Practice Post UTME AAUA commerce 2024 Past Questions

Question 1

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

A. Limited liability

B. Unlimited liability

C. Easy to set up

Correct D. Flexibility in decision-making

Correct Answer: D

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Question 2

A company has 100,000 shares issued and outstanding. If 80% of the shares are held by the public, how many shares are held by the public?

Correct A. 80000

B. 90000

C. 100000

D. 120000

Correct Answer: A

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Question 3

A consumer purchases a product with a price of ₦500. If the sales tax rate is 10%, what is the amount of sales tax paid?

Correct A. ₦50

B. ₦100

C. ₦200

D. ₦500

Correct Answer: A

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Question 4

A company has a production cost of ₦1,000 per unit and a selling price of ₦1,200 per unit. If the company produces 1,000 units, what is the profit?

A. ₦100000

B. ₦200000

Correct C. ₦300000

D. ₦400000

Correct Answer: C

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Question 5

A company has a risk management strategy that involves diversification. What is the primary benefit of diversification?

Correct A. Reduced risk

B. Increased risk

C. Improved liquidity

D. Enhanced profitability

Correct Answer: A

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Question 6

A company is considering two different insurance policies to cover its business operations. Policy A has a premium of ₦1,500 and a deductible of ₦5,000. Policy B has a premium of ₦2,000 and a deductible of ₦2,000. If the company experiences a loss of ₦12,000, which policy would result in a lower out-of-pocket expense?

Correct A. Policy A

B. Policy B

C. Both policies would result in the same out-of-pocket expense

D. Neither policy would result in an out-of-pocket expense

Correct Answer: A

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Question 7

A firm is considering investing in a new production facility. The facility will require an initial investment of ₦10 million and will generate annual profits of ₦2 million for the next 5 years. If the firm's cost of capital is 10%, what is the net present value of the investment?

A. ₦5,000,000

Correct B. ₦7,000,000

C. ₦9,000,000

D. ₦11,000,000

Correct Answer: B

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Question 8

A company is considering launching a new product in a foreign market. The company has estimated that the product will generate annual sales of ₦5 million for the next 3 years. If the company's cost of capital is 12%, what is the present value of the expected cash flows?

A. ₦12,000,000

Correct B. ₦15,000,000

C. ₦18,000,000

D. ₦20,000,000

Correct Answer: B

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Question 9

A firm is considering investing in a new marketing campaign. The campaign will require an initial investment of ₦3 million and will generate annual returns of ₦1.5 million for the next 2 years. If the firm's cost of capital is 8%, what is the net present value of the investment?

Correct A. ₦2,000,000

B. ₦3,000,000

C. ₦4,000,000

D. ₦5,000,000

Correct Answer: A

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Question 10

A company is considering expanding its operations to a new market. The company has estimated that the expansion will require an initial investment of ₦8 million and will generate annual profits of ₦3 million for the next 4 years. If the company's cost of capital is 15%, what is the net present value of the investment?

A. ₦10,000,000

Correct B. ₦12,000,000

C. ₦14,000,000

D. ₦16,000,000

Correct Answer: B

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Question 11

A firm producing both goods and services is an example of a _______ business unit.

A. sole trade

Correct B. company

C. partnership

D. cooperative

Correct Answer: B

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Question 12

The _______ of a firm refers to the process of producing a specific product or service.

A. production

Correct B. specialization

C. division of labor

D. economies of scale

Correct Answer: B

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Question 13

A _______ is a financial institution that provides loans to individuals and businesses.

Correct A. bank

B. credit union

C. microfinance institution

D. insurance company

Correct Answer: A

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Question 14

The _______ of a firm refers to the process of creating and communicating value to customers.

Correct A. marketing

B. advertising

C. public relations

D. sales

Correct Answer: A

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Question 15

A _______ is a type of business that is owned and controlled by its members.

A. sole trade

B. partnership

Correct C. cooperative

D. company

Correct Answer: C

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Question 16

In a perfectly competitive market, the supply curve is horizontal and the demand curve is downward-sloping. Given that the market equilibrium price is ₦150 and the quantity demanded is 100 units, what is the consumer surplus?

Correct A. ₦15,000

B. ₦20,000

C. ₦25,000

D. ₦30,000

Correct Answer: A

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Question 17

A company uses the following production function: Q = 2L^2 + 5K. If the price of labor is ₦50 per unit and the price of capital is ₦100 per unit, and the company wants to maximize its profit, what is the optimal level of labor?

A. 10 units

Correct B. 20 units

C. 30 units

D. 40 units

Correct Answer: B

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Question 18

A firm has the following cost function: C = 2L^2 + 5K. If the price of labor is ₦50 per unit and the price of capital is ₦100 per unit, and the firm wants to minimize its cost, what is the optimal level of labor?

A. 5 units

Correct B. 10 units

C. 15 units

D. 20 units

Correct Answer: B

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Question 19

A company uses the following production function: Q = 2L^2 + 5K. If the price of labor is ₦50 per unit and the price of capital is ₦100 per unit, and the company wants to maximize its profit, what is the optimal level of capital?

A. 10 units

B. 20 units

Correct C. 30 units

D. 40 units

Correct Answer: C

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Question 20

A firm has the following cost function: C = 2L^2 + 5K. If the price of labor is ₦50 per unit and the price of capital is ₦100 per unit, and the firm wants to minimize its cost, what is the optimal level of capital?

A. 5 units

Correct B. 10 units

C. 15 units

D. 20 units

Correct Answer: B

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Question 21

A sole trader's business is not registered with the Corporate Affairs Commission (CAC). What is the implication of this on the sole trader's business?

A. The sole trader's business is not recognized by the government.

B. The sole trader's business is not entitled to tax deductions.

Correct C. The sole trader's business is not protected by the Companies and Allied Matters Act (CAMA).

D. The sole trader's business is not required to file annual returns.

Correct Answer: C

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Question 22

A company has a share capital of ₦1,000,000, divided into 100,000 ordinary shares of ₦10 each. If the company issues 20,000 shares to the public, what is the total amount received from the public?

A. ₦200,000

Correct B. ₦400,000

C. ₦600,000

D. ₦800,000

Correct Answer: B

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Question 23

A producer specializes in producing two goods, X and Y. The production function for good X is given by Qx = 2L + 3K, where L is labor and K is capital. The production function for good Y is given by Qy = 4L + 2K. If the producer has 10 units of labor and 5 units of capital, what is the total output of the producer?

A. 20 units

B. 25 units

Correct C. 30 units

D. 35 units

Correct Answer: C

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Question 24

A consumer has a budget of ₦1,500 and a preference for two goods, A and B. The prices of goods A and B are ₦500 and ₦300, respectively. If the consumer spends all of their budget on the two goods, what is the total quantity of good A consumed?

A. 2 units

Correct B. 3 units

C. 4 units

D. 5 units

Correct Answer: B

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Question 25

A company is sued for breach of contract. The company's lawyer argues that the contract was void ab initio. What is the implication of this on the company's liability?

Correct A. The company is not liable for breach of contract.

B. The company is liable for breach of contract, but the damages are limited to the amount specified in the contract.

C. The company is liable for breach of contract, and the damages are not limited to the amount specified in the contract.

D. The company is not liable for breach of contract, but the plaintiff can still recover damages for any losses suffered.

Correct Answer: A

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