105 questions. Try each one, then open the answer to check yourself and read the explanation.
Extractive occupation is an example of
Answer: D (primary industry)
Extractive occupations (mining, farming, fishing) are primary industry.
The fastest means of sending a printed message from Lagos to London is through
Answer: D (telex)
Telex sends a printed message instantly; the telephone is fast but not printed.
An association that mobilizes the savings of members and channels them to needy members is known as
Answer: C (Thrift and Credit Co-operative)
Thrift and credit societies collect members' savings and lend them to members in need.
If Ade issues a Union Bank cheque to Chukwu, the Union Bank is the
Answer: A (drawee)
The bank on which a cheque is drawn is the drawee; Ade is the drawer and Chukwu the payee.
Which of the following is the clearing house for all the banks in the country?
Answer: C (The Central Bank of Nigeria)
The Central Bank is the bankers' bank and provides clearing facilities for all banks.
An overdraft can only be granted to the holder of a
Answer: D (current account)
An overdraft lets a current account holder draw cheques for more than his balance.
Use the diagram to answer the question.
The appropriate label for X on the diagram is
Answer: A (commerce)
Trade plus the aids to trade (transport, banking, etc.) make up commerce.
Use the diagram to answer the question.
The appropriate label for Y on the diagram is
Answer: D (aids to trade)
Transport, banking, advertising, communication and warehousing are aids to trade.
Use the diagram to answer the question.
The appropriate label for P on the diagram is
Answer: C (wholesale)
Home trade (O) is divided into retail and wholesale trade.
Which of the following is not a source of capital to a partnership?
Answer: D (Shares)
A partnership cannot sell shares to the public; only companies issue shares.
Which of the following functions of the wholesaler helps to stabilize prices?
Answer: E (Warehousing)
By storing goods when plentiful and releasing them when scarce, the wholesaler keeps prices steady.
Division of labour often results in
Answer: B (an increase in production)
Workers who specialise in one task become faster, so output increases.
Who among the following is not an agent?
Answer: C (Jobber)
Brokers, factors, auctioneers and manufacturers' representatives act for others; a jobber deals for himself.
Who among the following comes first in the channel of distribution?
Answer: D (Manufacturer)
Every channel starts with the producer (manufacturer).
The services rendered by Nigeria Airways to foreign companies are part of Nigeria's
Answer: C (invisible exports)
Services sold to foreigners earn money for Nigeria, so they are invisible exports.
One of the characteristics of a debenture is that
Answer: C (it yields a fixed rate of interest)
A debenture is a loan to the company that earns a fixed rate of interest.
Which of the following is a disadvantage of credit transaction?
Answer: D (encourages bad debts)
Some credit customers fail to pay, causing bad debts.
In which of the following do the goods become the property of the buyer on the payment of first instalment?
Answer: B (Deferred payment)
Under deferred payment ownership passes at once; under hire purchase only at the last instalment.
Which of the following government legislations is not aimed at consumer protection?
Answer: A (Taxation Law)
Tax laws raise government revenue; the others protect consumers.
Self-service, mail order and automatic vending are examples of
Answer: D (selling techniques)
They are methods (techniques) of selling to customers.
Span of control is defined as the
Answer: D (number of subordinates reporting directly to a supervisor)
Span of control is how many subordinates report directly to one supervisor.
An established pattern of relationships among members of an organization is known as
Answer: B (organizational structure)
Organizational structure is the set pattern of positions, authority and relationships in an organization.
The aspect of management which ensures that there is no deviation from the set standards is called
Answer: A (controlling)
Controlling checks performance against standards and corrects deviations.
When a Public Limited Company is incorporated it means that
Answer: C (it has a legal existence)
Incorporation creates the company as a legal person; it needs a trading certificate before it can start business.
The Manager,
Afribank,
Lagos.
Please pay to Great Nigeria Insurance Company, from my account, a sum of N125.00 at the end of every month until further notice, starting from this month.
A. A. Adewale
The above instruction is a
Answer: D (standing order)
An instruction to a bank to pay a fixed sum regularly until cancelled is a standing order.
