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F4 BUSINESS STUDIES TOPIC BY TOPIC

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 1. SOURCE DOCUMENTS AND BOOKS OF ORIGINAL ENTRY
The topic entails;
-Meaning of source documents; identify source documents and explain how they are used in recording
business transactions
-Meaning a book of original entry
-Discussing the various types of books of original entry
-The journal as the main book of original entry and how to record information from source documents
into relevant journals.
-Posting information from the journals to relevant accounts.

1. The following data was extracted from the books of Mwauri Traders:
31-12-2002 31-12-2003
Shs. Shs.
Salaries accrued 46 000
Salaries prepaid 150 000
For the year ended 31-12-2003, salaries paid amounted to sh.200 000.
Prepare the salaries account as at 31st Dec. 2003

2. State four conditions necessary for the operation of the principle of indemnity in Insurance

3. On 31st December,2009 details extracted from Khetia’s Ltd. showed commission received for the
year as Kshs. 60,000. Commission received in advance by 1st January,2009 was Kshs.12,000. Whereas
commission received in advance as at 31st December, 2009 was Kshs. 24,000. Determine the
commission income for the year 2009 that is posted to the profit and loss account

4. State the journal that deals with each of the following types of transactions
TYPE OF TRANSACTION JOURNAL
i) Credit sales
ii) Return of goods by customers
iii) Return of goods to suppliers
iv) Cash cheques received
v) Credit purchases
vi) Sale of fixed assets on credit
vii) Purchase of a motor van on credit from general motors
viii) Correction of errors

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5. From the following information prepare debtors control account for the year ended 31st Dec 2007
Shs
Debtors balance 1-1-07 11,000
Credit sales ?
Bad debts written off 5,000
Return inwards 1,600
Receipts from debtors 31,000
Dishonoured cheque 2,800
Discount allowed 3,400
Debtors balance 31-12-07 25,300

6. Journalize the following transactions which took place in the business of W. Wanjala during the month
of June 2009:-
June 1 Balance B/f from May 2009 were:-
Office furniture shs.50,000 and motor vehicle shs.100,000
June 2 Purchased office furniture on credit for shs.65,000 from Mwema
Furniture June 10 Sold an old vehicle on credit to Omwami garage for shs.200,000
June 25.Discovered that a motor vehicle that had been bought on credit from Kanyere motor for
Kshs.750,000, had been recorded in purchases account
June 28 Sold an old computer to classic academy on credit for ksh. 15,000
June 29 :Sold an old tractor whose book value is Kshs. 200,000 for
Khs.250,000 to Goseta
Prepare a general journal

7. Mr. Osodo, a sole trader in Mumias town does not keep complete set of accounting books. However,
the following information was obtained from his general operation book
for the year ending 31/12/2009 Shs.
Debtors balance on 1/1/2009 24000
Bad debts 2000
Creditors balance 1/1/2009 68000
Debtors balance on 31/12/2009 72000
Discount allowed 18000
Creditors balance on 31/12/2009 83600
Returns inwards 5600
Cash paid to creditors 590000
Returns outwards 10200
Cash received from debtors 298000
Discount disallowed 1000
Dishonored cheques 36000
Discount received 6000
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 Additional information
He also disclosed that he had paid cash purchases amounting to Shs.483400 and received cash sales
of Shs.70000 for the year
Required; i) Prepare total debtors account and total creditors account
ii) Calculate total purchases and total sales for the year

8. On 1st June 2009, Nyamira Traders had cash in hand shs.87,000 and cash at bank Shs.250,000.
During the month, the following transactions took place:-
2009 June 2:-Cash sales shs.50,000 issued Receipt No.063
3:- Paid salaries and wages shs.101,500 by cheque ; cheque no. 083
6:- Received a cheque for shs.76,800 from Kemunto, after allowing her a cash discount
of 4% issued a receipt No. 064
12:- Settled Omwabo’s account of shs.40,000 in cash, having deducted shs.800
cash discount. Received recipt no. 0656
18:- Withdrew shs.30,000 from bank for office use
21:- Received shs.16,500 cash from Manwari in settlement of his account less
shs.660
cash discount. Receipt No. 065
22: - Bought office furniture by cheque shs.85,000. Receipt No. 734
23:- Paid wages Shs.24,000 in cash receipt No. 801
28:- Withdrew shs.5000 cash for private use
30:- Received a cheque for shs.150,000 in respect of cash sales . Receipt No.066
Required: Prepare:- (i) A cash receipts journal
(ii) A cash payment journal

