasing?
a)
Can get to use asset quickly
b)
You own it after a certain period of time
c)
Asset is replaced if it becomes obsolete
d)
Do not need to pay out a large sum of money up front
11.
Which is NOT a disadvantages of selling shares to raise finance?
a)
Dividends are paid to shareholders
b)
Ownership is diluted and original shareholders have less control
c)
It is more expensive as interest must be paid
d)
Fees to produce legal share documents can be high
12.
Which source of finance's benefits are that it can be repaid over a long period of time and can be arranged quickly.
a)
Bank loan
b)
Sale of shares
c)
Retained profits
d)
Owner's savings
13.
Which source of finance do most sole traders use at the start of the business?
a)
Own savings
b)
Retained profits
c)
Donors
d)
Debentures
14.
Fill in the blank - a disadvantage of using retained profits as a source of finance is that the money cannot be _____ for something else.
a)
used
b)
deposited
c)
borrowed
d)
controlled
15.
What statement shows the knowledge you need for sources of finance topic at National 5?
a)
description, costs and benefits
b)
Most popular and least popular sources of
16.
What is the name of the document which is used to show future income and expenditure for a business?
a)
Cash budget
b)
Cash statement
c)
Income statement
d)
Income budget
17.
What is NOT a benefit of preparing a cash budget?
a)
helps determine profits for owners and shareholders
b)
ensures there will be enough cash to pay employees and suppliers
c)
will help business plan when to invest in new equipment
d)
helps to plan a bank overdraft or additional funding in advance of when needed
18.
What name is given to the situation of having excess cash expected at the end of next month?
a)
Cash surplus
b)
Cash deficit
c)
Cash profit
d)
Cash loss
19.
What name is given to the situation of having a negative cash balance expected at the end of next month?
a)
Cash surplus
b)
Cash deficit
c)
Cash profit
d)
Cash loss
20.
Cash flow problems can be resolved by reducing expenses. Which is NOT a way of reducing expenses below?
a)
Implement new advertising campaign to increase sales
b)
Reducing overtime for staff and paying off temporary staff
c)
Finding a new supplier who will offer bulk buying discounts
d)
Delaying purchase of a new asset
21.
It is also possible to help a cash flow issue by looking at income. Which is NOT a way of helping to resolve cash flow issues?
a)
Allowing customers a longer credit period
b)
Having a special offer for a limited period
c)
Offering customers a discount for payment by cash
d)
Selling invoices to a trade
factoring company
22.
Identify the action below which would NOT help a cash deficit situation?
a)
Implement tighter inventory control and reduce wastage
b)
Negotiate a temporary overdraft with the bank
c)
Sell unwanted assets
d)
Award bonuses to staff to help motivate them
23.
What action would NOT be taken if a cash surplus is predicted?
a)
Invest in new machinery to improve efficiency
b)
Arrange a bank loan at a discounted rate
c)
Consider growing the business by opening a new branch
d)
Pay off outstanding bank loans to reduce interest payments
24.
Which of the following does NOT appear in a cash budget statement?
a)
Opening balance
b)
Profit
c)
Income
d)
Expenses
25.
Which statement is correct when calculating a cash budget?
a)
Opening balance + income - expenses = closing balance
b)
Opening balance - income + expenses = closing balance
c)
Closing balance - income + expenses = opening balance
d)
Closing balance + income- expenses = opening balance
26.
A company sees a potential cash deficit situation. This is made worse by the planned purchase of a new delivery van which is essential. What other option to fund this van would be the best solution?
a)
Sell shares to generate income
b)
Arrange for a leased van
c)
Trade factoring of invoices
d)
Sell wanted assets e.g. machinery
27.
What action below - taken by a manager when reviewing a cash budget - is FALSE?
a)
Look for trends in expenditure e.g. unexpected increases
b)
Look for trends in income e.g. unexpected drop
c)
Look to the closing balance each month for cash deficits or large cash surpluses
d)
Look for profits and losses in the statement
28.
A company has predicted an opening cash balance of £250k, income of £100k and expenditure of £150k for May. What would be its closing cash balance position for that month?
a)
£200k
b)
£300k
c)
£500k
d)
£0k
29.
A company has a cash surplus of £300k. Which action would it be most likely to take below?
a)
Launch a special offer for customers
b)
Replace the old IT system
c)
Cancel overtime for the next few months
d)
Switch to a cheaper supplier whose quality is slightly below that of current supplier
30.
A sole trader predicts a cash deficit for the next month only. What would be the easiest way to solve this situation?
a)
Temporarily reduce the amount of drawings he takes from business
b)
Factor his trade invoices to an external company
c)
Delay paying his suppliers by a month
d)
Insist that loyal customers pay by cash for that month
31.
What is the name given to the method of calculating whether a product will make a profit or loss in the future?
a)
Break-even Analysis
b)
Preparing an Income statement
c)
Preparing a Cash Budget
d)
Working out a Source of Finance
32.
