JAMB and WAEC Commerce questions: Financing a business

32 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· JAMB

   Gross profit is ₦40,000 on sales of ₦160,000. The gross profit margin is

   • A33⅓%
   • B40%
   • C25%
   • D16%

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   Explanation and discussion

4. Question 4· Financing a business· WAEC

   Turnover means

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

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   Explanation and discussion

5. Question 5· Financing a business· JAMB

   Holders of ordinary shares in a company

   • Areceive a fixed rate of dividend
   • Bbear the greatest risk and may receive variable dividends
   • Care paid before debenture holders
   • Dare creditors of the company

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   Explanation and discussion

6. Question 6· Financing a business· JAMB

   Trade credit as a source of finance means

   • Aleasing equipment
   • Bborrowing from a commercial bank
   • Cselling shares to the public
   • Dreceiving goods now and paying the supplier later

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   Explanation and discussion

7. Question 7· 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

8. Question 8· 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

9. Question 9· Financing a business· JAMB

   Working capital is calculated as

   • Acapital minus drawings
   • Bfixed assets plus current assets
   • Ccurrent assets minus current liabilities
   • Dsales minus cost of sales

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10. Question 10· Financing a business· WAEC

    Capital employed is

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

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    Explanation and discussion

11. Question 11· Financing a business· JAMB

    Trade credit is a source of finance in which

    • Ashares are sold
    • Bbanks give overdrafts
    • Csuppliers allow goods to be paid for later
    • Dgovernment gives grants

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    Explanation and discussion

12. Question 12· Financing a business· JAMB

    A trader's capital is ₦600,000 and liabilities are ₦150,000. Total assets are

    • A₦450,000
    • B₦750,000
    • C₦600,000
    • D₦150,000

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13. Question 13· Financing a business· JAMB

    Leasing allows a firm to

    • Aown an asset at once
    • Buse an asset by paying rent without buying it
    • Csell shares
    • Dborrow from friends

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    Explanation and discussion

14. Question 14· Financing a business· JAMB

    Gross profit is ₦150,000 on sales of ₦600,000. Find the gross profit margin.

    • A4%
    • B15%
    • C40%
    • D25%

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15. Question 15· 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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16. Question 16· Financing a business· JAMB

    A business has current assets of ₦300,000 and current liabilities of ₦150,000. Its current ratio is

    • A₦450,000
    • B1 : 2
    • C2 : 1
    • D₦150,000

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17. Question 17· Financing a business· JAMB

    A trader's opening stock is ₦20,000, closing stock ₦30,000 and cost of goods sold ₦100,000. The rate of turnover is

    • A4 times
    • B5 times
    • C3.3 times
    • D10 times

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18. Question 18· Financing a business· JAMB

    Cost of sales is ₦240,000 and average stock is ₦40,000. Find the rate of stock turnover.

    • A6 times
    • B4 times
    • C10 times
    • D9,600 times

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19. Question 19· Financing a business· JAMB

    Ploughing back profit into the business is a source of

    • Aexternal finance
    • Binternal finance
    • Cshort-term borrowing
    • Dtrade credit

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    Explanation and discussion

20. Question 20· Financing a business· WAEC

    Ordinary shareholders receive

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

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    Explanation and discussion