WAEC Commerce 2022 past questions and answers

Before modern currencies, cowrie shells were widely accepted as money in West Africa. Cedi, dalasi and naira are modern currencies.

Tertiary production covers services such as trade, banking, transport and teaching.

Commerce grows when people can afford to buy. Low income per head means low purchasing power, so it holds trade back; a growing population, on the other hand, enlarges the market.

Production is complete only when goods reach the final consumer, and the retailer does that last step.

Land, labour, capital and entrepreneur are the factors of production combined to produce goods and services.

Public enterprises are owned by government to provide essential services (power, water, transport) to citizens at low cost, not mainly for profit.

In a wholesale cooperative, retailers (sellers) join to buy in bulk and then sell to their member shops.

Average stock = (opening stock + closing stock) ÷ 2.

A mail order firm advertises through catalogues and sends goods to customers by post.

The Articles of Association contain the internal rules of a company, including shareholders' voting rights and how meetings are run.

Retained earnings are profits kept in the business, so they come from inside it; the others come from outsiders.

Cost of goods sold = 30,000 + 16,000 − 10,000 = ₦36,000. Gross profit = sales − cost of goods sold = 50,000 − 36,000 = ₦14,000.

A nominal partner only lends his name (reputation) to the firm; he puts in no capital and takes no part in running it.

Households are consumers of electricity, so a consumers' association speaks up for them.

A tied shop is linked to one manufacturer and stocks only its products (e.g. a petrol station selling one company's fuel). Chain stores are branches of one firm in different towns.

Visible trade is trade in physical goods, so it includes earnings from exported goods. Interest, profit and dividends are invisible items.

Divisibility means money can be broken into smaller units so that small purchases can be paid for.

A central bank is the bankers' bank and government's bank; it does not take deposits from ordinary members of the public, which commercial banks do.

A closed indent names the firm the agent must buy from; an open indent leaves the choice to the agent.

A cash discount is a reduction given when a buyer pays promptly or within an agreed time.

Under contribution, when one property is insured with several companies, they share the loss so the insured gets no more than the actual loss.

Bulls, bears and stags buy and sell hoping to profit from price changes, so they are speculators.

Only the central bank issues bank notes; commercial banks are profit-making limited companies owned by individuals and organisations.

When the public buys treasury bills, money moves from them to the central bank, so less cash is left in circulation (open market operation).

A consular invoice is signed by the importing country's consul in the exporting country, confirming the value of the goods so customs can charge the right duty.

A special crossing names a particular bank between the lines, so only that bank can collect it. Two plain lines is a general crossing.

A share sold above its nominal (face) value is sold at a premium: here ₦70 is ₦20 above ₦50.

Tramps go wherever there is cargo, with no fixed route or timetable. Liners keep to fixed routes and sailing times.

Freight is the charge for carrying goods; fare is what passengers pay.

Trains can haul large, heavy loads such as coal, cement and timber over long distances cheaply.

The small charge paid when buying a postal order is called poundage.

Advertising informs and persuades consumers to buy a product.

The marketing concept says a firm should satisfy consumers' needs and, by doing so, make a profit.

Repairs and maintenance offered after a sale are after-sales services.

Consumers have rights to safety, redress (replacement) and to be heard, but no right to demand credit; giving credit is the seller's choice.

Direct advertising is aimed at a specific, chosen group of people (e.g. by mail or targeted messages), unlike mass advertising aimed at everyone.

The Sale of Goods Act governs contracts in which ownership of goods passes from seller to buyer for a price.

Deregulation removes government controls so that demand and supply set prices.

Agency by ratification arises when a principal later approves an act done on his behalf.

An offer has no effect until the person it is made to knows about it, so it must be communicated to the offeree.

Private owners put profit first, so the public interest may suffer, e.g. through higher prices.

Span of control is the number of people who report directly to one manager. Chain of command is the line of authority from top to bottom.

An organisational chart shows positions and the lines of authority between them, i.e. the hierarchy of staff.

The functions of management are planning, organising, directing (leading), coordinating and controlling; delegation is a principle of organisation, not one of these functions.

ECOWAS aims to increase trade and economic cooperation among West African states.

The West African Clearing House was set up by an agreement signed in Lagos in 1975 by West African central banks, with its headquarters in Freetown.

(a) Division of labour (specialisation by process).
(b)(i) Any five: increased output; workers become more skilled through repetition; saves time (no moving from one task to another); short training period; lower cost per unit; better quality/finish; makes use of machines and tools easier; each worker does the task he is best at.
(ii) Any four: monotony and boredom; loss of craftsmanship (no worker can make the whole item); absence of one worker holds up the others (interdependence); workers lose interest or pride in the finished product; risk of unemployment if one skill is no longer needed; a fault at one stage affects the whole product.

Each worker doing one stage of the job is division of labour.

