2022 JAMB COMMERCE
Question 1
One of the following defines commerce
A. Man’s production, distribution and consumption of goods and services
B. Man’s utilization of the resources in his physical environment
C. Conversion of raw materials into finished goods
D. Man’s buying, selling and distributing activities
Answer: D. Man’s buying, selling and distributing activities
Explanation: Commerce covers buying, selling and distributing goods and services both within a territory and across its borders.
Question 2
Which of the following types of activity turns processed raw materials into consumer and industrial goods?
A. Construction
B. Processing
C. Production
D. Distribution
Answer: C. Production
Explanation: Production transforms raw or partly processed materials into finished products, which may be consumer goods or industrial goods.
Question 3
The production of clothing falls under
A. Constructive industry
B. Mining industry
C. Service industry
D. Business industry
Answer: A. Constructive industry
Explanation: Cloth production can also be classed as construction because it involves designing the intended product before making it.
Question 4
A firm can demonstrate social responsibility by
A. Paying taxes to government
B. Distributing dividends to shareholders
C. Paying interest on loans
D. Constructing drainage in the community
Answer: D. Constructing drainage in the community
Explanation: Providing drainage is not a private firm’s primary duty. When it undertakes such work beyond its obligations to benefit the wider community, it is fulfilling social responsibility.
Question 5
A distinctive feature of a limited liability company is that it
A. Declares dividend every year
B. Has a huge capital base
C. Is a separate entity
D. Has unlimited resources
Answer: C. Is a separate entity
Explanation: A limited liability company has its own separate legal identity and can bring or face legal proceedings.
Question 6
The coming together of two firms producing at different stages is?
A. Consortium
B. Horizontal integration
C. Vertical integration
D. Cartel
Answer: C. Vertical integration
Explanation: Vertical integration joins two firms at different stages of production into one business.
Question 7
When a firm liquidates, ____________ are first settled
A. Redeemable shareholders
B. Debenture holders
C. Ordinary shareholders
D. Founders shareholders
Answer: B. Debenture holders
Explanation: Debenture holders lend to the organization and are creditors, whereas shareholders are among its owners.
Question 8
Compulsory liquidation can arise from
A. Agreement
B. Court order
C. Death of a member
D. Declaration of loss
Answer: B. Court order
Explanation: A court order can require a firm to undergo compulsory liquidation.
Question 9
What is the net profit for a company that earned ₦18 million and incurred total cost of ₦7 million considering that it paid 45% tax on its gross profit?
A. ₦6.05 million
B. ₦11.00 million
C. ₦2.90 million
D. ₦1.5 million
Answer: A. ₦6.05 million
Explanation: Calculate gross profit as ₦18 million − ₦7 million = ₦11 million. Tax is 45% of ₦11 million = ₦4.95 million. Deducting it gives net profit of ₦11 million − ₦4.95 million = ₦6.05 million.
Question 10
Fixtures and fittings represent ____________ in a balance sheet?
A. Working capital
B. Liquid capital
C. Current assets
D. Fixed assets
Answer: D. Fixed assets
Explanation: Fixtures and fittings are included among the company’s fixed assets.
Question 11
The following include the reasons government imposes import duties except
A. Raising revenue for governmental activities
B. Retaliating against other governments
C. Discouraging income redistribution
D. Protecting home made
Answer: C. Discouraging income redistribution
Explanation: Import duties allow government to redistribute income by collecting from the wealthy and directing benefits towards poorer people.
Question 12
Which of the following businesses suit sole proprietorship?
A. Oil exploration business
B. Construction business
C. Gold mining business
D. Retailing business
Answer: D. Retailing business
Explanation: Sole proprietorship is particularly suitable for a retail business.
Question 13
The use of machines to sell goods is a form of
A. Personal selling
B. Retailing
C. Wholesaling
D. Mail-order selling
Answer: B. Retailing
Explanation: Vending machines supply goods straight to final buyers. They represent automated retailing rather than wholesale trade.
Question 14
The major function of the wholesaler is?
A. Buying and selling to exporters
B. Buying in bulk and selling in small quantities
C. Credit facilities to retailers
D. Providing information to manufacturers
Answer: B. Buying in bulk and selling in small quantities
Explanation: Wholesalers mainly buy goods in bulk and divide them into smaller quantities for retailers, supporting efficient distribution.
Question 15
The rate at which a country’s exports exchange for its imports is called
A. Balance of trade
B. International exchange rate
C. Terms of payment
D. Terms of trade
Answer: D. Terms of trade
Explanation: Terms of trade measure the rate at which a country’s exports pay for its imports over a given period.
Question 16
An industrial worker can be found at?
A. Commercial industry
B. Banking industry
C. Insurance industry
D. Manufacturing industry
Answer: D. Manufacturing industry
Explanation: A manufacturing business belongs to the industrial sector, so its employees are industrial workers.
Question 17
Which of the following is a form of simple production?
A. Bricklaying
B. Shoemaking
C. Blacksmithing
D. Car assembling
Answer: B. Shoemaking
Explanation: Making shoes is a simple form of production.
Question 18
If a partnership deed is silent on profit sharing, partners share profits
A. In the ratio of the value of business secured by partners for the partnership
B. In the ratio of partners’ capital contributions
C. In an equal proportion
D. According to duties performed by each partner
Answer: C. In an equal proportion
Explanation: Without a partnership deed, partners divide profits and losses equally.
Question 19
The Articles of Association of a limited liability company will contain?
A. Rights and obligations of directors
B. Objectives of the company
C. Amount of share capital
D. Limitation of liability of shareholders
Answer: A. Rights and obligations of directors
Explanation: The articles of association govern a company’s internal affairs, while the memorandum of association governs its external affairs.
