WAEC Commerce 2019 Theory Past Questions

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(a) Career opportunities for a student of commerce: Marketing; Trading; Teaching; Management. (b) Functions of an entrepreneur: • Decision making: the entrepreneur makes most of the decisions of the business — this is their major role in the organization. • Provision of funds needed for the continued survival of the business. (c)(i) Extractive industry: the industry that deals with the exploration of natural resources from source. It is the major provider of raw materials. Examples: mining of gold; fishing. (ii) Construction industry: the industry that deals with building and maintaining structures such as roads and buildings. Examples: road construction; building construction. (iii) Manufacturing industry: the industry that deals with converting raw materials into finished goods, creating utility from materials extracted by the extractive industry. Examples: production of cars; production of beverages. (iv) Tertiary industry: the industry that deals with the provision of services for other industries, linking other industries and the general public. Examples: banks; insurance companies.

Model answer

(a)(i) Thrift and savings cooperative society. (b) Features of a thrift and savings cooperative society: • They are formed by people who work in the same organization, most of the time. • They instill saving habits in their members. • Appointment to posts is based on a democratic system. • The society is a going concern in most cases. (c) Advantages of thrift and savings societies: • They provide loans to members at a very low interest rate. • They help members meet up with their contingencies. • They encourage savings habits and investment. Disadvantages of thrift and savings societies: • There is a limit to the loans given to members. • Management issues, as some of the people appointed to run the cooperative are not management-oriented.

Model answer

(a) Reasons for dishonouring cheques: • Insufficient balance in the account. • Irregularity on the cheque. • Cancellation of the cheque. • Stale date on the cheque. • An order from the account operator that the account should not be debited. (b) Reasons countries introduce restrictions on foreign trade: • To promote and protect local industry. • To correct balance of payment problems. • To avoid importation of banned goods. • To avoid dumping. • As a retaliation method against a country that bans exports from their own country.

Model answer

(a) Benefits of commodity exchange: • It encourages import-export competitiveness. • It encourages price stability. • It encourages portfolio diversification, since more options are available for buyers and sellers. (b) Methods of trading in a commodity exchange: (i) Futures: done by opening an account in a futures trading firm and putting a substantial amount of money into that account. (ii) Mutual funds: involves people with similar interests coming together and investing in a company closely tied to commodity trading. (c) Requirements for trading in a commodity exchange: (i) Copy of the memorandum and articles of association from the Corporate Affairs Commission (CAC). (ii) Credentials of sponsored individuals. (iii) Evidence of minimum paid-up capital. (iv) Certificate of incorporation.

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(a) Advertising media: (i) newspaper (ii) television (iii) radio (iv) social media (v) posters (vi) pamphlets. (b) Personal selling involves selling directly to customers through one-on-one contact. (c) Advantages of personal selling: • It creates intimacy between the buyer and seller. • It makes it easy to directly inform the seller about the uses and benefits of the product. • It reduces the constraints posed by middlemen. • It leads to an increase in sales. Disadvantages of personal selling: • It is stressful on the part of the seller. • It may involve too much cost to reach customers.

Model answer

(a) Balance of Payment deficit. (b) Measures to correct a balance of payment deficit: • Reducing imports of goods that can be produced locally: placing restrictions on goods that local firms can produce. • Promoting export-based firms: government can give loans and tax holidays to exporting firms so they can charge lower prices, making exports cheaper and increasing purchases. • Devaluation of local currency: reducing the value of the local currency, making imported goods more expensive and reducing demand for them. • Selling of property abroad: if property held abroad is sold, this leads to higher receipts for the country, helping correct the deficit. • Borrowing from abroad: taking loans from institutions like the IMF, resulting in increased international receipts to offset export payments. • Embargo: government can place an embargo on foreign goods, reducing the payment made for foreign goods.

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(a) Services rendered by courier companies: • Storage facilities. • Parcel sending. • Logistic services. • Passenger transportation. (b) Advantages of rail transport: • Rail transport does not face traffic jams. • There is less risk of accident. • It is less expensive. Disadvantages of rail transport: • It has limited stopping points. • Its accidents are usually very fatal. • It is expensive to install a rail system.

Model answer

(i) Cost of goods sold: Sweets: 15 × #2,000 = #30,000 Milk: 25 × #4,000 = #100,000 Sugar: 15 × #3,000 = #45,000 Soap: 17 × #5,000 = #85,000 Total = #260,000 If payment was made within 7 days: Cash discount = 6% × 260,000 = #15,600 Trade discount = 10% × 260,000 = #26,000 Cash paid = 260,000 − 15,600 − 26,000 = #218,400 (ii) If markup is 20% (¼): Margin = 1/(1+4) = 1/5 Gross profit = ¼ × 218,400 = #54,600 Selling price = 5 × 54,600 = #273,000 (iii) Computation of net profit: Gross profit = #54,600 Expenses: Rent and rates #3,500 + Salaries #8,000 + Fuel #2,000 + Electricity #1,500 = #15,000 Net profit = 54,600 − 15,000 = #39,600