REDEEMER'S UNIVERSITY (RUN) COLLEGE OF MANAGEMENT SCIENCES CMS 302 "ENTREPRENEURSHIP DEVELOPMENT" 2009/2010 SECOND SEMESTER EXAM

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1 REDEEMER'S UNIVERSITY (RUN) COLLEGE OF MANAGEMENT SCIENCES CMS 302 "ENTREPRENEURSHIP DEVELOPMENT" 2009/2010 SECOND SEMESTER EXAM TIME: 2 hours INSTRUCTIONS: Answer all questions in section A, one question in section Band one question in section C 1. Business organisations are embedded in.. 2. Environmental impact are. 3. Nigeria operates a.. economic system 4. Distinctive competence is any..... ' _,.,, a company has over its competitors 5. Entrepreneurs are both... and The Nigerian business environment is is an instihltional framework to promote business in Nigeria 8. An entrepreneur is an individual who An incorporated company is regarded by law as A promoter is a person who The word entrepreneur originates from the French word Double Taxation on Dividends is a disadvantage of is the usual type where each partner is fully active in the firm with a voice in its management 14. Unlimited and Unshared Liability is a disadvantage to the is art of innovation and risk-taking for profit in business

2 day running of the business is an intangible artificial being-an entity separate and independent from the owners Businesses can be organized in one of three basic legal forms: 21. The coming together of two or more people who share the similar qualifications, knowledge, skill and training, to render personal service with the intention of generating new ideas to make profit to is called According to AdeJeke (2001),. we are and where we want to go. 25. In planning, after scanning the environment to know the weakness, strengths, opportunities and treats, a company uses the data from the environment to Which of these is an appropriate definition of profitability. (a) The reward for risk taking (b) The relationships between profits of the firm and the capital employed in generating them. (c) The indicator of the efficiency ofa finn's management in using its funds (d) All of the above 27. Which of these is not a variable that affects a firm's profitability (a) (b) (c) (d) The selling price The operating cost The accounting package used in its accounts dept Volume of sales or quantity. 28. The profit margin of a firm can be increased by (a) Raising prices if operating costs are constant. (b) Reducing operating costs if prices are constant

3 (c) Generating increased volume of sales with operating costs and price kept constant (d) all ofthe ahove 29. The stocks ofa firm will likely include (a) Suppliers (b) raw materials (d) all of the ahove 30. The size of stock held by a ftnn is not likely to be influenced by (a) The demand for their finished goods. (b) the length and technical nature of their production process (c) the political climate of the country (d) The durability ofthe stocks involved. 31. Which of these is not one of the reasons why ftnns hold stock. (a) to take advantage of bulk purchasing discounts (b) to reduce overtime claims of factory workers (c) to provide a buffer between production process (d) to meet anticipated and unanticipated demands. 32. Which ofthese is not a short term sources offmancing (a) borrowing from friends (h) trade credit (c) finance lease (d) Bank overdrafts. 33. In granting any fonn of bank loan the bank does not consider (a) the purpose for which the loan is required (b) the amount of the loan (c) the marital status of the customer (d) The character or record of the customer. 34. Capital investment decision can affect (a) A firms' shareholders wealth (b) the growth (c) its business path 0 f the firm risk (d) all of the above

4 (a) maintenance of market position (b) new productions or products and diversification (c) for safety and environmental consideration. (d) all of the above 36. The task of analysing an organisations environment is that of the top management only 37. Environmental changes will have diverse impacts on organisation 38. A stockholder is an owner of part of a corporation 39. Without planning, Business Dies with the Sole Proprietor 40. An entrepreneur is someone who organizes a business venture but does not assumes the risk for it 41. Corporate planning is concerned with setting goals and objectives for a section of an organisation 42. Corporate planning is based on the examination of the business environment 11. Given that operating costs are more predictable and can be more easily controlled by an entrepreneur reducing costs to improve profitability is usually preferred to raising prices. 43. Improving on the utilization of assets of a ftrm has nothing to do with the finn's profitability 44. Holding costs include cost of obsolescence and deterioration or spoilage 45. Debt factoring involves turning over the responsibility for collecting a firm's debt to a specialist institution. 46. Under an overdraft arrangement, a firm enjoys access to a limitless amount of funds beyond its own deposits. 47. Borrowing from cooperatives is a long term sources of financing. 48. If a firm buys an equipment under a hire purchase agreement full legal title to the asset will pass to the firm only after full payment for their asset. 49. Another teon for accounting rate of return is average rate ofretum 50. An investment evaluation criterion need not provide ranking of projects in order of attractiveness. 51. Discounted cashflow method of evaluating capital investment projects do not include the net present value.

5 1. Objecti ves exp lain the reason for being of a business organisation. What are organisational objectives? Identify and discuss five types of organisational objectives and give examples of each 2. Discuss the key factors of business environment and explain how they influence entrepreneurs' operations and performance? b. Tolly Nig Ltd is considering selecting between two project A and B. The following information is available on each of the projects. Project A(naira) Project B(naira) Cost of project Life of project 4yrs 4yrs Residual value Estimated future profits before depreciation and tax Year I Yr Year Year Calculate the accounting rate of return of each project. ii. Determine which of the project the firm should select. b. Addy and sons is a small business firm. It requires 4000 units of a component used in its production process annually. This component cost 20 naira each to purchase. Every time the firm places an order, it incurs cost 200 naira. Assuming the carrying cost are 20% per annum, determine the firm's economic order quantity.

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