Cambridge O Level

COMMERCE 7100/12
Paper 1 Multiple Choice May/June 2023
1 hour

You must answer on the multiple choice answer sheet.

*4865299278*

You will need: Multiple choice answer sheet

Soft clean eraser
Soft pencil (type B or HB is recommended)

INSTRUCTIONS
 There are forty questions on this paper. Answer all questions.
 For each question there are four possible answers A, B, C and D. Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
 Follow the instructions on the multiple choice answer sheet.
 Write in soft pencil.
 Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
 Do not use correction fluid.
 Do not write on any bar codes.
 You may use a calculator.

INFORMATION
 The total mark for this paper is 40.
 Each correct answer will score one mark.
 Any rough working should be done on this question paper.

This document has 12 pages.

IB23 06_7100_12/3RP
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1 Which statement describes production?

A creating products which satisfy consumers

B distributing finished goods to consumers
C obtaining natural resources from the Earth
D providing direct services to consumers

2 What is an example of trading?

A banking
B manufacturing
C retailing
D transporting

3 How do direct services help industry?

A assisting the health of people

B providing transportation of goods
C supplying raw materials
D taking the risk out of business

4 The diagrams show the services offered to customers by a television retailer.

Which service is provided by the retailer after a television has been purchased by a customer?

A B


 
Part exchange
your old TV

C D

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5 A chain of petrol stations decides to install automatic vending machines for soft drinks and
chocolates inside many of its outlets.

What is the most likely reason for this decision?

A availability of free space

B little need for maintenance
C no labour costs
D potential for extra income

6 Despite competition from large-scale retailers, why do small-scale retailers continue to exist?

A They offer cheaper goods.

B They offer many facilities.
C They offer nearness to customers.
D They offer a wider choice of goods.

7 Which selling technique is not offered by supermarkets?

A branded goods
B hire purchase
C loss leaders
D self-service

8 This label was displayed on a tablet computer in a store.

Cash Price: $450

Hire Purchase Price:

Deposit $200 and 12 monthly
installments of $25

How much more would the tablet computer cost if it was bought on hire purchase?

A $25 B $50 C $300 D $500

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9 The diagram shows a distribution channel for a UK company selling to South Africa.

UK manufacturer

import agent in South Africa

South Africa’s wholesalers

The import agent’s function is to put the manufacturer in touch with wholesalers in South Africa.

What is the import agent acting as?

A broker
B del credere agent
C factor
D merchant

10 HF Wholesalers prepared a statement of account for LL Trading.

STATEMENT OF ACCOUNT

HF WHOLESALERS
TRENDY ROAD
LONDON
To LL Trading Month Ending May 31 2023
110 Main Road
London

DATE DETAILS DEBIT CREDIT BALANCE

$ $ $

1 May balance owed 500

6 May cheque no. 652 425 75
6 May cash discount 75 0
12 May invoice no. 146 600 600
22 May invoice no. 210 900 1500
26 May credit note no. 20 80 1420
29 May sales 300

How much did LL Trading owe HF Wholesalers on 31 May?

A $1120 B $1720 C $1800 D $4095

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11 On 2 November 2022, a sports retailer purchased sports clothing for $800 from a manufacturer
on the following credit terms.

trade discount 25%

cash discount 5% 30 days

If payment was made in full on 27 November 2022, how much was paid?

A $200 B $570 C $600 D $760

12 Which statement explains why countries conduct international trade?

A It allows countries to sell surplus goods.

B It enables countries to compare prices of goods.
C It makes countries dependent on other countries.
D It permits countries to use the same currency.

13 What is an invisible export in the Balance of Payments for a country?

A financial institutions lending to a foreign country

B payments being made to a foreign bank
C surplus food being sold to another country
D tourists taking holidays in another country

14 Which statement about free trade is correct?

A Free trade applies only to imports and restrictions can still apply to exports.
B Free trade may lead to a common pricing structure among member countries.
C Trading blocs encourage free trade between member countries.
D Trading blocs lead to reduced choice for consumers.

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15 An advertisement for a plumber is shown.

K Plumbers
All plumbing jobs undertaken
- no job too small
24-hour emergency service
Telephone 01234 567890

Which type of advertising is shown?

A collective
B competitive
C informative
D persuasive

16 What is an example of advertising media?

A coupons
B posters
C samples
D special offers

17 What is sales promotion?

A collective advertising of products

B methods of pricing products
C plans for increasing long-term sales
D strategies to attract consumers

18 Why is communication important for a multinational company operating in the global market?

A to allow the company to sell more goods in the home market

B to enable the company to operate as a single unit
C to reduce tariffs and quotas imposed in international trade
D to transport goods from its warehouses to ports and airports

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19 Consumers now rely on smartphones as a multifunctional tool.

