Quiz 8 of 14

2017 Commerce WAEC Theory Past Questions

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A) What is E-commerce

Answer

E-commerce: Electronic commerce is defined as buying, selling and distribution of goods and services through electronic media/internet.

 

B) State four advantages and four disadvantages of privatization

Answer

Four advantages of privatization:

i) It saves the government the funds usually budgeted as subsidies to such business

ii) The government gets a lump sum of revenue from the privatization for other essential services

iii) It helps in the development of private sector businesses because individuals are encouraged to participate in business

iv) It encourages foreign investment as some buyers of privatized enterprises are foreigners

v) It encourages the training of entrepreneurs and the acquisition of skills and technical know-how

vi) It promotes efficiency in the privatized industries because firms aspire to make a profit

Four disadvantages of privatization:

i) It leads to job loss thereby worsening unemployment

ii) The privatization process is often deviled by corruption and lack of transparency and equity/uneven distribution of wealth

iii) It makes the government in power to be unpopular

iv) It may confer monopoly power to the new owners

v) It leads to an arbitrary increase in the market prices of goods and services of privatized enterprises as against the formally subsidized prices

A) Define communication

Answer:

Communication is the transmission of messages or information from one source to another.

 

B) List six means of communication in business

Answer:

i) Letters/memo

ii) Circular

iii) Radios

iv) Telephone

v) Television

vi) E-mail

vii) Word of mouth (oral)

viii) Internet

 

C) In what four ways is communication important in business

Answer:

i) It enhances contact with suppliers of goods and services.

ii) For advertisement businesses need to inform the public about the availability of their product.

iii) Communication is needed for payments of business transactions.

iv) Communication aids effective business management by providing the necessary information for sound decisions and also keep staff and management well informed.

v) Feedback/contact with customers -  Communication helps a business to interact with its customers (market research) thus enabling firms to improve their product(s)

Explain the following retail outlets

i) Departmental store:

Answer

ii) Mobile shop:

Answer

iii) Chain store:

Answer

iv) Mail-order business:

Answer

v) Supermarket:

Answer

A) State four features of a warehouse

Answer

i) Convenient location: it should be located as conveniently as possible to potential users

ii) There should be adequate mechanical appliances and facilities for loading, unloading, and refrigeration

iii) Spacious accommodation to facilitate easy movement of goods, equipment, and people

iv) Adequate parking space inside the premises for free movement of vehicles, container trucks e.t.c.

 

B) Explain six reasons why warehousing is important to a business

Answer

i) Protection of goods against theft and fire

ii) It ensures regular flow of goods to the market thus helping in stabilizing prices

iii) It facilitates continuity in production as it permits the precautionary holding of inventory to respond to market conditions

iv) It reduces the risk of loss as warehouses guarantee the good condition of goods in their care

v) It promotes sales by allowing prospective buyers to inspect goods while in the warehouse

vi) Some goods are blended, graded, and labelled while in the warehouse

A) State five merits of cooperative societies

Answer

Merits of cooperative societies

  1. They encourage saving habits among their members
  2. They are democratic in nature
  3. They improve the standard of living of their members by providing goods which they cannot buy on their own
  4. They assist their members in marketing their products by ensuring fair prices
  5. The death of any of its members cannot bring it to an end since they are duly registered under the law
  6. Settlement of disputes among members
  7. They educate their members

 

B) Explain five procedures to be followed in the formation of a private limited company

Answer

Procedures to be followed in the formation of a private limited company

  1. Application for name search and reservation
  2. Preparation of articles and memorandum of association
  3. Preparation of declaration documents
  4. Filing of documents with the registrar of companies
  5. Assessment of documents filed for the purpose of fee payment
  6. Payment of the fee charged on the documents for registration
  7. Collection of certificate of incorporation

A) Define advertising

Answer

Advertising is a paid form of non-personal means of bringing the existence of goods and services to the knowledge of members of the public and to persuade them to buy and use the goods and services.

 

B) Explain four demerits of advertising

Answer

i) It encourages adulteration of fast-moving products.

ii) At times it interrupts interesting programs e.g. football matches, drama series, etc

iii) It is instrumental to the higher cost of products in the market, thereby making some products non-affordable.

iv) Some advertising through persuasion, mislead consumers to buy goods that they do not need.

v) Some advertising is unethical as a result it corrupts the minds of young people.

