49 questions. Try each one, then open the answer to check yourself and read the explanation.
Commercial activities received a great boost in West Africa due to contact with
Answer: B (Europeans.)
Trade in West Africa grew greatly after contact with European traders, who brought money, banking and shipping.
A business which becomes insolvent may result in
Answer: C (liquidation.)
A business that cannot pay its debts may be wound up (liquidated).
Which of the following activities does not belong to extractive occupations?
Answer: B (Carving)
Carving shapes wood into products, which is manufacturing; the others take resources from nature.
The facility which is not provided by the ports authority is
Answer: C (tarmac.)
Tarmac (runway/apron) is an airport facility; ports provide berths, warehouses and cranes.
A cheque could be dishonoured as a result of
Answer: A (insufficient funds.)
A bank refuses to pay a cheque when there is not enough money in the drawer's account.
When a company sells shares to existing shareholders at preferential rates, this is
Answer: A (rights issue.)
A rights issue offers existing shareholders new shares at a favourable price; bonus shares are given free.
The conversion of raw materials into finished goods is performed by
Answer: D (the manufacturing industry.)
Manufacturing turns raw materials into finished goods.
Which of the following is not a factor of production?
Answer: C (Exchange)
The factors of production are land, labour, capital and entrepreneurship; exchange is not one.
Use the following information: Adama's opening stock is D5,000. He purchased goods worth D30,000. His closing stock was D7,000 and sales D55,000.
What is the average stock?
Answer: C (D6,000)
Average stock = (opening + closing) ÷ 2 = (5,000 + 7,000) ÷ 2 = D6,000.
Use the following information: Adama's opening stock is D5,000. He purchased goods worth D30,000. His closing stock was D7,000 and sales D55,000.
What is the cost of goods sold?
Answer: D (D28,000)
Cost of goods sold = 5,000 + 30,000 − 7,000 = D28,000.
Use the following information: Adama's opening stock is D5,000. He purchased goods worth D30,000. His closing stock was D7,000 and sales D55,000.
What is the rate of stock turnover?
Answer: C (4.7 times)
Rate of turnover = cost of goods sold ÷ average stock = 28,000 ÷ 6,000 ≈ 4.7 times.
Which of the following is a source of short term capital?
Answer: A (Trade credit)
Trade credit lets a business pay suppliers later, usually within weeks, so it is short-term finance.
The most suitable channel for the sale of an aircraft is
Answer: D (manufacturer— consumer.)
Costly, specialised goods like aircraft are sold directly by the manufacturer to the buyer.
The duty payable on goods produced locally is
Answer: B (excise duty.)
Excise duty is a tax on goods produced within the country.
An overdraft is granted to holders of
Answer: D (current accounts.)
Only current account holders can be allowed to overdraw their accounts.
The amount of capital used in the day-to-day running of a company is
Answer: A (working capital.)
Working capital (current assets less current liabilities) finances day-to-day operations.
An example of an invisible item of trade is
Answer: B (shipping.)
Services such as shipping, insurance and banking are invisible items; oil, machinery and textiles are visible.
In a hire purchase agreement, the buyer is the
Answer: B (hirer.)
Under hire purchase the buyer is called the hirer and the seller the owner.
Which of the following terms is not used in price quotation for goods?
Answer: A (E & O.E)
CIF, ex works and FAS state what the quoted price covers; E & OE (errors and omissions excepted) is written on invoices.
Mr. Ojo paid Noak the sum of ₦3,000 for a piece of land without signing a deed of sale. The element of contract which is lacking in the transaction is
Answer: B (formality.)
A sale of land must be made in writing by deed; without it the contract lacks the required form (formality).
The expert responsible for the calculation of probability of risks in insurance is
Answer: A (an actuary.)
An actuary uses statistics to calculate the probability of risks and fix premiums.
A disadvantage of rail transport is that
Answer: C (it is not flexible.)
Trains run only on fixed tracks and timetables, so rail transport is not flexible.
The advertising medium that makes only audio impression is
Answer: B (radio.)
Radio is heard but not seen.
Which of the following activities aims at increasing sales?
Answer: D (Advertising)
Advertising creates awareness and persuades people to buy, increasing sales.
A machine supplied by the post office to organizations to imprint stamps on their letters is
Answer: D (franking machine.)
A franking machine prints postage marks on letters instead of using stamps.
The marketing mix element which ensures that goods are available when and where needed is
Answer: A (place.)
