WAEC SSCE - Commerce - 1995

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In economics, land is a factor of production that includes all natural resources provided by nature. This encompasses not only the surface of the earth, but also the minerals, forests, water resources, oil, and gas reserves that exist within it. Land is distinct from labor and capital, which are the other two factors of production. Land as a factor of production does not refer solely to the earth's surface or vegetation, but also includes everything that is found beneath it or on it that is not created by human beings. Therefore, the answer is "all resources provided by nature."

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When the balance of trade is unfavorable, it means that a country's imports are exceeding its exports. This situation leads to a trade deficit, which means that the country is buying more goods and services from other countries than it is selling to them. As a result, the country is spending more money on imports than it is earning from exports. The options provided are: - Exports exceed imports - Imports exceed exports - Customs duty is high - Invisible exports exceed visible imports - The value of money falls Based on the definition provided, we can conclude that the correct answer is "Imports exceed exports."

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The document that is a declaration by the captain of a ship as to the cargo on board is called the "Ships manifest". This is a list of all the cargo and passengers carried on board a vessel. It includes information such as the type and quantity of goods, their value, and the ports of loading and discharge. The manifest is an important document used by customs officials and other authorities to ensure that goods are properly declared and taxed.

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A cheque drawn by a bank on itself is a bank draft. It is a payment instrument where the bank guarantees payment of the specified amount to the payee. The bank draft is paid for upfront, and the amount is deducted from the customer's account. This payment instrument is usually used for large transactions, and it provides a secure means of payment since the bank is responsible for ensuring that the payment is made.

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A trade in which many countries exchange goods and services is called multilateral trade. This means that there are more than two countries involved in the exchange of goods and services. Multilateral trade is conducted among members of international organizations such as the World Trade Organization (WTO) and the European Union (EU). Multilateral trade agreements are aimed at promoting free trade among countries and removing trade barriers such as tariffs and quotas. This allows countries to specialize in the production of goods and services that they have a comparative advantage in, leading to increased efficiency and economic growth.

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When a seller decides to sell his goods at a specific price for a specific period, he is making a firm offer. This means that the seller is promising to sell the goods at the specified price for the specified time period, and is willing to enter into a binding agreement with a buyer who accepts the offer within that time frame. It is a clear and definite statement of the seller's intention to sell, and creates a legal obligation for the seller to fulfill the terms of the offer if accepted by a buyer.

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The Co-operative Thrift and Credit Society is formed primarily to promote savings and loans among members. A co-operative thrift and credit society is a type of financial institution that is owned and operated by its members. Its main purpose is to provide its members with a safe and secure place to save their money and to offer loans at reasonable rates. Members of a co-operative thrift and credit society pool their savings and use these funds to provide loans to other members who need them. This type of society promotes thrift among its members and encourages them to save for the future. It is also a way for members to access credit at a lower cost than they might be able to obtain from other financial institutions.

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When a company sells shares to its existing shareholders at a preferential rate, it is called a "Rights issue." A rights issue is a way for companies to raise additional capital from their existing shareholders. It is called a "rights" issue because existing shareholders have the right to purchase additional shares at a discounted price before the shares are offered to the public. This can be a cost-effective way for companies to raise capital as it avoids the fees associated with a public offering. To participate in a rights issue, existing shareholders are typically given a specific number of rights for each share they already own. These rights allow them to purchase a certain number of new shares at a discounted price. Shareholders who do not wish to purchase additional shares can sell their rights on the open market to other investors. In summary, a rights issue is a way for companies to raise additional capital from their existing shareholders by offering them the right to purchase new shares at a discounted price before they are offered to the public.

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The option that is not true of insurance is "Possibility of making a profit out of an event." Insurance is a system in which a large number of people contribute a small amount of money into a common pool, which is used to compensate the few who suffer losses due to a specified risk. The fundamental principle of insurance is that a large number of people face the same risk, but only a small number will actually suffer a loss in any one year. The premiums collected from the many policyholders are used to compensate the few who suffer losses. Therefore, it is not possible to make a profit out of an event covered by insurance, as insurance is not intended to generate a profit but to provide financial protection against loss.

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Del-credere commission is an extra allowance paid by a principal to a commission agent for guaranteeing the recovery of debts from customers. In other words, it is an incentive paid to a commission agent who is willing to take on the risk of bad debts from the customers to whom they have sold goods. This commission is paid to ensure that the agent takes the necessary steps to recover the debt from the customer, even if it means going to court. The del-credere commission is usually a percentage of the total sales and is paid in addition to the normal commission paid to the agent.

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The best method of making payment to an overseas supplier is by a letter of credit. This is a financial instrument issued by a bank on behalf of a buyer to guarantee payment to a seller. The bank acts as an intermediary between the buyer and seller, ensuring that the seller receives payment once they have fulfilled the terms of the agreement. This method is safe and secure for both the buyer and the seller as it guarantees payment for the seller and protects the buyer against non-delivery or non-performance by the seller. Other methods such as bankdraft, bill of exchange, travellers cheque, and certified cheque may also be used, but they are not as secure and reliable as a letter of credit.

