Business Studies Paper 2 Questions and Answers - Cekana Mock Exams 2023

INSTRUCTIONS

• This paper consists of Six questions.
•  Answer any five questions in the spaces provided after questions 6.
• All questions carry equal marks
• Candidates should answer the questions in English.

QUESTIONS

1.  
   1. Describe the procedure of making an insurance claim. (10marks)
   2. Outline five factors to consider when selecting means of reproducing documents. (10marks
2.  
   1. Explain five disadvantages that a developing country may suffer by liberalizing foreign trade (10marks)
   2. Explain five factors that may hinder economic development in Kenya. (10marks)
3.  
   1. Explain four resources found in a business enterprise. (8marks)
   2. Mworia limited operates a whole sale business. During the month of March 2023, the company carried out the following transactions;
      March 1 Credit sales to Mwikali and Njeri were shs. 200,000 and shs.180, 000 respectively.
      March 2 Credit purchases from chebet shs.150, 000 wanbui shs, 700,000, Alfred shs.185,000.
      They also paid advertisement expenses by cash sh.48, 000.
      March 5 Credit sales to Abdallah shs.175, 000,Mwangi shs.320,000 and Mwikali shs.135,000
      March 8 Goods returned by Mwikali shs. 2, 800 and Njeri shs. 3,100
      March 12 Goods returned by Mworia Limited to Chebet shs. 30,000 and Alfred shs.25, 000
      March 27 Paid Wambui her debt in cash after deducting a cash discount of 5%
      March 28 Receive rent of shs.5, 200
      March 29 Sold goods on credit to Njeri shs. 220,000 and Phiniah shs.150, 000
      March 30 Goods returned by Phiniah shs.2, 300
      Required:
      From the information given, prepare
      1. Sales journal
         2. Sales returns journal (12marks)
4.  
   1. Explain five forms of economic integration. (10marks)
   2. Describe five channels of distribution that Hannan manufacturer’s ltd can use to distribute their products in Kenya
5.  
   1. The following transactions were extracted from the books of Memsi Traders on 1st January 2023
                           shs
      Capital         600,000
      Creditor       180,000
      Motor van    200,000
      Furniture     200,000
      Stock          60,000
      Debtors      80,000
      Cash          240,000
      The following transactions took place during the year ended 31^st January 2023
      1. Sold furniture worth sh. 60,000 for which sh.40,000 Cash was received and the balance was due at the end of the month.
      2. Purchased goods worth sh.100,000 for which cash of shs.70,000 was paid and the balance was still outstanding at the end of the month
      3. Cash of shs. 10,000 was taken from the business by the proprietor for personal use
         Required: Prepare Memsi’s balance sheet as at 31^st January 2023 (10marks)
   2. Distinguish between perfect competition market structure and oligopolistic market structure. (10marks)
6.  
   1. In the recent past celebrities and other social influencers have been instrumental in promoting products over the TIK TOK social media platform. Explain five benefit that business enterprise may enjoy by using social media platform in sales promotion. (10marks)
   2. Explain five purposes of public finance. (10marks)

MARKING SCHEME

1.  
   1. Procedure of making an insurance claim
      1. Notifying/ reporting to the insurer (of the loss suffered/occurrence of risk)
      2. Filling a claim form(from the insurer)
      3. Carrying out investigation/survey to determine /ascertain the cause of loss
      4. Insurance company making a report/finding /assessment/calculation of compensation
      5. Payment of the claim/compensation (5x2 marks)
   2. Factors to consider while selecting means of reproducing documents
      1. Cost of production method. chosen should be cost effective
      2. Type of document to be reproduced. to some method may not be able to produce some details in a document
      3.  Number of the colours required. Some methods are able to produce document on one colour only
      4. State of neatness. some method produce neat document while others do not
      5. Status of the user. the method chosen should ensure compliance hence with the status of the uses eg senior offices require presentable document
      6. The quality required. Consideration should be made as to the expertise/skills possessed by the firms employees.
      7. Availability of personal required to operate the equipment
      8.  Availability of other means of reproducing document.so as to assess their accessibility and comparative advantages.
2.  
   1. Disadvantages that a developing country may suffer by liberalizing foreign trade include.
      1.  May lead to dumping of inferior products into the country
      2.  May cause over exploitation of resources leading to their depletion
      3. May lead to loss of jobs due to closure of firms that cannot cope with competition
      4. May contribute to worsening balance of payment situation as developing countries have fewer Lowly value exports
      5.  Culture values and belief may be eroded due to unrestricted trade
      6. Entry of harmful goods. Goods with harmful ingredients such as beauty creams and drugs may find their way into the country.(accept relevant examples as expansions)
      7. Slow economic development . The country may stagnate due to over dependence on other countries for supplies
      8. Brain drain. The development country looses skilled personnel to better developed countries who provide better pay and amenities
   2.  Factors hindering economic development in Kenya
      1.  Inaccessibility to appropriate technology leading to low quality/quantity of output
      2. Inadequate research data hence uninformed/ poor development decision making
      3. Poor development planning hence lack of clarity/confusion during implementation of the development goals
      4.  Inadequate skilled labour force hence low quality/quantity/low productivity/low output
      5. Inadequate natural resources endowment leading to low input/raw materials in the production process
      6. Brain drain –skills man power seeking pastures elsewhere hence inadequate skills labour (access examples of consequences as qualification)
      7. Low demand for goods/services due to low income levels/ low purchasing power
      8.  Negative socio-culture practices thus discourage/limit consumption of goods or services
      9. Inadequate /lack of foreign exchange to facilities international trade/causes disequilibrium in balance of payment
      10. Poor governance/corruption/embezzlement of government funds/lack of political goodwill which leads to stalling development projects (Any 5×2=10marks)
3.  
   1. Resources found in a business enterprise (8marks)
      1. The human resource environment-the human resource environment refer to the employees or workers in an organization
      2. Financial resources-this refer to the money needed to fund the various activities in business
      3. Physical Resource- These include tangible facilities which belong to the business such as building, machinery, furniture and stock. Availability of such facilities enable the business to operate
      4. Technology-This refers to skills and methods used in production (4x2 marks)
   2.  
      SALES JOURNAL
      