9.The following is a trial balance of JAO traders as at 31/12/2009

Dr Cr
(Shs) (Shs)
Capital 170000
Opening stock 60000
Equipment at cost 125000
Purchases 161000
Sales 208000
Discounts 2000 8000
Returns 27000 25000
Salaries 20000
Telephone charges 5000
Water bills 2100
Creditors 15100
Debtors 21000
Electricity expenses 2000
Insurance paid 1000
426000 426000

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Additional information
i. Closing stock was valued at Shs.72000
ii. Telephone charges prepaid was Shs.1000 and outstanding water bills was Shs.1300
iii. Depreciation on equipment is 10% p.a on cost
iv. Carriage inwards was Shs.11000 and carriage outwards Shs.10000
Prepare trading and profit loss account for the year ending 31/12/2009

10. During the month of March 2010 the petty cashier of Nyangija distributors made the following
payment after receiving an imprest of shs12, 000 from the general cashier.
March 3 traveling 3500
March 6 office expenses 1000
March 8 postage 1200
March 15 staff tea 800
March 19 stationery 2000
March 22 office expenses 800
March 24 staff tea 1000
March 26 sundry expenses 700
March 31 F. Benson a creditor 900
Required: Using the analytical columns below prepare a petty cash book of Nyangija distributors
o Traveling
o Office expenses
o Postage
o Stationery
o Staff tea
o Sundry expenses
o Ledger accounts

11. The following extracted from the books of Mogusii Ltd. 2005
March 1. Credit purchases from Obwocha Sit 1200
Agwata sh. 3,000 and Nyauamba sh.2,500
March 5 Credit sales to Okero Sit 2,000, Michieka sh.4,300 and Omwenga sh. 1500
March 10 Credit purchases from Onyancha Sh.2700
Obwocha sh 6600 and Ombaki sh.3300
“ 20 Returned goods to Obwocha sh.250 and Onyancha 703
26 Credit sales to Bundi sh.850. Tendu sh.630 and Okero-sh.900
“ 30 GoodswereretumedbyBundish.I50andMichiekasitl30
Required: Enter the above transactions in their relevant day books

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 2. FINANCIAL STATEMENTS

The topic entails:

-Explaining the meaning of a financial statement and identifying basic financial statements and discuss
purpose of each.
-Prepare basic financial statements as per the relevant formats.
-Discuss the various types of capitals and their implication on performance of business
-Identify basic financial ratios and compute the various ratios form financial statements
-Discussing the importance of each financial ratio.

1. The following information was extracted from the books of Klub traders
Kshs.
Opening stock 160,000
Closing stock 200,000
Purchases 1,800,000
Margin 20%
Calculate klubs sales

2. The following balances were extracted from the books of Masai retailers on 14th July 2000
Shs.
Opening stock 30 000
Purchases 800 000
Closing stock ?
Sales 1 000 000
Return inwards 20 000
Return outwards 15 000
Maasai retailers sell goods at a mark up of 20%
Prepare the trading account for the period ended 14th July 2000

3. The following account balances were obtained from Omenda traders on 31st December 2002
Kshs.
Stock (1/1/2002) 120,000
Purchases 170,000
Return inwards 30,000
Stock (31/12/2002) 110,000
Sales 300,000
Calculate: (i) Margin
(ii) Rate of stock turn over

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4. The following information relates to Kafupi business enterprise:-
Average stock Shs.120,000
Rate of stock turnover 3 times
Margin 25%
From the data above, determine;
(a) The cost of goods
(b) Gross profit
(c) Sales

5. The following information was extracted form the books of Bondo Traders as at 31st Dec. 2004
Opening stock 2,500
Purchases 46,000
Closing stock 1,500
Mark up 20%
Prepare a trading account
6. Identify four methods that a government can use to finance a national budget deficit

