BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- a) Labour is an important factor of production. Explain five barriers that may hinder its
mobility as a factor of production. (10 marks)
- b) Recently there has been a general rise in the price of consumer goods and services in Kenya. Explain five negative effects of this trend. (10 marks)
- a) Insurance is based on several principles. Explain five principles of insurance. (10 marks)
- b) The table below shows the terms of trade for country A from year 2006 to 2009.
| Year | Terms of trade (%) |
| 2006
2007 2008 2009 |
80
77 74 68 |
Explain five factors that may have accounted for the trend in term of trade of country A
above. (10 marks)
- a) Explain five circumstances under which a high population growth may be desirable to a
country. (10 marks)
- b) Explain five factors that influence the amount of money held by an individual for
transactionary motive. (10 marks)
- a) Highlight five ways through which a government can provide an enabling environment for the
success of business activities in a country. (10 marks)
- b) On 1st June 2008 Happy Traders had cash in hand shs.5000 and cash at Bank shs7500. The
following transactions took place during the month.
June 2: Bought goods in cash sh750
June 4: Paid salaries by cash shs. 3750
June 5 Received cheques from the following debtors after allowing 2% discount in
each case, Kamau sh. 490, Jane sh. 980.
June 8: Paid the following accounts by cheque in each case deducting a 5% discount
Otieno sh.1,500, Wanjiku sh.600.
June 12: Bought office machinery by cheque shs.2,500
June 20: Withdrew cash sh.500 for private use.
June 25: Cash sales sh.1000
June 26: Banked cash amounting to sh.500
June 29: Received shs.1,500 cash from Wanjohi a debtor.
Required: Prepare a three column cash book duly balanced. (10 marks)
- a) A potential manufacturing firm of domestic products would like to introduce new products in the market. Explain five factors that would influence their decision on what goods to produce.
(10 marks)
- b) Explain five considerations to be made by a government when deciding on a good tax
system. (10 marks)
- a) Manufacturers distribute their products to the final consumers through various channels.
Explain five factors considered when choosing a particular channel of distribution.
(10 marks)
- b) The following information was extracted from Simba traders on 31st 2008
| Stock (1-1-08) | Shs.25,000 |
| General expenses | 19,000 |
| Commission income | 21,250 |
| Discounts allowed | 2,750 |
| Salaries | 20,000 |
| Carriage outwards | 2,500 |
| Purchases | 350,000 |
| Return outwards | 2,000 |
| Sales | 500,000 |
| Return inwards | 15,000 |
| Carriage inwards | 5,000 |
| Stock (31-12-08) | 3,000 |
Required: Prepare Simba Traders trading profit and loss account for the period ended
31st Dec. 2008. (10 marks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education.
- a) Discuss five tools used by the Central bank to control the monetary policy in a country. (10mks)
- b) The world has been experiencing global economic recessions. Explain five effects of this economic recession in Kenya. (10mks)
- a) The following trial balance relate to Gatundia Traders as at 31st Dec 2009.
Gatundia Traders
Trial balance
As at 31st Dec 2009.
Dr. Cr.
|
Fixed assets Stock 1/1/2009 Purchases & sales Bad debts Debtors & Creditors Salaries Cash Bank Return in & outwards General expenses Capital |
Shs.
82,000 12,500 70,000 4,000 10,500 14,000 2,500
1,500 5,200
202,200 |
Shs.
95,000
8,500
7,500 2,400
88,800 202,200
|
Additional information
- Closing stock valued at shs. 6,500.
- Salary outstanding 2,800.
Required
- Profit and loss account as at 31st Dec 2009.
- Balance sheet as at that date. (10mks)
- b) Explain five benefits that will accrue to a trader who sell goods on cash basis only (10mks)
- a) Explain five reasons why the Government imposes tax on its Citizens. (10mks)
- b) The following information was obtained from Kathure’s Business for the year ended 30th June 2009.
Creditors opening balance shs. 165,000
Debtors opening balance shs. 263,000
Payment to creditors’ shs. 296,000
Receipts from debtors’ shs. 309,000
Discount allowed shs. 34,000
Discount received shs. 29,500
Purchases return shs. 44,600
Sales return shs.36, 400
Debtors closing balance shs. 189,500
Creditors closing balance shs. 143,400
Required
- determine credit sales
- Determine credit purchases (10mks).
- a) Explain five benefits that will accrue to Kenya from joining the East African Community. (10mks).
- b) Discuss five negative effects of inflation in the Kenyan economy. (10mks).
- a) Discuss five reasons for disequilibrium in Balance of payment in Developing countries. (10mks).
- b) Explain five factors that limit the size of the firm. (10mks).
- a) Hussein Traders had the following balances as at June 1st 2009.
Cash shs 10,000
Bank shs 4300.
During the month of June, the following transactions took place.
June 3. Fatuma a debtor settled her account of shs 8.000 by cheque of shs 7,500
- Paid rent in cash shs 4,000.
- Deposited shs3000 into the business Bank account from the cash box.
- Settled Obama’s account of shs 10,000and allowed him a discount of 1% .
- Deposited shs 14,000 in the Business Bank account from private sources.
- Cash sales shs 6,000.
- Wanjiku a debtor settled her account of shs 4,000 having been allowed a discount of 20%.
- Purchased furniture shs 2,600 by cheque.
- Received shs 1,800 cash from Mohammed.
- Bank all the cash in the cash box except shs 800.
Required
- i) Prepare a three column cash book and balance it off. (10mks).
- b) Explain three reasons why its better for Kenya to borrow internally rather than from external sources. (6mks).
- c) Use a diagram to explain the incidence of tax under perfectly inelastic demand. (4mks).
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
Answer any five questions
- (a) The Kenya government is in the process of establishing a new rail service in the country.
Explain five reasons why the government is involved in business activities in the
country. (10mks)
(b) Most of African’s top professionals do not work in the continent but work in the “Diaspora”.
Explain five measures that individual countries may use to prevent “brain drain.” (10mks)
- (a) From the recent economic survey, the gap between the rich and the poor is so wide in Kenya.
Explain any five factors that must have contributed to this display in income distribution
(b) The following balances were extracted from the books of Melito Holdings on
31, December 2009.
