“0” LEVEL COMMERCE

REVISION MODULE

EXAM PRACTISE

STRIVING FOR EXCELLENCE

Tinofamba nevanofamba

1|Page TINOFAMBA NEVANOFAMBA

1. Explain the following terms, giving examples,

a. Value addition {3}

It is the process of changing or transforming a product from its original state to a more
valuable state. Many raw commodities have intrinsic value in their original state. For
example, field corn grown, harvested and stored on a farm and then fed to livestock on that
farm has value. In fact, value usually is added by feeding it to an animal, which transforms
the corn into animal protein or meat. The value of a changed product is added value, such as
processing wheat into flour.

b. Beneficiation {3}

It is the crushing and separating ore into valuable substances or waste by any of a variety of
techniques for example, mineral dressing , mineral extraction , mineral processing, ore
dressing , ore processing

2. List 5 functions of Customs and Excise Authorities. {5}

 Collect revenue for the government by charging customs and excise duties
 Collect, keep and analyze records of imported and exported goods and services
 Control bonded warehouses to ensure that duty is collected.
 Supervise public health by arranging quarantine for animals
 Supervise entreport trade

3. a) Distinguish between private limited companies and public limited companies. {4}

A private company is a closely held one and requires at least two or more persons, for its
formation. On the other hand, a public company is owned and traded publicly. It requires 7 or
more persons for its set up. It is compulsory to call a statutory general meeting of members,
in the case of a public company, whereas there is no such compulsion in the case of a private
company. The issue of prospectus/statement instead of the prospectus is mandatory in case of
a public company, but this is not the case with the private company.

b) State five benefits of free trade to citizens of Zimbabwe. {5}

 Free trade increases access to higher-quality, lower-priced goods.

 Free trade means more growth.
 Free trade improves efficiency and innovation.
 Free trade drives competitiveness.
 Free trade promotes fairness.

2|Page TINOFAMBA NEVANOFAMBA

 4. Why is international trade important to Zimbabwe ? {20}
Zimbabwe does not have all it requires to feed its populace i.e. like most countries it is not
self-sufficient. It therefore buys goods and services from other countries in order to
supplement shortages. Get what it does not have due to climatic conditions for example raw
materials such as cocoa . Get what it cannot manufacture due to lack of technological
expertise or differences in technology for example vehicles. Access a wider range of goods
and services thus uplifting the standards of living. Prevent shortages for example when there
is a drought. Obtain higher quality goods at lower prices than would otherwise be possible if
they were manufactured locally. Benefit from comparative cost advantage. Get seasonal
goods when they are not in season in Zimbabwe.

5. Identify difficulties faced by importers and exporters and how they can be
overcome. {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 in stances
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

6. Explain the advantages and disadvantages of multinationals. {20}

Advantages of multinational companies

 Multinationals create jobs which boosts the local economy and more workers to tax.
 They bring expertise in that skills of workforce are improved, some may use IT that
would never have before or other skills now deemed basic by the western or
developing world.
 Multinationals are in position to benefit from economies of scale . This means the cost
per unit can be lowered through specialisation – with a large workforce work can be
divided up and people can do their limited job expertly.
 Technical economies can be gained with automated equipment, but only when fixed
costs of machine can be spread out over outputs.
 Purchasing economies can be achieved, for example by buying in bulk companies can
obtain supplies and materials at a cheaper cost per unit.

3|Page TINOFAMBA NEVANOFAMBA

 Disadvantages of multinational companies

 Multinationals can, however, be accused that the jobs they create may be deskilled
jobs and in fact may be low paid, repetitive assembly line work.

 Multinationals' profits are not usually kept in the host country.

 Multinationals have been accused of cutting corners. Social responsibility may be

overlooked. They have been accused of exploiting the workforce and/or the
environment. Workers can work below minimum wage and for longer hours.

 They may exert political muscle. The multinational may threaten to pull out of a
country if they don't get deals on workforce (wages) or overheads (land, rent and
rates) and pollution/clean-up deals.

