SCHEME OF WORK
WEEK TOPICS
THEME 1: TRADE AND BUSINESS ORGANIZATIONS
1. Revision for last term’s work
2. Commodity Exchange: (a) Meaning of commodity (b) Types of commodity –Agricultural, solid minerals, oil and gas.
3. Commodity Exchange: (a) Meaning of commodity exchange (b) tradable commodity (c) Requirement for trading (i)Grading system (ii) Warehousing (iii) Clearing system (iv) Standardizing (d)Types of commodity exchange – Spot and forward futures € Method of trading. (i) Open outcry, (ii) Electronic.
4. Commodity Exchange: (f) Benefit of Commodity Exchange (i)Increase in agricultural production (iii)encourage exploration of solid minerals (iv) Foreign exchange earnings (v) improved agricultural output and quality.
5. Commodity Exchange:(g) Constraints to commodity trading (k) Inadequate supply (ii) poor storage (iii) Bad weather (IV) Middle men (v) ethical issues (VI) inadequate knowledge of the working of commodity exchange.
6. Commodity Exchange: (h) Commodity exchange (i) Differentiate between commodities and stocks (ii) Items traded – Tangible and intangible methods of pricing.
7. Sole Proprietorship: (a) Meaning of Sole Proprietorship (b) Sources of Capital (c) Advantages and Disadvantages
8. Partnership: (a) Meaning of Partnership (b) Types of partnership – normal, dormant, limited, etc. (c) Formulation and agreement.
9. Partnership: (d) Sources of Capital (e) Advantages and disadvantages (f) Dissolution
10. Money: (a) Meaning of money (b) Evolution of money (c) Functions of money (d) Qualities/Characteristics of money (e) Forms/Types of money.
11. Revision.
3RD TERM
WEEK 1
TOPIC: COMMODITY EXCHANGE
CONTENT: 1. Meaning of Commodity
2. Types of commodity – Agricultural produce, solid minerals, oil and gas.
SUB-TOPIC 1: MEANING OF COMMODITY
Commodity is any good or material in a specified quantity which has universally standardized quality and price for exchange purpose.Commodities may also be defined as materials or products that can be traded or exchanged for value at a particular time and at a pre-determined price. Any material or anything regarded as commodity must possess standard quality and price. For instance, gold, silver are commodities because they have standardized quality and price which are objective and are determined in line with local or international standard.
However, gold jewellery is not a commodity because the price is subjective depending on factors such as design, period of sale, etc.
EVALUATION:
1. What is a commodity?
SUB-TOPIC 2: TYPES OFCOMMODITY
Commodities are basically classified or divided into three categories.
1. Agricultural Produce: these are goods that are grown or cultivated for human consumption. They include food crops, cash crops and livestock which are traded or exchanged at a pre-determined price and graded quality. Cash crops are sold in international market based on certain standardized price and quality. Another name for agricultural produceare soft commodities. Examples are beans, wheat, sugar, coffee etc.
2. Solid Minerals: They are basically solid materials which are extracted thorough mining. They include natural or mineral resources which can be sold in the local market or international market based on regulated pre-determined quality, quantity and price. Examples are gold, iron ore, silver, copper, tin, etc. Solid minerals can also be called hard commodities.
3. Oil and gas/energy commodities: these entail commodities which are generated from certain sources for the purpose of domestic or industrial consumption. Such commodities are consumed as soon as they are produced because they cannot be stored for many years. Examples are electricity, gas, oil etc.
EVALUATION:
1. List ten commodities and classify them into :
i. Food crops
ii. Cash crops
iii. Solid crops
iv. Oil and gas
2. Explain the following terms: oil and gas commodity, agricultural produce, and solid minerals.
GENERAL EVALUATION
1. Commodity is ……………. A. services B.any material that must possess standard quality and price c. any material that has product differentiation d. any good that can be consumed immediately.
2. One of the following is an agricultural produce…….. A. silver b. electricity c. sugar d. gold.
3. Which of the following cannot be accurately graded? A wheat b. tea c. cotton d. sugar.
4. Oil and gas commodities are ………….. Except a. gold b. electricity c. natural gas d. crude oil.
5. Another name for hard commodities is…………commodities. A. energy b. soft c. agricultural produces d. solid minerals.
ESSAY QUESTIONS
1. Mention the types of commodities.
2. Explain the types of commodities.
3. A commodity exchange is a highly organized market. What do you understand by the terms in italics?
WEEKEND ASSIGNMENT:
Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al; (pages 85 and 86)
PRE- READING ASSIGNMENT:
Read about the following: meaning of commodity exchange, tradable commodities, Requirement for trading – (i) Grading system (ii) warehousing (iii) Clearing system (iv) standardizing; Types of commodity exchange – spot and forward futures; Method of trading: (i) open outcry, (ii) Electronic.
WEEKEND ACTIVITY:
1. What is commodity exchange?
2. State and explain six requirements for commodity trading.
REFERENCE TEXTS:
1. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.
CONTENT: 1. Meaning of Commodity
2. Types of commodity – Agricultural produce, solid minerals, oil and gas.
SUB-TOPIC 1: MEANING OF COMMODITY
Commodity is any good or material in a specified quantity which has universally standardized quality and price for exchange purpose.Commodities may also be defined as materials or products that can be traded or exchanged for value at a particular time and at a pre-determined price. Any material or anything regarded as commodity must possess standard quality and price. For instance, gold, silver are commodities because they have standardized quality and price which are objective and are determined in line with local or international standard.
However, gold jewellery is not a commodity because the price is subjective depending on factors such as design, period of sale, etc.
EVALUATION:
1. What is a commodity?
SUB-TOPIC 2: TYPES OFCOMMODITY
Commodities are basically classified or divided into three categories.
1. Agricultural Produce: these are goods that are grown or cultivated for human consumption. They include food crops, cash crops and livestock which are traded or exchanged at a pre-determined price and graded quality. Cash crops are sold in international market based on certain standardized price and quality. Another name for agricultural produceare soft commodities. Examples are beans, wheat, sugar, coffee etc.
2. Solid Minerals: They are basically solid materials which are extracted thorough mining. They include natural or mineral resources which can be sold in the local market or international market based on regulated pre-determined quality, quantity and price. Examples are gold, iron ore, silver, copper, tin, etc. Solid minerals can also be called hard commodities.
3. Oil and gas/energy commodities: these entail commodities which are generated from certain sources for the purpose of domestic or industrial consumption. Such commodities are consumed as soon as they are produced because they cannot be stored for many years. Examples are electricity, gas, oil etc.
EVALUATION:
1. List ten commodities and classify them into :
i. Food crops
ii. Cash crops
iii. Solid crops
iv. Oil and gas
2. Explain the following terms: oil and gas commodity, agricultural produce, and solid minerals.
GENERAL EVALUATION
1. Commodity is ……………. A. services B.any material that must possess standard quality and price c. any material that has product differentiation d. any good that can be consumed immediately.
2. One of the following is an agricultural produce…….. A. silver b. electricity c. sugar d. gold.
3. Which of the following cannot be accurately graded? A wheat b. tea c. cotton d. sugar.
4. Oil and gas commodities are ………….. Except a. gold b. electricity c. natural gas d. crude oil.
5. Another name for hard commodities is…………commodities. A. energy b. soft c. agricultural produces d. solid minerals.
ESSAY QUESTIONS
1. Mention the types of commodities.
2. Explain the types of commodities.
3. A commodity exchange is a highly organized market. What do you understand by the terms in italics?
WEEKEND ASSIGNMENT:
Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al; (pages 85 and 86)
PRE- READING ASSIGNMENT:
Read about the following: meaning of commodity exchange, tradable commodities, Requirement for trading – (i) Grading system (ii) warehousing (iii) Clearing system (iv) standardizing; Types of commodity exchange – spot and forward futures; Method of trading: (i) open outcry, (ii) Electronic.
WEEKEND ACTIVITY:
1. What is commodity exchange?
2. State and explain six requirements for commodity trading.
REFERENCE TEXTS:
1. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.
WEEK 2
TOPIC:COMMODITY EXCHANGE:
CONTENT: 1. Meaning of commodity exchange and Tradable commodity
2. Requirement for trading { (i) Grading system (ii) warehousing (iii) Clearing system
(iv) standardizing},Types of commodity exchange (spot and forward futures) and
Methods of trading: (i) open outcry, (ii) Electronic.
SUB TOPIC1:MEANING OF COMMODITY EXCHANGE AND TRADABLE COMMODITY
MEANING OF COMMODITY EXCHANGE
Commodity Exchange can be defined as an open and organized market place where ownership and titles to certain quantity of tradable commodity are exchanged at a predetermined standardized price and quality. It can also be defined as an organized process and procedure where buyers and sellers of tradable commodities come into contact to exchange such commodities at a pre-determined price and quality. Commodity exchange is characterized by commoditization or commodification in which commodities are made to lose any form of differentiation across their supply base for the purpose of arriving at a globalised standard. Example of commodity exchange in Nigeria is the agricultural commodity board where samples of agricultural commodities are physically examined and graded to meet the international standard.
TRADABLE COMMODITY.
Tradable commodities are materials which are exchanged for value in big quantities and whose quality standards and price are universally applicable (have international markets). Examples of tradable commodities in West Africa are: energy(natural gas, crude oil, furnace oil), fibre (cotton, raw jute), Grains (rice, maize, cowpea, millet etc. Non-tradable commodities are the goods that have only domestic markets. For example, land is a non-tradable commodity.
Distinctions between tradable and non-tradable commodities
Tradable commodity Non-tradable commodity
1. It is universally supplied and demanded without qualitative differentiation It is universally supplied and demanded subjected to different quality.
