O Level Business: Enterprise, business growth and size (Cambridge 7115) – 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 test section 1.3 of the Cambridge O Level Business Studies 7115 syllabus for examination in 2026, from 1.3.1 to 1.3.4. All businesses and people are invented. Money figures are in dollars. Read the study guide and the revision notes first, then use the Cambridge O Level Business hub and the checklist to plan what to practise next. The free diagnostics show which topics need most work.

Questions

1. State two characteristics of successful entrepreneurs. [2]

2. Identify two contents of a business plan. [2]

3. Maribeth plans to open a garden cafe and needs a bank loan. Explain one way a business plan could help her. [3]

4. (a) Describe one way a government can support people who start new businesses. [2] (b) Explain one reason why a government wants to support new businesses. [2]

5. Tamarisk Boatyard, owned by Dayo, had 20 employees and annual output worth 1,250,000 last year. This year it has 25 employees and output worth 1,500,000. (a) Calculate the percentage increase in the value of output. [2] (b) Calculate output per employee for each year. [2] (c) Dayo says the boatyard is now 25% bigger because it employs 25% more people. Analyse one limitation of using the number of people employed to measure business size. [3]

6. Explain why a firm’s profit cannot be used to judge how big it is. [2]

7. Zeynep owns Ilsley Candle Works. State whether each development is internal or external growth. [3] (i) She opens a second workshop paid for from profits. (ii) She buys a smaller candle maker and takes control of it. (iii) She starts selling through her own website.

8. Explain one problem linked to business growth and one way the problem might be overcome. [4]

9. Mr Greaves runs Greaves Print Co., a local printer with six staff. Customers outside the town have asked him to supply them, but he has refused to expand. Explain two reasons why he might choose to keep the business small. [4]

10. Ilsley Candle Works began January with 6,000 in cash. The accounts show a profit for the two months, because Zeynep bought a large stock of wax and new equipment. In January receipts were 14,500 and payments were 17,300. In February receipts were 12,000 and payments were 15,200. (a) Calculate the closing cash balance for January and for February. [3] (b) Analyse why a business that makes a profit can still fail because of liquidity problems. [4]

11. Analyse why a firm in its first year is more likely to close than one that has traded for decades. [4]

12. Nadira Tailoring has 11 employees, annual sales revenue of 480,000, profit of 38,000 and cash of 20,000. The owner can buy a rival, Pinfold Alterations (7 employees, sales revenue 260,000), for 190,000. She would pay with the 20,000 cash and a bank loan of 170,000. Evaluate whether she should buy Pinfold Alterations. Reach a justified judgement. [8]

Answers

1. Any two, for example: willing to take calculated risks [1]; self-motivated with initiative [1]. Also credit determination, creativity or innovation, organisation, resilience. [2] Examiner insight: A short phrase is usually all a “state” question needs, so spend the time on questions with more marks, and choose two characteristics that are clearly different.

2. Any two, for example: the business idea and aims [1]; market research findings, a marketing plan, financial forecasts, sources of finance, or staffing [1]. [2] Examiner insight: Name distinct contents. Two wordings of the same item (for example “forecasts” and “financial predictions”) are one idea, so choose clearly different headings.

3. The plan contains financial forecasts such as expected costs, sales and cash flow [1], which shows the bank how much the cafe will earn and whether Maribeth can repay the loan [1], making the bank more willing to lend and reducing the risk of her being refused [1]. [3] Examiner insight: Strong answers tie the plan to this business and this purpose, the loan, instead of writing that a plan “helps the business succeed”. A development step that says what the benefit leads to adds more than a restatement.

4. (a) A grant, meaning money that does not usually need to be repaid [1], or a training scheme that teaches business skills, with a short description of how it helps [1]. [2] (b) New businesses create jobs [1], so there is more income and less unemployment in the economy [1]. (Also credit more output, tax revenue or competition.) [2] Examiner insight: “Why” and “how” are different questions. Part (a) wants a type of support described; part (b) wants a reason with a consequence, so a reason without its effect is only partly developed.

5. (a) (1,500,000 minus 1,250,000) divided by 1,250,000, times 100 [1] = 20% [1]. [2] (b) Last year 1,250,000 divided by 20 = 62,500 [1]; this year 1,500,000 divided by 25 = 60,000 [1]. [2] (c) The number of employees ignores how productive they are [1]. Output rose 20% but employees rose 25% [1], so output per employee fell from 62,500 to 60,000, meaning headcount can suggest a bigger rise than the value of output shows [1]. [3] Examiner insight: Write the formula and each step of working, then state the unit or the percentage sign. In part (c), use the figures from the stem; a general statement about machines is weaker than a comparison with these numbers.

6. A modest-sized firm may earn a big profit while a much larger rival makes a loss [1], so profit shows performance rather than scale [1]. [2] Examiner insight: Saying only that profit differs from size repeats the question. The explanation comes from the contrast: a small firm with high profit, or a large firm making a loss.

