Quiz 3 of 16

2015 Commerce WAEC Theory Past Questions

Responses

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a. What is occupation?

Answer

Occupation is defined as the productive activity an individual engages in to earn a living. It is the economic activity which occupies an individual’s productive time.

 

b. With the aid of a diagram, show the different classes of occupation.

Answer

 

c. Explain with one example each, three classes of occupation shown in 1 (b) above.

Answer

The classes of occupation:

  • Industrial occupation: This is concerned with obtaining raw materials and converting them to finished goods. It refers to activities involved in the physical production of goods. This class of occupation is divided into; Extractive occupation, Manufacturing occupation, and Constructive occupation. An Example of industrial occupation is mining.
  • Commercial occupation: This is concerned with activities in the effective distribution of goods. This class of occupation involves buying and selling of goods as well as the services that enhance or facilitate buying and selling. An example is retailing.
  • Services: These are those activities rendered to the people. That is services rendered to people either directly or indirectly but which the people are directly beneficial. An example is banking.

a.What is a vending machine?

Answer

A vending machine is a retail outlet which dispenses pre-packed items such as canned drinks, candies, bottled drinks, cigarettes, and so on. It sells automatically once the appropriate amount has been inserted in the slot provided. This is one of the modern ways of retailing.

 

b. State six reasons why supermarkets are popular with shoppers.

Answer

Reasons for the popularity of supermarkets with shoppers:

  • Prices of goods sold are highly competitive and consumer-based
  • Goods are arranged in such a manner that attracts the buyers and stimulates impulse buying
  • All consumers enjoy preferential treatment. One consumer is not specially treated over the other in pricing and other benefits.
  • Shoppers enjoy self-service. That is, though the provision of trolleys and baskets, shoppers are able to move around rolls of properly arranged goods to pick items they want.
  • Goods are provided in varieties and ranges that allow shoppers to make choices proportionate to their purses.
  • Most supermarkets are located at accessible locations where there are no traffic congestions.

a.  Outline five functions of commercial banks.

Answer

Functions of commercial banks are:

  • They discount bills of exchange
  • They grant loans and overdraft
  • They act as agents for their customers in making payments or collecting dividends
  • They keep money and other valuables
  • They give advice to their customers on investment.

 

b. How the central bank control commercial banks:

Answer

  • Open Market Operation (OMO): This is the sale and purchase of securities between the central bank and commercial banks, It sells securities to the commercial banks in order to reduce money in circulation and buys securities from commercial banks in order to increase the money in circulation.
  • Moral Persuasion: This is a policy whereby the central bank persuade or implore commercial banks on its lending rate to reduce or increase money in circulation
  • Bank rate: The central bank can either increase or decrease its lending rate to the commercial banks in order to discourage or encourage borrowing by the public.
  • Special Deposit: In order to control credit, the central bank may demand a compulsory deposit from the commercial banks as a percentage of the deposit with the commercial banks
  • Special Directives: The central bank gives some special instructions to the commercial banks on their deposits, lending policies, and so on.

a. State five reasons for the presence of the customs and excise authority at seaports.

Answer

Reasons for the Customs and Excise Authority at the seaports are:

  • To prevent smuggling
  • Collection of taxes
  • Supervision of a bonded warehouse where goods are kept until duties is paid.
  • To educate and supply information on government policies to exporters and importers
  • To collect and compile reports on import and export

 

b.  Explain five functions of airport authority

Functions of Airport Authority:

Answer

  • Collection of taxes and levies: The airport authority collects airport levies from airline operators and taxes as well as other rates for use of its facilities
  • Security: The airport authority assures the security of aircraft and passengers
  • Traffic control: It controls air traffic for aircraft on taxing, landing, weather control, and so on.
  • Provision of warehouse: It provides warehouse facilities for the safekeeping of goods.
  • Maintenance: It ensures the effective functioning of facilities at the ports through proper maintenance.

a. Explain five reasons for which manufacturers advertise their products.

Answer

Reasons for advertising:

  • Enlightenment: It educates the buyers on the functions and importance of goods
  • Demand stimulation: Advertising stimulates and creates demand for goods.
  • Awareness: Advertising creates awareness of a product, especially a new product, to the public
  • Goodwill: It improves the goodwill and reputation of the manufacturer
  • Relationship: It builds a healthy relationship between the consumer and the manufacturer. That is, it endears the manufacturers to consumers.

 

b. State five reasons for the continued criticism of advertising.

Answer

Reasons for the criticism of advertising:

  • It increases the cost of goods which increases the price of goods as well
  • It leads to wastage of resources
  • Advertising sometimes misleads the people
  • It sometimes leads to unhealthy competition.
  • It interferes with the free choice of the people

a. What is a contract?

Answer

A contract is a legally binding agreement imposing rights and obligations on the parties which will be enforced by the courts. It is also seen as an agreement between two or more parties which is intended by them to have legal backing. Therefore, it follows that a contract involves an agreement between two parties which may be individuals or groups of individuals or organizations or countries recognizable by law.

 

b. List and explain four ways by which a contract can be discharged.

Answer

Ways by which a contract may be discharged:

  • By Agreement: This is when the parties involved decide to discharge the contract even before the performance
  • Performance: This is when the content of the contract has been fully performed and the details carried out.
  • Breach: One of the parties may fail in his part of the agreement
  • Lapse of time: This is when the time stated in the contract has expired. This may happen before the performance of the contract

a.  State five reasons for governments participation in business

Answer

Reasons for Government participation in Businesses:

  • Huge capital involved in setting up such business
  • Security and strategic reasons
  • To ensure even distribution of resources
  • To prevent monopoly
  • To provide essential services at affordable prices

 

b. Explain five problems encountered by government businesses.

Answer

Problems encountered by government businesses:

  • Political Instability: When there are frequent changes in government, there may be inconsistency in the administration of such businesses which may lead to waste.
  • The attitude of workers: Most of the workers in government businesses are often indifferent in the disposal of their duties. Attitudes such as lateness, absence without notice, and so on can cripple government businesses.
  • Nepotism: Favouritism in appointment often lead to the appointment of incompetent or unqualified personnel into office which will affect the effectiveness of the business
  • Misappropriation of funds: Most items, due to inconsistent government and administration, funds for projects or some other purposes are either mismanaged or embezzled.
  • Government Interference: In most cases, the government interferes in the affairs too frequently such that it results in poor performance of such businesses

a. Write in full the following abbreviations as used in commerce:

(i) COD (ii) CIF (iii) FOB; (iv) E and O.E.

Answer:

  • COD – Cash on Delivery
  • CIF – Cost, Insurance and Freight
  • FOB – Free on Board
  • E and O.E – Errors and Omissions Exempted

 

b. The sale of consumer goods costing N 100,000 attracts a cash discount of 7.5% and a quantity discount of 5%. Calculate the:

(i) Value of the quantity discount

(ii) Value of the cash discount

(iii) The net amount of money payable by the buyer.

Answer:

i. Quantity discount 5%, cash discount 7 ½ %, cost of goods = #100,000

∴Quantity discount = 5% x #100,000 = #5,000

∴Value of quantity discount = #5,000

ii. Value of cash discount

7 ½ % X #100,000 = #7,500

iii. Net amount of money payable by the buyer

Net amount payable = cost – discounts (cash + quantity)

= #100,000 – (#7,500 + #5,000)

= #100,000 – #12,500

= #87,500

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