Debenture is an example of
Answer: C (loan capital)
Debentures are long-term loans to a company, so they are loan capital.
Which of the following is not an acceptable collateral security for a bank loan?
Answer: D (Family building)
Good security must have clear ownership; a family house belongs to many people and cannot be pledged by one of them.
Which of the following is the basic principle of marketing concept?
Answer: C (Consumer-oriented)
The marketing concept puts the consumer's needs first.
The compensation given to brokers who sell shares to jobbers is called
Answer: B (commission)
Brokers are agents paid by commission.
The Stock Exchange does not deal in
Answer: B (treasury bills)
Treasury bills are short-term and traded on the money market, not the stock exchange.
The insurance principle which expects the insured and the insurer to disclose all facts about a proposed contract is called
Answer: A (uberrimae fidei)
Uberrimae fidei (utmost good faith) requires full disclosure of all material facts.
Which of the following is not covered by fire insurance policy?
Answer: A (Consequential loss)
A fire policy covers damage to property from fire, lightning and some explosions; loss of profit after a fire needs a separate consequential loss policy.
Which of the following is not considered when siting a retail shop?
Answer: A (Advertising)
Location depends on rent, access, customers and supply; advertising is not a siting factor.
The law stipulating that labels should contain full details about a product is known as the
Answer: D (Trade Description Act)
The Trade Descriptions Act requires true and full descriptions of goods.
A design which distinguishes the goods of one producer from those of others is called
Answer: C (trade mark)
A trade mark is a design or name that identifies one producer's goods.
Which of the following is responsible for the maintenance of the quality of goods produced?
Answer: C (Standards Organization of Nigeria)
The Standards Organisation of Nigeria sets and checks quality standards.
The document stating the particular country from which goods are imported is called
Answer: A (certificate of origin)
A certificate of origin states the country the goods come from.
Which of the following makes it possible for people to collect their letters at their convenient time?
Answer: C (Post Office Box)
Letters are kept in a rented post office box until the owner collects them.
Which of the following is not a function of the Nigerian Ports Plc?
Answer: A (Checking smuggling activities)
Checking smuggling is the work of the Customs Service, not the ports authority.
Which of the following indicates special crossing on a cheque? Two parallel lines with
Answer: D (the name of a particular bank)
A cheque with a special crossing can be paid only through the bank whose name is written between the parallel lines.
Which of the following is usually sent to prospective buyer when the seller expects payment of the goods despatched?
Answer: A (Pro-forma invoice)
A pro forma invoice asks the buyer to pay before the goods are released.
A company which acquires more than 50% voting shares of another company is called
Answer: E (a holding company)
Owning over half the voting shares makes it a holding company.
Which of the following is true of a merger?
Answer: D (The company formed acquires a new name)
In a merger (amalgamation) the firms combine into one company, usually under a new name.
Which of the following covers damages to the body of a ship and its machinery?
Answer: E (Hull insurance)
Hull insurance covers the ship itself and its machinery.
The major disadvantage of pipeline transportation is that it
Answer: D (is not easy to detect damages)
Pipelines are often underground, so leaks and damage are hard to find.
Which of the following are true of a bill of lading?
I. It is a means of payment in foreign trade
II. It is a document of title to goods
III. It is a contract of carriage
IV. It is usually drawn in triplicate
Answer: E (II, III and IV only)
A bill of lading is a document of title and a contract of carriage, usually in sets of three; it is not a means of payment.
The difference between the total amount owed to a country and the total amount owed by it is
Answer: E (balance of payments)
The balance of payments compares all receipts from and payments to other countries.
Which of the following is not true of branding?
Answer: D (Encourages pilfering)
Branding helps identification, sales and advertising; it does not encourage pilfering.
Which of the following is a disadvantage of air transport?
Answer: C (High cost)
Air freight is the most expensive means of transport.
Which of the following is not a characteristic of Charter Party?
Answer: E (An association of ship owners)
An association of shipowners is a shipping conference, not a charter party.
