Business Studies Paper 2 Questions and Answers - MECS Cluster Joint Pre Mock Exams 2021/2022

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Instructions to candidates

  • Write your name in the spaces provided.
  • The paper consist of Six questionsAnswers any
  • Five questions in the spaces provided.
  • All questions carry equal marks
  • Non programmable electronic calculator may be used.
  • Candidates should answer questions in English.
    1. Explain Five characteristics of human wants. (10 Marks)
    2. The graph below shows the rate of population growth of a given Country.
      Explain Five factors that may have contributed to the trend between P and Q. (10 Marks)
    1. Outline Five differences between commercial banks and non-banking financial institutions(NBFI’s). (10 Marks)
    2. Explain five factors considered when choosing a means of transport. (10 Marks)
    1. Amina has been doing her shopping at a popular hypermarket in Kenya. Explain Four benefits that she may be enjoying. (8 Marks)
    2. On 1st May 2019, Steicy Traders had cash Ksh 25,000 and a bank overdraft of Ksh 15,000. The following transactions took place during the month of May 2019.
      2nd : Paid wages in cash Ksh 15,000
      3rd : Sold goods to Luka on credit worth Ksh 10,000
      5th : Bought goods worth Ksh 750 in cash.
      6th : Received a cheque of 1,960 from Kobia having allowed him a 2% cash discount
      8th : Luka a debtor cleared his debt by cheque.
      11th : Bought machinery by cheque for ksh 5,000
      13th : Cash sales directly banked Ksh 14,000
      15th : Withdrew from bank Ksh 1,000 for private use.
      20th : A cheque received from Luka was dishonoured.
      21st : Banked cash amounting to Ksh 1,000 from cash Till.
      26th : Paid Kioko his account of Ksh 2,000 less a 5% discount in cash.
      28th : Received in cash Ksh 3,000 from Njambi.
      30th : Banked all the available cash except Ksh 1,000
      Prepare Steicy Traders Three column cash book for the month of May 2019. (12 Marks)
    1. Describe Five types of partners as found in a partnership form of business units. (10marks)
    2. With an aid of a well labelled diagram, explain the effect of a shift of demand curve to the left on the equilibrium price and quantity. (10marks)
    1. Highlight Five advantages of advertising to the consumers. (10marks)
    2. Company XYZ is the only producer and supplier of commodity Q. Explain Five circumstances that may have led to this situation in the market. (10 marks)
    1. State and explain Five characteristics of a good filling system. (8marks)
    2. Zaweria Traders trial balance as at 30th June 2008.
       Zaweria Traders
      Trial balance
      As at 30th June,2008 
      A/C NAME DR
      Land 750,000  
      Cash at bank 45,000  
      Opening stock 22,500  
      Machinery 5,000  
      Debtors 10,000 15,000
      Discounts 3,000 1,000
      Purchase and Sales 70,000 160 000
      Wages 25,000  
      Furniture 13,500  
      Capital   771,850
      Carriage outwards 1,150  
      Carriage inwards 2,700  
      Returns 7,500 9,500
      Lighting 6,000  
      Commission   4,000
        961,350 961,350
      Closing stock was valued at Ksh 11,000
      Prepare a Trading, Profit and loss Account. (12marks)


    1. Characteristics of human wants. (10 mrks)
      • They are insatiable – Human wants cannot be fully satisfied.
      • They are unlimited/numerous- human wants are too many/begins at birth and ends at death.Some are habit forming-
      • once one develops a taste for a commodity he/she tends to use it over and over again.
      • Require resources- certain things must be available to satisfy human wants.
      • They are competitive- wants compete for attention each yearning to be satisfied first.
      • They are recurrent/ repetitive – once satisfied they are felt again.
      • Vary in intensity and urgency- they change with age,gender and time/some need to be satisfied earlier than others.
      • Some are complementary- satisfaction of one creates a second derived from the first while others are satisfied jointly (accept examples as expansion).
      • Some are universal-they are needed/common to all.
        . Any 5*2=(10marks).

