2 N (004372/SPEC 2002 w 2 SECTION A MODULE 1 BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. Discuss how your country’s economic system impacts on the operations of a local business entity. Total 25 marks ‘A country’s success in the global marketplace is a direct result of the company’s multi-faceted approach to cross-cultural preparation’. Explain the challenges faced by Caribbean business organisations as a result of globalisation. Total 25 marks SECTION B MODULE 2 ‘THE MANAGEMENT OF PEOPLE Answer ONE question from this section. “Motivation of subordinates is an important aspect of a manager's job’. (@ Examine THREE factors that motivate a person to work well. [13 marks} (6) Identify and evaluate FOUR steps managers may take to motivate their subordinates. [12 marks} ‘Two important strategies for effective management of an organisation include: (i) training of ‘employees and (ii) conflict management. With reference to the above statement: (@ _ Discuss THREE advantages and TWO disadvantages of an ‘on the job’ system of training. [15 marks] (b) Discuss THREE major strategies a manager may use toresolve conflict in his organisation. [10 marks} GO ON TO THE NEXT PAGESECTION C MODULE 3 BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. (a) Whatare the advantages of debt financing to a firm? . 6 marks} (&) A medium-sized retail chain wishes 4 To do so it needs to raise additional | capital. Suggest THREE possible igrémal sources of fu this exercise and comment "HER equity OR debt methods. [19 marks} | on the relative merits of financing the remainder by Total 25 marks 6. The following relates to the Income Statement and Balance Sheet of Blackwood and Company Ld for the period ending 31/12/98 Sales 10,795,000 Cost of Sales _ 8,650,000 Less Overheads: ‘Administration Expenses: - - Wages & Salaries 235,000 - Supplies & Stationery 96,000 Heat & Light 50,000 | Rates, Rent & Insurance 75,000 | Depreciation 10,000 465,000 | Finance Interest 100,000 _ Bad debts 95,000 195,000] Selling Salaries 100,000 _ Distribution 50,000 _ ‘Advertising 100,000 300,000) CY Ccontinwed an pack ) GO ON TO THE NEXT PAGE 004372/SPEC 2002BALANCE SHEET Fixed Assets Freehold Premises 3,000,000 Leasehold Premises {630,000 Plant & Machinery 2,645,000 Motor Vehicle 770,000 Long Term Investments 795,000 7,840,000 Current Assets Inventories (Stock) 5,500,000 Debtors Prepayment 1,500,000 Marketable Securities 500,000 Bank Balance 100,000 7,600,000 Total Assets 15,440,000 Share Capital & Reserves Ordinary Shares 5,300,000 Preference Shares 2,100,000 Reserves 2,500,000 9,900,000 Long Term Liability Debentures 12,500,000 2,500,000 Current Liabil | Creditors 1,754,000 “Tax Payable 500,000 Bank Overdraft 451,000 Proposed Dividends 335,000 3,040,000 ‘Total Capital Liabilities 15,440,000 From the above financial statements, calculate the following ratios and state TWO important features of EACH. @ Current Ratio [5 marks] (>) Inventory Turnover [5 marks] (© Gross Profit Margin [5 marks] @ Interest Cover Ratio [5 marks] (©) Gearing Ratio (5 marks] Total 25 marks (004372/SPEC 2002; @ © @ ) © SECTION A MODULE 1 — BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. Identify and evaluate FIVE ways in which multi-national corporations have impacted on countries of the region. [15 marks} Identify TWO ways in which a multinational company may have to adapt its operations to suit the Caribbean business environment. Explain the rationale for, and the possible effect of EACH adaptation on the company. [10 marks} Total 25 marks Discuss FOUR circumstances under which state control of private business is justified. {8 marks ‘Suggest and justify THREE objectives you think a publicly owned business should pursue. [9 marks ] (With the aid of TWO examples, explain the concept of ‘franchising’. (ii) Discuss TWO benefits of this practice to the franchisee. [8 marks | Total 25 marks SECTION B MODULE 2 — MANAGEMENT OF PEOPLE Answer ONE question from this section. 3. The OM (Operations Manager) of Flyerbee Airlines is considering delegating the task of procuring food supplies and monitoring aircraft maintenance to two of his supervisors. @ ) © 004372/CAPE 2003 Distinguish between ‘delegation’ and ‘decentralization’. {2 marks ] Outline TWO benefits and TWO disadvantages of delegation. [8 marks ] ‘Authority, responsibility and accountability are three concepts related to the process of delegation. Define EACH concept, give an example of EACH and explain how these ‘concepts may impact on the success of the Managing Director’s attempt at delegation at Flyerbee. [15 marks} Total 25 marks GO ON TO THE NEXT PAGE-3- 4. (@_ Distinguish between leadership skills and leadership roles and