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AQA GCSE · Question 02.4 · Finance

Item B: One Day Photography
Debbie's revenue can be unpredictable. She has received an average of two wedding bookings per week this year, but she has very few of these bookings for next year.
As the wedding photography industry is very competitive, Debbie has decided to focus more on family photography. Her plan is to open a studio and upgrade her camera equipment. One of Debbie's friends is offering to lend her all the money but needs the full amount repaid within six months. Interest rates are currently low so Debbie is considering a bank loan. She could borrow the full amount and pay the money back in fixed instalments over five years. She would have to use her home as security for the bank loan.

Identify one current asset of a business.

How to approach this question

The question asks for one example of a current asset. Recall the definition of a current asset: something the business owns that is likely to be turned into cash within one year. Think of the most common examples.

Full Answer

Cash (or cash in bank).
Assets are items of value owned by a business. They are categorised as either non-current (fixed) assets or current assets. - **Non-current assets** are items owned for more than one year, such as property, vehicles, and machinery. - **Current assets** are assets that are expected to be converted into cash within one year. The main types are: - **Cash:** Money the business has in hand or in its bank account. - **Inventory (Stock):** Raw materials, work-in-progress, or finished goods held for sale. - **Trade Receivables (Debtors):** Money owed to the business by customers who have bought goods on credit.

Common mistakes

✗ Naming a non-current (fixed) asset like "camera equipment" or "studio". ✗ Naming a liability like "bank loan".
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