RESULTS ORIENTATED HANDOUT 0777 749 666

“O” LEVEL COMMERCE

PAPER 2- QUESTIONS
TOPIC BY TOPIC

EXAM TIME
With
Admire

TINOFAMBA NEVANOFAMBA
NAMWARI ZVINOITA
O777749666
NOVEMBER 1992 TO JUNE 2015
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PRODUCTION
1.a) What are the purposes of trade? (10)
-to obtain foreign currency
-to make profit
-to supplement shortages
-to make available throughout the year seasonal goods
-to access wider range of goods and services at lower prices
-to increase sales by widening market
-improves standard of living
-create friendship with other countries
-create employment
-bring in new technology
b) Distinguish between commercial services and direct services(4)
Commercial services Direct service
-these are services offered indirectly to -these are services offered directly to the
consumers consumer
-examples include banking -examoles include teaching
-bo face to face contact because it is -consumers have face to face contact
indirect with the provider of the service

c) How would a manufacturer of glass benefit from the services of

transport(6)
-carry raw materials to production
-ferry employees and executives to and from work
-transporting equipment and machinery
-carrying partly finished goods and finished goods
2.a) State five advantages and five disadvantages of specialisation(10)
advantages
-saves tools
-save time
-workers become experts
-job become easier to perform
-leads to automation
Disdadvantages
-automation leads to unemployment
-repetitive tasks are boring to the worker
-results in immobility of labour
-there is skill deepening but no skill widening
-leads to interdependency of workers if another worker is absent
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b) Explain any three problems of barter. (5)

-double coincidence of wants
-some goods are perishable hence storage problems
-transport costs
-long distances are involved
-some goods are difficult to divide
c) How is a producer of cotton assisted by warehousing? (5)
-storage of : -raw material
-finished goods
-cotton in transit
-plant and machinery
-safekeeping of cotton bales
3.a) Distinguish between primary and secondary industry. (6)
Primary industry Secondary industry
-first stage of industry -second stage of industry
-deals with the extraction of raw -deals with the processing of raw
materials materials
-eg mining -eg construction

b) State the advantages of division of labour. (8)

-saves time
-saves tools
-leads to automation
-improves skills
-goods are produced in surplus
-quality goods are produced
-high standard of living
-leads to constant supply of goods
c) How does communication benefit a manufacturer? (12)
-enables speedy contact : with buyers and suppliers
between employer and employee
-allows dialogue to take place through letters,telephone
-allows the sending and receiving of orders
-allows receiving and making payments
-allows lodging of complaints and settlement of queries
4.a) What is meant by the term “industry”? (8)
-it is concerned with the making of goods
-there are three stages of industry
-the first one is primary where raw materials are extracted from the surface,
example inclue forestry,mining
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-the second stage is secondary which is concerned with the processing of

raw materials into finished or semi-finished goods
-it includes manufacturing and construction work that is tanning and
building of houses
-the third stage is tertiary which is concerned with the distribution of goods
and services
-it provides direct and indirect services
-examples of direct services include teaching,nursing
-examples of indirect services include banking,transport
b) How do transport and banking assist an exporter of tobacco? (12)
Transport enables the exporter to carry:
-farming inputs like fertiliser
-equipment and machinery
-finished and unfinished bales
-workers to and from work
-spare parts
-sales persons at work
Banking enables the exporter to:
-obtain loans and overdrafts
-deposit money using night safe facility
-get financial advice and trade information
-obtain credit cards
-keep money safe through savings or current accounts
-receive or make payments through cheque
5.a) Explain the term production. (10)
-it is the provision of goods and services in order to satisfy human needs
and wants.
-there are three stages of production and the first stage is primary which
deals with the extraction of raw materials from the surface.
-the second stage is secondary which deals with converting the raw
materials from the first stage into finished or semi-finished goods.
-the last stage is tertiary which deals with the distribution of goods and
Services.
-there are also two forms of production namely direct and indirect.
-direct production is when people produce goods and services for own
consumption like subsistence farming.
-indirect production is concerned with producing goods and services
In surplus for sale which is commercial farming.
-lastly there are four factors of production namely land,labour, capital
and enterprise.
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b) How is a producer of sugar assisted by communication? (10)

communication enables the producer to:
-contact buyers,employees and suppliers
-lodge complaints
-settle queries
-receive and send payments
-give and receive information
-receive and send orders
-arrange contracts
6. Explain the following terms:
a) indirect production,(8)
-it is when one produce goods and services in surplus for sale ,for
example, commercial farming.
-goods produced are of high quality
-it leads to specialisation and standardisation
-there is use of specialised machinery like tractors
-more capital is needed
-variety of goods are available
b) tertiary production.(12)
-it is the third stage of production
-this stage deals with the distribution of goods and services that is
from the producer until they reach the final user.
-direct services are part of tertiary production and these are services
offered directly to consumers which include teaching and
entertainment.
-activities in tertiary production include indirect services which are aid
to trade and these include banking, warehousing.
-this stage also involves trade that is buying and selling of goods and
services,for example, shopkeeping.
7.a) Distinguish between industry and commerce.(12)
Industry Commerce
-deals with the extraction of raw -deals with the distribution of goods and
materials from the ground services
-can be primary or extractive -involves buying and selling of goods
and services
-can be secondary -can be home trade which includes retail
and wholesale trade
-deals with the changing of raw -involves import and export tade
materials into finished goods
-deals with tanning,making of clothes -deals with aids to trade that is transport
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b) Explain how a manufacturer of clothes benefits from communication(8)

-enables speedy contact : with buyers and suppliers
between employer and employee
-allows dialogue to take place through telephone
-allows lodging of complaints and settlement of queries
-allows receiving and making payments
-allows the sending and receiving of orders
8.a) Explain the following:
I. Secondary production,(5)
-it is the second stage of production
-it nvolves the processing of raw materials into fonisdhe or semi-
finished goods
-involves manufacturing and construction work
II. Tertiary production.(5)
-it is the third stage of production
-deals with the distribution of goods and services to the final user
-direct and indirect services are offered at this stage
b) Describe the importance of banking to a farmer.(10)
-obtain loans and overdrafts
-get financial advice to clients
-safekeeping of money and valuable documents
-obtain foreign currency
-provide telebanking facilities
-provides night safes
-provides ATM’s and credit cards
9.a) What are the benefits of mass production? (8)
-goods are always available
-improves standard of living
-leads to automation
-leads to specialisation of goods
-leads to trade
-leads to simplification of processes
-lower costs of production resulting in lower prices
-leads to standardisation of products

b) Explain the four factors of production.(12)

