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

Answer: Finance in a small business refers to the management of money, including how the business earns, spends, saves, and invests money.

Question 2: List three sources of finance that a new business might use to get money to start up.

Answer: Bank loans, personal savings, and investors or family members providing money.

Question 3: Imagine a small bakery spends £200 on ingredients, £50 on electricity, and pays £150 in wages each week. What is the total weekly cost of running the bakery?

Answer: Total weekly cost = £200 + £50 + £150 = £400.

Question 4: If the bakery sells products for £5 each and sells 100 items in a week, how much money does it make from sales?

Answer: Sales revenue = 100 items × £5 = £500.

Question 5: Explain the difference between 'expenses' and 'profit' in a business.

Answer: 'Expenses' are the costs spent on running the business, while 'profit' is the money left after subtracting expenses from total sales revenue.

Question 6: A business has total sales of £1,000 in a month and total expenses of £700. What is the profit for that month?

Answer: Profit = £1,000 - £700 = £300.

Question 7: Draw a simple bar chart showing the weekly expenses of the bakery: ingredients (£200), electricity (£50), wages (£150). Label the chart.

Answer: A bar chart with three bars, each representing one expense. The height of the bar for ingredients should be the highest, followed by wages, then electricity. Labels should include expense names and amounts.

Question 8: Sketch a basic flow of money in a business from earning to spending, using arrows to show the direction of money movement. Include at least three steps.

Answer: A sketch showing: 1) Money earned from sales flows in; 2) Business spends money on expenses; 3) Remaining money is profit or saved.

Question 9: Why is it important for a business to keep track of its income and expenses?

Answer: To ensure the business is making a profit, manage money effectively, and make informed financial decisions for growth.

Question 10: Imagine you are starting a small lemonade stand. Sketch your plan for managing the money, including where you will get money, how you will spend it, and how you will keep track of your earnings.

Answer: A sketch showing sources of initial money (savings or parents), spending on lemons, sugar, cups, and labels; and a simple method for recording sales, such as a ledger or tally chart.