58 questions. Try each one, then open the answer to check yourself and read the explanation.
A bonded warehouse is a place for keeping
Answer: B (dutiable goods.)
A bonded warehouse holds imported goods on which duty has not yet been paid.
Which of the following can quote its shares on the stock exchange?
Answer: D (Public Limited Company)
Only public limited companies can have their shares quoted on the stock exchange.
If a businessman wants to insure against dishonesty of the cashier, he will take
Answer: C (a fidelity guarantee cover.)
Fidelity guarantee covers losses from employees' dishonesty.
Which of the following describes the reason for international trade?
Answer: B (Comparative cost advantage)
Countries trade because each can produce some goods at a lower opportunity cost: comparative cost advantage.
Small scale retailers continue to survive in spite of serious competition from large scale retailers because they
Answer: B (maintain personal relationship with customers.)
Small retailers keep customers through personal relationships and attention.
Which of the following factors is not to be considered in starting a retail trade?
Answer: D (Level of tax payable)
The size, nature and capital of the business are key starting decisions; the level of tax is not a main factor in starting a small retail trade.
The import of foreign-produced goods to be re-exported is known as
Answer: C (entrepôt trade.)
Importing goods in order to re-export them is entrepôt trade.
One roof containing a number of shops is a
Answer: C (department store.)
A department store has many shops (departments) under one roof.
The selling of articles from place to place on foot is
Answer: B (itinerant trading.)
Itinerant traders (hawkers) move from place to place selling goods.
A company whose shares are not easily transferable is a
Answer: A (private limited company.)
A private company restricts the transfer of its shares.
Which of the following must be stated in the article of association?
Answer: C (The method of issue and transfer of shares)
The articles contain internal rules such as how shares are issued and transferred; the others are in the memorandum.
Which of the following insurance principles states that a person must be in a position to suffer financially in the event of a loss?
Answer: C (Insurable interest)
Insurable interest means the insured must lose money if the event happens.
Catalogues are mostly used by
Answer: C (mail order firms.)
Mail order firms sell through catalogues.
The main function of a thrift and credit cooperative society is to
Answer: D (encourage members to save.)
A thrift and credit society encourages saving and gives members loans.
The exchange of goods for goods in home trade is known as
Answer: B (trade by barter)
Exchanging goods directly for goods is barter.
Which of the following is the safest way of sending important documents through the post?
Answer: A (Registered mail)
Registered mail is signed for and compensation is paid if it is lost.
Which of the following is not true of the stock exchange?
Answer: A (It is a commodity market)
The stock exchange deals in securities, not commodities.
A cheque issued in January 1997 which the holder failed to present for payment until September 1997 is called a
Answer: D (stale cheque.)
A cheque more than six months old is stale.
When the buyer of an existing share is to receive the pending dividend, the price is
Answer: A (cum div.)
Cum div means 'with dividend': the buyer gets the coming dividend.
What is the name of the service where a bank makes regular payment on behalf of its customers?
Answer: C (Standing order)
A standing order instructs the bank to make regular payments for the customer.
The enterprise whose main objective is to provide the public with essential services is known as
Answer: D (public corporation.)
Public corporations exist mainly to provide essential services.
Which of the following is a more suitable medium for advertising a new tractor?
Answer: D (Trade fair)
At a trade fair a new tractor can be displayed and demonstrated to farmers.
Which of the following is an advertising function?
Answer: B (Persuading)
Advertising persuades people to buy.
The document of title to goods being shipped abroad is known as
Answer: D (bill of lading.)
The bill of lading is the document of title for goods shipped abroad.
The practice whereby customers purchase goods without being attended to by shop assistants is
Answer: C (self service.)
In self-service, customers pick goods themselves.
In which of the following organizations are members entitled to one vote, irrespective of the number of shares held?
Answer: D (Co-operative society)
Co-operatives follow 'one member, one vote'.
Mobile Shopping involves selling
Answer: A (from motor van.)
Mobile shops sell from vans that move to customers.
The provision of adequate number of berths by which ships can load and off-load is the function of the
Answer: B (Ports Authority.)
The ports authority provides and maintains berths.
Which of the following is not a disadvantage of a one-man-business?
Answer: C (Personal control of business)
Personal control is an advantage of a sole proprietorship.
Unlimited liability in business implies that the
Answer: D (owners private property can be used to settle the business debts.)
With unlimited liability, the owner's private property can be taken to pay business debts.
Sole proprietorship is a form of business owned by
Answer: A (an individual.)
A sole proprietorship is owned by one person.
Which of these qualities guarantees the keeping of money for a long period?
