1.In the table below, indicate using a tick () whether the indicated factor constitutes internal or external business environment.4mks

FACTOR

INTERNAL ENVIRONMENT

EXTERNAL ENVIROMENT

a) Management

b) Economy

c) Human resources

d) Population

2.Give THREE reasons why consumers make choice whenever they want to satisfy humanwants.3mks

3.Highlight FOUR factors that can promote occupational mobility of labour. 4mks

4.Give FOUR qualities of a good entrepreneur. 4mks

5.Highlight FOUR ways in which an open office lay-out can contribute to efficiency in office operations.4mks

6.A wholesaler sold 20 bags of maize at Kshs. 1200 each to a retailer. The retailer was allowed atrade discountof 10% and cash discount of 3% if payment was made within a month. Calculate the total amount of money the retailer paid if the payment was made within a week.

4mks

7.Distinguish between

(a)A firm and industry.2mks

(b) Direct costs and indirect costs.2mks

8.Highlight FOUR ways in which the government can promote the location of business enterprises in a given area4mks

9.Complete the table below relating to the trading accounts of businesses X and Y.2mks*Tso*

BUSINESS

OPENING STOCK

PURCHASES

CLOSING STOCK

GROSS PROFIT

SALES

X

2000

7,500

800

10,400

Y

3,500

24,600

4000

30,000

10.State FOUR reasons why a trader would issue a statement of account to buyers4mks

11.Outline FOUR disadvantages of ageing population.4mks

12.Give FOUR uses of a bill of lading4mks

13.Highlight FOUR reasons why air transport is the best suited for transporting valuable goods.14.Jaja traders had a closing capital of Kshs. 280,000 on 31^st December 2002. During the same year the following information was found in their books.:-4mks

Kshs.

Gross profit48,000

Total expenses35,000

Drawings6,000

Additional Investment28,000

Calculate the opening capital for the year 2002.

15.Outline FOUR importance of a bonded warehouse to the government.4mks

16. The diagram below represents the demand curve of a market structure.

Price

&

cost

Output

(a) Identify the market structure1mk

(b) Give reasons for the shape of the curve above.3mks

17. The balance sheet below relates to Onyoni traders on 30^th October 2005.

ASSETSLIABILITIES AND CAPITAL

Land120,000Capital 210,000

Premises58,000Loan (10yrs)48,000

Van72,000Creditors16,000

Stock16,000Overdraft10,000

Cash14,000

Debtors4,000

284,000284,000

The following transactions took place during the month of November 2005.

-Took cash Kshs. 3,500 for personal use

-Sold van at Kshs. 80,000 and was paid by cheque

-Bought goods worth Kshs. 2,000 on credit.

Prepare new balance sheet at the end of November for Onyoni traders.5mks

18.Outline FOUR distribution channels for locally produced agricultural products.4mks

19.Identify the motive of holding money in each of the circumstances below:3mks

(a) Need to hold money to cater for future unforeseen eventualities

(b) Need to have money to cater for daily expenses

(c) Need to have money with hopes that prices will fall in future in order to purchase more

20. Listed below, are transactions of a retailer in town X. For each of the following, identify the appropriate journal in which it should be entered.4mks

TRANSACTION

TYPE OF JOURNAL

(a) Sold goods on credit to Nyawira Hotel

(b) Goods sold earlier to Riziki were returned back due to defects

(c) Received a credit note from Malaba Wholesalers

(d) Bought goods from Zubeda distributors on credit.

21.Outline FOUR features of under development.4mks

22.The following information relate to Mapesa Enterprises on 31^st December 2005.

Gross Profit48,000

Salaries8,500

Discount received3,800

Bad debts3,600

Discount allowed3,000

Commission earned4,000

Rent income3,500

Depreciation1,400

Required

Prepare Mapesa's profit and loss account at 31^st December 2005.5mks

23. Give two advantages of source documents to a firm.2mks

24.The incorrectly prepared trial balance below belongs to Sifa Traders on 30^th October 2004.

Prepare the correct trial balance.4mks

DRCR

Kshs.Kshs.

Capital149,400

Debtors45,300

Insurance2,000

Fixures48,000

Stock (30/10/04)6,000

Premises160,000

Creditors21,900

ICDC loan90,000

227,300295,300

25.State FOUR negative effects of inflation to a country.4mks

26. List THREE methods used in computing national income.3