 

C) Explain five different ways producers can create awareness for their goods and services

Answer

i) This is done through the print media e.g newspapers, magazines, journals, and catalogues which have state, national and international coverage.

ii) The electronic media such as radio, television, and cinema where products are displayed and their uses demonstrated.

iii) Personal selling: this involves the engagement of salesmen who move from one place to another explaining the features, benefits and uses of the products to members of the public.

iv) Sales promotion: This involves giving out free gifts like T-shirts, openers, bags, caps, and stickers that have the product's name or logo to attract buyers.

v) Through organized trade fairs and exhibitions at well-known locations/centres to explain or educate their audience on the usage and benefits of the goods ad other well-designed structures at strategic locations with a display of such products for the attention of passersby.

vi) Window display, handbills, fliers, posters, public address system, internet, and telephone.

Explain the following business terms

A) Standing order: This is an order or instruction to the bank by a customer, to pay a certain sum of money to a named person or organisation on his behalf at regular intervals.

B) Bank draft: It is a cheque drawn on a bank by itself or its branch to guarantee payment.

C) Legal tender: This is a form of payment which by law a creditor must accept in the settlement of a debt.

D) Money order: This is a form of payment through the post office where the payer fills a form to include the payee’s name, the amount payable, and the post office of collection.

E) I.O.U: This is drawn by the debtor to the creditor acknowledging a debt.

A) Write the following commercial abbreviation in full

Answer

i) C.O.D: Cash on delivery

ii) C.I.F: Cost, Insurance and Freight

iii) E & O .E : Free onboard

iv) F.O.B: Errors and omission excepted

 

B) The sale of a good costing Le100,000 attracts a trade discount of 5% and a cash discount of 5%. You are required to calculate the:

(i) Trade discount value

(ii) Cash discount value

(iii) Net amount payable by the buyer.

Solution

i) Calculate Trade discount value (5% of cost of goods)

Cost of goods = Le100,000

ii) Calculation of cash discount

Cash payable = Le100,000 - Le5,000

=    Le95,000

Cash discount = \( \frac{5}{100} \scriptsize \: \times \: 95,000 \)

= Le4,750

 

iii) Calculation of net amount payable

A) What is E-commerce

Answer

E-commerce: Electronic commerce is defined as buying, selling and distribution of goods and services through electronic media/internet.

 

B) State four advantages and four disadvantages of privatization

Answer

Four advantages of privatization:

i) It saves the government the funds usually budgeted as subsidies to such business

ii) The government gets a lump sum of revenue from the privatization for other essential services

iii) It helps in the development of private sector businesses because individuals are encouraged to participate in business

iv) It encourages foreign investment as some buyers of privatized enterprises are foreigners

v) It encourages the training of entrepreneurs and the acquisition of skills and technical know-how

vi) It promotes efficiency in the privatized industries because firms aspire to make a profit

Four disadvantages of privatization:

i) It leads to job loss thereby worsening unemployment

ii) The privatization process is often deviled by corruption and lack of transparency and equity/uneven distribution of wealth

iii) It makes the government in power to be unpopular

iv) It may confer monopoly power to the new owners

v) It leads to an arbitrary increase in the market prices of goods and services of privatized enterprises as against the formally subsidized prices

A) Define communication

Answer:

Communication is the transmission of messages or information from one source to another.

 

B) List six means of communication in business

Answer:

i) Letters/memo

ii) Circular

iii) Radios

iv) Telephone

v) Television

vi) E-mail

vii) Word of mouth (oral)

viii) Internet

 

C) In what four ways is communication important in business

Answer:

i) It enhances contact with suppliers of goods and services.

ii) For advertisement businesses need to inform the public about the availability of their product.

iii) Communication is needed for payments of business transactions.

iv) Communication aids effective business management by providing the necessary information for sound decisions and also keep staff and management well informed.

v) Feedback/contact with customers -  Communication helps a business to interact with its customers (market research) thus enabling firms to improve their product(s)

Explain the following retail outlets

i) Departmental store:

Answer

ii) Mobile shop:

Answer

iii) Chain store:

Answer

iv) Mail-order business:

Answer

v) Supermarket:

Answer

A) State four features of a warehouse

Answer

i) Convenient location: it should be located as conveniently as possible to potential users

ii) There should be adequate mechanical appliances and facilities for loading, unloading, and refrigeration

iii) Spacious accommodation to facilitate easy movement of goods, equipment, and people

iv) Adequate parking space inside the premises for free movement of vehicles, container trucks e.t.c.

