Masengo owns a furniture warehouse. He sells directly to consumers who visit thewarehouse.He accepts credit cards, debit cards and cash in payment for the furniture.He does not accept cheques.He also offers hire purchase agreements for the more expensive items.(a) Why should Masengo accept credit cards?[2](b) Explain two benefits to Masengo of his customers using cash to pay for the furniture.Benefit 1Benefit 2[4](c) Explain why Masengo does not accept cheques.[2](d) Explain one difference between a credit card and a debit card.[2]

2Abdul bought his van from Hassan Motors Ltd, a public limited company. He has hisvan maintained and serviced at Ready Auto Services, a small garage owned by Mr Ng,a sole trader.(i) State two features of a public limited company.Feature 1Feature 2[2](ii) Why might Abdul prefer to use Ready Auto Services for the maintenance andservicing of his van rather than using Hassan Motors Ltd?[4]The Managing Director of Smartwear Ltd has decided to install a computer system whichwill automatically produce invoices and other commercial documents ready to send tocustomers. At present this is done manually.(a) (i) Explain what is meant by an invoice.[3](ii) Name one other commercial document sent to customers after the invoice andexplain its function.Commerical documentFunction[3]

(b) Explain the benefits of using a computer system to issue invoices.[4]

3 A wholesaler has many retail customers. These customers are offered trade discount and tradecredit by the wholesaler.(a) Explain two other services that a wholesaler would provide for retail customers. [4](b) (i) Distinguish between trade discount and trade credit. [4](ii) Why does the wholesaler offer trade discount and trade credit to his customers? [4](c) The following documents are used between the wholesaler and the retail customers.order delivery note invoice credit note statement of accountWhich document would be used in each of the following circumstances?(i) To request payment for several transactions. [1](ii) To allow a reduction in the amount owed because of faulty goods. [1](iii) To accompany goods supplied to the retailer. [1](d) The wholesaler offers many of his retail customers terms of 5% 28 days.(i) A retailer bought goods valued at $620 after the deduction of trade discount and paid forthem within two weeks. Calculate how much the retailer would pay for the goods. Showyour working. [3](ii) In what circumstances might the retailer not take advantage of these terms? [2]

4 Fiona Kwek is planning to open a shop selling bread and cakes. She is considering the followingoptions:• taking a franchise with Almon Bakeries, a well-known nationwide bakery company• forming a partnership with her friend, Betty Kaur• opening the shop as a sole trader.(a) (i) State two advantages of operating as a franchise with Almon Bakeries. [2](ii) State two advantages of forming a partnership with Betty Kaur. [2](iii) If Fiona decides to operate the shop as a sole trader, explain how she might finance thepurchase of the shop and its fittings. [4](iv) Which of the three options would you recommend to Fiona? Give reasons for your choice.[6](b) When Fiona sets up her business, she will apply mark up to the goods she sells and she willallow some of her customers to buy on credit.(i) Explain what is meant by the term mark up. [2](ii) Explain the advantages to her customers of being able to buy on credit. [4]

5 Sati Satellite Communication Ltd is a public limited company, trading in a number of markets.It sells communication systems and satellite dishes. Many of its customers are private limitedcompanies.(a) (i) State two characteristics of public limited companies that do not apply to private limitedcompanies. [2](ii) State two characteristics of private limited companies that do not apply to public limitedcompanies. [2](b) ‘The shareholders of both public limited companies and private limited companies have limitedliability’. What does this statement mean? [3](c) Explain the benefits of trading in a number of markets. [4](d) Sati Satellite Communication Ltd has seen a fall in sales and profits over the last two years.(i) State three possible reasons for the fall in sales and profits over the last two years. [3](ii) The directors of the company are considering the following options:• increasing advertising and sales promotion• offering a wider range of products.What course of action would you recommend to the directors? Give reasons for yourrecommendation. [6]

6 The pie chart in Fig. 2 shows the number of service stations Galaxy Petroleum owns and thenumber of service stations that it operates as franchises.

