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TEST CODE 02260010
SPECIMEN 2024 do so may result in disqualification.

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN ADVANCED PROFICIENCY EXAMINATION®
ENTREPRENEURSHIP

SPECIMEN PAPER

UNIT 2 – Paper 01
1 hour 30 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 45 items. You will have 1 hour and 30 minutes to answer them.
2. In addition to this test booklet, you should have an answer sheet.

3. Do not be concerned that the answer sheet provides spaces for more answers than there are items
in this test.

4. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item
you are about to answer and decide which choice is best.

5. On your answer sheet, find the number which corresponds to your item and shade the space
having the same letter as the answer you have chosen. Look at the sample item below.

Sample Item

One of the MAJOR challenges online retailers experience is Sample Answer

(A) tracking sales results A B C D
(B) managing communication
(C) the capacity to enhance customer service
(D) the ability to maintain sufficient stock levels

The best answer to this item is “the ability to maintain sufficient stock levels”, so (D) has been
shaded.
6. If you want to change your answer, erase it completely before you fill in your new choice.

7. When you are told to begin, turn the page and work as quickly and as carefully as you can. If
you cannot answer an item, go on to the next one. You may return to that item later.
8. You may do any rough work in this booklet.
9. Figures are not necessarily drawn to scale.
10. You may use a silent, non-programmable calculator to answer items.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2023 Caribbean Examinations Council

All rights reserved.
02260010/MJ/CAPE/SPEC 2024
 -2-

1. Sudeep is seeking direction in deciding the 4. John Rong grants a licence to Lilo Food
BEST way to organize his entrepreneurial Stores to market products using John
venture. His first decision is to determine Rong’s name and design, to provide the
the form of legal ownership. same products. This type of venture is
called a
Which of the following features of the
venture has a direct bearing on legal (A) franchise
ownership? (B) partnership
(C) limited company
(A) Liability (D) sole proprietorship
(B) Taxation
(C) Profitability
(D) Transferability 5. Joy-Ann, the owner of JA Apparel, is
considering expanding her business.
Kristian, the owner of a store, has offered
2. Karla is the owner of Karla’s Hairstyling to partner with Joy-Ann. Which of the
Salon while Tommy is an entrepreneur following is an advantage that Joy-Ann
managing his own barber shop. Due to would enjoy as a partnership over a sole
individual challenges, they are facing, the proprietorship?
two have decided to merge their businesses
to take advantage of their individual (A) Shared risks
expertise. (B) Unlimited liability
(C) Timely decision-making
Which of the following forms of business (D) Continuity of the business
would be MOST suitable for the new
venture? 6. A Caribbean government mandated that
an airline must obtain a licence before
(A) Franchise operating in that territory. Which of
(B) Sole trader the following types of requirements
(C) Partnership is the airline being asked to satisfy?
(D) Corporation
(A) Contract
(B) Taxation
3. Which of the following types of business (C) Registration
has unlimited life and allows for the easy (D) Environment
transferability of ownership?

(A) Partnership 7. Which of the following regulatory

(B) Corporation frameworks contains guidelines for
(C) Sole proprietorship regulating processes and services relating
(D) Limited liabilty partnership to the types of businesses?

(A) International Financial Reporting

Standards
(B) Hazard Analysis and Critical
Control Points
(C) Occupational Safety and Health
Administration
(D) International Organization for
Standardization

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8. Rajiv is a certified professional accountant 12. Mr Sam rears cows for a living to help
who has decided to open a fast-food supplement his family’s income. Each
restaurant. He advises his employees to week he gives one gallon of milk to the
place yellow cones on wet floors in the children’s home in his community. Mr
restaurant. Sam is demonstrating

Which of the following regulations is (A) good business ethics

Rajiv observing? (B) environmental stewardship
(C) good corporate governance
(A) Duty of care (D) corporate social responsibility
(B) Industrial labour laws
(C) Occupational safety and health
(D) Hazard analysis and critical 13. Which of the following activities is an
control example of a lumber company practising
corporate social responsibility?

