3RD TERM 2023/2024 ACADEMIC SESSION EXAMINATION

COMMERCE MARKING GUIDE

1. B 11. A 21. A 31. B
2. D 12. B 22. B 32. A
3. D 13. B 23. D 33. C
4. D 14. D 24. E 34. D
5. A 15. A 25. D 35. B
6. C 16. C 26. B 36. B
7. A 17. B 27. D 37. D
8. D 18. C 28. B 38. B
9. B 19. C 29. D 39. D
10. E 20. A 30. C 40. D
THEORY
ANSWER QUESTION ONE AND ANY OTHER THREE
1a.
What is commerce?
Commerce can be defined as all the activities involved in the distribution and exchange of goods
and services. ( 1mark)
1aii.
Explain four commercial activities that facilitate buying and selling.
1. Transportation: Transport facilitates movement of goods and services from the point of production
to where they are needed.
2. Insurance: Insurance reduces the risks associated with the production and distribution of goods and
services.
3. Advertising: Advertising helps to create awareness about the existence of goods and services.
4. Warehousing: Warehousing helps the storage of ods until they are needed. It also facilitates
commercial activities by making it possible for production to continue ahead of demand.
5. Finance and Banking: Finance and banking facilitate commercial activities by making money
available for production and distribution of goods and services. Banks grant credits in the form of
loan and overdrafts and provide facilities for saving money and other valuables.
6. Communication/ Tourism: Communication and tourism provide efficient network which links
businessmen and thus facilitate commercial transactions.
1 mark each for any correct four (4marks)
b.i.
Define production
Production is the changing of raw materials into finished goods and the distribution and provision of
goods and services in order to satisfy human wants. Production is also referred to as the creation of
utility. (Utility is the ability of any commodity or services to satisfy human wants). (1 mark)
1bii.
Explain the factors of production with their rewards
LAND: This refers to the resources provided free by nature e.g. soil, sunshine, rain, minerals,
forest, fishing grounds etc. The reward for land as a factor of production is RENT.
LABOUR: Labour is the physical and mental efforts of man directed to the production process.
Labour may be unskilled, semi-skilled or skilled. The reward for Labour is WAGES.
CAPITAL: This is the resources or wealth made by man that is used for producing further wealth
e.g. machinery, motor vehicles, cash e.t.c
ENTREPRENEUR: This is the factor that organizes or co-ordinates other factors of production for
more productive purposes. The reward for entrepreneurship is PROFIT
½ mark for any correct four explanation (2marks)
½ mark for any correct four rewards stated (2marks)

1ci.
Define foreign trade
Foreign trade refers to the exchange of goods and services across the border of two or more
countries by their residents and government. It is also known as international trade or external trade.
(1mark)
1bii.
Explain four problems associated with foreign trade.
1. Banking: Banking Services are provided by an institution set-up to help business transactions. Such
2. Insurance: This is a measure taken to safeguard against risk of life or property. The insurance company
is called the insurer while the person taking out the policy is called the insured.
3. Communication: This is the passing of information from one person to another. Buying and selling of
goods requires communication between two or more persons. To facilitate communication between the
sellers and the buyers, there are organizations which provide aid to both parties.
4. Advertising: This is the creating of awareness of the existence of new and old goods. This is done
through the following means of advertising: Newspaper, magazines, radio, television, bill boards etc.
5. Warehousing: This is the act of storing goods in a warehouse until they are needed. Goods are
sometimes stored for future use. This storage function is performed by the warehouse.
6. Transportation: This is carrying of goods and persons from one place to another by land, air and sea.
Transport helps persons and goods to reach where they are needed.

