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GCSE/A level Business: Bridging the Gap (1)

Complete the multi choice review questions;

• make sure you can explain your answer

• show any working out

• useful sources

o https://www.bbc.co.uk/bitesize/examspecs/zhrphbk

o https://www.tutor2u.net/business/blog/gcse-igcse-business-studies-revision-notes-

master-listing

Business Activity

1 Businesses produce goods and / or provide services. Which one of the following is an example

of a good as opposed to a service?

A A dress

B A driving lesson

C A spa treatment

D An operation

Your answer

2 Which one of the following is not likely to be a characteristic of an entrepreneur?

A Confidence

B Creativity

C Determination

D Indifference

Your answer

3 Which one of the following is a reward associated with starting your own business?

A Emotional stress

B Guaranteed income

C Lack of security

D Sense of achievement

Your answer

4 Which one of the following statements is not a true statement about a business plan?

A It can help a business to obtain finance

B It can help achieve business aims and objectives

C It identifies the resources a business needs

D It increases the risk of business failure

Your answer

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5 Which one of the following is not an example of a component of a business plan?

A Business aims and objectives

B Financial forecasts

C Location

D Marketing structure

Your answer

6 Which one of the following is not true of a public limited company when compared with other

types of business ownership?

A Business and financial affairs do not remain private

B More complex to set up

C More expensive to set up

D Subject to fewer government regulations

Your answer

7 Which one of the following statements is true about unlimited liability?

A It increases the personal financial risk associated with owning a business

B It minimises the personal financial risk associated with owning a business

C It protects the financial and personal assets of a business’s owners if the business fails

D It protects the owners of private and public limited companies

Your answer

8 Which one of the following types of business ownership is suitable for a person setting up a

business who wants to be the only owner of the business?

A Limited partnership

B Partnership

C Private limited company

D Public limited company

Your answer

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9 Which one of the following is least likely to be an aim or objective of a business?

A To increase the level of sales

B To make a profit

C To reduce the business’s market share D To survive

Your answer

10 Which one of the following statements is not a true statement to explain why aims and

objectives may differ between businesses?

A Many businesses, just starting up, may be content to survive (and break-even) in the short

to medium term, as it takes time to build a customer base

B Small businesses may not be able to raise the finance required to fund expansion and so

their objectives may be less ambitious than those of larger businesses

C Sole traders have more opportunities to raise finance to fund growth than limited

companies and so may have more ambitious growth objectives

D Some business owners may be more willing than others to take a risk and, as a result, may

pursue more ambitious growth objectives, such as expansion overseas

Your answer

11 Which one of the following is not an example of an external business stakeholder group?

A Customers

B Employees

C Local authorities

D Pressure groups

Your answer

12 Which one of the following is most likely to arise from the growth and expansion of a business?

A Fewer promotion opportunities for employees

B Greater revenue for the government from taxes

C Lower dividend payments for shareholders

D Smaller order quantities and, thus, lower revenue and profit for suppliers

Your answer

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13 Which one of the following business stakeholder groups can exert pressure on a business by

imposing stricter credit terms, or by refusing to grant further credit?

A Customers

B Pressure groups

C Shareholders

D Suppliers

Your answer

14 Which one of the following is not an example of organic business growth?

A Buying another business

B Developing new products

C Gaining new customers through increased investment in marketing

D Increasing output

Your answer

15 If a health and fitness club purchased its supplier of health and fitness equipment, this would be

an example of:

A backwards vertical integration

B conglomeration

C forwards vertical integration

D horizontal integration

Your answer

Marketing

1 Which one of the following is not one of the key roles / purposes of marketing within business?

A To identify potential customer groups

B To inform customers about the business’s product or service

C To prepare cash flow forecasts

D To understand customers and their needs

Your answer

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2 Which one of the following are customers most likely to consider when choosing between

competing businesses’ products?

A How many products the business sells

B How many shareholders the business has

C How much the business is worth

D How much the product costs to buy

Your answer

3 Which one of the following correctly defines primary market research?

A The gathering of data which already exists

B The gathering of data which does not already exist

C The study of materials and sources to improve knowledge

D The study of the behaviour of primary school children

Your answer

4 Which one of the following is not a source of secondary market research?

A Direct observation

B Government reports and statistics

C Magazine articles

D Websites

Your answer

5 Which one of the following methods of market research would be the least appropriate for a

business that wants to obtain information on customer reaction to a potential new product that

it has recently developed, before launching into the market place?

