Practice Post UTME FUTO commerce 2023 Past Questions

Question 1

A sole trader's business is considered a separate legal entity from its owner. Which of the following statements is FALSE regarding this separation?

A. The sole trader's business is responsible for its own debts.

Correct B. The sole trader's business is responsible for its owner's debts.

C. The sole trader's business is taxed separately from its owner.

D. The sole trader's business is not responsible for its owner's debts.

Correct Answer: B

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Question 2

A company's memorandum of association is a document that outlines the company's

A. objects and powers

B. share capital and shareholding

C. management structure and board composition

Correct D. all of the above

Correct Answer: D

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Question 3

A company's articles of association are a document that outlines the company's

A. objects and powers

B. share capital and shareholding

Correct C. management structure and board composition

D. all of the above

Correct Answer: C

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Question 4

A company's share capital is divided into

A. shares and debentures

B. shares and loans

C. shares and bonds

Correct D. shares and preference shares

Correct Answer: D

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Question 5

A company's board of directors is responsible for

A. appointing the company's management

B. approving the company's financial statements

C. making strategic decisions for the company

Correct D. all of the above

Correct Answer: D

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Question 6

A company's financial performance can be evaluated using various metrics, including the return on equity (ROE) and the return on assets (ROA). Which of the following statements is true about the relationship between ROE and ROA?

A. ROE is always greater than ROA

Correct B. ROE is always less than ROA

C. ROE and ROA are always equal

D. ROE and ROA are inversely related

Correct Answer: B

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Question 7

A firm's cost of capital is the minimum return required by investors to invest in the firm. Which of the following is a component of the cost of capital?

A. Operating expenses

B. Capital expenditures

Correct C. Interest expenses

D. Dividends paid

Correct Answer: C

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Question 8

A company's break-even point (BEP) is the point at which its total revenue equals its total fixed costs. Which of the following is a factor that affects the BEP?

A. Selling price

B. Fixed costs

C. Variable costs

Correct D. All of the above

Correct Answer: D

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Question 9

A firm's cash flow statement is a financial statement that shows the inflows and outflows of cash and cash equivalents over a specific period. Which of the following is a type of cash flow?

A. Operating cash flow

B. Investing cash flow

C. Financing cash flow

Correct D. All of the above

Correct Answer: D

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Question 10

A company's financial leverage is the use of debt financing to increase its return on equity. Which of the following is a benefit of financial leverage?

A. Increased risk

B. Decreased return on equity

Correct C. Increased return on equity

D. No effect on return on equity

Correct Answer: C

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Question 11

A sole trader's business is considered a separate legal entity from its owner. Which of the following is a consequence of this separation?

Correct A. The sole trader's business is not liable for the owner's personal debts.

B. The sole trader's business is not entitled to the owner's personal assets.

C. The sole trader's business is not responsible for the owner's personal taxes.

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

Correct Answer: A

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Question 12

A company's articles of association may provide for the appointment of a managing director. What is the primary responsibility of the managing director?

A. To manage the company's day-to-day operations.

B. To oversee the company's financial affairs.

C. To represent the company in legal matters.

Correct D. To make strategic decisions on behalf of the company.

Correct Answer: D

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Question 13

A consumer has entered into a contract with a trader for the purchase of a defective product. The consumer wishes to claim damages for the loss suffered. Which of the following is a prerequisite for the consumer's claim?

Correct A. The consumer must have provided written notice to the trader.

B. The consumer must have returned the defective product to the trader.

C. The consumer must have suffered a loss of at least ₦10,000.

D. The consumer must have complained to the trader within 30 days of purchase.

Correct Answer: A

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Question 14

A company has issued 10,000 ordinary shares of ₦10 each. If the company has a share capital of ₦100,000, what is the percentage of the share capital represented by the ordinary shares?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 15

A sole trader has incurred a loss of ₦50,000 in the course of business. The sole trader's personal assets are valued at ₦200,000. What is the sole trader's net worth?

A. ₦150,000

Correct B. ₦200,000

C. ₦250,000

D. ₦300,000

Correct Answer: B

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Question 16

A company's sole trader is considering expanding its operations to a foreign market. Which of the following is a key factor to consider when evaluating the risks associated with this expansion?

A. Cultural differences

B. Language barriers

C. Differences in business practices

Correct D. Exchange rate fluctuations

Correct Answer: D

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Question 17

A firm is considering investing in a new project. The project's expected return is 12%, and the risk-free rate is 6%. What is the project's beta?

A. 0.5

Correct B. 1.0

C. 1.5

D. 2.0

Correct Answer: B

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Question 18

A company's financial statements show that its current ratio is 2.5 and its acid-test ratio is 1.2. What can be inferred about the company's liquidity position?

Correct A. The company has a strong liquidity position

B. The company has a weak liquidity position

C. The company's liquidity position is uncertain

D. The company's liquidity position is not relevant

Correct Answer: A

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Question 19

A firm is considering issuing a bond with a face value of ₦100 million and a coupon rate of 8%. What is the bond's yield to maturity?

A. 8%

Correct B. 9%

C. 10%

D. 11%

Correct Answer: B

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Question 20

A company's balance sheet shows that its total assets are ₦500 million and its total liabilities are ₦300 million. What is the company's equity?

A. ₦100 million

Correct B. ₦200 million

C. ₦300 million

D. ₦400 million

Correct Answer: B

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Question 21

A company's sole trader is considering the purchase of a new vehicle for business use. The vehicle costs ₦5,000,000 and has an expected lifespan of 5 years. The company's accountant estimates that the vehicle will depreciate by 20% each year. What is the total depreciation of the vehicle over its lifespan?

A. ₦1,000,000

B. ₦1,200,000

Correct C. ₦1,500,000

D. ₦2,000,000

Correct Answer: C

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Question 22

A consumer protection agency is investigating a complaint about a company's unfair business practices. The company has been accused of engaging in false advertising, making false promises to customers, and failing to provide refunds to dissatisfied customers. Which of the following is a legal consequence of the company's actions?

A. The company will be fined ₦500,000

Correct B. The company will be required to pay damages to affected customers

C. The company will be forced to cease operations

D. The company will be granted a license to operate

Correct Answer: B

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Question 23

A company's warehouse is storing goods worth ₦10,000,000. The company's inventory manager estimates that the goods will depreciate by 10% each month. What is the total depreciation of the goods over a period of 6 months?

A. ₦600,000

B. ₦800,000

Correct C. ₦1,000,000

D. ₦1,200,000

Correct Answer: C

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Question 24

A company's sole trader is considering the purchase of a new vehicle for business use. The vehicle costs ₦5,000,000 and has an expected lifespan of 5 years. The company's accountant estimates that the vehicle will depreciate by 20% each year. What is the total depreciation of the vehicle over its lifespan?

A. ₦1,000,000

B. ₦1,200,000

Correct C. ₦1,500,000

D. ₦2,000,000

Correct Answer: C

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Question 25

A consumer protection agency is investigating a complaint about a company's unfair business practices. The company has been accused of engaging in false advertising, making false promises to customers, and failing to provide refunds to dissatisfied customers. Which of the following is a legal consequence of the company's actions?

A. The company will be fined ₦500,000

Correct B. The company will be required to pay damages to affected customers

C. The company will be forced to cease operations

D. The company will be granted a license to operate

Correct Answer: B

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POST UTME FUTO 2023 Commerce | Objective

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