Business Studies Paper 2 Questions and Answers - Mathioya Mock Exams 2022

Questions

1.    
   1. Explain five benefits of operating a public limited company (10marks)
   2. Discuss five ways in which commercial banks facilitate trading activities in the community. (10 marks)
2.  
   1. Explain five factors that an entrepreneur would consider when evaluating a business opportunity. (10 marks)
   2. Explain five sources of public finance. (10 marks)
3.  
   1.  Explain five methods that the government of Kenya may adopt in its effort to control high population (10 marks)
   2. Explain the various ways in which computers have improved efficiency in business organizations (10 marks)
4.  
   1.  On 1st March 2017 Staicy Enterprises had Ksh 7,800 cash in hand and a bank overdraft of Ksh 24,300. During the month, the following transactions took place.
      2017
      March 2: cash sales paid directly into the bank sh 165,000
      4: cash sales sh. 50,000
      6 Bought goods for ksh 15,000 and paid by cheque
      7: Bought goods on credit worth 5000 from Jane
      9: received a cheque for sh 18,000 from Amollo
      13: Paid insurance premiums sh 16,000 in cash
      15: Paid Kamotho by cheque sh 9,700 after deducting 3% cash discount
      21 Withrew sh 30,000 from a bank for office use
      24: received a cheque for ksh 23,750 from Rotich having allowed him 5% cash discount
      25: Paid wages in cash sh 20,000
      28: A cheque that was received from Amollo was dishonoured
      30: Banked all the cash, except sh 3,000
      Required:
      Prepare a three column cashbook and balance it off on 30th March 2017 (12mks)
   2. Apart from sources of demand and supply, describe any other four ways in which the price of a commodity can be determined in the market (8 marks)
5.  
   1. Explain five ways of improving the efficiency of a warehouse (10 marks)
   2. Explain five problems of using per capita income to measure the standards of living of people in a country (10 marks)
6.  
   1. Explain five means of payment available to traders in Kenya. (10marks)
   2. the following balances were extracted from the books of Mwanabiashara traders as at 31st December 2015
      

      Purchases  Carriage inwards  Returns outwards Sales Stock 1/1/2015  Returns inward  Salaries  Electricity  Telephone  Rent Carriage Outwards  Insurance  General Expenses  Stock 31/12/2015  Discount received

      480 000 29 000 80 000 700 000 90 000 30 000 13 000 10 000 16 400 17 000 20 200 30 200 28 400 12 600 16 800

      1. Prepare a trading, profit and loss account for Mwanabiashara traders for the period ended 31st December 2015. (8 marks)
      2. Calculate the rate of stock turn over. (2 marks)

Marking Scheme

1.      
   1. Explain five benefits of operating a public limited company (10marks)
      
      • Large capital base-plc has access to a wide source of capital through sale of shares and debentures to the public. It can also borrow loans from banks using its assets as security
      • Transfer of shares-shares can be transferred from one person to another without any effect on the continuity or ownership of the company
      • Continuity- the company will continue to exist regardless of the death insanity or bankruptcy of shareholders
      • Specialized professional management- its wide sources of capital enables a public ltd company to employ qualified skilled staff
      • Economies of scale- its size enables the company to operate on large scale hence reducing the costs while maximizing on profits
      • Encouragement and motivation of employees to work harder for higher profits in case where the company has share schemes for its employees
      • Accountability- there exist transparency and accountability since it’s a legal requirement for the company to publish its accounts and discuss them during AGM.
   2. Discuss five ways in which commercial banks facilitate trading activities in the country.(10 marks)
      