Which of the following is issued to the exporter or his agent when the goods have been loaded in the ship?
Answer: B (Mate's receipt)
The mate's receipt is given when goods are loaded and is later exchanged for the bill of lading.
A common carrier is
Answer: E (one who engages in the transportation of goods and passengers for a fee)
A common carrier carries goods and passengers for anyone who pays.
The cost of goods sold divided by the average stock held during a trading period gives the
Answer: D (rate of stock turnover)
Rate of stock turnover = cost of goods sold ÷ average stock.
An organised market for securities is called
Answer: C (Stock Exchange Market)
The stock exchange is the organised market for securities.
A carton of spoons valued at N3,000.00 was invoiced at N300 only. Which of the following documents would be used by the seller to correct the error?
Answer: E (A debit note for N2,700.00)
The buyer was undercharged by N3,000 − N300 = N2,700, so the seller sends a debit note for N2,700.
Which of the following is not a means by which banks facilitate foreign trade?
Answer: C (Open market operations)
Open market operations are a Central Bank tool of monetary control, not a service to traders.
Which of the following is a characteristic of a private company?
Answer: C (Shares are not dealt in on the stock exchange)
A private company cannot offer shares to the public, so its shares are not quoted on the stock exchange.
Food and Drugs Act, Weights and Measure Act, Standards Organization of Nigeria, etc are aimed at
Answer: E (protecting consumers)
These laws and bodies protect consumers.
The reorganization of public enterprises to operate as profit-making ventures is known as
Answer: D (commercialization)
Commercialisation makes public enterprises run for profit while still owned by government.
The intangible benefits arising from the business connections and reputation of a firm is called
Answer: B (goodwill)
Goodwill is the value of a firm's reputation and customer connections.
Which of the following monitors people's opinion about a firm and takes measures to correct adverse impressions?
Answer: A (Public Relations)
Public relations builds goodwill and corrects bad impressions of the firm.
Which of the following mostly serves as a useful promotional device for consumer goods?
Answer: E (Packaging)
Attractive packaging catches buyers' eyes on the shelf and helps sell consumer goods.
Which of the following is a function of advertising?
Answer: A (Stimulation of demand)
Advertising creates and increases demand for products.
The main reason for advertising an already existing line of products is to
Answer: E (retain old customers)
Advertising an established product reminds buyers and keeps existing customers loyal.
The principle of insurance that restores the insured to the position he occupied immediately before the loss occurred is called
Answer: B (indemnity)
Indemnity puts the insured back in the same financial position as before the loss.
Business activities that direct the flow of goods and services from the producer to the consumer is
Answer: D (marketing)
Marketing covers all activities that move goods from producer to consumer.
Capital owned is synonymous with the
Answer: C (net worth)
Capital owned = assets − liabilities, which is the net worth.
The products that are regularly and easily bought by customers through habit are called
Answer: E (convenience goods)
Convenience goods, such as bread, soap and matches, are bought frequently and by habit.
A business unit whose membership ranges from 2 to 20 is a
Answer: B (partnership)
An ordinary partnership has 2 to 20 partners.
Which of the following is a legal tender?
Answer: B (Bank notes)
Bank notes (and coins) must by law be accepted in payment of debts.
Which of the following takes the shortest time and is the most accurate means of communication?
Answer: A (Telephone)
A telephone call is instant and the parties can confirm details directly.
When an assured is unable to honour his obligation in an insurance contract thereby terminating it before maturity, he could only receive
Answer: C (the surrender value)
If a life policy is ended before maturity, the insured gets only the surrender value.
Assets of a business which cannot easily be changed into cash are known as
Answer: B (fixed capital)
Fixed assets such as land and buildings are not easily turned into cash.
The imposition of high tariff on imported goods by the customs authority is to
Answer: E (protect infant industries)
High import duties make foreign goods dearer and protect young home industries.
Who among the following has no right of ownership to a business organization?
Answer: D (Debenture holder)
A debenture holder is a creditor who lent money to the company, not an owner.
