AQA A-LEVEL BUSINESS – PAPER 2
(7132/2) — 200 Practice Questions
with Verified Answers & Rationales
Exam Board: AQA
Qualification: A-Level Business (7132)
Paper: Paper 2 – Business 2 (7132/2)
Exam Format: 2 hours, 100 marks, 33.3% of A-Level
Paper Structure: Three compulsory data response questions, each worth approximately 33
marks, made up of three or four part-questions
Content: Full specification – all content from topics 3.1 to 3.10
Assessment Objectives Tested: AO1 (Knowledge), AO2 (Application), AO3 (Analysis), AO4
(Evaluation)
SECTION A: WHAT IS BUSINESS? – Business Forms, Objectives & Stakeholders (Questions
1–30)
1. What is the main advantage of operating as a sole trader?
- A) Limited liability for business debts
- B) The owner keeps all profits after tax
- C) Easy to raise large amounts of finance
- D) Separate legal identity from the owner
Answer: B
Rationale: A sole trader keeps all profits after tax. However, sole traders have unlimited liability,
meaning they are personally responsible for business debts. Limited companies offer limited
liability.
,2. What is the key drawback of a private limited company (Ltd)?
- A) Unlimited liability for shareholders
- B) Shares cannot be sold to the general public
- C) The business must publish annual accounts
- D) No legal separation between owners and business
Answer: B
Rationale: A private limited company cannot sell shares to the general public. Shares can only
be transferred with the agreement of existing shareholders. Public limited companies can sell
shares on the stock exchange.
3. Which of the following is a feature of a public limited company (PLC)?
- A) Shares are only available to family and friends
- B) The company has limited liability
- C) It cannot raise finance through share capital
- D) Shareholders do not expect dividends
Answer: B
Rationale: A public limited company (PLC) has limited liability, meaning shareholders are only
liable for the amount unpaid on their shares. PLCs can raise finance through selling shares on
the stock exchange, and shareholders typically expect dividends.
4. What is meant by 'limited liability'?
- A) Shareholders are personally responsible for all business debts
- B) Shareholders can only lose the amount they have invested in shares
- C) The business has a limit on how much it can borrow
- D) Shareholders have no say in business decisions
Answer: B
Rationale: Limited liability means that shareholders are only liable for the amount unpaid on
their shares. They do not have to sell personal assets to pay company debts if the business
fails.
5. Which of the following is a non-profit organisation?
- A) A public limited company
- B) A private limited company
- C) The Red Cross
- D) A sole trader
,Answer: C
Rationale: Non-profit organisations such as the Red Cross reinvest profits back into the
organisation to meet their objectives rather than distributing them to owners. They exist for
social, charitable or community purposes.
6. What is a public sector organisation?
- A) A business owned by private individuals
- B) A government-provided service such as the NHS
- C) A business with shareholders
- D) A charity
Answer: B
Rationale: Public sector organisations are owned and run by the government to provide public
services to all citizens. Examples include the NHS, state schools, and the armed forces.
7. Which stakeholder group is most likely to be interested in a business's profit levels?
- A) Employees
- B) Shareholders
- C) Local community
- D) Suppliers
Answer: B
Rationale: Shareholders are primarily interested in profit levels because this affects the
dividends they receive and the value of their shares. While other stakeholders may have some
interest in profits, it is the primary concern for shareholders.
8. What is meant by a 'stakeholder'?
- A) Anyone who owns shares in a business
- B) Any individual or group with an interest in a business
- C) Only the employees of a business
- D) Only the customers of a business
Answer: B
Rationale: A stakeholder is any individual or group that has an interest in the activities and
performance of a business. This includes shareholders, employees, customers, suppliers, the
local community, and the government.
, 9. Which of the following is a potential conflict between shareholders and employees?
- A) Shareholders want higher profits, employees want higher wages
- B) Shareholders want higher wages, employees want higher profits
- C) Both want the same thing
- D) Neither group has conflicting interests
Answer: A
Rationale: Shareholders typically want higher profits to increase dividends and share value,
while employees want higher wages and better working conditions. These objectives can
conflict as higher wages reduce profits.
10. What is a corporate objective?
- A) A target set by employees
- B) A long-term goal set by senior management for the whole business
- C) A short-term target for a single department
- D) A legal requirement for all businesses
Answer: B
Rationale: Corporate objectives are long-term goals set by senior management for the entire
business. They provide direction and are used to measure overall business performance.
11. What is the difference between a private limited company and a public limited company?
- A) Private companies have limited liability; public companies do not
- B) Public companies can sell shares to the public; private companies cannot
- C) Private companies are larger than public companies
- D) There is no difference
Answer: B
Rationale: The key difference is that public limited companies (PLCs) can sell shares to the
general public on the stock exchange, while private limited companies cannot. Both have limited
liability.
