WAEC SSCE - Commerce - 2008

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Keeping them informed of the demands of consumers is not a service offered to retailers by wholesalers. Wholesalers offer a variety of services to retailers, such as keeping them informed of new products, offering a wide range of products, and granting credit. However, wholesalers do not typically provide information on the demands of consumers, as this is something that retailers need to determine based on their own market research and customer feedback.

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A mail order business mostly uses catalogues to sell goods. Catalogues are printed booklets that showcase the products being sold by the business, along with their prices and descriptions. Customers can browse through the catalogue, select the items they want to purchase, and place an order by mail or phone. Catalogues are an effective marketing tool for mail order businesses because they allow customers to see a wide variety of products in one place and at their own pace.

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A firm that accepts, sells and delivers goods by post is a mail order business. This type of business operates through catalogs or online platforms, allowing customers to browse and order products without visiting a physical store. Once an order is placed, the business delivers the goods to the customer's address through postal or courier services. Mail order businesses are popular for their convenience and accessibility, as they allow customers to shop from the comfort of their own homes and often offer a wider selection of products than local stores.

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The takeover by government of Sanking Sillah and Sons Ltd is referred to as "nationalization." Nationalization is a process in which a government takes control of a private company or industry and makes it under state ownership and control. It can be done for various reasons, such as to ensure public control, to support national interests or to address issues of public welfare.

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An agreement whereby the seller transfers or agrees to transfer the property in goods for a monetary consideration is called a "contract of sale". In simpler terms, a contract of sale is an agreement between a buyer and a seller, where the seller agrees to sell and transfer the ownership of certain goods to the buyer in exchange for a specified amount of money. It is the most common type of contract used in the sale of goods and is governed by the Sale of Goods Act.

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The amount paid regularly by the assured (the person who wants to be insured) to the insurer (the company providing insurance) is called the premium. The premium is the cost of obtaining insurance coverage, and it is usually paid in installments (monthly, quarterly, or annually) by the insured to the insurer. The premium amount is based on several factors, such as the type and amount of coverage, the risk level of the insured, and the probability of a claim being made. The payment of the premium is essential to maintain the insurance policy in force, and failure to pay may result in the cancellation of the policy.

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The buying and selling of goods and services within a country is called home trade. It refers to the economic transactions that occur within the national borders of a country, involving businesses and consumers within the country. Examples of home trade include the sale of goods and services by local producers to local consumers, the purchase of goods and services by businesses from other businesses within the same country, and the trading of goods and services between different regions within the country. Home trade is an essential component of a country's economy as it helps to boost domestic production, create employment opportunities, and promote economic growth.

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Vessels that operate on fixed routes and schedules in sea transport are called liners. Liners are typically large ships designed for carrying passengers or cargo on a fixed route and schedule between specific ports of call. They provide regular, scheduled service to a fixed number of ports, making them ideal for transporting large quantities of goods and people between specific locations. This is in contrast to tramp ships, which operate on a more flexible, unscheduled basis and carry a wider variety of cargoes to a wider range of destinations.

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The disadvantage of advertising to the consumer is that it may bring confusion on the choice of goods. This is because there are usually many brands of a product advertised, and the consumer may find it difficult to choose the best one. In addition, some advertisements may make exaggerated claims about the product, leading the consumer to have unrealistic expectations. This may result in dissatisfaction with the product and a loss of trust in advertising in general.

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In this scenario, the factor of production that Babou Penn refers to as missing is "labour". The captain of the boat is a human resource, which is a type of labor used in the production process of fishing. The other factors of production mentioned are materials, which would fall under the category of capital, as well as the sea which would be classified as land. The entrepreneur refers to the person who takes on the risk and initiates the fishing venture, but in this scenario, Babou Penn is not referring to the entrepreneur, but to one of the necessary labor inputs for his production process.

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Indigenization refers to a policy aimed at promoting the participation of indigenous people in the ownership and control of businesses. One disadvantage of indigenization is that it may discourage foreign investment in the economy because foreign investors may be hesitant to invest in an environment where they do not have significant control over their investments. This can lead to a reduction in the overall level of investment and may also lead to a decline in the overall competitiveness of the economy.

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The option that cannot be used to regulate importation is "Increase of excise duty." Excise duty is a tax imposed on certain goods produced within a country, and increasing it would not directly affect importation. Import quota limits the quantity of goods that can be imported, import license regulates who can import and what can be imported, and an embargo prohibits the importation of goods altogether.

