Finance Revision Test

What is the Break-Even Point?

• • The point where total revenue equals total costs

• The point where costs are zero

• The point where total costs are higher than revenue

• The point where total revenue is double the total costs

If a company’s fixed costs are £600, the selling price per unit is £25, and the variable cost per unit is £15, what is the break-even point in units?

Sort these Sources of Finance

Groups:

(a) Internal

,

(b) External

• Bank Loans

• Share Issue

• Selling Assets

• Retained Profits

• Friends and Family

• Government Grants

• Trade Credit

• Owners Capital

Which of the following is a fixed cost?

• Wages

• Purchases

• Rent

• Sales

Identify the point representing the break-even point where sales revenue equals total costs.

​ (a)   ​ is the profit from buying and selling

​ (b)   is the profit after adding other income and subtracting expenses

• Gross Profit
• Net Profit

A business has cash inflows of £8,000 and cash outflows of £9,500 this month. Does it have a surplus or deficit?

• Deficit

• Surplus

Which of the following is an advantage of using retained profits as a source of finance?

• It requires paying interest

• It does not increase debt

• It is easily available in large amounts

• It reduces ownership control

What is the main purpose of a cash budget?

• To calculate the total profit or loss over a period

• To analyze market trends

• To plan and monitor expected cash inflows and outflows

• To determine the break-even point

Complete the income statement calculations using the terms. Gross profit = _________ Profit/loss for the year = _________