MINISTRY OF EDUCATION

GRADE 12 COMMERCE MOCK EXAMINATION – 2022

INSTRUCTIONS: There are three (3) Sections in this Paper A, B and C

 SECTION A – Multiple choice answer all [20] marks.

 SECTION B – Answer all [40] marks
 SECTION C: There are five questions, answer any two questions [40] marks.

SECTION A

1. Which one is an example of an Aid to trade?

A. Buying and selling of goods to make profit.
B. Creating a surplus of production
C. Providing a storage facility
D. Reducing taxes on imports
2. Which group of people distributes raw materials and finished goods?
A. Commercial workers
B. Direct service providers
C. Factory employees
D. Primary producers
3. A business legal binding agreement between two or people that creates an obligation to do cr not do
certain thing is called ……………
A. Acceptance B. Company C. Contrast D. Partnership
4. Which document prepared by the seller, shows a number of transactions and sent to the buyer at the
end of trading period?
A. Credit note B. delivery note C. Invoice D. State of account
5. How much would a buyer pay when given 5% cash discount on an item originally priced at K1,200?
A. K60 B. K1,140 C. K1,195 D. K1,250
6. Which of the following is a method of buying and selling o credit?
A. Deferred payment B. Bank overdraft C. Bank Loan D. Kaloba
7. What is a limit placed on quality of goods imported into a country in one year?
A. Embargo B. Licence C. Quotas D. Tariff
8. ………………. is a document of title of goods, you cannot claim goods without this document.
A. Bill of lading B. Charter party C. Consular invoice D. An indent
9. Who has the overall control of a public corporation?
A. Government B. General partners C. Shareholders D. Managing directors
10. Which source of finance would not be available to a partnership?
A. Bank loan B. Refined profit C. Share issue D. Trade credit
11. Who elects directors in public limited companies?
A. Employees B. Government C. Ordinary shareholder D. Money lenders
12. …………. Provide a source of cheaper and long term capital both new and old companies.
A. LUSE B. Investors C. Commercial banks D. Money lenders
13. Identify from the list one mode of transport……………………….
A. Bus B. Train C. Sea D. Car
14. …………………. is used to store suitable goods on which customs duty has not yet been paid.
A. Manufacturer’s warehouse B. Bonded warehouse C. Retailer’s warehouse

D. Wholesaler’s warehouse

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15. A bank facility used when making regular payments of fixed amount such as rentals is known as………
A. Credit transfer B. Standing order C. Bank loan D. Bank overdraft
16. The telecommunication service that allows a business to send exact copies of documents to a distant
place using telephone line is called …….
A. Confravision B. Facsmile C. Prestel D. Telex
17. A postal service that enables letters to be addressed to a post office in order to be collected in
person’s known as ……..
A. Cash on delivery B. Data post C. Poste restante D. Business reply service
18. Which insurance principle prevents someone from insuring his neighbour’s premises?
A. Indemnity B. Insurable interest C. Subrogation D. Utmost good faith
19. Mrs Hara owns a factory valued at K400 000. She insured the factory with two insurance companies
at the value of K500,000. Later 25% of the factory was destroyed by a fire. How much would each
insurance company Mrs Hara?
A. K50,000 B. K62,500 C. K200,000 D. K250,000
20. Which insurance cover is a transport company required to have by law to carry goods for its
customers?
A. Cash in transit B. Consquential loss C. Public liability D. Third party

SECTION B

Answer all questions in this Section. The number of marks is given at the end of each questions.

1. Mention any three types of items that satisfy human needs. [3 marks]
2. (a) For each of the following statements below state whether they are true/false. [3 marks]
i. Buying and selling of goods and services is called wholesaling.
ii. A contract can either be expressed or implied.
iii. Retail trade is divided into small scale and large scale.
(b) Kamara bought the following goods from Ngwenya company.
 10 pockets of cement at K95 per pocket
 5 tonnes of river sand at K120 per tonne

Calculate the invoice price [3 marks]

3. Using the phrase / words below, answer the questions that follow.
Partnership deed , Memorandum of Association, Article of Association, Certificate of
incorporation, Business permit and Prospectus

(i) ……………….. introduces the business to the people outside.

