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BMF – May 2015 – L1 – SB – Q6 – Basics of Business Finance and Financial Markets

Describe the Boston Consulting Group (BCG) matrix used for business portfolio management.

Describe the Boston Consulting Group (BCG) matrix.

The Boston Consulting Group (BCG) matrix is a model by which businesses are
classified in relation to market growth and relative market share.
The strategy of each business is determined on the basis of the following factors:
(i) The growth rate of its market
(ii) The market share it enjoys

The matrix can be depicted by the following quadrant:

b. Product-Market Strategies:

i. Stars:
Stars operate in high-growth markets and dominate their sectors. They require substantial investment to maintain market position but promise high returns. The recommended product-market strategy is to continue heavy investment in advertising, promotion, and product development to ensure growth in market share and revenue.

ii. Question Marks (Problem Children):
These products operate in high-growth markets but have low market share. They create opportunities for long-term growth but need significant cash investments. The suggested strategy is to either invest heavily to turn them into stars or divest if the market position does not improve. This may involve strategic decisions like harvesting or liquidation.

iii. Cash Cows:
These products have high market share in low-growth markets. They generate consistent cash flows but offer limited growth opportunities. The strategy is to maintain or consolidate their position, using their revenue to fund other areas of the business that require investment (such as Stars or Question Marks).

iv. Dogs:
Dogs have low market share in low-growth markets, providing little to no profit potential. The strategy is often to divest or liquidate these products, as they are not worth the continued investment given their bleak future.

c. Weaknesses of the BCG Matrix:

  1. The model ignores the synergies between different business units, which can affect overall profitability.
  2. High market share does not always guarantee profitability, as it depends on other factors such as cost structure and competitive advantage.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q6 – Basics of Business Finance and Financial Markets

Describe the Boston Consulting Group (BCG) matrix used for business portfolio management.

Describe the Boston Consulting Group (BCG) matrix.

The Boston Consulting Group (BCG) matrix is a model by which businesses are
classified in relation to market growth and relative market share.
The strategy of each business is determined on the basis of the following factors:
(i) The growth rate of its market
(ii) The market share it enjoys

The matrix can be depicted by the following quadrant:

b. Product-Market Strategies:

i. Stars:
Stars operate in high-growth markets and dominate their sectors. They require substantial investment to maintain market position but promise high returns. The recommended product-market strategy is to continue heavy investment in advertising, promotion, and product development to ensure growth in market share and revenue.

ii. Question Marks (Problem Children):
These products operate in high-growth markets but have low market share. They create opportunities for long-term growth but need significant cash investments. The suggested strategy is to either invest heavily to turn them into stars or divest if the market position does not improve. This may involve strategic decisions like harvesting or liquidation.

iii. Cash Cows:
These products have high market share in low-growth markets. They generate consistent cash flows but offer limited growth opportunities. The strategy is to maintain or consolidate their position, using their revenue to fund other areas of the business that require investment (such as Stars or Question Marks).

iv. Dogs:
Dogs have low market share in low-growth markets, providing little to no profit potential. The strategy is often to divest or liquidate these products, as they are not worth the continued investment given their bleak future.

c. Weaknesses of the BCG Matrix:

  1. The model ignores the synergies between different business units, which can affect overall profitability.
  2. High market share does not always guarantee profitability, as it depends on other factors such as cost structure and competitive advantage.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q5b – Management, Individual, and Organisational Behaviour

Discuss hygiene factors and motivators in Herzberg’s two-factor theory.

Write briefly on the following:
i. Hygiene factors
ii. Motivators

i. Hygiene Factors: These are factors that can lead to dissatisfaction in the workplace if they are absent or inadequate, but their presence does not necessarily create satisfaction. They include aspects like working conditions, salary, company policies, job security, and relationships with supervisors and colleagues. Inadequate hygiene factors result in employee dissatisfaction, but improving these factors alone will not boost job satisfaction.

ii. Motivators: These are factors that positively influence job satisfaction and encourage employees to improve performance. They include recognition, responsibility, opportunities for advancement, achievement, and personal growth. Unlike hygiene factors, motivators directly impact an employee’s level of job satisfaction and contribute to higher levels of performance and motivation.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q5b – Management, Individual, and Organisational Behaviour

Discuss hygiene factors and motivators in Herzberg’s two-factor theory.