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A public limited company has the rights and duties of an individual because it has "corporate status." Corporate status is a legal concept that allows a company to be treated as a separate legal entity from its owners. This means that the company can enter into contracts, own property, and sue or be sued in its own name, just like an individual. The concept of corporate status is important because it protects the personal assets of the company's owners from any legal or financial liabilities that may arise from the company's activities. For example, if a public limited company is sued for breach of contract, the company's shareholders are generally not personally liable for any damages awarded against the company. To establish corporate status, a public limited company must be registered with the relevant government authorities and have a legal framework in place, such as a memorandum and articles of association. In summary, a public limited company has the rights and duties of an individual because it has corporate status, which allows it to be treated as a separate legal entity from its owners.

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The Securities and Exchange Commission (SEC) regulates and controls the activities of the Nigerian Stock Exchange. The SEC is a government agency responsible for supervising and regulating the Nigerian capital market, including the stock exchange. It ensures compliance with securities laws, protects investors' interests, and promotes transparency and fairness in the market. The SEC sets rules and guidelines for the operations of the stock exchange, approves the listing of securities, and monitors the activities of brokers, dealers, and other market intermediaries.

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The capital market is a market for long-term investments, where companies and governments raise funds for their operations and projects. The stock exchange is the correct option that belongs to the capital market, as it is a marketplace where stocks, bonds, and other securities are bought and sold. Commercial banks and savings banks belong to the banking sector, bureau de change is a foreign exchange market and the clearinghouse is a financial institution that handles the settlement of financial transactions.

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The term that refers to all activities involved in the distribution and exchange of goods and services is Commerce. Commerce encompasses a range of activities such as buying, selling, and transporting goods and services from producers to consumers. It also includes activities such as market research, advertising, sales promotion, and other promotional activities aimed at creating demand for goods and services. Commerce plays a crucial role in the economy as it facilitates the exchange of goods and services, helps to create employment, and generates income and revenue for businesses and governments.

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Non-indemnity insurance is an insurance policy where the insurer pays a fixed amount to the policyholder upon the occurrence of a specific event, regardless of the actual amount of loss or damage incurred. Based on this definition, the non-indemnity insurance among the options given would be life insurance, as the policyholder or beneficiary receives a fixed amount in the event of the death of the insured person. Marine, fire, burglary, and bad debts are examples of indemnity insurance, where the insurer compensates the policyholder for the actual amount of loss or damage incurred, up to the policy limit.

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The stock exchange belongs to the capital market. The capital market is a market for long-term investments, such as stocks, bonds, and other securities, where individuals and institutions buy and sell financial instruments. The stock exchange provides a platform for companies to issue and sell stocks to the public, and for investors to buy and sell these stocks in a regulated and transparent manner. This helps companies raise capital to finance their growth and expansion, while providing investors with an opportunity to invest in these companies and potentially earn a return on their investment through capital gains or dividends.

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Cumulative preference shares are a type of preference shares in which any unpaid dividend is carried forward to the next year. This means that if a company is unable to pay dividends in a particular year, the unpaid amount is accumulated and added to the next year's dividend payment. Therefore, option A is correct. Option B is incorrect because cumulative preference shareholders do not have the right to a capital refund. Option C is also incorrect because cumulative preference shareholders do not have the right to share in further profits beyond the fixed dividend rate. Option D is also incorrect because unpaid dividends are carried forward, not forfeited. Finally, option E is incorrect because the dividend declared is not accumulated in a reserve account, but paid out to shareholders.

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A cheque drawn by a bank on itself is called a bank draft. A bank draft is a check that is guaranteed by the bank that issues it, which means that the bank is responsible for paying the amount written on the draft. This makes bank drafts a secure form of payment, as they cannot bounce or be canceled like personal checks. Bank drafts are typically used for large transactions, such as real estate purchases or international trade, where a high degree of certainty and security is required. They can also be used by individuals who do not have a checking account or who need to make a payment quickly and securely.

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The term used to describe the fund granted for goods that are imported and later re-exported is called "customs drawback." Customs drawback is a type of refund or rebate of duties paid on imported goods that are subsequently exported. It is a way for exporters to recover some of the costs associated with importing goods, such as customs duties and fees. To be eligible for customs drawback, the goods must have been previously imported and duty paid, and must be exported within a specified time frame. The exporter must provide proof of the original import and payment of duties, as well as documentation of the subsequent export. In summary, customs drawback is a financial benefit that allows for the recovery of duties paid on imported goods that are later exported.

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Selling a bill in less than the face value for immediate cash before the due date is known as "discounting the bill." Essentially, the holder of the bill sells the right to collect the full value of the bill to a third party, who pays the holder less than the full amount in cash. The third party then collects the full value of the bill when it comes due. Discounting a bill can provide the holder with immediate cash, but at the cost of receiving less than the full value of the bill.

