Quiz 12 of 16

2019 Commerce WAEC Theory Past Questions

Responses

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A) Career opportunities available to a student of commerce are;

Answer

i) Trading/wholesaling/retailing

ii) Marketing/salesmanship

iii) Agency

iv) Banking

 

B) Functions of an entrepreneur

Answer

i) An entrepreneur organizes all other factors of production.

ii) He provides capital.

 

C) Explain the following activities giving two examples each

Answer

i) Extractive industry: This deals with obtaining materials from nature r earth e.g. farming, fishing, lumbering, mining, and drilling.

ii) Construction industry: This involves the assembling of manufactured products into usable forms. It includes furniture making, construction of bridges, roads,  rails, and seaports.

iii) Manufacturing Industry: this involves the changing of raw materials into finished and semi-finished goods. Activities in this sector include making vehicles, textiles, refining, and brewing.

iv) Tertiary industry: this is concerned with the provision of commercial services including direct and indirect services. It involves the distribution and exchange of goods and services. Examples are; banking, teaching, barbing, trading, entertainment, medical and legal services.

The staff of Kadar manufacturing company limited formed a cooperative society to enable them to have access to funds

A) Name the type of cooperative society they formed

Answer

The cooperative society to be formed is a thrift and credit society

 

B) Features of a thrift and credit cooperative society

Answer

i) There is continuity which means that the death of a member will not bring the society to an end

ii) Members are entitled to one vote each irrespective of the number of shares owned

iii) The liability is limited to the shares held by members

iv) Profit is shared among members based on patronage

(v) The objective of the society is to generate funds which would be given as loans to its members

(vi) The management of the society is by a committee of elected members

(vii) Capital is raised from members contribution

 

C) Advantages of thrift and credit society

Answer

i) The society encourages saving habits among members.

ii) The members of the society have equal powers as all are entitled to one vote each during decision making.

iii) It enables members to have access to funds which could be difficult to obtain from other financial institutions.

iv) The death of any member cannot bring the society to an end. It has continuity

v) It improves members standard of living as commodities such as cars, furniture and housing are made available on credit

vi) Members benefit from training and seminars which are organized by the society

vii) It grants loans to members

 

Disadvantages of thrift and credit society

Answer

(i) There is usually difficulty in recovering loans which may hinder the operations of the society

(ii) Mismanagement/embezzlement of funds by elected members which may lead to the collapse of the society

(iii) There is great reliance on the contribution from members as well as repayment of loans

(iv) Some committee members lack management and technical skills to run the society thereby leading to the collapse of the society

A) Reasons that would make a bank to dishonour a cheque

Answer

i) When the amount written in figures does not correspond with the one in words

ii) When the drawer’s signature is different from the specimen captured when the account was opened

iii) If the bank has been informed about the demise or insanity of the account ledger

iv) When a court of competent jurisdiction freezes the account (Garnishee order)

v) When the amount in the cheque is greater than the account balance

vi) When the owner orders the bank to stop the payment of cheques

vii) If the cheque is not presented within a period of six months

 

B) Reasons countries introduce restrictions on foreign trade

Answer

i) Countries restrict trade to protect their home/infant industries from the competition of more advances industries abroad

ii) To enable local industries to expand and employ indigene

iii) Trade restrictions through the use of tariffs generate revenue for government

iv) Countries restrict foreign trade to improve their balance of payment with other countries

v) Foreign trade restrictions are usually employed to preserve a country’s foreign reserves

vi) To prevent the importation of harmful goods

A) Benefits of a commodity exchange

Answer

i) It provides the opportunity for industrial buyers and sellers to meet and manage their price risks better

ii) It ensures that farmers sell their products close to the market price by publishing future price daily

iii) It encourages continuous production and removes the need to look for buyers on the part of the producer or it increases agricultural production

iv) It encourages foreign exchange earnings

v) It encourages standardization of products

 

B) Methods of trading in a commodity exchange

Answer

i) Open outcry: This is a method of starting items for sale on commodity market with hand raised by the buyers to signify intention to buy.

ii) E-trading: This is the method where buyers and sellers of commodities are brought together through an electronic platform. The bargain is struck without negotiation.

iii) Pit-trading: This is the method of trading where buyers and sellers meet in a particular area of the trading floor to reach a bargain through an open outcry system

 

C) Requirement for trading in a commodity exchange

Answer

i) Items must have the possibility of being sold by the description.

ii) Demand must be large and supply must flow naturally to the market.

iii) The commodity must be susceptible to standardization or grading.

iv) The commodity must not be a perishable one that could be susceptible to deterioration.

v) The traders must be bonafide members of the trading and must not engage in inside trading

A) List six advertising media used in business

Answer

i) Newspaper

ii) Magazines/ journal

iii) Billboards

iv) Radio

v) Television

vi) Catalogue

vii) Internet

 

B) Personal selling: This is the face-to-face interaction of a salesman with potential customers for the purpose of presenting products, answering questions, or explaining features of products and processing orders.

