CA ZAMBIA PROGRAMME EXAMINATIONS

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KNOWLEDGE LEVEL
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CA 1.1: FINANCIAL ACCOUNTING

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MONDAY 14DECEMBER 2020
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TOTAL MARKS – 100: TIME ALLOWED: THREE (3) HOURS

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INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination
paper carefully so that you understand what to do in each question.

2. This paper is divided into TWO (2) sections:

Section A: Ten (10) compulsory multiple choice questions.
Section B: One (1) compulsory scenario question.
Plus Four (4) scenario questions. Attempt any Three (3) questions.

3. Enter your student number and your National Registration Card number on
the front of the answer booklet. Your name must NOT appear anywhere on
your answer booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. Cell Phones are NOT allowed in the Examination Room.

6. The marks shown against the requirement(s) for each question should be
taken as an indication of the expected length and depth of the answer.

7. All workings must be done in the answer booklet.

8. Present legible and tidy work.

9. Graph paper (if required) is provided at the end of the answer booklet.
DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED BY
THE INVIGILATOR.

SECTION A

Attempt all ten (10) multiple choice questions

QUESTION ONE

There are 10 multiple choice questions in this section. Attempt all of them by selecting your
best answer from the options given.

1.1 ZikomoTwalumba, a sole trader had an opening capital K10,000 and closing capital
of K4,500. During the year ended 31 March 2020, she introduced capital of K4,000
and withdrew K8,000 for her own use.

Her profit or loss during the period was:

A. K1,500 loss
B. K9,500 loss
C. K1,500 Profit
D. K7,500 profit
(2 marks)

1.2 Which of the following will NOT result in a debit entry in the accounts?

A. Increase in expense
B. Increase in revenue
C. Increase in assets
D. Decrease in liabilities

(2 marks)

1.3 Opening inventory was K29,000, carriage outwards was K2,000, carriage inwards
was K1,000, closing inventory was K31,500, purchases were K128,000, and purchase
returns were K8,500. What was cost of sales?

A. K128,000
B. K234,000
C. K118,000
D. K122,000

(2 marks)

1.4 Who issues International Financial Reporting Standards (IFRSs)?

A. The Zambia Institute of Chartered Accountants

B. The IFRS Interpretations Committee
C. The Financial Accounting and Reporting Standards Board
D. The International Accounting Standards Board (IASB)

2
 (2 marks)

1.5 Which of the following lists the four (4) enhancing qualitative characteristics of
financial statements as defined in the IASB’’s Conceptual Framework for Financial
Reporting?

A. Comparability, verifiability, timeliness and understandability.

B. Comparability, relevance, timeliness and understandability.
C. Relevance, timeliness, understandability and going concern.
D. Timeliness, understandability, going concern and faithful representation.

(2 marks)

1.6 Profit for the year ended 31 March 2020 was calculated as being K10,200. It was
later discovered that capital expenditure of K3,000 had been treated as revenue
expenditure.

The correct profit for the year should have been:

A. K10,200
B. K13,200
C. K7,200
D. K16,200
(2 marks)

1.7 The general name used to describe computer programs is:

A. Nominal Ledger
B. Hardware
C. Software
D. Firmware
(2 marks)

1.8 The following items were extracted from Shanene’saccounting records. Sales
K150,000, opening inventory K10,000, closing inventory K15,000. The business
applies a constant mark up of 25%. Calculate the total purchases for the year.

A. K115,000
B. K145,000
C. K117,500
D. K125,000 (2 marks)

1.9 Bonilinda a manufacturing company based in Luapula province, has the following
figures for the year ended 31st March 2020:

Direct materials K8,000

Factory overheads K12,000
Direct labour K10,000
Sales returns K5,000
Decrease in work-in-progress K4,000

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 How much is the Prime cost:

A. K18,000
B. K26,000
C. K30,000
D. K34,000 (2 marks)

1.10 An asset must be _______ by the business to be shown as an asset in its "Statement
of the financial passion":

A. Possessed
B. Owned
C. Controlled
D. Used
(2 marks)
[Total: 20 Marks]

4
SECTION B

Question TWO (2) in this section is compulsory and must be attempted. Then
attempt any THREE (3) questions from the remaining four (4) questions.

QUESTION TWO – (COMPULSORY)

Mukapasa Limited Liability Company was established in 1980 by a family and has since
then built up a loyal and expanding customer base. The following trial balance was extracted
from the books at 31 December 2019:
Dr Cr
K’000 K’000
General reserve 100
Land at valuation 4,950
Buildings: -at cost 3,500
- depreciation to 1 January 2019 200
Plant and machinery: - at cost 2,200
- depreciation to 1 January 2019 300
Inventory at 1 January 2019 2,100
Receivables 8,750
Cash in hand 4,620
Payables 3,180
Bank 900
Administration expenses 2,640
Selling and distribution expenses 2,920
Ordinary dividends paid 350
Loan note interest paid 150
Returns inwards 4,000
Sales 29,920
Purchases 20,450
Carriage inwards 150
Carriage outwards 100
Returns outwards 1,340
Discounts received 1,690
Retained earnings at 1 January 2019 1,900
10% Preference shares, K1 each 1,000
Suspense 1,500
Share premium 1,000
Revaluation reserve as at 1 Jan. 2019 350
Ordinary shares of K1 each 11,000
12% Loan notes 2,500

_______ _______

56,880 56,880

5
The following additional information is available at 31 December 2019:
(1) One (1) million new ordinary shares were issued for K1.5 per share on 1
October 2019. The proceeds have been left in a suspense account. The
company proposed to pay a final ordinary dividend of K666,000 for the year.
(2) At 31 December 2019, prepaid administration expenses were K120,000 and
accrued selling and distribution expenses were K170,000.
(3) Mukapasa uses revaluation model as allowed by IAS 16 Property, Plant and
equipment. The independent specialists in land valuation based in Kitwe, have
advised that the land should be revalued upward by K50,000.
(4) Depreciation is to be provided as follows:
(i) Buildings at 4% per annum on their original cost.
(ii) Plant and machinery at 10% per annum on their carrying amount.
All depreciation expense must be charged as part of administration expenses
(5) The charge for corporation tax of K80,000 is to be provided for the year.
(6) The 12% loan note were issued on 1 of July 2019.
(7) A customer ceased trading owing the company K280,000. The debt is not
expected to be recovered and an adjustment is yet to be made. Further, an
allowance for receivables of K10,000, is to be created.
(8) Inventory at the close of business has been valued at K1,940,000.
(9) The preference shares are redeemable preference shares and preference
dividends
for the year, have not yet been accounted for.
(10) Directors approved to transfer K200,000 from retained to general reserves.
This
transaction is yet to be accounted for.
(11) It was discovered that credit sales invoices totalling to K1,000,000 for goods
delivered to customers on 22 December 2019 had by mistake been dated 2
January 2020 and thus excluded from the sales for the year and from account
receivables at the year end.

Required:

Prepare the following:

(a) Statement of profit or loss and other comprehensive income for the year ended 31
December 2019 for Mukapasa Ltd.(10 marks)

(b) Statement of financial position as at 31 December 2019 for Mukapasa Ltd.

(10 marks)
[Total: 20 Marks]

6
QUESTION THREE

Musonda and Mwaba have been trading as partners and sharing profits and losses equally.
From 1 October 2019 they decided to revise their profit sharing Agreement as they realized
that Mwaba had special skills to boost the business and claimed a salary entitlement. Their
capital and current accounts as on 1 January 2019 are as follows:

Capital Current Additions

Accounts Accounts In the year

Musonda K120,000 K18,250 K30,000

Mwaba K120,000 K15,840 -

The Profit Sharing Agreement (PSA) was revised on 1 October 2019 when Musonda brought
in additional capital as follows:

Interest is to be charged on capital at the rate of 10% per annum (8% before
change in Profit Sharing Agreement), and on drawings at the rate of 5% (3% before
change in Profit Sharing Agreement ). Mwaba would be entitled to an annual salary
of K60,000. The new profit sharing ratio is 3:2 between Musonda and Mwaba
respectively.

Drawings were made by partners as follows:

1 March 1 July 1 November2019

2019 2019

Musonda K50,000 - K20,000

Mwaba - K50,000 K30,000

Draft accounts were prepared and the profit made for the year was K325,000. A bank
reconciliation has just been completed and reveals that interest of K15,000 on a fixed
deposit account has been credited while bank charges amounting to K1,680 were debited to
the account. Profits are deemed to accrue evenly throughout the year.

Required:

(a) Calculate the profit or loss to be shared by partners for periods before and after the
revision of terms in the Profit Sharing Agreement. (4 marks)

(b) Calculate the total profit appropriations to each partner for the year ended 31
December 2019 (12 marks)

(c) Prepare the Current Accounts for the partners using the figures you calculated in (b),
clearly showing the closing balances. (4 marks)
[Total: 20 Marks]

QUESTION FOUR

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(a) You are the Accountant of Amazon Co. You prepared a receivables (sales) ledger
control account at 31 March, 2020 for you to reconcile with the list of sales ledger
balances at that date. You discovered that the total list of all the personal accounts
extracted from the sales ledger at 31 March 2020 was K128,915, whereas the
balance on the receivables control account on the same date amounted to K125,500.

The following discrepancies were discovered after carrying out investigations:

1. Cash received from a credit customer of K25,530 had been debited to a personal
account.
2. Discounts received of K5,321 had been debited to G.H.K. Ltd in the receivables
ledger account.
3. Cash received of K8,972 had been credited to a personal account as K7,127.
4. Discounts allowed amounting to K11,527 had not been entered in the control
account.
5. A personal account balance had been under cast by K20,450.
6. A contra item of K42,352 with the payables ledger had not been entered in the
control account.
7. A debt of K54,976 from a customer who is bankrupt had not been entered in the
control account.
8. Cash received of K75,389 had been entered in a personal account as K68,169.
9. Returns inwards of K21,392 had not been included in the control account.
10. A cheque for K34,765 received from a customer had been dishonoured by the
bank, but no adjustment had been made in the control account.
11. Sales for the period amounting to K85,629 had been omitted from the control
account.
12. An account balance of B. Suzyo Ltd. of K31,728 had not been included in the list
of balances.

Required:

(i) Prepare a corrected receivables control account, bringing down the amended
balance as at the opening period. (4 marks)

(ii) Prepare a statement showing the adjustments that are necessary to the list of
personal account balance so that it reconciles with the corrected receivables
control account balance. (4 marks)

(iii) Explain the purpose of preparing control accounts. (4 marks)

(b) You have recently joined Zeze Limited, an engineering company as an Assistant
Accountant and one of your tasks is to prepare bank reconciliation statements on a
weekly basis. The following extract from the cash book of the company for the
month of June 2020 shows the company’s cheque receipts and payments:

Cash book
Balance b/d 9,167 Purchases ledger 1,392
Credit transfer 4,023 Salaries and wages 2,613
Dividends from ZBL Ltd 2,194 Californian Beverages Ltd. 981
Royalties received 7,249 Rent and rates 3,290
Balance c/d 14,357
22,633 22,633
The company Assistant Accountant obtained the following bank statement on the same
date:

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 Bank statement for the month of June 2020
Debit (K) Credit (K) Balance (K)
Balance b/d 7,645
Lodgement 000301 2,491 10,136
Cheque 000104 969 9,167
Insurance D/D 2,413 6,754
Credit transfer 4,023 10,777
Cheque 000105 1,392 9,385
Cheque 000106 2,613 6,754
Rent and rates: cheque 000108 3,290 3,482
Dividends 2,194 5,676
Bank charges 563 5,113
Required:

(i) Prepare an adjusted cash book for Zeze Ltd. as at 30 June 2020. (2 marks)
(ii) Prepare the bank reconciliation statement starting with balance as bank statement as
at 30 June 2020. (4 marks)
(iii)Explain any two (2) reasons for preparing bank reconciliation statement. (2 marks)
[Total: 20 Marks]
QUESTION FIVE

BusumaMusonda is a treasurer of the Lusaka squash club and has presented you with the
following Receipts and Payments account for the club for the year ended 30 November
2019.
Lusaka Squash club’s Receipts and Payments account for the year ended 30
November 2019:
K’000 K’000

Balance b/f 14,420 Rates 7,476

Subscriptions 42,140 Electricity 1,190

Donations 14,000 restaurant wages 30,100

Receipts from social events 31,220 Ground wages 16,870

Restaurant takings 103,880 Payables – restaurants 49,455

Printing and stationery 12,285

Social events expenses 13,916

Insurance 18,340

Restaurant expenses 8,610

_______ Balance c/d 47,418

205,660 205,660

Balance b/d 47,418

Busuma has also provided you with the following relevant balances:

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 30 November 2018 30 November 2019

K’000 K’000

Subscriptions prepaid 385 -

Rates prepaid 1,225 1,680

Subscriptions owing - 3,465

Electricity owing 224 308

Food inventory at restaurants 5,110 5,740

Sports grounds 91,000 91,000

Club house (cost K140,000) 133,000 126,000

Furniture and fittings (cost K42,000) 33,600 29,400

Sports equipment (Cost K57,400) 45,920 34,440

Restaurant payables 9,520 11,620

Additional information:

1. The Net realisable values of the Food inventory at the restaurant was K6,543,210.
2. Besides offering facilities for playing squash, the club provides numerous other functions
in a bid to raise funds for its continued operational needs.
3. Ground wages of K3,069,000 for the last three months for the year have not been
accounted for.
4. The club’s policy for depreciating non-current assets is as follows:

Club house 5% per annum straight line

Furniture and fittings 10% per annum straight line

Sports equipment 20% per annum straight line

Required:

(a) Calculate the amount of accumulated fund at 1 December 2018 for Lusaka squash
club. (4 marks)

(b) Prepare the Club income and expenditure account for the year ended 30 November
2019.(8 marks)

(c) Prepare the club’s statement of financial position as at 30 November 2019.

(8 marks)

[Total 20 Marks]
QUESTION SIX

10
The conceptual framework for financial reporting sets out the concepts that underlie the
preparation and presentation of financial statements for users. The objectives of financial
statements is to provide information about the financial position, performance and changes
in financial position of an entity that is useful to a wide range of users in making economic
decisions. The trial balance is an internal control check to confirm the arithmetic accuracy of
the general ledger; therefore a trial balance is not part of financial statements.

