52 questions. Try each one, then open the answer to check yourself and read the explanation.
Where a number of insurance companies are liable under one Policy, the principle applicable is
Answer: B (Contribution.)
When several insurers cover the same risk, they share the claim under the principle of contribution.
Buying and selling stocks in the stock exchange in anticipation of changes in the share prices is
Answer: D (speculation.)
Speculation is dealing in shares expecting prices to change in order to make a profit.
Another term for a dishonoured cheque is
Answer: B (a bounced cheque.)
A cheque the bank refuses to pay is said to have 'bounced'.
Which of the following is an example of life assurance?
Answer: D (Endowment policy)
An endowment policy is a life assurance policy that pays on a fixed date or on earlier death.
The main concern of commerce is to
Answer: C (exchange and distribute goods and services.)
Commerce is concerned with the exchange and distribution of goods and services from producers to consumers.
The organized effort of consumers to protect themselves against the unfair practices of businessmen is
Answer: B (consumerism.)
Consumerism is the organised movement of consumers to protect their rights against unfair business practices.
Which of the following legislations aims primarily at protection of consumers
Answer: B (Trade Description Act)
The Trade Descriptions Act forbids false descriptions of goods, protecting buyers.
In a law of contract a counter offer operates as
Answer: C (a rejection.)
A counter offer changes the terms, so it rejects (ends) the original offer.
An economic policy which encourages government ownership of businesses is called
Answer: B (Nationalization.)
Nationalisation is government taking over ownership of businesses.
Lack of permanent record for the message receiver is a disadvantage of
Answer: A (television.)
A television advert is gone once shown, unlike printed media that can be kept.
Which of the following abbreviations allows the drawer of a document to correct any error?
Answer: D (E. & O.E.)
E & OE (errors and omissions excepted) on an invoice lets the seller correct mistakes later.
Use the following information relating to Bala Enterprises (₦): Premises 32,000; Motor vehicle 15,000; Debtors 15,000; Stock 20,000; Creditors 10,000.
The value of current assets is
Answer: A (₦35,000)
Current assets = debtors + stock = 15,000 + 20,000 = ₦35,000.
Use the following information relating to Bala Enterprises (₦): Premises 32,000; Motor vehicle 15,000; Debtors 15,000; Stock 20,000; Creditors 10,000.
What is the value of the working capital?
Answer: C (₦25,000)
Working capital = current assets − current liabilities = 35,000 − 10,000 = ₦25,000.
Use the following information relating to Bala Enterprises (₦): Premises 32,000; Motor vehicle 15,000; Debtors 15,000; Stock 20,000; Creditors 10,000.
The value of fixed assets is
Answer: B (₦47,000)
Fixed assets = premises + motor vehicle = 32,000 + 15,000 = ₦47,000.
A clean bill of lading is so called because
Answer: D (it shows no record of damaged goods.)
A clean bill of lading carries no remark that the goods were damaged or short when shipped.
When an importer has been overcharged for goods supplied, the exporter issues him with a
Answer: D (credit note.)
A credit note reduces the amount the buyer owes, e.g. after an overcharge.
When a cheque is paid by the bank on which it is drawn, the cheque is
Answer: D (cleared.)
A cheque that the drawee bank has paid has been honoured (cleared).
Risk bearing in business organization is a function of the
Answer: B (entrepreneur.)
The entrepreneur bears the risks of the business.
The worth of a life assurance policy before its maturity date is
Answer: B (surrender value.)
The surrender value is what the insurer pays if the policy is cashed in before it matures.
One disadvantage of advertising is that it
Answer: A (could be misleading.)
Adverts can exaggerate or give false claims, misleading consumers.
The business unit that applies the principle of one man, one vote is
Answer: D (Co-operative society.)
In a co-operative each member has one vote however many shares he holds.
The Water Corporation is an example of
Answer: B (Public Enterprise.)
A water corporation is owned and run by government, so it is a public enterprise.
A partnership is dissolved due to
Answer: C (insanity of a partner.)
Death, bankruptcy or insanity of a partner can end a partnership.
A document that contains the relationship between the company and outsiders is
Answer: B (Memorandum of Association.)
The memorandum of association governs the company's external relations.
An insurance broker is involved in
Answer: C (commercial occupation.)