Sh
Gross profit 200,000
Capital 500,000
Cash at bank 50,000
Cash in hand 25,000
Equipment 450,000
Provision for depreciation on equipment 85, 000
Furniture 250,000
Provision for depreciation on furniture 32,500
Electricity 12,000
Stock(31.12.09) 17,500
General expenses 120,000
Debtors 175,000
Creditors 275,000
Discount allowed 13,000
Discount received 20,000
Additional information:
- Electricity paid in advance was sh. 2,000
- Depreciation is to be provided as follows:
Equipment 20% on cost
Furniture 10% on book value
- General expenses due amounted to sh.6,000
Prepare
(i) Profit and loss account for the year ended 31 December, 2009
(ii) Balance sheet as at 31 December, 2009 (10mks)
- (a) Outline five differences between a parastatal and a co-operative society (10mks)
(b) Explain five reasons why mobile banking services are becoming increasingly popular in
Kenya (10mks)
- (a) Discuss five principles that should be considered when designing a good tax system (10mks)
(b) The table below shows the age distribution of a country.
| Age (year) | % |
| 0-15 | 45 |
| 16-55 | 31 |
| 56 and above | 24 |
2
Explain five negative economic implications of this age distribution to a country (10mks)
- (a) Describe the procedure that should be followed when taking an insurance policy (10mks)
(b) Injera investment operates a wholesale business and the following information relates to
a various transactions during the month of May, 2010.
May 3 sold goods on credit to Anyimba sh 60,000
8 purchased goods on credit from Mjuaji stores sh 120,000
12 returned goods bought on credit from Mjuaji stores sh 6,000
16 purchased goods on credit from Mjuaji stores sh 160, 000
22 sold goods on credit to Mafala retailers sh 150,000
23 bought a new motor vehicle from Mashariki motors worth sh 3,200,000
on credit
24 Anyimba returned goods worth sh 10,000 to the business
29 sold equipment worth sh 840,000 on credit to chap chap limited.
Record these transactions into Injera investment books of original entry. (10mks)
- (a) Explain five merits of globalization to the Kenyan economy (10mks)
(b) Naftali started business on 1st July 2008 with a capital of sh 54,000 in the bank. The business
Bank account summary for the year ended 30th June 2009 is given below.
Sh
Receipts:
Takings banked 296,000
Commission 4,800
Bank loan 40,000
Payments:
Purchases 280,000
Furniture 16,000
Insurance 7,000
Telephone 5,800
Rent 14,400
Loan repayment 41,000
Drawings 4,400
All the takings were banked except sh 26,000 which was utilized for:
Paying rent sh 1,600
Buying goods for resale sh 16,000
Personal needs sh 8,400
Additional information:
(i) all the purchases were made on cash basis.
(ii)Goods were sold at a mark up of 25%
(iii) As at 30th June 2009, stock was valued at sh 24,000 while insurance prepaid amounted
to sh 1,000.
Prepare the trading, profit and loss account for the year ended 30th June 2009. (10mks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- Explain five causes of balance of payment deficit in developing countries 10 Marks
- Outline five differences between public limited company and a public corporation 10 Marks
- Explain four negative implications of an ageing population to a country 8 Marks
- The following trial balance relates to Machakos Traders for the year ended 30.12.2009
Dr Cr
Premises 250 000
Motor vehicle 500 000
Provision for depreciation
On motor vehicle 55 000
Machinery 800 000
Provision for depreciation
On machinery 98 000
Gross Profit 636 500
Stock 31.12.2009 72 000
Heating and lighting 48 500
Insurance 24 000
Salaries 140 000
Debtors 220 000
Creditors 350 000
Furniture 600 000
Cash in hand 85 000
Cash at bank 420 000
Commission 20 500
Capital 2 000 000
3 160 000 3 160 000
Additional information;
- Insurance due and unpaid amount to Ksh. 3 000
- Salaries paid in advance were Ksh. 2 200
- Depreciation is to be provided as follows
- Motor vehicle 25% on reducing balance
- Machinery 12% on cost
- Furniture to be reduced by Ksh. 42 000
Required prepare;
- Profit and loss account for the year ended 31.12.2009 6 Marks
- Balance sheet as at 31.12.2009 6 Marks
BUSINESS STUDIES
PAPER2
Kenya Certificate Of Secondary Education
- Answer any Five questions in the separate answer booklet provided.
This paper consists of 4 printed pages.
Candidates should check the question paper to ensure that all pages are printed as indicated
and no questions are missing
- a) Explain Five negative effects of inflation to a country (10mks)
- b) The information below relates to Kekalet retailers for the month on August 2009. Prepare a petty cash book for the month of August with the following analysis columns. (10mks)
Stationery
Postage
Transport
Refreshments
Miscellaneous
Ledger
Given that the business operates on a monthly float of 25,000/=
Balance as at 31st July 8,550/=
August 2nd: Re-imbursement
August 3rd: Soda for workers’ meeting 1,580/=
August 5th: Envelopes 380/=
August 6th: Fare to wholesale and back 2,100/=
August 10th: Milk and tea leaves 800/=
August 11th: Repair of bicycle 180/=
August 12th: Sundry expenses 2,900/=
August 14th: Taxi 600/=
August 18th: Stamps and courier services 1,120/=
August 20th: Paid Karani a creditor 4,000/=
August 22nd: Bought stationery 2,400/=
August 24th: Airtime for calling 1,600/=
- a) Explain five differences between a public corporation and a private limited company (10mks)
- b) Highlight five circumstances under which an insurance contract may be terminated
(10mks)
- a) Discuss five factors that will influence the choice of office layout to be adopted by a firm
(10mks)
- b) Explain five advantages of a country belonging to a trading bloc (10mks)
- a) Explain five contributions of an efficient transport to the economic development of a country
(10mks)
- b) With an aid of a diagram, explain how a firm in perfect competition attains its equilibrium output and price in the short run (10mks)
- a) Explain five benefits of retailers to wholesalers (10mks)
- b) The trial balance below was extracted from Onyapidi traders on 31st December 2009,
Dr Cr
Gross profit 42,500
Debtors 48,440
Motor vehicle 162,750
Furniture 20,000
Stock 22,000
Bank 27,500
Salaries 27,000
Sundry 22,600
Creditors 37,500
Rent income 21,400
Equipment 27,600
Rates 7,710
Capital 264,200
365,600 365,600
Additional information
- Rate of gross profit to sales is 20%
- Opening stock was 24,000
- Depreciation vehicle 25%
Furniture 7%
Required
Prepare a trading profit and loss account for the year ended 31st December 2009 (10mks)
- a) Explain five characteristics of an effective communication system (10mks)
- b) Explain five ways through which commercial banks advance funds to traders (10mks)
BUSINESS STUDIES
Paper 2
Kenya Certificate Of Secondary Education
- (a) Explain five circumstance under which a partnership may be dissolved. (10 marks)
(b) Explain five policies found under general accident ,Insurance (10 marks
- (a) Draw a labeled diagram to illustrate the determination of price and output under
Monopoly. (10 marks)
(b) Highlight five purposes of taxation. (10 marks)
- (a) Highlight five differences between Commercial banks and non-bank financial
Institutions. (10 marks)
(b) A business enterprise had the following transactions in September 2008.