Use the pie chart in Fig. 2 to help you to answer the following questions.(a) Calculate how many service stations are operated as franchises. Show your working. [2]

(b) State two advantages of operating a franchise to:(i) Galaxy Petroleum (the franchisor) [2](ii) the customers of Galaxy Petroleum [2](c) State two ways in which the franchisor might help a franchisee. [2](d) Galaxy Petroleum moves its products using both roads and railways.State two factors Galaxy Petroleum would consider when choosing which of these twomethods of transport to use. Give reasons for each of your choices. [6](e) Galaxy Petroleum imports crude oil and exports petroleum products. Are its trading activitiesimportant to the country in which it is located? Give reasons for your answer. [6]7 Mustapha Ltd manufactures shoes.(a) State two ways in which Mustapha Ltd can add value to the leather it has bought fromsuppliers. [2](b) The company sells its shoes directly to customers online. It also sells to shoe shops.Explain what is meant by selling online. [2](c) Mustapha Ltd has made a batch of 300 pairs of shoes. Each pair of shoes costs $25 to make.The retail price is $40. Mustapha Ltd allows 30% trade discount ($12) from the retail pricewhen selling to the shoe shops.(i) Explain what is meant by trade discount. [2](ii) Calculate (showing your working) how much net profit Mustapha Ltd will make if thecompany sells:120 pairs of shoes online180 pairs of shoes to the shoe shops [6](iii) Should Mustapha Ltd continue to sell to the shoe shops or should it concentrate onselling online? Give reasons for your answer. [6](d) One of the shoe shops has returned five pairs of shoes. Explain how a credit note would beused in this transaction between Mustapha Ltd and the shoe shop. [2]

8 Clare wishes to buy a home cinema system costing $2500 from a retailer. She could pay forit by credit card or on hire purchase terms.(a) Explain what is meant by the term credit.[2](b) What benefits may the retailer gain from selling to customers on credit?[3](c) Which form of credit – credit card or hire purchase - would you recommend Clare touse? Give reasons for your choice.[6]

9 The following sentences appeared in an advertisement for a commercial bank.

Use the information given in Fig. 3 to help you to answer the following questions.(a) (i) You wish to use an ATM at the bank where you have an account. What will youneed?[2](ii) You can obtain cash from an ATM. State two other services provided by ATMs.Service 1Service 2 [2](b) Explain the differences between a bank statement and a statement of account.[4] (c) Describe three services you can obtain using Internet or telephone banking.Service 1Service 2Service 3[6](d) ‘The provision of bank automated services means the end of bank branches in townand city centres.’ Discuss this statement. Do you agree? Give reasons for your answer[6].

10 Alina and Ali are accountants and are in partnership.(a) (i) Explain two advantages to Alina and Ali of being in partnership.Advantage 1Advantage 2[4](ii) How are profits distributed in a partnership?[1]

(iii) Alina and Ali wish to expand their business. Anna is joining the partnership in therole of a sleeping partner. What effects will this change have on the partnership?Tom is the major shareholder and managing director of a family farming businessoperating as a private limited company.(b) Is a private limited company a better form of business ownership for Tom’s businessthan being in a partnership? Give reasons for your opinion.[6](c) Tom wishes to open a farm shop on the farm.(i) Why should he use retained profits rather than borrow money for this project?[3](ii) Why should he use trade credit rather than an overdraft for purchasing some of thesupplies needed for the shop?[3]

11 Fig. 1 below describes some of the activities involved in the production of fruit juice.

Use the information given in Fig. 1 to help you to answer the following questions.(a) Identify the words missing from the points labelled (i), (ii) and (iii) in Fig. 1. [3](b) State two ways in which Marabella Juicers adds value to the oranges and grapefruit. [2]

(c) Is it better for small-scale retailers to buy from wholesalers rather than to buy directly fromMarabella Juicers? Give reasons for your answer. [6](d) Marabella Juicers sends invoices and statements of account to the wholesalers who buy fromthem on credit.(i) State one function of an invoice. [1](ii) State one function of a statement of account. [1](iii) Why do wholesalers buy on credit from Marabella Juicers? [3](e) A wholesaler has returned a case of orange juice for which he has been charged $100.The packaging of the orange juice is faulty. Explain the actions Marabella Juicers should take.[4]

