Public sector businesses

are generally funded through taxation

A charity, such as the British Red Cross, benefits from

exemptions from many types of taxation

include items such as rent,utilities and salaries

An example of a social objective may be

To reduce the company’s carbon footprint

In a competitive market customers may

benefit from low prices and high quality

Businesses usually set objectives that are SMART. This means that they are Specific, ...

Measurable, Achievable, Realistic and Timed

Private limited companies

offer limited liability to owners for business debts

If average pay rises by 1%,and inflation is running at 2.5%, then

real incomes are falling by 1.5%

Total costs are calculated by

adding total fixed costs to total variable costs

Unlimited liability means that

the business owners are liable for all business debts

An ordinary share entitles the holder

to one vote at the firm’s AGM

Two common objectives for start-up businesses during their first two years of operation are

Survival and Building a Brand Image

A firm has been awarded the ‘fair trade’ certification. This is likely to have been due to

its commitment to the fair treatment of suppliers

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What is Business?

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GCE Business Studies Topic 1 Multiple Choice Test

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Questions 20

Answers

1
Public sector businesses
aim to make a profit
are owned by shareholders
are generally funded through taxation
sell their shares on the stock exchange
2
The acronym ‘PLC’ stands for:
Private Liability Company
Public Limited Company
Private Limited Company
Partnership Limited Corporation
3
Revenue may also be known as
gross profit
turnover
variable costs
profit
4
A charity, such as the British Red Cross, benefits from
exemptions from rent and utility bills
exemptions from many types of taxation
exemptions from all types of employment law
exemptions from the Disability Discrimination Act
5
Fixed costs
are those costs that are directly linked to output
neither increase nor decrease with inflation
include items such as rent,utilities and salaries
are usually paid annually
6
If interest rates rise, demand for ‘big ticket’ items is likely to
remain the same
rise significantly
rise slightly
fall
7
An example of a social objective may be
To increase spending on promotion using social media
To increase dividends forshareholders
To create employment in the local community
To reduce the company’s carbon footprint
8
In a competitive market customers may
benefit from low prices and high quality
have to endure high prices and poor quality
have little choice of where to buy products
have no choice over quality as one firm is a monopoly
9
Businesses usually set objectives that are SMART. This means that they are Specific, ...
Measurable, Active, Realistic and Timed
Monitorable, Achievable, Ready and Timed
Measurable, Achievable, Realistic and Timed
Monitorable, Achievable, Ready and Trusted
10
A sole trader wants to purchase new machines. The least appropriate source of finance would be:
Overdraft
Selling shares
Owner’s capital
Bank loan
11
A demographic factor affecting costs and demand for goods and services in the UK may be
increased levels of competition in retail
increasing levels of unemployment
decreasing population due to high rates of infant mortality
an ageing population
12
Selling shares for the first time on the stock exchange is called
Market capitalisation
Flotation
Regulation
Incorporation
13
Private limited companies
are required to publish annual accounts on their website
have between two and twenty owners
sell shares on the stock exchange
offer limited liability to owners for business debts
14
If average pay rises by 1%,and inflation is running at 2.5%, then
real incomes are rising by 3.5%
real incomes are rising by 1.5%
real incomes are falling by 1.5%
real incomes are falling by 3.5%
15
Total costs are calculated by
adding total fixed costs to variable costs per unit
adding total fixed costs to total variable costs
multiplying fixed costs by variable costs per unit
adding variable costs per unit to revenue
16
Unlimited liability means that
the business owners will always have debtstopay
the business has become a liability for its owners
there is no liability for business debts for owners
the business owners are liable for all business debts
17
An ordinary share entitles the holder
to one vote at the firm’s AGM
to receive a copy of the annual report
to a dividend if the firm makes a profit
to meet once a year with the CEO
18
Two common objectives for start-up businesses during their first two years of operation are
Survival and Building a Brand Image
Retrenchment and Maximising Revenue
Growth and Maximising Profit
Increasing shareholder dividends and Survival
19
A firm has been awarded the ‘fair trade’ certification. This is likely to have been due to
the firm’s commitment to increasing dividends
its decision to stop testing its goods on animals
its commitment to the fair treatment of suppliers
the firms commitment to the environment
20
A business aims to increase its market share, which of these strategies may it not pursue?
Increase spending on promotional activity
Reduce its prices below those of competitors
Increase its selling price
Seek new retailers to stock its products

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