September 1: Bought goods at Shs. 10,000 from Baraza.
September 3: Sold goods at Shs. 3,000 on credit to Kosgey.
September 8: Returned goods worth Shs. 2,000 to Owino
September 12: Bought goods worth Shs. 5,000 on credit from Patel
Required:
(i) Record the above transactions in the required journals. (7 marks)
(ii) Shows the posting from journals to ledger accounts (3 marks)
- (a) Explain five uses of National Income statistics (10 marks)
(b) Describe five factors that determine price elasticity of demand. (10mks)
- (a) Most firms have introduced customer care services as part of their promotion
techniques. Highlight five benefits of this method to a firm. (10 marks)
(b) The table below shows the total cost of a certain produce of the given out-put levels
| Out – put level | Total cost |
| 0 | 300 |
| 10 | 380 |
| 20 | 470 |
| 30 | 550 |
| 40 | 620 |
| 50 | 680 |
| 60 | 730 |
| 70 | 770 |
| 80 | 860 |
| 90 | 1080 |
Add columns to show the following at each level of out – put. (10mks)
- Fixed cost.
- Variable cost.
iii. Average variable cost.
- Marginal cost.
- (a) Explain the roles played by Kenya Ports Authority in ensuring that sea transport. (10mks)
operate efficiently.
(b) Below is a Trial balance belonging to Mumias Traders.
Mumias Traders
Trial Balance
as at 31/12/2004
| Dr | Cr | |
| Capital | 125,000 | |
| Purchases | 45,000
|
|
| Carriage outwards | 2,000
|
|
| Stock | 25,000
|
|
| Sales | 120,000
|
|
| Carriage inwards | 1,200
|
|
| Insurance | 5,900
|
|
| Salaries | 12,450
|
|
| Discount allowed | 3,400
|
|
| Debtor | 25,000
|
|
| Creditors | 15,500 | |
| Discount received | 1,950 | |
| Bank | 14,500 | |
| Machinery | 128,000 | |
| 262,450
|
262,450 |
Additional information.
- Closing stock Kshs. 25,000
- Outstanding salaries Kshs. 450
vii. Insurance Kshs. 900 has been paid in advance
viii. Depreciate machinery by 10% on cost –
Required: –
- c) Prepare Trading Profit and loss account for the period ended 31/12/2004.
- d) Balance sheet as at 31/12/2004. (10 marks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
INSTRUCTIONS TO CANDIDATES
- Answer any FIVE questions
- All questions carry equal marks
- a) Explain five factors that may influence the firm’s decision on what products to produce
(10mks)
- b) Explain five challenges that may be experienced by a new entrepreneur who has just establish a business in Kenya (10mks)
- a) Advertising in the newspaper is one way of promoting sales of goods. Highlight limitations of
advertising goods in newspapers (10mks)
- b) Discuss five advantages of pipeline as a mode of transporting oil products in Kenya (10mks)
- a) Explain five services offered by commercial banks to business people (10mks)
- The petty cashier operates on an imprest of sh. 15,000 per month on 1st Jan 2010, he had a
balance of sh 1,000 and received reimbursement to restore the imprest. The following
payments were made during the month:
Jan 2: Travelling sh 200 and postage sh 400
Jan 5: Tea leaves for staff tea sh 500
Jan 10: Stationary expenses sh 1,000
Jan 15: Sundry expenses sh 1,000
Jan18: Stamps shs 500
Jan 24: Tea leaves sh 600 and bus fare sh 350
Jan 29: Travelling sh 600, stationery sh 1,500
Jan 30: Postage sh 300, Electricity sh 3,000
Required:
Prepare a petty cashbook using analysis columns for traveling, postage, staff tea, stationery,
sundry expenses and electricity. (10mks)
- a) Study the diagram given below showing equilibrium of a firm and answer the questions that
follow.
- i) State the market structure represented by the diagram (1mk)
- ii) Give the name of the shaded area labeled (a) (1mk)
iii) Outline four features of the above market structure (8mks)
- The following information was extracted from the books of Litien wholesalers for the trading
period ended June 2009.
Sh
Stock on 30.06.2008 40,000
Purchases 35,000
Sales 70,000
Return inwards 1,500
Return outwards 2,000
Discount allowed 2,100
Insurance 2,000
Transport 1,400
Discount received 8,000
Electricity 2,400
Rent received 3,000
Wages and salaries 5,000
Advertising 2,000
Stock 30. 06.2009 15,000
Prepare a trading profit and loss account for the year ended 30th June 2009 (10mks)
- a) The table below shows the frends in inflation rates in a country
| Year | Inflation rates |
|
2006 2007 2008 2009 |
12% 19% 27% 33% |
Explain five causes that would have triggered the increasing inflation trends in the country
(10mks)
- b) Explain five reasons why the government of Kenya is encouraging the location of industries
in all parts of the country (10mks)
- a) Explain four factors to be considered when making a development plan in a less developed
Country (8mks)
- The following cash book summary relates to Wakulima traders.
Cash book summary
| Sh
Bal b/d 350,000 Cash 220,000 Debtors 1,080,000 Capital (W Traders) 100,000 Commission 20,000 10% bank loan 120,000
________ 1,890,000 Bal b/d 779,000 |
Sh
Payment to creditors 800,000 Light & heat 8,000 Cash purchases 180,000 General expenses 47,500 Interest on loans 8,000 Insurance 22,500 Bank charges 2,500 Advertising 50,000 Bal c/d 779,000 1,890,000 |
Assets and liabilities were as follows
01/01/2003 31/12/2003
Creditors 80,000 95,000
Stock 35,200 46,400
Debtors 75,000 86,000
Insurance paid in advance 8,500 1,200
Commission receivable 6,300 7,500
Accrued general expenses 24,000 35,000
Delivery van 180,000 –––––
Additional information;
- Bank loan was acquired on January 2003
- Discount received and allowed was sh 6,200 and sh 7,100 respectively.
- Delivery van are depreciated at 20% p.a.
Required: Trading, profit and loss account for the year ended 331.12.03 (12mks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- (a) Explain five problems facing small scale businesses in Kenya (10 mks)
(b) Explain five factors that insurance companies consider in determining the amount of premium to charge in a life assurance policy. (10 mks)
- (a) Explain five reasons for the increasing popularity of producer co-operatives in Kenya (10 mks)
(b) The following information was extracted from the books BBC enterprises for the year ended 31st Dec 2007.
