Questions
Instructions
- Answer ALL the questions
- State four reasons why people satisfy basic wants before secondary wants. (4 mks)
- Write the type of accounts the following items fall under (4 mks)
ITEM TYPE OF ACCOUNT a Discount received b buildings c Creditor kemboi d capital - Highlight four assumptions of the circular flow of income in a two-sector economy (4 mks)
- Highlight four reasons why it is suitable to locate a bonded warehouse at a point of entry of a country. (4 mks)
- State the type of unemployment described below (4 mks)
DESCRIPTION TYPE OF UNEMPLOYMENT a People lose jobs and spend time looking for a new job b Unemployment occurs repeatedly at similar times c Affects certain occupations such as the construction industry d Workers unwilling to accept the current wage rate - State four reasons why a businessperson would prefer to use current account. (4 mks)
- Highlight four ways that can be used to correct unfavorable balance of payment. (4 mks)
- State four internal economies of scale. (4 mks)
- Indicate with a (+) for increase, (-) for decrease and a (0) for no change in totals of the balance sheet following the transactions below: (4 mks)
TRANSACTION EFFECT a A debtor paid by cash b Paid creditors by cheque c Bought goods on credit d Withdrew cash from bank for office use
- A trader wants to import a car from Japan. List four possible channels of distribution he will use. (4 mks)
- Outline four benefits that accrue to business organizations that use the latest technology in record keeping. (4 mks)
- Highlight four ways in which a business idea can be implemented. (4 mks)
- Outline any four ways through which producers co-operatives help agricultural development in Kenya. (4 mks)
- Identify four types of small scale retail business without shops that wambui can run without a shop. (4 mks)
- Why would an exporter prefer to use container services as a method of transport? (4 mks)
- The diagram shows a shift of a supply curve for a certain commodity. (4 mks)
State four reasons why the supply curve could have shifted from S0 to S1 - Given the items of Njoroge Wholesalers on 1st July 2000 (5 mks)
Building 780 000 Net loss 43 000 Additional investment 8 400 Stock 45 000 Creditors 32 000 Debtors 29 000 Loan 240 000 Overdraft 60 000 Weighing machine 17 000 Cash 30 000 - Highlight three features of cartels (3 mks)
- The following are some of the terms used in international trade. Write the following initials in full. (4 mks)
- F.O.B
- C.I.F
- F.A.S
- F.O.R
- The following information relates t to Maji Mazuri Traders as at 31. 12. 2010. (4 mks)
Fixed assets
Stock
Current liabilities
Net profit for the current year400,000
120,000
60,000
100,000- Working capital (2 mks)
- Rate of return on capital employed (2 mks)
- Outline four factors that may limit te development of a less-developed country. (4 mks)
- Highlight four factors that should be considered by a firm when deciding on the method to use for promoting its products. (4 mks)
- Identify four types of taxes based on structure of taxes. (4 mks)
- Highlight four problems associated with determining consumer price index in an economy. (4 mks)
- A farmer’s house valued at ksh. 1,200,000 was insured against fire for ksh. 900,000 under the ‘average clause’. Fire occurred and damaged the house causing a loss of ksh. 500,000. Determine the value of compensation due to the farmer. (4 mks)
Marking Scheme
-
- They can’t be postponed
- They are felt needs
- Limited resources
- One can’t do without them
-
- Nominal account
- Real account
- Creditors
- Private
-
- They are only two sectors in the economy
- Households spend all their incomes on goods and services produced by the firm
- Firms spend all their revenue on factors of production provided by households
- No government intervention
- The economy is closed
-
- Facilitates easy collection of revenue
- Control entry of harmful goods
- For easy re-exportation
- To enable inspection of goods
- To collect information on goods entering the country
- Enables the country to control quality and quantity of goods
-
- Frictional
- Cyclical
- Erratic/casual
- Voluntary
-
- Overdraft facilities are available
- Payments are made very conveniently because cheques are used
- Not required to maintain any minimum balance
- Bank statements are usually sent to the account holder regularly
-
- Decreasing the volume of imports
- Increasing the volume of exports
- Encouraging foreign investment into the country
- Devaluation of currency
- Restricting outflow of capital
-
- Marketing economies
- Financial economies
- Risk bearing
- Managerial
- Technical
- Research
- Welfare
-
- No effect
- Decrease
- Increase
- No effect
-
- Foreign producer → local wholesaler → retailer → consumer
- Foreign producers → local consumer
- Foreign producer → local wholesalers → consumer
-
- Speedy customer service
- Confidentiality of business records
- Records can easily be retrieved
- Clean and tidy records produced
- Minimum storage space required
- Accuracy is enhanced
- Information is easily portable
- Labour saving
-
- Creating a new good
- Improving on an existing product
- Improving the process of production
- Improving the marketing strategies
- Offering unique services
- Improving the quality of services
-
- Help farmers get better prices for their produce
- Assist farmers input at free or reduced prices or on credit
- Offer useful advise on farming
- Grant loans for farmer’s development
- Provide a channel of distribution of loans offered by the government to relevant members
- Provide better storage facilities for the products
-
- Hawking/peddling
- Road side selling
- Open air market trading
- Automatic vending
- Online selling
-
- easy handling of goods
- less damage to goods
- safety because they are sealed at the loading points
- low premium charges due to less risks
- use of specially designed containers for special goods
- reduced inspection hence less disturbance to goods
-
- Increase in cost of production
- Inavailability of factors of production
- Reduction of other related products
- Poor state of technology
- Unfavorable government policy
- Unfavorable natural factors
-
- Formed when a group of manufacturers agree to act as one
- Fix prices
- Fixing quantity to be supplied
-
- Free on Board
- Cost Insurance and Freight
- Free Alongside Ship
- Free on Rail
-
- Working capital = current asses – current liabilities
120,000 – 60,000 = 60,000
Rate of return on capital employed
100,000/460,000 x 100 = 21. 73%
- Working capital = current asses – current liabilities
-
- Low natural resource endowment
- Inadequate capital
- Poor technology
- Poor human resource endowment
- Unfavorable domestic environment
-
- Cost
- Nature of the product
- Target group
- Objectives of the promoting firm
- Methods used by competing firms
- The law
-
- Regressive
- Proportional
- progressive
-
- Determining basket of goods or commodities
- Difficulty in determining the base year
- Differences in prices of goods
- Difficulty in the choice of the average to be used
- ( 900,000 x 500, 000) / 1,200,000 =375,000
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