1. You intend to establish a small-scale diary farm in your area:

a) Name the different: i) products,

ii) by products

of your proposed business.

b) Describe the measures you would take to increase output on your farm.

c) Outline the benefits of your business to the community.

d) In what ways may your business be harmful to the natural environment?

2. KK CO. LTD has the following balances as at May 1, 2003:


Cash 2, 900, 000

Bank 65,400,000

Debtors (Olima) 12,000,000

Creditors (Oloo) 6,000,000

The following transactions took place during the month of May:

May 2 Olima, a debtor paid his account by cash.

8 bought goods by cheque 44,000,000

11 withdrew from bank for office use 10,000,000

16 sold goods by cheque 28,000,000

25 paid wages in cash 9,200,000

28 sold goods for cash 4,000,000

29 paid Oloo, a creditor by cheque.

30 bought goods by cheque 10,000,000


a) Enter the above information in KK's Ledger Book and balance off the accounts at the end of the month.

b) Extract KK's Trial Balance as at 31 May, 2003.

c) Calculate the capital of KK Co.Ltd as at 31 May,2003.

3. You have obtained a loan of Ug.shs50,000,000 from a commercial Bank to establish either a petrol station or a mobile phone shop:

a) Giving reason for your answer, identify the business you would choose to operate

b) Mention the risks you are likely to encounter when operating the business chosen in(a) above.

c) Suggest ways of minimizing the risks mentioned in (b) above.

d) Explain the benefits you are likely to enjoy from running the business.

4. The following particulars were extracted from the books of KAROBWA Enterprises LTD as at 31st December , 2001: shs

Stock on Jan 1 32,000,000

Creditors 60,000,000

Capital 200,000,000

Loans to firms (short-term) 50,000,000

Purchases 116,000,000

Closing stock 40,000,000

Cash 8,000,000

Motor vehicle 100,000,000

Bank 34,000,000

Debtors 38,000,000

Expenses 7,000,000


a) Calculate the:

i. Cost of sales

ii. Average stock

iii. Rate of turn over

iv. Working capital.

b) If the mark up is 25%, determine the:

i. Turn over

ii. Gross profit margin

iii. Net profit

c) Calculate the: i) current ratio.

ii) capital employed.

5. You intend to establish a large-scale bakery project:

a) List the requirements for your project.

b) Explain the tasks you would perform as a manager of your project.

c) What factors would you consider when recruiting employees for your business?

d) I) Describe the methods of communication you would use when dealing with your employees.

ii) Outline the barriers you are likely to face when communicating with your employees.


SECTION A: (40 marks)

1. a) Give any four ways in which agribusiness are important to your country.

b) State any two: i) types of income,

ii) Reasons why people save their income.

c) i) Distinguish between retail trade and whole sale trade.

ii) Mention any two services a retailer offers to a customer.

d) i) Define the term "pre-operating expenses".

ii) Give any three pre-operating expenses met by an entrepreneur.

e) i)Differentiate between a cash discount and trade discount.

ii) Owor bought goods worth shs9, 000. He was allowed a cash discount of 5%. How much did he pay for the goods?

f) i)Define the term "advertising".

ii) Give any three advertising media used in your country.

g) i) Distinguish between insurable risks and non-insurable risks.

ii) Mention any two principles of insurance.

H) i) Differentiate between a development bank and a merchant bank.

ii) Mention any two services offered by merchant banks.

I) i) What are credit sales?

ii) State any three advantages of credit sales.

j) i)Distinguish between returns inwards and returns outwards.

ii) State any two reasons why goods may be returned by the buyer.

SECTION B: (60 marks)

2. a) Explain the challenges faced by manufacturing business in your country.

b) Suggest ways of overcoming the challenges in (a) above.

3. a) Explain the importance of packaging a product for sale.

b) What factors should an entrepreneur when choosing packaging materials?

4. a) Outline the activities carried out by an entrepreneur when marketing a product.

b) Describe the qualities of a good salesperson.

5. a) Describe the steps taken when preparing a business plan.

b) What factors should be considered when preparing a marketing plan for a business?

6. a) Differentiate between a sole proprietorship and a partnership.

b) Outline the advantages and disadvantages of a partnership.

7. a) Explain the essential elements of a valid contract.

b) Under what circumstances may a contract be discharged?