1.Rain water and cloth are basic human wants. State three characteristics of rain water that makes it different from a cloth. (3mks)

2. Classify the following costs into either fixed or variable costs.(4rnks)

a. Rent......... ..................................................................

b. Raw materials. . ..........................................................

c. Fuel consumed. . .........................................................

d. Insurance property. ......................................................

3. State four indicators of business threats (4mks)

4. Highlight on four factors that may bring about improved national income of our country Kenya. (4mks)

5.The table below shows the description and the category of inflation. Fill in blank spaces the category of inflation described. (4mks)

DESCRIPTION

CATEGORY

(i) Has no effect on the output, employment or income distribution

(ii) A period of high inflation and high unemployment

(iii) The government can prevent it by using deliberate measures.

(iv) Prices increase at steady rate over time.

6. Highlight four factors that may lead to low taxable income capacities in developing countries.

(4mks)

7.Describe four measures that one would take when the trial balance fails to balance. (4mks)

8.Below is a table showing population totals in Kenya for the years 1969, 1979, 1989 and 1999 population census.

YEAR

1969

1979

1989

J999

Total population

10,942, 705

15,327,061

21 ,443,636

28,686,607

% growth rate

4.0

3.9

3.3

Give four reasons to account for the trend depicted above.(4mks)

9. List four documents which are required to be filled with the registrar of companies to facilitate registration of limited liability companies.(4mks)

10. State four reasons that may account for the existence of oligopoly markets. (4mks)

11 . Mention four benefits that consumers get from small-scale retailers.(4mks)

12. Under what three circumstances would a trader allow a customer to pay cash on delivery?

(3mks)

13. Outline four disadvantages of devaluating a country's currency.(4mks)

14. The balance sheet below relates to Prime enterprises as at 1^st July 2007.

PRIMEENTERPRISES

BALANCE SHEET

AS AT 1/7/2007

Cash in hand

32,000

Capital

190,000

Stock

47,000

Bank overdraft

23,000

Buildings

143,000

2year loan

80,000

Debtors

26,000

Land

150,000

Creditors

105, 000

398,000

398,000

During the month of July the following transactions took place.

July 6 - Sold stock paid by cheque shs. 27,000

July 10 - Received cash shs. 18,000 from a debtor.

July 13 - Paid creditors cash shs. 95,000 from personal savings.

Required:

Prepare PRIME balance sheet as at 13-7-2007.(5mks)

15. Outline four circumstances under which a firm may be the sole supplier of a product in the

market. (4mks)

16. List four ways in which public debts can be redeemed. (4mks)

17. (a) State the law of supply.(1mk)

(b) Highlight three circumstances under which a good may have inelastic demand despite price changes. (3mks)

18. Study the information below and answer the questions that follow.

ABC COMPANY LTD

NOTICE TO ALL MEMBERS

The meeting scheduled for 21/4/2008 has been

postponed until further notice.

Managing Director

J K MWINAMO

(a) What is the name of the document? (1mk)

(b) State any feature of the document that makes you give it the above name. (1mk)

(c) Give two advantages of using the above document. (2mks)

19. The following figures were extracted from Onyango's Trading account.

Opening stocksh. 37,000

Mark-up 25%

Purchases210,000

Closing stock39,000

Calculate:

a) Sales (3mks)

b) Stock turn over.(2mks)

20. Highlight four factors to be considered when determining the most suitable business opportunity from a variety of business ideas. (4mks)

21. Highlight four circumstances that make a country reluctant to join a trading bloc. (4mks)

22.The following journals relate to Malingumu traders In the year 2006

Purchases journal

Date

Details

Amount

June 2

June 7

June 11

Kinga traders

Kima traders

Salome traders

72,000

23,000

31,000

Purchases Returns journal

Date

Details

Amount

June 9

June 15

June 18

Kima traders

Salome traders

Kinga traders

11,000

6,000

4,720

From the above journals prepare Kinga's creditors ledger account and balance it. (4mks)

23. The following are functions of some departments in an organization. In the spaces below write the name of the department whose function is given. (4mks)

Function

Department

a) Processing payment

b) Recruitment of workers

c) Procuring of supplies

d) Doing the overall management

24. The following information was collected from the books of Namanga traders for the year ended 31^s1 December 2006.

Debtors 31^S1 Dec 2006 42,300

Returns inwards 2,300

Bad debts written off 3,100

Discount allowed 4,600

Debtors Jan 1^st 2006 34,000

Cash sales 334,000

Dishonored cheque from debts19,000

Discount disallowed450

Receipts from debtors 198,000

Required: Determine the total sales for the year ended 31^sl Dec. 2006.(4mks)

25. State the document to be applied in each of the following statements. (4mks)

STATEMENT

DOCUMENT

(i) A request by a seller for advance payment

(ii) Used to correct undercharge in an invoice

(iii) To reply to specific Setter of inquiry

(iv) To inform the buyer when goods were dispatched and by what means