Required:

(a) Definethe five (5) elements of financial statements. (5marks)

(b) Identify five (5) benefits that financial statements provide to its users.
(5marks)
(c) Explain four (4) objectives of preparing a trial balance. (4 marks)

(d) Give three (3) advantages and three (3) disadvantages of a limited liability company.
(6 marks)
[Total: 20 Marks]

END OF PAPER

11
SUGGESTED SOLUTIONS

SECTION A

SOLUTION ONE

1.1. A
1.2. B
1.3. C
1.4. D
1.5. A
1.6. B
1.7. C
1.8. D
1.9. A
1.10. C

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SECTION B

SOLUTION TWO
a) Mukapasa Ltd
K’000
Revenue (29,920 – 4,000 + 1000) 26,920
Cost of sales (w4) (19,420)
Gross profit 7,500
Administrative expenses (W5) (1,160)
Selling and distribution (W6) (3,480)
Operating profit 2,860
Finance cost (150 +100) (250)
Profit before tax 2,610
Income tax (80)
Profit for the year 2,530
Other comprehensive income:
Gains on land revaluations 50
Total comprehensive income 2, 580

NON CURRENT ASSETS

K’000

Property, Plant and Equipment (w7) 9,870

Current assets
Inventory 1, 940
Receivables (8, 750 – 280-10+1,000) 9, 460
Prepaid administrative expenses 120
Cash 4, 620
_______

16, 140
_______

Total Assets 26, 010

_______

Equity and Liabilities

Equity
Ordinary share capital (11,000 + 1,000) 12, 000

13
General reserve (100 +200) 300
Share premium (1,000 + 500) 1,500
Revaluation reserve (350 + 50 rev. gain) 400
Retained earnings(1,900 b/d+ 2,530 profit –350
div -200) 3, 880
18, 080

Liabilities

Non-current liabilities
Preference shares 1,000
12% Loan notes
2, 500
Current liabilities
Trade payables 3, 180
Bank overdraft 900
Preference divid 100
Accrued selling and distrib expenses 170
Income tax 80

4, 430
Total equity and liabilities 26, 010
_______

Workings
All workings are in K’000
(W1) Depreciation
K
Buildings 4% x K3, 500 = 140
Plant and machinery 10 % x (K2, 200 –K300) 190
330
(W2) Loan note interest

K2, 500 @ 12% x 6/12= K150

(W3) To clear suspense account

Debit suspense by K1, 500

Credit Share capital by K1, 000
Credit Share premium by K 500

(W4) Opening inventory 2, 100

Purchases (20,450 + 150 – 1,340) 19, 260

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 Closing inventory (1, 940)
______
19,420

W5 administrative expenses
Per trial balance (2,640 – 120) 2,520
depreciation 330
discount received(1,690)
total 1,160

W6) selling and distribution expenses

Per trial balance 2,920 +170 3,090
Carriage out 100
Irrecoverable debts 280
Allowance for receivables 10
3,480

W7property, plant and equipment

Cost/valuations Accumulated Carrying
depreciation amount
K K K
Non-
current
assets
Land (4, 5, 000 - 5, 000
950 + 50)
Buildings 3, 500 *(340) 3,160
(Acc. Dep.
=200 +
140 w1)*
Plant and 2, 200 **(490) 1,710
mach.
(Acc. Dep.
300+190
w1)**
_______ _______ _______

11, 200 830 9, 870

TOTAL PPE = 9,870

15
SOLUTION THREE

(a)

1. Calculation of Profit to be shared by partners:

Net Profit per draft accounts 325,000

Interest received 15,000
Bank Charges (1,680)
Adjusted net Profit 338,320

2. Splitting profit between the first nine months and the last three months:

First 9 months 338,320 x 9/12 253,740

Second 3 months 338,3320 x 3/12 84,580

(b) Sharing profits of the first 9 nine months(Profit or Loss Appropriation

Account):
K K K

Profit for nine months 253,740

ADD: Interest on Drawings Musonda
50,000 x 3%x 10/12 1,250 Mwaba
50,000 x 3% x 6/12 750
2,000
255,740

LESS: Interest on Capital Musonda

120,000 x 8%x 9/12 7,200 Mwaba
120,000 x 8% x 9/12 7,200
(14,400)
LESS: Salaries (None)

Residue profit 241,340

LESS: Share of residue Profit

Musonda 241,340 x 1/2 120,670
Mwaba 241,340 x 1/2 120,670

(241,340)

Sharing profits of the last 3 months (Profit or Loss Appropriation Account):

K K K

Profit for 3 months 84,580

ADD: Interest on Drawings Musonda
20,000 x 5%x 2/12 167 Mwaba 30,000 x

16
 5%x 2/12 250 Total
417
84,997

LESS: Interest on Capital Musonda

150,000 x 10%x 3/12 3,750 Mwaba 120,000 x
10%x 3/12 3,000
(6,750) LESS: Salaries

Mwaba 60,000 x 3/12 15,000

(15,000)

Residue profit 63,247

LESS: Share of Profit

Musonda 63,247 x 3/5 37,948
Mwaba 63,247 x 2/5 25,299
(63,247)

(c) Current Accounts (in columnar form):

Musonda Mwaba
Credit side: Accrued amounts K K K

Opening balances 18,250 15,830

Salaries - 15,000
Interest on Capital 10,950 10,200
Share of Profits 158,617 145,969
Sub-totals 187,817 186,999

Musonda Mwaba
Debit side: Accrued utilised K K K

Drawings 70,000 80,000

Interest on Drawings 1,417 1,000
Sub-total 71,417 81,000

Closing balances 116,400 105,999

Workings:

Interest on capital: Musonda

7,200 + 3,750 = 10,950 Mwaba 7,200 + 3,000 =
10,200

Share of Profits: Musonda

120,670 + 37,948 = 158,618 Mwaba 120,670 + 25,299
= 145,969

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Interest on Drawings: Musonda
1,250 + 167 = 1,417 Mwaba 750 + 250 =
1,000

Drawings in the year : Musonda

50,000 + 20,000 = 70,000 Mwaba 50,000 + 30,000
= 80,000

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SOLUTION FOUR
a) i) Receivables control account
Uncorrected balance b/d 125,500 (1/2) Discount omitted 11,527 (1/2)
Sales omitted 85,629 (1/2) Contra set off omitted 42,352 (1/2)
Dishonouredcheque 34,765 (1/2) Irrecoverable debts omitted 54,976 (1/2)
Returns inwards omitted 21,392 (1/2)
Balance c/d 115,647 (1/2)
245,894 245,894

ii) Statement of adjustments to list of personal account balances

K K
Original total list of balances 128,915 (1/2)

Add:
Debit balance omitted 31,728 (1/2)
Debit balance understated 20,450 (1/2)
52,178 (1/2)
181,093
Less:
Transposition error—understatement of cash
received 1,845 (1/2)
Cash debited instead of credited (2 x 25,530) 51,060 (1/2)
Discounts received wronged debited 5,321 (1/2)
Understatement of cash received 7,220 (1/2)
65,446
115,647
iii) The purposes of control accounts are:
- Accuracy of ledger accounts-control accounts help to check the accuracy of
ledger accounts that they control.
- Segregation of duties-they enable segregation of duties by allocating the job
of maintaining the sales ledger and purchases ledger to one person and the
job of maintaining the control account to another person, thereby reducing
the risks of fraud.
- Speedy preparation of the trial balance-control accounts enables the trial
balance to be prepared more speedily, as the receivables and payables total
can be extracted from the control accounts rather than waiting for the
individual accounts to be balanced and totalled.
- Speedy identification of errors-control accounts enables speedy identification
of reasons as to why the trial balances fail to balance so that investigations
can be carried out.

b) i)
Adjusted cash book
K K
Balance b/d 14,357 (1/2) Insurance 2,413 (1/2)
Bank charges 563 (1/2)

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 Balance c/d 11,381 (1/2)
14,357 14,357

ii) Bank reconciliation statement

K
Balance as per bank statement 5,113 (1/2)
Add: lodgementcheques 7,249 (1/2)
12,362 (1/2)
Less: unpresented cheques (981) (1/2)
Balance as per cash book 11,381

iii) Purposes of bank reconciliation

- To correct any errors at an early stage.
- To prevent or detect fraud.
- To ensure the correct balance of cash at bank is reflected in the
statement of financial position.

20
SOLUTION FIVE

Accumulated fund at 1 December 2018

Assets K’000 K’000

Rates prepaid 1,225

Food inventory 5,110

Sports grounds 91,000

Club house 133,000

Furniture and fittings 33,600

Sports equipment 45,920

Bank balance b/f 14,420

Liabilities

Subscriptions prepaid 385

Electricity owing 224

Restaurant payables 9,520

Accumulated fund (bal. fig.) 314,146

324,275 324,275

b) Lusaka squash Club’s income and expenditure account for the year ended30
November 2019

K’000 K’000
Incomes
Subscriptions (W1) 45,990
Donations 14,000
Receipts from social events 31,220
Profit from restaurant trading (w5) 14,245

Total incomes 105,455

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 Expenditure

Rates (W2) 7,021

Electricity (W3) 1,274
Ground wages (16, 870 + 3069) 19,939
Printing and stationery 12,285
Social events expenditure 13,916
Insurance 18,340
Depreciation:
Club house (5% x 140,000) 7,000
Furn.& fit.(10% x 42,000) 4,200
Sports equipment (20% x 57,400) 11,480

Total expenditure (95,455)

Surplus 10,000

(c) Lusaka Squash Club’s Statement of financial position as at 30 November 2019

Non-current assets Cost Accumulated carrying

Depreciation value

K’000 K’000 K’000

Sports grounds 91,000 - 91,000

Club House 140,000 14,000 126,000

Furniture and fittings 42,000 12,600 29,400

Sports equipment 57,400 22,960 34,440

330,400 49,560 280,840

Current assets

Inventory 5,740

Bank 47,418

Rates prepaid 1,680

Subscriptions owing 3,465 58,303

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 339,143

Accumulated fund and liabilities:

Accumulated fund 314,146

Add surplus 10,000

324,146

Current liabilities

Trade payables 11,620

Ground wages 3069

Electricity owing 308

14,997

Total accumulated fund and liabilities 339,143

Workings

1.Subscription account
K’000 K’000
Prepaid b/f 385
Bank 42,140
I/E (bal. fig.) 45,990 owing c/d 3,465
45,990 45,990
Owing b/d 3,465

2.Rates account
K’000 K’000
Prepaid b/f 1,225 I/E (bal. fig.) 7,021
Bank 7,476 prepaid c/d 1,680
8,701 8,701

3.Electricity account
K’000 K’000

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 Bank 1,190 Owing b/f 224
I/E (bal. fig.) 1,274
Owing c/d 308
1,498 1,498

4.Payables control account

K’000 K’000
Bank 49,455 balance b/f 9,520
Balance c/f 11,620 purchases (bal fig) 51,555
61,075 61,075

5. Restaurant statement of profit or loss for the year ended 30 November

2019
K’000 K’000

Revenue 103,880

Less cost of sales:

Opening inventory 5,110

Purchases (W4) 51,555

Less closing inventory (5,740)

(50,925)
Gross profit 52,955

LESS EXPENSES

Restaurant expenses 8,610

Restaurant wages 30,100

(38,710)

Net profit 14,245

Note: For theory questions, exact wordings NOT required.

24
SOLUTION SIX
(a) The elements of financial statements

Based on 2018 Conceptual framework .

Asset
An asset is a present economic resource controlled by an entity as a result of past events. .

Liability
A liability is a present obligation of the entity to transfer an economic resource as a result of
past events. Examples of liabilities include payables, finance lease obligations, accruals etc.

Equity interest is the residual interest in the assets of the entity after deducting all its
liabilities.
Income is increases in assets or, decreases in liabilities that result in increases in equity, other
than those relating to contributions from holders of equity claims.
Expensesis decreases in assets or, increases in liabilities, that result in decreases in equity,
other than those relating to distributions to holders of equity claims.
Or
Based on old definitions
An asset is a resource controlled by the enterprise as a result of past events and from which
future economic benefits are expected to flow to the enterprise.
A Liability is a present obligation of the enterprise arising from past events, the settlement of
which is expected to result in an outflow from the enterprise of resources embodying
economic benefits.
Once assets and liabilities are defined, the remaining three definitions are expressed in
relation to assets and liabilities. This focus on the balance sheet is referred to as a balance
sheet approach to the financial statements.
Equity interest is the residual amount found by deducting all liabilities of the entity from all
of the entity’s assets.
Income is increases in economic benefits during the accounting period in the form of inflows
or enhancements of assets or decreases in liabilities that result in increases in equity, other
than those relating to contributions from equity participants.
Expenses are decreases in economic benefits during the accounting period in the form of
outflows or depletions of assets or incurrences of liabilities that result in decreases in equity,
other than those relating to distributions to equity participants.
(b) Possible benefits of financial statements to users of financial statements include
the provision of information;

• To allow decisions to be made for the good of the company on the value of
shareholders investments and the income they derive from their shareholding.

25
 • To allow employees to look for alternative work in a different company, or look
for pay increases and promotions based on the financial health of the company.
• To allow trade payables and banks to identify if the company can meets it
financial obligations and commitments to them.
• To allow accountants audit or prepare tax returns on behalf of the company.
• To help government plan effectively.

(c) Objectives of preparing a trial balance

i. To check the arithmetical accuracy

The trial balance may confirm the correctness of postings in ledger accounts as
well as the accuracy of the ledger accounts’ balances among others.
ii. To help in the preparation of financial statements

The trial balance provides ledger account balances for various items that go in
the preparation of statement of profit or loss and statement of financial
position.
iii. Helping in locating errors

The trial balance must always balance. If it does not balance, that may be an
indication of errors in posting transactions to respective ledger accounts and/or
in extracting balances from ledger accounts among others. However, it is
worth noting that not all errors affect the agreement of the trial balance.
iv. Helps in comparison

It helps management to make informed decisions by comparing ledger account

balances from one period to the other.
v. Helps in making adjustments

The trial balance may help the preparer of financial statements to identify
items that require adjusting.
(d) Advantages of a limited liability company
(i) Limited liability of owners – once they contribute capital in full, shareholders are not
personally liable for debts of company.
(ii) Easier to raise finance because of limited liability and generally can issue shares to
many shareholders.
(iii) Separate legal entity – company continues to exist regardless of the identity of its
owners.

(iv) Tax advantage – company taxed as separate entity from its owners.