Stock on 1.1.2007 sh.34,430
Net purchases during the year sh.212,290
Expenses for the year sh.45.880
Stock on 31.12.2007 sh.26,720
Gross profit mark up 50%
You are required to calculate the following: – (12 mks)
- Average stock
- Rate of stock turn over
- Gross profit
- Net profit for the year
- (a) Outline five differences between private and bonded warehouses. (10 mks)
(b) The government of Kenya is in the process of selling Telkom Kenya to private investors. Explain five reasons to justify such a step (10 mks)
- (a) Highlight five circumstances under which a newly established firm may find it necessary to locate itself near where well established firms are located. (10 mks)
(b) Explain five services offered by the central bank to the government. (10 mks)
- (a) Explain five reasons that make it necessary for pharmaceutical companies to increasingly use salesmanship (10 mks)
(b) Explain five reasons that may lead to a decline in supply of maize in Bomet district (10 mks)
- (a) Explain four factors that have led to increased use of container services (8 mks)
(b) The following information was extracted from the books; Highway Traders who do not keep a complete set of accounting records on 31st Dec 2005.
1/1/2008 31/12/2008
shs shs
Motor vehicle 560,000 420,000
Furniture 218,000 196,000
Debtors 75,000 95,000
Creditors 66,000 72,000
Stock 60,000 85,000
Rent owing 3,000 4,200
Prepaid insurance 2,400 3,600
Cash summary
for the year 31st Dec, 2008
| Balance bld 15,000
Receipts from debtors 260,000 Cash sales 50,000 Bal c/d 800 |
Rent and rates 40,000
Payment to creditors 160,000 General expenses 22,000 Electricity 3,500 Carriage outwards 4,000 Insurance 28,000 Salaries 64,000 Carriage inwards 4.300 |
| 325,800 | 325,800 |
The following additional information was available for the year ended 31st Dec2008
- Returns inwards amounted to sh.9,600
- Bad debts amounted to sh.8,200
- Discount allowed and discount received were sh.12,000 and sh.24,000 respectively required.
- Highway Traders statement of affairs as at 1st January 2008
- Highway Traders trading profit and loss account for the year ended 31st Dec 2008 (9 mks)
BUSINESS STUDIES
Paper 2
Kenya Certificate Of Secondary Education
INSTRUCTIONS TO CANDIDATES:
- Answer any FIVE Questions.
- Write your answers in the answer booklet provided
- All questions carry equal marks
- a) Explain five features that differentiate a private limited company from a public corporation form of Business (10 marks)
- b) Explain five functions of management in a Business Organization (10 marks)
- a) Discuss five factors which may influence price elasticity of supply for a product
(10 marks)
- b) A manufacturing company operates on imprest of Kshs 20,000. On 1/04/2010 the petty cashier had a balance of Kshs 5,000. He/she received a reimbursement to restore it on 2/04/2010. The following transactions took place during the month of April
5: Paid bus fare sh 200 PCV no.010
7: Paid Osano a creditor sh 800.His ledger folio was 027
10: Bought stationery sh 1,000 and postage stamps sh 500 PCV no.011
and 012 respectively
15: Bought tea leaves sh 250 with PCV no.013
20: Paid cleaning expenses sh 700 with PCV no.014
22: Paid traveling expense sh 600 PCV no. 015
24: Motor vehicle repairs sh 3,000 PCV no. 016
28: Paid cleaning sh 700 PCV no 018
Required: Prepare a petty cash book using the following analysis columns: Traveling, stationery postage, cleaning, miscellaneous and ledger account
(10 marks)
- a) Using a suitable diagram explain the habits of sellers in an Oligopoly market
(10 marks)
- b) Describe five principles of Insurance (10 marks)
- a) Explain five benefits of taxation to the Kenyan economy (10 marks)
- b) Explain five circumstances under which a country may belong to a common market (10 marks)
- a) The following balances were obtained from the books of Wema traders on 31st
December 2009
Kshs
Purchases 320,000
Sales 460,350
Carriage on purchases 6,250
Carriage on sales 15,000
Return inwards 8,150
Stock on (1/01/2009) 4,450
Furniture 200,000
Drawings 18,200
5 year loan 30,000
Equipment 150,000
Discount received 7,800
Salaries 5,000
Discount allowed 5,300
Insurance 8,200
Capital 850,000
General expenses 6,000
Repairs on furniture 10,000
Bad debts 2,000
Additional information:
- i) Stock on 31/12/2009 was valued at sh. 14,800
- ii) Insurance owing was sh. 1,500 and salaries paid in advance amounted to sh.4,100
- Depreciation on equipment is 10% per annum on cost
- The loan was borrowed on 1.7.2009 and interest on loan to be provided at 5% per annum.
Required: Prepare Trading, profit and loss account of Wema traders for the year ending 31st December 2009 (12 marks)
- b) Banking has played a major role in Kenyan’s economic development, explain four current trends in the banking sector (8 marks)
- a) Explain five limitations of advertising goods in newspapers (10 marks)
- b) Keroka traders does not maintain proper accounting records. The following information was extracted from their books.
1/01/2009 31/12/2009
Stock 66,000 60,000
Debtors 58,000 82,000
Creditors 70,000 92,000
Motor van 520,000 –
Cash 66,800 150,200
Accrued salaries – 46,000
Furniture – 130,000
Additional information:
- i) Additional investment by the owner sh.98,000
- ii) The owner took sh.60,000 from the business for personal use.
iii) Motor van to be depreciated at 10% per annum.
Required:
- i) Prepare statements of affairs as at 1/01/2009 and 31/12/1009 (7 marks)
- ii) Determine profit or loss for the year 2009. (3 marks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
INSTRUCTIONS TO CANDIDATES
- This paper consists of six questions
- Answer any 5 questions
- Write your answers in the answer sheet provided
- All questions carry equal marks
- Candidates should check the question paper to ascertain that all pages are printed as indicated and that no questions are missing
- (a) Explain FIVE problems associated with operations of public corporations in Kenya (10 mks)
(b) Motorcycles have become a common feature in transport in Kenya. Outline five reasons that explain the rapid growth of motorcycle transport in Kenya (10 mks)
- (a) Explain FIVE benefits that would accrue to a country that encourages entrepreneurship (10 mks)
(b) Mauzo poa enterprises operates a petty cash book on the imprest system with analysis columns for wages, stationery and ledger and a cash float of Sh.6000. On 1st October, 2009, the petty cashier had a cash balance at hand of Sh.528.
The following transactions took place during the first week of October 2009
Oct 1: The main cashier reimbursed the cashier the amount to replenish the
cash float.