give an example of EACH. [4 marks ] (&) Communication, considgration, planning, coaching and inspiration are some of the behaviours expected of effective leaders. Describe EACH of the foregoing behaviours - and with the aid of examples, discuss the role of EACH in effective leadership. — [21 marks] Total 25 marks SECTION C MODULE 3 — BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. (/5 Arawak Limited manufactures cutlery, vases and cooking utensils. The firm is short of working capital (@) Identify, describe and explain the impact of THREE alternatives which the firm may use to increase its working capital. (15 marks} 5 (b) State THREE criteria Arawak Limited may use to chose among the alternatives identified in (a) above and explain how EACH criterion may be used to make the choice. [10 marks} Total 25 marks 6 Comwall School and Office Supplies Ltd. published accounts and recorded the following information for the last two years of operations: 1999 2000 Profit before tax and interest $10m 520m Net assets employed $300 m $250. m Sales turnover $8,200 m $700 m (@) Using the information above, calculate THREE profitability ratigs and use your results to ‘comment on the company’s performance in 2000. Assume a tax rate of 25%. (15 marks} () Explain THREE limitations of accounting ratios and suggest how EACH of these might be overcome. {10 marks} Total 25 marks END OF TEST (004372/CAPE 2003SECTIONA MODULE 1 BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section, ‘Question 1 \/_ Carmen Martin is contemplating turning her itinerant (mobile) canteen into a full fast-food restaurant. "She is pondering whether to maintain the sole proprietorship she has, whether she should organize the business as a partnership with two friends or form a private limited company with them. (@) Describe THREE features of each form of business Carmen is considering. [ 9 marks} ro YO (b) Discuss TWO advantages and TWO disadvantages of organizing the restaurant as a limited 2. company rather than a partnership. [16 marks} 2 ‘Total 25 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 an insurance company in conducting its business @ legislation Gi) information technology iii) trade liberalization (12 marks] (>) Explain, with specific examples, TWO ways in which each of the following can hinder an insurance company in conducting its business @ competition Gi) natural environment (i) globalization (13 marks} ‘Total 25 marks GO ON TO THE NEXT PAGE (02132020/CAPE 2004SECTION B MODULE 2 MANAGEMENT OF PEOPLE Answer ONE question from this section. Question 3 ,/ Frederick Herzberg has developed what is referred to as the “two-factor theory of motivation” in which he argues that job satisfaction and dissatisfaction are caused by two distinct sets of factors. (Name the TWO factors of motivation identified by Herzberg. { 2marks} ) Describe the factors you named in (a) (i) above. [4 marks] i “ (iii) Give TWO examples of each of the factors described in (a) (ji) above. {| 4 marks) (b) Explain how the TWO factors outlined in (a) above lead to job satisfaction OR dissatisfaction 48 in an organization. [8 marks} (© Outline a three-phase plan which you, as a Human Resources Manager, would use to bring about job satisfaction in an organization based on Herzberg’s theory. (7 marks} ‘Total 25 marks Question 4 Joy Manning has just been appointed the Human Resources (HR) Manager for a cement manufacturing plant. Joy has had no training in HR management, however, she recalls vaguely that HR managers are responsible for five major activities in an organization viz. recruitment, selection, training, perfor- mance assessment and remuneration. (a) Describe the FIVE activities which HR managers have responsibility for. { S marks] (b) Explain ONE way in which clear policies for the execution of each activity can contribute to the effective management of people in her organization. [10 marks} (©) _ Explain THREE ways in which labour unions can impact on the HR manager’s job. [6 marks] (@) Describe TWO ways in which Joy Manning can ensure a healthy and safe working environment. { 4marks) Total 25 marks GO ON TO THE NEXT PAGE 02132020/CAPE 2004D 229° v.22 2 Guvet Kobo cH) Stow 50 Rrrnouey 42, @00 “Ae = 19th Stee 3362 ~ et SECTION C ai Ee 1-75 tees MODULE 3 BUSINESS FINANCE AND ACCOUNTING . 