EDEXCEL BUSINESS A LEVEL PAPER 2
(THEME 2 & 3) QUESTIONS WITH 100%
CORRECT ANSWERS 2025
Retained profits - correct answer-
profits that the owners have reinvested into the business after paying costs and taxes
Owners' funds - correct answer-money put in by the owners themselves
Sale of assets - correct answer-a one-
off way to raise money, generally used during financial struggles
Benefits of owners funds - correct answer-Avoids interest on loans
Owners keep complete control
Disadvantages of owners funds - correct answer-
If it fails after remortgaging, they could lose their house
Limit to amount raised
Short term finance examples - correct answer-overdrafts for daily expenses
Medium term finance examples - correct answer-
loans, hire purchase, trade credit, debt factoring used to pay for repairs, paid back after 1-5 years
Long term finance examples - correct answer-
issuing shares, debentures, mortgages, grants used to pay for major expenditure, paid back over m
any years
Selling assets - correct answer-Can sell machines, buildings, land
Limited buyers
Advertising costs
,Sold cheaply
Loans - correct answer-High interest rates
Usually requires security in the form of assets which will be taken away if they don't make the rep
ayments
Needs regular updates
Grants - correct answer-No repayment
May be recalled if conditions aren't met
May not cover full amount
Hire purchase / leasing - correct answer-Must pay deposit and monthly
Own assets at the end
Leasing does not lead to ownership
Must pay interest
Will be re-claimed if not paid for
Issuing shares - correct answer-Only for a limited company (ltd, plc)
No risk but must pay yearly dividends
Shareholders at risk as shares fluctuate
Shareholders have influence
Venture capital - correct answer-Large businesses lend to smaller (not plc) businesses
Lender becomes shareholder
Aim to grow business so share price increases
Lenders play active role
Revenues - correct answer-the amount of product that a customer actually buys
,Total revenue equation - correct answer-volume sold x average selling price
Profit as an objective - correct answer-Profit is the most important source of cash flow and finance
Can be other reasons for running a business than profit
Why profit is important - correct answer-A return on investment
A reward for taking risks
A key source of finance
A measure of business success
A motivating factor
Profit equation - correct answer-total sales - total costs
Costs - correct answer-amounts that a business incurs in order to make goods/services
Costs are important because - correct answer-They drain away profit
Change profit margins
Main causes of cash flow problems
Changes with output
Variable costs - correct answer-Change as output varies
Lower risk for startups
Variable cost examples - correct answer-Raw materials
Brought in stocks
Wages based on hours
Marketing costs based on sales
Fixed costs - correct answer-Don't change with output
, Higher risk for startups
Fixed cost examples - correct answer-Rent & rates
Salaries
Advertising
Insurance, banking, legal fees
Software
Advisers
Total costs equation - correct answer-fixed costs + variable costs
Problems estimating costs - correct answer-Some are easier than others
Rent, salaries, advertising
Others are harder
Raw materials
Returns or refunds
Budget - correct answer-
a financial plan for the future concerning the revenues and costs of a business
Managerial accountability - correct answer-Budgets on the objectives
Managers are required to think ahead
Budget uses for management - correct answer-Set targets
Motivate staffs
Improve efficiency
Forecast outcomes
Monitor performances
Assign responsibilities
(THEME 2 & 3) QUESTIONS WITH 100%
CORRECT ANSWERS 2025
Retained profits - correct answer-
profits that the owners have reinvested into the business after paying costs and taxes
Owners' funds - correct answer-money put in by the owners themselves
Sale of assets - correct answer-a one-
off way to raise money, generally used during financial struggles
Benefits of owners funds - correct answer-Avoids interest on loans
Owners keep complete control
Disadvantages of owners funds - correct answer-
If it fails after remortgaging, they could lose their house
Limit to amount raised
Short term finance examples - correct answer-overdrafts for daily expenses
Medium term finance examples - correct answer-
loans, hire purchase, trade credit, debt factoring used to pay for repairs, paid back after 1-5 years
Long term finance examples - correct answer-
issuing shares, debentures, mortgages, grants used to pay for major expenditure, paid back over m
any years
Selling assets - correct answer-Can sell machines, buildings, land
Limited buyers
Advertising costs
,Sold cheaply
Loans - correct answer-High interest rates
Usually requires security in the form of assets which will be taken away if they don't make the rep
ayments
Needs regular updates
Grants - correct answer-No repayment
May be recalled if conditions aren't met
May not cover full amount
Hire purchase / leasing - correct answer-Must pay deposit and monthly
Own assets at the end
Leasing does not lead to ownership
Must pay interest
Will be re-claimed if not paid for
Issuing shares - correct answer-Only for a limited company (ltd, plc)
No risk but must pay yearly dividends
Shareholders at risk as shares fluctuate
Shareholders have influence
Venture capital - correct answer-Large businesses lend to smaller (not plc) businesses
Lender becomes shareholder
Aim to grow business so share price increases
Lenders play active role
Revenues - correct answer-the amount of product that a customer actually buys
,Total revenue equation - correct answer-volume sold x average selling price
Profit as an objective - correct answer-Profit is the most important source of cash flow and finance
Can be other reasons for running a business than profit
Why profit is important - correct answer-A return on investment
A reward for taking risks
A key source of finance
A measure of business success
A motivating factor
Profit equation - correct answer-total sales - total costs
Costs - correct answer-amounts that a business incurs in order to make goods/services
Costs are important because - correct answer-They drain away profit
Change profit margins
Main causes of cash flow problems
Changes with output
Variable costs - correct answer-Change as output varies
Lower risk for startups
Variable cost examples - correct answer-Raw materials
Brought in stocks
Wages based on hours
Marketing costs based on sales
Fixed costs - correct answer-Don't change with output
, Higher risk for startups
Fixed cost examples - correct answer-Rent & rates
Salaries
Advertising
Insurance, banking, legal fees
Software
Advisers
Total costs equation - correct answer-fixed costs + variable costs
Problems estimating costs - correct answer-Some are easier than others
Rent, salaries, advertising
Others are harder
Raw materials
Returns or refunds
Budget - correct answer-
a financial plan for the future concerning the revenues and costs of a business
Managerial accountability - correct answer-Budgets on the objectives
Managers are required to think ahead
Budget uses for management - correct answer-Set targets
Motivate staffs
Improve efficiency
Forecast outcomes
Monitor performances
Assign responsibilities