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The document which gives legal authority to a company to operate as a legal entity is the Certificate of Incorporation. It is a legal document that confirms that the company has been registered with the government and has met all the legal requirements for incorporation. It provides evidence that the company is a separate legal entity, distinct from its owners or shareholders, and can therefore enter into contracts, own property, and sue or be sued in its own name. The certificate of incorporation contains important information about the company, such as its name, registered address, business activities, share capital, and details of its directors and shareholders.

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A shop that sells only products of a particular manufacturer is known as a "tied shop". This means that the shop is tied to or associated with the manufacturer, and only sells their products. Tied shops are common in industries such as fashion and electronics, where manufacturers may establish their own stores or outlets to sell their products directly to consumers. This allows the manufacturer to have more control over the retail environment and presentation of their products.

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If a customer opens a deposit account with a bank, he will receive interest. A deposit account is a type of bank account that allows the account holder to deposit and withdraw money. Banks use the money deposited in these accounts to lend to other customers and earn interest on the loans. In return for the use of the account holder's money, the bank pays interest to the account holder based on the balance in the account and the interest rate offered. The account holder may also be given a debit card or access to online banking services to facilitate transactions from the account. A crossed cheque book and a tally are not typically associated with opening a deposit account, and while a loan may be available to the account holder, it is not a guaranteed feature of opening a deposit account.

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The economic union that is made up of countries in West Africa only is ECOWAS (Economic Community of West African States). It is a regional intergovernmental organization made up of 15 member states located in West Africa. The organization was founded in 1975 with the aim of promoting economic integration and cooperation among its members. Its member states include Benin, Burkina Faso, Cabo Verde, Cote d'Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.

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The charges imposed by the government on locally manufactured goods is called "excise duties". Excise duty is a tax levied on the production or sale of a specific good or product within a country. It is imposed by the government on goods that are produced domestically rather than on goods that are imported. Excise duties are generally charged as a percentage of the value of the goods, and the revenue generated from these taxes is often used to fund government programs and services. Examples of goods subject to excise duties include alcohol, tobacco, and petroleum products.

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A cheque dated 30th July, 2004 but presented for payment on 28th February, 2005 is a "stale" cheque. A cheque has an expiry date, beyond which it becomes "stale". The expiry date is usually six months from the date of the cheque. In this case, the cheque was presented for payment after the expiry date, which means it is no longer valid for payment.

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The option that is not an advantage of marketing is "Implementing government regulations." Marketing is the process of identifying, anticipating, and satisfying customer needs and wants through the creation, promotion, and distribution of goods and services. The advantages of marketing include creating demand for products or services, ensuring effective distribution of goods, and applying marketing techniques to reach target audiences effectively. However, implementing government regulations is not an advantage of marketing, but rather a legal requirement that companies must follow to comply with various laws and regulations.

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The relationship between partners in a partnership is stipulated in the Partnership Deed. A partnership deed is a legal document that outlines the terms and conditions of a partnership agreement between two or more partners. It contains details of the rights, responsibilities, and duties of each partner, the percentage of profits and losses each partner is entitled to, the management structure of the partnership, and the process for dispute resolution. The partnership deed is a vital document that guides the operation of the partnership and is binding on all partners.

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The main purpose of sending delivery notes along with goods is to enable the goods to be checked on arrival. A delivery note is a document that accompanies a shipment of goods and contains important information such as the quantity, description, and value of the goods being shipped. This information is essential for the recipient of the goods to verify that the correct items and quantities have been delivered, and to check for any damage or discrepancies. The delivery note also serves as proof of delivery, which can be useful in resolving any disputes that may arise between the buyer and the seller. In summary, the purpose of the delivery note is to facilitate accurate and efficient handling of the shipment and to provide a record of the transaction.

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Television combines the advantages of both sight and sound. Television advertising is a powerful tool because it allows advertisers to create visually appealing and attention-grabbing ads with the use of colors, images, and motion. In addition, television commercials can also incorporate music, sound effects, and spoken language to make an emotional appeal to the audience. This combination of visual and auditory elements makes television advertising a highly effective way to promote products and services to a wide audience.

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The charge that a ship pays for overstaying its stipulated time at a port is known as "demurrage." This charge is imposed to compensate the port authorities for the loss of revenue that they would have earned if the ship had left on time. The demurrage charges increase with the amount of time the ship stays beyond the stipulated time. It is a penalty charge levied on the ship owner or charterer and is intended to incentivize them to comply with the terms of the agreement and avoid delaying other ships from using the port.

