Principles of Business

Midterm

Secondary Class

Section A – Functions of a Business 10mks

Read the following and attempt to answer the question that follows. You may give your answer in point
form or paragraph form.

1. John owns and operates a business performing cell phone repair and support out of a store in Long
Circular Mall. John has two employees, provides tools, infrastructure and purchases equipment that him
and his employees would need to effectively run the business. John initially approached an investor (a
bank) to receive the startup funding to begin his business and has cleared off his borrowed debt from
the bank through sales and profit generated through his business.

A) What functions of a business are John fulfilling as he runs store in Long Circular Mall? 8-10mks

1. The provision of goods and services

2. The provision of jobs

3. Assistance with social activities through sponsorship

4. To make a profit

5. Contribute to economic growth

Section B – Responsibilities of a Business to its Shareholders 27mks

Answer the following questions by both filling in the blank space or by answering the questions with the
required information. 1m ea

1. The ______i____ of a business is to produce goods and services that society wants and
sell them at a profit.

i)Economic Responsibility ii) Legal Responsibility iii) Personal Responsibility

2. A business has the responsibility to provide a fair return to the ___ii_______.

i. Tax Authorityii) Shareholders iii) Customers iv) Government

3. What are the responsibilities of business towards workers? 6-10mks

 Provide relatively secure jobs and fair wages according to the position of employee
 Comply with government legislation e.g. payment of taxes, publishing annual accounts Statements
 Provide a safe working environment
 Protect the surrounding physical environment
 Provide good conditions of employment e.g. working hours, holidays, paid overtime,breaks during the day
etc.
Principles of Business
Midterm
 To provide safe products and services to customers
 To maximise profit

Section C – Characteristics of Multinationals, Sole Traders and Partnerships 35mks

Answer the following questions about the various types of businesses.

1. What is one of the major characteristics that define a Multinational and give a specific
example of a multinational here in Trinidad. 3mks
a) What are two advantages and two disadvantages of a Multinational company? 8mks
b) What is a reason that a multinational company may choose to establish a business in a target
country? 4mks
2. John owns and operates a business performing cell phone repair and support out of a store in
Long Circular Mall. John has no employees, provides tools, infrastructure and purchases
equipment that he would need to effectively run the business. John initially approached an
investor (a bank) to receive the startup funding to begin his business and has cleared off his
borrowed debt from the bank through sales and profit generated through his business.
a) What type of business is John operating? 2mks
b) Name one major problem that would affect John’s business if he never hires employees?
2mks
c) What are the advantages and disadvantages of this style of business? 6mks
3. Nafeesia, Antonio and Israel find that there is a shortage of fruits available in their local
community so they come together and start a Fruit Stall. They draw up a deed of sorts which
describes the agreement they have decided upon which is as follows ; Israel will be the main
owner as he has a space for the stall and the most money to start up a new business, Nafeesia
and Antonio both decide they will be workers and contribute some money towards the startup
cost of the fruit stall.
a) What type of business have the three friends formed? 2mks
b) Which friend do you think will be the Unlimited Liability party? 2mks
c) Explain with a simple example, why there must be at least one Unlimited Liability party?
6mks