Business Studies Paper 2 Questions and Answers - Lanjet Joint Mock Exams 2022

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INSTRUCTIONS.

  • Answer any FIVE Questions

QUESTIONS

  1.                    
    1. Explain five causes of unemployment in Kenya. (10 Marks)
    2. Explain five circumstances that would influence a producer to use wholesalers in distributing his produce. (10 Marks)
  2.                    
    1. Explain five factors that promote entrepreneurship in Kenya (10marks)
    2. Explain five non-tax internal sources of revenue to the government. (10mks)
  3.                                      
    1. Explain five benefits that a country would get by encouraging investors to locate industries in rural areas. (10 Marks)
    2. On 1st May 2010 Musa Traders had sh. 15, 000 cash in hand and Sh. 160, 450 at bank. During the month, the following transactions took place.
      May 2 Bought goods for Sh. 5, 400 and paid by cheque.
      May 8 Received sh. 7, 200 cash from a debtor
      May 15 Paid a creditor Sh. 18, 300 by cheque
      May 16 Paid salaries sh 4, 200 in cash
      May 18 Sold goods for sh. 9, 200 and was paid by cheque
      May 20 Withdrew sh. 30, 000 from bank for office use
      May 25 Received sh.8, 000 cash from a debtor
      May 28 Paid general expenses sh. 4, 000 cash.
      May 29 Deposited sh.10, 000 cash in bank
      May 30 Paid for electricity sh. 2, 500 by cheque
      Record the above transactions in a two column cash book and balance it off. (10 Marks)
  4.                              
    1. Explain five differences between private limited companies and public limited companies. 10 (Mks)
    2. Explain five factors that could affect the quantity of cabbages supplied in a Market. (10Marks)
  5.                          
    1. Explain five factors to consider when choosing an appropriate means of transport. (10 Marks)
    2. TLhe following Trial Balance was extracted from the books of Mwangi Traders on 31st December, 2005.
      Mwangi Traders
      Trial Balance
      As at 31st December, 2005
         Dr (sh).   Cr (sh)
       Purchases   70,000  
       Carriage Outwards   4,000  
       Stock 1/1/2005  12,500  
       Sales    95,000
       Fixed Assets   82,000  
       Creditors     8,500
      Debtors  10,500  
      Salaries  14,000  
      Bank Overdraft    7,500
      Returns  1,500 2,400
      Cash In Hand  2,500  
      General expenses 5,200  
      Capital    88,800
        202,200 202,200
      Additional Information
      1. Closing stock was valued sh 6,500
      2. Salary outstanding was sh 2,800
        Prepare the following
        1. Trading, Profit and Loss Account 6mks
        2. Balance sheet 4mks
  6.                                    
    1. Explain five roles of commercial banks in the development of a country’s economy. (10 Marks) 
    2. Explain five challenges that may be experienced by a country whose population is made up of large proportion of young people. (10 Marks)

MARKING SCHEME

  1.                            
    1. Five causes of unemployment in Kenya.
      • High population growth rate.
      • Inappropriate education system.
      • Inappropriate technology.
      • Rural – urban migration.
      • Lack of product market.
      • Seasonality in production. 5 x 2 = total Marks
    2. Circumstances that would influence a producer to use wholesalers in distributing his produce.
      • If he needs to only specialize in production.
      • If he lacks means to distribute his goods.
      • If the market is quite large.
      • If it is economical to use the wholesalers.
      • If the wholesales are versed with the market and he is not. 5 x 2 = total 10 Marks
  2.                      
    1. Explain five factors that may promote entrepreneurship. (10marks)
      • Availability of finances which supports the growth / expansion / operation of the business.
      • Availability of security that ensures safety of business property.
      • Availability of market / demand where people can sell goods/services to satisfy their needs.
      • Good infrastructure / roads that facilitate movement of goods to the market.
      • Political stability that creates a conducive environment for starting / running a business.
      • Healthy / fair competition that the owner of the business can cope with / withstand.
      • Favourable government policies / government support that may encourage starting / expansion of business venture.
      • Presence of role models / successful business people that inspires the youths to go into business.
      • Development of positive entrepreneurial culture through early exposure to business activities / that values individuals who are successful entrepreneurs.
      • Relevant education / training in the curriculum which prepares the youths to become entrepreneurs.
      • Good governance that ensures accountability / transparency in conduct of business activities.
      • Availability of appropriate technology that can lead to production of desired quality /quantity of goods
      • Need for independence / self-reliance through earning of income
    2. Explain five non-tax internal sources of revenue to the government. (10mks)
      • Fees-Amounts received by the government after rendering direct services to its citizens e.g licensing businesses
      • Fines and penalties- Imposed by judicial system (courts and tribunals) on individuals or the firms who break the law of the land
      • Incomes from government owned properties- These include land for which rates are charged and houses for which rent is charged.
      • Profits and dividends from public corporations- When revenue is earned from these corporations the profits go to the government.
      • Loan repayment- Recovery of principal amount and interest on loans lent out by government financial agencies e.g KIE
      • Escheats- If a person dies without a proper will and has no legal heirs, the property of such a person revert to the government
      • Income from sale of government property and ownership in companies (shares)
  3.                      
    1. Benefits that a country would get by encouraging investors to locate industries inrural areas.
      • Reduced rural – urban migration.
      • Improved infrastructure in rural areas.
      • Balanced development in the country.
      • Better living standards in rural areas.
      • Utilization of rural resources in such areas.
      • Lesser population in urban areas. 5 x 2 = 10 Marks
    2. Two column cash-book

      Date

      Details

      Folio

      Cash

      Bank

      Date

      Details

      Folio

      Cash

      Bank

      2010

       

      Bal b/d√1

      Debtor√½

      Sales√½

      Bank√½

      Debtor√½

      Cash√½

       

      Sh.

