TEST CODE 02133010

FORM TP 2016252 MAY/JUNE 20I6

CARIBBEAN EXAMINATIONS COUNCTL
CAzuBBEAN ADVANCED PROFICIENCY EXAMTNATION@
MANAGEMENT OF BUSINESS
Unitl-Paper0l
I hour 30 minutes

19 MAY 2016 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

This test consists of 45 items. You will have I hour and 30 minutes to answer them.
2. In addition to this test booklet, you should have an answer sheet.
3 Do not be concerned that the answer sheet provides spaces for more answers than there are
items in this test. i'
4 Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item
you are about to answer and decide which choice is best.
5 On your answer sheet, find the number which corresponds to your item and shade the space
having the same letter as the answer you have chosen. Look at the sample item below.

Sample Item

Which of the following actions CANNOT be taken by a trade union?

Sample Answer
(A) Picket
(B)
(C)
Strike
Go slow
o
(D) Lock out

The best answer to this item is "Lock out", so (D) has been shaded.

6. If you want to change your answer, erase it completely before you fill in your new choice.
7 When you are told to begin, turn the page and work as quickly and as carefully as you can.
If you cannot answer an item, go on to the next one. You may retum to that item later.
8 You may do any rough work in this booklet.

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9 You may use silent non-programmable calculators to answer questions.

I- DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

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- Copyright O 2013 Caritibean Examinations Council
All rights reserved.
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I lrr rvhich of tlre follorving activities is the 6. Which of the following is LOWEST in the
tertiary sector of the economy engaged? hierarchy of objecti ves?

(A) Harvesting crops (A) Tactical

(B) Providing services (B) Strategic
(C) Manufacturing goods (C) Corporate
(D) Extracting rarv materials (D) Decisional

2 Nationalization is BEST defined as a 7 Which of the following is NOT Iikely to be

situation where considered a corporate objective?

(A) a private company takes ownership (A) Labour relations

of a govemment-owned business (B) Profit maximization
(B) a national corporation merges with (C) Growth and survival
a private business (D) Corporateresponsibility
(c) government takes ownership of a
private business
(D) ownership of a business is 8 Which of the following is a benefit of
transferred from a sole trader to a multinational corporation to the host
a limited liability company country?

(A) Increased foreign exghange

3 The term'technological obsolescence' earnings
refers to technology being (B) Better access to local natural
resources
(A) outdated (C) Better knowledge of consumers'
(B) inefficient taste
(C) expensive (D) Lower transportation costs for the
(D) inappropriate finished product

4 Trade liberalization may be BESTdescribed 9 A benefit of a private limited company

as the over a partnership is that a private limited
company
(A) free movement of capital
(B) removal of trading barriers (A) affords shareholders limited
(C) unrestricted movement of goods liability
(D) independence of trading partners (B) is an unincorporated association
(C) can issue a prospectus to the
general public
5. Growing interdependency and free (D) allows shareholders to sell their
movement of capital among countries are shares on the stock exchange
features of

(A) free trade

(B) integration
(c) liberalization
(D) globalization

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r0 Singlr's Engineering Cornpany and Ranr's t4 Which of the follou,ing statements

Architectural Firm have decided to work represents an advantage ofa franchise to a
together on a governtnent project to franchisee?
construct a bridge. This type ofarrangetnent
can be referred to as (A) Royalties are received flrom the
Franch iser.
(A) a franchise (B) The irritial capital investrnent is
(B) a co-operative relatively low.
(c) ajoint venture (c) The franchisee exercises total
(D) an unlimited company control over the franchise.
(D) Research and development support
is provided by the franchiser.
11 President Lervis is concerned that although
the business strategy adopted promises to
rnake the company profitable, the business 15 ACaribbean island has been experiencing a
operations could have a negative impact on decline in its grossdomesticproduct(GDP)
the community. Which of the following for the past six months. How would this
types of issues MOST accurately represents economic situation affect local producers?
the president's concems?
(A) lmprove relations between
(A) Legal employers and employees.
(B) Ethical (B) Extend product range\.for designer
(C) Political products. .i.
(D) Financial (C) Increase output for go6ds and
services.
(D) Reduce demand for workers.
12. Which of the following phrases BEST
of unemployment to a
explains the costs
country? 16 The manager of Promotions Plus
sometimes yields to his workers when
(A) A highly efficient workforce they make suggestions. They sometimes
(B) An increase in foreign reserves give in to him as well. Which of the
(c) lncreased costs for trade unions following conflict handling modes does
(D) Reduced demand for goods and this demonstrate?
services
(A) Smoothing
(B) Compromise
l3 Which of the following statements (c) Collaboration
represents an advantage of trade (D) Confrontation
liberalization?