Oct 2: Paid wages of sh.720 and bought envelopes for sh.410
Oct 3: Bought office pins for sh.200 and paid wages to casual workers, sh.890
Oct 4: Paid wages sh.700. Paid a credit supplier sh.500
Oct 5: Bought photocopying paper for sh.600 and printer ink for sh.450
Oct 6: Paid wages sh.650
Required:
Prepare a petty cash book for Mauzo Poa enterprises, balance it off and show replenishment of cash float on 8th October, 2009. (10 mks)
- (a) A country’s exchange rate has been deteriorating over the last one year. Identify FIVE reasons that could have caused the deterioration in the exchange rate (10 mks)
(b) Explain FIVE factors that contribute to effective communication in an organization (10 mks)
- (a) Credit cards are increasingly being used in transactions in Kenya. Highlight SIX disadvantages of using credit cards (12 mks)
(b) The following diagram shows the cost and revenue curves of a firm at equilibrium in the long run
- Identify the market structure under which the firm operates (2 mks)
- Name the curves labelled w, x, y and z (2 mks)
- Identify four characteristics of the market structure in (i) above(4 mks)
- (a) Explain FIVE advantages of imposing indirect taxes in a country (10 mks)
(b) Prize-winning competitions have become common in product promotion. Explain FIVE benefits that a firm will get by using this method to promote its products (10 mks)
- (a) Explain FIVE advantages of an open office layout for a business (8 mks)
(b) The following is a trial balance status to Kamusinga wholesalers as at 31st December, 2009
Kamusinga Wholesalers
Trial Balance as at 31st December, 2009.
Dr Cr
shs shs
Fixed assets 292,600
Current assets 78,000
Rent income 23,000
Discounts 3,000 2,000
General expenses 89,000
Carriage inwards 28,000
Purchase/sales 280,000 474,000
Returns Outwards/inwards 4,600 7,000
Stock (1/1/2009) 46,000
Drawings 33,000
Current liabilities 53,000
Capital 300,000
854,200 854,200
Stock on 31st December, 2009 was sh.54, 000.
Required:
- Prepare the trading, profit and loss account for the year ending 31st November, 2009 (8 mks)
- Calculate:-
- Rate of return capital employed (2 mks)
- Rate of stock turn over (1 mk)
- Gross profit margin (1 mk)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- a. Explain five ways in which business entrepreneurship helps in economic development of a country. (10mks)
- Discuss five ways in which privatization would be beneficial to an economy. (10mks)
- a. Describe five features of departmental stores. (10mks)
- Discuss five methods that the central bank of Kenya may employ to bring down the rate of inflation in a country. (10mks)
- a. Unemployment is one of the most serious economic problems facing our country today. Explain five measures that can be taken by government of Kenya to solve unemployment problems. (10mks)
- Discuss five circumstances under which high population growth rate may be desirable. (10mks)
- a. Explain the role of warehousing in indirect production. (8mks)
- Outline six benefits that Kenya may enjoy by being a member of East Africa Economic Community. (12mks)
- a. Highlight five changes that have occurred in the Banking industry in recent years occasioned by competition and rapid development in technology.(10mks)
- Describe five negative effects of inflation. (10mks)
- a. With the aid of a diagram, explain the effect of new firms entering a perfectly competitive market. (10mks)
- The following information was extracted from the books of Korir Traders as at 31st December 2008.
Ksh.
Bank loan 80,000
Trade supplier 29,000
Debtor 32,160
Stock 29800
Accrued expenses 3,000
Capital 200,000
Furniture 58,900
Motor vehicle 155,100
Cash 5,400
Net profit 30,000
Bank 17,500
Drawings 43,140
- prepare a balance sheet, in a format that shows
–working capital
–loan capital
–owner’s equity
–capital employed.
- Calculate the following ratios.
–current ratio
–return on capital employed.
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- a) Explain FIVE factors that may be considered in determining the appropriate channel for
distributing goods (10mks)
- b) Explain FIVE reasons why a new business may fail (10mks)
- a) Discuss FIVE methods which the central bank of Kenya may use to control the
Supply of money in the country (10mks)
- b) Describe FIVE services offered by a wholesaler to a retailer (10mks)
- a) Discuss FIVE factors influencing price elasticity of demand for a commodity (10mks)
- b) On 1st March 2006 Mokaya traders had cash in hand Ksh.10,000 and cash at bank
ksh.15,000. The following transactions took place during the month.
March 2: Bought goods in cash sh.1,500
March 4: Paid salaries by cash 7,500
March 5: Received cheques from the following debtors after allowing 2% discount in
each case Salga Sh.980, Gumbo Shs.1,960
March 8: Paid the following accounts by cheques in each case deducting 5% discount
Kiimo Ksh.3,000, Karani Ksh.1,200
March 12: Bought machinery by cheque Shs.5,000
March 20: Withdrew Sh.1000 for personal use
March 25: Cash sales Shs.2000
March 26: Banked cash amounting to Ksh.1000
March 29: Received Shs.3000 from Alex a debtor.
Required:
Prepare a three column cash book duly balanced (10mks)
- a) Explain FIVE benefits Kenya can enjoy from her participation in COMESA as a
Trading bloc (10mks)
- b) Explain FIVE ways in which the insurance industry promotes the growth of business
in Kenya (10mks)
- a) Explain FIVE reasons for the existence of small firms despite competition from
large scale firms (10mks)
- b) Explain FIVE factors that have led to the privatization of public corporations by the
government of Kenya (10mks)
- a) Explain FIVE obstacles to economic development in developing countries (10mks)
- b) The following trial balance was extracted from Ekerenyo traders as at 30th June 2009
EKERENYO TRADERS
TRIAL BALANCE
AS AT 30TH JUNE 2009
| Details | Dr. Shs | Cr. Shs. |
| Premises
Debtors and creditors Cash at Bank Cash in hand Purchases and sales Stock on 1st July 2008 Discounts Salaries and wages Power and lighting Returns Carriage inwards Carriage outwards Capital Furniture |
1,500,000
20,000 90,000 10,000 140,000 45,000 6,000 50,000 12,000 15,000 5,400 2,300
27,000 1,922,700 |
30,000
320,000
2,000
19,000
1,551,700
1,922,700 |
Additional Information;
- i) Stock on 30th June 2009 was Shs.22000
- ii) Prepaid salaries and wages were Shs.4000 and accrued power and lighting were shs.5000.
iii) Provide depreciation on furniture at 10% per annum on cost
Required;
Prepare a trading, profit and loss account for the year ending 30th June 2009 (10mks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- (a) Explain five current trends in forms of business units (10mks)
(b) Explain five causes of disequilibrium in the balance of payment (10mks)
- (a) Highlight five factors that have contributed to declining population growth Rate in developing countries like Kenya (10mks)
(b) Highlight five circumstances under which a seller may require a buyer to pay cash with order (c. w. o) (10mks)
- (a) Explain five benefits of a bonded warehouse to the government (10mks)
(b) Explain five policies which the Kenyan government may use to control the level of inflation in the country (10mks)
- (a) Highlight five roles played by intermediaries in the distribution chain (10mks)
(b) Broad ways holding company deals in sale of carpets and curtains. The following transactions took place during the month of May 2008
May 4: Purchased a delivery van for sh.250, 000 from Cleanways motors, making a down payment of sh.150, 000 by cheques. The balance to be paid in installments
May 9: Carpets which had been purchased on credit for sh.49, 500 for use in the office were returned to the suppliers, unique office suppliers limited, who issued a credit note for the same.
