Edexcel GCSE Business 2027 Predicted Practice Paper — Paper 1

Answer ALL questions. Write your answers in the spaces provided. You must write down all the stages in your working.

Section A

Theme 1 short-answer and calculation questions. Answer all questions in Sections A, B and C.

• 1

  Question SECTION-A1 (1 mark)

  Which of the following best describes an entrepreneur?

  A. A person who lends money to a bank in return for interestB. A person who takes a financial risk to set up and run a businessC. A government official who regulates new businessesD. An employee who is paid a fixed salary each month

  (Total for Question SECTION-A1 is 1 mark)
• 2

  Question SECTION-A2 (1 mark)

  A sole trader has unlimited liability. Which statement correctly explains what this means?

  A. The business can sell an unlimited number of shares to the publicB. The owner can employ an unlimited number of staffC. The owner is personally responsible for all the business's debtsD. The business pays no tax on its profits

  (Total for Question SECTION-A2 is 1 mark)
• 3

  Question SECTION-A3 (1 mark)

  Which of the following is an example of a fixed cost for a small cafe?

  A. The cost of coffee beans usedB. Monthly rent on the premisesC. Wages paid per hour to casual staffD. The cost of takeaway cups

  (Total for Question SECTION-A3 is 1 mark)
• 4

  Question SECTION-A4 (1 mark)

  Which document sets out a business's expected inflows and outflows of cash over a future period?

  A. A cash-flow forecastB. A market mapC. A business plan mission statementD. A profit-sharing agreement

  (Total for Question SECTION-A4 is 1 mark)
• 5

  Question SECTION-A5 (1 mark)

  Which of the following is the most likely reason a bank would refuse a start-up business a loan?

  A. The business has too much collateralB. The entrepreneur has a strong personal credit historyC. The business plan shows no clear way to repay the loanD. The business is highly profitable

  (Total for Question SECTION-A5 is 1 mark)
• 6

  Question SECTION-A6 (1 mark)

  A market that is dominated by a small number of large firms is best described as which of the following?

  A. A perfectly competitive marketB. A concentrated marketC. A niche marketD. A saturated market

  (Total for Question SECTION-A6 is 1 mark)
• 7

  Question SECTION-A7 (2 marks)

  Define the term 'niche market'.

  (Total for Question SECTION-A7 is 2 marks)
• 8

  Question SECTION-A8 (2 marks)

  State two benefits to a small business of carrying out primary market research.

  (Total for Question SECTION-A8 is 2 marks)
• 9

  Question SECTION-A9 (3 marks)

  A furniture maker sells each handmade stool for GBP 45. The variable cost per stool is GBP 18 and fixed costs are GBP 4,050 per month. Calculate the number of stools the business must sell each month to break even. Show your working.

  (Total for Question SECTION-A9 is 3 marks)
• 10

  Question SECTION-A10 (2 marks)

  A start-up records total revenue of GBP 62,000 and total costs of GBP 47,500 in its first year. Calculate the business's profit for the year. Show your working.

  (Total for Question SECTION-A10 is 2 marks)
• 11

  Question SECTION-A11 (2 marks)

  A cafe sells 320 lunches in a week at an average price of GBP 8.50 each. Calculate the total revenue from lunches for the week. Show your working.

  (Total for Question SECTION-A11 is 2 marks)
• 12

  Question SECTION-A12 (2 marks)

  State one internal source and one external source of finance a sole trader could use to buy new equipment.

  (Total for Question SECTION-A12 is 2 marks)
• 13

  Question SECTION-A13 (3 marks)

  Explain one way in which technology, such as a social media page, can help a small business increase its sales.

  (Total for Question SECTION-A13 is 3 marks)
• 14

  Question SECTION-A14 (3 marks)

  Explain one reason why setting clear aims and objectives is important for a new small business.

  (Total for Question SECTION-A14 is 3 marks)
• 15

  Question SECTION-A15 (4 marks)

  Explain one benefit and one drawback to a small business of using an overdraft to manage short-term cash-flow problems.

  (Total for Question SECTION-A15 is 4 marks)
• 16

  Question SECTION-A16 (6 marks)

  Analyse one way in which understanding customer needs can help a small business succeed.

  (Total for Question SECTION-A16 is 6 marks)

Section B

Business context data-response questions. Answer all questions in Sections A, B and C.

• 1

  Question SECTION-B1 (2 marks)

  Context for Section B: Priya runs 'GreenLeaf', a small business selling reusable food wraps online. She started with GBP 3,000 of her own savings and now employs one part-time assistant. GreenLeaf's sales have grown steadily but Priya is finding it hard to keep enough cash in the business to pay suppliers on time. Using the context, state two features of a sole trader that apply to Priya's business.

  (Total for Question SECTION-B1 is 2 marks)
• 2

  Question SECTION-B2 (3 marks)

  GreenLeaf receives GBP 1,200 cash in a month and has cash outflows of GBP 1,550 in the same month, starting the month with an opening balance of GBP 500. Calculate GreenLeaf's closing cash balance for the month. Show your working.

  (Total for Question SECTION-B2 is 3 marks)
• 3

  Question SECTION-B3 (4 marks)

  Explain one method GreenLeaf could use to improve its cash flow.

  (Total for Question SECTION-B3 is 4 marks)
• 4

  Question SECTION-B4 (6 marks)

  Analyse the benefits to GreenLeaf of selling its products online rather than through a physical shop.

  (Total for Question SECTION-B4 is 6 marks)
• 5

  Question SECTION-B5 (6 marks)

  Priya is considering taking on a business partner who would invest GBP 5,000. Analyse one advantage and one disadvantage to Priya of changing GreenLeaf from a sole trader to a partnership.

  (Total for Question SECTION-B5 is 6 marks)
• 6

  Question SECTION-B6 (9 marks)

  Priya must decide whether to spend her limited cash on (a) paid social media advertising to attract new customers, or (b) improving her website to make it easier to use. Justify which option you think Priya should choose.

  (Total for Question SECTION-B6 is 9 marks)

Section C

Business context data-response questions. Answer all questions in Sections A, B and C.

• 1

  Question SECTION-C1 (2 marks)

  Context for Section C: 'PedalPost' is a small start-up offering same-day bicycle courier deliveries in a busy city centre. The founder, Tom, has identified that local independent shops want fast, low-cost deliveries. Tom competes against two large national courier firms. He has drawn up a business plan and is seeking GBP 10,000 of finance to buy bikes and equipment. Using the context, state two pieces of information Tom's business plan should contain to help him obtain finance.

  (Total for Question SECTION-C1 is 2 marks)
• 2

  Question SECTION-C2 (4 marks)

  Identify and explain one way PedalPost could differentiate itself from the two large national courier firms.

  (Total for Question SECTION-C2 is 4 marks)
• 3

  Question SECTION-C3 (4 marks)

  Explain one risk Tom faces as the founder of a new start-up in a competitive market.

  (Total for Question SECTION-C3 is 4 marks)
• 4

  Question SECTION-C4 (6 marks)

  Analyse the benefits to PedalPost of focusing on a niche market of local independent shops.

  (Total for Question SECTION-C4 is 6 marks)
• 5

  Question SECTION-C5 (9 marks)

  Tom is deciding whether to fund the GBP 10,000 he needs through (a) a bank loan repaid over three years, or (b) crowdfunding from supporters of local businesses. Justify which source of finance you think Tom should use.

  (Total for Question SECTION-C5 is 9 marks)