Place (distribution) makes goods available where and when customers want them.
An example of a computer's output device is a
Answer: C (monitor.)
A monitor displays results, so it is an output device; keyboard, mouse and scanner put data in.
Ocean liners are vessels that
Answer: A (sail at scheduled times on fixed routes.)
Liners run on regular, published routes and timetables; tramps go wherever there is cargo.
The process of placing the right people in the right position in an organization is
Answer: C (staffing.)
Staffing is recruiting and placing suitable people in the right jobs.
The right of an unpaid seller does not include
Answer: A (declaring the buyer bankrupt.)
An unpaid seller may keep the goods (lien), stop them in transit or resell them; only a court can declare a person bankrupt.
The coming together of people who engage in trade and industry in a particular area is
Answer: C (a chamber of commerce.)
A chamber of commerce unites people in trade and industry in an area.
The term which enjoins the buyer to examine goods thoroughly before making a purchase is
Answer: D (caveat emptor.)
Caveat emptor means 'let the buyer beware': the buyer must examine goods before buying.
Which of the following is not a tool for sales promotion?
Answer: A (Publicity)
Exhibitions, competitions and free samples are sales promotion tools; publicity is unpaid news coverage, not sales promotion.
The organization of local and international trade fairs is the responsibility of
Answer: C (chambers of commerce.)
Chambers of commerce organise trade fairs to promote trade.
Under the principle of subrogation, the insurer has the right to
Answer: C (take over any legal rights of the insured.)
After paying a claim, the insurer takes over the insured's rights, e.g. to sue the person who caused the loss.
The law that protects a musician's work from piracy is
Answer: B (copyright.)
Copyright law stops others from copying an author's or musician's work without permission.
Which of the following countries is a member of the Lake Chad Basin Commission?
Answer: B (Cameroon)
Lake Chad borders Nigeria, Niger, Chad and Cameroon, which are members of the commission.
The transfer of ownership of government businesses to individuals is
Answer: C (privatization.)
Selling government businesses to private individuals is privatisation.
One of the aims of ECOWAS is to
Answer: D (promote trade within the region.)
ECOWAS aims to promote trade and economic co-operation among West African states.
Which of the following businesses relies on government subvention for its operation?
Answer: A (Public Corporation)
Public corporations are government-owned and receive government grants (subventions).
Balance of payment deficits may be caused by
Answer: D (unrestricted imports.)
When imports are not controlled, payments abroad can exceed earnings, causing a deficit.
Commerce 2 (theory)
(a) What is E-Commerce?
(b) State four advantages and four disadvantages of privatization.
(a) E-commerce is the buying, selling and payment for goods and services through electronic means, especially the internet.
(b) Advantages (any four): improves efficiency as owners seek profit; saves government money spent on subsidies; government earns revenue from the sale; encourages private/foreign investment; widens share ownership; reduces political interference and corruption; better quality services.
Disadvantages (any four): job losses; higher prices for consumers; private monopolies may exploit consumers; wealth concentrated in few hands; foreign domination of the economy; essential services may be neglected in poor areas; government loses future revenue/control of strategic industries.
(a) and (b) are separate topics; answer both.
Commerce 2 (theory)
(a) Define communication.
(b) List six means of communication in business.
(c) In what four ways is communication important to a business?
(a) Communication is the passing of information, ideas or messages from one person or place to another so that it is understood.
(b) Any six: letters/postal services; telephone/mobile phone; e-mail; internet/social media; fax; courier services; telegram/telex; radio and television; newspapers; memos and notice boards; meetings; intercom.
(c) Any four: links buyers and sellers (orders, enquiries); helps advertising and sales; enables quick decisions and coordination within the firm; saves time and travel costs; helps management give instructions and get feedback; helps in banking and payments; keeps the firm informed about markets and prices.
Means in (b) can be oral, written or electronic.
Commerce 2 (theory)
Explain the following retail outlets:
(i) department store;
(ii) mobile shop;
(iii) chain store;
(iv) mail order business;
(v) supermarket.
(i) Department store – a large shop with many departments under one roof and one management, each selling a different type of goods, usually in city centres.
(ii) Mobile shop – a van or vehicle fitted as a shop that moves from place to place selling goods to customers near their homes.
(iii) Chain store (multiple shop) – many branches owned by one firm in different towns, selling similar goods at uniform prices and with similar shop fronts, controlled from a head office.