7 a) Identify how consumers can protect themselves when buying goods and services {8}

Exercising care in credit commitments. Consumers need to do window shopping so as to

compare prices and quality. Consumers need to check for expiry dates on products before
buying. Inspecting goods for defects before buying is also another responsibility that should
be done by consumers. Consumers need to check for spare parts before buying goods and
also knowing their rights and legislation. Making shopping lists before buying is another
important way of avoiding exploitation. Lastly consumers should read advertisements and
labels carefully.

b) Explain, giving examples, four methods of advertising appeal. {12}

Social Acceptace:
A consumer could make more friends if a particular brand of deodorant is used.

Ambition and success:

The customer can be persuaded that if he buys a particular brand of cloths he could get a
better job.

Romance:
If a woman buys a particular cream she could become more and attractive.

Hero worship
A well known personality can be seen to advertise the product. It is hoped that consumer will
buy the product because of the appeal of personality.

4|Page TINOFAMBA NEVANOFAMBA

8. Outline any five factors considered when choosing the mode of communication. {5}

 the cost of communication

 the speed of transmission
 safety of transmission
 nature of information
 the urgency of the message

9 a) Define e-commerce {2}

E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or
the transmitting of funds or data, over an electronic network, primarily the internet.

b) List three advantages of e-commerce {3}

 Online catalogues can be viewed
 There is much bigger choice for products
 Products review can be obtained before we buy the goods
 Orders can be placed 24 hours a day
 Goods or services are usually cheaper on internet as the middlemen are cut
 Once the customer has placed an initial order, the customer details are stored
and makes shopping online very fast
 You can buy goods and services from anywhere in the world

Any three

10. Discuss the impact of multinational companies to the host country. {10}

Benefits of multinational companies

 paying taxes to boost the country’s revenue employment
 transfer of knowledge, skills and technology
 bringing foreign exchange
 providing vital goods and services within the country
 may improve the infrastructure of the country
 may provide useful competition for home industries
 may require supplies from local companies

5|Page TINOFAMBA NEVANOFAMBA

Multinationals also have many disadvantages for the host country:
 they may exploit underdeveloped countries
 they may bring in their own experts rather than train local people
 they often pay higher salaries and so attract employees at the expense of local
industries
 they may take back all the profits of their business to their own country - drain on
foreign exchange
 they are centrally controlled and so do not take account of local conditions
 they may close down factories and leave the country as quickly as they have come.
11. Identify elements of a business’s external environment. {5}

 political environment
 economic environment
 social environment
 technical environment
 legal environment

12. List 5 reasons why do countries impose trade restrictions.? {5}

 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

13 a) Distinguish between private limited companies and public limited companies. {4}

A private company is a closely held one and requires at least two or more persons, for
its formation. On the other hand, a public company is owned and traded publicly. It
requires 7 or more persons for its set up. It is compulsory to call a statutory general
meeting of members, in the case of a public company, whereas there is no such
compulsion in the case of a private company. The issue of prospectus/statement
instead of the prospectus is mandatory in case of a public company, but this is not the
case with the private company.

b) State four benefits of free trade to citizens of Zimbabwe. {4}

 Free trade increases access to higher-quality, lower-priced goods.

 Free trade means more growth.
 Free trade improves efficiency and innovation.
 Free trade drives competitiveness.
 Free trade promotes fairness.

6|Page TINOFAMBA NEVANOFAMBA

14. a) State any two laws put in place to protect consumers {2}
 Hire Purchase Act
 Sale of Goods Act
Any two
15 (a) Explain the term production {10}
 It is the provision of goods and services to satisfy human needs and wants
 Production is divided into three stages primary, secondary and tertiary
 There are two forms of production namely direct and indirect production
 There are also factors of production that is land, labour, capital and enterprise

The above points need to be expanded

(b) Discuss the advantages and disadvantages of value addition. {10}

Advantages
 Products will fetch more money when sold
 Products look attractive

Disadvantages
 It is expensive
 Lack of knowledge on how to add value to a product

16 (a) Describe the characteristics of a department store. {10}

 It consists of many departments all in one building.

