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  1. Outline four features of Basic wants                                                                                       (4mks)
  2. Name the type of warehouse associated with each of the statement given below                 (4mks)


    Type of warehouse

    a). Good can be stored before payment of custom duties


    b). Individual can hire storage facilities


    c). goods are stored from several manufacturers


    d). Specialized goods are stored

  3. Highlight four characteristics of monopolistic competitive market (4mks)
  4. The following balances were extracted from The books of Gaitu Traders for the month ended on 31st march 2005,
    Sales                                                    420,000          
    Purchases                                            240,000
    Motor van                                           300,000
    Equipment                                           120,000
    Debtors                                               80,000
    Creditors                                             40,000
    Expenses                                             160,000
    Capital                                                 440,000

    Prepare trial balance for Gaitu Traders as at 31st march 2005.                                               (4mks)
  5. Outline four benefits that Kenyan government from may get as a member of common market for Easter and Southern Africa (COMESA) (4mks).
  6. Highlight Four circumstances under which a seller may offer after sales service to the buyer (4mks)
  7. Highlight four indicators of economic growth that may be observed as a country progresses   (4mks)
  8. Outline four ways in which internal environment may contribute to success of a business       (4mks)
  9. Highlight four principles of a co-operative society                                                                  (4mks)
  10. Mobile phones have become a common means of communication in Kenya today. State four challenges that a trader may encounter when using mobile phones (4mks)
  11. State four ways in which a youthful population may be useful to Kenyan economy           (4mks)
  12. State four characteristic of money                                                                                         (4mks)
  13. Outline four principles of public expenditure.                                                                       (4mks
  14. On 2nd November 2006 Kinoti received an invoice of Ksh. 12,000.Terms of payment were trade discount 5% and cash discount of 10% if payment is made within 30days. Determine the amount paid if payment was made on 28th November 2006.                                                                     (4mks)
  15. Outline four characteristic of property insurance                                                                  (4mks)
  16. Highlight four factors that may cause supply curve to shift to the right                                (4mks)
  17. List four features of a good filing system                                                                             (4mks)
  18. The following information relates to Khadija wholesalers. Capital at the end of the year 2016 was sh. 190, 000, profit sh, 20,000, additional investment sh, 75,000 and drawings were sh.5000. Calculate Khadija wholesalers’ initial capital.
  19. Kenya has recently discovered crude oil in turkana. Outline four advantages of transporting the oil through pipeline                                                                                                                        (4mks)
  1. The table shows some occupation in production .Indicate the level of production associated with each of the following occupations. (4mks)   


    Level of production

    a)      mining


    b)     oil refining


    c)      insurance


    d)     Teaching

  2. Highlight four benefits that would accrue to a firm located near other existing firms.        (4mks).
  3. State four roles of intermediaries in the chain of distribution.                                              (4mks)
  4. Outline four benefits of a business plan to an entrepreneur                                                  (4mks)
  5. The following balances were extracted from the books of Kinja traders as at 31st December 2005.
    Current liabilities                                             150,000
    Net profit                                                        50,000
    Total Assets                                                    500,000
    2years Bank loan                                             100,000

    Calculate the rate of return on capital               (5mks)
  6. Outline three monetary policy tools used by the central bank to control inflation.              (3mks)


  1. Features of basic human wants:
    • One cannot do without them
    • They are felt needs
    • They cannot be postponed
    • They are satisfied before secondary wants
    • They are universal                                                                         Any 4x1=4mks
    • Bonded warehouse
    • Public warehouse
    • Wholesalers warehouse
    • manufacturers warehouse                                                             1x4=4mks
  3. Characteristics of a monopolistic competitive market
    • There are a large number of buyers and sellers who act independently.
    • There are no barriers to entry and exit from the industry
    • Sellers offer similar products that are only differentiated.
    • No single firm has control over the factors of production.
    • Firms set their own prices
    • buyers and sellers have perfect knowledge of the market
    • Firms incur large selling / promotional costs.                                                         Any 4x1=4mks
    AS AT 31ST MACH ,2005










