Tag: Profit Making

Alex works for Lucy plc.

Alex has been asked by his manager, Bob, to undertake an internal analysis of the company as part of a STRATEGIC planning review.

Which ONE of the following analytical techniques will be useful in this context?

Select ONE answer:

1. Porter’s five forces analysis
2. The BCG Matrix
3. PESTEL analysis
4. Ansoff’s Matrix

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. Notcorrect
2. Correct  –> Options (1) and (3) are methods of analysing the company’s external environment . Option (4) is a means of assessing potential growth strategies of the company.
3. Not correct
4. Not correct

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

Alex Ltd is considering several options to market a new product called the Staffordshire with Lucy Ltd’s help.

Which of the following business structures is a joint venture?

Select ONE answer:

1. Buy Lucy Ltd and market the Staffordshire through that company
2. Form a project team with employees of both Alex Ltd and Lucy Ltd and market the Staffordshire through that team
3. With Lucy Ltd as equal partner, form Allu Ltd and market the Staffordshire through that company
4. Sell Lucy Ltd the right to market the Staffordshire in return for a percentage of the revenues

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
2. Not correct
3. Correct –> Purchasing the company will make it part of a group; forming a project team is a form of strategic alliance (a strategic alliance is more informal), while selling Lucy the marketing rights in return for a fee is a licensing. agreement.  Allu Ltd would be a separate legal entity owned 50:50 by the two companies and this is the most usual form of joint venture.
4. Not correct

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

The Lucy Partnership comprises of six partners who share profits in the following ratio 6:5:4:3:2:1

They are considering incorporation as a limited company, Lucy Partners Ltd.

Only the six partners will become shareholders on incorporation.

In relation to Lucy Partners Ltd, which of the following statements is necessarily true?

Select ONE answer:

1. All partners will be equal shareholders in Lucy Partners Ltd
2. If Lucy Partners Ltd wishes to raise new share capital, the number of shareholders may be allowed to rise above six
3. All shareholders will become directors and will have the right to be equally involved in the management of the new Limited company
4. If one of the shareholders in Lucy Partners Ltd dies, the company will be dissolved

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. Notcorrect
2. Correct  –> Shareholders do not have an  automatic right to be a director or to be involved in management (3).  The partners’ individual shareholdings will be determined by an agreement that is not necessarily related to the existing partnership agreement (1). The concept of perpetual succession means that the company will not dissolve upon the death of a shareholder (4).
3. Not correct
4. Not correct

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

Alex is a sole trader who works alone, maintaining and repairing photocopier systems.

He works about 80 hours per week, 52 weeks per year with no holidays.

He wants to take on a major new maintenance and repair contract for a local hospital’s administration department that needs to print out patient records on special paper.

This will require at least 60 working hours each week to do it justice.

It will be extremely profitable if he can acquire the necessary equipment to do the work.

Which of the following statements about his sole trader status is true?

Select ONE answer:

1. It prevents him from employing staff to help with the contract
2. It gives him personal liability for any failure of his in relation to the hospital photocopier system
3. It prevents him from obtaining a loan to obtain the equipment
4. It allows him to issue shares in his business to friends and family

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. Notcorrect
2. Correct  –> As a sole trader he does have the disadvantage of personal liability.
3. Not correct
4. Not correct

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