Questions Q1. 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) Q2.

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1 Questions Q1. 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) Q2. Which three of the following would Hamish include in his business plan? Select three answers: A B C D Summary of the market research carried out Copy of the design of his letter heading Projected profit and loss account All receipts and invoices

2 E F Names and addresses of all employees Overview of the nature of the business (Total for question = 3 marks)

3 Q3. Hayley Franks wants to own and run her own shoe shop. She can set up as a sole trader or as a franchise with a major UK shoe brand. Research shows that the franchise has an 80% success rate. The sole trader has a 50:50 chance of survival. Hayley decides to produce a business plan to help minimise the risk when starting up her business. Which two of the following would not be necessary to include in her business plan? Select two answers: A Name and addresses of all employees B A summary of market research she has carried out C A cash flow forecast D Photograph of the business owner E An overview of the nature of the business (Total for Question = 2 marks) Q4. PrintZone Ltd is a small retail business specialising in supplying printers, ink and paper. The following chart shows cash flows for PrintZone Ltd for the period April to October. Monthly sales at PrintZone remained unchanged from April to October. Given this fact, which two of the following are possible reasons for the worsening in cash flow position of the business during this time? Select two answers: A Increased spending on stocks of ink cartridges and printers by PrintZone B Change in the interest rate on PrintZone's bank loan from 5% to 4% C Monthly rent on PrintZone's premises changing from 700 to 650 D More favourable trade credit terms provided by suppliers to PrintZone E PrintZone's monthly advertising costs changing from 800 to 1400 (Total for Question = 2 marks)

4 Q5. Hayley Franks wants to own and run her own shoe shop. She can set up as a sole trader or as a franchise with a major UK shoe brand. Research shows that the franchise has an 80% success rate. The sole trader has a 50:50 chance of survival. The following table shows Hayley's cash flow forecast for April to June. Fill in the four blanks to complete the table. (Total for Question = 4 marks) Q6. PrintZone Ltd is a small retail business specialising in supplying printers, ink and paper. The following chart shows cash flows for PrintZone Ltd for the period April to October. Using the chart, calculate the net cash flow for April to October. Select one answer: A B C D

5 (Total for Question = 1 mark) Q7. Lee is considering operating his business in a different location when the summer is over. He has produced a cash flow forecast to include in his business plan for a loan. Which three of the following might be the reasons why Lee produced a cash flow forecast? Select three answers. A B C D E F It is a legal requirement that a business should have a cash flow forecast It can help a bank decide whether it should lend money to a business A cash flow forecast ensures that the business will be successful Cash flow forecasts can reduce the risk of business failure To identify the cash inflows over the last six months To identify if the business will require an overdraft (Total for question = 3 marks) Q8. 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

6 (Total for question = 2 marks) Q9. What is the closing balance for the business at the end of the month? Select one answer. A B C D (Total for question = 1 mark)

7 Q10. PrintZone Ltd is a small retail business specialising in supplying printers, ink and paper. The following chart shows cash flows for PrintZone Ltd for the period April to October. Which two of the following are the most likely ways that PrintZone Ltd could improve its cash flow position? Select two answers: A Use a mind map to improve financial planning B Carry out quantitative market research C Increase revenue by improving sales D Negotiate lower prices with suppliers E Employ two more full-time members of staff (Total for Question = 2 marks) Q11. Steve Wade is a painter and decorator. He operates as a sole trader. He bases his pricing on the costs he has to pay on an average job. He estimates the variable cost per day at 75 which includes the fuel he uses in his vehicle, the cost of paint, sandpaper, wallpaper and adhesive. His fixed costs include insurance, the cost of the van that he runs, administration and advertising. He estimates the fixed costs to be each month. He charges customers 200 per day. Steve wanted to raise some additional finance using a loan from his bank. The bank asked Steve to prepare a cash flow forecast for the year. Which three of the following are most likely to be the reasons why Steve's bank would want to see a cash flow forecast? Select three answers: A A cash flow forecast removes all the risks of running a business B To see whether Steve would be able to pay back the money he might borrow C To see if Steve could add up figures properly D To help them decide if Steve's business is a worthwhile risk for the bank E Poor cash flow is one of the main reasons why small businesses fail F There is a legal requirement that a new business should have a cash flow forecast (Total for Question = 3 marks)

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9 Q12. 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)