Business Paper 2 Questions and Answers - Momaliche Joint Pre Mock Exams 2022

INSTRUCTIONS TO STUDENTS:

• Answer any five questions.
• All questions carry equal marks

1.  
   1. Every institution has office staff which should have certain prescribed code of behaviour. Explain five office etiquette of an office staff. (10mks)
   2. Explain five methods that government uses to protect consumers. (10mks)
2.  
   1. Explain five insurance policies that the proprietor of Umoja Supermarket may take to his business. (10mks)
   2. Explain five negative effects of inflation. (10mks)
3.  
   1. Describe five channels used to distribute manufactured goods in Kenya.
   2. Highlight five differences between a co-operative and a public limited company. (10mks)
4.  
   1. Explain five consideration that the county government should look into before incurring any expenditure. (10mks)
   2. The following transactions were extracted from the books of NKUNDI enterprise for the month of August.
      1. August 1^st cash in hand Ksh.13,000 and at bank Ksh.28,000.
      2. August 3^rd cash sales amounting to Ksh. 15,000.
      3. August 5^th received Ksh. 7,800 form Mwenda after deduction of 2 ½ % cash discount.
      4. August 7^th paid Kananu Ksh.17,000 by cheque in full settlement of her account of Ksh.17,500.
      5. August 9^th received Ksh.19,000 from Kawira after allowing 5 % cash discount.
      6. August 10^th Deposited Ksh.15,000 into the bank from the cash till.
      7. August 11^th took Ksh.9,500 cash for personal use.
      8. August 15^th paid Barazaksh. 8,800 after deducting 12% cash discount by cheque.
      9. August 20^th Banked some cash leaving Ksh.12,300 in the cash till.
         Required: Prepare a three column cash book for Njundi Enterprise duly balanced. (10mks)
5.  
   1. Kwanza limited operates as monopolist. Explain five possible factors that made this firm acquire monopoly power. (10mks)
   2. A flower farmer in Njoro has secured market for her flowers in a foreign market.
      Explain five reasons why the farmer should use air to transport his flowers.
6.  
   1. Explain four factors that lead to business success. (8mks)
   2. The following trial balance was extracted from the books of Hekima Traders as at 
      30^th June 2010.

      Details	Dr.(sh)	Cr(sh)
      Premises Debtors & creditors Cash (bank) Cash (hand) Purchases and sales Stock 1st June 2010 Salaries and wages Discounts Commissions Power &  lighting Returns Carriage inwards Carriage outwards Capital Furniture	1,500,000 20,000 90,000 10,000 140,000 45,000 50,000 6,000 12,000 15,000 5,400 2,300 27,000	30,000  320,000  2,000  8,000  19,000  1,543,700
      	1,922,700	1,922,700

      Stock on 30^th June 2010 was worth shs. 22,000
      Required:
      Prepare a trading, profit and loss account for the year ending 30^th June 2010.(12mks)

MARKING SCHEME

1.  
   1.  
      • Courtesy – One should be polite/pleasant
      • Diplomacy – One should be able to convince others people tactfully.
      • Judgement – One should be able to consider all possibility/come up with the right decisions.
      • Initiative – One should be able make proper decisions/be creative in ideas.
      • Respect – One should show due regard to others.
      • Loyalty – One should be committed/devoted to his/her work.
      • Honesty – One should be sincere/truthful.
      • Punctuality – One should observe working hours/time consciousness.
   2.  
      • Trade description Act – to guard against misleading /false advertisement.
      •  Food and drug Act – to ensure products sold to consumers are not harmful.
      • Public health Act – to ensure safety and health standards are met.
      • Weight and Measures act – To ensure goods of the right weight and measurement are accurate.
      • Hire purchase Act – to guard against unfair repossession of goods.
      • Kenya bureau of standards act – to ensure standards of goods are maintained.
      • By encouraging formation of consumer associations to cater for the interest of consumer.
      • Rent and tribunal Act – which ensures that landlords don’t exploit their tenants by charging them unreasonable rates.
      • Licensing to protect consumers from being sold harmful and illegal goods.
      • Price control Act – to protect consumers from being overcharged.
2.  
   1.  
      • Theft /burglary – to protect the owner from loser that may be arise form Theft/burglary.
      • Fidelity guarantee – to cover losses suffered thro’ worker’s dishonesty.
      • Workman’s compensation – to assist the workers who may be injured in the bus.
      • Fire – to compensate the owner of losses arising from fire.
      • Personal accident cover – Insures accident to the owner of the supermarket in the Course of his duty.
      • Good /cash on transit – Insures against losses of goods /cash while on transit.
      • Medical cover policy – Insurance will compensate for medical claim of employee.
      • Motor vehicle – to cover bus’ vehicle in case of accident.
   2.  
      • Reduction in profit – Rise in prices of commodities reduces salerol, hence reduces profit.
      • May lead to industrial unrest – As worker pressure for high wages to compensate declining money value/increase in cost of living.
      • Wastage of time – As business/firm and individual waste time shopping for reasonable prices.
      • Balance of payment deficit as most people will opt for cheaper imported than local expensive.
      • Discourage saving as people fear to loose the value of their money overtime.
      • Decline in the standard of living since the purchasing power of consumer decreases. This will reduce their standards of living.
      • Weakens the value of currency hence failing as store of wealth.
3.  
   1.  
      1. Manufacture → consumer
      2. Manufacturer → retailer →  consumer.
      3.   Manufacturer → wholesaler →  consumer
      4. Manufacturer → retailer → wholesaler → consumer.
      5. Manufacturer →  agent → consumer.
      6. Manufacturer →  agent → retailer → consumer
      7. Manufacture →  agent → wholesale → retailer → Consumer.
   2.  
      

