Business studies

IGCSE Business Studies Student CD-ROM Section 4 – Multiple choice 1 Which of the following is an input in the production process? A Money B Labour C Added value D Packaging 2 Production can be defined as: A how efficiently inputs are changed into outputs B the process of changing goods into services C the process of changing inputs into outputs D how efficiently inputs are used. 3 A firm employs 40 workers. The average weekly output is 10,000. The average weekly labour productivity is: A 40% B 250% C 40 D 250 4 One way of improving labour productivity is to: A employ more workers B replace machines with workers C reduce spending on training of workers D invest in new technologies. 5 Which of the following might be a benefit of flow production? A The business holds high levels of inventories. B Labour turnover increases. C The business might benefit from purchasing economies of scale. D A business can produce products for niche markets. 6 Which of the following is a limitation of batch production? A Workers are highly motivated. B Unique, highly quality products are made. C It is capital intensive. D Economies of scale are unlikely. © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Multiple choice 1

IGCSE Business Studies Student CD-ROM  7 Which of the following statements is true about the benefits of technology to consumers? A Lower prices – lower quality products B Higher quality products – higher prices C Lower prices – higher quality products D Lower prices – less choice  8 Which of the following is an example of variable costs? A Factory rent B Components C Managers’ salaries D Advertising expenditure  9 Which of the following is not an economy of scale? A Purchasing economy B Technical economy C Production economy D Managerial economy 10 A benefit to a business of economies of scale is: A price will fall B average cost will rise C total costs will fall D average cost will fall. 11 Which of the following describes break-even? A Revenue is higher than total costs. B Revenue is the same as fixed costs. C Revenue is the same as total costs. D Revenue is the same as variable costs. 12 What will happen to break-even output when price remains the same but total costs rise? A Break-even output will be lower. B Break-even output will not change. C Break-even output will be higher. D It is not possible to say what will happen to break-even output. 13 A benefit to a business of producing quality products is: A competitors will have to lower their prices to compete B the costs of waste is reduced which increases average costs C the business might be able to charge a premium price D they will be more capital intensive. © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Multiple choice 2

IGCSE Business Studies Student CD-ROM 14 A system of setting agreed standards for every stage of production is known as: A quality standards B quality assurance C quality inspection D quality targets. 15 A quality product is: A always more expensive than competitor products B one that uses the highest quality raw materials C produced by capital intensive production methods D free from defects. 16 A problem of quality control by inspection is: A inspection only ever takes place at the end of the production process B workers do not see quality as their responsibility when quality inspectors are employed C customer returns are reduced D workers need to be trained to improve quality. 17 A business produces an average of 20,000 units per week. The average number of damaged units found by inspection is 500 units. The percentage of output that is damaged is: A 25% B 2.5% C 0.25% D 40% 18 Which of the following is not likely to be a factor influencing a location decision? A Price of land B Closeness to suppliers C Availability of skilled workers D The price of competitors’ products 19 A business might decide to relocate production facilities in another country because: A labour costs are higher B labour is unskilled C the government offers financial incentives D it is located far from the market. 20 Which of the following legal controls is most likely to affect the location of a factory? A Laws to protect employees B Laws to protect employers C Laws to protect consumers D Laws to protect the environment © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Multiple choice 3

IGCSE Business Studies Student CD-ROM Section 5 – Multiple choice 1 Businesses need finance for: A investment in other businesses B the purchase of non-current assets C improving their bank balance D increasing credit to customers. 2 Which of the following is an internal source of finance? A Debenture B Share issue C Retained profit D Overdraft 3 The best source of finance for the purchase of a motor vehicle is: A mortgage B overdraft C leasing D working capital. 4 Which of the following is a benefit of internal sources of finance? A Interest rates are low. B It is always available. C It is less costly than external sources. D It is more costly than external sources. 5 An advantage of equity financing is that: A it is available to all types of business B it does not have to be repaid C it has no cost to the business D interest payments are low. 6 Micro-finance is usually for: A entrepreneurs in developed economies who are able to borrow from banks B when an entrepreneur needs a large amount of capital at low interest rates C entrepreneurs in developing economies who are unable to borrow from other lenders D established businesses in developing economies. © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Multiple choice 1