 

Four Advantages of personal selling

Answer

i) It facilitates the sale of expensive, fragile, complex, and infrequently bought goods.

ii) It facilitates individualization of company products and getting feedback/demonstration of the use of the products.

iii) It is selective: a company’s sales personnel contacts only buyers in the target market, unlike other promotional measures that reach out to all and sundry.

iv) it is used to increase sales both during and off-peak periods.

v) It projects and sustains the good image of a company

 

Disadvantages of personal selling

i) Its use is limited to the sale of technical of industrial goods.

ii) It is difficult for managers to control the activities of the salesman on the field.

iii) Honest and the right caliber of personnel are hard to come by

Country X is facing a situation where its total payments to other countries is greater than its total earnings from abroad

A) State the term that relates to the above situation

Answer

The situation is referred to as an unfavourable/adverse/deficit balance of payment

 

B) Measures to correct an unfavourable balance of payment

Answer

i) Restricting imports: If imports are more than exports, the country should restrict imports to reduce its citizens demand for imported goods and services. Such restrictions may take the form of total ban, quotas and increased import duties.

ii) Increasing exports: A country may resort to measures that would encourage its citizens to produce for exports whereby its earnings from exports would be used to offset its import bills.

iii) Exchange control: The government of a country may introduce measures that would regulate the amount of foreign exchange available for importers

iv) Devaluation: A country may reduce the official rate of exchange of her currency with other countries. The effect of this is to make exports cheaper and imports expensive, thus increasing the demands for export.

v) Borrowing: A country may borrow to solve its balance of payment problems, such loans should go to the finance home production for exports.

vi) Sale of gold reserves/foreign investment: A country may sell part of its gold reserves as well as other securities so as to finance its balance of payment.

A) Services rendered by courier companies:

Answer

i) They deliver importation parcels and documents quickly and safely to their destination/render door to door delivery.

ii) They provide air cargo and shipping services for their customers.

iii) They provide recorded delivery service named customer/person/institution.

iv) They provide postal delivery services to remote areas.

v) They handle and deliver cash on behalf of customers

 

B) Advantages of rail transport:

Answer

i) It is suitable for the conveyance of heavy and bulky goods over long distances.

ii) It provides convenience services for passengers.

iii) It is very cheap because it has standard rates of charges to passengers.

v) It is not affected by traffic congestion or hold up as the case may be

 

Disadvantages of rail transport:

Answer

i) It requires large capital outlay which individuals or small firms cannot afford

ii) It is not flexible as it is not available everywhere

iii) There is high cost of maintaining the train and its rail track

iv)It is slow on short distances and not suitable for perishable goods

Note:

Milk 25 x 4,000           =          100,000

Soap 17 x 5,000          =          85,000

Sugar 15 x 3,000         =          45,000

Sweet 15 x 2,000        =          30,000

 

ii) Selling price of the goods at a markup of 20%

Answer

To determine selling price

Selling price = cost + profit (markup 20%)

CostMarkup 20%Selling Price
Milk 25 x 4,000 = 100,0020% x 100,000 = 20,000(20,000 + 100,000) = 120,000
Soap 17 x 5,000 = 85,00020% x 85,000 = 17,000(17,000 + 85,000) = 102,000
Sugar 15 x 3,000 = 45,00020% x 45,000 = 9,000(9,000 + 55,000) = 54,000
Sweet 15 x 2,000 = 30,00020% x 30,000 = 6,000(6,000 + 30,000) = 36,000

 

iii) Calculate the net profit

Determine gross profit

Gross profit = sales – cost of sales/purchases

Total cost of sales = (100,000 + 85,000 + 45,000 + 30,000 ) = N260,000

Total sales = (120,000 + 102,000 + 54,000 + 36,000) = N302,000

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