cape mob 2002-2010 unit 1 past papers

7/22/2019 CAPE MOB 2002-2010 Unit 1 Past Papers

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SECTION A

MODULE 1

BUSINESS AND ITS ENVIRONMENT

Answer ONE question from this section.

1.Discuss how your country's economic system impacts on the operations of a localbusiness entity.Total25 marks

2..A country's success in the global marketplace is a direct result of the company

's multi-facetedapproach to cross-cultural preparation'. Explain the challenges faced by Caribbean businessorganisations as aresult of globalisation.Total25 marks

SECTION B

MODULE 2

THE MANAGEMENT OF PEOPLE


I

3.'Motivation of subordinates is an important aspect of a manager's job' .I

F

(a)Examine THREE factors that motivate a person to work well. [13 marksl

I

I (b) Identify and evaluate FOUR steps managers may take to motivate their subordinates.[12 marks]

I

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i 4.Tlvo important strategies for effective management of an organisation include: (i) training of

employees and (ii) conflict management.

With reference to the above statement:



(a)DiscussTHREE advantages andTWO disadvantages of an 'on the job'system of training.[15 marks]O) Discuss THREE major strategies a manager may use to resolve conflict in his organisation.

[10 marksl

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SECTION CMODULE 3BUSINESS FINANCE AND ACCOUNTING


5. (a) What are the advantages of debt financing to a firm? f6 mu.t\, _., "1O) A medium-sized retail chain wishesgg+xpanA*L-deLlo it needs to raise additionalcapital. suggestT!![lE possible rrn4 tgur9!!-g:Tglg*-d this exercise and commenton the relative merits of financing thdrefi;inder byEiTHER equity OR debt methods.[19 marks]

Total

25 marks

6.The following relates to the Income Statement and Balance Sheet of Blackwood and CompanyLtd for the period ending 3Il12/98.Sales 10,795,000Cost of Sales 8,650,000Less Overheads:Administration Expenses:Wages & Salaries 235,000Supplies & Stationery 96,000Heat & Light 50,000

Rates, Rent & Insurance 75,000Depreciation 10,000 465,000FinanceInterest 100,000Bad debts 95,000 195,000SellineSalaries 100,000Distribution 50,000Advertising 100,000 300,000

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BALANCE SHEET

Fixed Assets

Freehold Premises 3,(X)0,U)0Leasehold Premises 630,000

Plant&Machinery 2,645,000MotorVehicle 770,000LongTerm Investments 795,000 7,840,000Current AssetsInventories (Stock) 5,500,000Debtors Prepayment 1,500,000Marketable Securities 500,000Bank Balance 100,000 7,6i00,000Total Assets 15,440,000Share Capital-& Reserves

Ordinary Shares 5.300.000

Preference Shares 2,100,000Reserves 2,500,000 9,900,000Long Term LiabilityDebentures r 2,500,000 2,500,000

Current LiabilitiesCreditors l,'754,ONTax Payable 5m,qnBankOverdraft 45l,moProposed Dividends 33s,mo 3,040,000Total Capital Liabilities 15,440,000

From the above financial statements, calculate the following ratios and state TWO important features ofEACH.

(a) Current Ratio [5 marks]O) Inventory Tirnover [5 marks]

(c) Gross ProfrtMargin [5 marksl(d) Interest Cover Ratio [5 marks](e) Gearing Ratio [5 marks]Total25 marks

END OF TEST



00437ASPEC2ffi2



-2SECTIONAMODI'LE T _ BUSINESS AI\TD ITS ENYIRONMENTAnswer OflE question from this section.

:

V 1. (a) Identiff and evaluate FIVE ways in which multi-national iorporations have impacted on[15 marks]

countries of the region. I

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-Identiff TWO ways in which a multinational company may have to adapt its operati

ons to

(b).9 r.f

suit the Caribbean business environment Explain the rationale for, and the possible effect

4\fr'lt.q'

U r l'[10 marlsl

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of EACH adaPtation on the comPany',ir''

Total25 marks

2.(a) Discuss FOUR circtmstmccs undcrq,hich stab cmbol of privale business is justified.[8 marls I(b)Suggsstadjustifyll{REE objcctivesyouthinkapublicly owned business should Pursue[9 marks IWith the aid of TWO examples, explain the concept of 'franchising'.

(c)(r)(iD Discuss TWO benefits of this practice to the franchisee. 18 marks lTotal25 marks

SECTION BMODTILE 2 _ MANAGEMENT OF PEOPLE

Answer OI\E question from this scction.



