Question 1: Define 'cash flow' in the context of a business and explain why it is important for an enterprise.

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 expenses, invest, and grow.

Question 2: Identify three different sources of finance that a new business might use to start up its operations.

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

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

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

Question 4: Sketch a simple bar chart comparing the monthly sales revenue of a business over four months. Label each axis and provide example data for each month.

Answer: A bar chart with the vertical axis labeled 'Sales Revenue (£)' and the horizontal axis labeled 'Months'. Bars representing sales for Month 1, Month 2, Month 3, and Month 4, with example values such as £2000, £2500, £1800, and £3000 respectively.

Question 5: Explain the purpose of a budget in a business and how it helps in financial planning.

Answer: A budget forecasts income and expenses, helping businesses plan spending, control costs, and ensure financial stability.

Question 6: List two advantages and two disadvantages of using bank overdraft as a short-term finance option.

Answer: Advantages: Easy to access and flexible; Disadvantages: High interest rates and potential for accumulating debt.

Question 7: Draw a simple pie chart to illustrate how a business might allocate its monthly expenses. Include at least three categories such as staff costs, rent, and utilities. Label each section with a percentage and category name.

Answer: A pie chart divided into sections representing expenses. For example, staff costs 50%, rent 30%, utilities 20%. Each section labeled accordingly.

Question 8: What is the difference between a fixed cost and a variable cost? Provide one example of each.

Answer: Fixed costs remain constant regardless of production levels (e.g., rent), while variable costs change with production volume (e.g., raw materials).

Question 9: Describe how a profit and loss statement can help an enterprise make financial decisions.

Answer: It shows income and expenses over a period, helping managers identify profit levels, areas of overspending, and opportunities for improvement.

Question 10: Sketch a simple flow chart showing the process of how a business receives and manages customer payments, from sale to bank deposit.

Answer: A flow chart starting with 'Customer makes payment' leading to 'Payment received', then 'Payment processed', and finally 'Funds deposited into business bank account'.