(ii) It’s a document that acts as birth certificate of a business given by the registra of
companies……………………..
(iii) ……………………Sets out rules and regulations of the business.
(iv) ………………….. acts as a advertisement to invite the public to buy shares in order to raise
capital for a public limited company.
(v) ………………………. Is a document that can be signed by two people in business, it shows
the duties, methods and ratio of profit sharing. [5 marks]
4. Explain the phrase production [3 marks]
5. Give any three roles of the security and stock exchange commission. [3 marks]

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 6. The following describe vessels that are used in sea transport. Name the vessel that fits the
description.
(a) Follows a fixed route and a fixed time table ……………………………….
(b) Can go to any place anywhere as long as there is business……………………………..
(c) Carries vehicles from one place to the other by allowing them to drive on and off the ship
once it reaches its destination………………………….. [3 marks]

7. Match the sentence in A and those in B

SENTENCE (A) PHRASE (B)

A. An account which does not earn (i) Credit union
interest but is popular with
business people
B. Which bank issues notes and (ii) Current account
coins
C. Name the account intended for (iii) Central bank
a small saver with regular
income
D. Bank owned by financial co- (iv) Banker’s draft
operatives and controlled by
the same members
E. A document equivalent banker’s (v) Savings account
cheque
[5 MARKS]
8. Fill in the blank spaces using appropriate word/phrase.
(a) A fax is used to send or receive ……………………………………
(b) Express mail service is used because it is ………………………..
(c) A ……………… can be used for short message service (SMS)
(d) A service that allows people situated at different locations to hold face to face discussion is
known as ………………………. [4 marks]
9. Describe whole Life Assurance [3 marks]
10. Explain the term internet [5 marks]

SECTION C [40 MARKS]

There are five questions in this Section, Answer any two questions.

1. (a) Define Commerce [10 marks]

(b) Explain the advantages and disadvantages of specialization [10 marks]

2. (a) Discuss the main characteristics of a Hypermarket [10 marks]

(b) Why is the wholesaler considered to be:
i. Reservoir
ii. Financier
iii. Risk bearer [10 marks]
3. (a) List some corrective measures that might be taken by a country which has been experiencing
unfavourable balance of payment. [10 marks]
(b) Give reasons for international trade [10 marks]
4. (a) Explain any 5 ways of appeal used in persuading customers to by a product. [10 marks]
(b) Explain 4 advantages of advertising a product on TV and 5 disadvantages of advertising in the

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 newspaper. [10 marks]
5. (a) Explain any five principles of insurance [10 marks]
(b) Explain 5 importance of insurance in business
(c ) Explain the following types of insurance
(i) Marine insurance
(ii) Motor vehicle insurance
(iii) Fidelity
(iv) Employer’s liability
(v) Fire [10 marks]

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 COMMERCE MOCK EXAMINATION 2022

MARKING KEY

SECTION A (MULTIPLE CHOICE ANSWERS

1. C, Providing a storage facility

2. A, Commercial workers
3. C, Contract
4. D, Statement of account
5. B, K1,140
6. A, Deferred payment
7. C, Quotas
8. A, Bill of lading
9. A, Government
10. C, Share issue
11. C, Ordinary share holders
12. A, LUSE
13. C, Sea
14. B, Bonded warehouse
15. B, Standing order
16. B, Facsmile
17. C, Poste restante
18. B, Insurable interest
19. A, K50,000
20. D, third party