2. The price sand quality are objective in nature The price and quality are subjective in nature
3. It is commonly traded in international market. It is commonly traded in local market.
4. The price of tradable commodities fluctuates based on global supply and demand The prices of non-tradable goods fluctuate based on local supply and demand.
5. The price of tradable commodity is relatively fixed at a specified quality The price of non-tradable commodity is not fixed due to differentiation in aspect of production.
EVALUATION:
1. Explain the term commodity exchange.
2. Explain the term tradable commodity.
SUB-TOPIC 2: (1) REQUIREMENT FOR TRADING. (2) TYPES OF COMMODITY EXCHANGE
(3) METHODSOF TRADING
1. Grading System: this is a systematic procedure and process involve in examining and sorting of tradable commodities in order to meet up with the world standard.
2. Warehousing:It is the process whereby tradable commodities are stores for a specified future period to satisfy trading purpose i.e. until they are needed.
3. Clearing system: this is a commodity trading requirement which entails the movement of traded commodities from the warehouse to a specified market for exchange purpose.
4. Standardizing: this involves the process of establishing or obtaining agreement or standard for tradable commodity in order to meet up with the taste of the buyers. Standardizing gives room for consistent quality, uniformity and reduction in variety of commodity in the commodity exchange market.
5. Simplification: it is the process of reducing wasteful and irrelevant commodity which may not contribute to effective exchanging process.
TYPES OF COMMODITY EXCHANGE – spot and forward futures.
The following are the types or forms of commodity exchange:
1. Spot Trading: it is a system or type of commodity trading or transaction on the spot where delivery takes place immediately.
2. Forward Future: this can be regarded as forward contract. it is a trading agreement between sellers and buyers to exchange a pre-determined quantity of commodity at a pre-specified market price and fixed future period of time. It involves trading which shall be completed at a later date between the parties involved.
3. Hedging: this is a system of future contract of selling or buying goods at a pre-determined fixed market price in order to prevent fluctuations in price of the commodity.
METHODS OF TRADING- OPEN OUTCRY AND ELECTRONIC.
1. Open Outcry is the name of a method of communication between professionals on a futures exchange (and also on a stock exchange), which involves shouting and use of hand signals to transfer or send information about buy and sell orders. The part of the trading floor where this takes place is called a ‘pit’. Open outcry allows the sellers and buyers to physically meet for trading purpose.
2. Electronic Trading: this is otherwise known as e-trading. It is a method of trading securities (such as stocks and bonds), foreign exchange or financial derivatives electronically. The use of electronic trading method is supported due to the fact that it is faster, cheaper, more efficient for users and less prone to manipulation by market makers and broker or dealers.
EVALUATION:
1. Explain 5 requirements for trading.
2. What is the difference between spot trading and forward future?
3. Shouldelectronic method of tradingreplace open outcry? Explain
GENERAL EVALUATION:
OBJECTIVE TEST
1. ……………. Is a requirement for trading a. spot trading b. forward future c. standardizing d. open outcry
2. …………… involves movement of traded commodities from the warehouse to a specified market for exchange purpose. A. warehousing b. clearing system c. simplification d. graded system.
3. One of the following is a non-tradable commodity…………. A. oil b. raw jute c. gold d. land.
4. The method of trading that allows shouting and hand signals is called………….. a. open outcry b. town cry c. electronic system d. open communication.
5. …………….. is a type of commodity exchange that provides for delivery at some future point in time. a. forward match b. forward contract c. froward d. clearing and forwarding.
ESSAY QUESTIONS:
1. Define commodity exchange.
2. Write short notes on the following: spot trading, forward future, hedging.
3. Explain five requirements for commodity trading.
4. State the two technique of trading
5. State five differences between tradable and non-tradable commodities.
WEEKEND ASSIGNMENT:
Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al; (pages 86-98)
PRE- READING ASSIGNMENT:
1. Read about the Benefit of Commodity Exchange.
WEEKEND ACTIVITY:
1. List five benefits of commodity exchange.
REFERENCE TEXTS:
1. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
CONTENT: 1. Meaning of commodity exchange and Tradable commodity
2. Requirement for trading { (i) Grading system (ii) warehousing (iii) Clearing system
(iv) standardizing},Types of commodity exchange (spot and forward futures) and
Methods of trading: (i) open outcry, (ii) Electronic.
SUB TOPIC1:MEANING OF COMMODITY EXCHANGE AND TRADABLE COMMODITY
MEANING OF COMMODITY EXCHANGE
Commodity Exchange can be defined as an open and organized market place where ownership and titles to certain quantity of tradable commodity are exchanged at a predetermined standardized price and quality. It can also be defined as an organized process and procedure where buyers and sellers of tradable commodities come into contact to exchange such commodities at a pre-determined price and quality. Commodity exchange is characterized by commoditization or commodification in which commodities are made to lose any form of differentiation across their supply base for the purpose of arriving at a globalised standard. Example of commodity exchange in Nigeria is the agricultural commodity board where samples of agricultural commodities are physically examined and graded to meet the international standard.
TRADABLE COMMODITY.
Tradable commodities are materials which are exchanged for value in big quantities and whose quality standards and price are universally applicable (have international markets). Examples of tradable commodities in West Africa are: energy(natural gas, crude oil, furnace oil), fibre (cotton, raw jute), Grains (rice, maize, cowpea, millet etc. Non-tradable commodities are the goods that have only domestic markets. For example, land is a non-tradable commodity.
Distinctions between tradable and non-tradable commodities
Tradable commodity Non-tradable commodity
1. It is universally supplied and demanded without qualitative differentiation It is universally supplied and demanded subjected to different quality.
2. The price sand quality are objective in nature The price and quality are subjective in nature
3. It is commonly traded in international market. It is commonly traded in local market.
4. The price of tradable commodities fluctuates based on global supply and demand The prices of non-tradable goods fluctuate based on local supply and demand.
5. The price of tradable commodity is relatively fixed at a specified quality The price of non-tradable commodity is not fixed due to differentiation in aspect of production.
EVALUATION:
1. Explain the term commodity exchange.
2. Explain the term tradable commodity.
SUB-TOPIC 2: (1) REQUIREMENT FOR TRADING. (2) TYPES OF COMMODITY EXCHANGE
(3) METHODSOF TRADING
1. Grading System: this is a systematic procedure and process involve in examining and sorting of tradable commodities in order to meet up with the world standard.
2. Warehousing:It is the process whereby tradable commodities are stores for a specified future period to satisfy trading purpose i.e. until they are needed.
3. Clearing system: this is a commodity trading requirement which entails the movement of traded commodities from the warehouse to a specified market for exchange purpose.
4. Standardizing: this involves the process of establishing or obtaining agreement or standard for tradable commodity in order to meet up with the taste of the buyers. Standardizing gives room for consistent quality, uniformity and reduction in variety of commodity in the commodity exchange market.
5. Simplification: it is the process of reducing wasteful and irrelevant commodity which may not contribute to effective exchanging process.
TYPES OF COMMODITY EXCHANGE – spot and forward futures.
The following are the types or forms of commodity exchange:
1. Spot Trading: it is a system or type of commodity trading or transaction on the spot where delivery takes place immediately.
2. Forward Future: this can be regarded as forward contract. it is a trading agreement between sellers and buyers to exchange a pre-determined quantity of commodity at a pre-specified market price and fixed future period of time. It involves trading which shall be completed at a later date between the parties involved.
3. Hedging: this is a system of future contract of selling or buying goods at a pre-determined fixed market price in order to prevent fluctuations in price of the commodity.
METHODS OF TRADING- OPEN OUTCRY AND ELECTRONIC.
1. Open Outcry is the name of a method of communication between professionals on a futures exchange (and also on a stock exchange), which involves shouting and use of hand signals to transfer or send information about buy and sell orders. The part of the trading floor where this takes place is called a ‘pit’. Open outcry allows the sellers and buyers to physically meet for trading purpose.
2. Electronic Trading: this is otherwise known as e-trading. It is a method of trading securities (such as stocks and bonds), foreign exchange or financial derivatives electronically. The use of electronic trading method is supported due to the fact that it is faster, cheaper, more efficient for users and less prone to manipulation by market makers and broker or dealers.
EVALUATION:
1. Explain 5 requirements for trading.
2. What is the difference between spot trading and forward future?
3. Shouldelectronic method of tradingreplace open outcry? Explain
GENERAL EVALUATION:
OBJECTIVE TEST
1. ……………. Is a requirement for trading a. spot trading b. forward future c. standardizing d. open outcry
2. …………… involves movement of traded commodities from the warehouse to a specified market for exchange purpose. A. warehousing b. clearing system c. simplification d. graded system.
3. One of the following is a non-tradable commodity…………. A. oil b. raw jute c. gold d. land.
4. The method of trading that allows shouting and hand signals is called………….. a. open outcry b. town cry c. electronic system d. open communication.
5. …………….. is a type of commodity exchange that provides for delivery at some future point in time. a. forward match b. forward contract c. froward d. clearing and forwarding.
ESSAY QUESTIONS:
1. Define commodity exchange.
2. Write short notes on the following: spot trading, forward future, hedging.
3. Explain five requirements for commodity trading.
4. State the two technique of trading
5. State five differences between tradable and non-tradable commodities.
WEEKEND ASSIGNMENT:
Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al; (pages 86-98)
PRE- READING ASSIGNMENT:
1. Read about the Benefit of Commodity Exchange.
WEEKEND ACTIVITY:
1. List five benefits of commodity exchange.
REFERENCE TEXTS:
1. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
WEEK 3
TOPIC: COMMODITY EXCHANGE
CONTENT:Benefit of Commodity Exchange (i)Increase in agricultural production (iii) encourage exploration of solid minerals (iv) Foreign exchange earnings (v) improved agricultural output and quality.
SUB-TOPIC 1: BENEFITS OF COMMODITY EXCHANGE.
