WAEC Commerce 1990 Past Questions & Answers

Commerce is broadly divided into two main branches. The first is Trade, which involves the buying and selling of goods. The second branch is Aids to Trade (also called auxiliaries to trade), which includes all the services that support trade, such as banking, insurance, transportation, and warehousing. Therefore, the major divisions of Commerce are trade and its auxiliaries.

Common mistake: Students often mistakenly choose option B because they correctly identify communication and warehousing as commercial activities, but they forget that these are just examples of the broader category called 'auxiliaries to trade'.

The statement is false because commerce is not just about physical goods; it also includes services. Services like banking, insurance, or transportation are part of commerce and can be provided even when no physical goods have been produced yet. For example, a bank can give a loan to start a business before that business produces anything.

Common mistake: Students might mistakenly choose option C, thinking that production can happen without commercial services, but these services are actually essential for modern production to take place efficiently.

Production is the process of creating goods and services, and it is broadly divided into three stages. The first is Industrial production (primary and secondary), which involves extraction and manufacturing. The second is Commercial activities, which are the aids to trade that facilitate the distribution of goods. The third is direct Services, which are personal or professional services rendered to people. Therefore, the three main divisions are industrial, commercial, and services.

Common mistake: Students often mistakenly choose option D, forgetting that manufacturing is a type of industrial production, not a separate main division alongside it.

Commerce covers all activities involved in getting goods from the producer to the final consumer. These activities are divided into trade (buying and selling) and aids to trade. Storage of goods, also known as warehousing, is a vital aid to trade because it ensures that goods are available when and where they are needed, solving the problem of time. The other options like manufacturing and growing tomatoes are part of production, which happens before commerce begins.

Common mistake: Students often mistakenly choose 'Manufacturing' because they confuse commerce with the entire process of business, failing to separate the production of goods from their distribution.

The extractive industry is a type of occupation where people take raw materials directly from the earth or sea. Farming (from the soil), mining (for minerals), and drilling (for oil) are all examples of extractive activities. Insuring, on the other hand, is a commercial service that provides financial protection against risks; it does not involve taking anything from nature.

Common mistake: Students might mistakenly choose 'Farming' because they associate 'extractive' only with mining or drilling, but farming is also a primary occupation that extracts resources from the land.

Average stock is calculated by adding the opening stock to the closing stock and then dividing the total by two. In this question, this means (N=1,000 + N=9,000) ÷ 2. This equals N=10,000 ÷ 2, which gives the correct answer of N=5,000. The 'Purchases' figure is extra information that is not needed to find the average stock.

Common mistake: Students often mistakenly calculate the Cost of Goods Sold (N=6,000) instead of the average stock because all the necessary figures for that different calculation are also provided.

The cost of goods sold is calculated using the formula: Opening Stock + Purchases - Closing Stock. Using the figures given, the calculation is N1,000 + N14,000 - N9,000. This first equals N15,000 (cost of goods available for sale), and after subtracting the closing stock, the final answer is N6,000.

Common mistake: The most likely wrong choice is B, where students mistakenly add the opening and closing stock together instead of using the correct formula.

A sole proprietorship is a business owned and managed by one person. It is the oldest and most common form of business in Nigeria because it is the easiest and cheapest to set up, requiring very little capital and simple legal procedures. You can see sole proprietors everywhere, from the woman selling provisions in her kiosk to the local barber or tailor, making it the most widespread business type.

Common mistake: Students might mistakenly choose 'partnership' because it is also a very common business type, but sole proprietorship is far more numerous and simpler to establish, making it the most common and oldest form.

A delivery note is a document sent by the seller along with the goods to the buyer, listing the description and quantity of the goods being delivered. In this transaction, Mrs. Jumai, the wholesaler, is the seller who is sending the goods to Mr. Aigbojie, the retailer. Therefore, she is the one responsible for preparing the delivery note to accompany the shipment.

Common mistake: Students may mistakenly choose Adefila Limited, the manufacturer, forgetting that the delivery note is prepared by the immediate seller in the transaction, which is the wholesaler, Mrs. Jumai.

The factors of production are the basic resources required to produce goods and services, which are Land, Labour, Capital, and Entrepreneur. Staffing is a management function that involves recruiting and managing employees; it is related to the 'Labour' factor but is not a primary factor of production itself. Therefore, as Land, Labour, and Capital are all correct factors, Staffing is the one that does not belong in the list.

Common mistake: Students might confuse Staffing with Labour because both involve people, but Labour is the human effort used in production, while Staffing is the management process of organizing that labour.

An occupation is what a person does to earn a living, and these are grouped into different types. Commercial occupations are activities that help trade by distributing goods and services. A taxi-driver provides transportation, which is a service that helps move people and goods, making it a key part of commerce and an aid to trade. Therefore, a taxi-driver's job is classified under commercial services.

Common mistake: Students often mistakenly choose 'Personal services' because the taxi driver deals directly with the passenger, but they forget that transportation is a major commercial activity that aids trade.

A credit note is a document sent by a seller to a buyer to reduce the amount the buyer owes from a previous invoice. This is done to correct a mistake, most commonly when the buyer was overcharged for goods or services. It can also be issued when goods are returned by the buyer, effectively crediting their account for the value of the returned items.

Common mistake: Students often confuse a credit note with a debit note, which is used to correct an undercharge (option B).

