AQA AS-Level Business: What Is Business? — Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs — AQA holds copyright in its own papers. Use these alongside the official past papers available free from AQA.

Related: What Is Business? revision notes

Covers 3.1.1 Business and objectives and 3.1.2 Forms of business and stakeholders only.

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Section A

1. State two characteristics of entrepreneurs named by the specification. [2]

2. State two of the influences on business decisions the specification names. [2]

3. Give the formula for dividend yield. [2]

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Section B

4. A sole trader wants to expand but needs significant new finance and is reluctant to lose control of the business.

(a) Recommend a suitable alternative business form. [1] (b) Justify your recommendation, referring to liability, access to finance and control. [4]

5. A plc has 4,000,000 ordinary shares in issue, trading at 220 pence each, and pays a total dividend of £480,000 for the year.

(a) Calculate the dividend per share. [2] (b) Calculate the dividend yield, to 2 decimal places. [3]

6. A business states its objective as “we want our company to grow.”

(a) Explain why this growth objective, as stated, is not SMART. [2] (b) Rewrite it as a SMART objective. [2]

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Section C

7. An entrepreneur is deciding whether to launch a new product line, knowing it carries a real risk of failure but also a chance of significant reward. Explain how the influences on business decisions named by the specification might shape this choice, and evaluate whether the entrepreneur should go ahead. [8]

8. Evaluate whether a private limited company is always the best choice of business form for a sole trader seeking to expand. [6]

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Worked answers

1. Any two of: risk taker, resilient, focused, passionate, innovative, adaptable. [2]

2. Any two of: objectives, risk, reward, resources, market conditions, ethics, opportunity costs. [2]

3. Dividend yield (%) = (dividend per share / share price) x 100. [2]

4. (a) A private limited company. [1] (b) A private limited company offers limited liability, replacing the sole trader’s unlimited liability and reducing the owner’s personal financial risk; it also allows outside investors to buy shares, improving access to finance compared with a sole trader; the trade-off is some reduction in control, since decisions may need to be shared with other shareholders and profits distributed more widely, and a new requirement to publish annual accounts, though this loss of control is generally less than converting to a public limited company. [4]

5. (a) Dividend per share = £480,000 / 4,000,000 = 12 pence. [2] (b) Dividend yield = (12p / 220p) x 100 = 5.45% (2 d.p.). [3]

6. (a) Growth is a valid business objective, but as stated it gives no measure of growth (revenue, market share, number of outlets) and no time limit [1], so there is no way to judge whether it has been achieved (it is not Specific, Measurable or Time specific) [1]. [2] (b) For example: “Increase annual revenue by 10% within the next 18 months.” [2]

7. The specification names objectives, risk, reward, resources, market conditions, ethics and opportunity cost as influences on a business decision, and a strong answer applies several of them to this scenario rather than listing them: the entrepreneur must weigh the reward of a successful new product line (extra revenue, growth) against the risk of failure (wasted resources, reputational damage), consider whether the business currently has the resources (finance, staff time, production capacity) to absorb a failed launch without threatening the rest of the business, and factor in opportunity cost — resources committed to this launch cannot be used elsewhere. A genuinely evaluative answer reaches a conclusion that depends on a stated condition, for example: proceeding is justified if the business has spare resources and the potential reward clearly outweighs a limited, contained risk of failure, but not if a failed launch would threaten the business’s existing, profitable operations. [8] (Marks for applying several named influences to the specific scenario, and for a genuinely evaluated conclusion rather than an unqualified yes/no.)

8. A private limited company offers real advantages over a sole trader for a business seeking to expand — limited liability and improved access to finance being the two most significant — but it is not automatically the best choice in every case. If the sole trader’s expansion needs only a modest amount of additional finance, the costs and requirements of incorporating (such as publishing annual accounts and sharing some control and profits with other shareholders) may outweigh the benefit, and a sole trader might instead expand more slowly using retained profit or a bank loan without changing business form at all. The best choice therefore depends on the scale of finance needed, how much control and privacy the owner is willing to give up, and whether the ongoing administrative requirements of a private limited company are proportionate to the size of the expansion being planned, rather than a private limited company being unconditionally superior for every expanding sole trader. [6] (Marks for a genuine evaluation weighing the benefits of incorporation against a specific limitation or alternative, rather than asserting one form is always best.)

Official syllabus

AQA AS and A-level Business (7137, 7138) specification PDF, Version 1.1 (November 2025), subject content section 3.1.1-3.1.2 (pp.12-14) and Annex: Formulae and key data (p.47) — the same source cited by the What Is Business? study guide and its revision notes. Verified 2026-09-17.