      Sh.

      2010

       

      Purchases√½

      Creditor√½

      Salaries√½

      Cash√½

      Gen.exp.√½

      Bank√½

      Electricity√½

      Bal c/d√1

       

      Sh.

      Sh.

      May 1

       

      15,000

      160,450

      May 2

         

      5,400

      8

       

      7,200

       

      15

         

      18,300

      18

      20

      25

      29

       

      C C

       

      30,000

      8,000

      9,200

       

       

      10,000

                    

      16

      20

      28

      29

      30

      31

       

      C

       

       

      C

      4,200

       

      4,000

      10,000

       

      42,000

       

      30,000

       

       

      2,500

      123,450

             

      60,200

      42,000

      179,650√1

      123,450√1

         

      60,200

      179,650

  4.                       
    1. Explain five differences between private limited companies and public limited companies.

      Private Ltd Co.

      Public Ltd Co.

      i) Formed by a minimum of 2 and a maximum of 50 shareholders

      i) Formed by a minimum of 7 shareholders with no set maximum

      ii) Restricts transfer of shares

      ii) Shares are freely transferable

      iii) Do not invite subscription for shares and debentures from members of public

      iii) Invites subscription for shares and debentures from members of public

      iv) Can be managed by one director

      iv) Managed by board of directors

    2. Factors that could affect the quantity of cabbages supplied in a Market.
      • Price of cabbages in the market.
      • Nature of road / transport network.
      • Seasonal factors / climate.
      • Production ways embraced.
      • Future expectations of change in price.
      • Government policies e.g. quota, price control etc. 5 x2 = total 10 Marks
  5.                
    1. Factors to consider when choosing one appropriate means of transport
      • Nature of goods.
      • Cost of transport.
      • Value of goods.
      • Distance to be covered.
      • Terminals.
      • Flexibility.
      • Reliability.
      • Availability. Any 5 well explained x 2 = total 10 Marks
    2.                      
      1. Trading profit and loss account for the period ended 31st December, 2005. (6mks)
        Mwangi Traders
        Trading Profit and Loss Account
        For the period ended 31/12/2005
         

        Sh

        Sh

         

        Sh

         

        Opening Stock

         

        12500

        Sales

        95,000

        Add Purchases

        7000

         

        Less Returns Inwards

        1,500

        Less Returns Outwards

        2400

        67600

        Net sales

        93,500

        Cogas

        80,100

             

        Less Closing Stock

        6,500

             

        Cost of Sales

        73,600

             

        Gpc/d

        19,900

             
         

        93,500

           

        93,500

             

        G.P b/d

        19,900

        General Expenses

        5,200

             

        Carriage outwards

        4,000

             

        Salaries

        14,000

             

        Outstanding salaries

        2,800

         

        Net Loss c/d

        6,100

         

        26,000

           

        26,000

        Net loss b/d

        6,100

             
      2. Balance sheet as at 31st December, 2005. (4mks)
        Mwangi Traders
        Balance Sheet
        As At 31/12/2005

        Fixed Assets

        82,000

        Capital

         

        88,800

        Current Assets

         

        Less net loss

         

        6,100

        Stock              6,500

             

        82,700

        Debtors          10,500

         

        Current Liabilities

           

        Cash in hand 2,500

        19,500

        Creditors

        8,500

         
           

        Bank Overdraft

        9,500

         
           

        Outstanding Salaries

        2,800

        18,800

         

        101,500

           

        101,500

  6.                             
    1. Explain five roles of commercial banks in the development of a country’s economy.
      • Promotes savings- savings provide funds which can be changed into useful development projects.
      • Source of capital- Commercial banks give loans to firms and individuals that are used in financing various business projects.
      • Stimulating economic activities- Commercial banks may do this by giving business advices to its clients and also by lending to them.
      • Provision of employment- Commercial banks provide employment opportunities to individuals who work in various departments of the bank hence earn income.
      • Act as guarantors and referees- Banks acts as guarantors on behalf of their clients who wish to engage in credit transactions or secure loans from other financial institutions
      • Effect foreign exchange payment- Commercial banks provide foreign exchange and the means through which traders who engage in international trade may effect payments.
    2.                  
      • Explain five challenges that may be experienced by a country whose population is made up of large proportion of young people.
      • Increase in crime-idleness may result to illegal means as they look for means of survival
      • Dependency ratio will rise- economically active population will shoulder bigger economic burden
      • Reduced investment /savings-reduced –investment will decline as a result of low level of unemployment/ high dependency ratio
      • low per capita income-since national income is spread through a large non-contributing population the living standards will be low
      • Low labour supply-many young people may not attain the working age hence low production of goods Increased unemployment –jobs don’t match the demand-

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