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MULTITECH BUSINESS SCHOOL

BLOCK RELEASE NOVEMBER 2011


COMMERCIAL ENVIRONMENT ATC PAPER 4
MARKING GUIDE
QUESTION ONE (SECTION A- CIRCLE THE MOST CORRECT ALTERNATIVE)
i)

A good title of a report requires the following except


a) Clarity in statement of what the report is about
b) Having an attractive display
c) Being as brief as possible
d) Confidentiality

ii) The disadvantage of speech over written word is that in a speech;


a) A persons mood such as sympathy or anger can be conveyed
b) The ton e and stress of words increase meaning
c) There is no permanent record
d) There is immediate feed back
iii) In an organisation the disadvantage of horizontal communication is that people:
a) People operate at the same level
b) Enjoy increase frankness and ease
c) Rely heavily on cooperation
d) Are likely to develop rivalry, negative attitude and jealousy
iv) The role of a chairman in a meeting is to:
a) Invite member for the meeting
b) Register member present
c) Remind members of their commitments to the meeting
d) Guide the members through the meeting proceedings
v) Re on the official letter stands for the:
a) Reference made to the letter writer
b) Referees to be contacted where necessary
c) Purpose of writing the letter
d) Recipients opening remarks
vi) Communication feed back takes place when:
a) The sender sends the message to the receiver
b) The medium used is straight forward
c) The receiver interprets the message from the sender
d) The receiver interprets the message and responds
vii) The following are methods of communication except:
a) Oral/speech
b) Written and graphics
c) Body language/touch
d) Attitude/attributes
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viii)
a)
b)
c)
d)

The format of a memo includes the following:


The date. The venue and the purpose
Communication from the chair, minutes of the previous meeting
Salutation, addresses and complementary clause
Receiver, sender, date, and subject

ix) A simple report format consists of :


a) Terms of reference, summary and appendices
b) Headings, subtopics, and reference
c) Title, introduction, results and conclusions
d) Contents, preface and personal opinion
x) Punctuation in a piece of writing serves to:
a) Complete unsaid meaning
b) Illustrate ideas in written work
c) Interpret vague statements
d) Make clear what is written
xi) Barter' system means
a) producing goods and services to make profit.
b) exchanging goods or services for goods or services without the employment of money.
c) transfer of goods from the place of production to the ultimate consumers.
d) any activity which is directly related to wealth.
xii) The liability of a sole proprietor is unlimited. This means
a) the private property is safe and cannot be utilized in the discharge of the debts.
b) the liability of the sole proprietor is limited up to his investment in the business.
c) not only his business property, but also the personal property is liable to pay his business
debts.
d) he can raise his funds because he has unlimited opportunity to expand its capital.
xiii)
In order to form a partnership there must be a minimum of
a) two persons but not exceeding 22.
b) two persons and maximum 22.
c) two persons but exceeding 20.
d) two persons but not exceeding 20
xiv)
Articles of Association is a document explaining rules and regulations regarding.
a) external affairs of a company.
b) internal affairs of a company.
c) external and internal affairs of a company.
d) none of the above.
xv) The main purpose of cooperative societies is
a) to earn the maximum profit
b) the welfare of their members. The society does not work for profit motive.
c) to earn the maximum profit with low cost of production.
d) to do business with abnormal profit for its members only.

xvi)
When an insurance company restores the insured to the original financial position, this is
called:
a) Indemenity
b) Insurable interest
c) Proximate cuase
d) Subrogation
xvii) Unquoted companies means:
a) Amount paid out of the profit of the business to its shareholders depends on the number
of shares
b) Companies whose shares are bought and sold on the stock exchange
c) Companies whose share are not traded on the stock exchange
d) Conversion of undistributed profits into share capital.
xviii)
a)
b)
c)
d)

