(For Both School and Private Candidates)

Time: 2:30 Hours Friday, 14thNovember 2014 p.m.


1.This paper consists of sections A, B and C.

2.Answer all questions in sections A and B and two (2) questions from section C.

3.Calculators and cellular phones are not allowed in the examination room.

4.Write your Examination Number on every page of your answer booklet(s).

SECTION A (20 Marks)

Answer all questions in this section.

1. For each of the items (i) ­ (x), choose the correct answer from among the given alternatives and write its letter beside the item number in your answer booklet.

(i) Advertising is important because it mainly

  1. creates the demand for the goods and services
  2. creates employment for a large number of people
  3. reduces the price of goods and services
  4. induces customers to buy goods that have minor defects
  5.  creates the demand for the goods of low quality.
Choose Answer :

(ii) Which of the following are the major sources of partners’ capital?

  1. Financial institutions.
  2. Trade credit from suppliers.
  3. Profit from the business.
  4. Business properties sold.
  5. Hire purchase.
Choose Answer :

(iii) Which one of the following statements is true of a sole trader?

  1. He is legally separate entity from the business.
  2. He has limited liability.
  3. His business has unlimited legal life.
  4. He makes decisions with other co­partner.
  5. He enjoys all the profits and suffers all the losses.
Choose Answer :

(iv) The main reason for the existence of public corporations is to

  1. maximize profits for distributions to members of the public
  2. provide certain essential services to members of public
  3. enlighten the public on how to conduct their business
  4. sell shares to members of the public
  5. to distribute loss made by corporations to members of the public.
Choose Answer :

(v) Which one of the following documents is used by a buyer to gather information from the seller?

  1. An order.
  2. An invoice.
  3. A statement.
  4. A delivery note.
  5. An inquiry.
Choose Answer :

(vi) Road transport is used mainly as as a method of carrying goods within the country because it is the

  1. cheapest form of transport
  2. quickest form of transport
  3. most widely available form of transport
  4. most reliable form of transport
  5. safe mode of transport.
Choose Answer :

(vii) Which one of the following is a method used by government to protect consumers?

  1. Fixing minimum prices.
  2. Fixing maximum prices.
  3. Fixing minimum profits.
  4. Fixing maximum profits.
  5. Fixing minimum and maximum prices.
Choose Answer :

(viii) A debit note is used to correct 

  1.  undercharge on an invoice
  2. overcharge on an invoice
  3. undercharge on a statement
  4. overcharge on a statement
  5. undercharge on an order.
Choose Answer :

(ix) Which of the following activities cannot be classified as productive?

  1. Working as a cook in your own house.
  2. Playing hockey as a professional.
  3. Working as a cook in a restaurant.
  4. Playing cards as a hobby.
  5. Building house of a neighbour.
Choose Answer :

(x) Which of the following reasons does not justify the existence of parastatal enterprises?

  1.  To provide goods and services not being provided by the private sector.
  2. To enable the government to control the distribution of certain commodities.
  3. To enable the government to control the profits earned by the private enterprises.
  4. To provide goods and services at relatively fair prices.
  5. To control exploitation of the individuals by the private sector.
Choose Answer :

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