WAEC SSCE - Commerce - 2003

Maelezo ya Majibu

The principle of insurance involved in the given scenario is subrogation. Subrogation is a legal principle that allows insurers, after fully indemnifying the insured, to step into the shoes of the insured and take any advantage or right that the insured may have had against a third party. This allows insurers to recover some or all of the amount they paid out in claims from the responsible third party.

Maelezo ya Majibu

The refund made on goods re-exported after being imported is known as "customs drawback". This is a mechanism that allows for the reimbursement of the duties paid on imported goods that are later re-exported. Essentially, it is a way to incentivize and promote international trade by reducing the overall cost of importing and exporting goods. By providing a refund of import duties, it allows businesses to remain competitive and potentially earn higher profits on their exports.

Maelezo ya Majibu

A catalogue contains the complete information on goods available for sale. A catalogue is a document or list that contains a comprehensive description of all the goods or products that a company has available for sale. It usually includes product names, descriptions, specifications, prices, and other relevant information that a customer may need to make an informed purchasing decision. Unlike an invoice, delivery note, or consignment note, a catalogue is not a transactional document but rather an informational one that provides a detailed overview of the company's products.

Maelezo ya Majibu

Recorded delivery provides a proof of posting and delivery of an item to the addressee. When an item is sent via recorded delivery, the sender receives a receipt as proof of posting, and the addressee must sign to confirm receipt of the item upon delivery. This provides evidence that the item has been delivered to the intended recipient, which can be important for legal or financial documents. Certificate of posting, registration letter, and express letter do not provide the same level of proof of delivery as recorded delivery.

Maelezo ya Majibu

Maelezo ya Majibu

Maelezo ya Majibu

Maelezo ya Majibu

Maelezo ya Majibu

Maelezo ya Majibu

The taken over by government of enterprises formerly owned by private person is referred to as nationalization. Nationalization refers to the transfer of ownership and control of private property to the government. This can be done for various reasons such as to ensure the smooth functioning of essential services, for public welfare, and to regulate key industries in the economy. Nationalization typically involves the government taking over the assets and operations of a private company, which then becomes a state-owned enterprise.

Maelezo ya Majibu

Maelezo ya Majibu

The issued capital of a company refers to the total number of shares that have been sold to shareholders. In this case, the authorized capital of the company is 60,000 shares and the company has issued 36,000 shares. To calculate the issued capital, we need to multiply the number of issued shares (36,000) by the price per share (N150k): Issued capital = 36,000 x N150k Issued capital = N5,400,000 Therefore, the issued capital of the company is N5,400,000, which corresponds to option C.

Maelezo ya Majibu

The worker who processes garri is engaged in manufacturing. Manufacturing involves the production of goods through the use of labor, machinery, tools, and chemical or biological processing. Garri processing involves several stages such as washing, peeling, grinding, fermenting, sieving, and roasting cassava tubers to produce a dry, powdery food product. Therefore, since the worker is processing raw materials to create a finished product, they are engaged in manufacturing.

Maelezo ya Majibu

The option that has as one of its objectives the removal of obstacles to the movement of people and goods across the boundaries of member countries is ECOWAS. ECOWAS stands for Economic Community of West African States and is a regional intergovernmental organization that was established to promote economic integration among countries in West Africa. One of its key objectives is to create a single large trade bloc through the removal of trade barriers such as tariffs and import duties, and the harmonization of trade policies among member countries. This helps to facilitate the movement of people and goods across borders, which in turn promotes economic growth and development within the region.

Maelezo ya Majibu

Maelezo ya Majibu

To sell a bill at less than the face value before its maturity is called discounting. This means that the holder of the bill sells it to a bank or other financial institution for an amount less than its face value, and the difference between the face value and the discounted price represents the interest earned by the bank or financial institution. The holder of the bill receives immediate cash for the bill, rather than having to wait until the maturity date to receive the full face value of the bill. Discounting is a common practice used by businesses to raise funds quickly, particularly when they have outstanding bills that have not yet been paid by their customers.

Maelezo ya Majibu

Maelezo ya Majibu

The doctrine that "the consumer is always right" is known as consumer sovereignty. It means that in a market economy, the consumers have the power to determine which goods and services will be produced based on their preferences and demand. The producers will then compete to provide the products that meet the needs and wants of the consumers. This doctrine places the consumer in a dominant position in the market, and businesses are expected to cater to their needs and desires.

