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WorksheetsA-level Business CHRISTMAS REVISION
Total questions: 91
Worksheet time: 51mins
Which of the following is an example of internal finance?
a) Bank loan
b) Selling shares
c) Retained profits
d) Trade credit
What is the main advantage of using retained profits as a source of finance?
No interest payments
No need to repay
Ownership dilution
Immediate availability
Which source of finance involves selling off a company's fixed assets?
Bank overdraft
Issuing debentures
Asset sales
Trade credit
Which of the following is considered a short-term source of finance?
Issuing shares
Retained earnings
Trade credit
Leasing
What is the key disadvantage of using a bank overdraft as a source of finance?
High-interest rates
Loss of control
Which source of finance is best described as borrowing money that is repaid in instalments over a set period of time?
Trade credit
Leasing
Bank loan
Retained profits
Which type of finance is obtained by selling shares to the public for the first time?
Venture capital
Initial Public Offering (IPO)
Business angels
Trade credit
Which of the following is a benefit of using leasing as a source of finance?
Full ownership of the asset
Tax benefits
High initial costs
Increased liability
What is a primary disadvantage of using venture capital as a source of finance?
High-interest rates
Short repayment terms
Dilution of control and ownership
Difficulty in obtaining
Which of the following sources of finance is typically most expensive in terms of cost?
Retained earnings
Trade credit
Bank overdraft
Sale and leaseback
Which of the following is a source of internal finance?
Bank loan
Issuing shares
Retained profits
Government grant
Which source of finance involves selling an asset to lease it back?
Factoring
Trade credit
Sale and leaseback
Overdraft
What is a key disadvantage of using a bank overdraft?
Fixed interest rates
Immediate repayment requirement
High interest rates
Long-term repayment period
Which type of finance is typically used for long-term capital projects?
Trade credit
Bank loan
Overdraft
Factoring
Which of the following is NOT a source of external finance?
Friends and family
Issuing shares
Personal savings
What is the primary advantage of retained profits as a source of finance?
No dilution of ownership
No repayment required
Tax-deductible
Low-interest rates
Which type of finance involves selling accounts receivable at a discount?
Factoring
Trade credit
Bank loan
Retained profits
Which source of finance could involve giving up a portion of ownership in the business?
Bank loan
Retained profits
Issuing shares
Trade credit
What is a potential drawback of using venture capital?
High interest rates
Loss of control
Immediate repayment
Limited availability
Which of the following is a short-term source of finance?
What does unlimited liability mean for a business owner?
The owner's liability is limited to the amount invested in the business.
The owner can lose only the business assets if the business fails.
The owner is personally responsible for all business debts.
The business is a separate legal entity from the owner.
Which type of business structure typically has unlimited liability?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited liability partnership (LLP)
Which of the following is a key characteristic of limited liability?
Owners are personally responsible for all debts of the business.
Business assets are at risk, but personal assets are protected.
The business cannot be sued independently of the owners.
There is no distinction between the business and the owners.
Which business structure provides limited liability to its owners?
Sole trader
Partnership
Private limited company (Ltd)
Franchise
How does having limited liability benefit business owners?
It increases the owners' personal financial risk.
It reduces the owners' control over the business.
It protects the owners' personal assets from business debts.
In which type of business structure do partners share unlimited liability?
Limited liability partnership (LLP)
General partnership
Private limited company (Ltd)
Public limited company (PLC)
Which of the following is an advantage of a public limited company (PLC)?
Unlimited liability for shareholders
Ability to raise capital through stock markets
Simplicity in formation and operation
Greater privacy and less regulation
Which type of liability means that a business owner is only liable for the amount they invested in the company?
Joint liability
Unlimited liability
Limited liability
Shared liability
What is a key disadvantage of operating as a sole trader?
Limited control over business decisions
Difficulty in raising finance
Unlimited liability
Increased regulatory requirements
Which business structure must have at least one partner with unlimited liability?
