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  • 20 Marks

BMF – May 2015 – L1 – SB – Q6 – Basics of Business Finance and Financial Markets

Describe the Boston Consulting Group (BCG) matrix used for business portfolio management.

Describe the Boston Consulting Group (BCG) matrix.

The Boston Consulting Group (BCG) matrix is a model by which businesses are
classified in relation to market growth and relative market share.
The strategy of each business is determined on the basis of the following factors:
(i) The growth rate of its market
(ii) The market share it enjoys

The matrix can be depicted by the following quadrant:

b. Product-Market Strategies:

i. Stars:
Stars operate in high-growth markets and dominate their sectors. They require substantial investment to maintain market position but promise high returns. The recommended product-market strategy is to continue heavy investment in advertising, promotion, and product development to ensure growth in market share and revenue.

ii. Question Marks (Problem Children):
These products operate in high-growth markets but have low market share. They create opportunities for long-term growth but need significant cash investments. The suggested strategy is to either invest heavily to turn them into stars or divest if the market position does not improve. This may involve strategic decisions like harvesting or liquidation.

iii. Cash Cows:
These products have high market share in low-growth markets. They generate consistent cash flows but offer limited growth opportunities. The strategy is to maintain or consolidate their position, using their revenue to fund other areas of the business that require investment (such as Stars or Question Marks).

iv. Dogs:
Dogs have low market share in low-growth markets, providing little to no profit potential. The strategy is often to divest or liquidate these products, as they are not worth the continued investment given their bleak future.

c. Weaknesses of the BCG Matrix:

  1. The model ignores the synergies between different business units, which can affect overall profitability.
  2. High market share does not always guarantee profitability, as it depends on other factors such as cost structure and competitive advantage.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q6 – Basics of Business Finance and Financial Markets

Describe the Boston Consulting Group (BCG) matrix used for business portfolio management.

Describe the Boston Consulting Group (BCG) matrix.

The Boston Consulting Group (BCG) matrix is a model by which businesses are
classified in relation to market growth and relative market share.
The strategy of each business is determined on the basis of the following factors:
(i) The growth rate of its market
(ii) The market share it enjoys

The matrix can be depicted by the following quadrant:

b. Product-Market Strategies:

i. Stars:
Stars operate in high-growth markets and dominate their sectors. They require substantial investment to maintain market position but promise high returns. The recommended product-market strategy is to continue heavy investment in advertising, promotion, and product development to ensure growth in market share and revenue.

ii. Question Marks (Problem Children):
These products operate in high-growth markets but have low market share. They create opportunities for long-term growth but need significant cash investments. The suggested strategy is to either invest heavily to turn them into stars or divest if the market position does not improve. This may involve strategic decisions like harvesting or liquidation.

iii. Cash Cows:
These products have high market share in low-growth markets. They generate consistent cash flows but offer limited growth opportunities. The strategy is to maintain or consolidate their position, using their revenue to fund other areas of the business that require investment (such as Stars or Question Marks).

iv. Dogs:
Dogs have low market share in low-growth markets, providing little to no profit potential. The strategy is often to divest or liquidate these products, as they are not worth the continued investment given their bleak future.

c. Weaknesses of the BCG Matrix:

  1. The model ignores the synergies between different business units, which can affect overall profitability.
  2. High market share does not always guarantee profitability, as it depends on other factors such as cost structure and competitive advantage.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q5b – Management, Individual, and Organisational Behaviour

Discuss hygiene factors and motivators in Herzberg’s two-factor theory.

Write briefly on the following:
i. Hygiene factors
ii. Motivators

i. Hygiene Factors: These are factors that can lead to dissatisfaction in the workplace if they are absent or inadequate, but their presence does not necessarily create satisfaction. They include aspects like working conditions, salary, company policies, job security, and relationships with supervisors and colleagues. Inadequate hygiene factors result in employee dissatisfaction, but improving these factors alone will not boost job satisfaction.

ii. Motivators: These are factors that positively influence job satisfaction and encourage employees to improve performance. They include recognition, responsibility, opportunities for advancement, achievement, and personal growth. Unlike hygiene factors, motivators directly impact an employee’s level of job satisfaction and contribute to higher levels of performance and motivation.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q5b – Management, Individual, and Organisational Behaviour

Discuss hygiene factors and motivators in Herzberg’s two-factor theory.

