Business Studies Paper 2 Questions and Answers - KCSE 2022 Mock Exams Set 1

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INSTRUCTIONS TO CANDIDATES
  1. Write your name, and Index number in the spaces provided after the questions.
  2. Sign and write the date of examination.
  3. This paper consists of Six questions.
  4. Answer any five questions in the spaces provided after the questions.
  5. All questions carry equal marks
  6. Candidates should answer the questions in English.
FOR EXAMINER’S USE ONLY

Question

Maximum Score

Candidate’s Score

1

20

 

2

20

 

3

20

 

4

20

 

5

20

 

6

20

 

Total Score

100

 

QUESTIONS

  1.                              
    1. Explain five circumstances that can cause a business to succeed in their activities.    (10 marks)
    2. Describe the procedure an insured must take when making an insurance claim.      (10 marks)
  2.                  
    1. Mzalendo Enterprises started business on 1st July 2010 with Shs. 250,000 consisting of:
      Cash at bank Shs.200,000, Cash in Hand Shs. 30,000 and Furniture Shs. 20,000.         
      The following transactions took place during the month of July 2010.
      3rd July 2010, Motor Van worth Shs. 85,000 and stock of Shs. 25,000 were bought on credit
      4th July 2010, more stock worth shs.10,000 was bought by cash
      10th July 2010, withdrew money from bank sh 50,000 for office use
      15th July 2010, Sold stock at cost to a customer on credit for shs. 18,500
      19th July 2010, received a cheque for the full settlement of a debt owed from the transaction
      of 15th July 2010
      23rd July 2010, paid Shs. 65,000 by cheque for the motor van bought earlier on credit
      29th July 2010, paid Shs. 20,000 cash for the stock bought on credit
       
      Required:
      Prepare the balance sheet of Mzalendo Enterprises as at 30th July 2010. (10marks)
    2. Explain five reasons why upward communication should be encouraged in an organization. (10 marks)
  3.                      
    1. On 1st March 2020, Yawa had cash in hand shs. 7,800 and a bank overdraft of shs 23,400. During the month of the following transaction took place.
      March 3: Cash sales sh. 6500 paid directly into the bank.
      March 4: Bought goods for sh. 15,000 by cheque.
      March 6: cash sales sh. 50,000
      March 9: Received a cheque for sh. 18,000 from Amolo in full settlement of his account of sh. 20,000.
      March 13: Paid insurance premiums sh. 16,000 in cash.
      March 14: Paid Kimotho by cheque sh. 9,700 in full settlement of his debt of sh. 10,000.
      March 17: Cash sales sh. 150,000 paid directly into the bank.
      March 21: Withdrew shs. 30,000 from bank for office use.
      March 23: Received a cheque of sh. 23,750 from Rotich after having deducted 5% cash discount.
      March 25: Paid wages shs. 20,000 in cash.
      March 26: The cheque received by Amolo was dishonoured.
      March 30: Banked all cash except sh. 3,000.
       
      Required: Prepare a three-column cashbook. (10mks)
    2. Explain five challenges that may be experienced by a country whose population is made up of a large proportion of young people. (10mks)
  4.                          
    1. Explain five circumstances under which personal selling may be appropriate as a method of product promotion. (10mks)
    2. Explain five factors that may hinder entrepreneurial activities in a country. (10mks) 
  5.                      
    1. As business expands, it experiences economies of scale such as division of labour and specialization. Explain Five benefit of the economy of scale mentioned to the business (10mks)
    2. Kamau operates a large hardware business in a town in Kenya. A part from motor vehicle insurance policies, highlight giving reasons, five insurance policies that may be beneficial for this business. (10mks)
  6.                      
    1. Explain five advantages of M-pesa (10 mks)
    2. Using a well labeled diagram, illustrate, the effect of reduced cost of production on equilibrium price and output (10mks)

Marking Scheme

  1.                                  
    1. Circumstances that can cause a business to succeed in their activities
      • Where there is proper location of the business convenient for its operations .i.e Availability of customers.
      • Where there is favourable government policies it encourages growth and investment.
      • Where there is political stability and security thus creates certainty and confidence to entrepreneurs.
      • Where there is fair competition to enable business access markets for its goods and services
      • Where there is use of modern technology in production of goods and services promoting quality production.
      • Where there is adequate capital to run and expand the business.
      • Where there is availability of skilled and adequate labor matched to their job specialization
      • Where there is good customer relationship and care to attract and retain clients.
      • Where there is availability of good infrastructure for business to access its market and inputs.
      • Where there is proper marketing plans to increase sales.
        5 well explained points= 10mks
    2. Procedure an insured must take when making an insurance claim (10mks)
      • Notification of the insurer by the insured that the risk insured against has occurred.
      • Filling a claim form. The insured is issued with a claim form to fill in giving details of the risk based on the principle of utmost good faith.
      • Investigation of the claim. The insurer investigates the claim based on the information in the claim form.
      • Preparation of the assessment report. The insurer assesses the assessor's report on the extent of the loss.
      • Payment of the claim .On the assessment of the claim, the insured prepares to compensate the insured.(5 well explained steps= 10mks)
  2.                            
    1. Mzalendo Enterprises
      Balance Sheet
      As at 30th July 2010
      Assets  Liabilities and Capital

