Commerce Exam Questions for SS2 Third 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 focus on Commerce exam questions. We will cover Commerce exam questions for SS2 Third 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, and don’t forget to join our Free Online Tutorial Classes on Facebook. (Like and Follow Page)

Introduction to Commerce as a School Subject

Commerce is a school subject that deals with the study of trade, business activities, and the distribution of goods and services. It teaches students how buying and selling take place, and the different roles people and organizations play in the flow of goods from producers to consumers.

Through Commerce, students learn about important topics such as trade, banking, insurance, advertising, transportation, warehousing, and communication. These topics help students understand how business works in the real world and prepare them for careers in business, marketing, and entrepreneurship.

Commerce also helps students to develop business skills, make wise financial decisions, and understand the structure and operations of modern economies.

Commerce Exam Questions for SS2 Third Term

Cömmerce Exam Questions for SS2 Third 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 follow specific instruction and answer the required number of questions.

Note that what you have below are SS2 Commerce Third Term Exam Past Questions made available to assist students in their revision for 3rd term examinations and also teachers in structuring standard examinations.

SECTION A: Objectives

Instruction: Answer all questions in this section by choosing from the options lettered A—D. Each question carries equal marks.

1. Turnover may be increased by
(a) advertising and utility prices
(b) refusing credits and customer services
(c) increasing the mark-up
(d) stocking very expensive goods

2. The market for short term loans is known as the
(a) capital market
(b) discount market
(c) money market
(d) stock market

3. A customer is granted an overdraft by the bank subject to his operating a
(a) savings account
(b) fixed deposit account
(c) current account
(d) loans account

4. The total assets acquired for permanent use in a business concern is called
(a) current assets
(b) fixed assets
(c) working capital
(d) authorized capital

5. A ‘bear’ on the stock exchange sells shares in anticipation of
(a) a fall in price
(b) a rise in price
(c) a change in price
(d) new shares

6. In nationalized industries, losses are borne by the
(a) shareholders
(b) tax payers
(c) board of directors
(d) debenture holders

7. A facility used for impressing pre-paid postage rate on letters is called
(a) rending machine
(b) franking machine
(c) used post
(d) cash register

8. A speculator who buys shares and stocks in anticipation of a rise in their price at the stock exchange is a
(a) bill            (b) bear
(c) stay           (d) broker

9. Which of the following products is likely to have low rate of turnover
(a) foodstuff       (b) ball-pen
(c) furniture        (d) newspaper

10. The difference between cost and selling price gives
(a) trading account
(b) gross profit/ loss
(c) net profit/loss
(d) appropriation

11. The document issued to a lender under a company’s seal acknowledging a debit is called
(a) stock          (b) debenture
(c) share          (d) mortgage

12. An organization licensed and authorized to deliver fast mails and parcels are engaged in
(a) courier services
(b) haulage services
(c) transport services
(d) career services

13. Parties to a bill of exchange that is endorsed to a third party are the
(a) drawer, payee, creditor
(b) drawer, drawee payee
(c) drawer, drawee, debtor
(d) payee, drawee, debtor

14. A deduction made by a wholesaler from the catalogue and which represents a retailer’s profit margin is called
(a) cash discount
(b) deferred payment
(c) trade discount
(d) quantity discount

15. An advance that is specifically given for housing or building projects is called
(a) a loan
(b) an overdraft
(c) a collateral
(d) mortgage

16. Another name for hoarding is
(a) blackboards
(b) bill boards
(c) redesign
(d) window display

17. Which of the following required the use of indirect advertising
(a) baby milk       (b) detergent
(c) textbooks       (d) soccer boots

18. Moving an employer to a new position in which both his status and responsibilities are increased is called
(a) vary              (b) motivation
(c) demotion     (d) promotion

19. What document is issued by a public limited company when offering shares for sale
(a) proposal forms
(b) prospectus
(c) quotation
(d) memorandum

20. Which of the following is not a source of capital to a sole proprietor
(a) borrowing through debenture
(b) loan from friends
(c) personal savings
(d) borrowing from relations

21. When an industry is nationalized, ownership belongs to the
(a) government      (b) shareholders
(c) indigenes          (d) foreigners

22. The capital that is needed to meet the day to day running of a business is the
(a) fixed capital
(b) circulating capital
(c) liquid capital
(d) capital employed

