Edexcel GCSE BUSINESS STUDIES

SPOTTING A BUSINESS
OPPORTUNITY
NAME ____________________

Unit 1: Section 3
Putting a business idea into
practice
What you need to know
Revision Review

Key term definitions

Profit

Revenue

Fixed Cost

Variable Cost

Motivation

Leadership

Price

Cost
 Cash Flow

Cash Inflow

Cash Outflow

Net Cash Flow

Negative Cash Flow

Insolvency

Overdraft

Trade Credit

Personal Savings

Venture Capital

Limited Liability

Unlimited Liability

Sole Trader
 Private Limited
Company

Calculations – Write the formulas to calculate the following

Profit

Revenue

Total Costs

Total Variable Costs

Net Cash Flow

Questions
Q1.

Venture capital is a long-term source of finance for small businesses.

Which two of the following are the most likely advantages to a business of using venture capital?

Select two answers:

A Venture capitalists do not interfere with the running of the business

B There is the opportunity to benefit from expert advice

C Venture capitalists do not have to pay tax

D It increases access to finance for small businesses

E There is no need to produce a business plan

(Total for Question = 2 marks)

Q2.

Detailed below is a table showing the prices of airline tickets and the number of passengers booked on
each flight.

Which flight generated the highest revenue?

Select one answer

A SK345

B SK611

C SK212

D SK322

(Total for Question = 1 mark)

Q3.

Match the definition on the left with the correct term on the right.

The first one has been done for you.

(i) . . . . . . . . . .I . . . . . . . . . . . .

(ii) . . . . . . . . . . . . . . . . . . . . . .

(iii) . . . . . . . . . . . . . . . . . . . . . .

(iv) . . . . . . . . . . . . . . . . . . . . . .

(v) . . . . . . . . . . . . . . . . . . . . . .

(vi) . . . . . . . . . . . . . . . . . . . . . .

(Total for Question = 5 marks)

Q4.

The following table shows the revenue and costs of a business over a three-month period. The business
manufactures plastic components which are sold to a larger manufacturer.

Fill in the four blanks to complete the table.

April May June

Total revenue £3 700 £3 400 (iv)

Fixed costs (i) £900 £900

Variable costs £1 700 £1 600 £1 500

Total costs £2 600 (iii) £2 400

Profit (ii) £900 £1 100

(Total for Question = 4 marks)

Q5.

Below is copy of Hamish's cash flow forecast from his business plan.

Fill in the three blanks to complete the cash flow forecast.

(Total for question = 3 marks)

Q6.

Which three of the following are fixed costs of a manufacturing business?

Select three answers:

A Raw materials

B Salaries of managers

C Rent on premises

D Packaging for products

E Interest on a bank loan

F Parts and components

(Total for question = 3 marks)

Q7.

James decides that he will use his personal savings to finance the expansion.

Which two of the following are disadvantages of using personal savings as a source of finance?

Select two answers.

A No interest will have to be paid

B The amount available might not be sufficient

C The money will not have to be repaid

D Less money available to deal with emergencies

E The money is instantly available

(Total for Question = 2 marks)

Q8.

This question is based on the information below.

Fayazee Mantel is an entrepreneur who owns and runs a successful printing business.
She keeps a weekly diary, an extract of which is shown below.

Using the information, which entrepreneurial quality does Fayazee demonstrate on Tuesday?

Select one answer:

A Leadership

B Willingness to take risks

C Being lucky

D Showing determination

(Total for Question = 1 mark)

Q9.

WedgeWelly has many variable costs when running the business.

Which one of the following is an example of a variable cost?

Select one answer.

A Loan repayments
B Salaries
C Insurance
D Raw materials

(Total for question = 1 mark)

Q10.

A small manufacturing company has variable costs.

Which three of the following are examples of variable costs?

Select three answers

A Raw materials

B Insurance premiums

C Packaging

D Loan repayments

E Gas/electricity bills

F Salaries

(Total for Question = 3 marks)

Q11.

What is the closing balance for the business at the end of the month?

Select one answer.

A –£14 000
B –£4 000
C £24 000
D £38 000

(Total for question = 1 mark)

Q12.

Which two of the following might help Nick to increase sales volume?

Select two answers.

A Increase spending on marketing
B Employ fewer production staff
C Failure of a competitor
D Reduce net cash flow
E Increase the price of all of his products

(Total for question = 2 marks)

Q13.

Which one of the following is an example of a long-term source of finance?

Select one answer:

A Sales revenue

B Bank loan

C Trade credit

D Overdraft
(Total for question = 1 mark)

Q14.

Which one of the following is the most likely effect of these floods on the market for potatoes?

