TIME — 2 hours 30 minutes INSTRUCTIONS TO CANDIDATES Write your name, centre number and candidate number in the spaces provided on the Answer Booklet There are ten (10) questions in this paper. Answer any five (6) questions. Write your answers in the separate Answer Booklet provided. Ifyou use more than one Answer Booklet, fasten the Booklets together. INFORMATION FOR CANDIDATES The number of marks is given in brackets [at the end of each question or part question. Calculators may be used. Cell phones are not allowed in the examination room. This question paper consists of 4 printed pages. eeczzo1rs [urn overPage 2 of 4 Answer any five(5) questions. 1 ‘Commerce is an integral part of production. {a) Justify the above statement. (10) {b) What do you understand by the terms below and give examples of each? (i) Exhaustive extractive industry (3) (ii) Constructive industry. 8 (c) Indicate the problem for which the following are solutions: i) Transport. (ii) Warehousing (iii) Banking (iv) Communications. 14 [20 marks} (a) Discuss the main characteristics of a hypermarket, (8) (b) What are the advantages of hypermarkets from the point of view of: (i) the retailer? (6) (il) the consumer? (6) [20 marks] (a) Explain the importance of warehousing in trade. 112) (b) Why is the wholesaler considered to be: (i) Reservoir. B] (i) Financier. 2] (lii) Risk Bearer. io [20 marks} (a) Why does the principle of indemnity not apply to all forms of insurance? BI (b) Explain briefly how the principle of indemnity applies in each of the following cases: (I) A plate glass window is insured for K1 000 000. It is broken and costs K900 000 to replace. 8) (ii) A house valued at K30 000 000 is insured against fire for K20 000 000. Itis damaged by fire and the cost of repairs amounts to K900 000. (4) (iii) A motor vehicle cost K15 000 000 in 2000 and has been insured since that date. In 2008 it was involved in an accident and was too damaged to be repaired. (4) ‘Commerce/7100/1/2010Page 3 of 4 (c) Describe briefly the insurance cover given by: (i) Contents insurance. 3] (il) Consequential loss insurance. G8 [20 marks] Explain, giving your own reasons, why a firm would advertise: (a) (i) On television. 3) (ii) Local Radio Station. BI (ii) Posters. 1 (iv) Catalogues. (1 (b) State the advantages of advertising to the firm. (8) [20 marks] Lucas and Zulu decide to start a manufacturing business making blankets. They discuss whether to enter into partnership or to form a private limited company. (a) Explain the differences between a partnership and a private limited company. [6] (b) In the formation of a partnership, a Partnership Deed may be required. (i) What is a Partnership Deed? rea} (ii) What information does it contain? (8 (c) A limited company may raise its capital by issuing debentures. List four features of debentures, (41 [20 marks} There are various services which a bank offers its customers which vary from each other. Explain the following terms: (a) Bank Giro credits. 5] (b) Point Of Sales Service. (5) (c) Cash Dispensers. (5) (d) Bankers Draft. (5) [20 marks] (a) In connection with the dispatch of goods from one firm to another, explain the terms, Advice Note and Delivery Note (6) (b) Give five reasons for returning goods to the seller. 5] (c) (i) What are the uses of an invoice? 2] (ii) Give three items of information which must appear on an invoice. (31 Commerce!” 100112010 [Turn overPage 4 of 4 40 (d) Explain the terms: (i) Eand Oe. (2) (ii) Cash Discount. a [20 marks} Consumer credit refers to the lending of cash, goods or services to individuals in exchange for a promise to pay at a later date (a) Mention and explain the many forms in which consumer credit is available. [4] (b) Give reasons for the mushrooming of consumer credit in the last decade in Zambia, (8) (c) What are the advantages to the consumer of using consumer credit? (8) [20 marks] (a) The following figures were, extracted from Mwiya and Sons’ books. Tumover 4 800 000 Purchases K2 720 000 Opening stock 840 000 Cash in hand 400 000 Debtors K120 000 Creditors K240 000 Bank overdrafts K200 000 Advertising K250 000 Other expenses k680 000 Closing stock k760 000 Calculate: (i) Cost of goods sold (2) (ii) Gross profit 2 (iii) Net profit 24 (iv) Rate of Stock Turn 2 (v) Working capital rea} (b) Describe briefly and explain the importance to a business of fixed assets (5) (c) On 1* August 2008, a manufacturer sold 100 cases of biscuits to a wholesaler at K80 000 per case less 15 per cent trade discount and an invoice was forwarded to the wholesaler together with the goods. A cash discount of 5 per cent is allowed if payment is made within seven days. The wholesaler paid the manufacturer on 6" August 2008 by crossed cheque drawn on Barclays Bank Plo. (i) What is the total amount due to the manufacturer as shown on the invoice? [2] (ii) How much did the wholesaler pay to settle the amount due on 6" August? [2] (ili) On what type of bank account would the cheque have been drawn. uy [20 marks] CCommeren/7100/8/2010