Practice bank
Every question, cut by section
All 63 questions in this paper in one place, filterable down to a single spec section when you know what you’re bad at — and mixed by default, because the real paper never tells you which section you’re in.
Mode
Every pick reveals its explanation immediately here — right or wrong, and why. Switch to Drill when you want to rehearse the real paper’s pacing instead: a timed countdown, with feedback withheld until the whole set is done.
Pool
From Planning, Finance and Forms of Business
A twenty-year-old bakery chain with a decade of trading accounts and its own freehold premises wants a £30,000 loan to open a new branch. A six-month-old food-delivery app with no trading history and no valuable assets wants the same amount to develop its software. Which one is a bank most likely to lend to on ordinary commercial terms, and why?
From Profit, Liquidity and Business Failure
A business has annual revenue of £600,000 and cost of sales of £350,000. What is its gross profit margin? (VERIDIAN-original scenario, built to reproduce a genuinely verified real exam answer value.)
From External Influences
A business has no outstanding loans or overdraft, and holds a large cash reserve on deposit at a variable interest rate. Assuming its customers' spending is unaffected, what is the most likely direct effect on this business when the central bank raises interest rates?
From Profit, Liquidity and Business Failure
A firm's sales grow by 60% this year after it wins several new large customers, all given 60 days to pay. To meet the extra orders it buys more raw materials and takes on extra staff, both paid within 30 days. Its statement of comprehensive income shows rising profit throughout the year, yet it is struggling to pay its own bills. Which internal cause of business failure does this best illustrate?
From External Influences
Priya's Furniture, a UK-based furniture retailer, imports a shipment of hardwood chairs priced at $13,000 from an overseas supplier. When the order is placed, the exchange rate is £1 = $1.30. By the time payment is due, the pound has depreciated to £1 = $1.10.
What is the approximate increase in the shipment's cost to Priya's Furniture, in pounds, caused by the depreciation? (VERIDIAN-original, same calculation type confirmed across the archive's Calculate/Explain questions.)
From Profit, Liquidity and Business Failure
A firm reports an operating profit margin of 16% for the year — a strong figure for its industry. At the same year end, its current ratio is 1.0 and its acid test ratio is 0.33. What does this tell you about the firm?
From External Influences
A small, family-run bakery faces a large supermarket chain that has just opened an in-store bakery, selling bread at a much lower price than the family bakery can profitably match. Given the family bakery cannot achieve the supermarket's economies of scale, which strategy is most likely to help it compete?
From Profit, Liquidity and Business Failure
A firm's gross profit rises from £40,000 to £50,000 after it cuts its selling price and sells a much larger volume. Its gross profit margin falls from 40% to 25% over the same period. Which statement is correct?
From External Influences
A start-up develops a genuinely new industrial process for manufacturing a material more cheaply than any existing method, and wants exclusive legal rights to use, license or sell that process for a fixed number of years. Which type of intellectual property protection fits this?
From Cash Flow and Budgets
A different bakery's four-month cash-flow forecast shows total cash inflow falling every month (£9,000, then £7,600, £6,300, £5,200), while net cash flow falls from +£1,200 in month 1 to −£1,800 in month 4, with no month recovering.
Which of the following correctly identifies the genuine problem this forecast reveals?
From External Influences
A leather-goods manufacturer starts discharging chemical dye waste into a local river to avoid paying for proper disposal, cutting its costs. Which type of legislation most directly targets a business behaving this way?
From Cash Flow and Budgets
In August, Harlow Bakes' opening cash balance is £600. Cash sales that month total £3,900. Credit sales invoiced in July, £4,600, are received in August. Cash outflows for August total £8,100, including a one-off £3,500 shop refurbishment.
Calculate Harlow Bakes' closing cash balance for August.
From External Influences
A small independent electronics-repair shop competes against a large national chain store that also offers repairs, at a much lower price. The chain's lower price comes from its scale of operations, not from cutting corners on quality. What does this tell the small shop about trying to win a straight price war against the chain?
