2022 JAMB COMMERCE PAST QUESTIONS AND ANSWERS

Business policy sets the direction for decision making, corporate growth, and the company’s image. These elements work together to form the company’s overall approach to business operations.

Social responsibility requires firms to consider their impact on society, beyond just profitability. Helping the government achieve its aims is one example, while focusing solely on growth or operating under strict guidelines does not directly relate to social responsibility.

While businesses, government, and non-profit organizations are expected to engage in social responsibility, individuals are not typically bound by this expectation in the same formal way.

Partnerships are best suited for professional services because they allow for shared responsibilities and expertise. Private limited companies, sole proprietorships, and public enterprises do not offer the same flexibility in managing professional services.

The primary goal of corporate mergers is to enhance economies of scale, allowing the combined entity to operate more efficiently. Profit maximization and risk minimization may follow, but they are not the primary drivers.

The highest form of business ownership where shareholders are involved is a public corporation, which allows for widespread ownership through shares. Cooperatives, partnerships, and limited liability companies involve fewer shareholders or different structures of ownership.

Professional partnerships, such as those in law or accounting, are preferred because they offer favorable regulations and tax treatment. Raising capital is not always easier, and government regulation does not directly influence the preference for this business type.

Government-funded industries are most suited for partnerships, as they often require pooled resources and shared management. Other businesses like gold mining or oil exploration are not as well-suited for partnerships.

The royal charter was issued in 1886 to establish the framework for certain corporations and businesses. Other years, such as 1887 or 1885, were not the correct periods for the issuance of this document.

In a partnership, administrative duties are typically assigned to each partner, as they are responsible for managing the day-to-day activities. Capital, profit, and cash flow duties are not as commonly associated with specific roles within a partnership.

A partnership deed outlines the ratio in which profits and losses will be shared among partners. This agreement also clarifies the terms of partnership and avoids misunderstandings.

A rights issue involves offering shares to existing shareholders, usually at a discount, to raise capital. This is a common practice in public companies to allow shareholders to maintain their ownership stake.

The balance sheet shows the financial position of a company, listing its liabilities against assets. Cash flow statements, capital statements, and statements of account do not provide this specific information.

Factoring is a financial service used by exporters who sell their receivables to a third party for immediate cash. It is not directly applicable to banks, shippers, or national companies.

A public limited company can issue debentures, which are a form of long-term debt. Capital market bonds, discount houses, and bank overdrafts are not typically associated with public limited companies in the same way.

The nominal value of a share is its face value or par value, which is the value set by the company when the shares are issue This value is not reflective of the market price.

A company that relies more on loans than on equity for financing is said to be highly geare This indicates that the company has a high level of debt, which can be risky. Other options like insolvency or solvency do not address the company’s debt-to-equity ratio in the same way.

Incorporated companies have legal separateness, which means that while their assets may be seized, the owners are not personally liable. This makes it difficult for them to raise loans as creditors may view them as less stable. Other options, like the inability to be sued, do not address the challenges in raising loans.

This process is known as a merger, where two companies combine to form a new entity. Joint business, consortium, and acquisition are different forms of business combinations that do not result in the formation of a new entity.

The Articles of Association detail the rights and obligations of directors, along with other organizational matters of the company. It does not directly concern the company’s objectives, share capital, or shareholder liability.

Indirect services are those that are provided in support of direct service activities. Civil servants play an indirect role in facilitating government functions, while family doctors, household servants, and on-call services are direct services.

Manufacturing is a process of producing goods, while banking, insurance, and transportation are service-based industries. Therefore, option C (Manufacturing) is the odd one out in this context.

Trade involves the exchange of goods and services, and warehousing and transportation are key components of that process. Packaging and branding, while important for marketing, are not forms of trade.

An industrial worker is typically found in the manufacturing industry, where goods are produce Other industries such as banking, insurance, and commercial sectors are unrelated to industrial work.

The rate at which one currency exchanges for another is known as the exchange rate. Interest rates, balance of payments, and inflation rates are separate economic measures that do not directly relate to currency exchange rates.

Management is influenced by a variety of prevailing circumstances, including the management team itself. While product, financial, and market teams may also play a role, the overarching influence is the leadership and decision-making of the management team.

The main function of a wholesaler is buying in bulk and selling in smaller quantities to retailers or other buyers. Wholesalers may also provide credit facilities or offer discounts, but these are secondary functions compared to the core activity of bulk buying and selling.

The use of machines to sell goods, such as vending machines, is a form of retailing. This differs from personal selling, wholesaling, and mail order selling, which involve human interaction or different methods of distribution.

Retailing businesses are best suited for sole proprietorship due to their relatively small scale and ease of operation. Other businesses, such as oil exploration and gold mining, typically require large capital and are not suited to sole proprietorship.

Government imposes import duties to raise revenue, retaliate against other governments, and protect local industries. However, protecting the poor is not a direct reason for import duties, which makes option D incorrect.

Fixtures and fittings are long-term physical assets that a company uses in its operations, such as furniture or machinery, which are classified as fixed assets. Other options like liquid capital or current assets are short-term resources and do not represent fixtures and fittings.

To calculate net profit, first find the gross profit by subtracting the total cost from the earnings (N18M – N7M = N11M). Then, calculate the tax (45% of N11M = N4.95M). Finally, subtract the tax from the gross profit (N11M – N4.95M = N6.05M). Thus, the net profit is N6.05 million.

Compulsory liquidation can be initiated by a court order, which may be a result of financial distress or failure to comply with legal obligations. Other options like agreement, death of a member, or declaration of loss are not valid causes for compulsory liquidation.

Debenture holders are first in line to be paid in the event of a firm’s liquidation. Redeemable shareholders, ordinary shareholders, and founder shareholders are paid after the debenture holders.

This is called vertical integration, where firms combine operations from different stages of production. Horizontal integration involves merging firms at the same production stage. Consortium and cartel are different types of business collaborations.

A limited liability company is a separate legal entity from its owners, offering protection from personal liability for business debts. This is a key characteristic, making option C the correct answer. Other options like declaring dividends or having a large capital base do not define this specific feature.

Social responsibility refers to actions taken by a firm that benefit the community or environment. Constructing drainage in the community is an example of such responsibility. Other options like paying taxes or dividends are financial obligations, not specifically social responsibilities.

The production of clothing is part of the service industry since it provides a product that meets consumer needs. The constructive, mining, and business industries are unrelated to clothing production in this context. Option C is the best fit.

The process of turning raw materials into goods for consumption or industrial use is called production. Processing refers to the conversion of raw materials, while construction and distribution involve different stages of bringing goods to the market. Therefore, option C, Production, is the correct answer.

Commerce refers to man’s activities that involve the production, distribution, and consumption of goods and services. This broad definition encompasses the core aspects of economic activities. Option B focuses only on resource utilization, while options C and D narrow down commerce to specific activities not encompassing its broader definition.