General partnership
Limited partnership
Corporation
Sole proprietorship
Which type of business has an owner who is personally responsible for all business debts?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
Which type of business is a sole trader?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
In which type of business are business assets at risk, but personal assets are protected?
a) Private limited company (Ltd)
b) Public limited company (PLC)
c) Sole trader
d) Limited partnership (LP)
Which type of business is a private limited company (Ltd)?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
Which type of business protects the owners' personal assets from business debts?
a) Private limited company (Ltd)
b) Public limited company (PLC)
c) Sole trader
d) Limited partnership (LP)
Which type of business is a general partnership?
a) Private limited company (Ltd)
b) Public limited company (PLC)
c) Sole trader
d) Limited partnership (LP)
Which type of business has the ability to raise capital through stock markets?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
Which type of business has limited liability?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
Which type of business has unlimited liability?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
Which type of business is a limited partnership (LP)?
Private limited company (Ltd)
Public limited company (PLC)
Sole trader
Limited partnership (LP)
What is the main purpose of a business plan when seeking finance?
To attract new employees
To impress competitors
To persuade investors or banks
To reduce tax liabilities
Which type of investor is mainly interested in the upside potential of a business?
Bank manager
Government agency
Dragon-type investor
Customer
What is usually considered the “heart” of a business plan?
Marketing plan
Executive summary
Financial plan (cash flow forecast)
Product/service description
Which section of a business plan identifies the customer’s problem and explains how the business will solve it?
Executive summary
Operational plan
Market analysis
Conclusion
In the business plan structure, which section explains how the product will be produced and delivered?
Financial plan
Operational plan
Marketing plan
Market analysis
Why was Tom Doyle’s bank loan request rejected?
He asked for too much money
His product idea wasn’t unique
He underestimated his day-to-day finance needs
He didn’t provide a marketing plan
What does a cash flow forecast estimate?
What does a monthly balance in a cash flow forecast show?
The difference between inflows and outflows for that month
Total revenue for the year
Net profit
Average customer spend
In a cash flow forecast, the opening balance of a month is equal to:
Zero each time
The previous month’s closing balance
Net profit for the year
Initial investment only
What financial issue did Debenhams face in 2013 according to the case study?
Falling sales
High employee turnover
A cash flow crisis
Legal disputes with suppliers
What is the easiest remedy for negative cash balances in the short term?
Increase stock levels
Negotiate a bank overdraft
Increase marketing expenditure
Cut staff wages
Which of the following is an example of cash inflow?
Paying suppliers
Wages
Sales revenue from customers
Rent for premises
Which of the following is an example of cash outflow?
Bank loan received
Customer payments
Interest received
Wages
Why is it important to make accurate estimates of finance needs?
Banks prefer smaller loan requests
Overestimating guarantees approval
Underestimating may lead to rejection of finance
Investors ignore financial forecasts
Which of the following can help improve cash flow?
Leasing equipment instead of buying
Increasing stock levels
Delaying customer payments
Buying buildings instead of renting
Which of these is a limitation of cash flow forecasts?
They are always 100% accurate
They cannot be used by banks
They rely on uncertain assumptions
They exclude expenditure
Why might entrepreneurs produce over-optimistic cash flow forecasts?
They underestimate competitors
They are naturally optimistic and may overestimate sales
They are legally required to
Banks demand it
Which of the following describes contingencies in cash flow forecasting?
Planned overstatement of costs to cover unexpected problems
Ignoring customer defaults
Delaying all payments
Relying on one main supplier
Which part of the business plan discusses target customers and pricing strategy?
Marketing plan
Executive summary
Operational plan
Conclusion
What is one reason a bank manager may want to see a cash flow forecast?
To understand employee skills
To check long-term market growth
To ensure the business can repay loans
To measure customer satisfaction
A
B
C
D
What is a sales forecast?
A record of past sales
An estimate of future sales based on data and trends
A government prediction of national GDP
A budget for business spending
Which business function is directly influenced by sales forecasts?