Write briefly on the following:
i. Hygiene factors
ii. Motivators

i. Hygiene Factors: These are factors that can lead to dissatisfaction in the workplace if they are absent or inadequate, but their presence does not necessarily create satisfaction. They include aspects like working conditions, salary, company policies, job security, and relationships with supervisors and colleagues. Inadequate hygiene factors result in employee dissatisfaction, but improving these factors alone will not boost job satisfaction.

ii. Motivators: These are factors that positively influence job satisfaction and encourage employees to improve performance. They include recognition, responsibility, opportunities for advancement, achievement, and personal growth. Unlike hygiene factors, motivators directly impact an employee’s level of job satisfaction and contribute to higher levels of performance and motivation.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q5a – Management, Individual, and Organisational Behaviour

List and explain the five levels of human needs as per Maslow’s hierarchy.

List and explain the FIVE general types of human needs in ascending order.

  1. Physiological Needs: These are the basic survival needs for human life, such as food, water, shelter, air, and clothing. In an organizational context, these are equated to adequate salary, heat, and air to ensure employees’ survival and well-being.
  2. Safety Needs: Once physiological needs are met, individuals seek protection and security, both physically and psychologically. In the workplace, this relates to job security, safe working conditions, and a stable environment free from physical harm.
  3. Belongingness/Social Needs: After safety, individuals look for social connections, love, and belonging. In an organization, this refers to forming relationships with colleagues and feeling accepted as part of a team. Employees value a friendly work environment and camaraderie among coworkers.
  4. Esteem Needs: These involve the need for recognition, respect, and self-esteem. Employees strive to achieve recognition for their work, which can be fulfilled through awards, promotions, or being acknowledged as valuable team members.
  5. Self-Actualization Needs: The highest level, where individuals strive to realize their full potential. In the workplace, this involves opportunities for personal growth, creativity, and achieving career goals. Managers can help employees meet these needs by providing challenging tasks and encouraging innovation.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q5a – Management, Individual, and Organisational Behaviour

List and explain the five levels of human needs as per Maslow’s hierarchy.

List and explain the FIVE general types of human needs in ascending order.

  1. Physiological Needs: These are the basic survival needs for human life, such as food, water, shelter, air, and clothing. In an organizational context, these are equated to adequate salary, heat, and air to ensure employees’ survival and well-being.
  2. Safety Needs: Once physiological needs are met, individuals seek protection and security, both physically and psychologically. In the workplace, this relates to job security, safe working conditions, and a stable environment free from physical harm.
  3. Belongingness/Social Needs: After safety, individuals look for social connections, love, and belonging. In an organization, this refers to forming relationships with colleagues and feeling accepted as part of a team. Employees value a friendly work environment and camaraderie among coworkers.
  4. Esteem Needs: These involve the need for recognition, respect, and self-esteem. Employees strive to achieve recognition for their work, which can be fulfilled through awards, promotions, or being acknowledged as valuable team members.
  5. Self-Actualization Needs: The highest level, where individuals strive to realize their full potential. In the workplace, this involves opportunities for personal growth, creativity, and achieving career goals. Managers can help employees meet these needs by providing challenging tasks and encouraging innovation.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q4 – Basics of Business Finance and Financial Markets

Discuss major cash flow items in capital investment projects and explain the payback period investment appraisal method.

a. List and explain FOUR major cashflow items to be included in a capital investment project. (8 Marks)
b.
i. Explain the payback period technique of investment appraisal. (4 Marks)
ii. State TWO advantages and TWO disadvantages of payback period. (8 Marks)

a. Major cashflow items to be included in a capital investment project:

  1. Initial capital outlay: This is the cash expenditure required at the beginning of the project, usually spent on fixed assets.
  2. Operating cash flows: These include cash inflows from sales and cash outflows for operating expenses like wages, utilities, and materials.
  3. Terminal cash flows: These are the cash flows at the end of the project, such as salvage value or disposal of assets.
  4. Incremental cash flows: These refer to the additional cash flows generated directly by the investment, which wouldn’t have been earned otherwise.

b. i. Payback Period Investment Appraisal Technique:
This technique calculates the time needed for the cash inflows generated by a project to recover the initial investment. It emphasizes liquidity by focusing on the period over which the project will generate enough cash inflows to cover the initial outlay. It does not take into account the time value of money or cash flows beyond the payback period.

ii. Advantages of Payback Period:

  1. Simple to calculate and understand.
  2. It is useful for projects where liquidity is important because it focuses on recovering the initial investment quickly.

