O Level Business: Types of business organisation and Business objectives and stakeholder objectives (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 cover sections 1.4 (Types of business organisation) and 1.5 (Business objectives and stakeholder objectives) of the Cambridge O Level Business Studies 7115 syllabus for examination in 2026. The command words follow the syllabus list, such as define, state, identify, outline, explain, calculate and justify. All businesses are invented and money is in dollars.

Learn the content first in the study guide and the revision notes. See also the course hub, the checklist and the free 10-minute diagnostics.

Questions

1. Define the term limited liability. [2]

2. State two features of a partnership. [2]

3. Lindrick Cycles is a sole trader’s business. It closes owing 64,000 to suppliers and a bank. The sale of its assets raises 22,000.

(a) Calculate the amount of debt still unpaid. [2] (b) Explain why the owner is at greater risk than if Lindrick Cycles had been a private limited company in which the owner had invested 15,000. [3]

4. Rudgwick Cleaning is a partnership of three people. Their agreement shares profit in the ratio 3 : 2 : 1. The profit for the year is 96,000.

(a) Calculate the amount each partner receives. [3] (b) Explain one problem of running a business as a partnership. [2]

5. Elmsett Dairy shop is a franchise outlet. The franchisee paid an initial fee of 30,000 and pays the franchisor 5% of sales revenue each year. Sales revenue this year is 520,000.

(a) Calculate the royalty payable this year. [2] (b) Calculate the total paid to the franchisor in the first year. [1] (c) Explain one benefit to the franchisee of buying a franchise rather than starting an independent shop. [2]

6. Outline two differences between a private limited company and a public limited company. [4]

7. Wolvey Steel and Cressing Turbines agree to work together on a 800,000 project. Wolvey will pay 45% of the costs and Cressing the rest.

(a) Define the term joint venture. [2] (b) Calculate the amount each business pays. [2]

8. Nadia wants to open Pennyroyal Day Nursery. She needs 400,000 for premises and equipment. She has 120,000 in savings, two friends will each invest 100,000, and she owns a house she does not want to risk. She wants to make decisions with her friends and does not want shares sold to the public.

Recommend and justify a suitable form of business organisation. [6]

9. Dalwood Telecoms had sales revenue of 90,000 in a market worth 750,000. The next year its sales revenue was 108,000 in a market worth 900,000.

(a) Calculate its market share in each year. [3] (b) Explain whether Dalwood Telecoms met a growth objective and a market share objective. [3]

10. A bus company is planning a fare increase.

(a) Identify one internal and one external stakeholder group of the company. [2] (b) Explain one possible conflict between two stakeholder groups over the fare increase. [4] (c) Identify two other business objectives, apart from profit, that the company might have. [2]

11. (a) Define the term social enterprise. [2] (b) Explain how the objectives of a public corporation may differ from those of a private sector company. [4]

12. Abbotts Garments Ltd made a profit after tax of 80,000. The directors retained 35% for a new factory and paid the rest as dividends. The company has 400,000 shares. Some shareholders say that Abbotts should now pay out more.

(a) Calculate the amount retained, the total dividends, and the dividend per share. [3] (b) A shareholder owns 50,000 shares. Calculate her dividend. [1] (c) Justify whether Abbotts should keep retaining 35% of profit. [6]

Answers

1. The owner’s loss is limited to the amount they have invested [1], so personal possessions cannot be claimed to pay the business debts [1]. [2] Examiner insight: A definition needs the idea of a limit; saying only “limited” repeats the term and is unlikely to gain credit.

2. Any two from: two or more owners [1]; profit shared as agreed; owners usually have unlimited liability; shared decisions or capital [1]. [2] Examiner insight: “State” asks for features only, so a reason or example adds no further credit.

3. (a) 64,000 − 22,000 [1] = 42,000 [1] [2] (b) As a sole trader the owner has unlimited liability, so the 42,000 can be recovered from personal assets [1]. In a company the loss is limited to the 15,000 invested [1], so the 42,000 shortfall falls on creditors rather than on the owner [1]. [3] Examiner insight: Using the figures from the stem to show the difference is stronger than a general statement about liability.

4. (a) Total parts 3 + 2 + 1 = 6 [1]. One part is 96,000 ÷ 6 = 16,000 [1]. Shares are 48,000, 32,000 and 16,000 [1]. [3] (b) Partners may disagree over decisions [1], which can slow the business or damage it; or unlimited liability means one partner’s debts can affect the others [1]. [2] Examiner insight: A problem that is developed, with a consequence, usually earns more than a bare label such as “arguments”.

5. (a) 520,000 × 5% [1] = 26,000 [1] [2] (b) 30,000 + 26,000 = 56,000 [1] [1] (c) The franchisee uses a known brand [1], which attracts customers more quickly than an unknown independent shop [1]. (Support and training from the franchisor is an alternative benefit.) [2] Examiner insight: “Explain” needs a benefit and a reason; naming “brand” alone is a statement, not an explanation.

