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Esm 104: Quantitative Skills Ii Question Paper
Esm 104: Quantitative Skills Ii
Course:Bachelor Of Education Science
Institution: Masinde Muliro University Of Science And Technology question papers
Exam Year:2012
Masinde Muliro University of Science and Technology (MMUST)
Course Title: Quantitative skills II
First year second semester
Course code: ESM 104
Time: 3 HOURS
Instruction to candidates:
Answer question ONE and any other THREE questions
QUESTION ONE
a) (i) Define a balance sheet and give one reason why it is prepared? (3mks)
(ii) The following balances were extracted from the books of Kenya Traders enterprises as at December 2011.
K Shs
Capital 1,250,000
Land and Buildings 2,000,000
Plant and Machinery 1,500,000
5 Year loan from ICDC 1,000,000
Debtors 450,000
Creditors 1,750,000
Cash at bank 300,000
Cash at hand 50,000
Net profit 300,000
Required: Prepare a balance sheet of Kenya Traders enterprise as at 31st December 2011 clearly showing long-term liabilities, current Liabilities, Fixed Assets and Current Assets. (5mks)
b) (i) Mr. Joseph Mathews is commission agent for Carmax, who are importers of new cars in Kenya. During the month of August 2011, he sold 12 new cars each selling at K Shs 2,000,000. The company’s commission policy for its agents is as follows:
Number of units sold Percentage commission
1 – 5 3%
6 – 10 5%
11 – 15 7%
16 – 20 10%
Calculate Mr. Joseph Mathew’s commission fro the month of August 2012. (3mks)
(ii) Define tax and explain the difference between Direct tax and Indirect tax. (3mks)
c) (i) Explain what you understand by Gross National Product (GDP) and state the difference between Gross National Product (GNP) and Gross Domestic Product (GDP) (3mks)
(ii) Mambo Safaris is a limited Liability Company with 10,000 ordinary shares each per value of K Shs 100. After the end of the year results for the year 2011, and after taking into consideration Government taxes, the company declared a dividend of 10% for each ordinary share held. Calculate the dividend on ordinary shares. (2mks)
d) (i) What is the difference between simple interest and compound interest? (2mks)
Mr. Simiyu Mwangi borrowed K Shs 100,000 from Kenya Commercial bank which charges 10% p.a simple interest. The loan is payable in 5 years. Calculate the total interest payable on the loan and the total amount of money repaid after 5 years. (2mks)
(ii) Differentiate between a surplus budget and a deficit budget. (2mks)
e) (i) Highlight TWO uses and ONE limitation of index numbers. (3mks)
(ii) What do you understand by the term Return on capital invested? (1mk)
(iii) Explain the meaning of Payable period of an investment. (2mks)
(iv) State the difference between Cash discount and Trade discount. (2mks)
QUESTION TWO
a) The following table is an extract from Miss Rose Odhiambo’s personal earnings and expenses (in K Shs) at the beginning of the year 2012.
Month Salary Dividends Profits Food Clothing Rent Fees Transport
January 9000 1100 600 3800 1600 1500 1700 800
February 9000 400 200 3400 800 1500 3800 800
March 9000 900 1200 360 700 1500 300 800
At 31st December 2011, she had a balance of K Shs 300
Using the information provided, prepare Odhiambo’s personal budget clearly showing:
i) Total income for each month.( 2mks)
ii) Total expenditures for each month.(2mks)
iii) Net surplus or deficit for each month. (2mks)
iv) Balance carried forward in each month. (2mks)
b) Explain THREE factors that will cause the change in the amount of capital of the business. (3mks)
c) What is the difference between taxable income and disposable income? Give an illustration in each case. (4mks)
QUESTION THREE
Mr. Peter Smith, a small scale deals in food products. On examination of his goods of accounts, the following balances were extracted for the year ended 30th June 2012.
K Shs
Stock 1st July 2011 20,500
Stock 30th June 2012 22,500
Sales 200,000
Purchases 104,000
Stationary 1,630
Rent and rates 5,280
Traveling expenses 3,500
Capital 72,590
Salaries 15,000
Debtors 20,000
Creditors 30,000
Required:
(i) Prepare Mr. Peter Smith’s Trading Profit and Loss account for each year ended 30th June 2012 clearly showing the Gross Profit, Total expenses and Net profit. (8mks)
(ii) Calculate his net profit as a percentage of capital. Comment on this ate of return on capital. (4mks)
b) What is the difference between a Subsidy and a Grant? (3mks)
QUESTION FOUR
a) Kenya Government uses taxation to serve various purposes. Explain any FIVE purposes for imposition of tax by the government. (5mks)
b) An employee with a Local Authority drew the following benefits in the month of Jul 2012.
K Shs
Basic Salary 25,000
House Allowance 12,000
Medical Allowance 2,000
Commuter Allowance 1,500
During the same month, the employee made the following payments
5% of basic salary to a registered Pension Scheme
2% of basic salary to a cooperative Society shares
Shs.320 to NHIF
Shs.700 to House savings
Shs.600 to Life Insurance Scheme
The employee is entitled to a personal relief of K Shs. 1025 per month.
Tax Schedule
Amount (K Shs) Tax (%)
1 – 10164 10%
Next 9576 15%
Next 9576 20%
Next 9576 25%
Excess of 38,892 30%
Using the tax schedule provided, calculate the employee’s
i) Gross income for the month of August 2012. (2mks)
ii) Taxable income for the month of August 2012. (2mks)
iii) Tax liability for the month. (4mks)
iv) Net income for the month. (2mks)
QUESTION FIVE
The table below shows the prices and quantity of commodities sold at a certain market in the Years 2010 and 2011
Year 2010 2011
Commodity Price (Shs) Quantity (Kg) Price (Shs) Quantity(Shs)
Maize 65 20 135 30
Rice 95 8 160 7
Beans 150 5 320 8
a) Using 2010 as the Base year, compute to the nearest 1 decimal place:
i) Laspeyre’s Price Index. (5mks)
ii) Paasche’s Price index. (5mks)
iii) Fisher’s Ideal Price index. (2mks)
b) Comment on the prices of commodities in the month using Laspeyre’s Price Index. (1mk)
c) Give the reason why Paasche’s Price Index is preferred as a measure of the cost of living. (2mks)
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