2. Outline FOUR ways in which the government creates an enabling environment for business. 4mks

3. HighlightFOUR differences between a whole life policy and endowment policy4mks

4. State Four measures that could be adopted to control cost push inflation. 4mks

5. Identify any FOUR factors that limit the use of credit cards in commercial

ransactions 4mks

6. The table below depicts the relationship between various parameters in determination of costs in a firm.Compute the missing values.

Output (Units)

Average Fixed Costs (AFC)

Average Variable Costs (AVC)

Average Cost

Total Cost

Marginal

cost

1

20

10

30

2

10

9.0

19

3

6.7

8.0

14.7

4

5.0

7.0

12

7. The following information relates to Mumbua traders for the year ended 31st April 2005.

shs

Cash at bank 30,000

Cash in Hand 40,000

Current liabilities 500,000

Sales 920,000

Opening stock 150,000

Closing Stock 230,000

Margin 25%

Expenses 15% of sales

Determine

(i)Gross profit 1mk

(ii)Cost of sales 1mk

(iii)Purchases for the year 1mk

(iv)Net profit 1mk

8. Name FOUR current trends and emerging issues in communication in the world

today 4mks

9. List FOUR reasons whya friend ofyours who is joining form one next year should take Business Studies as one of her subjects. 4mks

10. Highlight FOUR reasons why carbon copying is not a popular method of reproducing documents in an office. 4mks

11. Record the following transactions in the relevant ledger accounts of Birgen traders excluding the capital account 5mks

1st DEC. 2005 Started a business with sh.180,000 in a bank account, building sh. 200,000

and furniture sh. 40,000

2ndDEC 2005 Drew shs 100,000 from the bank for office use.

5thDEC 2005Paid a watchman shs. 5,000

12. The following is a three sector economy circular flow diagram

Investment expenditure

Payment for factor services

B

Households Firms

Goods & Services

D

Payment for goods & services

C

Financial A

Institutions Government

governmentpurchases

Outline what letters A,B,C and D stand for: 4mks

13. Highlight FOUR limitations consumers are likely to face as they strive to protect themselves from unscrupulous businessmen 4mks

14. Wathiomo runs a hotel business in Kimumu village.He maintains scanty records, but the following detailsabout the business were available on 31st October 2005.

Shs

Creditors 42,000

Cash at Bank 173,000

Rent income in advance 35,000

Debtors 76,000

Furniture 84,000

Insurance outstanding 20,000

Stock 160,000

Prepare Wathiomo's statement of affairs as on the particular date. 5mks

15. Distinguish between the following terms.

a)Comforts and luxuries. 2mks

b)Human Resources and Man Made resources. 2mks

16. Define the following terms

(i)Bureaucracy

(ii)Pilferage

(iii)Ultra vires

(iv)De-industrialisation 4mks

17. State Four factors that may influence the choice of a distribution channel. 4mks

18. Use the information below to write up a three column cash book and balance it as at 31st December, 2003. 5mks

2003 Dec 1st-Kericho Ltd. hadcash balance of sh.2,000 and bank balance of sh. 39,800.

-Paid by cheque Abdi account of shs. 20,000 less 5% discount.

2nd -Receiveda cheque for sh. 9800 from Habib in Full settlement of her account of

sh.10,000

9th -Cash sales paid directly into the bank sh.3500

12th-Paid insurance by cash sh 1150

22nd- Kiminini traders settled their account of sh. 6400 by cheque at a cash discount

of 2%

28th-Paid rent in cash sh. 1000

30th- Withdrew sh. 4000 from the bank for office use

19. Use a diagram to illustrate the fact that increased supply leads to a reduction in price and that

a lower price results in decreased supply. 4mks

20. Imperfect competition takes many forms.Outline FOUR features of retail trade as a form

of monopolistic competition. 4mks

21. The proposed share capital of Bahati Company is Kshs. One million divided into:-

Kshs.600,000 ordinary shares.

Kshs.400,000 preference shares.

The shares are divided into equal shares of Kshs. 10 each.In the period ending 31st Dec. 2000 they made a profit of kshs120,000.Find out how much was paid as dividend on ordinary shares if each of the preference shares was earning an extra sh.1. 4mks

22. State Four reasons to justify product promotion activities carried out by businesses 4mks

23. Highlight Four circumstances under which abusiness may fail to achieve the objectives set out by its owners 4mks

24. State Five reasons why John would prefer to obtain a loan from his sacco and not a commercial bank.