1 marks for any correct four (4marks)

1di.
Who is a retailer?
A retailer is a trader who buys goods in small quantities from the wholesaler and sells in bit/unit to
the final consumer. (1mark)

1dii.
List four types of small scale retailers and large scale retailer.
Small scale large scale
Hawkers/itinerant trade Chain stores
Mobile shops Departmental stores
Street traders Supermarkets
Market traders Mail order business
Small Stores (Urban and Rural) Discount houses
Tied shops/unit stores Franchising
kiosks Hypermarkets
 Variety stores
Retail cooperatives
½ mark each four correct 4 from the two sides (4marks)
2a.
Define partnership
A partnership may be defined as a type of business organization in which two to twenty persons
agree legally to set up and manage a business outfit with the sole aim of making profit. The people
involved in partnership agreement are called partners and they share profit, losses and risk of the
business together. (3marks)
2b.
Explain four functions of money
1. MEDIUM OF EXCHANGE: Money can serve as a medium of exchange through which people
can exchange goods and services.
2. STANDARD OF DEFFERED PAYMENT: Since money can be stored. It can be accumulated to
pay debts that are fixed in terms of money.
3. UNIT OF ACCOUNT: In serving as a unit of account, it becomes practically possible for
individuals and companies to keep accounting record of their transactions in bank statements,
ledgers and invoices.
4. STORE OF VALUE: Money is a good store of value because wealth can be stored for future use.
5. AS A MEASURE OF VALUE: The value of goods and services are expressed by prices,
therefore money is used as yardstick to measure and compare the worth of goods and services as
well as occupation.
1 mark each for any of correct four (4marks)
2c.
State Six contents of deed of partnership
1. Sharing of profit and loss.
2. Management of the business.
3. Duration of the business.
4. Capital contribution.
5. Admission of new partners.
6. Remunerations/ Salaries.
7. The names of the partners.
8. The nature of the business.
9. The name of the firm.
10. The objective of the firm.
11. Drawing right.
12. Procedure in the event of death of a member.
13. Interest payable on loans from member’s
½ each for any correct six (3marks)
3a.
What do you understand by money?
Money is anything that is generally acceptable as a medium of exchange and in the settlement of
debts. (3marks)
 3b.
Explain four functions of commercial bank
1. ACCEPTING DEPOSIT: Commercial banks accept deposits from the public for safekeeping.
This is the oldest function of banks which helps in taking care of people’s money.
2. LENDING TO CUSTOMERS: This is perhaps the most profitable functions of a commercial
banks. Deposits from different customers are pooled together and given out as loans with interest to
people and firms for profitable investment.
3. AGENT OF PAYMENT: Commercial banks can act as agent of payment on behalf of their
customers. They encourage and permit customers to have current account in which they can draw
without notice by cheque.
4. SAFEKEEPING OF VALUABLES: One of the functions of commercial banks is to keep
customer’s valuable such as jewellery, certificate, will e.t.c.
5. ISSUANCE OF BANK STATEMENT: At regular intervals, the bank will prepare and send bank
statements to their customers to show tgeir transactions with them.
6. ISSUANCE OF TRAVELLERS CHEQUE: Travellers cheques are often issued to those
travelling overseas in order to facilitate their commercial transactions.
7. PROVIDE FINANCIAL ADVICE: Commercial banks encourage and advise businessmen on the
type of project they should invest their money in.
8. FACILITATES INTERNATIONAL TRADE: Commercial banks provide credits facilities to
exporters, and this facilitates payment in foreign trade
1 mark each for any of correct four (4marks)
3c.
Explain three kinds of partners.
LIMITED PARTNER: A limited partner is the one who has agreed to contribute a certain sum to a
partnership business and is prevented by later from taking any active part in the management and
administration of the business. He is liable for debts and obligations of the partnership only up to
the amount of capital he has contributed. A limited partner has limited liability.
2. GENERAL PARTNER: A general partner has full power of participating in the conduct and
management of the partnership business. He is entitled to take full share in the management of the
firm. This kind of partner is liable to the full extent of his estate for the partnership debts, i.e he has
unlimited liability.
3. ACTIVE PARTNER: An active partner takes active part in the management and administration
of a partnership business. He contributes to the financing and formation of the business, takes active
role in the day-to-day running of the enterprise and is being paid a certain sum as salary.
4. NOMINAL OR QUASI-PARTNER: A nominal partner contributes only his name to the
formation of the business. He neither contributes capital nor takes part in the management of the
firm.
A nominal partner must be a distinguished personality within the society as his name must surely
increase the reputation and possibly the goodwill of the partnership business.
5. SLEEPING OR DORMANT PARTNER: A dormant partner takes no part in the conduct and
management of the partnership business. He will contribute capital and share from the profit but
will not engage in the day-to-day running of the enterprise, i.e no active participation in the firm. A
