GCSE Edexcel: Trivia Quiz On Business! Test

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GCSE Edexcel: Trivia Quiz On Business! Test - Quiz


Do you know anything about Edexcel? Do you think you know as much as necessary to pass this quiz? People do not popularly know it, but here you will learn. Edexcel is a British international education and examination body formed in 1996, and then it was entirely owned by Pearson since 2005. It is the lone privately owned examination board in the United Kingdom. Taking this quiz will help you see how much you know about Edexcel.


Questions and Answers
  • 1. 

    Enterprise involves which one of the following?

    • A.

      A lack of ideas.

    • B.

      Only providing a service.

    • C.

      A willingness to take risks.

    • D.

      Poor planning.

    Correct Answer
    C. A willingness to take risks.
    Explanation
    Enterprise involves a willingness to take risks. This means that individuals or organizations involved in enterprise are willing to step out of their comfort zones, try new things, and take calculated risks in order to achieve their goals. This willingness to take risks is essential for innovation, growth, and success in business and other endeavors. Without this willingness, it would be difficult to seize opportunities, adapt to change, and overcome challenges that come with pursuing new ventures or ideas.

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  • 2. 

    Which two of the following are examples of variable costs for a small manufacturing business? Payment for:

    • A.

      Rent of the business premises

    • B.

      Insurance payments

    • C.

      Raw materials used in production

    • D.

      Advertising costs

    • E.

      Packaging of the finished products.

    Correct Answer(s)
    C. Raw materials used in production
    E. Packaging of the finished products.
    Explanation
    Variable costs are costs that change in direct proportion to the level of production or sales. In this case, raw materials used in production and packaging of the finished products are examples of variable costs because they increase or decrease depending on the amount of products being manufactured. Rent of the business premises and insurance payments are fixed costs because they do not change with the level of production. Advertising costs can be either fixed or variable depending on the specific situation.

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  • 3. 

    Which three of the following documents are used in the recruitment process?

    • A.

      Job Description.

    • B.

      Business Plan.

    • C.

      Person Description.

    • D.

      Job Advert.

    • E.

      Application Form.

    • F.

      Cash Flow Forecast.

    Correct Answer(s)
    A. Job Description.
    D. Job Advert.
    E. Application Form.
    Explanation
    The three documents used in the recruitment process are the Job Description, Job Advert, and Application Form. The Job Description outlines the responsibilities and requirements of the position, helping potential candidates understand if they are a good fit. The Job Advert is used to attract candidates by advertising the job opening and providing key details. The Application Form is used to collect information from candidates, such as their qualifications and work experience, which helps in the initial screening process.

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  • 4. 

    A business has the following cash flow information for one particular month: Opening balance: £5 000 Cash inflow: £7 000 Cash outflow: £14 000 What is the net cash flow for the business at the end of this month? Select one answer.

    • A.

      –£16 000

    • B.

      –£7 000

    • C.

      £12 000

    • D.

      £26 000

    Correct Answer
    B. –£7 000
    Explanation
    The net cash flow for the business at the end of the month is -£7,000. This is calculated by subtracting the cash outflow (£14,000) from the sum of the opening balance (£5,000) and the cash inflow (£7,000). The negative sign indicates that the business had more cash outflow than inflow, resulting in a net decrease in cash for the month.

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  • 5. 

    A business has the following cash flow information for one particular month: Opening balance: £5 000 Cash inflow: £7 000 Cash outflow: £14 000   What is the closing balance at the end of this month?

    • A.

      –£12 000

    • B.

      –£2 000

    • C.

      £9 000

    • D.

      £16 000

    Correct Answer
    B. –£2 000
    Explanation
    The closing balance at the end of the month is -£2,000. This is calculated by subtracting the cash outflow (£14,000) from the sum of the opening balance (£5,000) and the cash inflow (£7,000), resulting in a negative balance.

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  • 6. 