(v) Transferability of shares – relatively easy to transfer from one owner to another.
Disadvantages of a limited liability company

26
(i) Have to publish annual financial statements, therefore, anyone including competitors can
have access to performance of company, good or bad.

(ii) Have to comply with rigorous legal and accounting requirements.

(iii) Financial statements of larger companies have to be audited; time consuming and
expensive.

(iv) Shareissues are regulated by law.

END OF SUGGESTED SOLUTIONS

27
 CA ZAMBIA PROGRAMME EXAMINATIONS
___________________
KNOWLEDGE LEVEL
___________________
CA 1.2: BUSINESS STATISTICS
___________________
WEDNESDAY 16 DECEMBER 2020
___________________
TOTAL MARKS – 100; TIME ALLOWED: THREE (3) HOURS
__________________

INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination paper
carefully so that you understand what to do in each question.

2. This paper is divided into TWO (2) sections:

Section A: Ten (10) compulsory multiple choice questions.
Section B: One (1) compulsory scenario question.
Plus Four (4) scenario questions. Attempt any Three (3) questions.

3. Enter your student number and your National Registration Card number on the front
of the answer booklet. Your name must NOT appear anywhere on your answer
booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. Cell Phones are NOT allowed in the Examination Room.

6. The marks shown against the requirement(s) for each question should be taken as
an indication of the expected length and depth of the answer.

7. All workings must be done in the answer booklet.

8. Present legible and tidy work.

9. Graph paper (if required) is provided at the end of the answer booklet.

10. A mathematical/statistical formulae book MUST be provided. Request for one if

not given by the Invigilators.

DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED BY THE
INVIGILATOR.

28
SECTION A – (COMPULSORY)

Attempt all the ten (10) multiple choice questions.

QUESTION ONE

Each of the following questions has only ONE (1) correct answer. Write the LETTER of the
correct answer you have chosen in your answer booklet. Marks allocated are indicated
against each question.

1.1 A mining company buys 100 machine parts, then it is discovered that 80 of the items
are perfect and 20 are defective. There are three (3) types of defect: A, B, C. of the
20 defective items, 5 possess defect A alone, 4 have defect B alone, 2 have defect C
alone, 4 have defect A and B (but not C), 3 have defect A and C (but not B) and 2
have all three defects. One (1) item is randomly selected from the items bought.
Two (2) different items are drawn at random. The probability that they both have all
three (3) defects is:
A. 1/50
B. 1/4950
C. 1/2500
D. 1/2450
(2 marks)

1.2 Which of the following measures is usually greater than half of the observations in
the data set?
A. Mean
B. Median
C. Mode
D. Standard deviation
(2 marks)
1.3 Which of the following measures of variability is NOT dependent on the exact value
of every measurement?
A. Mean deviation
B. Variance
C. Range
D. Standard deviation
(2 marks)

29
1.4 If the probability of success on a single trial is 0.3 and two (2) trials are performed,
what is the probability of at least one success?
A. 0.91
B. 0.41
C. 0.51
D. 0.49 (2 marks)

1.5 The following numbers are the hours spent studying by six (6)ZiCA students in a
randomly selected week: 52, 20, 24, 31, 35, 42.
The standard deviation of this data is:
A. 10.8
B. 11.8
C. 12.8
D. 13.8
(2 marks)
1.6 The first step in time series analysis is to:
A. Calculate the moving average
B. Perform preliminary regression calculations
C. Identify relevant correlated variables
D. Plot the data on the graph
(2 marks)
1.7 Mr.Gomwi is a stone products salesman. Let 𝑥be the number of contacts he makes
on a particular day. The following table gives the probability distribution of 𝑥:

X 1 2 3 4

P(X=x) 0.12 0.25 0.56 0.07

What is the probability that Mr Gomwi makes at most three times on a paticular day?
A. 0.37
B. 0.63
C. 0.07
D. 0.93 (2 marks)

30
1.8 For two (2) events A and B, which of the following is a true probability statement?
A. P(A or B) = P(A) + P(B) if A and B are independent
B. P(A or B) = P(A) + P(B) if A and B are mutually exclusive
C. P(A and B) = P(A) x P(B) if A and B are mutually exclusive
D. P(A or B) = P(A) x P(B) if A and B are independent
(2 marks)
1.9 A bank receives twenty seven (27) applicants for the position of Manager. Three (3)
of the applicants have doctorate degrees and the rest have master’s degrees. A
sample of five (5) applicants is selected at random for scrutiny, what is the
probability that the sample contains one (1) applicant with a doctorate degree?

A. 0.108
B. 0.270
C. 0.369
D. 0.500
(2 marks)
1.10 The ages (in years) of nine employees of an insurance company are distributed as
follows:47 28 39 51 33 37 59 24 33.
The interquartile range for the datais:

A. 19
B. 18.5
C. 18
D. 17 (2marks)
[Total: 20 Marks]

31
SECTION B

Question TWO (2) in this Section is compulsory and must be attempted.

Then attempt any THREE (3) questions out of the remaining four.

QUESTION TWO - (COMPULSORY)

(a) The prices on a particular day, of 53 stocks, on the Lusaka Stock Exchange are
summarized in the table below:

Stock Price (K) Number of Stocks

[75 – 95] 6

[95 – 100] 10

[100 – 105] 12

[105 – 110] 13

[110 – 120] 7

[120 – 135] 5

Required:
Calculate:
(i) The average stock price from the data given above. (2 marks)
(ii) The median price. (3 marks)
(iii) The Modal price. (3 marks)
(iv) Calculate the standard deviation. (4 marks)

(b) A contractor has submitted bids on three state jobs: an office building, a theater, and
a parking garage. State rules do not allow a contractor to be offered more than one
(1) of these jobs. If this contractor is awarded any of these jobs, the profits earned
from these contracts are K10 million from the office building, K5 million from the
theater, and K2 million from the parking garage. His profit is zero if he gets no
contract. The contractor estimates that the probabilities of getting the office building
contract, the theater contract, the parking garage contract, or nothing are 0.15,
0.30, 0.45, and 0.10, respectively. Let 𝑥be the random variable that represents the
contractor’s profits in millions of Kwacha.
(i) Write the probability distribution of 𝑥. (2 marks)

32
 (ii) Compute the mean and standard deviation of 𝑥. Give a brief interpretation of the
values of the mean and standard deviation. (6 marks)
[Total: 20 Marks]

QUESTION THREE

(a) The relationship between monthly orders and years of experience of ten orders and
years of experience of ten sales representatives is shown in the following table:

Sales 1 2 3 4 5 6 7 8 9 10
representative
Experience(years) 13 9 15 18 10 11 13 5 17 4

Orders (K000) 65 30 58 73 61 46 56 33 76 21

Required:

Calculate:
(i) The product – moment coefficient of correlation (6 marks)

(ii) The coefficient of rank correlation (6 marks)

(b) 85% of the girls and 70% of the boys at a school are able to play a musical
instrument. If one (1) girl and one (1) boy are chosen randomly from the school.

Required:

Calculate the probabilities that:

(i) Both are able to play a musical instrument. (1 mark)

(ii) Only one (1) of them is able to play a musical instrument. (3 marks)

(iii) Given that the ratio of the number of girls to the number of boys in the
school is 3: 5, calculate the probability that, a randomly chosen pupil from
the school is able to play a musical instrument. (4 marks)
[Total 20 Marks]

QUESTION FOUR

(a) The weights of bags of red gravel soil may be modelled by the normal distribution
with mean 26.9 kg and standard deviation 0.6 kg.

Required:

Determine:

(i) Probability that a randomly selected bag of red gravel will weigh by less than
26 kg.(3marks)

33
 (ii) Probability that a randomly selected bag of red gravel will weigh between
26.5 kg and 27.5 k (3 marks)

(iii) To two decimal places, the weight exceed by 75% of the bags. (4 marks)

(b) The value of sales (in K000) of golf equipment by a large department store is shown
for each period of three (3) months are as follows:

Quarter 2010 2011 2012 2013

1 9 21 41

2 31 51 63

3 61 81 93

4 25 21 41

Required:

Find the four (4) yearmoving average trend values.

(10 marks)
[Total 20 Marks]

QUESTION FIVE

(a) Define the followingprobability terms:

(i) Experiment (1 mark)

(ii) Outcome (1 mark)

(iii) Sample space (1 mark)

(iv) Event (1 mark)

(b) In an organisation out of 200 employees, 40 are having their monthly salary more
than K15,000 and 120 of them are regular takers of coffee. Out of those 40, who are
having their monthly salary more than K15,000, 20 are regular takers of coffee. If a
particular employee is selected, what is the probability that he is having a monthly
salary of more than K15,000, if he is a regular taker of coffee? (4 marks)

(c) Hundreds of Zambians get up each morning and go to work in their offices at Home.
The growing use of personal computers is suggested to be one of the reasons more
people can operate at–home businesses. The following is a sample of ages for
individuals working at home.

22 58 24 50 29 52 57 31 30 41
44 40 46 29 31 37 32 44 49 29

34
 Required:

Compute:
(i) Mean (2 marks)

(ii) Mode (1 mark)

(iii) First quartile (2 marks)

(iv) Third quartile (2 marks)

(v) Quartile deviation (2 marks)

(vi) 40th percentile. (3 marks)

[Total: 20 Marks]

QUESTION SIX

(a) The time (in seconds) that a random sample of employees took to complete a task is
as follows:

23 35 14 37 28 45 12 40 27 13 26 25
37 20 29 49 40 13 27 16 40 20 13 66

Required:

(i) Develop a stem –and–leaf display for the data (3 marks)

(ii) Find the median (2 marks)
(iii) Find the range (1 mark)
(iv) Find the standard deviation (2 marks)
(v) Describe the shape of the distribution (2 marks)

(b) Employees at XYZ Electronics Associates are on a flextime system. They can begin
their working day at 7:00, 7:30, 8:00, 8:30 or 9:00 hours. The following data
represent a sample of the starting times selected by the employees.

7:00 8:30 9:00 8:00 7:30 7:30 8:30 8:30 7:30 7:00

8:30 8:30 8:00 8:00 7:30 8:30 7:00 9:00 8:30 8:00

Required:

Construct:

(i) A frequency distribution (2 marks)

(ii) A percent frequency distribution (2 marks)
(iii) A simple bar graph (2 marks)

35
(iv) A pie chart (4marks )
[Total: 20 Marks]

END OF PAPER

36
SUGGESTED SOLUTIONS

SOLUTION ONE

1.1 B

2 1 1
𝑃(𝑏𝑜𝑡ℎ ℎ𝑎𝑣𝑒 𝑎𝑙𝑙 𝑡ℎ𝑟𝑒𝑒 𝑑𝑒𝑓𝑒𝑐𝑡𝑠) = × =
100 99 4950

1.2 B

1.3 A

1.4 C

Let X denote the number of trials.

Therefore, we have that;

n = 2 , P(success) = p = 0.3 ( q = 1 − p = 0.7) , So that X~B(2, 0.3).

n n
And we know that: P(X = x) = ( ) px qn−x = ( ) px (1 − p)n−x , x = 0,1,2, … , n.
x x

2 2
P(X = 0) = ( ) (0.3)1 (1 − 0.3)2−1 = 0.42P(X = 0) = ( ) (0.3)2 (1 − 0.3)2−2 = 0.09
1 2
P(X ≥ 1) = 𝑃(1) + 𝑃(2) = 0.42 + 0.09 = 0.51

1.5 B

(52− 34)2 +(20− 34)2 +(24− 34)2 +(31− 34)2 +(35− 34)2 +(42− 34)2
S=√ 6−1
= 11.8

1.6 D

1.7 D 𝑃(𝑋 ≤ 3) = 𝑃(1) + 𝑃(2) + 𝑃(3) = 0.12 + 0.25 + 0.56 = 𝟎. 𝟗𝟑

1.8 B

1.9 C
27 26 25 24 3
5× × × × × = 0.369
30 29 28 27 26
1.10 B
𝑛+1
Lower Quartile = ( 4
)th value

9+1
=( 4
)th value

= 2.5th value

(Average of 2nd and 3rd values)

37
 28 + 33
=
2
= 30.5
3
Upper Quartile = 4 (𝑛 + 1)th value
3
= 4 (9 + 1)th value

= 7.5th value

(Average of 7th and 8th values)

47 + 51
= = 49
2
Inter-quartile range = 𝑈𝑝𝑝𝑒𝑟 𝑄𝑢𝑎𝑟𝑡𝑖𝑙𝑒 − 𝐿𝑜𝑤𝑒𝑟 𝑄𝑢𝑎𝑟𝑡𝑖𝑙𝑒

= 49 − 30.5

= 18.5.

38
SOLUTION TWO

Solution 1 (a)

Stock Mid- Number of Stocks Cumulative (f)(x) 𝒙)𝟐

𝒇(𝒙 − ̅
Prices point
F
X

[75 – 95[ 85 6 6 510 34808.17

[95 – 100[ 97.5 10 16 974 78617.78

[100 – 105[ 102.5 12 28 1230 105281.34

[105 – 110[ 107.5 13 41 1397.5 126556.45

[110 – 120[ 115 7 48 805 78899.53

[120 – 135] 5 53 637.5 70408.89

127.5

TOTAL 53 5554 3940581.16

1 1
i. The mean: ∑ 𝑛𝑓 = (5554)=104.79
𝑛 53

[1 mark for working and 1 mark correct answer]

ii. To find the median, first locate the median class which is the class that fall on the
mid of the values of cumulative frequency, then find the lower limit of the median
class and the class width, and calculate using the formula
𝑤 𝑛
𝑚𝑒𝑑𝑖𝑎𝑛 = 𝑙𝑘 + 𝑛 (2 − 𝑐𝑓𝑘−1 ). 𝑘 = 3
𝑘

5 53
100 + (
28 2
− 16) = 101.88

[1 mark for working and 1 mark correct answer]

iii. Modal price

d1
Mo = Lk + ω ( ) , k=4
d1 + d2

1
Mo = 105 + 5 ( ) = 105.71
1+6

39
Note:
d1 = nk − nk−1 = 13 − 12 = 1

d2 = nk − nk+1 = 13 − 7 = 6

1 marks for working 1 mark correct answer

iv. Standard deviation

𝒙)𝟐
∑ 𝒇(𝒙 − ̅ 3940581.16
𝒔=√ =√ = 𝟐𝟕𝟓. 𝟐𝟖
𝒇−𝟏 𝟓𝟑 − 𝟏

3 marks for working 1 mark correct answer

(b) probability distribution
i.
X 0 2 5 10

P(X=x) 0.1 0.45 0.3 0.15

ii. 𝐸(𝑋) = ∑ 𝑋 ∙ 𝑃(𝑋 = 𝑥) = (0 × 0.1) + (2 × 0.45) + (5 × 0.3) + (10 × 0.15) =

𝐾3.9 𝑀𝑖𝑙𝑙𝑖𝑜𝑛

𝐸(𝑋 2 ) = ∑ 𝑋 ∙ 𝑃(𝑋 = 𝑥) = ((0)2 × 0.1) + ((2)2 × 0.45) + (52 × 0.3) + (102 × 0.15) = 24.3

Therefore, = 𝐸(𝑋 2 ) − [𝐸(𝑋)]2 = 24.3 − 3.92 = 9.09 .

𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 = √9.09 = 𝐾3.015 𝑀𝑖𝑙𝑙𝑖𝑜𝑛

40
SOLUTION THREE

(a)

(i) ∑ 𝑥 = 115, ∑ 𝑦 = 519 , ∑ 𝑥𝑦 = 6654, ∑ 𝑥 2 = 1519, ∑ 𝑦 2 = 30097

𝑛 ∑ 𝑥𝑦 − ∑ 𝑥 ∑ 𝑦
𝑟=
√(𝑛 ∑ 𝑥 2 − (∑ 𝑥)2 )(𝑛 ∑ 𝑦 2 − (∑ 𝑦)2 )
10(6684) − (115)(519) 7155
𝑟= =
√[10(1519) − (115)2 ][10(30097) − (519)2 ] 7881.096688

𝑟 = 0.907868572 ≈ 0.91

(ii)

𝑥𝑟 𝑦𝑟 𝑑 𝑑2

4.5 3 1.5 2.25

8 9 -1 1

3 5 -2 4

1 2 -1 1

7 4 3 9

6 7 -1 1

4.5 6 -1.5 2.25

9 8 1 1

2 1 1 1

10 10 0 0

Total ∑𝑑 =0 ∑ 𝑑2 = 22.5

6 ∑ 𝑑2 6(22.5)
𝑟𝑠 = 1 − 2
=1− = 0.863636363 ≈ 0.86
𝑛(𝑛 − 1) 10(99)

(b)

(i) 𝑃(𝑏𝑜𝑡ℎ) = (0.85)(0.70) = 0.595

(ii) 𝑃(𝑜𝑛𝑒 𝑜𝑓 𝑡ℎ𝑒𝑚) = (0.85)(0.30) + (0.15)(0.70)

= 0.255 + 0.105 = 0.36

41
 3 5
(iii) 𝑃(𝑟𝑎𝑛𝑑𝑜𝑚𝑙𝑦 𝑐ℎ𝑜𝑠𝑒𝑛 𝑝𝑢𝑝𝑖𝑙) = 8 × (0.85) + 8 × (0.70)
2.55+3.5 6.05
= 8
= 8
= 0.75625

42
SOLUTION FOUR

(a) 𝜇 = 26.9 𝑘𝑔 , 𝜎 = 0.6 𝑘𝑔

26−26.9
(i) 𝑃(𝑋 < 26) = 𝑃 (𝑍 < ) = 𝑃(𝑍 < −1.5)
0.6
= 0.5000 − 0.4332 = 0.0668

26.5−26.9 27.5−26.9
(ii) 𝑃(26.5 < 𝑋 < 27.5) = 𝑃 ( <𝑍< )
0.6 0.6
𝑃(−0.67 < 𝑍 < 1.00) = 0.2485 + 0.3413 = 0.5899

(iii) The 𝑍 value corresponding to 75% is -0.67

𝑋−𝜇 𝑋 − 26.9
𝑍= = −0.67 =
𝜎 0.6
−0.67(0.6) = 𝑋 − 26.9
𝑋 = 26.9 − 0.402 = 26.498
Therefore 𝑋 = 26.50 ( to two decimal places)

(b) The calculations are given in the table below

year Quarter Sales Four Centered

quarterly values =
moving total trend

2010 1

43
 2

4 25

2011 5 9

126

6 31 15.75

122

7 61 15.25

134

8 21 36

154

2012 9 21 41

174

10 51 46

194

11 81 51

214

12 41 55

226

2013 13 41 58

238

14 63

15 93

16

44
SOLUTION FIVE

(a)
i. Experiment refers to the process of obtaining observed result of some
phenomenon.

ii. An outcome is a possible result of an experiment.

iii. A sample space is a set of all possible outcomes of an experiment.

iv. An event is a subset of a sample space.

(b) Let   be an event that an employee’s monthly salary is more than K15,000.
  be an event that the employee is a regular taker of coffee
Then,
20
       0.1
200
120
    0.6
200
      0.1
We want    /   . Therefore,    /      0.167
   0.6

(c)
i. The mean is given by

x
 x  775  38.75
n 20
ii. The mode is 29

iii. Rearranging the observations in numerical order we have:

22 24 29 29 29 30 31 31 32 37
40 41 44 44 46 49 50 52 57 58
n  20
1
Position of first quartile Q1   n  1 value
th

4
1
  20  1 value
th

4
 5.25th value

 First quartile is on the 5th position i.e. Q1  29 .

3
iv. Position of third quartile Q3   n  1 value
th

45
 3
  20  1 value
th

4
 15.75th value

 Third quartile is on the 16th position i.e. Q3  49 .

Q3  Q1 49  29 20
v. Quartile Deviation     10
2 2 2
The position of the 40th percentile is given by
40
 40   n  1 value
th

100
40
  20  1 value
th

100
 8.4th value
 40  31

46
SOLUTION SIX

(a)
i. Arranging the observations in numerical order we have
12 13 13 14 16 20 20 23 25 26 27 27
28 29 35 37 37 40 40 40 45 49 66

The stem –and –leaf is as shown below

stem Leaf

1 2 3 3 4 6
2 0 0 3 5 6 7 7 8 9
3 5 7 7
4 0 0 0 5 9
5 6

ii. Position of the median is given by

1
  n  1 value
th

2
1
  24  1 value
th

2
 12.5th value
27  27
 Median   27
2

iii. Range = Highest value – Lowest value

 66 12  54

1
iv. Lower quartile  Q1  is the  n  1 value  6.25th value i.e. Q1  16
th

4
3
Upper quartile  Q3  is the  n  1 value  18.75th value i.e. Q3  40
th

4
We know that median  Q2   27
Q3  Q2  40  27  13
Q2  Q1  27  16  11

47
  Q3  Q2  Q2  Q1

Hence the distribution is said to have positive skew or skewed right.

i.
ii. A frequency distribution is shown below:

Time Tally Frequency

7:00 /// 3
7:30 //// 4
8:00 /// 4
8:30 //// // 7
9:00 // 2

TOTAL 20

iii.
iv. A percent frequency distribution is as shown below:

Time Relative Frequency Percent Frequency

7:00 0.15 15
7:30 0.20 20
8:00 0.20 20
8:30 0.35 35
9:00 0.10 10

TOTAL 1.00 100

v.
vi. A bar graph is as shown below:

48
 BAR GRAPH
8

0
07:00 07:30 08:00 08:30 09:00

Frequency Column1 Column3

vii. The size of the angle at the Centre for each flextime will be as follows:
3
7 : 00   360  54
20
4
7 : 30   360  72
20
4
8 : 00   360  72
20
7
8 : 30   360  126
20
2
9 : 00   360  36
20

Pie chart of Flextime

49
 Time

126 54 36 72 72

viii. Most of the employees prefer 8:30 as the starting time.

END OF SOLUTIONS

50
 CA ZAMBIA PROGRAMME EXAMINATIONS
___________________

KNOWLEDGE LEVEL
_________________
CA 1.3: BUSINESS ECONOMICS
___________________
TUESDAY 15 DECEMBER 2020
__________________
TOTAL MARKS – 100: TIME ALLOWED: THREE (3) HOURS
__________________

INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination paper
carefully so that you understand what to do in each question. You will be told when
to start writing.

2. This paper is divided into TWO (2) sections:

Section A: Ten (10) compulsory multiple choice questions.
Section B: One (1) compulsory scenario question.
Plus Four (4) scenario questions. Attempt any Three (3) questions.

3. Enter your student number and your National Registration Card number on the front
of the answer booklet. Your name must NOT appear anywhere on your answer
booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. Cell Phones are NOT allowed in the Examination Room.

6. The marks shown against the requirement(s) for each question should be taken as
an indication of the expected length and depth of the answer.

7. All workings must be done in the answer booklet.

8. Present legible and tidy work.

9. Graph paper (if required) is provided at the end of the answer booklet.

DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED BY THE
INVIGILATOR.

51
SECTION A – (COMPULSORY)

Attempt all Ten (10) multiple choice questions.

QUESTION ONE

Each of the following questions has only one (1) correct answer. Write the letter of the
correct answer you have chosen in your answer booklet. Marks allocated are indicated
against each question.

1.1 The demand curve for a normal good will shift to the left when there is …………………

A. A rise in household income

B. An increase in the product’s desirability from the point of view of fashion
C. A fall in the price of a substitute good
D. A fall in the price of a complementary good
(2 marks)

1.2 Which of the following will always rise when a manufacturing company increases its
output?

(i) Fixed costs

(ii) Marginal costs
(iii) Average variable costs
(iv) Total cost

A. (i) and (ii) only

B. (ii) and (iii) only
C. (iii) and (iv) only
D. (iv) only
(2marks)

1.3 Which of the following solutions to market failure is least likely to distort economic
decision of businesses?

A. Establishing property rights

B. Imposing a price floor
C. Imposing a quota
D. Subsidy to encourage production
(2 marks)

1.4 In a perfectly competitive market structure, all producers charge the same price
because………………………..

A. They are all profit maximizers

B. They incur same costs of production
C. The product is homogenous
D. None of the above
(2 marks)

52
1.5 What function is money serving when you deposit money in your savings bank
account?

A. A unit of account
B. A store of value
C. A means for deferred payments
D. A medium of exchange
(2 marks)

1.6 The unemployment rate in a named country is 18%. The country’s labour force is 7
million. Calculate the number of the employed people in that country.

A. 5.74 million
B. 1.26 million
C. 8.26 million
D. 7 million
(2 marks)

1.7 Which one of the following best describes demand-pull inflation?

A. Inflation caused by increases in the costs of production

B. Inflation caused by too much money chasing too few goods
C. Inflation caused in decrease in the costs of production
D. Inflation caused by imported goods
(2 marks)

1.8 Which of the following is not a method that a company can use to finance long-term
investments?

A. Bank loan
B. Retained earnings
C. Issue of new shares
D. Bank overdraft
(2 marks)

1.9 The purpose of a cartel is to:

A. Reduce consumer uncertainty

B. Rationalize production
C. Create a monopoly type operations
D. Standardize product quality
(2 marks)

53
1.10 Which one (1) of the following are characteristics of perfect competition?

(i) Large number of sellers of a product

(ii) Differentiated product
(iii) Normal profit in the long run
(iv) Freedom of entry into and exit from the industry

A. (i), (ii) and (iii) only

B. (i), (iii) and (iv) only
C. (ii), (iii) and (iv) only
D. All of the above
(2 marks)
[Total: 20 Marks]

54
SECTION B
Question TWO (2) in this section is compulsory and must be attempted.
Then attempt any THREE (3) from the remaining four (4).
QUESTION TWO - (COMPULSORY QUESTION)
The market forces of demand and supply interact in the market to determine the price of a
good or service, without the intervention of the government. Economists favour this kind of
arrangement as prices adjust automatically to ensure that equilibrium is attained. For
example, when the price is above equilibrium price, there will be a downward pressure on
the price until equilibrium is established and vice versa. However, the government may
intervene in the market by way of price controls which may take the form of price ceiling
and price floor for a good or service. Further, the government can restrict demand by
rationing a good. A tax on a good shifts the supply curve to the left causing an increase in
equilibrium price and decrease equilibrium quantity. A subsidy to the producer will do the
opposite and lower the equilibrium price and raise the equilibrium quantity. When this
happens, disequilibrium is introduced.

In line with this scenario, answer the following questions:

Required:

(a) Define ‘price ceiling’ giving one (1) example from the Zambian economy (2 marks)

(b) Define ‘price floor’ and giving one (1) example from the Zambian economy (2
marks)

(c) The market demand and supply equations for a good are:
QD = 300 – 3P
QS = 100 + 5P

Where Q is the quantity and P is the price:

(i) Calculate the equilibrium price and quantity for this good. (4 marks)

(ii) Suppose that an increase in the consumer income resulted in the new
demand equation QD = 420 – 3P. What is the new equilibrium price and
quantity for this good. (4 marks)

(iii) Suppose the government enacts legislation that imposes a price ceiling
equivalent to the original equilibrium price, what is the result of the legislation
(4 marks)

(iv) Suppose the government wishes to subsidize the production of this good by
placing a price floor of K30 per unit, what would be the new relationship
between quantity supplied and quantity demanded for this good (4 marks)
[Total: 20 Marks]

55
QUESTION THREE

Musonda is a sole trader who sells goods worth K50,000. He incurs material costs of
K12,000, hired labour costs of K16,000 and other expenses of K4,000. He rents an office for
his business at K1,500. Suppose that Musonda’s car that he uses could have been put on
the road as a pirate taxi earning K2,400 and his own labour as a business manager could
get him a job with a monthly salary of K18,500.

(a) Distinguish between economic costs and accounting costs (6 marks)

(b) Calculate Musonda’s accounting profit or loss for the month(5 marks)

(c) Calculate Musonda’s economic profit or loss for the month(5 marks)

(d) Advice Musonda, in economic terms, based on your calculations to part (c) whether
or not he made the right decision(4 marks)
[Total: 20 Marks]
QUESTION FOUR

A firm that has no competitors in its industry is called a monopoly. Monopolies are usually
not liked by consumers because their profit incentive leads them to raise prices and lower
output in order to squeeze more money out of the consumers. As a result, Governments
typically go out of their way to break up monopolies and replace them with competitive
industries that generate lower prices and higher output. At times, however, governments
also intentionally create monopolies in other situations, for example through the issue of
patents and licenses.