IGCSE Business Studies Student CD-ROM  7 A cash-flow forecast shows the: A timing of cash inflows and outflows over a period of time B amount of cash a business earns from sales C the amount of profit a business earns over a period of time D how much cash a business has in its bank account.  8 A short-term cash shortage might be financed by: A not paying workers’ wages B reducing dividend payments to shareholders C taking out a bank loan D offering discounts to credit sales customers.  9 A business can improve its working capital by: A increasing sales B reducing inventories C increasing credit terms to customers D paying trade payables sooner than it needs to. 10 Working capital measures: A business profitability B business efficiency C business liquidity D business productivity. 11 The difference between gross profit and profit is: A cost of sales B taxation C expenses D interest on borrowing. 12 Profit is: A total costs less revenue B revenue less costs of sales C revenue less fixed costs D revenue less total costs. 13 Profit is important to businesses because: A it improves businesses, cash balances B it can be used to measure business size C it is a measure of businesses, success D businesses need to pay taxes to the government. © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Multiple choice 2

IGCSE Business Studies Student CD-ROM 14 The appropriation account of an income statement: A shows how profit is to be distributed between the business and the government B shows how profit is to be distributed between stakeholders C shows how profit is to be distributed between owners and the business D shows how profit is to be distributed between shareholders and stakeholders. 15 Profit is the reward to the owners/shareholders of a business for: A working hard B lending money to the business C being an entrepreneur D risking their investment in the business. 16 An asset is something which a business: A owes B owns C borrows D lends. 17 An example of a current asset is: A machinery B buildings C profit D inventories. 18 Which of the following is not a current liability? A Overdraft B Bank loan C Trade payables D Taxation not yet paid 19 Current assets and current liabilities can be used to measure: A profitability B productivity C liquidity D business performance. 20 Shareholders’ funds include: A share capital and taxation B retained profit and dividend payments C share capital and retained profits D retained profit and taxation. © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Multiple choice 3

IGCSE Business Studies Student CD-ROM Questions 21–25 The following financial data has been extracted from the income statement and balance sheet of a company. Revenue $000s Gross profit 300 Profit 200 Current assets 150 Current liabilities 60 Inventories 30 Capital employed 30 100 Use the table above to identify the correct value for: 21 The gross profit margin A 1 B 50% C 2 D 66.6% 22 The current ratio A 1 B 50% C 2 D 66.6% 23 The return on capital employed A 1 B 50% C 2 D 66.6% 24 The acid test ratio A 1 B 50% C 2 D 66.6% 25 The net profit margin Section 5 – Multiple choice 4 A 1 B 50% C 2 D 66.6% © Cambridge University Press 2014  IGCSE Business Studies

IGCSE Business Studies Student CD-ROM Section 6 – Multiple choice 1 Which of the following is not an economic objective of the government of a country? A Economic growth B Higher inflation C Lower unemployment D Healthy balance of payments 2 The price increase of goods and services over time is known as A inflation B GDP C balance of payments D globalisation. 3 Which stage of the business cycle is characterised by a decline in economic activity? A Boom B Growth C Recession D Slump 4 Which two factors are the main elements of a government’s economic policy? A Interest rates B Infrastructural improvements C Tax rates D Waste collection 5 How will the cost of borrowing money from banks be affected by an increase in interest rates? A It will become more expensive B It will stay the same C It will become cheaper D It will depend on the bank 6 Which of the following is not a type of tax? A Tariff B VAT C Income tax D Quota © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Multiple choice 1

