WAEC SSCE - Commerce - 2007

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A partnership is a business owned by two or more individuals who share the profits and losses of the business. Therefore, the best organized business as a partnership would be the "Designing and building of houses" as it is a service-oriented business that typically requires a small team of professionals working together, sharing profits, and making decisions. The other options mentioned in the question involve larger capital requirements, complex production processes, and require more significant investment, making them more suited to other forms of business organization such as corporations.

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Marine insurance is referred to as the oldest form of insurance. This is because it has been in existence for over 4000 years, with evidence of its practice dating back to ancient Babylonian times. Marine insurance is a type of insurance that provides coverage for marine vessels, cargo, and related risks, such as piracy and collisions at sea. It was originally developed to protect merchants and traders from the risks associated with shipping goods over long distances, and it remains an important form of insurance today.

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Treasury bills are bought and sold in the Money Market. The Money Market is a financial market where short-term financial instruments such as treasury bills, commercial papers, and certificates of deposit are traded. It is also called the capital-short-term market, and it provides a platform for businesses, financial institutions, and governments to borrow or lend money for a short period, usually less than a year. Treasury bills, also known as T-bills, are short-term debt securities issued by governments to finance their budget deficits. They are issued with maturities ranging from a few days to 52 weeks, and they are considered one of the safest investments since they are backed by the full faith and credit of the issuing government. In the Money Market, investors can buy and sell treasury bills at a discount to their face value. The difference between the purchase price and the face value represents the investor's return, which is also called the yield. Therefore, the correct option is "Money Market."

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The feature described is a characteristic of producers' cooperatives. Producers' cooperatives are organizations formed by producers of goods or services who come together to jointly own and operate a business enterprise. Members of a producers' cooperative pool their resources, including money, labor, and equipment, to manufacture and market their products. They contribute capital to the cooperative, which is used to purchase equipment, raw materials, and other inputs needed to produce goods or services. The cooperative then markets the goods on behalf of its members, and profits are distributed among the members based on their contributions to the cooperative.

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A document showing full details of the goods and passengers carried in a ship or aircraft is called a manifest. The manifest provides a list of all the cargo, passengers, and crew members onboard the vessel or aircraft, including their names, origins, destinations, and other relevant information. The manifest is important for customs and immigration purposes, as it helps authorities to identify and track all items and people entering or leaving a particular country. In addition, the manifest is also useful for insurance and liability purposes, as it provides a detailed record of all items and individuals onboard the vessel or aircraft in case of any accidents or incidents that may occur during the journey.

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To calculate the rate of turnover, we need to divide the cost of goods sold by the average inventory. The average inventory is the sum of the opening and closing stock divided by two. So, the average inventory = (200 + 120) / 2 = 160 The cost of goods sold is given as Le2,400. Therefore, the rate of turnover = 2,400 / 160 = 15 times. This means that the company sold its entire inventory 15 times during the period.

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If a share is sold at a price below its face value, it is sold at a discount. The face value of a share is the amount stated on the share certificate, and it represents the nominal value of the share. Sometimes, due to various reasons such as poor company performance or market conditions, the market value of a share may fall below its face value. When this happens, the share is said to be sold at a discount. For example, if a share has a face value of $10 but is sold for $8, it is being sold at a discount of $2. This means that the buyer is paying less than the face value of the share, and the seller is receiving less money than the nominal value of the share.

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The money used by Njie & Co. Ltd in running the day-to-day activities of the business is represented by "current assets less current liabilities". Current assets are assets that can be easily converted into cash within a year, such as cash in hand, accounts receivable, and inventory. Current liabilities are the obligations of the business that are expected to be paid within a year, such as accounts payable and salaries payable. The difference between current assets and current liabilities is referred to as working capital, which is the money that a company has available for its day-to-day operations. Therefore, the formula for working capital is current assets minus current liabilities.

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An extractive industry refers to industries that extract natural resources from the earth such as oil, gas, minerals, and timber. Therefore, the correct option is "Digging for minerals". This involves extracting minerals from the earth's crust, such as gold, iron, copper, silver, and diamonds.

