CAIE IGCSE Business 0264 - Paper 1

5.3 Profit and loss

Topical Past-Paper Questions

Why it’s here: Revenue, cost of sales, gross profit and profit for the year.

CAIE IGCSE Business 0264 Paper 1 Topic 5.3

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Key concepts to revise

The main ideas to know for 5.3 Profit and loss.

Revenue

Selling price multiplied by quantity sold gives sales revenue.

Gross profit

Revenue minus cost of sales gives gross profit.

Profit for the year

Gross profit minus expenses gives profit for the year.

Using the statement

Results help owners compare performance and make decisions.

About this topic

Profit and loss includes selected 0450 questions that continue to align with the Cambridge IGCSE Business 0264 syllabus.

Keep every answer connected to the business in the case study.

Use the case-study evidence
Develop each explanation fully
Show working for calculations
Justify the final recommendation

Before you begin

1Read the command word
2Check the marks available
3Study every table or figure
4Apply the answer to the business

Exam material

Past-paper questions

Past-paper question 0450/11/M/J/25 [6] marks

PKN manufactures glass. Contributing to sustainable development is important to the business. PKN has factories in 30 countries. It has 27 000 employees. The Managing Director knows PKN has benefited from globalisation. She plans to expand the business using external growth. Retained profit is one source of finance a business could use to fund expansion. Some of PKN’s directors are concerned about possible diseconomies of scale as the business grows. (e) Do you think the advantages of using retained profits to fund business expansion are greater than the disadvantages? Justify your answer. [6]

Open question

Past-paper question 0450/12/M/J/25 [2 + 4] marks

FLD is a furniture retailer. It has 460 shops and 20 000 employees. Internal recruitment is used when recruiting new shop managers. The Managing Director wants to know whether job rotation is the best method of motivation for a large business to use. The Finance Director is reviewing FLD’s income statement. An extract is shown in Table 2.1. She is concerned that FLD’s gross profit is decreasing.

Extract from FLD’s income statement for year ending April 2025 ($ million)

Revenue	400
Gross profit	200
Expenses	60
Profit	140

Table 2.1

a) Define ‘profit’. [2]

b) Identify two expenses a business might have. [2] Expense 1: Expense 2: (c) Outline two possible reasons why FLD’s gross profit is decreasing. [4] Reason 1: Reason 2:

Open question