WAEC Commerce 2023 Theory Past Questions

Model answer

(a) Factors that delayed the growth of commerce in West Africa: (i) Shortage of manufacturing sector — one of the major shortcomings in the growth of commerce in West Africa is due to the fact that majority of the countries that made up the region are non-manufacturing countries; rather they are consuming economies. (ii) Lack of unified currency — West Africa region has not achieved a unified currency that can aid easy trade among them, which is another setback in the development of commerce in the region. (iii) Language barrier — a significant factor that delays development of commerce in the language barrier, while some adopt English, others adopt French. (iv) Bad road network — West Africa region is yet to construct an effective road network that covers the region, which can aid easy flow of goods from one border to another; without easy movement of goods, there cannot be significant growth in commercial activities. (v) Political instability — the West Africa region has not been stable politically; this has always caused change in policies and loyalty, and the effect of that is low trade among themselves. (b) Classification of workers: Primary sector: farmer. Secondary sector: potter, brewer, mason. Industrial sector: oil driller, policeman, stock broker.

Model answer

(a) Problems of sole proprietorship: (i) Unlimited liability — one of the major problems of the sole proprietor is that he bears all the liability of the business alone. (ii) Limited capital — the capital enjoyed in a partnership business is higher as a result of joint contribution when compared with a sole proprietor. (iii) Limited expertise — a sole proprietor's success is limited to his own ideas alone. (iv) Lack of investors — a sole proprietorship business does not attract an investor as much as a partnership business. (v) Limitation in access to loans — there will be limited loans that the sole proprietor will be able to attract to his business. (b) Positive effects of tourism: Economy: it will improve the country's foreign exchange earning; it will create employment for the locals. Society: it will promote conservation of cultural heritage; it will also promote cultural exchange among tourists and residents. Environment: it may lead to proper sanitation of the environment from time to time; it will reduce urban congestion.

Model answer

(a) Differences between marketing and selling: Marketing creates awareness for the goods while selling transforms the goods to money. Marketing focuses on customers' needs while selling focuses on the seller's need. (b) Elements of the marketing mix: (i) Product; (ii) Price; (iii) Place; (iv) Promotion. (c) Benefits of being an ECOWAS member: (i) It will promote economic cooperation among its members, so whoever leaves may not enjoy the cooperation. (ii) It avails members' citizens to move freely; thus, if Z leaves, her citizens cannot move freely within the ECOWAS region. (iii) ECOWAS maintains peacekeeping among its troubled members; this benefit will not be available for Z if she leaves. (iv) It provides an open border to member states, which Z will not enjoy as soon as she leaves ECOWAS.

Model answer

(a) Securities traded at the stock exchange market: (i) Stocks — this is the unit of ownership in a limited liability company; by buying stock of a company, one becomes part of the owner of the company; the shareholder receives dividend from the company from time to time and also has the opportunity to attend the annual general meeting of the company. (ii) Bonds — this is a document of indebtedness on the part of the issuer, which usually has a maturity date, but the owners can trade the bonds at the stock exchange market before the maturity date; the holder usually receives interest from time to time before its maturity. (iii) Unit trust — this is a type of investment in which a group of investors form a mutual fund managed by a fund manager; a contributor may sell off its fund at any time. (iv) Debentures — this is also a document which stipulates that the issuer is indebted to the bearer; the difference between it and bond is that it is issued by a limited liability company. (v) Derivatives — this is a financial contract which value is related to the underlying asset used to back it; it is also traded in the market. (b) Duties of an agent to his principal: (i) He should always act in the interest of his principal. (ii) He must always act for the advantage of the principal. (iii) He must execute the mandate given to him by the principal with utmost good faith. (iv) He must exercise reasonable care and skills in the discharge of his responsibility. (v) He must always communicate with the principal as situation demands.

Model answer

(a) An indent is a document issued by an importer to the buyer stating all relevant information regarding the price, quantities and nature of the goods, while quotation is a document that a seller provides to a buyer showing prices and quantities. Indent involves foreign trade, quotation is domestic trade. Also, quotation is a form of invitation to treat. (b)(i) Functions of export promotion council: to promote growth and development of export related industry; to promote diversification of export of the country; to articulate the implementation of export policies; to manage goods that will be exported out of the country. (ii) Functions of customs and excise authority: to generate revenue for the government through imposition of import and excise duties; to regulate government importation policy; to control bonded warehouses to ensure proper documentation for all imported goods; to keep and analyse import and export records.

Model answer

(a) Tourism can be defined as the act of visiting places, usually away from home, with the aim of recreation, relaxation, pleasure etc., in order to increase one's experience. (b) Negative effects of tourism: Economy: it may lead to inflation. Society: it usually encourages imported vices such as prostitution, alcoholism etc. Environment: congestion and pollution. (c) Positive effects of tourism: Economy: (i) it will improve the country's foreign exchange earning; (ii) it will create employment for the locals. Society: (i) it will promote conservation of cultural heritage; (ii) it will also promote cultural exchange among tourists and residents. Environment: (i) it may lead to proper sanitation of the environment from time to time; (ii) it will reduce urban congestion.

Model answer

Using the LOMPAT VENTURES figures given: (i) Net profit = Gross profit − Expenses. Cost of goods sold = Stock(01/01/22) + Goods bought − Stock(31/12/22) = ₦(37,500+30,000-15,000) = ₦52,500. Gross Profit = Sales − Cost of goods sold = ₦70,000−₦52,500 = ₦17,500. Net profit = Gross profit − Expenses = ₦(17,500) − ₦(2,500+3,500+2,600) = ₦17,500−₦8,600 = ₦8,900. (ii) Working capital = Current assets − Current liabilities = ₦(15,000+100,000+25,000) − ₦(50,000+60,000) = ₦140,000−₦110,000 = ₦30,000. (iii) Rate of stock turnover = Cost of goods sold ÷ Average stock. Average stock = (Opening stock + Closing stock)/2 = (37,500+15,000)/2 = ₦26,250. Rate of stock turnover = 52,500/26,250 = 2 times.