Business Studies P2 Questions and Answers - Butula Sub-County Post Mock Exams 2021/2022

INSTRUCTIONS TO CANDIDATES

1. Write your name, index number and school in the spaces provided above.
2. Sign and write the date for examination in the spaces provided above.
3.  Answer ANY FIVE questions in the booklet provide.
4. All the questions carry equal marks.
5. Candidates should check the question paper to ascertain that all pages are printed as indicated and that no questions is missing.
6. Candidates should answer the questions in English.

FOR EXAMINER’S USE ONLY

QUESTIONS

1.                          
   1. Explain five ways in which a computer may be used in an office. (10mks)
   2. The following information was extracted from the books of Ras Kimono as at 31 Dec. 2016.
      

      ITEM	DR	CR
      Sales		1,000,000
      Return Inwards	10,000
      Premises	500,000
      Purchases	650,000
      Discounts		9,000
      Creditors		60,000
      Capital		487,500
      General expenses	30,000
      Drawings	20,000
      Salaries	90,000
      Rent Expenses	23,500
      Stock at 31 Dec 2016	25,000

      Required:
      1. Prepare Trading, Profit and Loss Account for the year ended 31 Dec. 2016. (8mks)
      2. Calculate the margin. (2mks)
2.                        
   1. Explain five circumstances under which a business person may use air transport. (10mks)
   2. Explain five causes of unfavourable balance of payment for most developing countries.(10mks)
3.                      
   1. Outline five principles of an efficient tax system. (10mks)
   2. Describe five types of partners in business formation. (10mks)
4.                      
   1. Explain five ways in which a country may reduce the level of unemployment. (10mks)
   2. Highlight five factors that can make a business to be successful. (10mks)
5.                          
   1. Explain five sources from which a business organization may gain monopoly power. (10mks)
   2. The following information relates to Kazi Nzuri retailers for the month of June 2019.
      June 1: Balance brought down; Cash shs. 180, 000, bank shs 450,000(cr)
      June 3: Received a Cheque of 1,500,000 from Malone a debtor
      June 7: Cash sales shs 280,000
      June 11: Joy a creditor settled her account of shs 60,000; shs 40,000 by Cheque and the balance in cash
      June 14: Received commission in cash sh150, 000
      June 17: A debtor Lelu, paid his account of 185,000 by cheque less 2% cash discount
      June 19: Paid the following expenses by Cheque
                      Rent shs.75, 000
                      Electricity shs 32,000
                      Insurance shs 25,000
      June 21: Withdrew shs 100,000 from bank to settle his spouse medical bill.
      June 24: Paid cash shs 133,280 to Kinai after deducting a cash discount of 2%
      June 25: Received a cheque of shs 200,000 from Alando a debtor in full settlement of his account of shs 205,000
      June 28: Paid salaries shs 120,000 by Cheque June 31: Banked all cash except sh 50,000
      Required
      Record the above transactions in a three column cashbook and balance it off. (10mks)
6.                      
   1. Explain five reasons why some countries are lesser developed than others. (10mks)
   2. Explain five ways in which wholesalers prepare goods for sale. (10mks)

MARKING SCHEME

1.                        
   1. Ways in which a computer may be used in an office.
      • Data processing as it sorts /organizes and gives meaningful output.
      • Storage of information /filing – a computer has various storage devices / information can be kept for future reference.
      • A tool for communication – a computer can be linked to internet /other stations / computer to enhance sharing of information.
      • Production /reproduction of documents – to produce soft or hard copies.
      • Assist in research – it provides a link with various sites where information can be sourced.
      • Assist in decision making since it has special programmes / models which facilitate the decision making process for managers.
      • Capacity building – can be used for training during staff orientation/presentation / induction.
      • Recreation / entertainment computer has accessories for games.
      • Security – through use of password/ pin code/ rising of alarms.
      • It is a tool of supervision by monitoring activities of employees online through system administration/ control of fraud.
   2.                      
      1. Ras Kimono Enterprises
         Trading profit and loss Account
         As at 31st Dec 2016
         

