55 questions. Try each one, then open the answer to check yourself and read the explanation.
The development of Commerce was promoted by
Answer: C (specialization.)
Specialization created surpluses that had to be exchanged, and this need for exchange led to commerce.
A major setback of e-commerce in West Africa is
Answer: B (poor communication infrastructure.)
E-commerce depends on internet and telecom networks, which are poor or costly in many parts of West Africa.
Conversion of raw materials into finished goods is
Answer: B (secondary production.)
Secondary production (manufacturing and construction) turns raw materials into finished goods.
A source of finance peculiar to public companies is
Answer: A (sale of shares.)
Only a public company can raise money by selling shares to the general public.
An example of an entrepreneur is a
Answer: D (sole proprietor.)
An entrepreneur starts a business and bears its risks; a sole proprietor does exactly that.
A partner who loses his capital only, in case of bankruptcy is
Answer: B (a limited partner.)
A limited partner's liability is limited to the capital he put in.
Ship building is an activity under
Answer: C (industrial occupation.)
Building ships is construction/manufacturing, which is industrial occupation.
The process of making goods and providing services for consumption is
Answer: C (production.)
Production is the creation of goods and services to satisfy human wants.
A disadvantage of a sole trader is that he
Answer: C (has unlimited liability.)
A sole trader's personal property can be taken to pay business debts: unlimited liability.
Raw materials are classified as
Answer: C (circulating capital.)
Raw materials are used up and replaced in the course of production, so they are circulating (working) capital.
A factor that determines the occupation of people living along coastal areas is
Answer: C (natural resources available.)
People on the coast often fish or work in sea-related jobs because of the natural resources there.
An advantage of self-service to customers is that it
Answer: B (enables customers to inspect goods.)
In self-service customers pick and examine goods themselves before buying. Impulse buying benefits the seller, not the customer.
Use the information below to answer questions 14 and 15.
D
Opening stock 22,000.00
Purchases 20,000.00
Debtors 12,000.00
Creditors 8,000.00
Closing stock 8,000.00
Overdraft 5,000.00
Calculate average stock.
Answer: A (D15,000.00.)
Average stock = (opening stock + closing stock) ÷ 2 = (22,000 + 8,000) ÷ 2 = D15,000.
Use the information below to answer questions 14 and 15.
D
Opening stock 22,000.00
Purchases 20,000.00
Debtors 12,000.00
Creditors 8,000.00
Closing stock 8,000.00
Overdraft 5,000.00
The value of current liabilities is
Answer: B (D13,000.00.)
Current liabilities = creditors + overdraft = 8,000 + 5,000 = D13,000.
One of the aims of a consumers' association is to advocate for
Answer: D (good quality products.)
Consumers' associations push for good quality, safe goods at fair prices.
Prefinancing production is a wholesaler's function to
Answer: A (manufacturers.)
By paying manufacturers in advance or ordering in bulk, the wholesaler helps finance their production.
An adverse balance of payment could be corrected through
Answer: B (increase in exports.)
A deficit means more is paid out than received; earning more from exports helps close it.
A price quotation that includes the cost of delivering the goods up to the ship but excludes the cost of loading is
Answer: A (FAS.)
FAS (free alongside ship) covers costs up to placing goods beside the ship; loading costs are extra.
A financial institution established to raise funds for people who wish to build homes is a
Answer: D (mortgage bank.)
Mortgage banks give long-term loans for buying or building houses.
A market where items are sold in lots or by description is a
Answer: C (commodity market.)
On a commodity market goods such as cocoa or grain are traded by grade, sample or description, often in lots.
The insurance policy that covers a company against cashiers' dishonesty is
Answer: C (fidelity guarantee.)
Fidelity guarantee insures an employer against loss from employees' fraud or dishonesty.
Which of the following instruments is not a means of payment?
Answer: A (Debit notes.)
A debit note is a document telling a buyer he was undercharged; it does not pay anyone.
To correct an overcharge for goods on an invoice, the seller sends the buyer
Answer: B (a credit note.)
A credit note reduces the amount the buyer owes, correcting an overcharge.
A market for long-term loans is the
Answer: A (capital market.)
The capital market deals in long-term funds; the money market deals in short-term funds.
The most suitable means of transporting liquid and gas over long distances within a country is by
Answer: C (pipeline.)
Pipelines carry large volumes of oil, water and gas continuously and cheaply over long distances on land.
A computer's main storage device is the
Answer: C (hard disk.)
The hard disk is the main built-in device for storing programs and data permanently.
The amount an assured receives if he discontinues a life policy is
Answer: A (surrender value.)
If a life policy is given up before maturity, the insurer pays its surrender value.
Which of the following means of advertising generates a wider coverage?
Answer: A (Radio.)
Radio reaches people across the whole country, including those who cannot read.
A cheque that bears a date later than the current date is a
Answer: B (post-dated cheque.)
A post-dated cheque carries a future date and cannot be paid before that date.
The holder of a bill who wishes to dispose it before maturity would be paid
Answer: C (the discounted value.)
A bill sold before it is due is discounted: the buyer pays less than its face value.
A medium of advertising that could be used by a hawker to promote sales is
Answer: C (free samples.)
