i

saboke
mic
ah@g
mai
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BUSI
NESSSTUDI
ES
KCS
EQUI
CKREVI
SION
I
NTRODUCTI
ONTOBUSI
NESSSTUDI
ES
1. St
ate4r
easonswhypeopl
eengagei
nbusi
ness

 Tomakepr
ofi
t

 Topr
ovi
degoodsandser
vices

 Todi
sposeof
fsur
pluspr
oduce

 Toexpl
oiti
ndi
vi
dualt
alent

 Tokeeponesel
foccupi
edorbusy

2.Outl
inefourway
sinwhi
chabusi
nesscanbesoci
all
yresponsi
blet
oit
simmedi
ate
env
ironment

 Avai
l
ingi
tsi
nfor
mat
ionconcer
ningi
tsoper
ati
onst
othepubl
i
c

 Maki
ngdonat
ionst
ohel
pdevel
opandsuppor
teducat
ion

 Suppor
ti
ngt
hecommuni
tybypur
chasi
ngr
awmat
eri
ali
tuses

 Suppor
ti
ngt
hei
nfor
malsect
or

 Pr
ovi
dingempl
oymentoppor
tuni
ti
est
osoci
ety

 Avai
l
ingi
tspr
oduct
satacheaperpr
icet
othecommuni
ty.

3. Hi
ghl
ightf
ourbenef
it
sthatacommuni
tyshoul
dder
ivef
rom amanuf
act
uri
ngf
ir
m

 Par
ti
ci
pat
ingi
ncommuni
typr
ogr
ammes

 Pr
ovi
si
onofj
oboppor
tuni
ti
es

 Pr
oduct
ionofsaf
epr
oduct
s

 Pr
operdi
sposalofwast
epr
oduct
s

 Conser
vat
ionofenvi
ronment

 Pr
ovi
si
onofsaf
eandheal
thywor
kingpl
ace.

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4. Out
li
nef
ourmai
nreasonswhybusi
nessent
erpr
iseexi
st

 Pr
ovi
degoodsandser
vices

 Toear
npr
ofi
t

 Tout
il
izeext
rar
esour
ces

 Tout
il
izespar
eti
me

 Tobeownboss

 Tocr
eat
eempl
oymentoppor
tuni
ti
es

5.St
atef
ourbenef
it
sofl
ear
ningbusi
nessst
udi
est
oaKeny
anst
udent
.(4mar
ks)
 Torelateknowl edge,skil
lsandat t
it
udestodayt oday.
 Ski
ll
snecessar ytostartabusiness.
 Appreciat
er oleofbusinessinpr ovi
sionofgoodsandser vi
ces.
 Appreciat
eneedf orgoodbusinesspr act
ices.
 Sel
fdi sci
pli
neandposi ti
veatt
itudetowardswor k.
 Understandt heroleofgovernmenti nbusinessacti
viti
es
 Understandt heroleofcommuni cati
onandi nf
ormationtechnol
ogy.
 Developposi ti
veatti
tudetowardst heenvir
onment .

BUSI
NESSANDI
TSENVI
RONMENT
1. Out
li
ne4el
ement
sthatmaycompr
iset
hei
nter
nal
env
ironmentofabusi
ness

 Busi
nesscul
tur
e

 Busi
nessst
ruct
ure

 Humanr
esour
ces

 Fi
nanci
alr
esour
ces

 Technol
ogy

 owner
s

2.Outl
ine4measur
est
obet
akenbyabusi
nessmant
oimpr
ovei
nter
nal
busi
ness
env
ironment

 Set
ti
ngsmar
tobj
ect
ives

 Devel
opi
nganef
fect
ivebusi
nesscul
tur
e

 Avai
l
ingnecessar
yandr
equi
redski
l
ls,
knowl
edgeandval
ues

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 Car
ryi
ngoutser
vicet
rai
ningf
ort
heexi
sti
ngper
sonnel

 Devel
opawor
kabl
ebusi
nessst
ruct
ure

 I
mpr
ovi
ngt
hewor
ker
swel
far
e

3. St
ate4way
sinwhi
chabusi
nessmaynegat
ivel
yaf
fectt
hephy
sicalenv
ironment

 Envi
ronment
aldegr
adat
ion

 Envi
ronment
alpol
l
uti
on

 Depl
eti
onofr
esour
ces

 def
orest
ati
on

4. Stat
e4waysi
nwhi
chHI
V/AI
DSpr
eval
encehasnegat
ivel
yaf
fect
edbusi
ness
acti
vi
ti
es

 Regul
arabsent
eei
sm ofwor
ker
s

 Lowpr
oduct
ivi
tyduet
oil
lheal
th

 Mar
ketl
oss

 Resour
cesbei
ngusedt
opr
ovi
decar
eforAi
dspat
ient
s

 Loseofski
l
ledl
abour

 I
ncr
easei
ndependencyr
ati
o

5.Expl
ain4measuresabusi
nesscant
aket
oensur
ethati
tsenv
ironmenti
sconduci
vet
o
i
tsbusinessact
ivi
ti
es

 Ensuri
ngthebusi
nessoper
atesi
nsur
roundi
ngt
hatar
ecl
eanandat
tr
act
ivet
o
customer
s.

 Ensur
ingt
hatlegalr
equi
rementsandcondi
ti
onshavebeenf
ulf
il
ledi
.e.r
elevant
permi
tsandl
icenceshavebeenobtai
ned

 Thatal
lgover
nmentt
axesar
epai
dpr
ompt
ly

 Suppl
i
erst
othebusi
nesspai
dpr
ompt
lyf
ort
hei
rser
vices

 Ensur
ingt
hegoodsandser
vicesf
air
lypr
icedi
nrel
ati
ont
othei
rqual
i
ty

6.Outl
ine4measur
esanentr
epreneurshoul
dtaket
oensur
eaconduci
vei
nter
nal
env
ironmentf
orhi
sbusi
ness

 Agoodbusi
nessst
ruct
ure

 Pr
operr
esour
ceal
l
ocat
ion

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 Goodbusi
nesscul
tur
e

 Bet
terdeci
sionmaki
ngbyt
heowner
s

Highli
ghtf
ourwaysi
nwhichabusinessownercanposi
ti
vel
yinf
luencet
hei
nter
nal
envir
onmentofhi
s/herbusi
ness. (4mks)

 Pr
ovi
si
onofadequat
efi
nancet
orunt
hebusi
ness.

 Pr
ovi
si
onofenoughphysi
calr
esour
cesl
i
kemachi
nes,
andequi
pment
.

 Empl
oyi
ngski
l
ledper
sonnelandal
l
ocat
ingt
hem t
her
ightdut
ies.

 I
ntr
oduci
ngmoder
nandappr
opr
iat
etechnol
ogy.

 Set
ti
ngupr
eal
i
sti
cgoal
s.

 Est
abl
i
shacl
earbusi
nessst
ruct
ure.

7. Hi
ghl
ight4i
nter
nalweaknessest
hatmayaf
fectbusi
nessper
for
mance

 Poormanager
ialst
ruct
ure

 Useofi
nappr
opr
iat
etechnol
ogy

 Lackofadequat
eresour
cesegphysi
cal

 Unmot
ivat
edwor
ker
s

 Poori
nter
nalcommuni
cat
ion

 Poort
imemanagement

 Poorpl
anni
ng

8. Out
li
nef
ourel
ement
sthatmaycompr
iset
heext
ernal
env
ironmentofabusi
ness
 Poli
tical
 Economi cal
 Social-cul tural
 Technol ogi cal
 Legalst ruct ure
 Customer s
 Int
ermedi aries
 Geogr aphi cal
 Demogr aphi cal
 Suppliesofr awmat
eri
als
 Compet i
tion
St
atef
ourext
ernal
fact
orst
hatwi
llenhancet
heper
for
manceofabusi
ness.
 I
ncr
easedpopul
ati
on(Mar
ket
)
 I
mprovedi
nfr
ast
ructur
e

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 Favourableclimate
 Improvedt echnol
ogy
 Securit
y
 Lowt axes.
 Fashionandt astefar
mingt
hebusi
ness.

St
ate4way
sinwhi
chHI
V/AI
DSpr
eval
encehasnegat
ivel
yaf
fect
edbusi
nessact
ivi
ti
es.
Regularabsenteei
sm ofworkers/owner/l
ossofti
me.
Lowpr oducti
vi
tyduetopoorhealth.
Lossofmar ket.
Incr
easeindependencyrati
o.
Lossofskill
edlabour
.
Resourcesbeingusedtoprovidecaref
orpat
ient
s

St
ate4r
easonsf
oret
hical
pract
icesi
nbusi
ness.

Toensurewor ker
sarepaidfair
lyandont i
me.

Toensurethattherei
snodiscriminati
onofemployees.

Tocreatef
airnessincompetit
ion.

Toensureri
ght sofempl
oyeesar eprotect
ed/upheld.

Toavoidcorr
upt i
on/ensureresponsibl
epromoti
on.

Toavoidconsumerexploit
ati
on.

Toensureprotecti
onoftheenvironment/hencenopol l
uti
on.

Toensurecompl i
ancewithcountry‘
slawsandregulat
ions.

9. Expl
ainf
iver
easonswhyanewbusi
nessmayf
ail

 Inadequat ecapi tal/lackoff unds-initi

al/oper at
ioncapitalmaybei nadequat etosustain/run/
expandduet olackofcol lateral/secur i
ty
 Poori nappr opriat emar ket i
ng/st rategies/leadingtolowsal es/fewercust omers/
 Unfair/st i
ffcompet iti
on
 Inadequat e/l ackofpoor /ineffici
entmanagementski ll
s.Thebusi nessmayhavei nsuf f
ici
ent
skil
lst ooper ate/manager
 Lackofi nadequat emanpower
 Thebusi nessmaynothaveenoughmanpowert ooperate/manage
 Lack/ inadequat emoder ntechnol ogy/ i
nappr opri
atet
echnol ogy.Thismayl eadtol ess
quant i
ty/qual i
tygoods/ser vices
 Unfri
endl y/poormanagementpol i
cies.Maybet hegover nmentpol i
ciesareunfavour ableto
thegr owt h/expl osi onofbusi ness
 Inadequat e/l ackofmar ketduet olowi ncomeofbuyer s/cust omers/culturalpracti
ces/
beli
efs
 Poorpr i
cingwhi chmi ghtmaket hepr oduce/ser vi
cestooexpensi vetoattractbuyers/t oo
cheapt osust aint hebusi ness
 Inappropr iat
epr oduct /busi nessf orthei ntendedmar ket/
 Polit
icalinst abil
ity/i nsecuritythatmayhi ndersmoothr unningofthebusiness
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 Poor/inadequat einfrast
ructur
ewhi chmayhi nderaccessthemarket
/inputs/
 Lackofpl anningt oaccommodat efutur
echanges.
 Misal
locat i
on/mi sappropri
ati
onofr esourcesl
eadingtowastages/misuseofresour
ces.
 Poorcustomerr elat
ion/careleadingtolossofmar ket
.
 Poorti
memanagementwhi chmaycausel ossofbusinessopport
uni
ti
es/inabi
li
ti
esto
accompl i
sht asks

10. Expl
ainf
iveway si
nwhicheff
ecti
vemanagementpr
act
icesmaycont
ri
but
ethe
successofabusi
ness
 Properpl anni ngi sputi npl acesot hatgoodr esul tscanbeant icipat edandal so
accommodat ef uturechanges.
 Relevantst rategi esmaybeest abli
shedsoast oachi evedesi redr esul ts.
 Setti
ngcl eargoal sandobj ectivessoast oachi evet hei ntendedr esults.
 Providingandusi ngor gani zationalr esour cesef ficient l
yandef fectively.Thi sinvolves
budget ingt oavoi dwast ageandmi suse.
 Propert imemanagementt oensur esetact iviti
es( tasks)ar eaccompl i
shedwi thi
nt he
requiredt ime.
 Goodsuppl ier/ customer /empl oyeer elati
onst oat tractandr etaint hem ( suppl i
ers,
empl oyeesandcust omer s) .
 Corpor atesoci alresponsi bil
ityi sfost ered.Thi sbui ldsont heimageandr eput ati
onof
thecompany.
 Compl i
ancewi thlegalrequi rement si nor dert ooper at esmoot hlyandavoi dconf li
ct
withlawenf or cementaut hor it
ies.
 Mot i
vat i
onofempl oyeest oi ncr easepr oduct ivity.
 Properor gani zat i
ont oavoi dover lap/ duplicat i
onofdut i
es.
 Properdi rectiont oensur eact iviti
esar egear edt owar dsachi evingt hesetgoal s.
 Identif
yingt her equiredski l
ls/trainingr elevantst afff orsmoot hr unni ngoft he
organizat ion
 Moni toring/ eval uating/checki ngt hatpl annedact ivitiest akeplacei nor dertoachi eve
desiredr esul ts.
 Properco- or dinat i
ont oreduceconf l
icts.

11. Amanuf act

uri
ngfir
m hasbeenconsi
stent
lyr
eleasi
ngt
oxi
cwastesi
ntothe
nei
ghbourhood.outl
inef
ourmeasuresyoucantaketostopt
hefi
rmfr
om such
malpr
acti
se

 Publ
i
cizet
hemal
pract
ice

 Takel
egalact
ionIsuet
hef
ir
m

 Repor
ttoNat
ionalEnvi
ronment
alManagementAut
hor
it
y(NEMA/Rel
evantaut
hor
it
y

 Educat
ethenei
ghbour
sont
hei
rti
ght
s.

 Boycot
tthef
arm pr
oduct
s
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 Car
ryoutdemonst
rat
ionsagai
nstt
hef
ir
m.

12. Stat
efourr
easonswhyt
hegov
ernmentshoul
dcr
eat
eanenabl
ingenv
ironmentf
or
i
nvest
ors

 Tomi
nimi
zecostofdoi
ngbusi
ness

 Toopennewar
eas/
hit
her
tonegl
ect
edbyi
nvest
ors(
localf
orei
gn)

 Toexpandt
het
axbaseandhencei
ncr
easer
evenue

 Toenhanceeconomi
cdevel
opmenti
nthecount
ry

 Topr
omot
epubl
i
c/pr
ivat
esect
orr
elat
ionshi
p

 Tocr
eat
eempl
oymentoppor
tuni
ti
es

 Toi
ncr
easet
hel
evelofNat
ional
/i
ncr
easepr
oduct

 Toavai
lavar
iet
yofgoodsandser
vices.

13. Jumaopenedupashopatmusi
koma.St
atef
ivebenef
it
sthecommuni
tyar
ound
woul
dbenef
itf
rom t
hebusi
ness

 Theycanbuyfarminput sfrom theshop

 Theycanbuyconsumergoodsf rom t heshop
 Theycangetgoodsoncr edit
.
 Theycansel
lsomeoft hefarm pr oducet ojumashop
 Theshopcanbeusedasacommuni cati
oncentr
e.
 Theshopcanbeusedasaf i
nancialcent r
e
 Jumacanofferempl oymentoppor tunit
ies
 Advi
cecanbeof fer
ed
 Goodsarebroughtclosertot hem

14. Expl
ainf
ivef
act
orst
hatcont
ri
but
etobusi
nesssuccessi
nthesoci
ety
 avail
abil
ityofcapi t
al.
 developedi nfrastructure.
 avail
abil
ityofski l
ledl abour .
 governmentsuppor t.
 accesstomar kets/cust oms
 aggressivemar keting.
 propermanagementoft hedebts
 avail
abil
ityofsecur it
y
 i
deallocat i
on
 fai
rcompet it
ion
 avail
abil
ityofr awmat eri
als/st
ock
 goodpubl icrelations
 beingcreative&i nnovat i
ve/enter
pri
si
ng/t
echnol
ogy
Nov
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 properall
ocati
onofresour
ces
 properrecordkeepi
ng
 poli
ti
calstabil
i
ty

15.Stat
e4way si
nwhi
cht
heeconomi
cenv
ironmentmayposi
ti
vel
yinf
luencet
heact
ivi
ti
es
ofabusiness
 Thepricesofcommodi tiesarelowleadi
ngtoi ncr
easeddemand
 I
ncreaseinconsumer sincomeshencehi ghdemand
 I
fthetaxeslevi
edongoodsar elowasi twi
llmakepr icesofcommodi ti
estofall
 I
fbankschar gelowinterestr
atesonloans,itencouragespeopletoborrowloansand
buymor egoods
 I
fthereislowlevel
sofi nfl
ati
onincr
easingormai ntai
ninghigherabi
l
itytobuy

16. Expl
ainfiv
eway
sinwhi
cht
hei
nter
nalbusi
nessenv
ironmentaf
fect
sbusi
ness
oper
ations
-Businessst ructur e/or ganisat i
onaswel lasdefinedstructuressetupal lowsdut i
es
tobeal l
ocat edt ot herightpeopl ehencehi gherproductivi
ty
-Businesspol icies-Rul est hatar ewelldefi
nedmakei teasierforemployeest o
i
nterpretthem accor dingly
-Humanr esour ces-Wel ltrainedandexper iencedwor kfor
cecani ncreasepr oducti
vit
y
ofbusiness.Empl oyeesneedt obepai dwel ltopreventthem from quit
tingf orbett
er
payment
-Fi
nanci alresour ces-Avai labilit
yofphysicalresourcescanensur eefficientoperati
on
ofthebusi ness
-Businesscul ture-Aposi t
iver el
ati
onshipbet weent hebusinessandi t
sempl oyees
wil
lmaket hem per for
mi ntheirduti
es.Goodr el
ationshi
p
wit
ht hecust omer sincreasesdemandf oritsgood

17.Explainf
iveext
ernal
busi
nessenv
ironmentf
act
orst
hatwoul
dinf
luencet
hebusi
ness
negat
ivel
y.

Soci al/culturalbel i
ef soft hepeopl eiftheculturei sagai nsttheconsumpt ionoftheproduct
beingt raded/ ifproductbei ngt r
adedi sagainsttheval uesoft hepeopl e.

Pol i
ticalef fect;
Pol i
ticalinstabil
i
tymaymakebusi nessf ail
/hightaxati
on/ unconduci
ve
l
egalsyst emsar enotconduci veforbusi ness.

Technol ogi calchanges; 
Fai l
uretoadopthi ghl evelsoft echnol ogymayr esul
ttopoor
quali
ty/ l
owquant it
ies.

Compet iti
on;Cutt hroatcompet it
ionmayi mpactnegat i
velytot hebusiness/closi
ngdown.

Lackofr equi r
edsuppl iers–Busi nessmayexper ienceshor tages/irr
egularsuppli
es.

Economi cenvi ronment–pur chasingpower /inflation/Hi ghinterestonloans/tari
ff
sby
tr
adingpar tner sboast /lowerdemandf orthepr oduct s.

Legalf actor s–changesi nl aws/regulati
onmayr equirenewwaysofconduct ing
business/ adj ustment sf orbusi nesst ocontinue/oper ati
on.

Lackofi ntermedi ariest odistri
butegoodst oconsumer s/ maynotr each

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consumer
s/l
eadi
ngt
olossofmar
ket
.

SATI
SFACTI
ONOFHUMANWANTS.
1.St
ate4char
act
eri
sti
csofbasi
cwant
s

 Onecannotdowi
thoutt
hem

 Theyar
efel
tneeds

 Cannotbepost
poned

 Theyar
esat
isf
iedf
ir
stbef
oresecondar
ywant
s

2.Hi
ghl
ight4char
act
eri
sti
csofcapi
tal
asaf
act
orofpr
oduct
ion

 Capi
tali
samanmader
esour
ce

 Capi
talcanbemovedf
rom onepl
acet
oanot
her

 I
tcanr
educei
nval
uei
.e.i
tssubj
ectt
odepr
ecat
ion

 Canbei
mpr
ovedt
hroughadvancementoft
echnol
ogy

 I
tsr
ewar
disi
nter
est

 I
tisabasi
cfact
orofpr
oduct
ion

3.St
ate4r
ewar
dsofl
abourasaf
act
orofpr
oduct
ion

 Sal
ari
es

 Wages

 Fees

 Commi
ssi
on

 Royal
ti
es

4.Out
li
ne4di
ff
icul
ti
esf
acedi
nsat
isf
act
ionofhumanwant
s

 Theyar
etoomanyt
osat
isf
y
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 Theyar
ehabi
tual

 Theyar
erepet
it
ive/
recur
ri
ng

 Theychangewi
tht
ime,
age,
gender

 Li
mit
edr
esour
cesr
equi
redt
osat
isf
ythem

 Pr
obl
em ofdeci
dingwhi
chonet
osat
isf
y

5.St
ate4r
easonswhyconsumer
shav
etomakechoi
cesbet
weencompet
ingwant
s

 Becauseofawi
devar
iet
yofneeds

 Di
ff
erentt
ast
esandpr
efer
ences

 Di
ff
erentpr
icesofgoods

 Li
mit
edr
esour
ces/
income

6.St
ate4way
sinwhi
chaf
ir
m cani
mpr
ovet
hepr
oduct
ivi
tyofi
tshumanr
esour
ce

 Pr
ovi
dewor
ker
swi
thmor
eeducat
ionandt
rai
ning

 Paywor
ker
swel
l

 Pr
omot
ingwor
ker
s

 Pr
ovi
demedi
calcar
e

 Ensur
egoodr
elat
ionshi
pwi
thmanager
s

 Pr
ovi
dinggoodwor
kingenvi
ronment

 Pr
ovi
dewor
ker
swi
thgoodt
ool
sofequi
pment

7.7Out
li
ne4way
sinwhi
checonomi
cresour
cesar
eusef
ult
oKeny
a

 Theyhavemoneyval
uet
huscanbesol
dandt
hemoneyusedt
odevel
opt
he
economy

 Theycanbecombi
nedt
opr
oducemor
eusef
ulgoodsf
ort
hecount
ry

 Theycanbeusedt
ocr
eat
egoodsandser
vicest
hatsat
isf
yhumanwant
s

 Theyl
eadt
oeconomi
cdevel
opmentoft
hecount
ry

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8.St
atef
ourdi
ff
icul
ti
esconsumer
sfacewhensat
isf
yinghumanwant
s

 Humanwant
sar
etoomanyt
obesat
isf
iedf
ull
y

 Resour
cest
osat
isf
ythem ar
escar
ce

 Humanwant
sreccurandt
heyr
equi
ref
reshr
esour
cest
osat
isf
ythem

 Humanwant
sarecompet
it
ivet
her
efor
efacedwi
tht
het
askofdeci
dingwhi
ch
wantwi
l
lbesat
isf
ied

 Humanwant
sar
ecompl
i
ment
aryandr
equi
remor
eresour
cest
osat
isf
ythem

 Theychangewi
tht
ime,
ageandgender

9.Ment
ion4f
eat
ureswhi
chqual
if
iesf
oodasapr
imar
ywant

 Cannotbepost
poned

 Requi
redf
orsur
vival

 I
tisaf
eltneed

 Sat
isf
iedf
ir
stbef
oresecondar
ywant

 Cannotbef
ull
ysat
isf
ied

10.
Out
li
ne4r easonst
oaccountf
orcont
inuousexi
stenceofdi
rectpr
oduct
ioni
n
modernsociet
y

 Requi
resl
esscapi
tal

 Lackofent
repr
eneur
ialski
l
ls

 Cul
tur
albackgr
ound/
bel
i
efs

 Poort
echnol
ogy

 Pr
ovi
desel
fempl
oyment

 Leadst
oindependence

11.
Stat
e4char
act
eri
sti
csofl
aborasaf
act
orofpr
oduct
ion

 I
t’
sahumanr
esour
ce

 I
t’
sabasi
cfact
orofpr
oduct
ion

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 I
tssuppl
ycanbevar
ied

 I
tsqual
i
tycanbei
mpr
ovedt
hrougheducat
ion,
trai
ningandexper
ience

 I
tsr
ewar
dissal
ari
es,
wages,
commi
ssi
on,
feesandr
oyal
ti
es

 I
tcannotbest
oredi
elabouri
sper
ishabl
e.

 Labori
smobi
l
ethati
scanmovef
rom pl
acet
opl
ace

St
ate4r
easonswhyshel
teri
sabasi
cwant
.

 Pr
ovi
deswar
mtht
othebody

 Pr
event
sdi
seases

 Pr
event
smanagai
nstadver
seweat
her

 Forst
orageofbasi
cit
ems

 Forsur
vival

 Pr
ovi
desspacef
orr
elaxat
ionandsl
eepi
ng

12.
Stat
e4char
act
eri
sti
csofhumanwant
s

 Theyar
einsat
iabl
e

 Theyar
ecompet
it
ive

 Theyar
erecur
rent

 Somear
euni
ver
sal

 Theyvar
yini
ntensi
tyandur
gency

 Theyar
ehabi
tual

 Theyr
equi
rer
esour
ces

13.
Stat
e4r
easonswhyconsumer
str
ytosat
isf
ybasi
cwant
sbef
oresecondar
ywant
s

 Consumer
shavel
i
mit
edr
esour
ces

 Basi
cwant
scannotbepost
poned

 Basi
cwant
sar
efel
tneeds/
urgent

 Basi
cwant
sar
eamustf
orsur
vival

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14.
Stat
e4occupat
ionsaper
sonmayengagei
natt
hepr
imar
ylev
elofpr
oduct
ion

 Fi
shi
ng

 Far
ming

 Mi
ning

 Lumber
ing

 Quar
ryi
ng

15.
Stat
e4way
sinwhi
chcl
othi
ngsat
isf
ieshumanwant
s

 I
tpr
ovi
deswar
mth

 I
thi
desnakedness

 I
tpr
otect
sani
ndi
vi
dualegf
rom i
nsectbi
tes

 I
tmakesaper
sonpr
esent
abl
e/l
ookgood

 I
tpr
otect
sfr
om di
seases

16.
Highli
ghtfourway
sinwhi
chaf
ir
m cani
mpr
ovet
hepr
oduct
ivi
tyofi
tshuman
resources

 Tr
aini
ngt
hewor
ker
s

 Remuner
ati
ngt
hewor
ker
saccor
dingt
othei
rjobs

 Pr
ovi
dingwor
kingt
ool
sandequi
pment
s

 Pr
ovi
dinggoodwor
kingcondi
ti
ons

 Al
l
owi
ngwor
ker
stot
akepar
tinsomedeci
sion-
maki
ng

 Gi
vi
ngpr
omot
ionst
odeser
vingwor
ker
s

 Pr
omot
inggoodwor
kingr
elat
ionshi
pbet
weenwor
ker
sandmanagement

17.
Highl
ightf
oursi
tuat
ionsi
nwhi
cht
heoppor
tuni
tycostconceptmaybeused

 Wher
eresour
cesar
escar
ce

 Wher
ewant
sar
emany
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 Wher
ewant
sar
ecompat
ibl
e

 Wher
ewant
svar
yinur
gencyandi
ntensi
ty

18.
Stat
efourf
eat
uresofeconomi
cresour
ces

 Theyar
escar
ce/
li
mit
edi
nsuppl
y

 Theyhavemonet
aryval
ue

 Theyar
eunevenl
ydi
str
ibut
ed

 Theyar
ecompl
i
ment
ary

 Theyhaveut
il
it
y

 Theycanchangeowner
shi
p

19.
Outli
nefourbenef
itsaccr
uedf
rom appl
icat
ionofmoder
ntechnol
ogyi
nthe
product
ionsector

 Reduct
ioni
nthecostofpr
oduct
ion

 I
ncr
easedval
ueofout
put

 Hi
ghqual
i
tyofout
put

 Possi
blet
ost
andar
dizeout
put

 Enhancesef
fi
ciencyandaccur
acy

 Fast
erpr
oduct
ionpr
ocesst
her
ebysavi
ngont
ime

20.
Expl
aint
hebenef
it
sofi
ndi
rectpr
oduct
iont
oaconsumer

 Var
iet
yofpr
oduct
sar
eavai
l
edi
nthemar
ketl
eadi
ngt
omor
erangeofchoi
ce

 Al
l
owsf
orexchangeofpr
oduct

 Encour
agesspeci
ali
zat
ion-l
eadi
ngt
opr
oduct
ionofhi
ghqual
i
typr
oduct
s

 Resul
tsi
nsur
pluspr
oduct
ionhencenoshor
tages/
product
sar
echeaper

 Pr
omot
escompet
it
ionl
eadi
ngt
opr
oduct
ionofhi
ghqual
i
typr
oduct
s

 Leadst
oint
eract
ionst
her
efor
epr
omot
ingpeaceandunder
standi
ng

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21.
Explai
nfiv
ebenefit
sthatmayaccr
uet
oapr
oducerwhoencour
agesdi
vi
sionof
labourandspeci
ali
zat
ion

 Out
putperwor
keri
sincr
eased

 I
tsavest
imeduet
ouseofmachi
nes

 I
tencour
agesi
nvent
ionsandi
nnovat
ions

 Enabl
eswor
kert
oengagei
ntr
adewhi
chhe/
shei
sbestat

 Leadst
opr
oduct
ionofqual
i
tygoodsandser
vices

 I
tleadst
omechani
zat
ion/
useofmachi
neshenceeasi
ngwor
k.

 Withspeci
ali
zati
on,awor
kercanengagei
nat
radewhi
chshe/
hei
sbest
t
alentedorsui
ted.

22.
Expl
ainf
ourt
ypesofut
il
it
iescr
eat
edbypr
oduct
ion

 For
m uti
li
ty–Thisischangi
ngthefor
m ofacommoditybyconvert
ingraw
mater
ial
stofi
nishedgoods.I
tisdonethr
oughpr
ocessi
ng/manufactur
ing.

 Timeuti
lit
y-Thisiscr
eatedwhenagoodi sstor
edunt
ilwheni
tis
needed.
.donet
hroughstorageorwar
ehousing

 Placeuti
li
ty–Thi
sismovementofgoodsandser
vicesf
rom onepl
acet
o
another
.Donethr
ought
ranspor
tat
ion

 Possessi
veut
il
it
y–Referst
ot r
ansferofownershi
pofgoodsandser
vicesf
rom
onepersont
oanother
.Donethroughtrade,
gif
ts

23.Hi
ghl
ightf
ourmeasur
esaconsumermayundert
aket
osat
isf
ytheunl
imi
tedwant
s

 Hast
omakeachoi
ce

 Haveascal
eofpr
efer
ence

 Shoul
dconser
ver
esour
ces

 Shoul
dhaveoppor
tuni
tycost

 Shoul
dinventnewpr
oduct
s

24. Hi
ghl
ight4r
easonsf
ormaki
ngchoi
cesbet
weencompet
ingwant
s

 Li
mit
edr
esour
cest
omeett
heneeds

 Theyar
ecompl
ement
aryi
.e.i
fyousat
isf
yone,
itl
eadst
oneedoft
heot
her

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 Somehumanwant
srecur

 Theyar
einsat
iabl
ei.
e.cannotbesat
isf
iedf
ull
y

 Theykeeponchangi
ngwi
thage,
educat
ionl
evel

 Theyar
ecompet
it
ive

 Di
ff
erentpr
icesofgoods

25.
Expl
ainfi
vef
eat
uresofhumanwantapar
tfr
om t
hef
actt
hatt
heyr
equi
rer
esour
cest
o
sati
sfy
.

(
i) Theyareinsat
iable/
endless/unl
i
mit
ed-Thesati
sfact
ionofonehumanneedleadst
o
theneedtosti
llhaveitbutinamoreimprovedway.Onehasacar,f
ori
nstancebut
sti
llwor
kshardt obuyabet t
erone.

(
ii
) Someareuni
ver
sal
-somehumanwant
sli
kef
oodandcl
othi
ngar
ecommont
oal
l
humanbei
ngs

(
ii
i) Theyarecomplement
ary-Somehumanneeds,oncesati
sfi
edwillrequi
rethatot
hers
areal
sosati
sfi
edsoasf ori
ttoworkorser
veit
spurpose.Fori
nstanceifonacquir
es
acar,
heorshemustbuyf uelsot
hathecarcanrun.

(
ii
i) Theyar
erepet
it
ive/
recur
rent
-Somehumanneedsl
i
kehungercanonl
ybesat
isf
ied
tempor
ari
l
y

(
iv) Theyar
ehabitfor
ming/
addict
ive-useofcer
tai
ngoodst
osat
isf
ysomeneedsmay
l
eadtodependenceonsuchsubstances

(
v) Theyvar
yinur
gencyandi
ntensi
ty-Somehumanwant
sar
emor
eur
gentt
hanot
her
s

(
vi) Theyaredynamic-Humanneedschangewi
tht
ime,
age,
heal
thst
atus,
soci
aland
eveneconomicstat
us

(
vi) Theyarecompeti
ti
ve-Humanwant
sal
wayscompet
eforat
tent
ion.Eachwoul
dli
ke
tobesati
sfi
edfi
rst
.

26.Expl
ain5char
act
eri
sti
csofeconomi
cresour
ces

Haveuti
l
ity–t heyhaveabil
i
tytobeused.

Havemoneyval ue–Theyhaveaval ueatwhi cht heycanbeexchangedf orownershi
p.

Haveal
ternati
veuse–Theycanbeputi ntodi
fferentuses.

Scar
ceinsuppl y–Theyarenotavailabl
einsuf f
icientquantit
ies.

Canbecombi ned–Theycanbecombi nedsoast oproducedi ff
erentgoodsandservi
ces.

Canchangeowner shipfr
om onepersont oanothert hr
oughsal e.

Canbecompl ementary–Differ
entresourcescanbeusedt ogether.

Theyar
edi st
ri
buted–t heyareavai
l
abl einvaryi
ngquant it
iesatdiffer
entplaces;

27.Expl
ainsomeoft
hepr
obl
emsencount
eredbyconsumer
sast
heyt
ryt
osat
isf
ythei
r

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want
s.
˗Means/resourcesofsatisfyi
ngtheirwantsareli
mitedduetoscar ci
ty.
˗Wantskeeponr ecurri
ng.
˗Wantsarehabitualandhencer equir
eonet oconti
nuelooki
ngf orresourcestosat
isf
ythem
˗Somewant sareessentialforsurvi
valt
huscannotbepost poned.
˗Wantschangewi thage,ti
meandgender .
˗Somewant sarecompl i
ment ary-sati
sfact
ionofonewantr equir
essat i
sfact
ionofanot
her
.
˗Competi
tivenatureofsomewant s.
˗Wantsarenumer ous/unlimited.

PRODUCTI
ON.
1.St
ateway
sinwhi
chasoci
etybenef
it
sfr
om i
ndi
rectpr
oduct
ion

 Betterqual i
tygoods
 Availsavar iet
yofgoods
 Highpr oduct i
oncapacity/masspr oduct
ion
 Betterut i
l
isati
onofr esources
 Facili
tatesexchange/ tr
ade
 Goodsbecomecheaper
 Leadst ohi ghstandardsofl i
ving
 Createsempl oyment
 Leadst ospeci al
isat
ion/betterski
ll
s

2.Out
li
neway
sinwhi
cht
hepr
oduct
ivi
tyofl
andcanbei
ncr
eased

 Ir
ri
gat i
ont ogetper enni aloutput /cont i
nuousout put
 Usingf ert
il
izerstoi ncreaseorr estoresoi lf
ertil
i
ty
 Afforestati
ont oprot ectsoilandat tractrain
 Cropr otat
iont oensur et hatsoi lnutrientsarenotexhaust ed
 Furrowingt orejuvenat ethel and/ l
andl eftunculti
vated
 Mechani sationtof acili
tatelandcul ti
vation/useofmachi ner
y
 Reclamat i
ont omakel andhi thertounpr oduct i
vetomor eproducti
ve
 Pestcont roltoreducedamage
 Landt enuresyst em t oensur eeconomi call
yviablepieceoflandexi
sts
 Topr otectsoilthusavoi dsoiler osion

3.Li
stt
hebenef
it
sthatsubsi
stencepr
oducermaygetbypar
ti
cipat
ingi
npr
oduct
ion

 Ear
ningani
ncome
 Wil
lbesel
femployed
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 Gett
ingwhathedoesnotproduce
 Hemayi mprovehi
sskill
s
 Di
sposingoffhi
ssurpl
us
 Hisl
ivi
ngstandar
dswillbei
mproved
 Hewi l
lpr
oducegoodsofhighqual
it
y
 Hewi l
ldomassproducti
on

4.St
atef
unct
ionsofanent
repr
eneuri
npr
oduct
ion

 Organisesthef act
orsofproducti
oncontrols/
planseval
uat
es/coordi
nates
business
 Providesfactorsofproduct
ion(l
andlabourandcapital
)
 Makesdeci sions
 Paysf ortheuseoff act
orsofproducti
onsuchaswages, sal
aries,
int
erest
 Takest herisks
 I
dent i
fiesbusinessopport
unit
y/star
tsbusiness

5.Gi
ver
easonswhyKeny
ashoul
dusemet
hodsofpr
oduct
iont
hatr
elymor
eonl
abour
t
hanmachi
ner
y

 Machinesareexpensive/
labouri
scheap
 Maintenanceofmachineisexpensi
ve
 Itwi
lleaseunemployment
 Itwi
llsavefor
eignexchange
 Labourisabundantl
yavail
able

FORMOREHI GHSCHOOLNOTRS,REVISI
ON0714497530
6.Cl
assi
fyeachofthef
oll
owi
ngpr
oducti
onactiv
iti
esasei
therpr
imar
yort
ert
iar
y
Acti
vi
ty Levelofpr
oduction

Di
ggi
ngcl
aysoi
l Pr
imar
y

Const
ruct
ionofabr
idge Secondar
y

Sel
l
ingofashop Secondar
y

Gr
owi
ngveget
abl
es Pr
imar
y

Tr
anspor
tat
ionofmedi
cine Ter
ti
ary

7.Hi
ghl
ightf
ourway
sinwhi
chanent
repr
eneurcont
ri
but
est
othepr
oduct
ionofgoods

 I
dent
if
iesvi
abl
ebusi
nessoppor
tuni
ti
es

 Pr
ovi
desgui
del
i
nesonhowpr
oduct
ionshoul
dbeor
gani
zed/t
ake/pl
ace/Coor
dinat
e

Nov
els,
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 Pr
ovi
dest
hecapi
talnecessar
ytocar
ryonpr
oduct
ion

 Hi
re/r
ewar
dsal
lot
herf
act
orsofpr
oduct
ion

 Bear
sal
lther
isks/i
ncur
slosses/enj
oysal
lpr
ofi
ts

 Deci
deshow/wher
e/when/whatt
oinvestt
hebusi
ness

 Pr
ovi
des/avai
l
s/assembl
es/mar
shal
sot
herf
act
orsofpr
oduct
ion

8.Out
li
nef
ourr
easonswhypr
oduct
ioni
nthesubsi
stencesect
ori
susual
lyl
ow

 Doesnoti
nvol
veexchangeandt
her
efor
enosur
pluspr
oduct
ion

 Ther
eisl
i
mit
eduseofmoder
ntechnol
ogy

 Ther
eisuseofl
esscapi
tal

 Pr
oduct
ioni
sdoneonsmal
lscal
e

 Ther
eisl
i
mit
eduseofmachi
nes

9.Outli
nef
ourreasonswhyamulti
-nati
onalcompanymaypref
ersett
ingupapr
oduct
ionuni
tin
dev
elopi
ngcountr
yinst
eadofexpor
tingfi
nishedgoodst
othecount
ry

 Takeadvant
ageofcheapl
abouri
nthecount
ry

 avoi
dpayi
ngt
axont
hegoodst
hatwoul
dot
her
wisebei
mpor
ts

 Tot
akeadvant
agesofsui
tabl
erawmat
eri
alsi
nthecount
ry

 Tomakepr
oduct
scheaperhencemor
esal
es

 Tomaket
ranspor
tcheaper

10.
Namet
hef
act
ort
hateachoft
hef
oll
owi
ngr
esour
cesr
elat
eto

Resour
ces Fact
orofpr
oduct
ion

Manager Labour

Vehi
cle Capi
tal

Cot
ton Land

Wat
er Land

Owner Ent
repr
eneur

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els,
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11.
Out
li
ne4char
act
eri
sti
csofdi
rectpr
oduct
ion

 Pr
oduct
ivi
tyusual
l
yonsmal
lscal
e

 Usual
l
yforownconsumpt
ion

 Pr
oduct
ioni
snotf
ort
hemar
ket

 Usesi
mpl
emet
hodofpr
oduct
ion

 Lowqual
i
tyofpr
oduct
spr
oduced

12.
Listf
ourf
unct
ionsofent
repr
eneur
sasaf
act
orofpr
oduct
ion

 I
dent
if
iesvi
abl
ebusi
nessoppor
tuni
ty

 Combi
net
heot
herf
act
orsofpr
oduct
ion

 Pr
ovi
descapi
talr
equi
redt
ocar
ryoutpr
oduct
ion

 Empl
oysandr
ewar
dsot
herf
act
orsofpr
oduct
ion

 Hebear
sal
lther
isksandl
osses

 enj
oyst
hepr
ofi
ts

 Hemakesal
lthedeci
sionsont
hebusi
ness

 Hecont
rol
sandmanagest
hebusi
ness

13. St
ate4way
sinwhi
chpr
oduct
ionact
ivi
ti
esmaynegat
ivel
yimpactoncommuni
tyheal
th

 Airpolluti
oncauseai rbornedi seases
 Wat erpol l
uti
oncauseswat erbor nediseases
 Congest i
on–Congest i
oncr eatedasmor epeoplecometolookforwork(job)
 Noise–pol luti
on–causi nghar ingfacili
ti
es-demandforheal
thf
acil
i
tiesi
ncrease
 Soli
dwast epol l
uti
on–causi ngmanydi seases
 Environment aldegradati
on-Thi smayl eadtohealt
hprobl
ems
 Socialevilse.gimmor ali
ty
 Occupat i
onalhazards
 Unheal thyproducti
on
 Globalwar ming

14.Hi
ghl
ightf
ourf
act
orst
hatcoul
dinf
luencemobi
li
tyofcapi
talasaf
act
orofpr
oduct
ion

 Dif
fer
entusesinwhi chcapit
alcanbeputto/degr
eeofspeci
ali
zat
ion
 Amountofcapitalavail
abl
e
 Ski
ll
sofknowledgeavai l
abletooper
atecapi
tal
 Governmentpol
icy
 Governmentgoodwill(support
)

Nov
els,
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 Ti
met akent omodi f
y
 Rewardof fered
 Securi
tyinthenewl ocati
on
 Natureofcapi tal(f
ixedorl i
qui
d)
 Costofmovi ngt hecapit
al
 Ti
met hecapi talhasbeeni nthecur
rentuse
 I
nfrast
ructure

15. St
ate4adv
ant
agesofdi
vi
sionofl
abour

 Developmentofi ndivi
dualskill
s.
 Incr
easedout put.
 Producti
onofst andardizedgoods.
 Maximum useofmachi nery.
 Developmentofnewt alents.
 Encouragesinvention/i
nnovat i
on.
 Savestime.
 Lessuseofment alandphysi calef
for
t.
 Highqualit
ygoods/ servicesproduced/of
fer
ed.
 Incr
easesempl oymentoppor tuni
ti
es.
 Reducestraini
ngt i
me.
 Facil
i
tatesplanningandmanagement .

16. St
atef
ourf
act
orst
hatmayaf
fectt
hegeogr
aphi
calmobi
li
tyofl
abour
 Unf
avor
abl
ecl
i
mat
iccondi
ti
ons

 Languagebar
ri
ers

 Jobsecur
it
y

 Rel
ocat
ioncost
s

 I
nadequat
einf
ormat
ionaboutj
oboppor
tuni
ti
esel
sewher
e.

 Soci
alt
ips/r
elat
ives!f
ami
l
y

 Secur
it
yoft
hepl
ace

 Pol
i
ticalst
abi
l
ity

 Gover
nmentpol
i
cy(
immi
grat
ionr
ules)

 Age

 Soci
alameni
ti
es(
school
s,hospi
tal
s)

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els,
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 Costofl
i
ving

 Avai
l
abi
l
ityofi
nfr
ast
ruct
ure

 Rewar
ds(
sal
ari
es,

17. Expl
ainf
ivebenef
it
sofdi
vi
sionofl
abourt
oanor
gani
zat
ion

Lessti
meisspenti
ncompl
eti
ngajob/savesti
me/f
aster
/quicker
/speedi
er.Ther
eis
lessmovementbywor
ker
s.No/
minimalchangi
ngfr
om doingonewor ktoanother
.

I
ncreasedproduct
ion/
quanti
ty/output-Peoplebecomemoreexpert/
speci
ali
stat
t
heirjobsastheydoitr
epeatedly(henceincreasi
ngpr
oduct
ivi
ty)

Standar
dizedgoods/uni
form goods-Goodsproducedareofuni
for
m qual
it
ydueto
useofmachi nes/
workcanbeaut omatedleadi
ngt ol
owercost
sofproducti
on
/makingworkeasier/
effi
cient
.

Bet
ter/
improved/
enhancedmanagement-Thisfaci
li
tat
escont
rol
/co-
or
dinati
on/Pl
anning/
dir
ect
ing/
account
abi
li
ty/
staff
ing/
eval
uat
ion/or
gani
zat
ion/
sup
er
visi
on.

Hi
ghquali
tygoods/serviceproduced-Peopleconcent
ratei
ndoingjobsf
orwhi
ch
t
heyarebestsui
ted(whi chimprovequali
tyofoutput
)/r
epeat
ingsame
t
ask/
repeati
ngsamet ask/speci
ali
zati
on.

I
ncreasedcreati
vi
ty/
invent
ion/i
nnovat
ion-theorganizati
onmayt apworker
stalent
s
andskil
lswhichmayhel ptomodifyexist
ingproducts/devel
opnew
product
s/i
niti
atenewmet hodsofproduction/
technology/di
scovernewmarkets.

I
mprovedef
fici
ency–duet
obet
teruseofr
esour
ces/i
mpr
ovei
mage/
reput
ati
onof
t
heorgani
zati
on

18. St
atef
ourchar
act
eri
sti
csofi
ndi
rectpr
oduct
ion

 Goodsarepr oducedf orsale/mar ket.

 Goodsarepr oducedinl argequantit
ies/sur
plus
 Therei
sspeci ali
zati
oninpr oducti
on.
 Highqual
itygoodsar epr oduced.
 Moderntechnol ogyi
sext ensivel
yused/machines
 Promoteinterdependence

19. Out
li
ne4way
sinwhi
chl
andi
nfl
uencest
hel
ocat
ionofi
ndust
ri
es

 Costoft
hel
and

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els,
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 Gover
nmentpol
i
cyonl
andut
il
izat
ion

 Nat
ureoft
hel
and/
ter
rai
n

 Pr
oxi
mit
ytoauxi
l
iar
yser
vices

 Avai
l
abl
eroom f
orexpansi
on

20. St
ate4occupat
ionsengagedi
nter
ti
aryl
evelofpr
oduct
ion

 Nur
sing

 Hai
rdr
essi
ng

 Teachi
ng

 Tr
anspor
t

 Communi
cat
ion

 War
ehousi
ng

 I
nsur
ance

 Banki
ng

21. Gi
veanyf
ourr
easonswhyoccupat
ional
mobi
li
tyofski
ll
edl
abori
slow

 Costofr
etr
aini
ngi
stoohi
gh

 Fearofunknown

 Per
iodoft
rai
ningi
slong

 Lackofi
nfor
mat
ionaboutoppor
tuni
ti
esi
not
heroccupat
ions

 Pr
ofessi
onalbar
ri
erst
ojobent
ry

ENTREPRENEURSHI
P.
1.Whatar
ethef
act
orst
hathav
econt
ri
but
edt
othegr
owt
hofent
repr
eneur
shi
pin
Keny
a.

 needtoexploittalent
 hi
ghmar ketavailabil
it
y
 growthinawar eness
 i
mpr ovedsecur i
ty
 i
mpr ovedi
nfrastructure
 Needt obeownboss

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els,
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 Avai
l
abi
l
ityofsour
ceoff
inance
2.Out
li
nef
ourr
easonsf
orest
abl
ishmentofabusi
nessent
erpr
ise

 Profi
tgenerati
on/maximizat
ion
 Creati
onofempl oyment
 Provi
sionofgoodsandser vi
ces
 Forpresti
ge/enhanci
ngowni mage
3.St
atef
ourr
easonst
oconsi
derwhenev
aluat
ingav
iabl
ebusi
nessoppor
tuni
ty

 Potenti
alprofi
ts
 Avail
abil
ityofmar ket
 Avail
abil
ityofrawmat eri
als
 Amountofcapi t
alrequi
red
 Levelofcompet it
ion
 Securi
ty
 Governmentpol i
cy
 Levelofdevelopmentofi nf
rast
ruct
ure.
 Futur
egr owth
 Acceptancebyt hecommuni ty
 Costofcapi t
al
 Abil
it
ytomanage

4. Asur
geonsetupacli
nici
nadi st
antrur
alcentr
e.Thebusi
nesswascl
osedaf
tersi
x
mont
hs. Ident
if
yfourpossi
blecausesfort
hef ai
lur
e
 Inadequat ecapi tal
 Poorwor kingst rat egies
 Unfavor ablegover nmentpol i
cies
 Insecurityint hear ea
 Inadequat eacademi candt echni
calknowledge
 Inadequat ebusi nessmanagementknowl edge
 Inadequat edemandmar ket
 Poorr ecor dkeepi ng
 Poorcust omerr elat i
ons
 Largedr awi ngsf rom f i
rm
 Lackofsel fdi sciplineandpoormor alchar
acter
 Poorpl anning
 Changesi nt echnol ogy
 Changesi nbusi nessenvi r
onment
6. Stat
ef ourr
easonswhyt
hegov
ernmentofKeny
aisencour
agi
ngent
repr
eneur
ial
knowledgeinschool
s
 Toreducer at
eofunemployment
 Equiplear
nerswit
hentr
epr eneuri
alskil
lsandknowl edge
 Createinf
ormedpopul
ati
ononcommer cialact
ivi
ti
es
 Learnerstobeabl
etouti
lizelocalresources

Nov
els,
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 Enabl
elear
ner
stobesel
frel
i
ant

7.Ident
if
yfourbenef
it
sofent
repr
eneur
shi
ptot
hedev
elopi
ngeconomi
essuchas
Kenya
 Promot esjobcr eation
 Promot eproduct i
onofawi devar iet
yofgoods
 Improvesinfrast ructur eofacount ry
 Promot esheal thycompet it
ionhencepr oduct
ionofhi
ghqual
i
tygoods
 Enhancesf ullexpl oitationofacount ry’
sresource
 Promot esindust r
ialdevel opment
 Providesconsumerwi thvar i
etyofgoods
 Promot essavi ngsandi nvestment s
 Raisesthelivingst andar dsofcitizens
 Reduct i
onofr ur alur banmi grati
on
 Itsavesthecount r
yoni mpor t
ationofgoods
 Leadst opromot ionofent repreneurialcult
ure
 Reducesf oreigndomi nanceoft heeconomy

9.I
dent
if
y4gapst
hatmaycr
eat
eabusi
nessoppor
tuni
tyi
nthemar
ket
 Poorquali
typroducts
 I
navail
abil
i
tyofproducts
 Unaff
ordablepri
ces
 Poorservi
ces
 I
nsuff
ici
entquantit
ies

10.
Out
li
ne4f
act
orst
hatmayhi
nderent
repr
eneur
shi
pinKeny
a

 Degener
ati
vecul
tur
es

 I
nsuf
fi
ci
entsuppor
tandgoodwi
l
lbyt
hegover
nment

 Lackofr
olemodelent
repr
eneur
sinsoci
ety

 Lackoff
inanci
alsuppor
t

 Lackofent
repr
eneur
ialcul
tur
e

 Lackofbusi
nessski
l
ls

 St
if
fcompet
it
ionf
rom out
sidet
hecount
ry.

 Poori
nfr
ast
ruct
uresuchaspoorr
oadnet
wor
k.

11.
Stat
e4r
olesofanent
repr
eneuri
npr
oduct
ion

 Pr
ovi
descapi
talr
equi
redf
orpr
oduct
ion
Nov
els,
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 Combi
nesot
herf
act
orsofpr
oduct
ion

 I
dent
if
iesvi
abl
ebusi
nessoppor
tuni
ti
es

 Empl
oysandr
ewar
dsot
herf
act
orsofpr
oduct
ion

 Hebear
sal
lri
sksandl
osses

 Hemakesal
ldeci
sionsont
hebusi
ness

 Hecont
rol
sandmanagest
hebusi
ness

12.
Stat
e4pr
obl
emst
hatmaybef
acedbyent
repr
eneur
swi
thoutbusi
nesspl
an

 Theent
repr
eneurwi
l
lcommi
ttomanymi
stakesorer
ror
sint
hebusi
ness
oper
ati
ons.

 Theentr
epreneurwi
l
lnotbeabl
etoi
dent
if
yst
rengt
hsandweaknessoft
he
busi
ness.

 Thebusinesswil
lnotbebeablet
omeett
her
equi
rement
sbyt
hef
inanci
ers
bef
oretheyprovi
definance.

 Ther
ewi
l
lbepooral
l
ocat
ionofr
esour
ces

 Theentrepr
eneurwi
llnotbeabl
etodet
ermi
net
hef
inance/
capi
talt
hati
s
requi
redbythebusi
ness.

 Thewor
ker
soft
hebusi
nessmaynotbemot
ivat
ed

13.
Stat
e4sour
cesofbusi
nessi
deas

 Newspaper
s

 Showsandexhi
bit
ions

 Magazi
near
ti
cles

 Hobbi
es

 Li
steni
ngt
owhatpeopl
esay

 Spot
ti
ngamar
ketgap(
niche)

 Sur
veys

 Vocat
ionalt
rai
ningandexper
ience.

 Li
steni
ngt
owhatpeopl
esay
Nov
els,
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 Wast
epr
oduct
s

14.
Highl
ight4measur
est
hatt
hegov
ernmentmayt
aket
oencour
ageent
repr
eneur
shi
p
inthecount
ry
 Offer
ingsubsidiestoent repreneurs
 Provi
dingsecurity.
 Provi
dingtaxincent i
vesandt axholidays.
 Fundinginsti
tut
ionst hattrainentrepreneur
s.
 I
mpr ovinginf
rastructuralfaci
lit
ies.

15.
Highl
ight4f
act
orst
hatf
avourent
repr
eneur
ialgr
owt
hinKeny
atoday

 Avai
l
abi
l
ityofgoodr
olemodel
s

 Favor
abl
egover
nmentpol
i
cies

 Avai
l
abi
l
ityofappr
opr
iat
etechnol
ogy.

 Appr
opr
iat
eeducat
ionsyst
em.

 Easyaccesst
oloans.

 Goodi
nfr
ast
ruct
ure.

 Avai
l
abi
l
ityofmar
ket
.

 Ent
repr
eneur
ialcul
tur
e

16.
Stat
e4adv
ant
agesofbusi
nesspl
ant
oabusi
ness

 Enhancescommuni
cat
ioni
naf
ir
m

 Hel
psdet
ermi
net
heamountoff
inancer
equi
red

 Hel
psi
dent
if
ythest
rengt
hsandweaknessesoft
hebusi
ness

 Usedt
oeval
uat
eper
for
manceoft
hebusi
ness

 Usedt
oat
tractext
ernalf
undi
ng.

 Test
sbusi
nessi
deasonpaper
.

 Pr
operal
l
ocat
ionofbusi
nesssour
ces

 Mot
ivat
eswor
ker
sandmanagement

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17.
Ment
ion4component
sofagoodbusi
nesspl
an

 Nameoft
hebusi
ness

 Pr
oductt
obesol
d

 Per
sonnelt
omanaget
hebusi
ness

 Amountoff
inancer
equi
red

 Mar
kett
obeser
ved

 Typesofempl
oyeesr
equi
red

 Summar
yoft
hepl
an

18.
Thegov er
nmentofKeny
at houghtheMinistr
yofTr
adeandIndust
ryhasdevel
oped
poli
ciestopr
omoteentrepreneur
shi
p.Explai
nfi
veimpor
tanceofsuchi
nit
iat
ivet
o
theeconomyofKenya

 Creationofempl oyment .
 Exploitati
onofresources
 Promot i
onoftechnology.
 Promot i
onofentrepreneur/cult
ure.
 Format ionofcapital
/joi
ning.
 I
ncreaseofconsumer s’choice.
 Developmentofi nfrastr
ucture.
 Foreignexchangeear ningsandconservat
ion

20. Entrepr
eneurshi
pisbecomingthedri
vi
ngfor
cebehi
ndmosteconomiesinthewor
ld
andmostgovernmentssuppor
tit
.Explai
nwhyentr
epr
eneur
shi
pisi
mpor t
anttothese
economi
es
 Creationofempl oyment /j
obsbyabsor bi
ngpeoplewhowoul dother
wisebe
j
obless
 Format i
onofcapi t
althroughpr of
it
swhi chmaybeusedt oexpandthebusiness
 Reduci ngr ur
al-urbanmi gr ati
onasbusi nessesinruralareaof
feremployment
oppor tunit
ies
 Raisingst andardsofl ivingt hroughreceiptofsal
ariesandwagesaswel las
avail
ingavar ietyofqual i
tygoodsandser vi
ces
 Savingoni mpor tsasent r
epreneursareabl etoproducegoodandser vi
cesthat
aresubst itut
est oi mpor ts
 Improvi nginfr
ast ruct
ur ethroughi mprovementofr oadsandsecurit
ybyt he
gover nment
 Reduci ngf or
eigndomi nanceoft heeconomybyi ncreasingthepart
ici
pati
onof
l
ocalent r
epreneur sinvar iousbusinessact i
vi
ti
es
Nov
els,
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 Maki
nguseofl ocalr
esour
ceswhi chwouldotherwi
sebei dleort
houghttobea
wast
e
 Pr
omotionoftechnol
ogythroughtheentr
epreneurscreati
vit
yandinnovat
ion
 Pr
omotionofentrepr
eneur
ialcul
turebyusingsuccessfulentr
epr
eneursasrole
model
s

21.
Expl
ainf
ivef
act
orst
hatmayhi
nderent
repr
eneur
shi
pdev
elopmenti
nKeny
a
 Cult
uralpracti
cest hatdoesnotal l
owi ndivi
dual
stobesuccessf
ul
 Teachersdonotencour aget heirstudenttobeentrepr
eneur
s
 Lackofrelevantbusi nesscoursesi nschool s
 Lackofrolemodel si nthesoci ety
 Peergroupinfluencet hewaypeopl eact
 Lackoffinancialandbusi nessconsul tancyinst
it
uti
on
 HIV/AIDSisbecomi ngade- mot i
vatingfactor
 Genderdiscri
mi nati
oni nmanyAf ri
cant radi
ti
ons

22.
Expl
ainanyf
iver
easonswhyanewbusi
nessmayf
ail

 Wr ongchoi ceofbusi ness:Evaluateyourbusi nessinter msofacceptabili

ty,
finance,ti
me, mar kete. t.
c.
 Avai l
abil
it
yoff inancesandi nadequat efinances:Businesst aketi
mebef ore
theycangener atepr of i
ts.I
tistheni mpor t
anttohaveenoughmoney
 Fai l
uretounder standt hemar ket:Youneedt ounder standthemar kett
rendse.g.
ar eaproductseasonal ,tar
getconsumer s,competit
orse. t.
c.
 Poorpr ici
ng:Nott ool owast or eali
zelossesandnott oohighf ort
hetarget
consumer s
 Compet i
tion:Alwayst rytostayaheadofyourcompet itorsbydoingthenor mal
thingsinadi fferentandappeal ingwaye. g.packaging
 Ignoringconsumer sneeds:al waysst r
ivetosatisfyyourcust omers
 Poorl ocation
 Poorpl anning
 Ineffecti
veorpoormar keti
ng
 Poort imemanagement
 Poorr ecor dkeepi ng
 Poormanagementoff i
nances
 Poorpubl icrelations
 Lackofcr eati
vityandi nnovation

23. Expl
ainanyf
ivef
act
ort
obeconsi
der
edwheneval
uat
ingabusi
nessi
deas

 Prof
ittobeearnedinordertocoveralloperati
onalexpenses
 Technologyt
obeusedi npr oduci
ngthepr oduct
 Avai
labil
it
yofmarket/
demandwhi chshouldbeadequat e
 Governmentpoli
cy/
legalrequir
ementwhi chshouldbef avor
abl
e

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 Channelofdistr
ibutiont
oensur ethepr oduct
sisavail
abl
eint
hemar ket
 Compet i
ti
onwhi chshouldbef ai
r
 Capit
alwhichshoul dbeadequat et ostar
t
 I
nput/suppli
eswhi chshouldbemi nimal
 Paybackperiodwhi chshouldber easonablei
nrel
ationtoamount
sinvested

24. Explainfi
vewaysinwhichthegov
ernmentofKeny
acanpr omot
eent
repr
eneur
ial
developmenti
nhereconomy
. (10mar
ks)

 i
mpr
ovementofi
nfr
ast
ruct
uralf
aci
l
iti
esi
ntheeconomy

 Beef
ingupsecur
it
yint
heeconomy

 Enact
ingl
awst
hatf
avor
s/pr
omot
esr
egi
str
ati
onofbusi
nesses

 Fi
xi
ngpr
icecont
rol
sforbasi
cnecessi
ti
es

 Of
fer
ingi
ncent
ivest
obusi
nessesi
.e.t
axhol
i
days

 Ext
endi
ngcr
edi
tfaci
l
iti
est
olocalent
repr
eneur
ial
/gi
vi
ngsof
tloans

 Pr
otect
ingl
ocali
ndust
ri
esf
rom excessi
vei
mpor
tat
ionoff
orei
gngoodsand

 ser
vices/
for
eignt
rader
s

 Cr
eat
ingf
aircompet
it
ivebusi
nessenvi
ronment

25. Expl
ain5f
act
orst
hathi
nderent
repr
eneur
ialact
ivi
ti
es
Unfavorablegover nmentpol icieswhi chtendtodi scourageest abli
shmentofbusi nesses
e.g.hightaxation
Poori nf
rastructurewhichdi scour agesmoot hrunningofbusi nesses
Lackofadequat eknowl edgeandski ll
st ostar
tandmanagebusi nesses
Lackofmar ketwhi chdiscour agesest abli
shmentofnewbusi nesses/cont i
nuat i
onofthe
existi
ngones
Inadequater esourcestost art/r unbusinessessmoot hly
Stif
fcompet iti
onwi thcheapandhi gherqualit
yimpor tsmakingdemandf orlocalgoodsto
declinehencecl osur eoflocal
businesses
Polit
icali
nstabilit
ycreatingapoorenvi ronmentf orbusinessest ost ar
t/thri
ve
Unfavorablecul t
ure-someval uesandnor msdi scourageest ablishmentofbusi nesses/
consumpt i
on

26.Expl
ain5ci
rcumst
ancesunderwhi
chanent
repr
eneurwoul
dpr
epar
eabusi
nesspl
an
Whenattract
ingf
unding-i
tisusedt oattr
actfundi
ngfr
om potenti
ali
nvestor
sandlender
s
asi
sjusti
fi
esthevi
abi
li
tyofthebusi ness.
Whenonewant stoavoidmistake-itmini
mizestheimpactofdisr
upti
onofbusiness
act
ivi
ti
esasaresul
tofunforeseencircumstancesb7yanti
cipat
ingchal
lengesandpossi
ble

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setbacks.
Whenonewant sabl uepr
intforstart
ingandoper ati
ngabusiness.
-Itguidestheowner
/management ‘
sdeci si
onandact i
onsondayt odaybusiness.
Whenat oolforevaluati
onisr equi
red-I ti
susedt oeval
uatebusi
nessper for
mancetosee
i
fit
‘sachievingthesetobj ecti
ves
Whent heowner swant st
odet erminet hefi
nancesrequi
redtostartthebusiness
Wheni denti
fyingcust omers.-Itenablesonetotargetappropr
iat
ecust omerstobuythe
product

27.Expl
ain5chal
lengest
hatmaybeexper
iencedbyanewent
repr
eneuri
nKeny
a
˗Inadequatecapital/f
undst osustain/expand.
˗Inadequateskill
s/poormanagement .
˗Unfri
endly/poorgover nmentpol i
ciese.g.hightaxeswhichar eunfavourabl
et othegrowt
h
/expansionofthebusiness.
˗Poorinfrastr
ucture/poorroadswhi chmayhi nderaccesstomar ketsorinputs.
˗Inappropri
atetechnol
ogywhi chmayr esult
sinlessquant i
tyorpoorqual i
typroducts.
˗Unfaircompet i
ti
on.
˗Inadequatemanpowert orunthebusi nesseffecti
vel
y/laboursupply.
˗Poorpr i
cingwhichmi ghtmaket hepr oducttobet ooexpensivetoattractbuyerortoo
cheapt osustainthebusiness.

*
LATESTHI
GHSCHOOLNOTES*
*
0714497530*(
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Mat
hsf
orm 1-
4
Engl
ishf
orm 1-
4
ki
swahi
lif
orm 1-
4
chemi
str
yfor
m 1-
-4
Bi
ologyf
orm 1-
4
Phy
sicsf
orm 1-
-4
Agr
icul
tur
efor
m 1-
-4

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Busi
nessf
orm 1-
-4
Cr
efor
m 1-
-4
Hi
stor
yfor
m 1-
-4
Comput
erf
orm 1-
-4
Geogr
aphyf
orm 1-
-4
Homesci
encef
1--
4
I
.R.
Est
udi
esf
1-4
Fr
enchnot
es
Set
booksgui
des
Pr
imar
yschoolnot
es
KCSETopi
cal
s
*
CPA*t
uit
ioni
ng
Updat
ed*
CPA,
CIFAATD*KASNEBnot
es
Updat
ed*
CPS,
CICT,
ATD*KASNEBNot
es
Updat
ed*
ICT,
I
T,ACCA,
CFA*not
es
For
ext
radi
nggui
dance
*
CCTV*i
nst
all
ati
on&Net
wor
kingser
vices
Onl
ineser
vices
*
_Al
lthemat
eri
alsar
einsof
tcopyandwe'
l
lupdat
ed

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OFFI
CE.
1.Hi
ghl
ight4qual
it
iesofanef
fect
iveof
fi
cemanager
 Shoul
dbeabletoleadhis/
herstaff
 Shoul
dbeabletomakewi sedecisi
ons
 Shoul
dhaveastrongcharacter
 Shoul
dbeadiscipl
inedperson
 Shoul
dbepleasantandpolit
e

2.St
ate4adv
ant
agesofl
andscapeof
fi
cel
ayoutt
oanor
gani
zat
ion
 Givegoodi mpressionofanor ganizati
on
 Createsanat t
ract
ive/condusivewor ki
ngenvironment
 Supervi
si onofwor ker siseasysincet hemanagermaybeatar ai
sedground.
 Lowconst ruct
ioncost
 Easylocat i
onofwor kers
 Staffmovementi smi nimum hencesavi ngti
me
 Lowmai ntenancecost
 Savingoff loorspace
 Promot est eamwor kamongempl oyees
 Discouragesabsent eeism ofemployees
 Promot esshar i
ngofof fi
ceequipmentt herebyreduci
ngt
hecostofbuyi
ng
mor e

3.Name4f
eat
uresofal
andscapeof
fi
cel
ayout
 Moder nfaci
li
ti
es
 I
nternaldecorat
ions/fl
owerlylook
 Si
ngleof f
icemayser ve/housemanyworker
s
 Entert
ainmentfacil
it
iese.gvideoshows
 Coversal ar
gespace

4.St
atet
heusesoft
hef
oll
owi
ngof
fi
cemachi
nes
o Guill
otine-tr
immi ngdocument sintor
equiredshapesandsizes
o Foldi
ngmachi ne-f ol
dinglett
ersandseali
ngenvelopes
o Frankingmachi ne-printi
ngpostageimpressionsonenvel
opes
o Papershr edder–f ordestroyi
ngunwanteddocument s
o Composi te-tof ol
ddocument splacethem inenvol
opesandsealt
hem

5.Li
st4r
easonswhymostf
ir
msst
il
lpr
efercl
osedof
fi
cel
ayoutt
oopenone
 Therei
slessnoise
 I
tpresentsaconduciveworkingenvi
ronment
 I
tconfersstat
ust otopl
evelemployees
 Therei
spr i
vacyforconf
identi
aldi
scussi
ons

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els,
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 Provi
dessecurit
yf orval
uabl
eandsensi
ti
vei
temssuchasdocumentsandcash
 Aircondi
ti
oning,l
ighti
ngandheat
ingint
heroom maybecont
rol
ledaccor
ding
totheneedsoftheoccupant.
 I
tiseasiert
omai ntain

6.Mostorgani
sat
ionst
odayhav
ecomeupwi
thcust
omercar
edesks.Out
li
ne4
f
uncti
onsthatt
heyplay
 Advisemanagementonissuesandcompl ai
nts
 Att
endtoanyenquiry
 Buil
dconfi
denceincli
ent
s(eff
ici
entservi
ce)
 Att
endtocompl ai
nts
 Ensuret
hatcli
entsareat
tendedtofastenough

St
ate4way
sinwhi
chi
tcomput
eri
zat
ioncont
ri
but
est
othesuccessofanor
gani
zat
ion.
 I
thasenabl eglobali
zation
 I
thasmadecommuni cationfast
er.
 I
thasreducedpaperwor k.
 Hasassistedindatast orageandi nventor
ycont
rol
.
 I
tfaci
l
itatesmar ketresear chact
ivi
ties
 Makesiteasyt heperformanceofanycompl exmathemat
icpr
ocedur
e
 Ai
dinsecur i
tycontrols

7.Hi
ghl
ight4adv
ant
agesofusi
ngaf
ranki
ngmachi
nei
nanor
gani
sat
ion
 Canbeusedt opri
ntmessages
 Canprintaccurat
epostageamounts
 Lessenstheft/
misuseofloosest
ampsbyempl
oyees
 Minimizeslossofstamps
 Producesneatwor k

8.Stat
e4reasonswhythecomputeri
sincreasingl
ybei
ngusedf
orr
epr
oduci
ng
document
sinanoff
iceinst
eadofatypewrit
er
 Producesneatdocument s
 Fasterinproduci
ngdocument s
 Easiertomanipulatedocument si
ncomputers
 Requireslessphysi
caldocument s
 Comput ersareeffi
cientorfast
eri
nproduci
ngdocument
s

9.Outl
ine4meri
tsofr
epl
aci
ngmanual
syst
emswi
thaut
omat
edonesi
ncar
ryi
ngout
of
fi
ceacti
vi
ti
es
 Theyar elaboursavi
ng
 Faster(
savest i
me)
 Theyar eaccurate
 Presentableoutput
 Controlfr
aud

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 Uni
for
mit
yofout
put

10.
State4measur
est
hatcanbet
akenbyanof
fi
cet
osaf
eguar
dthepr
oper
tyoft
he
organi
zat
ion
 Keepr ecor dst ot heasset smovement s
 Takingi nsurancecover
 Enhanci ngsecur ityagainstt
hef tegbyempl oyi
ngwatchmen,inst
all
i
ngsecur
it
y
l
ightsandf enci ng
 Ensuringphysi calcar ebypeopl eusi ngthepr oper
ty
 Properr epairsser vi
cingandmai ntenanceofequi pments
 Keepingr ecordsofmovementandusageofeachoft hepropert
y.
 I
ssuedi recti
vesont hei
ruse
 Keeppr operrecor dsont heasset sacquir ed
 Control/expendi tureonassets
 Formul atessyst emsandpol i
ciesr egardingassetsauthor
izat
ion

11.
State4waysinwhi
chof
fi
ceequi
pmentmayf
aci
li
tat
etheoper
ati
onsi
nan
organi
zat
ion
 Isl
aboursaving
 Reducesf i
rm’slabourr
elatedpr
oblemse.gunrest
 Workpr oducedisofhighquali
tyandpresent
able
 Speedsupr ateofproducti
on
 Improveslevelofaccuracy
 Lowerscostofpr oducti
on

12.
Stat
e4circumst
ancesunderwhi
chanor
gani
zat
ionmaychooset
osel
loutanof
fi
ce
machine
 Whenitisexpensi
vetomai ntai
n
 Whenitcannotadopttoanewt echnology/
changesi
nthebusi
ness
 Whenithasbecomeabsol ete/outdat
ed
 I
fitl
ackssparepart
sforrepai r
 I
fitcannotcopewit
hincr
easedwor kload

13.
Highl
ight4di
sadv
ant
agesofusi
ngmoder
ntechnol
ogyi
npr
oduct
ion
 Mayleadtolossofj obs
 Expensi
vetoaf f
ordandmai nt
ain
 Poll
uti
onoftheenvi r
onment
 Harmfulef
fects/accident
s

14.
Stat
e4char
act
eri
sti
csofagoodf
il
ingsy
stem
 Easyt
oaccess
 Shoul
dbecompact
-notoccupytoomuchspace
 Shoul
dbesafe
 Shoul
dbeeconomi
cal-
notexpensi
vet
ostartandmai
ntenance
Nov
els,
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 Shoul
dbeexpandable
 Shoul
dbesi
mpl etounderst
andandoperat
e
 Shoul
dbeel
asti
c-flexi
blei
.ecancat
erf
orfutur
echangesorexpansi
on.
 Shoul
dbeeconomicalonspace

15.
Stat
e4moder
ntr
endsi
nof
fi
cemanagementi
nKeny
a
 Useofcomputersinmostor gani
zati
ons
 Mostorgani
zati
onshaveintroducedcustomercaredesks
 Useofmobilephones/
cellphones
 Mostoffi
ceshaverel
ocatedf r
om urbansetti
ngtosub-
urbanar
east
oavoi
d
tr
aff
icj
ams
 Mostoffi
ceshaveadoptedlandscapeofficel
ayout
s

16.
Namef
ourequi
pmentt
hatcanbeav
ail
abl
eint
heaccount
sof
fi
ce

 Addingmachine
 Cashregist
er
 Cal
culat
ingmachine
 Accounti
ngmachine
 Computer
 Moneycount i
ngmachi
ne.

17. I
dent
if
yfourqual
it
iesofaper
sonalsecr
etar
y
 l
oyal
 abl
etowor kforlonghours
 qual
if
iedinsecretari
alduti
es
 goodplanner
 abl
etokeepsecr ets
 goodcommuni cationskil
l
s
 goodgrooming

18. Gi
vef
ourchar
act
eri
sti
csofagoodmemo
 Properl
yaddressed
 shouldbedated
 shouldbeprécised
 Mustcontai
nt hemainobj
ect
ive/
massage
 Besigned

19. Out
li
nef
ourdut
iesofacompanysecr
etar
y
 Provi
delegaladvice
 Writi
ngminutesofboardmeet i
ngs
 Maintai
nsconfidenti
alr
ecordsoftheorgani
zation
 Maintai
nsandupdat esorgani
zati
onslegalr
egister
s
 Ensurescompliancebytheorgani
zati
onwi t
hlegisl
ati
onorl
aw

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 Pr
eparat
ionofcont
ract
s,leasesandotherlegaldocument
s
 I
nter
pret
slawandlegalnoti
cestothedirector
s

20.. Mwitahasi
ntroducedcomput
ersi
nhi
sbusi
nessoper
ati
ons,
out
li
nef
ourbenef
it
s
thathemayexper
ience
 Fast/qui
ck
 Storelar
geamountofinfor
mation/
dat
a
 Largeoutput
 Qualit
youtput/
standar
doutput
 Saveonl abour

21. Hi ghli
ghtf
ourway
sinwhi
chanopenof
fi
cel
ay-
outcancont
ri
but
etoef
fi
ciencyi
n
off
iceoperat
ions
 Easytosupervi
se
 Cheaperastherear
enopar
ti
ons

 Movement
sar
efast
er

 Shar
ingofi
deas

 Wor
kisdonei
nuni
ty

 Shar
ingofequi
pment

 Of
fi
cecanbeputt
ovar
ioususes(
e.g.conf
erence)

22.Stat
efourr
easonswhyanor
gani
zat
ionshoul
dkeepst
ockr
ecor
dsf
ori
tsof
fi
ce
stati
onery

 Toensureeffici
entuse/preventmi suse
 Maintai
ntheirsafecustody
 Foraccounti
ngpur poses/storekeepingrecords
 Tomoni t
ortheirmovementwi thi
nt heor
ganizati
on
 Ensureadequatesupplyatal lt
imes

23.
Stat
efourl
imi
tat
ionsofadopt
ionofnewt
echnol
ogybyabusi
ness
 Leadstounemployment
 Hinder
screati
vit
yandinnovativeness
 Manymachi nesaresubjectt
of requentbr
eakdowns
 Expensi
vetoacquire,
instal
landmai ntai
n

24.Stat
e4measuresthatcanbet
akenbyanor
gani
zat
iont
oensur
esecur
it
yof
i
nfor
mationanddocumentsint
heoff
ice

 f
il
ingi
nfor
mat
ioni
nti
me
 ensur
ingonl
yaut
hor
izedper
sonshandl
ethef
il
es

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 ensur
ingpr
operr
ecor
dingoff
il
esl
eavi
ngher
egi
str
y
 t
rai
ningst
affonhowt
ohandl
efi
l
es
 usi
ngsecur
efi
l
es
 conduci
ngr
egul
arphysi
calchecki
ngoff
il
esi
nther
egi
str
y/ot
herof
fi
ces
25.St
ate4t
rendsi
nof
fi
cemanagement
.
Useofcomput er
st oper form dif
ferenttasks.
Customercaretodealwi thcustomeri ssues.
Useofclosedcircui
ttelevisi
on( CCTV)f orsurveil
lance.
HIV/AI
DSawar enessint heof fi
ce.
Str
essmanagementt or educest r
essatwor kplace.
Useofbetteroff
icelayoute. g.adoptionofopenpl anof
fices.
Si
gningofperfor
mancecont ractbywor kers.
Team-buil
dingamongdi ffer
entcategor i
esofof fi
cestaff
.

Paper2
17.
Discuss5fact
orst
obeconsi
der
edwhenencl
osi
ngameansofr
epr
oduci
ng
documentsinanoff
ice
 Numberofcopiesneeded
 Quali
tyrequi
red
 Avail
abi
lit
yofpersonnel
 Costofproducti
on
 Avail
abi
lit
yofothermeansofr
epr
oducingdocument
s
 Nature/
typeofdocumenttobepr
oduced
 Desir
edimpression

18.
Expl
ain5f
act
orst
oconsi
derwhenchoosi
ngaf
il
li
ngsy
stem t
oadopt
 Economi calinspace/ compact ness/ shoul doccupysmal lspacet
ocreateroom
forofficeact i
viti
es
 Lessexpensi vet oinstal
l
/mai ntain/operate
 Secur i
ty/safetytoavoi dloss/protectdocument sf rom t
he
theft/
damage/ misplacement
 Accessi bletof acil
it
atefastretrievalofdocument s
 Simplicity–shoul dbeeasyt ooper ate/understandt oavoi
dconfusi
on/del
ayin
retr
ievinginfor mation
 Adapt able/fl
exibletosuitchangi ngneedsofanor gani
zati
on
 Suitabili
tyoft heneedsoft heor ganizati
on
 Crossr eferencingt ofacil
it
ateeasyl ocationofr el
ateddocuments

19.
Discussfi
veconsi
der
ati
onabusi
nessper
sonmayt
akei
ntoaccountwhenpr
epar
ing
abusinesspl
an
 Obj
ect
ivesofvent
uri
ngint
ot hebusiness
 Ski
l
lst
ost ar
tandrunthebusiness
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 Commi tmenttot hebusi ness

 Int
erestwhet herthei ntendedbusinesswi lli
nteresttheenter
prenuerornot
 Availabil
ityofmar ketwher eexi
stsamar ketgap
 Technol ogyrequiredtor unthebusiness/ appropri
ate/costoftechnol
ogy
 Availabil
ityofr
awmat eri
al–quali
tyofr awmat eri
al
 Gover nmentpolicy
 Amountofcapi tal
 Levelofcompet i
tion
 Dif
ficulti
esinmar keting
 Secur it
y
 Possi bil
i
tyofexpansi on

20.
Explai
nfi
ver
easonswhymoder
ngover
nmentof
fi
ceshav
eadopt
edt
heopenof
fi
ce
lay
outasopposedt
oencl
osedpl
anl
ayout
 Bidt ocur bcor r
upt i
on/ menace/ problem
 Exposedpubl icof fi
cer sar ediscour agedf r
om soli
cit
ingforbr i
besf r
om cl i
ent
s
 Limi t
edmachi nesl iket elephones, pr i
nterscanbesgher dbyt hegover nment
staff.
thisreducest hecostofoper at i
on
 Createst eam wor kspi ritbecausewor kersconsulteachot herregular
lyand
i
nf ormal l
y.i
tincreasespr oductivit
yi ntheof fi
ce
 Iti
seasyt osuper vi
seempl oyeesf rom onel ocati
onasopposedt o
managementbywal kingar oundhencer educingti
mewast age
 Itreduces/ eli
mi natesabsent ism ofempl oyeesfr
om theirplaceofwor k.
it
i
ncr easesmanhouratwor kplace
 Itreducesbur eaucracy/ red–t apewhendeal i
ngwithseniorstaff.some
emer gingi ssuesar esol vedbyt opmanagementf astastheyar ise
 Discour agesabsent eei sm byempl oyees
 Staffmovementi smi nimi zedthussavi ngt i
meusedi npassi nginformat i
on.
 Officeequi pment sandmachi ner yar enotmi susedduet oclosesuper visi
onof
wor kers
 Const ructi
oncosti sl owbecausepar titi
onsar ef
ew

21.
Expl
ainf
iver
easonswhyef
fect
ivef
il
li
ngi
simpor
tanti
nanof
fi
ce
 Tidinessinthevoi cei smai ntai
nedasdocument sar eneatlyarr
anged
 Quackaccesst oinformat i
on/ retri
evedofinformat i
onismadeeasysi nce
document sareser i
alized/ coded
 Saf etyofinf
ormat ionf r
om damagedbybadweat her/fi
re/
pest s
 Savi ngonstoragespace/ mi ni
mi zespaceasdocument sarekeptcompact l
y
 Promptdeci sionmaki ngpossi ble/ savesti
mei nmaki ngdeci si
onsas
i
nf ormat i
onencour aget ranspar ency/accountabil
it
yasondocument sar eeasi
l
y
mi splacedasmovementofdocumentcaneasi lybemoni tored
 Secur it
yforinformat i
onagai nstl ossduet otheft/mispl
acement
 Saf eguardconf i
dentialinformat i
onasdocument sarekeptawayf rom
unaut hori
sedaccess
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22.
Ident
if
yandexpl
ainf
ivechar
act
eri
sti
csofanef
fi
cientof
fi
cel
ayout
 Wor kfl
ow-anef fi
cientlayoutisonewher ethereissmoothworkflowor
;
 Movement-onewher et hereisleaststaf
fmovement
 Consultat
ion-onewher ethereiseasyconsult
ation
 Fl
oorspace–onewher ef l
oorspaceshoul dnotrestr
ictmovement
 Furnit
ure–arrangementoff urni
tureshouldal
loweasysupervi
sion
 Shouldnotrestr
ictnaturalli
ght
 Shouldenhancephysi calappearance

23.
Discuss5f
act
orsanor
gani
zat
ionwi
llconsi
derwhensel
ect
inganof
fi
cel
ayout
 Costoflayout-shoul dbecheaper/ economi calt
oconst ruction
 Governmentpol i
cy-shouldconsidergovernmentpol i
cyont helayouttoadopt
orelsewillgoagainstthelaw
 Numberofwor kers-i
fthenumberi slargeopenl ayoutischoosenandi fthe
numberi ssmallclosedlayouti
schosen
 Spaceofl andavailabl
e-ifsmallopenlayout ni
schoseni flargeclosedlayouti
s
chosen
 Needf orsupervi
sion-ifworker
sneedcl osesupervi
sionanopenl ayoutois
chosen
 Flow/speedofwor k-whereworkneedt obedonef asteranopenl ayouti
s
chosen
 Flexi
bil
it
yi nappearance-whenthesi t
ti
ngpl anneedst obechangedeasi l
ythen
openlayoutischosen

24.
Out
li
ne5adv
ant
agesofapaper
ler
ssof
fi
ce
 Theoffi
ceiskeptneat
 Timesavingisdocumentretri
val
 Envi
ronmentall
yfr
iendl
y/conservetr
ees
 Economisesspace
 Enhancesgoodimageoft hebusiness

Expl
ainany5usesofacomput
eri
nanof
fi
ce.