Question 20
The combination of two companies to form a single entity is referred to as
A. Joint business
B. Consortium
C. Merger
D. Acquisition
Answer: C. Merger
Explanation: A merger occurs when two companies combine to create a single entity.
Question 21
For an incorporated company
A. Raising loans will be more difficult
B. The company cannot be sued but can sue
C. The company’s property becomes an entity
D. Its members become liable for all the debts of the company
Answer: C. The company’s property becomes an entity
Explanation: Incorporation gives a company a separate identity, distinguishing its assets from those of its owners.
Question 22
The main advantage of a sole trader is the freedom to
A. Quick decision
B. Seek loan anywhere
C. Employ any minor
D. Profit plough-back
Answer: A. Quick decision
Explanation: A sole trader can decide without consulting others, enabling rapid business decisions.
Question 23
If a company is voluntarily liquidated, the receiver is appointed by the
A. Creditors
B. Debtors
C. Directors
D. Shareholders
Answer: C. Directors
Explanation: The directors appoint the receiver when their company enters voluntary liquidation.
Question 24
When a company uses more of loans than equity to finance its business, the company is said to be
A. Bankrupt
B. Solvent
C. Highly geared
D. In a strong liquid position
Answer: C. Highly geared
Explanation: A company relying heavily on loans to fund operations has high gearing.
Question 25
The nominal value of a share of a company is also referred to as
A. Discounted value
B. Stock value
C. Face value
D. Par value
Answer: D. Par value
Explanation: A share’s par value is its nominal value, registered in the memorandum of association.
Question 26
A public limited company can issue debenture through
A. The capital market
B. The money market
C. Bank overdrafts
D. Discount houses
Answer: A. The capital market
Explanation: A debenture is a long-term instrument, and such instruments are traded in the capital market.
Question 27
Factoring is not applicable to
A. Importers
B. Exporters
C. Nations
D. Shipper
Answer: C. Nations
Explanation: Factoring is generally used in international trade and is therefore not a business conducted by a nation.
Question 28
The financial statement that shows claims of liability against assets is
A. Trading account
B. Capital statement
C. Trial balance
D. Balance sheet
Answer: D. Balance sheet
Explanation: A balance sheet presents liabilities’ claims against the company’s assets.
Question 29
Rights issue means the
A. Issue of shares to the directors of a company
B. Issue of shares by a company only to existing shareholders
C. Right of shareholders to vote on any issue
D. Issue of shares to only existing shareholders
Answer: D. Issue of shares to only existing shareholders
Explanation: A rights issue offers shares to current shareholders on preferential terms.
Question 30
Profit that is expressed as a percentage of the cost of goods sold is referred to as
A. Margin
B. Mark-up
C. Gain percent
D. Gross profit
Answer: B. Mark-up
Explanation: Mark-up expresses profit as a percentage of the cost of goods sold.
Question 31
Which of the following are aids to trade?
I. Trading and advertising
II. Warehousing and transportation
III. Packaging and branding
IV. Insurance and banking
A. I and II
B. I and III
C. II and IV
D. II, III and IV
Answer: C. II and IV
Explanation: Banking, insurance, warehousing, transport, advertising and communication are aids to trade.
Question 32
A royal charter was signed in
A. December, 1888
B. May, 1887
C. July, 1886
D. August, 1885
Answer: C. July, 1886
Explanation: The Royal Niger Company’s founding royal charter was signed in 1886.
Question 33
Which of the following is odd?
A. Banking
B. Insurance
C. Manufacturing
D. Transportation
Answer: C. Manufacturing
Explanation: Manufacturing is the only listed activity that is not an aid to trade.
Question 34
Which of the following provides indirect service?
A. Civil servants
B. Family doctors
C. Household servants
D. Entertainers
Answer: A. Civil servants
Explanation: Taxpayers fund civil servants’ salaries. The people receiving their services therefore do not pay them directly for those services.
Question 35
Which of the following is the most important entity for a business?
A. Workers
B. Government
C. Society
D. Promoters
Answer: D. Promoters
Explanation: A company would not be established without its promoters, making them central to bringing the business into existence.
Question 36
Partnership businesses are most suitable where
A. The partners are family friends
B. Professionals are involved
C. Members can easily raise enough capital
D. Government regulations are favourable
Answer: B. Professionals are involved
Explanation: Professional partnership is the most suitable form of partnership business.
Question 37
The business that is more pressed to discharge social responsibility is
A. Sole proprietorship
B. Professional partnership
C. Public enterprise
D. Public limited liability company
Answer: D. Public limited liability company
Explanation: A public limited company faces more pressure to fulfil social responsibility than a public enterprise, whose activities are all regarded as serving social responsibility.
Question 38
The business that has the most chance to continue to eternity is
A. Sole proprietorship
B. Professional partnership
C. Public enterprise
D. Public limited liability company
Answer: C. Public enterprise
Explanation: State ownership gives a public enterprise a greater prospect of continuity than other business forms.
Question 39
The business organization in which shareholders have equal votes is
A. Sole proprietorship
B. Partnership
C. Co-operative
D. Limited liability company
Answer: C. Co-operative
Explanation: Each cooperative member has a single vote.
Question 40
The major objective of corporate mergers is to
A. Minimize the effects of taxation
B. Increase financial advantage
C. Facilitate profit maximization
D. Enhance economies of scale
Answer: D. Enhance economies of scale
Explanation: Merging companies can achieve economies of scale by eliminating some administrative expenses.