AQA A LEVEL BUSINESS VALUATION v v v v
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EXAM WITH THE CORRECT ANSWERS
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Name three ways business impacts a country and its residents: -
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vanswer-Provides employment
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New products can enhance the lives of consumers
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Improve a country's reputation v VV v VV v VV
What do businesses do in the primary sector? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Extract or v VV v VV
vgrow raw materials
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What do businesses do in the secondary sector? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer- v VV
Manufacture goods using raw materials v VV v VV v VV v VV
What do businesses do in the tertiary sector? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Provide v VV
vservices
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What do mission statements create? -
v VV v VV v VV v VV v VV v VV vVV correct answer-Corporate aims v VV v VV
What are the benefits of setting business objectives? - correct answer-
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Provide direction and can support planning and operations
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Allow a business to co-ordinate resources and ensure that all employees are
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vworking towards the same overall aim
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,What is profit maximisation? - correct answer-A business objective that
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vrequires a business to achieve the highest amount of profit for shareholders
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Which business objective requires a business to continue trading despite
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vchallenges in the external environment? - correct answer-Survival
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Which business objective requires the growth of stores or locations, sales
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vvalue, sales volume or product range? - correct answer-Growth
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Which business objectives require a business to focus on supporting society
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vthrough initiatives including sustainability and fair trade? - correct answer-
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Social, ethical and environmental v VV v VV v VV
What can corporate objective be broken down into? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer- v VV
Functional objectives v VV
Team objectives v VV v VV
Individual objectives v VV
What is revenue? - correct answer-The income earned by a business from
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vthe sale of its goods and services
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What is the calculation for revenue? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-number of sales x v VV v VV v VV v VV
vsales price
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What are the types of costs? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Variable Fixed v VV v VV
What are variable costs? -v VV v VV v VV v VV v VV vVV correct answer-Costs that change directly withv VV v VV v VV v VV v VV
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What are fixed costs? - correct answer-Cost that do not vary as the
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vcompany changes its output
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Who argued in 1980 that a business can be a cost leader or differentiated
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vbut not both? - correct answer-Michael Porter
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What is profit? - correct answer-The amount of money that the business
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vmakes when taking into account costs
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What is the calculation for interest? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-interest rate x the size v VV v VV v VV v VV v VV
vof the loan
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What is the calculation for profit? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-total revenue - total costs v VV v VV v VV v VV v VV
What do we call things like raw materials that businesses convert into
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voutputs? - correct answer-Inputs
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What kind of sector do forestry businesses operate in? -
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Primary sector v VV
,What does the SMART acronym of business objectives stand for? -
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vanswer-Specific
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Measurable v VV
Agreed v VV
Realistic v VV
Timely
Which type of costs don't change with a business' output? -
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Fixed costs v VV
What is a sole trader? - correct answer-A single person who is the
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vexclusive owner of a business.
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What is the term used to describe the lack of distinction between a sole
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vtrader's assets and their business' assets? - correct answer-Unlimited
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vliability
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What are the advantages of sole trader business ownership? -
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vanswer-Easiest type of business to set up
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Sole trader is their own boss
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Sole trader decides what to do with the profit
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Easy to change the legal structure
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What are the disadvantages of sole trader business ownership? -
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vanswer-Unlimited liability
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Hard to raise finance
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Sole trader has all the responsibility
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Harder to retain good employees
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What is a partnership? - correct answer-Businesses that are owned by 2 or
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vmore partners that have an equal share of the profits and say in the
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vdecision-making process
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What are the disadvantages of partnership business ownership? - correct
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vanswer-Shared profits mean lower profits for individuals Unlimited liability
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Partners may disagree about business decisions
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Each partner is liable for the actions of the other partners
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Which type of limited company is where the ownership of shares is
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vrestricted? - correct answer-Private limited company
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Which type of limited company is where it sells share on the stock
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vexchange? - correct answer-Public limited company
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What are the advantages partnership business ownership? - correct answer-
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More partners mean more experience and ideas
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Easier to raise money v VV v VV v VV v VV
Easier to retain good employees as they can be made into partners
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, What are the advantages of private limited companies? - correct answer-
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Limited liability v VV v VV
The owners retain a lot of control over how the business is managed