A hawker moves about with his goods and has no shop window, billboard or cinema budget; giving free samples to taste or try is something he can do.
Which of the following activities would make continuous production possible?
Answer: D (Warehousing.)
Warehousing stores finished goods (and raw materials), so production can go on even when demand is low.
An advantage of personal selling is that it
Answer: D (generates immediate feedback.)
In personal selling the salesperson meets the buyer face to face, so he gets questions and reactions at once.
The protection of an author's published work is
Answer: A (copyright.)
Copyright protects writers' and artists' original works from being copied.
Under which Act could a buyer of a faulty television set claim for replacement?
Answer: D (Standard Organization Act.)
Of these laws, only the Standards Organisation Act deals with the quality of manufactured goods like television sets.
The process of providing cover for goods is
Answer: D (packaging.)
Packaging wraps or encloses goods to protect them and make them attractive. Branding gives them a special name or mark.
Which of the following retail businesses sells without shop assistants?
Answer: B (Mail order.)
Mail order firms sell through catalogues and the post, so there are no shop assistants serving customers.
The right of an unpaid seller includes the right to
Answer: A (sue a debtor for amounts owed.)
An unpaid seller's rights include holding the goods (lien), stopping them in transit, reselling them and suing the buyer for the price.
One of the legislations that protects consumers is the
Answer: D (Sale of Goods Act.)
The Sale of Goods Act requires goods to match their description and be of acceptable quality, protecting buyers.
Internal and external factors that affect how a business functions is
Answer: A (business environment.)
The business environment is all the internal and external forces that influence a firm.
The management function that provides guidance and supervision to subordinates is
Answer: C (directing.)
Directing means guiding, leading and supervising staff.
A document issued by the captain of a ship to acknowledge receipt of goods is a
Answer: B (bill of lading.)
The bill of lading is signed by the ship's master (or agent) as a receipt for goods shipped and as a document of title.
A reason for the privatization of the petroleum industry is to
Answer: C (encourage private businesses in the sector.)
Privatization hands businesses to private owners, so it encourages private firms in the sector.
A disadvantage of commercialization to consumers is that
Answer: D (prices of products increase.)
Once a state firm must cover its costs and make a profit, subsidies end and it charges higher prices to consumers.
One of the social responsibilities of a business to the community is
Answer: D (controlling pollution.)
A responsible business protects the community's environment, for example by controlling pollution.
An objective of the Niger Basin Commission is to
Answer: A (enhance development of irrigation systems.)
The Niger Basin Commission develops the river's resources, including irrigation, hydro-power and navigation.
The act of reducing government intervention in business is
Answer: B (deregulation.)
Deregulation removes or reduces government controls on business.
ABC Breweries Limited started operations with production, finance, marketing and administration departments. The following personnel were in its employment: General manager; Finance manager; Personal secretary; Accounts officers; Marketing manager; Production manager; Production supervisors; Factory workers; Sales agents; Administrative manager; Administrative officers.
(a) Draw an organizational chart for ABC Breweries Limited.
(b) State two functions of each of the departments in the company.
(a) Chart (boxes joined by lines):
General Manager at the top, with Personal Secretary on a side (staff) line.
Below the General Manager: Production Manager, Finance Manager, Marketing Manager, Administrative Manager.
Production Manager → Production Supervisors → Factory Workers.
Finance Manager → Accounts Officers.
Marketing Manager → Sales Agents.
Administrative Manager → Administrative Officers.
(b) Two for each:
Production: makes goods of the right quality and quantity at the right time; controls production costs; maintains machines; research and product development.
Finance: keeps accounts and financial records; raises and controls funds; pays salaries and bills; prepares budgets and advises on finance.
Marketing: market research; advertising and sales promotion; distribution of products; pricing; handling customers' complaints.
Administration: recruits, trains and places staff; staff welfare, discipline and records; maintains office services and labour relations.
Show the chain of authority from the general manager down to factory workers.
(a) List five contents of a Memorandum of Association and five contents of an Articles of Association.
(b) Explain five problems faced by public corporations.
(a) Memorandum (any five): name of the company with 'Limited'/'Plc'; address of registered office; objects clause; limited liability clause; authorised share capital; statement that it is a private or public company; names and signatures of subscribers (association clause).
Articles (any five): types of shares and how they are issued and transferred; rights of each class of shareholders; voting rights; how meetings are called and run; appointment, powers and removal of directors; borrowing powers; how dividends are declared; appointment of auditors and keeping of accounts.
(b) Any five, explained: political interference in management and appointments; inefficiency and bureaucracy; lack of profit motive leading to waste; inadequate funding by government; corruption and embezzlement; poor management/unqualified staff; monopoly, so no competition to push efficiency; workers' 'nobody's property' attitude; poor maintenance of equipment.
Memorandum = external relations; Articles = internal rules.
(a) State five factors a bank manager would consider before granting a loan to a young school leaver.
(b) State five conditions that will make a bank to dishonour a customer's cheque.
(a) Any five: purpose of the loan/viability of the business plan; the applicant's character and integrity; collateral/security offered; guarantor; ability to repay (source of income); amount requested; repayment period; whether he has an account and its record with the bank; his age and legal capacity.