Barter trade is the direct exchange of goods for other goods without the use of money. The question describes this exact process, which was the main form of trade before money became widely used. Therefore, exchanging goods for other goods is known as barter trade.

Common mistake: Students might mistakenly choose 'home trade' because the phrase is mentioned in the question, but 'home trade' refers to trade within a country, not the specific method of exchanging goods for goods.

Television is the correct answer because it is an audio-visual medium, meaning it uses both sound and moving pictures. This allows advertisers to show their products in action (motion) while explaining the benefits (sound), making it a very powerful advertising tool. Other options like radio only have sound, while press and neon signs are primarily visual without sound.

Common mistake: Students might mistakenly choose Radio because it has sound, but they forget that the question also requires motion, which radio lacks.

Sales promotion refers to short-term incentives used to encourage customers to buy a product immediately. Offering free samples is a classic example of sales promotion because it gives customers a direct, risk-free opportunity to try the product, which can lead to an instant purchase. While advertising (like on radio or TV) aims to build awareness over time, sales promotion techniques like free samples are designed to boost sales quickly.

Common mistake: Students often confuse the broad category of 'promotion' with the specific tool of 'sales promotion', leading them to incorrectly choose advertising options like A or B.

Public relations (PR) is the specific management function that works to build and maintain a positive image for a company with the public. It involves planned activities like media relations, community events, and strategic communication to create goodwill and mutual understanding. This makes it the correct term for efforts geared towards establishing and maintaining a good company image, and it is a key element of the promotional mix in marketing.

Common mistake: Students often mistakenly choose 'human relations' because it involves people, but human relations specifically focuses on managing relationships inside the company among employees, while public relations focuses on the company's image to the outside world.

In the process of buying and selling, an inquiry is a request from a potential buyer for information about goods, especially their prices. The seller's formal reply to this inquiry is called a quotation. A quotation is a document that states the price, terms of payment, and other conditions for the sale of the goods.

Common mistake: Students often mistakenly choose 'Estimate' because it also relates to price, but an estimate is a rough calculation of cost, while a quotation is a firm price offer in response to a specific inquiry.

Net profit is the final profit a business makes after all its costs have been paid. To calculate it, you must add up all the money the business received from sales and other sources, which is the total revenue. From this total, you then subtract all the money spent to run the business, including salaries, rent, and cost of goods, which is the total expenditure.

Common mistake: Students often mistakenly choose option C, confusing net profit with gross profit, which is calculated before deducting other operating expenses like salaries and rent.

The primary or main objective of any business enterprise is to make a profit. Profit is the reward for the risk taken by the entrepreneur in setting up the business. While businesses do provide goods, services, and employment, these are secondary objectives or functions performed in the process of achieving the main goal of profit maximization.

Common mistake: Students often mistakenly choose 'provide goods and services' because this is the visible activity of a business, but it is the means to an end, not the primary purpose itself.

A department store is a large retail business that offers a wide variety of goods organized into different sections or 'departments'. Each department functions like a separate shop, specializing in a specific product line (e.g., clothing, furniture, electronics), but they are all located within a single building. This perfectly matches the description of 'a number of shops under one roof'.

Common mistake: Students might mistakenly choose 'chain store' because it also involves multiple shops, but they forget that chain stores are located in different geographical places, not under a single roof.

A contract is the correct answer because it is defined as a legally binding agreement between two or more parties. This agreement creates rights and obligations that can be enforced in a court of law. The question is asking for the specific term for an agreement that the law will uphold, which is the exact definition of a contract.

Common mistake: Students might mistakenly choose 'offer' because an offer is a key part of forming a contract, but it is only the initial proposal and not the complete, enforceable agreement itself.

In commerce, an auction or a call for tenders is considered an 'invitation to treat,' which is an invitation for people to make offers. The bid from a potential buyer is the actual offer. A legally binding contract is only formed when the seller or auctioneer accepts this offer, which is often signified by the fall of the hammer in an auction or the formal acceptance of a tender.

Common mistake: Students often mistakenly choose 'offered' or 'advertised' because they confuse the initial advertisement of the auction with a legal offer, but in contract law, this is only an invitation for others to make an offer.

The correct answer is consumerism, which is the organized movement by consumers to protect their rights and interests. This movement aims to shield buyers from unfair business practices, such as misleading advertisements, poor quality products, and unfair pricing. The question describes this exact organized effort by consumers to protect themselves from businessmen.

Common mistake: Students might mistakenly choose 'propaganda' if they confuse it with public campaigns, but propaganda involves spreading biased or misleading information, which is often what consumerism fights against.

Rail transport, using a train, is the most suitable means for moving bulky goods over long distances on land, such as from Lagos to Kaduna. Trains are designed to carry very heavy and large-volume cargo efficiently and at a lower cost than other options for this type of journey. This makes it the best choice for transporting bulky items between these two cities.

Common mistake: Many students mistakenly choose 'Lorry' because road transport is common, but they overlook that rail transport is generally more cost-effective and practical for very bulky goods over long distances.

Telex is the correct answer because it was a teleprinter system that transmitted typed messages over a network, making it almost instantaneous and highly accurate. The message is printed out at the destination exactly as it was typed, ensuring accuracy. While options like courier services and express mail are fast for physical delivery, they cannot match the speed of an electronic transmission like telex.

Common mistake: Students often mistakenly choose Courier services because they are known for fast physical delivery, but they forget that electronic methods like Telex are significantly quicker as they do not involve physical travel time.