Write briefly on the following:
i. Hygiene factors
ii. Motivators

i. Hygiene Factors: These are factors that can lead to dissatisfaction in the workplace if they are absent or inadequate, but their presence does not necessarily create satisfaction. They include aspects like working conditions, salary, company policies, job security, and relationships with supervisors and colleagues. Inadequate hygiene factors result in employee dissatisfaction, but improving these factors alone will not boost job satisfaction.

ii. Motivators: These are factors that positively influence job satisfaction and encourage employees to improve performance. They include recognition, responsibility, opportunities for advancement, achievement, and personal growth. Unlike hygiene factors, motivators directly impact an employee’s level of job satisfaction and contribute to higher levels of performance and motivation.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q5a – Management, Individual, and Organisational Behaviour

List and explain the five levels of human needs as per Maslow’s hierarchy.

List and explain the FIVE general types of human needs in ascending order.

  1. Physiological Needs: These are the basic survival needs for human life, such as food, water, shelter, air, and clothing. In an organizational context, these are equated to adequate salary, heat, and air to ensure employees’ survival and well-being.
  2. Safety Needs: Once physiological needs are met, individuals seek protection and security, both physically and psychologically. In the workplace, this relates to job security, safe working conditions, and a stable environment free from physical harm.
  3. Belongingness/Social Needs: After safety, individuals look for social connections, love, and belonging. In an organization, this refers to forming relationships with colleagues and feeling accepted as part of a team. Employees value a friendly work environment and camaraderie among coworkers.
  4. Esteem Needs: These involve the need for recognition, respect, and self-esteem. Employees strive to achieve recognition for their work, which can be fulfilled through awards, promotions, or being acknowledged as valuable team members.
  5. Self-Actualization Needs: The highest level, where individuals strive to realize their full potential. In the workplace, this involves opportunities for personal growth, creativity, and achieving career goals. Managers can help employees meet these needs by providing challenging tasks and encouraging innovation.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q5a – Management, Individual, and Organisational Behaviour

List and explain the five levels of human needs as per Maslow’s hierarchy.

List and explain the FIVE general types of human needs in ascending order.

  1. Physiological Needs: These are the basic survival needs for human life, such as food, water, shelter, air, and clothing. In an organizational context, these are equated to adequate salary, heat, and air to ensure employees’ survival and well-being.
  2. Safety Needs: Once physiological needs are met, individuals seek protection and security, both physically and psychologically. In the workplace, this relates to job security, safe working conditions, and a stable environment free from physical harm.
  3. Belongingness/Social Needs: After safety, individuals look for social connections, love, and belonging. In an organization, this refers to forming relationships with colleagues and feeling accepted as part of a team. Employees value a friendly work environment and camaraderie among coworkers.
  4. Esteem Needs: These involve the need for recognition, respect, and self-esteem. Employees strive to achieve recognition for their work, which can be fulfilled through awards, promotions, or being acknowledged as valuable team members.
  5. Self-Actualization Needs: The highest level, where individuals strive to realize their full potential. In the workplace, this involves opportunities for personal growth, creativity, and achieving career goals. Managers can help employees meet these needs by providing challenging tasks and encouraging innovation.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q4 – Basics of Business Finance and Financial Markets

Discuss major cash flow items in capital investment projects and explain the payback period investment appraisal method.

a. List and explain FOUR major cashflow items to be included in a capital investment project. (8 Marks)
b.
i. Explain the payback period technique of investment appraisal. (4 Marks)
ii. State TWO advantages and TWO disadvantages of payback period. (8 Marks)

a. Major cashflow items to be included in a capital investment project:

  1. Initial capital outlay: This is the cash expenditure required at the beginning of the project, usually spent on fixed assets.
  2. Operating cash flows: These include cash inflows from sales and cash outflows for operating expenses like wages, utilities, and materials.
  3. Terminal cash flows: These are the cash flows at the end of the project, such as salvage value or disposal of assets.
  4. Incremental cash flows: These refer to the additional cash flows generated directly by the investment, which wouldn’t have been earned otherwise.

b. i. Payback Period Investment Appraisal Technique:
This technique calculates the time needed for the cash inflows generated by a project to recover the initial investment. It emphasizes liquidity by focusing on the period over which the project will generate enough cash inflows to cover the initial outlay. It does not take into account the time value of money or cash flows beyond the payback period.

ii. Advantages of Payback Period:

  1. Simple to calculate and understand.
  2. It is useful for projects where liquidity is important because it focuses on recovering the initial investment quickly.