IGCSE Business Studies Student CD-ROM  7 What happens to the cost of imports when the currency of a country depreciates? A It stays the same. B It becomes more expensive. C It becomes cheaper. D It becomes the same as the price of exports.  8 What is the main aim of pressure groups? A To take care of the environment. B To demonstrate. C To influence government policy and business actions. D To reduce energy consumption.  9 The effect of business activities on unrelated parties is known as: A externality B opportunity cost C cost-benefit analysis D globalisation. 10 Business activities that meet present needs without harming the future are said to be: A renewable B sustainable C ethical D profit-making. 11 Which of the following is not an aspect of corporate social responsibility? A Social costs B Social benefit C Interest of stakeholders D Price of goods 12 Which of the following is an example of an unethical business practice? A Selling products at competitive prices. B Advertising products on television. C False advertising of products and services. D Payment of overtime for extra work done by workers. 13 The process by which countries are connected with each other because of the trade of goods and services is known as: A import and export B globalisation C balance of payments D free trade agreements. © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Multiple choice 2

IGCSE Business Studies Student CD-ROM 14 Which of the following is not a characteristic of globalisation? A Growth in international trade. B Global recognition of brands. C Greater movement of products and services. D Increase in environmental damage. 15 The setting up of a MNC in the host country poses a threat to local businesses through: A increased competition B increased choice of goods and services C better infrastructure D more employment. 16 Which of the following is not a positive impact of globalisation? A Wider variety of products available to consumers. B Increased cooperation between countries. C Increased competition leads to more efficiently run businesses. D Loss of jobs in the home country. 17 Which of the following is not a benefit to the host country of having a MNC set up operations in its country? A Improved infrastructure B More employment C More foreign exchange D Lower cost of labour 18 Which two of the following are benefits to a business of becoming a multinational company? A Easier access to raw materials B Threat from pressure groups C Tight regulatory framework D Access to a bigger market 19 A physical limit on the quantity of goods that can be imported and exported is known as a: A tariff B quota C VAT D trade bloc. 20 Which of the following will not attract MNCs to start operations in a country? A Availability of skilled labour B Tax incentives, rebates and stable currency C Reliable power supply D High tax rates © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Multiple choice 3

IGCSE Business Studies Student CD-ROM 21 What is meant by the appreciation of a currency? A The value of the currency fluctuates. B The value of the currency decreases with respect to another currency. C The value of the currency increases with respect to another currency. D The value of the currency remains the same. 22 What are the two effects of depreciation of currency on exporters? A Exports are cheaper overseas. B A decrease in sales. C Exports are more expensive overseas. D An increase in sales. © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Multiple choice 4

IGCSE Business Studies Student CD-ROM Section 1 – Revision questions Two-mark questions  1 What is meant by ‘opportunity cost’?  2 Identify two advantages to a business of specialisation.  3 Identify two examples of capital goods.  4 What is meant by ‘added value’?  5 Identify two differences between the private sector and public sector.  6 Identify two characteristics of an entrepreneur.  7 Identify two uses of a business plan.  8 Identify two reasons why owners might want to grow their business.  9 Identify two problems of business growth. 10 Identify two reasons why a business might remain small. 11 What is meant by ‘unlimited liability’? 12 What is meant by ‘joint venture’? 13 What is meant by ‘public limited company’? 14 What is meant by ‘joint venture’? 15 Identify two features of private sector organisations. 16 What is meant by ‘SMART objectives’? 17 What is meant by ‘business stakeholder’? 18 What is meant by ‘social enterprise’? 19 What is meant by ‘mixed economy’? 20 Identify two objectives of public sector organisations. © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Revision questions 1

IGCSE Business Studies Student CD-ROM Four-mark questions  1 With the aid of examples explain the difference between a ‘need’ and a ‘want’.  2 Identify and explain two factors of production.  3 Explain how a restaurant might achieve specialisation of labour.  4 Identify and explain two disadvantages of specialisation to workers.  5 Identify and explain two ways a business could increase value added.  6 With the aid of examples, explain the difference between primary sector and tertiary sector business activity.  7 Using oil as an example, explain the relationship between primary and secondary sector business activity.  8 Identify and explain two differences between unincorporated and limited liability businesses.  9 Identify and explain two features of a business plan. 10 Identify and explain two reasons why governments might support business start-ups. 11 Identify and explain two problems of measuring the size of a business. 12 Identify and explain two ways of achieving external growth. 13 Identify and explain two reasons why the owner of a business may not have growth as an objective. 14 Identify and explain two benefits to a sole trader of becoming a partnership. 15 Identify and explain two advantages of a franchise. 16 Identify and explain two disadvantages of a public limited company. 17 Identify and explain two advantages to businesses of forming a joint venture. 18 Identify and explain the importance of profit to any two business stakeholders. 19 Explain the main difference between the objectives of a social enterprise and other private sector businesses. 20 Identify and explain two differences between the objectives of private sector and public sector organisations. © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Revision questions 2