23. The working capital of a company is
(a) fixed assets less current liabilities
(b) current assets less fixed liabilities
(c) current assets less current liabilities
(d) fixed assets less fixed liabilities

24. Goods discharged from ships on which import duties have not been paid are kept in the
(a) private warehouse
(b) public warehouse
(c) ordinary warehouse
(d) bonded warehouse

25. Net profit is the
(a) excess of income over expenses
(b) difference between sale and purchases
(c) total income from the sale of goods
(d) amount of purchase less closing stock

26. A document that is sent to the buyer when credit is not allowed is
(a) invoice
(b) profoma invoice
(c) delivery note
(d) debit note

27. A pair of shoes valued at #2,000 was invoiced at #200 only. Which of the following would be used by the seller to correct this error?
(a) an invoice for #200
(b) a debit note for #1,800
(c) a credit note for #1,800
(d) a debit note for #2,200

28. An increase in turnover is an increase in
(a) liquid capital
(b) current assets
(c) fixed assets
(d) the volume of sales

29. Which of the following is a compulsory requirement by the commercial banks when granting loans to customers
(a) collateral       (b) referee
(c) interest          (d) insurance

30. A foreign bill of exchange is drawn by the
(a) importer
(b) exporter
(c) importer’s bank
(d) discount house

31. Capital owned is the same as
(a) authorized capital
(b) issued capital
(c) net worth of a business
(d) fixed assets of a business

32. A stock exchange is a market for
(a) old stock of goods
(b) capital goods only
(c) raising new shares
(d) existing shares and quoted companies

33. Rate of turnover is the
(a) number of times average stock is sold during a period
(b) number of times the stock is turned over
(c) number of times opening stock in sold during a period
(d) rate paid by retailers for their stocks

34. The process of taking over private business by government is known as
(a) nationalization
(b) naturalization
(c) privatization
(d) indigenization

35. Which of the following belong to the capital market
(a) commercial bank
(b) chamber of commerce
(c) stock exchange
(d) discount house

36. Those who buy and sell shares on their own account in the stock exchange are
(a) brokers       (b) under writers
(c) clerks          (d) jobbers

37. Called-up capital is the amount
(a) demanded on shares issued
(b) paid on allotment
(c) paid on first call
(d) paid on application

38. When firms producing similar commodities join together, this is
(a) vertical merger
(b) horizontal merger
(c) holding company
(d) cartel

39. The total indebtedness of business is the same as its
(a) liquid capital
(b) insolvency
(c) liabilities
(d) cartel

40. A refund usually granted for goods imported and later re-exported is called
(a) discount
(b) dock due
(c) demurrage
(d) customs draw back

41. When the balance of trade is unfavourable which of the following conditions prevails
(a) imports exceed exports
(b) exports exceed imports
(c) customs duty is high
(d) the value of money falls

42. What is the working capital of KO ltd which has #3,500 in fixed assets, cash balance of #4,170, trade debtors #1,150 and sundry creditors of #1,800
(a) #5,520        (b) #4,720
(c) #7,020         (d) #3,520

43. Opening stock plus purchases less closing stock gives
(a) cost of goods sold
(b) working capital
(c) net profit
(d) gross profit

Use the following information relating to Bala Enterprises to answer questions 44 to 46.

Premises #32,000, motor vehicle #15,000, Debtors #15,000, stock #20,000, Creditors #10,000.

44. The value of current assets is
(a) #35,000       (b) #30,000
(c) #25,000        (d) #10,000

45. The value of the working capital is
(a) #47,000         (b) #35,000
(c) #25,000         (d) #10,000

46. The value of fixed assets is
(a) #72,000         (b) #47,000
(c) #35,000         (d) #25,000

Use the information below to answer questions 47 to 49.

A trader’s turnover was #36,000; purchases was #28,000. The opening stock was #2,000 and the closing stock #3,000.

47. What is the cost of goods sold
(a) #28,000         (b) #27,000
(c) #8,000           (d) #5,000

48. The average stock is
(a) #5,000          (b) #3,000
(c) #2,500           (d) #2,000

49. What is the rate of turnover?
(a) 13.5 times       (b) 10.8 times
(c) 9 times            (d) 5.4 times

50. When consumers engage in actions that express dissatisfaction with the quantity, price and quality of goods available, such action is termed
(a) consumer behaviour
(b) consumerism
(c) consumer education
(d) consumer orientation

SECTION B: Essay

INSTRUCTION – Answer all five (5) questions in this section.

