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2020 NABTEB Commerce Questions and Answers
NABTEB September 21, 2020 • 4 months ago • No Comment Yet










(i) Mass production of Goods and services: commerce facilitates mass production and thus people all over the world can enjoy goods and services produced both within and outside their countries.
(ii) Raising capital : It facilitates the raising of capital for individual needs and investment through the services of banks and other financial institutions.
(iii) Employment Opportunity: It offers employment opportunities to a large number of people such as traders ,bankers and insurance brokers
(iv) Transport : It assists in moving people ,raw materials and finished goods from production points to consumption point through transport.
(v) Exchange of Goods and services: It facilitates the exchange of goods and services. Commerce facilities the exchange of goods and services through transportation and telecommunication services.


(i) Nature of goods: The nature of the goods to be transported will determine the means of transportation to be use Perishable and fragile goofs for example, are both better handled by fast means of transportation like aircraft while bulky goods are better handled by ship or rail.
(ii) Cost of transport: The overall cost of transport does determine the choice of means of transportation of goods. Air transport is costly while rail is cheaper over a long distance and this will determine the choice of either of the two to use.
(iii) Weight/Bulky goods: This is one of factor that determine choice of transportation. Goods that are heavy and bulky are better moved by road,rail and sea while light goods are best suitable for air transport.
(iv) The value of the goods: This is one of factor that determine choice of transportation. Commodities with high values like jewellery are better transported by air so as to reduce pilferage.
(v) Distance involved: This is among major factor that determine choice of transportation. When the distance is long,the best means of transportation are water and air ,irrespective of the cost while road transportation is good over short distance.

(i) Widening of the firm’s market: Transportation has the ability to extend a firm’s market for the sales of the firm’s products. It aid the movement of people and goods to the interior thereby widening it’s market.
(ii) Encouragement of international trade: The development of transport by air and sea has greatly promoted and encouraged trading activities between one country and another.
(iii) Prevention of Wastage of perishable goods: A good and efficient transport system will ensure quick distribution of perishable goods to areas where they are needed and therefore prevent wastage.
(iv) Development of Rural area: Transportation has greatly encourage the development and growth of the rural areas of a country.
(v) Effective and Efficient distribution of goods: Transportation facilities and quickens the effective distribution of goods and services to areas where they are needed.

(i) Offer and unqualified Acceptance: In a valid contract ,a definite offer must be made by one party to the other and the offer must be unconstitutionally accepted. Acceptance must be absolute and once it is completed, it cannot be revoked. Advertising and invitation to render, for instance, are not offers.
(ii) Intention to create Legal Relations : The terms of an agreement must state clearly that the parties intended to create legally binding contract . There must be no clause that will exclude the court ,eg in the case of Merrit vs Merrit, there was an intention to be legally bound.
(iii) There must be valuable consideration : All simple contract must be supported by valuable consideration, that is, some elements of exchange which is measurable in money or money’s worth. The benefit to one party must be balanced by the benefit to one party must be balanced by the benefit to the other.
(iv) Genuineness of consent: The consent of the parties involved in a contractual agreement must be genuine. An agreement of the parties to a contract must not be obtained under duress,undue influence, misrepresentation or mistake eg Cummis Vs Ince (1847)
(v) The parties must have contractual capacity : Those entering into a contract must have contractual capacity. An adult ,corporation etc cab enter into a valid contract while a minor,drunkard and an insane person cannot enter into a contract.

(i) Promotion of commercial activities: communication promotes commercial activities as the whole world is connected together as a global village.
(ii) Enhances settlement of international indebtedness: The use of telecommunication has enhanced the settlement of debts through telegraphic money transfer, eg Western union money transfer.
(iii) Creation of Awareness for Goods and services: communication helps in creating awareness for goods and services inorder to induce customers to buy.
(iv) Reduction in cost and Risk of travelling : Through communications ,the cost and risk involved in travelling long distances for business transactions can be greatly reduced.
(v) Facilitates contract between businessman : It provides and facilitates good and efficient means of maintaining close contact between businessman

(i) Business reply service: courier services provide business reply services to customers
(ii) Render services in all location: courier services render services to both urban and rural areas
(iii) Long hours of services: Courier service provide long hours of services running up to about 24hours per day.
(iv) Safe delivery of document: important documents are delivered safely without getting lost in transit.
(v) Transportation of load: Courier companies help to carry bulky loads over short or long distance.

(i) Indemnity : Indemnity is the compensation given to the insured by the insurer in the event of his suffering a loss. Under this principle,the insured will be given compensation for loss suffered. He will be restored to his former position before the loss occurred.
(ii) Insurable Interest : This one of the principles of insurance which states that,one can only insure properties that will bring loss or liabilities to him upon destruction. The properties of a neighbour or friend cannot be insured by the individual. He can only insure property that will bring financial loss to himself.
(iii) Contribution: The principle state that where a person has insured a certain risk with many insurance companies, he cannot claim compensation in full from each of the insurance companies. This means that each of the insurance companies will pay a certain proportion of the loss. The insured cannot make gain or profit.
(iv) Proximate Cause: This principle states that only the losses or liabilities which arise from the direct and immediate cause of the event insured against are indemnified. There must be a link between demand the loss suffered and the risk for which the insurance has been taken.
(v) Abandoned: This principle states that property that has been insured may be abandoned in certain cases if it’s actual loss appears to be unavoidable or if the cost of repairing the damaged property will exceed their value. In such cases,the insured will inform the insurer that he wishes to abandon the goods e.g as a constructive total loss under marine insurance.

Profit can be defined as the financial benefits which accrue to a business man. it represents the gain ,resulting from investing one’s capital in a business enterprise.

(i) Gross profit : Gross profit is the excess of turnover over the cost of goods sold. It is the difference between the selling price and cost Price of a particular product. This is the total profit before any expense is deducted.
(ii) Net profit: The net profit is the excess of gross profit over the expenses . it is arrived at after all expenses incurred in that period have been deducted from gross profit .This is ascertained in the profit and loss account

(i)Issued capital
(ii)Fixed capital
(iii)Liquid capital
(iv)Working capital
(v)Nominal capital


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