SECTION A: (20 marks)

1. The Articles of Association

A) States the liability of members of a company.

B) States the share capital of the company.

C) States the rights and powers of shareholders in a company.

D) Outline the objectives for forming a company.

2. The debenture where some property is pledge against it is

A) Naked debenture.

B) Mortgage debenture.

C) Redeemable debenture.

D) Fixed debenture.

3. Which of the following sets are functions of a bill of lading?

i) It acts as a receipt.

ii) It is a contract of carriage (for the goods).

iii) It's a document of title to the goods.

iv) It puts the liability of damages in transit on to the shipper.

A) (i), (ii) and (iii).

B) (i), (iii) and (ii).

C) (i), (ii) and (iv).

D) (ii), (iii) and (iv).

4. Mr. Amuyo bought goods on credit. He was allowed 20% trade discount and 4% cash discount. After utilizing all the discounts, he required to pay shs.30, 720. What was the price indicated on the list?

A) Shs.38, 093.

B) Shs.38, 278.

C) Shs.38, 439.

D) Shs.40, 000.

5. Then main reason why partners register their names with registrar of business. Names is to

A) Stop future quarrels among themselves.

B) Make names of real business owners known.

C) Get permission to proceed with business.

D) Hide the names of real business owners.

6. Mining is an example of

A) Tertiary production.

B) Direct production.

C) Secondary production.

D) Primary production.

7. Which one of the following is true about Hire Purchase retailing?

A) Goods become the property of the buyer after all the installments have been paid.

B) If the buyer fails to pay an installment, the seller has no right to repossess the good.

C) The goods become the property of the buyer on first installment.

D) An initial deposit on a commodity is not essential.

8. The difference between visible imports and visible exports of country is called

A) Balance of payment.

B) Terms of trade.

C) Balance of trade.

D) Trade deficit.

9. Which of the following documents is a contract between shipper and ship owner?

A) Airway bill.

B) Charter party.

C) Bill of lading.

D) Bill of exchange.

10. A document sent to the buyer by the seller showing goods returned and effecting a reduction in the invoice is called a

A) Credit note.

B) Debit note.

C) Delivery note.

D) Statement

11. Which of the following functions is not performed by a central bank?

A) Issuing currency.

B) Lender of last resort.

C) Creating credit by lending to individuals.

D) Exchange control.

12. One of the following reasons explains the existence of the installment selling.

A) Decrease costs of selling.

B) Enables consumers buy goods offered at low prices.

C) Enables consumers buy highly priced goods.

D) Encourages consumers to buy items that they may not require.

13. Why is consumer protection essential in advertising?

A) Check the dangers of misleading advertisements.

B) Creates demand for goods.

C) Helps in reducing prices.

D) Promotes markets research.

14. One of the principles of insurance which requires the insured to surrender the scrap after full compensation has been met is

A) Indemnity.

B) Subrogation.

C) Utmost good faith.

D) Insurable interest.

15. What is the purpose of the Uganda manufacturers' Association (UMA) show ground at lugogo?

A) Reduce selling expenses.

B) Reduce prices of goods.

C) Discourage customers from purchasing imported goods.

D) Create market for goods.

16. Which of the following terms is used in case of delivery of goods in internal routes made at the dock?

A) Ex-warehouse.

B) Ex-works.

C) Ex-quay.

D) Ex-station.

17. Why is a cheque crossed? So that

A) It may not be endorsed.

B) Payment is done through the payee's account only.

C) It can be cashed across the counter.

D) It can bounce easily.

18. Which of the following may not cause winding up of a limited company?

A) Petition from a creditor.

B) Company's assets fail to cover debts.

C) One of the shareholders decides to sell his shares.

D) Voluntary winding up by shareholders.

19. Valued Added Tax (VAT) is

A) A tax levied on goods from other countries.

B) A tax paid by customer at the time of purchase of a commodity.

C) A direct tax paid on the value added to the product.

D) An indirect tax paid on the value added to the product.

20. Which of the following is not a characteristic of a public limited company?

A) The liability of members is limited.

B) Has a minimum of seven members.

C) Has a minimum of two members.

D) The shares are freely transferrable.

SECTION B: (80 marks)

21. a) What is meant by sales promotion?

b) Describe with examples the forms of sales promotion used in Uganda.

c) Give four disadvantages of advertising to consumers.

22. Briefly mention how the following services benefit consumers.

i) Communication.

ii) Warehousing.

iii) Branding.

iv) Commercial Banking.

23. a) What is sole proprietorship?

b) What are the advantages and disadvantages of sole proprietorship?

24. a) What is a cheque?

b) Explain the precautions that a drawer can take to ensure the security of his/her cheque.

c) Why is a bank draft preferred as a method of payment?

25. a) Differentiate between peddlers and hawkers.

b) Give eight reasons to explain why the number of hawkers is on the increase in Uganda.

26. a) Distinguish between commodity Marketing Board and Produce Marketing Board.

b) Explain four functions of Marketing Boards and four problems faced by these boards.

27. Discuss briefly the basic principles of insurance.

28. The following information is available from the books of Tayari & Co.Ltd for the year ending 31-12-1996.

Stock, 1st January, 1996 1,140,000

Year's purchases 9,210,000

Year's sales 10,694,000

Returns outwards 340,000

Returns inwards 164,000

Expenses 1,340,000

Stock, 31st December, 1996 1,740,000


a) Turnover ( total net sales)

b) Total net purchases

c) Total cost of sales

d) Gross profit

e) Net profit.