Form Three Business Studies Paper 1 End of Year Examination 2013

TIME: 1 hr.
Principles of Business
1. Man is termed an ‘economic animal’ because he

a) Lives in any one of three economic systems

b) Considers satisfaction of wants, scarcity and choice daily
c) Economizes so that his wealth is not used up
d) Works hard to feed his family

2. Direct satisfaction of wants entailed

a) Obtaining goods through barter

b) Paying only for goods of a high quality
c) Producing one’s own goods and services
d) Producing goods through a process of specialization

3. Barter may be described as the

a) Bargaining for quality goods at cheaper prices

b) Credit sale and purchase of goods
c) Exchange of goods for goods
d) Exchange of goods for money

4. Which of the following can be identified as disadvantages of the barter system?

I. Absence of a common measure of value

II. Difficulty of storing wealth
III. Double coincidence of wants
IV. Provision of a wider variety of good
a) I, II and III only
b) I and II only
c) II and III only
d) IV only

5. Which of the following factors made the barter system cumbersome and time-wasting?

I. Absence of a double coincidence of wants

II. Availability of abundant supplies of goods
III. Desire of people to hoard their goods
IV. Lack of a standard measure of values
a) I only
b) II and III only
c) I and IV only
d) I, II and IV only
Form Three Business Studies Paper 1 End of Year Examination 2013
6. In very primitive economies, money took the form of

a) Beads, shells and feathers

b) Bank drafts and cheques
c) Gold, silver and copper coins
d) Money and postal order

7. The MOST important characteristic of money is its

a) Acceptability
b) Divisibility
c) Durability
d) Portability

8. Which of the following is NOT a function of money?

a) A measure of value
b) A substitute for cheques
c) A store of value
d) A medium of exchange

9. Which of the following are features of the private sector?

I. State control of goods and services produced

II. Ownership and control of businesses by private individuals
III. Control of some of the country’s productive individuals
IV. Ownership of some business enterprises by overseas investors
a) I only
b) I and II only
c) II and III only
d) II, III and IV only

10. The public sector comprises

a) A body of public corporations, public companies and municipal undertakings

b) A combination of public companies and public corporations
c) An association of all public companies within the country
d) Central and local government organizations and state corporations

11. Within the free enterprise system, the economic problem of ‘what goods shall be produced’ is solved
primarily by the

a) Decisions of the government

b) Pattern of consumer spending
c) Prices paid for capital goods
d) Production costs of consumer goods
Form Three Business Studies Paper 1 End of Year Examination 2013
12. In which type of system does the state own and control all of the country’s productive resources?

a) Capitalist system
b) Mixed system
c) Planned system
d) Socialist system

13. What type of economic system is found in most Caribbean countries?

a) Free enterprise system

b) Mixed system
c) Planned system
d) Socialist system

14. In which type of economy is demand and supply used to determine price?
a) Mixed
b) Planned
c) Free enterprise
d) Both planned and mixed

15. A mixed economy is one which consists of:

a) The provision of free social services

b) More than one political party
c) Both public and private enterprises
d) No private businesses

16. ‘The relationship which subsists between two or more persons carrying on a business with a view to profit’
defines the

a) Co-operative society

b) Partnership
c) Public corporation
d) Public joint stock company

17. The organization which brings people together to carry on a business for their mutual benefit is the

a) Co-operative society
b) Municipal authority
c) Partnership
d) State corporation

18. In a partnership, the sleeping partner is one who

Form Three Business Studies Paper 1 End of Year Examination 2013
a) Contributes not less than three-quarters of the share capital of the business.
b) Sleeps on the premises as a watchman and is paid a salary.
c) Takes no active part in the affairs of the business but shares in its profits.
d) Undertakes the task of implementing the policy decisions of the partnership.

19. Which of the following are advantages of the ‘one man business’?

I. The proprietor is accountable only to himself and apart from income tax need not disclose the
state of his business to anyone.
II. The proprietor has unlimited liability.
III. Personal supervision ensures effective operation.
IV. Sickness of the proprietor may cause the business to experience difficulties.
a) I and II only
b) I and III only
c) I, II and III only
d) II, III and IV only

20. In a limited partnership, limited partners are liable for the debts of a firm to the

a) Extent of their private means

b) Value of half their shareholdings
c) Amount they have guaranteed to pay
d) Amount they have invested in it

OFFICE ADMINISTRATION
21. An agenda is:

a) Notice of a forthcoming meeting

b) List of the decisions taken at a meeting
c) Summary of what has taken place at a meeting
d) List of the items to be discussed at a meeting

22. A quorum is:

a) Part of the rules for meetings

b) Decided by the chairperson
c) A decision of the previous meeting
d) An amendment to a motion

