56 questions. Try each one, then open the answer to check yourself and read the explanation.
A firm which turns timber into wooden office desks belongs to the
Answer: D (construction industry.)
In WAEC Commerce, furniture making is classed under the construction industry, which assembles processed materials into usable forms.
E-commerce is an activity which involves
Answer: B (trading in products through the internet.)
E-commerce is buying and selling over the internet.
Rent is the return on
Answer: C (land.)
Each factor of production earns a reward: land earns rent, labour wages, capital interest and the entrepreneur profit.
A partner whose only contribution to partnership is his name and goodwill is
Answer: C (a nominal partner.)
A nominal partner only lends his name and reputation; a sleeping partner contributes capital but takes no part in management.
Computer manufacturers in an area could form a
Answer: A (producer association.)
Firms producing the same kind of goods form a producers' (manufacturers') association to protect their common interests.
The problem of double coincidence of wants is that
Answer: D (one has to find someone who wants his surplus and also has what he needs.)
Under barter, a trader must find a person who both wants what he has and has what he wants.
The type of business where management is separated from ownership is a
Answer: B (public company)
A public company is owned by many shareholders but run by a board of directors and paid managers.
Where there is no deed of partnership, members share profit on
Answer: D (equal basis.)
Under the Partnership Act, when there is no deed the partners share profits and losses equally.
The factor of production that is fixed in nature is
Answer: A (land.)
Land is a gift of nature and its total supply is fixed.
A means of payment through the post office is
Answer: B (money order.)
Money orders (and postal orders) are bought at the post office to send money.
A stock exchange broker is engaged in
Answer: B (commercial occupation)
A stockbroker helps in the buying and selling of securities, which is a commercial occupation.
A group of companies formed to carry out an activity that is beyond the ability of any individual company is
Answer: C (a consortium.)
A consortium is a temporary association of firms that join forces for a project too big for any one of them, while each keeps its identity.
The share capital of a company stated in the Memorandum of Association and approved by the registrar of companies is
Answer: C (nominal capital.)
Nominal (authorised) capital is the maximum share capital stated in the memorandum of association.
One of the aims of a trade association is to
Answer: D (promote commercial activities in their business.)
A trade association is formed to promote and protect the business interests of firms in one trade.
Retail outlets which sell from vehicles are
Answer: B (mobile shops.)
Mobile shops are vans or vehicles that carry goods to customers and sell from the vehicle.
Cash in hand and at bank, plus debtors are components of
Answer: B (current assets.)
Cash, bank balances, debtors and stock are current assets.
Goods sold under a distinctive trademark are
Answer: A (branded goods.)
Branded goods carry a name or trademark that distinguishes them from rivals' goods.
A firm which imports goods with the view of re-exporting them is engaged in
Answer: B (entrepot trade.)
Entrepot trade is importing goods in order to re-export them.
A risk whose probability of occurrence is impossible to estimate is
Answer: A (uninsurable risk.)
Insurers can only cover risks they can calculate; a risk whose chance cannot be estimated is uninsurable.
An instruction to a bank to make regular payment to a third party on behalf of a customer is
Answer: A (standing order.)
A standing order tells the bank to pay a fixed amount to someone at regular intervals.
Use the diagram (a cheque: XYZ Bank of Commerce PLC, 55 Jones Road, Freetown, 18/06/2016, 'Pay Peter Saidy or Order the sum of Sixty thousand leones', Le 60,000.00, SIGN: Oki Williams) to answer the question. The diagram above shows a
Answer: C (cheque.)
It is a written order to a bank to pay a named person a sum of money, signed by the account holder: a cheque.
Use the diagram (a cheque: XYZ Bank of Commerce PLC, 55 Jones Road, Freetown, 18/06/2016, 'Pay Peter Saidy or Order the sum of Sixty thousand leones', Le 60,000.00, SIGN: Oki Williams) to answer the question. XYZ Bank of Commerce PLC is the
Answer: D (drawee.)
The bank on which a cheque is drawn, and which pays it, is the drawee.
