WAEC Commerce 2005 past questions
Ten questions from the 2005 WAEC Commerce paper, with answers and explanations. We hold 49 questions from this paper, and the Skolra app has all of them.
WAEC Commerce 2005 questions and answers
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1.Which of the following organizations aims at providing relief for countries facing adverse balance of payment?
- AInternational Monetary FundCorrect
- BInternational Development Association
- CInternational Finance Corporation
- DWorld Bank
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Answer: A
The International Monetary Fund (IMF) is the correct answer. The IMF was set up specifically to promote international monetary cooperation and exchange rate stability, and one of its core functions is to provide short-to-medium term financial assistance to member countries that are facing balance of payment difficulties, so they do not have to resort to harsh trade or exchange restrictions.
- A
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2.The people involved in the formation of new companies are called?
- APromotersCorrect
- BUnderwriters
- CShareholders
- DDirectors
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Answer: A
Promoters are the people involved in the formation of a new company. They are the ones who conceive the idea of starting the business, carry out feasibility studies, bring together the people and capital needed, arrange for the drafting of the Memorandum and Articles of Association, and take the steps needed to get the company registered with the Corporate Affairs Commission.
So the correct term for those who actually bring a new company into being is promoters.
- A
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3.Farming is an activity that falls under?
- AManufacturing industry
- BService industry
- CConstruction industry
- DExtractive industryCorrect
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Answer: D
Farming is an extractive industry. In Commerce, industries are grouped by what they do with natural resources:
Extractive industries take raw materials directly from nature or the land without changing their form first — farming, fishing, mining, and lumbering all belong here. The farmer grows and harvests crops or rears animals straight from the land; nothing is being assembled or processed at that stage.
So farming is correctly classified as an extractive (primary) industry.
- A
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4.Which of the following coordinates other factors of production to achieve set objectives?
- AEntrepreneurCorrect
- BCapital
- CLabour
- DLand
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Answer: A
Entrepreneur is correct. Among the four factors of production — land, labour, capital and the entrepreneur — the entrepreneur is the one who organises and combines the other three (land, labour, and capital) into a working business, takes on the risk of the venture, and directs them towards achieving the enterprise's set objectives. This organising/coordinating role is unique to the entrepreneur.
- A
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5.Who among the following cannot be regarded as an itinerant trader?
- AMarket trader who moves from village to village
- BHawker
- CPedlar
- DShopkeeperCorrect
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Answer: D
An itinerant trader is a small-scale trader who has no fixed shop or permanent business premises. Instead, the trader moves from place to place (house to house, village to village, or market to market) looking for customers. Hawkers, pedlars, and wandering market traders who carry their goods from one location to another all fit this description because their business location is not fixed.
So the trader who stays put in one shop is the one that does not belong in the itinerant-trader group, while hawkers, pedlars, and traders who roam from village to village all qualify as itinerant traders.
- A
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6.Production is defined as
- AThe manufacturing of goods only
- BThe creation of utility to satisfy human wantsCorrect
- CThe buying and selling of goods and services
- DThe storage of goods for future use
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Answer: B
Production is defined in Commerce as the creation of utility — that is, the creation or addition of want-satisfying power to goods and services in order to satisfy human needs. Utility can be created in different forms: form utility (changing raw materials into a finished product), place utility (moving goods to where they are needed), time utility (making goods available when needed), and possession utility (transferring ownership to the person who needs it). Production is therefore much broader than just manufacturing.
- A
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7.The nominal capital of a public limited company is made up of 400,000 ordinary shares of 50k each. The Board of Directors decided to issue 50% of it for subscription by the public. The authorized share capital is
- A₦200,000Correct
- B₦20,000
- C₦400,000
- D₦100,000
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Answer: A
Authorized (nominal) share capital is the total value of shares a company is legally permitted to issue, as fixed in its memorandum of association. It is found by multiplying the total number of authorized shares by the nominal (par) value of each share — it has nothing to do with how many of those shares have actually been offered or sold.
So the correct authorized share capital remains ₦200,000, unaffected by how much of it the directors choose to issue at any given time.
- A
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8.Which of the following makes it an offense for a trader to make untrue statement about his goods?
- AHire Purchase Act
- BTrade Descriptions ActCorrect
- CWeights and Measures Act
- DSale of Goods Act
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Answer: B
The Trade Descriptions Act is the law that makes it a criminal offense for a trader to apply a false or untrue description to goods, or to make an untrue statement about the quality, quantity, composition, fitness, or origin of goods he is selling. It exists specifically to stop sellers from misleading buyers with false claims about what they are selling.
So the Act that directly makes untrue statements about goods a punishable offense is the Trade Descriptions Act.
- A
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9.Which of the following is not a principle of insurance
- AInsurable interest
- BSpeculationCorrect
- CIndemnity
- DUtmost good faith
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Answer: B
Speculation is not a principle of insurance. In fact, insurance is built to be the opposite of speculation: a speculator deliberately takes on a new risk hoping to profit from it (as in betting or gambling on price movements), while insurance only protects a person against a risk that already exists and that they would rather not bear at all. This is why insurance contracts require an insurable interest — you can only insure something whose loss would genuinely harm you financially, which rules out using insurance as a tool for speculative gain.
- A
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10.Time policy in insurance is associated with
- ALife assurance
- BMarine insuranceCorrect
- CFidelity guarantee insurance
- DFire insurance
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Answer: B
Insurance policies are grouped in different ways depending on the class of insurance. In marine insurance, policies are classified by what they cover: a specific trip, or a stretch of time. A time policy covers the ship, cargo or goods for a fixed period — usually twelve months — no matter how many voyages are made within that period. This is contrasted with a voyage policy, which covers one particular journey from a named port to another, however long that journey takes, and a mixed policy, which combines both.
- A
The questions come from past JAMB, WAEC and NECO papers. We use software to help write the answer options and explanations, and every answer is checked twice before it goes on the site. How we check
Spotted a wrong answer? Tell us from the app or on the contact page and we check it.
Practise all 49 questions we hold from the 2005 paper, on a timed CBT screen
Every question has the answer and an explanation, in the Skolra app.