All 50 questions from the West African Examinations Council (WAEC) Commerce 2021 Objective paper, with the correct answer and a full explanation for each. Free, no signup needed.
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Commerce started as a result of
Commerce started as a result of competition; specialization created the need for distribution and exchange, but competition drove commerce's promotion of buying and selling.
The process of changing raw materials into the finished goods is
Manufacturing is the process of converting raw materials into finished goods.
An example of a primary product is
Primary products have not undergone refining, e.g. cocoa, palm kernel, crude oil; textile and flour are processed/manufactured products.
All activities geared towards the distribution and exchange of goods and services is
Commerce is trade (buying and selling) plus aids to trade — all activities that assist easy exchange of goods and services.
The word “limited” written after the name of a company means that
“Limited” indicates that the liability of members is limited to the amount of their shareholding in the company.
Which type of occupation is a carpenter engaged in?
A carpenter converts semi-finished goods (wood) into a more useful form, placing the occupation in the construction sector.
The reward for land as a factor of production is
Rent is the reward for land as a factor of production.
Which of the following businesses can raise capital through the stock exchange?
Public limited liability companies quoted on the Nigeria Stock Exchange are the only form of business that can raise capital on the exchange floor.
A group of people representing a cross-section of business interests in an area is
A Chamber of Commerce is the institution that brings all businesses under a single umbrella in an area.
One of the disadvantages of selling on credit is
Higher credit sales increase the tendency of bad debts.
A number of shops under one roof is a
A department store is a single shop divided into different units to trade different goods.
An organization of producers of similar products, which controls output with the intention to fix prices is a
A cartel is a union of producers of similar products formed to regulate/fix prices by controlling output.
One of the functions of a trade association is to
Trade associations exist mainly to promote the welfare of their members.
The practice of selling goods to a foreign country at lower prices than obtainable in the exporting country is
Dumping is selling goods abroad at a lower price than in the originating (exporting) country.
A foreign order which instructs an agent to buy certain goods from a particular supplier is
A closed indent instructs an agent to buy from a particular supplier; an open indent allows buying from any supplier.
Which of the following is not a condition for dissolution of a partnership?
Expiration of one business year is followed by another and is not sufficient reason for dissolving a partnership.
A country's balance of trade of -$20 million shows that its
A negative balance of trade indicates that import receipts exceed export receipts (import volume greater than export).
The collection of import duty is a function of the
Customs and Excise authority is charged with collecting import duties, while the port authority manages containers at the port.
An error on an invoice may be rectified by issuing
A credit note is used to correct an error on an invoice, reflected by ‘errors and omissions excepted.’
What is the average stock? (Opening stock N4,000, Closing stock N12,000, Purchases N17,000)
Average stock = (Opening stock + Closing stock) ÷ 2 = (4,000 + 12,000) ÷ 2 = N8,000.
The cost of goods sold is
Cost of goods sold = Opening stock + Purchases – Closing stock = 4,000 + 17,000 – 12,000 = N9,000.
The expected response from the recipient of a quotation is to send
After receiving a price quotation, the customer's next step is to send in an order.
The main function of a bureau-de-change is
A bureau-de-change's main function is buying and selling foreign currencies.
The right of a seller to make corrections on invoices is expressed by the term
The phrase used on invoices to allow correction of errors is ‘errors and omissions excepted.’
Speed is an important factor to be considered for choice of means of transport where goods are
For perishable goods, the fastest means of transportation must be used to avoid spoilage/destruction.
The practice by which insurance companies share risks with other insurance companies is
Re-insurance is when insurance companies transfer (‘cede’) some financial risk to another insurance company.
One of the functions of the port's authority is
The port authority maintains warehouses so cargo can be offloaded, i.e. it provides warehousing services.
Which of the following means of payment requires acceptance by the debtor to make it valuable?
A bill of exchange requires acceptance by the debtor to be valid; refusal makes it invalid.
The purpose for which the Central Bank sells securities is to
When the Central Bank sells securities, it receives cash from the public, thereby reducing cash in circulation.
The amount a current account holder is allowed to withdraw in excess of the balance in his account is
Overdraft is the amount above the balance which a current account holder is permitted to withdraw.
Which of the following business risks would an insurance firm not cover for an entrepreneur?
Change in consumer taste cannot be insured against because it cannot be measured; theft, fire and transit loss are insurable.
One of the qualities of tradable goods is
Homogeneity (uniformity) is a quality of tradable goods, especially on organized markets/exchanges.
Which of the following instruments of payment could be used in international trade?
A (foreign) bill of exchange is acceptable in international trade; the other listed instruments are typically used domestically.
Bonded warehouses are supervised by
Customs and Excise authorities supervise bonded warehouses used to keep imported goods until duties are paid.
An advertising campaign by a chicken seller designed to sell his products at the expense of a beef seller is
An advert campaign designed to sell at the expense of a rival substitute product is regarded as competitive advertising.
The main idea of the marketing concept is that all the firm's plans and operations should be
The marketing concept is consumer-oriented, aimed at maximizing profit for the seller by satisfying consumers.
A person who is employed for the purpose of bringing his principal into contractual relationship with third parties is
An agent is a person who acts on behalf of a principal, entering contracts with third parties on the principal's behalf.
The transfer of a government company to the public is
Privatization is the transfer of a government enterprise into private hands.
One of the roles performed by middle managers is
Middle managers don't formulate or review policy; they assist in carrying out (implementing) formulated policy and submitting results.
Which of the following is responsible for protecting consumers against poor quality goods?
Standard organizations are the government's watchdog for consumers, ensuring products meet set standards.
The saying that the 'consumer is always right' describes the doctrine of
Consumer sovereignty is the concept that the consumer is king and is always right.
A disadvantage of privatization is that
A disadvantage of privatization is that the new owner's profit motive outweighs public interest and the promotion of welfare.
The act of placing goods in glass shields in front of shops to attract passersby is
Placing goods in glass shields at shop fronts to attract passersby is window display.
The practice of making a state firm more profit-oriented is
Commercialization is when a public enterprise is reformed to become a profit-making organization.
Trade fairs and exhibitions are media of
Trade fairs and exhibitions are a form of sales promotion (trade promotion).
The income generated from tourism forms part of the country's
Tourism is not a visible/tangible export, so revenue from it is classed as invisible export.
An objective of the European Union is to
The EU aims at eliminating tariffs and quotas among member countries.
An inventor of a new machine for canning tomatoes can protect his product by
A patent protects an inventor of a new machine/invention.
The concept of determining the objectives of a business and stating how they can be actualized is
Planning involves setting organizational goals/objectives and the ways to achieve them.
One of the aims of ECOWAS is to
One objective of ECOWAS is to foster exchange of goods and services among member countries.
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