Tag: AQA

The City Council of Stafford decided to use a zero-based budgeting system for the first time for the financial year 2021–2022.

Zero-based budgeting is most likely to be …….?

Select ONE answer:

1. efficient in allocating resources
2. a quick method of budgeting
3. produced by an accountant
4. based on previous data

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

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

The answer is 1

1. Correct – Definition of zero-based budgeting e.g. a method of budgeting in which all expenses must be justified for each new period by the manager. Managers must bid and justify their budgets. This forces managers to examine all their costs for the current year, which should lead to a more efficient allocation of resources.
2. Not correct – because zero-based budgeting can be very time consuming to examine every cost each year rather than basing it on previous budgets.
3. Not correct – because zero-based budgeting is produced by individual managers of each department not by an accountant.
4. Not correct – because zero-based budgeting does not use any historical data which is used in historical based budgeting.

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This multiple-choice question is suitable for Business Studies KS4 & KS5 classes

The answer is 2

1. Not correct 
2. Correct – Definition of capacity utilisation e.g. measures the proportion/percentage of the maximum possible output which is actually produced, with the formula – – > Current Output / Maximum possible output x 100 = = > 125 / 1,500 x100 = 75%
   
3. Not correct 
4. Not correct 

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

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This multiple-choice question is suitable for Business Studies KS4 & KS5 classes

The answer is 2

1. Not correct – because an increase in cash flow will help Blockbuster to trade effectively in the long term as they have cash to pay suppliers and employees.
2. Correct – Definition of business failure e.g. when costs exceeds revenues in the long run OR Definition of online sales e.g. products or services can be bought and received on the internet rather than in a physical outlet. Blockbuster failed because it sold DVDs and computer games from traditional retail outlets rather than through online sales as more people are buying DVDs online. This has resulted in a fall in demand for DVDs bought through traditional retail outlets such as Blockbuster.
3. Not correct – because a decrease in competition from supermarkets could increase sales for Blockbuster as customers have less choice as to where to purchase DVDs and games.
4. Not correct – because if there is a decrease in labour costs Blockbuster should see an increase in operating profits as costs are lower resulting in the business being able to continue to trade.

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