1. a) Explain six reasons why a new business may fail (12mks)

b) Explain four advantages of transaction business through e-commerce. (8mks)

2. a) Explain six sources of government revenue for development expenditure. (12mks)

b) Karani does not keep a complete set of accounting records.During the year ended 30 June 2006, the following balances were extracted from the books of accounts. Sh. Stock 140,000 Land and buildings 500,000 Cash in hand 2500,000 Cash at bank 120,000 Credit 240,000 Long term loan 1400.000 Plant and machinery 600,000 Additional information: Karani drew sh. 140,000 from the business for private use. Opening capital was sh.2000 000 as at 1 July 2005 Additional capital during the year was sh.120,000.

i) Prepare statement of affairs for the year ended 30 june 2006

ii) Determine profit or loss for the year ended 30 june 2006

3. a) explain five ways is which the Agriculture Finance Corporation(AFC)

b) Explain five factors that could affect the quantities of cabbages supplied in a market. (10mks)

4 a) Explain five strategies that a small - scale firm could adopt to expand so as to enjoy economies of scale. (10mks)

b) Explain five benefits that could accrue to a customer who buys goods from a departmental store. (10mks)

5. a) Discuss five reasons why less developed countries are reluctant in implementing free trade agreement. (10mks)

b) Draw a diagram to show how equilibrium price and output are determined undermonopoly. (10mks) .

6. a) Explain five features that you would consider in establishing a warehouse for imported goods. (10mks)

b) The following trial balance was prepared from the books of Mugambi Traders for the year ended 31 December 2005 Mugambi Traders Trial Balance Dr Cr Kshs Kshs Land and buildings 500,000 Capital 940,000 Plant & Machinery 200,000 Motor Vehicles 300,000 10 year bank loan 200,000 3 year ICDC loan 100,000 Stock 100,000 Debtors 60,000 Creditors 60,000 Accrued expenses 20,000 Cash at Bank 100,000 Cash in hand 20,000 Drawings 40,000 Prepare

(i) A balance sheet for the year ended 31 December 2005

(ii) Determine Working capital Capital employed Borrowed capital

1. State factors that may affect the geographical mobility of labour ( 4 mks)

2. Outline four ways in which commercial attaches may promote trade between 1,320,000 1320,000 . their country and other countries ( 4 mks)

3. Amboseli Enterprises has been spending heavy on promotion for its products though its sales have consistently declined. Outline four measures that the company take to reverse the trend

4. Write the type of demand represented by each of the following statements

(i) Demand for a commodity causes an increase in demand for another Commodity

(ii) Demand for one commodity calls for demand of another commodity

5. The following balances were extracted from the books of Saku traders on 31 March 2008 Fixed assets 300,000 Current assets 123, 700 Creditors 84, 500 5 year loan 125,000 Determine the net worth of the business as at 31st March 2008 ( 4 mks)

6. Indicate the type of journal in which each of the following transaction would be recorded . Transaction Type of journal

Goods previously sold on credit were returned Goods bought on credit Goods sold for cash Motor vehicle sold on credit ( 4 mks)

7. A trader has decided to take a loan to expand a manufacturing business. Give two reasons why it is beneficial to borrow from a non- bank financial institution ( 4 mks)

8. State four items that usually appear the credit side of the current account of a country ( 4 mks)

9. Outline four benefits that may accrue to a business from a country's political stability ( 4 mks)

10. A lucrative manufacturing firm been constantly releasing toxic wastes into the neighborhood. Outline four measures you can take to stop the firm from such . malpractice ( 4 mks)

11. Outline four factors that should be considered in the choice of a means of transporting perishable goods ( 4 mks)

12. Outline four circumstances which face to face communication may be ineffective ( 4 mks)

13. Highlight four benefits that would accrue to a firm located near other existing firms ( 4 mks)

14. Country X has been experiencing an upward trend in the price of petrol as a result of a rise in inflation. State four steps that can be taken to minimize expenditure on this product. ( 4 mks)

15. Outline four reasons why an increase in per capital income may not necessarily lead to a rise in the standard of living of the citizens ( 4 mks)

16. The bookkeeper of trade Traders extracted the following information from the accounting records 1.1 2007 31.12.2007 . Kshs Kshs Suppliers 465, 000 640,000 Discount received - 12,000 Purchases returns - 25,000 During the year ended 31.12.2007, suppliers were paid Kshs 1,500, 000 while cash purchases amounted to Kshs 800,000 Determine the purchases for the year (5 mks)

17. Outline four circumstances that would make an office manager to replace an existing machine with modern one ( 4 mks)

18. Outline four reasons why hypermarkets are becoming increasingly popular in Kenya ( 4 mks)

19. The graph below the rate of population growth of a given country . Outline four factors that may have contribute to the trend between s and t ( 4 mks) 20. Kazim maintains a petty cashbook on a weekly interest of Kshs 13,000 on 1st April 2007 the cash balance was Kshs 2,570 During the week of April, the following transactions took place