Theory question 104
Purchase and Sale of GoodsCommerce 2 (essay)
(a) List four means of payment in business.
(b) Explain the following:
(i) Quotation;
(ii) Hire purchase;
(iii) Deferred payment;
(iv) Quantity discount.
Show the model answer
(a) Any four: cash; cheques; bank drafts; postal orders/money orders; bills of exchange; credit transfer; credit/debit cards; standing orders; electronic transfer/POS; vouchers.
(b)(i) Quotation – a seller's reply to an enquiry, stating prices, terms of payment and delivery of goods.
(ii) Hire purchase – the buyer pays a deposit, takes the goods and pays the rest in instalments; ownership passes after the last instalment.
(iii) Deferred payment – the buyer takes the goods now and pays the whole amount or instalments at a later date; ownership usually passes at once (credit sale).
(iv) Quantity discount – a reduction in price given to buyers who buy in large quantities.
Keep each explanation to one or two sentences.