NABTEB Commerce 2025 Questions And Answers

NABTEB Commerce 2025 Questions And Answers

NABTEB COMMERCE
1-10: ACCCDCDCDB
11-20: DDDBCCBDCC
21-30: DCAACBBCDC
31-40: ABADBBCBBB
41-50: CBCCDDDDBD

INSTRUCTION: ANSWER FIVE(5) QUESTIONS ONLY

(1a)
(i) 10%:
This usually refers to a trade discount or percentage reduction on the listed price of goods or services. For instance, if an item costs ₦10,000, a 10% discount reduces the price to ₦9,000. It is often used to encourage bulk purchases or as a negotiated term between buyer and seller.

(ii) Net 3 months:
This means the full payment of the invoice is due within 3 months (90 days) from the invoice date, with no discount offered for early payment. The buyer must pay the total amount by the end of this period.

(iii) E & O.E.:
This stands for “Errors and Omissions Excepted.” It is a disclaimer on invoices indicating that the seller reserves the right to correct any errors or omissions in the invoice without being legally bound by the incorrect information.

(iv) 2½% cash discount 1 month:
This means a 2.5% discount is offered if the buyer pays the invoice within 1 month from the invoice date. If payment is made after this period, the full amount is due without the discount.

(v) Carriage forward:
This term means that the buyer is responsible for paying the transportation or shipping costs of the goods from the seller’s location to the buyer’s destination. The seller does not include shipping charges in the invoice total.

(1b)
(i) A proforma invoice is issued before goods are delivered as a quotation or estimate, while an ordinary invoice is issued after goods or services have been supplied to request payment.
(ii) A proforma invoice is not legally binding for payment purposes, whereas an ordinary invoice serves as a legal document to demand payment.
(iii) A proforma invoice is mainly used for customs, import/export, or pre-shipment documentation, while an ordinary invoice is used to record actual sales and trigger payment collection.
(iv) A proforma invoice typically does not carry an invoice number, whereas an ordinary invoice must include an invoice number, date, and terms of payment.
(v) A proforma invoice helps the buyer understand the expected cost in advance, while an ordinary invoice represents the final amount payable for goods or services already rendered.
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(2a)
Production is the process of creating goods and services by converting raw materials, labor, and other resources into finished products that satisfy human wants and meet market demand. In essence, it involves transforming inputs into outputs that have value to consumers.

(2b)
(Draw the diagram)
[img]https://i.ibb.co/wFNyWTjN/production.jpg[/img]
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(3a)
(i) Bankers
(ii) Transporters
(iii) Traders
(iv) Insurance Agents
(v) Advertising Agents

(3b)
(i) Bankers:
Bankers are involved in providing financial services such as accepting deposits, giving loans, and facilitating payments. They help individuals and businesses manage their money and provide capital for business activities. They also play a crucial role in the economy by promoting savings and enabling investments.

(ii) Transporters:
Transporters are responsible for moving goods and services from producers to consumers or between different locations. They include drivers, pilots, sailors, and others who ensure timely delivery of products. Efficient transport services reduce delivery time and costs, enhancing overall trade efficiency.

(iii) Traders:
Traders engage in buying and selling goods and services. They operate at various levels including wholesalers who buy in bulk and retailers who sell directly to consumers. Traders facilitate the exchange of goods in the market. They help bridge the gap between producers and consumers by making products available in convenient locations.

(iv) Insurance Agents:
Insurance agents help individuals and businesses protect themselves against financial risks by selling insurance policies. They act as intermediaries between insurance companies and clients, providing advice and handling claims. Their work provides financial security and peace of mind to clients by mitigating potential losses.

(v) Advertising Agents:
Advertising agents promote products and services to potential customers by creating awareness through various media channels. They design marketing campaigns to increase sales and market reach for businesses. Effective advertising helps businesses build brand recognition and attract more customers.
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(4a)
Business environment refers to the sum of all internal and external factors, conditions, and influences that affect the operations, performance, and decision-making of a business.

(4b)
(i) Economic Environment
(ii) Legal Environment
(iii) Technological Environment
(iv) Social Environment

(4c)
(i) Economic Environment:
The economic environment includes factors such as inflation, interest rates, and consumer income that influence how businesses operate and make profits. Changes in these factors affect demand for products and the cost of doing business, so companies must adjust their strategies accordingly.

(ii) Legal Environment:
The legal environment consists of laws and regulations that control how businesses operate, including labor laws, consumer protection, and environmental rules. Compliance is essential to avoid legal penalties and to maintain fair competition and ethical business practices.

(iii) Technological Environment:
The technological environment involves innovations and advancements that affect production processes, communication, and marketing methods. Businesses that adopt new technologies can improve efficiency, reduce costs, and create new products or services.

