Business Studies Paper 2 Questions and Answers - Kapsabet Mock Exams 2021/2022

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INSTRUCTIONS TO CANDIDATES
Answer any five questions in the spaces provided.

  1.    
    1. Explain five benefits that could accrue to a customer who buys goods from a departmental store. (10mks)
    2. Explain five roles played by licensing as a government regulatory tool. (10mks)
  2.      
    1. Explain five services that the central bank of Kenya offers to commercial banks. (10mks)
    2. The following information relates to the business of Kipisigs Traders for the week ended 29th Feb 2016.
      Feb 24th Started business with shs 24,000 in thebank.
      Feb 25 th Bought goods worth shs 18,000 by cheque.
      Feb 26 th Sold goods for cash shs 18,900
      Feb 28 th Cash sales worth Kshs 5,625
      Feb 29 th Paid commission Kshs 900 in cash.
      Required
      Prepared ledger accounts and balance them off. (10mks)
  3.    
    1. Describe five channels followed in exporting agricultural product. (10mks)
    2. The following trial balance was extracted from Milka traders on 31st Dec 2020.
        Dr
      Sh
      Cr
      Sh
      Capital 
      Stock 
      Machinery 
      Motor vehicle 
      Purchase 
      Sales 
      Returns inwards 
      Returns outwards 
      Discount received 
      Carriage inwards 
      Carriage outwards 
      Bad debts (written off) 
      General expenses 
      Debtors 
      Creditors 
      Rent  

      25000
      250,000
      87000
      360,000

      40,000


      2000
      3000
      80,000
      88,000
      18,000

      1000
      954.000
      250,000




      600,000

      20,000
      5,000





      49,000

      954.000
      Additional information;
      Closing stock was sh. 22000
      Prepare Milka traders Trading, profit and loss account for the year ending 31/12/2020. (10mks)
  4.    
    1. Explain five reasons why a country imposes taxes on her citizens. (10mks)
    2. Outline five differences between a public limited company and a cooperative society. (10mks)
      Public Co-operative society
         
  5.    
    1. Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantity (10mks)
    2. Explain five features of land as a factor of production. (10mks)
  6.    
    1. Mmanyi Enterprises have decided to construct their own warehouse. Explain five benefits they are likely to derive. (10mks)
    2. Explain five importance of filing documents in an organization (10mks)


MARKING SCHEME

  1.    
    1. Advantages of departmental stores
      • Access to specialised goods/ service from the relevant / shops / particular type of goods. Personalised / attention to customers.
      • Access to auxiliary / after sales services - which may easily be available within the shops.
      • One can save time by shopping under one roof.
      • Prices of goods are relatively low = making consumers save/ buy more .
      • One can access a variety of goods under one roof.
      • Use of credit i debit cards - relieving customer the need of carrying cash.
      • Access new products which a customer may not have been aware of.
    2. Explain five roles played by licensing as a government regulatory tool. (10mks)
      • Licensing provides the government with a platform to monitor the type of goods moving in and outside the country.
      • Through licensing the government can get the total number of businesses operating in the country
      • Licensing is used by the government a tool to prevent illegal business activities.
      • Licensing ensures that professional standard as stipulated by the government are adhered to against which a license can be withdrawn for a business which does not stick to the standards.
      • Ensures that business people do not provide harmful goods and services to the citizens.
      • Ensures that there is a healthy competition between people involved in the same business activities.
  2.    
    1. Explain five services that the central bank of Kenya offers to commercial banks.
      • Accepts deposits for safe-keeping i.e. banker to commercial banks.
      • Licenses the operation of commercial bank Supervises the banking operations.
      • Provide clearing house for interbank transaction.
      • Ask as a mediator / arbitrator for commercial bank in case of any disputes.
      • Lends money to commercial banks.
      • Provide advisory services on banking on economic matters to commercial banks.
      • Provide them with currency
      • Replaces old notes and coins with new ones.
      • It repatriates excess foreign currency.