Inventorycont
rol–i tcanaccur atel
ykeepar ecor
dofst ockathand, r
eceipt
sandi
ssue.

Itcanbeusedt opr ocessaccount i
ngtransit
ionsandpr epareledgeraccount
sand
payrol
ls.

Dat astorage–itcanst oreinformationrelat
iontotheBusi ness.

Usedi ncommuni cat
ionser vi
cessuchasi nt
ernet,
intr
anetandwebsi te.

Usedf orenter
tainmentsuchasmusi c,videoandgames.

Productpr omoti
on/mar ket i
ngproductionthroughinternet,
website.

Tocar ryoutmarketr esearchusinginternet

St
ate4r
easonswhyshoppi
ngmal
lshav
ebecomepopul
ari
nKenv
a

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
Offerextensi
vepar ki
ngf aci
l
iti
es

Customer sdoalltheirshoppingi
nonebuildi
nghencesavestime

Shoppingmai l
ssaveonspacewhi chreducesrent
sandr at
es

Usuall
yopenf orlonghour s

Theyacceptcr editcards

Theyof f
erawi devar i
etyofgoods

Theyareconveni enttoshopi nsi
ncet
heypr ovi
deser
vicessuchasr
est
aur
ant
s,post
of
fi
ces,readingroomset c.

Areusual l
ysi
tuatedi ntowncentr
es

Expl
ainf
iver
easonswhyabusi
nessmayr
epl
aceanol
dmachi
newi
thanewone

Adaptabil
it
y-whent hemachi neisnotabl etocopewi thnewchanges/obsol ete

Lackofspar eparts-whichmakesi tdiffi
cul
tt oser
vice/repair

Wheni thasaffectedtheoffi
ce-mor al
enegat i
vel
ytoi mproveperformance

Whent hecompl ement ar
yresourcese.g.powerar elacki
ngyetthenewonecanuset he
newresources

Whent hemanpoweravai l
ableforit
soper at
ionisnol ongeravai
lable

Wheni tsnolongersecuretost or
ethemachi neinthepremiseswhi chmakesi tendanger
ed

Wheni tsuff
ersfrom occassionalbreakdownhencemaki ngitexpensivetooperate

25.
Descr
ibefi
vequal
it
iest
hatamanagerisexpect
edt
ohav
einor
dert
opr
omot
e
teamworkamongmembersofthestaf
f
 Shoul
dbeabletosetclearandachi evabl
egoal sfort
hemember sofst
aff
.
 Shoul
dbesociablewi
thst affmember s
 Shoul
dhaveadequateknowl edgeaboutt hejobhesuper vi
ses
 Heshoul
dbeabl etodelegatedutiestostaffmember s
 Shoul
dbeconcernedaboutst affwelfar
e
 Shoul
dal
waysl i
stent
ost affmember sinmat tersdeci
sionmaking.

26.
Explai
n4factor
samanagerwoul
dconsi
derbef
orebuy
ingof
fi
ceequi
pmentf
ort
he
organi
zat
ion
 Cost -itshouldnotbetooexpensivetoacquireandmai ntain
 Adapt abi
li
ty–itshouldbeabletocopewi ththefutur
echangesand
devel opment
 Dur abili
ty–itbeabl et
olastf
orlong.
 Effectonst affmorale–itshouldnotdiscouragestaf
ffrom working
 Avai l
abi l
i
tyofmanpower–Theper sonneltorunandoper atetheequipment
shoul dbeavai l
abl
e.
 Avai l
abi l
i
tyoftheroom –theroom forkeepingtheequipmentshoul dbe
available.
 Secur ityoftheequipment–onehast oconsi derwhethertheavai
lable
resour cesareadequatetoofferenoughsecur i
tyfort
heequi pmentornot

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27.
Expl
ainf
iveway
sinwhi
chaf
ir
m cani
mpr
ovet
hepr
oduct
ivi
tyofi
tshumanr
esour
ce
 Trai
ningwor kers
 Remuner at
ingwor kingaccor di
ngtot heirjobs/
tasks-payi
ngthem wel
l
 Provi
dinggoodwor kingcondi t
ions
 All
owingwor kerstot akepar ti
ndecisionmaki ng
 Promotinggoodwor kingrelati
onshipbet weenwor ker
sandthemanagement
 Givi
ngpr omotionstodeser vingworker s
 Provi
dingwor kingtoolsandequi pment

28.
Expl
ainf
ivebenef
it
sthataccr
uet
oabusi
nesst
hatconduct
str
adet
hroughE-
commerce/Websi
te

 Faci
l
itat
esaccesst
oal
argemar
ket

 Lar
geandsmal lbusi
nessescant
ransactbusi
nesst
hrought
hei
nter
netwi
thout
di
scri
minat
ion

 Af
astwayofdoi
ngbusi
ness

 Reducespaperwor
ksi
ncemanydeal
i
ngsar
eonl
i
ne

 Savesont
hecostofsendi
ng,
recei
vi
ngandst
ori
ngi
nfor
mat
ion

 Onecanaccessi
mport
antbusinessi
nfor
mat
ionwhi
chwoul
dbeusedt
o
enhancer
unni
ngoft
hebusiness.

29Expl
ainf
iveaccept
abl
ecodesofbehav
iori
nanof
fi
ce (
10mar
ks)

 Cour
tesy;oneshoul
dbepol
i
teandpl
easant

 Respect
-oneshowr
egar
dtoot
her
s.

 Punct
uali
ty-oneshoul
dhavet
heabi
l
ityt
okeept
imei
nat
tendi
ngdut
iesand
appoi
ntments.

 Loyal
ty-bei
ngcommi
tt
edanddevot
edt
ohi
sorherwor
k.

 Accur
acy-byper
for
mingdut
ieswi
thexcel
l
ence,
preci
sionandcor
rect
ness.

 Honest
y–bei
ngsi
ncer
ebyt
ell
i
ngt
het
rut
h.

 Cooperat
ion – oneshoul
d wor
kwi
thot
herpeopl
ewi
thoutmal
i
ce,f
ri
cti
onor
sel
fi
shness.

 I
nit
iat
ive–oneshoul
dbeabl
etomakepr
operdeci
sionsandbecr
eat
ivei
nideas.

 Judgment–beabl
etoconsi
deral
lpossi
bil
i
tiesandcomeupwi
thr
ightdeci
sions.

 Di
plomacy–oneshoul
dbeabl
etoconvi
nceot
herpeopl
etact
ful
l
y.

Expl
ainf
ivef
act
orst
oconsi
derwhenbuy
ingof
fi
ceequi
pment
.
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Costofbuyi ng/mai nt
ainingtheequi pment:Ifcosti
shi ghconsiderthemost
affordable.
Qual i
tyofequi pment–Consi derthelonglasting/bestqual i
tyappropri
atef orit
s
use.
Dur abil
i
tyoft heequi pment–shoul dchooset hemostdur abl
e.
Manpower/Per sonnelt ooper atetheequipment–chooseequi pmentt hatthe
personnelcanoper ate/lookf or/train
personnel .
Avai l
abil
ityofspar eparts–chooseanequi pmentwhosespar epart
sar ereadily
available/af f
or dable.
Space/r oom f ort heequipment–chooseanequi pmentthatcanf ittheavailable
rooms/avai lther ooms.
Comf or
t/secur ityofwor kers–chooseequi pmentt hatarenotinjuri
oust owor kers
health/comf ort.
Effectonmor aleofwor ker s–chooseequi pmenti naccor dancewi t
hgover nment
policy.

HOMETRADE.
1.St
ate4f
eat
uresofsuper
mar
ket
s
 Requirelargecapi t
altoinvest
 Stocksvar i
etyofgoods
 Offersselfservicefacil
it
ies
 Goodshavepr icetags
 Nocr edi
tf aci
li
tiesareoffered
 Saleatcompar ati
velylowpr i
ces
 Pricesofgoodsar efixed

2.St
ate4benef
it
sthatconsumer
sgetf
rom smal
l-
scal
eret
ail
ers
 Freeadvice
 Widevariet
yofgoods
 Steadysupplyofgoods
 Creditf
acil
i
ties
 Bringsgoodsneartotheconsumer
s
 Theybreakbulkforconsumers

3.St
ate4usesofpr
ofor
mai
nvoi
cef
orasel
lerofgoods
 I
nformsthebuyeronwhathewoul dpayifhedeci
dest
obuythegoods
 Apoli
tewayofaskingforpaymentbefor
ethegoodsar
edel
iver
ed
 Sentwhenthesell
erdoesnotwantcredi
t
 Canbeusedtoserveasaquot at
ion

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 I
ssuedt
oanagentwhosel
l
sgoodsonbehal
foft
hesel
l
er

4.I
dent
if
ythedocumentsthateachoft
hef
oll
owi
ngdescr
ipt
ionsr
efert
o:
Descr
ipt
ion Document

i
)Usedtoinf
orm buyert
hatsel
l
erhas Acknowl
edgementnot
e
r
eceivedt
heorder

i
) Usedtoaskaboutt
heavai
l
abi
l
ityof Let
terofi
nqui
ry
goods

i
i
)Usedt oorgani
zefort
ranspor
tati
on Consi
gnmentnot
e
ofgoodsbetweensel
lerandbuyer

i
i
i)Usedt
oshowgoodssol
doncr
edi
t I
nvoi
ce

5.Out
li
ne4benef
it
sofusi
ngM-
pesaasameansofpay
ment
 Easytouseasagent sprovideassist
ance
 Fastasitisconveyedthroughsms
 Conveni
entasi tcanbesentandr ecei
vedfr
om anylocation
 Accessi
bleasagent sarelocat
edi nmostur
banandr uralar
eas
 Confi
dentialasPINisused
 Affor
dableassendingandr ecei
vingmoneyisr
elat
ivelycheaper
.

6.Outl
ine4benef
it
sther
etai
ler
smayder
ivef
rom t
hepr
esenceofwhol
esal
ersi
nan
ar
ea
 Provideawi devarietyofgoods.
 Providegoodsatconveni entpri
ces.
 Providetransportfacil
it
iestoretai
ler
s.
 Adviceretail
ersonavai l
ablegoodsandpr i
ces.
 Offercreditfaci
l
iti
est oretai
ler
s.
 Breakthebul ktoenabl ethem buyinsui
tabl
equant
it
ies.

7.St
ate4di
sadv
ant
agesofusi
ngchequeasameansofpay
ment
 Requir
espayeetotraveltothebank.
 Chequesmaybedi shonoured
 Bankchargesarepaid
 Canonlybeissuedbyt heholder
 Notreadi
l
yacceptablebyever ybody.
 Canonlybeissuedbyanaccounthol der

8.St
ate4ci
rcumst
ancesunderwhi
chanov
erchar
gemayoccuri
nani
nvoi
ce
 Ari
thmet
icer
roregaddit
ionalmi
stake.
 Useofhi
gherpri
cesthanthecor
rectpri
ce

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 I
nclusi
onofi
temsinthei
nvoicethatwer
enotdel
i
ver
ed.
 Notall
owi
ngadeserveddi
scount
 I
nclusi
onoft
ranspor
tordel
iver
ycharges

9.Ment
ion4t
ypesofl
argescal
eret
ail
ers
 Depart
ment alst
ore
 Hypermarkets
 Supermarkets
 Chainstor
es

10.
Stat
e4usesofani
nvoi
cef
orasel
lerofgoods
 I
tusedforfut
urereference
 Actsasanevidenceoft r
ansacti
on
 I
tisusedtorequestthebuyertomakeapayment
.
 Canbeusedassecur itytoborr
owmoneyfort
hebusi
ness

11.
Out
li
ne4ci
rcumst
ancesunderwhi
chacr
edi
tnot
emaybei
ssued
 Tocorr
ectanover charge
 Whengoodsar ereturned
 Whenempt ycasespr evi
ousl
yincl
udedint
hei
nvoi
cesar
eret
urned
 Wherethesel
lerforgottodeductdi
scount

Underwhatci
rcumst
ancesi
sachequeappr
opr
iat
easameansofpay
ment
.(
4mar
ks)
 Wher
etheamountofmoneyi nvol
vedislarge.
 Wher
ethepol
icyofthebusinessdemandsso
 Wher
eachequeistheonlymeansavai l
able.
 Wher
ether
eisneedt oavoi
dr i
skassoci
atedwithot
hermeansofpayment
.

12.
List4t
ypesofr
etai
ler
sthatmai
nlysel
lgoodsandser
vicesoncashbasi
s
 Supermarkets
 Automaticvendi
ngmachi
nes
 Mailordersst
ores
 hawkers

13.
Giv
e4benef
it
sthatconsumer
sgetf
rom smal
lscal
eret
ail
ers
 Varietyofgoodsforchoi
ce.
 Adviceonuseofpr oduct
s
 Aftersaleservi
ces
 Goodsar eavail
edatconveni
entpl
aces/
poi
nts/
shops
 Creditfaci
li
ti
es

14.
Outl
ine4fact
orst
hatmaydi
scour
ageconsumer
sfr
om buy
inggoodsf
rom t
he
supermar
ket
 Fi
xedpr
ices

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 I
mpulsebuying
 Donotoff
ert r
anspor
tforconsumer
 Nocredi
tfacil
it
ies
15.
Out
li
ne4f
eat
uresofahy
per
mar
ket
 Dealindif
ferentlines/vari
etyofgoods
 Goodaccessr oads
 Locatedintheout skir
tsoft own
 Usuall
ylocatedoutoft owns
 Openupt olatehour sonal ldays
 Provi
depar ki
ngspacef orcars
 Operateunderoner oofthoughownedbydi
ff
erentpeopl
e.

16.
Highl
ight4t
ypesofsmal
lscal
eret
ail
erswi
thshop
 Si
ngleshops
 Ti
edshops
 Ki
osks
 Marketstal
ls
 Canteens
 Mobileshops.

17.
Stat
e4diff
erencesbet
weenHi
repur
chaseandCredi
tbuy
ing
Hi
rePur
chase Cr
edi
tbuyi
ng

i
)Thehi
repur
chasepr
icei
shi
gher Credi
tpri
cei
susual
l
ythesameast
he
t
hancashpri
ce cashpri
ce

i
i)
Thebuyerdoesnotbecomethe i
i
)Thebuyerbecomestheownerof
owneroft
heproductonpossessi
on t
heproductontaki
ngpossessi
on

i
i
i)Thebuyercannotr
esel
lthepr
oduct i
i
i)Thebuyercanr
esel
lthepr
oduct

i
v)Ther
eisdownpayment i
v)Ther
eisnodownpayment

v)
Ther
eisanagr
eementtohir
ewith v)
Therei
snoopt
ionofr
etur
ningt
he
anopt
iont
obuyorr
etur
nt hegood goods

vi
)Goodscanber epossessedi
ncase vi
)Goodscannotber
epossessed
ofdefaul
tinpayment

18.
Stat
e4di
sadv
ant
agesofHi
repur
chaset
othesel
ler
 Goodsbecomemor eexpensi
ve
 Temptat
ionstobuymorehencefi
nanci
alpr
oblems
 Goodsbelongtothesel
l
erunti
ll
asti
nst
all
mentispaid.
 Li
mitedt
ypeofgoodscanbeboughtonhirepurchase.

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els,
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19.
Highl
ight4adv
ant
agesofHi
repur
chaset
othesel
ler
 I
ncreasei
nsalesvolume.
 Hi
gherprofi
tmar gi
nsarereali
zed.
 Goodscanber epossessedifthebuyerdefaul
ts.
 Ownershi
pofthegoodsi sretainedunt
ilt
hepaymenti
scompl
eted.

20.
Stat
e4f
act
orst
hatmaydi
scour
aget
heuseofcr
edi
tcar
dsast
ermsofpay
ment
 Theholdersarechargedhighinter
estrat
esbyt
hecar
dcompany.
 Theirusei
slimitedtospecifi
careas
 Onlyfewbusinessesacceptthecar ds
 Theyarepronetoabuset hroughfraud.
 Thebuyermaybet emptedtooverspend.
 Acquisi
ti
onprocessislong.

21.
Highl
ightf
eat
uresofmai
lor
derst
ores
 Goodsaresoldthroughpostof fi
ce.
 Customersdonotvi si
ttheselli
ngpremi
ses.
 Goodsaredispatchedmost lyonCWOorCOD
 Theymayhavel argewar ehouses
 Theyadvert
isethroughmeanssuchaspr intmedi
a,el
ect
roni
cmedi
a,j
our
nal
s

22.
Stat
efourf
eat
uresofchai
nst
ores
 Pur chasesarecentr
ali
zed
 Salesar edecentr
ali
zed
 Pricesarestandardforal
lthei
rproductsinal
lthei
rbranches
 Allbranchesdealinthesamet ypeofproduct
s
 Theyar eunifor
mi noutwar
dappear anceandinter
iorl
ayout

23.
Stat
efourchar
act
eri
sti
csofdepar
tment
alst
ores
 Theyoff
erawi devarietyofgoodsatrelati
vel
ylowerpr
ices
 Theyareatt
racti
veandconveni entt
oshopi n.
 Theyareusuall
ysituatedintowncentres.
 Theymaypr ovi
deser vi
cessuchasr estaur
ants,r
eadi
ngroomsandpostoff
ice.
 Eachdepart
menti smanagedbyadepar t
mentalmanagerdeal
i
ngi
nadi f
fer
ent
l
ineofgoods

PAPER2.

24.
Expl
ainfi
vereasonsf
orthecont
inueduseofordi
narychequesi
nset
tl
ingdebt
s
despi
teadvancement
sinmodernf or
m ofmoneytransf
er
 Evi
denceofpayment-
Thecount
erf
oilpr
ovi
desprooft
hatpayment
shavebeenmade
 Conveni
enceofpayment
-Thedr
awerdoesnotneedtotr
aveltomakepayment
 Secure-I
fiti
sst
oleni
tcanbetr
acedtotheper
sonwhocashedit.
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 I
tcanbenegot i
able.-I
tcanbetransf
erredtothethi
rdpart
ytosettl
etransactions.
 Canbediscounted-Canbecashedbef orematuri
tyunderspeci
alci
rcumst ances
 Easy/
li
ghttocarry.-I
tcanbeeasil
yusedt ocarr
ylar
gesumsofmoney.

25.
Enumeratefi
vedi
ffer
encesbet
weenachai
nstor
eandadepar
tment
alst
ore
Depar
tment
alst
ore Chai
nstor
e

i
)Eachdepar
tmentset
sit
sownpr
ice i
)Pr
icesar
euni
for
minal
lthe
br
anches

i
i
)St
ocksav
ari
etyofgoods i
i
)St
ocksl
i
mit
edt
ypeofgoods

i
i
i)Al
ldepar
tment
soper
ateunderone i
i
i)Hav
ebr
anchesal
lov
ert
hecount
ry
r
oof

i
v)Eachdepar
tmentdeal
swi
tha i
v)Al
lbr
anchessel
lsi
mil
argoods
di
ffer
entl
ineofgoods

v
)Pur
chasesar
edecent
ral
i
zed v
)Pur
chasesar
ecent
ral
i
zed

vi
)Goodsr
emaininthei
rdepar
tment
s vi
)Goodsmaybemovedtoother
eveni
fdemandislow br
ancheswher
ethei
rdemandishigh

26.
Out
li
nef
ivedi
sadv
ant
agesofHi
repur
chasear
rangementt
oabuy
er
 Buyerhasnoowner shipofgoodsunt i
lpaymentiscomplet
ed
 Hir
epurchaseisexpensiveast hebuyerpaysmoreduet ohighint
erestchar
ged.
 I
tem/propert
ycanber epossessedwhent hebuyerdefaul
tsinpaying
i
nstal
ment s.
 Buyercannotresel
l.
/tr
ansferi
tem toathir
dpartybecauseitdoesnotbelongto
hi
m.
 Buyerl
osesallinst
almentspaidiftheit
em isr
epossessed.
 Hir
epurchasemayencour agei mpulsebuyi
ng/buyermaybet empt edtobuy
moregoodst hatshecantaffordtopay.

27.
Expl
ainf
ivebenef
it
sof
fer
edbyt
hewhol
esal
erst
oret
ail
ers
 Theystockawi devarietyofgoodsi nlar
gequant it
iesreli
evi
ngt heret
ail
erf
rom
buyi
ngfrom differentpr oducers
 Theyavailgoodsatpl acesconveni enttoretai
lers
 Theybreakbul kforthebenef i
tofr et
ail
ers
 Theyoffertr
anspor tfacilit
iestoretail
ers
 Theyofferadvisoryser vicestoretail
ersregardingmar kettr
ends
 Theyoffercreditfaci
li
tiest oretai
lers
 Theyengagei npr oductpr omot i
ononbehal fofr etai
ler
s
 Theysort,bl
end, packandbr andgoodssavi ngr etail
ersfrom havi
ngtodoit.

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28.
Expl
ainf
iveci
rcumst
ancesunderwhi
chasel
lermaysendadebi
tnot
etoabuy
er
 Whengoodsar eundercharged
 Whenomi ssionsaremadei ntheinvoice
 Whenpackingcasesandmanyempt ycontainer
swhichwerenotretur
nedare
chargedbythebuyer
 Whent her
ear ecal
culati
oner ror
sr esult
inginlowerfi
gur
esintheinvoi
ce
 Whenmor egoodst hanor deredaredel i
veredandkeptbythebuyer
 Whenmor eexpensivegoodst hanor deredaresentandthebuyeri
schargedfor
cheapergoods.

29.
Expl
ainanyf
ivemeansofpay
ment
sav
ail
abl
etobusi
nessesi
nKeny
a
 Cash–t hisistheuseofcoi nsandnot esofdif
ferentdenomi nationsfor
payment s
 Cheque–i sawr it
tenor derbyanaccounthol derwi t
hthebank( drawer)tothe
bankt opayondemandaspeci fi
edamountofmoneyt ot henamedper sonor
tothebear er
 Bil
lofexchange–i tisanuncomdi t
ionalorderinwr i
ti
ngaddr essedbyone
personanot her,r
equiri
ngt hepersont owhom iti saddressedt opayondemand
thesum ofmoneyont hebi l
ltoanamedper sonorbear er.
 Promi ssorynote-i
sadocumentwher ebyoneper sonpromi sest opaya
specifiedsum ofmoneyatacer t
ainst at
eddate.
 Moneyor der-moneyor dersaresoldbypostof ficeforthepur poseofr emitti
ng
money,
 Postalor der-t
heseareal sosoldbyt hepostofficeindenomi nat i
onseg5.10,
20,50100, 200forthepur posesofr emitt
ingmoney.Forexampl eaper son
wishingt osendksh230wi l
lbuy200, 20and10
 Banker scheque(bankover draft
)–t hisisachequedr awnbyt hebank.Onecan
sendi ttoapayeet ocashi t.

30.
Expl
ainf
ivedi
sadv
ant
agesf
ort
heuseofcr
edi
tcar
dsasmeansofpay
ment
s
 Thecar dholderischar gedhi ghi nt
erestratebyt hecardcompany
 Int
erestisalsochargedwhent hereisdelayinpayment
 Iti
spr onetoabuset hr oughf raud
 Ami nimum ageof18year si srequiredforonet obecomeahol der
 Theiruseislimitedtospeci fi
careasorur banar eas
 Facescompet i
ti
onfrom ot hermeansofpaymentsuchascheques, money
ordersandpost alorder s
 Onlyfewbusi nessesacceptt hecards
 Longpr oceduresarei nvolvedi ngettingthecards
 Holdermaybet empt edt oover spend
 Thecar dscanonl ybeaf f
or dedbypeopl ewi t
hhi ghincome

31.
Expl
ainf
iveci
rcumst
anceswher
eaf
tersal
esser
vicesar
eneeded
 Wher
e goods sol
d ar
e of t
echni
cal nat
ure and may need
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advice/demonst r
ati
ononuse.
 Wher eexper tisei sr equiredi ninst al
lati
onandt het raderhast echnical
knowl edge/ abili
ty/backup.
 Wher et hepr oducti snewi nt hemar ketandt hetraderrequiresfeedbackon
thepr oduct ’
sper formance.
 Wher ecompet i
ti
oni sst i
ffandt het r
aderusesaf t
ersal esser vi
cesasa
productpr omot i
onalt ooltowi nmor ecust omersandi ncreasesales.
 Wher eexper t
isei srequiredi nmai ntenance/ ser
vice/repairsandthet r
aderis
abletopr ovi
det heser vice.
 Wher ei ti sthepol icyoft hebusi nessasawayofi mprovingcust omer
relat
ionsandi mpr ovebusi nessi mage.
 Wher eiti sthegover nmentpol icy,t
het raderwil
lhavenoopt ion.
 Wher et he nat ure oft he pr oducti s such thatisr equir
es speciali
zed
transpor tandt het r
adercanpr ovideit.

32.Expl
ainf
ivedocument
sthatar
esentbyt
hesel
lert
othebuy
erinhomet
rade.
(
10marks)
 Bookl etwhi chbr iefl
ydescr ibest hegoodsasel l
erst ocks.I ti
snor mal l
ysentwhen
abuyersendsagener all
et terofi nqui ry.Itcontai nst ermsofsal es, aftersal e
ser vicesof f
eredbyt hesel ler,deliverser vi
cestobeused, packingandpost ing
expensesi ncur r
ed.
 Quot ation-I tissentt opr ospect ivebuyerspeci fyingt hecondi ti
onsunder
whi ch t hesel l
eriswi ll
ingt osuppl ygoodsandser vices.
 Pr i
cel i
st-Thi sissimpl yal istofi temssol dbythet ract ortogetherwi tht heir
prices.
 Acknowl edgementnot e-Documentsentt oapr ospect ivebuyert oi nform hi m/ her
thatt heor derhasbeenr ecei vedandi tisbeingact edupon.
 Packi ngnot e- Documentshowi ngt hei temspackedi napar ti
cularcont ai neri n
whi chgoodsar ebei ngdel ivered.I tmaycont ainquant itiesofgoodspacked, t
he
meansofdel i
veryandquant i
ti
esofgoodspacked. Ithel pst hebuyert omakea
spotcheckont hegoodswhent heyar rive.
 Advi cenot e-Documentsentbyt hesel lertothebuyeraf tergoodshavebeen
dispat chedt oinf orm him/ hert hatgoodshavebeendi spat ched.Sentt hr ought he
fast estmeansavai l
abl esoast or eachbef or
egoods.I ti susedt oinf ormt hebuyer
thatt hegoodsar eont hewaysot hati ncaseofanydel ayindel i
veryt hebuyercan
makei nqui r
iesandal sot oal ertthebuyersot hatt henecessar yar rangementcan
bemadef orpayment swhengoodsar rive.
 Invoi ce- Documentsentbyt hesel lert ot hebuyerdemandi ngpaymentf or
goodsdel ivered.Ther earet wot ypes; cashinvoi cewhi chi ssent when
paymenti sexpect edimmedi atelyaf terdel i
veryandcr edi t i
nvoi cewhi chi s
i
ssuedwhenabuyeri sal l
owedt opayata l ater dat e.Ani nvoiceshowst he
det ailsofgoodssol dandi ti salsoused assour cedocumenti nr ecor ding
transact i
onsi nt hebooksofaccount s.
 Pr o-for mai nvoice-Sentbyt hesel lertot hebuyerbef oregoodsar edel ivered
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showi
nghowt
hei
nvoi
cewoul
dlookl
i
kei
fthebuyerbuyst
hegoods.

 Stat
ementofaccount -Statementthatissentbythesel
l
ert
obuyergi
vinga
summar yofallt
ransacti
onst hathastakenplacebet
weent
hesell
erandbuyerover
aspecif
iedperi
odoft ime.
 Creditnot
e-Usedt ocorr ectanovercharge.
 Debitnote–Usedt ocorrectanunder charge.

33. Expl
ainbenef
it
sthatmayaccr
uet
oacommuni
tyi
nvol
vedi
nhomet
rade

Varietyofgoods/ser vices-enhanceconsumerchoi ce

Promot espeaceandhar mony-amongt radingpar t
nersastheyi
nter
act

Sour ceofgover nmentr evenue-f r
om licences, f
ee,taxesongoodsetc.

Empl oyment-t hoseengagedi ntradingact i
vit
ies

Impr ovedinfr
ast r
ucture-tof aci
li
tatemovementofpeopl eandgoods

Uti
li
zat i
onofl ocall
yavai l
ableresources-t hatwoul dhaveother
wiseremai
nedi
dle

Sale/di sposalofsur plus-mi ni
mizingwast age

Impr ovedtechnology- duetoexchangeofi deasl eadingtoi
mprovedqual
it
y

34.Expl
ainf
iveadv
ant
agesofbuy
inggoodsonhi
repur
chaset
erms. (
10mar
ks)

Abuyeri sabletotakepossessi onofgoodsaf terthepaymentofthefi
rstinstal
l
ment .

Instal
l
ment sarespreadoverar easonableper
iodoft i
mehencedoesnotcausef i
nanci
al
st
raintothebuyer.

Aftersaleservi
ceareof feredtobuyers.

Nosecur it
yisrequiredapar tf
rom theit
em boughthencer educi
ngthecostofcr edit
.

Thebuyerusest hegoodsbef orecleari
ngdebt.

Paymenti spredeterminedhencet hebuyercanbudgethi sincome.

Buyerscanaf for
dt obuyexpensi veit
ems, whi
cht heycannotaff
ordotherwise.

Canaf for
dt obuyavar ietyofgoodsatt hesamet i
me.

Itisakindofsavingi nform ofgoods.

35.Expl
aint
hedi
ff
erencesbet
weent
iedshopsandsi
ngl
eshops
Tiedshop Singleshop
1.Thepr opri
etori
snor mallyt hemanufact
urer1.Ownerbyindivi
dual
s
2.Itsell
sproductsfrom asi nglemanufact
ur er
‘s. 2.Itsell
sproduct‘
sfr
om dif
fer
ent
manuf actur
er.
3.Theshopsusual lyhavet hesomedesi gns. 3.Thedesignoftheshopisaccordi
ng
totheowner ‘
s
wish
4.Pricesofgood‘saredet ermi nedbyt
he 4.Pri
cesofgoodsar edet
erminedby
dif
ferent
manuf actur
er.manuf act
uresorshopowner s.
5.Theoper atorar
eusual l
yt rainedbyt
he 5.Theoperator‘
sarenott
rai
nedbyt he
manuf actur
es.
Nov
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6.Dealershi
pcanbewi t
hdrawnbyt
he 6.Theownerisatl
i
ber
tyt
ost
ockwhat
ever
heorshe
manuf actur
eri
ftheoperat
orst
ockcompet
ingwishest
ostock.
products.

36.Expl
ainf
iveci
rcumst
anceunderwhi
chapr
o-f
ormai
nvoi
cemaybeused.

Whenther
eisneedt oaskf orpaymentbefor
ethegoodsaredeli
vered.

Whenthesell
erdoesnotwantt ogivecredi
t.

Itmaybeusedbyimpor t
erstogetcustomsclearancebef
orethegoodsaredeli
ver
ed.

Whenonewant stogivei
ttoanagentwhosel lsgoodsonbehalf
ofthesell
er.

Whenonewant stoshowt hebuyerwhathe/shewouldpayift
heorderisappr
oved.

Whereonewantstousei ttoserveasaquotati
on.

FORMSOFBUSI
NESSUNI
TS.
Li
stanyf
ourcl
ausesofmemor
andum ofassoci
ati
onf
orj
ointst
ockcompani
es
 Namecl ause
 Objectiveclause
 Li
abilit
ycl ause
 Capitalclause
 Declarationclause

Ment
ionf
ourci
rcumst
ancesunderwhi
chst
ocki
nabusi
nessmaychange
 Sal
eofstock
 Pur
chaseofstock
 Ret
urnofstockbycustomers(r
eturni
nwar
ds)
 Ret
urnofstocktosuppli
ers(r
eturnout
war
ds)

Hi
ghl
ightf
ourf
act
orst
hatmayl
eadt
obusi
nessmer
ger
s
 Toel
iminatewast
efulcompetit
ion
 Toexpandthecapi
talbase
 Toenableafi
rmtodiversif
y
 Toenableafi
rmtopoolt hei
rhumanresources
 Toestabl
ishmonopolytocontr
olthemarket.

St
atef
ourbenef
it
sthatani
nvest
orwoul
dder
ivef
rom ast
ockexchangemar
ket
 Pr
ovidereadymarketforbuyers
 I
nvestor
scangeti nf
ormationonthecurr
entpri
cesofthet
ypesofshar
es
 Pr
ovidesinvest
orswithreadymarkett
osellt
heirshar
es
Nov
els,
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 Provi
desecur
it
ytot hei
nvest
ors,
sincesecur
it
iesquot
edar
egover
nedbyt
hest
ock
exchanger
egulat
ion.

Gi
vef
ourr
easonswhyt
hegov
ernmentmayf
indi
tnecessar
ytost
artapubl
iccor
por
ati
on
 Toprovideessentialservi
ces
 Togener ater
evenuef orotheroperati
ons
 Tocreateempl oyment
 Toi
nvesti nventur
est hatrequi
relargecapi
taloutl
ay
 Toi
nvesti nventur
est hatareunattract
ivet
oprivat
esect
orsduet
olowpr
ofi
t
 Toredistri
but
eweal th

Hi
ghl
ightfourreasonst
oaccountf
ort
her
api
dgr
owt
hinmember
shi
pint
hesav
ingsand
cr
edi
tco-operati
vesoci
eti
esi
nKenya
 Easytosavewi ththem duet ocheckof fsystem
 Easytogetl oans/ fewpr ocedur es
 Chargesl owi nterestratesont heirl
oans
 Provi
desdi fferenttypesofl oansegemer gency,r
efi
nanci
ng,
nor
mal
 Loansdonotr equiresecuriti
es
 Improvest andar dsofl i
vingthroughdivi
dends
 Flexi
bleloanr epaymentper iod
 Loansf oradeadmemberi swritt
enoff

Out
li
nef
ourf
eat
uresoft
radecr
edi
tasasour
ceoff
inance
 I
tisashor tterm cr
editfaci
li
ty
 Pract
icedbyt rader
sonl y
 Buyer
st akeowner shipofgoodsimmediat
ely
 Credi
tattractsnointeresti
fpai
dwit
hinagreedper
iod.

Out
li
nef
ourbenef
it
sofpr
ivat
izat
iont
okeny
aseconomy
 Reducegovernmentexpendi t
ure
 Leadstoeffi
ciencyinmanagement
 Attr
act
sf or
eigninvestors
 Promotesinventi
onandi nnovation
 Reducespolit
icalint
erfer
enceint heeconomy
 Helpsthegovernmentt orai
ser evenue
 Leadstoproductionofhighqual i
tygoodsandser
vices
 Leadstoproductionofavar i
etyofgoodsandservi
ces.

Out
li
net
her
olesofst
ockexchangemar
keti
nthedev
elopmentoft
heKeny
aneconomy
 Facil
it
atesthebuyingofshares
 Facil
it
atesthesell
ingofshares
 Safeguardstheinvestor
sint
erests
 Provi
desusef uli
nformati
ontoinvestor
s
 Helpstocreateempl oymentforexamplebr
oker
s
Nov
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 Thegovernmentgetsrevenueinform oftaxes
 Avail
savari
etyofsecuri
ties/
sharetoinvestor
s
 Promotescul
tur
eofsavi ng
 Actsasanindi
catorofeconomi cperf
ormanceoft
hecount
ry

St
atef
ourr
easonswhypubl
icl
imi
tedcompani
esar
evi
ewedasl
egalper
sons
 Theycanent
erintocontractsundert
heirownnames
 Theycanownoracquirepr oper
tyunderthei
rownnames
 Theycanbesuedbyot herparti
esunderthei
rownnames
 Theycansueotherpart
iesundertheirownnames.

St
atef
ourf
eat
uresofpubl
iccor
por
ati
ons
 Est
ablishedbyanactofpar l
iament
 Ownedandr unbyt hegovernment
 I
sasepar at eent i
tyfr
om theirowner
 Havelimitedl i
abil
ity
 For
medt opr ovideessenti
algoodsandservi
ces
 I
nit
ialcapitalprovidedbythegovernment

Out
li
nef
ourchar
act
eri
sti
csofpr
efer
enceshar
es
 Haveaf i
xedrat
eofdi vi
dends
 Holder
sar epai
ddi vi
dendsbef
oreordi
nar
yshar
ehol
der
s
 Havenovot i
ngrights
 Canber edeemableorirr
edeemabl
e
 Canbecumul at
iveornon-cumulat
ive

Li
stfourt ypesofpar t
nershi
ps.

Ordinarypartnership/Generalpar
tner
shi
p.

Limitedpartnership.

Tempor arypartnership.

Permanentpar t
nership

St
atef
ourchar
act
eri
sti
csofagener
alpar
tner
 I
sar ealpartner
 Mayt akepartintherunningthebusi
ness
 Enti
tl
edt otheshareofpr of
it
 Contri
butescapitali
ntothebusiness
 Mustbe18year sandabove
 Bearsunlimitedl
iabi
li
tytowardsdebtsofpar
tner
shi
p

St
atef
ourr
easonst
hatwoul
dmaket
rader
stof
orm acar
tel
 Toavoidunheal
thycompetit
ion
 Todetermi
near easonabl
epricef
ort
hepr
oduct

Nov
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 Toi
ncreaset hei
rbargaini
ngpower
 Tohel
pt hem getfavorabl
epoli
ciesf
ort
hei
rint
erest
 Toenabl
et hem sharethemarket

Out
li
nef
ourpr
inci
plesofcooper
ati
ves
 Openandvoluntarymember ship
 Democrati
cadmi nist
rati
on
 Di
videndpayment
 Li
mi t
edint
erestonshar ecapi
tal
 Promoti
onofco- operat
iveeducati
on
 Co-oper
ati
onwi t
hot herco-
operati
vesatal
ll
evel
s

Namef
ourdocument
srequi
redf
ort
her
egi
str
ati
onofal
imi
tedl
iabi
li
tycompany
 Memor andum ofassociation
 Art
iclesofassociati
on
 Li
stofdi rect
orswhoagr eest oserveasdir
ector
s
 St
atementofshar ecapital
 Declarati
onthatregi
strationrequi
rementshavebeencompl
i
edwi
th

Stat
ef ourbenef
it
sthatmayaccr
uet
oacompanyt
hati
squot
edi
nNai
robisecur
it
ies
exchange
 Thecompanyisabletorai
ser evenue
 Thr
oughquoti
ngthecompany’ simageimpr oves
 Thecompanygetstimel
y,accurateandrel
iablei
nvest
menti
nfor
mat
ion
 Hel
psthecompanyt oknowt hevalueofit
sshares
 Thecompanyatt
ractsquali
fi
edmanpower

Expl
ainf
ivebenef
it
sofSACCOst
othemember
s (
10mar
ks)
 Member sareabletosavet hr
oughcheckoffsyst
em
 Borr
owingofloansofl owinter
est
 Off
ersdiff
erenttypesofloansegeducati
onloans,devel
opment
,emergency
 Educat
iont omember soninvestment
 Member ssavingsearndivi
dendsannual
lyfr
om sharingofpr
ofi
ts
 Member sloanupondeathar ewrit
tenof
fhencear el
ieft
othebenef
ici
ari
es

Expl
ainanyf
ivedocument
soft
hememor
andum ofassoci
ati
onofacompany
 Namecl ause:showst henameoft heCompanyendi ngwi t
hthewordlimit
ed(lt
d)
 Obj ectscl ause:setoutact ivit
iesthecompanyengagesi n
 Situationcl ause:i ndicatesther egister
edheadof f
iceforeasycommuni cation
 Capi talclause:di sclosest heamountofcapi t
alwhi chthebusinesscanrai
seand
speci fythet ypeofshar esandval uesofeachshar e.
 Liabilit
ycl ause:Di sclosesorwar nst hepubl
i
ct hattheliabi
li
ti
esofthemember sare
l
imi ted
 Decl arationcl ause:Adecl ar ati
onsi gnedbythepromot ersindi
cati
ngthattheywisht
o
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f
ormt
hecompanyandwi
l
lbuyshar
esi
nthepr
oposedf
ir
m

Expl
ainfi
vedif
fer
encesbet
weenapubl
icl
imi
tedcompanyandaco-
oper
ati
vesoci
ety
Publ
icli
mitedCompany Co-oper
ati
ve

Gov
ernedbyt
hecompani
esAct Gov
ernedbyco-
oper
ati
veact

For
medbyami
nimum of7member
s For
medbyami
nimum of10member
s

Ai
medatget
ti
ngpr
ofi
t Ai
medatser
vingmember
s

Member
shav
enot
hingi
ncommon Member
shav
eacommonbond

Nodi
rectgov
ernmentcont
rol Contr
oll
edbythegov
ernmentthr
ough
themini
str
yofco-
operat
ives

Descr
ibef
ivef
eat
uresofpar
tner
shi
ps (
10mar
ks)
 Unli
mi tedliabi l
ity
o Thel iabilityofthepar tnersisnotl i
mitedt otheamountofcapi t
alinvestedbut
extendst ot heirpersonalpr opert
ies.
 Decisionmaki ng
o I npar tner shipdecisionmaki ngisshar edbyal lpart
ners
 Sharingpr ofits/losses
o Shar edaccor dingtot heter msoft hepar tner
shi pdeedorpartnershipact
 Mutualagency
o Eachpar t nerisanagentoft hepartnershipoft hebusi
nessfort hepurposeof
theoper at i
on
 Li
mit edlif
e
o Par tner shi phasshor tlif
et hatcanbet erminatedbyeitherdeath,insani
ty
bankr upt cyorwi thdrawalofapar tner
 Possibili
tyofdi sagreement s
o Par tner shi pisusuallypronet odi
sagr eement samongt hepartners
FORMOREHI GHSCHOOLRESOURCESCONTACT MRI SABOKE0714497530
Expl
ainf
iveemer
gingt
rendsi
ntheowner
shi
pandmanagementofvar
iousbusi
nessuni
ts
(10mar
ks)
 Privati
zation–changi ngowner shi
pofast ateownedf i
rmtoapublicownedfirm
throughsal eofshares/assets
 Hol di
ngcompani es–af i
rm acqui
rescont rol
li
ngint
eresti
nanothercompanyby
buyingover51%ofshar es
 Takeover /Absorpti
on–Af i
rm buysallassets/shar
esofanotherfrom whi
cht hen
ceasest oexi st
 Mer ger/amal gamation–f i
rmscombi ne/jointoform anewfi
rmt hati
sbiggerthan
i
ndi vi
dualfirms
 Franchising–Af ir
m grantsanothertherighttopurchase/
manufacture/di
str
ibuteit
s
brandedpr oductsusi ngitsname.
Nov
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 Globali
zation–abusi nessoperatesineverypar toftheworldegcocacolacompany
 Nationali
zati
on–St atetakesoverabusi nesspr evi
ouslyownedbypr i
vate/publ
ic
 Cartel
s–Acar telisagr oupofrelatedcompani esthatagreet oworkt
ogetherinorder
tocontroloutput,pri
cesandmar ketsoftheirgoodsandser vices.
 Performancecont r
acts-Theyar esignedcontractsbyempl oyeesofstate
corporati
onsinanat t
emptt oi
mpr oveperf
ormance.

Expl
ainfiv
ediff
erencesbet
weenapubl
iccorpor
ati
onandapubli
cli
mit
edcompany
(10marks)
Publi
cCor por
ati
pn Publ
icl
imi
tedcompany

Est
abl
i
shedbyanActofpar
li
ament Est
abl
i
shedt
hroughcompanysact

I
niti
alcapi
talcomesf
rom t
he Ini
ti
alcapi
tali
scont
ri
but
edby
government sharehol
ders

Dir
ect
orsar
eappoi
ntedbyt
he Di
rect
orsar
eel
ect
edbyshar
ehol
der
s
gover
nment

Capi
tali
snotsub-
divi
dedi
ntoshar
es Capi
tali
ssubdi
vi
dedi
ntoshar
es

Notl
i
stedi
nthest
ockexchangemar
ket Li
stedi
nthest
ockexchangemar
ket

Out
li
nef
ivef
eat
uresofapar
ast
atal (
10mar
ks)
 Theyarecreatedbyanactofpar l
i
amentwhi chdefinesthei
rstr
uctur
eaimsand
obj
ecti
ves
 Theydonothaveshar ecapi t
al
 Mostofthem ar ewholl
yownedbyt hegovernmentorareundergovernmentcontrol
 Thestat
epr ovidesmostoft hefi
nancinginaddi
tiontothefeesomeoft hem char
ges
i
ntheprovisionofservi
ces.
 Theyareformedt oprovideessenti
algoods/ser
vicesatsubsidi
zedratet
othepublic.
Theyarenotpr ofi
tmotivat
ed
 Theyarerunbyt heboar dofdir
ectorsappoi
ntedbyt hegovernment

Expl
ainf
iveadv
ant
agesofPubl
icl
imi
tedcompany (
10mar
ks)
 Raisemorecapi t
al
o Canr ai
semor ecapitalbecauseofl
argemember shi
pthrought hesaleof
sharestot hepublic
 Haveli
mitedliabili
ty
o Havel i
mitedl i
abil
i
tieshencepersonalproper
tiesofshareholderscannotbe
soldtopaydebt softhecompany
 Freetr
ansferofshar es
o Sharesanddebent uresarefreel
ytr
ansferabl
ewhi chencouragesmanypeopl e
toinvestinthecompany.
Nov
els,
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 Hir
equal if
iedpersonnel
o Abl etoempl oyprofessionalsastheyhavemorecapital
 Thereiscont i
nuit
y
o Hasaper petualsuccessionhencedeath,bankrupt
cyorinsecurit
yofa
sharehol
derdoesnotl eadt odissol
uti
onofthecompany.
 Raisemor ecapital
Companiescanr ai
semor ecapi t
althroughthesaleofdebent
ures
 Shareholderscannotwithdrawf rom thecompanythusensuringmai nt
enanceofshar
e
capit
al
 Hasasepar at
elegalenti
tyfrom itsownershencecanownordi sposeproper
ty

St
atef
ourr
equi
rement
snecessar
ytosecur
eal
oanf
rom t
heSACCO’
s
 Onehastobeamember
 Guar
anteef
rom fell
owmember
s
 Memberssalary
 Memberssaving/shar
es

Gi
vef
ourhi
tchesf
acedbyt
hegov
ernmentofKeny
aint
heendeav
ort
opr
ivat
izest
atef
ir
ms
 l
ackofpol it
icalgoodwil
l
 corrupt
ion/ i
nsensit
ivepubl
icservi
ce
 fearoftransferr
ingownershi
pintoforei
gnl
ands
 Needt okeepi nvest
mentopportunit
ies

Outl
inef
ivebenef
it
sofbecomi
ngamemberofasav
ingsandcr
edi
tcooper
ati
vesoci
ety
(SACCO)
 Wil
lgetadvi ceanar eaoff i
nances
 Earninterestoninvestment
 Receiveloansathowi nter
estrates
 Receivecr edi
tfaci
li
ties
 Assistedint i
mesofpr oblems( benor
elent
)
 Sourceofsavi ngs

Inthespacesprovi
dedbel
ow, wri
tethet y
peofpartnerdescri
bedbyeachofthef
oll
owi
ng
statements( i
)Onewhoisbelow18y earsofage-Mi nor
(
ii
)Onewhohasunlimit
edl i
abil
it
y-General
(
ii
i)Onewhogetsi
nvolv
edi nthedailyr
unni
ngoft hebusi
ness-Acti
ve
(
iv)Onewhoall
owshis/hernamet obeusedint hebusi
ness-Norminal

Otwomai ntendst
ost
artabusiness.Gi
vefourr
easonswhyitisadv
isabl
eforhi
mtost
arta
ret
ailbusi
nessshopi
nsteadofbuyingshar
esinapubli
cli
mitedcompany
 Willhavefullcont
rolofthebusi
ness.
 Noshar i
ngofpr ofi
ts.
 Easydecisionmaki ng.
 Therearefewl egalfor
malit
ies.
Nov
els,
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es 0714497530 58
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ah@g
mai
l.
com

 Topsecrecy.
 Fl
exi
ble.

St
atef
ourci
rcumst
ancest
hatmayl
eadt
othedi
ssol
uti
onofapar
tner
shi
p
 I
fthepart
nersmut uall
yagr ee/decidetodissolvei
t
 I
ncaseofdeath/insanit
y/bankruptcyofapar tner
 I
ncasethecourtordersso
 I
ncasecompletionofhei ntendedpur pose
 I
fthebusi
nessengagesi nunlawf ulpract
ices
 I
ncaseofret
irement/ admissionofanewpar t
ner
 I
ncaseofcontinueddisagreement samongt hepart
ner
s

St
atef
ourf
eat
uresofi
ncor
por
atedbusi
nessuni
ts
 Legalprocedureisf ol
lowedduringformation
 Theyaresepar atelegalent
iti
esfrom theowner swhoformedi t
 Shareholdershavelimitedl
iabil
i
ty
 Theyhaveper petualsuccession
 Theycanr aiselar
geamountofcapi talhencelar
geinsize
 Fai
lureoft hebusinessdoesnotnecessar il
yrefr
eshthefail
ureofi
tsowner
s
Li
stf
ourdocument
sthatar
erequi
redbef
oreapubl
icl
imi
tedcompanyi
sal
lowedt
ooper
ate
i
nthecount
ry
 Memor andum ofAssoci
ati
on
 Arti
clesofassociati
on
 Declarati
on
 Certi
ficateofi
ncorporat
ion
 Prospectus
 Tradingcerti
fi
cate
Hi
ghl
ightf
ourway
sinwhi
cht
her
unni
ngofpubl
i
ccor
por
ati
onsi
sinef
fect
ivei
nthi
scount
ry
 Toomuchpoli
ti
cali
nterf
erence
 I
nadequat
ecapi
tal
 Poormanagementski
ll
s
 Embezzl
ementofpubli
cfunds

Youhavebeenchargedwit
hadut yofpr
epar
inganart
icl
eofAssoci
ati
onf
ory
ourcompany
;
st
atefouri
temsthatyouwil
lincl
udeiny
ourart
icl
eofAssoci
ati
on
 Theri
ghtsofeacht ypeofshareholderseg.Voti
ngright
s
 Methodsofcalli
ngmeet i
ngs
 Rul
esgoverningelecti
onsofoffi
cialsinthecompany
 Rul
esregardingpreparat
ionandaudi t
ingofaccount
s
 Powers,
dutiesandr i
ghtsofthedirect
ors

Honeyi
ntendst
ojoi
naconsumerCo-
oper
atesoci
ety
;Hi
ghl
ightf
ourbenef
it
sshewoul
dget
bybei
ngamemberofthesoci
ety
 Shewi
l
lear
npr
ofi
ts
Nov
els,
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ah@g
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l.
com

 Shewi
l
lgetbet
terqualitygoods
 Shewi
l
learni
nterestoncapi tali
nvest
ed
 Shewi
l
lenj
oycreditfacil
it
ies
 Shewi
l
lbuygoodsonf ai
rprices
 Shewi
l
lbeassuredofpr otectionagai
nstmal
pract
ice
St
atef
ourf
eat
uresofmul
ti
nat
ional
cor
por
ati
on
 Theytr
ainl
ocalpeoplesoast ocreatethenecessarymanpowerinthesubsi
diar
ies
 Theydominatei
nter
nationalmarketbecauseoft hei
rgr
eati
nfl
uences
 Theyassi
stdevel
opingcountri
esfinanciall
y
 Theyhomeaguesti nf
luenceininter
nationalt
rade
 Theyhavealotofcapit
al

St
atef
ourt
ypeofpar
tner
shi
pbusi
nesses
 Permanent
 Tempor ar
y/j
ointvent
ure
 Generalpart
nershi
p(unl
imi
ted)
 Li
mi t
edpar t
nership
 Tradi
ngpar tner
ships

Out
lineFourway
sinwhi
chasav
ingsandcr
edi
tco-
oper
ati
vesoci
etycanr
aisecapi
tal(
4
marks)
 Member shipcontr
ibut
ion
 Retainedpr ofi
t
 I
nvest ments
 Hirepurchase
 Creditpurchasing
 I
nterestf r
om credi
textended
 Borrowingl oans

Mutukuwi
shestoj
oinasav
ingsandcr
edi
tco-operat
ive(
Sacco)
.Out
li
nef
ourbenef
it
she
wi
ll
enjoybybei
ngamemberoftheco-
operat
ive. (4mks)

 Hewi
l
lear
ndi
vi
dendsonshar
essaved.

 Hewi
l
lobt
ainl
oansatl
owi
nter
estr
ates.

 Hewi
l
lbeencour
agedt
osavebyuseofcheckof
fsyst
em.

 Hewi
l
lobt
ainl
oanseasi
l
ysi
nceonl
yaf
ewf
ormal
i
tiesar
erequi
red.

 Hewi l
laccessdiff
erentcat
egor
iesofl
oanssuchasnor
mal
,emer
gency,medi
cal
devel
opmentetc.

 I
ncaseofdeat
h,hi
sbenef
ici
ari
eswi
l
lber
efundedhi
sshar
econt
ri
but
ion.

 I
ncaseofdeat
h,hi
sloanswi
l
lbewr
it
tenof
f/hi
sbenef
ici
ari
eswi
l
lnotbeaskedt
opay
hi
sloans.
Nov
els,
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ah@g
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com

 Hi
ssavi
ngswi
l
lbesaf
esi
ncet
heywi
l
lbei
nsur
ed.

 Hewi
l
lnotr
equi
reanysecur
it
ytoobt
ainl
oans.

 Hemayaccessbanki
ngf
aci
l
iti
est
hrought
heSACCOSf
rontof
fi
ceser
vices.

Descri
bethepr
ocedur
ethatashar
ehol
derwoul
dfol
lowi
nsel
li
ngshar
ethr
ought
hest
ock
exchange.
 Shar
eholderscont actabr oker
/agentsnot i
fyi
ngofint endedsale
 Shar
ehol derssur rendert heoriginalsharecerti
ficatetothebroker
/agent
 Shar
ehol dersi gntransferfor
m
 Shar
eholdergivethepr iceheexpect sf ort heshares
 Thebroker/agentsver if
iesowner shipoft heshar e/ownershi
pisveri
fi
ed
 Thebroker/
agentget sbuyerf ort heshar es
 Shar
esar esol d/paidfor

Expl
ainf
ivechal
lengesf
acedbyt
hesav
ingsandcr
edi
tcooper
ati
vesoci
eti
es (
10mar
ks)
 Compet ition-Ther ehadbeenst eadyr i
sei nthelevelofcompet itionfrom commer cial
bankswhi chhaveencr oachedintothet radit
ionalroleoft hesavi ngsandcr editco-
operatives.Manymi cro-fi
nanceinstit
ut i
onshaveal sojoinedthef iel
dt oprovidet he
sameser vicesast hoseofSACCO.
 Manager ialchallenges–Mostoft heco- operati
vesoci eti
eshaveexper ienced
manager i
alwhi chi nsomecaseshavenear l
ycausenearcol l
apseofsomeoft he
societies
 Delayedr emi t
tance–someempl oyershavebeendel ayi
ngr emi t
t i
ngmember s
deduct ionst othesoci ety.Thishasaf fectedthesoci ety’
scashf lowaf fecti
ngt he
societyl endingpr ograms. Member smayt akef orlongt ogett heloansasar esult
.
 HIV/ AIDS–Thescour gehasaf fectedmanymember s.Thesoci et yspendal otof
moneyi nassi sti
ngt hef amil
iesaffectedt hough,forexampl e,of fsett
ingorwr i
tingof f
ofloans.
 gover mentpol i
cy–Thegover nmentt hrought heMi nistr
yofco- oper ativeshasbeen
regulatingt hesect or.sometimest hegover nmentmaydesi gnsomepol ici
esthatwi l
l
affectthe member sorsocietyadverselye.g.1/ 3rule
 Polit
icali nterf
erence-especi all
ydur i
ngt heelectionsofof f
ici
als, somepol iti
cians
suppor tt hei
rfriendstobeel ected

TheKenyaGovernmenthasbeenpri
vati
zingi
tsparast
atalst
owoul
dbei
nvest
ors.Expl
ain
anyf
ivebenef
it
softhepriv
ati
zati
onprocesstothegovernment (
10mar
ks)
 Reductioni ngover nmentexpenditure–Governmentceasestohavetheobl
igati
onof
subsidi
zi nglossesmadebyt hecor por
ati
ons
 Incr
easedef fi
ciency–Thi sisbecausepri
vati
zedfir
msar esubj
ectt
ocompletion
 Avoidanceofpol it
icali
nter
ference–Nor oom forappoi
ntofunqual
if
iedmanagerson
poli
ti
calgr ounds
 Attr
actf orei
gni nvestor
s
Nov
els,
Ebooks,
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imar
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ah@g
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l.
com

 I
ncreasedforei
gnexchangeear ni
ngs
 Al
lowancef orwiderpart
ici
pat
ion
 I
ncreasedinnovati
veness–car r
youtresear
chi
ntobet
termet
hodsofpr
oduct
ion,
 or
ganizat
ionandmar ket
ing
Expl
ainf
ivedi
ff
erencesbet
weenpr
ivat
eli
mit
edcompani
esandpubl
icl
imi
tedcompani
es
 Atleasttwoandamaxi mum of50member sforapr i
vatecompanywhi leatleast
seven
 member sar er equiredf orapubl icl
imitedcompanyandnomaxi mum
 Pri
vatelimi tedcompani esar enotal lowedtoadver ti
sesal eofsharewher easpubl i
c
l
imitedcompani esar eallowed
 Unli
kepr ivatel i
mi tedcompani es,sharesofpubliclimit
edcompani esarequot edand
canbesol dt hrought hest ockexchange
 Wher easpubl i
cl i
mi tedcompani esmustwai tforacer t
if
icat eoft
radingtocommence,
pri
vatelimi tedcompani esar eallowedt ocommencebusi nessuponr eceiptof
cert
ifi
cateofi ncor poration
 Unli
kepubl icli
mi tedcompani eswhi chmusthaveatl easttwodi r
ectors,pri
vateli
mited
compani escanbeal lowedt ohaveonl yonedirector
 Wher east herei snoagel imitfordirector
sofapr ivateli
mi tedcompany, dir
ectorsof
publi
cl i
mi tedcompani esmustr eti
reat75year s
 Unli
kepr ivatel i
mi tedcompani es,publi
climit
edcompani esmustpubl i
shbooksof
accountsi nnewspaper s

Discussfiv
ebenef
it
sthatt
heKeny
angov
ernmentmaygetbypr
ivat
izi
ngast
ate
corporat
ion
 Torestructur
eitformor eeffi
ciencyandef fect
ivenesstogeneratemorepr of
its
 Toeliminateunnecessaryposi t
ionsandr educethest af
finordertoachieveeconomi
c
numberandqual i
ty
 Inordertoimproveonqual it
yandquant itytoincreasecustomer’schoi
cei nter
msof
g/savailabl
e
 Tomakei tmorecompet it
iveinserviceprovisi
onshencel oweri
ngofpr i
cesto
advantagecustomer s
 Toappoi ntandempl oydir
ectorswi t
houtpol i
ti
calinf
luencebutonmer it
 Toimpr oveonaccount abi
lit
yofdi r
ector
ssandt omanager s
 Tomakei tprof
itori
entedandhenceef f
iciency
 Toimpr oveoncust omerservice

Descr
ibef
iveci
rcumst
ancesunderwhi
chl
imi
tedl
iabi
li
tycompani
esmaybeliqui
dat
ed
(10mar
ks)
 Bankrupt
 Ult
ra-vires
 Amal gamat i
on
 Courtorder
 Decisionbyshareholder
s
 Compl etionofi
ntendedpur
pose/per
iod
Nov
els,
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Descr
ibef
ivedi
sti
nct
ionsbet
weenapubl
icl
tdcompanyandpubl
iccor
por
ati
on(
10mar
ks)
PUBLICLTDCO. PUBLI CCORPORATI ON
 Formedundercompani esAct FormedbyActofpar l
i
ament
 Managedbyboar dofDi rect
ors ManagedbyBoar dofdi rector
s
 Appointedbyshareholders. Appointedbythemi ni
ster/govt/
Par li
ament
 I
niti
alcapit
alcontr
ibut
edbyshar eholderInit
ialCapit
alcontr
ibutedbyt hegovt
 Formedwi t
hanai m ofmaki ngpr
ofit Formedwithanai m ofproviding
goods
 Profi
tsmadei ssharedamongshar eholders Profi
tsmadegoest othegover nment

Dist
inguishbetweenapubl
icl
imi
tedcompanyandapri
vat
eli
mit
edcompany
(10marks)
PUBLICLIMITEDCOMPANY PRIVATELI
MITEDCOMPANY
Formedbyami nimum of7andno Canbef or medbybet ween2- 50
setmaxi mum
Canst artbusinessonlyaf t
er Canst ar
tbusi nesssoonaf t
erreceivi
ng
gett
ingacer tifi
cateoftrading thecerti
ficateofincorporat i
on
[
Cer t
if
icateofr egi
strati
on
Canbemanagedbyoneort wo Managedbyaboar dofdi r ectors
dir
ector s
Advertisesandi nvi
testhepublicto Doesnotadver ti
seit
sshar est othe
subscribeforitsshares publi
c
Sharesar efreelytr
ansferablefr
om Rest ri
ctst r
ansferofshar es.
oneper sontoanot her Shareholderscanonl ysel ltheirshares
withconsentofot hershar eholders

Katwaai
samemberofBidi
isav
ingsandcr
edi
tCo-
oper
ati
ve.(
SACCO).Whatbenef
it
sdoes
sheenj
oyforbei
ngamemberoftheSACCO (
10marks)
 SACCOwi llenablehert osave
 Profi
tsmadebyt heSACCOwi llbedistr
ibutedt
oherandmember sasdi
vi
dends
 Katuracanobt ainaloanf rom theSACCOatl owinter
estrates
 IncaseKatwadi estheout standingloansar ewri
tt
enof f
 Katwacanobt ai
ndifferenttypes/categor i
esofl
oansf r
om theSACCO
 Loanscaneasi l
ybeobt ainedasf or
mal i
ties/pr
oceduresinvol
vedar
efew
 SACCO’sof fereducationt omember s

Expl
ainf
iver
olesofst
ockexchangeasamar
ketf
orsecur
it
ies
 Faci
li
tat
esbuyingofshares–Thestockexchangemarketpr
ovi
desaconduci
ve
envi
ronmentt
oi nvest
orswant
ingt
obuysharesindi
fer
rentcompani
es.

Nov
els,
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imar
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es 0714497530 63
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ah@g
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l.
com

 Facil
itatesselli
ngofshar es–Cr eatesar eadymar ketf orthosewhowi sht osellthei
r
securi
t i
es
 Assistscompani estor ai
secapi tal–Thest ockexchangemar ketassistcompani esto
rai
secapi t
albycreatinganenvi r
onmentt hroughwhi chsuchcompani esi ssuenew
sharest omember soft hepubl ic
 Creati
onofempl oyment–st ockexchangemar kethasassi stedi nthecreat ionof
employmentoppor t
uni ti
es.Thepeopl eempl oyedincludethebr okersandt heiragents.
 Raisi
ngr evenuefort hegover nment–Thegover nmentear nsr evenuebycol lect
ing
feesandot herduesf rom act ivit
iescar ri
edouti nthestockexchangemar ket .
 Avail
ingavar i
etyofsecur iti
es–Thest ockexchangemar ketavai lsavariet yof
securi
t i
esf rom whichi nvestor scanchoose.
 Measur eofacount ry’seconomi cpr ogress–Theper f
ormanceofsecur iti
esi nt
he
stockexchangemar ketmaybeani ndicatorofacount ryseconomi cprogr ess.
 Promot est hecultureofsavi ng–St ockexchangemar ketpr ovidesinvestor swi t
h
opportuni t
iestochannelt heirexcessf unds.

Expl
ainf
iveadv
ant
agesofpubl
iccor
por
ati
ons/par
ast
atal
s
 Readycapi tal–I nitialcapit
alisreadil
yavai lablebecauseitisprovi
dedbythe
gover nment
 Providesgoodsatl owpr ices–Acor porati
oncanaf fordtoprovidegoodsand
servicesatl owpr iceswhi chwoul dotherwi sebever yexpensiveiftheywereleftt
othe
pri
vat esect or.
 Masspr oduct ion–Mostoft hecorporationspr oducegoodsandser vi
cesinlarge
quant it
iest herebyr eapingt hebenefit
sofl ar gescaleproduction
 Somear emonopol i
es–Theyhenceenj oyt hebenef it
sofbei ngamonopol y.For
exampl et heydonothavet oadver t
isetheirpr oducts
 Bailedbyt hegover nment–Cor porati
onsar eusuallybail
edoutbyt hegovernment
wheni nfinanci alproblems.

Di
sti
ngui
shbet
weenco-
oper
ati
vesoci
eti
esandpar
tner
shi
p. 
  
  
  
  
  
  
  
 (
10mar
ks)

Co-
oper
ati
vesoci
eti
es Par
tner
shi
p

Managedbyacommi
tteeof Managebyact
ivepar
tner
s
ni
nemembers
For
medbyami ni
mum of10 For
medby2-20part
nersunl
essf
orpr
ofessi
onal
memberswit
hnomaxi
mum. par
tner
shi
pwhichgoestoamaxi
mum of50

Themainmoti
vei
stoi
mpr
ove Mai
nmot
ivei
stomakepr
ofi
ts
thewel
far
eofmember
s

Gover
nbyco-
oper
ati
veact Gover
nbypar
tner
shi
pact

Nov
els,
Ebooks,
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imar
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es 0714497530 64
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ah@g
mai
l.
com

Member
shavel
i
mit
edl
i
abi
l
ity Somepar
tner
smayhaveunl
i
mit
edl
i
abi
l
ity

Notaff
ect
edbydeat
h,i
nsani
ty, Maybedissolveduet
oexi
t,entr
y,deat
h,i
nsani
ty
exi
torent
ryofamember andbankr
uptcyofamember .

Expl
ainanyf
ivedocumentsthatarerequi
redt
obefi
ll
edwi
tht
her
egi
str
arof
companiest
ofacil
it
atet
heregist
rati
onofacompany. (
10marks)

 Memor andum ofassoci ati

on:thi
sisabr iefstatementt hatspeci fiest henameoft he
proposed company,amountofcapi t
alr ai
sed orexpect ed,t heobj ect
ivesoft he
companyandi tsproposedheadquarter
s
 Arti
clesofAssoci ati
on:thi
sdocumentcont ainsthesetr ulesf ormul atedtogover nthe
i
nternaloper ati
onsofacompany.I tcover sthingssuchaspr ocedur etobef ollowedin
call
inggener almeet i
ngs,issueandt ransf erofcompanyshar esandshar ehol
ders
voti
ngr ights
 Al i
stofdi r
ectors:thi
sdocumentcont ainsdet ail
sofnames,addr esses,occupat i
on,
sharessubscr i
bedandst atementofagreementt oaper sont oser veasadi rector
 Declaration:thi
sdocumentshowswhet hert heregistr
ationr equir ementasl aiddown
bylawhasbeenmet .Itmustbesignedbyt hesecret ar
y,thedi rectorandal awyer
 Ast atementsi gned:thisisadocumentsi gnedbyt hedirectorsst atingthattheyhave
agreedt oactasdi r
ectors

(
b)Pr
obl
emsf
aci
ngt
hesav
ingsandcr
edi
tcooper
ati
vesoci
eti
esi
nKeny
a
 Loandef ault
ingbymember sassomel eaveempl oymentduet ot er
minali
ll
ness,
sacki ng
 andper sonalreasons.
 Lackofmanagementski l
l
samongmember sleadingt opoormanagementof
soci eti
es.
 Cor rupti
onandembezzl ementoff undsbyoffici
al
 Poori nvestmentdecisionsbysomeof fi
cial
sleadingtol osses.
 Sti
f fcompet iti
onfrom commer cialbanksandmi crof i
nancialinstit
uti
ons.
 Lat er emitt
anceofmember scontri
buti
onsbyempl oyers.
 Hi ghdemandf orl
oansagai nstt
her ecei
ptsfrom mont hlycont r
ibuti
ons.
 Ret renchmentofwor kersbybothgover nmentandpr i
vatesect orhasledtofi
nanci
al
 probl emst othesociety.

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GOVERNMENTANDBUSI
NESS.
1.St
atef
ourway
sinwhi
cht
hegov
ernmentmayr
egul
atebusi
nessact
ivi
ti
es
 Thoughl i
censi
ng
 Byof f
eri
ngadvisoryser
vices
 Throughtaxati
on
 Registr
ati
on
 Throughlegisl
ati
ons

2.Stat
efourmeasuresthatthegovernmentofKenyahasputi
npl
acet
opr
otect
consumersf
rom unscrupulousbusinesspeopl
e
 Settingstandar
dsthr
oughtheKenyabur
eauofst
andar
ds
 Wei ghtsandmeasuresAct
 Tradedescr i
pti
onAct
 Publ i
chealthAct
 Li
censi ng
 PricecontrolAct
 Rentt r
ibunalAct

3.Out
li
nef
ourmaj
orar
easofgov
ernmentpar
ti
cipat
ioni
nbusi
nessact
ivi
ti
es
 Regulati
on
 Trai
ning
 Tradepromoti
on
 Provi
sionofpubl
i
cuti
li
ti
es
 Enabli
ngenvir
onment

4.I
dent
if
yfourmet
hodsusedbyt
rader
sassoci
ati
onst
opr
otectconsumer
s
 Set
tingsstandar
dsforpr
oductsusedbymember s
 I
nvestigat
ingcompl
aint
smadebyconsumer sagainstthei
rmember
s
 Set
tingcodeofethi
cstoguidemember sastheyt
rade
 Enl
ighteni
ngconsumersontheirr
ightsfr
om t
imetotime.
 Act
ingoncasesofexploit
ati
onnot edbymembers

5.St
atef
ourr
easonst
hatbr
ingt
heneedf
orconsumerpr
otect
ion
 Toensuref
airpri
cesofgoods
 Toensuret
hatstandar
dsar emet
 Toensuret
hatconsumer sgetqual it
ygoods
 Toensuret
hatgoodsareofr ightwei ghtandmeasur es
 Toprot
ectconsumersagainstbr eachofcont r
act
 Toensuret
hatconsumer sareprot ectedf rom thesaleofharmf
ul
commoditi
es
 Toprot
ectconsumersfrom falseadver ti
sing
 Toensuret
hathealt
hstandardsar eadheredt o
 Toensuret
hatcommodi ti
esar er eadil
yavai l
abl
et otheconsumers
Nov
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 Toensur
ethatbui
l
dingconst
ruct
ionandsaf
etyst
andar
dsar
emai
ntai
ned,
.

6.Hi
ghl
ightf
ourci
rcumst
ancesunderwhi
cht
hegov
ernmentmayi
ssuel
icenses
 Whent hereisneedtoregulat
et henumberofbusi nesses
 Wheret her
eisneedofdoi ngawaywi thi l
l
egalbusi nessinthecountry.
 Whent hegovernmentwant stoensur ethattradersengageonl yinthose
busi
nessesf orwhicht
heyhavebeenl icensed.
 Whent hegovernmentwant stoear ntorevenuef rom theissui
ngofl i
censes.
 Whent hereisneedtoprotectconsumer sagai nsttheexploit
ati
onbyt rader
s
 Whent hereisneedtocontrolthetypesofgoodst hatenterorleavethe
count
ry.

7.Out
li
nef
ourway
sinwhi
cht
hegov
ernmentmaypr
omot
elocalt
rade
 Traini
ngbusi nessmenonappr opri
atewaysofcar ryi
ngbusinesses
 Offeri
ngf i
nancialai
ds(subsidi
es)
 Providingi ncenti
vessuchast axexemptions
 Advisingbusi nesspeopleonbet t
erwaysofcar r
yingoutbusiness.
 Organi zingshows, t
radefairsandexhi
bit
ionst hroughwhi chl
ocaltr
ader
smay
pr
omot etheirgoodsandser vi
ces
 Creatinganenabl i
ngenvironmentforbusinessest othr
ive.

8.Hi
ghl
ightf
ourdemer
it
sofgov
ernmenti
nvol
vementi
nbusi
nessact
ivi
ti
es
 Maycr eateunfaircompet it
iontoprivatei
ndivi
duals
 Leadst omisappr opriati
onofpubl i
cf unds
 Mayl eadtoproduct ionofpoorqual itygoods
 Itmayscar eawayi nvest orswhowoul dhaverenderedthesameser vi
ces
 Mostmanager i
alpost singovernmentr unbusinessesarepoli
ti
calandnot
basedonqual if
ication
 Mostgover nmentpr ojectsareexpensiveenterpri
seswhichrequi
reheavy
i
nvest mentintermsofper sonnelt
rainingandequi pment
 Somest ate-r
unor gani zati
onscontinuoslymakel ossesther
ebyfail
i
ngt o
sustainthemselves.

9.Hi
ghlightfourwaysi
nwhi
cht
hegov
ernmentcr
eat
esanenabl
ingenv
ironmentt
o
at
tractinv
estors
 Favourablegover nmentpoliciesli
kelowtax
 Developmentofi nf
rastr
ucture
 Offeri
ngsubsi dies
 Offeri
ngi ncenti
ves
 Polit
icalstabil
i
tyensuringsecur i
tyinthecountry
 Provisi
onofr elevanteducationalskil
l
sandt r
ainingf
aci
l
iti
es
 Actingasl oanguar ant
orstobusi nesspeople

St
atef
ourr
easonswhyconsumer
sneedpr
otect
ionf
rom unscr
upul
oust
rader
s.
Nov
els,
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ah@g
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l.
com

(
4mar
ks)
 Ensurecommodi ti
esar eofgoodqualit
y
 Rightquantit
yandsizeofgoods
 Ensurestandardsofhealtharemaintai
ned
 Ensurebuildi
ngconstruct
ionandsafetystandardsaremai
ntai
ned
 Ensurefairpri
cesarecharged
 Ensurecommodi ti
esar eavail
abl
e
 Protectconsumersfrom fal
seadverti
sing
 Protectconsumersfrom saleofharmfulcommodi t
ies
 Protectconsumersagainstbreachofcontract
.

10.
Highli
ghtfourwaysinwhi
chconsumer
smaypr
otectt
hemsel
vesagai
nst
exploi
tat
ionbytrader
s
 Byjoi
ningconsumerassociat
ions
 Byreporti
ngtr
aderswhoexploitthem
 Enl
ight
ingotherconsumersaboutt hei
rri
ghts
 Boycott
ingtr
aderswhoselldefecti
veproducts

11.
Giv
efourwaysi
nwhi
chcommerci
alatt
acheesmaypr
omot
ethev
olumeofexpor
ts
int
hecount
ri
eswher
etheyar
ebased
 Explor i
ngandi denti
fyi
ngnewmar kets
 Keepi ngst at
ist
icsofpr oductsexpor t
ed
 Publishingandadver ti
si ngthei
rcount r
ysproductsinjournal
s
 Selectingbuyersagent sanddi str
ibutorsofthehomecount r
ysexports
 Orgainisingvisi
tstot r
adef air
sandexhi bi
tionsforbusinesspeoplefrom t
heir
homecount r
ies
 Att
endmeet i
ngs,semi narsandwor kshopsont radepat t
ernsofthecountri
es
andkeepdat aofnewmar ketsforexports
 Inf
ormt radersinthei
rhomecount riesofthestandardsrequir
edf orexpor
ts

12.
Stat
efourr
easonswhyt
hegov
ernmenthast
oor
gani
zesemi
nar
sforbusi
ness
people
 Exposebusi nesspeopl etomoder ndevel opment sinmanagement
 Enablebusi nesspeoplet oacquir
eknowl edgeonhowt ouseavailabl
e
resources
 Toinform busi nesspeopleonpr of
itablebusi nessesoppor
tunit
ies
 Educatet hem onef f
icientmethodsofoper atingbusi
ness
 Impartproperbusi nesset hi
csforexampl egoodcust omerrelati
ons
 Exposet hem togover nmentpolici
esr egardingbusinessacti
vit
iesinthe
country.

13.
Descr
ibef
iver
olesoft
heKeny
aBur
eauofst
andar
ds(
KEBS)i
nconsumerpr
otect
ion
(
10mar
ks)
 I
tsetsst
andardsont
hequali
tyt
hatmustbemetbybot
hthel
ocal
l
ypr
oduced
goodsaswellast
hei
mportedgoods.

Nov
els,
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 Itensur est hatharmf ulgoodsar eneitherproducednorimport

edint
ot he
count r
ybyi nspectingalllocalgoodsandi mpor ted
 Itprovidesqual i
tyassuranceexper tssevicestoproducerst
oensurethatthey
producehi ghqual i
tygoods.
 Ittakesl egalactionagai nstthosewhooper ateoutsi
dethesetst
andards
 Itensur est hatallproductsaretest edtoensurequali
tyandthatt
heybeara
KEBSmar kofqual i
ty
 Itensur est hatallfoodsar ewelllabeledandpackedsoast oensurethatsuch
foodi spr otected

14.
Expl
ainfi
vemeasur
esthatthegover
nmentusest
ocr
eat
eanenabl
ingbusi
ness
Envi
ronmentf
orbusi
nessesinthecount
ry
 Givingeconomi cincent i
ves-Thesei ncentiveswi llboostt hebusi nessacti
viti
esinthe
count ry.Theyi ncludel owt axes,subsi di
esandcheapl and.
 Impr ovi nginfr
ast ructure-Byput t
ingupandi mpr ovi nginfrastr
ucturesuchasr oads
watercommuni cationandel ectr
icit
yint hecount ryt oattracti
nvestors.
 Impr ovi ngsecur i
ty-Byensur ingt hattherei spol i
ticalstabili
tyandgoodsecur i
tyto
createaconduci vebusi nessenvi ronment
 Devel opmentofsoci alameni ti
es-Thesei ncl udesschool s,housing,hospi
talsand
recreat ionfacil
iti
eswhi charer equiredbyi nvest ors
 Enact i
ngf avourablel awsandr egulati
onsi nt hecount rythatwillboostbusiness
acti
vities
 Simpl i
f yingprocedur esi nstarti
ngandr unni ngbusi nessest oattr
actmor ebusiness
peopl e
 Provisionofsubsi dies-Thi sar efinancialassi stancet obusinesses.Ital
soinvolves
technicalassi stanceandmanpowerespeci allyint opmanagement .

15.
Expl
ainf
ivepr
obl
emsf
acedbyKETA
 Poorinfrastr
ucturewhi chdi
scouragesi nvestor
s
 Highrateoft axati
onwhi chdiscouragesinvestorsandmakeslocalgoods
expensive
 Insecur
itythatdiscouragesinvestors
 Corrupti
onwhi chmayaddext racostt oproject
s/invest
ments
 Inadequatefundst hatmakesi tdi
fficul
tforKETAt ocarryouti
tsf
uncti
ons

16.
Expl
ainfi
vereasonst
hatj
ust
if
ythei
nvol
vementofagov
ernmenti
nbusi
ness
acti
vi
ti
es(10marks)
 Topr ovidesensit
ivegoodsandser vi
ces-Thegover
nmentpr ovidesgoodsandser vices
thataret oosensi
tivetobel ef
tinthehandsoft hepri
vatesect orforexampl efi
rearms.
 Topr eventexploi
tationofthepublic-Thegovernmentinvolvesi nbusinesstoprevent
exploit
ationofthepubl i
cbypr i
vatepersonsespeci
all
yint hepr ovisi
onofessential
goodsandser vi
cessuchassal t
,sugarandcommuni cation.
 Topr ovideessentialgoodsandser vi
ces-Thegovernmentget sinvol
vedi nbusi
ness
Nov
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acti
vi
tiestoprovideit
sci t
izenswi thessenti
algoodsandservi
cesinar easwher
e
pri
vatesector
sar eunwilli
ngt oinvestbecauseoflowprofi
tsegpr ovi
sionofwater
.
 Topreventforeigndomi nanceoft heeconomybyi nvest
inginareaswher ethel
ocal
s
arenotableto
 Tocreateempl oymentoppor tunit
iesbyi ni
ti
ati
ngproj
ectssuchaspr ovisi
onof
el
ectri
cit
yandkazikwavi janainit
iati
ves.
 Toprovideessent i
algoodsandser vi
ceswhi chpri
vat
eindi
vidual
sar enotablet
odue
t
olar
geamountofcapi
tal
requi
redegel
ect
ri
cit
y.

