BTEC Level 1/Level 2 First Award in Business|Unit 2: Finance for Business MOCK EXAM 2 ANSWERS | 2022 update

BTEC Level 1/Level 2 First Award in Business Student Name: ...................................... Teacher: ................................................ Date: ..................................................... Mark: ..................................................... Page 1 of 19 Unit 2: Finance for Business MOCK EXAM Question 1 of 18 Place a tick in one of the boxes. Rent Ingredients Telephone rental Road Tax Question 2 of 18 Place a tick in one of the boxes. Rental Income Sales Stock Purchases Interest on savings Page 2 of 19 Select one type of variable cost for a burger van business (1) Identify one example of a cash outflow (1) Question 3 of 18 Susan owns a second hand clothes shop. In the last month she has paid £2,565 for stock. She has also paid an assistant £380 in wages Her rent for the month was £5,600 Write your answer in the box. You must show your working Workings ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . Page 3 of 19 Calculate the monthly total cost for Susan’s business (2) £ Question 4 of 18 Gemma owns a market stall selling soft toys. The price of a soft toy is £3.45 In the last month she has sold 2,300 soft toys. Write your answer in the box below. You must show your working. Workings ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . Page 4 of 19 What is Gemma’s revenue for the last month? (2) £ Question 5 of 18 Place a tick in one of the boxes The cost of electricity for the shop’s lighting The cost of bread for making the sandwiches The cost of renting the sandwich shop The cost of painting the shop Question 6 of 18 Place a tick in one of the boxes Fixed Costs + Variable Costs Direct Costs + Fixed Costs Start up costs + Fixed Costs Variable Costs – Fixed Costs + start up costs Page 5 of 19 Which statement is an example of direct costs for a sandwich shop? (1) Select the correct formula for calculating total cost? (1) Question 7 of 18 Gurjeet runs a mobile phone accessory shop. She has started to produce a balance sheet to show her financial position. Item £ Current Assets Stock 25,820 Debtors 3,500 Bank 14,568 Current Liabilities Creditors 16,250 Net Current Assets Non Current Liabilities 14,000 Net Assts Place a tick in one of the boxes Current Debtors Current Creditors Current Liabilities Mortgage Page 6 of 19 (a) Complete the Balance sheet below. (3) (b) Debts owed by a business that have to be repaid within a year are called? (1) Question 8 of 18 Reason one: ............................................................................................. ................................................................................................................... ....................... ........................................................................................... .. Reason Two: ............................................................................................. ................................................................................................................... ....................... ........................................................................................... .. Question 9 of 18 Edward runs a business repairing laptops. The business has been running for two years. Edward has collated the financial information for his business for the last two years. The table below shows the financial information. Extract of Financial Information Item Year 1 (£) Year 2 (£) Total Sales 125,000 225,000 Gross Profit 93,750 90,000 Net Profit 53,750 30,000 Fixed Assets 20,000 110,000 Current Assets 10,000 30,000 Current Liabilities 12,000 96,000 Page 7 of 19 State two reasons why a business should create a cash flow forecast. 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Page 8 of 19 Discuss the financial performance of Simon’s business over the last two years. (8) ..................................................... ............................................................. ................................ Page 9 of 19 Question 10 of 18 It helps improve cash flow It identifies output level / sales a business needs to make a profit It identifies if customers will buy the product. It can help a business decide what price to charge to cover its costs. Question 11 of 18 Replacing ingredients used to make meals. Paying builders to convert the building into a restaurant. Paying wages at the end of the month. Purchasing kitchen equipment such as a cooker, fridge and freezer. Question 12 of 18 Example 1: ................................................................................................. Example 2: ................................................................................................. Page 10 of 19 Identify two benefits to a business of using break-even analysis (2) Identify two start-up costs of a restaurant. (2) Give two examples of a current asset. Question 13 of 18 Tick one of the boxes. It shows the total cash inflows and outflows. It shows the total profit made. To show the financial position of a business at a point in time It shows all the expenditure and income for the business. Question 14 of 18 Connor sells Tea and Coffee at the market. His cash flow forecast is shown below. Write your answers in the boxes shaded grey. Cash Flow Forecast Month 1 (£) Month 2 (£) Cash In Sales 4,800 5,520 Total Inflows 4,800 5,520 Cash Out Market Stall Rent 2,400 2,400 Insurance 50 50 Electricity 65 60 Replacement Stock 40 48 Total Outflows 2,555 2,558 Net Cash Flow 2,962 Opening Balance 1,000 2,000 Closing Balance 2,000 Page 11 of 19 Which statement describes a Statement of financial position (balance sheet)? (1) Complete the cash flow forecast (2) Question 15 of 18 Sandra sells T-shirts at a market stall at the weekends. Sandra adds a design to each T-shirt before selling them. The table below shows the financial information for her business. Financial Data for Sandra’s T-Shirt Business Selling Price of T-Shirt £14.75 Cost of blank T-shirt £5.75 Cost of adding design to each T-Shirt £1.00 Fixed Cost of Renting Market Stall £400 The formula to calculate break-even is: Break-even = Fixed Costs Selling price per unit – variable cost per unit You must show your workings. Break-even output Workings:.................................................................................................. ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . Page 12 of 19 Calculate Sandra’s break-even output and write your answer in the box below: (3) ................................................................................................................... . Page 13 of 19 Question 16 of 18 Holly is planning on opening a shop selling hats. She is considering undertaking a break-even analysis. Write your answer in the space below: ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . Write your answer in the space below: ................................................................................................................... . ................................................................................................................... . Page 14 of 19 (a) Give two limitations of break-even analysis (2) (b) Explain one reason why Holly’s business may benefit from undertaking break-even analysis. 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Page 15 of 19 Question 17 of 18 Write your answer in the space below: ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . Page 16 of 19 Explain one reason why a business is interested in knowing its working capital figure. (2) Question 18 of 18 Harry is planning on opening a Fish and Chip shop. He has completed a cash flow forecast for the business which is shown below: Cash Flow Forecast for Harry’s Fish and Chip Shop Cash Flow Forecast Month 1 (£) Month 2 (£) Month 3 (£) Month 4 (£) Cash In Eat in Sales 3,000 2,400 1,920 1,536 Take Away Sales 2,100 2,310 2,541 3,049 Total Inflows 5,100 4,710 4,461 4,585 Cash Out Rent 1,400 1,400 2,400 2,400 Wages 1,440 2,880 2,880 2,880 Electricity Replacement Stock Total Outflows 3,165 4,605 5,945 5,945 Net Cash Flow 1,935 105 (1,484) (1,360) Opening Balance 3,500 5,435 5,540 4,056 Closing Balance 5,435 5,540 4,056 2,696 Write your answer in the space below: ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . ................................................................................................................... . Page 17 of 19 Evaluate the possible actions Harry could take to address the issues within his cash flow forecast. 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