    Motor van


















  5. Benefits that Kenya gets for being a member of the common market for Eastern Sand Southern Africa.
    • Free flow of goods/ services/factors of production
    • Expanded market for goods and services.
    • Reduced average cost/economies of scale due to increased scale of production
    • Production of competitive/quality goods and services.
    • Possibility of political cooperation/peace/understanding
    • Increased range /variety of goods and services
    • Improved infrastructure
    • Creation of employment opportunity/living better life.
    • Attract investments due to greater demand
    • fair prices of goods/services due to reduction/abolition of tax
    • Encourages specialization
    • Increased economic bargaining power
    • Bridging the production gap/can get what they don’t produce
    • Share research   information which reduces the cost of doing business
    • Technology/skills transfer which enhances production.                           Any 4x1=4mks)
  6. Circumstances under which a trader may offer after sales services to the buyer
    • When goods sold are technical in nature
    • Where expertise is needed in installation
    • When the product is new in the market
    • where competition is stiff to attract more customers
    • Where specialized transport is needed
    • Where expertise is required in maintenance/service/spare parts
    • Where it is the policy of the business
    • Where it is the government policy                                                             any 4x1=4mks
  7. Indicators of economic growth that maybe observed as a country progresses
    • Increasing national income/GNP.
    • Increasing national output/GDP
    • Improved infrastructure like roads
    • Improvement in the provision of health facilities
    • Increased education opportunities/literacy levels
    • Increased life expectancies.
    • Improved housing for the population.
    • Provision of more social amenities for leisure
    • Improved standards of living for the citizens /reduction in poverty level
    • Increased per capita income
    • Increased employment opportunities
    • Reduced dependency ratio/self reliance
    • Reduced income disparities
    • Good governance / democracy
    • Reduction of negative cultural practices
    • Improved technology
    • Industrialization
    • Increased entrepreneurial practices.                                                                     4x1=4mks
  8. Ways in which the internal environment may contribute to the success of a business
    • A good business structure is directed towards the achievement s of business goals
    • Employment of qualified staff enhances performance.
    • proper allocation of financial resources/Adequate finances
    • Availability of relevant physical resources eg. Buildings, equipment etc.
    • Innovation/creativity /research and development improves methods of production.
    • Positive business culture that matches the beliefs/values of the staff
    • Good management style
    • Motivated/supportive owners.                                                                              Any 4x1=4mks 
  9. Principles of co operatives:
    • Democratic administration
    • Open/voluntary membership
    • Limited interest on share capital
    • Promotion of education to members
    • Political /religious neutrality
    • Cooperation with other cooperatives
    • repayment of dividends/distribution of surplus.
    • service to members
    • limit on the number of shares each member can buy
    • Non-profit motivated                                                                                             any 4x1=4mks
  10. Challenges that a trader may encounter when using a mobile phone
    • May be damaging to the ears
    • Are relatively expensive to acquire
    • calls/messages may be tapped
    • Its use may be limited to where there is lack of network
    • May not be used under certain circumstances eg. Banking halls
    • May be stolen by thieves
    • Expensive to maintain
    • Requires constant charging
    • prone to misuse/ damage
    • difficult to operate                                                                                                  Any 4x1=4mks
  11. Ways in which a youthful population may be useful to the Kenyan economy  
    • Energetic and a highly productive team
    •  Availability of diverse talents
    • Highly mobile labour force
    • Increased inventions due to their adventurous nature.
    • faster growth of some sectors eg fashion, music etc
    • Flexibility and adaptability to technological changes which improves production.
    • Continuous supply of labour
    • Wider market for goods meant for the youth
    •  Less expenditure on social security and pension schemes.                         Any 4x1=4mks
  12. Characteristic of money.
    • Cognisability/authenticity
