WorksheetsEdexcel GCSE Business 1.3
Total questions: 29
Worksheet time: 15mins
Which one of the following is the correct formula for calculating the total revenue generated by each product sold by a business?
Variable costs X Selling price per unit
Fixed costs X Selling price per unit
Quantity sold X Selling price per unit
Total output X Total inputs
Which one of the following is the correct definition of overheads?
Costs that are not directly related to the production of goods or supply of services
Costs that are directly related to the production of goods or supply of services
Costs that vary according to level of output
Wages paid to staff for working extra hours
Which two of the following are examples of short-term methods of finance?
Share capital
Loan
Trade credit
Retained profit
Overdraft
Which one of the following is an example of a fixed cost for a business that makes shoes?
Leather for making the shoes
Rent on the factory premises
Boxes used in packaging the shoes
Electricity to run the cutting machines
Which one of the following is the correct formula for calculating the break even level of output?
Total fixed costs / selling price per unit
Total costs / contribution per unit
Total fixed costs / contribution per unit
Which one of the following correctly defines a situation of insolvency?
Where the value of items owned is greater than the value of money owed
Where total costs exceed total revenue
Where the value of inputs is greater than the value of outputs
Where debts are unable to be met as they fall due
Which two of the following statements are true about using trade credit as a source of finance for a business?
It dilutes ownership and control of the business
It may deny a business any discounts available for paying promptly
It is interest free - as long as the business pays within the time-frame specified
It is difficult and expensive to arrange
It negatively affects cash flow
Which one of the following is the correct definition of margin of safety?
The amount by which total revenue can fall before a business is unable to cover its total fixed costs
The amount by which output can fall before a business reaches its break even level of output
The amount by which the total revenue of a business exceeds its total costs
The amount by which a business’s actual output exceeds its planned level of output
A business’s fixed costs are £10 000, selling price per unit is £4, and total variable costs per unit are £1.50. Which one of the following is the break even level of output (to the nearest whole number)?
2 500 units
2 857 units
4 000 units
6 667 units
Which two of the following statements are true about using venture capital as a source of finance to start up a business?
Venture capital is often used to raise small sums of money (eg up to £10,000)
Venture capital firms often provide expert management support
Venture capital is simple and quick to arrange
Venture capital does not dilute ownership and control
Many venture capital firms want a relatively quick return
Which one of the following is the correct definition of break even?
When the quantity sold equals the quantity produced to sell
When fixed costs equal variable costs
When total revenue equals total costs
When total quantity equals total costs
Which two of the following are advantages of using a bank loan to finance a business?
Less flexible than overdrafts
Regular interest payments are incurred
Collateral is often required to offer as security for the loan
Relatively straightforward to arrange
Cannot be recalled before the agreed date
Which one of the following is the correct formula for calculating profit?
Total costs - Total revenue
Total quantity sold - Total costs
Total output - Total input
Total revenue - Total costs
Which two of the following are examples of an overhead?
Rent
Insurance
Packaging
Raw materials
Wages to production staff
Which one of the following is the correct definition of crowd funding?
Raising a large amount of money from a large number of people who each contribute a small amount
Raising a small amount of money from a small number of people who each contribute a large amount
Raising a large amount of money from a small number of people who each contribute a large amount
Raising a small amount of money from a small number of people who each contribute a small amount
Which one of the following is the correct definition of fixed costs?
Costs that stay the same regardless of the output quantity
Costs that change according to output quantity
The cost of producing all output over a period of time
Costs that directly relate to the production of a product or process
Which two of the following are examples of short-term methods (sources) of finance?
Overdraft
Venture capital
Share capital
Trade credit
Crowd funding
Which two of the following statements are advantages to a potential entrepreneur of selling shares to family and friends, rather than taking out a bank loan, to raise the finance required to start a business?
Risks are shared with other shareholders
Profits are shared with other shareholders
Less control - as shareholders have a right to vote on important matters
No repayment requirement or ongoing costs in the form of interest payments
Personal relationships could be damaged if the business does not make a profit
Which two of the following are examples of variable costs?
Rent on premises
Raw materials
Insurance
Salaries of managers
Wages of production staff
Which one of the following is a true statement about using retained profit to finance a business?
It is likely to be popular with shareholders as it means lower dividends
It dilutes ownership and control of the business
Unlike loans there are no interest payments to make
It is generally considered to be a short-term method of finance
Which one of the following is the correct definition of variable costs?
The cost of producing all output over a period of time
Costs that stay the same regardless of the output quantity
Costs that change according to output quantity
Costs that are not directly related to the production of a product or Process
Which two of the following are examples of cash outflows?
Rent on office premises
Cash from sales
Loans from the bank
Interest on investments
Corporation tax
Which two of the following are advantages of using crowd funding to finance a business?
There are no upfront fees
It can take a lot of time and effort to attract enough interest in the business to secure the finance required
If the funding target is not reached, finance pledged is usually returned to investors and the business gets nothing
Investors often become a business’s most loyal customers
It involves publically displaying the business idea, which risks others copying it
Which one of the following is the correct formula for calculating margin of safety?
Actual output - Planned output
Planned or actual level of output - Break even level of output
Actual total revenue - Actual total costs
Selling price - variable cost per unit
Which one of the following is another term for overheads
Variable costs
Direct costs
Indirect costs
Overtime
Which one of the following is the correct business term for profit reinvested in a private limited company, rather than being paid out to shareholders in dividends?
Net profit
Operating profit
Profit after tax
Retained profit
After its second year of trading a business’s total fixed costs are £64 620. Its total revenue is £196 180 and its total variable costs are £93 530. Which one of the following is the correct figure for the profit or loss made?
£38 030 loss
£38 030 profit
£102 650 profit
£131 560 profit
A business takes out a bank loan of £15 000. It does not have to start repaying the loan for 2 years, but does have to pay annual interest on the loan of 7%. Which one of the following is the total interest the business will pay on this loan, before it has to start making repayments?
£105
£210
£1 050
£2 100
Which two of the following statements can be true about using an overdraft as a source of finance for a business?
Flexible
Interest does not have to be paid
Difficult to arrange
Dilutes ownership of the business
Repayable on demand