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Land
-this is the site on which production on takes place for example seas
-no costs of production
-reward for land is rent
Labour
-this is the effort put in by people in the production of goods
-can be in the form of body that is physical
-reward for labour is wages or salaries
Capital
-wealth put aside for the the production of further wealth
-example include assets that is machinery
-reward for capital is inTerest
Entrepreneurship/Organisation
-the ability to run a business
-coordinates other factors of production
-reward is profit
10.a) Explain the term human wants and needs. How are they satiesfied?(10)
-human wants are the things which, though not essential for the proper
functioning of the body
-these are desired by people in order to have a higher standard of
living
- examples of wants include television sets,cars
-human needs are those items that people require in order to keep
their bodies functioning properly.
-examples of the basic human needs are food ,clothing and shelter
cars, televisions
-people seek to satisfy the human needs before satisfying wants
-these are satiesfied through the provision of goods and services
-this involves all the stages of production that is primary,secondary and
tertiary
-it also involves forms of production which includes direct and indirect
production
b) State the importance of warehousing to
i. a large chain of supermarkets, and (5)
-it enables the storage of: -finished goods
-goods in transit
-equipment and machinery
-prevents shortages and evens out flow of goods
-protects goods from bad weather conditions
ii. a wine importer (5)
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-it enables the storage of:-goods in transit

-allows wine to mature
-reduces risks such as theft and damage
-it allows bulk purchasing
-it protect wine from bad weather conditions

ADVERTISING AND CONSUMER

PROTECTION
1.a) What are branded goods? Give two examples of brands.(4)
-these are goods that have distinctive names from that of other
manufacture or competitors.
-examples include mazoe drinks which is a brand name of coca cola
company and bakers inn a brand name for bread.
b) How does branding benefit the consumer?(4)
-goods are easy to identify
-goods are made attractive to the consumer
-goods advertise themselves
c) State and explain briefly any three factors which affect the choice of
advertising media.(6)
-effectiveness of the media
-cost of the media
-target group
d) Why is it that manufacturers of soap powders advertise on radio but
tractor manufacturers do not?(6)
radio(manufacturers of soap powders)
-provides wide coverage
-different languages can be used
-caters for the illiterate and blind
trade journal(manufactures of tractors)
-advertisements are in great detail
-offers selective coverage
-avertisements lasts long
2.a) List and explain five consumer rights.(10)
-the right to be informed means that consumers must be given facts
and figures reqired to make informed decisions.
-the right to consumer education means that consumers must be provided
with knowledge of their rights.
-the right to be heard means consumers must be allowed to epress
themselves and lodge complaints.
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-the right to basic human needs thus consumers must have access to basic
needs such as food and shelter.
-the right to safety thus consumers must be protected against goods and
and services which are dangerous to health
b) State five functions of the Standard Association of Zimbabwe(S.A.Z.).(5)
-tests products for quality
-prepare standards of products
-ensure quality of goods is maintained
-adopts or modify international standards of quality,safety or perfomance
c)State five ways in which advertising can be a disadvantage to consumers.(5)
-leads to overspending
-leads to impulse buying
-interupts television and radio programmes
-some advertised goods are harmful
-leads to higher prices if advertising campaign is unsuccessful
3.a) Explain factors to be considered in the choice of advertising media.(10)
-cost of advertising
-target group
-expected revenue
-size of market
-effectiveness of the medium
b) What are the functions of the Code of Advertising Practice? (4)
-establishes basic standards of advertising
-guards against disparaging advertisements
-ensures that there is fair competition among producers
-ensures that advrtisements are not misleading by making untrue claims
about their products
c) What are the funtions of the Consumer Council of Zimbabwe?(6)
-receives complaints from customers and investigates them
-acts as a watchdog against profiteering by overcharging
-encourages fair competition among manufacturers when advertising
-educates consumers on their rights
-settles disputes between traders and consumers
-promotes proper labelling of goods

4.a) Why do producers advetise their goods? (10)

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-to increase sales and profits

-to maintain sales
-to fight competition
-to fight adverse publicity
-improve the company’s image
-to attract customers
-to remind customers about existing goods
b) State, with reasons,the most suitable type of medium for advertising
1)a new soap powder (5)
television
-provides sound and vision
-demonstrations are possible
-advertisements can be repeated
-advertisements can be timed
-provides wide coverage
2)a new tractor model (5)
trade journal
-used to advertise specialised products like tractors
-advertisements lasts long
-offer selective coverage
-advertisements are in great detail
-provide record of advertisements
5.a) What are the benefits of prepackaging to consumers? (6)
-goods can be displayed
-goods are protected from deteriorating
-labels can be shown on goods
-advertiment can be written on the package
b) Why would a soap manufacturer use competitive advertising? (5)
-to create competition
-to gain market share
-to promote its brand at the expense of other manufacturers
c) How can consumers protect themselves against exploitation by traders? (9)
-check for standard seal of approval
-check expiry dates
-do window shopping so as to compare prices
-reading and understanding credit agreements before signing them
-examine labels before buying
-preparing a shopping list so as to avoid impulse buying
-get consumer education
-check if spare parts are available
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-exercise caution in credit commitments

