(a) Explain five important of Entrepreneurship to an economy. (10 mks)
(b) Explain five effects of a declining populating to an economy. (10 mks)

(a) Outline the use of following source of documents as used in Home Trade. (10 mks)
(b) Outline the use of the following source documents as used in Home Trade.(10 mks)
(i) catalogue
(ii) advice note
(iii) credit note
(iv) debit note
(v) invoice

(a) The following information was extracted from the books of Baraka Traders on 31^st December 2011.

Required:
(i) Prepared Baraka Traders balance sheet as at 31st December 2011. Clearly showing
fixed assets, current assets, long-term liabilities and current liabilities. (6 mks)
(ii) Calculate: ï‚·

• Working capital (1 mk) ï‚·
• Capital employed (1 mk)
• Borrowed capital (1 mk) ï‚·
• Return on capital (1 mk)

(b) Explain five circumstances under which a business person would prefer written
communication. (10 mks)

(a) With an aid of a diagram explain how price is determined through price mechanism.
(10 mks)
(b) Outline five benefits of the “pooling of risks” to an insurance company. (10 mks)

(a) Explain five causes of cost-push inflation. (10 mks)
(b) Explain five circumstances under which a producer would prefer to sell his product
directly to the consumer. (10 mks)

(a) Explain five importance of warehousing to a producer. (10 mks)
(b) The accounts Zawadi Traders showed the following balances on 1^st January 2010.
(10 mks)

The following transitions took place during the month of January 2010.

2010
Jan 2: Bought stock worth sh 50,000 n credit
Jan 3: Cash sales sh 80,000
Jan 5: Received sh 20,000 cash from debtors
Jan 10: Paid part of loan sh 70,000 cash
Jan 12: Paid creditors sh 52,000 cash
Jan16: Bought office furniture sh 45,000
Jan 20: Paid salaries sh 40,000 cash
Jan 25: Deposited sh 100,000 into the bank

Required:
Record the above transactions in the relevant ledger accounts and balance the account on
31^st January 2010.