Practice neco commerce 2023 Past Questions | Edcrib

Question 1 View Details

Three partners A, B and C run a business. Their capital contributions are $\text{₦}40,000$, $\text{₦}60,000$ and $\text{₦}100,000$ respectively. Interest on capital is charged at $10\%$ per annum. In addition, A receives a salary of $\text{₦}12,000$ and B receives a salary of $\text{₦}8,000$. After one year the net profit before distribution is $\text{₦}150,000$. Determine the total amount each partner receives (including interest, salary and profit share).

A. A: ₦30,000; B: ₦45,000; C: ₦75,000

B. A: ₦52,667; B: ₦50,667; C: ₦46,667

Correct C. A: ₦38,000; B: ₦47,000; C: ₦65,000

D. A: ₦42,000; B: ₦53,000; C: ₦75,000

Correct Answer: C

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Question 2 View Details

A tailor marks a suit at $\text{₦}120,000$. He first gives a discount of $15\%$ and then a further discount of $5\%$ on the reduced price. After the discounts, he pays a commission of $8\%$ of the final selling price to a sales agent. If the cost price of the suit is $\text{₦}70,000$, calculate the tailor's net profit.

A. ₦34,652

Correct B. ₦19,148

C. ₦23,840

D. ₦26,900

Correct Answer: B

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Question 3 View Details

A motor insurance policy has a base premium of $\text{₦}45,000$. Because the vehicle is in a high‑risk area, the insurer adds a loading of $12\%$ and then a tax of $5\%$ on the loaded premium. The policyholder pays the total premium. In a claim, the loss amount is $\text{₦}80,000$. The insurer will deduct a deductible equal to $10\%$ of the loss, but the deductible cannot exceed $\text{₦}20,000$. Determine (a) the amount the insurer will pay on the claim and (b) the net cost to the policyholder after receiving the claim payment.

Correct A. (a) ₦72,000; (b) net gain of ₦19,080

B. (a) ₦60,000; (b) net gain of ₦7,080

C. (a) ₦66,000; (b) net gain of ₦13,080

D. (a) ₦72,000; (b) net gain of ₦19,350

Correct Answer: A

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Question 4 View Details

During a financial year a retailer purchased goods worth $\text{₦}500,000$. The opening stock was $\text{₦}120,000$ and the closing stock was $\text{₦}150,000$. After the year‑end a shrinkage amount equal to $2\%$ of the purchases is discovered. Net sales for the year were $\text{₦}950,000$. Calculate the gross profit margin (as a percentage) after accounting for the shrinkage.

A. 48.5\%

B. 52.0\%

C. 45.0\%

Correct D. 49.5\%

Correct Answer: D

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Question 5 View Details

An importer purchases goods priced at $\text{US}\$200,000$. The prevailing exchange rate is $1\ \text{US}\$ = \text{₦}460$. Import tariff is $15\%$ of the CIF value and insurance costs $0.5\%$ of the CIF value. Determine the total cost in Naira that the importer must pay.

A. ₦101,660,000

B. ₦106,329,000

C. ₦105,800,000

Correct D. ₦106,260,000

Correct Answer: D

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Question 6 View Details

An wholesaler purchases a batch of goods at a cost price of $\text{₦}8,000$. He marks them up by 25\% to obtain the marked price. He then offers a trade discount of 5\% on the marked price. After the trade discount, a cash discount of $d$\% (on the discounted price) may be allowed for payment within 10 days. A sales agent receives a commission of 2\% of the selling price (after the cash discount). The wholesaler wants to earn at least a 12\% profit on his original cost price. Determine the greatest cash‑discount percentage $d$ that can be offered while still meeting the profit requirement. Give your answer to one decimal place.

