BTEC Business Level 3 Business
Finance Topic F Comprehensive
Questions (Frequently Tested)
with Verified Answers Graded
A+
Statement of Comprehensive Income - Answer: Calculates whether the firm has made a profit
or loss during the period by deducting all costs from all revenues earned.
Revenue - Answer: Money earned from selling goods and services.
Cost of Sales - Answer: The costs directly associated with producing the goods / services.
Gross Profit - Answer: Shows whether a firm is profitable from "trading" by deducting the cost
of sales from the revenues earned.
Overheads / Expenses - Answer: Are all indirect costs. Costs that the business must spend but,
are not directly associated to the production or delivery of goods and services.
Other Income - Answer: Income the business receives from sources other than revenue e.g.
interest paid.
, Opening Inventories - Answer: The value of inventory (stock) at the beginning of the period
(usually financial year).
Closing Inventories - Answer: The value of inventory (stock) at the end of the period (usually
financial year).
Depreciation - Answer: The spreading of the cost of an asset over it's useful life.
Historic Cost - Answer: The cost of the asset when it was first purchased.
Useful / Expected Life of an Asset - Answer: How long the asset is expected to be used by the
business.
Residual Value - Answer: The value of the asset at the end of its useful life. This may also be
shown as the resale value or the disposal value (if sold for scrap)
Profit / Loss for the Year - Answer: The amount of money available after all costs, expenses and
taxation has been deducted from all sources of revenue and other income.
- Answer: A loss is shown by a negative "profit" figure e.g. -£3m. In this case a loss
demonstrates that the business's costs are higher than their income.
Prepayment - Answer: Is when an expense is paid in advance of the period it relates to e.g. £300
is paid in January for rent, this is payment for Jan, Feb and March (£100 per month)
Accrual - Answer: Is when the expense is paid after the period it relates to e.g. £600 is paid to
the electricity company at the end of June. It is to pay for the electricity that was used in April,
May & June at £200 per month
Finance Topic F Comprehensive
Questions (Frequently Tested)
with Verified Answers Graded
A+
Statement of Comprehensive Income - Answer: Calculates whether the firm has made a profit
or loss during the period by deducting all costs from all revenues earned.
Revenue - Answer: Money earned from selling goods and services.
Cost of Sales - Answer: The costs directly associated with producing the goods / services.
Gross Profit - Answer: Shows whether a firm is profitable from "trading" by deducting the cost
of sales from the revenues earned.
Overheads / Expenses - Answer: Are all indirect costs. Costs that the business must spend but,
are not directly associated to the production or delivery of goods and services.
Other Income - Answer: Income the business receives from sources other than revenue e.g.
interest paid.
, Opening Inventories - Answer: The value of inventory (stock) at the beginning of the period
(usually financial year).
Closing Inventories - Answer: The value of inventory (stock) at the end of the period (usually
financial year).
Depreciation - Answer: The spreading of the cost of an asset over it's useful life.
Historic Cost - Answer: The cost of the asset when it was first purchased.
Useful / Expected Life of an Asset - Answer: How long the asset is expected to be used by the
business.
Residual Value - Answer: The value of the asset at the end of its useful life. This may also be
shown as the resale value or the disposal value (if sold for scrap)
Profit / Loss for the Year - Answer: The amount of money available after all costs, expenses and
taxation has been deducted from all sources of revenue and other income.
- Answer: A loss is shown by a negative "profit" figure e.g. -£3m. In this case a loss
demonstrates that the business's costs are higher than their income.
Prepayment - Answer: Is when an expense is paid in advance of the period it relates to e.g. £300
is paid in January for rent, this is payment for Jan, Feb and March (£100 per month)
Accrual - Answer: Is when the expense is paid after the period it relates to e.g. £600 is paid to
the electricity company at the end of June. It is to pay for the electricity that was used in April,
May & June at £200 per month