      • Safekeeping of money for businesses people-money deposited is safely kept and released on demand
      • Transfer of money- through various means. Accept examples of money transfer as an explanation
      • Lending money- by offering various loans which enable businesses people to start or continue with business
      • Foreign exchange services- business people dealing in international trade can exchange currency
      • Investment services- to their customers which enable them invest wisely accept examples of investment services as a mention
      • They give advice on taxation- when preparing taxation reforms for business people
      • Acting as trustees
      • Provide night safe services-for late business bankers
      • Provide safe custody services
      • Provide credit cards
      • Acts as agents of stock holders
      • Disseminate business information in form of pamphlets
2.  
   1. Explain five factors that an entrepreneur would consider when evaluating a business opportunity. (10 marks)
      • The profit margin to be earned. There should be a reasonable profit from the investment in order to cover for all the expenses
      • Existing attitude /beliefs of the target market.
      • Business idea must be in line with the peoples attitude and practices
      • Appropriate technology-technology to be used in producing the product or offering the services should be efficient/cost effectiv
      • Size/availability of the market-should be adequate
      • Legal requirements- should be favorable/easily be met to operate smoothly
      • Level of competition- should be fair or capable to cope with
      • Capital- should be adequate to operate the business
   2. Explain five sources of public finance. (10 marks)
      • Fines-imposed on law offenders
      • Taxes- levying on peoples incomes and profits
      • Rent and rebates getting regular levies from services carried out in government institutions and properties
      • Fees- levies charged on documents issued by the government eg driving license trade licences and road licenses
      • Profits-profits from government businessesLeasing of properties-government lets properties for a long time to get money for other projects
      • Internal and external borrowing-the government gets loans from the internal and external sources eg IMF and World Bank
3.    
   1. Explain five methods that the government of Kenya may adopt in its effort to control high population (10 marks)
      • By providing and promoting use of family planning methods to reduce the birth rate
      • By discouraging early marriage by imposing stiff penalties to those found practicing it
      • By educating public on advantage of small families and problems associated with large families
      • By improving medical facilities to enhance confidence on the survival of the few number children given birth to
      • By setting upper limit on the number of children that a couple can give birth to
      • By improving on social security programme so that people may not have many children as source of wealth
      • Restricting immigration by controlling the number of people coming into the country.
      • Reducing poverty levels by promoting the standards of living through incoming generating projects so that children are not viewed as security in the old age
   2. Explain the various ways in which computers have improved efficiency in business organizations (10 marks)
      • Accurately keep the records of everything in an office
      • It helps in speeding up operations
      • It helps in giving, presentable /neat output
      • Has high information storage ability-thus assist to create space in an office
      • It facilitates communication from one point to another eg internet
      • Help to reduce wage bill as a few people are employed
      • Has made the world a global village making the transactions easier/faster
4.      
   1.        
       

      DATE	Particulars	cf	DA	Cash	Bank		Date	Particulars	CF	DR	Cash	Bank
      2011 March							2011 March
      1 2 4 9 21 24 30	Bal b/d Sales Sales Amollo Bank Rotich Cash	. c1 c2	1250 .	7 800 50 000 30 000 .	165 000 18 000 23750 48 800		1 6 13 15 21 25 28 30 31	Bal b/d Purchases Insurance Kamotho Cash Wages Amollo Bank Bal c/d	. c1 c2 .	300 .	16 000 20 000 48 800 3000	23 400 15 000 9700 30 000 18 000 159 460
      			1250	87800	255550					300	87800	255550
      31	Bal b/d			3000	159 450

