CANDIDATE – PLEASE NOTE!

PRINT your name on the line below and return

TEST CODE 02260010
this booklet with your answer sheet. Failure to
FORM TP 2016195 do so may result in disqualification. MAY/JUNE 2016

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN ADVANCED PROFICIENCY EXAMINATION®
ENTREPRENEURSHIP

UNIT 2 – Paper 01
1 hour 30 minutes

03 JUNE 2016 (a.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 45 items. You will have 1 hour and 30 minutes to answer them.

2. In addition to this test booklet, you should have an answer sheet.

3. Do not be concerned that the answer sheet provides spaces for more answers than there are items in this test.

4. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item you are about
to answer and decide which choice is best.

5. On your answer sheet, find the number which corresponds to your item and shade the space having the same
letter as the answer you have chosen. Look at the sample item below.

Sample Item

One of the major challenges online retailers have is

Sample Answer
(A) tracking sales results
(B) managing communication A B C D
(C) the capacity to enhance customer service
(D) the ability to maintain sufficient stock levels

The best answer to this item is “the ability to maintain sufficient stock levels”, so (D) has been shaded.

6. If you want to change your answer, erase it completely before you fill in your new choice.

7. When you are told to begin, turn the page and work as quickly and as carefully as you can. If you cannot
answer an item, go on to the next one. You may return to that item later.

8. You may do any rough work in this booklet.

9. Figures are not necessarily drawn to scale.

10. You may use a silent, non-programmable calculator to answer items.

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

Copyright © 2014 Caribbean Examinations Council

All rights reserved.

02260010/CAPE 2016
 -2-

1. If a business is listed on the stock exchange 6. An entrepreneur wishing to adopt open

it is a innovation must

(A) private company (A) maximize the return to shareholders

(B) limited partnership (B) focus on the firm’s core competencies
(C) limited liability company (C) build internal collaboration networks
(D) nongovernmental organization (D) be willing to collaborate with
customers and competitors

2. Which of the following are characteristics of

limited liability companies? 7. A statement of specific rules or standards for a
variety of situations which guides employees’
I. They have unlimited liability. behaviour is referred to as a
II. They are a separate legal entity.
III. Taxes paid are based on profit. (A) prospectus
(B) code of ethics
(A) I and II only (C) mission statement
(B) I and III only (D) health and safety regulation
(C) II and III only
(D) I, II and III
8. Mr Groban is a director at XYZ Inc., which
has had a legal claim made against it to settle a
3. One advantage of the franchise approach to considerable outstanding debt. The company
business is that the entrepreneur gets more is currently facing serious financial challenges.
Which of the following may be affected in the
(A) profit course of settling the claim?
(B) guidance
(C) capital (A) Mr Groban’s salary
(D) partners (B) The personal assets of Mr Groban
(C) The company car used by Mr Groban
(D) Mr Groban’s ownership interest in the
4. Business ethics and integrity will DIRECTLY company
impact organizational

(A) profits 9. The process of setting up a corporation in

(B) structure accordance with the laws of the country in
(C) behaviour which the business is located is referred to as
(D) performance
(A) incorporation
(B) limited liability
5. Which of the following standards emphasizes (C) going concern
health and safety in the production process? (D) obligation

(A) ISO Standards

(B) Duty of Care 10. A major disadvantage of BOTH general
(C) HACCP partnerships and sole trading organizations is
(D) OSHA the

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02260010/CAPE 2016
 -3-

(A) complex formation requirements (C) is highly inclined towards socializing

(B) limited pool of talent available and networking
(C) unlimited liability of owners (D) starts and manages several companies
(D) limited liability of owners at the same time

11. In the context of venture operations, a 15. A good business ethics policy can help a
whistleblower is a person who company address issues such as

(A) reports illegal and unethical behaviour (A) profits and losses
(B) speaks loudly during the decision- (B) revenue and expenses
making process (C) savings and investments
(C) contributes capital but is inactive in (D) bribery and discrimination
managing the business
(D) seeks new innovative ways of doing
things within a business 16. Which of the following involves collecting and
analyzing first-hand data?

12. A private hotel chain has decided to allow the (A) Second inquiry
local community access to part of the beach in (B) Product analysis
(C) Primary research
front of its property at no cost. The hotel is
(D) Feasibility analysis
fulfilling

(A) a political obligation 17. The process by which an entrepreneur

(B) an environmental obligation determines if he has the required technical
(C) an economic responsibility skills and necessary equipment for a business
(D) a social responsibility idea is referred to as

(A) personal feasibility

13. Which of the following forms of business (B) financial feasibility
ownership is affected by double taxation? (C) operational feasibility
(D) managerial feasibility
(A) Cooperatives
(B) Partnerships
(C) Public corporations 18. Which of the following feasibility analyses
(D) (D) Sole proprietorships assesses whether a new business venture will
provide a return on investment?