Maelezo ya Majibu

The option that would not be stated in Memorandum of Association is "Rights of shareholders". The Memorandum of Association is a legal document that contains the fundamental conditions upon which a company is allowed to operate. It contains clauses such as the name clause, registered office, and objective clause. The rights of shareholders, on the other hand, are contained in the Articles of Association, which is another legal document that outlines the internal regulations of a company. Therefore, the rights of shareholders are not stated in the Memorandum of Association.

Maelezo ya Majibu

A public limited liability company is a legal entity and has a separate legal identity from its shareholders. This means that it can enter into contracts, sue and be sued in its own name. The liability of the shareholders is limited to the amount of their investment in the company, and the company can raise funds through the sale of shares or by taking out debentures. Therefore, the ability to enter into contracts is not dependent on the number of employees or shareholders, but rather on the legal status of the company.

Maelezo ya Majibu

Quality discount is offered to persuade the buyer to buy more. Quality discount is a type of incentive or discount that is given to buyers to encourage them to purchase more of a product. It is usually offered when a buyer purchases a certain quantity of a product or spends a certain amount of money on a purchase. The purpose of quality discount is to increase the volume of sales and improve the profitability of the business. By offering quality discount, the buyer is motivated to buy more and the seller benefits from increased sales volume.

Maelezo ya Majibu

One advantage of large scale retailing is one-stop shopping. This means that a variety of goods are available in one location, making it more convenient for customers to purchase everything they need in one trip. This can save time and money for customers who would otherwise have to visit multiple smaller stores to purchase everything they need. Additionally, large scale retailers can often negotiate better prices with suppliers due to their purchasing power, which can result in lower prices for customers.

Maelezo ya Majibu

When a public company receives the certificate of incorporation, it implies that it can go ahead and start business. The certificate of incorporation is a legal document issued by the government to a company after meeting all the legal requirements for registration. It shows that the company has been registered and is now a legal entity with the capacity to do business, raise capital, own assets and sue or be sued in its own name. Therefore, the company can start operations and carry out its activities legally.

Maelezo ya Majibu

Maelezo ya Majibu

Maelezo ya Majibu

When all producers in an industry combine to advertise their product instead of each firm advertising its own brand, this is referred to as "mass advertising". Mass advertising is a marketing technique in which companies or businesses pool their resources to promote their industry as a whole rather than their individual products. The objective is to increase overall demand for their products and create a positive image for the industry as a whole. This strategy is often used in industries where there are many small producers who do not have the resources to advertise individually, or where it is more effective to promote the industry as a whole.

Maelezo ya Majibu

Maelezo ya Majibu

The General Agreement on Tariffs and Trade (GATT) is not concerned about consumer protection. GATT is a multilateral agreement regulating international trade and tariffs between member countries. Its main objective is to promote free trade by reducing trade barriers and eliminating discriminatory trade practices. On the other hand, the Foods and Drugs Act, Trade Descriptions Act, and Price Control Act are all regulations that aim to protect consumers from unsafe products, false advertising, and price gouging, respectively.

Maelezo ya Majibu

The document that tells the customer exactly what has been sold to him, the amount due and any discount granted is called an invoice. An invoice is a commercial document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services that the seller has provided to the buyer. The invoice is used to request payment from the buyer, and it serves as a record of the transaction between the two parties. It is an essential document for businesses to keep track of their sales and payments, and it is often required for accounting and tax purposes.

Maelezo ya Majibu

A void contract is a contract that has no legal effect, from the outset or ab initio. It is not enforceable by law, and it does not create any legal obligations or rights between the parties involved. This is because the subject matter of the contract may be illegal, against public policy or contrary to law, or the parties may lack the legal capacity to enter into the contract. In other words, a void contract is not a valid contract, and it cannot be enforced by any court of law.

Maelezo ya Majibu

Maelezo ya Majibu

Commerce refers to the exchange of goods and services for the purpose of earning a profit. Its scope is not limited to any particular type of trade, but rather encompasses all activities related to trade, including buying and selling of goods and services, aids to trade such as transportation and warehousing, and the study of market trends and consumer behavior. Therefore, the correct option from the given choices is "trade and aids to trade."