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The answer is "Display room". In mail order business, customers place their orders through mail or internet, and the goods are then delivered to them via post or courier. As the customers cannot physically see or touch the products before buying, a catalogue or brochure is usually sent to them to provide information about the products. A warehouse is necessary to store the products and fulfill orders. However, a display room is not required in mail order business as customers do not come to a physical store to purchase products.

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A limited company can raise long term capital through the stock exchange market. This is because a limited company can issue shares to the public and list them on the stock exchange market. By doing so, the company can raise capital from a large number of investors, and the investors can buy and sell the shares on the stock exchange market. This is a common way for companies to raise capital for long-term investments or expansion. The other options mentioned (commodity market, export market, and foreign exchange market) are not typically used by limited companies to raise long-term capital.

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The feature that is not a feature of a self-service store is "it offers steady employment opportunities." Self-service stores are retail outlets where customers select and purchase products themselves without the assistance of a salesperson. The store layout and displays are organized in such a way that customers can easily find what they need, and goods are typically arranged on shelves or in aisles. Prices are displayed on each item or on a nearby tag, which eliminates the need for a salesperson to negotiate prices. While self-service stores do employ staff for tasks such as stocking shelves, managing inventory, and operating cash registers, they do not typically offer steady employment opportunities as they require fewer staff members than traditional stores with salespeople assisting customers.

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The importer is responsible for the payment of the bill in a documentary credit. A documentary credit, also known as a letter of credit, is a payment mechanism used in international trade to ensure that the exporter will receive payment for goods shipped to the importer. In a documentary credit, the importer's bank agrees to pay the exporter a specified amount of money once the exporter presents certain documents, such as a bill of lading or an invoice, that confirm the shipment of goods. The importer is ultimately responsible for reimbursing their bank for the payment made to the exporter.

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A specialist on the stock exchange who buys and sells securities in his own name is a Jobber. A jobber is a professional who operates on the trading floor of a stock exchange and buys and sells securities for his own account. Jobbers are independent traders who use their own capital to buy and sell securities, and they specialize in specific stocks or types of securities. They make money by buying securities at a lower price and then selling them at a higher price, or by selling securities at a higher price and then buying them back at a lower price. In contrast, brokers are intermediaries who act as agents for their clients and buy and sell securities on their behalf. Brokers do not use their own capital, but instead earn a commission or fee for their services. Stags and bulls are types of investors on the stock exchange who try to make a profit by buying securities that they expect will increase in value. Overall, jobbers play an important role in the stock exchange by providing liquidity and helping to facilitate the buying and selling of securities.

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The means of water transport is a system that allows the movement of goods, people, or materials from one place to another through waterways. Therefore, the option that is not a means of water transport is the truck, as it is a means of land transportation. Trucks are used to move goods or materials from one place to another on land. The other options are all means of water transport. - Liner: a commercial ship designed to transport goods or people on regular routes, according to a fixed schedule. - Tanker: a ship designed to transport liquid or gas cargo in bulk. - Barge: a flat-bottomed boat used for transporting goods on rivers and canals. So, the correct answer is the option: Truck.

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The advantage of transportation by sea is that it is a cheaper means of transporting goods. Shipping companies can carry a large volume of cargo at once, and this reduces the cost per unit of goods transported. Shipping companies also have the advantage of being able to negotiate bulk shipping rates, further reducing costs. Additionally, ships are able to carry oversized and heavy cargo that other forms of transport may not be able to handle. While it may not be the fastest means of transport, it is still an efficient and reliable way of moving goods across long distances.

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A prospectus is a document used to advertise shares for sale. It provides important information to potential investors about the company, including its history, financial statements, and future plans. The prospectus also outlines the risks associated with investing in the company and any restrictions on the shares being offered. By providing this information, the prospectus helps potential investors make informed decisions about whether to invest in the company or not.

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The various rights attached to different classes of shares are stated in the articles of association. The articles of association are a document that outlines the internal regulations of a company, including the rights and responsibilities of its shareholders, directors, and officers. It is a legally binding document that governs the way a company is run and outlines the rules for conducting business activities. The articles of association specify the types of shares a company can issue and the rights and privileges that are attached to each class of shares, such as voting rights, dividend entitlements, and priority rights in the event of liquidation.

