Paper 1

1.Outline four reasons for establishment of a business enterprise.4mks

2.Identify four documents used in the delivery process in hometrade.4mks

3.Outline three basic qualities of an office worker.3mks

4.Outline four ways in which the government influences the quantity of a commodity

supplied.4mks

5.Highlight four factors that may be used in determining the size of a firm.4mks

6.Outline four uses of a general journal. 4mks

7.Identify four type of taxes levied on businesses in Kenya.4mks

8.The Central Bank is a banker to the government.Outline four banking services that it provides to the government. 4mks

9.The following information was extracted from the books of Kabila Traders for the year ended 31^st December, 2003.

shs

Capital on 1^st January 2003270,000

Capital on 31^st December 2003320,000

Drawings during the year100,000

Additional capital introduced

during the year 200330,000

Calculate Kabila Traders Ltd's profit or loss for the year ended 31^st December 2003

3mks

10.Identify four sources of monopoly powers.

11.Under what circumstances would a common carrier refuse to transport goods of a particular trader4mks

12.Highlight four advantages of hire purchase to the seller.4mks

13.The following balances were extracted from the books of Njoroge traders on 31^st May 2004.

Shs

Creditors 62,500

Stock2,000

2 years bank loan 40,000

Bank160,000

Cash 20,000

Premises800,000

Prepare his balance sheet4mks

14.Record the following transactions in the relevant ledger accounts.

2004

June 1Ochieng started a business with shs.50,000 cash

"4Bought office equipment for shs. 2,000

"6Deposited shs.12,000 into the business bank account

"8 Bought stock for the shs.10,000

(Balancing of accounts not required)4mks

15.Differentiate between circular letters and Memoranda.4mks

16.The following diagram represents the demand and supply of a commodity.

State four effects of fixing maximum price at Po.4mks

17.Outline four characteristics of insurable risks.4mks

18.Outline four factors to consider when deciding on an ideal office layout.4mks

19.The following information was extracted from the books of Bondo Traders as at 31^st December, 2004.

Shs

Opening stock2,500

Purchases46,000

Closing Stock1,500

Mark up20%

Prepare trading account.4mks

20.The following transactions relate to Kabala Traders for the month of December, 2004.

2^nd December:Cash sales shs. 30,000

8^th December: Banked sh. 15,000

10^th December: withdrew sh. 10,000 from bank for office use.

Prepare cash extract.5mks

21.Identify four advantages of export processing zones to a country. 4mks

22.Outline four benefits that a country gets by being a member of the international monetary fund (IMF) 4mks

23.Identify four short falls of after sales service as a method of sales promotion to the buyers. 4mks*BND*

24.State four circumstances under which a country's terms of trade would be unfavourable.

4mks

25.The following assets and liabilities were available as at 1^st January, 2005.

Shs

Cash in hand43,000

Furniture19,000

Telephone bills due3,000

Rent outstanding8,000

Electricity prepaid4,000

Debtors19,000

Prepare statement of affairs as at 1^st January 2005.4mks