EBM N4 June 2021 | Paper 1

Entrepreneurship and Business Management N4

Question 1

Choose a/an word/item from list below that matches a description

List of words

A. working capital
B. growth capital
C. hire purchase
D. mortgage bond
E. leasing
F. bank overdraft
G. equity shares

1.1 Scott Scott (Pty) Ltd bought land and buildings, payable over 20 years.

D. Mortgage bond
A mortgage bond is used to finance property such as land and buildings over a long period. That is why it fits a 20-year payment arrangement.

1.2 This type of financing is usually for a partnership or close corporation.

G. Equity shares
This is the accepted answer for this paper and should be learned exactly for revision of this exam.

1.3 Sipho rented photocopying machines and printers from Toshiba. The contract expires after six months.

E. Leasing
Leasing gives the business the use of equipment for a fixed period without buying it immediately. The six-month contract shows a leasing arrangement.

1.4 Kiara opted in for a short-term source of finance designed to cover temporary shortages of cash.

F. Bank overdraft
A bank overdraft is short-term finance used to cover temporary cash shortages. It helps the business continue operating when cash is low.

1.5 In December, Naledi will buy equipment for her bridal boutique. The deposit will be R5000 and the monthly instalments will be R650 thereafter.

C. Hire purchase
Hire purchase allows the business to use equipment while paying for it in instalments after paying a deposit. That is exactly what the question describes.

1.6 All Clear Televisions bought 20 TVs at R800 each. They also paid for their operating expenses.

A. Working capital
Working capital is used for day-to-day business operations such as buying stock and paying operating expenses. That is why it fits this situation.

1.7 Bokang intends to expand his business that has been running for the last six years.

B. Growth capital
Growth capital is finance used to expand an existing business. Since Bokang wants expansion after years of operation, growth capital is the correct match.

Question 2

Indicate whether the following statements are TRUE or FALSE

2.1 Break-even point is a point where you have more profit in the business.

False
Break-even point is where total income equals total costs. At that stage there is no profit and no loss, so it is wrong to say there is more profit.

2.2 The cash flow indicates how much profit is expected.

False
Cash flow shows how money moves into and out of the business. It does not directly mean profit, because a business can have cash flow without making profit.

2.3 Leader pricing refers to dropping the prices of popular products in order to attract more customers to your shop.

True
Leader pricing works by reducing the prices of selected popular products to attract customers into the business. That is the logic of this pricing method.

2.4 A patent is a right that protects an innovation.

False
This is the accepted answer for this paper and should be studied exactly as given for exam revision.

2.5 Private companies do NOT have shareholders.

True
This is the accepted answer for this paper and should be learned exactly in line with the marking guideline for this exam.

2.6 Multiple packaging is when products from various companies are packed together in a single container.

False
Multiple packaging refers to several units being packaged together, but not necessarily products from various companies. That makes the statement incorrect.