A cash and carry whole saler


Sells to retailers at reduced prices against cash and retailers transport their goods
In a wholesaler who pays cash and collects the goods himself
Sells to retailer at reduced prices on cash and self service terms
Operates like a departmental store

xix)
Advertising is important because it mainly:
A. Reduces the price of goods.
B. Induces customers to buy goods that have minor defects.
C. Creates employment.
D. Creates demand for goods and services.
xx) In a textile factory which of the following items may be classified as land?
A. Raw cotton.
B. Machinery
C. Wealth.
D. Lint.
SECTION B: (COMPULSORY)
Question 2
Read the following passage and answer the questions that follow
The provision of rural infrastructure has provided significant positive impact in many
emerging Asian economies as indicated by increased agricultural out-put productivity and
development for farm activities.
Market oriented incentives for agriculture and nonfarm activities are found to be necessary to
induce and maximise supply response. To do so government should intervene where markets
have failed, particularly in the area of infrastructure. Although infrastructure alone can both
induce economic growth its absence is likely to cause some constraints.
These are important lessons for Uganda policy on liberalisation of agricultural markets and
strategy for rural investment aimed at poverty reduction and economic growth. Recent changes
in agricultural markets should continue with restructuring of some processing industries,

regulations of business and development supported by increased investment in rural


infrastructure.
The poor indirect benefits from rural infrastructure to an extent that it stimulates economic
activities and increases the demand for local labour. To improve their direct access requires
either reducing the cost of infrastructure (i.e. appropriate standards and low cost labour
intensive technology or reducing the cost of using low transport services.
The poor in Uganda who reside in areas of low agriculture potential are largely the illiterate
without basic infrastructure and social services. For the hard-core poor access to social services
and development of human capital are considered to be of highest priority. Social sector
investment strategies tend to have greater impact on the income of the poorer people in society.
Adopted from Uganda: the challenge of growth and poverty reduction, world bank country study,
Washington D.C. 1996.
Required:
a) Suggest a suitable title for the passage
Relationship between rural infrastructural development and agricultural development
(2 marks)
b) provide a suitable word or phrase to replace each of the following words as used in the
passage:
(i). induce
(paragraph 2)
cause or determine
(ii). intervene (paragraph 2)
to get involved in solving a problem
(iii).restructuring (paragraph 3)
making significant changes in the structure
(iv). appropriate (paragraph 4) suitable
(v). priority
(paragraph 5) considered to be important
c) explain the meaning of each of the following phrases as used in the passage:
(i). a significant positive impact (paragraph 1) a great desirable effect(s)
(ii). Market- oriented incentives (paragraph 2) actions/programs to expand the
market of agricultural products
(iii). stimulates economic activities (paragraph 4) rural infrastructural development
encourages/attracts economic activities
(iv). low agricultural potential (paragraph 5) areas with less ability to produce
agricultural products
(v). hard core poor
(paragraph 5)
people who are very poor
d) What important lessons can Uganda draw from the Asian countries experience? (3 marks)
Invest in rural infrastructure e.g rural roads, schools and hospitals
Government should intervene where the free market fails
Restructure agro processing industries

Question 3

You have been at UMA Trade Fair Exhibition held at UMA show grounds between 2-10 October
2011. As a sales representative of a computer company. several orders were placed and you
got the best stall award.
REQUIRED
Write a short report to your company about the proceedings of the proceedings of the exhibition.
Include the following:

Introduction your name and that of the company


Organisation represented
Venue of exhibition
Duration of the exhibition
Products at the exhibition
Types of orders and quantity
Future exhibitions
Recommendations/suggestions as a way forward

(15 marks)

Memo
To: Sales manager; MCL Computers Ltd
From: Ambrose Tubenawe; Sales representativesign
Date: 31st October 2011
Re: Summary report on UMA 2011 Trade Fair Exhibition
Introduction
Our company participated in this years UMA trade fair exhibition at UMA show grounds from 2nd
to 10th October 2011. I was a sales representative for our company at this exhibition. Anumber of
products were exhibited and many people turned up to our stall and pressed order as listed in
the table below:
Product

Number of inquiries made

Purchases made

Orders made

Antivirus software

1000

200

300

Desk tops

1200

250

350

Lap tops

1000

100

400

LCD Projectors

400

10

50

We were also got the best stall award from UMA.