Maelezo ya Majibu

Maelezo ya Majibu

Maelezo ya Majibu

Activities undertaken to create awareness for a product by giving out samples premium or conducting contest are known as sales promotion. Sales promotion is a type of marketing communication that aims to persuade customers to buy a product or service by offering incentives such as discounts, free samples, or contests. It is a short-term strategy designed to boost sales and generate consumer interest in a product or service.

Maelezo ya Majibu

A public limited liability company is a legal entity that is distinct from its shareholders and can enter into contracts in its own right. This means that the company can sue and be sued, borrow money, and engage in other business activities on behalf of its shareholders. The liability of the shareholders is limited to the amount of their investment in the company, which means that they are not personally responsible for the company's debts or obligations. Therefore, the correct answer is "is legal entity".

Maelezo ya Majibu

When all producers in an industry combine to advertise their product instead of each firm advertising its own brand, it is referred to as "mass advertising." Mass advertising is a marketing strategy in which firms in an industry pool their resources to promote their products or services collectively rather than separately. It allows producers to reach a larger audience, reduces the cost of advertising, and creates a more significant impact on consumers. Mass advertising is often used in industries where there is intense competition and where it is challenging for individual producers to stand out. It is a way for producers to work together to promote their products or services and increase consumer awareness.

Maelezo ya Majibu

The formula for calculating gross profit percentage is [(revenue - cost of goods sold) / revenue] x 100. Using the given information, we can calculate the gross profit as N16,000 - N12,000 = N4,000. So, the gross profit percentage is [(N4,000 / N16,000) x 100] = 25%. Therefore, the answer is 25%.

Maelezo ya Majibu

Fishing is not a commercial occupation. While it is an economic activity, it is not a commercial occupation because it involves catching fish for personal consumption or for small-scale local trade rather than for large-scale profit-making ventures. Transportation, warehousing, and banking are all commercial occupations because they involve the production and distribution of goods and services for profit.

Maelezo ya Majibu

The issued capital of a public company is the total number of shares that have been sold or issued to shareholders. In this case, the company has an authorized capital of 60,000 shares and has issued 36,000 shares. Therefore, the issued capital would be 36,000 x 150k = N5,400,000. So, the correct option is N54,000 which seems to be a typo, and the actual answer is N5,400,000.

Maelezo ya Majibu

A transporter who does not reject carrying lawful goods to destination is known as a common carrier. Common carriers are transportation companies that offer their services to the general public, without discrimination, and are responsible for the safe delivery of goods or passengers to their destination. They are obligated to transport goods for any person or company that is willing to pay the established fee, as long as the goods are legal and not dangerous. Common carriers can be found in various industries, such as trucking, railroads, and airlines, and are held to a high standard of care and responsibility for the goods they transport.

Maelezo ya Majibu

Maelezo ya Majibu

When goods are shipped, a bill of lading is usually issued as a document of title, which represents the ownership of the goods. However, sometimes the bill of lading is not readily available to enable the goods to be landed. In such cases, a bill of sight is required. A bill of sight is a document that allows a shipment of goods to be imported without the full set of shipping documents, and the goods can be cleared through customs based on the information available on the bill of sight. The bill of sight contains the same information as the bill of lading, but it is not considered a document of title.

Maelezo ya Majibu

ECOWAS has as one of its objectives the removal of obstacles to the movement of people and goods across the boundaries of member countries. ECOWAS stands for the Economic Community of West African States, and it is a regional intergovernmental organization composed of 15 member states in West Africa. One of its main goals is to promote economic integration in the region by creating a common market, free movement of people, goods, and capital, and harmonizing policies and regulations. By removing obstacles to the movement of people and goods, ECOWAS aims to enhance trade, investment, and regional cooperation, and promote economic development and integration in West Africa.

Maelezo ya Majibu

Maelezo ya Majibu

The document that tells the customer exactly what has been sold to him, the amount due and any discount granted is an invoice. An invoice is a commercial document that itemizes the goods or services provided, the quantity, the price, and the terms of payment for the transaction. It serves as a record of the transaction and as a request for payment from the customer. In other words, an invoice is a document sent by a seller to a buyer that specifies the amount and cost of products or services that have been provided and payment details.