    Sonia Fletcher was fed up with taking orders from other people at work. She wanted personal satisfaction and financial security so decided to set up as a sole trader selling cakes made from organic ingredients. After a successful 18 months trading from a market stall she wanted to expand the business. Sonia needed to raise £25 000 to rent a shop and buy equipment.   Which three of the following are the most likely reasons why Sonia decided to set up as a sole trader? Select three answers.

    • A.

      She will benefit from limited liability.

    • B.

      She could raise finance from selling shares.

    • C.

      To have greater control within the business

    • D.

      She would take all of the profits.

    • E.

      She would have the ability to make her own decisions.

    • F.

      It would involve greater risk.

    Correct Answer(s)
    C. To have greater control within the business
    D. She would take all of the profits.
    E. She would have the ability to make her own decisions.
    Explanation
    Sonia decided to set up as a sole trader because she wanted greater control within the business, to take all of the profits, and to have the ability to make her own decisions. As a sole trader, she would have full control over the operations and direction of the business, allowing her to make decisions that align with her personal vision and goals. Additionally, she would be entitled to all the profits generated by the business, providing her with personal financial security and satisfaction.

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  • 7. 

    Sonia Fletcher was fed up with taking orders from other people at work. She wanted personal satisfaction and financial security so decided to set up as a sole trader selling cakes made from organic ingredients. After a successful 18 months trading from a market stall she wanted to expand the business. Sonia needed to raise £25 000 to rent a shop and buy equipment. As a sole trader, which three of the following are long-term sources of finance for Sonia? Select three answers.

    • A.

      Profit.

    • B.

      Overdraft.

    • C.

      Bank loan.

    • D.

      Trade credit.

    • E.

      Share capital.

    • F.

      Personal savings.

    Correct Answer(s)
    A. Profit.
    C. Bank loan.
    F. Personal savings.
    Explanation
    Profit, bank loan, and personal savings are all viable long-term sources of finance for Sonia as a sole trader. Profit refers to the money she earns from selling her cakes, which can be reinvested into the business. A bank loan is a common option for entrepreneurs looking to expand their business and acquire funds for renting a shop and buying equipment. Personal savings can also be used to finance the business, as Sonia may have saved up money specifically for this purpose.

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  • 8. 

    Which one of the following is an example of a calculated risk for Sonia’s business? Select one answer.

    • A.

      Sonia’s costs had risen by 30% in the past 6 months.

    • B.

      Sonia has calculated her yearly income tax as £795.

    • C.

      There is an 80:20 chance of Sonia’s business failing.

    • D.

      Sonia has estimated that demand will rise by 10% over the next 6 months.

    Correct Answer
    C. There is an 80:20 chance of Sonia’s business failing.
    Explanation
    The answer "There is an 80:20 chance of Sonia’s business failing" is an example of a calculated risk for Sonia's business. Calculated risks involve assessing the probability and potential outcomes of a particular decision or action. In this case, Sonia has evaluated the likelihood of her business failing and determined that there is an 80% chance of failure. This suggests that she has considered the potential risks and rewards associated with her business and made a calculated decision based on that assessment.

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  • 9. 

    During Sonia’s first year of trading, interest rates increased from 3% to 5%. Identify three possible effects of this change on the business. Select three answers.

    • A.

      A reduction in fixed costs due to lower repayments on her overdraft.

    • B.

      A worsening net cash flow position.

    • C.

      A rise in sales due to higher levels of consumer spending.

    • D.

      A greater chance of rivals entering the market.

    • E.

      A fall in sales due to lower levels of consumer spending.

    • F.

      An increase in fixed costs due to higher repayments on her overdraft.

    Correct Answer(s)
    B. A worsening net cash flow position.
    E. A fall in sales due to lower levels of consumer spending.
    F. An increase in fixed costs due to higher repayments on her overdraft.
    Explanation
    The increase in interest rates from 3% to 5% can have three possible effects on the business. Firstly, there may be a worsening net cash flow position as higher interest rates would mean increased interest expenses, reducing the available cash for other business activities. Secondly, there could be a fall in sales due to lower levels of consumer spending. Higher interest rates can discourage borrowing and reduce disposable income, leading to decreased consumer spending. Lastly, there may be an increase in fixed costs due to higher repayments on the overdraft. As interest rates rise, the cost of borrowing increases, resulting in higher repayments and potentially increasing fixed costs.