Required:

(a) Using a diagram explain the profit-maximizing monopoly in the short-run (6 marks)

(b) Outline any four (4) advantages of monopoly (4 marks)

(c) Outline any four (4) disadvantages of monopoly (4 marks)

(d) Explain any three (3) approaches that a Government can adopt to prevent monopoly
abuse of power or dominant position (6 marks)
[Total: 20 Marks]

QUESTION FIVE

The Zambian kwacha depreciated immensely to the United States Dollar during the month of
December 2019 from an average of K11 to K16 per US$. This did not go well for importers
and exporters who called on the relevant authorities to act to arrest the free-fall of the local
currency.

Clearly, it can make a big difference whether a nation fixes its exchange rate or allow the
value of the local currency to float. To what extent might adopting a floating exchange rate
enhance national economic stability? Under what circumstances is it desirable to peg the
exchange rate of a nation’s currency? What are the advantages and disadvantages of a
floating exchange rate for monetary and fiscal policymaking? These are questions of real-
world significance to economists.

56
Required:

(a) Distinguish between a fixed exchange rate and a floating exchange rate. (4 marks)

(b) Explain any three (3) advantages of a floating exchange rate. (6 marks)

(c) Explain any three (3) disadvantages of a floating exchange rate. (6 marks)

(d) Explain any two (2) approaches that a government use to intervene in foreign
exchange market. (4 marks)
[Total: 20 Marks]
QUESTION SIX

In Zambia, December to February of every year are reserved as the fish breeding period. As
such, a fish ban is enforced during this period. However, it is common sense that fishermen
rarely observe this ban. This is because open lakes and rivers are common resources which
are non-excludable and but rival. They are a special kind of public goods. Since fishermen
do not bear the private costs of reducing the number of available fish to others, so it is
rational for them to overfish.

Required:

(a) Explain the concept of common resource (3 marks)

(b) Explain what is meant by the term ‘’non-excludable good” (3 marks)
(c) Explain the meaning of the term ‘rival good” (3 marks)
(d) Explain the meaning of the term ‘public goods’’ (3 marks)
(e) Explain any two (2) policy interventions that the government can use to manage a
common resource like fish apart from using a fish ban. (8 marks)
[Total 20 Marks]

END OF PAPER

57
SUGGESTED SOLUTION

SOLUTION ONE

1.1 C
1.2 D
1.3 A
1.4 C
1.5 B
1.6 A
1.7 B
1.8 D
1.9 C
1.10 B

58
SOLUTION TWO
a) A price ceiling is a legally established maximum price a seller can charge. The aim is
to protect consumers against ‘too high’ a price that can be set by the market for
essential goods. An example is a rent control and Mealie Meal prices (at times).
b) A price floor is a legally established minimum price a seller can be paid. The aim is to
protect sellers against ‘too low’ a price that can be set by the market. Examples in
Zambia are Minimum wage and Maize floor price.
c) (i) Equilibrium is characterized by the condition QD = QS, 300 - 3p = 100 + 5P,
solving for P, we have K25 as equilibrium price. Substituting P in either demand or
supply equation and solving QD = 300 -3(25) =225 units.

(ii) 420 -3P = 100 + 5P, equilibrium P = K40; equilibrium Q= 300

(iii) At a price ceiling of P = K25, the quantity demanded is QD = 420 – 3(25) =
345
At the ceiling price quantity supplied is QS = 100 + 5P, 100 + 5(25) = 225
Based on these, there is a shortage in this market of QD - QS = 345 – 225 =
120
(iv) QS = 100 + 5(30) = 100 + 150 = 250
QD =300 – 3(30) = 300 – 90 = 210
Surplus is 250 – 210 = 40

59
SOLUTION THREE
a) Economic costs represent explicit plus implicit costs. Explicit costs are out of pocket
while implicit costs represent opportunity cost of the factors of production that are
used. Accounting costs, on the other hand, are explicit or out-of-pocket costs of
production.
b) The accounting profit or loss is calculated as follows:
K K
Sales 50,000
Less Explicit costs:
Material Costs 12,000
Labour 16,000
Rentals 1500
Other expenses 4,000 (33,500)
Profit 16,500
c) The economic profit or loss is calculated as follows:
K K
Sales less explicit costs (as given above) 16,500
Less Implicit costs:
Forgone taxi earnings 2,400
Forgone salary as an employee 18,500 (20,900)
Loss (4,4 00)
d) In economic terms, Musonda made a loss. It would pay Musonda to put his car to
alternative use, and sell his labour for a salary.

60
SOULUTION FOUR
a) Profit-maximizing monopoly in the short-run:

A monopoly maximizes profit at a point where Marginal Revenue = Marginal Cost. However,
for the monopolist after equating MR to MC he moves up until he touches the demand curve
so as to charge a higher price and supply less quantity. The profit maximization position
can be shown by drawing the following curves.
MC
Price/
Cost

P1 Q ATC
Profit
P0 R

D = AR

0 MR
Q1Quantity

b) The following are the advantages of monopoly:

 Greater stability of supply because a monopoly can use its supernormal
profits as a cushion against losses if the market suffers a downturn
 Monopolies can afford to spend more on research and development, and are
able to exploit innovation and technological progress than small firms
 Monopolies may be needed to achieve maximum economies of scale, lower
unit costs, and marginal costs of production often translate into lower prices
 Monopolies may find it easier to raise new capital on the capital markets, so
can finance new technology and new products which enhance growth
 Patents rights rewards monopolies for taking risks to innovate new products
and serves as a motivator
c) The following are the disadvantages of monopoly:
 Resources are not allocated efficiently as average costs are not minimized
(i.e. MR =MC but MC ˂ AC)
 Monopolies might stifle competition
 If there are no economies of scale less will be produced and more sold at a
higher price than would be the case un a competitive market
 Monopolies may become slack about cost control or adopt a complacent
attitude to innovation, because they are not threatened by competition and
earn supernormal profits.
 Restrictive practices such as price discrimination can be carried out to
increase supernormal profits
 There might be diseconomies of scale in a large monopoly
d) The following are the measures that the government can take to control of monopoly
abuse power:
 By trying to make monopolized industries more competitive
 By regulating the behavior of monopolies
 By turning some private monopolies into public enterprises
 By doing nothing at all

61
SOLUTION FIVE
a) A fixed exchange rate is one where the rate is fixed by the government whereas a
floating exchange rate is one where the exchange rate is determined by the market
forces of demand and supply.
b) The following are the advantages of a floating exchange rate:
 Governments do not have to spend or even hold foreign currency reserves
 Balance of payments deficits or surpluses are automatically corrected. A deficit
will result in an exchange rate falling which improves competitiveness, raise
exports and restore equilibrium.
 Governments need not adopt economic policies that may be undesirable for
other reasons to maintain exchange rates
 Encourage efficient allocation of resources since exchange rates will reflect
economic conditions.
c) The following are the disadvantages of a floating exchange rate:
 If exchange rates appreciate too much under a floating rate system, then
firms’ international competitiveness may be reduced, and output and
employment may fall across the economy.
 Uncertainty surrounding fluctuations in the exchange rate could deter trade
 If exchange rates fall too much, import prices, and hence inflation, will rise
 Currency risk will be maximized under a system of floating exchange rates
 The freedom afforded by governments by (c) in the advantages above may
mean governments do not pursue domestic policies which they should.
d) A government can intervene in the foreign exchange markets by:
 Selling its own currency in exchange for foreign currencies. This is done to
keep the exchange rate of its domestic currency low. The foreign currencies it
buys can be added to the official reserves
 Buying its own currency and pay for it with the foreign currencies in its official
reserves. It will do this when it wants to keep the exchange rate high when
market forces are pushing it down
 Changing domestic interest rates. This can either attract or discourage
investors in financial instruments which are denominated in the domestic
currency.
 Exchange rate controls. Government may put some controls on the purchase
of foreign currencies to protect the local cureency

62
SOLUTION SIX

a) A common resource is a good that is rival but not excludable. They are goods that
get used more than desirable from the standpoint of society as a whole.
b) An non-excludable good is one that people cannot be prevented from using
regardless of who has or has not paid for it.
c) A rival good is one for which one person’s use of it diminishes another person’s
enjoyment of it e.g. Pizza is both excludable and rival
d) A public good is a good that is neither excludable nor rival e.g. National defense
which protects everyone as no one can be prevented from enjoying the benefits of
it, so it isn’t excludable and is non-rival.
e) The two ways that government can use to protect a common resource in general
are:
 Introduce property rights: This means making open lakes and rivers where
fishing takes place as private properties. People are allowed to fish
throughout but only those on their own property. With private ownership
and profit motive now on their side, fishermen will avoid overfishing.
 Regulation: Government may enact various laws to protect the fish. This can
be done by issuing charges and/or licenses for fishing which restricts the
lengths of the fishing. Further, fishermen are required to throw back small
fish. These laws reduce the use of a common resource and help maintain
fish population.

63
 CA ZAMBIA PROGRAMME EXAMINATIONS
___________________

KNOWLEDGE LEVEL
___________________

CA 1.4: COMMERCIAL AND CORPORATE LAW

___________________
FRIDAY 18 DECEMBER 2020
___________________

TOTAL MARKS – 100; TIME ALLOWED: THREE (3) HOURS

__________________

INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination paper
carefully so that you understand what to do in each question.

2. This paper is divided into TWO (2) sections:

Section A: Ten (10) compulsory multiple choice questions.
Section B: One (1) compulsory scenario question.
Plus Four (4) scenario questions. Attempt any Three (3) questions.

3. Enter your student number and your National Registration Card number on the front
of the answer booklet. Your name must NOT appear anywhere on your answer
booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. Cell Phones are NOT allowed in the Examination Room.

6. The marks shown against the requirement(s) for each question should be taken as
an indication of the expected length and depth of the answer.

7. All workings must be done in the answer booklet.

8. Present legible and tidy work.

9. Graph paper (if required) is provided at the end of the answer booklet.

DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED BY THE
INVIGILATOR

64
Section A – (COMPULSORY)

Attempt all Ten (10) multiple choice questions.

QUESTION ONE

Each of the following questions has only one (1) correct answer. Write the letter of the
correct answer you have chosen in your answer booklet. Marks allocated are indicated
against each question.

1.1 Which one (1) of the following is the first requisite for any contract?

A. Agreement

B. Consideration

C. Negotiation

D. Meeting

(2 marks)

1.2 Which of the following defines an invitation to treat?

A. An offer made to the Public

B. An invitation to receive offers from the public

C. An offer to sell

D. All of the above

(2 marks)

1.3 The definition of a contract of Sale has been defined differently by so many scholars,
which one of the following is the most acceptable one:

A. The purchaser makes the contract with the vendor, even if the vendor still
has something to do to put the goods into a deliverable state.
B. The purchaser notifies the vendor he is ready to receive delivery.

C. The Seller transfers or agrees to transfer the property in the goods to the
buyer for a money consideration called the price.

D. Passing of property has occurred.

(2 marks)

65
1.4 Which one (1) of the following is not a vitiating factor?

A. Mistake

B. Frustration

C. Misrepresentation

D. Undue influence

(2 marks)

1.5 This remedy requires payment of a reasonable amount to cover work done, even
though there was no agreed upon sum or the work is less than what was contracted
for:
A. Specific performance
B. Injunction
C. Rescission
D. Quantum meruit
(2 marks)

1.6 Which of the following is not true about limited companies

A. Theyhave legal capacity to enter into contracts.

B. They have directors as its agents.

C. They are not exempt from tax.

D. They do not need court orders to alter their share capital

(2 marks)

1.7 Which of the following is not true about Partnerships?

A. They are regulated by the law
B. Law firms do not qualify as Partnership
C. Limited liability partnership has partners as agents of the form
D. All of the above
(2 marks)

66
1.8 Which of these is not true consideration?

A. Something a party did prior to contemplation of the contract.

B. A promise to perform a pre-existing contractual obligation to a third party.

C. Money.

D. A little red

(2 marks)

1.9 In a strict liability tort, it is necessary to prove that:

A. The other person intended to do the specific act.

B. The other person intended to do the specific act and, in some cases, that the
person intended harm.

C. A reasonable person would not have acted that way.

D. The specific act occurred.

(2 marks)

1.10 Which one (1) is true about customary law as a source of Law?

A. It is judge made

B. It is based on indigenous practices of citizens

C. Customs and International customary law are the same

D. The Parliament must approve it

(2 marks)
[Total: 20 Marks]

67
SECTION B

Question Two (2) in this Section is Compulsory and must be attempted.

Attempt any three (3) questions out of the remaining four (4)

QUESTION TWO - (COMPULSORY)

(a) Write notes on the following sources of law in Zambia

(i) The constitution

(ii) Acts of Parliament
(iii) Delegated legislation
(iv) Case law
(v) Customs (10marks)

(b) The land mark case of Christine Mulundika and 7 others v the Attorney Generalis
critical to the Zambian jurisprudence on Constitutional law.

Explain the principle of law that was set out in this case. (5marks)

(c) Explain the difference between criminal and civil matters and in doing so, show how
liability arises in both. (5 marks)
[Total: 20Marks]

QUESTION THREE

(a) A contract may come to an end with the parties discharged from their
contractualobligations in four main ways, namely: Performance; Agreement;
Frustration and Breach. Discuss the types of performance as a way through which a
contract may be discharged. (10 marks)

(b) Explain the difference between an implied warranty and implied condition in
a contract of sale. (5marks)

(c) The driver of a petrol tanker was engaged in transferring petrol to an

underground tank when he lit a cigarette and threw a match stick to the
floor. This caused a fire and an explosion which did great damage. The question
which arose was as to “who was to beheld liable”?
Required:
With reference to the above scenario and using the rules of employment law,
advise as to who will be liable. (5 marks)
[Total: 20Marks]

68
QUESTION FOUR

(a) Explainincorporation of a company (4marks)

(b) Explain the distinction between a partnership and an incorporated company.

(4 marks)

(c) Describe the essential elements of agency by necessity. (12 marks)

[Total: 20 Marks]

QUESTION FIVE

(a) There are different types of business entities that can be formed in Zambia.
Among them are companies, sole proprietorships, business trusts, partnerships inter
alia. A company is the biggest type of business entity that can ever be
formed. The Zambian Company Law provides for four main types of companies
that can be registered in Zambia.

