NTS NAT-ICOM Commerce and Business Studies Flashcards

24 sample cards from the Commerce and Business Studies deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. List four services a wholesaler provides to the manufacturer.

   Buying in bulk and providing a ready market, bearing the risk of price fluctuations/storage, providing finance through advance payment, warehousing/storing goods, and giving market information/feedback.

2. Give examples of small-scale and large-scale retailers.

   Small-scale retailers: hawkers, peddlers, street stalls, general stores. Large-scale retailers: departmental stores, chain/multiple shops, supermarkets, mail-order houses.

3. What is a departmental store and a chain (multiple) store?

   A departmental store is a large retail store under one roof selling a wide variety of goods in separate departments. A chain/multiple store is a series of identical shops in different locations under one ownership selling a limited range of standardized goods.

4. Define foreign trade and its three types.

   Foreign trade (external/international trade) is trade between two or more countries. Its three types are: import trade (buying from abroad), export trade (selling to other countries), and entrepot/re-export trade (importing to re-export to a third country).

5. State three differences between home trade and foreign trade.

   Home trade is within one country, uses one currency, and has fewer documents/restrictions; foreign trade is between countries, involves different currencies and exchange rates, customs duties, and many documents (invoice, bill of lading, etc.).

6. What is the difference between balance of trade and balance of payments?

   Balance of trade is the difference between the value of a country's visible exports and visible imports only. Balance of payments records all economic transactions (visible + invisible + capital flows) between a country and the rest of the world.

7. Name four important documents used in foreign trade.

   Commercial invoice, bill of lading, certificate of origin, letter of credit (L/C), bill of exchange, marine insurance policy, and indent.

8. What is a bill of lading?

   A bill of lading is a document issued by a shipping company acknowledging receipt of goods for carriage; it is a receipt for goods, evidence of the contract of carriage, and a document of title to the goods.

9. What is a Letter of Credit (L/C)?

   A Letter of Credit is a written undertaking by the importer's bank to pay the exporter a stated sum on presentation of specified shipping documents; it guarantees payment and reduces risk in foreign trade.

10. What is an invoice and how does it differ from a debit/credit note?

    An invoice is a statement of goods sold showing quantity, price and total amount due from buyer to seller. A debit note increases (or a credit note decreases) the amount owed to correct an invoice (e.g., for returns or undercharges).

11. What is a bill of exchange?

    A bill of exchange is a written, unconditional order signed by the drawer directing the drawee to pay a certain sum to a named person (payee) on demand or at a fixed future date; it is widely used to settle trade debts.

12. Define a bank and name the main types of banks.

    A bank is a financial institution that accepts deposits, lends money, and provides related financial services. Main types: central bank, commercial banks, industrial/investment banks, agricultural banks, cooperative banks, and exchange/savings banks.

13. What is a central bank and what is Pakistan's central bank?

    A central bank is the apex bank that controls and regulates a country's banking and monetary system; it is the bank of issue, banker to the government, and lender of last resort. Pakistan's central bank is the State Bank of Pakistan (SBP).

14. List four main functions of a central bank.

    Issuing currency notes, acting as banker/agent/adviser to the government, acting as banker's bank and lender of last resort, controlling credit/money supply, and managing foreign exchange reserves.

15. List four functions of a commercial bank.

    Accepting deposits, advancing loans/credit, creating credit (credit creation), facilitating payments (cheques, drafts, transfers), discounting bills of exchange, and providing agency/general utility services (lockers, foreign exchange).

16. Name and distinguish the main types of bank deposit accounts.

    Current account (no/low interest, unlimited withdrawals, for businessmen), Savings account (small interest, limited withdrawals, for small savers), and Fixed/Term deposit account (lump sum for a fixed period at higher interest, not withdrawable before maturity).

17. What is a cheque and name its three parties?

    A cheque is a written order to a bank to pay a stated sum from the drawer's account. Its three parties are the drawer (account holder who writes it), the drawee (the bank), and the payee (the person to be paid).

18. What is the difference between a bearer cheque and a crossed cheque?

    A bearer/open cheque is payable in cash across the counter to whoever presents it. A crossed cheque (two parallel lines on the face) cannot be cashed over the counter and must be paid only into a bank account, making it safer.

19. Define insurance and its basic principle.

    Insurance is a contract (policy) in which the insurer agrees to compensate the insured for a specified loss in return for a premium. Its basic principle is the pooling/sharing of risk—losses of the few are borne by the contributions of the many.

20. Name the main principles of insurance.

    Utmost good faith (uberrimae fidei), insurable interest, indemnity, contribution, subrogation, proximate cause, and (in life insurance) the principle of greater risk/mortality.

21. Explain the principle of indemnity and which insurance is an exception.

    Indemnity means the insured is compensated only for the actual loss suffered, not to make a profit, so payment cannot exceed the loss. Life insurance is an exception because human life cannot be valued in money.

22. What is insurable interest?

    Insurable interest means the insured must stand to suffer a financial loss if the insured event occurs; without insurable interest the insurance contract is void (e.g., you can insure your own property or life).

23. Distinguish life insurance from general (non-life) insurance and name types of general insurance.

    Life insurance covers risk to human life and pays on death or maturity (an investment + protection contract). General insurance covers property/liability risks and is a pure indemnity contract; types include fire, marine, motor, theft and accident insurance.

24. Define premium and policy in an insurance contract.

    The premium is the consideration (amount) the insured pays the insurer, periodically or as a lump sum, to keep the cover in force. The policy is the written document containing the terms and conditions of the insurance contract.

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