(A) A level playing field is provided for l7 Which of the following is a non-financial
all countries. reward?
(B) Home producers are protected from
unfair competition. (A) Gain sharing
(c) Consumers are able to purchase a (B) Job enrichment
wider variety of goods. (c) Lump-sum bonus
(D) Infant industries thrive well against (D) Employee stock ownership plan
competition from importers. (ESOP)

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18 Most workers feel that their jobs are 22 According to McCregoq horv do managers
threatened when ner.r, production methods who subscribe to a 'Theory X' view expect
are introduced in a company. Which area of workers to treat the conceptof responsibilitv?
change would workers be MOSTconcerned
about? (A) Slrare
(B) Avoid
(A) Social (c) Accept
(B) Cultural (D) Denronstrate
(c) Political
(D) Technical
23 Poor management and personality clashes in
organizations often lead to
19. Effective communication is distorted when
(A) conflict
(A) only the electronic medium is used (B) conciliation
(B) verbal and non-verbal cues are used (c) competition
(c) body language and intonation are (D) communication
not aligned
(D) several types of media are used to
communicate information 24 A project-based firm assigns workers from
each department to its various projects. The
resulting structure is described as a
20. Employees at JC Ltd often complain that
their manager does not give them the (A) circle
opportunity to express their views and (B) matrix
feelings about decisions made by the (C) network
company. Confl ict is likely to result because (D) hierarchy
of the

(A) management style 25. Cindy isa newmanager in chargeofagroup

(B) clash of personalities ofyoung, inexperienced employees. Wh ich
(c) lack of communication of the following types of leadership styles
(D) competition for scarce resources would be MOST suitable in a situation
where Cindy's team must meet very tight
deadlines?
21. Which of Maslow's hierarchy of needs
would an organization be satisffing if it (A) Autocratic
provides its workers with pension plans? (B) Democratic
(c) Laissez faire
(A) Social (D) Transformational
(B) Security
(C) Self-esteem
(D) Physiological 26 When employees areallowedto develop and
carry out plans with high levels of effort,
they are applying Fayol's principle of

(A) initiative
(B) authority
(C) discipline
(D) unity of direction

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27 When authority is assigned to sorrreone in 32 Which of the [ollowing types of liabilities

order for thern to make decisions. this can is NOT a current liability?
be BEST defined as
(A) Bank overdraft
(A) control (B) Expenses owirrg
(B) promotion (C) Mortgage payable
(c) delegatiorr (D) Creditors of goods
(D) empowerment

33 A type of external finance rvhich offers

28 U pu,ard commun ication occurs r,r,hen flexibility and the ability to access funds
'over and above' bank balances is knorvn
(A) instructions are given to AS

subordinates
(B) objectives are communicated to the (A) a lease
rank and file (B) an overdraft
(C) employees are allowed to express (c) a trade credit
their views (D) a standing order
(D) employees coordinate tasks within
their departments
34 Which of the following investment
appraisal methods uses profiti rather than
29 What is the HIGHEST level in Abraham cash flows? .1.

Maslow's hierarchy of needs?

(A) Net present value
(A) Social (B) The payback method
(B) Safety (c) Internal rate of return
(C) Esteem (D) Average rate of return
(D) Self-actualization

35 Mrs Till, the accounting manager of XZY

30. Which of the following would NOT be Co. Ltd, is in the process of assessing
classified as a hygiene factor based on the profitability of the business. She is
Herzberg's two-factor theory? comparing profit with the capital which
has been invested in the business. Which
(A) Pay of the following ratios is Mrs Till using?
(B) Job security
(C) Recognition (A) Acid test
(D) Working conditions (B) Net profit margin
(C) Gross profit margin
(D) Return on capital employed
3t Which of the following types of financing
can be classified as debt financing for a
company? 36. The purpose of venture capital is to

(A) Stock issue (A) start a business

(B) Debt factoring (B) invest in capital goods
(c) Debenture issue (C) pay creditors for goods
(D) Retained earnings (D) pay wages and salaries

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37 The following table is an extract from the 39 The follolving information rvas taken frorn
books of XJ's Ltd. the books of Sam's business.

Sales $9 000 $
Opening stock $3 200 Opening stock 3 000
Closing stock $2 400 Wages 4 500
Purchases $s 600 Purchases r0 000
Postage 150
The gross proht ratio is Closing stock 2 300

(A) 2s% What is the total cost of goods sold?

(B) 29Yo
(C) 36%0 (A) $ 9 000
(D) 62% (B) $ e 300
(c) s ro600
(D) $ l0 700
38 The fol lowing information is an extract from
the firm, Ali and Sons Ltd, at 3l December
2015. 40 The following is an extract from the books
of Carib Vibes Vacation Tours.
Current assets $160 000
Long-term liabilities $200 000
Current assets $40 000..
Fixed assets $300 000
Fixed assets $60 000
Current liabilities $ 60 000
Current Iiabilities:
Creditors $r0 000
The firm's capital as at 3l December 2015
ts
Overdraft $10 000

(A) The current ratio of Carib Vibes Vacation

$200 000
(B) $260 000
Tours is
(c) $360 000
(D) $s00 000
(A) 0.5
(B) 1.0
(c) 2..0
(D) 5.0

4t Which of the following assets is NOT a

current asset?

(A) Stock
(B) Debtors
(c) Cash at bank
(D) Bank overdraft

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42 The MAIN objective ofcaslr flou,statements 44 Which of the following sources of finance
to a business is to shou,the is LEAST likel,v to be used as investment
in neu, prodr.rct development?
(A) cash inflow and cash outflorv
(B) cash-in-hand and cash ourflorv (A) Bank loan
(c) caslr equivalents and cash inflorv (B) Debentures
(D) cash-in-hand and cash equivalents (C) Share issues
(D) Bank overdraft

43 Jake rvould llke to measure the ability of

his business to pay for or cover its short- 45 In which of the [ollorving accounts is interest
term debts from all current assets. Which paid on debentures charged?
of the following ratios would be MOST
appropriate in assisting Jake? (A) Current
(B) Trading
(A) Current (C) Appropriation
(B) Gearing (D) Profit and Loss
(C) Acid test
(D) Profitability

END OF TEST

IF YOU FINISH BEF'ORE TIME IS CALLED, CHECK YOUR WORI( ON THIS TEST.

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