Finance | AQA GCSE Business (8132)
Finance
- 105 questions
- 6 subtopics
- Paper 2
- Paper 2
Finance is examined in Paper 2, Influences of marketing and finance on business activity.
It covers sources of finance, cash flow and cash flow forecasts, financial calculations and average rate of return, break-even charts and margin of safety, income statements and statements of financial position and profit margins and judging financial performance.
Sample questions from Finance
Answer each one closed book first, then open the answer.
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Sources of finance
What is a bank loan?
Show the answer
A bank loan is a fixed sum borrowed from a bank and repaid with interest over an agreed period. The repayments must be made whatever the business's profit. -
Sources of finance
Should a small bakery buy a new oven using hire purchase or an overdraft?
Show the answer
Hire purchase suits the oven better, because it spreads the cost over the oven's working life. An overdraft is expensive and is meant for short-term gaps. -
Cash flow and cash flow forecasts
What are the opening and closing balances in a cash flow forecast?
Show the answer
The opening balance is the cash a business has at the start of a month. The closing balance is the opening balance plus net cash flow. Each closing balance becomes the next month's opening balance. -
Cash flow and cash flow forecasts
What are the consequences of cash flow problems?
Show the answer
A business may be unable to pay wages or suppliers, and suppliers may stop deliveries. In the worst case, creditors can force the business to close. -
Financial calculations and average rate of return
How does a price rise affect revenue and profit?
Show the answer
A price rise increases revenue per unit, but fewer units may be sold. Profit rises only if the extra revenue per unit outweighs the fall in sales. -
Financial calculations and average rate of return
A florist buys a delivery van for £20,000. The van brings total returns of £28,000 over four years. What is the ARR?
Show the answer
The ARR on the van is 10%. Average annual profit is £8,000 ÷ 4 = £2,000, and £2,000 ÷ £20,000 × 100 = 10%. -
Break-even charts and margin of safety
How do you read the break-even level of output from a chart?
Show the answer
Find the point where the total revenue and total costs lines cross. Read straight down from that point to the output axis. -
Break-even charts and margin of safety
What happens to break-even output if fixed costs rise?
Show the answer
Break-even output rises, because more units must be sold to cover the higher costs. The margin of safety falls if sales stay the same.
The 6 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Sources of finance | Internal and external finance, retained profit, selling assets, family and friends, share issues, bank loans, mortgages, overdrafts, trade credit, hire purchase and grants, and matching finance to the business. | 23 |
| Cash flow and cash flow forecasts | Cash inflows and outflows, building a cash flow forecast, net cash flow and opening and closing balances worked through examples, cash against profit, and ways to solve a cash shortage. | 18 |
| Financial calculations and average rate of return | Revenue, costs and profit worked through takeaway and market-stall examples, how changes in rent or unit costs affect profit, and the average rate of return calculated, compared and questioned. | 16 |
| Break-even charts and margin of safety | Break-even output and how to read it from a chart, the fixed cost, total cost and revenue lines, margin of safety, and the effect of changes in costs or price on break-even. | 16 |
| Income statements and statements of financial position | Revenue, cost of sales, gross profit, expenses and net profit worked through a shoe shop, assets and liabilities, current and non-current items, net assets, and how the two statements differ. | 16 |
| Profit margins and judging financial performance | Gross and net profit margins calculated for a clothing shop and a restaurant, what falling margins reveal, comparing with past years and rivals, and how shareholders, banks and suppliers read the accounts. | 16 |
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
AQA GCSE Business Active Recall Guide
Every topic, not just this one. 659 questions with their answers.