The OM (Operations Manager) of Flyerbee Airlines is considering delegating the task of procuring

3.food suppliis and monitoring aircraft maintenance to two of his supervisors'[2 marla I

(a)Distinguishbetween'delegation' and'decentralization''(b) outline Two benefits and TWo disadvantages of delegation.[8 marks I(c)Authority, responsibility and.accointabilrty are three concepts related to the process of.delegation. Define EACH concepl give an example of EACII and explain how theseconcepts may impact on the success of the Managing Director's attempt at delegation at[15 marks]

Flyerbee.Total25 marks


004372|CAPE 2003



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1-(a) Distinguish betrvqr leadershipsHb and lea&rship roles and give an exampleof EACH.[4 marks I

o)Cornmunication, considcrdioo, pfrqqing ceching and inspiration are some of thebehaviours expected of *Ectiv= btiEs. DsscrlUe EAC! of the fonigoingpehavioursand with the aid of aamplcs, discnss fuT! of EACH in effective leadership.

[21 marksl

Total25 marks

SECTION C

MODT'LE 3 _ BUSINESS FINAhICE AITD Ac(](X'NIIIIG

Answer OI\IE question fium this section.

ArawakLimited manufactures cutlery, vases and cooking utensils. The firm is stort of working

u/s'

capital.

(a)

Identiff, describe and explain the impact of THREE alternatives which the trrm mey useto increase its working capital. lfs r.rbl-t I O) State THREE criteriaArawak Limited may use to chose among the altematives idcdifcdin (a) above and explain how EACH criterion may be used to make the choice.[10 mer]rl

Total25 mutr

6.Cornwall School and Oflice Supplies Ltd. published accouhts and recorded the followinginformation for the last two years of operations: \tgv, 2000

Profit before tax and interest $10 m $20 m

Net assets employed $300 m $250 mSales furnover $8,200 m $700 m

(a)Using the information above, calculate THREE p-1qfi@b_itity ratigs and use yourresuls tocomment

on the company's performance in 2000. Assume a tax rate of 25Vo.115 marksl



(b)Explain THREE limitations of accounting ratios and suggest how EACH of these mightbe overcome. [10 marlslTotal25 marks

END.OF TEST

O0/.3TACAPE 2003



-2

SECTION AMODI,'LE 1BUSIhTESS AI\TD ITS EhTVIRONMENT

Answer ONE $cstion ftom thb section.

Question It I' Carmen Martin is contemplating turning her itinerant (mohile) cmeen into afull fast-food restaurant.

"

She is pondering whether to maintain the sole proprietorship sbe hr*, whetber sh

e should organize thebusiness as a partnership with two friends or form a private limited cmpmy withthem.

:l (a) Describe THREE features of each form of business Carmen is considering. [ 9 marks]ol' (b)

Discuss TWO advantages and TWO disadvantages of organizing the restaunut as a limited

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/1.' -)-t. company rather than a partnership.[16marks]

Ibtal25 marks

Question 2

The success of an insurance company is strongly influenced by external environmental forces.

(a)Explain, with specific examples, TWO ways in which each of the following can facilitate anirinsurance company in conducting its business(i) legislation(ii)information technology(iii)trade liberalization [12 marksl(b)Explain, with specific examples, TWO ways in which c.cl of the following can hinder an

insurance company in conducting its business(i) competition(ii)



nahml environment.

(iii)globalization [13 marks]Total25 marksGO ON TO THE NEXT PAGE

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SECTION BMODULE 2MANAGEMENT OF PEOPLEAnswer ONE question from this section.

Question 3inwhich

Frederick Herzberghas developed what is referred to as the 'twofrctor theory ofmotivation"he argues that job satisfaction and dissatisfaction are caused by two distinct sets of factors.

Name the TWO factors of motivatim ideatified by Hlzbrg-[ 2marks]

(a)(i)

;t,[ 4marks]

(ii) Describe the factors you narned in (a) (i) above'(iiD Give TWO examples of ach of the frtqs described in (a) (ii) above. [ 4 marks]^L!

1".r::" Explain how the Two factors outlined in (a) above lead to job satisfaction oRdissatisfaction

(b)

[ 8marks]

inLorganization.

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(c) Outline a three-phase plan which you, as a Human Resources Manager, would use to bringabout job satisfaction in an organization based on Herzberg's theory' [ 7 marks] Total25 marks

Question 4Joy Manning has just been appointed the Human Resources (HR) Manager for a cement manufacturingplant. Joy nL naO no training in HR management, however, she recalls vaguely that HR managers areLrponriut" for five major activities in an organization viz. recruitment, selection, training, performanceassessnrent and remuneration., -'-, .'

