CSEC Principles of Business Paper 1 May/June 2006 - Free CXC Past Paper with Answers

Which of the following statements explain why a barter system restricts exchange?

I. There must be a coincidence of wants. II. The commodities used are not homogeneous. III. It is difficult to divide certain commodities. IV. A rate of exchange must be determined.

Which one of the following is NOT a function of money?

Which of the following categories would subsidised meals for employees fall under?.

Workmen'scompensation

The type of business environment most typical of the Commonwealth Caribbean area is

perfectly competitive

In which of the following situations would the individual have limited liability?

Tom who has 200 shares in a company that produces beer

Alfred who is running a business of his own

Mary who is carrying on a hairdressing shop jointly with her sister

Lucy who owns a private secretarial school

In the Caribbean, many people are hired for sugar-cane farming and very little equipment is used. This industry can BEST be described as

having high capital input

having low capital input

Which of the following characteristics of the sole trader type of business is NOT advantageous to the owner?

Low operational cost

Ownership of all profits

Which of the following outcomes is LEAST likely to result from growth in an organization?

Increased capital investment

More division of labour

Greater productivity

Increased communication

In a firm with a departmentalized structure, which department performs the four duties listed below?

I. Receiving the goods purchased II. Giving a report of the quality of goods received III. Applying the principles involved in costing goods IV. Keeping an inventory

Selecting objectives and the procedures for achieving goals is referred to as

The manager of ABC company has embarked on sponsoring a school cricket team in a Caribbean territory. The company is fulfilling its

obligation to customers

obligation to maximise surpluses

For employees to produce at their maximum, which of the following is important?

I. Suitable working conditions II. Holiday with pay III. Good human relations IV. Creating surplus

Which of the following responsibilities must be assumed by the management of a company?

I. Maximising efficiency and creating surpluses II. Maintaining good communication and human relations III. Producing goods of a marketable quality IV. Determining dividends to be paid to shareholders

According to the information given in the graph above, the equilibrium price in cents is

An essential feature of a valid contract is that

the offer has been accepted by the offeree either in writing or orally.

a counter offer has been made by the offeree to the offeror.

the offer is made in writing by the offeror.

the offer has been communicated to the offeree.

Which of the following are functions of management? I. Co-ordinating the work of employees II. Delegating work to subordinates III. Controlling employees and raw materials IV. Ensuring that employees join a trade union

Which of the following situations would occur if a contract for the sale of goods becomes void? I. The prospective buyer becomes the owner. II. The prospective buyer does not become the owner. III. The seller has the right to keep any money or goods which have been given to him in this transaction. IV. The seller must return any money or goods given to him by the prospective buyer for the transaction.

Under which of the following conditions can a contract be terminated? I. Both parties agree to do so. II. One party loses his job. III. The subject matter ceases to exist. IV. The subject matter is illegal.

The money used for the day-to-day operations of a business is called

An increase in the productivity of labour in the Caribbean region means that

the value of output per man is greater than before.

more factors of production are available for production.

a greater number of the population is now employed.

both population and the value of output are decreasing.

A, B and C have dissolved their partnership which is worth $12000. Proceeds are divided in the ration 3:2:1 respectively. How much does B get?

The supply of labour is adversely affected by

an increase in migration

a reduction in small scale operations

an increase in population

a reduction in the school-leaving age

The factor of production which earns interest is

Which of the following is a fixed asset?

Bicycle for private use

Washing machine for resale

Motor car for family use

Van for delivery of goods

Which of the following productive activities is LEAST likely to be conducted on a large scale in the Caribbean region?

The location of an extractive industry is LEAST affected by

proximity to large shopping areas

proximity to sources of raw materials

availability of an abundant labour supply

the presence of good roads and drain- age

A firm expands to achieve internal economies of scale because it wants to

increase costs of production

increase worker's wages

decrease the quantity of goods it produces

decrease its costs per unit

What is the MOST likely effect of a substantial increase in the duty on cars on the car-buying public?

An increase in the use of public transportation

A decrease in car purchases

An increase in the number of car pools

A decrease in the consumption of gasolene

Which of the following practices does NOT result from mechanization?

Production is increased.

Goods are produced to a standard pattern.

People may be needed for manual work.

The specialist becomes more skilled in his work.

A capital-intensive industry is characterized by

large amounts of capital and very little labour

large amounts of labour and very little capital

all capital and no labour

capital and labour in the same propor- tion

Which of the following activities carried out in a firm will NOT be under the supervision of the marketing manager?

All persons can be called consumers because they

The PRIMARY function of advertising is to

communicate information

promote brand loyalty

ensure wider distribution of goods

promote public relations

Which of the following practices is LEAST likely to be described as good public relations for a company?