The following are the major benefits or importance of commodity exchange. They also entail the roles which commodity exchange plays in the economic development of a country.
1. Increase in Agricultural Production:Commodity exchange has helped in enhancing and promoting large-scale agricultural production. For example, those engaged in agriculture will be inclined to plant seeds for crops that they know are guaranteed to be sold so long as they achieve minimum standards of quality.
2. Stabilization in Agricultural Product Pricing: this is done by fixing price to be executed in trading at a pre-determined period so as to prevent the risks of price fluctuation in the world market.
3. It encourages the exploration of solid minerals: the exploration of metals and oil is encouraged since present and future demands are visible.
4. They ensure increase foreign exchange earnings: It has served as a source of revenue and income to individuals, firms and government in a country and this helps to ensure increase or improvement in the standard of living.
5. Improved Agricultural Output and Quality: Commodity exchange help to standardize prices and quality of commodities to be traded between the participants.
6. They provide a good and secure environment where members meet to trade their commodities.
EVALUATION:
Give four advantages provided by commodities exchanges.
GENERAL EVALUATION
1. ………………is one of the benefits of commodity exchange. . stabilized prices b. reduced production c. poor national income d. insecure environment.
ESSAY QUESTIONS
1. Outline and explain six roles of commodity exchange in economic development countries.
WEEKEND ASSIGNMENT:
Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al; (pages 98-100)
PRE- READING ASSIGNMENT:
Read about the following: constraints to commodity trading.
WEEKEND ACTIVITY:
Outline 5 constraints to commodity trading.
REFERENCE TEXTS:
1. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
CONTENT:Benefit of Commodity Exchange (i)Increase in agricultural production (iii) encourage exploration of solid minerals (iv) Foreign exchange earnings (v) improved agricultural output and quality.
SUB-TOPIC 1: BENEFITS OF COMMODITY EXCHANGE.
The following are the major benefits or importance of commodity exchange. They also entail the roles which commodity exchange plays in the economic development of a country.
1. Increase in Agricultural Production:Commodity exchange has helped in enhancing and promoting large-scale agricultural production. For example, those engaged in agriculture will be inclined to plant seeds for crops that they know are guaranteed to be sold so long as they achieve minimum standards of quality.
2. Stabilization in Agricultural Product Pricing: this is done by fixing price to be executed in trading at a pre-determined period so as to prevent the risks of price fluctuation in the world market.
3. It encourages the exploration of solid minerals: the exploration of metals and oil is encouraged since present and future demands are visible.
4. They ensure increase foreign exchange earnings: It has served as a source of revenue and income to individuals, firms and government in a country and this helps to ensure increase or improvement in the standard of living.
5. Improved Agricultural Output and Quality: Commodity exchange help to standardize prices and quality of commodities to be traded between the participants.
6. They provide a good and secure environment where members meet to trade their commodities.
EVALUATION:
Give four advantages provided by commodities exchanges.
GENERAL EVALUATION
1. ………………is one of the benefits of commodity exchange. . stabilized prices b. reduced production c. poor national income d. insecure environment.
ESSAY QUESTIONS
1. Outline and explain six roles of commodity exchange in economic development countries.
WEEKEND ASSIGNMENT:
Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al; (pages 98-100)
PRE- READING ASSIGNMENT:
Read about the following: constraints to commodity trading.
WEEKEND ACTIVITY:
Outline 5 constraints to commodity trading.
REFERENCE TEXTS:
1. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
WEEK 4
TOPIC: COMMODITY EXCHANGE
CONTENT:CONSTRAINTS TO COMMODITY TRADING (i) Inadequate supply, (ii) poor storage (iii) Bad weather (iv) Middle men (v) ethical issues (vi) inadequate knowledge of the working of commodity exchange.
SUB-TOPIC 1:CONSTRAINTS TO COMMODITY TRADING.
1. Inadequate Supply: the supply of some commodities may be inadequate especially when unexpected poor harvest affects discharge of future contract.
2. Bad Weather: most of tradable commodities, especially agricultural products, are subjected to climatic or weather condition, thereby causing a limitation to commodity trading.
3. Inadequate knowledge of the workings of the Commodity Exchanges: inexperienced and unskilled agents and contractors which lack the skills and knowledge of the workings of the commodity exchange hinder patronage and participation.
4. The problems of Middlemen: the presence of middlemen or agents who often cause artificial scarcity inflation of commodity process is also a major constraint to commodity trading in Nigeria.
5. Poor Storage Facilities:this usually reduces the quantity of soft commodities available for sale as some quantity decays over time.
6. Ethical Issues: speculative activity may have a destabilizing effect on prices. Speculators can collectively cause prices to rise or fall in their pursuit of Profit.
7. Problemof Price Fixing: the prices of tradable commodities that are fixed ahead of trading period often suffer certain fluctuation due to shortage or overproduction which may warrant a change in already fixed prices of commodities.
EVALUATION:
State five constraints of commodity exchange in Nigeria.
GENERAL EVALUATION
1. All but one is not a constraint to commodity trading in Nigeria……..a. ethical issues b. poor storage facility c. bad weather d. exploration of solid minerals.
2.
ESSAY QUESTIONS
1. Discuss five problems militating against the growth and prosperity of commodity trading in Nigeria.
2. What solutions can be proffered to the problems listed above?
3. Relate how the problems of commodity trading can affect the national economy.
WEEKEND ASSIGNMENT:
1. Read Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited. Page 54
2. Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al;. (Page 101)
3. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(page116)
PRE- READING ASSIGNMENT:
Read about: Commodity exchange (i) Differentiate between commodities and stocks (ii) Items traded – Tangible and intangible methods of pricing.
WEEKEND ACTIVITY:
Differentiate between commodities andstock
REFERENCE TEXTS:
1. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
CONTENT:CONSTRAINTS TO COMMODITY TRADING (i) Inadequate supply, (ii) poor storage (iii) Bad weather (iv) Middle men (v) ethical issues (vi) inadequate knowledge of the working of commodity exchange.
SUB-TOPIC 1:CONSTRAINTS TO COMMODITY TRADING.
1. Inadequate Supply: the supply of some commodities may be inadequate especially when unexpected poor harvest affects discharge of future contract.
2. Bad Weather: most of tradable commodities, especially agricultural products, are subjected to climatic or weather condition, thereby causing a limitation to commodity trading.
3. Inadequate knowledge of the workings of the Commodity Exchanges: inexperienced and unskilled agents and contractors which lack the skills and knowledge of the workings of the commodity exchange hinder patronage and participation.
4. The problems of Middlemen: the presence of middlemen or agents who often cause artificial scarcity inflation of commodity process is also a major constraint to commodity trading in Nigeria.
5. Poor Storage Facilities:this usually reduces the quantity of soft commodities available for sale as some quantity decays over time.
6. Ethical Issues: speculative activity may have a destabilizing effect on prices. Speculators can collectively cause prices to rise or fall in their pursuit of Profit.
7. Problemof Price Fixing: the prices of tradable commodities that are fixed ahead of trading period often suffer certain fluctuation due to shortage or overproduction which may warrant a change in already fixed prices of commodities.
EVALUATION:
State five constraints of commodity exchange in Nigeria.
GENERAL EVALUATION
1. All but one is not a constraint to commodity trading in Nigeria……..a. ethical issues b. poor storage facility c. bad weather d. exploration of solid minerals.
2.
ESSAY QUESTIONS
1. Discuss five problems militating against the growth and prosperity of commodity trading in Nigeria.
2. What solutions can be proffered to the problems listed above?
3. Relate how the problems of commodity trading can affect the national economy.
WEEKEND ASSIGNMENT:
1. Read Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited. Page 54
2. Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al;. (Page 101)
3. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(page116)
PRE- READING ASSIGNMENT:
Read about: Commodity exchange (i) Differentiate between commodities and stocks (ii) Items traded – Tangible and intangible methods of pricing.
WEEKEND ACTIVITY:
Differentiate between commodities andstock
REFERENCE TEXTS:
1. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
WEEK 5
TOPIC: COMMODITY EXCHANGE
CONTENT:1.Commodity exchange (i) Differentiate between commodities and stocks (ii) Items traded – Tangible and intangible methods of pricing
SUB-TOPIC1: COMMODITY EXCHANGE:
Commodities –tangible things, such as products are things we can see. Commodities are traded in commodity exchange. Stocks are intangible things (cannot be seen) that are traded on the Stock Exchange.
Differences between commodities and stocks.
COMMODIITIES STOCKS
a. Commodities entail immediate consumption of products for domestic and industrial purposes.
Stocks entail investment in a company.
b. Commodities are tangible in nature which is consumed. Stocks are intangible in nature
c. Commodities involve passing of ownership and titles of goods between the seller and the buyers. Stocks allow taking ownership in a company
d. Traders are involved in selling and buying of commodities. Brokers are involved in buying and selling of stocks.
e. Commodities are traded in commodity exchange market. Stocks are traded in stock exchange market.
f. Commodities often came into existence through production process. Stocks came into existence through issuing processes.
g. The return on tradable commodities is known as profit. The return on stocks is known as dividend.
EVALUATION:
1. What is tangible and intangible commodity?
2. State five differences between commodities and stocks.
GENERALEVALUATION
OBJECTIVE TEST:
1. ……………. Is regarded as intangible goods. A. stock b. commodity c. gold d. energy
2. …………….. are a financial security issued by government and large companies as a means of raising long-term capital to finance their expenditure. A. commodities b. sand c. stock d. soft commodity.
3. Ownership of a company is taken by buying………………. A. stock b. gold c. oil d. hard commodities.
4. A good example of tangible goods is……………. A. bond b. shares c. commodities d. debentures.
5. Commodities include …………… and …………… a. stock and bonds b. shares and gold c. agricultural product and solid minerals d. air and water.
