Business Studies Paper 2 Questions and Answers - Sukellemo Joint Mock 2020/2021

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SUKELLEMO JOINT MOCK
Kenya Certificate of Secondary Education
BUSINESS STUDIES
PAPER 1

2 HOURS

Instructions to Candidates

  • This paper consists of six questions
  • Answer any five questions. All questions carry equal marks
  1.    
    1. Outline five differences between a public limited company and a parastatal(10 marks)
    2. The following details were ectractred from the books of Juhudi Retailers
      Invoices Issued:
       2017   Sh
       July 1 Mwango   120,000
       July 4  Nyambura  60,000
       July 10  Mwango  150,000
       July 25  Nyambura  80,000
        Invoices Received: 
        2017  Sh
       July 1  Ndaru  220,000
       July 3  Ndaru  90,000
       July 14  Omari  40,000
       July 28  Ndaru  110,000
       Credit Notes Sent  
        2017  Sh
       July 8  Mwango 20,000 
       July 26  Nyambura 16,000
        Credit Notes Received 
        2017  Sh
       July 11  Ndaru  30,000
       July 27  Ndaru  10,000
      Prepare Journal entries and show the posting of the totals to the relevant ledger accounts(10 marks)
  2.    
    1. By use of a diagram show the effect of a shift of the demand curve from the left to right on equilibrium price and quality. (10 marks)
    2. Discuss five benefits of filing office documents to an organization. (10 marks)
  3.    
    1. Give five limitations of using per capita income to compare the standard of living in different countries. (10 marks)
    2. Explain five ways in which a country may suffer as a result of being a member of a trading bloc. (10 marks)
  4.    
    1. Explain five benefits Kenya would derive from a well-drawn development plan. (10 marks)
    2. Highlight five reasons why the government may find it necessary to participate in business activities. (10 marks)
  5.    
    1. On 1st January 2013, Chui has Sh. 35,000 in cash and a bank overdraft Sh. 12,00. During the month, the following transaction took place:

      Jan 2 Sold goods for Sh. 8,000 cash.
      Jan 5 Received a cheque for Sh. 40,000 from Mwirigi Enterprises
      Jan 8 Paid Sh. 6,000 cash to Bundi.
      Jan 10 Deposited Sh. 13,000 into the bank from cash till
      Jan 14 Withdrew Sh. 5,000 from bank for personal use.
      Jan 15 Paid wages Sh. 4,000 in cash.
      Jan 18 Received Sh. 25,000 cash from Kazure.
      Jan 24 Cash sales paid directly into the bank Sh. 45,000
      Jan 26 Paid wages Sh. 2,400 in cash
      Jan 27 Withdrew Sh. 21,000 from bank for business use
      Jan 28 Bought furniture Sh. 19,000 in cash.
      Jan 29 Paid insurance Sh. 17,000 by cheque.
      Jan 30 Deposited all the cash into the bank leaving a balance of only Sh.3,000

      Prepare a two-column cashbook and balance it off. (10 marks)

    2. Explain five circumstances under which a buyer would prefer buying goods under credit purchase rather than hire purchase terms. (10 marks)
  6.       
    1. Give four ways in which an entrepreneur contributes to produce goods.(8 marks)
    2. The following trial balance was extracted from the books of Baite Traders as at 31st August 2015
        Dr Cr
        Sh Sh
      Sales   350,000
      Purchases 160,000  
      Cash at the bank 290,000  
      Returns inwards 5,000  
      Carriage inwards 20,000  
      Carriage outwards 14,000  
      Salaries and wages 10,000  
      Debtors 56,000  
      Creditors   90,000
      Stock 35,000  
      Machinery 265,000  
      Rent   25,000
      Discounts received   18,000
      Light and heating 12,000  
      Buildings 240,000  
      Advertising 13,000  
      Drawings 30,000  
      Capital   667,000
        1,150,000 1,150,000
      Additonal information:
      1. Stock on 31st August 2015 was valued at Sh. 50,000
      2. Prepare trading, profit and loss account for the year ended 31st August 2015 and a balance sheet as at that date.(12 marks)

MARKING SCHEME

  1.    
    1. Outline five differences between a public limited company and a parastatal(10 marks)
      Public Limited Company  Parastatal 
      -Owned by private people who own shares
      -Directors are elected by shareholders

      -Main objective is to make profit

      -Profit realised belongs to shareholders
      -Initially financed through issues of shares.
      -Fully owned by government

      -Directors are appointed by government

      - Main objective is to offer essential goods and services
      -Profit realised belongs to the state.

      -Initially financed by state or though state guarantee
    2. The following details were ectractred from the books of Juhudi Retailers
      Invoices Issued:
       2017   Sh
       July 1 Mwango   120,000
       July 4  Nyambura  60,000
       July 10  Mwango  150,000
       July 25  Nyambura  80,000
        Invoices Received: 
        2017  Sh
       July 1  Ndaru  220,000
       July 3  Ndaru  90,000
       July 14  Omari  40,000
       July 28  Ndaru  110,000
       Credit Notes Sent  
        2017  Sh
       July 8  Mwango 20,000 
       July 26  Nyambura 16,000
        Credit Notes Received 
        2017  Sh
       July 11  Ndaru  30,000
       July 27  Ndaru  10,000
      Prepare Journal entries and show the posting of the totals to the relevant ledger accounts(10 marks)
      Sales Journal
       Date Details  Invoice No.  l.f  Amount 
       20 -7

      July 1
      July 4
      July 10
      July 25
      July 31

       
      Mwango
      Nyambura
      Mwango
      Nyambura
      total posted to G.L(Cr)
          SH
      120,000
      60,000
      150,000
      80,000
      410,000

      Purchases Journal
       Date Details  Invoice No.  l.f  Amount 

       20 -7
      July 1
      July 3
      July 14
      July 28
      July 31

       
      Ndanu
      Ndanu
      Omari
      Ndanu
      Total posted to G.L
           Sh
      220,000
      90,000
      40,000
      110,000
      460,000

      Returns Inwards Journal
       Date Details  Invoice No.  l.f  Amount 
       20 -7
      July 8
      July 26
      July 31
       
      Mwango
      Nyambura
      Total posted to G.L(dr)
         

       Sh
      20,000
      16,000
      36,000


      Returns Outwards Journal
       Date Details  Invoice No.  l.f  Amount 
       20-7
      July 11
      July 27
      July 31

      Ndaru
      Ndaru
      Total posted to G.L(cr)
           Sh
      30,000
      10,000
      40,000

      Sales Account
       Dr    Cr 
        .    .  .    . .    .  20-7
      July 31 

      Sundry Debtors 
      Sh
      410,000 

      Purchases Account
       Dr   Cr 
       20 -7
      July 31

      Sundry creditors 
      Sh
      460,000 

       .    .

       .   . .   .  

      Returns Outwards Account
       Dr   Cr 
       .    .  .   . .   .   20-7
      July 31 

      Sundry creditors 
      Sh
      40,000 

      Returns Inwards Account
       Dr   Cr 
       20 -7
      July 31

      Sundry debtors 
      Sh
      36,000 
      .    .   .   .  .   . 


  2.    
    1. By use of a diagram show the effect of a shift of the demand curve from the left to right on equilibrium price and quality. (10 marks)
      Bsukpp2a2a
    2. Discuss five benefits of filing office documents to an organization. (10 marks)
      • Filing of documents in an office makes it tidy, otherwise it would make an office disorganised if documents are thrown all over the place without any order.
      • It makes it possible for an organization to make references when necessary. In case the documents are not kept, it may be difficult for information to be accessed when needed at some future date.
      • Documents can easily get lost or stolen if not filed. Filing ensures that documents are kept in secure places which minimises loss, theft or misplacement.
      • It takes a shorter time to access documents than when they are not filed which would waste a lot time trying to look for them.
      • It saves spaces otherwise documents that are not filed and kept end up taking a lot of space.

