ANSWER ALL QUESTIONS IN THIS PAPER
QUESTIONS
- Outline four benefits that consumers get from warehousing. (4mks)
- Name the business document that each of the following descriptions refers.(4 Marks)
Description
Document
a)It is used to correct an overcharge in an invoice
b)It is used to alert the buyer that ordered goods are on the way
c)Summarize all monthly credit transactions between regular buyer and seller.
d)It is a reply to an inquiry which contains descriptions, illustrations, terms of sale and prices of goods
- Outline four reasons why a business person may prefer written communication to verbal communication. (4 Marks)
- Outline factors that may lead to a shift in the supply curve to the right. (4mks)
- Using a tick(√) indicate the effect of the following transactions on capital(4mks)
Transaction
Increase
Decrease
No effect
a)Withdrew cash for personal use
b)Used personal savings to buy stock
c)Paid a creditor by cheque
d)Bought office furniture in cash
- Omamo a trader had the following assets and liabilities on 1st February 2020.
Shs
Capital 120,000
Machinery 80,000
Trade creditors 10,000
Trade Debtors 20,000
Stock in trade 25,000
Cash at hand 5,000On 2nd Feb the following transactions took place
Purchased goods on credit for shs. 15,000
Received a cheque sh. 10,000 from a debtor
Sold the machinery for shs. 90,000 in cashRequired: Prepare Omamo Balance Sheet as at 2nd January 2020 after the above transactions (5mks)
- State four external factors that may positively influence the operation of a business.(4mks)
- Outline four circumstances when the government may introduce regulatory measures to protect consumers from exploitation by business people. (4mks)
- State four features of a perfectly competitive market (4mks)
- Identify four factors that may cause demand- pull inflation to occur in a country (4 Marks)
- The following transactions relate to Salim traders
- 15th Feb 2020 sold an old business vehicle for shs. 150,000 on credit to Recovery Motors
- 20th Feb 2020 bought a new sewing machine on credit from singer limited for shs.50,000
Required: Record the above transactions in a General Journal
- State four demerits that are associated with water transport. (4 Marks)
- State four advantages of an open office layout to an organization (4mks)
- Highlight four features private limited company (4 Marks)
- Open relevant ledger accounts using the following information. (4 Marks)
1/2/2011 started business with sh. 10,000 in cash and sh. 50,000 at bank.
2/2/2011 Bought goods on credit from LK traders worth sh.5000
4/2/2011 Withdrew sh. 2000 from bank for office use. - Outline four circumstances where personal selling is appropriate. (4 Marks)
- Highlight four benefits that a firm may enjoy by preparing a business plan. (4 Marks)
- Highlight four forms of economic integration (4 Marks)
- A business had the following record for the year ended 31st December 2018
Capital as at 31/12/18 64,000
Net profit for the year 14,000
Capital as at 1st Jan 2018 42,000
Monthly drawings 1,500
Calculate the additional investments made during the year (4 Marks) - Outline four principles that guide a government in spending public finance (4 Marks)
- State four negative implications of ageing population in a country (4 Marks)
- State four errors which may affect the agreement of a trial balance(4mks)
- The following information relates to Mumbua traders for the year ended 31st April 2020.
Cash at bank 30,000
Cash in hand 40,000
Current liability 500,000
Sales 920,000
Opening stock 150,000
Closing stock 230,000
Margin 25%
Expenses 15% of sales
Determine- Gross profit (1Mark)
- Cost of sales (1Mark)
- Purchases for the year (1Mark)
- Net profit (1Mark)
- State any four money transfer facilities offered by commercial banks (4 Marks)
- State four problems encountered at the plan implementation stage in economic planning and development (4 Marks)
Marking Scheme
- Outline four benefits that consumers get from warehousing. (4mks)
- Consumers are assured of a steady supply of goods
- They are assured of quality goods and stable prices.
- They get goods in convenient quantities
- They are able to get a variety of goods
- Are able to choose the right goods where they are branded or blended
- Name the business document that each of the following descriptions refers.(4 Marks)
Description
Document
a)It is used to correct an overcharge in an invoice
Credit note
b)It is used to alert the buyer that ordered goods are on the way
Advice note
c)Summarize all monthly credit transactions between regular buyer and seller.
