46 questions. Try each one, then open the answer to check yourself and read the explanation.
The central focus of commercial activities is
Answer: C (trading)
Commerce is about buying and selling (trade) and the services that help trade.
An aid to trade associated with communications is
Answer: B (transportation)
Transport and communication go together as the aids that link producers with consumers across distance.
The services of a textile worker are an example of
Answer: C (manufacturing)
A textile worker turns fibre into cloth, which is manufacturing.
Resources harnessed in certain proportion to create goods and services are
Answer: A (factors of production)
Land, labour, capital and the entrepreneur are combined to produce goods and services: the factors of production.
Primary production is associated with
Answer: C (agriculture)
Primary production takes things from nature, as in farming, fishing and mining.
The major components of modern retailing include
Answer: D (branding, supermarkets and after-sales service)
Modern retailing features branded goods, large self-service supermarkets and after-sales service.
A chain store usually combines the features of
Answer: A (multiple shops and departmental stores)
A chain store has many branches like a multiple shop and sells many lines of goods like a departmental store.
One of the functions of the wholesalers is to
Answer: C (promote sales)
Wholesalers advertise and push goods to retailers, which promotes sales for manufacturers.
An artificial barrier to international trade is
Answer: D (custom duties)
Customs duties are imposed by governments, so they are man-made (artificial) barriers.
The most commonly used commercial documents are
Answer: B (letters of enquiry, consignment notes, receipts and invoices)
Letters of enquiry, consignment notes, receipts and invoices are used in almost every trade transaction.
If a buyer is given 12.5% discount on N50000 worth of goods, how much will he pay?
Answer: B (₦43 750)
Discount = 12.5% × 50 000 = ₦6 250. He pays 50 000 − 6 250 = ₦43 750.
A cheque which a bank draws on its own funds is a
Answer: A (bankdraft)
A bank draft is a cheque drawn by a bank on itself, so it is almost as good as cash.
Billboards and posters are forms of
Answer: C (outdoor media)
Billboards and posters are placed outdoors along roads and in public places.
A collective term for advertising, personal selling and publicity is
Answer: B (promotion)
Advertising, personal selling, publicity and sales promotion together make up promotion.
One of the facilities enjoyed by a current account holder is
Answer: C (an overdraft)
A current account holder can be allowed to overdraw his account.
In which of the following will the number of words used determine the cost of the message sent?
Answer: B (Telegram)
Telegrams are charged by the number of words in the message.
The transmission of telephone services from one country to another is facilitated by
Answer: A (communication satellite)
Satellites relay telephone signals between countries.
The principle of insurance which entitles an insurance company to take any advantage due to the insured after full indemnity is
Answer: B (subrogation)
Under subrogation the insurer, having paid in full, takes over the insured's rights, e.g. to salvage or to sue.
A risk that can be estimated and calculated to be compensated is
Answer: B (an insurable risk)
A risk is insurable when the chance of loss can be calculated so a premium can be fixed.
The most important reason for the existence of insurance business is to
Answer: B (spread losses to all covered participants)
Insurance pools premiums from many people so that the losses of the few are shared by all.
One major advantage of transportation to a business is to
Answer: A (extend the firm's market coverage)
Transport carries the firm's goods to distant places, widening its market.
Warehousing is important to manufacturers because it helps to
Answer: B (produce goods in advance)
With storage space, manufacturers can produce ahead of demand and keep the goods until needed.
One of the major problems of a sole proprietor is sourcing for
Answer: D (funds)
A sole trader relies on his own savings and small loans, so lack of capital is his main problem.
In a public limited liability company, planning is carried out by
Answer: B (the board of directors)
The board of directors sets the company's policies and plans.
The type of partnership in which all partners are jointly liable in bearing risks is
Answer: C (ordinary partnership)
In an ordinary (general) partnership every partner has unlimited liability for the firm's debts.
The financial instrument that entitles the holder to receive dividend and capital gains is a
Answer: A (share)
A shareholder earns dividends and gains when the share price rises; bonds and bills earn interest.
The circulating capital of a business enterprise is classified into
Answer: A (cash, work-in-progress and debtors)
Circulating (working) capital keeps changing form: cash, stock and work-in-progress, and debtors. Vehicles, buildings, fittings and equipment are fixed capital.