-check on guarantees before buying
6.a) Why would a manufacturer want to advertise on radio?(5)
-provide sound
-has a wide coverage
-caters for the illiterate and blind
-different languges are used
-advertisements can be repeated
b) What benefits would a company expect from its advertising campaign?(7)
-increased profits and sales
-improved company image
c) How are consumers protected by government through legislation?(8)
-goods are insured by the seller during the hire purchase period
-rate of deposit is legislated
-consumers are allowed a cooling off period if the agreement is signed
outside the traders premises
-goods are under guarantee during the hire purchase period
-cash price of goods is shown
-guards against unfair repossession of goods
-the number and amount of instalments are shown to enable customer
decide if he/she is able to hire the goods
7.a) How are consumers protected by the Hire Purchase Act?(6)
-goods are under guarantee during the hire purchase period
-goods are insured by the seller during the hire purchase period
-the cash price of goods is shown
-the total hire purchase price of goods is shown
-the rate of deposit is legislated
-if buyer defaults in payment ,seller can repossess the goods through a
court order if one third of the purchase price has been paid
-it guards against unfair repossession of goods
b) State the benefits of advertising to consumers.(8)
consumers will know about: -how to use the goods
-where to buy the goods
-prices of goods
-terms of payment
-job vacancies
-dangers of the goods
-events taking place

c) Outline the functions of an advertising agency. (6)

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-conduct market research

-think up the advertisement
-create the advertisement
-produce the advertisement
-place the advertisement
-monitor the success of the advertisement
8.a) For what reasons would a trader use:
I. informative advertising(5)
-inorder to give give precise information about prices of goods,
and also where to buy the goods
-give details of future events, for example competitions
-also when introducing new products
II. competitive advertising(5)
-inorder to give good points of a product
-when the trader is competing with other traders
-whe the trader wants to use brand names to promote its own
products
-to encourage customers to buy the traders products
III. generic advertising(5)
-advertising products jointly
-there is no competition among producers
-there is no use of brand names
-traders will be promoting their products together
-used by traders in the same industry
b) Why would a manufacturer of a washing powder use posters to advertise
his/her product?(5)
-provides local coverage
-are cheap to produce
-give vivid impression
-provide record of advertisement
-can target potential customers
9.a) What action has been taken by the Zimbabwean government in order to
protect consumers when buying goods and services?(10)
-Hire Purchase Act-guards against unfair and unlawful repossession of
goods bought on credit.
-Price Control Act-safeguards against overpricing of goods.
-Sale of Goods Act-it specifies that goods must fit the purpose for which
they are sold.
-Food and Drugs Act-it guards against improper labelling of goods.
-Fair Trading Act-guards against false price cutting or conditional
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selling.
b) Why might a trader use television to advertise products(6)
-provides sound and vision
-demonstrations are possible
-advertisements can be repeated
-different languages can be used
-advertisements can be timed
-provides wide coverage
c) What are the funtions of Standard Association of Zimbabwe(S.A.Z.)(4)
-tests products for quality
-ensures that standard of goods is maintained
-adopt or modify international standards of quality,safety or perfomance
-encourage uniformity of products
10. Study the advertisement and answer the question that follow.
“Stationery Box,the leading brand in stationery and office supplies”.
a) State and describe the type of advertising given above. (8)
Persuasive advertising
-promoting products of Stationery Box only
-undertaken by individual company
-the advertisement is using a brand or name
-encouraging customers to buy the advertiser’s products
b)Outline the disadvantages of advertising to a consumer. (6)
-leads to overspending
-leads to higher prices if advertising campaing is unsuccessful
-some advertised goods are harmful
-interupt television and radio programmes
-leads to impulse buying
-some advertisements are misleading
c) Why would a manufacturer of exercise books use radio to advertise? (6)
-provides sound
-caters for both the illiterate and blind
-advertisements can be repeated or timed
-differnt languages can be used
-provides wide coverage

TRANSPORT AND
COMMUNICATION
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1.State the importance of the following communication services:

a) freepost(5)
-envelope is marked freepost on top of the address
-sender does not pay for postage
-recipient pays a surcharge on usual postage
-user needs to seek for approval from Zimpost
b) recorded delivery(5)
-used to send important documentfor example,certificates
-there is proof of postagr and delivery
-each article has a registered number
-articles are delivered personally
-it provides security for items in transit
c) electronic mail(e-mail)(5)
-fast in sending and receiving messages
-messages can be retrieved and printed
-it is cheap
-information received can be stored,retrieved and printed
d) cellphone(5)
-used when speed is required
-it allows dialogue
-it is portable
-it shows call summary that is time when call was made
-can be used to send messages by e-mail
2.a) What factors would a trader consider when choosing an efficient mode of
communication?(5)
-urgency of the message
-cost of the mode
-effectiveness of the mode
-nature of the message or documents
-availability of the mode
b) State,with reasons, the most appropriate method of communication to be
used in each of the following circumstances:
I. Edgars Stores sending statements of accounts to clients,(5)
-uses a franking machine because it is suitable for sending large
volumes of mail
-it saves time for sticking, cancelling stamps and also on labour
-the machine is simple to operate
II. a manufacturer undertaking marketing research, (5)
-uses business reply service so as to encourage responses
-mail is written business reply service
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-used by mail order firms

-licencee only pays postage on mail returned
-respondent does not pay for postage
III. sending important documents from Harare to Chimanimani. (5)
-use recorded delivery because it provides security for items in transit
-articles are delivered personally
-each article has a registered number
-there is proof of postage and delivery
3.a) Giving two reasons in each case,state the most suitable mode of transport
to carry
I. day old chicks from Karoi to Maputo,(3)
air transport
-fast over short distance
-suitable for carrying perishables like day old chicks
II. mealie meal from millers to shops,(3)
road transport
-fast over short distances
-provide door to door service
III. 5 000 tonnes of cement from Mutare to Chinhoyi,(3)
Rail transport
-suitable for carrying bulky goods
-fast over long distances
IV. oil from Kuwait to Beira(3)
sea transport
-cheap mode of transport
-there is no need to construct a route
b) Describe the following communication services:
I. datel,(4)
-used to communicate business information using a computer
-used in banking and forex markets
-fast way of transmitting information
-information can be reprinted
II. business reply(4)
-the service is used in market research
-mail is written Business Reply Service
-used by mail order firms
-licencee on pays postage on mail returned
4.a) Outline the advantages and disadvantages of road transport.(12)
advantages
-fast over short distances
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-flexible timetables
-provide door to door delivery service
-cheap over short distances
-low cost of maintanance
-there is no transhipment of goods
disadvantages
-slow over long distances
-not suitable for carrying bulky or heavy goods
-can be affected by bad weather conditions
-can also be affected by traffic congestion
-expensive over long distance
-requires other modes of transport when transporting goods
b) Why has there been an increase in the use of containers in transporting
goods?(8)
advantages
-less handling charges
-lower insurance costs
-safe method of carrying goods
-less deterioration from bad weather conditions
-marked for easy identification
-less damage and less theft
-allows groupage of less than a container
-can be easily transferred from one mode of transport to another
5.) State,giving reasons,the most suitable form of communication which can
be used in each of the following cases:
a) sending important documents from Karoi to Mutare,if not required
urgently;(5)
recorded delivery
-suitable for sending valuable documents
-there is proof of postage and delivery
-articles are delivered personally
-each article has a registered number
-provide security for items in transit