From Cash Flow and Budgets
Harlow Bakes budgets its July ingredient costs at £2,750. Actual July ingredient costs are £2,950, because flour prices rose unexpectedly during the month.
Which of the following correctly calculates and explains the ingredient-cost variance for July, to the standard a 4-mark Calculate/Explain question on this paper actually credits?
From External Influences
A small design studio creates an original piece of digital artwork and wants to legally stop other businesses copying and reselling it without permission. Which type of intellectual property protection covers this automatically, without the studio needing to register anything?
From Cash Flow and Budgets
Which of the following is a genuine PURPOSE of a budget, as distinct from a difficulty of preparing one?
From External Influences
A UK-based clothing manufacturer sells almost all of its output to overseas retailers, invoiced in pounds sterling, and buys its raw cotton domestically from UK growers. The pound then appreciates sharply against most other currencies. What is the most likely effect on this business?
From Cash Flow and Budgets
Which of the following is a genuine LIMITATION of a cash-flow forecast, rather than one of its uses?
From External Influences
A small manufacturing business has a large bank overdraft it relies on to fund its day-to-day production costs, and holds no significant cash savings. The central bank raises interest rates. What is the most likely direct effect on this business?
From Cash Flow and Budgets
A firm's actual raw-material cost for the month is lower than the budgeted figure, and the quantity produced is unchanged. What is this variance?
From Inventory Control and Quality Management
A factory carries out a single, large, one-off machinery upgrade that cuts its defect rate in half overnight, with no further changes planned. Does this count as Kaizen, and why?
From Cash Flow and Budgets
A finance manager builds next year's marketing budget by starting at £0 and requiring every single item of spend to be justified from scratch, rather than adjusting last year's marketing budget up or down. What type of budget is this?
From Inventory Control and Quality Management
A furniture manufacturer switches from holding roughly three months of timber stock in its own warehouse to a Just In Time system, ordering timber from a single overseas supplier only once a customer order is confirmed. The supplier's shipping lead time is six weeks.
Explain one way in which this change is likely to affect the manufacturer's ability to fulfil an urgent custom order that a customer wants completed within two weeks.
From Cash Flow and Budgets
A bakery sells £4,000 of bread to a café on 30-day credit terms in March. The café pays in April. In which month does this £4,000 count as a CASH inflow on the bakery's cash-flow forecast?
From Inventory Control and Quality Management
A furniture factory sets up regular fortnightly meetings where a small group of workers from the finishing department suggests ways to reduce scratches on painted surfaces. Which term describes this group specifically, and how does it relate to TQM?
From Sales Forecasting and Break-even
The spec (2.3.2.2) separates "factors affecting sales forecasts" from "difficulties of sales forecasting" as two distinct sub-points. Which of the following is a difficulty of sales forecasting itself, rather than simply a factor that can move a forecast up or down?
From Inventory Control and Quality Management
A car-parts manufacturer only checks for faults by testing the finished, assembled part at the end of the line, rejecting any that fail. A rival manufacturer instead requires every worker to check their own part of the assembly against a checklist before passing it on to the next stage. Which pairing correctly labels the two approaches?
From Sales Forecasting and Break-even
Milo's Juice Bar has fixed costs of £8,100 a month. Each smoothie sells for £4.50 and currently costs £1.80 in fruit, ice and packaging (variable cost per unit). A supplier price rise pushes variable cost per smoothie up to £2.10, with selling price and fixed costs unchanged.
Explain the effect of this supplier price rise on Milo's break-even point, using contribution. (VERIDIAN-original, testing the exact 1×AO1 + 2×AO2 + 1×AO3 structure confirmed for 4-mark Explain/Calculate questions on this paper.)