(a)Describe the FIVE activities which HR managers have responsibility for' [ 5 marksl

Explain ONE way in which clear policies for the execution of each activity can contribute to(b)



the effectiv" -un"g"-"nt of people in her organization. [10 markslExplain THREE ways in which labour unions can impact on the HR manager's job.

(c)[ 6 marks]Describe TWO waYs in which JoY Manning can ensure a healthy and safe working envirorunent'

(d)[ 4 marks]Total25 marks

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SECTION C

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'J-' ^" MODI,'LE 3

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" BUSINESS FINAI\CE AhiD ACCOUNTING

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AnsrerONE quesCion frrom this section. lt/Question 5 gtoN

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Following are the financial statements of L. Magan fc year ending June 30, 19x9.

Income Staternent fc Year Ending Jrme 3O, 19x9.

$$Sales 40 800

Opening Stock 8mo

5j oc>.l * 61oe-h'chases 32 0004

40 000'6400



Closing Stock f' 0?P ' 4os'l of' Se.les 33 60d

Y:Dcl. =Gross Profit 7zffi

Expenses I 850

Net Profit

_l 3sq

Balance Sheet as at 30 June 19x9.

Fixed Assets 30 000 Opening Capital 30 000. ll

, Stock 6 400 Net Profit 5 350 irr

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" Debtors 8 800 35 350

" Bank n1<a 4750 Drawings 800

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_49 950 34 550

Loans 10 000

iri

44 550

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Creditors 2 800

trli

-l/Accrued Expenses-2ffi _49 950 l

(a) Compute the following ratios for the year ending June 3O l9x9 cqrecr to onedecimal place: ;liI(i) Net hofit Margin'l(ii) Mart UpI(iii) Current RatioJ

(iv) ' Stock-nrrnover(v) Long-terrr Debt to Equiry [l5marks] rl

(b) Explain what EACH ratio shows about the performance of the company. ll0 markslTotal25 marks



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5

Question 6

(a)

Draft the journal entries using the general journal format to record the following adjustments tothe final accounts of KD Ltd for the year ended September 30' 1999'N.B.: Narratives not required.

(i) Rent in arrears $172(ii)Insurance PrePaid $104(iii)Bad debts to be written off $320(iv)The provision for bad debs tp be increased by $215 .

(v)Accumulated Depreciation: Equip,ment is to be inseasd by $3 450. *[10 marks]

(b)LIFO and FIFO arc bases for valuing clcing stock. State the meaning of these abbreviationsand outline, wiih 6e ai{t of nurcrical examples, how EACH is used to determine the value ofclosing stock-U.5 markslTotal25 marks

END OFTEST

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o2t33020lcAPE200/.



-2SECTIONAMODULE 1: BUSINF^SS AND ITS ENVIRONMENTAnswer ONE question from this section.

t#: (a) The rational decision-making process can be summarized into five steps.Identify thosesteps. [ 5 marks]

(b)Ms Butcher owns a computer storc located in Bishop City, Flamingo Island. The store isfour years old. Sales increasd over the first nvo years but sharp decreases have beenexperienced over the last two years. The srock ornover has declined from 5 times in thefrrst year to 0.95 times in the last year-For several months in the last year he

r overdraft,t )

has exceeded the $10,000limit and the bank manager has indicated that she must bring

'v t'

J the overdraft down to the allowable limit in ftree monrhs-

Explain how Ms Butcher may use the rational decision-making process outlined in(a)above, to solve the problem being faced by the store. [20 marks]

Total25 marksa

Ms Smart is planning to start an auto parts business. Ms Wise has advised her that she shouldfirst establish the business objectives.

(a)Outline THREE objectives that Ms Smart's Auto Business should aim to achieve.[10 marksl(b)Discuss THREE reasons why it is necessary for companies to establish and periodicallyreview their objectives. [15 marks]Total25 marks

SECTION BMODLTLE 2: MANAGEMENT OF PEOPLEAnswer OIrIE question from this section.