sleeping partner receives no salary but is liable for the debts of the firm.
1 mark each for any of correct three (3marks)
4a.
Define Cheque
A cheque is an order written by the drawer to a bank to pay on demand a specified sum of money to
the person named as payee on the cheque. ( 3marks)
4b.
Explain four functions of central banks
1. Banker to the government: CBN is the only authority empowered to issue currency notes and
coins that are used as a medium of exchange in the country.
2.Banker’s bank: CBN acts as bank to commercial banks, merchant banks, development banks,
discount houses, microfinance banks and all other banks in Nigeria. Each banks in Nigeria have a
bank account with CBN from where they settle debts between themselves.
3.Lender of last resort: CBN lends funds to banks in financial difficulties. CBN is where other
banks run to borrow and to discount bill of exchange.
4.Foreign exchange transaction: It is the responsibility of CBN to promote stability in the rate of
exchange of naira vis-a-vis the foreign currencies in the international trade.
5.Management of national debt: It is responsible for the management of domestic and external
debts of the federal government.
6.Maintenance of external reserves: CBN is the watch dog of external reserves on behalf of the
federal government. It also gives advice to the government on what to do if the foreign reserves are
falling.
7.Responsible for monetary policy: The CBN formulates and implements monetary policy with
the primary objectives of promoting price stability, maintenance of balance of payments, etc.
1 mark each for any of correct four (4marks)
4c.
State six factors to be considered by commercial bank before granting a loan.
1. The bank will want to know the purpose or reason why a customer will need loan.
2. The bank is also interested to know the financial capability of the customer to repay back the
loan at expiration.
3. The commercial bank will study the credibility of the customer to determine his credit
worthiness.
4. When the loan is given out, the bank is interested in knowing the sources of income available to
the customer to repay loan, including interest.
5. The bank will also study and analysis the financial position of the customer’s account to ascertain
whether loan can be given out or not.
6. Provision of collateral security
7. Provision of referees or guarantors.
8. Period to repayment of loan.
½ mark each for any of correct six (3marks)
5a.
What do you understand by bank?
Bank is a commercial institution which performs various financial activities e.g accepting and handling of
deposits of its customers. (2marks)
5b.
 Olawale and Olakunle have team up to form a partnership business. A Explain four benefits
they are likely to derive from the business.
1. SUFFICIENT CAPITAL: Partnership has more financial resources than a sole proprietorship
because more people are involved, hence more capital can be raised through partners contribution.
2. INCREASE IN PRODUCTION: There is increase in production as a result of increase in capital
and management
3. JOINT DECISION MAKING: Better results are deribed when two or more partners put their heads
together and take joint decisions for the enterprise.
4. THERE IS PRIVACY: In this kind of business uniy , there is privacy because partners are not
legally xompelled to publish the annual accounts for public consumption.
5. BETTER MANAGEMENT: By combining skills and abilities, partnership businesses are usually
better managed than one man business.
6. SHARING OF SKILLS AND LIABILITIES: The partners can sharrrisks and liabilities among
themselves and this will reduce individual burden.
7. BETTER CHANCE OF CONTINUITY: There is better Chance of continuity because the death or
exit of a partner may not lead to the end of the business.
1 mark each for any of correct four (4marks)
5c.
Explain two functions of each of the following organizations:
i.
Nigeria Port Authority
1. PRIOVISION OF FACILITIES: The ports authority provides facilities like berth, cranes, fork-
lifts and navigational aids.
2. MINTENANCE AND IMPROVEMENT OF PORTS: The authority is responsible for the
improvement of ports including dredging of easy passage of ships.
3. REVENUE COLLECTION: The ports authority collects harbor and dock dues.
4. PROVISION OF WAREHOUSE: The Authority provides Warehouse Facilities at the Dockyard.
5. SUPERVISION OF LOADING AND UNLOADING OF GOODS: The ports authority takes
cares of loading and unloading of vessels.
6. PROVISION OF SECURITY: The ports authority provides security to monitor movement of
ships, cargoes and people within and around the nation’s ports.
1 mark each for any of correct two (2marks)
ii.
Nigeria Airport Authority
1. CONTROL OF AIRLINES: It controls domestic and international airlines.
2. PROVISION OF PARKING SPACE: It provides parking space for vehicles:
3. PROVISION OF FACILITIES: The ports authority provides facilities for landing, refueling and
taking off of aeroplanes.
4. MAINTENANCE OF FACILITIES: It provides repairs and maintenance facilities to damaged
aircrafts.
5. PROVISION OF WAREHOUSE: The airports authority provides warehouse for storage of
goods before loading and off-loading.
 6. REVENUE COLLECTION: The airport authority takes charge of collecting airport taxes from
airlines, shop operators in the airport etc.
7. ENSURES PASSENGERS SECURITY: The airports authority ensures passengers safety by
providing security.
1 mark each for any of correct two (2marks)