Human resource planning
Cash flow forecasting
Production scheduling
All of the above
Why is forecasting especially difficult for start-up businesses?
They usually have too much sales data
They have no reliable historical sales data
Customers are always loyal to new businesses
Competitors cannot influence them
Which of the following best describes extrapolation?
Estimating future sales by asking customers their preferences
Assuming future sales will follow the same trend as past sales
Predicting sales using only competitor data
Adjusting prices to influence demand
Which example shows how consumer trends affect sales forecasts?
A fall in fruit juice sales due to concerns about sugar
A drop in the value of the pound
A rise in income tax
A supermarket merger
Which of these products is most likely to be income inelastic?
Luxury holidays
Organic food
Toothpaste
Designer handbags
A sharp fall in the pound could lead to:
UK imports becoming cheaper
UK exports becoming less competitive
Imported goods becoming more expensive
UK manufacturers losing sales
What happened to Branston Ketchup sales after 2010?
They grew steadily to £15 million by 2012
They collapsed to around £3.5 million in 2012
They replaced Heinz as the market leader
They stayed the same as forecasted
Which supermarket merger in 2018 was linked to the growth of Aldi and Lidl?
Tesco and Morrisons
Asda and Sainsbury’s
Aldi and Lidl
Waitrose and Iceland
Which quote best reflects the uncertainty of sales forecasting?
“Sales forecasting is always 100% accurate.”
“It’s tough to make predictions, especially about the future.” – Yogi Berra
“Consumers never change their habits.”
“Competitors do not affect sales forecasts.”
What is the definition of revenue?
Profit after tax
Value of total sales in a given period
Money invested in a business
Costs of production
Which of the following is an example of a cost to a business?
Wages
Rent
Raw materials
All of the above
Sales volume measures:
The number of units sold
The value of sales in pounds
The profit per unit sold
The difference between revenue and costs
Sales revenue is calculated as:
Profit ÷ units sold
Volume × price
Fixed costs + variable costs
Assets – liabilities
Why might sales revenue be uncertain?
Some sales are made on credit
Customers never return
Prices never change
Costs are always fixed
Which UK retailer went into liquidation in 2018, leaving suppliers unpaid?
Debenhams
House of Fraser
BHS
Woolworths
What do entrepreneurs often begin their financial planning with?
Staffing forecasts
Cost analysis
Revenue estimates
Competitor research
A firm can increase revenue by:
Selling more units
Raising the price of products
Both A and B
Reducing costs
Which company saw a 5% decline in advertising revenue in 2018?
Reach plc
The Guardian
News UK
The Telegraph
Reach plc made a pre-tax loss in 2018 because:
Revenue was too high
Costs were higher than revenue
Sales volume was low but costs were fixed
They sold the Express newspapers
Which business grew sales from £1m to nearly £100m between 2009 and 2017?
PureGym
Fitness First
The Gym Group
Virgin Active
What type of funding did The Gym Group rely on to expand?
Bank overdraft
Venture capital
Government grant
Family loans
What is an advantage of financing growth without external funding?
Lower fixed costs
Avoiding interest payments and loss of control
Guaranteed success
Increased sales automatically
Why do managers need to know the cost of production?
To decide if selling at current prices is profitable
To compare actual vs forecast costs
To judge efficiency in different areas
All of the above
Fixed costs are:
Costs that change with output
Costs that stay the same regardless of output
Costs that depend on sales revenue
Always equal to variable costs
Which of the following is a fixed cost?
Rent
Raw materials
Fuel
Packaging
Variable costs are:
Costs that never change
Costs that change directly with output
Long-term expenses like rent
Unavoidable payments
Which of the following is a variable cost for Innocent Smoothies?
Rent on the factory
Raw strawberries and bananas
Management salaries
Business rates
Total costs are equal to:
Fixed costs + variable costs
Sales revenue - profit
Revenue × output
Assets - liabilities
Why might a firm with high fixed costs aim to maximise sales?
To reduce wages
To spread fixed costs across more units
To avoid paying rent
To lower variable costs
