Commerce Exam Questions for SS3 First Term

You’re welcome to our school exams series where we provide you with termly examination questions in different subjects. In today’s post, we will cover Commerce exam questions for SS 3 first term with answers. This means that we’ll be providing you with answers to the questions at the end. Also, you will get a few success tips on how to pass commerce examinations with flying colors. Remember to use the comments sections if you have questions.

Introduction to Commerce

Commerce, as a secondary school subject, refers to the study of trade, business activities, and the processes involved in the exchange of goods and services. It introduces students to concepts such as buying and selling, banking, insurance, advertising, transportation, and entrepreneurship. The subject helps students understand how businesses operate and equips them with foundational knowledge for careers in business, finance, and economics.

Commerce Exam Questions for SS3 First Term

Commerce Exam Questions for SS3 First Term are divided into two sections:

• Section A
• Section B

The first section, namely, Section A is the objective test, and students are expected to attempt all questions in the section. Section B is the theory part, and students are expected to answer only five (5) questions out of seven (7).

SECTION A: OBJECTIVE TEST

1. Activities which facilitate commerce include
A. engaging youths in environmental sanitation
B. Funding political campaigns
C. providing recreational facilities in communities
D. improving road networks

2. A document through which an invitation is extended to subscribe to shares is
A. article of association
B. prospectus
C. memorandum of association
D. quotation

3. One example of a product of the construction industry is a
A. chair
B. bag of cement
C. price of cloth
D. television

4. A person authorized to sell the property of a company in a winding-up is
A. an auctioneer
B. an agent
C. a liquidator
D. a bailee

Use the diagram below to answer questions 5 – 7.

5. The space marked A represents ……
A. trading
B. industry
C. occupation
D. advertising

6. The space marked X represents
A. industry
B. foreign trade
C. home trade
D. production

7. What does the space marked M represent?
A. Quarrying
B. Manufacturing
C. Agriculture
D. Trade

8. The purchase and sale of goods over an electronic system is
A. E-payment
B. E-commerce
C. E-mail
D. E-transfer

9. One disadvantage of a sole proprietorship is
A. quick decision-making
B. unlimited liability
C. pride of ownership
D. unlimited source of capital

10. Which of these is a source of short-term finance to a business?
A. Hire purchase
B. Overdraft
C. Lease
D. Debenture

11. The portion of share capital which the company has asked the shareholder to pay is
A. called-up capital
B. authorized capital
C. paid-up capital
D. unpaid capital

12. Multilateral trade is carried out
A. Between two countries only.
B. Within many countries.
C. Among many countries.
D. between neighboring countries only.

13. An association of businesses engaged in both trade and industry is a
A. co-operative society
B. trade union
C. trust fund.
D. chamber of commerce

14. Which of the following statements is true of debenture?
A. its holder receives interest
B. it forms part of the company’s authorized capital
C. its holders are co-owners of the company
D. its holder controls the company

15. The path through which a product moves from the manufacturer to the consumer is a
A. channel of communication
B. line of production
C. means of transportation
D. channel of distribution

16. If the opening stock of Ali Ltd is ₦40,000, the cost of goods sold is ₦48,000 and the closing stock is ₦24,000, its rate of turnover will be?
A. 1.2 times
B. 1.5 times
C. 2.0 times
D. 7.5 times

17. A business which requires a certificate of trading in order to commence operation is a
A. co-operative society
B. private company
C. sole proprietorship
D. public company

18. The exchange of goods in the international market which does not involve the use of money is
A. barter trade
B. entrepot trade
C. counter trade
D. bilateral trade

19. Which of the following is not associated with a chamber of commerce? It is
A. democratically administered
B. an independent association.
C. open only to entrepreneurs
D. a voluntary association

20. The reason for sending a proforma invoice to a potential customer is that it is
A. an indication of the seller’s willingness to grant credit
B. A polite way of telling the customer to return the goods
C. an invitation to the buyer to buy on hire purchase
D. a polite way of refusing to sell on credit

21. The insurance policy taken to cover dishonesty of accounts personnel of an organization is
A. employers liability
B. fidelity guarantee
C. life endowment
D. marine insurance

22. Which of the following documents is used when goods are being sent by a common carrier?
A. Delivery note
B. Consignment note
C. Advice note
D. Credit note

23. A put option in the stock exchange is an option
A. to sell
B. not to sell
C. to buy
D. Not to buy

24. The functions of money do not include
A. store of value
B. medium of exchange
C. double coincidence of want
D. means of deferred payment

25. A document of title of goods written by the ship owner, specifying that certain goods are being conveyed in the ship is a
A. bill of sale
B. bill of sight
C. bill of entry
D. bill of lading

26. Informative advertising is aimed at
A. giving advice on the use of a product
B. influencing customers to buy a product
C. giving gifts to attract customers
D. encouraging specific customers to buy a product

27. A cheap means of carrying bulky goods over long distances is by
A. rail
B. road
C. air
D. pipeline

28. A contract terminated by the occurrence of an event which makes performance impossible is discharged by
A. breach
B. agreement
C. frustration
D. performance

29. An individual employed to act on behalf of another within a specified guideline is
A. a jobber
B. an agent
C. a broker
D. a distributor

30. Which of the following is not a component of the marketing mix?
A. price
B. place
C. population
D. product

31. A method of buying in anticipation of price fluctuation in the commodity market is
A. speculation
B. arbitrage
C. contango
D. hedging.