From the following figures in the accounting books of XY company, calculate its working capital: stock N2,000; Cash N1,500; Creditors N1,000; Bank overdraft N1,400.
Answer: C (N1,100)
Current assets N2,000 + N1,500 = N3,500; current liabilities N1,000 + N1,400 = N2,400; working capital = N1,100.
If goods invoiced at N1,500 were sold to Etim at less 15% trade discount, he would pay
Answer: C (N1,275.00)
15% of N1,500 = N225; N1,500 − N225 = N1,275.
An agent who takes possession of goods and sells in his own name but does not guarantee payment is known as
Answer: D (factor)
A factor holds the goods and sells in his own name; a del credere agent would also guarantee payment.
The total assets of Ogo Plc is N16,000 and the liabilities included loan N2,000, creditors N1,000 and electricity bill N2,000. Calculate the capital owned by the company
Answer: E (N11,000.00)
Capital owned = assets − liabilities = N16,000 − (N2,000 + N1,000 + N2,000) = N11,000.
Ali Plc with issued capital of N500,000 in N1.00 shares has for now requested shareholders to pay only 50k for each N1.00 share. The amount requested from the shareholders by the company is called
Answer: B (Called-up capital)
The amount the company has asked shareholders to pay is called-up capital.
When a company raises additional capital by selling shares directly to the public through insurance companies or investment houses, this is known as
Answer: C (private placing)
Placing shares with institutions such as insurance companies and investment houses is a private placing.
Which of the following is not one of the aims of indigenization? To
Answer: D (discourage foreign investors)
Indigenisation aimed to increase local control, not to drive away foreign investment.
One of the features of reinsurance is the
Answer: E (transfer of a portion of risk from one insurer to another)
In reinsurance an insurer passes part of a large risk to another insurer.
Which of the following is used in home trade?
Answer: B (Bank draft)
Bank drafts are used for payments within the country; the others are foreign trade documents.
To which of the following occupations does a broker belong?
Answer: C (Commercial)
A broker is a middleman in trade, so he is in a commercial occupation.
When firms that operate at different stages in the production of a commodity merge, this is known as
Answer: B (vertical integration)
Merging firms at different stages of the same production chain is vertical integration.
The document which gives the current price and terms of trade of a product is called
Answer: B (an invoice)
An invoice states the goods, their prices and the terms of sale.
Which of the following is not a function of merchant banks?
Answer: E (Printing new bank notes)
Only the Central Bank issues bank notes.
A restriction on the quantity of a commodity that could be imported is known as
Answer: C (quota)
A quota limits the quantity that can be imported.
The art of combining human, material and other resources to achieve the stated goals of a business is known as
Answer: E (organizing)
Organising brings together people and resources in a structure to achieve goals.
An agent with authority to bind his principal in everything, provided he acts lawfully, is called
Answer: C (a universal agent)
A universal agent has unlimited authority to act for the principal.
Mr. Ojo paid Nnamdi the sum of N5,000 for a piece of land without their signing any deed of sale. Which of the following elements of contract is lacking in the transaction?
Answer: B (Formality)
A sale of land must be in writing (a signed deed); this required form (formality) is missing.
When an industry is nationalized, ownership belongs to the
Answer: C (state)
Nationalisation transfers ownership to the state.
The payment made to the insured for loss incurred is
Answer: B (indemnity)
Indemnity is the compensation paid for the loss suffered.
When a bill of exchange is signed by a debtor, it is said to be
Answer: A (accepted)
The debtor (drawee) accepts a bill by signing it.
Commerce 2 (answer any five questions)
Explain any five reasons why commerce is important in the life of a nation.
Any five, explained: links producers and consumers – distributes goods to where they are needed; makes goods available at the right time (warehousing) and place (transport); creates employment for traders, transporters, bankers, insurers and others; raises the standard of living by giving people a variety of goods, including foreign goods; encourages specialisation and large-scale production by widening the market; earns foreign exchange and revenue for government (taxes, duties); provides finance through banks and the capital market; reduces risks through insurance; spreads information through advertising and communication; promotes international understanding and co-operation through foreign trade.
