Practice Post UTME AAUA commerce 2020 Past Questions

Question 1

In a sole trader business, what is the primary advantage of using a sole proprietorship structure?

A. Limited liability

B. Easy to set up

Correct C. Flexibility in decision-making

D. No tax benefits

Correct Answer: C

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Question 2

A company has a share capital of ₦1,000,000, divided into 100,000 ordinary shares of ₦10 each. If the company issues 50,000 shares to the public, what is the amount of share premium?

A. ₦250,000

Correct B. ₦500,000

C. ₦750,000

D. ₦1,000,000

Correct Answer: B

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Question 3

A consumer purchases a product for ₦5,000 and pays a 10% sales tax. If the consumer returns the product and receives a refund, what is the amount of refund?

Correct A. ₦4,500

B. ₦4,750

C. ₦5,000

D. ₦5,250

Correct Answer: A

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Question 4

A company uses the following data to calculate its weighted average cost of capital (WACC):

A. Debt: 60%, Equity: 40%

Correct B. Debt: 40%, Equity: 60%

C. Debt: 50%, Equity: 50%

D. Debt: 70%, Equity: 30%

Correct Answer: B

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Question 5

A firm's profit function is given by the equation: ( pi = 100x - 20x^2 ). If the firm produces 20 units of output, what is the profit?

A. ₦1,600

B. ₦1,800

Correct C. ₦2,000

D. ₦2,200

Correct Answer: C

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Question 6

A company is considering two different production processes for its new product. Process A requires an initial investment of ₦5 million and has a fixed cost of ₦2 million per unit produced. Process B requires an initial investment of ₦3 million and has a fixed cost of ₦1.5 million per unit produced. If the company expects to produce 10,000 units, what is the total cost of production for each process?

A. ₦25 million

Correct B. ₦20 million

C. ₦30 million

D. ₦35 million

Correct Answer: B

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Question 7

A firm is considering two different marketing strategies for its new product. Strategy A involves a high initial investment of ₦10 million and a fixed cost of ₦1 million per unit sold. Strategy B involves a low initial investment of ₦2 million and a fixed cost of ₦500,000 per unit sold. If the firm expects to sell 20,000 units, what is the total revenue for each strategy?

Correct A. ₦40 million

B. ₦30 million

C. ₦50 million

D. ₦60 million

Correct Answer: A

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Question 8

A company is considering two different distribution channels for its new product. Channel A involves a high initial investment of ₦5 million and a fixed cost of ₦500,000 per unit distributed. Channel B involves a low initial investment of ₦2 million and a fixed cost of ₦250,000 per unit distributed. If the company expects to distribute 15,000 units, what is the total cost of distribution for each channel?

A. ₦7.5 million

Correct B. ₦3.75 million

C. ₦10 million

D. ₦12.5 million

Correct Answer: B

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Question 9

A firm is considering two different pricing strategies for its new product. Strategy A involves a high initial price of ₦10,000 per unit and a discount of 10% for bulk purchases. Strategy B involves a low initial price of ₦5,000 per unit and a discount of 20% for bulk purchases. If the firm expects to sell 20,000 units, what is the total revenue for each strategy?

Correct A. ₦80 million

B. ₦60 million

C. ₦100 million

D. ₦120 million

Correct Answer: A

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Question 10

A company is considering two different production processes for its new product. Process A requires an initial investment of ₦5 million and has a fixed cost of ₦2 million per unit produced. Process B requires an initial investment of ₦3 million and has a fixed cost of ₦1.5 million per unit produced. If the company expects to produce 10,000 units, what is the total cost of production for each process?

A. ₦25 million

Correct B. ₦20 million

C. ₦30 million

D. ₦35 million

Correct Answer: B

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Question 11

The concept of 'just-in-time' inventory system is most closely related to which of the following transportation modes?

A. Air Freight

B. Truckload

Correct C. Intermodal

D. Rail

Correct Answer: C

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Question 12

A company's financial statements are audited by an external auditor. What is the primary purpose of this audit?

