Business Awareness Flashcards
7 cards from real AAT L3 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Awareness flashcards as text
When the Bank of England increases the base interest rate, what is the MOST likely direct impact on businesses with variable-rate loans?
Answer: Their interest repayments will increase
Variable-rate loan interest payments rise in line with the base rate, directly increasing borrowing costs and reducing cash flow for businesses.
UK inflation rising above the Bank of England's 2% target is MOST likely to result in which monetary policy response?
Answer: The Bank of England increasing the base interest rate
The Bank of England raises interest rates to reduce consumer spending and borrowing, thereby cooling demand and bringing inflation back towards its 2% target.
If the pound sterling appreciates significantly against the euro, what is the MOST likely effect on a UK business exporting goods to Europe?
Answer: Its goods become more expensive for European buyers, potentially reducing sales
A stronger pound means UK goods cost more when converted into euros, making them less price-competitive for European customers and potentially reducing export volumes.
Which macroeconomic indicator measures the total monetary value of all goods and services produced within the UK during a specific time period?
Answer: Gross Domestic Product (GDP)
GDP measures the total economic output of the UK and is the primary indicator of economic size, growth, and overall performance of the economy.
Which source of business finance involves selling outstanding trade receivables (invoices) to a third party at a discount in exchange for immediate cash?
Answer: Invoice factoring
Invoice factoring enables businesses to convert unpaid invoices into immediate working capital by selling them to a factoring company at a discounted value.
Retained profit as an internal source of finance has which MAIN advantage over a bank loan?
Answer: It requires no interest payments and does not create any debt obligation
Retained profit requires no interest payments and imposes no debt on the business, making it a cost-free internal funding source that does not dilute ownership.
The National Living Wage in the UK is BEST described as:
Answer: The minimum hourly rate that all workers aged 21 and over must be paid by law
The National Living Wage is the statutory government-mandated minimum hourly rate that UK employers are legally required to pay workers aged 21 and over.