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If the charterer delayed the ship beyond the lay days, he is asked to pay demurrage. Demurrage is a fee charged by the shipowner to the charterer for the delay in unloading the cargo and vacating the vessel beyond the agreed time period known as the "lay days." It compensates the shipowner for the additional time and expenses incurred due to the delay in unloading and moving the vessel. Demurrage is usually calculated per day and is included in the charter party agreement between the shipowner and charterer.

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In a limited partnership, there are two types of partners: limited partners and general partners. The limited partner is a partner who contributes capital to the partnership but does not participate in the day-to-day management of the partnership. This means that the limited partner has limited liability and is not responsible for the debts and obligations of the partnership beyond the amount of their capital contribution. On the other hand, the general partner is responsible for managing the partnership and has unlimited liability. Therefore, the presence of a limited partner does not affect the requirement for at least one ordinary partner to manage the partnership.

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The popular product priced low to attract a larger number of buyers to a shop is called a "loss leader". A loss leader is a marketing strategy where a product is sold at a price lower than its market cost to attract customers to the store. The intention behind selling a product below market price is to attract customers who will also buy other items with a higher profit margin, making up for the loss incurred from the sale of the "loss leader" product. The purpose is to encourage customers to purchase other items as well, making the store more profitable.

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The insurance principle that was breached by Madam Tope is utmost good faith. Utmost good faith means that the insured should disclose all relevant information to the insurer in good faith, including any potential risks or hazards associated with the insured property. By not disclosing that she cooks in the shop and instead telling the insurer that she sells second-hand clothes, Madam Tope failed to provide the insurer with all the relevant information required to make a fair assessment of the risk involved. This breach of utmost good faith may result in the insurer denying Madam Tope's claim for compensation due to the misrepresentation of the nature of the shop's activities.

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Selling to consumers is a function of the small retailer. Small retailers are businesses that purchase goods in small quantities from wholesalers and manufacturers and sell them directly to the end-users or consumers. They play a vital role in the distribution chain by providing personalized services, convenience, and accessibility to consumers in their local communities. Small retailers can also offer a wide variety of goods and provide specialized products that larger retailers may not offer. Thus, their main function is to sell goods to consumers, making them an essential part of the retail industry.

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A Chamber of Commerce refers to a voluntary association that represents a cross-section of business interests in an area. It is a non-profit organization that promotes and protects the interests of businesses in a particular region or city. The Chamber of Commerce provides support and advocacy for businesses, as well as networking opportunities and educational resources. It also works to improve the business climate in the area by promoting economic development, tourism, and community events. The Chamber of Commerce may also serve as a liaison between businesses and local government to address issues affecting the business community.

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Public enterprises are entities that are owned and operated by the government. They provide public goods and services such as transportation, utilities, and communication services. Since public enterprises are owned by the government, their financing is mainly through government grants. These grants may come from the national budget or from external sources such as international development agencies. While public enterprises may also generate revenue from the sale of goods and services, they are often subsidized by the government to ensure affordable and accessible public services. Therefore, the financing of public enterprises is primarily through government grants.

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The option that is not a reason for dishonoring a cheque is "Poor handwriting." Poor handwriting may make it difficult to read the cheque, but it is not a valid reason for dishonoring it. However, if the handwriting is so bad that the amount in words or figures cannot be deciphered, it may be a reason for dishonoring the cheque, as it may not be clear how much the drawer intended to pay. The other options listed are valid reasons for dishonoring a cheque. If there are insufficient funds in the drawer's account, the cheque cannot be honored, as there is not enough money to cover the payment. A cheque is considered stale if it is presented for payment after a certain period, usually six months, from the date of issue. If the amount in figures differs from the amount in words, there may be confusion about how much the cheque is for, which can be a reason for dishonoring it.

