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TESTCODEO}I33OTO
FORMTP2007240 MAY/JTINE2OOT

CAR IBBEAN EXAMINATIONS COUN CIL

ADVAN CED PROFICIENCY EXAMINATI.ON
. MANAGEMENT OF BUSINESS
Unitl-Paper0l
90 minutes

ls MAY 2007 (p.m.)

READ THE FOLLOWING DIRECTIONS CAREFULLY

L In addition to this test booklet, you should have an answersheet.

?. Each item inthistesthas four suggested answers lettered (A), (B), (C), (D). Read each item you are
aboutto answer and decide which choice is best.

On youranswersheet, findthenumberwhich correspondstoyour item andshadethe space having

the same letter as the answeryou have chosen. Look atthe sample item below.

Sampleltem
-.>
Which one ofthe following actions CANNOTbetaken by atrade union?
SampleAnswer
(A) Picket X
=t
(t
(B)
(C)
Strike
GoSlow
@@@o Itl
r-
(D) Lock out Itt
i!,

The best answer to this item is "Lock out", so answer space (D) has been blackened. {>

4. Ifyou wantto changeyouranswer, besureto eraseyourold answercompletely and fill in yournew

choice.

5. Whenyouaretoldtobegin,turnthepageandworkasquicklyandascarefullyasyoucan.lfyoucarurot
answer an item, omit it and go on to the nqxt one. You can conre back to the harder item later.
6. You may do any rough work in this booklet.
This test consists of45 itenrs. You wi| | have 90 m inutes to answer them.

8. You may use silent non-programmable calculatorsto answerquestions.

9. Do notbeconcernedthatthe answersheet provides spaces formore answersthanthere are items in

this test,

DO NOT TURI\ THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyri ght O 2006 Caribbean Exanr inations Council -@

All rights reserved.
02 r33010/CAPE2007
 -2-
l. Which one of the following BEST explains t. Which options BEST represent the objectives
the term'privatization,?
of the CSME?
(A) The selling of government assets ro I. Political integration
a private business
(B) II. Commonexternaltariff
Businesses operating privately III. Free movement of people
without state interference IV. Free movement of capital
(C) The transfer of ownership from
public sector to private entity (A) III and IV onty
(D) When a business, public or private, (B) I, III and IV only
decides to keep decisions secret (C) II,III and IV only
(D) I, II, III and IV
, The ability of a registered company to enter
in a contract is based on the company's
6. Government's payment, to a domestic
producer, in the form of a tax relief is known
(A) limitedliability as
(B) legalpersonality
(C) articles of incorporation (A) quota
(D) memorandum of association (B) tariff
(C) subsidy

3.
(D) corporate tax
The mission statement of an organization
defi nes the organization's
7. In a planned economy, the government may
(A) purpose and direction
seek to correct market failures by
(B) strategic objectives
(C) long-term goals which it hopes to (A) advertising reform
achieve (B) offering welfare benefits
(D) strategic, tactical and operational (C) making economic decisions
objectives (D) rationing rhe supply of goods

4. One advantage of a mixed economy is that g. Caribbean private sector organizations are
largely influenced by their
(A) the state provides public goods
(B) there is no wasteful competition
(c)
(A) concern for the flora and fauna
the price of all goods is dictated bv (B) desire to survive orgain high profits
rirarket forces (C) desire to function in an open honest
(D) the private sector provides essential
manner
services for consumers (D) desire to correct inequities in pay
packages

9. Which one of the following is a feature of

cost push inflation?

(A) High levelof wages

(B) Lower cost of production
(c) Increase in the money supply
(D) 'Increased demand
for goods and
services
 -3-
10. Which of the following are benefits of
Caribbean-based multinational companies?

I. Reduced imports
il. Increased productivity
III. Repatriation of profits
IV. Creation of employment

(A) I and IV only

(B) III and IV only
(c) I,II and III only
(D) II, II], and [V only

Items 11 - 13 referto the network diagram below.

ll. The critical path is 13. The duration of the CPA is

(A) A-C-D-F (A) l6 days

(B) A-C-E-F (B) I 7 days
(c) A-B-D-F (c) 2l days
(D) A-B-C-D-E-F (D) 28 days

12. In which ofthe following activities can work

be delayed?

(A) BandDonly
(B) CandEonly
(C) A, C, E and F
(D) A, B, D and F
 -4-
t4. St. Nolbs, a Caribbean Island, has been 19. At which stage in group formation does
experiencing a decline in its GDP for the past conflict and resistance arise?
six months. How would this economic
situation affect local producers? (A) Forming
(B) Norming
(A) Reduce demand for workers (C) Storming
(B) Extend product range for designer (D) Performing
products
(C) Increase output for goods and
services 20. A leader can BEST be described as one who
(D) Improve relations between
employers and employees (A) emerges from within the group
(B) is appointed to a position of formal
authority
15. How would British tourists travelling to (C) organizes resources to meet the
Paradise Island be recorded in the Balance obj ectives of the organization
of Payments of Paradise Island? (D) influences others to perform beyond
the actions dictated by formal
(A) Increase in visible trade authority
(B) Decrease in visible trade
(C) Increase in invisible trade
(D) Decrease in invisible trade 21. The person who is elected at the workplace
to represent union members at a local level is
the
16. An organizational structure which is 'task' or
'project' focused is said to be (A) shop steward
(B) branch officer
(A) matrix (C) executive leader
(B) functional (D) trade union leader
(C) concentric
(D) hierarchical
22. The team member who is action-oriented and
enjoys challenges is BEST described as
17. The assignment of tasks, grouping of 'tasks'
into departments and allocating of resources (A) a shaper
are the management function of (B) an evaluator
(C) a specialist
(A) leading (D) a resource investigator
(B) pla-ing
(C) organizing
(D) contolling 23. Which one of the following organizational
structures is a multinational corporation
MOST likelytoadopt?
18. Which one ofthe following theorists referred
to man as an "EconomicAnimal"?
(A) Mafrix
(A) HenriFayol
(B) Functional
(B) Frederick Taylor
(C) Geographical
(C) Abraham Maslow
(D) Product based
(D) Frederick Herzberg
 -5-
24. When the marketing manager advises the 28. In Maslow's hierarchy of needs, in which
production manager on a new product, what level of needs does 'Open and honest
type ofauthority is displayed by the marketing communication among employees' belong?
manager?
(A) Safety
(A) Line (B) Esteem
(B) Staff (C) Selfdcnralization
(C) Functional (D) Social'
(D) Line and Staff

