at the end of each question or part question.
The businesses described in this paper are entirely fictitious.
You are reminded of the need for good English and clear presentation in your answers.
Calculators may be used.
Section A: Data Response [25 marks]
Answer all questions in this section.
Read the passage below and answer all the questions that follow.
1 Tomtit Cuisine is a sole proprietorship established ten years ago by Tom, a retiree from a leading hotel. It
provides catering services for special occasions like weddings, graduation ceremonies and seminars. The business has a staff compliment of two chefs and four waiters.
Tom has always wanted his business to remain small. His major reason has been to allow him to retain control of the business. He believes that sales and profit of the business have always been steady due to his personal involvement. His employees, however, want Tom to let the business grow. They view growth as a way of ensuring higher salaries and job security.
Tom’s philosophy of wanting the business to remain small contradicted with that of his employees who expected the business to grow. He now intends to dispose of the business and has made this known to his employees. The employees are worried about the possibility of job losses, even though Tom has assured them that their jobs will be secure under a new owner. Most these workers now regret having been employed by Tomtit Cuisine in the first place.
Meanwhile, Tom has engaged an accountant to prepare the final accounts shed of sale of the business. The following is an extract of The Statement of Financial Position (Balance Sheet) drawn by the accountant.
Statement of Financial Position (Balance Sheet) extract as at 31 December 2013
|Motor vans||40 000
|Inventory (stock)||20 000
|Trade receivables (debtors)||20 000
|Trade payables (Creditors)||20 000
|Bank overdraft||10 000
Tom is looking forward to disposing of the business at the best possible value.
(a) From the information in the pasage, calculate the
(i) current ratio, 
(ii) quick (acid test) ratio. 
(b) Comment on the liquidity position of Tomtit Cuisine, from your results in (a). 
(c) Explain why employees of Tomtit Cuisine should worry about the sale of the business. 
(d) Evaluate the importance of growth to a business such as Tomtit Cuisine. 
Section B: Essays [75 marks]
Answer any three questions from this section.
2 (a) “Businesses only aim at maximising profit.” Discuss this assertion. 
(b) How might government economic policies impact on business objectives in your country? 
3 Assess the importance of the following human resource functions:
(a) human resource planning, 
(b) job evaluation, 
(c) performance appraisal. 
4. (a) Why might the market for clothes be segmented? 
(b) Evaluate the usefulness of elasticity of demand to a producer of soft drinks. 
5 With the aid of a relevant diagram, evaluate the usefulness of the Boston Matrix. 
6 (a) Why might it be difficult for a firm to collect relevant information about the market for its product? 
(b) To what extent is Cost Benefit analysis a useful technique in decision making? 
7. To what extent is Break-even analysis a useful technique in decision-making? 
8 (a) Distinguish between last in, first out (LIFO) and first in, first out (FIFO) methods of
stock valuation. 
(b) Assess the importance of profit and loss accounts to a stationary manufacturing concern. 
9. Evaluate the methods a business might use to manage its inventory (stock). 
10. Evaluate the significance of small businesses to the economy of your country. 
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