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rESr coDE 02133010

FORM TP 2015238 MAY/JUNE 20I5
CARIBBEAN BXAMINATIONS COUNCIL
CARIBBEAN ADVANCED PROFICIENCY EXAMINATION@
MANAGEMENT OF BUSINESS

Unitl-Paper0l
t hour 30 minutes

21 MAY 2015 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

l. This test cdnsists of 45 items. You will have I hour and 30 miriutes 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.
A
Eaclr item in this test has l'our suggested answers lettered (A), (B), (C), (D). Read each itenr
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 ltem

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

Sample Answer
(A) Picket
(B) Strike
@@@.
(C) Co slow
(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, be sure to erase it completely before you fill in your new
choice.

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, omit it and go on to the next one.
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.
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I DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.
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I
E Copyright O 2013 Caribbean Examinations Council
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All rights reserved.
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 -2-
l. Government's payment to domestic 6. What stage of the decision-making process
producers, in the form of a tax relief. is should follow after a course of action is
known as a determined?

(A) tariff (A) Evaluation

(B) quota (B) Implementation
(C) subsidy (C) Problem analysis
(D) corpgrate tax (D) Formulation of alternatives

2. In which of the following levels of 7. The introduction ofthe CSME has provided
production would bottling water fall? numerous opportunities to Caribbean
territories including
(A) Primary
(B) Teftiary I. removal of trade barriers
(C) Secondary II. free movement of capital
(D) Subsistence III. repayment of foreign debt

(A) I and II only

3. Which of the following is NOT a decision-
(B) I and III only
making tool?
(c) II and III only
(D) I, II and III
(A) Decision tree
(B) Qualitative data
(C) Cost benefit analysis
8. One benefit of multinational corporations
(D) Critical path analysis
to the host country is

4. A firm practiges ethical behaviour when it (A) bettpr knowledge of consumers'

taste
(A) recalls a specific batch of products (B) increased foreign exchange
because of flaws in a few eamings
(B) places more emphasis on social (c) better access to local natural
responsibilities over profi ts resources
(C) delays paying its supplier in order (D) lower transportation costs for the
to improve its liquidity position finished product
(D) pays large salaries to its executives
during a redundancy exercise
9. The benefits which many large firms enjoy
over smaller firms are referred to as
5. A & B Electronics is in the business of
providing internet and cellular phone (A) economies of scale
services. (B) economic wellness
(c) profit maximization
In which ofthe following economic activities (D) goodwill of the firm
isA & B Electronics involved?

(A) Tertiary
(B) Primary
(C) Secondary
(D) Elementary

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10. President Lewis is concerned that although 14. One advantage of trade liberalization to the
the business strategy adopted promisesio
Caribbean is that
make the company profitable, the business
operations could have a negative impact on (A) a level playing field is provided for
the community. all countries
(B) home producers are protected from
With which of the following issues is the unfair competition
president MAINLY concerned? (C) consumers are able to purchase a
wider variety of goods
(A) Legal (D) infant industries thrive well against
(B) Ethical competition from importers
(C) Political
(D) Financial
15. Which of the following statements BEST
explains the costs of unemployment to a
u. A multi-national company wi lt MOST likely country?
be located in a country which has
(A) A highly efficient workforce
(A) limited services (B) An increase in foreign reserves
(B) low taxation rates (C) lncreased costs for trade unions
(C) high employment rates (D) Reduced demand for goods and
(D) limited access to raw materials services

12. Which of the following factors is NOT a 16. A job description comprises the
challenge of globalization to Caribbean
firms? (A) personal ity requ irements
(B) physical attributes required
(A) Wider market access (c) main tasks to be performed
(B) Increased competition (D) level of knowledge and intel ligence
(C) Removal of protectionist policies required
(D) Conformity to international
standards
17. The flow of communication in a matrix
structure reflects the interest of
r3. John wishes to start a business with branches
(A) customers
in different countries. However, he has
(B) authority figures
no advertising experience but needs quick
(c) management and customers
business success. He also needs easily
(D) the functionalareas of management
available sources of raw materials.

Which of the following types of business

is BEST suited for John?
18. Effective communication is distorted when

(A) only the electronic medium is used

(A) Franchise
(B) verbal and non-verbal cues are used
(B) Partnership
(c) body language and intonation are
(c) Sole Trader
not aligned
(D) Multinational (D) several media are used to relav
information

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02 r 3301 0/CAPE 20 l s
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19. In which of the following types of 24. Whenemployeesworktogethertoachieve
organizational structures is specialization a common goal, they are applying Fayol's
a MAJOR consideration? principle of

(A) Team (A) initiative

(B) Matrix (B) authority
(C) Product (C) discipline
(D) Functional (D) unity of direction

20. Which of the following schools of 25. Which of the following types of
management theories promotes a communication is illustrated by the
bureaucratic nlanagement approach? grapevine?