17.
Expl
ainfi
vemeasurest
hatar
eadopt
edbyt
hegov
ernmentt
opr
otectconsumer
s
agai
nstexpl
oit
ati
on
 Sett i
ngupst andar ds-Thegover nmentt hr
ought heKEBSset sst
andardswhi chmust
bemai nt ai
nedbypr oducer sandt r
aders.
 Wei ght sandMeasur esAct-Thegover nmentensur esthatt heequipmentusedf or
wei ghingandmeasur ingar ecor rectandaccur atebyregularcheckingandadj ustingof
theequi pment .
 Licenses-Thegover nmentr equiresmanuf acturersandbusi nesspeoplet oget
l
icensesbef orecommenci ngtheirbusinessoper ati
onsthisensur esthatthereis
cont r
oloft het ypeofbusi nesscar ri
edout .
 FoodandDr ugsAct -Thegover nmentensur esthatproducersandt radersdonot
i
ncl udeanysubst ancet hattheysel ltocustomer swhichmayhavehar mfuleffectsto
thecust omer sheal th.
 Tradedescr iptionAct -Ensurest hatapr oducersortradersdoesnotcheatt he
consumer sbypr ovidi
ngf alsedescr ipti
onofcommodi ti
es.
 Pricecont rol-Thegover nmentmaysetapr i
cebeyondwhi chacommodi tyshoul dnot
besol d.
 RentandTr i
bunalAct -Ensurest hattenantsarenotover chargedbyl andlords.

18.
Stat
efourr
easonswhyt
hegov
ernmenti
ssuesl
icensest
obusi
nesses

 Toobt ai
nr evenue/sourceofrevenueforthegovernment
 Regulati
ngt henumberofbusi nessesinanygiventimet oavoidunheal
thy
compet i
tion.
 Regulati
ngt henumberofbusi nessinanyonel i
neofact ion.
 Ensuri
ngt hattradersengageonlyinthosebusinessact i
vit
yforwhicht
hey
haveal i
cense.
 Contr
ol l
i
ngi ll
egalbusi
nessinthecount ry
 Ensuri
ngt hatthosewhoengagei nprofessi
onalacti
vit
iesmeetthe
requi
rement .
 Contr
olt hetypeofgoodst hatshouldenterorleavethecountry.

19.
Highl
ightf
ourser
vicesof
fer
edbyt
hel
ocalaut
hor
it
iesi
nKeny
a

 Gar
bagecol
l
ect
ion

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 Wat ersupply
 Streetli
ghts
 Repairofr oads
 Provisi
onofsoci alser
vicese.
g.school
s,hospit
als
 Recreationalfaci
li
ti
ese.gspor
tsfiel
ds,
stadiumse.t.
c
 Provisi
onofhousi ngneeds

20.
Outl
inef
ourway
sinwhi
cht
hegov
ernmentcr
eat
esenabl
ingenv
ironmentf
or
busi
ness

 Offer
ingseverali
ncent ivestoencour
ageinvest
ment sl
iket
axhol
i
daysubsi
dies
 Provi
sionofcreditt
hr oughgovernmentinsti
tut
ions
 Creat
ingapoolofqual ifi
edmanpower
 Provi
sionofsecurit
y
 Ensuri
ngthereispoliticalst
abil
it
yandgoodwi l
l
 Provi
sionofinfr
astruct uret
oreducecostofprovisi
on
 Li
berali
zat
ionofmar ket i
ng
St
ate4f
unct
ionsofKEBs

 Testgoodst
oensur
etheyar
esaf
eforconsumer
suse
 Dest
roycont
ami
nat
edgoodsorpoi
sonousgoods
 Dest
roypoorqual
i
tygoods
 Ensur
eal
lpr
oducer
shavemetr
equi
redst
andar
dswhenpr
oduci
ngt
hei
rgoods
 Checkl
abel
sandpackagest
oensur
etheyhavecor
recti
nfor
mat
ion
 Cont
rolandmoni
tort
heuseofst
andar
dizat
ionmar
ks
Amanufactur
ingf
ir
m hasbeenconsi
stent
lyr
eleasi
ngt
oxi
cwastesi
ntot
he
nei
ghbor
hood.Out
li
nefourmeasur
esyoucantaketost
opthef
ir
mf r
om such
malpr
act
ice
 Publ
icizi
ngthemalpr
act
icet
obeknownt
othepubl
i
c
 Takelegalact
ioni
ncour
t
 Repor
ttot
her
elevantaut
hor
it
yli
keNEMA
 Educat
enei
ghbour
stof
ightf
ort
hei
rri
ght
s
 Boycot
tthef
ir
m’spr
oduct
s
 Car
ryoutdemonst
rat
ionagai
nstt
hef
ir
m
 Reasonoutwi
tht
hef
ir
mst
oeducat
ethem ont
hei
mpor
tanceofconser
vingt
heenvi
ronment
.

21.Locall
eader
swoul
dliket
oseemorebusi
nessenter
prisesestabl
ishedwit
hinUgenya.
Out
li
nefourmeasur
esthegover
nmentcant
aketoencourageinvestmentsi
nthisregi
on
 I
mprovei
nfr
astruct
ureespeci
all
yroads
 Pr
ovi
desecuri
ty

Nov
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 Provi
deincenti
vese.g.taxholiday
 I
mpr oveaccesstofinance/provide
 Reducebureaucrati
crequirementforlicensi
ng
 Provi
desocialameniti
ese.g.school s,
hospital
s,mar
ketski
l
lse.
t.
c
 Provi
deawar enessofinvestmentoppor tuni
ti
es

22.
Limi
tat
ionsofconsumeri
nit
iat
edmet
hodsofconsumermet
hods

 Lackofsuppor tbythegovernment
 Lackoff inance
 Ignoranceofconsumer s
 Reluctanceofconsumer stojoi
ntheseassoci
ati
on
 Lackofi nit
iat
ivefrom consumerstocheckontrader
sper
for
manceandr
epor
t
casesonnon- compliance

23.
Stat
efourreasonswhysomel
ocal
aut
hor
it
iesi
nKeny
afi
ndi
tdi
ff
icul
ttopr
ovi
de
publ
icuti
li
ty

 Lackofadequatefinance
 Poormanagementski l
l
softheselocalaut
hor
it
ies
 Poli
ti
calint
erf
erenceandwrangle
 Poorgarbagecoll
ectionandisposal
 Embezzlementoff unds
 Corr
uption

24.
Listf
ourt
ypesofcompl
aint
sthataconsumeror
gani
zat
ionmayr
ecei
vef
rom
consumer

 Poorqualit
ygoodsandser vices/damagedgoods
 I
ncorrectweightsandmeasur es
 Poorhygienicconditi
ons
 Contr
abandsi tems/prohi
bitedgoods
 Hoarding
 Misl
eadingadver t
isements
 Envi
ronment alpoll
uti
on
 Harmfulproducts
 Pri
ceoverchar ge

St
ate4way
sinwhi
chKeny
aBur
eauofst
andar
ds(
KEBS)r
egul
atesbusi
nesses.
 Conductingregul
arinspecti
onstoensurethatstandardsaremeetbybusinesspeople
 Theystamponpr oductstoprovethatt
heestabli
shedst andar
dshavebeenadher edto.
 Takelegalacti
onsagai nstt
hosewhovi ol
etsetstandards.
 Setstandardsforalll
ocalandimportedmanufacturedgoodsbyconducti
ngr esearchand
test
sont hesegoods.
 Ensuresbusinesseshavevalidli
censes
Nov
els,
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 Testgoodstoensuret
heyar
esafeforconsumeruse
 Destr
oycontaminat
edorpoi
sonousgoods
 Checklabel
sandpackagest
oensurethatt
heyhavethecor
recti
nfor
mat
ion

25.St
atef
ourway
sinwhi
cht
hegov
ernmenti
sinv
olv
edi
nbusi
nessact
ivi
ti
es

 Regul ati
on
 Training
 I
nter naltr
adepr omotion
 Eternaltradepromotion
 Servicepr ovi
si
ons
 Creat i
onofenabl i
ngenvir
onment
 Consumerpr otect
ion

25.
Stat
efourf
unct
ionsofconsumerassoci
ati
ons
 Deali
ngwithcomplaintsaboutef
fect
iveitemsboughtbymember s.
 Makingsurecommodi ti
esarenothoardedandthataregularsupplyismaintai
ned
 Ensuri
ngthatweightsandmeasurement sofcommoditi
esar ecorrect
 Educati
ngmember sont hei
rri
ghtsasconsumers
 Ensuri
ngthathealt
handsaf et
yregul
ati
onsareadheredto
 Ensuri
ngthatessenti
algoodsandservicesar
eavail
ableandt hatthei
rpr
icesarefai
r.

26.
Stat
e4f
act
orsl
imi
ti
ngt
her
olesofconsumerassoci
ati
onsi
nKeny
a
 Lackofsuppor tfrom t hegovernment
 Lackofcapi taltof i
nancet heirorganizat
ions
 Ignoranceofconsumer sabouttheirri
ghts
 Reluctanceofmanyconsumer stojointheseassoci
ati
onssothatt
heymay
voicetheircompl aintsasagr oup
 Lackofi nit
iati
vesf rom consumer stocheckont r
adersper
for
manceandrepor
t
casesofnon- compl iancetoqualityandpr i
ce.

27.
Outl
inefi
vewaysi
nwhi
cht
hedepar
tmentofext
ernal
tradepr
omot
esacount
ry’
s
ext
ernalt
rade
 Exploreandi denti
fynewmar ketsf ormor eexpor toppor t
uniti
es
 researchandanal ysemar ketsf orexpor tsf r
om t heirhomecount ri
es
 keepst ati
sti
csofpr oduct
si .e.volume, packagingsi zesandmet hodsof
manuf acturi
ng
 attendmeet i
ngssemi nar
sandwor kshopsont radepat ternsoft het r
ading
count r
ies/onbehalfofexpor ter
s
 publishandadver ti
set hei
rcount ry’sexpor tsinbusi nessjournalsofmagazi nes
 selectbuyers, agentsanddi stri
but orsoft hehomecount ry’
sexpor ts
 i
nf ormt radersoft heirhomecount ri
esoft hest andardsrequiredf orexpor
ts

28.Expl
ain5chal
lengesf
aci
ngconsumerassoci
ati
ons

Nov
els,
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˗Lackofsuf f
icienteducationtoconsumer s-consumer sar enotawar eoftheirri
ghtsand
thust akenoact i
on
˗Consumerapat hy-consumer sdonotr eportexpl
oitati
veact i
onsbyt r
aders
˗Inadequat efunds/f inances-t heassociati
onslackf undstocar r
ytheiracti
viti
esrelatedto
consumerpr otection
˗Lowmember ship-fewconsumer sareunawar eoft heirexi
stenceandt husdonotj oin
˗Lackofsuf f
icientgovernmentsuppor t-manyconsumeror gani
zati
onsar enotsuppor tedby
thegover nmentast heyar eseenashumanr ightsgroups
˗Lackofpol i
ti
calgoodwi ll-poli
tici
ansdonotsuppor tconsumer sintheirf
ightfortheirri
ghts
˗Individual
ism -consumer sprefertoactindi
vidual
lywhenbuyi nggoodsorhandl ingunf ai
r
traders,theydonotuni t
eandcompl ainasagr oup

COMMUNI
CATI
ON.
1.Def
inet
het
erm communi
cat
ion
 Communi
cat
ioni
sthepr
ocessbywhi
chi
nfor
mat
ioni
spassedf
rom oneper
sonor
pl
acet
oanot
her.

2.Out
li
net
her
olepl
ayedbycommuni
cat
ioni
nanygi
venor
gani
zat
ion
 Iti
susedt ogiveinstructionsonwhatshoul dbedoneatwor kanddur ingwor k.
 Itenhancesgoodr elationsamongwor ker stherebypromoti
ngandenhanci ngt hei
r
effi
ciency.
 Throughcommuni cationmostor gani
zat i
onshavebeenabl etoimpr ovet heirimage,
forexampl ethroughadver ti
sing.
 Itusedt oi mprovet her elat
ionshipbetweent heor gani
zat
ionandt hecust omeror
cli
ents.
 Forco- ordinati
ngpur poses, communi cat i
oni susedtoensurealldepar t
ment sworkin
harmony.
 Thef eedbackgotf rom t heclient
sorcust omer shelpstoimproveanor ganizati
on’s
rel
iabil
ityandqual i
tyofgoodsandser vicesof f
ered.
 Communi cati
onisusedasat oolformanagement .
 Gooddeci sionsar emadeascommuni cati
onhel psoneunderst
andal lthenecessar y
mat t
ers.

FORMOREHI GHSCHOOLRESOURCESCONTACT MRI SABOKE0714497530

3.Bri
efl
yexplai
nthef
oll
owingl
evel
sofcommuni
cat
ion
(a)Ver
ti
calcommunicat
ion
 Invol
vestheflowofi
nfor
mati
onei
therdownwar
dsorupwar
ds,
forexampl
e,f
rom a
senioremployeet
oajuni
orempl
oyee
(
b)Hor
izont
alcommuni
cat
ion
 I
salsoref
err
edtoaslat
eralcommuni
cationwhi
chispassi
ngofinf
ormati
onbetween
peopl
eofthesamerankorstat
us,
forexamplef
rom onedepar
tmentalmanagert
o

Nov
els,
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ah@g
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com

anot
herdepar
tment
almanager
(
c)Di
agonalcommuni
cat
ion
 I
scommunicati
onofdif
fer
entpeoplei
ndiff
erentl
evel
sofmanagementor
depar
tment
sforexampl
ear ecept
ioni
stcommunicati
ngt
oaproduct
ionmanager
.
4.Di
sti
ngui
shbet
weenf
ormal
andi
nfor
malcommuni
cat
ion
 Formalcommuni cat
ionisof
fi
cialanddocumentedandfol
lowscer
tai
nrulesfor
exampleawor kerwri
ti
nganof f
ici
all
ett
ertoanorgani
zati
on’
sseni
ors.I
nformal
communi cat
iondoesnotconformtoanytime,f
orexamplecommunicati
ngtofri
ends
andrel
ati
ves.

5.St
atet
heessent
ial
element
sincommuni
cat
ion.
 Thesenderwhoi sthesourceoft heinfor
mati
onbeingcommunicat
ed
 Therecei
ver(
orrecipi
ent)ofinfor
mat i
on
 Themessagebei ngcommuni cat
ed
 Thechannel(ormedium)t hr
oughwhi cht
hemessageispassedon
 Feedbackwhichistheresponseorr eacti
onofther
ecipi
ent
.

6.Hi
ghl
ightt
hev
ari
oust
ypesofv
erbalcommuni
cat
ion
 Face-to-
facecommuni cat
ion
 Telephoneconversat
ion
 Radiocallsconver
sati
on.

7.Stat
et headv
ant
agesanddi
sadv
ant
agesofv
erbal
communi
cat
ion
Advantages
 Al ar
genumberofpeopl ecanreceivethei
nformati
onatoncef orexamplewhen
addressingi nameet ing.
 Therei si
mmedi at
efeedback
 Clari
ficat
ioncanbemadeeasi lyandi mmediatel
y
 Thisisper sonalappeal
 Itcanbever yconveni entandpersuasi
ve
 Iti
sf astsincetheintendedinf
ormat i
onreachesthereci
pienti
mmedi at
ely.

Di
sadv
ant
ages
 I
tisnoteasyt oknowi fthemessageori nformationhasbeenreceivedpar
ticul
arl
yif
ther
eceiversaremany
 I
tispronetoout sideinterfer
enceduet onoiseandot herf
ormsofdi sr
upti
ons
 I
ncaseofi ncorrectpronunciationofwor ds,
therecouldbedist
ort
ionofthe
i
nfor
mat ion
 Ther
eisnor ecordforfuturereference.
 Themet hodi snoteffectiveforreci
pientswithlearni
ngprobl
ems.
 Cantakeal otoftimet opassi ntendedi nfor
mat i
on.

8.Out
li
net
hev
ari
ousbar
ri
erst
oef
fect
ivecommuni
cat
ion
 Noi
semayhi
nderef
fect
ivecommuni
cat
ion
Nov
els,
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com

 Theemot ionalst at
eofbot hthesenderandt hereci
pient
 Useoft hewr ongchannelt ocommuni cat
e
 Breakdownofachannelusedt ocommuni cat e
 Il
l
iter
acyoft her eci
pientparti
cul
arlyf
orwrit
tencommuni cati
on.
 Theatti
tudeoft herecipi
enttowardsthesenderandt heinfor
mationbei
ng
communi cated
 Useofdi f
ficultvocabular
yorwor dsbythesender
 Lackofconcent rat
ionont hepar
toftherecipientmayaffectcommunicati
on
 Poortimingbyt hesender.

9.Highl
ightr
easonsthatwouldmakeanor
gani
zat
ionusecel
lphonesf
orcommuni
cat
ion
wit
hinandoutsidet
heor gani
zat
ion.
 Oneget si
mmedi atef eedback
 I
tisfastandcanbeusedt osendur gentmessages
 Ther
ei spersonalappeal
 Thesenderhasagr eatopportunityt
oconvinceandpersuadetherecipi
ent
.
 I
tisnotveryexpensi veparti
cularl
yformakingcall
sforashortdurat
ionofti
me
 I
tcanbeusedevenwhenbot ht hesenderandthereci
pientar
efarapart

10.St
atet
hev
ari
oust
ypesofwr
it
tencommuni
cat
ion.
 Writ
ten
 Memor andum(
memos)
 Reports
 Noti
ces
 Tel
egrams
 Cir
cular
s
 Minutes

11.St
atether
easonswhyanor
gani
zat
ionwoul
dusewr
it
tencommuni
cat
ioni
nst
eadof
ver
balcommunicat
ion.
 Wr i
ttencommuni cati
onpr ovidesevi dencewhi chmaynotbet hereinverbal
communi cation
 Wr i
tteninformationcanbest oredf orfutureref er
enceunl i
kever balwhichcannotbe
storedanddependsont her ecipientsmemor y
 Iti
snotpr onetodistort
ionsandt hereforemor eaccur atethanver balcommunicati
on
 Wr i
ttencommuni cati
oncanbei nform ofdi agrams, i
ll
ustr
ationandmapswhi chisnot
possi bl
eforverbalcommuni cat i
on
 Somewr ittencommuni cationsuchasl etterswoul dbecheaperandt i
mesavingthan
verbalcommuni cati
on,forexampl emaki ngl ongt elephonecalls.
 Wr i
ttencommuni cati
oncanbeusedf orconf identialmessages, forexample
register
edmai l
s.

12.St
atet
hedi
sadv
ant
agesofwr
it
tencommuni
cat
ion
 Wr
it
teni
snotver
yper
suasi
veorconvi
nci
ng
Nov
els,
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 Ther ei
snopersonalt
ouch
 Itcanonlybeusedbylit
erat
e
 Itcanbeslowwher el
ett
erstaketi
met oreachtherecipi
ent
 Ittakesti
metogetafeedbackfrom ther
ecipient
 Messagescannotbeenhancedbygest ur
es, t
hatis,bodylanguageorf
ace
expressi
ons
 Itcanbeexpensetofi
leallt
hewr i
tt
encommuni cat
ion

13.Out
li
net
hev
ari
ousmeansofv
isual
communi
cat
ion
 Charts
 Photographs
 Gestures,whi
chmayi
ncl
udesi
gnsandsymbol
s
 Sl
ides

14.Statetheadv
ant
agesanddi
sadv
ant
agesofaudi
o-v
isualofcommuni
cat
ion
Advantages
 I
nfor
mat i
onismoreattr
act
iveandappeal
i
ng
 Canreachmanypeopleatonce
 I
tcanbeusedevenf ort
hosewhocannotreadandwri
te
 I
mmedi at
efeedbackisr
eceivedf
rom t
hewaythereci
pientbehave
 Canbeenter
taini
ng

Di
sadv
ant
ages
 Canbemi si
nterpr
eted, f
orexampl eift her ecei
verdoesnotunderstandthesi
gnsor
gest
ure
 Notsui
tableforpassingconf ident
ialinformat i
on
 I
tisnotpossiblefortherecipienttogiveaf eedback
 Gest
ureandsi gnsar eonlysuitabl
et ot hosewhocanunder standthem
 Theini
ti
alcostofpr epari
ngt heseformsofcommuni cat
ionmaybehi ghfort
hesender
 I
tmayt akealotoft i
met opr eparethesef or msofcommuni cati
on

15.Out
li
net
hev
ari
ousser
vicet
hatf
aci
li
tat
ecommuni
cat
ion
 Registeredmai l,forsendingvaluableorconf i
dent
iali
nfor
mat i
on.
 Speedpostser vicesof fer
edbyt hepostofficetosendlet
tersparcelsusi
ngthe
quickestmeanspossi ble
 Poster est
ant e, usuallyusedbyt hosewithoutpostaladdr
esses
 Businessr eplyser vi
cewhi chenablescustomer sandcli
entstoreplytoabusiness
withouthavi ngt opayf orpostagestamps
 Broadcastingser vicest hr
oughvariousradiostati
ons
 Pri
ntmedi asuchast hevar i
ousnewspaper s,magazinesandjournals
 I
nternetser viceswhi chconnectonet othewor ldwidewebsite
 Telephoneser vices

16.St
atet
hev
ari
oust
rendsi
ncommuni
cat
ion
Nov
els,
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ah@g
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l.
com

 Mobileorcellphoneuse
 I
nternetwhichusesinterl
inkedcomputer
stothewor
ldwidewebsit
e
 Fax,whichcanbeusedt osendwr i
tt
enmessagesver
yfast
 I
nformationandt el
ephonebureauswhereonecanmakelocalandi
nter
nat
ionalcal
l
s
 Movet owardsapaper l
essoffi
ce.
 Transfor
mat i
onoflanguage.

17.Hi
ghl
ightt
hef
act
orst
obeconsi
der
edwhenchoosi
ngameansofcommuni
cat
ion.
 Thecostbecausesomear emoreexpensi vet hanot hers
 Avail
abil
it
yoft hemeans
 Rel
iabil
it
yorassur ancethatthemessagewi llreacht hereci
pient
 Thedistancebetweent hesenderandt her ecipient.
 Thelit
eracylevelofboththereceiverandt her eci
pient
 Theconf i
denti
alnatureoftheinformationbei ngsent
 Theurgencyoft hemessage
 I
fthereisneedf orevidenceorneedf orf uturer efer
ence
 Thedesiredimpactoft hemeansupont her ecipient.

18.Adv
iceMar
yWaki
owhysheshoul
dnotuset
elext
ocommuni
cat
etoherf
ri
ends
 Herfriendsmaybei l
li
ter
ateandmaybeunabl etoreadt hemessagereceived
 Herfriendsmaynothavear eceivi
ngmachineandwillbeunabletogetthe
i
nf or
mat i
on
 Itcanbeexpensi vetouseast hesenderpaysasubscripti
onfeeandrentalfeewhil
e
heandt her ecipi
entpaysforthesentmessage
 Itcanbeexpensi vetobuyt het el
epri
nter
susedinr
eceivingandsendinginformati
on
 Telexmayonl ysendwr i
tt
enmessagesbutcannotbeusedt osendmaps, diagr
ams
andchar ts

19.St
ateci
rcumst
anceswhensi
gnl
anguagecanbet
hemostappr
opr
iat
efor
m of
communicati
on
 Whencommuni catingtosomeonewhohasahear i
ngpr obl
em
 I
fonewishest opassasecr etorcodedmessage
 I
fbotht
her eceiverandt hesenderaref arapartbutcanseeeachother
 I
tcanbeusedi ncaset hereisalanguagebar r
ier
 I
nanenvir
onment alwher ether
ei salotofnoiseorphysicali
nter
fer
encetoot
her
f
ormsofcommuni cati
on,signlanguagemaybeused
 I
tcanbeappr opriatewher eboththerecipi
entandt hesenderunder
standt
hesigns.

20.St
atefourr
easonswhyf
ace-
to-
facecommuni
cat
ionwoul
dbepr
eff
eredt
owr
it
ten
communicat
ion
 Whenimmedi atefeedbackisrequi
red
 I
ncaseofameet i
ng
 I
fclar
if
icati
onisrequir
ed
 Whereinfor
mationisconfident
ial
Nov
els,
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ah@g
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l.
com

 Wher
efaci
alexpr
essi
oni
srequi
red

21.St
atefourci
rcumst
ancesunderwhi
chsi
gnl
anguagemaybeusedi
ncar
ryi
ngout
busi
ness
 Wher
ether
eisnocommonver ballanguage
 Wher
ether
eisalotofnoi
seinter
ruption
 Wher
esil
encemustbeobserved
 Wher
ether
eisneedfordemonstrati
ons
 Wher
eonepart
yisdeafordump
 Wher
eiti
stheonlymeansofcommuni cati
on
 Wher
ethemeaningofsi
gnsiswel lunderst
oodbyt
het
wopar
ti
es

22.Out
li
nef
ourl
imi
tat
ionsofusi
ngi
nter
netasameansofcommuni
cat
ion
 Expensi
vetoaff
ordbysmallfi
rms
 Onlyoper
atesi
nconnectedareas
 Canonlybeusedbyli
ter
ategroups
 Cannotbeusedinar
easwi t
houtpower
/el
ect
ri
cit
y

23.Hi
ghl
ightf
ourl
imi
tat
ionsf
ort
heuseofmobi
lephonesi
ncommuni
cat
ion
 Poornetworkcoverageinsomear eas
 Pronetothef
tincrowdedar eas
 Expensi
vetomai nt
ain(
frequentai
rti
metopups)
 Notsuit
ablefort
hedeafanddump
 Radiowavesmaycauseheal t
hproblems

24.St
atef
ouradv
ant
agesofsendi
ngi
nfor
mat
iont
hroughSMSov
eral
ett
er
 I
tisf
aster
 I
tcanprovi
dequickfeedback
 I
tsmorerel
iabl
e/sendercanknowifthemessagei
sdel
i
ver
edornot
 I
t’
sacheapmeansofcommuni cati
on
 I
dent
it
yofthesenderisreveal
ed
 Themessagecanbesavedf orfut
ureref
erence

25.Out
li
nef
ourci
rcumst
ancesunderwhi
chat
raderwi
llusee-
mai
ltosendmessages
 Whenmessageissendurgentl
y
 Whensavi
ngoncosts
 Whenimmediat
efeedbackisrequi
red
 Whenmessageisdetai
led
 Wher
ethemessageistobesendt omanypeople
 Wher
etherei
sneedforstorageforfut
urer
efer
ence

26.Gi
vef
ouradv
ant
agesofdownwar
dcommuni
cat
ioni
nanor
gani
zat
ion
Nov
els,
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 Facil
i
tatestraini
ngofjuniors
 I
mpor tantwhenevaluatingbusinessper
formance
 Necessarywhendel egatingduti
es
 Helpsinsolvinganyproblemsf aci
ngworkers
 Helpsininspiri
ngandmot i
vati
ngjuni
ors

27.Expl
ainf
ivebenef
it
sthatmayoccurt
oaper
sonwhousese-
mai
lasaf
orm of
communicat
ion
 I
tfasterinsendingmessaget hussavi ngtime
 I
tall
owsf ori mmedi atefeedback
 I
tisrelati
velycheapandonecanaf ford
 I
nformat i
onobt ainedcanbesavedf orfutureref
erence
 I
tmakesi tpossibletocommuni cat
ewi t
hper sonsfaraway
 Onecangetamessaget hatcont ai
nphotos/ di
agrams
 Possibletoforwar dinf
ormat i
ont ootherpeople
 I
treducesont heuseofpaper s

28.Expl
ainf
ivef
act
orst
oconsi
derwhenchoosi
ngmeansofcommuni
cat
ion
 Speed–chooset hemosturgent
 Cost–chooset hecheapest
 Conf i
denti
ali
ty
 Distance-det er
mi nedbythedistancebet
weenthesenderandtherecei
ver
 Evidence–i ncaseoffutur
ereferencewrit
tencommunicat
ioni
st hebest
 Reliabil
i
ty
 Desi r
edimpression

29.Expl
ainf
iveshor
tcomi
ngsofi
nter
netser
vices
 I
nfor mati
onmaynotbesecur e–sincepeoplenoti
ntendedt omayaccessi
t.
 I
nfor mati
oncanbedivert
edbycompet it
ors–whoknowt hepassword
 Comput ersmaybeinvadedbycomput ervi
rust
hatwilli
nterf
erewit
hcomputer
programs
 Couldbeusedtotransmitharmfuli
nformati
onegterr
orism ,dr
ugsandpornogr
aphy
 I
tmaybesl owort
akinglongtimetoaccessinf
ormationsincecomputer
shastogo
throughamassinformation
 Oneneedst obecomput erl
it
erat
e

30.Hi
ghl
ightfi
vebenef
it
sthatmaybeenj
oyedbyabusi
nessor
gani
zat
iont
hatengagesi
n
e-
commerceinhertr
adi
ngacti
vi
ti
es
 Facil
i
tatesaccesstolargemarket
 Largeorsmallbusinesscantransactbusinesswit
houtdiscriminat
ion
 Iti
saf astwayofdoingbusiness
 Itr
educespaperwor kasmanydeal sareonli
ne
 Servi
cesoncostofsendi ngreceivi
ngandst ori
ngbusi
nessi nformati
onischeap
 Onecanaccessot herbusinessinformati
onf r
om t
heinternetenhancingtherunni
ngof
Nov
els,
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com

t
hebusi
ness

31.
Stat
efouressent
ialcomponent
sforcommuni
cat
iont
otakepl
ace
 Thesender
 Thechannel
 Themessage
 Therecei
ver

32.
.Li
stf
ourf
ormsofcommuni
cat
ion
 Verbal/oral
 Wri
t t
en
 Audio-visual
 Audio
 Vi
sual

33.Stat
efourci
rcumstancesunderwhichver
balcommuni
cat
ionmaybepr
efer
redt
o
wri
ttencommunicati
oninabusinessenter
pri
se

 Wher
econf i
denti
ali
tyi
srequi
red
 Wher
ei mmediatefeedbacki
srequi
red
 Wher
espeedi snecessar
y
 Whenitiseasi
ertoconvi
nce/per

34.St
ateanyf
ourcur
rentt
rendsi
ncommuni
cat
ioni
nKeny
atoday
 I
ncreaseinuseofcall
i
ngcar
ds
 Useofmobi lephones
 Useofemai l
 Useofi nter
net
 Useofintranet
 Useofcybercables

35.Explai
nfi
veposi
ti
veef
fect
sofi
ntr
oduci
ngmobi
lephonesi
ncommuni
cat
ioni
ndust
ry
i
nKeny a.

 Fast
ercommuni cati
on
 Canbeusedt or emit/tr
ansferofmoney
 Cansendwr i
ttenmessages
 Theyarepor t
able
 Accessi
blefor24hrs/ continuous
 Youcanaccessi nternetfrom anywher
e
 Youcanusef oralterati
on

36.
Expl
ainf
ivef
act
orswhi
chmayhi
nderef
fect
ivecommuni
cat
ion
 Lackofcommonl
anguagef
orbot
hsenderandt
her
ecei
ver

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 Languagebar r
ier-whichr eceivermaynotf ullyunder stand
 Wideagegapbet weent her ecei
versandsender
 Poort imi ng-whenonemaynotber eadyt or eceivet hemessage
 Useofi ncor rect/inappr opr i
atemeans- l
eadingt odi st
or t
ionoft hemessage
 Negat iveat ti
tudes- ofoneoft het wocommuni cationpar ti
es
 Sever almessagespassedt hroughf ew oronechannel
 Poorl i
steni ngski lls-
oneoft hepar tiesfail
ingt ol ist
enpr operly
 Badweat her-meansbei ngusedi saffect
edbybadweat her
 Differencei nsoci alstatusoft hecommuni cat ingpar ties-andar enotconsidered
toeachot herposi ti
ons
 Unavai labili
ty/ ineffectivei nfr
astructuree.g.landl i
nes/ opt i
ccabl ef orcheap
i
nter netconnect ions
 Distractionbynoi se,li
ghtsmel letc
 Wr ongmedi um-f orexampl eonemaynotconveyaconf i
dent ialmessageoverthe
tel
ephoneef fectively
 Unf ami l
iarnon- verbalsi gns–useoff aci
alexpr essions, gest uresandnoddingthati
s
notf ami l
iart ooneoft hepar tymaymakecommuni cationi neffecti
ve.

37.Expl
ainanyf
ivebenef
it
sthatmayaccr
uet
oanor
gani
zat
iont
hatusesef
fect
ive
communicati
on
 BetterPer f
ormance–Goods&obj ectiveswi l
lbeknownhencewor kerswil
lwork
towar dsachievingt hem.
 Effi
ciency–Wor kersar eabl etoincreasepr oduct
ivit
ywhencommuni cati
on
i
appr opriat
e.
 Bettermanagement-Thei nfor
mat ionwi l
lbeusedf orbet
terpl
anning/contr
ol.(
Easy
decisionmaki ng) .
 Properuseofr esour ces–Thusr edeemi ngt i
meandef for
twastage.
 I
mpr ovedcust omerr elations–Thef i
rm wil
lbeabl etoest
abli
shcustomerneeds
/el
imi nati
ngcust omerdi ssatisf
action.
 Coor dinati
on–I rrespect i
veofdi stance/ wouldthusenhancingteamwork.

38.
Outl
inefi
vedi
sadv
antagesofsi
rensasaf
orm ofcommuni
cat
iont
hati
spopul
arwi
th
ambul
ancesandt
hepoli
ce

 Maybedi ffi
cultt
ointer
pretintheabsenceofwrit
tenorspokenword
 Mayr equir
eadditi
onalorspecial
izedski
ll
sofcompr ehensi
onandint
erpr
etat
ion
 Expensivewayofcommuni cati
onasitneedssomeski ll
s
 Thereisnof eedback
 Li
mi t
edcover ageasitservessmallaudi
encewhoar eaccessi
ble
 Meaningofsomesymbol smaynotbeunder stood

39.Di
scussf
iveadv
ant
agesofmobi
lephonesi
ncommuni
cat
ion
 I
tispor
tabl
ehenceconvenient
 Hasshortmessageser
vices

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 Canbeusedforot
herpur
posese.g.cal
cul
ator
 Canbeusedanywherewhenther
eisnetwork
 Aff
ordabl
e/cheap
 Canbeusedforst
rongi
nfor
mat i
on

40.Expl
ainf
iveel
ement
sofef
fect
ivecommuni
cat
ion
 Sender–Thi sist hesourceoft hemessage.
 Message- Thisist hei
nfor mat i
ont obecommuni cat ed.
 Channel -Thi sisthemedi um/ meanst obeusedi nconveyi ngt hemessage/ i
nfor
mation
 Encodi ng-Thi sist heprocessoff or ming/ gener atingt hemessage.
 Decodi ng–Thi sisthepr ocessofi nterpreti
ngt hemessagesor ecei
ved.
 Receiver /Recipient–Thepar t
y/per sont owhom t hemessagei ssent.
 Feedback–Thi sistherecei ver’
sr eact i
on/ r
esponset ot hemessage.
 Clari
ty-Themessageshoul dnotbevague/ ambi guous.
 Precision/ conciseness–byavoi dingunnecessar ydet ail
s.
 Prepar edness-sendershoul dcaref ull
yt hinkt hrough/ plant hemessagebef or
e
sendingi t.
 Accur acy/ Correctness–Messageshoul dbef actual /errorf r
ee
 Timeliness/ propert i
ming–messageshoul dbepr esent edatt he
ri
ght/appr opr i
atetime.
 Compl etenessoft hemessage-shoul dcont ainal lt her elevantfacts/det
ail
s.
 Attentivenessoft herecipient-ther eceivershoul dl istencar ef
ullytobekeent othe
message.
 Positiveat ti
tude-sender /receivershoul dhaveduer egar df oreachot her
.
 Propermedi a/meansi nter m ofchoi ceandf unct ionality.

41.a)Expl
ainf
ivemeansofwr
it
tencommuni
cat
ion. (
10mar
ks)

 Let
ter
s–af
orm ofwr
it
tencommuni
cat
ion;
busi
ness,
off
ici
al/
for
mal
,non-
for
malet
c

 Tel
egrams-isameansofcommuni cat
ionprovi
dedbyt hepostof
fi
ce,t
hesender
obt
ainsthet
elegr
am formfrom t
hepostoffi
ceandfil
l
st hemessageoniti
ncapit
al
l
ett
ersandhanditovert
othepostof
fi
ceemployeesatthecount
er.

 Tel
ex-isameansofcommuni cati
onusedtosendshor
tordet
ail
edmessagesqui
ckl
y
byuseofat
elepr
int
er.Theser
viceispr
ovi
dedbythepostof
fi
ceonappl
icat
ion.

 Facsi
mi l
e(Fax)-involvestransmi
ssionofi
nfor
mati
ont
hroughaf
axmachi
ne.Bot
h
thesenderandthereceivermusthaveafaxmachi
ne.

 Memorandum ( Memo)-is pr
int
ed inf
ormati
on fori
nter
nalmessages wi
thi
n an
or
gani
zati
on.Itisnor
mal
l
yusedt opassinf
ormati
onbetweendepar
tment
soroffi
ces
i
nanorganizat
ion.

 Not
ice-isusedtoi
nform agr
ouporthepubli
caboutpastcur
rentorfut
ureevent
s.I
t
i
susual
lybri
efandt
ot hepoi
nt.I
tcanbeplacedonwall
s,i
npublicpl
aces,ontr
ees,i
n

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newspaper
soronnot
iceboar
ds.

 Report
s-ar estatements/
withi
nrecordsoffindi
ngsrecommendat
ionsandconcl
usi
on
ofaninvesti
gati
on/resear
ch.Areportisusuall
ysenttosomeonewhohasaskedforit
foraspecif
icpurpose.

 Ci
rcul
ars-aremanycopi
esofasingl
elet
teraddr
essedt
over
ymanypeopl
ewhent
he
messagei
ntendedf
oreachi
sthesame.

 Agenda-isanout
li
neoft
heit
emst obedi
scussedinameeting.I
tisusual
lycont
ained
i
nanoticetoameeti
ngsenti
nadvancet
oallthepart
ici
pant
softhemeet i
ng.

 Mi
nut
es-ar
erecor
dsoft
hepr
oceedi
ngsofameet
ing.

42.Expl ai
nf iveSer vicest hatf aci l
itatecommuni cation.

Post alservice–Del iveri
ngr egi stered, expressandor dinar ymai lthr
oughpost alcor
por at
ion.

Busi nessr eplyser vice–wher ebusi nesspeopl egivet heircust omer sal
readyst amped
envelopest ousewhenr epl
yingt olet ter
s.

Cour ierservices–pr ovidedbypr ivateindividualsoror gani zationsbydel i
veri
ngparcels,
document sorl ett
ersusi ngf astmeansoft r
anspor t
.

Franki ng–whencust omer s/ organi zati
onsar eal l
owedbypost alcorporati
ontousea
fr
ankingmachi net oaf fixpost agest ampi mpr essiononl etters.

PostRest ante–ser vicepr ovidedt ovisitorswhomaynothavef i
xedaddress.

Telephoneser vi
ces–pr ovidedbyf irmsegAi rt
el,Safar i
com, telkometcforaf ee.

Broadcast ingser vicesi eradioandt elevisi
onser vices.

Printingmedi aser vices–wr itt
encommuni cationt opassi nformat i
onienewspaper s,
magazi neset c

43.Yourschooli
ntendstoplaceanorderwithElimuCompanyl i
mi t
edf orthesuppl
yof
someurgentl
yrequir
edlabor
atoryequipment.Explainfi
ver
easonswhyi twoul
dbe
advi
sabl
efortheschooltouseemailinsteadoftelephonewhenplacingt heor
der.(
10
marks)

Emailsprovideevi denceforusei ncaseofadi sput
e

Emailmessagesar emor econf identi
alhenceabl etomai
ntai
nsecret
s/i
nfor
mati
oncan‘
t
gettounauthorizedper sons.

Messagesar ereceivedwi thoutdistort
ioni.e.isrel
i
abl
e.

Iti
saffordablet osendmessagesvi aemai l.

Messagescanbest oredforf ut
urereference.

Emailscanbesentt osever alpeopleatonce.

Itcanprovidedet ail
edandcompl exinformationsuchastabl
es,
stati
sti
csandgr
aphs.

44.Expl
ainanyfi
vebenef
it
sthatmayaccr
uet
oabusi
nessorgani
zati
onwhi
chusee-
mai
l
tocommunicate. (
10mar ks)

Savesonthecostofsendi
ng/
recei
vi
ngi
nfor
mat
ion.

Reducespaperwork.

Nov
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com


Savesont hecostofstori
nginfor
mat ion

Iti
sfast.

Facil
i
tatesacesstoalargernumberofr ecipi
ent
s

Onecansendmessagest hatcertai
nphot ogr
aphanddiagrams.

Thereisevidenceofcommuni cat
ion.

Iti
spossibletofor
wardtheinformationtootherbusi
nessmen

45.Expl
ainanyf
ivel
imi
tat
ionsofadv
ert
isi
nggoodsi
nnewspaper
s.(
10mar
ks)
Notallpotent
ialcust
omer sareablet oreadnewspaper s
Thenewspaper smaybewr i
tteninal anguageormedi um thati
snotf amil
i
artomany
customer s
I
tisexpensivetobuynewspaper sandmanypeopl ecannotafford.
I
tisexpensivetoadverti
seusi ngnewspaperasonei ncursextr
acost .
Newspaper sarenotabletodiscriminatebetweenthei nt
endedgr oupandother
s
Newspaper smaynotr eachallpartsofthecountry.
Newspaper shaveashor tl
if
eandt heref
oreeasil
ydiscarded

TRANSPORT.
St
atef
ourci
rcumst
ancesunderwhi
chabusi
nessmanwoul
dchooset
otr
anspor
tgoodsbyai
r?
 Wher
egoodsareofhighvaluet
ojust
if
yhighfr
eightcosts
 Wher
egoodsareprof
itabl
eandsorequir
eshortter
mt ranspor
tat
ion
 Wher
esecur
it
yisnecessary

 Wher
eot
heral
ter
nat
ivemeansoft
ranspor
tar
enotavai
l
abl
e

 Wher
egoodsar
eur
gent
lyneeded

1. Out
li
nef
ourreasonswhyaschooli
nKisumumaypref
ertot
ranspor
tit
ssi
xtyst
udent
s
toamusicf
estiv
alinNai
robibyt
rai
nrat
hert
hanbybus. (
4mks).

 Tr
avelbyt
rai
nisr
elat
ivel
ycheapert
hatt
ravelbybus

 I
tismor
ecomf
ort
abl
etot
ravelbyt
rai
noverl
ongdi
stancest
hanbybus

 Tr
aveli
smor
erel
i
abl
efor
m oft
ravelt
hanbus

 Tr
avelbyt
rai
nhasconveni
entf
eat
uresascat
eri
ngandt
oil
etf
aci
l
iti
es

2.Giv
efi
vereasonswhyamanuf
act
uri
ngf
ir
m woul
dbel
ocat
edi
nanar
eawellser
vedby
goodr
oadnetwork. (4mks)
.

Nov
els,
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ah@g
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 Tof
aci
l
iti
eseasydel
i
ver
yofr
awmat
eri
als

 Toeasewor
ker
smovementt
oandf
rom wor
k

 Tof
aci
l
itat
emovementoff
ini
shedgoods

 Togai
neasyaccesst
oauxi
l
iar
yser
vicesl
i
kebanks,
postof
fi
cee.
t.
c

 r
educedcostoft
ranspor
t

Stat
e4measur
est
hathav
ebeenputi
npl
acebyt
hegov
ernmentt
oensur
ethesaf
etyof
passenger
s

 Removalofunr
oadwor
thyvehi
cleswhi
chmaycauseacci
dent
s
 I
nst
all
ati
onofbumpst
oreducespeed
 heavypenal
ti
esonmot
ori
stwhodi
sobeyt
raf
fi
crul
es
 maki
ngsur
ethatpassenger
svehi
clehavesaf
etybel
tst
omi
nimi
zecasual
ti
es
 ensur
ingt
hatPSVhavespeedgover
nment
stol
i
mitt
hespeed
 r
est
ri
cti
onont
ravel
l
inghour
stoensur
edr
iver
shaveampl
eti
met
orest
 al
lthePSVsar
eoper
ati
ngunderaSACCO

3.Out
li
nef
ourl
imi
tat
ionsofcont
ainer
izat
ion. (
4mks)

 Cont
ainer
sar
eexpensi
veandt
hisi
ncr
easest
hecostoft
ranspor
ti
nggoods

 Cont
ri
but
est
ounempl
oymentsi
ncecont
ainer
sar
ecapi
tali
ntensi
ve.

 Notsui
tabl
efort
ranspor
ti
ngsmal
lquant
it
ies

 Requi
resspeci
alhandl
i
ngequi
pmentwhi
chmaybeexpensi
ve

 Maynotbesui
tabl
eforgoodswi
thi
rr
egul
arshapes

4. St
atef
ourr
easonswhyr
oadt
ranspor
tispopul
ari
nKeny
a (
4mks)
.

 Avai
l
abl
einmostpar
tsoft
hecount
ry

 Fl
exi
bil
i
tyt
ovar
iet
yofvehi
cles

 Fl
exi
bil
i
tyofr
out
es

 Fl
exi
bleovershor
tdi
stances

 Fl
exi
bil
i
tyi
nschedul
es

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els,
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5. St
atef
ourway
sinwhi
cht
henat
ureofgoodswoul
dinf
luencet
hechoi
ceoft
ranspor
t.

 I
fgoodsar
eper
ishabl
eaf
astandappr
opr
iat
emeansi
srequi
red

 I
fgoodsar
efr
agi
l
e,asmoot
hmeansoft
ranspor
tisr
equi
red

 I
fgoodsar
ehi
ghl
yval
ued,
asaf
eandsecur
emeansi
srequi
red

 I
fgoodsar
eur
gent
lyr
equi
red,
afast
ermeansi
sused

 I
fgoodsar
ebul
kyanappr
opr
iat
emeanswi
l
lbeused

6. Out
li
nefourreasonswhyat r
anspor
terofgoodsf
rom Mombassat
oNai
robimaypr
efer
rai
ltr
anspor
ttor oadt
ranspor
t. (
4mks)
.

 Tr
anspor
tbyr
aili
scheapert
hanr
oadt
ranspor
t

 Wher
egoodst
obet
ranspor
tedar
ebul
ky

 Rai
ltr
anspor
ttendt
ohaver
egul
art
imeschedul
e

 Wher
egoodsar
eur
gent
lyr
equi
red,
afast
ermeansi
sused

 I
fgoodsar
ebul
kyanappr
opr
iat
emeanswi
l
lbeused

7.St
atet
heuni
tofcar
ri
agef
oreachoft
hef
oll
owi
ngmodesoft
ranspor
t. (
5mks)

Modeoft
ranspor
t Uni
tsofcar
ri
age

i
. Por
tage Humanbei
ngs

i
i
. Sea shi
ps

i
i
i. Road v
ehi
cles

i
v. Car
tage car
ts

v
. Ai
r ai
rpl
anes

8. l
istf
ourway
sinwhi
cht
ranspor
tpr
omot
esgr
owt
hoft
rade. (
4mks)

 Assi
sti
nthedi
str
ibut
ionoff
ini
shedgoods

 Ai
dsi
nthet
ranspor
tofl
abourt
othei
ndust
ri
es
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 Movement(
transpor
t)ofr
awmat
eri
alst
othei
ndust
ri
es

 Cr
eat
eut
il
it
yofpl
aceandt
imeoft
hegoods

 Faci
l
itat
esf
ast
erexchanges.

9.Gi
ve4di
sadv
ant
agesofr
ail
wayt
ranspor
tinKeny
a. (
4mks)

 Notf
lexi
bleast
rai
nsf
oll
owast
ri
ctt
imet
abl
e

 Notal
lar
easar
eser
vedbyr
ail
wayl
i
nes

 Tr
ainsar
eexpensi
vet
oacqui
reandmai
ntai
n

 Notsui
tabl
efort
ranspor
ti
ngur
gent
lyr
equi
redgoods

10.Li
st4di
sadv
ant
agesofusi
ngcont
ainer
stot
ranspor
tgoods. (
4mks)

 Cont
ainer
sar
eexpensi
veandt
hisi
ncr
easest
hecostoft
ranspor
ti
nggoods

 Notsui
tabl
efort
ranspor
ti
ngsmal
lquant
it
ies

 Requi
resspeci
alhandl
i
ngequi
pmentwhi
chmaybeexpensi
ve

 Maynotbesui
tabl
eforgoodswi
thi
rr
egul
arshapes

 Cont
ri
but
est
ounempl
oymentduet
ouseofmachi
ness

11.
Out
li
ne4di
sadv
ant
agesofi
nlandwat
ert
ranspor
t (
4mks)

 Sl
owandunsui
tabl
efort
ranspor
ti
ngur
gentgoods

 Doesnotal
l
owuseofl
argevessel
s

 Of
tenaf
fect
edbywat
erweeds

 I
tsi
nfl
exi
blei
.eboat
scanonl
ytr
avelonwat
erwi
thi
nthel
ake

FORMOREHI
GHSCHOOLRESOURCESCONTACT MRI
SABOKE0714497530

12.
List4adv
ant
agesofusi
ngcont
ainer
stot
ranspor
tgoods

 Reducet
hef
tofgoods

 Reducedamageofgoods

 Savest
imesi
ncel
oadi
ngandof
fl
oadi
ngofgoodsi
sbyuseofmachi
nes

Nov
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 I
nsur
ancer
atesar
elowbecauseofenhancedsecur
it
y1

 Speci
alcont
ainer
scanbemadet
ocar
ryspeci
algoods

13.
Stat
efourmer
it
sofmar
inet
ranspor
t

 Handl
esbul
kygoods

 Thewayi
ssmoot
hhencecomf
ort
abl
e

 Lesspr
onet
oacci
dent
scompar
edt
oot
hermeans

 Sui
tabl
eforl
ongdi
stancet
ravel
l
ing

14.
Outl
ine4benef
it
sthatcanber
eal
izedbyr
educi
ngt
henumberof14seat
ermat
atusi
n
fav
ourofbuses

 Reducednumberofacci
dent
s

 Reducedf
uelconsumpt
ion

 Reducedcongest
ion

 Reducedl
evelofpol
l
uti
on

 Easysuper
visi
on/
cont
rolbypol
i
ce

 Reducedcostoft
ravel
i
ng

15.
Out l
inef
ourf
act
orsf
ort
hei
ncr
easei
ntheuseofmat
atusasameansofpassenger
transpor
t

Oneofthefl
agshi
pproj
ectsbytheKeny
anGovernmenti
sLAPSSETandStandar
dGauge
Rai
lway(SGR).Out
li
nefourbenef
it
softhenewRail
wayl
inetot
heKenyaneconomy
.
(
4marks)
 Moreempl oymentoppor tunit
ies
 Fast
ermovementofgoods/ people
 Governmentr evenue
 Touri
sm willi
ncr ease
 Moregoods/ cargowi l
lbetranspor
ted
 Reducti
onofcongest i
ononKenyanr oads
 Openupr emot ear eas

16.
Out
li
nef
ourchar
act
eri
sti
csofagoodt
ranspor
tsy
stem

 I
tshoul
dbecostef
fect
ivet
otheuser
s

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 I
tshoul
dber
eli
abl
e

 Shoul
dbecomf
ort
abl
etopassenger
s

 I
tshoul
dof
fersaf
etyt
othegoodsandpassenger
s

17.
Stat
efourpr
e-r
equi
sit
esoft
ranspor
t

 Way

 Ter
minal

 Met
hodofpr
opul
sion

 Uni
tofcar
ri
age

18.
Highl
ightf
ourf
eat
uresoft
ramps

 Theydonotoper
ateonaf
ixedr
out
e

 Theydonotf
oll
owaf
ixedt
imet
abl
e

 Thei
rchar
gesar
efl
exi
ble

 Theyar
eownedbyi
ndi
vi
dual
s

19.
Highl
ightfourwaysi
nwhicht
hegov
ernmentofKeny
acanuset
oeaset
raf
fi
c
congesti
oni nur
banareas

 Useofbusesi
nst
eadofmi
nibuses

 Wi
deni
ngofr
oads/
const
ruct
ionofdualcar
ri
ageways

 Under
groundt
rai
ns

 Const
ruct
ionoff
ly-
over
s

 I
ncr
easi
ngt
hepar
cki
ngf
ee

 Rest
ri
cti
ngpr
ivat
evehi
clesf
rom t
heCBD

20.
Hi ghl
ightf
ourci
rcumst
ancesunderwhi
chonewi
llchooseai
rtr
anspor
trat
hert
hanr
oad
transport

 Fast
ert
hanr
oad

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 Nothi
nder
edbyphysi
calbar
ri
ers

 Rel
ati
vel
yfl
exi
ble

 Saf
eint
ranspor
ti
ngval
uabl
eit
emssuchasgol
d

 Fr
eeway

 Conveni
entoverl
ongdi
stance

 Sui
tabl
efort
ranspor
ti
ngper
ishabl
eandur
gent
lyr
equi
redgoods.

21.
Out l
inef
ourreasonst
hataccountf
ort
hepopul
ari
tyofhumanpor
ter
agemeansof
transpor
tinKenya

 Fl
exi
blesi
ncei
thasnof
ixedt
imet
abl
e

 Cheapcompar
edt
oot
hermeans

 Readi
l
yavai
l
abl
ewhenr
equi
red

 Conveni
entovershor
tdi
stances

 Compl
ement
sot
hermeansoft
ranspor
t

22.
Stat
efourr
easonsf
ort
hepopul
aruseofmot
orcy
clesi
ntr
anspor
t

 Cheapt
oacqui
re

 Lowmai
ntenancecost

 Char
ger
elat
ivel
ylowerf
are

 Doesnotr
equi
respeci
alski
l
ls

 Rel
ati
vel
yfast
ercompar
edt
ocar
tageandhumanpor
ter
age.

23.
Stat
efourmoder
ntr
endsi
ntr
anspor
t

 Pi
pel
i
neandcont
ainer
izat
ion

 El
ect
ri
ctr
ainsar
erepl
aci
ngdi
eselengi
ne

 Dual
-car
ri
ager
oadsar
ebei
ngdevel
oped

 Under
groundt
unnel
sfort
rai
ns

 Devel
opmentofpl
aneswi
thl
argercar
ryi
ngcapaci
ty
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 Useofbi
cycl
escommonl
yknownasbodaboda

PAPER2

1. Explai
nf i
vereasonst
hatmayaccountf
orcont
inueduseofhandcar
tsasamodeof
transportinKenya.

 I
tisr
elat
ivel
ycheapcompar
edt
oot
hermodes

 Requi
resl
i
ttl
ecapi
talascar
tsar
echeap

 Doesnotr
equi
respeci
alski
l
ls

 Doesnotnecessar
il
yrequi
rear
oad

 Doesnotr
equi
respeci
alt
ermi
nus

 Sui
tabl
eovershor
tdi
stance

 Appr
opr
iat
einr
emot
ear
easwher
eot
hermeansar
enotavai
l
abl
e

 Compl
i
ment
sot
hermeansoft
ranspor
t

 Readi
l
yavai
l
abl
eforhi
re

2.Theoi
lpi
pel
inehasr
ecent
lybeenext
endedf
rom Nai
robit
owest
ernKeny
a.

Expl
ainf
ivebenef
it
sthatmaybeaccount
edt
othecount
ryf
rom t
heext
ensi
on.
(10mks)
.

 Largervol
umeofoi lwillbet ransport
edwithi
ngi venti
me.Roadacci dent
sshouldbemi ni
mi zed
astherewouldbef ewert anker sontheroad.
 Roaddamagewi llbemi ni
mi zedduet ofewertankers
 Delays/shor
tageoff ueltoWest er
nKenyawi l
lber educedaspi pel
inegiveconti
nuessupply.
 Envir
onmentalpoll
utionf r
om heavyt ankerswillbeminimized
 Pil
ferageoff
uelwillber educedasi tisdif
fi
cul
tt ostealoi
lf r
om thepipeli
ne.
 Traveli
ngbet
weenNai robiandWest ernKenyat akesshorterti
meduet oreducedcongesti
ono
theroad
 Reducedcostsoftranspor tationoil

3.Di
scussf
ivef
act
orst
hathav
ehi
nder
edt
heexpansi
onofr
ail
wayt
ranspor
tinKeny
a.

 Highcost–r ai
l
wayconst r
uct
ionandmai
ntenanceisexpensi
vevent
urer
equi
ri
ng
hugeinvest
ment .Suchhugei
nvest
ment
sareunaffordabl
e.

 Competi
ti
onfr
om ot
hermodesther
eexi
stsar
elat
ivel
ywi
der
oadnet
wor
kwhi
ch
mayleadtol
owdemandforrai
l
way.

 Poormanagement–t
her
ail
wayt
ranspor
tsect
orhasbeenpoor
lyr
unr
esul
ti
ngi
n
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hugel
osses.

 Lackofmoderntechnol
ogy–t hemoder
ntechnol
ogyt
hati
srequi
redf
oran
eff
ici
entr
ail
waysystem i
sabsenti
nKenya

 Li
tt
legovernmentcommi t
ment-t
hegover
nmenthascommitedit
sresour
cesmor
e
onotherf
ormsoftranspor
tatt
heexpenseofr
ail
waytr
ansport

 Lackoff
lexi
bil
it
y–i
nabi
l
ityt
orenderdoort
odoorser
vicesmakesi
tlessat
tr
act
ive.

 Speed–i
tsr
elat
ivel
ylowspeedr
enderi
tinappr
opr
iat
eforcar
ryi
nggood.

4.Expl
aint
headv
ant
agesofpi
pel
ineasamodeoft
ranspor
ti
ngoi
lpr
oduct
s.(
12mks)
.

 Pi
pel
i
nei
senvi
ronment
alf
ri
endl
yasi
tcont
ri
but
est
olesspol
l
uti
on.

 I
tisaf
astmodeoft
ranspor
tasi
tisnotaf
fect
edbyweat
herorcongest
ion

 I
tisl
esspr
onet
oacci
dent
sandhencemayr
educer
oadacci
dent
scausedby
t
anker
s

 Lowmai
ntenancecost
sduet
oeasei
nmai
ntai
ningt
hewayanduni
tofcar
ri
age

 Cont
inuossuppl
yoft
hepr
oducti
nlar
gevol
umes

 Pipel
inesmaybeconst
ruct
edi
nar
easwher
eiti
sdi
ff
icul
ttoconst
ructr
oadsor
rai
lwayli
nes

 I
tisl
aboursavi
ngasi
trequi
resmi
nimalmanpower

 Pi
pel
i
net
ranspor
tmaynotbeaf
fect
edbyadver
seweat
hercondi
ti
ons

 I
tischeapmeansoverl
ongdi
stanceoroverwi
der
egi
on

5. Out
li
nef
ivef
act
orst
hatshoul
dbeconsi
der
edwhenchoosi
ngameansoft
ranspor
t.

 Costoft
hemeans

 Di
stancet
obecover
ed

 Speedoft
hemeans

 Avai
l
abi
l
ityoft
hemeans

 Nat
ureoft
hegoods

 Saf
etyandsecur
it
y

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6. Expl
ainsi
xadv
ant
agesofcont
ainer
izat
ionasamodeoft
ranspor
t.
(10mks)

 Mi
nimi
zest
her
isksofl
ossordamageofgoodsascont
ainer
s

 Cont
ainer
sar
efi
tt
edwi
thdevi
ceswhi
chmakemovementandhandl
i
ngeasy

 Savest
imeandl
abouri
nloadi
ngandof
f-
loadi
ngduet
ouseofmachi
nes

 Speci
alcont
ainer
sar
eavai
l
abl
eforgoodsr
equi
ri
ngspeci
alat
tent
ion

 I
nsur
ancecost
sar
erel
ati
vel
ylowasr
isksar
eless

 Container
ssealedatsour
ceinpr esenceofcust
omsof
fi
cial
smaynotbeopened
unt
iltheyreachthei
rdest
inat
ions.

 Spaceissavedwhencont
ainer
sar
eusedasopposedt
owheni
ndi
vi
duali
temsar
e
packedinthecar
ri
er.

7.Expl
ainf
ivef
act
orst
hatl
imi
t/di
scour
aget
heuseofpi
pel
ineasamodeoft
ranspor
tina
count
ry(
10mks)

 Al
eakagenotdet
ect
edi
ngoodt
imemayl
eadt
ohi
ghl
osses

 I
nit
ialconst
ruct
ioncosti
sver
yhi
gh

 Acci
dent
all
eakagesmayl
eadt
oenvi
ronment
alpol
l
uti
on

 I
tisuni
dir
ect
ionalt
hati
s,t
ravel
sonl
yinonedi
rect
ion.

 I
tcant
ranspor
tonl
yonepr
oductatat
ime.

 Costofmonit
ori
ngthepipel
i
necouldbehi
ghasitmaynecessi
tat
etheuseof
ai
rcr
aftsduet
ofrequentmovementtomoni
tort
hesaf
ety.

 Gener
atecompar
ati
vel
yfewerj
oboppor
tuni
ti
esasi
tiscapi
tali
ntensi
ve/
requi
res
l
it
tl
elabour
.

8.Expl
ainf
ivemeasurethegovernmentcant
aket
oimpr
ovet
heef
fi
ciencyoft
her
oad
tr
anspor
tsyst
em inthecountr
y(10mks)

 Improvi
ngt
her
oadnet
wor
ksyst
em byt
armacki
ngmor
eroadspar
ti
cul
arl
yinr
ural
areas.

 Ensuri
ngthatvehi
clesdonotexceedt
hei
rloadcapaci
ti
esast
hiscausesdamages
toroads.

 Ensur
ingt
hatt
her
eisst
ri
ctadher
encet
otr
aff
icl
aws

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 I
mpr
ovi
ngr
ailt
ranspor
tsoast
oeasecongest
iononr
oads

 Under
taki
ngregularmai
ntenanceofr
oadst
oensur
ethatt
heyar
eingood
condi
ti
onatallt
ime.

 Ensuri
ngt
hatonl
ytr
ainedandl
i
censedpeopl
ear
eal
l
owedt
odr
ivevehi
clesont
he
roads

 Establ
i
shmentofby-passr
oadsyst
emsi
ntheout
ski
rt
sofur
bancent
resdoesnot
havetopasst
hrough.

9.Expl
ainf
iveci
rcumst
ancesunderwhi
chat
raderwoul
dpr
efert
otr
anspor
tgoodsby
tr
ain

 Whenthegoodsar ebulky/
heavy
 Whenthegoodsneedspeci alatt
enti
on/
handli
ng
 Wher
et hedistancei
slong
 Wher
et her
ei sneedforsecur
ityfort
hegoods.

10.
Expl
ainf
iveadv
ant
agesofpi
pel
inet
ranspor
t (
10mks)
 I
tisenvi
ronment
all
yfr
iendl
ysi
ncei
tisf
reeofnoi
seandsmoke

 Pi
pel
i
nesal
l
owscont
inuousf
lowofgoodsbei
ngt
ranspor
ted

 Pipel
i
net
ranspor
thel
pst
oreduceacci
dent
sthatmaybecausedbyt
anker
son
roads

 I
tisl
aboursavi
ngasi
trequi
resmi
nimalmanpower

 Lowmai
ntenancecost
sduet
oeasei
nmai
ntai
ningt
hewayanduni
tofcar
ri
age

 I
tischeapmeansoverl
ongdi
stanceoroverwi
der
egi
onbecausepr
essur
eor
f
orceofgravi
tyi
sused.

11.
Explainf
iver
easonst
hatmayaccountf
ort
hecont
inueduseofhandcart
sasamodeof
transpor
tinKenya (
10mks)

 I
tisr
elat
ivel
ycheapcompar
edt
oot
hermodes

 Requi
resl
i
ttl
ecapi
talascar
tsar
echeap

 Doesnotr
equi
respeci
alski
l
ls

 Doesnotnecessar
il
yrequi
rear
oad

 Doesnotr
equi
respeci
alt
ermi
nus

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 Sui
tabl
eovershor
tdi
stance

 Appr
opr
iat
einr
emot
ear
easwher
eot
hermeansar
enotavai
l
abl
e

 Compl
i
ment
sot
hermeansoft
ranspor
t

 Readi
l
yavai
l
abl
eforhi
re

12.
Expl
ainfi
veway
sinwhichagoodt
ranspor
tsy
stem f
aci
li
tat
est
hedev
elopmentof
manufact
uri
ngi
ndust
ri
es (10mks)

 Rawmat
eri
alsar
esuppl
i
edt
othef
ir
m hencecont
inuospr
oduct
ion.

 Fi
nishedgoodsar
edel
i
ver
edt
othemar
ketl
eadi
ngt
ofast
erpr
oduct
ion/
reduced
st
oragecosts

 Wor
ker
scaneasi
l
ymovei
nandoutoft
hef
act
oryl
eadi
ngt
oef
fi
ciencyi
noper
ati
on

 Reducescostoft
ranspor
tleadi
ngt
olowpr
icesofgoods

 St
abi
l
izespr
icesofgoodsduet
ocont
inuossuppl
y

 Enhanci
ngspeci
ali
zat
ionasgoodspr
oducedi
ndi
ff
erentf
ir
msar
eexchanged.

13.
Expl
ainf
iveci
rcumst
ancesunderwhi
chat
raderwoul
dpr
efert
otr
anspor
tgoodsbyr
ail
 I
ncaset hegoodst ransportedar ebulky
 Wher egoodst r
ansportedareheavy
 I
ncasegoodsr equiresecurit
ybecausecasesoft heftandacci dentar
emi nimalinr
ail
way
transport
 I
ncaseofl argequant i
ti
esbecausei thaslargecar r
yingcapaci ty
 Railwaytransportischeapandeconomi caloverlongdistances
 Railwaysstationshavewar ehousest ost or
egoodsbef oretheyar ecoll
ectedbyowner s
 I
ncaset hetraderwant stomakeadvancepl annedf ormovementofgoodsbecauset rai
n
foll
owr egularti
met abl
es
 Railwaystationshavemanycar gohandlingfaci
li
tiesforloadingandof floadingofgoods
hencesavest i
me.
 Railwayauthor i
ti
eshavet heirownmot orvehicl
edeliveryservicesfrom t
heirrail
waystat
ions
thishelpsinconnect i
ngthet raderstootherterminus

14.Outl
inefi
vef
actorst
hatmayl
imi
ttheuseofcont
ainer
sasamet
hodoftr
anspor
ti
nggoodsi
na
dev
elopi
ngcountr
y. (10marks)

 Speciali
zedequi
pmentwhichareexpensive.Themet hodcall
sforspeci
ali
zedequipment
forhandli
nggoodswhicharel
acking/expensivetobuy/use/
maintai
n.
 Organizati
onper
sonnel
/t
alent
s/tr
aini
ng/operational
/managementskil
lsneededforthe

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met hodmaybel acking/trai

ningmaybeexpensi ve.
 Volumeofbusi nessmaynotbel argeenough/ warrantt heheavyinvestment /volumeof
businessmaybel ow.
 Ini
ti
alcapi talneededf orthesyst em/ noteasilyavailable/expensi
ve.
 Themet hodr equi resre-degradingofexi st
ingpor t
s/reconst r
ucti
ngpar twhichi squi
te
expensi ve.
 Useofmedi um t echnologywhi chi slimit
ed/lacing/notr eadil
yavail
able/li
mi t
edmedi um
technology( inadevel opingcount ry)whichmaysl owt herateofprocessi nggoods.
 Gener alr esistancest ochangebyst akeholders/interested/aff
ectedpar t
iesofpeople
generallyr esistchange.
 Maynotbesui tablef orgoodswi t
hi r
regularshapes

15.
Expl
ainf
ivedi
sadv
ant
agesoft
ranspor
ti
nggoodsbywat
er

 Seapi
rat
esandst
ormsmayoccurr
esul
ti
ngt
olosses

 Notsui
tabl
efort
ranspor
ti
ngper
ishabl
eandur
gent
lyr
equi
redgoods

 I
tisexpensi
vet
oconst
ructandmai
ntai
nar
ti
fi
cialhar
bour
s

 Unf
avour
abl
eweat
hercondi
ti
onsmayaf
fectwat
ert
ranspor
t

 Seat
ranspor
tisnotaccessi
blet
olandl
ockedcount
ri
es

 Lackofl
oadi
ngandof
fl
oadi
ngf
aci
l
iti
esmayl
eadt
odel
ay

 Costofacqui
ri
ngandmai
ntai
ningshi
psi
shi
gh

16.
Discussfact
orst
hatshoul
dbeconsi
der
edwhenchoosi
nganappr
opr
iat
emeansof
transpor
t
 Cost–Thecostoft r
anspor tshoul
dbeconsi der ed.Thecheapestmeansshoul dbe
chosen
 Natur eofgoods–Forexampl eperi
shabl esgoodsr equir
eaf astmeans, simil
arl
y
heavyandbul kygoodsr equi r
esameansoft ranspor tconvenientforsuchgoods
egtrains.
 Reli
abi li
ty–r eli
abili
tyreferst oassurancet hatt hegoodswi l
lreacht heintended
destinat i
onatt her i
ghtt i
meandi nther ightfor m.Themeanschosenshoul d
ensur er eli
abi
lit
y.
 Urgency–Forgoodst hatar eurgentl
yr equired, t
hef ast
estmeansavai lableshoul
d
bechosen.
 Secur i
ty–Themeanschosenshoul densur et hatthegoodsont ransitaresecure
againstl ossthef torphysi caldamages
 Dist
ance–Somemeansoft r
ansportaresui tableforlongdistanceswhi l
eothers
aresui tableforshor tdistances.Ifgoodsar etobet r
ansportedf orlongdistances,
ai
rorr ailwaytransportwoul dbeappr opr i
ate.
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 Avail
abili
tyofmeans–Themeansoft r
ansporttobeselectedshouldbebasedon
i
tsavailabili
ty.
 Fl
exibil
i
t y–Wher efl
exibi
l
ityisrequi
redthenthemeanst hatwoul dprovi
desuch
shouldbechosen.Forexampl eamat atui
susuallymoref l
exibl
ethananaeropl
ane.
 Terminals–Somemeansoft ransportmayhavet hei
rterminalsnearthe
tr
anspor terthanothers.I
nt hiscase,t
hetransport
ershouldchooset hemeans
whoset er minal
sareconvenientlyaccessi
ble.

17. Expl
ain5f
act
orst
hathav
eledt
oincr
easedusesofcont
ainer
isat
ion
˗Lowi nsurancepr emiums-goodst r
ansportedundert hismodeat t
ractcheapi nsurance
premi umsduet oconsol i
dation
˗Secur it
yofgoods-goodsar epr otectedagainstlossbyt heftascont ai
nersar esealedby
theexpor ter(consigner)
˗Saf etyofgoods-goodsar epr otectedagai nstdamages, breakagesandhandl ingis
reduced
˗Lar gecar r
yingcapaci t
y/spaci ous-cont ai
nersar elargeinsizeandt hushol dmor e
goodsatat i
me
˗Speci alcontainers-specialgoodsar epackedi nspecialcontai
nerstomai ntaintheir
standar ds
˗Economyofspace-duet ost ockingcont ai
ner soccupysmal lspaceont het r
ucks, trai
ns
orshi ps
˗Adequat ehandlingfacil
iti
es-handl i
ngequi pmentar eusedatt hepor tsandl oadi ng
point smakei teasier
˗Cheap-car rylargequant i
ti
esusi ngthesamet ransportfeesont heroads, railli
nesand
onwat er
˗Impr ovedpor tfacil
it
ies-por t
saut horit
ieshavei mprovedtheirportfacil
i
tiest hatallow
quickof floadingandunl oadingatt he
termi nus
˗Inl
andcont ainerdepot-est ablishmentoft hecont ainerdepotatEmbakasihas
i
ncr easedt heuseofcont ai
ner i
zat i
on

18.Expl
ainf
ivef
act
orst
hatmayl
imi
ttheuseofpi
pel
ineasamodeoft
ransporti
na
count
ry. (
10mar ks)
Easyt ar get
sf orsabot age.Theyusual lycoverl
ongdi stanceinremot eareasorj ungles.
Expensi vef orsmal lquantit
ies.Iti
snoteconomi caltotransportsmallvolumesofi t
ems.
Suitablef orli
quidsandgases.Cannott r
anspor
tonepr oductatat i
met hispreventsits
populari
ty
Highcost sofconst r
uction-i
niti
alcostsinvol
vedi nconstructi
onar eusuall
yver yhigh.
Heavyl ossesofl eakages- l
eakagesal ongthepipeli
nemaybedi sast
rousandcanl eadto
hugelossesi fnoti dentifi
edqui ckl
y.
Requirequal i
fi
edper sonnelandmoder nequipment .Thisistohelpincont r
oll
ingand
monitoringmovement .Thesear equit
e
expensive.

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Envi
ronment
aldegr
adat
ion.I
ncaseofl
eakagei
tcanhar
m mar
inel
i
feandpeopl
e

WAREHOUSI
NG.
1.
Highl
ight4r
equi
rement
sthatar
eneededf
orasmoot
hfunct
ioni
ngofawar
ehouse
 Appropri
ateequipment
 Appropri
atestaf
f
 Properrecor
dingsyst em
 Properbuil
dingdesign
 Appropri
atespecialfaci
li
ti
esegr
efr
iger
ator
s

3.St
ate4consequencest
hatmayar
iseduet
opoorar
rangementofgoodsi
na
warehouse
 Possibl
elossofgoodst hr
oughbreakage
 Underuti
li
zati
onofspace
 Theftofgoods(pi
lf
erage)
 Contaminati
onofgoods
 Ti
mei slostl
ookingforgoodsinawar ehouse.

4.Mr.Jumaisawholesal
eri
nBungomat ownwhoownsherownwar
ehouse.Out
li
ne4
benef
it
sthatwi
ll
accruetoherf
rom herwar
ehouse
 Rel
i
evedofstoragecostsincur
redbyhiri
ngstorage
 Hecanusethewar ehouseaslongasisnecessar y
 Heisunderdir
ectcontr
olofthewarehouse
 Heensuressecuri
tyofgoodsfrom t
heftorphysicaldamage.
 Hecanhandlethegoodsthewayhewant s.

5.Out
li
ne4waysi
nwhi
chconsumer
sar
eli
kel
ytosuf
feri
nsi
tuat
ionswher
ether
eisno
war
ehousi
ng
 Consumerswillsuff
erfr
om theproblem ofunstableandhighpri
ces
 Theconsumer swillsuf
ferf
rom theshortageofgoodsast herewil
lbeno
cont
inuoussupply
 Consumerswillnothaveacontinuoussupplyofseasonalproducedgoods
 Consumersmaygetdamagesast herewil
lbenopr otect
ionfr
om badweather
 Consumersmaysuf f
erfr
om theproblem ofbuyingpoorquali
tygoods
 Consumersmaynotgetgoodst hatarewellpackedorblended

6.St
ate4pr
omi
nentf
eat
uresofr
etai
ler
swar
ehouse
 Mainlyownedbyl ar
gescal eret
ail
ers
 Stockfastmovingconsumergoods
 Theyholdreservest ocktoensuredemandi sconst
ant
lymet
 Designedtosuiteowner sspecifi
cati
ons
 Owner shavefullcontroloverwarehouseoper
ati
on.
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7.St
ate4r
olest
hecust
omsof
fi
cial
sinabondedwar
ehouse
 Veri
fyi
ngtheorigi
nofgoods
 Checki
ngthequalit
yofgoodst oavoi
ddumpi
ng
 Col
lecti
ngcustomsdut y
 Checki
ngthelegali
tyofthegoods
 Checki
ngthequant i
tyofimpor
ts

8.Gi
ve4r
easonst
hatmakeswar
ehousi
ngav
italai
dtot
rade
 I
tensuressteadyflowofgoods
 Ensur
esstabili
tyi
npr icesofgoods
 Warehousi
ngensur escont i
nuousproducti
on
 Goodsstoredinwar ehousesimprovesinquali
ty
 Warehousi
ngencour agesspeciali
zati
on
 Buyer
scani nspectgoodsbef or
etheycanbuyt hem
 Goodsstoredinwar ehousescanbepr eparedf
orsale

St
atef
ourf
eat
uresofpubl
icwar
ehouses (
4mks)
 Ownedbyi ndividuals
 Rentspacetot raders
 Goodsstoredt empor ary
 Opentoallmember softhepubl i
c
 Maybesituatedneart ermi nal
s
 Goodscanbegr aded/packed
 Goodsareinsur edagai nstloss

St
ate4r
easonswhyapr
oducerwoul
dnotneedal
otofwar
ehousi
ngf
aci
li
ti
es.

Ifthebusinessislocatedneartheconsumer s.

Wher ethegoodspr oducedarehighl
yperi
shable.

Wher ehisscaleofpr oducti
onislow.

Wher ethereareintermediari
estotaketheroleofstorage.

Wher ethedemandofgoodsi shi
gherthanwhati sproduced.

Ifdeali
ngwi t
hfastmovi nggoods.

Wher egoodsar epr oducedonorder

9.Out
li
ne4benef
it
sthatmayber
ecei
vedbyabusi
nesst
hatusesi
tsownwar
ehouse
 Busi
nessmai ntai
nscont inuoussupplyofgoods
 Goodsar ekeptsafelyegf r
om theft
 Costsincurr
edinrentingspacer educed
 I
twillcontr
oltheoper at
ionsofthewar ehouse
 Warehousecanbet ail
oredtomeeti tsneeds
 I
tispossibletochoosedesi redlocat
ion

10.
Highl
ightanyf
ourt
rendsi
nwar
ehousi
ng
 Useofspeci
ali
zedhandl
i
ngmachi
nes
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 Useofstor
ager acks
 Envi
ronmentalpoll
uti
on
 Warehousedesignstoall
owmovementf
orf
orkl
i
ftsandcr
anes.

11.
Ment
ion4f
eat
uresofabondedwar
ehouse
 Goodscanbestoredunti
ldutyispaid
 Goodscanbere-expor
tedwhileonbond
 Goodscanbesoldwhileonbond
 Rel
easewarr
antisrequir
edforgoodst obereleased
 Goodscanbepreparedforsal
e(repackaged,
br andedorbl
ended)

12. Out
li
nef
ourf
eat
uresofabondedwar
ehouse (
4mar
ks)

 Goodscanbeboundedt i
lldutyispaid
 Goodsarerel
easedonpr oduct i
onofr eleasewarrant
 Chargesar
emadeonal lgoodsst oredint hewarehouse
 Goodscanbesol dwhil
eunderbond
 Goodscanbeinspected,re-parked, bl
ended,branded,l
abel
edet
cwhi
l
eint
hewar
ehousi
ng
 Goodscanber e-expor
tedwhi leunderbond
 Theyareguar
dedbycust omsof fi
cials
 Theyareownedbyt hegover nment
 Theyareusedforimported/expor t
edgoods

13.
Expl
ainf
ivebenef
it
sofabondedwar
ehouset
othegov
ernment
 Inspect ionofgoods-nat ureofgoodsthatenterandl eavet hecountryar e
inspect edt oensureharmfulgoodsdonot` enterint
ot hecount ry.
 Qualityofgoods–I nspecti
ondonebyt hegover nmentmai ntai
nsthest andar
ds
ofgoodsent eri
ngthecount r
yandensuresgoodqual ity
 Quant ityofgoods–Gover nmentcanmoni t
orandcont rolamountofgoods
enteringt hecount r
y.
 Sourceofr evenue–Cust omsdutycoll
ectedbygover nmentact sasr evenue
forpromot i
ngothersectorsoft
heeconomy.
 Document ationandregulati
on–Document sregardi
ngst orageofgoodsar e
verif
iedandgover nmentcaneasi l
yenforceallregul
ationsr egardi
ng
impor tationofgoods.
 Thegover nmentisabletocheckonill
egalgoodsent er i
ngt hecountr
y.

14.
Expl
ainf
iveway
sinwhi
chwar
ehousi
ngf
aci
li
tat
est
rade.

 Steady/
continuousflow/suppl
yofgoods.War
ehousi
ngassist
sinensur
ingasteadyflowof
goodsintothemar ket
 Stabl
epr i
ces–War ehousingensur
esthatt
her
eisnoexcessorshort
ageandthisresult
sin

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stablepr i
ces
Impr ove/maintainqualit
yofgoods- war ehousi ngpr ovidesst or
agef acil
i
ties
thatmai nt
ain/improvesi nthequal i
tyunt iltheyar edemanded
 Tomeetunexpect eddemand- unexpect eddemandcanbemetduet otheexi stenceof
warehousi nge. gi
nt i
meofdi saster/calami ty
Inspect i
onofgoods- war ehousingenabl est raderst oinspectgoodsbef or etheybuyt hem
 Clearanceofgoods( paymentofcust oms/ dut ies)-
war ehousingfaci
lit
atescl earanceof
i
mpor tedgoodsf ortraders( i
nspectionofgoodsbyt hegover nment)
 Storageofgoods- warehousi ngenabl est het radert ostoregoodsashel ooksf orthemarket
orduet omasspr oduct i
onoral lowscont inuouspr oduction
 Prepar ati
onf orsal
e-goodsar eblended/ packed/ graded/sorted/br
andedwhi leinthe
warehouse
 Protect i
onfrom damage/ keepinggoodsi ngoodcondi t
ion-warehousingpr otectsgoodsfrom
theft/seasonal

15.
Expl
ainfi
vebenef
it
ssmal
lscal
ebusi
nessder
ivef
rom t
hepr
esenceofawar
ehouse
inanarea
 Ensuresstablepri
cesf orgoodsandservi
cesduet osteadysupplyofgoods
 Ensuressteadysupplyofgoodsast hegoodsar estoredwheni npl
entyand
rel
easedwhenneeded.
 All
owspr eparati
onofgoodsf orsal
esuchasbr andingandgr adi
ng
 Protect
sgoodsf rom damageandadver seweathercondi t
ions
 Enablesthetradertoinspectgoodsbef
oretheycanbuy
 I
mpr ovesthequal i
tyofgoodssuchaswi neandt obacco
 Traderisabletomeetunexpect eddemandsinthemar ket
.

16.Highl
ightf
ivewaysi
nwhi
chconsumer
sbenef
itf
rom war
ehousi
ngf
aci
li
ti
espr
ovi
ded
byawholesaler
 Consumersmaybenef itwhenquali
tyofgoodsisimpr ovedthrough
packi
ng/blendi
ng
 Consumersar eli
kel
ytogetgoodssuppliedtothem whent heyneedthem.
 Consumersmaygetavar i
etyofgoodsstoredbywholesalersinthei
r
warehouses
 Consumersar eli
kel
ytogetgoodsthatarenotspoil
t/damaged.
 Consumersar eli
kel
ytobuygoodsi nconveni
entquant i
ti
es.
 Warehousingfaci
li
ti
esareli
kelyt
ost abi
l
izepri
cestherebybenef i
tst
he
consumer.

