Lesson 1.1.2a

1.1.2a Risk and reward in business activity Quiz: Pearson Edexcel Business, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 1.1.2a, Risk and reward in business activity: 20 multiple choice questions for the Pearson Edexcel GCSE Business (1BS0), Unit 1: Enterprise and entrepreneurship, written with Revision Ninja.

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The 20 questions

  1. Which of these represents a financial risk for a business?

    • Earned dividend
    • Unsold stock
    • Bank interest
    • Sales revenue

  2. Which factor is typically considered a non-financial reward of entrepreneurship?

    • Suppliers debt
    • Independence
    • Corporation tax
    • Overdraft fee

  3. What does lack of security mean for a start-up owner?

    • Paid holiday
    • Uncertain income
    • State pension
    • Fixed salary

  4. What financial reward remains after all business costs are paid?

    • Revenue
    • Turnover
    • Interest
    • Profit

  5. A sole trader loses money when purchased stock fails to sell. What occurred?

    • Financial loss
    • Capital gain
    • Added value
    • Retained profit

  6. If an investor puts £20,000 into a business that completely fails with no money recovered, what is the loss?

    • £nil
    • £40,000
    • £10,000
    • £20,000

  7. What is a primary financial reward for starting a new business?

    • Overdraft
    • Bankruptcy
    • Profit
    • Debt

  8. What generally happens to the level of risk when a business aims for a much greater reward?

    • It decreases
    • It vanishes
    • It stays identical
    • It increases

  9. Which of these represents a major risk for a business owner?

    • Profit
    • Business failure
    • Independence
    • Personal satisfaction

  10. What key reward does a successful food van generate for its owner?

    • Loss
    • Liability
    • Insolvency
    • Profit

  11. What term describes a business stopping trading because it cannot pay its debts?

    • Business failure
    • Expansion
    • Diversification
    • Takeover

  12. According to the risk-reward principle, what accompanies a higher potential reward?

    • Guaranteed safety
    • Higher risk
    • Zero risk
    • Lower risk

  13. What non-financial reward allows an owner to make all decisions without a boss?

    • Dividends
    • Independence
    • Overdraft
    • Interest

  14. What occurs when a business's total costs exceed its total revenue over a period?

    • Added value
    • Surplus
    • Net profit
    • Financial loss

  15. When a café loses money because sales fall below costs, what risk has it experienced?

    • Financial loss
    • Market dominance
    • Unlimited liability
    • High liquidity

  16. Which action best reduces the financial risk of launching a new business idea?

    • Renting large premises
    • Massive borrowing
    • Small market trial
    • Hiring fifty staff

  17. Which term describes the non-financial reward of feeling proud of your own enterprise?

    • Corporation tax
    • Trade credit
    • Personal satisfaction
    • Fixed cost

  18. Why is lack of security a major drawback for a sole trader?

    • Hours are capped
    • Dividends are guaranteed
    • Salaries are fixed
    • Income fluctuates

  19. Which activity is a clear example of a business taking a financial risk?

    • Paying fixed rent
    • Banking cash safely
    • Insuring premises
    • Launching new products

  20. Which concept links a bigger possible reward to accepting more risk?

    • Risk and reward
    • Price elasticity
    • Market segmentation
    • Economies of scale

All Pearson Edexcel Business quizzes