 

B) Explain six reasons why warehousing is important to a business

Answer

i) Protection of goods against theft and fire

ii) It ensures regular flow of goods to the market thus helping in stabilizing prices

iii) It facilitates continuity in production as it permits the precautionary holding of inventory to respond to market conditions

iv) It reduces the risk of loss as warehouses guarantee the good condition of goods in their care

v) It promotes sales by allowing prospective buyers to inspect goods while in the warehouse

vi) Some goods are blended, graded, and labelled while in the warehouse

A) State five merits of cooperative societies

Answer

Merits of cooperative societies

  1. They encourage saving habits among their members
  2. They are democratic in nature
  3. They improve the standard of living of their members by providing goods which they cannot buy on their own
  4. They assist their members in marketing their products by ensuring fair prices
  5. The death of any of its members cannot bring it to an end since they are duly registered under the law
  6. Settlement of disputes among members
  7. They educate their members

 

B) Explain five procedures to be followed in the formation of a private limited company

Answer

Procedures to be followed in the formation of a private limited company

  1. Application for name search and reservation
  2. Preparation of articles and memorandum of association
  3. Preparation of declaration documents
  4. Filing of documents with the registrar of companies
  5. Assessment of documents filed for the purpose of fee payment
  6. Payment of the fee charged on the documents for registration
  7. Collection of certificate of incorporation

A) Define advertising

Answer

Advertising is a paid form of non-personal means of bringing the existence of goods and services to the knowledge of members of the public and to persuade them to buy and use the goods and services.

 

B) Explain four demerits of advertising

Answer

i) It encourages adulteration of fast-moving products.

ii) At times it interrupts interesting programs e.g. football matches, drama series, etc

iii) It is instrumental to the higher cost of products in the market, thereby making some products non-affordable.

iv) Some advertising through persuasion, mislead consumers to buy goods that they do not need.

v) Some advertising is unethical as a result it corrupts the minds of young people.

 

C) Explain five different ways producers can create awareness for their goods and services

Answer

i) This is done through the print media e.g newspapers, magazines, journals, and catalogues which have state, national and international coverage.

ii) The electronic media such as radio, television, and cinema where products are displayed and their uses demonstrated.

iii) Personal selling: this involves the engagement of salesmen who move from one place to another explaining the features, benefits and uses of the products to members of the public.

iv) Sales promotion: This involves giving out free gifts like T-shirts, openers, bags, caps, and stickers that have the product's name or logo to attract buyers.

v) Through organized trade fairs and exhibitions at well-known locations/centres to explain or educate their audience on the usage and benefits of the goods ad other well-designed structures at strategic locations with a display of such products for the attention of passersby.

vi) Window display, handbills, fliers, posters, public address system, internet, and telephone.

Explain the following business terms

A) Standing order: This is an order or instruction to the bank by a customer, to pay a certain sum of money to a named person or organisation on his behalf at regular intervals.

B) Bank draft: It is a cheque drawn on a bank by itself or its branch to guarantee payment.

C) Legal tender: This is a form of payment which by law a creditor must accept in the settlement of a debt.

D) Money order: This is a form of payment through the post office where the payer fills a form to include the payee’s name, the amount payable, and the post office of collection.

E) I.O.U: This is drawn by the debtor to the creditor acknowledging a debt.

A) Write the following commercial abbreviation in full

Answer

i) C.O.D: Cash on delivery

ii) C.I.F: Cost, Insurance and Freight

iii) E & O .E : Free onboard

iv) F.O.B: Errors and omission excepted

 

B) The sale of a good costing Le100,000 attracts a trade discount of 5% and a cash discount of 5%. You are required to calculate the:

(i) Trade discount value

(ii) Cash discount value

(iii) Net amount payable by the buyer.

Solution

i) Calculate Trade discount value (5% of cost of goods)

Cost of goods = Le100,000

ii) Calculation of cash discount

Cash payable = Le100,000 - Le5,000

=    Le95,000

Cash discount = \( \frac{5}{100} \scriptsize \: \times \: 95,000 \)

= Le4,750

 

iii) Calculation of net amount payable