(iv) Mail order business – selling through catalogues/advertisements; customers order by post, phone or internet and goods are delivered to them.
(v) Supermarket – a large self-service store selling mainly food and household goods, with customers picking goods and paying at check-out points.
Give at least one distinguishing feature of each outlet.
Commerce 2 (theory)
(a) State five merits of co-operative societies.
(b) Explain five procedures to be followed in the formation of a Private Limited Company.
(a) Any five: eliminate middlemen and lower prices; encourage saving; give members cheap loans; democratic control (one member, one vote); limited liability; profits shared according to patronage; educate members; promote self-help and unity.
(b) Any five, explained: promoters agree to form the company (at least two members); choose and reserve a name with the Corporate Affairs Commission (Registrar); prepare the Memorandum of Association; prepare the Articles of Association; prepare a statutory declaration and list of directors, registered address and share capital; pay registration fees and stamp duties; submit documents to the Registrar; receive the Certificate of Incorporation, after which the private company can start business.
A private company can start business once it gets its certificate of incorporation.
Commerce 2 (theory)
(a) State four features of a warehouse.
(b) Explain six reasons why warehousing is important to a business.
(a) Any four: located near transport links (roads, rail, ports); spacious and well ventilated; secure (fenced, guarded) and fire-proof; equipped with handling machines (forklifts, cranes); good lighting and drainage; cold rooms for perishables; proper record-keeping system.
(b) Any six, explained: stores goods until needed (time utility); keeps prices steady by releasing goods when scarce; protects goods from damage and theft; allows production ahead of demand/seasonal goods; enables bulk buying; place for grading, packing and blending; bonded warehouses allow duty to be paid when goods are sold; goods can be used as security for loans (warrants).
Link each reason in (b) to a benefit for the business.
Commerce 2 (theory)
(a) Define advertising.
(b) Explain four demerits of advertising.
(c) Explain five different ways producers can create awareness for their goods and services.
(a) Advertising is a paid, non-personal presentation of information about goods, services or ideas by an identified sponsor through the mass media, to inform and persuade people to buy.
(b) Any four, explained: raises the cost and price of goods; can mislead with false claims; encourages people to buy things they do not need; may promote harmful products (alcohol, tobacco); can lead to monopoly by big firms; some adverts are indecent/offend culture; waste of resources in competitive advertising.
(c) Any five, explained: advertising in the print media (newspapers, magazines); electronic media (radio, TV, internet/social media); personal selling by sales representatives; sales promotion (free samples, gifts, discounts); trade fairs and exhibitions; public relations/sponsorship of events; billboards and posters; window display; branding and attractive packaging.
Demerits are mostly about cost and misleading consumers.
Commerce 2 (theory)
Explain the following business terms:
(a) standing order;
(b) bank draft;
(c) legal tender;
(d) money order;
(e) I.O.U.
(a) Standing order – a customer's written instruction to his bank to pay a fixed sum to a named person at regular intervals (e.g. rent, subscriptions).
(b) Bank draft – a cheque drawn by a bank on itself (or its branch) at a customer's request, so payment is guaranteed.
(c) Legal tender – money that the law says must be accepted in settlement of debts in a country (e.g. naira notes and coins).
(d) Money order – a document bought from the post office for sending money (larger sums) to a named person who cashes it at a post office.
(e) I.O.U. ('I owe you') – a written acknowledgement of a debt signed by the debtor; it is not a negotiable instrument.
Each term needs a clear definition, ideally with an example.
Commerce 2 (theory)
(a) Write the following commercial abbreviations in full:
(i) C.O.D.;
(ii) C.I.F.;
(iii) F.O.B.;
(iv) E & O.E
(b) The sale of a good costing Le100,000 attracts a trade discount of 5% and a cash discount of 5%. You are required to calculate the:
(i) trade discount value;
(ii) cash discount value;
(iii) net amount payable by the buyer.
(a)(i) C.O.D. – Cash on Delivery.
(ii) C.I.F. – Cost, Insurance and Freight.
(iii) F.O.B. – Free on Board.
(iv) E & O.E – Errors and Omissions Excepted.
(b)(i) Trade discount = 5% × 100,000 = Le 5,000.
(ii) Price after trade discount = 95,000; cash discount = 5% × 95,000 = Le 4,750.
(iii) Net amount payable = 95,000 − 4,750 = Le 90,250.
Cash discount is worked out on the amount left after trade discount.