Business Studies Paper 2 Questions and Answers - Mokasa II Mock Exams 2022

Questions

Instructions to Students

• This paper consists of six questions.
• Answer any five questions.
• All questions carry equal marks.
• Students should answer the questions in English.

1.      
   1. Describe Five office etiquette qualities that an office worker should have. (10 marks)
   2. Explain Five reasons why a country needs to prepare a development plan. (10 marks)
2.    
   1. Explain Four circumstances under which a Limited liability company can be terminated. (8 marks)
   2. Kiprono started business on 1st January 2022 with 100,000 in the bank and 80,000 cash in hand. His transactions for the month of January were as follows.
      Jan 4: Purchased office equipment by cheque worth 20,000
      Jan 8: Bought stock worth 10,000 in cash
      Jan 15: Sold goods worth 25,000 to Kilel on credit
      Jan 18: Withdrew 40,000 from bank and kept it in the office to be used for marking minor payments when necessary.
      Jan 22: Bought stock worth 15,000 on credit from Otieno
      Jan 26: Purchased stationary worth 22,000 in cash
      Required:
      Record the above transactions in the relevant ledger accounts, balance them off on 31st January 2022 and extract a trial balance as at that date. (12 Marks)
3.  
   1. Given below is a table showing the market supply for a commodity from January to May 2022.
      

      Month	January	February	March	April	May
      Quantity	10 000	13 000	17 000	25 000	27 000
      Price	120	120	120	120	120

      Outline Five factors that may have contributed to the trend in the quantity supplied from January to May, 2022. (10 marks)
   2. Explain Five factors that may contribute to demand – pull inflation. (10 marks)
4.  
   1. Explain Five measures that the government can take to increase the volume of exports. (10 marks)
   2. Explain five factors that may lead to increase in the level of National income. (10 marks)
5.  
   1. Explain any five reasons that could be contributing to increased use of credit cards in transacting business in the world today. (10 marks
   2. Explain five positive implications of a country whose population is mainly dominated by the youthful population. (10 marks)
6.  
   1. Describe four features of an effective warehouse. (8 marks)
   2. The following trial balance was extracted from the Ledgers Accounts of Ashley’s electronics business on 31st December 2020.
      

      Ashley’s Electronics Trial Balance As at 31st December 2020
      TITLE OF ACCOUNT	DEBIT (Dr) KShs	CREDIT(Cr) KShs
      Gross Profit Equipment Motor vehicle Electricity Carriage out Rent Discount Salaries Commission Insurance Cash at bank Debtors ABC Bank loan Capital Creditors	90,000 250,000 12,000 3,300 50,000 8,000 12,900 15,000 100,000 36,000	157,000 20,000 10,700 5,000 100,000 250,000 34,500
      TOTAL	577 200	577 200

      Prepare:
      1. Profit and Loss account for the year ended 31st December 2021. (6 marks)
      2. A balance sheet as a 31st December 2021. (4 marks)
      3. Calculate, (2 marks)
         1. Working capital
         2. Capital Employed

Marking Scheme

1.      
   1. Describe five office etiquette qualities that an office worker should have. (10 marks)
      
