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coDE02133010
FORM TP 2013226
MAY/JUNE 20t3
cAR rBB EAN PxAnl
I xaiiolvs?o
uNcrL
, CARIBBEAN ADVI.NCED PROFICIENCY EXAMINATION!
MANAGEMENT OFBUSINESS

Unitl-paper0l
I' hour S0 minutcs

i$: 23 MAY 2013 (p:m.)

READ THE FOLLOWING INSTRUCTIONS

CAR.EFULLf,
|. .. , T.his test consists of 45 items. you will have I hour and 30 minutes to
answer them.
2. , In addition !o this test booklet, you should have an answer sheet.
answ€r sheet provides spaces for more answerc
items in this test. than therc are

4. Each item in this test has fourruggested answers

lcttcred (A), (B), (C),
you are about to answer and deciJe which iD). Read each ircm

,5. "h.i""il;;.
On your answer shecl find thenurnber which corrciponds
to your item and shade the space
having the samc lctter as the answer you have chosen.
Look;t the sampl;i;;;i;;.
Samole ltem

Which of the following actions CANNOT be taken

by a trade union?
Sample Answer
(A) Picket
fr (B) Strike
3
I (C) Co slow @@@o
(D) Lock out

The best answer to this item is ..Lock out ,, so

answer.space (D) has been shaded.
6. lf you want to change your answer, be sur€ to erase
it completely before you
choice. fill in your new

7. When you ar€ told to b€gin, turn the pagc and

work as quickly and as carefully as you can.
rf you cannot answer an item, omit it and go on to
thc n;xt one. your score wi[ be the iotal
' number ofcorrect answots,

-!
8. You may.do any rough work in this booklet.
9. You may use silent non-programmable calculators
to answ€r questions.

Copyright O 201 I Caribbcan Examinations Council

All rights rcserved.
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02 | 330 | 0/CAPE 2013
l. Government's payment to domestic 'Trede liberalization'can bc BESTdescribed
prcclucers, in the form of a tax rtlisf, is as the
known. Es a
IdI romoval of tradelorri6R/l
(A) tarifT 6l free movembnt of caPital- . .' ,
(BL, .quota (C) unrcstrictod movement of goods-
gt pubsidy (D) indepcndcnceoftradingpartners :

(D) corporate tax I

i
6.' A multinational corporation can be BEST
2. Business MUST operate gndet certain defined as
regulations,ih arder to do which of the
(A) an unincbrporated association with
following?
many operating branches
l. Be fair to emPloYeos. . (B) a business that has main offices in
' ll. Protect tlre environment.' many operating countries
lll. Take odvantage of prospective (c) an unincorporatcd association with
' customers. many lread offices in various
locations
(D.) a business that lras its main o{fice
t\ I and It onlY

(c) Il and lll ouly bases in otlrerc

(D) l, ll and lll

7. A public limitcd company msy decide to

3. Which ofthc following is NOTa decision- 'go privatc' in order to
making tool?
l, .scgEin control ofthe business
(A) Decision tree ll. eliminate the thrcat of takeover
IBI Quantitative data lll. raise additionalfinance to purchase
(C) Cost b€nefit analysis . now equipment
(D) Critical path anilysis
tA+, I and II only
(B) I and lll only
4. The 'system opproach' applies BEST to (C) ll and lll only
managcment b€cause it (D) l, ll and lll

(A) emphasizes the humanistic

approach Which of the following is a benefit of
(B) places emphasis on the classisal a multinational corporation to the host
approaclr country?
(c) engourages and inspires all the
other theories of managomcnt' tA| !ncreaso in foreign exchangc
tD.I sees management as a continuous eamings
flow between functions or (B) Bcttcr knowledge of oonsumers'
departments taste
(c) Bsttgr access to loaal natursl
resources
(D) lrwer transportation costs for the
finished product

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9. The benefts which many largefirms enjoy t4. Which of the following is an advantage of
over smaller firms are refened to as trade liberalization?

(A) economic wellness (A) A level playing field is provided for

(B)-.- economies of scale all countribs,
(C) profit maximization (B) Homo producers are protected frorn
(D) good will oi the firm unfair competition.
(a Consumers arc able to purchase a
wider variety ofgoods.
t0. One benefit ofa private limited company (D) lnfant industries thrive well against
over a partnership is that competition from importers.