ESSAY QUESTIONS
1. Clarify the difference between ‘tangible’ things traded and ’intangible’ things.
2. Mention five components of commodities.
3. Stocks are intangible things. Explain
4. Explain to an investor the advantage of stocks over commodities.
WEEKEND ASSIGNMENT:
1. Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al;. ( page 102)
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.(Page 54)
PRE- READING ASSIGNMENT:
Read about: sole proprietorship: (a) Meaning of Sole proprietorship (b) Sources of Capital (c) Advantages and Disadvantages
WEEKEND ACTIVITY:
1. Outline five advantages and five disadvantages of sole proprietorship.
REFERENCE TEXTS:
1. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC
CONTENT:1.Commodity exchange (i) Differentiate between commodities and stocks (ii) Items traded – Tangible and intangible methods of pricing
SUB-TOPIC1: COMMODITY EXCHANGE:
Commodities –tangible things, such as products are things we can see. Commodities are traded in commodity exchange. Stocks are intangible things (cannot be seen) that are traded on the Stock Exchange.
Differences between commodities and stocks.
COMMODIITIES STOCKS
a. Commodities entail immediate consumption of products for domestic and industrial purposes.
Stocks entail investment in a company.
b. Commodities are tangible in nature which is consumed. Stocks are intangible in nature
c. Commodities involve passing of ownership and titles of goods between the seller and the buyers. Stocks allow taking ownership in a company
d. Traders are involved in selling and buying of commodities. Brokers are involved in buying and selling of stocks.
e. Commodities are traded in commodity exchange market. Stocks are traded in stock exchange market.
f. Commodities often came into existence through production process. Stocks came into existence through issuing processes.
g. The return on tradable commodities is known as profit. The return on stocks is known as dividend.
EVALUATION:
1. What is tangible and intangible commodity?
2. State five differences between commodities and stocks.
GENERALEVALUATION
OBJECTIVE TEST:
1. ……………. Is regarded as intangible goods. A. stock b. commodity c. gold d. energy
2. …………….. are a financial security issued by government and large companies as a means of raising long-term capital to finance their expenditure. A. commodities b. sand c. stock d. soft commodity.
3. Ownership of a company is taken by buying………………. A. stock b. gold c. oil d. hard commodities.
4. A good example of tangible goods is……………. A. bond b. shares c. commodities d. debentures.
5. Commodities include …………… and …………… a. stock and bonds b. shares and gold c. agricultural product and solid minerals d. air and water.
ESSAY QUESTIONS
1. Clarify the difference between ‘tangible’ things traded and ’intangible’ things.
2. Mention five components of commodities.
3. Stocks are intangible things. Explain
4. Explain to an investor the advantage of stocks over commodities.
WEEKEND ASSIGNMENT:
1. Read Extension Modern Commerce for Senior Secondary Schools, by Bello A. A. et al;. ( page 102)
2. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.(Page 54)
PRE- READING ASSIGNMENT:
Read about: sole proprietorship: (a) Meaning of Sole proprietorship (b) Sources of Capital (c) Advantages and Disadvantages
WEEKEND ACTIVITY:
1. Outline five advantages and five disadvantages of sole proprietorship.
REFERENCE TEXTS:
1. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC
WEEK 6
TOPIC: SOLE PROPRIETORSHIP
CONTENT:1. Meaning of Sole proprietorship and Sources of Capital
2. Advantages and Disadvantages
SUB-TOPIC 1: MEANING OF SOLE PROPRIETORSHIP and SOURCES OF CAPITAL
• Sole proprietorship could be defined as the business organization both owned and controlled by a man. The owner is called the sole proprietor orsole trader. This type of business may be operated by the proprietor (owner) alone or it may employ several people, but the main feature of it is that it is owned by one person and tends to be a small business.It is the oldest, simplest and commonest form of business in Nigeria.Sole proprietors tend to have only a few employees, and less machinery or capital than larger business. Examples are private schools, hair salon, barber’s shop etc.
Features of Sole proprietorship
Sole proprietorship business is characterized by the following:
It owned and controlled by one man.
It has unlimited liability.
It is not a legal entity.
Its main aim is to make profits.
It requires small capital.
It allows the owner to make decision alone.
SOURCES OF CAPITAL.
A sole trader has many ways to secure funds needed in running the business. Some of the sources are enumerated below.
1. Personal savings.
2. Borrowing from relatives like friends, family, etc
3. Plough back profits, i.e. profits made last year but not spent till this year.
4. Loans from the commercial banks, if there is a collateral security.
5. Trade credits.
EVALUATION
1. State the meaning of sole proprietorship
2. List five sources of capital to the sole proprietorship.
SUB-TOPIC 2: ADVANTAGES AND DISADVADVANTAGES OF SOLE PROPRIETORSHIP
Advantages of Sole Proprietorship
1. Low capital requirement: The capital requirement to start is small.
2. It is easy to Start: One-man business is easy to establish because no rigorous legal or administrative formalities are required before business can start.
3. Cordial relationship exists between the owner, staff and customers.
4. Quick Decision making: the sole proprietor does not need to consult anybody before decisions are taken.
5. Privacy and secrecy: there is no legal requirement that books of account should be opened for public inspection, or for the inspection of anybody.
6. It can adapt to any environment: one-man business can be established in any environment where the clientele(customers) are available.
7. Easy to Manage: the business is small, making its management and organization simple and easy.
Disadvantages of Sole Proprietorship
1. Inadequate Capital: due to inability of the sole proprietor to present collateral security, he may not be able to secure funds from banks.This will limited the amount of capital in his possession.
2. Limited Expansion: As a result of little capital available in sole proprietorship business, it is difficult for the business to grow.
3. Unlimited Liability: if the business fails, the proprietor runs the risk of losing his business assets as well as his personal possessions. This is because the sole proprietorship is not a legal entity that is separate from its owners.
4. No continuity: the death of the sole proprietor may bring the business to an end, especially if direct services are involved.
5. Unwise and rash decisions may often be taken; this is because the proprietor is not required to consult anybody before taking a decision.
6. Inability to retain Professionals: due to poor staff welfare, the sole proprietor cannot retain professionals that are highly paid.
7. He bears all the risk: a sole proprietor is a risk bearer since he alone dictates how the business is controlled and managed. This means that any mistake on his part will adversely affect the business.
EVALUATION:
1. Outline the advantages and disadvantages of sole proprietorship.
GENERALEVALUATION:
OBJECTIVE TEST:
1. Sole proprietorship is ………………. A. owned by one individual. B. is characterized by limited liability. C. is and incorporated business. D. A and B. E. A and C.
2. Which of the following is not a source of borrowed finance for a sole proprietorship? A. trade creditors b. loans from a cooperative society c. debentures d. bank overdraft e. loans from traditional money lenders.
3. Which of the following is an advantage enjoyed by sole proprietorship? A. the proprietor is personally liable for all debts incurred by the business. B.it is cheap and easy to set up c. there may be lack of continuity in the life of the business, following the death or incapacitation of the owner. D. A and B. E. A and C.
4. Disadvantages suffered by sole proprietorship include a. that the proprietor is personally liable for all debts incurred by the business b. that it is cheap and easy to set up. C. that there may be lack of continuity in the life of the business, following the death or incapacitation of the owner d. A and B e. A and C.
5. I. A sole proprietorship is subjected to more legal restrictions than other forms of business
II. Sole proprietorships are generally smaller than other forms of business units.
III. Sole proprietorships can raise finance by issuing share.
Which of the above three statements is/are true? A. I only b. II only c. III only d. I and II only e. I,II and III.
ESSAY QUESTIONS:
1. Discuss the term ‘sole proprietorship.’ what are the major sources of finance for sole proprietorship?
2. Outline the advantages and disadvantages of sole proprietorship.
3. It is said that in Nigeria, the number of sole proprietors continues to increase every year. Why do you think this is so?
4. State five features of soleproprietorship.
WEEKEND ASSIGNMENT:
1. Read Commerce for Senior Secondary School book1 by Odedokun et al; Longman Nigeria PLC. (pages 139,142 and 143)
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(page 120)
PRE- READING ASSIGNMENT:
Read about the definition of partnership, types of partnership and formulation and agreement.
WEEKEND ACTIVITY:
1. Define partnership and mention the types of partnership.
REFERENCE TEXTS
1. Commerce for Senior Secondary School book1 by Odedokun et al; Longman Nigeria PLC.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
CONTENT:1. Meaning of Sole proprietorship and Sources of Capital
2. Advantages and Disadvantages
SUB-TOPIC 1: MEANING OF SOLE PROPRIETORSHIP and SOURCES OF CAPITAL
• Sole proprietorship could be defined as the business organization both owned and controlled by a man. The owner is called the sole proprietor orsole trader. This type of business may be operated by the proprietor (owner) alone or it may employ several people, but the main feature of it is that it is owned by one person and tends to be a small business.It is the oldest, simplest and commonest form of business in Nigeria.Sole proprietors tend to have only a few employees, and less machinery or capital than larger business. Examples are private schools, hair salon, barber’s shop etc.
Features of Sole proprietorship
Sole proprietorship business is characterized by the following:
It owned and controlled by one man.
It has unlimited liability.
It is not a legal entity.
Its main aim is to make profits.
It requires small capital.
It allows the owner to make decision alone.
SOURCES OF CAPITAL.
A sole trader has many ways to secure funds needed in running the business. Some of the sources are enumerated below.
1. Personal savings.
2. Borrowing from relatives like friends, family, etc
3. Plough back profits, i.e. profits made last year but not spent till this year.
4. Loans from the commercial banks, if there is a collateral security.
5. Trade credits.
EVALUATION
1. State the meaning of sole proprietorship
2. List five sources of capital to the sole proprietorship.
SUB-TOPIC 2: ADVANTAGES AND DISADVADVANTAGES OF SOLE PROPRIETORSHIP
Advantages of Sole Proprietorship
1. Low capital requirement: The capital requirement to start is small.
2. It is easy to Start: One-man business is easy to establish because no rigorous legal or administrative formalities are required before business can start.