IGCSE Business Studies Student CD-ROM Six-mark questions 1 Ben is a professional photographer. He has a studio where he takes photographs of individuals and family groups. Ben’s business has been successful and he believes this is due to setting SMART objectives. Ben enjoys the benefits of being his own boss but as a sole trader he sometimes worries about the disadvantages of this form of business organisation. He is wondering if he should change his business into a private limited company. a How important are SMART objectives to the success of Ben’s business? Justify your answer. b Identify and explain two benefits to Ben of being a sole trader. c Do you think Ben should become a private limited company? Justify your answer. 2 Outdoor Living is a private limited company owned by four members of the Mitchell family. They manufacture garden furniture such as tables and chairs. All of their products are made from wood. The younger members of the Mitchell family are keen to set growth as a business objective, but their father Andrew, the Chief Executive of Outdoor Living, is less keen to do so. a Identify and explain two ways Outdoor Living might increase the value added of its products. b Identify and explain one advantage and one disadvantage to the owners of Outdoor Living of being a private limited company. c Do you think the directors of Outdoor Living should set growth as an objective? Justify your answer. © Cambridge University Press 2014  IGCSE Business Studies Section 1 – Revision questions 3

IGCSE Business Studies Student CD-ROM Section 2 – Revision questions Two-mark questions  1 What is meant by ‘motivation’?  2 Identify two needs in Maslow’s hierarchy of needs.  3 Identify two hygiene factors in Herzberg’s two-factor theory.  4 What is meant by ‘economic man’?  5 Identify two financial rewards that might be used to motivate workers.  6 What is meant by ‘chain of command’?  7 What is meant by ‘span of control’?  8 What is meant by ‘delayering’?  9 What is meant by ‘job rotation’? 10 What is meant by ‘trade union’? 11 Identify two features of a job description. 12 What is meant by ‘person specification’? 13 Identify two benefits of induction training. 14 Identify two disadvantages of on-the-job training. 15 Identify two legal controls over employment. 16 Identify two methods of oral communication. 17 What is meant by ‘electronic communication’? 18 Identify two benefits of written communication. 19 What is meant by ‘effective communication’? 20 Identify two benefits of effective communication. © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Revision questions 1

IGCSE Business Studies Student CD-ROM Four-mark questions  1 Identify and explain two motivators identified by Herzberg.  2 Identify and explain two benefits of having a well-motivated workforce.  3 Using examples, explain what is meant by ‘fringe benefits’.  4 Identify and explain two non-financial rewards that might be used to motivate workers.  5 Identify and explain two benefits of delegation.  6 Identify and explain two disadvantages of a tall hierarchy.  7 Identify and explain two functions of management.  8 Explain the difference between autocratic and democratic leadership styles.  9 Identify one advantage and one disadvantage of a laissez-faire leadership style. 10 Identify and explain two benefits to workers of trade unions. 11 Identify and explain two differences between internal and external recruitment. 12 Identify and explain two benefits of training to a business. 13 Explain the difference between dismissal and redundancy. 14 Identify and explain two features of a contract of employment. 15 Identify and explain two reasons why a business might downsize its workforce. 16 Identify and explain two methods of written communication. 17 Identify and explain two limitations of oral communication. 18 Identify and explain two benefits to a business of video-conferencing. 19 Identify and explain two features of effective communication. 20 Identify and explain two barriers to effective communication. © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Revision questions 2