  3.    
    1. Give five limitations of using per capita income to compare the standard of living in different countries. (10 marks)
      • Inequality in income distribution. Per capita income in one country may be high but in the hands of very few people yet another country may have low per capita income, which is evenly distribution.
      • Inappropriate application of national income. Per capita income in one country may be high but used in a way that does not benefit citizens while in the other country, it may be used to finance projects that directly benefits the masses.
      • Effect in people’s health. High per capita income in one country could be achieved at the expense of the people’s health
      • Different interpretations of national income. One country may interpret her national income as gross domestic product at market price while another may interpret hers as net national product at factor cost.
      • Non-marketed output. A country heavily relying on subsistence sector may appear to have low per capita income because of un-marketed output compared with another where such as sector insignificant.
      • Price structure. Price structure may be different in difference countries e.g. food stuffs may be cheaper in one country compared to another.

    2. Explain five ways in which a country may suffer as a result of being a member of a trading bloc. (10 marks)
      • Loss of government revenue as no duty is imposed on goods to and from member countries.
      • Closing down of local industries due to unhealthy competition with goods from more established industries from member countries.
      • Unemployment for locals as they are not able to compete with more qualified people from member countries.
      • Limits consumer choice. Citizens may have a limited choice as they may get goods produced within the trading block due to barriers placed to non-member countries.
      • Compromising a country’s political ideology as the country adjusts itself to fit in the trading block.

  4.    
    1. Explain five benefits Kenya would derive from a well-drawn development plan. (10 marks)
      • Allocation of available resources enables the government to allocate the available resources in the best way possible. This would ensure that there are neither idle resources nor some being used in the wrong manner.
      • Project evaluation. Plan acts as a standard in which projects can be evaluated. Where there are deviations, they may analysed and corrective measures taken before it is too late.
      • Equitable distribution of income. Development plans enables government to distribute equitably income thorugh fair allocation of resources regionally.
      • Negotiation with donors. The government may use a development plan to convince donors that funds being sought would be put into proper use.
      • Stimulating effort. A well-drawn and explained development plan may make the masses exert more effort in national development.
      • Avoiding duplication. Through proper planning, different industries are set in different parts of the country thereby ensuring balanced development in the country.

    2. Highlight five reasons why the government may find it necessary to participate in business activities. (10 marks)
      • To provide goods and services that are too sensitive to be left in the hands of the private sector.
      • To attract foreign investment by initiating major development projects
      • To prevent exploitation of consumers by private business people especially in provision of essential goods and services
      • To provide essential goods and services which private individuals are not able to due to large amount of capital required.
      • To stimulate economic development in the country
      • To ensure equitable distribution of essential goods and services
      • To provide unprofitable but essential goods and services

  5.    
    1. On 1st January 2013, Chui has Sh. 35,000 in cash and a bank overdraft Sh. 12,00. During the month, the following transaction took place:

      Jan 2 Sold goods for Sh. 8,000 cash.
      Jan 5 Received a cheque for Sh. 40,000 from Mwirigi Enterprises
      Jan 8 Paid Sh. 6,000 cash to Bundi.
      Jan 10 Deposited Sh. 13,000 into the bank from cash till
      Jan 14 Withdrew Sh. 5,000 from bank for personal use.
      Jan 15 Paid wages Sh. 4,000 in cash.
      Jan 18 Received Sh. 25,000 cash from Kazure.
      Jan 24 Cash sales paid directly into the bank Sh. 45,000
      Jan 26 Paid wages Sh. 2,400 in cash
      Jan 27 Withdrew Sh. 21,000 from bank for business use
      Jan 28 Bought furniture Sh. 19,000 in cash.
      Jan 29 Paid insurance Sh. 17,000 by cheque.
      Jan 30 Deposited all the cash into the bank leaving a balance of only Sh.3,000

      Prepare a two-column cashbook and balance it off. (10 marks)