3. Cordial relationship exists between the owner, staff and customers.
4. Quick Decision making: the sole proprietor does not need to consult anybody before decisions are taken.
5. Privacy and secrecy: there is no legal requirement that books of account should be opened for public inspection, or for the inspection of anybody.
6. It can adapt to any environment: one-man business can be established in any environment where the clientele(customers) are available.
7. Easy to Manage: the business is small, making its management and organization simple and easy.
Disadvantages of Sole Proprietorship
1. Inadequate Capital: due to inability of the sole proprietor to present collateral security, he may not be able to secure funds from banks.This will limited the amount of capital in his possession.
2. Limited Expansion: As a result of little capital available in sole proprietorship business, it is difficult for the business to grow.
3. Unlimited Liability: if the business fails, the proprietor runs the risk of losing his business assets as well as his personal possessions. This is because the sole proprietorship is not a legal entity that is separate from its owners.
4. No continuity: the death of the sole proprietor may bring the business to an end, especially if direct services are involved.
5. Unwise and rash decisions may often be taken; this is because the proprietor is not required to consult anybody before taking a decision.
6. Inability to retain Professionals: due to poor staff welfare, the sole proprietor cannot retain professionals that are highly paid.
7. He bears all the risk: a sole proprietor is a risk bearer since he alone dictates how the business is controlled and managed. This means that any mistake on his part will adversely affect the business.
EVALUATION:
1. Outline the advantages and disadvantages of sole proprietorship.
GENERALEVALUATION:
OBJECTIVE TEST:
1. Sole proprietorship is ………………. A. owned by one individual. B. is characterized by limited liability. C. is and incorporated business. D. A and B. E. A and C.
2. Which of the following is not a source of borrowed finance for a sole proprietorship? A. trade creditors b. loans from a cooperative society c. debentures d. bank overdraft e. loans from traditional money lenders.
3. Which of the following is an advantage enjoyed by sole proprietorship? A. the proprietor is personally liable for all debts incurred by the business. B.it is cheap and easy to set up c. there may be lack of continuity in the life of the business, following the death or incapacitation of the owner. D. A and B. E. A and C.
4. Disadvantages suffered by sole proprietorship include a. that the proprietor is personally liable for all debts incurred by the business b. that it is cheap and easy to set up. C. that there may be lack of continuity in the life of the business, following the death or incapacitation of the owner d. A and B e. A and C.
5. I. A sole proprietorship is subjected to more legal restrictions than other forms of business
II. Sole proprietorships are generally smaller than other forms of business units.
III. Sole proprietorships can raise finance by issuing share.
Which of the above three statements is/are true? A. I only b. II only c. III only d. I and II only e. I,II and III.
ESSAY QUESTIONS:
1. Discuss the term ‘sole proprietorship.’ what are the major sources of finance for sole proprietorship?
2. Outline the advantages and disadvantages of sole proprietorship.
3. It is said that in Nigeria, the number of sole proprietors continues to increase every year. Why do you think this is so?
4. State five features of soleproprietorship.
WEEKEND ASSIGNMENT:
1. Read Commerce for Senior Secondary School book1 by Odedokun et al; Longman Nigeria PLC. (pages 139,142 and 143)
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(page 120)
PRE- READING ASSIGNMENT:
Read about the definition of partnership, types of partnership and formulation and agreement.
WEEKEND ACTIVITY:
1. Define partnership and mention the types of partnership.
REFERENCE TEXTS
1. Commerce for Senior Secondary School book1 by Odedokun et al; Longman Nigeria PLC.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
WEEK 7
TOPIC: PARTNERSHIP
CONTENT1. Meaning of Partnership
2 Types of partnership – normal, dormant, limited, etc.
3 Formulation and agreement.
SUB-TOPIC 1: MEANING OF PARTNERSHIP
Partnership is an association between a minimum of two and maximum of twenty members coming together to undertake a/some businesses) in order to make profit. The partnership Act 1890 defined partnership as the relationship which subsists between persons carrying on a business in common with a view of profit. Partnerships are also known as firms. The law allows this type of business to have between two and 20 persons as members although there are exceptions. A bank is not allowed to have more than ten partners and certain professional firms such as accountants, solicitors and stockbrokers are allowed to have more than 20 partners. Examples are Femi and Shade Enterprises, Diya Fatimilehin and Co; (estate firm).
FEATURES OR CHARACTERISTICS OF PARTNERSHIP
1. Ownership:membership is limited and is from two to twenty.
2. Objective: the main aim of forming this type of business organization is to make profit.
3. Source of capital: the partners contribute the capital required for starting and running the business.
4. Unlimited Liability: members of a partnership have unlimited liability for the debts of the firm.
5. Life span: the duration of the business depends on the agreement signed by the partners involved.
6. Legal entity: it is not a legal entity as the partners are not separated from the business.
7. Management: the business is controlled and managed by the partners.
EVALUATION
1. Explain the meaning of partnership
2. Identify five features of partnership
SUB-TOPIC 2: TYPES OF PARTNERSHIP
1. Limited Partnership:
This is a type of partnership which is formed and registered under the limited Partnership Act. In a limited partnership, there must be one general partner with unlimited liability and one limited partner whose liability is limited to the amount invested. The partners do not take equal part in management and administration of the business.
2. General or Ordinary Partnership
This is the opposite of limited partnership where the members who formed the business have the equal rights and responsibility in the administration of the business. The liability of members is unlimited, which means that all partners are liable to the full extent of the debts of the firm.
TYPES OF PARTNERS
1. Limited Partners:a limited partner is one who has agreed to contribute a certain sum to a partnership business and is prevented by law from taking any active part in the management and administration of the business. He has limited liability.
2. General Partners: this type of partner has full power of participating in the conduct and management of the partnership business. A general partner has unlimited liability and binds the firm. Death or bankruptcy of this partner leads to the dissolution of the partnership.
3. Active Partner: an active partner participates actively in the day to day running of the firm and is being paid a certain sum as salary.
4. Nominal or Quasi Partner: a nominal partner contributes only his name to the formation of the business. He neither contributes capital nor takes part in the management of the firm.
5. Sleeping or Dormant Partner: a dormant partner takes no part in the conduct and management of the partnership business. He contributes capital and share from the profit but receives no salary. A sleeping partner is liable for the debts of the firm.
EVALUATION
1. Mention two types of partnership and point out their differences.
2. Itemize five types of partners and explain and three.
SUB-TOPIC 3: FORMULATION AND AGREEMENT.
A partnership business may be established without any formality although the partners have certain unavoidable obligations to third parties. It is usual for people entering into partnership to express their intention in a partnership agreement known as, deed of partnership.
Deed of Partnership
This is a document which contains the rules and regulations which partners agree to abide by in the course of the operation of the partnership. The deed is also called Partnership law. Thecontents of partnership deed are:
The name of the partners
The name and nature of business.
The amount of capital contributed by each partner.
The role of each partner in the firm
How profits and losses are to be shared.
Whether or not salaries are to be paid to any partners and how much.
How decisions are to be made either by majority vote or what
The duration of the partnership
The rights and obligations of partners
How the business shall wind up if the need arises.
RIGHTS OF PARTNERS
1. The partners are entitled to share from the profits of the partnership business.
2. They must be indemnified by the firm in respect of payments made and personal liabilities incurred in the conduct of the business
3. A partner making advance beyond the amount of capital which he has agreed to subscribe is entitled to interest of 5%.
4. A partner has the right to act as the agent of the business.
5. Every partner must have access to the partnership books of accounts.
6. Every general partner can take part in the management of the partnership.
EVALUATION
1. List 5 contents of the partnership deed.
2. Enumerate 5 rights of apartner
GENERALEVALUATION
OBJECTIVE TEST
1. Which of the following activities is most likely controlled by a partnership? A. multiple retail chain b. mass production c. oil production d. accountancy
2. The document that sets out the agreement between partners is called a: a. partnership agreement b. contract of partnership c. deed of partnership d. Partners contract.
3. Which of the following is not contained in a deed of partnership? A. Names and addresses of partners B.Ratio for sharing profits and losses c. investment of each partner d. rate of taxation.
4. A partner who does not play an active role in a business but contributes capital is a ………. A secret partner b. dormant partner c. nominal partner d. limited partner e. general partner..
5. ……………. Is not a right of a partner? A. right to the books of account b. right to share profits c. right to 5% interest of additional capital contribution d. right to steal
ESSAY QUESTIONS
1. (a) What is a Deed of Partnership? (b) State six contents of a Deed of partnership. (c) Give three rights of a partner (SSCE Nov.,1999).
2. Explain the rights of partners in the partnership business.
3. State five features of partnership.
4. Mention five kinds of partners.
5. Clarify the difference between general and limited partnership
WEEKEND ASSIGNMENT:
1. Read Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd. (page 62-64) Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.(Page 58)
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(pages 126-133)
PRE- READING ASSIGNMENT:
1. Read about: Partnership: (d) Sources of Capital (e) Advantages and disadvantages (f) Dissolution
WEEKEND ACTIVITY:
1. List five advantages and five disadvantages of partnership.
REFERENCE TEXTS:
1. Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
3. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
4. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
CONTENT1. Meaning of Partnership
2 Types of partnership – normal, dormant, limited, etc.
3 Formulation and agreement.
SUB-TOPIC 1: MEANING OF PARTNERSHIP
Partnership is an association between a minimum of two and maximum of twenty members coming together to undertake a/some businesses) in order to make profit. The partnership Act 1890 defined partnership as the relationship which subsists between persons carrying on a business in common with a view of profit. Partnerships are also known as firms. The law allows this type of business to have between two and 20 persons as members although there are exceptions. A bank is not allowed to have more than ten partners and certain professional firms such as accountants, solicitors and stockbrokers are allowed to have more than 20 partners. Examples are Femi and Shade Enterprises, Diya Fatimilehin and Co; (estate firm).
