Business Studies Paper 2 Questions and Answers - Baringo North Joint Evaluation Mock Exams 2022

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Questions

Instructions to Candidates

  • This paper consists of 6 questions.
  • Answer ANY FIVE questions in the spaces provided
  • Candidates should answer the questions in English

 

  1.      
    1. Explain five methods used by central bank to increase money supply in the economy. (10mks)
    2. Discuss five ways in which the government can reduce unemployment levels in Kenya (10mks)
  2.  
    1. Explain five factors that may limit the use of containers as a method of transporting goods in a developing country. (10mks)
    2. The following Trial balance was extracted from the books of Kabaka traders as at
         Kabaka Traders
      Trials balance as at 30/6/2021
       Particles  Dr  Cr
       Sales
      Purchases
      Return inwards
      Carriage inwards
      Return outwards
      Carriage outwards
      Stock 1st Jul 2017
      Rent
      Delivery van
      Bank
      Creditors
      Debtors
      Discount allowed
      General expenses
      Capital
       ____________
      600,000
      80,000
      40,000
      ____________
      3,000
      100,000
      60,000
      180,000
      60,000
      ____________
      120,000
      80,000
      18,000
      ____________
       900,000
      ________
      ________
      ________
      20,000
      _________
      _________
      _________
      _________
      _________
      170,000
      _________
      _________
      _________
      178,000
         1,268,000  1,268,000
      Stock on 30th June 2018 was valued at 135,000/=
      Required:
      Prepare Kabaka Traders Trading profit and loss A/c.
  3.  
    1. Explain five advantages of government involvement in Business. (10mks)
    2. Discuss five factors that may influence entrepreneurial practices positively in the country (10mks)
  4.  
    1. Apart from selling of shares, explain five other sources of finance for public limited company. (10mks)
    2. Explain five features of oligopoly. (10mks)
  5.  
    1. Muema is planning to construct a warehouse for renting. Explain five measures that he may take to ensure its smooth operation. (10mks)
    2. Outline five measures that the Kenya government may take to reduce unemployment. (10mks)
  6.  
    1. Explain five methods used to distribute imported manufactured goods. (10mks)
    2. The following transactions relates to Konate Traders for the month of December 2010.
      Dec
      • 1st   Started a business with sh. 200,000 in the Bank account.
      • 2nd  Bought furniture for sh, 50,000 and paid by cheque
      • 3rd   Sold goods on credit to Tilashs, 20,000; Katu 10,000
      • 4th Bought goods on credit from Kahamash 30,000; Kanga shs. 40,000
      • 5th Returned faulty goods to Kahamash 5,000
      • 6th Paid Kahama on account by cheque less 10% cash discount.
      • 7th Received faulty goods from Katushs. 2000
      • 8th Received payment due from Tila and Katu by cheque less 5% cash discount.
      • 9th Cash sales shs. 100,000
      • 10thPaid for wagesshs. 20,000 by cash and electricity shs.10,000 by cheque.
      • 11thDeposited all the cash in hand into the bank account.
        Required:
        Prepare a three-column cash book duly balanced (10mks)

Marking Scheme

  1.      
    1. Methods used by central bank to increase money supply
      • Reducing bank rates
      • Reducing liquidity ratio
      • Buying government securities
      • Reductions on compulsory deposits
      • Opening credit to all sectors in the economy
      • Directives to increase credit lending
      • Moral persuasions to banks to increase credit lending  
    2. Population control to have labour force that economy can absorb.
      • Reviving collapsed industries hence increased production activities.
      • Establishing of more labour intensive industries.
      • Expanding market for goods and services.
      • Diversification of economy hence create more employment opportunities.
      • Increasing government expenditure to expand size of the economy.
      • Exposing labour to assist unemployed acquire jobs abroad.
      • Encouraging informal/Juakali sector in order to promote self – employment.
      • Encouraging self employment/entrepreneurship through low taxes, subsidies.
  2.    
    1. Special equipments for handling are expensive to buy and maintain.
      • Use of modern technology which is not available in developing countries hence it slows down handling of containers.
      • Requires skilled personnel which may not be available in developing countries.
      • Initial capital to set up the system/ buy containers man not be available since the cost is high.
      • Low volume of goods/irregular shaped goods may not call for use of containers.
    2.        
        KABAKA TRADERS
      TRADING PROFIT AND LOSS A/C
      FOR THE YEAR ENDED 30/6/2021
       Opening stock 
      Purchases 
      Carriage inwards 
      Return outwards
      C.O.G.A.F.S
      Closing Stock 
      C.O.G.S 
      Gross profit c/d 

