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WorksheetsPreliminary Business Studies Revision Questions
Total questions: 100
Worksheet time: 2hrs 40mins
Which option best identifies an SME in the Australian context?
Independently owned/operated; fewer than 200 employees in most industries
Any business earning under $10m revenue
Any sole trader regardless of size
Any business not listed on the ASX
What is the most significant economic role of SMEs in Australia?
Driving employment and innovation
Setting monetary policy
Collecting GST for states
Controlling exchange rates
SMEs primarily contribute to GDP by:
Producing goods/services and employing large numbers of people
Setting monetary policy
Paying higher company tax than large firms
Importing to increase the trade deficit
Which factor best explains why many niche SMEs succeed?
Flexibility and close customer relationships
Access to monopoly power
Guaranteed bank finance
High levels of bureaucracy
Which is an internal cause of SME failure?
Poor financial management and cash flow control
Sudden change in exchange rates
Entry of a new competitor
New government regulation
Which is an external cause of SME failure?
Interest rate rises increasing loan costs
Inaccurate stock records
Overstaffing
Owner’s inexperience
How do SMEs support Australia’s Balance of Payments?
By exporting goods/services in niche markets
By increasing government spending
By reducing savings rates
By setting tariffs
Which feature is typical of an SME?
Simple organisational structure with direct owner management
Separation of ownership and control
Global oligopoly power
Multi-layer board committees
Which combination most improves SME survival in the first five years?
Sound planning, access to information, and prudent cash management
Rapid expansion, high debt, and price cutting
Minimal record keeping and informal HR
Relying on one major customer
Why do SMEs increase market competition?
They offer alternative suppliers and reduce barriers to entry
They coordinate prices with large firms
They receive exclusive government contracts
They set industry-wide wages
Which is a personal quality linked to successful entrepreneurship?
Motivation and resilience
Guaranteed risk-free attitude
Avoidance of innovation
Delegating all decisions
How do qualifications and skills influence SME establishment?
They improve capability to operate and comply with regulations
They remove the need for market research
They guarantee bank finance approval
They eliminate competition
Cultural background may influence entrepreneurs by:
Shaping networks, market insights and product ideas
Ensuring legal immunity
Providing automatic grants
Eliminating the need for planning
Which source offers free guidance for start-ups in NSW?
Government small business websites and Service NSW
Only paid management consultants
Foreign central banks
Private equity firms
Which best distinguishes an entrepreneur from a manager?
Entrepreneurs assume risk to create value; managers organise resources to achieve goals
Entrepreneurs only work alone; managers work in teams
Entrepreneurs avoid planning; managers plan
Entrepreneurs are volunteers; managers are paid
How is motivation critical at start-up?
It sustains effort through uncertainty and setbacks
It guarantees profit
It replaces capital requirements
It removes legal obligations
How does industry networking support SME success?
Provides market information, mentors and supplier contacts
Eliminates competition
Locks in customers by law
Avoids the need for a business plan
Which is a non-financial reward of entrepreneurship?
Independence and work flexibility
Guaranteed leave loading
Award wage protection
Government pension
Why use an accountant when establishing a business?
To set up records, advise on structure, and tax compliance
To approve all prices by law
To write employment contracts for government
To eliminate GST obligations
To what extent can entrepreneurship offset limited capital at start-up?
It helps via creative, low-cost strategies but does not replace funding needs
It fully replaces finance requirements
Copying any competitor without change
It is irrelevant to resource use
Which is a common source of a viable business idea?
Identified customer pain point or unmet need
Random product with no target market
Ignoring feedback
Random product with no target market
Which indicator best suggests high competitive intensity in a local market?
Many similar firms with low switching costs for customers
High barriers to entry and one dominant firm
Geographic isolation with one supplier
Government monopoly
Which best distinguishes buying an existing business from starting new?
