Questions
1.a) Explain five causes of unemployment in Kenya. (10 Marks)
b) Explain five circumstances that would influence a producer to use wholesalers in distributing his produce. (10 Marks)
2.a) Explain five ways in which the insurance industry contributes to the development of Kenya’s economy. (10 Marks)
b) Explain five demerits of government involvement in the running of public corporations.
(10 Marks)
3.a) Explain five factors that may be considered in determining the appropriate channel for distributing goods. (10 Marks)
b) Explain five reasons why business organizations may merge with one another. (10 Marks)
4.a) Explain five benefits that a country would get by encouraging investors to locate industries in rural areas. (10 Marks)
b) On 1st May 2010 Musa Traders had sh. 15, 000 cash in hand and Sh. 160, 450 at bank. During the month, the following transactions took place.
May 2 Bought goods for Sh. 5, 400 and paid by cheque.
May 8 Received sh. 7, 200 cash from a debtor
May 15 Paid a creditor Sh. 18, 300 by cheque
May 16 Paid salaries sh 4, 200 in cash
May 18 Sold goods for sh. 9, 200 and was paid by cheque
May 20 Withdrew sh. 30, 000 from bank for office use
May 25 Received sh.8, 000 cash from a debtor
May 28 Paid general expenses sh. 4, 000 cash.
May 29 Deposited sh.10, 000 cash in bank
May 30 Paid for electricity sh. 2, 500 by cheque
Record the above transactions in a two column cash book and balance it off. (10 Marks)
5.a) Explain five ways which traders can apply to attract more customers. (10 Marks)
b) Explain five factors that could affect the quantity of cabbages supplied in a Market. (10 Marks)
6.a) Explain five factors to consider when choosing an appropriate means of transport. (10 Marks)
b) The following balances were extracted from the ledger accounts of Bidii traders for the year ended 31st December 2010.
Capital 940, 000
Bank 100, 000
Accrued expenses 20, 000
Debtors 60, 000
Creditors 60, 000
Stock 100, 000
10 Years Bank loan 200, 000
3 year ICDC loan 100, 000
Vehicle 300, 000
Plant and machinery 200, 000
Land 500, 000
Drawings 40, 000
Cash 20, 000
Using these balances prepare Bidii traders trial balance for that year dully balanced.(10 Marks)
Marking Scheme
1.a) Five causes of unemployment in Kenya.High population growth rate.Inappropriate education system.Inappropriate technology.Rural – urban migration.Lack of product market.Seasonality in production. 5 x 2 = total Marks
2. b) Circumstances that would influence a producer to use wholesalers in distributing his produce.If he needs to only specialize in production.If he lacks means to distribute his goods.If the market is quite large.If it is economical to use the wholesalers.If the wholesales are versed with the market and he is not. 5 x 2 = total 10 Marks
3.a) Ways in which the insurance industry contributes to the development of Kenya’seconomyCreates employment.Earns government revenue through taxation.Facilitates savings by people.Encourages investors since they are assured of compensation.Allows continuity of business. 5 x 2 = total 10 Marks
b) Demerits of government involvement in the running public corporations.Government bears loss made by the corporations.Inefficiency – lack of competition leads to corporation inefficiency.Political pressure – there is political interference in decision making.Decision making takes long.Foreign investors may shy off.Where there is a state monopoly the consumer choice is limited.
5 x 2 = total 10 Marks
4.a) Factors that may be considered in determining the appropriate channel for distributing goods.Nature of goods.Size of the Market.Cost involved.Availability of intermediaries.Competition.Government policy.Scale of production. 5 x 2 = total 10 Marks
b) Two column cash-book
DR MUSA TRADERS CR
| Date | Details | Folio | Cash | Bank | Date | Details | Folio | Cash | Bank |
|---|---|---|---|---|---|---|---|---|---|
| 2010 May 1 8 18 20 25 29 | Bal b/d√1 Debtor√½ Sales√½ Bank√½ Debtor√½ Cash√½ | C C | Sh. 15,000 7,200 30,000 8,000 60,200 42,000 | Sh. 160,450 9,200 10,000 179,650√1 123,450√1 | 2010 May 2 15 16 20 28 29 30 31 | Purchases√½ Creditor√½ Salaries√½ Cash√½ Gen.exp.√½ Bank√½ Electricity√½ Bal c/d√1 | C C | Sh. 4,200 4,000 10,000 42,000 60,200 | Sh. 5,400 18,300 30,000 2,500 123,450 179,650 |
b) Reasons why business organizations may merge with one another.Do away with unnecessary competition.Diversify production.Make quality products.Enhance their bargaining power in the market.Enjoy economies of scale. 5 x 2 total 10 Marks
5.a) Benefits that a country would get by encouraging investors to locate industries in rural areas.Reduced rural – urban migration.Improved infrastructure in rural areas.Balanced development in the country.Better living standards in rural areas.Utilization of rural resources in such areas.Lesser population in urban areas. 5 x 2 = 10 Marks
b) Factors that could affect the quantity of cabbages supplied in a Market.Price of cabbages in the market.Nature of road / transport network.Seasonal factors / climate.Production ways embraced.Future expectations of change in price.Government policies e.g. quota, price control etc. 5 x2 = total 10 Marks
6.a) Ways which traders can apply to attract more customers.Lowering their prices.Making high quality goods.Advertising their products.Offering after sale services.Offering free gifts.Discounts. 5 x 2 = Total 10 Marks
b) Factors that could affect the quantity of cabbages supplied in a Market.Price of cabbages in the market.Nature of road / transport network.Seasonal factors / climate.Production ways embraced.Future expectations of change in price.Government policies e.g. quota, price control etc. 5 x2 = total 10 Marks
7.a) Factors to consider when choosing one appropriate means of transportNature of goods.Cost of transport.Value of goods.Distance to be covered.Terminals.Flexibility.Reliability.Availability. Any 5 well explained x 2 = total 10 Marks
b) Bidii traders’ balance sheet for the year ended 31st December 2010.
BIDII TRADERS
TRIAL BALANCE(√1mark)
AS AT 31ST DECEMBER 2010
| Capital Land Plant and Machinery Vehicle 10 years loan 3 years bank loan Stock Debtors Creditors Accrued expenses Bank Cash drawings | 500,000.√ ½ 200,000.√ ½ 300,000.√ ½ 100,000.√ ½ 60,000.√ ½ 100,000.√ ½ 20,000.√ ½ 40,000.√ ½ 1,320,000.√ 1 | 940,000.√ ½ 200,000.√ ½ 100,000 60,000.√ ½ 20,000.√ ½ 1,320,000.√ 1 |
