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Cambridge Ordinary Level

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Cambridge Ordinary Level

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Talha Nafees

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Cambridge International Examinations

Cambridge Ordinary Level

* 5 5 7 7 0 0 9 8 4 4 *

COMMERCIAL STUDIES 7101/11

Paper 1 Elements of Commerce October/November 2016
2 hours
Candidates answer on the Question Paper.
No Additional Materials are required.

READ THESE INSTRUCTIONS FIRST

Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
Do not use staples, paper clips, glue or correction fluid.
You may use an HB pencil for any diagrams, graphs or rough working.
DO NOT WRITE IN ANY BARCODES.

Section A
Answer three questions.

Section B
Answer all the questions.

The businesses described in this Question Paper are entirely fictitious.

At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.

This document consists of 18 printed pages and 2 blank pages.

DC (NF/SG) 120163/1
© UCLES 2016 [Turn over
2

SECTION A

Answer three questions from this section.

1 Commerce is concerned with the distribution and the exchange of goods and services in home
trade and international trade.

(a) Explain what is meant by:

(i) distribution

...........................................................................................................................................

...................................................................................................................................... [2]

(ii) exchange

...........................................................................................................................................

...................................................................................................................................... [2]

(b) Explain two differences between home trade and international trade.

...................................................................................................................................................

.............................................................................................................................................. [4]

© UCLES 2016 7101/11/O/N/16

(c) Explain how transport assists distribution in international trade.

...................................................................................................................................................

.............................................................................................................................................. [6]

(d) Trading has been improved by developments in telecommunications.

(i) Explain two advantages of telecommunications compared to Post Office services.

...........................................................................................................................................

...................................................................................................................................... [4]

(ii) Describe one way in which Post Office services assist traders.

...........................................................................................................................................

...................................................................................................................................... [2]

© UCLES 2016 7101/11/O/N/16 [Turn over

2 Retailing is constantly changing. Many customers are using large-scale retailers such as
hypermarkets where they purchase bar-coded and branded goods. The biggest change has been
in the use of online shopping.

(a) State four features of a hypermarket.

...................................................................................................................................................

.............................................................................................................................................. [4]

(b) (i) Explain how bar-coded goods assist the hypermarket.

...........................................................................................................................................

...................................................................................................................................... [3]

(ii) Explain how branded goods assist the customer.

...........................................................................................................................................

...................................................................................................................................... [4]

© UCLES 2016 7101/11/O/N/16

(c) Many customers now buy online.

Explain why customers are attracted to online shopping.

...................................................................................................................................................

.............................................................................................................................................. [6]

(d) Using an example, explain one way in which personal service is needed in retailing.

...................................................................................................................................................

.............................................................................................................................................. [3]

© UCLES 2016 7101/11/O/N/16 [Turn over

3 The bar chart in Fig. 1 shows a country’s world trade in goods from 2010 to 2015.

A COUNTRY’S WORLD TRADE IN GOODS

Exports Imports
4500
4000
3500
3000
$ Million

2500
2000
1500
1000
500
0
2010 2011 2012 2013 2014 2015
Year

Fig. 1

Use Fig. 1 to help you answer the following questions.

(a) (i) Identify the year that the country exports the most goods.

...................................................................................................................................... [1]

(ii) Identify the year that the country imports the least goods.

...................................................................................................................................... [1]

(iii) Explain why the Balance of Trade for this country is −$500 million for 2015.

...........................................................................................................................................

...................................................................................................................................... [2]

© UCLES 2016 7101/11/O/N/16

(b) Explain why countries find it necessary to trade with each other.

...................................................................................................................................................

.............................................................................................................................................. [6]

...................................................................................................................................................

.............................................................................................................................................. [4]

© UCLES 2016 7101/11/O/N/16 [Turn over

(d) Many goods exported to other countries are transported in shipping containers.

(i) State two features of a shipping container.

...........................................................................................................................................

...................................................................................................................................... [2]

(ii) Explain why the containerisation of goods has become so important in international
trade.

...........................................................................................................................................