23. A meeting of directors is generally known as a:

a) General meeting
Form Three Business Studies Paper 1 End of Year Examination 2013
b) Board meeting
c) Standing meeting
d) Committee meeting

24. A proposal put forward at a meeting is known as a:

a) Resolution
b) Policy
c) Quorum
d) Motion

25. Standing orders are:

a) The arrangements for regular meetings

b) A method of counting votes
c) Rules for the conduct of meetings
d) The regular items on the agenda

26. An agenda is:

a) A record to the decisions reached at a meeting

b) A programme of business to be discussed at a meeting
c) An extract from the standing orders relating to the conduct of meetings
d) A report submitted for consideration at a meeting

27. The secretary assists the chairman at a meeting by:

a) Providing information required from files

b) Using a casting vote, when required
c) Conducting the meeting according to the agenda and standing orders
d) Signing the minutes of the last meeting

28. An ex-officio member of a committee is one who:

a) Serves after retiring from office

b) Attends because of the office held
c) Counts the votes
d) Serves as a co-opted member

29. Which one of these tasks involved in planning a meeting is out of order?

a) Prepare the agenda and distribute it to participants

b) Arrange for the attendance register to be signed
Form Three Business Studies Paper 1 End of Year Examination 2013
c) Book a suitable room
d) Prepare the draft minutes for the chairman’s’ approval

30. A resolution is carried unanimously when:

a) The majority are in favour

b) The majority are against
c) All are in favour
d) All who vote are in favour but some have abstained

31. The minimum number of persons who must be in attendance to constitute a meeting is known as:

a) Ad hoc
b) Status quo
c) Quod vide
d) Quorum

32. Which of the following has the right of reply when a motion has been fully discussed?

a) Proposer
b) Seconder
c) Chairman
d) Convenor

33. If a unanimous decision is reached it means that

a) Everyone agreed
b) The people who voted agreed
c) Most of the people who voted agreed
d) Few people agreed

34. Which of the following persons is authorized to call a meeting?

a) Teller

b) Secretary

c) Proxy

d) Convenor

35. Assume that you have been elected to be Secretary of your school’s Thrift Society. Which of the following
give the CORRECT sequence of the items to be put on the agenda?

I. Matters arising
Form Three Business Studies Paper 1 End of Year Examination 2013
II. New business

III. Approval of the minutes

IV. Any other business

a) I, II, III, IV

b) II, III, I, IV

c) III, I, II, IV

d) III, I, IV, II

PRINCIPLES OF ACCOUNTS

36. Which of the following statements gives a

correct definition of the double-entry system of 39. Which of the following transactions should be
accounting? debited in the Cash Account?
a) Every account is recorded twice a) Bought goods for cash from J. Jones
b) Every transaction is concerned with b) Paid office cleaner cash
at least two accounts c) Sold goods for cash
c) Every entry is recorded twice d) Paid on loan account
d) In every account an entry is
recorded twice. 40. Which of the following is a liability?
a) Buildings
37. Which of the following statements is b) Debtors
INCORRECT? c) Loan from J. Henry
a) Asset + Capital = Liabilities d) Equipment
b) Capital = Assets - Liabilities
c) Liabilities + Capital = Assets 41. Given the following, what is the amount of
d) Liabilities = Assets – Capital capital? Premises, $55 000, Motor Vehicles, $17
800, Stock $6 450, Debtors $3 720, Bank $1 110,
38. Which of the following is NOT an asset? Creditors $4 000, loan from D. Allen, $10 000.
a) Cash at the bank a) $60 080
b) Premises b) $65 580
c) Stock c) $70 080
d) Creditors d) None of the above

Assets and Liabilities of Mr. Smith $

Cash 320

Bank 410
42.
Creditors 500

Debtors 75

Unpaid expenses 100

Form Three Business Studies Paper 1 End of Year Examination 2013

What is Mr. Smith’s capital?

a) $55
b) $205
c) $405
d) $495

43. Which of the following statements BEST describe the purposes of accounting?
i. Keeping proper records of business transactions
ii. Keeping proper control of the finances of a business
iii. Assisting management in making decisions
iv. Using the accounting transactions to make proper decisions
a) I and II only
b) II and IV only
c) I, II and III only
d) I, III and IV only

44. Which of the following is INCORRECT?

Assets Liabilities Capital
$ $ $
a) 18 270 5 290 12 980
b) 9 340 3 120 6 220
c) 15 160 6 380 7 780
d) 12 230 1 390 10 840

45. Which of the following are INCORRECT?

Accounts To Record Entry in the account
i. Liabilities an increase Debit
a decrease Credit
ii. Assets an increase Debit
a decrease Credit
iii. Capital an increase Debit
a decrease Credit
a) (i) and (ii)
b) (ii) and (iii)
c) (i) and (iii)
d) None of them