1.Which of the following sentences describes the relationship between a franchisor and a franchisee of 7-Eleven correctly?
A.The franchisor has to pay franchise fee to the franchisee.
B.The franchisor shares the cost of promotion campaign which is carried out by other 7-Eleven in Hong Kong.
C.The franchisee provides support to the franchisor in operating the business.
D.The franchisee is required to operate its business according to the franchisor's requirement.
2.Which of the following statements about the financial market is correct?
A.There cannot be more than one kind of securities in a mutual fund.
B.There must be a tangible physical location for financial transactions.
C.Securities traded in the over-the-counter market need to meet the listing requirements.
D.The development of financial market increases the liquidity of the financial products.
3.Watery Limited purchased a motor vehicle for company use. Watery Limited paid 10% of the down payment in cash immediately. In which of the following books of original entry should Watery Limited record the above transaction?
(1)Cash book
(2)Sales journal
(3)General journal
(4)Purchases journal
A.(1) and (3) only
B.(1) and (4) only
C.(1), (2) and (3) only
D.(1), (3) and (4) only
4.Although there are several managers in the same department, only one manager leads the working plan. Which of the following principles are being adopted?
(1)Division of labor
(2)Unity of command
(3)Unity of direction
(4)Management by objective
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(2), (3) and (4) only
5.Many partnerships would like to change to a private limited company because a private limited company enjoys
(1) wider source of capital
(2) separate legal existence
(3)freely transferable ownership
(4)lower tax rate
A.(1) and (2) only
B.(1), (2) and (3) only
C.(1), (2)and (4) only
D.(1), (2), (3) and (4)
6.According to statistic figures, the risk of investing can be reduced by ______.
A.investing in only blue-chip stocks
B.following closely the advices of the financial planner
C.mixing different kinds of investment products
D.holding only cash
7.Which of the following incidents will not occur under good corporate governance?
(1) All activities that violate the code of ethics are eliminated.
(2) The executive directors constitute the board of directors.
(3)The Chief Executive Officer will be monitored by the board of directors.
(4)The responsibilities of the Chairman of the board of directors and top management are clearly defined.
A.(3) only
B.(4) only
C.(1) and (2) only
D.(1), (2) and (3) only
8.Under which of the following situations an autocratic leadership should not be adopted?
A.Quick responses are needed
B.The workers are inexperienced
C.The task needs high degree of creativity
D.The information needed for decision making is only available to managers
9.Bamboo Company sold 12 boxes of goods to Shampoo Company for $150 each less 5% trade discount. Shampoo Company returned one-third of the goods to Bamboo Company. Bamboo Company should record the return of goods in the ______with the amount of ______.
A.purchases returns journal;$1,800
B.purchases returns journal;$570
C.sales returns journal;$600
D.sales returns journal;$570
10.On 28 July 20X1, Flower Company bought ten batches of seeds from Plain Limited at $250 each batch, less 15% trade discount. Cash discount of 3% would be given for settlement within a week. The account was settled on 8 Aug 20X1.
Which of the following are the correct journal entries to be made in the books of Plain Limited?
Debit / Credit$ / $
A. / Flower Company / 2,125
Discount allowed / 375
Sales / 2,500
Discount allowed / 63.75
Bank / 2,061.25
Sales / 2,125
B. / Flower Company / 2,125
Sales / 2,125
Discount allowed / 63.75
Bank / 2,061.25
Flower Company / 2,125
C. / Flower Company / 2,125
Sales / 2,125
Bank / 2,125
Flower Company / 2,125
D. / Purchases / 2,125
Plain Limited / 2,125
Plain Limited / 2,125
Bank / 2,125
11.Which of the following statements are the differences between small and medium enterprises (SMEs) and multinational corporations (MNCs)?
(1) SMEs are relatively smaller in size.
(2) All MNCs are listed companies
(3)MNCs can raise capital by issuing shares to the public while SMEs cannot.
(4)SMEs are usually labour-intensive operations that use simple technology.
A.(1) and (4) only
B.(1), (2) and (4) only
C.(1), (3) and (4) only
D.(1), (2), (3) and (4)
12.Marie & Pang Ltd is an international clothing retailer based in France. It plans to enter the Mainland China market. Which of the following is the most important factor when formulating its marketing strategy?
A.Technical factor
B.Social and Cultural factor
C.Economic factor
D.Political factor
13.Which of the following are not the main principles of the human resource management?
(1)Determining the marketing mix
(2)Providing training to the employees
(3)Maximizing the profit of the company
(4)Promoting the employees with good performance
A.(1) and (3) only
B.(2) and (4) only
C.(1), (3) and (4) only
D.(2), (3) and (4) only
14.Which of the following is a nominal account?
(1)Drawings
(2)Bank overdraft
(3)Rent and rates
(4)Loan from KK Bank
A.(3) only
B.(1) and (3) only
C.(1), (2) and (3) only
D.(1), (3) and (4) only
15.Sunshine Limited is considering the purchase of a machine. Below is the future cash flow brought in by the machine:
Year / Cash Flow ($)0 / 70,000
1 / 50,000
2 / 18,000
3 / 2,500
Given that the cost of capital is 5%, with the net present value of ______, Sunshine Limited should ______the purchase.