(iv) Social Environment:
The social environment covers cultural values, demographics, lifestyle changes, and social trends that influence consumer preferences and behaviors. Understanding these factors helps businesses tailor their products and marketing to meet the needs of different customer groups.
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(5a)
Credit is an arrangement where one party (the creditor) provides money, goods, or services to another party (the debtor) with the understanding that the debtor will repay the value at a later date, usually with interest. It enables individuals and businesses to acquire resources immediately without having the full payment upfront. Credit can be classified into various types based on duration and purpose, such as short-term credit for working capital and long-term credit for investments. The use of credit facilitates economic growth by allowing businesses to expand, consumers to purchase goods, and governments to fund projects. Key features of credit include trust, repayment terms, interest charges, and collateral in some cases. Overall, credit is essential for smooth business operations and financial flexibility.

(5b)
(i) Trade Credit:
This is a type of credit extended by a supplier to a buyer, allowing the buyer to purchase goods or services and pay at a later agreed date. It is common in wholesale and retail transactions and helps businesses maintain inventory without immediate cash outflow.

(ii) Bank Credit:
This involves loans, overdrafts, or advances provided by commercial banks to individuals or businesses. It enables borrowers to meet urgent financial needs or invest in business operations, with repayment usually including interest.

(iii) Consumer Credit:
This is credit given to individuals for personal or household use, often through hire purchase, credit cards, or installment plans. It allows consumers to enjoy products like electronics, furniture, or vehicles while spreading payments over time.

(iv) Mortgage Credit:
This type of credit is used to finance the purchase of real estate, such as homes or commercial buildings. The property serves as collateral, and repayment is usually long-term, often with monthly installments over several years.

(v) Bank Overdraft:
An overdraft is a credit facility that allows a bank customer to withdraw more money than is in their account, up to an approved limit. It is a short-term loan used to handle temporary cash flow issues, and interest is charged only on the overdrawn amount.

(vi) Credit Sale (Hire Purchase):
In this arrangement, a buyer pays a deposit and takes possession of a product while repaying the balance in installments, often with interest. Ownership typically transfers to the buyer after the final payment is made.
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(6a)
Communication is the process of transmitting information, ideas, or messages from one person or group to another to achieve understanding. It involves a sender conveying a message through a chosen channel to a receiver who interprets it, often followed by feedback to confirm the message was understood.

(6b)
(i) Facilitates Decision Making:
Effective communication provides accurate and timely information, enabling managers to make informed decisions that guide business operations. For example, sales reports communicated regularly help managers decide on production levels.

(ii) Promotes Coordination:
Communication helps coordinate activities among different departments and employees, ensuring everyone works towards common organizational goals. Without coordination, departments might duplicate efforts or work at cross purposes.

(iii) Enhances Employee Motivation:
Clear communication of goals, expectations, and feedback motivates employees by making them feel valued and involved in the business. Motivated employees tend to be more productive and committed to their work.

(iv) Improves Customer Relations:
Good communication with customers helps understand their needs and resolve complaints promptly, leading to customer satisfaction and loyalty. For instance, prompt responses to customer inquiries build trust and encourage repeat business.

(v) Enables Efficient Problem Solving:
Communication allows quick identification and discussion of problems, facilitating faster resolution and minimizing disruptions. Team meetings and feedback sessions are examples where communication helps address issues early.

(vi) Supports Change Management:
Effective communication is crucial when implementing changes, as it helps explain reasons, reduce resistance, and gain employee support. Clear communication during restructuring can ease employee anxiety and ensure smoother transitions.
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(7a)
An agent is a person who is legally authorized to act on behalf of another person or entity, called the principal, to create legal relationships or conduct business transactions. The agent represents the principal in dealings with third parties and may have specific or general authority to make decisions.

(7b)
(i) Duty to Obey Instructions:
The agent must follow all lawful and reasonable instructions given by the principal regarding the business or task. For example, if the principal instructs the agent to buy goods within a certain budget, the agent must adhere to this limit.

(ii) Duty of Loyalty:
The agent must act in the best interest of the principal and avoid conflicts of interest or acting for personal gain at the principal’s expense. This means the agent should not engage in transactions that benefit themselves without the principal’s consent.

(iii) Duty to Exercise Skill and Care:
The agent is expected to perform their duties with reasonable care, skill, and diligence as required by the nature of the agency. For instance, a real estate agent must have adequate knowledge of the property market to serve the principal effectively.

(iv) Duty to Account:
The agent must keep accurate records of all transactions and properly account for any money or property received on behalf of the principal. This ensures transparency and prevents misuse of the principal’s assets.