1a. Explain the following
(i) quotation
(ii) Hire purchase
(iii) Deferred payment
(iv) Quantity discount
(v) credit card

1b. State two advantages of credit.

2a. State three differences between a loan and an overdraft.
2b. Explain four factors to be considered by a bank manager before granting loan.

3a. Write explanatory notes on the following stock exchange terms
(i) Bull
(ii) Bear
(iii) Backwardation
(iv) contango

3b. State three advantages of tourism.

4a. Mention and explain five tourist centers in Nigeria.
4b. Outline four advantages of indigenization.

5a. State four functions of capital market.
5b. State four functions of the stock exchange.
5c. Explain three institutions involved in the capital market.

6a. Explain the following:
(i) Authorized capital
(ii) issued capital
(iii) called-up capital
(iv) working capital

6b. State three importance of working capital.

7a. The state of affairs of Zig stores as at 31st December, 2009 shows the following:

• Furniture and fittings — N30,000
• Motor van — N164,000
• Stocks — N76,000
• Debtors — 50,000
• Creditors — 60,000
• Cash in hand — 20,000
• Bank overdraft — 20,000

You are required to calculate Zig stores:
(i) current liabilities
(ii) current assets
(iii) working capital

7b. Explain current assets giving two examples.

Answers to Commerce Exam Questions for SS2 Third Term

Answers to Section A (Objective Test)

The following table gives the correct answers to the objective section of Commerce exam questions for SS2 Third term. If you are using a mobile device, hold the table and scroll to the right or left for a complete view.

So here you have the answers to the objective section of Commerce Exam Questions for SS2 Third term. Use the comments section to let me know if you have any questions you would want me to clarify or discuss further.

Answers to Section B (Theory)

1a. Explain the following

(i) Quotation: A quotation is a document sent by a seller to a potential buyer, stating the price of goods or services and the terms of sale.

(ii) Hire Purchase: This is a system of buying goods in which the buyer pays in installments and takes possession of the goods immediately, but ownership remains with the seller until full payment is made.

(iii) Deferred Payment: This is a method of payment where the buyer receives the goods or services and agrees to pay at a later date, usually with interest.

(iv) Quantity Discount: A quantity discount is a price reduction given to a buyer who purchases goods in large quantities.

(v) Credit Card: A credit card is a plastic card issued by a bank or financial institution that allows the holder to purchase goods and services on credit.

1b. State two advantages of credit.

• It allows the buyer to get goods and services even when they do not have ready cash.
• It increases sales and profits for sellers by encouraging more purchases.

2a. State three differences between a loan and an overdraft.

• A loan is a fixed amount borrowed, while an overdraft allows one to withdraw more than what is in their account.
• Loans have fixed repayment terms; overdrafts are repaid as funds are deposited.
• Loans are usually for long-term needs; overdrafts are short-term facilities.

2b. Explain four factors to be considered by a bank manager before granting a loan.

• Creditworthiness: The bank assesses if the borrower has the ability and history of repaying loans.
• Purpose of the loan: The reason for the loan must be clearly stated and acceptable.
• Collateral: The borrower must provide security for the loan in case of default.
• Repayment plan: The borrower must have a clear plan to repay the loan.

3a. Write explanatory notes on the following stock exchange terms:

(i) Bull: A bull is a speculator who buys shares expecting their prices to rise so that he can sell at a profit.

(ii) Bear: A bear is a speculator who sells shares expecting prices to fall so he can buy back cheaper later.

(iii) Backwardation: This is a situation where the spot price of a commodity is higher than its futures price.

(iv) Contango: This is when the futures price of a commodity is higher than the spot price.

3b. State three advantages of tourism.

• It generates foreign exchange for the country.
• Ît creates employment opportunities.
• It promotes cultural exchange and national unity.

4a. Mention and explain five tourist centers in Nigeria.

• Obudu Cattle Ranch: A scenic highland resort in Cross River State.
• Yankari Game Reserve: A wildlife park located in Bauchi State.
• Olumo Rock: A historic rock in Abeokuta, Ogun State, with steps and caves.
• Erin Ijesha Waterfall: A natural waterfall located in Osun State.
• Zuma Rock: A giant rock located in Niger State near Abuja.

