OCR 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

Multiple choice questions. Answer all questions.

• 1

  Question SECTION-A1 (1 mark)

  A sole trader is a business owned and controlled by one person. Which of the following is the main DISADVANTAGE of operating as a sole trader?

  A. The owner keeps all the profitB. The owner has unlimited liabilityC. The business is quick and cheap to set upD. The owner makes all decisions themselves

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

  Question SECTION-A2 (1 mark)

  Which of the following is the best definition of 'added value'?

  A. The total revenue a business earns in a yearB. The difference between the price charged and the cost of the inputs usedC. The amount of tax a business pays to the governmentD. The number of units a business sells each month

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

  Question SECTION-A3 (1 mark)

  A business calculates its gross profit. Which formula is correct?

  A. Revenue - total costsB. Revenue - cost of salesC. Gross profit - expensesD. Revenue - tax and interest

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

  Question SECTION-A4 (1 mark)

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

  A. Flour used to make breadB. Wages paid per loaf producedC. Monthly rent on the shopD. Packaging for each cake sold

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

  Question SECTION-A5 (1 mark)

  A company sells shares on the stock exchange to the general public. What type of business is this most likely to be?

  A. Sole traderB. PartnershipC. Private limited company (Ltd)D. Public limited company (plc)

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

  Question SECTION-A6 (1 mark)

  Which of the following best describes 'market segmentation'?

  A. Dividing a market into groups of customers with similar characteristicsB. Setting the highest possible price for a productC. Selling products in more than one countryD. Reducing the number of products a business offers

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

  Question SECTION-A7 (1 mark)

  A business uses primary market research. Which of the following is an example of this?

  A. Reading a government report on the industryB. Using a competitor's published accountsC. Carrying out a customer survey in-storeD. Looking at data from a market research agency's website

  (Total for Question SECTION-A7 is 1 mark)
• 8

  Question SECTION-A8 (1 mark)

  Cash flow is best described as the:

  A. Profit a business makes over a yearB. Value of assets owned by a businessC. Money flowing into and out of a business over timeD. Amount of money owed to suppliers

  (Total for Question SECTION-A8 is 1 mark)
• 9

  Question SECTION-A9 (1 mark)

  Which of the following is a benefit to a business of using e-commerce?

  A. It removes the need for any customer serviceB. It allows the business to reach customers 24 hours a dayC. It guarantees the business will make a profitD. It removes all competition from the market

  (Total for Question SECTION-A9 is 1 mark)
• 10

  Question SECTION-A10 (1 mark)

  A business wants to motivate its employees using a non-financial method. Which of the following would achieve this?

  A. Paying a higher hourly wageB. Offering a bonus for hitting targetsC. Giving employees more responsibility (job enrichment)D. Introducing commission on sales

  (Total for Question SECTION-A10 is 1 mark)
• 11

  Question SECTION-A11 (1 mark)

  Which of the following would most likely cause a business's variable costs to rise?

  A. A fall in the number of units producedB. An increase in the price of raw materialsC. A reduction in the rent of the factoryD. Repaying part of a long-term bank loan

  (Total for Question SECTION-A11 is 1 mark)
• 12

  Question SECTION-A12 (1 mark)

  The 'break-even point' is the level of output at which:

  A. Total revenue equals total costsB. Total revenue is at its highestC. Variable costs equal fixed costsD. The business makes maximum profit

  (Total for Question SECTION-A12 is 1 mark)
• 13

  Question SECTION-A13 (1 mark)

  Which of the following is an EXTERNAL source of finance for a limited company?

  A. Retained profitB. Selling off an unused delivery vanC. A bank loanD. Reducing the amount of stock held

  (Total for Question SECTION-A13 is 1 mark)
• 14

  Question SECTION-A14 (1 mark)

  A business decides to expand by opening branches in other countries. This is an example of:

  A. Organic growth in the domestic marketB. Globalisation / international expansionC. Downsizing the businessD. Franchising the business to others

  (Total for Question SECTION-A14 is 1 mark)
• 15

  Question SECTION-A15 (1 mark)

  Which stakeholder group is most directly affected if a business decides to make some workers redundant?

