INSTRUCTIONS TO CANDIDATES
- Answer any five questions in the spaces provided.
QUESTIONS
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- Explain five benefits that could accrue to a customer who buys goods from a departmental store. (10mks)
- Explain five roles played by licensing as a government regulatory tool. (10mks)
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- Explain five services that the central bank of Kenya offers to commercial banks. (10mks)
- The following information relates to the business of Kipisigs Traders for the week ended 29th Feb 2016.
Feb 24th Started business with shs 24,000 in the bank.
Feb 25 th Bought goods worth shs 18,000 by cheque.
Feb 26 th Sold goods for cash shs 18,900
Feb 28 th Cash sales worth Kshs 5,625
Feb 29 th Paid commission Kshs 900 in cash.
Required
Prepared ledger accounts and balance them off. (10mks)
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- Describe five channels followed in exporting agricultural product. (10mks)
- The following trial balance was extracted from Milka traders on 31st Dec 2020.
Dr Cr Capital 250,000 Stock 25,000 Machinery 250,000 Motor vehicle 87,000 Purchase 360,000 Sales 600,000 Returns inwards 40,000 Returns outwards 20,000 Discount received 5,000 Carriage inwards 2,000 Carriage outwards 3,000 Bad debts (written off) 80,000 General expenses 88,000 Debtors 18,000 Creditors 49,000 Rent 1,000 954.000 954.000
Closing stock was sh. 22000
Prepare Milka traders Trading, profit and loss account for the year ending 31/12/2020. (10mks)
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- Explain five reasons why a country imposes taxes on her citizens. (10mks)
- Outline five differences between a public limited company and a cooperative society. (10mks)
Public Co-operative society
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- Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantity (10mks)
- Explain five features of land as a factor of production. (10mks)
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- Mmanyi Enterprises have decided to construct their own warehouse. Explain five benefits they are likely to derive. (10mks)
- Explain five importance of filing documents in an organization (10mks)
MARKING SCHEME
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- Advantages of departmental stores
- Access to specialised goods/ service from the relevant / shops / particular type of goods. Personalised / attention to customers.
- Access to auxiliary / after sales services - which may easily be available within the shops.
- One can save time by shopping under one roof.
- Prices of goods are relatively low = making consumers save/ buy more .
- One can access a variety of goods under one roof.
- Use of credit i debit cards - relieving customer the need of carrying cash.
- Access new products which a customer may not have been aware of.
- Explain five roles played by licensing as a government regulatory tool. (10mks)
- Licensing provides the government with a platform to monitor the type of goods moving in and outside the country.
- Through licensing the government can get the total number of businesses operating in the country
- Licensing is used by the government a tool to prevent illegal business activities.
- Licensing ensures that professional standard as stipulated by the government are adhered to against which a license can be withdrawn for a business which does not stick to the standards.
- Ensures that business people do not provide harmful goods and services to the citizens.
- Ensures that there is a healthy competition between people involved in the same business activities.
- Advantages of departmental stores
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- Explain five services that the central bank of Kenya offers to commercial banks.
- Accepts deposits for safe-keeping i.e. banker to commercial banks.
- Licenses the operation of commercial bank Supervises the banking operations.
- Provide clearing house for interbank transaction.
- Ask as a mediator / arbitrator for commercial bank in case of any disputes.
- Lends money to commercial banks.
- Provide advisory services on banking on economic matters to commercial banks.
- Provide them with currency
- Replaces old notes and coins with new ones.
- It repatriates excess foreign currency.
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Dr Capital a/c Cr Bai c/d 24,000 bank 24,000 24,000 24,000 Dr bank a/c Cr capital 24,000 purchases 18,000 bal c/d 6,000 24,000 24,000 Dr cash a/c Cr Sales 18,900 rent 150 Sales 5,625 comission 900 bal c/d 23,475 24,525 24,525 Dr sales a/c Cr bal c/d 24,525 cash 18,900 cash 5,625 24,525 24,525 Dr purchases a/c Cr bank 18,000 bal c/d 18,000 18,000 18,000 Dr comission a/c Cr cash 900 bal c/d 900 900 900 Dr comission a/c Cr bank 150 bal c/d 150 150 150
- Explain five services that the central bank of Kenya offers to commercial banks.
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- Describe five channels followed in exporting agricultural product. (10mks)
- Farmer marketing board -> foreign consumers
- Farmer —agent - foreign wholesaler - foreign retailer -foreign consumer
- Farmer foreign wholesaler foreign retailer foreign consumer
- Farmer -foreign retailer -foreign consumer
- Farmer -foreign fanner‘s representative - foreign wholesaler -foreign retailer - foreign consumer
- Farmer - foreign consumer
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Milka traders
Trading, Profit & Loss A/c
For the year ended 31 December 2020Shs Shs Shs Shs Opening stock 25,000 Sales 600,000 Add purchase 360,000 40,000 560,000 + C inwards 2,000 Less returns out 20,000 342,000 Gas 367,000 Less C. stock 22,000 COS 345,000 Gross profit c/d 215,000 560,000 560,000 General expenses 88,000 Gross profit b/d 215,000 Carriage out 3,000 Add disc. Received 5,000 Rent 1,000 Bad debts 80,000 Net profit c/d 48,000 220,000 220,000 Net profit 48,000
- Describe five channels followed in exporting agricultural product. (10mks)
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- Reasons why a country imposes taxes on citizens
- Raise government revenue - to cater for various government expenditure
- Reduce income disparity - by facilitating fair distribution of incomes and resources by taxing rich more
- Discourage consumption - of harmful products and engagement in illicit activities
- Control inflation - by reducing money supply through reduction of people‘s disposable income
- Correct unfavourable balance of payments- by taxing imported products more to discourage importation
- Influence business location e.g. high tax on urban centres make entrepreneurs to go to rural areas
- To subsidize various undertakings for the benefit of the society
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Public Co-operative society 1 Formed by a min of 10 1 Min 7 members /shareholders 2 Registered by commissioner of cooperatives 2 Registered by registrar of companies 3 Managed by committee elected by members at AGM 3 Managed by Board of directors 4 Governed by cooperative by – laws 4 Governed by Articles of Association 5 Formed with service motive (to serve members) 5 Formed for profit motive 6 Members have acommon bond 6 Members have nothing in common 7 Controlled by government through the ministry of cooperative development 7 There is no government control .
- Reasons why a country imposes taxes on citizens
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- Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantity. (10 marks
- Features of land as a factor of production
- Basic factor of production. Production cannot take place without land.
- Lack geographical mobility- land cannot be moved geographically from one location to another.
- Uneven in quality – the land quality differs from one place to place.
- Suffers from diminishing returns after some time the quality of land reduces.
- Quality can be improved – use of technology and fertilizers can improve the quality of land.
- Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantity. (10 marks
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- Benefits that Mmanyi Enterprise may derive from constructing their own warehouse.
- Bulk buying; they can buy stock in large scale because they have storage facilities
- They can be able to meet market demands since they stock the right quantities required by the customers.
- Seasonal goods can be stocked in order to satisfy customer‘s seasoned needs
- Variety of goods can be stocked to promote customer‘s satisfaction
- Security of goods is offered untiln they are demanded.
- Preparation of goods for sale such as branding, parking, sorting while in the warehouse is made easier.
- Suitable design- they can construct a warehouse suitable for their own needs
- Construction of one‘s warehouse is economical
- Importance of filing documents in an organization
- Easy retrieval of documents
- Keeps office very tidy
- Safety of documents
- Documents are kept neat
- Documents are kept away from unauthorised persons
- Space is well utilized
- Information for future reference is kept
- Filed documents are used as evidence in case of disputes
- Benefits that Mmanyi Enterprise may derive from constructing their own warehouse.
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