May 15: The proprietor took two carpets which had been purchased at sh.56, 000 each for use in his house.
May 20: Paid sh.5, 800 by cheque to settle the business electricity bill.
May 25: Bought an office machine on credit for sh.48, 000 from modern technology company
Prepare the general journal entries to record the above transactions. Brief narration required (10mks)
- (a) Explain five roles played by the management in the success of a business (10mks)
(b) Explain five principles of insurance and their significance to the insured (10mks)
- (a) Taxation based on the income of individuals or profits of limited companies has several limitations. Highlight five of such limitations (10mks)
(b) The following trial balance was extracted from the books of Kiatu Kubwa traders on 31st Dec, 2005.
Kiatu Kubwa Traders
Trial Balance
As at 31/12/2005
Dr (sh) Cr (sh)
Capital 150, 000
Purchases 200, 000
Wages 12, 000
Sales 300, 000
Insurance 7, 000
Salary 9, 000
Commission 3, 000
Cash 89, 000
Repairs 6, 000
Motor vehicles 168, 000
Returns 2, 000
Creditors 42, 000
494, 000 494, 000
Additional information
- Depreciation motor vehicle by 12%
- Closing stock was valued at sh.65, 000
- 600 was prepaid for commission
- Repairs upstanding amounted to sh.400
Required
(a) Prepare a trading, profit and loss account for the year ended 31st December, 2005 (10mks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- (a) Explain five problems that are likely to be experienced if intermediaries are eliminated from the chain of distribution. [10 marks]
(b) Explain five roles of a commercial attachee in promoting international trade. [10 marks]
- (a) Explain five reasons as to why oligopoly markets arise. [10 marks]
(b) The following balances were extracted from the books of Juja Traders on 31st December 2009.
Sh.
Opening stock 30,000
Equipment at cost 63,000
Purchases 85,500
Sales 104,000
Discount received 3,750
Returns outwards 12,500
Returns inwards 13,500
Salaries 11,000
Telephone charges 2,500
Water bills 1,050
Creditors 7,550
Debtors 10,500
Electricity expenses 1,000
Drawings 9,750
Insurance paid 500
Additional information:
- Closing stock was valued at sh. 15,000.
- Telephone charges prepaid sh. 550
- Outstanding water bills sh. 650
- Depreciation on equipment 10% p.a. on cost.
- Carriage inwards and carriage outwards sh. 5,500 and 5,000 respectively.
Prepare:
Juja Traders profit and loss account for the year ended 31st December 2009. [10 marks]
- (a) Explain five problems associated with the output approach in the computation of national income of a country. [10 marks]
(b) The following are transactions that took place during the month of June 2009 for Mr. Ali.
June 1 Balance of cash at bank was sh. 25,000 and cash in hand was sh. 10,000.
June 2 Bought goods in cash sh. 1000
June 3 Paid rent by cash shs. 6000
June 4 Received cheques from the following debtors after allowing a 2% discount in each case Jane sh. 980, Willison sh. 1960.
June 8 Paid the following accounts by cheque in each case deducting a 5% discount. Wangari sh. 3,000 Mati shs. 1,200.
June 13 Bought a computer by cheque sh. 10,000.
June 20 Withdrew cash sh.1,000 for private use.
June 25 Cash saves sh. 2,000.
June 26 Banked cash amounting to sh. 1,000.
June 29 Received sh. 3,000 cash from Wanyonyi who is a credit customer.
Prepare: A three column cashbook duly balanced. [10 marks]
- (a) Explain any FOUR factors that may be used in determining the size of a firm. [8 marks]
(b) The following information relates to Kagendo Trader as per the dates shown.
1/1/2006 31/12/2006
Motor vehicles 80,000 145,000
Debtors 25,000 28,000
Creditors 18,000 20,000
Outstanding standing 6,000 8,000
Rent received in advance 10,000 4,000
Office machine & equipments 35,000 31,000
Stock 6,000 8,000
Premises 150,000 150,000
Kagendo had prepared a summary of cash transaction for the year 2006 as shown below.
Cash book summary
Cash in hand b/d 5,000 Salaries 101,000
Cash at bank b/d 46,000 Drawings 12,000
Debtors 90,000 Creditors 50,000
Cash sales 102,000 Cash purchases 70,000
Rent 116,000 Motor vehicle 85,000
Insurance & rates 15,000
Cash in hand c/d 8,000
359,000 Cash at bank b/d 18,000
359,000
Required: Prepare Kagendo’s trading profit and loss a/c for the year ended 31st Dec. 2006 and a balance sheet as at 31st Dec. 2006. [12 marks]
- (a) Outline five changes that may take place when a country is experiencing economic development. [10 marks]
(b) Explain five factors that may lead to a deficit in balance of payment in a country. [10 marks]
- (a) It has been the will of the government of Kenya to create 500,000 jobs per year. Explain five reasons which have hindered the achievement of this goal. [10 marks]
(b) Explain five importance of filing documents in an organization.
[10 marks]
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
(a) Highlight five essentials of effective communication. (10 mks)
(b) Explain five non-monetary incentives that an organization can used to motivate its employees. (10 mks)
- (a) Explain five advantages of a bonded warehouse to the importer. (10 mks)
(b) Highlight five differences between a cooperative society and a public limited company. (10 mks). (10 mks)
- (a) The terms of trade for a country can be favourable or unfavourable. Explain five factors that can lead to deterioration terms of trade. (10 mks)
(b) Silvian Enterprises intends to commit some of its funds to conduct market research. Outline five benefits that it’s likely to get from this venture. (10 mks)
- (a) Explain five challenges that traders can encounter under barter system of exchange. (10 mks)
(b) Kimathi Traders had the following balances on 1st August 2005.
Bank 35,000
Debtors 28,000
Creditors 66,600
Later in the month, the following transaction took place:-
August 5: Bought goods worth 9,500 and paid by cheque.