12 Two sisters plan to start a business selling T-shirts and fashion tops using the Internet.(a) Which form of business organisation should they set up?partnership private limited companyGive reasons for your answer, showing briefly why you have rejected the other form ofbusiness organisation. [6](b) The sisters are looking for suitable premises. Explain three factors that would influence theirchoice of premises. [6](c) Discuss the advantages to the two sisters of selling T-shirts and fashion tops on the Internet.[4]

13 AG Services is a company specialising in refuse collection and recycling.(a) (i) Explain why AG Services would have a bank savings account. [2](ii) State two ways in which payments from a current account may be made. [2]

14 Broadway Autos is a business that sells cars.(a) Explain how Broadway Autos is involved in the chain of production for cars. [4](b) A customer has bought a new car from Broadway Autos. Its price is $12 000.(i) Broadway Autos paid $9000 to the car manufacturer for the car. Calculate the percentagemark up on the car. Show your working. [3](ii) The customer is offered 5% discount if she makes immediate payment. Calculate thetotal discount she receives. Show your working. [2](iii) State and explain the purpose of one commercial document that will be completed byBroadway Autos before the customer pays for the car. [2](iv) Explain the importance of the abbreviation E & OE that appears on some commercialdocuments. [3]

(c) Broadway Autos has an Internet account at its bank. It also uses a local branch of the bank.Does it need both? Give reasons for your answer. [6]

15 Mr Patel is considering setting up a business selling car tyres and batteries. He could establishhimself as a sole trader or he could take out a franchise with a large tyre and battery companywhich offers franchise agreements.(a) Name three features of a sole trader business which makes it different from any other form ofbusiness organisation. [3](b) Explain what is meant by the term franchise agreement. [3](c) Why does the large tyre and battery company offer franchises rather than operate its ownretail outlets? [4](d) Mr Patel has the following two options:set up as a sole trader;become a franchise.Discuss both these options. Which would you recommend? Give reasons for your choice. [6]

16 Fig. 2 is an extract taken from a mail order catalogue for a range of shoes.

Use Fig. 2 to help you to answer the following questions:(a) Identify two phrases or statements mentioned in Fig. 2 used to persuade customers to buy.[2](b) Mrs Singh has decided to order a pair of shoes using the website.Explain why is this a better method of ordering the shoes than using the telephone. [4](c) Mrs Singh is ordering a pair of shoes which originally cost $90. There is a 30% reduction inthe price. Calculate how much she will pay. Show your working. [3](d) (i) Mrs Singh pays when she orders the goods. She might use a:credit card or debit card.Which would you recommend? Give reasons for your choice. [3](ii) Why would Mrs Singh not use cash to pay for the shoes? [2](e) What are the advantages to Maman Shoes of organising its business as a mail ordercompany? [6]

17 Fig. 3 shows factors which may influence the location of a business.

Use Fig. 3 to help you to answer the following questions:(a) State two factors from Fig. 3 that a large retail company would take into account whenopening a new shop. [2](b) (i) State two factors from Fig. 3 that a multinational manufacturing company would take intoaccount when locating to a developing country. [2](ii) Explain why each of these two factors is important for the multinational company. [4](c) Explain why multinational companies are becoming increasingly important in the globaleconomy. [4](d) A multinational company selling fast food operates its outlets as franchises.(i) What is meant by the term franchise? [3](ii) Is this a good way for the multinational company to operate its business?Give reasons for your answer. [5]

18 Advanced Processes Ltd is considering two ways of financing the purchase of a new computersystem costing $480 000.The company is considering the following options:Using its retained profits and an overdraft of $100 000Taking out a bank loan for 3 years for $480 000(a) Explain the term retained profits. [2](b) Discuss the advantages and disadvantages of each of the two options.Which of these two options would you recommend? Give reasons for your choice. [8](c) Why might leasing the new computer system be better than buying it? [4](d) The bank has offered Advanced Processes Ltd a loan of $480 000 over 3 years, payable inmonthly instalments. It will charge 10% interest per year on the full loan.(i) Calculate how much the company will pay overall for the loan. [4](ii) Calculate how much the company will repay monthly. [2](NB You should assume that Advanced Processes Ltd does not pay back the loan early.)

