SECTION A: (20marks)

1. Which of the following is a feature of cash and carry wholesale business?

A) Offers self-service facilities.

B) Extends credit facilities.

C) Provides delivery facilities.

D) Sells goods in bulk.

2. The sum insured refers to the

A) Value of property insured.

B) Number of properties insured.

C) Total number of compensation received.

D) Total number of risks insured.

3. Super markets are different from other large scale retail businesses because of

A) Selling one type of goods.

B) Self service.

C) Selling only to registered members.

D) Extending credit facilities to consumers.

4. The difference between a broker and a factor is that a

A) Broker owns the goods unlike a factor

B) Factor possesses goods unlike a broker.

C) Factor gets higher commission unlike a broker.

D) Broker sells goods in his own names unlike a factor.

5. Which of the following best explain why government established state enterprises? To

A) Reduce exploitation of the consumers.

B) Minimize competition.

C) Generates profits.

D) Provide unprofitable but desirable services.

6. A principle of insurance where the insured must suffer the final loss is called

A) Utmost good faith.

B) Proximate cause.

C) Insurable interest.

D) Subrogation.

7. A price quotation which includes all expenses up to the buyers premises is called

A) Franco.

B) Landed.

C) Duty paid.

D) Loco.

8. An accumulation preference shareholder has missed dividends over the last three years due to lack of profits. If he holds fifty shares shs.10,000 each at a rate of 6%, how much dividend will he get this year?

A) Shs.18,000

B) Shs.25,000

C) Shs.30,000

D) Shs.90,000

9. A document where the importer specifies the manufacturer of the goods to be imported is called

A) An order.

B) A closed indent.

C) A certificate of origin.

D) An invoice.

10. Which of the following is a basic principle of co-operatives?

A) Profit maximization.

B) High interest on share capital.

C) Democratic administration.

D) Restricted membership.

11. Trade between countries can take place because of

A) Difference in costs of production.

B) Same level of development.

C) Equal distribution of resources.

D) Having the same currency.

12. Which one of the following methods of trade restrictions is being used by OPEC?

A) Tariffs.

B) Total ban.

C) Price control.

D) Quotas.

13. A consignment of goods was invoiced at shs.200, 000 at a trade discount of 10%, cash discount of 5%. What was the amount payable to the seller?

A) Shs.170,000

B) Shs.171,000

C) Shs.180,000

D) Shs.190,000

14. Dumping as applied in trade means

A) Disposal of goods that have gone stale.

B) Disposal of goods in water to save a ship from sinking.

C) Producing of too many goods that cannot be bought.

D) Selling of goods abroad at a give away price.

15. What is true about most commercial banks? They

A) Are government owned.

B) Offer savings accounts only.

C) Are joint stock companies.

D) Offer current accounts only.

16. Suppose the turnover of a business was shs.240,000 and the total cost of sales was shs.200,000, what was the mark-up?

A) 20%

B) 16.7%

C) 83.3%

D) 120%

17. The role of insurance to a business is to

A) Make profits.

B) Guarantee compensation.

C) Guarantee safety.

D) Ensure efficiency.

18. A situation where business expenses exceed gross profits is called

A) Gross loss

B) Redeemable debt.

C) Bad debt.

D) Net loss.

19. Which one of the following documents does a buyer receive when he has been overcharged in the invoice?

A) Advice note.

B) Debit note.

C) Credit note.

D) Proforma invoice.

20. The act of giving names to commodities is known as

A) Pre-packing.

B) Branding.

C) Trade mark.

D) Blending.

SECTION B: (80 marks)

21. a) Define the following terms as used in insurance:

i) premium,

ii) sum-insured,

iii) risk,

iv) co-insurance,

v) Indemnity.

b) Explain the steps followed when taking out an insurance policy.

22. a) Explain the role of transport in the development of trade in Uganda.

b) What are the limitations of water transport?

23. a) Describe the services commercial banks offer to traders in Uganda.

b) What advantages does payment by cheque have over payment by cash?

24. a) Define the term localization of industry.

b) Describe the advantages and disadvantages of localization.

25. a) Why do consumers need government protection?

b) What methods does the government of Uganda employ to protect consumers?

26. a) Give seven ways in which a partnership differs from a public limited liability company.

b) What are the disadvantages of a partnership?

27. a) Give four advantages of each of the following retailing services:

i) Self service.

ii) Hire purchase.

b) State two advantages of hire purchase to the seller.

28. Mr. Kato's accounts showed the following as on 30th May,1997:

Fixed assets shs.500,000

Current assets shs.220,000

Long-term liabilities shs.200,000

Current liabilities shs.180,000

Using the information, calculate:

i) Capital owned,

ii) Capital employed,

iii) Working capital.

b) In addition, Kato's books also had the following information:

Opening stock shs.120, 000

Closing stock shs.150, 000

Net purchases shs.820, 000

Long-term liabilities shs.982, 000

Expenses shs12, 000


i) Cost of sales,

ii) Gross profit,

iii) Rate of turnover.