Classwork Series and Exercises {Business Studies – JSS2}: Market

Business Studies Jss 2

Week 2

Topic: Market II

Contents:

• Methods of buying and selling
• Procedures for buying and selling

For previous note on Market, visit: https://passnownow.com/namaste-lesson/market/

A. Methods of buying and selling

Buying can be defined as the possessing or acquisition of goods by paying a certain amount of money as price for the goods. Sellers carry their goods to the market to sell and the buyers go to the market with money to exchange for goods they need. Methods of buying are:

• Buying by description or grade: Due to the fact that some goods cannot be open for the buyers to see, goods like ice cream, bear, soft drinks cannot be open but the seller can only describe how it taste and the amount of satisfaction the consumer will gain from it.

• Buying by sample: This is the situation where some sellers allow consumers to taste or test their products before paying for them. It is buying by sample method. Goods commonly sold by sample include oranges, mango, a cloth seller can allow a customer to try the shirt on for fitness before paying for it. It is a common method of selling new products.

• Buying by inspection: Buying by inspection is a situation where the goods are displayed and the buyers inspect by checking or testing the goods, then a customer can decide f to buy the goods or not. E.g. A person who wants to buy a television will require the TV to be tested before paying for it, also a buyer inspect a tuber of yam before paying for it.

• Buying by auction: Buying by auction means that the person who wants to buy makes an offer for the goods. There is usually large number of bidders and the goods will be sold to the highest number of bidders i.e. the person who is ready to pay the highest price.

B. Procedures for buying and selling

Procedures for buying and selling are:

• Cash Transaction: This occurs when goods are bought and the money is paid immediately. In a situation like this the seller issues a receipt to the buyer as evidence of payment.

• Credit sales: This is a situation where the customers cannot pay for their goods and services immediately and promise to pay in a future date. Such customers are said to buy on credit. They pay in full or many times, that is known as payment by installments.

• An enquiry: This is a situation where a buyer wants to know about the goods he can buy from a seller. An enquiry is just a request for information about goods which a buyer wants to buy from a seller and to ensure a seller has specific goods.

• Quotation or price list: This is the letter a seller sends to the buyer in request to the enquiry. The seller sends a catalogue which will show the description of the goods. The marketing or sales department is responsible for preparation of a quotation or price list.

• Order: When the buyer receives a quotation from the seller, he prepares an order. An order is a firm request for buying goods or services. A number of copies are prepared, one to the seller, one to account department of the buyer and the last copy is kept by the department that needs the product.

• Invoice: An invoice is a document which shows a list of goods sent or services provided, with a statement of the sum due for the goods. It shows the discount and amount owed by the customer.

• Proforma invoice: A Proforma invoice is a document that states a commitment on part of the seller to deliver the products or services as notified to the buyer for a specific price. It is thus not a true invoice.

• Delivery Note: This is a note sent to ensure the goods ordered for have been delivered as per invoice. The delivery notes contains

1. Quantity of goods delivered
2. Date of delivery
3. Signature of the person delivery the good
4. Signature of the receiver

• Payment and Receipt: After the delivery of goods, the buyer pays the monetary value of items in the invoice. It may be in cash or by cheque.

Test and Exercise

1. The process of paying a credit bit by bit is payment by (a) agreement (b) installment (c) joint (d) individual
2. The method of buying where the highest bidder gets the good is called (a) buying by inspection (b) buying by sample (c) buying by auction (d) buying by description
3. A note sent to ensure the goods ordered for have been delivered as per invoice is called (a) an invoice (b) delivery note (c) an enquiry (d) the order
4. Cash transaction occurs when (a) goods bought are paid for immediately (b) goods bought are paid for in the future date (c) goods bought are not paid for at all (d) when only half payment is made.
5. Which of the following department prepares the order for goods (a) production department (b) advertising department (c) purchasing department (d) financial department

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