19 Use Fig. 4 to help you to answer the following questions:(a) Identify

(i) one document in Fig. 4 sent from the customer to the trader. [1](ii) one document in Fig. 4 requesting payment. [1](b) Explain two circumstances when a credit note would be used. [4](c) Explain the importance of each of the following documents in a commercial transaction:(i) quotation. [2](ii) invoice. [2](d) Describe one method of communication that the seller might use to send commercial documentsto the customer. [3](e) Does the delivery note safeguard the buyer and the seller in a commercial transaction?Give reasons for your answer. [3](f) Why do regular customers usually buy on credit? [4]

20 Mr Wong, a successful trader, wishes to expand his business, build a new factory and buy stockand equipment. He has retained profits of $80 000 and wishes to borrow $200 000 over a five-yearperiod.He is considering applying for either a loan or an overdraft.(a) Mentioning the main features of each of these two sources of finance, advise Mr Wong on hisbest course of action. Give reasons for your recommendation. [6](b) Mr Wong trades both at home and in other countries.(i) Describe two means of payment provided by commercial banks to help such businessestrade at home. [4](ii) Describe two means of payment provided by commercial banks to help Mr Wong tradein other countries. [4](c) The use of cash and cheques to pay bills is gradually declining in many parts of the world.Explain some of the developments in banking that are making this possible. [6]21 Fatima has had a bank current account for several years.

(a) State three advantages to Fatima of having a bank current account. [3](b) Fatima wishes to undertake 24-hour banking. Is she able to do this? Give reasons for youranswer. [5](c) Fatima is able to use the following bank services to pay bills:BANK DRAFTS CHEQUESCREDIT TRANSFERS DIRECT DEBITSState, with reasons, which bank service Fatima should use to pay each of the following:(i) mortgage payments which vary with changes in interest rates. [3](ii) settlement of a hotel bill. [3](iii) payment for a secondhand car when she is not known to the seller. [3](d) Fatima has an overdraft facility on her bank current account.Her recent bank statement shows that she is $2000 overdrawn.The following transactions have taken place since the bank statement was issued:her salary of $1800 per month has been credited to her accounta cheque for $50 has been debited from her accounta cheque for $500 has been paid into her account.Calculate the balance on her bank current account. Show your working. [3]

22 The advertisement in Fig. 2 is for a garage.

Use this advertisement to help you to answer the following questions.

(a) Is this advertisement shown in Fig. 2 persuasive or informative? Using the data given in theadvertisement, give reasons for your answer. [4](b) (i) Why might a customer prefer to telephone the garage rather than send an email? [2](ii) Why would Handymotors Ltd publish its mobile telephone number? [2](c) (i) Mr Sharif bought a car from Handymotors Ltd. It cost $40 000.How much would Mr Sharif pay if he paid for the car within 7 days? Show your working.[2](ii) Should Handymotors Ltd continue to offer discount for prompt payment? Discuss theadvantages and disadvantages, giving reasons for your opinion. [6](iii) How would Mr Sharif be protected as a consumer if the car developed a fault? [4]

23 Riaz Storage Ltd owns a distribution business with several warehouses, including a cold storagewarehouse. It supplies retailers throughout the country using its own road transport.(a) Explain how Riaz Storage Ltd contributes to trade within the country. [4](b) The cold storage warehouse is used to store fruit which is produced seasonally. Explain howthis warehouse assists seasonal production. [4](c) Riaz Storage Ltd uses the following documents when trading:DELIVERY NOTE CONSIGNMENT NOTE INVOICEORDER QUOTATION STATEMENT OF ACCOUNTWhich three of these documents would Riaz Storage Ltd use when selling goods to a retailerwho purchases on a regular basis? Give one reason for each of your choices. [6](d) Riaz Storage Ltd has decided to sell overseas. The company is considering the followingoptions:Option 1 making use of agentsOption 2 setting up distribution centres in individual countriesConsider the advantages and disadvantages of each option. Which would you recommend?Give reasons for your choice. [6]

242

24 Use the information given in the business cards in Fig. 3 to help you to answer the followingquestions.(a) Identify the two types of business organisation labelled A and C. [2](b) Who are the owners of B and D? [2](c) Explain how the following business organisations are financed:(i) Amos Patel [2](ii) Cosmos Ltd. [2](d) Ming and Mohammed are considering moving to new premises.Explain the factors they should take into consideration when deciding where to relocate theirbusiness. [6](e) Cosmos Ltd’s head office is at Bridge Industrial Park. It has factories in several other Asiancountries so can be classed as a multinational company.Evaluate the benefits and the disadvantages to the countries where it is located. [6]

