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

Answer: Income is the money a business earns from selling goods or services.

Question 2: What is a 'profit' and how is it different from 'income'?

Answer: Profit is the money remaining after deducting all expenses from the income. Income is the total money earned before expenses are paid.

Question 3: Name two common expenses that a business might have.

Answer: Rent and wages are two common expenses.

Question 4: Explain why it is important for a business to keep track of its expenses and income.

Answer: Because it helps the business know if it is making a profit or a loss, and allows for better financial planning.

Question 5: Describe what a 'budget' is and why a business might use one.

Answer: A budget is a plan that estimates income and expenses over a period of time. It helps the business control spending and plan for future growth.

Question 6: Sketch a simple example of a cash flow chart showing inflow and outflow of money.

Answer: The sketch should show two columns or sections: one labeled 'Inflow' with arrows pointing inwards, representing income (e.g., sales, loans); and one labeled 'Outflow' with arrows pointing outwards, representing expenses (e.g., bills, wages).

Question 7: Identify and explain one benefit of keeping accurate financial records for a business.

Answer: Accurate records help the business make informed decisions, track profitability, and meet legal requirements.

Question 8: Imagine you are starting a small business selling handmade crafts. List three types of costs you might expect to have.

Answer: Materials for making crafts, packaging supplies, and advertising costs.

Question 9: Draw a simple table with two columns labeled 'Expenses' and 'Amount'. Include three example expenses and approximate amounts for each.

Answer: The table should have three rows with expenses such as 'Materials - £50', 'Transport - £20', 'Advertising - £10'.

Question 10: What is the purpose of a financial forecast in a business plan?

Answer: To predict future income and expenses, helping the business plan for growth and avoid financial problems.