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Opening the stock plug purchase of less closing the stock gives the cost of goods sold. In accounting, the cost of goods sold (COGS) is the direct cost of producing or acquiring the goods that a company sells during a particular period. It includes the cost of materials, direct labor, and overhead costs directly tied to the production process. To calculate the cost of goods sold, you need to know the value of the beginning inventory (opening stock), purchases made during the period, and the value of the ending inventory (closing stock). The calculation is as follows: Cost of Goods Sold = Opening Stock + Purchases - Closing Stock Therefore, by subtracting the value of closing stock from the sum of opening stock and purchases, we get the cost of goods sold.

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Terms of trade refer to the relationship between the prices of a country's exports and imports. It is the ratio of the price index of a country's exports to the price index of its imports. In simpler terms, it is the value of a country's exports compared to its imports. A country's terms of trade can affect its economy and trade balance, as well as its ability to pay for imports with exports.

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The option that is not true of insurance is "A Possibility of making profit out of an event". Insurance is a financial product designed to protect individuals and businesses from financial loss due to unexpected events such as accidents, theft, or natural disasters. When a person purchases an insurance policy, they pay a premium to an insurance company. In return, the insurance company agrees to compensate the insured in case of a covered loss. The other statements in the list are true of insurance. For example, insurance works based on the principle of risk pooling, where a large number of people face the same risk and make a small contribution to a common pool. Only a small number of people are expected to suffer a loss in any given year, but the pool of contributions is large enough to cover their losses. Insurance companies use actuarial science to assess the frequency of occurrence of the events they insure against, and calculate premiums based on the level of risk involved. The goal of insurance is to provide protection and financial security to individuals and businesses, rather than making a profit out of an event. Insurance companies may make a profit through their investments, but this is separate from the protection provided by insurance policies.

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The certificate deposited by Mr Ojo with the commercial bank serves as collateral. Collateral is an asset that is pledged by a borrower to a lender as security for a loan or debt. It acts as a guarantee to the lender that the borrower will repay the loan, and if the borrower fails to repay, the lender can seize and sell the collateral to recover the outstanding loan amount. In this case, Mr Ojo has deposited his life assurance certificate with the bank to secure the loan of N54,000.

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Goods are usually classified into producer goods and consumer goods. Producer goods are those goods which are used in the production of other goods and services. For example, machinery, tools, and raw materials. Consumer goods are those goods which are used for final consumption or use by the consumers. For example, food, clothing, and household items. This classification is important because the marketing strategy and distribution channels for producer goods and consumer goods are different. Also, the demand for these goods may vary depending on economic conditions and consumer preferences.

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Salaries of expatriates is classified as an invisible item in the balance of payments. Invisible items refer to transactions that do not involve the physical movement of goods or services across borders. Salaries of expatriates are payments made by a country to its citizens who work in another country, and it is an example of a service payment that is not visible in the balance of payments. Other examples of invisible items include tourism, remittances, and intellectual property payments.

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The regulatory body that oversees and controls the activities of the Nigerian Stock Exchange is the Securities and Exchange Commission (SEC). The SEC is a government agency that is responsible for regulating and supervising the Nigerian capital market, including the stock exchange. Its main function is to protect investors and maintain fair, efficient, and transparent markets. The SEC establishes rules and regulations for market participants, including issuers of securities, brokers, and other market intermediaries. It also monitors compliance with these rules and investigates any violations of securities laws. Overall, the SEC plays a vital role in ensuring the integrity and stability of the Nigerian Stock Exchange and the broader Nigerian capital market.

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The total indebtedness of a business refers to the total amount of money that the business owes to its creditors or lenders. This includes both short-term and long-term debts. Liabilities are the financial obligations that a business owes to others, including both current and long-term debts. Therefore, the total indebtedness of a business is the same as its liabilities. It represents the amount of money that the business has borrowed and must repay in the future.

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The name for shares, stocks, and debentures traded in the stock exchange is securities. Securities are financial instruments that represent ownership in a company or organization and can be bought and sold in the stock market. The term "security" is used to describe any tradable financial asset, such as stocks, bonds, or other investment instruments, that has value and can be traded. Securities are a way for companies to raise money by selling ownership shares, and they are also a way for investors to invest in those companies and potentially earn a return on their investment.

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Endowment assurance is the policy that qualifies the holder to income tax relief. Endowment assurance is a life insurance policy that pays a lump sum amount to the policyholder at the end of a specific period or upon the death of the policyholder. The premiums paid for the policy are tax-deductible, which means the policyholder can claim a deduction on the income tax payable on their income. Therefore, the policyholder is eligible for income tax relief when they hold an endowment assurance policy. The other options, such as accident insurance, public liability insurance, comprehensive insurance, and fidelity guarantee insurance, do not qualify the holder for income tax relief.

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The option that enables production to take place ahead of demand is "warehousing". Warehousing is the process of storing goods before they are sold or distributed. By having a warehouse, a company can produce goods in advance and store them until there is a demand for them. This is beneficial for the company because it allows them to take advantage of economies of scale and produce goods in larger quantities, which can result in cost savings. When the demand for the goods increases, the company can quickly access the stored goods from the warehouse and distribute them to the market. This way, the company can meet the demand without any delay in production or shipment. In summary, warehousing enables a company to produce goods ahead of demand and store them until the demand arises, allowing them to fulfill customer needs quickly and efficiently.

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