Tag: A-Level

After a very successful year in 2021, the Staffordshire Mining Company gave all of its mining employees an extra £6,000, and equivalent of two month’s wages.

This payment can be BEST described as ……?

Select ONE answer:

1. performance related pay
2. job enrichment
3. piecework
4. a bonus

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 linked to whether an employee has met their individual targets whereas every employee receives this bonus no matter if they have met their own targets.
2. Not correct – job enrichment is when employees are given more responsibility and more meaningful tasks and has no connection to any form of financial remuneration.
3. Not correct – piecework is when employees are rewarded individually according to how much they produce whereas a bonus is paid collectively.
4. Correct – Definition of a bonus e.g. an extra payment made in recognition of the contribution of employees, often linked to profits and sales. This is in addition to their normal salaries/wages and is a one off payment. The bonus is paid to all employees as a recognition of the good performance of the business.

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Corporation tax is paid by businesses on their earnings at a level set by the government.

An increase in corporation tax will initially result in a reduction in ….?

Select ONE answer:

1. price
2. variable costs
3. fixed costs
4. retained profit

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 – firms will be more likely to increase their prices to compensate for the increased tax rate.
2. Not correct – costs are likely to increase as a consequence of suppliers having to pay higher taxes.
3. Not correct – fixed costs are not affected by increases or decreases in corporation tax in the short term.
4. Correct – Retained Profit is the amount of profit kept in the business rather than paid out to the owners or shareholders and held as cash for reinvestment. Paying the increased rate of tax is a legal requirement. It will have to be paid by businesses resulting in less profit to be retained in the organisation.

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In March 2022, Electromac Group, a multinational engineering business, reported the following annual results.

Revenue £64 826M
Cost of sales £60 737M
Gross profit £4 089M
Other operating expenses £546M

What was the profit in relation to revenue %?

Select ONE answer:

1. 5.47%
2. £3 543m
3. 6.31%
4. £64 280m

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 1

1. Correct – formula for margin is: profit for the year/revenue x 100. Profit for year is £3 543 or 4 089-546. Therefore £3 543m / £64 826m x 100 = 5.47%
2. Not correct
3. Not correct
4. Not correct

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The Staffordshire Beer Company produces its beer using a closely guarded secret recipe.

This is likely to give The Staffordshire Beer Company a….

Select ONE answer:

1. competitive advantage
2. market orientation
3. market map
4. test market

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 1

1. Correct – Competitive advantage is any positive feature that distinguishes a company from its competitors. In this case, the competitive advantage comes from Staffordshire’s secret recipe that no other drinks company can use. Customers who like the taste of the Beer because of its secret recipe can only buy from Staffordshire Beer which then generates consumer loyalty, which is a source of competitive advantage.
2. Not correct – the secret recipe is an aspect of product orientation not market orientation.
3. Not correct – market mapping places the Beer in relation to its competitors and is nothing to do with the secret recipe.
4. Not correct – test marketing would involve trialing different recipes and there is only one for Staffordshire Beer Company’s Beer.

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Lucy started and owns “Big Time Art Student”, a small business that sells 100% woollen clothes spun from wool from local Dorset sheep.

Which ONE of the following is MOST LIKELY to be the structure of Lucy’s business?

Select ONE answer:

1. Partnership
2. Co-operative
3. Sole trader
4. Public limited company

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 3

1. Not correct – a partnership is owned by two or more people and “Big Time Art Student”, was set up and owned by Lucy.
2. Not correct – with any co-operative the ownership is shared between many people. Lucy does not share ownership with any other person.
3. Correct – A sole trader is a business set up, owned and run by one person with unlimited liability. Most small businesses start as sole traders because of the simplicity of the structure/it is easy to set up. As Lucy has set up and owns this business herself, meaning she has no partners or shareholders, she can make all of the business decisions and keep the profits herself.
4. Not correct – Public Limited Companies have shares that are traded on the stock exchange and multiple owners are called shareholders which own the business. As a sole trader, this option is not open to Lucy.

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