The offering of scholarships

Reduction in price to retailers

Sponsorship of a steel band

Hosting of an annual sport event

In which of the following types of trade can the hire purchase method of buying be used?

Which of the following is NOT a function of the retailer?

Selling in small quantities

Providing a local supply of goods

Preparing goods for resale

Transporting goods to suitable storage facilities

A 'purchase order' is a

statement offering to buy goods

notification of goods received

statement of debts outstanding

request for additional goods

Which of the following documents would have been used by a ship owner who agreed, for a sum of money, to provide a ship to transport a shipment of cargo from one port to another?

A post-dated cheque is one which

was written no longer than six months ago

is dated by the businessman to agree with the date of the document requesting payment

is dated by the bank dates on the day the cheque is presented for payment

is dated for payment at a future date

If an exporter quotes prices CIF, it means that the

exporter pays the freight

importer pays the freight

exporter pays insurance and freight

importer pays insurance and freight

For which of the following reasons is a small retail outlet able to survive despite competition from large department stores? I. It sells goods at cheaper prices. II. It buys goods at lower costs. III. It benefits from personal contact with customers. IV. It has lower overhead costs.

One of the MAJOR functions of a central bank is to

issue notes and coins

accept deposit accounts

make loans and advances

issue stocks and shares

Which of the following CANNOT be used as collateral for obtaining a loan from a financial institution?

A mortgaged home with insurance coverage

An insurance policy with a cash value.

An amount in a fixed deposit account

Legally owned property not covered by insurance

The MOST important use of collateral security to the lender is that it

can be sold if the borrower fails to pay.

gives the banker an idea of the state of the business.

establishes the financial position of the borrower.

improves the borrower's chance of getting a loan.

A country will restrict importation of certain items in order to do which of the following? I. Assist local industries. II. Prevent similar items from being consumed by its citizens. III. Encourage use of local resources. IV. Alter the lifestyle of its citizens.

When a high property tax is levied in a country it is most likely to have all of the following effects EXCEPT to

reduce the number of new buildings erected

encourage business firms to set up business elsewhere

create additional revenue for the government

entice citizens into buying more land

Which of the following is an example of indirect taxation?

When a Government subsidizes a commodity, it means that the Government

has limited the importation of the commodity.

has levied a purchase tax on the commodity.

is helping to pay part of the production cost of the commodity.

is encouraging the production of a substitute for the commodity.

The price of an article is usually high when there is a

large quantity for sale and few people wanting to buy

small quantity for sale and few people wanting to buy

small quantity for sale and many people wanting to buy

large quantity for sale and many people wanting to buy

Market equilibrium exists when

buyers pay reasonable prices for goods

sellers are satisfied with the price paid for their goods

at the ruling market price, buyers do not want to add to the stock of goods they already have

at current prices, the amount of goods buyers wish to buy equals the amount sellers want to sell

A 'market' in economic terms is defined as

a place where tangible goods are bought and sold

a specific place where buyers and sellers meet

a situation which exists when buyers and sellers influence the price of goods

the business centre of the community

Which of the following market situations is typically found where there is a large number of producers and consumers?

Which of the following practices would NOT contribute to the economic development and growth of a community?

Increased use of the country's natural resources

Provision of loans and technical assistance for establishing local businesses

Increased importation of consumer goods

Provision of more infrastructure within the country

International trade owes its origin to

countries with large populations not having sufficient goods

the varying resources of different regions

the fact that countries desired to have greater contact with each other

the great need for foreign exchange by most countries

A country has a favourable balance of trade when

exports are higher in value than imports

imports are greater in value than exports

there are no restrictions to trade

imported goods are cheaper

If a Caribbean country should devalue its currency, it is MOST likely that

its imports would become cheaper and its exports would become more expensive

its imports would become more expensive and its exports would become cheaper

both its imports and exports would become more expensive

both its imports and exports would become cheaper

The term 'economic dualism' defines an economy in which one sector is

highly dependent on foreign capital

overpopulated while the other is underpopulated

technologically advanced while the other is technologically retarded

highly dependent on local capital

Which of the following are MAJOR economic problems facing many Caribbean countries today? I. High levels of unemployment II. Adverse balance of payments III. Low productivity in manufacturing IV. Lack of capital for investment

Which ONE of these methods may government use to reduce unemployment?

Unemployment levy on firms

Increases in income tax

Deflation of the economy

Increased interest rates on borrowers

Adverse Balance of Payment problems can be corrected by I. tariffs II. quotas III. devaluation IV. revaluation

CSEC Principles of Business Paper 1 May/June 2006 - Free CXC Past Paper with Answers

CSEC Principles of Business Paper 1 May/June 2006 Questions