Commerce

Resource Mock Exam

Senior Four
Time: 2 Hours 30 Minutes
Instructions to candidates
The paper consists of two sections A and B.
Section A is compulsory; answer any four questions in section B.
Any extra questions answered in section B shall not be marked.
All answers to sections A and B must be written in the answer booklets provided.
Section A (20 marks)
1. A transaction for which a cheque is used to pay instantly for goods bought is;
A. credit transaction.
B. cash transaction.
C. trade transaction.
D. Non-cash transaction.
2. Patricia and Patrick wish to start a partnership business. Which document are they to
prepare to bind them?
A. Partnership act.
B. Prospectus.
C. Articles of association.
D. Partnership deed.
3. Two commodities A and B are related. When the price of A increases the demand for
B reduces. The two commodities are
A. substitutes.
B. giffen
C. complimentary.
D. supplementary.
4. An Itinerant trader who moves with goods on his body, selling them from person to
person is a
A. peddler. B. hawker.
C. barrow boy. D. mobile shop.

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5. Partnership business formed to perform a specific activity and closes after that, is a
A. registered partnership.
B. permanent partnership.
C. General partnership.
D. Temporary partnership.
6. Given that cost of sales is Shs 1,870,000 and the closing stock is Shs 230,000, the
opening stock is Shs 148, 000. What is the value of the cost of goods available for
sale?
A. Shs 2,100,000
B. Shs 1,952,000
C. Shs 1,640,000
D. Shs 1,788,000
7. Customs union in the economic integration requires that
A. countries eliminate all taxes, and adopt a common tax and quota system for
non-member countries.
B. elimination of all taxes, but charge different taxes to non-members countries.
C. adopt a common tax for member countries and different external tariffs for
non-member countries.
D. countries influence other countries to follow a common political system in
addition to the common tax.
8. The challenge firms face when they are delocalised is
A. reduced output.
B. excess output.
C. increase in the cost of transport for raw materials.
D. low costs of production.
9. The principle of insurance, which prevents an insured from being compensated for
any claim due to being unfaithful, is
A. indemnity.
B. proximate cause.
C. insurable interest.
D. utmost good faith.

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10. One of the following documents serves as a contract of sale between the seller and the
buyer.
A. Local purchase order.
B. Invoice.
C. Delivery note.
D. Dispatch note.
11. One of the following is a personal tax.
A. Export duty. C. Rental tax.
B. Excise tax. D. Value-added tax.
12. Rehema wishes to order goods from Japan Famaica Enterprises in Japan. She would
place …………….. to her agent.
A. closed indent. C. Direct order.
B. open indent. D. Local purchase order.
13. The following records belong to Tafa LTD. as at 31.Dec.2021.
Average stock Shs 480,000
Rate of stock turn 5
Turnover Shs 3,600,000

What is her margin?

A. 33% C. 50%

B. 66% D. 96%

14. A bank commonly used by foreign traders to discount bills of exchange is

A. Development bank. B. Commercial bank.

C. Merchant bank. D. Post bank.

15. A document giving a title for goods kept in a warehouse at the dock for a specified
period is;

A. Bill of lading. C. Advice note.

B. Dock warrant. D. Order form.

16. A business unit where dividends are shared according to the participation of members
is,

A. co-operative C. partnership.

B. marketing board. D. joint venture.

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17. A cheque was drawn in favour of “Nakayima”. Nakayima is a

A. Drawee. B. Drawer

C. Payee. D. Endorsee

18. A bill of exchange paid before the date of maturity is a;

A. Usance bill C. Dishonoured bill

B. Sight bill D. Retired bill

19. One of the following is outdoor advertising,

A. Radio c. Television
B. Bill board D. Films
20. Which one of the following is the best advantage of using a telephone in
communication?
A. It is very fast C. It leaves a record for reference.
B. it is very slow. D. Inter conferencing is possible
Section B.(80 marks)
21. ( a) Distinguish between specialization by craft and specialization by stage.
(04 marks)
(b) Outline any four functions of each of the following factors of production;
i). Land (08marks)
ii) labour (08 marks)
22. (a) Outline any five risks faced by a trader under accident insurance (05 marks)
(b) Explain any principles of insurance. (15 marks)
23. (a) State any four ways in which Hire purchase benefits each of the following;
(i) The seller (04 marks)
(ii) The buyer (04 marks)
(b) Give any three ways the seller and the buyer are respectively disadvantaged by
hire purchase. (06 marks)
(c) Give six contents of a hire purchase agreement (06 marks)
24. (a) Define a warehouse (02 marks)
(b) Explain any three type of warehouses. (06 marks)
(c) Explain any six functions of warehousing in the development of trade.
(12 marks)
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25. (a) Give any four reasons why government protects local industries from foreign
traders (08 marks)
(b) Explain any six methods used by the government to reduce foreign trade.
(12 marks)
26. (a) Outline the functions of the following documents as used in commerce;
(i) Articles of association (02 marks)
(ii) Certificate of incorporation (02 marks)
(iii) Memorandum of association (02 marks)
(b) Explain any five contents of the memorandum of association. (10 marks)
(c) Give any four reasons why public limited companies are not common in
Uganda. (04 marks)
27. (a) Define personal selling. (02 marks)
(b) Other than personal selling give any eight methods used by traders to increase
their sales (08 marks)
(c) State three advantages and two disadvantages of personal selling. (10 marks)
28. (a) Define solvency as used in commerce. (02 marks)
(b) Kamulali Muka’s records as at 31st December 2020 were as follows.
Opening stock shs. 680,000
Closing stock shs. 820,000
Gross profit margin 20%
Rate of stock turn 6 times
Net profit ratio 16%
Capital shs. 4,380,000
Calculate.
i. Cost of sales. (04 marks)
ii. Net sales (04 marks)
iii. Net profit (03 marks)
iv. Return on capital (03 marks)
v. Net purchases (04 marks)

End