2023 JAMB COMMERCE
Question 1
The word “Freight” is used in place of ………. in domestic trade.
A. Transportation
B. Communication
C. Insurance
D. Documentation
Answer: A. Transportation
Explanation: Freight refers to moving bulk goods between locations, usually by ship, and is a term commonly used in international trade.
Question 2
FOB means that
A. The seller bears the risk
B. The buyer bears the risk
C. Both the buyer and seller bears the risk
D. No risk involved
Answer: B. The buyer bears the risk
Explanation: FOB stands for Free On Board. It indicates that risk passes from seller to buyer once the goods are loaded onto the ship.
Question 3
In a cooperative society, the profit generated will be shared based on
A. Capital contributed
B. Savings made during the period
C. The wealth of members
D. Patronage of members
Answer: D. Patronage of members
Explanation: A not-for-profit organization’s surplus is distributed according to patronage. Since patronage generates the surplus, those who contribute it receive a share.
Question 4
Which of the following documents are restrictedly used in international trade?
A. Consignment note
B. Certificates of origin
C. Freight notes
D. Invoice
Answer: B. Certificates of origin
Explanation: A certificate of origin states the country where exported goods originate and belongs specifically to international trade. Invoices serve both domestic and overseas trade.
Question 5
When goods remain in the customs warehouse beyond the specified time, the additional charge is known as
A. Warehouse cost
B. Demurrage
C. Storage cost
D. Security cost
Answer: B. Demurrage
Explanation: Demurrage relates to failing to remove goods from a warehouse within the specified time.
Question 6
A share that is issued at the price value quoted on it is said to be issued at
A. Premium
B. Discount
C. Par
D. Loss
Answer: C. Par
Explanation: Par.
Question 7
Insurance claims give insurance companies the right to claim the remnants of the object, this is a principle of
A. Subrogation
B. Indemnity
C. Proximity
D. Utmost good faith
Answer: A. Subrogation
Explanation: Subrogation permits an insurer to pursue the third party responsible for a loss. In doing so, the insurer must take ownership of the remaining property.
Question 8
Use the following information to answer Questions 8 and 9:
- Opening stock: ₦5,100
- Purchases: ₦91,000
- Closing stock: ₦6,000
What is the average stock?
A. ₦5,550
B. ₦6,000
C. ₦5,100
D. ₦5,500
Answer: A. ₦5,550
Explanation: To calculate average stock, add opening and closing stock and divide by two:
(₦5,100 + ₦6,000) ÷ 2 = ₦5,550
Question 9
Use the following information to answer Questions 8 and 9:
- Opening stock: ₦5,100
- Purchases: ₦91,000
- Closing stock: ₦6,000
The stock turnover is
A. 15 times
B. 17 times
C. 18 times
D. 16 times
Answer: D. 16 times
Explanation: First calculate cost of goods sold:
₦5,100 + ₦91,000 − ₦6,000 = ₦90,100
With average stock of ₦5,550:
Stock turnover = ₦90,100 ÷ ₦5,550 = 16.23 times, or approximately 16 times.
Question 10
NAFDAC means
A. National Association for Food and Drugs Administration Council
B. Nigerian Agency for Food and Drugs Administration Council
C. National Agency for Food and Drugs Administration and Control
D. National Administration of Food and Drugs Agency and Control
Answer: C. National Agency for Food and Drugs Administration and Control
Explanation: The full meaning of NAFDAC is National Agency for Food and Drugs Administration and Control.
Question 11
The best chain of distribution for groceries is
A. Producer → Wholesaler → Consumers
B. Producer → Wholesaler → Retailer → Consumers
C. Producers → Consumers
D. Producers → Retailers → Consumers
Answer: B. Producer → Wholesaler → Retailer → Consumers
Explanation: Groceries are best distributed from producer to wholesaler, then retailer and finally consumer. This route supports continuous production.
Question 12
Best form of advertisement for electronic gadgets is
A. Ratio advert
B. Magazine advert
C. Television advert
D. Pamphlets advert
Answer: C. Television advert
Explanation: Television advertising is best suited to electronic devices because it can demonstrate their use to prospective customers.