Disadvantages of Payback Period:

  1. It ignores cash flows that occur after the payback period, potentially overlooking the profitability of longer-term projects.
  2. It does not consider the time value of money.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q4 – Basics of Business Finance and Financial Markets

Discuss major cash flow items in capital investment projects and explain the payback period investment appraisal method.

a. List and explain FOUR major cashflow items to be included in a capital investment project. (8 Marks)
b.
i. Explain the payback period technique of investment appraisal. (4 Marks)
ii. State TWO advantages and TWO disadvantages of payback period. (8 Marks)

a. Major cashflow items to be included in a capital investment project:

  1. Initial capital outlay: This is the cash expenditure required at the beginning of the project, usually spent on fixed assets.
  2. Operating cash flows: These include cash inflows from sales and cash outflows for operating expenses like wages, utilities, and materials.
  3. Terminal cash flows: These are the cash flows at the end of the project, such as salvage value or disposal of assets.
  4. Incremental cash flows: These refer to the additional cash flows generated directly by the investment, which wouldn’t have been earned otherwise.

b. i. Payback Period Investment Appraisal Technique:
This technique calculates the time needed for the cash inflows generated by a project to recover the initial investment. It emphasizes liquidity by focusing on the period over which the project will generate enough cash inflows to cover the initial outlay. It does not take into account the time value of money or cash flows beyond the payback period.

ii. Advantages of Payback Period:

  1. Simple to calculate and understand.
  2. It is useful for projects where liquidity is important because it focuses on recovering the initial investment quickly.

Disadvantages of Payback Period:

  1. It ignores cash flows that occur after the payback period, potentially overlooking the profitability of longer-term projects.
  2. It does not consider the time value of money.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q3 – The Role of Professional Accountants in Business and Society

Discuss reasons for government involvement in the Nigerian financial system and mechanisms for intervention.

a. State FIVE reasons for the increasing role of Government in the Nigerian Financial System.
(10 Marks)

b. State FIVE mechanisms for government intervention in the financial system.
(10 Marks)

a. Reasons for the Increasing Role of Government in the Nigerian Financial System:

  1. To maintain monetary stability: The government needs to ensure that the financial system remains stable to control inflation and manage the economy effectively.
  2. To promote economic growth: Government interventions are essential to stimulate growth and support the development of various sectors of the economy.
  3. To ensure healthy competition: By regulating the financial system, the government prevents monopolies and ensures fair competition, both domestically and internationally.
  4. To protect the public from fraud and exploitation: Government policies are crucial to safeguarding the public from unethical financial practices.
  5. To attract foreign investment: A stable financial system encourages international investors, contributing to the growth of the economy.

b. Mechanisms for Government Intervention in the Financial System:

  1. Open Market Operations (OMO): The government buys and sells treasury bills and bonds to control the money supply.
  2. Changes in monetary policy rates (MPR): Adjusting the MPR influences interest rates, which in turn affects borrowing and investment levels in the economy.
  3. Liquidity ratio adjustments: The government can change the liquidity ratio to control the amount of cash that banks must hold as reserves, impacting the availability of credit.
  4. Fiscal policy (taxation and spending): The government uses taxes and public spending to influence the financial system and stimulate or slow down the economy.
  5. Recapitalization of banks: To maintain stability, the government may require banks to recapitalize, ensuring that they have enough funds to meet their obligations.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q3 – The Role of Professional Accountants in Business and Society

Discuss reasons for government involvement in the Nigerian financial system and mechanisms for intervention.

a. State FIVE reasons for the increasing role of Government in the Nigerian Financial System.
(10 Marks)

b. State FIVE mechanisms for government intervention in the financial system.
(10 Marks)

a. Reasons for the Increasing Role of Government in the Nigerian Financial System:

  1. To maintain monetary stability: The government needs to ensure that the financial system remains stable to control inflation and manage the economy effectively.
  2. To promote economic growth: Government interventions are essential to stimulate growth and support the development of various sectors of the economy.
  3. To ensure healthy competition: By regulating the financial system, the government prevents monopolies and ensures fair competition, both domestically and internationally.
  4. To protect the public from fraud and exploitation: Government policies are crucial to safeguarding the public from unethical financial practices.
  5. To attract foreign investment: A stable financial system encourages international investors, contributing to the growth of the economy.

b. Mechanisms for Government Intervention in the Financial System:

  1. Open Market Operations (OMO): The government buys and sells treasury bills and bonds to control the money supply.
  2. Changes in monetary policy rates (MPR): Adjusting the MPR influences interest rates, which in turn affects borrowing and investment levels in the economy.
  3. Liquidity ratio adjustments: The government can change the liquidity ratio to control the amount of cash that banks must hold as reserves, impacting the availability of credit.
  4. Fiscal policy (taxation and spending): The government uses taxes and public spending to influence the financial system and stimulate or slow down the economy.
  5. Recapitalization of banks: To maintain stability, the government may require banks to recapitalize, ensuring that they have enough funds to meet their obligations.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q2 – The Business Environment

Discuss four external environmental factors that impact business operations.

