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These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.

01 Hours 45 Minutes

50 Marks

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IB BUSINESS MANAGEMENT SL, Paper 2, November, 2018, TZ0, Solved Past Paper

Master the 2018 IB November for Paper 2 Business Management SL with examiner tailored solutions and comments for TZ0

Question 1 [Explained]

Piper Industrial (PI) manufactures pipe and is highly profitable, with a corporate tax rate of 20%. The company is forecasting major capital expenditure for 2019. The following tables provide financial data for PI, including cost of goods sold, expenses, gross profit, interest, net profit, sales revenue, tax, receipts from debtors, total receipts, payments to creditors, payments for expenses, payments to banks for debt, capital expenditure, total payments, net cash flow, opening balance, and closing balance.

Cost of goods sold	Expenses	Gross profit	Interest	Net profit after interest and tax	Net profit before interest and tax	Net profit before tax	Sales revenue	Tax
$ 15000000	$ 4700000	X	$ 1000000	$ 3440000	$ 5300000	$ 4300000	$ 25000000	Y

Receipts from debtors	Total receipts	Payments to creditors	Payments for expenses	Payments to banks for debt	Capital expenditure	Total payments	Net cash flow	Opening balance	Closing balance
$ 24000000	$ 24000000	$ 14000000	$ 4600000	$ 1200000	$ 2700000	$ 22500000	Z	$ 3700000	$ 5200000

Question 1 [a] [Explanation]

This question asks you to define the term 'capital expenditure'.

Question 1 [b] [Explanation]

This question asks you to use Table 1 to calculate:

Question 1 [b] [i] [Explanation]

Calculate the gross profit (X).

Question 1 [b] [ii] [Explanation]

Calculate the tax (Y).

Question 1 [c] [Explanation]

Using Table 1 and your calculations in (b)(i) and (ii), construct a profit and loss account for PI.