A. 5.0

B. 3.2

Correct C. 3.8

D. 4.2

Correct Answer: C

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Question 7 View Details

An investor buys 200 shares of Company\,X at $\text{₦}150$ each and pays a brokerage fee of 1.5\% of the transaction value. He later purchases another 150 shares at $\text{₦}165$ each, again paying a 1.5\% brokerage fee. He then sells 250 shares at $\text{₦}180$ each, paying a 1.5\% brokerage fee on the sale and a capital‑gains tax of 10\% on the profit (before tax). Using the weighted‑average cost method, calculate the net profit realised from these transactions. Give your answer in Naira to two decimal places.

A. 4775.63

Correct B. 4168.13

C. 4631.25

D. 4455.00

Correct Answer: B

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Question 8 View Details

A warehouse faces an annual demand of 12,000 units for a product. The ordering cost is $\text{₦}2,500$ per order and the holding cost is 20\% of the unit cost per year. Each unit costs $\text{₦}150$. Lead time is 10 days and daily demand is uniform. The manager requires a 95\% service level; demand during lead time is normally distributed with a standard deviation equal to 15\% of the mean lead‑time demand. Determine (i) the economic order quantity (EOQ) and (ii) the reorder point (ROP) that includes safety stock. Round the EOQ to the nearest whole unit and the ROP up to the nearest whole unit.

Correct A. EOQ = 1414 units; ROP = 410 units

B. EOQ = 1300 units; ROP = 440 units

C. EOQ = 1500 units; ROP = 380 units

D. EOQ = 1414 units; ROP = 380 units

Correct Answer: A

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Question 9 View Details

A company needs $\text{₦}5,000,000$ for expansion. It can either (a) obtain a bank loan at 8\% per annum payable annually, with a loan‑arrangement fee of 1\% of the loan amount, or (b) issue 5‑year debentures at 10\% per annum payable annually, with an underwriting cost of 2\% of the issue amount. The corporate tax rate is 30\%. Assuming the company can meet the interest payments, compute the after‑tax cost of each financing option as a percentage of the net amount actually received. Express each cost to two decimal places and state which option is cheaper.

Correct A. Bank loan: 5.66%; Debenture: 7.14%; Cheaper option: Bank loan

B. Bank loan: 5.66%; Debenture: 8.02%; Cheaper option: Bank loan

C. Bank loan: 6.12%; Debenture: 7.14%; Cheaper option: Bank loan

D. Bank loan: 5.66%; Debenture: 7.14%; Cheaper option: Debenture

Correct Answer: A

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Question 10 View Details

A small business obtains a loan of $\text{₦}2,000,000$ from a bank. The nominal annual interest rate is 12\% compounded monthly. The bank also charges a processing fee of 1.5\% of the loan amount, deducted from the loan proceeds. The loan is to be repaid in equal monthly instalments over 3 years. Determine (i) the monthly instalment amount (rounded to the nearest Naira) and (ii) the effective annual interest rate (EAR) that the borrower actually pays, taking the processing fee into account. Express the EAR as a percentage rounded to two decimal places.

Correct A. Monthly instalment = 66,364 Naira; EAR = 13.75%

B. Monthly instalment = 64,200 Naira; EAR = 12.90%

C. Monthly instalment = 68,500 Naira; EAR = 14.20%

D. Monthly instalment = 66,364 Naira; EAR = 14.00%

Correct Answer: A

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Question 11 View Details

A trader buys 150 shares of Company A at $\text{₦}2,400$ each and 200 shares of Company B at $\text{₦}1,800$ each. He pays a brokerage commission of $0.5\%$ on the total purchase cost and a transaction tax of $0.1\%$ on the same amount. Later he sells all the shares at the same price per share, but pays a higher commission of $0.75\%$ on the sale proceeds. What is the minimum selling price per share (in ₦, rounded up to the nearest naira) that will give him at least a $20\%$ profit on his total outlay?

A. 2600

B. 2450

C. 2400

Correct D. 2503

Correct Answer: D

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Question 12 View Details

A retailer purchases a batch of goods for $\text{₦}45,000$. He adds a profit margin of $25\%$ on cost and then applies a Value Added Tax of $7.5\%$ on the selling price before VAT. What is the final selling price inclusive of VAT (rounded to the nearest naira)?

