Questions

1.a) Explain six reasons why a businessman would choose to operate a current account instead

of a savings account. 12mks.

b)Highlight any four circumstances under which a businessman would communicate to the

customers by letters rather than telephone. 8mks.

2.a) Discuss the main challenges/problems that face the small scale industry in Kenya today10 mks

b)Explain the factors that a seller should take into account when choosing the best medium

for advertising his products10mks

3.a) Explain the benefits that Kenya is likely to enjoy for being a member of the common

market for East and Southern Africa (COMESA)

b) Clearly describe the services rendered by wholesalers to growers, producers and

manufacturers 10mks

4.a) Clearly describe how the central bank limits the credit creation of the commercial banks.10mks

b) Explain the role played by marketing boards 10mks

5.(a)The following information relates to African Retail Traders for the year ended

31^stDec 1999

Gross profit600000

Opening stock285000

Sales 2400000

Purchases1830000

Expenses360000

Net profit 240000

Closing stock 315000

Fixed assets 400000

Debtors 900000

Cash at bank 35000

Current liabilities438000

a)Calculate

a)Cost of goods sold

b)Mark -up percentage

c)Debtors ratio

d)Current ratio12mks

b) Outline any four reasons that may lead to dissolution of a partnership business8mks

6 .a) What arguments can be advanced for state ownership of business understandings10mks

b) Write short notes on the following terms as used in insurance

i)Indemnity

ii)Utmost good faith

iii)Proximate cause

iv)Insurable interest

v)Subrogation10mks