Predicted Paper 1
90 marks • 2 hours • June 2026
Personal and Business Finance
Hartley & Co. Accountants • Weber Retail Ltd • Grant's Insurance Services • Nexus Logistics
| Question | 1 | 2 | 3 | 4 | Total |
|---|
| Marks Available | 20 | 22 | 24 | 24 | 90 |
| Marks Awarded | | | | | |
Instructions to Candidates
- Answer ALL questions
- Show working in calculations
- Use black ink or pen
Information for Candidates
- Marks are shown in brackets
- Total marks available: 90
- Time allowed: 2 hours
Hartley & Co. Accountants — Personal Finance Planning
Hartley & Co. is a high-street accountancy firm offering personal financial planning services. They help clients understand financial products, manage budgets, and plan for different life stages. A recent client survey shows that many young adults are confused about borrowing options and debt management.
(a)State two examples of personal financial products that help people save or invest money.(2)
(b)Explain one factor that affects a person's personal finance decisions at a specific life stage.(2)
(c)Describe one advantage of having a personal budget.(2)
(d)Discuss whether young adults should prioritise paying off credit card debt or saving for their first home.(6)
(e)Evaluate the effectiveness of using a personal budget to manage discretionary spending.(8)
Question 1 Total: 20 marks
(d)Discuss whether young adults should prioritize paying off credit card debt or saving for their first home.(6)
(e)Evaluate the effectiveness of using a personal budget to manage discretionary spending.(8)
Question 1 Total: 24 marks
Weber Retail Ltd — Consumer Protection and Financial Services
Weber Retail Ltd is a large clothing retailer operating both online and in physical stores across the UK. They offer store credit cards and have recently faced complaints about unclear terms and conditions. The Finance Director wants to ensure the company complies fully with FCA regulations and consumer protection laws.
(a)Name two financial institutions other than banks that provide financial services to consumers.(2)
(b)Explain one advantage to Weber Retail Ltd of holding full FCA authorisation.(3)
(c)Describe the role of the Financial Ombudsman Service (FOS) in protecting consumers.(3)
(d)Analyse why clear communication about credit card terms and conditions is important under FCA regulations.(6)
(e)Evaluate the effectiveness of the FSCS in protecting consumer savings at Weber Retail Ltd's bank partner.(8)
Question 2 Total: 22 marks
Grant's Insurance Services — Break-even Analysis and Financial Planning
Grant's Insurance Services is planning to launch a new home insurance product. The Finance Team has gathered the following data: Fixed costs are £120,000 per year. The average selling price per policy is £450. The variable cost per policy is £180. In addition, the company expects a 5% increase in variable costs next year and a 10% discount on the first 100 policies sold.
(a)Calculate the contribution per unit (per policy) for Grant's Insurance Services. Show your workings.(2)
(b)Calculate the break-even output (number of policies) for the new product. Show your workings.(3)
(c)If variable costs increase by 5% next year, what will be the new break-even output? Show your workings.(4)
(d)Grant's Insurance expects to sell 600 policies in Year 1, with a 10% discount on the first 100 policies. Calculate the profit or loss for the year. Show your workings.(4)
(e)Explain two limitations of using break-even analysis for this new product launch.(4)
(f)Evaluate whether the new product is viable given the projected sales and financial calculations.(7)
Question 3 Total: 24 marks
(d)Explain two limitations of using break-even analysis for this new product launch.(6)
(e)Calculate the margin of safety if Grant's Insurance expects to sell 600 policies.(3)
(f)Evaluate whether the new product is viable given the projected sales and financial calculations.(6)
Question 3 Total: 24 marks
Nexus Logistics — Cash Flow Forecasting and Working Capital
Nexus Logistics is a distribution company. The Finance Director is preparing a 3-month cash flow forecast for Q1 2026 to manage working capital and plan for potential cash shortages. Opening balance for January is £45,000. The table below shows projected inflows and outflows.
Complete the following cash flow forecast table and answer the questions.
| Item | January | February | March |
|---|
| Opening Balance | 45,000 | | |
| Inflows (£) |
| Cash sales | 28,000 | 32,000 | 35,000 |
| Credit sales received | 18,000 | 22,000 | 25,000 |
| Total Inflows | | | |
| Outflows (£) |
| Wages & salaries | 16,000 | 16,000 | 16,000 |
| Rent & utilities | 8,000 | 8,000 | 8,000 |
| Vehicle running costs | 6,000 | 6,000 | 6,000 |
| Insurance (quarterly) | 12,000 | 0 | 0 |
| Total Outflows | | | |
| Net Cash Flow |
| Net Cash Flow | | | |
| Closing Balance | | | |
(a)Complete the cash flow forecast table for the three months (January to March). Show all workings and label each step.(6)
(b)Explain one risk to Nexus Logistics if a negative closing balance occurs in any month.(2)
(c)Suggest one way Nexus Logistics could manage potential cash flow problems in Q1. Justify your answer.(4)
(d)Explain why understanding cash flow is important for business planning.(2)
Question 4 Total: 20 marks
(e)Discuss the importance of accurate cash flow forecasting for a logistics business like Nexus Logistics. Use the scenario to support your answer.(6)
END OF PAPER
Total marks available: 90
For revision purposes. Not an official Pearson paper.