3.(a) Explain briefly TWO reasons why subordinates in an organisation might resist change.[ 4 marks]

(b)Discuss FIVE approaches that managers can use to increase the likelihood that workers



will co-operate with a proposed change. [21 marks]. Total25 marks

4.(a) (D Identify FOUR factors which can influence effective teamwork. [ 4 marks](ii)Explain how EACH of the factors identified in (a) (i) above may affect effective

teamwork. [12 marks](b)Evaluate THREE benefits of using a team approach. [ 9 marks]Total25 marksGO ON TO THE NEXT PAGEo2t33020tcAPE 2005



-3SECTIONCMODLILE3:BUSINESSFINANCEANDACCOI']NTINGAnswer ONE question from this sectionl. Following is the condensed Balance Sheet of Carib Entertainment,year ending 30 June 2OO2:

a sole proprietorship, for theFixed AssetsStockDebtorsBank6,4003,8001,68019,00011,88029,880Capital

Net ProfitDrawingsI-oansCreditors20,0004;s0029,88024,5001,22023,2802,0004,600'l I

I:StJ' >';''r-9; -L-):Sales for the year amounted to $50,(m dccdrhs $3Z(m. Coryute the following ratiosand explain what EACH ONE indicares abod tu pcrfumre of fu company betrreen 2002 and the previous year. The ratios for tre previrrc ycr (Anf ) re fucm in brrket5 N.B. Average capital is used to compute th Rrturn cryrd Em@yod ratio'(a) NetProfitMatgin(l2.5%o)(b) Mark up (6ovo) ?"-";'J'ji ," rq>(c) Current Ratio (2.1)(d) Acid TeSt Ratio (0.98 : l)(e) Return on Capital Employed (L8Vo) . I2S markslTotal25 marksGO ON TO TTIE NEXT PAGE

02t33020lcAPE 2005



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6.A company is considering investing in one of three projects, A, B or C. The initial cost and net

cash inflows from EACH project are shown below. The company has the option of borrowingthe amount to cover the cost of either project at 9Vo interest per annum.ftj'rr4 {'

Cash Flow Project A Pmject B Project C

-$2, ooo(Initial Cost) 43,500 42,000 40,000 q 6q& ra* O' ql}..?-:I'r \ ? ?" rt A:' Fr1

I 8,400 lo,l00 9,640 lt t3q * aTlv,.z

2', 8,820 10,605 to,r22 .t t bqf'x$'?ot:13 tf *{ * F"{B*.}:9,702 11,666 I I,134

4 10,187 12,249 lr,69l

t r 31 .q t *572'15 11,715 14,086 13,M5 + ?s 15' q + te +J.Z

+e?3t. !

Discount factors at 9Vo per annum:

-t >q"4. Year Factor Year Factor

I o.917 4 0.708

2 o.842 5 0.650

3 o.772

(a)Compute the Net Present Value of EACH project. lL8 marksl(b)On the basis of the Net Present Value criterion, in which project should the companyinvest? Give ONE reason for your answer. [ 3 marks](c) Outline ONE advantage and ONE disadvantage of the Net Present Value criterionr compared to the Payback Period. . t 4 markslTotal25 marks

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END OF TEST

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SECTION AMODULE 1BUSINESS AND ITS ENVIRONMENT


l.(a) Defineglobalization. [ 3marks](b)Outline THREE factors which have contributed to the growth of globalization.[ 6 marks](c)Discuss, giving suitable examples, FOUR ways in which globalization may impact onorganizations operating within the Caribbean Business Environment.

[16marks]

Total25 marks

2.John, the hoduction Manager of Carib Incorporated, has an option of locating his firm's productionplant in Moonlight Island or Sunny Isle. He is provided with the following dataon bothcountries.Moonlight IslandLevel of Demand Probability ${noHieh .4 80

Medium .4 40Low .2 -20

$rrnny IsleLevel of Demand Probability $000High _4 60Medium .4 40Low .2

30

(a) (i) Draw a Decision Tree to illustrate the above scenario.[ 9 marks](ii)Calculate the expected value for:(a)Moonlight Island(b)Sunny Isle [ 4 marks](iii)Recommend to John, the country in which he should locate the production plant,and why. [ 2 marks]GO ON TO THE NEXT PAGE

o2r33020tcAPE 2006



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(b)

Apart from the decision tree, John has been informed that the Critical Path Analysis(CPA), a Network Analysis Technique, can also be used as a decision-making tool. (i)Define "Network Analysis". [ 2 marks](ii)Outline TWO advantages and TWO disadvantages of using the Critical PathAnalysis as a decision-making tool. [ 8 marks]Total25 marks

SECTION B

MODULE 2MANAGEMENT OF PEOPLEAnswer ONE question from this section.

