Factors influencing decisions on what goods and services to produce

30/3/2022

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Factors influencing decisions on what goods and services to produce.

Profitability – people produce goods whose return are faster and higher
Government policy – Trade produce goods that are allowed by the laws of the country
Availability of resources – Goods produces should be the one that have adequate resources
Level of competition – People produce goods whose competition is not there as compared with the one that have shift competition
Market – Goods which have market are greatly produced
Cost of production – Goods and services produce should be cheaper in terms of overall cost

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Reasons justifying the use of economic barriers to control free trade.

30/3/2022

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Reasons justifying the use of economic barriers to control free trade.

Protection of strategic industries – food and clothing industries.
Creation and protection of employment – restrictions discourages imports thereby, encouraging, establishment of industries opportunities locally.
Prevention of dumping – to rid disposal of cheap, substandard and inferior goods.
Protection of local infant industries – young growing industries are unable to complete favourably with established industries.
Preservation of balance of trade deficit in a country.
Expanding market for local products – economic barriers creates large market for locally produced goods and services.

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Give any four conditions that a country’s terms of trade is likely to improve

22/9/2021

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A country may experience an improvement in terms of trade if:

Prices of imports decline while those of exports remain constant
Prices of imports remain constant while those of exports increase
Price of imports decline while those of export increase
The prices of both the imports and export increase where the rate of increase for exports is higher than of imports.
Both prices decrease but the decrease in price of reports is lower than that of imports

Give any four conditions that a country’s terms of trade is likely to improve

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Outline one circumstance under which each of the following source documents may be issued by a trader:

21/12/2020

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Outline one circumstance under which each of the following source documents may be issued by a trader:

(a) Debit note
(b) Invoice
(e) Credit note
(d) Quotation

When correcting undercharge.
When demanding payment for goods supplied.
When correcting an overcharge for goods supplied/empty packaging returned)goods returned.
When replying to a specific letter of inquiry.

Outline one circumstance under which each of the following source documents may be issued by a trader:

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Fill the relevant branches of trade in the diagram given below:

20/12/2020

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Fill the relevant branches of trade in the diagram given below:

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A school leaver plans to start a retail business. Explain five types of small scale retail shops the person may start.

20/12/2020

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A school leaver plans to start a retail business. Explain five types of small scale retail shops the person may start.

Types of small scale retail shops that a school leaver may start include:

Single/unit shops - where the person can sell a wide range of goods in a small fixed shop.
Kiosk - the person can put up a simple semi-permanent structure and sell fast moving goods.
lied shop - the person can operate from a permanent building but sell products of a particular manufacturer.
Market stall - the person can hire a permanent bench/stall from the county council/municipal market from where to sell goods.
Canteen - the person can rent a room from an institution and stock goods from different manufacturers.
Mobile shop - the person can acquire or hire a vehicle from where to sell goods by moving from one place to another.
Automatic vending machines - can hire or buy coin-operated machines for selling goods.

A school leaver plans to start a retail business. Explain five types of small scale retail shops the person may start.

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Highlight four benefits that a country gets by encouraging trade among her citizens.

20/12/2020

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Highlight four benefits that a country gets by encouraging trade among her citizens.

Benefits that a country gets by encouraging trade among her citizens include:

Facilitates exchange of goods between people from different regions.
Creates employment opportunities.
Earns tax revenue from businesses.
Enhances relationships between communities.
Opens up remote areas.
Encourages specialization.
Improves the standards of living for citizens.
The country is able to dispose off her surplus produce.

Highlight four benefits that a country gets by encouraging trade among her citizens.

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Nyaboke operates a shop in a fanning area. State four ways in which the farming community can benefit from the business activity.

20/12/2020

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Nyaboke operates a shop in a fanning area. State four ways in which the farming community can benefit from the business activity.

Benefits that a farming community would get from Nyaboke’s shop include:

They can buy farm inputs from the shop.
They can buy consumer goods from the shop.
They can get goods on credit.
They can sell some of the farm produce to Nyaboke.
The shop can be used as a communication centre.
The shop can offer employment opportunities.
The shop ensures steady supply of goods to them.

