Test Revision

Question 1

Ethical

Answer 1

morally correct behaviour e.g. treating workers and the environment well

Question 2

Market capitalisation

Answer 2

the value of a company as measures by the stock market.
Market Capitalisation = Number of shares x share price

Question 3

Private Limited Company

Answer 3

A limited liability business where shares are not
freely available for sale, decisions can be made by the owners. They are usually small or medium sized firms but there are exceptions e.g. Virgin.

Question 4

Fair Trade

Answer 4

Buying raw materials at a price that allows a reasonable standard of living for the suppliers and often above at the market price.

Question 5

Non-profit organisations

Answer 5

An incorporated organization which exists for the
interests of its members or as a charity, so there are no shareholders only trustees benefit financially. E.G. Kimbolton School

Question 6

What is a Share?

Answer 6

A certificate indicating part ownership of a company. The share entitles the holder to receive dividends and voting rights to affect the way the firm is run.

Question 7

Define “the transformation process”

Answer 7

describes what happens inside the business. This is where value is added to inputs to create outputs

Question 8

Dividends

Answer 8

a portion of the profits of the firm given to shareholders

Question 9

Define Growth

Answer 9

the increase over time of the revenue of a business. Economic growth refers to the increase in size of the whole economy i.e. the sales of all the businesses in a nation.

Question 10

Limited liability

Answer 10

Shareholders can only lose the money invested in the company not
their entire personal wealth if the business collapses with debts. Limited liability is shown by either Ltd or plc

Question 11

Private sector

Answer 11

Any organisation that is not government run or owned.

Question 12

Public sector organisations

Answer 12

Government-owned organisations.

Question 13

State the revenue formula.

Answer 13

Revenue = Price x quantity sold

Question 14

Shareholder

Answer 14

Part-owners of a business who can vote at the AGM and receive
dividends.

Question 15

Shareholder

Answer 15

Part-owners of a business who can vote at the AGM and receive
dividends.

Question 16

Define a business

Answer 16

an organisation that exists to provide goods and services on a commercial basis to customers

Question 17

Define fixed costs.

Answer 17

Costs that do not change directly with the level of output

Question 18

What are public limited companies?

Answer 18

Large firm whose shares can be bought and sold by the general public on the Stock Exchange. The owners appoint managers to run the business.

Question 19

Define a Sole Trader.

Answer 19

An individual who owns and runs a business. S/he operates under unlimited liability so are personally responsible for all business debts

Question 20

What does CELL stand for?

Answer 20

Capital, Enterprise, Land. Labour

Question 21

What is the added value formula?

Answer 21

Added value = selling price – the cost of bought in materials, components and services

Question 22

What is the total costs formula?

Answer 22

Total costs = Fix costs + variable costs

Question 23

Define profit

Answer 23

Is the difference between a firm’s revenues from its trading activities and its total costs. It is a reward for risk and a return on capital invested.

Question 24

Variable costs

Answer 24

Costs that change directly with output. They will increase by a set amount each time a new unit is made.

Question 25

Define revenue.

Answer 25

the income generated by sales of a product