Question 1: Define the term '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 the company's ability to pay its expenses, invest, and remain solvent.

Question 2: List three common sources of finance available to start-up businesses.

Answer: Bank loans, personal savings, and investment from family or friends.

Question 3: Explain the difference between revenue and profit in a business context.

Answer: Revenue is the total income generated from sales before any costs are deducted. Profit is the remaining income after subtracting all expenses from revenue.

Question 4: Describe what a budget is and its purpose in managing a business’s finances.

Answer: A budget is a financial plan that estimates income and expenses over a period. Its purpose is to help manage spending, plan for future expenses, and monitor financial performance.

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

Answer: Profit = Total sales - Total expenses = £50,000 - £35,000 = £15,000.

Question 6: Draw a simple cash flow chart illustrating inflows and outflows over a month. Label the sections clearly.

Answer: A sketch showing two columns or rows: one for cash inflows (e.g., sales, loans) and one for outflows (e.g., wages, rent). The sketch should clearly differentiate the two, with arrows or labels indicating the flow of money.

Question 7: Identify and explain two financial risks a new business might face.

Answer: Cash flow shortages, which can prevent the business from paying bills; and unexpected expenses, which can reduce profits or cause financial strain.

Question 8: Sketch a simple bar chart representing a business’s monthly sales over six months. Include axes labels and a title.

Answer: A bar chart with months on the horizontal axis and sales figures on the vertical axis. Bars should vary in height to show sales fluctuations, with a clear title and labeled axes.

Question 9: Explain what is meant by 'break-even point' and how it helps a business plan its finances.

Answer: The break-even point is when total revenue equals total costs, meaning the business is neither making a profit nor a loss. It helps business owners determine the minimum sales required to cover all expenses.

Question 10: Identify two sources of financial advice or support available to small businesses in the UK.

Answer: The local Small Business Advice Centre and the UK Government’s Business Support Helpline.