QUICK QUESTIONS WITH ANSWERS FOR REFERENCE

On 31st December 2013 Kiu Traders had made a turnover of Sh.80,000 for the fear and had a closing stock of SH.10,000. If the business was working at a margin of 20%, draw its trading account for the period ending 31st, December 2013 (4mks) Virus-free. www.avast.com

Meaning of insurance terms Surrender value Amount of money that is refundable to the insured by insurer incase the insured has terminated the contract before maturity. Beneficiaries People named named in a life assurance policy to be paid in event of death of the assured. Re – insurance An insurance company insuring the same property it has covered with another insurance company called the  re – insurer. Cover note a document issued by an insurance company to insured when the insured has paid the first premium while awaiting the policy to be processed. Virus-free. www.avast.com

The table below shows descriptions of different types of partners. Identify type of partners that match the description Virus-free. www.avast.com

Give four reasons why some traders prefer to operate supermarket business Increase sales Lower operational costs Enjoy economies of sale Time is saved Virus-free. www.avast.com

Outline four features  of monopolistic  competition  Many sellers and buyers Products are differentiated No barriers to entry No firm has to control over factors of production Products are not perfect substitutes No interdependence in pricing between the firms Virus-free. www.avast.com

Outline four source documents used in recording transaction. Invoice Debit note Credit note Receipts Payment voucher Cash sale slip Virus-free. www.avast.com

Match the following description of errors with the type  of   errors  made when keeping books  of accounts (4mks) Virus-free. www.avast.com

The following account balances were extracted from the migingo traders on 30th April 2002 solution Virus-free. www.avast.com

Outline four emerging trends in office management  Use of computers Using open plan office Merging duties of staff members Adapting customer care centers Use of modern communication methods Opening up offices away from town centers Virus-free. www.avast.com

Show the accounts to be debited or credited for the following transactions Answer Virus-free. www.avast.com

On 1st March 2006 the cash book of Kericho traders showed cash and bank balances of sh. 15000 and sh 147000 respectively. The following transactions took place during the month May 3 cash sales sh 120, 000 May 11 paid sh. 7,500 cash in respect to wages May 16 received a cheque of sh. 250,000 from a debtor May 26 withdrew sh. 25,000 from bank for office use. May 29 paid sh. 97,000 cash to creditor Prepare a two column cash book                (4mks) Solution Virus-free. www.avast.com

Match the following description of errors with the type  of   errors  made when keeping books  of accounts answer Virus-free. www.avast.com

Describe four channels used when importing commodities.    Virus-free. www.avast.com

State four reasons why short message service (SMS) is replacing letters as a way of communication Cheap to use SMS services Faster than letters Can be sent to many at once Realiable-delivery reports are given Virus-free. www.avast.com

Give four reasons for the increased use of mobile phones in banking. (4mks) Fast in transacting business Reduce s paper work May be used to pay utility bills One can access account balance Safe to use (use of secret pin) i.e. reduce risk of carrying cash May be used to buy airtime Easy transfer of funds from one account to another Easy to  monitor ones financial transactors details Easy transfer of money from account to phone for other transactions. Virus-free. www.avast.com

State four functions of commercial attaches   Look for market for Kenyan goods abroad Organize trade tours for Kenyan traders Inform local producers of standards required and procedures in foreign countries Help in identifying agents in foreign countries for local producers Organize training for local businessmen abroad Avail information about selling opportunities in foreign countries Virus-free. www.avast.com

Give three reasons why the per capita income of a country may not change. When total output and total population increase at the same rate When total output and total population decrease at the same rate When total output and total population remain constant Virus-free. www.avast.com

State four merits of storing goods in a public warehouse  Goods can be sold without physical movement Traders do not incur costs of constructing their own warehouses Goods can be used as collateral to get short term loans Goods are insured Enables large scale buyers to accommodate bulk from small scale sellers Additional services e.g. repairs are provided Virus-free. www.avast.com

State four circumstances under which it may be appropriate to use personal selling as a form of product promotion Its not easy to ignore like other methods Its more persuasive Immediate feed back about the product is got Seller is able to direct effort to a specific group Consumers are shown how to use a product Demonstration can be done Suitable for both the literate and illiterate Virus-free. www.avast.com

Benefits that may accrue to a firm as a result of growth of the industry. Easier access to labour- where many firms are located in one area a pool of labour of various skills is usually available. Therefore firms relocating to the area find it easy to obtain. Improved/efficient infrastructure- usually where many firms are located, infrastructure would be highly developed e.g. roads, power, water and communication facilities. Firms relocating in that area thus enjoy the services of infrastructure already in place. Firms may be able to dispose off their waste product easily Ready market may be available from the surrounding firms Readily available services such as banking, insurance and medical care Adequate supply of power due to large volume of consumption e.t.c Virus-free. www.avast.com

Circumstances under which personal selling may be appropriate in product promotion. When the product is being launched in the market. Where the firm is financially able to finance sales persons. When the product is tailored to meet customers specification. Where the product is of high value. Where it is necessary to demonstrate the use of the product. Where the market is limited to a small local area. Virus-free. www.avast.com

