NECO 2025/2026 Commerce Objective and Essay Questions and Answers

The transfer of ownership of goods is a feature of —
A. barter
B. trade
C. production
D. advertisement
Answer: B
Advertising that promotes a general idea or institution is called —
A. persuasive
B. competitive
C. informative
D. institutional
Answer: D
Which of the following is not a function of the Central Bank?
A. Issuing currency
B. Serving as banker’s bank
C. Accepting deposits from the public
D. Formulating monetary policies
Answer: C
The insurance principle that says both parties must disclose all relevant facts is —
A. indemnity
B. utmost good faith
C. proximate cause
D. contribution
Answer: B
Life assurance is an example of —
A. marine insurance
B. general insurance
C. compulsory insurance
D. non-indemnity insurance
Answer: D
The body that regulates business registration in Nigeria is —
A. CBN
B. NDIC
C. CAC
D. SON
Answer: C
A major reason for packaging is to —
A. reduce weight
B. increase cost
C. make handling easier
D. discourage theft
Answer: C
A document issued by a manufacturer guaranteeing repair or replacement of goods is a —
A. invoice
B. warranty
C. receipt
D. indent
Answer: B
Which of the following is a means of deferred payment?
A. Bank draft
B. Cheque
C. Credit card
D. Traveller’s cheque
Answer: C
Which of the following facilitates international trade?
A. Exchange control
B. Trade barriers
C. Foreign exchange
D. Quotas
Answer: C
An order to a bank to pay a stated sum from one’s account is a —
A. bank draft
B. standing order
C. cheque
D. direct debit
Answer: C
Which of the following documents is used when goods are returned?
A. Invoice
B. Debit note
C. Credit note
D. Proforma invoice
Answer: C
Which of the following is not a function of a retailer?
A. Selling in small units
B. Providing after-sales service
C. Breaking bulk
D. Selling to wholesalers
Answer: D
The government agency responsible for the protection of consumer rights in Nigeria is —
A. NAFDAC
B. SON
C. CPC
D. EFCC
Answer: C
A trade discount is usually given to —
A. consumers
B. agents
C. retailers
D. wholesalers
Answer: D
The method of payment used when the buyer pays only after goods are sold is called —
A. credit
B. hire purchase
C. deferred payment
D. consignment
Answer: D
The function of a bonded warehouse is to —
A. store perishable goods
B. store dutiable goods awaiting customs clearance
C. store local goods
D. store goods for free
Answer: B
The mode of transport suitable for heavy and bulky goods over long distances is —
A. road
B. air
C. rail
D. motorcycle
Answer: C
The person who takes insurance cover is known as the —
A. insurer
B. broker
C. underwriter
D. insured
Answer: D
A debit note is issued by a seller to —
A. correct an overcharge
B. request payment
C. correct an undercharge
D. cancel a transaction
Answer: C
A receipt issued when goods are loaded on board a ship is —
A. waybill
B. consignment note
C. bill of lading
D. delivery note
Answer: C

NECO 2025/2026 Commerce Objective and Essay Questions and Answers

Banking and Insurance (31–40)

The body responsible for insuring deposits in Nigerian banks is —
A. NDIC
B. CBN
C. SEC
D. BOI
Answer: A
The principle of indemnity in insurance implies —
A. full refund of premium
B. no profit, no loss
C. a profit for the insured
D. the more claims, the better
Answer: B
A financial institution that offers long-term loans to businesses is a —
A. merchant bank
B. mortgage bank
C. development bank
D. central bank
Answer: C
A document that shows the summary of account transactions is —
A. bank draft
B. cheque
C. bank statement
D. pay-in slip
Answer: C
A cheque that is post-dated cannot be —
A. rejected
B. accepted
C. cashed immediately
D. written
Answer: C
An agent who is paid a percentage of sales is a —
A. factor
B. broker
C. commission agent
D. del-credere agent
Answer: C
Which of the following is a direct service?
A. Banking
B. Hairdressing
C. Warehousing
D. Transportation
Answer: B
Which of these banks deals with foreign exchange control?
A. Commercial bank
B. Development bank
C. Central bank
D. Microfinance bank
Answer: C
An example of a negotiable instrument is —
A. invoice
B. cheque
C. proforma invoice
D. waybill
Answer: B
The body that regulates activities on the Nigerian Stock Exchange is —
A. SEC
B. CBN
C. NDIC
D. CAC
Answer: A

Trade, Advertising, Marketing (41–50)

An advertisement that appeals to people’s emotions is —
A. institutional
B. informative
C. persuasive
D. collective
Answer: C
The practice of selling goods in foreign countries at very low prices is —
A. dumping
B. exporting
C. importing
D. retailing
Answer: A
Retailers are often bypassed in modern commerce because of —
A. better roads
B. technological advancement
C. reduced tax
D. inflation
Answer: B
Branding is most useful in —
A. services
B. agriculture
C. manufacturing
D. importation
Answer: C
The market structure with a single seller is called —
A. oligopoly
B. perfect competition
C. duopoly
D. monopoly
Answer: D
A short-term loan to finance imports and exports is called —
A. overdraft
B. bridge loan
C. trade credit
D. letter of credit
Answer: D
A document used for payment when goods have not yet been delivered is —
A. invoice
B. credit note
C. delivery note
D. receipt
Answer: A
In order to avoid over-dependence on foreign goods, a country may adopt —
A. import liberalization
B. free trade policy
C. import substitution
D. export promotion
Answer: C
The person who bears the financial risk in an insurance contract is the —
A. broker
B. underwriter
C. insured
D. adjuster
Answer: B
Which of the following is a tertiary activity?
A. Banking
B. Farming
C. Manufacturing
D. Mining
Answer: A

NECO 2025/2026 Commerce Objective and Essay Questions and Answers

Section B: Theory Questions (Essay)

Instruction: Answer four (4) questions only. All questions carry equal marks. Use diagrams where necessary.

Question 1:

(a) Define commerce.
(b) List and explain five aids to trade.
(c) Mention two differences between commerce and economics.

Question 2:

(a) Define a sole proprietorship.
(b) State and explain four advantages and four disadvantages of a sole proprietorship.
(c) Why is it common in Nigeria?

Question 3:

(a) What is a cooperative society?
(b) State and explain five types of cooperative societies.
(c) Highlight three benefits of cooperative societies to members.

Question 4:

(a) Define advertising.
(b) Distinguish between informative and persuasive advertising.
(c) Explain four functions of advertising.

Question 5:

(a) Explain the meaning of insurance.
(b) List and explain four types of insurance policies.
(c) State and explain three principles of insurance.

Question 6:

(a) Define banking.
(b) Distinguish between a commercial bank and a central bank.
(c) List four services rendered by commercial banks.

Question 7:

(a) Define the term “wholesaler.”
(b) Explain five functions of a wholesaler in the chain of distribution.
(c) Mention two reasons why wholesalers are bypassed in modern trade.

Question 8:

(a) What is international trade?
(b) Distinguish between import and export trade.
(c) State four reasons why countries engage in international trade.

NECO 2025/2026 Commerce Examination

Section A: Objective Questions (1–50)

Objective Questions

NECO 2025/2026 Commerce Objective and Essay Questions and Answers

NECO 2025/2026 Commerce Objective and Essay Questions and Answers

Banking and Insurance (31–40)

Trade, Advertising, Marketing (41–50)

NECO 2025/2026 Commerce Objective and Essay Questions and Answers

Section B: Theory Questions (Essay)

Question 1:

Question 2:

Question 3:

Question 4:

Question 5:

Question 6:

Question 7:

Question 8:

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