    • general acceptability
    • Portability /easy to carry around
    • divisibility
    • Homogeneity
    • Stability in value
    • malleability
    • durability
    • Scarcity
    • Not easy to forge/ imitate                                                                                       any 4x1=4mks
  13. Principles of public expenditure
    • Sanctions
    • Maximum social benefit
    • Flexibility
    • Economy
    • Proper financial management                                                                                 any 4x1=4mks
  14. Alternative I
  15. Characteristic of property insurance.
    • Premiums charged depends on the degree of risk/number of risk/value of the property.
    • It’s a contract of indemnity
    • Short term contract
    • Cannot be assigned to another person
    • Has no surrender value
    • There must be insurable interest in the property to be insured
    • There is a maximum limit on the amount of compensation
    • Policy can be used as security for loan
    • Uncertainty of the risk
    • Premium paid is a direct expense
    • subject to the principle of subrogation
    • Subject to the principle of contribution
    • Subject to the principle of proximate cause
    • Subject to the principle of utmost good faith.
  16. Factors may cause supply curve to shift to the right.
    • Reduced cost of production
    • Favorable climate condition /bumper harvest
    • Government incentive to producers eg subsidies
    • increase in the prices of jointly produced goods
    • Entry of a new firm into the market
    • Improved production methods /technology
    • Reduced incidences of industrial strikes
    • Availability of enough factors of production
    • Reduces prices of competitively produced goods
    • Future expectation of increase in quantity supplied in the market
    • Enough time                                                                                                          4x1=4mks
  17. Features of a good filing system
    • Simplicity
    • Compactness /not occupy too much space
    • suitability/appropriate to business needs
    • Elasticit
    • Safety/secure
    • Accessibility
    • Economical                                                                                                             Any 4x1=4mks
  18. I.C=C.C – P-I+ D.
    = 190,000 √-20,000 √-75,000 √+5,000√
    =shs 100,000√   √   √   √
  19. Advantages of pipeline
    • Reduces congestion on the roads/reduces number of tankers on the road
    • Maintenance/operation cost is low compared to road transport
    • Minimal manpower is required/saves on labour cost
    • Safe and convenient means of transport /less prone to accidents
    • Enables continuous flow of oil
    • Cheaper to transport by pipeline than road or railway
    •  Does not pollute the environment
    • Not affected by bad weather
    • Less accidents on the roads due to less tankers.                                        Any 4x1=4mks)
  20. Primary
  21. Benefits that accrue to a firm located near existing firms.
    • Enjoy use of existing infrastructure
    •  Access to labour
    • Collaboration with existing firms
    • Auxiliary services are available
    • Access to raw materials
    • Access to security
    • Access to market
    • Access to social amenities                                                                        any 4x1=4mks)
  22. Roles of inter intermediaries
    • Breaking bulk
    • Accumulating bulk
    • Preparing goods for sale
    • storage of goods
    • Arranging deals between buyers and traders
    • Bearing risks associated with transportation.
    • Reducing the number of transaction between buyer and seller
    • Passing information between the producer and the consumer.
    • Providing variety of goods to the buyers
    • Advising buyers and sellers on market trends                                                        Any 4x1=4mks
  23. Benefits of a business plan to an entrepreneur
    • Helps one to avoid mistakes
    • Enables one to identify the strengths and weaknesses of a business
    • Used to secure finances from financial institutions/ requirements by financiers
    • Helps one to determine the amount of finance required
    • useful in allocation of resources/ for proper allocation of resources
    • It’s a motivating factor.
    • For adaptability incase of changes in the future
  25. Monetary policy tools used by the central bank of Kenya to control inflation
    • Increasing the rate of interest on lending to commercial banks
    • Selling government securities in open markets operations
    • Increasing compulsory deposits by commercial banks.
    • Increasing commercial banks cash /liquidity ratios
    • Instituting selective credit control measure
    • directives to commercial banks
    • Requests by central banks to commercial banks/ moral suasion.


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