Mini practice paper: 8 questions
Mixed-difficulty questions from across the Business Studies syllabus. Tap "Show answer" after each to check yourself.
Q1 · Difficulty 1/3
Which of the following best describes the purpose of a cash flow forecast?
- To show the assets and liabilities of a business at one point in time
- To record all transactions that have already occurred
- To calculate the annual profit made by a business
- To estimate future cash inflows and outflows over a period
Show answer & explanation
✓ Answer: D — To estimate future cash inflows and outflows over a period
A cash flow forecast estimates expected future cash inflows and outflows, helping businesses plan for periods of cash shortage. Option B describes bookkeeping or accounting records of past transactions. Option C describes an income statement (profit and loss account). Option A describes a balance sheet.
Q2 · Difficulty 1/3
A business has total revenue of $150,000 and total costs of $110,000. What is its profit?
- $260,000
- $40,000
- $110,000
- $15,000
Show answer & explanation
✓ Answer: B — $40,000
$40,000 is correct because Profit = Total Revenue − Total Costs = $150,000 − $110,000 = $40,000. Option C restates total costs only. Option D divides revenue by 10, which has no basis in the formula.
Q3 · Difficulty 1/3
Which of the following best defines 'contribution' in break-even analysis?
- Selling price per unit minus variable cost per unit
- Total revenue minus total costs of the business
- Fixed costs divided by the number of units sold
- Total revenue minus fixed costs of the business
Show answer & explanation
✓ Answer: A — Selling price per unit minus variable cost per unit
Contribution per unit = Selling price per unit − Variable cost per unit. It shows how much each unit sold contributes towards covering fixed costs and then profit. Option D describes profit, Option B describes fixed cost per unit, and Option C incorrectly subtracts only fixed costs from revenue.
Q4 · Difficulty 2/3
A factory produces 500 units and its total costs are $10,000. Its fixed costs are $4,000. What is the variable cost per unit?
- $16.00 per unit
- $20.00 per unit
- $8.00 per unit
- $12.00 per unit
Show answer & explanation
✓ Answer: D — $12.00 per unit
Variable costs = Total costs − Fixed costs = $10,000 − $4,000 = $6,000. Variable cost per unit = $6,000 ÷ 500 = $12.00. Option B divides total costs by 500 incorrectly. Option D divides total costs by fixed costs. Option A confuses total cost per unit with variable cost per unit.
Q5 · Difficulty 2/3
On a break-even chart, what does the area between the total revenue line and the total costs line represent when output is below the break-even point?
- The margin of safety for the business
- The loss made by the business
- The profit made by the business
- The fixed costs of the business
Show answer & explanation
✓ Answer: B — The loss made by the business
Below break-even output, total costs exceed total revenue, so the gap between the two lines represents a loss. Above break-even, the gap represents profit. The margin of safety is a measure of output difference, not the gap between cost and revenue lines. Fixed costs are shown as a separate horizontal line.
Q6 · Difficulty 2/3
Which of the following is a consequence of a business operating significantly below its full production capacity?
- Fixed costs are spread over fewer units, increasing average cost per unit
- Variable costs per unit increase as output falls
- The business produces more output than the market demands
- Fixed costs are spread over more units, reducing average cost
Show answer & explanation
✓ Answer: A — Fixed costs are spread over fewer units, increasing average cost per unit
When a business operates below full capacity, it produces fewer units but fixed costs remain the same, so each unit bears a larger share of fixed costs, raising average cost per unit. Option A describes the benefit of operating at or near full capacity. Option B describes overproduction. Option D is incorrect because variable costs per unit remain constant regardless of output level at IGCSE level.
Q7 · Difficulty 3/3
Analyse how lean production can reduce costs in a car factory.
- It cuts waste in stock, time and defects, so fewer resources make the same output
- It increases stock levels, so production never has to stop for parts
- It uses more workers on each task, so mistakes become less likely
- It raises prices, so the factory earns more on each car it sells
Show answer & explanation
✓ Answer: A — It cuts waste in stock, time and defects, so fewer resources make the same output
Award 1 mark. Lean methods such as just-in-time and kaizen remove waste: less money is tied up in stock, less time is lost waiting, and fewer cars need reworking.
Q8 · Difficulty 3/3
Site X costs $50,000 a year in rent and $30,000 in transport. Site Y costs $35,000 in rent and $55,000 in transport, but the government offers a $15,000 yearly grant there. Which site is cheaper, and by how much?
- Site X, by $10,000 a year
- Site Y, by $15,000 a year
- Site Y, by $5,000 a year
- Site X, by $25,000 a year
Show answer & explanation
✓ Answer: C — Site Y, by $5,000 a year
Award 1 mark. X costs $80,000. Y costs $90,000 − $15,000 = $75,000, so Y is $5,000 cheaper. Without the grant, X would be cheaper by $10,000.
CIE IGCSE Business Studies FAQ
What does the CIE IGCSE Business Studies exam look like?
The CIE IGCSE Business Studies exam is structured across 3 components. Paper 1 (Multiple Choice): 40 multiple-choice questions, 1 mark each. 45 minutes. Tests breadth of knowledge. Paper 2 (Core) / Paper 4 (Extended): Structured written paper. 1 hour 30 minutes (Core) or 1 hour 45 minutes (Extended). Tests depth of understanding and application. Paper 6 (Alternative to Practical): Written paper assessing practical skills for candidates without lab access. 1 hour. Worth ~20% of the total. Total exam time: ~3 hours, depending on tier (Core vs Extended).
Can I download a free CIE IGCSE Business Studies past paper?
Real CIE past papers are published directly by CIE on their official website. Kramizo doesn't redistribute copyrighted past papers, but we do generate free AI-written practice papers in the exact same style — same command words, same difficulty tier, same mark conventions. Use this practice paper as warm-up, then time yourself on official past papers before exam day.
How is CIE IGCSE Business Studies graded?
Grades: A* (highest) to G (lowest), with U (ungraded). Most universities require C or above. Kramizo's practice questions are tagged with difficulty 1-3 mapping roughly to the lower, middle, and top grade boundaries you'll encounter in the real exam.