3. a) With the aid of a well labeled diagram, explain the effect on the equilibrium price and equilibrium quantity when the supply of vehicles increases. (10 marks)

b) Outline five measures that the government of Kenya has put in place to protect consumers from unscrupulous business practice. (10 marks)

4. a) Explain five problems experienced when computing national income using the expenditure approach. (10 marks)

b) Fahari traders had the following balances on 1st July 2014. Kshs Equipment 5,600 Bank 35,000 Debtors 28,000 Creditors 66,600 Later in the month, the following transactions took place. July 6th -Purchased goods worth sh 9500 and paid by cheques. July 7th -paid creditors, sh 10,600 by cheques. July 23rd -Received a cheques of sh. 22,000 for goods sold July 28th -Withdrew sh 5000 from the bank to pay salaries. Required: Open the relevant ledger accounts and extract a trial balance. (10 marks)

5. a) Explain five effects of production activities on the environment and community health. (10 marks)

b) Explain any five roles played by commercial banks to the business community. (10 marks)

6. a) The economy of country X has been growing at a very low rate. Explain four possible reasons that could have led to thistrend. (8 marks)

b) The following information was extracted from the books of Ramogi Traders as at 31st December, 2012. Kshs Sales 800,000 Purchases 500,000 Returns inwards 90,000 Returns outwards 26,000 Creditors 150,000 Rent 60,000 Delivery van 160,000 Carriage outwards 3,000 Debtors 120,000 Carriage inwards 40,000 Bank 60,000 Stock (Jan 2012) 100,000 Interest expenses 10,000 General expenses 7,000 Stock (31st Dec 2012) 120,000 Bank overdraft 4,000 Capital 170,000 Required: i) Prepare Trading, Profit and loss account for the year ended 31st December, 2012. (8 marks) ii) Prepare balance sheet as at 31st December 2012.

a) Explain five ways division of labour and specialization enhances business performance.(10 marks) b) Discuss five method that can be used to determine the size of a firm. (10 marks) 20 marks

2. a) Explain five ways manufacturers of products in Kenya enhance consumer protection. (10 marks) b) Describe five methods through which the Central Bank regulates economic activities in Kenya. (10 marks) 20 marks

3. a) The following information was extracted from the books of Pumzika Traders in 2015. January 1st: Goods bought on credit worth sh100 from Onyango; invoice number 007. January 2nd: Goods returned to Makokha Traders amounting to shs.500 credit note No. 459. January 3rd: Cash sales worth shs.150 receipt No. 0245 from ABC stores Ltd. January 5th: Credit purchases worth shs. 840 from Pete Traders. January 10th: Bought goods on credit worth sh. 1500 from Jaribu Traders. January 15th: Cash purchases worth sh. 2100 by cash. January 20th: Purchased goods on credit from Karatina traders worth shs.650. REQUIRED Prepare: i. Pumzika Traders purchases Jurnal (5 marks) ii. Open the relevant ledger accounts for Pumzika Traders from the above Purchases Journal only. (5 marks) b) Explain five services offered by wholesalers to retailers. (10 marks) 20 marks

4. a) Explain five means of payment used in Home Trade. (10 marks) b) Discuss the significance of five principles of insurance. (10 marks) 20 marks

5. a) Explain five merits of direct tax. (10 marks)

b) The following balances were extracted from the books of Bunjosi Traders as at 31st Dec. 2015. Shs. Land and premises 250 000 Capital 470 000 Plant and machinery 100 000 Motor vehicle 150 000 10 year Equity Bank loan 100 000 5 year I.C.D.C loan 50 000 Stock (31/12/2015) 50 000 Debtors 30 000 Creditors 30 000 Accrued expenses 10 000 Cash at bank 50 000 Cash in hand 10 000 Drawings 20 000 REQURED Prepare balance sheet showing the following types of capital in their relevant classes. i. Fixed capital ii. Borrowed capital iii. Working capital iv. Capital owned v. Capital employed (10 marks) 20 marks

6. a) Explain negative effects of five macro-environmental factors on a business enterprise. (10 marks)

b) Outline five differences between cooperatives and limited liability companies. (10 marks)