2018 JAMB COMMERCE
Question 1
Factoring is a trade debt term used when the agent buys all the trade debts of the
A. Importers
B. Exporters
C. Nations
D. Customers
Answer: D. Customers
Explanation: Factoring involves a specialist firm purchasing a client’s receivables arising from sales of goods or services to customers.
Question 2
Rights issue means the
A. Issue of shares to the directors of a company on favourable terms
B. Issues of share by a company only to the founders of the company
C. Right of shareholders to vote on any issue
D. Issue of shares to shareholders on favourable terms
Answer: D. Issue of shares to shareholders on favourable terms
Explanation: A rights issue invites current shareholders to buy new shares, generally in proportion to their existing holdings and often at an advantageous price. The shares are not issued free.
Question 3
The direct authority of a superior over his subordinate is known as
A. Staff authority
B. Line authority
C. Line and staff authority
D. Lateral authority
Answer: B. Line authority
Explanation: Line authority allows a supervisor to direct the actions of subordinates.
Question 4
Consumer sovereignty means that the consumer
A. Is a citizen
B. Is always independent
C. Is always wrong
D. Is always right
Answer: B. Is always independent
Explanation: Consumer sovereignty describes consumers’ freedom from outside influence.
Question 5
Taking a new product to a particular part of a country to test the reaction of consumers to the product is referred to
A. Sales promotion
B. Sampling
C. Merchandising
D. Advertising
Answer: B. Sampling
Explanation: Introducing a product to assess the target consumers’ reactions is called market sampling.
Question 6
The major objective of corporate mergers is to
A. Minimise the effects of taxation
B. Increase financial advantage
C. Facilitate profit maximisation
D. Enhance economies of scale
Answer: D. Enhance economies of scale
Explanation: Obtaining internal economies of scale is a primary reason for merging businesses.
Question 7
When it becomes necessary to liquidate a company, the first step to be taken is the appointment of
A. A receiver
B. An auditor
C. An account
D. A liquidator
Answer: D. A liquidator
Explanation: Once a decision to liquidate a firm is made, the first step is appointing a liquidator to carry out the process.
Question 8
Transportation, retailing and wholesaling industries rely heavily on
A. Banking
B. Insurance
C. Manufacturing
D. Railway
Answer: C. Manufacturing
Explanation: Manufacturers must produce goods before wholesalers can buy and transport them to retailers.
Question 9
Erroneous rearrangement of financial figures such as writing ₦624 as ₦264 is called
A. Transposition
B. Principle
C. Commission
D. Omission
Answer: A. Transposition
Explanation: A transposition error records an incorrect amount in the correct account by reversing digits, such as entering 52 instead of 25.
Question 10
The business organisation in which shareholders have equal votes is
A. Sole proprietorship
B. Partnership
C. Cooperative
D. Limited liability company
Answer: C. Cooperative
Explanation: A cooperative is democratic because each member has an equal vote, regardless of shareholding.
Question 11
Excise duties are paid on goods that are
A. Imported into the country
B. Manufactured within the country
C. Exported to other countries
D. Kept in bonded warehouses
Answer: B. Manufactured within the country
Explanation: Excise duties apply to designated goods manufactured domestically. They are not defined as export taxes.
Question 12
A person who undertakes any risk in insurance business is known as
A. A broker
B. An underwriter
C. An insurer
D. An actuary
Answer: B. An underwriter
Explanation: An underwriter assesses and accepts another party’s risk in return for payment.
Question 13
Bank giro is a system where
A. Commercial banks can give loan to all customers
B. A central bank opens accounts for commercial banks
C. A customer uses a cheque to pay several bills
D. A customer closes his account by writing a cheque
Answer: C. A customer uses a cheque to pay several bills
Explanation: A bank Giro transfer moves funds directly between bank accounts on the customer’s instructions without physical cheques.
Question 14
One of the criteria for differentiating consumer markets from industrial ones is the
A. Type of demand
B. Type of supply
C. Nature of services rendered
D. Price of the goods
Answer: A. Type of demand
Explanation: Demand for industrial goods comes from demand for the final products businesses make. Consumer goods are demanded for direct satisfaction of personal wants.
