SECTION A: (20 marks)

  1. Which one of the following factors of production earns profits?

    A) land

    B) labor

    C) Entrepreneurship

    D) capital

  2. Gross profit is expressed as a percentage of the sales and is known as

    A) mark-up.

    B) margin

    C) rate of turnover

    D) return on capital

  3. The number of times a business replaces its stock in a trading period is referred to as

    A) stock valuation

    B) stock taking

    C) stock turn

    D) turnover

  4. Which one of the following is an example of invisible trade?

    A) lumbering

    B) touring

    C) fishing

    D) mining

  5. The sales of a business amounted to shs250,000, returns inwards valued at shs10,000 returns outwards shs8,000. Calculate the net sales.

    A) shs248,000

    B) shs252,000

    C) shs242,000

    D) shs240,000.

  6. The regular payment an insured makes for insurance cover is called

    A) premium

    B) sum insured

    C) surrender value

    D) brokerage.

  7. Which one of the following bridges the gap between a producer and a consumer?

    A) production

    B) trade

    C) industry

    D) commerce.

  8. The demand for goods or services is, determined by the following factors except the

    A) level of incomes

    B) prices of other goods

    C) level of technology

    D) tastes of consumers.

  9. The main function of insurance to a business is to

    A) make profits

    B) guarantee compensation

    C) ensure efficiency

    D) prevent risks.

  10. A businessman has stock worth shs8,000,000 and insures it for shs4,800,000against fire. If half of the stock is destroyed by fire, how much will the business be compensated?

    A) shs2,400,000

    B) shs4,000,000

    C) shs4,800,000

    D) shs6,400,000

  11. A motor company that sells cars on behalf of a motor-vehicle manufacturing industry is a good example of a

    A) factor

    B) broker

    C) forwarding agent

    D) merchant

  12. A person or firm in whose favor the payee transfer a cheque is known as

    A) the drawer

    B) an endorser

    C) the drawee

    D) an endorsee.

  13. Which insurance policy would provide cover of goods stolen by factory workers?

    A) workman's compensation

    B) public liability

    C) fidelity guarantee

    D) pilferage

  14. A post office facility which is used to send money in case of an emergency is called

    A) registered post

    B) postal order

    C) expedited mail service(EMS)

    D) telegraphic money order

  15. Given the following record of a business transaction for a trading period ending Dec.31.2007:

    Debtors amount shs800,000

    Stock shs500,000

    Cash at hand shs250,000

    Creditors amount shs1,000,000

    Compute the working capital of the business,

    A) shs2,550,000

    B) shs550,000

    C) shs950,000

    D) shs1,750,000

  16. The generation of gas from animal manure can be classified under

    A) primary production

    B) secondary production

    C) tertiary production

    D) direct production

  17. The quantity of goods a person is willing to buy at a given price and time is known as

    A) demand

    B) consumption

    C) stock

    D) supply

  18. Which one of the following documents will a seller send to te buyer if payment for the goods is required before delivery?

    A) Delivery Note

    B) Catalogue

    C) Proforma invoice

    D) Price list

  19. A form of trade where imports are re-exported is called

    A) bilateral

    B)customers draw back

    C) entreport

    D) multi-lateral.

  20. Identify the set of items which represents capital goods.

    A) Raw materials, tools, furniture, equipment.

    B) Furniture, equipment, vehicles,tools.

    C) Machines, tools, raw materials, radios.

    D) Tools, machines, equipment, vehicles.


  21. a) Explain any five services a wholesaler offers to a manufacturer.

    b) Give any five circumstances under which a wholesaler may not be necessary in the chain of distribution.

  22. a) Outline any four advantages of large-scale retail outlets.

    b) What are the features of the following retail outlets and traders?

    I) Departmental stores

    ii) Multiple shops

    iii) super markets

    iv) Hawkers

  23. a) Give five differences between a private limited company and a public limited company.

    b) Explain five advantages of private limited company over other forms of business units.

  24. a) What is the importance of transport in trade?

    b) Explain six reasons why most businessman in Uganda prefer road transport.

  25. a) Explain five functions of the Bank of Uganda.

    b) Describe five methods used by Bank of Uganda to control commercial Banks.

  26. a) Differentiate between the following as used in insurance:

    I) Endorsement policy and whole life policy.

    ii) Over insurance and under insurance.

    Iii) subrogation and proximate cause.

    b) Explain any four services which insurance companies offer to the business community in Uganda.

  27. a) Distinguish between specialization and division of labour.

    b) Give advantages and five disadvantages of specialization.

    c) Describe the following types of specialization:

    I) Specialization by process

    ii) Specialization by craft/profession

    iii) Specialization by area


Liabilities shs

capital 110,000

long-term liabilities

loans (to firm) 50,000

current liabilities

creditors 60,000


Assets shs shs

motor-vehicle 100,000

current assets

stock 60,000

Debtors 28,000

Bank 24,000

Cash 8,000 120,000


    You are provided with the following information:

  • opening stock value at

  • purchase for the year was

  • returns outwards amounted to 2.5% of purchase.

Calculate the:

    I) net purchases,

    ii) cost of sales,

    iii) average stock,

    iv) rate of stock turn to nearest whole number,

    v) working.