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MADHRASATHUL AHMADHIYYA, MALE
FIRST TERM TEST 2008
COMMERCE
Grade 10
PAPER - 2
DURATION: 2 HOURS
Information and instructions:
Write your name, index number, class and register number on the
answer sheets.
Answerany fourquestions.
(1) Mr and Mrs Phiri own a warehouse.(a) State two reasons why
they should insure their warehouse. [2 Marks](b) In relation to
insuring the warehouse, explain the functions of the following:
(i) the proposal form [3 Marks](ii) a policy [3 Marks](iii)
underwriters [4 Marks]
(c) The warehouse is valued at $1m but Mr and Mrs Phiri wish to
insure it for$750 000.
(i) Why might they wish to do this? [2 Marks](ii) Why is it not
advisable for them to do this? [2 Marks](iii) Explain how
consequential loss insurance might assist them if the
warehouse were burnt down. [4 Marks]
(2) Samsing Electricals is a company making and selling
electronic components.It has received a letter of enquiry from a
customer.(a) Why are commercial documents used in trade? [5
Marks](b) (i) What is a letter of enquiry? [2 Marks]
(ii) How might Samsing Electricals respond to the letter of
enquiry? [2 Marks](c) The customer has decided to place an order.
Name and briefly describe three
documents which migh be used between the order and payment for
the goods. [6 Marks](d) The electronic components are packaged
after manufacture. Explain why Samsing
Electricals needs to package its components before selling them.
[5 Marks]
(3) (a) (i) Explain what is meant by competitive advertising. [2
Marks](ii) State and explain one advantage and one disadvantage of
competitive
advertising for the consumer. [4 Marks](b) Why does a company
which has a large volume of sales continue to advertise? [2
Marks](c) State two different advertising media for each of the
following. Give a reason
for each of your choices.(i) a chain of clothing stores. [4
Marks](ii) a vacancy for the manager of a supermarket. [4
Marks](iii) the new catalogue of a mail order company. [4
Marks]
(NB You should not select the same advertising medium more than
once)
(4) Many business organisations operate as limited companies.(a)
What is a limited company? [4 Marks]
(b) (i) Who owns a limited company? [1 Marks](ii) Who decides
the long term policies of a limited company? [1 Marks]
(c) A limited company has paid up capital of 5 million ordinary
shares of $1each. Its net profit for the year is $400 000. It has
decided that 75% of the
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net profit shall be distributed as dividends.(i) How much paid
up capital does the company have? [1 Marks](ii) How much will the
owner of 2000 ordinary shares receive in dividend? [4 Marks](iii)
What is the company likely to do with the remaining profits? [2
Marks]
(d) Many limited companies have developed into multinational
corporations.(i) Give an example of a multinational corporation. [1
Marks]
(ii) State two features of a multinational corporation. [2
Marks](iii) State and explain one advantage and one disadvantage to
a country of
having a multinational corporation operating in that country. [4
Marks]
(5) (a) State four factors you would take into consideration
when choosing a methodof transport for goods. [4 Marks]
(b) Explain why effective and efficient transport is important
to a manufacturer. [10 Marks](c) Why is it important to provide
good passenger transport systems within a country? [6 Marks]
(6) (a) State four services a wholesaler might offer to a
retailer. [4 Marks](b) Why do the following producers often prefer
to sell direct to retailers:
(i) manufacturers of technical goods; [2 Marks](ii) producers of
perishable products? [2 Marks]
(c) What is a specialized wholesaler? [4 Marks](d) How might a
voluntary chain assist a small retailer to survive? [8 Marks]
(7) You wish to set up a small business and have approached a
bank for a loanand for other assistance.(a) State three items of
information which the bank manager will require before
considering a loan. [3 Marks](b) If you borrow $20 000 over two
years at a flat rate of interest of 10% per
annum, how much will you have to repay monthly in order to
settle the debtand the interest? (You are advised to show all your
workings). [5 Marks]
(c) Describe two other services which the bank can provide in
helping you toset up in business. [6 Marks]
(d) Describe two different services which the bank can provide
to help yourbusiness once it is running. [6 Marks]
(8) You have chosen to buy a car on hire purchase terms rather
than on credit sale terms.(a) In what ways do hire purchase terms
differ from credit sale terms? [6 Marks](b) Give possible reasons
for deciding to buy on hire purchase terms rather
than paying immediately in full. [4 Marks](c) What legal
protection do you receive when buying on hire purchase terms? [4
Marks](d) If you paid $4000 deposit on an $8000 car, how much would
you have to
repay monthly (capital and interest) over two years if the rate
of interest wasa flat 10% per year? (You are advised to show your
workings). [6 Marks]
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