Finance | OCR GCSE Business (J204)
Finance
- 97 questions
- 6 subtopics
- Component 02
- Component 02
Finance is examined in Component 02, Business 2: operations, finance and influences on business.
It covers the role of the finance function, sources of finance, revenue, costs, profit and loss, break-even, cash, liquidity and profit and cash flow forecasts.
Sample questions from Finance
Answer each one closed book first, then open the answer.
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The role of the finance function
How does the finance function influence the marketing department?
Show the answer
The finance function sets the marketing budget and checks whether campaigns are affordable. A campaign may be cut back if it does not pay for itself. -
The role of the finance function
Why does the finance function keep a close watch on cash?
Show the answer
The finance function makes sure the business always has enough cash to pay its bills on time. A shortage can be planned for, for example by arranging an overdraft. -
Sources of finance
What is an overdraft?
Show the answer
An overdraft lets a business take more money out of its bank account than it holds, up to an agreed limit. Interest is charged only on the amount overdrawn. -
Sources of finance
How can a business raise finance from the sale of assets?
Show the answer
A business can raise cash by selling property, machinery or vehicles it no longer needs. The cash carries no interest, but an asset can only be sold once. -
Revenue, costs, profit and loss
A market stall has monthly revenue of £4,200 and total costs of £4,650. Has it made a profit or a loss, and of how much?
Show the answer
The stall has made a loss of £450. £4,200 − £4,650 = −£450. -
Revenue, costs, profit and loss
A toy shop has revenue of £90,000 and net profit of £14,000. What is its net profit margin, to one decimal place?
Show the answer
The toy shop's net profit margin is 15.6%. £14,000 ÷ £90,000 × 100 = 15.6%. -
Break-even
Why is a break-even quantity always rounded up rather than down?
Show the answer
A business cannot sell part of a unit. Selling one unit fewer than the rounded-up figure would still leave a small loss. -
Break-even
On a break-even chart, what does the point where total revenue and total costs cross show?
Show the answer
The crossing point is the break-even point. Output to the right of it makes a profit, and output to the left makes a loss.
The 6 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| The role of the finance function | What the finance function does, the information it provides, how it supports planning and decisions across marketing, HR and operations, and why lenders, investors and HMRC need it. | 15 |
| Sources of finance | Why new and established businesses need finance, owners' capital, bank loans, overdrafts, trade credit, retained profit, sale of assets, new partners, share issues and crowdfunding. | 18 |
| Revenue, costs, profit and loss | Revenue, fixed, variable and total costs, profit and loss, gross and net profit and their margins, the average rate of return, and worked calculations for small businesses. | 18 |
| Break-even | The break-even formula and contribution per unit, worked break-even quantities rounded up, how price and cost changes move break-even, reading a break-even chart, and the method's limitations. | 16 |
| Cash, liquidity and profit | Why cash and liquidity matter, the difference between cash and profit, how selling on credit or overstocking drains cash, and how a business improves its cash position. | 14 |
| Cash flow forecasts | The rows of a cash flow forecast, net cash flow and opening and closing balances with worked examples, anticipating shortages, why banks ask for one, and its limitations. | 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
OCR GCSE Business Active Recall Guide
Every topic, not just this one. 582 questions with their answers.