SysTools PDF Watermark Demo Version \

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TEST CODE 01240 [) l 0

FORlVI TP 2008117
CARIBBEAN EXAMINATIONS COUNCIL
SECONDARYEDUCATION CERTIFICATE
EXAMINATION
PRINCIPLESOFBUSINESS
PaperOl -GeneralProficiency
75minutes
( 27MAY2008(p.m))

READ THE FOLLOWING DIRECTIONS CAREFULLY

l. ln addi.tion to this test booklet, you should have an answer sheet.

Each item inlhis test has four suggested ans\¥ers lettered \A), (B), (C), (D). Read ead1 item) 0u ar~
ab0ut to answer and decide which choice is best.

~. On your answer sheet, find the number which corresponds to your item and blacken the space i '" ·. •ng
the same letter as the answer you have chosen. Look at the sample item below.

Sample Item
The money a business receives from the sale
ofgoods or services is called its Sample Answer

(A)
(B)
assets
capital
@®•@
(C) income
(D) resources
The best answer to this item is "income", so answer space (C) has been blackened.

4. Ifyou wantto change your answer, be sure to erase your old answer completely and fill in ye .ir " " "
choice.

5. When you are told to begin, turn the page and work as quickly and as carefully as you can. lfyou cannot
I answer an item, omit it and go on to the next one. You can come back to the harder item late1. Y uur
1r
score~ will be the total number ofcorrect answers.
!
6. · This test consists of60 items. You will have 75 minutes to answer them ..

7. Do not be concerned that the answer sheet provides for more answers than there are items in ti 1i s test

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

01240010/F2008
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I. Which of the following is NOT a function of 6. Which of the following is LEAST liko.y to
money? result from growth in an organization'!

(A) Indivisibility (A) Greaterproductiv ity

\B) Store of value (B) More division oflabour
(C) iv1~a.su.r~ ofvulue (<:) Increased communication
\0) Medium ofexchange {D) Increased capital investment

2. In a comperitive market situation, which of 7. Which ofthe following characteristics ot' the
the following is LEAST likely to influence sole trader form of business enterprise is
consumer demand? NOT advantageous to the owner?

\Al Taste (A) Secrecy

\B) Price (B) Unlimited liability
( C) Brand loyalty (C) Ownership ofall profits
\0) • Consumers' income (D) Low operational cost

8. The MAIN purposeofinstalling a suggestion

3. Subsidised meals for employees would fall box in a company is to get workers' view
under which ofthe following categories? about

(A) Fringebenefits (A) each other

(B) Duty allowance (B) other companies
(C) Wages and salaries (C) ways of improving the workplace
\D) Workmen' scompensation (D) ways of improving t:conomic

r
'
conditions in the country

' Private enterprise is runMAINL Y to

9. ln a public limited company, the losso:s are
(A) provide jobs for more people borne by the
(B) distributegoodsandservices
(C) reduce inflation (A) staff
(D) create profits for owners (B) directors
(C) community
(D) shareholders
5. Which of the following are functions of a
business unit?
10. Which of the following is MOST likely'''
1. Production of goods and services occurwh.:namemberof a partnershi1i dies''
ll~- Creationofjobs
IIL Maximization ofsales lA) The busint:ss is dosed down
lY. -. Educationofworkers (B) A new partner is brought in
(C) The government takes O\ er the
\A) !, II and III only business
(B) I, II and IV only (D) The business becomes ajointsrock
(CJ !, Ill and IV only company

. (D) ll, Ill and IV only

f GO ON TO THE NEXT PA.GB

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ll. ln a finn with a departmentalized structure, 15. J:he condensation of the business plan ts
which department performs the four duties contained in the
listed below?
(A) feasibility plan
l. Receiving the goods purchased (B) marketing plan
l l. Reporting on the quality of goods (C) key note summary
received (D) executive summary
Ill Applying the principles for costing
gcxxis
IV. Keeping an inventory 16. Which ofthe following is NOT a feature ofa
business plan?
\A) Finance
\B) Purchasing (A) Demonstratesaclearcompellingvision
1.C) Stock control (B) Provides clear and realistic projections
tD) Marketing (C) Gives infomrntion about the target
market
(D) Outlines financial institution frcm
12. Pro tit may NOT be the main objective ofa which business may get funding
business which is

(..\ J finding cheaper raw materials 17. Which ofthe following desc1ibesan essential
(Bl increasing the salaries of its feature ofa valid contract?
directors
increasing the price of goods and (A) The offer has been communicated to
services ·the offeree.
(D) expanding factory space to increase (B) A counter offer has been made by
production the offeree to the offeror.
(C) The offer is made in writing by the
offeror.
l3. An entrepreneur may reduce his riskofloss (D) The offer has been accepted by the
by offereeeitherin writing or orally.