6a.
Explain two functions of each of the following specialized bank
i.
Merchant bank
i. RAISING FINANCE FOR CLIENTS: merchant banks help their clients to raise finance from both
domestic and international markets, through the issue of shares debentures and banking loans.
ii. CORPORATE RESTRUCTURING: Merchant banks assists their clients in matters relating
mergers and acquisition, sales of existing business unit or disinvestment.
iii. DISCOUNTING OF BILLS OF EXCHANGE: Merchant banks engage in the acceptance and
discounting of bills of exchange.
iv. DEPOSITS: Merchant banks accept large deposits from corporate clients and wealthy individual
this is usually in the form of fixed term deposits. They also issue certificates of deposits
(CDs)which are usually purchased by commercial bank.
vi. LOAN SYNDICATION: loan syndication is the process of involving different lenders in
providing various portions of a loan, merchant banks engage in loan syndication by organizing a
consortium of institutions to finance a business venture
vii. UNDERWRITING ISSUES OF NEW SHARES: merchant banks engage in underwriting
services were they guarantee to take shares which are not subscribed to by the public in the event
that the shares issued by their clients are no fully subscribed to.
viii. LEASING SERVICES: a lease is a contract between the lessor and the lessee, were the lessor
(the owner of the asset) allows the lessee (the renter of the asset) to use a specific asset for a
specified period of time charging a fee called rentals
ix. BANKER ACCEPTANCES: Merchant banks facilitate international trade through use of
“bankers acceptance”. This entails the merchant bank endorsing a bill drawn by its client (an
importer) guaranteeing the payment of the bill to the exporter at maturity.
1 mark each for any of correct two (2marks)

