SECTION A: (20 Marks)

  1. The main branches of commerce are

    A. production and exchange.

    B. production and consuption.

    C. buying, selling and aids to trade.

    D. home trade and foreign trade

  2. Limited interest on share capital, as a principle of co-operative societies means

    A. no dividend is paid on capital.

    B. members do not contribute capital.

    C. dividend payment is based on investment.

    D. production is encouraged not financial investment,

  3. A business firm insured a vehicla worth shs5,000,000 for shs4,000,000 against accident. How much would the firm be compensated if the vehicle is destroyed?

    A. shs4,000,000

    B. shs5,000,000

    C. shs1,000,000

    D. shs9,000,000

  4. Which of the following statements is true of Tramp steamers? They

    A. follow a fixed timetable and specific routes.

    B. do not follow specific routes but use a fixed timetable.

    C. only follow specific routes.

    D. do not follow a fixed timetable

  5. Railway transport is preferred to road transport because

    A. it is cheap over long distances.

    B. goods can be sold enroute.

    C. it is faster over short distances.

    D. it is suitable and economical for expensive goods.

  6. What is meant by Ex-works as used in trade? It is where the quoted price covers

    A. only the cost of goods at the factory.

    B. charges for carriage to the docks.

    C. costs to the port of destination and unloading charges.

    D. only handling charges in a bounded warehouse.

  7. Wholesalers may be eliminated from the chain of distribution if the

    A. goods are very cheap

    B. manufacturers use their agents

    C. demand for goods increases.

    D. manufacturers are far from the consumers.

  8. Atrader's records have the following information: Capital employed valued at shs6,500,000, buildings valued at shs2,000,000 and shop equipment valued at shs3,000,000. Determine the trader's working capital.

    A. shs1,000,000

    B. shs4,500,000

    C. shs1,500,000

    D. shs3,500,000.

  9. Which one of the following refers to the ability of a good or service to satisfy a need?

    A. consuption

    B. demand

    C. utility

    D. production

  10. A document which invites the public to subsccribe for shares in the public limited company is the

    A. Memorandum of Association.

    B. Articles of Association.

    C. Certificate of Trading

    D. Prospectus.

  11. A non-contributor of capital but whose name is used in partnership referred to as the

    A. Quasi Partnership

    B. limited partner

    C. minor partner

    D. dormant partner

  12. Why is an insurance contract referred to as a contract of indemnity? Because it

    A. is profitable to the insured

    B. gives confidence to the insured

    C. compesates the insured.

    D. ensures safety of property.

  13. When government takes over all firms operating in a particular industry, this is known as

    A. privitization of industries.

    B. nationalization of industries

    C. merging of industries

    D. delocalization of industries

  14. The difference between the value of visisble exports and visible impots is known as

    A. Terms of trade

    B. Balance of payment

    C. Terms of payment

    D. Balance of trade

  15. Which one of the following pairs is a classification of a joint stock company?

    A. registered and private

    B. public and registered

    C. registered and statutory

    D. public and statutory

  16. If an increase in the price of a commodity leads to a decrease in the demand for another commodity, the two goods are said to be

    A. compementary goods.

    B. substitute goods.

    C. consumer goods.

    D. inferior goods.

  17. Interest is a reward for the services of

    A. labour

    B. entrepreneur

    C. capital

    D. land

  18. A bonded warehouse is where

    A. imported goods are stored awaiting collection

    B. manufacturers store their goods before they are collected

    C. agricultural goods are stored before they are processed.

    D. imported goods are stored before payment of customs duties

  19. Sole proprietorship benefits the owner because

    A. the business expands faster

    B. quick decisions can be made

    C. the owner has wider knowledge of the business

    D. it promotes specialization

  20. Abill of exchange which is settled by a drawee before the maturity date is called a

    A. retired bill

    B. dishonoured bill

    C. usance bill

    D. discouted bill

SECTION B: (80 marks)

  1. a) Give six advantages of paying by cheque.

    b) Explain any seven circumstances under which a cheque may be dishonoured.

  2. a) What is a stock Exchange?

    b) Define the following terms as used in stock exchange .

    I) bulls,

    ii) bears,

    iii) stags

    c) Explain any six roles of a stock exchange in the development of a country.

  3. a) Outline the proedure of claiming compesation from an insurance company.

    b) Give five reasons why insurance services are not commonly used by the business community in Uganda.

    c) Mention any six policies issued under accident insurance

  4. a) Outline four characteristics of supermarkets.

    b) Explain four advantages and four disadvantages of large scale retailers.

  5. a) Differentiate between a produce marketing board and a commodity marketing board.

    b) state six functions of a marketing board.

    c) What problems are faced by marketing boards?

  6. a) Give four reasons why international trade is essential

    b) What eight measures can be taken by the government to promoted regional trade?

  7. a) Define a partnership Deed.

    b) Outline eight items contained in a partnership Deed.

    c) Explain five advantages of a partnership form of business.

  8. A firm had the following records at 31 Dec. 2006:


    Stock at 1-01-2006 182,400

    stock at 31-12-2006 213,600

    purchases 1,382,900

    sales 1,966,900

    returns outwards 34,100

    returns inwards 51,000

    Determine the firm's:

    a) I) Turn over

    ii) Netpurchase

    iii)Goods availabe for sale

    iv) Costs of sales

    v) Rate of stock turn

    b) I) Gross profit

    ii) Mark up

    iii) Margin