T,+t shareholders have limited liability

(B) the private company is an Which of the followingarc LI KELY benefits
unincorporated qssociation of globalization to Caribbean countries?
(C) shareholders can sell their shares
on the stock exchange I, Incrcased employment
(D) the privste company can issue a il. lmprovements in the balance of
prospectus to the general public trade
III. lmprovements in the balance of
payment
ll Which nfrh" €^tloy,i.g isg ferturc ef .c
push inflation'? goods

tA.I High level of wages (A) I and Il only

(B) Lower cost of production (B) I and lll.only
(c) lncrease in the money supply (c) II, Ill and IV only
(D) lncreased demand for goods and (D) I, II, lll and lV
services

t6. Whicb of the following statements BEST

12. One MAIN benefit of the Caribbean describes a feature of a centralized
Common Market to businesses in the organization?
member countries is
(A) Managers delegate tasks to the
(A) limited costs periphery.
(B) higher prices (B) Employees are empowercd to make
(C) grcater profits decisions.
tD\ reduction in tarifrs (C) Autonomy is given to those at the
lower levcls.
(D) Decision making lies within the
13. A lirm practises ethical behaviour when it
. uppcr levels ofthe organization.

tA) recalls a specific batch ofproducts

because offlaws in a few
(B) places more emphasis on social
responsibilities than pnofi R
(C) pays large salaries to its executives
during a redundancy exercisc
(D) delays paying its supplier in order
to improve its liquidity position

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 -4-
17. The flow of sommunication in a matrix Which of the is LEAST likely to
of
structure reflects the intorest be tho objective performance appraisal
systenr?
(A) customers :

(B) authority figures. (A) the advanoement of

(C) monagemont and customers
(D) thefunctionaloreasofmanagem6nt (B) the futur€ needs of t

(c) and support planned

ir
18. Effective cdmmunication is distoried when within the oryanizotion
. (D) employees in ahe
(A) only the electronic medium is used who arc not coping
(B) vertaland non-verbalcues are used
(C) body language and intoriation arc
not aligned 23. Which of the repr€sents the idea
(D) several media are used to tlrat an is a system but at the
sommunicate information same time, psrt e lsrgor system?

(A) Syneryy
Which of the following theorists is known (B)

(D) Closed
(A) Elton Mayo
(B) Max Webe r
(c) Frederick Taylor 24. Wlren employeee to developand
(D) Douglas Mccregor carry out plans high levels of effort,
they aro applying ayol's principle of

20. Which of tbe following is a non-ffnancial (A) initistive

reward? (B) authority
(c) I
(A) Gain sharing (D) unity of
(B) Job enrichment
(c) Lumpsum bonus I
i
(D) Employees stock ownership 25. Which of the following types ofl
plan communication is illustrated by the
grapevine?

2t. Which of the following would NOT be (A) Lateral

classificd as a liygiene factor basod on (B) Formal
Herzberg two-factor theory? (C) Informal
(D) Diagonal
(A) Pay hi
(B) Supervision V:i
ij:,:
(c) Recognition ['
(D) Working conditions

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02t330t0/CAPE 20t3

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26. Upward communication occurs when 30. At which level of Maslow's hierarcly
of needs would .open and honest
(A) instructions are given to communication among employees' be
subordinates applicable?
(B) employees are allowed to express
their views (A) Social
(G) objectives'are communicated to the (B) Safety
i! . rank and file (C) Esteem
(D) ' mernbers of staff coordinate tasks (D) Self-actualization
within their departments

31' tn" following is Nor a current

27. when nranagernent anempts to incrcase trre Hlit,,L"tt
scope ofajob by broadening or deepening
tlre task undertaken by a wor*er, this can (A) Bank overdraft
. be BEST described as (B) Expenses owing
(C) Mortgage payable
(A) job roration (D) Creditors of goods
. (B) job analysis
(C) job enlargement
(D) job enhancement 32. Tho THREE main components ofa cash
, flely Etatemcntare ,

