Business Studies Paper 2 Kenya High Post Mock Exams 2020 - Questions and Answers

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INSTRUCTIONS TO THE CANDIDATES

Answer any FIVE questions
All questions carry equal marks
All working must be shown

  1.   
    1. Explain five causes of unemployment in Kenya. (10 Marks)
    2. Explain five circumstances that would influence a producer to use wholesalers in distributinghis produce. (10 Marks)
  2.   
    1. Explain five ways in which the insurance industry contributes to the development of Kenya’s economy. (10 Marks)
    2. Explain five demerits of government involvement in the running of public corporations. (10 Marks)
  3.   
    1. Explain five factors that may be considered in determining the appropriate channel fordistributing goods. (10 Marks)
    2. Explain five reasons why business organizations may merge with one another. (10 Marks)
  4.   
    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)
  5.   
    1. Explain five ways which traders can apply to attract more customers. (10 Marks)
    2. Explain five factors that could affect the quantity of cabbages supplied in a Market. (10 Marks)
  6.   
    1. Explain five factors to consider when choosing an appropriate means of transport. (10 Marks)
    2. The following balances were extracted from the ledger accounts of Bidii traders for the yearended 31st December 2010.
      Capital - 940, 000
      Bank - 100, 000
      Accrued expenses - 20, 000
      Debtors - 60, 000
      Creditors - 60, 000
      Stock - 100, 000
      10 Years Bank loan - 200, 000
      3 year ICDC loan - 100, 000
      Vehicle - 300, 000
      Plant and machinery - 200, 000
      Land - 500, 000
      Drawings - 40, 000
      Cash - 20, 000
      Using these balances prepare Bidii traders trial balance for that year dully balanced.(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. Ways in which the insurance industry contributes to the development of Kenya’seconomy
      • Creates employment.
      • Earns government revenue through taxation.
      • Facilitates savings by people.
      • Encourages investors since they are assured of compensation.
      • Allows continuity of business. 5 x 2 = total 10 Marks
    2. Demerits of government involvement in the running public corporations.           
      • Government bears loss made by the corporations.
      • Inefficiency – lack of competition leads to corporation inefficiency.
      • Political pressure – there is political interference in decision making.
      • Decision making takes long.
      • Foreign investors may shy off.
      • Where there is a state monopoly the consumer choice is limited.5 x 2 = total 10 Marks
  3.     
    1. Factors that may be considered in determining the appropriate channel fordistributinggoods.
      • Nature of goods.
      • Size of the Market.
      • Cost involved.
      • Availability of intermediaries.
      • Government policy.
      • Scale of production. 5 x 2 = total 10 Marks
    2. Reasons why business organizations may merge with one another.
      • Do away with unnecessary competition.
      • Diversify production.
      • Make quality products.
      • Enhance their bargaining power in the market.
      • Enjoy economies of scale. 5 x 2 total 10 Marks
  4.   
    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

      DR                                                      MUSA TRADERS                                                   CR

      Date

      Details

      Folio

      Cash

      Bank

      Date

      Details

      Folio

      Cash

      Bank

      2010
      May 1
             8
           18
           20
           25
           29

       

      Bal b/d√1
      Debtor√½
      Sales√½
      Bank√½
      Debtor√½
      Cash√½

       

       

      C

      C

       

      Sh.
      15,000
      7,200

      30,000
      8,000 

      60,200
      42,000

      Sh.
      160,450

      9,200

      10,000
       
      179,650√1
      123,450√1

      2010
      May 2
      15
      16
      20
      28
      29      30      31

      Purchases√½
      Creditor√½
      Salaries√½
      Cash√½
      Gen.exp.√½
      Bank√½
      Electricity√½
      Bal c/d√1

       

      C

      C

      Sh.

      4,200

      4,000
      10,000

      42,000
      60,200

      Sh.
      5,400
      18,300

      30,000

      2,500
      123,450
      179,650

      Total 10 Marks
  5.   
    1. Ways which traders can apply to attract more customers.  5 x 2= Total 10 Marks
      • Offering free gifts.
      • Offering after sale services.
      • Advertising their products.
      • Making high quality goods.
      • Lowering their prices.
    2. Factors that could affect the quantity of cabbages supplied in a Market. 5x2 = total 10 Marks
      • 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. 
  6.   
    1. Factors to consider when choosing one appropriate means of transport
      1. Nature of goods.
      2. Cost of transport.
      3. Value of goods.
      4. Distance to be covered.
        Any 5 well explained x 2 = total 10 Marks
    2. Bidii traders’ balance sheet for the year ended 31st December 2010.
      BIDII TRADERS
      TRIAL BALANCE(√1mark)
      AS AT 31ST DECEMBER 2010
        DR.√ ½  CR.

      Capital
      Land
      Plant and Machinery
      Vehicle
      10 years loan
      3 years bank loan
      Stock
      Debtors
      Creditors
      Accrued expenses
      Bank
      Cash
      drawings 

      500,000.√ ½
      200,000.√ ½
      300,000.√ ½


      100,000.√ ½
      60,000.√ ½



      100,000.√ ½
      20,000.√ ½
      40,000.√ ½
      1,320,000.√ 1

      940,000.√ ½


      200,000.√ ½
      100,000



      60,000.√ ½
      20,000.√ ½



      1,320,000.√ 1
      Total 10 Marks

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