COMMERCE 7100/13 Paper 1 Multiple Choice May/June hour

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1 * * ambridge International Examinations ambridge Ordinary Level OMMERE 7100/13 Paper 1 Multiple hoice May/June hour dditional Materials: Multiple hoice nswer Sheet dditional Materials: (not provided by IE) Soft clean eraser Soft pencil (type or H is recommended) Ruler Protractor RE THESE INSTRUTIONS FIRST Write in soft pencil. o not use staples, paper clips, glue or correction fluid. Write your name, entre number and candidate number on the nswer Sheet in the spaces provided unless this has been done for you. O NOT WRITE IN NY ROES. There are forty questions on this paper. nswer all questions. For each question there are four possible answers,, and. hoose the one you consider correct and record your choice in soft pencil on the separate nswer Sheet. Read the instructions on the nswer Sheet very carefully. Each correct answer will score one mark. mark will not be deducted for a wrong answer. ny rough working should be done in this booklet. The businesses described in this question paper are entirely fictitious. This document consists of 11 printed pages and 1 blank page. I14 06_7100_13/2RP ULES 2014 [Turn over

2 1 The diagram shows the three stages of production. 2 production primary extractive secondary manufacturing tertiary X What is X? commercial services construction non-exhaustive industries processing 2 furniture company buys raw materials for $ It pays $2000 for wages, $1000 for factory rent and $500 in taxes. The furniture manufactured is sold for $ What is the amount of added value? $3500 $ $ $ The diagram shows people working in a factory. raw materials process 1 process 2 process 3 process 4 process 5 product What manufacturing process is shown in the diagram? chain of production division of labour interdependence primary production 4 How do direct services assist industry? aiding the education and health of people providing the transportation of goods supplying raw materials taking the risk out of business ULES /13/M/J/14

3 5 Why do some retailers buy directly from manufacturers? 3 Many retailers want to buy in small quantities. Retailers may require urgent deliveries. Some retailers may need regular local supplies. These retailers have their own warehouses. 6 Which name is given to an out-of-town store which sells a large variety of goods and has a large car park? department store hypermarket supermarket variety chain store 7 hmed has seen an advertisement for a computer. It includes the words credit terms available. Which statement explains why he is interested in buying the computer shown in the advertisement? ash vouchers will be offered to him. His money will be refunded if he finds he cannot use the computer. Payment for the computer can be spread over time. The price will be reduced if he pays cash when he buys the computer. 8 To avoid paying interest, credit card holders should pay for their goods at the time of purchase. before a date given on the monthly statement. two months after the purchase date. when their goods arrive. 9 shopkeeper must exchange goods when a shopper does not want the goods after they have been paid for. a shopper prefers another item after the goods have been paid for. goods are deliberately damaged just after they have been bought. goods have faults but are supposed to be in perfect condition. ULES /13/M/J/14 [Turn over

4 4 10 The diagram shows a chain of distribution. producer retailer consumer For which product would this chain of distribution be most suitable? a variety of canned foods sold through small-scale retailers branded perishable goods sold in supermarkets coffee ready for export to a number of countries imported raw materials required by manufacturers 11 Which service is provided by wholesalers to manufacturers? forecasting the likely changes in the market giving information on record-keeping operating a cash and carry facility providing a wide range of goods 12 What is the function of a ustoms uthority? collecting statistical information on imports and exports deciding on changes in the rates of customs duties to be charged maintaining port and airport facilities providing warehousing for seasonal goods 13 Which document is sent as a response to an enquiry? advice note delivery note invoice quotation ULES /13/M/J/14

5 14 Trendy Wholesalers prepared a statement of account for Lee esigns. 5 STTEMENT OF OUNT TRENY WHOLESLERS H H RO LUSK To Lee esigns Selma Road Lusaka Month Ending pril TE ETILS EIT REIT LNE $ $ $ pril 1 pril 7 pril 7 pril 11 pril 22 pril 25 balance owed cheque no. 456 cash discount invoice no. 579 invoice no. 610 credit note no Why was a credit note issued on pril 25? ash discount of $60 was given. Goods valued at $60 were bought on pril 25. Goods valued at $60 were returned. Payment of $60 was made by cheque. 15 supplier may allow his customer cash discount because he is a regular customer. for paying in cash rather than by cheque. for prompt payment. to allow him to make a profit when re-selling the goods. 16 Mrs Mututu buys 100 dresses at $80 each and sells all of them for $ What is her percentage mark-up? 20% 25% 80% 125% ULES /13/M/J/14 [Turn over