(b) Any five: insufficient funds in the account; signature differs from specimen; words and figures differ; cheque is stale (over six months old); cheque is post-dated; alterations not signed for; drawer has died, become bankrupt or insane; customer has stopped payment; account is closed or frozen by court order; cheque is mutilated.
(b) asks for reasons the bank refuses to pay a cheque.
(a) State five features of itinerate trade.
(b) State five features of a supermarket.
(a) Itinerant trade (any five): traders move from place to place (hawkers, pedlars, mobile shops); small capital; no fixed shop; sell small quantities of goods; deal in cheap, everyday or fast-moving goods; usually cash sales; sole proprietors; take goods to customers' doors; prices often bargained.
(b) Supermarket (any five): large shop, usually in towns; self-service; wide variety of goods, mainly food and household items; goods displayed on shelves with prices marked; cash/card payment at check-out points; fixed prices, no bargaining; large capital; often part of a chain; shopping trolleys/baskets provided.
Itinerant = moving traders; supermarket = large self-service shop.
(a) Differentiate between the following: (i) a factor and a broker; (ii) a stock exchange and a commodity exchange.
(b) Explain the following terms as used in the commodity market: (i) open outcry; (ii) futures contract; (iii) clearing system; (iv) pit outcry.
(a)(i) A factor is an agent who has possession of the principal's goods, may sell in his own name and fix the price; a broker does not hold the goods, only brings buyer and seller together for a commission (brokerage) and sells in the principal's name.
(ii) A stock exchange is a market for second-hand securities (shares, stocks, bonds); a commodity exchange is a market for raw materials and produce (cocoa, coffee, grains, metals) traded by grade, sample or description.
(b)(i) Open outcry: trading in which dealers shout bids and offers aloud (and use hand signals) on the trading floor so that all can hear.
(ii) Futures contract: an agreement to buy or sell a stated quantity of a commodity at a price fixed now, for delivery at a future date; used to guard against price changes (hedging).
(iii) Clearing system: the arrangement (clearing house) that records, matches and settles trades between members, guaranteeing that deliveries and payments are made.
(iv) Pit outcry: open outcry taking place in a 'pit', a ring or sunken area of the exchange floor where dealers in one commodity gather to call out prices.
A factor holds the goods; a broker does not.
Digital Trading Limited agreed to supply 200 computers to Mr. Kontch at the cost of D10,000 per computer. The company promised to deliver the machines within 30 days of the agreement.
(a) State four factors that may lead to the cancellation of the agreement.
(b) List and explain four essential elements of the agreement between Mr. Kontch and Digital Trading Limited.
(a) Any four: failure to deliver within 30 days (breach); delivery of wrong or faulty computers; Mr. Kontch failing to pay; mutual agreement to cancel; impossibility (frustration), e.g. fire, war, government ban; misrepresentation or fraud; death or bankruptcy of a party; the contract being illegal.
(b) Any four, explained: offer (Digital Trading offers to supply computers on stated terms); acceptance (Mr. Kontch agrees unconditionally to the terms); consideration (D10,000 per computer, D2,000,000 in all, exchanged for the computers); intention to create legal relations; capacity of the parties (adult, sane, company duly registered); legality of object; genuine consent (no fraud, mistake or duress).
Elements of a valid contract: offer, acceptance, consideration, capacity, intention, legality.
(a) Differentiate between deregulation and commercialization.
(b) The government of country Z wishes to sell its transport company. (i) Name the policy that the government wishes to adopt; (ii) Explain five reasons which could have necessitated the government's course of action.
(a) Deregulation is removing or relaxing government rules and controls in a sector so that market forces and private firms operate freely; commercialization keeps the enterprise in government ownership but makes it run on business lines to cover its costs and make profit.
(b)(i) Privatization.
(ii) Any five, explained: to improve efficiency and service; to reduce the financial burden of subsidies on government; to raise revenue from the sale; to stop losses and mismanagement; to reduce political interference and corruption; to encourage private investment and competition; to bring in new capital and technology; to widen share ownership among citizens.
Selling a government company = privatization.
The following information was extracted from the books of XYZ Ventures as at 31st June 2023.
Le
Opening stock 200,000
Closing stock 100,000
Salaries and wages 120,000
Purchases 900,000
Shop rent 150,000
30% profit was made on cost of goods sold.
You are required to calculate: (a) cost of goods sold; (b) gross profit; (c) total sales; (d) net profit; (e) rate of turnover.
(a) Cost of goods sold = 200,000 + 900,000 − 100,000 = Le1,000,000
(b) Gross profit = 30% × 1,000,000 = Le300,000
(c) Sales = cost of goods sold + gross profit = 1,000,000 + 300,000 = Le1,300,000
(d) Net profit = 300,000 − (120,000 + 150,000) = Le30,000
(e) Average stock = (200,000 + 100,000) ÷ 2 = Le150,000
Rate of turnover = 1,000,000 ÷ 150,000 = 6.67 times (about 7 times)
The 30% is on cost (mark-up), so gross profit = 30% of cost of goods sold.