(A) Systems (A) Laterul

(B) Classical (B) Formal
(C) Behavioural (C) Informal
(D) Contingency (D) Diagonal

21. Rose Telecommunications Services has 26. Upward communication occurs when
initiated changes to increase its profitability
in the market place. This response may be (A) employees are allowed to express
interpreted as being their views
(B) specific instructions are given to
(A) risky pubordinates
(B) reactive (C) objectives are communicated to the
(C) proactive rank and file
(D) spontaneous (D) members of staff coordinate tasks
within their departments

22. Which of Maslow's hierarchy of needs

would an organization be satisfying if it 27. Which of the following factors is LEAST
provides its workers with pension plans? likely to influence group cohesiveness?

(A) Social (A) Size

(B) Security (B) Goal
(C) Self-esteem (C) Name
(D) Physiological (D) Diversity

23. An organization that has adopted a team

structure would be characterized bv

(A) cultural bias

(B) change management
(C) autoCratic leadership
(D) decision by consensus

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28. The 'systems approach' to management 32. The THREE main components of a cash
refers to
flow statement are
(A) top down management strategies (A) issuing shares, funds flow, financing
(B) inter-connectedness of individual activities
parts of the organization (B) operating activities, investing
(c) the view that there is no best way to activities, funds flow
perform tasks in the organization (C) operatingactivities,financing
(D) the view that there is only one activities, issuing shares
correct way to carry out work (D) operatingactivities,investing
functions activities, fi nancing activities

29. Finex Inc is a multi-national corporation 33. Which of the following sources of finance
with four local branches in the Caribbean. is NOT internal to a limited company?
The branch managers have been given fult
control of their respective operations. (A) Sale of assets
(B) Trade creditors
Which of the following terms BEST (C) Retained profits
describes the organizational structure (D) Working capital
referred to above?

(A) Flexible 34. Someone whose job involves buying shares

(B) Inflexible on the stock market is called a
(C) Centralised
(D) Decentralised (A) stockbroker
(B) stockjobber
(c) stock valuator
30. In the context of a modern organization, (D) stockexchange operator
the term'delayering' means

(A) flatter structures

(B) poor communication
(c) fewer chances of promotion
(D) more sophisticated managers

31. Which of the following sources of finance

is an example of debt financing for a
company?

(A) Stock issue

(B) Debt factoring
(c) Debenture issue
(D) Retained earnings

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0213301O/CAPE 2015
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Item 35 refers to the following table which 38. Which of the following sources of finance
shows a cash budget for January 2014. is LEAST likely to be used as investment
in a new pFoduct development?
January 2014
(A) Bank loan
Receipts from debtors 46 000 (B) Debentures
Payments 43 000
(c) Share issues
(D) Bank overdraft I
Net Receipts ? I

Bal b/fwd I 000

Net Bal c/f 0l Februaw 2014
l
?
39. An investment costs Sl 000 and generates
cash flow of $80 over an indefinite period.
The internal rate of return (lRR) is

35. The balance brought forward for February (A) 4%%

2014 is (B) 6%
(c) 80

(A) $l 000 (D) 12 %

(B) $2 000
(c) $3 000
(D) $4 000 Item 40 refers to the following information.

The owner,ofa company withdrew from the

36. Which of the following methods of company, gclods worth $100 for personal
investment appraisal uses profits in its use.
calculation?
40. Which TWO accounts are required to post
(A) Payback period this transaction?
(B) Net present value
(C) Internalrate of return (A) Sales and creditors
(D) Average rate of return (B) Sales and drawings
(C) Purchases and creditors
(D) Purc,hases and drawings
37. Which of the following ratios gives a
measure of how easily a business could
meet its short-term debts or liabilities? 41. Which ofthe following items is retained in
a business to generate wealth over time?
(A) Gearing
(B) Liquidity (A) Current assets
(C) Efficiency (B) Fixed assets
(D) Profitability (C) Trade receivables
(D) Trade creditors

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 42. The following extract is from the books of 44. The following information was taken from
Carib Vibes Vacation Tours.
the books of Sam peter,s Business.

EXTRACT
$
(ooo) Stock at 1', January 3 000
current assets Wages 4 500
Fixed assets
Current liabilities
$60 Purchases l0 000
Creditors
Postage 150
S l0 Closing stock 2 300
Overdraft $10
What is the cost of goods sold?
The current ratio of Carib Vibes Vacation
Tours is
(A) $ e ooo

(A) (B) $ e 300

(B)
0.s
l.o
(c) $to 600
(D)
(c) 2.0
$10 700
(D) 5.0
Item 45 refers to the following extract from
Maria's Cosrnetics Cash Account.
Item 43 refers to the following table which
shows an extract from the books of pB,s
Ltd.
DR Cash Account CR
$ $
Openingbalance 800 Rent r 000
Net cash inflow from operation $46 000 ,2 400 Wages 1 200
Taxation paid $12 000 Telephone 300
Payment offixed asset $r9 000 Closing balance 740
Share issue $13 000 3 200 3 200

43. The closing cash balance is

45. Which ofthe following amounts should be
posted to the trial balance?
(A) $ 2 000
(B) $26 000 (A) $ 3oo
(c) $28 000 (B) $ 7oo
(D) $40 000 (c) $ 8oo
(D) $l ooo

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR

WORK ON THIS TEST.

0213301O/CAPE 2015