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

Answer: Revenue is the total amount of money a business earns from selling its 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 with the level of output, such as raw materials or packaging costs.

Question 3: A business sells 500 units of a product at £10 each. If the total costs for producing these units are £3000, what is the total revenue, total costs, and profit?

Answer: Total revenue is £10 x 500 = £5000. Total costs are £3000. Profit is £5000 - £3000 = £2000.

Question 4: Describe what is meant by 'profit' in a business context.

Answer: Profit is the money a business makes after subtracting all costs and expenses from its total revenue.

Question 5: Identify two reasons why understanding financial information is important for an entrepreneur.

Answer: To ensure the business is making a profit and to make informed decisions about spending, investing, and growth.

Question 6: Sketch a simple profit and loss chart showing 'Revenue', 'Costs', and 'Profit'. Use large blank space for the drawing.

Answer: A clear sketch should include a bar or line chart with labeled axes: 'Money' on the vertical axis and 'Categories' on the horizontal. Bars or lines should represent revenue, costs, and profit, with revenue being the highest, costs in the middle, and profit as the difference between revenue and costs.

Question 7: A small business has fixed costs of £2000 per month and variable costs of £5 per unit sold. If they sell 300 units in a month at £15 each, calculate the total costs and profit.

Answer: Total fixed costs = £2000. Variable costs = 300 units x £5 = £1500. Total costs = £2000 + £1500 = £3500. Revenue = 300 x £15 = £4500. Profit = £4500 - £3500 = £1000.

Question 8: Write a short paragraph explaining how a business can increase its profit.

Answer: A business can increase its profit by increasing sales, reducing costs, or both. For example, marketing better to attract more customers or finding cheaper suppliers.

Question 9: List three financial documents a business might use to keep track of its money.

Answer: Income statement (profit and loss statement), balance sheet, cash flow statement.

Question 10: Describe what a cash flow statement shows about a business.

Answer: It shows how money moves in and out of the business over a period of time, including cash received from sales and cash paid for expenses.