3.Many organizations suffer from poor communication.(a)Discuss THREE principal barriers to good communication in an organization.[ 9 marksl(b)Explain ONE way in which EACH barrier discussed in (a) above might be overcome.I 6 marfrdJ

(c)Describe TWO important features of:(i)The Formal Communication Network [ 4 marks](ii)The Informal Communication Network. [ 4 marks](d)Outline TWO advantages of face-to-face communication over written communication. [ 2 marks]Total25 marks

4.Change is a crucial element in an organization's ability to survive and grow.(a) Discuss FOUR reasons why people resist change. [12 marks]O) Discuss FOUR conditions which are necessary for change to be successfullyimplemented.[13 marks]Total25 marks

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o2r33020tcAPE 2006



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SECTION CMODULE 3BUSINESS FINANCE AND ACCOUNTING


i

5.A company has three projects, A, B and C which it is considering for investment. Since fundsare scarce, the company can only invest in one project. The initial investment in the projectsand the expected cash flows are shown below. The interest rate facing the company is llVo p.a.

,

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ABc

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t$ $$

iInitial outlay 9 200 18 300 26 000 II

Cash Flows

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I Year I 2 5005 100 3 200

l Year 2 3 1005 200 7 500

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Year 33 100 5 600 8 125

Year 43 200 5 700 9 450

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i Year 5 3 800 5 775 10 200

i



Present value of $1 received at the end of a number of years at ll% is as follows

I

1

Year 12 345

PV of $l 0.901 4.8r2 o.731 0.6s9 0.593

(a)Compute the Net Present Value (NPV) of EACH project using a discount rate of llVo.[l8marks](b)Based on the NPV determine which project the company should invest in and justify

yourrecornmendation.[ 4marks]

(c)Compare the implication of the NPV of project B and project C. [ 3 marks]Total25 marks02r33020/cAPE 2006

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6. (a) Distil_guish betweenEACH. an operational budget and a capital budget and give an example of[ 4 mirks]

(b) L. Carter is a wholesaler whose financial year ends in March. His balance sheet atMarch 31,2005 and as well as additional information are shown below.Prepare a Cash Budget in columnai (tabular) form in as much detail as possible for themonths of April and May 2005. Round all final figures to the nearest whole number.$ $Fixed.Assets at costAccumulated Depreciation40 0002 400

Ordinary Share Capital 30 000' Creditors 27 3OO37 600 Accrued Expenses 4 150Stock 6 000Debtors 9450.Bank 8 400 23 85061 450 61 450 rlNOTES(i)MarchBudgeted sales (in units) are as follows:900'1April 1 000

May I 500June I 200(ii) Each unit sells at $42.(iii) credit is collecfed in theAll sales are made on credit. 75Vo of goods sold onmonth of the sale and 25Vo in the month following.(iv)AprilBudgeted purchases are as follows:I100 unitsMay I 440 unitsJune 1 280 units(v) The purchase price of each unit is $30 and goods bought are paid for in thesamemontli of the purchase.(vi) Accrued expenses consist of rent owing for the months February and March($3 000) and utilities for the month of March.(vii) Accrued rent is to be paid in April; rent for the current quarter is to be paid ineach month as it becomes due.(viii) Utilities are paid one month in arrears. Utility expenses are as follows:-April$1 240; May $1 300 and June $1 400. [21 marks]Total25 marksEND OF TEST

o2l33020tcAPE 2006



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-2

SECTIONA

MODULE 1: BUSIITIESS AND ITS ETWIRONMENT


1.The concept of globalization has been one of the most current topics of discussion in the BusinessWorld.(a)Define'globalization'. [ 3 marks]

(b)Discuss THREE positive and TWO negative impacts of globalization on Caribbeanbusiness organizations. [22 markslTotal25 marks

)(a) Discuss TWO main contributions of small businesses to the development of your

colmtry'seconomy.[ 6marks]

o)

Discuss THREE challenges faced by small lusinssses in the Caribbean. [ 9 marks]

(c)Identiff THREE criteria used for measuring the size of a business and state ONEadvantageand ONE disadvantage of EACH criterion. [10 marks]Total25 marks

SECTION B

MODI,JLE 2: MANAGEMENT OF PEOPLE

Answer OI\E question from this section.

