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1.3 Putting a business idea into practice

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Overview of the theme 1, topic 1.3
holly swift
Quiz by holly swift, updated more than 1 year ago
holly swift
Created by holly swift about 6 years ago
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Question 1

Question
What is an aim?
Answer
  • Aim to achieve things in the business
  • An overall goal that a business is trying to achieve
  • Small steps to achieve an overall goal
  • A process of thought when planning within a business

Question 2

Question
Break-even analysis allows firms to find out the minimum amount they need to sell to get by
Answer
  • True
  • False

Question 3

Question
Choose 4 non-financial aims a business may have
Answer
  • Accomplishing a personal challenge
  • Achieving personal satisfaction
  • Gaining independence and control
  • Doing what's right for society
  • Feeling good on a personal level
  • to survive within a market

Question 4

Question
Choose 5 financial aims a business may have
Answer
  • To survive
  • Maximise sales
  • Increase market share
  • Achieve financial security
  • Maximise profit
  • To gain rewards

Question 5

Question
What is an objective?
Answer
  • Specific steps to achieve an aim
  • Selling a certain amount of products
  • Earning a high profit
  • overall goals a business wants to achieve

Question 6

Question
What is a S.M.A.R.T objective ?
Answer
  • Specific. Measurable. Achievable. Relevant. Time Bound
  • Specific. Measurable. Achievable. Realistic. Time Bound
  • Suitable. Measurable. Achievable. Relevant. Time Bound
  • Suitable. Measurable. Achievable. Realistic. Time Bound

Question 7

Question
Revenue is the Income earned by a business
Answer
  • True
  • False

Question 8

Question
How do you calculate revenue?
Answer
  • Revenue = Quantity Sold x Price
  • Revenue = Price x Fixed Cost
  • Revenue = Quantity Sold x Variable Cost
  • Revenue = Quantity Sold x Fixed Cost

Question 9

Question
What is a fixed cost?
Answer
  • Costs that do not vary with output. They remain the same whether the business produces 100 units or 0 units
  • Costs you have to pay at the beginning of the business
  • Costs you pay every quarter
  • The opposite as a variable cost

Question 10

Question
What is a variable cost?
Answer
  • Increase with the amount of products produced and sold
  • The opposite as a fixed cost
  • Costs that are expensive
  • Costs that you can pay over a period of 2 months

Question 11

Question
total costs = fixed costs + variable costs
Answer
  • True
  • False

Question 12

Question
How do you calculate total variable cost?
Answer
  • Total Variable Cost = quantity sold x variable cost per unit
  • Total Variable Cost = quantity sold + total costs
  • Total Variable Cost = quantity sold / price
  • Total Variable Cost = price / quantity sold

Question 13

Question
How to calculate Interest (on loans) ?
Answer
  • Interest (on loans) = (total repayment - borrowed amount / borrowed amount) x 100
  • Interest (on loans) = total repayment - borrowed amount / borrowed amount
  • Interest (on loans) = (borrowed amount /total repayment - borrowed amount) x 100
  • Interest (on loans) = (total repayment + borrowed amount / borrowed amount) x 100

Question 14

Question
Profit = Revenue - Costs
Answer
  • True
  • False

Question 15

Question
How to calculate break-even point (in units)?
Answer
  • Break-even point (units) = fixed cost / selling price - variable cost
  • Break-even point (units) = variable cost / selling price - fixed cost
  • Break-even point (units) = total costs / selling price - fixed cost
  • Break-even point (units) = total costs / selling price - variable cost

Question 16

Question
Margin of Safety = Actual sales (or budgeted sales) - Break-even sales
Answer
  • True
  • False

Question 17

Question
The firm will use budgeted sales if it's trying to forecast its future margin of safety. The budgeted sales will be the sales the business expect to make.
Answer
  • True
  • False

Question 18

Question
One benefit of a firm knowing its margin of safety for a financial year is...
Answer
  • It can see how much its output can fall before the business starts running at a loss
  • It knows the amount of sales it will make
  • It knows how much revenue to expect
  • It knows how much revenue is needed to equal total costs

Question 19

Question
Net Cash Flow = cash inflows - cash outflows
Answer
  • True
  • False

Question 20

Question
What is cash flow ?
Answer
  • The process of cash flowing in and out of a business
  • paying money out of the business
  • A source of income

Question 21

Question
3 examples of cash outflows are...
Answer
  • Paying wages to staff
  • Buying equipment
  • Repayment of loans
  • Receiving a loan payment

Question 22

Question
3 examples of cash inflows are...
Answer
  • Government grants
  • Personal funds
  • Cash sales
  • Costs of making products

Question 23

Question
BEP is when total costs = total revenue
Answer
  • True
  • False

Question 24

Question
What is the margin of safety?
Answer
  • The number of sales above the BEP
  • The amount of revenue left after costs
  • Net cash flow

Question 25

Question
2 ways of increasing revenue are...
Answer
  • Increasing selling price
  • Increasing amount sold by promotions, offers etc.
  • Make more products

Question 26

Question
4 problems with cash flow forecasting?
Answer
  • Sales prove lower than expected
  • customers don't pay up on time
  • cost of production proves higher than expected
  • certain costs aren't included
  • It is difficult to read

Question 27

Question
5 main causes of cash flow problems?
Answer
  • Over spending
  • Getting too big too quick
  • Too much stock
  • Giving too much credit to customers
  • Seasonal demands
  • variable cost too high
  • location of store

Question 28

Question
5 reasons why cash flow forecasting is important?
Answer
  • identifies possible shortfalls in cash balance
  • shows if business can afford to pay suppliers and customers
  • spot problems with customer payments
  • shows bank you've planned your finances
  • external stakeholders (e.g. banks) may require a regular forecast
  • fun to make
  • seems to be professional

Question 29

Question
Examples of Short-term finance...
Answer
  • Trade Credit
  • Overdrafts
  • Short-term bank loan
  • retained profit

Question 30

Question
Examples of Long-term finance....
Answer
  • Long-term loans
  • Personal savings
  • Share Capital
  • Crowd Funding
  • Hire purchase
  • Trade Credit

Question 31

Question
An overdraft allow a business to take more money out of its bank account than it has paid into it
Answer
  • True
  • False

Question 32

Question
Chose one advantage and one disadvantage of using overdrafts
Answer
  • Allow businesses to make payments on time even if they don't have enough cash
  • Have a high interest rate
  • If it isn't paid off, the bank can take some of the businesses assets
  • Have to pay back straight after next payment which will cover amount withdrawn
  • can withdraw as much cash as you want

Question 33

Question
Chose one advantage and one disadvantage of using personal savings as a source of finance.
Answer
  • Owner could end up loosing own money if the business fails
  • only a small amount of money
  • Interest free
  • Can buy everything straight away and expand quick
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