Learning Unit 2

Question 1

What are ways ru increase demand

Answer 1

Ensure that you have the best product possible
Products keep up with the trends and fashions that prevail in the market
Try to set new trends
Advertise products to the right target market
Offer discounts
Keep sales returns to a minimum

Question 2

How can we maximize gross profit

Answer 2

Increase sales revenue

Decrease cost of sales

Question 3

How do we reduce cost of sales

Answer 3

Negotiating discounts or better terms with suppliers
Ensuring fewer inventory through damage or theft reduce the transport and storage costs of goods
Buying in bulk

Question 4

What are the components of the operating expenses

Answer 4

Marketing and selling expenses

General and admin expenses

Question 5

Interest is the cost of money. How is income tax calculated?

Answer 5

Calculated at 28%

Question 6

Explain the 4 causes of shrinkage

Answer 6

1 theft
2 breakage
3 ageing
4 obsolete inventory

Question 7

How can you minimize shrinkage?

Answer 7

• increase security
• keep accurate records
• secure storage facilities
• cameras
• Warning signs
• pur things in visible areas

Question 8

Explain the difference between the perpetual and periodical inventory system

Answer 8

Perpetual: continuous updating

Periodical: value of items will be determined by stocktakes
Cost of sales
Purchases+ carriage/ railage / freight on purchases+ import tariffs+ customs duties - closing inventory

Question 9

Explain technical analysis vs fundamental analysis

Answer 9

Technical analysis - value of share does nor matter us price predictions are only extrapolations from historical price patterns

Fundamental analysis: financial statements