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Cameroon GCE O-Level Commerce study materials
Cameroon GCE O-Level Commerce study resources

Cameroon GCE O-Level Commerce practice questions

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Question 1Introduction to Commerce and the Scope of Business

A trader in Bamenda buys cartons of soap from a wholesaler in Douala and sells them in small quantities to households in her neighbourhood. Which function of commerce is she performing?

  1. Transport insurance
  2. Bank credit creation
  3. Currency minting
  4. Breaking bulk Correct answer.

Explanation

Breaking bulk is the process of dividing large consignments bought from wholesalers into smaller units that suit the needs of final consumers. The trader buys cartons and resells in small quantities to households, which is precisely this function.

Question 2Introduction to Commerce and the Scope of Business

Which of the following best describes the term 'commerce' as used in the GCE O-Level Commerce syllabus?

  1. The whole process of producing goods in factories
  2. The distribution and exchange of goods and services, including trade and aids to trade Correct answer.
  3. The keeping of accounting records for a business enterprise
  4. The extraction of raw materials from the earth

Explanation

Commerce is concerned with the movement of goods and services from producers to consumers, covering trade itself and the aids to trade such as transport, banking, insurance, warehousing and advertising. Production, extraction and bookkeeping are separate activities that commerce serves or records.

Question 3Introduction to Commerce and the Scope of Business

A cocoa farmer in the South West Region sells his crop to a licensed buying agent who later sells it to an exporter. The exporter then ships the cocoa to Europe. Which link in this chain is a direct example of foreign trade?

  1. The farmer consuming part of his own crop
  2. The farmer selling to the buying agent
  3. The buying agent selling to the exporter
  4. The exporter shipping cocoa to Europe Correct answer.

Explanation

Foreign trade, also called international trade, occurs when goods cross national boundaries. The exporter selling Cameroonian cocoa to buyers in Europe is an export transaction and therefore foreign trade.

Question 4Introduction to Commerce and the Scope of Business

Which of the following is classified as an aid to trade rather than as trade itself?

  1. An insurance company covering goods in transit Correct answer.
  2. A shop selling stationery to pupils
  3. A market trader selling tomatoes
  4. A boutique selling imported clothes

Explanation

Aids to trade are the services that make trade possible, such as transport, insurance, banking, warehousing and advertising. Insurance supports the movement of goods by spreading the risk of loss, so it is an aid to trade.

Question 5Introduction to Commerce and the Scope of Business

A firm that buys groundnuts from many small farmers, cleans and grades them, and then sells them in bulk to oil processors is best described as performing which commerce function?

  1. Financing
  2. Insuring
  3. Grading and standardising Correct answer.
  4. Advertising

Explanation

Grading and standardising involve sorting goods into uniform qualities and sizes so that buyers can purchase with confidence without inspecting every item. Cleaning and sorting groundnuts into grades before bulk sale is exactly this function.

Question 6Introduction to Commerce and the Scope of Business

Which statement correctly distinguishes home trade from foreign trade?

  1. Home trade always involves the use of foreign currency
  2. Foreign trade takes place only between neighbouring countries
  3. Foreign trade never requires customs clearance
  4. Home trade is carried out within the boundaries of one country, while foreign trade crosses national boundaries Correct answer.

Explanation

The key distinction is the boundary crossed: home trade is conducted inside a single country, while foreign trade involves goods or services moving between countries and therefore customs formalities, exchange of currencies and trade documents.

Question 7Introduction to Commerce and the Scope of Business

A student wants to explain why commerce is said to create place utility. Which example best illustrates the idea?

  1. An insurer paying a claim after a fire
  2. A trader moving rice from a surplus area to a town where it is scarce Correct answer.
  3. A tailor sewing a shirt for a customer
  4. A bank lending money to a trader

Explanation

Place utility means value is added by moving a good from where it is abundant and cheap to where it is wanted and scarce. Transporting rice from a surplus area to a market town is a clear illustration of commerce creating place utility.

Question 8Introduction to Commerce and the Scope of Business

Which pair consists only of aids to trade?

  1. Transport and warehousing Correct answer.
  2. Teaching and nursing
  3. Mining and quarrying
  4. Farming and fishing

Explanation

Transport moves goods from producers to markets and warehousing stores them until they are needed; both are classic aids to trade. Farming, fishing, mining, teaching and nursing are production or service activities, not supporting services for trade.

Question 9Introduction to Commerce and the Scope of Business

A businessman in Yaoundé needs to send a consignment of furniture to Kumba. He hires a haulage company and also takes out cover against loss in transit. Which two aids to trade are involved?

  1. Warehousing and grading
  2. Banking and advertising
  3. Transport and insurance Correct answer.
  4. Advertising and insurance

Explanation

Hiring a haulage company is the use of transport to move the goods, while taking cover against loss in transit is insurance. Together these are two of the recognised aids to trade.

Question 10Introduction to Commerce and the Scope of Business

Which of the following best explains the relationship between industry and commerce?

  1. Industry and commerce are the same activity
  2. Industry produces goods and services, while commerce distributes them to consumers Correct answer.
  3. Commerce produces goods that industry later distributes
  4. Industry only exists in foreign trade

Explanation

Industry covers the creation of goods and services through extraction, manufacturing, construction and direct services. Commerce then takes over the distribution side, moving those goods and services from producers to consumers through trade and aids to trade.

Question 11Introduction to Commerce and the Scope of Business

A cooperative in the North West Region stores bags of maize for six months after harvest and sells them when prices rise. Which aid to trade is being used, and what benefit does it give?

  1. Insurance, because it protects the maize against theft
  2. Banking, because it lends money to the cooperative
  3. Warehousing, because it holds goods until they are demanded and evens out price fluctuations Correct answer.
  4. Advertising, because it informs buyers about the maize

Explanation

Warehousing is the aid to trade that provides storage for goods between production and consumption. By holding maize after harvest and releasing it later, the cooperative creates time utility and reduces the fall in prices that would occur if all farmers sold at once.

Question 12Introduction to Commerce and the Scope of Business

Which of the following statements about the scope of commerce is most accurate?

  1. Commerce is limited to international transactions
  2. Commerce includes trade and the services that facilitate trade Correct answer.
  3. Commerce includes only the buying and selling of goods
  4. Commerce excludes services such as banking and transport

Explanation

The scope of commerce extends beyond the mere exchange of goods to include all the supporting services known as aids to trade. Banking, transport, insurance, warehousing, advertising and communications all fall within commerce.

Question 13Introduction to Commerce and the Scope of Business

A trader orders goods from a supplier and pays for them three weeks after delivery. Which aid to trade has the supplier effectively extended to the trader?

  1. Transport
  2. Credit Correct answer.
  3. Warehousing
  4. Advertising

Explanation

Credit is the aid to trade that allows goods or money to be received now and paid for later. By allowing payment three weeks after delivery, the supplier has granted trade credit to the buyer.

Question 14Introduction to Commerce and the Scope of Business

Which of the following situations shows a service rather than a physical good being exchanged in commerce?

  1. A shop selling tinned fish
  2. A barber providing a haircut to a customer Correct answer.
  3. A trader selling bags of cement
  4. A farmer selling yams at the market

Explanation

A service is intangible, is consumed at the point of delivery and cannot be stored, so a haircut is a service. Cement, tinned fish and yams are tangible goods that can be stored and resold.

Question 15Introduction to Commerce and the Scope of Business

An entrepreneur buys timber in Ebolowa, has it sawn and processed into furniture, and sells the furniture in Douala. Which sequence correctly describes the activities involved?

  1. Commerce followed by industry followed by commerce Correct answer.
  2. Commerce only, because the timber is sold at the end
  3. Industry only, because the timber is processed
  4. Industry followed by commerce only

Explanation

Buying the timber is a commercial activity, processing it into furniture is an industrial activity, and selling the finished furniture is again commerce. The full sequence therefore moves from commerce to industry and back to commerce.

Question 16Introduction to Commerce and the Scope of Business

A shopkeeper is considering whether to expand by selling on credit to customers. Which combination of aids to trade would most directly help him manage the risks and records of such a decision?

  1. Grading and standardising
  2. Warehousing and transport
  3. Insurance and advertising
  4. Credit and accounting, supported by banking facilities Correct answer.

Explanation

Selling on credit requires the trader to grant credit terms, keep accurate records of amounts owed and use banking facilities to collect payments and obtain finance. Credit and accounting, supported by banking, therefore address the core needs of the decision.

Question 17Introduction to Commerce and the Scope of Business

Which statement best explains why advertising is regarded as an aid to trade rather than as trade itself?

  1. It stores goods until prices rise
  2. It transfers the risk of loss to a third party
  3. It creates a physical product that is then sold
  4. It informs potential buyers about goods and so helps to bring about exchange Correct answer.

Explanation

Advertising does not itself transfer ownership of goods; it communicates information to prospective buyers and thereby facilitates the sale. Because it supports rather than constitutes exchange, it is classified as an aid to trade.

Question 18Introduction to Commerce and the Scope of Business

A country decides to reduce its imports of rice and encourage local rice production. Which type of trade is most directly affected by this policy?

  1. Home trade only
  2. Foreign trade, specifically the import side Correct answer.
  3. Wholesale trade only
  4. Retail trade only

Explanation

Imports are purchases of goods from other countries and therefore form part of foreign trade. A policy to cut rice imports and promote local production directly affects the import side of foreign trade, while also influencing home production.

Question 19Introduction to Commerce and the Scope of Business

Which of the following best describes the function of a wholesaler in the chain of distribution?

  1. Providing insurance cover for goods in transit
  2. Buying in large quantities from producers and reselling in smaller lots to retailers Correct answer.
  3. Selling goods in small quantities directly to households
  4. Manufacturing goods for export

Explanation

A wholesaler buys in bulk from producers or importers and breaks the consignment into smaller lots for retailers. In doing so the wholesaler performs breaking bulk, storage and financing functions within the chain of distribution.

Question 20Introduction to Commerce and the Scope of Business

A firm wishes to reduce the risk of losing money if its warehouse burns down. Which aid to trade is designed for this purpose, and how does it work?

  1. Insurance, by pooling premiums so that the losses of the few are shared among many contributors Correct answer.
  2. Warehousing, by storing goods in several buildings
  3. Advertising, by attracting more customers to replace lost sales
  4. Banking, by lending the firm money after the fire

Explanation

Insurance works by collecting premiums from many policyholders into a common fund from which the losses of the unfortunate few are paid. This spreads risk across a large group instead of leaving it to fall entirely on one firm.

Question 21Production, Division of Labour and Factors of Production

Which factor of production is rewarded with rent in commerce?

  1. Enterprise
  2. Capital
  3. Land Correct answer.
  4. Labour

Explanation

Land covers all natural resources used in production, and its reward is rent because the owner receives payment for allowing the resource to be used. Labour earns wages, capital earns interest, and enterprise earns profit.

Question 22Production, Division of Labour and Factors of Production

A tailor buys cloth, thread and buttons and sews them into school uniforms. Which type of production is the tailor mainly carrying out?

  1. Tertiary production
  2. Primary production
  3. Extractive production
  4. Secondary production Correct answer.

Explanation

Secondary production involves changing the form of raw materials into finished or semi-finished goods, which is exactly what manufacturing uniforms from cloth does. Primary production extracts from nature, while tertiary production provides services.

Question 23Production, Division of Labour and Factors of Production

Which of the following is the best example of division of labour?

  1. A trader buying goods in bulk and reselling them in small quantities
  2. A farmer hiring three labourers to clear the same field together
  3. A bakery where one worker mixes dough, another bakes and a third packages the bread Correct answer.
  4. A firm buying a second delivery van to serve more customers

Explanation

Division of labour means splitting a production process into separate tasks, each performed by a different worker, as in the bakery where mixing, baking and packaging are specialised. The other options involve extra resources or selling methods, not task specialisation.

Question 24Production, Division of Labour and Factors of Production

What is the main reward received by an entrepreneur for combining the other factors of production?

  1. Interest
  2. Wages
  3. Rent
  4. Profit Correct answer.

Explanation

The entrepreneur organises land, labour and capital and bears the risk of loss, so the residual reward is profit. Interest goes to capital owners, rent to landowners and wages to workers.

Question 25Production, Division of Labour and Factors of Production

Which statement best describes the difference between direct and indirect production?

  1. Direct production makes goods for sale, while indirect production makes goods for personal use
  2. Direct production is for the producer's own use, while indirect production is for exchange and sale Correct answer.
  3. Direct production is done in towns, while indirect production is done in villages
  4. Direct production uses machines, while indirect production uses only hand tools

Explanation

Direct production occurs when a person produces goods or services to satisfy their own wants, such as a farmer eating his own maize. Indirect production is carried out for exchange, with goods and services passing through markets to consumers.

Question 26Production, Division of Labour and Factors of Production

Which of the following best explains why commerce is described as a link between producers and consumers?

  1. It supplies raw materials to farmers
  2. It moves goods and services through trade and aids to trade until they reach final users Correct answer.
  3. It manufactures goods that consumers need
  4. It fixes the prices of all goods in the market

Explanation

Commerce covers trade plus aids to trade such as transport, warehousing, insurance, banking and advertising, which together bridge the gap between production and consumption. Manufacturing belongs to industry, not commerce.

Question 27Production, Division of Labour and Factors of Production

A furniture workshop employs one carpenter who performs every stage of making a chair, from cutting timber to polishing. This arrangement is an example of:

  1. Non-specialisation in production Correct answer.
  2. Mass production
  3. Division of labour
  4. Specialisation by trade

Explanation

When a single worker carries out all the stages needed to complete a product, there is no splitting of tasks, so the worker is not specialised within the production process. Division of labour requires different tasks to be assigned to different workers.

Question 28Production, Division of Labour and Factors of Production

Which of the following is a limitation of division of labour for a small firm?

  1. It prevents the use of machinery in production
  2. It makes it impossible to produce goods in large quantities
  3. It always raises the cost of training each worker
  4. It can cause boredom and reduce worker satisfaction when tasks are repetitive Correct answer.

Explanation

Specialising workers on narrow, repeated tasks can lead to monotony, low morale and carelessness, which is a recognised disadvantage of division of labour. It does not necessarily raise training costs or block mechanisation.

Question 29Production, Division of Labour and Factors of Production

Which of the following activities belongs to primary production?

  1. A bank lending money to a cocoa farmer
  2. A supermarket selling tinned fish to households
  3. A factory roasting cocoa beans into chocolate
  4. A fisherman catching tilapia in the Sanaga River Correct answer.

Explanation

Primary production involves extracting natural resources directly from land, water or air, and fishing is a classic extractive activity. Banking, manufacturing and retailing belong to tertiary and secondary production respectively.

Question 30Production, Division of Labour and Factors of Production

Why is capital described as a man-made factor of production?

  1. It includes the skills and knowledge possessed by workers
  2. It refers to money earned by workers as wages
  3. It is created by nature and used without human effort
  4. It consists of goods produced by human effort and used to produce other goods Correct answer.

Explanation

Capital goods such as machines, tools and buildings are themselves produced by human effort and are then used in further production. Money and workers' skills are not capital goods in this technical sense.

Question 31Production, Division of Labour and Factors of Production

A country encourages cocoa farmers to process beans into chocolate locally instead of exporting raw beans. What effect is this policy expected to have on the structure of production?

  1. It expands secondary production and may create more employment Correct answer.
  2. It reduces the total value of goods produced in the country
  3. It shifts activity from secondary to primary production
  4. It moves production entirely into tertiary activities

Explanation

Processing raw cocoa into chocolate is manufacturing, so the policy increases secondary production. Processing also adds value and creates factory jobs, which supports economic development.

Question 32Production, Division of Labour and Factors of Production

Which of the following best illustrates a service provided by trade as an aid to trade?

  1. A firm buying raw materials from a supplier
  2. A firm producing cement for sale
  3. A firm paying wages to its factory workers
  4. A firm insuring its stock against fire Correct answer.

Explanation

Aids to trade are the services that support trading activity, and insurance is one of them because it protects goods and businesses against risk. Buying raw materials, paying wages and manufacturing cement are production activities rather than aids to trade.

Question 33Production, Division of Labour and Factors of Production

In which situation would division of labour be least suitable?

  1. A large shoe factory producing thousands of pairs daily
  2. A textile mill operating several specialised departments
  3. A car assembly plant with a moving production line
  4. A small workshop where one craftsman makes custom-made furniture to order Correct answer.

Explanation

Division of labour works best when output is large and standardised, because the cost of coordinating many specialised workers must be recovered. A single craftsman making unique items on order has too little and too varied work to split profitably.

Question 34Production, Division of Labour and Factors of Production

What is meant by the mobility of labour as a factor of production?

  1. The ease with which workers can move between jobs or locations Correct answer.
  2. The total number of workers available in a country
  3. The willingness of employers to hire new staff
  4. The amount of wages paid to workers each month

Explanation

Labour mobility refers to how easily workers can change occupation or move geographically to where work is available. It is affected by skills, housing, family ties and information about jobs.

Question 35Production, Division of Labour and Factors of Production

A government raises the retirement age and encourages more women to take up paid work. Which factor of production is this policy directly aimed at increasing in quantity?

  1. Land
  2. Capital
  3. Labour Correct answer.
  4. Enterprise

Explanation

These measures enlarge the number of people available for paid work, which is the quantity of labour. Land and capital are separate factors, and enterprise concerns organising and risk-bearing rather than the size of the workforce.

Question 36Production, Division of Labour and Factors of Production

A country's workforce is concentrated in subsistence farming with very low output per worker. Which change would most clearly increase productivity of labour?

  1. Reducing the number of hours each farmer works per day
  2. Introducing improved seeds, fertilisers and simple machinery on the farms Correct answer.
  3. Employing more farm workers on the same land using the same methods
  4. Encouraging workers to leave farming for trading in the same local market

Explanation

Productivity of labour means output per worker, so it rises when each worker produces more. Better seeds, fertiliser and machinery raise output per worker, whereas adding workers to the same land or cutting hours does not.

Question 37Production, Division of Labour and Factors of Production

A firm replaces ten manual packers with one packaging machine. Which statement best explains the effect on the factors of production used?

  1. The firm substitutes capital for labour in the packaging process Correct answer.
  2. The firm has increased the amount of land used in production
  3. The firm uses more labour and less capital than before
  4. The firm has reduced its use of enterprise in the business

Explanation

Buying a machine to replace workers is capital substituting for labour, a common response when machinery raises productivity or lowers unit costs. The other factors are not directly increased or reduced by this change.

Question 38Production, Division of Labour and Factors of Production

Two bakeries operate in the same town. Bakery A uses a long oven and ten workers, each doing a single task, while Bakery B uses five workers who each bake complete loaves. Which explanation best accounts for Bakery A producing at a lower average cost?

  1. Bakery A benefits from specialisation and larger scale, which raises output per worker Correct answer.
  2. Bakery B uses more capital and therefore has higher fixed costs
  3. Bakery A pays its workers lower wages because its tasks are simpler
  4. Bakery B produces more loaves per day than Bakery A

Explanation

Splitting work into single tasks allows each worker to become quick and skilled at that task, and the longer oven permits larger batches. The combination of specialisation and scale lowers average cost for Bakery A.

Question 39Production, Division of Labour and Factors of Production

A country's output rises because its workers become better educated and healthier, while the amounts of land, machinery and factories remain unchanged. Which explanation is most consistent with this outcome?

  1. The quality of labour has improved, raising output per worker Correct answer.
  2. The quantity of labour has increased while its quality is unchanged
  3. The country has increased its stock of capital goods
  4. The country has discovered new natural resources

Explanation

Education and health improve the efficiency of workers, which is an improvement in the quality of labour rather than its quantity. Better human capital raises output per worker even when other factors are fixed.

Question 40Production, Division of Labour and Factors of Production

In a developing economy, most people work in agriculture but output per worker is low, while factories in towns cannot find enough skilled workers. Which policy combination best addresses both problems?

  1. Banning migration from villages to towns to keep farm labour in place
  2. Providing vocational training and rural extension services to raise skills and farm productivity Correct answer.
  3. Increasing the number of unskilled labourers on each farm
  4. Taxing factory output and subsidising food imports

Explanation

Vocational training raises the quality of labour for industry, while extension services improve farming methods and output per farm worker. Together they tackle the skills shortage and the low productivity in agriculture.

Question 41Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

A trader who runs a small provisions shop alone, keeps all profits and bears all losses has which form of business organisation?

  1. Sole proprietorship Correct answer.
  2. Public corporation
  3. Cooperative society
  4. Private limited company

Explanation

A sole proprietorship is owned and controlled by one person who supplies the capital, takes the profits and bears unlimited liability for the debts of the business. The other forms involve shared ownership or state ownership, so they cannot describe a single trader keeping all profits and losses.