Statement of account
d)It is a reply to an inquiry which contains descriptions, illustrations, terms of sale and prices of goods
Catalogue
- Outline four reasons why a business person may prefer written communication to verbal communication. (4mks)
- Can be re-read over again for better understanding/cannot be distorted
- Can be used for reference purposes
- Can be reproduced
- Can be used as evidence in the law court
- Can be used to convey confidential matters/information
- Outline factors that may lead to a shift in the supply curve to the right. (4mks)
- Reduced cost of production
- Favorable climate conditions/ inseason
- Increase in the price of jointly produced production
- Favourable government policy
- Entry of new firms into the market.
- Reduced incidence of industrial strikes
- Availability of factors of production
- Future expectations of a fall in price.
- Using a tick(√) indicate the effect of the following transactions on capital (4mks)
Transaction
Increase
Decrease
No effect
a)Withdrew cash for personal use
√
b)Used personal savings to buy stock
√
c)Paid a creditor by cheque
√
d)Bought office furniture in cash
√
- Omamo a trader had the following assets and liabilities on 1st February 2020.
Omamo Trader
Balance sheet
As at 2nd February 2020sh sh Stock in trade
(25,000 + 15,000)40,000 Capital 120,000 Trade debtors
(20,000 – 10,000)10,000 Add capital gain 10,000 Bank(5,000 +10,000) 15,000 130,000 Cash 90,000 Total Creditors
10,000 + 15,00025,000 155,000 155,000
NB: Correct total on both sides one tick √ - State four external factors that may positively influence the operation of a business.(4mks)
- Fair competition/lack of competition
- Use of appropriate technology in production
- Stable political environment
- A favourable legal framework/favourable government policies such as low taxes
- Reliable supply systems
- Well developed physical facilities/infrastructure
- Increasing/high population
- Favourable social cultural environment
- Enhanced security
- Positive publicity by media houses.
- Outline four circumstances when the government may introduce regulatory measures to protect consumers from exploitation by business people.
- Where standards for operating business a low/unhealthy
- Where hearding is taking place
- Where there unsafe buildings
- Where customers are being charged unfairly high prices
- Where false advertising is taking place
- Where there are rampant branch of contract
- Where customers are being exploital on weights and measurements
- Where there is need to enforce trading laws
- State four features of a perfectly competitive market (4mks)
- Large number of buyers and sellers
- Buyers and sales have perfect knowledge e.g market
- There is no government interference
- No transport costs are incurred
- There is free entry and exit by firms
- The products are identical
- There is no excess demand/ supply
- There is uniformity of buyers and sellers
- Both the buyers and sellers are price takers
- Factors that may cause demand- pull inflation to occur in a country (4 Marks)
- Increased government expenditure
- Increase in population
- Expectation of price increment
- General shortage of goods and services
- Increased credit creation by commercial banks
- A fall in savings
- Increased in money incomes
- The following transactions relate to Salim traders
GENERAL JOURNAL
Date
Feb: 2020
Particulars
Folio
Debit
Credit
15th
Recovery motors
Vehicle
(Sale of vehicle on credit)
S.L
150,000
150,000
20th
Sewing machine
Singer limited
(Purchase of sewing machine on credit)
G.L
P.L
50,000
50,000
- State four demerits that are associated with water transport.
- Relatively slow – hence unsuitable for transporting perishable and urgently required goods.
- Limited availability – since its only applicable where large water bodies are available and in places with navigable rivers
- Water ways may be affected by adverse weather conditions such as storms which hinder movement of water vessels
- High costs to construct and maintain /expensive to construct ports etc. unaffordable to many/some countries
- May lack flexibility – Door to door facilities may not be available/some follow fixed schedules/routes
- May be prove to piracy – leading to huge losses and increased insurance costs
- High cost of unit of carriage vessels. Thus unaffordable to many
- State four advantages of an open office layout to an organization (4mks)
- Easier to communicate
- Supervision is enhanced
- Resources are evenly shared
- Saving on space
- Easier/cheaper to construct
- Enhance interpersonal relationship
- Workflow is made easy
- Service delivery is enhanced
- Reorganization is easier/cheaper
- Cheaper to decorate
- Cheaper to maintain
- Optimum use of resources.
- Features private limited company (4 Marks)
- Shareholders have limited liabilities
- Managed by a minimum of 1 director
- Owned by a minimum of 1 (or 2) to a maximum of 50 shareholders
- Does not advertise its shares to the public
- Share transfer is restricted
- Not required to publish its financial reports
- Open relevant ledger accounts using the following information (4 Marks)
Dr Capital A/c Cr
1.2.2011 cash 10,000
1,2,2011 Bank 50,000
Dr Cash a/c cr
1.2.2011 capital 10,000
4.2.2011 Bank 2,000
Dr Purchases a/c cr
2.2.2011 LK Trdaders 5,000ü
Dr LK Traders a/c cr
2.2.2011 purchases 5000
Dr Bank a/c cr
1.2.2011 Capital 50,000
4.2.2011 Cash 2000
- Outline four circumstances where personal selling is appropriate.
