Instructions
- This paper consists of twenty five questions.
- Answer All the questions.
- Write your answers in English.
- State four reasons why itinerant traders are becoming increasingly popular in Kenya. (4marks)
- State four factors that lead to ineffective services in a warehouse. (4marks)
- Classify the following factors as either internal or external business environment. (4marks)
Factors Business (a) Political factor (b) Economic recession (c) Business structure (d) Employees - State four reasons why one would prefer partnership instead of sole proprietorship. (4marks)
- Highlight four ways in which a monopolistic competition differs from a pure monopoly. (4marks)
- The following balances were obtained from the books of Omweri traders.
Sales - 360,000
Opening stock - 50,000
Gross profit - 25% of sales
Closing stock - 70,000
Calculate:- Cost of goods sold. (2marks)
- Rate of stock turnover (2marks)
- State four ways a country may benefit from high population (4marks)
- Outline four advantages of transporting oil by pipeline rather than by road. (4marks)
- State four reasons why consumers find it difficult to satisfy their needs. (4marks)
- Using the diagram drawn below state the effect of shift in supply as indicated. (4marks)
- State four sources of government revenue. (4marks)
- Secretarial bureaus are usually found in urban centres. State four reasons that may account this type of location. (4marks)
- Name the insurance policy a school can take to cover the following risks. (4marks)
Risk Insurance policy (a) Losses arising from debtors failure to pay their debts (b) Injury caused by a school dog to a passer-by (c) Loss of cash when being transported to the bank (d) Loss of goods through dishonesty of an employee - Record the following transactions in the general journal of Velma Traders. (4marks)
- On 2nd January 2009 sold office equipment to Faith Traders on credit for sh. 20,000
- On 5th January 2009 bought motor vehicle sh. 300,000 on credit from Sarah enterprises.
- On 10th January 2009, bought lawnmower on credit for sh. 70,000 from Veronica.
- Wrote off a debt of sh. 50,000 due from Mueke on 12th January 2009.
- Outline four services that facilitate communication. (4marks)
- Highlight four limitations of adopting a new technology in business. (4marks)
- Record the following transactions in the relevant ledger accounts. (4marks)
2020
June 1: Ochieng started a business with sh. 50,000 cash
June 4: Bought office equipment for sh. 2,000
June 6: Deposited sh. 12,000 into the business bank account.
June 8: Bought stock worth sh. 10,000 by cheque. - State four factors that influence the amount of money held by an individual for precautionary motive. (4marks)
- Below is a two column cash book.
Describe the transactions that took place on the dates- 1/2/2022
- 3/2/2022
- 4/2/2022
- 6/2/2022
- Outline four circumstances under which a manufacturer would prefer to sell his product directly to customers instead of selling through intermediaries. (4marks)
- State four factors that may cause the capital of a business to change and how. (4marks)
- State four benefits a producer is likely to experience from using shows, trade fairs and exhibitions to promote his/her products. (4marks)
- State four uses of a business plan. (4marks)
- State demerits of government involvement in business. (4marks)
- Outline four characteristics of under-developed countries. (4marks)
MARKING SCHEME
-
- They are convenient; they go to where the customers are.
- They sell on cash basis hence no bad debts.
- They are more responsive to customer demands due to personal contact.
- They are flexible in making business decisions.
- Only require a trading licence to operate.
- Have no fixed prices hence can sell more items.
- Have low operating costs since they do not need to pay rents of high salaries.
-
- Unqualified personnel
- Inadequate security and safety.
- Improper recording system
- Improper building design
- Poor location of the warehouse
- Poor infrastructure.
-
- External
- External
- Internal
- Internal
-
- Easy to raise capital in partnership than in sole proprietorship
- There is sharing of responsibilities hence not tedious
- Some partners have limited liabilities
- There is sharing of ideas to better decision.
-
- In monopolistic competition there are many firms while in a pure monopoly there is only one firm.
- In a monopolistic completion there is product differentiation while in pure monopoly there is no product differentiation.
- In a monopolistic competition, there is free entry and exit of goods while in a pure monopoly there is no entry or exit of goods.
- In the long run, monopolistic competitive firms make normal profits whereas monopolistic firms make profit in the long run.
-
- Cost of goods sold
Cost of goods = Sales – G. Profit
360,000 – (25100 x 360,000)
360,000 – 90,000
= 270,000 - Rate of stock turnover
Rosy = cost of sales
Average stock
Average stock = 50,000 + 70,000
2
= 60,000
= 270,000
60,000
= 4.5 times
- Cost of goods sold
-
- There is increased labour mobility
- Bigger market for goods and services.
- Adequate supply of cheap labour.
- High demand for goods and services.
- Increased innovation.
-
- Transport cost are reduced
- Regular supply is assured
- Loss through accidents is reduced.
- Cases of theft of oil are reduced.
- Transportation of oil is faster.
- Less damages of roads.
- Less road accidents.
-
- Resources required to satisfy then are limited.
- Wants are competing hence difficult to choose on which want to satisfy first.
- The changing nature of wants makes it complicated.
- Human wants keep on recurring
- They are unlimited hence cannot be satisfied fully.
-
- Equilibrium point shifts to the right downwards.
- Equilibrium process moves downwards from Pe0 to Pe0.
- Equilibrium quantity moves from Qe1 to Qe1 to the right.
- Supply curves shifts from left to right i. e. S0S0 to S1S1.
-
- Taxes
- Fines
- Licence fees.
- Grants
- Sale of government assets.
- Interest on loans.
-
- Nearness to market or customers
- Nearness to communication services.
- Nearness to maintenance services
- Availability of qualified personnel.
-
- Bad debts policy
- Public liability policy
- Cash transit policy
- Fidelity guarantee policy.
- General Journal
Date Details Dr (sh) Cr (sh) 2009 Jan. 2nd Faith traders a/c
Office equipment a/c
(Being a record of sale of office equipment on credit.20,000 20,000 2009 Jan 5th Motor vehicle a/c
Sarah enterprises a/c
(To record purchase of motor vehicle on credit.)200,000 200,000 2009 Jan 10th Lawn mower a/c
Veronicah a/c
(To record purchase of lawn mower on credit)70,000 300,000 2009 Jan 31st Bad debt a/c
Mueke a/c
(To record bad debts written off)50,000 50,000 -
- Mail services e.g. Securicor currier
- Electronic media e.g. T,V
- Print media e.g. News paper
- Telephone services
- Internet services
-
- May require long capital to put in place.
- Requires trained personnel
- Resistance to change by some employees
- The team of the unknown by a proprietor.
-
Dr Cash a/c Cr.
Date Details Amount Date Details Amount 1/6/20 Capital 50,000
4/6/20
6/6/20
office equip
Bank2,000
12,000
Dr Bank a/c Cr
Date Details Amount Date Details Amount 6/6/20 cash 12,000 5/6/20 Purchases 10,000
Dr. Capital a/c Cr.
Date Details Amount Date Details Amount 1/6/20 Cash 50,000
Dr. Purchase a/c Cr.
Date Details Amount Date Details Amount 8/6/20 Bank 10,000
Dr. office equipment Cr.
Date Details Amount Date Details Amount 4/6/20 cash 2,000 -
- The level of income
- The family status
- The age of the individuals
- The number of dependent’s one has
- The duration between incomes of an individual.
-
- 1/2/2022 The proprietor had cash sh.3000
- 3/2/2022 The proprietor paid for equipment
- 4/2/2022 Sold goods worth sh. 7000and has paid by cheque.
- 6/2/2022 paid Jumashs. 1000 by cheque
-
- Where the manufacturer wants to save on commissions and discounts.
- Where the goods are fragile.
- Where the goods are of technical nature.
- Where the manufacturer would like to avoid price increases by intermediaries.
- Where the manufacturer would like to maintain his/her reputation by offering after-services.
-
- Profit realized increases the business capital.
- Losses incurred reduces the business capital.
- Additional investment increases the business capital.
- Drawings reduces the business capital.
-
- Enable producers and traders to display their products for sale.
- Gives opportunity for producers and traders to advertise their products.
- Gives an opportunity for producers to attract their customers so as to answer their questions.
- Enables the producers and traders to launch new products in the market.
- Enables producers to get new ideas on how to improve on their products.
-
- Serves as a management tool.
- Helps allocate business resources
- Used to acquire loans from financiers
- Used to and sell business
- Helps sound business decisions.
-
- May come away foreign investors
- May create monopoly business if it is the only provide
- Lack of Innovation
- Political Interference
-
- Low GDP per capita
- Inadequate infrastructure
- High population growth rates
- Low human development indicators
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