CIE IGCSE Topical Past Paper 1

1.1 Business activity

0450/12/M/J/2024

Avtar owns a car repair business which operates in the private sector. It is a small business with 2 full-time employees. Avtar wants to find out the best way for a business to increase added value. Avtar’s business needs finance for many reasons. Avtar wants to know how an economic recession might affect his business.

(e) Explain two ways a business can increase added value. Which is likely to be the best way for a business to use? Justify your answer. [6]

045/12/F/M/2024

TCH is a small bakery producing pastries and cakes. It operates in the secondary sector. The added value of TCH’s products has increased since it opened 3 years ago. TCH uses non-financial methods to motivate its 6 employees. TCH’s business objectives have changed since it started up. One of
its new objectives is to expand. Many businesses use external recruitment when they expand.

(a) Define ‘added value’. [2]

045/12/F/M/2024

WFH produces hats and sells them to a mass market. It holds a high level of inventory. The Managing Director is concerned about the liquidity of the business and has been analysing WFH’s financial statements. An extract is shown in Table 2.1. The Managing Director thinks that the business might fail. Other stakeholder groups might also be interested in WFH’s financial statements.

Extract from WFH’s financial statements ($000)
	2021	2022
Current assets	60	50
Inventory	20	30
Trade receivables	25	10
Cash	15	10
Current liabilities	20	40
Profit / loss	15	(10)

Table 2.1

(a) Identify two possible causes of business failure. [2]
Cause 1:
Cause 2: