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Questions ?1

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?1.     Distinguish the following terms:                                                                                      6mks

a)      Free goods and economic goods

b)     Consumer goods and producer goods

c)      Business wealth and personal wealth

2.     State four advantages of a bonded warehouse                                                               4mks

3.     Name the factor of production that each of the following resources relate to.               5mks

Resource                                                  Factor of production

a)     Teacher                                   ______________________________________

b)     Computer                               ______________________________________

c)     Water                                     ______________________________________

d)    Sole proprietor                       ______________________________________

e)     Forest                                     ______________________________________

4.     Mention any four methods used for sending money through the post office.               4mks

5.     Using the book keeping equation, indicate the correct figure in the empty spaces provided.

Assets

Capital

Liabilities.

180,000

50,000

200,000

90,000

45,000

38,000

150,000

50,000

6.     The following information was drafted from the books of Rayrose college on 31st Jan 2002.

Item                                        Amount (Kshs)

Opening stock                        400,000          

Sales                                       700,000

Closing stock                         10,000

Purchases                               150,000

Sales returns                           20,000

Purchase returns                     50,000

Salaries and wages                 80,000

Rent                                       70,000

Income                                               80,000

     

      Calculate:

a)      Gross Profit                                                                                                              4mks

b)     Net profit                                                                                                                  4mks

c)      Mark-up percentage                                                                                                  2mks

 

7.     State any four conditions under which a proforma invoice may be used.                      4mks.

8.     Highlight any four services rendered by retailers to consumers.                                    4mks

9.     Outline any four functions of the Kenya External Trade Authority by (K.E.T.A.)       4mks

10. Mention four limitations of advertising as a means of sales promotion                          4mks

11. As the transport manager of a busy company highlight four factors you would consider

before choosing a mode of transport for your goods and services.                                 4mks

12. "Most secondary schools maintain that students should pay fees with cheques and not cash" Account for this statement.                                                                                     4mks

13. Indicate the account in which the following entries are made.

Entry

Account

Carriage inwards

Carriage outwards

Incomes receivable

Return inwards expenses.

14. List four features of co-operative societies.                                                                    4mks

15. Outline any four barriers that hinder effective communication.                                     4mks

16. Highlight any four problems or challenges that businesses would face due to adoption

of the decentralization policy.                                                                                         4mks

17. Give any four benefits that a farmer would reap from being a member of a producer cooperative.                                                                                                           4mks

18. Outline any four features of multiple shops.                                                                   4mks

19. With the aid of a tree diagram, show the main divisions of trade.                                  3mks

20. What is meant by the following abbreviations as used in the study of commerce.         4mks

i)                   F. O. R     __________________________________________________________

ii)                 O . M . O  __________________________________________________________

iii)               C. I . F      ___________________________________________________________

iv)               C. W. O    ___________________________________________________________

21. State any four methods that the government of Kenya uses to protect its consumers.  4mks

22. Give any three characteristics of money as a medium of exchange                                3mks

23. What is a 'bill of exchange'                                                                                             2mks

Highlight any three demerits of the barter system of trade.                                     3mks

 

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1.                 Distinguishing Concepts.

      a)  Free goods                - Those things which are given free by nature eg air. Have utility but

  no economic value.

Economic goods         - Those things which are scarce when compared to human wants and

               human effort required to obtain them. Have utility and economic

    value (price)

      b) Consumer goods       - Goods meant for direct consumption and they satisfy economic

  wants may be perishable or durable.

 Produce goods         - Goods that help in further production of consumer goods. They

  assist in production eg machinery.

c)  Business Wealth        - Goods of value (assets) that belong to a business eg. Premises.

            Personal Wealth        - Consists of items that belong to an individual person eg clothes,

   TV,  etc.                                       1 x 6

 

2.                 Advantages of a bonded warehouse.

-           Goods can be prepared for sale while in bond

-           If goods are sold on bond, the duty passes to the buyer

-           The owner can look for market first before paying the duty

-           Some goods lose weight so the duty paid becomes lower if its based on weight

-           Ensures that no duty is evaded since the goods cant be released without payment

-           Enables the government to check on prohibited goods and smuggling.

Any other relevant point.

 

3.                 Resource                                           Factor of production

a) Teacher                                         Labour

b)  computer                                      Capital

c)  Water                                           Land

d)  Sole proprietor                             Enterprenuer

e)  Forest                                           Land                           1 x 4

 

4.                 Methods of sending money through post office.

-         Telegraphic money order

-         Ordinary money order

-         Registered mail

-         Postal order.                          1 x 4

 

 

 

 

 

 

5.                  

Assets

Capital

Liabilities

180,000

50,000

130,000

200,000

110,000

90,000

83,000

45,000

38,000

150,000

100,000

50,000

                                                                                         1 x 4

6.                 a) Calculating gross profit

 

Rayrose College

Trading account

 

 

 For the year ended 31st Jan 2001

 

Kshs.                                                                                                        Kshs.

Opening stock                                400,000                               Sales                           700,000

Add purchases     130,000                                  Less sales returns                                 20,000

Less purchases      50,000             100,000                   Net sales                                680,000          

                                                      500,000

Less closing stock                         10,000

Cost of goods sold                       490,000

Gross profit c d                          190,000

                                                    680,000                                                                      680,000

Gross Profit b d          190,000   

                                                 4mks

Calculating Net profit.

Net profit   = (Gross profit + income) - expenses

                   Income  = 80,000

                   Expenses        = Salaries & wages + rent

                               = 80,000 + 70,000

                               =  130,000

       hence N.P       = ( 190,000 + 80,000) - 150,000

                               =  270,000 - 150,000

                               = kshs. 120,000                                                                    4mks

 

b)     Calculating mark-up percentage.

Mark - up       =    Gross profi    x 100

                           Cost of goods sold

                       = 190,000   x 100

                           490,000

                       = 38.8%                                                                                2mks

 

7.   When a proforma invoice may be used.

-           When the seller wants to request for payment before goods are delivered

-           When the seller does not want to give credit to the buyer

-           Issue to an agent who sells goods on behalf of the seller

-           Used by importers to get customs clearance before the goods are sent

 

 

 

-           Serve the purpose of a quotation

-           Sent to the buyer to show him what he would have to pay if he bought goods sent on approval.                                                                  1 x 4  

 

8.   Services rendered by retailers to consumers

-           Selling goods to consumers in affordable units

-           Display goods to enable consumers know which alternatives exist.

-           Advise the consumers on use. Servicing and maintenance of goods

-           Stock a large variety from different manufacturers as per the needs of consumers

-           Provide credit facilities to worthy customers

-           Offers after sales services on technical goods to the consumers

Any other relevant point.                    1 x 4

 

9.   Functions of K.E.T.A.

-           Marketing of Kenyan products in foreign markets

-           Advise manufacturers on how to improve the quality of their products in order to get bigger markets overseas.

-           Providing training facilities on export matters

-           Arrange trade fairs and exhibitions in foreign countries to introduce Kenya products in foreign countries.

-           Publishing information on the possibilities of the expansion of exports

-           Encourage the production and marketing of handicrafts

-           Provide trade facilities and negotiate with transport companies on behalf of exporters.

1 x 4

 

10.   Limitations of Advertising.

-           Its expensive to the producer who may have to go through advertising agencies.

-           May be misleading or deceitful since they create unproductive competition.

-           The consumer is penalised in terms of prices since advertising costs are passed over to him her.

-           Creates mechanical buying particularly for permanently advertised products

-           Some advertisements are nasty and dirty hence leads to decay of good morals

Any other relevant point.                    1 x 4

 

11.   Factors to consider when choosing mode of transport.

-        The cost of transport

-        Speed and time taken

-        Nature of goods

-        Flexibility

-        Packing requirements

-        Distance to be covered

-        Insurance risks.                                   1 x 4

 

12.   Advantages of cheques.

-      Secure since if stolen they can be traced

-      Convenient to carry than coins and notes

-      Payment can be made without the need to travel

-      Acts as evidence of payment.

                                 Any other relevant point.                    1 x 4

 

13.              

Entry

Account

Carriage inwards

Trading account

Carriage outwards

Profit and loss

Incomes receivable

Profit and loss

Return inwards

Trading account

 

14.   Features of cooperatives.

-      Voluntary Association ie open to all

-      Service motto ie serves its members and that profit is not the only motive

-      One for all and all for one ie self help through mutual help

-      Democratic management

-      Division of profit is done on the basis of service rendered

-      State control ie state exercises chose control.            1 x 4

 

15.   Barriers to effective communication

-      The language used

-      The medium used

-      Willingness of the receiver to listen

-      Noise

-      Attitudes of the communicators

-      Poor planning

-      Improper timing                                 Any other relevant point.                   1 x 4

 

16.   Problems of decentralization.

-      Lack of trained personnel

-      Lack of basic infrastructures such as roads

-      Basic services like banking may not be found in all areas

-      Inadequate market

-      Certain benefits eg entertainment may not be found in the decentralized industries.

Any other relevant point.              1 x 4

 

17.   Benefits from co-operatives.

-           Fair price for his her produce

-           Reduced costs of transport, processing and marketing

-           Get ideas regarding quality improvement, better methods of cultivation, etc

-           Secure credit on reasonable terms than an individual could

-           Purchasing farm equipment's at reasonable prices

-           A farmer is assumed of a stable price for his produce.        1 x 4

 

18.   Features of multiple shops.

-      Uniformity of the premises, external shop front, internal layout, etc

-      Control is vested in the central organisation

-      Buying if centralised and selling is decentralized through several branches.

-      Deal only in a particular set of goods

-      Sales are strictly cash

-      Selling prices are fixed by the central organisation.

Any other relevant point.              1 x 4

 

 

19.   Divisions of trade.

 

Trade

 

 

 

                       Home trade                            Foreign trade

 

 

 

           Retail         Wholesales                     Import            Export

 

20.   Meaning of abbreviations.

i) F.O.R                     - Free On Rail

ii)  O. N. O.   - Or Nearest Offer

iii) C. I. F      - Cost, Insurance and Freight

iv)  C. W. O  - Cash With Order.

 

21.   Government methods of consumer protection.

-      Setting up standards eg Kenya Bureau of Standards

-      Price control

-      Licences

-      Food and Drugs Acts.

-      Sale of Goods Act.

-      Public Heath Act.

 

22.   Characteristics of money

-           Acceptability

-           Portability

-           Divisibility

-           Durability

-           Homogeneity

-           Stability

-           Scarcity

-           Cognizability                                   1 x 3

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