7. The information below relates to Half-Bilha Traders for the year ended 30th September 2009;
Net sales 300,000
Cost of sales 150,000
Bad debts 30,000
Wages 25,000
Discount received 25,000
Rent 6,000
Carriage inwards 18,000
Carriage outwards 12,000
Prepare a profit and loss account for the business

8.The following information related to Virusi Trader for the year ended June 28th 2009
Shs
Sales 5 400 000
Expenses 800 000
Mark up ration 2:3
Stock turnover ratio 6times
Required:-
Calculate: i) Gross profit
ii) Cost of sales
iii) Net profit

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9. The following information relates to Mandu enterprises limited
Stock (1.1.2009) 40000
Stock (31.1.2009) 60000
Purchases 500000
Margin 20%
Prepare Mandu Enterprises Limited Trading account for the year ended 31st December, 2009
10. The following balances were extracted from the books of Wanga traders as at 30th June,2009
Current assets 320000
Capital 525000
Net profit 95000
Creditors 88200
Accrued expenses 10800
Calculate: a) Working capital
b) Return on capital

11. The following relates to Atis traders

Stock (1-7-2007) shs. 22,000
Purchases 100,000
Mark –up 10%
Stock (30-6-2008) 26,000
Prepare her trading account

12. The following balances were extracted from the books of Shah Traders on 30th June, 2010
Shs
Opening stock 65,000
Sales 280,000
Purchases 190,000
Purchases returns 10,000
Sales returns 4,200
th
Closing stock was Kshs. 70,000 as at 30 June, 2010. Prepare the trading account for the period
ended 30th June, 2010
13. The following balances were extracted from the books of Chombo wholesalers for the
year ended 31st December, 2009
Kshs.
Sales 500,000
Purchases 320,000
Opening stock (1:1:2009) 80,000
Closing stock (31:12:2009) 40,000
Debtors 140,000
Creditors 90,000

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 Calculate;- a) Margin
b) Current ratio
c) Rate of Stock turnover

14. The following information was obtained from Maganda Enterprises for the year ended
31st Dec 2003:-
Opening stock kshs. 40,000
Purchases kshs. 400,000
Gross profit kshs. 100,000
Goods were sold at a marked-up of 25%
Required;
Calculate: i) Sales for the year
ii) Rate of stock turn over

15. The following information was extracted from Jaribu traders on 31st December 2009
Stock turnover 5
Mark up 25%
Cost of sales 60,000
Closing stock 8,000
Required: i) Net sales
ii) Average stock
iii) Opening stock
iv) Net purchases

16. The following trial balance was extracted from Vumilia traders as 31st December 2006
Dr Cr
Capital 125,000
Purchases 45,000
Carriage on sales 2,000
Stock 25,000
Sales 120,000
Carriage on purchases 1,200
Insurance 5,900
Salaries 12,450
Discount allowed/ Discount received 3,400 1,950
Debtors/creditors 25,000 15,500
Bank 14,500
Machinery 128,000
262,450 262,450
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 Additional information:
-closing stock 25,000
-Outstanding salaries 450
-Insurance 900 has been paid in advance
-Depreciate machinery by 10% on cost
Required: i) trading, profit and loss a/c
ii) Balance sheet
17. The following balance sheet was prepared by the accounts clerk of Mapato traders:-
Mapato traders
Balance sheet
As at 31st dec 2009
Fixed assets
Land and building 300 000 capital 422 930
Furniture and fittings 51 500 +net profit 220 500
Machinery 140 000 643 430
Motor vehicle 190 000 -drawings 175 000
681 500 468 430
Current assets long term liabilities
Stock 124 500 mortgage loan 30 000
Debtors 103 650 bank loan 400 000
Cash at bank 54 850 430 000
Cash at hand 3650 current liabilities
286 650 creditors 99 730
968 150 968 150
Requirements:
Calculate the following
i) Working capital
ii) Return on capital
iii) Current ratio
iv) Capital employed
v) Borrowed capital

