* * Cambridge International Examinations Cambridge Ordinary Level. COMMERCE 7100/12 Paper 1 Multiple Choice October/November 2015.

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1 * * ambridge International Examinations ambridge Ordinary Level OMMERE 7100/12 Paper 1 Multiple hoice October/November 2015 dditional Materials: dditional Materials (not provided by IE): Multiple hoice nswer Sheet Soft clean eraser Soft pencil (type or H is recommended) Ruler Protractor 1 hour RE THESE INSTRUTIONS FIRST Write in soft pencil. o not use staples, paper clips, glue or correction fluid. Write your name, entre number and candidate number on the nswer Sheet in the spaces provided unless this has been done for you. O NOT WRITE IN NY ROES. There are forty questions on this paper. nswer all questions. For each question there are four possible answers,, and. hoose the one you consider correct and record your choice in soft pencil on the separate nswer Sheet. Read the instructions on the nswer Sheet very carefully. Each correct answer will score one mark. mark will not be deducted for a wrong answer. ny rough working should be done in this booklet. The businesses described in this question paper are entirely fictitious. This document consists of 11 printed pages and 1 blank page. I15 11_7100_12/4RP ULES 2015 [Turn over

2 2 1 The diagram shows the parts of production. Production industry X primary secondary commercial direct What is X? aids to trade distribution services trade 2 José makes leather gloves. He buys the leather from the primary producer. How does he add value to the leather? adding his profit to the finished goods buying the leather in bulk cutting the leather into the shape of gloves storing the gloves until prices rise 3 s a result of specialisation by process, the consumer has less choice of goods to buy. This is because factories produce less output of each product. goods are more expensive to produce. goods take longer to make. standardised goods are made. 4 Which statement is true of a vending machine? It has low maintenance costs. It offers personal service. It operates twenty-four hours a day. It provides a wide choice. ULES /12/O/N/15

3 5 Which type of retail outlet would be most likely to buy goods from a wholesaler? 3 hypermarket multiple chain store supermarket unit retailer 6 What does the picture show? Have a hot potato bar code brand name guarantee loss leader 7 large-scale retailer is in a better competitive position than a small-scale retailer because it buys in bulk direct from suppliers at discounted prices. it is located in city centres with high costs, such as rent. it offers a narrow range of goods and personal service. it provides informal credit to regular customers. 8 Which statement about credit is not true? redit enables buyers to purchase expensive goods. Impulse buying is encouraged by having credit available to use. Offering credit to customers is risk-free for retailers. Spending on credit means borrowing against your future income. ULES /12/O/N/15 [Turn over

4 9 The picture shows the box of six water glasses Mrs Sores has just purchased. 4 Which consumer protection law has been broken? consumer credit food and drugs trade descriptions weights and measures 10 Why is the wholesaler being eliminated in some trades? ash and carry warehouses are becoming more popular. Large-scale retailing has increased. Many small-scale retailers buy in small quantities. Self-service is used in many shops. 11 Mr Smith runs a small shop. He buys his stock from a cash and carry warehouse. This means that he has to buy in very large quantities. collect the goods himself. make his order via the Internet. pay the warehouse monthly using his credit card. 12 Most wholesalers do not operate retail businesses. What is the reason for this? Wholesalers are located in warehouses in industrial areas. Wholesalers buy in bulk from manufacturers and clear production lines. Wholesalers provide many services to small-scale retailers. Wholesalers would be in competition with their own customers. ULES /12/O/N/15

5 5 13 What are companies that specialise in arranging transport, insurance and customs clearance called? brokers factors freight forwarders merchants 14 Which document, shown as X, completes the chain? enquiry X order invoice advice note delivery note quotation statement of account 15 n extract from an invoice received by a retailer is shown below. 20 cases canned $10 per case $200 less 20 % trade discount $40 Total $160 If two damaged cases of pineapple are returned, what should the supplier send to the retailer? a credit note for $20 a credit note for $16 an invoice for $144 a receipt for $16 16 manufacturer offers a trader an allowance of 5% on goods purchased if the trader pays the manufacturer s account within 14 days. What is the name of this allowance? bad debt cash discount loss leader net profit ULES /12/O/N/15 [Turn over