      • Respect- This involves showing regard to other people according to their rank in the organization, age and social status
      • Punctuality -This refers to the ability to keep time in a attending duties and appointments
      • Courtesy- This involves handling people politely, pleasantly and with consideration
      • Loyalty- This refers to the commitment an employee has to the organization he/she works for
      • Honesty- This is the ability to tell the truth and being sincere
      • Co-operation- This refers to the ability of workers to work comfortably as a team without malice, bias, hatred or selfishness
      • Diplomacy- This is the ability to convince others tactfully
      • Judgement- This is the ability to make a ruling or a decision after considering all possibilities or likely outcomes
      • Accuracy- This involves performing duties with excellence, precision and correctness
      • Initiative- This is the ability to create and implement ideas
   2. Explain five reasons why a country needs to prepare a development plan. (10 marks)
      • Appropriate resource allocation, where resources are allocated according to the need of the objective and in a most productive way
      • Stimulation of effort of people in the desired direction. The plan outlines including the possible outcomes which persuade people to move to that directionSupport foreign aid bargain. Since it shows including the objective that the country seeks to achieve, it is capable of convincing the donor to Project evaluation, by assisting on checking whether the predetermined targets or objectives are being achieved
      • Long term decision making, as it will show what each and every sector of the economy will require in the future to make it stable.
      • Avoiding duplication of industries in different parts of the country, for it will show the ones that have been set in those parts and even enhance balancing
      • Promote balancing in regional development by ensuring that they are not concentrated in only one region, ignoring other regions.
2.            
   1. Explain Five circumstances under which a Limited liability company can be terminated. (10marks)
      • Failure to commence business within one year- If a company does not commence business within one year from the date of registration, it may be wound up by a court order on application of a member of the company.
      • Insolvency – when a company is not able to pay its debts, it can be declared insolvent and wound up.Ultra- vires – this means a company is acting
      • contrary to what is in its objective clause. In such a case, it may be wound up by the registrar.
      • Amalgamation – two or more companies may join up to form one large company completely different from the original ones.
      • Court order – the court of law can order a company to wind up especially following complaints from creditors or if it is doing an illegal business.
      • Decision by shareholders – the shareholders may decide to dissolve a company in a general meeting.
      • Change in laws that may render the company illegal.
3.    
   1. Given below is a table showing the market supply for a commodity from January to May 2022.
      

      Month	January	February	March	April	May
      Quantity	10 000	13 000	17 000	25 000	27 000
      Price	120	120	120	120	120