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  • 10. 

    Sam Martinez is a driving instructor. Two years ago, he decided to set up on his own and researched being a sole trader or buying into a franchise. He decided to become a sole trader. Sam operates in a highly competitive market. He provides his customers with a computer print-out record at the end of each lesson, which highlights where the learner needs to improve. He also charges a price lower than his rivals for each lesson. Which two of the following methods are most likely to give Sam a competitive advantage? Select two answers.

    • A.

      Providing high quality tuition.

    • B.

      Operating as a sole trader.

    • C.

      Providing a personalised service.

    • D.

      Operating in a competitive market.

    • E.

      Providing a service for the community.

    Correct Answer(s)
    A. Providing high quality tuition.
    C. Providing a personalised service.
    Explanation
    Sam Martinez can gain a competitive advantage by providing high quality tuition because it sets him apart from his competitors and ensures that his customers receive excellent instruction. Additionally, providing a personalized service, such as the computer print-out record highlighting areas for improvement, gives Sam an edge by showing his dedication to meeting the specific needs of each learner. Operating as a sole trader does not necessarily give Sam a competitive advantage, as it is simply the legal structure of his business. Operating in a competitive market and providing a service for the community are not mentioned as methods that would give Sam a competitive advantage in this scenario.

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  • 11. 

    Sam Martinez is a driving instructor. Two years ago, he decided to set up on his own and researched being a sole trader or buying into a franchise. He decided to become a sole trader. Sam operates in a highly competitive market. He provides his customers with a computer print-out record at the end of each lesson, which highlights where the learner needs to improve. He also charges a price lower than his rivals for each lesson. Which two of the following would have been possible advantages to Sam if he had decided to buy into a franchise? Select two answers.

    • A.

      He would not have to pay any tax.

    • B.

      He would have no stakeholders.

    • C.

      Customer service would not be so important.

    • D.

      A recognised brand name.

    • E.

      Access to help and advice when running his business.

    Correct Answer(s)
    D. A recognised brand name.
    E. Access to help and advice when running his business.
    Explanation
    If Sam had decided to buy into a franchise, he would have benefited from having a recognized brand name, which would have given him a competitive advantage in the highly competitive market he operates in. Additionally, he would have had access to help and advice when running his business, which could have provided him with valuable support and guidance in managing and growing his driving instructor business.

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  • 12. 

    Vakas Shah was fed up with having his bicycle stolen; three times in the last year! He used his engineering background to develop ‘CycleSecure’, a lightweight but strong cable which secured the wheels and the frame of the bicycle. The design made it very difficult for anyone to steal a bicycle. Vakas hoped that his invention would be of interest to bicycle manufacturers. There were few similar products like this on the market. Which one of the following best describes the term ‘invention’? Select one answer.

    • A.

      Identifying new products and new ways of making products.

    • B.

      Identifying a gap in a market for a new product.

    • C.

      New business ideas which are profitable.

    • D.

      The process of transforming new ideas into products that can be sold.

    Correct Answer
    A. Identifying new products and new ways of making products.
    Explanation
    The term 'invention' refers to the process of identifying new products and new ways of making products. In this context, Vakas Shah identified a gap in the market for a bicycle security product and developed CycleSecure as a solution. This demonstrates his ability to come up with a new product idea and create a unique way of making it. Therefore, the term 'invention' best describes the act of identifying new products and new ways of making products.

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  • 13. 

    Vakas needed to think creatively to produce CycleSecure. Why is thinking creatively important? Select one answer. It is important because it:

    • A.

      Avoids having to ask the ‘what if?’ question

    • B.

      Increases the calculated risk

    • C.

      Generates competitive advantage

    • D.

      Avoids the need for lateral thinking.

    Correct Answer
    C. Generates competitive advantage
    Explanation
    Thinking creatively is important because it generates competitive advantage. When someone is able to think outside the box and come up with innovative solutions, it sets them apart from others in their field. This creativity allows them to bring new ideas and approaches to the table, which can lead to unique products or services that stand out in the market. This competitive advantage can help them attract more customers, increase their market share, and ultimately achieve success in their industry.

