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Edexcel GCSE
Business Studies (Short Course)
Unit 6: Introduction to Small Business

Tuesday 10 January 2012 – Afternoon Paper Reference

Time: 45 minutes 5BS06/01

You do not need any other materials. Total Marks

Instructions
t Use black ink or ball-point pen.
t Fill in the boxes at the top of this page with your name,
centre number and candidate number.
t Answer all questions.
t – there may bequestions
Answer the in the spaces provided
more space than you need.

Information
t The total mark for this paper is 40.
t – use this asfora guide
The marks each question are shown in brackets
as to how much time to spend on each question.
t written
Questions labelled with an asterisk (*) are ones where the quality of your
communication will be assessed
– you should take particular care with your spelling, punctuation and grammar, as
well as the clarity of expression, on these questions.
t A calculator may be used.

Advice
t Keep
Read each question carefully before you start to answer it.
t Try toananswer
eye on the time.
t Check your answers
every question.
t if you have time at the end.
Turn over

P40493A
©2012 Pearson Education Ltd.
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5/5/3/3
 Answer ALL the questions.

Some questions must be answered with a cross in a box . If you change your mind about an
answer, put a line through the box and then mark your new answer with a cross .
1 Which one of the following is the definition of innovation?
Select one answer:

A Bringing a new idea to market

B Taking a calculated risk
C The process of thinking ahead
D Developing competitive advantage

(Total for Question 1 = 1 mark)

2 Which two of the following are methods of protecting business ideas?
Select two answers:

A Franchising
B Limited liability
C Copyright
D Business plan
E Patent

(Total for Question 2 = 2 marks)

3 Which two of the following are examples of market segments for a small sports
retailer?
Select two answers:

A Rival sports retailers in the same area

B Young members of local sports teams
C A questionnaire conducted with customers
D Individuals with interests in specialist sports
E An advertisement in a local newspaper

(Total for Question 3 = 2 marks)

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Question 4 is based on the information below:

Cocoa is a commodity which is traded on world markets. Cocoa is used in different

industries, such as food and confectionery.

The chart shows the falling price of cocoa between December 2009 and June 2010.

Price of Cocoa
800

700
Cents per kilo

600

500

400
Price
300

200
10
09

0
0

10
10

-1
-1

r-1

-
c-

n-
ay
n-

ar
b

Ap
De

Fe

Ju
Ja

Month

4 Which three of the following are the most likely causes of the fall in the price of
cocoa?
Select three answers:

A Less supply of cocoa by African producers

B Higher demand for cocoa by European chocolate manufacturers
C Increased awareness of the possible dangers of cocoa consumption
D Good harvests of cocoa in producer countries
E Rising consumption of goods for which cocoa is an ingredient
F Greater demand for cocoa substitutes

(Total for Question 4 = 3 marks)

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Questions 5 and 6 are based on the information below:

Hayley Franks wants to own and run her own shoe shop. She can set up as a sole
trader or as a franchise with a major UK shoe brand. Research shows that the
franchise has an 80% success rate. The sole trader has a 50:50 chance of survival.

5 Using the principle of calculated risk, which decision should Hayley make?
Select one answer:

A Don’t choose either option as both have a chance of failing

B Choose the franchise as it is the least risky option
C Choose to start as a sole trader as she will keep all profits made
D Choose to start as a sole trader as there is a 50% chance of success

(Total for Question 5 = 1 mark)

6 Hayley decides to produce a business plan to help minimise the risk when starting up
her business.
Which two of the following would not be necessary to include in her business plan?
Select two answers:

A Name and addresses of all employees

B A summary of market research she has carried out
C A cash flow forecast
D Photograph of the business owner
E An overview of the nature of the business

(Total for Question 6 = 2 marks)

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 BLANK PAGE

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Questions 7 to 9 are based on the information below.
The following table shows Hayley’s cash flow forecast for April to June.
7 Fill in the four blanks to complete the table.

April May June

Receipts (£) 17 000 22 000 (1)
Payments (£)
Raw materials 8 500 10 000 11 000
Fixed costs 2 000 2 000 (1)
Other costs 3 400 4 100 3 900
Total payments 13 900 16 100 16 900
Net cash flow 3 900 5 100 (1)
Opening balance 1 500 4 600 8 500
Closing balance 4 600 13 600 (1)

(Total for Question 7 = 4 marks)

8 According to the information in the cash flow forecast, which two conclusions can be
drawn from the data?
Select two answers:

A Total net cash flow from May to June will be £9 000

B A bank would be likely to grant the business an overdraft
C Hayley’s business will make a profit of £13 600 in June
D ‘Other costs’ will decrease from April to June
E The cash flow for July to December will be positive

(Total for Question 8 = 2 marks)

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9 Hayley imports all her stock from the USA.
What would be two effects on the business if the pound weakened against the dollar
by 20%, assuming all other costs and receipts remain the same?
Select two answers:

A Fixed costs would increase by 20%

B Total costs would increase
C Hayley could charge a lower price for her shoes
D Raw materials costs would fall by 20%
E The net cash flow position of the business would worsen

(Total for Question 9 = 2 marks)

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Please read the passage below carefully and then answer questions 10 and 11 which both
relate to the passage.