SECTION B MAKING KEY

1. Health care, food, shelter, clothing

2. (a) (i) False (ii) false (iii) True
(b) 10 pockets of cement x K90 per pocket = K900
5 tonnes of river sand x K120 per tonne = K600
900 + K600
= K1,400 invoice price
3. (i) Memorandum of association
(ii) Certificate of incorporation
(iii) Article of association
(iv) Prospectus
(v) Partnership deed
4. Production is the provision of goods and services in order to satisfy the needs and wants of mankind
needs are basics that are needed for one’s survival e.g food, shelter. Wants are luxuries e.g car,
cellphone etc.
5. To ensure rules and fair trading and competition observed
 To protect the invester
 Approves the buying and selling of shares
 To develop the securities market in Zambia
6. (a) Passanger linership
(b) Trampship
(c ) Roll and roll off feries (RORO ship)

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7. A – (ii)
B – (iii)
C – (v)
D – (i)
E – (iv)
8. (a) Exact copies of document or just (document)
(b) Fast or quick
(c ) Cellphone or mobile phone
(d) Video conferencing
9. Assurance means “certainty’ whole life police is an insurance
 Cover that compensates after the death of the holder,
 Money can be given to beneficiaries
 The police can also cover education of the children.
 Also the money can be used to settle debts of the deceased.
10.Internet: Is an international network that concerts two or more people using computers, or smart
phones.
 An internet can be used by a trader for advertising of products.
 An internet is also used for e-commerce
 Traders can make and receiving payments using internet on E-banking

SECTION C

QUESTION 1

(a) Commerce is trade and aid to trade.

 Trade is the buying and selling of good in order to make profit.
 There are two types of trade Home and foreign.
 Home trade is divided into (two) wholesale trade which involves the buying of goods in bulk
direct from the producer and retail trade that involves the breaking of bulk in order to sell in
smaller quantities to the customers.
 Foreign trade is also divided into imports that involves the buying goods and services from other
countries and export trade that involves the selling of goods and services to other countries.
 Aids to trade are commercial services that assist trade to take place such as
(i) TRANSPORT – For delivery of people, goods and raw materials from one place to the
other.
(ii) INSURANCE – For protecting and compensating traders against losses and damages due
to unforeseen events.
(iii) BANKING – For safeguarding traders finances
(iv) WAREHOUSE = For storage of goods awaiting sales or distribution.
(v) ADVERTSEMENT – For descemination of information to the public.
(vi) COMMUNICATION – For allowing the buyer and the seller to contact each other
(b) Specialisation is the breaking down of task according to which an individual does best.
ADVANTAGES
 Workers become skilled
 Workers to mass production
 Everyone’s ability is made use of training is quicker as jobs are easy to learn
 Time is saved workers do not have to more from operation to the other.

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 ADVANTAGES
 Work becomes boring and leads to low productivity
 Individual skills and craft are lost
 Great use of machinery leads to unemployment
 Workers become dependent on each other
 Slow worker find it difficult to keep pace with others
 Difficult to find employment after loss of a job.
QUESTION 2
(a) Hyper market is large scale retail shop located outside town center. The following are
characteristics:
 Are very large retail shop establishment with a floor space of 500m2
 Offers a very wide range of goods.
 Usually located outside town centers along main roads.
 Usually located where a good road network and communication.
 They provide large car parking space.
 They offer self-service
 Goods are sold on cash and carry basis
 Usually offers low prices as a result of economies of scale
 Goods are displayed in appropriate sections [10 marks]
(b) A wholesaler is any business person who buys goods in bulk direct from the producer and sell to
the retailer. [1 mark]
(i) RESEVOIR
 The wholesale stores goods and keep them until they are required by the
retailer.
 He buys in bulk from different producers
 He stores goods to avoid shortage on the market [3 ]
(ii) FINANCIER
 Usually pay cash for good bought from the producers
 Enable the producers to have working capital.
 Gives goods on credit to retailers who cant afford cash
 Hence he finances both the manufacturer and retailers
(iii) RISK BEARER
 Buys goods in bulk in advance
 He buys goods that may not be required by the retailer
 He buys goods which may deteriorate and go out of fashion if retailers do not
buy on time.
 May lose goods in the warehouse due the theft or fire. [3 marks]

QUESTION 3

(a) May improve customs duties on duty free items

 May increase customs duty on suitable goods
 May introduce a system of impart quotas
 May restrict foreign travel
 May introduce export incentives
 May promote local industries

