Cambridge International A Level · Business (9609)

Business finance: Practice Questions

5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Business finance.

10 questions28 marksFree, no account

Question 1

1 mark

What is the primary difference between cash and profit in a business context?

Question 2

1 mark

A highly profitable construction company is forced into liquidation despite having a record-breaking order book for the next two years and significant non-current assets. Which of the following is the most likely explanation for this business failure?

Question 3

1 mark

A business with high profitability is facing a liquidity crisis and is unable to meet its short-term debts. Which of the following sets of circumstances is the most likely cause of this situation?

Question 4

1 mark

Which of the following is considered a revenue expenditure for a clothing retailer?

Question 5

1 mark

The purchase of a new delivery van for a courier company is best classified as which type of expenditure?

Question 6

2 marks

Identify and briefly describe one internal source of finance available to a sole trader.

Write your answer out first, then check it against the worked solution.

Question 7

3 marks

Distinguish between contribution per unit and total profit, explaining how a business can have a positive contribution but still record a net loss.

Write your answer out first, then check it against the worked solution.

Question 8

5 marks

Explain why a business might experience a liquidity crisis leading to insolvency even while reporting significant accounting profits during a period of rapid expansion.

Write your answer out first, then check it against the worked solution.

Question 9

8 marks

(a) Define working capital and explain its importance to a business like a supermarket chain for its day-to-day operations. (4 marks)

(b) Explain the difference between capital expenditure and revenue expenditure, providing an example of each in the context of the supermarket chain. (4 marks)

Write your answer out first, then check it against the worked solution.

Question 10

5 marks

A successful entrepreneur wants to expand their small printing business by purchasing a high-speed digital press costing \( \$25,000 \). They are comparing leasing the equipment versus obtaining a bank loan.

(a) Explain two advantages of leasing the equipment rather than buying it with a bank loan. (3 points)

(b) Identify and explain one internal source of finance that might have been used instead. (2 points)

Write your answer out first, then check it against the worked solution.

* The content provided by thinka is generated by AI and may not always be accurate or up-to-date. Please use it as a supplementary resource and verify with official materials.

You've seen the model answer. Now get yours marked.

This page can show you how a good answer looks. It cannot tell you what your answer was missing. thinka marks your written work against the real mark scheme in about 15 seconds.

Get My Answers Marked Back to the notes

Want more questions like these? Get a fresh set on this topic, graded as you go.