JAMB Commerce 2003
Questions & Answers

Students could mistakenly select a distractor like N224 by merely taking 20% off or making calculation errors, but the correct answer is derived by recognizing that the selling price represents 100% plus the 30% profit. Setting the cost price as C yields a selling price of C + 0.3C, which equals 1.3C; dividing N280 by 1.3 determines the cost price to be N215.38. Common mistake: Forgetting to add the profit percentage to the base 100% of the cost price.

A learner might mistakenly guess Subrogation or Contribution, as these also relate to property insurance clauses, but the principle of indemnity ensures the insured is compensated only for the actual loss, preventing profit from a loss. Common mistake: Confusing the mechanism of recovering from third parties with the foundational valuation rule of loss compensation.

An unprepared test-taker might incorrectly select N180,000 by stopping after the trade discount, but the task requires applying both discounts sequentially. First, a trade discount of 10% on N200,000 yields N20,000, leaving a price of N180,000; next, subtracting a 2% cash discount of N3,600 from that intermediate price results in an amount paid of N176,400. Common mistake: Applying the cash discount to the original gross price instead of the net trade price.

A student might incorrectly choose retail lending or profit maximization because they associate financial institutions with commercial banking, but development finance institutions provide financial support for economic and social development projects, such as infrastructure and poverty reduction. Common mistake: Assuming all financial institutions operate primarily for short-term retail profits.

A candidate might mistakenly pick N2,500,000 by failing to adjust for the currency depreciation, but the updated figures require recalculating the total exposure. The original cost equals $5,000 multiplied by N500 for N2,500,000, and a 4% depreciation raises the new exchange rate to N500 multiplied by 1.04, which is N520, making the new cost $5,000 multiplied by N520 to reach N2,600,000. Common mistake: Forgetting that a weaker domestic currency increases the local cost of foreign imports.

Someone might mistakenly select goods stored for immediate sale or short-term transport because warehouses are common in logistics, but a bonded warehouse stores goods duty-free until customs duties are paid, allowing importers to defer tax payments. Common mistake: Believing that all storage facilities release merchandise without customs intervention.

A student could mistakenly choose 2.0:1 by dividing total current assets directly by current liabilities without excluding inventory, but the quick ratio requires isolating quick assets. Subtracting the N50,000 inventory from the N200,000 current assets yields N150,000 of quick assets, which is then divided by the N100,000 current liabilities to get 1.5:1. Common mistake: Failing to subtract inventory when calculating liquidity ratios.

A test-taker might mistakenly select N10,000 by omitting either the weight or the distance multipliers, but finding the aggregate transport fee requires multiplying all given parameters together. Multiplying the total distance of 500 km by the weight of 20 tonnes and the rate of N5 per tonne-km gives a total cost of N50,000. Common mistake: Forgetting to multiply all three metric components together.

A learner might mistakenly pick N32,500 by using simple interest instead of compounding, but compound interest applies growth across each period via the formula A = P(1 + r/n)^(nt). Using a principal of N25,000, a rate of 0.1, compounded annually over 3 years, means multiplying N25,000 by (1.1)^3, which equals N25,000 multiplied by 1.331 to arrive at N33,275. Common mistake: Calculating flat interest instead of compounding the accumulated totals annually.

A student might mistakenly choose limited access to capital, confusing public corporations with private startups, but public corporations often face political interference, hindering efficient management and decision-making. Common mistake: Overlooking external bureaucratic and government influences on state-owned entities.

An examinee might mistakenly believe the action discharges the original debt or makes the bill non-negotiable, but endorsing a bill of exchange transfers the right to receive payment to the endorsee, making them the new payee. Common mistake: Confusing endorsement with the final settlement or cancellation of a negotiable instrument.

A student could mistakenly select N80,000 by ignoring the deductible entirely, but policy deductibles must always be subtracted from the loss amount first. Subtracting the N5,000 deductible from the N80,000 loss leaves a claimable amount of N75,000, which the insurer pays since it falls within the N100,000 sum insured limit. Common mistake: Treating the full loss value as the payout without accounting for the policy excess or deductible.

A candidate might mistakenly select offering discounts to loyal customers, mistaking a standard promotional strategy for misconduct, but subliminal advertising manipulates consumers unconsciously, violating ethical marketing standards. Common mistake: Failing to distinguish between transparent promotional pricing and deceptive psychological manipulation.

A student might mistakenly pick N400,000 by simply halving the total assets, but the debt-to-equity relationship requires setting up a proportional equation where liabilities equal 0.5 of equity. Since total assets equal liabilities plus equity (N800,000), letting liabilities be L and equity be 2L means L + 2L equals N800,000, so 3L equals N800,000, making L equal to N266,667. Common mistake: Applying ratios directly to total assets rather than splitting them between liabilities and equity components.

A learner might mistakenly choose unity of command or division of labor, which deal with single supervisors and task specialization respectively, but the scalar chain principle emphasizes a clear chain of command for effective communication and authority. Common mistake: Mixing up the vertical line of authority with horizontal division of duties.

An examinee might mistakenly pick N300,000 through miscalculation, but finding the ad valorem tariff requires first calculating the gross value of the shipment. Multiplying 200 units by N10,000 per unit gives a total value of N2,000,000, and applying the 10% tariff rate to that total yields a payable tariff of N200,000. Common mistake: Applying percentage rates to individual unit values instead of aggregate shipment valuations.

A student might mistakenly select easy access to large-scale financing, which contradicts the typical hurdles faced by emerging entities, but small businesses face limited resources and bargaining power, making competition with larger firms difficult. Common mistake: Assuming small firms enjoy the same financial economies of scale as major corporations.

A candidate might mistakenly select N250,000 by forgetting to add back secondary income or by misplacing operating expenses, but net profit before tax builds systematically from gross margins. Subtracting the N300,000 cost of goods sold from N750,000 in sales yields a gross profit of N450,000, and subtracting operating expenses of N180,000 while adding back interest revenue of N10,000 results in a net profit before tax of N280,000. Common mistake: Omitting non-operating revenues like interest earnings from the final profit computation.

A student might mistakenly choose lowering tax rates or increasing government expenditure, which are fiscal policy tools controlled by the government, but the central bank adjusts the discount rate to influence interest rates, affecting borrowing costs and money supply. Common mistake: Confusing monetary policy tools managed by central banks with fiscal measures handled by the state.

An examinee might mistakenly calculate 15% by simply taking the absolute difference between the two index numbers, but percentage inflation requires evaluating relative change. Subtracting the old CPI of 150 from the new CPI of 165 gives a difference of 15, which is then divided by the old CPI of 150 and multiplied by 100 to yield 10%. Common mistake: Dividing the price index change by the new index value instead of the base period index.