Fig. 3.1 shows the statement of financial position (balance sheet) for Sam's Garage. The garage sells petrol and second-hand cars and provides after-sales services. Sam uses leaflets to advertise the business. STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) FOR SAM'S GARAGE AS AT 31 AUGUST 2024 | | $ | $ |---|---|---| | **Assets** | | | | Fixed assets | | 45000 | | Current assets: | | | | Inventory | 8750 | | | Debtors | 15450 | | | Cash | 4600 | | | Total current assets | (x) ......... | | | **Liabilities** | | | | Current liabilities | 6800 | | | Net current assets (working capital) | | (y) ......... | | Total net assets employed | (z) ......... | | | Long-term liabilities | 4000 | | | Capital employed | | 112000 | Fig. 3.1 Use Fig. 3.1 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [1] (x) $28 800
2. [1] (y) $22 000
3. [1] (z) $67 000
4. [1] Anything that is owned by a company / item that belong to a business
5. [1] Creditors / overdraft / utility bills such as electric / insurance / rent / supplies / legal fees / wages /interest / dividends payable / trade payables
6. [1] Does not want to keep large amounts of cash at garage
7. [1] less likely to have robbery/theft
8. [1] Cash is easy to steal
9. [1] better for security
10. [1] Eliminates fraud
11. [1] as no fake/counterfeit money
12. [1] Less employee theft
13. [1] reducing skimming
14. [1] Faster service/more convenient
15. [1] can process petrol sales quicker/efficiently
16. [1] Timesaving
17. [1] no need to count money / visit bank with cash deposits
18. [1] Digital transactions more accurate record of sales
19. [1] less mistakes / improved analysis of accounts
20. [1] Cashless society
21. [1] more people using electronic payments or example such as credit card / bank transfers
22. [2] Repairs
23. [2] Tyre fitting / pumping
24. [2] Breakdown service
25. [2] Servicing car maintenance
26. [2] Brake replacements
27. [2] Maintenance checks / inspecting / testing vehicle
28. [2] Selling spare parts
29. [2] Warranty/replacement
30. [2] Car washing
31. [2] Delivery/transport of vehicles / car towing
32. [2] Sell car accessories such as floor mats
33. [3] Yes - they are cheap (1) easy/quick to produce (1) for a small business/sole trader (1) as they may not be able to afford other advertising media (1) can hand them / deliver to target group/local people (1) with relevant information/details (1) example, such as contact details (1) kept for reference/long-lasting (1) passed on to other people (1) can easily be changed (1) can use colour (1) eye catching/visual impact (1) making them persuasive (1) can be flexibly distributed at garage or door-to-door (1)
34. [3] No - they might be treated as junk mail (1) easily ignored (1) limited information (1) and the information is not read (1) and then just thrown away (1) pollutes the environment (1) not wide coverage (1) time-consuming to distribute (1) no audio impact (1) less impact/less attractive (1) if printed in black or white (1) excludes illiterate readers (1) costly to distribute / need to hire people (1) difficulty to track response rate (1) better to use for example social media / posters / billboard / internet (1)
35. [6] Up to 2 marks for describing discount / sales promotions
36. [6] Up to a further 2 marks for analysing whether Sam's Garage should offer discount for prompt payment
37. [6] Up to a final 2 marks for evaluating whether Sam's Garage should offer discount for prompt payment
38. Cash discount is a reduction in price given by the seller to the buyer to encourage prompt payment.
39. A quick way for Sam's Garage to increase sales as customers like a good deal
40. Improves Sam's Garage's cashflow as it reduces payment time
41. Increases available working capital so that can be used to buy more cars
42. Encourages impulse buying so increase in sales
43. Can encourage word-of-mouth advertising to increase sales
44. Less need for Sam's Garage to use external finance as there is increased cash flow from early payment
45. It reduces bad debts/risk of late payments for Sam's Garage as the buyer makes the payment within the specified period/on time
46. Discounts encourage buyers to continue buying from Sam's Garage rather than going elsewhere
47. However, discounts erode Sam's Garage's profit margin, especially if the discount is too large
48. However, discounts require extra accounting work as Sam's Garage would need to keep track of transactions
49. However, discounts may be unnecessary reductions if customers already pay on time
50. Evaluation: The effect of internet car sales has meant that motor garages such as Sam's need to have cars competitively priced and offering discounts is a good way of being competitive. However, it is money lost, as discounts add up to up to significant sums over time which can have a negative effect on Sam's Garage's sales revenue and ultimately profit.