25 Many people use Internet banking and automatic teller machines (ATMs).(a) Explain the advantages of Internet banking to:

(i) the customer [4](ii) the bank. [4](b) (i) Banks provide customers with plastic cards to use in ATMs. Name one type of card andstate its purpose. [2](ii) Why do many banks provide ATMs for use by customers? [4](c) A bank wishes to publicise its services to obtain new customers. It could use the followingmethods:leaflets and booklets sponsorship of sports eventsnational newspapers television campaignposters the Internet financial magazinesShould the bank use all or some of these methods? Give reasons for your answer. [6]

26 Jabatan Ltd is a public limited company building and servicing small boats. The company wishesto open a boatyard in another country.(a) Explain what is meant by a public limited company. [4](b) Why should Jabatan Ltd issue ordinary shares rather than obtain a bank loan to build the newboatyard? [4](c) Jabatan Ltd could use either an overdraft or trade credit to buy regular supplies of fibre glass.Which would you recommend? Give reasons for your answer. [3](d) Describe three factors Jabatan Ltd should take into account when considering the location ofa new boatyard in another country. [9]

27 Mrs Awan owns a small business selling sewing machines and other sewing items. She buys fromwholesalers and manufacturers on credit. Until recently, her customers paid for goods using cashor cheques. She decided last year to accept credit cards in payment for goods.(a) Explain three advantages to Mrs Awan of owning a small business. [6](b) Why is it better for Mrs Awan to purchase her supplies on credit from wholesalers andmanufacturers rather than for cash? [4](c) Give two benefits to Mrs Awan of being paid in cash. [2](d) Mrs Awan has now found that the amount of goods sold to customers using their credit cardshas increased. Should Mrs Awan be concerned about this? Give reasons for your answer. [8]

28 Trade may be defined as buying and selling goods and services to make profits.(a) Why might a trader sometimes sell goods at a loss? [3]

(b) A manufacturer makes watches. Explain how he is also involved in trade. [4](c) A consumer buys food and drink to eat at home. Is the consumer taking part in trade? Givereasons for your answer. [3](d) (i) Explain how trade and banking are interdependent. [6](ii) Using examples, explain how advertising assists the working of the global market. [4]

29 A customer has a current account and a savings account at a commercial bank.(a) What are the benefits of a current account for the customer? [6](b) Why might a customer also have a savings account? [4](c) Explain the purposes of a debit card. [4](d) The customer borrows $1500 by means of a bank loan for a year.The customer also has a $1500 overdraft limit for a year.8% interest is charged on each kind of borrowing.(i) Will the total interest payments paid on each kind of borrowing differ? Give reasons foryour answer. [4](ii) Calculate the total interest charged on the loan for the year.Show your working. [2]

30 Fig. 2

Use Fig. 2 to help you to answer the following questions.(a) From the sequence of documents shown in Fig. 1 identify one document sent from thecustomer, Miss Phiri, to Agrabad Mail Order Ltd. [1](b) Why does Agrabad Mail Order Ltd use catalogues? [2](c) Distinguish between the order and the invoice. [4]

(d) Why might Miss Phiri prefer to use a mail order company rather than shops in the nearesttown? [4](e) (i) Miss Phiri has bought several items totalling $90. She is allowed 3% discount if she payswithin 10 days of receiving the statement of account. Calculate the total bill if she payswithin 7 days. Show your working. [3](ii) Miss Phiri could use one of the following methods of payment for this bill:CASH CHEQUE CREDIT CARD CREDIT TRANSFERWhich would be the most suitable? Give reasons for your choice. Explain why you haverejected the other methods of payment. [6]

31 Mrs Kumar has applied for and received a credit card with a credit limit of $2000. She intends touse the card to buy $200 of goods each month.(a) (i) Mrs Kumar settles her account in full each month. How much interest will she pay eachmonth? [1](ii) How do retailers benefit from accepting credit cards? [3](iii) In what ways does using a credit card differ from having a store card issued by a largescaleretailer? [4](b) Mrs Kumar bought a pair of trousers from a shop. She wore them once and then found a holein them. Advise Mrs Kumar on what actions she should take. [4]