Required:

Discuss the main types of companies recognised in Zambia. (10 marks)

(b) Mr.and Mrs.Malumoare a happy couple that recently got married. One day,
Mrs. Malumo cooked a nice meal which her husband enjoyed so much that he
promised to buy her a plot. After a few months, she heard a rumour that her
husband had a lover, but when asked, Mr.Malumo refused. Later on it was
proven that the rumour was actually true and the couple has since been on
judicial separation. Mrs.Malumo now wishes to sue her husband for not
fulfilling his promise of buying her a plot.

Required:

With reference to the above scenarioand making further reference to the rules of
intention to create legal relations, advise Mrs. Malumo. (10 marks)
[Total: 20 Marks]

69
QUESTION SIX

Butemwe is a successful young lady who in spite of her riches, does not enjoy flying. She is
a regular customer of Magudu Bus Services and she has been using this bus for more than
10 years now. Last week, she tried to book for an urgent bus ticket to South Africa where
she was to attend to a multi-million-dollar deal. To hear disappointment, all the buses were
fully booked and there was no room for an alternative. As a result of the important meeting,
Butemwe decided to book an available ticket with ZiCA International Family Buses. She
signed a form that enabled her to travel to South Africa. She did not see or check the back
of this form as she was told it was irrelevant.

The back had a statement which stated that:

“…the company would not be responsible for any loss caused by delay in departure
or loss of goods or anything while on the bus.”

While enroute to Beit Bridge, Butemwe realised that her hand bag were all the documents
that she was supposed to use in South Africa was lost. She pleaded with the bus attendant
but in vain. Butemwe lost the multi-million-dollar contract as the other parties thought she
was not serious to go for the meeting without any documentation.

Butemwe is fuming and has come to you for advice.

Required:

(a) Define an exclusion clause. (2 marks)

(b) With reference to the above statement, advise Butemwe on the likelihood of her
success if she is to sue. (10 marks)
(c) Butemwe is not aware of a contract can be discharged.
Explain to her the ways in which a contract can be discharged. (8 marks)
[Total: 20 Marks]

END OF PAPER

70
SUGGESTED SOLUTIONS

SOLUTION ONE
1. A
2. B
3. C
4. B
5. D
6. D
7. B
8. A
9. D
10. B

71
SOLUTION TWO

(a) (i) The constitution in Zambia is the supreme law of the land. It derives its sources
from the people and therefore revered as the grand norm. All other laws in country
are bound to constitutional interpretation. Article 1(3) provides that any law
inconsistent to the law of the constitution, that other law shall be void to extent of
inconsistency.
(ii)Acts of Parliament in Zambia are laws made by the country’s parliament. The
constitution has conferred powers on the country’s legislature to make laws.
However, when laws are made by parliament, they are required to conform to the
provisions of the constitution otherwise they are declared null and void should they
not. Acts of Parliament are usually known as administrative laws.
(iii)Delegated legislation is another source of law in Zambia. Delegated legislation is
law made pursuant to Acts of Parliament. When parliament has passed legislation, it
further gives power to other institutions pursuant to article 80(i) of the constitution,
to make laws. Delegated legislation is made by local authorities (by-laws) and
ministers (statutory instruments) and the law they make is supposed to conform to
the laws in the enabling Act.
(iv)case law is equally another source of law in Zambia. Case law also known as
precedents is judge made law. This guides society especially in the practice of law on
what the law basically is. Case law operates as a source of law in Zambia in that,
decisions of judges in fact interpret laws of Acts of Parliament of delegated
legislation thereby giving them effect. Case law is therefore as important as source
of law in Zambia as the others considered above.
(v)Zambia is divided into two legal systems. The first and oldest form of law in
Zambia like most other countries of the world has in fact been customary law.
Customary law has existed from the time man existed. These are customs that guide
the manner in which a society is required to exist. For example, in Zambia we
practice customary and civil law. All customary matters are dealt with in the local
courts.
(b) The principle of law established by the case of Christine Mulundika and 7 others
v the Attorney General is that the constitution in Zambia is the supreme law of
the land and should any other law be inconsistent with it, that other law is to the
extent of the inconsistency to be declared void. Further, the case established that in
Zambia freedoms in the constitution are to be protected and given effect where
there is evidence of their violation.
(c) In civil cases, especially law of contracts and tort, liability arises mainly through the
parties themselves agreeing in cases of contract to enter into a contract with terms
and conditions agreed upon by themselves where, a breach entitles the aggrieved
party to sue in the courts of law for damages. In tort, liability arises by general
imposition of the law. The law imposes a duty of care on every individual to act in a
manner that would not cause injury to others. A breach if that duty resulting in
damage entitles the aggrieved party to sue in the courts of law. Criminal liability
however arises by operation of the law. In Zambia the Penal Code is the main source
of criminal law. The Penal Code has described certain acts and omissions to be
criminal and has also prescribed the penalty for them. Liability in criminal law is to

72
the state and the state on behalf of society prosecutes all criminal acts or omissions.

73
SOLUTION THREE
(a) The general rule is that parties must carry out precisely what they agreed
under the contract. If one of the parties does less than, or different from
that which he agreed to do, he is not discharged from the contract and
cannot sue under the contract. Performance is one of the ways trough which
a contract is discharged. Once a contract is discharged it means that both
parties are relieved from their obligations. The following are the types of
performance:
 Partial performance: If one of the parties only partially carries out
his side of the contract, but the other party exercising a genuine
choice, accepts the benefit of the partial performance, the court will infer
a promise to pay for the benefit received. Cutter v Powell (1795),
Cutter agreed to serve on a ship sailing from Jamaica to Liverpool. The
ship sailed on 2nd August, arriving in Liverpool on 9th October but
Cutter died at sea on 20 September. Held: His widow could not
recover anything for the work done before he died. Cutter was obliged
to complete the voyage before he was entitled to payment. However,
the parties may agree otherwise then a party can accept partial
performance and payment can be made.
 Substantial performance: Substantial performance entails that a party
has performed three quarters of the work or the work has been
completed, but with a few defects. If the court decides thatthe
plaintiffhas substantially carried out the terms of the contract, the
plaintiff may recover for the work he or she has done. The defendants
may counter claim for any defects in the performance. Hoeing v Isaacs
(1952), the plaintiff agreed to decorate the defendant’s flat and fit a
bookcase and wardrobe for E 750. On completion of the work, the
defendant paid E400 but he complained about faulty workmanship and
refused to pay the balance of E350. Held: The court held that the
contract had been substantially performed. The plaintiff was entitled to
the outstanding E350, less the cost of remedying defects which was
estimated at E55 18s 2c.
(b) An implied condition in a contract is that which is not stated or written but it
may be implied by fact or deed. Breach of a condition leads to termination
of a contract and/or claim for damages because it is a fundamental term of

74
 a contract, while an implied warranty is a written term for the assurances
whether written or oral that a product is fit for the purpose intended and is
merchantable i.e. it conforms to an ordinary buyer’s expectations. Breach of
a warranty only entitles the innocent party to damages because it is not a
fundamental.
(c) This scenario borders on vicarious liability which simply means that the
employer will be liable for the wrongful acts committed by his employees
during the course of employment. This may include acts outside contractual
duties, unauthorised ways of performing contractual duties and acts forbidden
by the employer. In the case of Century Insurance Co v Northern
Ireland Road Transport Board (1942), the driver of a petrol tanker was
engaged in transferring petrol to an underground tank when he lit a
cigarette and threw a match to the floor. This caused a fire and an
explosion which did great damage. Held: The employer was liable for the
driver’s negligence. In the same way, the employer in this case will be liable
as the driver was performing his contractual duties, thus the doctrine of
vicarious liability will apply.

75
SOLUTION FOUR

(a) Incorporation of a company is where two or more people apply through the
prescribed forms under the Zambian Company’s Act 2017 to have their company
registered by the Registrar of Companies at PACRA. The Act prescribes forms to be
completed by applicant and stipulates the documents to be lodged together with the
application. Upon approval by the registrar, the company then stands registered and
is born as an artificial person.

(b) The effects of incorporation are that the company stands alone from its sponsors and
has legal capacity to sue or be sued in its own name. Upon incorporation, the
company is liable for its debts and sponsors cannot be answerable for the company’s
debts. Salomon v Salomon is instructive on this. In the case the court held that
once incorporated, a company becomes a separate legal personality and can be held
liable for its actions and not the sponsors. Even where the company is a sole trader
as long as it is incorporated the sole owner cannot be held liable for the acts of the
company.

(c) Agency by necessity.

Agency by necessity occurs under circumstances where, although there is no agreement
between the parties, an emergency requires that an agent take particular action in order to
protect the interests of the principal. The usual situation which gives rise to agency by necessity
occurs where the agent is in possession of the principal's property and, due to some
unforeseen emergency, the agent has to take action to safeguard that property.
For this type of agency to exist, proof of the following must be shown:
i. There is a genuine emergency: there must be proof that the circumstances that have arisen
are a genuine emergency. An example can be traced in the case ofGreat Northern Railway
Co v Swaffield(1874), the railway company transported the defendant's horse and,
when no one arrived to collect it at its destination, it was placed in a livery stable. It
was held that the company was entitled to recover the cost of stabling, as necessity had
forced them to act as they had done as the. defendant's agents.

ii. No ways of obtaining further instructions from the principal: there must be no
communication or method to communicate with the principal. This was seen in Springer v
Great Western Railway Co (1921), a consignment of tomatoes arrived at port after a
delayed journey due to storms. A railway strike would have caused further delay in
getting the tomatoes to their destination, so the railway company decided to sell the
tomatoes locally. It was held that the railway company was responsible to the plaintiff
for the difference between the price achieved and the market price in London. The
defence of agency of necessity was not available, as the railway company could have
contacted the plaintiff to seek his further' instructions.

iii. The agent must have acted bona fide in the interests of the principal: where
the agent acts on its own or not for the benefit of the principal. If the act is not
beneficial of the principal, this type of agency may not exist.

76
Thus, Zambia railway company acted as the agent of ChawatuHoldiingsLimiited as all
the above facts are present in the scenrion given in that there was an emmrgency,
there was no way of communicationg to the principal being Chawatu Holdings
Limited and that the act was done in the best interest of the principal as seen in the
case of Great Northern Railway Co v Swaffield(1874) and Springer v Great
Western Railway Co (1921).

77
SOLUTION FIVE

A company is a business entity that is registered under the Companies Act of 2017,
and once it is registered it acquires a personality separate and distinct from its
owners. The following are the main types of companies in Zambia:

(a) (i) Public Company which by nature is limited by shares meaning it raise its
capital by listing its shares on the stock exchange.

(ii) Private company limited by shares which raises its capital through selling
its shares to private individuals or companies and the liability of its members
is limited to the extent of the balance owing on their shares.

(iii) Private limited by guarantee where the company does not necessarily sell
shares and the liability of its members is determined by the amount they
guarantee at inception indication how much they will contribute in the event
that the company goes into liquidation.

(iv) Private unlimited company which has no amount specifies as to how

much each member will contribute in the event of winding up.

(b) Intention to create legal relations refers to the fact that parties are aware
that their agreement may have legal consequences in the event of default by
one party. Where there is a domestic agreement the presumption is that legal
relations are not intended. For example an agreement by a man to pay his wife £50
per week ‘housekeeping’ money. However it is possible for a man to make a binding
contract with his wife, for example as part of a separation agreement. In Balfour v
Balfour (1919), Mr. Balfour promised to pay his wife £30 per month if she
stayed in England while she was working in Ceylon. Mrs. Balfour was to remain
in England for medical reasons. The couple later separated. Mrs. Balfour claimed £30
per month pursuant to Mr. B’s promise. The legal issue in question was whether
or not this promise by a husband to his wife amounted to a contract. Held: in
its ruling the court considered the view that an agreement to pay £30 per
month existed because at the time they were living in amity

78
In the same way, since Mr and MrsMalumo were living in amity when the
promise was made by her husband, she cannot enforce such a promise against
her husband, even if she does she will not succeed.

79
SOLUTION SIX
(a) An exclusion clause which is also known as an exemption clause a clause in a
contract which purports to exclude liability altogether or to restrict it by limiting
damages or by imposing other onerous conditions.

(b) The likeliness of Butemwe’s success is dependent on whether the clause was part of
the contract or not. The states that to be enforceable, a term must be validly
incorporated into a contract. Because most disputes about whether a term has been
incorporated arise in the context of exclusion clauses.
For many years, the case law has provided guidance on exclusion clauses by
developing various rules designed to restrain their effect.
Therefore, for an exclusion clause tbe enforceable, it must have been incorporated
into a contract before the contract was made so that it gives the other party an
opportunity to object or not.
Further, exclusion clauses are interpreted strictly by the court such that in the case
of ambiguity or doubt, it should be interpreted in such a way that does not favour
the person who inserted it. Exclusion clauses also only protect the party acting within
the contract and any deviation from the contract means that the protection is lost.
Therefore, if a contract is a written one, there must be knowledge before making it
and if it is oral, there must be notice of the said clause.
In the scenario, the duty is on Magudu Bus Services to prove that before Butemwe
signed that document, she was noticed of the exclusion clause. From the scenario,
Magudu Bus Services must show or prove that Butemwe was notified which from the
facts seems impossible.
Additionally, if a person signs a document containing a term, he is held to have
agreed to the term even if he had not read the document. But this is not so if the
party who puts forward the document for signature gives a misleading explanation of
the term's legal effect. In this context, Butemwe was told the overleaf was irrelevant.
Therefore, Magudu Bus Services can’t rely on this clause and Butemwe can sue
successfully for the recovery of the bag and damages.

(c) The following are the ways in which a contract is discharged and Butemwe is
accordingly advised as:

Performance:A breach of contract is failure to perform the terms of a contract.

The general rule is that the parties must carry out precisely what they agreed under their
contract. If one of the parties does something less than, or different from, that which he
agreed to do, he is not discharged from the contract and, moreover, cannot sue on the
contract.

Agreement:The parties may have agreed in their original contract that it should end
automatically with the happening of some event or after a fixed period of time. The
agreement may have included a term allowing either party to terminate the contract by

80
giving notice. A contract of employment, for example, can be brought to an end by either
the employer or employee giving reasonable notice to the other.

Frustration:An agreement which is impossible to perform from the outset will be void for
mistake. However, the question arises about the position where initially it is perfectly
possible to carry out the contract, and then a change in circumstances occurs, making it
impossible to carry out the agreement. Formerly, the parties were under an absolute duty to
perform their contractual obligations. A person was not excused simply because outside
events had made performance impossible.