 Department stores are located in the centre of large cities.
 Each department is under the control of a manager and the head office controls all the
departments.
 Each department specializes in one line of goods, for example, furniture, hardware,
clothes, foodstuff, etc.
 Many conveniences to the shoppers including toilets, restrooms, saloons, telephone
booths, car parking facilities, etc, are provided.
 Goods are pre-packed and the prices are clearly marked.
 Many department stores are owned by very large firms.

(b) Explain any six measures which can be taken to correct an unfavourable
balance of payments {10}
 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 in order 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 theexporter

7|Page TINOFAMBA NEVANOFAMBA

17 a) Explain intellectual property. {5}

Intellectual property ( IP ) is a category of property that includes intangible creations

of the human intellect, and primarily encompasses copyrights , patents , and
trademarks. It also includes other types of rights, such as trade secrets , publicity
rights, moral rights, and rights against unfair competition. Artistic works like music
and literature, as well as some discoveries, inventions, words, phrases, symbols, and
designs can all be protected as intellectual property.

b) How does Global Positioning Remote Sensing (GPRS) used in the transport
business? {6}

 it is a method of working out exactly where a vehicle is

 it can be placed in a vehicle
 it works by providing information on exact location.
 It track the movement of the vehicle.
 A GPRS antenna is tethered to the unit with a lead wire

GPRS satellite vehicle with tracking unit cellular tower

Computer / Cellphone Cloud server

This is how the vehicle tracking system operate

c) Using the information on the table for country Y

Visible imports $500M

Visible exports $450M
Invisible imports $300M
Invisible exports $250M

Calculate country X {5}

a. Balance of trade

Visible exports $450M

Less : Visible imports $500M
- $ 50M
b. Invisible balance

Invisible exports $250M

Invisible imports $300M
- $50M

c. Balance of Payments
Balance of trade plus Invisible balance
- 50M + - $ 50M = - $ 100M

8|Page TINOFAMBA NEVANOFAMBA

18. Describe the functions of a Trading Bloc, for example SADC {5}
 Mobilize resources and share ideas
 To assist each other in times of economic hardships
 Promote trade among member states
 Foster peace and friendship
 Bargain powerfully as a group when seeking financial assistance

19. List any six contents of a business plan. {6}

 Executive summary
 Organizational background
 Products or services to be offered
 Market analysis
 Operational plan
 Financial plan

20. Distinguish between formal and informal communication. {4}

Formal communication involves the sending and receiving of information through
established channels of communication such as e-mails, letters, reports whereas informal
communication the message is send and received through unofficial channels such as
grapevine.
21. a) State and explain any five consumer rights. {10}

1. The right to be heard

- Consumers must be allowed to express themselves and lodge complains

2. The right to redress

- Consumers must be compensated for substandard goods

3. The right to choose

- Consumers must have access to a wide range of goods and services

4. The right to be informed

- Consumers must be given facts and figures required to make informed choices and
decisions

5. The right to safety

- Consumers must be protected against goods and service that are dangerous to health

6. The right to consumer education

- Consumers must be provided knowledge of their rights

7. The right to basic human needs

- Consumers must have access to basic needs such as food, water, clothing, shelter,
education and health care.
Any five

9|Page TINOFAMBA NEVANOFAMBA

b) What action has been taken by the Zimbabwe 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 or description for which they are sold.

Fair Trading Act

Guards against false price cutting, hoarding and conditional selling of goods.

Consumer Safety Act

This Act ensures that products are safe for human consumption and use.

The Trade Measure Act

It guards against underweight and incorrect weights and measures.