Challenges:

Some challenges were experienced:


Floods at the stall due to heavy rains
Insufficient sales and customer care staff
Lack of enough brochures
Delay in allocation of a stall by UMA management

Recommendations:

Apply and clear for the stall early enough


Secure a semi-permanent exhibition stall
Increase the sales and customer care staff at the future exhibitions
Provide enough marketing materials e.g. brochures

Question 4
As the human resource assistant in your organisation, you are requested to seek for qualified
persons to take on the job of the Chief Accountant
Required:
Design an advertisement to be published in the news paper daily specifically stating the
qualification required and the terms of employment.

MULTITECH BUSINESS SCHOOL


JOB VACANCY: CHIEF ACCOUNTANT
Reporting to the Finance manager
Main purpose of the job: To assist the finance manager.
Duties and Responsibilities:
Preparing books of accounts for purposes of accountability.
Maintains contract ledger for various contract ledger for various contract works.
Carries out bank reconciliation.
Produces financial reports.
Processing payment document.
Maintains cash book.
Making authorized petty cash payments.
Banking and withdrawal of funds.
Filling of accounting records.
Minimum Qualifications:
CPA 1 or its equivalent.
.Proficiency in accoumting packages an absolute advantage.
Job Experience:
At least ONE year.
Excellent computer skills.
Able to meet set deadlines and work long hours with minimal supervision.
How to apply: send your CV to KENSALT LTD plot 234 Wampewo Avenue, P.O Box 10923 Kampala or
kensaltltd at gmail.com. Dead line of submission is 10th November 2011

Question 5
You are the office manager for Smart System, ltd, a start-up IT firm in Kampala (22/F,
Linkage Building, 188 Luwum Street). Recently you bought 10 modems from
Precision Supplies, a computer hardware supplier in Wanchai (12/F, Parkview Building, 276
Nairobi Road, Kenya). Two weeks after installing the modems to the computer systems
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in your office, you discovered that two of the modems could not function properly. Since
you have already paid the full amount for the modems, you are entitled to enjoy the two-year
warranty that comes with the product including free replacement for any products bought
within one month.
You called their customer service department to ask for a replacement last Friday and was
told that the replacement would be delivered to your office the following Monday. It is now
already Friday and you still have not heard anything from them. You really need the two
modems immediately for your company is working on a major project with an approaching
deadline. This is the first time you have ordered from Precision Supplies and may be the last.
REQUIRED:
Write a letter of complaint to demand for an immediate replacement or a full refund.

SMARTSYSTEM, INC.
22/F, Linkage Building
188 Luwum Street, Kampala
Uganda
Tel. 2345-2345
Fax. 2345-5432
31ST October, 2011
The Manager
Customer Services Department
Prescision Supplies
12/F, Parkview Building
276 Nairobi Road, Kenya.
Dear Sir/Madam
RE: COMPLAINT ON DELAY IN REPLACEMENT
We bought 10 modems from Precision Supplies about three weeks ago ( invoice number 1234).
We installed the modems in our offices computer system, and they seemed to be running
smoothly until last Friday when two of the modems began to refuse taking any command
signals.
Discovering the malfunction, we called your customer service department immediately asking
for replacements and were told that these would be delivered the following Monday. It is now
already Friday and we still have not heard anything from you. This has caused us great
inconvenience and delay in our work. The absence of the two modems has caused us a big
drop both in productivity and efficiency. We really need the two modems immediately as our
company is working on a major project with an approaching deadline. We face with heavy
penalties should the project fail to be completed on time.
Therefore, we cannot afford to continue working without the two modems. To make matters
worse, we could also lose a very valuable customer should we fail to meet the deadline. Having
paid the full amount for the modems, we have been informed that SmartSystem is entitled to the
two-year warranty that comes with the product including free replacement for any products
bought within one month.
This is the first time we have bought anything from Precision Supplies. We ordered from you
because of your reputation of always providing excellent and dependable customer service.
Therefore, we would like you to look into the matter and replace the two modems immediately.
Should we fail to receive the replacement by tomorrow, we shall be prepared to receive a full
refund for the two modems.
Thank you for your attention in this matter and please contact me at 2345-2345 should you
need any further information.
I look forward to receiving the replacement soon.
Yours faithfully
..
Office Manager
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SECTION D (choose any THREE questions)