A. To verify the company's financial performance

B. To ensure compliance with tax laws

Correct C. To provide an opinion on the company's financial statements

D. To identify areas for cost reduction

Correct Answer: C

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Question 13

A sole trader's business is registered under the name 'ABC Ltd'. What is the legal implication of this?

A. The business is now a partnership

B. The business is now a private company

Correct C. The business is still a sole trader

D. The business is now a public company

Correct Answer: C

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Question 14

A company's stock price is affected by the following factors: interest rates, inflation, and government policies. Which of the following is the most significant factor?

Correct A. Interest rates

B. Inflation

C. Government policies

D. All of the above

Correct Answer: A

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Question 15

A company's financial statements are prepared using the accrual accounting method. What is the primary advantage of this method?

Correct A. It provides a more accurate picture of the company's financial performance

B. It is easier to prepare than the cash accounting method

C. It is more relevant to the company's stakeholders

D. It is less complex than the cash accounting method

Correct Answer: A

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Question 16

The concept of comparative advantage in international trade is based on the idea that countries should specialize in producing goods for which they have a lower opportunity cost. Which of the following is a correct example of comparative advantage?

A. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 100 units of cloth.

B. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 150 units of cloth.

Correct C. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 50 units of cloth.

D. Country A produces 100 units of wheat and 50 units of cloth, while Country B produces 50 units of wheat and 200 units of cloth.

Correct Answer: C

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Question 17

A firm's marketing mix consists of four main elements: product, price, promotion, and place. Which of the following is NOT a part of the marketing mix?

A. Product

B. Price

C. Promotion

Correct D. Distribution

Correct Answer: D

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Question 18

A warehouse is a facility used for storing goods. Which of the following is a type of warehouse?

A. Cold storage warehouse

B. Dry warehouse

C. Bonded warehouse

Correct D. All of the above

Correct Answer: D

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Question 19

A firm's advertising budget is typically a percentage of its total sales. Which of the following is a common advertising budget percentage?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 20

A firm's transportation costs are typically a function of the distance between the supplier and the customer. Which of the following is a common transportation cost?

A. Fuel costs

B. Labor costs

C. Equipment costs

Correct D. All of the above

Correct Answer: D

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Question 21

A company is considering the introduction of a new product line. The product line has a high fixed cost of ₦500 million and a variable cost of ₦50,000 per unit. The selling price of the product is ₦75,000 per unit. If the company expects to sell 10,000 units, what is the minimum revenue required to break even?

A. ₦500 million

Correct B. ₦750 million

C. ₦1.25 billion

D. ₦1.5 billion

Correct Answer: B

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Question 22

A firm is considering the introduction of a new product line. The product line has a high fixed cost of ₦500 million and a variable cost of ₦50,000 per unit. The selling price of the product is ₦75,000 per unit. If the company expects to sell 10,000 units, what is the minimum revenue required to break even?

A. ₦500 million

Correct B. ₦750 million

C. ₦1.25 billion

D. ₦1.5 billion

Correct Answer: B

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Question 23

A company is considering the introduction of a new product line. The product line has a high fixed cost of ₦500 million and a variable cost of ₦50,000 per unit. The selling price of the product is ₦75,000 per unit. If the company expects to sell 10,000 units, what is the minimum revenue required to break even?

A. ₦500 million

Correct B. ₦750 million

C. ₦1.25 billion

D. ₦1.5 billion

Correct Answer: B

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Question 24

A firm is considering the introduction of a new product line. The product line has a high fixed cost of ₦500 million and a variable cost of ₦50,000 per unit. The selling price of the product is ₦75,000 per unit. If the company expects to sell 10,000 units, what is the minimum revenue required to break even?

A. ₦500 million

Correct B. ₦750 million

C. ₦1.25 billion

D. ₦1.5 billion

Correct Answer: B

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Question 25

A company is considering the introduction of a new product line. The product line has a high fixed cost of ₦500 million and a variable cost of ₦50,000 per unit. The selling price of the product is ₦75,000 per unit. If the company expects to sell 10,000 units, what is the minimum revenue required to break even?

A. ₦500 million

Correct B. ₦750 million

C. ₦1.25 billion

D. ₦1.5 billion

Correct Answer: B

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