Question 1: Define the term 'expenses' in relation to a business.

Answer: Expenses are the costs a business has to pay out to operate, such as rent, wages, and supplies.

Question 2: List three examples of income a small business might earn.

Answer: Sales revenue from products or services, interest earned on savings, and any rental income from property.

Question 3: Explain the difference between 'profit' and 'loss'.

Answer: Profit is the money a business makes when income is more than expenses. Loss occurs when expenses are higher than income.

Question 4: Calculate the profit if a business's total income is £10,000 and its expenses are £7,500.

Answer: Profit = Income - Expenses = £10,000 - £7,500 = £2,500.

Question 5: Describe what a 'budget' is in business finance.

Answer: A budget is a plan that estimates the income and expenses for a business over a period of time.

Question 6: Identify two purposes of keeping financial records for a business.

Answer: To track how much money the business is making and spending, and to help with tax and legal requirements.

Question 7: Sketch a simple bar graph showing the following income sources for a small business: sales (£8,000), interest (£500), rental (£1,500).

Answer: A bar graph with three bars: Sales at the highest level, Rental next, and Interest the lowest, each labeled accordingly.

Question 8: Draw a basic diagram of a simple cash flow chart showing money coming into a business and money going out.

Answer: A diagram with two sections: 'Money In' with arrows pointing from sources like sales and loans, and 'Money Out' with arrows pointing to expenses like wages and supplies.

Question 9: Why is it important for a business to keep accurate financial records?

Answer: To make informed decisions, ensure legal compliance, and prepare for taxes accurately.

Question 10: Name two financial documents that a business might produce regularly.

Answer: Income statement (profit and loss account) and a balance sheet.

Question 11: Sketch a simple plan of how a small business might manage its cash flow during a busy sales period.

Answer: A sketch showing incoming cash from sales, with arrows leading to paying expenses like stock and wages, and saving some cash for future needs.