A Direct observation

B Focus groups

C Sales data

D Trialling

Your answer

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6 A shoe manufacturing firm is deciding whether to produce ‘custom made’ shoes for sport or for

work, and which gender to initially target with such a product. The results of a market research

survey (undertaken), in which an equal number of men and women were surveyed, are

summarised below:

• 29% of men and 17% of women said they would be interested in buying custom made shoes.

• Of these, within both gender categories, around two-thirds of those surveyed favoured custom

made sports shoes, and around one third of those surveyed favoured custom made work shoes.

Which one of the following does the market research suggest it would be best for the firm to do?

A Produce custom made sports shoes and target men

B Produce custom made sports shoes and target women

C Produce custom made work shoes and target men

D Produce custom made work shoes and target women

Your answer

7 Which one of the following is a method of market segmentation?

A Face to face

B Lifestyle

C Penetration

D Skimming

Your answer

8 Which one of the following is not directly related to any element of the marketing mix?

A E-tailing

B Free samples

C Innovation

D Recruitment

Your answer

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9 Which one of the following is not one of the key factors likely to be taken into account when

designing a new product for the market place?

A Aesthetics

B Cost

C Function

D Stock

Your answer

10 Which one of the following is not a stage of the product life cycle?

A Decline

B Extension

C Introduction

D Maturity

Your answer

11 Which one of the following is not an example of a competitor-based pricing method?

A Going rate pricing

B Predatory pricing

C Price leadership

D Rivalry pricing

Your answer

12 Which one of the following is not an accurate statement about loss leaders?

A Loss leaders are products with very high prices that are used to attract customers to buy

other lower-priced products

B Loss leaders are typically positioned in a store so that customers have to pass many other

products on sale before they reach the loss leader product

C Loss leaders is a technique that essentially uses price as a method of sales promotion

D Loss leaders is a technique commonly used by supermarkets

Your answer

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13 Which one of the following is a disadvantage of radio advertising?

A Greater impact than print advertising - as emotion can be conveyed in the voices used

B People are often doing other things whilst listening

C Possibility of a wide audience - people at home, at work, or in the car

D There is scope to target specific market segments, ie groups with similar interests

Your answer

14 Which one of the following is not a benefit for a business of using a website with ecommerce

facilities to distribute its products?

A Accessible by customers globally

B Lower fixed costs

C Packaging, transportation and delivery costs

D Transactions are automated

Your answer

15 The quantity demanded of a business’s product was 1200 units in March and 700 units in April.

Which one of the following is the percentage change in the quantity demanded from March to

April, to two decimal places?

A - 4.17%

B - 7.14%

C - 41.67%

D - 71.42%

Your answer

People

1 Which one of the following statements is least likely to be true of delegation?

A It is most likely to occur when an organisation reduces in size or complexity

B It may not suit all workers as some may not be willing or have the ability to take on the

extra task / duties

C It requires trust in the ability and commitment of staff

D Some initial training may be required, to ensure workers are able to carry out delegated

tasks to the standard required

Your answer

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2 Which one of the following is ultimately, responsible for ensuring a company meets its statutory

(legal) requirements?

A Directors

B Managers

C Shareholders

D Team leaders

Your answer

3 Which one of the following is not a true statement about self-employed individuals?

A They are in control of the hours they work

B They control the timing, tools and methods used to complete a task

C They deal with their own income tax payments and national insurance contributions

D They work as employees in other businesses in jobs they have found themselves, ie without

the use of a job centre or agency

Your answer

4 Which one of the following is a way of communicating in a business context?

A Diversification

B Invention

C Presentation

D Selection

Your answer

5 Which one of the following is not a reason why effective communication between production

line managers and operational staff under their span of control is important?

A To ensure decisions made by managers are carried through

B To ensure staff are clear on their roles, tasks and responsibilities

C To ensure tasks are completed to the required standard and by the deadline set D To

ensure the business has sufficient finance to meet debts as they fall due

Your answer

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6 Which one of the following is not a true consequence of using email as a way of

communicating, compared with sending a letter through the post?

