Edexcel IGCSE Business: Business objectives and types of organisation (4BS1) – 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 – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover Topic 1, sections 1.1 and 1.2 of the Pearson Edexcel International GCSE in Business (4BS1) specification, Issue 2, February 2026: business objectives, why they change, and the types of organisation. Use the study guide and revision notes first if you need them. Course links: the 4BS1 Business hub, the printable checklist and the free diagnostics. Every business named here is invented and amounts are in dollars. Show your workings. Give percentages to 1 decimal place where needed.

Questions

1. (a) Define limited liability. [2] (b) Define the terms shareholder and stakeholder. [2]

2. Maya runs a one-person pottery studio. She says: “I want to stay my own boss, and I need to earn enough to keep the studio open through the quiet winter months.” State one non-financial objective and one financial objective shown in her words. [2]

3. Harbury Gym had revenue of 91,000 last year. Total revenue in the local gym market was 650,000. (Calculation)

(a) Calculate Harbury Gym’s market share. [2] (b) The owner sets a target of 16% market share next year. Assuming the market stays at 650,000, calculate the revenue needed. [2]

4. Outline one way that new technology could cause a small print shop to change its objectives. [2]

5. A sole trader had revenue of 410,000 and total costs of 355,000. (Calculation)

(a) Calculate profit. [1] (b) Calculate profit as a percentage of revenue. [2]

6. Explain one disadvantage of operating as a sole trader. [3]

7. Dunmore Ltd is a private limited company. It made a profit of 130,000. The directors decide to retain 35% of the profit. The rest is paid as dividends on 5,000 shares, all of the same type. (Calculation)

(a) Calculate the retained profit. [1] (b) Calculate the dividend per share. [3] (c) Ms Okoro owns 800 shares. Calculate her dividend. [1]

8. Three partners run Vale Surveyors and agree to share profit in the ratio 3 : 2 : 1. Profit last year was 84,000.

(a) Calculate the share of profit received by each partner. [3] (b) Analyse one problem that may arise from running the business as a partnership. [4]

9. Sana is thinking of buying a franchise of a juice-bar chain. She expects an outlet to earn revenue of 180,000 with costs of 120,000, before the franchisor’s fee. The franchisor charges a continuing fee of 6% of revenue. Sana could instead open her own juice bar with no fee but no existing customers.

(a) Calculate the fee payable in a year. [1] (b) Calculate Sana’s expected profit after the fee. [2] (c) Explain one benefit to Sana of buying the franchise. [3] (d) Justify whether Sana should buy the franchise or open her own bar. [6]

10. Lorvane Rail is a public corporation owned by the state. It runs routes that private companies would not, and keeps fares low. It lost 12 million last year and employs 4,000 people. Evaluate whether Lorvane Rail should remain in public ownership. [9]

11. Holloway Tools is a private limited company owned by one family. It had revenue of 2,400,000 and total costs of 2,130,000. It needs 1.2 million to build a new factory and is considering becoming a public limited company and selling shares to the public. The family wants to keep control.

(a) Calculate Holloway Tools’ profit. [1] (b) Evaluate whether Holloway Tools should become a public limited company. [8]

12. Greenlane is a business that sells refurbished bicycles. It employs people who have been out of work for a long time. It trades to earn revenue and puts its profit into training programmes.

(a) Define multinational. [1] (b) State two features of Greenlane that show it is a social enterprise. [2] (c) Greenlane’s training programme has far exceeded its target for places. Explain one way this performance could lead Greenlane to change its objectives. [3]

Answers

1. (a) Limited liability means the owners of a company can lose no more than the money they invested in it [1]; their personal belongings cannot be used to pay the company’s debts [1]. [2] (b) A shareholder is someone who owns shares in a company [1]; a stakeholder is any person or group with an interest in a business, such as employees, customers or suppliers, whether or not they own shares [1]. [2] Examiner insight: Give a separate definition for each term, and make the contrast clear by saying who is included in each.

2. Non-financial: independence and control (she wants to be her own boss) [1]. Financial: survival, or financial security (earning enough to keep the studio open through winter) [1]. [2] Examiner insight: “State” asks for a short answer chosen from the information given, so pick out the words from the stem and give the named objective rather than a general one.

3. (a) Market share = business revenue ÷ market revenue × 100 [1] = 91,000 ÷ 650,000 × 100 = 14% [1] [2] (b) Revenue needed = 0.16 × 650,000 [1] = 104,000 [1] [2] Examiner insight: Show the formula or the substitution. Workings should be given, and a method shown beside a slip is easier to credit than a bare figure. Give the answer as a percentage in part (a).

4. Technology could open new ways of selling or producing (for example online ordering) [1], so the shop might set a new objective such as raising sales through online orders [1]. [2] Examiner insight: An “outline” answer gives two linked points: the change and what it leads to. A statement that “technology changes” with no resulting objective supplies only one half.

5. (a) Profit = 410,000 − 355,000 = 55,000 [1] [1] (b) Profit ÷ revenue × 100 = 55,000 ÷ 410,000 × 100 [1] = 13.4% [1] [2] Examiner insight: The base for a percentage is revenue here, not costs.

6. A sole trader has unlimited liability [1], so if the business fails the owner is personally responsible for its debts [1], which could mean losing personal savings or property [1]. [3] Examiner insight: “Explain” is a statement followed by two expansion points. Naming the disadvantage and stopping scores less than naming it and saying why it matters and what follows.

