This 2022 Commerce examination paper covers fundamental business operations, financial accounting structures, and commercial systems. Students will encounter questions focusing on key topics such as business finance and capital calculations, insurance principles and clauses, organizational structures, and the functions of banking and financial institutions. Working through this paper will help reinforce your understanding of how commercial enterprises operate and interact within the broader economy. To get the most out of this practice session, make sure to review the detailed explanations behind each correct answer rather than simply memorizing the final options.
Topics in this paper
Government policies relating to the establishment and operations of businesses are targeted at
1) Distractor check: A student might choose increasing the profits of business owners because businesses are involved, but policies govern public economic health. 2) Reasoning to the answer: The overall economy is enhanced through growth, employment, and sustainable development rather than focusing exclusively on individual business profits or expansion. 3) Common mistake: Confusing micro-level business gains with macro-level governmental economic targets.
The share capital value that forms part of the balance sheet total is the
1) Distractor check: A student might mistakenly select authorized share capital, which represents the maximum limit rather than actual funds integrated into the accounts. 2) Reasoning to the answer: Equity includes the amount shareholders have actually paid for issued shares, which is why paid-up share capital forms part of the balance sheet total. 3) Common mistake: Confusing the maximum capital a company is permitted to raise with the capital actually paid in by investors.
Bank overdraft as a short-term source of funds is
1) Distractor check: A student might select repayable after more than a year, forgetting that bank overdrafts are meant for immediate short-term liquidity needs. 2) Reasoning to the answer: Short-term borrowings are classified as current liabilities because a bank overdraft is typically repayable within a year. 3) Common mistake: Categorizing short-term credit facilities as long-term liabilities.
The measure of independence available to individual business units that come together is the main difference between
1) Distractor check: A student might choose mergers and acquisitions, but those involve complete ownership changes rather than cooperative business unit agreements. 2) Reasoning to the answer: Members in a cartel maintain greater autonomy while coordinating on prices or production, whereas in a trust, businesses retain some operational independence under a central authority, highlighting the measure of independence as the main difference. 3) Common mistake: Failing to distinguish the varying degrees of autonomy retained by member firms across different business combinations.
The major factors that facilitate merchandising are
A student might mistakenly guess trading, warehousing, and production because they sound like general business operations, but production is a manufacturing concept rather than a direct support mechanism. To understand why banking, insurance, and transportation are correct, look at how the sale of goods functions in commerce. Transactions require financing through banking, potential risks must be managed with insurance, and physical merchandise has to reach buyers via transportation. Common mistake: Confusing core production processes with the auxiliary services that facilitate trade.
Amina Enterprises Balance Sheet as at 30/3/99: Liabilities (N) - Share capital 400,000, Reserve fund 200,000, Creditors 110,000, Bills payable 50,000, Undistributed Profits 45,000, Wages due 5,000; Assets (N) - Land 200,000, Buildings 150,000, Machinery 200,000, Implements 20,000, Office fittings 5,000, Raw materials 100,000, Finished goods 50,000, Debtors 20,000, Bills receivable 15,000, Cash at bank 45,000, Cash at hand 5,000. What is the total fixed capital?
A student might mistakenly pick N570,000 or N550,000 by miscalculating or incorrectly adding current assets into the long-term total. To find the correct figure, you must isolate the long-term investments of the business from its circulating items. Summing up Land (200,000), Buildings (150,000), Machinery (200,000), Implements (20,000), and Office fittings (5,000) gives a combined total of N575,000. Common mistake: Including short-term items like raw materials or cash when calculating fixed assets.
Amina Enterprises Balance Sheet as at 30/3/99: Liabilities (N) - Share capital 400,000, Reserve fund 200,000, Creditors 110,000, Bills payable 50,000, Undistributed Profits 45,000, Wages due 5,000; Assets (N) - Land 200,000, Buildings 150,000, Machinery 200,000, Implements 20,000, Office fittings 5,000, Raw materials 100,000, Finished goods 50,000, Debtors 20,000, Bills receivable 15,000, Cash at bank 45,000, Cash at hand 5,000. What is the circulating capital?
A student might mistakenly select a higher figure like N250,000 by incorrectly adding fixed assets into the short-term working capital calculation. To determine the circulating capital correctly, you need to aggregate all current assets listed on the balance sheet. Adding Raw materials (100,000), Finished goods (50,000), Debtors (20,000), Bills receivable (15,000), Cash at bank (45,000), and Cash at hand (5,000) yields a total of N235,000. Common mistake: Mixing up fixed capital items with current assets.
