Ordinary level 2025 Littoral regional mock commerce guide

Ordinary level 2025 Littoral regional mock commerce guide

Ordinary level 2025 Littoral regional mock commerce guide

Question 1
(a) Advantages of partnership over sole proprietor:
 With partnership there is possibility to raise more capital as many people are involved unlike the sole proprietor
 Partnership businesses have greater prospect of continuity as compared to sole proprietorship
 With partnership, business risk is shared among the members whereas sole proprietors bear the whole risk.
 With partnership, better decisions are taken since there are many heads involved
 Partnership businesses have possibilities of greater expansion as compared to sole proprietorship
 With partnership, there is limited liability for limited partners meaning in the event of business failure, limited
partners do not lose their private properties

(b) Advantages of joint stock companies
 There is continuity of business. This is because the death or retirement of a shareholder does not affect the business
(or put an end to the business)
 Possibility of raising more capital. Capital can easily be raised since there are many and various kind of shareholders
 Shareholders enjoy limited liability. This means in case of business failure, shareholders will lose only the amount
contributed in the business and their personal properties will be saved
 Shares are easily transferred. In public limited companies, shareholders can sell their shares without the consent of
other shareholders
 It is a legal entity. Joint stock companies have a legal existence, that is, the business is separate from the owners
such in case of breach of contract it can sue and be sued in the court of law.
 Economies of scale. Joint stock companies enjoy a variety of economies of scale since they produce in large
quantities
 Risk bearing is shared. Risks and worries of the business are shared among shareholders depending on their
agreement during the formation of the business.
(Up to 8 marks for any 4 pts well explained, Listing 4 marks)
(c) Elements in an article of association
 The method of issue and transfer of shares.
 The procedure of and time of calling general meetings.
 The duties, qualification and powers of the directors.
 The voting rights of shareholders.
 The methods of sharing profits and dividends.
 How directors and other officers may be appointed.
 The method of settling disputes that may arise in the company.
 The method of auditing the accounts of the company.

Question 2
(a) Reasons for the survival of small shops
 Personal contact. Small retailers know their customers need and they offer personal services to them