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

Answer: Revenue is the total amount of money that a business earns from selling its goods or services before any expenses are deducted.

Question 2: Explain the difference between 'profit' and 'loss'.

Answer: Profit is the money a business makes when its total revenue exceeds its total costs. Loss occurs when the total costs are higher than the total revenue, resulting in a negative financial outcome.

Question 3: What is meant by 'fixed costs'? Provide two examples.

Answer: Fixed costs are expenses that do not change with the level of production or sales. Examples include rent and salaries of permanent staff.

Question 4: Describe what is meant by 'variable costs' and give two examples.

Answer: Variable costs are expenses that vary directly with the level of production or sales. Examples include raw materials and commission payments.

Question 5: Calculate the profit if a business has total revenue of £50,000 and total costs of £35,000.

Answer: Profit = Total Revenue - Total Costs = £50,000 - £35,000 = £15,000.

Question 6: Define 'cash flow' and explain why it is important for a business.

Answer: Cash flow refers to the movement of money into and out of a business. It is important because it determines whether a business has enough cash to pay its expenses and invest for growth.

Question 7: Draw a simple bar chart to represent the following data: In a month, a business earned £10,000 in revenue, spent £6,000 on costs, and made a profit of £4,000.

Answer: A bar chart with three bars labeled 'Revenue', 'Costs', and 'Profit'. The 'Revenue' bar reaches up to £10,000, 'Costs' up to £6,000, and 'Profit' up to £4,000. The bars should be proportional to the values.

Question 8: Sketch a basic diagram illustrating the relationship between 'Income', 'Expenses', and 'Profit'.

Answer: A simple flow diagram showing 'Income' leading to 'Expenses', with the remaining amount labeled as 'Profit'. The diagram should clearly indicate that profit is calculated as income minus expenses.

Question 9: Explain the term 'budget' and why it is useful for a business.

Answer: A budget is a financial plan that estimates income and expenses over a specific period. It helps businesses plan their spending, control costs, and set financial targets.

Question 10: Identify and explain one benefit and one risk of using credit for business purchases.

Answer: Benefit: Using credit allows a business to acquire goods or services immediately while paying later, helping with cash flow management. Risk: If not managed properly, debt can accumulate, leading to financial difficulties or insolvency.