Key Terms for Pearson Edexcel AS/A Level
Business EXAM QUESTIONS WITH CORRECT
ANSWERS SOLVED.
Acid test ratio - CORRECT ANSWERS✔✔Current assets-Inventory/Current liabilities
Added Value - CORRECT ANSWERS✔✔The increase in value that a business creates when producing a
product/service. The difference between the price the customer pays and the total cost of inputs
needed to create a product
Adverse variance - CORRECT ANSWERS✔✔Negative variance e.g. higher costs than budget
Advertising - CORRECT ANSWERS✔✔A paid form of communication, used by a business to raise
customer awareness of its products, services and brands, to persuade purchases to be made
Aesthetics - CORRECT ANSWERS✔✔Relates to the appearance of a product
Appreciation - CORRECT ANSWERS✔✔The rise in the price of one currency against another currency
Assets - CORRECT ANSWERS✔✔Valuable things that a business can use.
Autocratic leadership - CORRECT ANSWERS✔✔A leadership style where the decision-making is best kept
with managers, who will direct subordinates with little consultation
Average cost - CORRECT ANSWERS✔✔The cost of producing one unit. Total costs/output
Bank loan - CORRECT ANSWERS✔✔An external method of finance/money borrowed from a bank paid
back, with interest (over a period of time)
,Barriers to entry - CORRECT ANSWERS✔✔Obstacles that make it difficult for new firms to enter the
market
Batch production - CORRECT ANSWERS✔✔A manufacturing process in which components or goods are
produced in groups (batches). The manufacturing of a limited number of identical products.
Biased questions - CORRECT ANSWERS✔✔Where the questions do not produce findings that give a true
reflection of the views of the target audience on the product or service
Bonus - CORRECT ANSWERS✔✔A sum of money added to an employee's wages/salary as a reward for
performance when they reach or exceed their targets.
Boom/peak - CORRECT ANSWERS✔✔The high point in the business cycle where GDP is growing quickly
Boston matrix - CORRECT ANSWERS✔✔A method used to analyse the product portfolio of a business
that contains stars, Cash cows, question marks and dogs
Brand - CORRECT ANSWERS✔✔A symbol, logo or design that is recognisable and distinguishes a product
from competitors
Break-even - CORRECT ANSWERS✔✔The level of output where the total revenue is equal to the total
cost.
Budget - CORRECT ANSWERS✔✔A financial plan of income and expenditure prepared/agreed in advance
Buffer stocks - CORRECT ANSWERS✔✔Stock held as protection in case of reduction in supply.
Business Angels - CORRECT ANSWERS✔✔Individuals who invest in a business in exchange for a stake in
the business (shares)
,Business cycle - CORRECT ANSWERS✔✔Measures economic activity over time and shows stages of
boom, downturn (where there is rising unemployment), recession and recovery
Business objective - CORRECT ANSWERS✔✔A goal/target set by the business in the short/medium term
to help achieve its aim/mission
Business plan - CORRECT ANSWERS✔✔A document giving details of a variety of aspects about the
business in order to provide a strategic look at the business and to attract investors. It contains details
such as the product, costs, revenues, cashflow forecasts
Business to business (B2B) - CORRECT ANSWERS✔✔When a business promotes the sale of
products/services to other businesses for use in their operations
Business to customer (B2C) - CORRECT ANSWERS✔✔Where a company targets to sell its products to
individual customers
Capacity utilisation - CORRECT ANSWERS✔✔The current output of a factory measured as a percentage
of the total maximum potential output. Current output/maximum possible output x100.
Capital - CORRECT ANSWERS✔✔Cash put into the business by the owner
Capital intensive - CORRECT ANSWERS✔✔This is where output of the firm is made primarily using
machinery/capital goods relative to the use of labour.
Cash - CORRECT ANSWERS✔✔An asset of a business which can come from investors, lenders or
customers.
Cash flow - CORRECT ANSWERS✔✔The movement of cash into and out of a business over a period of
time.
Cash Inflow - CORRECT ANSWERS✔✔The flow of cash into a business
, Cash Outflow - CORRECT ANSWERS✔✔The flow of cash out of a business
Cash-flow forecasts - CORRECT ANSWERS✔✔The predicted flow of cash into and out of a business over
a period of time
Cell production - CORRECT ANSWERS✔✔A method of manufacturing where employees are organised
into multiskilled teams, with each team responsible for a particular part of the production process.
Centralised structure - CORRECT ANSWERS✔✔An organisational structure where business decisions are
made at the top of the hierarchy by senior management/or at the headquarters of a business.
Chain of command - CORRECT ANSWERS✔✔The way authority and power is organised in an
organisation.
Channels of distribution - CORRECT ANSWERS✔✔Methods used by businesses to get their products
from manufacture to consumer. They can include intermediaries such as wholesalers and retailers.
Closing balance - CORRECT ANSWERS✔✔Cash left in the account at the end of the month.
Collective bargaining - CORRECT ANSWERS✔✔Negotiation of wages/conditions of employment between
employee representatives / trade unions and the employer
Commission - CORRECT ANSWERS✔✔A payment to a worker based on a percentage of the value of
sales.
Competition - CORRECT ANSWERS✔✔The rivalry among sellers trying to achieve goals such as increasing
profits, market share, and sales volume
Competitive Advantage - CORRECT ANSWERS✔✔A feature of a business and/or its products that enable
it to compete effectively with rival producers/products.
