O Level Commerce: Aids to Trade that Support Commerce — Practice Questions

These questions cover all four sections of Topic 5, Aids to trade that support commerce, in Cambridge O Level Commerce (7100, 2026-2028): advertising and sales promotion, banking and digital banking, insurance, and sources of finance with the commercial calculations. The scenarios mirror Paper 2, where every question is set in a commercial context.

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs — examination boards hold copyright in their own papers. Use these alongside the official past papers available free from your board.

Related: Aids to Trade study guide | Aids to Trade revision notes

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Section A - multiple choice

1. A supermarket sells bread below cost to attract shoppers who then buy other goods. This is a: [1] A free sample B loss leader C coupon D competition

2. Which source of finance involves selling unpaid customer invoices to a specialist company? [1] A leasing B debt factoring C crowdfunding D debentures

3. Which payment method is best for paying the same rent every month? [1] A direct debit B standing order C store card D documentary credit

4. A product costs $50 and sells for $65. The mark-up is: [1] A 15% B 23% C 30% D 77%

Section B - structured questions

5. Two rival paint brands advertise: Brand A says “Our paint covers twice the area of Brand B”; the national paint association runs adverts saying “Paint protects your home”. (a) Identify the type of advertising used by each. [2] (b) Explain one advantage and one disadvantage of competitive advertising. [4]

6. Sana opens a mobile phone repair shop in a small town. (a) Recommend two methods of advertising media for Sana. Justify each. [4] (b) Explain two sales promotion methods she could use. [4]

7. Explain why a perfume company might use the romantic and social acceptance methods of appeal. [4]

8. Ocean Traders imports furniture and has a current account with its bank. (a) Explain two banking services, other than the current account, that Ocean Traders could use. [4] (b) Explain two impacts of the growth of digital banking on businesses like Ocean Traders. [4]

9. (a) State three purposes of insurance. [3] (b) A warehouse is insured for $400 000. The premium rate is 0.6%. Calculate the annual premium. [2] (c) Explain the difference between employer’s liability and public liability insurance. [4]

10. Describe the purpose of a proposal form. [2]

11. Tech Start Ltd, a new software company, needs $500 000 to grow. Discuss whether venture capital or a bank loan would be more suitable. [6]

12. The table shows data for Green Grocers.

Item	$
Revenue	90 000
Cost of sales	63 000
Expenses	18 000

(a) Calculate gross profit and gross profit margin. [3] (b) Calculate profit for the year. [1] (c) Explain two ways Green Grocers could increase its gross profit margin. [4]

13. Define working capital and explain why it is important for a retailer. [3]

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Answers

1. B. [1]

2. B. [1]

3. B. [1]

4. C - (65 - 50) / 50 x 100 = 30%. [1]

5. (a) Brand A: competitive [1]; association: collective (generic) [1]. (b) Advantage: can attract customers from rivals by showing why the brand is better [2]. Disadvantage: rivals may respond with their own adverts or legal complaints, increasing costs [2].

6. (a) Any two justified: leaflets or flyers - cheap and target the local town [2]; social media advertising - low cost, reaches young phone users, easy to change [2]; signboard or window display - catches passing customers [2]; word of mouth - free and trusted locally [2]. [max 4] (b) Any two explained: special offer on a first repair [2]; free gift such as a screen protector [2]; coupons in leaflets [2]; competitions on social media [2]. [max 4]

7. Romantic appeal links the perfume to love and attraction [2], encouraging buying as a gift or to feel attractive; social acceptance suggests the perfume helps people fit in and be admired [2].

8. (a) Any two explained: documentary credit to pay overseas suppliers safely [2]; foreign currency services for paying in other currencies [2]; overdraft to cover shortages of cash while waiting for sales [2]; loan to expand [2]; electronic transfer for quick payments [2]. [max 4] (b) Any two explained: payments and transfers can be made at any time, saving time [2]; local branch closures make face-to-face advice harder [2]; customers pay less by cash, so less cash handling [2]; risk of fraud means more security is needed [2]. [max 4]

9. (a) Any three: risk reduction; compensation; financial protection; business confidence; investment. [3] (b) 400 000 x 0.6 / 100 = $2 400. [2] (c) Employer’s liability covers claims by employees injured or made ill at work [2]; public liability covers claims by members of the public injured on the premises or by the business’s activities [2].

10. It is the insurance application form [1] on which the business gives all material facts so the insurer can assess the risk and set a premium [1].

11. [6] Venture capital: suits a risky, fast-growing business; no fixed repayments; investors may offer expertise; but the owners give up a share of ownership and control. Bank loan: owners keep control; but banks may refuse a new firm with few assets, and interest and repayments must be paid even if sales are slow. Conclusion: venture capital is likely to be more suitable for a new software company with high growth potential but limited security.

12. (a) Gross profit = 90 000 - 63 000 = $27 000 [1]; margin = 27 000 / 90 000 x 100 = 30% [2]. (b) 27 000 - 18 000 = $9 000. [1] (c) Any two explained: raise selling prices if customers will accept it [2]; buy in bulk or find cheaper suppliers to lower cost of sales [2]; reduce waste of perishable stock [2]; sell more high-margin products [2]. [max 4]

13. Current assets minus current liabilities [1]. It shows whether the retailer can pay short-term debts such as suppliers [1] and buy stock to keep trading [1].

A note on exam technique for this topic

Calculation questions carry method marks - write the formula, show the working, then the answer with $ or %. In “recommend” questions, tie each choice to the business: a small-town repair shop does not need TV advertising.

Frequently asked questions

Which banking payment methods are in 7100? Cash, cheque, credit card, debit card, store card, credit transfer, standing order, direct debit, electronic transfer and documentary credit (letter of credit).

What is the difference between debt factoring and an overdraft? Debt factoring raises cash by selling unpaid invoices; an overdraft lets a business spend more than it has in its current account up to a limit.

Which calculations must I know? Revenue, gross profit, gross profit margin, profit for the year, working capital and mark-up percentage.

Official syllabus

Cambridge O Level Commerce (7100) syllabus for 2026, 2027 and 2028 - official syllabus PDF.