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A partnership cannot raise its capital by selling shares to the public. In a partnership, the business is owned by two or more individuals who share the profits and losses of the enterprise. The partners contribute to the capital of the business, either through personal funds or through profits earned by the business that are not distributed to the partners. In addition, a partnership can raise its capital by admitting new partners who also contribute to the business. However, partnerships are not allowed to sell shares to the public in order to raise capital. This is because partnerships are considered to be private entities, and the shares of the business are owned by the partners. In contrast, companies that are publicly traded are able to raise capital by selling shares to investors on stock exchanges. Overall, partnerships are a type of business structure that is often used by small businesses or professional practices, and they are typically not involved in large-scale capital raising activities through public offerings of shares.

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The correct answer is "Terms of trade". Terms of trade refer to the rate at which a country exchanges its imports for its exports. It is the ratio between the prices of a country's exports and imports. In other words, terms of trade measure the purchasing power of a country's exports in relation to its imports. If a country's terms of trade improve, it means that it can purchase more imports for the same amount of exports, which is beneficial for the economy. Conversely, if a country's terms of trade deteriorate, it means that it can purchase fewer imports for the same amount of exports, which can be harmful to the economy.

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In this scenario, the bookseller will issue a receipt to Mr Ojo. A receipt is a written or printed statement that confirms the payment of a specific amount of money for goods or services. It is usually issued by the seller to the buyer as evidence of payment and serves as a proof of purchase. The receipt contains details such as the name and address of the seller, the name of the buyer, the date of the transaction, a description of the goods or services purchased, the total amount paid, and any taxes or discounts applied.

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Retailers do not render direct service. Teachers, musicians and doctors all directly provide services to their clients or patients. However, retailers provide a product or goods for customers to purchase rather than a service. While they may assist customers in selecting and purchasing products, their primary function is to sell and distribute goods rather than provide a direct service.

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The staff responsible for the calculations of probability of losses in insurance is called an Actuary. An Actuary is a professional who specializes in risk management and uses mathematical and statistical methods to analyze the likelihood of future events, particularly those related to insurance. They evaluate risks and uncertainties associated with insuring individuals or organizations against loss or damage and determine the appropriate premiums to be charged. Actuaries are employed in various industries, including insurance, finance, healthcare, and government. In insurance companies, actuaries play a crucial role in setting insurance rates, designing insurance policies, and managing the financial risks associated with insurance operations. Therefore, the correct option is "Actuary."

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Recorded delivery service provides evidence of receipt of an important document sent through the post. This is because recorded delivery is a service offered by postal services where the sender can track the delivery progress of a package and receive a signature upon delivery as proof of receipt. The recipient of the package signs a form upon delivery and the sender can then obtain this form as evidence that the package was delivered. This provides assurance to the sender that the package has been successfully delivered to the recipient, which is particularly important for important or sensitive documents.

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Market segmentation refers to the division of a market into identifiable sub-markets based on characteristics such as demographics, geographic location, behavior, and psychographics. This process involves identifying groups of consumers with similar needs or preferences and tailoring marketing efforts to meet those specific needs. By dividing the market into smaller segments, businesses can better understand their customers and create more targeted marketing strategies to meet their needs. This can lead to increased customer satisfaction, higher sales, and improved overall business performance.

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The option that involves the delivery of mails to a traveler without a fixed address is "Post restante". Poste restante is a service offered by many postal systems where a person can have mail held at the post office until they pick it up. The person addressing the letter writes the name of the recipient, followed by "Poste Restante," the name of the town or city where the post office is located, and the postal code or ZIP code. The recipient can then go to the post office, show identification, and collect their mail. This service is useful for travelers who don't have a permanent address or who don't want to receive mail at their current location.

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Legal tender refers to any form of payment that is recognized by law to settle a financial obligation. It is a means of payment that is acceptable by law in a particular country to pay off debts or other financial obligations. In this context, the only option that is legal tender is bank notes. Bank drafts, central bank cheques, and traveller's cheques may be used as forms of payment, but they are not considered legal tender in most countries.

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A document showing that a person has shipped certain goods through a named ship is called a bill of lading. This document serves as a receipt for the goods shipped and provides evidence of the contract of carriage between the shipper and the carrier. It contains important information such as the name of the shipper and consignee, description of the goods, and the terms and conditions of the shipment. The bill of lading is a crucial document in international trade and serves as a title document for the goods shipped, allowing the receiver to claim ownership of the goods upon arrival at the port of destination.

