1.a) Explain any five methods that the Kenyan government may adopt in order to control

the volume of imports. 10mks

b) Discuss the main sources of capital to small scale enterprises. 10mks

2.a) What do you understand by economies to scale.

3. Discuss any four internal economies

of scale 10mks

Clearly define the term sales promotion.

4.Discuss the importance of Trade Fairs as

part of sales promotion. 10mks

5.Opportunities exist for purchasing of necessary durable goods by installment.

6. Describe two methods commonly used for this purpose. 4mks

7.Mention three advantages of each to:

a)The manufacturers 6mks

b)The consumer 6mks

8. Give any two differences of the two methods. 4mks

9.Prepare trading profit and loss account for 2000 and a balance sheet as at 31st Dec 2000 from the following trial balance.

L. Kabas Co.

Trial Balance

As at 31st Dec 2000

Capital

Land and buildings

Motor vehicle

Drawings

Furniture and fittings

Debtors

Creditors

Stock on 1st Jan 2000

Purchases

Sales

Returns inward

Transport

Return outwards

Telephone and Electricity

Rates and Insurance

Licence and Legal expenses

Rent income

Salaries

Advertising

Carriage inwards

Stationery and office expenses

General expenses

DR (Kshs)

50,000

38,000

32,485

11,200

38,459

37,129

273,538

7,832

35,223

9,835

4,942

1,956

37,280

6,342

12,345

950

2,484

600,000

CR (Kshs)

150,000

46,253

384,803

10,544

8,400

600,000

Cost of unsold stock on 31st Dec 2000 was Kshs. 43,210. 20mks

a) Explain any five functions of commercial banks. 10mks

Assume that you are a policy maker in Kenya today, explain the reasons which would

make you recommend rural industrialization policy. 10mks

a) Account for the low bargaining power of trade unions in Kenya today. 10mks

Outline any five benefits that a person may derive from being a member of savings

and credit cooperative society.

-Explain the following terms as used in commerce 4mks

Registered capital

Subscribed capital

Issued capital

Paid up capital

-Outline any four circumstances under which a credit note may be used. 4mks

-The main objective of commerce is profit maximization. Highlight any four ways in

which businesses can achieve this objective. 4mks

-Give any four functions of commercial attaches. 4mks

-Mention four investment services offered by the Kenya Postal Corporation. 4mks

-Give any four reasons that may lead to dishonour of a cheque. 4mks

-Highlight any four benefits that accrue to a seller who uses personal selling as a method

of sales promotion. 4mks

-Give any four categories of goods that are suitable for direct distribution from producers

to retailers. 4mks

-Highlight four ways in which Insurance companies make profits. 4mks

State any four sources of capital to co-operative societies. 4mks

-The following balances relates to a business for the year ended 31st Dec 2000.

Capital as at 31st Dec 2000 170,000

Drawings for the year 5,000

Net profit for the year 5,000

Extra capital introduced 52,000

Purchases 20,000

Determine the amount of capital as at 1st Jan 2001. 3mks

Calculate the Net profit ratio 3mks

-Outline any four features of a fixed deposit account. 4mks

-Give any four reasons why most business people prefer to transport their finished

products via road transport. 4mks

-Give any four benefits that you may reap as a consumer from an advertising campaign. 4mks

-Mention any four remittance services offered by the post office. 4mks

-Give four reasons why an office may prefer storing information in micro-films instead

of files 4mks

-Assume that you want to start photocopying business in your nearest town. Cite any

four factors you would consider before buying your copies. 4mks

-The following machines are found in a mailroom. State the function of each. 5mks

Machine

Functions

Addressing machine

Shredding machine

Guillotine

Franking machine

Composite machine

-Give any four reasons why the use of Electronic mail (E-mail has become very popular

in Kenya today. 4mks

-The following balances were extracted from the books of MM traders on 31st January 2002.

Item Amount

Sales 10,000

Purchases 6,000

Bank loan 2,000

Buildings 30,000

Machinery 40,000

Premises 60,000

Debtors 5,000

Creditors 4,000

Opening Stock 7,000

Capital 132,000

You are required to prepare trial balance for MM traders as at 31st January 2002 from

the above information. 6mks

-Outline any four functions of money as a medium of exchange. 4mks

-Give any four reasons why the government would need to train businessmen. 4mks

-Identify three reasons that can lead to dissolution of partnership. 3mks