AQA Business Studies Unit 2 (BUSS2) Revision thread.

After revising the theories of motivation it has come to my attention that I really cannot remember who wrote which one... I remember all the theories but just not the theorists... Does anyone have an good suggestion on how to learn who wrote what? Or does it not matter, as long as I can reference the theories themselves...?

So Maslow made the hierarchy...

Also, why do restaurants have higher labour turnover than the average?

Is it me or does anyone else tend to repeat most of what they say in the analysis part when they are writing thier evaluation??

the implications of budget variances

Also how would you answer a question asking whether the benefits of budgeting outweight the disadvantages?

Hey, guys, im going through budgets and im stuck on:
the implications of budget variances

Also how would you answer a question asking whether the benefits of budgeting outweight the disadvantages?

Thanks in advance!

Haha, me and Magic Dust make a great team :P

How come it says you have quoted me even though you haven't?

Evaluate some of the main causes of cash flow problems.

Cash flow is the amount of money that flows into and out of the business. Prudent managers are likely to use cash flow forecasts and other financial aids (such as budgeting) to manage their financial resources carefully and ensure that there is enough cash in the firm. Cash flow problems can be caused by a wide range of problems such as those listed below.

By giving goods on credit to debtors, a firm risks delaying their cash inflows. This is due to the fact that the firm is not receiving the money until after they have produced the goods even though costs are being incurred. The cost may lead to the firm using external sources of finance in order to avoid a negative cash flow. By allowing creditors to much credit without assessing their creditworthiness firms also risk increasing the number of bad debts they have. Firm’s must alter their credit terms to suit the business (and maybe coincide with creditor payment periods) without putting a strain on relationships with debtors.

Although borrowing from external sources (and potential stakeholders) such as the bank may provide a firm with large amounts of cash in the short term it may cause a problem in the long run. Once a loan has be arranged or a bank account overdrawn, the firm must pay back the amount borrowed with interest. This means that the firm is paying regular amounts out of the business regardless of cash inflows. If the bank does not pay the amount back then assets used to secure the borrowing will be repossessed. Thus firms can use a mixture of sources of finance incuding sources which do not require the amount to be paid back such as injecting more capital, seeking venture capitalists or giving out shares, however this may affect the overall control of the business.

In the event of stock piling, lots of money is tied up in stock and some goods such as raw materials are hard to liquidate without making a loss. Also large sums of money will have to be paid out in order to store held stock. Money can also be tied up in fixed assets which are also hard to liquidate thus in some cases it is better to lease capital items rather than buy them.

There are many unforeseen circumstances such as a recession which may cause the business to suffer from cash flow problems. A machine breakdown in particular will lead to the firm spending cash to repair or replace the machine; also production is affected meaning that the firm is producing less and thus selling less putting a strain on cash inflows.

Absolutely perfect. Apart from one or 2 things: you cant say a source of finance is "injecting more capital", I think you are thinking of retained profit. You also say that "if the bank does not pay the amount back..." I think you mean the business :P

But then...


In the first paragraph you kinda weave around 2/3 separate points without developing them, you are MUCH better picking up one point and developing it, so take stock piling and talking more about it for example how, if demand decreases, you are stuck with stock that you can't shift but your money is invested in.

Then the second paragraph, you mentioned external factors, a fantastic point but you mentioned the word recession but didn't explain that and instead went onto machine breakdowns (another valid point), again, you would have been better not saying the word recession and following through with analysing machine breakdowns in more detail.



Obviously, there is no Application and Im not sure what marks this is out of (10?) but it would get a good mark simply from those first three paragraphs, I would put this at 7/8 out of 10. To bump that up, you would need to go further into evaluation and analysis on the last 2 paragraphs. However, bear in mind that I am not an examiner, I am a student taking the same exam so I may be wrong in my marking :P

I tried to but it just came out as a space hence the gap before my reply.

Ok, im going to start answering some random questions so please mark them and give me feedback on how to get an A!



Evaluate some of the main causes of cash flow problems.

Cash flow is the amount of money that flows into and out of the business. level 1 Prudent managers are likely to use cash flow forecasts and other financial aids (such as budgeting) to manage their financial resources carefully and ensure that there is enough cash in the firm. Cash flow problems can be caused by a wide range of problems such as those listed below. level 2

By giving goods on credit to debtors, a firm risks delaying their cash inflows. level 1This is due to the fact that the firm is not receiving the money until after they have produced the goods even though costs are being incurred. The cost may lead to the firm using external sources of finance in order to avoid a negative cash flow. By allowing creditors to much credit without assessing their creditworthiness firms also risk increasing the number of bad debts they have. Firm’s must alter their credit terms to suit the business (and maybe coincide with creditor payment periods) without putting a strain on relationships with debtors. level 3 - I would suggest the use of however here and then say like, however they may not have made so many sales or something.

Although borrowing from external sources (and potential stakeholders) such as the bank may provide a firm with large amounts of cash in the short term it may cause a problem in the long run.level 2 - although you are talking about cash flow, if I were you I'd make it clearer, so I would say something like, borrowing from backs can prevent cash flow problems in the short term, however... that was it is VERY clear you are answering the question (although you are) Once a loan has be arranged or a bank account overdrawn, the firm must pay back the amount borrowed with interest. This means that the firm is paying regular amounts out of the business regardless of cash inflows. If the bank does not pay the amount back then assets used to secure the borrowing will be repossessed. Thus firms can use a mixture of sources of finance incuding sources which do not require the amount to be paid back such as injecting more capital, seeking venture capitalists or giving out shares, however this may affect the overall control of the business. level 3 again. You aren't evaluating, like giving another side of the argument. You haven't said how many marks but if it is more then ten then it is essential you do this.

In the event of stock piling, lots of money is tied up in stock and some goods such as raw materials are hard to liquidate without making a loss. level 1 - in full honesty, although this is a good point you haven't directly said how it links to the question. Really make it clear that way the examiner cannot question whether to give you the marks.Also large sums of money will have to be paid out in order to store held stock. Money can also be tied up in fixed assets which are also hard to liquidate thus in some cases it is better to lease capital items rather than buy them. I don't think you have actually answered the question here although the point is very relative. You should just add a sentence at the end to explain how it links to cash flow problems.

There are many unforeseen circumstances such as a recession which may cause the business to suffer from cash flow problems. A machine breakdown in particular will lead to the firm spending cash to repair or replace the machine; also production is affected meaning that the firm is producing less and thus selling less putting a strain on cash inflows. Why?

Thanks in advance!

...

Thanks for your comment! I guess my main problems are: evaluating and adding more detail to my points! Could you please give me some evaluation comments that you would make in realtion to the question.
Thanks again!


Taking your paragraph:

In the event of stock piling, lots of money is tied up in stock and some goods such as raw materials are hard to liquidate without making a loss. Also large sums of money will have to be paid out in order to store held stock. Money can also be tied up in fixed assets which are also hard to liquidate thus in some cases it is better to lease capital items rather than buy them.