Existing business has customers and systems; new business starts from scratch
Existing business is always cheaper
New business has guaranteed success
Existing business has no risk
Which is a key advantage of franchising for a new owner?
Proven model and brand recognition
Complete strategic freedom
No fees or royalties
Guaranteed profitability
Which is a likely disadvantage of franchising?
Ongoing fees and less control over business decisions
No training support
No marketing assistance
Unlimited product range freedom
Why does analysing competitors help planning?
It informs differentiation and pricing decisions
It guarantees monopoly power
It replaces market research
It eliminates the need for promotion
Which option best lowers start-up risk?
Buying an existing profitable business after due diligence
Starting new without research
Leasing equipment with no plan
Ignoring cash flow needs
Why is a minimum viable product (MVP) useful?
It tests demand quickly with low cost
It locks in patents automatically
It replaces a business plan
It ensures market dominance
A town already has two 24/7 gyms. Which strategy best avoids direct price wars for a new gym entrant?
Differentiate on niche classes and community programs
Match competitor prices and features exactly
Spend nothing on marketing
Reduce opening hours
Which is typically part of due diligence when buying a business?
Reviewing financial statements and existing contracts
Announcing new prices before purchase
Changing legal structure immediately
Firing existing staff on day one
Which is a service rather than a good?
Personal training session
Coffee beans
T-shirt
Laptop
If demand is price sensitive, which pricing strategy is most appropriate?
Competitive pricing near rivals’ prices
Premium pricing above market
Price skimming far above market
No pricing strategy
Which location is most suitable for a convenience-based café?
High foot-traffic strip near transport
Remote industrial estate
Second-floor office hidden from street
Warehouse district open weekends only
Offering both dine-in and delivery primarily affects which marketing mix element?
Place (distribution)
Product quality
Promotion only
People only
A smoothie bar sets price at 8withvariablecost 3 and fixed costs $5,000/month. Break-even units?
1000
625
1600
500
What is the main risk of aggressive discounting to gain market share?
Eroded margins and unsustainable expectations
Improved brand equity
Guaranteed loyalty
Higher perceived quality
Which location factor most explains success of a suburban childcare centre?
Proximity to residential areas and parking
Distance from customers
Lack of signage
Restricted opening hours
Which is an augmented product feature for a gym membership?
Access to a mobile app and training plans
The physical treadmill
Electricity used on site
Lease of the building
Online-only retail primarily changes which cost structure element?
Lower store rent but higher shipping/returns costs
Higher store rent and utilities
No need for inventory
Guaranteed faster delivery
If price is 10,variablecost 6, and fixed cost $4,000, break-even units equal:
1,000
400
666
2,500
Which is an example of equity finance?
Owner’s savings invested into the business
Bank overdraft
Trade credit
Term loan
Main cost of debt finance to a business is:
Interest payments and fees
Loss of ownership
Dividend obligations
Reduced tax obligations
Which distinguishes debt from equity finance?
Debt must be repaid with interest; equity involves ownership shares
Debt gives voting rights; equity does not
Debt requires dividends; equity requires interest
Debt has no covenants; equity does
Why is cash flow forecasting essential for SMEs?
To ensure liquidity for bills despite seasonal sales
To eliminate fixed costs
To set exchange rates
To avoid budgeting
A $50,000 loan at 8% simple annual interest costs how much in interest for one year?
$4,000
$8,000
$400
$6,000
When might trade credit be most useful?
To smooth short-term inventory purchases without immediate cash
To finance long-term property purchases
To raise owner equity
To pay dividends
High gearing (high debt-to-equity) increases which risk most?
Interest rate and cash flow stress
Loss of brand identity
Supplier concentration
Technological obsolescence only
If monthly fixed costs are 12,000andcontributionperunitis 6, monthly break-even units are:
2,000
720
1,200
12,006
Which item is a cash outflow?
Loan principal repayment
Accrued depreciation
Accounts receivable increase
Inventory revaluation gain
Why might an SME choose equity over debt at start-up?
