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MAYAI.INE2OO8
CARIBBEAN EXAMINATIONS COUN CIL
;
ADVANCED PROFICIENCY EXAMINATION
]VTANAGEMENTOF BUST.{E SS

UnitI _paper0l
90minutes

14 JULY 2008 (p.m.)

READ TIIE FOTLOWING DIRECTIONS CAREF,IILLY

L This test consists of45 items. you will have
90 minutes to answer them.
In addition to tlris test bookret, you shourd
have an answer shee t. . i
3. Do not be concdrned that the answer sheet provides
spaces for more answers flran there are items
test. r', in this

+. Eachiteminthistesthasfoursuggestedanswerslettered(A),(B),(c),(D).
Readeachitemyouareabout
to answer and decide which choice is best.

on your answer sheet, find the number which corresponds

to your item and shade the space having the
same letter as the answeryou have chosen.
Look at the sampre
-o item berow.
.-
Samoleltem 41
v
which of the fol lowing acti ons cANNor x
be taken by a trade uni ori? o

(A) SampleAnswer -
Picket lrt
(B) Strike
(C) Goslow @@@o f
(D) Lockout
The best answer to this itern is "Lock out,,, ,o
unr*.r roace (D) has beeri blackened.
6. Ifyou want to change your answer, erase it completely
and fi ll in your new choice.
7. when you are told to begin, tum the page and work
as quickly and as carefully as you can.
answeranitem,omititandgoontothenextone. Youricorewillbethetotalnumberofcorrectanswers. Ifyou cannot

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

9. You mayuse silentnon-programmabre calcurators

to answerquestions.

DO NOT TURN THIS PAGE UNTIL YOU ARE

TOLD TO DO SO.
Copyright tO 2008 Caribbean Examinations Council.@
A ll riohtc
"^can'6't
 -) - .,:
t. Which of the following can be used to Which of the following is LEAST likeiv to
measure the size of a firm? contribute to economies of scale?

';l,.ri-'i
I. Market share (A) Finance
ti.-j',, ,t U. Capital employed (B) Marketing
ll'
III. Number of employees (C) Technology
.."' .;:

(-'a
IV. Technology employed (D) Competition

(A) I, II and III'only

(B) I, III and IV pBly
(c)
6. Government's payment to domestic
II,III and lVionly producers, in the form of a tax relief is known
(D) I, U,III and IV AS

) The MAIN objectives of CARICOM are to

(A) quota
(B) tariff
I. coordinate foreign policy
(C) subsidy

II. faiilitateeconomicintegration
(D) corporate tax
ilI. make decisions on employment
policies
IV. cooperate in providing common
7. A public limited company may decide to
'go private' in order to
services

" (A) I, II and III only I. regain control of the business

(B) I.II and IV only n. eliminate the threat of takeover
(C) I, III and IV only
m. avoid costs associated with the stock
(D) II,III and IV only exchange
IV raise additional finance to purchase
new equipment
3. The mission statement of an organisation
BEST defines the organisation's , (A) I,II and IIt only ,F

/ (B) I, II and IV only

(A) operationalobjectives '(C) I, III and IV only
(B) strategic objectives (D) II,III and IV only
(C) tactical objectives
(D) specific and quantifiable objectives
8. A firmpractises ethical behaviourwhen it
4, Technological obsolescence refers to (A) delays paying its supplier in order to
technology being
rmprove its liquidity position

(A) (B) places more emphasis on social

outdated responsibilities over profits
(B) expensive (C) recalls a specific batch of products
(C) inefficient because of flaws in a few
(D) inappropriate (D) pays large salaries to its executives
during a redundancy exercise

GO ON TO THE NEXT PAGF

 3-
9. A multinational corpolation
has decided to
locate in a Carib-bean t3. Caribbean countries are plagued
.ounrry.-ilt ich of the with the
following is MOST likety probtem ofskiiled person,
t; be;potential d"iifu;J ;h;rr.
benefittothehost.ounfy? - -- -
Which of the following
BEST illustrates a
(A) Better access to local natural benefit ofthis ,brain drain,
to Ur. CariUb""nZ
resources
(B) Increase in foreign exchange (A) An'increase in tade
.:ar,reduction in training
eamings .-
!9) cost
(C) Better knowledge of consumers, !C) A reduction in the tr.,-.t oiirnpo,t,
, taste
(D) A'fositive effec ii.l}J*"
(D) Lower hansportation costs payments "" "r
for the
finishedproduct

14. St. Nolbs, a Caribb.ean lsland,

has been
10. Change can be created
both intemally and
experiencing a decline in
its Cpp rurll. past
externally. Which of the six months. How would ttris
..onoill
ofintemalchange? - '--F' u fo,m
followiojis
situation affect local producers?