...................................................................................................................................... [4]

© UCLES 2016 7101/11/O/N/16

4 Victor makes furniture and insured his warehouse against fire. His annual fire premium is about to
be renewed.

(a) Explain two reasons why Victor needs a warehouse.

...................................................................................................................................................

.............................................................................................................................................. [4]

(b) Victor’s fire insurance policy offers cover for consequential loss. What does this mean?

...................................................................................................................................................

.............................................................................................................................................. [3]

...................................................................................................................................................

.............................................................................................................................................. [4]

© UCLES 2016 7101/11/O/N/16 [Turn over

(d) Why will insurance cover be provided only if Victor has insurable interest?

...................................................................................................................................................

.............................................................................................................................................. [3]

(e) Assess the importance of adequate insurance cover to the future success of Victor’s furniture
business.

...................................................................................................................................................

.............................................................................................................................................. [6]

© UCLES 2016 7101/11/O/N/16

5 Eyah is planning to open a small restaurant. She is keen to have an appointment at the bank in
order to open a bank account, find out about making payments and obtaining a loan.

(a) Explain two differences between a current account and a deposit account.

...................................................................................................................................................

.............................................................................................................................................. [4]

(b) Eyah would prefer that customers pay their restaurant bills by credit card or debit card.

(i) Explain how the system of credit card payment operates.

...........................................................................................................................................

...................................................................................................................................... [4]

(ii) Describe one advantage to Eyah’s business of customers paying by debit card.

...........................................................................................................................................

...................................................................................................................................... [2]

© UCLES 2016 7101/11/O/N/16 [Turn over

(c) Apart from debit and credit cards, name and describe two other payment services offered
through a current account at a bank.

...................................................................................................................................................

.............................................................................................................................................. [6]

(d) State four questions that the bank might ask Eyah before granting her a loan.

...................................................................................................................................................

.............................................................................................................................................. [4]

© UCLES 2016 7101/11/O/N/16

SECTION B

Answer both questions in this section.

6 Fig. 2 shows an invoice.

INVOICE
INVOICE No: 538
Order NO: 892
Date: 19 October, 2016 Terms: 5% 7 days, 3% one month

From: Beller Freezers Wholesalers Ltd To: AJ Electrical Retail Supplies

KAMPONG KAPOK ARCADE SALAFFA
BRUNEI DARUSSALAM CUREPIPE
BRUNEI MAURITIUS

Quantity DESCRIPTION UNIT PRICE ($) $

40 lengths Conduit 2.10 84.00
12 Brass Adapters 0.50 6.00
10 cans Oil 6.00 60.00
Subtotal 150.00
Plus Sales Tax 22.50
TOTAL 172.50
E & OE

Fig. 2

Use Fig. 2 to help you answer the following questions.

(a) (i) State the name of the supplier.

...................................................................................................................................... [1]

(ii) When was the invoice prepared?

...................................................................................................................................... [1]

(iii) Name two commercial documents which might have been used before the invoice was
prepared.

...........................................................................................................................................

...................................................................................................................................... [2]

(b) (i) What is the meaning and importance of the abbreviation ‘E & OE’ at the bottom of the
invoice?

...........................................................................................................................................

...................................................................................................................................... [2]

(ii) What do the terms ‘5% 7 days, 3% one month’ refer to, and why is it offered?

...........................................................................................................................................

...................................................................................................................................... [3]

(c) The Accounts Department has prepared this invoice.

State two other functions of the Accounts Department.

...................................................................................................................................................

.............................................................................................................................................. [2]

(d) (i) What does ‘Ltd’ refer to at the end of the name, Beller Freezers Wholesalers Ltd?

...........................................................................................................................................

...................................................................................................................................... [1]

(ii) Explain the importance of the term ‘Ltd’.

...........................................................................................................................................

...................................................................................................................................... [2]

(e) Explain three advantages to AJ Electricals of using a wholesaler.

...................................................................................................................................................

.............................................................................................................................................. [6]

7 Fig. 3 shows the percentages spent on individual advertising media in a country.

Advertising Media Expenditure for 2015–16

Cinema
Outdoor 0.3%
3.3%
Mail
5.4%
Online
10.5%

Newspapers
30.5%

Magazines
10.6%

Radio
11.5%
TV
27.9%

Total expenditure = $100 million

Fig. 3

Use Fig. 3 to help you answer the following questions.

