SECTION A: (20 marks)

1. Which one of the following tems refers to creation of utility?

A) Satisfactions

B) Exchange

C) Production

D) Consuption

2. A secondary school produces maize on its farm for consumption by students. What type of production is this?

A) Direct

B) Secondary

C) Tertiary

D) Indirect

3. Which one of the following factors influences a consumer's decision to buy

A) Cost of production

B) Level of technology

C) Number of production

D) Fashion and preference.

4. Which one of the following insurance principles is applied when the insured over-declares the value of hs/her property?

A) Proximate cause

B) Utmost good faith

C) Indemnity

D) Insurable interest.

5. A trader's total was shs480,000, gross profit was shs154,000 and expenses shs24,000. What is the value of net profit ratio?

A) 27%

B) 39,9%

C) 32%

D) 47.2%

6. A jobber who deals in new issues of shares is called a

A) Bull

B) Broker

C) Stag

D) Bear

7. The reward to an entreprenuer is called

A) Interest

B) Wage

C) Profit

D) Salary

8. The facility which enables a bank customer to make regular payment to a named payee is called

A) Credit transfers

B) Bank draft

C) Credit card

D) Standing order.

9. Calculate the net sales of a trading firm which has Returns Outwards of shs500,000, total sales of shs1,400,000 and Returns Inwards amounting to shs400,000.

A) Shs900,000

B) Shs1,000,000

C) Shs1,800,000

D) Shs500,000.

10. The amount of money a person gets life policy before th maturity date is known as

A) Premium

B) Sum insured

C) Workman's compensation

D) Surrender value.

11. The following are ways through which manufacturers differentiate their products form others except

A) Blending

B) Packaging

C) Exhibiting

D) Branding

12. The final stage in the process of production is

A) Cosumption

B) Exchange

C) Distribution

D) Trade

13. A sale cheque refers to

A) An out-dated cheque

B) An insufficient fund

C) A post-dated cheque

D) A forged cheque

14. The cost of goods in an invoice was shs520,000. How much would a consumer pay if he was allowed 8% trade discount and 10% cash discount

A) Shs89,440

B) Shs430,560

C) Shs426,400

D) Shs609,440

15. A business is said to be insolvent when it has

A) More assets than liabilities

B) More liabilities than assets

C) Equal amount of assets and liabilities

D) More fixed assets than current assets

16. Self service is a common feature of a

A) Chain store

B) Single shop

C) Supermarket

D) Departmental store

17. Which one of the following documents has to be prepared when a public limited company wishes to make a public issue of shares?

A) Certificate of incorporation

B) Memorandum of Association

C) Certificate of Trading

D) Prospectus

18. The main aim of commerce is to

A) Bridge the gap between producers and consumers

B) Transform raw materials into finished goods

C) Enable manufacturers produce and distribute goods

D) Bridge the gap between producers and other middlemen.

19. The minimum number of members neede to form a public limited company is

A) Two

B) Ten

C) Fifty

D) Seven

20. The following factors affect demand for a commodity except the

A) Number of buyers

B) Number of sellers

C) Tastes of consumers

D) Incomes of consumers.

SECTION B: (80 marks)

21. a) Explain five reasons why the business community in Uganda prefers Current Accounts to Fixed Deposit Accounts.

b) Describe the process of opening a current account.

22. a) what is meant by Aids to trade?

b) Explain any five Aids to trade.

c) Give any four reasons why commerce is studied in schools.

23. Describe any five services which a retailer offers to its:

a) Customers

b) Wholesalers

24. a) Explain six factors to be considered when choosing a means of transport.

b)what problems are faced by the business community in Uganda when using road transport?

25. a) what is the effect of the following crossings on a company?


b)state any seven circumstances when a charge may be dishonoured by a bank,

26. a)Explain the following terms as used in insurance:

i) sum insured

ii) subrogation

iii) contribution

b)Explain the role of insurance to traders in Uganda.

27. a)What is meant by consumer protection?

b)Explain four reasons for consumer protection.

c)Out line any five methods used to protect consumers.

28. a)Difference between the following:

i) mark-up and margin

ii) Capital owned and borrowed capital

b)Bamuri's books of accounts revealed the following records:

Opening stock

Gross profit

Average stock

Rate of stock turn





Calculate the:

i) Cost of sales

ii) Closing stock

iii) Net purchase

iv) Net sales

v) Mark up

vi) Margin