Practice post utme pan-atlantic university commerce 2025 Past Questions

Question 1

A company's sole trader, Mr. A, has a warehouse with a capacity of 1000 units. He has 500 units of goods in stock. If he receives a new shipment of 300 units, what is the probability that the total stock will exceed 800 units?

Correct A. 0.6

B. 0.4

C. 0.2

D. 0.8

Correct Answer: A

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Question 2

A bank offers a 5-year fixed deposit account with an interest rate of 8% per annum compounded annually. If a customer deposits ₦100,000, what is the future value of the investment after 5 years?

Correct A. ₦164,087.42

B. ₦164,087.41

C. ₦164,087.40

D. ₦164,087.39

Correct Answer: A

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Question 3

A consumer protection agency receives a complaint from a customer who purchased a product with a 2-year warranty. The customer claims that the product failed after 1 year and 6 months. What is the agency's likely response?

A. The agency will reject the complaint.

Correct B. The agency will investigate the complaint.

C. The agency will accept the complaint.

D. The agency will refer the complaint to the manufacturer.

Correct Answer: B

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Question 4

A company's financial statements show a net income of ₦1,000,000 and a total equity of ₦2,000,000. What is the company's return on equity (ROE) for the year?

Correct A. 50%

B. 60%

C. 70%

D. 80%

Correct Answer: A

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Question 5

A sole trader, Mr. B, has a business that generates revenue of ₦500,000 per annum. His expenses include rent of ₦100,000, salaries of ₦150,000, and other expenses of ₦50,000. What is Mr. B's net profit for the year?

Correct A. ₦200,000

B. ₦250,000

C. ₦300,000

D. ₦350,000

Correct Answer: A

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Question 6

In the context of consumer protection, what is the primary purpose of the Consumer Protection Act of 2004?

Correct A. To regulate consumer rights and responsibilities

B. To promote fair competition among businesses

C. To protect the environment from consumer waste

D. To regulate consumer finance and credit

Correct Answer: A

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Question 7

A company has a policy of paying its employees a 10% bonus on their annual salary. If an employee earns ₦1,200,000 per year, how much will they receive as a bonus?

A. ₦120,000

Correct B. ₦125,000

C. ₦130,000

D. ₦135,000

Correct Answer: B

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Question 8

A firm has a capital structure consisting of 60% debt and 40% equity. If the firm's total capital is ₦10,000,000, how much of it is equity?

Correct A. ₦4,000,000

B. ₦4,500,000

C. ₦5,000,000

D. ₦5,500,000

Correct Answer: A

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Question 9

A company's profit margin is 25%. If the company's revenue is ₦1,500,000, what is its profit?

A. ₦375,000

B. ₦400,000

Correct C. ₦425,000

D. ₦450,000

Correct Answer: C

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Question 10

A firm has a cost structure consisting of fixed costs of ₦500,000 and variable costs of ₦0.50 per unit. If the firm produces 10,000 units, what is its total cost?

A. ₦6,500,000

B. ₦6,750,000

Correct C. ₦7,000,000

D. ₦7,250,000

Correct Answer: C

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Question 11

A sole trader's business is considered a separate legal entity from the owner's personal assets. However, this separation is not absolute. What is the name of the legal doctrine that allows a court to pierce the veil of incorporation and hold the owner personally liable for business debts?

Correct A. Piercing the Veil Doctrine

B. Separate Legal Entity Doctrine

C. Limited Liability Doctrine

D. Corporate Veil Doctrine

Correct Answer: A

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Question 12

A company has a production capacity of 100 units per day. However, due to a shortage of raw materials, production is reduced to 80 units per day. What is the opportunity cost of producing 80 units per day instead of 100 units per day?

A. ₦10,000

B. ₦20,000

Correct C. ₦30,000

D. ₦40,000

Correct Answer: C

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Question 13

A company has a production cost of ₦10,000 per unit and a selling price of ₦15,000 per unit. If the company produces 100 units per day, what is the profit per unit?