\A) planning ahead

(BJ securing bank loans 18. Which of the following are functions of
\C) cleaning offices regularly management?
(DJ purchasing additional fixed assets
I. Co-ordinatingtheworkof employees
II. Delegating work to subordinates
l-1. Cash used to secure a loan at the bank is refered III. Controlling employees and raw
lO .J.S materials
IV. Ensuring that employees join a trade
\f\) coiiaLerai W110n
(B) fixed assets
(C) '·currentasset (A) I and llonly
\D) fixed deposit (B) 1land lll "" ly
(C) I, II and Ill only
(0) II, Ill and JV only

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L9. Which of the following factors prevents an 23. Which ofthe following isa fixeq asset?
cigreement from being considered a valid
>2011tr<:1ct? (A) Bi eye le for private us~
(B) Motorcarforfamily use
1 A\ Offer and acceptance (C) Washing machine for resale
( B) Misrepresentation (D) Motor lorry for delivery of goods
(C) Legal purpose
\1)) Consideration
24. Thete1m 'hun1anresources' refers to

20. Which ofthe following situations would occur (A) materials and goods made by hum'rn
it' a contract for the sale of goods becomes beings
\0id'~ (B) raw materials used in the manufacture
ofgoods
!. The prospective buyer becomes the (C) persons available for productive linJ
owner. professional services
! l. The seller has the rightto keep any (D) capital invested by shareholders in a
money or goods which have been company
·given to him in this transact ion.
Ill. The prospective buyer does not
become the owner. 25. The movement ofeducated, skilled peopk to
IV. Thesellermustreturnanymoneyor settle in other industrialised countries is cal kd
goods given to him by the
prospective buyer for the (A) migration
transaction. (B) brain drain
(C) unemployment
\A) I and I Vonly (D) underemployment
(Bl II and llI only
(C) Ill and IV only
(D) I, II and IV only 26. Which ofthe following is the BEST exam pk or
capital as a factorofproduction?

21. ll1e money used fortheday-to-day operations (A) Money

ofa business is called (B) Shares
(C) Machinery
(A) fixed capital (D) Debentures
(B) nominal capital
(C) floating capital
(D) working capital 27. To which of the following industries .Jues a
firm involved in food processing belun.~'/

22. The factqrof production which earns interest (A) Service

IS (B) Extractive
(C) Constructive
(A) land (D) Manufacturing
(B) labour
(C) capital
(D) enterprise

GOONTOTHENEXTPAGE

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2!1. Which ofthe following can be described as a 33. Which ofthe following is NOT a function ot
marketing activity? the retailer?

(A) Issuing bulletins on staffmatters (A) Transporting goods to suitable

(8) Distributing commodities to outlets storage facilities
,. IC\ Pub! icising advertisements for new <Bl Providing a local su!'.mlv of goods
' staff (C) Preparing goods for resale
Ensuring that workers are given (D) Selling in small quantities
fringe benefits

34. The variables of a marketing mix can easily

2i.i. .'\ll persons can be called consumers because be remembered by referring to the four P's
they . which are

(A) use goods (A) product, price, place, promotion

(Bl buy goods (B) product, publicity, purchase, price
(C) have wants (C) product, pr0motiof!, p~ckage. price
(DJ satisfy themselves (D) product, package, place, promotion

JO. Which of the following BEST describes the 35. A court order requmng an employer to
1
tenn 'loss leaders ? deduct money from an employee for payment
ofhis debts is kno\vn as
\A) A.n item which the retailer gives away
to custon1ers (A) demand
1l:l J A pruduct which is sold cheaply to (B) revenue
artractcustomers (C) withdrawal
(C) A good which has no real marketvalue (D) garnishment
(0) A product which the retailer is unable
to locate
\ 36. A post-dated cheque is one which
j '
1 Jl. Which ofthe fol lowing activities carried out in (A) was written no longer than six
a ti rm will NOTbeunderthesupervision ofthe months ago
marketing manager? (B) is dated to agree with the date of the
documentrequesting payment
(A) Packaging (C) is dated by the bank on the day it is
(B) Advertising presented for payment
\ C) Distributing (D) is dated for payment at a future date
lD) Purchasing

37. Oneofthe tvtAJOR functions ofacentral banK

32. \\ hichofthe following isLEASTlikelytobe is to
Jcscribi:d as good public relations for
a company? (Al issue notes and coins
(B) issue stocks and shares
v\) The offering of scholarships (C) accept deposit accounts
(l:JJ Sponsorshipofasteel band (D) make loans and advances
"-------··- \CJ Reducrion in piiceto retailers
~D) Ho~ting ofan annual sport event
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38. The monthly payments collected by an 42. Governments can infuence businessactiv iry
insurance company on behalf of its policy positively by
holders are known as
(A) reducing taxes
(A) deposits ,_,
fl>\ rPrh icing grants
(B) premiums (C) reducing spending
(C) instalments (D) budgeting fora surplus
(D) endo"ments