b) sending urgenlty needed house plans from Mutare to Lusaka;(5)

facsmile(fax)
-fast way of sending and receiving information
-suitable for sending or receiving detailed diagrams
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-provides written record

-produces information as it is that is exact
-messages can be received even if the office is closed
c) discussing a change in time and venue for a meeting to be held in a few
hours’ time;(5)
cellular phone
-used when speed is required
-subscribers can be reached anywhere and anytime
-it allows dialogue
-it shows call summary that is time when call was made
-can send or receive messages
d) sending letters to a Kwekwe based salesperson working for a month in
Masvingo.(5)
poste-restante
-suitable for people without fixed addresses
-letters are addressed to the nearest post office
-mail is written poste restante
-mail is collected by the addresee
-mail is collected after production of positive identification
6. Under what circumstances would a business person use
a) confravision(skype) (5)
-used by executives to hold meetings or confrerences
-people are able to talk and see aech other over any distance
-it saves on transport and accomodation costs
-it is a fast way of communication
b) poste restante (5)
-used by people without fixed addresses
-mainly salespersons visiting places ,for example two weeks or one
month
-mail is addressed to the nearest Zimpost
-addressee only collect the letter after producing positive identification
c) registered mail (5)
-used for sending valuable items like cash
-use special envelopes
-provide proof of postage and delivery
-if the item is lost it can be traced
-if the item is not found it will be compensated
e) expedited mail service(E.M.S.) (5)
-used when items need to reach to their destinations quickly and
safely
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-used when safety is necessary

-used to send valuable articles ,for example certificates
-mail is delivered to final destination by a Zimpost messenger and
EMS vehicles
7.a) What are the functions of
I. seaport authorities;(7)
-ensure accessibility of inland by road or rail
-provide fueling facilities for vessels
-provide: -warehouses
-ship repair yards
-accomodation
-passenger facilities like toilets
-office space for customs officials
-fresh supplies of food and water
II. a bonded warehouses;(7)
-store dutiable goods whose duty has not been paid
-store goods for entrepot trade
-store goods until they mature,for example wine
-goods in bond can be bottled,sampled,branded,graded, bottled but
not to be manufactured
-goods can be sold whilst in bond
-goods are released after duty has been paid
III. telex?(6)
-provides written record
-can operate unattended
-it is a fast way of sending and receiving information
-message can be corrected before sending
-messages can be received even if office is closed
-messages can be received and send at anytime
8.a) What are the functions of a seaport authority?(10)
-provides:
-warehouses
-accomodation
-supplies of fresh water and food
-ship repair yards
-re-fueling facilities for ships
-loading and off loading facilities
-offices for customs authorities
-docks
-quarantine for animals in order to maintain animal health
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b) How do the following assist a trader in communication?

i. franking machine(5)
-used when sending large volumes of letters
-saves time for sticking stamps
-machine is easy to operate
-machine can print company logos
-it is fast
ii. fax machine(5)
-used for sending detailed diagrams
-produce exact copies
-fast way of communication
-information can be received even if office is closed
-subscribers are provided with fax numbers
9. Describe the following communication services:
a) fascimile(fax)(5)
-used when sending detailed information
-provides written record
-fast way of receiving and sending information
-messages can be received even if the office is empty
b) private bags(5)
- it used by people without street addresses to receive and send mail
-each bag is numbered and is lockable
-mail can be collected from Zimpost anytime but only during working
hours
-bags are rented from Zimpost
c) internet(5)
-send ,receives and stores information
-information can be retrieved
-it is a fast way of sending information
-it is cheap
d) cash on delivery(5)
-used by mail order firms
-parcels are written cash on delivery
-sellers do not need to keep money tied up in bad debts
-customers need not send money in advance
-Zimpost collects payments for the goods being delivered
before they are handed over to the customer
10.a) What are the functions of an airport authority?(10)
Provides:
-car parks
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-security
-refueling points for aeroplanes
-information to pilots on weather conditions
-warehouses
-repair and maintanance facilities
-office space for customs authorities
-information on departure and arrivalk times of aeroplanes
b) Differentiate between cargo liner and tramp(10)
Tramp Cargo liner
-meant for hiring -not meant for hiring
-operate on flexible timetable -operate on fixed timetable
-operate on flexible routes -operate on fixed routes
-have no permanent homes -have permanent homes
-charges are fixed by negotiations -charges fixed at conferences

RETAIL AND WHOLESALE

TRADE
1.a) Explain the following terms:
i. do it yourself (D.I.Y.)products;(8)
-these are semi assembled kits like solar kits
-mostly sold in supermarkets
-little skill is required
-accompanying instructions are provided
-consumer assembles the parts to make the finished
products
-customer enjoys improved standard of living
-customer feels satiesfied by doing the work
-customer saves money by doing the work
self service; (6)
-it is a method of selling goods
-mainly used in supermarkets
-customer examine the goods and then place in a trolley
or basket.
-goods sold are: -well displayed
-branded and prepacked
-individually priced
-arranged according to use
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ii. self selection (6)