A It enables information to be sent and received almost instantly

B It increases printing and stationery costs

C It provides a much faster way of communicating D It reduces postage costs

Your answer

7 Which one of the following is an advantage of internal recruitment over external recruitment?

A It is likely to be more expensive

B The recruited employee is likely to require a longer induction period

C The recruitment process is likely to be slower

D There is less risk of appointing the wrong person for the job

Your answer

8 Which one of the following is not a method of selecting candidates for a job?

A Interview

B Job advert

C Letter of application

D References

Your answer

9 Which one of the following is not a method of paying workers?

A Commission

B Internal promotion

C Salary

D Wages

Your answer

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10 Which one of the following is not a financial method of motivation?

A Bonuses

B Delegation

C Remuneration

D Profit sharing

Your answer

11 Which one of the following is most likely to result from high levels of worker motivation?

A Low customer satisfaction rates

B Low employee retention rates

C Low labour costs per unit

D Low output per worker

Your answer

12 Which one of the following is least likely to be included in a formal induction programme for a

new employee?

A Health, safety, security policies and procedures

B Key individuals, particularly people with whom they are to work

C Sources of finance used by the business

D Working hours, breaks, holiday entitlement, disciplinary / grievance procedures

Your answer

13 Which one of the following is least likely to occur when a business trains its workers?

A Improvements in quality and customer service

B Increased labour turnover

C Increased productivity

D Increased workforce motivation

Your answer

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14 Which one of the following is least likely to occur as a result of a business investing in staff

development?

A Easier recruitment

B Improvements in workforce motivation

C Increased competitiveness

D Increased labour turnover

Your answer

15 Which one of the following is generally not true of the terms of a contract of employment?

A Some terms may stem from custom or general practice in a particular industry

B They can be expressed orally

C They have to be in writing

D They include compulsory duties and rights that are implied under common and statute law

Your answer

Operations

1. Which one of the following is a method of production suitable for mass market products where

there is constant high demand?

A Batch

B Job

C Flow

D Volume

Your answer

2. Which one of the following is not likely to be the result of a business moving from job to batch

production?

A Greater price competitiveness

B Reduced costs

C Reduced job satisfaction

D Reduced productivity

Your answer

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3. Which one of the following is the most likely consequence for a business, following its

investment in automation?

A Reduced competitiveness

B Reduced costs

C Reduced productivity

D Reduced quality

Your answer

4. Which one of the following would best describe the term quality in relation to the production of

goods?

A Providing a product that is exactly as described

B Providing a product that is suitable for its intended use

C Providing a product that meets customer expectations

D Providing the most expensive product in the marketplace

Your answer

5. A team of staff in a mobile phone factory are responsible for checking all of the phones before

they leave the factory. What key business function does this team of staff perform?

A Distribution

B Innovation

C Quality assurance

D Quality control

Your answer

6. Which one of the following is not a true statement about a ‘good’ as opposed to a ‘service’?

A Goods are physical objects

B Goods are intangible

C Goods can be seen or touched

D Goods include mobile phones

Your answer

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7. Producing good quality products is likely to lead to:

A increased costs of re-working, re-testing, re-inspecting

B increased repeat business

C increased time spent handling complaints

D increased waste

Your answer

8. Which one of the following is a stage in the sales process?

A Communication

B Closing

C Introduction

D Skimming

Your answer

9. Which one of the following statements is not true of e-commerce? It concerns:

A digitally enabled commercial transactions between and among organisations and

individuals

B the sale or purchase of goods or services, conducted over computer networks

C orders placed over the web (internet), extranet or electronic data interchange

D orders placed by telephone, fax or manually typed e-mail

Your answer

10. Providing poor customer service is likely to result in:

A a good reputation

B customers recommending the business to others

C falling sales

D high levels of repeat business

Your answer

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11. In which one of the following situations are high levels of product knowledge and customer

engagement likely to be the most important in securing a sale?