IGCSE Business Studies Student CD-ROM Six-mark questions 1 Simon is the Human Resources Manager for Top Tools (TT). TT is a small engineering company. It manufactures parts for the car industry. TT’s Factory Manager is retiring soon. Simon has been asked by TT’s directors to recruit a replacement for the Factory Manager. Simon has prepared a job description and person specification for the Factory Manager’s job. Simon thinks that the company should consider internal recruitment, but the directors want to look externally. a Identify and explain two benefits to TT of having a job description for the Factory Manager’s job. b Identify and explain two benefits to TT of having a person specification for the factory manager’s job. c Do you agree with Simon that the Factory Manager should be recruited internally? Justify your answer. d TT uses induction training. Identify and explain two benefits to TT of induction training for the new Factory Manager. 2 Noah is the owner of Speedy Delivery Services (SDS). SDS collects parcels from local businesses and delivers them to customers. SDS employs 30 drivers and four office staff. Profits have been falling over the past two years, mainly due to increased competition from a large delivery company that moved into the area three years ago. Noah has decided the only way to increase profits is to reduce costs. He plans to make 11 workers redundant. Ten will be drivers and one will be from the office staff. The drivers are all members of a trade union. a Identify and explain two ways Noah could effectively communicate his plan to reduce the size of the workforce to the SDS workers. b Identify and explain how Noah might select the workers to be made redundant. c Identify and explain how the drivers’ trade union might help its members at SDS. d Do you agree with Noah that ‘the only way to increase profits is to reduce costs’? Justify your answer. © Cambridge University Press 2014  IGCSE Business Studies Section 2 – Revision questions 3

IGCSE Business Studies Student CD-ROM Section 3 – Revision questions Two-mark questions  1 What is meant by ‘consumer market’?  2 Identify two products of industrial markets.  3 What is meant by ‘external environment’?  4 Identify two ways a business might respond to increased competition.  5 What is meant by ‘mass marketing’?  6 What is meant by ‘market research’?  7 What is meant by ‘unique selling point’?  8 Identify two sources of secondary data.  9 What is meant by ‘qualitative research’? 10 Identify two methods of sampling. 11 What is meant by ‘marketing mix’? 12 Identify two roles of packaging. 13 Identify the stages of a product life cycle. 14 A firm makes Product X. The average cost of making Product X is $10. The firm wants to earn a profit of 75%. Calculate the selling price of Product X. 15 What is meant by ‘price elasticity of demand’? 16 What is meant by ‘direct selling’? 17 Identify two aims of promotion. 18 What is meant by ‘marketing strategy’? 19 What is meant by ‘barriers to trade’? 20 Identify two ways a business might overcome the problems of entering foreign markets. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Revision questions 1

IGCSE Business Studies Student CD-ROM Four-mark questions  1 Identify and explain two reasons why consumer spending patterns change.  2 Identify and explain two reasons why markets have become more competitive.  3 Identify and explain one benefit and one limitation of niche marketing.  4 Identify and explain two methods of market segmentation.  5 Identify and explain two benefits to a business of market segmentation.  6 Identify and explain two reasons why a business should carry out market research.  7 Identify and explain one benefit and one limitation of primary research.  8 Identify and explain two advantages of test marketing.  9 Identify and explain two factors that influence the accuracy of market research data. 10 Identify and explain two methods of presenting market research data. 11 Identify and explain one cost and one benefit of new product development. 12 Using examples, explain the purpose of extension strategies. 13 Identify and explain two methods of pricing. 14 Identify and explain the role of two middlemen in the channel of distribution. 15 Identify and explain two methods of promotion. 16 Identify and explain one opportunity and one threat to a business of e-commerce. 17 Identify and explain two ways legal controls affect marketing activities. 18 Identify and explain two reasons a business might decide to enter foreign markets. 19 Identify and explain two problems a business might face when entering foreign markets. 20 Identify and explain one benefit and one limitation of joint ventures. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Revision questions 2

