UNIT 1

Question 1

why do businesses exist

Answer 1

•profit
• to sell their products
• providing services
• provide jobs

Question 2

what does a mission statement communicate?

Answer 2

• what does your company do
• why does ur company do this
• how does your company do this

Question 3

advantages of business setting objectives

Answer 3

• increases motivation
• organisation
• measuring success

Question 4

why is the acronym SMART used

Answer 4

SMART is used as a way to set goals within a business

Question 5

how do i increase profit?

Answer 5

increase revenue or decrease costs

Question 6

to decrease costs

Answer 6

• move to a cheaper premises
• use less electricity
•find a cheaper supplier

Question 7

to increase revenue

Answer 7

• increase/ decrease prices
• advertise

Question 8

advantages and disadvantages of a sole trader

Answer 8

advantages
• keep all profit
• easy to set up
• owner has all control
disadvantes
• longer hours
• unlimited liability
• people reluctant to give you money

Question 9

advantages and disadvantages of a private limited company

Answer 9

advantages
• limited liability
• keep control over business when selling shares
• can sell shares
disadvantages
• takes time
• profit is shared with shareholders
• have to share financial figures

Question 10

adv and disadv of a public limited company

Answer 10

advantages
• limited liability
• more reliable to lender
• public awareness
disadvantages
• risk of being taken over
• shareholders have more control
• finance published

Question 11

influences of share price

Answer 11

• less employees
• taken over
• cost of living
• announced profit

Question 12

whats a public limited company?

Answer 12

a company registered under the companies house
minimum capital requirements
shares offered to the public

Question 13

whats a private limited company

Answer 13

a type of organisation you can set up to run your business. Company ownership is split into shares owned by shareholders.

Question 14

whats a private sector

Answer 14

a part of the national economy that isnt under control of the government

Question 15

whats a sole trader

Answer 15

own and run by 1 person

Question 16

whats a partnership

Answer 16

working with another company, 2-20 people can be involved

Question 17

primary sector

Answer 17

extracting raw materials

Question 18

secondary sector

Answer 18

manufacturing; making things with materials

Question 19

tertiary

Answer 19

services such as police

Question 20

quaternary

Answer 20

office jobs/ ICT

Question 21

tangible products

Answer 21

products we can physically touch

Question 22

intangible products

Answer 22

something you cannot physically hold eg: services

Question 23

difference between fixed costs and variable costs

Answer 23

variable costs changes with output eg: wages, raw materials. fixed cost doesnt change: rent, utilities

Question 24

whats a business

Answer 24

a business is an organisation that transforms inputs into outputs to be purchased by customers. they can have a profit or a non profit drive

Question 25

whats a corporate objective

Answer 25

an objective set by the higher power

Question 26

whats a functional objective

Answer 26

an objective set to reach the overall objective

Question 27

how to calculate revenue

Answer 27

price X quantity sold

Question 28

whats the golden formula

Answer 28

(price x quantity)- ( fixed cost + variable costs)

Question 29

whats flotation

Answer 29

the process of becoming a public limited company from a private limited company

Question 30

order of flotation

Answer 30

• advertise with prospectus
• review with lawyer
• 50,000 up front

Question 31

how is the wealth of an economy measured

Answer 31

GDP- value of all goods in country

Question 32

whats a good

Answer 32

a tangible item

Question 33

name an intangible object

Answer 33

services

Question 34

what does gdp stand for

Answer 34

gross domestic product

Question 35

why are markets dynamic

Answer 35

things change and new trends come in

Question 36

whats a mission statement

Answer 36

a statement that communicates the purpose and existence of your business

Question 37

whats an objective

Answer 37

medium to long term plan which aims to co ordinate the business, acting as a target

Question 38

5 main objectives from functionable objectives

Answer 38

• survival
• growth
• profit
• cash flow
• ethical

Question 39

how to calculate contribution per unit

Answer 39

selling price - variable costs

Question 40

whats cumulative profit

Answer 40

recurring profit per month

Question 41

whats an aim

Answer 41

used to achieve businesses mission statement

Question 42

why is profit important

Answer 42

more likely to gain investment
suppliers increase credit time
motivation for employees☝️
fund expansions

Question 43

name 4 fixed costs

Answer 43

• rent
• salaries
• tax
• utilities

Question 44

4 variable costs

Answer 44

• wages
• deliveries
• raw materials
• packaging

Question 45

liability definition

Answer 45

being legally responsible for something, such as business debt

Question 46

define unlimited liability

Answer 46

owner and business are not seperate

Question 47

2 economic factors on interest

Answer 47

cost of borrowing and reward for saving
interest increases, loan repayment ☝️

Question 48

name 2 demographic factors

Answer 48

• population growing
• demand increasing
• people living longer