Ojo's Balance Sheet as at 31st December, 2006
Capital ₦10,000; Drawings ₦600 = ₦9 400; Profit ₦6 200 = ₦15 600; Creditors ₦1 800; Total ₦17 400
Land and building ₦12000; Fittings ₦850; Motor vans ₦1600; Cash ₦2150; Prepayments ₦700; Debtors ₦100; Total ₦17 400
10% is charged on depreciation of fixed assets.
Determine the value of Ojo's fixed assets
Answer: C (₦13005)
Fixed assets = 12 000 + 850 + 1 600 = ₦14 450. Less 10% depreciation (₦1 445) leaves ₦13 005.
Ojo's Balance Sheet as at 31st December, 2006
Capital ₦10,000; Drawings ₦600 = ₦9 400; Profit ₦6 200 = ₦15 600; Creditors ₦1 800; Total ₦17 400
Land and building ₦12000; Fittings ₦850; Motor vans ₦1600; Cash ₦2150; Prepayments ₦700; Debtors ₦100; Total ₦17 400
10% is charged on depreciation of fixed assets.
What is Ojo's working capital?
Answer: D (₦1150)
Current assets = cash 2 150 + prepayments 700 + debtors 100 = ₦2 950. Working capital = 2 950 − creditors 1 800 = ₦1 150.
If a firm has a turnover of N50 000 and the cost of goods sold is N40 000, what is the percentage of gross profit on sale?
Answer: C (20.0%)
Gross profit = 50 000 − 40 000 = ₦10 000; 10 000/50 000 × 100 = 20%.
A body established to protect the interest of members against the exploitation of retail traders and manufacturers is the
Answer: B (consumers' association)
A consumers' association is formed by consumers to protect themselves against exploitation by sellers.
The Manufacturers' Association of Nigeria is an example of a
Answer: B (pressure group)
MAN lobbies government on behalf of manufacturers, which makes it a pressure group.
The characteristic which ensures that money is free from forgery is its
Answer: A (legality)
Money is legal tender issued only by the central bank; its legal backing and security features protect it against forgery.
The major dealers on the stock market are the
Answer: D (brokers)
On the Nigerian Stock Exchange, trading is done through stockbrokers, the dealing members.
The daily official publications of the Nigerian Stock Exchange give detailed information on the
Answer: D (changes in the price of securities)
The Daily Official List shows the prices at which securities were traded and how they changed.
The function which ensures that set objectives are attained by an organization is
Answer: D (controlling)
Controlling compares actual performance with the plan and corrects deviations so objectives are reached.
An organizational structure that is military in nature is the
Answer: A (line structure)
In a line structure orders pass straight down a chain of command, as in the army.
The efficiency of an organization is enhanced by
Answer: D (skilled manpower)
Skilled workers do their jobs better and faster, which raises efficiency.
The concept which focuses on consumers in decision-making is
Answer: B (marketing concept)
The marketing concept starts from what consumers want and plans the business around it.
Market skimming is an example of
Answer: C (pricing policy)
Skimming sets a high price for a new product and lowers it later, so it is a pricing policy.
The most important attributes in a sale of goods contract are
Answer: B (price and goods)
A contract of sale of goods is one where the seller transfers goods to the buyer for money called the price. Without goods and a price there is no sale of goods.
Unresolved disputes between the employer and employees are usually referred to the
Answer: D (industrial arbitration tribunal)
Trade disputes that cannot be settled are referred to the Industrial Arbitration Panel or tribunal.
The primary memory component of a computer is the
Answer: A (cache)
Cache is fast memory beside the processor and is part of primary memory; assemblers and compilers are programs.
A customer with XYZ Plc sent money through his account to his sister's account in another branch. This is an example of
Answer: D (e-banking)
Moving money between bank accounts electronically is e-banking.
The economic environment of a business is concerned with
Answer: C (the growth rate)
The economic environment covers the state of the economy, such as its growth rate, inflation and interest rates.
A firm that disposes its wastes properly is discharging its
Answer: B (environmental responsibility)
Proper waste disposal protects the environment.