  A. EmployeesB. The local council's planning departmentC. Overseas suppliers of raw materialsD. Customers browsing the website

  (Total for Question SECTION-A15 is 1 mark)

Section B

Stimulus-based short, medium and extended response questions. Answer all questions.

• 1

  Question SECTION-B1 (3 marks)

  Read the following context, then answer the question below. Amara Cole runs 'Bloom & Sprout', a small business selling houseplants from a market stall in Leeds. She is the only owner and makes all the decisions herself. She wants the business to grow but is worried about the debts she has taken on to buy stock. State what is meant by the term 'unlimited liability' and identify ONE way it could affect Amara. (3 marks)

  (Total for Question SECTION-B1 is 3 marks)
• 2

  Question SECTION-B2 (3 marks)

  Bloom & Sprout carries out market research before launching a new range of rare plants. Amara is deciding between using primary and secondary research. Explain ONE advantage to Bloom & Sprout of using primary market research. (3 marks)

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

  Question SECTION-B3 (4 marks)

  Bloom & Sprout sells a rare fern for a price of GBP 24 each. The variable cost per fern is GBP 9, and the business has fixed costs of GBP 1,800 per month. Calculate the number of ferns Bloom & Sprout must sell each month to break even. You must show your working. (4 marks)

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

  Question SECTION-B4 (6 marks)

  Amara is considering two sources of finance to fund the growth of Bloom & Sprout: a bank loan or retained profit. Analyse ONE advantage and ONE disadvantage to Bloom & Sprout of using a bank loan to finance its growth. (6 marks)

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

  Question SECTION-B5 (6 marks)

  Bloom & Sprout has grown and now employs five staff in a shop as well as the market stall. Amara wants to keep her staff motivated so that fewer of them leave. Analyse how using non-financial methods of motivation could help Bloom & Sprout retain its staff. (6 marks)

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

  Question SECTION-B6 (8 marks)

  Bloom & Sprout currently sells only from its shop and market stall. Amara is thinking about launching an e-commerce website to sell plants online across the UK. Discuss the likely impact on Bloom & Sprout of launching an e-commerce website. (8 marks)

  (Total for Question SECTION-B6 is 8 marks)
• 7

  Question SECTION-B7 (9 marks)

  The table below shows Bloom & Sprout's forecast cash flow for the next three months. Month 1: opening balance GBP 500; total inflows GBP 4,000; total outflows GBP 4,800. Month 2: total inflows GBP 5,200; total outflows GBP 4,600. Month 3: total inflows GBP 6,000; total outflows GBP 5,100. (The closing balance of one month becomes the opening balance of the next.) (a) Calculate the closing cash balance at the end of Month 3. Show your working. (5 marks) (b) State ONE action Amara could take if a forecast showed a negative closing balance. (4 marks)

  (Total for Question SECTION-B7 is 9 marks)
• 8

  Question SECTION-B8 (9 marks)

  Amara is deciding whether to change Bloom & Sprout from a sole trader into a private limited company (Ltd). Recommend whether Amara should change Bloom & Sprout into a private limited company. Justify your recommendation. (9 marks)

  (Total for Question SECTION-B8 is 9 marks)
• 9

  Question SECTION-B9 (8 marks)

  Bloom & Sprout now imports some plants from suppliers in the Netherlands and Kenya. Amara has noticed that changes in the exchange rate and rising transport costs affect the price she pays. Analyse how operating in a global market could affect Bloom & Sprout's costs and competitiveness. (8 marks)

  (Total for Question SECTION-B9 is 8 marks)
• 10

  Question SECTION-B10 (9 marks)

  Bloom & Sprout wants to improve its net profit margin. Last year its revenue was GBP 90,000, cost of sales was GBP 45,000, and other expenses were GBP 27,000. (a) Calculate Bloom & Sprout's net profit margin for last year. Show your working and give your answer as a percentage. (4 marks) (b) Analyse ONE way Bloom & Sprout could improve its net profit margin. (5 marks)

  (Total for Question SECTION-B10 is 9 marks)