      Dr    Two-column Cash Book     Cr 
       Date  Particulars Cash  Bank  Date  Particulars  Cash  Bank 
       20 -8   Sh  Sh  20-8    Sh  Sh 
       Jan 1 Balance b/d  35,000    Jan 1  Balance b/d    12,000 
       Jan 2  Sales 18,000    Jan 8  Bundi  6,000  
       Jan 5  Mwirigi Entr    40,000  Jan 10  Bank  13,000  
              Jan 14   Drawings    5,000
       Jan 10  Cash    13,000  Jan 15  Wages  4,000  
               Jan 26  Wages  2,400  
       Jan 18  Kazure  25,000    Jan 27  Cash    21,000
               Jan 28  Furniture  19,000  
       Jan 24  Sales    45,000  Jan 29  Insurance    17,000
       Jan 27  Bank 21,000     Jan 30  Bank  51,600  
               Jan 31  Bal c/d  3,000  94,600
       Jan 29  Cash    51,600        
           99,000  149,600      99,000  149,600

       

    2. Explain five circumstances under which a buyer would prefer buying goods under credit purchase rather than hire purchase terms. (10 marks)
      1. Where there is need to own the goods as under hire purchase ownership remain with the seller until the last instalment is paid.
      2. Where there is need to sell the goods as goods under hire purchase cannot be sold before all instalments are paid.
      3. Where there is need to benefit from lower price as hire purchase term is higher.
      4. Where there is need to avoid good being repossessed as it is the case in hire purchase terms.
      5. Where buyer is buying non durable goods which cannot be sold under higher purchase terms.
      6. Where buyer is intending to pay in one instalment and avoid periodic instalment which are required under hire purchase terms.
  6.   
    1. Give four ways in which an entrepreneur contributes to produce goods.(8 marks)
      1. Provides the capital required in the production process
      2. He assembles other factors of production
      3. He makes decisions on how the business should run
      4. Pays fro other factors of production
      5. Bears risk
      6. Identifies the viable business opportunity

    2. The following trial balance was extracted from the books of Baite Traders as at 31st August 2015
        Dr Cr
        Sh Sh
      Sales   350,000
      Purchases 160,000  
      Cash at the bank 290,000  
      Returns inwards 5,000  
      Carriage inwards 20,000  
      Carriage outwards 14,000  
      Salaries and wages 10,000  
      Debtors 56,000  
      Creditors   90,000
      Stock 35,000  
      Machinery 265,000  
      Rent   25,000
      Discounts received   18,000
      Light and heating 12,000  
      Buildings 240,000  
      Advertising 13,000  
      Drawings 30,000  
      Capital   667,000
        1,150,000 1,150,000
      Additonal information:
      1. Stock on 31st August 2015 was valued at Sh. 50,000
      2. Prepare trading, profit and loss account for the year ended 31st August 2015 and a balance sheet as at that date.(12 marks)
        Baite Traders
        Trading, Profit and Loss A/C
        For the period ended 31st August 20-5
          Sh Sh   SH Sh
        Opening stock   35,000 Sales 350,000  
        Add: Purchases 160,000   Less: Return inwards 50,000 345,000
        Carriage inwards 20,000 180,000      
        COGAFs   215,000      
        Less: Closing stock   50,000      
        Cos   165,000      
        G.P c/d   180,000      
            345,000     345,000
        Carriage outwards   14,000 G.P b/d   180,000
        Sal/wages   10,000 Rent   25,000
        Light & heat   12,000 Discount Received   18,000
        Advert   13,000      
        NP c/d   174,000      
            223,000     223,000


          Biate
        Balance sheet
        As at 31st August 20-5   

        Assets
        Machinery
        Buildings 
        Sh
        265,000
        240,000 
        Capital + Liabilities
        Capital
        Less: Drawings 
        Sh 
        667,000
        30,000
        Sh

         
               637,000  
        Stock
        Bank
        Debtors
          50,000
        290,000
        56,000
         Add Net Profit

        Creditors
         174,000


         811,000

        90,000
          901,000      901,000

 

 


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