-it is a method of selling goods
-mainly used in departmental stores
-cash points are dotted throughout the store
-customers usually pay for an item on any cash point
-purchase another item and pays for it at another cash
point
2.a) Describe any four measures which a sole trader could take to avoid risk of
failure. (8)
-offer credit to well known customers
-open for long hours
-offer personal services by being friendly
-ensure adequate capital by borrowing from friends and relatives
-must also have business skills by taking short courses
-offering variety oy goods
-carry out market research to identify goods on demand
-lowering overheads by employing family members or relatives
b) Distinguish between Hire Purchase and Credit Sale. (12)
Hire purchase Credit sale
-agreement is necessary -agreement not required
-deposit is required -deposit is not required
-financed by finance house -financed by trader
-buyer own goods after last instalment -buyer own the goods as soon as the
agreement is made
-seller repossess the goods if buyer -seller does not repossess the goods
defaults in making payment through a
court order
-suitable for durable goods -suitable for non durable goods

3.a) Distinguish between department stores and supermarkets. (10)

Department store Supermarket
-located in city centre -located in busy shopping centre
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-uses self selection method of selling -use self srvice method of selling
-sell goods at high prices -sell goods at low prices
-offer credit facilities -sell goods on cash basis
-offer luxurious facilities eg lifts -do not offer luxurious facilities

a) What are the differences between multiple shops and department store(10)
Multiple shops Department stores
-located in busy shopping cetres -located in the city centre
-sell narrow range of goods on one -sell wide range of goods
line of products
-goods are usually sold at low prices -sell goods at high prices
-do not offer delivery services -offer delivery services
-may offer credit sales -offer credit sales

4.a) What services are offered by wholesalers to:

i. consumers,(6)
-provides a variety of goods
-advertises goods
-takes consumer complaints to the consumers
-informs consumers on new products
-help in stabilising prices of goods
-ensures a steady flow of goods to consumers
ii. retailers,(7)
-stores goods
-offer credit facilities to customers
-provides retailers with a wide variety of goods
-receives complaints and suggestions from retailers
-convinientyly situated near retailers
-advises retailers on display techniques and store layout
-informs retailers of new product development
iii. manufacturers.(7)
-collect orders from numerous retailers
-bears risks
-stores finished goods
-finances manufacturere by paying cash
-blends,grades,dyes and brands goods
-advertises goods on behalf of manufacturers
-clears manufacturers’ production line
5.a) What are the characteristics of a supermarket?(10)
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-offers a variety of goods

-goods are individually priced
-has wide aisles
-display goods according to uses
-offers trolleys and baskets for carrying goods in the shop
-uses self-service method of selling
-places daily used commodities at the back of the shop, for example
bread
-sell goods at low prices
-goods are usually fresh
-sells branded and prepacked goods
b) Which measures can a sole trader take to survive in business?(10)
-provide variety of goods
-opening for long hours and even during holidays
-consider competition by avoiding similar businesses
-ensure adequate capital by obtaining loans from banks
-advertise continuosly by posters or leaflets
-provide after sales service where necessary
-taking short causes so as to have business skills
-offering personal service by being friendly to customers
-identifying a viable market by carruing out market research
6.a) How do independent retailers continue to trade successfully despite
competition from supermarkets?(12)
-offering variety of goods
-selling goods in smaller quantities
-opening for long hours
-opening during holidays
-cater for individual tastes
-offering informal credit to well known customers
-offering:
-delivery services
-after sales service
-personal services

b) Why do large scale retailers buy directly from manufacturers?(8)

-they have large amount of capital to buy in bulk and for cash
-they have own transport and warehouses
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-it is cheaper to buy from manufacturers

-to get large discounts
-growth of branding and pre-packaging
-the use of tied shops which sell one line of products
-sale of perishable goods like milk which need to be distributed to
consumers as quikly as possible
7a) What are the features of:
1) Retail Co-operative Societies,(7)
-found in private sector
-formed by customers
-members may buy on credit
-sells to both members and non members
-sells a variety of goods at low prices
-membership is open to customers by paying a subscription
-the affairs of the business are run by a management committee
2)lndependent Stores.(7)
-owned by individuals
-business affairs are private
-bears unlimited liability
-easy to establish and requires less capital
-controlled and managed by the owner
-open for long hours or even during holidays
-cater for individual tastes
b) Why may a wholesaler be eliminated?(6)
-bulk purchasing by large scale retailers who have:
-own warehouses
-own transport
-adequate capital to buy on cash
-it is cheaper to buy from manufacturers
-to get large discounts
-growth of branding and pre-packaging

INTERNATIONAL TRADE
1.a) Distinguish between visible and invisible trade,giving one example of each
for Zimbabwe.(6)
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Visible trade Invisible trade

-trade in goods only -trade in services only
-eg desks, cars -eg tourism ,transport
-goods sold and bought from other -services offered and provided by other
countries countries

b) What is meant by the balance of payments?(2)

-it is the difference between total exports(goods and services) less
total imports(goods and services)
c) Explain any six measures which can be taken to correct an unfavourable
balance of payments(12)
-increase exports by reducing consumption of imported goods
-impose exchange controls by rationing the allocation of foreign
currency to importers
-devalue local currency so as to make imports expensive and exports
cheaper
-control the issue of import licences inorder to limit the number of
importers
-charging high customs duty on imports to make them expensive than
locally produced goods
- give tax concessions to exporters so as to reduce export costs to the
exporter
2. Distinguish between home trade and foreign trade(20)
Home trade Foreign trade
-trade between citizens of the same -trade between citizens of different
country countries
-short distances are involved -long distances are involved
-fewer middlemen are involved -more middlemen are used
-documents used are fewer -a lot of documents are used
-citizens in the same country use local -citizens of different countries speak
language different languages
-costs involved in transporting goods -costs incurred in transporting goods out
locally is lower of the country are high
-local currency is used within the same -foreign currencies are used by citizens
country of different countries
-involves retail and wholesale trade -involves import and export trade
-uses the same units for weighing and -uses different units for weighing and
measuring products measuring products
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3. Explain the problems faced by importers and exporters.(20)

