Business Studies Level N Weekly Exam Material

Week: 3
Exam Timetable:

Sunday Monday Tuesday Wednesday Thursday

CA

CA code: 2122-UNH12 Level N Business Studies Continuous Assessment T1 W3

Book Material:
Ch 1
Ch 2.1: LP1, LP2, LP3 (Apps: 1-5)
Ch 2.2: LP1, LP2 (Apps: 1-2)
Ch 2.3: LP1, LP2, LP3 (Apps: 1-4)

Course Revision Material:

Chapter 1; Grid Qs 1-10, Top Qs 1-9
Chapter 2; Grid Qs 1-4, Top Qs 1, 2, 7, 11.

Date 08-09-21 | Level N | 1

 Sample Questions Exam

1. What are the economic sectors and how do they impact the economy?

2. What are the different legal structures?

3. What is limited liability and how is it beneficial?

4. What is the role of a business or enterprise?

5. How does the nature of economic activity influence businesses?

6. How do economies benefit from business activities?

7. What are the ways of adding more value to raw materials?

8. What makes an entrepreneur successful, and what role does he play?

9. Why do some enterprises fail?

10. How is the business environment?

11. What are the similarities between public limited companies and private limited
companies?

12. What are the features of private limited companies (Ltd)?

13. Which of the following information appears in the Articles of Association?

(i) The maximum share capital for which the company seeks authorization
(ii) The internal workings and control of the business
(iii) The names of directors
(iv) The address of the head office

14. What is the main difference between a public and a private limited company?

Date 08-09-21 | Level N | 2

15. What can be said about sole traders?

16. A production that provides services such as banking and insurance is known as:

17. What are the advantages of setting up as a partnership?

18. What are the benefits of industrialization?

19. Define “Free market economy”

20. Give examples of primary production industries.

21. How is it possible for a firm to achieve success?

22. What are social enterprises and what do they aim for?

23. What does the “ triple bottom line” mean?

Date 08-09-21 | Level N | 3

Answers:
1. What are the economic sectors and how do they impact the economy?
Sample question answer:
- The primary sector deals with extracting resources and includes fishing and
mining.
- The secondary sector uses the resources to manufacture and process them and
includes construction and food processing.
- The tertiary sector provides services such as banks and insurance.
The composition of an economy is determined by the extent of business activity under
each sector. For instance, developing or low-income countries rely heavily on the
primary sector, whereas developed countries have a high level of industrialization.

2. What are the different legal structures?

Sample question answer:
- Unincorporated businesses do not have a separate legal entity from their owners
and have unlimited liability and pay income tax. They include sole traders and
partnerships.
- Incorporated businesses are separate legal entities from their owners and they
can sell shares and have limited liability. They pay corporate taxes and include
private and public limited companies. Private limited companies can sell shares
internally whereas public limited companies sell their shares on the stock
market.

3. What is limited liability and how is it beneficial?

Sample question answer:
Limited liability is the condition by which the shareholders of a business are responsible
for the debts of the company only to the extent of their initial investment, without losing
their personal assets. This attracts investors into the business, but requires the company
to control its debts, because in the event of collapse, the shareholders might not be able
to use their personal belongings to cover the debts.

4. What is the role of a business or enterprise?

Sample question answer:
Enterprises exist to transform inputs into outputs of goods and services to satisfy
consumers’ wants or demand. This involves risk-taking and decision-making about why
to set up, who will make decisions, and how to organize the firm’s operations, size, and
type.

5. How does the nature of economic activity influence businesses?

Sample question answer:
The factors of production land, labor, capital, and enterprise are available in limited
quantities, while individuals’ wants are unlimited. This problem of scarcity forces
businesses to choose between given alternatives. The next best alternative that they give
up is referred to as the opportunity cost. To solve this economic problem, decisions
about what, how, and for whom to produce need to be made.

Date 08-09-21 | Level N | 4

6. How do economies benefit from business activities?
Sample question answer:
Enterprises are able to produce goods and services and create job opportunities to raise
the level of employment and the standard of living. By investing in technology, they help
the economy produce better output and become more competitive in international
markets. Enterprises are also able to increase social coherence and improve the skills of
entrepreneurs. Overall, the economy improves when many firms set up as output and
exports increase.

