JAMB Commerce 2020
Questions & Answers

Students might mistakenly pick options A, B, or D by underestimating the historical impact of infrastructure and financial systems compared to trade associations. To determine the correct choice, recognize that while banks provided essential financing, transportation enabled goods movement, and currencies served as the medium of exchange, traders' unions primarily supported collective bargaining and had minimal impact on overall commercial evolution. Common mistake: confusing organizational support groups with foundational economic drivers like transportation and banking.

A test-taker might mistakenly select options A, B, or D by confusing acquired abilities with the inherent traits that drive career suitability. To find the right answer, consider that aptitude represents a natural talent, which critically determines occupational suitability and success because it reflects an individual's inherent ability rather than learned skills or training. Common mistake: selecting learned capabilities like training or skill over innate potential.

A student might mistakenly pick options A, B, or D by confusing production tiers with functional sectors. To identify the correct category, understand that extractive industries like mining and agriculture pull raw materials directly from nature, classifying them specifically as primary industries. Common mistake: mislabeling natural resource extraction as a secondary or direct service operation.

Learners might mistakenly pick options A, C, or D by focusing on altruistic or secondary organizational goals rather than commercial drivers. To arrive at the right answer, recognize that profit-making is the primary objective of businesses, acting as the fundamental mechanism for ensuring financial sustainability and growth. Common mistake: confusing corporate social outcomes with the core financial purpose of a business.

Students could mistakenly select options A, B, or C by assuming private entities handle vital utilities more efficiently than government bodies. To determine the correct provider, note that services which are of absolute monopoly are best provided by public enterprises to ensure accessibility and protect the public interest via direct government control. Common mistake: assuming private companies are better suited for managing absolute monopolies.

A student might mistakenly choose options B, C, or D by overestimating the capital reach or structural unity of cooperatives relative to corporate entities. To identify the correct advantage, recognize that co-operative societies often enjoy tax exemptions, unlike companies which face corporate taxes, giving co-operatives a distinct financial edge. Common mistake: assuming cooperatives have larger memberships or attract more capital than registered companies.

Test-takers might mistakenly pick options A, C, or D by misinterpreting how shared resources and profit arrangements define business structures. To arrive at the correct classification, note that pooling resources, sharing profits, and inviting more farmers indicate a general partnership, where partners share liabilities and profits equally. Common mistake: misidentifying an expanded multi-owner agreement as a sole proprietorship.

Learners could mistakenly choose options A, C, or D by confusing general partnerships with corporate limited liability or perpetual succession models. To find the correct characteristic, understand that in a general partnership, partners share profits and losses equally unless specified otherwise, operating with unlimited liability and active management roles. Common mistake: assuming partners in a general partnership enjoy limited liability.

A student might mistakenly choose options A, C, or D by confusing private corporate fundraising limits with public share issuances. To identify the correct source of capital, recognize that private limited companies raise capital from selected persons, such as family and investors, because they are legally restricted from offering shares to the general public. Common mistake: assuming private limited companies can freely issue shares to the public.

Students might mistakenly pick options A, C, or D by selecting specialized entities or utilities instead of diversified enterprises. To determine the correct example, recognize that the United African Company (UAC) operates diverse businesses across multiple distinct sectors, making it a true conglomerate, unlike specialized entities like banks or utility corporations. Common mistake: confusing state-owned utility monopolies with multi-sector conglomerates.

A test-taker could mistakenly choose options A, B, or D by misinterpreting the liquidation hierarchy or voting privileges of stock classes. To find the right answer, recall that preference shareholders hold a priority claim to company assets after debts are settled in liquidation, ranking ahead of common stockholders but below creditors. Common mistake: confusing preference stock priority with creditor claims or common stock voting rights.

Learners might mistakenly pick options B, C, or D by confusing general shareholder privileges with specific purchase priorities. To identify the correct term, note that a pre-emptive right is a specific provision in a company's charter giving common stock the first option to purchase additional share issues, preserving their ownership proportion. Common mistake: confusing pre-emptive purchase options with general dividend distribution rights.

A student might mistakenly choose options A, C, or D by incorrectly summing asset and liability categories from the trial balance. To determine the current ratio, first compile Current Assets by adding Debtors (450), Stock (1250), Bank (875), and Cash (3000), which totals ₦5575. Then calculate Current Liabilities by combining Creditors (1000) and Accruals (187.50) to get ₦1187.50. Dividing current assets by current liabilities gives 5575 / 1187.50, which is approximately 4.69, rounding to 4.5:1. Common mistake: including fixed assets like plant machinery or motor vans in the current asset calculation.

Test-takers might mistakenly choose options B, C, or D by using only total assets or mixing up working capital formulas with the current ratio. To find the correct value, calculate working capital by subtracting Current Liabilities from Current Assets. Using the previously derived totals of ₦5575 for current assets and ₦1187.50 for current liabilities, subtract the liabilities to get ₦5575 - ₦1187.50 = ₦4387.50. Common mistake: reporting total current assets instead of the net difference for working capital.

Learners could mistakenly pick options A, C, or D by confusing transport receipts with storage documentation. To identify the correct document, note that a warehouse warrant confirms goods storage, serving as proof of ownership and often utilized as collateral. Common mistake: confusing a warehouse warrant with a bill of lading used in shipping.

A student might mistakenly select options A, C, or D by dividing cost of goods sold or failing to compute gross profit correctly. To find the correct percentage, first calculate gross profit by subtracting the cost of goods sold (₦10,000) from the turnover (₦15,000), yielding ₦5000. Then, compute the percentage by dividing the gross profit by the turnover and multiplying by 100, which gives (5000 / 15,000) multiplied by 100, resulting in 33 1/3%. Common mistake: dividing the gross profit by the cost of goods sold instead of total sales/turnover.

Test-takers might mistakenly choose options A, C, or D by selecting office or communication equipment instead of a retail dispensing unit. To identify the correct machine, recognize that a vending machine dispenses goods automatically, enabling sales without requiring a human sales attendant. Common mistake: confusing automated retail vending units with office computers or communication machines.

Students might mistakenly pick options A, B, or C by confusing shipping receipts with customs valuation paperwork. To determine the correct document, note that a consular invoice provides certified goods valuation, which is specifically necessary for calculating ad valorem duties based on value. Common mistake: selecting a bill of lading instead of a consular invoice for value-based duty assessment.

Learners could mistakenly select options B, C, or D by choosing general trade zones instead of the specific storage facility meant for delayed duty payments. To find the correct answer, recognize that a bonded warehouse stores goods without immediate duty payment, allowing processing or sale before duties are settled. Common mistake: confusing bonded storage facilities with general export-import zones.

A student might mistakenly choose options like B or D because they assume insurance is always bundled into shipping terms, or option C thinking it spans the entire transit. F.O.B stands for Free on Board, meaning the seller takes care of all costs, including loading the cargo, strictly until the items are placed onto the ship, after which the buyer takes over any subsequent expenses. Common mistake: Confusing F.O.B with destination-based shipping terms that cover transit all the way to the port of arrival.