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  • 14. 

    Vakas decided to protect his idea by use of a patent. What is one possible benefit of a patent to Vakas? Select one answer.

    • A.

      Prevents another business from using his brand name.

    • B.

      Provides the right of ownership of an invention or process.

    • C.

      Is an insurance policy which provides protection from financial loss.

    • D.

      Ensures he will not make a loss for 20 years.

    Correct Answer
    B. Provides the right of ownership of an invention or process.
    Explanation
    A patent provides the right of ownership of an invention or process. This means that Vakas will have exclusive rights to his idea and others cannot use it without his permission. This can give him a competitive advantage in the market and allow him to profit from his invention or process.

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  • 15. 

    Which two of the following were most important for Vakas in spotting a new business opportunity? Select two answers.

    • A.

      Being able to produce his product cheaply.

    • B.

      Recognising a need in the market-place.

    • C.

      Being a keen cyclist.

    • D.

      Knowing who his possible competitors were.

    • E.

      Having a large amount of personal savings.

    Correct Answer(s)
    B. Recognising a need in the market-place.
    D. Knowing who his possible competitors were.
    Explanation
    Vakas was able to spot a new business opportunity by recognizing a need in the market-place. This means that he was able to identify a gap or demand in the market that his product could fulfill. Additionally, knowing who his possible competitors were was important for Vakas in spotting a new business opportunity. This implies that he conducted market research and understood the competitive landscape, allowing him to position his product effectively in the market.

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  • 16. 

    Charles Mitchell imports high quality pasta from Northern Italy for sale at his delicatessen in Suffolk. The exchange rate between the pound (£) and the euro (€) is important for Charles. He buys 100 kg of pasta every month. The price of pasta is €5 per kg. In April, the exchange rate is £1.00 = €1.25. How much does Charles have to pay to buy his pasta? Select one answer.

    • A.

      £625

    • B.

      £500

    • C.

      £400

    • D.

      £250

    Correct Answer
    C. £400
    Explanation
    In April, the exchange rate is £1.00 = €1.25. To find out how much Charles has to pay to buy his pasta, we need to convert the price of pasta from euros to pounds. The price of pasta is €5 per kg, so if we multiply €5 by the exchange rate of £1.00 = €1.25, we get £6.25 per kg. Charles buys 100 kg of pasta, so he has to pay £6.25 x 100 = £625. Therefore, the correct answer is £625.

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  • 17. 

    In May the exchange rate changed to £1.00 = €1.20. What effect would this have on Charles’s business? Select one answer.

    • A.

      The cost of importing pasta from Italy stays the same.

    • B.

      His net cash flow will improve.

    • C.

      The euro price of pasta will rise.

    • D.

      His import costs will rise.

    Correct Answer
    D. His import costs will rise.
    Explanation
    Since the exchange rate changed to £1.00 = €1.20, it means that the euro has become stronger compared to the pound. As a result, when Charles imports pasta from Italy, he will need to pay more pounds to buy the same amount of euros. This increase in the cost of importing will lead to higher import costs for Charles' business.

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  • 18. 

    Pasta is made from wheat. In 2009, good weather led to a large increase in the wheat harvest. Which of the following is the most likely effect of this increase? Select one answer.

    • A.

      The price of wheat will fall.

    • B.

      Charles will have to pay more for his pasta.

    • C.

      The cost of wheat will rise.

    • D.

      The demand for wheat will fall.

    Correct Answer
    A. The price of wheat will fall.
    Explanation
    The most likely effect of a large increase in the wheat harvest due to good weather in 2009 is that the price of wheat will fall. When there is a surplus of a particular crop, such as wheat in this case, the increase in supply leads to a decrease in price. This is because there is more wheat available in the market, and sellers may need to lower their prices in order to sell their surplus. Therefore, it is reasonable to expect that the price of wheat will fall as a result of the increased harvest.

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