CAR IBBEAN E XAM I NAT I O N S COUNCIL

ADVANCED PROFICIENCY EXAMINATION

SPECIMEN PAPER
MULTIPLE CHOICE QUESTIONS
FOR

MANAGEMENT OF BUSINESS

UNIT 1 - Paper 01

90 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 45 items. You will have 90 minutes to answer them.

2. 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.

Sample Item

Which of the following actions CANNOT be taken by a trade union?

Sample Answer
(A) Strike
(B) Go slow A B C D
(C) Picketing
(D) Lock out

The best answer to this item is “Lock out”, so answer space (D) has been shaded.

Copyright © 2010 Caribbean Examinations Council

All rights reserved.

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1 5. A company which owns or controls

production or service facilities outside the
country in which it is based is referred to
(A) The selling of government assets as
to a private business.
(B) Businesses operating privately (A) international
without state interference. (B) multi-national
(C) The transfer of ownership from (C) conglomorate
public sector to private entity. (D) export-oriented
(D) When a business, public or private,
decides to keep decisions secret.
6. Which of the following is NOT a feature
of a free market economy?
2. One advantage of a mixed economy is that
(A) Long term planning
(A) the state provides public goods (B) Good worker motivation
(B) there is no wasteful competition
(C) the price of all goods is dictated by (D) No restrictions on pollution control
market forces
(D) the private sector provides essential
services for consumers 7. Which of the following are reasons for
setting objectives?
3. I. To know what to do if things go
wrong
II. To monitor progress as it takes
(A) strategic objectives
place
(B) purpose and direction
(C) long-term goals which it hopes to
been made
achieve
IV. To ensure that everything is going
(D) strategic, tactical and operational
as planned
objectives
(A) I and II only
(B) I and III only
(C) II and III only
producer in the form of a tax relief is known
(D) II and IV only
as

(A) quota
8.
(B) tariff
(C) subsidy
(D) corporate tax
(A) economies of scale

(C) economic wellness

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9. Which of the following is NOT a criterion 12. Some objectives of trade unionism include

I. collective bargaining
(A) Labour force II. industrial democracy
(B) Market share III. strike action
(C) Capital layout IV. educating its members
(D) Capital structure
(A) I and II only
(B) II and IV only
10. Which of the following are benefits (C) I, II and IV only
of Caribbean-based multi-national (D) I, III and IV only
companies?

I. Reduced imports 13. Mrs Stunning, who is a heart patient,

declined a job offer as a gym instructor.
III. Creation of employment What key factors were likely to have

(A) I and II only

(B) I and III only (A) Social
(C) II and III only (B) Economic
(D) I, II and III (C) Human constraints
(D) Ecological considerations

11. At wh at ma n ag e r ia l l ev e l of t h e

planning decisions made?

(A) Top
(B) Middle
(C) First Line
(D) Lower Level

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Items 14–15 refer to the following Balance Sheet of General Motors Ltd.

GENERAL MOTORS LTD.

Balance Sheet as at 31 December 2010

Liability & Owners Equity Assets

Share Capital $ 139 600 Freehold Property $ 50 000

General Reserves $ 15 000 Plant and Machinery $ 75 000
Bank Overdraft $ 3 000 Fixtures and Fittings $ 5 000
Creditors $ 1 500 Motor Vehicles $ 10 000
Tax Payable $ 2 000 Stock $ 14 000
Accrued costs $ 900 Debtors $ 3 000
Cash $ 4 000
Prepayment $ 1 000
$ 162 000 $ 162 000

14. What is the Acid Test or Quick Ratio? 15. What is the current ratio?

(A) 1.1:1 (A) 2.7:1

(B) 1.2:1 (B) 2.9:1
(C) 1.5:1 (C) 3:1
(D) 2:1:1 (D) 3.2

16. Which of the following statements BEST 17.

that

dysfunctional
the impetus to action.
(B) People only act to achieve their is avoidance
goals if they feel they will be (C) a good manager can resolve every
successful.
(C) I f w o rk i s n ot i nte r e s ti n g,
challenging or rewarding, workers and can be positive

(D) When management consults with

workers and takes an interest in
their work then motivation is
improved.