A When selling exercise books

B When selling fairground rides

C When selling mobile phones

D When selling packets of crisps

Your answer

12. Which one of the following is not a likely consequence for a business of breaking consumer law?

A Imprisonment of business owners

B Improved reputation of the business

C Paying out compensation to consumers

D Temporary closure of the business

Your answer

13. Which one of the following businesses does not need to locate close to customers?

A A café

B A hairdresser

C A supermarket

D An insurance company

Your answer

14. Which one of the following concerns the role of procurement within a business?

A Identifying and understanding customers

B Improving employee performance

C Ordering goods and services

D Promoting new products

Your answer

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15. Decisions about how a business delivers its products to its customers relate to:

A business ownership

B logistics

C market research

D recruitment and selection

Your answer

Finance

1. Which one of the following is not likely to be a key responsibility of the finance function?

A Determining financial methods of motivating staff

B Ensuring the business is able to meet its debts

C Producing cash flow forecasts

D Sourcing funds for expansion

Your answer

2. Which one of the following is an internal source of finance?

A Loan from a bank

B Sale of business assets

C Sale of shares in the business to family and friends

D Stock market flotation

Your answer

3. Which one of the following is not a true statement about selling assets to raise finance over

other methods, such as loans or selling shares?

A Profits do not have to be shared with new owners (ie shareholders)

B It does not involve interest payments

C It is likely to be more expensive than selling shares through a stock market flotation and

becoming a public limited company

D Key business decisions can be made without the interference of shareholders and, thus,

decisions can be made more quickly

Your answer

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4. A business will make a loss if:

A cash inflows exceed cash outflows

B cash outflows exceed cash inflows

C revenue is greater than total costs

D total costs are greater than revenue

Your answer

5. Which one of the following is the correct definition of variable costs?

A Costs that are not directly related to the production of a product or process

B Costs that change according to output quantity

C Costs that stay the same regardless of the output quantity D The cost of producing all

output over a period of time

Your answer

6. A business earned the following annual revenues over a 3 year period:

Year 1: £40 000 Year 2: £66 000 Year 3: £90 000.

The percentage increase in revenue between Year 1 and Year 3 is:

A 40%

B 50%

C 65%

D 125%

Your answer

7. Hair Care Ltd makes shampoo. Last financial year, fixed costs totalled £220 000 and variable cost

per unit was £0.80. They sold 500 000 units in the year at a selling price of £1.50 per unit. Which

one of the following represents Hair Care’s profit for the year?

A £104 000

B £130 000

C £280 000

D £530 000

Your answer

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8. Which one of the following is calculated by dividing the gross profit figure by revenue, and

multiplying by 100?

A Gross profit margin

B Margin of safety

C Net profit margin

D Revenue margin

Your answer

9. Which one of the following would lead to an increase in the net profit margin of a business?

A A fall in gross profit

B A fall in revenues

C A fall in the interest paid on loans

D A rise in the cost of sales

Your answer

10. A business pays £40 000 for a new machine which generates £400 000 profit over 4 years. Which

one of the following is the average rate of return (ARR) of the new machine?

A £90 000

B £100 000

C 10%

D 250%

Your answer

11. A business’s fixed costs are £10 000, selling price per unit is £4, and total variable costs per unit

are £1.50. Which one of the following is the break-even quantity (level of sales)?

A 2 500 units

B 2 857 units

C 4 000 units

D 6 667 units

Your answer

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12. Calculating the break-even point can help a business to work out its:

A loan repayments

B market share

C net cash flow

D profit potential

Your answer

13. Which one of the following is not an accurate reason why cash is important to a business?

A To meet debts as they fall due

B To pay employees for time worked

C To pay suppliers for goods purchased

D To prevent a situation of solvency

Your answer

14. Cash flow forecasts can help a business to assess its ability to meet its:

A debts

B delivery deadlines

C flow production schedules

D profit targets

Your answer

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15. The table below shows the cash flow forecast for a small business.

April

£

Cash inflow:

Revenue 12 700

Total Inflow 12 700

Cash outflow:

Raw materials 3 630

Wages 2 400

Overheads 1 540

Total outflow 7 570

Net cash flow

Opening balance 4 700

Closing balance 9 830

Which one of the following is the correct figure for net cash flow?