Nyaboke operates a shop in a fanning area. State four ways in which the farming community can benefit from the business activity.

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Outline four circumstances under which cash with order may be used. (4 marks)

19/12/2020

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Outline four circumstances under which cash with order may be used.

Circumstances under which cash with order may be used include:

When the business is being conducted through post/mail order business.
When the buyer is new to the seller.
When the buyer's credit worthiness is in doubt.
When it is the seller’s policy not to advance credit.
When the seller wants to avoid the high cost of debt collection.
When the seller needs working capital.

Outline four circumstances under which cash with order may be used. (4 marks)

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Describe five accounting documents that are used in home trade. (10 marks)

17/12/2020

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Accounting documents that are used in home trade

Accounting documents that are used in home trade include:

Invoice.
This is a document sent by the seller to a buyer demanding payment for goods supplied. It shows details of the goods, quantity, unit price, value, any discount given, net payment and terms of payment sold/bought on credit/a source document for sales/purchases day bool/A Ledger.
Debit note.
A document sent by the seller to the buyer to correct an undercharge. It is issued when the invoice shows a lesser amount than what is actually owed. It is an additional invoice/may be used when empty containers have not been returned and have to be charged for.
Credit note.
A document sent by the seller to the buyer to correct an overcharge It is issued when goods are returned to the seller because they are defective, not the ones ordered or they were not required. When returning empty containers (which had been charged for). A source document for sales returns/purchases returns day books
Receipt.
This is a document issued by the seller to the buyer when payment is made for goods I services. A source document for the cash book/cash payment journal/cash receipts journal.
Statement of account
This is a document sent by the seller to the buyer showing details of transactions for the month with a running balance shown with each entry.
Payment voucher
A document used to validate payment for service/goods rendered. It is issued by a cashier and signed by the service provider/ payee/ recipient/a source document for the petty cash book/imprest used where the receipt is not readily available.
Remittance advice note.
This is a document that accompanies a cheque issued for settlement of a debt. It provides information on the payment.
AIE (Authority to incurr expenditure.
Written instructions allowing one to spend institutional funds up to a certain amount.
Bank deposit slip
As a source document for cash book/evidence of payment into the bank account.
Consignment note
supports hire of carriage services/shows transport charges.

Consignment Note

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Identify the types of wholesalers described in the statements given below:

16/12/2020

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Identify the types of wholesalers described in the statements given below:

(a) A wholesaler who trades in maize grain only.

Specialized wholesaler

(b) A wholesaler who supplies goods to most of the traders in Kitui, Mbooni and Machakos districts in the Eastern part of Kenya.

Regional wholesaler

(c) A wholesaler who buys tomatoes from farmers in rural areas and sells the same to other wholesalers in urban areas.

Rack jobbers

(d) A wholesaler who trades in a wide variety of human medicine.

General line wholesaler

Identify the types of wholesalers described in the statements given below:

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State four factors that may influence the level of national income.

16/12/2020

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State four factors that may influence the level of national income.

Factors that may influence the level of national income include:

Availability of natural resources. .
Availability of skilled labour force.
Literacy levels of the citizens in general.
Level of country’s industrialization.
Dependency ratio on the economically active portion of the population.
Level of technology
The size and quality of the population
The entrepreneurial culture/level of investment
Infrastructure (transport, communication
Political stability
Socio-cultural factors
Security

State four factors that may influence the level of national income.

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State four disadvantages of barter trade. (4 marks)

15/12/2020

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Disadvantages of barter trade

Disadvantages of barter trade include:

Lack of double coincidence of wants.
Indivisibility of some goods.
Perishability of some goods.
Difficult to measure value.
Problems of portability of some goods.
Lack of a standard for making deferred payments.
Lack of unit of accounts.

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Outline four reasons why hypermarkets are becoming increasingly popular in Kenya

14/12/2020

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Outline four reasons why hypermarkets are becoming increasingly popular in Kenya

Reasons for popularity of hypermarkets in Kenya include:

Easily accessible
One stop shop-A range of goods and services may be obtained
Parking space is available of auxiliary services
Operates for longer hours
Accept debits/Credit cards
Attractive & convenient to shop in
Saves on land rates/ space
They offer sales services
Security guaranteed
Located away from city hassles
Availability of auxiliary services.

