2020 JAMB COMMERCE
Question 1
Trade and aids to trade are?
A. International trade
B. Economy components
C. Commerce
D. Market
Answer: C. Commerce
Explanation: Commerce has two broad divisions, trade and aids to trade, which form its foundation.
Question 2
Customers’ deposit is
A. An asset to banks
B. Capital to banks
C. Goodwill to banks
D. Liability to banks
Answer: D. Liability to banks
Explanation: Customers’ deposits are claims against a bank’s assets. Such claims are liabilities of the asset owner.
Question 3
The acronym CAMA stands for
A. Companies Allied Matters Act
B. Companies and Allied Matters Act
C. Companies and Allied Matters Act
D. Company and Allied Matters Act
Answer: B. Companies and Allied Matters Act
Explanation: The abbreviation CAMA means Companies and Allied Matters Act.
Question 4
The main function of the wholesaler is
A. Serving a middleman
B. Providing credit facility to the retailer
C. Provision of warehouse facilities
D. Assisting the producer
Answer: C. Provision of warehouse facilities
Explanation: Wholesalers store bulk purchases until retailers require them, providing warehouse facilities that sustain production and distribution.
Question 5
The difference between hire purchase and credit sales is
A. Ownership
B. Possession
C. No difference
D. Time
Answer: A. Ownership
Explanation: Under hire purchase, the seller usually keeps ownership until the last instalment and other purchase conditions are met. A credit sale normally transfers ownership under the agreement before every instalment has been paid.
Question 6
Del credere commission means
A. Agent’s commission
B. Agent’s commission as a surety
C. Principal’s commission
D. Principal’s commission
Answer: B. Agent’s commission as a surety
Explanation: Del credere commission is extra payment to an agent who guarantees that customers purchasing on credit will pay.
Question 7
The best channel of distribution for consumer goods is
A. Producer → Wholesaler → Consumers
B. Producer → Retailer → Consumers
C. Producer → Consumer
D. Producer → Wholesaler → Retailer → Consumer
Answer: D. Producer → Wholesaler → Retailer → Consumer
Explanation: For goods in widespread use, the producer–wholesaler–retailer–consumer route moves bulk output through wholesalers to retailers who supply final buyers.
Question 8
Credit note indicates
A. Indebtedness to the bearer
B. Indebtedness to the issuer
C. Indebtedness to the inheritor
D. None of the above
Answer: A. Indebtedness to the bearer
Explanation: A credit note lowers the buyer’s debt to the seller, typically following returned goods or an overcharge on the initial invoice.
Question 9
One of the following causes a share to be issued at a discount
A. Too much profit
B. Low patronage
C. Deflation
D. Too much reserve
Answer: C. Deflation
Explanation: The memorandum of association sets out how a company will operate and other important matters concerning its management.
Question 10
Which of the following documents specifies the relationship of a registered company internally?
A. Article of Association
B. Memorandum of Association
C. Certificate of Cooperation
D. Deed of Agreement
Answer: A. Article of Association
Explanation: The Articles of Association set the rules for internal company management, including directors’ authority, meetings and members’ rights.
Question 11
The periodic payment by an insured to the insurance company is referred to as
A. Indemnity
B. Charge
C. Premium
D. Fee
Answer: C. Premium
Explanation: A premium is the insured person’s payment to secure or continue insurance protection.
Question 12
The coming together of two companies producing the same thing at the same level of production to form a single company for the sake of synergy is referred to as
A. Joint venture
B. Conglomerate
C. Vertical integration
D. Horizontal integration
Answer: D. Horizontal integration
Explanation: Horizontal integration joins businesses in the same industry operating at the same production stage.
Question 13
If the average stock for the year is ₦500 and the purchases totalled ₦7,500, then the rate of stock turnover is
A. Indeterminate
B. 8 times
C. 10 times
D. 15 times
Answer: A. Indeterminate
Explanation: Stock turnover depends on cost of goods sold and average stock. Without stock-movement information, purchases alone cannot establish cost of goods sold, leaving the information insufficient.
