SECTION A: (20 marks)

1. Trade means

A) Buying and selling of manufactured goods only.

B) Selling of goods and services to the ultimate customers.

C) Buying and selling of goods and services with the infection of making a profit.

D) Any activity undertaken to make profit.

2. Which of the following are classified under secondary industries?

A) Mining and farming.

B) Textile milling and road construction.

C) Mining and textile milling.

D) Farming and road construction.

3. Give a mark-up of 40% and the cost of goods sales of shs. 2,800,000. The gross profit will be

A) Shs3,920,000

B) Shs1,680,000

C) Shs800,000

D) Shs1,120,000

4. Excise duty is a form of

A) Indirect tax.

B) Proportional tax.

C) Income tax.

D) Direct tax.

5. A person who coordinate other factors of production in the production process is called

A) General Manager.

B) Managing Director.

C) An Entrepreneur.

D) Production Manager.

6. Which one of the following documents enables the correct calculation of the custom duties on the goods?

A) A bill of lading.

B) Letter of hypothecation.

C) Letter of credit.

D) Certificate of origin.

7. A limited partnership is a business in which

A) At least one partner enjoys limited liability.

B) There are no liabilities.

C) All partners enjoy limited liability.

D) All partners have unlimited liability.

8. The summary below shows Mary's current account for the month ending January 20th

January 2nd the account had been overdrawn by shs150, 000.

January 15th pay-in-slip showed shs600, 000.

January 29th drew a cheque for shs400, 000.

How much did Mary have on her account by January 31st?

A) Shs1,150,000

B) Shs50,000

C) Shs850,000

D) Shs350,000

9. An agent who sells goods on behalf of his/her client is known as a

A) Broker.

B) Commission agent.

C) Factor.

D) Del credere.

10. Which of the following is an advantage of a retailer to a consumer

A) Offering a wide variety of goods to consumer.

B) Selling of goods at low prices to customers.

C) Keeping prices of goods stable for consumer.

D) Buying for consumers only cheap goods from the wholesalers.

11. One of the main function of a public enterprise is to

A) Provide entrepreneurship skills to the public.

B) Make profit for the government.

C) Encourage competition in the public sector.

D) Provide essential services to the public.

12. The following are methods of discouraging import trade except

A) Tariffs.

B) Quotas.

C) Excise duties.

D) Embargoes.

13. The best method for advertising a new brand of typewriter is through the

A) Newspapers.

B) Radio.

C) Posters.

D) Television.

14. A situation where a business has more assets than liabilities is called

A) Bankruptcy.

B) Insolvency.

C) Solvency.

D) Liquidity.

15. A tax which is charged on imported goods according to the commodity's price is called

A) Advalorem tax.

B) Specific tax.

C) Direct tax.

D) Quantitative tax.

16. Why is it necessary to create a customs union? To

A) Have one government and political union.

B) Create a larger market for producers.

C) Collect more money from imports.

D) Keep out foreign products.

17. A company's current asset are 125,000,mixed assets are shs 500,000,long term liabilities are shs300,000 and current liabilities are shs 85,000.calculate its working capital

A) Shs200,000

B) Shs40,000

C) Shs240,000

D) Shs210,000

18. Which of the following characteristics is true of tramp steamers? They

A) Have no timetable.

B) Follow regular routes.

C) Charge very high rates.

D) Handle specialized cargo.

19. Which one of the following abbreviations included in an invoice signifies the seller reserves the right to correct an invoice?

A) F.O.B.

B) C&F

C) C.I.F.

D) E&O.E

20. The insurance policy which covers goods in ships or in ports is called

A) Voyage policy.

B) Marine hull policy.

C) Floating policy.

D) Marine cargo policy.

SECTION B: (80 marks)

21. a) What are the functions of money?

b) Describe the qualities of good money.

22. a) Distinguish between a bill of lading and bill of exchange.

b) What are the features of a bill of exchange?

c) Under what conditions may a bill of exchange be dishonored?

23. a) Differentiate between the following terms as used in international trade.

i) Bi-lateral trade and multi-lateral trade.

ii) Balance of trade and terms of trade.

iii) Open indent and closed indent.

b) Describe the factors that limit international trade.

24. a) Give the differences between multiple shops and departmental stores.

b) Explain the functions of large scale retailers to the:

i) Producers.

ii) Consumers.

25. a) Define the term containerization.

b) Outline any five advantages and three disadvantages of containerization.

26. a) What is wholesale trade?

b) Describe four main characteristics of wholesale trade.

c) Under what circumstances may a wholesaler be eliminated from the chain of distribution?

27. a) state three advantages of each of the following methods of communication:

i) Telephone.

ii) Letters.

b) What is the role of communication in the development of trade?

28. Alpha's Books of accounts showed the following records:

Average margin 20%

Average stock at cost shs114,000

Rate of stock turn 5 times

Expenses 10%


a) Sales.

b) Gross-profit.

c) Expenses.

d) Net profit.