Business Studies Multiple Choice Question – 20 January 2022

Nancy owned a corporate events company.

Sales revenue fell and her company failed.

This is an example of?

Select ONE answer:

1. performance-related pay
2. an increase in orders
3. good management of cash flow
4. changing market conditions

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

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

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct – performance related pay is not a factor determining demand for the product/service as it rewards employee performance
2. Not correct – an increase in orders would increase the chance of the company doing well as demand rose
3. Not correct – good management of cash flow is more likely to help the business continue as it enables the monitoring of cash flow movements
4. Correct – Accurate definition of changing market conditions – the factors that alter the supply and demand for goods/services or sales revenue, e.g. price x quantity or business income. Identifies what causes market conditions to change e.g. recession, competitors. Therefore a fall in sales revenue could be due to either a fall in units demanded/sold or a decrease in the selling price of the products/service. Which may mean that Sarah’s business may not be able to cover her costs and therefore fail.

This work is licensed under a Creative Commons Attribution 4.0 International License.