August 6: Paid creditors 10,600 by cheque
August 22: Received a cheque of 22,000 for goods sold.
August 28: received shs 14,000 cash from a debtor which he banked the same day.
August 29: Withdrew 5,000 from the bank to pay wages.
Open the relevant ledger accounts and extract a trial balance after the last transaction. (10 mks)
- (a) Highlight the risks covered under the following insurance policies.
- Consequential loss. (2 mks)
- Workmen’s compensation. (2 mks)
- Fidelity guarantee. (2 mks)
- Public liability. (2 mks)
(b) Explain six characteristics of under developed countries. (12 mks)
- (a) Highlight four difficulties encountered in satisfaction of human wants. (8 marks)
(b) The following balances were extracted from the books of Mfalme Traders for the year ended 31 December 2008.
Rent 48,000
Water 9,220
Stock 25,250
Salaries 72,500
Motor vehicles 2,300,000
Gross profit 320,000
General expenses 98,000
Furniture 650,000
Electricity 7200
Discount received 8,500
Discount allowed 4,600
Debtors 270,000
Creditors 396,400
Commission received 9870
Cash 50,000
Capital 3,000,000
Bank 200,000
Prepare:
- Profit and loss account for the year ended 31st December, 2008. (6 marks)
- Balance sheets as at 31st December 2008. (6 marks)
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- a) Explain five factors which limit effectiveness of consumer organization in protecting
consumers in Kenya (10mks)
- b) Explain five assumptions of oligopoly (10mks)
- a) Explain five circumstances under which a manufacturer would find it advisable
to distribute his/her goods through wholesalers (10mks)
- b) Explain five demerits of the flexible exchange rate system (10mks)
- a) Describe five channel of distribution for imported manufactured goods (10mks)
- b) The following transactions took place in the month of March 2006 in the business of
Lelmokwo traders. 2006.
March 2: Barngetunty traders returned goods worth shs.2,800
(Credit Note No.1080)
10: Soma traders returned goods worth Shs.1200 (Credit Note No.1081)
15: Goods worth Shs.800 were returned to Safina traders. (Credit Note
No.1121)
20: Returned goods worth Shs.600 to Ukwala traders (credit note No. 1038)
22: Goods worth Shs.10,000 were returned by Ukweli Ltd. (Credit Note
No.1017)
25: Kokwon traders returned damaged goods worth Shs.5000 (Credit Note
No.1021)
30: Samburu traders returned goods worth. Shs.4,000 (Credit Note No. 1024)
Required: Prepare the returns inwards journal of Lelmokwo traders as at 30th March 2006.
- a) Explain five disadvantages of progressive taxes (10mks)
- b) The information below was extracted from the bookshop of Lemlem which maintains
incomplete records for the year ended 31st December 2008.
Estimated values of assets and liabilities were;
1/1/2008 13/12/2008
Shs. Shs.
Furniture 92,000 92,000
Debtors 96,000 103,000
Creditors 132,600 108,000
Rent prepaid 68,800 53,600
Telephone due 50,800 39,200
Stock 73,800 59,800
Bank balance 412,000 290,000
- i) Prepare statement of affairs to determine the initial and final capital for the trading
period (8mks)
- ii) Determine net profit or loss for the year ended 31st December 2008 (2mks)
- a) Explain four roles played by commercial banks in the development of Kenyan
Economy (8mks)
- b) The following balances were extracted from the books of Sunset Traders for the year
ended 31st Dec. 2009.
Shs.
Carriage inwards 29,000
Purchases 480,000
Purchases Returns 80,000
Sales 710,000
Stock (1/1/2009) 90,000
Sales Returns 90,000
Salaries 13,000
Electricity 11,800
Telephone 16,800
Rent 17,000
General expenses 28,800
Stock (31/12/2009) 12,600
Discounts received 16,800
Carriage outwards 20,400
Discount allowed 24,800
Insurance 30,800
Prepare the business Trading, Profit and Loss Account for the year ended 31st December
2009 (12mks)
- a) Highlight five circumstances under which the nature of the message may influence the
Choice of a medium of communication (10mks)
- b) Discuss five goals of development planning (10mks)
BUSINESS STUDIES
Paper 2
Kenya Certificate Of Secondary Education INSTRUCTIONS TO CANDIDATES
- a) Differentiate between a co-operative society and a public limited company (10mks)
- b) Explain five importance of entrepreneurship in Kenya. (10mks)
- a) Explain five challenges faced by manufacturer who sells his/her products directly to the
consumer. (10mks)
- b) Discuss five factors to be considered when choosing a means of reproducing documents in an
office. (10mks)
- a) Discuss five ways of improving the efficiency of a warehouse. (10mks)
- b) With the aid of a diagram explain how price and output are determined by a firm in a
perfectly competitive market. (10mks)
- a) Discuss five ways the Kenyan economy benefits from indirect production. (8mks)
- b) The following trial balance was extracted from the books of Nyahururu Enterprises for the
year ended 2009.
Nyahururu Enterprises
Trial Balance as at 31st Dec 2009.
| Dr (Shs.) | Cr (Shs.) | |
|
Capital Drawings Opening stock Purchases Sales Return inward Return outward Carriage inward Carriage outward Discount allowed Furniture Motor vehicle Creditors Divided income Premises Debtors |
32,500 46,100 284,400
3,600
27,900 10,000 3,400 25,000 144,700
100,000 48,500
|
250,000
415,300
6,700
54,250 1,900 |
| 728,150 | 728,150 |
Additional information:
Closing stock was valued at Shs.55,300
Depression is to be written off on fixed assets as follows;
15% on motor vehicle and 10% on furniture, both to be calculated on cost
Prepare
- i) Trading profit and loss account for the year ended 31st Dec 2009. (7mks)
- ii) Balance sheet as at 31st Dec 2009. (5mks)
- a) Give five reasons that would account for phenomenal success of mobile phone money transfer
in Kenya. (10mks)
- b) On March, 1st, 2009, Doris had cash in hand Shs. 87,000 and cash at bank Shs. 250,000.
During the month, the following transactions took place .
2009
March 2. Cash sales Shs.60,000
3 Paid salaries Shs.101,500 by cheque.
7 Received a cheque of Shs.76,000 from Henry after allowing him a cash discount of 5%.
13 Bought office furniture by cheque Shs.86,000.
17 Settled Marita’s account for Shs.34,200 in cash, having deducted Shs.800 cash discount.
20 Received a cheque for Shs.165,000 in respect of cash sales.
22 Paid wages Shs.25,000 in cash.
24 Withdrew Shs.32,000 from the bank for office use.
25 Withdrew Shs.4,000 cash for personal use.
29 Received Shs.17,000 cash from Alvin in settlement of his account less Shs.1,000 cash discount.
31 Deposited all the money into the bank except Shs.24,000.
Required: Prepare a three column cash book duly balanced. (10mks)
- a) Explain five ways in which an efficient road transport system may promote trade within a
country. (10mks)
- b) The following information was provided by Chelagat who operates a hardware shop at
Nakuru and does not keep complete records.