-different languages are used which will require a language interpreter
-long distances are involved resulting in high transport costs
-a lot of documents are involved of which some are difficult to
understand
-different currencies are used which will require conversion
-different weights and measurements are used which makes it difficult
to compare quantities
-the exporter also experiences delays in receiving payments and in some
instances faces risks of non payment
-there is also stiff competition in different countries
-political instability that is political interference by the government may
restrict trade
-different governments may impose trade restrictions by enforcing trade
barriers
-different cultures and religions also affect trade, for example a
Zimbabwean trader cannot export mini-skirts to Malawi
4. a) Why do countries impose trade restrictions?(6)
-to reduce imports
-to prevent dumping of goods
-to correct a balance of payment deficit
-to protect infant industries
-to safeguard employment
-to raise government revenue
-to protect strategic industries
b) Explain three purposes and four contents of the fpllowing documents:
i. indent,(7)
-an order to buy goods abroad
-can be open when it does not state the source from which the goods
are to be obtained
-can be closed whe it specifies the types of brands required and the
the manufacturer of the goods
-it contains: -how goods are packaged
-terms of payment
-how the goods are to be forwarded
-prices of goods
ii. consular invoice.(7)
-assists customs officials to calculate customs duty
-prevents cheating when assessing duty
-speeds up clearing and delivering of goods
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-it contains:-description of goods

-prices of goods
-names and addresses of importer and exporter
5.a) Why is a bonded warehouse important to a manufacturer?(8)
-to store dutiable goods
-to allow branding,packing,blending,sampled but not to be
manufactured
-stores goods until they mature, for example wine
-stores goods in enrepot trade
-goods are only released when duty has been paid
b) For what reasons do revenue authorities keep statisticsal records of
imports and exports?(6)
-to provide information on levels of imports and exports necessary
to compile: -balance of trade
-invisible balance trade
-balance of payment
-assist government in correcting an unfavourable balance of payment
-assist in enforcing quotas and embargos
c) Describe the use of documentary credits.(6)
-it is a letter of credit accompanied by shipping documents ,for example
bill of lading
-it provides security of payment to the exporter
-importer’s bank finances the importer
-importer obtains short term credit
-may be revocable that is authority to make payment may be cancelled by
the importer at anytime
-may be irrevocable that is the bank’s authority cannot be cancelled
without the conscent of the exporter
-may be confirmed that is the bank will agree to pay the exporter if there is
any default by the exporter
6.a) Why is international trade important to Zimbabwe?(12)
-to obtain foreign currency
-improves standard of living
-makes a variety of goods available
-lowers the prices of goods
-creates employment
-creates friendship and peace between nations
-promotes specialization
-enables the country to obtain seasonal goods
-provides market for surplus goods
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-allows countries to benefit from comparative advantage

-to supplement shortages
-to enable transfer of technology
b) How does government restrict foreign trade?(8)
-trade barries- these are measures taken by the overnment to reduce
imports
-import licences that is thr government may refuse to issue new licences or
renew expired licences
-quota that is a limit placed on the quantity of goods to be imported
-import duty which is a tax charged on imported goods so as to make
imports more expensive than locally produced goods
7.a)Below are trade figures for country Z for the year ending 31 December
2014.
Goods bought from other countries$500
Goods sold to other countries$400
Tourists from country Z to other countries$200
Tourists to country Z$100
Transport services provided to foreign companies$40
Shipping services provided to companies in country Z$20
Calculate, showing all working;
i. invisible trade balance(2)
($100+$40) – ($200+$20) = -$80

ii. balance of trade, (2)

$400 - $500 = -$100
iii. balance of payment.
($100+$40+$400)-($200+$20+$500) =- $180
(2)
c)Explain the methods that are used to correct a balance of payment
deficit.(10)
-to inrease exports to increase the inflow of foreign currency
-devaluing local currency so as to make imports expensive and imports
cheaper
-enforcement of quotas so as to limit the quantities of goods to be imported
-charging high customs duty so as to make imports expensive
-control the issue of import licences in order to limit the number of
importers
-borrowing from IMF(International Monetary Fund) so as to pay all debts
c) What is a bill of exchange? (4)
-it is a promise to pay a certain amount of money at a future date
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-it is drafted by an exporter and sent to an importer

-it is drawn for a period of three months(or multiples thereof)
-it must first be accepted by importer who then writes the word
“accepted” across the face of the bill

FINANCE AND BANKING

1.a) State and explain the functions of money.(10)
-a medium of exchange means money can be used to exchange goods and
services, for example labour for wages.
-a store of value thus money can be saved in savings or current account
-a standard for deferred payments means that goods and services can be
be paid at a future date
-a measure of value which means goods and services can be expressed in
monetary terms
-a unit of accounts thus all transactions are expressed in monetary term
b) What are the advantages of a current account?(10)
-keeps money safe
-allows withdrawals on demand
-allows use of cheques
-a convinient means of handling receipts and payments
-holders can use it to deposit money at night through the use of night
safe facility
-allows use of stop orders,direct debit or credit transfers
-allow use of cheque cards
2. Under what circumstances does a trader need the following bank services?
a) direct debit(5)
-it is a method of payment initiated by creditor
-it is used for payments of varying amounts
-used where intervals between payments vary
-used to settle telephone,water and electricity bills
-it minimises bad debts
-creditor does not need to send reminders to customers
b) tele-banking(5)
-tader can access baking services through the use of telephone, for
example maing balance inquiries
-makes banking easier an convinient
-saves transport costs
-save tme
-save on bank queues
c) cheque card(5)
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-it guarantees payment of cheques drawn by customer

-enable card holder to draw cash from the customer’s bank
-allows customer to obtain overdraft facility
-it enables request of statement of account
-guarantees limited cash withdrawals at other banks
d) credit transfer(5)
-it is a method of payment
-used to pay many accounts using one cheque
-the method is used to pay wages
-a multiple transfer form is completed
-it is ideal for several payments at one time
3.a) Distinguish between a loan and an overdraft.(12)
Bank loan Bank overdraft
-formal way of borrowing -informal way of borrowing
-inerest rate is fixed -interest rate is variable
-interest rate is low -inerest rate is high
-repayments are regular by instalments -repayments are irregular
-collateral security is needed -collateral security is not needed
-loan account is needed -uses current account

b) Describe the services offered by a building society.(8)

