What this practice covers
These questions are drawn from past CIE 0264 Business papers and filtered to business finance. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on business finance, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Giving retained profit as a source for a brand new business. It has not traded, so there is no profit to retain.
- Suggesting share capital for a sole trader or a partnership. Only a company has shares to sell.
- Confusing leasing with hire purchase. Hire purchase ends in ownership, leasing never does.
- Saying working capital is the same as cash. Cash is one part of current assets, and working capital is what is left after current liabilities come off.
- Saying a profitable business cannot run short of working capital. It can, whenever customers pay later than suppliers must be paid.
- Answering "which source" with a list of every source and no choice. The recommendation mark needs a decision.
- Justifying a recommendation only by cost. The amount, the time period and the legal form rule options out first.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Business finance revision notes.