Business Studies Multiple Choice Question – 13 January 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Business Studies

Bob set up Bob’s Musical Fun (BMF). BMF is a high street shop that sells only rare vinyl records. BMF also takes bookings for a number of local bands. The customer asks BMF for a band that plays a particular type of music and BMF finds a band that suits the request. Bob needs a loan to expand his business. As BMF is an established business, the bank agreed to a loan with an interest rate of 6.0%.

Which one of the following would be a benefit for BMF if it delayed paying its suppliers?

Select ONE answer:

  1. Increased profit
  2. Improved cash flow
  3. Reduced interest payments
  4. Improved relationship with suppliers

 

Show the workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Business Studies KS4 & KS3 classes

The answer is 2:

  1. Increased profit – is not correct because profit would not be greater if you delayed paying suppliers.
  2. Improved cash flow – is correct because cash outflows are decreased.
  3. Reduced interest payments – is not correct because interest rates do not affect delayed paying to suppliers.
  4. Improved relationship with suppliers – is not correct because delaying payment would have the opposite effect on suppliers.

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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