-keeps money safe through savings or deposit accounts
-provide Automated Teller Machines(ATM)
-provide financial advice
-provide mortgage finance
-operate stop orders for their clients
-provide purchase points,for example in supermarkets
-issues certified cheques on request
-provide cash
4.a) Explain four characteristics of money.(8)
-scarcity which means money should be limited in supply
-durability that is money should last for long time
-acceptability that is money should be acceptable in settlement of debts
-portability this means that money should be easy to move around with

b) Explain the following banking services:

i. stop order,(6)
-it is a method of payment
-used to pay fixed amounts to creditors at specified times
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-it is an arrangement between a customer and a banker

-debtor initiates payment
-the system avoid bad debts
-it reduces paperwork
ii. direct debit.(6)
-it is a method of payment initiated by creditor
-used for payment of varying amounts
-minimises bad debts
-payment is prompt
-used where intervals between payments vary
5. Distinguish between:
a) a money order and a postal order;(4)
Money order Postal order
-suitable for paying large amounts -suitable for sending small amounts
of money
-valid for twelve months -valid for three months

b) a direct debit and a credi transfer;(4)

Direct debit Credit transfer
-direct debit authorisation form is -multiple transfer form is completed
completed
-creditor initiates payment -debtor initiates payment

c) a current current and a deposit account(4)

Current account Deposit account
-withdrawals are made on demand -notice of withdrawal is needed
-use cheques in transacting -no use of cheques

d) direct debit and a stop order.(4)

Direct debit Stop order
-used to pay varying amounts -used whe paying fixed amounts
-debtor initiates payment -creditor initiates payment

6.a) Under what circumstances might might a cheque be dishonoured?(10)

-if there are unsigned alterations
-if there is insufficient money in the drawer’s account
-when the cheque is postdated
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-when the drawer is insane

-the drawer has requested for stop payments
-if the account is closed
-the amount in figures is different from the amount in words
-when the cheque is torn
-if there are incomplete details on the cheque
-when the signature on the signature is different from the
specimen in the bank
b) What is the effect of a special crossing on a cheque?(5)
-it is written not transferrable
-the cheque must be deposited into a bank account
-it cannot be cashed over the counter
-the cheque must be deposited into a bank account at the stated branch
-it is easy to trace if stolen
c) Describe a credit transfer.(5)
-it is a method of payment
-used to pay many accounts using one cheque
-ideal for several payments at one time
-the method is used to pay wages
-a multiple transfer form is completed

INSURANCE
1.a)What are the differences between assurance and insurance?(4)
Assurance Insurance
-events must occur, for example death -events may occur ,for example theft
-cannot be indemnified for loss -can be indemnified for loss

b) With the aid of examples,explain the following principles of insurance:

i. indemnity(6)
-a contract of insurance
-restore the insured to his/her former position before the loss
-it does not apply to life assurance because life cannot be indemnified
-the insured must not gain from a loss
-it comes with subrogation which means the remains of the damaged
property is taken by the insurance company
-it contains average clause which ensures that the insured does not gain
by under insuring
ii. insurable interest(5)
-one can only insure one’s property
-for example one’s own house,car,wife
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-the insured must suffer financially if the risk occurs

-it prevents the insured from making profit out of a loss
-it helps the insurance company to determine whether or not an
applicant is entitled to any cover
iii. utmost good faith(5)
-insured should be honest that is tell the truth
-must show all relevant details on the proposal or claim form
-failure to provide truthful information will make the policy void
-the insurance company must also explain all terms and conditions
2.a)Describe the work of the Export Credit Guarantee Corporation.(8)
-collects overdue debts
-investigates credit worthiness of importers
-covers risks of non-payment by importers due to political instability,
war or lack of foreign currency
-provides comprensive policies to cover whole of export business for
at least twelve months
-compensates exporter if importer defaults
-finances importer in the interim
b) Why is a broker important in insurance?(6)
-give expert advice to prospective policy holders
-assist clients in claiming compensation
-assist clients with the completion of proposal form
-gather information on insurance companies or type of policies they offer
-arranging re-insurance for clients
-advise on how losses can be avoided
c)What steps are taken by a person intending to take out a policy?(6)
-contact the insurance company
-request for an insurance prospectus to check the type of policies on offer
-discuss the risk to be insured with the broker
-after satiesfied one completes a proposal form in utmost good faith
-proposal form is assessed by actuaries so as to fix a fair premium
-a cover note is issued pending the issue of the policy
3. Explain the following terms used in insurance:
a) fidelity guarantee(5)
-taken out by employer
-it cover against dishonesty of employees who handle money
-it cover against embezzlement of funds
-insured is restored to the former position by the insurer
-compensation is only paid if the employee is convicted in the court of laws
b)employers’ liability(5)
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-taken out by employer

-cover injury due to negligence by the employer
-employee is compensated
-it is a requirement under the workman’s compensation ,for example
National Social Security Authority(NSSA)
c)public liability(5)
-taken out by the employer
-cover claims made by the public who get injured in the trader’s premises ,
for example if a customer is inured by falling shelves
d)consequential loss(5)
-it is taken out by employer mainly in conjuction with fire insurance
-it ensures that a business continues to receive reasonable payments in
lieu of profits
-it covers losses resulting from an insured loss
-that is loss of revenue,income from rents or cost of paying salaries
4. Explain the following insurance terms:
a)premium(4)
-it is an amount paid by the insured to the insurer usually monthyly
-it is fixed
-it is an amount which will help the insured to obtain cover in the event of
a loss
-it depends on the value of property
b)propectus(4)
-show name of insurance company
-contains premium to be paid
-states compensation to be paid
-shows types of risks that can be covered
c)actuaries(4)
-these are expects who calculate probabilities of risks
-fix fair premium to be paid
-collect statistics of risks
-analyse these risks
d)pooling of risks(8)
-many people join the insurance company
-each insured pays premium into a common pool
-when loss occurs the insurance company withdraws money from the pool
and assist the unfortunate member
-the burden is shared by all the members
-some profit is left for the insurance company
5.a) Outline the steps taken out when making an insurance claim(6)
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-obtain a police report

