Cambridge O Level Commerce: Aids to Trade that Support Commerce — Revision Notes (7100)

Aids to trade are the support services without which commerce would struggle: advertising tells buyers about goods, banks handle payments and lend money, insurers protect against loss, and finance pays for the business itself. In Cambridge O Level Commerce (7100, 2026-2028) Topic 5 has four sections - 5.1 Advertising, 5.2 Banking, 5.3 Insurance and 5.4 Sources of finance and commercial performance - and it contains most of the syllabus’s calculations.

For full explanations use the aids to trade study guide; practise with the aids to trade practice questions.

Syllabus coverage (7100, 2026-2028)

Section	Sub-sections
5.1 Advertising	5.1.1 types; 5.1.2 traditional and digital media; 5.1.3 methods of appeal; 5.1.4 sales promotion
5.2 Banking	5.2.1 banking services; 5.2.2 digital technology in banking
5.3 Insurance	5.3.1 purposes; 5.3.2 types of risk; 5.3.3 how enterprises use insurance
5.4 Finance and performance	5.4.1 raising finance; 5.4.2 calculations; 5.4.3 improving performance

5.1 Advertising: why, what, where, how

• Why (purposes): to inform customers, persuade them to buy, launch new products, build a brand and increase sales.
• What (types): informative; persuasive; collective/generic (a whole industry advertises together); competitive (compares with rivals). Informative adverts help customers decide but can be dull; persuasive adverts raise sales but can mislead; collective adverts share cost but do not promote one brand; competitive adverts win customers but can provoke rivals.
• Where (media): traditional - TV, radio, cinema, newspapers, magazines and trade journals, leaflets, packaging, direct mail, sponsorship, catalogues, posters, transport vehicles, window and point of sale displays, signboards, word of mouth. Digital - social media and internet advertising (websites, search engines), display and video adverts, email marketing, digital billboards, influencers.
• How (appeals): emotion, fear, humour, rational, ambition, social acceptance, romantic, adventure, music, celebrity and influencer endorsement.

Choosing media - match the medium to the situation

Business	Sensible media	Factor used
Village bakery	Leaflets, window display, word of mouth	Local coverage, low cost
Machine-tool maker	Trade journals, trade websites	Specialist audience
International sportswear brand	TV, social media, influencers, digital billboards	International coverage, multi-channel
Seasonal ice-cream kiosk	Signboards, social media posts in summer	Timing, flexibility to change

Sales promotion = short-term incentives to increase sales, chosen according to business type, competitors, cost, nature of product, whether the product is new or old, and timing. Methods: point of sale, special offers, sponsorship, displays, competitions, coupons, sales periods, loss leaders (sold below cost to attract customers), free gifts, free samples.

5.2 Banking: services for every need

Need	Service
Keep money safe and make daily payments	Current account
Earn interest on spare cash	Deposit/savings account
Deposit takings after closing time	Night safe
Pay for an overseas trip or import	Foreign currency; documentary credit
Pay rent of the same amount monthly	Standing order
Pay a bill that varies each month	Direct debit
Pay a supplier directly from the account	Credit transfer or electronic transfer
Buy now, pay later	Credit card; store card
Short-term shortage of cash	Overdraft
Buy premises	Mortgage
Buy equipment in instalments	Hire purchase; loan
Get advice	Financial advice; telephone banking

Digital banking: internet and mobile banking. For - convenient, 24/7, fast and cheap. Against - fraud and hacking risk, needs devices and network, can exclude some customers. Impact - branch closures, more digital-only banks, less use of cash.

5.3 Insurance: how it works

1. Business completes a proposal form, disclosing all relevant facts.
2. Insurer may issue a cover note for temporary cover.
3. The policy sets out the full contract.
4. The insurer pools risk: premiums from many cover the losses of a few.
5. An insurance broker can advise on and arrange the best cover.

Purposes: risk reduction, compensation, financial protection, business confidence, investment. Risks: consequential loss, employer’s liability, fire, motor, premises, public liability, theft.

Premium example. A van worth $30 000 is insured at 4% a year. Premium = 30 000 x 4 / 100 = $1 200.

5.4 Finance and commercial performance

• Entrepreneurship: identifying an opportunity and taking the risk of starting a business.
• Short-term: trade credit, debt factoring, hire purchase, leasing, sale and leaseback, overdraft, selling assets, owner’s savings, retained profit.
• Long-term: ordinary and preference shares, loans, debentures, venture capital, crowdfunding.

Calculations - worked from one set of figures

A shop sells 1 200 lamps at $40. Each lamp cost $28. Expenses are $9 000. Current assets $18 000; current liabilities $11 000.

Measure	Working	Answer
Revenue	1 200 x 40	$48 000
Gross profit	48 000 - (1 200 x 28 = 33 600)	$14 400
Gross profit margin	14 400 / 48 000 x 100	30%
Profit for the year	14 400 - 9 000	$5 400
Working capital	18 000 - 11 000	$7 000
Mark-up	(40 - 28) / 28 x 100	42.9%

Improving performance: cut expenses, raise mark-up, change prices, advertise better, launch new products.

Common mistakes and exam traps

• Using revenue instead of cost as the base for mark-up.
• Saying an overdraft is long-term finance.
• Confusing a cover note with a proposal form.
• Recommending a medium without linking it to the audience or cost in the scenario.
• Calling a loss leader a free gift - it is sold, but below cost.

Frequently asked questions

What is the difference between ordinary and preference shares? Preference shareholders receive a fixed dividend before ordinary shareholders; ordinary shareholders usually have voting rights and variable dividends.

Why might a business choose leasing instead of buying? Leasing avoids a large upfront payment, although the business does not own the asset and may pay more overall.

What does “working capital” measure? Current assets minus current liabilities: the money available to pay short-term debts and run the business day to day.

Official syllabus

Cambridge O Level Commerce (7100) syllabus for 2026, 2027 and 2028 - official syllabus PDF, Topic 5.