Distinguish between the following… | Commerce

Question 1 Report

Distinguish between the following:

(a) Broker and Jobber.

(b) Gross profit and net profit

(d) Factors and del credere agents.

(e) F. 0. B. and C. I. F.

Answer

Distinctions

(a) Broker and Jobber

Broker	Jobber
An agent who buys and sells securities on the stock exchange on behalf of members of the public (his clients).	A dealer who trades in securities in his own name and on his own account, dealing only with brokers, not the public.
He earns a commission called brokerage.	He earns his profit from the difference between his buying and selling prices, called the jobber's turn.

(b) Gross profit and Net profit

Gross profit	Net profit
The excess of net sales over the cost of goods sold (\(\text{Sales} - \text{Cost of goods sold}\)).	The gross profit less all other operating expenses (\(\text{Gross profit} - \text{Expenses}\)).
It is found in the trading account.	It is found in the profit and loss account and is the true profit of the business.

(c) Fixed capital and Liquid capital

Fixed capital	Liquid capital
Capital tied up in durable fixed assets such as buildings, machinery and vehicles.	Capital held in the form of cash or assets that can be turned into cash very quickly, such as bank balances and debtors.
It is not easily converted into cash.	It is readily available for immediate use.

(d) Factors and Del credere agents

Factor	Del credere agent
A mercantile agent who is given possession of his principal's goods and sells them in his own name, and may sell on credit.	An agent who, for an extra commission, guarantees payment to his principal and bears the risk of the buyer's default.
He earns an ordinary commission and does not bear the risk of bad debts.	He earns an additional del credere commission for accepting the risk of bad debts.

(e) F.O.B. and C.I.F.

F.O.B. (Free On Board)	C.I.F. (Cost, Insurance and Freight)
The seller's price covers all costs only up to loading the goods on board the ship.	The seller's price covers the cost of the goods plus insurance and freight to the port of destination.
The buyer pays the freight and insurance from the port of shipment.	The seller pays for the carriage and insurance; the buyer pays one all-inclusive price.

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