Break-even analysis can help a business take good financial ___________
a)
Journeys
b)
Decisions
c)
Sales
d)
Banking
33.
What does break-even analysis NOT help answer?
a)
The profitability of a product or service at a level of sales
b)
The number of units needed to be sold cover all costs
c)
The changes in profit for different levels of sales of a product
d)
The overall company profit or loss made in a year
34.
What three lines are normally shown on a break-even chart?
a)
Fixed costs, variable costs and sales
b)
Fixed costs, total costs and sales
c)
Variable costs, total costs and sales
d)
Total costs and sales
35.
Where on the y-axis of a break-even chart does the total costs line always start?
a)
At the amount of fixed costs
b)
At the amount of variable costs
c)
At zero
d)
At the amount of sales
36.
What is the name given to fixed costs + variable costs?
a)
Overall costs
b)
Total costs
c)
Company costs
d)
Break-even costs
37.
If total costs are greater than sales, what will the company make?
a)
Neither a profit or loss
b)
A loss
c)
A profit
d)
A surplus
38.
What is the definition of a fixed cost?
a)
A cost which does vary with output or sales
b)
A cost which does not vary with output or sales
c)
A costs which must be paid by each company
d)
A cost which does not need to be paid by each company
39.
Select the example of a variable cost from list below
a)
Rent
b)
Insurance
c)
Raw materials
d)
Bank loan repayments
40.
What is the definition of a variable cost?
a)
A cost which does vary with output or sales
b)
A cost which does not vary with output or sales
c)
A costs which must be paid by each company
d)
A cost which does not need to be paid by each company
41.
Select the example of a fixed cost from the list below
a)
Wages of piece rate staff
b)
Raw materials
c)
Machine fuel
d)
Light and heat
42.
When does break-even happen?
a)
Total costs = Total sales
b)
Total costs > Total sales
c)
Total costs < Total sales
d)
Total costs = Fixed + Variable costs
43.
What is made to the right of the Break-even Point on a chart?
a)
Profit
b)
Loss
c)
Surplus
d)
Deficit
44.
What is made to the left of the Break-even Point on a chart?
a)
Profit
b)
Loss
c)
Surplus
d)
Deficit
45.
Fill in the blank. The name given to the difference between BEP and actual sales above this point is ________ __ __________
a)
Margin of safety
b)
Sales margin
c)
Safety zone
d)
Sales surplus
46.
What does the y-axis show you on a break-even chart?
a)
Level of sales in units
b)
Level of sales in £
c)
Level of sales and costs in £
d)
Sales and costs in units
47.
What does the x-axis show you on a break-even chart?
a)
Level of sales in units
b)
Level of sales in £
c)
Sales and Costs in units
48.
My total sales are £10,000 for 1,000 units. What must my selling price be for one unit?
a)
£10
b)
£1
c)
£100
d)
Cannot be calculated
49.
My total costs are £50,000 when selling 100 items. My fixed costs are £20,000. What must be the variable cost of one item?
a)
£300
b)
£500
c)
£200
d)
Cannot be calculated
50.
What is the correct definition of Sales Revenue?
a)
The income received from selling goods and services
b)
The total net cash flow
c)
Amount of returns by customer
d)
Number of items sold by a company
51.
The name given to the document which shows profit or loss made over a period of time is ...
a)
Income Statement
b)
Profit or Loss Statement
c)
Cash Budget
d)
Break-even Chart
52.
What type of business organisation must publish their Income Statement?
a)
Sole traders
b)
Partnerships
c)
Ltds
d)
Voluntary groups
53.
What does an Income Statement NOT show?
a)
Sales Revenue
b)
Gross Profit
c)
Profit for Year
d)
Net worth of the business
54.
What technology software would be used to produce an Income Statement?
a)
Spreadsheet
b)
Database
c)
Presentation software
d)
Word Processing
55.
What is the correct definition of Gross Profit?
a)
Profit made from buying and selling goods and services
b)
Overall profit made by the company
c)
Profit to be shared amongst owners
d)
The largest profit possible
56.
What is the missing item to be deducted when calculating Cost of Goods Sold?
Opening Inventory + Purchases - ???
Opening Inventory + Purchases - ???
a)
Closing Inventory
b)
Returns
c)
Sales
d)
Rent
57.
What would be NOT be deducted from Gross Profit in order to calculate Profit for Year?
a)
Salaries of Managers
b)
Purchases of Raw Materials
c)
Rent of Premises
d)
Heating and Lighting Costs
58.
Income Statement looks at future profits and losses.
a)
True
b)
False
c)
Depends on type of organisation
d)
Depends on sector of industry
59.
Spreadsheets are efficient in the Finance Department as ___________ reduce _______ of human error.
a)
Formulae + Risk
b)
Files + Decrease
c)
Cells + Value
d)
Staff + Variety
60.
Which department deals with all the accounting statements?
a)
Human Resources
b)
Finance
c)
Operations
d)
Marketing
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