    2. Dr Capital a/c Cr
      Bal c/d

      24.000Bank
      24,000
      24,000
      24,000

      Dr Bank a/c Cr
      Capital


      24,000Purchases
      Bal c/d
      24,000
      18,000
      6,000
      24,000

      Dr Cash a/c Cr
      Sales
      Sales

       
      18,900
      5,625

      24,525
      Rent
      Commission 
      Bal c/d

      /150
      ^900
      23,475
      24,525

      Dr Sales a/c   Cr
      Bal c/d

       
      24,525

      24,525
      Cash
      Cash
       
      18,900
      5,625
      24,525

      Dr Purchases a/c Cr
      Bank 18,000
      18,000 
      Bal c/d

      18,000
      18,000

      Dr Commission a/c Cr
      Cash
       
      900
      900
      Bai c/d

      900
      900

      Dr Commission a/c Cr
      Bank
       
      150
      150
      Bal c/d

      150
      150
  3.    
    1. Describe five channels followed in exporting agricultural product. (10mks)
      1. Farmer marketing board -> foreign consumers
      2. Farmer —agent - foreign wholesaler - foreign retailer -foreign consumer
      3. Farmer foreign wholesaler foreign retailer foreign consumer
      4. Farmer -foreign retailer -foreign consumer
      5. Farmer -foreign fanner‘s representative - foreign wholesaler -foreign retailer - foreign consumer
      6. Farmer - foreign consumer
    2. Milka Traders
      Trading, Profit & Loss A/c
      For the year ended 31 December 2020
        Shs Shs   Shs cts
      Opening stock
      Add purchase
      + C inwards 
        25,000


      Sales

       
      600,000
      40,000
       
      560,000
      Less returns out
      Gas
      Less C. stock
      COS
      Gross profit c/d
      20,000




      342,000
      367,000
      22,000
      345,000
      215,000
           
          560,000     560,000
      General expenses
      Carriage out
      Rent
      Bad debts
      Net profit c/d

        88,000
      3,000
      1,000
      80,000
      48,000
      220,000
      Gross profit b/d
      Add disc. Received




        215,000
      5,000



      220,000
            Net profit    48,000
  4.    
    1. Reasons why a country imposes taxes on citizens
      1. Raise government revenue - to cater for various government expenditure
      2. Reduce income disparity - by facilitating fair distribution of incomes and resources by taxing rich more
      3. Discourage consumption - of harmful products and engagement in illicit activities
      4. Control inflation - by reducing money supply through reduction of people‘s disposable income
      5. Correct unfavourable balance of payments- by taxing imported products more to discourage importation
      6. Influence business location e.g. high tax on urban centres make entrepreneurs to go to rural areas
      7. To subsidize various undertakings for the benefit of the society

    2. Cooperatives Public limited cos
      1 Formed by a min of 10
      2 Registered by commissioner of cooperatives
      3 Managed by committee elected by members at AGM
      4 Governed by cooperative by – laws
      5 Formed with service motive (to serve members)
      6 Members have acommon bond
      7 Controlled by government through the ministry of cooperative development.
      1 Min 7 members /shareholders
      2 Registered by registrar of companies
      3 Managed by Board of directors AGM
      4 Governed by Articles of Association
      5 Formed for profit motive
      6 Members have nothing in common
      7 There is no government control
  5.    
    1. Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantity. (10 marks)
      1
    2. Features of land as a factor of production
      • Basic factor of production. Production cannot take place without land.
      • Lack geographical mobility- land cannot be moved geographically from one location to another.
      • Uneven in quality – the land quality differs from one place to place.
      • Suffers from diminishing returns after some time the quality of land reduces.
      • Quality can be improved – use of technology and fertilizers can improve the quality of land.
  6.    
    1. Benefits that Mmanyi Enterprise may derive from constructing their own warehouse.
      • Bulk buying; they can buy stock in large scale because they have storage facilities
      • They can be able to meet market demands since they stock the right quantities required by the customers.
      • Seasonal goods can be stocked in order to satisfy customer‘s seasoned needs
      • Variety of goods can be stocked to promote customer‘s satisfaction
      • Security of goods is offered untiln they are demanded.
      • Preparation of goods for sale such as branding, parking, sorting while in the warehouse is made easier.
      • Suitable design- they can construct a warehouse suitable for their own needs
      • Construction of one‘s warehouse is economical
    2. Importance of filing documents in an organization
      1. Easy retrieval of documents
      2. Keeps office very tidy
      3. Safety of documents
      4. Documents are kept neat
      5. Documents are kept away from unauthorised persons
      6. Space is well utilized
      7. Information for future reference is kept
      8. Filed documents are used as evidence in case of disputes

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