(v) Duty to Inform:
The agent should keep the principal informed of all relevant information and developments concerning the agency and the business. Timely updates help the principal make informed decisions and avoid surprises.

(vi) Duty to Act Personally:
Unless otherwise authorized, the agent must personally carry out the tasks and not delegate them to others without the principal’s consent. This ensures the principal’s trust is not compromised by unauthorized third parties.
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(8a)
A contract is a legally binding agreement between two or more parties that creates mutual obligations enforceable by law. It can be written or oral and involves an offer, acceptance, and consideration exchanged between the parties.

(8b)
(i) Offer:
An offer is a clear, definite proposal made by one party (offeror) to another (offeree) expressing willingness to enter into a contract on specific terms. It must be communicated effectively and remain open for acceptance; for example, a seller offering to sell goods at a stated price.

(ii) Acceptance:
Acceptance is the unconditional and final agreement by the offeree to all the terms of the offer, which creates mutual consent. It must be communicated to the offeror and can be verbal, written, or implied by conduct.

(iii) Consideration:
Consideration is something of value exchanged between the parties, such as money, goods, services, or a promise, which makes the contract binding. Without consideration, a contract is generally not enforceable; for instance, paying money in exchange for goods.

(iv) Capacity:
Both parties must have the legal ability to enter into a contract, meaning they are of sound mind, of legal age, and not under undue influence or coercion. Contracts involving minors or mentally incapacitated persons are generally void or voidable.

(v) Intention to Create Legal Relations:
The parties must intend their agreement to be legally binding and enforceable by law, rather than a casual or social arrangement. For example, business agreements usually imply this intention, while social promises often do not.

(vi) Legality of Object:
The contract’s purpose and terms must be legal and not against public policy; contracts involving illegal activities, fraud, or immoral acts are void. For example, a contract to sell illegal drugs is not enforceable.
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(9a)
(i) Consumer Cooperative Society
(ii) Producer Cooperative Society
(iii) Credit Cooperative Society
(iv) Multipurpose Cooperative Society
(v) Marketing Cooperative Society

(9b)
(i) Consumer Cooperative Society:
Formed by consumers who pool resources to buy goods in bulk directly from producers, enabling members to access quality goods at lower prices by eliminating middlemen. It protects consumers from exploitation and ensures availability of essential goods at affordable rates.

(ii) Producer Cooperative Society:
Comprises producers who collaborate to produce, process, or market their goods collectively, improving efficiency and bargaining power. It helps small producers reduce costs and gain better access to markets.

(iii) Credit Cooperative Society:
Provides members with affordable loans and credit facilities by pooling their savings into a common fund. This protects members from high-interest rates charged by private lenders and supports financial stability.

(iv) Multipurpose Cooperative Society:
A cooperative formed to provide multiple services to its members, such as credit, supply of agricultural inputs, marketing, health, sanitation, and other social and economic activities. It aims to meet various member needs under one organization, offering flexibility and comprehensive support.

(v) Marketing Cooperative Society
Marketing cooperatives assist small producers by providing a platform to sell their products collectively, eliminating middlemen and ensuring fair prices. They often handle marketing functions such as transportation, packaging, and warehousing to improve market access and profitability.
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(10a)
Consequential Loss:
(i) It covers indirect losses resulting from a direct loss, such as loss of profit due to a fire or machinery breakdown.
(ii) The policy typically compensates for loss of income during the period the business is unable to operate.
(iii) It often includes fixed operating expenses, such as rent and salaries, that continue despite the business interruption.

(10b)
Subrogation:
(i) It allows the insurer to step into the shoes of the insured after compensation to recover losses from third parties.
(ii) It ensures the insured does not benefit more than once from the same loss.
(iii) It applies after the insurer has fully indemnified the insured for the covered loss.

(10c)
Fidelity Guarantee:
(i) It provides protection against losses caused by dishonest or fraudulent acts of employees.
(ii) It is commonly used by employers to cover trusted staff handling money or valuable property.
(iii) The policy may be individual or collective, depending on the number of employees covered.

(10d)
Motor Vehicle Insurance:
(i) It provides financial protection against loss or damage to a motor vehicle due to accidents, theft, or third-party liability.
(ii) It is often compulsory by law to protect both the vehicle owner and other road users.
(iii) The policy may cover damages to the insured vehicle, injury to the driver, passengers, and third parties.

(10e)
Fire Insurance:
(i) It provides compensation for loss or damage to property caused by fire, lightning, or explosion.
(ii) It typically requires the insured to take reasonable precautions against fire hazards.
(iii) The policy usually covers buildings, equipment, stock, and furniture.
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