a) The following demand schedule shows a change in demand of milk in Kiwi County in a certain period.

Explain five factors that could have caused the change in demand of milk from Q₀ to Q_1. (10 marks)

b) The following transactions for the month of June 2013 were extracted from the books of Kyondoni Retail Traders
June 1^st Received invoice number 122 valued Kshs. 10,000 from Onyango
June 5^th Received invoice number 345 worth Kshs. 8,400 from Pendo Traders.
June 16^th Received invoice number 207 worth Kshs. 15,000 from Jasho Traders.
June 26^th Received invoice number 500 from Kurasini Traders worth Kshs. 6,500

Required:

i) Prepare the relevant journal for Kyondoni Retail Traders. (5 marks)

ii) Post the transactions to the relevant ledger accounts for Kyondoni Retail Traders.

Do not balance off the ledger accounts. (5marks)

a) Explain five benefits business firms enjoy as a result of government involvement in business activities. (10 marks)

b) Explain five causes of cost push inflation in an economy. (10 marks)

a) Explain five factors one should consider in choice of a method of product promotion. (10 marks)

b) Explain five measures that would be taken by a country in order to correct her balance of payment deficit. (10 marks)

a) Explain five demerits of indirect taxes. (10 marks)

b) Explain five principles of insurance. (10 marks)

a)Explain five differences between commercial banks and non-banking financial institutions. (10 marks)

b) Musengo hardware dealers had the following trial balance for as 31^st December, 2014.

TRIAL BALANCE AS AT 31/12/2014

Closing stock was valued at Ksh. 55, 000.

Required:

Trading, profit and loss account for the year ended 31/12/2014. (10 marks)

a) Explain five problems encountered in measuring national income using the income approach. (10 marks)

b) Explain five factors that encourage entrepreneurship in Kenya. (10 marks)