gce model questions vol1 2023 commerce | Essay

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Question 1 View Details
Commerce is the engine of economic activity in Nigeria. Answer the following questions based on this premise.
Question Parts
(a)
Define commerce and explain its four main functions.
(b)
Discuss the role of entrepreneurs in the development of commerce in Nigeria.
(c)
Evaluate two ways in which modern technology has transformed commercial activities in the Nigerian market.
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Question 2 View Details
The table below shows Nigeria’s import and export values (in billions of naira) for three major commodities – Crude Oil, Cocoa and Cement – for the years 2021 and 2022. | Commodity | 2021 Imports | 2021 Exports | 2022 Imports | 2022 Exports | |-----------|--------------|--------------|--------------|--------------| | Crude Oil | 1.20 | 2.80 | 1.10 | 3.00 | | Cocoa | 0.45 | 0.30 | 0.50 | 0.35 | | Cement | 0.70 | 0.40 | 0.80 | 0.45 | Using this information, answer the following questions:
Question Parts
(a)
Calculate the trade balance (exports − imports) for each commodity in 2021 and 2022.
(b)
Identify which commodity gave the highest trade surplus and which gave the greatest trade deficit in 2022.
(c)
The government is considering a 10 % ad valorem tariff on imports of Cement. Re‑calculate the 2022 trade balance for Cement after the tariff and comment on the effect of the tariff on the overall trade position of that commodity.
(d)
Suggest two policy measures the government could adopt to improve Nigeria’s overall trade balance and briefly justify each measure.
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Question 3 View Details
A young entrepreneur runs a home‑based business producing handcrafted wooden toys. During the last financial year the following information was recorded: - Fixed costs (rent, utilities, salaries) = ₦250,000 per year - Variable cost per toy (materials and labour) = ₦1,200 - Selling price per toy = ₦2,000 - Number of toys sold = 500 units - Opening inventory of finished toys = 80 units - Closing inventory of finished toys = 70 units Using the data above, answer the following:
Question Parts
(a)
Determine the break‑even quantity of toys for the business. State the minimum whole number of toys that must be sold to cover all costs.
(b)
Calculate the gross profit earned from the 500 toys sold.
(c)
Evaluate the inventory turnover ratio for the year and comment briefly on what the figure indicates about the business’s inventory management.
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Question 4 View Details
A Nigerian import‑export company trades cocoa beans. In a particular quarter the company imported 15,000 kg of cocoa beans at a FOB price of $2.20 per kg. The exchange rate at the time of purchase was ₦460 per $1. The company incurred freight charges of ₦120,000 and insurance costs of ₦45,000. A tariff of 5 % ad valorem is applied on the CIF value of the shipment. The processed cocoa is sold locally at a price of ₦1,200 per kg. During the same quarter the exchange rate moved to ₦480 per $1 for the conversion of revenue. Using the information above, answer the following:
Question Parts
(a)
Calculate the total landed (CIF) cost of the cocoa beans in Naira, including freight, insurance and the 5 % tariff.
(b)
Determine the gross profit earned from the sale of the processed cocoa and state the profit margin (as a percentage of revenue).
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Question 5 View Details
FreshMart is a supermarket that sells a variety of grocery items. The following information relates to its operations in the month of June: - Total sales revenue: ₦4,200,000 - Cost of goods sold (COGS): ₦2,730,000 - Operating expenses (salaries, utilities, rent, advertising): ₦720,000 - Opening inventory (1 June): ₦540,000 - Closing inventory (30 June): ₦480,000 - The retailer offers a 2 % trade discount on all purchases and a 5 % cash‑payment discount on invoices settled within 10 days. - Average credit sales represent 40 % of total sales and are collected in 30 days. Using the data above, answer the following questions.
Question Parts
(a)
Calculate FreshMart’s gross profit and gross profit margin for June. Show all working.
(b)
If FreshMart raises its selling price by 5 % on all items while keeping COGS unchanged, estimate the new gross profit margin. State any assumptions you make.
(c)
Discuss two non‑price factors that could influence FreshMart’s sales performance in the next quarter.
(d)
Recommend one strategy FreshMart could adopt to improve its inventory turnover ratio and justify why it would be effective.
