A business will make a loss if:

its total costs are greater than its revenue

Which of the following is the finance function of a business most likely to be concerned about?

The sales revenue generated by the business

Which of the following must be true for a business whose total revenue equals its total costs?

The business is operating at its break-even level of output

One advantage to a company of using a bank loan to fund its expansion is that:

the money can be paid back in instalments

How is break-even calculated?

fixed costs ÷ (selling price - variable cost per unit)

Which of the following tasks is part of the role of the finance function?

Providing cash flow information to management

How is average rate of return (ARR) calculated?

total net profit ÷ number of years ÷ initial outlay x 100

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OCR GCSE 9-1 Business - Finance

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Questions 15

Answers

1
A business will make a loss if:
its revenue is greater than its total costs
its variable costs are greater than its fixed costs
its fixed costs are greater than its variable costs
its total costs are greater than its revenue
2
Sciser Ltd has revenue £75000, cost of sales £32000 and expenses £28000. Its gross profit is
£15000
£47000
£4000
£43000
3
Which of the following is a consequence to a business of an increase in its monthly rent?
Break-even quantity increases
Variable costs rise
Profit increases
Total revenue falls
4
Which type of cost will not change even if output increases?
Variable cost
Total cost
Production cost
Fixed cost
5
Which of the following is most likely to be a short-term source of finance?
New partner
Bank loan
Overdraft
Share issue
6
Which of the following is the finance function of a business most likely to be concerned about?
The reputation of the business
The sales revenue generated by the business
The communication methods used by the business
The ethical profile of the business
7
Which of the following must be true for a business whose total revenue equals its total costs?
The business is operating at its break-even level of output
The business has a cash flow crisis and needs an overdraft
The business has made a net loss
The business is making a profit
8
Which of the following is not a reason to produce a cash flow forecast?
To set financial targets
To predict when a business may run short of cash
To plan future spending
To estimate profit
9
A business sells 2000 items at 50p each. Its revenue is:
£2000
£1000
£200
£500
10
How is a firm’s gross profit margin calculated?
Net profit + Expenses
Gross profit ÷ Revenue x 100
Revenue - Cost of sales
Revenue ÷ Gross profit x 100
11
One advantage to a company of using a bank loan to fund its expansion is that:
cash flow monitoring will not be required
business costs will fall
the money can be paid back in instalments
interest is added to the amount that is owed
12
How is break-even calculated?
fixed costs ÷ selling price x sales revenue
fixed costs ÷ (selling price - variable cost per unit)
fixed costs ÷ variable cost per unit
fixed costs ÷ gross profit
13
Which of the following is a long term source of finance for an established company?
A share issue
New partner
Trade credit
An overdraft
14
Which of the following tasks is part of the role of the finance function?
Providing cash flow information to management
Paying the wages and salaries of the employees
Ordering raw materials from suppliers
Choosing which pricing method to use
15
How is average rate of return (ARR) calculated?
total net profit x number of years x initial outlay x 100
total net profit ÷ number of years ÷ initial outlay x 100
total net profit x number of years ÷ initial outlay x 100
total net profit ÷ number of years x initial outlay x 100

OCR GCSE 9-1 Business - Finance Flashcards | StudBud