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5. Finance and accounting (AS Level)
A section of Business Studies, 9609
Listing 10 of 99 questions
Jake’s Cakes (JC) Jake started baking cakes while at university. He baked cakes for friends’ birthdays and other celebrations. He posted pictures of his cakes on social media sites where they received very positive feedback and were widely shared. In 2021 Jake started JC, a small business, using his parents’ kitchen. JC bakes cakes and sells them online. Jake created a website where customers design and order unique cakes. Jake uses digital promotion as the main method of promoting his products. JC has only used retained earnings to invest in marketing and new equipment. In 2023, Jake made a cake for a celebrity who shared JC’s social media posts with their social media followers. As a result of this an investor approached Jake. The investor offered to provide a $25 000 capital investment to help Jake grow the business. However, Jake does not want to take on an equal partner. Jake is considering a different plan for growth. His parents have agreed to let him convert their garage into his commercial kitchen. He has prepared a business plan and applied for a bank loan of $15 000 to finance this growth. He has produced a cash flow forecast for the first quarter of 2024. Table 1.1: JC’s cash flow forecast 2024 ($ 000) Jan Feb March Cash inflow Bank loan Cash sales 2.5 2.6 Total inflow 17.5 2.6 Cash outflow Fixed costs 1.5 1.5 Variable costs 0.5 0.6 0.8 Total outflow 20.5 2.1 2.3 Net cash flow (3) 0.5 Opening balance (1) Closing balance (1) (0.5) Identify one element of a business plan. Explain the term variable costs. Refer to Table 1.1. Calculate the forecast closing balance in March 2024. Explain one of Jake’s human needs that may be satisfied by operating JC. Analyse two benefits to JC of using digital promotion. Evaluate whether a bank loan is the most appropriate source of finance for JC’s growth.
9609_w23_qp_23
THEORY
2023
Paper 2, Variant 3
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Questions Discovered
99