7. (a) 0.35 × 130,000 = 45,500 [1] [1] (b) Dividends = 130,000 − 45,500 = 84,500 [1]; dividend per share = 84,500 ÷ 5,000 [1] = 16.90 [1] [3] (c) 800 × 16.90 = 13,520 [1] [1] Examiner insight: A multi-step calculation is easier to follow when each stage is written on its own line.

8. (a) Total parts = 3 + 2 + 1 = 6, so one part = 84,000 ÷ 6 = 14,000 [1]; first partner 3 × 14,000 = 42,000 [1]; second 28,000 and third 14,000 [1]. [3] (b) Any one developed problem, for example: partners may disagree about decisions [1]; because each partner has a say, choosing a direction may take longer [1]; the partner with the largest share (42,000) may feel entitled to more influence [1], which can cause conflict [1]. [4] Examiner insight: “Analyse” asks for an extended chain tied to the business. Use details from the question and follow the argument through to its effect.

9. (a) 0.06 × 180,000 = 10,800 [1] [1] (b) Profit = 180,000 − 120,000 − 10,800 [1] = 49,200 [1] [2] (c) She gets a known brand [1], so customers will already recognise the bar [1], which can bring sales from the first day rather than waiting to build a reputation [1]. [3] (d) For buying: the brand brings customers immediately [1], and a profit of 49,200 is expected even after paying the fee [1]. Against buying: the 10,800 fee comes out every year [1], and she must follow the franchisor’s rules, so she has less independence [1]. For her own bar: she keeps all the profit and control, but there are no existing customers, so revenue may be lower [1]. Judgement: for example, buy the franchise because the brand reduces the risk of a new business, unless independence matters more to her [1]. [6] Examiner insight: A “justify” answer recommends one of two options using the information provided. Name the option you choose, back it with figures from the stem and show why the other option is weaker.

10. For public ownership: it provides routes private firms would not run [1], so people who have no other way to travel keep access [1]. Low fares let the public interest come before profit [1], helping passengers on low incomes [1]. Against: a loss of 12 million is likely to be covered by taxpayers [1], who could argue the money would be better used elsewhere [1]. With no owners demanding profit, managers may be less efficient [1], so costs may be higher than needed [1]. Judgement: for example, it should remain public because the service has a social purpose that a profit-seeking owner would drop, but it should set targets to cut costs [1]. [9] Examiner insight: An “evaluate” answer weighs both sides and ends with a supported conclusion. A judgement that uses a fact from the stem, such as the lost routes or the loss, is stronger than one that only restates points above.

11. (a) 2,400,000 − 2,130,000 = 270,000 [1] [1] (b) For: selling shares to the public can raise large sums, so the 1.2 million for the factory could be found without borrowing [1]; more finance allows expansion and growth [1], and the cost is spread across many investors rather than the family alone [1]. Against: the family may lose control if too many shares are sold [1], because the new shareholders can vote on who runs the business [1]. Shareholders will expect dividends, so less profit may be kept [1]. Judgement: for example, becoming a public limited company only if the family keeps a majority of shares; otherwise raise the money through retained profit or loans to protect its stated wish to keep control [2]. [8] Examiner insight: Use the stem’s priority, here keeping control, as the deciding factor.

12. (a) A business that operates in more than one country [1]. [1] (b) It trades to earn revenue by selling bicycles [1], and its profit goes to a social purpose, training for long-term unemployed people [1]. [2] (c) Performance has beaten the target [1], so Greenlane may raise its objective for training places, for example by setting a higher figure for next year [1], because the results show it can reach more people with the same resources [1]. [3] Examiner insight: When a question names a reason for change, such as performance, link that exact reason to the new objective. Writing about market conditions or legislation instead would not answer the question set.

Where marks are usually lost

• Defining limited liability as “no risk” or “the company cannot fail”.
• Naming “profit” when the stem points to a more specific objective such as survival.
• Choosing the wrong base for a percentage.
• Giving only features of a form of ownership without saying whether they suit the business.
• Writing a one-sided answer to “evaluate” or “justify” with no decision at the end.
• Treating a public corporation as a public limited company.

Next steps

• Review the revision notes and the study guide.
• Return to the 4BS1 Business hub or tick off progress on the checklist.
• Find weak spots with the free diagnostics.
• Book a free trial class: /trial/.

Frequently asked questions

What do these objectives and types of organisation questions cover? They follow Pearson Edexcel International GCSE Business (4BS1) sections 1.1 and 1.2: financial and non-financial objectives, why objectives change, forms of ownership, liability, public corporations, franchises, social enterprises and multinationals.

What is a common mistake when defining limited liability? Describing it as “no risk” or saying the company cannot fail. Shareholders can still lose the money they invested, but they are not asked to pay the business’s debts from their own pockets.

Is a public corporation the same as a public limited company? No. A public corporation is owned by the state on behalf of the public, while a public limited company is owned by shareholders whose shares can be bought by the general public.

How should you answer a question on choosing a form of ownership? Use the facts in the case, such as how much finance is needed, how much risk the owners will accept and how much control they want, and finish with a clear decision.

Official syllabus

Pearson Edexcel International GCSE in Business (4BS1), Specification, Issue 2, February 2026, published by Pearson Education Limited. Topic 1: Business activity and influences on business, sections 1.1 and 1.2.