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18. The following information was extracted from books of Chunga Traders for the period ending
31/12/2000:-
Fixed assets – 350,000
Drawings – 50,000
Creditors – 50,000
Cash – 60,000
Discount received 4,000
Rent – 12,000
Bank overdraft – 10,000
Debtors – 20,000
Stock (31/12/2000)-30,000
Commission received – 6,000
Gross profit – 80,000
Electricity – 3,000
Stock (11/1/2000) – 50,000
Salaries – 20,000

(a) Prepare:- (i) Their profit & loss account

19. The following balances were extracted from the books of Nyamaiya Traders on 31st May 2009:-
shs.
Gross profit 400,000
Equipment 900,000
Furniture 500,000
Provision for depreciation on furniture 65,000
Power & lighting 24,000
Commission received 170,000
Stock (31.05.09) 35,000
General expenses 240,00
Debtors 350,000
Provision for bad debts 3,000
Creditors 550,000
Discounts allowed 29,000
Discounts received 40,000
Cash in hand 150,000

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Additional information
(i) Depreciation to be provided as follows:
– Equipment 20% on cost
– Furniture 10% on book value
(ii) Adjust provision for bad debts to shs.3500
(iii) Commission received in advance amounted to shs.10,000
Required: Prepare:- (i) Profit and loss account for the year ended 31st May 2009
(ii) Balance sheet as at 31st May 2009

20. The following information relates to Kipgaa traders for the year 2006:-
Kshs.
Turnover 270,000
Margin 40%
Rate of turnover 6 times
Expenses 40,000
From the information given above,
Calculate: (i) Gross profit
(ii) Cost of goods sold
(iii) Average stock

21. The following information relates to Odongo Traders for the year ended 31.Dec. 2008.
Land shs.50,000
Capital shs.94,000
Machinery shs.20,000
Motor vehicles shs.30,000
10 year bank loan shs.20,000
5 year AFC loan shs.10,000
Stock shs.10,000
Debtors shs.6,000
Creditors shs.6,000
Accrued expenses shs.2,000
Cash at bank shs.10,000
Cash in hand shs.2,000
Drawings shs.4,000
Required:
i) A balance sheet as at 31st Dec. 2008
ii) Calculate -borrowed capital
-current ratio
-capital owned

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22.(a) Two firms X and Y engage in similar lines of business had the following records in 2009;
Firm X Firm Y
Average stock at cost shs.8,000 shs.7000
Rate of stock turnover 6.4times 6.5times
Average mark-up 20% 20%
Expenses shs.5,632 shs.4,186
Capital shs.30,720 shs.24,570
(a) For each firm, calculate:
(i) The cost of sales
(ii) Gross profit
(iii) Rate of return on capital
(b) Giving a reason, state the firm which is better

23. The following information relates to Ladopharma Chemist as at 30th November 2008
Dr (shs) Cr (shs)
th
Stock (30 Nov 2007) 23 910
Capital 30 955
Drawings 8 420
Bank 3 115
Cash 295
Debtors 12 300
Creditors 9 370
Motor vehicles 4 100
Equipment 6 250
Sales 130 900
Purchases 92 100
Returns inwards 550
Carriage inwards 215
Return outwards 307
Carriage outwards 309
Motor expenses 1 630
Rent 2 970
Telephone charges 405
Wages 12 810
Insurance 492
Office expenses 1 377
Sundry expenses 284
171 532 171,532

Stock as at 30th November 2008 was shs 27 475

Required: prepare
i) The trading, profit and loss account
ii) A balance sheet as at 30th November 2008
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24. The following is a trial balance of JAO traders as at 31/12/2009
Dr Cr
(Shs) (Shs)
Capital 170000
Opening stock 60000
Equipment at cost 12500
Purchases 161000
Sales 208000
Discounts 2000 8000
Returns 27000 25000
Salaries 20000
Telephone charges 5000
Water bills 2100
Creditors 15100
Debtors 21000
Electricity expenses 2000
Insurance paid 1000
426000 426000
Additional information
(i) Closing stock was valued at Shs.72000
(ii) Telephone charges prepaid was Shs.1000 and outstanding water bills was Shs.1300
(iii) Depreciation on equipment is 10% p.a on cost
(iv) Carriage inwards was Shs.11000 and carriage outwards Shs.10000
Prepare trading and profit loss account for the year ending 31/12/2009

