SECTIONA (60 marks)

There are 30 questions in this section. Answer ALL questions. Choose the best answer for each question.

l. Which of the following statements about a joint venture in Hong Kong is correct?

A. It has a renowned brand name which is granted to the investors to set up branches under this brand name.
B. It is formed by two or more partnerships.
C. It will be terminated by an agreement between the partners.
D. It is required to disclose the financial information to the public.

2. Which of the following statements about Hang Seng Index is correct?

A. It acts as an indicator of the overall stock perfomrance in Hong Kong's financial market.
B. It calculates the weighted average price of all the bonds traded in Hong Kong.
C. It is a monthly statistics on the market performance in Hong Kong.
D. It is a summary of the investnent recommendation made by brokers or banks.

3. Mr Chan decides to get married and buy a flat two years later. To save up for the down payment of the flat, u,tich of
the following is most suitable for her?

A. Corporate bonds
B. Preference shares
C. Ordinary shares
D. Fixed deposit

4. Which of the following is / are to discharge corporate social responsibility towards employees?

(1) Make man{atory contribution to the Mandatory Provident Fund on time.

a
(2) Provide a safe and healthy working environment.
(3) Conductstaffappraisal.

A. (2) only
B. (3) only
C. (1) and (2) only
D. (1) and (3) only

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 Consider the following case and answer Questions 5-6:

The following account balances were obtained from the books of Mr Lee's business as at 31 December 20X9:

$
Inventory 1 January 20X9 61 000
Sales 480 000
Purchases 275 000
Selling expenses 7 700
Commissions received 19 000
t-
Discounts allowed 3 500
Drawings 46 000
I Wages and salaries 80 000
Cash in hand s9 000
Cash at bank ?

Rent and rates 10 000

Capital, 1 January 20X9 100 000
Carriage inwards 23 000
Carriage outwards 33 900
Trade receivables 265 000
Trade payables 240 000

Inventory as at 31 December 20X9 amounted to $179 000.

5. What is the balance of the cash at bank account as at 31 December 207i9? 6".Hinrs+ P.12

A. $4 300 (debit balance)

B. $17 300 (debit balance)
C. $25 10p (creditbalance)
D. $55 300 (credit balance)

6. Which of the following statements is / are correct?

(l) The liquidity position of the company is poor as the current ratio is less than 1.
(2) The net profit ratio is 62.50/o.
(3) The balance of capital account as at 31 Decernber 20X9 is $237 900.

A. (1) only
B. (3) only
C. (1) and (2) only
D. (2) and (3) only

DSE-BAFS-I (Mock Exam 2)

7. Which of the following are the advantages of maintaining a good personal credit record?

(1) The cost ofloans can be lowered.

(2) The borrowers can obtain loans easily.
(3) The credit limit can exceed the annual income of the borrower.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

8. Which of the following are the characteristics of the Hong Kong economy?

(t) Hong Kong promotes free trade.

@ Hong Kong has no primary production.
(3) Most of the industries in Hong Kong are engaged in tertiary production.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

9. Which of the following are the examples of legal factors that might affect the business of an education centre in
Hong Kong?

(1) Statutory minimum wages

(2) Legal license required for operating an education centre
(3) Fire services ordinance
A. (1) and (2) oply
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

10. Mr Wong withdrew cash from his business to settle the amount owing to his personal bank loan. Which of the
following double entries for the business is correct?

Debit Credit
A. Cash Bank loan
B. Bank loan Cash
C. Drawings Bank loan
D. Drawings Cash

11. Which of the following is the function of a trial balance?

A. It ensures that the double entries ofeach transaction are correct.

B. It checks the arithmetical accuracy of bookkeeping entries.
C. It shows the financial position of a firm at a certain date.
D. It shows the financial performance of a firm for a period of time.

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 12. Mr Tang plans to use net present value to decide whether to buy a motor van for his business. Therefore, he
needs to consider:

(l) Acquisition cost of the motor van

(2) Cost of capital
(3) Scrap value of the motor van at the end of its useful life
A. (1) and (2) only
B. (l) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)
a

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13. Which of the following statements about employees joining the Mandatory Provident Fund scheme is correct?

A. Employees cannot adjust their fund choices.

B. To make things simple, an employee should consolidate their multiple personal accounts.
C. Employees can choose any funds provided by the registered trustees without assessing the risk levels.
D. There will not be a time lag for employees to shift the kustee.

t4. Which of the following items are expenses?

