2018 JAMB COMMERCE PAST QUESTIONS AND ANSWERS

Factoring involves the purchase of all trade debts from entities such as exporters, enabling the company to convert accounts receivable to immediate cash. This provides liquidity to businesses. Other options like importers or nations are not typically involved in factoring.

A rights issue is the offering of shares to current shareholders on favorable terms, allowing them to buy more shares at a reduced price. This strengthens the company’s capital. Issuing shares only to directors or founders is not standard in a rights issue, nor does it directly involve shareholder voting.

Line authority refers to the direct power a superior holds over subordinates, essential in establishing clear command chains. This contrasts with staff authority, which advises but lacks direct control over subordinates.

Consumer sovereignty implies that consumers hold ultimate control in a market economy, as their preferences drive production decisions. The idea rejects the notion that consumers are always wrong or dependent.

Sampling involves launching a new product in a limited market area to observe consumer responses before broader distribution. It differs from sales promotion, which typically aims to increase awareness rather than evaluate consumer reactions.

Corporate mergers aim to achieve economies of scale, reducing costs per unit as production increases, thereby boosting efficiency and profitability. Other motives, such as minimizing taxes or merely increasing financial advantage, are secondary goals.

A liquidator is appointed first in a company’s liquidation process, managing asset disposal to settle debts. Receivers or auditors play roles in insolvency but don’t initiate liquidation.

These industries depend significantly on insurance to mitigate risks associated with transit, storage, and product handling. Banking supports financial transactions, but insurance is more directly relevant.

Transposition errors involve swapping digits, leading to inaccurate entries. Unlike principle or omission errors, this type of mistake does not reflect fundamental misclassification but rather a simple clerical slip.

In a cooperative, each member typically holds equal voting rights, ensuring democratic control. Limited liability companies, however, assign voting power based on share ownership.

Excise duties apply to goods manufactured domestically. These duties differ from customs duties, which are levied on imports, or duties on exports or bonded goods.

An underwriter assesses and assumes risks for insurance policies, unlike brokers or actuaries, who facilitate sales and analyze statistical data, respectively.

A bank giro enables customers to deposit money by writing a cheque, facilitating quick transactions. This contrasts with traditional banking or systems where accounts are opened specifically for businesses.

Consumer markets are differentiated primarily by demand type, with personal needs driving demand, as opposed to industrial markets where production demands prevail.

Trade associations aim to safeguard the common interests of their members, fostering industry standards. They do not solely promote individual products or specific market goals.

The element of marketing mix here is “Place,” as it involves the physical distribution of newspapers to customers. Other elements like Product or Promotion are relevant to product design or awareness, not physical delivery.

Sudden technological advances may render a company’s product obsolete by introducing superior alternatives. This differs from merely complicating management or control systems, which are indirect effects of technological shifts.

Skills are essential in career selection, as they align with job demands. Training and aptitude are secondary, enhancing pre-existing skills rather than determining career choice outright.

Extractive industries, focused on raw material extraction, are classified as primary industries. Direct or indirect industries are broad terms, not specific to extraction.

Public enterprises manage monopoly services effectively, as they are often too essential or costly for private providers. Private companies rarely monopolize without competition or regulation.

Called-up share capital reflects actual shareholder contributions and is thus included in the balance sheet, unlike authorized or unissued share capital.

A laser printer uses a photosensitive drum to imprint images, unlike dot matrix or thermal printers, which use pins or heat rather than light-sensitive technology.

Utmost good faith is fundamental in insurance, requiring all parties to disclose relevant facts. This differs from indemnity or subrogation, which address claim reimbursements rather than initial disclosure.

Ordinary shareholders receive the remaining assets after settling all debts, unlike creditors or preference shareholders, who have prioritized claims in liquidation.

Commodity money, such as barter items, has been replaced by more practical currency types like paper or digital money, making it outdated.

Recruitment, selection, and placement encompass the staffing process, addressing the entire lifecycle from hiring to assigning roles. Interview and appraisal are sub-steps but not core components.

Chambers of commerce unite merchants for mutual support and to promote business interests, differing from manufacturing or import-focused associations.

The Sale of Goods Act protects consumers by establishing standards for transactions, unlike the Usury or Food and Drugs Acts, which address specific sectors.

Joint partnerships allow partners to offset each other’s weaknesses by combining resources, unlike corporations or cooperatives, which are more formalized and less personal.

Retained earnings, set aside from profits, are part of personal or business savings. Accrued taxes do not represent a voluntary savings component but rather an obligation.

A del-credere agent guarantees customer payments to the supplier, a unique role among wholesalers. Brokers and factors differ as they do not provide this guarantee.

A proforma invoice outlines the prices of goods before delivery, aiding in cost estimation. It does not specify quality or designation details, which are handled separately.

Warehousing boosts utility by making products available when needed, unlike quantity or quality, which are affected by production rather than storage.

RAM (Random Access Memory) serves as a temporary storage for data during processing, unlike ROM, which is non-volatile and stores permanent instructions.

Sovereignty of states hinders ECOWAS goals, as each state prioritizes national interests, impacting unification efforts. Language differences and currency are secondary concerns.

The Standards Organization of Nigeria (SON) regulates quality standards, distinct from consumer or manufacturing associations, which lack regulatory authority.

A group of companies often consists of a holding company and its subsidiaries, forming a corporate structure. Standalone firms or holding companies are not equivalent to groups.

Effective communication relies on understanding the audience, ensuring messages are well-received and clear. The sender’s role is to influence through encoding, while the receiver interprets the message.

System software includes all necessary programs to operate a computer, unlike specific microprograms or system flowcharts, which lack functional breadth.

Turnover rate calculation uses (Sales / Average Stock). With sales of 15,000 and an average stock of 4,500, the turnover rate is 3.5 times. Other options result from different calculation methods not aligning with the turnover formula.