17.
Stat
efourf
unct
ionsofwar
ehousi
ng
 St
orage
 Pr
eparinggoodforsale
 St
abil
izespri
ces
 Pr
otectionofgoods/securi
ty
 Hol
dsgoodsupunt i
lcustom dut
yispai
doni
mpor
tedgoods
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15. Underwhatcir
cumst
ancescant
hel
ocat
ionofawar
ehousebeseent
obe
i
nappropr
iat
e
 Wheni
tisnotaccessi
ble
 Wheni
t’
splacedawayf rom t
heterminalorsour
ceofproduce
 Wheni
tleadstohighoperati
onalcosts
 Wheni
tdoesnothavet heri
ghthandli
ngequipmentsandstaf
fs

16. Stat
efourreasonswhyi
tissui
tabl
etol
ocat
eabondedwar
ehouseatt
hepoi
ntof
ent
ryofacountry
 Foreasyre-exporti
ng.
 Foreasyinspectionofimpor t
s.
 Topreventtheent ryofharmfulgoods./
danger
ousgoods.
 Topreventexitwi t
houtlegalaut
horit
y.
 Foreasycollect
ionofcust om dut
ies.
17. Outli
nefourci
rcumst
ancest
hatwoul
dhi
nderawar
ehousef
ormf
unct
ioni
ng
ef
fect
ivel
y
 I
fitslocat
ionisnotsuitabl
ef orclient
/i
fiti
snotaccessi bl
etousers
 I
fitcannotstorediff
erenttypesofgoods
 I
fitdoesn’thavecommuni cat i
onnet wor
k
 I
fitisnotwellequippedtohandl egoods/ i
tlacksappropri
atef
acil
i
ties
 I
fitisnotspaciousenought oal l
oweasymovement
 I
fitdoesn’thavewelltrai
nedper sonnel
 I
fitdoesn’tkeepproperrecordsofmovementofgoods
 I
fitdoesn’toff
ernecessarypr otecti
ontogoodsi nit

18. St
atef
ourr
easonswhygoodsmaydel
ayi
nawar
ehouse
 I
fthei
mporteri
snotawareofthear
rivalofgoods
 I
fthei
mporteri
ssti
l
llooki
ngformoneyt osett
ledues
 I
fgoodsar
eyettobeinspect
ed
 I
fthei
mporteri
ssti
l
llooki
ngformarket

Hi
ghl
ightf
ourway
sinwhi
chawar
ehousei
susef
ult
oat
rader
. (
4mar
ks)
 st
orageofgoodsunti
ltheyareneeded
 Pr
otecti
onofgoodsfr
om vagar i
esofweather
.
 Pr
otecti
onofgoodsfr
om pi l
fer
age
 Pr
ovidesroom f
orbul
kbr eaki
ng,packi
ngandblendi
ng

Out
li
nef
ourci
rcumst
ancesunderwhi
chal
ocalpr
oducerwouldbui
ldhi
sownwar
ehouse.
(4mks)

 Wher
ethepr
oducerneedst
oexer
cisef
ullcont
roloft
hewar
ehouse.

 Wher
ethepr
oducerwi
shest
osaveoncost
sincur
redi
nhi
ri
ngapubl
i
cwar
ehouse.

 Wher
ethepr
oducerneedst
odesi
gnt
hewar
ehouset
osui
tthegoodshe/
shedeal
s
Nov
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wi
th/
ownspeci
fi
cat
ions.

 Wher
etheproducerdoesnotwantt
obesubj
ect
edt
olongpr
ocedur
est
hatar
efound
i
npubl
icwar
ehouses.

 Wheretheproduceri
sinvolvedi
npr
oduct
ionofseasonalgoodsandmayneedt
o
st
orethem t
il
ldemandar
ises.

 Wher
ethepr
oducerpr
oducesgoodscont
inuousl
yonal
argescal
e.

19. St
atef
ourf
unct
ionsoft
hepur
chasesdepar
tmentofawar
ehouse
 Receiptofrequisi
ti
ons
 Purchasingallgoodsfortheorgani
zat
ion
 Maintaini
ngthesupplier
sr ecor
ds
 Managi nganef f
ecti
vepurchasesmanpower
 Dispatchi
nggoodst ovari
ousdepartments

20. St
atef
ouradv
ant
agesofwar
ehousi
ngt
oar
etai
ler
 Cont i
nuoussuppl yofgoodsf orhiscustomer s
 Storinggoodswhosedemandi sseasonal
 Goodsar estoredawaiti
ngcollecti
on
 Goodscanbepr eparedforsalethroughbr eaki
ngbulk,
sort
ing,
packing,
andblendi
ng
 Protectinggodsf r
om physicaldamage, pil
f er
ageandadversewealt
hcondit
ion
 Relievesretai
lersoftheneedt ocarrylargestocksandtheycanalwaysreor
der,
these
helpst hem tostartbusi
nesswi t
houtt oomuchcapi t
al

21.
LoboTrader
sint
endstoconsultawarehouse.Expl
ainfi
vemeasur
est
hatLobo
wouldt
aketoensuresmoothfunct
ioningofthewarehouse.
 Ensuret hatthewarehousei slocatedi naconveni ent /accessi blepl ace
 Ensuret hatthewarehousei spr ovi
dedwi thadequat emat erialshandl ing
equipment /machines/workingmat erials/tools
 Ensuret hatthewarehousei sspaci ousenought oal l
oweasymovement /accommodat ionof
goods/per sonnel
 Loboshoul densur ethatthewar ehousei sfi
t t
edwi thsaf etyequi pmentf orthe
facil
it
y/personnel/
goods/ ensurenecessar ypr ecautioni st aken
 Ensuret hatthewarehousehasst or agef acilit
iesforhol dingdi ff
er enttypesofgoods
 Ensureadequat esecur i
tyforthegoodst obest or
ed/ agai nstdamageofgoods/ personnel
/faci
li
tyi.esecuri
tyofthear eat oensur egoodsar enotst olen
 Ensuret hatthewarehousehasqual if
iedper sonnel
 Ensuret hatther
eisapr opersyst em ofi nventor ycont rol/goodr ecor dingsyst em andrecordi
ng
system forstock
 Ensuret hatthel
aiddownl egalprocedur esar ef ol
lowed
 Ensuret hatther
ear eproperbui l
dings/ structur esappr opr iatetot het ypeofgoodst obestored
 Ensuret hatther
e’seffi
cienttranspor tsyst em/ availabili
tyoft r
anspor tt omovegoodsi nandou

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ofthewarehouse
 Toensuretherei
scommuni
cat
ionsyst
em bet
weent
hewar
ehouseandcl
i
ent
sorbywayof
examples

22.
Out
li
nef
ourbenef
it
sthatconsumer
sgetf
rom awar
ehousi
ng (
4mar
ks)

 Consumersareassur
edofast eadysuppl
yofgoods
 Theyareassur
edofqualit
ygoods
 Theyareassur
edofsteadysupplyofgoods
 Theyareassur
edofstablepr
ices
 Theygetgoodsinconveni
entquanti
ti
es
 Consumersareablet
ochooset heri
ghtgoodswhentheyar
ebr
aided,
blendedet
c
 Consumersareablet
ogetavar i
etyofgoods

23.Out
li
nef
ourf
act
orst
hatat
raderwoul
dconsi
deri
nlocat
ingawar
ehouse. (
4mar
ks)

 Thelocat
ionshouldbeideali
nter
msofaccessi
bil
i
ty
 Avai
labi
li
tyofsuit
abl
eland
 Nearthepointofsal
emar ket
 Nearadequatesecur
ity
 Governmentpoli
cy
 Costofbuil
ding

24.St
atef
ouradv
ant
agesofpubl
icwar
ehouset
oret
ail
ers. (
4mar
ks)

 Retail
erscanr entspacetost orethei
rgoods
 Retail
ershaveapl acetobr eak
 Goodscansel lst
oredwhi l
einpubl i
cwarehouse
 Goodsar einsuredagainstdamagecausedbyf i
re,
thef
tet
c.
 Protect
sagai nstadverseweat hercondi
ti
ons
 Ensurecontinuoussuppl yofgood

25.Out
li
nef
ourbenef
it
stoabusi
nesst
hatusesi
tsownwar
ehouse. (
4mar
ks)

 Thebusinessmai ntai
nsacont inuoussupplyofgoods
 Customersar eretainedast heyaresur eofget
tingt
hegoodsondemand
 Goodsaresaf ef r
om t hef
t
 Savi
ngsincreasesf ornotr enti
ngstoragefaci
li
ti
es
 Goodscanbepr ocessedi nthewar ehouse
 Canbetailoredtosui tonesspeci fi
cations
 Canbeconveni ent l
ylocated
 Moresecur efrontdamage
 Spaceisguar anteed

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26.
Outli
necondi
ti
onsunderwhi
chawar ehousemaybeconsideredtooper
ati
ng
eff
ici
ent
ly/ Expl
ainfi
veessent
ialqual
it
iesofagoodwarehouse

 Thewar ehouseshoul dbeconveni entlylocated/t ypeofwar ehouse

 Thewar ehouseshoul dbemanagedbyqual ifi
edper sonnel
 Oper ationalpr ocedur esandgui delinesshoul dbei npl ace
 secur i
tysyst emsshoul dbei npl acee. gcct valarms, fi
reext i
nguishers.
 shoul dhavesui tablebui l
dings/wel ldesigned
 appr opriateequi pmente. gcoldr ooms
 compl iancewi tht hel aw-Awar ehouseshoul dbeoper atedaccor di
ngt othe
requirement soft hel aw
 Adequat espace-Awar ehouseshoul dbespaci ousenought oalloweasymovement
andaccommodat ionofgoodsandper sonnel.
 Pr operr ecordkeepi ng-Ther eshoul dbeapr operrecor dingsystem inawar ehouset o
ensur et hatallmovementofgoodsi spr operlymoni tored.
 Goodt ranspor tsyst em-Awar ehouseshoul dbel i
nkedwi thagoodandappr opr
iate
transpor tnetwor kt of acili
tatemovementofgoodsi nandoutoft hewar ehouse.
 Goodcommuni cat i
onnet wor k-Awar ehouseshoul dhaveagoodcommuni cat
ion
net workt oorsyst em f oreasycont actwi thit
scl i
entssuppl i
ers.
 Appr opr i
atest aff–War ehousest affshouldbewel ltrainedandef fi
cientforproper
managementandef ficientfunct ioningofawar ehouse.
 Pr operbui ldi
ngdesi gn-Awar ehouseshoul dbedesi gnedi nawayt hatit
accommodat est heint endedgoods.

Expl
ainf
iveway
sofi
mpr
ovi
ngt
heef
fi
ciencyofawar
ehouse

Ensur
ingt
hatt
her
eispr
operadequat
ehandl
i
ngequi
pment-t
ohandl
egoodssaf
elyand
easily
Ensuri
ngt hatthest affi
swel lt
rai
nedandmot ivated-soast oenhancet hei
rperformance
Toensuret hatlegalrequirementsaref ol
lowedt oavoidconfli
ctwithlawenforcers
Provi
sionofsuf fi
cientloading/offloadingar eas-t oavoi
dcongest ionanddelays
Ensurethereisadequat esecur i
ty-toavoidt heftofgoodsandsaf etyofworkers
Ensureproperuseofspace-bypr operar rangementofgoods
Ensurethereispr opersystem ofinventorycont roltomonitorstockmovement st oavoi
d
theft
Ensurethereissaf etyequipment/per sonnel-t ot akecar
eofpest s,fi
re,wat
erleaksto
safeguardgoodsf r
om damage

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I
NSURANCE.
1.Descr
ibet
hepr
ocedur
est
hatshoul
dbef
oll
owedwhent
aki
ngani
nsur
ancepol
icy
.(10mks)

 Fi
ll
ingapr
oposalf
orm

 Aper soni ntendingt ot akeani nsur ancepol i

cyfil
lsinapr oposalformfrom the
i
nsur ancecompany.Thef ormi sdesi gnedi nsuchawayt hatitguidestheappli
canton
thedet ail
sr equired.
 Deter miningt hepr emi um t obepai d
 oncet hecompanyr eceivest hef or mi tstudiesthef act sgi veninandmakesdeci sion
onwhet hert oacceptt ocovert her isk.Iftheappl i
cationi saccept edtheinsurer
calculatestheamountofpr emi um t ochar get heappl icant .
 Paymentoft hef ir
stpr emi um
 Afterthei nsurancecompanyhasaccept edt ocovert her iskandpr emiumsar e
calculatedthei nsur edpayst hef i
r stpr emium.
 Issuingofcovernot e( Binder )
 Thei nsuredi sissuedwi thacovernot eaf terpayingt hef irstpremium.Thedocument
servesasevi dencet hattheper sont owhom i ti
sissuedi si nsuredandwoul dbe
compensat edi ncaseofal ossar isingf rom t hei
nsur edr isk.
 Issuingoft hepol i
cy
 Thepol icyist heact ualdocumentofcont r
actbet weent hei nsurerandtheinsur
ed.It
containst ermsandcondi t
ionsoft heinsur ancecover .Thedocumenti sissuedwithi
n
thir
tydaysandoncei ssuedi treplacest hecovernot e.

3.
Expl
ainfourwaysi
nwhi
cht
hei
nsur
ancei
ndust
rycont
ri
but
est
othedev
elopmentofKeny
a’s
economy. (10mks)
 Conti
nui tyofbusi ness
o Ever ybusi nessent erprisei sexposedt oavar ietyofr i
skse. g.fi
re,thefte.t.
c.The
occur r
enceofsuchr isksof t
enr esultinf inanci allossest othebusi ness.
Insurancepr ovidesadequat eprot ecti
onagai nstsuchr isksi nthat,i
fat rader
sufferslossesasar esultofi nsuredr isk, she/ hei scompensat ed,thushe/ she
i
sabl etocont i
nuewi thbusi nessoper ations.
 I
nvestmentpr ojects
o I nsuranceenabl esi nvest orstoi nvestinpr ofitabl eyetr i
skybusi nesspr ojects
thatwoul dot herwiseavoi ded.
o Notal lt
hemoneyr ecei vedaspr emi ums( byt hei nsurancecompani es)isused
upf orcompensat iont ot hosewhohavebeenexposedt or iskandsuf f
ered
l
osses.Ther estoft hemoneyi sinvest edi not herbusi nessest oear nprof i
ts.
 Creat
ionofempl oyment
o I nsurancedoespr ovideempl oymentoppor t
uni t
iestomember soft hepubl ic.
 Governmentpol icy
o Thepr ofit
sear nedar easour ceofr evenuef ort hegover nmenti .
e.insurance
compani esar epr ofit
-maki ngorgani zationswhi chgener aterevenuet othe
governmentt hroughpayment soft axes
Nov
els,
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 Creditf acil
iti
es
o Thei nsur ancei ndust ryhaveal soest ablishedcr editorl endingf aci l
iti
eswhi ch
thebusi nesscommuni tyusesbybor rowi ng.Loansar emadeavai labletothe
publicfordi fferenti nvest mentpr ojectsi ndif f
er entsect orsoft heeconomyand
alsof orper sonalr equirement s.
 Devel opmentofi nfrast ructures
o Thei nsur ancei ndust rypl aysacr ucialr oleint hedevel opmentofur banfacili
ti
es
i
nmaj or t owns.Bot hr esident ialandof fi
cebui l
dingshavebeendevel opedby
i
nsur ancef i
rms.Thef i
rmsal sopar ticipateindevel opmentpr ojectsi nthear eas
wher etheyoper ate.Theycont ribut et odevel opmentofar egionbyconst r
uct i
ng
andinf rastructur alfacilit
ies
 Lif
epol i
ciescanbeusedassecur i
tyf orl oansf rom ei thert heinsur ancecompanyor
otherf i
nanci alinstit
ut i
ons.
 Provisionofl i
feandgener alinsurancepol iciesencour agesKenyanst opl anaheadf or
thei
rdependant st herebyr educi ngt henumberofneedyf ut urestudent s.
 Losspr event i
on- Thei nsur ancecompani esencour aget hei nsurednott ocause
accident sthuschannel ingt heuncl aimedr esour cesi ntot heeconomy.
 Revenuet ot hegover nment -incomesr eal i
sedi nt hei nsur ancei ndustr ysuchas
profi
tsmadebycompani esandsal ar i
est oempl oyeesar esubj ectedtot axation.This
providesr evenuet ot hegover nment .
 Creatingconf idencei ninvest or s–i nsur anceser vicescr eat esconf i
dencei ninvestors
whoar eablet oi nvesti nr i
skybutpr of i
tabl ear easi nt hatt heyar eassur edof
compensat ioni ncaseoft her i
skst aki ngpl ace.

4.Di
scussvar
iousinsur
ancepol
ici
es/
circumst
ancesunderwhi
chani
nsur
ancecompanywoul
dnot
compensat
et hei
nsuredi
ntheeventoft
heloss. (
10mks)

 Wheni nsuredhadnoi nsurablei nteresti

nt hepr oper l
ydestroyedashewi l
lnotsufferany
f
inanciall
oss.
 Whent heinsureddi dnotdiscloseal ltherelevantf acts.
 Whent hepr opert
yhasbeendest royedbyanactofGod, ast heri
sksar enotinsur
edwhent he
l
osswascausedbyani nsurablee. g.actofGod/ earthquake.
 Whent hepol i
cywasnoti nf orceatt hetimeofl ossi nsur
edwhent heinsuredpurposelycauses
t
heloss.
 Whent heinsurancecompanyi sinsolvent,henceenabl etoitsfi
nancialobl
igati
on.Latecl
aim
whereinsuredf ai
lstoclaim withinst i
pulat
ionper iod.
 I
mpr operprocedur eswheret hei nsuredfail
st ofollowl ai
ddownpr ocedurewhen cl ai
ming.

5.Di
scussvari
ousi
nsur
ancepol
ici
est
hatt
heownerofasuper
mar
ketmayfi
ndi
tusef
ulf
ort
he
busi
ness. (
12mks)

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 Thef t
/burglary:topr otectt heownerf rom lossesthatmaybemadet hrought heft/burglar
y.
 Fi
del i
tyguar anteed:t ocoverl ossessuf feredthroughwor ker’
sdishonesty
 Wor kman’scompensat ion:t hi
sistoassi stt
hewor ker
swhomaybei nj
uredint hebusi ness.
 Fi
re:t ocompensat et heownerf orlossesar isi
ngf rom f
ir
e.
 Mot orvehicle:tocoverbusi nessvehi clesincaseofacci dent
 Medi calcoverpol icy:insur ancewi l
lcompensat ef ormedicalclai
msoft heempl oyees.
 Personalacci dentcover :insur esaccidentt otheowneroft hesuper marketinthecour seofhi
s
duty.
 Good/ cashont ransit:insur esagainstl ossesofgoods/ cashwhi leontransi
t
 Platesglosspol icy:insur esagai nstbr eakagescausedbycl osureofbusinesstempor ary.
 Sprinklerl
eakagepol i
cy:cover saccidentaldamagecausedbyacci dent
alleakages of
spri
nkl er
s.

6.Expl
ainf
ourbenef
it
soft
he‘
pool
ingofr
isks’
toani
nsur
ancecompany
. (
8mks)

 Pooli
ngofrisksenabl
esani nsurancecompanyt ocreateacommonpooloff undsf r
om the
regul
arpremiumsfrom diff
erentcli
ents.
 I
tenablestheinsur
ancecompanyt ocompensat ethosewhosuf f
erl
osswhent heri
sksoccur .
 Theinsur
ancecompanyi sabl etospreadrisksoveral ar
genumberofinsuredpeople.
 Surpl
usfundscanbei nvestedin,f
orexampl egivi
ngoutl oansorbuyi
ngsharesinrealestat
es
 I
tenablestheinsur
ancecompanyt omeeti tsoperat
ingcost sbyusi
ngthepoolfunds.
 I
tenablestheinsur
ancecompanyt icalcul
atepremiumst obepaidbyeachclient
.

7.
Expl
aint
hef
act
orst
hatmaymakei
tnecessar
yforani
nsur
ancecompanyr
e-ensur
e.
 Valueofthepr operty–whent hevalueofpr oper
tyisgreatsuchasashi pasingleinsurance
companymayf inditdiff
icul
ttobeartheloss.
 Highriskofloss–whenchancesofl ossthroughtheinsuredrisksar ehighitbecomes
necessarytore-i
nsure
 Numberofr iskscover ed–whent heinsurancecompanyhasi nsur edmanydi ff
erentrisks,i
t
wouldbet oocost l
ytocompensat emanycl aimsatonce, hencet heneedf orre-
insurance.
 Needt ospreadt herisks–whent heinsurancecompanywi shest oshareliabi
li
tyintheevento
amaj orl
ossoccur ri
ng.
 Governmentpol icy–t hegovernmentmaymakei talegalrequirementf oraninsurance
companyt ore-i
nsure.

8.
Expl
aint
hemeani
ngoft
hef
oll
owi
ngt
ermsasusedi
ninsur
ance (
10mks)
i
)Uber rimaef idei-Iti
sapr i
nci plet hatr
equi resaper sont akingoutinsurancecovert
odi scl
ose
allmat eri
alfactsrelat
ingt ot heper sonorpr opertybeingi nsuredwithhonesty.
i
i)Indemni ty-i t’
sapr i
nci plet hatst atesinsur ancecont ractputsonei nthefi
nanci
alpositi
on
he/ shewasj ustbef or
et her iski nsur edagai nsttookpl ace.
i
ii)Thir
dpar tymot orvehi cleinsur ance–Thi spol icycoverslossescausedbyt hevehicl
et o
otherpeopl e,othervehiclesandpr operty.
i
v)Cont ri
bution.–Thispr incipleoper at
esi nasi tuati
onwher etheinsuredhastakenaplacewi
twoormor einsurancecompani escover i
ngt hesamer isk.I
nt heeventoflossallt
heinsurance

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companieswoul
dcontr
ibuteproport
ionat
elyi
nor dertoi
ndemnif
yt heinsur
ed.
v)Subrogat
ion-Thi
sprinci
plestat
esthatwhateverremainsoft
hepr opert
yinsur
edaf
tert
he
i
nsuredhasbeencompensatedbecomest hepropertyofthei
nsurer.

9.Di
scussf
ourci
rcumst
ancesunderwhi
chani
nsur
ancecont
ractmaybet
ermi
nat
ed.(
8mks)
 Whent heinsuredhasnotact edutmostgoodf ait
handi sdiscoveredhencemaki ngt hecontrac
i
nval
id.
 Whent heriskinsuredhasoccurredandcompensat ionpai dthisbringinganendtot hecontract
 Onmat urit
yoft hecontract
,thi
ssignifyi
ngtheendoft hepol i
cyagr eement.
 I
ftheinsureddeci dedtodisconti
nuet hecont
r actmaki ngthecont ractnolongertenable.
 Whenacour toflawor dert
erminati
onoft hecont r
actthi sr
ender i
ngi twil
landvoid
 Whent heinsurancecompanyi sf i
nall
ywoundup
 Duetof ai
luretoreviewthecontractthisl
eadingt olapseofpol i
cy.
 Wheret heinsuredceasestohavei nsurabl
eint er
estint hepropertyincasepropertyissold.

11. Explainfi
veway
sinwhi
cht
hei
nsur
ancei
ndust
rypr
omot
esgr
owt
hofbusi
ness
enterpri
ses

 Insurancei ndust r
ymobi li
zessavingswhi chthebusi
nesscommuni tyborrows
tost art/r
unandgi veloanst opoli
cyhawker sear
ninginterest
.
 Itcreat esconf i
denceamongt hebusinesscommuni tywhi chenablesthem to
taker i
sks.
 Variouspol i
ciesprovidedbyt heindustr
ycanbeusedassecur i
tyt
oobt ainbank
l
oansf orbusi nessuse.
 Itprovidescompensat i
ont othebusinesscommuni t
yi ntheeventof
occur renceofi nsuredrisk.
 Theyi nvesti nrealestateswhi chcanbeusedbybusi nesscommuni ty.
 Theyadvi ce/informt hebusinesscommuni t
yonthemostconveni entpol i
cies
pertainingt oinsuranceoft hei
rbusinessthatcansuittheirpur
posesher eby
attr
act ingmor ecustomer s.

12. Hi
ghl
ightf
iveci
rcumst
ancesunderwhi
chani
nsur
ancecompanymayunder
taker
e-
i
nsur
ance
 Whenvalueofpropert
yisgreatandri
skt
oohigh
 Tospreadther
isk
 I
fiti
sthegovernmentpoli
cy
 Whenthenumberofr i
skscoveredaremany
 Whenchancesofriskoccur
ringarehi
gh

13. Expl
ainf
ivebenef
it
sthatcoul
dbeenj
oyedbyaper
sonwhodeci
dest
otakeoutan
endowment
 Poli
cyhol
dercanusethepoli
cyascol
l
ateralsecur
it
ytoobt
ainl
oansorcr
edi
t.
 Poli
cyhol
derpart
akes/
sharesint
heprof
itofthecompanybyear
ning
bonuses/
int
erest
s

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 Incaseofdeat hbef orematuri

tythebeneficiari
esofpolicyholderareentit
ledto
profit
s/bonus/ sum assur
ed.
 Thepol i
cyhol derenjoysthesum assuredi fheisalivebymat uri
tydate.
 Policyholderisent i
tl
edtoasur r
endervaluewher econtracti
sterminatedbyt he
assured.
 Itcanbeusedbyt hepoli
cyholderasaf orm ofsavingsf orfut
ureinvestment.
 Thepol i
cyhol derisabletodecideonthedur at
ion/t
imef rame/maturit
ydat e
thusenabl etof i
titi
nhisfutur
ef i
nanci
alpl ans.

FORMOREHI GHSCHOOLRESOURCESCONTACT MRI SABOKE0714497530

14. Lopezwhorecentl
ycomplet
edbui
ldi
ngahousehasinsur
editagai
nstt
heriskoffi
re.
Explai
nfi
veci
rcumstancest
hatmayprev
entherf
rom bei
ngcompensatedinthe
eventofl
ossoccurr
ing
 Whenthei nsur edhadnoI nsur abl
eint er
estinthepr opertydestr
oyedasshe
wouldnotsuf ferfinancialloss.
 Whenshedi dnotdi scloseal ltherelevantfactsoft aki
ngt hepoli
cy.
 Ift
hepolicywasnoti nf orceatnat uraldisasterast herisksarenoti
nsurableeg
eart
hquakes
 Whenthepr opertyisdest r
oyedbynat ur
aldisasterasr i
skar enoti
nsurabl
e
 Whenthel ossoccur r
edduet owill
fulacti
onoft hei nsured.
 Whenthei nsur ancecompanyi sinsolventhenceunabl et omeetitsfi
nancial
obl
igat
ions.
 WhenLopezf oll
owsi mpr operpr ocedureswhencl aimingcompensat i
on
 Whenshef ail
edt oclaim compensat ionwithinstipulat
edt ime.

15. Hi
ghl
ight4f
act
orst
hatmakear
iskv
ali
dfori
nsur
ance
 Parti
esinvol
vedmusthavelegalcapaci
ty(
roundmind, notbankr
uptand18
yearsorabove)
 Insur
edandi nsur
ermustaccepttheter
msandcondi t
ionsofthecontr
act
.
 Theremustbepayment (
premium)andaconsi der
ation(compensati
on)
 Thebusinessmustbeforalegalpurpose(
notprohibit
edbyl aw)

16. Hi
ghl
ightf
ourf
eat
uresofi
nsur
abl
eri
sks
 Ri
sksmustbeacci dental
 Theriskmustleadtoal ossthatismeasurablei
nmonetaryter
ms
 Theinsuredmusthaveinsur abl
einter
est
 Therehastobel ar
genumberofsi mil
arr
isks
 Thevalueoftheinsur
edi tem shoul
dbeeasilydet
ermi
ned.
 Possibi
li
tyoftheri
sktakingplacemustnotbenearcert
ainty.

17. Li
stf
ourt
ypesofl
if
eAssur
ancepol
ici
es

 Ter
m assur
ance
 Annui
ti
es

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 Stat
utory(NSSF,
NHI
F,WCPS)
 Wholeli
fe
 Endowment

Gi
vef
ourr
easonst
hatmakei
nsur
ancecompani
esdecl
inet
oinsur
eact
sofnat
ure.4mks

thel
ossmayaf fectmanypeopleatago

theval
ueoft helossmaynoteasi l
ybedeter
mi ned

thel
ossi sunpredict
able

ther
emi ghtbever yfewpeoplewil
li
ngtobeinvolvedt
ofor
m apool

i
tmaynotbeeasyt odeter
minepremiumstobepai d

thepossibi
li
tyofther i
skoccurr
ingi
scert
ain

18. Hi
ghl
ight4f
act
orst
hatdet
ermi
net
heamountofpr
emi
umsi
nli
feassur
ance

 Ageofassured
 Occupati
onoftheassured
 Resi
denceoftheassured
 Healt
hstatusoft
heassured
 Theamountofsum assured
 Thelengt
hoftheinsur
ancecont
ract
.

19. Jumawhol esalersownedamot orvehi

cleval
uedatKshs.2,
000,000whicht hey
comprehensivelyinsur
edforKshs.1,600,
000.Thevehi
clewasinvolv
edi nan
acci
dentandwr i
tt
enof f
.DeterminetheamountofmoneyJumawhol esaler
sshoul
d
expectt
ogetf rom thei
rinsurer

Compensat
ion=sum assur
ed/i
nsur
edpr
emi
um xl
oss
Actualv
alue

1,
600,
000x1,
600,
000=1,
600,
00
2,
000,
00

20.Expl
ainf
ivechar
act
eri
sti
csofpr
oper
tyi
nsur
ance. (
10mar
ks)

 Premium char
gedidsdependentonthedegreeofr
isk/
numberofr
isks/valueof
propert
y-hi
gherpr
emium wil
lbepaidforri
sksofhi
ghdegree/
number/valueandvi
ce
versa.

 Iti
sacontr
actofi
ndemnit
y–theownersoft
heinsur
edproper
tyis
compensat
ed/r
est
oredfort
helossoft
heproper
tyuponoccur
renceoft
her
isk.

 I
tisashor
tter
m cont
ract–Thei
nsur
ancecont
ractendsaf
teraspeci
fi
cper
iodof
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t
imeusual
l
yoneyear
/mustber
enewedf
ort
hepol
i
cyt
ocont
inuebei
ngi
nfor
ce.

 Pol
icycannotbeassignedtothenextofkint
oanotheri
ndivi
dual
-theowneroft
he
pol
i
cycannott r
ansferitincaseofsale/
changeofownershi
pofproper
ty.

 Ithasnosurrenderval
ue-shoul
dthei
nsuredter
minat
et hepoli
cybef
oret
hecont
ract
expir
es,he/
shei snotent
it
ledtoanyr
efundfr
om theinsurer
.

 Ther
emustbeani nsurabl
einteresti
nthepropert
ytobeinsured.Theinsur
edmustbe
i
napositiont
osuf ferfi
nanci
allossintheeventofther
iskcoveredhappeningi
nor
der
tocl
aim compensation.

21.
Expl
aint
hepr
ocedur
efol
lowedwhenmaki
ngani
nsur
ancecl
aim
 Not if
yingt heinsur er–i mmedi atelyther i
skinsuredagai nstoccurst heinsur edshould
notifythei nsurer.
 Fill
ingacl ai
mf orm –af t
ernot i
fi
cat i
ont heinsurerissuest heinsuredwi thanof fi
cial
claimf ormt obef i
lled.Detai
lsrelatedt otheoccur renceoft heriskar egiven.
 Investigat i
onoft hecl aim -Onr eceivingt hefi
ll
edcl aimf ormthei nsurerlaunchesan
i
nvest i
gat ionconcer ni
ngthecauseofoccur renceoft her i
sk
 Prepar ationoft heassessmentr eport–Oncei tisest abli
shedthatt heclaimi sval
id,
i
nsur ancecompanyusesassessor stopr eparear eportconcerningt heext endofthe
l
osssuf fered.
 Paymentoft hecl aim –onr eceivingt hereportthei nsurancecompanymakes
arrangement stopayt heinsured.

22.
Discussanyf
ivet
ypesofmar
inei
nsur
ancepol
ici
est
akenbyashi
p
 Mar inehul lpol
icy–Thi spol icycover stheshi pagai nstlossordamageasa
resultofrisksatt hesea.Ri sksi ncludest orms, f
ire,coll
ision
 Mar inecar gopol i
cy–Thepol i
cycover scar goagai nstlossordamagewhi le
beingt r
anspor tedbyt heshi p.
 Por tpol
icy-Thi spol i
cycover saspeci fi
edper i
lwhent heshi piseit
herbeing
l
oadedof floadedorser viced.
 Voyagepol i
cy-cover st heshi porcar goonapar ticularjour neyegship
transportingcar gof r
om t hepor tofMombasat oDaressal aam
 Timepol i
cy–cover sl ossesar isingwi t
hinaspeci fi
edper i
odoft i
me.Itusually
cover stheshi pitself
.
 Mi xedpol i
cy–Thi scover sshipsagai nstl osseswhi leonaspeci fi
edvoyage
andspeci f i
edtime.
 Fleetpolicy–cover saf leetofshi psagai nstlossesunderonepol i
cy.Thismay
bet hecaseespeci allywher et herear emanyshi psbel ongi ngt othesame
organization.
 Composi tepolicy–Appl ieswher esever alinsurancecompani eshaveinsureda
par t
icul
arshi pagai nstthesamer i
sk.

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23.
Expl
ainf
ivef
act
orsconsi
der
edbyt
hei
nsur
erwhendet
ermi
ningpr
emi
umst
obe
char
gedonapoli
cy
 Healthoft heperson
 Frequencyofoccur renceofri
sks
 Extendofpr eviouslosses
 Residenceoft heinsured
 Occupationoft heinsured
 Valueoft hepropertyinsur
ed
 Ageoft heper sonort hepr
opert
yinquest
ion
 Periodtobecover edbyt hepol
icy

24.
Discusst
hechar
act
eri
sti
csofGener
ali
nsur
ance
 Thepoli
cycannotbeassi gnedtoanybodyel se
 Thepoli
cyhasnosur renderval
ue
 Thepoli
cyisacontractofindemnity
 I
tisnormall
yashor tt
erm contractthatrequir
esperiodi
calr
enewal
 Requi
restheinsur
edtohavei nsurableinter
estintheproper
tybei
nginsur
ed
 Premiumschargeddependont hevalueoft hepropert
yandthedegr
eeofthe
ri
sk.

25.
Out
li
nef
ivedi
ff
erencesbet
weenl
if
eassur
anceandpr
oper
tyi
nsur
ance

Li
fe Assur
ance Pr
oper
tyi
nsur
ance

a)
Risksar
eboundt
ohappen Ri
sksmayormaynotoccur

b)
Maybeusedasasecur
it
y Notusedasasecur
it
yforl
oan

c)Val
ueofthepoli
cyappr
eciat
esand Sum i
nsur
edr
emai
nsconst
atnt
sum assur
edpaidatmatur
it
ydate

d)
Thei
nsuredmayinsur
esamer
isk Thei
nsur
edisnor
mall
yrequi
redt
o
wi
thdi
ff
erentcompani
es i
nsur
eariskwi
thonecompany

e)
Notsubjectt
othepri
nci
plesof Subj
ect
edt
oal
li
nsur
ancepr
inci
ples
i
ndemnit
y,subr
ogat
ionandcontr
ibut
ion

f)
Nolimi
toramountspel
toutona Cover
sval
uedependsont
heval
ueof
cover thepr
oper
ty

g)
Clai
m guar
ant
eed Mayormaynotr
esul
tinacl
aim

26.
Expl
aindif
fer
encesbet
weenwhol
e-l
if
epol
icyandendowmentpol
ici
es
Whole-
li
fe Endowmentpol
icy

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Compensat
ioni
saf
terdeat
hof Compensat
ioni
saf
terexpi
ryof
assur
ed agr
eedperi
od

Pr
emi
umsar
epai
dthr
oughoutt
he Premiumspai
donl
ydur
ingt
heagr
eed
l
if
e peri
od

Benef
it
sgot
othedependant
s Theassuredbenefi
tsunl
essdeat
h
preceedsexpi
ryoft
heagreedper
iod

Aimsatfinanci
alsecur
it
yoft
he Aimsatf
inanci
alsecur
it
yoft
he
dependants assur
edanddependants

27.Expl
ainanyfi
veci
rcumstancesunderwhi
chani
nsur
ermaynotcompensat
ethei
nsur
ed
aft
ertheoccur
renceofther
isk.
 Whenthelossi
sreport
edaf t
er14daysf rom t
het i
meofoccur r
ence.
 Whenthelossi
scatastr
ophic/bestalt
sal ar
genumberatt hesamet ime
 Whenthelossi
sselfcaused/int
entional.
 Wher
et her
eisnocloserel
ationshipbetweent heri
skinsuredandthecauseoft
he
l
oss.
 Whentheinsur
edhadstoppedpayi ngpr emiums.
 Whentheinsur
eddidnotfoll
owt her i
ghtproceduresforcl
aiming.
 Whentheinsur
edhadnoi nsurableinter
estinthepropert
yinsured.
 Whentheinsur
eddidnotdiscloseorobeyt heprinci
pleofutmostgoodfait
h.

28.Expl
ain5char
act
eri
sti
csofgener
ali
nsur
ance
˗Premi um char gedisdependentont hedegr eeofr isks/numberofr i
sksorvalueoft he
proper tyhigherpr emiumsar echargedf orhigherrisks)
˗Itisacont ractofindemni ty-compensat ionisdonef ort hefi
nanciallosstotheowner
˗Itisashor tterm contract-insurancecont r
actendsaf teraspeci fi
cper i
odandmustbe
renewedannual l
ytobei nforce
˗Policycannotbeassi gned-t heownercannott ransf ert hepolicytoanextofki n.Incaseof
sale,thecont r
actexpi r
es
˗Ithasnosur rendervalue-ifthepol icyholdert erminat est hecont r
actprematurely,heisnot
entit
ledofanyr efund
˗Ther emustbei nsurableinteresti
nt hepr operty-onecanonl yi nsurehisownpr opertyand
notanot herper sons;ownermustsuf ferfi
nanciallossi ncaseofoccur r
ence
˗Ther eisamaxi mum limittot heamountofcompensat ionusual l
yuptothevalueoft he
proper tyinsured
˗Thepol icycannotbeusedasacol lateral-holdercannotusei tt oacquir
ealoanassecur i
ty
˗Cont ractofcont ri
buti
onappl ies-incaseofunder insur ancethei nsurershar
est helosswith
theinsur ed
˗Uncer tainit
y-t her i
skmayormaynothappen, ri
ski snotguar anteedofoccurring
˗Principleofsubr ogati
onappl ies-thei nsuredshoul dnotbenef itfr
om thescraporbenef i
ts
from thirdpar ties.

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PRODUCTPROMOTI
ON.
1.Out
li
ne4unet
hical
pract
icest
hatar
eassoci
atedwi
thpr
oductpr
omot
ion
 Gi
vef alsei nformati
onaboutapr oduct
 Notdiscl osingsideeffect
sofapr oduct
 Overpricingofgoods
 Cheatingoni ngredi
entsofgoods
 Advertisingwi t
hnegat i
veeffect
sont heenvir
onment
 Promot inggenui neproductsbutsellcount
erf
eit
s

2.St
ate4ser
vicesof
fer
edbyadv
ert
isi
ngagenci
esi
npr
oductpr
omot
ion
 Theyhel
por ganizat
ionsindesigningtheirtr
ademarks,l
ogosand
adver
ti
singmat eri
als.
 Theybookspaceandai r
t i
mefort hei
rcustomersi
nvariousmedia.
 Theyoff
eradvisoryservicestotheircl
ientsonsel
l
ingtechni
ques
 Theyadvert
iseonbehal foftheircli
ent
s.
 Theychooseonbehal foft hei
rcli
entstheappropr
iat
emedi atobeused.

3.St
ate4r
ecentt
rendsi
npr
oductpr
omot
ion
 Useofint
ernetinadverti
sing
 Manyf.m.radi
ost at
ionsbeingused
 Useofadverti
singagenciestomarketpr
oduct
s.
 Useofroadshowsandconvoys
 I
ntensi
fi
cati
onofper sonalsell
i
ng
 Useofmobi l
ephones( sms)

4.St
ate4obj
ect
ivesofi
nst
it
uti
onal
adv
ert
isement
 Pr
omot esthenameoft heinsti
tuti
on
 Tocountersti
ffcompeti
tion
 Toopenupnewmar ketterr
it
ori
es
 Tocreateawarenessoftheinsti
tut
ion

 St
ateany4cur renttrendsi nproduct
ionpr
omot
ion.

Useofel ectr
onicbi l
lboar ds.

HIV/AI DSawar eness

Cateri
ngf orther i
ghtoft heneedy.

Digi
taladverti
singscr eens.

Useofwebsi tes.

Roadshowsandconvoys.

Cateri
ngf orther i
ghtoft heyouth.

Gendersensi ti
vi
t yawareness
Nov
els,
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5.Out
li
ne4benef
it
sthatconsumer
sder
ivef
rom adv
ert
isi
ng
 I
tcreatesawar enessoftheproductandexistenceofproduct
 I
tcautionstheconsumer saboutthepossiblesideef
fects
 I
talsoeducat estheconsumersonhowt ouset hepr
oducts.
 Provi
desent ert
ainmentforconsumers
 Gi
vesinformat i
onaboutt hepr
icesoftheproduct.
 Consumer sgetinfor
mationaboutavar i
etyofgoods.
 Helpsconsumer stomakeagoodchoi ce

6.Hi
ghl
ight4r
easonswhybusi
nessesst
il
luser
adi
ost
opr
omot
ethei
rpr
oduct
s
i
nspi
teofot
herhi
ghl
yadvancedmedia
 Widergeogr aphicalcover
 Servesbot ht helit
erateandill
iteratemembersofthesociet
y.
 Dif
ferentr adiochannel sareablet ocasti
ndif
fer
entlanguages
 Bli
ndcangett hemessage
 Ablet oreachmanypeopl eatthesamet i
me
 Radioi saccessibleeveni nther emoteareas
 All
owsr epetit
ionofmessage
 Aff
or dable/ cheapertoadver t
ise.

7.Whatar
etheadv
ant
agesofper
sonalsel
li
ngasamet
hodofsal
espr
omot
ion
 Createsgoodr el
ationshipbet weencust omersandsel l
ers
 Thesellerhasachancet oexpl ai
nfinerdet ai
l
soft heproduct
 Thesellercancollectinfor
mat ionregardingthedemandoft heproduct
.
 Sell
ercanper suadet hecustomert obuyt hepr oduct.
 Thebuyeri sabletomakei nformeddeci sions
 I
ttakescar eofbot hthelit
erateandi l
lit
erates
 Thesalespersoncandemonst rat
et heoper at
ionsanduseoft heproduct
 I
tgivesbuyeranoppor tuni
tyt onegotiatethetermsofpur chase.

8.State4ci
rcumst
ancesunderwhi
chaproducerofapr
oductmayuseper
sonal
sell
ingmethodt
opromoteaproduct
 Whenlaunchi
nganewpr oduct
 Whentheproductistai
l
or edtomeetcustomer sspeci
ficat
ions
 Wher
et hemarketisconcent r
atedinonearea
 Wher
edemonst rat
ionsisr equi
red
 Whenthevalueoftheproducti shi
gh
 Whenthebusinesscanaf fordtofi
nancethesalesfor
ce.

9.Out
li
ne4di f
fer
encesbet
weenf
reesampl
esandgi
ft
s
FreeSamples Gi
ft
s

Nov
els,
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Si
mil
artothepr
oductbei
ng Notnecessar
il
yrel
atedt
othe
pr
omoted pr
oduct

Gi
venbef
oret
hepr
oducti
sbought Gi
venaf
terbuyi
ngt
hepr
oduct

Gi
venf
ort
ri
alpur
poses Createsbr
andyl
oyal
ty/
ret
ainst
he
customers

I
nducespotent
ialcust
omer
sto Makest
hecustomer
stobuygoods
makeapurchase i
nlar
gequant
it
ies

10.Give4ci
rcumst
ancesunderwhi
chamanuf
act
urerwoul
dusei
nfor
mat
ive
adv
ert
isi
ng
 Whenlaunchi
nganewpr oduct
 Whentherearechangesinprice
 Whentherearenewusesoft hepr oduct
 Toi
nform aboutf
eaturesofapr oduct.
 Toi
nform onwheretof i
ndthepr oduct.

11.Stat
e4circumstancesunderwhi
chonewoul
dchooset
oadv
ert
iseapr
oduct
t
hrought
elevi
sion
 Widecover age–r eachesbothli
terateandil
li
ter
ate
 Audio-vi
sualenablescustomerst osee,hear–theadvert
isementappeal
s.
 Educatespot ent
ialcust
omer sonusageoft heproduct
 Possibletoil
lust
ratethebasicfeaturesofaproductanditsusage.
 Hardtoi gnoresi
ncei ti
sentert
aining.

12.
Stat
e4di
sadv
ant
agesofaf
tersal
esser
vicesasamet
hodofpr
oductpr
omot
ion
 Itisanext raexpenset ot hetrader
 Install
ation,maintenanceandr epai
rsmayrequi
respeci
ali
stswhoar e
expensi vetohire.
 Thecust omeristiedt oonet raderf
ormaint
enanceandrepair
 Itmayencour agecar elessnesswhenhandlingt
heitemswhi chresul
tst
o
l
osses
 Ther eiswast ageoft i
meandmoneyi ft
hebuyerandthetraderare
geogr aphical
lyfarapar t

13.
List4di
sadv
ant
agesofadv
ert
isement
stot
heconsumer
 Incr
easeinpricesofproduct
s
 Leadstoimpul sebuyi
ng
 Erodescult
ure
 Encouragesconsumpt i
onofhar
mfulproduct
s
 Doesn’ti
nform consumersofsi
deef
fects

Nov
els,
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 Leadst
oconsumpt
ionofl
owqual
i
tygoods.

14.
Out
li
ne4f
eat
uresofawel
lpr
epar
edadv
ert
isement
 Legal
 Decent
 Honest
 Trut
hful
 Mustnotcausegr
ave/
widespr
eadof
fence.

15.
Highl
ightf
ivebenefi
tsaccr
uingt
oasel
lerwhousest
heper
sonalsel
li
ngmet
hod
topromoteherproducts

 Personalsel l
i
nggivesthesel l
eranoppor tunit
ytodemonst r
atetheproducts
thattheyar esel
li
ng.
 Shecangetani mmedi atefeedbackandactoni t.
 Salespersonscanof f
ermor eelaborateexplanati
onsabouttheproduct.
 Sell
erwillbeabletogetor dersdirect
lyfrom customers.
 Personalsel l
i
ngcompl imentsotherpr omotionalact
ivi
ti
es.
 Sell
erscangetanoppor t
unityt
oconvi ncethebuyerhencemakeasal e.
 Sell
erhasanoppor tuni
tytoobservet hereactionofcustomertotheproduct
 I
mpr ovest herel
ati
onshi pbetweensel l
erandbuyer .
 Enablesthesel l
ertotargetthespecifi
cgr oupsinquesti
on.

16.
Advert
isi
nginnewspaperisoneofthepopularwaysofpromot
ingsal
eofgoods
inKenya.Hi
ghl
ightf
iveli
mitat
ionsofadver
ti
singgoodsinanewspaper.
 Adverti
sl i
mitedt othosewhoar el i
ter
ateonly.
 Demonst rat
ionsmaynotbepossi ble.
 Adverti
singcanbeexpensi vetotheuser .
 Readersmayi gnoretheadverti
sement
 Someadver tisement smaynotbeappeal i
ngast heyar
enotcol our
ed.
 Readersinterestedinspecifi
careasoft henewspaperegspor t
sand
ent
ertainmentmayout looktheadver t
isement.
 Newspaper sar enotaffordabl
etomanypeopl eandtherefor
etheadvertwi
l
l
onl
yreachpeopl ewhocanaf f
ordt obuy.
 Advertdoesnotl astlongsincenewspaper shaveshortli
fespan/are
di
sposedof fver yfast.

17.
Highl
ightf
iveet
hicali
ssuest
hatshoul
dbepr
act
icedi
nabusi
ness
 Ensurenodiscr
iminat
ioninbusinessi
nareassuchaspr omot
ion,tr
aini
ng,
salar
iesandassi
gnmentofdut i
es.
 Ensureprot
ecti
onoftheenvir
onmentt oavoi
dpollut
ionanddegradati
onof
theenvir
onment.
 Ensuresri
ghtsofemployeesareuphol
despecial
lyinter
msandcondi ti
ons

Nov
els,
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ah@g
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com

ofemployment/wel
fare.
 Avoidconsumerexploi
tati
onthroughpracti
cessuchasover chargingt
hem,
fal
seadverti
sement.
 Eli
minatesuseofunfairmeansofachievi
ngbusi nessobject
ivessuchgivi
ng
orrecei
vingabri
be/hoardinggoodsawai t
ingtheirpr
icestorise.

18.
Expl
ainf
iveadvant
agesofaf
tersal
esser
vicest
oabusi
nessusi
ngi
tasamet
hod
ofpr
oductpromoti
on.
 Itisasour ceofadditionalr
evenuet othefi
rm.
 Cust omer sareassuredoflongerser vi
cesfr
om t
heproductduetorepair
sand
mai ntenance
 Cust omer sareoff
eredassistanceespecial
lywhendeali
ngwitht
echnicalor
sophi st
icati
on.
 Impr ovestheimageoft hebusinessbycreati
nggoodreput
ati
on.
 fir
msest abl
ishcontactwiththeircustomer
shencecangetfeedback.

19.FORMOREHI GHSCHOOLRESOURCESCONTACT MRI SABOKE0714497530

20.Ani nter
nati
onalcompanyisplanningt
olaunchitsproducti
nthel
ocalmarket.
Highli
ghtthefact
orsthatshoul
dbeconsideredbyt hecompanywhenchoosing
theappropri
atemediathroughwhichtoadvert
isetheproduct
 Cost–Abusi nessf i
rm shoul dgof orthecheapermet hod.
 Natur eoft hepr oduct–Somepr oduct sarebett erpromot edt hr oughsome
met hodst hanot hersegt hoser equiri
ngdemonst r
ationswi llbebest
promot edt hroughper sonalselli
ng.
 Targetgr oup–Thef ir
m shoul dchooseamet hodt hatonl yt argetgroupt o
avoidwast age.
 Thel aw–Af ir
m shoul dchooseonl ythosemet hodsal l
owedbyt helawof
theland.
 Object i
vesoft hepr omot i
onoff i
rm –Themet hodchosenhel pt hefi
r mto
achievet hesetgoal sfort heproductpr omot i
onegt ocor r
ectadent ed
i
mageofapr oductitwillbewi setousepubl i
cr elati
onsmet hod.
 Met hodsusedbycompet i
ngbusi ness–Af i
rm shoul dchooseamet hodof
productpr omot ionthatwi llmakeitcompet efavour abl ewit
hot herfi
rm.
 Availabil
ityofr esources–Fi r
msshoul duset hephysi calandhuman
resourcest hatar eavail
ablei nordertoi mplementt hepr omot i
onmi xegt o
usesal esper sons,thef i
rm musthaveenoughr esour cedper sonsand
fi
nance.

21.
Out
li
nefi
veci
rcumstancesunderwhi
chabusi
nessper
sonmaychoosear
adi
oas
ameansofadver
ti
singhis/
herpromot
ion
 Wher
ehe/ shewant
stousedif
ferentl
anguagestoreachdi
ff
erentpeopl
e.
 Whenshe/hewanttochooset
het i
met oadver
ti
set or
eachtoaparti
cul
ar
gr
oupofli
stener
s.
 Whenhe/shewantstohaveawidecoveragetoreachmanypeople.
Nov
els,
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ah@g
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l.
com

 Wher eonewantstousemusi corentert

ainmenttoadvert
iseinorderto
att
ractpeople.
 Whenhe/ shewantstheadverttoberepeatedsever
alti
mest oreachtimes
toreachmor epeopl
e.
 Wher ehe/shewantstheadvertt
oreachthebli
ndasi tr
equiresl
isteni
ng
only.
 Wher ebothli
ter
ateandil
li
ter
atepeopleneedtobereachedbyt he
adverti
sement.

22.
Expl
ainfi
vebenef
it
sthatsaf
ari
com companywil
lgetbypr
omot
ingi
tspr
oduct
s
byarr
angingapri
cewinni
ngcompetit
iont
hroughthemedi
aasawayofsal
es
promoti
on
 Itsti
mul at
est hedemandf ort
hepr oductt husincreasingsales.
 Itcanbeusedt oopenuporent ernewmar kethencemor esales.
 Itwil
lmaket hepr oductt ocompet eeffectivel
yinthemar ketbecauseofthe
awar enesstot hepeopl e.
 Itwil
linformt heuser saboutt hepriceoft hepr oducthencemor edemand.
 Itwil
lcreateormai ntaingoodcompanyi mageorr eputat
ionhencemor e
demandf orthepr oduct .
 Manycust omer swi l
lbuyt heproducthopi ngt owinet hepri
cehencemor e
sales.
 Thecompanywi llretainthemar ketforthepr oductsincetheuser sar
e
remindedoft hecont inuedexist
enceoft hepr oducti nthemar ket.

23.
Expl
ainfi
vesal
espr
omotionalmethodswhi
chmaybeusedbyt
rader
stoi
ncr
ease
thesal
esvol
umeofthei
rproduct
s
 Advertisi
nggoodst ocreateawar eness/convincecust omers.
 Brandinggoodst ocreatecustomer sloyalt
ygi vevariet
y.
 Pricereducti
on/di
scounthencer educi ngcustomer sexpendit
ure.
 Freegiftshencecustomersgetext ragoods.
 Selli
ngqualit
ygoodswhi chwi l
lsatisfycustomer sneeds
 Organizingtr
adefairsandexhibiti
onst odisplaypr oductst
ocustomer
s.
 Creditfaci
li
ti
eshencecust omerswi llpaylater.
 Aftersalesservi
ces-provi
dingfreeser vi
cesaf tergoodshavebeenbought
.

24.
Bil
lboardsar
ebecomi
ngapopul
armet
hodofpr
oductpr
omot
ion.Expl
ainf
ive
li
mitati
onsofthi
smet
hod
 Theycanbeeasi lyvandal
ized
 Theyareexpensivetoinstallandmai ntai
n
 Theydonottar getaparti
culargroupofconsumer s
 Theycanbedest r
oyedbyweat herbecausetheyar
eexposedt
oel
ement
sof
natur
ee.g.r
ain.
 Theycancauseobst r
ucti
ont omot ori
stsifnotwel
ler
ect
ed.
 Localaut
hori
tiesusuallyi
mposehi ghcharges.
Nov
els,
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ah@g
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l.
com

 Theyar
enotconveni
entt
opeopl
ewi
thvi
suali
mpai
rment

24. Expl
ainf
ivebenef
it
sofusi
ngsoci
almedi
ainpr
omot
ingapr
oduct
.(10mar
ks)

 Incr
easedbr
andAwareness-I
ncr
easebrandr
ecogni
ti
onsi
nceyouwi
l
lbe
engagi
ngwit
habroadaudienceofconsumer
s.
 Bett
ercust
omersat
isf
act
ions.Tr
adewi
llbeabl
etoseethecomment
sfr
om t
he
cust
omerwhichhe/
shecanusetoimpr
ovetheproduct
.
 I
mpr
ovet
hebr
andl
oyal
ty
 Savesont
hecostofsendi
ng,
recei
vi
ngandst
ori
ngi
nfor
mat
ion.
 Hel
ptor
educepaperwor
ksi
ncet
ransact
ionsar
edoneonl
i
ne
 Lar
geandsmallbusinessescant
ransactbusi
nesst
hrought
hesoci
almedi
a
wit
houtdi
scr
iminat
ion
 Fastwayofdoi
ngbusi
ness

DEMANDANDSUPPLY.

1.
Indi
catebywri
ti
ngademandorsuppl
ywhet
hereachoft
hef ol
lowi
ngfact
orsi
nfl
uencedemandor
suppl
yofacommodit
y.
(
5mar ks)

a) Changesi
nthepr
icesofi
nput
s-Suppl
y

b) Changei
ntast
esandpr
efer
ences.-Demand

c) Changesi
ntechnol
ogy-Suppl
y

d) Changesi
nout
comes-Demand

e) Changesont
hepr
iceofot
herr
elat
edpr
oduct
s.-Demand

2.St
atet
hel
awr
elat
ingt
oeachoft
hef
oll
owi
ng.

Demand

i
tst
atest
hatt
hedemandwi
l
lbehi
ghwhent
hepr
icesar
elow

Suppl
y

Nov
els,
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ah@g
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l.
com

I
tst
atest
hatt
hesuppl
ywi
l
lbehi
ghwhent
hedemandsar
ehi
gh

Demandandsuppl
y

I
tst
atest
hatt
hedemandandsuppl
ywi
l
lbeatequi
l
ibr
ium oft
hesuppl
yanddemandcur
vemeet
.

3.
Ineachofthefol
lowi
ngcases,
indi
cat
ewhet
hert
hesuppl
ywi
lli
ncr
ease,
decr
easeorr
emai
n
const
ant.

a)
Ifthedemandf orcoffeeri
ses,thesuppl
yoft
eai
sli
kel
y
t
o ...
.f
ail
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..

b)
Ifthepri
cesofcar sfal
l,t
hesuppl yofpet
rol
asl
i
kel
y
t
o .
..
..
.f
ail
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.

c)
ifthedemandforbeefincreasesthesuppl
yofwool
isl
i
kel
y
t
o ..
..
.decr
eases.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.

4.St
atef
ourf
act
orst
hatmaycauseani
ncr
easei
nthesuppl
yofapr
oduct
. (
4mar
ks)

 Reducedt axati
onofpr oduct
ion
 Favorableweatherconditi
ons
 Reducedcost sofproduction
 I
ncreasedpr i
ceofpr oduct.
 I
ncreasei ndemand
 I
ncreasei nproduct
ion
 Speci
alizati
on
 Governmentpol i
cy
 Futur
eexpect ati
ons.

7.Thef
oll
owi
ngdi
agr
am r
epr
esent
sdemandandsuppl
yofapr
oduct
.
(5mar
ks)

a
d

a)
Label
thel
i
nes(
a)and(
b)

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els,
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a)
Demandcur
ve

b)
Suppl
ycur
ve

-Poi
ntCi
sthepoi
ntofequi
l
ibr
ium suppl
y(quant
it
y)andpr
ice.

-
Equi
l
ibr
ium pr
ice(
PE)andequi
l
ibr
ium quant
it
y(EQ)

8.
Stat
efourf
act
orst
hatmayl
eadt
oani
ncr
easei
nmar
ketsuppl
yofaproduct
.
(
4mar ks)

 I
ncreaseinthepri
ceoftheproduct
 Fai
linthecostofproduct
ion
 Avail
abil
it
yofcheapcredi
t
 Governmentpoli
cy.
 Decreaseinpri
ces
 Whent hedemandishigh
 Futureexpect
edfal
linpri
ce

9. Thedi
agr
am bel
owshowsashi
fti
ndemandcur
vef
rom d0d0t
od1d1.

d0 d1

Pr
ice

d0 d1
Quant
it
y
I
dent
if
yfourf
act
orst
hathav
emadet
hedemandcur
vet
oshi
ftf
rom d0d0t
od1d1

 Fut
ureexpectati
onintheincr
easeofpri
ce
 I
ncreaseinpri
ceofcompl ementar
ygoods
 I
ncreaseinpopulat
ion
 Posit
ivet
astetowardstheproduct

10. Expl
ainf
ivef
act
orst
hatcoul
daf
fectt
hequant
it
iesofcabbagessuppl
iedi
na
market (10marks)

 Technol
ogy-modernmethodsmayi ncreasetheproducti
onofcabbages/poormethodsmay
decr
easetheproduct
ionofcabbage.
 Pri
ceofcabbages-Thehighert
hepricemor eissuppl
ied.Suppl
ied,
thelowerthepr
icet
he
l
owerissuppl
ied.
Nov
els,
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 Gover nmentpol i
cy-f avour able, unf avour ablepol icies-favour ablepol i
ciesmayi ncreasest he
suppl yofcabbages/ unf avour abl egover nmentpol iciesmaydecr easehet hesuppl yofr elated
productdecr easest hesuppl yofcabbages
 Priceofot her/relatedcommodi ties/ relatedcommodi tiesaf f
ectt hesuppl y-i
fpr i
cesofr elated
product sincreasest hesuppl yofcabbagesmaydecr ease/i fpr i
cesofr elatedpr oduct
decr easest hesuppl yofcabbagemayi ncr ease.
 Nat uralf actors/ seasonal /
cl i
mat ic-favour ablefact orsl eadt oi ncreasei nsuppl yof
cabbages/ unfavour abl enat ural/seasonal /cl
imat i
cf act orsmayl eadtodecr easeinsuppl yof
cabbage.
 Skill
s/ trainingoff armer s-Bat terski lls/traini
ngl eadst oincr easei nsuppl yofcabbage/ poor /
skill
s/t rainingleadst ol owsuppl yofcabbages
 Costofpr oduct ion-Hi ghcostofpr oduct i
onl eadst oadecr easei nsupplyofcabbages/ l
ow
cost sleadst oincr easei nsuppl yofcabbages.
 Expect edf uturechangesi npr iceofcabbages- Expect edf ut ureincreasei ndemandl eadst o
i
ncr easei nsuppl yofcabbages/ expect edf uturedecr easel eadst odecreasei nsuppl yof
cabbages.
 Avai l
abi li
tyofi nput sf orcabbagepr oduct ion-ifinput sar eavai l
ablemor emaybesuppl ied/if
availabl elesswi l
lbesuppl ied.
 Deci sionsofcabbagepr oducer s-incaseofdeci siont opr oducemor et hant herewi l
lbe
i
ncr easei nsuppl y/i ncaseofdeci siont opr oducel esst herewi l
lbeadecr ease/ supplyof
cabbages

11. Thef
igur
ebel
owshowsadecr
easei
ndemandf
oracommodi
tyf
rom DDt
oD1D1

Pr
ice

D1 D

Po

D1

O Q1 Q0 Quant
it
y

St
atef
ourpossi
blecausest
hathav
eledt
othi
ssi
tuat
ion

Nov
els,
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 Risei npr iceofcompl ement ar

ies.
 Af alli
nhousehol dincome.
 Fallint hepr i
ceofsubst it
utes.
 Expect edf allinthepr i
ceoft heproduct.
 Negat ivet ast es/preferences/f
ashion.
 Decr easei npopul ation.
 Unf avor ablet ermsofpayment .
 Unf avour ablegover nmentpol i
cy(forexampl
e:-abanoncommondi
ty)
.
 Unf aovour ableseasonalchanges.

12. Wr
it
ethet
ypeofdemandr
epr
esent
edbyeachoft
hef
oll
owi
ngst
atement
s

(
i)Demandf
oracommodi
tycausesanincr
easei
ndemandf
oranot
her
commodi
ty -Der i
veddemand

(i
i
)Demandforonecommodi
tycal
l
sfordemandofanot
hercommodi
ty-Joi
nt
demand/
compli
mentar
y

18. Thef
igur
ebel
owshowsashi
fti
nthesuppl
ycur
veofagi
vencommodi
ty.
Pr
ice

P Eo E1

So S1

O Qo Q1 Quant
it
y

Out
li
nef
ourf
act
orst
hatmayhav
ecausedt
heshi
fti
nthesuppl
ycur
vef
rom Sot
oSr

 Af allinthecostofpr oducti
on
 Fallinpr i
ceofpr oducedgoods
 Technol ogicalprogress
 Conduci venat uralfactorse.g.goodweatherseason
 Gover nmentpol iciese.g.reducedtaxandincreasedsubsi
des
 Futur eexpectationofaf allinpri
ce
 Entryofnewf ormsi ntheindustry
 Increasei nfactorofpr oduction
 Longert ime
 Lessst r
ikes
 Increasei npri
ceofj oi
ntl
ysuppl i
edgoodse.g.beefandhides

Nov
els,
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19. Zawadioperatesahardwarebusi
nessi
nherhometown.Outl
inef
ourmethodsshe
mayusetodeter
mi nepri
cesforhergoodsot
hert
hanthefor
cesofdemandofandsupply.

 Bar gai
ning/Haggling
 Abidingbygover nmentpol icy
 Tender i
ng-off
ersar einvi
tedt oquoteforapr i
ce.Goodsaresoldt
obuyerswiththe
quot at
ionthatbestmeet sZawadi ’sexpectati
ons
 Biddersmakeof f
er sforgoodsandt hebidderwi t
hthehighestof
fert
akesthegoods
(salebyauct i
on)
 Ret ai
lpri
cemai ntenance-sellgoodsaccordingtothedict
atesofthepr
oducer.
 Pricediscri
mination

20.Thedi agram bel

owshowssuppl
ycurv
esoftwoproducersofmaizeindi
ff
erent
countr
ies.Highl
ightf
iver
easonswhypr
oducerPsuppl
ier
smor emaizethanproducerQ at
thesamepr ice. (10marks)

25 Q P

Pr
ice20

(
Usd)

15

10

0 200 300 400 500

Quant
it
ysuppl
i
ed(
tons)

 Favorabl
ecli
mat eincountryPt hancount ryQ
 Useofmoder ntechnologyincount ryPt hanQ
 Moreaccesst osubsidiesi
ncount ryPt hanQ
 Avail
abil
i
tyoffactorsofproductionincount r
yPthanQ
 Theremightbepeaceandt ranquil
ityi
ncount r
yPthanQ
 Improvedinf
rast
ructureincount r
yPt hanQ
 Lowercostofproductionincount ryPthanQ

Nov
els,
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Expl
ain5f
act
orst
hatmaynegat
ivel
yaf
fectt
hedemandf
orapr
oducti
nthemar
ket


Negat i
vetasteandpref
erencest owardst hecommodi ty.

Lowpr icesofsubst
it
utes.

Incr
easei npri
ceofit
scompl i
ment aries.

Lowl evelsofpopul
ati
on.

Unfavourablegover
nmentpol i
ciese.g.increasedtaxes.

Incr
easei npri
ceoftheproduct.

Futur
eexpect ati
onofafalli
nthepr i
ceoft heproduct.

SI
ZEANDLOCATI
ONOFAFI
RM.
1. Hi
ghl
ightf
ouradv
ant
agesofl
arge–scal
ebusi
nessor
gani
zat
ion. (
4mar
ks)

 Obt ai
nsdiscountbecauseofbulkbuying
 Abl etoadvert
ise
 Incurslowcost sofproducti
on
 Offersbettermanagementbecauseofspecial
izat
ion
 Allowsdiversi
ficat
ioninordert
oreduceri
sks
 Abl etocaterforst
affwelfar
e
 Lar geoutputduetomanychannel s

2.St
atedi
sadv
ant
agesofconcent
rat
ingi
ndust
ri
esi
nonear
eawi
thi
nacount
ry. (
4mar
ks)

 Leadstocongest
ion
 Causepoll
uti
on
 Incr
easesoci
alevi
ls
 Leadstowidespr
eadunemployment
 Canleadtoeconomicdepr
essiondur
ingt
imesofwar
,cal
ami
ti
es

3.
Highl
ightf
ourci
rcumst
ancesunderwhi
chaf
ir
m woul
dbel
ocat
edneart
hemar
ketf
ori
tspr
oduct
.
(
4mar
ks)

 Wher
ethef
ir
mi sproduci
ngperishabl
eproducts
 Wher
ethef
ir
mi sproduci
ngfragil
eproducts
 Wher
ether
awmat eri
alsar
echeapert otr
ansportt
hanfi
nalpr
oduct
s.
 Wher
ethemarketf
ortheproduceisconcentrat
edint
hearea.

4.Out
li
nef
ourway
sinwhi
chl
andi
nfl
uencest
hel
ocat
ionofi
ndust
ri
es. (
4mar
ks)

 Costofl
and

Nov
els,
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 Avail
abilit
yofr oom forexpansion
 Governmentpol icyonlanduti
lizati
on
 Thenat ureoft heland
 Proxi
mi ty,auxil
iaryser
vices
 Convenience
 Getexactval ueofhi smoney
 Receivegenui negoodsdi rect
lyfrom manuf
act
urer
 Cheap
5.Out
li
nef i
vebenef
it
sthatcount
rywoul
dgetbyencour
agi
ngbusi
nessmentolocat
enewi
ndust
ri
es
i
nrur
alareas. (10marks)

 Thecount rywil
lachievebalancedeconomi cdevel
opment
 Creat
ionofj oboppor t
uniti
esinallregionsofthecountry
 Reducingrural/urbanmi grati
on
 Technologyt r
ansfertoruralar
eas
 Locati
onofi ndustri
esinruralwil
lleadt oinf
rast
ruct
uraldevel
opment
.
 Mayleadt oest abl
ishmentofsubsi diary
 Mayleadt oexpandedut i
l
izati
onofr esources
 Mayleadt oevendi str
ibuti
onofsoci alameniti
es
 Mayachi eveamor eevendistri
buti
onofi ncomebetweenr egi
ons.

6.
Stat
efourci
rcumst
ancesunderwhi
chaf
ir
m woul
dbel
ocat
edneart
hemar
ketf
ori
tsproduct
s.
(
4marks)

 Getservicesfor24hour s
 Requi
ref astservi
ce
 Convenience/NextToAPer son
 Recei
vegenui ne/f i
rstcl
assgoodsdi
rect
lyf
rom manuf
act
urer
 Cheap/doesn’trequirel
abour
.

7.St
atef
ouradv
ant
agesofl
ocat
ingaf
ir
m neart
hesour
ceofr
awmat
eri
als. (
4mar
ks)

 Reducetransportcost
 Getquali
tyrawmat eri
als
 Enhancecontinuouspr oduction
 Avoidwastageofr awmat eri
als
 Reduceit
scostofpr oduction.

St
atef
ourext
ernal
diseconomi
esofscal
ethataf
ir
m mayget (
4mks)
 Scrambleforrawmat er
ial
s
 Unavail
abil
it
yofl andforexpansi
on
 Scrambleforavailabl
elabour
 Compet i
ti
onf oravail
ablemarket
 Easytargetespeciall
yinti
meofwar

8.
Ident
if
yfourpr
obl
emst
hatt
endt
oli
mitt
hegr
owt
hofsmal
l–scal
eret
ail
busi
nessi
nrur
alKeny
a.

Nov
els,
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imar
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ah@g
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l.
com

(
4mar
ks)

 Lackofcapit
al
 Competit
iontechniques
 Lackofmarket
 Expensi
ve
 Poormanagement
 Poorinf
rast
ructure
 Lackofcommer ci
alser
vices.

9.Di
scussthefact
orst
hathav
eledt
othesur
viv
alofsmal
lscal
eret
ail
ersdespi
tecompetit
ionf
rom
supermarket
s. (10marks)

 Personal i
zedser vices:smal lscaler etai
lersprovideper sonali
zedser vi
cesandar et heref
oreabl
toat tractandr et
aincust omer swhi char enotof feredbysuper mar kets.
 accessi bili
tyofsmal lscaleretail
ers/conveni enceofl ocatingsmal lscaleretai
lersar e
conveni entlyinur bancent res.
 Creditf acil
iti
essmal lscaleretail
er sof f
ercreditfacil
iti
est osomeoft heircustomer swhi char e
notavai l
ablet ospeci fi
ccust omerneeds.
 Adapt at i
ont ospeci ficcustomerneedssmal lscaleretail
erseasilyadaptt othespeci fi
cclient.
 Theycansel lgoodsi nsmal lunitsthant hesuper mar kets.
 Runni ngcost sofsmal lscaleretail
er sarelit
tleandt hismakesi teasierforthem t osur vi
ve
unlikesmal lmar ketswhi chr equirehugecapi t
altooper ate.
 Management :Smal lscalebusi nessest her i
sksinvolvedar elowwhi l
einsuper mar ketsaregr ea
 Starting/initi
alcapi talstar
tingsmal lscaleretail
ersasui tableforpeoplef or
m ofl owi ncome.
 Flexibili
ty-i
tiseasi erf orsmal lscaler et
ail
erst ochangef r
om onef orm ofbusi nesst oanot her
l
ocat iont hani tisforsuper mar kets.
FORMOREHI
GHSCHOOLRESOURCESCONTACT MRI
SABOKE0714497530

10.
Discusst
heeconomi
cbenef
it
stoacommuni
tyt
hatmayr
esul
tfr
om t
heconcent
rat
ion

ofi
ndust
ri
esi
nanar
ea. (
10mar
ks)

 Empl oymentisgener at
edf orthebenef i
tofthemember softhecommuni ty.
 Member si
fthecommuni tytendst obewi l
li
ngtol ear
nskill
srequiredbytheindustri
es.
 Leadst oemer genceofauxi l
iaryser vi
ceindustr
yi.e.backinsurance
 Improvestandar dsofli
vingar elikelytobeexper i
encedinthear eaduetoriseofincome.
 Infr
astruct
ureisl i
kel
ytoar i
set oser vethecommuni t
y
 Industri
esdealinginbypr oductsar elikel
ytoariseandt hecommuni tywoulduset hereby–
products
 Leadst odevelopmentofcompl ement aryi
ndustri
es/auxi l
iar
yindustr
y
 Leadst oestablishmentofimpr ovedsoci alser
vices
Nov
els,
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com

 Leadstoi
ntroduct
ionofmoderntechnologywhicht
hecommunitycanuti
li
ze.
 Provi
deswidemarketfort
helocalproducedgoods
 Mayleadtoexploi
tat
ionofl
ocalresourceswhi
chwouldother
wisebeidl
e.

11.Hi
ghl
ightf
ourmeasur
esagov
ernmentmayt
aket
oat
tractf
ir
mst
oanar
ea. (
4mar
ks)

 Provi
debusinessi ncent
ives
 Provi
decreditfacil
it
iestoinvest
ors
 Provi
delandactr easonablecost
 Transport
 Communi cati
on
 Healthcases.

12.Out
li
nef
ouradv
ant
agesofl
argebusi
nessor
gani
zat
ions. (
4mar
ks)

 abl
et ogetdi scountsduetobul kpurchases
 Abletoest abli
shitsownretailoutl
ettopromoteit
sproduct
s
 Canaf f
ordt ohirequali
fi
edmanpowerandhi remachi
nes
 Couldenjoyl owcostofpr oducti
onduet ospreadi
ngofcost
soverl
argeOut
put
s
 Abletospr eadrisks
 Easiert
or aisecapital

13.
Stat
efourdi
sadv
ant
agesofl
ocat
ingabusi
nessawayf
rom ot
herr
elat
edbusi
ness.(
4mar
ks)

 Dif
fi
cul
ttoacquir
er el
evantl abour
 Dif
fi
cul
ttoexchangei deas
 Dif
fi
cul
ttogetrawmat erial
s
 Lackofcompetit
ionleadt olowqual i
ty
 Dif
fi
cul
ttogetmar ket
 Dif
fi
cul
tinexchangingt echnology.

14.St
atef
ourdi
sadv
ant
agesofdel
ocal
izat
ionofi
ndust
ri
est
oacount
ry. (
4mar
ks)

 Governmentsubsidyandincenti
ver educe
 Dif
fi
culttoatt
ractpr
ofessi
onals.
 Securit
y
 Governmentmayhavet oraisetaxesonot herareast
ocovert
he
 shortfai
landthusburdenthepublic.
 Speciali
zedservi
cemaynotbel andr equi
redthatwhenf
ir
msar e
 concentrat
edinoneplace.

15..
Expl
ainf
iveci
rcumstancest
hatmayi
nfl
uenceaf
ir
mtol
ocat
eit
soper
ati
onsnear
thesour
ceofrawmat er
ial
s. (10marks)
 Wher
ether
awmat
eri
alsar
ebul
ky

Nov
els,
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ah@g
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l.
com

 Handl
ingcostsofrawmaterialsasthemovementtot hef
irm wil
lbemi ni
mal
.
 Whererawmat eri
alsar
ehighlyperi
shabl
e
 Wherethecompet i
ti
onofrawmat eri
alsi
shightoensureaccess
 Wherethegovernmentpol
icyrequir
es/givesi
ncentivest
hatindust
rysetupnearsour
cesofr
a
mater
ial
s.
 Pr
oductofthemar keti
sconcentrat
ednearthesourceofrawmat eri
als.

16.St
atef
ourf
act
orswhi
chi
nfl
uencet
hel
ocat
ionofbusi
nessent
erpr
ises. (
4mar
ks)

 Avai
labi
li
tyofmarket
 Avai
labi
li
tyofwaterandpower
 Securi
ty
 Communi cat
ion
 Costofland
 Governmentpoli
cy.

17.
Expl
ainf
ivemeasur
est
hatagov
ernmentmayt
aket
oencour
ageest
abl
ishmentofi
ndustr
iesi
n
rur
alar
eas. (10marks)

 Impr ovet ranspor tsystem tof acili

tateeasymovementofgoodsandpeopl et houghindustr
ies.
 Taxr educt i
on:indust ri
esinr uralar easf rom payi ngcer taintaxest oreducet hecostofproducti
o
enabl i
ngt hem tosel lmor ecompet iti
vepr ices.
 Facili
tat eaccesst ocheapcr edi tforindust riesinr uralareas/provisi
onofl oansatlowi nt
erest
availfinanceataf fordabler ates.
 Providel andf orput t
ingupi ndust riesi nruralar easatr educedr ates.
 Providet r
aining/educat i
onalf acilit
iesi nrur alareasf oedevel opmentofl abour.
 Subsi dizingt hecostofpr oduct ionoft heindust riesint heruralareasbymel ti
ngpointoftheco
ofpr oduct ion.
 Providepowerf orr unningthei ndust ri
es
 Providecommuni cationser vicest oenabl ei ndustries
 Providewat erforrunni ngthei ndust ry
 Providesoci alameni ti
esoft hosewor kingi nt heindustr y
 Providesecur i
tytosaf eguar dpr oper tyfori nvestors
 Setti
ngupser vi
cei ndustrytoser vet heot heri ndust r
iesofbanksi nsuranceet c.
 Reduci ngl icensef eest husr educi ngt hecostofest abli
shing.

18.Gi
vef
ivebenef
it
sofexpandi
ngabusi
ness (
5mar
ks)

 Provi
decheapl abour
 Provi
deeff
icientcommunicat
ion
 Reducetherateoftaxat
ion
 Givesubsi
dies

19.
Highl
ightf
iveadv
ant
agesofhav
ingabusi
nessent
erpr
isesl
ocat
edi
nanar
ea.
(10mks)

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els,
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ah@g
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l.
com

 Labour:Wheni ndustriesar ecloselylocated,apoolofl abourbothski

ll
edandunski l
ledisavai
l
e
 Market:Theindust ri
esat tractl
ar gepopulati
ont hatof
fermar ketfort
hepr oduct
sproducedin
theindustr
y.
 Inf
rastr
ucture:roads,rai l
wayusual lydevelopsintheareawi thconcentr
atedindust
ri
es.
 Communi cation:bylocat ingofi ndustr
iesinonear ealeadstodevelopmentoft el
ephone
amongot hers.
 Securit
y:wheni ndustriesar ecloselyrelat
ed,thesearef ewsecuri
typroblemsexperiencedas
compar edtothedi sper sedindust r
ies.

20.
Expl
ainf
iveway
sinwhichl
argescal
eor
gani
zat
ionar
eabl
etor
educet
hei
rcost
sofpr
oduct
ion.
(
10marks)

 Lar gequant i
ti
esTheybuyi nbul k,hencet heygetagoodquant itydi
scount
,hencereducetheir
pur chaseexpenses
 Tr ansportcost sTheybuyinbulk, hencetheyt r
ansporttheygoodsatonce,whichreduceson
transpor tcosts.
 Ski l
ledmanpowerTheyar eablet oempl oyskill
edpersonnel,
whopr ovi
desquali
tymanagemen
reduceonl osses, andhencemaxi mizepr of
it
s
 Useofmachi nery.Theyareabletoaf for
dmachi nerywhichi
ntur nr
educeonlabourcosts,henc
reduci ngproduct ioncost
sResear ch
 Theyar eabletocar ryoutresearch,hencepr oducingquali
typroduct
sandwi t
hthel east
wast age,hencer educi
ngonpr oduct i
oncost .

21.
Giv
efourbenef
it
sofoper
ati
ngasmal
lscal
ebusi
nessov
eral
argescal
e. (
4mar
ks)

 easytorai
secapitaltostartthebusiness
 Thebusinessishighlyfl
exi
ble
 Quickdeci
sion-making
 Requir
eslesslegalproceduresduringformati
on
 Abletokeeptopbusi nesssecret
s
 Doesnothavet oomuchgover nmentcont r
ol
 Exposedtofewerr i
sksduet othei
rsmal lsi
zes
 Theyarenotheavilytaxedcompar edtobigcompani
es

22.
Whatbenef
it
smayaccr
uet
omanuf
act
uri
ngf
ir
mthatusesmoder
ntechnol
ogy(
4mks)

 Incr
easel evelofoutput
 Improvementofser vicedeli
ver
y
 Savingonpr oducti
ont ime
 Standardizati
onofpr oducts
 Lowerpr oductionofwast e
 Reductionofwast e
 Betterqualit
ygoods.

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23.
Stat
efoursoci
alr
esponsi
bil
it
iest
hatamanuf
act
uri
ngf
ir
m shoul
dhav
eonthecommuni
ty.
(
4marks)

 Parti
ci pat i
oni ncommuni typrogrammers
 Applyingappr opr i
at ewast edisposalmanagement
 Providingaf fordabl epr oductstot hecommunity
 Conser vationoft heenvi ronment
 Communi t
ydevel opment
 Provisionofempl oyment
 Toengagef ami lymember sinempl oymen
 Positivecul turalpr acti
ce
 Encour agementf rom fami lymember sandfri
end
 Avail
abi l
ityofi nfrast r
ucture
 Avail
abi l
ityofmar ket
 Hobbi esi nt erestsandt alents
 Moder nt echnol ogy

24.Hi
ghli
ghtf
ourf
act
orst
hataf
ir
m mayconsi
derwhendeci
dingont
hegoodst
opr
oduce.
(4marks)

 Expect eddemand–wher edemandi slow, af i

rm wil
lonlypr oduceaf ewgoodsornot
produceatal l
 Availabil
ityofcapitalresources–thi
swoul dhel pdeci
deont helevelofproducti
on
 Timeper i
od-thef i
rm mustconsiderwhet hershortorlongt erm productionisrequi
red
 Availabil
ityoflabour-l
aboursupplyofther elevantski
ll
swoul dber equir
ed
 Costofpr oducti
on-thef i
rm mustconsiderdi r
ectandindirectcost
 Gover nmentpol icy-
thef i
rm mustabidebyt her ul
esandr egul at
ionsofthecount r
y.
 Availabil
ityofrawmat eri
als/f
act
orsofpr oduction
 Levelofcompet iti
on
 Profitabi
li
ty
 Effectofgoodsont heenvironment
 Seasonal it
yinpr oduction
 Social/cultur
alfactors
 Priceoft hegoods
 Leveloft echnology

25. Out
li
nef
ourcr
it
eri
aofdet
ermi
ningsi
zeofaf
ir
m

 Numberofempl oyees
 Amountofcapitali
nvested
 Fl
oorareacoveredbyt hepr
emi
ses
 Si
zeofthemar ketserved
 Methodsofproducti
onused.