Question 13
The memory that a computer uses to store files permanently is
A. ROM
B. RAM
C. CD-ROM
D. None of the above
Answer: A. ROM
Explanation: RAM is temporary working memory whose contents disappear when power is switched off. ROM retains its instructions without power because it is non-volatile.
Question 14
A good displayed in a supermarket can be considered as
A. Invitation to treat
B. An offer
C. A contract
D. Acceptance to sell
Answer: A. Invitation to treat
Explanation: Displaying goods constitutes an invitation to treat, wherever the display appears.
Question 15
The bank that specializes in helping people to build structures is
A. Micro-finance Banks
B. Commercial Banks
C. Bank of Industry
D. Mortgage Banks
Answer: D. Mortgage Banks
Explanation: Mortgage banks specialize in helping people finance building projects.
Question 16
Which of the following enterprises is mandated by law to publish its financial statement?
A. Private limited liability company
B. Public limited liability company
C. Partnership concern
D. Sole proprietorship
Answer: B. Public limited liability company
Explanation: The Companies and Allied Matters Act (CAMA 1990, as amended) requires only public limited companies to publish their financial reports.
Question 17
The market for trading the shares of companies is referred to as
A. General market
B. Special market
C. Stock exchange market
D. None of the above
Answer: C. Stock exchange market
Explanation: The stock exchange provides a market for company shares and certain other securities.
Question 18
The organization that sees to the registration of companies is
A. CAMA
B. CCA
C. SMEDAN
D. CAC
Answer: D. CAC
Explanation: Company registration is the responsibility of the Corporate Affairs Commission (CAC).
Question 19
A partner who lends only his name in the partnership business is
A. Active partner
B. Sleeping partner
C. Nominal partner
D. Dormant partner
Answer: C. Nominal partner
Explanation: A nominal partner lends only their name to the partnership.
Question 20
Margin is
A. Percentage of profit on cost price
B. Percentage of profit on cost of goods available for sale
C. Percentage of profit on selling price
D. Percentage of profit on stock value
Answer: C. Percentage of profit on selling price
Explanation: Margin measures profit as a percentage of a product’s selling price.
Question 21
The difference between hire purchase and credit sales is
A. The amount involved
B. Ownership
C. Interest charged
D. All of the above
Answer: B. Ownership
Explanation: The main distinction between credit sales and hire purchase is ownership. Credit sales transfer ownership, whereas hire purchase does not transfer it immediately.
Question 22
Buy one take two is a form of
A. Promotion
B. Advertising
C. Scholarship
D. Waste
Answer: A. Promotion
Explanation: Offers that provide two items when one is bought are generally intended to promote the product.
Question 23
The beneficiary of life insurance is
A. The insured
B. The assured
C. The dependence of the assured
D. The assurance company
Answer: C. The dependence of the assured
Explanation: Life assurance protects the future of dependants, who are therefore the policy’s beneficiaries.
Question 24
Bank of Industry deals with
A. The general public
B. Big industries
C. Small industries
D. All industries
Answer: D. All industries
Explanation: The Bank of Industry (BOI) promotes industrial activity and works with both small and large industries.
Question 25
In most cases, storage of goods is done by
A. Producer
B. Wholesaler
C. Retailer
D. Consumers
Answer: B. Wholesaler
Explanation: Wholesalers usually store goods in bulk, freeing factory space for further production and ensuring retailers can obtain supplies promptly.
Question 26
Excise duty is the tax paid on
A. Imported goods
B. Exported goods
C. Local goods
D. None of the above
Answer: C. Local goods
Explanation: Excise duties apply to specified goods manufactured locally. They differ from customs duties levied on imports or exports.
Question 27
The third-party insurance policy means that
A. The person that has no contract with the insurance company receives value
B. A third party will be held after paying compensation
C. There must be a third witness to a policy
D. All of the above
Answer: A. The person that has no contract with the insurance company receives value
Explanation: Third-party insurance covers the insured’s liability to someone to whom they may cause a loss.