A. 59625.00

Correct B. 60468.75

C. 60469.00

D. 58050.00

Correct Answer: B

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Question 13 View Details

A household trades 8 kg of rice for 5 kg of beans with a neighbour. If the market price of rice is $\text{₦}200$ per kg and the market price of beans is $\text{₦}350$ per kg, does the household gain or lose in monetary terms? State the amount of gain or loss.

A. 300

B. 0

C. -150

Correct D. 150

Correct Answer: D

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Question 14 View Details

A consumer buys a washing machine for $\text{₦}120,000$ with a 2‑year warranty that covers only parts. After 18 months the machine fails due to a defect. The consumer repairs it under warranty, paying $\text{₦}8,000$ for parts (labour is not covered). He then decides to return the machine and claim a refund. Under consumer protection law, the refund amount equals the purchase price minus depreciation (based on a useful life of 5 years, proportionate to time used) and minus any repair costs already incurred. What refund is the consumer entitled to receive?

A. 92000

B. 84000

Correct C. 76000

D. 64000

Correct Answer: C

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Question 15 View Details

A retailer sells a product with a marked price of $\text{₦}5,000$ per unit. He offers a trade discount of $10\%$ on the marked price and a cash discount of $2\%$ on the discounted price if payment is made within 10 days. All customers take the cash discount. The retailer's variable cost per unit is $\text{₦}2,800$ and his fixed monthly costs are $\text{₦}150,000$. What is the minimum number of units he must sell in a month to achieve a net profit of at least $\text{₦}200,000$?

A. 215

Correct B. 218

C. 225

D. 220

Correct Answer: B

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Question 16 View Details

A invests $\text{₦}200{,}000$ for 12 months, B invests $\text{₦}150{,}000$ for 9 months, and C invests $\text{₦}100{,}000$ for 6 months. The total profit to be shared is $\text{₦}320{,}000$. C receives a fixed salary of $\text{₦}30{,}000$ before profit sharing. Determine A's final share of the profit in naira.

A. 185600

Correct B. 160000

C. 204800

D. 176552

Correct Answer: B

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Question 17 View Details

An importer buys cocoa beans from Ghana at a FOB price of $\$2.20$ per kg and pays a shipping cost of $\$0.30$ per kg. Import duty is 5% ad valorem on the CIF value, and a surcharge of 2% is charged on the duty amount. The bank commissions 1% on the total of CIF, duty and surcharge. If the exchange rate is $\text{₦}460$ per $\$1$, calculate the total landed cost in naira per kilogram.

A. 1242.81

Correct B. 1220.74

C. 1219.59

D. 1194.20

Correct Answer: B

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Question 18 View Details

A wholesaler purchases 800 units of a product for a total cost of $\text{₦}480{,}000$. He adds a markup of 25% on the cost price to set the wholesale price. For bulk orders of 200 units or more, he offers a discount of 10% on the wholesale price. Fixed monthly overhead is $\text{₦}60{,}000$. What is the minimum number of units the wholesaler must sell in a month to achieve a profit of at least $\text{₦}120{,}000$?

A. 800

B. 750

Correct C. 770

D. 720

Correct Answer: C

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Question 19 View Details

A retailer buys 500 shirts for a total cost of $\text{₦}250{,}000$. He adds a markup of 20% on the cost price to set the selling price per shirt. If he sells all shirts, what is his total profit?

A. 60000

Correct B. 50000

C. 25000

D. 5000

Correct Answer: B

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Question 20 View Details

A marketing manager drafts a promotional email for a new product and sends it to the sales team. The message contains several technical terms and ambiguous phrasing, so many salespeople misunderstand the target market. They reply asking for clarification, but the manager assumes they understood and does not respond. Identify the primary communication barrier that caused the breakdown, state at which stage of the communication process the failure occurred, and suggest two ways to avoid such a breakdown in future communications.

A. The breakdown was caused by psychological noise (personal biases) during the reception stage, compounded by a lack of feedback. To prevent it, conduct audience analysis and schedule follow‑up meetings.

