Answer the questions below

1. Distinguish the following terms: 6mks

a)Free goods and economic goods

b)Consumer goods and producer goods

c)Business wealth and personal wealth

2. State four advantages of a bonded warehouse 4mks

3. Name the factor of production that each of the following resources relate to. 5mks

Resource Factor of production

Teacher ______________________________________

Computer ______________________________________

Water ______________________________________

Sole proprietor ______________________________________

Forest ______________________________________

4. Mention any four methods used for sending money through the post office. 4mks

5. Using the book keeping equation, indicate the correct figure in the empty spaces provided.

Assets

Capital

Liabilities.

180,000

50,000

200,000

90,000

45,000

38,000

150,000

50,000

6. The following information was drafted from the books of Rayrose college on 31st Jan 2002.

Item Amount (Kshs)

Opening stock 400,000

Sales 700,000

Closing stock 10,000

Purchases 150,000

Sales returns 20,000

Purchase returns 50,000

Salaries and wages 80,000

Rent 70,000

Income 80,000

Calculate:

Gross Profit 4mks

Net profit 4mks

Mark-up percentage 2mks

7. State any four conditions under which a proforma invoice may be used. 4mks.

8. Highlight any four services rendered by retailers to consumers. 4mks

9. Outline any four functions of the Kenya External Trade Authority by (K.E.T.A.) 4mks

10. Mention four limitations of advertising as a means of sales promotion 4mks

11. As the transport manager of a busy company highlight four factors you would consider

before choosing a mode of transport for your goods and services. 4mks

12. Most secondary schools maintain that students should pay fees with cheques and not cash Account for this statement. 4mks

13. Indicate the account in which the following entries are made.

Entry

Account

Carriage inwards

Carriage outwards

Incomes receivable

Return inwards expenses.

14. List four features of co-operative societies. 4mks

15. Outline any four barriers that hinder effective communication. 4mks

16. Highlight any four problems or challenges that businesses would face due to adoption

of the decentralization policy. 4mks

17. Give any four benefits that a farmer would reap from being a member of a producer cooperative. 4mks

18. Outline any four features of multiple shops. 4mks

19. With the aid of a tree diagram, show the main divisions of trade. 3mks

20. What is meant by the following abbreviations as used in the study of commerce. 4mks

F. O. R __________________________________________________________

O . M . O __________________________________________________________

C. I . F ___________________________________________________________

C. W. O ___________________________________________________________

21. State any four methods that the government of Kenya uses to protect its consumers. 4mks

22. Give any three characteristics of money as a medium of exchange 3mks

23. What is a bill of exchange 2mks

24. Highlight any three demerits of the barter system of trade. 3mks