GCE Commerce
Past Questions

AI Explanation

Trade removes the hindrance of person by bringing buyers and sellers together, thereby bridging the gap between producers and consumers. The other aids to trade remove different hindrances such as risk (insurance), time (warehousing), and finance (banking).

AI Explanation

Foreign trade (also called international trade) involves the exchange of goods and services between two different countries. Since the transaction is between Nigeria and China, it qualifies as foreign trade (specifically, import trade). Entrepôt trade would require the goods to be re-exported to a third country.

AI Explanation

Gross profit = ₦195,000 − ₦150,000 = ₦45,000. Gross profit margin = (Gross profit ÷ Sales) × 100 = (₦45,000 ÷ ₦195,000) × 100 ≈ 23.1%. Option C (30%) is the mark-up percentage on cost, a common distractor error.

AI Explanation

Industry creates form utility by converting raw materials into finished goods (changing their form). Commerce creates place utility (transport), time utility (warehousing), and possession utility (trade), making goods available where and when they are needed. Option A reverses the correct relationship.

AI Explanation

The retailer's cost price = ₦80,000 − (20% × ₦80,000) = ₦80,000 − ₦16,000 = ₦64,000. Gross profit = Selling price − Cost price = ₦90,000 − ₦64,000 = ₦26,000. Option A (₦10,000) ignores the trade discount, and option B (₦16,000) represents only the discount amount.

AI Explanation

Commerce encompasses all activities involved in the exchange of goods and services, including trade and the aids to trade such as banking, insurance, transport, and warehousing. It is broader than mere buying and selling or international trade alone.

AI Explanation

Wholesaling is a form of trade (specifically home trade), not an aid to trade. The aids to trade include banking, insurance, transport, warehousing, advertising, and communication, which facilitate but are distinct from trade itself.

AI Explanation

Entrepôt trade involves importing goods into a country, often storing them temporarily, and subsequently re-exporting them to other countries. Countries like Singapore and the United Arab Emirates are classic examples of entrepôt trade centres. It is distinct from ordinary import trade where goods are consumed domestically.

AI Explanation

Warehousing overcomes the hindrance of time by storing goods produced at one period until they are needed at a later period, thereby bridging the gap between production time and consumption time. Transport overcomes the hindrance of place, not time.

AI Explanation

Warehouses perform functions such as storage, price stabilisation, grading, blending, and packaging. The transfer of legal ownership of goods is a function of commerce broadly and is effected through documents of title such as a bill of lading or invoice, not by the warehouse itself.

AI Explanation

CIF stands for Cost, Insurance, and Freight. Under this term, the seller bears the cost of the goods, the freight charges to the named destination port, and the insurance premium for the goods in transit. Import duties and other charges at the destination port remain the buyer's responsibility.

AI Explanation

The insurable value is computed by adding 10% to the consignment value: ₦4,500,000 × 1.10 = ₦4,950,000. The premium is then 2% of ₦4,950,000 = ₦99,000. Option A ignores the mark-up, option B applies 2% to ₦4,725,000 (a common error), and option D uses an incorrect base.

AI Explanation

Entrepôt trade involves a country importing goods and then re-exporting those goods to other countries, often after storage or minor processing. Countries like Singapore and the UAE are classic examples of entrepôt trade centres. The other options describe barter, home trade, and border trade respectively.

AI Explanation

A bill of lading performs three key functions: it is a receipt for goods shipped, evidence of the contract of carriage between the shipper and the carrier, and a document of title that can be endorsed and transferred to give the holder rights over the goods. The other options describe different trade documents.

AI Explanation

Transportation bridges the gap of place by moving goods from where they are produced to where they are needed by consumers. Warehousing bridges the gap of time by storing goods until they are required. Insurance bridges the gap of risk, while commerce broadly encompasses all aids to trade.

AI Explanation

The discount for 90 days at 8% per annum is calculated as: ₦500,000 × 8/100 × 90/360 = ₦10,000. Eze therefore pays ₦500,000 − ₦10,000 = ₦490,000. Option A incorrectly applies the full annual rate, option C uses 365-day convention giving ₦500,000 × 0.08 × 90/365 ≈ ₦9,863, and option D is a common arithmetic error.

AI Explanation

A tariff is a tax levied on imported goods, which raises their price and makes domestically produced goods relatively cheaper and more competitive. An embargo is an outright ban, a quota limits the quantity of imports, and exchange control restricts access to foreign currency.

AI Explanation

The issuing bank (also called the opening bank) is the importer's bank that opens the letter of credit and undertakes to pay the exporter once the stipulated documents are presented. The advising bank notifies the exporter of the credit, the confirming bank adds its guarantee, and the negotiating bank discounts the documents presented by the exporter.

AI Explanation

Cooperative societies are registered under cooperative societies laws and are guided by the principle of democratic control — one member, one vote — regardless of the amount of capital contributed. In a limited liability company, voting power is proportional to shareholding, and profits are distributed as dividends based on shares held.

AI Explanation

A key distinguishing feature of a public limited company (Plc) is its ability to invite the general public to subscribe to its shares and debentures, usually through a stock exchange. Both public and private limited companies enjoy limited liability and perpetual succession.

AI Explanation

When a partnership deed is silent on profit sharing, the Partnership Act requires profits to be shared equally among partners regardless of capital contribution. With three partners, each receives ₦78,000 ÷ 3 = ₦26,000. Capital ratios are irrelevant here because the deed is silent.

AI Explanation

The Articles of Association is the internal rulebook of a company, regulating the rights of shareholders, conduct of meetings, duties of directors, and internal procedures. The Memorandum of Association, by contrast, governs the company's relationship with the outside world.

AI Explanation

In a partnership, each partner can be held fully responsible for the entire debts of the firm, including debts incurred by other partners in the course of business. This joint and several liability is a significant disadvantage compared to a sole proprietorship where only one person's assets are at risk.

AI Explanation

A sole proprietorship is a one-person business where the owner provides all the capital, makes all decisions, and bears unlimited liability for all debts. The owner enjoys all profits and suffers all losses alone, distinguishing it from partnerships and companies.

AI Explanation

Under the Companies and Allied Matters Act (CAMA) 2020, a public company requires a minimum of two members (shareholders) for its formation, which is the same minimum as a private company. CAMA 2020 reduced the previous requirement and streamlined company formation rules in Nigeria.