AQA A-LEVEL BUSINESS EXAM PAPER
QUESTIONS AND ANSWERS
Why businesses exist - ANSWER✔️Can make you money and you can be your own boss
Mission - ANSWER✔️a business aim expressed to make it seem especially purposeful and
motivating
Objectives - ANSWER✔️SMART Specific, Measurable, Achievable, Realistic, Time-bound
Why businesses set objectives - ANSWER✔️- it is motivating to have a goal to aim toward
- as a boss you can not make every decision
Profit - ANSWER✔️Revenue - total costs
What are the 5 types of business - ANSWER✔️-sole traders
-private limited companies (LTD)
-Public limited companies (PLC)
,-Private and public sector organisations
- non-profit organisations (charities)
Sole traders - ANSWER✔️a business that is owned and operated by one person
Private Limited Company (Ltd) - ANSWER✔️A small to medium sized company, owned by
shareholders who have limited liability. The company cannot sell its shares to the general public.
Private Limited Company Advantages - ANSWER✔️-Limited liability
-Additional capital can be raised by selling shares (not to the general public)
-Separate legal existence to the owner
-Higher business status to sole trader
Private limited company Disadvantages - ANSWER✔️-You have to publish the account
information
-You need two share of £1 each
Public limited company (plc) - ANSWER✔️A limited company with more that £50,000 of share
capital. Any member of the public can buy shares. Public companies must publish more detailed
accounts
Public limited company Advantages - ANSWER✔️-Raising capital through public issue of shares
-Offering shares to the public spreads risk
-Banks are more likely to lend money to PLC's
-More growth and expansion opportunities
-Having PLC at the end of your business name gives a better image
-Shares are more easily transferred so shareholders are happier
-Separate legal entity to the owner
public limited company Disadvantages - ANSWER✔️-More regulations that could increase costs
-Higher level of transparency needed
-Must start with £50,000 share capital
Private sector organisations - ANSWER✔️Organisations owned by individuals or companies
Public sector organisations - ANSWER✔️Businesses owned by the government.
Non-profit organisations - ANSWER✔️Businesses with a motive other than profit, may be to
provide a social benefit or service to society or to support a cause.
Share capital - ANSWER✔️The total value of capital raised from shareholders by the issue of
shares
Role of Shareholders - ANSWER✔️to raise important issues with the board directors and raise
funds
, Why shareholders invest - ANSWER✔️-Annual dividend payments
-A rise in the value of shares
Market capitalisation - ANSWER✔️Number of issued shares x current share price
Influences on the price of shares - ANSWER✔️-The profit after tax of the company x the value
investors place on on those earnings
Significance of share price changes - ANSWER✔️High = cheap and easy to obtain more share
capital
Low = unlikely to raise any extra share capital
What are the 6 external factors affecting businesses - ANSWER✔️-Market conditions
-Competition
-Changes in household incomes
-Changes in interest rates
-Demographic factors
-Environmental issues
Market Conditions - ANSWER✔️-The number of competitors in a particular market
-The intensity of competitiveness
-Total market available
-The rate at which the market is growing
Competition - ANSWER✔️The tighter the economic and market conditions, the greater the
competitive pressures tend to be
Factors that effect household incomes - ANSWER✔️-Changes in the real income of the main
income earner
-The number of people in the household that work
-The impact of government decisions on taxation and benefits
Changes in interest rates - ANSWER✔️If interest rates go up, businesses and individuals spend
less. If interest rates go down, businesses and individuals spend more.
Demographic factors - ANSWER✔️-Population size
-Age
-Gender
-Ethnicity
Environmental issues and fair-trade - ANSWER✔️Concern for green issues and ethical issues
involved with business.
QUESTIONS AND ANSWERS
Why businesses exist - ANSWER✔️Can make you money and you can be your own boss
Mission - ANSWER✔️a business aim expressed to make it seem especially purposeful and
motivating
Objectives - ANSWER✔️SMART Specific, Measurable, Achievable, Realistic, Time-bound
Why businesses set objectives - ANSWER✔️- it is motivating to have a goal to aim toward
- as a boss you can not make every decision
Profit - ANSWER✔️Revenue - total costs
What are the 5 types of business - ANSWER✔️-sole traders
-private limited companies (LTD)
-Public limited companies (PLC)
,-Private and public sector organisations
- non-profit organisations (charities)
Sole traders - ANSWER✔️a business that is owned and operated by one person
Private Limited Company (Ltd) - ANSWER✔️A small to medium sized company, owned by
shareholders who have limited liability. The company cannot sell its shares to the general public.
Private Limited Company Advantages - ANSWER✔️-Limited liability
-Additional capital can be raised by selling shares (not to the general public)
-Separate legal existence to the owner
-Higher business status to sole trader
Private limited company Disadvantages - ANSWER✔️-You have to publish the account
information
-You need two share of £1 each
Public limited company (plc) - ANSWER✔️A limited company with more that £50,000 of share
capital. Any member of the public can buy shares. Public companies must publish more detailed
accounts
Public limited company Advantages - ANSWER✔️-Raising capital through public issue of shares
-Offering shares to the public spreads risk
-Banks are more likely to lend money to PLC's
-More growth and expansion opportunities
-Having PLC at the end of your business name gives a better image
-Shares are more easily transferred so shareholders are happier
-Separate legal entity to the owner
public limited company Disadvantages - ANSWER✔️-More regulations that could increase costs
-Higher level of transparency needed
-Must start with £50,000 share capital
Private sector organisations - ANSWER✔️Organisations owned by individuals or companies
Public sector organisations - ANSWER✔️Businesses owned by the government.
Non-profit organisations - ANSWER✔️Businesses with a motive other than profit, may be to
provide a social benefit or service to society or to support a cause.
Share capital - ANSWER✔️The total value of capital raised from shareholders by the issue of
shares
Role of Shareholders - ANSWER✔️to raise important issues with the board directors and raise
funds
, Why shareholders invest - ANSWER✔️-Annual dividend payments
-A rise in the value of shares
Market capitalisation - ANSWER✔️Number of issued shares x current share price
Influences on the price of shares - ANSWER✔️-The profit after tax of the company x the value
investors place on on those earnings
Significance of share price changes - ANSWER✔️High = cheap and easy to obtain more share
capital
Low = unlikely to raise any extra share capital
What are the 6 external factors affecting businesses - ANSWER✔️-Market conditions
-Competition
-Changes in household incomes
-Changes in interest rates
-Demographic factors
-Environmental issues
Market Conditions - ANSWER✔️-The number of competitors in a particular market
-The intensity of competitiveness
-Total market available
-The rate at which the market is growing
Competition - ANSWER✔️The tighter the economic and market conditions, the greater the
competitive pressures tend to be
Factors that effect household incomes - ANSWER✔️-Changes in the real income of the main
income earner
-The number of people in the household that work
-The impact of government decisions on taxation and benefits
Changes in interest rates - ANSWER✔️If interest rates go up, businesses and individuals spend
less. If interest rates go down, businesses and individuals spend more.
Demographic factors - ANSWER✔️-Population size
-Age
-Gender
-Ethnicity
Environmental issues and fair-trade - ANSWER✔️Concern for green issues and ethical issues
involved with business.
