SECTION A: ( 20 marks)

1. The main purpose of a cash discount to a seller is to

A) Sell in large quantities

B) Attract more customers

C) Encourage prompt settlement of bills

D) Retain regular customers

2. Which of the following may a drawer use to pay rent to a landlord on monthly basis for a year

A) Credit transfer

B) Money order

C) Bank draft

D) Standing order

3. A commission agent is one who

A) Links buyers and sellers for a fee

B) Sells good on behalf of the manufacturer

C) Sells goods by auction

D) Guarantees payment for the principal

4. A credit transaction is one where payment

A) Is done before goods and services are delivered

B) For goods and services is done at a later date

C) Is higher than the value of goods and services purchased

D) And transfer of goods takes place at the same time

5. A trader purchased goods worth shs2, 000,000 and was allowed 20% trade discount. Calculate how much was paid.

A) Shs1,520,000

B) Shs1,600,000

C) Shs1,500,000

D) Shs1,700,000

6. A price quotation which excludes the buyer from all import expenses is referred to as

A) Ex-works

B) In-bond

C) Franco

D) Loco

7. The most suitable form of transporting ammunition, newspaper and gold from Kampala to Dar-es-Salaam is

A) Road

B) Air

C) Water

D) Rail

8. A debenture where some property is pledged against is called

A) irredeemable debenture

B) naked debenture

C) redeemable debenture

D) mortgaged debenture

9. Which one of the following insurance policies is compulsory for all vehicles?

A) Comprehensive

B) Accident policy

C) Fidelity guarantee

D) Third party

10. A firm invested shs.3, 000,000 and after one year it had earned shs.900,000 as profit. Only shs.300, 000 was spent on rent. Calculate the rate of return on capital invested.

A) 81/3%

B) 161/3%

C) 25%

D) 331/3%

11. Identify from the following, a document drawn and signed by a person who owes money.

A) Promissory note

B) Statement of account

C) Credit note

D) Bill of exchange

12. Tertiary production includes

A) Trading and hunting

B) Retail trade and teaching

C) Construction and oil refining

D) Wholesaling and farming

13. Which one of the following statement is correct about co-operatives?

A) Members share profits equality.

B) Decision making is according to the number of shares held.

C) Profits are shared according to participation.

D) The number of membership is limited to fifty

14. The government may set up a business enterprise to

A) Earn more profit

B) Enlighten the public on how to conduct business.

C) Provide essential services

D) Sell shares to members of the public

15. The most common form of business in East Africa is

A) Sole proprietorship

B) Partnership

C) Joint stock companies

D) Co-operatives

16. Calculate the opening stock for a business whose closing stock was shs.3,600,000 and the average stock was shs.3,000,000.

A) Shs.9,600,000

B) Shs.2,400,000

C) Shs.3,300,000

D) Shs.600,000

17. A partner who contributes capital, shares profits and losses but does not take part in the day-to-day running of a business is a

A) Limited partner

B) Quasi partner

C) General partner

D) Dormant partner

18. The form of advertising commonly used by Uganda breweries ltd is

A) Informative

B) Mass

C) Persuasive

D) Indirect

19. The document that acknowledges settlement of a debt is

A) An order

B) An invoice

C) A statement of account

D) A receipt

20. An example of business organization that belong to the public sector in Uganda is

A) Corporations

B) Limited companies

C) Marketing boards

D) Co-operatives

SECTION B (80 marks)

21. a) What are the qualities of a good retailer?

b) State any three advantages of installment selling to a:

i) Seller,

ii) Consumer.

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

i) premium

ii) policy

iii) risk

iv) cover note

b) Explain the importance of any four principles of insurance.

23. a) Mention any four types of information a business should give to enable the advertising agent design a suitable advertisement.

b) Apart from advertising, what other methods may a trader use to promote sales of the business?

24. a) Name main features of a cheque.

b) Give five advantages of using a cheque as a method of payment.

c) Why are cheques not widely used in Uganda?

25. a) i) Define a partnership deed.

ii) State any eight items contained in a partnership deed.

b) What are the advantages of partnership over sole proprietorship?

26. a) Distinguish between the following:

i) consumer goods and producer goods

ii) primary production and secondary production

b) Explain any four factors of production indicating a reward for each.

27. a) What benefits do countries get from international trade?

b) Why do countries put restrictions on international trade?

28. a) Differentiate between margin and mark-up.

b) The following information relates to a retailer's business for the year ending 31st December, 2003:

Stock on 1st January shs.344, 300

Stock on 31st December shs.267, 200

Net purchases shs.2, 122,900

Mark -up 40%

Expenses shs.458, 000

Calculate i) cost of sales

ii) Average stock

iii) Rate of stock turn

iv) Net profit.