Maelezo ya Majibu

Maelezo ya Majibu

One disadvantage of rail transport is its inflexibility. Rail transport follows a fixed route and schedule, which makes it difficult to accommodate changes in demand or unexpected circumstances. This lack of flexibility can result in delays, which can be particularly problematic for time-sensitive goods. Additionally, rail transport may not be able to provide door-to-door delivery, which can add to transportation costs and make it less convenient for businesses and consumers.

Maelezo ya Majibu

Entrepot trade refers to the importing of goods for the sole purpose of re-exporting them to other countries. In this type of trade, the imported goods are not intended for domestic consumption but are rather stored, processed, and distributed to other countries. The entrepot, or trading center, acts as an intermediary in the trade process and earns revenue from handling the goods. This type of trade is common in countries with favorable geographic locations that serve as transit points for goods being transported between different regions or countries.

Maelezo ya Majibu

The option that does not belong to the group is "Hoarding of goods". The other options - Posters, Window display, and Free samples - are all examples of advertising techniques that businesses use to promote their products or services. "Hoarding of goods" does not fit into this category as it refers to the practice of storing goods for future use, rather than advertising or promotion.

Maelezo ya Majibu

Maelezo ya Majibu

To sell a bill at less than its face value before its maturity is called discounting. Discounting is a common practice in financial transactions, especially in the banking sector, where a bank buys a bill of exchange from its holder before the maturity date at a discounted rate. The holder receives immediate payment for the bill, minus the discount, and the bank earns the full face value of the bill when it matures. The discount rate is determined by the bank's cost of funds and the perceived risk of the bill. Discounting helps businesses to improve their cash flow by converting their receivables into cash before they are due, and it also provides liquidity to the financial system.

Maelezo ya Majibu

Maelezo ya Majibu

The person who sells securities in anticipation of a fall in price is called a "Bear". The term "bear" is used in the context of the stock market to refer to investors who are pessimistic about the market's future performance and expect prices to decline. They sell stocks or other securities with the hope of buying them back at a lower price, making a profit from the difference. The opposite of a bear is a "bull," which refers to investors who are optimistic about the market's future performance and expect prices to rise.

Maelezo ya Majibu

The greatest risk in a business venture is borne by the entrepreneurs. An entrepreneur is a person who takes a financial risk by starting and running a new business venture to make a profit. Starting a business involves a significant amount of risk, including financial risk, market risk, operational risk, and legal risk. Entrepreneurs invest their own money or obtain funding from investors, and they are responsible for the success or failure of the business. They bear the risk of losing their investment, reputation, and personal assets in case of failure. Therefore, entrepreneurs are considered to be the ones who bear the greatest risk in a business venture.

Maelezo ya Majibu

A catalogue contains the complete information on goods available for sale. A catalogue is a printed or digital document that lists and describes the goods or products offered by a company for sale. It includes details such as product names, descriptions, prices, images, and sometimes specifications. Customers can use a catalogue to browse and select products they wish to purchase. Unlike an invoice, delivery note, or consignment note, a catalogue is not a document used in the transaction or shipment of goods, but rather a marketing tool used to showcase products available for sale.

Maelezo ya Majibu

Taxes imposed on locally made goods are known as excise duties. Excise duty is a type of tax levied on goods produced within a country, such as cigarettes, alcohol, or petrol. The government imposes excise duty to increase its revenue and to discourage the consumption of harmful goods. The tax is usually included in the price of the product, so consumers do not have to pay it separately. The amount of excise duty varies depending on the type of product, and it is usually a fixed amount per unit of the product or a percentage of the price.

Maelezo ya Majibu

When a number of thrift societies come together and are registered, they become a credit union. A credit union is a non-profit financial cooperative that is owned and controlled by its members, who typically have a common bond such as working for the same company, living in the same community, or belonging to the same organization. Credit unions offer savings and loan products to their members, often at more favorable rates than traditional banks, and are usually governed by a volunteer board of directors elected from among the membership.