Disadvantages of Payback Period:

  1. It ignores cash flows that occur after the payback period, potentially overlooking the profitability of longer-term projects.
  2. It does not consider the time value of money.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q4 – Basics of Business Finance and Financial Markets

Discuss major cash flow items in capital investment projects and explain the payback period investment appraisal method.

a. List and explain FOUR major cashflow items to be included in a capital investment project. (8 Marks)
b.
i. Explain the payback period technique of investment appraisal. (4 Marks)
ii. State TWO advantages and TWO disadvantages of payback period. (8 Marks)

a. Major cashflow items to be included in a capital investment project:

  1. Initial capital outlay: This is the cash expenditure required at the beginning of the project, usually spent on fixed assets.
  2. Operating cash flows: These include cash inflows from sales and cash outflows for operating expenses like wages, utilities, and materials.
  3. Terminal cash flows: These are the cash flows at the end of the project, such as salvage value or disposal of assets.
  4. Incremental cash flows: These refer to the additional cash flows generated directly by the investment, which wouldn’t have been earned otherwise.

b. i. Payback Period Investment Appraisal Technique:
This technique calculates the time needed for the cash inflows generated by a project to recover the initial investment. It emphasizes liquidity by focusing on the period over which the project will generate enough cash inflows to cover the initial outlay. It does not take into account the time value of money or cash flows beyond the payback period.

ii. Advantages of Payback Period:

  1. Simple to calculate and understand.
  2. It is useful for projects where liquidity is important because it focuses on recovering the initial investment quickly.

Disadvantages of Payback Period:

  1. It ignores cash flows that occur after the payback period, potentially overlooking the profitability of longer-term projects.
  2. It does not consider the time value of money.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q3 – The Role of Professional Accountants in Business and Society

Discuss reasons for government involvement in the Nigerian financial system and mechanisms for intervention.

a. State FIVE reasons for the increasing role of Government in the Nigerian Financial System.
(10 Marks)

b. State FIVE mechanisms for government intervention in the financial system.
(10 Marks)

a. Reasons for the Increasing Role of Government in the Nigerian Financial System:

  1. To maintain monetary stability: The government needs to ensure that the financial system remains stable to control inflation and manage the economy effectively.
  2. To promote economic growth: Government interventions are essential to stimulate growth and support the development of various sectors of the economy.
  3. To ensure healthy competition: By regulating the financial system, the government prevents monopolies and ensures fair competition, both domestically and internationally.
  4. To protect the public from fraud and exploitation: Government policies are crucial to safeguarding the public from unethical financial practices.
  5. To attract foreign investment: A stable financial system encourages international investors, contributing to the growth of the economy.

b. Mechanisms for Government Intervention in the Financial System:

  1. Open Market Operations (OMO): The government buys and sells treasury bills and bonds to control the money supply.
  2. Changes in monetary policy rates (MPR): Adjusting the MPR influences interest rates, which in turn affects borrowing and investment levels in the economy.
  3. Liquidity ratio adjustments: The government can change the liquidity ratio to control the amount of cash that banks must hold as reserves, impacting the availability of credit.
  4. Fiscal policy (taxation and spending): The government uses taxes and public spending to influence the financial system and stimulate or slow down the economy.
  5. Recapitalization of banks: To maintain stability, the government may require banks to recapitalize, ensuring that they have enough funds to meet their obligations.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q3 – The Role of Professional Accountants in Business and Society

Discuss reasons for government involvement in the Nigerian financial system and mechanisms for intervention.

a. State FIVE reasons for the increasing role of Government in the Nigerian Financial System.
(10 Marks)

b. State FIVE mechanisms for government intervention in the financial system.
(10 Marks)

a. Reasons for the Increasing Role of Government in the Nigerian Financial System:

  1. To maintain monetary stability: The government needs to ensure that the financial system remains stable to control inflation and manage the economy effectively.
  2. To promote economic growth: Government interventions are essential to stimulate growth and support the development of various sectors of the economy.
  3. To ensure healthy competition: By regulating the financial system, the government prevents monopolies and ensures fair competition, both domestically and internationally.
  4. To protect the public from fraud and exploitation: Government policies are crucial to safeguarding the public from unethical financial practices.
  5. To attract foreign investment: A stable financial system encourages international investors, contributing to the growth of the economy.

b. Mechanisms for Government Intervention in the Financial System:

  1. Open Market Operations (OMO): The government buys and sells treasury bills and bonds to control the money supply.
  2. Changes in monetary policy rates (MPR): Adjusting the MPR influences interest rates, which in turn affects borrowing and investment levels in the economy.
  3. Liquidity ratio adjustments: The government can change the liquidity ratio to control the amount of cash that banks must hold as reserves, impacting the availability of credit.
  4. Fiscal policy (taxation and spending): The government uses taxes and public spending to influence the financial system and stimulate or slow down the economy.
  5. Recapitalization of banks: To maintain stability, the government may require banks to recapitalize, ensuring that they have enough funds to meet their obligations.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q2 – The Business Environment

Discuss four external environmental factors that impact business operations.