Job Advertisement
Trainee Accountant

Hammills Accountants are looking to appoint a young trainee accountant.

Candidates should have 5 GCSEs at A*-C, including Maths and English, plus at
least two A-Levels at grade C or higher.
Experience is desirable but not essential as full training is given.
The successful candidate must be aged between 18 and 25 and will be expected
to work as part of a team.
Applicants should not have any record of illness in the previous 12 months.

Hammills Accountants received nine applications for the post. Two candidates –
Amandeep and David – were shortlisted for interview.
David arrived at the interview in his wheelchair. Following the interview the owner of
the business decided to appoint Amandeep, even though her qualifications were not as
good as David’s. The owner felt that Amandeep did better in the interview. He was also
worried that David’s wheelchair would put him at a disadvantage.
10 Which two of the following broke employment legislation in this recruitment process?
Select two answers:

A Requiring candidates to have specific qualifications

B Not appointing the candidate with the best qualifications
C Rejecting David due to his disability
D Advertising for a trainee accountant aged between 18 and 25
E Stating that experience is desirable

(Total for Question 10 = 2 marks)

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11 When recruiting staff employers need to ensure they find someone with the right
skills and attitudes.
Which two of the following are examples of the employee attitudes that might be
desirable for Hammills?
Select two answers:

A A willingness to undertake training

B Having experience of similar work
C Being able to operate different office equipment
D Having a range of academic qualifications
E Being prepared to work as part of a team

(Total for Question 11 = 2 marks)

12 Some businesses produce goods whilst others produce services.
Which two of the following are examples of goods?
Select two answers:

A A bus journey
B Freshly-prepared sandwiches
C A newspaper
D Haircut
E Computer repairs

(Total for Question 12 = 2 marks)

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Question 13 is based on the information below:

Andrew Plant lost his job as a fitness instructor at a local gym. He always wanted
to run his own business. He was keen to use his interest in cooking. Andrew had a
talent for producing high quality desserts.
He decided to set up a business, with three friends, as a private limited company
supplying desserts to local restaurants.

13 Identify one advantage to Andrew of setting up as a private limited company rather

than starting as a sole trader.
Select one answer:

A All profits will go to Andrew

B Andrew has total control of the business
C Less risk due to limited liability
D Fewer legal requirements

(Total for Question 13 = 1 mark)

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Questions 14 and 15 are based on the information below:

A business has the following cost and price information:

Variable Costs:

t Raw materials – £2.70 per unit

t Packaging – £1.20 per unit

t Delivery – £0.50 per unit

Fixed Costs:

t £450 per month

The selling price for each unit of output is £10

14 The business produces 500 units in one month. What is the total monthly value of
variable costs?
Select one answer:

A £4.40
B £454.40
C £1 350
D £2 200

(Total for Question 14 = 1 mark)

15 If the business sells 500 units but its fixed costs rise by £200, what is its monthly
profit?
Select one answer:

A £2 150
B £2 350
C £2 550
D £2 600

(Total for Question 15 = 1 mark)

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Question 16 is based on the information below:

Hardacres is a small family-run hardware business. It has one shop which provides
a range of household equipment.
The business has taken out a bank loan of £25 000 in order to carry out
improvements to the shop. The bank charges Hardacres an interest rate of 8.5%
on the loan.

16 The bank increases the rate of interest on Hardacres loan to 10.5%.

Identify one effect of this change on the business.
Select one answer:

A An increase in cash outflows

B Higher National Insurance payments
C Lower variable costs
D Lower Value Added Tax (VAT) payments

(Total for Question 16 = 1 mark)

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17 Match the definition on the left with the correct term on the right.
Show your answers by drawing a line from the definition on the left, to the matching
term on the right. If you change your mind about an answer, cross the line out and
draw a new line to mark your new answer.

Definition

A business that agrees to Term

manufacture, distribute or provide a i
branded product under licence A Market gap

Where no business is currently B Customer needs

serving the needs of customers for a ii
particular product C Innovation

D Invention
The wants and desires of buyers of a
iii
product
E Lateral thinking

F Goods
Thinking differently to try and find
iv
new and unexpected ideas
G Franchisee

The discovery of potential new H Market segment

products, typically after a period of v
research

(Total for Question 17 = 5 marks)

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Read the passage below carefully and then answer the following question which
relates to the passge.

Maria Stone and her partner operate a private limited company making
customised jewellery. The business has been successful and they are thinking of
expanding. They need to raise £75 000.
The bank is prepared to lend them the required £75 000 at an interest rate of
5%. Alternatively, they could decide to sell more shares in the business and raise
£75 000.

*18 Which of the options do you believe would be most appropriate? Justify your choice.
Choose one option (tick one box only)

Bank loan

Sale of shares

. . . . . . . . . . . . ................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ ............................................................................................................................... .. . . . . . . . . . . . . . . . . .

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(Total for Question 18 = 6 marks)

TOTAL FOR PAPER = 40 MARKS

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