43. Whichofthe following measures are used by

J'}. Which of the following CANNOT be used government to redistribute incorne?
as collateral for obtaining a loan from a
financial institution9 (A) Customs duties and levies
(B) Consumption tax and tariffs
(:\) A mortgaged home with insurance (C) PA YEandNationallnsurance
coverage (D) Excise dut~e'S and Yalu~ added t<.LX
(B) An insurancepolicywithacashvalue
(C)' Money in a fixed deposit account
(D) Property not covered by insurance 44. Tax paid on wages and salaries is rd"ecred to
as

40. The MOST important use of collateral (A) excise duty

security to the lender is that it (B) income tax
(C) customs duty
(A) can be sold if the borrower fails to. (D) corporation tax
pay
(B) gives the banker an idea ofthe state
ofthe business 45. Which of the following forms of taxatil>n
(C) establishes the financial position of could be classified as "direct'?
the borrower
(DJ improves the borrower's chance of (A) Excise duty
gening a loan (B) Income tax
(C) Customs duty
(D) Purchase tax
41. A country will restrict importation of
certain items in order to
46. Which of the following is included 111

I. assist local industries. protection of the environment?

II. prevent similar items from being
consurn~d by its citizens. (A) Food legislation
Ill. encourage use oflocal resources. (B) Social insurance
IV. alter the life style ofits citizens. (C) Competition policy
(D) Deforestation laws
(A).. !only
(8) I and Ill only
(C) II and Ill only
(D) II and IV only
 •
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~7. Which ofthe following can be considered as 51. Which ofthe following are likely to aftect the
incentives to industries? standardofliving in a country?

Increasing coporation tax L Widespread pollution

Increase in insurance premiums IL A low literacy rate
i I~\
,_ ...._ J !!!. A hinh f"rimP ~t""
- ----e-- ------- ----
The devaluation of the local currency IV. Advertisements

(A) I and III only

.. is. A. country has a favourable balance oftrade (8) II and lII only
when (C) I, II and III only
(D) I, lII and IV only
(A) it sells more than it buys
\8) it buys more than it sells
(Cl imported go6ds are cheaper 52. In National Income Accounting, students'
ID) there are no restrictions to trade grants and retirement pensions are exampks
of

Which ofthe following practices would NOT (A) national income

contribute to the economic development and (8) transfer income
growth ofa community? (C) personal income
(D) disposable income
\A) lncreaseduseofthecountry'snatural
r~sources

Increased importation ofconsumer 53. Which of the following indices is the BEST
goods measure of the economic growth of a
Provision of loans and technical country?
assistance for establishing local
businesses (A) Economic stability
Provision of more infrastructure (8) High standard ofliving
within the country (C) Ghangesinthegrossnational product
(D) Changes inthegrossdomesticproduct

50. To co meet an adverse balance of payments

p0sition, agove111n1ent may 54. The balance ofpayments account comprises

IA) reduce credit I. current account

(BJ increase exports II. total currency tlow
IC) reduce income tax III. gross national income
(D) increase the money supply IV. official financing

(A) I and lII only

(8} II and III only
(C) l, II and lI I only
(D) I, II and IV only

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-8-

SS. WhichofthefollawingareMAJOR econ0mic 58. The PRIMARY function of the Caribbean

problemsfacingCarlbbeancountries? Basin Initiative is to give concessions on

I. Highlevelsofunemployment (A) traditional products entering the

II. Adversebal.-ofpayments Canadian market
Ill. Lowproductivityinrnanufacturing (B} traditionalproductSenteringthe US
IV. Lackofcapitalfurinvestment market
(C} non-traditional productsenteringthe
(A) land II only US market
(B) lland!Ilonly (D) non-traditionalproductsenteringthe
(C) I, II and IV only Canadian market
(D} I, !I, III, and JV

S9. Investmentcanbedefmedas
56. Which of the following methods may
govemmlontusetoreduceunemploymentin (A) the stock ofgoods in acountry
the long run? (B) additions to the capital stock of a
countcy
W Employment levy on firms (C) theamountofmoneyavailableata
(B) Increases in income"" given time
(C) Deflationoftheeconomy (D) the amount of capital owned by the
(D) Increased interest rates on borrowers government
\

57. The following policies are barriers to 60. .· Whichofthe following can beclassiftedas
international trade EXCEPT · benefltsofnationalisation?

(A) quotas I. Profits will remain in the country.

(B) subsidies II. Essential industries will be state
(C) embargoes owned.
(D) custom duties III. Employment wil I be provided for
citi7.lllls. ·
·N. The enterprise wiH have joint
ownership.

(A} I, II and III only

(B) I, n and IV only
(C) I, JU and IV only
(D) II, IIIandIVonly

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

01240010/F2008

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