1. Indicate the account in which the following entries as made. (4mks)

Entry

Account

Bad debts

Carriage inwards

Returns inwards

Discounts given

Gross profit

Purchases

Drawings

Pre-paid rent

2.Highlight four ways in which Insurance companies make profits. (4mks)

3.The major objectivein commerce is to maximize profits. Highlight four ways in

which businesses can achieve this important objective. (4mks)

4. Use the following information to Calculate the requiredratios.

Sundry debtors52,000

Stock5,000

Cash at bank100,000

Capital40,000

Net profit16,000

Current liabilities82,000

Calculate:

(i) Current ratio.(3mks)

(ii) Quick ratio.(2mks)

5. Mention four types of wholesalers. (4mks)

6. List down four machines used in the mail nom and their use. (4mks)

MACHINE

USE

(i)

(ii)

(iii)

(iv)

17. The law of demand applies 'ceteris penbus' all other factors held constant ). Highlight

four circumstances under which this law may not hold. (4mks)

11. As the transport manager of a busy company. Highlight four factors you would consider

before choosing a mode of transport for your goods and services. (4mks)

8. The following balances were extracted from the books of Beauty Care Enterprises on

31^st of March 1997.

Shs.

Fixed Assets42,000

Stock48,000

Debtors50,000

Bank overdraft25,000

Creditors40,000

Cash in hand 2,000

During the month of Aprilthe following transactions took place.

(a) Bought Motor Vehicle on credit valued at kshs. 80,000 from General motors.

(b) With drew Sh. 28,000 for personal use.

Required: Prepare balance sheet as atApril 30^th 1997.(5mks)

9. Give four reasons why an office may prefer storing information in Micro-films instead

of files.(4mks)

10. Name four documents used in home trade.(4mks)

11. Mention four reasons to justify that the Central Bank is not a Commercial Bank.(4mks)

12. Give four reasons why people prefer using a cheque to cash when effecting payment.(4mks)

13. The following information relates to Sis Mis traders for the year ended 31^st Dec 1996.

Opening stock

Closing stock turnover 8 times

Sales for the year 293,000

Determine:

(a) Cost of sales

(b) Purchases

(c) Gross profit or Gross loss. (5mks)

14.Give four advantages of personal selling as a means of sales promotion. (4mks)

15.Mention four of the contents in articles of association.

2. (a) Despite major development in the transport sector. Many people are still using

carts (both those driven by animals and those pushed by human beings).

Discuss five reasons to show why this type of transport is still preferable to others.

(10mks)

(b) Money evolved through severalstages to get to the currency notes and coins we

have today. However " Modern - day trade may compare negatively with barter

trade". Discuss this statement giving it your support. (10mks)

15. (a)A business enterprise should keep a budget other than the other statements it

keeps.Discuss reasons why this activity is important. (10mks)

(b)You are the sales manager of 'speed' Industries Ltd. that manufactures tyres.

You are faced with the decision to choose an appropriate channel to distribute the

product.Discuss the factors you consider in your choice. (10mks)

16. (a)Mail order business is whereby customers place their orders through mailand goods

are also send through mail. This businessis however not popular in Kenya.

Discuss five reasons to encourage your colleagues to start this type of business. (10mks)

(b) Discuss the factors that influence the choice of a filing system in an organization. (10mks)

17. (a) Briefly explain the following terms as used in Capital structure of a company.

(i) Registered capital. (2 mks)

(ii) Called - up capital. (2 mks)

(iii) Issued capital. (2 mks)

(iv) Paid - up capital. (2 mks)

(b) Specialization is the separation of jobs, activities and processes so that every individual concentrates on what they can do best. Name and explain four major such divisions.

(12mks)

18. (a)Discuss five benefits that the Kenyan government gets from Binded Warehouses. (10mks)

(b) Mwachai BINA's books disclose the following information for the period ended

31 Dec. 1996.

Opening Stock21000

Purchases40000

Closing Stock10000

Sales82000

Returns inwards2000

Motor Vehicle10000

Rent3000

Sales expenses18000

Discount received3000

19.State four advantages of a bonded warehouse4mks

20.Name the factor of production that each of the following resources relate to.5mks

ResourceFactor of production

a)Teacher______________________________________

b)Computer______________________________________

c)Water______________________________________

d)Sole proprietor______________________________________

e)Forest______________________________________

21.Mention any four methods used for sending money through the post office.4mks

22.Using the book keeping equation, indicate the correct figure in the empty spaces provided.

Assets

Capital

Liabilities.

180,000

50,000

200,000

90,000

45,000

38,000

150,000

50,000

23.The following information was drafted from the books of Rayrose college on 31^st Jan 2002.

ItemAmount (Kshs)

Opening stock400,000

Sales700,000

Closing stock10,000

Purchases150,000

Sales returns20,000

Purchase returns50,000

Salaries and wages80,000

Rent70,000

Income80,000

Calculate:

a)Gross Profit4mks

b)Net profit4mks

c)Mark-up percentage2mks