ii.
Mortgage bank
PROVISION OF LONG TERM LOANS: Mortgage banks provide long term loans to individual
and estate developers for the purpose of building houses
ii. ACCEPTANCE OF DEPOSIT: Mortgage banks accept deposits from customers in order to
encourage savings towards owning a house.
iii. PROVISION OF HOUSES: Mortgage banks engage in building of houses, which they offer for
sale to customers
iv.GIVE ADVICE ON HOUSING MATTER: They render advise to customers in relation to
housing issues.
V. DEVELOPMENT OF MORTGAGE INSTITUTION: They supervise and encourage the
development of mortgage institution.
1 mark each for any of correct two (2marks)
6b.
Victor and Samba have been partners for two years. They have had disagreements
throughout the period and Samba requested for a dissolution of the partnership so that he
could start a sole proprietorship.
Explain three Benefits and problems Samba could face as a sole trader
BENEFITS OF SOLE PROPRIETORSHIP
1. IT INVOLVES SMALL CAPITAL: The sole proprietorship requires very small capital to set
up.
2. IT IS EASY TO ESTABLISH: The one man business is easy to establish because of the small
capital requirement and it may not involve much protocol or procedures when setting up the
business.
3. QUICK DECISIONS: Quick decision are easily taken by the sole proprietor alone without the
consent of other workers in the organization.
4. IT IS EASY TO MANAGE: The sole proprietor can easily manage the operations of the
Enterprise without expert management from outside.
5. IT REQUIRES SMALL OPERATION: The sole proprietorship serves fragmented markets in
West Africa and as such, large operations would not be necessary.
6. ALL PROFIT BELONG TO THE OWNER: All the profits derived from the business belong to
the owner of the business because the capital outlay or provision came from him.
7. THERE IS PRIVACY IN CONDUCTING BUSINESS AFFAIRS: The sole proprietor can keep
his business matters secret.
1 mark each for any of correct three (3marks)
PROBLEMS OF SOLE PROPRIETORSHIP
1. PROBLEM OF CONTINUITY: in the event of the death of the owner, the business may also die
with him, especially when there is no successor to take over.
2. INADEQUATE CAPITAL: The sole proprietor is always faced with inadequate capital because
of the small size of his business funds outside his business.
3. HE BEARS ALL RISKS ALONE: The ridk required in operating the business is borne solely by
the owner.
4. IT HAS UNLIMITED LIABILITY: In the event of business failure, his assets and properties
have to be sold to pay his creditors.
5. IT IS NOT S SEPARATE LEGAL ENTITY: In the lae there is no difference between the owner
of sole proprietorship and the business itself. The business cannot be sue or sued in its own name/
right.
1 mark each for any of correct three (3marks)
 SS 2 3RD TERM 2023/2024 ACADEMIC SESSION EXAMINATION
COMMERCE MARKING GUIDE
1. B 11. A 21. A 31. B
2. D 12. B 22. B 32. A
3. D 13. B 23. D 33. C
4. D 14. D 24. E 34. D
5. A 15. A 25. D 35. B
6. C 16. C 26. B 36. B
7. A 17. B 27. D 37. D
8. D 18. C 28. B 38. B
9. B 19. C 29. D 39. D
10. E 20. A 30. C 40. D
THEORY
ANSWER QUESTION ONE AND ANY OTHER THREE
1a.
i.Define partnership

A partnership may be defined as a type of business organization in which two to twenty persons
agree legally to set up and manage a business outfit with the sole aim of making profit. The
people involved in partnership agreement are called partners and they share profit, losses and
risk of the business together. (1mark)
ii.
Explain two advantages and two disadvantages of partnership.
ADVANTAGES
1. SUFFICIENT CAPITAL: Partnership has more financial resources than a sole
proprietorship because more people are involved, hence more capital can be raised
through partners contribution.
2. INCREASE IN PRODUCTION: There is increase in production as a result of increase in
capital and management
3. JOINT DECISION MAKING: Better results are deribed when two or more partners put
their heads together and take joint decisions for the enterprise.
4. THERE IS PRIVACY: In this kind of business uniy , there is privacy because partners
are not legally xompelled to publish the annual accounts for public consumption.
5. BETTER MANAGEMENT: By combining skills and abilities, partnership businesses
are usually better managed than one man business.
6. SHARING OF SKILLS AND LIABILITIES: The partners can sharrrisks and liabilities
among themselves and this will reduce individual burden.
 7. BETTER CHANCE OF CONTINUITY: There is better Chance of continuity because
the death or exit of a partner may not lead to the end of the business.
1 mark each for any of correct two (2marks)
DISADVANTAGES OF PARTNERSHIP
1. UNLIMITED LIABILITY: The partners are liable for the debts of the partnership business up to the
full extent of their estate.
2. INABILITY TO RAISE UP TO SUFFICIENT CAPITAL: Partners cannot invite the public to raise
capital. Members of the public are always afraid to invest because of its unlimited liability.
3. IT IS NOT A LEGAL ENTITY: Partnership business is not a separate and distinct personality. It
cannot be sue and be surd in its own name.
4. DIFFICULTY IN MANAGEO: Since all partners will want to contribute his own quota decision
making may be slow and long.
5. RISK OF DISSOLUTION: Death, insanity and bankruptcy of a partner will bring the business to an
abrupt end.
6. DISAGREEMENT BETWEEN PARTNERS CAN END THE BUSINESS: There is the possibility
that a minor disagreement between the partners can bring the business to an end.
b. i.
Define money