Lower cash burden from repayments, despite diluted ownership
Guaranteed control retention
Faster approval than any loan
Better tax deductibility
Registering a business name in Australia primarily:
Allows trading under a chosen name
Creates a separate legal entity automatically
Provides trademark protection automatically
Eliminates need for an ABN
Zoning laws most directly affect which aspect of business?
Where certain business activities can operate
Which prices may be charged
How many staff must be hired
What software must be used
A key WHS responsibility of employers is to:
Provide a safe workplace and training
Set wages above award at all times
Provide free lunch
Guarantee promotions
Which is a non-wage labour cost?
Superannuation contributions
Overtime pay
Base hourly wage
Commission
Why do skills shortages matter to SMEs?
They increase wages and reduce productivity
They eliminate demand
They remove training needs
They reduce competition for labour
Which tax is federal in Australia?
Company income tax
Payroll tax
Stamp duty
Council rates
Which statement about GST is correct?
It is a 10% tax on most goods/services collected by businesses for the ATO
It is a tax on company profits only
It is a state tax set by NSW Treasury
It is paid only by exporters
Why is ethical tax compliance important?
It reduces legal risk and supports public services
It guarantees higher sales
It eliminates competition
It replaces financial planning
Which approach best supports retention in a café?
Clear rosters, training, and recognition programs
Cutting all breaks to increase hours worked
No feedback policy
Random roster changes
Country-of-origin food labelling mainly helps consumers to:
Understand where ingredients are grown or processed
Determine the exact profit margin
Identify award wages paid
Learn the business’s ABN
Which section summarises the whole business plan for busy readers?
Executive summary
Operations plan
Financial statements
Appendices
Why include a marketing plan in the business plan?
To outline target market and strategies for the 4Ps
To comply with labour law
To replace budgeting
To set tax rates
Which pair shows internal vs external SWOT analysis correctly?
Strengths/Weaknesses are internal; Opportunities/Threats are external
Strengths/Threats are internal; Weaknesses/Opportunities are external
All four are internal
All four are external
Which is an Opportunity for a suburban gym?
New housing development nearby
High staff turnover
Aging equipment
Poor cash flow
What is the purpose of situational analysis?
To assess current internal and external environment before choosing strategies
To set tax rates
To avoid market research
To replace financial reporting
If projected sales fall short of budget, which part of the plan must be revisited first?
Cash flow forecasts and funding needs
Legal structure
Logo design
Org chart titles
Why include HR planning in a start-up?
To match staffing, training and costs to operational needs
To set global exchange rates
To replace marketing activities
To avoid compliance
A 5-year expansion target is which type of goal?
Strategic
Tactical
Operational
Incidental
Price 12,variablecost 5, fixed cost $7,000. Break-even units?
1,000
700
500
2,400
Which strategy best converts a strength into growth for a café with a strong local brand?
Launch a loyalty program and local partnerships
Cut staff training
Reduce product range randomly
Avoid social media
Budgeted profit 15K,actualprofit 6K with sales below budget. First corrective action?
Investigate demand and adjust pricing/promotion
Increase fixed costs
Ignore variance
Borrow more immediately
Which is an example of corrective action?
Negotiating cheaper supplier contracts after overspending
Reprinting the plan without changes
Ignoring cash deficits
Sacking staff without cause
Why is a business plan critical to success?
It sets goals, strategies, and financial forecasts used to guide decisions
It guarantees profits
It replaces management
It removes market risks
Which practice best improves team performance?
Regular feedback, training and clear role definitions
No induction
Unpredictable rosters
No delegation
Sales increase each Nov–Dec annually. Best managerial response?
Increase inventory and staffing for peak season
Cut marketing in Oct
Reduce opening hours in Dec
Raise fixed costs permanently
Which example shows sustained competitive advantage?