Question 14
A preference shareholder is entitled to
A. Profit
B. Interest
C. Fixed dividend
D. All of the above
Answer: C. Fixed dividend
Explanation: Preference shares generally provide a specified dividend rate and rank before ordinary shares, depending on issue conditions and available distributable profits.
Question 15
Which of the following is not an aid to trade?
A. Commerce
B. Transportation
C. Warehouse
D. Banking
Answer: A. Commerce
Explanation: Trade and aids to trade together make up commerce. Banking, transport and warehousing support trade, while commerce encompasses the whole category.
Question 16
In a partnership where there is no deed
A. Interest on capital is 5%
B. Interest on drawing is 5%
C. Interest on partner’s loan is 5%
D. Interest of profit is 5%
Answer: C. Interest on partner’s loan is 5%
Explanation: Under traditional Partnership Act rules, a partner’s advance above agreed capital earns 5% annual interest unless a different agreement applies.
Question 17
All the following are sources of finance to a sole proprietor except
A. Overdraft
B. Debenture
C. Bank loan
D. Credit purchase
Answer: B. Debenture
Explanation: Sole traders can obtain loans, overdrafts and trade credit. Debentures are issued as corporate debt and are not a financing instrument issued by a sole proprietor.
Question 18
The minimum number of shareholders in a public limited liability company according to CAMA 1990 is
A. Seven
B. Two
C. Ten
D. One
Answer: B. Two
Explanation: Section 18 of CAMA 1990 permitted two or more people to establish and incorporate a company. The minimum required by the question is consequently two.
Question 19
Dangote Group is an example of
A. Sole proprietor
B. Partnership
C. Limited liability
D. Unlimited liability
Answer: C. Limited liability
Explanation: The Dangote Group operates as a limited liability company.
Question 20
Capital employed is
A. Assets less liability
B. Assets
C. Liabilities
D. Fixed asset
Answer: A. Assets less liability
Explanation: In commerce, subtract total liabilities from total assets to calculate capital employed.
Question 21
Tax imposed on locally made goods is known as
A. Tariff
B. Excise duties
C. Import duties
D. Value added tax
Answer: B. Excise duties
Explanation: Excise duties are taxes charged on domestically manufactured goods.
Question 22
Scholarship offered by a private organization is a form of
A. Education responsibility
B. Political responsibility
C. Environmental responsibility
D. Social responsibility
Answer: D. Social responsibility
Explanation: Scholarships are not a basic organizational obligation. They give something back to the community and therefore represent social responsibility.
Question 23
Privatization is defined as
A. Transfer of ownership of businesses
B. Transfer of ownership of public corporation to private individuals
C. Making business for private people
D. Making business profit oriented
Answer: B. Transfer of ownership of public corporation to private individuals
Explanation: Privatization occurs when ownership interests in a taxpayer-owned public corporation are sold to private individuals.
Question 24
Consideration in contract is
A. The act of pity on parties to the contract
B. Price
C. Agreement
D. Breach of the contract
Answer: B. Price
Explanation: Consideration is the agreed price a contracting party gives in return for goods or services.
Question 25
Voyage loss is loss involved in
A. Third party insurance
B. Motor insurance
C. Marine insurance
D. Load insurance
Answer: C. Marine insurance
Explanation: Voyage and time policies relate to marine insurance, which covers transportation by water.
Question 26
The four Ms are
A. Market, money, man and machine
B. Market, materials, man and machine
C. Market, money, materials, machine and man
D. Money, material, machine and men
Answer: D. Money, material, machine and men
Explanation: Commerce’s four Ms are materials, machines, money and manpower.
Question 27
One of the responsibilities of Chamber of Commerce is
A. Organizing trade fairs
B. Conducting compulsory exams
C. Setting prices of goods
D. Collecting tax for government
Answer: A. Organizing trade fairs
Explanation: A chamber of commerce encourages commercial activity in its region. It holds trade fairs periodically to advance that purpose.
