Chapter 1

Question 1

What is barter

Answer 1

Bartering is an exchange of goods and services without the use of money

Question 2

What are some advantages of barter

Answer 2

1. People can access goods and they do not produce themselves
2. Surplus production can be traded
3. There is no need for money

Question 3

Disadvantages of barter

Answer 3

1. It requires finding someone willing to barter so there is a double coincidence
2. There is no common measure of the value of items
3. Unlike money it is difficult to transport certain goods once they have been received

Question 4

What is money

Answer 4

Money is anything that is widely accepted used in exchange for goods

Question 5

Examples of money?

Answer 5

Notes, coins, etc

Question 6

Some characteristics of money are?

Answer 6

1. Durable: must be hard wearing and long lasting
2. Divisible: it is possible to divide it into smaller units
3. Scare: it’s value is maintained when it’s harder to require

Question 7

What are some functions of money

Answer 7

1. A medium of exchange: money makes exchange of goods easier
2. A measure of value: Money can be used to state prices for goods
   3.A store of value: Money can be saved whereas goods often cannot

Question 8

What is a bill of exchange

Answer 8

A written order by one party in an exchange (the drawer) to another (the drawee) to pay a given sum of money on the date set out out in the order

Question 9

Electronic transfer

Answer 9

Way of transferring funds from one bank to another automatically without using the bank staff

Question 10

What is a Cheaque

Answer 10

A instrument of payment that a person use to pay someone a sum of money for their bank account

Question 11

What are the sequence of a cheque

Answer 11

The date
The name of the recipient
The account number of the drawer
The signature of the person issuing the Cheque

Question 12

What is a bank draft

Answer 12

Banks drafts are a more reliable cheque that provides the recipient the funds guaranteed that they are available

Question 13

What is a money order

Answer 13

A directive to pay a pre specified amount of money from pre paid funds

Question 14

What is an economy

Answer 14

A system of organization of institutions that either facilitate or play a ride in the production and distribution of goods and services of society

Question 15

What is trade

Answer 15

This means buying and selling business ‘em engage in trade to make a profit

Question 16

What is a organization

Answer 16

A group of persons using resources or things that are arranged in a certain way to carry out specific activities

Question 17

What is a producer

Answer 17

This is a person or businesses that makes or creates goods or services

Question 18

What are consumers

Answer 18

This a person that buys goods and services

Question 19

What is an exchange

Answer 19

This is the giving of one thing and receiving of another

Question 20

What are services

Answer 20

Work that is done for another

Question 21

What is a market

Answer 21

A situation where buyers and seller meet and communicate in order to exchange goods

Question 22

What is profit

Answer 22

This is the sun of money that remains after the cost of production

Question 23

What is a loss

Answer 23

A loss is the opposite of profit when the cost of production are greater than the return or revenue

Question 24

What is e-commerce

Answer 24

Business activities such as marketing of goods and de or business transactions over the internet

Question 25

Benefits of e-commerce

Answer 25

Business can market an see their products anywhere in the world Business have lower overhead cost as there is less need for a physical store

Question 26

What are some drawbacks of e-commerce

Answer 26

It usually encodes no human contact disallowing you to provide personalized service Customer are unable to experience the good or inspect the product It will be difficult to keep up todays as technology keeps changing

Question 27

What is the public sector

Answer 27

Are business own by the government used for the benefit of the whole community

Question 28

What is the private sector

Answer 28

Businesses owned by a group of individuals for their personal profit

Question 29

What are sole traders

Answer 29

A person who owns controls and manages and is totally responsible for their business

Question 30

How do you form a sole trader business

Answer 30

No legal requirement however trade name must be registered

Question 31

Who manages sole trader businesses

Answer 31

The owner manages

Question 32

What is a partnership

Answer 32

An association of 2-20 partners Oo Persia business for the common goal of making a profit

Question 33

How are partnerships formed

Answer 33

No formal requirement but it is best if a person partnership deed is drawn

Question 34

Who manages a partnership

Answer 34

Managed by ordinary partners

Question 35

What are cooperative businesses

Answer 35

A business that is formed by individuals with a common bond

Question 36

How is a cooperation formed

Answer 36

Each member purchases shares to form the capital base of the business

Question 37

Who manages a cooperation

Answer 37

Members through a board of management

Question 38

Advantages of sole trader

Answer 38

1.easy to form 2. The owner has great flexibility 3.there is no need to disclose a profit

Question 39

Disadvantages of sole trade

Answer 39

1.source of finance is limited 2.lack of specialized staff 3.The owner has unlimited liability

Question 40

Advantages of partnership

Answer 40

1. More capital is obtained 2. Some partners enjoy limited liability 3. The workload can be shared

Question 41

Disadvantages of partnerships

Answer 41

1. Ordinary partners have limited liability 2. Capital is still limited 3. Conflict may occur among partners

Question 42

Advantages of cooperations

Answer 42

1. Members pool their resources 2. Members are the owners 3. Decision making is shared

Question 43

Disadvantages of cooperation

Answer 43

1.The membership may not have the experience necessary to build the organization 2. Decision making is slow

Question 44

Formation of private and public sector

Answer 44

They must be registered and they need memorandum of association, articles of association and private needs prospectus

Question 45

Who manages the public and private sector

Answer 45

A board of directors will oversee major decisions

Question 46

Advantages of private and public sectors

Answer 46

1. Shareholders have limited liability 2. large sums of capital can be raised by a company 3. enabling it to grow larger

Question 47

Disadvantages of private and public sector

Answer 47

1. Shares are not easily transferred 2. Decision making can be slow

Question 48

What is a franchise

Answer 48

A franchise business is made up of a franchisor or franchisee. The franchisor is an established business with a well known name and product

Question 49

How does franchises form

Answer 49

Set up through a franchise agreement between the franchisor and franchisee

Question 50

Who manages a franchise

Answer 50

The franchisee runs the business with the support of the franchisor

Question 51

Advantages of franchises

Answer 51

1. The franchisee works hard t make a success if the business 2. Starts with a recognizable name 3. There is increased income for the franchisor

Question 52

Disadvantages of franchises

Answer 52

The agreement usually involved restrictions on a franchisee runs their business

Question 53

What is limited liability

Answer 53

the condition by which shareholders are legally responsible for the debts of a company