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

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

Question 2: List three common costs that a small business might have to pay regularly.

Answer: Rent, wages, and utility bills.

Question 3: Explain what a 'profit' is in simple terms.

Answer: Profit is the money left over after subtracting all expenses from the income or revenue.

Question 4: Give an example of a fixed cost and explain why it is called fixed.

Answer: An example is rent. It is called fixed because it stays the same each month regardless of how much the business sells.

Question 5: Imagine a small business earns £5,000 in sales last month, and their costs were £3,000. What is their profit?

Answer: Their profit is £2,000 (£5,000 - £3,000).

Question 6: Describe what a cash flow statement shows for a business.

Answer: A cash flow statement shows the money coming into and going out of the business over a period of time, helping to see if the business has enough cash to pay its bills.

Question 7: Sketch a simple budget plan for a small business, including at least two income sources and two costs. Label each part clearly.

Answer: A clear sketch should include boxes or sections labeled 'Income' with sources like sales and services; and 'Expenses' with items like rent and wages. The drawing should show these categories with lines or arrows indicating the flow from income to expenses.

Question 8: Explain why it is important for a business to keep track of its income and expenses.

Answer: It is important to know if the business is making enough money to cover costs and to plan for future growth or to avoid losing money.

Question 9: What is a loan, and how can it help a new business?

Answer: A loan is money borrowed from a bank or lender that must be paid back with interest. It can help a new business buy equipment, stock, or cover other start-up costs.

Question 10: Sketch a simple diagram showing the relationship between income, expenses, and profit in a business. Use arrows to connect the parts and label each one.

Answer: The diagram should show income at the top, with an arrow pointing to 'Total Revenue'. From there, an arrow should lead to 'Expenses', with a subtraction sign indicating costs. Finally, an arrow from this shows 'Profit', which is the remaining money after expenses are deducted from income.