53 questions. Try each one, then open the answer to check yourself and read the explanation.
A function of commerce is to
Answer: C (facilitate movement of goods and services.)
Commerce moves goods and services from producers to consumers through trade and aids to trade.
Labour as a factor of production attracts
Answer: A (wage.)
The reward for labour is wages (or salaries).
Which of the following industries uses wood to make furniture?
Answer: C (Construction)
Of the options, only construction (part of secondary industry that builds and assembles things) covers making furniture from wood; extraction only fells the trees.
A factor which will not influence choice of occupation is
Answer: C (population.)
A person chooses an occupation by his ability, the pay and the risks involved; the size of the population is not a personal reason.
An aid to trade that provides information about a product is
Answer: A (advertising.)
Advertising informs people about products and persuades them to buy.
A feature of land is that
Answer: C (its supply is fixed.)
Land is a gift of nature and its total supply cannot be increased.
The industry that transforms raw materials into finished goods is
Answer: C (manufacturing.)
Manufacturing changes raw materials into finished goods.
An organization formed to control prices of commodities by restricting the quantity supplied is a
Answer: C (cartel.)
A cartel is an agreement among producers to limit output and so control prices.
If a groundnut farmer takes over a vegetable oil processing company, the merger is
Answer: C (forward integration.)
The farmer moves forward to the next stage of production (processing his groundnuts into oil), so it is forward integration.
A chamber of commerce is an asssociation of business individuals aimed at promoting the interest of the
Answer: B (members.)
A chamber of commerce exists to promote and protect the interests of its member businesses.
In business, the net value of the owner's assets is
Answer: D (capital owned.)
Capital owned (net worth) is total assets minus total liabilities: what the owner really owns.
Quick decision making is a feature of a
Answer: A (sole proprietorship.)
A sole trader decides alone, so decisions are made quickly.
A business unit that is restricted from transferring shares freely is a
Answer: B (private company.)
A private company's Articles restrict the transfer of its shares, and it cannot sell shares to the public.
Use the information below to answer questions 14 to 16.
₦
Stock as at 01/01/2024 20,000
Stock as at 31/12/2024 50,000
Purchases 100,000
Sales 90,000
The cost of goods sold is
Answer: D (₦70,000.)
Cost of goods sold = 20,000 + 100,000 − 50,000 = ₦70,000.
Use the information below to answer questions 14 to 16.
₦
Stock as at 01/01/2024 20,000
Stock as at 31/12/2024 50,000
Purchases 100,000
Sales 90,000
The gross profit is
Answer: B (₦20,000.)
Gross profit = sales − cost of goods sold = 90,000 − 70,000 = ₦20,000.
Use the information below to answer questions 14 to 16.
₦
Stock as at 01/01/2024 20,000
Stock as at 31/12/2024 50,000
Purchases 100,000
Sales 90,000
The rate of stock turnover is
Answer: A (2 times.)
Average stock = (20,000 + 50,000) ÷ 2 = ₦35,000. Rate of stock turnover = cost of goods sold ÷ average stock = 70,000 ÷ 35,000 = 2 times.
An organization that protects users of products is a
Answer: C (consumers' association.)
Users of products are consumers, and consumers' associations protect them.
An attribute of a coprative society that makes it democratic is
Answer: D (entitlement to one vote by each member.)
In a cooperative each member has one vote however many shares he holds, which makes control democratic.
A function of a wholesaler to a producer is
Answer: D (breaking bulk.)
By buying in large quantities, the wholesaler relieves the producer of breaking his output into small lots for many retailers.
Which of the following trade documents prevents understatement of prices?
Answer: A (Consular invoice)
A consular invoice is certified by the importing country's consul, confirming the true value so that prices are not understated to avoid duty.
The quality of money that enables it to serve as a medium of exchange is
Answer: A (acceptability.)
Money can be used to buy things only because everyone accepts it.
Application for insurance cover could be done using a
Answer: C (proposal form.)
A person applying for insurance fills a proposal form giving details of the risk.
Sharing of risks among insurance companies is
Answer: B (re-insurance.)
Re-insurance passes part of a large risk to other insurers.
An organization that provides facilities and arranges for the purchase and sale of goods is
Answer: D (a commodity exchange.)
A commodity exchange is an organised market providing facilities for buying and selling goods such as cocoa or metals.
An example of an invisible item in the balance of payment account is
Answer: C (salaries of expatriates.)
Salaries paid to or by foreign workers are payments for services, which are invisible items.
Which of the following documents would be used to collect imported goods?
Answer: C (Bill of lading)
The bill of lading is a document of title; the importer presents it to collect goods from the ship.
A merit of credit sale is
Answer: B (improvement in living standard.)
Credit lets people buy and use goods (e.g. furniture, appliances) before they have the full price, which raises their standard of living. It actually increases the risk of bad debts.
A financial institution which offers loans to small scale businesses is a
Answer: D (microfinance institute.)
Microfinance institutions give small loans to small businesses and low-income people.
