2. a) By the use of diagram, explain the effects of excess supply over demand on quantity demanded and supplied

b) The following balances relate to Brian traders as at 31st December 2013 Shs. Salaries 70,000 Stock (1/1/2013) 30,000 Creditors 35,000 Capital 700,000 Purchases 150,000 Insurance 10,000 Electricity 40,000 Debtors 60,000 Sales 350,000 Stock (31/12/2013) 20,000 2 year bank loan 200,000 Returns inwards 15,000 Required: (i) Prepare trading, profit and loss account for the year ending 31st December 2013 (5 Marks) (ii) Calculate the following ratios (a) Margin (1 mark)

(b) Rate of stock turn over (2 marks) (c) Rate of return on capital (2 marks)

3. a) The per capita income in country A is considerably higher than that in country B. Discuss Five reasons why the citizens of country A may not necessarily enjoy higher standards of living than citizens of country B. (10 Marks)

b) Explain five circumstances under which the nature of goods may influence the choice of appropriate means of transport (10 marks)

4. a) Highlight five ways in which the Central Bank acts as a banker to the government (10 marks)

b) Explain five characteristics of under development (10 marks)

5. a) Highlight five reasons why Kenyan government encourages the development of small business enterprises (10Marks)

b) Explain five circumstances under which personal selling is appropriate (10 marks)

6. a) Explain four services rendered by retailers to consumers (8 marks)

b) On 1st July 2014 moshi traders had cash in hand Ksh.560,000 and a bank overdraft of Ksh. 175,000. The following transactions took place during the month: July 9: Paid the following creditors by cheque after deducting 10% cash discount: Betty Ksh. 140,000 Mary Ksh. 98,000 July 12: Settled kithekas account Ksh.70, 000 by cheque after deducting 10% cash discount July 16: Received cheques from the following debtors after deducting 10% discount in each case: Ali Ksh. 350,000 Hassan Ksh.105,000 July 23: Received the following cheques from debtors after having deducted cash discount of 2% In each case: Joseph Ksh. 411,600 Daniel Ksh. 123,480 July 29: Received the following amounts in cash from debtors having deducted cash discount of 2% Josephine Ksh.82, 320 Fatuma Ksh.246, 960 Required: Record the above transactions in a three column cash book and balance it off at the end of the month

1. State four circumstances under which stock of the business may change. ................................................................................................................................................................... ................................................................................................................................................................... ................................................................................................................................................................... ..................................................................................................................................................................

4 marks

2.

Highlight four benefits of an enclosed office plan to an organization. ................................................................................................................................................................... ................................................................................................................................................................... ................................................................................................................................................................... ..................................................................................................................................................................

4 marks

3.

State four implications of a young population on the economy.

................................................................................................................................................................... ................................................................................................................................................................... ................................................................................................................................................................... ..................................................................................................................................................................

4 marks

4.

The following balances were extracted from the books of Mama Safi Enterprises for the year ended 31st December 2013.

Shs. Sales 95,000

Buildings 100,000

Debtors 74,000

Capital 150,000

Purchases 58,000

Stock 35,000

Creditors 53,700

General Expenses 42,200

Bank Overdraft 10,500

Requirement:

Prepare trial balance as at 31st December 2013.

4 marks

5.

Highlight four features of gambling.

................................................................................................................................................................... ................................................................................................................................................................... ................................................................................................................................................................... ...................................................................................................................................................................

4 marks

6.

State four conditions that may make difficult for the government to create job opportunities to its citizens. ................................................................................................................................................................... ................................................................................................................................................................... ................................................................................................................................................................... ...................................................................................................................................................................

4 marks

7.

Draw a diagram to illustrate the effects of expansion in demand accompanied by a proportionate contraction in supply on equilibrium.

4 marks

8.

Draw a diagram to illustrate the effects of expansion in demand accompanied by a proportionate contraction in supply on equilibrium.

4 marks

9.

A new student has been convinced by a colleague to take Business Studies as a subject because he will be able to acquire skills and attitudes to benefit him in life. Highlight any four skills that he will acquire.

4 marks

10.

On 1st January 2014 Mr Ochumbo bought land worth Ksh. 800,000. He made payments as follows:- Kshs.300, 000 cash, Kshs. 200,000 by cheque, gave out posho mill worth Ksh. 250,000 and the balance to be paid later. Record the transaction in the relevant ledger accounts.