All 50 questions from the West African Examinations Council (WAEC) Commerce 2013 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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A document used as a polite way of refusing credit is
A proforma invoice is a document that shows the prices and total amount which a prospective buyer is expected to send before delivery of goods can take place — it can be used as a polite way of refusing credit.
Carriage forward on an invoice means
Carriage forward means that the buyer is responsible for paying the carriage bill.
Which of the following is not contained in a consignment note?
Cost of goods is not detailed in the consignment note.
The PW company Ltd. Achieved the following result in 2012: Sales ₦100,000 Profits ₦5,000 Capital employed ₦20,000 The return on capital employed is
Return on capital employed = (Profit/Total capital employed)×100% = (5,000/20,000)×100% = 25%.
Which of the following will be suitable for hire purchase sale?
Since a refrigerator can last for a long time with little depreciation, it is suitable for hire purchase, as the seller can take it back in case of default by the buyer.
A person who earns extra commission for guaranteeing debts is a
A del-credere agent is the agent who assures the principal of all debts or default on the part of the buyer whom he links him with the principal, earning extra commission for this guarantee.
An insurance principle that prevents a person from insuring what he does not stand to lose, financially if the insured risk occur is
Before a person can take an insurance cover for anything, he must have insurable interest, i.e. liability to financial loss in the case of an event.
Voyage policy insurance is associated with
Voyage policy is the cover taken against the sinking of a ship. Thus, it has to do with marine insurance.
If a share is quoted ex-div, it means the new buyer would
Ex-div means that the seller is entitled to the next dividend, so the new buyer will not get the next dividend.
Which of the following is the function of commerce?
Commerce is all trading activities and whatever will aid trading activities — i.e. the exchange and distribution of goods and services.
Who among the following does not render direct service?
Musicians are not paid directly for rendering any service but paid for his music, unlike a teacher, doctor or retailer who render direct services.
The last link in the production process is the
It is said that production is not yet complete until it reaches the final consumer. Thus, the consumer is the final link in the production link.
The Board of Directors of Public corporation is appointed by the
Public corporations are owned by government. Thus, the board of directors are appointed by the government.
The object clause of a limited liability company is stated in the
The object clause is what specifies the area of business of the organisation. This information is needed by outsiders to know what area they can deal with the company. Anything that spells out the relationship of the company with outsiders is contained in the Memorandum of Association.
A market which deals in the purchase and sale of second-hand securities is the
The stock exchange sells second hand securities. Second hand securities are securities that have been issued earlier.
To endorse a cheque means to
To endorse a cheque, the drawer must write and sign the payee's name at the back of the cheque.
An insurance policy that covers the body of the ship only is called
Hull insurance covers the ship itself and not the cargoes on it.
Which of the following protects consumers against poor quality goods?
Standard Organisation is the body that ensures that products meet acceptable standard.
Mr. Biu has been paying the premium of a straight Life Assurance policy for several years. The surrender value of the policy is the amount that
Cash surrender value or surrender value is the cash amount offered to the policyholder by the issuing life carrier upon cancellation of the contract.
The use of current account in business is convenient because
Current account holders are entitled to loans such as overdraft. Thus, it is the best for business, and withdrawals can be made at any time.
The cost of telephone conversation is determined by the
The duration spent conversing determines the cost of telephone conversation.
'Not Negotiable' on a cheque means
Non-negotiable cheques means ownership cannot be transferred from one person to another; the holder has no better title than who transfers it.
The type of transport a manufacturer will use will be influenced by
The nature of the goods is the major determinant of the type of transportation a producer will use for its product.
A contract made between a ship owner and a merchant for the carriage of cargo is a
Charter party is a contract made between a ship owner and a merchant for the carriage of cargo.
Advertising efforts geared towards a particular audience is known as
Direct advertising is the type of advertising that is directed to a particular group of persons.
Trade fairs and exhibitions are media of
Through trade fairs, organisations can present their products to populace, which is a form of sales promotion.
The concept which says that a company's production policy should be centered on the ultimate user of the product is known as a
Consumer sovereignty is an economic concept which establishes the fact that consumer's preferences determine the production of goods and services. This means a company will produce goods and services that consumers will buy.
The various right attached to different classes of shares are stated in the
The prospectus states the right, duties and responsibility of shareholders and debenture holders.
Which of the following is a feature of supermarkets?
In a supermarket, goods are displayed with their prices attached to the desk.
Public enterprises are financed mainly by
Public enterprises are government owned corporations, such, it is financed by government.
A personal computer on sale in an office equipment shop is an example of a
Stock are goods which a business purchase for the purpose of selling them. For an office equipment shop, personal computer is part of its stock.
The difference between current assets and liabilities is a
Working capital is the difference between current assets and current liabilities.
A ltd. Company has an authorized capital of 2,000,000 shares of ₦5 each. If the company issued 1,200,000 shares, it issued capital is
Issued capital = D5 × 1,200,000 = ₦6,000,000.
The money used by Ola Maro and Co. Ltd. In running the day-to-day activities of the business is represented by
Working capital is the money used in running the day to day affairs of the company.
Which of the following is an advantage to a sole trader?
In a sole trader, only one person decides, thus, the decision making in such organisation is quick and fast.
A country's deliberate decision to reduce the value of her currency is called
When a country reduces the value of its currency in relation to other countries' currency, such deliberate action is known as devaluation.
Which of the following is not a function of warehousing?
Warehouse in itself does not create scarcity of goods but the individual middlemen do.
Ad valorem duties are based on the
Ad valorem tax/duties are duties charged on goods based on the value.
A tariff refers to a fees imposed on
While tariff is a tax imposed on imported goods, excise duty is tax imposed on exported goods.
The selling of goods in small units is normally performed by a
Retailers are the middlemen that break relatively large quantity into smaller units for the final consumers of the goods.
Direct sales to consumers by manufacturers is a means of eliminating
When the manufacturer sells directly to the consumers, the middlemen in form of wholesalers and retailers have been eliminated.
A physical restriction placed on the quantity of goods that can be imported is
Quota is an act of specifying the quantity of goods that can be imported into a country.
A country is said to achieve a trade surplus when total visible exports exceed total visible imports
A country achieve a trade surplus if the total visible export exceeds total visible import.
The process of winding up a public limited company by a court order is known as
When a court give order to wind-up a company, such is referred to as compulsory liquidation.
A person who undertakes the responsibility for forming a new company is a
Promoter is the person who takes the responsibility to incorporate a new company.
A term which describes the value of business connections made by a company over the years is known as a
Goodwill is the established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold.
The auxillary to trade which ensures that people have access to information pertaining to goods is a
Auxiliary to trade or aids to trade are all activities which assist trading activities. Advertising is the aid to trade that provides the consumers information about the product.
The insurance principle of indemnity does not apply to
In life assurance, the assured cannot be indemnified.
Which of the following price quotations requires the buyer to take delivery at the manufacturer's warehouse?
Ex works (EXW) is an international trade term that describes when a seller makes a product available at a designated location, and the buyer must cover the transport costs.
To take an insurance policy, an applicant must first complete a/an
A proposal form will introduce the policy which the prospective insured intend. It will provide all information about the prospective insured.
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