0 pe? ‘Answer ONE question from this section. o LS, F Question 5 3) Following are the financial statements of L. Morgan for year ending June 30, 19x9. > 33-31 Income Statement for Year Ending June 30, 1919. - $ s Sales 40 800 Opening Stock 8000 $2004 Gys>_ Purchases 32.000 2 40 000 Closing Stock 6.400 Rut FP cost ot sales 33 600 Gross Profit 7200 : Expenses 1850 Net Profit 5.350 Balance Sheet as at 30 June 19x9. Fixed Assets 30.000 Opening Capital 30.000. . Stock 6400 Net Profit 5.350 . Debtors 8800 35.350 | Bank 199994750 Drawings 800 49 950 34550 Loans 10.000 44550 , Creditors 2.800 v Accrued Expenses- 2.600 49950 (@) Compute the following ratios for the year ending June 30 19x9 correct to one decimal place: @ Net Profit Margin (i) Mark Up Gii) Current Ratio (iv) Stock-tuover (v) Long-term Debt to Equity [15 marks] (b) Explain what EACH ratio shows about the performance of the company. [10 marks] Total 25 marks GO ON TO THE NEXT PAGE. 02132020/CAPE 2004‘Question 6 (a) Draft the journal entries using the general journal format to record the following adjustments to the final accounts of KD Ltd for the year ended September 30, 1999. N.B.: Narratives not required. (i) Rentin arrears $172 Insurance prepaid $104 Bad debts to be written off $320 ‘The provision for bad debts to be increased by $215, () Accumulated Depreciation: Equipment is to be increased by $3 450... [10 marks} LIFO and FIFO are bases for valuing closing stock. State the meaning of these abbreviations and outline, with the aid of numerical examples, how EACH is used to determine the value of closing stock. [15 marks} ‘Total 25 marks 02133020/CAPE 2004SECTION A MODULE 1: BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section, The rational decision-making process can be summarized into five steps. Identify those steps. { 5 marks] Ms Butcher owns a computer store located in Bishop City, Flamingo Island. The store is four years old. Sales increased over the first two years but sharp decreases have been experienced over the last two years. The stock turnover has declined from 5 times in the first year to 0.95 times in the last year. For several months in the last year her overdraft has exceeded the $10,000 limit and the bank manager has indicated that she must bring the overdraft down to the allowable limit in three months. 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} Total 25 marks 2, Ms Smart is planning to start an auto parts business. Ms Wise has advised her that she should first establish the business objectives. @ b) nO} ) | 4 @ (b) Outline THREE objectives that Ms Smart's Auto Business should aim to achieve. [10 marks] Discuss THREE reasons why it is necessary for companies to establish and periodically review their objectives. (15 marks] ‘Total 25 marks SECTION B MODULE 2: MANAGEMENT OF PEOPLE Answer ONE question from this section. Explain briefly TWO reasons why subordinates in an organisation might resist change. [ 4 marks} Discuss FIVE approaches that managers can use to increase the likelihood that workers will co-operate with a proposed change. [21 marks} Total 25 marks (i) Identify FOUR factors which can influence effective teamwork. [ 4 marks] Gi) Explain how EACH of the factors identified in (a) (i) above may affect effective teamwork. {12 marks] Evaluate THREE benefits of using a team approach. 1 9 marks} ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 2005-3- SECTIONC MODULE 3: BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5, Following is the condensed Balance Sheet of Carib Entertainment, a sole proprietorship, for the year ending 30 June 2002: Fixed Assets Stock Debtors Bank Capital ~ Net Profit 6,400 3,800 1,680 60, 227 Fe 18,000 29,880 20,000 4,500 24,500 1,220 23,280 2,000 4,600 29,880 cons PAL Sales for the year amounted to $50,000 and cost of sales $32,000. Compute the following ratios and explain what EACH ONE indicates about the performance of the company between 2002 and the previous year. The ratios for the previous year (2001) are shown in brackets. NB. Average capital is used to compute the Return om Capital Employed ratio. (@) Net Profit Margin (12.5%) (&) Mark Up (60%) *° Pott Cot Of Sales (©) Current Ratio (2.1) (a) Acid Test Ratio (0.98 : 1) (©) _ Return on Capital Employed (18%) 02133020/CAPE 2005, foo [25 marks] ‘Total 25 marks GO ON TO THE NEXT PAGE6 A company is considering investing in one of three projects, A, B or C. The initial cost and net cash inflows from EACH project are shown below. The company has the option of borrowing the amount to cover the cost of either project at 9% interest per annum. _ agret Cash Flow || ProjectA | Project B | Project | — gu, 00 itial Cost) | 43,500 42,000 mon00| | 2 4 cues alogat 4 gar nore ee 1 8,400 10,100 9,640 1 Bue OTP PEE 2 8,820 10,605 10,122 11 GAP ROTOR: Va yusy ores: 3 9,702 11,666 1134 | 4 10,187 12,249 11,691 | RESTS E E522 5 1,715 14,086 13,445 | + 9S95°4 + E2772 4+ ¢4349+3 Discount factors at 9% per annum: - 5 2990-65 Year Factor Year Factor 1 0.917 4 0.708 | . 