Outline four reasons why hypermarkets are becoming increasingly popular in Kenya

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Highlight four circumstances in which a cheque may be used as a means of payment. (4 marks)

13/12/2020

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Circumstances in which a cheque may be used as a means of payment

Circumstances in which a cheque may be used as a means of payment include:

When the amounts involved in the transaction are high.
When the seller insists on payment by cheque.
When evidence of payment is required.
When payment is to be directed into the payee ‘s account.
When the tenus of sale is cash with order.
When there is need to ensure safety of the money being transferred.

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The following are some of the documents used in home trade: Cash sale receipt, catalogue, invoice and statement of account. Match each document with the appropriate description provided in the table below.

11/12/2020

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The following are some of the documents used in home trade: Cash sale receipt, catalogue, invoice and statement of account. Match each document with the appropriate description provided in the table below.

Catalogue
Invoice
Statements of account
Cash sale receipt

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Explain five benefits that may accrue to a community that is involved in trading activities. (10 marks)

10/12/2020

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Benefits that may accrue to a community that is involved in trading activities.

There will be an opportunity to utilize available resources that would otherwise have stayed idle/the community will be able to utilize idle resources.
There will creation of employment for those engaged in trading activities/ various/different trading action
Trade will also lead to expanded / wide markets for goods / services (produced)
Variety of goods/services (for exchange will be available giving people a choice/to satisfy different consumer needs.
Growing/increased income/earning of income to purchase/continue more goods/services
New business/more business opportunities (will be started as people’s needs continue to increase/more business opportunities to provide support services/other services.
Increased production of goods/services making more goods/services available to the community/when these meet consumer needs.
Entrances specialization/division of labour/improve quality of goods due to exchange of goods/services/which leads to quality goods/services.
Improved technology due to exchange of ideas/skills, machinery, employment.
Poorer/understanding due to interdependence/interaction.
Sale/disposal of surplus goods/services to minimize wastage.
Factors goods/services they don’t produce by buying them from others.
Improved infrastructure e.g. roads, amenities, railways

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Outline four benefits to a trader who operates a small retail outlet. (4 marks)

8/12/2020

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Benefits to a trader who operates a small retail outlet.

He needs only a small amount of capital.
He gives personal attention to customers.
His operations can be flexible.
Outlet is easy to manage
There is legal requirement.
He does not have to share profits with anyone
Maintains business

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State four circumstances under which hire purchase may be used to acquire goods. (4 marks)

7/12/2020

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Circumstances under which hire purchase may be used to acquire goods

Circumstances under which Hire purchase may be used to acquire goods include:

When the buyer does not have enough money to pay at once.
When the product is expensive.
When the buyer wants to use the item immediately before completing paying.
When the buyer is a salaried employee/has regular income.
When the buyer desires to own luxurious items.
When the buyer wants to save in the form of goods.
When the goods are durable in nature.
When the goods can generate income to pay the installments.

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Highlight four factors that may influence a consumer to purchase products from a kiosk rather than a supermarket. (4 marks)

7/12/2020

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Factors that may influence a consumer to purchase products from a kiosk rather than a supermarket

Factors that may influence a consumer to purchase products from a kiosk rather than a supermarket include:

Kiosks may offer credit facilities without any security offered.
Kiosks bring goods closer to consumers.
Kiosks provide sizes/quantities consumer can afford.
Kiosk owners have personal contact/touch with consumers.
Kiosks may be accessed beyond the normal working routine when the need arises.
Kiosks may allow for bargaining.
Kiosks may offer advice.
To promote the kiosk owner.

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Outline four considerations that a seller should take into account before giving credit to a new customer. (4mks)

6/12/2020

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Considerations that a seller should take into account before giving credit to a new customer.