Money is anything that is generally acceptable as a medium of exchange and in the settlement of
debts. (1mark)
ii.
Explain four qualities of money
GENERAL ACCEPTABILITY: Money must be generally acceptable by all in the society or country as a means
of exchange.
2. PORTABILITY: The object that serves as money must be something that can easily be carried about from one
place to another, which means such object has to be light in weight.
3. RELATIVE SCARCITY: Money must be relatively scarce, that is, it must not be too many so as not lose its
value.
4. HOMOGENEITY: Each unit of money must be the same in size, colour and quality and be the same
nationwide.
5. DURABILITY: The object that will serve as money must be able to last long.
6. STABILITY: The value of money must be stable. The stability of its value will help business to be predictable
and encourage lending and borrowing of money.
7. DIVISIBILITY: Money must be capable of being divided into smaller units. E.g. ₦100, ₦50, ₦20 e.t.c.
8. RECONGNISABILITY: Money must be easily recognized and identified by the totality of the people in the
society.
9. NO INTRINSIC VALUE: The commodity that should serve as money must have little or no value in itself as
opposed to its value of exchange.
1 mark each for any of correct four (4marks)
c.
i.
What do you understand by Bank?
Bank is a commercial institution which performs various financial activities e.g accepting and handling of
deposits of its customers. (1mark)
ii.
Explain four functions of commercial bank.

ACCEPTING DEPOSIT: Commercial banks accept deposits from the public for safekeeping. This
is the oldest function of banks which helps in taking care of people’s money.
2. LENDING TO CUSTOMERS: This is perhaps the most profitable functions of a commercial
banks. Deposits from different customers are pooled together and given out as loans with interest to
people and firms for profitable investment.
3. AGENT OF PAYMENT: Commercial banks can act as agent of payment on behalf of their
customers. They encourage and permit customers to have current account in which they can draw
without notice by cheque.
4. SAFEKEEPING OF VALUABLES: One of the functions of commercial banks is to keep
customer’s valuable such as jewellery, certificate, will e.t.c.
5. ISSUANCE OF BANK STATEMENT: At regular intervals, the bank will prepare and send bank
statements to their customers to show tgeir transactions with them.
6. ISSUANCE OF TRAVELLERS CHEQUE: Travellers cheques are often issued to those
travelling overseas in order to facilitate their commercial transactions.
7. PROVIDE FINANCIAL ADVICE: Commercial banks encourage and advise businessmen on the
type of project they should invest their money in.
8. FACILITATES INTERNATIONAL TRADE: Commercial banks provide credits facilities to
exporters, and this facilitates payment in foreign trade
1 mark each for any of correct four (4marks)
d.
i. What is a cheque

A cheque is an order written by the drawer to a bank to pay on demand a specified sum of money
to the person named as payee on the cheque. (1mark)
ii.
Explain two advantages and disadvantages of sole proprietorship
ADVANTAGES OF SOLE PROPRIETORSHIP