Answer: C (Durability)
Durable money does not wear out, so it can be kept for a long time.
Which of the following is not a source of fund for sole proprietorship?
Answer: D (Government bonds)
Government bonds are a way for government to borrow, not a source of funds for a sole trader.
Which of the following is not an advantage of partnership?
Answer: C (Freedom to terminate business)
A partner cannot freely end the business alone; the partnership is bound by agreement, so this is not an advantage.
Which of the following is used for a single payment of many people at the same time through a bank instead of writing separate cheques?
Answer: B (Credit transfer)
A credit transfer pays many people with one cheque through the bank.
The Legal document that gives an individual power to protect his own piece of invention is called
Answer: C (patent right.)
A patent protects an inventor's invention.
The work of actuaries is to
Answer: B (calculate insurance premiums.)
Actuaries use statistics to work out risks and premiums.
Government financial grants is a source of capital to a
Answer: C (public corporation.)
Public corporations are funded by government grants.
Which of the following is not a feature of a co-operative society?
Answer: C (Votes are according to shares held)
In a co-operative each member has one vote, whatever shares he holds.
The practice of selling a product below the cost price to attract customers to a shop is known as
Answer: B (loss leader.)
A loss leader is sold below cost to draw customers who will buy other goods.
Which of the following is not contained in a deed of partnership?
Answer: D (Rate of taxation)
The deed sets out partners' names, capital and profit-sharing; tax rates are set by government, not the deed.
Which of the following is not a function of a retailer?
Answer: D (Financing manufacturers)
Financing manufacturers is a wholesaler's function, not a retailer's.
A firm on the stock exchange which agrees to buy shares not bought after a public offer is
Answer: D (an underwriter.)
An underwriter guarantees to take up shares the public does not buy.
Which of the following ancillary services makes it possible for goods to be where they are required?
Answer: C (Transportation)
Transport moves goods to where they are needed.
Use the following information: Ojo bought a bicycle for ₦20,000, and repaired it at a cost of ₦5,000. He then sold the bicycle for ₦30,000.
What was his net profit?
Answer: D (₦5,000)
Total cost = 20,000 + 5,000 = ₦25,000; net profit = 30,000 − 25,000 = ₦5,000.
Use the following information: Ojo bought a bicycle for ₦20,000, and repaired it at a cost of ₦5,000. He then sold the bicycle for ₦30,000.
What is the percentage of expenses over cost?
Answer: C (25%)
Expenses (repair) ÷ cost price × 100 = 5,000 ÷ 20,000 × 100 = 25%.
Use the following information: Ojo bought a bicycle for ₦20,000, and repaired it at a cost of ₦5,000. He then sold the bicycle for ₦30,000.
What is the cost of goods sold?
Answer: B (₦25,000)
The bicycle cost ₦20,000 plus ₦5,000 to repair it, so the cost of the bicycle sold is ₦25,000.
Which of the following mode of transport involves the use of tramps?
Answer: B (Sea transport)
Tramps are cargo ships with no fixed route.
Commerce 2 (essay)
(a) Define commerce.
(b) Explain six functions of commerce in an economy.
(a) Commerce is all activities involved in the buying, selling and distribution of goods and services from producers to consumers, i.e. trade and aids to trade.
(b) Any six, explained: links producers and consumers; encourages mass production by widening markets; creates employment; raises standard of living through variety of goods; bridges gap between production and consumption through transport and warehousing; reduces risk through insurance; provides finance through banks; creates awareness through advertising; links nations through foreign trade; earns government revenue.
Each function should show how commerce helps the economy.
Commerce 2 (essay)
(a) What is production?
(b) Explain the following factors of production:
(i) land;
(ii) labour;
(iii) capital
(c) State three functions of an entrepreneur.
(a) Production is the creation of goods and services to satisfy human wants; it is complete only when they reach the consumer.
(b)(i) Land – all natural resources (soil, minerals, water, forests); its reward is rent.
(ii) Labour – human effort, mental or physical, used in production; its reward is wages.
(iii) Capital – man-made goods used to produce other goods (machines, buildings, tools); its reward is interest.
(c) Any three: organises/combines the other factors; provides capital; bears risks; takes decisions; innovates; supervises the business.
Give the reward of each factor as well as its meaning.
Commerce 2 (essay)
(a) State four steps that can be taken by a customer opening a current account.
(b) Explain six functions of commercial banks.
(a) Any four: go to the bank and collect/fill the account opening form; provide passport photographs and valid identification; provide references/introducers (existing customers); give specimen signatures; make an initial deposit; collect the cheque book after the account is opened.