Businesses do not operate in a vacuum. There is a combination of internal and external factors that affect how businesses function.
State and explain any FOUR external environmental factors that affect a business.

  1. Political Factors:
    Political factors affect the level of opportunities and threats within the business environment. Factors such as the stability of the political system, government policies, and regulations have a major influence on how businesses operate. A change in government or political instability can affect market conditions and disrupt business operations.
  2. Economic Factors:
    Economic conditions, including inflation rates, interest rates, economic growth, and exchange rates, play a crucial role in business performance. A strong economy encourages businesses to expand, whereas a weak economy may force businesses to downsize or halt operations.
  3. Socio-Cultural Factors:
    Socio-cultural aspects include the beliefs, values, attitudes, and lifestyles of people. These factors influence consumer behavior and market demand. A business must understand these cultural nuances to tailor products and services that meet the expectations of its customers.
  4. Technological Factors:
    The level of technological advancement within a country or industry determines the efficiency of production processes and service delivery. Businesses must keep up with technological changes to remain competitive. This includes automation, internet usage, and new software or tools that improve operational efficiency.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q2 – The Business Environment

Discuss four external environmental factors that impact business operations.

Businesses do not operate in a vacuum. There is a combination of internal and external factors that affect how businesses function.
State and explain any FOUR external environmental factors that affect a business.

  1. Political Factors:
    Political factors affect the level of opportunities and threats within the business environment. Factors such as the stability of the political system, government policies, and regulations have a major influence on how businesses operate. A change in government or political instability can affect market conditions and disrupt business operations.
  2. Economic Factors:
    Economic conditions, including inflation rates, interest rates, economic growth, and exchange rates, play a crucial role in business performance. A strong economy encourages businesses to expand, whereas a weak economy may force businesses to downsize or halt operations.
  3. Socio-Cultural Factors:
    Socio-cultural aspects include the beliefs, values, attitudes, and lifestyles of people. These factors influence consumer behavior and market demand. A business must understand these cultural nuances to tailor products and services that meet the expectations of its customers.
  4. Technological Factors:
    The level of technological advancement within a country or industry determines the efficiency of production processes and service delivery. Businesses must keep up with technological changes to remain competitive. This includes automation, internet usage, and new software or tools that improve operational efficiency.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q1b – Business and Organizational Structures and Choices

Identifying the advantages of a partnership business.

Identify FIVE advantages of a partnership business.

  1. Shared management and pooled knowledge: Partners bring in varied expertise and skills to manage the business.
  2. Attraction of more financial resources: Partnerships can attract more capital compared to sole proprietorships.
  3. Continuity in comparison with sole proprietorship: Unlike sole proprietorships, partnerships can continue even when one partner exits.
  4. Division of labor: Partners can divide work based on their strengths, leading to more efficient management.
  5. Sharing of risks and losses: The risks and financial losses are shared among partners, reducing the burden on a single individual.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q1b – Business and Organizational Structures and Choices

Identifying the advantages of a partnership business.

Identify FIVE advantages of a partnership business.

  1. Shared management and pooled knowledge: Partners bring in varied expertise and skills to manage the business.
  2. Attraction of more financial resources: Partnerships can attract more capital compared to sole proprietorships.
  3. Continuity in comparison with sole proprietorship: Unlike sole proprietorships, partnerships can continue even when one partner exits.
  4. Division of labor: Partners can divide work based on their strengths, leading to more efficient management.
  5. Sharing of risks and losses: The risks and financial losses are shared among partners, reducing the burden on a single individual.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q1a – Business and Organizational Structures and Choices

Features of the Memorandum of Association, Articles of Association, and Public Sector Entities.

State FIVE features of each of the following:
i. Memorandum of Association (5 Marks)
ii. Articles of Association (5 Marks)
iii. Public Sector Entity (5 Marks)

i. Features of Memorandum of Association:

  • The name of the company.
  • The names and addresses of the shareholders.
  • The number of shares held by each shareholder.
  • The location of the registered office.
  • The objectives of the company.

ii. Features of Articles of Association:

  • The internal relations of the company.
  • The rights of shareholders.
  • How meetings are convened.
  • Appointment and renewal of directors and other officers.
  • Power and duties of directors.

iii. Features of Public Sector Entity:

  • It is owned by the government.
  • It is created by an Act of Parliament.
  • It is managed by a board of directors appointed by the government.
  • It renders essential services.
  • It is not established for profit.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q1a – Business and Organizational Structures and Choices

Features of the Memorandum of Association, Articles of Association, and Public Sector Entities.