Breach:A breach of contract is failure to perform the terms of a contract which may occur
by anticipatory or an actual breach. Thus, one party may fail to perform his side of the
bargain completely or he may fail to carry out one or some of his obligations. In this
context, a breach of condition will entitle the innocent party to terminate a contract and
claim for damages.

81
 CA ZAMBIA PROGRAMME EXAMINATIONS
___________________

KNOWLEDGE LEVEL
___________________

CA 1.5: MANAGEMENT PRACTICE AND THEORY

___________________
MONDAY 14 DECMBER 2020
___________________

TOTAL MARKS – 100; TIME ALLOWED: THREE (3) HOURS

__________________

INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination paper
carefully so that you understand what to do in each question.

2. This paper is divided into TWO (2) sections:

Section A: Ten (10) compulsory multiple choice questions.
Section B: One (1) compulsory scenario question.
Plus Four (4) scenario questions. Attempt any Three (3) questions.

3. Enter your student number and your National Registration Card number on the front
of the answer booklet. Your name must NOT appear anywhere on your answer
booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. Cell Phones are NOT allowed in the Examination Room.

6. The marks shown against the requirement(s) for each question should be taken as
an indication of the expected length and depth of the answer.

7. All workings must be done in the answer booklet.

8. Present legible and tidy work.

9. Graph paper (if required) is provided at the end of the answer booklet.

DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED BY THE
INVIGILATOR
SECTION B

QUESTION ONE

82
Attempt all ten (10) multiple choice questions in this section

Each of the following questions has only one (1) correct answer. Write the letter of the
correct answer you have chosen in your answer booklet. Each question is allocated two (2)
marks.

1.1 Which of the following is the highest level of management in the structure of an
organization?

A. Operational level
B. Management level
C. Strategic level
D. Business level
(2 marks)

1.2 Contingency management is based on the belief that ……………………….

A. There is no one best way of managing and leading
B. There is always one best way of managing and leading
C. There is always one good employee in every organization
D. Every manager can be the best if given the right human resource.
(2 marks)

1.3 ………………………… organizations are organizations that are owned partly or wholly
by the state. They are not a government department but a separate organization
such as a corporation.
A. Partnership organizations
B. Parastatals organizations
C. Non GovernmentalOrganisations
D. Public Private Partnership organizations
(2 marks)

1.4 Which of the following best describes the recruitment process?

A. Interviews, selection, recruitment and induction

B. Interviews, induction, recruitment and induction
C.Recruitment, selection, interviews and induction

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 D. Selection, interviews, recruitment and induction
(2 marks)

1.5 Effective delegation should lead to optimum use of human resources and improved
organization performance. Which of the following is/are not benefits of delegation?

A. Best use of managerial time

B. A means of training and development of staff
C. Cost of paying the person being delegated
D. Limited time of senior managers
(2 marks)

1.6 Which of the following statements isNOT true?

A. By nature of its business a sole trader makes profits

B. Partnership involves two or more people doing a business together.
C. A limited corporation is made of private individuals
D. A parastatal company does not make profits
(2 marks)

1.7 Identification of the forces affecting competitive dynamics of an industry will be used
by the manager to formulate …………… for the organization.

A. Budget

B. Strategies

C. Plans

D. Solutions

(2 marks)

1.8 Peter Drucker outlined the management system commonly known as MBO. The
acronyms MBO means …

A. Movements before Observing

B. Management by Observation

84
 C. Management by Objectives

D. Management by Objections
(2 marks)

1.9 Which of the following best describes decentralization?

A. Resources being controlled by one Authority

B. A Pyramid management structure

C. A public sector system

D. Resources being controlled by subsector authorities

(2 marks)

1.10 ………………………. analysis model can be used to analyze the market competitive
structure in an industry

A. SWOT
B. PESTLE
C. PORTERS Five Forces
D. MASLOWS
(2 marks)
[Total: 20
Marks]

SECTION B

Question TWO (2) in this Section is Compulsory and must be attempted.

Then attempt any THREE (3) Questions from the remaining four.

QUESTION TWO- (COMPULSORY QUESTION)

Trade Kings Zambia Limited penetrates international markets.

INTERNATIONAL Distributors has expressed interest to distribute Trade Kings products in

various countries, a move that will enable the firm to penetrate the global market to
generate income.

85
This follows interaction between Trade Kings representatives and various distributors,
immense wholesalers and retail chain stores.

According to a statement availed to the Daily Mail recently, Trade Kings products have
received overwhelming response on the international market and this creates an opportunity
for further growth.

Over the past few days, Trade Kings representatives have been interacting with distributors,
big wholesalers and retail chain stores. Many distributors have shown their interest in Trade
Kings products. Distributors mainly from Saudi Arabia, Kuwait, Qatar, Palestine, Jordan,
Oman, UAE, Pakistan, Democratic Republic of Congo, Kenya, Iran, Uganda, Tanzania,
Guinea, Ghana and United Kingdom, the statement reads.

Some of the products that have generated high interest include Fizz Wizz, Milkit Pops, Dent-
O Gum, Eclairs Pops, Amazon Pops and Roll Gums.

It says with the current economic slowdown, Trade Kings believes that the firm is well
equipped to approach the future on a positive note and gain massive strides in both local
and international markets.

The statement notes that the Zambian manufacturing industry has vast opportunities but is
currently faced with challenges.

Meanwhile, in its quest to penetrate the global markets, Trade Kings Group last week
participated at the Yummex Middle East trade fair, which provided the company an
opportunity to showcase its various products.

The Yummex Middle East is a key international trade fair for the confectionery and snacks
market in the Middle East and North Africa region.

The 10th anniversary expo attracted more than 350 exhibitors from 46 countries with
Turkey, Germany, Egypt, Italy and Spain having the strongest participation.

Recently, Trade Kings was awarded the Best Manufacturer in Zambia 2016 by the Zambia
Association of Manufacturers at its annual Manufacturers Awards Gala dinner.
Source:Extracted from The Zambia Daily Mail-November 15, 2016

Required:

Discuss five (5) impacts of Globalization on firms. [Total: 20 Marks]

QUESTION THREE

The public sector refers to organizations that are owned by the government. Organizations
in the public sector are different in some ways from organizations in the private sector.
Public sector organizations have certain characteristics which make them distinguishable
from private sector organizations.

Required:

86
(a) Describe three (3) characteristics of Public Sector Organizations. (12 marks)

(b) Describe two (2) advantages and two (2) disadvantages of Public Sector
Organizations.
(8 marks)
[Total: 20 Marks]
QUESTION FOUR

Business organizations pursue different strategies as they grow their business. One of the
ways of growing a business is to go international. This means the organizations will set up
businesses in other countries and hence engage in international trade. There are many
organizations that are engaged in the promotion of international trade. These are the World
Trade Organization (WTO), the International Monetary Fund (IMF), the World Bank and the
G7.

Required:

Describe each of these organizations and their respective role in promoting international
trade.

[Total: 20 Marks]

QUESTION FIVE

In every business organization, there are individuals who are employed to carry out the
work of the organization. These individuals dictate the behavior of the organization as a
whole. These individuals come from different backgrounds and hence have different
attributes. Among these attributes are personality, perception, attitudes, intelligence and
individual roles.

Required:

Describe any four (4) of these attributes and show how they affect the individual’s behavior
in the business organization.[Total: 20 Marks]

QUESTION SIX

In order to be an effective manager, individuals should have managerial skills. Managerial

skills can be developed through training and experience.

Required:

Describe any four (4) managerial skills and explain how each of the skills contributes to the
effectiveness of a Manager. [Total: 20 Marks]

END OF PAPER
87
SUGGESTED SOLUTIONS

SOLUTION ONE

1 2 3 4 5 6 7 8 9 10

C A B C C D B C D C

88
SOLUTION TWO

a) Five impacts of Glabalisation on firms:

i. Relocation: firms may need to relocate their operations to reduce costs, avoid
tariffs and quotas, or take advantage of areas of industrial excellence.
ii. Markets: new markets may emerge as closed markets (such as China) open
up or as nations become more developed. Consumers tastes change and
products become more homogenized and can therefore be sold in more
countries.
iii. Competition: reduced trade barriers and advances in in communications
greatly increases the number of competitors that a firm faces.
iv. Alliances: the opportunities for forming alliances or merging/acquiring other
firms also increase.
v. Economic divisions: wealthy countries with access to modern communication
technology become more wealthy at the expense of poorer nations that
cannot afford to make the necessary investment. Such nations may also be
pressured into producing goods for export rather than ensuring the
production of goods and services needed locally.

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SOLUTION THREE

a. Accountability- Public Enterprises owe accountability to people as they are funded

through public money. This accountability is realized through legislature and its
committees, ministers, audit institutions and other specialized agencies.

b. Coverage- The public enterprise traverses all areas and activities. There is hardly
any field of activity, which is not covered by the operations of public enterprises
c. State Owned- Public Enterprise is controlled by the Government both in its
management and functioning. The Government has the direct responsibility to
manage the affairs of the enterprise through various devices and exercises control
over it by means of a number of agencies and techniques

2b.

Advantages

 They base their decisions on the full costs and benefits involved.

 They can be used to influence economic activity. To boost the country’s output,
public corporations can be directly encouraged to increase their output.

Disadvantages

 They can be difficult to manage and control. The large size of the organisations may
mean that time has to be spent on meetings and communicating with staff, slowing
down decision making.

 They may become inefficient, produce low quality products and charge relatively
high prices, due to a lack of competition and the knowledge that they cannot go
bankrupt.

90
SOLUTION FOUR

World Trade Organization (WTO) - The World Trade Organization (WTO) is an

intergovernmental organization that is concerned with the regulation of international trade
between nations. The WTO deals with regulation of trade in goods, services and intellectual
property between participating countries by providing a framework for negotiating trade
agreements and a dispute resolution process aimed at enforcing participants' adherence to
WTO agreements, which are signed by representatives of member governments and ratified
by their parliaments. The WTO prohibits discrimination between trading partners, but
provides exceptions for environmental protection, national security, and other important
goals. Trade-related disputes are resolved by independent judges at the WTO through a
dispute resolution process. (5 Marks)

International Monetary Fund (IMF) -TheInternational Monetary Fund(IMF) is an

international organization which works to foster global growth and economic stability by
providing policy, advice, and financing to its members. It also works with developing nations
to help them reduce poverty and achieve macroeconomic stability. It plays a central role in
the management of balance-of-payments difficulties and international financial crises.IMF
member countries contribute funds to a pool, from which they can borrow if they are
experiencing balance-of-payments problems. The rationale for this arrangement is that
private international capital markets function imperfectly, and many countries have limited
access to financial markets. Without access to IMF financing, many countries can only
correct large external payment imbalances through drastic measures that can have adverse
effects on their own economies and the world’s. The IMF provides alternate sources of
financing to countries in need that would not otherwise be available to them. (5 Marks)

World Bank - the World Bank is an international organization that helps emerging
market countries to reduce poverty. Its first goal is to end extreme poverty. The World
Bank is not a bank in the conventional sense of the word. Instead, it consists of two
development institutions. One is the International Bank for Reconstruction and
Development. It provides loans, credit, and grants. The second is the International
Development Association. It provides low- or no-interest loans to low-income countries.
The World Bank provides low-interest loans, interest-free credit, and grants. It focuses
on improving education, health, and infrastructure. It also uses funds to modernize a
country's financial sector, agriculture, and natural resources management. The Bank's
stated purpose is to bridge the economic divide between poor and rich countries. It does
this by turning rich country resources into poor country growth. It has a long-term vision
to achieve sustainable poverty reduction. (5 Marks)

The G7- The Group of Seven (G-7) is a forum of the seven countries with the world's largest
developed economies—France, Germany, Italy, Japan, the United States, the United
Kingdom, and Canada—whose government leaders meet annually on international economic
and monetary issues. The Presidency of the G-7 is held by each of the member countries in
turn. The European Union is sometimes considered an eighth member of the G-7, since it
holds all the rights and responsibilities of full members except to chair or host the meeting.
The major purpose of the G-7 is to discuss, and sometimes act in concert to help resolve,
global problems, with a special focus on economic issues. The group has discussed financial
crises, monetary systems, and major world crises such as oil shortages.The G-7 has also
launched initiatives to fund issues and relieve crises where it sees an opportunity for joint
action. Those efforts include several aimed at debt relief for developing nations. (5Marks)

91
SOLUTION FIVE

Personality - encompasses a person’s relatively stable feelings, thoughts, and behavioral

patterns. Each of us has a unique personality that differentiates us from other people, and
understanding someone’s personality gives us clues about how that person is likely to act
and feel in a variety of situations. To manage effectively, it is helpful to understand the
personalities of different employees. Having this knowledge is also useful for placing people
into jobs and organizations.

Perception- Perception is the result of processing of information received by individuals

regarding various events around them. It involves the organization of inputs through a
dynamic inner process which shapes all that comes in from the outside environment. This
information processing approach rests on the assumption that a person’s perceptions of
another person are based on the information available about the person and how one uses
this information. Various researches on perception revealed that quite often a perceiver uses
his or her own race or sex stereotypes to assume certain things about another person. The
individual, while perceiving the world, provides a picture that expresses his or her own
individual view of reality. This may differ from the reality. The study of the difference
between the perceptual world and the real world is of great significance in organizational
behavior.

Attitudes- which defines the way we think or feel anything. It is a hypothetical construct,
i.e. whose direct observation is not possible. It is a predisposition to respond in a settled
way to a person, event, opinion, object, etc., which is reflected in our body language. It has
a strong impact on our decisions, actions, stimuli, etc. Education, experience, and
environment are the major factors that affect a person’s attitude.(5 Marks)

Intelligence- this is a wider and more complex concept than the traditional view of
intelligent quotient (IQ).It personifies a person’s intelligence, verbal and analytical reasoning
abilities, memory as well as verbal comprehension.