32. A shipping document detailing the charges for carrying a particular cargo for a specified voyage is
A. dock warrant
B. freight note
C. bill of lading
D. mate’s receipt

33. Commercial agents who are authorized to keep goods until they are sold are
A. factors
B. distributors
C. brokers
D. auctioneers

34. An advertisement method whose objective is to convince customers to buy a product is
A. informative advertisement
B. persuasive advertisement
C. competitive advertisement
D. mass advertisement

35. A government legislation that ensures that quality goods and services are available to customers is
A. Hire Purchase Act
B. Copyright Act
C. Price Control Act
D. standard Organization act

36. A bank draft is a cheque drawn by a bank on
A. another bank
B. itself
C. creditors
D. customers deposits

37. A company is quoted on the stock exchange when its shares are
A. put under private placement
B. not for sale to the public
C. listed for sale on the exchange
D. owned by the government

38. Which of the following functions is not performed by the export promotion council?
A. Prevention of importation of harmful goods
B. Provision of credit facilities to exporters
C. Provision of technical advice to exporters
D. Creation of export-free zones

39. Activities undertaken to create awareness of a product by giving out samples or gifts is
A. marketing mix
B. marketing concepts
C. window display
D. sales promotion

40. An advantage of privatizing a firm is that it
A. becomes more efficient
B. sells goods at low price
C. employs more workers
D. attracts more customers

41. The transfer of authority by a superior officer to his subordinate in an organization is
A. controlling
B. decentralization
C. delegation
D. directing

42. The provision of scholarships by a firm to needy students is part of its
A. political responsibility
B. economic responsibility
C. social responsibility
D. legal responsibility

43. How many countries form ECOWAS?
A. 17   B. 16   C. 15    D. 14

44. Which of the following is a modern means of communication?
A. Grapevine
B. E-mail.
C. whistles
D. Town crier

45. A system of issuing new shares to selected investors instead of the general public is
A. public offer
B. issue by tender
C. offer for sale
D. private placement

46. One of the aims of the European Union is to
A. ease trade among member countries
B. enhance better trade with Africa
C. enhance better trade with America
D. offer financial assistance to poor countries

47. The purpose of commercialization is to
A. encourage the participation of the private sector
B. make state-owned firms more efficient
C. encourage the flow of foreign capital
D. enable state-owned firms to pay tax

48. The time allowed for loading and unloading a ship at the harbor is
A. demurrage
B. tenure
C. lay days
D. dead freight

49. Interbank indebtedness is settled at the
A. clearing house
B. money market
C. discount house
D. stock exchange

50. The concern of a marketing manager whose company has adopted the marketing concept is to
A. recruit more salesmen
B. make maximum profit
C. identify and satisfy customers’ needs
D. maintain the company’s shares of the market

SECTION B: (Theory)

Instruction: Answer only five questions in this section.

1.  a. Outline five functions of commercial banks.
b. List and explain five ways the central bank controls the commercial banks.

2.  a. What is contract?
b. List and explain four ways by which a contract can be discharged.

3. a. Write in full the following abbreviations as used in commerce
I. COD
II. CIF
III. FOB
IV. E and O E

b. The sale of consumer goods costing ₦200,000 attracts a cash discount of 9% and a quantity discount of 6%. Calculate the:
I. Value of the quantity discount
II. Value of cash discount
III. Net amount of money payable

4. a. What is the stock exchange market?
b. Explain six functions of the stock exchange market

5. Explain each of the following insurance concepts
I. Reinsurance
II. Under insurance
III. indemnity
IV. non-indemnity insurance
V. group insurance

6. a. Define the term market segmentation.
b.  List six factors that influence market segmentation.
c. State five advantages of advertising.

7. Explain the following documents used in international trade.
a. Indent.
b. Bill of lading.
c. Consular invoice.
d. Certificate of origin.
e. Bill of exchange.

8 a. Differentiate between nationalization and indigenization.
b. State six reasons why a country would indigenize some industries.

Answers to Commerce Exam Questions for SS3 First Term

Answers to Section A (Objective Test)

Here is a table with the answers arranged in five columns. If you are using a mobile device, hold the table and scroll to the right or left for a complete view.

