1. Write down four circumstances under which a country may be classified as underdeveloped.

4mks

2. State four benefits that a country may get by being a member of the International Monetary Fund (IMF) 4mks

3. List four disadvantages of an ageing population for a country. 4mks

4. State four measures that could be taken to control cost Push inflation. 4mks

5. Outline four uses of national income statistics in a country. 4mks

6. The following are types of advertising:

Product advertising

Competitive advertising

Informative advertising

Institutional advertising

In the table, match each type with its appropriate description. 4mks

Creates awareness about a product

Promotes the name of the manufacturer

Persuades the consumers to buy a product

Promotesa particular brand of a product

7. State four reasons why few Kenyans take out life assurance policies: 4mks

8. The following description relate to some documents used in home trade. In the spaces provided, write the name of each document described. 4mks

A document seeking information on the availability of products and their prices.

A document showing products and quantity required.

A document describing items for sale and their prices.

A document sent to a specific buyer, detailing the availability of products and their prices.

9. Write down four advantages of an open office. 4mks

10. Name the department where the following functions are carried out. 4mks

FUNCTION DEPARTMENT

To maintain supply records ..............................................

To enhance relationship among employees. ..............................................

To control the use of machines, materials

and labour ..............................................

To maintain good relationships between

the customers and the organization. ..............................................

11. The following information relates to the businesses of Burundi Baridi Mjuaji and Falaa.

Business(sh) Assets(sh) Capital(sh) Liabilities(sh)

Baridi 500,000 300,000 A

Mjuaji B 1,200,000 800,000

Mawe 300,000 C 120,000

Falaa 700,000 500,000 D

Determine the value of: (4mks)

A

B

C

D

12. Listed below is a set of transactions. In each case, state whether the transaction will increase, decrease or have no effect on capital. 4mks

TRANSACTION

EFFECT

a) Additional cash invested by the owner

b) Receiving cash from a debtor.

c) Losses incurred by a business

d) Owner takes some stock for own use

e) Sale of old business furniture at a profit

f) purchase of stock on credit.

13. The table below shows four types of ledger accounts for a business. In the spaces provided, indicate by a tick, whether each of the accounts should have a debit o credit balance. 4mks

TYPES OF ACCOUNT

DEBIT

CREDIT

Expense

Income

Asset

Liabilities

14. Record the following transactions in the cash book of Mutonga Traders for the month of January 2004 and balance it. 5mks

2004

Jan1: Cash in hand sh. 10,000, cash at bank 20,000

Jan10: Paid Lucy sh. 8, 800 and Tarus sh. 11,000 after deducting 12% cash discount in each case.

Jan 30: Banked all the cash leaving sh. 1,200 in the cashbook.

15. For each of the following transactions, indicate in the spaces provided, the book of original entry in which the transaction would be recorded. 4mks

Transaction Book of origin entry:

a) Bought office furniture on credit.

b) Withdrew cash for personal use

c) Sold goods on credit

d) Returned goods bought for sale on credit

16. Outline four barriers to written communication. 4mks

17. Outline four ways in which the government creates enabling environment for business. 4mks

18. State four advantages of operating a public limited company. 4mks

19. State four reasons why governments levy taxes. 4mks

20. For each of the following cases, name the motive for holding money. 4mks

SALE

MOTIVE

a) To meet daily transport expenses

b) To meet any unforeseen circumstances

c) To take advantage of anticipated fall in prices

d) To pay for daily good requirements.

21. The information given below was extracted from the business of Moto Traders, for the year ended 31st Dec. 2000

shs.

Creditors as at 1st Jan 2000 40,000

Creditors as at 31st Dec 2000 30,000

Cash paid to creditors during the year 200,000

Cash purchases during the year 60,000

Credit purchase returns during the year 10,000

Discount received 5,000

Calculate the total purchase for the year. 4mks

22. The following information relates to Ndolo Traders. For the year ended 31 Dec. 2003

Shs

Gross profit 140,000

Salaries 20,000

Electricity charges 8,000

Discount allowed 6,000

Discount received 26,000

Prepare profit and loss account for Ndolo Traders for the year ended 31st Dec,2003 4mks

23. Outline four characteristic of a perfectly competitive market. 4mks

24. Write down four reasons that account for the continued survival or small firms despite the existence of large firms producing similar goods. 4mks

25. State whether the following would either lead to a shift in or a long-term movement in the demand curve. 4mks

FACTOR EFFECT

An increase in population ............................................................

An increase in the sales tax of a product ............................................................

A change in the price or a product ............................................................

A change in real income. ............................................................