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26. Highli
ghtf
ourcir
cumst ancesunderwhi chanentr
epr
eneurmayest
abl
ishhi
s
businesswher
eot herbusinessesal
readyexi
sted

 Soast
obenef
itf
rom alr
eadyavai l
ableimprovedinfr
astruct
ure
 Soast
obenef
itf
rom supporti
veser vi
cessuchasbanki ng
 Soast
obenef
itf
rom j
ointresearchwi t
hotherbusinesses
 Soast
obenef
itf
rom alr
eadyavai l
ablemarket
 Soast
obenef
itf
rom thejoi
ntdisposalofwast eproductswithot
herf
ir
ms

27. Enumerat
efourbenef
it
sthatacount
rywoul
dgetasar
esul
tofl
ocat
ingf
ir
msaway
fr
om eachot
her

 Balancedregi
onaldevelopmentwil
lbereal
i
sed
 Rural-
urbanmigrati
oncontrol
l
ed
 Creati
onofempl oymentopportuni
ti
es
 Reductionofr
iskofwar s
 Promot i
onofexploi
tat
ionofresources

28. Out
li
ne4r
easonswhyaf
ir
m mayr
emai
nsmal
l

 I
fthefi
rmisservi
ngsmal lmarket
 Smallf
ir
msareeasiertomanage
 Forqui
ckdeci
sionmaking
 Desi
retoavoi
ddiseconomi esofscal
e
 Smallf
ir
msarehighlyfl
exible

29. St
ate4reasonswhyafi
rm shoul
dcar
ryoutmar
ketr
esear
chbef
orer
eleasi
ngi
ts
pr
oduct
st othemar
ket

 I
tel
imi
nateswastefuladvert
isi
ng
 Hel
ptoimprovethequalit
yofagi venproduct
 Afi
rmisabl
et ocomeupwi t
hnewpr oduct
sasperthedemand
 Afi
rmisabl
et oreducethecostofpr oduct
ionegpackagi
ngcost
s
 Afi
rmisabl
et oi
dentifynewmar ketoftheproduct

30. Expl
ainf
ivebenef
it
sthatmayaccr
uet
oabusi
nessor
gani
zat
ionwhi
chexpandst
he
scal
eofit
soperati
on

 Thef i
rmi sablet oenjoymar keti
ngeconi omiesduetol ar
gevol umeofsales
 Enjoysfinancialeconomi esegeasyaccesst olargecredi
t/avail
abi
li
tyofcoll
ater
al
 Productioneconomi es–t hefir
m willaccesslargequanti
tiesthatat
tractquanti
ty
di
scount
 Spreadingrisksbydi versi
fyi
ngoper ati
ons
 Thef i
rm canaf fordmoder nmachi nery
 Canpr ovidestaffwelfarefacil
it
iesforimprovedper f
ormance

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 Di
vi
sionofl
abourdi
ff
erentpeopl
ear
eassi
gneddi
ff
erentt
askaccor
dingt
oabi
l
ity

31. Di
scussanyf
ivedi
seconomi
esofscal
ethatabi
gfi
rm mayexper
ience

 Manager ialdiseconomi es–Duet oexpandedoperati

onsfirmsmaysufferf
rom
i
nher i
tancepr oblems
 Delayindeci sionmaki ng–duet oincreasedbur
eaucracy/
consult
ati
ons
 Highcost sofpr oductions-
 Highcost sofi nputs-duetoexhaustionoftheexi
sti
ngones.
 Mar keti
ngdi seconomi es–duetol i
mi t
edsizeofmarket
 Technologicaldi seconomies–duet ot heuseofout
datedabsolutet
echnol
ogy

32. Expl
ainf
iver
easonswhyt
hegov
ernmentdi
scour
agesl
ocal
izat
ionoff
ir
ms

 Concent rationoffirmsi noner egi onmayhaveanegat i

veimpactontheenvi
ronment
ofther egion.
 Mayl eadt oregi
onalimbal ancei ndevelopment
 Cont ribut etoruralurbanmi gration
 Increasedpopul ationint helocalizedareamayspar koffaser
iesofprobl
emssuchas
congest ion,incr
easedcr imer ates
 Mayber i
skybecausei fanyundesi r
ablethi
nghappenstotheregi
onitmaydestr
oythe
count rieseconomi candi ndustrialbase
 Af allindemandf orproductspr oducedbyl ocali
zedfi
rmswoul dr
esul
tint
o
widespr eadunempl oymenti ntheaf f
ectedarea.

33. Expl
ainf
iveway
sinwhi
cht
hegov
ernmentcanuset
oencour
agedel
ocal
izat
ionof
fi
rms. (
10marks)

 Offer
ingfreeandcheapl and
 Reducti
onoft axes.Tor educecostofpr oductions
 Offer
ingsubsi dies.Tor educecostofpr oducti
ons
 Offer
ingdirectfinancialassistance.Shouldfacil
it
atesaccesst
ocheapcr
edi
tforf
ir
ms
toencouraget hem
 I
mpr ovementofi nfr
astructure.Roadstoeaset hemovementofgoodsandpeoplein
rur
alareas,elect r
ici
tyforrunningthebusiness.
 Shoul
denhancesecur
it
ytosaf
eguar
dthepr
oper
tyofi
nvest
orsandcr
eat
econf
idence
i
nthem.
 Pr
ovi
dingcl
eanwat
erf
ori
ndust
ri
es
34.Expl
aint
hebenef
it
sthataccr
uet
oabusi
nesst
hatexpandsi
tsoper
ati
ons
˗Fi
rmsareabletoenj
oymarket
ingeconomies-l
argevol
umesofsalesatcheaprat
es
˗Adver
ti
singeconomi
es-f
ir
mi sabletofi
nanceadver
ti
singcampai
gnstocaptur
eawider
market

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˗Financialeconomi es-t hefir

m haswi deraccesst ocapi talsourcesthroughcr edit
˗Reducedoper ati
onalcost s-aver agecostofpr oduct i
onl ower sasout putincreases
˗Per sonneleconomi es/l abour-f i
rmisabl etoattractpr ofessionalorqual i
fi
edper sonnelfor
betteroper ati
ons
˗Pur chasingeconomi es-t hefir
mi sabletobuyi nbulkandenj oyhuget radeandquant ity
discountsonst ocks/r awmat erials
˗Technol ogicaleconomi es-thef ir
m canaf fordmoder nt echnol ogyforimpr ovedqualit
ies
andquant i
t i
es
˗Staf fwelfareeconomi es-t hef i
rmi sabletoof f
erwel faret ot hestaf
ft hatmot i
vatesit
s
wor kers
˗Manager ialeconomi es-t hefir
mi sabletogetpr ofessional sinthemanager i
alpoststhat
i
mpr oveef fi
ciencyofpr oduction
˗Spr eadingr i
sks-thef i
rmi sablet ospreaditsri
sks
˗Resear checonomi es-t hef i
rm cancar ryoutresearchf orf uturedevel
opmentoft hef i
rm

PRODUCTMARKET.
1.
Highl
ightf
ourci
rcumst
ancesunderwhi
chbusi
nessent
erpr
isesmaychooset
omer
ge

 Wher
eper
sist
entdecl
i
nei
npr
ofi
tabi
l
ityexi
st

 Wher
ether
eisi
ntent
iont
ovent
urei
ntonewl
i
ne

 Wher
ether
eisneedt
oexpandcapi
talbase

 Wher
ether
eisneedt
obr
ingonboar
dnewski
l
ls/
compet
ences

 Wher
ether
eisneedt
oshar
eresear
chi
nfor
mat
ion

 Cont
rolwi
dermar
ket
/i
ncr
easedsal
es

 Cont
rolout
put

 Tol
owercostofpr
oduct
s(e.
grawmat
eri
als,
l
abour
)

 Tocont
rolpr
ices

 Easi
ert
obor
row

 Easi
ert
ofaceemer
genci
es/
ri
sks

 Wher
ether
eist
oomuchcompet
it
ion

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 Needt
odi
ver
sif
y

2.Expl
ainf
iveci
rcumst
ancesi
nwhi
chaf
ir
m mayacqui
remonopol
ypower
.(10mar
ks)

 Ifthef i
rm hasasecr etivepr oduct i
ont echnique-Thisdeni esot herfirmst heuseof
thetechnique/ product ion/ sal eoft hepr oduct.
 Ifthef i
rm hascont roloverst rategicinputs/rawmat eri
als-Thi smakest hef i
rm have
thesol eaccesst oinput s/rawmat erial
susedi nproductionoft hecommodi t
y
 Ifthevent urerequi r
esl argecapi tal/i
nvestmentofsubst ant i
alcapi talotherf ir
msmay
notbeabl et or aiset hecapi t
alleavingt hefieldtoonef i
rm.
 Ifthef i
rm enjoysgr eat er /subst ant i
aleconomi esofscal e-Thisenabl est hef i
rmt o
produceatal owercostt hanot herf i
rmst husedgi ngoutl essef fi
cientfirms.
 Ifthef i
rmi ssetupasast at emonopol y/
givenexcl usi
ver ights/legalright sof
product i
onofapar ticularpr oductbyt hegover nmentt husshut ti
ngout
 compet i
ti
onf rom compet itors.
 Iffi
rmsmer ge/ amal gamat e/ combi ne/joi
nt ogether/buysot herst hrough
absor pti
on/acqui siti
ont obecomet heonl yfirm/supplier/producer /eli
mi nat e
Compet i
ti
on/ chopscompet i
tion.
 Ifthemar keti sbestser vedbyonef i
rm mor eeconomi callyotherf i
r msent eri
ngthe
mar ketmaymakel ossesduet ol owsal eshencet hef ir
mr emai ndomi nant
 Ifthef i
rm haspat entr i
ght s/copyr i
ght /whi
chbar sot herfirmsf rom pr oduci ng/sel
li
ng
thepr oducts.

3. St
ate4f
eat
uresofol
igopol
yty
peofmar
ketst
ruct
ure

 Fewf i
rmsint hemar ket
 Pri
cerigi
dit
y
 Thereisi
nterdependenceinrelat
iontopr
ici
ng
 Theyexperiencekinkeddemandcur ve
 Theyconductal otofadver
ti
sing
 Fi
rmsar erelati
velyl
arge

4. Out
li
ne4f
eat
uresofmonopol
ist
iccompet
it
ion

 Largenumberofsel lers
 Perfectknowl edgei
nthemar ket
 Freeentryandexi ti
ntotheindust
ry
 Fi
rmssett heirownpri
ces
 Fi
rmsdi fferenti
atet
heirpr
oductsalt
houghser
vet
hesamepur
pose

St
ate4essent
ial
feat
uresofanymar
ket
.
 Presenceofthecommodi ti
estobesold.
 Presenceofbuyers.
 Presenceofsell
ers.
 Exist
enceofagener al
l
yacceptedmedium ofexchange.
 Pri
ceatwhichgoodswi llbeboughtandsol
d.
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5. St
ate4condi
ti
onst
hatar
enecessar
yforpur
ecompet
it
ion

 Largenumberofsel l
ers
 Largenumberofbuyer s
 Homogenouspr oducts
 Not ransportcost
 Nogover nmenti nter
vention
 Freeent r
yintothemar ket
 Perfectknowledgeoft hemar ket
 Freeexitoutoft hemar ket

6. Hi
ghl
ight4met
hodsusedbyamonopol
ist
icf
ir
mtodi
ff
erent
iat
eit
spr
oduct
s

 Brandi ng
 Packagi ngindiff
erentsi
zes
 Pricing
 Bl
endi ngi nt
odiff
erentcol
ours
 Per suasiveadver
tisi
ng
 Trademar ks

7. Out
li
ne4sour
cesofmonopol
ypower
s

 Owner ship/
controlofimport
anti
nputi
npr
oduct
ion
 Si
zeoft hemar ket
 Mergingoft woormor efi
rms
 Hi
ghi niti
alcapi
tallayout
 Governmentpower
 Productionri
ghts

State4r easonswhi
chmayi
nfl
uenceagov
ernmentt
oimpl
ementapol
icyof
delocal
ization

 t
opr
omot
ebal
ancedr
egi
onaldevel
opment
 t
oredi
str
ibut
eincomes
 t
oensur
ebet
teruseofr
esour
cesi
ndi
ff
erentpar
tsoft
hecount
ry
 t
ocr
eat
eempl
oymenti
ndi
ff
erentr
egi
onsoft
hecount
ry

toreducecongestioninurbancentreswheretopmanyformsarelocal

8. St
atef
ourway
sinwhi
cht
hegov
ernmentmayi
nfl
uencet
hepr
iceofacommodi
ty

 Thr
oughtaxat
ion
 Thr
oughoffer
ingsubsi
dies
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 Thr
oughi
mposingquotas
 Thr
oughpr
icecont
rol
s

9. Out
li
nef
ivedi
sti
nqui
shi
ngdi
ff
erencesbet
weenol
igopol
yandper
fectcompet
it
ion

Ol
i
gopol
y Per
fectCompet
it
ion

i
)Sel
l
ersar
efew i
)Sel
l
ersar
emany

i
i
)Thesel
l
erset
sthepr
ice i
i
)Thesel
l
erdoesnotsetpr
ices

i
i
i)Het
erogenouspr
oduct
s i
i
i)Homogenouspr
oduct
s/si
mil
ar

i
v)Bar
ri
erst
oent
ryandexi
t i
v)Nobarr
ier
stoent
ry/
exi
tfr
om t
he
market

v
)Pr
icewar
sexi
st v)Nopri
cewar s/
all
fir
mssel
latsame
unif
orm pr
ice

v
i)Not
ranspor
tcostar
eincur
red v
i)Tr
anspor
tcost
sar
eincur
red

v
ii
)Fact
orsofpr
oduct
ionar
emobi
l
e v
ii
)Fact
orsofpr
oduct
ionar
eimmobi
l
e

10. Expl
ainf
ivechar
act
eri
sti
csofper
fect
lycompet
it
ivemar
ket

 Therearemanysel lersandbuyer s
 Freeentryandexitoff i
rmsi nthemar ket
 Sellhomogenouspr oduct s
 Bothsell
ersandbuyer shaveper fectknowl edgeofthemarket
 Thereisfreemobilit
yoff actorsofpr oduction
 Buyersandseller
sar ei ncl
osecont acthencenot r
anspor
tcost
 Nodi scr
iminat
ionofbuyer sandsel lers
 Nogover nmentinterventi
ont hroughpr ici
ng

11. Li
stt
he4essent
ial
sofamar
ket

 Wil
li
ngbuyersandsell
ers
 Commodi t
ytobeboughtorsold
 Acceptabl
emedium ofexchangeegmoney
 Marketpri
ce

12. St
ate4char
act
eri
sti
csofamonopol
yMar
ket

 Onl
yonesuppl
ierf
ortheent
ir
emar ket
 Commodi
tysuppli
eddoesnothaveclosesubsti
tut
es
 Newfi
rmsarenotall
owedtoenterthemarket
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mic
ah@g
mai
l.
com

 Pr
icesar
efi
xedbyt
hepr
oducerorsuppl
i
er

13. Hi
ghl
ightany5di
sadv
ant
agesofmonopol
ies

 Consumer sar eexploitedbecausemonopolist

schargehi ghpr i
cesf ortheirgoodsand
servi
ces.
 Duet oabsenceofcompet i
ti
on,thel
owqualitygoodsar eproducedt husconsumer s
aresuppli
edi nfer
iorgoods.
 Consumer slackawi derangeofgoodst ochoosefrom sincet hereisonesuppl ieror
producer
 Whenpr oduct i
onisr educedsomewor kersarerenderedunempl oyed
 Monopolistsmayover looksomemar ketswhichseem lesspr ofit
ablet othem and
thusconsumer sarenotsuppl i
edwithgoodsorservices.
 Monopolistsmaycausear t
if
ici
alshort
agessoast omani pulatepr i
ces.

14)Outl
inef
ivedi
ff
erencesbet
weenmonopol
ist
iccompet
it
ionandmonopol
yty
pesof
market
s.10mks
monopoly monopol
ist
iccompet
it
ion

-mar ketmadeupofmany
-mar ketsmadeup, ofonesuj pplier suppl ier
s
/seller -firmsear nnor malprof
it
sinthe
-Fi
r msmayear nsuper normalpr ofi
tsi
n longr un
thel ongrun -product sarehomogenous
-productsar eheterogeneous/ notclose /closesubst it
utes
subst i
tutes -Nosi nglefir
m hascontrolover
-si
ngl efi
rmsmayhavecont rolover thef actorsof
factorsofpr od. -i
nvol vedfir
msusual l
ysmal li
n
-fi
rmi susual l
ylargeinsize size
-entryintothemar ketisrest
ricted -ent r
yt othemar keti
sfree
pricediscri
mi nati
onispossibl e -pri
cedi scri
mi nati
onnot
possi bleesp.inlongru
16.Expl
ainf
ivechar
act
eri
sti
csofper
fectcompet
it
ionmar
ketst
ruct
ure

Lar genumberofbuyer s/sel lerssucht hatacti
onofsi nglebuyer/sel lercannotaff
ectt he
mar ket

Homogenei ty/uniformityoft hepr oduct-productsfrom differentproducersareidentical
i
nal laspects

Wi deknowl edgeoft hemar ket-thereforenosinglesel l
er/'buyercanaf fectthebusiness
atanypr iceothert
hant heequi l
ibri
um price

Fr eedom ofentry/exi t-therear enobar ri
erstoentryorexi ttoorfrom themar ket

Uni formit
yofbuyer sandsel l
ers-thereforenobenef i
tofsel li
ngorbuyi ngfrom aparticular
buyerorsel l
er

Nogover nmentinterference-i nform oftaxes,subsidies,quotas,pricecontrol/pri
ce
prevaili
nginthemar ketisdet erminedst ri
ctl
ybyi nt
erplayofdemandandsuppl y

Noexcessdemand/suppl y-buyer sar eabletobuyal ltheywant/sel lersareabletosel l
al
ltheysuppl ytothemar ket
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
Not
ranspor
tcost
sasbuyer
sandsel
l
ersar
elocat
edi
nonear
ea

17.Expl
ainf
ivef
eat
uresofmonopol
y
Thereexistsonlyonesingleselleroftheproduct
Nocl osesubstit
uteorri
valsuppl i
ersoftheproduct
Thedemandcur vesteeplyslopesf r
om lef
ttorightbecausemonopol
i
stcannothave
controlofbothpr i
ceandout putatt he
samet i
me
Pri
cedi scr
iminati
onispossible
Maypr oducelowqual i
typroduct sduetolackofcompet it
ion
Pri
cesar efi
xedbyt hesupplier
Dif
ficultf
orotherfi
rms( suppli
ers)toenterthemar ket

18.Expl
ainf
ivedi
ff
erencesbet
weenmonopol
yandol
igopol
ymar
ketst
ruct
ures.(
10mar
ks)

Monopol
y Oligopoly
i
.Themar ketisdomi nat
edbyf ewfirms
i
.Thereisonef i
rmintheindust
ry
i
i.Thereisexi stenceofnon-price
i
i.Therearenopr icewarshenceno
compet it
ion.
compet i
ti
on
i
ii.Thereishighl evelofint
erdependencei
n
i
ii
.Thef i
rmisi ndependenti
nrel
at i
ontothe
relat
ionto
outputand
prici
ngandout put.
pri
cingstrat
egies
i
v.Thesel lersar epri
cetakes
i
v.Themonopol yisapricemaker
v.Thedi f
ferentiatedproductsareclose
v.Productshavenocl osesubst
itutes.
substit
utesof
vi
.Thef i
rmf acesadownwar dsloping
eachot her.
demandcur ve
vi.Thefir
mf acesaki nkeddemandcur ve.

POPULATI
ONANDEMPLOYMENT.
1.
Listf
ourt
ypesofunempl
oymenti
naneconomyandgi
vet
hecausef
oreach(
4mar
ks)

 Cycl
icalemploymentduet orel
ati
vel
ylowgener aldemandf orgoodsandservi
ce
 Str
ucturalunempl
oymentduet otechnologicalunempl oyment
 Seasonalunemployment-duetorel
ati
velylowdemandf orl
abouratcert
aint
imes oftheyear
 Fri
cti
onalunemploymentduet oti
mel agsi.etimet akeninchangingj
obs
 I
nvoluntaryunemployment–want i
ngjobsatpr evaili
ngwagesandcannotgett hem.

2.
Out
li
nef
ournegat
iveef
fect
sofanagei
ngpopul
ati
ont
oaneconomy
. (
4mar
ks)

 Defi
ciencyofaneconomi cal
l
yactivel
abour/l
owlaboursuppl
y
 I
ncreaseinwelfarecost
s
 Needt oimportlabourt
hatef f
ectthefor
eignexchanger
eserves

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 Dependencyr ati
oincr
eases
 Rigidit
ytochange
 Fallinoldf
orgoodsandser vi
cesrequi
redbytheyout
h
 Lesspr ogr
essive/l
owsavingsandlowinvest
ments

3.
Expl
ainf
ivechal
lengest
hatmaybeexperi
encedbyacount
rywhosepopulat
ioni
s
madeupofalargepropor
ti
onofyoungpeopl
e. (
10marks)

 Highr ateofunempl oymentasdemandf orj obsout str

ipst heavai l
ablejob
opport uni
ti
es.
 Rateofcr ime/socialevilsmayr ise.Ast heyout hr emai nidle,theyar el
ikelytor esort
tocrimeandot hersoci alevil
sast heylookf ormeansofsur vival.
 Const rai
ntsongoods/ servicesassoci atedwi thyoungpeopl easdemandout stri
ps
supply.
 Dependencyr atiowi l
lriseaseconomi callyacti
vepopul ati
onwi l
lshoulderabi gger
burden.
 Reducedsavi ngs/ i
nvest ment s.Investment swi l
ldecl i
neasar esultofhighr ateof
consumpt ionbyyoungpeopl e.Thi smayl eadt olowdevel opment .
 Lowpercapi t
ai ncome.Si ncet heNat i
onalI ncomewi l
lbespr eadoveral argenon-
contri
but i
ngpopul ati
onwhi chmayl eadt oal owst andar dofl i
ving.
 Problem ofraisinggover nmentr evenuewhi chmayf orcethegover nmentt odi vert
resourcesmeantf orothersect or stocat erfortheyoung.
 Lowl aboursuppl yasmanyyoungpeopl emaynothaveat tainedt hewor kingagenor
acquiredtherequi r
edski ll
sandexper ience.
4.
Expl
ainway
sinwhi
cht
hegov
ernmentofKenyacanr
educet
hel
evel
ofunempl
oyment
(
10mar ks)

 Di
versif
icati
onoftheeconomybyencouragi
ngtheest
abl
i
shi
ngofdi
ff
erenti
ndust
ri
es
/sector
st ocreat
eemployment
sOpportunit
ies.

 Transf
ormingagri
cul
tur
alsect
or/ruralsect
ort
ocur
bruralur
banmigrat
ion/accept
egsoftransf
ormati
onasanami ng(t
ocr eat
emorej
obsandreduceunemployment)

 Tr
ansformingeducati
on/trai
ningsect
ort
oimpr
oveonski
l
ls/(
thi
smakest
he
gr
aduates)acqui
rerel
evantski
lls.

 Est
abl
i
shingonemploymentpol
icybygover
nmentt
omakei
teasyf
orpeopl
etoget
j
obs/acceptegsofgover
nmentpoli
cyasment
ion.

 Lending/set
ti
ngofaf undt
oassi
stunempl
oyedt
ost
arti
ncomegener
ati
ngact
ivi
ti
es/
acceptegsoffundsasamenti
on

 Expor
ti
ngLabourbyassist
ingunempl
oyedpeopl
etoacqui
rej
obsabr
oad/count
ri
es
wit
hlabourdef
ici
ency.

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 Encour
agi
ngt
hei
nfor
mal/JuaKal
isect
ori
nor
dert
opr
omot
esel
fempl
oyment
.

 Delocal
izat
ion/decentr
ali
zat
ionpol
i
cyf
orbal
ancedr
egi
onaldevel
opment/r
educed
rur
alurbanirr
igat
ion.

 Popul
ati
onpol
i
cyt
ocont
rolgr
owt
h/haveal
abourf
orcet
hatt
heeconomycanabsor
b.

 Toimprovei
nfr
ast
ruct
urei
nor
dert
osui
tabl
eeconomi
cact
ivi
ti
es/Acceptegsof
i
nfr
astr
uctur
easarari
ng.

 I
ncreasegover
nmentexpendi
tur
etoexpandt
hesi
zeoft
heeconomy/t
ofi
nance
devel
opmentproj
ect
s

 Eff
ecti
veusesofnatur
alr
esourcest
oincr
easepr
oduct
ionact
ivi
ti
esacceptegsof
nat
uralresour
cesasamentor.

 I
ncome/wagepol
i
cyt
ohar
moni
ze/el
i
minat
edi
ff
erencesbet
weenr
egi
ons/sect
ors.

 Pr
ojectl
ocal/i
nfanti
ndust
ri
esagai
nstunf
aircompet
it
ion.

 Att
ract(Local/forei
gn)invest
mentsthroughvi
sioni
ncer
ti
ves/t
ogr
owt
heeconomy
accepteg.sofincenti
vesasexplanat
ion.

 Receivi
ngcoll
apsedi
ndust
ri
es/pr
oject
sbyi
nject
or,
fundsIsel
l
ingt
hem /i
ncr
eased
producti
onacti
vi
ti
es.
FORMOREHI
GHSCHOOLRESOURCESCONTACT MRI
SABOKE0714497530

5.
Highl
ightf
ourpr
obl
emsofdev
elopmentpl
anni
ngt
hatacount
rymayexper
ience
(4marks)

 Inadequat edataoneconomi cperf

ormance.
 Unr el
iabledata/inaccuratedatawhi chmaynotbeusefulf
orplanning.
 Lessqual ifi
edpersonneltocopewi ththetasksofdevel
opmentplanning.
 Privatesectoractivi
ti
esar enoteasil
ycoordinat
ed.
 Politi
calrigi
dit
y/lackofpol i
ti
calwil
l.
 Inappr opri
ateuseoft echnol
ogy.
 Inadequat efunds/capi t
al/resources.

6.Highli
ghtf
ourmeasur
est
hatagov
ernmentmayt
aket
oreducet
hemor
tal
it
yrat
eina
country
. (4marks)

 Avail
abili
tyofbet terheal
thcar
e
 Foodsecur it
y
 Minimizinginternalconfl
ict
sandwar s.
 I
mpr ovingenvironment alSani
tat
ion.
 Sensit
izati
ononpubl ice.gonpersonalhygi
ene,
educati
onvacci
nat
ionHI
VAi
ds.
 Disast
erpr eparednesse. gfl
oods,f
ires,
coll
apsi
ngbuil
dings

Nov
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 Appl
ymeasurestor
educer
oadacci
dent
s
 Cont
roluseofdr
ugsandal
cohol
 Cont
rolcri
mes

7.Out
li
ne4negat
ivei
mpl
icat
ionsofr
api
dpopul
ati
ongr
owt
hinKeny
a

 Incr
easeddependencyr ati
o
 Reductioninsavi
ngsandi nvest
ments
 Leadst ounemployment
 Exert
spr essur
eonsoci alamenit
ies
 Mayl eadtooverexploi
tati
onofnaturalr
esour
ces
 Reducedpercapitaincome

8.St
ate4causesofseasonal
unempl
oymenti
nKeny
a

 Decli
neinthesupplyofcertainrawmat eri
als
 Temporaryemployment /
contractworkers
 Economicdepressi
on/decli
nei neconomi cactivi
ti
es
 Volunt
aryresi
gnati
onduet ogr eenerpastures
 I
nterdi
cti
onsi.
etempor arystoppageort erminati
onofempl
oyment

9.St
ate4negat
ivei
mpl
icat
ionsofar
api
dlygr
owi
ngpopul
ati
on

 Strainontheresourcesduetoover
popul
ati
on
 Mayl eadtounempl oyment
 Lowst andardsofli
ving
 Lowi ncomepercapi ta
 Increasei
npover t
ylevels

10.Gi
ve4r
easonswhyi
tisi
mpor
tantf
oracount
ryt
oknowi
tspopul
ati
onst
ruct
ure

 Todeter
mi nethelifeexpectancyofthepopulat
ion
 Toknowt hesizeofuneconomi cal
l
yactivepopulat
ion
 Toprovi
dei nf
rastructur
e
 Toplanforofferi
ngsecur i
ty
 Toplanforsocialameni t
iesegsecurit
yeducati
on
 Toplanforrel
evantj obcreati
on
 Toplanforregionaldevelopmentneeds

11.Out
li
ne4r
easonswhyanagei
ngpopul
ati
onmaynotbedesi
rabl
etoacount
ry

 Oldpeopletendtopr
ovidelesslabourf
orce
 Highdependencyrat
io
 Thesocietybecomeslessproducti
ve
Nov
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 Mayresul
ttoempl
oymentduet
ofal
l
ingi
ndemandf
orgoodsandser
vicesr
equi
redbyt
he
yout
h

12.Out
li
ne4measur
est
akenbyt
heKeny
angov
ernmentt
ocont
rolhi
ghr
atesof
unempl
oyment

 Cont r
olli
ngpopul ationgrowth
 Providingr elevanteducat i
on
 Usingappr opriatetechnology
 Expor t
inglabourt oothercount r
ies
 Diversi
f i
cationofeconomi cact i
vit
ies
 Maxi mum ut il
izati
onofnat uralr
esources
 I
ncr easinggover nmentexpendi t
ureonproject
sthatgener
atemor
ejobs
 Encour agingf oreigninvestment
 Promot ingt hei nfor
malsect or
 Cont r
olli
ngi nflati
on

13.Kenya’
spopulat
ionismai
nlycompr
isedoft
hey
out
hcompar
edt
oagei
ngpeopl
e.St
ate4
benefi
tsofthi
spopulat
ion

 Ther
eisalargesupplyoflabour
 Ther
eisalargemar ket/
demandforproduct
s
 Ther
eishi
ghpr oductivi
ty
 Ther
eischanceofhi ghmobili
tyi
nlabour

14.Out
li
ne4negat
ivei
mpl
icat
ionsofunder
popul
ati
ononacount
ry

 Li
mitedlaboursupply
 Li
mitedmar ket
 Underuti
li
zati
onofr esour
ces
 Uneconomicaltoprovidegoodsandservi
ces
 Lackofspecial
izat
ion
 Reducedphaseofeconomi cdevelopment

St
atef
ouremer
gingi
ssuesi
npopul
ati
onandempl
oyment (
4mks)
 TheHI V/Aidspandemi c
 Populati
ongr owthandcont rolpoli
cies
 Famil
ypl anningcampai gntocreateawareness.
 Teenagepr egnancies
 Provi
sionoff reebasichealt
hser vi
ces
 Foodsecur it
yissues
 I
ll
egalimmi grati
onintothecount ry
 Emphasisonmat ernalchil
dhealth.
 Emphasisoncer t
if
icateofgoodconductdur i
ngrecr
uit
ment

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16.Li
stf
ourf
act
orst
hatcont
ri
but
etoani
ncr
easei
nthepopul
ati
onofacount
ry

 I
mpr ovedhealt
hf aci
li
ti
es
 Decreasei
nmor t
alit
yrates
 I
mpr ovedstandardsofli
ving
 I
mpr ovedfert
il
it
yr at
e
 Migrati
onfrom othercountr
ies
 Earl
ymar r
iages

17.Expl
ainf
ivemeasur
est
hatKeny
amayt
aket
ocont
rolunempl
oymentpr
obl
em

 Popul ati
oncont rolegf ami l
ypl anning
 I
ncr easedgover nmentexpendi turethushavi ngmanypr oj
ectssetup
 Encour agingexpl oit
ati
onofnat uralresourcestoincr
easeproducti
onacti
vi
ti
es
 Expor ti
nglabourt ocount rieswi thlabourdef i
ciency
 Diversif
icationoft heeconomyt oreduceseasonalunempoyment
 Ruraldevel opment
 Encour agef orei
gni nvestmenti nthecount ry
 Encour ageuseofl abouri ntensivemet hodinproducti
on
 I
mpr ovementoft heinfrastructuret ostimulateeconomicacti
vi
ties
 I
mpr ovementofeducat i
onsyst emst omakei tmoreappropr
iatetotheempl
oymentneeds
oftheeconomy.

18.Expl
ainf
ivemeasur
esKeny
amayt
aket
ocont
rolherr
api
dlygr
owi
ngpopul
ati
on

 Adoptingfamilyplanning
 Li
mi t
ingthenumberofchi ldr
enperwoment hroughlegi
slat
ion
 Raisi
ngmar ri
ageaget hroughlegislat
iontodiscourageearl
ymar r
iages
 Creat
ingawar enessamongci tizensaboutbenef i
tsofsmallfamil
ies
 Creat
ingeducat i
onoppor t
uni
tiesf orwomenasanal ter
nati
vetobr i
ngi
ngupchi
l
dren
 Raisi
ngthecostofr ai
singchil
dr enbyr ai
singthecostofchil
drensneeds

St
ate4Causesofunempl
oymenti
nKeny
a.

 Hi
ghpopul
ati
ongr
owt
hrat
e.

 Lowdemandf
orgoodsandser
viceswhi
chl
eadst
ocl
osur
eofi
ndust
ri
es.

 Mini
mum wagelaws:Peopl
ecannotbeempl
oyedatr
atesbel
owt
hesetmi
nimum as
i
twouldbei
ll
egal.

 Shortageofcapit alwhichhindertheestabl
ishmentandexpansionofi
ndust
ries/l
ack
offactorsofproduct ion.
 I
nappr opri
ateeducat ionsystem:Theeducat i
onsystem doesnoti
nsti
l
lther
ightski
ll
s
thatcanbeappl iedi mmediatelyaft
erleavi
ngschool .
 Choiceofpr oduct i
onmet hods:Choiceofcapitali
ntensi
vemethodswherel
abouris

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abundant.
 Seasonali
tyinproducti
on/
poorcl
imati
ccondi
ti
ons.
 Jobselecti
onduet opoorwages.
 Poorgovernmentpol i
cyonjobcr
eat
ion.
 Inappr
opri
atelandtenure.

20.Di
scussf
ivef
act
orst
hatdet
ermi
net
hef
ert
il
it
yrat
einacount
ry

 Cult
uralbeli
efsconcerningfamil
ysize
 Costofbringi
ngupf ami l
y
 Peaceandsecur it
y
 I
mpr ovedhealthandeducationservices
 Governmentpol i
cyonf amil
ysize
 Ageandsexst r
uctur
eoft hepopulation

21. Expl
ainf
ivet
ypesofunempl
oymentr
elat
edt
otheKeny
aneconomy
. (
10mar
ks)

 Residualunempl oyment- Thi soccur swher el aborisi ncapacit

atedment al
l
yand
physicallyhenceunabl etowor k
 Structural/Technicalunempl oyment-Thi soccurswher ecapi t
alint
ensivemet hodsof
productionar eusedandwor kersarelai
dof f
 Seasonalunempl oyment– I toccur s due to seasonalchanges i n demand and
productionhencel aborisnotdemandeddur i
ngcer tai
nt i
mesofseasonse. g.drought,
l
owt ourism seasonet c.
 Hidden/ disguisedunempl oyment -Thisoccurswhent hewor kersar esomanyt han
ther equi r
ednumberf oragi venjobhencet heycannotf ull
yut i
li
zet heirskilland
abili
ti
es
 Involuntary/ openunempl oyment–Theseoccur swhenpeopl earelookingf orjobsat
existi
ngwagesr ate/salariesbuttheycan’tgetthem
 Fricti
onalunempl oyment–Theseoccur swher epeopl elosejobsandt heyt akealot
oft i
met ogetnewj obs.
 Cyclicalunempl oyment-Thi sismassunempl oymentt hatoccursduet or educt i
onof
mar ketpr oductsalloverthewor l
d
 Keynesi anunempl oyment–causedwhent heeconomyi soper at
ingatal owcapaci t
y
thannor malhencel eadingt ounderuti
li
zati
onofr esources.

22. Pr
obl
emswi
thanagei
ngpopul
ati
on

 Theypr
ovi
dealessmobil
elabourf
orce-Theol
derapersongets,
thel
esswi
l
li
ngt
hey
aret
omovefr
om oneplacetoanot
heroreventochangejobs.

 Lowlaboursupply-Ol
dpeopl
ear
elesspr
oduct
iveandt
huscannotpr
ovi
det
hemuch
neededlabourf
orce

 Highdependencyl
evel
s-t
heoldwil
lbel
essproducti
veandther
eforewil
lbehighl
y
dependentonthef
ewwor ki
nggr
oupwhowillthenbestr
ainedwhil
eprovi
dingfort
hei
r
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needs.

 Thecount
rybecomesl
esspr
ogr
essi
vebecausei
tlackst
hei
nputofmor
eener
get
ic
yout
h.

 Mayleadtounempl
oyment
-thi
smaybeduet
othef
alli
ndemandf
orgoodsand
ser
vicesr
equi
redbyt
heyout
h.

23.Expl
ainf
ivecausesofUnempl
oymenti
nKeny
a.
Rapi dpopul ati
ongr owt h–Ast hel abourf or ceenteri
ngt hel abourmar ketwi l
lber isi
ngat
higherr at et hant heeconomycanabsor b.
Useofi nappr opr iat
et echnology–wher eacount rywithhi ghlaboursuppl yresor tstouseof
capi t
ali ntensi vemet hodsofpr oduct ion.
Rur altour banmi gration–Hi ghinf luxinur banar easexpandt hewor kf orcethatcannotbe
absor bedbyt helabourmar keti ntowns.
Inappr opr i
at eeducat ionsyst em .–Whent heeducat i
onsyst em doesnotequi p;the
yout h/lear ner swithski ll
srequir edint helabourmar ket.
Lackofpr oductmar ket,-lackofdemandorr educti
onindemandf orpr oductsdi scourages
product i
onwhi chl eadst ounempl oyment .
Jobsel ect ion.–Wher ejobseeker spr eferwhi t
ecollarj
obsmaki ngt hem nott ot akeupt he
availablebl uecol larjobs.
Seasonal i
tyi nproduct ion.–Seasonalnat ur eofsomej obscr eateunempl oymentdur ing
theof f
-peakseasons.
Inadequat eco- oper antfactor sinput s.–I nsuf f
ici
encyoff actorsofpr oduct i
ont hatneedt o
becombi nedwi t
hl abourl i
mi texpansi onofj oboppor tuniti
es.Thi scauseunempl oyment .
Poorpl anni ngandmi smanagement–Mi smanagementofpubl icresour cesleadt o
collapseofmanyi nst i
tuti
onsr esultingi nreduct i
onofempl oymentoppor tunit
ies.

Expl
aint
hef
oll
owi
ngt
ermi
nol
ogi
esasusedi
npopul
ati
on
Fertil
it
yr ate
Thisisther ateatwhi chonet housandwomengi vebirt
hwithi
noneyear/ Iti
salsothe
numberofchi ldreni naver ageawomanwi llbearinherproduct
iveyears.
Overpopul ation
Thisisthesi tuat i
onwher ethesi zeofthepopul ati
onistoomuchcompar edtothatcountr
y‘s
resources/ Thepopul ationist oohight hanwhati sneededtoprovi
delabourt oexpl oi
tnat
ural
andmanmader esour cesoft hecount ry/Theavai labl
egoodsandser vicesar etoolowto
supportthatpopul at i
on.
Emi grati
on- Movi ngoutofanar ea.
Decliningpopul ations-Ref erst oapopul ationthathasbeenreducingovert ime.
Popul ati
onst ructure.-Referstot hecomposi t
ionofpopulati
onaccordi ngtoage, sex,
i
ncomedi stri
but ionandl evel
sofl it
eracy

Expl
ain5measur
esusedt
ocur
brapi
dlyi
ncr
easi
ngpopul
ati
oni
nKeny
a
˗Famil
yplanni
ngi
nor
dert
oreducet
henumberofchi
l
drenonewi
l
lgetdur
ingt
hechi
l
d
bear
ingperi
od
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˗Rai singt hemar ri

ageaget hroughl egisl
ati
onsoast or educet hefer
ti
lit
yr at
e
˗Rai singt hecostofbr i
ngingupachi l
dhencemaki ngitdiff
icultt
ocaterf orthei
rneeds
whi chmakest hem toreducet henumberofchi ldren
˗Limi tingt henumberofchi l
dr ent ogivebir
thperwomanvi alegisl
ati
on
˗Rai singt helevelofeducationt ochanget hecult
ureandat tit
udesoft hesoci et
y
˗Incr easingempl oymentoppor tunit
iesforwoment oengaget hem mor eatwor kasan
al
t ernat i
veofbr i
ngingupchi ldren
˗Cr eatepubl icawarenessaboutt hebenef i
tsofsmallerfami l
i
es

CHAI
NOFDI
STRI
BUTI
ON
1.Out
li
nef
ourbenef
it
sthatcust
omer
sgetf
rom smal
l–scal
eret
ail
ers. (
4mar
ks)

 Enjoyscreditfaci
li
ties
 Providevari
et yofgoods
 Goodsar ebr oughtclosertocust omers
 Theyst or
egoodsf ortheconsumer s.
 Consumer scanmakespeci alorderforgoods.
 Enjoypersonalattentionfr
om t hem
 Stabil
izat
ionofpr i
ces.

2.St
atef
ouract
ivi
ti
escar
ri
edouti
nthepr
ocessofdi
str
ibut
ion (
4mks)

 Handling
 Storage
 Packing/packagi
ng
 Transportat
ion
 Grading
 Bl
endi ng
 Sorti
ng
 Breakingthebulk

3.St
ate4expensest
hatar
eincur
redi
nthepr
ocessofdi
str
ibut
inggoods

 Storagecosts
 Transportcosts
 Adver t
isi
ngcost s
 Packing&bl ending
 I
nsur ancecosts
 Actualpurchasingofst
ock

4.Out
li
ne4emer
gingt
rendsi
ndi
str
ibut
ion (
4mks)

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 Buyersareabletoviewgoodsont heinternet
 Buyerscanmakeor der
sont heinter
net
 Buyerareabletotransf
erpayment sforgoodsont hei nt
ernet
 Largescalebuyersaretendingtobuydi rect
lyfrom themanufacturer
 Premisesarebeingconvertedintoexhibiti
ons
 Hawkinghasbecomeanor mi nmostur bancent er
s
 Singl
eshopsar ebeingconvertedtoself-servi
cemi ni-
supermakets.

2.
Highl
ightf
ourbenef
it
sthataccr
uet
oacust
omerwhobuy
sdi
rect
lyf
rom amanuf
act
urer
(
4marks)

 Consumerisli
kel
ytogetaftersalesser
vices
 Consumerisli
kel
ytogettechnicaladvi
ceofhowt ousethegoods
 Consumerisli
kel
ytogetthegoodsatr elati
vel
ylowpr i
ces
 Manufact
uresmayarrangethef i
ancéoft heconsumers.
 Consumerisassur
edthatwhathei sbuyingisgenuine.

3.
Descr
ibef
iveci
rcumst
ancesunderwhi
chapr
oducerwoul
dsel
lhi
sgoodstohi
sconsumer
s
(10marks)

 Wher egoodsareexpensivef ormi ddlemen( cannotaf f

or dtostockthem)
 Wher egoodsareoftechni calnatureandt heproducermaywantt ohavedirect
 contactwit
hthecustomer .
 Wher egoodsareperishable( andproducerwant stodeliverthem f
asttohavedirectcontactwi
t
thecustomer.
 Wher ethemarketi
slocalizedi ntermsofgeogr aphicall
ocat i
on/wher ethe producerisclose
tocustomers.
 wherethegoodsarepr oducedaccor dingtoconsumer sspeci f
icat
ions/speci
algoods
 wheretheproducerrequiresimmedi atefeedback

4.Namefourchannel
stheamanuf
act
urerwoul
duset
odi
str
ibut
ehi
sgoodst
othecust
omer
(4marks

 Manuf
act
urer–consumer s
 Manuf
act
urer–retai
ler
s–consumer s
 Manuf
act
ure–agent–r etail
ers–consumers.
 Manuf
act
urer……..
wholesaler
…………consumer
 Manuf
act
urer………agent………………….consumer
 Manuf
act
urer………wholesal
er………….retai
l
er…………consumer

5.
Zangomanufacturer
swhohavebeensell
ingthei
rproduct
sdir
ectl
yasret
ail
ershav
edecidedt
o
di
str
ibut
etheproductsthr
oughwhol
esal
ers.Expl
ainf
ivebenef
it
sthatZangomanufact
urersmayge

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f
rom t
hisnewar
rangement
s. (
10mar
ks)

 Zangowil
lprovidewi t
hinformati
onregar di
ngthemar ketforthei
rgoods
 Thewholesal
er swil
lbreakonbehalfoft hemanuf act
urers.
 Zangowil
lsellhisstockfasteraswholesalersbuyinbulk
 Themanufacturer’
ssuppl yofgoodswillbestabil
i
zedaswhol esal
ersr
egul
atest
hesuppl
y
 Zangowil
lber eli
evedofvar i
ousri
sksrelati
ngtogoodst of al
linpri
ce,
demand,non-
prof
it
abl
ebutessent ialservi
ces.

7.Hi
ghli
ghtf
ourfact
orst
hatshoul
dbeconsi
der
edi
nchoosi
ngamethodofdi
str
ibut
ingagr
icul
tur
al
pr
oducts (4mar
ks)

 Natureoftheproduce
 Avail
abi
li
tyofmi ddl
emen
 Governmentpolicyonthedistr
ibut
ion.
 Costoftheproduce
 Dist
ancebetweent heproducerandtheconsumer

8.
Expl
ainf
ourf
act
orst
hatmaybeconsi
der
edi
ndet
ermi
ningt
heappr
opri
atechannelf
ordi
str
ibut
ing
goods (
10marks

 Thenat ureofgoodswher eper i

shableadi rectchannelt oconsumer si smor e pref
erred
 Sizeoft hemar ketwher ethemar ketisl
arge, iftheconsumer sareconcent r
atedinonear ea.
 Cost swher ethecostofmar ket
inganddi stri
but i
onar ehighmanuf acturerswilldi
sposegoods
throughi ntermedi ari
es.
 Lackoff acili
ti
es/ski l
lswher et
hepr oducesl acksf acil
i
tieshewi llcalluponintermediari
es.
 Gover nmentpol i
cy.Ifthegovernmentpol icypr ohi
bits/requireduseofacer t
ainchannelthenit
hast obef oll
owed.
 Nat ureofmar ketdependingonconsumer ’
spr eferences/t asteitmayr equir
eaper sonal
attentionoft hepr oducer.
 Compet it
ion:Wher ecompetiti
onishighmanuf act
uremayhavet obecl osertotheconsumer .
 Bulkiness:I fthequant i
tyi
flargealongchanneli susedandvi ceversa.
 Techni calgoodsneedt obesolddirecttoconsumeri nordert oprovidenecessar yi
nformat i
on.
 Prof i
tabil
it
ywher eproducerwant stomaxi mi zeprof i
t.

9.
Giv
edi
sadv
ant
agesofl
ongchai
nofdi
str
ibut
ionofgoodst
oabuy
er (
4mar
ks)

 Increasedpr
ice
 Likehoodofdel ay
 Chancesofdamaget ogoodsduet
ohandl
i
ng
 Feedbacktot hemanuf
act
urer
 Perishabl
egoodsmaygobad
10.
Descr
ibef
ivechannel
sthatcanbeusedt
odi
str
ibut
elocal
lymanuf
act
uredgoods (
10mar
ks)

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 Fr
om manufact
uret hroughownr etai
lout
letstoconsumer s’
 Manuf
act
urersselldirecttoconsumers
 Fr
om manufact
urert houghwholesaler
sthroughindependentret
ail
erstoconsumers.
 Fr
om manufact
urerst hroughwholesal
ersthroughindependentr
etai
ler
st oconsumers.
 Fr
om manufact
urerst hroughwholesal
erstoconsumer s.

11.
Stat
efourbenef
it
stoal
argeconsumerwhobuy
sdi
rect
lyf
rom t
hepr
oducer
.(4mar
ks)

 Theymaybeboughtatl owerprices
 Theymaybepr ovi
dedwi t
htransport
 Theymayr ecei
vecash
 Theymaybegi vengoodsoncr edit
 Theyhaveachancet osel
ectqualit
ygoods
 Theyarel
ikelyt
ogetgoodstoonesspeci f
icat
ions.

12.
Discussci
rcumst
ancesunderwhi
chawhol
esal
erbecomesessent
iali
nthechainofdist
ri
but
ion
(
10mar ks)

 Wheremar ketisspreadoutforthepr oducertoreachtheconsumer

 Wherethepr oducerdoesnothaveadequat ecapit
altosetupowndi stri
but
ionpoi nt
s.
 Managementpr oblems:Wher eitbecomesdi ffi
cultt
omanagepr oducers distr
ibuti
onoutl
ets.
 Poori
nfrastr
ucture:makingitdi
ffi
cul ttodistr
ibutegoods.
 Gover
nmentpol i
cy:Thismaysepar atet hefuncti
onswhichcanbebyt hewholesaler
.
 Wherethepr oducerlackst
ransportf acil
it
ieswhichcanbepr ovi
dedtoadver t
ise
 Wherethepr oducerwantstogetinf ormat i
onaboutt hemarkethewillusethewhol esal
er.

13.
Expl
aint
hechannel
ofdi
str
ibut
ionf
ori
mpor
tedgoods (
10mar
ks)

 For
eignproducer…………………l ocalconsumer.
 For
eignproducer……….foreignagent/expor ter………….l ocalconsumer
 For
eignproducer……………l ocalagents/i mpor ter
s……………l ocalconsumer
 For
eignproducer’
s………. .f
oreignagent………l ocalagent/i mpor tmerchant……l
ocal
whol
esaler….
.Localr
etai
ler………..localconsumer
 For
eignproducer………..l
ocalr et
ail
ers…………..l ocalconsumer s
 For
eignproducer…………l ocalretai
ler
s………..localconsumer s
 For
eignproducer’
s………f oreignagent…………. .localagent/l ocalwhol
esaler
…….
.l
ocalconsumer

14.
Out
li
nef
ourbenef
it
stoal
argeconsumerwhobuy
sdi
rect
lyf
rom t
hepr
oducer
. (
4mar
ks)

 Linkage–whol esal
ersactasal i
nkbet weenthepr oducer
sandt heretai
l
ers.
 Storage–of fer
sstor
agef aci
li
ti
estot heproducers.
 Breakingbulk–buysinl ar
gequantit
iesf r
om producersandsel
lst hem i
ntosmal l
erquant
it
ies
toretail
ers.
 Transportat
ion–whol esal
ershelpsi
nt ranspor
tinggoodsf r
om producerstoret
ail
ers.

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15.Hi
ghl
ightf
ourci
rcumst
ancesunderwhi
chamanuf
act
urermaypr
efert
osel
lgoodsdi
rect
lyt
oth
consumers (4mar
ks)

 Whengoodsareper i
shable
 Whenthemanufacturersi
sf inanciall
ystrongtoopenupretai
lout
side
 Whenthemanufacturerswishest ot akechargeofhemarketi
ngofthepr
oduce.
 Whenthemanufacturerwishest ohavedi rectcont
actwi
ththeconsumer
.
 Whenthemarketfortheproducti sl i
mited
 Whenther
eisinef
fici
entinfrastructure.

17.Kabumanuf
act
urer
shavedeci
dedt
odistr
ibutet
hei
rgoodst
hroughwhol
esal
ers. Discussf
ive
benefi
tst
hatwoul
daccountt
oKabumanufactur
ers (10marks)

 Kabumanuf act uri

ngwillbepr ovidedwithinformati
onregardi
ngthemar ketf
or t hei
rgoods.
 Thewholesalerswi llbr
eakbul konbehal fofthemanuf act
urer
sKabumanuf act
urerswil
lsel
lhi
st
ockfasteraswhol esalersbuyi nbulk.
 Kabuwil
lber elievedoft ransportofgoods
 Themanuf actur er
’ssupplyofgoodswi l
lbest abi
li
zedaswholesalersr
egulat
ethesupply.
 Kabuwil
lbepr ovidedwithst oragefacil
i
ties
 Kabuwil
lber elievedofvar iousrisksrel
atingtogoodstofalli
nprice.

18.a)MusiEnt
erpri
sesar
econsideri
ngt
omarketthei
rimpor
tedpr
oduct
sdirectto
consumers.Outl
inefi
ver
easonsthatmaybei
nfl
uencingt
hem tomakethi
sdecisi
on.
(10marks)

 I
tmayt hatt hegoodsar epr oducedaccor dingt ocustomerspeci fi
cat
ions
 Thefi
rm maybehavi ngt heirownr etai
lout l
et/dist
ri
butionf acil
it
ies.
 Themar ketmaybel ocali
zed/ near(i
nt ermsofgeogr aphicallocati
on).
 Thegoodsmaybeexpensi veandmi ddlemencannotbeabl et ostockthem.
 Thegoodsmaybeofat echni calnat
ure/ r
equireaftersalesser vi
ces.
 Thegoodsmaybeper i
shable( andthef ir
m maywantt odeliverthem fasttotheconsumer)
 Thefi
rm maywantt ohavedi r
ectcontactwi t
hcust omer s/getimmedi atefeedback/cr
eat
e
goodimpr ession.
 Wherecust omer sor derforgoodsdi rectf r
om t hetr
ader /f
irm
 I
ftherearenomi ddlemen
 Wheregover nmentpol i
cyr equiresgoodst obesol ddi rectl
yt oconsumer s.
 Wheret hegoodsi mpor t
edar einsmallquant i
ties.
 Wheret hesizeoft hemar ketissmal l
.
 Wheret hefirm wouldmaxi mi zeprofi
tsbysel l
ingdirectlytoconsumer s.
 Whent hereisstiffcompet i
tion.
 Wheret herestofdi stri
butorst i
mei nmi ddlemenmaket hepr i
ceofpr oducts
hi
gh/expensi ve

19.Expl
ainf
iveci
rcumst
ancest
hatwoul
dinf
luenceapr
oducert
ousewhol
esal
ersi
n
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di
str
ibut
ingf
arm pr
oduce

 Wher et hepr oducerl acksadequat est or age.Thewhol esalermayr eli

evet he
produceroft hest oragecost s.
 Wher egoodsr equi rebul kbreaking.Thewhol esalermayr e-packaget hegoodsi n
smal lerquant i
tiesasr equi r
edbycust omer s.
 Wher et hereisneedt opr epar egoodsf orf i
nalsale.Thewhol esalermaypack,
brand, blend,gr adesor tandwei ghgoodst other eli
efoft hepr oducer.
 Wher et hemar ketiswi deandt hegoodshavet obedi str
ibut edfar.Thewhol esaler
willreacht heconsumermor eeasily.
 Wher et hepr oducerwoul dwantf eedbackont hemar ketst atus.Thewhol esaler
mayr eachconsumer st hrought her etailersandgetf eedbackr egardingthe
productmor eeasi ly.
 Wher et hepr oducerwoul dwantt oengagewhol esalertoassi stwithadver ti
singso
ast osaveoncost s.
 Wher et hepr oducerwant st osellinbul ksi ncethewhol esal erscanaf fordt obuyin
l
argequant iti
es.
 Wher et hepr oducerl ackst ransport, t
hewhol esalerwoul dr elievehim oft hecost .
 Wher ei tisthegover nmentpol i
cytodi st ri
butethroughwhol esalersthent he
producerwoul dhavenochoi ce.
 Wher et hemar keti
ngr isksar ehighsi ncet hewhol esalerscanbearsomeoft he
ri
sks.
 Wher et hepr oducerwant st oconcent rat e/speciali
zei nproduct i
on,thent he
di
st r
ibut i
oncanbehandl edbywhol esal er s.
 Wher et hepr oducerneedst omai ntainf ewerr ecordsbydeal ingwi t
hwhol esal er
s
whoar ef ew.

20.
Stat
efourser
vicest
hatawhol
esal
ermayof
fert
oamanuf
act
urer
. (
4mar
ks)

 Li
nkst hemanuf acturerwiththeretai
lers
 Breaksbul konbehal fofmanuf acturer/pr
epari
ngf orsal
e
 Providesstorageonbehal fofamanuf actur
er
 Provideswor ki
ngcapi t
alwhent heypayf orgoods
 Assistsindistri
butionofgoods/ off
eringtransport
 Promot edthepr oduct sonbehalfoft hemanuf actur
er
 Reli
evest hemanuf actureoffsomer i
skse. gpriceoffl
uct
uat
ions,expi
ryofgoods
 Offersvaluableinformat i
onaboutgoods

21.Hi
ghli
ghtf
ourci
rcumstancesunderwhi
chapr
oducerwoul
dpr
eferdi
str
ibut
inghi
s
goodsthr
oughawholesal
er

 Wheretheproducerdoesnothavehisownwar ehousefr
om wher
ehecandi
str
ibut
e
goods
 Wheretheconsumeraref arawayf
rom theproducer
spremi
ses
 Wherethegoodstobedi str
ibut
edarebulkyandneedtobebr
okenint
osmal
l
er
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quant
it
ies.
 Whentheproduct
sarenewandr
equi
republ
i
cit
y/adver
ti
sement
 Whenthecostisaf
for
dabl
e

22.Hi
ghl
ightf
ourr
olespl
ayedbyi
nter
medi
ari
est
oapr
oduceri
nthechai
nofdi
str
ibut
ion

 Reducest ransacti
onsbet weenproducer
sandconsumer
s
 Breakingbul k
 Accumul atingbulk
 Providingfinances
 Passingr el
evantinformation
 Productpr omot i
on
 Transpor t
ationservices
 War ehousing/storageservices

23.Out
li
nef
ourbenef
it
sofal
ongchai
nofdi
str
ibut
ion

 Addsvaluetothefi
nalproduct
 Createsemploymentopport
unit
ies
 Spreadsri
sks
 Appropri
atef
orgoodswi thawidermar
ket

24.Stat
efourci
rcumst
ancesunderwhi
chi
nter
medi
ari
esmaybeel
imi
nat
edf
rom t
he
di
stri
buti
onprocess

 Whendeal
ingi
nperishabl
egoods
 Whendemandofgoodsi sveryhigh
 Whengoodsareofhighquali
ty
 Whendeal
ingwit
hgoodst hatrequi
reor
der

25.I
dent
if
yfourmer
it
sofashor
tchannelofdi
str
ibut
iont
oapr
oducer

 Goodscanr eachtheconsumerfaster
 Producershasdir
ectcontactwit
htheconsumer
s
 Reduceschancesofgoodsget ti
ngspoil
t
 Producercangetfeedbackfrom t
hebuyers

26.I
dent
if
yfourexpensesawhol
esal
eri
ncur
soncehebuy
sgoodsf
rom apr
oducer

 Transportcost
s
 Storagecosts
 i
nsur ancecost
s
 Packingandblendi
ng
 Salariesandwages

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els,
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27.Descri
befi
vechannel
sapharmaceut
icalpr
oduceri
nBr
it
ainmayuset
odi
str
ibut
eit
s
product
sintheKenyanmarket

For
eignpr
oducer l
ocalconsumer

For
eignpr
oducer Ret
ail
er l
ocalconsumer

For
eignpr
oducer whol
esal
er l
ocalconsumer

For
eignpr
oducer whol
esal
er Ret
ail
er Localconsumer

For
eignpr
oducer Agent Whol
esal
er Ret
ail
er Localconsumer

For
eignpr
oducer Agent Ret
ail
er Localconsumer

For
eignpr
oducer Agent Whol
esal
er Localconsumer

28.Descr
ibef
ivechannel
sthatmaybeusedt
odi
str
ibut
eimpor
tedpr
oduct
s

For
eignpr
oducer l
ocalconsumer

For
eignpr
oducer For
eignagent
/expor
ter l
ocalconsumer

For
eignpr
oducer f
orei
gnagent l
ocalagent l
ocalconsumer

For
eignpr
oducer l
ocalr
etai
l
er l
ocalconsumer

For
eignpr
oducer l
ocalwhol
esal
er l
ocalr
etai
l
er l
ocalconsumer

For
eignpr
oducer l
ocalwhol
esal
er l
ocalconsumer

For
eignpr
oducer l
ocalagent l
ocalr
etai
l
er l
ocalconsumer

29.Di
scussf
ivei
mpor
tantr
olesofi
nter
medi
ari
esi
nthechai
nofdi
str
ibut
ion

 Reducingt ransactionsbet weenpr oducersandconsumers

 Breakingbul k–buyi nlargequant i
ti
esandsel li
nsmallquanti
ti
es
 Accumul at
ingbul k–buyi ngi nsmallquanti
tiesf
rom manysmal lproducer
sand
offer
ingt helargeamountgat her
edt obuyers
 Risktakingegassocaut edwi t
hdamagedgoods
 Provi
di ngfinance–somepr oducerslackfi
nanceandotherresourcesrequi
redto
enablet hem selltofinalconsumer s
 Passingi nformation–gat herinf
ormat i
onfrom consumersandpassst oproducer
s
 Productpr omot i
on
 Transpor tandst orage
 Avail
inggoodst oconsumer s
FORMOREHI
GHSCHOOLRESOURCESCONTACT MRI
SABOKE0714497530

30.Expl
aint
hemeani
ngoft
hef
oll
owi
ngi
nter
medi
ari
esi
nthechai
nofdi
str
ibut
ion
(12mks)

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 Broker
s-Ani nt
ermedi
arywhorepresent
sabuyerorasell
eri
nnegot
iat
ingapur
chase
orasalewi
thoutwit
houtphysi
cal
lyhandl
ingt
hegoodsinvol
ved

 Auctioneer s–Thesear ebusinessorgani sat

ionsorindivi
dualswhodi sposeof fgoods
onbehal foft hei
rprincipal
s.Aucti
onsar eheldi npubli
cwher eattendingmember sof
thepublicgi vethei
rbi dsandtheitem onsal egoest othehighestbidderont hefallof
thehammer .
 Cleari
ngandf or
war dingagents–Agent swhof acil
i
tateexportandi mportofgoodsi n
areasofdocument at i
on,stor
age,cust omsclearance,coll
ecti
onofgoodsf rom the
ship
 Wholesal ers–Tr ader swhobuyi nlargequant i
ti
esfrom producersandsel lat
rel
ati
velylowquant i
tiestoothertraders
 Agent s–I ntermediarieswhosellgoodsonbehal foftheirpri
ncipalforcommi ssion
basedonagr eedpercentageandquant i
tyofgoodssol d

 Merchants-I
nter
mediar
ieswhobuyandsel
lgoodsonthei
rownaccount
.Theyt
ake
r
isksastheyhandlet
hegoodsandmakesprofi
tsorl
osses.

31.Expl
ain5fact
orst
hatmaybeconsi
der
edi
ndet
ermi
ningt
heappr
opr
iat
echannelf
or
di
stri
but
ionofgoods.
Nat ureofthemar ket.–I namar ketwher econsumer sareconcent ratedi nonear ea,ashort
channeli sused.Ont heot herhandwher ecust omer sarespr eadoverawi dear ea,al
ong
channeli sused.
Nat ureofthepr oduct .–Heavyandbul kpr oductsaswel lasper i
shabl epr oductrequirea
shor tchannel
Gover nmentpol icy–Af ir
m canonl yuseachannelt hatisal lowedbyl aw.
Mar keti
ngr isk:-Whenpr oducerswantt oavoi dri
skinvol vedi ndi
stribution,thenal ong
channeli susedwher egoodsar esol dt hroughi ntermediaries.
Rol eoft hei ntermedi ar i
es.–Af ir
m shoul dsel ectachannelt hatwoul dpr ovideservices
requiredbyt hegoods.
Compet i
tors.–I faf i
r m wi shest ohavedi rectcompet i
ti
on, itwil
luseachannelbei ngused
byitscompet itors.Ont heot herhandi fitwi shedt oavoiddi rectcompet i
ti
oni twi l
lselecta
diff
er entchannel .
Resour ces:-Af i
rm wi thsmal lfi
nanci alresour cesrequiresashor tchannel .
Si zeoft hef i
rm.–Asmal lfi
rmr equi r
esashor tchannel.
Val ueandt echni calnat ureoft hepr oduct .–Ahi ghvaluepr oductrequi r
esashor tchannel.
Likewi seproduct st hatr equirespecializedser vi
cesr equir
eashor tchannel .

32.Descr
ibeanyf
ivechannel
sthatcanbeusedt
odi
str
ibut
elocal
lymanufact
uredgoods.
(10mar ks)
Localpr
oducer
→Agent→Wholesal
er→Ret
ail
er→Localconsumer
Localpr
oducer
→Whosaler→Rt
yail
er→l
ocalconsumer
Localpr
oducer
→ consumer

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Localproducer
→ manuf actur
er‘
sRepr esent
ati
ve
Wholesaler→ Retai
l
er→l ocalconsumer
l
ocalproducer→ wholesal
er→l ocalconsumer
l
ocalproducer→ Retai
ler
→ Localconsumer

NATI
ONALI
NCOME.
1.Expl
ainf
ivef
act
orst
hatmayi
nfl
uencet
hel
evelofnat
ionali
ncomeofacountr
y.
(10marks)

 Humanr esources/labour/wor ki
ngpopul
ati
on/manpower
Acountr
ywithskil
led/(hi
ghly)t
rained/largemanpowercanpr
oducequal
i
ty/
quant
it
y
goods/
servi
ces/cangener atehighincome.

Acountrywit
hunski
ll
ed/oruntr
ained/smal
lmanpowercanpr
oducel
owqual
i
ty/quant
it
ygoods
/ser
vicescangener
atel
owincome.

 Naturalr
esour
ces/l
and./gi
ftsofnatur
e/acceptgi
ftofnat
ure
acount
ryendowedwit
hnat
uralr
esourcescanproducemor
egood/ser vi
ces/cangener
ate
i
ncome.

ACountrynotwellendowedwi
thnat
uralr
esour
cesmaypr
oducel
essgoods/
ser
vices/can
gener
atelessi
ncome.

 ( Levelof)technol
ogy
Hi
ghleveloftechnologymaypr
oducel
owqual
i
ty/quant
it
yofgoods/ser
vices/gener
atehi
gh
i
ncome.

Lowleveloft
echnol
ogymaypr
oducel
owqual
i
ty/quant
it
ygoods/ser
vices/gener
atel
ow
i
ncome.

 Capi tal(equipment)/man–mader esources/accepti

fmanmader esour
cese.g.
i
nfrastructurebui
ldi
ngs.
Avail
abi
lit
yofcapi t
al/manmader esources(goods)makesproduct
ioneasy/preser
ves
product
ion( resulti
ngini
ncreasednatur
alincome)/maygener at
ehighi
ncome.

Lackofcapi
tal/ormakespr
oduct
iondi
ff
erent/r
educespr
oduct
ion/maygener
atel
owi
ncome.

 For
eigninvestment
o I nvestment sfrom abr oadmayi ncreasenaturalincomet othecountry/increase
product ionofgoods/ser vices/i nvest
ment sabr oadmayi ncreasenat
ionalincome.
o Reduct ionoff or
eigninvest mentmayr educepr oducti
onofgoods/ser vices/
income.
 Goodgover nance/pol it
icalstabil
ity
o Pr oduct ionofgoods/ser vices/i nvest
ment s/i ncomeincreaseasar esultofgood
gover nance/pol i
ticalstabil
itycreatesconfi
dencei ni
nvestors.
o Poorgover nance/pol it
icalinstabil
it
yreducessavi ngs/investment/damages/
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i
nvestment/r educeincomes/product
ionofgoods/ser vices.
 Cul
tur
e/ent r
epreneurship
o Cul t
urethatencourageshared/work/entrepreneurshi
preducesproducti
onof
goods/services/maygener at
elowincome.
o Cul t
urethatencourageshard/work/entrepreneurshi
preducesproducti
onof
goods/services/maygener at
elowincome.

2.
Outl
inefourreasonswhyanincreaseinpercapi
tai
ncomemaynotnecessar
il
yleadt
oa
ri
sei
nt hestandardofl
iv
ingoftheciti
zen (
4marks)

 Percapi
tai
ncomei
sanaver
ageandhenceamer
est
ati
sti
cs.

 Percapi
taf
igur
esmaybehi
ghbuti
ncomemaybeunevenydi
str
ibut
ed.

 Thosenoti
nvol
vedi
nthegener
ati
onoft
henat
ionali
ncomear
eal
soi
ncl
udedi
nthe
cal
cul
ati
on

 Generat
ionrisei
nthepr
iceofcommodi
ti
es!i
nfl
ati
onmayaf
fectt
hepur
chasi
ngpower
oftheci
tizen.

 Hi
ght
axesmayer
odet
her
ealval
ueofpercapi
tai
ncome.

 Maybeobt
ainedt
hroughast
rai
nonpeopl
e’
sheal
th.

3.
(a)Usi
ngadi
agr
am expl
aint
heci
rcul
arf
lowofi
ncomei
nat
wosect
oreconomy

(
10mar
ks)

Recei
pts/
pay
ment
sforf
act
orsofpr
oduct
ion/r
ent/wages/sal
ari
es/pr
ofi
ts

i
nter
est
s
Expendi
tur
e/pay
ment
s/r
ecei
ptsongoodsandser
vices
Busi
nessfir
ms
Househol
d

 Fi
nishedgoodsandser
vices

 pr
ovi
si
onoff
act
orsofpr
oduct
ion/l
and/l
abour/capi
tal
/ent
repr
eneur
shi
p

 Househol
dssuppl
ythei
rresour
ces(
fact
orsofpr
ovi
sion)t
ovar
ious

typesofbusi
nessesandr
ecei
vepayment
sont
hef
orm ofr
ent
,wagesand
profi
t

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els,
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 Ont
heot
herhand,
busi
nessessel
lfi
nishedpr
oduct
stohousehol
dand

househol
dspayf
orthegoodsandser
vicesr
ecei
ved.
Thedestr
uct
ionmustbeshown

4.
Stat
efourf
act
orst
hatmayi
nfl
uencet
hel
evelofnat
ionali
ncome. (
4mar
ks)

 Availabil
ityofnat uralresour ces/naturalendowment
 Availabil
ityofski ll
edlabourf orce/quali
tyavai
labi
l
ityofski
l
ls
 Lit
eracyl evelsoft heci t
izensi ngener al
 Levelofcount y’
si ndustrial
ization
 Dependencyr at
ioont heeconomi call
yact i
veport
ionofthepopul
ati
on
 Leveloft echnol ogy
 Popul ati
onsi ze( quantit
yofl abour)
 Entrepreneurialcul t
ure/levelofi nvestment/tr
ade
 Poli
ticalstabilit
y
 Socialcultural
 Inf
rast r
ucture
 Foreigninvest ment s

5.
Out
li
nef
ourchal
lengest
hatmaybeencount
eredwhenmeasur
ingnat
ionali
ncome

usi
ngt
heout
putappr
oach. (
4mar
ks)

 Deci
dingonwhatgoodsandser
vicest
oincl
udei
nmeasur
ingnat
ionali
ncome.
 I
nadequat eout putdata
 Someact i
vit
iesearningincomeareconsi deredil
legalandnot
i
ncludedi nthemeasur ementofnat ionalincome.
 Determiningtheval ueofnati
onalout put
/duet ochangeinprices.
 Howt ovalueoutputinthesubsistencesect or
.
 Decidingont hepricetousef ort
hegoodst hathavebeenkeptasst ock.
 Possibil
it
yofdoubl ecount i
ng/different
iatepri
mar yi
nputfr
om inter
mediatei
nput
 Problem ofvaluinggovernmentout putast heyarenotsoldi
nt hemarket.

6.Listf
ourit
emsthatar
econsi
der
edwhenmeasur
ingt
henat
ionali
ncomeusi
ngt
he
expendit
ureappr
oach

 Exports
 I
mpor ts
 Netincomefrom abroad(expor
ts-i
mport
s)
 Consumptionexpenditure
 Governmentexpendi
t ure
 I
nvestmentexpendit
ur eoncapit
algoods

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7.St
ate4pr
obl
emsassoci
atedwi
thexpendi
tur
eappr
oachofdet
ermi
ningnat
ionali
ncome

 Accur ater ecordsofexpendi tur

earenotkept
 Doubl ecount i
ngproblem
 Fl
uct uatingexchanger ates
 Di
fficulttodi ffer
enti
atebet weenfinalexpendit
ureandi nter
medi at
eexpendi
tur
e
 Appr oxi
mat iontodetermi neexpendit
uresinsubsistencesect or
 Problem ofval ui
ngil
legalact i
vi
ti
es
 Problem ofchangi ngpr i
ces
 I
ndividual s/fir
msmaynotgi vecomplete/accur
ateinfl
ationaryti
mes

8.Highl
ightf
ourf
act
orst
hatmayl
eadt
oadecl
inei
nthel
evel
ofnat
ionali
ncomeofa
count
ry

 Lowpopul ati
on
 Lowl eveloft echnology
 Inadequat efinance/capi
tal/r
esources
 Popul ationwi thhighnumberofunski ll
edlabour
 Polit
icali nstabil
ity
 Apopul ationwi thfewentrepreneuri
alski
l
ls
 Deepr oot edcorruptionpracti
ces

9.Stat
efourr
easonswhynat
ional
incomest
ati
sti
csi
snotagoodmeasur
eofst
andar
dsof
l
ivi
nginacount
ry

 Thedatabeingusedmaynotbeaccur ate
 Thenationali
ncomef iguresdonotref
lectt
hedistr
ibut
ionofi
ncome
 Peoplehavediff
erenttastesandneeds
 Fi
guresmaynotr eflectappreci
ati
onordepreci
ati
onofassets

10.Li
stf
ourusesofnat
ional
incomest
ati
sti
cst
otheKeny
angov
ernment

 I
ndicatorsofstandardsofli
vi
ng.
 Compar ingstandardsofli
vi
ngofdi f
fer
entcountr
ies
 Assessingtheper f
ormanceoftheeconomyovert i
me
 Assist
ingthegover nmenttopl
ant heeconomy
 Usedbyent repreneurst
omakei nvestmentsdeci
sion

St
ate4assumpt
ionsoft
heci
rcul
arf
lowofi
ncome

Theeconomyhasonl ytwoplayers;f
ir
msandhouseholds

Therei
snotgovernmentinvolvement

Therei
snoforei
gntrade/t heeconomyisclosed

Househol
dsuseallthei
rincomest oacqui
regoodspr
oducedbyfir
ms

Fir
msspendallt
heirrevenuesonacquisit
ionoff
act
orservi
cesf
rom househol
ds
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els,
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11.Name4f
act
orsaf
fect
ingt
heci
rcul
arf
lowofi
ncome

 Savings-l
eakages
 Taxes-leakages
 Gover nmentexpendi
tur
e
 I
nvest ments
 Foreigntrade

Ident
if
yfourf
act
orst
hatmayl
eadt
oani
ncr
easei
nthel
evel
ofnat
ionali
ncomeofa
countr
y. 4mks

avail
abil
it
yofhumanr esources

avail
abil
it
yofnat uralresour ces

highlevel
soft echnologyi npr oduct
ion

goodgover nance/ poli
ti
calst abil
it
y

i
ncreasedf orei
gninvest ment

goodent r
epreneurialculture.

Expl
ainf
ivel
imi
tat
ionsofusi
ngpercapi
tai
ncomei
nmeasur
ingpeopl
est
andar
dofl
iv
ing.
10mks

Atthepr obl
em ofhandli
ngill
egalacti
viti
esthatgeneratei
ncometotherecei
pt

lackofaccuratedataofpopulati
on

lackofaccuratedataofnati
onalpopul at
ion

timespentonpr oducti
onversusrecreation.

doesnott akeint
roconsider
ationtheef f
ectsofproducti
onact
ivi
ti
esontheenvi
ronment
e.
genvironmentdegradationands
poll
uti
on

economi cgrowthdoesnotnecessar i
lymeasuresdevelopment

Doesnotshowt hedist
ri
buti
onofgr assnat i
onaloutputamongtheci
ti
zenofacountr
y

13.Explai
nfiveproblemsencounter
edinusi
ngnat
ionali
ncomest
ati
sti
csi
ncompar
ing
thest
andardsofli
vingindi
ff
erentcount
ri
es

 Diff
erencesinthecostofl i
vinginacount ry-
--
-wherethecostofl ivi
ngislow,lowper
capit
amaynotmeanl owst andardsofliving.
 Diff
erencesinlevelofinfl
ati
on---Acount rywi t
hhighinflati
onmayhavehi ghpercapit
a
i
ncomebutt heli
vingstandardsislow.
 Distr
ibuti
onofincome- -
--
Wher eincomei sfairl
ydistr
ibutedthegapbet weent hepoor
andther ichwi
llbenarrow.Suchacount r
ymayhavel owpercapi tabuthighstandar
ds
ofli
ving.
 Diff
erencesinpricesofgoodsandser vicesindi ff
erentcountries--
--
-i
nacount ry
wheret herei
spricecontrolthenationalincomemayappeart obelowerthani na
countrywherethepr i
cesar edeterminedbyt hemar ketforces.
 Diff
erentneedsandt astes- -
-Duetodi f
ferentneedsandt astesofl i
vi
ngindiffer
ent
Nov
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count
ri
es,nat
ionalincomest atist
icsmaynotcompare.
 Dif
fer
entcurr
encies---
-Differ
entcountri
eshavedif
fer
entcurrenci
eswi
thdi
ff
erent
val
ueswhichmaybet edioustoconvert.
 Dif
fer
entgoodsandser vices---Usedincomputi
ngnationali
ncomemaydif
ferfr
om
onecountr
ytoanother .

14.Expl
ainf
ivef
act
orswhi
chmayl
eadt
oadecr
easei
nthel
evel
ofnat
ionali
ncomeofa
count
ry

 Inadequateskill
ed/ humanr esource/l
abour- --
---Acount rywi t
hinadequat eski l
l
ed
l
abourcanpr oducepoorqual i
ty/l
owquant it
ygoods/ servi
cest husgener ati
ngl ow
i
ncome
 Inadequatenatur alresources- -
--Acount rywithi nadequatenat uralresourcescan
producelessgoodst husgener atelessi ncome
 Lowl eveloftechnol ogy---useofl owleveloft echnologyleadst olowpr oductionthus
l
owi ncome
 Inadequatecapitalleadst ol owpr oductionofgoods/ servi
cesl eadingt olessincome
 Polit
icali
nstabil
itywhi chscar esinvestor sl
eadi ngtol essinvestmentandl owi ncome.
 Inadequateforeigni nvestmentduet olacki fenoughsubsi dies/i
ncent i
vest hus
reducingproduct i
onofgoodsandser vices
 Poorent r
epreneur i
alculturer educesproduct ionofgoodst husgener ati
ngl owi ncome

15.Expl
ainf
iveassumpt
ionst
hatwoul
dmakest
wosect
oreconomyt
ohol
d

 Ther
eisnogover nmentinfl
uence
 Fi
rmsspendal lt
heiri
ncomei nhi
ri
ngf act
orsofpr
oducti
on
 Householdsuseallthei
rincomeinbuyinggoodsandservices
 Theeconomydoesnotal lowgoodsandser vi
cesfr
om othercount
ri
es
 Thecountryhasonlytwosectorf
irm andhouseholds

16.Explainfi
ver
easonswhyacount
ry’
seconomyi
sshowi
ngsl
owi
ncr
easei
nthei
r
Nati
onalIncome
Poorsuppl yandl owpr oducti
vit
yoft helabourforce
I
nadequat ecapi talnecessaryfortheexploitat
ionofnat
uralr
esour
ces
Poornat uralresourceendowment
Thet echnologyusedmaybepoorandi nappropr
iate
Effectsofpoliti
calinstabil
it
y
Cit
izens‘slazinessandnegat i
veatti
tudet owardswork
Presenceofal argesubsistencesector
Lowl evel
soff oreigninvestment

17.Expl
ainany5pr
obl
emsencount
eredwhenmeasur
ingnat
ionali
ncome

Transf
erpaymentsposesaprobl
em asi
tisdi
ff
icul
ttoi
mput
ethepr
opor
ti
onofi
ncome
const
it
utedbythoset
ransf
ers

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els,
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
Inaccur atedat a/i nadequatedatawher etherecoul dbeunder estimationor
overestimat ions

Pricef l
uct uati
onsmaydeval ueoroverval uethei ncomef igures

Ignoringi l
legalgoods/ser vi
cesyett heyconstit
ut egeneratedincome

Subsist encesect orgoodsandser vicesarenotmar ket
edhenceunaccount edfor

Differentiatingbet weenf i
nalexpenditur
eandi ntermediateexpendi tur
emaybediffi
cul
t
whichmayl eadt odoubl ecounti
ng

Lackofqual if
iedper sonneltocoll
ectandcompi l
edat a

Lackofadequat eresourcestof i
nancethegat heringofrelevantinformati
on

Val ui
ngofgover nmentout put-manyser vicesarenotsol dint heopenmar ket

18.Expl
ainf
act
orst
hatcont
ri
but
etol
owl
evelofNat
ionalI
ncome.
Polit
icali
nstabil
i
ty–Whent hereisnopeacei nt hecount r
ytheproducti
onofgoodsand
ser vi
cesisaffect
ed.
Leveloftechnology–Theuseofl owl eveloftechnologyoroutdatedmet hodsof
product i
on.
Land–Wher eacount r
yisnotendowedwi thnationalresour
ces.
Lowl aboursupply.Labourwi thlessskill
s.
Inadequatecapitalanduseofsi mpletoolsinproduct i
on.
Negat i
veatti
tudeofci t
izenstowar dswor k.
Inacount rywheret hesubsistencesect ori
slarge.
Thepr oducti
onofgoodsandser vicesmaybel owi nacountryexperi
encingreduced
foreigninvestment.