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  May promote the use of locally made products
 May devalue the currency
 May inform people about benefits of exports
 May introduce system of exchange control [10 marks]
(b) International trade is the buying and selling of goods and services among countries. The
following are the reasons why people engage in international trade.
 To get goods that cannot be produced in own countries
 To supplement insufficient qualities produced
 To get goods of high quality
 To widen the market
 To do away with surpluses
 To obtain foreign currencies
 To create friendship among countries
 To obtain cheap goods
 To mobilise resources efficiently e.g technology
 To promote peace within the region
[10 marks]
QUESTION 4
(a) Advertising appeals are techniques used when advertising a product to persuade people.
(i) PERSONALITY APPEAL
This is a type of an appeal where famous person/people may be shown in the
advertisement e.g Kalusha Bwalya footballer, Esther Phiri Boxer
(ii) ROMANCE
This is a type of an appeal used in advertisement that suggests that the user of a
product will be attractive to the opposite sex e.g Romance soap
(iii) AMBITION
The advertisement suggests that he/she will be more successful in his /her ambition if
use a product for example UNZA whose motto is “Service and Excellency”
(iv) WORK SIMPLIFICATION
The product shown in an advertisement to simplify work performance for example
computer, nutro charge energy drink
(v) HEALTH
This appeal is sued to make the user of a product healthier for example, detto soap,
baby porridge
(vi) Display of goods
(vii) Social acceptance etc
(b) (i) The following are the advantages of advertising a product on t.v
 It combines both sound and pictures
 Good can be demonstrated to the views
 The advert can be repeated as many time as possible
 The advert can be shown at pick hours (during news)
 It gives widest national coverage
 Most people have television therefore, the product can be known quickly

(ii) The following are the disadvantages of advertising in the news paper.

 Not everyone knowns how to read (illiteracy)

 It is more expensive than radio advertisement
 Products that requires demonstrations cannot be easily demonstrated

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 Newspaper can be disposed and damage easily
 News paper are not distributed quickly to some places.

QUESTION 5

(a) The following are principles of insurance

(i) UTMOST GOOD FAITH
This is an insurance principle that states that all parties must dispose relevant and
accurate facts relating to the risk being covered. Must act in good faith by telling the
truth.
(ii) INDEMNITY
This is a principle which states that the insurer must be restored to the former position
after an accident and both the insurer and the insured should not gain from the
accident neither should they make a loss.
(iii) INSURABLE INTEREST
States that the person taking an insurance cover must insure his or her property but,
not someone .e.g you cannot insure your neighbour’s house.
(iv) PROXIMATE CAUSE
This principle state that the insurance compate can only compensate for the risk insured
against if your car is stolen and you only insured for accident they cannot compensate
you.
(v) CONTRIBUTION
State that where the insured person insured a property with two or more insurance
companies, all the companies must contribute to compensate for the loss. [10 marks]
(b) Explain 5 importance of insurance in business
 Encourages people to do business
 It provides a mean of saving
 It encourages people with small businesses to invest in large businesses.
 Insurance compensates traders on their loss or damage
 Helps business to continue even when suffered an accident or theft. [5 marks]
(c) (i) MARINE INSURANCE
This is a type of insurance that covers for ships, cargo and hull (body of a ship)
(ii) MOTOR VEHICLE INSURANCE
This is a type of an insurance that covers motor vehicles and this insurance thee are three
policies
 Fire, theft and third party
 Full comprehensive

(iii) FIDELITY

This is a types of an insurance that covers and provides compensation for losses suffered due
to unfaithful workers e.g accountants or cashiers or any other workers who steal in your
business.

(iv) EMPLOYER’S LIABILITY

This is a type of insurance that protects the employer from claims that may be made
against them due to injuries or accidents or death of a worker at work.

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(v) FIRE
This is a type of an insurance that can be compensated as a result of a loss or damage
caused by fire. There are two policies ordinary or consequential [5 marks]

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