IGCSE Business Studies Student CD-ROM Six-mark questions 1 Adventure Software (AS) develops gaming software aimed at the adult market. It is just about to launch its latest software product ‘The Return of the Titans’. The gaming software market is very competitive, but AS has built a strong brand image and it has many loyal customers. ‘The Return of the Titans’ is a sequel to ‘The Defeat of the Titans’, which was the most popular adult adventure software product of 2012. a Identify and explain two methods AS could use to promote its latest product. b Identify and explain two methods of pricing AS could use for the launch of its latest product. c To what extent is a ‘strong brand image’ important for the success of AS? Justify your answer. 2 Horologe is a manufacturer of watches. It produces a range of watches aimed at different segments of the market. Horologe sells all of its watches through wholesalers. At a recent board meeting the Marketing Director said ‘we should consider using e-commerce to sell our products’. a Identify and explain two benefits to Horologe of market segmentation. b Identify one advantage and one disadvantage to Horologe of using wholesalers to distribute its products. c Do you agree with the Marketing Director that Horologe should consider using e-commerce to sell its products? Justify your answer. © Cambridge University Press 2014  IGCSE Business Studies Section 3 – Revision questions 3

IGCSE Business Studies Student CD-ROM Section 4 – Revision questions Two-mark questions  1 What is meant by ‘production’?  2 Identify two inputs of the production process.  3 A business produced 50,000 units of output last year. It employs 40 production workers. Calculate the labour productivity for last year.  4 Identify two methods of production.  5 Identify two ways technology might be used to improve the production process.  6 Identify two limitations of not holding stocks.  7 What is meant by ‘lean production’?  8 Identify one benefit and one limitation of technology to workers.  9 Identify two examples of fixed costs. 10 What is meant by ‘total cost’? 11 A business produced 5,000 units of output at a total cost of $75,000. Calculate the average cost. 12 What is meant by ‘diseconomies of scale’? 13 What is meant by ‘break-even point’? 14 What is meant by ‘margin of safety’? 15 Identify two limitations of break-even charts. 16 What is meant by ‘quality’? 17 Identify two methods of achieving quality production. 18 Identify two factors that influence business location. 19 Identify two reasons why a business might decide to locate in another country. 20 Identify two legal controls affecting location decisions. © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Revision questions 1

IGCSE Business Studies Student CD-ROM Four-mark questions  1 Explain the difference between ‘production’ and ‘productivity’.  2 Identify and explain two functions of operations management.  3 Identify and explain one benefit and one limitation to workers of measures to improve labour productivity.  4 Other than training, identify and explain two ways of improving labour productivity.  5 Identify and explain one benefit and one limitation of to a business of becoming more capital intensive.  6 Identify one benefit and one limitation to workers of flow production.  7 Identify and explain two costs of holding inventories.  8 Identify and explain two factors that might influence the success of just-in-time (JIT) inventory management.  9 Identify and explain two ways technology has changed production methods. 10 Identify and explain the importance of two economies of scale. 11 Identify and explain two causes of diseconomies of scale. 12 Identify and explain one benefit and one limitation of break-even analysis. 13 Identify and explain two uses of cost data to a business. 14 Identify and explain two reasons why quality is important to a business. 15 Identify and explain two problems of quality control by inspection. 16 Identify and explain two benefits of quality assurance. 17 Identify and explain the relationship between quality and a product’s life cycle. 18 Identify and explain two factors a retailer needs to consider when deciding on the location for a new store. 19 Identify and explain two ways the government might influence the location decision. 20 Identify one benefit and one limitation of locating in another country. © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Revision questions 2

IGCSE Business Studies Student CD-ROM Six-mark questions 1 Sweet Sensation (SS) is a manufacturer of candy. It uses batch production methods. In recent months it has not been able to make enough of its most popular product, Candy Bears. The Operations Director is considering introducing flow production methods for Candy Bears. The Finance Director is concerned at the level of investment that this will require. Workers are also concerned about this proposal. a Identify and explain one advantage and one disadvantage to SS of batch production methods. b Do you think SS should introduce flow production for Candy Bears? Justify your answer. c Identify and explain two reasons why you think workers at SS are concerned about the Operation Director’s proposal to introduce flow production. 2 Meesum Electricals (ME) is a manufacturer of consumer electrical goods. It has two factories in Country Z. ME is a very successful company with a strong brand image in Country Z. Labour costs in Country Z have been rising recently. The owners are thinking of relocating one of their factories to Country Y. Country Y is a low labour cost economy with a good supply of skilled and semi-skilled workers. ME currently sells 35% of its output in Country Y. The Operations Director is concerned about the effect any relocation might have on quality. a Do you think ME should relocate one of its factories to Country Y? Justify your answer. b Identify and explain one benefit and one limitation to ME’s workers if the company decides to relocate one factory to Country Y. c ME decides to relocate a factory to Country Y. Identify and explain two methods ME could use to ensure quality in the new factory meets consumer expectations. © Cambridge University Press 2014  IGCSE Business Studies Section 4 – Revision questions 3