Proprietary technology that lowers cost over time
One-day promotion
Copying rivals’ ads
Random price cuts
Opening 5 stores in 6 months funded by short-term debt mainly risks:
Liquidity squeeze and failure if sales lag
Instant economies of scale
Guaranteed market share
Lower interest rate risk
How can POS data help a café?
Identify top sellers and schedule staff accordingly
Set tax rates
Replace budgeting completely
Eliminate fixed costs
How do rising interest rates affect leveraged SMEs?
Increase repayments and reduce cash flow
Lower borrowing costs
Boost discretionary demand
Guarantee growth
Sales 80,000;COGS 32,000; expenses $38,000. Profit equals:
$10,000
$48,000
$42,000
$-
Price is $5; expected sales is 3,000 units. Forecast revenue equals:
$15,000
$3,000
$5,000
$30,000
Fixed costs 10,000;variable 2/unit; output 4,000 units. Total cost equals:
$18,000
$8,000
$14,000
$10,000
A forecast shows negative cash in Month 2 but profit for the quarter. Why?
Timing of inflows/outflows causes a temporary shortfall
The profit figure must be wrong
GST is always negative
Sales were cash only
When is equity preferable to debt?
When early cash flows are uncertain and flexibility is needed
When quick tax deductions are the only goal
When control must never be shared
When interest rates are zero forever
Why do food businesses monitor labelling rules?
Non-compliance risks fines and brand damage
It reduces rent
It increases wages automatically
It sets exchange rates
Which pair shows wage vs non-wage cost?
Base pay vs superannuation
Superannuation vs overtime
Workers’ comp vs uniforms
Training vs equipment
Why do clear roles matter in an org chart?
They reduce duplication and improve accountability
They increase hierarchy for its own sake
They guarantee promotions
They eliminate training needs
Which action best sustains a differentiation advantage?
Continuous product innovation based on customer feedback
One big launch then no updates
Random price cuts
Copying rivals’ menus
High inflation most likely leads SMEs to: budgeted expenses 25,000;actual 27,500. What is the variance?
Review prices and cost controls to protect margins
Cut prices permanently
Increase stock with no plan
Ignore budgeting
27,500− 25,000. What is the variance?
$2,750 unfavourable
$2,750 favourable
$2,500 unfavourable
$-
Strategic vs operational goals differ because strategic goals are:
Long-term and organisation-wide; operational are short-term and task-focused
Short-term and task-focused; operational are long-term
Always financial; operational are non-financial
Set by staff only; operational by owners
Mall vs strip location: which statement is most accurate?
Malls have higher rent but greater foot traffic; strips offer street visibility and lower fixed costs
Strips always have more traffic
Malls have lower rents
Location choice does not affect sales
Rising interest rates most affect which finance source?
Variable-rate bank loans
Owner's equity
Retained profits
Trade credit on 0% terms
Which is a legal requirement in hiring?
Complying with anti-discrimination and Fair Work laws
Offering above-award wages only
Providing free meals
Using only word-of-mouth ads
If a café’s SWOT finds a threat of new low-cost entrants, which response aligns?
Improve loyalty and differentiate on service/quality
Slash prices to zero
Stop marketing
Increase fixed costs randomly
Which KPI best measures sales productivity?
Revenue per staff hour
Floor area
Number of suppliers
Total assets
Fixed 9,000;price 15; variable $9. Break-even units?
1,500
600
900
10,000
A key benefit of adding online ordering to a café is:
Expanding reach and smoothing demand via pre-orders
Eliminating all in-store costs
Guaranteed 5-star reviews
Removing the need for staff
Which signal suggests resource over-extension?
Stockouts, quality issues, and cash deficits after rapid expansion
Higher training levels
Improved cash reserves
Lower debt ratios
During a downturn, which strategy is most prudent for an SME?
Tighten costs, protect cash flow, and focus on core customers
Leverage up and expand rapidly
Cease all marketing
Ignore budgets