4b. Outline four advantages of indigenization.

• Promotes local ownership and control of businesses.
• Increases national income through retained profits.
• Creates job opportunities for citizens.
• Reduces foreign dominance in the economy.

5a. State four functions of capital market.

• It provides long-term funds to businesses and governments.
• Ít mobilizes savings for investment purposes.
• It facilitates the buying and selling of securities.
• It helps in capital formation and economic growth.

5b. State four functions of the stock exchange.

• Provides a market for buying and selling shares.
• Helps companies raise capital through public issues.
• Promotes investment through liquidity of shares.
• Provides information on the value of securities.

5c. Explain three institutions involved in the capital market.

• Stock Exchange: Provides a platform for trading in stocks and shares.
• Issuing Houses: Help companies raise funds through public offers.
• Securities and Exchange Commission (SEC): Regulates and supervises the capital market.

6a. Explain the following:

(i) Authorized Capital: This is the maximum amount of capital a company is allowed to raise as stated in its memorandum of association.

(ii) Issued Capital: This is the part of the authorized capital that has been offered to the public for subscription.

(iii) Called-up Capital: The part of issued capital that shareholders have been asked to pay.

(iv) Working Capital: The capital available to a business for day-to-day operations, calculated as current assets minus current liabilities.

6b. State three importance of working capital.

• It helps in the smooth running of daily business operations.
• Ît improves the company’s liquidity and solvency.
• It enables the firm to meet short-term obligations.

7a. Calculate Zig Stores:

Given:

• Furniture and fittings = N30,000 (Fixed asset)
• Motor van = N164,000 (Fixed asset)
• Stocks = N76,000
• Debtors = N50,000
• Cash in hand = N20,000
• Creditors = N60,000
• Bank overdraft = N20,000

(i) Current Liabilities: N60,000 + N20,000 = N80,000

(ii) Current Assets: N76,000 + N50,000 + N20,000 = N146,000

(iii) Working Capital: N146,000 – N80,000 = N66,000

7b. Explain current assets giving two examples.

Current assets are assets that are expected to be used up or converted into cash within one year. They are essential for the day-to-day operations of a business.

Examples:

• Cash in hand
• Stock (inventory)

Read Also: Economics Exam Questions for SS2 Third Tērm

How to Pass Commerce Exam Questions for SS2 Third Term

Passing your Commerce exam questions for SS2 Third term requires a combination of preparation, understanding, and strategy. Here are actionable tips to help you excel:

1. Study the Topics in Your Syllabus

Go through the SS2 third term syllabus and make sure you understand every topic. Some common topics include:

• Stock exchange and capital market
• Insurance principles
• Business organizations
• Consumer protection
• Trade associations and chambers of commerce

2. Master Commercial Terms and Definitions

Commerce has many key terms like debenture, overdraft, capital market, insurance, stock exchange, and so on. Know what each term means and how to explain it with examples.

3. Practice Past Questions

Get past exam questions from your teacher, school library, or a trusted website. Practice both objective and theory questions. This helps you understand the question pattern and boosts your confidence.

4. Write Short Notes on Each Topic

After studying a topic, write a summary in your own words. This helps you remember faster and makes revision easier, especially before the exam.

5. Work on Your Time Management

During the exam, you’ll be given limited time to answer both objective and essay questions. Practice answering questions within a time limit at home so you can manage your time well in the hall.

6. Learn How to Answer Essay Questions

Commerce essay questions often ask you to define, explain, state, or differentiate. Answer directly, use bullet points, give examples, and make sure your points are clear and neat.

7. Study with Friends or Ask Questions

If there are parts of the subject that confuse you, ask your teacher or classmates. You can also form a small reading group to discuss key topics and exchange ideas.

8. Stay Consistent and Revise Regularly

Don’t wait till exam week. Read at least 2–3 pages every day. Use weekends to revise older topics and test yourself.

9. Avoid Cramming

Commerce is not just about cramming definitions. Try to understand how the concepts work in real life. When you understand, you’ll find it easier to remember and apply during exams.

10. Be Calm and Believe in Yourself

Before you enter the exam hall, relax your mind. Pray and have confidence in your preparation. With focus and determination, you will succeed.

It’s a wrap!

If you need more clarification on SS2 Third Term Questions on Commerce, you can use the comments box below. We’ll be there to answer you asap.

Best wishes.