2 0.842 5 0.650 3 0.772 (a) Compute the Net Present Value of EACH project. [18 marks) (b) On the basis of the Net Present Value criterion, in which project should the company invest? Give ONE reason for your answer. [ 3 marks] (©) Outline ONE advantage and ONE disadvantage of the Net Present Value criterion compared to the Payback Period. { 4 marks} noe 43) , Total 25 marks Project hE 3,509 0+ roe + BELO K Duy 2) a02 Kon Ds (reves @ ote) & SE ary x Ogee) SR UBS 4 BR 20eF age 4 + 20 FFE RIE + F614 °F > -$ 6053.9 END OF TEST Poye BF 4B 4 (lo # O-41F) + (iocos A OfUZ) HM oGeR 0779 4 (sR toa HO IMD + Crore Robs) BE F4DOEOE FLED 4 Ha2dY 4 GoQZIIPOICAPE 2005 eete-B 4 WEST © g 2025-5 = Se eee eee eee-2- SECTIONA MODULE 1 BUSINESS AND ITS ENVIRONMENT. Answer ONE question from this section. 1. (a) __ Define globalization. [ 3marks] (b) Outline THREE factors which have contributed to the growth of globalization. [ 6 marks] (©) Discuss, giving suitable examples, FOUR ways in which globalization may impact on organizations operating within the Caribbean Business Environment. [16 marks] Total 25 marks 2. John, the Production Manager of Carib Incorporated, has an option of locating his firm's pro- duction plant in Moonlight Island or Sunny Isle. He is provided with the following data on both countries, Moonlight Istand i Level of Demand Probability $000 i High 4 80 : Medium 4 40. Low 2 -20 ‘Sunny Isle Level of Demand Probability $0007 High 4 60 Medium 4 0 Low 2 30 ‘ (2) @_Drawa Decision Tree to illustrate the above scenario. [ 9 marks} Gi) Calculate the expected value for: (a) Moonlight Island. (b) Sunny Isle [4 marks} (ii) Recommend to John, the country in which he should locate the production plant, | and why. [ 2 marks} GO ON TO THE NEXT PAGE 02133020/CAPE 2006-3- (6) 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” [ 2marks] (ii) Outline TWO advantages and TWO disadvantages of using the Critical Path Analysis as a decision-making tool [ 8 marks] ‘Total 25 marks SECTION B MODULE 2 MANAGEMENT OF PEOPLE Answer ONE question from this section. 3. Many organizations suffer from poor communication, (a) Discuss THREE principal barriers to good communication in an organization. [ 9 marks} (6) Explain ONE way in which EACH barrier discussed in (a) above might be overcome. { 6 marks] (©) Describe TWO important features of: (i) The Formal Communication Network [ 4 marks} (i) The Informal Communication Network. [ 4marks] () Outline TWO advantages of face-to-face communication over written communication. [ 2marks] Total 25 marks Change is a crucial element in an organization's ability to survive and grow. (@) Discuss FOUR reasons why people resist change. [12 marks} (6) Discuss FOUR conditions which are necessary for change to be successfully implemented, {13 marks] ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 2006ae SECTION C MODULE 3 : BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. Acompany has three projects, A, B and C which it is considering for investment. Since funds are scarce, the company can only invest in one project. The initial investment in the projects, and the expected cash flows are shown below. The interest rate facing the company is 11% p.. A B c s s s | Initial outlay 9 200 18300 26 000 Cash Flows i Year 1 2.500 5100 3.200 Year 2 3.100 5200 7.500 : Year 3 3.100 5.600 8125 ' Years 5 3200 5700 9.450 ) Year 5 3.800 5775 10200 Present value of $1 received at the end of a number of years at 114% is as follows | ‘Year 1 2 3 4 5 PV of $1 0.901 osi2 0.731 0.659 0.593 ! (@) Compute the Net Present Value (NPV) of EACH project using a discount rate of 11%. l [18 marks] (b) Based on the NPV, determine which project the company should invest in and justify | your recommendation. [ 4marks] (©) Compare the implication of the NPV of project B and project C. [ 3marks} ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 2006@ (b) ase Distinguish between an operational budget and a capital budget and give an example of EACH. [ 4 marks) L. Carter is a wholesaler whose financial year ends in March. His balance sheet at March 31, 2005 and as well as additional information are shown below. Prepare a Cash Budget in columnar (tabular) form in as much detail as possible for the ‘months of April and May 2005. Round all final figures to the nearest whole number. $ s Fixed Assets at cost 40000 Ordinary Share Capital 30 000 ‘Accumulated Depreciation 400 * Creditors 27300 37600 Accrued Expenses 4150 Stock 6.000 Debtors 9.450.¢ Bank 8400 _ 23.850 61 450 61.450 NOTES (@ Budgeted sales (in units) are as follows:- March 900 April 1000 May 1500 June 1200 Gi) Each unit sells at $42 (iii) All sales are made on credit. 