NECO GCE 2023 COMMERCE (ESSAY & OBJ) ANSWERS(4th December)

(1b)
(PICK ANY SIX)

(i) Home trade occurs within the borders of a country, while foreign trade involves transactions between different countries.
(ii) Home trade is regulated by domestic laws and regulations, whereas foreign trade is subject to international trade agreements and policies.
(iii) In home trade, the currency used is typically the domestic currency, while in foreign trade, different currencies are involved.
(iv) Home trade is usually conducted in the local language, while foreign trade often requires communication in multiple languages.
(v) Home trade is influenced by domestic economic factors, while foreign trade is influenced by global economic conditions.
(vi) Home trade is generally easier to manage due to familiarity with local laws and customs, whereas foreign trade requires knowledge of international trade practices.
(vii) Home trade often involves shorter transportation distances, while foreign trade involves longer distances and international logistics.
(viii) Home trade is more likely to involve personal relationships and local networks, while foreign trade relies on international business connections.

(1c)
(PICK ANY FOUR)

(i) China
(ii) United States
(iii) Germany
(iv) Japan
(v) United Kingdom
(vi) France
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••

(2)
(PICK ANY FIVE)

(i) Buying and Selling: Commerce facilitates the exchange of goods and services between buyers and sellers. It provides a platform for transactions to take place.

(ii) Production and Distribution: Commerce involves the production and distribution of goods and services. It ensures that products are manufactured, packaged, and delivered to the intended consumers.

(iii) Market Information: Commerce provides valuable market information to businesses. It helps them understand consumer preferences, market trends, and demand patterns, enabling them to make informed decisions.

(iv) Financing: Commerce involves financial activities such as providing credit, loans, and insurance services. It helps businesses secure the necessary capital for their operations and manage financial risks.

(v) Advertising and Promotion: Commerce includes advertising and promotional activities to create awareness and attract customers. It helps businesses reach their target audience and effectively market their products or services.

(vi) Transportation and Logistics: Commerce facilitates the movement of goods from producers to consumers. It involves transportation, warehousing, and logistics services to ensure the smooth flow of products across different locations.

(vii) Risk Management: Commerce helps manage risks associated with business operations. It involves activities such as insurance, quality control, and supply chain management to minimize potential risks and uncertainties.
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••
(3a)
(i) Articles of Association: The Articles of Association is a legal document that outlines the internal rules and regulations governing the operations and management of a company. It covers aspects such as the rights and responsibilities of shareholders, the appointment and powers of directors, and the conduct of meetings.

(ii) Partnership business: Partnership business is a type of business structure where two or more individuals come together to carry out a business venture. Partners share the profits, losses, and responsibilities of the business. It is typically governed by a partnership agreement that outlines the terms and conditions of the partnership.

(iii) Limited liability company: A limited liability company (LLC) is a business structure that provides limited liability protection to its owners, known as members. This means that the personal assets of the members are generally protected from the company’s liabilities. An LLC combines the benefits of a corporation, such as limited liability, with the flexibility of a partnership.

(iv) Certificate of trading: A certificate of trading is a document issued by the relevant authority or regulatory body to confirm that a business is legally authorized to engage in trading activities. It serves as proof that the business has met the necessary requirements and has the legal right to conduct its operations.

(3b)
(i) Legal Entity: Both public and private limited companies are separate legal entities distinct from their owners. They have their own legal rights and obligations.

(ii) Limited Liability: In both types of companies, the liability of the shareholders or members is limited to their investment in the company. Their personal assets are generally protected from the company’s debts and liabilities.

(iii) Both public and private limited companies have shareholders or members who invest in the company and hold ownership shares. These shareholders or members have certain rights, such as voting rights and the right to receive dividends.

(iv) Both types of companies are subject to corporate governance principles and regulations. They are required to have a board of directors responsible for the management and decision-making of the company.

•••••••••••••••••••••••••••••••••••••••••••••••••••••••••

(4a)
(PICK ANY FIVE)

(i) Bad Debts: There is a risk of customers defaulting on their payments, leading to bad debts and financial losses for the seller.

(ii) Cash Flow Issues: Offering credit sales can create cash flow problems for the seller, as they have to wait for the customers to make payments.

(iii) Increased Administrative Work: Managing credit sales requires additional administrative work, including credit checks, invoicing, and collection efforts.

(iv) Higher Costs: The seller may incur additional costs, such as interest expenses on borrowed funds or credit insurance, to mitigate the risks associated with credit sales.

(v) Opportunity Cost: The funds tied up in credit sales could have been invested elsewhere to generate returns or used for other business purposes.

(vi) Customer Disputes: Credit sales can lead to disputes over payment terms, delivery, or product quality, which can strain customer relationships.

(vii) Limited Sales to Cash Customers: Offering credit sales may discourage cash customers who prefer immediate transactions, potentially limiting the customer base.

(4b)
(PICK ANY FIVE)

(i) Ownership: In hire purchase, the buyer takes ownership of the goods after completing all the installment payments while In deferred payment, the seller retains ownership until the full payment is made.

(ii) Hire purchase involves paying regular installments over a specific period, whereas deferred payment involves paying the full amount at a later date.

(iii) Hire purchase typically includes interest charges on the installment payments, while deferred payment may or may not involve interest charges.

(iv) Hire purchase is a legally binding contract between the buyer and the seller, outlining the rights and responsibilities of both parties while Deferred payment may not require a formal contract.

(v) In hire purchase, if the buyer defaults on payments, the seller has the right to repossess the goods whereas In deferred payment, the goods are not typically repossessed if the payment is not made.

(vi) Hire purchase allows for more flexibility in terms of payment options and installment amounts while Deferred payment often has a fixed payment date and amount.

(vii) Hire purchase is usually arranged through a financial institution or the seller, while deferred payment is often provided directly by the seller without involving external financing.
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••

(5a)
Non-indemnity insurance refers to a type of insurance policy where the insured party receives a predetermined fixed sum in the event of a covered loss or occurrence.

(5b)
(PICK ANY FOUR)
(i) Financial Protection
(ii)
Risk Management
(iii) Business Continuity
(v) Peace of Mind
(vi) Legal Requirement

EXPLANATIONS;

(i) Financial Protection: Insurance provides financial protection against unexpected events, such as accidents, illnesses, or property damage. It helps to mitigate the financial burden and provides peace of mind.

(ii)
Risk Management: Insurance allows individuals and businesses to transfer the risk of potential losses to an insurance company. This helps in managing and minimizing the impact of unforeseen events.

(iii) Business Continuity: For businesses, insurance can be vital in ensuring continuity in case of disruptions like natural disasters, lawsuits, or other unforeseen circumstances. It helps businesses recover and resume operations.

(iv) Health Care Coverage: Health insurance provides coverage for medical expenses, ensuring access to quality healthcare without the worry of high costs. It promotes preventive care and supports overall well-being.

(v) Peace of Mind: Having insurance coverage gives individuals and families peace of mind, knowing that they are protected against financial losses and have support in times of need.

(vi) Legal Requirement: In some cases, insurance is a legal requirement. For example, auto insurance is mandatory in many countries to protect against potential liabilities in accidents.
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••