Questions ?1
Subject:FinancePrice:5.86 Bought11
Questions
?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