9. Articles of Association may BEST be (A) Providing cash donations for

described as the legal document that reforestation
(B) Supporting the company’s fun-
(A) pertains to the legal regulation of day celebrations
taxes (C) Spearheading the growth of the
(B) governs the company’s external company
relations (D) Increasing workers’ salaries and
(C) pertains to the company’s ethical wages
guidelines
(D) governs the establishment of a
corporation 14. A company has decided to pay the college
fees of 50 children from impoverished
families living within its local community.
10. Mr Brown arranged with Mrs James to
This is an example of the company’s
acquire a property for a period of ten
years. Which of the following terms BEST
(A) legal obligation
describes the contractual arrangement?
(B) ethical behaviour
(C) corporate governance
(A) Rent
(D) social entrepreneurship
(B) Sales
(C) Lease
(D) Contextual
15. Sandra has a logging company that provides
lumber for community projects. Sandra
11. When a registered company evades taxes, is careful to cut the trees in a manner
which of the following actions is likely to that ensures the proper regrowth of the
be taken by a regulatory agency? forest. Which of the following types of
development BEST describes Sandra’s
(A) Prosecute the company’s board of action?
directors.
(B) Cut the company’s source of raw (A) Economic
material supply. (B) Sustainable
(C) Arrest the company’s non- (C) Agricultural
managerial employees. (D) Entrepreneurial
(D) Encourage customers to boycott
the company’s products.
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16. The primary purpose of a business plan to 20. Mia operates a fashion design business in
a venture is to a small town of Lagota. She focuses on
advertising, public relations and personal
(A) clarify the vision selling. Which of the following elements
(B) clarify the mission of market research is Mia utilizing?
(C) determine an exit strategy
(D) establish the business’ feasibility (A) Customer analysis
(B) Promotional strategy
(C) Definition of market
17. Which of the following activities (D) Expected sales trends
represents the correct order of the
accounting cycle?
21. The MAIN reason for preparing a
(A) Journalizing, identifying source statement of cash flow for a new venture
documents, posting to ledgers, is to
extracting the trial balance
(B) Identifying source documents, (A) register the venture
posting to ledgers, extracting the (B) determine unpaid debts
trial balance (C) benefit the shareholders
(C) Journalizing, posting to ledgers, (D) support the business model
identifying source documents,
extracting the trial balance 22. Which of the following financial statements
(D) Identifying source documents, shows the revenue earned against the
journalizing, extracting the trial expenses incurred by a business?
balance, posting to ledgers
(A) Statement of cash flow
(B) Statement of financial position
18. In which of the following sections of (C) Statement of breakeven analysis
a business plan would the promotional (D) Statement of comprehensive
resource be found? income

(A) Financial
(B) Marketing 23. Which of the following is NOT a source
(C) Operations of funding for a new venture?
(D) Management
(A) Gift
(B) Loan
19. Prior to establishing a restaurant, Brian has (C) Sales
to examine the way of life of his potential (D) Grant
customers. Which of the following types
of feasibility focuses on the environment
in which the venture will operate? 24. The section of a business plan that an
investor reads first, to determine the
(A) Time feasibility of the venture, is described as
(B) Industry the
(C) Cultural
(D) Management (A) financial plan
(B) marketing analysis
(C) executive summary
(D) business description

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25. Kobi decided to develop a business model 29. Michelle is a novice entrepreneur. She is
for his call centre business. Which of the preparing a business model to determine the
following would NOT be suitable for his time scope and ambitions of the venture.
product differentiation?
Which of the following components of the
(A) Product quality business model would help Michelle to
(B) Revenue sources achieve her objective?
(C) Innovative leadership
(D) Operational excellence (A) Value proposition
(B) Investment model
(C) Income generation
26. The statement that shows the value of an (D) Product differentiation
organization’s assets, liabilities and owner’s
equity is the statement of
30. In developing a business model canvas,
(A) cash flows various components capture how the
(B) cash budget business intends to make money. The section
(C) financial position that details the various sources of income
(D) comprehensive income to be generated is known as

(A) cost structure

27. Which of the following would be (B) key resources
considered a saving and investment option (C) revenue streams
for a business venture? (D) value proposition

(A) Cash
(B) Inventory 31. The MOST appropriate form of financing
(C) Raw materials during the rapid growth stage of a venture
(D) Fixed deposits is

(A) first-round financing

28. Patricia’s ambition is to determine the (B) second-round financing
long-term prospect for development and (C) start-up or seed financing
to reinvest her profits to become a well- (D) public and seasoned financing
established clothing line. Which of the
investment models would Patricia be
pursuing?

(A) Income
(B) Growth
(C) Speculative
(D) Subsistence

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32. Joy-Ann is the CEO of the Hay Strong 34. E-commerce has contributed immensely
Consulting Firm. She discovered that rapidly to new venture growth and
one of the firm’s clients was considering development across the globe. Zee is an
purchasing the intangible assets of an entrepreneur who markets his products on
existing registered business. The Hay the internet. His customer base increased
Strong Consulting Firm specializes in from 50 to 200 in six months.
helping prospective buyers through the
due diligence process. Which of the following factors contributed
to Zee’s increased customer base?
Which of the following approaches should
the prospective client explore before (A) Low-profit volume
acquiring an existing company? (B) Speed and flexibility
(C) High incidental costs
I. Cost (D) More emphasis on size and space
II. Market
III. Income

(A) I and II only

(B) I and III only
(C) II and III only
(D) I, II and III

33. Ansoff developed a tool to evaluate risks

associated with growth strategy, while
Blacks’ Enterprises altered existing
products for a new market. Which of the
following options was used by Blacks’
Enterprises?