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18. The person who is elected at the workplace 22. Which of the following is a reason for
to represent union members at a local level
is the
(A) The need for consistent policies
(A) shop steward
(B) Greater economies of scale would
(C) executive leader be gained
(D) trade union leader (C) To retain the same business identity
in all markets
(D) The need to make more informed
19. Which of the following management
functions assigns tasks and resources? market conditions

(A) Leading
(B) Planning 23. The gr e ate st s co pe f o r inc re a se d
(C) Controlling responsibility and recognition in the
workplace is provided by job

(A) rotation
20. A leader can BEST be described as one who (B) assessment
(C) enlargement
(A) emerges from within the group (D) enlargement
(B) is appointed to a position of formal
authority
24. The Production Manager makes suggestions
to his superior about ways to improve the
(D) influences others to perform
beyond the actions dictated by
formal authority
(A) Lateral
(B) Upward
21. Mark, the manager of ABC Co. Ltd., has
been described as an individual who was (D) Downward
born with outstanding leadership qualities
hence his effectiveness as a leader.
25. Which of the following MUST be present if
Which of the following approaches to the a team of workers is to achieve its desired
study of leadership can be associated with objectives?

(A) Interdependence
(A) Trait Theory (B) Open communication
(B) McGregor Theory X (C) Charismatic leadership
(C) McGregor Theory Y (D) Shared sense of purpose

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26. When the marketing manager advises the 30. Whic h o f the follo win g type s o f
production manager on a new product,
what type of authority is displayed by the when it makes choices and takes actions
marketing manager? that will contribute to the welfare and
interests of the society?
(A) Line
(B) Staff (A) Legal
(C) Functional (B) Social
(D) Line and Staff (C) Ethical
(D) Strategic

27. When Sonia Green, the Marketing Manager

31. Which of the following forms of capital is
targets and develops strategies to achieve
them, she is demonstrating the management
function of (A) Equity
(B) Start up
(A) leading (C) Waking
(B) planning (D) Joint Venture
(C) controlling

32. Which of the following is NOT a part of

the money market?
28.
level of needs does ‘open and honest (A) Development Bank
(B) Commercial Bank
(C) Merchant Bank
(A) Safety (D) Credit Union
(B) Social
(C) Esteem
33. Which of the following long-term sources

(A) Leasing
29. The BCG Banking & Investment Company (B) Trade credit
(C) Share capital
services within the next six months. How (D) Hire purchase
BEST should management implement this
change?
34. Which of the following is NOT an
investment appraisal technique?
feedback and train the remaining
employees.
(B) Offer voluntary severance and train (B) Payback period
the remaining workforce. (C) Net present value
(C) Meet with key personnel and await (D) Average rate of return
feedback prior to implementation.
(D) Implement a redundancy
programme with immediate effect.

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35. If a company is highly geared, it means that 40. The following information is taken from

(A) cash $
(B) loan Opening Stock 5 000
Wages 2 500
(D) equity Purchases 12 000
Closing Stock 2 000

36. Which of the following is NOT an item on What is the TOTAL cost of goods sold?
the balance sheet of a company?
(A) $ 10 000
(A) Cash (B) $ 12 000
(B) Bank overdraft (C) $ 15 000
(C) Wages and salaries (D) $ 16 500
(D) Plant and machinery

41. Which of the following is the MOST

37. appropriate source of finance for an
is LEAST likely to be used as investment entrepreneur who wants to expand his air
in a new product development? conditioning and refrigeration business?

(A) Bank loan (A) Bank loan

(B) Debentures (B) Debenture
(C) Share issues (C) Share issue
(D) Bank overdraft (D) Retained earning

42. Machinery cost $ 800 000 and is expected

38. Sunshine Limited keeps records and to last for five years and produce an

Which of the following groups is the MAIN investment has an average rate of return
(ARR) of

(A) Suppliers (A) 15%

(B) Employees (B) 30%
(C) Government (C) 50%
(D) Management (D) 67%

39. Managers of Atlas Ltd. have decided

to purchase additional equipment using
internal funds. They would MOST likely

(A) hire purchase

(C) a bank overdraft

(D) sale and lease back

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43. The following table is an extract from the Item 45 refers to the following table.

$ 46 000
$ Taxation paid $ 12 000
Sales 17 000 $ 19 000
Opening Stock 2 400
Share issue $ 13 000
Closing Stock 1 350
Purchase 12 500
45. The closing cash balance is

(A) $ 2 000
(B) $ 26 000
(A) 4%
(C) $ 28 000
(B) 20%
(D) $ 40 000
(C) 80%
(D) 96%

44.
balance sheet as at 31 December 2010.

EXTRACT
Opening Capital $ 200 000

Drawings $ 50 000
$ 350 000

The return on capital invested is

(B) 40%
(C) 50%
(D) 80%

END OF TEST

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