Question 15
The main objective of a trade association can best be described as promoting and protecting
A. The products
B. Common interest
C. The market
D. Customer’s interest
Answer: B. Common interest
Explanation: A trade association works to defend its members’ interests.
Question 16
When a vendor supplies newspaper from house to house and across the streets, the element of marketing mix involved is
A. Product
B. Price
C. Promoting
D. Place
Answer: D. Place
Explanation: Place refers to distribution in the marketing mix.
Question 17
Sudden technological changes can have the effect of making
A. A company’s management style ineffective
B. A company’s product obsolete
C. The control mechanism difficult to implement
D. The motivational factors in the company difficult to monitor
Answer: B. A company’s product obsolete
Explanation: Fast technological development is the principal reason goods become obsolete.
Question 18
One of the factors which critically determines the choice of occupation is
A. Training
B. Skill
C. Aptitude
D. Interest
Answer: B. Skill
Explanation: A worker’s skills are a major influence on the job they perform.
Question 19
Extractive industries may also be nominated as
A. Direct industries
B. Service industries
C. Primary industries
D. Indirect industries
Answer: C. Primary industries
Explanation: Extractive industries belong to primary industry because they explore and extract resources.
Question 20
Services which are of absolute monopoly can best be provided by
A. Private companies
B. Limited liability
C. Public companies
D. Public enterprises
Answer: D. Public enterprises
Explanation: Public enterprises may supply essential monopoly services with public welfare as a goal, reducing the risk of exploitation by private monopolists.
Question 21
The share capital value that forms part of the balance sheet total is the
A. Issued share capital
B. Called-up share capital
C. Authorised share capital
D. Paid-up share capital
Answer: A. Issued share capital
Explanation: Only the company’s issued capital is included in the balance-sheet balance.
Question 22
A printer that burns the print image into the photosensitive drum is called
A. Dot matrix printer
B. Laser printer
C. Daisy wheel printer
D. Thermal printer
Answer: B. Laser printer
Explanation: A laser printer creates an electrostatic image on a light-sensitive drum. Toner adheres to this image and is then transferred to paper.
Question 23
The insurance principle that requires full disclosure of information on the insured is known as
A. Indemnity
B. Caveat emptor
C. Subrogation
D. Uberrimae fidel
Answer: D. Uberrimae fidel
Explanation: Uberrimae fidei requires the highest level of good faith in disclosure for certain contracts, including insurance agreements.
Question 24
On liquidation of a public limited liability company, the residual owners are the
A. Creditors
B. Debenture shareholder
C. Preference shareholders
D. Ordinary shareholders
Answer: D. Ordinary shareholders
Explanation: When a public limited company liquidates, ordinary shareholders are paid last from what remains after all other debts and obligations have been settled.
Question 25
A form of money that has gone out of use is
A. Commodity money
B. Bank money
C. Paper money
D. Foreign money
Answer: A. Commodity money
Explanation: Commodity currencies such as cowries are no longer used.
Question 26
The three components of staffing are
A. Recruitment, interview and appointment
B. Recruitment, selection and placement
C. Recruitment, test and placement
D. Recruitment, procurement and appointment
Answer: B. Recruitment, selection and placement
Explanation: Recruitment draws potential employees, selection chooses suitable candidates and placement assigns them to positions. Staffing additionally covers ongoing workforce development and management.
Question 27
A chamber of commerce is an association made up of
A. Merchants
B. Manufacturers
C. Entrepreneurs
D. Importers
Answer: A. Merchants
Explanation: A chamber of commerce unites merchants and other businesspeople to advance shared commercial interests. Its membership extends beyond manufacturers.
Question 28
The first known legislation to protect consumer rights in Nigeria is the
A. Usury Laws
B. Sale of Goods Act
C. Hire Purchase Act
D. Food and Drugs Act
Answer: B. Sale of Goods Act
Explanation: The Sale of Goods Act was passed in 1893 and was the first legislation enacted to protect consumers.