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The ancillary to trade which ensures that people gain access to facts pertaining to goods is advertising. Advertising is a marketing communication that uses various media channels to promote or sell a product, service or idea. It aims to reach potential customers and create awareness and interest in the product, with the ultimate goal of driving sales. In doing so, advertising provides information about the product or service, its features, benefits, and availability. It plays a vital role in creating demand for products and services, and thus facilitating trade.

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The type of share that gets extra dividend after its due fixed rate of dividend is participating preference shares. Participating preference shares are a type of preference shares that, in addition to receiving a fixed dividend, also have the right to participate in the company's profits above and beyond the fixed dividend rate. This means that if the company's profits exceed a certain amount, the participating preference shareholders are entitled to an additional dividend. This extra dividend is usually calculated as a percentage of the ordinary shareholders' dividend, and is paid out after the ordinary dividend has been paid.

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A bill of lading is a legal document issued by a carrier that acknowledges the receipt of goods and details the terms and conditions of their transportation. The content of a bill of lading typically includes the name of the shipper, the date and place of shipment, the name and destination of the vessel, the type, quantity, and condition of the goods being shipped, and any special instructions or terms related to the shipment. However, the content of a bill of lading does not include demurrage payable, which refers to the fees charged for the delay of a vessel beyond the time specified for loading and unloading.

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The document used to show that goods imported were produced in an ECOWAS (Economic Community of West African States) member country is a "Certificate of origin." This certificate is an official document that provides evidence that the goods being imported were produced, manufactured, or processed in an ECOWAS member state. The certificate of origin is usually issued by a chamber of commerce or a designated government agency in the exporting country, and it includes details such as the exporter's name, the consignee's name, the country of origin, the product's description, and the shipment value. The certificate of origin is an essential document for customs clearance and is used to determine the applicable duties and taxes on the imported goods.

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Importing goods into a country and then re-exporting them is known as "entrepot trade". Entrepot trade involves importing goods from one country and storing them in a warehouse or free zone before exporting them to another country. The main purpose of entrepot trade is to take advantage of differences in tariffs, taxes, or regulations between countries. By doing so, it is possible to earn a profit from the difference in price of the goods between the importing country and the exporting country. Entrepot trade can also help to reduce transportation costs and improve supply chain management.

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Granting loans to the public is not a function of the Central Bank. A Central Bank is the apex financial institution of a country that is responsible for formulating and implementing monetary policy. The Central Bank plays a vital role in maintaining the stability of the financial system and promoting economic growth. The following are the functions of the Central Bank: - Banker to the government: The Central Bank acts as the government's banker by managing its accounts and handling transactions on its behalf. It also manages the government's debt and provides advice on economic policy. - Banker's bank: The Central Bank serves as a lender of last resort for commercial banks, providing them with liquidity in times of need. It also regulates and supervises banks to ensure their stability and soundness. - Issuance of currency notes: The Central Bank is responsible for issuing and managing the country's currency notes and coins. - Formulating and implementing monetary policy: The Central Bank sets interest rates and manages the money supply to achieve its monetary policy objectives, such as price stability and full employment. Granting loans to the public is not a function of the Central Bank. While the Central Bank may provide loans to commercial banks, it does not typically lend to individuals or businesses directly. That function is usually performed by commercial banks, which obtain their funds from various sources, including deposits from the public, loans from other banks or financial institutions, and borrowing from the Central Bank. Therefore, the correct option is "Granting loans to the public."

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(a) Five advantages of large scale retailing

1. Economies of scale / bulk buying: Large retailers buy in huge quantities directly from manufacturers, earning trade discounts and lower unit costs which can be passed on as lower prices.
2. Wide variety of goods: They stock a very large range of products under one roof, giving customers wide choice and the convenience of one-stop shopping.
3. Better facilities and services: They can afford facilities such as air-conditioning, car parks, escalators, delivery services and credit facilities that attract customers.
4. Specialisation and division of labour: With many employees, staff can specialise in buying, selling, accounting and display, raising efficiency.
5. Large-scale advertising and promotion: Their size allows heavy advertising and sales-promotion campaigns whose cost is spread over a large turnover.