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A chamber of commerce is an organization made up of representatives from various businesses and industries in a particular town or region. It is usually established to promote the economic and commercial interests of its members, as well as to foster networking and collaboration among them. The members of a chamber of commerce are typically business owners, executives, and professionals who represent a variety of sectors, such as manufacturing, retail, finance, and services. They work together to advocate for policies that benefit the business community, provide education and training opportunities, and facilitate business development and growth. Therefore, the people who represent a cross-section of business interests in a town is the most appropriate answer.

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Newspaper is not a sales promotion method. A sales promotion is a marketing activity that aims to boost the sales of a product or service. Demonstration, exhibition, and free samples are examples of sales promotion methods because they are used to entice potential customers to try or buy a product or service. However, newspaper is a medium of advertising, not a sales promotion method. Advertisements in newspapers can promote a product or service, but they are not considered sales promotion methods.

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The transaction described in the question is called "hire purchase". Hire purchase is a type of transaction where the buyer makes a down payment and then pays off the remaining amount in installments over a period of time. The buyer is allowed to use the commodity or product during the repayment period but does not become the legal owner until the last installment is paid. At that point, the ownership of the commodity is transferred from the seller to the buyer.

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The process of making goods attractive and easy to handle is called packaging. Packaging refers to the design and production of the container or wrapper that holds a product. The primary purpose of packaging is to protect the product from damage or contamination during transportation, storage, and handling. Additionally, packaging can also serve as a means of promotion and advertising by creating a visually appealing and easily identifiable product. Packaging can include a variety of elements such as shape, color, size, and materials used.

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The option that carries specialized goods is a tanker. Tankers are designed for transporting liquids, gases, or chemicals in bulk. They have specialized storage and handling facilities to ensure the safe and efficient transportation of their cargo. The other options, liner, tramp, and ferry, are types of cargo vessels that carry general goods, vehicles, and passengers on fixed routes.

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People who sell shares in anticipation of a fall in their value are called "bears". The term is often used in the stock market to describe investors who believe that the market or a particular stock is going to decline in value, and who sell shares in order to profit from that decline. Bears are essentially pessimistic about the future of the market or a particular stock and are betting against its performance. The opposite of a bear is a "bull", which describes an investor who believes that the market or a particular stock is going to rise in value.

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Okoni and Co. law chamber is an example of a partnership. A partnership is a type of business organization in which two or more individuals own and operate the business. In a partnership, the partners share the profits and losses of the business according to the terms of their partnership agreement. In this case, Okoni and Co. are working together to provide legal services, and they share the profits and losses of the law chamber.

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The net profit is calculated as the revenue earned from sales minus all the expenses incurred in generating that revenue. This includes the cost of goods sold, operating expenses, taxes, and any other costs associated with running the business. In other words, it is the profit that remains after all the expenses have been subtracted from the total revenue. The formula for calculating net profit is: Net Profit = Total Revenue - Total Expenses

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Farmers and all other workers concerned with getting raw materials from the earth are engaged in extractive occupation. Extractive occupation involves activities that extract or remove raw materials from the earth, such as agriculture, mining, fishing, and forestry. These workers are involved in extracting natural resources such as crops, minerals, timber, and fish, which are then used to produce goods or provide services.

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A business that is independent of its owners is a "limited liability company". A limited liability company (LLC) is a legal entity that is separate from its owners. This means that the business can enter into contracts, incur debts, and engage in other business activities in its own name, without the personal liability of the owners. The owners of an LLC are called members, and their liability is limited to their investment in the company. This means that their personal assets are protected from the company's debts and liabilities. LLCs are a popular choice of business structure because they offer the liability protection of a corporation and the tax benefits of a partnership.

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The exchange of goods and services among many countries is known as multilateral trade. This involves the import and export of goods and services between multiple countries. In multilateral trade, countries engage in trade agreements and negotiations, such as the World Trade Organization (WTO), to promote and regulate international trade.

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The correct answer is "Payment of tax." A partnership deed is a legal document that outlines the terms and conditions under which a partnership operates. It typically includes the names of the partners, the nature of the business, the sharing of profits and losses, the management structure, the capital contributions of each partner, and the allocation of profits and losses. However, the payment of tax is not usually included in the partnership deed because it is governed by tax laws and regulations that are outside the scope of the partnership agreement. Each partner is responsible for paying their own taxes based on their share of the partnership's profits.