State FIVE features of each of the following:
i. Memorandum of Association (5 Marks)
ii. Articles of Association (5 Marks)
iii. Public Sector Entity (5 Marks)

i. Features of Memorandum of Association:

  • The name of the company.
  • The names and addresses of the shareholders.
  • The number of shares held by each shareholder.
  • The location of the registered office.
  • The objectives of the company.

ii. Features of Articles of Association:

  • The internal relations of the company.
  • The rights of shareholders.
  • How meetings are convened.
  • Appointment and renewal of directors and other officers.
  • Power and duties of directors.

iii. Features of Public Sector Entity:

  • It is owned by the government.
  • It is created by an Act of Parliament.
  • It is managed by a board of directors appointed by the government.
  • It renders essential services.
  • It is not established for profit.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q20 – Communications in Business

Defining the process of information transmission in business contexts.

The process of transmission of information from one person, group or organisation to another is called:

A. Decoding
B. Communication
C. Globalization
D. Presentation
E. Translation

Answer: B. Communication

Explanation:
Communication refers to the process of transmitting information from one entity to another, encompassing various methods and channels. It is essential for effective interaction within and between organizations.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q20 – Communications in Business

Defining the process of information transmission in business contexts.

The process of transmission of information from one person, group or organisation to another is called:

A. Decoding
B. Communication
C. Globalization
D. Presentation
E. Translation

Answer: B. Communication

Explanation:
Communication refers to the process of transmitting information from one entity to another, encompassing various methods and channels. It is essential for effective interaction within and between organizations.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q19 – Management, Individual, and Organisational Behaviour

Identifying the leadership style based on authority and control over rewards.

A leadership style in which the leader has the authority to withhold or give reward and punishment is referred to as ………………. style.

A. Democratic leadership
B. Participative leadership
C. Contingency leadership
D. Autocratic leadership
E. Laissez faire leadership

Answer: D. Autocratic leadership

Explanation:
Autocratic leadership is characterized by a leader who has significant control over decision-making and the authority to reward or punish subordinates. This style does not typically involve team input or collaboration, focusing instead on the leader’s authority and directives.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q19 – Management, Individual, and Organisational Behaviour

Identifying the leadership style based on authority and control over rewards.

A leadership style in which the leader has the authority to withhold or give reward and punishment is referred to as ………………. style.

A. Democratic leadership
B. Participative leadership
C. Contingency leadership
D. Autocratic leadership
E. Laissez faire leadership

Answer: D. Autocratic leadership

Explanation:
Autocratic leadership is characterized by a leader who has significant control over decision-making and the authority to reward or punish subordinates. This style does not typically involve team input or collaboration, focusing instead on the leader’s authority and directives.

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  • 20 Marks

MI – May 2015 – L1 – SB – Q2 – Costing Methods

Prepare process accounts, normal loss account, and abnormal gain account for Maputo Nigeria Limited for Process 2 and Process 3.

MAPUTO NIGERIA LIMITED manufactures its product through three processes. The following data relates to Process 2 and Process 3 for the month of October:

  • 100,000 units at N10 each were transferred from Process 1 to Process 2.
Cost Components Process 2 (N) Process 3 (N)
Direct Materials 100,000 114,000
Direct Labour 135,000 100,000
Variable Expenses 30,000 53,500
Production Overhead 250,000 200,000
  • Normal output: 90% for Process 2 and 80% for Process 3
  • Actual output: 85,000 units for Process 2 and 70,000 units for Process 3
  • Scrap value of loss: N3 per unit for Process 2 and N2 per unit for Process 3

Required:
a. Prepare Process 2 and Process 3 accounts (16 Marks)
b. Prepare the Normal Loss account (2 Marks)
c. Prepare the Abnormal Gain account (2 Marks)

MAPUTO NIGERIA LIMTED
PROCESS 2 ACCOUNTS

a

i)

PROCESS 3 ACCOUNTS

ii)

b) NORMAL LOSS ACCOUNT

 

c) ABNORMAL LOSS ACCOUNT

ABNORMAL GAIN ACCOUNT

 

 

 

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  • 20 Marks

MI – May 2015 – L1 – SB – Q2 – Costing Methods

Prepare process accounts, normal loss account, and abnormal gain account for Maputo Nigeria Limited for Process 2 and Process 3.