      Date	particular	l.f	Invoice no	Amount
      March 1 March 1 March 5 March 5 March 5 March 29 March 29	Mwikali Njeri Mwangi Abdallah Mwikali Njeri Phiniah	001 002 003 004 001 002 005		200,000 180,000 320,000 175,000 135,000 220,000 150,000
      	Total posted to the sales account in the general ledge			1380,000

      
      SALES RETURN JOURNAL
      

      Date	particulars	l.f	Invoice no	amount
      March 8 March 8 March 30	Mwikali njeri phiniah	001 002 005		2,800 3,100 2,300
      	Total to be posted in the sales return account in the general ledger			8,200

4.  
   1. Form of economic integration
      1. Preferential Trade Area: In this form of integration, trade barriers are reduced among the member nations while barriers are applied at rate for trading activities with non-member nations.
      2. Free trade area. This is economic integration where all trade barrier are removed between the member countries while each country retains its own barriers towards non-members.
      3. Customs union. In this form of integration, tariffs and other trade barriers are removed between member countries while their trade polices are harmonized with regard to treatment of trade with the rest of the world
      4. Common market. This integration goes beyond harmonizing trade polices and removal of trade barriers but also allows for free movement of labour and capital among member nations
      5. Economic union. In this form of integration member countries set up common institutions like central banks, adopt use of common currency(monetary system) and have common public services like railways networks
      6. Duty-free zones. Member countries allow importation of raw materials without charging duty. Exports from these zones to member countries also attract no excise duty.
      7. Political union. In this form of integration, several state form a central government through which share a central bank, the defense and core ministries that run their affairs. (5x2 marks)
   2. channels of distribution that Hannan manufacturers can adopt
      1. Hannan manufacturers → Consumer
      2. Hannan manufacturers → wholesaler→  consumer
      3. Hannan manufacturers → wholesaler → Retailer → consumer
      4. Hannan manufacturers → Manufacturer Agent → Wholesaler → Retailer
      5. Hannan manufacturers → Manufacturer Agent → wholesaler→  consumer
      6. Hannan manufacturers → Manufacturer Agent →  Retailer → consumer
5.  
   1.  
                                         MEMSI TRADERS
                                        BALANCE SHEET
                                  AS AT 31^ST JANUARY 2023
      
   2. Distinguish between a perfect competition market structure and oligopolistic market structure

      Perfect Competition market structure	Oligopolistic market structure
      i Sellers deal in homogeneous  products       ii Low advertising costs iii. Large number of seller iv. Freedom of entry of exit v. Perfect knowledge of the market       vi. Perfectly inelastic demand curve vii. Prices vary and determine by price mechanism viii. Firms are independent	i. Sellers can be identical or differentiated productions  ii. Incur heavy/high advertising/promotion costs expense in promotion of products iii. Few large seller/supplier iv. Barriers to entry into the industry  v. Imperfect knowledge of the market vi. Kinked demand curve vii. Prices are rigid/prices may be determined through collusion by sellers viii.Firms are interdependent

6.  
   1. Advantages of promoting sales through the tik tok social media include
      1. A firm can advertise goods universally, thus enlarging its market base
      2. Access to world market for increased sales as it has large geographical coverage’s leading to instant receipt of orders from all over the world
      3. Payment receive through electronic fund transfer (EFT) leading to proper and timely business financing
      4. Reduced paperwork on customer records leading to efficiency in cost and debt management
      5. Reduced cost of sales promotion due to lower management charges
   2. Purposes of Public finances
      1. To provision of essential goods and services. The government has a responsibility of providing its citizen with essential goods and services such as security, health schools, drought control, law e.t.c such facilities services may not be adequately covered by the private sector because of the high costs involved and risks
      2. Encouraging consumption of certain commodities eg the government may discourages consumption of certain commodities e.g. maize by subsidizing on their productions or lowering their taxes
      3. Controlling consumption of certain commodities. the government may also encourage consumption of some commodities eg. Cigarettes and alcohol by imposing heavy taxes on them.
      4. Promotion of Balanced regional development this may be done by initiating economic projects in areas that are under developed/lagging behind
      5. Wealth Redistribution. This is done by heavily taxing the rich and using the money raised to provide goods and services that benefit the poor
      6. To promote economic stability-Economic instability may be caused by factors such as unemployment. Such problems can be solved through public expenditure, in projects that generate employment such as kazi kwa vijana
      7. Creation of a conducive business environment through public expenditure, the government may develop infrastructure such as roads. electricity security e.t.c thereby creating a conducive environment for business to thrive in
      8. To raise government revenue-through public finance, the government raise revenue which it uses in provision of essential goods and services to the public
      9. Improving balance of payment-this may be done by improving heavy taxes such as customs duty to discourage importation