Di
scussf
iver
easonswhypercapi
tai
ncomemaynotbeaper
fectmeasur
eofst
andar
dof
l
iv
ingbet
weendif
fer
entcount
ri
es
˗Differ
entcount ri
esusedi fferentcur renciesmeani nghi ghpercapi taincomei nonecount ry
doesnotmeani tsbetter/lowpercapi t
ai ncomedoesnotmeanacount ryi swor seof f(si
nce
whatagi venamountofmoneycanbuyi nonecount rymaynotbet hesamequant ityi
tmay
buyi nanot her)
˗Differ
entcount ri
eshavedi fferentl evelsofi nfl
ation-highpercapi t
ai ncomei nacount ry
wher einf
lat i
oni shighmaynoti ndicatehi ghl i
vingstandar ds/l owerpercapi taincomei none
count r
ywher einflat
ionrateisl owerdoesnotmeant heyar ebadlyoff
˗Popul at
ioni ndifferentcountrieshavedi fferenttastes/pr ef
erences/di fferencei nbasketof
commodi ti
es
˗Higherpercapi taincomei nonecount rymaynoti ndicateahi gherstandar dofl i
vingsince
tastes/pr eferencesi nthatcount rymaybeexpensi ve/l owpercapi taincomei nonecount ry
maymeani nexpensi vetastesofcommodi t
iesandhencenotnecessar i
lylowerst andardsof
l
iving
˗Differ
entcount ri
esmayhavedi f
ferentlevelsofaccur acyofdat a
Itsnoteasyt odet er
mi nethecount rywi t
hhi gher/l owerst andar dsofl i
vingsi ncet her
ear e
highchancesofi naccurate/unr eliabledat a/i nformat i
ononpopul ati
on, incomes, GDPset c.
˗Differ
entcount ri
esdonothavesi mi larincomedi str
ibutions

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Onecount r
ymayhaveamor eeven/uneveni ncomedi str
ibuti
ont hantheothermakingit
difficulttogaugewher eli
vi
ngst andar dsarehi gher/l ower
˗Di fferencei nl
evelofsacr ifi
ce/ef fortindiff
erentcount ries
Acount rywithhigherpercapi t
ai ncomemayhavesi mplyattainedthatduetosacrif
ice/
har dwor k/ext raef fortandvi cever saandcannotbepr esumedt ohaveahigherstandardof
li
vingt hanacount rywher ewor kforcei slazy
˗Expendi t
ureofdiffer entcount ri
esonspeci alneeds/emer gencies/calamities/soci
al
needsvar yAcount r
ymayhaveahi gherpercapi t
ai ncomebutwi thhugeexpenditureonwars,
diseases, famine,nat uralcalami ties/soci alneedsandvi cever sa
˗Di fferentcount r
ieshavedi fferentsi zeofsubsi stencesect ors/non-mar ketedoutput/
unpai dgoods/ser vicesAcount rymayhavel owpercapi taincomet hananotherbutwitha
largevol umeofnon- marketedout putandvi cever sa
˗Expendi t
ureofpr oduct snotmeantf orimmedi atesat i
sfacti
on
Somecount rymayspendhugeamount sofmoneyonpr ojectsthatmaybecompl et
edin
year sahead( maki ngi tdiff
iculttocompar ewel f
areatpr esent)

NETWORTHOFABUSI
NESS.
1.Thefol
l
owingaccountbal
anceswer
eext
ract
edf
rom t
hebooksofKi
tut
r son30th
ader
November1995

Machi
ner
y 250,
000

Debt
or 62,
000

Cr
edi
tor
s 46,
000

St
ock 12,
680

Cashi
nhand 1,
500

Cashatbank 15,
000

Det
ermi
net
hecapi
t asat30thNov
al ember
1995

Capi
tal
=Tot
alasset
s–Tot
all
i
abi
l
iti
es

250,
000+12,
680+62,
500+15,
000+46,
520

=295,
160

2.Thef
oll
owi
ngbal
anceswer
eext
ract
edf
rom t
hebooksofWasot
rader
son

30thOct
ober1995.

Nov
els,
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Cash 20,
520

Bank 160,
230

Pr
emi
ses 800,
000

Debt
ors 40,
000

Cr
edi
tor
s 62,
000

2y
earl
oan 40,
000

St
ock 2,
500

Pr
epar
eabal
ancesheet (
5mar
ks)

3.
Thef
oll
owi
ngt
abl
econt
ainsi
nfor
mat
ionr
elat
ingt
oabusi
nessA,
BandC.Det
ermi
net
he

f
igur
esr
epr
esent
edbyW,
XandY.

Busi
ness Asset
s Capi
tal Li
abi
l
iti
es

A 620,
000 W 230,
000

B X 400,
000 120,
000

– C 800,
000 500,
000 Y Asset
s=
Capi
tal
– l
iabi
li
ti
es

(
a)Capi
tal =620,
000–230,
000

=390,
900

(
b)Asset
s =400,
000+120,
000

=520,
000

(
c)Li
abi
li
ti
es =800,
000–500,
000

=300,
000

4.
Int
hespacespr
ovi
ded,
indi
cat
ewi
tha(
+)or(
-)t
heef
fect
sofeachoneoft
he

f
oll
owi
ngt
ransact
ionsont
heasset
s,Li
abi
li
ti
esorcapi
tal (
4mar
ks)
Nov
els,
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Tr
ansact
ion Asset
s Li
abi
l
iti
es Capi
tal

a Boughtf
urni
tur
eoncr
edi
t

b.Pai
dcr
edi
tor
sbycash

c.wi
thdr
ewcashf
orper
sonal
use

d.Conv
ert
edaper
sonal
carf
orbusi
nessuse

Asset Li
abi
l
ity Capi
tal

a)Boughtfurnit
ure + +
b)Pai
dcredi t
orsoncash
- -
c)Wit
hdrawcashf orpersonaluse
d)Conver
tedaper sonal
carf or - - -
per
sonal use

+ +

5.
Thef
oll
owi
ngr
elat
etobusi
nessA,
BandC.Foreachoft
hebusi
nessdet
ermi
net
he

mi
ssi
ngf
igur
es:M,
N,andP

Busi
ness Asset
s Capi
tal Li
abi
l
iti
es

A 30,
000 m 12,
000

B n 16,
000 13,
000

C 60,
000 48,
000 p

-M -Kshs18,
000

-N–Kshs29,
000

-P Kshs12,
000

6.
Stat
efourusesofbal
ancesheetf
orbusi
nessor
gani
zat
ions. (
4mar
ks)

7.
Foreachoft
hef
oll
owi
ngt
ypesofaccount
s,st
atei
nthespacespr
ovi
dedwhet
hery
oudebi
t

orcr
edi
tincr
easeordecr
easet
heaccount
. (
3mar
ks)

Nov
els,
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Ty
peofaccount Toi
ncr
ease Todecr
ease

a Assetaccount

b Li
abi
l
ityaccount

c.Capi
tal

8.
Thef
oll
owi
ngt
ransact
ionsr
elat
est
oTaj
i
raTr
ader
sfort
hemont
hofJanuar
y2001

Jan1st
art
edbusi
nesswi
thKshs.20,
000i
ncash

Deposi
ted15,
000f
rom casht
il
li
ntoabusi
nessBankaccount

Boughtgoodsoncr
edi
tfr
om Wemat
rader
sfor6,
000

Boughtf
urni
tur
ebychequesh3,
000

Pr
epar ancesheetasat31stJanuar
eabal y2001

9.
Int
het
abl
ebel
ow,
det
ermi
net
hemi
ssi
ngf
ig.X,
YandZf
oreachofbusi
ness

Q,
RandS.

Busi
ness Asset
s Capi
tal Li
abi
l
iti
es

Q 250,
000 X 120,
000

R Y 1,
500,
000 Z

S 600,
000 100,
000 400,
000

(
3 mar
ks)
10. Thef
oll
owi
ngi
nfor
mat
ionr
elat
est
obusi
nessA,B,
CandD.

Busi
ness Asset
s Li
abi
l
iti
es Capi
tal

A 500,
000 x 300,
000

B Y 800,
000 1,
200,
000

C 300,
000 120,
000 z

D 700,
000 t 500,
000

Nov
els,
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Det
ermi
nef
igur
erepr
esent
edbyX,
Y,ZandT. (
4mar
ks)

11.
Thef
oll
owi
ngbal
anceswer
eext
ract
edf
rom t
heTangot
r sasat31stDecember2004
ader

Mot
orv
ehi
cle 80,
000

Pl
antandmachi
ner
y 70,
000

Loanf
rom Bank 60,
000

St
ock 25,
000

Debt
ors 30,
000

Cr
edi
tor
s 15,
000

Bank 20,
000

Pr
epar
eabal
ancesheetf
orTangoTr sasat1stDecember2004.
ader (
5mar
ks)

12.
Stat
etwochar
act
eri
sti
csofeachoft
hef
oll
owi
ngbal
ancesheetel
ement
s:

a)Asset
s

b)Li
abi
l
iti
es

(
a) Asset
s

-
Resour
ceownedandcont
rol
l
edbyt
hebusi
ness.

-
Musthav
ebeenacqui
redi
nthepast
.

-
Ani
tem ofv
aluet
hatcanbemeasur
edr
eli
abl
yinmonet
aryt
erms.

-
Fut
urebenef
it
sassoci
atedwi
tht
henetexpect
edt
ober
ecei
vedbybusi
ness

ent
it
y.

-
Theyar
efi
xedorcur
rent
.

(
b) Li
abi
li
ty

-Apr
esentobli
gat
ionf
orabusi
nesst
oset
tl
easar
esul
tofpast
commitments.

-
Set
tl
ementwoul
dreducebusi
nessasset
s.

Nov
els,
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-
Amounti
nvol
vedcanbemeasur
edr
eli
abl
yinmonet
aryt
erms.

-
Owedt
oout
sider
s.

-
Theyar
elongt
erm orcur
rent
/shor
tter
m.

13.
Thef ol
lowingbal
anceswereext
ract
edf
rom t
hebooksofSakuTr
ader
son
31March2008
Fi
xedasset s 300,
000
Currentassets 123,700
Creditors 84,
500
5y earloan 125,000
st
Deter
minet henetwor thofthebusinessasat31 Mar
ch2008
(4mar ks)
Det
erminationofnetwor thofSakut r
aders
Networth=Tot alassets-Totall
iabil
i
ties
X=-{300,000+123, 700)-(125,
000+84. 500)
X=423, 700-209,500
Networ t
h=214, 200 8x1/
2mar
ks

PUBLI
CFI
NANCE.

1. Expl
ainf
iveconsi
der
ati
onst
obemadebyagov
ernmentwhendeci
dingonagood
tax syst
em. (
10mks)
 Equitable–f air
nessi npaymentoft ax.I
tshoul dnotstrainthet axpayers.
 Certain–shoul dbecl earinter
msofamount ,ti
meandmanneri nwhichi tshoul
dbe
paid.
 Conveni ent -Taxleviedshoul dbeconveni entt othecont r
ibutorandt hecol l
ect
or.To
thecont ributoritshoul dbelevi
edatat i
mewhent hepayerhasmoney.
 Economi cal-thecostofcol l
ecti
ngandadmi nisteri
ngshoul dbel owerthant he
revenuet obecol l
ected.
 Diversit
y–Agoodt axsyst em shouldbedi versif
iedsot hatitmeet srevenue
requirement softhecount r
yandalsobei nli
newi ththeprincipl
eofequi ty.
 Flexi
bi l
it
y–shoul dbecapabl eofchangi nginaccor dancewi thchangesi nNat i
onal
i
ncome.
 Elasti
c–i tshoul dallowt hegovernmentt oincreaseorr educer evenueasneedar i
ses.
 Abili
tytopay–At axsyst em shouldbedesi gnedi nawayt hattheamountchar gedis
nottoohi ght otheext endthatthecont r
ibutorisnotablet opay.
 Simplicity-Agoodt axsyst em shouldbesi mpleenought obeunder st
oodbyeacht ax
payer.

2.Expl
ainf
iver
easonswhyt
heGov
ernmenti
mposest
axoni
tsCi
ti
zens. (
10mks)

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 Raiser evenue-t hisisusedbyt hegover nmenttoprovideessent i

algoodsandser vices
totheci tizens.
 Discour ageconsumpt ionofhar mfulproducts–suchasbeerandci garett
ebyheavi l
y
taxingt hem
 Reducei nequal ityinincomedi st
ri
but i
on–Thi sisdonebyt axingt her i
chandusi ng
themoneyf obenef i
tt hepoor
 Cont roli nflation-t axat i
onr educest hemoneysuppl yt hroughr eductionofpeopl es
i
ncomet her ebycont roll
ingi nfl
ati
on.
 Cor rectunf avour ablebal anceofpayment s–hight axoni mpor tedpr oductswoul d
discour aget hei rimpor tationandl owt axonexpor t
ingpr oductswi llencouragemor e
expor tation.
 Discour agei mpor t
ationofcer tai
npr oductsbychar gi
nghi ght axont heiri
mpor tat
ion.
Forexampl ehi ght axoni mpor tedsugarai medatpr otecti
ngt helocalsugari ndustries.
 Infl
uenci ngl ocat i
onofbusi nessesf orexamplebyheavi lytaxingbusi nesseslocated
i
nt ownst hiswi llmakeent r
epreneurst oshif
ttoruralareas. .

3.
Expl
ainf
ivebenef
it
soft
axat
iont
otheKeny
aneconomy (
10mks)
 Tor aiserevenuet of i
nancegover nmentdevelopmentpr oj
ects
 Todi scourageconsumpt i
onofharmfulproductse.g.ci
garet t
eswhichcausenegat i
ve
effectsonheal thoft hepeopl e.
 Todi scouragei mpor tationofcert
ainproductsi
nor dertoboost ,l
ocalproduction
andlocalindustries.
 Tocor r
ectbalanceofpaymentdef i
citbytaxi
ngimpor tsinor dert
odiscour age
i
mpor tat
ion.
 Tor educei nequalit
iesi nincomedistri
buti
onbyt axi
ngt herichandf i
nancingactivi
ti
es
thatbenef it
sthepoormember softhesociet
y.
 Tor educei nfl
ati
onbyr educi
ngpeoplesdisposableincome/ byreducingmoneysuppl y.
 Toencour agedel ocalizati
onofindustr
iesbytaxingurbanbusi nessesmor e.

4. Expl
ainf
ivedi
sadv
ant
agesofpr
ogr
essi
vet
axes (
10mks)
 Itmaydi scouragepeopl efrom workingasanyadditionali
ncomegoestothet
ax
 Invest orsmaybedi scouragedfrom venturi
ngintori
skybutmoreprof
it
able
busi nessesast hesewoul datt
ractmor etax.
 Itisbasedont heassumpt ionthatpeopleearni
ngthesameamountofi ncomehave
simi larneedsandabi l
i
tytopayt ax.Thisisnotthecaseinreal
it
y.
 Itmayr educeout put.
 Itmaydi scouragever t
icalmobili
tyoflabour.
.
 Ret ardscapitalf ormation
 Scopeoft axevasi on
 Itbr eedscorrupt ion
 Hamper ssocialwel fare

5. Val
ueaddedt
axi
soneoft
hei
ndi
rectt
axesusedbyt
hegov
ernmentt
orai
ser
evenue.
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Expl
ainf
ivebenef
it
soft
hist
axt
otheeconomy
.
 Mor er evenuei scol lect ed-Thet axi sl eviedonawi der angeofessent i
als
commodi t
ies/ pr oduct st husahi ghamountofr evenuei scol l
ected.
 Canbeusedsel ectively-i tcanbeusedsel ecti
vel ybyt hegover nmentt oachi evea
certainobj ectivel i
kedi scour ageconsumpt i
onofcer tai
npr oduct ssuchasbeerby
i
mposi nghi ght axoni t
.
 Stimul ateef f
or t-increasei ni ndir ectt axi sli
kelyt ost i
mul ateef fortaspeopl est ruggl
e
tomai ntai
nt heircur rentst andar dsofl ivingbywor kinghar dert or ai
seaddi tional
revenue.
 Conveni ent -i
ti sconveni entbecausei ti snotpai di nl umpsum buti nsmal lbi tsasone
buyst hecommodi t
y.
 Flexible-thet axi sflexi blewhi chenabl est hegovtt oei therraiseorr educet het axrat
e
tosui tthepr evai l
ingeconomi csi tuationi nthecount ry.
 Easiert ocol l
ect -col lectioni sdonebymanuf act urer sandsel lerswhot henr emi tt
o
thegovt .thismakesi teasi ert ocol l
ect .
 Paymenti smadepr ompt ly–Gover nmentcangett axr evenuei mmedi atelypr oducts
arebought /produced.
 Lessexpensi vet oadmi nister- Sincei tcanbecol lect edatt hepoi ntofpr oduct ion,
may
notbeexpensi vet oadmi nisterasdi rectt axes.
 Taxpaymenti svol unt ar y–Paymentofi ndi
rectt axi svol untar ybecausei tispai d
mai nlybyt hosewhoconsumet het axedcommodi ty.
 Notpossi blet oevade–I tisnotpossi bletoevadei ndirectt axbecauseal lthosewho
buyt het axedcommodi t yhavet opayt het ax.

6. Hi
ghl
ightf
ivedi
ff
erencesbet
weendi
rectt
axandi
ndi
rectt
ax (
10mks)

Di
rectt
ax I
ndi
rectt
ax

(
i)
Taxr
evenuei
scer
tai
n (
i)
Uncer
tai
ntyi
ntaxcol
l
ect
ed

(i
i)Doesnotaf
fectpr
icesofgoodsand (
ii
)Af
fect
spr
icesofgoodsndser
vices
servi
ces

(i
ii
)Thesoci
etyort
axpay
ersar
e (
ii
i)t
hetaxpayermaynotbeawar
eof
consci
ous t
axbeingpai
d.

(
iv)Economi
cal
incol
l
ect
ion (
iv)Expensi
vei
ncol
l
ect
ion

(
v)Cannotbeav
oided (
v)Canbeav
oided

(
vi)
Candi
scour
agewor
k (
vi)
Encour
agespeopletowor
khardt
o
maint
aint
hei
rstandar
dsofli
vi
ng.

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7. Expl
ainf
ivenegat
iveef
fect
sofhi
ght
axat
ioni
naneconomy (
10mks)

 Decr easei npr ofi

tsofbusinesses-thi
smakest hebusi nessesunablet omeeti ts
oper at
ionalexpensest husai dingt
heirpoorperformance.
 Reduct ioni nconsumer sincome-Theconsumer sdisposableincomewi llr
educet hus
l
ower i
ngt heirstandar
dsofl i
ving.
 Discour agessavi ngs–peopl ewil
lbediscouragedf r
om savi ngthusr educi
ngl evelof
i
nvest ment si nthefut
ure.
 Increasescost sofproduction–Thi swillf
orcepr oducerswhocannotmeett hecost
outofbusi nessorpasst hebur dentoconsumer sint ermsofhi ghpricedpr oducts.
 Increasedpr icesofgoodsandser vi
ces-Thismakest hem unaffordablebysome
consumer st husreduct
ioninconsumpt ion.

8. Expl
ainf
ivemer
it
sofdi
rectt
axes (
10mks)

 Elasti
c–Canber aisedorr educedaccor dingtot heneedsoft heeconomy.
 Flexi
ble–I tcanbeexpandedt ocoverasmanyar easaspossi ble(
taxbase)t ocoll
ect
mor erevenue.
 Simplet ounder st and–i tssimpl etounder st
andt obot hthetaxcol l
ectorandt he
payerintermsofamountandt imeofcol lecti
on.
 Certain–Thet axcol lect i
oni scer t
aini nt
heamountofr evenuet obecol lect ed
 Equitable–Di rectt axi sequi tableasamountt obepai dincreaseswi t
hi ncr easein
i
ncome.
 Doesn’taf f
ectt hepr iceofgoodsandser vices–i tsnotpartoft hesell
ingpr iceof
goodsandt heref orecantf uelinfl
ation.
 Desirable–i tonl yaf fect sindividualsinacer tainincomebr acketasi tdoesnotaf f
ect
al
ltheci t
izens.
 Promot esweal t hr edist r
ibut i
on–r educeshi ghdif f
erencesbet weenther ichandt he
poor.Highi ncomeear nersar et axedmor e.
 Economi calincol lection–Mostoft hedirecttaxesar ecoll
ectedatsour ceandt he
costofcol l
ectingt hem i sf air
lylow.Forexampl ePay- As-You-Earn(P.A.Y. E)taxis
deductedatt heendofever ymont hf rom theempl oyee’ssalarybytheempl oyerwho
actsasahonor aryt ax- coll
ector .

9. Expl
ainf
ivedi
sadv
ant
agesofi
ndi
rectt
axes (
10mks)

 Mayf ueli
nflat
ion–cont i
nuedi ncr
easeinindi
recttaxmayf uelinfl
ati
onasitdirect
ly
i
ncr easesthepr i
cesofgoodsandser vi
ces.
 Canbeavoi ded–I ndi
recttaxcanbeavoi dedbypeoplewhodonotconsumet he
taxedpr oduct.
 Uncer tai
ntyinrevenuecoll
ection–Theamountt obecol
lect edini
ndirectt
axmaynot
bepr edict
edbecausei tsnoteasytoforecastsales.
 Expensi veincoll
ecti
on–i ndir
ecttaxesareexpensiveincollecti
onasmanyt ax

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i
nspect orsareempl oyed.
 Lackofcont ri
butorsawar eness–asi ndir
ecttaxishi ddeninthepricesofgoodsand
services,manyofi t
scont ribut
orsarenotawar ethattheyar econtri
buti
nganyt hingto
thegover nment .
 Lessequi t
able–Thebur denofindirecttaxfall
smor eheavilyonconsumer swi thlow
i
ncomescompar edt othosewi thhighincomes.
 Mi ghtinterf
erewit hresour ceall
ocat i
on–I ndirecttaxincreasesthepricesofthe
taxedgoodsr el
ativetoot hers.Thismi ghtdiscourageconsumer sfr
om buyingt hem
therebyshi f
ti
ngconsumpt ionandpr oducti
onr esourcest owardscommodi t
iesthatare
nott axed.

10. St
atef
ourt
ypesofdi
rectt
axes (
4mar
ks)
 I
ncomet ax
 Stampdut y
 Corporat
iont ax
 Capit
algaintax
 Estat
edut ytax
 Wealthtax
 Capit
altransfer(gi
ft
)tax

11.
Statefourci
rcumstancesunderwhi
cht
hegov
tmayf
indi
tnecessar
ytor
aiser
evenue
throughint
ernalbor
rowing
 I
fexter
nalsour
cesoffundsarenotavail
able.
 I
fthegovtwantst
ostandoni tsown
 I
fthegovtwantst
ocontrolinf
lat
ion
 Whenthegovtwantst
or educeexter
naldebts.

Ci
rcumst
anceswhent
hegov
ernmentmaybor
rowf
rom i
nter
nal
sour
ces.

 I
fther
eisbudgetdef
ici
tint
hecount
ry.

 Whent
her
eisneedt
oimpr
ovei
nfr
ast
ruct
ure.

 Whent
her
eisneedt
oreducei
nfl
ati
on.

 I
fint
ernall
oansat
tractl
owi
nter
estr
atest
hanext
ernalones.

 I
ncaset
heext
ernall
oanshavest
ri
ct/
toughcondi
ti
onsat
tachedt
othem.

 Whenr
eli
ef/
emer
gencyser
vicesar
erequi
redi
nthecount
ry.
St
ateany4sour
cesoff
inancet
othecount
ygov
ernment
.
Fi
nesandpenal t
ies.
I
ncomef rom saleofcountygovernmentownedpr operty.
Recoveryofprincipalamountandint
erestofloans.
Chargesi.
e.receiptsbythegovernmentforservi
cesr endered.

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I
ncomegener
atedf
rom t
our
ism et
c.

12. Out
li
nef
oursour
cesofgov
ernmentr
evenue
 Taxes
 Fi
nesandpenal ti
es
 Ratesandr ent
s
 Profi
tsfr
om gover nmentbusi
nesses
 I
nterestonloans
 Feesandlicenses
 Saleofshares/debent
ures
 Governmentbor r
owing

13. Expl
ainf
ivet
ypesoft
axesl
evi
edonbusi
nessesi
nKeny
a (
10mks)
 Incomet ax–itisleviedont heincomesofindividualsandbusinesses
 Exciseduty–i ti
sl evi
edongoodspr oducedwi t
hinacount r
y.
 Customsdut y–I tisat axlevi
edongoodswhi char eimport
edi nt
o/expor
tedtoother
countri
es.
 Valueaddedt ax–i ti
sappliedtoallgoodsatagi venpercentage.
 Capitalgai
nst ax–i tislevi
edoni ncr
easeintheval ueofcert
aintypesofproper
ty
whensol datahi gherpricethanitwasbought.

14. Expl
ainf
iveway
sinwhi
cht
hegov
ernmentf
inancesi
tsexpendi
tur
e (
10mks)
 Fi
nesi
mposedbycour
tonof
fender
s

 Benef it
sandr atespaidforuseofgover nmentpr opert
y
 Licensef eepaidbyt hosewhowantt ooper at
ebusinesses.
 Dividendsandpr ofi
tsearnedfrom governmentdirecti
nvest
ments.
 Interestsearnedonl oansadvancedbyt hegover nmenttofi
rms.
 Proceedsf rom saleofgover nmentproperty
 Gover nmentbor rowinginter
nallyandexternal
ly
 Taxespai dbyi ndivi
dualsororganizat
ionst ogovt.

15. Expl
ainf
ivepr
inci
plesofgov
ernmentexpendi
tur
e (
10mks)
 Maxi mum soci albenefi
t–Anypubl icexpenditur
emustbespendi nsuchawayt hat
maj or
ityoft hepeopl eareabletoreapmaxi mum benefitfr
om it.
 Economy–Publ i
cexpendituremustbei ncuredinthemosteconomi calwayby
avoidi
nganypossi bl
ewast eormisuse.
 Elasti
city/Flexibi
li
ty–mustbepossi bletoincr
easeordecr easetheexpendi tur
e
accordingt ot heprevai
li
ngci r
cumstances.
 Sanctions–Publ icexpenditur
emustbesanct i
onedorappr ovedbyther elevant
authori
tysuchast heparli
amentort hecountyassembl y.
 Properf inancialmanagement -publicfundsshouldbewel lmanaged.Pr operrecords
ofexpendi tureshouldbekeptandaudi tedasrequired.

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16. Out
li
nef
ourway
sinwhi
chgov
ernmentexpendi
tur
emayst
abi
li
zet
heeconomyofa
count
ry.

 Provisionofsecur i
ty:Thiscreatesanenabl ingenvironmentf oreconomi
cactivi
ti
es
 Creation and mai ntenance ofadmi nistr
ative depart
ment s:These are cr
eated for
eff
ect i
veoper ati
onofacount ry’
seconomye. g.sal
ari
es
 Socialser vices:Thi s enhances t he war fare of the populati
on for ef fect
ive
part
icipationi neconomi cact i
vit
ies.
 Spendi ngoni nfrastr
ucture-Iti mprovesef fici
encyinpr oducti
onand distr
ibuti
onof
goodsandser vicesintheeconomy.
 Advancementofnon- i
nterestearningcapitaltoentrepr
eneur sduri
ngeconomicrecess
 Provisionofbasi cgrowthandser vi
cest hr
oughsubsi dies.
 Promot i
ngl ocalindustr
ies

17. Hi
ghl
ightf
iver
easonswhybudget
ingi
simpor
tantt
oabusi
nessor
gani
zat
ion (
10mks)
 Planningactivit
iesisanecessar yact i
vit
ywhi chassistsorganizat
ionstof ocusonf utur
e
operations
 Budget i
ngisi mport anti
ncoordinatingoper ati
onsinanor ganizat
ionfrom diff
erentdepart
ment
 Budget i
ngassi stsincommuni catingt heintendedoper at
ionsoft heorganizati
ontointer
ested
parti
es
 Budget ssetstandar dsofperformancef ortheorganizati
onwhi chthemanager sstr
iveto
achieve
 Budget smot i
vatet hemanager sast heywor ktoachievethetarget
 Budget shelpst ocont r
olexpendit
ureast hoseimplement ingi
tareexpectedt ooperatewithi
nit
l
imit
 Ithelpsthebusi nesst oident
if
yitsar easofexpendi ture
 Awel lplannedbudgetcanbeusedasameansofat tract
ingexternalf
inances
 Ithelpsthebusi nessest i
matether evenue

18. Di
scusst
her
easonswhyabusi
nessor
gani
zat
ionmaypr
epar
eabudget (
10mks)
 I
nordertodet
ermi neorgani
zati
onsearni
ngs/sal
est
otalr
ecei
ptf
oragi
venper
iodoft
ime
 Todeter
mineallexpenses/payments

 Todeterminethebalancebet weent her

eceiptandpaymentanddiscoveri
fther
eisbal
ance
surpl
usordef i
citinabudget
 Deter
minewaysofget ti
ngextr
ai ncomeifthereisadefici
tint
hebudget
 Enabl
etheor ganizat
iontohaveaf orwardlooki
ngapproach
 Creat
estaffmot i
vati
on/coordinati
onifallarei
nvol
ved
 Iti
srequi
redbyl endersoffi
nance/condi ti
onse.t
.c

19. Expl
ainf
ourway
sthatagov
ernmentcanuset
ofi
nanceabudgetdef
ici
t. (
8mks)

 (I
nfl
ati
onar
yfinancing)Borr
owingfr
om t
hecent
ralbankt
hroughoverdr
aft
s/ shor
tterm
l
oans/acceptuseofexampl est
oexpl
ain.
 Borr
owingfr
om internati
onalmoneymarket
s/agenci
es/fi
nanci
alinst
it
uti
ons/non-banki
ng
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fi
nanciali
nstituti
onssuchasI BRD/I MF/ Wor ldBank/PBR/pr ovidesfunds/r evenuefor
government/acceptuseofexampl es.
 Bor r
owingfrom capi t
almarket ssuchasI CDC/i nsurancecompani es/AFC/NPCK/
procedurebysel li
ngbonds.
 Bor r
owingfrom domest i
cmoneymar ketssuchascommer cialbanks/sel li
ngtreasur
ybi l
l
s
and/bonds/pr omissorynotes/I .
O.U.
 Bor r
owingfrom ot hercountr
ies/mul til
ater al/Bil
ater
alborrowingt hr
oughl oans/buying
goods/ser vicesoncr edit
.
 Bor r
owingfrom member soft hepublicbysel l
ingtr
easurybills/bonds/pr omissorynotes.
 Grants/donat ions/f r
om donorcount r
ies/f i
nances/indi
viduals.
 Printi
ngmor ecur r
encies
 Imposingcondi ti
ons/new/t axationinr elatedgoods/ser vices/increasedgover nment
revenue/raisef unds.

20. Expl
ainsi
xsour
cesofgov
ernmentr
evenuef
ordev
elopmentexpendi
tur
e.

 Taxation–Gover nmentl evisdi

f f
er entt ypesoft ypesongoods/ser vi
cesf r
om raisi
ngrevenue/
onincomes
 Rent/rates/leasei ncome/hi ri
ngchar gesr eceivedf rom gover nmentpropertysuchas
l
and/ buil
dings
 Salesofasset s–t hisincludesasset sl i
keshar es/bui l
dings/vehicles
 Loans–Thesear er ecei
vedf r
om devel opmentpar tners/internati
onallenders/world
bank/I.M.F/l
ocallender s
 Divi
dends/pr ofit
s–r eceivedfr
om gover nmenti nvestment /business
 Li
censes/f ees–l i
censesf oroper atingbusi ness/f essf orgovernmentser vi
ces
 Loyalti
es–gener atedbyacount ry’sr esour cessuchasf orests/minerals.Nationalpar
ks
 Grants/donation/gi f
ts–f rom thedevel opmentpar tners/otherwellwi sher
s
 Loansr epayment s/interestsonl oansgi venoutbyt hegover nmentagenci es
 Fi
nes/penal ti
esi mposedbycour ts/gover nmentagenci es

21. Out
li
nef
ivesour
cesofnon-t
axpubl
icr
evenue

 Ext
ernalbor
rowi
nge.
g.f
rom I
MFandWor
ldBank

 Sol
i
citf
orf
orei
gngr
ant
s/donat
ions/
aidsf
rom donorcount
ri
es

 Reducegovernmentexpendi
turethroughcost
-cut
ti
ngmeasur es
 Sal
eandl easebackofpubli
cassets
 I
ntroduci
ngnewt axati
onofsel
ectedgoods
 Impulsesfrom publ
iccor
porat
ive/gover
nmentbusinesses.

 Fi
nes&penal
ti
esi
mposedonpeopl
esf
oundbr
eaki
ngt
hel
aw.

 Feef
rom di
rectser
vices.

 Escheat
s

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 I
ncomef
rom gover
nmentpr
oper
ti
ese.
g.par
ks/
lande.
t.
c

 Loanr
epayment
s/i
nter
estear
nedf
rom gover
nmentownedf
inanci
ali
nst
it
uti
ons.

22.(
a)Expl
ainf
ivesour
cesofpubl
icf
inances. 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
(10mar
ks) 
 
   
  
  

 
(i
) Taxesandl
evi
es

Thesearetaxesandl
evi
esonindi
vi
dualmembersofpubl
i
candbusi
ness
organi
zat
ionsoutoft
hei
rear
ningsandser
vicespr
ovi
dedbyt
hegover
nment
.

(
ii
) Di
vi
dendsf
rom par
ast
atalandi
nvest
ment
s

Thesearetheshar
esofpr
ofi
tsgi
vent
othegover
nmentbypar
ast
atal
sinf
orm of
di
vidends.

(
ii
i) Bor
rowi
ngl
oansl
ocal
l
yani
nter
nat
ional
l
y

Locall
y,thegover
nmentborr
owst hr
oughthesal
eoftreasur
ybondsandbill
sas
wellasinfr
astr
uctur
ebonds. 
Int
ernat
ional
l
ythegover
nmentborrowsfrom
i
nternati
onalfi
nanci
ali
nst
it
uti
onssuchast heWorl
dBankandfri
endlycountr
ies.

(
iv) Feesforser
vicesrender
edt oi
ndivi
dual
sdi
rect
lybythegovernmentforexamples
regi
str
ati
onofbirt
h, mar
ri
agesanddeaths,
businessli
censi
ng,bur
ialper
mi t
,work
permit
sandtransferofproper
ty.

(
v) Fi
nesandpenalti
eschar
gedont
hoseconsi
der
edt
ohavebr
eachedgover
nment
l
awsfrom cour
ts.

Thesear
eimposedoni
ndi
vi
dual
sfi
rmsandcor
por
ati
onsf
oundgui
l
tyofbr
eaki
ng
thel
awsofland.

(
vi) Escheat
s

Pr
opert
iesreposedbythegover
nmentfrom member sofpubl
i
cforvar
iousr
easons
e.
g.whereonedieswit
houtawillandhavenolegalhei
r.

23. I
ndi
cat
orsofagoodt
axsy
stem
 Equity;Taxbur denshoul dbedi st
ri
butedamongt hetaxpayersaccor di
ngtotheir
abil
ityt opay
 Economy; Coll
ectionandadmi ni
str
ati
vecostofthetaxshouldnotexceedt axrevenue
coll
ect ed
 Fl
exi bili
ty;Taxsyst em shouldbecapableofbeingrevisedorchangedi nl
inewiththe
changi ngeconomi ccondi t
ions.
 Diversity;Di f
ferenttypesoft axsothatt
axburdenisondi ff
erentgroupsofthesociety.
 Elasticit
y; Taxrevenueshoul dbecapableofrespondingappropriat
elytochangesin
nationali ncome.
 Simpl ici
ty;Thet axsystem shouldbeunderstoodbyt axpayersandt hecol
lect
ors.
Thismot i
vatesthem to payt ax.

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 Cert
ain;Theoneexpectedtopayshoul
dbeclear
lyawar
eofhowmuchhe/
sheis
payi
ng.Thetaxcoll
ector/
gover
nmentshoul
dalsobeawareofhowmuchi
tis
supposedtocoll
ectfr
om tax

MONEYANDBANKI
NG.

1. Hi
ghli
ghtfouradvant
agesofusingat
elegr
aphi
cmoneyor
derasameansofremi
tt
ing
moneythoughthepostoff
ice. (4marks)

 I
tisfast
ermeansofsendi ngmoney
 Thesendercanbecompensat edincaset
hemoneyi
slost
 I
tisfast
erwayofsendi ngmoney
 I
tisaconvenientwayofsendingmoney
 I
tcanbeeasilytracedwhenitget
slost

3. Expl
ainf
iveway
sinwhi
chbankscont
ri
but
etot
hedev
elopmentofKeny
a (
10mks)

 Provi
dingcapi taltoexistingnewbusi ness
 Theycarryf easibili
tystudiesf orpot
ent
iali
nvest
ors
 Theyprovideadvi soryservicesonhowt osetupandr aninvestpr
ojects
 Theysuppor ti
nvest mentsi nar easwhi
chwouldotherwisenotbefinancedbyotherf
inanci
al
i
nstit
uti
onsduet or i
sksinvol ved
 Theygener ater evenuet othegover nmenttopaytaxesordivi
dendstothe government
 Createempl oymentoppor tuniti
es
 Mobili
zati
onofsavi ngsinvest ments

4. St
atef
ourl
imi
tat
ionsofbar
tert
rade (
4mks)
 Involvedoublecoincidenceofwantswhi chisdif
fi
culttofi
ndinreall
i
fe
 Somei t
emscannotbeconveni entl
ydividedintosmal l
erunit
s
 Somegoodsar etooheavyhencedi ff
iculttotr
ansport
 Lacksst andardsmeasur eofvalue.
 Somecommodi ti
escannotbest oredf oralongperiod/peri
shabl
e.
 Diffi
culttodeterminefairr
ateofexchange

5. Out
li
nef
iver
easonswhybankscur
rentaccounti
spopul
arwi
tht
rader
s (
10mks)
 Thetraderscanwi t
hdrawmoneyatanyt i
mewi thoutnot
ice
 Chequesar eusedforpayment sinst
eadofcash
 Traderscanarrangeforoverdraft
sfaci
li
ti
eswiththemanagementoft
heBank
 Thebankcanpayonbehal fofthetr
adessuchasst andi
ngorder
s
 Thereisnomi nimum balancerequir
edintheaccount
 Purchasescanbemadepostdat edcheques

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els,
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6. Expl
ainser
viceof
fer
edt
ocommer
cialbanksbyt
hecent
ralbankofKeny
a (
10mks)
 Acceptingdeposi tsf r
om commer cialbank
 Advicecommer cialbanksonf inancialmat t
ers
 Supervisestheoper at
ionstocommer cialbanks
 Facil
it
atesthecl earingofcheques
 Givesloanst ocommer ci
albanksoper ati
ons
 Saleoff or
eigncur rency

7. Li
stf
ourchar
act
eri
sti
csofmoney (
4mks)

 Di
visibi
li
ty
 Portabi
li
ty
 Malleabil
i
ty
 Acceptabil
it
y
 Homogenei ty
 Stabil
it
y
 Durabil
it
y

8. St
atef
ourmet
hodst
hatcent
ralbankmayuset
ocont
rolcr
edi
t (
4mar
ks)
 Bankrates.Thisi
st herateatwhi
cht hecentralbanklendstocommerci
albanks.I
tcanbevar
ie
toencourageordiscour agecr
edi
t/raisi
ng/lower i
ngbankr at
e
 Openmar ketoperation.Thecent
ral;
bankmaysel lorbuysecuri
ti
esi
nthemarket.Sel
l
ing
secur
it
iesreducesthemoneysuppl y(forlending)

 Specialdeposi
ts/compulsorydeposi
ts/mini
mum r eserverequi
rements.Thecentralbank
requi
reotherfi
nanciali
nst
it
uti
onstohaveacer t
ainpercentageofdepositsdeposi
tedinthe
centr
albankwhi chcanbevariedt
oencourage/discouragecredi
ts

 Cashr ati
o/liquidit
yr ati
o.Ther ationofcash/deposi t
smaybecar riedtocontrolmoneysuppl y
creditwhi chcanbei ncreasedt or educemoneysuppl y/canbedecr easedt oi
ncr easemoney
suppl y.
 Mor alper suasion/Li qui
dasset sper suasion.Thecent ralbankmayappeal /request /persuade/
restrainleading/credi tr
at i
oning.
 Thecommer cialbanksmayber equiredbyt hecentralbankt oapproveloansonlyf orspecial
typesofpr oj
ectse.g.agr icult
ure, manuf acturi
nge.t.
c
 Directact i
on/di r
ective/instructions
 Cent ralbankscanusei t
saut hor it
ytodi r
ect/ i
nst
ructthef i
nancialI
nstit
uti
onstol endmor e/
l
ess/appl ycreditssqueeze/cr editexpansi onsmar ginsrequirements.

9. Descr
ibemet
hodswhi
chmaybeusedbycommer
cialbankst
otr
ansf
ermoneyf
or
cust
omers.
 Standi
ngor
der–Astandi
ngor
derisani
nst
ructi
onbyitscustomerstobepayingacertai
n
amountofmoneyt
oanamedpersonori
nst
itut
ionaf
teragivenint
ervalunt
ilaspeci
fi
ed
date
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 Credittransfer–I tisamet hodofpayingmanypeopl eusi ngonecheque.Thepayer

compi l
esal i
stofpayees, t
heamountpayabl etoeach, theaddressandt heaccountnumber
ofeach.
 Telegraphi ctransfer–Tel egraphi
ct r
ansferisamet hodofr emitt
ingmoneyof fer
edby
commer cialbankst oanybodywhowant st osendmoneyt oanother .Themoneyis
tr
ansferredt hroughcabl eort el
ephonefacil
it
ies.
 Mobi l
ebanki ng–wher ecust omerscancarryouttransactionsbyuseofmobi lephones.
 Travelerscheque–whi chassi st
speopletravell
i
ngabr oad
 Banker scheque–Thi sar eboughtbycustomer stopayt heircr
editorswhocannotaccept
personalcheques
 Cheques–i sawr ittenorderbythedrawert oabankt opayondemandaspeci fi
edamount
ofmoneyt otheper sonnamedast hepayeeort othebear er.

10. Abusinessmanwishestoobt
ainaloanf
rom acommercialbank.Hi
ghl
ightt
he
condi
ti
onst
hatheshoul
dsatisf
ybefor
ethebankcangranthi
mt heloan

 Coll
ateralsecurit
yvaluedbyappointedval
uers
 Accountf rom l
eadingbankatleastsixmonthsold
 Bankst atementsforthelastsi
xmont hsbusyaccountt
odeter
minecr
edi
twor
thi
ness
 Quarantinetothef ol
l
owedi ncaseofdefaul
t
 I
ntendedpur poseoft heloan
 Agreementont herepayment
 Appraisalfee/chargetodeterminecredi
twort
hinessbyabank

11. Highl
ightf
ourr
easonswhyl
oansadv
ancedbycommer
cialbanki
nKeny
amaynotappeal
tomanypeople (4mar ks)

 Highrat
eofi nter
estchargedontheseloans
 Poorprofit
sasar esul
tofpooreconomy
 I
ndivi
dualsandf ir
msmayhavecheapersour ceofloans
 I
nvolvelengthyformal
it
ies
 Manypeopl efeartheconsequencesoffai
li
ngtopayt hel
oans
 Manypeopl edonothaver ecogni
zedpropert
ythattheycanof
ferassecur
it
yforl
oans

12. Expl
ainf
iveser
vicest
hatt
hecent
ralbankofKeny
aof
fer
stocommer
cialbanks(
10
marks)
 Acceptsdeposi tsforsafekeepi ng
 Li
censingt heoperationsofcommer cialbanks
 Supervi
sionofbanki ngoper ations
 Provi
decl eari
nghosesf aci
lit
iesf orcheque
 Givi
ngcommer ci
albanks, l
oansast het enderofthelastresor
t
 provi
desadvi soryservices,bankingeconomi cmat ters
 Centr
albanki sasour ceofcur rencyforcommer cialbankoperat
ions

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 Buyingandsell
ingfor
eigncurr
encyf rom commercialbanks
 Act sasamediatorsf
orcommer ci
albanksincaseofdisputebet
weenthem
 I
tr epatr
iat
esexcessf
oreigncurrencyonbehalfofcommer ci
albanks
 Statutor
ymanagementdur i
ngfinancialcr
isi
s

13. Expl
ainf
ourdi
sadv
ant
agesofusi
ngabankov
erdr
aftasasour
ceoff
inances(
8mks)

 Iti
sanexpensi vesourceoff i
nanceast hei nt
erestchar gesareveryhigh
 Frequentuseofover draftuseofover draftcouldbesi gnofpoormanagementhencei tmakei
t
diffi
culttoobtaincredi
t .Bankmayr ecallt
heover draf tanyt i
me
 Over draftarenoteasilyavailableunlessonei swel lknown
 Interestrepaymentcannotbepl annedf orwi t
hcer tainty
 Limitedaccess-over draftsisonlygivent ocurrentaccounthol dersonl
y
 Secur i
ty–t hel ender
smayr equiresecurit
y/pr opertypl edge
 Limitedamountar ehenceunsui t
ableforlongt ermf inanci ng
 Repaymentpat ter
nsar eunpl annedhenceanydeposi t
smadei ntheaccountar
eassumedtob
repayingt heover dr
aft
 Shor trepaymentper i
odwhi chaf fectsthecashf l
ow off i
rm adversel
y

14. Descr
ibef
ourway
sinwhi
chanon-bankf
inanci
ali
nst
it
uti
onsdi
ff
erf
rom t
he commer
cial
banks
 Theydonotprovi
decurr
entaccount(f
acil
it
ies)whi
l
ecommer ci
albankspr
ovi
det
hef
aci
l
iti
e
I
ncommer ci
albankscurr
entA/Choldersusecheques/commerci
al
 banki
ssueschequeswhil
eNBFIdon’t

 Theyprovi
delongtermloanswhi l
ecommer ci
albankspr ovideshorttermloanwhil
e
commer ci
alprovi
deshortterml oan/over draft/discountingbi l
l
sofexchangeNBFIdon’t
 Non-bankfinanci
ali
nsti
tuti
onsar enotregul atedsupervisedbycent ralbankwhil
e
commer ci
albanksareregulatedbycent ralbanks/super vised/bankingact.
 TheNBIFslendmoneyf orspeci fi
cpur pose/speci f
icsect orwhilecommer ci
albank
provi
desgeneralfi
nance
 Commer ci
albankcredi
twhi leNBI Fdon’tcr eatecredit
 Commer ci
albankmeansofpayment/t r
ansf erofmoneywhi l
eNBFI sdon’
t
 Commer ci
albankexchangef oreigncur r
encywhi leNBFIdon’ t
 Commer ci
albankprovi
dessaf e(forlaterbanker s)whileNBFIdon’ t
 Commer ci
albankgiveslet
tersofcr editinI TwhileNBFIdon’ t
 Commer ci
albankprovi
desl ockersfacili
ties/saf ecustodyf orvaluableswhil
eNBFIsdon’
t

16. Di
scussf
iver
easonswhybusi
nesspeopl
epr
efert
ooper
atebankcur
rentaccount
s
 Onecangivepostdatedchequesifneedar
ises,
thusenabli
ngclear
ingofdebt satafuturedat
e
 Onecanmakewi thdr
awalsasmanyt imesastheywishthusenabli
ngthem toaccessmoney
whenneeded
 Onecangetissuesofregul
arstat
ementsthusenabl
ingthem t
obeawar eoft hei
rbankbalance
 Onecanwithdrawlar
gesumsofmoneywi t
houtnoti
ce,whichconveni
entforthebusiness.

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 Onecangetbankoverdr
aftfaci
l
itywhenonedoesnothaveenoughcash.
 Onedoesnothavetomaintainmini
mum balanceunl
i
keinotheraccount
shencecanuseallt
he
fundsint
heaccount.
 Safet
yisenhancedasonepaycredit
orsusi
ngachequeanddoesnothavetogot othebank.

17. Wambuai nt
endstoimpor tacarfrom Dubaiwhi
chcost
sKshs.20,
0000Dir
ams.If
4Dirams=1UsDol larandKshs70=1Dol l
ar,
cal
cul
atet
heamountinKeny
ashi
ll
ings
t
hatWambuawi llpayforthecar.
CarCosts20,
000di r
ams
4di r
ams=1USdol l
ar
AmountofKshspaid
20,
000 =5,000USdol lars
4
Amountpai
d=Kshs350, 000

18. Hi
ghl
ight4f
unct
ionsoft
heCent
ralBankofKeny
a
 i
ssuingofcur r
ency
 Bankertothegover nment
 Bankertocontroll
ercommer ci
al
 Lenderoflastresort
 Control
l
ingcredit
 Managementoff or
eignexchanger
eser
ves
 Implementinggovernmentmonetar
ypoli
cy
 Managementofpubl i
cdebts

19. Out
li
net
hebenef
it
sthatbankcust
omerget
sfr
om oper
ati
ngacurr
entaccount
(10marks)

 paycr
edi
tor
scheques,
hencesaf
etyanddoesnothavet
ogot
othebank

 Theycangetbankover draftfacil
i
tywhent heydonothaveenoughcash
 Theydonothavet omai ntai
nmi nimum balanceunlikeinotheraccountshencecanuseal lthe
fundsintheaccount
 Theycanwi thdrawlargesumsofmoneywi t
houtnot i
ceconvenientforbusiness
 Theycanmakewi thdrawsasmanyt imesast heywishthusenablingthem toaccessmoney
whenneeded.
 Theycangi vepostdat edchequesi fneedarises,t
husenablingthem tobeawar eoftheirbank
balances
 onecanwi thdrawlargesumsofmoneywi thoutnotice,whi
chi sconvenientfort
hebusiness
 Onecangetbankover dr aftfacil
it
ywhenonedoesnothaveenoughcash
 Onedoesnothavet omai ntai
nmi nimum balanceunlikei
not heraccountshencecanuseal lt
h
fundsintheaccounts
 Safetyisenhanceasonepaycr edit
orsusi
ngachequeanddoesnothavet ogot othebank

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20. Expl
aint
he5ser
vicesof
fer
edbycommer
cialbankst
othei
rcust
omer
s(10mar
ks)

 Safekeepi
ngofval
uabl
esit
ems.Commer ci
albankact
sascust
odi
anofval
uabl
eit
em f
ort
he
cl
ient
ssuchaswill
s,t
it
ledeeds,
jewel
l
eryetc.

 Theylendmoneyt otheircli
entsinf orm ofl oans,over dr
aftsordi scountingbill
sofexchangean
promissorynot es.
 Theyreceivemoneydeposi t
sf rom theirclientscommer ci
albanksoper ate3typesofaccounts
fort
hispur posenamel ysavings,currentandf i
xeddeposi taccount .
 Theyfacil
itatetransferofmoneyt hroughcheques, credittransfersstandingorderset
c.
 Theyadvicet heircl
ientsonf inancialandi nvestmentmat t
er s.
 Theyfacil
itateinter
nat i
onalpayment sthroughl ett
er sofcr edit.
 Theyactasmanagementt rusteesofpr oper ti
esofbusi nessofdeceasedcl ients.
 Theyactasr efereesf orthei
rcl i
entsdur i
ngacr editstatusi nquiri
ng.

21. Outl
inef
ourwayst
hatt
heWor
ldBankmayuset
oassi
stdev
elopi
ngcountr
iest
o
i
mprov
et hei
reconomy. (4marks)

 Pr
ovi
dingfi
nancest oreducebudgetarydefi
cit
s
 Pr
ovi
deloansf ordevel
opmentprojects.
 Pr
ovi
definancetocor r
ectandadversebalanceofpayment
.
 Pr
ovi
detechnicalexpert
isetosupportdevel
opment.

22. Expl
ainf
ourf
unct
ionsofmoney
. (
8mar
ks)
 Used/ser vesasamedi um ofexchange.Moneycanbeexchangedf orgoods/services
removi ngt hepr oblem ofbarter/canbeusedt obuygoods/servesasitisgeneral
lyaccepted
asamedi um ofexchange.
 Measur eofval ue:Val ueofgoods/ser vi
cescanbecompar ed/estimated/det er
mi ned/
calculated/assi gned.
 Storeofval ue:valueofgoods/ser vi
cescanbest or
edinform ofgoods/servicesar e
recordedi nt ermsofmoney.
 Standar dofdef err
edpayment s/moneyassistofconductbusinessoncredit/wher e
payment sar emadel ater.
 Unitofaccount .Val uesofgoods/ servi
cesarerecor
dedont er
m ofmoney.

Out
li
ne4ser
vicesof
fer
edi
nagencybanki
ngasat
rendi
nthebanki
ngsect
or.
(4mks)

 Cust
omerdeposi
ts
 Wi
thdr
awalf
rom ownaccount
 Tr
ansf
eroff
unds
 Payi
ngbi
l
ls
 Bal
anceenqui
ri
es
 Openi
ngnewaccount
s
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 Fi
l
li
ngofl
oanappl
i
cat
ionf
orms
23. Thefoll
owingaresomeoftheaccountsavai
labl
etocustomersi
ntheKenyanbanki
ng
i
ndustr
y:Curr
entaccount,
savi
ngsaccountandFixeddeposi
taccount
.Giv
etheaccountt
hat
cor
respondstoeachofthedescr
ipt
ionsgi
venbelow. (4mar
ks)

Descr
ipt
ion Ty
peofAccount

(
a)Accounthol
der
srequi
retodeposi
taspeci
fici
nit
ial SAVI
NGS
amountaswellasmai
ntainamini
mum balance

(
b)Accountholdermaydepositandwi t
hdrawmoney CURRENT
whenevertheywantwithoutmaintai
ningaminimum
bal
ance
(
c)Bankspayi nt
erestont
hedepositatcomparati
vely FI
XEDDEPOSI
T
hi
gherrates.
(
d)Moneymaybedeposi t
edatanyt i
meandi nt
eresti
s SAVI
NGS

ear
nedi
faspeci
fi
edbal
ancei
smai
ntai
ned

24. Out
li
nefourbenef
it
sthataccr
uet
oacust
omerwhousesaut
omat
edtel
lermachi
ne
(
ATM)banki
ngservi
ce. (4marks)

 Savest i
me
 Withdrawinganyt ime
 Convenientl
ypl aced
 Accesst oaccountbalances/ext
rai
nfor
mati
on
 Canpayut il
it
ybi ll
s
 Depositsanyt ime
 Si
nceATM car dscanbeusedt obuygoods/ser
vices
 Cheapert ooper at
e
 Safertouse
 Highlypor t
able
 Withdrawalscanbedonef oroneel
sebehal
f

25. Descri
befourmeasur
est
hatt
hegov
ernmentmayputinpl
acet
oreducet
heamount
ofmoneyi
nci
rcul
ati
on. (8marks)

 Compul sorydeposits/specialdeposit
s/i
ncreaseminimum r eserver equir
ement s.The
Centralbankmayr equir
et hatcommer ci
albanksdepositacer tainamountoft heir
cashwi t
ht hecentralbank.
 Selecti
vecr edi
tcontrol/
creditrat
ioni
ng.Thegover nmentt hrought hecent r
albank
mayr equirethatcertai
nsect orsoftheeconomybeassi stedf i
nanci all
y.
 Openmar ketoperati
ons.Thegover nmentmayi nstr
uctthecent ralbankt osell
governmentsecur iti
es/stocks/bondsintheopenmar ker/stockexchange.

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 Raiseinterestrates-Hi ghinter
estratesmaybeof feredforsavi
ngst oencourage
mor edeposi t
s.
 Raisecash/ li
quidityrati
otherebyleavingcommer cialbankswi t
hlessmoneyt olend.
 Raisingthebankr ateleadingtocredit/loansbecomi ngmor eexpensi ve.
 Raisingmar ginrequirementt odiscour ageborrowing.
 Mor alsuasionbygover nmentappeal ingt ocommer ci
albankstor educelendi
ngtothe
public.
 Reducinggover nmentexpendi t
urebysuspendi ngsomepr oject
s.
 Raisingtaxest oreducedi sposableincomehencel owerpur chasingpower .
 Surplusbudget i
ngbyspendi nglesst hant heincomer ai
sed.

26. Out
li
nef
ourr
equi
rement
sforopeni
ngacur
rentaccountwi
thaCommer
cialbank

 Personalident i
fi
cati
on.
 I
nit
ialdeposi trequi
red.
 Aletterofintroducti
onfrom anexi
sti
ngcust
omer
.
 Physicalcontactaddress.
 Beofmaj ori
tyage/above18yearsold.
 Passportsizephot ographs.

27. At
raderhasdeci
dedt ot
akealoantoexpandamanufactur
ingbusiness.Giv
efour
reasonswhyiti
sbenefi
cialt
oborrowf
rom anon-bankf
inanci
ali
nsti
tut
ion (
4marks)

 Gi
vesl
ongt
erml
oans

 Pr
ovi
desf
inancef
orcapi
taldevel
opment/speci
fi
cpr
oject
s

 Lowi
nter
estr
ates.

 Assi
sti
nmanagementoft
hepr
oject
.

 Acceptl
owercol
l
ater
alval
ues.

 Gi
veal
ongergr
aceper
iod.
.

28. Explainfourser
vicest
hatt
heCent
ralBankofKeny
amayof
fert
oabankert
o
commer
cialbanks (8mar
ks)

 Advi
sing/inf
ormation/educat
ion/publ
i
shi
ngj
our
nal
sforcommer
cialbanks or
fi
nancialmatt
ers.

 Bankertocommerci
albanks/accept
sdeposi
tsbybei
ngi
ncust
odyoft
her
eser
ves
recei
vedfr
om commercialbasi
s.

 Super
visi
ng/moni
tor
ingt
heoper
ati
onsofcommer
cialbanksbanki
ngact

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 Pr
ovi
dingacentralcl
eani
nghor
sewher
ecommer
cialbanksset
tl
edebt
sduet
oeach
ot
her/forcheques.

 Bei
ngat
enderoft
hel
astr
esor
ttot
hecommer
cialbanks.

 For
eignexchange/buy/sel
lfor
eigncur
rencyt
o/f
orcommer
cialbanks.

 I
coreofcurrencyf
orcommer
cialbanksoper
ati
ons/r
epl
acesol
dcur
rency/i
ssuenew
not
es/coins.

 Medi
ati
on/
arbi
tr
ati
oni
ncaseofdi
sput
es(
bet
weencommer
cialbanks)

 Li
censi
ng—t
heoper
ati
onsofcommer
cialbanks.

 Repatr
iat
ionofexcessf
orei
gncur
rency/pr
ofi
ts(
broad)onbehal
fofcommer
cial
banks.

 St
atut
orymanagementdur
ingf
inanci
alcr
isi
sIr
ecei
ver
shi
ps.

29. I dent
if
yfourbenef
it
sthataccr
uet
oacust
omerusi
ngE-Banki
ng/
Mobi
lebanki
ng
ser
vices
 Thecustomercanusei ttobuyai rt
ime.
 Enablet
hecust omert opayut il
it
ybill
s.
 Fastint
ransactingbusiness.
 Customercanbeal er
tedonanydeposi t
sintheaccount
 Onemayaccessaccountbal ance
 Onemayr equestf ormini-
statement
 Onecant r
ansfermoneyf r
om t hebanktothemobilephone.

30. St
atef
ourmet
hodsusedbycommer
cialbankst
olendmoney
 Overdraftfaci
lit
ies
 Personalloans
 Useofcr editfacil
i
ties
 Treasurybill
s
 Discountingbill
sofexchange/
promi
sor
ynot
e

32. Namef
ourf
act
orsi
nfl
uenci
ngt
heamountofmoneyhel
dforpr
ecaut
ionmot
ive
 Levelofincome
 Familystatus
 Ageofi ndi
vidual
 Numberofdependant s
 Indi
vidualtemperaments
 Durationbetweenincomes

33. Di
scussf
iveci
rcumst
ancesunderwhi
cht
hegov
ernmentmaybef
orcedt
obor
row
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money
 Wheret hereisabudgetdef i
cit–i ft heplannedexpendi tureexceedsplannedrevenue
 Wheret hereisneedforreconst ruction–t hisusuall
yhappensaf t
ertheeconomyi s
devastatedbynat ur
alcalami tiesorwar .
 Wheret hereisneedtopr ovider eliefservicestothoseaf fect
edbydi sast
ers.
 Whent hereisneedt oimpr ovei nfrastructure–soast oenhancet hepeaceof
economi cdevelopment/distributionofgoodsandser vices.
 Wheret hereisneedtomai nt ainpr icestabili
ty–thegover nmentcoul dborrowthrough
thesaleoft r
easurybil
lsandbondsi nordertoreducet heamountofmoneyi n
cir
culati
on.

Expl
ainf
iveway
sinwhi
chcommer
cialbanksf
aci
li
tat
epay
mentonbehal
foft
hei
r
cust
omers. (
10mar
ks)
a.Standi ngor ders.Acust omermaki ngr egularpayment scouldinstructt hebankt omaket he
payment sf oranagr eeper i
odoft imeunt ilhemakeschangest ot hei nstructi
oni nwr iti
ng.
b.Creditt ransf er.Cust omerwi thseveralpayment stomakeatacer taint imemaywr iteonly
onechequeandt henf illacr edittransferform whi chinstr
uctsthebankwhoi stobepai dand
howmuch.
c.Creditcar ds.Thecust omerobt ainsgoodswi t
houtpayingforthem i ncashf rom ar etail
outl
ett hataccept sthecar ds.Thebuyersi gnsavoucherwhi chi slaterpr esentedt othebank
bythesel lerforpayment .
d.Cheques.Thebanki ssuest hecust omer swi thachequebookwhi cht heyusef orpayment s.
e.Mailt ransf er.Thisiswher et hebankwoul dremi tt
hepaymentt hroughmai lonbehal fof
thecust omer .
f.Banker ‘scheque/ bankdr af t
.Thi sisachequedr awnbyonebankt oanot hert hepeopl e
makingt hepaymentbuyst hechequeandmakest hepaymenttocr editorswhodon‘ taccept
personalcheques.
g.Letterofcr edi t
.Thisi swher ebanksguar anteepaymentt oexpor t
er sonbehal foft heir
cli
entswhohavei mpor tedgoods.
h.Traveler ‘scheques.Thi si susedt oassi sttravelersin/
outofthecount rytoset tletheir
debtsint hecount rytheyar evisiti
ng.
i
.Telegr aphi ct ransfer.Thi siswher ebybankr emitsmoneybyuseofcabl es/telephoneon
behalfoft heircust omer s.

34. Expl
ainfi
veway
sthr
oughwhi
cht
heCent
ral
Bankcanreduceexcesssuppl
yof
moneyi
ntheeconomy
. (
10mar ks)

 Bankr
ates-
Incr
easi
ngt
heCent
ralbanki
nter
estl
endi
ngr
atest
ocommer
cialbanks
 Li
qui
dit
y/cashr
ati
o–i
ncr
easi
ngt
hecash/
li
qui
dit
yrat
io
 Compul
sor
ydeposi
t-i
ncr
easi
ngt
hecompul
sor
ydeposi
trequi
rement
s
 Openmar ketoper
ati
ons-sel
l
ingt
hegover
nmentsecur
it
iest
othegener
alpubl
i
cand
i
nsti
tut
ions

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 Sel
ecti
vecredi
tcont
rol
-i
nst
ruct
iont
ocommer
cialbanksandot
herl
endi
ngi
nst
it
uti
ons
toadvancel
oanstofewspeci
fi
csector
s
 Di
recti
ves–instr
uct
ionstocommercialbanksandot
herl
endi
ngi
nst
it
uti
onst
o
i
ncreasethei
nter
estthatt
heyshoul
dchar ge
 Request
s/moralsuasi
on-
appeal
i
ngt
hecommer
cialbankst
ocont
ractcr
edi
tact
ivi
ti
es
tospeci
fi
csectors
Expl
ainf
iveadv
ant
agesofM-
pesa

Savesti
me–Mpesashopsar eavailableever ywhere.

Withdr
awi nganyt ime–asl ongast heshopsar eopened.

Convenientlyplaced–i nalltowns.

Accesst oaccountbal ances/ext rainformat i
on–t hroughphone.

Canpayut i
li
tybill
s–e. g.elect
rici
tybill
s.

Candeposi tanyt i
me–asl ongast heshopsar eopened.

M-pesacanbeusedt obuygoodsandser vices–i nashop/pet r
olst
ati
on.

Cheapert ooper at
e–l esschar ges.

Safert
ouse–haspr ivatepi n/passwor d.

Withdr
awal scanbedonef oroneselfbehal f–wi thanID.

Candeposi tmoneyi nt hebankaccount–t hroughM- banking.

Canwithdr awmoneyf rom thebank–t hroughM- banking

Expl
ain5ser
vicest
hatt
heCent
ralbankofKeny
aof
fert
oCommer
cialbanks.
Lender soflastresort; -Centralbankist helasti nsti
tuti
onwher ecommer ci
albanksobt ai
n
l
oansi ftheyareunabl et ogetfinancesel sewher e.
Abankt ocommer cialbanks.–Ascommer cialbanksoper at
eaccountswiththecentral
bank.
Clearingofcheques; -Centralbankf acili
tatest heclearingofchequesbetweendi f
fer
ent
commer ci
albankst hr
oughi t
scl eari
nghouse.
Cont roll
i
ngcommer ci albanks.–Bygi vingthem i nstructi
onsonthelendingproceduresand
properbanki ngpr acti
ces.
Cont roll
i
ngofmonet ar ysystem.Bycont roll
ingt helendingcapacit
yofcommer ci
albanks
thusr egulati
ngtheamountofmoneyi nci rculat
ion.
Li
nkt oexter
nalf i
nances.–I tlinksthecommer ci
albankst oint
ernat
ionalfi
nanci
al
i
nst i
tutionandot hercent r
albanks

Expl
ainf
ivecur
rentt
rendsi
nKeny
a‘sbanki
ngsect
or
˗Incr
eased/wi despreaduseofAutomat i
cTellermachinesATMs/ATM car dshasenabled
bankst oofferservi
cest ocli
ent
s/purchasefrom designat
edretai
loutlet
s( usingATM cards
/debtcar ds)
˗Networ ki
ngofbr anches/comput er
isedserviceshasfacil
i
tatedabil
it
ytot ransactbusi
ness
from anybranchcount rywide/f
ast
erprocessingoftransacti
onse.g.cl
earingofcheques
takelesstime

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˗Relaxati
onofconditionsr elati
ngtooperat i
onofbankaccount ssincefeaturesofspeci f
ic
accounttypesacrossdi f
fer entbanksarenol ongerunif
orm( butkeeponchangi nginli
ne
withcompet i
ti
vemar ket)
˗Easiercredi
tcondi
tions-var i
etyofloanpr oducts/loanswithmi nimalrequirementsar e
nowavai l
able(toat
tractmor ecustomers)
˗Customercar eser
vicest ocat erforcustomer swhomayr equirepersonali
sed/speci ali
sed
advice/assist
ance
˗Bankingservi
cesbyMi cro-FinanceInsti
tutionsthroughprovisi
onofbasi cbanki ngservi
ces
e.
g.FauluKenya, Fr
ontOf ficenServiceActiviti
es(FOSA,KWFT)acceptexampl esofmi cro-
fi
nance.

-Emer genceofAgencybanki ngwher ebysomef i

nanci alinstit
uti
onsal l
owsomebusi nesses
topr ovidef i
nancialser vi
ceson
theirbehal f(acceptbenef i
tsofagencybankingasexpl anation)
˗Liberisat i
onoff oreignexchangedeal ings/li
censingoff orexbur eauxhasenabl
edclientst
o
accessf oreignexchangeser vi
cesmor econveni
ently/r eadily
˗E-banki nghasenabl edcl i
entstocar r
youtsomebanki ngtransact i
onsbyuseofcomput ers
online
˗M- banki ng-cust omer scancar r
youtsomebanki ngt ransact i
onsvi amobil
ephonese. g.
balancei nqui r
ies/sal arydepositalert
s/airti
metopup/paymentofbi l
ls/chequebook
order i
nget c.
˗Rest ructuring/rationalizi
ngofoper ati
onsbymer ging/cl osingsomebr anches/
i
ntroduci ngnewout l
ets/r etr
enching(toimproveser vicedel i
very)nanceinst
it
uti
onas
expansi on)

Expl
aint
hebenef
it
sofmobi
lephonebanki
ng
˗Easeofuse-mobi l
ephonesareeasyt ooperateandaccesst heaccount
˗Speedyt ransferofmoney-moneyi ssentandr eceivedwithoutdelays
˗Secur it
y-i tismor esecureandsafeasaphonei susedbyt heownerf ormonet ary
transact ions
˗Cheapt ouse-somebankschar geveryl i
tt
lefeesf ortheuseofbanki ngser vi
ces
˗Faci li
tatesl oanf aci
li
ti
es-ownerscanaccessl oanst hroughmobi lephones
˗Ut i
li
tybi lls-easyt opaybill
sbythecust omers-wat er,
power ,air
ti
me
˗Ser vicei savai l
ablefor24hoursconvenientfort heaccounthol der
˗Stat ementofaccount-accounthol derscanaccesst heirstat
ementf rom thephone
˗Pr ovidear ecord-t r
ansacti
onsthr
oughmobi l
ephonehaveevi denceofr ecordsforany
futurer efer ence
˗Banki ngser vicesbecomecheaperint ermsofcost sandt imeatt hetouchoft hebutt
on,o
transpor tcost s
˗Instantf eedbacki savail
abl
eforanytransaction

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I
NTERNATI
ONALTRADE.
1.Out
li
nef
ourbenef
it
sthatKeny
ader
ivesbybei
ngamemberofpr
efer
ent
ial
TradeAr
ea PTA
(4marks)
 Obt
ainsl
oanf
rom PTA
 Obt
ainswi
demarketf
orgoods

 Obt
ainl
oanf
rom PTAbank

 Pr
omot
esunder
standi
ngbet
weenst
ates

 Pr
omot
esunder
standi
ngbet
weenst
ates

 Reducedcust
omsdut
y.

 Obt
ainsgoodscheapl
y

 Shecangetgoodst
hatshecannotpr
oduce

 Ther
eisneedf
orf
orei
gnexchangewheni
mpor
ti
nggoodsf
rom PTAmember
s.

2.Expl
ainf
iveway
sinwhi
chacount
rybenef
it
sbypar
ti
cipat
ingi
nint
ernat
ionalt
rade
(10marks)
 Thecount
ryi
sabl
etoexpor
tsur
plusgoods

 Thecount
ryi
sabl
etobuywhati
tdoesnotpr
oduce

 Thecount
ryi
sabl
etoear
nfor
eignexchange.

 Consumer
sint
hecount
ryenj
oyavar
iet
yofgoods

 Thecount
ryi
sabl
etoacqui
ret
echnol
ogyf
rom ot
hercount
ri
es

 Count
ry’
sci
ti
zensmayacqui
re/l
ear
nposi
ti
vehabi
tsl
i
fest
yle

 I
tenabl
esacount
ryt
ospeci
ali
zei
nfi
eldswher
eiti
sbestsui
ted

 Pr
omot
esheal
thycompet
it
ionamongl
ocalandf
orei
gnmanuf
act
urer
s

 Acount
ryvar
iabl
etogetgoodsevendur
ingt
imesofcal
ami
ti
ese.
gfl
oods

 I
tcr
eat
esempl
oymentoppor
tuni
ti
esf
orci
ti
zens.

 I
tgener
atesr
evenuet
hrought
axes.

3.Gi
vef
ourr
easonswhyi
tmaybenecessar
yforacount
ryt
ocont
roli
mpor
ts (
4mar
ks)
 Toprot
ecti
nfantfact
ori
es
 Toavoi
ddumpi ng

 Tocor
rectbal
anceofpaymentdef
ici
t

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 Tor
aiser
evenue

 Topr
otectexi
sti
ngl
ocali
ndust
ri
es.

4.Out
li
nef
ivet
ransact
ionswhi
char
erecor
dedi
nbal
anceofpaymentaccountofacount
ry
(10marks)
 I
trecor
dst
angi
bles/vi
sibl
eexpor
ts.

 I
trecor
dst
angi
ble/
visi
bleexpor
ts

 I
trecor
dsnont
angi
ble/
visi
blei
mpor
ts.

 I
trecor
dsnont
angi
blei
mpor
tsser
vices.

 I
nfl
owofl
oans/
grantbyf
orei
gngover
nment
.

 I
nfl
owofpr
ivat
ecapi
tal

 Outf
lowofl
oansbyagover
nmentt
oot
hercount
ri
es

 Monet
arymovementf
ormI
MF/wor
ldBank

5. Expl
ainf
ivemeasur
est
hatacount
rymayt
aket
opr
omot
eherexpor
ts (
10mar
ks)
 Bypar
ti
ci
pat
ioni
nint
ernat
ionalt
radef
air
s

 Byusi
nghercommer
cialat
tachest
opr
omot
ecount
ri
esofaccr
edi
tat
ion

 Bysubsi
dizi
ngpr
oduct
ionofexpor
t/gi
vi
ngboundar
iest
hroughexpor
tcompensat
ion.

 Bydi
ver
sif
yingherexpor
t/r
elyi
ngondi
ff
erentpr
oduct
s

 Byent
eri
ngi
nto(
bil
ater
al)t
radeagr
eement

 Byl
ower
ingdut
iesoni
mpor
tedr
awmat
eri
alsmeantf
orexpor
t/cust
omsdr
awback

 Lendi
ng/maki
ngf
inanceavai
l
abl
eforexpor
tpr
oducer
s

 Reducebur
eaucr
acyi
nli
censi
ngofexpor
ttr
ade

 Byest
abl
i
shi
ngEPZ

6.St
atef
ourmet
hodsofcont
rol
li
ngi
mpor
ts (
4mar
ks)
 Tar
if
fsoni
mpor
ts

 Subsi
diest
ocont
roll
ocalpr
oducer
s

 Exchangecont
rol

 Quot
as

 Tot
alban

 Longi
mpor
tpr
oducer
s
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 Admi
nist
rat
ion

7.Explai
nthemeani
ngandsi gni
fi
cancei
neachofthefol
lowi
ngter
msasusedoft he fol
lowing
termsasusedinf
orei
gnt r
ade.Termsoft
rade,
balanceofpay
ment,
exchangerate,
balanceof
tradeandcommonmar ket
. (10marks)
 Ter
msoft r
ade:t
herat
eatwhichexport
sononecount
ryexchangeswit
himport
s.ToT=Pr i
ce
i
ndexofexpor
tsdet
ermineswhet
herthetr
adebet
weenonecountryandanot
heri
sfavour
able.

 Balanceofpayment :t
hediff
erencebetweenbot hcapi
talandcurr
entexport
sandimpor
tsofa
country.Ift
hevalueofexport
sishigher,thecountr
yexperi
encesasurplusandvi
cever
sa.I
t
determineswhetheracountr
yisexperiencingsurpl
usi
nI

 Exchanger
ate:r
ateatwhi
chacountry’
scur
rencyexchangeswit
hanot her
.Thi
sratedeter
mine
theval
ueofexpor
tsandimpor
ts/showsit
sindicat
ionofacountr
y’seconomi
cstrengt
h.

 Bal
ancetrade:thedi
ff
erencebet
weentheval
ueofacount
ry’
svi
sibl
etangi
blei
mpor
tsandi
ts
val
ueofexportsishi
gherthani
mport
s.

 Det
ermi
neswhet
heracount
ryi
sexper
ienci
ngsur
plus/def
ici
ttr
ade

 Commonmar ket
:anagreementbet
weencountr
iesthatal
lowf
reemovementofgoodsand
fact
orsofpr
oduction.Thi
sall
owsmobil
izat
ionofresour
ces/t
radewi
thoutr
est
ri
cti
on.

8.Explai
nthesi
gni
fi
canceofeachofthefol
lowingdocument
sasusedi
nter
nat
ionalt
rade.Bi
llof
l
ading,pr
ofor
mainvoi
ce,i
ndent,
let
terofcredi
t
 Bil
loflanding:i
tisadocumentusedi
nt r
ansporti
nggoodsbyshi
p.I
tenabl
est
hehol
dert
otak
possessionofgoods.Itent
it
lest
heholdertotakepossessi
ont
ogoodsi
mport
ed.

 Per
for
mai
nvoi
ce-adocumentsenti
nadvanceofgoodsbei
ngexpor
ted.

 I
ndent-anorderpl
acedwithagentofexpor
ter
.Iti
susedtoassi
sttheexpor
terofagentt
okno
wher
et obuygoods.Itusedtoassistt
heagentt
osel
ectonexport
ers.

 Lett
erofcredi
t–anoff
ici
all
ett
erfrom abankal
l
owi
nganot
herbanki
nfor
eigncount
ryt
opaya
export
eronbehal
foft
heimporter
.

St
atef
ourf
act
orst
hatmayl
imi
tthesuccessoft
radeagr
eement
samongAf
ri
cancount
ri
es
 Lackofgoodwi l
l
 Simil
arproducts
 Bureaucracy.
 Dif
ferenceinheight
sandmeasur
es
 Poli
ti
cal
 Languagebar ri
er
 Cult
uraldiff
erence.

9.Hi
ghl
ightf
iveway
sinwhi
chabi
llofl
adi
ngi
susef
ult
oani
mpor
terofgoods
 Heusesi
tasadocumentf
orfuturerefer
ence.
 Heusest
hebi
llofl
adi
ngtocountercheckhisgoodsonar
ri
val
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 Hecanusei
ttogetmoneyf
orcl
ear
ing,
oncet
hegoodshavecome

 Hecanusi
tasapr
oofofbusi
nesst
ransact
ion

 Hecanuset
hebi
l
ltocl
aim compensat
ioni
ncaseal
lthegoodsi
ndi
cat
eddonotr
eachhi
m.

10.
Highl
ightf
ourpr
obl
emsacount
rymayexper
iencebypar
ti
cipat
ingi
nint
ernat
ionalt
rade
(
4mar ks)
 Causesexhaust
ionofnon-
renewabl
eresour
ces

 Thr
eatt
ogr
owt
hofl
ocali
ndust
ryduet
oimpor
tat
ionofcheaperandbet
tergoods

 I
mportanceofgoodst
hathaveadver
seef
fectonci
ti
zens,
li
keconsumpt
ionofhar
mfuli
mpor
te
pr
oducts

 Er
osi
onofcul
tur
alval
ueduet
ocopi
ngofundesi
redf
orei
gnhabi
ts

 Pol
i
cebl
ackmai
lduet
opol
i
ticaldi
ff
erence

 I
ncr
easedi
nfl
ati
onduet
oimpor
tat
ionofexpensi
vegoods

 Mayl
eadt
oacount
ryexper
ienci
ngi
mpor
tedi
nfl
ati
on

 Mayleadtounfavour
abl
ebal
anceofpayment
swher
etheval
ueofi
mpor
tsar
emor
ethant
he
val
ueofexport
s

 Acountrythatr
eli
esoni
mpor
tedpr
oduct
smayf
acepr
obl
emsofsuppl
ydur
ingt
imesof
emergency.

 Mayl
eadt
odumpi
ngwhenl
ocalmar
keti
sfl
oodedwi
thcheapgoods.

11.
Out
li
nef
ourci
rcumst
ancesunderwhi
chapr
ofor
mai
nvoi
cemaybeused (
4mar
ks)
 Whengoodsar
esentonanagentt
oshowsel
l
ingpr
ices

 Whent
hesel
l
erdoesn’
twantt
ogi
vecr
edi
ttot
hebuyer

 Whenpaymentf
orgoodsi
srequi
redi
nadvance

 Whent
hei
mpor
terwantwr
it
tencl
ear
ancebef
oregoodsar
esent

 Whengoodsar
esentt
oat
rader

 Whenanswer
ingani
nqui
ryl
ett
er

 Whent
heconsi
gneeofgoodswi
shest
odet
ermi
nepr
ofi
tabi
l
itybef
oresel
l
ing

12.
Expl
ainsi
xpr
obl
emsbei
ngf
acedbyt
heKeny
aExt
ernalTr
adeAut
hor
it
y(KETA)
 Poori
nfr
ast
ruct
urewhi
chdi
scour
agesi
nvest
orsmakesl
ocalgoodsl
esscompet
it
ion

 Hi
ghpr
oduct
ioncost
swhi
chmaymakel
ocalpr
oduct
sexpensi
ve

Nov
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 I
nsecur
it
y:maydi
scour
agei
nvest
ors/
discour
aget
our
ism

 Cor
rupt
ion/embezzl
ementoff
undswhi
chmayaddt
oext
racost
stopr
oject

 Shor
tagesofener
gymayhampert
heoper
ati
onsoft
hei
nvest
ors

 I
nadequat
efundsmaymakei
tdi
ff
icul
tforKETA t
oachi
evei
tsai
ms

 Pol
i
ticali
nter
fer
encewhi
chhi
der
sthesmoot
hrunni
ngofKETA

 Compet
it
ionf
rom ot
hercount
ri
eswhi
chmakesi
tdi
ff
icul
tfort
heKenyangoodst
osel
l
.

13.Expl
aint
hef
act
orst
hatmayl
eadt
odet
eri
orat
ingt
ermsoft
ermsoft
radef
oracount
ry
(
10marks)
 Highpri
cesofi
mpor t
s.Lowerpr
icesexport
scomparedtocount
ri
esexpor
ts.
 Advice/
fal
li
nexchangerat
es/depreci
ati
onofl
ocalcur
rencywhi
chmakestheimpor
ts
expensi
ve

 Appr
eci
ati
onoff
orei
gncur
rencywhi
chmakesi
mpor
tsmor
eexpensi
ve

 Low/f
alli
ndemandf
orcount
ry’
sexpor
tsmor
eexpensi
ve

 Competi
ti
on(fr
om simil
arpr
oductsofot
hercount
ri
esi
nthesamemar
ketwhi
chl
eadst
o
decr
easehencelowerexpor
tpr
ices

 Deval
uat
ionofl
ocalcur
rencyt
husmaki
ngi
mpor
tsmor
eexpensi
vemaki
ngexpor
tscheaper

14.
Expl
aint
hef
oll
owi
ngt
ermsasusedi
nint
ernat
ionalt
rade
a.LOCO–Meanst hepr icequotedcover sthegoodsast heyarei ntheexpor t
er ’
spremises.The
i
mpor terhast omeett hecost sofmovi ngt hegoodsf rom theexpor ter’spremi sestotheirdest i
nation.
b.F.O. R–Thi smeanst hatthepri
cequot edi ncludest heexpensesf ortranspor t
ingthegoodsf rom
thesel ler
’swar ehouseupt othenearestrailwayst ati
on.Thebuyermeet srail
waychar gesandal lothe
costs.
c.F.A.S-Pr i
cequot edi ncludetr
anspor texpensesupt ot hedocksaswel lasdockchar ges.Loadi ng
ontot heshi pandanyot herexpensear epai dbyt heimpor ter.
d.BillofLandi ng-Thi si sadocumentpr eparedwhengoodsor deredf orar eloadedintot heship.It
servesasevi dencet hatgoodshavebeenr ecei vedbyt heshipowner .Itusedbyt heimpor tertoclaim
thegoodswhent heyarriveattheportofdest ination.
e.Indent–Thi sisanor dersentbyani mpor tertoanagenti ntheexpor ti
ngcount ry.I
tcont ainsthe
detail
soft hegoodsr equi r
ed,themet hodofpacki ng,t
het ransporti
ngcompanyandt het ermsof
payment .
f.l
etterofhypot hecati
on–Thi sisaletterwr i
ttenbyt heexpor tertohi s/herbankaut horizingittorese
thegoodsbei ngexpor ted.