MAPUTO NIGERIA LIMITED manufactures its product through three processes. The following data relates to Process 2 and Process 3 for the month of October:

  • 100,000 units at N10 each were transferred from Process 1 to Process 2.
Cost Components Process 2 (N) Process 3 (N)
Direct Materials 100,000 114,000
Direct Labour 135,000 100,000
Variable Expenses 30,000 53,500
Production Overhead 250,000 200,000
  • Normal output: 90% for Process 2 and 80% for Process 3
  • Actual output: 85,000 units for Process 2 and 70,000 units for Process 3
  • Scrap value of loss: N3 per unit for Process 2 and N2 per unit for Process 3

Required:
a. Prepare Process 2 and Process 3 accounts (16 Marks)
b. Prepare the Normal Loss account (2 Marks)
c. Prepare the Abnormal Gain account (2 Marks)

MAPUTO NIGERIA LIMTED
PROCESS 2 ACCOUNTS

a

i)

PROCESS 3 ACCOUNTS

ii)

b) NORMAL LOSS ACCOUNT

 

c) ABNORMAL LOSS ACCOUNT

ABNORMAL GAIN ACCOUNT

 

 

 

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  • 20 Marks

MI – May 2015 – L1 – SB – Q1 – Budgeting

Prepare a cash budget for a three-month period based on sales, purchases, loan, and other projections.

WHYME LIMITED is engaged in the manufacturing and sales of fast-moving consumer products. The following data are projections for a period of six months:

Month Sales (N’000) Purchases (N’000) Salaries (N’000) Staff Salary Deductions (N’000) Overheads (N’000)
Jan 9,600 5,400 1,650 78 1,650
Feb 15,800 12,000 1,760 82 1,920
March 16,000 10,000 1,760 90 2,100
April 17,600 11,000 1,789 89 2,400
May 14,800 11,200 1,842 92 1,860
June 14,200 9,800 1,800 85 1,720

Other additional information:

  1. Sales are 25% on cash basis, 55% is collected in the month following sales, and the balance in the third month.
  2. All purchases are on 30 days credit while 20% of overheads are paid in the same month, with the balance in the following month.
  3. Net salaries will be paid in the same month, while statutory deductions are remitted on the 10th day of the following month.
  4. A N10 million loan will be released in March to finance the purchase of a new asset costing N12 million in the same month. The loan will be repaid equally over four months starting from April. (Ignore interest).
  5. An old asset will be disposed of in April for N1.5 million.
  6. Cash balance as at the end of February will be N6.5 million, with N2.5 million put into a short-term investment in March at a 2% monthly interest rate, credited at the beginning of the following month.

Required:
Prepare a cash budget for the period of March to May. (Ignore taxation).
(20 Marks)

WHYME LIMITED
CASH BUDGET FOR THREE MONTHS ENDING MAY YEAR XXX

March (N’000) April (N’000) May (N’000)
INFLOWS
Sales Collections 14,610 16,360 16,580
Loan 10,000 – –
Fixed Asset Disposal – 1,500 –
Investment Income – 50 50
Total Inflows (A) 24,610 17,910 16,630
OUTFLOWS
Purchases 12,000 10,000 11,000
Salaries 1,670 1,700 1,750
Salaries Deductions 82 90 89
Overheads 1,956 2,160 2,292
Fixed Assets 12,000 – –
Loan Repayment – 2,500 2,500
Investment 2,500 – –
Total Outflows (B) 30,208 16,450 17,631
Balance B/F 6,500 902 2,362
Net Cash Flow (A – B) (5,598) 1,460 1,001
Balance C/F 902 2,362 1,36

 

Workings

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  • 20 Marks

MI – May 2015 – L1 – SB – Q1 – Budgeting

Prepare a cash budget for a three-month period based on sales, purchases, loan, and other projections.

WHYME LIMITED is engaged in the manufacturing and sales of fast-moving consumer products. The following data are projections for a period of six months:

Month Sales (N’000) Purchases (N’000) Salaries (N’000) Staff Salary Deductions (N’000) Overheads (N’000)
Jan 9,600 5,400 1,650 78 1,650
Feb 15,800 12,000 1,760 82 1,920
March 16,000 10,000 1,760 90 2,100
April 17,600 11,000 1,789 89 2,400
May 14,800 11,200 1,842 92 1,860
June 14,200 9,800 1,800 85 1,720

Other additional information:

  1. Sales are 25% on cash basis, 55% is collected in the month following sales, and the balance in the third month.
  2. All purchases are on 30 days credit while 20% of overheads are paid in the same month, with the balance in the following month.
  3. Net salaries will be paid in the same month, while statutory deductions are remitted on the 10th day of the following month.
  4. A N10 million loan will be released in March to finance the purchase of a new asset costing N12 million in the same month. The loan will be repaid equally over four months starting from April. (Ignore interest).
  5. An old asset will be disposed of in April for N1.5 million.
  6. Cash balance as at the end of February will be N6.5 million, with N2.5 million put into a short-term investment in March at a 2% monthly interest rate, credited at the beginning of the following month.

