Question 1: Define the term 'income' in a business context.

Answer: Income is the money a business earns from selling goods or services.

Question 2: What is meant by the term 'expenses'?

Answer: Expenses are the costs or money spent by a business to operate and run its activities.

Question 3: Explain what a 'profit' is for a business.

Answer: Profit is the money left over after all expenses have been deducted from the income.

Question 4: Describe what a 'budget' is used for in a business.

Answer: A budget is a plan that shows expected income and expenses over a period of time to help manage money.

Question 5: Identify which of the following is an example of an expense: (a) Selling goods, (b) Paying staff wages, (c) Selling a product.

Answer: Paying staff wages.

Question 6: Imagine a business earns £10,000 from sales and spends £6,000 on expenses. Calculate the profit.

Answer: Profit = Income - Expenses = £10,000 - £6,000 = £4,000.

Question 7: Draw a simple bar chart that shows the following monthly expenses: Wages (£2,000), Rent (£1,000), Supplies (£500). Use the space below.

Answer: A bar chart with three bars, each representing one expense, with heights proportional to their amounts: Wages tallest, followed by Rent, then Supplies.

Question 8: Sketch a basic diagram of a cash flow statement, indicating the flow of money into and out of a business.

Answer: A diagram showing 'Money In' (e.g., sales, loans) flowing into the business and 'Money Out' (e.g., expenses, purchases) flowing out, with arrows indicating direction.

Question 9: Explain the difference between 'revenue' and 'profit'.

Answer: Revenue is the total income from sales before expenses, while profit is what remains after deducting expenses from revenue.

Question 10: A business's total income is £15,000, and its total expenses are £9,000. What is its net profit?

Answer: Net profit = Total income - Total expenses = £15,000 - £9,000 = £6,000.

Question 11: Describe why it is important for a business to understand its financial terms.

Answer: Understanding financial terms helps a business make good decisions, manage money effectively, and stay profitable.