Question 28
Authorized share is the same as
A. Issued shares
B. Offer for sale shares
C. Subscribed shares
D. None of the above
Answer: D. None of the above
Explanation: Authorized shares represent the maximum number a limited company may issue during its existence, as specified in its memorandum of association.
Question 29
Flow of authority in an organization is displayed on
A. Organogram
B. Bar chart
C. Organ-chart
D. Chart
Answer: A. Organogram
Explanation: An organogram charts organizational authority and shows who reports to whom.
Question 30
The difference between domestic trade and foreign trade is
A. Price
B. Region
C. Quality of product
D. Quantity of product
Answer: B. Region
Explanation: Domestic trade occurs within a territory, whereas foreign trade takes place between territories.
Question 31
Which of the following determines the means of transportation of products?
A. Price of the product
B. Quantity of the product
C. Quality of the product
D. Nature of the product
Answer: D. Nature of the product
Explanation: The type of product determines the appropriate transport method.
Question 32
The memory used by computers to process a job is
A. Central processing unit
B. Read only memory (ROM)
C. Random access memory (RAM)
D. Internal memory
Answer: C. Random access memory (RAM)
Explanation: RAM provides memory for ongoing information processing. Greater RAM capacity lets a computer handle more items simultaneously.
Question 33
A microfinance bank is
A. Co-operative and thrift bank
B. Financial institution
C. Commercial bank
D. Industrial bank
Answer: B. Financial institution
Explanation: Microfinance banks belong to the category of financial institutions.
Question 34
BOI and BOA respectively stand for
A. Bank of Industry and Bank of Agriculture
B. Bank of Industries and Bank of Agric
C. Bank for Industry and Bank for Agric
D. None of the above
Answer: A. Bank of Industry and Bank of Agriculture
Explanation: BOI means Bank of Industry, and BOA means Bank of Agriculture.
Question 35
Terms of trade are
A. Trade agreement between two or more countries
B. The rate at which export pays for import
C. The period at which trade occurs
D. The rate of exchange for foreign currencies
Answer: B. The rate at which export pays for import
Explanation: Terms of trade describe the rate at which exports pay for imports.
Terms of Trade = Export Price ÷ Import Price
Question 36
The difference between debenture holder and preference shareholder is
A. No difference
B. Debenture holders are owners while preference shareholders are not
C. Preference shareholders are owners while debenture holders are not
D. Preference shareholders are entitled to dividend while debenture holders are entitled to interest
Answer: D. Preference shareholders are entitled to dividend while debenture holders are entitled to interest
Explanation: Shareholders receive dividends, while debenture holders receive interest.
Question 37
If a person insured goods worth ₦500 for half the value and a fire occurred in which goods valued at ₦200 were destroyed, the value of compensation expected from the insurer is
A. ₦500
B. ₦250
C. ₦100
D. ₦200
Answer: C. ₦100
Explanation: For underinsurance, the average clause calculates compensation as the sum insured divided by actual value, multiplied by the loss:
₦250 ÷ ₦500 × ₦200 = ₦100
Question 38
Which of the following documents is not relevant in foreign trade?
A. Certificate of Origin
B. Import duty
C. Freight note
D. Bill of lading
Answer: B. Import duty
Explanation: A duty is a charge on goods rather than a document.
Question 39
One of the following causes setback for consumer protection agency in Nigeria
A. Political intervention
B. Shortage of funds
C. Cultural problem
D. Misunderstanding among members
Answer: A. Political intervention
Explanation: Political influence is one reason consumer-protection agencies in Nigeria may be less effective.
Question 40
Extractive activities are classified as
A. Primary production
B. Manufacturing production
C. Technical production
D. Secondary production
Answer: A. Primary production
Explanation: Extractive and mining activities explore natural resources in their deposits.