Each point needs a sentence of explanation.
Commerce 2 (answer any five questions)
(a) Give six features of a public company.
(b) Explain four reasons for winding up a public limited company.
(a) Any six: minimum of seven (now two) members with no maximum; separate legal entity – can sue and be sued; limited liability of shareholders; shares offered to the public and freely transferable/quoted on the stock exchange; perpetual succession; managed by a board of directors elected by shareholders; must publish audited annual accounts; formed by registering a Memorandum and Articles of Association; must obtain a trading certificate before starting business; ends 'Plc' in its name; holds statutory and annual general meetings.
(b) Any four, explained: inability to pay its debts (insolvency) – creditors petition the court; resolution of the shareholders (voluntary winding up); continuous losses; failure to start business within a year of incorporation or suspension of business for a year; completion of the purpose for which it was formed or expiry of its fixed period; membership falling below the legal minimum; fraud or illegal activity – court orders it; failure to hold the statutory meeting or file the statutory report; amalgamation/merger with another company.
Six features, four reasons; explain each reason in (b).
Commerce 2 (answer any five questions)
Explain five services of each of the following:
(a) Courier firms
(b) NITEL
(a) Courier firms (any five): fast delivery of letters, documents and parcels; door-to-door pick-up and delivery; local and international delivery; tracking of items; proof of delivery; safe handling and insurance of valuables; same-day/overnight delivery; delivery of goods bought online/by mail order.
(b) NITEL (any five): telephone services (local, trunk and international calls); telex; telegram/cablegram services; fax (facsimile) services; leased lines and data transmission for businesses; public call offices/payphones; mobile telephone (Mtel); directory and enquiry services; radio and satellite links for broadcasting.
Five services under each heading.
Commerce 2 (answer any five questions)
(a) Identify four environmental factors that affect business.
(b) Explain how each of the factors mentioned in 4(a) above affects business operations.
(a) Any four: economic; political/legal; social/cultural; technological; physical/natural (geographical); competitive.
(b) Effects (for the four chosen): economic – inflation, income levels, interest and exchange rates, unemployment affect demand and costs; political/legal – stability, government policies, laws, taxes and regulations decide what firms may do and their costs; social/cultural – customs, religion, tastes, population size and education decide what people buy; technological – new machines and methods affect efficiency, products and costs, old technology makes a firm uncompetitive; physical – climate, raw materials, terrain affect location and production; competitive – number and strength of rivals affect prices and market share.
Name four factors and, in (b), show how each one helps or limits a business.
Commerce 2 (answer any five questions)
(a) What is an advertising medium?
(b) State any five factors to be considered before choosing a particular advertising medium.
(c) Give eight examples of advertising media.
(a) An advertising medium is a channel or means through which an advertising message is passed to the public, e.g. newspapers, radio, television.
(b) Any five: cost of the medium and the advertising budget; the target audience (age, literacy, location); nature of the product; coverage/reach of the medium (local, national); the medium used by competitors; frequency and timing required; the impact and attractiveness of the medium (sound, colour, demonstration); permanence of the message; government regulations.
(c) Any eight: newspapers; magazines/journals; radio; television; cinema; billboards/posters; neon signs; handbills/leaflets; transit (vehicle) advertising; window display; trade fairs/exhibitions; catalogues/direct mail; the internet/social media; sky writing; sandwich men/loudspeaker vans.
Eight distinct media are needed in (c).
Commerce 2 (answer any five questions)
(a) Describe five ways by which commercial banks aid international trade.
(b) State and explain five functions of the Nigerian Export Promotion Council.
(a) Any five, described: issue letters of credit and documentary credits that guarantee payment to exporters; foreign exchange services – buying and selling foreign currencies; discounting and collecting bills of exchange; transferring money abroad (telegraphic and mail transfers, bank drafts); giving loans and advances to exporters and importers; providing status reports/trade references on foreign buyers; giving advice and information on foreign markets and regulations; acting as confirming houses and processing import/export documents (e.g. Form M).
