Question 6
- Explain the term cost benefit analysis.
- State one use each of the following records in RTV business.
- Accounting ledger.
- Repair order form.
- Inventory sheet.
- List two documents required by an RTV entrepreneur to make purchase.
- State two difference between banks and credit unions as sources of capital for RTV business.
Observation
The expected responses were:
(a) Meaning of cost benefit analysis
- Planning process which indicates the benefits that can be derived from business transactions.
- Equating the value accrued from every investment to the investment itself.
- Procedure used to analyze business to ensure positive benefits.
- Procedure for estimating all cost involved and possible profit to be derived from a business opportunity.
- Ratio of benefit to cost
(b) (i) Use of accounting ledger in RTV business
- Provides up-to-date information about the financial status of the business
- As a document in the process of securing loan facility
- To record income and expenditure of the business
- To determine profit and loss
(ii) Use of repair order form in RTV business
- Contains information about the job to be done
- For reference purpose
- To identify owner and type of electronic equipment brought for repair
(iii) Use of inventory sheet in RTV business
- Contains total record of stock and spare parts
- Contains record of work in workshop
- Helps in deciding the type, quantity and time of procurement of items
(c) Documents required by an RTV entrepreneur to make purchase
- Invoice
- Quotation
- Receipt
- Purchase order
- Delivery note
- Way bill
- Inventory sheet
- Repair order form
(d) Differences between banks and credit unions as sources of capital for RTV business
Banks |
Credit unions |
High interest rates |
Low interest rates |
Presence of service charge |
Absence of service charge |
Long repayment period |
Short repayment period |
Only a few customers can be shareholders |
All members are shareholders |
Collaterals are required for loans |
Collaterals are not required for loans |
One-on-one relationship |
Association of people |
Acceptable proposal for utilization |
Guarantee support from one or two association member |
May not have a prior saving |
Must have a percentage of required loan as saving |
Variable interest rate and service charge |
Simple interest rate, no service charge |
May require property as collateral |
Requires only guarantors who are members of the union |
Question 6 was basically on the entrepreneurship section of the syllabus. The Chief Examiner reported that majority of the candidates attempted the question and quite a good number of them responded well.