POST UTME LEAD CITY UNIVERSITY 2023 Commerce | Objective

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Question 1
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 subject to 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 2
A company's articles of association specify that the company's shares can be transferred only with the consent of the board of directors. What is the effect of this provision?
A. The company's shares are considered to be freely transferable.
Correct B. The company's shares are subject to a restriction on transfer.
C. The company's shares are not affected by the provision.
D. The company's shares are automatically transferred to the board of directors.

Correct Answer: B

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Question 3
A consumer purchases a product that is defective and causes damage to their property. The consumer sues the manufacturer for damages. What is the legal basis for the consumer's claim?
A. The Consumer Protection Act.
B. The Sale of Goods Act.
C. The Defective Products Act.
Correct D. The Product Liability Act.

Correct Answer: D

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Question 4
A company's warehouse is damaged in a fire, resulting in a loss of inventory. The company's insurance policy covers losses due to fire. What is the effect of this policy on the company's financial position?
A. The company's financial position is unaffected.
Correct B. The company's financial position is improved.
C. The company's financial position is worsened.
D. The company's financial position is neutral.

Correct Answer: B

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Question 5
A company's marketing strategy involves creating a social media campaign to promote its products. What is the primary goal of this campaign?
Correct A. To increase brand awareness.
B. To generate leads.
C. To drive sales.
D. To build customer loyalty.

Correct Answer: A

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Question 6
A company's marketing strategy involves creating a brand image that appeals to a specific demographic. Which of the following is a characteristic of this approach?
A. Segmentation
B. Targeting
Correct C. Positioning
D. Differentiation

Correct Answer: C

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Question 7
A sole trader's business is affected by the following factors. Which one is NOT a characteristic of a sole trader's business?
Correct A. Limited liability
B. Unlimited liability
C. Flexibility in decision-making
D. Separation of ownership and management

Correct Answer: A

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Question 8
A company's risk management strategy involves diversifying its investments. Which of the following is a benefit of this approach?
Correct A. Reduced risk
B. Increased returns
C. Improved liquidity
D. Enhanced reputation

Correct Answer: A

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Question 9
A country's foreign trade policy involves imposing tariffs on imported goods. Which of the following is a consequence of this policy?
A. Increased imports
B. Decreased exports
C. Reduced competition
Correct D. Increased government revenue

Correct Answer: D

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Question 10
A company's introduction to commerce involves understanding the following concepts. Which one is NOT a characteristic of a company's introduction to commerce?
A. Market research
B. Product development
C. Financial planning
Correct D. Human resource management

Correct Answer: D

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Question 11
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 12
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 amount of proceeds received?
A. ₦200,000
Correct B. ₦400,000
C. ₦600,000
D. ₦800,000

Correct Answer: B

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Question 13
A consumer purchases a product with a price of ₦5,000 and a 10% discount. If the consumer pays ₦4,500, what is the amount of discount received?
Correct A. ₦500
B. ₦1,000
C. ₦1,500
D. ₦2,000

Correct Answer: A

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Question 14
A company has a profit of ₦500,000 and a net worth of ₦2,000,000. What is the return on equity (ROE) of the company?
A. 25%
Correct B. 50%
C. 75%
D. 100%

Correct Answer: B

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Question 15
A sole trader has a business income of ₦1,000,000 and a personal income of ₦500,000. What is the total income of the sole trader?
A. ₦1,000,000
B. ₦1,500,000
Correct C. ₦2,000,000
D. ₦2,500,000

Correct Answer: C

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Question 16
A firm specializes in producing only one product. This specialization is an example of which of the following production concepts?
A. Economies of scale
Correct B. Division of labor
C. Product differentiation
D. Vertical integration

Correct Answer: B

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Question 17
A company uses a combination of both fixed and variable costs to produce its products. Which of the following is an example of a fixed cost?
Correct A. Rent
B. Wages
C. Raw materials
D. Utilities

Correct Answer: A

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Question 18
A firm's revenue is calculated as the total amount of money received from the sale of its products or services. Which of the following is an example of a revenue stream?
Correct A. Sales of a new product
B. Rent received from a property
C. Interest earned from a savings account
D. Dividends received from an investment

Correct Answer: A

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Question 19
A company's insurance policy covers losses due to natural disasters. Which of the following is an example of a type of insurance policy that covers such losses?
A. Liability insurance
Correct B. Property insurance
C. Casualty insurance
D. Workers' compensation insurance

Correct Answer: B

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Question 20
A firm's financial statements provide information about its financial position and performance. Which of the following is an example of a financial statement that provides information about a firm's financial position?
Correct A. Balance sheet
B. Income statement
C. Cash flow statement
D. Statement of changes in equity

Correct Answer: A

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Question 21
Determine the probability of a firm experiencing a loss in its investment portfolio, given that the probability of a single stock experiencing a loss is 0.05, and the portfolio consists of 20 stocks.
A. 0.05
B. 0.10
C. 0.20
Correct D. 0.95

Correct Answer: D

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Question 22
A company is considering two different marketing strategies for its new product. The first strategy involves a large advertising campaign, while the second strategy involves a smaller advertising campaign and a higher price point. Which strategy is more likely to result in higher sales?
A. The first strategy
Correct B. The second strategy
C. Both strategies are equally likely to result in higher sales
D. Neither strategy is likely to result in higher sales

Correct Answer: B

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Question 23
A firm is considering investing in a new project. The project has a 10% chance of resulting in a loss of ₦100,000, a 20% chance of resulting in a gain of ₦50,000, and a 70% chance of resulting in a gain of ₦200,000. What is the expected value of the project?
A. ₦10,000
B. ₦50,000
C. ₦100,000
Correct D. ₦150,000

Correct Answer: D

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Question 24
A company is considering two different production strategies for its new product. The first strategy involves producing 100 units per day, while the second strategy involves producing 50 units per day. Which strategy is more likely to result in higher profits?
Correct A. The first strategy
B. The second strategy
C. Both strategies are equally likely to result in higher profits
D. Neither strategy is likely to result in higher profits

Correct Answer: A

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Question 25
A firm is considering investing in a new project. The project has a 5% chance of resulting in a loss of ₦50,000, a 10% chance of resulting in a gain of ₦20,000, and a 85% chance of resulting in a gain of ₦100,000. What is the expected value of the project?
A. ₦4,250
B. ₦5,000
C. ₦10,000
Correct D. ₦45,000

Correct Answer: D

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