      Outline five factors that may have contributed to the trend in the quantity supplied from January to May, 2022. (10 marks)
      • Improved level of technology
      • Decrease in cost of production
      • Increase in subsidies from the Government
      • Decrease in the level of taxation
      • Increased availability of factors of production
      • Entry of new firms in the market/industry
      • Less industrial unrest
      • Better climatic conditions in case of agricultural products
      • The goods may have been in season
      • Security and stability in the area/community
      • Improved infrastructure
      • Future expectations/speculations in fall in prices
   2. Explain Five factors that may contribute to demand – pull inflation. (10marks)
      • Increase in government expenditure which makes money available to people hence increasing aggregate demand
      • Effects of credit creation by commercial banks which increases consumers ability to buy
      • Increase in money income which increases ability to buy increasing aggregate demand.
      • General shortages of goods and services since demand will be higher than supply.
      • Increase in consumers expenditure which increases pressure on existing goods and services
4.      
   1. Explain five measures that the government can take to increase the volume of exports. (10 marks)
      • Export compensation scheme-This is where the exporter is allowed tp claim from the government a certain percentage of the value of the products exported to enable them to charge less hence increasing demand for their products in the world markets
      • Diversifying foreign markets- Government may provide useful information to the exporters about the available business opportunities involving different products as well as negotiating with other countries to secure preferential treatment for their country’s exports hence increasing the amount of goods being exported
      • Offering customs drawbacks- This is where the government refunds either in full or part the custom duty paid on raw materials that are imported for the manufacture of goods meant for exports. This enables the manufacturer to lower the price of the exported goods hence increasing their demand in the world market
      • Lobbying for removal of trade restrictions- The government may negotiate with trading partners so as to remove or reduce trade barriers such as taxes and quotas placed on the country’s exports. When such barriers are removed the country may be able to export more.
      • Devaluation of a country’s currency- When the government devalues her currency, their exports become cheaper in the foreign markets hence promoting volume of exports since a foreigner will be able to purchase more with the same amount of foreign currency that they initially had.
   2. Explain five factors that may lead to increase in the level of National income of a country. (10 marks)
      • Availability of capital/Man made resources. - When a country has enough man made resources, it can produce goods and services in large quantities and a faster rate than the country that has poor man made resources.
      • Country’s infrastructural development – a country with well-established roads, electricity and rail network is more likely to have a higher output.
      • Technological advancement – a country with advanced /developed modern technology, it will be able to produce large quantities of high quality goods/services to increase the value of national income
      • Country’s natural resource endowment – a country with endowment of natural resources such as minerals/good climate/tourism can use them to produce/generate more income.Human resource endowment – a country with well-trained manpower is able to produce large quantities of goods and services and of quality thus generating a higher income
      • Political stability/security – as it will give producers opportunity to concentrate with productive activities with no fear of losing their investments.
      • Country’s entrepreneurial culture – a culture of hard work inculcated in their citizens would lead to venturing into various activities to generate income.
5.  
   1. There is an increase in the number of customers using credit cards as a term of payment to transact business in the world today. Explain any five reasons that could be contributing to this increased use of credit cards. (10marks)
      • They are safer to carry around than cash
      • Convenient to carry around
      • Enables the holder to get goods and services from specified sellers without paying immediately
      • Some are acceptable both locally and internationally
      • Enables the holder to get money from specified banks
      • Increases credit rating of an individual.
      • The card holder is able to keep track of his expenditure since he gets a statement at the end of the month from the credit card company
   2. Explain five positive implications of a country whose population is mainly dominated by the youthful population. (10 marks)
      • Increase in market demand- The youth tend to consume more of products like food, clothing and entertainment therefore a larger youthful population wider market for such goods and services hence faster growth of such sectors
      • Technological advancement- The youthful population tend to be more creative and innovative due to their adventurous nature which eventually leads to advancement in technology
      • Better utilization of resources – A youthful population creates increased demand for goods and services which in turn leads to better utilization of the available resources in attempt to satisfy the increased demands
      • Enough labour supply- A youthful population creates a pool of labour force which would in turn lead to payment of low wages which may in turn become an incentive to prospective investors
      • Stimulates investments- A large youthful population creates high demand which makes the existing entrepreneurs to expand their businesses and at the same time new investments may be made in order to produce various goods and services which are required.
      • Promotes labour mobility- A youthful population who are skilled are likely to move from one place to another in search for employment making the producers to satisfy their labour needs in whichever locations they are in
6.          
   1. Describe four features of an effective warehouse. (8 marks)
      • Proper security- It should have good security to safeguard goods from theft loss or damage.
      • Qualified staff- It should have well trained workers who can take care of goods.
      • Good transport network- To ensure ease of movement of goods into the market or into the warehouse
      • Proper handling facilities- For ease of movement and handling of the goods stored e.g. forklifts, cranes, conveyor belts etc.
      • Compliance with legal requirements - To enable the warehouse operate smoothly without interruption from the government/regulators
      • Adequate/Proper storage facilities- To take care of the goods in a store from damage
      • Adequate / suitable buildings - that is suitable for the goods in store.
      • Clear and proper inventory control system - to avoid fraud.
      • Convenient/Appropriate location - which can easily be reached by customers
      • Adequate / proper communication network - to enable the trader easily reach customers or suppliers.
   2.         
      

      Ashleys electronics Profit and Loss Account For the period 31/12/2020
      Sh		Sh
      Expenses Insurance Carriage Outwards Salaries Discount allowed Rent Electricity Net profit c/d	15 000 3 300 12 900 8 000 50 000 12 000 91 500	Gross profit b/d Discount received Commission received	177 000 10 700 5 000
      	192 700		192 700

      
      
      

      Ashley’s Electronics Balance Sheet As at 31st December 2022
      	Sh	Sh		Sh	Sh
      Fixed Assets Equipments Motor Vehicle	90 000 250 000	340 000	Capital Add Net profit	250 000 91 500	341 500
      Current Assets Debtors Bank	36 000 100 000	136 000	Long term liabilities ABC Bank loans	100 000	100 000
      			Current liabilities Creditors	34 500	34 500
      		476 000			476 000

      
      
      1. working capital CA – CL
         213,000 – 34,500 = Shs. 178,500
      2. Capital employed
         341,500 + 100,000 = Shs. 441,500