BUSINESS STUDIES PAPER 2 - 2019 KCSE Prediction Questions Set 2

INSTRUCTIONS

• This paper consists of 6 questions
• Answer any five questions
• All questions carry equal marks.

1.  
   1. Explain five functions of money (10mks)
   2. Differentiate between a public limited company and a partnership (10mks)
2.  
   1. Explain five principles that guide the tax system in a country (10mks)
   2. Labour is one of the basic factors of production. Outline five measures that a business can take to increase the productivity of its labour force (10mks)
3.  
   1. With the aid of a diagram, explain the effects of an increase in supply on equilibrium price and quantity of a commodity (10mks)
   2. Discuss five causes of unfavourable balance of payment for most developing countries (10mks)
4.  
   1. Explain five factors that influence the choice of a channel for distributing flowers (10mks)
   2. Explain five circumstances that would influence a producer to use wholesalers in distributing farm produce (10mks)
5. The following balances relate to Msafiri traders as at 31^st December 2014
   

   	Sh
   Purchases	900,000
   Stock 1.1.2014	230,000
   Buildings	1,200,000
   Motor Vehicles	750,000
   Returns outwards	50,000
   Debtors	190,000
   Creditors	310,000
   Loan from IDB	600,000
   Cash	130,000
   Bank	270,000
   Drawings	100,000
   Capital	1,840,000
   Net profit	170,000

   Additional information
   1. Stock 31/12/14 280,000
   2. Expenses (including carriage inwards Shs. 150,000) 250,000
      Required
      1. Balance sheet as at 31^st December 2014 (6mks)
      2. Calculate
         1. Mark-up percentage (2mks)
         2. Return on capital employed (2mks)
      3. Explain five problems associated with a sole proprietorship form of a business (10mks)
6.  
   1. Businesses are adopting new technology in their operations. Explain five limitations of adoption of this practice  (10mks)
   2.  The following balance sheet was extracted from the books of Sagana traders on 1^st April 2015
      
      The following transactions took place during the month of April 2015
      4^th April: Sagan traders sold her personal assets for sh. 30,000 receiving payment by cheque which she invested in the business
      10^th: She purchased goods for sh. 29, 000 on credit from Mutai
      19^th April: She returned goods worth sh. 3,000 to Mutai after they were found defective.
      
      Required
      1. Open the ledger accounts record the above transactions and balance them off. (5mks)
      2. Extract a trial balance            (5mks)