Question 29
A form of ownership which exploits the strength of one partner to remedy the weakness of the other is a
A. Joint partnership
B. Cooperative
C. Corporation
D. Joint venture
Answer: A. Joint partnership
Explanation: Partnerships usually arise when individuals cannot successfully manage a business alone and need complementary support from others.
Question 30
I. Personal savings
II. Retained Earnings
III. Accrued Taxes
Which of the items above constitute internal sources of financing for companies?
A. I and II
B. I and III
C. II and III
D. I, II and III
Answer: C. II and III
Explanation: Personal savings come from outside the business because the owner and the enterprise are separate entities. Retained profits and accrued taxes, however, are internal sources of business finance.
Question 31
A merchant wholesaler is referred to as
A. Del-credere agent
B. A broker
C. Rack jobber
D. A factor
Answer: C. Rack jobber
Explanation: A rack jobber owns the merchandise and maintains its display racks in retail shops. A broker usually arranges deals without owning the goods.
Question 32
A proforma invoice is sent to inform a buyer about the
A. Quantity of goods
B. Prices of goods
C. Designation of goods
D. Quality of goods
Answer: B. Prices of goods
Explanation: A pro forma invoice gives a preliminary quotation of intended prices and other conditions before the final sale or shipment.
Question 33
Warehousing is a productive function because it increases the
A. Quantity of goods
B. Utility of goods
C. Quality of goods
D. Price of goods
Answer: B. Utility of goods
Explanation: Production creates utility. Warehousing adds time utility by keeping goods until needed, making it a productive activity.
Question 34
The temporary working area of the central processing unit is called the
A. CD-ROM
B. CD-RAM
C. ROM
D. RAM
Answer: D. RAM
Explanation: Random access memory, or RAM, provides the computer’s short-term storage for handling active applications and tasks.
Question 35
One of the obstacles to achieving the objectives of ECOWAS is
A. Lack of a common currency
B. Colonial linkages
C. Sovereignty of state
D. Language differences
Answer: B. Colonial linkages
Explanation: Many ECOWAS countries retain strong ties to their former colonial rulers, hindering the organization’s principal objectives.
Question 36
The agency in Nigeria which ensures that products conform to government quality specifications is the
A. Standards Organisation of Nigeria
B. Nigeria Consumer Association
C. Manufacturers’ Association of Nigeria
D. Nigerian Chamber of Commerce
Answer: A. Standards Organisation of Nigeria
Explanation: The Standards Organisation of Nigeria (SON) is the government body responsible for ensuring products meet minimum standards.
Question 37
A group of companies is a collection of
A. Subsidiaries and their holding company
B. Firms
C. Associates and their holding company
D. Industries
Answer: A. Subsidiaries and their holding company
Explanation: A corporate group consists of a parent or holding company and its controlled subsidiaries. An industry instead consists of firms engaged in a similar economic activity.
Question 38
Communication process involves the transmission of a message over a selected channel to the
A. Encoder
B. Receiver
C. Audience
D. Sender
Answer: B. Receiver
Explanation: Communication transfers a message from a sender to a receiver through a chosen channel.
Question 39
The programs that make up the operating system in a computer are
A. System software
B. Micro program
C. Syntax
D. System flow-chart
Answer: A. System software
Explanation: System software enables a computer system to operate.
Question 40
Given: Sales = 15,000; Opening stock = 5,600; Purchases = 9,700; Closing stock = 4,400; Gross profit = 4,500; Net profit = 2,000. From the data above, calculate the rate of turnover.
A. 3.50 times
B. 3.00 times
C. 2.00 times
D. 2.18 times
Answer: D. 2.18 times
Explanation: Calculate stock turnover as cost of goods sold divided by average stock.
Cost of goods sold:
= Opening stock + Purchases − Closing stock
= 5,600 + 9,700 − 4,400
= 10,900
Average stock:
= (Opening stock + Closing stock) ÷ 2
= (5,600 + 4,400) ÷ 2
= 5,000
Rate of turnover:
= 10,900 ÷ 5,000
= 2.18 times