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WorksheetsN5 Management of Finance
Total questions: 35
Worksheet time: 19mins
How are sole traders financed?
The partners
Selling shares to family and friends
Owners savings
Which of the following are disadvantages of government grants?
Item is not owned until all payments are made
If interest rates change, repayments might increase
Usually has conditions attached
Can take time to get
Which of the following is a method of finance secured against land or property?
Mortgage
Bank overdraft
Grant
Hire purchase
Which of the following relates to partnerships sourcing finance by increasing number of partners?
Brings more skills and ideas to the business
Profits would need to be shared amongst more people
Large amounts of finance can be raised that doesn't need to be paid back
Risk of increased disagreements occuring
Which of the following is a short term source of finance with a high rate of interest?
Bank loan
Bank overdraft
Hire purchase
Mortgage
Which method of finance involves buying an item and paying for it at a later date over a period of time?
Bank overdraft
Grant
Hire purchase
Share issue
Which method of finance is only available to private/public limited companies?
Grant
Bank loan
Hire purchase
Share issue
Arguments over borrowed money may occur with this source of finance
Hire purchase
Bank overdraft
Government grants
Loan from family/friends
To be able to make a profit which calculation should be carried out?
Expenses-sales
Sales-expenses
Total costs = Total revenue
Sales/Expenses
The break-even point is to find out how many units of a product you have to sell before you start to make a profit?
False
True
What type of costs always stays the same, no matter how many units of a product are made?
Fixed costs
Variable costs
If Caitlin's toy business has £200 per week of fixed costs and variable costs of £5 per toy made. What would her costs be when 2 toys are made?
£200
£210
£205
£195
What type of costs change depending on how many units of a product are made?
Fixed costs
Variable costs
If Caitlin sells each toy she makes for £15 and she sells 10 toys in one week. What is Caitlin's total revenue?
£150
£1500
£1.50
£15
Break even point is when Total revenue = selling price x units sold
True
False
Which of the following costs is a variable cost?
Rent
Raw materials
Advertising
Electricity
Which of the following is a fixed cost?
Raw materials
Electricity
Rent
Advertising
If the output level is zero, how much would the variable costs be?
£1
£10
£50
£0
Which calculation allows us to calculate the total costs of a business?
Adding fixed costs to sales revenue
Subtracting variable costs from sales revenue
Adding variable costs to fixed costs
Subtracting variable costs from fixed costs
What is the term for when a business is making neither a profit or a loss?
Fixed costs
Total revenue
Budgeting
Break-even
Businesses which don't have a healthy cash flow may face issues with which of the following
Spending too much money on stock that has not sold
It can help make decisions
It can help control expenses
Giving customers too long to pay their debts
In what ways can a business improve cash flow?
Owners taking additional drawings
Looking for cheaper supplies of raw materials
Selling equipment no longer needed
Offering discounts to customers who pay on time
On a cash budget, the cash available at the start of the period is known as...
Opening balance
Total receipts
Cash available
Total payments
How can we calculate the gross profit on an income statement?
Sales + Purchases
Sales - Purchases
Expenses + Purchases
Expenses - Purchases
How is profit for the year calculated on an income statement?
Gross Profit * Expenses
Gross Profit + Expenses
Gross Profit - Expenses
Purchases + Expenses
What do we call the total value of goods sold to a customer?
Sales
Net profit
Gross profit
Expenses
What do we call the profit made by a business after all expenses have been deducted?
Sales
Gross profit
Net profit
Expenses
Which type of business legally is required to produce and publish an income statement?
Every business
Sole trader
Partnership
Limited company
Which result does gross profit minus expenses give?
Gross profit
Net profit
Expenses
Cash flow
Under which heading would advertising, wages and rent be listed?
Expenses
Cost of sales
Revenue
Net profit
In what ways can spreadsheets be used for financial information?
Prepare cash budgets
Record cost information and calculate break-even
Create graphs showing income and expenditure
Email suppliers about upcoming projects
What package might be used to prepare financial information?
Spreadsheet
Word
Database
PowerPoint
Net profit is calculated by taking gross profit and subtracting expenses
True
False
What is a cash budget?
A document that shows expected receipts and payments over a period of time
A document which creates graphs showing financial information
A document which calculates the break even point
A document which shows gross profit and profit for the year
If all payments and receipts are consistent each month except wages and advertising costs which continue to increase in a cash budget. How would this impact the business?
Opening balance would be higher each month
Opening balance would be lower each month
Closing balance would be lower each month
Total payments for the business would be increasing each month