Maelezo ya Majibu

The process of dealing with a cheque once it has been paid into the creditor's bank is called clearing. Clearing is the process by which the amount of the cheque is transferred from the account of the debtor to the account of the creditor. The cheque is sent to the clearinghouse, which acts as an intermediary between the banks of the debtor and creditor. The clearinghouse verifies the authenticity of the cheque and ensures that there are sufficient funds in the debtor's account to cover the amount of the cheque. Once the cheque has been cleared, the funds are transferred to the creditor's account.

Maelezo ya Majibu

The sales promotion method referred to as "Buy-two-take-three" is a form of a premium. A premium is an extra item offered to customers as an incentive to buy a product. In this case, the customer is required to purchase two items, and as a reward, they get a third item for free. This sales promotion method is used to encourage customers to buy more and to increase sales.

Maelezo ya Majibu

(a) Difference between an ordinary invoice and a proforma invoice

An ordinary invoice is a document sent by the seller to the buyer after goods have been sold on credit. It is a demand for payment, showing the goods supplied, quantities, prices and the total amount the buyer owes. A proforma invoice is not a demand for payment; it is a document sent to a prospective buyer to show what the goods would cost if an order were placed. It is used to quote prices, to accompany goods sent on approval or on consignment, or to request advance payment before goods are supplied.

(b) Terms used in connection with an invoice

1. 5% trade discount: This is a reduction of 5% off the catalogue (list) price allowed by a manufacturer or wholesaler to a trader who buys for resale. It is deducted before the net amount is calculated.
2. Net 3 months: This means the buyer is expected to pay the full (net) amount of the invoice within three months, and no cash discount will be allowed for payment within that period.
3. E. & O.E.: This stands for Errors and Omissions Excepted. It means the seller reserves the right to correct any mistake or figure wrongly stated or left out on the invoice.
4. Carriage forward: This means the cost of transporting the goods to the buyer is to be paid by the buyer (the receiver), not by the seller.
5. 2½% cash discount: This is a reduction of 2½% allowed to the buyer as an inducement to pay the invoice promptly, that is, within the stated period of credit.

Maelezo ya Majibu

(a) Five reasons why a manufacturer may brand his products

1. Identification. A brand name or mark distinguishes the manufacturer's goods from those of competitors so buyers can easily recognise them.
2. To build customer loyalty. A trusted brand encourages repeat purchases, as satisfied customers keep asking for the same brand.
3. To ease advertising and promotion. A brand name gives the product an identity that can be advertised and remembered, aiding sales promotion.
4. To protect against imitation. A registered brand or trademark gives legal protection against copying by other producers.
5. To command a higher price. A well-known, reputable brand can be sold at a premium price because customers associate it with quality.

(Also acceptable: it helps maintain and control quality; it makes it easy to introduce new products under the same trusted name.)

(b) Five advantages of packaging

1. Protection. Packaging protects goods from damage, dirt, moisture, breakage and contamination during handling, transport and storage.
2. Preservation. Good packaging keeps perishable goods fresh and extends their shelf life.
3. Easy identification and advertising. Attractive, labelled packages carry the brand and information, promoting the product on the shelf.
4. Convenience in handling. Packaging makes goods easier to carry, store, stack and measure into convenient quantities.
5. Facilitates sales and self-service. Neatly packed and priced goods can be sold quickly in supermarkets without an attendant.

(Also acceptable: it enables branding and gives information such as expiry date, weight and directions for use.)

Maelezo ya Majibu

(a) What is indigenization?

Indigenization is a government policy that transfers the ownership and control of certain businesses and enterprises from foreigners to the citizens (indigenes) of a country. It reserves some businesses wholly for nationals and requires that citizens hold a stated share of the ownership in others, so that the economy is controlled mainly by the country's own people.

(b) Four advantages of indigenization

1. Local control of the economy. It places ownership of key businesses in the hands of citizens, reducing foreign domination of the economy.
2. Retention of profits at home. Profits are enjoyed by nationals and reinvested locally instead of being repatriated abroad.
3. Employment and managerial experience for citizens. Nationals gain ownership, top management posts and business skills previously held by foreigners.
4. Encourages local investment and entrepreneurship. It stimulates indigenous people to invest and develop entrepreneurial ability.

Four disadvantages of indigenization

1. Shortage of local capital. Citizens may lack enough funds to buy over and run the large businesses effectively.
2. Loss of foreign investment and expertise. It may discourage foreign investors and lead to loss of technical and managerial know-how.
3. Concentration of ownership in few rich hands. Only wealthy citizens can afford the shares, widening income inequality.
4. Fall in efficiency and productivity. Inexperienced indigenous owners and managers may run the businesses poorly, reducing output and quality.