6 17 Why might a company benefit from international trade? 6 It can charge import duties on foreign goods and services. It can expand its trade in the home market. It can export goods and services into a larger market. It can increase the country s alance of Payments. 18 What is the term for the difference between the value of exported goods and the value of imported goods? alance of Payments alance of Trade invisible trade balance visible trade surplus 19 Some countries adopt protective trade measures despite all the advantages of free trade to correct a alance of Payments deficit. enable their consumers to have a wider choice of goods. encourage interdependence between trading countries. widen markets for their own goods. 20 What is not a difficulty faced by an exporter? communication by Internet cost of transport language methods of payment 21 Why might advertising lead to lower prices? dvertising costs are deducted from product prices. ompetition with other manufacturers might be reduced. osts of advertising are lower than production costs. Increased sales can reduce unit costs of production. ULES /13/M/J/14

7 22 This advertisement appeared on leaflets given to shoppers in the town centre. 7 krazy days for s, Vs, Video Games Yes folks, we have moved to our new shop at: No. 7, Star Shopping entre, The ity (Tel or us at krazydays@net) What type of advertisement is shown in this leaflet? competitive generic informative persuasive 23 Which businesses are most likely to make frequent use of digital billboards to advertise their products or services? cash and carry warehouses freight forwarders international airlines small shops 24 What is a method of electronic communication? airmail letter memorandum voic ULES /13/M/J/14 [Turn over

8 8 25 customer in Pakistan wishes to inform his UK supplier immediately that a recent delivery was not up to the quality expected. What would be the most appropriate method of communication? pager surface mail teleconferencing 26 Which document is used in international trade to provide proof of ownership for exported or imported goods? bill of exchange bill of lading consignment note letter of credit 27 The diagram shows a road vehicle. Which commodity is most likely to be carried in this road vehicle? milk rubber sand steel 28 What is not an advantage of owning a van to the owner of a florist shop? delivering flowers to her customers when required displaying her flowers and plants to customers providing a method of advertising her business reducing the danger of damage to her flowers ULES /13/M/J/14

9 29 For each additional day that vegetables are kept in warehouses, 9 costs of warehousing are reduced. more profit is gained on the capital employed. the risk of wastage increases. the vegetables increase in value. 30 Which statement about a bonded warehouse is correct? Goods can be manufactured while they are in the bonded warehouse. Imported goods are stored in the bonded warehouse until their duty is paid. Imported goods on which duty has been paid are stored in the bonded warehouse. Seasonal goods are stored in the bonded warehouse until they are demanded. 31 Mrs ube rents a shop and insures the goods only. Which principle of insurance prevents her from insuring the shop building as well? insurable interest proximate cause subrogation utmost good faith 32 Lahore Insurance ompany has insured 1000 people for the same risk. The company expects claims totalling $ in the next year. The business also needs to cover administrative costs of $ and to earn a profit of $ Which annual premium will the 1000 people pay? $500 $600 $700 $ What is an advantage of a bank current account? high interest rate is earned on money deposited. minimum amount must be kept in the account. n overdraft may be possible. It is a means of long-term saving. ULES /13/M/J/14 [Turn over

10 10 34 To what is the holder of a bank savings account entitled? a cheque book a credit card a debit card money available on demand 35 bank statement for Miss hang is shown below. Part of the entry for 13 th May is missing. ank of sia Statement for Miss hang Paid in Paid out alance 1 st May alance $560 7 th May heque $300 $860 9 th May $180 $ th May heque $70 O/ 15 th May heque $130 $60 27 th May ash $250 $310 What is the correct entry for 13 th May? $610 paid in $610 paid out $750 paid in $750 paid out 36 What is a firm likely to arrange with its bank to collect monthly payments of variable amounts from a customer? bank draft credit transfer direct debit standing order 37 Who owns a public sector organisation? directors government shareholders workers ULES /13/M/J/14

11 11 38 What is a general partnership? a business unit formed by shareholders a business unit with limited liability an association of individuals engaged in business an organisation able to sue and be sued in its own name 39 What is a source of short-term finance for a business? mortgage overdraft shares venture capital 40 Mr Singh is a small-scale retailer. His cost of goods sold in a three-month period was $ His opening stock at cost was $ and closing stock at cost $8000. The value of sales for the period was $ with average stock at selling price $ What is the rate of turnover for the three-month period? ULES /13/M/J/14

12 12 LNK PGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (ULES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. ambridge International Examinations is part of the ambridge ssessment Group. ambridge ssessment is the brand name of University of ambridge Local Examinations Syndicate (ULES), which is itself a department of the University of ambridge. ULES /13/M/J/14