Correct B. The breakdown was caused by semantic noise (ambiguous/technical language) during the decoding stage, compounded by a lack of feedback. To prevent it, use clear plain language and establish a feedback/confirmation step.

C. The breakdown was caused by physical noise (background sounds) during the encoding stage, compounded by a lack of feedback. To prevent it, use a quieter environment and repeat the message.

D. The breakdown was caused by channel distortion (email formatting issues) during the transmission stage, compounded by a lack of feedback. To prevent it, use standardized templates and verify email delivery.

Correct Answer: B

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Question 21 View Details

An individual deposits $P = 500{,}000$ naira in a savings account that pays a nominal annual interest rate $i$% compounded quarterly. The bank deducts a maintenance fee of $F = 2{,}000$ naira at the end of each quarter. After 2 years (8 quarters) the balance is $B = 560{,}000$ naira. Determine the nominal annual interest rate $i$ (to two decimal places).

A. 7.50%

B. 6.95%

Correct C. 7.23%

D. 8.10%

Correct Answer: C

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Question 22 View Details

A loan of $L = 1{,}200{,}000$ naira is to be repaid over 3 years with equal monthly installments. For the first 18 months the bank charges a nominal annual rate of 12% convertible monthly, then revises the rate to 9% convertible monthly for the remaining months. The borrower also makes an extra lump‑sum payment of $100{,}000$ naira at the end of month 12. Find the fixed monthly installment amount (the same for all 36 months) that will exactly amortise the loan under these conditions.

Correct A. 36520

B. 35200

C. 34000

D. 37850

Correct Answer: A

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Question 23 View Details

State the three main functions of money in an economy and give one example for each function.

A. Unit of account (e.g., salary), Medium of exchange (e.g., buying gasoline), Means of taxation (e.g., property tax)

B. Medium of exchange (e.g., paying rent), Store of wealth (e.g., gold coins), Unit of measurement (e.g., length of a road)

Correct C. Medium of exchange (e.g., buying rice), Unit of account (e.g., price of a TV), Store of value (e.g., bank savings)

D. Store of value (e.g., real estate), Medium of exchange (e.g., selling a car), Unit of time (e.g., hourly wage)

Correct Answer: C

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Question 24 View Details

A company issues a proforma invoice for $2{,}500{,}000$ naira. The buyer receives a trade discount of 12% on the list price, followed by a cash discount of 3% on the balance after the trade discount if payment is made within 10 days. After all discounts, a value‑added tax (VAT) of 7.5% is added. The buyer pays within the discount period.\n\n(a) Calculate the amount payable by the buyer.\n(b) Write an appropriate salutation and closing for a formal business letter addressed to "Mr. Adewale Okoro, Purchasing Manager, XYZ Ltd.".

A. 2,294,050; Salutation: \"Dear Mr. Adewale Okoro,\" Closing: \"Yours faithfully,\n[Your Name]\n[Your Position]\n[Company Name]\"

B. 2,310,000; Salutation: \"Dear Mr. Okoro,\" Closing: \"Yours faithfully,\n[Your Name]\n[Your Position]\n[Company Name]\"

Correct C. 2,294,050; Salutation: "Dear Mr. Okoro," Closing: "Yours faithfully,\n[Your Name]\n[Your Position]\n[Company Name]"

D. 2,294,050; Salutation: \"Dear Mr. Okoro,\" Closing: \"Sincerely,\n[Your Name]\n[Your Position]\n[Company Name]\"

Correct Answer: C

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Question 25 View Details

An insurance company offers a motor‑insurance policy with a base premium of $45{,}000$ naira. Because the driver is classified as high‑risk, a loading of 18% is added. A policy tax of 5% is then applied to the loaded premium. For early renewal the insurer gives a 10% discount on the tax amount. Compute the final premium payable by the policyholder.

A. 50180

B. 55125

Correct C. 55490

D. 55755

Correct Answer: C

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