NECO 2021 Commerce Objective and Essay Answers (11th August 2021)
Wednesday 11th August, 2021.
Paper III & II: Objective & Essay – Commerce 10:00am–12:40pm.
Crossed Cheque is the type of cheque in which no cash withdrawal can be done.The amount can only be transferred from the drawer’s account to the payee’s account While, Stale Cheque is one which cannot be honoured because the reasonable period is expired.
Stale Cheque is one which cannot be honoured because the reasonable period is expired. As against, a Post-dated Cheque or Crossed Cheque is a cheque which is drawn today but contains a future date for payment.
(i)Cash (bills and change):
Cash is one of the most common ways commercial banks pay their customers. Both paper money and coins are included under the larger category of “cash.” While cash has the advantage of being immediate, it is not the most secure form of payment since, if it is lost or destroyed, it is essentially gone. There is no recourse to recoup those losses.
These another payment method that commercial banks do operate on. They are essentially paper forms the buyer fills out and gives to the seller. The customer gives the cheque to their bank, the bank processes the transaction, and a few minutes later the money is deducted from the customers account.
Paying with a debit card takes the money directly out of the customer’s account. It is almost like writing a personal cheque, but without the hassle of filling it out. E.g ATM Card.
Credit cards look like debit cards. But paying with a credit card temporarily defers the customer’s bill. At the end of each month, the customer’s receives a credit card statement with all transactions performed. Credit cards can be used for both online purchases and at physical retailers.
Cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, dividing up markets, rigging bids or restricting output of goods and services.
Consortium is an alliance of companies, individuals, or other entities that got together to achieve a specific objective. The objective benefits all the parties. Examples include lobbying for regulatory changes, bidding on a large projector, or increasing partners’ purchasing power to get better deals.
In other words, it is a business club that offers benefits to its members.
Trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. In finance, a trust can also be a type of closed-end fund built as a public limited company.
(ii)Acquisition of assets.
(iii)increase in financial capacity.
The marketing division under research is mainly concerned with actual and potential buyers. It determines why and when the buyers buy goods or are not interested in buying goods; how and where the market for goods can be expended and at what cost. The time limit for expanding the market, and the probable fluctuations in demand and supply, these too, must be taken into consideration.
Promotion of product and services refers to providing information to the customers about the firm’s products, their features, uses, prices etc and persuading them to buy these products. Advertising, Personal selling. Publicity and Sales Promotion are the main tools of promotion. A marketer has to decide about the promotion budget, promotion mix (i.e. combination of promotional tools) etc.
(iii)Packing and Labeling:
Packaging means designing the package for the product while labelling is concerned with putting label on the package. Packaging and labelling have been recognized as pillars of marketing. They not only provide protection to the product but also act as a promotional tool.
Branding is a process of giving a brand name to a product to differentiate it from competitor’s products, in building customers’ loyalty and in promoting the product. The most important decision under this strategy is whether to give a separate brand name or same brand to all products of a business firm.
(v)Storage or Warehousing:
There is a time gap between production and consumption of goods. Thus it is an important function of marketing to provide for proper storage of such goods until they are demanded. For example, apples are produced in winter are stored in cold storages and sold even in summer.
Form utility is an economic concept that identifies the value obtained by consumers from products designed in the most convenient ways for them. It is the idea that a product or service is more valuable for the consumer if the way it is presented and modeled matches is actual needs.
Possession utility is the value customers have while buying a product and they have the choice to use the product for the purpose it was made for or finding a new way to use the product.
An intermediary storage facility where goods are kept temporarily for distribution within a country or for re-export.
Tariffs are fees paid on imported goods. Tariffs increase the price that consumers pay for the good, thus reducing the quantity of the good demanded and making the price more in line with the price charged by domestic producers. Tariff profits may go to the government or to developing industries.
Another reason for restricting trade is that free trade threatens national security. The reasoning behind this is that trade allows countries to become dependent on other countries to supply vital resources. In the case of a war, these dependencies can become a liability, if countries are unable to be self-sufficient and produce essential goods themselves.
Quota system imposes restrictions on the specific number of goods imported into a country. Quota systems allow governments to control the quantity of imports to help protect domestic industries.
Subsidies are grants given to domestic industries to help them develop and compete with foreign producers. Through subsidies, domestic producers can charge less for their goods without losing money due to outside grants.
(v) Currency devaluation:
Currency devaluation is the official lowering of the value of a country’s currency under a fixed exchange rate regime. To the extent that most countries have floating exchange rate regimes, currency devaluations are relatively rare. Under a floating exchange rate system, in which exchange rates are determined by market forces, a decrease in the value of a currency relative to others is called depreciation.
1. Sales tax
2. Administrative Expenses
3. Freight and carriage on sales
4. Selling and distribution Expenses
(i) Sales tax:
Sales Tax is the type of indirect tax which is levied on the number of sales, considering the exempt and nonexempt supplies, tax is collected from the recipient of goods, making it an indirect way of tax collection, and ultimately is paid to the government.
(ii) Administrative Expense:
Administrative expenses are business expenses that are not related to the cost of goods or sales, such as salaries of office staff, insurance, and legal and accounting costs. The company’s administrative expenses can be divided into personnel, travel, building occupancy and other similar costs.
(iii)Frieght and carriage on sales:
Freight is clearly a direct cost that’s associated with a product sale, so it has to be in the cost of goods sold. It doesn’t relate to the daily operations of the business, and so it shouldn’t be included in the sales department, or for that matter in the general and administrative area.
The carriage on sales is carriage outwards as the carriage deals outwardly with the cost of shipping and storage borne by the company when delivering the goods to a customer. It is shown in the income statement in the cost of the goods sold section. This also be presented in the balance sheet asset side.
(iv)selling and distribution expenses:
Selling expenses are those expenses which are incurred to promote sales and service to customers. Distribution expenses, on the other hand, are those which are incurred for warehousing and storage, packing for goods sent and making the goods available for delivery to customers.
1. The degree of competition a firm faces.
2. The strength of demand.
3. The state of the economy
Fear of domination; members are always suspicious and afraid of each other because of the uneven development in the region.
Political Instability; the constant changes in government among member nations as a result of coups lead to political instability in the sub-regions.
Currency differences; the differences in currency among member nations had made the transfer of capital difficult and also reduced trading activities.
Political Ideology/Colonial Ties; the West African region is split into French and English Speaking countries. Member countries still lean to their colonial masters.
Breach of contract:
Breach of Contract is a violation of any of the agreed-upon terms and conditions of a binding contract. The breach could be anything from a late payment to a more serious violation such as the failure to deliver a promised asset. A contract is binding and will hold weight if taken to court.
A Contract is a legally binding agreement that defines and governs the rights and duties between or among its parties. A contract is legally enforceable when it meets the requirements of applicable law. A contract typically involves the exchange of goods, services, money, or a promise of any of those.
Contract under seal:
contract under seal or a deed, is a written document that, when “sealed” is distinguishable from a contract. A deed is a formal document that gives the clear indication that a person or entity gives its most sincere promise that they will fulfil contractual obligations.
A Void contract is a contract that isn’t legally enforceable, starting from the time it was created. While both a void and voidable contract are null, a void contract cannot be ratified. In a legal senses, a void contract is treated as if it was never created and becomes unenforceable in court.
Termination of contract:
Termination of a contract means legally ending the contract before both parties have fulfilled their obligations under the terms of the contract. There are a variety of reasons why a party can terminate a contract. When and how the contract is terminated will determine whether either party has any liability for breach of the contract before it was terminated.
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