(Also acceptable: capital flight and reduced access to foreign technology.)

Maelezo ya Majibu

(i) Small stores

These are small single-shop retail outlets, usually owned and run by one person or a family, keeping a limited range of goods and serving a small neighbourhood. They require little capital, offer personal service and often sell on credit to regular customers.

(ii) Mobile shops

A mobile shop is a retail outlet that moves from place to place, usually a van or vehicle stocked with goods, taking the goods directly to customers in different locations. It is useful in rural and scattered areas where fixed shops are few.

(iii) Tied shops

A tied shop is a retail outlet that is bound by agreement to sell only the products of one particular manufacturer or supplier. The manufacturer often finances or owns the shop, so the retailer cannot stock competitors' goods (for example, a filling station tied to one oil company).

(iv) Supermarkets

A supermarket is a large self-service retail store selling a wide variety of goods, especially foodstuffs and household items, under one roof. Customers pick goods from open shelves and pay at a central checkout point. Goods are pre-packed and price-tagged, and it relies on large turnover at low profit margins.

(v) Peddling

Peddling is a form of itinerant (mobile) retailing in which a trader called a peddler or hawker carries goods about on foot, on the head, or on a bicycle, moving from house to house or street to street to sell to customers. It needs very little capital and reaches customers at their doorstep.

Maelezo ya Majibu

(a) Five roles of transport to businessmen

1. Movement of goods. Transport carries raw materials to factories and finished goods from producers to wholesalers, retailers and final consumers.
2. Creation of place utility. It moves goods from where they are of little value to where they are needed and more valuable, bridging the gap between producer and consumer.
3. Widening of the market. Efficient transport enables businessmen to reach distant markets, both local and international, thereby increasing sales.
4. Encourages large-scale production. By making it possible to distribute goods widely, transport supports mass production and the resulting economies of scale.
5. Movement of people and labour. Transport conveys businessmen, employees and customers to places of work and trade, and helps distribute labour to where it is needed.

(Also acceptable: makes goods available in and out of season through storage in transit; helps prevent price differences between regions.)

(b) Three characteristics of tramp vessels

1. They have no fixed routes and sail to any port where cargo is available.
2. They keep no fixed timetable, sailing only when fully loaded.
3. They usually carry bulky, homogeneous cargo (such as grain, timber or ore) and charge freight by bargaining/charter.

Two characteristics of ocean liners

1. They follow fixed, regular routes and operate to a published timetable, sailing whether full or not.
2. They carry general cargo and passengers, and charge fixed, published freight rates.

Maelezo ya Majibu

Odika Enterprises - year ended 31st December 2000

Fixed assets = 75,000 + 65,000 + 60,000 + 60,000 + 18,000 = N278,000

Current assets = 20,000 + 10,000 + 8,000 + 6,000 + 6,000 = N50,000

Current liabilities = 12,000 + 5,000 + 3,500 = N20,500

(a)(i) Capital owned = Total assets - External liabilities

= (278,000 + 50,000) - 20,500 = 328,000 - 20,500 = N307,500

(a)(ii) Fixed assets = N278,000

(a)(iii) Working capital = Current assets - Current liabilities

= 50,000 - 20,500 = N29,500

(b) Five sources of capital available to a public limited company

1. Issue of ordinary (equity) shares
2. Issue of preference shares
3. Issue of debentures
4. Long-term loans from banks and financial institutions
5. Ploughed-back (retained) profits and reserves

Maelezo ya Majibu

(a) Four steps in opening a current account with a commercial bank

1. Obtain and complete an account-opening form. The retailer collects the application form from the bank and fills in personal and business details such as name, address, occupation and nature of business.
2. Provide references and required documents. He supplies two respectable referees who already hold accounts, plus means of identification, passport photographs, and (for a business) evidence of registration.
3. Make the minimum opening deposit. He pays in the amount required by the bank to open and activate the account.
4. Supply specimen signatures and receive a cheque book. He signs a specimen signature card so the bank can verify his signature, and on approval he is issued a cheque book and paying-in book.