IT INVOLVES SMALL CAPITAL: The sole proprietorship requires very small capital to set
up.
2. IT IS EASY TO ESTABLISH: The one man business is easy to establish because of the small
capital requirement and it may not involve much protocol or procedures when setting up the
business.
3. QUICK DECISIONS: Quick decision are easily taken by the sole proprietor alone without the
consent of other workers in the organization.
4. IT IS EASY TO MANAGE: The sole proprietor can easily manage the operations of the
Enterprise without expert management from outside.
5. IT REQUIRES SMALL OPERATION: The sole proprietorship serves fragmented markets in
West Africa and as such, large operations would not be necessary.
6. ALL PROFIT BELONG TO THE OWNER: All the profits derived from the business belong to
the owner of the business because the capital outlay or provision came from him.
7. THERE IS PRIVACY IN CONDUCTING BUSINESS AFFAIRS: The sole proprietor can keep
his business matters secret.
1 mark each for any of correct two (2marks)
DISADVANTAGES OF SOLE PROPRIETORSHIP
1. PROBLEM OF CONTINUITY: in the event of the death of the owner, the business may also die
with him, especially when there is no successor to take over.
2. INADEQUATE CAPITAL: The sole proprietor is always faced with inadequate capital because
of the small size of his business funds outside his business.
3. HE BEARS ALL RISKS ALONE: The ridk required in operating the business is borne solely by
the owner.
4. IT HAS UNLIMITED LIABILITY: In the event of business failure, his assets and properties
have to be sold to pay his creditors.
5. IT IS NOT S SEPARATE LEGAL ENTITY: In the lae there is no difference between the owner
of sole proprietorship and the business itself. The business cannot be sue or sued in its own name/
right.
1 mark each for any of correct two (2marks)
2.

i. Gross profit = cost of goods sold – sales

Cost of goods sold = Opening stock+ Purchases - Closing stock
15,000 – 6,000 = N9,000
i. Net profit = gross profit – total expenses(wages)
N9,000 – N1,000 = N8,000
ii. Gross profit percentage = Gross profit *100
Sales
9,000 * 100 =60%
15,000
iii. Net profit percentage= Net profit *100
Sales
8,000 * 100 =53.3%
 15,000

iv. Current Liabilities = Creditors + Bank overdraft

30,000 + 5,000 = N35,000
v. Current asset = Cash in hand + Debtors + Stocks
10,000 + 25,000 + 38,000 = N73,000
vi. Working capital = Current asset - Current Liabilities
73,000 - 35,000 = N62,000
vii. Fixed assets = Vehicles + Furniture
82,000 + 15,000 = N97,000
viii. Rate of stock turn = closing stock
Average stock
5,000 = 1.6times
3,000

ix. Average stock= Opening stock + Closing Stock

2
1,000 + 5,000 = N3,000
2
1 mark each for any correct answer(5marks)
3.
What is communication?
Communication is the process of exchange or transmission of meaningful information, feelings, opinions and
ideas from one person to another or from one place to another. It is a two way process which involves sending and
receiving of messages. (2marks)
b.
Explain 5 importance of communication to commerce (5marks)

1.PROMOTION OF COMMERCIAL ACTIVITIES: Communication promoted commercial activities as the

whole world is connected together as a global village.
2. ENHBANCES SETTLEMENT OF INTERNATIONAL INDEBTEDNESS: The ise of telecommunication has
enhanced the settlement of debts through telegraphic money transfer, e.g. Western Union, Money Transfer.
3. CREATION OF AWARENESS FOR GOODS AND SERVICES: Communication helps in creating awareness
for goods and services in order to induce customers to buy.
4. REDUCTION IN COST AAND RISK OF TRAVELING: Through communication the cost and risks involved
in traveling long distances for business transactions can be greatly reduced.
5. FACILITATES CONTACT BETWEEN BUSINESSMEN: It provides and facilitates good and efficient
means of maintaining close contact between businessmen.
6. ENSURES QUICK AND FAST DELIVERY OF DOCUMENTS: Documents and parcels are easily, quickly
and safely moved from one place to another.
7. PROVIDS GOOD AND FAST MEANS OF SPREADING INFORMATION: Communication facilities the
dissemination of information about the market situation of goods and services.

1 mark each for any of correct five (5marks)

c.
Mention three traditional means of communication
1. Wooden/talking Drum
2. Town crier
3. Metal gong
4. Palm frond
5. Smoke signal
6. Gun blast
7. Whistles
8. Bells
9. Trumpets
10.Drum and flutes.