From Inventory Control and Quality Management
A firm's buffer inventory is 250 units. It uses a component at 120 units per week, and its supplier's lead time is 3 weeks. What reorder level should it set?
From Sales Forecasting and Break-even
Milo's budgets to sell 3,750 smoothies this month, with a break-even output of 3,000. What is Milo's margin of safety as a percentage of budgeted sales?
From Inventory Control and Quality Management
A furniture factory currently only checks finished, packaged chairs at the very end of the production line, rejecting any that are faulty. Which quality management approach does this describe, and what is its main structural weakness compared with checking quality at every stage instead?
From Sales Forecasting and Break-even
Milo's Juice Bar has fixed costs of £8,100 a month and a contribution of £2.70 per smoothie. What is its break-even output?
From Inventory Control and Quality Management
A firm switches from holding several months of raw-material stock to a Just In Time system with no buffer inventory held at all. If a single delivery is delayed for any reason, what is the most direct consequence?
From Sales Forecasting and Break-even
Milo's Juice Bar sells a smoothie for £4.50. Variable cost per smoothie (fruit, ice, cup, straw) is £1.80. What is the contribution per smoothie?
From Inventory Control and Quality Management
A firm's buffer inventory is 300 units. It uses a component at a constant rate of 150 units per week, and its supplier's lead time is 2 weeks. At what stock level should it place a new order, so that stock is exactly at buffer level when the delivery arrives?
From Sales Forecasting and Break-even
A bakery predicts it will sell 900 loaves a week for the coming quarter, and uses that number to decide how much flour to order and how many staff to schedule. What is this prediction functioning as?
From Production, Productivity and Capacity
A furniture workshop has a maximum possible output of 4,000 units a year. Demand has fallen sharply and looks set to stay low for the foreseeable future — the workshop only produced 2,000 units last year, 50% capacity utilisation. (VERIDIAN-original stimulus and figures — not a reproduction of any real Pearson question or data.)
Given that the fall in demand looks permanent rather than temporary, which is the most appropriate way for the workshop to improve its capacity utilisation?
From Sales Forecasting and Break-even
A shop sells 1,200 units of a product in a month at £15 each. What is its sales revenue for the month?
From Production, Productivity and Capacity
A furniture company currently uses batch production, with fixed costs of £20,000 a month and a variable cost of £8 per unit. It is considering switching to flow production, which would raise fixed costs to £60,000 a month (financing a dedicated automated line) but cut variable cost to £3 per unit. The company currently produces 6,000 units a month and forecasts demand will rise to 10,000 units a month within two years. (VERIDIAN-original stimulus and figures, written in the style of a WBS12 Calculate/Explain question — not a reproduction of any real Pearson question or data.)
Using the figures given, explain what should happen to the company's choice of production method as its output grows from 6,000 to 10,000 units a month.
From Sales Forecasting and Break-even
A firm's fixed costs rise (a new insurance premium), while its selling price and variable cost per unit are unchanged. What happens to its break-even point?
From Production, Productivity and Capacity
Which of the following firms is most likely to choose capital-intensive over labour-intensive production?
From Sales Forecasting and Break-even
From Production, Productivity and Capacity
A firm currently produces at an output below the level where its average cost is minimised. In the sense the WBS12 spec uses the word, what does moving output up toward that minimum-AC level do to the firm's efficiency?
From Planning, Finance and Forms of Business
Nourish Roots is a two-year-old vertical-farming start-up. It rents its growing space rather than owning any property, and has not yet posted a full year of profit — but food-tech investors have shown strong interest in its growth potential.
Explain why venture capital is likely to be more suitable than a bank loan as a source of external finance for Nourish Roots' next stage of expansion.
From Production, Productivity and Capacity
A call centre's maximum possible output is 10,000 handled calls a month. Last month it handled 8,500 calls. What was its capacity utilisation?
From Planning, Finance and Forms of Business
A private limited company takes out a bank loan of £40,000 to buy new equipment, at a fixed simple interest rate of 6% per year, repaid in full with all interest at the end of 4 years.