         Purchase	650,000	Sales		1,000,000
         Less Closing stock	25,000	Less Return Inwar	ds	10,000
         Cost of goods sold	625,000
         Gross Profit c/d	365,000
         TOTAL	990,000	990, 000
         General Expense	30, 000	Gross profit b/d	365, 000
         Salaries	90, 000	Discount received 9,000
         Rent expense	23, 000
         Net profit	230, 500
         374 000		Total		374, 000

      2. Margins = Gross Profit
                            Sales
         = 365,000
           1000,000
         16 × 1/2 = 8
         36. 5% 
         2 mks.
2.                      
   1. Circumstances under which a trader may use air transport.
      • Perishable nature of goods since the goods can get spoiled /expired / damaged easily.
      • Goods are of high per unit value since they are prone to theft.
      • Urgency where goods required to arrive at the destination promptly / speedy.
      • Security – where security of goods is of valuable / sensitive consideration.
      • Where other means of transport are available since there is alternative.
      • Where distance to be covered is too long for other means to be used / reach.
      • Where it is the policy of the business which needs to be followed.
      • Where the destination is remote making it in accessible by other means.
      • Safety – since it is less prone to accidents.
   2. Causes of unfavorable balance of payment for most developing countries.
      • Reliance on Primary products which fetch low prices in the international market.
      • Heavy importation of finished goods, whose value are very high hence spend more on them.
      • Low level of technology which compromises the quality of their exports and lowering their value
      • Too much reliance on foreign borrowing-Such loans are repaid with heavy interest.
      • Susceptibility to natural calamities like drought which adversely affect their production.
      • Preference towards foreign goods – most consumers in developing countries prefers foreign goods in the belief that they are of better quality.
      • Unfavorable world economic order - Developing countries have very little say in international trade forums and cannot influence the world economic order in their favors. Any 5 @ 2 = 10.
3.                
   1. Principles of an efficient tax system.
      • Equity – the tax should be fair / just / people should be taxed according to their level of income.
      • Economical – It should be cheap / easy to administer/ Cost effective Cost of collection should be lower than tax revenue.
      • Convenient method of payment / collection should be convenient to tax payer.
      • Collector – It should be suited / favorable to the needs of tax payer.
      • Certainty – taxpayer should know what and when to pay /collect.
      • Flexibility – It should be adaptable to all economic circumstances / conditions.
      • Simplicity – easily understand.
      • Elasticity – Proceeds from tax should be capable of expanding and contracting in line with changes in income /population.
      • Diversity/Wide base – there should be a wide variety/ range of taxes.
      • Difficult to evade – should not create loopholes for people to escape.
      • Should have maximum benefit to the tax payer – through provision of goods and services. Any 5 @ 2 = 10 mks.
   2. Types of partners
      • Active partners – Contributes capital and take part in day to day running of the business.
      • Dormant /sleeping partner – contribute capital but does take part in the running of the business.
      • Real partner – contributes capital in business.
      • Nominal / quasi partner – doesn't contribute capital in business.
      • Major partner – above 18 years of age.
      • Minor partner – below 18 years.
      • General partner has – has unlimited liability.
      • Limited partner – has limited liability 5 @ 2 = 10 mks
4.                              
   1. Ways in which a county may reduce level of unemployment.
      • Diversification of the economy by encouraging the establishing of different industries to create employment.
      • Transforming agricultural sector to curb rural urban migration.
      • Transforming education/ training sector to improve on skills / to make graduates acquire relevant skills.
      • Establishing an employment policy by government to make it easy for people to get jobs.
      • Lending/ setting of a fund to assist unemployed to start income generating activities / e.g youth fund.
      • Exporting labour by assisting unemployed people to acquire jobs abroad.
      • Encouraging the informal sector in order to promote self – employment.
      • Delocalization/decentralization policy for balanced regional development/reduce rural urban migration .
      • Control population growth.
      • To improve infrastructure in order to suit economic activities.
      • Increase government expenditure to expand the size of the economy/to finance development projects.
      • Effective use of natural resources to increase production activities.
      • Protect local/infant industries against unfair competition.
      • Attract local/foreign investment through incentives to grow the economy.
      • Reviving collapsed industries / projects by injecting funds / selling them.
   2. Causes of business success.
      • Adequate capital to expand and run the business.
      • Availability of adequate labour supply.
      • Appropriate skills in both the owner and employees for efficient running of the enterprise.
      • Proper marketing plans to increase sales.
      • Use of modern / appropriate technology for the production of right quality and quantity of goods/services.
      • Fair competition to enable the business access markets and suppliers for its goods.
      • Favorable government policy to encourage growth/investment of business.
      • Political stability/ Security to create confidence in entrepreneurs.
      • Appropriate pricing policies to attract and encourage buying of firm's products.
      • Availability of markets for firm's products
      • Good time management to take advantages of available opportunities.
      • Good customer relations and care to attract and retain customers.
      • Availability of goods infrastructure for the business to access its markets & inputs.
      • Proper business planning to accommodate unexpected changes.
      • Efficient use of resources to enhance productivity of the enterprise.
5.                      
   1. Sources of monopoly power.
      • Size of the market/existence of a small market – size only appropriate for one producer.
      • Control of important inputs / raw material in production thus denying others.
      • Patient rights – has the formula of productions denying others the opportunity / legal protection.
      • Restrictive practices – Use of topics that drive others out of market.
      • Mergers / cartels – firms come together to control the market,.
      • Additional costs enforced by the established firm to new firms making their operation costs high thus drive them out.
      • Government policy – where government supports the existence of only one producer.
        5 points (Naming 1 point Explanation 1 point)
   2.                                  
      