Businesses do not operate in a vacuum. There is a combination of internal and external factors that affect how businesses function.
State and explain any FOUR external environmental factors that affect a business.

  1. Political Factors:
    Political factors affect the level of opportunities and threats within the business environment. Factors such as the stability of the political system, government policies, and regulations have a major influence on how businesses operate. A change in government or political instability can affect market conditions and disrupt business operations.
  2. Economic Factors:
    Economic conditions, including inflation rates, interest rates, economic growth, and exchange rates, play a crucial role in business performance. A strong economy encourages businesses to expand, whereas a weak economy may force businesses to downsize or halt operations.
  3. Socio-Cultural Factors:
    Socio-cultural aspects include the beliefs, values, attitudes, and lifestyles of people. These factors influence consumer behavior and market demand. A business must understand these cultural nuances to tailor products and services that meet the expectations of its customers.
  4. Technological Factors:
    The level of technological advancement within a country or industry determines the efficiency of production processes and service delivery. Businesses must keep up with technological changes to remain competitive. This includes automation, internet usage, and new software or tools that improve operational efficiency.

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  • 20 Marks

BMF – May 2015 – L1 – SB – Q2 – The Business Environment

Discuss four external environmental factors that impact business operations.

Businesses do not operate in a vacuum. There is a combination of internal and external factors that affect how businesses function.
State and explain any FOUR external environmental factors that affect a business.

  1. Political Factors:
    Political factors affect the level of opportunities and threats within the business environment. Factors such as the stability of the political system, government policies, and regulations have a major influence on how businesses operate. A change in government or political instability can affect market conditions and disrupt business operations.
  2. Economic Factors:
    Economic conditions, including inflation rates, interest rates, economic growth, and exchange rates, play a crucial role in business performance. A strong economy encourages businesses to expand, whereas a weak economy may force businesses to downsize or halt operations.
  3. Socio-Cultural Factors:
    Socio-cultural aspects include the beliefs, values, attitudes, and lifestyles of people. These factors influence consumer behavior and market demand. A business must understand these cultural nuances to tailor products and services that meet the expectations of its customers.
  4. Technological Factors:
    The level of technological advancement within a country or industry determines the efficiency of production processes and service delivery. Businesses must keep up with technological changes to remain competitive. This includes automation, internet usage, and new software or tools that improve operational efficiency.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q1b – Business and Organizational Structures and Choices

Identifying the advantages of a partnership business.

Identify FIVE advantages of a partnership business.

  1. Shared management and pooled knowledge: Partners bring in varied expertise and skills to manage the business.
  2. Attraction of more financial resources: Partnerships can attract more capital compared to sole proprietorships.
  3. Continuity in comparison with sole proprietorship: Unlike sole proprietorships, partnerships can continue even when one partner exits.
  4. Division of labor: Partners can divide work based on their strengths, leading to more efficient management.
  5. Sharing of risks and losses: The risks and financial losses are shared among partners, reducing the burden on a single individual.

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  • 5 Marks

BMF – May 2015 – L1 – SB – Q1b – Business and Organizational Structures and Choices

Identifying the advantages of a partnership business.

Identify FIVE advantages of a partnership business.

  1. Shared management and pooled knowledge: Partners bring in varied expertise and skills to manage the business.
  2. Attraction of more financial resources: Partnerships can attract more capital compared to sole proprietorships.
  3. Continuity in comparison with sole proprietorship: Unlike sole proprietorships, partnerships can continue even when one partner exits.
  4. Division of labor: Partners can divide work based on their strengths, leading to more efficient management.
  5. Sharing of risks and losses: The risks and financial losses are shared among partners, reducing the burden on a single individual.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q1a – Business and Organizational Structures and Choices

Features of the Memorandum of Association, Articles of Association, and Public Sector Entities.