Business EXAM QUESTIONS WITH CORRECT
ANSWERS SOLVED.
Acid test ratio - CORRECT ANSWERS✔✔Current assets-Inventory/Current liabilities
Added Value - CORRECT ANSWERS✔✔The increase in value that a business creates when producing a
product/service. The difference between the price the customer pays and the total cost of inputs
needed to create a product
Adverse variance - CORRECT ANSWERS✔✔Negative variance e.g. higher costs than budget
Advertising - CORRECT ANSWERS✔✔A paid form of communication, used by a business to raise
customer awareness of its products, services and brands, to persuade purchases to be made
Aesthetics - CORRECT ANSWERS✔✔Relates to the appearance of a product
Appreciation - CORRECT ANSWERS✔✔The rise in the price of one currency against another currency
Assets - CORRECT ANSWERS✔✔Valuable things that a business can use.
Autocratic leadership - CORRECT ANSWERS✔✔A leadership style where the decision-making is best kept
with managers, who will direct subordinates with little consultation
Average cost - CORRECT ANSWERS✔✔The cost of producing one unit. Total costs/output
Bank loan - CORRECT ANSWERS✔✔An external method of finance/money borrowed from a bank paid
back, with interest (over a period of time)
,Barriers to entry - CORRECT ANSWERS✔✔Obstacles that make it difficult for new firms to enter the
market
Batch production - CORRECT ANSWERS✔✔A manufacturing process in which components or goods are
produced in groups (batches). The manufacturing of a limited number of identical products.
Biased questions - CORRECT ANSWERS✔✔Where the questions do not produce findings that give a true
reflection of the views of the target audience on the product or service
Bonus - CORRECT ANSWERS✔✔A sum of money added to an employee's wages/salary as a reward for
performance when they reach or exceed their targets.
Boom/peak - CORRECT ANSWERS✔✔The high point in the business cycle where GDP is growing quickly
Boston matrix - CORRECT ANSWERS✔✔A method used to analyse the product portfolio of a business
that contains stars, Cash cows, question marks and dogs
Brand - CORRECT ANSWERS✔✔A symbol, logo or design that is recognisable and distinguishes a product
from competitors
Break-even - CORRECT ANSWERS✔✔The level of output where the total revenue is equal to the total
cost.
Budget - CORRECT ANSWERS✔✔A financial plan of income and expenditure prepared/agreed in advance
Buffer stocks - CORRECT ANSWERS✔✔Stock held as protection in case of reduction in supply.
Business Angels - CORRECT ANSWERS✔✔Individuals who invest in a business in exchange for a stake in
the business (shares)
,Business cycle - CORRECT ANSWERS✔✔Measures economic activity over time and shows stages of
boom, downturn (where there is rising unemployment), recession and recovery
Business objective - CORRECT ANSWERS✔✔A goal/target set by the business in the short/medium term
to help achieve its aim/mission
Business plan - CORRECT ANSWERS✔✔A document giving details of a variety of aspects about the
business in order to provide a strategic look at the business and to attract investors. It contains details
such as the product, costs, revenues, cashflow forecasts
Business to business (B2B) - CORRECT ANSWERS✔✔When a business promotes the sale of
products/services to other businesses for use in their operations
Business to customer (B2C) - CORRECT ANSWERS✔✔Where a company targets to sell its products to
individual customers
Capacity utilisation - CORRECT ANSWERS✔✔The current output of a factory measured as a percentage
of the total maximum potential output. Current output/maximum possible output x100.
Capital - CORRECT ANSWERS✔✔Cash put into the business by the owner
Capital intensive - CORRECT ANSWERS✔✔This is where output of the firm is made primarily using
machinery/capital goods relative to the use of labour.
Cash - CORRECT ANSWERS✔✔An asset of a business which can come from investors, lenders or
customers.
Cash flow - CORRECT ANSWERS✔✔The movement of cash into and out of a business over a period of
time.
Cash Inflow - CORRECT ANSWERS✔✔The flow of cash into a business
, Cash Outflow - CORRECT ANSWERS✔✔The flow of cash out of a business
Cash-flow forecasts - CORRECT ANSWERS✔✔The predicted flow of cash into and out of a business over
a period of time
Cell production - CORRECT ANSWERS✔✔A method of manufacturing where employees are organised
into multiskilled teams, with each team responsible for a particular part of the production process.
Centralised structure - CORRECT ANSWERS✔✔An organisational structure where business decisions are
made at the top of the hierarchy by senior management/or at the headquarters of a business.
Chain of command - CORRECT ANSWERS✔✔The way authority and power is organised in an
organisation.
Channels of distribution - CORRECT ANSWERS✔✔Methods used by businesses to get their products
from manufacture to consumer. They can include intermediaries such as wholesalers and retailers.
Closing balance - CORRECT ANSWERS✔✔Cash left in the account at the end of the month.
Collective bargaining - CORRECT ANSWERS✔✔Negotiation of wages/conditions of employment between
employee representatives / trade unions and the employer
Commission - CORRECT ANSWERS✔✔A payment to a worker based on a percentage of the value of
sales.
Competition - CORRECT ANSWERS✔✔The rivalry among sellers trying to achieve goals such as increasing
profits, market share, and sales volume
Competitive Advantage - CORRECT ANSWERS✔✔A feature of a business and/or its products that enable
it to compete effectively with rival producers/products.
