Lesson 6.2.2

6.2.2 Costs, Liabilities and Assets Quiz: NCFE Business & Enterprise, Unit 6

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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This lesson sorts a business's money into categories: start-up and running costs, fixed and variable costs, and assets and liabilities split by whether they last more or less than twelve months. It then applies these ideas to total cost sums, working capital and the purpose of a cash flow forecast, and introduces two ratios.

Key points

  • Start-up costs are one-off expenses of getting ready to trade, whereas running costs such as wages, rent and ingredients recur once trading begins.
  • Fixed costs stay the same whatever the output; variable costs rise and fall with the amount produced.
  • Total costs equal fixed costs plus variable cost per unit multiplied by the number of units made.
  • Assets and liabilities are both split by timing: due or used within twelve months is current, longer than that is non-current.
  • Vehicles, machinery and premises are non-current assets, while cash, stock and money owed by customers are current assets.
  • Working capital is current assets minus current liabilities and shows whether day-to-day bills can be met.
  • A negative closing balance on a forecast means the firm expects to be overdrawn, giving it time to act beforehand.

Key terms

Start-up cost
A one-off cost paid to get a business ready to trade, such as fitting out premises.
Fixed cost
A cost that does not change with the level of output, such as monthly rent.
Variable cost
A cost that rises and falls directly with the number of units produced.
Non-current asset
An item the business owns and uses for longer than a year, like machinery or a van.
Current liability
A debt that must be repaid within twelve months.
Working capital
Current assets minus current liabilities, the cushion available for everyday trading.
Net cash flow
The difference between cash received and cash paid out in a period.
ROCE
Return on capital employed, operating profit divided by capital employed, shown as a percentage.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

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The 20 questions

  1. Which of these is classified as a start-up cost?

    • Monthly rent
    • Staff wages
    • Fitting out premises
    • Utility bills

  2. A company pays a monthly rent for its office space. How is this cost best classified?

    • Variable cost
    • Start-up cost
    • Current liability
    • Fixed cost

  3. A bakery's spending on flour and sugar rises when it bakes more loaves. These costs are:

    • Start-up costs
    • Fixed overhead costs
    • Current assets
    • Variable costs

  4. A business must repay a bank loan in full within the next 12 months. The loan is a:

    • Current liability
    • Non-current liability
    • Non-current asset
    • Current asset

  5. A courier firm owns a delivery van that it uses on its rounds. In its accounts the van is a:

    • Current liability
    • Current asset
    • Non-current asset
    • Variable cost

  6. A company is owed money by customers who must pay their invoices within 30 days. This is a:

    • Current asset
    • Non-current liability
    • Current liability
    • Non-current asset

  7. A business borrows money on a 20-year mortgage to buy a factory. The mortgage is a:

    • Non-current liability
    • Current liability
    • Current asset
    • Non-current asset

  8. A firm has fixed costs of £2,000 a month and variable costs of £3 per unit. What are its total costs in a month when it makes 500 units?

    • £2,000
    • £1,500
    • £3,500
    • £2,003

  9. Which financial term describes a debt owed by a business?

    • Equity
    • Liability
    • Asset
    • Retained profit

  10. Which of these is an example of a non-current asset?

    • Raw materials stock
    • Bank cash
    • Factory machinery
    • Unpaid invoices

  11. A café has sales revenue of £250,000, gross profit of £100,000 and net profit of £20,000. What is its net profit margin?

    • 40.0%
    • 8.0%
    • 12.5%
    • 20.0%

  12. What does a negative closing cash flow balance indicate?

    • High profit
    • Bankrupt status
    • Overdrawn account
    • Zero assets

  13. A shop has current assets of £40,000 and current liabilities of £15,000. What is its working capital?

    • £25,000
    • £55,000
    • £15,000
    • £40,000

  14. What is the primary purpose of a cash flow forecast?

    • Predicting cash shortages
    • Measuring asset values
    • Calculating annual profit
    • Assessing total sales

  15. What is the main risk of prolonged negative net cash flow?

    • Decreased sales
    • Higher taxes
    • Loss of shares
    • Inability to pay bills

  16. Which line on a break-even chart stays completely flat as output rises?

    • Total revenue line
    • Total cost line
    • Fixed cost line
    • Variable cost line

  17. In May a business receives £18,000 and pays out £21,500. What is its net cash flow for May?

    • Negative £39,500
    • Negative £3,500
    • Positive £18,000
    • Positive £3,500

  18. What is the main purpose of preparing a cash flow forecast?

    • Valuing total assets
    • Calculating annual profit
    • Measuring market share
    • Spotting cash shortages

  19. Which component is subtracted from current assets in the acid-test ratio?

    • Trade payables
    • Bank overdraft
    • Fixed assets
    • Inventory

  20. Which financial metric is the denominator in the ROCE formula?

    • Gross revenue
    • Total assets
    • Net profit
    • Capital employed

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