      Co- operative society	Public limited co.
      - Requires Min. of ten member. - One man one vote. -Registered under co-operative Act. -Formation is usually very easy. - Serves various sectors of the economy. - Usually intensely monitored by the government including financial support.  - Main source of capital in members’ contribution. - Cost of shares in very low. - Aimed at uplifting members living stds.	- Requires a minimum of seven members. - The no. of shares determine the voting. -Registered under the companies Act. - Formation requires long legal procedures - Limited by the objective clause -It is independent from government supervision. - Main source of capital is sale of shares to the public. - Cost of share is relatively high - Aimed at making profit.

4.  
   1.  
      • Sanction – The expenditure must be approved by the relevant authority.
      • Maximum social benefit – Any expenditure must be incurred in such a way that majority of the people reap max. benefit out of it.
      • Flexibility – The expenditure should be able to change/meet the prevailing economic situation.
      • Economy – The expenditure must be focused in the most economical way by avoiding any possible waste.
      • Proper financial management – Public fund should have proper records and should also be audited.
   2.                                       NKUNDI ENTERPRISES LTD
                                                FOR THE YEAR ENDED
                                                     28^TH AUGUST 2010
      

      Date

      Details

      Folio

      Disc Allowed

      Cash

      Bank

      Date

      Details

      Folio

      Disc Allowed

      Cash

      Bank

      2010  Aug 1 Aug 3 Aug 5 Aug 9 Aug10 Aug20

      Sh Bal b/d Sales Mwenda Kawira Cash Cash

      Sh  C1  C2

      Sh  200  1000  1,200

      Sh 13,000 15,000  7,800 19,000 54,800

      Sh 28,000 15,000 18,000 61,000

      2010  Aug 7 Aug10 Aug11 Aug15 Aug20

      Kananu Bank Drawings Baraza Bank Bal c/d

      C1  C2

      Sh  500  1,200  1,700

      Sh 15,000  9,500 18,000 12,300 54,800

      Sh 17,000 8,800 35,200 61,000

5.  
   1.  
      • Control of an important factor of production which other forms may not be able to  access.
      • Legal restrictions. Other firms might not be allowed by the government/law to operate a competing bus.
      • Restrictive practices used by monopolist entry.
      • High initial capital which other firms might not be able to raise.
      • Size of the market ie. Small market that can serve one supplier.
      • Ownership of copy right and patent rights.
   2.  
      • There is less handling of flower since airplane may more direct to final destination.
      • Air transport in secure /safe for good in transit.
      • Smoothness of transport makes ideal for flowers.
      • Appropriate for long distance.
      • Remote places can be met reached by charter plan.
6.  
   1.  
      • Ability to manage people.
      • Proper location/availability of customers
      • Availability of raw materials or stock of goods.
      • Adequate finance.
      • Lack of competition.
      • Commitment to the business
      • Proper management of finances.
      • Proper debt management
      • Good public relations
      • Being creative and innovative
      • Proper market research.
   2. HEKIMA TRADERS
      Trading, profit& loss account for the period ending 30th June 2010
      

      Opening stock                              45,000 Add Purchases            140,000 Add carriage in              5,400                                    145,000 Less Ret O.                  19,000    126,000                                                     171,400 Less closing stock                         22,000 Cost of sales                                149,400 G.P. c/d                                        155,600 305,000   Expenses   Discount allowed                            6,000 Salaries & wages                           50,000 Power & lighting                           12,000 Carriage outward                             2,300 N.P c/d                                           95,300 165,600

      Sales                                      320.000 Less return inwards                  15,000                                                 305,000           305,000   G.P brought down                  155,600 Add comm.Received                18,000 Discount received                       2,000 165,600        165,600