6. Shares of a public limited company can be sold to the general public through a stock exchange [1], while a private limited company cannot offer shares to the public [1]. A public limited company can raise much larger sums of capital [1], while a private limited company usually has fewer shareholders and so more control by the original owners [1]. [4] Examiner insight: “Outline two differences” is best answered with a pair of linked contrasting points, not two separate features of one company.

7. (a) Two or more businesses agree to work together [1] on a particular project, sharing costs, risks and profits [1]. [2] (b) Wolvey: 800,000 × 0.45 = 360,000 [1]. Cressing: 800,000 − 360,000 = 440,000 [1]. [2] Examiner insight: Show the calculation for each partner, because the second figure is checked against the first.

8. Private limited company [1]. Limited liability protects Nadia’s house if the nursery fails [1]. She and her friends can put in 320,000 (120,000 + 200,000) as shareholders, with the other 80,000 borrowed or raised from more shares [1], and shares are not sold to the public so the three keep control [1]. A partnership would be quicker and cheaper to set up but Nadia and her friends would have unlimited liability, which is a risk to her house [1]. On balance a private limited company is the better fit because protecting her house and keeping control matter most to Nadia [1]. [6] Examiner insight: Answers that pick a form, link it to several facts in the stem and weigh a rejected option tend to be placed higher than answers that list general features.

9. (a) Year 1: 90,000 ÷ 750,000 × 100 = 12% [1]. Year 2: 108,000 ÷ 900,000 × 100 = 12% [1]. Market share is unchanged [1]. [3] (b) Sales revenue grew by 20% (18,000 ÷ 90,000) so a growth objective was met [1]. The market also grew by 20% [1], so market share did not rise and a market share objective of gaining share was not met [1]. [3] Examiner insight: Comparing the growth rates of the firm and the market is the point of the question; either figure alone gives only part of the answer.

10. (a) Internal, for example employees, managers or owners [1]; external, for example passengers, the government or the local community [1]. [2] (b) Passengers want low fares [1] while owners want higher revenue and profit [1]. A fare rise helps the owners but costs passengers more, so both objectives cannot be fully met [1], and passengers may use other transport and reduce revenue [1]. [4] (c) Any two of survival [1], growth, market share, customer satisfaction, social benefit [1]. [2] Examiner insight: A conflict answer names two groups, states both objectives and says why they clash; one-sided answers gain less.

11. (a) A business that sells goods or services [1] mainly to achieve a social or environmental aim, with most profit reinvested [1]. [2] (b) A public corporation is owned by government and often aims to provide a service to everyone at an affordable price [1]. A private sector company usually aims at profit, growth or survival [1] because owners expect a return [1]. A public corporation may accept a low profit or a loss that the government covers [1]. [4] Examiner insight: A comparison needs both sectors in the same answer; describing only the public corporation leaves the difference unstated.

12. (a) Retained: 80,000 × 0.35 = 28,000 [1]. Dividends: 80,000 − 28,000 = 52,000 [1]. Per share: 52,000 ÷ 400,000 = 0.13 [1]. [3] (b) 50,000 × 0.13 = 6,500 [1] [1] (c) Retaining profit pays for the new factory without borrowing [1] and can raise long-term profit and growth [1]. Shareholders, such as the one receiving 6,500, want more of the profit now [1], and unhappy shareholders may sell their shares or press the directors [1]. The result depends on whether the factory will increase future profit [1]. A reasoned judgement is that Abbotts should keep a high retention while the factory is built and then raise dividends [1]. [6] Examiner insight: A justify answer that supports its decision with both sides and the figures in the stem earns more than one that only repeats advantages.

Where marks are usually lost

• Defining limited liability as “no liability” or saying the business is protected rather than the owner.
• Describing a feature when the command word asks for an explanation with a reason.
• Calculating without showing the working or the unit.
• Mixing up growth in sales revenue with a rise in market share.
• Listing stakeholder groups with no stated objectives or no conflict.
• Recommending a form of organisation without using the facts in the stem.
• Writing one-sided answers to a justify question.
• Confusing private and public limited companies, or private and public sector.

Frequently asked questions

Are these Cambridge O Level Business Studies 7115 past paper questions? No. They are twelve original practice questions written for Marlbridge on sections 1.4 (Types of business organisation) and 1.5 (Business objectives and stakeholder objectives). Use them alongside the official past papers.

Is a rise in sales revenue the same as a rise in market share? No. Market share depends on the business’s sales compared with the whole market, so compare the growth of the firm with the growth of the market. Mixing the two up is a common error.

How do you write a stakeholder conflict answer? Name two stakeholder groups, state each group’s objective and explain why the two clash. Listing groups with no objectives or no conflict gains little.

How do you answer an “outline two differences” question? Give pairs of linked, contrasting points, such as how shares can be sold in each type of company, rather than two separate features of one type.

How do you recommend a form of business organisation? Pick a form, link it to several facts in the stem, such as the finance needed, the risk and who wants control, and weigh a rejected option.

Next steps

• Review the revision notes and the study guide.
• Tick off the checklist and visit the course hub.
• Try all the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Cambridge O Level Business Studies 7115 syllabus for examination in 2026, published by Cambridge International Education, sections 1.4.1 and 1.5.1 to 1.5.3.