State FIVE features of each of the following:
i. Memorandum of Association (5 Marks)
ii. Articles of Association (5 Marks)
iii. Public Sector Entity (5 Marks)

i. Features of Memorandum of Association:

  • The name of the company.
  • The names and addresses of the shareholders.
  • The number of shares held by each shareholder.
  • The location of the registered office.
  • The objectives of the company.

ii. Features of Articles of Association:

  • The internal relations of the company.
  • The rights of shareholders.
  • How meetings are convened.
  • Appointment and renewal of directors and other officers.
  • Power and duties of directors.

iii. Features of Public Sector Entity:

  • It is owned by the government.
  • It is created by an Act of Parliament.
  • It is managed by a board of directors appointed by the government.
  • It renders essential services.
  • It is not established for profit.

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  • 15 Marks

BMF – May 2015 – L1 – SB – Q1a – Business and Organizational Structures and Choices

Features of the Memorandum of Association, Articles of Association, and Public Sector Entities.

State FIVE features of each of the following:
i. Memorandum of Association (5 Marks)
ii. Articles of Association (5 Marks)
iii. Public Sector Entity (5 Marks)

i. Features of Memorandum of Association:

  • The name of the company.
  • The names and addresses of the shareholders.
  • The number of shares held by each shareholder.
  • The location of the registered office.
  • The objectives of the company.

ii. Features of Articles of Association:

  • The internal relations of the company.
  • The rights of shareholders.
  • How meetings are convened.
  • Appointment and renewal of directors and other officers.
  • Power and duties of directors.

iii. Features of Public Sector Entity:

  • It is owned by the government.
  • It is created by an Act of Parliament.
  • It is managed by a board of directors appointed by the government.
  • It renders essential services.
  • It is not established for profit.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q20 – Communications in Business

Defining the process of information transmission in business contexts.

The process of transmission of information from one person, group or organisation to another is called:

A. Decoding
B. Communication
C. Globalization
D. Presentation
E. Translation

Answer: B. Communication

Explanation:
Communication refers to the process of transmitting information from one entity to another, encompassing various methods and channels. It is essential for effective interaction within and between organizations.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q20 – Communications in Business

Defining the process of information transmission in business contexts.

The process of transmission of information from one person, group or organisation to another is called:

A. Decoding
B. Communication
C. Globalization
D. Presentation
E. Translation

Answer: B. Communication

Explanation:
Communication refers to the process of transmitting information from one entity to another, encompassing various methods and channels. It is essential for effective interaction within and between organizations.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q19 – Management, Individual, and Organisational Behaviour

Identifying the leadership style based on authority and control over rewards.

A leadership style in which the leader has the authority to withhold or give reward and punishment is referred to as ………………. style.

A. Democratic leadership
B. Participative leadership
C. Contingency leadership
D. Autocratic leadership
E. Laissez faire leadership

Answer: D. Autocratic leadership

Explanation:
Autocratic leadership is characterized by a leader who has significant control over decision-making and the authority to reward or punish subordinates. This style does not typically involve team input or collaboration, focusing instead on the leader’s authority and directives.

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  • 1 Marks

BMF – MAY 2015 – L1 – SA – Q19 – Management, Individual, and Organisational Behaviour

Identifying the leadership style based on authority and control over rewards.

A leadership style in which the leader has the authority to withhold or give reward and punishment is referred to as ………………. style.

A. Democratic leadership
B. Participative leadership
C. Contingency leadership
D. Autocratic leadership
E. Laissez faire leadership

Answer: D. Autocratic leadership

Explanation:
Autocratic leadership is characterized by a leader who has significant control over decision-making and the authority to reward or punish subordinates. This style does not typically involve team input or collaboration, focusing instead on the leader’s authority and directives.

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  • 10 Marks

BL – May 2015 – L1 – SB – Q2c – Company Law

Explain the duties of a company director and the legal implications of breaching them.

Joe, a Pharmacist, is a director in Wuzup Pharmaceutical Company Limited. Last month, an investigation by police detectives revealed that Joe had been stealing drugs from the company’s store and selling them in his own private pharmacy. The board of Wuzup Pharmaceutical Company Limited was unaware that Joe owned and operated a private pharmacy.

It was also discovered that Joe had been accepting bribes from suppliers of chemicals to Wuzup Pharmaceutical Company Limited.