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25. The following trial balance relates to Jakobura Stores
DR CR
Gross profit 85,000
Debtors 95,500
Motor vehicle 150,000
Furniture 30,000
Bank 62,000
Stock 52,500
Provision for depreciation on
Motor vehicle 16,000
Provision of depreciation on
Furniture 2,620
Salaries 64,000
Building 180, 000
General expenses 45,200
Creditors 75,000
Commission received 42,800
Equipment 55,200
Electricity 15,420
Capital 528,400
749,820 749,820
Additional information
(i) Profit margin was 20%
(ii) Stock as at 1st January was valued at Ksh. 48,000
(iii) Depreciation was provided as follows:
(a) Motor vehicle 25% p.a on cost
(b) Furniture 7% p.a on cost
st
(iv) On 31 Dec 2006, equipment was valued at Ksh. 48,576 and general expenses outstanding were
Ksh. 1,200
(v) A bill of Khs.340 which was paid for a private residence was included in the electricity account .

Required:-. Prepare a trading profit and loss account for the year ended 31st Dec 2006

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26. Prepare a trading and profit and loss account for the year ended 30th June 2008 and a
Balance sheet as at date from the following trial balance;
Closing stock shs. 5.00
Bosongo wholesalers
Trial balance as at 30th June 2008
Stock on 30/6/2007 400 13,870
Capital and drawings 600 7,000
Purchases and sales 3,500
Furniture and fittings 2,000
Motor vehicles 15,000
Debtors and creditors 800 1,200
Returns 150 200
Discounts 90 80
Rent 100
Insurance 210
Bank 300
22,750 22,750

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 3. INCOMPLETE RECORDS
The topic entails:
-Meaning of incomplete record, giving examples and explain how they come about.
-Explaining the meaning of a statement of affair and show the difference between statement of affairs
and balance sheet.
-Preparation of statement of affairs
-Identifying the items used in updating the records
-Prepare financial statement from the updated records.
1. The bookkeeper of Chacha Traders extracted the following information form the accounting records:-
1/1/2009 31/12/2009
Suppliers 445,000 620,000
Discount received - 12,000
Purchases returns - 25,000
During the year ended 31/12/2009, suppliers were paid shs.1,400,000 while cash purchases
Amounted to shs.800,000. Determine the purchase for the year

2. On 31st January 2004, Maleya Traders had a capital of Kshs.65000. At the end of the year, the
following balances were available:-
Kshs.
Stock 8,000
Creditors 6,000
Cash at bank 4,000
Premises 90,000
Prepare a statement of affairs on 31st December 2004

3. On 1st January 2009, Rodi Traders had a capital of shs 550 000 at the end of the year.
The following balances were available
Items 31.12.2009
Shs.
Creditors 50 000
Debtors 30 000
Bank overdraft 80 000
Buildings 870 000
Rent due 10 000
Salaries prepaid 10 000
i) Prepare statement of affairs as at 31.12.2009
ii) Determine the net profit for the year
4. Highlight four differences between a balance sheet and statement of affairs

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5 Kemoko, a trader does not keep a complete set of accounting records. A summary of his
bank account for the year ended 31st Dec. 2008 is given below:

Bank account summary

Cash sales 47,500 Balance b/f 30,000
Trade debtors 170,000 Trade creditors 250,000
Commission 65,000 Rent & Rates 5,000
Balance c/f 20,500 Sundry expenses 4,000
Wages 7,750
Lighting 3,750
Insurance 2,500
303,000 303,000
The following information was also available:-
01/01/08 31/12/08
Stock 45,000 27,500
Creditors 100,000 125,000
Debtors 75,000 115,000
Machinery & 432,000 425,000
Equipment

Required: -Prepare Kemoko’s Trading, profit and loss account for the year-ended 31st Dec. 2008

