Business, Accounting and Financial Studies

Mock Exam Paper 1 (Set C)

SECTION B (30 marks)

Part 1 (20 marks) Answer ALL questions in this part.

1. Johnson is considering joining a partnership of a hair salon. Although he has ownership over the
partnership, he has no time to manage its operation and he wants to limit his liability to the amount
of contributions.

(a) Suggest what kind of partner Johnson should be. (1 mark)

(b) Johnson has finally decided to operate in a limited company rather than a partnership.
Explain two advantages of forming a limited company over a partnership. (4 marks)

2. The human resources manager of an advertising company finds that the turnover rate of staff is
rising in recent years. He is considering the ways to resolve this problem.

(a) Except not adjusting salaries and benefits because of limited budget, explain two other
methods to reduce the staff turnover rate. (4 marks)

(b) Which key business function, except human resources management, is usually involved in
the above case? (1 mark)

3. Mr Wong plans to buy a flat three years later. At present, his budgeted flat is $5 000 000, which is
expected to increase by 5% each year. The down payment will be 30% of the flat price. In order to
fulfill the down payment required, Mr Wong has decided to make a time deposit at bank.

(a) If the interest rate of the time deposit is 3% annually, how much does he have to deposit
today? (Assume interest is compounded annually and correct the answer to the nearest
dollar.) (2 marks)

(b) His friend has advised him to invest in stock to earn a better return. He is concerned about
the factors affecting the share price. List two of them. (2 marks)

2021-DSE MOCK SET C 1-1 1

Business, Accounting and Financial Studies
Mock Exam Paper 1 (Set C)

4. The following information was extracted from books of Hugo Company on 31 March 2015:
$
Cost of goods sold 12 500
Sales 45 800
Inventory, 31 March 2015 6 700
Machinery 21 000
Bank overdraft 6 100
Bank overdraft interest 400
Administrative expenses 4 190
Selling and distribution expenses 5 780
Trade receivables 19 800
Trade payables 5 270
Capital ?

Prepare a trial balance for Hugo Company as at 31 March 2015. (6 marks)

2021-DSE MOCK SET C 1-2 2

Business, Accounting and Financial Studies
Mock Exam Paper 1 (Set C)

Part 2 (10 marks) Answer ONE question in this part.

5. Tommy is a sole trader, specialising in clothing. The following are the financial ratios of the
business for the year ended 31 March 2015:
Tommy’s Business Industry Average
Gross profit ratio 52% 50%
Net profit ratio 15% 28%
Turnover $3 640 000 $2 180 000
Current ratio 2.5:1 2.8:1
Quick ratio 0.5:1 1.2:1

(a) Calculate the gross profit and net profit for Tommy’s business. (2 marks)

(b) Comment on the profitability and liquidity of Tommy’s business with the industry average.
(8 marks)

6. Francis Company has specialised in selling home appliances and audio equipment for many years.
In order to train its staff all-rounded skills, the company required all its salespeople to be
responsible for both products. Some customers have recently complained that the salespeople are
unfamiliar with the products and some home appliances had been proven to be violating the safety
requirements of the government.

(a) List which principle of effective management has been violated in the above case. (1 mark)

(b) Explain two possible problems that violating the principle of effective management in (a)
would lead to. (4 marks)

(c) Explain the effects on the company when selling unsafe products and list one stakeholder
who will be affected except from customers and the government. (5 marks)

END OF PAPER

2021-DSE MOCK SET C 1-3 3