FEATURES OR CHARACTERISTICS OF PARTNERSHIP
1. Ownership:membership is limited and is from two to twenty.
2. Objective: the main aim of forming this type of business organization is to make profit.
3. Source of capital: the partners contribute the capital required for starting and running the business.
4. Unlimited Liability: members of a partnership have unlimited liability for the debts of the firm.
5. Life span: the duration of the business depends on the agreement signed by the partners involved.
6. Legal entity: it is not a legal entity as the partners are not separated from the business.
7. Management: the business is controlled and managed by the partners.
EVALUATION
1. Explain the meaning of partnership
2. Identify five features of partnership
SUB-TOPIC 2: TYPES OF PARTNERSHIP
1. Limited Partnership:
This is a type of partnership which is formed and registered under the limited Partnership Act. In a limited partnership, there must be one general partner with unlimited liability and one limited partner whose liability is limited to the amount invested. The partners do not take equal part in management and administration of the business.
2. General or Ordinary Partnership
This is the opposite of limited partnership where the members who formed the business have the equal rights and responsibility in the administration of the business. The liability of members is unlimited, which means that all partners are liable to the full extent of the debts of the firm.
TYPES OF PARTNERS
1. Limited Partners:a limited partner is one who has agreed to contribute a certain sum to a partnership business and is prevented by law from taking any active part in the management and administration of the business. He has limited liability.
2. General Partners: this type of partner has full power of participating in the conduct and management of the partnership business. A general partner has unlimited liability and binds the firm. Death or bankruptcy of this partner leads to the dissolution of the partnership.
3. Active Partner: an active partner participates actively in the day to day running of the firm and is being paid a certain sum as salary.
4. Nominal or Quasi Partner: a nominal partner contributes only his name to the formation of the business. He neither contributes capital nor takes part in the management of the firm.
5. Sleeping or Dormant Partner: a dormant partner takes no part in the conduct and management of the partnership business. He contributes capital and share from the profit but receives no salary. A sleeping partner is liable for the debts of the firm.
EVALUATION
1. Mention two types of partnership and point out their differences.
2. Itemize five types of partners and explain and three.
SUB-TOPIC 3: FORMULATION AND AGREEMENT.
A partnership business may be established without any formality although the partners have certain unavoidable obligations to third parties. It is usual for people entering into partnership to express their intention in a partnership agreement known as, deed of partnership.
Deed of Partnership
This is a document which contains the rules and regulations which partners agree to abide by in the course of the operation of the partnership. The deed is also called Partnership law. Thecontents of partnership deed are:
The name of the partners
The name and nature of business.
The amount of capital contributed by each partner.
The role of each partner in the firm
How profits and losses are to be shared.
Whether or not salaries are to be paid to any partners and how much.
How decisions are to be made either by majority vote or what
The duration of the partnership
The rights and obligations of partners
How the business shall wind up if the need arises.
RIGHTS OF PARTNERS
1. The partners are entitled to share from the profits of the partnership business.
2. They must be indemnified by the firm in respect of payments made and personal liabilities incurred in the conduct of the business
3. A partner making advance beyond the amount of capital which he has agreed to subscribe is entitled to interest of 5%.
4. A partner has the right to act as the agent of the business.
5. Every partner must have access to the partnership books of accounts.
6. Every general partner can take part in the management of the partnership.
EVALUATION
1. List 5 contents of the partnership deed.
2. Enumerate 5 rights of apartner
GENERALEVALUATION
OBJECTIVE TEST
1. Which of the following activities is most likely controlled by a partnership? A. multiple retail chain b. mass production c. oil production d. accountancy
2. The document that sets out the agreement between partners is called a: a. partnership agreement b. contract of partnership c. deed of partnership d. Partners contract.
3. Which of the following is not contained in a deed of partnership? A. Names and addresses of partners B.Ratio for sharing profits and losses c. investment of each partner d. rate of taxation.
4. A partner who does not play an active role in a business but contributes capital is a ………. A secret partner b. dormant partner c. nominal partner d. limited partner e. general partner..
5. ……………. Is not a right of a partner? A. right to the books of account b. right to share profits c. right to 5% interest of additional capital contribution d. right to steal
ESSAY QUESTIONS
1. (a) What is a Deed of Partnership? (b) State six contents of a Deed of partnership. (c) Give three rights of a partner (SSCE Nov.,1999).
2. Explain the rights of partners in the partnership business.
3. State five features of partnership.
4. Mention five kinds of partners.
5. Clarify the difference between general and limited partnership
WEEKEND ASSIGNMENT:
1. Read Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd. (page 62-64) Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun ;Pearson Educational Limited.(Page 58)
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(pages 126-133)
PRE- READING ASSIGNMENT:
1. Read about: Partnership: (d) Sources of Capital (e) Advantages and disadvantages (f) Dissolution
WEEKEND ACTIVITY:
1. List five advantages and five disadvantages of partnership.
REFERENCE TEXTS:
1. Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
3. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
4. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
WEEK 8
TOPIC: Partnership
CONTENT: (4) Sources of Capital (5) Advantages and disadvantages (6) Dissolution
SUB-TOPIC1:SOURCES OF CAPITAL
1. Personal contribution: the partners raise the initial capital by contributing specified sums of money to the partnership.
2. Undistributed profits; profits made in certain years can be ploughed back into the business for the purpose of expansion.
3. Admission of new partners: additional capital can be raised by inviting new persons to become partners.
4. Loans and overdraft: Partners can easily obtain loans and overdraft from banks since they are jointly liable.
5. Trade credit: money can be obtained from middlemen in advance in order to facilitate production of goods.
EVALUATION
1. State five sources of capital to a partnership business.
SUB-TOPIC 4: ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
Advantages of Partnership
1. Sufficient Capital: it is easier to raise more capital than a sole proprietorship because of the number of persons involved in this business.
2. Division of Labour: the work of a firm is shared according to the area of specialization of each partner, for instance, an accounting firm may have one partner specializing in cost accounting while the other concentrates on auditing.
3. Better Chance of Continuity: there is greater continuity in partnership because the exit or death of one partner may not result to the dissolution of the business.
4. Better Decision: better decisions are reached because two are better than one
5. Greater possibility of expansion: there is the possibility of expansion by making use of additional capital derived from the admission of a new partner.
6. Abundant Skills: partner may have different skills as well as their employees to contribute to the growth of the business.
7. No Legal Formalities required: in setting up a partnership, no major procedure of establishment is required, unlike a limited liability company.
8. There is Privacy: partners are not legally compelled to publish the annual accounts for public consumption.
DISADVANTAGES OF PARTNERSHIP
1. Unlimited Liability: If the business goes bankrupt, the partners may have to offset the debt by selling their personal properties.
2. Limited Capital: since partnership is not allowed to sell shares, its capital limited to the contributions of partners.
3. The death or exit of a general partner may end th business.
4. Slow decision making: decision making process in this business is usually slow because a meeting of partners may be necessary before major decisions are taken.
5. Disagreement between partners: Partners may disagree over a sensitive issue that may lead to the end of the business.
6. Collective Responsibility: the misconduct of an unscrupulous partner can endanger the business.
7. It is not a legal entity: partnership business is not a separate and distinct personality. It cannot sue and be sued in its own name.
EVALUATION
1. Mention six advantages and six disadvantages of partnership
SUB-TOPIC 6: DISSOLUTION OF PARTNERSHIP
Dissolution of partnership is the coming to an end of a partnership agreement. It is the wind up or liquidation of a partnership business. A partnership may wind up because of the following:
a. Expiration of Agreement: if entered into for a fixed term, the partnership is dissolved at the expiration of that term.
b. Death or Bankruptcy of a partner; partnership will be dissolved when one of the partners is bankrupt or dead.
c. Notice of Retirement: a partnership may end when a partner has given sufficient notice of his retirement.
d. Joint Decision: Partnership can be dissolved when all the members decide to put a stop to the business relationship.
e. Insolvency of the Business: partnership can be dissolved when it cannot meet its obligations.
f. Court verdict: the court may decree the dissolution in certain cases, e.g. if a partner is incapacitated or if there is a misconduct.
g. Insanity of a partner: if one of the partners becomes insane, the remaining partners can apply to the court for dissolution.
EVALUATION
1. Outline five reasons for the dissolution of partnership.
GENERAL EVALUATION
OBJECTIVE TEST
1. A partnership formed for banking business is made up of a. 2-10 members b. 2-20 members c. 2-30 members d. 2-40 members e. 2-50 members.
2. Which of the following statements is true of limited partnership? A. every member is a limited partner b. all members are general partners c. all members have limited liability d. there is at least one ordinary partner. E. limited and ordinary partners must be equal in number.
3. Which of the following is not required for the dissolution of a partnership? A expiration of the partnership deed. B. termination of the venture c. one partner notifying the other of his intention to dissolve it d. mutual consent of the partners e. order from the registrar of companies.
4. A partnership agreement specifying the relationship amongst partners is called a. article of association b. memorandum of association c. partnership act. D. partnership deed e. certificate of incorporation
5. The minimum number of persons in a partnership is ………. A. 1 b.2 c.3 d. 4 e. 5
ESSAY QUESTIONS
1. Akannni and Sule are sole proprietors. Akanni proposed that their businesses be merged to form a partnership. (a) Explain to Sule how such a partnership would be to their mutual benefit. (b) State five reasons why Sule might be reluctant to accept the proposal (SSCE Nov., 1990).
2. (a) State six contents of a deed of partnership (b) What four conditions are necessary for the dissolution of partnership (NECO June, 2000).
