Danho
ZIMSEC O Level · 7103/02 · N2004

Commerce Paper 2 November 2004

Questions
18
Total marks
180
Time allowed
120 min
Syllabus code
7103/02

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Questions
18
Pass mark
11
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 101

[1 marks]Industry and commercial services
Secondary industry involves...
  1. ABuying and selling of already-finished goods for profit, which commerce classifies as trade rather than manufacture
  2. BConverting raw materials into semi-finished and finished products, e.g. manufacturing
  3. CExtracting raw materials directly from nature, e.g. mining, farming or fishing
  4. DProviding direct or indirect services to consumers rather than producing goods, e.g. teaching or insurance

Question 102

[1 marks]Industry and commercial services
How does banking assist an exporter of tobacco?
  1. ABy advertising the tobacco crop on the sides of the exporter's own delivery vehicles and packaging
  2. BBy insuring the tobacco crop against loss from fire, theft, drought or accidental damage in transit
  3. CBy ferrying the tobacco crop physically to its export destination
  4. DBy providing a current account, safe custody of documents, and finance such as loans

Question 201

[1 marks]Retailing
Why do large-scale retailers buy directly from manufacturers rather than through wholesalers?
  1. AThey have enough capital to buy in bulk and in cash, earning large discounts
  2. BGovernment regulations forbid wholesalers from supplying large retailers
  3. CThey lack the warehousing needed to store bulk stock
  4. DManufacturers refuse to sell to wholesalers at any price

Question 202

[1 marks]Retailing
How do independent retailers survive competition from supermarkets?
  1. ABy selling only pre-packaged, standardised branded goods
  2. BBy offering personal service, credit, delivery and long shopping hours
  3. CBy buying in bulk directly from manufacturers at large discounts
  4. DBy operating many branches under one centralised accounting system

Question 301

[1 marks]Customs and trade restrictions
Which of the following is a function of Customs and Excise Authorities?
  1. AIssuing memoranda of association to new private companies
  2. BProviding insurance cover against the risk of theft of imported goods
  3. CCollecting customs duty on imports and compiling statistics on trade
  4. DSetting the exchange rate between the local currency and foreign currencies

Question 302

[1 marks]Customs and trade restrictions
Which trade restriction involves a complete ban on trade in a particular good?
  1. AA customs duty
  2. BDevaluation
  3. CA quota
  4. DAn embargo

Question 401

[1 marks]Company formation and privatisation
Which of the following is a content of a company's Memorandum of Association?
  1. AThe day-to-day operating procedures agreed between employees and managers
  2. BThe minutes of the company's most recent Annual General Meeting
  3. CThe objects of the company and the amount of authorised capital to be issued
  4. DThe names of the company's current customers and suppliers

Question 402

[1 marks]Company formation and privatisation
Why might a government privatize a public corporation (parastatal)?
  1. ATo prevent members of the public from ever owning shares in the corporation
  2. BTo reduce the burden on the taxpayer and improve efficiency through competition
  3. CTo increase the government's direct day-to-day control over the industry's pricing
  4. DTo guarantee that the corporation will make a loss and rely on government subsidies

Question 501

[1 marks]Banking
Which of the following is true of a bank loan but not of an overdraft?
  1. AIt requires no collateral security to be provided, unlike a mortgage or a bank loan
  2. BIt is repaid in regular fixed instalments over a long period, at a fixed interest rate
  3. CIt is an informal, short-term way of borrowing against one's own current account
  4. DInterest is charged only on the amount actually overdrawn on any given day of the month

Question 502

[1 marks]Banking
What is an advantage of making payments by cheque rather than in cash?
  1. ACheques can always be cashed immediately over the counter by absolutely anyone who presents them
  2. BA cheque can be crossed, and cheque stubs and returned cheques provide a record of payment
  3. CPayment by cheque is completely untraceable once it has been posted to the payee's address
  4. DCheques save time because payment can be made instantly without needing to open a bank account at all

Question 601

[1 marks]Insurance terms
What is meant by a 'premium' in insurance?
  1. AThe total compensation an insurer pays out to the insured after a loss occurs
  2. BThe maximum sum for which an item may be insured under the policy
  3. CA regular, fixed payment made by the insured into the insurance pool
  4. DThe commission fee an insurance broker charges for arranging the policy

Question 602

[1 marks]Insurance terms
What does the principle of indemnity mean?
  1. AThe insured is restored to the same financial position as before the loss, without making a profit
  2. BThe insured must always suffer at least part of any loss personally, even when the policy is fully paid up
  3. CThe insurer may refuse to pay out any claim that it personally considers to be unreasonably large
  4. DOnly life assurance policies, and not fire, motor or marine policies, are subject to the principle of indemnity

Question 701

[1 marks]Communication
What is confravision (tele-conferencing)?
  1. AA system using satellite transmission and TV screens so people in different places can see and talk to each other
  2. BA postal facility where mail is kept at a post office for later collection by a travelling salesperson
  3. CA machine that automatically prints and meters the correct postage on a firm's outgoing business mail
  4. DA device allowing bank customers to withdraw cash outside normal banking hours using a card and a PIN number

Question 702

[1 marks]Communication
Poste restante is used mainly by...
  1. ATravellers or salespersons who are away from their base and have no fixed address
  2. BBanks wishing to transfer funds electronically between customer accounts
  3. CManufacturers wishing to insure goods that are in transit by sea to another country
  4. DCompanies wishing to hold video conferences between their head office and distant branches

Question 801

[1 marks]Air transport and containerization
Which of the following is an advantage of containerization?
  1. AContainerization increases the risk of theft and physical damage to the goods being carried inside
  2. BContainers require extensive manual loading and unloading by dock labourers at every single port of call
  3. CContainers cannot be transferred between different modes of transport
  4. DContainers can be sealed in the presence of customs officials, allowing quick customs clearance

Question 802

[1 marks]Air transport and containerization
Why has the volume of cargo carried by air increased in recent years?
  1. ABecause air freight charges are always higher than sea freight charges
  2. BBecause air transport is the cheapest method for bulky, low-value goods
  3. CBecause fewer airports have been built, concentrating traffic
  4. DBecause air transport is fast and safer, with modern planes and airports

Question 901

[1 marks]Consumer protection and advertising
What is the main purpose of the Code of Advertising Practice?
  1. ATo set standards ensuring advertisements are legal, decent and truthful
  2. BTo fix the maximum price that manufacturers may charge for advertised goods
  3. CTo collect customs duty on advertising materials imported from abroad
  4. DTo register new companies and their memoranda with the Registrar of Companies

Question 902

[1 marks]Consumer protection and advertising
Why would a soap manufacturer use competitive advertising?
  1. ATo reduce the overall demand for soap in the market
  2. BTo inform consumers generally about the existence of soap as a product
  3. CTo promote its own brand and fight competition from other manufacturers
  4. DTo comply with a legal requirement to advertise before selling

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