Question 42Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

Which characteristic best explains why a sole trader has unlimited liability?

  1. The owner must register with the tax office
  2. The owner and the business are not separate in law Correct answer.
  3. The business can only employ family members
  4. The business must publish annual accounts

Explanation

A sole proprietorship has no separate legal personality, so the owner's personal assets can be used to settle business debts. Registration and tax duties do not create or remove liability, and there is no rule restricting employment to relatives.

Question 43Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

In a general partnership, what is the usual position of the partners towards the debts of the firm?

  1. The government bears any debts the firm cannot pay
  2. Each partner has unlimited liability for the firm's debts Correct answer.
  3. Only the senior partner is liable for the firm's debts
  4. Partners are liable only up to their capital contribution

Explanation

In an ordinary partnership the partners are jointly and severally liable without limit for the debts of the firm. This distinguishes them from limited partners and from shareholders of a company, whose liability is limited to their investment.

Question 44Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

A partnership deed normally states all of the following EXCEPT the

  1. procedure for admitting a new partner
  2. ratio in which profits and losses are shared
  3. colour of the firm's delivery vehicles Correct answer.
  4. amount of capital each partner contributes

Explanation

A partnership deed records the financial and management arrangements agreed by the partners, such as capital, profit-sharing and admission of new partners. The colour of vehicles is an operational detail with no legal or financial significance for the partnership agreement.

Question 45Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

A limited partner in a limited partnership differs from a general partner because the limited partner

  1. is named in the firm's records
  2. cannot take part in managing the firm Correct answer.
  3. shares in the profits of the firm
  4. contributes capital to the firm

Explanation

A limited partner enjoys liability limited to the capital agreed, but in return must not take part in management; doing so can make the partner liable as a general partner. Sharing profits, contributing capital and being recorded are features common to both types of partner.

Question 46Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

Which document must a person normally submit to the registrar before a company can begin to operate as a registered company?

  1. The partnership deed signed by the promoters
  2. The company's first audited profit statement
  3. The memorandum and articles of association Correct answer.
  4. The firm's trading licence from the council

Explanation

Company registration requires the memorandum of association, which governs the company's relationship with the outside world, and the articles of association, which govern internal management. A partnership deed applies to partnerships, and a trading licence or audited accounts are not incorporation documents.

Question 47Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

The memorandum of association of a company primarily regulates the company's

  1. salaries of junior employees
  2. relationship with the outside world Correct answer.
  3. rate of dividend to be declared
  4. day-to-day internal management

Explanation

The memorandum sets out the company's name, registered office, objects and capital, and governs its external relations. Internal rules such as meetings and directors' powers belong in the articles of association.

Question 48Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

A private limited company differs from a public limited company mainly because a private company

  1. cannot offer its shares to the general public Correct answer.
  2. is owned and controlled by the government
  3. must have at least seven shareholders
  4. must publish its accounts for anyone to buy

Explanation

A private company may not invite the public to subscribe for its shares, and its shares are transferred only with the consent of members. Public companies may raise capital from the public, and neither type is government-owned merely because of its size.

Question 49Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

Why is a company described as having a separate legal personality?

  1. It can own property and sue or be sued in its own name Correct answer.
  2. It ceases to exist when a director resigns
  3. Its directors are personally liable for all its debts
  4. Its shareholders must all work in the business

Explanation

Once incorporated, a company is a legal person distinct from its members, so it can own assets, enter contracts and sue or be sued in its own name. Shareholders' liability is limited, and the company continues to exist despite changes in membership.

Question 50Forms of Business Organisation (sole trader, partnership, companies, cooperatives, public enterprise)

Which statement correctly describes the liability of a shareholder in a company limited by shares?

  1. The shareholder must repay all loans obtained by the company
  2. The shareholder risks only the amount unpaid on the shares held Correct answer.
  3. The shareholder is liable for every debt of the company
  4. The shareholder's personal property is pledged to creditors

Explanation

Where a company is limited by shares, a member's liability is restricted to any amount unpaid on the nominal value of the shares. Once shares are fully paid, the shareholder has nothing further to contribute to company debts.