St
atet
hreef
unct
ionsofdepar
tment
sofi
nter
nat
ionalt
radei
nthemi
nist
ryofcommer
ceandi
ndust
 Prot
ect
ionofconsumeragai
nstexploi
tat
ion(
highpri
cesandlowqualit
y)
 Carr
youtmarketr
esear
chondistr
ibuti
onofessent
ialgoodsandser
vices
 Promot
ionanddevel
opmentofint
ernaltr
ade.
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 Actsasamediatorforcommercialbanksincaseofdisput
ebet weenthem.
 I
trepatr
iat
esexcessforei
gncurrencyonbehalfofcommercialbanks.
 Stat
utor
ymanagementdur ingf
inancialcr
isi
s.

15.
Explai
nfi
vedisadvant
agest
hatacount
rymayexper
iencef
rom i
mposi
ngt
rader
est
ri
cti
onson
tradi
ngpart
ners.
 Retali
ati
onbyot hertr
adingpar t
ners/count riesl eadingt oreducti
oni nexpor
ts.
 Low/ f
oreignexchangeear ningsduet oreducedexpor ts.
 Curtai
ledtransf eroftechnol ogy/factorsofpr oduct i
ont hatmayleadt opoorquali
ty
producti
on/ l
owqual it
yofpr oducts/l
owout put.
 Lackofvar i
etyof /l
imit
edpr oduct swhi chr estrictsconsumer s’choice.
 Poorinternationalrelati
onswhi chmayl eadt oconf li
ctsamongconsumer s/maynotget
assist
ancei nt imesofcal ami ty/needs.
 Leadst oincreasedunempl oymentduet oreducedt radingacti
vit
ies.
 Maysuf ferbal anceofpaymentasar esul tofr educedi ncomeofexpor t
s.
 Reducedcompet i
ti
onleadingt ol owqual it
ygoods/ services/i
neffi
cientfi
rms/expl
oit
ati
onof
consumer s.

17.Di
scussfi
ver
easonswhyl
essdev
elopedcount
ri
esar
erel
uct
anti
nimpl
ement
ingf
reet
rade
agr
eement.

 Avoi
dunfai
rcompeti
ti
onfrom devel
opedcount
ri
eswi
thsuper
iorpr
oduct
sasi
tmay/
coul
dlead
tol
ossofmarketf
orthei
rproducts.

 Preventdumpi ngofi nferiorgoodsbydevel opedcount ri

eswhi chmayhaveadver seeffectson
theeconomy.
 Tosaf eguardlocalempl oymentt hismaysuf ferduet of reeent ryofimpor ts.
 Reducebal anceofpayment sdeficit
s; asaresultofpaymentf orimpor tsexceedingreceipts
form exports.
 Safeguardagai nstgover nmentrevenueot herwiseear nedt hrought axati
onofexpor ts/
impor t
s.
 Safeguardagai nstgover nmentrevenueot herwiseear nedt hrought axati
onofexpor ts/
impor t
s.
 Avoiderosionofcul t
ur alvaluesar i
singfrom unrest r
ictedi nterrupti
oni nfreetrade
 Avoidoverexpl oitati
onofr esourceswhi chmaybedepl eted/ exhaustedduet oincr
ease
demandi nf reetrade.
 Avoidimpor tedinflationwhi chmaybecausedbyi nf
lowofhi ghlypricedimpor ts.
 Prevententryofhar mf ulgoods/ser viceswhi chmayhaveadver seeffectsont hehealt
hoft he
people/acceptexampl esifharmf ulgoodsasexpl anation.

18.Expl
ainsi
xci
rcumst
ancesunderwhi
chacount
rymayr
est
ri
cti
nter
nat
ionalt
rade(
12
mks)

 Wheret
herei
sneedtoprot
ectlocal/
infanti
ndustr
ieswhichmaynotwi
thst
and
compet
it
ionf
rom est
abl
i
shedforeignindustr
ies.
 Wheret
herei
sneedtocontr
oldumpi ngtopreventadver
seeff
ect
sontheeconomy.

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 Wher ebalanceoftrade/paymentcont inuest odet eror

iatetoreducepaymenton
i
mpor ts.
 Wher egoodsar ehazardous/harmf ulforconsumpt i
oni nordertoprotecttheheal thof
consumer s.
 Wher egoodsi nvol
vedareasecur ityri
skt ot hecount r
ytoensur epeaceandst abil
ity.
 Wher eiti
snecessar ytocountertheact ionsoft radingpartnersasar etali
ator
y
measur e.
 Wher ethereisneedt oavoidimportedi nflati
onar i
singfrom overpr
icedi mports.
 Wher eiti
spol i
ti
cal
lyexpedienttodosoi nordert opromotegoodgover nancei n
anothercountry.
 Wher ethereisneedt osafeguar
dl ocalempl oymentwhi chmaybel ostthroughent ry
ofcheapi mpor t
s.
 Wher ethereisneedt oavoidoverdependenceoni mpor t
swhi chmayl eadt opolit
ical
bl
ackmai l.
 Wher ethereisneedt oavoidoverexploitationofresourceswhi chmaycauset heir
depl
et i
on.
 Wher ethereisneedt obuil
dreservesofst rategi
ccommodi ti
estoavoi dshor t
agesi n
meet i
nglocaldemands.

19.Statef
ouri
temst
hatusual
lyappearont
hecr
edi
tsi
deoft
hecur
rentaccountofa
count
ry

 Recei
ptsf
rom expor
tofgoodsIvi
sibl
eexpor
t

 Recei
ptsf
rom expor
tofser
vices/i
nvi
sibl
eexpor
ts

 Recei
ptf
rom i
nvest
mentabr
oad

 Def
ici
tbal
ance.

20.Expl
ainf
ivemeasur
est
hatt
hegov
ernmentmayt
aket
oimpr
ovet
hev
olumeofexpor
ts.

 Creati
onofexpor tpr
ocessingzones—wher etheproducers/export
ersenj
oya
vari
etyofincept
ives/accepte.
g.ofinvestorsasexplanati
on.
 Manuf act
ureunderbondt oencouragelocalmanufacturer
stoproduceexcl
usi
vef
or
export.

 Expor
tcompensati
onschemes/subsidesschemesbyref
undingaspecif
ic%ageof
val
ueofgoods/servi
cesexpor
ted/meeti
ngpartoft
hecostofproduct
ionfor
expor
ter
s

 Pr
ovidinginf
ormati
ononinternat
ionalmar
ket
sthr
oughpubl
i
cat
ions/semi
nar
s/
workshops/educat
ionalt
ours.

 Fi
nanci
ngt
hosepr
oduci
ngf
orexpor
tsbyavai
l
ingcr
edi
t/l
oanst
oexpor
ter
s.

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els,
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 Part
ici
pati
ngini
nternat
ionalt
radef
air
s/exhi
bit
ion/showt
oexposet
heexpor
ter
s/
thei
rgoods/ser
vices.

 Useofcommerci
alat
tachesothergover
nmentagenci
est
opr
omot
eexpor
tsI
adver
ti
se/l
ookformarket
sforexpor
ts.

 Reduct
ionofbur
eaucr
acy/r
edt
apet
hroughsi
mpl
i
ficat
ionofexpor
tpr
ocedur
es.

 Customsdr
awbacksbyr
efundi
ngt
axoni
mpor
tedr
anmat
eri
alsusedt
opr
oduce
export
s.

 Devol
uti
onofcur
rencyt
omakeexpor
tscheaper/i
ncr
easeddemand.

 I
mprovedi
nfrast
ruct
uretofaci
l
itat
eexpor
tpr
oduct
ion/expor
ttr
ade/acceptegsof
i
nfr
ast
ruct
ureasament i
oned.

 Enteri
ngintotradeagr
eement/b1oks/int
egr
ati
ongr
oupi
ngcooper
ati
ont
ogi
ve
prefer
ent
ialtr
eatmenttocool
i
ngexport
s.

 I
mpr
ovi
ngqual
it
y/st
andar
dizat
ion/packagi
ngt
omakeexpor
tsmor
eat
tr
act
ive.

 Exportcr
editguar
ant
eeschemet
oinsur
e/compensat
eexpor
ter
sagai
nstr
iskswhen
sel
li
ngoverseas.

 Taxrebates/lower
ingofdut
iesonexport
s/r educt
ionoftaxesoninput
s.usedto
producegoodsforexpor
ttomakethem cheaper/increasethei
rdemand/toreduce
costofproducti
on.

 Improve/adoptmoder
ntechnol
ogyi
nor
dert
oincr
easet
hevol
umeofgoodsf
or
export
s.

22.St
atef
ourf
ormsofeconomi
cint
egr
ati
ont
hatmayexi
stbet
weencount
ri
es.

 commonmar ket s–.Thi

siswherecountri
esinaneconomi cintegrationall
owfr
ee
movementoff actor
sofproducti
onsuchasl abourcapi
talandentr epreneur
shi
p
amongt hemembercount ri
es
 FreeTradeAreas-wherebarri
erssuchast ar
iff
sandquot asareremoved.
 CustomsUnjons-membercount r
ieschar
gecommonext ernaltar
iffs.
 EconomicUnion-wher ecommoneconomi cinst
it
uti
onsli
kebanksar esett
odealwi
th
monetarypol
icy.

Out
li
nef
ivechar
act
eri
sti
csofaneconomi
cuni
onf
orm ofi
ntegr
ati
on.10mks

fr
eetradei
nallgoodsandser
vices

fr
eedom ofmigrat
ion

singl
ecurr
encyinuse

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
j
ointeconomicinst
it
utionegcent ralbank

devel
opmentofcommoni nfrast
ructur
e

fr
eeflowofcapital

commonenvi r
onment alregulati
ons

Nonat i
onaldi
ff
erencesint axati
on

23. Explainfiv
edi
sadv
ant
agest
hatacount
rywoul
dsuf
feri
fsher
est
ri
ctedt
radewi
th
othercount
ries. (
10mar ks

 Reducedcompetit
ion-l
eadi
ngt
olowqual
i
tygoods/
ser
vicesi
nef
fi
cient
fi
rms/expl
anat
ionofconsumer
s.

 Reduced/ limi tedconsumerchoi ce-trader est ri

ctionr educest hevar i
etyof
goods/ser vicesavai l
abletoconsumer sleadi ngt ol owst andar dsofl iving.
 Retali
ati
on/ tradingpar t
ner sar elikelyt oret aliateleadi ngt ol ossofbusi nessbet ween
countri
esi nvol ved/reducedexpor t/impor t s.
 Reduced/ lowi nvest mentduet ol i
mi tedt radingoppor t unit
ies
 Blackmai lofgover nmentbyi nf ant/locali ndust riesseeki ngcont inuedpr otection/due
tolackofgr owt h/stagnat i
on/ nott owi t
hdr awpr ot ect ion.
 Reduced/ limi tedmar kethenceunderexpl oit
at i
onofavai labler esour ces/ reduced
producti
oncapaci ty.
 Misall
ocat ionofr esources/ i
nappr opriateal locat ionofr esour ces-i tmayf orcea
countrytouseherr esourcesi nar easwher eshehasnocompar ati
veadvant age/not
bestsuitedi n
 Costlytot hegover nment -Thi smayhappeni fmeasur esl i
kesubsi diesar eused/ to
enhancer estr i
ctionsbyencour agi ngi mpor tsubst itution/ meetpar toft hecost s.
 Reduced/ lossofgover nmentr evenueear nedf rom i mpor t/ expor ttaxes.
 Reducedf orei gnexchangeear ningsf rom goods/ ser vicesnotexpor t
ed
 Leadst oincr easedunempl oymentduet or educedt radi ngact iviti
es.
 Poorinter nationalr elationswhi chmayl eadt oconf l
icts/ f
riction/ among
countri
es/ maynotgetassi stancei ntimesofcal ami ties.
 Controll
edt ransf eroft echnol ogy/ factorsofpr oduct iont hatmayl eadt opoorqual i
ty
goods/lowqual i
tyofpr oduct s
 Reduced/ limi tedsuppl yofgoodsandser viceswhi chmayadver selyaf f
ect consumer s
(Acceptexampl esofadver seef f
ect sasexpl anat ion)
 Encouragessmuggl ing/blackmar ketinghencel eadi ngt ol ossofr evenue/ entryof
counterfeitgoods/ services.

25.Out
li
nef
ourbenef
it
sthatKeny
ader
ivesf
rom bei
ngamemberofPr
efer
ent
ial
Trade
area
 Getawi dermarket
 Dutyexemptionsbenef
it
s
 Obtai
nconcessionaryl
oansf
rom PTAbanks
 I
ncreasedinvest
mentopport
uni
ti
es

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 Obtai
navari
etyofgoods
 Peacef
ulco-
exist
enceiscreat
ed
 Thecommoncur renci
esthusreducet
hebur
denofcur
rencyexchange

26.Gi
vef
ourdemer
it
sofeconomi
cint
ergr
ati
ont
oacount
ry
 Lossofacountry’
srevenue
 Maycompromi sehomet radeasmoreat
tent
ionisdi
rect
edtoint
ergar
ti
on
 Membercountrysaresubjectedt
oacompeti
tionwhi
chisexpensi
ve.
 Maycause/br
inginsecuri
tyduetofr
eemovement

27.St
atef
ourr
olesofi
nter
nat
ionalmonet
aryf
und
 Offerloanstomembercount ries
 Givetechnicaladvi
ceandsuppor t
 Maintenanceofst abl
eexchanger at
es
 Givemembercount ri
esdebtr eli
ef
 Providesuffi
cienti
nternati
onalliqui
dit
y
 Promot econsultat
ionandco- operati
on
 Assisti
ngmembercount r
ieswi t
hbalanceofpaymentdef
ici
t

28.Outli
nefourspecialconcessi
onsof
feredbyt
hegov
ernmentt
oencour
age
est
abl
ishmentofindustri
esinaparti
cul
ararea
 Off
eringfreeorcheapland
 Reducti
onoft axes
 Off
eringsubsidies
 Dir
ectfinanci
alassist
ance
 I
mpr ovementofi nf
rast
ruct
ures

29.I
dent
if
yfouradv
ant
agesofexpor
tpr
ocessi
ngzonest
oacount
ry
 Itpr
ovidesemploymentt otheci
ti
zens
 Theyst i
mulat
egrowt hinspeci
fi
csectorsoftheeconomysuchasagr
icul
tur
al
acti
vi
ties.
 Theyleadtodevelopmentofgoodi nf
rastr
uctur
einthesezones.
 Theypr omoteexporttr
adewhichearnforei
gncurrency.

30. EastAfri
cacommuni tyhasnotr
eali
zedt
hebenef
it
swhi chaccr
uefr
om i
ts
establ
ishment
.Discussfi
vefactor
swhichmayhavecontr
ibutedt
oslowpacei
nthe
achiev
ementofit
sgoal s
 Diff
erencesinpoli
ti
calideologi
es–Thismakesitdiffi
cul
ttoharmonizet
heir
economi cacti
vi
ti
es
 Commonorsi mil
arproductsproducedhencenotmucht radecantakeplacebetween
them
 Lackofcommoncur rencymakest r
adebetweent hepeopleoft
hethreecountr
ies
diff
icult
 Poori nf
rast
ruct
urethatleadstopoorconnect
ivi
tybymeansoft r
ansport
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 Highl
evelofpover
tyamongmemberstatesmakei
tdi
ff
icul
tfort
hem t
obuygoods
fr
om nei
ghbouri
ngcountri
es
 Lackofcommonl anguageofcommuni
cati
ont
hushamperi
ngshari
ngofi
deas

31. Di
scussf
ivef
act
orst
hatmayl
eadt
odet
eor
ior
ati
ngt
ermsoft
radeofacount
ry.
 Highpricesofimpor t
s/lowerpr i
cesofexpor t
scompar edtocountri
esexports
 Falli
nexchanger ates/depreciati
onoflocalcurrencywhichmakesexpor t
sexpensi
ve
 Appreciati
onofforeigncurrencywhi chmakesi mpor t
smor eexpensi
ve
 Low/falli
ndemandf oracount r
ysexports.
 Compet it
ion/
simil
arpr oductsofot hercountr
iesinthesamemar ketleadstodecr
ease
i
ndemandhencel owerpr i
cesofexpor ts.
 Devaluati
onofthel ocalcurrency,thusmakingimpor t
smor eexpensi
veandexports
cheaper.

32. A countr
ywasexper
ienci
ngbal
anceofpay
mentsur
plus.Expl
ainanyf
ivef
act
orst
hat
mighthavecausedt
hat
.
 Incr
easeinexpor tearni
ngswher ebyt heval
ueofexpor tisgreat
erthanthevalueof
i
mpor t.
 Decreasedimportexpendi ture.Wher ebythevalueofimpor t
sislessthanthevalueof
exportear
nings.
 Incr
easedforeignprivateinvestment swhichincreasesinfl
owoff orei
gncurr
ency
 Incr
easedforeignpubl i
cloans/ grantswhi chincreasesforei
gnearning
 Reducedout f
lowofcapi talwhi chr educesout f
lowoff or
eignexchangebyprivate
i
nvestors.
 Reducedout f
lowofpubl iccapi talwher ethegovernmentspendsl essonloans/grant
s
toothercountri
es.

33. Expl
ainFi
ver
easonswhymanycount
ri
est
endt
opr
eferf
reet
rade
 Enabl
eacount rytoenj oyqualitygoodsandser viceduetoincreasedcompet i
ti
on
 All
ow specializat
ion/
count ri
est endt ospeci ali
zeinwhattheycanpr oducebest .
 All
owthem accesswi devar i
etyofgoods/ servi
ces
 All
ow wi dermar ketforgoods/ ser vi
cesproduced
 Freemovementoff actorsofpr oductionf r
om countrytocount r
y.
 All
owcr eati
onofmanyj oboppor tunit
iesforinvestmenti
ndi f
ferentcountri
es
 Countr
iesenj oycheapergoods/ ser vi
ces
 All
ow freeflow ofnewt echnologyi deasandski ll
samongdifferentcountr
ies
 Promotepeaceandunder st
andi ngamongcount ries

34. Expl
ainf
ivecausesofper
sist
entbal
anceofpay
mentdi
sequi
li
bri
um i
nEastAf
ri
ca

 Falli
nvolumeofexpor
ts–relyonpri
mary/
agri
cul
tur
alproductsusuall
yaf
fectedby
draughtyi
eldi
ngl
owproduct
ionhencelowexpor
tshencereducedforei
gnearning

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 Deter
ior
ati
ngt
ermstr
ade–valueofexpor
tsar
elowr
elat
ivet
otheval
ueofi
mpor
ts
hencepaymoret
hanthef
orei
gnearned

 Lesscapi
tali
nfl
owcompar
edtooutfl
ow-theyusual
lyborr
owmoneyf r
om devel
oped
count
ri
esatrepayathi
ghi
nter
estr
atescr
eatinganetcapit
aloutf
low.

 Devaluat
ionpol
i
cy–devaluati
onoflocalcur
rencymakesexpor
tscheapert
o
for
eigner
sandhenceanincreasei
nt hecosti
mportat
ion

 I
ncreasei
nimportvol
umeofcapit
algoodsandindust
ri
alrawmat er
ial
sfor
devel
opmentpur
poses.Thi
sincr
easesexpendi
tur
eonf or
eigngood.

35.Explai
nfi
vemeasuresthatt
heGov
ernmentofKeny
amayt
aket
ocont
rolherper
sist
ent
Balanceofpaymentdef
ici
t ;
 I
ncreasingthevolumeofexportsi
e.bygivi
ngi ncent
ivestotrader
ssot hatt
heycan
producemor eoutput
 Reducingthelevelofi
nputi
e.Byusi
ngrestr
ict
ivemeasur essuchasinputdut
iest
otal
banetc

 Bydiversi
fyingt
her at
eofexpor
tsoft
hecount
rysot
hatwhensomef
ailot
her
scan
st
il
lselli
nt heworl
dmar ket

 ThroughDeval
uat
ionoft
hecount
ry’
scur
rency-t
hismakest
heexpor
tscheaperand
hencemorecompeti
ti
vei
nthemar
ket

 Bynegot
iat
ingf
orf
orei
gndebtr
educt
ion

 Byaddi
ngval
uet
otheexpor
ts

36. Expl
ainf
ivemeasur
esofcor
rect
ingbal
anceofpay
mentdi
sequi
li
bri
um. 
  
  
  
(10mks)

 Devaluati
onofcurr
ency(lower
ingthecurr
encyval
ue)-Thisi
smakingexport
s
cheaperandimportsexpensi
ve. 
Thisincr
easesexpor
tsandr
educesimport
sthus
reducingdef
ici
tint
hebalanceofpayment.

 Importrest
ri
cti
ons-Thi
smaybedonebyimposi
ti
onofhi
ght
ari
ff
sonimport
sor
sett
ingimportquot
as. 
Thisl
imi
tsthevol
umeofi
mport
swher
ebyreduci
ngthe
negati
veofbalanceofpayment
s.

 Expor tpromoti
on-Thi
sisai
medati ncreasi
ngt
hevolumeofexport
sfrom t
hecount
ry
throughexpor t
scompensat
ionbyestabli
shi
ngexpor
tprocessi
ngzonesand
diversif
icat
ion.

 Byencouragi
ngforei
gninvest
menti
ntothecount
ry-
Thi
spr
ovi
dest
hef
orei
gncur
rency
necessar
yforthepaymentofimpor
ts.

 Rest
ri
cti
ngout
fl
owofcapi
tal
.-Thi
sisadel
i
ber
ateef
for
tbyt
heGover
nmentt
orest
ri
ct

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out
fl
owofcapi
tal
.

37.Descr
ibef
ivedocument
susedi
nint
ernat
ional
trade

 i
nqui ry–l ettersentbyani mpor tertoanexpor teraskingaboutt hesuppl yof
goods/ termsofsal e
 Or der/indent–Usedbyi mpor tertoaskt heexportertosuppl yhim wi
thgoods
speci f
ied
 Billofladi ng–Documentusedbyi mpor t
ert oclai
mf ort hegoodswhent heyarr
iveat
thepor tofent ry.
 Let t
erofcr edi t-i t
’si
ssuedbyt hei mpor ter
sbankt otheexpor t
ersbankt oassurethe
expor tert hatgoodwi l
lbepai df or
 Impor tl i
cence- Issuedbyt heaut horit
ytoper mitthehol dertobuygoodsf r
om abroad.
 Freightnot e-Showst ranspor t
at i
onchar gesf orgoods
 Airwaybi ll-Issuedbyt heai rli
ne.I t’
sadocumentoft i
tl
eusedbyi mpor t
erwhen
claimingf orgoodsatt hepor t
 Cer ti
fi
cat eofor igi
n–Showst hecount r
yf r
om whi chgoodshavebeenbought
 Consul ari nvoi ce–I t
’sani nvoicesi gnedbyconsult oconf i
rmthatpriceschargedon
goodsar ef air
 Prof ormaI nvoi ce–I ssuedbyt heexpor terifhewi shest obepaidbef oregoodsare
delivered
 Commer cialI nvoi ce–I ssuedbyt heexpor tertodemandpaymentf orgoodssol don
credit

38.
Out
li
nesi
xbenef
it
sKeny
ader
ivesf
rom bei
ngamemberofEastAf
ri
cancommuni
ty.
(
12marks)

 Expandedmar ketforgoodsandser vices–si ncei tiscomposedofmany

countri
eswher eitcansel lsur
plusgoods
 Creati
onofempl oymentoppor tuniti
es–duet oi ncreasedtradi
ng/busi
ness
acti
vit
ies
 Fair
/l
owerpr i
cesofgoodsandser vices–duet oreduct i
on/abol
ishmentof
tax/
compet it
ion
 Encourage/promot especi ali
zation–i nar easwher ecount ri
esenjoy
compar ati
veadvant age/ l
owcostofpr oducti
on
 Incr
easedbar gaini
ngpower–whi chmayi mprovet ermsoft r
ade/bal
anceof
payment s
 Freefl
owofgoods/ services/f
act orsofpr oducti
on–duet omini
mal
rest
ri
ctions/f
lowoff actorsofpr oduct i
on

39.Reasonswhyacount
rymayr
est
ri
ctt
radewi
thot
hercount
ri
es
 Pr
otectlocalinfantindustri
esfrom establ
i
shedf or
eignindust
rieswhichmayenj
oy
gr
eateconomi esofscale.
 Cr
eate/protectlocalempl oymentbyencour agi
ngpr oduct
ion.
 Pr
otectofcul t
ure/socialvaluesbymi ni
mizingi
nteracti
onbyfor ei
gner
s
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 Protecti
ngstr
at egicindust
ri
esofacount rysoast oavoiddependenceonot her
countri
es.
 Preventdumping/ i
mpor t
ati
onofsub- st
andar dgoodswhichmaycr eat
eunf ai
r
compet i
ti
on.
 Expandingmar ketforlocalproduct
sbyl i
mi t
ingthenumberofexternalsuppli
ers.
 Promot esel
freliancetoavoidpolit
icali
nterf
erenceorcri
sis.
 Protectbal
anceoft r
adebyensur i
ngexpor taremorethanimportshenceleading
tofavorabl
ebalanceoft r
ade.

40.Expl
ainf
iver
easonsf
orTr
adeRest
ri
cti
on.
Topr otectlocali nfantindustrieswhi char
enotabl etocompetewi t
hest abli
shedf i
rms
fr
om ot hercount ri
es.
Topr otectstrategi cindustri
est hatis,i
ndustri
esthatar
eextremelyimpor tantandacount ry
cannotdowi thoutt hem.
Tocr eateempl oymentoppor tuniti
esbyencour agi
ngestabli
shmentofl ocali ndustri
esand
al
soensur ingthatt heexisti
ngindust ri
escont i
nuetoprovi
deempl oymentt ot hoseal ready
empl oyed.
Topr eventdumpi ngwher eacount r
ymayt rytodisposeoffit
ssub-standar dpr oduct sby
sell
ingt hem cheapl ytoanot hercount ry.
Tor ecti
fyabal anceoft radedef ici
t.
Topr otectcultureandsoci alvaluesbycur tai
li
ngtheimportati
onofhar mfulcul turesf r
om
othert r
adingcount ries.
Toexpandmar ketf orl
ocalpr oducts.
Topr omot esel f-
reliancetoensur ethatacountrydoesnotsufferi
ncaseofapol it
ical
confli
ctwi that radingpar tner.

I
NFLATI
ON.
1. St
ate4causesofhy
peri
nfl
ati
on
 Devaluati
onofcur rency/
lossofval
ueofcurrency
 Globalrecession-economicdownt r
endinothercount
ri
es
 Poli
ti
calinstabil
it
y/tur
moilcausi
nguncert
ainti
es
 Naturalhazardsegdr oughtl
eadingtol
owpr oduct
ion

2.Hi
ghl
ight4way
sinwhi
chi
nfl
ati
onbenef
it
saneconomy
 Mildinf
lat
iongivesincent
ivestoinvestorswhoi
ntur
ncr
eat
e
 I
ncreasesproduction
 Sell
ersmayear nmor e
 Mot i
vat
espeopl etowork
 Promotesbetteruseofavai l
abl
er esources

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St
atef
ourf
act
orst
hatmi
ghtcausecost
-pushi
nfl
ati
on.
 Ri
seinwagesandsal ar
ies.
 I
ncreaseintaxes
 I
ncreaseinprofi
tmargin
 I
ncreaseincostofinputsothert
hanl
abour
.
 Reducti
oninsubsidi
es.

3.I
ncreaseinmoneycir
culat
ioni
sthemajorcauseofinfl
ati
on.St
atef
ourmonet
ary
pol
ici
esthecent
ralbankofKenyacanusetocontr
olinfl
ati
on
 Increasetherat
eofi nterestonl endingt ocommer ci
albanks
 Selli
nggovernmentsecur it
iesinopenmar ketoperati
on(O.M.O)
 Increasecommer ci
albankscashorl i
qui di
tyrati
o
 Increasecompulsorydeposi t
sbycommer ci
albankswi t
ht hecent
ralbank
 Insti
tuti
onofselect
ivecr editcontrolmeasur es
 Directi
vestocommer cialbanksoni nt erestratestochargeonlending.
 Request sbycentr
albankt ocommer cialbanks(moralpersuasi
on)towill
i
ngl
y
exercisecont
rolonthei rlendingtocont roli
nfl
ation,

4.Hi
ghl
ightf
ouradv
erseef
fect
sofi
nfl
ati
on
 Leadst oreducti
oninpr of
it
s
 Leadst owastageoft i
measpeopl emovef rom oneplacetoanot heri
nsuchof
betterpri
cesofgoods.
 Leadst oconfli
ctsbetweenempl oyersandempl oyees
 Leadst odecli
neinstandardsofl i
vi
ng
 Losst ocredit
orsastheylendoutwhent hevalueofmoneyi shighandr ecei
ve
moneywhent hevalueislow.
 Leadst oretar
dationofeconomi cgrowth
 Leadst olossofconfidenceinthemonet arysystem
 Discouragessavingsaspeopl etendtospendmostoft hei
rearningsleavi
ngli
tt
le
ornot hi
ngtosave.

5.St
atef
ourcausesofdemandpul
linf
lat
ion
 I
ncreaseingovernmentexpendi
tur
e
 Ef
fectsofcredi
tcreati
onbythecommer ci
albanks
 I
ncreaseinmoneyi ncomes
 Generalshor
tageofgoodsandservices
 I
ncreaseinconsumer ’
sexpendi
tur
e

6.Year2017hasKenyaexperi
enceapersi
stentr
isei
nthegener
alpri
cel
evel
sormostof
thecommodit
ies.Expl
ainf
ivemeasur
esthatthegover
nmentshoul
dtaket
ocount
er
thi
strend.
 I
ncreasetherat
eofinter
estonlendi
ngtocommer ci
albanks
 Sel
l
inggovernmentsecurit
iesi
nopenmarketoperat
ion(O.M.
O)
 I
ncreasecommer ci
albankscashorli
qui
dit
yrat
io

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 I
ncr
easecompul
sorydeposi
tsbycommer ci
albankswi
tht
hecent
ralbank
 I
nst
it
uti
onofsel
ect
ivecredi
tcont
rolmeasur
es

7.St
atef
ourcausesofCostpushi
nfl
ati
on
 Ri
seinwagesandsal ar
ies
 I
ncreaseintaxes
 I
ncreaseinprofi
tmarginsbybusinesses
 I
ncreaseincostofinputsothert
hanlabour
 Reducti
oninsubsidi
esbyt hegovernmentt
obusi
nesses

8.Descr
ibef
ivest
atut
orymeasur
est
hegov
ernmentmayuset
ocur
binf
lat
ion
 Cont r
ol l
ingwagesandsal ari
es-i ncr easesi nsal ariesandwagesbr i
ngsmor e
moneyi ntoci rculat
ionwhi chint urnf uelsdemand- pullinfl
ation.Thegovernment
controlst hi
st ypeofi nflat
ionbyr est r
ictingi ncreasesonsal ar i
esandwages.
 Pricecont r
ol s-wher einf
lati
oni spr ofitpusht hegover nmentmaycur bitbyuseof
pricecont rols
 Rest r
icti
ngi mpor ts–wher einfl
at ioni scausedbyi ncreasesi npri
cesofi mport
s,
theimpor ti
ngcount rycancont rolt hei nf l
ationbyr educingt hequant i
ti
esofsuch
i
mpor ts,thi
scanbedonebyl ookingf oral ternat i
vesour cesofsuppl y.
 Rest r
icti
ngt ermsofhi r
epur chaseandcr editter msofsal e–Thegover nmentcan
placecont r
ol sonhi repurchaseagr eementandcr editsalesi nordertoreduce
demandf orcommodi ti
essold.
 Cont r
ol l
ingofexpor ts–i nfl
ationmayst em from excessi veexpor tati
onoflocal
ly
producedcommodi t
ies.Suchexpor tationcr eat esshor tagesi nthelocalmarket
therebyi ncreasi ngthepr i
ces,thegover nmentcur bst hisinfl
ationbyrestri
cti
ngor
banningexpor tati
onoft hesaidpr oduct s.

9.Br
ief
lyexpl
ainf
iveposi
ti
veef
fect
sofi
nfl
ati
ont
oacount
ry
 Debtor smaypayl ess–debt orsmaypayf ort hecommodi ti
esi nthefutureatt he
oldlowpr icesandnott hehi ghpr i
ceswhi cht hecommodi tywoul dbesel li
ng.
 Sell
er smayear nmor e–Sel lersmaybenef i
tf rom infl
ati
oni nt hattheybuy
commodi ti
eswhenpr i
cesar el owandsel lthem l aterwhenpr icesar ehight hereby
maki ngmor epr of
it.
 Mot i
vat i
ont owork–Aspr icesofcommodi tiesgoup, peoplemaywor khar derin
ordert oearnmor esot hattheyar eabletobuyt hecommodi ties.
 Incr
easedpr oduction–Aspeopl ewor khar di nor dertomai ntaintheirstandar ds
ofli
vingt heyhadbef oreinfl
at i
onsetin,theypr oducemor egoodsandser vices.
 Betteruseofavai lableresour ces–dur i
ngi nflationaryti
mespeopl etendt ouse
theavai l
ableresourcesinthemosteconomi calwayi nordertoavoi dwast age.

10.
Expl
aint
hemeani
ngoft
hef
oll
owi
ngt
ermsasusedi
nInf
lat
ion
 Mil
di nf
lat
ion-Atypeofi
nfl
ati
onwherethegener
alpr
icesofgoodsandser
vices
i
ncreaseslowl
yatasingl
edigitr
ateofl
essthan10%

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 Hyperi
nfl
ati
on-I
tisasit
uati
onwherebythegener
alpr
icesofgoodsandservi
cesar
e
ext
remel
yhighwherebyther
atei
sinthousandsandmill
ionsper
centperyear

 Demandpulli
nflat
ion-Comesaboutwhentherei
sexcessi
vedemandforgoodsand
ser
vicesi
n theeconomycausingari
sei
npricesI
nthissi
tuat
iont
her
eistomuch
moneyintheeconomychasi
ngveryfewgoodsandservi
ces

 Costpushi nflati
on-Itr
esul
tsfrom anincr
easei
nthetot
alproduct
ioncost
sofgoods
andservicesl eadingt
oanincreaseinpri
cesofcommodit
ies.I
tist
hehighcost
sof
product
iont hatpushesthepr
icesofgoodsandservi
cesup

 I
mpor tedinf
lat
ion-Itresult
sf r
om tr
adingwit
hforei
gnerswher
ebypri
cesoff
orei
gn
goodsaffectdomesticprices.Highpri
cesoffor
eigngoods[
impor
tedgoods]
i
ncreasesdomest i
cpricesofgoodsduet odomest i
cdemand

Explai
n5way
sthr
oughwhi
chi
nfl
ati
onmaybecont
rol
ledot
hert
hant
heuseofmonet
ary
poli
cy.
Taxesshoul dber educedt or educedisposablei ncomehencelower i
ngconsumpt i
on
expenditure.
Restr
icti
onofi mpor ts/imposeheavyt ari
ffstomakepeopl eswi tchtheirspendingon
i
mpor tstol ocall
ypr oducedgoodsi n
ordertocur bimpor tedi nfl
ation.
Pri
celegislati
on/pr icecont r
olasat empor arymeasur eofkeepingpricesstable.
Useofwagepol icies/checki ngont r
adeuni onst oavoidi
ncreaseinwages.
I
ncreasegener alpr oduct i
onofgoodsandser vicestoavoi
dshor tages.
Reducepubl icexpendi t
uresuchasconst r
uct i
onofr oads/extensiveelectr
if
icati
on,f
ree
publi
cgoodsandser vicestor educe
demandf orgoodsandser vices.
Appropriateregulationofpr i
nti
ngnationalcurrency.

11.Expl
ainf
ivemeasur
est
hatcanbet
akenbyagov
ernmentt
oreducecost push
i
nfl
ati
on. (
10mar ks)

 Imposepricecontr
ol-
onfuel
s,elect
ri
cit
y.Fi
xi
nganupperli
mitf
orpr
icesoff
uel
,
elect
ri
cit
ysoast ocontr
oli
ncreaseincostofpr
oduct
ion.
 Cont
rol
l
ingwages/
sal
ari
es-har
monizi
ngwages/sal
ari
esandchecki
ngont r
adeuni
on
pr
essur
etoavoi
dincr
easeinwagesthatcoul
dleadt
oincr
easeinthecostof
pr
oduct
ionl
eadi
ngtocostpushinf
lat
ion.
 Subsi
dizi
ngpr
oduct
ion–sot
hatpr
oducer
sincurl
essi
npr
oduct
ion
 Reduci
ngt
axonpr
oduct
ion-
taxi
mposedonr
awmat
eri
als
 I
mpr
oveef
fi
ci
encyofpr
oduct
ion

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ECONOMI
CDEVELOPMENTANDPLANNI
NG.
1.
Highli
ghtf
ourpr
obl
emsencount
eredatt
hei
mpl
ement
ati
onst
ageofdev
elopment
pl
anning

Reli
anceondonorf undi
ng
Lackofdomest i
cr esources
Fai
luret
oinvolvelocalpeoplei
npl
anni
ng
Lackofpol
iti
calwill

2.Thegapbet
weent
her
ichandt
hepoori
nKeny
aissowi
de.Hi
ghl
ightf
ourf
act
orst
hat
contr
ibut
etothi
s
Di
spar it
yinnatur
alresour
ces
I
nher i
tance
Corrupti
on
Di
fferencesintal
ents
Nepotism inemployment

2. St
atef
ourpr
obl
emst
hatapl
annermayencount
eri
ndev
elopmentpl
anni
ng

 Lackofadequat
einf
ormat
ion

 Bur
eaucr
ati
cri
gidi
ti
es

 I
nadeaquat
epol
i
ticalgoodwi
l
l

 I
nadequat
efi
nanci
alr
esour
ces

 I
nadequat
ehumanr
esour
ces

3. Out
li
nefourreasonsthatmakei
tnecessar
yforacount
ryt
ogeti
nvol
vedi
n
dev
elopmentplanni
ng

 Enabl
esappr
opr
iat
eal
l
ocat
ionofr
esour
ces

 Encour
agesst
imul
ati
onofef
for
t

 Enabl
epr
ojecteval
uat
ion

 Hel
pst
osuppor
tfor
eignai
dbar
gai
n

 Encour
agesl
ongt
erm deci
sionmaki
ng

 Hel
pst
oavoi
dthedupl
i
cat
ionofpr
oject
s

 Pr
omot
ebal
ancei
nregi
onaldevel
opment

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Changest
hatmayt
akepl
acei
nacount
ryt
oindi
cat
ethati
tisexper
ienci
ngeconomi
c
devel
opment

 Shi
ftf
rom agr
icul
tur
alsect
ort
omanuf
act
uri
ngsect
or.

 I
ncr
easedent
repr
eneur
ialabi
l
ity.

 Reduct
ionofi
l
li
ter
acyl
evel
.

 I
mpr
ovementi
nresear
chact
ivi
ti
es.

 I
ncr
easei
nski
l
ledmanpower
.

 I
mpr
ovedi
nfr
ast
ruct
ure.

 I
mpr
ovementi
nheal
thf
aci
l
iti
es.

 I
ncr
easedi
nlevelofsavi
ngsandi
nvest
ment
s

 I
mpr
ovedt
echnol
ogy.

4. Hi
ghl
ightf
ourpr
obl
emsencount
eredi
nthepr
ocesssofi
mpl
ement
ingdev
elopment
pl
ans

 Shor
tageofqual
i
fiedmanpower
/per
sonnel

 Pol
i
ticali
nter
fer
ence/
lackofpol
i
ticalsuppor
torgoodwi
l
l

 Localpeopl
ear
enoti
nvol
vedi
npl
anni
ng

 Rel
i
ancei
ndonorf
undi
ng

 Nat
uralcal
ami
ti
es/
unf
oreseenoccur
rences

5. Outl
inef
ourst
ructur
alchangest
hatmayt
akepl
acewhenacount
ryi
sexper
ienci
ng
economi
cdevelopment

 Shi
ftf
rom agr
icul
tur
etomanuf
act
ure

 Reduct
ioni
nil
l
iter
acyl
evel
s

 I
ncr
easei
nski
l
ledmanpower

 I
mpr
ovementi
nheal
thf
aci
l
iti
es

 I
mpr
ovementi
ntechnol
ogy

 I
mpr
ovedi
nfr
ast
ruct
ure

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 I
mpr
ovedbal
anceofpayment

6. Descr
ibef
ivef
eat
uresofanunderdev
elopedcount
ry

 Hi
ghlevel
sofpovert
y-Mostunderdevel
opedcount
riestendtobepovert
y-r
iddensuch
t
hatabigpopul
ati
onlivesatt
hesubsist
enceorbel
owt hepover
tyl
evel.

 Dispari
tyi
nincomedi
str
ibuti
on-inmostunderdevel
opedt
herei
sasmal lproport
ion
ofaf ewri
chpeopl
ewhil
et herestoft
hepopulat
ionl
ivi
ngbel
owthepovertylevel
.

 Lowl
evel
sofsavi
ngsandi
nvest
ment s–mostpeopl
ehavel
i
ttl
eornot
hingt
osave.
Lowsavi
ngsi
ntur
nleadst
olowinvestment
s.

 Hi
ghpopulat
iongr
owt
hrat
e–Mostoft
hepopul
ati
onar
eil
l
iter
ateanddoesnotval
ue
f
amil
yplanni
ng

 Dominanceofsubsi
stencesect
or–Inunderdevel
opedcount
ri
est
het
radi
ti
onal
subsi
stencesect
ort
endst odominat
etheeconomy.

 Pr
oblem ofunempl
oyment-Thi
smaybeasar
esul
tofhi
ghgr
owt
hrat
esandhi
gh
i
ll
i
ter
acylevel
s.

 Underut i
l
izat
ionofnatur
alr
esources–Naturalr
esour
cesexist
ingi
nmanyunder
-
developedeconomiesremainunder-
expl
oit
edduetolackofeit
hercapi
talor
appropri
atetechnol
ogy.

7. Expl
ainf
ivepr
obl
emsencount
eredi
ndev
elopmentpl
anni
ngi
ndev
elopi
ngcount
ri
es

 Lackofaccurat
edata–Devel opmentplanni
ngdependsont hequal
i
tyand
rel
i
abil
i
tyofthestat
ist
icaldataonwhichiti
sbased,whensuchdatais
i
naccurat
e,t
henthequalityofthepl
anisgreat
lydi
minished.

 Lackofquali
fi
edpersonnel–Duetolackoflocalqual
i
fiedper
sonnel
,many
l
essdevelopedcount
ri
esreli
esonforei
gnexpertswhomaynotbehavi ng
adequat
eknowledgeaboutthel
ocaleconomies.

 Transf
erofinappropr
iat
edevel
opmentplan–whenpl anst
hatworkedi
nother
countr
iesar
et r
ansfer
redtot
helessdevel
opedcount
ri
estheyendupfai
l
ing.

 Reli
anceondonorfunding-mostlessdevel
opedcountri
esbasethei
r
devel
opmentplansontheexpectedaidfrom moredevel
opedcountr
ies.I
fsuch
ai
disnotrel
eased,i
mplementati
onoft heproj
ectbecomesdif
fi
cult
.

 Lackofdomest i
cresour
ces–l i
mitat
ionofdomest
icr
esourcessuchasski
l
led
personnel
,fi
nanceandcapi
talequi
pmentmayhamperimplementati
onofawell
l
aidoutdevelopmentpl
an.
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 Fail
uret oinvol
velocalpeoplei
nplanning–ifthelocalpeopl
ewhoar e
expectedt oimplementplansar
eleftoutduri
ngtheplanformulat
ionst
age,
they
mayf ailtosupportt
heplanatimplementati
onstage.

 Natur
alcal
amiti
es–Projecti
mpl
ementationmaybefr
ust
rat
edbynat
ural
cal
amiti
essuchasout
breakofdi
sease,
floodsordr
ought
.

 Over-ambit
iouspl
ans–Somepl
ansespeci
all
ythosemeantt
oent
icedonor
s
forf
undingmaybeunreal
i
sti
c

 Lackofpolit
icalgoodwil
l–i rr
espect
iveofhowgoodapl
anisi
fther
eisno
poli
ti
calgoodwillorpol
i
ticalcommitmenttoimpl
ementi
t,i
twi
l
lremainapaper
pl
an.

9.Expl
ainf
ivef
unct
ionsoft
henat
ional
budgetasat
oolofpl
anni
ng;

 Outli
ninggover nmentexpendi t
ure–I tdetailsthevar i
ousexpendit
ur eprogrammest he
governmentpl anst ounder t
akeoveragi venper i
odoft ime
 Outli
ninggover nmentr evenue–I tgivesdet ai
lsoft hevari
oussour cesofr evenuefor
thegovernmentt of i
nanceitsact i
viti
es
 Enabli
nggover nmentpl anni
ng–Thegover nmentusest hebudgett oplanf orvar
ious
acti
vit
iesandpr ogrammest hatleadt oeconomi cgr owthanddevelopment
 Int
roducingchangesi ntaxation–Thevar ioust axest obeapplied,thetaxr at
eandt he
modeofappl icat i
onoft hetaxesar eout l
inedi nthebudget
 Regulati
ngmoneysuppl y–I toutlinesthemonet arysystemst obei nsti
tutedbythe
governmenttor egulatemoneysuppl yint heeconomy
 Sti
mul at
ingeconomi cact i
vi
ties–I tisusedt oincreasegovernmentexpendi t
ureinthe
economywhi chwi llspureconomi cactivit
iesi nthecount r
y

10.Expl
ainf
act
orst
hatmayhi
ndert
hef
ormul
ati
onofagooddev
elopmentpl
ani
nKeny
a.
 
  
  
  
   (
10mar
ks)

(
i) Lackofadequate/accurat
e/det
ail
eddat
a-r
ecor
dsar
erar
elykeptbysoci
etyl
eadi
ng
topoor/unr
eli
ableplans.

(
ii
) Shor
tage/i
nadequatef
undsorcapit
al-t
hismakei
tdi
ff
icul
ttocol
l
ect/
comput
e
i
nfor
mationandrel
iabl
eprepar
eplans

(
ii
i) Copyi
ng/
transf
erofinappropri
ateplans-whichwi
llnotsui
tlocalci
ti
zens
/communi
tiesastheydif
ferincult
ure,devel
opment

(
iv) Exist
enceoflargesubsi
stencesect
orhencedi
ff
icul
ttogeti
nfor
mat
ionandmakes
thewholeprocessofplanni
ngunreal
ist
ic

(
v) Probl
em ofthepri
vat
esect
or-i
nmostcasestheymaypur suedi
ff
erentobj
ect
ives
fr
om thoseofthegover
nmentyetgover
nmentdoesn'
thavedir
ectcontr
ol

(
vi) Lackoft
rai
nedst
afft
oconductt
hepl
anni
ng-Expat
ri
atesar
eusedwhi
chi
s
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els,
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expensi
veandtheydonothaveadequat
eknowl
edgeaboutt
hel
ocaleconomi
est
hey
arecall
edupontopl
anfor.

11.Explai
nfiv
ebenef
it
sthatacount
ygov
ernmentmayder
ivef
rom pr
epari
ngapr
oper
dev
elopmentpl
an (10marks)

 Appropri
ater
esour
ceallocat
ion– t
owher
eout
puti
shi
ghestt
oensur
emaxi
mum
ut
il
izat
ionofr
esour
ces.

 Pr
ior
it
izi
ngofpr
oject
s–t
oensur
ethatmor
eimpor
tantpr
oject
sint
hecount
yar
e
gi
venpri
ori
ty

 Tosti
mul
ateeff
ort\
moti
vat
ionalt
ool–t
obeownedandsuppor
tedbyt
heci
ti
zenst
o
meett
hei
robj
ecti
ves.

 To ensur
e bal
anced regi
onaldevel
opment– t
o make i
tpossi
blet
o di
str
ibut
e
devel
opmentt
oallpar
tsofthecount
y.

 Toavoi
ddupl
icat
ion–byensur
ingt
hatsi
mil
arpr
oject
sar
eputi
nthesamear
ea

 Forl
ongt
erm deci
sionmaki
ng–i
nar
eas/
sect
orsofi
nvest
ment
s

12. Expl
ain5r
easonsf
ordev
elopmentpl
anni
ng

Appr opri
ater esourceal l
ocationtoavoi d/r educewastage

St i
mul ationofef fortsbyshowi ngpossi bl
eachievement swhichmakespeopl et oapply
greateref fort
s

Suppor tsforeignai dbargainbecauset hepl ani
susedt oconvincedonor stogiveresources

Pr ojectevaluat i
on-asi mplement ati
onoft hepr oj
ectisdoneont hebasisofpr e-
determi nedcr i
teriacontainedint heplan

Longt erm deci si
onmaki ngbecauset heplancont ai
nsal ongterm vi
ewf ormaking
decisions

Avoi dingdupl icati
on-t oavoi destabli
shmentofsi mil
arindustr
iesinsamel ocali
ti
es

Pr omot ingbal ancei nregionaldevelopment

byavoi dingest abl
ishmentofi ndustr
iesi nsamel ocal
it
ies

Cor rectimper f
ectionsint hemar ket-likepresencemonopol iesandoligopoli
eswhi ch
contri
but et omi sall
ocati
onofr esources

ACCOUNTI
NGREVI
SION.
1. Thefol
lowinginfor
mat
ionrel
atestoRoki
totr
ader
sfort earended31stDecember2011.
hey
Sh.
Fi
xedAsset s 5,
000,
000
Curr
entassets 650,
000
NetProfi
t 300,
000

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CurrentLiabili
ti
es 650,000
Sales 2,000,
000
Closingstock 100,000
Openi ngStock 200,000
GrossPr ofi
tMar gi
nwas20%
Cal
cul
ate
(a) Cur rentrati
o
(b) Gr osspr ofi
tmark-
up
(c) Rat eofst ockt
urnover
(d) Capi talemploy
ed

14.
(i) Cur
rentRat
io.=

= = 1:
1

(
ii
) Gr
osspr
ofi
tmar
k-up

= x100%

(
a) Gr
ossPr
ofi
t=Mar
ginxsal
es

(
b) Costofsal
es = Sal
es–GrossPr
ofi
t
= 2,
000,
000–400,
000
= 1,
600,
000
= 25%or¼
ALTERNATI
VEI
Conver
tmar
gint
omar
k-up

ALTERNATI
VEII
Conver
tMar
gint
omar
k–up

3.Rat
eofSt
ockTur
nOv
er

= 150,
000

St
ockt
urnov
er=

= 10.
67t
imes
4.Capi
tal
Empl oyed
= FixedAsset s+Curr
entAsset
= 5,000,000+650,000
= 5,650,000
Or
Capi
tal
+Netpr of
it+Curr
entLi
abil
it
ies

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els,
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= (4,700,000+300,
000)+650,
000
= 5,650,000

2. (b) Asat1stJul y2008t hecashbookofEmor ienterpriseshowedt hef oll

owing
bal
ances: Cash sh. 20, 000andabankov erdraftsh.8,
600.
Duri
ngt heMonththef oll
owingt ransacti
onstookplace.
3/07/08: Nafulasettl
edheraccountofsh.16, 000bychequeofsh.15, 000
6/07/08: Paidrentbycashsh.8, 000
10/07/08: Deposi tedsh.6, 000intothebusinessbankaccountf rom thecasht i
ll
15/07/08: Set tl
edWakul isaccountofsh.20, 000andheal lowedadi scountof
1%by cheque.
18/07/08: Deposi tedsh.28, 000i nt
hebankf rom privatesources.
21/07/08: Cashsal essh.12, 000
24/07/08: Ot i
enoadebt orset t
ledhisaccountbychequeofsh.8, 000hav i
ng
been al lowedadi scountof20%.
26/07/08: Pur chasedf urnit
ureofsh.5,200pay i
ngbycheque.
28/07/08: Recei vedsh.3, 600cashf rom Nduta.
30/07/08: Bankedt hecucr i
l
ablecashexceptsh.1, 600.
Required:
Drawupat hr
ee–col umncashbook. (10mar ks)

3.I
jarainvestimentoper atesawhol esalebusi ness.Thef oll
owi ngtr
ansact i
onst ook
pl
acei ntheMont hofmay2010.
May3: Soldgoodsoncr edittoAy i
mbash.60, 000.
May8: Purchasedgoodsoncr editf r
om mj uaj
istor essh.120, 000.
May12: Returnedgoodst oMj uaj
i storeswor t
hsh.6, 000.
May16: Purchasedgoodsoncr editf r
om Mj uaj
istor essh.160, 000.
May22: Soldoncr edittoMaf alaretailerssh.150,000.
May23: Boughtanewmot orvehi
cl efrom Mashar iki mot or
swor thsh.
3,
200,000.
May24: Ayimbar eturnedgoodswor thsh.10,000.
May29: Soldequi pmentwor thsh.840, 000oncredi tt ochaplimited.
Required:
Recor dtheabov etransact i
onsint her elev
antbooksofor i
ginalentryforIj
ara
Investment s (10mar ks)
3. (a) Thef oll
owingbal anceswer eobt ainedf rom t
hebooksofNakhul oTr aderson
st
31 Dec 2011
Shs.
Openi ngstock 60, 000
Equipmentatcost 125, 000
Accumul ateddepr eciati
ononequi pment 16, 200
Purchases 161, 000
Sales 208, 000
Landandbui lding 100, 000
Discountrecei ved 7, 500
Returnsout war ds 25, 000
Returnsinwar ds 27, 000
Salari
es 22, 000
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Tel ephonechar ges 5,000

Wat erbi ll
s 2,100
Cr editor s 15, 000
Debt ors 21,000
Elect ri
cityexpences 2,000
Bank 68,000
Cashi nhand 12,000
Dr awi ngs 19,000
Insur ancepai d 1000
Addi t
ional infor mat i
on
(i
) Closingst ockwasv aluedatsh.72,000
(i
i) Tel ephonechar gespr epaidshs.1100
(i
ii
) Out st andi ngwat erbillshs.1300
(i
v) Depr eci ationonequi pmenti s10%oncostcar riedi
nwardsshs.11,
000,
carriedout war dsshs. 10,000
Prepar e;
Tradi ng, pr ofitandl ossaccountf oryearended31stDec2011.
Nakhul oTr aders
Tr adingpr ofitandl ossAccount
Fort hey earended31stDec2011
Shs Shs shs
shs Sales 208,
000
Openingst ock LessReturns 27, 000
60,
000 181,000
Purchases 161, 000
Addcomi ngi nwar d11, 000
172, 000
LessRet urnsout 25, 000
147,000

207,
000
Lesscl
osi
ngst
ock
72,
000 181,000
COS GPb/ d
135,
000 46,000
GPc/d Disrecei
ved
46,
000 7,
500
Netloss
181,
000 1,
300

Telephone 5,000
Prepaid 1,100
3,
900
Wat erbil
ls 2,100
Adddue 1,300
3,
400
Depr eci
ati
ononequi
p
12,500 54,
800
Nov
els,
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Car
ri
ageout
10,
000
Sal
ari
es
22,
000
El
ectri
cit
yexpenses
2,
000
I
nsurance
1,
000

54,
800

4. (
b) Thef ollowi ngt rialbalancewasext r
actedfrom t
hebooksofBumal atrader
son
st
31 Dec2011
Tri
alBalance
Bumal aTraders
Dr(shs) Cr(shs)
Sales 720,000
Purchases 340, 000
Retur ns 20,000 18,000
Rent 16,000
Adv erti
sing 24,000
Commi ssi
on 9,000
Debt ors/cr edi tors 54,000 64,000
Stock1/ 1/
2011 60,000
Insurance 30,000
Drawi ngs 40,000
Furniture/f itti
ngs 100, 000
Cashi nhand 15,000
Premi ses 400, 000
Capi t
al 288,000
1,099,000 1,099,000
Additionalinf ormat i
on;
(i) Stockasat31stDecember2011shs52, 000
(ii) Rentaccr uedshs.6, 000
(iii
) I nsur ancepai dinadv ancedsh. 4,000
(iv) Commi ssiondueshs. 5,000
(v ) Sal ariesal ongshs. 21,000
Requi red;
(a) Tr adi ng,profitandl ostaccountfortheyearended31stDecember
2011.
(b) Bal ancesheetasatt hatdat e (12mks)
(
b) Bumal aTr aders
Tr adingPr ofi
tandLossAccount
Fort hey earended31/ 12/2011
Shs Shs shs
shs Sales 720,000

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Openingstock L.
Retur
ns 20,
000
60,000 700,
000
Purchases 340,
000
Lessretur
ns 18,
000
322,000
G.A.S
382,000
Lessclosi
ngstock
52,000 700,
000
COS GPb/d
330,000 370,
000
GPc/ d Commuss 9,
000
370,000 Adddue 5,
000
14,
000
700,000
Rent 16,000
Addcur ved 6,000
22,000
Adv erti
sing
24,000
Insurance 30,
000
LessAdv ance 4,
000
26,000
Salaries 384,
000
21,000
Profitc/d
291,000

384,
000

Bul
alaTr
ades
Bal
ancesheet
Asat31/12/
2011

5. F.A shs shs Shs shs

b) Format i
ve/Fit
ti
ngs 100, 000 Capit
al 288,000
Premi ers 400,000 LessDrawi ngs 40,000
500,000 Addnetpr ofit 248, 000 539,000
CA 291,000 539,000
Debtor s 54,000 C.C
Stock 52,000 Credi
tors 64,000
I
nsur eprepai
d 4,000 Rentaccured 6,
000
Commi ssdue 5,000 Salar
ies 21,000 91,
000
Cash 15,000
130,000 630,
000

630,
000
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els,
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Thef
oll
owi
ngtr
ialbal
ancer
elat
est
oKi
tui
Mil
l
ersLtdasat31stDecember2011.
Ki
tuiMill
ersLtd
Tri
alBal
ance
As31stDecember2011
Part
icul
ars Dr Cr

shs shs

Capi
tal 283,
200

Dr
awi
ngs 8000

CashatBank 30,
000

Machi
ner
y 360,
000

Debt
ors 42700

Cr
edi
tor
s 20000

St
ock(
1.1.
2011) 40000

Sal
es 570000

Pur
chases 325000

Ret
urni
nwar
ds 10000

Ret
urnonwar
ds 15000

Car
ri
agei
nwar
ds 4000

Car
ri
ageout
war
ds 5000

Rent 18000

Sal
ari
esandwages 40000

Di
scount
sRecei
ved 9000

Gener
alexpenses. 14,
500

897200 897200

St
ockasat31/
12/
2011wasv
aluedatshs.35,
000

Requi
red:

i
) Pr
epar
eat
radi
ng,prof
itandlossaccountfortheyearended31stDecember,2011.
(
8mar ks)
st
i
i
) Dr
awabal
ancesheetasat31 December ,2011. (
4mar ks)
KituiMi
ll
ersLtd
Trading,
prof i
tandLossAccount
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els,
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Fort earended31stDecember2011
hey

Ki
tui
Mil
l
ersLt
d
Shs Shs Sh shs
Openingstock 40,
000 Sales 570,
Add:purchases 325  Less : Ret
urns 000
LessReturns 000 i
nwar ds  560,
000
outwards  Netsales 
10,
0
Add :car
ri
age 150 00
i
nwards 0 31400
310, 0
C.O.g.
a.f
.s 000 35400
Less: cl osi
ng 0
stock 4,
00 35000 560,
00
C.o.g.
s 0  0
Grossprofi
tc/d 31900
0
24100 Gr
ossprofi
tb/
d 241000
Expenses 0 Di
scountr
ecei
ved 
Carri
age 560,
00
outwards 0 9000
Rent
Wages and
sal
aries
General 5000
expenses  250,
00
77500 0
Netpr
ofi
tc/
d 180
00 17250
0
400
00 250,
00
0
14500

Balancesheet
st
Asat31 December2011
shs shs shs shs
Fi
xed
Asset
s 360,
000 Capi
tal 283200
Machiner  Add:Net 
y pr
ofit 172500
35000 
Current  Less 455700 447700
Assets 42700 Drawi
ng
Stock  s 8000 20000
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Debt
ors 30000 107700 
Bank  467700 S.
T.L 467700
cr
edi
tor
s

6. b)On1stJanuar y2012,Ml achaket radershadcashi nhandKsh.10, 000andcashatbank

shs 15000.The f ollowi ngtransact i
onstookpl aceduri
ngthemont h:
Jan2: Boughtgoodsi ncashsh.1500
Jan4: Paidsalariesbycashsh7500.
Jan5:Recei vedchequesf rom thef ol
lowingdebtorsaft
erall
owing2%discountineach
case.Masy sh980, kipli
mosh. 1960.
Jan8:Set tl
edt hef ol
lowi ngaccount sbychequei neachcasededucting5%di scount
;
Jumash3000, Kasani shs1200.
Jan12:Boughtmachi nerywor t
hsh7000, pai
dsh5000bychequeandt hebalancetobe
paidlater
Jan20: Tooksh1000f orper sonal usefrom t
hebusinesscashtil
l
.
Jan25: Cashsal essh2000
Jan26: Receivedcashshs. 3000f rom Kioko,aDebtor.
Jan28: BroughtinSh2000cashf r
om hispersonalsavi
ngs.
Jan29: Bankedal l cashexceptsh.1000
Requi r
ed:Prepareadul ybal ancedt hr
eecolumncashbook. ( 12marks)
ThreeCol umnCashbook

Da par
ti L Di
s ca Ban Dat Par
ti L Di
s Cas Ban
te cul
ar . c sh k e cul
ar . c h k
s f al
l sh shs f Re
ow s v shs shs

sh sh
s s

201 201
2 2
Bal
a b 10, 150 Purc 150
Jan nce / 00 00 Jan hase 0
1 d 20 0  2 s
Mar
y  750
Jan 980 Jan Sal
ar 15 0 285
Ki
pli 40  0 0
5 4 i
es
mo 
Jan 196 Jan Jum 60 114
5 Sal
e 20 0 8 a  0
s 00
Jan  Jan Kasa 500
25 Ki
ok 8 ni C 0
o 30 100
Jan 00 Jan Mac 0
Capi C
26  12 hi
ner
tal c 600
600 y 0
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ls,
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Jan Cash 20 0 Jan Dra / 21
28 00 20 wi
ng d 0
60  s 100 149
Jan  Jan 0 50
29 29 Bank  
239 170
40 00
Jan Bal
a 239
29 nce 40
b 17
/ 00 149
d 0 50
Bal
a
nce
10
00

Dr
Cr

24x½=12mar
ks

8. Ekeruboshopsel l
salli
tsgoodsatamar gi
nof20%fort
hey
earended30t
hApr
il
2006,thet r
adingact
ivi
ti
eswereasfoll
ows;
Pur chases Shs.800,
000
Sales Shs950,000
Netpr ofi
t 5%ofsal es
Closingstock Shs200,000
Calculate; (
10
mks)
(i
) Thegr ossprofit
(i
i
) Theopeni ngstock
(i
i
i) Themar k-
upper centage
(v
) Thenetpr ofit
.
(
i) Grossprofit=margin= gr
ossprof
it 100% (2mks)
Sal
es
20 950,
000
100
Sincemar gin=20%Mar kup=1=¼=25%
5-1
Costofsal es
Mar kup=G. P 100%
Ther ef
ore25%=G. P 100%
1costofsal es

Hence25% costofsales=G.P100
25%costofsal
es=190,000100
Costofsal
es =19,
000,000

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ls,
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ima
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25 
(
2mks)
=760,000 
Theref
oreopeni
ngstock+Pur chases–cl
osi
ngst
ock=costofsal
es.
O.S+800000-
200000=760,000
O.
S=760-600000
=160,000 (4
mks)
(i
v) Netprofi
t=5%ofsales
5 950000 (
2
mks)
100
=47,
500 10ti
cks=10mks
t
h
8. (
b)Thef
oll
owi
ngtr
ialbal
ancebel
ongst
oKi
pev
utr
adesasat30 June,2004

KI
PEVUTRADERS

Tr
ial
bal
anceasat
30t
hJune2004

Dr (
shs) Cr (
shs)

St
ockon30/
6/03 40,
000

Capi
tal 162,
300

Pur
chaseandsal
es 35,
000 70,
000

Dr
awi
ngs 6,
000

Fur
nit
ureandf
it
ti
ngs 20,
000

Mot
orv
ehi
cles 150,
000 12,
000

Debt
orandcr
edi
tor
s 8,
000 4,
800

Ret
urns 2,
000 800

Di
scount 900

Wagesandsal
ari
es 15,
000

Rent 3,
500

I
nsur
ance 2,
100

Commi
ssi
on 400

Bank 3,
000

cash 6,
000

252,
900 252,
900g

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ls,
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REQUI
RED

(
i) Pr
epar
eat
radi
ngpr
ofi
tandl
ossaccount

(
ii
) Pr
epar ancesheetasat30thJune2004
eabal (
12mks)

KI
PEVUTRADERS:

ancesheetasat30thJune2004.
Bal
Dr Cr
Fi
xedAsset s Capit
al 164,
000
Furnitur
eandf it
ti
ngs20,000 Addprofi
t 900
Mot orvehi
cles 164,900
150,000 Lessdrawings 6,000
170,
000 Netcapit
al 158,
900
Currentassets. Curr
entli
abil
iti
es
Debt ors 8,
000
Cashathand 6, 000 Cr
edi
tor
s 22,
100
14,000
184,
000
184,
000
184,
000

4. (a) KI PEVUTRADERS
Tri
al anceasat30thJune2004:
bal
Dr Cr

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Openi
ngst ock 4,000 Sales 70,
000
Addpurchases 35,000 ½ Lesssalesr
etur
n 2,000
Costofgoodsas 39,0000 Netsales  ½ 68,000
Lessret
urnsoutwar ½
d 4, 800  ½

34,200
Gr
osspr
ofi
tc/
d 33,800

EXPENSES:
DISCOUNT 900 Gr
osspr
ofi
tb/d33,
800 ½
Wages 15,
000 Adddi
scount 800
Rent 3,
500
Insur
ance 2,
100 34,
600
Commi ssi
on 400

21,
900
Netpr
ofi
tc/
d 12,
700

34,
600

Netpr
ofi
tb/
d. 34,600
12,
700½

Tot
al=(
8mks)

KI
PEVUTRADERS
BALANCESHEET
Asat30thJune2004
FIXEDASSATS Capit
al 162,300½
Mot orvehi
cles Lessdrawings 6,
000 ½
150,000 Addprofit 12,
700
Furnitur
e Netprofi
t ½ 169,
000
20, 000½ ½
170,
000 CURRENTLI
ABI
LITY:
CURRENTASSETS Credi
tors 12,
000
Stock ½
34,200
Debt ors
8,000
Cash 218,
200½
6,000½

48,
200 Tot
al=mks.

218,
2
00

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9. Prepar
eat hreecolumncashbookf r
om thef ol
lowinginf
or mationf orthemont hof
May2004andbal ancei toff.
May1Bal ancesb/ dcashsh50, 000,Banksh180, 000
May1Cashsal essh3, 000
May2Pai dt hef ollowingcr edit
orsbycheque, NMwangish1, 500,J.Mwaniki
sh16,000,N Mugo sh1, 200af terdeducting10% cashdi scounti
n
eachcase.
May3Recei vedchequesf rom thef oll
owi ngdebt or
saf terdeducti
ng5%
discounti
n eachcaseE.Gi t
hinjish24,000,D. Ny amush9, 000,E.
Mut uash1,400.
May5Pai df orr epairsincashsh16, 000
May10Pai dJumai ncashsh9, 500
May15Bankedsh6, 000f rom thecasht i
l
l
May15Recei v edcashf rom P.Kav unikish13,500i nf ullsettl
ementofhi s
accountof sh15, 000.
THREECOLUMNCASHBOOK

DAT DA CASH BANK DAT DETAI

L DISCOUN CASH BANK
E E S T
RECEIVE
D

2004 Sh Sh Sh 2004 Sh Sh Sh

May Balb/
d 5000 18000 May N. 150 1350
1 0 0 2 Mwangi
Sal
es 1600 14400
3000 J. 
1 E 1200  2 k 120
Mwani
Gi
thi
nji  22800 1080
i 1600
May 
D. 450 0
3 2 N.
Nyamu  8550
Mugo 9500
E. 70 1330 
3 5 Repai
rs
Mutua
6000 6000
Juma
Cash 
3 1500 1350 10
C1 Bank
 0
May C1
15 P 15 20185
Kavuni 0
ki 3500
15 20 1870
0
21868 Balc/
d 21868
3220 6650 0 0
 0 6650
0

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10. Thef
oll
owingtri
albal
ancewasext
ract
edfr
om thebooksofBai
teTr
aderson31st
August
.2009.
Dr(sh) Cr(
sh)

Sales 350,
000
Purchases 160,000
Cashatbank 290,000
Retur ninwar ds 5,
000
Carriagei nwards 20,000
Carriageout war
ds 14,000
Salariesandwages 10,000
Debt ors 56,000
Creditors 90,
000
Stock 35,
000
Machi nery 265,
000
Rent 25,
000
Discountr ecei
ved 18,
000
Li
ght ingandheat ing 12,000
Building 240,000
Adv erti
sing 13,000
Drawi ngs 3,000
Capi t
al
667,000
1,
150, 000
1,150,000
Additional i
nformat i
on;
st
a)St ockon31 August .2009wasv al
uedatsh50, 000.Requi r
ed;PrepareTr ading
st
profitandl ossaccountf orthey earended31 August .2009.(12mar ks)
st
11. On1 Januar y2012Mangat r
ader shad180, 000cashi nhandandabankcr edi
t
balanceofShs. 57, 500.Dur ingthemont ht hefol
lowingtransactions
tookpl
ace.
3rdJan:Cashsal esShs.2, 800
th
4 Jan: Adebt orset tl
edhi saccentofsh.90, 00bycheque
th
10 Jan: Pai dSalariesshs.40, 000i ncash.
th
12 Jan: Tookcashsh.35, 000t oset tleonper sonal debt.
rd
23 Jan: Recei vedachequeshs.8460f r
om Our udistri
buti
onafterdeduct ing
6%cash discount.
th
24 Jan: Deposi tsshs.10000i nt hebankf r
om of fi
cecash.
th
25 Jan: Purchasedst ockwor t
hshs. 8950oncr editfrom Ngumodi st
ri
but ors
th
26 Jan: Cashsal esbankeddi rectlyshs. 38000
th t
h
27 Jan: Achequer eceivedon4 f r om adebt orswasdi shonored.Thebank
chargedhi m 2500.
th
29 Jan: Settl
edcr editorsaccountshs.6000bchequel ess3%cashdi scount .
st
31 Jan:Bankal l cashexceptshs. 40, 000
Requi red:Prepar edat hreecolumncashbookdul ybal anced (10mks)
b)

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Dat Det
ail
s D.
A Cash Bank Dat
e Det
ail
s D.
R Cash Bank
e

201 2011
1

Jan Bal
ance 18,
000 Jan Bal
ance 57,
500
1 BF 1 BF

Sal
es 21,
800 Sal
ari
es 40,
000
3 10

Debt
ors 90,
000 Dr
awi
ngs 35,
000
4 12

Our
u 540 5460 Bank 10,
000
23 24

Cash 10,
000 Bank 90,
000
24. 27

Sal
es 38,
000 Char
ges 2,
500
26. ”

Cash 103800 29 Redi

tor 180 5820
31.

31 Bank 108300

31 Bal
ance 40,
000 98880
c/d

540 20180 254700 180 201800 254700

0

Jan Bal
ance 40,
000 98800
31 b/d

12. b) Thef ol
l
owingbalanceswer
eex
tract
edf
rom thebooksofMutuaTrader
sfor
the y
earended31Dec2010hav i
ngproff
eredat
radingaccount
.
Dr.(sh) Cr.(Sh)
Grosspr ofit 38100
Cash 105060
Mot orvan 603000
Capital 653560
Equipment 200600
Furniture 94400
Creditors 74300
Debt ors 75900
Discountr ecei
ved 26400
Salaries 12400

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Carr
iageout war
d 14400
Rent:i
ncome 12600
Advert
ising 22200
I
nsurance 9400
Bankov erdr
aft 412600
1,
217560 1,
217560
Required:
a)Pr epar eapr ofi
tandl ossaccountofMut uaTrader
sf orthey earended31stDec2001
(5mks)
b)Abal ancesheetasatt hatdat e. (5mks)
MUTUATRADERS
PROFI T&LOW ACCOUNT
FORTHEYEARENDED31DEC2001
Shs. Shs.
CarriageOut wards 14400 GrossPr of i
tb/f 38100
Salaries 12,
400 DiscountRecei ved 26,400
Adv ertisi
ng 22200 Renti ncome 12,600
I
nsur ance 9400
NetPr ofi
t 18,
700
77100 77100
MUTUATRADERS
BALACESHEET
ASAT31STDEC2001
FIXEDASSETS SHS SHS SHS SHS
Mot i
vation 603100 Capital 653,560
Equipment 200600 Add: Netpr ofit 18,700
Furnit
ure 94400 898,
000 672260
CurrentAsset s CurrentLiabi l
ities
Stock 80200 Bankov erdr aft 412, 600
Debtors 75900 Creditor
s 74,300
Cash 105060 486,900
261260
1,
159,160 1,159,160
st
13.Thef ollowingTr i
al bal
ancewasext ractedfrom NDOLO’
SSTORESon31 Dec2009.
Dr. Cr.
Shs Shs
Capital 250,000
Stock 25, 000
Machi nery 250, 000
Mot orvehicles 87,000
Purchases 360, 000
Sales 600000
Returnsinwar ds 40, 000
Returnsout war ds 20,000
Discountr eceived 5,000
Carriageinwar ds 2,000
Carriageout war ds 3,000
Baddebt s( writtenoff) 80, 000

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Gener alexpenses 88,
000
Debt ors 18,
000
Creditors 49,
000
Rent
1,
000 ……………………….
954,
000 954,
000
Addi
ti
onali
nfor
mat
ion:
-
Cl
osi
ngstockwasval
uedatsh.22,
000.

Pr
epar
eNDOLO’SSTORES;Tr
adi
ng,pr
ofi
tandl
ossaccount
sfory
earendi
ng
31/
12/
2009.

NDOLOSTORES
TRADI NG,PROFITANDLOSSACCOUNT
ST
FORTHEYEARENDED31 DEC.
2003 .
Openi ngstock 25000 Sales 600000
Addpur chases 360000 l
essr
etur
ninw. 40000
56000
Addcar ri
agei nw. 2000
362000
Lessretur nout 20000 342000
Goodsav .forsale 367000
Lessclosi ngstock 22000
Costofsal es/Costofgoodssol d 345000
Grosspr ofitc/d 215000………………………………………………………
360000
560000
Generalexpenses 88000 Gr
ossprof
itb/d 215000
Carr
iageout. 3000 adddi
scountrecv. 5000
Rent 1000
Baddebt s 80000 172000
Netprofi
tc/d
48000 .
220000
Netpr
ofi
tb/
d
48000
14.On1stJune2009,MULIENTERPRI SEShadcashi nhandsh.87, 000andcashatbank
sh.250,
000.
Duringthemont h,thef ol
lowingtransacti
onstookplace.
June 2, Sales(cash)sh.50, 000
June3, Paidsalariessh.101, 500bycheque.
June6, Receivedachequef orsh.76,800f rom Mwel uaft
erall
owi
ng
hera cashdiscountof4%.
June12, Boughtof ficefurni
turebychequesh.85, 000
June16, Settl
ed Musau’ s accountof sh.40, 000 i
n cash,havi
ng
deduct
edshs 800cashdi scount.
June18, Receivedachequef orshs150,000i nrespectofcashsal
es.
June21, Paidwagesshs24, 000i ncash.
June22, Withdrewshs30, 000f r
om bankf orof f
iceuse.

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June25,Withdrewshs5000cashf orpri
vateuse.
June28,Receivedshs16500cashf rom Kasivainset
tl
ementofher
accountl
ess shs660cash discount.
June30, Depositedal
lthemoneyintobankexceptshs25,
000
Prepar
eathr
eecol umncashbookandbal anceitoff
. (
12marks)
MULIENTERPRISES

THREECOLUMNCASHBOOK
Dat
e Det
ail
s Di
sc. Cash Bank Dat
e Det
ail
s Disc. Cash Bank
Al
l
owed Receiv
ed
2009 250,
000 2009 101,
500
Bal
b/d 87,
000√ Sal
ari
es
1/6 √ 2/6 √
2/6 Sal
es 50,
000√ 12/6 Furni
tur
e
6/6 Mwelu 3,
200√ 76,
800 16/6 Musau 800 39,
200√
18/6 Sal
es 150,
000 21/6 Wages 2,
400√
22/6 Bank 30,
000√ 22/6 Cash 30,
000√
28/6 25/6 Drawing
Kasi
va 660√ 16,
500√ 5000√
s
30/
6 Cash c 90300√ 30/
6 Bank c 90,
300√
350,
600
30/
6 Bal
c/d 25,
000√
√
183,
500 567,
100
3,
860 183,
500 567,
100 800
√ √

15. Thefollowi ngbal ancesrelatet

oMsaf i
riTr sasat31stDecember
ader ,2012:
Sh.
Purchases 900,000
Stock,1/ 1/2012 230,000
Buil
dings 1,
200,000
Motorvehi cles 750,000
Returnsout war ds 50,000
Debtor s 190,000
Creditors 310,000
Loanf rom I DB 600,000
Cashathand 130,000
Cashatbank 270,000
Drawings 100,000
Capital 1,
840,000
170,000
Netpr ofit
Stock,31/ 12/ 2012 280,000
Expenses( includingcar
riageinwar
ds,shs 250,000
150,000)
REQUI
RED:
i ancesheetasat31stDecember
) Bal ,2011.
i
i)Cal
culat
e:

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- Mar
k-up
percent
age. (
2mks
- Ret
urnon
capit
alemployed. (
2mks)

Msaf
ir
itr
aders
st
Bal
ancesheetasat31 December2011

Asset
s Li
abi
li
ti
es
KSh Ksh
Fi
xedAsset
s Capit
al1,
840,000
Bui
l
dings 1,
200,
000 Add:Netprof
it170,000
Motorvehi
cle 750,
000 1,
950,
000 2,010,000
Less:Dr
awings 100, 000
1,910,000
Cur
rentAsset
s L/
TLi
abi
li
ti
es
Stock 280,
000 Loanf
rom I
DB600,
000
Debtor
s 190,
000 Cur
rentLi
abi
li
ti
es
Bank 270,
000 Cr
edi
tor
s310,
000
Cash 130,
000 870,
000
2,
820,
000 2,
820,
000

ii
)Mar k-
up
=Gr ossprof
itCostofsalesGrosspr of
it=net
profi
t+expenses=170, 000+100, 000=sh270,000
Costofsales=op.stock+pur chases+carr
iagein-ret
urnsout
wards–cl
osi
ng
stock=230,000+900,000+150, 000-50,
000-280,000=sh670,
000
Mar k-up=270,000x=40. 298%
670,
000.
½mkx4t
icks=2mks.

Ret
urnoncapi
tal
empl
oyed:
=Netprof
it x100
Capitalemployed Capitalempl oyed = owner
's capi
tal+ L/
T
li
abil
it
ies.=1,
910,000+600, 000=sh2, 510,
000.
Retur
noncapit
alemployed=170, 000 x100
2,
510,000=
6.
77%/
6.8/
7.0%.