What is the total interest paid over the 4 years?
From Production, Productivity and Capacity
A firm currently makes each customer's kitchen to a unique, one-off design — job production. It switches to producing kitchens in batches of 40 identical units before changing the design. What happens to its average setup cost per unit?
From Planning, Finance and Forms of Business
Two friends run a bakery together as an ordinary partnership, with no limited-liability structure. The bakery closes owing £60,000 to suppliers, and its remaining business assets are worth only £15,000. What happens to the remaining £45,000 owed?
From Production, Productivity and Capacity
A firm's labour productivity (output per worker per month) rises, while the wage paid to each worker per month stays exactly the same. What happens to the average variable cost contributed by labour?
From Planning, Finance and Forms of Business
A social enterprise reports a healthy annual profit of £340,000. Is this consistent with its status as a social enterprise?
From Production, Productivity and Capacity
A workshop's maximum possible output is 4,000 units a week. Last week it produced 3,200 units. What was its capacity utilisation?
From Planning, Finance and Forms of Business
Define franchising. (This paper's Define tariff: 2 marks, AO1 only, two distinct components required — no extract reference needed or credited.)
From Production, Productivity and Capacity
A factory switches from making bespoke, one-off furniture (job production) to running a single, continuous line making one standardised chair, non-stop, for months (flow production). What happens to its average setup cost per unit?
From Planning, Finance and Forms of Business
A logistics start-up has traded for four months, owns no property or vehicles of its own (it leases its one delivery van), and has not yet turned a profit. Its founder wants £80,000 to buy warehouse space outright. Which of the following best explains why a bank is unlikely to offer this on ordinary loan terms?
From Profit, Liquidity and Business Failure
Interest rates rise sharply across the economy. A firm that relies on a bank overdraft to fund its day-to-day working capital is affected. Which of the following correctly describes BOTH effects on the firm?
From Planning, Finance and Forms of Business
A profitable five-year-old bakery wants to fund a small equipment upgrade using retained profit from last year, rather than approaching a bank for a loan. What is the main advantage of doing this over borrowing?
From Profit, Liquidity and Business Failure
A retailer's statement of financial position shows current assets of £60,000 (of which £40,000 is inventory) and current liabilities of £60,000 — a current ratio of 1.0 and an acid test ratio of 0.33. The retailer also owns a delivery van, no longer used since switching to a courier service, held as a non-current asset with a market value of £18,000.
Explain the effect of selling the unused delivery van for cash on the retailer's acid test ratio.
From Planning, Finance and Forms of Business
A founder has a strong idea for a new business but hasn't written anything down — no sales forecast, no cash-flow forecast, no stated figure for how much finance she'll need. Before approaching a bank, why does actually writing a business plan matter, beyond just having a good idea?
From Profit, Liquidity and Business Failure
Spec item 2.3.3.3(a) lists 'poor management of cash flow' and 'overtrading' as two separate internal causes of business failure. What is the key difference between them?
From Planning, Finance and Forms of Business
A single founder wants full personal control over every decision, wants to start trading as cheaply and quickly as possible, and is willing to accept that her personal assets would be at risk if the business fails. Which form of business does this describe?
From Profit, Liquidity and Business Failure
A firm is asked to suggest one way to improve its profitability specifically, not simply to increase its profit. Which of the following actually does that?
From Planning, Finance and Forms of Business
A sole trader's business fails owing £15,000 to suppliers, and the business's own remaining assets are worth nothing. Under unlimited liability, what happens to the £15,000 debt?
From Profit, Liquidity and Business Failure
A firm's statement of financial position shows inventories of £47,000, trade receivables of £93,000 and cash of £40,000, against current liabilities of £50,000. What is its acid test ratio? (VERIDIAN-original scenario, built to reproduce a genuinely verified real exam answer value.)