Use the diagram (a cheque: XYZ Bank of Commerce PLC, 55 Jones Road, Freetown, 18/06/2016, 'Pay Peter Saidy or Order the sum of Sixty thousand leones', Le 60,000.00, SIGN: Oki Williams) to answer the question. Oki Williams is the
Answer: C (drawer.)
Oki Williams signed the cheque, so he is the drawer.
A proportion of the total deposit that a commercial bank must keep as cash and convertible papers is
Answer: B (liquidity ratio.)
The liquidity ratio is the share of deposits a bank must hold in cash and assets easily turned into cash.
The principle that applies when Greene and Sunwar Insurance Companies jointly indemnified Fatou for the destruction of her storey building by fire is
Answer: A (contribution.)
When the same property is insured with more than one insurer, they share the claim under the principle of contribution.
A cheque for which payment is refused due to insufficient funds is a
Answer: C (dishonoured cheque.)
When a bank refuses to pay a cheque, e.g. for lack of funds, the cheque is dishonoured.
The keyboard of a computer is classified as
Answer: A (an input device.)
A keyboard is used to enter data into a computer, so it is an input device.
A communication equipment which is stationed in space for sending signals is
Answer: C (satellite.)
Communication satellites orbit in space and relay signals around the world.
One of the factors which determines the choice of transport for goods is the
Answer: D (nature of the goods to be transported.)
Perishable, fragile or bulky goods each need a suitable means of transport, so the nature of the goods matters.
Which of the following activities increases demand for goods and services?
Answer: A (Advertising)
Advertising makes goods known and persuades people to buy them, raising demand.
A diagram showing the positions of the structure of a company is
Answer: B (organizational chart.)
An organisational chart shows the positions in a firm and how they relate to one another.
Good customer service practice requires
Answer: C (patience towards ill-mannered customers.)
Good customer service means treating every customer politely and patiently, even difficult ones.
The elements of a contract are offer
Answer: D (acceptance and consideration.)
The basic elements of a valid contract are offer, acceptance and consideration (with capacity and legality).
Which of the following types of advertising is aimed at taking away existing buyers from their suppliers?
Answer: B (Competitive)
Competitive advertising tries to win customers away from rival firms.
The marketing concept emphasizes the need to
Answer: A (identify and satisfy customer wants.)
The marketing concept puts the customer first: find out what customers want and satisfy it.
An agent whose authority, as conferred by the principal, has no limit is a
Answer: D (universal agent.)
A universal agent has unlimited authority to act for the principal in all matters; a del credere agent guarantees payment by buyers.
An agreement in which Philip paid half the price of a car and accepted to pay the rest in instalments is a
Answer: C (hire purchase contract.)
Paying a deposit and the balance in instalments is the usual form of a hire purchase agreement.
A new offer of contract that terminates the original offer is
Answer: B (a counter offer.)
A counter offer changes the terms, which rejects and ends the original offer.
Which of the following roles is performed by middle management in an organization?
Answer: D (Implementation of organizational plans and objectives)
Top management sets objectives; middle managers carry out (implement) those plans in their departments.
The management term which refers to the number of staff a superior officer can efficiently supervise is
Answer: D (span of control.)
Span of control is the number of subordinates one manager can supervise effectively.
Which of the following business units could be commercialized?
Answer: A (Public corporation)
Commercialisation applies to government-owned enterprises such as public corporations.
The restructuring of a government enterprise with the intention of making it profit oriented is
Answer: C (commercialization.)
Commercialisation keeps the enterprise in government hands but makes it run for profit.
The headquarters of the Mano River Union is in
Answer: A (Freetown.)
The Mano River Union's secretariat is in Freetown, Sierra Leone.
A source of capital to a public company which attracts a fixed rate of interest is
Answer: C (a debenture.)
Debentures are long-term loans to a company that earn a fixed rate of interest.
Which of the following is not an economic grouping in West Africa?
Answer: C (European Union)
The European Union is a grouping of European countries.
A customer who wishes to withdraw an amount greater than the balance in his current account would apply for
Answer: B (an overdraft.)
An overdraft allows a current account holder to draw more than the balance in the account.
