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CAIE IGCSE Business Studies 5.3 Profit and Loss Questions

Practise explaining why profit matters, using profit or loss data, and judging business decisions from revenue, costs and expenses.

Syllabus
2027–2029
Course
Business 0264

Exam points

  • calculate missing expenses, profit or cost figures from income statement extracts
  • justify profit decisions by linking revenue, costs and business aims to the case
  • compare profit evidence for two businesses before recommending an option

Covered syllabus points

5.3.1—What is profit and why it is important5.3.2—Statement of profit or loss

Question 1

[Maximum number: 12]

KPX manufactures computers. The business imports 60% of its raw materials. The Operations Director is considering ways to use lean production methods in KPX's factory. The Finance Director is reviewing KPX's financial data to calculate the value of its expenses. An extract is shown in Table 1.1.

Table 1.1

Table 1.1

Question (a)

(a)

Calculate KPX's expenses in 2024. Show your working.

Working:

Final answer:

[ 2 ]

Question (b)

(b)

Outline two ways KPX's Finance Director could use the financial data in Table 1.1.

Way 1:

Way 2:

[ 4 ]

Question (c)

(c)

Explain two reasons why profit is important for a business. Which reason is likely to be the most important? Justify your answer.

[ 6 ]

Question 2

[Maximum number: 2]

Alana opened a restaurant in the city centre 5 years ago. The restaurant provides plant-based meals using a range of vegetables. Alana uses primary market research to help identify changes in consumer spending patterns. Market research can also be used to help segment a market. The restaurant has 16 employees. Each employee is paid the legal minimum wage. In 2023 the business made a profit of $ 80000. Alana wants to know how an increase in interest rates might affect her business.

Define 'profit'.

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