Any five Acts

22. Explain the advantages and disadvantages of containerization. {20}

Advantages of containerization
 As cranes are used for loading and unloading containers, there is speed in their
transportation. Moreover lorries carrying containers can drive directly on to a ship.
 Containers are sealed and opened at its destination. So damages caused by rainwater
and sunlight can be avoided.
 Theft of goods can also be avoided.
 As the containers are loaded and unloaded with the help of cranes, breakages can be
reduced.
 Containers reduce the need to employ labourers to carry the goods. This reduces
expenses.
 Containers, which can be stacked, reduce the need for warehousing.
 As there is increased safety in using containers, the insurance cost is reduced.
 Refrigerated containers can be used to transport perishable goods.

Disadvantages of containerization
 High capital costs are involved in purchasing and maintaining containers.
 High training costs are incurred in training labour to handle the loading and unloading
of containers.
 Containers occupy a lot of space and hence large space is needed to keep the
containers.
 The weight of the containers, reduce the amount of goods that can be transported.
 Containers are loaded and unloaded with the help of cranes. This replaces human
labour thus causing unemployment.

10 | P a g e T I N O F A M B A N E V A N O F A M B A
 23 a) Explain long term and short term capital. {10}

Short term capital

Short term capital is needed by businesses so as to finance short term obligations that
is day to day requirements of the business such as payment of wages or purchase of
raw materials. Short term capital includes bank overdrafts and trade credit.Repayment
period is short.

Long term capital

Long term finance is used by a business to finance long term projects such as
purchasing of machinery. Examples of long term capital includes shares and
debentures. Repaid period is long.

24 (a) State and explain any five Consumer Rights {10}

The right to be heard

Consumers must be allowed to express themselves and lodge complains

The right to redress

Consumers must be compensated for substandard goods

The right to choose

Consumers must have access to a wide range of goods and services

The right to be informed

Consumers must be given facts and figures required to make informed choices and
decisions

The right to safety

Consumers must be protected against goods and service that are dangerous to health

The right to consumer education

Consumers must be provided knowledge of their rights

The right to basic human needs

Consumers must have access to basic needs such as food, water, clothing, shelter,
education and health care.

Any five

11 | P a g e T I N O F A M B A N E V A N O F A M B A
 (b) Describe the benefits of virtual markets. {10}
 These are non-physical markets
 Buyers and sellers trade goods and services online
Benefits
 Saves on travelling expenses
 Shopping can be done whilst at home
 Buying can be done at anytime
 Distance is not a barrier
 There is wide coverage
 Variety of goods can be accessed
25. Evaluate the usefulness of the following trends in Zimbabwe: {20}
a. Telebanking
Advantages of telephone banking

Some people prefer telephone banking because it gives them the chance to discuss
their finances with a human voice. For example, if a customer has a specific query, it
may be easier to receive advice on the phone rather than online . Telephone banking is
also convenient for customers who are temporarily unable to access the Internet from
their home.

The main advantage of banking by phone is that customers can receive information
about the status of any payments that are expected to be withdrawn or paid into an
account. If there is an issue, such as an overpaid credit card payment, it may be easier
to alleviate the problem on the phone because workers will be able to access the
bank's private databases.

Disadvantages of telephone banking

However, if a customer requires help outside of business hours, it may not be possible
to call their bank during this time.

Another disadvantage is that telephone banking does not usually operate during bank
holidays, whereas online banking is fully accessible throughout the year. Accessing
account details such as a balance or a recent transaction takes longer on the phone
because people will usually be redirected to different services before they can talk to a
person directly.

The security procedures involved are often more strict, since many banks require a
special security code that is different to the one used for online accounts. However,
this makes telephone banking a safer option than Internet banking because it is
significantly harder for criminals to access accounts through a phone network. For
more details, customers should visit their website or call their bank to request further
information about the services they can receive.

12 | P a g e T I N O F A M B A N E V A N O F A M B A
 b. Mobile banking
Advantages of Mobile Banking

In Mobile banking, the user can transfer funds from your bank account to another
bank account with a smartphone just with the help of the internet, from anywhere to
everywhere.