3.(a) Using examples from organizations that you have studied, evaluate FOUR major methods of communication that exist between management and staff. [17 marks](b)Suggest FOTIR major causes of poor communication between management and staff.[ 8 marks]Total25 marks

4.In today's business organizations, Human Resource Management is broad and far re

aching inscope. With reference to this statement, discuss FIVE main functions of the Human Resource



Department. [25 marks]

Total25 marks

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02r33020tcAPE 2007



SECTION C

MODULE 3: BUSINESS FINANCE AI\D ACCOUNTING


5.A company is considering investing in one of three projects A, B or C. The initial cost and cashflows of each project are shown below. The company has the option of borrowing the amount tocover the cost of each project at IlVo interest per annum.Cash FIow ProjectA Project B Project C

tnitial Cost $40 m0 $28 000 $30 400I 12 Ofi) l0 m0 8 1002 t2200 10 100 8 6003 11 8m 9 600 t2 000

4 142W 9 900 13 lm5 14 380 10 100 15 000

(a)Show the gymu!1i_v9 cash flow for EACH project. [12 marks],

(b)Compute the payback perid in years, to one decimal place, for EACH project.[ 6 marks](c)Indicate which project the company should accept and why. [ 2 marks](d)

Outline ONE advantage and ONE disadvantage of using the payback period as a projectappraisal criterion. [ 2 marks](e)Assume the IRR [Intemal Rates of Return] for the respective projects are as follows:A lL.57oB 87oC l1Vo

Indicate which project the company should accept, giving ONE reason for your choice.[ 3 marks]

Total25 marks

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02t33020tcAPE 2007



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6.Kensington Creations markets a single product. The following facts relate to its inventory forthe six-month period, January to June. At the beginning of January the company had openingstock of 15 units @ $20 per unit. In February, the company bought 25 units @ $18 per unit, andin March, the company sold 18 units. InApril, the company bought 10 units @ $22perunit andin June it sold 16 units.

(a)Construct a table which shows the value of the closing stock at the end of EACHmonthusing the 'Last In First Out' method of accounting for stock. [10 marks](b)Compute the Cost of Goods Sold EACH month, for the six-month period.[ 5 marks](c)If the items are sold for $52 each, draw up a Trading Account for the six-monthperiodending June 30. [10 markslTotal25 marks

END OF TEST

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02r33020tcAPE2W7



n

SECTION AMODULE I: BUSINESS AI\D ITS ENVIRONMENTAnswer ONE question from this section.

1.Discuss FOUR positive impacts and FOUR negative impacts that a multinational corporationmay have on the host country. t25 markslTotal25 marks

(a)Describe the following steps in the Rational Decision Making Process:(i) Defining the problem(ii)Collecting data

(iii)Developing alternatives(iv)Analyzing the alternatives(v)Selecting and implementing the alternatives(vi)Evaluating results [12 marks](b)Mr. Technil, the purchasing manager of a large hardware firm, is thinking aboutpurchasing four new computers for his departrnent.Explain how Mr. Technil can use EACH step outlined in (a) above in deciding which

computers to purchase. [13 marks]

Total25 marks

SECTION BMODULE 2: MANAGEMENT OF PEOPLEAnswer ONB question from this section.

3.(a) Discuss FOUR factors that may influence effective teamwork. [12 marks](b)Evaluate THREE benefits of using a team approach in the workplace. [13 marks]Total25 marks4.(a) Define EACH of the following functions of management:(i) Planning(ii)Organizing(iii)Leading(iv)Controlling [ 8 marks](b)Explain how the application of EACH function of management would help Miss Good-

Cook to operate her restaurant business more efficiently. [17 marks]Total25 marks




02I33020|CAPE 2008



-3

SECTION CMODULE 3: BUSINESS FINANCE AND ACCOUNTINGAnswer ONE question from this section.

5. (a) Define the following accounting concepts giving ONE example of EACH:(i) Prepayments(ii)Accrued expenses [ 6 marks](b)Following is aTrial Balance of The Corner Shop as at 30 June 2005 which is the end ofits financial period.Equipment at cost 20 240Accumulated Provision for Depreciation: Equipment 8 400

Vehicles at cost ll 500Accumulated Provision for Depreciation: Vehicles 4 600Debtors 15 500Less Provision for Doubtful Debts I 240Sales 2t 200Cost of Goods Sold 4 350Capital 18 640Rent 2 490

NOTES

l.Equipment is depreciated at lOTo on a reducing balance basis.

2.Vehicles are depreciated at ISVo on a straight line basis.3.Bad debts totalling $625 are to be written off.4.Rent owing is $200.5.The Provision for Doubtful Debts is to remain at the same proportion to Debtorsas inthe previous year.Instructions

(i) Compute the depreciation expense for equipment.[ 3 marks](ii)Compute the depreciation expense for vehicles for the year. [ 2 marks](iii)Compute the Provision for Doubtful Debts for the year. [ 3 marks](iv)Construct the Trading and Profit and Loss Account, in vertical format, for the-yearending 30 June 2005. [lL marks]Total25 marks


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4

6.Following is the condensed Balance Sheet of Carib Enterprises, a sole proprietorship for the

year ending 30 September 2005.Fixed Assets 20 200Stock 3 680Debtors 8 940Bank 2 480 15 100

35 300

:

Capital 26 000Net Profit 4 330

30 330Drawings I 73028 600Loans 2 300Creditors 4 400

_il__iqq

Sales for the year amounted to $47 900, Cost of Sales is $24 800 and Opening Stock is $4 600.

