Ondo State Joint Promotion Exam 2019 commerce Answer

COMMERCE OBJ:

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COMMERCE THEORY:

(1a)
Commerce is the activity of buying and selling of goods and services, especially on a large scale or quantity

Commerce is a branch of production that deals with the distribution; exchange of goods and services and all activities that assist or facilitate trade.

Commerce is also defined as the study of all the activities concerned with buying and selling and distribution of goods and series.

(1b)

(i) Commerce offers employment opportunities to a large number or people

(ii) Commerce links buyer and seller together to do business without physical contact.

(ii) Commerce helps to create wealth for nations as duties are charge on either imported or exported goods.

(iii) Commerce facilities the exchange of goods and services through transportation.

(iv) Commerce leads to the improvement of standard of living and quality of life of the people.

(v) Commerce facilitates mass production of goods and thus, people all over the world can enjoy goods and services within and outside their countries.

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(2a)
(i) Loan refers to long term debt given by the bank to the borrower.

WHILE

overdraft refers to short term facility given by the bank to the account holder to withdraw money from his or her account up to certain limit fixed by the bank.

(ii)
In case of loan, interest is charged on whole amount of loan.

WHILE

overdraft interest is charged only on the amount overdrawn and not on total limit of overdraft.

(iii) Bank loan is shown on the balance sheet as a long-term liability.

WHILE

overdraft is shown as short term liability in the balance sheet of the company.

(iv) Loan involves lot of formalities and documentation.

WHILE

overdraft it is flexible and also it requires LESS formalities and documentation as compared to loan.

(v) Loan is taken when one requires lot of money like housing loan, car loan, education loan.

WHILE

overdraft is taken for small amount of money so as to meet day to day shortage of money; overdraft is generally taken by current account holders of bank.

(2b)
1. Accepting Deposits

2. Lending of Funds

3. Credit Creation

4. Financing Foreign Trade

5. Agency Service

6. Miscellaneous Services

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(3a) Money is anything that is generally acceptable as a medium of exchange for goods and services and settlement of debt.

(3b)

1. Money as the Medium of Exchange

Money came into use to remove the inconveniences of barter as money has separated the act of purchase from sale. Medium of exchange is the basic or primary function of money. People exchange goods and services through the medium of money.

2. Money as a Unit of Account or Measure of Value:

Money serves as a unit of account or a measure of value. Money is the measuring rod, i.e., it is the units in terms of which the values of other goods and services are measured in money terms and expressed accordingly Different goods produced in the country are measured in different units like cloth m metres, milk in litres and sugar in kilograms.

3. Money as the Standard of Deferred Payments:

Deferred payments are payments which are made some time in the future. Debts are usually expressed in terms of the money of account. Loans are taken and repaid in terms of money.

4. Money as a Store of Value:

Wealth can be stored in terms of money for future. It serves as a store value of goods in liquid form. By spending it, we can get any commodity in future. Keynes places great emphasis on this function of money. Holding money is equivalent to keeping a reserve of liquid assets because it can be easily converted into other things.

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5a) Transportation is the movement of humans, animals and goods from one location to another. In other words, the action of transport is defined as a particular movement of an organism or thing from a point A to a Point B.

5b) merit

i) To reach hilly and mountainous areas, road transport is best suited.
ii) It serves as a feeder to railways because road transport has taken over the pressure that lied on railways transport.
iii) Road transport involves less cost and safety. of goods. One can easily deliver the goods on time through road transport.
iv) It is more appropriate for short distances as road transport is cheaper and speedier.

Demerits
i) Because of road congestion or even breakdown of vehicle, services may get delayed.
ii) Various agencies don’t charge uniform rates. Their rates are differ.
iii) Road transport proves to be costly for carrying heavy and bulky goods over long distances because of high cost of fuel and limited carrying capacity of motor trucks.
iv) Proper protection against loss or damage is not there and risks cannot be insured easily.

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7a) Production is a process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output).

7b)
I) ‘Land’ – all natural resources including oil, fish, soil, forests. The reward for land is rent.
ii)’Labour’ – the skills of the workforce and the quantity of labour they produce. The reward for labour is wages.
iii) ‘Capital’ – investment in man-made aids to production including buildings, factories, computers. The reward for capital is interest.
iv) ‘Enterprise – the risk-taking role of business owners undertaken in the pursuit of profit. Can be considered as a specialised form of labour. The reward for enterprise is profit.

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