      Date

      Detail

      L.F

      D All

      Cash

      Bank

      Date

      Details

      L.F

      D.REC

      Cash

      Bank

      2019   June

      Bal.

      b/d

      180,000

      2019   June

      Balance

      b/ d

      450,000

      June 3

      Malon e

      1500000

      June 11

      Joy

      20,000

      40,000

      June 7

      Sales

      280000

      June 19

      Rent

      75,000

      June 14

      Commi ssion

      150,000

      June 19

      Electr.

      32,000

      June 17

      Lelu

      3,700

      181,300

      June19

      Insur.

      25,000

      june

      Alando

      5000

      200,000

      June 21

      Drawin

      100,000

      June 31

      cash

      c

      406,720

      June 24

      Kinai

      2,720

      133,28 0

      June 28

      Salaries

      120,000

      June 31

      Bank

      C

      406,72 0

      J,une30

      Balance

      c/d

      50,000

      1,446020

      8700

      610,000

      2,288020

      2,700

      610,00 0

      2,288020

      June 30

      Bal

      b/d

      50000

      1446020

6.                       
   1. Reasons why some countries are less developed.
      • Poor technology leading to low quality /quantity of goods and services.
      • Inadequate capital which hinders investment /production.
      • Poor planning / resource management arising from inadequate research data /skills/leading to poor investment.
      • Inadequate skilled labour force leading to low production/underutilization of resources.
      • Shortage of /inadequate natural resource endowment which hinder production
      • Limited market which discourages production/investigation.
      • Negative social-cultural practices which may hinder production and consumption of goods and services.
      • Inadequate foreign exchange-which limits access to imports
      • Limited entrepreneurial skills-resulting to inefficiency in production
      • Poor infrastructure which hinder mobility of factor of production
      • High population growth rate leading to high dependency ratio/low saving
      • Political instability which discourage investment and production.
      • Over reliance on foreign aid which may lead to potential blackmail/not be available
      • Lack of political will/ political interference due to selfish interest.
   2. Ways in which wholesalers prepare goods for sale.
      • Branding- giving a product the name by which it will be sold
      • Packing/packaging – Putting goods in packets, boxes, bags.
      • Blending – Mixing various goods to achieve desired taste, quality.
      • Sorting – Selecting goods according to sizes, weight, colors & qualities.
      • Grading – Putting goods in groups of similar qualities to make it easier to price them.
      • Breaking bulk – dividing into smaller quantities.