Carefully review the question and solution below
1. When the government gives up its ownership and control of a business to private individuals, this is known as
A. Nationalization
B. Commercialization
C. Privatization ✔
D. Indigenization
Explanation:
Privatization occurs when government transfers ownership of a business to private individuals.
2. The reward received by a party in a contract agreement is known as
A. Consideration ✔
B. Acceptance
C. Offer
D. Warranty
Explanation:
Consideration is the benefit or reward each party receives in a contract.
3. Payment to a ship owner for carrying one's cargo is
A. Demurrage
B. Fare
C. Dock due
D. Freight ✔
Explanation:
Freight is the payment for transporting goods by ship.
4. Which of the following is not a pre-sale service?
A. Repair and maintenance work ✔
B. Providing details about the goods to be purchased
C. Demonstrating the use and performance of the products
D. Setting up facilities for storing the product to be bought
Explanation:
Repair and maintenance is post-sale service, not pre-sale.
5. Which of the following is used to inform the addressee that he has a registered parcel for collection?
A. Counter
B. Express label
C. Slip ✔
D. Telegram
Explanation:
A slip informs the recipient of a registered parcel available for collection.
6. The cooperative society that performs a combination of the functions of other types of co-operatives is called
A. Consumer cooperative
B. Multipurpose cooperative ✔
C. Producer cooperative
D. Thrift and credit cooperative
Explanation:
A multipurpose cooperative combines functions of consumer, producer, and thrift cooperatives.
7. That portion of the share capital which the company has asked the shareholder to pay for is known as
A. Authorized capital
B. Paid-up capital ✔
C. Issued capital
D. Called-up capital
Explanation:
Paid-up capital is the actual amount shareholders have paid to the company.
8. One of the advantages of air transport over other forms of transport is
A. Safety
B. Flexibility
C. Cost and acceptance
D. Speed ✔
Explanation:
Air transport is the fastest mode of transport, making it ideal for perishable or urgent goods.
9. Which of the following are elements of a valid contract?
A. Discharge and performance
B. Offer and acceptance ✔
C. Age and maturity
D. Promise and capacity
Explanation:
A valid contract requires offer and acceptance, consideration, and legal capacity.
10. The last link in the channel of distribution is the
A. Retailer
B. Consumer ✔
C. Wholesaler
D. Producer
Explanation:
Consumers are the final recipients in the distribution chain.
11. Taxes on imported foreign goods are also known as
A. Excise duties
B. Tariffs ✔
C. Ad valorem taxes
D. Dock dues
Explanation:
Tariffs are taxes imposed on imported goods.
12. If Karamo who lives in The Gambia imports goods from Senegal and later sells in Guinea Bissau; Karamo engaged in
A. Multilateral trade
B. Counter trade
C. Barter trade
D. Entrepot trade ✔
Explanation:
Entrepot trade involves importing goods and re-exporting them to other countries without significant processing.
13. Manufacturers may sell goods directly to consumers where goods are
I. Made to customers' specifications. II. Advertised by the manufacturer. III. Perishable. IV. Highly technical. V. Widely demanded
A. I, III and IV only ✔
B. I and III only
C. III and V only
D. III and IV only
Explanation:
Direct sales suit goods made to specification, technical, or perishable items.
14. Which of the following is a means of payment?
A. I.O.U
B. Postal order ✔
C. Promissory note
D. C.I.F.
Explanation:
Postal orders are instruments for transferring money.
15. Shipping services rendered by Nigeria to The Gambia would be classified by The Gambia as
A. Invisible imports ✔
B. Invisible exports
C. Visible imports
D. Visible exports
Explanation:
Shipping services are invisible imports because no physical goods are imported.
16. The main divisions of production are
A. Industry, direct and indirect services
B. Extraction, manufacturing and construction ✔
C. Industry, commerce and direct services
D. Industry, commerce and trading
Explanation:
Production includes extraction, manufacturing, and construction activities.
17. What is the cost of goods sold?
Cost of Goods Sold = Purchases + Opening Stock - Closing Stock
$ = D28,000 + D2,000 - D3,000 = D27,000 $
A. D28,000
B. D27,000 ✔
C. D8,000
D. D5,000
Explanation:
COGS = Purchases + Opening Stock − Closing Stock.
18. The average stock is
Average stock = $\frac{Opening\ Stock + Closing\ Stock}{2} = \frac{D2,000 + D3,000}{2} = D2,500$
A. D5,000
B. D3,000
C. D2,500 ✔
D. D2,000
Explanation:
Average stock = (Opening + Closing)/2.
19. What is the rate of turnover?
Rate of turnover = $\frac{Cost\ of\ Goods\ Sold}{Average\ Stock} = \frac{D27,000}{D2,500} = 10.8$ times
A. 13.5 times
B. 10.8 times ✔
C. 9 times
D. 5.4 times
Explanation:
Turnover = COGS ÷ Average stock.