Insurance is an aid to trade, so an insurance broker is in a commercial occupation.
The size of an enterprise is determined by the
Answer: C (amount of capital invested.)
A common measure of the size of a firm is the capital invested in it.
Which of the following functions is not performed by trade association?
Answer: C (Credit facilities)
Trade associations do research, set standards and give information, but they do not give credit to members.
The fees charged on postal order by the post office is
Answer: C (poundage.)
The small fee charged on a postal order is called poundage.
The document issued by a warehouse keeper for goods taken into the store is
Answer: D (dock warrant.)
A dock (warehouse) warrant is issued by the warehouse keeper as a receipt and title to goods stored.
Which of the following is a verbal means of communication?
Answer: D (Telephone)
On the telephone people speak to each other, so it is verbal (oral) communication.
Regarding the consumer as the King who must be satisfied is the main emphasis of
Answer: D (marketing concept.)
The marketing concept puts consumer satisfaction first.
Which of the following is a function of marketing?
Answer: A (Branding.)
Branding is a marketing activity; planning and organising are general management functions and manufacturing is production.
A component of marketing mix that is put in a consumable form to satisfy the consumer is
Answer: A (product.)
The product is the good or service offered to satisfy consumers.
Goods become the property of the buyer on the transfer of liability and: possession without immediate payment under the
Answer: B (credit sale agreement.)
In a credit sale, ownership passes to the buyer at once although payment is made later; under hire purchase ownership passes only after the last instalment.
The value at which one country obtains another country's currency is
Answer: B (exchange rate.)
The exchange rate is the price of one currency in terms of another.
Specializing in the sale of one line of goods is the main feature of
Answer: B (chain stores.)
Chain (multiple) stores usually specialise in one line of goods, such as shoes, sold through many branches.
One objective of the European Union is to
Answer: C (eliminate all tariffs and quotas among member countries.)
The EU removes tariffs and quotas so goods move freely among members.
Which of the following persons is a part of a business internal environment?
Answer: A (Employee)
Employees work inside the business, so they are part of its internal environment; suppliers, creditors and customers are external.
A person or a firm to whom a sum of money is owed is
Answer: D (creditor.)
A creditor is one who is owed money.
A general tax which applies at each point of exchange of goods and services is
Answer: C (a value added tax.)
Value added tax is charged at each stage where goods or services change hands.
If a business uses part of its profit to develop the area where it operates, the business is fulfilling its
Answer: C (social responsibility.)
Developing the host community is part of a firm's social responsibility.
Production ends when goods and services
Answer: A (reach the final user.)
Production is complete only when goods reach the final consumer.
The process of converting a non-profit making organization to a profit making business is
Answer: D (commercialization.)
Commercialisation makes a government enterprise run on a profit basis without selling it.
A distinctive symbol, title or design that readily identifies the company and its products is
Answer: B (Trade mark.)
A trade mark is a distinctive symbol or design that identifies a firm and its products.
Commerce 2 (theory)
Explain five ways in which commerce is important in the life of a nation.
Any five, explained: links producers and consumers (distribution); raises the standard of living by making varied goods available; creates employment in trade, banking, transport, insurance etc.; encourages production and specialisation by widening markets; earns foreign exchange through foreign trade; provides government revenue through taxes and duties; promotes international understanding and co-operation; encourages savings and investment through banks and the stock exchange; aids development of infrastructure (transport, communication).
Each point should say how the nation benefits.
Commerce 2 (theory)
(a) List four features of a self service shop.
(b) State four disadvantages of a self service shop.
(c) State four importance of working capital to a business.
(a) Any four: customers serve themselves; goods are pre-packed and price-marked; goods displayed on open shelves; baskets/trolleys provided; payment at check-out points near the exit; few sales attendants; usually cash sales.
(b) Any four: risk of shoplifting; little personal attention or advice; no credit; impulse buying may make customers overspend; high cost of setting up (shelves, security); goods may be damaged by handling; unsuitable for goods needing explanation.
(c) Any four: pays day-to-day expenses (wages, rent, bills); buys stock/raw materials; allows the firm to take discounts by paying promptly; keeps the business solvent – able to pay short-term debts; enables credit to customers; helps face emergencies; shows financial health to creditors.
(c) is about working capital, separate from the shop questions.