The combination of business activities of Abbas Ltd and Denko Ltd to form one large company is
Answer: A (an amalgamation.)
When two companies combine to form one new, larger company, it is an amalgamation (merger).
The difference between commercialization and privatization is that commercialized businesses
Answer: A (are government-owned while privatized businesses are owned by individuals.)
A commercialised firm stays government-owned but runs for profit; a privatised firm is sold to private owners.
Commerce 2 (theory)
(a) List four career opportunities available to a student of commerce.
(b) State two functions of an entrepreneur.
(c) Explain the following activities giving two examples of each:
(i) extractive industry;
(ii) construction industry;
(iii) manufacturing industry;
(iv) tertiary industry.
(a) Any four: trading (wholesaling/retailing); banking; insurance; accountancy; marketing/sales; advertising; transport/shipping and clearing; warehousing/storekeeping; stockbroking; secretarial/office work; tourism.
(b) Any two: combines and organises the other factors of production; provides capital; bears the risks of the business; takes major decisions/plans; innovates.
(c)(i) Extractive industry – taking raw materials from land, water or air, e.g. mining, fishing, farming, lumbering, quarrying.
(ii) Construction industry – assembling processed materials into usable structures, e.g. building houses, roads, bridges, furniture making.
(iii) Manufacturing industry – changing raw materials into finished or semi-finished goods, e.g. textiles, car assembly, brewing, oil refining.
(iv) Tertiary industry – provision of services, both commercial and direct, e.g. banking, transport, trading, teaching, medical and legal services.
In (c) define each industry first, then give two examples.
Commerce 2 (theory)
The staff of Kander Manufacturing Company Limited formed a cooperative society to enable them have access to funds.
(a) Name the type of cooperative society they formed.
(b) State four features of the cooperative society.
(c) State three advantages and two disadvantages of the cooperative society.
(a) Thrift and credit (credit and savings) co-operative society.
(b) Any four: formed by people with a common bond (e.g. same workplace); voluntary membership; capital from members' regular savings/shares; aim is to give members loans at low interest; one member, one vote; managed by an elected committee; registered, so it has continuity and limited liability; surplus shared according to patronage/savings.
(c) Advantages (any three): encourages saving; gives members cheap loans with little collateral; easy deductions from salary; loans for emergencies and projects; members learn management; dividends on savings.
Disadvantages (any two): limited capital; poor management by part-time officers; possible misuse or embezzlement of funds; loan defaults by members; small loans relative to needs; delays in giving loans.
The common workplace and the aim of access to funds point to a thrift and credit society.
Commerce 2 (theory)
(a) State five reasons that would make a bank to dishonour a customer's cheque.
(b) State five reasons countries introduce restrictions in foreign trade.
(a) Any five: insufficient funds in the account; signature differs from specimen; words and figures differ; cheque is stale (over six months old); post-dated cheque; drawer has stopped payment (countermand); death, insanity or bankruptcy of the drawer; account closed or frozen by court order; alterations not signed; cheque mutilated or wrongly filled/irregular endorsement.
(b) Any five: to protect infant industries; to correct a balance of payments deficit; to raise government revenue; to prevent dumping; to protect jobs/reduce unemployment; to prevent importation of harmful goods; to conserve foreign exchange; for political/strategic reasons (e.g. sanctions); to encourage local production and self-reliance.
Keep cheque reasons specific (e.g. 'stale', 'post-dated', 'signature differs').
Commerce 2 (theory)
(a) State three benefits of a commodity exchange.
(b) Explain two methods of trading in a commodity exchange.
(c) State four requirements for trading in a commodity exchange
(a) Any three: provides an organised market for commodities; helps fix fair prices through demand and supply; reduces risk through hedging/forward contracts; gives price information to producers and buyers; encourages production of the commodities; earns foreign exchange; enables trading without seeing the goods (by sample/grade).
(b) Any two, explained: spot (cash) trading – goods are bought and paid for for immediate delivery; futures/forward trading – contracts to buy or sell at an agreed price for delivery at a future date; trading by sample – a sample represents the whole lot; trading by description/grade – goods are sold by recognised grades without inspection; auction sales.