The price quoted when the exporter bears all the expenses up to the port of departure is
Answer: C (F.O.B.)
Under FOB (free on board) the exporter pays all costs until the goods are loaded on the ship at the port of departure; the buyer pays from there.
Use the information below to answer questions 32 and 33.
Gibril bought shares from a company at D 40 per share and sold them to Sam at D 60 each.
Gibril sold the shares at a
Answer: C (premium.)
He sold at D60, above the D40 he paid, i.e. at a premium.
Use the information below to answer questions 32 and 33.
Gibril bought shares from a company at D 40 per share and sold them to Sam at D 60 each.
In his decison to buy the share at a high price, Sam is acting as a
Answer: B (bull.)
A bull buys shares expecting their price to rise further, so he is willing to pay a high price now.
An advert for the sale of cattle placed on a butcher's journal is
Answer: C (direct.)
It is aimed directly at a particular group (butchers) who buy cattle, so it is direct advertising.
The fastest means of delivering parcels is through
Answer: D (courier service.)
Courier companies deliver parcels quickly, often door to door within a day. Telegram and online services cannot carry physical parcels.
Which of the following medium of communication is used within an organization only?
Answer: A (Memo)
A memo (memorandum) is an internal message between people in the same organisation.
A body charged with the responsibility of ensuring that products being sold are of a specified requirement is a
Answer: D (standards organization.)
A standards organisation sets and enforces quality standards for products.
A trade fair is an example of
Answer: A (sales promotion.)
Trade fairs display products to the public to boost sales, which is sales promotion.
The document used when goods are delivered by an independent carrier is
Answer: C (consignment note.)
A consignment note goes with goods sent by an independent (land) carrier.
A contract of sale where the selling price includes interest is
Answer: B (hire purchase agreement.)
Under hire purchase the buyer pays a deposit and instalments, and the total (HP price) is the cash price plus interest.
An advantage of deregulation is that it
Answer: B (reduces restrictions in business.)
Deregulation removes government restrictions, so businesses operate more freely.
If Rose feeds her neightbour's son because of his inability to pick him on time, she becomes an agent by
Answer: A (necessity.)
In an emergency, a person who acts to protect another's interest without prior authority becomes an agent of necessity.
Which of the following activities is considered as a pre-sale service?
Answer: D (Display of goods)
Display of goods happens before the sale; maintenance, installation and home delivery come after it.
Recruitment and placement of workers in an organization is a function of the
Answer: B (human resources department.)
The human resources (personnel) department hires, places and trains staff.
A disadvantage of privatization is that
Answer: C (profit motive outweighs the need to provide cheap basic goods.)
Private owners put profit first, so cheap essential goods and services may no longer be provided.
Which of the following is not a business objective?
Answer: D (Competition)
Survival, profit and growth are goals a business aims at; competition is a condition of the market, not an objective.
An objective of ECOWAS is to
Answer: D (eliminate tariffs and quota.)
ECOWAS aims to remove tariffs and quotas on trade among member states.
(a) Distinguish between manufacturing and construction.
(b) State four advantages of e-commerce.
(c) State four functions of commerce.
(a) Manufacturing changes raw materials or semi-finished goods into finished goods, usually in factories (e.g. textiles, beverages); construction assembles materials into structures on a site (e.g. buildings, roads, bridges).
(b) Any four: buyers can shop at any time from anywhere; wider (even global) market for sellers; lower operating costs (no big shop needed); cuts out some middlemen, so lower prices; easy comparison of prices and products; faster transactions and online payment reduce cash handling; small firms can compete with big ones.
(c) Any four: distributes goods from producers to consumers; links producers and consumers through trade; provides aids to trade (banking, insurance, transport, warehousing, communication, advertising); creates employment; helps raise the standard of living; promotes international trade; provides government revenue.
Manufacturing produces goods in factories; construction builds structures.
(a) Differentiate between the following terms: (i) cartel and consortium; (ii) holding company and subsidiary company.
(b) Abu and Saul are sole proprietors. Abu suggested to Saul for their businesses to be merged into a partnership. (i) List four sources of finance that could be available to the partnership. (ii) State four reasons Saul may be reluctant to accept the merger.
(a)(i) A cartel is an association of independent firms producing the same product that agree to restrict output and fix prices; a consortium is a temporary combination of firms that pool resources and skills to carry out a large project too big for one firm (e.g. building a dam).
(ii) A holding company owns enough shares (usually over 50%) in other companies to control them; a subsidiary company is a company controlled by a holding company that owns most of its shares, though it keeps its own name.
(b)(i) Any four: partners' capital contributions; admitting new partners; bank loans and overdrafts; trade credit; hire purchase; ploughed-back profits; loans from friends and relatives; cooperative/microfinance loans.
(ii) Any four: loss of sole control and independence; profits must be shared; unlimited liability for the partner's debts and actions; slower decision making; possible disagreements; lack of trust or confidence in Abu; partnership ends on death or withdrawal of a partner; difficulty withdrawing his capital.