In view of these findings, the company has invited you to advise it on the duties of a company director.

i. State any FOUR duties of a company director. (4 Marks)
ii. Comment briefly on the legal implications of Joe’s actions in relation to his duties as a director in Wuzup Pharmaceutical Company Limited. (6 Marks)

i. Four duties of a company director are:

  1. Duty to act in good faith: Directors must act in the best interest of the company.
  2. Duty to avoid conflicts of interest: Directors must not engage in activities that conflict with the interests of the company.
  3. Duty of care and skill: Directors must exercise reasonable care, skill, and diligence in their duties.
  4. Duty to disclose interests: Directors must disclose any personal interest in contracts or transactions involving the company.

ii. Legal implications of Joe’s actions:
Joe has breached several fiduciary duties as a director. By stealing drugs from the company and selling them in his private pharmacy, he has acted in bad faith and created a conflict of interest, violating the duty to avoid conflicts. Accepting bribes from suppliers is also a breach of the duty to act in the best interest of the company. Legally, Joe may be removed as a director, and the company can sue him for the return of any profits gained through his misconduct. He may also face criminal charges for theft and bribery.

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  • 10 Marks

BL – May 2015 – L1 – SB – Q2c – Company Law

Explain the duties of a company director and the legal implications of breaching them.

Joe, a Pharmacist, is a director in Wuzup Pharmaceutical Company Limited. Last month, an investigation by police detectives revealed that Joe had been stealing drugs from the company’s store and selling them in his own private pharmacy. The board of Wuzup Pharmaceutical Company Limited was unaware that Joe owned and operated a private pharmacy.

It was also discovered that Joe had been accepting bribes from suppliers of chemicals to Wuzup Pharmaceutical Company Limited.

In view of these findings, the company has invited you to advise it on the duties of a company director.

i. State any FOUR duties of a company director. (4 Marks)
ii. Comment briefly on the legal implications of Joe’s actions in relation to his duties as a director in Wuzup Pharmaceutical Company Limited. (6 Marks)

i. Four duties of a company director are:

  1. Duty to act in good faith: Directors must act in the best interest of the company.
  2. Duty to avoid conflicts of interest: Directors must not engage in activities that conflict with the interests of the company.
  3. Duty of care and skill: Directors must exercise reasonable care, skill, and diligence in their duties.
  4. Duty to disclose interests: Directors must disclose any personal interest in contracts or transactions involving the company.

ii. Legal implications of Joe’s actions:
Joe has breached several fiduciary duties as a director. By stealing drugs from the company and selling them in his private pharmacy, he has acted in bad faith and created a conflict of interest, violating the duty to avoid conflicts. Accepting bribes from suppliers is also a breach of the duty to act in the best interest of the company. Legally, Joe may be removed as a director, and the company can sue him for the return of any profits gained through his misconduct. He may also face criminal charges for theft and bribery.

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  • 4 Marks

BL – May 2015 – L1 – SB – Q2b – Company Law

Explain the term "debenture" in relation to a company’s securities.

In relation to a company’s securities, explain the term “debenture”. (4 Marks)

A debenture is a long-term security issued by a company, typically bearing a fixed rate of interest, and secured against the company’s assets. It is a type of loan that allows the company to raise capital without surrendering ownership or control. The holders of debentures are creditors to the company and are entitled to repayment of the loan plus interest at an agreed rate.

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  • 4 Marks

BL – May 2015 – L1 – SB – Q2b – Company Law

Explain the term "debenture" in relation to a company’s securities.

In relation to a company’s securities, explain the term “debenture”. (4 Marks)

A debenture is a long-term security issued by a company, typically bearing a fixed rate of interest, and secured against the company’s assets. It is a type of loan that allows the company to raise capital without surrendering ownership or control. The holders of debentures are creditors to the company and are entitled to repayment of the loan plus interest at an agreed rate.

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  • 6 Marks

BL – May 2015 – L1 – SB – Q2a – Company Law | Partnership Law

Explain three key differences between a partnership and a company.

A partnership and a company are similar in some respects, but they are different in many ways.
Required:
Explain any THREE differences between a partnership and a company. (6 Marks)

i. A company has a separate legal personality upon incorporation, while a partnership does not have a separate legal personality.

ii. Partnerships do not require a specific legal formality for formation, while a company must be incorporated with necessary documents.

iii. The liability of company members is limited to their shareholding, but partners in a partnership have unlimited liability except in the case of limited partners.

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  • 6 Marks

BL – May 2015 – L1 – SB – Q2a – Company Law | Partnership Law

Explain three key differences between a partnership and a company.