92
SOLUTION SIX

Social/ Human Skills -Interpersonal skills are also known as social skills. The process of
using social skills is called socialization. We all learned socialization skills at an early age.
Before we could even talk we were learning socialization skills from the caregivers around
us. In the workplace, social skills are known as interpersonal skills. Both social skills and
interpersonal skills refer to the same thing—interaction with others.In the workplace, you will
work with many people every day. Strong interpersonal skills will enable you to talk to and
work with all types of people, including managers, coworkers, and customers. Interpersonal
skills do more than give you the ability to communicate with other people. Interpersonal skills
also help you to develop relationships with people. Strong relationships with the people you
work with will help you succeed in the workplace. (5 Marks)

Technical Skills- Technical skill is knowledge of and proficiency in activities involving

methods, processes, and procedures.Thus it involves working with tools and specific
techniques. Technical skill is the ability to use the specialized knowledge, procedures, and
techniques of a field of activities. (5 Marks)

Leadership- Leadership skills are skills you use when organizing other people to reach a
shared goal. Whether you’re in a management position or leading a project, leadership skills
require you to motivate others to complete a series of tasks, often according to a schedule.
Effective leaders are essential to any organization. They can help build strong teams within
a business and ensure projects, initiatives or other work functions are performed
successfully. Because the skills of a leader involve multiple interpersonal and communication
skills, anyone can exercise and hone their leadership abilities. (5 Marks)

Conceptual skills- Conceptual skill is the ability to see the “big picture,” to recognize
significant elements in a situation and to understand the relationships among the
elements.Conceptual skill is the ability to coordinate and integrates all of an organization’s
interests and activities.It requires having the ability to visualize the enterprise as a whole, to
envision all the functions involved in a given situation or circumstance, to understand how
its parts depend on one another and anticipate how a change in any of its parts will affect
the whole.A manager’s ability to think in the abstract and to view the organization
holistically is important. (5 Marks)

END OF SOLUTIONS

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 CA ZAMBIA PROGRAMME EXAMINATIONS
___________________

KNOWLEDGE LEVEL
___________________
CA 1.6: BUSINESS COMMUNICATION
___________________
WEDNESDAY 16 DECEMBER 2020
___________________
TOTAL MARKS – 100; TIME ALLOWED: THREE (3) HOURS
__________________

INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination paper
carefully so that you understand what to do in each question.

2. This paper is divided into TWO (2) sections:

Section A: Ten (10) compulsory multiple choice questions.
Section B: One (1) compulsory scenario question.
Plus Four (4) scenario questions. Attempt any Three (3) questions.

3. Enter your student number and your National Registration Card number on the front
of the answer booklet. Your name must NOT appear anywhere on your answer
booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. Cell Phones are NOT allowed in the Examination Room.

6. The marks shown against the requirement(s) for each question should be taken as
an indication of the expected length and depth of the answer.

7. All workings must be done in the answer booklet.

8. Present legible and tidy work.

9. Graph paper (if required) is provided at the end of the answer booklet.

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DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED BY THE
INVIGILATOR.

SECTION A – (Compulsory)

Attempt all ten (10) multiple choice questions

QUESTION ONE

Each of the following questions has only one (1) correct answer. Write the letter of the
correct answer you have chosen.

1.1 What unit of measurement is used to measure the processing speed of a computer?

A. Bits
B. Bytes
C. MHz
D. Megabytes

(2 marks)

1.2 Which principle of data quality relates to whether the data can be used in
conjunction with other data or if it can be used over periods of time?
A. Relevance
B. Coherence
C. Accuracy
D. Interpretability

(2 marks)

1.3 Which one is a technical control?

A. Validation
B. RAM
C. Mouse
D. Documentation
(2 marks)

1.4 ……………… is NOT used as a routine method for presenting Management data.

A. reports

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 B. Business letters
C. Memos
D. E-mails
(2 marks)

1.5 Unauthorised people may access your password using ………….

A. Caps Lock button
B. Keyboards
C. Deception
D. Daily back-ups
(2 marks)

1.6 The process of converting a message into meaningful communication symbols is

known as:

A. Feedback
B. Encoding
C. Decoding
D. Medium
(2 marks)
1.7 Which one of the following is an example of diagonal communication.

A. An accounts clerk in the accounts receivable department advising the accounts

clerk in the payable department.
B. An accounts clerk in the accounts receivable department advising the sales
director when the customers breaches their credit limit.
C. An accounts clerk in the payable department advising about their customer.
D. The Sales Director advising the accounts clerk in the payable department about
their customer.
(2 marks)

1.8 Which of the following would be the most appropriate communication method for
dismissing an erring employee?

A. Report
B. Oral
C. Email
D. Letter
(2 marks)

1.9 What is the other name for the sender of message in the communication process?

A. Encoder
B. Effective
C. Decoder
D. Recorder

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 (2marks)

1.10 An employee of an organization tells his friend about a job vacancy. Which of the
following patterns of communication does this report represent?

A. Formal internal
B. Formal external
C. Informal internal
D. Informal external
(2 marks)

[Total: 20 Marks]

SECTION B

Question TWO (2) in this section is compulsory and must be attempted.

Attempt any three (3) questions from the remaining four

QUESTION TWO - (COMPULSORY QUESTION)

Today, there are different application software like Word and various Database applications
like Access which also has a DBMS. Business processes and storage have become flexible
and adaptable.

Required:

(a) State any five (5) abilities the DBMS is able to offer? (5 marks)

(b) Give three (3) disadvantages of using Batch processing method? (3 marks)

(c) Briefly explain two roles of back-up utility in a computerisedorganisation?(4 marks)

(d) Tabs are used to space text across the page. There are four types of Tabs, each
representing a different type of alignment. List and explain them.(8 marks)
[Total: 20 Marks]

QUESTION THREE

For a business entity to survive in this competitive environment it needs different

safeguards, good practices and good use of Information Technology. There are different
types of systems. The initials KWS and EIS are used to rank and define the types of
Information Systems.

Required:

97
(a) Elaborate more on the meaning of both KWS and EIS and outline any three (3) key
differences. (8 marks)
(b) Explain any three(3) reasons why input controls are important. (6 marks)
(c) List any two (2) categories of data quality principles organizations can adopt.

(2 marks)

(d) State four (4) advantages of Computer drawn charts and tables in management
reports. (4 marks)
[Total: 20 Marks]

QUESTION FOUR
Online systems accept data directly to the computer from point of origination and generally
transmit information to the user’s location. In building such systems, the choice of computer
hardware will depend on key factors that include Power, Reliability, Flexibility, Security and
Changeover.

Required:

(a) Describe the importance of each of the five(5) key factors listed in the passage.
(10 marks)
(b) An operating system provides a link between the application software and the
hardware. State any six (6) tasks it is able to perform.(6 marks)
(c) State any two (2) examples of online systems and demonstrate how they assist
management.(4 marks)
[Total: 20 Marks]

QUESTION FIVE

You are the Chairperson for the ZICA student’s sports organization committee. You wish to
host a tournament with other colleges within Kitwe town at your college. However, you have
observed that there are challenges preventing you from achieving the desired objectives.
The challenges include, lack of uniforms (sports attire) unreliable transport, lack of suitable
ground for training, professional coach and very poor ablution facilities. Your committee
wishes to address these challenges through the help of management at your college.

Required:

(a) Write a memo to the Principal of your college highlighting some of the challenges
that you face and suggest how to resolve the problems. (15 marks)

(b) State any five (5) functions of a memo in an organization. (5marks)

[Total: 20 Marks]

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QUESTION SIX

You are a recent chartered accountant graduate from one of the premier colleges in Zambia
and you came across the following job advert:

JOB ADVERT

Name of Organization: Astro Mobile Solutions

Astro Mobile Solutions is one of the leading providers of mobile and software solutions in
Africa. The company operates in Zambia, Zimbabwe, Malawi and South Africa, and is
currently on an expansion drive into other key strategic markets. If you are creative and
goal oriented professional, we would like you to be part of our vibrant team. The specific job
information is as follows:

Position: Accountant

Nature of Job: Full-Time

Location: Lusaka, Zambia

Interested and qualified individuals are kindly requested to submit their Curriculum Vitae
(CV) with three (3) traceable referees at [email protected] by the end of the month.

Required:

(a) Write detailed CV giving information about yourself and your skills, showing why you
are the best candidate for the job. (14 marks)

(b) With examples, explain the difference between professional and academic
qualifications. (6 marks)
[Total: 20 Marks]

END OF PAPER

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SUGGESTED SOLUTIONS
SECTION A

SOLUTION ONE

1.1 C
1.2 B
1.3 A
1.4 D
1.5 C
1.6 C
1.7B
1.8D
1.9A
1.10D

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SECTION B
SOLUTION TWO

a) Five (5) abilities DBMS is able to offer?

 Add, amend and delete records
 Retrieve data for reference or processing
 Present data in different forms and combinations
 Control access to data on the files by means of passwords and other security
procedures
 Allow the database to evolve without requiring modifications to applications
programs

b) Three (3) disadvantages of Batch processing

 The system is ‘time driven’ so it does not respond to rapid action
 Information is often delays to get response out of date because the company
waits to accumulate a batch of transactions before processing them
 Preparing batches results in duplication of effort
 Requires batch control or verification of batches being processed

c) BACK-UP UTILITY
 A specialized backup software to perform backup routines
 Can operate automatically at any regular time of the day
 Sometimes embedded in accounting package software
 Assist in data recovery in case of system failure

d) There are four types of Tabs, each representing a different type of alignment.
List and explain them
 Left Tab – text jumps to the tab stop and then shows to the right of the tab
stop
 Centre Tab – text centred on this tab stop
 Right Tab – text jumps to the tab stop and then will show to the left of the
tab stop
 Decimal Tab – text jumps to the tab stop and then will show to the left of the
tab and decimal places are aligned consistently

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SOLUTION THREE

(a)
KWS – Knowledge Workers System are information systems that facilitate the creation
and integration of new knowledge into an organization.
They are found at the knowledge level of the organisational hierarchy. The knowledge
workers have a professional qualification
On the other hand
EIS – Executive Information System provide generalised computing and communication
environment to senior managers to support strategic decisions. It draws data from the
MIS/DSS and allow communication with external sources of information.
(1 mark each for proper expansion of KWS and EIS, 3 marks each for proper differences,
(total 8 marks)

(b.)
The importance of input controls in information systems:
 Input controls regulate input of data to ensure it is accurate and free from error.
 Help in error identification at an early stage
 Enhance performance
 Ensure that data is accurate

(c.)
Categories of data quality principles organizations can adopt are:
(i) Intrinsic
(ii) Accessibility

(iii) Representational Relevancy

(iv) Interpretability
(v) Timeliness
(vi) Accessibility

(d.)

ADVANTAGES OF CHARTS AND TABLES IN REPORTS

i. Effective summary

ii. simple to understand

iii. attractive

iv. complete information for decision making

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SOLUTION FOUR

a) comments about the factors that will depend on choice of hardware

 Power – the power of the computer must be sufficient for current and foreseeable

requirements, which is measured by processor type, RAM size, Clock speed, Hard

disk size

 Reliability – a low expected break-down rate or there should be a back-up facilities

 Flexibility – hardware should be able to meet new requirements as they emerge.

More powerful CPUs tend to be more flexible

 Security – keeping unauthorized users or hackers away from the system

 Changeover – this will help with a smooth changeover from the old to the new

system

b) Any six (6) tasks the operating system is able to perform

 Opening and closing of files
 Maintenance of directories in the disk storage
 Calling up of program files and data files into memory
 Checking that hardware is functioning properly
 Initial set-up of the computer
 Controlling input and output devices
 Controlling system security

c) EXAMPLE OF ONLINE SYSTEMS

i. Department store or supermarket poin of sale terminal
ii. Banking credit system
iii. Airline Ticket and travel agents

103
SOLUTION FIVE
NEW TECH COMPUTING COLLEGE
MEMORANDUM
Ref: NEW/12/34
Date: (any date during examination time)
To: The Principal
From : The Chairperson, ZICA Sports Committee
Subject: Challenges experienced by the sports committee
Soccer is one of the activities that unite students from all walks of life. It is
appreciated at both individual and national level.
However, the ZICA college student’s sports team has been experiencing challenges
in running its activities. It is for this reason that the sports committee wishes to
inform you about some of the challenges that the team is facing with the view to
resolve them. Some of the challenges that the team face are:
- Lack of sports attire (uniforms) and equipment
- Inadequate funding
- No reliable form of transport for out of campus activities
- No suitable training grounds
- Very poor ablution facilities

The above challenges have a negative impact on our performances as evidence from
the fact that we have failed to bring the trophy in college for 3 tournaments so far.
Therefore we would like to appeal through your office to seriously look into this
matter and solicit for sponsors that would assist the committee to resolve these
challenges.
Your consideration in this matter will be appreciated.
Senders’ signature

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SOLUTION FIVE
Specific functions that a memo plays in an organization
- To give instructions/Get things done/Request
- To act as a reminder about something
- To notify staff about a meeting
- To warm staff about any negative work behavior
- To seek/share information (inform/report)

105
QUESTION SIX

KAKUNTA KASOKA
23 Simon MWANSA Kapwepwe Road, Avondale, Lusaka

CURRICULUM VITAE
Personal Information

Name: KakuntaKasoka
Date of Birth: 10th January, 2000
Gender: Male
Nationality: Zambian
National Registration Card: 222233/33/1
Mobile Number: 0977 000 000
Email: [email protected]
Postal Address: Private Bag 23

Education and Qualifications

2019 - Chartered Accountancy Zambia – Zambia Institute of Chartered Accountants
2016 – Bachelor of Arts Finance – University of Zambia
2011 – School Certificate – Munali Boys Secondary School

Skills Profile

- Proficient in IT
- Communication and Interpersonal skills
- Business acumen and Interest
- Organizational skills and ability to manage deadlines
- Detail – oriented eye

Work experience

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Organisation: Astro Africa Solutions
Position: Assistant Accountant (Intern)
Period: June, 2019 to todate
Duties:
- Provide financial information to management
- Prepare assets, liability and capital account entries
- Document financial transactions
- Substantiate financial transactions
-

Referees
Mr. M. Banda
The Senior Financial Officer
Astro Africa Solutions
Cell:
Email:

Mrs. C. Lubinda
Business Manager
Tamanga Zambia
Cell:
Email:
Mr. J. Mumba
Corporate Communications’ Manager
Muya Travels Limited
Cell:
Email:

107
QUESTION SIX

- Academic qualifications emphasise on theory and are not primarily designed as

preparations for professional careers. They prepare students for a life in academic
discipline. A Bachelor of Arts (BA) is a good example of an academic qualification.
- A profession qualification is one that is designed to prepare a student for specific
application of knowledge to professional practice. It is the advanced studies in a
professional or vocational field. e.g. MBA

END OF SOLUTIONS

108