(Other points: ability to employ experts; ready access to bank finance; ability to withstand periods of low sales.)

(b) Five characteristics each

(i) Department Stores

1. A very large single store divided into separate departments, each selling a particular class of goods.
2. Each department is managed almost like a separate unit under a departmental head, but all are under one overall management and ownership.
3. They provide many customer services such as restaurants, restrooms, delivery and after-sales service.
4. They stock a wide range of goods, mainly shopping and speciality goods, under one roof.
5. They are usually sited in city centres and require large capital and floor space; goods are often sold at fixed prices.

(ii) Supermarkets

1. They operate on a self-service basis; customers pick goods from open shelves using baskets or trolleys.
2. They deal mainly in fast-moving, everyday household goods such as foodstuffs, provisions and toiletries.
3. Goods are pre-packed, clearly priced and displayed on open shelves for easy selection.
4. Payment is made once at centralised checkout / cash points near the exit.
5. They rely on low prices, quick turnover and minimal sales staff to keep costs down.

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(a) The three parties to the cheque

• Drawer: Mr. Cham, the person who writes (draws) and signs the cheque and whose account is to be debited.
• Payee: M. Sumarch, the person to whom the money (D500) is to be paid.
• Drawee: Standard Chartered Bank, Bakau, the bank on which the cheque is drawn and which is ordered to pay.

(b) Four effects of the crossing "Account Payee Only" and "Not Negotiable"

1. The cheque cannot be cashed over the counter; it must be paid into a bank account, making it safer than an open cheque.
2. "Account Payee only" directs that the money be paid into the account of the named payee (M. Sumarch) alone, so it cannot properly be diverted to another person's account.
3. "Not Negotiable" means the cheque can still be transferred, but the transferee gets no better title than the person who transferred it; if the transferor's title is defective, the receiver also has a defective title.
4. It protects against theft and fraud, because a thief or finder cannot obtain valid ownership or safely pay it into his own account, and any loss can be traced.

(c) Three advantages of payment by cheque

1. Safety: It is safer than carrying large sums of cash, and a crossed cheque reduces the risk of loss or theft.
2. Convenience: Large amounts can be paid easily by writing a single cheque, without counting cash.
3. Proof of payment: The paid cheque (and counterfoil / bank statement) serves as documentary evidence that payment was made.

(Other points: it can be sent safely by post when crossed; payment can be stopped if necessary.)

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(a) What is balance of payments?

The balance of payments (BOP) is a systematic record of all economic and financial transactions between the residents of a country and the rest of the world over a given period, usually one year. It records receipts (inflows from exports and other credits) against payments (outflows for imports and other debits). It has three main parts: the current account (visible and invisible trade), the capital account and the official financing / monetary movements. A country has an adverse (unfavourable) balance of payments when its total payments to other countries exceed its total receipts.

(b) Six methods used in correcting an adverse balance of payments

1. Devaluation of the currency: Lowering the external value of the currency makes exports cheaper and imports dearer, so exports rise and imports fall, improving the balance.
2. Import restriction / quotas and tariffs: Placing quotas on, or raising import duties on, non-essential goods reduces the volume and value of imports.
3. Export promotion: Government encourages exports through subsidies, export incentives, and improved quality so as to earn more foreign exchange.
4. Exchange control: The government rations the foreign currency available for imports and other payments, thereby limiting outflows.
5. Deflationary (monetary and fiscal) policy: Raising interest rates and taxes and cutting government spending reduces domestic incomes and demand for imports, and attracts foreign capital.
6. Borrowing from abroad / drawing on reserves: The country may borrow from international bodies such as the IMF or use its external reserves to bridge the deficit temporarily.

(Other acceptable points: encouraging import substitution / local production; encouraging inflow of foreign investment and tourism.)