6 6 17 shopkeeper stocks a range of goods on which the mark-up is 25%. If each good is sold for $10, at which price have they been bought from the wholesaler? $2 $2.50 $8 $10 18 The table compares a country s total exports and total imports for ugust 2014 and for ugust ugust 2014 $m ugust 2015 $m Which statement is correct? total exports total imports Exports increased. Imports increased. The alance of Payments declined. The alance of Payments remained the same. 19 Which definition describes a trading bloc? a group of countries which agree to eliminate all trading restrictions with each other a group of countries which control supplies of natural resources to influence world prices a large multinational company which tries to monopolise global trade in all its products a number of companies which deal in similar products and share advertising costs 20 trader wishes to sell in another country. Which export difficulty would be overcome by employing a local agent? bulk consignments different languages maintaining regular supplies raising finance ULES /12/O/N/15

7 7 21 The picture shows an advertisement. ET FRUIT! For energy For health Give them FRUIT! Tropical Fruit ssociation What types of advertising are being used? collective and competitive collective and informative informative and persuasive persuasive and competitive 22 What is the benefit to a retailer of offering loss leaders? attracting potential customers to the store ensuring that products are of good quality helping customers choose a brand making the products more expensive 23 Which method of advertising involves several advertisements being scrolled one after the other? marketing digital billboards pop-up advertising web banners 24 Which pieces of information, communicated to consumers, are constantly changing throughout the day? customs duties charged at an airport prices of new cars in car showrooms railway timetables world prices of stocks and shares ULES /12/O/N/15 [Turn over

8 25 The ompany has many computers linked throughout its offices. What is the linking of these computers called? 8 Internet intranet telecommunication teleconferencing 26 For which consignment would delivery by air transport be suitable? a large quantity of iron ore from ustralia to Japan oil delivered in bulk from the Middle East to the UK spare parts for a computer to be sent from London to ape Town the daily delivery of perishable goods to a nearby town 27 What is a benefit of using containers to carry goods? ontainers can be used for any kind of cargo. Insurance for the goods carried is not required. Transport costs for bulk cargoes are reduced. Trans-shipment of goods can take place without unpacking. 28 Which service is provided by a port authority? operating currency exchange operating dry dock facilities for the repair of vessels providing customs clearance for goods and people supervising bonded warehouses 29 What is not a function of warehousing? ensuring the highest possible prices for goods keeping prices stable protecting goods from bad weather conditions reducing shortages of seasonal goods ULES /12/O/N/15

9 30 Which of the following goods would be most likely to be stored in a bonded warehouse? 9 coal perfume sugar wheat 31 Which insurance policy covers a customer who is injured on business premises? employer s liability fidelity guarantee personal accident public liability 32 retailer s stock is worth $ He insures it for $ Goods to the value of $ are stolen. How much should the insurance company pay him? $ $ $ $ Mr Shah uses a van to deliver orders to customers. What information would be used in the calculation of the insurance premium for this van? How frequently the van is serviced. How many deliveries are made by Mr Shah. How many motoring accidents Mr Shah has had in the past. How Mr Shah obtained the finance necessary to buy the van. 34 Which document, used in international trade, ensures that an exporter will receive payment? air waybill bill of exchange bill of lading letter of credit ULES /12/O/N/15 [Turn over

10 10 35 Why has there been a rapid increase in Internet banking? ustomers can make use of bank services at home. ustomers require personal service. Internet banking companies provide free gifts. The Internet is secure from fraud. 36 Most countries have a mixed economy. This means the economy has a public sector and a private sector. both private limited companies and public limited companies. businesses involved in exporting and importing. workers employed in both agriculture and manufacturing. 37 Which factor is most likely to influence the location of a shopping centre? availability of raw materials distance from suppliers local labour supply nearness to centres of population 38 factory owner needs an expensive piece of machinery. How can the factory owner obtain the machinery without buying on credit? hire purchase leasing overdraft trade credit 39 Mrs Patel calculated that she will need an extra $200 to meet her household bills. What is the best way for her to meet this shortfall? extend her mortgage negotiate a hire purchase loan request an overdraft take out a bank loan ULES /12/O/N/15

11 11 40 eri has provided the following information about her business. $ purchases returns 1000 closing stock 5000 What is the cost of goods sold? $ $ $ $ ULES /12/O/N/15

12 12 LNK PGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (ULES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the ambridge International Examinations opyright cknowledgements ooklet. This is produced for each series of examinations and is freely available to download at after the live examination series. ambridge International Examinations is part of the ambridge ssessment Group. ambridge ssessment is the brand name of University of ambridge Local Examinations Syndicate (ULES), which is itself a department of the University of ambridge. ULES /12/O/N/15