Celine and Lee are partners in a hairdressing business. They have agreed that profits should be shared in the same proportion as their capital invested. They use window displays to advertise their hair salon.

Mark scheme

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

1. [1] Two or more owners / 2 to 20 owners/partners
2. [1] Private sector
3. [1] Partners control/responsible for the partnership / shared responsibilities/management / shared tasks/workload
4. [1] Shared decision-making / thoughts on decisions
5. [1] Shared skills / expertise
6. [1] Share losses / share risks
7. [1] Unlimited liability
8. [1] Not a legal entity/identity / unincorporated
9. [1] May have / governed by a deed of partnership/partnership agreement
10. [1] Capital contributed by each partner / sharing of capital/costs / share resources
11. [1] Ease of setting up / no legal formalities
12. [1] No publication of accounts / secrecy
13. [1] Lack of continuity
14. [1] Can have a limited partnership
15. [2] Correct answer = $130 000 (2) Method = $195 000 divided by 3 = $65 000 × 2 (1)
16. [1] Yes - Noticed/attracts customers passing by; who can find information of salon's products / special offers
17. [1] informative advertising; gives opportunities for attractive designs / use of colour / such as wigs / hairstyles
18. [1] eye-catching / persuasive advertising; may tempt consumers to go into/visit the salon / try/buy their services
19. [1] an effective display may provide a positive impression
20. [1] an inexpensive display can attract the eye of potential new customers if it is effective; cost effective / low cost
21. [1] display can be changed quickly
22. [1] No - Can be easily ignored / overlooked / receive no attention
23. [1] limited only to those who physically pass the store
24. [1] will not remember what they saw
25. [1] only limited items can be displayed
26. [1] not able to show the variety of hairdressing services offered or example
27. [1] can look untidy/unprofessional
28. [1] need to be kept updated / display needs to be kept clean
29. [1] better to use social media or example of any other suitable method (must be supported by a reason to obtain the mark)
30. [1] Go to the salon/telephone salon to discuss complaint/see Celine
31. [1] Complain to Lee / ask to see Celine / make a complaint
32. [1] Refuse to pay
33. [1] Customer should ask to for/seek medical advice/obtain a medical report on the burn/go to hospital
34. [1] Take photographs of head/get evidence/find a witness
35. [1] Ask another member of staff to repeat the procedure
36. [1] Follow up complaint in writing
37. [1] Ask for refund
38. [1] Ask for compensation/payment for medical bills
39. [1] Claim on own insurance / insurance from partners
40. [1] Contact solicitor / start legal action/sue if necessary / file a case
41. [1] Do nothing
42. [1] Do not visit the salon in future
43. [1] Tell family/friends not to visit/about what happened
44. [1] Write a bad review on social media/local newspaper
45. [1] Own savings come from capital provided by the owners is a method of internal finance.
46. [1] Hire purchase is a form of credit and a method of external finance where the buyer hires the goods. The buyer usually makes a deposit/down payment and pays in monthly instalments but does not own the goods until the last payment.
47. [1] Option 1: Own savings It is easy to use as the partners will not have to spend time trying to secure other sources of finance
48. [1] They will be able to buy the equipment immediately
49. [1] They will be able to save the interest that would be charged if they took out hire purchase
50. [1] If they use their own money, they will be limited to what equipment they can afford which might mean they buy lower quality equipment
51. [1] After using their savings, they might not have enough money left for running the partnership
52. [1] The business might fail which means that, with unlimited liability, they would lose all their own savings
53. [1] There is the opportunity cost of putting their own savings into buying equipment rather than a more profitable activity.
54. [1] Option 2: Hire purchase They can use the equipment before paying for it in full, so could start receiving income by offering these new services
55. [1] Able to spread payments over e.g., three years, enables the partners to budget and save for other things / assists their cash flow
56. [1] Able to focus on other aspects of their business at the same time
57. [1] Hire purchase helps a business's cash flow by avoiding a large upfront deposit for an expensive asset. This frees up working capital.
58. [1] Sellers sometimes add servicing packages or accessories into the HP deal
59. [1] Expensive equipment, with high resale values, can have low monthly payments because they will be worth more at the end of the term
60. [1] They will not own the equipment until they pay the last instalment
61. [1] The equipment can be repossessed if they do not keep up with payments
62. [1] Total cost is higher than paying cash from own savings because of interest to be paid
63. [1] They cannot sell the equipment until final payment is made.
64. Evaluation: Own savings is the faster and easier option to secure funding to buy the new equipment. However, we are not told how much the equipment is going to cost or more importantly whether the partners have sufficient personal savings to afford it. Yes, paying by cash would be the cheaper option for the partners if they have enough savings in the bank. If the equipment is expensive, I recommend that it would be better to spread the payments through hire purchase and, at the same time, have the protection of being less exposed to risk if anything goes wrong with the equipment and it needs repair.