IGCSE Business Studies Student CD-ROM Section 5 – Revision questions Two-mark questions  1 Identify two reasons why businesses need finance.  2 What is meant by ‘debenture’?  3 What is meant by ‘micro-finance’?  4 Identify two benefits of debt financing.  5 Identify two reasons why businesses need cash.  6 What is meant by ‘cash-flow forecast’?  7 What is meant by ‘liquidity’?  8 Identify two factors that influence the length of the working capital cycle.  9 What is meant by ‘profit’? 10 Identify two parts of an income statement. 11 Identify two external stakeholders which might be interested in a business’s income statement. 12 What is meant by ‘balance sheet’? 13 Identify two non-current assets. 14 Identify two reasons why a business should regularly check its performance. 15 What is meant by ‘return on capital employed’? 16 A business has current assets of $80,000 and current liabilities of $50,000. Calculate the current ratio. 17 The business in question 16 has inventories of $40,000. Calculate the acid test ratio. 18 Comment on your results to questions 16 and 17. 19 A business has revenue of $400,000. The gross profit is $240,000. Calculate the gross profit margin. 20 In 2011 a business had a net profit margin of 13%. In 2012 the net profit margin was 16%. Identify two reasons why the net profit margin might have increased between 2011 and 2012. © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Revision questions 1

IGCSE Business Studies Student CD-ROM Four-mark questions  1 Using examples, explain the difference between short-term and long-term finance needs.  2 Identify and explain two internal sources of finance.  3 Identify and explain two ways working capital might be used as a source of finance.  4 Identify and explain one benefit and one limitation of equity finance.  5 Identify and explain two internal sources of finance.  6 Identify and explain two factors that influence the choice of finance.  7 Identify and explain two benefits to a business of producing cash-flow forecasts.  8 Identify and explain two ways a business might finance a short-term cash shortage.  9 Identify and explain two reasons why profit is important to a business. 10 Identify and explain the difference between gross profit and profit. 11 Identify and explain two uses of the appropriation account. 12 Identify and explain two uses of an income statement to employees of a business. 13 Using examples, explain the difference between an asset and a liability. 14 Identify and explain two items which are included as current assets on a balance sheet. 15 Identify and explain two elements of shareholders’ funds. 16 Using formulas, explain the difference between the current ratio and acid test ratio. 17 Identify and explain two benefits of ratio analysis. 18 Identify and explain two limitations of ratio analysis. 19 Identify and explain two reasons why the government might be interested in business performance. 20 Identify and explain two reasons why financial accounts are useful to shareholders. © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Revision questions 2

IGCSE Business Studies Student CD-ROM Six-mark questions 1 The accountant of a private limited company has produced the following financial data for 2011 and 2012. The directors of the company are worried about the performance of the business in 2012. The accountant is pleased with the liquidity measures as he believes cash is more important than profit. Gross profit margin 2011 2012 Net profit margin 45% 48% Return on capital employed 22% 20% Current ratio 13% 11% Acid test ratio 1.2:1 2.5:1 0.8:1 1:1 a Do you think the directors of the company should be worried about the performance of the business in 2012? Justify your answer. b Identify and explain how any two stakeholders, other than shareholders, might use the results shown in the table. c Is the accountant right in his belief that ‘cash is more important than profit’? Justify your answer. 2 Jonah is a sole trader. He designs and makes furniture. His customers pay for their furniture on delivery. Jonah pays cash for all of his supplies. Jonah’s business is profitable, but he always seems to have a shortage of cash at certain times of the year. He has produced a cash-flow forecast for the next six months. In months 3 and 4 he will have a cash shortage. In month 3 he has budgeted to buy a new wood-turning machine which he needs to replace one that is very old and often breaks down. a Identify and explain two benefits to Jonah of producing a cash-flow forecast. b Identify and explain two reasons why Jonah can be profitable yet suffer cash shortages. c Identify and explain two ways Jonah might finance the short-term cash shortage in months 3 and 4. © Cambridge University Press 2014  IGCSE Business Studies Section 5 – Revision questions 3