(a) (i) Which advertising medium has the most expenditure?

...................................................................................................................................... [1]

(ii) Give an example of outdoor advertising.

...................................................................................................................................... [1]

(iii) What is the total percentage spent on radio and TV advertising?

...........................................................................................................................................

...................................................................................................................................... [2]

(b) Explain one difference between magazine and mail advertising.

...................................................................................................................................................

.............................................................................................................................................. [2]

...................................................................................................................................................

.............................................................................................................................................. [6]

(d) Explain why cinema advertising is not a popular advertising medium.

...................................................................................................................................................

.............................................................................................................................................. [4]

(e) Discuss whether or not businesses expect to gain from expenditure on advertising. Give
reasons for your answer.

...................................................................................................................................................

.............................................................................................................................................. [4]

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.

Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

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Cambridge Ordinary Level

Uploaded by

Cambridge Ordinary Level

Uploaded by

Cambridge International Examinations

Cambridge Ordinary Level

COMMERCIAL STUDIES 7101/11

READ THESE INSTRUCTIONS FIRST

The businesses described in this Question Paper are entirely fictitious.

This document consists of 18 printed pages and 2 blank pages.

Answer three questions from this section.

(a) Explain what is meant by:

© UCLES 2016 7101/11/O/N/16

(c) Explain how transport assists distribution in international trade.

(d) Trading has been improved by developments in telecommunications.

(i) Explain two advantages of telecommunications compared to Post Office services.

© UCLES 2016 7101/11/O/N/16 [Turn over

(a) State four features of a hypermarket.

(b) (i) Explain how bar-coded goods assist the hypermarket.

(ii) Explain how branded goods assist the customer.

© UCLES 2016 7101/11/O/N/16

(c) Many customers now buy online.

Explain why customers are attracted to online shopping.

© UCLES 2016 7101/11/O/N/16 [Turn over

A COUNTRY’S WORLD TRADE IN GOODS

Use Fig. 1 to help you answer the following questions.

© UCLES 2016 7101/11/O/N/16

© UCLES 2016 7101/11/O/N/16 [Turn over

(i) State two features of a shipping container.

© UCLES 2016 7101/11/O/N/16

(a) Explain two reasons why Victor needs a warehouse.

© UCLES 2016 7101/11/O/N/16 [Turn over

© UCLES 2016 7101/11/O/N/16

(i) Explain how the system of credit card payment operates.

© UCLES 2016 7101/11/O/N/16 [Turn over

© UCLES 2016 7101/11/O/N/16

Answer both questions in this section.

6 Fig. 2 shows an invoice.

From: Beller Freezers Wholesalers Ltd To: AJ Electrical Retail Supplies

Quantity DESCRIPTION UNIT PRICE ($) $

Use Fig. 2 to help you answer the following questions.

(a) (i) State the name of the supplier.

(ii) When was the invoice prepared?

© UCLES 2016 7101/11/O/N/16 [Turn over

(c) The Accounts Department has prepared this invoice.

State two other functions of the Accounts Department.

(ii) Explain the importance of the term ‘Ltd’.

© UCLES 2016 7101/11/O/N/16

(e) Explain three advantages to AJ Electricals of using a wholesaler.

© UCLES 2016 7101/11/O/N/16 [Turn over

7 Fig. 3 shows the percentages spent on individual advertising media in a country.

Advertising Media Expenditure for 2015–16

Total expenditure = $100 million

Use Fig. 3 to help you answer the following questions.

(a) (i) Which advertising medium has the most expenditure?

(ii) Give an example of outdoor advertising.

(iii) What is the total percentage spent on radio and TV advertising?

© UCLES 2016 7101/11/O/N/16

(b) Explain one difference between magazine and mail advertising.

(d) Explain why cinema advertising is not a popular advertising medium.

© UCLES 2016 7101/11/O/N/16 [Turn over

© UCLES 2016 7101/11/O/N/16

© UCLES 2016 7101/11/O/N/16

© UCLES 2016 7101/11/O/N/16

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