SQA Higher Business UPDATED ACTUAL
Exam Questions and CORRECT Answers
gross profit percentage - CORRECT ANSWER - Measures the profit made from buying
and selling stock
Profitability ratio
mark-up ratio - CORRECT ANSWER - Measures how much has been added to the cost of
goods as profit
Profitability ratio
net profit percentage - CORRECT ANSWER - Measures the profit made after the business
has paid all business expenses
Profitability ratio
return on capital employed - CORRECT ANSWER - Measures the return on the capital
invested in the business by the owner or shareholder.
Efficiency ratio
current ratio/working capital ratio - CORRECT ANSWER - Shows the ability of a
business to pay its short term debts.
Liquidity ratio
acid test ratio - CORRECT ANSWER - Shows the ability of a business to pay its short-
term debts in a crisis situation
Liquidity ratio
job production - CORRECT ANSWER - A single product is custom-made to a customer's
own specification.
,batch production - CORRECT ANSWER - The production of groups of similar products.
No item in a group goes to the next stage until all are ready.
flow production - CORRECT ANSWER - A process in which production items move
continuously from one operation to the next. Each part of the process leads to the eventual
production of the final product with the aid of machinery to save labour costs.
labour-intensive production - CORRECT ANSWER - Manufacturers rely heavily on their
workforce rather than machinery to manufacture their products.
capital-intensive production - CORRECT ANSWER - Manufacturers rely heavily on
machinery and automation in their production process.
delayering - CORRECT ANSWER - Reducing staff levels by cutting out levels of
management to flatten the structure. It creates a smaller hierarchy where each manager has an
increased span of control.
downsizing - CORRECT ANSWER - Involves removing certain areas of the organisation's
activities by closing factories or merging divisions together.
hierarchical structure - CORRECT ANSWER - Tall pyramid with many management
levels
flat structure - CORRECT ANSWER - Low pyramid with few management levels
entrepreneurial structure - CORRECT ANSWER - Used in small businesses
Decisions are made by few people at the core of the organisation
matrix structure - CORRECT ANSWER - Teams are made by bringing together members
of different departments to carry out a complex task
, decentralised structure - CORRECT ANSWER - Control and decision-making is delegated
to departments, which relieves senior management from routine day-to-day tasks and burdens
centralised structure - CORRECT ANSWER - Control and decision-making lies with top
management in head office. Top management are more likely to possess higher quality decision
making skills
line relationship - CORRECT ANSWER - Exists between a manager and their
subordinates
Vertical relationship
lateral relationship - CORRECT ANSWER - Exists between staff on the same horizontal
level
functional relationship - CORRECT ANSWER - Exists where a specialist function is given
to a department e.g. HR and that department is given responsibility for the function throughout
the organisation
staff relationship - CORRECT ANSWER - Someone has an advisory relationship with
another member of staff. He/she has no authority over departments as he/she only advices
informal relationship - CORRECT ANSWER - Develop between staff at breaks, during
work and when socialising. This builds up a range of sources staff can seek advice from.
functional grouping - CORRECT ANSWER - Departments where staff have similar skills
and expertise and do similar jobs.
product/service grouping - CORRECT ANSWER - Departments where each deals with a
different product or product range.
Exam Questions and CORRECT Answers
gross profit percentage - CORRECT ANSWER - Measures the profit made from buying
and selling stock
Profitability ratio
mark-up ratio - CORRECT ANSWER - Measures how much has been added to the cost of
goods as profit
Profitability ratio
net profit percentage - CORRECT ANSWER - Measures the profit made after the business
has paid all business expenses
Profitability ratio
return on capital employed - CORRECT ANSWER - Measures the return on the capital
invested in the business by the owner or shareholder.
Efficiency ratio
current ratio/working capital ratio - CORRECT ANSWER - Shows the ability of a
business to pay its short term debts.
Liquidity ratio
acid test ratio - CORRECT ANSWER - Shows the ability of a business to pay its short-
term debts in a crisis situation
Liquidity ratio
job production - CORRECT ANSWER - A single product is custom-made to a customer's
own specification.
,batch production - CORRECT ANSWER - The production of groups of similar products.
No item in a group goes to the next stage until all are ready.
flow production - CORRECT ANSWER - A process in which production items move
continuously from one operation to the next. Each part of the process leads to the eventual
production of the final product with the aid of machinery to save labour costs.
labour-intensive production - CORRECT ANSWER - Manufacturers rely heavily on their
workforce rather than machinery to manufacture their products.
capital-intensive production - CORRECT ANSWER - Manufacturers rely heavily on
machinery and automation in their production process.
delayering - CORRECT ANSWER - Reducing staff levels by cutting out levels of
management to flatten the structure. It creates a smaller hierarchy where each manager has an
increased span of control.
downsizing - CORRECT ANSWER - Involves removing certain areas of the organisation's
activities by closing factories or merging divisions together.
hierarchical structure - CORRECT ANSWER - Tall pyramid with many management
levels
flat structure - CORRECT ANSWER - Low pyramid with few management levels
entrepreneurial structure - CORRECT ANSWER - Used in small businesses
Decisions are made by few people at the core of the organisation
matrix structure - CORRECT ANSWER - Teams are made by bringing together members
of different departments to carry out a complex task
, decentralised structure - CORRECT ANSWER - Control and decision-making is delegated
to departments, which relieves senior management from routine day-to-day tasks and burdens
centralised structure - CORRECT ANSWER - Control and decision-making lies with top
management in head office. Top management are more likely to possess higher quality decision
making skills
line relationship - CORRECT ANSWER - Exists between a manager and their
subordinates
Vertical relationship
lateral relationship - CORRECT ANSWER - Exists between staff on the same horizontal
level
functional relationship - CORRECT ANSWER - Exists where a specialist function is given
to a department e.g. HR and that department is given responsibility for the function throughout
the organisation
staff relationship - CORRECT ANSWER - Someone has an advisory relationship with
another member of staff. He/she has no authority over departments as he/she only advices
informal relationship - CORRECT ANSWER - Develop between staff at breaks, during
work and when socialising. This builds up a range of sources staff can seek advice from.
functional grouping - CORRECT ANSWER - Departments where staff have similar skills
and expertise and do similar jobs.
product/service grouping - CORRECT ANSWER - Departments where each deals with a
different product or product range.