(1) Discounts allowed
(2) Carriage inwards
(3) Carriage outwards

A. (l) and (2) only

B. (l) and (3) only
C. (2) and (3) only
D. (1), (2),and (3)

1 5. Natalie eams a gross profit margin of 30%. Calculate her closing inventory based on the following data:

F
A. $27 000
E
E.
F
B. $32 000
E c. $60 000
r D. S167 000

DSE-BAFS-I (Mock Exam 2)

I
16. Samusl started a retail business with Ricky and Bob. Samuel bears unlimited liability and Ricky does not contribute
any capital. Which of the following statements are correct?

(l) It is a general partnership.

(2) Samuel is a general partner.
(3) Ricky is a nominal parher.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (l), (2) and (3)

17. Which of the following is correct?

Transactions Effect on assets Effect on liabilities

(1) Sell goods on credit. * Inventory - Trade receivables
(2) Paythesupplierbychequeforthe -Bank -Tradepayables
goods purchased one month ago.
(3) Borrow a loan from Mr Wong via + Baxk * Loan from Mr Wong
the bank account.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

18. Which of the following transactions will affect the total amount of liability of a business?

A. Repaid a ba'nk loan by cheque.

B. Purchased goods from suppliers in cash.
C. Received goods from customers for the return.
D. Placed a two-month fixed deposits from a bank saving account.

19. Ensuring data security is apart of

A. risk management
B. informationmanagement
C. operationsmanagement
D. financial management

20. Which of the following statements is correct?

A. Preference shareholders do not have voting rights in the board of directors'meeting.

B. Only one partner in a limited partnership needs to bear unlimited liability.
C. Multinational corporations must be limited companies.
D. Public corporations can be owned by public investors.

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21. On 30 June 20X9, a firm bought a machine at $100 000. Apayment of $30 000 was made on that date. On 31 July
2OXg, the firm paid $40 000 to the supplier with a cash discount of $5 000. As at 3 I Decemb er 20X9 , the market
value of the machine had fallen to $60 000. The machine should be recorded at in the statement
of financial position as at 31 December 20X9.

A. $60 000
B. $7s 000
c. $95 000
D. $100 000

22. Abark offers a saving plan. The annual interest rute is 4o/o, compounded half-yearly. Calculate the effective rate
of return.

A. 2%
B. 4.04%
c. 4.06%
D. 8%

23. How will an increase in returns outwards affect the gross profit and the net profit?

Gross profit Net profit

A. increases increases
B. increases unchanged
C. decreases decreases
D. decreases unchanged

24. Which of the following is within the process of controlling in a marketing department of a business?

A. Set up a sales team.

B. Measure the nurnber of defective products within a month.
C. Assign sales representatives to different workhg locations.
D. Adjust the sales targets.

25. Which of the following statements is correct?

A. Cost of goods sold is the average of the opening inventory and the closing inventory.
B. Gross loss arises when the net sales exceeds the cost of the goods sold.
C. Net profit arises when the gross profit is less than the total expenses.
D. Working capital is the excess of total current assets over total current liabilities.

DSE-BAFS-I (Mock Exam 2)

26. Which of the following show the importance of management?

(1) Monitor and control the external factors that will affect the business.
(2) Make more efficient use of business resources.
(3) Help subordinates achieve the business goal effectively.

A. (1) and (2) only

B. (1) and (3) only
C- (2) and(3) only
D. (1), (2) and (3)

27. Dora decides to study overseas three years later. She budgets to spend $500 000 in total. Ifa bank offers an annual
interest rate af 4Yo for the time deposit, how much does Dora have to deposit today? Interest is compounded
annually. Correct to the nearest dollar.

A. $ss s02
B. $62 432
c. $444498
D. $562 432

28. Which of the following statements about using credit cards is / are correct?

(1) There is no credit limit if a minimum payment is made before the due date.
(2) Interest will be charged on the outstanding balance.
(3) It is convenient and safe for consumers as they do not need to carry a large amount of cash.

A. (1) only
B. (2) only
C. (1) and (3) only
D. (2) and (3) only

29. Which of the following factors are favourable to the price of a company share?

A. Change of directors
B. Increase in market interest rate
C. Stricter regulation imposed on the industry by the govemment
D. Many investors speculating on the company's share

30. Which of the following is not the task of accounting?

A. Classi$ring and recording business transactions

B. Summarising financial performance of the company for a certain period of time
C. Conducting staffappraisal
D. Performing financial,analysis

END OF SECTIONA

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