HSC BUSINESS STUDIES

Transcription

1 1 YEAR 12 HSC BUSINESS STUDIES ASSESSMENT TASK 2 FINANCE TIME ALLOWED 75 minutes This task is divided into TWO sections as follows: Section I: Multiple Choice Questions 15 marks.. Section II: Short Answer Questions 30 marks.. Total: 45 marks..

2 2 Section I Multiple Choice (15 minutes) 1. Which one of the following is a good measure of return on owner s equity? (A) Gearing (B) Liquidity (C) Profitability (D) Solvency 2. Which one of the following is an internal source of owner s equity? (A) Grants (B) Overdraft (C) Venture capital (D)Retained profits 3. Which one of the following best matches source of finance to business purpose? (A)Increasing bank overdraft to buy a delivery van (B) Using retained earnings to expand into new markets (C) Applying for a government grant to pay creditors (D)Selling accounts receivable to replace furniture and fittings 4. Which of the following are external sources of funds for businesses? (A)Factoring, debentures, leasing, mortgages (B) Venture capital, loans, drawings, factoring (C) Accounts payable, owner s equity, leasing discounts (D)Bank overdraft, retained profits, factoring, bank bills 5. What might happen as a result of a company having highly undervalued plant and equipment on its balance sheet? (A)Decline in equity (B) Growth in equity (C) Capital expansion (D)Factoring of liabilities 6. A business uses factoring to pay creditors Which financial objective is the business trying to achieve? (A) Efficiency (B) Liquidity (C) Profitability (D) Solvency

3 3 7. To reduce costs, a business employs external contractors to provide payroll services. Which term describes this strategy? (A)Strategic alliance (B) Vertical integration (C) Diversification (D) Outsourcing 8. Which is ONE use of a cash flow statement for management? (A)To determine the value of intangibles (B) To calculate depreciation of non-current assets (C) To identify new markets (D)To negotiate finance 9. Which of the following terms describes the business condition of having enough cash flow to pay bills as they fall due? (A) Liquidity (B) Efficiency (C) Profitability (D) Solvency 10. Which of the following are BOTH external sources of funding for a business? (A)Retained profits, leasing (B) Owner s equity, mortgage (C) Bank loan, mortgage (D)Retained profits, factoring 11. A business sells its accounts receivable to improve cash flow. Which of the following best describes this strategy? (A) Factoring (B) Equity finance (C) Sales and lease back (D)Accounts receivable turnover

4 4 12. Jerry owns a toy shop. As Christmas approaches he wants to increase his stock levels to meet the unexpected demand. This will place pressure on his available cash and he needs to borrow money from the bank for a short time. Which of the following would be the most appropriate method of finance for his needs? (A)A personal loan (B) An overdraft (C) A mortgage (D)A debenture 13. Which one of the following is an advantage for using owner s equity as a source of funds? (A)The owner s unproductive assets are liquidated (B) There is no change of ownership as funding is internal (C) The business can make tax savings in periods of high inflation (D)The business is able to sustain prolonged periods of operating losses 14. Answer the question using the financial information in the table below. Financial Information for Daniel s DVD s Wages $15,000 Sales $140,000 Rent $10,000 Cost of Goods Sold $50,000 The gross profit for Daniel s DVD s is which of the following? (A) $65,000 (B) $75,000 (C) $90,000 (D) $115, Answer this question using the financial information in the table below $ Buildings 160,000 Net Profit 25,000 Mortgage 50,000 Cash 55,000 Stock 110,000 Adam s Records Pty Ltd What is the value of the non-current assets? (A) $50,000 (B) $185,000 (C) $235,000 (D) $350,000 $ Owner s Equity 220,000 Accounts payable 22,000 Delivery van 25,000 Overdraft 43,000

5 5 Section II Short answer questions 10 marks Question 16 (15 minutes) a) Explain the difference between debt finance and equity finance. (2). b) Provide two external sources of short-term finance. (2) c) State two financial institutions that can provide short-term finance. (2) d) Evaluate cash flow statements as a financial monitoring tool for short-term finance. (4)

6 6 Question 17 (30 minutes) 14 marks This question is based on the long-term financial needs of expansion. In your answer you will be assessed on how well you: Demonstrate knowledge and understanding relevant to the question Use the information provided in this question for Section II Communicate using relevant terminology and concepts Present a sustained, logical and cohesive response in the form of a business report. You have been employed as a consultant to a business. The following questions will help to formulate a financial report for the business. a) Outline TWO external sources of long-term debt finance this business may access(4) b) Discuss the role of financial management in implementing this expansion. (4)

7 7 c) Propose and justify TWO processes that financial management could understand to implement this expansion. (6)

8 8 Question 18 (15 minutes) 6 marks You have prepared a budget for a business and have investigated projected sales and operating costs for their expansion. It is now the year 2012 and the plans for the business to expand have been successful. Produce an Income Statement for the year ending 30 th June 2012, using the following figures and calculate the new profit (or loss). Revenue Cash Sales Credit Sales Expenses Selling Expenses Promotion Salesman s Wages Operating Expenses Office supplies Wages Maintenance Financial expenses Interest payment on loans $ 368, ,000 87, ,000 14, ,750 13,500 35,630 COGS Stock 30 th June 2011 Purchases Closing stock $ 234, ,000 23,600 Respond to this question on the next page

9 9 Business Pty Ltd Income Statement ending 30 th June 2012

10 10 Section I: Multiple Choice Answer Sheet 1 2 A B C D

11 11 Answer Sheet Section I: Multiple Choices C D B A A B D D A C A B B C B Section II Question 18 Total Revenue: $1,313,000 COGS: $ Gross Profit: $352,100 Expenses: $567,380 Net Profit: ($215,280)