IGCSE Business Studies Student CD-ROM Section 6 – Revision questions Two-mark questions  1 What is meant by ‘gross domestic product’?  2 List the main economic objectives of a government.  3 What are the four main stages of the business cycle?  4 What is meant by balance of payments?  5 Identify two examples of direct taxes.  6 What is meant by ‘indirect taxes’?  7 Identify two ways in which the government can control business activity.  8 What is meant by ‘externality’?  9 Identify two effects of business activity on the environment. 10 What is meant by ‘social cost’? 11 What is meant by ‘sustainable development’? 12 Give two examples of unethical business practices. 13 What is a pressure group? 14 List two methods used by pressure groups to influence businesses and the government. 15 What is meant by ‘globalisation’? 16 Identify two characteristics of globalisation. 17 What is a multinational company? 18 Give two examples of trade blocs. 19 What is meant by ‘quota’? 20 What is meant by ‘depreciation of a currency’? © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Revision questions 1

IGCSE Business Studies Student CD-ROM Four-mark questions  1 Describe the main characteristics of the boom stage of the business cycle.  2 Identify and explain two economic objectives of a country.  3 With the aid of examples, explain the difference between direct and indirect taxes.  4 Explain how an increase in income tax rates can affect consumer spending.  5 Explain how an increase in interest rates will affect businesses.  6 How will changes in government spending in infrastructure affect businesses in that sector?  7 What are greenhouse gases? How does business activity contribute to the emission of greenhouse gases?  8 Identify and explain two negative externalities caused by a new factory located near a residential area.  9 Explain how the government can use incentives to encourage businesses to be environmentally friendly. 10 Identify and explain two steps a business can take to become sustainable. 11 Explain two advantages to a business of following ethical business practices. 12 With the help of an example, explain the significance of cost-benefit analysis when evaluating the impact of a project. 13 Identify and explain the opportunities and threats of globalisation. 14 Explain the importance of becoming a multinational company to a business. 15 Use an example to explain the impact of depreciation of a currency on a business. 16 Explain the effect of appreciation of a currency on exporters. 17 List and explain two characteristics that will make a country attractive for investment by multinational companies. 18 With the aid of an example, explain how free trade agreements may benefit international trade. 19 Identify and explain two advantages of a multinational company to the host country. 20 Identify and explain two ways in which a government tries to control the amount of international trade of its country. © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Revision questions 2

IGCSE Business Studies Student CD-ROM Six-mark questions 1 Country A is in recession. Its government has two main objectives: to reduce unemployment and improve the country’s balance of payments. In order to improve the balance of payments, the government has set quotas and tariffs on imports and lowered interest rates to encourage exports. The currency of Country A has been depreciating against the currencies of its international trading partners. a Identify and explain the main characteristics of an economy in recession. b Do you think setting quotas and tariffs and lowering interest rates will help improve the balance of payments of Country A? Justify your answer. c Do you think the depreciation of Country A against the currencies of its international trading partners will help the exporters of Country A? Justify your answer. 2 Surjit Banda owns a rubber manufacturing plant and has lately been facing opposition from local pressure groups in his country for the plant’s impact on the environment. Surjit has responded to the pressure groups by saying that his business activity is sustainable and that his manufacturing plant has helped the economy of the country. Surjit has plans to export his products to neighbouring countries and wants to be known as an ethical supplier. a Do you think Surjit’s business activity has more social benefits than costs? Carry out a cost-benefit analysis to justify your answer. b Why is it important for Surjit to respond to the pressure groups? Identify and explain the opportunities and threats posed by pressure groups. c Explain why it is important for Surjit’s business to be known as ethical. © Cambridge University Press 2014  IGCSE Business Studies Section 6 – Revision questions 3