It is available for 24 hours and easy and convenient mode for many Mobile users in
the rural areas. Mobile Banking is said to be more secure and risk-free than online
Internet Banking.

With the help of Mobile, Banking user can transfer funds, and pay bills, checking
account balance, study your recent transaction, block your ATM card, etc. Mobile
Banking is cost-effective, and Banks offer this service at less cost to the customers.

Disadvantages of Mobile Banking

Mobile Banking is not available on all mobile phone. Sometimes, it requires you to
install apps on your phone to use the Mobile Banking feature which is available on
the high-end smartphone. If the customer does not have a smartphone than the use of
Mobile Banking becomes limited. A transaction like transfer of funds is only
available on high-end phones. Regular use of Mobile Banking may lead to extra
charges levied by the bank for providing the service. Mobile banking users are at risk
of getting fake SMS messages and scams. The loss of a mobile customer device often
means that criminals can gain access to your mobile banking PIN and other sensitive
information.

c. E-banking
Advantages e-banking

The main advantage of electronic banking is convenience. You can communicate with
the bank via an online website and/or smartphone app from any location that offers an
internet connection. The electronic facilities are available 24/7 and don't require you
to travel to a branch. You can check balances, transfer money into or out of accounts,
issue payments, order checks, buy certificates of deposit, apply for loans and even
deposit checks by scanning and transmitting them. No travel or waiting in line is
necessary when you bank electronically. Online banking is generally secure,
especially websites that use encrypted communications; that is, websites with the
"https" prefix. Virtual banks can offer the same Federal Deposit Insurance
Corporation insurance provided by conventional banks. Often, virtual banks offer the
highest savings interest rates because they pass along to customers the savings
realized from not paying for physical bank branches and the employees to staff them.

13 | P a g e T I N O F A M B A N E V A N O F A M B A
 Disadvantages of e-banking

Although generally secure, electronic banking is not totally secure. It's possible for
sophisticated hackers to steal information as it is transmitted to online banks, leading
to identity theft. It can take a long time to fix problems stemming from stolen
financial information. Some folks feel that online banking is impersonal and would
rather sit with a flesh-and-blood customer representative at a branch. The better online
banks have extensive customer support facilities including phone, chat and email
contact, but some offer disappointing support. It's important to remember that some
banking transactions, such as collecting payments, aren't immediate even if performed
online. It's therefore important to print receipts of your money transfers if you want to
track the progress of a transaction. Online banks might not offer all the products and
services available at bank branches, such as insurance, annuities, trust and estate
planning.

If you want to withdraw money from your online-only account, you'll have to contact
the account holder. Often they provide customers with a network of ATMs where you
can use your debit card to get cash. The downsides are that these ATMs aren't always
available 24/7 and they aren't found around every corner.

26. Use the given information to answer questions that follow: {10}

Sales $ 50 000
Sale returns $ 5 000
Cost of sales $ 18 000
Overhead expenses $ 10 000
Average inventory $ 5 000

Required
a. Rate of stockturn
Cost of sales / average inventory
$10 000/ $5 000
2 times
b. Gross profit
Gross profit is Turnover less cost of sales
Then turnover is sales less sales returns
$50 000- $5 000 = $45 000
So $45 000 - $ 10 000 = $35 000
c. Net profit
Net profit = Gross profit less Overhead expenses
$35 000 - $10 000 = $25 000

14 | P a g e T I N O F A M B A N E V A N O F A M B A
27.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.

b) What are the functions 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 labeling of goods

28.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

29.a) Distinguish between visible and invisible trade, giving one example of
each for Zimbabwe. (6)

Visible trade Invisible trade

Trade in goods only Trade in services only
Examples include desks, cars Examples include tourism, transport
Goods sold and bought from other Services offered and provided by other
countries countries