The term PLC implies that the shares are available
A student might mistakenly choose option C because it mentions the public, assuming shares can simply be bought at the company office. A Public Limited Company actually offers its ownership units to the wider populace through a formal marketplace. This means the shares are available publicly on the stock exchange, allowing broad investor participation. Common mistake: Assuming public availability means buying directly from the corporate headquarters instead of through formal market exchanges.
The application of division of labour should generally bring about
A student might mistakenly select option B, assuming that breaking down tasks naturally boosts output volume rather than financial performance. When work tasks are specialized among workers, production processes become leaner and less wasteful. This leads directly to cost efficiency in the production of goods and services. Common mistake: Confusing total physical output volume with overall financial savings.
On liquidation of a public limited liability company, the residual owners are the
A student might mistakenly pick creditors or debenture holders, thinking that all claimants have equal standing during a company's wind-down. When a public limited liability company is liquidated, claims are settled in a strict hierarchy, leaving the ordinary shareholders as the residual owners who receive any remaining assets after creditors, debenture holders, and preference shareholders are paid. Common mistake: Forgetting that equity holders stand last in line behind all debt and preference claims.
Which of these is both a merit and demerit in a partnership?
A student might mistakenly select the number of partners, viewing it as a structural feature rather than a clear dual-natured attribute. Unlimited liability acts as both a merit and a demerit because it encourages strong commitment and responsibility among the partners, but it simultaneously exposes them to personal liability for debts. Common mistake: Overlooking how legal liability rules can be both a powerful motivator and a severe personal risk.
A printer that burns the print images onto a photosensitive drum is called
A student might mistakenly select a dot matrix printer because it is a common type of office output hardware. A laser printer operates differently, utilizing a photosensitive drum and toner to create images, burning them onto paper for high-quality prints. Common mistake: Confusing impact printing mechanisms with toner-based electrostatic printing.
The insurance principle that requires full disclosure of information by the insured is known as
A student might mistakenly choose caveat emptor, which relates to buyer caution rather than the strict disclosure duties required in contracts. For an insurance contract to be completely valid, the insured must fully disclose all relevant information to the insurer under the principle of uberrimae fidei, meaning utmost good faith. Common mistake: Confusing general consumer caution principles with specialized insurance disclosure doctrines.
A bank form used to transfer money from a personal account to a creditor’s account is called
A student might mistakenly pick a debit transfer form, assuming any money movement out of an account carries a debit label. When specifically moving funds from your personal holding to settle a creditor's ledger, the correct instrument used is a credit transfer form. Common mistake: Mixing up incoming and outgoing account terminology when dealing with bank forms.
A console is a device used in
A student might mistakenly choose option A, confusing a console with standard pointing peripherals or input hardware used for screen navigation. A console specifically serves as an interface enabling communication between the operator and a computer program, typically for entering commands or monitoring operations. Common mistake: Equating general screen display controls with operator-to-program communication interfaces.
The function of a merchant wholesaler is to
A student might mistakenly choose option B, thinking merchant wholesalers act purely as intermediaries who bring buyers and sellers together without holding inventory. A merchant wholesaler actually takes legal ownership of the goods, which involves purchasing in bulk, storing them, and selling them to retailers. Common mistake: Confusing agents who merely broker deals with merchant wholesalers who take legal title to the merchandise.
The computer using linear integrated circuit technology coupled with quantification of data in terms of length and distance is known as
A student might mistakenly choose a digital computer, thinking of modern processing hardware rather than specialized continuous measurement systems. An analogue computer uses linear integrated circuits and measures data in continuous forms, such as length or distance, unlike digital systems. Common mistake: Assuming all advanced computational hardware relies on digital binary processing.
Ocean liners are subdivided into
A student might mistakenly pick cargo liners and tramp liners, mixing up scheduled line operations with unchartered vessels. Ocean liners are specifically categorized into passenger liners for passenger transport and cargo liners for goods transport. Common mistake: Grouping tramp steamers together with scheduled liner classifications.
The current trends in retailing competition in Nigeria are
A student might mistakenly select advertising and sales promotion strategies, focusing purely on promotional pushes rather than structural retail evolution. Modern retailing competition in Nigeria leverages self-service, after-sales service, and branding to enhance customer experience and competitiveness. Common mistake: Confusing promotional marketing tools with comprehensive retail modernization trends.
The main factors militating against the rapid growth of trade in Nigeria are
A student might mistakenly think lack of motivation or government attitude is the primary barrier, overlooking physical and security barriers. Poor transportation infrastructure and investment insecurity significantly hinder trade growth in Nigeria. Common mistake: Underrating infrastructural deficits and safety concerns as primary roadblocks to commercial expansion.
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