(a)Compute the following ratios:

2004(i)Net profit margin (7Vo)(ii)Mark up (827o)(iii) Current Ratio(3.8:1)(iv) Stock turnover(4.5 times)(v)Return on Capital Employed (13.57o)(based on average capital)(b)Explain what EACH ratio indicates about the performance of the company for theTWO years. The ratio for the previous year ending 30 September 2004, is shown inbrackets. [25 marks]Total25 marks

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IEND OF TEST

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-oo02t33020/cAPE 2008



-2

SBCTION AMODULE 1BUSINESS AND ITS ENVIRONMENT


1.Kevin James, a tailor, is contemplating whether to remain as a sole trader or to form a privatelimited company.(a)Explain to Kevin TWO advantages and TWO disadvantages that a private limitedcompany has over a sole trader. [12 marks](b)Discuss THREE'ways in which a change in the economic system of the country from

amixed economy to a planned economy could affect Kevin's decision to form a privatelimited company. [13 marks]Total25 marks

.,

Discuss THREE benefis and THREE drawbacks that Caribbean countries could experiencewith multinationals operating in thefu territories. [25 marks]

Total25 marks


02r33020tcAPE 2009



-3

SECTION BMODULE 2MANAGEMENT OF PEOPLE


3.Weber conceptualized that organizations would be managed on an impersonal, rational basis.Weber called this form of organization a bureaucracy.(a)Outline FOUR characteristics of a bureaucracy as specified by Weber.I I marks](b)Discuss FOUR implications of "Weber's bweaucracy" on today's business orgarizati

ons.[17 marks]Ibtal25 marks

4.Change is a crucial element in an organization's ability to survive and grow.(a)Explain FOUR reasons why employees resist change. [12 marks](b)Discuss THREE methods that can be used to address resistance to change.[13 marks]Ibtaf 25 marks


o2r33020tcAPE 2009



l

-4--4I

SECTION CMODULE 3BUSINESS FINANCE AND ACCOUNTINGAnswer ONE question from this section.

5.(a) (i) Define the term 'working capital'. [ 2 marks](ii) Identify THREE components of working capital.[ 3 marks](b)

Buddy is setting up a new gas station and convenience store and requires financing forthe following areas:Land and buildingMachinery and equipmentStock of petrolStock for convenience storeWages for employees (for the frst week)

Identify the MOST suitable source of finance for EACH of the above areas of the

business. For EACH source identified, explain why it is the MOST suitable.

[20 marks]

Total25 marks


o2t33020tcAPE 2009



-5

6.The following is the Balance Sheet of Eastwood Hardware Ltd. as at December 3 I, 2008 . Study

the Balance Sheet and answer the questions that follow.Eastwood Hardware Ltd.Balance Sheet as at December 31,2008

Fixed Assets $ Cost Less $ depreciation $Buildings 500 000 50 000 450 000Plant and machinery 100 000 40 000 60 000Furniture and fittings 50 000 20 000 30 000Motor vehicles 70 000 20 000 50 000

720 000

130 000 590 000

Current AssetsStocks 140 000Debtors 30 000Prepayments 5 000Cash I 000

176 0m

Less current liabilitiesBank overdraft 13 000

Creditors 12 000Accrued costs 1 000Taxation payable 10 000 36 000

Net current assets (working capital) 140 000Assets less current liabilities 730 000Less lonp-term liabilities

Bank loan180 000

550 0mNet assetsFinanced by

Share capital 200 000Ordinary shares 200 000Preference shares 400 000Reserves 150 000550 000

The following items have been omitted from the Balance Sheet of Eastwood Hardware Ltd.