6. Explain five distinctions between statement of Affairs and a balance sheet

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 4. MONEY AND BANKING
The topic entails:
(i) Explanation of meaning of barter and highlight its major limitations in facilitating trade.
(ii) Explaining the meaning of money and its characteristics
(iii) Discussing function of money and how each of the characteristics of money facilitate these functions.
(iv) Discuss the factors that influence the demand and supply of money.
(v) Meaning of banking and discuss the role of banking in an economy.
(vi) Discuss the development of banking
(vii)Discuss the various types of accounts offered by commercial banks
(viii) Discuss the functions of non-bank financial institutions bringing out the differences between
commercial banks and non-bank financial institutions.
(ix) Discuss the role played by the central ban in an economy
(x) Identify trends in banking.
1. Give four circumstances under which a trader would operate a fixed deposit account
2. Give any four functions of money
3. Highlight four reasons why loans advanced by commercial banks in Kenya may not appeal to many
people
4. Give four disadvantages of barter trade
5. Identify the motive of holding money in each of the circumstances below:-
(a) Need to hold money to cater for future unforeseen eventualities
(b) Need to have money to cater for daily expenses
(c) Need to have money with hope that prices will fall in future in order to purchase more
6. Identify four roles of the Central Bank as a government banker
7. E-banking is a method of banking through electronic systems. Give four reasons to account for the
rising popularity of this banking system
8. Mention four ways in which individuals can hold money
9. State three motives of holding money
10. Outline four differences between commercial banks and non- bank financial institutions
11. Identify four roles played by the international monetary fund in international trade
12. Explain five characteristic of a monopolistic market.
13. Highlight any five modern trends in the Banking industry in Kenya
14. Explain five ways in which commercial banks have enhanced the development of business activities
in the country
15. Explain five ways through which the central bank of Kenya can expand the supply of money in an
economy
16.Explain five methods of payments offered by commercial Banks in Kenya
17. Explain five factors that can lead to a cheque being dishonoured
18. Explain four emerging trends in the banking system
19. Banking has played a major role in Kenyan’s economic development. Explain five
current trends in banking sector

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 5 PUBLIC FINANCE
The topic entails:
-The meaning of public finance and the purpose
-Identifying various sources of public finance.
-Categorizing public/government expenditure and explain various ways the government uses public
finances and their influence on business activities in an economy.
-Discuss taxation and its contribution to public finance
-Discuss the purpose and principles of taxation laying emphasis on characteristics of a good tax system.
-Classify taxes and outline the merit and demerits of each.
-Meaning of the budget and discuss the role of a budget as a tool for planning.

1. Outline four short comings of a country borrowing heavily from internal and external sources
2. Mention four cannons of taxation
3. State four reasons why government levy taxes
4. Identify four methods that a government can use to finance a national budget deficit
5. Match the following types of taxes with the appropriate description given below:-
Corporate tax, Customs duty, Estate duty, Excise duty

Tax Description
(a) Is a tax levied on manufactured goods
(b) Is a tax levied on wealth of a person after his death
(c) Is a tax levied on entry of goods into a country
(d) Is a tax levied on profits of business enterprises

6. Highlight any four features of a good tax system

7. Outline five principles of taxation
8. Differentiate between progressive and regressive taxation giving an example of each
9. Highlight four advantages of direct tax
10. Highlight four sources of revenue to the local authorities
11. Discuss five principles of taxation
12. Outline five sources of non- tax public revenue
13. Explain five principles of public expenditure
14. Highlight five reasons for imposition of tax by the government
15. Discuss five characteristics of a good tax system
16. Outline five reasons why the Kenya government must impose tax.

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 6. INFLATION
The topic entails:
-Explaining the meaning of inflation bringing out clearly how that affects the economy.
-Computation of the price index
-Discussing different types of inflation and how they may occur in real life situation and their
consequences to an economy.
-Discuss the levels of inflation
-Discussing how to control the various types of inflation and how the government controls inflation rates
so as to provided conducive environment for business to perform and contribute to the general growth
and development of the economy.

