Day: June 28, 2019

Business Studies Multiple Choice Question – 28 June 2019

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

CCBM Ltd manufactures high-quality stationery.

The graph below shows the interest rate the bank charged on CCBM Ltd’s overdraft between 2008 and 2018.

Table 60

Identify the likely effect on CCBM Ltd of the changes in the interest rate shown in the graph.

 

Select ONE answer:

  1. Increased risk of insolvency
  2. Lower variable costs
  3. Improved net cash flow
  4. Lower cash inflow

 

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 3

  1. reduced interests does not increase the risk of insolvency.
  2. does not produce lower variable costs – no guarantee that the prices change.
  3. Correct – could improve net cash flow as less money is going out of the business.
  4. no guarantee that there will be lower cash flowing into the business – the cost of stationery may remain the same.

 

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