Reliability- check if the customer is an honest per son who can honour the debt as agreed/character
Ability to pay – find out if the customer is an honest per son who can honour credit.
Capital- check whether the customer has assets that can cover all his liabilities
Collateral- checks whether the customer has resources to repay the credit to make sure that credit is covered.
Prevailing economic conditions-consider if the status of the economic climate is healthy to warrant giving the credit
Credit period
Amount of stock available

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Explain five differences between chain stores and departmental stores. (10 marks)

29/11/2020

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Differences between chain stores and departmental stores

Differences between chain stores and departmental stores include:

Vertical Divider

CHAIN STORES

Have many branches in different towns.
Purchases are centralized.
Have standardized prices in all branches.
Has uniform outward appearance and interior layout in all branches.
Management of the stores is centralized.
Slow moving goods in one branch can be moved to another where demand for them is higher.
A customer can pay for goods in one branch and collect than from another branch.

DEPARTMENTAL STORES

Have different departments within the same building.
Purchases are made per department.
Every department sets its own prices.
Each department is different from the other in terms of outward appearance and interior layout.
Each department has its own management.
Slow moving goods in one department cannot be moved to another department.
Goods paid for in a department can only be collected from that department.

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List four forms of retail businesses that a school leaver may engage in. (4 marks)

27/11/2020

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List four forms of retail businesses that a school leaver may engage in

Expected Response

Retail businesses that a school leaver may engage in include:

Kiosks
Single shops
Mobile shops
Roadside selling.
Open air market trading.
Hawking
Automatic vending machine.
Market stalls
Tied shops
Peddling
Canteens

List four forms of retail businesses that a school leaver may engage in

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Outline four conditions under which a manufacturer would distribute his products through the wholesaler. (4 marks)

22/11/2020

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Conditions under which a manufacturer would distribute his products through the wholesaler

Conditions under which a manufacturer would distribute his products through a wholesaler include:

When it is the dictate of government policy.
When the manufacturer needs time to concentrate on production.
When he wants to avoid the high costs of distribution.
Where it is too expensive to distribute using the manufacture’s own outlet.
Where wholesalers prefer to market the product under their own brand names.
Where the manufacturer wants to avoid marketing risks like drop in prices.
When the wholesaler provides ready cash while purchasing in bulk.
Where the manufacturer needs to free storage space.

four conditions under which a manufacturer would distribute his products through the wholesaler

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The document shown below is used in home trade.

21/11/2020

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The document shown below is used in home trade

(a) Identify the document(1 marks)
(b) Outline three circumstances under which the above document may be used. (3 marks)

Expected Response

(a) Credit note
(b) Circumstances under which the document is used include:

When correcting arithmetic error resulting into overcharge.
Where the buyer has been charged higher prices than the recommended price.
When items included in the invoice were not delivered.
When a deserved discount is not given.
When the buyer has returned some goods.
When empty crates /packaging for which a deposit had been paid are returned.

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<<Previous

Factors influencing decisions on what goods and services to produce.

Reasons justifying the use of economic barriers to control free trade.

Outline one circumstance under which each of the following source documents may be issued by a trader:

Fill the relevant branches of trade in the diagram given below:

A school leaver plans to start a retail business. Explain five types of small scale retail shops the person may start.

Highlight four benefits that a country gets by encouraging trade among her citizens.

Nyaboke operates a shop in a fanning area. State four ways in which the farming community can benefit from the business activity.

Outline four circumstances under which cash with order may be used.

Accounting documents that are used in home trade

Identify the types of wholesalers described in the statements given below:

State four factors that may influence the level of national income.

Disadvantages of barter trade

Outline four reasons why hypermarkets are becoming increasingly popular in Kenya

Circumstances in which a cheque may be used as a means of payment

The following are some of the documents used in home trade: Cash sale receipt, catalogue, invoice and statement of account. Match each document with the appropriate description provided in the table below.

Benefits that may accrue to a community that is involved in trading activities.

Benefits to a trader who operates a small retail outlet.

Circumstances under which hire purchase may be used to acquire goods

Factors that may influence a consumer to purchase products from a kiosk rather than a supermarket

Considerations that a seller should take into account before giving credit to a new customer.

Differences between chain stores and departmental stores

CHAIN STORES

DEPARTMENTAL STORES

List four forms of retail businesses that a school leaver may engage in

Expected Response

Conditions under which a manufacturer would distribute his products through the wholesaler

Expected Response

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