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(a) Six facilities a good seaport should have

1. Deep water / good harbour: Deep and sheltered water and a natural or artificial harbour to allow large ocean-going vessels to berth safely.
2. Quays, berths and jetties: Adequate berthing space where ships can dock to load and discharge cargo.
3. Cargo-handling equipment: Cranes, forklifts, derricks and conveyor belts for the quick loading and unloading of goods.
4. Warehouses and storage sheds: Covered and open storage, including bonded warehouses and cold storage, for goods awaiting clearance or shipment.
5. Good inland transport links: Efficient road and rail connections linking the port to the interior for onward movement of goods.
6. Customs and other administrative offices: Facilities for customs, immigration, health and port authority to inspect, clear and document cargo and passengers.

(Other points: dry docks and repair yards; tug boats and pilotage; banking, security and fuel/bunkering services.)

(b) Four ways transport is important to commerce

1. Movement of goods: It carries raw materials to factories and finished goods from producers to wholesalers, retailers and consumers, linking production with consumption.
2. Creates place utility / widens the market: By moving goods from where they are produced to where they are needed, it extends markets beyond the local area, even internationally.
3. Movement of people: It conveys traders, workers and businessmen to their places of work and to markets and business meetings.
4. Encourages large-scale production and specialisation: Reliable transport allows firms to produce in bulk for wide markets and enables regions to specialise in what they produce best.

(Other points: makes storage and prompt distribution of perishables possible; aids trade by delivering documents and mail.)

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(a) Six functions of wholesalers to manufacturers

1. Bulk buying: The wholesaler buys goods in large quantities from the manufacturer, thereby providing a ready and steady market that keeps the factory in continuous production.
2. Storage / warehousing: The wholesaler holds stock in his warehouse, relieving the manufacturer of the cost and space needed to store finished goods and freeing factory space for production.
3. Finance: By paying promptly (often in cash or on short credit) for large consignments, the wholesaler provides the manufacturer with working capital to buy raw materials and pay for labour.
4. Risk bearing: Once the wholesaler takes delivery, he bears risks such as fall in price, deterioration, theft, fire and changes in demand, relieving the manufacturer of these losses.
5. Distribution / breaking bulk indirectly: The wholesaler spreads the manufacturer's goods over a wide area by supplying many scattered retailers, so the manufacturer deals with a few wholesalers instead of thousands of retailers.
6. Market information and advice: The wholesaler, being close to retailers and consumers, feeds back information on consumer tastes, price levels and rival products, guiding the manufacturer on what and how much to produce.

(Other acceptable points: advertising and sales promotion on behalf of the manufacturer; saving the manufacturer selling and administrative costs.)

(b) Four problems a cooperative society may likely face

1. Shortage of capital: Members are usually people of modest means, so the society finds it hard to raise enough funds for large-scale operations or expansion.
2. Poor / inefficient management: Officers are often elected members who may lack business and managerial expertise, leading to weak administration.
3. Dishonesty and mismanagement of funds: Elected officials may embezzle or misuse the society's money, and weak record keeping makes fraud difficult to detect.
4. Apathy and lack of member cooperation: Many members show little interest, fail to attend meetings or default in paying subscriptions, weakening the society.

(Other acceptable points: political interference; keen competition from large private firms; slow decision making because of democratic voting.)

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(a) Five objectives of the International Monetary Fund (IMF)

1. To promote international monetary cooperation among member countries through a permanent institution for consultation on monetary matters.
2. To promote exchange-rate stability and orderly exchange arrangements, and to avoid competitive devaluation of currencies.
3. To assist in establishing a multilateral system of payments and to remove foreign-exchange restrictions that hamper world trade.
4. To provide short-term financial assistance (loans) to member countries facing temporary balance-of-payments difficulties, so as to correct the imbalance without harmful measures.
5. To promote the balanced growth of international trade, and thereby high levels of employment, income and development in member states.

(b) Five objectives of the European Economic Community (EEC)

1. To create a common market (customs union) with free movement of goods, services, capital and labour among member states.
2. To abolish tariffs and trade restrictions among members while operating a common external tariff against non-members.
3. To promote balanced economic growth and a higher standard of living among the peoples of member countries.
4. To harmonise economic, agricultural, transport and monetary policies of member states (e.g. the Common Agricultural Policy).
5. To foster closer economic and political unity and cooperation among the member nations of Europe.