3. State five features of a partnership business.
4. Explain to a group of sole proprietors who wish to form a partnership any seven problems they are likely to face. (b) State three conditions suitable for the formation of partnership business.
5. Argue that partnership is better than sole proprietorship.
WEEKEND ASSIGNMENT:
1. Read Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd. (page 64-66)
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(page 127,128,133,134)
PRE- READING ASSIGNMENT:
1. Read about .Money: (a) Meaning of money (b) Evolution of money (c) Functions of money (d) Qualities/Characteristics of money (e) Forms/Types of money.
WEEKEND ACTIVITY:
1. Define money
2. Mention 5 functions of money.
REFERENCE TEXTS
1. Commerce for Senior Secondary School book1 by Odedokun et al; Longman Nigeria PLC.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
CONTENT: (4) Sources of Capital (5) Advantages and disadvantages (6) Dissolution
SUB-TOPIC1:SOURCES OF CAPITAL
1. Personal contribution: the partners raise the initial capital by contributing specified sums of money to the partnership.
2. Undistributed profits; profits made in certain years can be ploughed back into the business for the purpose of expansion.
3. Admission of new partners: additional capital can be raised by inviting new persons to become partners.
4. Loans and overdraft: Partners can easily obtain loans and overdraft from banks since they are jointly liable.
5. Trade credit: money can be obtained from middlemen in advance in order to facilitate production of goods.
EVALUATION
1. State five sources of capital to a partnership business.
SUB-TOPIC 4: ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
Advantages of Partnership
1. Sufficient Capital: it is easier to raise more capital than a sole proprietorship because of the number of persons involved in this business.
2. Division of Labour: the work of a firm is shared according to the area of specialization of each partner, for instance, an accounting firm may have one partner specializing in cost accounting while the other concentrates on auditing.
3. Better Chance of Continuity: there is greater continuity in partnership because the exit or death of one partner may not result to the dissolution of the business.
4. Better Decision: better decisions are reached because two are better than one
5. Greater possibility of expansion: there is the possibility of expansion by making use of additional capital derived from the admission of a new partner.
6. Abundant Skills: partner may have different skills as well as their employees to contribute to the growth of the business.
7. No Legal Formalities required: in setting up a partnership, no major procedure of establishment is required, unlike a limited liability company.
8. There is Privacy: partners are not legally compelled to publish the annual accounts for public consumption.
DISADVANTAGES OF PARTNERSHIP
1. Unlimited Liability: If the business goes bankrupt, the partners may have to offset the debt by selling their personal properties.
2. Limited Capital: since partnership is not allowed to sell shares, its capital limited to the contributions of partners.
3. The death or exit of a general partner may end th business.
4. Slow decision making: decision making process in this business is usually slow because a meeting of partners may be necessary before major decisions are taken.
5. Disagreement between partners: Partners may disagree over a sensitive issue that may lead to the end of the business.
6. Collective Responsibility: the misconduct of an unscrupulous partner can endanger the business.
7. It is not a legal entity: partnership business is not a separate and distinct personality. It cannot sue and be sued in its own name.
EVALUATION
1. Mention six advantages and six disadvantages of partnership
SUB-TOPIC 6: DISSOLUTION OF PARTNERSHIP
Dissolution of partnership is the coming to an end of a partnership agreement. It is the wind up or liquidation of a partnership business. A partnership may wind up because of the following:
a. Expiration of Agreement: if entered into for a fixed term, the partnership is dissolved at the expiration of that term.
b. Death or Bankruptcy of a partner; partnership will be dissolved when one of the partners is bankrupt or dead.
c. Notice of Retirement: a partnership may end when a partner has given sufficient notice of his retirement.
d. Joint Decision: Partnership can be dissolved when all the members decide to put a stop to the business relationship.
e. Insolvency of the Business: partnership can be dissolved when it cannot meet its obligations.
f. Court verdict: the court may decree the dissolution in certain cases, e.g. if a partner is incapacitated or if there is a misconduct.
g. Insanity of a partner: if one of the partners becomes insane, the remaining partners can apply to the court for dissolution.
EVALUATION
1. Outline five reasons for the dissolution of partnership.
GENERAL EVALUATION
OBJECTIVE TEST
1. A partnership formed for banking business is made up of a. 2-10 members b. 2-20 members c. 2-30 members d. 2-40 members e. 2-50 members.
2. Which of the following statements is true of limited partnership? A. every member is a limited partner b. all members are general partners c. all members have limited liability d. there is at least one ordinary partner. E. limited and ordinary partners must be equal in number.
3. Which of the following is not required for the dissolution of a partnership? A expiration of the partnership deed. B. termination of the venture c. one partner notifying the other of his intention to dissolve it d. mutual consent of the partners e. order from the registrar of companies.
4. A partnership agreement specifying the relationship amongst partners is called a. article of association b. memorandum of association c. partnership act. D. partnership deed e. certificate of incorporation
5. The minimum number of persons in a partnership is ………. A. 1 b.2 c.3 d. 4 e. 5
ESSAY QUESTIONS
1. Akannni and Sule are sole proprietors. Akanni proposed that their businesses be merged to form a partnership. (a) Explain to Sule how such a partnership would be to their mutual benefit. (b) State five reasons why Sule might be reluctant to accept the proposal (SSCE Nov., 1990).
2. (a) State six contents of a deed of partnership (b) What four conditions are necessary for the dissolution of partnership (NECO June, 2000).
3. State five features of a partnership business.
4. Explain to a group of sole proprietors who wish to form a partnership any seven problems they are likely to face. (b) State three conditions suitable for the formation of partnership business.
5. Argue that partnership is better than sole proprietorship.
WEEKEND ASSIGNMENT:
1. Read Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd. (page 64-66)
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.(page 127,128,133,134)
PRE- READING ASSIGNMENT:
1. Read about .Money: (a) Meaning of money (b) Evolution of money (c) Functions of money (d) Qualities/Characteristics of money (e) Forms/Types of money.
WEEKEND ACTIVITY:
1. Define money
2. Mention 5 functions of money.
REFERENCE TEXTS
1. Commerce for Senior Secondary School book1 by Odedokun et al; Longman Nigeria PLC.
2. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
WEEK 9
TOPIC: MONEY
CONTENT: 1 Meaning of moneyand Evolution of money
2. Functions of money and Qualities/Characteristics of money
3. Forms/Types of money.
SUB-TOPIC 1: MEANING OF MONEY AND EVOLUTION OF MONEY
Money is anything that is universally accepted as a medium of exchange and for settlement of debt. It can also be defined as anything that is generally acceptable as a means of payment. Money include cash, bank notes, bank drafts, postal orders etc.
EVOLUTION OF MONEY
Paper money Early forms of money
coins
Before the advent of money, exchange took place by means of barter. This means that goods were exchanged for goods. The ancient people practiced subsistence farming that is they were able to provide for what they need. However, when the need comes for them to get what they do not have, they had to look for someone who want what they have and at the same time would give them what they want. This system of exchange was problematic and so effort was made to resolve the problem.
The solution came when items like cowries, cattle, shells, tobacco, salt and beads were used as medium of exchange. This means of exchange had his flaw because of the size and weight of the items used especially when a goat could be exchange for bags of cowries.Later, Precious Metals were weighed out whenever a payment was to be made. With time the metals were cut into pieces of definite weights and so, coins of limited face value were issued. And so, coins of limited face value were issued.
Paper money came to be as a result of the receipts issued by the goldsmiths in exchange for deposits of precious metal. The receipts became bank notes and the goldsmiths became bankers. In modern times, a further advance has been made by way of adopting paper money.
EVALUATION
1. Explain the term ‘money’
2. Discuss on the evolution of money.
SUB-TOPIC 2:FUNCTIONS OF MONEY and QUALITIES/CHARACTERISTICS OF MONEY
I. Medium of Exchange: money can be used in exchange for goods and services because it is generally accepted. This means that money facilitate exchange.
II. Standard of Deferred Payment: since money is durable and can be stored, it can be used for settlement of debts. The use of money makes it possible for credit transactions I e goods and services can be paid for at a later date.
III. Unit of Account: the true worth of goods and services is measured in monetary terms. This makes accounting possible. It also makes installment payments possible.
IV. Store of Value:Money is a good store of value because wealth can be stored for future use. When there is no inflation, money stored or saved retains its value for many years.
V. Measure of Value:money as a measure of value allows prices to be fixed for goods and services.Therefore money is used as a yardstick to measure and compare the worth of goods and serviced as well as occupation.
Sub-Topic 4:Qualities/Characteristics of money
Good money has qualities or characteristics which distinguish it from other commodities used in ancient times. These qualities are:
1. Acceptability: anything to be used as money must be generally acceptable as a means of exchange and for settlement of debt. Money is generally acceptable because it is widely used and backed up by law.
2. Divisibility: money must be divisible into smaller units, e.g. N10, N20, N50 etc. This will enable payments to be made in small amounts of money as desired.
3. Stability: the value of money must be stable. The stability of its value will help business to be predictable and encourage lending and borrowing of money.
4. Recognisability: Money must be easily recognized and identified by the totality of the people in the society. It must not be easily counterfeited
5. Durability: for money to be stored for a long time, it must be able to last long .It must also be able to stand the test of time. For example, grains, livestock used in ancient times could decay after a long time. On the other hand, coins and bank notes can be withdrawn and new ones issued.
6. Portability:anything to be called money must be easy to carry about. The portability of money makes local and foreign trade easy. For instance, if money were bulky, people will be discouraged from carrying them about.
7. Relative Scarcity: for money to maintain its worth, it has to be in limited supply. However, it should not be too scarce else people will not have money to buy goods thereby making money too valuable to be used in exchange for small items.
8. Homogeneity: this means that anything regarded as money should be the same within the restricted area where it is used. In this case, heterogeneity will give rise to problems of acceptability.
