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

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

Question 2: Explain the difference between 'fixed costs' and 'variable costs' with examples.

Answer: Fixed costs are expenses that do not change with the level of production or sales, such as rent or salaries. Variable costs change depending on how much the business produces, like raw materials or packaging costs.

Question 3: A company earns £10,000 in revenue and has expenses of £7,000. What is its profit?

Answer: Profit = Revenue - Expenses = £10,000 - £7,000 = £3,000.

Question 4: Describe what a cash flow statement shows for a business.

Answer: A cash flow statement shows the movement of cash into and out of a business over a period, including money received from sales and paid out for expenses, helping to assess liquidity.

Question 5: List three important reasons why a business needs to keep accurate financial records.

Answer: To monitor profitability, to prepare for taxes, and to make informed financial decisions.

Question 6: Sketch a simple bar chart that could show a company's monthly revenue over six months. Label the axes clearly.

Answer: A bar chart with months on the horizontal axis and revenue figures on the vertical axis, with bars representing revenue for each month.

Question 7: Imagine you are planning your business budget. What are three key expenses you should consider including?

Answer: Rent, stock or raw materials, wages or salaries.

Question 8: Draw a simple diagram of how income and expenses relate to each other in a business cycle. Use arrows to show the flow.

Answer: A diagram with 'Income' flowing into the business, 'Expenses' flowing out, and a central box showing 'Profit' as the difference between income and expenses.

Question 9: What is the purpose of creating a financial forecast for a new enterprise?

Answer: To predict future income and expenses, helping to plan and make informed decisions about the business’s growth and sustainability.

Question 10: Explain why it is important for a business to keep track of its debts and loans.

Answer: To ensure they can repay what they owe on time, avoid financial difficulties, and maintain a good credit rating.