(A) Diversification
(B) Market penetration
(C) Market development
(D) Product development

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02260010/MJ/CAPE/SPEC 2024
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Items 35 and 36 refer to the following financial data of The Hodge Company.

The Hodge Company

Financial Data, 2021–2022

Statement of Financial Position 2022 2021

$ $
Current assets 2 680 112 1 926 802
Net fixed assets 817 040 939 790
Total assets 3 497 152 2 866 592
Current liabilities 1 144 800 1 650 568
Long-term debt 400 000 723 432
Other Data
No. of shares 250 000 100 000
EPS 1.014 –1.602
DPS 0.220 0.110
Stock price 12.17 2.25

35. Using the book value approach, what is the value of The Hodge Company in 2022?

(A) $ 492 592

(B) $ 1 952 352
(C) $ 2 866 592
(D) $ 3 497 152

36. What is the price earings multiple of The Hodge Company in 2022?

(A) 2
(B) 8
(C) 10
(D) 12

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02260010/MJ/CAPE/SPEC 2024
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37. The process of buying and selling via the 40. At which stage of the venture life cycle
internet is referred to as does the entrepreneur consider expanding
or remaining in the market of choice?
(A) e-banking
(B) e-commerce (A) Start-up activities
(C) e-marketing (B) Venture growth stage
(D) e-communication (C) Business stabilization
(D) New venture development

38. Ms Wills is excited to share her products

and services with wholesalers across 41. Kyle is considering adding an e-commerce
the Caribbean. However, the regulatory presence to the store front operation
environments in the various countries of his leather crocs business. Which
differ with respect to labelling, handling of the following factors should Kyle
and packaging. first consider before adding the online
component to his business?
Before Ms Wills launches his business,
which of the following factors must first be (A) Data mining
considered in assessing the online potential (B) Social capital
of the venture? (C) Web integration
(D) Ongoing investment
(A) Target market
(B) Financial services
(C) Price of the products 42. Which of the following venture valuation
(D) Location of the business methods considers the time value of money?

(A) Book value

39. Which of the following is NOT a benefit (B) Price earnings
of selling online? (C) Payback period
(D) Discounted cash flows
(A) Higher operational costs of doing
business
(B) Ability to spot new business 43. Which of the following strategies is likely
opportunities to promote success in e-commerce?
(C) Enhanced customer service and
convenience (A) Focusing on market needs
(D) Ability to track customers’ (B) Minimizing the use of emails
purchases and sales (C) De-emphasizing strategic alliances
(D) Focusing on corporate social
responsibility

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44. The stage in the venture life cycle where 45. Zac has been operating a shoe shine
the entrepreneur can consider entering other business for 30 years. He is now considering
target markets is described as retiring and having his son take over the
business.
(A) growth
(B) decline Which of the following approaches
(C) start-up to venture valuation would be MOST
(D) maturity important in assisting Zac in making a
decision?

(A) Raising growth capital

(B) Developing a succesion plan
(C) Attempting to buy out a partner
(D) Obtaining insurance coverage

END OF TEST

02260010/MJ/CAPE/SPEC 204
 UNIT 2 – Paper 01

Item Specific Objective Key

1 2.1.1 A
2 2.1.1 (b) C
3 2.1.1 (d) B
4 2.1.1(c) A
5 2.1.2 A
6 2.1.3 C
7 2.1.3 D
8 2.1.3 C
9 2.1.3 D
10 2.1.3 C
11 2.1.3 A
12 2.1.4 D
13 2.1.4 A
14 2.1.4 D
15 2.1.5 B
16 2.2.13 D
17 2.2.5 B
18 2.2.13 B
19 2.2.3 C
20 2.2.1 B
21 2.2.6 D
22 2.2.6 D
23 2.2.4 C
24 2.2.13 C
25 2.2.11 B
26 2.2.7 C
27 2.2.8 D
28 2.2.1 A
29 2.2.11 B
30 2.2.10 C
31 2.3.1 C
32 2.3.5 B
33 2.3.6 C
34 2.3.7 A
35 2.3.4 B
36 2.3.4 D
37 2.3.8 B
38 2.3.9 A
39 2.3.11 A
40 2.3.1 B
41 2.3.9 C
42 2.3.4 D
43 2.3.13 A
44 2.3.1 A
45 2.3.3 B