7. What are the ways of adding more value to raw materials?

Sample question answer:
Ways of adding value to raw materials include:
· Raising the selling price but keeping the raw material costs constant (but will
customers still buy?)
· Purchasing cheaper raw materials but keeping selling prices the same (but will
customers notice a reduction in quality?)
· Using raw materials more efficiently so the cost per item falls (but this might need
more accurate machines or more highly trained staff)

8. What makes an entrepreneur successful, and what role does he play?

Sample question answer:
An entrepreneur is someone who takes the financial risk of starting and managing a
new venture.
To be successful, an entrepreneur should have the following characteristics:
· Innovation
· Commitment and self-motivation
· Multi-skills
· Leadership skills
· Self-confidence and an ability to bounce back
· Risk taking

9. Why do some enterprises fail?

Sample question answer:
- Lack of cash to pay for daily expenses and to carry operations
- Poor management due to having unskilled entrepreneurs
- Highly dynamic environment that causes changes in consumers’ tastes, level of
technology, labor market, and competition
- Changes in social and economic factors
- The legal framework
- The lack of accurate records

Date 08-09-21 | Level N | 5

10. How is the business environment?
Sample question answer:
It is dynamic, requiring firms to adapt to external factors, including social, political,
and economic, and continuously change in order to survive.

11. What are the similarities between public limited companies and private limited
companies?
Sample question answer:
limited liability, separate legal identity from that of its owners and continuity.

12. What are the features of private limited companies (Ltd)?

Sample question answer:
a) It is difficult for shareholders to sell shares.
b) It has a separate legal identity.
c) It is owned by shareholders who are often members of the same family.
d) Certain legal formalities are required to set up the business.
e) It is possible to raise capital from selling shares.

13. Which of the following information appears in the Articles of Association?

(i) The maximum share capital for which the company seeks authorization
(ii) The internal workings and control of the business
(iii) The names of directors
(iv) The address of the head office
Sample question answer:
Points (ii) and (iii) only

14. What is the main difference between a public and a private limited company?
Sample question answer:
A public limited company can sell shares to the public, while private ones cannot.

15. What can be said about sole traders?

Sample question answer:
It is difficult to raise additional capital, Owner can keep all profits, Owner’s personal
possessions can be taken to pay off the debts of the business, owner has complete control and
it is mostly used in new set ups and businesses of the sort for example, construction and
retailing services.

16. A production that provides services such as banking and insurance is known as:
Sample question answer:
Tertiary production

Date 08-09-21 | Level N | 6

17. What are the advantages of setting up as a partnership?
Sample question answer:
shared decision-making, additional capital injected by different partners, greater privacy
compared to LTDS and PLC, losses are shared, partners have a variety of skills.

18. What are the benefits of industrialization?

Sample question answer:
a) Higher exports.
b) Higher output
c) Higher standard of living
d) New job opportunities
e) Higher tax revenues to the government
f) Added value to the country’s output of raw materials

19. Define “Free market economy”

Sample question answer:
A free market economy is an economy where economic resources are owned largely by the
private sector with very little state intervention.

20. Give examples of primary production industries.

Sample question answer:
Farming, fishing, mining.

21. How is it possible for a firm to achieve success?

Sample question answer:
- Proper management of staff and business activities
- Proper financial planning and spending
- Appropriate choice and allocation of resources
- Taking risk by considering profitable opportunities
- Informing customers about products through marketing
- Setting achievable objectives

22. What are social enterprises and what do they aim for?
Sample question answer:
Social enterprises are businesses with mainly social objectives that reinvest most of their
profits into benefiting society rather than maximizing returns to owners.
The three objectives of social enterprises are economic (make a profit), social (provide
jobs), and environmental (protect the environment) – which they form what is known as
the “triple bottom line”.

Date 08-09-21 | Level N | 7

23. What does the “ triple bottom line” mean?
Sample question answer:
It refers to the aims of social enterprises and it requires firms to consider their staff and
workforce (people), set environmental targets (planet), and set objectives and take
actions that help the firm generate profit.

Date 08-09-21 | Level N | 8