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(2a)
=Memorandum of Association (MOA)=
(i) Name and address of the company
(ii) Objectives and purpose of the company
(iii) Type of company (public or private)
(iv) Liability of members (limited or unlimited)
(v) Capital structure (authorized share capital)
=Articles of Association (AOA)=
(i) Rules for shareholder meetings and voting
(ii) Procedures for appointing and removing directors
(iii) Directors’ powers and responsibilities
(iv) Dividend distribution and accounting procedures
(v) Procedures for amending the AOA
(2b)
(i) Conflict of interest between shareholders and management: Shareholders want maximum profits, while management may prioritize growth or other goals, leading to conflicting interests.
(ii) Difficulty in making quick decisions: Public corporations have a complex decision-making process, involving multiple stakeholders and regulatory requirements, which can slow down decision-making.
(iii) High regulatory compliance costs: Public corporations must comply with various regulations, such as financial reporting and disclosure requirements, which can be time-consuming and costly.
(iv) Risk of hostile takeovers: Public corporations are vulnerable to hostile takeovers, where another company or investor buys a majority of shares to gain control, potentially leading to changes in management and strategy.
(v) Difficulty in maintaining corporate social responsibility and ethical standards: Public corporations may face challenges in balancing profitability with social responsibility and ethical considerations, potentially leading to reputational damage if they fail to meet expectations.
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(3a)
(i) Creditworthiness: The bank manager would assess the young person’s credit history, if any, to determine their ability to repay the loan.
(ii) Income: The bank manager would consider the young person’s income, if any, to determine their ability to make regular loan repayments.
(iii) Collateral: The bank manager might require collateral, such as a guarantor or assets, to secure the loan.
(iv) Loan purpose: The bank manager would consider the reason for the loan, such as education or business expenses, to determine its viability.
(v) Character: The bank manager would assess the young person’s character, including their reputation and references, to determine their reliability.
(3b)
(i) Insufficient funds: If the customer’s account balance is less than the cheque amount.
(ii) Overdraft limit exceeded: If the cheque would exceed the customer’s approved overdraft limit.
(iii) Account closed: If the customer’s account has been closed or dormant.
(iv) Cheque dated incorrectly: If the cheque date is older than six months (also known as a “stale cheque”).
(v) Signature mismatch: If the signature on the cheque does not match the signature on the customer’s account records.
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(4a)
(i) Mobile business: Itinerant traders move from place to place to sell their goods.
(ii) No fixed location: They do not have a permanent shop or stall.
(iii) Direct sales: They sell directly to customers, often through door-to-door sales.
(iv) Limited products: They typically carry a limited range of products.
(v) Flexibility: They can adjust their prices and products according to the local market.
(4b)
(i) Large product range: Supermarkets offer a wide variety of products under one roof.
(ii) Fixed location: They have a permanent location, making it easy for customers to find them.
(iii) Self-service: Customers select products from shelves and pay at a checkout counter.
(iv) Organized layout: Products are categorized and displayed in a logical and attractive manner.
(v) Modern amenities: Supermarkets often have amenities like air conditioning, parking, and payment options.
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(5a)
(i) Factor is an agent who buys goods from a principal (producer/supplier) and sells them on their own account, taking ownership and risk WHILE Broker is an agent who acts as an intermediary between buyers and sellers, facilitating transactions without taking ownership or risk.
(ii) Stock Exchange is a platform for buying and selling securities (stocks, bonds, etc.) WHEREAS Commodity Exchange is a platform for buying and selling physical goods (agricultural products, metals, energy, etc.).
(5b)
(i) Open Outcry:
A trading method where buyers and sellers physically gather on the exchange floor, shouting bids and offers to negotiate prices.
(ii) Futures Contract:
A contractual agreement to buy or sell a specific commodity at a set price on a specific date in the future.
(iii) Clearing System:
A process that ensures the smooth settlement of trades, guaranteeing that buyers receive goods and sellers receive payment.
(iv) Pit Outcry:
An area on the exchange floor where traders gather to buy and sell futures contracts, using the open outcry method.
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(6a)
(i) Failure to deliver: If Digital Trading Limited fails to deliver the computers within the agreed 30 days, Mr. Konteh may cancel the agreement.
(ii) Breach of contract: If either party violates the terms of the agreement, the other party may terminate the contract.
(iii) Insolvency: If Digital Trading Limited becomes insolvent or bankrupt, they may be unable to fulfill the agreement, leading to cancellation.
(iv) Force majeure: Unforeseen events like natural disasters, war, or government interventions may make it impossible for Digital Trading Limited to deliver the computers, leading to cancellation.
(6b)
(i) Offer and acceptance: Digital Trading Limited offered to supply computers, and Mr. Konteh accepted the offer, forming a binding agreement.
(ii) Intention to create legal relations: Both parties intended to enter into a legally binding contract, as evident from the agreed terms and payment.
(iii) Consideration: The agreement involves the exchange of something valuable (computers) for a monetary payment (D10,000 per computer), representing consideration.
(iv) Capacity to contract: Both Digital Trading Limited and Mr. Konteh have the legal capacity to enter into a contract, being a company and an individual respectively, with the necessary authority and competence.
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(7a)
Deregulation refers to the process of removing government controls and restrictions from an industry, allowing market forces to dictate prices, output, and entry/exit of firms WHILE Commercialization refers to the process of transforming a public entity or service into a profit-oriented business, often involving privatization or introduction of market principles.
(7bi)
Privatization.
(7bii)
(i) Efficiency gains: Private companies are often more efficient than state-owned enterprises, leading to improved services and cost savings.
(ii) Financial constraints: The government may be facing financial difficulties and sees selling the transport company as a way to raise revenue.
(iii) Competition promotion: Privatization can introduce competition, driving innovation and better services in the transport sector.
(iv) Focus on core functions: The government may want to focus on its core responsibilities, such as regulation and public policy, rather than managing a transport company.
(v) Reduced subsidy burden: The government may be subsidizing the transport company, and privatization could transfer the financial burden to the private sector.
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(8a)
Cost of goods sold (COGS):
Opening stock + Purchases – Closing stock
= 200,000 + 900,000 – 100,000
= Le1,000,000
(8b)
Gross profit:
Since a 30% profit was made on COGS, the gross profit is:
= 30% of 1,000,000
= Le300,000
(8c)
Total sales:
Gross profit + COGS
= 300,000 + 1,000,000
= Le1,300,000
(8d)
Net profit:
Net Profit=Gross Profit – (Salaries and Wages+Shop Rent)
Net Profit=300,000−(120,000+150,000)
Net Profit = 300,000 – 270,000 = Le30,000
(8e)
Rate of turnover:
Rate of Turnover = COGS/Average stock
Average Stock=
(Opening Stock + Closing Stock)/2
Average Stock= (200,000+100,000)/2 = Le150,000
Rate of Turnover= 1,000,000/150,000 = 6.67
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