1. A company intends to promote its products by arranging a prize winning competition through the media. Prizes can only be won through buying the products.

2. Explain five benefits that the company would get by using this method of sales promotion 10mks

(b) Explain four factors determining the market prices of commodities. 10mks

(a) Thegovernment of Kenya has been adopting the policy of privatisation of firms.

Discuss someof the benefits that the Kenyan people reap from this policy 10mks

The following balance were extracted from the books of Charles & SonsCo.

as at May31st 2002 .

Capital 600,000

Net profit 130,000

Plantfixtures 160,000

Equipment's 100,000

Buildings 240,000

Office furniture 10,000

Stock 192,000

Cash 118,000

Debtors 158,000

Pre-paidexpenses 22,000

Creditors 130,000

Outstanding expenses 20,000

Bank overdraft 110,000

Required :

(i)Prepare balance sheet as at31st may 2002 7mks

Calculate

Working capital

Current ratio

Net profit as percentage to capital 3mks

3. (a) Explain five circumstances under which an insurance company would not compensate

the insured in the event of loss 10mks

(b) Odhiambo's publishingcompany recently joined the Nairobi stock exchange.

Describe five benefits 10mks

Describe two methods commonly used for this purpose 4mks

Mention three advantages of each to:

Manufacturers

Consumers 12mks

(c)Give any two differences of the two methods 4mks

5. (a) Explain anyfive methods that the Kenyan government may adopt in order to control the

volume of imports 10mks

(b)Discuss the main sources of capital to small scale enterprises 10mks

6. (a)Explain five reasons why it is necessaryfor a country to control internationaltrade

10mks

(b) Explain five diseconomies that may be suffered by firms due to large scale production