1. A country’s domestic currency has been depreciating over time highlight five disadvantages of this to
the country
2. State four negative effect of inflation to a country
3. State any four causes of demand-pull inflation
4. State four non-monetary methods of controlling inflation in a country
5. Mention four desirable effects if inflation
6. Highlight four negative effects of inflation in Kenya
7. Highlight four negative effects of inflation in Kenya
8.Explain five negative effects of inflation to an economy
9. Explain five positive inflation effects of inflation to the economy.
10. Explain five causes of inflation in an economy
11. Write short notes on the following strains of inflation;
i) Mild inflation
ii) Hyper inflation
iii) Demand-pull inflation
iv) Cost push inflation
v) Imported inflation

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 7. INTERNATIONAL TRADE
The topic entails:
-Meaning and importance of international trade
-Clear distinction between balance of trade, and balance of payment.
-Computation of balance of trade.
-Accounting for the differences in terms of trade of various countries
-Identifying components of balance of payment account and their preparation
-Discussing causes of disequilibrium in the balance of payment and measures to resolve them.
-Discussion on the terms of sale used in international trade and their cost implication of each to the seller
and the buyer.
-Discussing the meaning of economic integration and distinguish between the various forms of
integration.
-Discuss the benefits as well as the disadvantages of integration.
-Discuss free trade outlining case for and against free trade.
-Discuss merits and demerits of trade restrictions.
-Discuss the benefits of trade agreements such as A.G.O.A
-Meaning of exchange rates and comparison between salient features of flexible and fixed systems.
-Discuss reasons for various development.

1. Write in full the following abbreviations:

i) Franco ii)O.N. iii)C.W.O iv)I.O.U
2. State any four economic benefits Kenya may derive from the recently revived East African
cooperation (E.A.C)
3. Highlight four trade measures that can be undertaken by a country to correct balance of payment
disequilibrium
4. Highlight four difficulties encountered in international trade
5. The following statement shows the various level of economic integration. Against this statements, give
the level that suits each:
Statement Level
(a) Member countries imposes common tariffs on non-member states
(b) Member countries have joint economic institution and common
monetary and fiscal policies
(c) Member countries agree to either abolish or relax tariffs and other
barriers
(d) Member countries allow free movement factors of production

6. Outline four ways in which Kenya benefits by being a member of Common Market for East and
Southern Africa States (COMESA)
7. The table below gives descriptions of some documents used in international trade complete the table,
by indicating the name of the document that corresponds to each description
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 Description Document
i) Requests the exporter to supply the importer with the items indicated
ii) Acknowledges the receipt of goods on board a ship
iii) Authorizes the bank to resell goods being exported
iv) Gives details of exported goods and name of country of origin

8. Highlight four factor that may hinder the success of East African Co-operation (E.A.C)
9. Explain five benefits that will accrue to a country due to use of pipeline in transporting oil products
10. Explain five advantages that a country may experience from imposing trade restrictions
In trading partners.
11. Discuss five reasons why many countries tend to prefer free trade
12. Discuss five causes of the persistent balance of payment disequilibrium in East African
countries
13. Explain five measures that the Government of Kenya may take to control her persistent
Balance of payment deficit
14. Explain five advantages of economic integration to a member state.

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 8. ECONOMIC DEVELOPMENT AND PLANNING
The topic entails:
-Distinction between economic growth and economic development.
-Discussion of characteristics of under development.
-Discussion of the goals of development and factors that hinder development
-Discuss the meaning and importance of planning in an economy.
-Outlining common features of a development plan.
-Outline problems encountered in development planning.

1. Outline any four problems encountered in development planning in Kenya

2. Mention any four obstacles faced by the Kenyan government in realizing its development planning .
3. Outline four indicators of underdevelopment
4. Highlight four circumstances under which a country may be classified as underdeveloped
5. Highlight three goals of development
6. Describe four reasons why it is important for Kenya to prepare a proper development plan
7. Highlight four characteristics of good development plan
8. Discuss five principles of taxation
9. Highlight distinguishing features between developing and developed countries.
10. What are the Obstacles in implementations development plans
11. Every third world country aspires to develop but it is faced with some obstacles. Explain five of such
obstacles to economic development
12. Explain five factors that have frustrated economic development in a developing country like Kenya
for the last few decades
13. The national budget is drawn before the beginning of every financial year by the government discuss
five functions it plays as a planning tool
14. Explain five challenges that Kenya is facing in the implementation of her development plans
15. Explain five changes that may take place when a country is experiencing economic development

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