Business Studies Paper 2 - 2021 KCSE Prediction Questions and Answers Set 1

Instructions to Candidates

1. This paper consists of six questions
2. Answer any five questions.
3. All questions carry equal marks.

1.  
   1. Explain five ways in which Kenya may benefits from being a member of the East Africa community.   (10mks)
   2. Describe five principles that distinguish cooperatives from other forms of business organizations. (10mks)
2.  
   1. Explain five services that the central bank of Kenya may offer as a banker to commercial banks   (10mks) 
   2. Discuss any five reasons why a firm may consider hiring a machine rather than buying.
3.  
   1. Planning is an important aspect of economic development. Explain five reasons why a country should carry out development planning. (10mks)
   2. Explain five challenges that may be experienced by a new entrepreneur who is intending to start a business in Kenya.(10mks)

4.  
   1. Outline five circumstances under which a firm would carry out personal selling.  (10mks)                                                                      
   2. The following transaction took place in Zaodon enterprises in the month of June 2015.
      June 1        credit purchases          Bunface 25,00 , Mary 30,000 Angela 40,000
      June 4        credit sales                  Kopiyo 16,00, Francis 20,000
      June6         credit purchase            Margaret 10,000, Mary 35,000,Kadenge 50,000
      June8         credit sales                  Zachary 60,000, Kopiyo 26,000 and Kidila 45,000
      June 13      goods returned by Zaodon enterprises to Bunface 4000, Margaret 1,500 and Kadenge 3,000
      June18       Credit purchase           From Natalia 70,000
      June 22      Goods returned at Zaodon enterprises by Kopiyo 1000 and Francis 2,4000
      June 26      Credit sales to Kopiyo 54,000
      June 31      Goods returned to Zaodon enterprises by Kidila 2000 and Kopiyo 4,000
      Required
      Record the above transactions in the relevant books of original entry.
      
      
      
      
      
      
      
      
      

5.  
   1. The table below shows the demand and supply schedules for product A in a week
      

      Price (sh)	Quantity demanded (‘000’ tones)	Quantity supplied(‘000’ tones)
      35	5	80
      30	10	65
      25	20	55
      20	25	40
      15	30	35
      10	40	20
      5	55	5

      
      Using the information given in the table above, draw the price mechanism curves showing the equilibrium of the product.(10mks)
   2. Explain five ways of making face to face communication effective.(10mks)
6.  
   1. Pemba is an Island within the Indian Ocean. She had registered an improvement in her national income. Explain five factors that may have contributed to this trend.(10mks)
   2. The following Trial balance was extracted from PEMUR STORES on 31^st Dec 2009 
                
      Additional information;-
      Closing stock was valued at sh. 22,000
      Prepare PEMUR STORES; Trading, profit and loss accounts for year ending 31/12/2009.

MARKING SCHEME

1.  
   1. Explain five ways in which Kenya may benefits from being a member of the East Africa community.        (10mks)
      - Wider market of Kenyans products
      - High quality goods produced due to competition
      -Promotes peace among the members countries
      -Common bargaining with non-members resulting to better terms of trade
      -Employment creation because of increased mobility of factors
   2. Describe five principles that distinguish cooperatives from other forms of business organizations.(10mks)
      - Open and voluntary membership – members in a cooperative society are free to join and leave at will
      - Democratic administration – official are elected based on one man vote basis Limited interest on share capital- this encourage members to buy more shares
      -Promotion of education to members- they provide education through seminars and workshops
      -Provision of dividends to members – profits obtained are distributed to members inform of dividends
      -Cooperation with other cooperatives- they cooperate with other cooperatives locally, nationally or internationally.

2.  
   1. Explain five reasons why affirm may consider hiring a machine rather than buying
      • used for a short period of time
      • High initial cost of the equipment
      • High maintenance cost
      • High chances of obsolescence
      • Non availability of required skills/ staff to operate the machine
   2. Discuss any five reasons why a firm may consider hiring a machine rather than buying.             (10mks)
      • Lack of records in the subsistence sector.
      • Deficiency in differentiating final expenditure and intermediate expenditure
      • Double counting
      • Fluctuating exchange rate/valuation of export and imports.

3.  
   1. Planning is an important aspect of economic development. Explain five reasons why a country should carry out development planning(1 mks)
      • Appropriate resources allocation- putting the resources in the most productiveway/ not left idle.
      • Stimulates of effort- it enable the government to stimulate the effort of citizens in the desire way
      • Support foreign aid bargain- enable a country to solicit for foreign aid/ donation/grants
      • Project evaluation – it makes it possible to evaluate the plan at various stages of implementation
      • Long term decision making – provides a long term view for making decisions in various sector of the economy.
      • Avoiding duplication – different industries are located in different parts of the country
      • Promoting balance in regional development – it help in distributing industries in various parts of the country
      • Help in raising the standard of living – the gov’t looks into lives of various groups in the country.
   2. Explain five challenges that may be experienced by a new entrepreneur who is intending to start a business in Kenya (10mks)
      • Inadequate capital to sustain or expand the business
      • Inadequate skills to manage the business
      • Unfavourable gov’t policies that may hinder growth/expansion e.g high taxation
      • Poor infrastructures which may hinder access to market
      • Stiff competition which may lead to collapse of business
      • Poor pricing which may be too low to sustain the business/too high to attract buyers
      • Inadequate manpower to run the business
      • Inadequate market for goods produces
      • Inappropriate technology which may result into quality goods.

4.  
   1. Outline five circumstances under which a firm would carry out personal selling (10mks)
      • Where the product is technical in nature and therefore demonstration is necessary
      • Where the product if high value and hence security is needed.
      • Where the firm can afford to finance the sales force since it is expensive venture
      • Where the market is concentrated at one point and hence customers can be easily reached.
      • When launching a new product into the market where awareness creation, persuasion and convincing is required
      • When the product is tailored to meet customers’ specification because customers have varied taste and preferences
   2. Purchases journal
      
      Sales Journal
      
      Purchases return journal
      
      Sales return journal
      

5.  
   1.  
      • The curves have to be drawn to attract a tick
      • Even if the curves are named, DD and SS and the points are plotted appropriately and joined together award all marks
      • Candidates may not label Qe or Pe but drops a vertical line/horizontal axis – award
        Award for separate DD and SS curves drawn separately
   2. Explain five ways of making face to face communication effective.(10mks)
      • Lack of noise
      • Positive attitude between communicating parties
      • Absence of language barrier
      • Good listening skills
      • Proper preparation of message before communicating

6.  
   1. Pemba is an Island within the Indian Ocean. She had registered an improvement in her national income. Explain five factors that may have contributed to this trend.(10mks)
      - Labour supply – a country with more skilled labour force
      - Capital – a country that uses modern equipment in production
      - Entrepreneurship – it has more entrepreneurs who organize factors of production
      - Land – it has more natural resources
      -Political stability – Conducive political atmosphere attract both foreign and local investors vestment into the country.
      - Positive attitude of citizens towards work contributes to high national income.
      - increased foreign in
   2.  
      PEMUR STORE
      TRADING, PROFIT AND LOSS ACCOUNT
      FOR THE YEAR ENDED 31^ST DEC.2003