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Customs drawback is the refund of the duty collected on goods imported into a country which are later re-exported. This means that when goods are imported into a country and later re-exported without being used, the duty paid on them can be refunded by the customs authorities. This is known as customs drawback, and it is a way to encourage international trade by reducing the cost of doing business for companies that engage in re-export activities.

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(a) Explanations

• (i) Counter trade: a form of international trade in which goods are exchanged for other goods instead of money, or in which a country agrees to buy goods from another country as a condition for selling to it (for example barter and buy-back arrangements).
• (ii) Entrepot trade: the re-export trade, in which goods are imported into a country and then re-exported to another country, usually after being stored, graded or repackaged, without being consumed in the importing country.
• (iii) Import trade: the branch of foreign trade that involves buying and bringing in goods and services from other countries into one's own country.
• (iv) Invisible trade: the buying and selling of services (rather than physical goods) between countries, such as banking, insurance, shipping, tourism and transportation.

(b) Four barriers to international trade

1. Imposition of tariffs (import and export duties).
2. Import quotas limiting the quantity of goods that may be brought in.
3. Foreign exchange control and shortage of foreign currency.
4. Total ban (embargo) or import prohibition on certain goods.

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(a) Five factors that affect the rate of turnover

Rate of turnover is the number of times average stock is sold and replaced within a period. Factors affecting it are:

1. Type/nature of goods sold: perishable and everyday goods sell faster than durable or luxury goods.
2. Level of demand: high customer demand raises the rate of turnover.
3. Price charged: lower prices attract more sales and quicken turnover.
4. Location of the business: a shop in a busy, populated area sells stock faster.
5. Quality of goods and service (including advertising): good quality and effective advertising increase sales and turnover.

(b) What is working capital?

Working capital is the excess of current assets over current liabilities. It is the fund available for the day-to-day running of the business.

\[ \text{Working capital} = \text{Current assets} - \text{Current liabilities} \]

(c) Four importance of working capital

1. It enables the business to pay its short-term debts as they fall due.
2. It provides funds to buy stock and raw materials for continuous trading.
3. It is used to meet daily running expenses such as wages, rent and transport.
4. It allows the firm to take advantage of cash discounts and trade opportunities, and keeps it solvent.

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(a) Four functions of the stock exchange

1. Market for securities: it provides a ready and organised market where existing shares, stocks and bonds can be bought and sold.
2. Raising of capital: it helps companies and governments to raise long-term capital from the public through the sale of new securities.
3. Pricing of securities: it determines and publishes the fair market prices of securities through the forces of demand and supply.
4. Encourages saving and investment: it provides a safe outlet where surplus funds can be invested and later converted back into cash (liquidity), thereby mobilising savings.

(Others acceptable: barometer of the economy, protection of investors.)

(b) Four ways the Central Bank regulates commercial banks

1. Open market operations: buying or selling government securities to increase or reduce the amount of money in circulation.
2. Bank (rediscount) rate: raising or lowering the interest rate at which it lends to commercial banks, which influences their own lending rates.
3. Cash reserve ratio: fixing the proportion of deposits that commercial banks must keep with the Central Bank, so as to control how much they can lend.
4. Special directives and moral suasion: issuing instructions and giving advice to commercial banks on the amount and direction of their lending.

(Also acceptable: liquidity ratio, special deposits.)

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Types of retail outlets

• (a) Supermarket: a large self-service store, usually selling groceries and household goods, where customers pick items from open shelves, place them in baskets or trolleys and pay at a checkout counter on their way out. Goods are pre-packed and price-marked.
• (b) Mobile shops: shops built inside vehicles such as vans that move from place to place, taking goods directly to customers in different locations, especially where there are no fixed shops. They save customers the trouble of travelling.
• (c) Department stores: very large retail establishments, usually housed in one big building, divided into several sections or departments, each selling a different class of goods (clothing, furniture, cosmetics, etc.) under one roof and one management.
• (d) Chain (multiple) stores: a group of shops that are owned by the same firm, sell the same range of goods, bear the same name and are managed centrally, with branches spread in different towns. They buy in bulk and sell at standard prices.
• (e) Hawking: a form of petty retailing in which the seller (hawker) moves about from street to street or house to house carrying goods, often on the head or in the hands, to sell to customers wherever they are found.

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(a) Abbreviations in full

1. C.O.D: Cash On Delivery.
2. C.I.F: Cost, Insurance and Freight.
3. F.O.B: Free On Board.
4. E and O.E: Errors and Omissions Excepted.

(b) Discount calculations

The quantity (trade) discount is deducted first, then the cash discount is worked out on the reduced amount.