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(a) Five functions of advertising

1. Information: It informs the public about the existence, features, prices and uses of goods and services, and where they can be obtained.
2. Persuasion: It persuades and induces consumers to buy a particular product in preference to those of competitors, thereby creating and increasing demand.
3. Creating and maintaining a market: It opens up new markets for new products and helps to retain existing customers and market share.
4. Reminding / building goodwill: It keeps the product constantly before the public, reminds consumers to buy again and builds a favourable image and goodwill for the firm and its brands.
5. Educating consumers: It teaches consumers about new products and new uses of existing products and guides them on how to use goods properly.

(Other points: it supports salesmen by pre-selling goods; it can raise revenue for the advertising media.)

(b) Three merits and two demerits of newspaper advertising

Merits

1. Wide coverage: Newspapers reach a large and varied readership over a wide area at relatively low cost per reader.
2. Permanence / reference: The printed message can be kept, re-read and referred to later, unlike radio or television which is momentary.
3. Detailed message: Enough space is available to give full details, prices and illustrations, and the advert can be targeted by choosing a paper read by the desired audience.

Demerits

1. Short life-span: A newspaper is usually read once and discarded the same day, so the advert has a very short effective life.
2. Limited to the literate: It appeals only to people who can read, so it fails to reach illiterate consumers; also its still black-and-white print lacks the sound and motion of radio and television.

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(a) Amatco Ltd

Authorized capital: 6,000,000 ordinary shares of D5.00 each (nominal value D5.00). Issued: 3,000,000 shares. Amount called and paid: D2.00 per share, except 1,000 shares taken by Mr. Jones who has not paid.

(i) Authorized capital = Number of authorized shares x nominal value

= 6,000,000 x D5.00 = D30,000,000

(ii) Issued capital = Shares issued x nominal value

= 3,000,000 x D5.00 = D15,000,000

(iii) Called-up capital = Issued shares x amount called per share

= 3,000,000 x D2.00 = D6,000,000

(iv) Paid-up capital = Called-up capital - Calls in arrears

Calls in arrears (Mr. Jones) = 1,000 x D2.00 = D2,000

= 6,000,000 - 2,000 = D5,998,000

(b) Morgan's Ltd - assets and liabilities

No specific requirement was stated for this part, so the items are classified below and the derivable figures shown. Sales (50,000), sales returns (12,000) and net profit (20,000) are trading/profit items rather than balance-sheet assets or liabilities.

Fixed assets = 81,000 + 20,000 = N101,000

Current assets = 18,000 + 8,000 = N26,000

Current liabilities = 6,500 + 11,000 = N17,500

Working capital = 26,000 - 17,500 = N8,500

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Differences between the paired terms

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(a) Four elements of a valid contract

1. Offer and acceptance (agreement): There must be a definite offer by one party and an unqualified acceptance of that offer by the other party on the same terms.
2. Consideration: Something of value (money, goods, services or a promise) must pass between the parties; each party must give and receive something. A promise without consideration is generally not enforceable.
3. Capacity to contract: The parties must be legally competent, that is, of the age of majority, of sound mind, and not disqualified by law (infants, lunatics and drunken persons generally lack full capacity).
4. Intention to create legal relations: The parties must intend the agreement to be legally binding, so that either can enforce it in a court of law. (Social and domestic arrangements usually lack this intention.)

(Other valid elements: free/genuine consent, free from mistake, misrepresentation, fraud, duress or undue influence; legality of object, the purpose must be lawful.)

(b) Four duties of an agent to the principal

1. Duty to obey instructions: The agent must carry out the lawful instructions of the principal and act strictly within the authority given.
2. Duty of care and skill: The agent must perform his work with reasonable care, diligence and the skill expected in that line of business.
3. Duty to render account: The agent must keep proper records and give the principal a true account of all money and property received and spent on the principal's behalf.
4. Duty of good faith / not to make secret profit: The agent must act honestly, avoid conflict of interest, and must not take bribes or make secret profits; any such profit belongs to the principal.

(Other points: duty not to delegate his authority; duty to disclose all relevant information to the principal.)