Commerce 2 (theory)
(a) State four functions of a wholesaler to a retailer.
(b) Explain five advantages of small scale retail business over a large scale business.
(a) Any four: breaks bulk; grants credit; gives information and advice; stores goods so the retailer need not hold large stocks; offers variety of goods; delivers goods; pre-packs and labels; advertises products.
(b) Any five, explained: personal attention to customers; credit to known customers; small capital needed to start; convenient location near homes and long opening hours; quick decisions by the owner; sells in very small quantities; flexible – easy to change line of goods; customers may bargain over prices; secrecy of affairs.
In (b) compare with large shops such as supermarkets and department stores.
Commerce 2 (theory)
Explain each of the following classes of insurance:
(a) Marine insurance;
(b) Accident insurance;
(c) Group insurance;
(d) Fidelity Guarantee insurance;
(e) Consequential Loss insurance.
(a) Marine insurance – covers ships (hull), cargo and freight against risks at sea such as sinking, fire, piracy and collision.
(b) Accident insurance – covers losses from accidents other than at sea and fire, e.g. motor, personal accident, burglary, employers' liability.
(c) Group insurance – a single policy taken by an employer covering the lives (or health) of all employees as a group.
(d) Fidelity guarantee insurance – protects an employer against loss of money or goods through fraud or dishonesty of employees.
(e) Consequential loss insurance – covers loss of profit and continuing expenses when a business is stopped by an insured event such as fire.
Say what risk each class covers and who takes it.
Commerce 2 (theory)
(a) Explain four functions rendered by a courier firm.
(b) Explain six functions rendered by a Telecommunication firm.
(a) Any four, explained: fast door-to-door delivery of letters, documents and parcels; collection of items from senders; tracking of items in transit; delivery within the country and abroad; insured/secure delivery of valuable items; proof of delivery; cash-on-delivery services.
(b) Any six, explained: provides telephone (fixed and mobile) services; internet/data services; text messaging (SMS); e-mail and video conferencing facilities; mobile money/payment services; broadcasting links (radio/TV transmission); fax and telex; creates jobs; links businesses with customers and suppliers locally and internationally.
Explain each function briefly; a bare list earns fewer marks.
Commerce 2 (theory)
(a) List five media of public relations.
(b) Enumerate five types of after sales service.
(c) State five benefits of after sales service.
(a) Any five: newspapers and magazines (press releases); radio; television; company newsletters/journals; press conferences; exhibitions and trade fairs; sponsorship of events; open days/factory visits; websites and social media; seminars.
(b) Any five: free delivery; free installation; repairs and maintenance; guarantee/warranty; supply of spare parts; training of users; replacement of faulty goods; advice on use.
(c) Any five: wins customer confidence and loyalty; increases sales; gives the firm a good image; helps it beat competitors; gives feedback for improving products; makes customers' use of goods easier; encourages repeat purchases.
After-sales services are what the seller does after the goods are sold.
Commerce 2 (theory)
(a) Distinguish between a broker and a factor.
(b) State three duties of an employer to an employee.
(c) State four duties of an employee to an employer
(a) A broker brings buyers and sellers together but does not hold the goods; he buys/sells in the principal's name and earns brokerage. A factor is given possession of the goods, may sell in his own name, may give credit and fix prices, and earns a factor's commission.
(b) Any three: pay agreed wages promptly; provide safe working conditions; indemnify employee for losses in the course of work; give leave/holidays; provide welfare and training; treat employee fairly and give notice before termination.
(c) Any four: obey lawful instructions; work diligently and with skill; be honest and loyal; keep business secrets; take care of the employer's property; be punctual; account for money and property received.
The key difference in (a) is possession of the goods.
Commerce 2 (theory)
(a) What is turnover in commerce?
(b) List and explain six factors that determine the turnover of a product.
(a) Turnover is the total value of sales made by a business in a given period (also the rate at which stock is sold and replaced).
(b) Any six, explained: price of the product – lower prices raise sales; quality of the product; advertising and sales promotion; nature of the goods (perishables sell fast, durables slowly); location of the business; size of the market/population; income of consumers; competition; credit facilities; season/fashion; efficiency of distribution; attitude of sales staff.
Each factor should say how it raises or lowers sales.