A 5 130

B 15 140

C 20 270

D 24 970

Your answer

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Influences on Business and the Interdependent Nature of Business

1. Being ethical involves:

A complying with a code of conduct believed to be morally right

B identifying resources a business needs to operate

C making a profit

D reducing prices and giving free samples

Your answer

2. Which one of the following is an example of ethical business behaviour?

A Making jokes about an employee’s race, colour or gender

B Making misleading statements about the business’s products

C Taking measures to protect the environment D Using child labour

Your answer

3. Sustainability refers to:

A the amount of cash a business has to meet debts as they fall due

B maintaining an ecological balance by avoiding the depletion of natural resources

C the length of time a machine can be operated before requiring maintenance D the length of

time a business is likely to stay in business

Your answer

4. Which one of the following is not an example of environmentally responsible business

behaviour?

A Investing in renewable energy sources

B Investing in systems to minimise emissions

C Minimising the content of output that is recyclable

D Minimising the negative environmental impact of the business

Your answer

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5. Which one of the following is an environmental concern about goods being made in China and

flown to the UK to be sold to UK consumers?

A the chance of delays in UK consumers receiving goods

B CO2 emissions and thus pollution, which contributes to climate change

C higher transportation costs and, thus, the higher prices that have to be charged D stocks

held in case of problems with supply

Your answer

6. Which one of the following statements is not likely to be true? A decrease in levels of consumer

income may:

A be a result of a reduction in income tax

B be a result of an increase in interest rates

C force businesses to focus on survival instead of growth

D reduce the demand for consumer goods and services

Your answer

7. Which one of the following is likely to be a consequence of high unemployment for a business

producing and selling luxury goods?

A Higher revenue and profit

B Higher wage costs

C Reduced demand for products

D Reduced staff retention

Your answer

8. Which one of the following is least likely to happen during a period of recession?

A The cost of labour is likely to fall due to the high level of unemployment

B The demand for budget goods and services is likely to fall significantly

C The demand for luxury goods and services such as holidays and beauty treatments is likely

to fall

D Revenues may fall due to higher levels of unemployment

Your answer

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9. Polished Furniture Ltd (PFL) is a UK-based furniture manufacturer. Which one of the following

statements shows that PFL operates in a global market?

A PFL sells dining room furniture through retailers in the UK

B PFL’s obtains is supplies of wood from Scandinavia

C The UK economy has experienced a period of economic growth D There is high

unemployment in the area in which PFL is located

Your answer

10. Which one of the following describes the term branding?

A A public relations activity which involves funding people or events

B Communicating promotional messages to customers through paid media

C Giving a distinctive name, term, symbol, image, design or packaging to a product D Offering

price discounts to potential customers

Your answer

11. Which one of the following differences between countries is the most likely reason behind a

business’s decision to change the price of its products in order to compete internationally?

A Differences in climate

B Differences in levels of consumer income

C Differences in attitudes and beliefs

D Differences in tastes and preferences

Your answer

12. A UK based company exports its products to countries within the Eurozone. If the rate of

exchange between the British Pound and the Euro is 1 GBP = 1.15 Euros, which one of the

following would be the cost in euros, of one of its products priced at £28?

A 24.35 euros

B 26.85 euros

C 32.20 euros

D 41.07 euros

Your answer

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13. Top Toys plc, an established toy manufacturer and retailer of 20 years, has decided to close all

its high street stores and to only sell online. Which one of the following is not a likely

consequence of this decision?

A Some of the staff currently employed by Top Toys Plc’s will lose their jobs

B The business is likely to incur costs arising from redundancy payments

C The business will need to hold less stock of finished toys for sale D The fixed costs of the

business will significantly increase

Your answer

14. Which one of the following is likely to be the main reason behind an entrepreneur’s decision to

expand a business, in order to increase output?

A To create jobs for local people

B To increase revenues

C To make more profit

D To reduce total fixed costs

Your answer

15. The table below provides financial information relating to the performance of two of a

business’s retail outlets.

Outlet 1 Outlet 2

Sales Revenue £2.1 million £3.5 million

Gross Profit £945 000 £1 680 000

Other Expenses and Interest £840 000 £1 470 000

Which one of the following is a true statement?

A Outlet 2’s cost of sales is £182 000

B Outlet 1’s gross profit margin is 45%

C Outlet 1’s gross profit is £753 000 less than that of Outlet 2 D Outlet 2’s net profit is £210

000

Your answer