KCSE Business Studies Topical Questions and Answers

List four advantages of credit sales to a seller

5/11/2021

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List four advantages of credit sales to a seller. (4mks)

Four advantages of credit sale to a seller.

The seller is able to create goodwill with his customers.
Selling on credit increases the businessman’s profit due to increased sales.
Goods sold on credit are usually sold at high prices, meaning higher profits to the seller.
The seller is able to increase his sales volume.

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Outline four circumstances that lead to a trader declining in giving credit facilities to customers

5/11/2021

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Outline four circumstances that lead to a trader declining in giving credit facilities to customers. (4mks)

Circumstances leading to a trader declining in giving credit facilities to customers

Incase of unreliable customers/uncredit worthy customers.
Where stock level is too low.
Where customer has doubtful character.
Where customer order for goods beyond the ability of the seller.
When it is a business policy.
Where customers provide for longer credit period.
When the rate of stock turn-over is high

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The following balances were extracted from the books of Rehema Traders on 1st January 2015.

5/12/2020

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The following balances were extracted from the books of Rehema Traders on 1st January 2015.
Ksh
Capital 600,000
Creditors 180,000
Motor van 200,000
Furniture 200,000
Stock 60,000
Debtors 80,000
Cash 240,000

The following transactions took place during the year ended 31st December 2015:

(i) Sold furniture worth Ksh 60,000 for which Ksh 40,000 cash was received and the balance was due at the end of the year.
(ii) Purchased goods worth Ksh 100,000 for which cash of Ksh 70,000 was paid and the balance was still outstanding at the end of the year.
(iii) Cash Ksh 10,000 was taken from the business by the proprietor to settle the spouse’s hospital bill.

Required: Outline the effect of each transaction on the items of the balance sheet.(8 marks)

The following transactions relate to Jelimo Stores:

1/12/2020

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The following transactions relate to Jelimo Stores:

(a) 10th October 2015 sold unused stationery for Sh 3,000 on credit to K. Likia.
(b) 23rd October 2015, bought a motor vehicle on credit from Onjwaria Motors for Sh 700,000.

Required: Record the above transactions in the general Journal given below: (4 marks)

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List four advantages of credit sales to a seller

List four advantages of credit sales to a seller. (4mks)

Outline four circumstances that lead to a trader declining in giving credit facilities to customers

Outline four circumstances that lead to a trader declining in giving credit facilities to customers. (4mks)

The following balances were extracted from the books of Rehema Traders on 1st January 2015.

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The following transactions relate to Jelimo Stores:

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​List four advantages of credit sales to a seller

​List four advantages of credit sales to a seller. (4mks)

Outline four circumstances that lead to a trader declining in giving credit facilities to customers

Outline four circumstances that lead to a trader declining in giving credit facilities to customers. (4mks)

The following balances were extracted from the books of Rehema Traders on 1st January 2015.

Related Searches

The following transactions relate to Jelimo Stores:

Categories

Archives

List four advantages of credit sales to a seller

List four advantages of credit sales to a seller. (4mks)