A.$590;accept
B.$590;reject
C.$3,895;accept
D.$3,895;reject
16.The economy of Hong Kong is renowned for ______.
(1) little government intervention
(2) its effective and efficient labour force
(3)imposing no restrictions on doing business
(4)upholding the rule of law
A.(1), (2) and (3)
B.(1), (2) and (4)
C.(1), (3) and (4)
D.(2), (3) and (4)
17.Which of the following is the regulator of derivatives market in Hong Kong?
A.Hong Kong Monetary Authority
B.Securities and Futures Commission
C.Office of the Commissioner of Insurance
D.Hong Kong Exchange and Clearing Limited
Based on the following information, answer Questions 18 and 19:
The following is an extract of the balance sheet of Heads Company:
$Fixed assets / 225,550
Current assets / 58,000
Current liabilities / ?
Long term liabilities / 150,000
Capital / 97,520
18.The working capital of the Heads Company is amounted to ______.
A.$21,970
B.$36,030
C.$336,030
D.$278,030
19.Given that the value of inventory is $23,825, calculate the quick ratio.
A.0.10 : 1
B.0.95 : 1
C.1.56 : 1
D.1.61 : 1
20.Which of the following is the correct sequence of a personal financial planning process?
(1) Develop a financial plan
(2) Understand your own need
(3)Analyze your financial situation
A.(1) →(2) → (3)
B.(2) →(1) → (3)
C.(2) →(3) → (1)
D.(3) →(2) → (1)
21.Which of the following measures cannot enhance the effectiveness of communication?
A.Avoid using professional jargon
B. Communicate in a polite manner
C. Using English in all kinds of communication
D. Provide all necessary information that the receivers need to know
22.Business relationship between the Mainland and Hong Kong is getting closer. Which of the following is not the reason for this? (Topic 1)
A.Adoption of open-door policy by the Mainland
B.Signing of the CEPA
C.Controlled flow of Renminbi
D.Establishment of special economic zones
23.Which of the following is not the consequence of maintaining a free market policy?
A.Buyers and sellers can determine their prices themselves
B.Speculative activities may arise
C.Government can no longer impose regulations
D.Entrepreneurs will be encouraged to explore new opportunities
24.Karen is considering purchasing a LCD TV worth $18,000. The shop offers the following payment options:
(1) A two-year installment loan with a flat rate of 5%.
(2) Paying half the price now; then repaying $11,000 in one year.
(3)A two-year installment loan with 5% interest rate, using the reducing balance method.
Which of above options has the lowest total interest payment?
A.(1)
B.(2)
C.(3)
D.Cannot be determined
25.Rank the risks of investing in the following options, from the highest to the lowest risk:
(1) Ordinary share of a listed bank operating mainly in China
(2) A call option on a blue chip company in Hong Kong
(3)Ordinary share of a start-up technology company in Iraq
(4)A bond issued by the Ministry of Finance of the People's Republic of China
A.(3), (1), (2), (4)
B.(3), (2), (1), (4)
C.(2), (3), (1), (4)
D.(3), (4), (1), (2)
Based on the following information, answer Questions 26 and 27:
The following is the information related to E.T Company at the year ended 31 December 20X2:
$Capital (as at 1 January 20X2) / 42,500
Inventory (as at 1 January 20X2) / 11,250
Sales / 230,550
Purchases / 103,200
Returns inwards / 4,205
Returns outwards / 3,275
Rental income / 120,000
Rental expense / 96,000
Electricity / 8,400
Insurance expense / 24,000
Salaries / 102,000
On 31 December 20X2, the amount of inventory was $9,580.
26.Calculate the net profit/loss of E.T Company for the year ended 31 December 20X2.
A.$4,770
B. $13,420
C. $14,350
D. $56,850
27.Find the drawings by the owner during the year, given that the closing capital is $53,350.
A.$2,570
B. $3,500
C. $6,080
D. $46,000
28.E.T Company's return on capital employed for 20X2 is ______.
A.9.95%
B.28%
C.29.9%
D.118%
29.Mr. Lao is the owner of a trading firm in Hong Kong doing business with retailers in Canada. He insisted on using telephone to communicate with his clients. Which of the following descriptions is not correct?
A.Time zone difference may cause communication problem.
B.Compared to using e-mails, telephone conversation is more time consuming.
C.Response can immediately be notified when talking on telephone.
D.The cost of using telephone for negotiation is less than face-to-face communication.
30.Mrs. Wong had bought a land for $1,000,000. Half a year later, the market value of the land depreciated to $750,000. However, Mrs. Wong did not adjust the value of the land in the business accounting records. Which of the following accounting principles did Mrs. Wong violate?
A.Accruals
B.Historical cost
C.Going concern
D.Mrs. Wong did not violate any accounting principles
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