Principles of Business for CSEC®
2nd edition
Chapter 8: Business finance
The following test paper contains four multiple-choice questions, to help you prepare for
Paper 1, and one essay question, to help you prepare for Paper 2. If you decide to complete the
paper under exam conditions, you should give yourself no longer than 30 minutes to complete
sall questions.
1. What type of financial institution takes deposits, lends money and facilitates transactions on
a daily basis for individuals and businesses?
(A) The central bank
(B) A commercial bank
(C) An investment company
(D) An insurance company
(1 mark)
2. What type of collateral is most likely to be kept by a bank or building society when granting a
mortgage?
(A) The deeds to the property
(B) Cash
(C) Loans
(D) A customer’s credit card
(1 mark)
3. The income statement of a business illustrates:
(A) Cash flows from operating activities
(B) The assets and liabilities of the business
(C) How profits and losses are generated
(D) The value of the owner’s capital in the business
(1 mark)
4. Double-entry bookkeeping:
(A) Only deals with cash transactions
(B) Sets out the details of a transaction once only
(C) Is used only by small businesses
(D) Outlines the two-fold aspects of transactions
(1 mark)
1 Principles of Business for CSEC®, 2nd edition © Oxford University Press 2019
Chapter 8: Business finance
5. (a) (i) Identify two (2) financial institutions OTHER THAN the central bank and commercial
banks.
(2 marks)
(ii)
Identify three (3) services offered by financial institutions.
(3 marks)
(iii)
Outline adjustments to the bank rate as a regulatory tool of the central bank.
(2 marks)
2 Principles of Business for CSEC®, 2nd edition © Oxford University Press 2019
Chapter 8: Business finance
(b)
Complete the following income statement (add content to the boxes).
Income Statement for Bridgefield Supplies for the period ending 31 January 2019
Sales 756 000
Less:
Opening inventory 25 000
Purchases 400 000
Cost of goods available (1)
Ending inventory (2)
Cost of goods sold (375 980)
Gross profit (3)
Less expenses
Motor vehicle insurance 8 000
Wages and salaries 140 000
Interest on loan 8 000
(4) (5)
(6 marks)
(c)
Describe the following sources of personal capital.
(i)
Crowd funding
(2 marks)
(ii)
Personal savings
(2 marks)
3 Principles of Business for CSEC®, 2nd edition © Oxford University Press 2019
Chapter 8: Business finance
(d)
Explain why mutual funds are NOT seen as savings.
(3 marks)
(24 marks)
4 Principles of Business for CSEC®, 2nd edition © Oxford University Press 2019
