JAMB Commerce 2001

15 reviewed questions with answers and explanations.

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Question 1

The pivot on which the wheel of commerce rotates is

  1. tarriff
  2. trade
  3. taxation
  4. price
Answer and explanation

B: trade

Trade is the buying and selling at the centre of commerce. Other commercial activities such as transport, banking and insurance support the exchange of goods and services.

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Question 3

In the basic economic model, aggregate land supply as a factor of production is fixed in which respect?

  1. quantity
  2. nature
  3. quality
  4. cost.
Answer and explanation

A: quantity

In the basic economic model, the total supply of land is treated as fixed. Individual locations can differ in quality, nature and cost, so those characteristics are not assumed constant.

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Question 4

In the traditional direct-versus-indirect service classification, a lawyer serving a client renders which type?

  1. industrial services
  2. direct services,
  3. indirect services
  4. commercial services
Answer and explanation

B: direct services,

A lawyer advising or representing a client provides a direct professional service to that client. This differs from the traditional indirect-service category of public administration.

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Question 8

The person appointed to realise a company’s assets during its winding-up is called what?

  1. a broker
  2. an auctioneer
  3. a liquidator
  4. an auditor
Answer and explanation

C: a liquidator

A liquidator is appointed to wind up a company, realise its assets and distribute the available funds according to the applicable priorities. A broker or auctioneer may assist with sales but does not hold that overall role.

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Question 10

The financial instrument for borrowing in which collateral is usually more than the amount borrowed is

  1. trust certificate
  2. detachable warrant
  3. mortgage bond
  4. convertible securities
Answer and explanation

C: mortgage bond

A mortgage bond is backed by specified property as security. The collateral provides protection for the lender; a warrant instead gives a right to acquire securities and is not a mortgage-backed borrowing instrument.

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Question 11

I. Personal savings; II. Retained earnings; III. Accrued taxes. Which are internal sources of finance for a company?

  1. I & II
  2. I & III
  3. II & III
  4. I, II & III
Answer and explanation

C: II & III

Retained earnings originate within the company, and unpaid accrued taxes temporarily leave cash available within it. A shareholder’s personal savings enter from outside the separate company.

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Question 12

The difference between total current assets and total current liabilities of a business is known as

  1. Quick ratio
  2. Liquidity ratio
  3. Working capital
  4. Circulating capital
Answer and explanation

C: Working capital

Working capital is current assets minus current liabilities. It measures the net resources available for short-term operations, whereas quick and liquidity ratios compare amounts rather than subtract them.

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Question 20

Mr Awala sells a product at ₦100 per unit. He allows a 5% trade discount, a 3% quantity discount for orders above 1,000 units, and cash terms 2/10 net 30. Mr Bacus buys 1,500 units on credit and promises payment within ten days. Calculate the trade discount alone.

  1. ₦4,500
  2. ₦7,500
  3. ₦10,500
  4. ₦12,000
Answer and explanation

B: ₦7,500

The list value is 1,500 × ₦100 = ₦150,000. The trade discount alone is 5% of that amount, or ₦7,500; quantity and prompt-payment discounts are separate reductions.

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Question 22

Bank giro settles a debt by transferring money from one customer’s bank account to whose account?

  1. A bank
  2. The same customer
  3. Another customer
  4. Another bank
Answer and explanation

C: Another customer

A bank giro transfers money from one customer’s account to another customer’s account. The banks execute the payment, while the underlying debt is settled between the customers.

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Question 23

Warehousing is a productive function because it increases the

  1. quantity of goods
  2. utility of goods
  3. quality of goods
  4. price of goods
Answer and explanation

B: utility of goods

Storage creates time utility by preserving goods until they are needed. It does not necessarily increase their physical quantity, improve their quality or raise their selling price.

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Question 25

Pooling of risk in insurance means that

  1. Compensations are paid out of a common fund
  2. Two people can pool their risks to be insured
  3. Two insurance companies can buy two policies
  4. Insurance companies should encourage taking risks
Answer and explanation

A: Compensations are paid out of a common fund

Premiums from many policyholders form a common fund from which covered claims can be paid. Pooling spreads the financial burden of individual losses across the insured group.

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Question 30

Which memory provides temporary working storage for programs and data used by the CPU?

  1. CD-ROM
  2. CD-RAM
  3. ROM
  4. RAM
Answer and explanation

D: RAM

RAM temporarily holds the programs and data being used during processing. It is working memory; ROM contains persistent instructions and a CD-ROM is an optical storage medium.

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Question 40

Musa rented a room to Adamu for ₦1,500; Adamu paid ₦1,000. Adamu brought his friends Audu and Jacob to stay, and they later paid Musa the remaining ₦500. Who made the original rental contract?

  1. Musa and Jacob
  2. Musa and Audu
  3. Adamu and Musa
  4. Audu and Jacob.
Answer and explanation

C: Adamu and Musa

Musa rented the room to Adamu, so those two are the original contracting parties. Audu and Jacob later contributed money, but paying part of the price does not by itself substitute them as the tenants.

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Question 45

Departmentalization is an aspect of

  1. planning
  2. organising
  3. directing
  4. controlling.
Answer and explanation

B: organising

Organising groups activities and assigns responsibilities and authority. Creating departments is part of that arrangement, whereas directing guides people and controlling checks results.

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Question 47

In a line organisational structure, which statement describes the direction of authority?

  1. The lines of authority are vertical
  2. There is application of division of labour
  3. Specialisation is carried to a maximum degree
  4. The lines of authority are horizontal
Answer and explanation

A: The lines of authority are vertical

Line authority follows a vertical chain from a superior to subordinates. Each person reports through that chain; horizontal relationships do not define the line-authority structure.

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