A The demand for potatoes will increase

B The demand for potatoes will decrease

C The price of potatoes will increase

D The price of potatoes will decrease

(Total for question = 1 mark)

Q15.

Northern Coffee Merchants Ltd – Monthly Profit (January to June)

Identify two likely impacts for the owners of Northern Coffee Merchants Ltd as a result of the
information shown in the graph above.

Select two answers:

A Money will be available to reinvest in the business

B Greater risk of losing personal possessions

C More difficult to pay suppliers

D Higher rate of Value Added Tax

E Less risk of insolvency

(Total for Question = 2 marks)

Q16.

Which three of the following would Hamish include in his business plan?

Select three answers:

A Summary of the market research carried out

B Copy of the design of his letter heading

C Projected profit and loss account

D All receipts and invoices

E Names and addresses of all employees

F Overview of the nature of the business

(Total for question = 3 marks)

Q17.

Which one of the following is an example of long-term finance for a sole trader?

Select one answer.

A Share capital
B Overdraft
C Bank loan
D Trade credit

(Total for Question = 1 mark)

Q18.

Match the definition on the left with the correct term on the right.

The first one is done for you.

(Total for Question = 5 marks)

Q19.

Match the term on the left with the correct definition on the right.

The first one has been done for you.

(Total for question = 5 marks)

Q20.

This question is based on the information below.

Connie Francis plans to open a juice bar in a busy town centre. The new business will sell
organic freshly-squeezed juices and light snacks to take away.
Connie has carried out market analysis and has discovered that there are three competitors.
She has produced a summary of these competitors, including their strengths and
weaknesses.
Connie had a number of objectives when deciding to start her own business.

Identify two non-financial objectives when starting a business.

Select two answers:

A Personal satisfaction

B Earn a high profit

C Provide financial security

D To provide a challenge

E To increase personal wealth

(Total for Question = 2 marks)

Q21.

Which two of the following are disadvantages to Mike, Sarah and Laura of a venture capitalist
investing in their business?

Select two answers.

A The venture capitalist risks losing their investment
B Higher corporation tax will need to be paid
C Potential conflict between the shareholders
D The risk of WedgeWelly failing is reduced
E It will reduce the control of the existing owners

(Total for question = 2 marks)

 Q22.
The following is an extract of financial information for a small gardening business. It shows the
costs, revenues and profit.

Fill in the three blanks.

(Total for question = 3 marks)

Q23.

A business has the following revenue information over a six-month period.

Which three of the following are the most likely explanations for the changes in revenue?
Select three answers.
A An increase in variable costs
B The product being seasonal
C A rise in profits
D A higher level of sales
E A successful advertising campaign
F A new competitor entering the market

(Total for Question = 3 marks)

Q24.

Which two of the following might explain this fall in sales?

Select two answers:

A Weather has been poor over the last few months

B Cost of raw materials has fallen

C Interest rates have remained the same

D Improved staff training programme

E Gardens are smaller and have no available space

(Total for question = 2 marks)

Q25.

The following table shows his revenue, costs and profit/loss for three months.

Fill in the three blanks to complete the table.

(Total for Question = 3 marks)

Q26.

Which two of the following are possible objectives for someone setting up business as a sole
trader?

Select two answers.

A To allow other people to make all decisions

B To benefit from limited liability
C To gain financial support from shareholders
D To take all the profits
E To have full control of the decisions

(Total for Question = 2 marks)

Q27.
Which one of the following is an example of short-term finance for a small business?
Select one answer:

A Bank loan

B Overdraft

C Share capital

D Personal savings

(Total for Question = 1 mark)

Q28.

James is looking to expand the business. He is considering using short-term sources of finance
to do this.

Which two of the following are examples of short-term sources of finance?

Select two answers.

A Loan from bank

B Venture capital

C Share capital

D Trade credit

E Overdraft

(Total for Question = 2 marks)

Mark Scheme
Q1.

Q2.

Answer Mark
A 1

Q3.

Answer Mark

ii = E; iii = D; iv = B; v = G; vi 5
=C

Q4.

Answer Mark

(i) £900; (ii) £1 100; (iii) £2 4

500; (iv) £3 500

Q5.

Q6.
Q7.

Answer Mark
B, D 2

Q8.

Q9.

Q10.

Answer Mark
A, C, E 3

Q11.

Q12.
Q13.

Q14.

Q15.

Q16.

Q17.

Answer Mark

C 1

Q18.

Answer Mark
ii = D, iii = C, iv = I, v = B, vi
5
=E

Q19.
Q20.

Q21.

Q22.

Q23.

Answer Mark

B, D, E 3
Q24.

Q25.

Answer Mark
£3,250, £12 550, £1 275 3

Q26.

Answer Mark

D, E 2

Q27.

Q28.

Answer Mark
D, E 2