(b) Any six, explained: accept deposits; grant loans and overdrafts; provide means of payment (cheques, transfers, cards); safe custody of valuables; foreign exchange services; discount bills of exchange; give financial advice; act as agents for customers (pay bills, buy shares); electronic banking.
List the account-opening steps in order.
Commerce 2 (essay)
(a) State five features common to both public and private limited companies.
(b) State five provisions of a memorandum of association.
(a) Any five: limited liability; separate legal entity; continuity (perpetual succession); registered with the Registrar/CAC; have memorandum and articles of association; managed by a board of directors; capital divided into shares; must keep accounts and hold AGMs; owned by shareholders.
(b) Any five: name of the company (with Ltd or Plc); registered office address; objects of the company; statement that liability is limited; authorised share capital and how it is divided; association clause signed by the subscribers.
The memorandum's clauses are name, office, objects, liability, capital and association.
Commerce 2 (essay)
(a) Explain five measures a country could take to solve its balance of payment problems.
(b) State five disadvantages of international trade.
(a) Any five, explained: restrict imports (tariffs, quotas, bans); promote exports (incentives, export promotion); devaluation; exchange control; import substitution; foreign loans/IMF support; attract foreign investment; diversify exports; encourage tourism; cut government spending abroad.
(b) Any five: dumping harms local industries; over-dependence on other countries; spread of harmful goods/diseases; balance of payments problems; foreign exchange risks; may kill infant industries; political pressure/exploitation; importation of inflation; cultural erosion.
Each measure should cut imports or raise exports.
Commerce 2 (essay)
(a) What is a contract?
(b) List five elements of a contract.
(c) Explain six conditions that could lead to the termination of a contract.
(a) A contract is an agreement between two or more parties that is enforceable by law.
(b) Any five: offer; acceptance; consideration; capacity; intention to create legal relations; legality; genuine consent; proper form.
(c) Any six, explained: performance; mutual agreement; breach; frustration (impossibility); death or insanity of a party (personal contracts); bankruptcy; lapse of time; operation of law/illegality.
Explain each termination condition briefly.
Commerce 2 (essay)
(a) Define communication
(b) List and explain six functions of the post office.
(a) Communication is the transfer of messages, ideas or information from one person or place to another.
(b) Any six, explained: carries letters and parcels; registered and recorded delivery for valuables; express/speed post; post office boxes and private bags; poste restante; sells stamps and postal/money orders; savings bank services; business reply service; franking machines; courier (EMS) services.
Each post office service needs a short explanation.
Commerce 2 (essay)
(a) What is marketing?
(b) Explain five importance of marketing in an economy.
(a) Marketing is all activities involved in finding out consumers' needs and moving goods and services from producers to consumers to satisfy those needs at a profit.
(b) Any five, explained: links producers and consumers; creates employment; raises standard of living; encourages production and growth; provides information through market research; increases sales and profit; promotes competition and better quality; earns foreign exchange through export marketing.
Explain how each point helps the whole economy.
Commerce 2 (essay)
(a) List any five member countries of the Niger Basin Commission.
(b) State five objectives of the Niger Basin Commission.
(a) Any five: Nigeria; Niger; Mali; Guinea; Benin; Burkina Faso; Cameroon; Chad; Côte d'Ivoire.
(b) Any five: promote co-operation among member states in developing the River Niger basin; regulate navigation and transport on the river; develop agriculture and irrigation; develop hydro-electric power; develop fisheries; control flooding and pollution; promote trade among members; fair sharing of the river's water resources; carry out research on the basin.
The nine members are the countries the Niger and its tributaries pass through.
Commerce 2 (essay)
The following information relate to Jamiu & Co. Ltd. for the year ended 31st March, 2006 (₦):
Sales – 12,000
Opening stock – 3,000
Purchases – 7,000
Closing stock – 2,000
Wages – 500
Transport – 400
Electricity – 300
From the above figures, calculate (showing all workings) the
(a) cost of goods sold;
(b) net profit percentage;
(c) rate of turnover.
(a) Cost of goods sold = 3,000 + 7,000 − 2,000 = ₦8,000.
(b) Gross profit = 12,000 − 8,000 = ₦4,000; expenses = 500 + 400 + 300 = ₦1,200; net profit = ₦2,800; net profit percentage = 2,800 ÷ 12,000 × 100 ≈ 23.3%.
(c) Average stock = (3,000 + 2,000) ÷ 2 = ₦2,500; rate of turnover = 8,000 ÷ 2,500 = 3.2 times.
Net profit percentage is worked out on sales.