Question 28
Buying from AliExpress can be categorized as
A. Domestic trade
B. Local trade
C. International trade
D. Internal trade
Answer: C. International trade
Explanation: Purchasing from AliExpress is international trade because the goods undergo export and customs clearance like other traded goods.
Question 29
Into how many major parts is commerce divided?
A. Two
B. Four
C. Three
D. Five
Answer: A. Two
Explanation: Trade and aids to trade are the two principal branches of commerce.
Question 30
Which of the following is not among the principles of insurance?
A. Indemnity
B. Utmost good faith
C. Full compensation
D. Subrogation
Answer: C. Full compensation
Explanation: The seven basic insurance principles are insurable interest, indemnity, utmost good faith, subrogation, proximity, loss minimization and contribution.
Question 31
When a cheque is crossed with the statement “non-negotiable” it means
A. It must be paid to the account of the payee
B. It must be fixed
C. It must be paid to the account of the drawer
D. None of the above
Answer: D. None of the above
Explanation: The other choices do not explain “not negotiable.” This wording prevents a recipient from obtaining a better title to the cheque than the transferor possessed, but it does not itself ban transfer.
Question 32
The elements that make up the marketing mix are
A. People, product, place and price
B. Product, place, price and promotion
C. Buying, selling, people and product
D. Production, purchase, selling and price
Answer: B. Product, place, price and promotion
Explanation: The marketing mix consists of four Ps: product, place, price and promotion.
Question 33
OPEC is
A. A cartel
B. Pressure group
C. Manufacturers association
D. Monopoly
Answer: A. A cartel
Explanation: OPEC regulates member countries’ oil production and consequently operates as a cartel.
Question 34
Use the following information to answer Questions 34–35:
- Freehold Premises: ₦30,000
- Trade creditors: ₦5,600
- Stock: ₦15,000
- 5% loan: ₦2,000
- Receivables: ₦7,000
The current assets amount to
A. ₦15,000
B. ₦30,000
C. ₦45,000
D. ₦22,000
Answer: D. ₦22,000
Explanation: Stock and receivables make up current assets:
₦15,000 + ₦7,000 = ₦22,000
Freehold premises belong to non-current assets.
Question 35
Use the following information to answer Questions 34–35:
- Freehold Premises: ₦30,000
- Trade creditors: ₦5,600
- Stock: ₦15,000
- 5% loan: ₦2,000
- Receivables: ₦7,000
What is the capital employed?
A. ₦44,400
B. ₦7,600
C. ₦45,000
D. ₦52,000
Answer: A. ₦44,400
Explanation: Here, net capital employed is found by subtracting external liabilities from total assets:
(₦30,000 + ₦15,000 + ₦7,000) − (₦5,600 + ₦2,000)
= ₦52,000 − ₦7,600
= ₦44,400
Question 36
In the chains of distribution, the middlemen are
A. Producer and wholesaler
B. Retailer and wholesaler
C. Retailer and consumer
D. Producer and consumer
Answer: B. Retailer and wholesaler
Explanation: Producers supply wholesalers in bulk, and wholesalers divide these quantities for retailers, who sell individual units. Wholesalers and retailers are therefore the intermediaries between producer and consumer.
Question 37
The exclusive right granted an author for his intellectual work is referred to as
A. Exclusive right
B. Author right
C. Copyright right
D. Patent right
Answer: C. Copyright right
Explanation: Copyright gives a literary work’s creator exclusive rights to print, perform or produce it for a specified period.
Question 38
Which of the following cannot be categorized as secondary production?
A. Shoe maker
B. Food seller
C. Large scale farmer
D. Building material dealer
Answer: C. Large scale farmer
Explanation: Farming remains primary production regardless of the size of the farm.
Question 39
The body that is established to promote trade within and outside the country is
A. Trade association
B. Chamber of commerce
C. Ministry of finance
D. Consumers’ association
Answer: B. Chamber of commerce
Explanation: A chamber of commerce promotes trading activity through periodic local and international trade fairs.
Question 40
The cheapest land transportation is by
A. Road
B. Rail
C. Pipeline
D. None of the above
Answer: B. Rail
Explanation: Rail is the cheapest and most versatile transport method.