O Level (Intake 5), Business, Monthly test sample answer
Q. Customers who buy a grilled octopus for €7.50 and a broccoli tempura for €1.90 would pay a
total of €9.40. A lunchtime special deal offers them a 5% discount. Calculate what a customer
would pay for these two items after the discount is applied. You are advised to show your working
(2 marks)
Answer:
Total cost = € 9.40
Discount (5%) on total cost = € 0.47
After discount = € 9.40 - € 0.47 = € 8.93
Q .The Big Table wants to expand their business, to increase the investment they borrowed £2
million from a bank, the interest on bank loan was 7 percent per annum and the installment period
is 3 years (required to repay loan plus interest on each month). Calculate, to two decimal places,
the monthly installment rate for The Big Table. You are advised to show your working, (2 marks)
Answer:
Interest on the loan = € 2,000,000 × 7 % × 3 = € 420,000
Total amount to be repaid = € 2,000,000 + € 420,000 = € 2,420,000
Monthly installment = € 2,420,000 ÷ 36 = € 67,222.22
Q. Purpose of prospectus (2 marks)
When going public, a company is likely to publish a prospectus. This advertises the company to potential
investors and invites them to buy shares before a floatation.
Q. Advantages of external source of finance (2 marks) Pg 213 - 216
The advantage of using an external source of finance such as selling shares is that it raises additional
capital for the business and avoids interest payments.
Q. Advantages of private limited company (2 marks)
At private limited company, one advantage is that the company cannot be taken over by outsiders
because the shares are not open sale to public.
Q. Factor affecting appropriateness of different forms of ownership. (2 marks)
Growth; Many businesses start small and gradually get bigger, most businesses change their legal status
as they grow, because they need to raise more capital.
Q. Way for survive of business (3 marks) Pg 8
To survive businesses, have clear objectives and be aware that the changing environment. So, they must
produce goods and services that satisfy people needs and wants.
Q. Reason of business needs to have clear objective. (3 marks) Pg 12
The business that hasn’t objectives, owners might not have the motivation needed to keep the business
going. The owner might allow their business to drift, may result in business failure.
Q. Role of entrepreneur play their business. (3 marks) Pg 20
The entrepreneurs are the risk takers; they risk losing any money they put into the business and possibly
more if it fails. However, if the business is successful, they will be rewards with profit.
Q. One main feature of limited company. (3 marks) Pg 28
The owners have limited liabilities. If a company has debts, the owners can only lose the money
originally, they invested. They cannot be force to use their own money to pay debts run up by the
business.
Q. Feature of Multinational. (3 marks) Pg 31
The main feature of Multinational is it have huge assets (land, buildings, plant) and turnover.
Multinationals are extremely well-resourced and can often afford to take on large-scale contracts and
projects and can get large revenue.
Q. Factor influence the location decision of business. (3 marks) Pg 56
One factor that influence the location decision of business is proximity to materials, business that use
large number of materials that are difficult transport may choose to locate their premise very close to their
source.
^^^^^^^^^^^
Q. Analyze the importance of environmental factors for business (6 marks) Pg 104
The business is able to recycle packaging, then it can cut costs leading to more profit to be
contributed back to the local community, customers will be happy about this as they can
physically see their local
Business should explore ways of selling waste to other businesses as a by-product business of
restaurant food scraps, cooking oil and other materials.
Business can be sourcing locally and seasonally can reduce transportation costs and ensure
fresher, higher-quality ingredients.
Use more energy efficient equipment or renewable energy source by use prioritizing Energy Star
certified appliances refrigerator, cooker, dishwasher and lighting.
Q. A bank would be interested in firm’s financial documents. (6 marks)
Banks may need details of the financial situation of firm to assess the risk to them of a loan.
to look at the accounts for several years to see a trend in firm’s success and its debts.
to see if firm has sufficient funds to pay back not only the loan but also the interest.
If firm can prove that it has traded successfully for a number of years, it might receive a lower
interest rate on loan.
Q. Analyze the non-financial objectives of the business. (6 marks)
Business operates as social enterprises such as charities aim to improve human and
environmental mission.
Many business owners set up a business because they think they will be happier and feel more
satisfaction in their work environment than when working for an employer
Some people are motivated challenges and starting a business for their challenging.
Some people want to be “their own boss” they want to be a control and freedom to make all the
decision when running a business are an important for many business owners.
Q. Articles of Association. (6 marks) Pg 29
Name of the company
Name and address of the company’s registered office
Objectives of the company and nature of its activities
Amount of capital to be raised and the number of shares to be issued
Q. Benefits of locating factory near to its market. (6 marks) Pg 56 & 57
Many services provider such as restaurant proximity to their market is crucial.
This is because may service are sold directly to its customers.
This is where customers live and shop.
Tin this situation, traffic congestion is avoided for customers
Q. When expands a business, it will require additional finance. It is considering two options:
Option 1: crowdfunding
Option 2: Venture capital
Justify which one of these two options Saha should choose. (9 marks)
Option 1 – Crowdfunding means a large number of individuals invest in a business venture using
an online platform. (1.5)
Option 2 – A loan is a fixed agreement between a business and a bank. (1.5)
Option 1 – Crowdfunding could be a quick way to raise the finance needed for business growth
plans. (1.5)
Option 2 – This method would allow business to increase its short term or long-term sources of
finance and business will know exactly what it has to pay every month (1.5)
Option 1 – However, the business struggling to get finance for their business by using
crowdfunding. (1.5)
Option 2 – However, the amount borrowed and interest needed must be paid in regular
instalments over a fixed period. (1.5)
Q. Customers who buy a grilled octopus for €7.50 and a broccoli tempura for €1.90 would pay a
total of €9.40. A lunchtime special deal offers them a 5% discount. Calculate what a customer
would pay for these two items after the discount is applied. You are advised to show your working
(2 marks)