Question six
a) Distinguish between Informative Advertising and Competitive Advertising (4 marks)
Informative:
It simply makes available certain information e.g. price, quantity, and products available
e.g. Bread is sold here, We sell spare parts up stairs, Buy your animal feeds from
Rajab and Co. e.t.c
Persuasive:
This is also known as competitive advertising. It is concerned with making a product
appear desirable. E.g. There is no substitute for Tip Top bread, Rex is second to non
e.t.c
(b) Outline any three examples (forms) of out-door advertising used in Uganda (3 marks)
Bill boards
Neon signs
Window display
banners
(c) Give and explain the factors which should be considered when choosing a medium of
advertising (8 marks)
Cost of the media
Geographical coverage
Social class of people
Age bracket
Speed and urgency
Question seven
(a) Differentiate between the following terms as used in commerce:
(i) Bank loan and Bank overdraft (4 marks)
A bank loan is a lending facility offered by the bank to meet long term financial
requirements of the borrower.
Bank overdraft
It is a temporary short-term) loan which, is re-payable in a short period of time.
They are usually operated under current accounts in commercial banks.
(iii)Stale cheque and postdated cheque (4 marks)
A stale cheque is one presented after more than 6 months of its drawing where as a post
date cheque is a cheque presented for payment before its drawing date.
(b) Explain the factors considered by a Commercial Bank loans department when giving out
credit to borrowers. (7marks)
Purpose of the loan
Creditworthiness of the borrower
Amount of loan
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Duration of loan
Risks involved

Question eight
Mr Ahmed and Mrs Singh are sole traders owning shops of equal size in the same street.
(a) Explain why Mr Ahmed may have to pay a larger insurance premium for fire insurance
than Mrs Singh. [3 marks]
The intensity of the risk
The sum insured
(b) Explain two business risks, apart from fire, against which both Mr Ahmed and Mrs Singh
should insure. [4marks]
Burglary
Accidents
(c) Explain why they cannot insure their shops against the risk of bad management.
[4marks]
The extent of loss from such a risk cant easily be calculated
(d) Name one insurance principle and explain how it might apply to a fire insurance policy.
[4marks]
Utmost goodfaith (uberrimae fidei )
This Principle requires that the insured person to disclose all important facts about the
insured property to the insurance company even if the company does not specifically
ask questions about them. e.g. if the house to be insured is of wood, this fact must be
disclosed to the insurer.
This principle continues thorough the term. If for example a person with a life policy or
personal accident policy takes up a dangerous sport or occupation, he must inform the
insurers. This would be the case if he gave up an office job to work in the mines.
Insurable Interest:
The insured must be so situated in regard to the property insured that he would suffer
loss or benefit from its existence or destruction. I.e. a person can only effect an
insurance policy he possesses the interest in the subject matter. A person cannot gain
from occurrence of the event. It follows also that if ones property is insured with two
companies, the two will contribute to the loss for the exact value of the house and no
more.
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Subrogation:
This is a common law right of a person to stand in the legal position of the other and
avail himself with of the rights and remidie4s of the insured. In this case after an insured
has been indemnified, the rights in the residual sums or remains raised from the salvage
from the loss, pass on to the insurer.
The doctrine of proximate cause:
It states that there must be a fairly close connection between the cause of a loss and the
actual loss. In other words, the loss must be dominantly and effectively resulting from a
risk for which the insurance policy was taken against. If for example people set your
house on fire during a riot, the cause of your house being destroyed is rioting not fire. If,
on the other hand, sparks from the fire place set things on fire and the house is
subsequently burnt down, the proximate cause of your losing the house is fire.
Indemnity:
The principle states that no one can get compensation exceeding the actual monetary
loss caused by the event insured against. The object is to place the insured in the same
position as he was in before the event occurred. e.g. if a second hand car was stolen,
the compensation will be the assessed on its present day worth or value not its original
cost.

END

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