How to achieve profit maximisation objective. Reduce prices to increase sales Reduce the cost of production Diversify and expand production Expand market Increase prices of products Increase sales promotion campaigns.
When to use a credit note: When there are damaged goods When packing cases and containers are returned When there is overcharge resulting from an arithmetic error. When goods delivered are not in accordance with the order
Outline any four circumstances under which a credit note may be used. Read Post »
i) Registered Capital – Amount of capital that a company can raise from its registered members ii) Subscribed Capital – The portion of issued share capital that has been accepted by the shareholders iii) Issued Capital – The portion of the authorised share capital that has been offered to the shareholders. iv) Paid up capital – The amount of subscribed share capital paid up by the shareholders of a company.
Benefits of savings and credit co-operative society (SACCO) Education Sharing of additional profits Loans can be advanced Savings Improved living standards Credit facilities eg Bank overdraft.
Problems of trade unions. Poor management Political interference Insufficient funds Lack of strike benefits High levels of unemployment Lack of patience during the negotiation period.
Account for the low bargaining power of trade unions in Kenya today. Read Post »
Reasons for rural industrialization policy. Creation of job opportunities in rural areas Provision of market for raw materials produced in rural areas. Balanced growth in the economy Reduced rural – urban migration / influx Increase incomes of rural population Rural population will get modern facilities like electricity, piped water, etc.
Function of commercial Banks Receiving deposits Advancing loans Transferring money Agents of the stock exchange market Custodian of valuable items
Explain any five functions of commercial banks. Read Post »
Methods of buying goods in instalment. – Hire purchase – A system where the buyer agrees to pay for the commodity in instalments. The buyer obtains the possession of the article on the down payment (deposit) but the title of ownership remains wit the seller until the last instalment is made. Credit sales / Deferred payment – under this system the article becomes the property of the buyer with the payment of the first instalment. The buyer is supposed to pay the remaining amount in instalments. Advantages of Hire Purchase to: The manufacturer. He is able to increase his volume of sales. Profit earned on hire purchase is higher than profit earned on cash basis. Goods belong to the seller until the last instalment is paid. The buyer. He takes possession of goods and their use immediately after down payment. Instalments to be made are predetermined enabling him to plan and budget for payment of the amounts. He is able to acquire goods he could not have afforded on cash terms The buyer can possess more goods including expensive items. 1 x 6 Advantages of credit sale to: The manufacturer He is able to increase his volume of sales Profits realized are higher since customers must pay higher prices He can reclaim the amount due from the buyer under a court order. The buyer He is able to buy expensive goods on credit Ownership of the article posses to the buyer after the first instalment He is able to plan on acquisition of certain goods. Differences: Hire purchase – Goods can be repossessed if the buyer breeches the contract – Ownership remains with the seller till the last instalment is made Credit sale – Goods cant be repossessed but the buyer can be sued for damages – Ownership posses to the buyer when the first instalment is affected.
Sales promotion: refers to the process whereby the demand for the products of a business enterprise is created in an attempt to increase sales. It has to do with informing the consumers about the existence of a particular product, its quality and features, places of availability as well as the price of the product. Importance of Trade fairs. It’s a means of advertising products to the wholesale and retail trade Brings new products on view to create a demand Builds up an advance order book within the trade and hence ensure continuity of production over a period of time Enables new business contacts to be made
Economies of scale refers to the benefits that a firm enjoys due to expanding its scale of production. Internal economies Administration: When a firm expands, its administrative expenses are distributed over greater output and the per unit cost decreases. Financial: Large firms have a good reputation hence can get loans from financial institutions. Marketing: Large firms sell their products easily since they are able to engage in sales promotion methods Technical: Due to their financial capacity, large firms can afford capital goods that enables them to produce superior products.
Sources of capital to small scale enterprise Personal funds / owners capital Borrowing from friends and relatives Members contribution Loan from banks and other non bank financial institutions Going public ie borrowing from the public by the use of stocks Venture capital ie a group of rich people with a pool of financial resources which they led to viable small scale business.
Discuss the main sources of capital to small scale enterprises. Read Post »
Methods of controlling volume of imports Tariffs – Involves levying import duty on goods that are entering a country. Quotas – Is a quantitative restriction permitting only a given number of units of a commodity to be imported during a specific period. Exchange control – Refers to control by the government on the exchange value of the currency of a country. Importers can only import goods when they seek permission for acquiring foreign exchange. Trade agreements – is an agreement between different countries regarding the foreign trade under this system, goods can only be imported from some specific countries only. Total ban/ Embargo – Involves imposing a complete ban on import of some specific commodities.