(i) Quantity discount value

\[ \text{Quantity discount} = 5\% \times 100{,}000 = \frac{5}{100} \times 100{,}000 = 5{,}000 \]

Amount after quantity discount = \(100{,}000 - 5{,}000 = 95{,}000\).

(ii) Cash discount value

\[ \text{Cash discount} = 5\% \times 95{,}000 = \frac{5}{100} \times 95{,}000 = 4{,}750 \]

(iii) Net amount payable by the customer

\[ \text{Net amount} = 95{,}000 - 4{,}750 = 90{,}250 \]

The customer pays #90,250.

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Documents involved in the formation of a public limited company

1. Memorandum of Association: the document that governs the relationship between the company and the outside world. It contains the name clause, registered office (situation) clause, objects clause, capital clause and liability clause, and defines the powers and scope of the company.
2. Articles of Association: the document that contains the internal rules and regulations for the management of the company, such as the rights of shareholders, conduct of meetings, appointment and powers of directors and how dividends are shared.
3. Prospectus: a document (a public invitation) issued to invite the public to buy the shares or debentures of the company. It gives details of the company's prospects, capital and how to apply for shares.
4. Statement in lieu of prospectus / Certificate of Incorporation stage documents: a Statement in lieu of prospectus is filed where the company does not invite the public but wishes to obtain the Certificate of Trading. After registration, the Certificate of Incorporation is issued as evidence that the company legally exists, and a public company must also obtain the Certificate of Trading (Commencement) before it can begin business.

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(a) What is hire purchase?

Hire purchase is a system of buying goods on credit in which the buyer takes possession of the goods after paying an initial deposit and then pays the balance in agreed regular instalments. Ownership of the goods does not pass to the buyer until the last instalment has been paid; until then the goods legally belong to the seller.

(b) Advantages and disadvantages

(i) To the buyer

Advantages:

1. He enjoys the use of the goods while still paying for them.
2. It enables people of low income to acquire expensive goods they could not pay for at once.

Disadvantages:

1. The total amount paid is higher than the cash price because of interest charges.
2. The goods can be repossessed by the seller if the buyer defaults, and he may lose the instalments already paid.

(ii) To the seller

Advantages:

1. He attracts more customers and sells more goods, increasing his turnover and profit.
2. He earns extra income through the interest charged on the credit.

Disadvantages:

1. His capital is tied up while waiting to collect instalments over a long period.
2. He may suffer loss through bad debts or the cost of repossessing and reselling used goods.

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Insurance terms explained

• (a) Proximate cause: the principle that the insurer is liable only where the loss is caused by the nearest, most direct and effective cause covered by the policy, and not by a remote cause. Compensation is paid only if the insured peril is the proximate cause of the loss.
• (b) Contribution: the principle that where the same risk has been insured with more than one insurer, each insurer bears the loss only in proportion to the amount it insured. The insured cannot recover more than the actual loss from all the insurers together.
• (c) Utmost good faith (uberrimae fidei): the principle that both parties, especially the insured, must disclose all material facts about the risk honestly and completely. Concealment or misrepresentation of a material fact makes the policy void.
• (d) Re-insurance: an arrangement by which an insurer that has accepted a large risk transfers part of that risk to another insurance company (the re-insurer) so as to spread the risk and avoid heavy loss.
• (e) Contract of non-indemnity: a form of insurance (mainly life assurance and personal accident) in which the sum payable is fixed in advance because the loss (life, limb) cannot be measured in money. The agreed sum is paid on the happening of the event, rather than the exact loss suffered.

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(a) What is transportation?

Transportation is the movement or carriage of goods and people from one place (where they are produced or located) to another place (where they are needed or consumed), using means such as road, rail, water, air and pipeline. It creates place utility by bridging the gap between producers and consumers.

(b) Dead freight

Dead freight is the sum of money paid to a shipping company by a person who has hired space in a ship but fails to fill it with the full quantity of goods agreed. He is charged for the unused (empty) space that he reserved but did not occupy.

(c) Five factors that determine a seller's mode of transportation

1. Nature of the goods: perishable, fragile or bulky goods call for a suitable means of carriage.
2. Cost of transport: the seller compares freight charges and selects the cheapest suitable means.
3. Speed/urgency: where delivery is urgent, a faster means such as air is chosen.
4. Distance and destination: long or overseas journeys need ship, rail or air; short distances suit road.
5. Safety and value of the goods: valuable goods are sent by a means that offers greater security against damage or theft.

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Comparison of a partnership and a public limited company