1. You want to start a petrol station in the nearby trading center:

a) Describe the conditions that may influence your decision when locating the petrol station.

b) Explain the factors you will consider when recruiting employees.

c) State the various methods you will use to promote your business.

d) Outline the effects of the business on the environment.

2. The information below belongs to NDEGE ENTERPRISES LTD as at 31st December, 2005.


Capital 50,000,000

Drawings 10,000,000

Stock 20,000,000

Debtors 17,000,000

Creditors 9,000,000

Cash at bank 5,000,000

Cash balance 1,000,000

Premises 32,000,000

Equipment 9,000,000

10 year loan from Century Bank Ltd. 15,000,000

Net profit 20,000,000

Required to:

a) Prepare a Balance sheet as at 31st December, 2005.

b) Calculate the:

i. Working capital,

ii. Current ratio,

iii. Gross capital employed,

iv. Net capital employed,

v. Liquid capital.

3. You have acquired a shs10,000,000 loan set up a furniture workshop :

a) Prepare an estimate of the:

i. Working capital,

ii. Fixed capital

Requirements for the first month of the project.

b) Explain the factors you will consider when selecting machinery and equipment for the project.

c) Outline the benefits of your proposed workshop to society.

d) Giving reasons for your answer, state the type of insurance policies you will take to cover the project.

4. MADU ENTERPRISES maintains a petty cash book on the imprest system, with analysis columns: Motor expenses, Postage, General cleaning, Travel expenses at the ledger.

Below are the transactions for the month of September, 2006:


September 1 the chief cashier gave shs 300,000 as

a float to the petty cashier.

2 bought petrol for the van 16,000

3 paid travel expenses for staff 23,000

3 paid for postage 12,000

4 paid travel expenses for staff 32,000

7 paid for general cleaning 11,000

9 bought petrol for the van 21,000

12 paid travel expenses for staff 13,000

14 bought petrol for van 23,000

15 paid travel expenses for staff 5,000

16 paid for general cleaning 11,000

18 bought petrol for the van 22,000

20 paid for postage 12,000

22 paid for general cleaning 11,000

24 paid travel expenses for staff 7,000

29 settled accounts of Mr. C. Brown 13,000

30 paid for postage 12,000

Required to:

a) Prepare the petty cash book for MADU ENTERPRISES and balance it on September 30, 2006.

b) Transfer the accounts to the ledgers.

5. You intend to start farming project in your community:

a) Outline the factors you will consider when locating your project.

b) Prepare an action plan for your proposed project.

c) How will you ensure quality products in your business?

d) In what ways is your business dependent on the natural environment?


SECTION A: (40 marks)

1. a) (I) Define the term "income".

(ii) Name any three sources of income in your country.

b)(i) What is meant by depreciation?

(ii) Given that an asset has a cost value of Uganda shs100,000 and is depreciating at a rate 5% per annum; using the reducing balance method, calculate the value of the asset in the third year.

c)(i) Define the term "market assessment".

(ii) Give any three factors to consider when conducting market assessment.

d) Mention any four advantages of packaging a commodity.

e) (i) What is meant by pre-operating expenses?

(ii) State any three pre-operating expenses of a business.

f)(i) Distinguish between a development bank and a merchant bank.

(ii) Give any two services offered by financial institutions to business in your country.

g)(i) What is meant by a financial plan?

(Ii) Mention any three factors that should be considered when preparing a financial policies of insurance.

h)(i) Difference between workman's compensation and loss of profits policies of insurance.

(Ii) State any two principle of insurance.

i)(i) is a petty cash book?

(ii) Give any three advantages of using a petty cash book.

j)(i) What is meant by a trial balance?

(ii) Mention any three errors which do not affect totals of trial balance.

SECTION B: (60 marks)

2. a) What is the importance of transport to a business?

b) Explain the factors to consider when choosing a mode of transport.

3. a) Describe the activities carried out by an entrepreneur when marketing a product.

b) What are qualities of good sales person?

4. a) Distinguish between a limited liability company and a partnership.

b) Explain the advantages and disadvantages of a partnership.

5. a) Describe the different business laws in your country.

b) Explain the importance of business laws in your country.

6.a) Explain the essentials of a valid contract.

b) Under what circumstances may a contract be terminated?