WAEC Commerce 2023 past questions and answers

E-commerce is buying and selling goods and services over the internet and other digital networks.

Occupations are grouped into industrial, commercial and services (direct and indirect).

The Articles of Association set out the internal rules of a company; the Memorandum deals with its relations with outsiders.

A public limited company invites the general public to buy its shares. Sole traders, public corporations (funded by government) and cooperatives do not sell shares to the public.

Barter has no common measure of value, so it is hard to decide how much of one good equals another.

A partnership is a personal agreement, so the death of a partner normally ends it.

A cooperative's capital comes mainly from its members' contributions; it cannot issue debentures or ordinary shares to the public.

Extractive industry takes natural resources from land or sea (mining, drilling, farming). Barbing is a direct personal service.

What is left of the assets after paying all liabilities belongs to the owner: capital owned (net worth). Working capital is current assets minus current liabilities.

A chamber of commerce brings together businesses of different kinds in an area; a trade association is for one line of business.

Both private and public companies are registered and receive a certificate of incorporation; only public companies sell shares on the stock exchange.

Shares, stocks and debentures are securities traded on the stock exchange; an overdraft is a bank facility.

Users of electricity and telephone services are consumers, and a consumers' association fights for their interests.

A mobile shop is a van or vehicle fitted as a shop that moves from place to place to sell goods.

Clearing and forwarding agents arrange shipment, documents and transport of goods for exporters and importers.

An embargo bans trade in certain goods or with certain countries, so it blocks foreign trade.

'2%/15 net 30' means the buyer gets 2% off if he pays within 15 days; otherwise the full amount is due in 30 days. A discount for prompt payment is a cash discount.

It is an order to a bank (Mawoolu Bank) to pay a named person a sum of money: a cheque.

Two parallel lines drawn across a cheque make it a crossed cheque, which must be paid into a bank account.

A cheque becomes stale six months after its date. Dated 24 April 2023, it is valid until 24 October 2023, so on 25 October 2023 it is no longer valid.

A proforma invoice looks like an invoice but is sent before delivery, e.g. to ask for payment in advance (cash with order).

A clean bill of lading has no remarks about damage or shortage: the goods were loaded in good order. A 'dirty' (claused) bill notes damage.

Average inventory = (500 + 300) ÷ 2 = D400. Rate of turnover = cost of sales ÷ average inventory = 1,200 ÷ 400 = 3 times.

Because everyone accepts money in exchange for goods and services, it serves as a medium of exchange.

Devaluation is an official lowering of a currency's value against other currencies.

Demurrage is the penalty paid when a ship, wagon or goods are held beyond the agreed time for loading or unloading.

Only road transport can pick goods up at the seller's door and drop them at the buyer's door, avoiding extra loading and unloading at stations, ports or airports.

Fish is perishable, so its nature (it spoils fast) decides the need for fast or refrigerated transport.

The central bank studies the whole economy, publishes reports and advises government on problems and policies.

Advertising tells people that a product exists and what it does.

Market research collects information about consumers' needs and the market before a product is launched.

A principal must pay the agent the agreed commission or remuneration and reimburse his expenses.

The parties must have legal capacity to contract; performance and breach are ways a contract ends.

After-sales service is support given after a sale, e.g. free repairs, delivery, installation or replacement of faulty parts.

Tankers (ships or vehicles) are built to carry liquids and gases such as oil and gas.

Competitive advertising tries to win sales from rival brands.

Consideration is the price or value one party gives in return for the other's promise; a deposit is part of it.

A registered brand name or trademark distinguishes a firm's product and stops competitors from copying it.

Privatization puts public assets in the hands of a few rich buyers, widening the gap between rich and poor.

Commercialization keeps government ownership but runs the enterprise to make profit.

The marketing department handles pricing, promotion and distribution so that products reach consumers.

Free samples, demonstrations and 'buy one get one free' are used to boost sales. Cash on delivery is only a way of paying.

Privatization is government selling its shares in a business to private individuals and firms.

Organizing arranges people, money and materials and fits them together so the plan can be carried out efficiently.

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

Bolivia is in South America; Denmark, France and Greece are EU members.

The ECOWAS treaty aims at economic integration, including joint development of transport and communication links (roads, telecommunications) among member states.

(a) Any five, explained: poor transport network (bad roads, few railways); poor communication facilities; shortage of capital/low savings; few banks and other financial institutions; lack of insurance cover; inadequate warehousing (goods spoil); low income and low demand; illiteracy and lack of business skills; political instability; poor technology; barter and absence of a common currency in early times.
(b) Industrial occupation:
- Extractive: oil driller, farmer
- Manufacturing: potter, brewer
- Construction: mason
Commercial occupation: stock broker
Services (direct): policeman

Classify under industrial, commercial and services, with subheadings for industry.