(A) Product innovation (A) Reduce demand for workers

(B) Increased cornpetition (B) Increase output ofgoods
ard services
(C) Customer p."f.r"o.. (c)
(D) ..
change "-;fjJ,:"ruct range for dedigner
_Introduction ofpolturion-ta^ris
(D) Impiove relations
between
employers and employees
It. The On-Cola soft drink
company has been
able to finance new product
Oru.iop*.n"r lt I5.
has benefited from economies BKF Fashions Ltd. wishes
of scale in to.increase its
which of the following sales and market share.
departments? r, J..iJ., ,"
(A)
undertake a new marketing
decision tree betow rr,o*J
."dil;;.-il.
Finance tr,.-tiil"oj,,"",
(B) Markerine available to the company.
(C) Purchasin-e
(D) Research ind Development

12.
Fi:h ofthe following refers to Government
fiscalpolicy?
%S
I. Capital expenditure
II. lncome tax collected
m. Recunent expenditure
ry. Reduction in interest rates

(A) I and II only What is the probability of

success for
(B) I, II and III only Campaign B?
(c) I, II, and IV only
(D) I, III and IV only (A) o.r
(B) o.z
(c) 0.4
(D) 0.6
 -4-
16, The classical writers place emphasis on work, 2t. The MAIN objectives of continuous'staff
management and rational behaviour. appraisal are to

Which of the following theorists is NOT I. improveefficiency

associated with the classical school? il. identifyhainingneeds
m. identify areas ofweaknesses
(A) H. Fayol ry. arrive at wage payment rates
(B) S.Adams
(C) M. Weber (A) tr and IV only
(D) F.W. Taylor (B) I, II and IV only
(C) I, III and IV only
@) U, n andlV only
17. In which of the following theories would job
enrichment be classifi ed?
)J Wtrictr of the following statements BEST
(A) Herzberg's hygiene factors describes a feature of centralised
(B) Maslow's lower order needs organisation?
(C) Herzberg's motivator factgrs
(D) F.W Taylor's 'economic man'theory (A) Employees are empowered to make
decisions.
(B) Decision-making lies within the upper
18. A shop steward is an official member of levels of the organisation.
(C) Autonomy is given to those at thd
(A) a trade union lowerlevels.
(B) a credit union (D) Managers delegate tasks to the
(C) a workers' council periphery
(D) anemployers'association

23. Which of the following organisational

19. .Redundancy is MOST likely to occur when a structures is a multinational corporation
business MOST likelytoadopt? 't
I
(A) stops trading , (A) Matrix
(B) changes location (B) Functional
(c) changes technology (C) Geographical
(D) expands its production (D) Product based

20, A leader can be BEST described as one who .A Rose Telecommunications Services has
deliberately initiated change, and accepted
(A) emerges from within the group that change is necessary for survival in the
(B) is appointed to a position of formal market place. How would this response be
auth:rity interpreted?
(c) organlzes resources to meet the
obj ectives of the organizati on (A) tuslry
(D) influences others to perform beyond (B) Proactive
the actions dictated by formal (C) Reactive
authority (D) Spontaneous

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 '2;. -5
TheManage r ofXyZltdallowshisworkers 29. At which level of Maslow's hierarcby of
to use their full capabilities so that they
are needs would 'open and honest commurtication
given an opportunity to be fulfilled at work.
among employees' be applicable?
Their jobs are made more challengin.q and
they are made more accountable and greater
(A) Social
feedback on performance is provided. Which
(B) Safety
of the following BEST describes the action (C) Esteem
taken by the manager?
Selfactualizarion
-,.,O,
(A) Job enlargement
(B) Job enrichrnent 30. A highly skilled g oup ofworkers at a garment
(C) Job satisfaction
factory isNOT satisfied with the cloie level
(D) Jobevaluation
of supervision displayed by the production
manager. The production manager is not
wift the level ofproductivity. Which
satisfied
26. The grapevine is an example of ofthe following is MOST likely to improve
this situation?
(A) Iateral communication
(B) formal communication (A) Increasing piece rates
(C) diagonalcommunication (B) Givingworkers time off
(D) informalcommunication (C) Encouraging autonomous. iwork
groups

27. Whi'dh of the following is LEAST tikely to

(D) Letting all decisions be made on the
be groundlevel
the objectives of an appraisal system?