(c) Any four: commodities must be durable (non-perishable); capable of being graded/standardised; available in large quantities; sold through registered brokers/members; must have a large number of buyers and sellers; prices must fluctuate freely; goods must be easily transported/stored.
Requirements in (c) are mainly about the nature of the commodity (durable, gradable, plentiful).
Commerce 2 (theory)
(a) List six advertising media used in business.
(b) What is personal selling?
(c) State four advantages and two disadvantages of personal selling.
(a) Any six: newspapers; magazines/journals; radio; television; cinema; billboards/posters; handbills; internet/social media; window display; neon signs; direct mail; sky writing.
(b) Personal selling is face-to-face contact between a salesperson and prospective buyers to present a product, answer questions and persuade them to buy.
(c) Advantages (any four): immediate feedback from customers; salesperson can demonstrate the product; objections are answered on the spot; message is tailored to each customer; builds good customer relations/loyalty; can close the sale at once; useful for technical goods.
Disadvantages (any two): expensive (salaries, commission, travel); reaches few people; time-consuming; depends on skill of the salesperson; aggressive salespeople may annoy customers.
Personal selling must mention face-to-face contact with the aim of making a sale.
Commerce 2 (theory)
Country X is facing a situation where its total payments to other countries is greater than its total earnings from abroad.
(a) State the term that relates to the above situation.
(b) Explain six measures the country could take to correct the situation.
(a) Unfavourable balance of payments (balance of payments deficit).
(b) Any six, explained: restrict imports through tariffs, quotas or bans; promote exports (export incentives, export promotion council); devalue the currency to make exports cheaper and imports dearer; exchange control to ration foreign exchange; import substitution (produce locally what is imported); borrow from abroad/IMF to finance the deficit; attract foreign investment; diversify the economy and exports; reduce government spending abroad; encourage tourism; deflationary policies to cut demand for imports.
Each measure should say how it cuts payments or raises earnings.
Commerce 2 (theory)
(a) State four services rendered by courier companies.
(b) State three advantages and three disadvantages of rail transport.
(a) Any four: fast delivery of letters, documents and parcels; door-to-door collection and delivery; tracking of items; delivery of urgent/valuable items within the country and abroad; proof of delivery; insurance of items; cash-on-delivery/ e-commerce deliveries.
(b) Advantages (any three): carries bulky and heavy goods; cheap over long distances; carries large numbers of passengers; fairly safe and regular (timetable); less road congestion; not affected by traffic.
Disadvantages (any three): fixed routes – no door-to-door service; expensive to build and maintain; unsuitable for short distances; goods need double handling; inflexible timetable; slow compared with air; breakdowns delay all traffic on the line.
Rail suits bulky goods over long distances; its weakness is lack of door-to-door service.
Commerce 2 (theory)
The following information was extracted from the books of Jinka Enterprises as at 31st August 2015.
15 cartons of sweets at ₦2,000 per carton.
25 cartons of milk at ₦4,000 per carton.
15 cartons of sugar at ₦3,000 per carton.
17 cartons of soap at ₦5,000 per carton.
The following payments were made:
Rent and rates – ₦3,500
Salaries and wages – ₦8,000
Fuel – ₦2,000
Electricity – ₦1,500
A cash discount of 6% and a 10% trade discount was allowed if payment was made within 7 days.
(i) Calculate how much cash was paid for the goods bought if payment was made within 7 days.
(ii) If all the goods were sold at a mark up of 20%, determine the selling price.
(iii) Calculate the value of the net profit made.
List price: sweets 30,000 + milk 100,000 + sugar 45,000 + soap 85,000 = ₦260,000.
(i) Less 10% trade discount (26,000) = ₦234,000; less 6% cash discount (14,040) = ₦219,960 paid.
(ii) Cost after trade discount ₦234,000 + 20% mark-up (46,800) = selling price ₦280,800.
(iii) Gross profit 46,800 + discount received 14,040 = 60,840; less expenses (3,500 + 8,000 + 2,000 + 1,500 = 15,000); net profit = ₦45,840.
Take trade discount first, then cash discount; the cash discount received is added to gross profit.