(b) Six services provided by a commercial bank

1. Accepting deposits (current, savings and fixed deposit accounts).
2. Lending money through loans and overdrafts.
3. Providing means of payment such as cheques, standing orders and drafts.
4. Safe-keeping of valuables and documents (safe custody).
5. Foreign exchange services and transfer of money.
6. Acting as a referee and giving financial advice to customers.

(Also acceptable: issuing bank statements, night safe facilities, executor and trustee services.)

Maelezo ya Majibu

(a) Four arguments FOR advertising

1. It informs consumers. Advertising creates awareness of new products, prices, uses and where goods can be bought, so buyers can make informed choices.
2. It increases sales and expands markets. By persuading more people to buy, advertising raises turnover, allowing firms to produce on a large scale and enjoy economies of scale.
3. It lowers unit costs. Large-scale production stimulated by advertising spreads fixed costs over more units, which can reduce prices to the consumer.
4. It creates employment. The advertising industry employs copywriters, artists, models and media staff, and higher sales create jobs in production and distribution.

(Other acceptable points: it improves product quality through competition; it educates the public on health and safety; it finances newspapers, radio and television.)

Three arguments AGAINST advertising

1. It increases the price of goods. The heavy cost of advertising is added to the selling price and ultimately borne by the consumer.
2. It can mislead and deceive. Exaggerated or false claims persuade people to buy inferior or harmful goods they do not really need.
3. It encourages wasteful spending. Persuasive advertising creates artificial wants, leading consumers to spend on non-essential items.

(a) (b) Six advertising media used in West Africa

1. Television
2. Radio
3. Newspapers and magazines
4. Posters, billboards and hoardings
5. Handbills, leaflets and catalogues
6. The internet and social media

(Also acceptable: cinema, town criers, mobile vans with loudspeakers.)

Maelezo ya Majibu

(a) Third party policy vs Comprehensive policy

A third party policy covers only the loss, injury or damage suffered by another person (the third party) caused by the insured, not the insured's own vehicle or injuries. A comprehensive policy covers a wider range of risks, including damage to the insured's own vehicle, injury to the insured, and loss or damage to the third party.

(b) Whole life policy vs Endowment policy

Under a whole life policy, premiums are paid throughout the insured's lifetime and the sum assured is paid only on the death of the insured, to his beneficiaries. Under an endowment policy, premiums are paid for a fixed period, and the sum assured is paid at the end of that period if the insured is still alive, or earlier to beneficiaries if he dies before it matures.

(c) Insurance vs Assurance

Insurance covers risks that may or may not happen, such as fire, theft or accident, and the insured is only compensated if the event occurs (principle of indemnity). Assurance covers an event that is certain to happen but whose timing is uncertain, such as death, so payment is bound to be made sooner or later (life assurance).

(d) Premium vs Compensation

A premium is the periodic sum of money paid by the insured to the insurer to keep the policy in force. Compensation (indemnity) is the money paid by the insurer to the insured to make good the loss when the insured risk actually occurs.

Maelezo ya Majibu

(a) What is a market?

A market is any arrangement, place or medium through which buyers and sellers are brought into contact to exchange goods and services at an agreed price. It need not be a physical location; it exists wherever communication between buyers and sellers allows a transaction to take place (for example, telephone or internet markets).

(b) Four ways marketing is important to the economy

1. Bridges the gap between producers and consumers. Marketing ensures that goods produced reach the final consumers who need them, creating place and time utility.
2. Creates employment. Marketing activities such as selling, advertising, transport, warehousing and packaging provide jobs for many people.
3. Stimulates production. By selling output and studying consumer wants, marketing encourages producers to make more and better goods, raising national output.
4. Raises the standard of living. Marketing makes a wide variety of goods and services available to consumers at convenient places and times, improving welfare.

(Also acceptable: it generates income and government revenue; it promotes trade and economic growth.)

(c) Five functions of marketing

1. Buying (assembling goods for resale).
2. Selling (finding buyers and transferring ownership).
3. Transportation (moving goods to where they are needed).
4. Warehousing/storage (holding goods until they are demanded).
5. Financing and risk-bearing (providing funds and carrying the risk of loss).

(Also acceptable: grading and standardisation, advertising and market research.)