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Easier to get a loan v VV v VV v VV v VV
What are the disadvantages of private limited companies? - correct answer-
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Finance is needs which has a lot of costs v VV v VV v VV v VV v VV v VV v VV v VV v VV
Legally obliged to publish their accounts which can be used by competitors
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What are the advantages of public limited companies? - correct answer-Able
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vto raise money for investment allowing the company to grow
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Easier to raise capital v VV v VV v VV v VV
Limited liability v VV
What are the disadvantages of public limited companies? - correct answer-
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Owners have little say over how the business is run
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Anyone is able to take over the company by buying enough shares
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Accounts must be public which can be used by competitors v VV v VV v VV v VV v VV v VV v VV v VV v VV
What is flotation? - correct answer-When firms become public companies
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v
vand their shares are made available to buy
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Which suffix follows the name of a private limited company? -
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vanswer-Ltd
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What is a not-for-profit organisation? - correct answer-An organisation where
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vany profit is reinvested in the business and it cannot be kept by the
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vowners
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What are some types of not-for-profit organisations? -
v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer- v VV
Charities v VV
Social enterprise v VV v VV
Unincorporated association v VV
What does 'unincorporated association' mean? - correct answer-The
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vorganisation get no profit and are legally responsible for all of the
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vorganisation's debt The people who manage it have unlimited liability
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What are charities like Oxfam? -
v VV v VV v VV v VV v VV v VV vVV correct answer-Not-for-profit organisations v VV v VV
What is franchising? - correct answer-Where a business gives someone the
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vright to sell its products and use its trademarks
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What are the advantages of franchising? -
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vscaling without needing lots of investment
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Increased brand awareness v VV v VV v VV
Less risk of diseconomies of scale
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What are the disadvantages of franchising? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Lose control v VV v VV
vover how franchisees operate
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v
EXAM WITH THE CORRECT ANSWERS
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Name three ways business impacts a country and its residents: -
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VV vVV
vanswer-Provides employment
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New products can enhance the lives of consumers
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Improve a country's reputation v VV v VV v VV
What do businesses do in the primary sector? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Extract or v VV v VV
vgrow raw materials
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What do businesses do in the secondary sector? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer- v VV
Manufacture goods using raw materials v VV v VV v VV v VV
What do businesses do in the tertiary sector? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Provide v VV
vservices
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What do mission statements create? -
v VV v VV v VV v VV v VV v VV vVV correct answer-Corporate aims v VV v VV
What are the benefits of setting business objectives? - correct answer-
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Provide direction and can support planning and operations
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v v VV v VV v VV v VV
Allow a business to co-ordinate resources and ensure that all employees are
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vworking towards the same overall aim
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,What is profit maximisation? - correct answer-A business objective that
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Which business objective requires a business to continue trading despite
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vchallenges in the external environment? - correct answer-Survival
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Which business objective requires the growth of stores or locations, sales
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vvalue, sales volume or product range? - correct answer-Growth
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Which business objectives require a business to focus on supporting society
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vthrough initiatives including sustainability and fair trade? - correct answer-
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Social, ethical and environmental v VV v VV v VV
What can corporate objective be broken down into? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer- v VV
Functional objectives v VV
Team objectives v VV v VV
Individual objectives v VV
What is revenue? - correct answer-The income earned by a business from
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vthe sale of its goods and services
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What is the calculation for revenue? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-number of sales x v VV v VV v VV v VV
vsales price
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What are the types of costs? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Variable Fixed v VV v VV
What are variable costs? -v VV v VV v VV v VV v VV vVV correct answer-Costs that change directly withv VV v VV v VV v VV v VV
voutput
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What are fixed costs? - correct answer-Cost that do not vary as the
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vcompany changes its output
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Who argued in 1980 that a business can be a cost leader or differentiated
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v v VV v VV v VV VV
v v VV v VV v VV v VV v VV
vbut not both? - correct answer-Michael Porter
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What is profit? - correct answer-The amount of money that the business
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vmakes when taking into account costs
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What is the calculation for interest? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-interest rate x the size v VV v VV v VV v VV v VV
vof the loan
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What is the calculation for profit? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-total revenue - total costs v VV v VV v VV v VV v VV
What do we call things like raw materials that businesses convert into
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v v VV v VV v VV
voutputs? - correct answer-Inputs
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What kind of sector do forestry businesses operate in? -
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Primary sector v VV
,What does the SMART acronym of business objectives stand for? -
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vanswer-Specific
VV v VV
Measurable v VV
Agreed v VV
Realistic v VV
Timely
Which type of costs don't change with a business' output? -
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Fixed costs v VV
What is a sole trader? - correct answer-A single person who is the
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v v VV
vexclusive owner of a business.