Required:
Prepare a cash budget for the period of March to May. (Ignore taxation).
(20 Marks)

WHYME LIMITED
CASH BUDGET FOR THREE MONTHS ENDING MAY YEAR XXX

March (N’000) April (N’000) May (N’000)
INFLOWS
Sales Collections 14,610 16,360 16,580
Loan 10,000 – –
Fixed Asset Disposal – 1,500 –
Investment Income – 50 50
Total Inflows (A) 24,610 17,910 16,630
OUTFLOWS
Purchases 12,000 10,000 11,000
Salaries 1,670 1,700 1,750
Salaries Deductions 82 90 89
Overheads 1,956 2,160 2,292
Fixed Assets 12,000 – –
Loan Repayment – 2,500 2,500
Investment 2,500 – –
Total Outflows (B) 30,208 16,450 17,631
Balance B/F 6,500 902 2,362
Net Cash Flow (A – B) (5,598) 1,460 1,001
Balance C/F 902 2,362 1,36

 

Workings

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  • 1 Marks

MI – May 2015 – L1 – SA – Q20 – Computer Hardware, Software, and Data Life Cycle

Identify the data transmission phenomenon with a clock signal.

Data transmission phenomenon where data is transferred regularly with clock signal is called
A. Asynchronous data transfer
B. Simplex data transfer
C. Duplex data transfer
D. Synchronous data transfer
E. Regular data transfer

Answer:
D. Synchronous data transfer

Explanation:
In synchronous data transfer, data is sent at regular intervals that are coordinated by a clock signal, ensuring synchronized communication between sender and receiver.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q20 – Computer Hardware, Software, and Data Life Cycle

Identify the data transmission phenomenon with a clock signal.

Data transmission phenomenon where data is transferred regularly with clock signal is called
A. Asynchronous data transfer
B. Simplex data transfer
C. Duplex data transfer
D. Synchronous data transfer
E. Regular data transfer

Answer:
D. Synchronous data transfer

Explanation:
In synchronous data transfer, data is sent at regular intervals that are coordinated by a clock signal, ensuring synchronized communication between sender and receiver.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q19 – Computer Hardware, Software, and Data Life Cycle

Identify the name of the device that combines scanner, printer, fax, and copier.

A device that combines the capabilities of a scanner, printer, fax, and copying machine is called
A. Output device
B. Facsimile transmission machine
C. Multifunctional device
D. MICR
E. Dumb terminal

Answer:
C. Multifunctional device

Explanation:
A multifunctional device integrates several functions, such as printing, scanning, faxing, and copying, into one machine.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q19 – Computer Hardware, Software, and Data Life Cycle

Identify the name of the device that combines scanner, printer, fax, and copier.

A device that combines the capabilities of a scanner, printer, fax, and copying machine is called
A. Output device
B. Facsimile transmission machine
C. Multifunctional device
D. MICR
E. Dumb terminal

Answer:
C. Multifunctional device

Explanation:
A multifunctional device integrates several functions, such as printing, scanning, faxing, and copying, into one machine.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q18 – Computer Hardware, Software, and Data Life Cycle

Identify the odd one out among input devices.

Identify the odd one among the following devices
A. Joystick
B. Touch Screen
C. Dot-matrix
D. Light Pen
E. Mouse

Answer:
C. Dot-matrix

Explanation:
The dot-matrix is a type of printer, which is an output device, while the rest (joystick, touch screen, light pen, and mouse) are input devices.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q18 – Computer Hardware, Software, and Data Life Cycle

Identify the odd one out among input devices.

Identify the odd one among the following devices
A. Joystick
B. Touch Screen
C. Dot-matrix
D. Light Pen
E. Mouse

Answer:
C. Dot-matrix

Explanation:
The dot-matrix is a type of printer, which is an output device, while the rest (joystick, touch screen, light pen, and mouse) are input devices.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q17 – Computer Hardware, Software, and Data Life Cycle

Identify the incorrect reason for upgrading storage capacity on a microcomputer system.

