IGCSE Business Studies Review Exam
Questions and Answers (Verified)
Backward vertical integration - ANSWER-Brings together two firms in the same industry
but one is a supplier to the other e.g. Godiva and cocoa farm.
Bank loan - ANSWER-Finance given by a bank which the business will repay with
interest over an agreed period of time.
Batch production - ANSWER-The production of goods in batches. Each batch passes
through one stage of production before moving onto the next stage.
Capital employed - ANSWER-The value of all long term finance invested in the
business.
Capital intensive production - ANSWER-Production process uses a high quantity of
capital equipment compared with labour input.
Chain of command - ANSWER-The route through which authority is passed down
through an organisation.
Chief Executive Officer - ANSWER-Most senior manager who is responsible for the
overall performance of the organisation.
Competitive pricing - ANSWER-Setting a price similar to that of competitors' products
which are already established in the market.
Conglomerate integration - ANSWER-Brings together two firms who are in completely
different industries e.g. Forever 21 and Starbucks.
Cost plus pricing - ANSWER-Setting price by adding a fixed amount to the cost of
making or buying the product.
Costs of sales - ANSWER-The cost of purchasing the goods used to make the products
sold.
Credit sales - ANSWER-goods sold to customers who will pay for these at an agreed
date in the future.
Current assets - ANSWER-Resources that the business owns and expects to convert
into cash before the next balance sheet date.
Current liabilities - ANSWER-Debts of a business which it expects to pay before that
date of the next balance sheet.
, Current ratio - ANSWER-current assets/current liabilities
Debenture - ANSWER-Bonds issued by companies to raise long term finance usually at
a fixed rate of interest.
Decentralised organisation - ANSWER-All important decision making power is held at
Head Office.
Decentralised organisation - ANSWER-Decision making is passed down the
organization to lower levels.
Decline stage - ANSWER-Sales are falling and the products becomes unprofitable.
Delaying - ANSWER-Reducing the size of the hierarchy by removing on or more levels.
Democratic leadership - ANSWER-Workers take part in decision making.
Dividend - ANSWER-A payment to shareholders as a reward for their investment.
E-commerce - ANSWER-The use of the internet to market and sell goods and services
to customers.
Equity finance - ANSWER-Permanent source of finance provided by the owner of the
business.
External recruitment - ANSWER-Filling vacancy with someone not currently employed
by the business.
Flow production - ANSWER-The production of very large quantities of identical goods
using a continuous moving process.
Forward vertical integration - ANSWER-Brings together two firms in the same industry
but one is a customer of the other e.g. shoe manufacturer and a shoe retailer.
Franchise - ANSWER-A business system where entrepreneur buy the right to use the
name, logo and product of an existing business.
Gross profit - ANSWER-The difference between revenue and cost of sales.
Gross profit margin - ANSWER-gross profit/revenue * 100%
Growth stage - ANSWER-The product is becoming better known and sales are
increasing.
Hierarchy - ANSWER-The number of levels in an organisational structure.
Questions and Answers (Verified)
Backward vertical integration - ANSWER-Brings together two firms in the same industry
but one is a supplier to the other e.g. Godiva and cocoa farm.
Bank loan - ANSWER-Finance given by a bank which the business will repay with
interest over an agreed period of time.
Batch production - ANSWER-The production of goods in batches. Each batch passes
through one stage of production before moving onto the next stage.
Capital employed - ANSWER-The value of all long term finance invested in the
business.
Capital intensive production - ANSWER-Production process uses a high quantity of
capital equipment compared with labour input.
Chain of command - ANSWER-The route through which authority is passed down
through an organisation.
Chief Executive Officer - ANSWER-Most senior manager who is responsible for the
overall performance of the organisation.
Competitive pricing - ANSWER-Setting a price similar to that of competitors' products
which are already established in the market.
Conglomerate integration - ANSWER-Brings together two firms who are in completely
different industries e.g. Forever 21 and Starbucks.
Cost plus pricing - ANSWER-Setting price by adding a fixed amount to the cost of
making or buying the product.
Costs of sales - ANSWER-The cost of purchasing the goods used to make the products
sold.
Credit sales - ANSWER-goods sold to customers who will pay for these at an agreed
date in the future.
Current assets - ANSWER-Resources that the business owns and expects to convert
into cash before the next balance sheet date.
Current liabilities - ANSWER-Debts of a business which it expects to pay before that
date of the next balance sheet.
, Current ratio - ANSWER-current assets/current liabilities
Debenture - ANSWER-Bonds issued by companies to raise long term finance usually at
a fixed rate of interest.
Decentralised organisation - ANSWER-All important decision making power is held at
Head Office.
Decentralised organisation - ANSWER-Decision making is passed down the
organization to lower levels.
Decline stage - ANSWER-Sales are falling and the products becomes unprofitable.
Delaying - ANSWER-Reducing the size of the hierarchy by removing on or more levels.
Democratic leadership - ANSWER-Workers take part in decision making.
Dividend - ANSWER-A payment to shareholders as a reward for their investment.
E-commerce - ANSWER-The use of the internet to market and sell goods and services
to customers.
Equity finance - ANSWER-Permanent source of finance provided by the owner of the
business.
External recruitment - ANSWER-Filling vacancy with someone not currently employed
by the business.
Flow production - ANSWER-The production of very large quantities of identical goods
using a continuous moving process.
Forward vertical integration - ANSWER-Brings together two firms in the same industry
but one is a customer of the other e.g. shoe manufacturer and a shoe retailer.
Franchise - ANSWER-A business system where entrepreneur buy the right to use the
name, logo and product of an existing business.
Gross profit - ANSWER-The difference between revenue and cost of sales.
Gross profit margin - ANSWER-gross profit/revenue * 100%
Growth stage - ANSWER-The product is becoming better known and sales are
increasing.
Hierarchy - ANSWER-The number of levels in an organisational structure.