1 mark each for any of correct three (3marks)

4.
Define warehousing

Warehousing is the act of storing goods produced or brought in a place until they are
needed. Warehousing creates time utility. (2marks)
b.
Explain 5 importance of warehouse to commerce

1. STORAGE: This is the basic function of warehousing. Surplus commodities which

are not needed immediately can be stored in warehouses. They can be supplied as and
when needed by the customers.
2. PRICE STABILIZATION: Warehouses play an important role in the process of
price stabilization. It is achieved by the creation of time utility by warehousing. Fall in
the prices of goods when their supply is in abundance and rise in their prices during the
slack season are avoided.
3. RISK BEARING: When the goods are stored in warehouses they are exposed to
many risks in the form of theft, deterioration, exploration, fire etc. Warehouses are
 constructed in such a way as to minimize these risks. Contract of bailment operates
when the goods are stored in wave-houses.
4. FINANCING: Loans can be raised from the warehouse keeper against the goods
stored by the owner. Goods act as security for the warehouse keeper. Similarly, banks
and other financial institutions also advance loans against warehouse receipts. In this
manner, warehousing acts as a source of finance for the businessmen for meeting
business operations.
5. GRADING AND PACKING: Warehouses nowadays provide the facilities of
packing, processing and grading of goods. Goods can be packed in convenient sizes as
per the instructions of the owner.
1 mark each (5marks)
c.
Mention three types of warehouse

1. Bonded warehouse
2. Government /state warehouse
3. Public warehouse
4. Public warehouse
5. Manufacturers warehouse
1 mark each for any of correct three (3marks)
5.
Define capital according to a layman

LAYMAN’S UNDERSTANDING: Capital is the total amount of money for running a

business. (2marks)

b.
Explain five functions of Stock exchange

FUNCTIONS OF STOCK EXCHANGE

1. FUND MOBILIZATION: Through the stock exchange market which is part of the
capital market, fund or capital can be raised or mobilised by companies and investors.
2. SALES OF SECURITIES: Investors can buy and sell old securities like stock, shares
e.t.c.
3. FINANCIAL MARKET FOR INVESTMENT: It is a market where people can invest
their money in shares of companies.
 4. IT FACILITATES THE TRANSFER OF SHARES: Stock exchange facilitates the
transfer of ownership of shares between investors.
5. PROVIDES AVENUE FOR GOVERNMENT TO RAISE FUND: Government can
raise fund by selling bond or gilt – edge in the stock market.
6. VALUATION OF PRICE OF SECURITIES: The market, through the forces of
demand and supply can fix price for securities.
7. PROVISION OF PROFESSIONAL ADVICE: The stock market provides professional
advice to investors on sales and management of securities.
1 mark each for any of correct five (5marks)
c.
State three benefits of e-mail(3marks)
6.
Define stock exchange
Stock exchange is a market where investors can buy and sell existing securities like shares, stocks, debentures,
gift edge e.t.c. it serves as a source of raising capital as well as a forum for financial investment. (2marks)
b.
As an employee of the stock exchange market, explain to a group of investors five securities they
could trade in stock exchange
1. SHARES: Shares can be defined as an individual portion of the company’s capital owned by shareholders. It is
the interest which a shareholder has in a company.
2. STOCK: Stock can defined as the bundle of share or mass of capital which can be transferred in fractional
amount. It can be quoted per ₦100 nominal value.
3. DEBENTURE: A debenture is a document which acknowledges a loan generally under the company’s seal,
bearing a fixed rate of interest.
4. BOND: A bond is a security issued by a government or its agency or private institution as means of raisin
fund.
5. GILTED EDGED: Gilt Edges is a securities issued by the government, it has a fixed rate of interest. This type
of securities is considered to be very safe as government cannot fail to pay its debts.
1 mark each (5marks)
c.
Explain three advantages of credit to seller.

1. INCREASE IN SALES: Credit sales can lead to increase in sales of goods.

2. INCREASES IN PROFIT: It can bring increase in profit as higher prices are charged for credit transaction.
3. REDUCES THE RISK OF HOLDING STOCK: Credit sales will reduce the problem of holding stock for too
long as the goods can have outdated or become expired.
4. MORE PATRONAGE: It encourages the consumer to continue buying from the seller.
1 mark for any correct three (3marks)