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Question 6 View Details
AgroSupply is a wholesale distributor that supplies fertilizers, seeds and pesticides to retail outlets across the region. The following data relate to the first quarter (January–March): - Purchase cost of goods sold (COGS): ₦9,600,000 - Total sales revenue: ₦12,000,000 - Fixed operating costs (warehouse rent, salaries, utilities): ₦1,800,000 per month - Average selling price per unit of fertilizer: ₦2,400 - Variable cost per unit (including purchase cost and handling): ₦1,800 - Credit terms offered to retailers: 30 days, with a 2 % discount for payment within 10 days. - Average collection period for credit sales is currently 45 days. Answer the following questions based on the information above.
Question Parts
(a)
Determine the break‑even point in units for AgroSupply for a single month. Show the formula used and all steps.
(b)
Analyse how extending the credit period from 30 days to 60 days would affect AgroSupply’s cash flow, assuming sales volume remains unchanged.
(c)
Explain two advantages that bulk buying offers to AgroSupply as a wholesaler.
(d)
Propose one method AgroSupply could use to reduce wastage of perishable agricultural inputs and justify its effectiveness.
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Question 7 View Details
ABC Enterprises is a small manufacturing business currently run by two owners, Mr. A and Ms. B. They are planning to expand production and are considering changing the legal form of the business.
Question Parts
(a)
Compare a partnership and a private limited company in terms of (i) liability of owners, (ii) decision‑making structure, and (iii) ability to raise finance.
(b)
Given the expansion plans, evaluate which form – partnership or private limited company – would be more suitable for ABC Enterprises and justify your choice with reference to the three aspects listed in part (a).
(c)
Explain how changing the legal status from a partnership to a private limited company would affect the tax obligations of the business and its owners.
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Question 8 View Details
XYZ Ltd is a start‑up technology company that requires ₦20 000 000 to purchase equipment and fund working capital for the first two years. The management has identified five possible sources of finance:
Question Parts
(a)
For each source, calculate the total cash outflow over the first two years and state the effective cost of that source (interest or lease payments, or implied cost of equity). The sources are: (i) Retained earnings of ₦5 000 000 (no cash outflow). (ii) A bank term loan of ₦8 000 000 at 12 % per annum repayable over 5 years (use straight‑line amortisation for simplicity). (iii) Operating lease of the equipment costing ₦7 000 000 with an annual lease payment equal to 10 % of the asset value. (iv) Equity finance from a venture‑capital firm in exchange for 30 % of the company’s equity (assume the VC expects a 20 % return on its investment). (v) A government grant of ₦2 000 000 which does not require repayment but is conditional on meeting performance targets.
(b)
Using the calculations in part (a), recommend an optimal mix of the five sources to meet the ₦20 000 000 requirement. Justify your recommendation on the basis of cost, risk and any non‑financial considerations.
(c)
Discuss how the mix you have recommended would affect XYZ Ltd’s key financial ratios (debt‑to‑equity ratio and interest‑coverage ratio) for the first three years of operation.
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Question 9 View Details
A commercial bank in Nigeria offers the following products: • A Fixed Deposit (FD) scheme that pays a nominal interest rate of 8% per annum, compounded quarterly. • A personal loan of ₦5,000,000 for a term of 5 years, advertised at a nominal rate of 12% per annum payable monthly. A customer is considering whether to invest the ₦5,000,000 in the FD for five years or to borrow the same amount for five years and use the loan proceeds for other investments. Answer the following:
Question Parts
(a)
Calculate the effective annual interest rate (EAR) for the Fixed Deposit scheme.
(b)
Determine the monthly repayment amount for the loan using the amortisation method.
(c)
If the customer instead places the ₦5,000,000 in the Fixed Deposit for the full five‑year term, calculate the amount that will be received at maturity.
(d)
Based on the results from (b) and (c), advise which option – borrowing or depositing – is financially more advantageous for the customer. State the net cash‑flow difference and give a brief justification.
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Question 10 View Details
An insurance company offers a standard motor insurance policy. The following data are available from the previous underwriting year: • Total motor policies written: 2,000 • Number of claims reported: 150 • Average claim amount: ₦250,000 The company adds a loading of 25 % to cover administration costs and profit. A driver who has not made any claim in the past three years is eligible for a 10 % discount on the gross premium. Answer the following:
Question Parts
(a)
Calculate the pure premium (also called the net premium) for the motor policy using the given data.
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