WAEC Commerce questions: Financing a business

16 questions with answers and explanations. Tap an option to check yourself.

1. Question 1· Financing a business· WAEC

   Debentures are

   • Aprofits kept
   • Bordinary shares
   • Cgrants
   • Dloans to a company carrying fixed interest

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   Explanation and discussion

2. Question 2· Financing a business· WAEC

   Ploughed-back profit is a source of

   • Ainternal finance
   • Bexternal loan
   • Cgovernment grant
   • Dforeign aid

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   Explanation and discussion

3. Question 3· Financing a business· WAEC

   Turnover means

   • Awages paid
   • Btotal profit
   • Cfixed assets
   • Dtotal sales over a period

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   Explanation and discussion

4. Question 4· Financing a business· WAEC

   Holders of debentures receive

   • Adividends only when profit is made
   • Bfixed interest whether or not the company makes a profit
   • Cvoting rights at meetings
   • Da share of ownership

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   Explanation and discussion

5. Question 5· Financing a business· WAEC

   Debenture holders receive

   • Avoting rights
   • Bdividends from profit
   • Cfixed interest whether or not the company makes a profit
   • Dthe business's goodwill

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   Explanation and discussion

6. Question 6· Financing a business· WAEC

   Capital employed is

   • Aturnover
   • Bcurrent assets only
   • Ccash in hand
   • Dtotal assets minus current liabilities

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7. Question 7· Financing a business· WAEC

   A source of long-term finance for a company is

   • Aa bank overdraft
   • Bissuing shares or debentures
   • Ctrade credit
   • Daccrued expenses

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8. Question 8· Financing a business· WAEC

   Ordinary shareholders receive

   • Adividends that vary with profit
   • Bfixed interest
   • Cno voting rights
   • Dguaranteed returns

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9. Question 9· Financing a business· WAEC

   Which of these is NOT a short-term source of finance for a business?

   • Aaccrued expenses
   • Bbank overdraft
   • Ctrade credit
   • Dissue of ordinary shares

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10. Question 10· Financing a business· WAEC

    A business has current assets of ₦80,000 and current liabilities of ₦50,000. Its working capital is

    • A₦80,000
    • B₦130,000
    • C₦50,000
    • D₦30,000

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    Explanation and discussion

11. Question 11· Financing a business· WAEC

    Capital that a business uses for its day-to-day operations is

    • Aauthorised capital
    • Bfixed capital
    • Cworking capital
    • Dcalled-up capital

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12. Question 12· Financing a business· WAEC

    Ploughing back profit means

    • Aborrowing from banks
    • Bpaying all profit as dividends
    • Cusing retained profit to finance the business
    • Dselling shares

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    Explanation and discussion

13. Question 13· Financing a business· WAEC

    A firm has current assets of ₦800,000 and current liabilities of ₦500,000. Its working capital is

    • A₦800,000
    • B₦1,300,000
    • C₦500,000
    • D₦300,000

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14. Question 14· Financing a business· WAEC

    A trader's capital is ₦500,000, and he earns a net profit of ₦75,000. His return on capital is

    • A75%
    • B7.5%
    • C20%
    • D15%

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15. Question 15· Financing a business· WAEC

    The turnover of a business is its

    • Atotal capital
    • Btotal profit
    • Ctotal sales over a period
    • Dfixed assets

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16. Question 16· Financing a business· WAEC

    Working capital is

    • Atotal liabilities
    • Bfixed assets plus current assets
    • Cthe owner's capital
    • Dcurrent assets minus current liabilities

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    Explanation and discussion