33Tan Enterprises is a small trading company selling computer accessories by mail order. Inresponse to an enquiry, a parcel containing sample computer disks, a price list and catalogue wassent to the customer.(a) Explain what is meant by an enquiry. [2](b) A few days later the customer contacted Tan Enterprises to say that the price list was not inthe parcel.Explain how you would overcome this problem, mentioning one method of communicationyou might use. [3](c) The customer decided to purchase items from the catalogue.(i) Explain why documents are completed when goods are purchased. [4](ii) Name two documents which will be used in this transaction. [2](iii) Should Tan Enterprises offer the customer trade discount and cash discount for thistransaction? Give reasons for your answer. [5](iv) Name two methods of payment, through a commercial bank, the customer might use to

pay for the goods. Give a reason for each of your choices. [4]

34 Fig. 2Use Fig. 2 to help you to answer the following questions.COMPOSITION OF CONSUMER CREDIT

TOTAL CREDIT OUTSTANDINGAT END OF YEAR - $125BN

TOTAL CREDIT OUTSTANDINGAT END OF YEAR - $140BN

(a) (i) Calculate the percentage of total credit taken by customers using credit cards and storecards in 2000. Show your working. [2](ii) Calculate the amount owed at the end of 2004 by customers using credit cards. Showyour working. [2](b) State two ways in which Hire Purchase differs from Extended Credit (Deferred Payments).[4](c) Giving reasons for each of your choices, recommend the most suitable type of credit given inFig. 2 for each of the following purchases:(i) a new car [3](ii) payment of a hotel bill. [3](d) Explain why the use of credit for the purchase of goods and services has increased. [6]

35 Ben Rasheed owns a multiple chain of shops selling ice-cream and soft drinks.(a) Explain two advantages of operating his business as a multiple chain. [4](b) Ben wants to expand his business and is considering two options.OPTION 1: opening more shops in a neighbouring countryOPTION 2: forming a partnership with Sonia and Gregory Khan who own a group ofsandwich bars(i) Explain three difficulties for Ben of trading in the neighbouring country. [6]

(ii) Consider the advantages and disadvantages of forming the partnership with Sonia andGregory Khan. [6](iii) Advise Ben on which of the two options he should choose. Give reasons for your advice.[4]

36 Tan Enterprises is a small trading company selling computer accessories by mail order. In

response to an enquiry, a parcel containing sample computer disks, a price list and catalogue was

sent to the customer.

(a) Explain what is meant by an enquiry. [2]

(b) A few days later the customer contacted Tan Enterprises to say that the price list was not in

the parcel.

Explain how you would overcome this problem, mentioning one method of communication

you might use. [3]

(c) The customer decided to purchase items from the catalogue.

(i) Explain why documents are completed when goods are purchased. [4]

(ii) Name two documents which will be used in this transaction. [2]

(iii) Should Tan Enterprises offer the customer trade discount and cash discount for this

transaction? Give reasons for your answer. [5]

(iv) Name two methods of payment, through a commercial bank, the customer might use to

pay for the goods. Give a reason for each of your choices. [4]

37 A trader is involved in both trade and commerce.(a) Explain the differences between trade and commerce. [6](b) The trader is paid by cheque or by bank draft.(i) State two features of a cheque. [2](ii) State two features of a bank draft. [2](iii) Why might the trader be more willing to accept a bank draft rather than a cheque inpayment for a debt? [4]

38 Mosman Enterprises is a large multinational boat-building business. It was started by Jim Mosmanworking as a sole trader. It has developed as shown in Fig. 2 below.

Use Fig. 2 to help you to answer the following questions.

(a) Identify one characteristic of each of the four types of business organisation shown in Fig. 2.[4](b) Explain the advantages of making the changes from(i) sole trader to partnership(ii) partnership to private limited company(iii) private limited company to public limited company.[6](c) What are the benefits to Mosman Enterprises of being a multinational boat-buildingbusiness? [4](d) Jim Mosman owns 800 000 ordinary shares in Mosman Enterprises.(i) State two features of ordinary shares. [2]Information on shares in Mosman Enterprises is given in Fig. 3 below.