14. Which of the following is a distinguishing (A) Technical

feature of a social entrepreneur? (B) Marketing
(C) Industry
He/She (D) Financial

(A) is in business to create a profit

(B) takes environmental objectives into 19. One of the key components of a feasibility
consideration analysis is

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02260010/CAPE 2016
 -4-

(A) an individual’s SWOT profile (A) $ 4 million (increase)

(B) product characteristics (B) $ 4 million (decrease)
(C) income generation (C) $27 million (decrease)
(D) product offering (D) $27 million (increase)

20. Entrepreneurs are involved in various types of 24. A short-term debt obligation which is backed
business but in each case, they are finding by the government and has a maturity of less
ways to make money by giving customers than one year is known as a

(A) goods (A) bond

(B) service (B) stock
(C) value (C) treasury bill
(D) discounts (D) fixed deposit

21. Raising funds by debt financing rather than 25. Surplus cash reinvested in the business may be
equity financing affects a business’ classified as

(A) profitability (A) equity financing

(B) efficiency (B) long-term debt finance
(C) liquidity (C) short-term debt finance
(D) gearing (D) owner contributed finance

22. The amount of time it takes a business to earn

26. The following amounts were taken from the
a profit after the initial investment is referred
books of DigiX.
to as
$
Rent paid 10 000
(A) solvency
Increase in value of car 1 500
(B) liquidity
Rent prepaid at year end 1 000
(C) payback
Loss on sale of computer 500
(D) profitability
What value should DigiX record in the
Statement of Comprehensive Income as
23. The following is an extract of the Cash Flow expenses?
Statement for Shanah Ltd for the financial year
2014. (A) $10 000
(B) $11 000
($ millions) (C) $11 500
Net cash inflow from operating activities 25 (D) $12 000
Net cash outflow from investing activities 19
Net cash outflow from financing activities 2

The net change in cash and cash equivalent during the

2014 financial year was

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02260010/CAPE 2016
 -5-

27. Which of the following statements answers the

questions “Where the money will come from?”
and “Where it will go?”
(C) The satisfaction of customer needs
(A) Balance Sheet and expected profit margin
(B) Income Statement (D) The product and services required
(C) Cash Flow Statement to satisfy customer needs
(D) Expenses Statement

30. Faith has created a business plan for a

28. Which section of the business plan gives
potential solar panel production facility.
information about competitors?
Which of the following will be shown in
the operations section of the plan?
(A) Financial
(B) Marketing (A) Strategies to attract new customers
(C) Operations (B) Management structure and policies
(D) Management (C) The expected revenues, costs and
profits of the business
(D) Labour, materials, infrastructure
29. Which of the following is the BEST
requirements and the production
definition of a firm’s value proposition?
process
(A) The product offered
(B) The product and services provided

____________________________________________________________________________________________

31. Generally, the stages of the venture life cycle in correct order are

(A) start-up activities → new venture development → venture growth → business stabilization →
innovation/decline

(B) new venture development → start-up activities → venture growth → business stabilization →
innovation/decline

(C) start-up activities → venture growth → new venture development → business stabilization →
innovation/decline

(D) new venture development → venture growth → start-up activities → business stabilization →
innovation/decline

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02260010/CAPE 2016
 36. When considering an investment, which
32. In which of the following situations is method compares the stock market price of
business valuation important? the shares with the profits being generated?

I. Establishing an employee stock (A) Price-earnings analysis

option plan (B) Discounted cash flow
II. Buying out a partner (C) Balance Sheet analysis
III. Raising growth capital (D) Asset book value

(A) I and II only

(B) I and III only 37. An entrepreneur can value his business
(C) II and III only based on the current value of future cash
(D) I, II and III flow. This valuation method is known as

(A) net book value

33. What are the features of the ‘business (B) initial public offering
stabilization’ phase of the venture life (C) multiple earnings value
cycle? (D) discounted cash flow

(A) Increased competition, market

saturation, sales increase 38. John is the owner of a new car dealership
(B) Decline in business, acquisitions, and has enhanced his website to sell cars
new product development online. The advantage of doing this is
(C) Developing the mission, conducting
research, feasibility assessment (A) an increase in market share
(D) Expansion of team, administrative (B) an increase in vehicle options
challenges, reformulating strategies (C) a reduction in the business’ unit
cost
(D) increased capacity to enhance
34. A critical part of preparing for an initial customer service
public offering is establishing a good
39. The buying and selling of products and
(A) stock count
services via the Internet is known as
(B) valuation
(C) profit
(A) electronic commerce
(D) asset
(B) conceptual exchange (C)
continuous exchange
35. The decision to go into e-commerce should (D) perpetual trade
be pursued ONLY after
40. When assessing the online potential of a
(A) suitably trained personnel can be
business venture, consideration should be
hired
given to
(B) web-based sales begin to erode
traditional sales (A) data mining, target markets,
(C) identifying a suitable firm to host difficulty of access to offline
the website customers
(D) a strategy to integrate the web into (B) appeal to customers, online
overall strategy is developed shopping malls, data mining
 (C) appeal to customers, target markets, (A) low sales, high costs
costs and benefits (B) low sales, low costs
(D) costs and benefits, domain name, (C) high sales, low costs
target markets (D) high sales, high costs

44. As in a brick-and-mortar model, a frequent

41. Shanise wants to determine the overall buyer programme can help an e-commerce
value of her business venture. To estimate initiative establish
its value, Shanise can use
(A) privacy
(A) consumer value (B) loyalty
(B) annual sales revenue (C) security
(C) average annual net income (D) flexibility
(D) the book value of all assets

45. Many attempts at e-commerce fail because

42. Which of the following considerations is of the belief that
MOST important when developing a
community to enable e-commerce success? (A) technology is all that is needed
(B) the most important factor is
(A) Dynamic site design strategy
(B) Social media presence (C) too much security is better than too
(C) Adequate sponsorship listings little
(D) Restrictions on the type of content (D) online sales can lead to new growth
posted opportunities

43. When a business venture first begins

operations, it usually experiences

END OF TEST

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