- When the product requires demonstration. Example technical products
- When the market is concentrated in one area e.g bank sales representative will go to institutions like school to sell their products.
- Where the organization has resources since personal selling is expensive to various expenses incurred.
- Where the product is new in the market, hence awareness creation persuasion and convincing is necessary
- Where a product is customer tailored that is where products are made to meet specific needs of customers who have different tastes and preference
- Benefits that a firm may enjoy by preparing a business plan.
- Source of finance/capital/loans/credit – can be used to convince financial institutions investors to fund the firms operation
- A tool for evaluation – it can be used to determine whether the firms is achieving it’s goal/objectives/helps make necessary adjustment. It can be used for structuring the implementation of the firm’s activities /functions
- A tool for planning/organizing/directing/staffing/co-ordinating/budgeting/communication/controlling
- Gives the firm a competitive edge – it enables the firm to get better understanding of the market of competitors
- Enhances efficiency in the use of resources – (of the firm) ensures that the resources available are allocated/used in the best way possible without waste fullness
- Motivational tool – it inspires management/employees – creates teamwork. In accomplishing the objectives of the firm.
- Framework/blueprint/road map for implementing a new business thus assisting management in decision/ actions on a day to day basis.
- Increasing tool for analyzing possible strengths/weakness/opportunities/threats/unforeseen circumstances/ministries impact of disruptions
- Evidence proof of commitment (by the owner)who will devote his/her efforts to the success of the business/who is forced to think clearly through the business idea before starting it.
- A tool for testing business idea to determine whether it can succeed/not succeed.
- Adaptability tool – created room to cope with changing/prevailing circumstances/situations
- Highlight four forms of economic integration (4 Marks)
- Free Trade Area
- Preferential Trade Area
- Customs Union
- Common Market
- Economic Union
- A business had the following record for the year ended 31st December 2018
- Final = Opening + Net + Additional – drawings – Net
- Capital capital profit investments
- 64,000 = 42,000 + 14,000 + Ai – 18,000
- 64000 = 38,000 + AI
- Additional = 64,000 – 38,000
- investments
- Ans = Shs. 26,000
- Principles that guide a government in spending public finance
- Maximum social benefit
- Efficient allocation (wealth distribution)
- Proper financial management
- Flexibility –allow changes
- Economy in spending
- Surplus /reserve
- Negative implications of ageing population in a country
- Low labour supply/shortage of labour/manpower
- High dependency burden as majority are 65years and above
- Strain on economic resources to carter for the welfare of the aged eg health and homes
- Low standards of living /low per capita income since national income is spread over a large non-productive population.
- Rigidity to change
- Less progressive/low/savings and low investment
- State four errors which may affect the agreement of a trial balance
- Single entry for a transaction in the account
- Overcasting entry in an account
- Under costing entry in the account
- Wrong balance of an account/error of additional/arithmetical error
- Posting a balance on the wrong side of the trial balance
- The following information relates to Mumbua traders for the year ended 31st April 2020.
Gross profit- Margin = Gp x 100
Sales
Gp = 25 x100
920,000
100 Gp = 920000 x 25
100 100
Gp = 230,000 1 mk - cost of sales
sales – Gp = 920,000 – 230,000
= 690,000 1mk - Purchases for the year
COGS = OS + P + CI– RO – CS
690,000 = 150,000 + P – 230,000
= 770,000 1mk - Net profit
Gp – expenses
230,000 – (15 x 920000) = 230,000 – 138,000
100
= 92,000 1mk
- Margin = Gp x 100
- Money transfer facilities offered by commercial banks
- Cheques
- Credit transfer
- Bank drafts/bankers cheques
- Standing orders
- Telegraphic transfers
- Debit cards
- Electronic funds transfer
- Problems encountered at the plan implementation stage in economic planning and develop
- Reliance on donor funding
- Lack of domestic resources
- Failure to involve local people in planning
- Occurrence of natural calamities
- Over ambitious plans
- Lack of co-operation among the executing parties
- Effects of inflation
- Lack of political goodwill
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