Money owed to business from suppliersAn item of stock in a warehouseA piece of equipment used to make products



Electricity consumedRent pdid in advance for the next three months

(a)Identify the appropriate sub-heading under which EACH of the omitted items would appear in

the Balance Sheet of Eastwood Hardware Ltd. [ 5 marks]GO ON TO THE NEXT PAGE

o2t33020tcAPE 2009



-6.IiII(b)

(c)(i) Outline the MAIN difference between performance ratio and liquidity ratio.[ 3 marks](ii) Identify ONE stakeholder who will be interested in EACH type of ratio.[ 2 marks]Calculate the following ratios forEastwood Hardware Ltd. and explain the implication of EACHratio.(i)(iD(iii)Current Ratio

Acid Test RatioGearing Ratio [15 marks]Totat 25 marksEI\{D OF TEST

1

1

1

02133020/CAPE 2009



SECTION AMODULB 1: BUSINESS AI\D ITS ENVIRONMENT

Answer ONE question from this section.1. (a) Define the term 'mission statement'and outline THREE reasons why a missio

n statementis important to a business. [ 8 marks](b) (D Identify FOUR criteria that can be used to measure the size of a business.[ 4 marks](ii) Evaluate the effectiveness of THREE of the criteria identified in (b) (i) above[13 marks]Total25 marks

2.A firm is contemplating whether to include social responsibility as one of its m

ain objectives.(a)Discuss THREE main objectives of a typical business organization. [13 marks](b)Define the term 'social responsibility', giving TWO examples of how a firm can displaysocial responsibility. [ 6 marks](c)Outline THREE reasons why it is important for a firm to practise ',social responsibility'.[ 6 marks]Total25 marksSECTION B

MODULE 2: MANAGEMENT OF PEOPLEAnswer ONE question from this section.

3.John, the manager of KPJ Co. Ltd, has been described by his workers as a participative leader.(a)Define the term 'participative leadership'. [ 3 marks](b)Discuss TWO advantages and TWO disadvantages of the participative style ofleadership. [16marks](c)Outline THREE situations in which the participative style of leadership would be usefulto KPJ Co. Ltd. [ 6 marks]Total25 marks

GO ON TO THE NEXT PAGE02t33020lcAPE 2010



3

4.(a) (D Define the term'training'. [ 2 marks](ii)

State THREE reasons why training is important to an organization.[ 6 marks](b)Evaluate TWO conditions under which EACH of the following types of trainingprogrammes is BEST suited:(i) Internally based(ii)Extemally based [17 marks]Total25 marksSECTION CMODT]LE 3: BUSINESS FTNAI\CE AI\D ACCOUNTINGAnswer ONE question from this section.

5.XYZ Co. Ltd is considering investing in one of three projects, A, B or C. The initial costand cash flows of each project are shown below.The company has the option of borrowing the amount to cover the cost of either project at IIVointerest per annum.Cash Flow Project A Project B Project CInitial Cost $40 000 $28 000 $30 400Year L 12 000 10 000 '8looYear 2 12200 10 100 8 600

Year 311 800 9 600 12 fi)O

Year 4 14 200 9 900 13 100Year 5 14 380 10 100 15 000

(a)Compute the cumulative cash flow for EACH project. [13 marks](b)Compute the payback period, in years, to two decimal places, for EACH project.[ 6 marks](c)Indicate, giving a reason, which project the company should accept. [ 3 marks](d)Assume the IRR (Internal Rate of Return) of the projects are as follows:A ll.S%oB 8VoC I5Vo

Based on the IRR, indicate, giving a reason, which project the company should accept.t 3 marksl

Total25 marks




o2r33020tcAPE 2010



-4

6. The following is the cash flow statement for Nigel Enterprises for the year ended December 21,2008. Study the statement and answer the questions that follow.

Nigel EnterprisesCash Flow StatementFor the year ended December 2lr2OO8

(US $ millions) (US $ millions)Net cash inflow from operatinq activities 6Returns on investment and servicing of finance

Interest received 2Interest paid (4)

Dividends paid (4)

Net cash outflow from returns on investmentsand servicing of finance (6)

TaxationInland Revenue tax paid (4)

Investing activitiesPurchases of tangible fixed assets (4)Purchases of subsidiary undertakings (18)

(net ofcash and cash equivalents acquired)Sale of plant and machinery 4Net cash outflow from investing activities (18)Net cash outflow before financing (22)

FinancingNew secured loan repayable in 2009 t7Repayment of amount borrowed (2)Net cash inflow from financing 15Decrease in cash and cash equivalents 7

(a) (i) Explain what is meant by the term 'cash flow statement' [ 3marks](ii)Identify TV/O financial statements, other than the cash flow statement, that are used by firms. t 2marksl(b)Analyse the cash flow situation of Nigel Enterprises under EACH of the following headings:(D Net cash inflow or outflow from operating activities

(ii)Returns on investment and servicing of finance(iii)

Net cash outflow from investing activities(iv)Increase or decrease in cash equivalents



(v)Financing [20 markslTotal25 marks

END OF TEST

02r33020/cAPE 2010

cape mob 2002-2010 unit 1 past papers

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