Question 1: Define 'cash flow' and explain why it is important for a small business to manage it effectively.

Answer: Cash flow refers to the movement of money into and out of a business. Effective management ensures the business has enough liquidity to cover its expenses and avoid insolvency.

Question 2: Identify three different sources of finance that a new enterprise might use to raise capital.

Answer: Bank loans, personal savings, investor funding (such as angel investors or venture capital).

Question 3: Describe the difference between revenue and profit within a business context.

Answer: Revenue is the total income generated from sales before expenses, while profit is the amount remaining after deducting all costs and expenses.

Question 4: Explain what a budget is and how it can help an enterprise manage its finances effectively.

Answer: A budget is a financial plan that estimates income and expenditure over a period. It helps businesses allocate resources, plan for future expenses, and monitor financial performance.

Question 5: Sketch a simple bar chart representing monthly sales figures for a small business over six months. In your sketch, label the axes and indicate the sales amounts.

Answer: A bar chart with the horizontal axis labeled 'Months' (January to June) and the vertical axis labeled 'Sales (£)'. Each bar's height should correspond to the sales figures for each month, with varying heights to show fluctuations.

Question 6: List two advantages and two disadvantages of using bank overdraft as a source of finance for a business.

Answer: Advantages: 1) Quick access to funds, 2) Flexible repayment. Disadvantages: 1) High interest costs, 2) Can lead to over-reliance and financial instability.

Question 7: Imagine a business has a total income of £50,000 and total expenses of £45,000 for a year. Calculate the profit and state whether the business is profitable.

Answer: Profit = Income - Expenses = £50,000 - £45,000 = £5,000. Yes, the business is profitable.

Question 8: Describe what is meant by 'break-even point' and why it's important for a new enterprise.

Answer: The break-even point is when total income equals total costs, meaning no profit or loss. It is important because it indicates the minimum sales needed to cover all expenses, helping to plan for profitability.

Question 9: Draw a simple pie chart to show how a small business might allocate its annual expenses across three categories: staff wages, rent, and supplies. Indicate approximate percentages for each category.

Answer: A pie chart divided into three sections: Staff wages (~50%), Rent (~30%), Supplies (~20%). The sketch should show the proportions with labeled percentages.