(a) Vertical merger (backward integration for the textile firm): firms at different stages of the production of the same product combine, here a cotton processor (raw material) and a textile maker (user of the cotton).
(b) Any four: to secure a regular supply of raw material; to reduce costs and enjoy economies of scale; to raise more capital; to reduce or remove competition and gain market share; to control prices; to avoid liquidation of a weak firm; to cut duplicated overheads and staff.
(c) Any three, explained: issue of shares (selling ordinary/preference shares to the public); debentures (long-term loans at fixed interest); bank loans and overdrafts; retained profits; hire purchase and leasing of equipment; trade credit from suppliers.

Different stages of the same product line = vertical merger.

(a) A trade association is formed by firms in the same line of trade or industry to protect their common interests; a chamber of commerce is formed by businesses of all kinds (traders, manufacturers, bankers, farmers etc.) in a particular area to promote commerce and industry there.
(b) Any four: represents members before government; gives information on trade and markets to members; organises trade fairs and exhibitions; settles disputes among members (arbitration); issues certificates of origin; promotes trade links with other countries; advises government on economic policies.
(c) Any four: negotiates wages and conditions with trade unions (collective bargaining); represents employers in disputes and at industrial courts; acts as a pressure group on government policies; advises members on labour laws and industrial relations; collects and gives statistics to members; trains members' staff and managers.

Trade association = one trade; chamber of commerce = many trades in one area.

(a) Any eight: A – speakers; B – microphone; C – web camera (webcam); D – flash drive (USB stick); E – monitor; F – printer; G – keyboard; H – light (optical) pen; I – joystick.
(b) Any six input devices, one use each:
- Microphone: records or inputs sound/voice.
- Webcam: captures pictures and video, e.g. for video calls.
- Keyboard: types letters, numbers and commands.
- Light pen: points at or draws on the screen / reads special characters.
- Joystick: controls movement of the cursor or objects, especially in games.
- Flash drive (as a storage/input medium): brings files into the computer from another computer.
(Mouse and scanner are also input devices but are not shown.)

Speakers, monitor and printer are output devices; the flash drive is a storage device.

(a) Any four: bank loans; overdraft; trade credit from suppliers; hire purchase; loans from friends and relatives; cooperative/thrift societies; microfinance banks; credit cards.
(b)(i) Acceptance credit: an arrangement in which a bank (accepting house) accepts bills of exchange drawn on it by a customer, so the bills can be discounted for cash; it lets a business get short-term finance using the bank's good name.
(ii) Luncheon voucher: a voucher bought by an employer (often at a discount) and given to staff, which they use instead of cash to pay for meals at participating restaurants.
(iii) Bill of exchange: an unconditional order in writing, addressed by one person (drawer) to another (drawee), signed by the drawer, requiring the drawee to pay a certain sum on demand or at a fixed future date to a named person or bearer.
(c) Advantages (any two): increased sales/turnover; extra profit from interest charged; seller keeps ownership until the last instalment, so goods can be repossessed if payments stop.
Disadvantages (any three): capital is tied up; risk of bad debts and default; repossessed goods may be damaged or lose value; cost of collecting instalments and keeping records; legal costs of recovering goods.

For the bill of exchange, include 'unconditional order in writing'.

(a) International trade (any three, explained): bill of exchange/documentary bill; letter of credit (importer's bank guarantees payment to exporter); bank draft drawn on a foreign bank; telegraphic/electronic (SWIFT) transfer; travellers' cheques; credit/debit cards accepted abroad; open account.
Home trade (any two, explained): cash; cheques; bank transfer/mobile money; POS (debit/credit cards); postal and money orders.
(b) Any five, explained: uneven distribution of natural resources; differences in climate; differences in technology and skills; comparative cost advantage (each country specialises in what it produces most cheaply); to dispose of surplus output; to obtain goods a country cannot produce; wider market and economies of scale; to earn foreign exchange; to promote friendly relations among countries; to get variety of goods.

Keep home-trade and international-trade methods separate.

(a) Any four: reaches a very large audience at once; combines sound, sight, colour and movement, so it attracts attention; can demonstrate how the shoes look and are worn; adverts can be timed for programmes the target customers watch; builds brand image and goodwill; increases sales.
(b) Any four, explained: personal selling (sales staff persuade buyers face to face); sales promotion (discounts, free gifts, coupons, competitions); public relations/sponsorship (events, sports, charity to build the firm's image); direct marketing (letters, SMS, e-mail to chosen customers); internet and social media advertising; trade fairs and exhibitions; window display; newspapers, magazines, radio, billboards.

In (b) name promotional methods other than television.

Cost of goods sold = opening inventory + purchases − closing inventory = 80,000 + 180,000 − 60,000 = D200,000.
(i)–(iv): no sales figure is given, so gross profit, net profit and the two margins cannot be calculated. (If sales were S: gross profit = S − 200,000; net profit = gross profit + 20,000 discount received − 40,000 expenses; gross margin = gross profit ÷ S × 100; net margin = net profit ÷ S × 100.)
(v) Current assets = inventory 60,000 + other current assets 150,000 = D210,000
Working capital = 210,000 − 100,000 = D110,000
(vi) Average inventory = (80,000 + 60,000) ÷ 2 = D70,000
Rate of inventory turnover = 200,000 ÷ 70,000 = 2.86 times (about 3 times)

Include closing inventory in current assets.