75% of goods sold on credit is collected in the month of the sale and 25% in the month following. : (iv) Budgeted purchases are as follows:~ April 1100 units May 1440 units June 1.280 units (¥) The purchase price of each unit is $30 and goods bought are paid forin the same ‘month of the purchase. (vi) Accrued expenses consist of rent owing for the months February and March (83 000) 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 in each 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] ‘Total 25 marks END OF TEST 02133020/CAPE 20062 3. -2- SECTIONA MODULE 1: BUSINESS AND ITS ENVIRONMENT ‘Answer ONE question from this section. “The concept of globalization has been one of the most current topics of discussion in the Business World. (a) Define ‘globalization’. [ 3 marks] (b) Discuss THREE positive and TWO negative impacts of globalization on Caribbean business organizations. [22 marks} ‘Total 25 marks (@) Discuss TWO main contributions of small businesses to the development of your country’s economy. [ 6 marks] (b) Discuss THREE challenges faced by small businesses in the Caribbean. [ 9 marks} (©) Identify THREE criteria used for measuring the size of a business and state ONE advan- tage and ONE disadvantage of EACH criterion, [10 marks] Total 25 marks SECTION B MODULE 2: MANAGEMENT OF PEOPLE, Answer ONE question from this section. (@) Using examples from organizations that you have studied, evaluate FOUR major methods of communication that exist between management and staff. [17 marks] (b) Suggest FOUR major causes of poor communication between management and staff { 8 marks] Total 25 marks In today’s business organizations, Human Resource Management is broad and far reaching in scope. With reference to this statement, discuss FIVE main functions of the Human Resource Department. [25 marks} Total 25 marks GO ON TO THE NEXT PAGE (02133020/CAPE 2007SECTION C MODULE 3: BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. Acompany is considering investing in one of three projects A, B or C. The initial cost and cash flows of each project are shown below. The company has the option of borrowing the amount to cover the cost of each project at 11% interest per annum. @ (b) ©. @ ©) Cash Flow | Project | ProjectB | Project C Initial Cost_ | $40.00 | $28000 | $30 400 1 12.000 10.000 8100 2 12.200 10 100 8.600 3 11.800 9.600 12.000 4 14.200 9900 13 100 5 14.380 10 100 15 000 Show the cumulative cash flow for EACH project. [12 marks] ‘Compute the payback period in years, to one decimal place, for EACH project. [ 6 marks} Indicate which project the company should accept and why. [ 2 marks} Outline ONE advantage and ONE disadvantage of using the payback period as a project, appraisal criterion. [ 2 marks} Assume the IRR [Internal Rates of Return] for the respective projects are as follows: A 15% B 8% Cc 158% Indicate which project the company should accept, giving ONE reason for your choice. [ 3 marks} Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 2007Kensington Creations markets a single product, The following facts relate to its inventory for the six-month period, January to June. At the begit ‘of January, the company had opening stock of 15 units @ $20 per unit. In February, the company bought 25 units @ $18 per unit, and in March, the company sold 18 units. In April, the company bought 10 units @ $22 per unit and in June it sold 16 units (a) (b) (©) Construct a table which shows the value of the closing stock at the end of EACH month. using the ‘Last In First Out’ method of accounting for stock. [10 marks} Compute the Cost of Goods Sold EACH month, for the six-month period. [ 5 marks} Ifthe items are sold for $52 each, draw up a Trading Account for the six-month period ending June 30. [10 marks} ‘Total 25 marks END OF TEST 02133020/CAPE 20077 | SECTION A MODULE 1: BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. 1. Discuss FOUR positive impacts and FOUR negative impacts that a multinational corporation may have on the host country. (25 marks] 2 a) (b) 3 @) ) 4 @) (b) ‘Total 25 marks Describe the following steps in the Rational Decision Making Process: (Defining the problem Gi) Collecting data Gii) Developing alternatives (iv) Analyzing the alternatives (v) Selecting and implementing the alternatives (vi) Evaluating results (12 marks] Mr. Technil, the purchasing manager of a large hardware firm, is thinking about purchasing four new computers for his department. Explain how Mr. Technil can use EACH step outlined in (a) above in deciding which computers to purchase. (13 marks] ‘Total 25 marks SECTION B MODULE 2: MANAGEMENT OF PEOPLE Answer ONE question from this section. Discuss FOUR factors that may influence effective teamwork. [12 marks] Evaluate THREE benefits of using a team approach in