Which function is most likely to help a retailer increase sales?

A accessing social media sites to share information with friends

B adding new mobile apps
C text messaging to keep in contact with friends
D using QR codes for quick access

20 How is most of the world’s oil transported internationally?

A aeroplane
B goods train
C ocean tanker
D ro-ro ferry

21 Which problem has arisen with the increased use of containerisation in transport?

A greater need for customs clearance

B consignors may have more than container loads
C the need to provide more warehouse facilities
D the need to provide purpose-built ships and vehicles

22 What is not a feature of a seaport?

A hangars and runways

B immigration and customs
C lorry parks and warehousing
D quays and docks

23 What is not a function of warehousing?

A assisting the supply of goods

B preventing damage by fire
C protecting goods from deterioration
D reducing price fluctuations

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24 Which risk is a retailer likely to insure against?

A bad management
B bad weather
C marine
D public liability

25 A retailer insures his premises against the risk of fire but does not tell the insurer that he sells
paraffin in the shop.

If there is a fire, which principle of insurance will prevent him from being compensated?

A indemnity
B insurable interest
C proximate cause
D utmost good faith

26 What is the best description of the role of an insurance broker?

A fixes the premiums paid by customers

B gives the customer a choice of policies from different companies
C sells policies to an agent who will then sell them to the customer
D works on behalf of one insurance company and sells only its policies

27 A sole trader wishes to insure their van.

What would affect the premium charged?

A engine capacity of the van

B number of vans using the roads
C lifestyle of the van driver
D volume of goods the van can carry

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28 A bank is preparing the latest statement for NN Ltd.

debits credits balance

date details
$ $ $

5430
6 May cheque 100 207 25 5405
10 May cheque 102 068 45 5360
16 May credit transfer 260 5100
20 May cash deposit 400 5500
31 May direct debit 900

What is the balance on 31 May?

A $4460 B $4600 C $6090 D $6400

29 Which international trade document provides the seller with a guarantee of payment if the buyer
fails to make the payment?

A crossed cheque
B electronic transfer
C letter of credit
D trading certificate

30 What does moving to a cashless society mean?

A Banks are likely to have fewer branches.

B Businesses will not suffer bad debts.
C Customers will always be safe when shopping.
D More cheques will be written.

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31 The diagram shows four factors that have influenced the location of a business.

nearness to good access to

raw materials road and rail

business

availability of far from highly

cheap land populated areas

Which type of business is most likely to have all these factors influencing its location?

A chemical plant
B food processing plant
C newspaper printing company
D sports and leisure centre

32 What is a characteristic of a public corporation?

A It has limited liability for its shareholders.

B It is a business controlled by the government.
C It operates in the private sector.
D It raises money by selling shares on a stock exchange.

33 The liability of a sole trader is

A limited by the capital raised from family members.

B limited by the value imposed by a judge in court.
C unlimited so personal assets are at risk.
D unlimited up to the value of capital employed in the business.

34 Which statement describes a multinational company?

A medium-sized company having many branches

B large company operating in one country
C very large company that dominates the local market
D very large company with worldwide markets

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35 Mr Khan bought 500 shares for $3000.

After three months, he received a total dividend of $200. He then sold the shares for $8 each.

How much did he lose or profit on the whole transaction?

A $1200 loss
B $1000 profit
C $1200 profit
D $4000 profit

36 Which commercial term is correctly matched to its formula?

term formula

A cost of goods sold sales turnover – gross profit

B profit for the year sales revenue – purchases
C rate of inventory value of sales  average stock at cost price
D working capital current assets  current liabilities

37 The increased use of online retailing by consumers has reduced the number of shops in town
centres.

Which PEST factor best explains this statement?

A economic
B political
C social
D technological

38 What is a benefit to a retailer of establishing an e-shop?

A improved customer relations

B increased quantity of returned goods
C reduced selling costs
D restricted choice

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39 Which commercial activity is an example of the use of renewable resources to protect the
environment?

A deforestation
B intensive farming
C overfishing
D wind farming

40 The cover of Hotwheels car magazine is shown.

The magazine for the car fanatic!

This year’s new

cars tested!
Read our sensational
test results!
We reveal the best!

In which way might Hotwheels car magazine assist consumers?

A It aids car manufacturers to obtain loans from banks.

B It enables a country to increase its exports of cars.
C It helps the government ensure that consumers buy the best cars.
D It informs consumers about the performance of cars.

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reasonable effort has been made by the publisher (UCLES) 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 Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 7100/12/M/J/23