EVALUATION
1. State five functions of money.
2. Identify five characteristics of money.
SUB-TOPIC 3: FORMS/TYPES OF MONEY.
The following objects are used as money at the present time.
1. COINS: coins ar made of metals like copper, gold, silver etc. coins which are issued by the government or its agent are in two types. Standard coins and token coins. Standard coins contain the full face value of the metal while token coins have a face value that is usually higher than the value of the metal. Token coins are made of bronze and copper. Nigeria coins are token coins
2. PAPER MONEY/BANK NOTES: bank notes or paper money have no material value but have legal backing which makes them generally acceptable in exchange for the value of the amount indicated on them. Bank notes are also called fiat money, paper money, or representative money. Some paper money are backed up by gold while others which are not are called “fiduciary issue” .This is also called inconvertible paper money.
3. NEAR MONEY:near money consists of government securities that are close substitutes for money but are not legal tender. It is convertible money. Short and long term government securities have a guarantee which is redeemable by government at short notice..
4. NEGOTIABLE INSTRUMENTS: these are money order, postal orders, cheques, bills of exchange, bank draft etc. that are used in commercial transactions. The instruments authorize the bearer to collect cash or other item of value to the amount specified on the instrument.
5. TOKEN MONEY: token money is partial money that is temporarily accepted within the confinement of a place. Examples of tokens include luncheon vouchers, fuel vouchers, value coupons or cards, etc.
EVALUATION
1. Mention five types of money.
GENERAL EVALUATION
1. Of all the methods of payment, the only recognized legal tender is: (a) bank note and cheque (b) bank notes and coins (c) cheques and coins (d) commodity money.
2. Whichone is the odd one out? (a). paper money (b) cash (c) commodity money (d). token money.
3. Which of the following makes barter unnecessary? (a) money (b) storage facilities (c) specialization (d) trade.
4. Which of the following is not necessarily true? (a) satisfactory medium of exchange must be: (b). generally acceptable (c) divisible into smaller units (d). relatively limited in supply (e). of intrinsic value
5. Which of the following is a function of money? (a) a medium of exchange (b) a uniform quality (c) it is easily carried (d) it is easily recognized.
ESSAY QUESTIONS
1. What is money? (b) State and explain the functions of money.
2. What is trade by barter? Mention five qualities of money.
3. State five advantages of the introduction of money into commerce (WASSCE 1999)
4. Narrate the evolution of money.
5. State and explain five problems of barter.
WEEKEND ASSIGNMENT:
1. Read Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC. (pages 139-143)
2. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited. (pages111-117)
3. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.(pages 61-63)
PRE- READING ASSIGNMENT:
Read about commodity exchange and its sub-topics.
WEEKEND ACTIVITY:Answer all essay questions on Sole proprietorship, partnership, money from SSCE past question (1989-2013)
REFERENCE TEXTS
1. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
2. Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
4. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.
CONTENT: 1 Meaning of moneyand Evolution of money
2. Functions of money and Qualities/Characteristics of money
3. Forms/Types of money.
SUB-TOPIC 1: MEANING OF MONEY AND EVOLUTION OF MONEY
Money is anything that is universally accepted as a medium of exchange and for settlement of debt. It can also be defined as anything that is generally acceptable as a means of payment. Money include cash, bank notes, bank drafts, postal orders etc.
EVOLUTION OF MONEY
Paper money Early forms of money
coins
Before the advent of money, exchange took place by means of barter. This means that goods were exchanged for goods. The ancient people practiced subsistence farming that is they were able to provide for what they need. However, when the need comes for them to get what they do not have, they had to look for someone who want what they have and at the same time would give them what they want. This system of exchange was problematic and so effort was made to resolve the problem.
The solution came when items like cowries, cattle, shells, tobacco, salt and beads were used as medium of exchange. This means of exchange had his flaw because of the size and weight of the items used especially when a goat could be exchange for bags of cowries.Later, Precious Metals were weighed out whenever a payment was to be made. With time the metals were cut into pieces of definite weights and so, coins of limited face value were issued. And so, coins of limited face value were issued.
Paper money came to be as a result of the receipts issued by the goldsmiths in exchange for deposits of precious metal. The receipts became bank notes and the goldsmiths became bankers. In modern times, a further advance has been made by way of adopting paper money.
EVALUATION
1. Explain the term ‘money’
2. Discuss on the evolution of money.
SUB-TOPIC 2:FUNCTIONS OF MONEY and QUALITIES/CHARACTERISTICS OF MONEY
I. Medium of Exchange: money can be used in exchange for goods and services because it is generally accepted. This means that money facilitate exchange.
II. Standard of Deferred Payment: since money is durable and can be stored, it can be used for settlement of debts. The use of money makes it possible for credit transactions I e goods and services can be paid for at a later date.
III. Unit of Account: the true worth of goods and services is measured in monetary terms. This makes accounting possible. It also makes installment payments possible.
IV. Store of Value:Money is a good store of value because wealth can be stored for future use. When there is no inflation, money stored or saved retains its value for many years.
V. Measure of Value:money as a measure of value allows prices to be fixed for goods and services.Therefore money is used as a yardstick to measure and compare the worth of goods and serviced as well as occupation.
Sub-Topic 4:Qualities/Characteristics of money
Good money has qualities or characteristics which distinguish it from other commodities used in ancient times. These qualities are:
1. Acceptability: anything to be used as money must be generally acceptable as a means of exchange and for settlement of debt. Money is generally acceptable because it is widely used and backed up by law.
2. Divisibility: money must be divisible into smaller units, e.g. N10, N20, N50 etc. This will enable payments to be made in small amounts of money as desired.
3. Stability: the value of money must be stable. The stability of its value will help business to be predictable and encourage lending and borrowing of money.
4. Recognisability: Money must be easily recognized and identified by the totality of the people in the society. It must not be easily counterfeited
5. Durability: for money to be stored for a long time, it must be able to last long .It must also be able to stand the test of time. For example, grains, livestock used in ancient times could decay after a long time. On the other hand, coins and bank notes can be withdrawn and new ones issued.
6. Portability:anything to be called money must be easy to carry about. The portability of money makes local and foreign trade easy. For instance, if money were bulky, people will be discouraged from carrying them about.
7. Relative Scarcity: for money to maintain its worth, it has to be in limited supply. However, it should not be too scarce else people will not have money to buy goods thereby making money too valuable to be used in exchange for small items.
8. Homogeneity: this means that anything regarded as money should be the same within the restricted area where it is used. In this case, heterogeneity will give rise to problems of acceptability.
EVALUATION
1. State five functions of money.
2. Identify five characteristics of money.
SUB-TOPIC 3: FORMS/TYPES OF MONEY.
The following objects are used as money at the present time.
1. COINS: coins ar made of metals like copper, gold, silver etc. coins which are issued by the government or its agent are in two types. Standard coins and token coins. Standard coins contain the full face value of the metal while token coins have a face value that is usually higher than the value of the metal. Token coins are made of bronze and copper. Nigeria coins are token coins
2. PAPER MONEY/BANK NOTES: bank notes or paper money have no material value but have legal backing which makes them generally acceptable in exchange for the value of the amount indicated on them. Bank notes are also called fiat money, paper money, or representative money. Some paper money are backed up by gold while others which are not are called “fiduciary issue” .This is also called inconvertible paper money.
3. NEAR MONEY:near money consists of government securities that are close substitutes for money but are not legal tender. It is convertible money. Short and long term government securities have a guarantee which is redeemable by government at short notice..
4. NEGOTIABLE INSTRUMENTS: these are money order, postal orders, cheques, bills of exchange, bank draft etc. that are used in commercial transactions. The instruments authorize the bearer to collect cash or other item of value to the amount specified on the instrument.
5. TOKEN MONEY: token money is partial money that is temporarily accepted within the confinement of a place. Examples of tokens include luncheon vouchers, fuel vouchers, value coupons or cards, etc.
EVALUATION
1. Mention five types of money.
GENERAL EVALUATION
1. Of all the methods of payment, the only recognized legal tender is: (a) bank note and cheque (b) bank notes and coins (c) cheques and coins (d) commodity money.
2. Whichone is the odd one out? (a). paper money (b) cash (c) commodity money (d). token money.
3. Which of the following makes barter unnecessary? (a) money (b) storage facilities (c) specialization (d) trade.
4. Which of the following is not necessarily true? (a) satisfactory medium of exchange must be: (b). generally acceptable (c) divisible into smaller units (d). relatively limited in supply (e). of intrinsic value
5. Which of the following is a function of money? (a) a medium of exchange (b) a uniform quality (c) it is easily carried (d) it is easily recognized.
ESSAY QUESTIONS
1. What is money? (b) State and explain the functions of money.
2. What is trade by barter? Mention five qualities of money.
3. State five advantages of the introduction of money into commerce (WASSCE 1999)
4. Narrate the evolution of money.
5. State and explain five problems of barter.
WEEKEND ASSIGNMENT:
1. Read Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC. (pages 139-143)
2. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited. (pages111-117)
3. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.(pages 61-63)
PRE- READING ASSIGNMENT:
Read about commodity exchange and its sub-topics.
WEEKEND ACTIVITY:Answer all essay questions on Sole proprietorship, partnership, money from SSCE past question (1989-2013)
REFERENCE TEXTS
1. Commerce for Senior Secondary Schools by Ahukannah et al; African First Publishers PLC.
2. Essential Commerce for SeniorSecondary Schools by Longe O.A.Tonad Publishers Ltd.
3. Extension Modern Commerce for Senior Secondary School by A .A. Bello et al; Extension Publication Limited.
4. Complete Commerce for Senior Secondary Schools by Alan Whitcomb and Adekoya Fatai Olusegun; Pearson Educational Limited.