the workplace. [13 marks] ‘Total 25 marks Define EACH of the following functions of management: @ Planning (i) Organizing Gi) Leading (iv) Controlling [ 8 marks] Explain how the application of EACH function of management would help Miss Good- Cook to operate her restaurant business more efficiently. [17 marks] ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 20085. -3- SECTION C MODULE 3: BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. (@)__ Define the following accounting concepts giving ONE example of EACH: @ Prepayments Accrued expenses { 6 marks} (6) Following is a Trial Balance of The Comer Shop as at 30 June 2005 which is the end of its financial period. Equipment at cost 20240 ‘Accumulated Provision for Depreciation: Equipment 8400 Vehicles at cost 11500 Accumulated Provision for Depreciation: Vehicles 4 600 Debtors 15500 Less Provision for Doubtful Debts 1240 Sales 21 200 Cost of Goods Sold 4350 Capital 18 640 Rent 2.490 NOTES 1, Equipment is depreciated at 10% on a reducing balance basis. 2. Vehicles are depreciated at 15% 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 Debtors as in the previous year. Instructions (Compute the depreciation expense for equipment. [ 3 marks] Gi) Compute the depreciation expense for vehicles for the year. [ 2marks] 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-year ending 30 June 2005, [11 marks] ‘ ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 20086 Following is the condensed Balance Sheet of Carib Enterprises, a sole proprietorship for the year ending 30 September 2005. Fixed Assets 20200 Sales for the year amounted to $47 900, Cost of Sales is $24 800 and Opening Stock is $4 600. (@) Compute the following ratios: Stock 3.680 Debtors 8940 | Bank 2.480 15 100 35.300 Capital 26 000 Net Profit 4330 30.330 Drawings 1730 28.600 Loans 2.300 Creditors 4.400 35.300 | (Net profit margin %) (i) Mark up (82%) Gi) Current Ratio 8:1) (iv) Stock turnover (45 times) (¥) Return on Capital Employed (13.5%) (based on average capital) (6) Explain what EACH ratio indicates about the performance of the company for the TWO years. The ratio for the previous year ending 30 September 2004, is shown in brackets. [25 marks] ‘Total 25 marks END OF TEST 02133020/CAPE 2008SECTION A MODULE 1 BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. 1, Kevin James, a tailor, is contemplating whether to remain as a sole trader or to form a private limited company. (@) Explain to Kevin TWO advantages and TWO disadvantages that a private limited company has over a sole trader. [12 marks] (b) Discuss THREE ways in which a change in the economic system of the country from a mixed economy to a planned economy could affect Kevin's decision to form a private limited company. [13 marks] ‘Total 25 marks 2. Discuss THREE benefits and THREE drawbacks that Caribbean countries could experience with multinationals operating in their territories. [25 marks] ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 20093. SECTION B MODULE 2 MANAGEMENT OF PEOPLE Answer ONE question from this section. Weber conceptualized that organizations would be managed on an impersonal, rational basis. Weber called this form of organization a bureaucracy. (@) Outline FOUR characteristics of a bureaucracy as specified by Weber. [ 8 marks] (b) Discuss FOUR implications of “Weber's bureaucracy” on today's business organiza- tions. (17 marks] Total 25 marks Change is a crucial element in an organization's ability to survive and grow. (2) Explain FOUR reasons why employees resist change. [12 marks] (b) Discuss THREE methods that can be used to address resistance to change. [13 marks] ‘Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 20095 @ @ Gi) 02133020/CAPE 2009 ae SECTION C MODULE 3 BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. Define the term ‘working capital’ [ 2marks] Identify THREE components of working capital [ 3marks] (6) Buddy is setting up a new gas station and convenience store and requires financing for the following areas: Land and building Machinery and equipment Stock of petrol Stock for convenience store Wages for employees (for the first 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} a Total 25 marks GO ON TO THE NEXT PAGE@ ‘The following is the Balance Sheet of Eastwood Hardware Ltd. as at December 31,2008, Study the Balance Sheet and answer the questions that follow. Eastwood Hardware Ltd. Balance Sheet as at December 31, 2008 Fixed Assets Buildings Plant and machinery Fumiture and fittings Motor vehicles Current Assets Stocks Debtors Prepayments Cash Less current liabilities Bank overdraft Creditors Accrued costs ‘Taxation payable Net current assets (working capital) ‘Asses less current liabilities Less long-term liabilities Bank loan Netassets: Financed by Share capital Ordinary shares Preference shares Reserves $Cost 500.000 100 000 50.000 70.000 720 000 13.000 12.000 1000 10.000 Less depreciation s 50.000, 450 000. 