20. In marine insurance, when cargo is thrown into the sea to prevent the ship from sinking, the type of marine loss is
A. Particular average loss
B. General average loss ✔
C. Total average loss
D. Constructive average loss
Explanation:
General average loss occurs when sacrifices are made to save the ship and cargo.
21. The turnover of trade is the
A. Number of times the stock is sold
B. Total sales made during a period ✔
C. Profit made during the period
D. Total purchase made during the period
Explanation:
Turnover refers to total sales in a period.
22. The total assets of a business less its total liability is known as
A. Capital owned ✔
B. Share capital
C. Issued capital
D. Working capital
Explanation:
Capital owned = Total assets − Total liabilities.
23. A document issued to the public by a company to advertise its shares is known as
A. Prospectus ✔
B. Tender
C. Share certificate
D. Trading certificate
Explanation:
A prospectus advertises shares to potential investors.
24. An overdraft is the
A. Amount permitted to be withdrawn in excess of one's deposit ✔
B. Excessive cash withdrawn by commercial banks from the central bank
C. Credit balance standing in the name of customer
D. Special deposit made by commercial banks
Explanation:
An overdraft allows withdrawal beyond available account balance up to a limit.
25. Which of the following is not a principle of insurance?
A. Insurable interest
B. Subrogation
C. Surrender value ✔
D. Proximate cause
Explanation:
Surrender value is a feature of insurance policy, not a principle.
26. The par value of a share is also known as its
A. Premium price
B. Market price
C. Discount price
D. Nominal price ✔
Explanation:
Par value = nominal price assigned to a share by the company.
27. A cheque dated 15th March, 2012 will become stale on
A. 16th June, 2012
B. 16th July, 2012
C. 16th August, 2012 ✔
D. 16th September, 2012
Explanation:
Cheques become stale 6 months from the date of issue.
28. Banks settle their indebtedness in the
A. Discount house
B. Stock exchange market
C. Commercial bank
D. Clearing house ✔
Explanation:
Banks use the clearing house to settle payments and debts between themselves.
29. Which of the following distinguishes home trade from foreign trade?
A. Payments are easily arranged ✔
B. Taxes are levied
C. Goods have to be warehoused
D. Middlemen are not required
Explanation:
Home trade occurs within the same country; payments are simpler and usually in local currency.
30. Before the advent of legal tender and credit instruments, which of the following was used as a medium of exchange?
A. Currency notes
B. Cowries ✔
C. Cheques
D. Bank drafts
Explanation:
Cowries were one of the earliest forms of money used for trade.
31. When C.I.F. is quoted on an invoice, it means that the price includes the
A. Cost of the goods only
B. Cost only
C. Cost of carriage only
D. Cost, insurance, and freight ✔
Explanation:
C.I.F. = Cost, Insurance, and Freight.
32. Insurance is a function of
A. Encouraging manufacturers to produce high-quality products ✔
B. Trade unions
C. Employers' Association
D. Consumers' information association
Explanation:
Insurance protects manufacturers and consumers against risks in trade.
33. Association of business within a locality is known as
A. Trade executives
B. Consumer's association
C. Chamber of commerce ✔
D. Trade union
Explanation:
A chamber of commerce promotes and protects local businesses.
34. Which of the following is not a function of a port authority?
A. Providing facilities for loading and off-loading of vessels
B. Collecting dock dues
C. Providing enough ships for the country ✔
D. Dredging of the harbour
Explanation:
Port authorities manage infrastructure and fees, but do not supply ships.
35. Trade as a division of commerce is usually classified into
A. Retail and wholesale
B. Import and export
C. Home and foreign ✔
D. Visible and invisible
Explanation:
Trade can be domestic (home) or international (foreign).
36. The box marked 'X' stands for
A. Indirect services
B. Industry
C. Occupation
D. Aids to trade ✔
Explanation:
X represents aids to trade such as transport, warehousing, and banking that facilitate commerce.
37. The box marked 'Y' stands for
A. Wholesale
B. Indirect services
C. Aids to trade ✔
D. Foreign trade
Explanation:
Y refers to aids to trade like insurance, banking, and warehousing.
38. The box marked 'Z' stands for
A. Warehousing ✔
B. Home trade
C. Foreign trade
D. Marketing
Explanation:
Z represents warehousing, a key element of aids to trade.
39. Liquid capital in a business means
A. Movable assets of the business
B. Authorized capital
C. Issued capital
D. Assets easily convertible to cash ✔
Explanation:
Liquid capital refers to assets that can be quickly converted to cash to meet short-term obligations.
40. A trader's expected revenue from indirect taxes can be calculated as
Given the table:
| ITEMS | Amount ($) |
|---|---|
| Rent and Royalty | 75.00 |
| Company income tax | 150.00 |
| Custom and excise duties | 300.00 |
| Personal income tax | 80.00 |
| Fees and fines | 60.00 |
| Value added tax | 100.00 |