1/1/2008 31/12/2008
Creditors 220,000 185,000
Debtors 500,000 460,000
Wages prepaid ______ 40,000
Bank 390,000 800,000
Cash 600,000 180,000
Stock 150,000 100,000
Additional information:
- i) Sales are made on credit only.
- ii) 850,000 was received from debtors.
iii) Shs.285,000 were paid to creditors.
- iv) The following expenses were paid during the year:
Wages Shs.120,000
Rent Shs.60,000
- v) Cash purchases was worth Shs.146,000 during the year.
Required:
Prepare trading, Profit and Loss Account. (10mks)
|
BUSINESS STUDIES
PAPER 2
Kenya Certificate Of Secondary Education
- a) Explain Five limitations of using per capital income to compare the living standards
of people in different countries. (10mks)
- b) Describe Five qualities that a manager should have so as to promote team – work among his staff. (10mks)
- a) Highlight Five factors a prospective investor should consider in deciding on what goods
or services to produce / offer for the market. (10mks)
- b) Explain Five differences between a partnership and a co- operative society. (10mks)
- a) The following trial balance was extracted from the books of Jomoko Traders as at 31st ` December, 2009.
Jomoko Traders, Trial Balance,
As at 31st Dec, 2009
| Debit Shs. | Credit Shs. | |
| Sales | 1,200,000 | |
| Purchases | 500,000 | |
| Carriages inwards | 30,000 | |
| Carriage outwards | 15,000 | |
| Returns | 40,000 | 50,000 |
| Discounts | 35,000 | 20,000 |
| Commission | 10,000 | 17,000 |
| Rent Expense | 100,000 | |
| Salaries | 450,000 | |
| Capital | 1,363,000 | |
| Land and Buildings | 2,600,000 | |
| Furniture and fittings | 100,000 | |
| Stock ( 1st Jan 2009) | 600,000 | . |
| 2,665,000 | 2,665,000 |
- Depreciation is to be charged at 5 % p.a on furniture and Fittings .
- b) Rent prepaid Kshs 10,000
- c) Salaries accrued Kshs. 15,000
- d) Closing stock Kshs. 200,000
Required :
Prepare a trading and profit and loss account for the year ended 31st December 2009.
(12mks)
- b) Explain Four importance of entrepreneurship to the economy. (8mks)
- a) Explain Five ways in which the functions of commercial banks differ from those of the non – banking institutions. (10mks)
- b) Highlight some of the Five factors to consider when evaluation a business opportunity.
(10mks)
- a) Explain Four measures the Kenyan Government can undertake to create an enabling environment for business activities. (8mks)
- b) The following information were extracted from the books of Rita, a sole trader on 30th June, 2008.
Cash book summary
| Shs | Shs | Shs | |
| Balance b/d | 32,800 | Creditors | 125,000 |
| Debtors | 192,000 | Wages | 36,000 |
| . | Balance c/d | 63,800 | |
| 224,800 | 224,800 | ||
| Balance b/d | 63,800 |
Note: All the cash received was banked except Kshs 10,000 which was used to pay rent.
The account balances were as follows:
| 1/7/2007 | 30/06/2008 | ||
| Shs | Shs | ||
| Stock | 10,000 | 18,000 | |
| Acrrued wages | 3,000 | 5,000 | |
| Fixtures and fittings | 80,000 | 72,000 | |
| Creditors | 22,000 | 24,000 | |
| Debtors | 68,400 | 75,400 |
All purchases and sales were on credit
- a) Highlight what has led to privatization of public corporations by the government of Kenya. (10mks)
- b) Personal selling is an important tool of product promotion. Explain five circumstances when personal selling would be effective. (10mks)
BUSINESS STUDIES
Paper 2
Kenya Certificate Of Secondary Education INSTRUCTIONS TO CANDIDATES
ANSWER ANY FIVE QUESTIONS
- (a) Highlight FIVE hindrances to the attainment of an East African co-operation (10mks)
(b) Explain FIVE factors that have resulted in the shortage of maize supply in Kenya (10 mks)
- (a) Discuss FIVE ways through which the insurance industry has contributed to the economic
development of our country (10 mks)
(b) Outline FIVE monetary policies through which inflation in a country can be controlled.
(10 mks)
- (a) Business X and Y are located in the same area. X is succeeding yet Y is performing poorly.
Explain FIVE factors that may contribute to the poor performance in Y. (10 mks)
(b) With the aid of a diagram explain how the equilibrium price and output are determined in a
monopolistic competition market (10 mks)
- (a) Outline FIVE reasons that have contributed to the rise in mobile phone banking services
(10 mks)
(b) Explain FIVE reasons that may cause a manager to complain of the bad behaviour of his
Secretary (10mks)
5 (a) Discuss FIVE problems encountered by agricultural marketing board in Kenya (10 mks)
(b) Juma’s books availed the following
1ST Jan 98 31st Dec. 98
Stock 80,000 92,000
Debtors 143,000 214,000
Creditors 95,000 99,000
Building 420,000 400,000
Salary payable 16,000 19,200
Prepaid Rent 9,600 13,000
Dr Cash Book Summary Cr shs shs
Debtors 1,460,000 Creditors 645,000 Sales (cash) 440,000 Cash purchases 269,000
Salaries 143,000 Rent 142,000 Electricity 49,000
Additional Information
- Discount received amount to shs.43,000 and discount allowed shs.36,000
- Returns inwards shs.18, 000 and returns outwards shs.16, 000.
Required
- Determine total sales (3mks)
- Determine total purchases (3mks)
- Extract a salaries account (3mks)
- Extract a rent account (3mks)
- (a) Discuss FIVE adverse effects encountered by a country which has a large population.
(10 mks)
(b) KK.s books gave the following information for the period ended 31st Dec. 2000
Sales shs.848, 000
Opening stock shs . 42,000
Stock turnover rate 8 times
Gross margin 25%
Expenses –General shs.43, 000
– Water shs. 12,000
– Transport shs. 20,000
Required
Trading, Profit and Loss account for the period end 31st Dec. 2000 (10mks)
(SHOW YOUR WORKINGS)
&
Required:
- i) Determine capital as at July, 2007. (3mks)
- ii) Prepare the Trading Profit and Loss Account for the year Ended 30th June, 2008.
NB.
Show all your workings. (9mks)