40.000. 60 000. 20000 30000 20.000: 50 000. 130.000 590 000 140.000 30000 5.000 1.000 176 000 36.000 140.000 730 000 180 000 550 000, 200 000, 200 000, 400 000 150 000 550 000. ‘The following items have been omitted from the Balance Sheet of Eastwood Hardware Ltd. = Money owed to business from suppliers — _ Aniitem of stock in a warehouse A piece of equipment used to make products = Electricity consumed = Rent paid in advance for the next three months Identify the appropriate sub-heading under which EACH of the omitted items would appear in the Balance Sheet of Eastwood Hardware Ltd. (02133020/CAPE 2009 { S marks] GO ON TO THE NEXT PAGE(b) (Outline the MAIN difference between performance ratio and liquidity ratio. { 3 marks] (i) Identify ONE stakeholder who will be interested in EACH type of ratio, [ 2 marks} (©) Calculate the following ratios for Eastwood Hardware Ltd. and explain the implication of EACH ratio, @ Current Ratio (ii) Acid Test Ratio (iii) Gearing Ratio (15 marks] ‘Total 25 marks END OF TEST (02133020/CAPE 2009 eee)SECTION A MODULE 1: BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. 1. (@)_Deefine the term ‘mission statement’ and outline THREE reasons why a mission statement is important to a business. { 8marks] (>) (i)_ 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] ‘Total 25 marks A firm is contemplating whether to include social responsibility as one of its main objectives. (a) Discuss THREE main objectives of a typical business organization. [13 marks] (6) Define the term “social responsibility’, giving TWO examples of how a firm can display social responsibility. [6 marks] (©) Outline THREE reasons why it is important for a firm to practise ‘social responsibility’. [6 marks} ‘Total 25 marks SECTION B MODULE 2: MANAGEMENT OF PEOPLE Answer 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 of leadership. [16 marks] (©) Outline THREE situations in which the participative style of leadership would be useful toKPJ Co. Ltd. [ 6marks] Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 2010(@ —@)_Define the term ‘training’, [ 2marks] Gi) State THREE reasons why training is important to an organization. [ 6 marks} (b) Evaluate TWO conditions under which EACH of the following types of training programmes is BEST suited: (Internally based (ii) Externally based [17 marks} ‘Total 25 marks SECTION C MODUL! : BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. XYZ Co. Ltd is considering investing in one of three projects, A, B or C. ‘The initial cost and 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 11% interest per annum. Cash Flow Project A Project B Project C Initial Cost $40 000 $28 000 $30,400. Year 1 12.000 ee Year 2 12200 10 100 8600 | Year 3 11 800 9 600 12.000 Year 4 14200 9900 13.100 Year 5 14380 10 100 ___15000 (a) Compute the cumulative cash flow for EACH project. [13 marks] (b) Compute the payback period, in years, to two decimal places, for EACH project. [ 6 marks] (©) Indicate, giving a reason, which project the company should accept. [ 3 marks] (@) Assume the IRR (Internal Rate of Return) of the projects are as follows: A - 5% Bo- 8% c= 15% Based on the IRR, indicate, giving a reason, which project the company should accept. [ 3 marks] Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 20106. The following is the cash flow statement for Nigel Enterprises for the year ended December 21, 2008. Study the statement and answer the questions that follow. Nigel Enterprises Cash Flow Statement For the year ended December 21, 2008 (US$ millions) (US $ millions) ‘Net cash inflow from operating activities 6 ‘Returns on investment and servicing of finance Interest received 2 Interest paid @ Dividends paid @ Net cash outflow from returns on investments and servicing of finance © Taxation Inland Revenue tax paid 4 Investing activities Purchases of tangible fixed assets (4) Purchases of subsidiary undertakings (18) (net of cash and cash equivalents acquired) Sale of plant and machinery 4 Net cash outflow from investing activities cr) Net cash outflow before financing , @2) in ‘New secured loan repayable in 2009 7 Repayment of amount borrowed 2) Net cash inflow from financing Decrease in cash and cash equivalents (a) @_Explain what is meant by the term ‘cash flow statement”. [ 3marks] (ii) Identify TWO financial statements, other than the cash flow statement, that are used by firms [ 2marks] (b) Analyse the cash flow situation of Nigel Enterprises under EACH of the following headings: [Net cash inflow or outflow from operating activities Returns on investment and servicing of finance Net cash outflow from investing activities Increase or decrease in cash equivalents Financing [20 marks} ‘Total 25 marks 02133020/CAPE 20102- CTION A INESS AND ITS ENVIRONMENT. Answer ONE question from this section. 