1.Explain any four problems that Kenya would experience from participating in international trade.4mks

2.Outline any four importance's of advertising as a sales promotion method.4mks

3.Highlight any four ways in which insurance companies make profits.4mks

4.Mention four of the contents in the articles of association.4mks

5.In the spaces provided, name the type of business organisation described by each of the following features.4mks

DescriptionBusiness organisation

a)Each member has only one vote.............................................

b)The business enjoys perpetual succession.............................................

c)Each member may act on behalf of the business.............................................

d)Formed by an act of parliament.............................................

6.Identify four services that can be conveniently paid for using standing orders (bank orders)4mks

7.Give any four reasons why the Kenyan government is actively involved in licencing

business activities.4mks

8.Outline any four main principles of investment 4mks

9.Explain the meaning of the following terms.4mks

i)Par value

ii)Blue chips

iii)Cum right or Ex-Right

iv)Tilt Edged securities

10.The following is a summary of transactions for Ryan Traders for the month of April 2002.

2^nd April-Commenced business with shs. 12,000 in cash and shs. 150,000 at the bank

3^rd April -Made cash sales amounting to shs. 6,000

5^th April-Received cash shs. 16,000 from a debtor

12^th April-Paid for motor expenses shs. 7,000 in cash

13^th April-Drew shs. 30,000 from bank for office use

15^th April-Paid salaries in cash amounting to shs. 15,000

17^th April-Bought furniture worth shs. 18,000 paying by cheque.

18^th April-Paid expenses amounting to shs. 15,000 by cash

19^th April-Cash sales of shs. 40,000 received by cheque

23^rd April-Paid shs. 20,000 cash into the bank

25^th April-Paid a creditor shs. 16,000 by cheque

You are required to prepare two-column cash book for Ryan Traders for the month of April 2002.8mks

11.Highlight any four reasons why the Kenyan government finds it necessary to train businessmen.4mks

12.The following balances were extracted from the books of A & B Co. as at 1^st April 2002.

Capital shs. 200,000

Fixed Assetsshs. 180,000

Current Assetsshs. 40,000

Current Liabilities shs. 20,000

During the month, the following took place.

i)Goods worth 50,000 were taken away from the business for personal use.

ii)Net profit of shs. 80,000 was realized.

Calculate capital as at 30^th April 2002.4mks

13.Other than advertising, mention any other four methods of sales promotion.4mks

14.Highlight any four reasons why most businessmen do not prefer transferring their goods

via canals.4mks

15.Alex is an employee of an advertising firm as a sales executive.He receives a salary of

Kshs. 10,000 plus commission of the following basis:-

On the first sales of shs. 100,000- 2%

On the next shs. 200,000- 5%

On the balance of sales- 10%

He sold an advertising space worth shs. 450,000 during the month of January 2002.

Calculate his total income for the month.4mks

16.Highlight any four methods that the government can use to influence the quantity of a commodity supplied. 4mks

17.Indicate the type of resource represented by the following.4mks

Type of Resource

Forest ......................................................................

Road......................................................................

Doctor......................................................................

Wildlife......................................................................

18.Outline any four methods of determining prices in the market.

19.Write short notes on the following types of partners.4mks

a)Active Partners

b)Minor partners

c)Quasi partner

d)Outgoing partner

20.Opportunities exist for purchasing of necessary durable goods by installment.

a)Describe two methods commonly used for this purpose.4mks

b)Mention three advantages of each to:

i)The manufacturers6mks

ii)The consumer6mks

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

21.Prepare trading profit and loss account for 2000 and a balance sheet as at 31^st Dec 2000 from the following trial balance.

L.Kabas Co.

Trial Balance

As at 31^st Dec 2000

Capital

Land and buildings

Motor vehicle

Drawings

Furniture and fittings

Debtors

Creditors

Stock on 1^st Jan 2000

Purchases

Sales

Returns inward

Transport

Return outwards

Telephone and Electricity

Rates and Insurance

Licence and Legal expenses

Rent income

Salaries

Advertising

Carriage inwards

Stationery and office expenses

General expenses

DR (Kshs)

50,000

38,000

32,485

11,200

38,459

37,129

273,538

7,832

35,223

9,835

4,942

1,956

37,280

6,342

12,345

950

2,484

600,000

CR (Kshs)

150,000

46,253

384,803

10,544

8,400

600,000

Cost of unsold stock on 31^st Dec 2000 was Kshs. 43,210.20mks

22.a)Explain any five functions of commercial banks.10mks

b)Assume that you are a policy maker in Kenya today, explain the reasons which would

make you recommend rural industrialization policy.10mks

23.a)Account for the low bargaining power of trade unions in Kenya today.10mks

b)Outline any five benefits that a person may derive from being a member of savings

and credit cooperative socie10mks