Financial Planning | Edexcel A-Level Business (9BS0)
Financial Planning
- 129 questions
- 4 subtopics
- Theme 2: managing business activities
- Paper 2 and Paper 3
Financial planning is the second section of Theme 2.
It covers how a business predicts what it will sell, the revenue and costs that follow from that, the output at which it stops losing money, and the budgets it sets and then measures itself against.
Sample questions from Financial Planning
Answer each one closed book first, then open the answer.
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Sales forecasting
Why must seasonal variations be incorporated into sales forecasts?
Show the answer
Consumer behaviour creates predictable fluctuations at certain times of year that affect demand patterns. -
Sales forecasting
What would happen to a firm's sales forecast if a competitor exited the market?
Show the answer
Available market share may increase, leading to an upward revision of sales forecasts. -
Sales, revenue and costs
Give an example of a variable cost related to labour.
Show the answer
Direct labour costs paid per unit. -
Sales, revenue and costs
What information is needed to calculate sales revenue?
Show the answer
The selling price per unit and the sales volume (number of units sold). -
Break-even
What would happen to the margin of safety if actual output remained the same but break-even output increased?
Show the answer
The margin of safety would decrease, meaning the business is closer to making a loss. -
Break-even
How can you identify the profit zone on a break-even chart?
Show the answer
The profit zone is the area to the right of the break-even point where the total revenue line lies above the total costs line. -
Budgets
Define zero-based budgeting.
Show the answer
A budgeting approach that requires each budget to be justified from scratch each period, starting from a base of zero rather than from previous figures. -
Budgets
Why might budgets be inaccurate?
Show the answer
Because they are based on predictions and estimates about uncertain future conditions.
The 4 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Sales forecasting | Why a business forecasts sales, and how consumer trends, economic variables and the actions of competitors make a forecast harder to trust. | 30 |
| Sales, revenue and costs | Sales volume and sales revenue, fixed, variable and total costs and how each behaves as output changes, rearranging the formulae, and calculating percentage changes and percentage point differences. | 37 |
| Break-even | Contribution per unit, the break-even calculation and chart, the margin of safety, and how a change in price or cost moves the break-even point. | 30 |
| Budgets | Historical and zero-based budgeting, what budgets do for control and coordination, and favourable and adverse variance analysis. | 32 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
Edexcel A-Level Business Active Recall Guide
Every topic, not just this one. 2,305 questions with their answers.