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What is the term used to describe the lack of distinction between a sole
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vtrader's assets and their business' assets? - correct answer-Unlimited
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vliability
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What are the advantages of sole trader business ownership? -
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vanswer-Easiest type of business to set up
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Sole trader is their own boss
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Sole trader decides what to do with the profit
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Easy to change the legal structure
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What are the disadvantages of sole trader business ownership? -
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vanswer-Unlimited liability
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Hard to raise finance
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Sole trader has all the responsibility
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Harder to retain good employees
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What is a partnership? - correct answer-Businesses that are owned by 2 or
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vmore partners that have an equal share of the profits and say in the
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v v VV v VV v VV v VV v VV v VV
vdecision-making process
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What are the disadvantages of partnership business ownership? - correct
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vanswer-Shared profits mean lower profits for individuals Unlimited liability
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Partners may disagree about business decisions
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Each partner is liable for the actions of the other partners
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Which type of limited company is where the ownership of shares is
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vrestricted? - correct answer-Private limited company
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Which type of limited company is where it sells share on the stock
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vexchange? - correct answer-Public limited company
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What are the advantages partnership business ownership? - correct answer-
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More partners mean more experience and ideas
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v v VV
Easier to raise money v VV v VV v VV v VV
Easier to retain good employees as they can be made into partners
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, What are the advantages of private limited companies? - correct answer-
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Limited liability v VV v VV
The owners retain a lot of control over how the business is managed
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Easier to get a loan v VV v VV v VV v VV
What are the disadvantages of private limited companies? - correct answer-
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Finance is needs which has a lot of costs v VV v VV v VV v VV v VV v VV v VV v VV v VV
Legally obliged to publish their accounts which can be used by competitors
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What are the advantages of public limited companies? - correct answer-Able
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vto raise money for investment allowing the company to grow
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Easier to raise capital v VV v VV v VV v VV
Limited liability v VV
What are the disadvantages of public limited companies? - correct answer-
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Owners have little say over how the business is run
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Anyone is able to take over the company by buying enough shares
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Accounts must be public which can be used by competitors v VV v VV v VV v VV v VV v VV v VV v VV v VV
What is flotation? - correct answer-When firms become public companies
v VV v VV v VV v VV vVV v VV v VV v VV v VV VV
v
vand their shares are made available to buy
VV v VV v VV v VV v VV v VV v VV v VV
Which suffix follows the name of a private limited company? -
v VV v VV v VV v VV v VV v VV v VV v VV v VV v VV v VV vVV correct
vanswer-Ltd
VV
What is a not-for-profit organisation? - correct answer-An organisation where
v VV v VV v VV v VV v VV v VV vVV v VV v VV v VV
vany profit is reinvested in the business and it cannot be kept by the
VV v VV v VV v VV v VV v VV v VV v VV v VV v VV v VV v VV v VV v VV
vowners
VV
What are some types of not-for-profit organisations? -
v VV v VV v VV v VV v VV v VV v VV v VV vVV correct answer- v VV
Charities v VV
Social enterprise v VV v VV
Unincorporated association v VV
What does 'unincorporated association' mean? - correct answer-The
v VV v VV v VV v VV v VV v VV vVV v VV
vorganisation get no profit and are legally responsible for all of the
VV v VV v VV v VV v VV v VV v VV VV
v v VV v VV v VV v VV
vorganisation's debt The people who manage it have unlimited liability
VV v VV v VV v VV v VV v VV v VV v VV v VV VV
v
What are charities like Oxfam? -
v VV v VV v VV v VV v VV v VV vVV correct answer-Not-for-profit organisations v VV v VV
What is franchising? - correct answer-Where a business gives someone the
v VV v VV v VV v VV vVV v VV v VV v VV v VV v VV v VV
vright to sell its products and use its trademarks
VV v VV v VV v VV v VV v VV v VV v VV v VV
What are the advantages of franchising? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Low-cost way of v VV v VV v VV
vscaling without needing lots of investment
VV v VV v VV v VV v VV v VV v VV
Increased brand awareness v VV v VV v VV
Less risk of diseconomies of scale
v VV v VV v VV v VV v VV
What are the disadvantages of franchising? -
v VV v VV v VV v VV v VV v VV v VV vVV correct answer-Lose control v VV v VV
vover how franchisees operate
VV v VV v VV v VV v VV