7. (i) Internal [1], because it uses the firm’s own resources. (ii) External [1], because it is a takeover of another business. (iii) Internal [1], because it expands from the firm’s existing operations. [3] Examiner insight: The deciding question is whether another business is involved. Read “buys” and “takes control” as external signals.

8. Cash flow problems, because stock, wages and premises must be paid for before the extra sales bring in cash [1], so the business may be unable to pay bills on time [1]. It could prepare a cash-flow forecast [1] and arrange an overdraft or grow in stages so costs and receipts stay in line [1]. (Other pairs are credited, for example loss of control and delegation.) [4] Examiner insight: The solution should match the problem you chose. A cash problem followed by “hire a manager” does not connect, so answers that pair them tend to gain less.

9. He may want to keep personal control and know his customers and staff well [1], which would be harder with a larger workforce [1]. The extra risk and workload may not be worth it to him, since borrowing to expand could put his savings at stake [1], and the work is mainly local, so the market is small [1]. (Any two reasons, each developed.) [4] Examiner insight: Two reasons need two separate lines of explanation. Using the printer’s details, such as six staff and a local customer base, shows application.

10. (a) January: 6,000 plus 14,500 minus 17,300 = 3,200 [1]. February: 3,200 plus 12,000 minus 15,200 [1] = 0 [1]. [3] (b) Profit counts sales and costs when they arise, but liquidity depends on actual cash [1]. Ilsley spent cash on wax and equipment, so its cash has run out even though profit is shown [1]. With no cash, the business cannot pay suppliers or wages on time [1], and suppliers may refuse credit or take legal action, so the business can fail [1]. [4] Examiner insight: A common slip is to treat profit and cash as the same thing. Using the closing balance of zero from part (a) in part (b) is the application the question is looking for.

11. A new business has little cash to cover early losses [1], so a bad few months can end it [1]. It has no established customers or reputation [1], and lenders may refuse credit because there is no track record, so the owner may be learning from mistakes that a more experienced firm would avoid [1]. [4] Examiner insight: “Analyse” asks for cause and effect. Name a feature of new businesses and say what that feature does to survival; a plain list of features is a lower-level answer.

12. Credit: for buying, it makes the business bigger, with 18 employees and combined sales revenue of 740,000 [1], removes a rival and may allow lower unit costs from economies of scale [1]. Against: spending all 20,000 cash and borrowing 170,000 leaves no cash reserve [1], and loan repayments and interest could take much of the 38,000 profit, creating a liquidity risk [1]. Joining two workforces may be hard to manage [1], since the owner has to control 18 people instead of 11. Alternatives such as slower internal growth carry less risk [1]. Judgement: she should not buy yet [1], because the business has too little cash to survive a poor month after the purchase. She should build cash reserves first, or negotiate a smaller loan [1]. (Credit a well-supported decision to buy if the risks above are weighed.) [8] Examiner insight: For “evaluate”, arguments for and against are not enough: the answer needs a decision and a reason that depends on the case, such as the cash left after the purchase. Repeating the figures without saying what they mean is a common weakness.

Where marks are usually lost

• Listing characteristics or contents without linking them to the entrepreneur or business named.
• Using profit as a measure of size.
• Not showing working in percentage and output-per-employee calculations.
• Calling a takeover or merger internal growth, or the reverse.
• Choosing a solution that does not address the problem raised.
• Mixing up profit and cash.
• Writing two versions of one point in “two reasons” questions.
• Stopping after a statement, with no explanation of its effect, in “explain” and “analyse” questions.
• Ending an “evaluate” answer without a decision.

Frequently asked questions

Are these Cambridge O Level Business Studies 7115 past paper questions? No. They are original worked questions written for Marlbridge on section 1.3, Enterprise, business growth and size, with invented businesses and people. Use them alongside the official past papers.

How do you show working in output per employee and percentage growth questions? Write the formula, show each step and state the unit or the percentage sign. In later parts, use the figures from the stem rather than giving a general answer.

What is the difference between an “explain” and an “analyse” answer? Both need more than a statement. “Analyse” asks for cause and effect: name a feature of the business and say what that feature does to the outcome, rather than giving a plain list of features.

How do you answer a growth problem and solution question? Choose one problem, explain why it arises, then give a solution that matches it, such as a cash-flow forecast or an overdraft for a cash shortage. A solution that does not address the problem raised loses marks.

What does an “evaluate” answer on buying another business need? Arguments for and against, followed by a decision and a reason that depends on the case, such as the cash available. Ending without a decision is a common way to lose marks.

Next steps

• Re-read the revision notes for the points you missed.
• Revisit the study guide.
• Check coverage on the checklist and the course hub.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Source: Cambridge O Level Business Studies 7115 syllabus for examination in 2026, published by Cambridge University Press & Assessment, subject content 1.3.