12. Which of the following is an internal influence on business objectives?
- A) Competitor actions
- B) The state of the economy
- C) The business's financial position
(7132/2) — 200 Practice Questions
with Verified Answers & Rationales
Exam Board: AQA
Qualification: A-Level Business (7132)
Paper: Paper 2 – Business 2 (7132/2)
Exam Format: 2 hours, 100 marks, 33.3% of A-Level
Paper Structure: Three compulsory data response questions, each worth approximately 33
marks, made up of three or four part-questions
Content: Full specification – all content from topics 3.1 to 3.10
Assessment Objectives Tested: AO1 (Knowledge), AO2 (Application), AO3 (Analysis), AO4
(Evaluation)
SECTION A: WHAT IS BUSINESS? – Business Forms, Objectives & Stakeholders (Questions
1–30)
1. What is the main advantage of operating as a sole trader?
- A) Limited liability for business debts
- B) The owner keeps all profits after tax
- C) Easy to raise large amounts of finance
- D) Separate legal identity from the owner
Answer: B
Rationale: A sole trader keeps all profits after tax. However, sole traders have unlimited liability,
meaning they are personally responsible for business debts. Limited companies offer limited
liability.
,2. What is the key drawback of a private limited company (Ltd)?
- A) Unlimited liability for shareholders
- B) Shares cannot be sold to the general public
- C) The business must publish annual accounts
- D) No legal separation between owners and business
Answer: B
Rationale: A private limited company cannot sell shares to the general public. Shares can only
be transferred with the agreement of existing shareholders. Public limited companies can sell
shares on the stock exchange.
3. Which of the following is a feature of a public limited company (PLC)?
- A) Shares are only available to family and friends
- B) The company has limited liability
- C) It cannot raise finance through share capital
- D) Shareholders do not expect dividends
Answer: B
Rationale: A public limited company (PLC) has limited liability, meaning shareholders are only
liable for the amount unpaid on their shares. PLCs can raise finance through selling shares on
the stock exchange, and shareholders typically expect dividends.
4. What is meant by 'limited liability'?
- A) Shareholders are personally responsible for all business debts
- B) Shareholders can only lose the amount they have invested in shares
- C) The business has a limit on how much it can borrow
- D) Shareholders have no say in business decisions
Answer: B
Rationale: Limited liability means that shareholders are only liable for the amount unpaid on
their shares. They do not have to sell personal assets to pay company debts if the business
fails.
5. Which of the following is a non-profit organisation?
- A) A public limited company
- B) A private limited company
- C) The Red Cross
- D) A sole trader
,Answer: C
Rationale: Non-profit organisations such as the Red Cross reinvest profits back into the
organisation to meet their objectives rather than distributing them to owners. They exist for
social, charitable or community purposes.
6. What is a public sector organisation?
- A) A business owned by private individuals
- B) A government-provided service such as the NHS
- C) A business with shareholders
- D) A charity
Answer: B
Rationale: Public sector organisations are owned and run by the government to provide public
services to all citizens. Examples include the NHS, state schools, and the armed forces.
7. Which stakeholder group is most likely to be interested in a business's profit levels?
- A) Employees
- B) Shareholders
- C) Local community
- D) Suppliers
Answer: B
Rationale: Shareholders are primarily interested in profit levels because this affects the
dividends they receive and the value of their shares. While other stakeholders may have some
interest in profits, it is the primary concern for shareholders.
8. What is meant by a 'stakeholder'?
- A) Anyone who owns shares in a business
- B) Any individual or group with an interest in a business
- C) Only the employees of a business
- D) Only the customers of a business
Answer: B
Rationale: A stakeholder is any individual or group that has an interest in the activities and
performance of a business. This includes shareholders, employees, customers, suppliers, the
local community, and the government.
, 9. Which of the following is a potential conflict between shareholders and employees?
- A) Shareholders want higher profits, employees want higher wages
- B) Shareholders want higher wages, employees want higher profits
- C) Both want the same thing
- D) Neither group has conflicting interests
Answer: A
Rationale: Shareholders typically want higher profits to increase dividends and share value,
while employees want higher wages and better working conditions. These objectives can
conflict as higher wages reduce profits.
10. What is a corporate objective?
- A) A target set by employees
- B) A long-term goal set by senior management for the whole business
- C) A short-term target for a single department
- D) A legal requirement for all businesses
Answer: B
Rationale: Corporate objectives are long-term goals set by senior management for the entire
business. They provide direction and are used to measure overall business performance.
11. What is the difference between a private limited company and a public limited company?
- A) Private companies have limited liability; public companies do not
- B) Public companies can sell shares to the public; private companies cannot
- C) Private companies are larger than public companies
- D) There is no difference
Answer: B
Rationale: The key difference is that public limited companies (PLCs) can sell shares to the
general public on the stock exchange, while private limited companies cannot. Both have limited
liability.
12. Which of the following is an internal influence on business objectives?
- A) Competitor actions
- B) The state of the economy
- C) The business's financial position