15 | P a g e T I N O F A M B A N E V A N O F A M B A
 b) Explain three purposes and four contents of the following 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 when 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
-it contains:-description of goods
-prices of goods
-names and addresses of importer and exporter

30.) For what reasons do revenue authorities keep statistical 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

31.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;

 invisible trade balance (2)
($100+$40) – ($200+$20) = -$80

 balance of trade, (2)

$400 - $500 = -$100
 balance of payment.
($100+$40+$400)-($200+$20+$500) = - $180 (2)

16 | P a g e T I N O F A M B A N E V A N O F A M B A
32.a) What is a bill of exchange? (4)
-it is a promise to pay a certain amount of money at a future date
-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

b) Distinguish between a loan and an overdraft. (12)

Bank loan Bank overdraft

Formal way of borrowing
Interest rate is fixed
Interest rate is low
Repayments are by regular instalments
Collateral security is needed
Loan account is needed
Informal way of borrowing
Interest rate is variable
Interest rate is high
Repayments are by irregular
Collateral security is not needed
Uses current account

Essay form is recommended

c) 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

33.a) Under what circumstances 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
-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 is different from the
specimen signature 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

17 | P a g e T I N O F A M B A N E V A N O F A M B A
 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

d) 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
-factoring (selling) debts to banks
-issuing debentures to members of the public

34.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

c) Give the differences between shareholders and debenture holders. (10)

Shareholders Debenture holders

Owners of the company
Earn dividends which fluctuate
Cannot force a company into liquidation
Receives dividends after debenture holders
Have voting rights
Creditors of the company
Earn a fixed rate of interest
Can force a company into liquidation
Receive interest before shareholders
Do not have voting rights

18 | P a g e T I N O F A M B A N E V A N O F A M B A
35.a) Differentiate between a private limited company and a partnership. (10)

Private Limited Company Partnership

Formed by a minimum of two and a
maximum of fifty
Involves complex legal formalities
A separate legal entity
Raises capital by selling shares privately
Perpetual succession
Formed by a minimum of two and a
maximum of twenty
Less legal formalities
Not a separate legal entity
Partners contribute to raise capital
Lacks continuity

b.) Similarities of bill of lading and charter party (6)

Both documents are used in international trade and shows names of shipping company and
hirer. They are transport documents used in sea transport and are used as contract of carriage
which are prepared by the shipping company.
Differences of bill of lading and charter party (6)
A bill of lading is an agreement to carry goods whilst a charter party is an agreement to hire a
ship. A bill of lading is a document of title whereas a charter party is not a document of title.
A bill of lading is a quasi-negotiable instrument whilst a charter party is not a quasi
negotiable instrument.
(c) Distinguish between direct and indirect production (8)

DIRECT PRODUCTION INDIRECT PRODUCTION

This is when one produces goods and services This is when one produce goods and services in
for own consumption surplus for sale

Example - subsistence farming Example – commercial farming

Poor quality goods are produced Quality goods are produced

Lack of variety Variety of goods available

No surplus There is surplus

36 a). Functions of Customs and Excise authorities

 Collect revenue for the government by charging customs and excise duties
 Collect, keep and analyze records of imported and exported goods and services
 Control bonded warehouses to ensure that duty is collected.
 Supervise public health by arranging quarantine for animals
 Supervise entrepot trade

19 | P a g e T I N O F A M B A N E V A N O F A M B A
 b. Distinguish between a broker and a factor

Broker Factors

- Does not take possession of the - Takes possession of the goods

goods
- Earns a brokerage commission - Earns a factorage commission

- Do not deliver goods - Deliver goods to customers

- Sell goods in the principals name - Sell goods in his own name

- Brings buyer and seller into - Deals directly with the customer
contact

Essay format recommended

37. State 5 advantages and 5 disadvantages of a Sole Trader.

Advantages of a sole trader
 Easy to run and control
 Has few legal formalities
 Can be set up with a small amount of money
 Operates for long hours
 Owner is able to make quick decisions
 Profits are not shared

