1.a)Explain FIVE ways in which central Bank of Kenya regulates the operations of commercialbanks in Kenya.10mks

b)The table below represents a farmer's supply of cabbages in a local urban center.

Year

Quantity of cabbages (Tonnes)

2001

20,000

2002

15,000

2003

10,000

Assuming the price remained constant, explain five possible reasons for the trend in the supply of cabbages.10mks

2.a)Explain FIVE differences between a public corporation and a public limited company.

10mks

b)The following trial balance was prepared from the books of Triumphant NO-TABLES Enterprises as at 31^st Dec. 2005.

Triumphant Notables Enterprises

Trial Balance

As at 31^st Dec. 2005

Dr

Cr

Sales

900,000

Purchases

600,000

Returns inwards

80,000

Returns outwards

20,000

Carriage inwards

40,000

Carriage outwards

3,000

Stock (Jan 2005)

100,000

Rent

60,000

Delivery van

180,000

Bank

60,000

Creditors

170,000

Debtors

120,000

Interest Expenses

18,000

General expenses

7,000

Capital

178,000

1,268000

1,268,000

Stock on 31 Dec. 2005 was valued at sh. 135,000. Prepare trading profit and loss accounts for the year ended 31 Dec. 2005.10mks

3.a)Highlight five reasons why a distributor of consumer goods would prefer to locate his or her warehouse near the consumers.10mks

b)Explain five factors that have limited the adoption of containerisation in the transportation of goods..10mks

4.a)Explain five benefits that accrue to a company by using a prize winning competition to promote its products.10mks

b)The following transactions relate to Expert Traders for the month of may 2005.

May 5:Sold goods on credit to Paul sh. 12,000 and Jane sh. 16,000

8:Bought goods on credit from Shah traders sh. 40,000

10:Purchased goods on credit from Grace sh. 34,000 and Peter traders sh. 31,050

16:Goods worth sh. 6,000 were returned to Shah traders and goods worth sh. 3,000 to Grace.

20:Goods sold on credit to Paul sh. 8,000 Tom sh, 11,000 and Joseph sh. 13,000.

26:Goods returned by Betty sh. 2000

Prepare the relevant journals.10mks

5.(a) The following assets and liabilities relate to Manyonge a trader who does not maintain a complete set of accounts.

1998shs.

Outstanding general expenses8,250

Creditors32,000

Debtors18,000

A cashbook summary extracted on the same revealed the following.

Receipts

Cash sales -sh 35,000

Purchase-sh.31,200

Paid creditors-54,000

At the end of the year, the following information was available:

Discount received amounted to sh. 7,600

Discount allowedshs. 2,500

Creditorssh. 25,000

Debtors shs. 23,000

Outstanding general expenses shs 10,700

Prepare:

(i)General expenses Account

(ii)Total Debtors Account

(iii)Total creditors Account.

(b)Outline six measures that a country may take to reduce unemployment.10mks

6.Country Z is a developing country and it intends to liberalize its economy. Discuss the effects of such a trading policy to the economy of the country.20mks

1.(a) Explain four negative effects of economic development (8mks)

(b)Outline six factors that influence decisions on what goods and services to produce

(12mks)

2.(a)Use the demand and supply schedule given below to draw a diagram showing the following

(i)Demand and supply curves

(ii)Equilibrium quantity, equilibrium price and equilibrium point

(iii)Excess demand and excess supply

Price

Quantity demanded

Quantity supplied

450

10

70

400

20

60

350

30

50

250

40

40

150

50

30

50

60

20

10

70

10

(8mks)

(b)Explain six functions of micro finance institutions (12mks)

3.(a)Describe five features of perfect competition(10mks)

(b)Outline five factors that influence the level of national income(10mks)

4.(a)Explain five factors influencing the choice of distribution channel 10mks)

(b)The following transactions were carried out by Kiplangat traders during the month of July 2005.

July 1:Started a business with Shs. 10,000 in cash

2:Opened a bank account for the business by depositing Shs. 20,000 from personal savings

10:Bought goods worth Shs. 10,000 and paid by cheque

20: Sold goods worth Shs. 20,000 which were paid for in cash

26:Paid Shs. 5,000 as salary to a worker by cheque

27:Took Shs. 5,000 in cash for personal use

Enter the above transactions in their respective ledger accounts and balance them off

(10mks)

5.(a)Explain six measures to solve unemployment problems in Kenya(12mks)

(b)The following table shows relationship between output, total cost, marginal cost, the average fixed cost, average variable cost and total cost

Unit of output

Total fixed cost Shs.

Total variable cost Shs.

Total cost Shs.

Average fixed cost Shs.

Average variable cost Shs.

Marginal costs Shs.

Draw a similar table and use the information provided to complete it(8mks)

6.(a)Enter the following transactions in the petty cash book of Maendeleo stores for the month of July 2003 using the following analysis columns

Telephone and postage, office stationary, traveling expenses and office expenses. The business operates the petty cash book on an imprest system of 4000/= replenished on a weekly basis

July 1^st-Received a cheque from the cashier to start the imprest

July 1^st-Paid for taxi hire250/= and 130/= for office cleaning

July 2^nd-Bought postage stamps for 210/= and a ball of string for use in the office 100/=

July 3^rd-Postage of a parcel cost 100/= and paid a telephone bill 900/=

July 4^th Purchased envelopes for 150/= and one ream of photocopying paper 500/=

July 5^th-Paid for bus fare 500/= and made a telephone call costing 50/=

July 6^th-purchased a window cleaning cream for 250/= paid bus fare 200/=

July 8^th-Received a cheque to replenish the imprest

July 8^th-Bought various office stationary for 400/=

July 9^th-Purchased postage stamps for 210/= and paid 950/= telephone bill

July 10^th-paid train fare 600/= and taxi fare 250/=

July 11^th Paid for office cleaning 150/=

July 12^th- Purchased two reams of writing paper 600/= and office dusters 300/=

July 14^th - Obtained a cheque from the cashier to replenish the imprest

Required

Prepare the petty cash book for the two weeks8mks)

(b)The following trial balance relates to Leshao traders for the year ended 31^st January 2005

PARTICULARS DRCR

Capital 110,000

Land and buildings 70,000

Machinery 21,600

Furniture 20,000

Debtors 78,000

Creditors 50,000

Opening stock 1,100

Bank 60,000

Cash 9,000

Sales 15,400

Sales returns 400

Purchases 8,000

Purchases returns 1,200

General expenses1,200

Carriage inwards 400

Carriage outwards 900

Rent received 2,500

Commission received 1,000

Salaries and wages 6,000

Electricity 700

Insurance 1,500

Postage 300

Drawings 1000

Bank loan 100,000

Total 280,100280,100

Note: Closing stock on 31^st January 2005 was valued at Kshs. 2,500

Prepare

a)Trading, profit and loss account for the year ended 31^st January 2005(8mks)

Balance sheet as at 31^st January 2005