28. Which ol'the following leadership styles (A) issuing shares, funds flow, financing
is MOST suitable for an experienced and activities
flexible workforce? (B) operating activities, investing
activities, funds flow
, (A) Aulocratic (C) operating activities, financing
(B) Democratic activities, issuing sharcs
(C) Paternalistic (D) operating activities, investing
(D) Constitutional activities, financing activities

'li4ary
29. works in a small supermarket. She 33. A typ€ of external finance which offers
thinks the pay is good. While she enjoys f,exibility and the ability to access funds
the group of friends she works with, she 'over and above'bank balances is known
is considering leaving because she feels as
. tlrat her work is not appreciated and is not
challenging enough. (A) leasing
(B) overdraft
According to Maslow, which of the (C) trade cr€dit
tbllowing reasons BEST explains Mary's (D) standing order
dcsire to leave?

(A) Social needs are not being met.

(B) None ofher needs is being meL
(C) Higher order needs arc not being
satisfied.
(D) Lower order needs are not b€ing
satisficd.

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02r330r0/CAPE 20r3
 -6-
34. Working capital is often described as the 39. Mrs fill, the accounting manager of XZY
'life blood of a business'. Which of the Co. Ltd, is .in the process of assessing
following options BEST describes proper the profitability of the business. She is
management of working capital? comparing profit with the copital wlrich
has been invested in the business. Which
(A)' lncr€esed stock level of the following ratios is Mrs Till using?
(B) lncreased crcdit to purchasers
(C) lmproved cosh flow forecasts (A) Acid Test
(D) lmprcvedresearchanddevelopment (B) Net Profit Maryin
(C) Cross Profit Margin
(D) Return on Qapital Employed
Which ofthe tbllowing is NOTa component
of working capital?
llqgQ refers tothe following information.
(A) Caslr
(B) Stock The owner of a company withdrew fionr
(c) Debtors the company goods worth $ 100 for personal
(D) Building use.

Which TWO accounts ar€ rrquircd to post

(A) investment (A) Sales and creditors

(B) interbst rate (B) Salos and drawings
(c) loan payment (c) Purrhases and creditors
(D) insurance prenrium (D) Purchases and drawingb

37. Which of the following ratios gives a 4t. Which of the following is NOT classified
measure of how easily a busincss could as a cunEnt asset?
meet its short-tenn debe or liabilities?
(A) Stock
(A) Gearing (B) Debtors
(B) Liquidity (c) Cash at bank
(C) Efficiency (D) Bank ovendraft
(D) Profitability

Which of the following sources of finance i

is LEAST likely to be used as investment
in a new product development?
4.. .

rUr.'
(A) Bank loan ?.n:r

(B) Debentures
(C) Share issues :

(D) Bank overdraft

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02 r33010/CAPE 20 | 3
42. Sally is completing her assignment on Item 43 rcfers ro the tbllowing table which
investment appraisal methods. She is shows an extmct from the books of pB's
applying thc metlrod that allows for Ltd.
discounting all future cash flows t'rom a
project 1o their present day value and then
Net cash inflow from operation $ 45 000
subtmcting the currcnt cost ofthe projects.
The metliod Sally is using is Taxation paid $ t2 000
Paymert offixed asset $ 19 000
(A) payback period
Share issue $ 13 000
(B) net present value
(c) internal rate of return
(D) 43. The closing cash balance is
average rate of return

(A) $ 2000
(B) $25 000
(c) $28 000
(D) $40 000

plans for Quick Cook Ltd.

l{inancirl ACtUtl ferlormance

Budget ($) Vtriance
Vnrirhle If\
Sales Revenue t5 000 l2 000
Labour Costs 22 000 23 000

Overhead Costs 3 000 3 500

44. 'fhe variance for sales revenue for The variance for overhead costs for
Quick euick
Cook Ltd is Cook Ltd is

(A) $ 3 000 (adverse) (A) $ 500 (adverse)

(B) $ 3 000 (favourable) (B) $ 500 (favourable)
(c) $27 000 (favourable) (c) $6 500 (adverse)
(D) $27 000 (adverse) (D) $5 500 (favourable)

END OF TEST

IF YoU FrNrsH BEFORE TIME Is CALLED, cHEcK YouR woRK oN Tltrs rEsr.

02 t3301O/CAPE 20 t3