(b) Any five, explained: promoting the development and diversification of Nigerian exports, especially non-oil exports; finding and providing information on export markets; organising and taking part in international trade fairs and exhibitions; administering export incentives (e.g. export expansion grant, duty drawback); advising government on export policy; training and advising exporters on standards, packaging and procedures; registering exporters; encouraging local production of exportable goods.
Describe how each bank service helps importers or exporters.
Commerce 2 (answer any five questions)
(a) Explain five factors which determine the span of control.
(b) Give five functions of the personnel department in a business establishment.
(a) Any five, explained: ability and experience of the manager; ability and training of the subordinates; nature of the work – simple, routine work allows a wide span, complex work a narrow one; how close together the subordinates are (geographical spread); the level of management – top managers have narrower spans; the amount of delegation; quality of communication and control techniques; time available to the manager for supervision.
(b) Any five: recruitment and selection of staff; training and development; staff welfare (health, housing, canteen); keeping staff records; promotion, transfer, discipline and dismissal; wage and salary administration; industrial relations – dealing with trade unions and grievances; ensuring health and safety at work; manpower planning; retirement and pension matters.
Explain each factor in (a); short points are enough in (b).
Commerce 2 (answer any five questions)
(a) Give five reasons why a life assurance policy may be taken.
(b) Describe any five insurance policies which a large department shop owner may take.
(a) Any five: to provide for dependants if the assured dies; as a form of saving (endowment); to provide money for old age/retirement; to pay for children's education; it can be used as collateral for a loan; tax relief on premiums; to repay a mortgage or debt on death; to provide funds for funeral expenses; surrender value available in an emergency.
(b) Any five, described: fire insurance – building and stock against fire; burglary/theft insurance – stock and cash against theft; fidelity guarantee – against fraud or theft by employees; employers' liability – claims by injured staff; public liability – injury to customers on the premises; cash-in-transit insurance; plate-glass insurance – shop windows and display glass; motor insurance – delivery vans; consequential loss – loss of profit after a fire; goods-in-transit insurance; group life/personal accident for staff.
In (b) say what risk each policy covers for the shop.
Commerce 2 (answer any five questions)
Explain five reasons for consumer protection, stating in each case one relevant government law aimed at the enforcement.
Any five reasons, each with a relevant law or agency: to protect consumers from fake, adulterated and harmful food and drugs – Food and Drugs Act/NAFDAC Act; to ensure goods meet quality standards – Standards Organisation of Nigeria Act; to prevent short measures – Weights and Measures Act; to prevent exploitation through high prices – Price Control Act; to prevent false or misleading descriptions and advertisements – Trade Descriptions Act/Advertising Practitioners Act; to protect buyers on credit from unfair terms and repossession – Hire Purchase Act; to give buyers rights where goods are faulty or not as described – Sale of Goods Act; to provide means of redress for complaints – Consumer Protection Council Act; to prevent monopolies and unfair trade practices – Restrictive Trade Practices legislation.
Each of the five points must name a reason and a matching law.
Commerce 2 (answer any five questions)
(a) State five objectives of establishing the Economic Community of West African States.
(b) Give five reasons why the Lake Chad Basin Commission was established.
(a) Any five: to promote economic co-operation and integration among member states; to remove customs duties and other trade barriers between members; to establish a common external tariff (customs union); to allow free movement of people, goods, services and capital; to develop transport and communication links in the region; to harmonise agricultural, industrial and monetary policies; to raise the standard of living of the people; to promote peace and stability.
(b) Any five: to manage and share the waters of Lake Chad fairly among member states; to develop agriculture, irrigation and fisheries in the basin; to control the drying up of the lake, desertification and environmental damage; to promote joint projects (roads, livestock development); to encourage trade and co-operation among Nigeria, Niger, Chad and Cameroon; to settle disputes over the use of the basin; to control pests and diseases (e.g. tsetse fly).
Five points in each part.