Tag: Profit Making

To establish whether a particular organisation should be classified as a business or not, it would be necessary to understand the nature of its…?

Select ONE answer:

1. Primary objective
2. Mission
3. Vision
4. Secondary objective

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 –> Organisations whose primary objective is to make profits for their owners, are classified as businesses.
2. Not correct
3. Not correct
4. Not correct

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

In the opinion of a group of major shareholders, during the past five years the directors of Alex plc have run the company in a way that has been designed solely to increase the prestige in the business community.

According to William Baumol this characteristic of the company is most likely to be evident in the directors’ aim to:

Select ONE answer:

1. Maximise wealth
2. Maximise sales revenue
3. Minimise costs
4. Minimise social impact

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  –>  William Baumol argued that businesses act to maximise sales revenue whenever managers are rewarded or revered for the size of the organisation for which they work rather than its profitability or relative performance.
3. Not correct
4. Not correct

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

Maximising the wealth of its shareholders is the stated goal of Alex plc.

The objectives have been expressed as a hierarchy of primary and secondary objectives.

Identify which of the following is most likely to be the primary business objective.

Select ONE answer:

1. To increase the annual profit after tax by %125 in the next 10 years
2. To introduce an average of two new products each year for the next six years
3. To double the share price within the next 10 years
4. To become the market leader in four market segments whithin the next 10 years

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 – To double the share price within the next 10 years is most likely to be the primary business objective. The other three options would be typical secondary objectives for Alex plc in pursuit of the primary objective.
4. Not correct

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

Lucy, the managing director of Alex Ltd, has set a primary objective of growth in profits for the company.

She aims to concentrate on product development to support this objective.

Identify whether the following will be suitable secondary objectives to achieve the growth in profits via product development.

i.Bringing in new products

ii.Reducing labour turnover

iii.Investing in research and development

Select ONE answer:

1. i and ii only
2. ii and iii only
3. i and iii only
4. i, ii and iii

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 – Listed under the broad heading of product development, Lucy might choose to bring in new products; develop a product range; invest in research and development; and/or provide products of a certain quality ta a certain price level. If she were concentrating on employees and management to support, her primary objective then she might aim to reduce labour turnover.
4. Not correct

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