1, Mr. Tyre is faced with TWO options, whether to expand his existing car repairs business or to buy into a franchise, as a solution to the problems faced by the business. The following are steps in the decision-making process: (@___ Definition of the problem Gi) Analysis (iii) Implementation (iv) Evaluation (@) Discuss how EACH of the steps above may assist Mr. Tyre in deciding which of the two options to choose. [16 marks} (b) Explain ONE way in which EACH of the following environmental factors may impact Mr. Tyre’s car repairs business: (Globalization (ii) Information technology (ii) Government regulations [ 9 marks] Total 25 marks 3¥2. Miss Dressy is planning to start a fashion designing business. She was advised that the first step in setting up a business is to establish the “business objectives’ (a) Explain what is meant by the term “business objective’. 1 3 marks} (6) Discuss THREE reasons why it is important for Miss Dressy to establish objectives for her business. [12 marks] (©) Identify TWO business objectives that Miss Dressy should aim to achieve and discuss the importance of EACH objective to the business. (10 marks} ‘Total 25 marks GO ON TO THE NEXT PAGE °02133020/CAPE 2011SECTION B MODULE 2: MANAGEMENT OF PEOPLE Answer ONE question from this section, 3. Frederick Herzberg has developed the ‘Two Factor Theory’ of motivation in which he argues that job satisfaction and dissatisfaction are caused by two distinct factors. (a) Outline the TWO factors identified by Herzberg in his theory, giving TWO examples of EACH [10 marks} (b) Explain how the TWO factors identified in (a) above lead to job satisfaction OR dissatisfaction in an organization. [ 8 marks} (©) Outline a three-step approach, based on Herzberg’s Two Factor Theory, which you, as a Human Resource Manager, would adopt in order to enhance job satisfaction in your organization. [ 7 marks] ‘Total 25 marks 4, The workers of Jewellery Plus Co. Ltd., a very large organization, are complaining about poor communication which has resulted in the organization having problems meeting its goals. (@) Define the term ‘communication’, [ 2 marks} (b) Discuss THREE possible barriers to effective communication at Jewellery Plus and outline ONE way in which EACH barrier discussed may be overcome, [15 marks] (©) Outline TWO features of EACH of the following types of communication network: @ Formal (i) Informal [ 8 marks} Total 25 marks GO ON TO THE NEXT PAGE 02133020/CAPE 2011SECTION C MODULE 3: BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. The published accounts of Multi-link Inc. recorded the following information for the last two -years of operation. [Year | Capital Employed | Net Profit | Gross Profit | Sales Turnover 2009 45 0.75 135 5.0 2010 3.0_ [| _0375 1.025 4.10 (@) Using the information in the table above, calculate the following profitability ratios and use your results 10 assess the performance of the company over the two-year period: (Gross profit margin = (ii) Net profit margin E (iii) Return on capital employed [15 marks] (6) Explain TWO limitations of using accounting ratios to assess the performance of a firm and suggest how EACH limitation may be overcome. [10 marks} ‘Total 25 marks 6 (a)__State ONE way in which the final accounts of a business serve as a major source of information for EACH of the following stakeholders: (Investors Gi) Suppliers (iii) Government (iv) Business Managers [ 8 marks} GO ON TO THE NEXT PAGE “02133020/CAPE 2011John, the owner and operator of John’s Chemicals & Supplies, is in the process of examining his cash flow statement in order to make some informed decisions regarding his business. (b) © Outline to John (i the meaning of the term ‘cash flow statement” [ 2 marks} (ii) TWO advantages of a cash flow statement to his business. [ 4 marks} Below is list of John’s expenses, sales and other figures for the period ending May 31, 2010. Expenses Electricity Stationery Rent Advertising Depreciation of motor vehicles Insurances Sundry expenses $s 1020 250 1830 1490 2.000 1090 248 Sales & Other Figures $ Sales 55.000 Opening stock 18.000 Purchases 30.000 Profit on sale of plant 4 000 Closing stock 7500 Construct the Trading and Profit and Loss Account for John’s Chemicals & Supplies for the period ended May 31, 2010. END OF TEST [11 marks} Total 25 marks 02133020/CAPE 2011