-contact the insurance company
-complete a claim form in utmost good faith
-the insurer check the claim form to see whether the insured deserves
compensation or not
-if satiesfied compensation is paid according to the principles of
indemnity or proximate cause
b) What are the functions of underwriters? (8)
-are insurers who provide insurance cover
-assess risks
-pay commission to brokers
-charge and collect premiums
-earn profit as remuneration
-have large capital to pay big compensation
-sell insurance policies to merchant through brokers
-specialise in different types of risks, for example fire
c) Why are statistics important in insurance contracts?(4)
-insurance contracts are based on statistics
-this will help the insurance company whether a risk can be accepted or not
-they enable insurance companies to cover against claims form the insured
-they also help in determining a fair premium

BUSINESS DOCUMENTS
1.Why are the following documents important to a tader:
a) proforma invoice(5)
-may be used as a quotation
-used to apply for foreign currency
-used when goods are send on approval
-it contains details of goods send on consignment
-shows quantities of goods
b) advice note(5)
-notifies the buyer that goods are on the way
-enables buyer to prepare storage facilities
-enables buyer to check whether correct order has been dispatched
-it shows description of goods,method of despatch,date of despatch
and names and addresses of buyer and seller
c) delivery note(5)
-provides proof of delivery if signed
-sent with the goods to check state and quantity of goods on arrival
-it shows:
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-description of goods
-names and addresses of buyer and seller
-method of delivery
d)receipt?(5)
-it is evidence of cash sale
-used to acknowledge cash payments
-indicates reasons for payments
-it shows description of goods
-it shows prices of goods and unit prices
2.a) Differentiate between trade discount and cash discount.(8)
Trade discount Cash discount
-it is deducted from the gross invoice -it is an allowance from the net invoice
price price
-not recorded in the books of accounts -recorded in the books of accounts
-given by one trader to another -given to any customer who pays
promptly
-deducted at the point of sale -deducted at the point of payment

b) For what reasons might a trader use a quotation(6)

-reply a letter of inquiry
-enable the buyer to know the prices
-to enable buyer to knoe the terms of payment and period over which
over which quotation is valid
c) State any six reasons for the use of a statement of account(6)
-it is a summary of transactions over a period of time
-issued whe goods are bought on credit
-it request for payment
-may be used for advertising
-it reminds customers that payment is due
-it also indicate amount due,amount paid,instalment due date

BUSINESS ORGANISATIONS
1.a)Give three purposes of a Memorandum of Association, and(3)
-it states the name of the company followed by “limited”
-it states the purpose of the company
-it states the address of the company
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b) Five contents of a Memorandum of Association.(5)

it contains: -the names of the first company directors and first company
secretary
-the class of sares to be issued
-the amount of share capital to be issued to shareholders
-a statement that the liability of shareholders is limited
-the address of the company
c)List six advantages and six disadvantages of a sole trader.(12)
-easy to control and run
-few legal formalities
-little capital is required
-lower overhead expenses, for example wages
-business affairs are private
-has flexible working hours
-offer personal services to customers
-quick decision making since there is no one to consult
-there is close supervision of workers
-does not share profits with anyone
2.a) Why are parastatals converted into Public Limited Companies?(6)
-to improve efficiency of the company through competition
-to reduce the burden on the taxpayer, that is there will be no
subsidising of industries through taxes
-to improve quality of goods
-to raise revenue for the government by selling the parastatal
-to free the firm from political interference
-to reduce state monopoly by competing in the supply of goods and
services
b) State five ways in which a business can improve its net profit.(5)
-keeping goods which are more likely to sell
-lowering prices expecting that demand created will increase sales and
profits
-more advertising
-increasing sales promotions like competitions or free samples
-selling loss leader goods, for example sugar
c) How does a public limited company raise capital(9)
-buying goods on credit for resale?
-buying consumer durables on credit
-ploughing back some profits
-selling shares to members of the public
-obtaining loans and overdrafts from banks
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-factoring (selling) debts to banks

-issuing debentures to members of the public
3.a) What are the characteristics of a public corporation?(12)
-are in the private sector
-established by an Act of Parliament
-owned by the government on behalf of the government
-supply goods and services at low prices
-a government minister is responsible
-controlled by a Board of Management set up by government
-accounts are published and debated in Parliament
-raise capital by selling securities
-they are non-profit making ventures
-aim to provide services
b)State the features of a multinational corporation.(8)
-has large capital
-found in private sector
-there is centralised control by the headquarters
-brings advanced technology to the country,for example Zimbabwe
-large company with subsdiaries operating in other countries
-headquaters in one country
-subsdiary repatriates profits to the parent company
4.a) A trader bought goods valued at $40 000 at 25% trade discount and
5% cash discount. Calculate the
i. trade discount;(2)
$10 000
ii. cash discount;(2)
$1 500
iii. amount paid.(2)
$28 500
b) Give the differences between shareholders and debenture holders.(10)
Shareholders Debenture holders
-owners of the company -creditors of the company
-earn dividends which fluctuate -earn a fixed rate of interest
-cannot force a company into liquidation -can force a company into liquidation is
if dividends are not paid interest is not paid
-receive dividends after debenture -receive interest before shareholders
holders
-have voting rights -do not have voting rights

c)List four disadvantages of multinational companies.(4)

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-submit in foreign currency profits made in another country to the

parent country
-pay competitive salaries hence attract skilled and experienced
employees from local companies
-might also bring outdated equipment to the host country
-might also interfere with the politics of the host country
5.a) Differentiate between a private limited company and a partnership.(10)
Private Limited Company Partnership
-formed by a minimum of two and a -formed by a minimum of two and a
maximum of fifty maximum of twenty
-involves complex legal formalities -less legal formalities
-a seperate legal entity -not a seperate legal entity
-raise capital by selling shares privately -partners contribute to raise capital
-perpetual succession -lacks continuity

b) State the contents and importance of the following documents used

in the formation of a public limited company:
i. prospectus;(5)
-it is prepared by company promoters after the registration of a
public limited company
-issued to members of the public by public limited companies only
-it contains: -the profit record of the company
-future plans of the company
-it is important and useful to an investor who wants to assess his/her
risk in making an application to buy shares
ii. certificate of trading.(5)
-it is prepared and issued by the registrar of companies
-it contains:-date and place of issue
-name and address of the company’s registeredoffice
-it is important because it allows public limited companies to
start trading

tinofamba nevanofamba