16.On1stJune2011,Nyat
iTr
ader
shadcashinhandofsh25,000andsh56,
200atbank.
Dur
ingmonth,t
hef
oll
owingtr
ansact
ionstookplace:
2011
June2 Cashsales,sh42,000.
June5 Recei
vedachequeofsh70, 500f
rom But
alaTr
ader
saf
terdeduct
ing
a6% cashdiscount
.
June8 Pai
dsalar
ies,sh24,000
i
n cash

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June9 Ki vuitusettl
edhi saccountofsh45,000i ncashandwasal lowedsh
l,
800cas di scount.
June12 Cashsal es sh46, 500.
June18 Pai dTuiei
'sdebtofshl 00,
000bychequeaf terdeduct
ing5%cash
discount
.
June24 Wi thdr
ew sh26, 000 from thebankf oroffice
use.
June30 Bankedal lthecashexceptsh25,000.
Preparea3- columncashbookandbal anceitoffon30th June,2011.
(
10mks)
NyatiTraders3-
col
umncash
bookFort hemonthofJune
2011
Dat
e Det
ail
s Di
sc.Al
l
.Cash Bank Dat
e Det
ail
s Disc. Cash Bank
Rec.
2011 shs shs shs 2011 shs shs Shs
June1 Bal.b/d 25,
000 56,
200 June8 Sal ari
es 24,
000
June2 Sales 42,
000 June18 Tul
ei 5,
000 95,
000
June5 ButalaTr4,
500 70,
500 June24 Cash 26,
000
June9 Kiv
uitu 1,800 43,
200 June29 El
ect 8,
750
June12 Sales 46,
500 June30 Bank 24,
950
June24 Bank 26,
000 June30 Bal
.c/d 25,
000 130,
650
June30 Cash 124,950
6,
300 182,
700 251,650 5,
000 182,
700 251,
650

Jul
y1 Bal
.b/
d 25,
000 130,
65C

17. Thef
oll
owi
ngt
ri
albal
ancer
elat
est
oNt
hoi
’
sent
erpr
iseasat31stDecember2011
DR CR
Shs. Shs.
Drawi ngs 60,000
Land+bui l
dings 700,000
Cashi nbank 115, 000
Stock1. 1.2011 18,000
PurchasesandSal es 500, 000 1,
000,
000
Debt orsandCr edi
tor
s 46,000 92,
000
Salariesandwages 85,000
Carriagei nwards 9,000
Carriageout war ds 12,000
Mot orv ehicl
es 400,000
Capital 909,
000
Wat erandl i
ghting 36,
000
I
nsur ance 40,
000

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Ret
urns 30,000 50,000
2,051,000 2,
051,000
st
St ockon31 December2011wasv al
uedatkshs.25,000.
Requi red;prepareNthoi’
sTr
adingPr ofitandLossAccountfort
hey earended31st
December2011. (10mar ks)
NTHIO’STRADINGPROFI T&LOSSA/ C
ST
FORTHEYEARENDED31 DECEMBER2011
DR CR
Openi ngst ock 18,
000√ Sales 1,
000,000√
AddPur chases 500,
000 Less ret
urn 30,000√
Add car
riage √ Inwards 970,000√
i
nwar ds 9,
000√ Netsal es
527,
000
Less r
etur n √
outwar ds 50,
000√
Costofgoods f or 477,000
sales √
Less 25,
000√ 970,000√
Costofgoodssol d 452,
000 518,
000√√
Grosspr ofit √ Grosspr ofitB/d
518,
000
Expenses √
Salaries&wages 970,
000
Carriageout wards √
Wat er&Li ghti
ng
Insurance 85,
000√ 518,000√
12,
000√
Netpr ofitC/d 36,
000√
40,
000√
173,
000
√
345,
000
√
518,
000
√
20x½=10mks

19. ThefollowingTrial
Balancewasextractedfr
om t hebooksofKi
sumuAutospar
esasat
st
31 Oct2011
Ki
sumuAut oSpares
Tr
ialBalance
Asat31stOct2011
DR CR
Capital 653,
560
Mot orvehicl
e 603,000
Equipment 200,600
Furnit
ure 94,
400

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Debt ors 75,
900
Creditors 74,
300
Carriageonsal es 14,
400
DiscountRecei ved 26,
400
Salaries 12,
400
RentI ncome 12,
600
Sales 319,
400
Purchases 300,
000
Adv erti
sing 22,
200
Rates 9,
400
Stock1- 11-2010 61,
500
Bank 412,
600
Cash 105,060
TOTAL 1,498,860 1,
498,
860

St ockon31stOct ober2011wassh.80, 200

Requi red,
(
i)Pr epar eTr ading,
Profi
tandLossaccountf orthey earended31stOct2011
(
ii
)Pr epar eBal ancesheetasat31stOctober2011 (
12mks)
KisumuAut oSpar es
Trading,profi
tandl ossaccount
Forthey earended31stOct2011
Shs.
Shs.
Openi ngst ock Sal es
61,500√ 319,400√
Addpur chases
300,000√
COGAS
361,500√
Lesscl osingstock
80,200
COGS 319,400
281,300√ Grosspr ofi
tb/d
Grosspr ofi
tc/d 38,100√
38,100√ Discountrecei
ved
26,400√
319,400 Renti ncome
12,600√
Carriageonsal e
14,400√
Adv erti
sing
22,200√
Rates 77,100
9,
400√
Salaries
12,400√
Netpr ofitdd

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18,
700√

77,
100
14×½=7mks
KisumuAut oSpares
Bal
ancesheet
Asat31stOct2012
Fi
xedAsset s Shs.
Shs.
Mot orvehi
cles 603,000√ Capi
tal 653,
560√
Equipment 200,600√ Add.Netpr
ofi
t 18,
700√
Furnit
ure 94,400√
672,260
898,000 Currentl
iabi
l
iti
es
CurrentAsset
s Credit
ors 74,
300√
Stock 80,
200√ Bank 412,
600√
Debtors 75,900√
Cash 105,060√ 486,
900

261,
060
672,
260+672,
260+486,
900
1,
159,
060 1,
159,
060

20. Thefoll
owi ngi nfor mat i
onr el
atestoBiznaDist
ributorCompanyf ort
heyearended
st
31 Dec2009
shs
Grosspr of i
t 600,000
Openi ngst ock 285,000
Sales 2,400,000
Pur chases 1,830,000
Expenses 360,000
Closi ngst ock 315,000
Fixedasset s 400,000
Debt or s 900,000
Bank 35,000
Cur rentliabili
ti
es 438,000
Requiredcal culate
i
)Mar gin (
2½mks)
i
i)Rateofst ockt urnover (
2½mks)
i
ii
)Retur noncapi talemploy ed (
2½mks)
i
v)Curr entr atio (
2½mks)
a) .
i.Mar gin=Gr osspr of
it/sal
es×100√
=600, 000/ √2,400,000×100=25%√√ ( 5×½=2½mks)
i
i). Rat eofst ockt urnover
=costofsales/averagest ock√√
=1,800,000/300,
000√√=6times√√

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i
i
i). ROCE=Netprofi
t/
Capit
alempl
oyed×100√
=240,
000/
1,212,
000×100√√√
=19.
8%√√
(5×½=2½mks)

i
v). Cur
rentr
ati
o=Cur
rentAssets:
√√Cur
rentl
i
abi
l
iti
es
=1,250,
000√ : 438,000√
=2.85:
1√√ (5×½=2½mks)

21. b) On1stDecember2009, Kamauhadsh.55, 000inhandandsh.250, 000atbank.

Dur
ingt
hemonth,thef oll
owi ngt ransacti
onst ookpl ace.
December2cashsal esbankedsh.35, 260
3Boughtst ati
oneryincashsh.4, 500
8Pai dOdongoacr edit
orsh.94, 000bychequei nf ull set
tlementofhi saccount
afterdeduct i
on6%cashdi scount
12r eceivedachequef orsh58, 800from Waf ul
aaf terallowinghim acash
discountofsh.1, 200
15pai dsal ari
essh.34,000i ncash
25Wi thdr ewsh.50, 000f rom bankf oroff
iceuse.
28Any ango, adebt orpaidheraccountofsh.75, 000bychequel ess10%cash
discount
30Deposi tedal lthecashi ntot hebankexceptsh.13, 700
Pr epareat hreecolumncashbookandbal anceifof f. ( 10mks)
KAMAU
Threecol umncashbookf orthemont hofDec. 2009
Dr. Cr.
DATE Par ticul Di sc Cash( s Bank DAT Par ticul ar Di scou Cash Bank
ars ount hs) (shs) E s nt (shs) ( Shs)
all
ow
ed recei
ve
r
2009 2009
Dec1 Bal anc 55,000 250, 00 Dec. St ati
oner 4,500
edb/ d  0 3 y 
2 Sales 35,260 8 Ondongo 6, 000 94,000
 
12 Waf ula 1, 200 58,800 15 Salaries 34,000
 
25 Bank 50,000 25 Cash( C1) 50,000
(C1)  
28 Any ang 7, 500 67,500
o  
30 Cash 52,800 30 Bank( C2) 52,800
(C2)  
30 Balance 13,700 320, 36
c/d  0
8,700 105, 00 464, 36 6000 105, 00 464, 36

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 0 0 0 0
Jan1 Bal
anc 13,
700 320,
36
eb/d 0

22. b) Thef oll

owingt
ri
albal
ancewasext r
act
edfrom thebooksofMawegoTr s31st
ader
December2010.
MAWEGOTRADERS
TRIALBalanceasat31stDecember,
2010
Dr Cr
(shs) (shs)
Grosspr ofi
t 380,
000
Closingstock 274,000
Capital 259,
000
Drawi ngs 83,000
Creditors 93,
000
Premi ses 103,000
Debtor s 123,000
Cashatbank 33,000
Bankl oan(2 50,
000
years)
Gener al 54,000
expenses
Commi ssi
on 20,
000
received
Wagesand 132,000
salari
es
802,000 802,
000

Prepar
e:
i
) Profi
tandlossaccountfort earended31stDecember2010. (
hey 4mks)
st
i
i) Balancesheetasat31 December2010. (
6mks)

i
)

MawegoTrader
s
Pr
ofi
tandLossaccountf
ort
heyearended31/
12/
2010

EXPENSES SH SH shs
Gener
alexpenses 54,000 Grosspr
ofitb/d 380,
000
Wagesandsalari
es132,000 186,000 Add:Commi ssi
onr
ecei
ved 20,000
Netpr
ofi
tc/d 214,000 400,000
400,000 400,000
Netprof
itb/d 214,000
(8t
icksx½=4mks)

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(
ii
) MawegoTr aders
BalanceSheet
Asat31stDecember2010
SH SH Shs Shs
FI
XEDASSET
Pr
emi
ses 103,
000 Capi
tal 259,
000
Add:
Netpr
ofi
t 214,
000
CURRENTASSETS 473,
000
St
ock 274,
000 Less:
Drawi
ngs 83,
000
Debt
ors 123,
000 Netcapi
tal 390,
000
Cashatbank 33,
000 430,
000 Longt
erml
i
abi
l
ity
Bankl
oan 50,
000
CURRENTLI
ABI
LITY
Cr
edi
tor
s 93,
000
533,
000 533,
000

23. b)Thef
oll
owi ngt rialbalancewasextr
actedf r
om thebooksofMzal
endoTr sasat31st
ader
Dec2011.
Mzal
endoTr aders
Tri
albal ance
st
Asat31 Dec.2011
A/ CTi tl
e Dr(Sh) Cr(Sh)
Fixedasset s 292,600
Cur rentasset s 78,000
Renti ncome 23,
000
Discount s 3,000 2,
000
Gener alexpenses 89,000
Car ri
agei nwar ds 28,000
Pur chases/ sal
es 280,000 474,000
Retur ns 4,600 7,
000
Stock01/ 01/2011 46,000
Drawi ngs 33,000
Cur rentliabil
iti
es 53,
000
Capi tal 295,200
854,200 854,200

ockon31stDec.2011wasSh.54,
St 000.

Requi
red:
i
) Pr epar
et r
ading,pr
ofi
tandlossaccount
sfort
hey ng31st December
earendi
2011. (8marks)
Cal
culate;
i
i) Rateofret
urnoncapit
alempl
oyed.
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(
2marks)
i
ii
)Rat eofstockturnov er. (1mar k)
i
v)Gr ossprofi
tmar ginasaper cent age. (
1mark)
24. b) Thefoll
owingt r
ansact i
onsr elatet oBusbul Tr
ader sforthemont hofDecember2011.
Dec1: Start
edabusi nesswi thSh. 200,
000i nt hebankaccount .
Dec2: Boughtf ur
nituref orSh.50, 000andpai dbycheque.
Dec3: Soldgoodsoncr edittoTi laSh.20,000, KatuSh.10,000.
Dec4: Boughtgoodsoncr edi
tf rom KahamaSh. 30,000,KangaSh. 40,
000.
Dec5: Returnedfaultygoodst oKahamaSh. 5,000.
Dec6: PaidKahamaonaccountbychequel ess10%cashdi scount.
Dec7: Receivedfaultygoodsf rom Kat uSh. 2,000.
Dec8: Receivedpay mentduef rom Ti l
aandKat ubychequel ess5%cashdi scount
.
Dec9: Cashsal esSh. 100,000.
Dec10: PaidwagesSh. 20,000bycashandel ectri
citySh.
10,000bycheque.
Dec11: Depositedal lcashi nhandi ntothebankaccount .
Requir
ed:
Prepar
eat hreecolumncashbookdul ybalanced (10marks)

25. (a) Thef ollowingTrial

Bal
ancer
elat
est
oKat
ibaTrader
sfort
heyearended31stJanuar
y
2008
Capital 220,
000
Land&Bui ldi
ngs 140,
000
Machi nery 43,
200
Furni
tur e 40,
000
Debtor s 156,
000
Creditors 100,
000
Openingst ock 2,
200
Bank 120,
000
Cash 18,
000
Sales 30,
800
Salesr et
urns 800
Purchases 16,
000
PurchasesRet urns 2,
400
Gener alExpenses 2,
400
Carri
ageI nwards 800
Carri
ageOut wards 1,
800
RentRecei ved 5,
000
Commi ssionReceived 2,
000
Salar
iesandWages 12,
000
Elect
ricit
y 1,
400
Insur
ance 3,
000
Postage 600
Drawings 2,
000
BankLoan 200,
000
TOTAL 560,
20 560,
20
0 0
Not
e: Cl
osi ockon31stJanuar
ngSt y2008wasv
aluedatKshs.5,
000.
,Pr
epar
e:

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(
i)Tr ading,ProfitandLossAccountf ortheyearended31stJanuary2008. ( 8mks)
st
(
ii
)Bal anceSheetasat31 Januar y2008. (4mks)
KATIBATRADERS
TRADI NGPROFI TANDLOSSACCOUNT
FORTHEPERI ODENDED31STJANUARY2008
SHS SHS.
Openi ngStock 2,200√ Sales
30,
800√
Purchases 16, 000√ LessSalesRet ur
ns
800√
Add: CarrInw 800√
30,
000√
16, 800
Less: Purch.Ret 2,400√ 14,400√
CostofGoodsav ai
lforsal e 16,600√
LessCl osingSt ock 5,000√
CostofGoodsSol d 11,600√
GrossPr ofitC/d 18,400√
30,000 30,000
Gener alExpenses 2,400√ GrossProfi
tb/ d
18,
400√
Carri
ageOut war ds 1,800√ Rentrecei
ved
5,000√
Salari
esandWages 12,000√ Commi ssi
onr ecei
ved
2,000√
Elect
r i
cit
y 1,400√
I
nsur ance 3,000√
Postage 600√
NetPr ofit 4,200√√
25,400√ 25,400
(
24ti
cksx1/ 3=8mks)
(i
i)
KATI
BATRADERS
BALANCESHEET
ASAT31STJANUARY2008

FixedAssets SHS. SHS.

LandandBuildi
ngs 140,
000√ Capi
tal 220,
000√
Machinery 43,
200√ Add:NetPr
ofi
t 4,
200√
Furni
tur
e 40,
000√ 224,
200
223,
200 LessDr
awi
ngs 2,
000√
CurrentAsset
s 222,
200
Stock 5,
000√
Debtors 156,
000√ LongTer m Li
abil
it
ies
Bank 120,
000√ BankLoan 200,
000√
Cash 18,
000√ CurrentLi
abil
it
ies
299,
000√ Credit
ors 100,
000√

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522,
200 522,
200

27. Thef
oll
owi
ngi
nfor
mat
ionr
elat
est
oNdhi
war
esor
ttr
ader
sfort
hemont
hofNov
ember2009:
-
November, 1. startedabusi nesswithshs160,000cash
2.Purchasesshs. 120,000
3.Madesal esi ncashshs. 126,
000
4.Paidforelectri
cityshs.1000incash
5.Receivedr entofshs.37500i ncash
6.Gavedi scountofshs. 6,
000incash
Required:- i )Posttheabov einformat i
onintherel
evantl
edgeraccount
sandbal
ance
them off
ii
i) Ext r
actat r
ialbalance

Dr. CAPI
TALA/
C Cr
.
Dec.31Bal
.b/
d160,
000 Dec.1A/C160,
000
JanBalb/
d160,000

Dr. CashA/
C Cr.
Dec.1Capi
tal 160,000 Dec.2Purchase120, 000
3sal
es 126,000 4el
ectr
ici
ty 1,000
5Rent 37,500 6comm. 6,000
7Balc/d 196,500
323,
500 323,500

Jan1bal
.b/
d 196,
500

Dr
. PURCHASEA/
C Cr
.
Dec.2Cash 120,000 Dec.30Bal
b/d120,
000
Jan.1 Bal
b/d120,
000

Dr
. SALESA/
C Cr.
Dec.30Bal
.b/
d 126,
000 Nov.3Cash126,000
Jan.1Bal
b/d126,000

Dr. ELECTRI
CITYA/
C Cr.
Dec.4Cash 1,000 Dec.30Balc/
d1,
000
Jan.1 Bal
b/d1,
000

Dr. RENTA/
C Cr.
Dec.30Bal
.c/
d 37,
570 Dec.5Cash37,500
Jan.1Bal
b/d37,
500

Dr. DI
SCOUNTA/
C Cr
.
Dec.6Cash 6,
000 Dec.30Bal
c/d6,
000

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Bal
b/d6,
000

NDHIWATRADERS
Tr
ialbalanceasat31stDec.2008
Ti
tl
eofAccount
s Debi t Credit
Capital 160,000
Cash 196,500
Purchases 120,000
Sal
es 126,000
El
ectrici
ty 1,
000
Rent 37,500
di
scount 6,
000
323,500 323,500

28. OnMar
ch2007,
Dor
ishadcashi
nhandshs.
87,
000andcashatbankshs.
25,
000.Dur
ing
thi
s
mont h,thef oll
owi ngt ransactionst ookpl ace:
nd
Mar ch2 : Cashsal esshs. 60,000
rd
3: Pai dsal ariesshs.101, 500bycheque
th
7 :Recei vedachequeofshs. 76,
000f rom Henryaf t
erall
owi
ngacashdi scountof
5%
13th:Boughtof f
icefurnit
ur ebychequeshs. 86,000
th
17 : Settlemar i
talaccountf orshs.34,200i ncashhav i
ngdeductedshs.8,000cash
discount
20th: Recei vedachequef orshs. 165,000i nrespectf orcashsales
nd
22 : Paidwagesshs. 25, 000i ncash
th
24 :Wi thdr ewshs. 32,000f orbankf orof fi
ceuse
th
25 : Withdrewshs. 4,
000cashf orper sonal use
th
29 : Recei vedshs. 17,
000cashf or m Alv i
ninsettlementofhisaccountlessshs.1000
cashdi scount
31st: Deposi tedallthemoneyi ntothebankexceptshs. 24,
600
Required:Pr epar eat hreecolumncashbookdul ybalanced
Date Det ai L. Di s Cash Bank Dat e Det ail
s L. Di s Cash Bank
ls F al low F pai d
ed
1/3/
0 Bal 87,
00 250, 0 3/ 3/0 Sal ar i
e 10150
7 Sales 0 00 7 s 0
2/3/
0 Henr 4,000 60, 00 13/ 3/ Fur nitu 8,
00 34, 20
7 y 0 76,00 07 r
e 0 0 86,00
7/3/
0 Sal es 0 17/ 3/ Mar ita 25,
00 0
7 Bank 1,000 165, 0 07 Wages 0

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20/
3/ Alv
in 00 22/
3/ Cash
07 Cash 32,
00 07 Drawi
n 4,
000 32,
00
24/
3/ 5,
000 0 272,
8 24/
3/ g 272,
8 0
07 16,
00 00 07 Bank 00
29/
3/ Balb/ 0 25/
3/ Balc/
d 24,
00
07 598,
8 07 0 379,
3
31/
3/ 00 31/
3/ 360,
0 00
07 360,
0 379,
3 07 00 598,
8
00 00 00
24,
00
0

31. Apet t
ycashierofMugi rangot r
ader soperateshi
spettycashbookonani mprestsystem
ofsh.2500.OnIFebr uary2009, hehadcashi nhandofSh.500andwasr ei
mbursedthe
di
ffer
encebyt hemaincashi ert
or estorehi
scashf l
oat.Thefoll
owingtransacti
onstook
pl
acedur i
ngthesamemont hofFebr uar
y2009:
Feb 2nd pai dt
axi faresh.150andwagessh250
4th Boughtf i
ver eamsofpaperf orsh25eachandst ampsf orsh.30
7th Pai dwagessh. 250andboughtenv el
opesf orsh.40
20th Boughtt eaf orstaffsh.70andpaidforwat erbil
l
ssh.56
28th Pai dforelectrici
tysh.80andst ampssh.40
Requir
ed:Prepareapet t
ycashbookusi ngthefoll
owinganalysiscol
umns;
•Wages
•Traveli
ng
•Stat
ioner y
•Post
age
•Miscell
aneous
PETTYCASHBOOK
Rece Dat
e Det
ail
s Vouc Tot
al Wages Tr
avel
i
n Stat
ione Post
a Miscel
l
aneo
i
pts h g ry ge us
No.

2009
500 Feb Balb/d
2000 1 Cash
“1 Taxifare 150 150
“2 Wages 250 250
“2 Reamsof 125 125
“4 paper 30 250 30
“4 Stamps 250
“7 Wages 40
“7 Envel
ope 70 40 70
“20 Staf
ftea 56 56
“20 Waterbill 80 80
“28 El
ectrici
ty 40 40
“28 Stamps 1091 500 150 165 70 206
1409
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2500 “
28 Bal
c/f 2500

32. Recordthef ol
l
owingtransact
ionsintherelevantl
edgeraccount
s,balancetheaccount
andextractatri
albal
ance
Dat e Transacti
on
1/4/2007 Mar yst
artedbusinesswi t
hshs.80,
000cash
2/4/2007 Boughtstati
oneryf orshs.
4,000andpaidi
ncash
3/4/2007 Openedabankaccountanddeposi tedshs.
50,000from thecashti
ll
4/420007 Boughtmot orvehicleworthshs.
250,000f
rom Lucymot orsoncredi
t
5/4/2007 Boughtpostagest ampsf orshs.
60incash

33. Thefol
lowingtr
ansact ionsr elat
et oFurahat rader sforthemont hofJuly,
2008
July1 :Balancebr oughtdowncashsh. 16,250andBankShs. 19,847
July2 :Soldgoodswor t
hShs. 1,348t oPat elandr eceiv edacalculat
orinexchange
July5 :Paidt ranspor tbychequeShs. 2,000
July6 :Issuedachequet oKer i
oTr ader sset ti
ngani nv oi
ceforShs.10,
000
deduct
ing2%
cashdi scount
July10:Transf erShs. 15000f rom casht i
lltobank
July12:Soldgoodsf orcashShs. 12,000l ess2%cashdi scount
July13:Soldgoodst oOny angooncr editwor thShs. 15, 000
July14:Theowneroft hebusinesswi thdr ewShs. 3000i ncashtobuyapr esentfor
hi
s
daught er
July16:Recei v edachequef r
om Kur i
aShs. 2,
500l ess5%cashdi scount
July22:Boughtf urniturefrom BabuTr ader soncr editwor thShs.16,
500andcash
discountof10%i fpay menti smadewi t
hin2weeks
July24:Wi t
hdr ewcashf rom bankf orof fi
ceuseShs8, 000
July26:Theownerbr oughti ntothebusi nessShs. 9,000cash
July27:I
ssuedachequet oBabuTr ader sf oramountdue
July28:Soldgoodst oKur i
awor thShs. 5,000f orShs. 3,800andr ecei
vedpaymentby
cheque
July30:Bankedal lcashandr emai nedwi thShs. 100i nt hecashtil
l
Requi
red;Pr
epar
eFur
ahaTr
ader
sthreecol
umncashbookf
ort
hemont
hofJul
y,2008
FURAHATRADERS

CASHBOOK

DATE PARTI
CULARS D.
A CASH BANK DATE PARTI
CULARS D.
R CASH BANK

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2008 2008
Jul
y1 Bal
anceb/
d 16520 19847 Jul
y5 Transport 2000
6 Keri
ot r
aders 200 9800
10 Cash 15000
12 Sal
es 240 11760 10 Bank 15000
16 Kuri
a 125 2375 Drawi
ng 3000
24 Bank 8000 14
26 Capi
tal 9000 Cash 8000
28 Sal
es 120 3800 24 Babutr
ader
s 1650 14850
30 Cash© 0 18320 27 Bank© 18320
37320 67302 30 Bal
ancec/d 1000 32652
Bal
anceb/
d 156 1000 32652 1850 37320 67302
5

34. Journali
zethefol
lowi
ngtransacti
onswhi chtookpl aceint hebusinessofW.Wanj al
adur i
ng
themont hofJune2009:-
June1 Bal
anceB/ ffrom May2009wer e: -
Off
icef
urnit
ureshs.50,000andmot orvehicleshs.100,
000
June2 Purchasedof fi
cef urni
tureoncr editforshs.65,
000f rom Mwema
fur
nit
ure
June10 Soldanol dvehicleoncr edittoOmwami garagef orshs.
200,000
June25. Discoveredthatamot orvehiclethathadbeenboughtoncr editfr
om
Kany er
emot orforKshs. 750,000, hadbeenr ecordedinpurchases
account
June28 Soldanol dcomput ert
ocl assicacademyoncr editf
orksh.15,000
June29: Soldanol dtractorwhosebookv alueisKshs.200, 000for
Khs.
250,000
toGoseta
thegener
alj
ournal
Dat
e Part
icul
ars Fol
io Dr
(sh) Cr(
sh)
s

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com
2009June FurnitureA/ C G.
L 50,
000
Mot orv ehicle G.
L 100,
000
(Arecor dofopeni ngbal anceofasset s)
2009June2 FurnitureA/ C G.
L 65,
000
Mwemaf urnit
ureLtd G.
L 65,
000
(Beingar ecordofof ficefurnit
ureboughton
creditfrom Mwemaf urnit
ureLtd)
2009June10 Omwami garageA/ C G.
L 200,
000 200,
000
CMot orv ehicleA/ C G.
L
(bei
ngar ecordofcr editsaleofmot orv ehi
clet
o
Omwami garage)
2009June25 Mot orv ehicleA/C G.
L 750,
000
Purchases 750,
000
(Beingacor r
ecti
onofaner r
orofprinciple)
2009June28 ClassicacademyA/ C G.
L 15,
000 15,
000
Comput erof fi
ce
EquipmentA/ C
(Beingar ecordoft hecomput ertoclassic
2009June29 academy ) G.
L 250,
000
Goset af arm A/ C 200,
000
TractorA/ C 50,
000
Trainondi sposal ofoldt r
actor
(Beingar ecordofoldt ractortoGoset afarmsat
apr ofit
)

35. On1stJune2009, Ny amiraTr ader shadcashi nhandshs. 87,

000andcashatbank
Shs.
250,000.
Duri
ngthemont h,thef oll
owingt ransactionst ookpl ace:-
2009June2: -Cashsal esshs.50, 000i ssuedRecei ptNo. 063
3:-Paidsal ari
esandwagesshs. 101,500bycheque; chequeno.083
6:-Recei vedachequef orshs. 76,800f rom Kemunt o,afterall
owingheracash
discount
of4%i ssuedar ecei ptNo.064
12: -SettledOmwabo’ saccountofshs. 40,000incash, havingdeduct
edshs. 800
cash
discount .Receiv edr eciptno.0656
18: -Wi t
hdr ewshs. 30, 000f rom bankf orof f
iceuse
21: -Recei vedshs. 16,500cashf rom Manwar i
insettl
ementofhi saccountless
shs.
660
cashdi scount.Recei ptNo.065
22: -Boughtof f
icefur nit
ur ebychequeshs. 85,000.ReceiptNo.734
23: -Pai dwagesShs. 24,000i ncashr ecei ptNo.801
28: -Withdr ewshs. 5000cashf orprivateuse
30: -Recei vedachequef orshs. 150,000i nrespectofcashsal es.ReceiptNo.066
Requi
red:Pr epar e:-(i)Acashr ecei ptsjournal
(i
i
i) Acashpay mentj our nal

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com

Cashreceiptj
our
nal
Date part
icular
s Recei
pt Ledger Di
scoun cash Bank
2009 number fol
io t
al
lowed
June2 sal
es 063 50000
6 Kemunt
o 064 3200 76800
18 Bank C 30000
21 Manwor
i 065 660 16500
30 Sal
es 066 150000
3860 96500 226800

(
iv)

Cashpaymentj
our
nal
Date par ti
cul
ars Recei
pt Ledges Discount cash bank
2009 number fol
io recei
ved
June3 Salar
y 083 101500
12 &wages 0656 800 39
18 Omwabo C 200 30000
22 Cash 734 85000
23 Furni
ture 801
26 Wages 24
drawings 800 000 216500
5
000
68
200
(
v)

36. Thef ollowingi

satri
albal
anceofJAOt
radersasat31/
12/
2009
Dr Cr
(Shs) (Shs)
Capital 170000
Openi ngst ock 60000
Equipmentatcost 125000
Purchases 161000
Sales 208000
Discount s 2000 8000
Retur ns 27000 25000
Salaries 20000
Telephonechar ges 5000
Wat erbi ll
s 2100
Credit ors 15100
Debt or s 21000
El
ect ricit
yexpenses 2000
I
nsur ancepai d 1000
426000 426000

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ls,
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tedCPA,
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NEB,
Hig
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&Pr
ima
ryNot
es.0714497530 248
i
saboke
mic
ah@g
mai
l.
com
Addi
ti
onalinformation
i
. Closi ngstockwasv al
uedatShs.
72000
i
i
.Tel ephonechar gesprepai
dwasShs.1000andout
standi
ngwaterbi
l
lswasShs.
1300
ii
i
.Depr eci
ati
ononequi pmentis10%p.
aoncost
iv
.Car riageinwardswasShs.11000andcarri
ageout
wardsShs.
10000
Prepar
etradi
ngandpr
ofi
tlossaccountf
ort
heyearendi
ng31/
12/
2009
JAOTRADERS
TRADINGANDPROFI T&LOSSACCOUNT
FORTHEYEARENDI NG31/ 12/
2008
DR
CR
Openi
ngst ock 60000 Sales 208000
Addpurchases 161000 Lessret
urnsi
n 27000
Addcarri
age 11000
172000 181,
000
Lessretur
nsout (
25000) 147000
G.A.F.
S 207000
Lessclosi
ngstock (72000)
Costofsales 135000
Grossprofi
tc/d 46000
181000

Expenses 181000
Discountal l
owed 2000
Salaries 20000
Tel char ges 5000 Grossprofi
t 46000
Lesspr epaid 1000 4000 Discountr
ec 8000
Wat erbi ll
s 2100 Netlossc/
d 800
Addaccr ued 1300 3300
Electricityexpenses 2000
Carriageout 10000
Insurancepai d 1000
10
Deponequi l( /100x125000) 12500

54800

Netl
ossb/
d 800 54800

38. Thefoll
owi
ngextractedfr
om thebooksofMogusi iLtd.2005
March1. Creditpurchasesfrom ObwochaSi t1200
Agwat ash.3,000andNy auambash. 2,500
March5 Creditsal
estoOker oSit2,
000,Mi chiekash. 4,
300andOmwengash.1500
March10 Creditpurchasesfrom OnyanchaSh. 2700
Obwochash6600andOmbaki sh.3300
“20 ReturnedgoodstoObwochash. 250andOny ancha703

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com
26 Credi
tsal
estoBundish.850.Tendush.630andOkero-
sh.
900
“30 Goodswerer
etumedbyBundish.
I50andMichi
ekasi
tl
30
Requi
red: Ent
ertheabovet
ransacti
onsi
nthei
rrel
evantdaybooks
PURCHASESJOURNAL
Date Detai
ls I
nvoiceNo. Ledgerfol
io August
2005Mar
ch Obwocha 1200
1 Agwata 3000
“ “ Nyanamba 2500
1 Onyancha 2700
“ “ Obwocha 6600
1 Ombaki 3300
“ “ 1 19300
0
“ “ 1
0
“ “ 1
0
SALESJOURNAL
Dat
e Det
ail
s I
nvoi
ceNo. Ledgerf
oli
o August
2005 Okero 2000
March Micheka 4300
5 Omwega 1500
“ “ Bundi 850
5 Tendu 630
“ “ Okero 900
5 10180
“ “

PURCHASERETURNSJOURNAL
Dat
e Det
ail
s Invoi
ceNo. Ledgerf
oli
o August
2005Mar
ch20 Obwocha 250
“ “ 20 Onyancha 700
950
SALESRETURNSJOURNAL
Dat
e Det
ail
s I nvoi
ceNo. Ledgerf
oli
o August
2005Mar
ch Bundi 150
30 Mi
chi
eka 130
“ “ 3 280
0

39. Thef
ollowinginfor
mationwasextr
act
edf
rom Jar
ibut
r son31stDecember2009
ader
Stockturnover 5
Mar kup 25%

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ls,
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ryNot
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ah@g
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l.
com
Costofsales 60,
000
Cl
osingstock 8,
000
Requi
red: i
)Netsal
es
i
i
i)Aver
agestock
i
ii
)Openi
ngstock
i
v)Netpur
chases
Mar
kup = GP
Costofsal
es
¼= GP
60,
000
4GP =60,
000
GP = 15,
000.
i
) Netsal
es=Costofsal
es+gr
osspr
ofi
t
60,
000+15,
000=75,
000
i
i) Aver
agest
ock:st
ockt
urn=costofsal
es
Av.st
ock
5
/
1+60,000
AV
5AV+60,000
AV=12,000
i
ii
) Openi
ngst
ock.
AV=op.st+cl
.st
ock
2
24,
000=8000+opstock
Op.
stock=16,
000
i
v)Costofsal
es
op.
st+p–cl s
60,
000=16,000+p–8000
Pur
chases=42,000

40. Thefol
lowingt r
ialbalancewasext r
act
edfr
om Vumi
l
iat
radersas31stDecember2006
Dr Cr
Capital 125,
000
Purchases 45,000
Carriageonsal es 2,
000
Stock 25,000
Sales 120,
000
Carriageonpur chases 1,
200
Insurance 5,900
Salaries 12,450
Discountal l
owed/Di scountr
ecei
ved 3,400 1,
950
Debt ors/creditors 25,000 15,
500
Bank 14,500
Machi nery 128,000
262,450
262,
450
Addit
ionalinf ormat i
on:
-cl
osi ngst ock25, 000

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ryNot
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ah@g
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-
Out standingsalaries450
-
Insurance900hasbeenpai dinadvance
-
Depr eciatemachi neryby10%oncost
Requi
red:i)trading,pr
ofitandl ossa/c
ii
)Bal ancesheet
Vumili
aTraders
Tradi
ng,prof
itandlossaccount
Fortheyearending31stDecember2006.

Openi
ngStock 25,
000 Sal
es
120,
000
Add.Pur
chases 45,
000
70,000
Add.Carri
ageonpurchases 1,
200
Costofgoodsold 71,200
Less.Cl
osingstock 25,000
Costofsales 46,200
Grossprofi
tc/d 73,800
120,
000 120,
000
Expenses
Carri
ageonsal es 2,
000Grossprofi
tb/d 73,800
Discountall
owed/ 3,
400Add:Disrecei
ved 1,950
Insurancepaid 5,
900
LessPr epai
d 900
5,
000
Sal
ari
es 12,450
ADDOutst
andi
ngsal
ari
es450
12,
900
Machi
nery 12,
800
Tot
alExpenses 36,
100
Netpr
ofitc/
d 39,
630
75,
730 75,
730

Vumi l
i
aTr
aders
Bal
ancesheet
st
ASAT31 December2006

Machiner
y 128,
000 Capit
al 125,000
LESSDeprec 12,
800 Add.NetPr
ofi
t 39,630
115,200 164,630
Stock 25,000
I
nsurancepr
epai
d 900
Debtor
s 25,000 cr
edit
ors 15,
500
Bank 14,500 out
standi
ngsal
ari
es 450

180,
600 180,
600

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com

41. Thef
oll
owi
ngbal
ancesheetwaspr
epar
edbyt
heaccount
scl
erkofMapat
otr
ader
s:-

Mapatot r
ader
s
Balancesheet
Asat31stdec2009
Fi
xedasset s
Landandbui l
ding 300000 capit
al 422930
Furnitur
eandf itt
ings 51500 +netpr ofi
t220500
Machi nery 140000 643430
Mot orvehicl
e 190000 -dr
awi ngs175000
681500 468430
Currentassets l
ongt er
ml i
abili
ti
es
Stock 124500 mor tgagel oan30000
Debt ors 103650 bankl oan 400000
Cashatbank 54850 430000
Cashathand 3650 currentli
abil
it
ies
286650 cr
edi
tors 99730
968150 968150
Requi
rement
s:
Cal
culat
et hef
oll
owi
ng
i
)Wor kingcapital i
i
)
Returnoncapi t
al i
i
i)
Currentrat
io
iv)Capitalemployed v
)
Borrowedcapi t
al
i
)Wor
kingcapi
tal
Wor
kingcapital
=cur r
entassets-
curr
entl
iabi
li
ti
es
CA=st ock+debtors+cashinhand+cashatbank
=124500+103650+54850+3650=sh286650
CL=cr
editors=99720
∴W.C=286650- 99720 =sh186, 920

i
i
)Ret
urnoncapi
tal
Returnoncapi t
al=netprofi
tx100
Capitali
nvested
=220500x100
422930
=52%
i
i
i)Curr
entrati
o
i
v)Capi
talemployed
Capi
talemployed=capitalowned+l ongli
abil
i
ty
=468430+400000=868430
Or
=fixedasset s+workingcapital
=481500+186930=868, 430

v)Bor
rowedcapi
tal

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Bor
rowedcapit
al=l
ongtermliabi
l
iti
es
=mor t
gageloans+bankloan
=300000+100000 =sh400000

42. Thef ol
lowinginf
or mat i
onwasext ract
edf r
om booksofChungaTr
ader
sfort
heper
iod
endi
ng
31/
12/2000:-
Fi
xedasset s–350, 000
Drawings–50, 000
Credit
or s–50, 000
Cash–60, 000
Discountr ecei ved4,000
Rent–12, 000
Bankov erdraft–10, 000
Debtors–20, 000
Stock( 31/12/ 2000)-30,
000
Commi ssionr eceived–6, 000
Grosspr of i
t–80, 000
El
ectricity–3, 000
Stock( 11/1/ 2000)–50, 000
Salari
es–20, 000

a)Pr
( epar
e:- (
i)Thei
rpr
ofi
t&l
ossaccount

ChungaTraders
Pr
ofit&LossA/C
Fort
hePer
iodEnding31/12/
2000

Kshs Kshs
Sal
ary 20,
000 Grossprof
it 80,
000
Rent 12,
000 Di
scountrecei
ved 4,
000
El
ectr
ici
ty 3,
000 Commi ssi
onrecei
ved 6,
000
NetProf
it 55,
000

90,
000 90,
000

ChungaTrader
s
Bal
anceSheet
AsAt31/12/2000

Kshs. Kshs.
Capit
al- 395,000
Fi
xedAsst
s 350,
000 +NetPr ofi
t 55, 000
-Drawings 50,000
Cash 60,
000 ClosingStock400,000
Debt
ors 20,
000 Bankoverdraf
t10,
000

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ls,
Upda
tedCPA,
KAS
NEB,
Hig
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&Pr
ima
ryNot
es.0714497530 254
i
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mic
ah@g
mai
l.
com
St
ock 30,
000 Cr
edi
tor
s 50,
000

460,
000 460,
000

(
i)Wor
kingCapi
tal=CA-CL
=110,
000–60,
000 =50,
000
(
ii
)C.Empl
oyed =FA+WC

=350,
000+94,
000 =444,
000

43. Thef ol
l
owi
ngbal
anceswer
eext
ract
edf
rom t
hebooksofNy
amai
yaTr
ader
son
st
31 May2009:
-
shs.
Grosspr of i
t 400,
000
Equipment 900,
000
Furniture 500,
000
Provisionf ordepr eci
ati
ononf
urni
tur
e 65,
000
Power&l ight i
ng 24,
000
Commi ssionr ecei
ved 170,
000
Stock( 31.05. 09) 35,
000
Gener alexpenses 240,
00
Debtor s 350,
000
Provisionf orbaddebt s 3,
000
Creditors 550,
000
Discount sal l
owed 29,
000
Discount sr eceived 40,
000
Cashi nhand 150,
000

Addi
tionali
nformat i
on
(
i)Depreci
ationtobepr ovi
dedasf ol
lows:–Equi pment20%oncost
–Furnit
ure10%onbookval
ue
(
ii
)Adjustprov i
sionf orbaddebtstoshs. 3500
(
ii
i)Commi ssionr eceivedi
nadv anceamount edtoshs.10,000
st
Requi
red:Prepare:
-(i
)Pr ofi
tandl ossaccountforthey earended31 May2009
st
(ii
)Bal ancesheetasat31 May2009

Nyamaiy
aTr aders
Pr
ofi
t&LossAccountf ortheyearended31stMay2009
Depr eci
ation:Equipment Grossprofit 400,000
180,000 Commi ssionrecei
ved
Furnit
ure 43,
500 170, 000
Power&l ightni
ng 24,000 Less: Advance 10,000 160,000
Gener alexpenses 240,000 Discount srecei
ved 40,000
I
ncr easeinpr ovisi
onforbaddebt
s
500
Discount sall
owed 29,
000

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ls,
Upda
tedCPA,
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Hig
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&Pr
ima
ryNot
es.0714497530 255
i
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mic
ah@g
mai
l.
com
Netpr
ofi
tc/
f 83,000
600,000 600,
000

NyamaiyaTraders
Balancesheetasat31stMay2009
Fi
xedassets Capi
tal 1,
000,
000
Equi
pment 900,000 ADD:netpr
ofit 83,000 1,
083,
000
LESS:Depr
eciat
ion 180,000
720,
000 Currentl
i
abi
l
iti
es
Advancecommi ssi
onr
ecei
ved 10, 000
Furnit
ure 500,
000 Credit
ors 550,
000
LESS: Depr
eci
ati
on 108,500
391,500

CurrentAssets
Stock
35,000
Debtors 350,
000
LESS: Pr
ovisi
on 3,
500
346,500
Cashi nhand
150,000
1,
643,
000
1,
643,
000

44. Thef
oll
owi
ngt
ri
albal
ancewasext
ract
edf
rom t
hebooksofFul
aTr
ader
sonDec.31,
2005

FULATRADERS
TRIALBALANCE
ASATDEC.31, 2005
Dr. Cr.
Shs. Shs.
Sales 600,000
Gener alexpenses 60,000
Rentexpenses 10,000
Commi ssionrecei
ved 20,000
Mot orv ehi
cle 600,
000
Furniture 240,
000
Cash 50,000
Creditors 180,000
Debt ors 120,
000
Purchase 400,
000
Salesr etur
ns 20,000
capital 700,000

Nove
ls,
Upda
tedCPA,
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NEB,
Hig
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&Pr
ima
ryNot
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mic
ah@g
mai
l.
com

1,
500,00
0 1500,
000

Additi
onali nformati
on
I.StockatDec.31,2005wasval
uedatshs.
60,
000
II.Depreci
ati
ontobeprovi
dedasfol
l
ows:
(a)Mot orv ehi
cle20%perannum oncost
(b)Furniture10%perannum oncost
Requi
red:
-
(i
)Tr adingprof
itandlossaccountfortheyearendedDec.31,2005
(i
i)BalancesheetasatDec.31, 2005
45. Thef
oll
owingi nfor
mat i
onrelat
estoJoyTr adersfort
hey earendedDec.31,
2006
Turnov er 270,000
Mar gin 40,
000
Rateofst ockturnover 6times
Expense 40,000

Cal
cul
ate: (i)Grossprofi
t
(i
i)Costofsal es
(i
ii
)Netpr ofit
(i
v)Averagest ock
(
v)Mar
k–up
46. Thef
ollowinginformationr
elat
estoKipgaat
rader
sfort
hey
ear2006:
-
Kshs.
Turnover 270,
000
Mar gi
n 40%
Rateoft urnover 6ti
mes
Expenses 40,
000
Fr
om t
heinfor
mat
iongivenabove,
Cal
cul
ate: (i
)Grossprof
it
(
ii
)Costofgoodssold
47. Thef
ollowingi nformationrel
atest
oLadophar maChemi
stasat30t
hNov ember2008
Dr(shs) Cr(shs)
t
h
Stock( 30 Nov2007) 23910
Capital 30955
Drawi ngs 8420
Bank 3115
Cash 295
Debt or s 12300
Credit ors 9370
Mot orv ehicl
es 4100
Equipment 6250
Sales 130900
Purchases 92100
Retur nsi nwards 550
Carriagei nwards 215
Retur nout wards 307

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Carr
iageoutwards 309
Motorexpenses 1630
Rent 2970
Tel
ephonechar ges 405
Wages 12810
I
nsurance 492
Off
iceexpenses 1377
Sundryexpenses 284
171532 171,
532
ockasat30thNov
St ember2008wasshs27475

Requi
red:pr
epar
e
i
)Thet
rading,
profi
tandl
ossaccount
i
i
)Abalancesheetasat30thNov
ember2008

LADOPHARMACHEMI ST
TRADINGRPOFI TANDLOSSA/ C
t
h
Fort
heyearended30 June2008
Shs. Shs.
Openingstock Sal
es 130,
900
23,
910 Ret
urninwar
ds 550
Purchase
92,
100 130,
350
Ret
ur nsoutwards 307 Gr
osspr
ofi
tb/
d 41,
907
91,
973
Carri
ageinwards
215
115,
918
Sl
owi ngst
ock
27,475
Costofsales
88,443
Grossprof
itc/d
41,907
130,
350

Carr
iageoutwards
309
Moorexpenses 41,
907
1,
630
Rent 2,
970
Tel
ephonechar ge
405
Wages 12,
810
I
nsurance 492
Off
iceexpenses
1,
377
Sundryexpenses

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284
Netpr
ofi
tc/
d
21,
630
41,
907

l
ODAPHARMACHEMI
ST
BALANCESHEET
Asat30thJune2008
Capit
al 30, 955 Fixedassets
Netprofi
t 21,
630 52,630 Equipment 6,
250
Drawings 8,
420 Mot orvehi
cle 4,100 10,
350
44,
165
Currentl
i
abi
l
iti
es Currentasset
s
Credit
ors 9,370 Stock 27,
475
Debt or
s 12,300
Bank 3,
115
Cash 295
43,
185
53,
535 53,
535

48. Thef
oll
owingi sat ri
albalanceofJAOtrader
sasat31/12/
2009
Dr Cr
(Shs) (Shs)
Capital 170000
Openi ngst ock 60000
Equipmentatcost 125000
Purchases 161000
Sales 208000
Discount s 2000 8000
Retur ns 27000 25000
Salaries 20000
Telephonechar ges 5000
Wat erbi l
ls 2100
Credit ors 15100
Debt or s 21000
El
ect ricit
yexpenses 2000
I
nsur ancepai d 1000
426000 426000
Addi ti
onali nfor
mat ion
(i
) Closingstockwasv al
uedatShs.
72000
(i
i) Tel ephonechar gespr
epaidwasShs.
1000andoutst
andi
ngwaterbi
ll
swas
Shs.1300

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(
ii
i) Depreci
ati
ononequi
pmentis10%p.
aoncost
(
iv) Carr
iageinwar
dswasShs.
11000andcar
ri
ageout
war
dsShs.
10000
Pr
epar
etr
adi
ngandpr
ofi
tlossaccountf
ort
heyearendi
ng31/
12/
2009
JAOTRADERS
TRADI
NGANDPROFIT&LOSSACCOUNT
FORTHEYEARENDING31/
12/
2008
DR CR
Openi
ngst ock 60000 Sales 208000
Addpurchases 161000 Lessret
urnsi
n 27000
Addcarri
age 11000 181,
000
172000
Lessretur
nsout (
25000)
147000
G.A.F.
S 207000
LESSclosingstock
(72000)
Costofsales
135000 181000
Grossprofitc/
d
46000
181000 Grossprofi
t 46000
Discountr
ec 8000
Expenses Netlossc/
d 800
Discountal l
owed
2000
Salaries
20000
Tel char ges 5000
Lesspr epaid 1000
4000
Wat erbi ll
s 2100 54800
Addaccr ued 1300
3300
Electricityexpenses
2000
Carriageout
10000
Insurancepai d
1000
10
Deponequi l( /100x125000)
12500
54800

Netl
ossb/
d
800

49. Thef
oll
owi
ngt
ri
albal
ancer
elat
est
oJakobur
aStor
es
DR CR

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Grosspr of
it 85,
000
Debt ors 95,
500
Mot orv ehicl
e 150,000
Furnitur e 30,000
Bank 62,000
Stock 52,500
Prov i
si onfordepr eciat
ionon
Mot orv ehi
cle 16,
000
Prov i
si onofdepr eciati
onon
Furnitur e 2,
620
Salaries 64,
000
Building 180,000
Gener alexpenses 45,
200
Credi tors 75,
000
Commi ssionreceived 42,
800
Equipment 55,
200
El
ect ricity 15,
420
Capi tal 528,
400
749,
820 749,
820

Addi
ti
onalinformat ion
(i
)Pr ofi
tmar ginwas20%
(i
i)Stockasat1stJanuar ywasv al
uedatKsh.48,
000
(i
ii
)Depr eci ationwaspr ovi
dedasf ol
l
ows:
(a)Mot orv ehi
cle25%p. aoncost
(b)Fur niture7%p. aoncost
st
(i
v)On31 Dec2006, equipmentwasv al
uedatKsh.48,
576andgeneralexpenses
out standi ngwer eKsh.1, 200
(v)Abi ll
ofKhs. 340whichwaspai dforapri
vateresi
dencewasi
ncludedinthe
el
ect ri
cit
y
account.
Requi
red:
-. Pr
epar
eat
radi
ngpr
ofi
tandl
ossaccountf heyearended31stDec2006
ort
JAKOBURATRADERS
PROFITANDLOSSA/CFORTHEYEARENDED
31/
12/
006
SHS SHS SHS SHS
Openingstock 48000 sal
es 425
000
purchases 344
500
Costofgoodsav ai
l
abl
efor 392
sal
es 500
Lessclosi
ngstock 52500
Costsofgoodssold 340
000
Grossprofi
tc/d 85000

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425 425
000 000
sal
ari
es 4520 Grosspr
ofi
t 85
0 b/d 000
Addgeneral
expanses 1200 46400 commissi
on 42
accr
ued 800
el
ectr
ici
ty 1524
0
Lessdr awing 340 15080
depreciati
on
Mot orvehicles 37500
150000x25/ 100
Furnit
ure30000x7/ 100 2100
Equipment (55200-
48576) 6624
Netpr ofi
tc/d 20096
127 12780
800 0

50. Thef
ollowingi nformat i
onrelat est oOdongoTr
ader
sfort
hey
earended31.
Dec.2008.
Land shs. 50,000
Capital shs. 94, 000
Machi nery shs. 20,000
Mot orv ehicl
es shs. 30,000
10y earbankl oan shs. 20,000
5y earAFCl oan shs. 10,000
Stock shs. 10, 000
Debt ors shs. 6,000
Creditors shs. 6,000
Accruedexpenses shs.2,000
Cashatbank shs.10,000
Cashi nhand shs.2,000
Drawi ngs shs.4,000

Requi
red:
i ancesheetasat31stDec.2008
)Abal
i
i
)Cal
cul
ate-borrowedcapit
al
-
currentrat
io
-capital
owned
Odongotrader
s

ancesheetasat31stDec2008
Bal
F.A
Land 50,000 Capi
tal 94,
000
Machi nery 20,000 Lessdrawi
ngs 4000
M/vehi cl
es 30,000 90,000
100000 Longtermliabi
l
iti
es
Currentasset
s 10yr
sl oan 20,000

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Stock 10,
000 5y
rsAFCl
oan 10,
000
Debtors 6,
000 30,
000
Cashatbank 10,000 Shortter
mloan
Cashathand 2,
000 Credi
tors 6000
28,000 Expenseoccur
red 2,
000√
8,
000

128,
000

128,
000
i
i)cal
cul
ate-
Bor
rowedcapi
tal=l
ongt
erml
iabi
li
ti
es
=20,
000+10,
000
=30,
000 -curr
entr
ati
o
Cur
rentasset
s:cur
rentl
iabi
li
ti
es
28,
000:
8000
28:8
7:
2 -
capi
talowned
C=A-
L
=128,
000-
38,
000=90,
000
Or
Capi
tal
-dr
awi
ngs
94,
000-
4000=90,
000

51.Thef
oll
owingTri
albal
ancewaspr
epar
edf
rom t
hebooksofPakaTr sasat31st
ader
December1995.

Tr
ialbalanceDecember31st1995
Dr. Cr.
Kshs Kshs
Sales 900,
000
Purchases 600,000
Returnsi nwards 80,000
Returnsout wards 20,
000
Carri
agei n 40,
000
Carri
ageout 3,
000
Stock( Jan) 100,000
Rent 60,000
Creditors 170,000
Debtor s 120,000
I
nterestexpenses 18,000
Gener alexpenses 7,000
Capital 178,000
1,
268, 000
Creditors 240,
000
6226000 6226000

Addi
ti
onal
inf
ormat
ion

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ockasat31stDecemberwas100,
St 000
i
. Pr epar
eTr ading,
profi
tandLossaccountf ort
heper
iodended31December1999
i
i. Calcul
atereturnoncapital
,cur
rentrati
oanddebt
or’
srat
io (
10mar
ks)
PakaTr aders
TradingProfi
tandLossAccount
Asat31December1995

Dr Kshs Cr
. Kshs

OpeningStock 100,
000 Sal
es 900,
000
Purchases 600,
000
Purchasesret
urns 20,
000
Sal
esRet
urns 80,
000
Tr
anspor
tat
ioni
n 40,
000
820,
000
Cl
osingSt
ock(
135,
000)
G.
P.c/d 235,
000
920,
000
Expenses
Carr
iageout 3,
000
Rent 60,
000
I
nterestExpenses 18,
000
GeneralExpenses 7,
000
N.P.
C/d147,000
235,
000 235,
000
b) N.
P.Bb/d 147,
000

52. Thefoll
owi ngtri
albalancewasext r
actedfrom thebooksofMaringot
r son31st December2001
ader
MaringotradersTr
ialBalanceasat31stDecember2001
GrossProfit 380,
000
Closi
ngstock 274,000
Capit
al 259,
000
Drawings 83,000
Credi
tors 93,
000
Premises 103,000
Debtors 123,000
Cashatbank 33,000
Bankloan( 1yr) 50,
000
Generalexpenses 54,000
Commi ssionreceived 20,
000
Wagesandsal ari
es 132,000
802,000 802,
000
Prepare
a) ProfitandlossAccountfort heyearended31stDecember2001
b) Balancesheet

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Mar
ingoTrader
s
Pr
ofi
tandlossaccountasat31December2001
Dr Kshs Cr
. Kshs

Salari
esexpense 132,
000 Grosspr
ofi
t 380,
000
Generalexpense 54,
000 Comm.Receiv
ed 20,
000
N.P.c/d 214,
000

400,
000 400,
000

N.
P.c/
f214,
000

Mari
ngoTrader
s
BalanceSheetAsat31December2001
Dr Kshs Cr. Kshs
Premises 103,
000 Capital 259,
000
Netpr of
it 214,
000
Drawings (83,
000)
C.Assets C.Liabil
it
ies
Stock 274,000 Creditor
s 93,
000
Debtor
s 123,000 Bloan 50,
000
Cashatbank 33,000
533,000 533,
000

53. Thef
ollowinginf
ormati
onwasextr
actedfr
om t
hebooksofSar
aiTr
ader
sfort
hey
ear ended
30April2003
Sales 480,
000
Openi ngst
ock(1.
5.02) 80,
000
Grosspr of
iti
scal
culat
edat25%

i)Pr
epareatradingaccountfortheperi
odended30Apr
il2003
ii
)Calcul
atetherateofst
ockt ur
nov er (
10mar
ks)
SaraiTr
ader s
Tr ngAccountAsat30thApr
adi il2003
Dr Kshs Cr. Kshs
Openingstock 80,
000 Sales 480,000
Purchases 400,000
480,000

Cl
osi
ngst
ock (120,000)
360,000
N.
Pc/
d 120,000
480,000 480,
000

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(
ii
)Rat
eofst
ockt
urnov
er= C.O.S
Av
eragest
ock

Averagestock=80,
000=120,0000=100,
000
2
C.O.
S =360, 000
RateofStocktur
nover=360,
000=3.
55
100,
000

54. Thef oll

owinginformat
ionr
efer
stoteat r
ader
sfort
hey
earended31/
12/
04
Sales 800,000
Expenses 10,
000
Commi ssionreceiv
ed 15,000
Purchases 700,
000
Openi ngstock 250,000
Mar gin 20%

Pr
epar
etr
adi
ng,prof
it&lossa/cfortheyearended31/
12/
04
TeaTraders
Tradi
ng,Profi
t&LossAccount
Fortheyearendi
ng31/ 12/04
Kshs Kshs

OpeningStock 25,
000 Sal
es 800,
000
Addpurchases 700,
000
GoodsAv ail
abl
e 725,
000
Cl
osingstock 85,
000
Costofsales(20/
100x800,
000 640,
000
GrossProfi
t 160,
000
800,
000 800,
000

55. Thef ollowingbal anceswereext

ract
edf r
om booksofMot
opTr
ader
sfort
hey
ear
ended31/ 12/2004
Rent 48,
000
Li
ght ing 7,
200
Wat er 9,
220
Salaries 75,
000
Commi ssionr eceiv
ed 8,
500
Discountal lowed 4,
600
Discountr eceived 8,
500
Grosspr ofit 320,
000
Gener alExpenses 98,
000
Stock 5,
250
Mot orVehi cle 2,
300,
000
Furniture&equi pment 650,
000
Debt ors 270,
000
Creditors 396,
400
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com
Bank 200,
000
Cash 50,
000
Capi
tal 3,
000,
000

Prepar e:
Profitandlossa/cf
ort heyearended31/12/2004
Balancesheetasat31/ 12/2003 (
12mar
ks)
MolopTraders
Profi
tandlossAccountfortheyearending31/12/04
Expenses 48,000 GrossProfi
t 320,
000
Li
ght i
ng 7,200 Commi ssi
onrecei
ved 9,
870
Wat er 9,220 Di
scountrecei
ved 8,
500
Salari
es 72,500
DiscountAl l
owed 4,
600
Gener alexpenses 98, 000
NetPr of i
t 338,370 338,
370

MolopTrader
s
Bal
ancesheetasat31/12/04
Fi
xedassets Kshs Kshs Kshs
Fur
nit
ure 650,
000 Capit
al 3,000,
000
Motorvehi
cle 2,
300,
000 Addpr of
it 98,890
3,098,
850
Cur
rentl
i
abi
l
iti
es
Currentasset
s
Stock 25,
250
Debtors 270,
000 Cr
edi
tor
s 396,
400
Bank 200,
000
Cash 50,
000
3,
495,250 3,
495,
290

56. Thefoll
owingbalanceswer eextr
act
edf
rom t
hebooksofChomboWhol esal
ersf
or
theyearended31Dec2005.
Shs.
Sales 500,000
Purchases 320,000
Openingstock(1.1.
2005) 80,000
Closi
ng31.12.2005 40,000
Debtors 140,000
Credit
ors 90,000
Cal
culat
e
a) mar gi
n
b) Currentr
ati
o
c) Rateofstockt ur
nover (4mar
ks)

(
a)Mar
gin=G.PX100 = 500,
000-
(320,000-
80,
000-
40,
00)
Sal
es 500,000

=140,
000x100=28%0r28
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500,
000

(
b) Cur
rentr
ati
o = CA = 180,000=2:
1
CL 90,000
(
c) Rat
eofst
ockt
urnov
er = Costofsales = 360,
000
Aver
agestock 80,
000+40,
000

= 3t
imes (
4mar
ks)

57. MalamuTr ader shadt hef oll

owi ngbal anceasat31stDecember2008
Sh
Buil
di ng 540,000
Bankl oan 472,500
Debt or s 116, 900
Credit ors 227,000
Furnitur e 408,170
Grosspr ofi
t 520,600
Mot orv ehicl
e 900, 000
Discountal lowed 142, 000
Li
ght ing 25, 200
Interestonl oan 1,
200
Closingst ock 72, 500
Rentr eceived 120, 000
Repai ronbui ldi
ngs 60, 000
Repai ronf urnit
ure 72, 030
Repai ronmot orv ehi
cl es300, 000
Gener al expense 102,
100
Capital 1,400,000
Pr
epare:
(a)Profi
tandl ossaccountf orthey earended31stDecember2008
(b)Balancesheetasat31December2008

Mal
amuTr
ader
s

Fort
hey
earended3l
stDec,
2005
Expenses Sh Sh

Discountal l
owed 142,
000 GrossProfi
t 520,
000
Lighti
ng 25,
200 Rentrecei
ved 120,
000
Inter
estorl oan 1,200 Netlossc/
d 61,
930
General expenses 102,
100
Repairsonbui ldi
ng 60,
000
Repairsorrfurnit
ure 72,
030
Repairsonmot orvehi
cle 300,
000

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702,
530 702,
530

MALAMUTRADERS
BALANCESHEET
ASAT31stDEC2008

Sh Sh Sh Sh
Fi
xedAsset
s Capi
tal 1,
400,
000
Bui
ldi
ng 540,
000 Lessl
oss 6,
930

1,
338,
070
Furnitur
e 408,
170 l
oan 472,
500
Mot orVehi
cle900,
000 948,
170
CurrentAsset
s
Stock 72,
500 CurrentLi
abi
l
iti
es
Debt ors 116,
900 189,
400 Credit
ors 227,
000

2037,
570 2,
037,
510

150x100

(
b) On1stJanuar
y2017,
Majengotr
adershadksh.240,000cashi
nandBankcredi
tbal
anceofkshs
270,
000. Dur
ingt
hemonth,t
hefol
lowi
ngtransact
ionstookpl
ace.
(10marks)

Jan2: Cashsal eofkshs200, 000

5: Debt orset tl
edhisaccountofksh1, 000,000bychequel ess5%cashdi scount
.
 
  
15: Pai dsalarieskshs50, 000incash
 
  
20: Settl
edcr editorsaccount sofKshs100,000bychequel ess2%cashdi scount.
21: Receivedachequef orkshs84,000f r
om chari
tytrader
saf t
erdeduct
ing6%cash
discount.
 
  
 24: Deposi tedKshs100, 000from off
icecash
 
  
 25: Cashsal eKshs200, 000bankeddi rectl
y.
t
h
 
  
 26: Achequer eceiv
edonJanuar y5 f r
om adebtorwasdi shonoured.
 
  
 27: Purchasedgoodswor thkshs20,000oncr edi
t.
 
  
 31: Bankedal lthecashexceptKshs80, 000
Requi r
ed: Prepareat hreecolumncashbookdul ybalanced.

MAJENGOTRADERS
THREECOLUMNCASHBOOK
FORTHEMONTHOFJANUARY2017

DR(
Recei
pts) (
Pay
ment
s)CR

Dat
e Par
ti
cul
ars Di
sc Cash Bank Dat
e Par
ti
cul
ar Disc Cash Bank
al
l s Rec
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com
2017 240,
00 2017 BALANCE 270,
000
0 B/D
JAN BAL.B/
D JAN1 50,
000
200,
00 st sal
ari
es 2,
000
1ST  SALES 50,
000 950,
000 98,
000
0
15th cr
edi
tor
s
2   DEBTORS
ND
 
5,400 100,
000
CHARITY 20th  bank 210,
00
5TH 84,
600 9,
500
TRADERS 100,
000 0
24th di
shonore
21ST 200,
000 dcheques
CASH(
C)
26th  
 80,
00
bankc 226,
600
T
SALES st 0
 
 24  
  
210,
00 31
H CASH Balance
55,
400 440,
00 0 c/d
TH 0  
2,000 1,
55,
600
25
 
  
  
  
  
  
   1,
544,
60 440,
00
0
31ST  
  
  
   0

 
  
  
 Bal
anceb/
d  
  
  
  
  
  
 80,
000 266,
600

Descr
ibet
hepr
ocedur
eofbal
anci
ngt
hel
edgeraccount
s.

(
i) I
dent
if
yt heaccountt
itl
eandcalcul
atet
het
otal
soneachsi
deoft
hel
edgeraccounti
.e.
t
hedebittot
alsandcreditt
otal
s.

(
ii
) Cal
cul
atet
hedi
ff
erencesbet
weent
hedebi
tandt
hecr
edi
ttot
als

(
ii
i) Recordthedi
ff
erencesont
hesi
dewi
tht
hesmal
l
ert
otal
sasbal
ancecar
ri
eddown
(bal
ancec/d)

(
iv) Obtai
nthetotal
sofeachsideaft
erenter
ingt
hebalancec/d.Ift
herecordi
ngand
cal
culat
ionsarecor
rect
,thedebi
ttot
alshoul
dequaltothecredi
ttot
als.Writ
ethe
tot
alsatthesameanddoubleunderscor
e.

(
v) Fi
nall
yrecor
dthebalanceontheopposi
tesi
deoft
hebal
ancec/
dbel
owt
het
otal
sas
bal
ancebroughtdown.(Bal
anceb/d)

Thefol
lowingbalanceswer eextractedfrom thebooksofJumaTr sasat31stDecember
ader ,
2016. 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
(10marks)

SHS
Landandbui ldi
ngs 200,
000
Capital 370,
000
Prepaidr ent 
   
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 50,
000
Mot orVehi cl
e 150,
000
10y earbankl oan 100,
000
3y earsICDEl oan  
 50,
000
Stock( 31/12/15)  
 50,
000
Debt or
s  
 30,
000

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Credit
ors  
30,
000
Accruedexpenses  
10,
000
Cashatbank 50,
000
Cashinhand 10,
000
Drawings  
20,
000

Prepare:
i
. Abalancesheetasat31stDecember2016.
ii
. Determine:
 Wor kingcapital
 Ca pi
talempl oyed
 Bor r
owedcapi taL
 
   
  
  
  
  
  
  
  
 
  
  
   
  
  
  
 
Jumat raders

 
  
  
  
  
  
  
  
  
Balancesheet
st
 
  
  
  
Asat31 December2016

Asset
s  
  
  
  
  
  
  
  
  
  
  
  
 shsshs Capi
tal
andl
i
abi
l
iti
es 
  
  
shsshs

Fi
xedasset
s Openi
ngcapi
tal
  
  
  
  
  
  
 370,
000

Landandbui
l
ding 
  
  
  
 200,
000 Lessdr
awi
ngs 
  
  
  
  
  
  
  
  
20,
000

Pl
antandmachi
ner
y  
  
50,
000 Cl
osi
ngcapi
tal
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 350,
000
 
  
 Motorv
ehi
cles 
  
  
  
  
 150,
000
400,
000
Longt
erml
i
abi
l
iti
es
Cur
rentasset
s
10y
earbankl
oan 
  
  
  
100,
000
Debt
ors 
  
  
  
  
  
  
  
  
  
  
 30,
000
3y
earI
CDEl
oan 
  
  
  
  
50,
000 50,
000
St
ock 
  
  
  
  
  
  
  
  
  
  
  
  
50,
000
Shor
tter
mli
abi
l
iti
es
Pr
epai
drent 
  
  
  
  
  
  
  
10,
000
Cr
edi
tor
s  
  
  
  
  
  
  
  
  
  
  
 30,
000
Cashatbank 
  
  
  
  
  
  
 50,
000
140,
000 Accr
uedexpenses 
 
   
 
   
10,
000
40,
000
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
540,
000

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 540,
000

Wor
kingcapi
tal
.

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Cur
rentasset
s–cur
rentl
i
abi
l
iti
es

140,
000–40,
000= 
1000,
000

Bor
rowedcapi
tal

Longt
erml
i
abi
l
iti
es=150,
000

Capi
talempl
oyed

Wor
kingcapi
tal
+fi
xedasset
s i
.e100,
000+400,
000=500,
000

Thef
oll
owi
ngt
ri
albal
ancewasext
ract
edf
rom t
hebooksofCar
sonTr
ader
son31December

2005af
terpr
epar
ingt
het
radi
ngaccount
.

Dr Cr

Capi
tal
130,
000

Dr
awi
ngs 27,
000

Debt
orsandcr
edi
tor
s 25,
350
22,
500

St
ock31Dec.2005 25,
000

Wagesandsal
ari
es 31,
650

Gr
ossPr
ofi
t 58,
920

Di
scount 3,
540 3,
300

Adv
ert
isi
ng 3,
130

Baddebt
s 1,
100

Gener
alexpenses 5,
100

Rat
es 2,
750

Cashi
nland 800

Cashatbank 3,
300

Mot
orv
ehi
clesatcost 11,
000

Pr
emi
ses. 75,
000

214,
720 214720

Thef
oll
owi
ngaddi
ti
onal
inf
ormat
ioni
spr
ovi
ded.

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(
a)Wagesdueshs.5,
400

(
b)Rat
espai
dinadv
anceshs650

(
c)Mot
orv
ehi
clest
obedepr
eci
ated20%oncost
.

Youar
erequi
redt
opr
epar
e

(
i)Prof
itandl
ossaccountfort
hey
earended31Dec.2005 (6mks)
(i
i)
st
Bal
ancesheet
sasat31 Dec.2005 (4mks)

Car
sonTr
ader
s.

Pr
ofi
tandLossA/
Cfort earended31stDec.2005.
hey

Expenses sh. Sh.

Wagesandsal
ari
es 31,
650√ Grosspr
ofi
t
58920√
Add:Accr
uedwages 5,
400√
Discountr
ecei
ved
37,
050 3300√
Rat
es 2750√

Less:
Prepai
drat
es 650√

2100

Depr
eci
ati
onnetv
eh. 2200√

Di
scountal
l
owed 3540√

Adv
ert
isi
ng 3130√

Bal
ancedebt
s 1100√

Gener
alexpensed 5100√

Netpr
ofi
t 8000√

62220

62220

i
i
) Car
sonTr
ader
s

ancesheetasat31stDec.2005.
Bal

Fi
xedAsset
s sh. Sh. Sh. Sh.

Pr
emi
ses 75000√ Capi
ta 130
000
Mot
orv
ehi
cles 11000
Add:
Netpr
ofi
t
Less:
depr
eci
ati
on 2200 8,
800
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83,
800 8000√

Cur
rentAsset
s
138000
St
ock 25000√
Less:Dr
awi
ngs
Debt
ors 25350√ 27000√
Pr
epai
drat
es 650√ 111,
000
Cashatbank 3300√ Cur
rentLi
abi
l
iti
es
Cashathand 800√ 55100 Cr
edi
tor
s 22500√
138,
900 Accr
uedwages 5400√

27900

138900

b)Thefollowi ngtransacti
onsrelat
est oKonat eTr adersf
ort hemonthofDecember2010.
st
Dec1 St artedabusinesswi t
hsh.200, 000intheBankaccount .
nd
2 Boughtf ur
nit
ureforsh, 50,000andpai dbycheque
rd
3 Sol dgoodsoncr edittoTilashs, 20,
000;Katu10,000
th
4 Boughtgoodsoncr editfrom Kahamash30, 000;Kangashs.40,
000
th
5 Ret urnedfaul
tygoodst oKahamash5, 000
th
6 Pai dKahamaonaccountbychequel ess10%cashdi scount
.
th
7 Recei vedfaul
tygoodsf rom Kat ushs.2000
t
h
8 Recei
v edpay mentduef r
om TilaandKat ubychequel ess5%cashdi scount
.
t
h
9 Cashsal esshs.100,000
th
10 Pai df
orwagesshs.20, 000bycashandel ectr
icit
yshs.10,
000bycheque.
th
11 Deposi t
edal lt
hecashi nhandi nt
ot hebankaccount .
Requi
red:
Pr
epar
eat
hreecol
umncashbookdul
ybal
anced (
10mks)

Konat
eTr
ader
s

Thr
eecol
umncashbook

Asat31stDec2010

Dat
e Det
ail
s L.
F D.
A Cash Bank Dat
e Det
ail
s LF DR Cash Bank

1st/
12 Capi
tal 20000 1st Fur
nit
ure 50000
0 /12
3/
12 Pur
chase 40000
2/
12 s

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8/
12 Ti
l
a 100 250 22500
0 0
Kat
u 19000 6/
12 Kahama 20000
400
9/
12 Sal
es 10000 7600 10/
12 Wages 10000
0
31/
12 Cash c 11/
12 El
ect
ri
cit
y c 80000

80000 31/
12 Bank c/ 184100
d
31/
12 Bal
ance 10000 306600
140 10000 250 0
0 0 30660 0
0

Kapt
agatt
rader
shadt
hef
oll
owi
ngasset
sandl
iabi
li
teson31stDecember
i ,2017

Sh.

Creditors 280,
000
Equipment ’
s 1,
920,
000
Furnit
ure 103,
550
Stock 800,
000
Debtor s 240,
500
Bank ov er
draf
t 401,
950
Cashi nhand 291,
000
Capital ?

Duri
ngthefi
rstweekofJanuar y2018,thefol
lowingtransacti
onst ookplace.
2018
Jan 1.Boughtmor egoodsf rom NCPBoncr editforsh.330,800
2.Purchasedacomput erandaccessori
esbychequesh. 50,000
4.Paidcr edi
torsbychequesh. 200,
000
5.Recei vedsh140,500bychequef rom debtors.
6.Kapt agattr
adersputi nanextrash.
500,000i nt
othebusi ness,sh.
300,
000bychequeand
sh.
200,
000incash.
7.Kapt
agattraderspaidtheout st
andi
ngbankov er
draftusingthecash
from thecashtil
l

Requi
red.
a)
.Ascer
tai
nKapt
agatt
rader
scapi
t asat1stJanuar
al y,2018 (
4mar
ks)

Capit
al =Assets–li
abil
it
ies
=(1,
920,
000√+103,
550√+800,
000√+240,
500√+291,
000√)-
(
280,
000√+401,950√)
=2,
673,
100√
8√*
½=4mar
ks

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b)
.Dr
awupKapt agattr
ader
sBalancesheetasat7thJanuar
y2018aftert
heabov
e
t
ransact
ionshavebeencomplet
ed. (
6marks)

Kapt
agatt r
aders
Balancesheet
Asat7thJanuary2018.
√
Sh. Sh.
F.
Asset
s Capi
tal
2,
673,
100√
Equipment’
s 1,920,
000√ Add.I nvest
ment s 500,
000√
Furnit
ure 103,550√ 3,
173,
100
Comput er 50,000√
2,
073,550
C.Asset
s C.Liabil
it
ies
St
ock 1,
130,
800√ Credit
ors 410,
800√√
Debt
ors 100,000√
Cash 279,
550 √√ 1,510,
350
3,583,
900 3,
583,
900

Thef
oll
owi
ngbal
anceswer
eext
ract
edf
rom t
hebooksofMut
eit
r son31st
ader

December
,2017.

Shs

Gr
osspr
ofi
t 800,
000

Gener
alexpenses 180,
000

Bui
l
dings 1,
250,
000

Equi
pment 380,
000

Capi
tal 1,
400,
000

Fur
nit
ure 117,
000

I
nsur
ance 48,
000

St
ock 25,
000

Commi
ssi
oni
ncome 125,
800

Di
scountal
l
owed 55,
000

Di
scountr
ecei
ved 56,
200

BankOv
erdr
aft 79,
000

Sal
ari
esandwages 320,
000

Cr
edi
tor
s 90,
000

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ls,
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Car
ri
ageout
war
ds 60,
000

Debt
ors 65,
500

Car
ri
agei
nwar
ds 34,
500

Cash 51,
000

Pr
epare:
a)
.Profi
tandlossaccountfort
heper
iodended31stDecember
,2017.
st
b)
.Balancesheetasat31 December,2017. (
10mar
ks)

Muteit
rader
s
Profi
tandLossaccount
Fortheyearended31/12/
2017√
Shs Shs
Gener alexpenses 180,
000 √ Gr
ossprof
itb/
d
800,
000√
Insurance 48,
000 √ Commi
ssionincome 125,800 √
Discountal l
owed 55,
000 √ Discountrecei
ved 56,
200√
Salari
esandwages 320,
000√
Carri
ageout wards 60,
000√
NetPr ofit 319,
000√
982,
000 982,
000

Mar
king10√*
½=5mar
ks

Muteit
rader
s
Bal
ancesheet
Asat31/
12/2017
Fi
xedAssets Shs Shs
Bui
ldings 1,250,000√ Capi
tal 1,
400,
000√
Equipment 380,000√ AddNetPr
ofi
t 319,
000√
Furnit
ure 117,000√ 1,
719,
000
1,747,000
Currentasset
s Curr
entl
iabil
it
ies
Stock 25,
000√ Cr
edi
tor
s 90,000√
Debtors 65,
000√ BankOverdr
aft 79,
000√
169,
000
Cash 51,
000√ 141,000
1,888,
000 1,
888,
000

Di
scussf
iveer
ror
sthatmaynotbenot
icedi
nat
ri
albal
ance.(
10mar
ks)
(
i)Er
rorofomi
ssi
on
Thi
sisanerr
orwhereatransacti
oni
scompl
etel
yomi
tt
edf
rom t
hebooks.Noent
ri
eswer
emadeat
al
lfort
hetr
ansacti
on.I
tis
asift
hetr
ansact
ionhasnotexist
ed.
(
ii
)Er
rorofcommi
ssi
on

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Inthi
scase,doubl
eentr
ywasobser
vedbutthet
ransacti
onwaspost edtoawr ongaccountoft
he
sameclass.Forexampl
e
goodssoldtoJohnwascorr
ect
lycr
edi
tedtoRevenue(Sales)accountbutdebi
t oJane‘
edt s
account
.
(
ii
i)Er
rorofpr
inci
ple
Doubl eentryobser vedbutanentrymadeinthewr ongclassofaccount.Forexample,
paymentby
chequef orv ehicl
erepair
s
correctl
ycredi t
edtobankaccountbutdebitedtov ehi
cleaccountinst
ead.Inthi
scase,notonl
ythe
accounti swr ong
(vehicl
einsteadofv ehi
cler
epai
rs)butal
sothecl assofaccountisdif
ferent
.Vehicl
eaccounti
sa
realaccount( asset)whereas
vehiclerepairsaccountisanomi nal
account(expense).
(
iv)Er
rorofor
igi
nalent
ry
Thetransacti
onwascor r
ectl
yrecor
dedaccordi
ngtothedoubleent
rysyst
em butwit
hthewrong
amount .Forexample,
paymentoft el
ephoneexpensesincashofshs560wascredi
tedtocashaccountanddebi
tedt
o
tel
ephoneexpensesaccountbut
byshs600i nbothaccount
s.
(
v)Compl
eter
ever
salofent
ri
es
Foragiventr
ansacti
on,t
heaccountt
obedebit
edwascredit
edandt heaccounttobecredi
tedwas
debit
ed.Forexample,
goodssoldtoNadiaforshs500wasdebi
tedt
oRevenue(Sal
es)accountandcredit
edtoNadia‘
s
account,
bothbyshs500.
(
vi)Compensat
inger
ror
s
Error
sonthedebitsi
deoftheledgerhavebeensetof
fbyerr
orsonthecredi
tsideoftheledger
.For
example,
vehicl
eaccount
(debi
tbal
ance)andcommi ssi
onreceiv
edaccount(cr
edi
tbal
ance)werebothunderst
atedby
shs200.
(
vii
)Er
rorofdupl
i
cat
ion
At
ransact
ionwasr
ecor
dedt
wicei
nthel
edger
.Doubl
eent
rywasobser
vedi
neachcase.

Expl ai
nf i
v et
y pesoft hedocument sthatmakesBooksofAccount s.
(i
)Inv oice–Thi si sadocumentsentbyt hesel l
ertot hebuy erdemandingpay mentf orgoods
suppl i
ed.I tshowsdet ai
l
sof
goodssol d/boughoncr edit/sourcedocumentf orsale.
(i
i)Debi tNote–Adocumentsentbyt hesellertothebuy ertocorrectundercharge.Usedwhent he
i
nv oiceshowsal esser
amountt hanwhati sactuall
yowed/addi ti
onal i
nvoice/whenempt ycont ai
nershav enotbeen
returned( andhencet obe
char ged) .
(i
ii
)Cr edi tNot e–Adocumentsentbyt hesel l
ertothebuy ertocorrectanov er
char ge/Iti
sused
whengoodsar ereturnedto
thesel ler/becauset heyar edefecti
ve/nott heonesor dered/theywer enotrequired.
(i
v)Recei pt–Thi sisadocumenti ssuedbyt hesellertothebuy erwhenpay menti smadef orgoods
/ser vicesi ncash.
(v)Consi gnmentnot e–t osupporthirecarri
ageser vices/showst r
ansportcharges.
(vi
)Bankdeposi tsli
ps–Ev i
denceofpay ingmoneyi ntobank/sour cedocumentf orcashrecei
pt.
(vi
i)Bankst atement–asummar y/det ai
lsoft r
ansact i
onbet weentradersandbank.
(vi
ii)St atementofaccount–Thi sisadocumentsentbyt hesell
ertothebuy ershowi ngdetai
l
sof

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transacti
onsf oronemont h
wi t
har unningbalanceshownwi t
heachent
ry/closing/openingbalance.
(i
x )Paymentv oucher–Adocumentusedt ovali
datepaymentf orser
vices/goodsrender
ed.I
tis
usedbyacashi erand
signedbyt heser v
iceprovi
der/payee/r
eci
pient/document i
nggoodsf orpet
tycashbook.
(x)Remi t
tanceev i
dencenote–Thi si
sadocumentt hataccompaniesachequeissuedfor
settl
ementofadebt .I
tprovi
des
i
nf ormati
onont hepayment.

Thefoll
owingtransact i
onstookplacei
nt hebusinessofDar
asi
leTr
ader
sinKi
sumuy
ear2013.
Jul
y1st:Star
tedbusinesswi thcapit
ali
ncashKshs. 150,
000.
Jul
y2nd:Openingabankaccountanddeposi tedKshs.
30,
000.
Jul
y3rd:BoughtbuildingsincashKshs.60,000.
Jul
y4th:Borr
owedal oanincashKshs.20,000.
Jul
y5th:Boughtstationerybychequewor thKshs.6,
000.
Jul
y6th:Repaidpartoft heloanbychequeKshs. 10,
000.
Requi
red:
(
i)Recordtheabovetr
ansact
ionsi
nthei
rvar
iousl
edgeraccount
s.(
6mks)
(
ii
)Prepareatri
albal
ance.(
4mks)

On1stJanuar y2015, Ngunj i

rihadshs.15,
000i nhandandbankov erdr
aftofsh.25,
000.
Duringt hemont ht hef ol
lowingt r
ansacti
onst ookplace:
Januar y2:Cashsal esdirectlybankedsh40,360
―4; Boughtst ockofgoodsi ncashsh.2,
400
―6: Receivedachequeofsh. 97,
800from Karanjaafteral
lowinghim acashdiscountofSh.2,
200.
―9: PaidMung‘ athia,acr edit
orsh.65,
800bychequeaf terdeduct
ing6&cashdi scount.
―14; Paidsalar iessh.8,000i ncash.
―17: Mwat ela, adebt orset t
lehisaccountofsh.75,000bychequel ess10%cashdi scount
.
―24; Withdrawsh. 30,000f rom bankforoffi
ceuse.
―28: Boughtst ati
oner yincashsh. 10,
000.
―31; Withdrawsh. 7,000f rom bankforpri
vateuse.
Requi r
ed
Prepar ethethr eecol umncashbookdul ybalanced. (10mar ks)

THREECOLUMNCASHBOOK
DrCr
Disc. Disc.
L. Cash Bank Cash Bank
Date Detai
ls All Date Detail
s L.
F Rec.
f Sh. Sh. Sh. Sh.
Sh. Sh.
1/1/2015 25,
00
1/1/201
4/1/2015 0
5
Bal
anc 15,
00 9/1/2015 Balance 65,
80
2/1/201
e 2,
20 0 40,
360 14/1/201 Purchases 0
5 2,
400
Sal
es 0 30,
00 97, 800 5 Mung‘athi
a 30,
00
6/1/201 B/f 8,
000
Karanja 7,
50 0 67,
800 24/1/201 Salari
es B/f 4,
200 0
5 C 10,
000
Mwat el 0 ___
__ _ __
___ 5 Cash C __
___ 7,
000
17/1/20 b/ 24,
600
a ____ 45,00 205, 66 28/1/201 Stati
oneri
e C/d 4,
200 77,
86
15 d ___
___
Bank 9,
70 0 0 5 s 0
24/1/20 45,
000
Bal
anc 0 24,
60 77, 860 31/1/201 Drawings ___
__
15
e 0 5 Balance __
31/1/20
31/1/201 205,
6
15
5 60
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