Fanling Lutheran Secondary School

FANLING LUTHERAN SECONDARY SCHOOL

2012 - 20131stTerm Examination

S.6 BUSINESS, ACCOUNTING AND FINANCIAL STUDIES

PAPER 1

Section A

Date : 15thJanuary, 2013

Time allowed: 11:30 am - 1:00 pm (1 hour 30 minutes)

This paper must be answered in English

GENERAL INSTRUCTIONS:

There are TWO sections, A and B, in this Paper: Section A carries 60 marks and Section B carries 40 marks. You are advised to finish Section A in about 45 minutes.

Section A consists of the multiple-choice questions in this question book. Section B contains conventional questions printed separately in Question-Answer Book B.

Answers to Section A should be marked on the Multiple-choice Answer Sheet while answers to Section B should be written in the spaces provided in Question-Answer Book B. The Answer Sheet for Section A and the Question-Answer Book for Section B must be handed in separately at the end of the examination.

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SECTION A (MULTIPLE-CHOICE QUESTIONS)

INSTRUCTIONS

Read the instructions on the Answer Sheet carefully.

When told to open this book, you should check all the questions are there. Look for the words ‘END OF SECTION A ‘ after the last question.

All questions carry equal marks.

ANSWER ALL QUESTIONS. You should use an HB pencil to mark all your answer on the Answer Sheet. Wrong marks must be completely erased.

You should mark only ONE answer for each question. If you mark more than one answer, you will receive NO MARKS for that question.

No marks will be deducted for wrong answers.

SECTION A

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1213 S.6BAFS Paper 1A1st Examination Page 1 By M. C. WONG

1.Which of the following statements are the differences between a listed exchange and over-the-counter (OTC) market?

(1)Securities traded on the listed exchanges must meet the listing requirements of an exchange while those traded on OTC market need not.

(2)There is no broker involved in the OTC market while there is in a listed exchange.

(3)Mutual fund can only be traded on a listed exchange but not OTC market.

(4)A listed exchange is a form of primary market while OTC is a form of secondary market.

A.(1), (2) only

B.(1), (2), (3)only

C.(1), (3), (4) only

D.(2), (3), (4)only

2.How can a business be socially responsible to employees?

(1)Never lay off employees

(2)Ensure the safety of employees

(3)Disclose the information of whistle-blowers

(4)Provide employees with equal opportunities for rewards and promotion regardless of their gender and race

A.(1), (3) only

B.(2), (3)only

C.(2), (4)only

D.(1), (2), (3)and (4)

Refer to the following information for Questions 3-4:

Mr. Wong wanted to start a business as quickly as possible and to enjoy the diversification of management. His friends recommended limited company as they thought being limited company could enjoy lots of advantages.

3.Which form of ownership should Mr. Wong choose?

A.Sole proprietorship

B.Partnership

C.Private limited company

D.Public limited company

4.Which of the following about the advantages of limited company are correct?

(1)Shareholders of limited company can freely transfer shares.

(2)Shareholders of limited company have limited liability.

(3)Limited company can keep its business information secret.

(4)Limited company can raise fund easily.

A.(1), (3) only

B.(2), (4) only

C.(2), (3), (4) only

D.(1), (2), (3)and (4)

5.Under which condition(s) should autocratic leadership be adopted?

(1)The task performed by subordinates is non-routine in nature.

(2)Subordinates lack self-control.

(3)The business operates under dynamic environment.

(4)Subordinates are all professionals.

A.(1) only

B.(2) only

C.(1), (4) only

D.(2), (3) only

6.Which of the following is(are) the characteristic(s) of multinational corporations?

(1)They have political power.

(2)They are always efficient because they are big businesses.

(3)Their subsidiaries company must be wholly owned.

(4)They bear no risk as they operate in many countries.

A.(1) only

B.(1), (2) only

C.(2), (3) only

D.(3), (4) only

7.Which of the following are the examples of political factors affecting the operations of business in Hong Kong?

(1)Exchange rate

(2)Free flows of capital

(3)Tax structure

(4)Availability of land and natural resources

A.(1), (4)

B.(2), (3)

C.(1), (2), (3)

D.(1), (2), (3) and (4)

8.Which of the following is NOT the characteristic of quality business information?

A.Cost-effective

B.Timely

C.All of the related information included

D.Complete

9.Which of the following is NOT a means to effective management?

A.Job specialization

B.Number of level of authority held to a minimum

C.Team spirit

D.A subordinate reporting to more than one superior

10.Which of the following tasks is NOT the duty performed by an operations manager?

Manage the amount and type of materials.
Raise capital to support production expansion.
Plan the arrangement of equipment and facilities in the plant.
Control the cost of production.

11Which of the following people is eligible for the withdrawal of the Mandatory Provident Fund (MPF) Scheme even before reaching the age of 65?

A.Amy who is a teacher and lost her leg in a car accident.

B.Mr. Ng who retired at the age of 60.

C.Mr. Lau who is going to work overseas for 5 years and after which he will be back.

D.Donald who has a MPF account balance of $4,500.

12Mr. Lee, who can accept a high level of risk, wants to make an investment with a high return rate. Which of the following option would suit him most?

A.Deposit in bank

B.Commercial paper

C.Small company stock in the emerging market

D.Government bonds

13Which of the following statement(s) is (are) NOT the correct description of a primary market?

(1)The proceeds of the sales of the securities go to the issuer only.

(2)Only stock can be issued to raise find.

(3)It can be called as the private placement market.

A.(1) only

B.(2) only

C.(1), (2) only

D.(2), (3) only

14If Mr. Tse wants to buy a car costing $500,000, which of the following should be chosen?

