Sample GCE O Level Commerce Questions and Answers

GCE O Level Commerce Questions and Answers

1. What is the main difference between trade and commerce?
   Answer:
   Trade refers to the buying and selling of goods and services, while commerce involves trade as well as the services and activities (like banking, insurance, and transportation) that facilitate trade.
2. What is the function of a wholesaler in the distribution chain?
   Answer:
   A wholesaler buys goods in bulk from manufacturers and sells them in smaller quantities to retailers. They act as intermediaries and provide storage, packaging, and transport services.
3. Name three types of retailers.
   Answer:

• Department stores
• Chain stores
• Supermarkets

1. What is meant by ‘e-commerce’?
   Answer:
   E-commerce refers to the buying and selling of goods and services over the internet. It involves online transactions through websites or mobile apps.
2. State two advantages of a sole proprietorship.
   Answer:

• The owner has full control over the business decisions.
• The owner receives all the profits.

1. What is a bill of exchange?
   Answer:
   A bill of exchange is a written order from one party (the drawer) directing another party (the drawee) to pay a specified sum of money to a third party (the payee) on a future date or on-demand.
2. Explain the term ‘division of labor’.
   Answer:
   Division of labor refers to the breaking down of the production process into different tasks, with each worker specializing in one task. This increases efficiency and productivity.
3. What is meant by ‘insurance’?
   Answer:
   Insurance is a financial arrangement in which an individual or business pays regular premiums to an insurer in exchange for protection against specified financial losses or risks, such as damage, theft, or accidents.
4. Distinguish between ‘direct taxes’ and ‘indirect taxes’.
   Answer:

• Direct taxes are paid directly to the government by the individual or organization on whom it is imposed, such as income tax.
• Indirect taxes are levied on goods and services and are paid indirectly through purchase, such as value-added tax (VAT).

1. What is the purpose of a commercial bank?
   Answer:
   The main purpose of a commercial bank is to provide financial services, such as accepting deposits, offering loans, facilitating money transfers, and providing credit to individuals and businesses.