   2. Apart from forces of demand and supply describe any other four ways in which the Price of a commodity can be determined in the market (8 marks)
      • Auctioning/bidding-where buyers compete for the product and the product is sold to the highest bidder
      • Haggling/bargaining-sellers and buyers argue various possible prices until they agree on the price at which the product is exchanged
      • Tendering- prospective sellers suggest the price at which they are willing or able to sell and the buyer selects the appropriate price
      • Price fixing by the producer/seller where they fix/ set/ recommend the price at which the product should be sold
      • Price fixing by the government-the government sets the price at which all sellers offer the product to the marketLegislation/recommended retail
      • price-;producers fixing prices/ manufacturers agree in prices of commodities
5.      
   1. Discuss five ways of improving the efficiency of a warehouse (10 marks)
      • Ensuring that there is proper and adequate handling equipment to handle goods easily
      • Ensuring that staff are well trained /motivated hence enhancing their performance
      • Ensuring proper use of space/proper arrangement of goods to allow easy movement
      • Ensuring adequate security to avoid theft of goods
      • Ensure proper system of inventory control to monitor stock and avoid losses
      • Ensuring that legal requirement are adhered to for smooth running with laid down laws
      • Ensuring adequate transport to move goods and workers in and out of the warehouse
      • Ensure adequate communication facilities for effective communication within/without warehouse
      • Ensure there are adequate proper storage facilities to cater for special different loading/offloading area to avoid congestion
      • Ensuring that there are safety measures in place to take care of fire, water etc to avoid damage of goods and safeguard safety of workers
      • Ensure that the public health requirement are met for smooth operations
   2. Explain five problems of using per capita income to measure the standards of living of people in a country (10 marks)
      • The income may be inequitably distributed. An increase in per capita income does not signify an improvement in the living standards
      • Levels of inflation-high levels of inflation may falsify higher figures of the per capita income
      • Wrong data/inaccurate data of population and national income figures will give misleading figures of per capita income
      • Lack of leisure/ lack of sleep/sacrifices leading to poor health may be a reason for increased figures of per-capita income
      • Since governments may deliberately manipulate the per-capita income figures to serve some political reasons
      • It may increase in the face of social costs such as pollution
      • This is not a rational way of measuring the welfare of the people
6.   
   1. Explain five means of payment available to traders in Kenya (10marks)
      • Cash-use of notes and coins available in various denominations
      • Cheque-it is a written order or instructions by an account holder (drawer) to the bank (drawee) to pay a specified sum of money to the named person (payee) or to the bearer
      • Bill of exchange- it is an unconditional order in writing addressed by one person to another requiring the person to whom it is addressed to pay on demand or at a stated future date the sum of money on the bill to a named person or bearer
      • Promissory note-it is a document where one person promises to pay another person a specified amount of money at a stated future date.
      • Money order-a facility offered by the post office sender fills in a money order form, hands in the money to be sent and the commission to post office clerk who prepare the money order which is then sent or taken to the payee
      • Postal order-postal orders are sold by the post office in fixed denominations, person sending money buys the postal orders and sends or takes them to pay a commission is paid to the post office
      • Credit cards-specialized design plastic cards by credit cards companies which enable one to obtain goods and services on credit from certain specified suppliers
      • Standing order-is an instruction given by the account holder to his bank to make regular payment of specified amount to a named party directly into the recipient account
      • Credit transfer-where a trader may pay several creditors or employees using one cheque by paying directly into the recipients account
      • Electronic fund transfer eg Posta pay, pesa point, E-money. E-banking where he can access his/her account withdraws and deposits money using ATM cards mobile phones,etc
   2.               
      1.    
         

         Mwanabiashara traders Trading, profit and loss a/c √ For the year ended 31/December, 2015
         Dr		Cr
         	Sh		Sh
         Purchases Add purchases Add carriage inwards Less returns out GAFS Less closing stock COGS Gross profit c/d	90 000 480 000 29 000 80 000 519 000 12 600 506 400 163 600	Sales Less returns Net sales	700 000 30 000 670 000
         	670 000		670 000
         Expenses
         Carriage inwards Salaries Electricity telephone Insurance General expenses Rent Net profit c/d	20 200 13 000 10 000 16 400 30 200 28 400 17 000 45 200	Gross profit b/d discount received	163 600 16 800
         	180 400		180 400

         
         
         
      2. Rate of stock turnover =        COGS         
                                                    Ave stock
         506 400 ÷ (90 000 + 12 600)
                                       2
         = 9.87 times