Saraswati Vidya Niketan

End of Term Examination

Principle of Business
Name: ____________________________ Date:

Class: Form 3 ____ Time: 1 ½ hr

Good Luck 

Section I- Circle the Correct Answer (20mks).

1. The employees of SVN pool their money at the
end of every month and buy groceries at wholesale
prices. They are operating a form of ____________
4. Which of the following measures may be used by
a limited liability company to raise capital?
I. Selling shares

(a) Partnership II. Borrowing from banks

(b) Private Company III. Adding to existing stock

(c) Consumer Co-operative IV. Issuing debentures

(d) Public Company (a) I, II and IV only (b) I, II and III only

2. From which of the following commercial (c) I, III and IV (d) I, II and III only
organisations might any member of the public be
5. Limited liability is an advantage of the ________
allowed to purchase shares?
(a) Sole Trader Business
(a) Public Companies
(b) Partnership
(b) Private companies
(c) Proprietorship
(c) The Central Bank
(d) Public Company
(d) Sole Trader Businesses
6. A ___________________ is a form of business
3. A trait associated with entrepreneurs is:
organisation that is a separate entity from the
(a) fear of failure persons who it.

(b) takings risks (a) Cooperative Society

(c) opposition to change (b) Sole Trader Business

(d) acceptance of loss (c) Company

(d) Proprietorship
7. Annie invests her savings by buying shares in a (a) Committee
company. From this investment Annie expects to
(b) Line and Staff
receive ________________.
(c) Functional
(a) profits (b) interests
(d) Simple
(c) revenues (d) dividends
13. _______________ are facilities formed to
8. In a Public Limited Company, the losses are
provide consultancy training to young companies
borne by the ___________________
and entrepreneurs.
(a) Shareholders (b) Directors
(a) Small businesses
(c) Community (d) Staff
(b) Incubators
9. An entrepreneur may reduce his risk of loss by all
(c) Incubator Entrepreneurial Centres
of the following EXCEPT:
(d) Entrepreneurial Incubator Centres
(a) planning ahead
14. The __________________ sets out the
(b) securing bank loans
constitution or internal rules and regulations of the
(c) cleaning offices regularly proposed business venture.

(d) purchasing fixed assets (a) Declaration

10. Property used to secure a loan at the bank is (b) Articles of Association
referred to as ____________________
(c) Memorandum of Association
(a) fixed assets (b) collateral
(d) Constitution of the Country
(c) current asset (d) fixed deposit
15. The _________ states the external relationship
11. Which of the following is NOT one of the main of the company.
functional areas of a business?
(a) Declaration
(a) Marketing (b) Auditing
(b) Articles of Association
(c) Finance (d) Personnel
(c) Memorandum of Association
12. __________________ Organisation is a line
(d) Constitution of the Country
structure with some business operations cutting
across the traditional lines.
Fill in the blanks.

1. Cooperatives were first established by people in the __________________________________ sector. (1mk)

2. Three types of Cooperatives are _________________________ Cooperatives, ________________________

Cooperatives and _____________________________________________ Cooperatives. (3mks)

3. In __________________________ Cooperatives, members come together for the purpose of buying goods or
services at reduced costs and also ensure that these goods are in supply at all times. (1mk)

4. When the Cooperative makes a profit, members receive ________________________ on their shares. (1mk)

5. A Cooperative accumulates its earnings through ___________________________________________ (1mk)

6.Three major types of shares that may be issued by a Company that is seeking to expand its business operations
are _________________________________________,____________________________________ and
___________________________________________________________. (3mks)

7. The __________________________ limited company cannot seek to raise capital financing through the issue
of shares to the public. (1mk)

8. Limited Companies are either ___________________________ or ___________________________. (2mks)

9. The ______________________________ Company is also called a joint stock company because a number of
persons contributed to its jointly held stock. (1mk)

10. A Public Limited Company can be recognized by the use of _____________________ after the company’s
name. (1mk)

11.________________________________________________ help to provide training and consultancy

services in small business management. (1mk)

12. Two functions of Management are _________________________ and ______________________ (2mks)

13. Two types of Committee/ group Organisations are ______________________________________________

and _____________________________________ (2mks)
Answer all questions in complete sentences.

1. Explain the principle of ‘limited liability’. _____________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
____________________________________________________________________________________(2mks)

2. What is meant by a ‘share’? _________________________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
____________________________________________________________________________________(2mks)

3. List TWO advantages of a Cooperative. ? ______________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
____________________________________________________________________________________(2mks)

4. List TWO disadvantages of a Private Limited Company. __________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)

5. What is meant by the term ‘stock market’? _____________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)
6. Why do people want to set up and operate their own business? _____________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)

7. Who is an entrepreneur? ___________________________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)

8. List TWO advantages of small businesses. __________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)

9. What is an Organisational Chart? ____________________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)

10. List TWO functional areas of business. _______________________________________________________

__________________________________________________________________________________________
__________________________________________________________________________________________
___________________________________________________________________________________ (2mks)
11. In the box provided below, draw and label a pyramid Organisational structure (5mks)

The end of education is character

The end of education is character.