A. ₦5,000

Correct B. ₦10,000

C. ₦15,000

D. ₦20,000

Correct Answer: B

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Question 14

A company has a production capacity of 100 units per day. However, due to a shortage of raw materials, production is reduced to 80 units per day. What is the opportunity cost of producing 80 units per day instead of 100 units per day?

A. ₦10,000

B. ₦20,000

Correct C. ₦30,000

D. ₦40,000

Correct Answer: C

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Question 15

A company has a production cost of ₦10,000 per unit and a selling price of ₦15,000 per unit. If the company produces 100 units per day, what is the profit per unit?

A. ₦5,000

Correct B. ₦10,000

C. ₦15,000

D. ₦20,000

Correct Answer: B

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Question 16

A sole trader's business is considered a separate legal entity from its owner. True or False?

A. True

Correct B. False

C. Depends on the jurisdiction

D. It is not a separate legal entity

Correct Answer: B

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Question 17

A company's Memorandum of Association is a public document. True or False?

A. True

Correct B. False

C. It is a private document

D. It depends on the type of company

Correct Answer: B

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Question 18

A consumer protection law that prohibits unfair contract terms is the Unfair Contract Terms Act.

A. Consumer Rights Act

Correct B. Unfair Contract Terms Act

C. Sale of Goods Act

D. Supply of Goods and Services Act

Correct Answer: B

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Question 19

A bank's primary function is to act as a financial intermediary.

Correct A. True

B. False

C. It depends on the type of bank

D. It is a secondary function

Correct Answer: A

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Question 20

A life insurance policy is a type of non-life insurance policy.

A. True

Correct B. False

C. It depends on the type of policy

D. It is a type of life insurance policy

Correct Answer: B

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Question 21

A company is sued for violating the Consumer Protection Act. The company's defense is that the product was not defective at the time of sale. However, the plaintiff presents evidence that the product was defective and caused harm to the consumer. Which of the following is the most likely outcome?

A. The court will rule in favor of the company, as the product was not defective at the time of sale.

Correct B. The court will rule in favor of the plaintiff, as the product was defective and caused harm to the consumer.

C. The case will be dismissed, as the Consumer Protection Act does not apply to this situation.

D. The court will order the company to pay damages to the consumer, but the company will not be held liable for any further claims.

Correct Answer: B

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Question 22

A firm is considering setting up a new production line to manufacture a new product. The production line will require an initial investment of ₦500 million and will generate annual revenues of ₦1.2 billion. The firm's cost of capital is 10% per annum. What is the net present value (NPV) of the project?

Correct A. ₦1.5 billion

B. ₦1.2 billion

C. ₦500 million

D. ₦0

Correct Answer: A

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Question 23

A company is considering outsourcing its logistics operations to a third-party provider. The company's current logistics costs are ₦500 million per annum, and the outsourcing provider has quoted a price of ₦450 million per annum. However, the company will also incur additional costs of ₦50 million per annum for monitoring and controlling the outsourced operations. What is the net benefit of outsourcing the logistics operations?

A. ₦50 million

Correct B. ₦100 million

C. ₦150 million

D. ₦200 million

Correct Answer: B

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Question 24

A firm is considering setting up a new warehouse to store its inventory. The warehouse will require an initial investment of ₦200 million and will have an annual operating cost of ₦50 million. The firm's current inventory turnover ratio is 4 times per annum, and the warehouse will be able to store 20,000 units of inventory. What is the minimum price per unit that the firm must sell its product to break even?

A. ₦10,000

B. ₦12,500

Correct C. ₦15,000

D. ₦17,500

Correct Answer: C

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Question 25

A company is considering setting up a new business unit as a sole trader. The company's current annual revenues are ₦1 billion, and the new business unit is expected to generate an additional ₦500 million per annum. The company's cost of capital is 12% per annum. What is the expected return on investment (ROI) for the new business unit?

A. 15%

Correct B. 18%

C. 20%

D. 22%

Correct Answer: B

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