      Expenses
      Carriage outwards 
      Rent 
      Discount allowed 
      General expenses
      Net profit c/d 

      100,000
      600,000
      40,000
      20,000
      720,000
      135,000
      585,000
      235,000
      820,000

      3,000
      60,000
      18,000
      7,000
      147,000
      235,000

      Sales 
      Return inwards 
      Net sales 



      Gross profit b/d 


      Net profit B/d 


      900,000
      80,000
      820,000



      820,000


      235,000


      147,000
  3.             
    1. Protection of citizens from exploitation/malpractices
      • Provision of essential goods/services at fair prices
      • Help solve unemployment problems hence improve standards of living.
      • Provision of investments which are essential but require large capital.
      • Creates competition forcing private sector to provide quality capital
      • Help reduce foreign domination of the country’s economy.
      • Promote fairness in distribution/use of resources
      • Control use of resources through conservation thus ensuring sustainability.
      • Income generation through taxation, licensing to finance government expenditure.
    2. Factors that influence entrepreneurial practices
      • Positive/ good societal attitude
      • Government support
      • Good peer influence
      • Proper education and training
      • High number of successful entrepreneurs
      • High number of financial institutions
      • High level of personal motivations ]
  4.         
    1.          
      • Loans – borrowing from banks and other financial institutions.
      • Ploughing back profit/Retained profit – profit not shared but used to expand/ run the business.
      • Trade credit/buying goods on credit so as to pay at a later date.
      • Hire purchases – buying goods and paying them on installment basis.
      • Debentures to the members of the public.
      • Sale of idle assets – to run business activities/ meet its financial obligations.
      • Bank overdraft –To finance short term obligations.
    2.      
      • Interdependent in decision making to avoid counter reactions from other firms.
      • Deal in similar commodities which have been differentiated through colour, packing , pricing.
      • Engage in non-price competition through aggressive advertising market segmentation, after sale services etc.
      • Few-large firms which control substantial share of the market.
      • Engage in price rivalry/competition which may lead to survival or collapse of firms.
      • Price rigidity due to fear of selling above or below kinked demand curve.
      • Price leadership where the dominant firm dictates market price which rules the market.
  5.             
    1.            
      • Suitable location to receive and issue goods
      • Proper buildings suitable to the type of goods to be stored
      • Equipment and facilities for handling goods such as forklifts
      • Safety equipment for protection of goods against water and sunshine and personal protection
      • Accessibility to its users near transport system
      • Enough space for easy movement and accommodation of goods
      • Well trained staff for proper management
      • Requirement of the law
    2.   
      • Increase government expenditure to stimulate aggregate demand, hence the level of production
      • Encourage local private investment to increase productivity
      • Diversify the Kenyan economy
      • Protect local industries from foreign competition in order to maintain employment level
      • Find market for locally produced goods through aggressive export promotion in order to expand production capacities of local industries
  6.    
    1. Five channels for distribution of imported manufactured goods .
      • Foreign manufacturer → local consumer
      • Foreign manufacturer → Foreign agent/exporter → local consumer.
      • Foreign manufacturer → Foreign agent → local agent → local consumer.
      • Foreign manufacturer → local agents/importers → local consumer.
      • Foreign manufacturer → Foreign agent → local agent/import merchant → local wholesaler → local consumer.
      • Foreign manufacturer → Foreign agent → local agent→ local wholesaler → local retailer →local consumer.
      • Foreign manufacturer → local agent/import merchant → local wholesaler → local retailer → local consumer.
      • Foreign manufacturer → local retailer → local consumer.
      • Foreign manufacturer → local wholesaler→ local consumer.
      • Foreign manufacturer → local wholesaler → local retailer→ local consumer.
      • Foreign manufacturer → foreign agent → local wholesaler → local consumer.
      • Foreign manufacturer → Foreign agent → local wholesaler→ local retailer → local consumer.
      • Foreign manufacturer → own retail outlet → local consumer.
    2.      
              Konate Traders
      Three column cash book
      As at 31st Dec 2010
      Date Details L.F D.A Cash Bank   Date Details LF DR Cash Bank
      1st /12
      3/12
      8/12
      9/12
      31/12
      Capital
      Tila
      Katu
      Sales
      Cash




      C

      1000
      400





      100000

      200000
      19000
      7600

      80000
        1st /12
      2/12
      6/12
      10/12
      11/12
      31/12
      31/12
      Furniture
      Purchases
      Kahama
      Wages
      Electricity
      Bank
      Balance





      c
      c/d


      2500







      20000

      80000

      50000
      40000
      22500

      10000

      184100
            1400 100000 306600         2500 100000 306600

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