                                                  ksh                  ksh              
      Fixed Assets 
      Motor Van                       85,000√ 
      Furniture                          20,000√           105,000

      Current assets
      Stock                           16,500√
      Bank                            103,500√ 
      Cash                            50,000√                170,000 

       
      Capital 250,000√
      Short term liabilities
      Creditors 25,000√
       275,000  275,000
    2. Importance of encouraging upward communication in an organization
      • Facilitates quick feedback
      • Enables the management to receive and accommodate the views and sentiments of all staff in the organization when making decisions
      • Enables a sense of belonging among workers thus motivating all members of staff
      • Encourages free dialogue between the junior and senior members of staff
  3.                          
    1. Three column Cash book

      Date

      Details

      Discount allowed

      Cash

      Bank

      Date

      Details

      Disc Received

      Cash

      Bank

      2020         2020        
      March  1 Bal b/d   7800   March 1 Bal b/d     23400
      March  3 Sales     6500 March 4 Purchase     15000
      March  6 Sales   50,000   March 13 Insurance   16000  
      March  9 Amolo 2000   18000 March 14 Kimotho 300   9700
      March  17 Sales     150000 March 21 Cash     30000
      March  21 Bank   30,000   March 25 Wages   20000  
      March  23 Rotich 1250   23750 March 26 Amolo     18000
      March  30 Cash      48,800   Bank   48800  
                  Bal c/d   3000 150950
          3250 87800 247,050     300 87800 247050
    2. Challenges of young population. (10mks)
      1. High rate of unemployment – demand for jobs increases.
      2. Rate of crime/social evils may rise – due to the idleness of youths.
      3. Constraints/pressure on resources available
      4. Dependency ratio will rise.
      5. Reduced investment/savings.
      6. Low labour supply.
      7. Low per capital income.
      8. Problem of raising government/finance.
  4.                    
    1. Explain five circumstances under which personal selling may be appropriate as a method of product promotion. (10mks)
      1. When launching a new product because it requires a lot of awareness creation, persuading and convincing.
      2. When the products are tailored to meet customers specification because customers have varying tastes and preferences.
      3. When demonstration is required especially for technical products.
      4. When the value of the product is high to avoid risks of losing such products.
      5. When the organization can afford to finance the sales force.
      6. When the market is concentrated in one area.
    2. Explain five factors that may hinder entrepreneurial activities in a country. (10mks)
      1. Unfavorable government policies, which discourage establishment of business e.g high taxation.
      2. Poor infrastructure discourages smooth running of the business.
      3. Political instability.
      4. Stiff competition.
      5. Inadequate resources to start and run the business.
      6. Unavailability of market.
  5.                    
    1. Advantages of specialization and division of labour
      1. Output per worker is greatly increased thus increased productivity
      2. Encourages invention and innovation thus reducing the cost of production
      3. High quality goods and services are produced thus attracted more demand
      4. It saves on time thus maximizing on available labour
      5. Production is faster and efficient thus enable continuous supply and meet unexpected demand
    2. Policies to be taken
      1. Workman’s compensation policy as it covers workers who may be injure in the course of their duties
      2. Cash on transit policy to cover any loss of cash enroute the bank
      3. Fidelity / guarantee policy so as to cover any loss caused by dishonesty of workers
      4. Fire policy which covers the losses caused by incidences of fire
      5. Sprinkle leakage policy to cover against leakage of fires fighting sprinkles affixed in the premium
      6. Goods on transit policy to cover goods being transported to/from the premium
      7. Windows/ glass policy – to cover damage to the windows and glass to the premises
      8. Burglary policy – to cover theft and burglary to the premises
  6.                          
    1. Advantages of Mpesa
      1. Saves time
      2. Withdrawal can be done any time
      3. They are conveniently placed
      4. Have access to account balance
      5. Can pay utility bills
      6. Cheap to operate
      7. Safer to use
      8. Can deposit money in bank account
      9. Can withdraw money from the bank

    2. 6 aadadda
      A decrease in cost of production will increase the quantity supplied resulting to
      1. A forward shift of the SS curve
      2. Increase equilibrium quality
      3. Reduced equilibrium price
      4. A forward shift of the equilibrium point

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