(A) To encourage and support planned 3t. Which of the following is NOTmonitored by
changes withing the firm working capital management?
(B) To consider the development of the
individual's career (A)
(C) To recognise the future needs of the
' Stock
G) Debtors
individual
(D) To identify (C) rCreditors
employees in the (D) Fixed assets
organisation who have potential for
advancement
32. Which of the following BEST defines a
debenture?
28. The 'system approach' applies BEST to
management because it
(A) A bank loan with fixed interest rate
(B) A long term loan with a variable
(A) encourages all the other ttreories of interest rate

(B)
management (C) A long term loan with fixed interest
places emphasis on the classical
rate
approach (D) A short tenn loan wiflr principal paid
(C) emphasises the humanistic approach
at maturity date
(D) sees management as a continuous
flow between functions or
departments
 6-

33. Which of the following financial institutions 38. Profitable firms have cashflow probleins
was established by Caribbean nations to because
provide financing for development purposes?
(A) discounts are given for prompt
(A) InterAmericanDevelopmentBank payment
(B) Caribbean Development Bank (B) payments to trade suppliers are
(C) International Monetary Fund delayed
(D) The World Bank (C) outstanding accounts receivables are
toohigh
(D) shareholders demand proposed
34. Which ofthe following methods ofinvestment dividend
appraisal uses profit in its calculation?

39. Sundelight Juices has net assets worth $19 m

(A) Payback period
recorded in its balance sheet. Recently the
(B) Net present value
business was sold for $26 m to RF Group of
(C) lntemal rate of return
Companies. This action reflects the principle
(D) Average rate of return
that

(A) cost is less than book value of the

35. In preparing the books of a company, business
provision for bad debts is entered in the
(B) market value is greater than book
value of the business
JA) Balance Sheet
(c) net book value is greater than market
(B) TradingAccount
value
(C) Profit and Loss Account
(D) market value is less than cost of the
(D) Cash and Bank Account
business

36. One of the MAIN components of working

40. the New Line Corporation
capitalis ,Ihe accounts for
are prepared on the basis that the bus{ness is
oprating and is not likely to close down or
(A) inventory
go into liquidation in the near future. This
(B) debentures
action reflects the accountig concept of
(c) fixed assets
(D) prepaid insurance
(A) double entry
(B) going concem

37. Which ofthe following conditions indicates a

(C) accurals on assets

highly geared company?

(D) consolidating accounting

(A) Increased sales

(B) Interest payments
(c) Increased bad debts
(D) High levels ofdebtors

GO ON TO THE NEXT PAGE

 -7 -

Items 4l - 42 refer to the graph below, which 43. The following table is an extract from the
illustrates the net present values of an books of XJ's Ltd.
investment project.

Sales s9 000

20 000
Opening Stock $3 200
Closing Stock $2 400
r5 000 Purchases $_s 600
a
%
c, r0 000
dt
The gross profit ratio is
o) 5 000
o
c) (A) 2e%
(B) 36 %
(c)
q)
z 0
62 %
(D) 7t %
(s o0o)

44. The following is an extract from the bdoks of

(10 000)
Carib Vibes Vacation Tours.
Discount Rate (%)
EXTRACT
(ooo)
41. The discount rate at which the LR.R. occurs
cunent Assets
is
Fixed Assets 560
Curent Liabilities
(A) s% Creditors l0
(B) 10 % Over'draft
$
$ l0
(c) ts %
(D) 17 % t
The current ratio of Carib Vibes Vacation
Tours is
42. What is the net present value of the
investment at a rate of lSo/o? (A) 5.0
(B) 2.0
(A) S2000 (c) 1.0
(B) 53 000
(c) ss ooo
(D) 0.5

@) s6000
 -8-
from
45. The following table shows an extract
the books of PB's Ltd'

$46 000
Net cash inflow from oPerafion
Taxation Paid sl2 000

$19 000
Payment of fixed asset

Share issue
sl3 000

The closing cash balance is

(A) $ 2 000
(B) $26 ooo
(c) s28 0oo
(D) $40 000

.i
ItrECK Y OUR WORK ON THIS TEST'
INISH BEFORE TIME IS CALLED, C
rF yOU F