Cartel restricts output; consortium pools resources for a project.
Country X established a Council that would be tasked with the responsibility of increasing the sale of local products in foreign markets.
(a) Name the organization formed by country X.
(b) State four functions that the organization named in 3(a) would perform.
(c) State five reasons country X engages in foreign trade.
(a) Export Promotion Council.
(b) Any four: searches for and develops foreign markets for local products; organises participation in international trade fairs and exhibitions; gives information and advice to exporters on markets, standards and procedures; trains exporters; gives export incentives and helps with export finance; promotes the image of local products abroad; encourages production for export.
(c) Any five: to obtain goods it cannot produce; uneven distribution of natural resources; differences in climate; comparative cost advantage and specialisation; to sell surplus output; to earn foreign exchange; wider market and economies of scale; access to technology; to raise living standards; to improve international relations.
A council that promotes exports = Export Promotion Council.
(a) State five reasons for the survival of small retail businesses.
(b) Outline five ways a country can correct its balance of payment deficit.
(a) Any five: personal relationship with customers; sell in very small quantities; give credit to trusted customers; located near customers (convenience); open for long hours; small capital needed to start; low running costs; can bargain prices; provide home delivery and personal services; serve rural areas where big stores are absent.
(b) Any five: increase and diversify exports (export promotion); restrict imports through tariffs, quotas or bans; devalue the currency; exchange control; borrow from abroad/IMF; attract foreign investment; encourage tourism and other invisible exports; encourage local production of imported goods (import substitution); reduce government spending abroad.
Small retailers survive mainly by personal service and convenience.
Felisco Ltd., a raincoat manufacturing company intends to gain patronage from its customers by offering a discount once a year when demand is low.
(a) Name the type of discount the company could offer.
(b) State four reasons the company would offer such a discount.
(c) State five functions of a customs authority.
(a) Seasonal discount.
(b) Any four: to increase sales in the off-season (dry season); to clear old stock and free storage space; to attract new customers; to keep regular customers loyal; to get cash flow when demand is low; to compete with rival firms; to reduce storage costs and risk of damage.
(c) Any five: collects import, export and excise duties; prevents smuggling; stops the import of banned/harmful goods; controls bonded warehouses; examines and values imported goods; collects statistics on imports and exports; enforces import and export regulations; issues licences and permits.
A discount given at a particular time of year is a seasonal discount.
(a) List five types of banks.
(b) Explain five measures that the central bank could use to regulate the activities of other banks.
(a) Any five: central bank; commercial banks; merchant banks; development banks; mortgage banks; microfinance banks; cooperative banks; agricultural banks; savings banks; non-interest (Islamic) banks.
(b) Any five, explained: open market operations (buying/selling treasury bills to change the money banks hold); bank rate/monetary policy rate (raising or lowering the rate it lends to banks to make credit dear or cheap); cash reserve ratio (percentage of deposits banks must keep with it); liquidity ratio (proportion of assets banks must hold in liquid form); special deposits; selective credit controls/directives (telling banks which sectors to lend to); moral suasion (persuading banks); licensing, supervision and inspection of banks.
Explain how each measure increases or reduces banks' ability to lend.
(a) Define marketing.
(b) State three functions of marketing.
(c) Explain the following terms: (i) customer service; (ii) sales promotion; (iii) exhibition; (iv) after-sales service.
(a) Marketing is the process of identifying consumers' needs and wants and satisfying them profitably through the product, its price, promotion and distribution.
(b) Any three: market research; product planning and development; pricing; advertising and promotion; distribution; selling; packaging and branding; after-sales service.
(c)(i) Customer service: help and care given to customers before, during and after a purchase to satisfy them and keep them loyal.
(ii) Sales promotion: short-term activities that encourage people to buy, e.g. discounts, free samples, coupons, competitions.
(iii) Exhibition: a public display of goods for people to see, test and sometimes buy, to make them known.
(iv) After-sales service: services given after goods are sold, e.g. free delivery, installation, repairs, maintenance and guarantees.
Sales promotion is short-term; customer service is ongoing.
Manka Ltd. had an authorized capital of 100,000 shares of D 40 each, out of which 50,000 shares were fully subscribed and allotted as at December 31, 2024. Other assets and liabilities were:
D
Creditors 40,000
Motor van 100,000
Buildings 500,000
Stock 40,000
Debtors 15,000
Cash 10,000
You are required to calculate: (a) issued capital; (b) unissued capital; (c) total assets; (d) working capital.
(a) Issued capital = 50,000 × D40 = D2,000,000
(b) Unissued capital = (100,000 − 50,000) × D40 = D2,000,000
(c) Total assets = 100,000 + 500,000 + 40,000 + 15,000 + 10,000 = D665,000
(d) Current assets = 40,000 + 15,000 + 10,000 = D65,000
Working capital = 65,000 − 40,000 (creditors) = D25,000
Issued and unissued capital use the D40 nominal value of each share.