(53) BUSINESS STUDIES

Transcription

1 All Rights Reserved THE ASSOCIATION OF ACCOUNTING TECHNICIANS OF SRI LANKA FOUNDATION EXAMINATION - JUNE 2010 Time: 02 hours (53) BUSINESS STUDIES Afternoon Instructions to candidates (1) This paper consists of two (02) Sections A & B. (2) Five (05) questions should be answered as follows: Question No.01 of Section A Any four (04) questions from Section B (3) Answers should be in one language, in the medium applied for, in the booklets provided. (4) 100 Marks. No. of Pages: 05 No. of Questions: 07 SECTION - A Multiple Choice Questions All questions of this Section should be answered. 40 marks 01. Select from (1), (2), (3), (4) the most correct answer to each of the following questions. Write the number of the selected answer in your answer booklet with the English letter assigned to the question. (A) A partner, who contributes to capital in the partnership but does not participate in management affairs is known as a: (1) Limited partner. (2) Dormant partner. (3) Quasi partner. (4) Nominal partner. (B) Select from the following the special advantage of a partnership business in comparison with a sole proprietorship business: (1) Quick decision making. (2) Unlimited liability. (3) No legal personality. (4) Distribution of risk. (C) One of the basic documents issued by the Chamber of Commerce of Sri Lanka is: (1) Bill of Lading. (2) Letter of Indemnity. (3) Certificate of Origin. (4) Shipment Manifest. (D) Selling goods in foreign countries at a price below the cost of production is known as: (1) Export promotion. (2) Bargaining imports. (3) Dumping. (4) Sale at a discount.

2 (E) Select from the following the most correct statement in relation to Shipping Agreement : (1) It is a written agreement to hire a ship or a part thereof to transport goods from one place to another. (2) It is a written agreement signed by ship builders to complete the ship within a specified period. (3) It is a written agreement issued by local customs authorities giving permission to store goods in the warehouses without extra payment. (4) It is a document sent by the exporter to the importer indicating details of the goods. (F) Select from the following non-insurable risk: (1) Losses arising out of bad management decisions. (2) Risk envisaged in the process of building a ship. (3) Workmens compensation to be paid by an employer when a worker sustains injuries while at work. (4) Losses arising from floods and damages due to a cyclone. (G) The risk of non settlement of export invoices is insured by: (1) Agricultural & Agrarian Insurance Board. (2) Export Credit Insurance Corporation of Sri Lanka. (3) Central Bank of Sri Lanka. (4) Board of Investment of Sri Lanka. (H) When dealing with a cheque, the bank s duty is to carry out the instructions of the: (1) Payee. (2) Drawer. (3) Drawee. (4) Manager. (I) Select from the following, the group which consists only of money market instruments: (1) Commercial papers, Debentures. (2) Promissory notes, Unit trusts. (3) Debentures, Ordinary shares. (4) Treasury Bills, Commercial papers. 2

3 (J) Select from the following the statement that cannot be considered as true relating to a Treasury Bond: (1) Central Bank issues on behalf of the government. (2) These are mid and long term debt instruments. (3) These are subject to auction type sale. (4) These are zero coupon bonds. (K) To pass more benefit of the reduction of interest rates to the borrower, banks should adhere to: (1) Lending rates being reduced greater than the reduction of deposit rates. (2) Deposit rates being reduced greater than the reduction of lending rates. (3) Proportional reduction in lending rates and deposit rates. (4) None of the above. (L) Money brokers are: (1) The firms acting as intermediaries in the money market. (2) The firms acting as intermediaries in the secondary share market. (3) The firms which undertake to purchase any shares under-subscribed by the general public at a public issue of shares. (4) The investment firms of savings institutions and individuals in suitable investment portfolios in the money market. (M) Which of the following is not a subsidiary market of the formal money market? (1) Inter bank call money market. (2) Internal foreign exchange market. (3) Share market. (4) Secondry market for Treasury Bills. (N) Select from the following the highly liquid asset in relation to a bank balance sheet: (1) Investments in shares. (2) Money at call. (3) Loans and advances. (4) Placements with banks and financial institutions. 3

4 (O) Select from the following the correct statement in relation to the Foreign Exchange Market: (1) It is a market which provides the infrastructure for the exchange of goods and services among countries. (2) It is a market which provides facilities to discount letters of credit in international trade. (3) It is a market which provides facilities to trade goods and services within trading blocs. (4) It is a market which provides the infrastructure for the exchange of domestic currency with foreign currencies between importers and exporters. (P) Of the following, what function is not being performed by a finance company? (1) Accepting deposits. (2) Granting loans. (3) Issuing credit cards. (4) Creation of money. (Q) Licensed banks are regulated by: (1) Ministry of Finance. (2) Strategic Enterprise Management Agency. (3) Central Bank of Sri Lanka. (4) Bankers Association. (R) A cheque which can be encashed easily over the counter is known as: (1) A crossed cheque. (2) An order cheque. (3) An account payee only cheque. (4) A bearer cheque. (S) Which one of the following is correct under the hire purchase system? (1) After paying an initial payment as a deposit, the customer receives the commodity for his use, and the balance is to be paid by regular instalments. (2) The customer pays the price fully and receives the commodity immediately. (3) The customer obtains the commodity promising to pay from a loan expected shortly. (4) The customer hires the commodity for a special work and returns it after finishing the work. (T) The major shareholder of Lanka Clear (Pvt) Ltd. is: (1) Central Bank of Sri Lanka. (2) Bank of Ceylon. (3) Peoples Bank. (4) Private Commercial Banks. (02 marks each, Total 40 marks) 4

5 SECTION - B Answer any four (04) questions only from this Section. 60 marks 02. (a) Explain briefly five(05) advantages of partnership business. (b) State five(05) main features of a private limited company. (c) List five(05) types of securities traded in the Colombo Stock Exchange (CSE). 03. (a) List five(05) rights of a banker. (b) Explain what is meant by special crossing in relation to a cheque. (c) List main activities of a licensed specialized bank. 04. (a) Explain briefly what is meant by money market. (b) Explain briefly secondary market for Treasury Bills. (c) What are the main sources of funding a bank? 05. (a) Explain briefly comparative advantage in relation to International Trade. (b) Define Flexible Exchange Rate. (c) What is the meaning of the term Balance of Payment (BOP)? List the major components of BOP. 06. (a) Explain briefly the procedure relating to import of goods. (06 marks) (b) Write short notes on, (i) Re-export. (ii) Entrypot trade. (04 marks) (c) Differentiate between revocable letter of credit and irrevocable letter of credit. 07. Write short notes on, (a) GSP Plus. (b) Credit rating. (c) Mobile commerce (M-commerce). (d) Insurance certificate. (e) Mix policy in marine insurance. (03 marks each, Total 15 marks) - o0o - 5