A partnership and a company are similar in some respects, but they are different in many ways.
Required:
Explain any THREE differences between a partnership and a company. (6 Marks)

i. A company has a separate legal personality upon incorporation, while a partnership does not have a separate legal personality.

ii. Partnerships do not require a specific legal formality for formation, while a company must be incorporated with necessary documents.

iii. The liability of company members is limited to their shareholding, but partners in a partnership have unlimited liability except in the case of limited partners.

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  • 6 Marks

BL – May 2015 – L1 – SB – Q1c – Company Law

Explain the term "Insolvency" and state four consequences of insolvency.

An insolvent person cannot properly manage his personal affairs.
i. Explain briefly the term “Insolvency”. (2 Marks)
ii. State FOUR consequences of Insolvency. (4 Marks)

i. Insolvency refers to the state where an individual or entity is unable to meet financial obligations as they become due, with liabilities exceeding assets. (2 Marks)

ii. FOUR consequences of Insolvency:

  1. Exposure to bankruptcy petitions filed by creditors.
  2. The insolvent person can be sued by creditors for debt recovery.
  3. Assets may be transferred to a trustee in bankruptcy.
  4. The individual may face harassment and embarrassment from creditors. (4 Marks)

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  • 6 Marks

BL – May 2015 – L1 – SB – Q1c – Company Law

Explain the term "Insolvency" and state four consequences of insolvency.

An insolvent person cannot properly manage his personal affairs.
i. Explain briefly the term “Insolvency”. (2 Marks)
ii. State FOUR consequences of Insolvency. (4 Marks)

i. Insolvency refers to the state where an individual or entity is unable to meet financial obligations as they become due, with liabilities exceeding assets. (2 Marks)

ii. FOUR consequences of Insolvency:

  1. Exposure to bankruptcy petitions filed by creditors.
  2. The insolvent person can be sued by creditors for debt recovery.
  3. Assets may be transferred to a trustee in bankruptcy.
  4. The individual may face harassment and embarrassment from creditors. (4 Marks)

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  • 4 Marks

BL – May 2015 – L1 – SB – Q1b – Law of Tort

Explain two defences to negligence available to a defendant in an action for negligence.

Negligence is a tort. You are required to explain briefly any TWO defences that are available to a defendant in an action for negligence. (4 Marks)

i. Contributory Negligence: This defence asserts that the plaintiff’s own negligence contributed to the harm they suffered. If proven, it can reduce or eliminate the defendant’s liability.

ii. Volenti Non Fit Injuria: This defence applies when the plaintiff voluntarily assumed the risk of harm, knowing the dangers involved. It absolves the defendant from liability since the plaintiff consented to the risk.

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  • 4 Marks

BL – May 2015 – L1 – SB – Q1b – Law of Tort

Explain two defences to negligence available to a defendant in an action for negligence.

Negligence is a tort. You are required to explain briefly any TWO defences that are available to a defendant in an action for negligence. (4 Marks)

i. Contributory Negligence: This defence asserts that the plaintiff’s own negligence contributed to the harm they suffered. If proven, it can reduce or eliminate the defendant’s liability.

ii. Volenti Non Fit Injuria: This defence applies when the plaintiff voluntarily assumed the risk of harm, knowing the dangers involved. It absolves the defendant from liability since the plaintiff consented to the risk.

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  • 10 Marks

BL – May 2015 – L1 – SB – Q1a – Introduction to Law

Discuss the parties involved in civil and criminal actions and list six superior courts of record.

The parties to a civil action differ from the parties to a criminal action. You are required to state:
i. The parties to a civil action in the High Court. (2 Marks)
ii. The parties to a criminal action in the High Court. (2 Marks)
iii. SIX Superior Courts of Record. (6 Marks)

i. The parties to a civil action in the High Court are the Plaintiff/Claimant and the Defendant. (2 Marks)

ii. The parties to a criminal action in the High Court are the State and the Accused/Defendant. (2 Marks)

iii. SIX Superior Courts of Record are:

  1. Supreme Court
  2. Court of Appeal
  3. Federal High Court
  4. High Court of a State
  5. Sharia Court of Appeal
  6. Customary Court of Appeal

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  • 10 Marks

BL – May 2015 – L1 – SB – Q1a – Introduction to Law

Discuss the parties involved in civil and criminal actions and list six superior courts of record.