(a) Any five: limited capital; unlimited liability; bears all losses and risks alone; heavy workload; lack of continuity (business may end with his illness or death); limited skills and ideas; difficulty getting large loans; no one to share decisions with.
(b) Any five: more capital from two partners; losses and risks are shared; division of labour and specialisation; combined skills, ideas and experience; better decisions through consultation; easier access to credit; business continues if one partner is absent; continued use of goodwill already built.

Contrast one-owner business with two-owner business.

(a) Any four: safe storage of goods until needed; protects goods from damage, theft and weather; ensures a steady supply all year (seasonal goods); helps stabilise prices; allows packing, blending, grading and branding; bonded warehouses keep imported goods until duty is paid; goods in store can be used as security for loans; creates time utility.
(b)(i) Chain store (any two): many branches in different towns; same type of goods and similar shop fronts; central buying and control from head office; uniform prices.
(ii) Mobile shop (any two): sells from a van/vehicle; moves from place to place to meet customers; serves rural and new areas; carries a limited range of goods; attracts customers with music or horns.
(iii) Mail order (any two): advertises with catalogues, newspapers or online; orders received by post/phone/internet; goods delivered by post or courier; payment by cash with order or cash on delivery; no physical shop needed.

Two features for each of the three outlets.

(a) Any five, explained: ordinary shares (part ownership, variable dividend, voting rights); preference shares (fixed dividend paid first); debentures (long-term loans to a company at fixed interest); stocks (shares converted into a fund that can be traded in any amount); government bonds/gilt-edged securities (loans to government at fixed interest); treasury bills; convertible loan stock; municipal (local government) bonds.
(b) Any five: obey the principal's lawful instructions; act with reasonable care and skill; act in good faith and not make secret profit; not delegate duties without permission; keep proper accounts and render them; avoid conflict of interest; keep the principal's information confidential; pass on all money received for the principal.

Duties of an agent, not of the principal.

(a) An indent is an order for goods sent by an importer to an agent/supplier abroad (used in foreign trade); a quotation is a seller's reply to an enquiry stating the prices and terms on which goods can be supplied (from seller to buyer).
(b)(i) Export promotion council (any four): finds foreign markets for local products; organises and sponsors participation in trade fairs abroad; gives information and advice to exporters; trains exporters in export procedures and standards; gives incentives and help with export finance; promotes non-oil/non-traditional exports.
(ii) Customs and excise authority (any four): collects import, export and excise duties; prevents smuggling and arrests smugglers; stops the import of banned and harmful goods; manages bonded warehouses; checks documents and values goods; collects trade statistics for government.

Indent goes from buyer; quotation comes from seller.

(a) Tourism is the travel of people away from their usual home to other places, for a short time, for leisure, business or other purposes, together with the services provided for them.
(b) Negative (one each): (i) Economy: prices of goods and land rise in tourist areas / income is seasonal. (ii) Society: spread of foreign cultures, crime, drug use or prostitution. (iii) Environment: pollution, litter, damage to natural sites and wildlife.
(c) Positive (two each): (i) Economy: earns foreign exchange; creates jobs; government revenue; growth of hotels, transport and other businesses. (ii) Society: promotes cultural exchange and understanding; improved social amenities; preservation of culture and festivals. (iii) Environment: conservation of parks and wildlife; beautification and cleaner surroundings; better infrastructure.

Answer each heading separately.

(a) Any two: marketing starts before production (finding needs), selling starts after goods are made; marketing focuses on the customer's needs, selling on the seller's need to turn goods into cash; marketing is long-term and wide (research, product, price, place, promotion), selling is short-term and only one part of marketing.
(b) Product, price, place (distribution), promotion.
(c) Any four, explained: a wider market for its goods; free movement of people, goods and services; lower or no tariffs on trade with members; attracts investment and joint projects; access to ECOWAS development funds; improved transport and communication links; regional peace and security support; stronger bargaining power in world trade.

Marketing mix = the 4 Ps.

Cost of sales = 37,500 + 30,000 − 15,000 = ₦52,500
Gross profit = 70,000 − 52,500 = ₦17,500
(i) Expenses = 2,500 + 3,500 + 2,600 = ₦8,600
Net profit = 17,500 − 8,600 = ₦8,900
(ii) Current assets = debtors 100,000 + cash at bank 25,000 + closing stock 15,000 = ₦140,000
Current liabilities = creditors 50,000 + overdraft 60,000 = ₦110,000
Working capital = 140,000 − 110,000 = ₦30,000
(iii) Average stock = (37,500 + 15,000) ÷ 2 = ₦26,250
Rate of stock turnover = 52,500 ÷ 26,250 = 2 times

Find gross profit first, then subtract expenses.