Disadvantages of a sole trader

 Lacks specialized skills
 Prices of goods are usually high
 Lacks adequate capital for the day to day running of a business
 Suffers unlimited liability and may lose personal asserts in case of
insolvency

38. Explain the following terms as used in Insurance.

a. Embezzlement of funds – fidelity guarantee

 Taken out by the employer

 It covers against dishonesty of employees who hands money
 Provides security to employer against embezzlement of funds
 Insurer (insurance company) restores money stolen by the employee if
convicted in the courts of law

20 | P a g e T I N O F A M B A N E V A N O F A M B A
 b. Injury to customers – Public liability
 Taken by the employer
 Cover claims made by the public who get injured within a firm’s premises ,for
example a customer injured by a falling shelf.
 Business is indemnified.

39. Explain the purposes and contents of the following documents.

a. Indent (8)

Purposes
- An order to buy goods from abroad
- Send by an importer to an agent overseas
- It can be open indent where the indent does not state the source from which goods
are to be obtained or closed indent where the indent specifies the types of goods
required or the manufacturers from whom the agents must buy the goods.
Contents
It gives details of:
-types of goods
-prices of goods
-terms of delivery
-cost of insurance
-terms of payment
-indent number

b. Consular Invoice (8)

Purposes
- Document used in international trade and it assist customs officials to calcukate
customs duty.
- Speeds clearance of goods and delivering of goods
- Prevents fraud in duty calculation
Contents
-Description of goods (type and quantities)
-Prices of goods
-Quantities of goods
-Date of issue
-Names and address of importer and exporter

21 | P a g e T I N O F A M B A N E V A N O F A M B A
40. a) Distinguish between a General crossing and a Special crossing.

General crossing Special crossing

- The cheque is transferable - It is not transferable

- Must be deposited in a bank account - Must be deposited into a bank account at

the started bank branch

- Has the words not negotiable written - Has the name of the payees’ bank and
between the lines branch written in between the lines

b) Differentiate between shareholders and debenture holders

Shareholders Debenture holders

- Owners of the company - Creditors of the company

- Ordinary shareholders have voting - Debenture holders have no voting rights

rights
- Are paid dividends when there is - Interest is paid whether or no profit is
profit made

- Shareholders cannot force a company - Debenture holders can force a company

into liquidation into liquidation (if interest is not paid)

- Are irredeemable - Are redeemable

- Shareholders are paid after debenture - Debenture holders are paid first before
holders shareholders

c) Differentiate between liners and tramps

Liners Tramps

- Not meant for hiring - Meant for hiring

- Have permanent homes - No permanent homes

- Follow strict timetables - No fixed timetables

- Travel on fixed routes - No fixed routes

- Freight charges are fixed at - Freight charges are fixed by negotiations

conferences

22 | P a g e T I N O F A M B A N E V A N O F A M B A
41.a) Outline functions of seaport authority
 Provide refueling facilities for vessels
 Loading and offloading facilities e.g. crates
 Provide warehouse
 Provide accommodation
 Fresh supplies of food and water
 Passenger facilities e.g. toilets
 Office space (for customs officials)
 Provides ship repair yards
 Provide communication facilities e.g. telephone
 Maintain the efficiency of a seaport
 Quarantine for animals i.e. maintain public health

b) Differentiate between a Private Limited Company and a Partnership

Private Limited Company Partnership

- Governed by companies act of 1981 - Governed by partnership act 1890

- Complex legal formalities - Less legal formalities

- Owned by shareholders - Owned jointly by partners

- Perpetual succession - Lacks continuity

- Shareholders receive dividends - Partners get profits

- Raise capital by selling shares - Partners contribute to raise capital

privately
- A separate legal entity - Not a separate legal entity

- Members are shareholders - Members are partners

- Managed and controlled by a board - Managed by active partners

of directors

23 | P a g e T I N O F A M B A N E V A N O F A M B A