Tag: Business Studies

Woolies is an international supermarket chain offering high-quality products at prices 40% lower than rival supermarkets.

The most likely reason for Woolies to use this strategy is to …?

Select ONE answer:

1. sample the market
2. gain a competitive advantage
3. test the market
4. reduce production costs

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 2

1. Not correct – Woolies is selling all its products to all of the market. 
2. Correct – competitive advantage is a unique aspect of the business that competitors cannot easily imitate which can be based on innovation, reputation, quality, cost and price. Woolies differentiates itself from its retail rivals by charging lower prices, therefore gaining a competitive advantage, because lower prices are likely to attract more customers thereby increasing revenues and or profit.
3. Not correct – the products have already been tested in the market before being offered for sale in Woolies.
4. Not correct – the Woolies’s strategy is to do with sales revenue and not costs which are dependent on the price of factor inputs such as wages, electricity and rent. 

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Stafford Roofing has cash flow problems. It needs to pay its employees their wages but is waiting for £24 300 from customers.

Which one of the following options is the most suitable source of finance to overcome this problem? 

Select ONE answer:

1. Leasing
2. Overdraft
3. Debenture
4. Bank loan

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 2

1. Not correct – leasing is a long-term agreement to use expensive capital equipment and is not suitable for short term cash flow problems. 
2. Correct – an overdraft is a short term, prior arrangement for a bank customer to be able to withdraw an agreed amount of money that is not in their current account. The overdraft arrangement means the wages can be paid before the money owed goes into the bank account. When customers pay their bills, the overdraft can be paid off and interest is only paid on the balance that is outstanding.
3. Not correct – debentures are large long-term loans raised by public limited companies for major capital projects, which is not relevant to Stafford Roofing for paying its employees.
4. Not correct – a bank loan would mean making a monthly repayment with interest over a longer period than Stafford Roofing need the money for. 

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Stafford Holdings plc is one of the world’s biggest public limited companies.

Which one of the following is an advantage of being a public limited company for Stafford Holdings?

Select ONE answer:

1. need close supervisionIt publishes its annual accounts
2. It can control who buys its shares
3. Its shareholders have unlimited liability
4. It can raise funds through the stock exchange

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 – Theory Y managers assume that employees like to lead rather Not correct – has to publish its full accounts meaning its competitors can gain information that will help them to plan competitive strategies.
2. Not correct – since the shares can be bought and then sold on by any member of the general public through a stock exchange.  Stafford Holdings has no control over who owns it shares which could be bought in large quantities by rivals planning a takeover. 
3. Not correct – shareholders can only be held liable up to the value of the shares they have bought and paid for, their liability is limited. 
4. Correct – a public limited company as a company that sells it shares to members of the general public/ & the shares are traded on the stock exchange.  Stafford Holdings has greater access to potential investors in order to raise funds.  This means it can raise higher amounts of capital than other business structures.

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Lucy, prefers a Theory Y style of management in order to reduce labour turnover. 

A Theory Y style manager, such as Lucy, assumes that employees?

Select ONE answer:

1. need close supervision
2. tend to dislike work
3. can be trusted in their job
4. are only motivated by money

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 – Theory Y managers assume that employees like to lead rather than needing to be told what to do by a manager.
2. Not correct – disliking work is a perception by Theory X managers and not Theory Y managers.
3. Correct – Definition of Theory Y style of management e.g. a participative style of management.  If Lucy’s employees feel trusted by her, motivation will increase.This may result in higher staff retention as employees feel valued and are less likely to leave.
4. Not correct – Theory Y managers believe that employees are motivated by job satisfaction and not just by the money

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Alex Ltd compared its budgeted sales figures with its actual sales figures and discovered an adverse variance. 

Alex Ltd should?

Select ONE answer:

1. reduce its advertising budget
2. reduce its inventory levels
3. increase its prices
4. increase its production

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 2

1. Not correct – this may result in a reduction in sales due to lack of awareness in the market which would increase the adverse variance
2. Correct – Definition of adverse variance e.g. actual figures are worse than the budgeted figures.  Alex Ltd has unsold inventory.  Therefore Alex Ltd does not need to make additional products, so needs less inventory.
3. Not correct – this may result in demand falling as the prices are higher resulting in a loss of sales for Alex Ltd adding to the adverse inventory.
4. Not correct – this will just result in Alex Ltd having excess inventory rather than reducing the adverse variance

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