Outline four difficulties that would be faced by an individual in the satisfaction of human Wants     Needs are unlimited Different tastes and preferences Government restrictions Different prices of goods Limited resources/income Virus-free. www.avast.com

Reasons for popularity of WhatsApp as a trend in communication. (4mks) It offers unlimited messaging It has no hidden costs It offers international messaging It is simple to use Video calling available It is possible to send documents Virus-free. www.avast.com

Sources of capital to public limited companies. (4mks) Sale of shares Sale of debentures Profits ploughed back Loans from financial institutions Renting and leasing out property Disposal of assets Purchase of goods on credit Virus-free. www.avast.com

The following is a table of activities. Name the utility that is created by each activity answers (i) Form (ii) Possession (iii) Place (iv) Place    Virus-free. www.avast.com

Reasons why a producer may prefer to sell directly to consumers. Financial strength. Can use own retail outlets established in the market. Number of established /regular customers. If the established number is low, then direct sales are viable. Perishable goods. There is need to reach customers fast to avoid spoilage. Technical goods. So that he can demonstrate how they are used. Feedback required.  In order to get quick response from the customer about their feelings on the product. Scale of production. When the producer has a small amount of output can sell directly Need to keep prices low. Producers may want to control prices and keep them low by avoiding middlemen. Customer specification. If customers order goods directly, then direct sales are done. Concentrated markets. Where large markets are concentrated and accessible, then direc

Reasons why the government trains potential traders. Expose them to modern developments in management. Educate them on efficient methods of operating business. Expose business people to problems facing them and their possible solution. Impart proper business ethics. Educate them on how to use available resources to minimize costs and maximize profits. Inform them on various available profitable business opportunities in their environment. Expose them to government policies regarding business activities in the country. Virus-free. www.avast.com

Reasons why most organizations prefer locating their offices in the outskirts of town. To get ample parking space. Enough space for future expansion. Avoid traffic jam. To avoid noise interruptions associated with CBD. Cuts on rental charges/cost. Virus-free. www.avast.com

Outline four ways in which a good business structure is of benefit to a business organization(4mks) Facilitates easy control of workers Facilitates easy evaluation of workers Reduces confusion among workers Enhances teamwork Virus-free. www.avast.com

Reasons for the shift of supply curve to the left. Increase in the cost of production Shortage of factors of production Decrease in the levels of technology Unfavourable government policies such as an increase in tax Future expectation of an increase in price Unfavourable natural factors e.g. floods Wrong timing. E.g agricultural products are only available during certain times. Withdrawal of firms from the industry Virus-free. www.avast.com

K Ltd a manufacturing firm has been performing poorly in the recent past. Highlight four measures that they can take  to improve their profitability Improve on personnel management Locate the business where customers are many Manage finances properly Improve on public relations Being more creative and innovative Managing debts carefully Getting more capital to finance operations Should invest in more research to find out better production method Virus-free. www.avast.com

Benefits of youthful population to an economy. Provide large and cheap labour force Market for products demanded by the youth Greater invention and innovation Provide a large tax base for the country Provides a more mobile labour force Virus-free. www.avast.com

Features of the oligopoly market structure Has few large sellers and many buyers. The firms are interdependent among themselves especially in their output and pricing. Non-price competition, firms are in a position to influence the prices. However, they try to avoid price competition for the fear of price war. There is barriers to entry of firms due to reasons such as; requirement of large capital, Ownership of production rights, control over crucial raw materials,  Restrictive practices etc High cost of selling through methods of advertisement due to severe competition. Products produced are either homogeneous or differentiated. Uncertain demand curve due to the inter-dependence among the firms. Hence the shifting of the demand curve is not definite. There is price rigidity i.e. once a price has been arrived at in an oligopolistic market, it ten

The essential elements of transport The way The unit of carriage Method of propulsion Terminals Virus-free. www.avast.com

Level of production that matches the following occupations Virus-free. www.avast.com

Assumptions in the circular flow of income in a two sector economy Existence of two sectors only. It is assumed that the economy has only two sectors that is households and firms. The households provide the factors of production while firms are involved in the production of goods and services. Total spending by households. It is assumed that the households spend all their income on the goods and services produced by the firms i.e. no savings. Total spending by the firms. It is assumed that the firms spend the money received from the sale of goods and services to pay for the rewards of production factors. Lack of government intervention. The government does not influence how the firms and households carry out their activities. Such interventions are in the form of taxes, price controls among others. Closed economy. Exports and imports

Define the following principles as used in insurance Indemnity During compensation, insurance aims to reinstate the insured back to the financial situation he/she was just before the risk occurred Utmost good faith When taking an insurance policy or making a claim, the insured is expected to disclose all material facts to the insurer. Subrogation Once the insured has been compensated appropriately, any other benefits that he/she may get will revert to the insurer. Contribution In case of double insurance, any compensation due to an insured will be paid by the insurers in an agreed proportion so as to conform to the principle of indemnity Virus-free. www.avast.com