Answers to Section B (Theory)

Number 1:

a. Functions of commercial banks:

• Accepting deposits
• Granting loans and advances
• Providing cheque facilities
• Issuing bank drafts and money orders
• Offering foreign exchange services

b. Ways the Central Bank controls commercial banks:

• Setting reserve requirements
• Influencing interest rates through monetary policy
• Open market operations (buying/selling government securities)
• Discount rate control (the rate at which commercial banks borrow)
• Supervising and regulating commercial banks

Number 2:

a. Contract: A contract is a legally binding agreement between two or more parties, where they promise to do (or not do) something in return for a benefit.

b. Ways a contract can be discharged:

• Performance: Both parties fulfill their obligations.
• Agreement: Both parties agree to cancel or modify the contract.
• Frustration: An event occurs that makes performance impossible.
• Breach: One party fails to fulfill the terms of the contract.

Number 3:

a. Abbreviations:
I. COD – Cash on Delivery
II. CIF – Cost, Insurance, and Freight
III. FOB – Free on Board
IV. E and O E – Errors and Omissions Excepted

b. Discounts and Net Amount:
I. Quantity Discount: ₦200,000 × 6% = ₦12,000
II. Cash Discount: (₦200,000 – ₦12,000) × 9% = ₦17,016
III. Net Amount: ₦200,000 – ₦12,000 – ₦17,016 = ₦170,984

Number 4:

a. Stock Exchange Market: A market where securities (stocks, bonds, etc.) are bought and sold.

b. Functions of the Stock Exchange Market:

• Provides a platform for buying and selling securities
• Facilitates capital formation for businesses
• Helps in price discovery of securities
• Provides liquidity to investors
• Offers a means for risk diversification
• Enables government to raise capital through bonds

Number 5:

I. Reinsurance: A process where an insurance company transfers part of its risk to another insurance company.
II. Under Insurance: When the insured value is less than the actual value of the property.
III. Indemnity: A principle that ensures compensation for loss without exceeding the actual amount of loss.
IV. Non-Indemnity Insurance: Provides benefits regardless of the actual loss, e.g., life insurance.
V. Group Insurance: An insurance policy that covers a group of individuals under one contract, typically provided by employers.

Number 6:

a. Market Segmentation: The process of dividing a broad consumer or business market, typically consisting of existing and potential customers, into sub-groups of consumers based on some type of shared characteristics.

b. Factors influencing market segmentation:

• Demographic factors (age, gender, income)
• Geographic location
• Psychographic factors (lifestyle, interests)
• Behavioral characteristics (purchasing habits)
• Technological advancements
• Cultural factors

c. Advantages of advertising:

• Increases brand awareness
• Educates consumers about products
• Boosts sales
• Helps differentiate products
• Encourages repeat customers

Number 7:

a. Indent: A written order by an importer to a supplier to provide goods at specific terms.
b. Bill of Lading: A document issued by a carrier that acknowledges receipt of goods for shipment.
c. Consular Invoice: A document issued by the consulate of the importing country, detailing the goods and their value.
d. Certificate of Origin: A document certifying the country of origin of the goods being shipped.
e. Bill of Exchange: A written order by the seller for the buyer to pay a certain amount at a specified time.

Number 8:

a. Difference between nationalization and indigenization:

• Nationalization: The transfer of private sector assets to public ownership.
• Indigenization: The process of increasing local ownership and control of businesses or industries.

b. Reasons for indigenization include to:

• promote local ownership
• encourage economic independence
• create employment opportunities
• retain wealth within the country
• reduce foreign control of national resources
• develop local entrepreneurship

How to Pass Commerce Exam Questions for SS3 First Term

The following are the tips for passing commerce exam questions for SS3 first term:

1. Master the Basics:
   Before diving into complex topics, ensure you understand the fundamental concepts of commerce. Knowing what each term means—terms like trade, banking, insurance, and business ownership—will come in handy in answering many exam questions.
2. Know the Key Topics:
   Focus on the core areas that are often tested. These include banking, business structures, trade, insurance, and the role of the government in business. If you can confidently discuss these areas, you’ll be well-prepared.
3. Practice Past Questions:
   Familiarity breeds confidence. Work through past exam questions to understand the format and types of questions that frequently appear. This helps you get comfortable and reduces surprises in the exam room.
4. Focus on Application of Knowledge:
   Exam questions often test your ability to apply what you’ve learned. So, practice how you can use commerce concepts in real-life scenarios. For example, how would you explain the role of banks in economic growth or discuss the advantages of sole proprietorship?
5. Time Management is Key:
   Don’t waste time on questions you find difficult. Move on to others and come back later. Prioritize easy marks, and make sure to leave time at the end for reviewing your answers.
6. Stay Organized in Your Answering:
   Write clearly, and break down your answers logically. Start with definitions, then give examples and explanations where needed. When answering multiple-choice questions, read carefully and rule out obviously wrong answers before selecting the correct one.
7. Don’t Cram Last Minute:
   Start studying early! Spread your revision over time instead of cramming everything the night before. This ensures better retention and understanding.
8. Stay Confident and Positive:
   Your mindset is powerful! Believe in your ability to succeed. Stay calm, trust your preparation, and approach each question with a positive attitude. You’ve got this!

Best wishes from yours sincerely, HD.