(1)Mortgage

(2)Credit card

(3)Non-revolving personal loan

(4)Overdraft

A.(3)only

B.(1), (3) only

C.(2), (4) only

D.(1), (2), (3)and (4)

15.Which of the following is NOT the quality of an effective control system?

A.Positive

B.Timely

C.Understandable

D.Control all activities, operations and events

16.Which of the following is(are) the example(s) of money market instruments?

(1)Mutual funds

(2)Ordinary Shares

(3)Commercial papers

(4)US treasury bills

A.(3)only

B.(1), (3) only

C.(2), (4) only

D.(1), (3), (4) only

17.Sun Limited received trade samples from Moon Limited, a supplier. The ledger entries in the books of Sun limited should be:

A.Dr PurchasesCr Moon Limited

B.Dr PurchasesCr Bank

C.Dr InventoryCr Moon Limited

D.No entry is required

Refer to the following information for Questions 1820:

The following information relates to Happy Limited for the year ended 31 December 201X.

$
Capital as at 1 January 201X / 300,000
Motor vehicle at net book value / 500,000
Rent deposit / 5,000
Bank overdraft / 1,000
Carriage inwards / 4,000
Carriage outwards / 2,000
Drawings of goods by the owner / 20,000
12 % loan / 100,000
Purchases / 150,000
Opening inventory / 30,000
Closing inventory / 40,000
Accounts receivable / 20,000
Accounts payable / 15,000

18.Happy Limited’s capital at 31 December 201X amounted to ______.

A.$449,000

B.$451,000

C.$481,000

D.$444,000

19.Given that return on capital employed for 201X is 10%. Happy Limited’s net profit at 31 December 201X amounted to ______.

A.$39,050

B.$37,550

C.$44,900

D.$37,450

20.Given that net profit ratio is 20%, Happy Limited’s gross profit ratio for 201X was ______. (Correct to 1 decimal place)

A.33.8%

B.36.5%

C.23.1%

D.26.2%

21.Which of the following incidents should be recorded in the General Journal?

(1)Cash purchase of motor vehicle

(2)Disposal of equipment on credit

(3)Discounts received for early payment

(4)Introduction of motor vehicle by the owner

A.(1)and (4) only

B.(2) and(3) only

C.(2) and (4) only

D.(1), (2)and (4) only

22Snow Limited paid 14-month rent on the 31 December including one-month rent of owner’s private premises and recorded all payments into rent expense account. Moreover, an investment at original cost of $120,000 had a market value $150,000 at that date. Snow limited recorded the market value in the fixed asset account.

Which of the following accounting concept is NOT applicable to the above situation?

A.Consistency

B.Accrual

C.Business Entity

D.Historical cost

23Which of the following will NOT appear in the trial balance before the preparation of financial statements?

A.Drawings

B.Closing inventory

C.Commission received

D.Bank overdraft

24In which of the following books of original entry should purchase of stationery on credit be recorded?

A.Purchases Journal

B.General Ledger

C.General Journal

D.Cash Book

25Which of the following accounts will NOT appear in the balance sheet?

(1)Rental deposit

(2)Bank loan interest

(3)Short-term investment

(4)Carriage inwards

(5)Petty cash

(6)Stationery

A.(1), (2)and (4) only

B.(1), (3) and(5) only

C.(2), (4) and(6) only

D.(2), (5)and (6) only

26On 3 January, ABC Limited bought goods from Susan, a supplier, on credit. On 13 January, some of the goods were sold to Ben, a customer, on credit, 3 days after the sales, a credit note was received from the supplier.

Which of the following are the correct entries to be made regarding the credit note received, in the books of ABC Limited?

A.Dr Returns InwardsCr Ben

B.Dr Returns InwardsCr Susan

C.Dr SusanCr Returns Outwards

D.Dr BenCr Returns Outwards

27Which of the following is NOT a book of original entry?

A.Cash Discount Book

B.Cash Book

C.Petty Cash Book

D.General Journal

28Mr. Lee sold $1,000 goods to John, a customer, in cash on 1 January 201X. 15 days later, John returned $400 goods and was given a refund by cheque.

Which of the following are the correct journal entries to be made in the books of Mr. Lee for the above?

Debit / Credit
$ / $
A. / John / 1000
Sales / 1000
Returns inwards / 400
John / 400
B. / John / 1000
Sales / 1000
Returns inwards / 400
Cash / 400
C. / Cash / 1000
Sales / 1000
John / 400
Bank / 400
D. / Cash / 1000
Sales / 1000
Returns inwards / 400
Bank / 400

Refer to the following information for questions 2930:

Mr. Lee starts the business on 1 January 201X. The following information relates Mr. Lee company for the year ended 31 December 201X:

$
Rent (including $4,000 rental deposit) / 24,000
Inventory / 10,000
Bank charges / 2,000
Packing expenses / 3,000
Net profit / 87,500
Returns inwards / 6,000
Short-term marketable securities / 40,000
Accounts receivable / 500,000
Prepayments / 10,000

29.Given that the gross profit ratio is 20%, the gross sales for 201X was ______.

A.$553,500

B.$573,500

C.$547,500

D.$567,500

30.Given that all goods were bought on credit and half of them remained unpaid at 31 December 201X. Mr. Lee Company’s quick ratio for 201X was ______. (Correct to 1 decimal place)

A. 0.7 : 1

B. 3.2 : 1

C. 2.4 : 1

D. 2.5 : 1

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1213 S.6BAFS Paper 1A1st Examination Page 1 By M. C. WONG