29. The BCG Banking & Investment Company

25. When Sonia Green, the Marketing Manager is plaruring to computerize some of its services
of Sonia's Shoe Stores, sets new sales targets within the next six months. How BEST
and develops strategies to achieve them, she should management implement this change?
is dernonstrating the management function of
(A) 'Leak' information and await
(A) leading feedback and train the remainins
(B) planning employees.
(C) conholling (B) Offer voluntary severance and train
(D) organizing the remaining workforce.
(C) Meet with key personnel and await
feedback prior to implementation.
26. In the communications process, anything (D) Implementaredundancyprogramme
which distracts the receiver from receiving with immediate effect.
the message is known as

(A) noise 30. Christopher sought the legal advice of a

(B) an encoding tribunal because of an unfair dismissal at his
(C) a decoding workplace. An LINLIKELY decision of the
(D) feedback tribunal is that the employee

(A) sues the employer

27. Upward communication occurs when (B) be reinstated in the same job
(C) be reinstated in another job
(A) instnrctions are given to zubordinates (D) receives compensation for the unfair
(B) objectives are communicated to the dismissal
rank and file
(C) employees are allowed to express
their views
(D) mernbers of staff coordinate tasks
within their departments

GO ON TO THE NEXT PAGE

 -6-
31. Which one ofthe following is NOT monitored 17 . Which one ofthe following sources offinance
by working capital management? is LEAST likely to be used as investment in a
new product development?
(A) Stock
(B) Debtors (A) Debentures
(C) Creditors (B) Share issues
(D) Fixed assets (C) Bank overdraft
(D) Bank loan
32. Which one of the following is an external
long-term source of financing? 38. A main drawback of leasing is that

(A) Leasing (A) the asset is not owned by the lessee

(B) Trade credit (B) it is a binding contact with the lessor
(C) Share capital (C) only the shortterm cash flow position
(D) Hire purchase improved
is
(D) a periodic payment is made overthe
33. Which one ofthe following isNOT afinancial life ofthe agreement
statement?

(A) Trialbalance 39. Sunshine Limited keeps records and accounts

(B) Balance sheet of all of its financial transactions. Which one
(C) Cash flow statement of the following groups is the MAIN user of
(D) Profit and loss account the fi nancial information?

(A) Suppliers
34. If a company is highly geared, it means that a (B) Employees
high proportion of its finance is (C) Government
(D) Management
(A) cash
(B) loan
(C) profit 40. An increase in the provision fordoubtful debts
(D) equity will result in

35. Which one of the following is NOT

(A) an increase in current assets
investment appraisal technique?
an (B) an increase in current liabilities
(C) a credit adjustment to the income
(A) Cost benefit
(D)
statement
a debit adjustment to the income
(B) Payback period
statement
(C) Net present value
(D) Average rate of return
41. Straight-line depreciation is MOST suited to
36. The balance sheet equation can be written an asset which
AS
(A) is more efficient in the early years
(A) CA+CL:C+L (B) is more efficient in the later years
(B) FA-CA:C+L (C) provides the same quality of service
(C) CA(F+CL)=C+L in allyears
(D) F+(CA-CL):C*L (D) needs frequent repairs and
' maintenance as it gets older
 l ,, -
,')
a

-7 -
42 ' Which of the following costs will appear in 44. The following is an extract of a firm's balance
the cost ofsales of aretailer? sheet as at 3l/12/06.

I. Advertising EXTRACT
il. Carriage In
m. Purchases Capital
Opening $200,000
ry. Depreciation -
Net Profit $100,000
Drawings S 50.000
(A) I and II only $350.000
(B) I and III only
(C) II and III only
(D) II and IV only The return on capital invested is

(A) zt\N
43. M&T Ltd has issued 50 000 shares at $2.00
EACH. The company's net profit after tax (B) 40%
is $212 000. At the end of the year the
market value of the shares is $3.75. (c) s0%

The earnings per share ratio is (D) 80%

(A) $4.7s
(B) $4-2s Item 45 refers to the following table.
(c) $2.7s
(D) 52.00 Net cash inflow from operation s46 000
Taxation paid $r 2 000
Payment of fixed asset $r 9 000
Share issue $13 000

45. The closing cash balance is

(A) $ 2 000
(B) $26 000
(c) $28 000
(D) S40 000

IF YOU FINISII BEFORE TIME IS CALLED, CHECK YOI JR WORI( ON THIS TEST.