Use the information given in Fig. 3 to help you to answer the following questions.(ii) How much is Jim Mosman’s shareholding worth today? Show your working. [2](iii) Calculate how much dividend Jim Mosman received this year. Show your working. [2]

39 Use the documents shown in Fig. 2 to help you to answer the following questions.(a) Name and explain the purpose of one document which might be used before the order isplaced. [2](b) Explain two differences between the order and the invoice. [4](c) Why is there a signature on the order? [1](d) (i) The manufacturer allows 25% trade discount on the total amount of the invoice.Calculate the total amount owing on the invoice after trade discount. Show your working.[3](ii) The manufacturer also allows cash discount of 2% for settlement within 7 days.Calculate the amount that the retailer pays if the invoice is paid within 7 days. Show yourworking. [3](iii) In what circumstances might the retailer not wish to take advantage of the cash discountoffered? [2](e) Explain the benefits to the retailer of purchasing directly from the manufacturer. [5]

40 Mrs Sibanda is a retailer who owns two small shops.(a) Explain why it is necessary for her to take out insurance for her shops. [4](b) Why may she purchase her supplies on credit? [4](c) Why are the goods packaged before they are sold? [5](d) Why may Mrs Sibanda need the following services from a bank:(i) a current account [4](ii) a night safe? [3]

41 (a) What are the main characteristics of a bank loan? [6](b) In what circumstances would a building company make use of a bank loan rather than a bankoverdraft? [4](c) The building company wishes to obtain a loan of $600 000.(i) Imagine that you are a bank manager. What information would you require from thebuilding company before you decide whether or not to offer a bank loan? [5](ii) Interest rates are 6% per year. Calculate how much interest the building company willpay each year if it obtains the $600 000 loan. Show your working. [2](d) Explain why the building company might use its retained profits to finance a project. [3]42 (a) Explain the importance of the following to the business traveller:(i) credit cards [6](ii) mobile phone (cellphone). [4](b) How does air transport assist the business traveller? [4](c) In what circumstances might a business prefer to pay a debt:(i) by cash rather than by cheque [3]

(ii) by direct debit rather than by cheque? [3]

43The following commercial documents have been used in a commercial transaction between amanufacturer and a retailer.

Use the documents shown in Fig. 2 to help you to answer the following questions.

(a) Name and explain the purpose of one document which might be used before the order isplaced. [2](b) Explain two differences between the order and the invoice. [4](c) Why is there a signature on the order? [1](d) (i) The manufacturer allows 25% trade discount on the total amount of the invoice.Calculate the total amount owing on the invoice after trade discount. Show your working.[3](ii) The manufacturer also allows cash discount of 2% for settlement within 7 days.Calculate the amount that the retailer pays if the invoice is paid within 7 days. Show yourworking. [3](iii) In what circumstances might the retailer not wish to take advantage of the cash discountoffered? [2](e) Explain the benefits to the retailer of purchasing directly from the manufacturer. [5]

44 Fabrice, Charlene and Joseph own a printing business. They are in partnership.(a) Explain two advantages of operating the business as a partnership. [4](b) Fabrice, Charlene and Joseph share the profits in the ratio 7 : 3 : 2. The total profits for oneyear are $120 000.(i) Calculate how much each partner receives. Show your working. [3](ii) Suggest possible reasons for Fabrice receiving a greater share of the profits than theother two partners. [2](c) Fabrice, Charlene and Joseph are thinking of expanding their business. There are threeoptions available:OPTION 1 to look for a sleeping partnerOPTION 2 to apply to the bank for a loanOPTION 3 to change their business into a private limited company.(i) Discuss the advantages and disadvantages of each of the three options. [9](ii) Which one of the options would you recommend? Give reasons for your choice. [2]

45 A country’s privatised water supply is now owned by a public limited company, Water Services Ltd.It aims to modernise the water supply of the country.(a) Explain what is meant by the term ‘privatised’. [2](b) Explain two features of a public limited company. [4](c) Explain how the modernisation of the water supply might be financed by Water Services Ltd.[4]

