Level 2 Finance test

A Business ______________ when it earns enough money to cover its costs.

• increases expenditure

• breaks even

• reduces profit

• generates revenue

Which one is an external source of finance for a small business.

• retained profit

• owner's personal funds

• sales of non-current assets

What is meant by the term operating costs?

Sally organises boat trips. She sells 43 trips each month at £125 each. Calculate Sally's revenue. You must show your working out.

Select the correct formula for Calculating total costs.

• Start up costs-fixed cost

• fixed cost + start up cost

• variable cost - fixed cost

• fixed cost + variable cost

Which statement is an example of direct costs/fixed costs of a bakery

• The costs of renting the bakery

• The costs of advertising the bread

• The cost of flour for making the bread

• The cost of electricity for heating the bakery.

Aron runs a football coaching business. He has produced a statement of financial position (balance sheet). The table shows an extract from Aron's statement of financial position.

a) Calculate the items on the statement of financial poison.

show your working out.

Select two reasons why a business would create a cash flow forecast.

• To value the assets of the business

• To calculate how much the business is worth

• To support an application for a bank loan

• To show the level of debt the business has

• To see how much the business may receive.

Sasha runs a small flower stall in a local market. She wants to increase her revenue. Sasha has decided to increase her product range to include plants and trees as well as decorative vases and garden ornaments.

a)) State two other ways Sasha could spend money to help increase revenue.

b)) Explain how increasing the product range will affect Sasha's break even.

In January a business has an opening balance of £4000. It expects to have a net cash outflow of £1000 for the month.

Identify two possible outcomes of this for the business.

• The business expects to have an opening balance of £3000 in February

• The business expects to owe £3000 to suppliers at the end of January

• The business expects to make a loss of £3000 in February

• The business expects to make a profit of £3000 in February

• The business expects to have £3000 in the bank at the end of January