Lesson 3.1.1

3.1.1 Understanding the nature and purpose of business Quiz: AQA Business, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Lesson 3.1.1, Understanding the nature and purpose of business: 20 multiple choice questions for the AQA Business (7132), Unit 1: What is business?, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. Which statement best describes a business's mission?

    • A numerical target for sales revenue in the next financial year
    • The overall purpose and long-term direction of the business, which guides its objectives
    • The price at which shares are first offered to the public
    • A list of the business's legal obligations under company law

  2. Which of the following is a social objective of a business?

    • Holding a cash balance of at least 50,000 at all times
    • Providing safe working conditions and fair pay for employees
    • Increasing market share by 5% within two years
    • Reducing fixed costs by 10% in the next quarter

  3. How is profit calculated?

    • Total revenue minus total costs
    • Fixed costs minus variable costs
    • Total revenue plus total costs
    • Total costs divided by total revenue

  4. Which of these is a variable cost?

    • Insurance premium paid on the company premises
    • Salary of the full-time finance manager
    • Annual rent on the factory building
    • Raw materials used in production that rise with each unit made

  5. Revenue is also known as which of the following?

    • Turnover or sales
    • Capital or equity
    • Profit or surplus
    • Gross margin or contribution

  6. Which of these is an example of a fixed cost?

    • Fuel for delivery vans, charged by mileage
    • Monthly rent paid for a leased warehouse
    • Commission paid for each unit sold
    • Packaging materials used per customer order

  7. Which best describes a cash flow objective?

    • Maximising the net profit reported in the income statement
    • Ensuring enough cash comes in to meet payments as they fall due
    • Reducing the number of shares issued to shareholders
    • Increasing the value of assets held on the balance sheet

  8. A business has revenue of 240,000, variable costs of 96,000 and fixed costs of 84,000. What is its profit?

    • 60,000
    • 156,000
    • 144,000
    • 36,000

  9. A business sells 5,000 units at 12 each. Variable cost is 5 per unit and fixed costs are 15,000. What is the profit?

    • 45,000
    • 20,000
    • 40,000
    • 35,000

  10. A newly opened cafe is losing money and may close within months. Which objective is most likely to take priority?

    • Expansion into export markets within the first year
    • Growth, by opening several new branches at once
    • Survival, by keeping enough cash to stay open
    • A reputation award for social enterprise

  11. A business accepts higher costs to source ingredients ethically. Which type of objective does this decision mainly reflect?

    • A liquidity objective
    • An ethical objective
    • A profit maximisation objective
    • A growth objective

  12. A business reports revenue of 500,000 and total costs of 430,000. What is its profit as a percentage of revenue?

    • 70%
    • 86%
    • 14%
    • 16%

  13. A business makes a healthy profit but struggles to pay wages on time. Which explanation is most accurate?

    • Profit includes dividends paid to shareholders
    • Profit is recorded when sales are made, but cash arrives only when customers pay, so credit sales delay receipts
    • Cash flow includes depreciation, which lowers profit
    • Cash flow excludes all fixed costs by definition

  14. A business's mission is to be the most trusted supplier in its market. Which statement best shows how its objectives follow from this mission?

    • Objectives replace the mission once a target has been met
    • Objectives are set independently of the mission and never need to match it
    • Objectives are set only by shareholders and ignore the mission
    • Objectives translate the mission into specific, measurable targets, such as a customer satisfaction score of 90%

  15. A business sells 8,000 units at a price of 25 each. Variable cost is 15 per unit and fixed costs are 40,000. What are its total costs?

    • 120,000
    • 200,000
    • 40,000
    • 160,000

  16. Why might a profit-maximising objective conflict with a social objective?

    • Cutting costs to maximise profit may mean reducing pay or safety spending, which lowers social performance
    • Social objectives apply only to non-profit organisations
    • Social objectives always increase profit, so the two never conflict
    • Profit objectives are set by law, while social objectives are optional

  17. A business sets a growth objective of doubling revenue within three years while also aiming to protect survival. What is the best evaluation of this combination?

    • Rapid growth may strain cash flow and threaten survival, so the business must prioritise its objectives
    • Growth objectives are valid only for public sector bodies
    • Survival objectives make growth objectives impossible to set
    • Growth and survival always reinforce each other with no trade-off

  18. Which argument best supports the view that profit is not the only measure of business success?

    • Profit can only be measured using variable costs
    • Profit is irrelevant because shareholders never receive dividends
    • Success is defined only by the number of employees
    • Social and environmental outcomes can matter to stakeholders even when they do not raise short-term profit

  19. Total costs rise from 200,000 to 230,000 when output rises from 10,000 to 12,000 units, with fixed costs unchanged. What is the variable cost per unit?

    • 30
    • 15
    • 20
    • 11.50

  20. A business has revenue of 100,000 and costs of 80,000, giving profit of 20,000. Revenue then rises 20% and costs rise 30%. What is the new profit?

    • 36,000
    • 20,000
    • 16,000
    • 24,000

All AQA Business quizzes