The parties to a civil action differ from the parties to a criminal action. You are required to state:
i. The parties to a civil action in the High Court. (2 Marks)
ii. The parties to a criminal action in the High Court. (2 Marks)
iii. SIX Superior Courts of Record. (6 Marks)

i. The parties to a civil action in the High Court are the Plaintiff/Claimant and the Defendant. (2 Marks)

ii. The parties to a criminal action in the High Court are the State and the Accused/Defendant. (2 Marks)

iii. SIX Superior Courts of Record are:

  1. Supreme Court
  2. Court of Appeal
  3. Federal High Court
  4. High Court of a State
  5. Sharia Court of Appeal
  6. Customary Court of Appeal

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  • 1 Marks

BL – May 2015 – L1 – SA – Q20 – Law of Trusts

Identify what an equitable obligation to hold property for the benefit of others is called.

An equitable obligation which imposes a duty on a person to hold property for the benefit of others is called
A. Equity
B. Trust
C. Agency
D. Hire purchase
E. Administration

Answer: B

Explanation:
The correct answer is “B. Trust.” A trust is an equitable obligation where a trustee holds and manages property for the benefit of others (beneficiaries). The trustee has a legal obligation to act in the best interest of the beneficiaries.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q20 – Law of Trusts

Identify what an equitable obligation to hold property for the benefit of others is called.

An equitable obligation which imposes a duty on a person to hold property for the benefit of others is called
A. Equity
B. Trust
C. Agency
D. Hire purchase
E. Administration

Answer: B

Explanation:
The correct answer is “B. Trust.” A trust is an equitable obligation where a trustee holds and manages property for the benefit of others (beneficiaries). The trustee has a legal obligation to act in the best interest of the beneficiaries.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q19 – Negotiable Instruments

Identify the person on whom a Bill of Exchange is drawn.

The person on whom a Bill of Exchange is drawn is called
A. Drawer
B. Payee
C. Drawee
D. Payer
E. Holder

Answer: C

Explanation:
The correct answer is “C. Drawee.” The drawee is the party upon whom a bill of exchange is drawn and who is required to pay. The drawer is the party who creates the bill, and the payee is the party who receives the payment.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q19 – Negotiable Instruments

Identify the person on whom a Bill of Exchange is drawn.

The person on whom a Bill of Exchange is drawn is called
A. Drawer
B. Payee
C. Drawee
D. Payer
E. Holder

Answer: C

Explanation:
The correct answer is “C. Drawee.” The drawee is the party upon whom a bill of exchange is drawn and who is required to pay. The drawer is the party who creates the bill, and the payee is the party who receives the payment.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q18 – Law of Contract

Identify the consideration in a contract of insurance.

The consideration in a contract of insurance is
A. Subrogation
B. Premium
C. Assignment
D. Policy
E. Money

Answer: B

Explanation:
The correct answer is “B. Premium.” In an insurance contract, the premium is the consideration, which is the amount paid by the insured to the insurer in exchange for coverage. Subrogation and assignment refer to legal rights within an insurance context but are not the consideration.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q18 – Law of Contract

Identify the consideration in a contract of insurance.

The consideration in a contract of insurance is
A. Subrogation
B. Premium
C. Assignment
D. Policy
E. Money

Answer: B

Explanation:
The correct answer is “B. Premium.” In an insurance contract, the premium is the consideration, which is the amount paid by the insured to the insurer in exchange for coverage. Subrogation and assignment refer to legal rights within an insurance context but are not the consideration.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q17 – Sale of Goods

Identify what goods yet to be manufactured are called under the Sale of Goods Act.

Under the Sale of Goods Act, goods that are yet to be manufactured are called
A. Existing goods
B. Specific goods
C. Ascertained goods
D. Future goods
E. Unascertained goods

Answer: D

Explanation:
The correct answer is “D. Future Goods.” Future goods refer to goods that are not yet in existence or yet to be manufactured at the time a contract is made under the Sale of Goods Act. These are goods that the seller has promised to deliver in the future.

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  • 1 Marks

BL – May 2015 – L1 – SA – Q17 – Sale of Goods

Identify what goods yet to be manufactured are called under the Sale of Goods Act.

Under the Sale of Goods Act, goods that are yet to be manufactured are called
A. Existing goods
B. Specific goods
C. Ascertained goods
D. Future goods
E. Unascertained goods

Answer: D

Explanation:
The correct answer is “D. Future Goods.” Future goods refer to goods that are not yet in existence or yet to be manufactured at the time a contract is made under the Sale of Goods Act. These are goods that the seller has promised to deliver in the future.

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