46 Fabrice, Charlene and Joseph own a printing business. They are in partnership.(a) Explain two advantages of operating the business as a partnership. [4](b) Fabrice, Charlene and Joseph share the profits in the ratio 7 : 3 : 2. The total profits for oneyear are $120 000.(i) Calculate how much each partner receives. Show your working. [3](ii) Suggest possible reasons for Fabrice receiving a greater share of the profits than theother two partners. [2](c) Fabrice, Charlene and Joseph are thinking of expanding their business. There are threeoptions available:OPTION 1 to look for a sleeping partnerOPTION 2 to apply to the bank for a loanOPTION 3 to change their business into a private limited company.(i) Discuss the advantages and disadvantages of each of the three options. [9]

(ii) Which one of the options would you recommend? Give reasons for your choice. [2]

47 A country’s privatised water supply is now owned by a public limited company, Water Services Ltd.It aims to modernise the water supply of the country.(a) Explain what is meant by the term ‘privatised’. [2](b) Explain two features of a public limited company. [4](c) Explain how the modernisation of the water supply might be financed by Water Services Ltd.[4](d) In November 2004, the Finance Director of Water Services Ltd reported the information inFig. 3 to the Board of Directors.

(i) Explain the term ‘turnover’. [2](ii) Calculate the total turnover of Water Services Ltd in November 2003. Show yourworking. [2](iii) Give one example of a possible short-term debt for Water Services Ltd. [1](iv) Explain in what ways the amount of working capital available to Water Services Ltd mightbe increased. [5]

48 A trader is involved in both trade and commerce.(a) Explain the differences between trade and commerce. [6](b) The trader is paid by cheque or by bank draft.(i) State two features of a cheque. [2](ii) State two features of a bank draft. [2](iii) Why might the trader be more willing to accept a bank draft rather than a cheque inpayment for a debt? [4](c) Why might the trader use:(i) a forwarding agent [3](ii) an export agent [3]when selling in other countries?

49 (a) What are the main characteristics of a bank loan? [6](b) In what circumstances would a building company make use of a bank loan rather than a bankoverdraft? [4](c) The building company wishes to obtain a loan of $600 000.(i) Imagine that you are a bank manager. What information would you require from thebuilding company before you decide whether or not to offer a bank loan? [5](ii) Interest rates are 6% per year. Calculate how much interest the building company willpay each year if it obtains the $600 000 loan. Show your working. [2](d) Explain why the building company might use its retained profits to finance a project. [3]

50 Tinashe and Dambudzo are in partnership selling computers. They are considering changing theirbusiness into a private limited company.(a) State four features of a partnership. [4](b) What are the advantages to Tinashe and Dambudzo of changing their partnership into aprivate limited company? [6](c) Many of their clients are small businesses. Explain how a small business may benefit fromusing computers. [10]

51 (a) Giving examples, explain what is meant by legal tender. [4](b) You have the following methods of payment available:BANK DRAFT BANK GIROCHEQUE ELECTRONIC/CABLE TRANSFERWhich method would you choose to make the following payments? Give two reasons for eachof your choices.(NB Do not choose the same method of payment twice.)(i) buying a new computer(ii) moving US$10 000 from USA to Australia(iii) paying the workers of your company[9](c) (i) In what circumstances would you choose to pay a debt by direct debit rather than bystanding order? [4](ii) Why do many creditors prefer to be paid by direct debit rather than by cheque? [3]Mrs Ncube works in the accounts department of a large company. She is responsible for payingsuppliers who send her invoices and statements of account.

52(a) Explain three differences between invoices and statements of account. [6](b) Why should she use crossed cheques rather than open cheques for paying the suppliers? [6](c) Mrs Ncube wants to pay some regular suppliers by direct debit. Explain the main features ofpaying by direct debit and describe the benefits to her company of paying by this method. [8]

53 An electronics manufacturer, operating as a private limited company, wishes to expand thebusiness and build a second factory.(a) State four features of a private limited company. [4](b) The rate of interest charged is important when choosing a source of finance.State and explain two other general factors which might influence the choice of finance forexpanding the business. [4](c) The directors of the company wish to use for their expansion plans either:A BANK LOAN or RETAINED PROFITS(i) State two features of each of these sources of finance. [4](ii) Both options are possible. Which would you choose?Give reasons for your choice. [4](d) Why is a bank overdraft not a suitable method of financing the building of a second factory?[4]