A major consideration for an upgrade of a microcomputer system is an increase in storage capacity because of the following EXCEPT
A. Inadequate space to store files
B. Inadequate space to install new programs
C. Lack of secure place to backup important files
D. Inability to download large files from the internet
E. Inability to log-on to internet

Answer:
E. Inability to log-on to internet

Explanation:
An inability to log on to the internet is not related to storage capacity. This is typically a network or connectivity issue.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q17 – Computer Hardware, Software, and Data Life Cycle

Identify the incorrect reason for upgrading storage capacity on a microcomputer system.

A major consideration for an upgrade of a microcomputer system is an increase in storage capacity because of the following EXCEPT
A. Inadequate space to store files
B. Inadequate space to install new programs
C. Lack of secure place to backup important files
D. Inability to download large files from the internet
E. Inability to log-on to internet

Answer:
E. Inability to log-on to internet

Explanation:
An inability to log on to the internet is not related to storage capacity. This is typically a network or connectivity issue.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q16 – Computer Hardware, Software, and Data Life Cycle

Identify the term used for processed data or information from a computer system.

Processed data or information from a computer system is called
A. Input-output
B. Hardcopy
C. Softcopy
D. Output
E. Input

Answer:
D. Output

Explanation:
The result of data processing in a computer system is referred to as “output,” which can be in the form of reports, files, or other results.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q16 – Computer Hardware, Software, and Data Life Cycle

Identify the term used for processed data or information from a computer system.

Processed data or information from a computer system is called
A. Input-output
B. Hardcopy
C. Softcopy
D. Output
E. Input

Answer:
D. Output

Explanation:
The result of data processing in a computer system is referred to as “output,” which can be in the form of reports, files, or other results.

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MI – May 2015 – L1 – SA – Q15 – Computer Hardware, Software, and Data Life Cycle

Identify the correct characteristic of real-time processing.

Real-Time Processing Technique is characterised by
A. High turn-around time
B. Low turn-around time
C. Medium turn-around time
D. Very high turn-around time
E. Very little turn-around time

Answer:
E. Very little turn-around time

Explanation:
Real-time processing has very little turn-around time, meaning that it processes transactions almost instantly, minimizing any delays.

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MI – May 2015 – L1 – SA – Q15 – Computer Hardware, Software, and Data Life Cycle

Identify the correct characteristic of real-time processing.

Real-Time Processing Technique is characterised by
A. High turn-around time
B. Low turn-around time
C. Medium turn-around time
D. Very high turn-around time
E. Very little turn-around time

Answer:
E. Very little turn-around time

Explanation:
Real-time processing has very little turn-around time, meaning that it processes transactions almost instantly, minimizing any delays.

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MI – May 2015 – L1 – SA – Q14 – Computer Hardware, Software, and Data Life Cycle

Identify the transaction processing technique with severe time limitation.

A transaction processing technique with severe time limitation is called
A. Time Sharing Processing
B. Distributed Processing
C. Real-Time Processing
D. Multi-tasking
E. Multi-processing

 

Answer:
C. Real-Time Processing

Explanation:
Real-time processing involves handling data as soon as it is input, often under strict time constraints, such as in transaction systems like ATMs or online booking systems.

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  • 1 Marks

MI – May 2015 – L1 – SA – Q14 – Computer Hardware, Software, and Data Life Cycle

Identify the transaction processing technique with severe time limitation.

A transaction processing technique with severe time limitation is called
A. Time Sharing Processing
B. Distributed Processing
C. Real-Time Processing
D. Multi-tasking
E. Multi-processing

 

Answer:
C. Real-Time Processing

Explanation:
Real-time processing involves handling data as soon as it is input, often under strict time constraints, such as in transaction systems like ATMs or online booking systems.

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MI – May 2015 – L1 – SA – Q13 – Information Systems

Identify the management level Decision Support Systems (DSS) are designed for.

Decision Support Systems (DSS) provides non-routine decision-making for
A. Senior Management
B. Middle Management
C. Executive Programmer
D. Desk Officer
E. System Analyst

Answer:
A. Senior Management

Explanation:
Decision Support Systems (DSS) are typically used by senior management to assist in making strategic, non-routine decisions by providing relevant information and analysis tools.

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MI – May 2015 – L1 – SA – Q13 – Information Systems

Identify the management level Decision Support Systems (DSS) are designed for.

Decision Support Systems (DSS) provides non-routine decision-making for
A. Senior Management
B. Middle Management
C. Executive Programmer
D. Desk Officer
E. System Analyst

Answer:
A. Senior Management

Explanation:
Decision Support Systems (DSS) are typically used by senior management to assist in making strategic, non-routine decisions by providing relevant information and analysis tools.

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