    2. Factors that contributed to the trend increased population growth rate ( P to Q )
      • Improved health facilities – reducing maternal deaths /people living longer/elimination of diseases.
      • Improved fertility rate – ability to give birth to improved/reduced infant mortality/still birth.
      • Improvement in diet and nutrition- there is reduced mortality rates/diseases/improved lifespan.
      • Immigration from other countries- more people coming into this country.
      • Early marriages – Thus prolonged child-bearing age.
      • Negative attitudes towards family planning thus more births.
      • Cultural practices that favour many children
      • Absence of calamities/wars-thus lengthened lifespan.
      • Ignorance of family planning methods – thus encouraging child births.
      • Favourable government policies that favour population increase – eg free maternity, free primary/secondary education.
        Mention = (1 mark)
        Otherwise = (2 mks)
    1. Differences between commercial banks and Non banking financial institutions NBFI’s).
      Commercial banks NBFI’S
      They offer all the three accounts i.e savings ,current and fixed deposit They offer only savings and fixed deposit accounts
      They offer safekeeping of valuable items eg.title deeds,share certificates They do not offer safekeeping of valuable items
      They offer overdraft facilities through the current accounts They do not have overdraft facilities as they do not have current accounts
      They have foreign exchange department/services They do not offer foreign exchange services.
      They offer short term and medium term financing/credit  They offer medium term and long term financing or credit
      They participate in clearing house They do not participate in the clearing house
      They offer cheques to facilitate transfer of money/payments They do not offer cheque facilities
      They offer credit /loans to all sectors of the economy They give credit to specific sectors of the economy

      NB: No splitting of marks=5*2=10mks
    2. Explain five factors considered when choosing a means of transport .(10mks)
      • Cost-means chosen should be relatively cheap/economical
      • Nature of goods- perishable/urgently needed goods should be transported using a fast means of transport/heavy and bulky goods require require large vessels.
      • Reliability- means chosen should have ability to deliver the goods as required.
      • Distance – where distance is long e.g, over the borders of the country, air transport is the best
      • Business policy – some business have their own preferred means of transport
      • Speed – the means chosen should be able to reach within the intended time
      • Security – means chosen should provide safety for the goods /people.
    1. Benefits of shopping at a hypermarket. (8 marks)
      • Easy accessibility - located in open areas away from city centres / areas with good transport network hence easy to reach.
      • Abundant parking space- they offer enough parking to the convenience of shoppers.
      • Operates for long hours – Hence shopping can be done even at odd hours/ when there are no traffic jams.
      • Offer after sales services- customers goods can be parked, transport to parking bays etc.
      • Accept debit and credit cards – thus no need to carry physical money which is risky.
      • Offer one- stop shop – one can buy many different products in one shopping centre.
      • Security is guaranteed- usually highly guarded thus reducing risks of attacks.
      • Availability of auxiliary services – shoppers can access banks, insurance and other services conveniently.
      • Attractive and convenient to shop in – thus relaxing shoppers.
      • Spacious – avoiding congestions and hence spread of airborne/contagious diseases minimal.
        4 x 2 mks = 8 mks


      Dr   Cr
      Date Details L.F Disc allwd cash Bank   Date Details L.F Disc Rcd Cash Bank
      2019             2019          
      May 1
      May 6
      May 8
      May 13
      May 21
      May 28
      May 30



      25 000


      10 000
      14 000
      1 000

      May 1
      May 2
      May 5
      May 11
      May 15
      May 20
      May 26
      May 30
      May 30

      (Dishonored cheque)




      15 000


      15 000


      10 000


            40  28 000 35 310          100  28 000  35 310
      May 30 balance  b/d    1 000  4 310              

      24 x ½ = 12mks.
      NB: 1.Award if the details column is correct.
      2.Transaction on 21st May:
      -Award if a candidate writes dishonoured cheque only or dishonoured cheque( Luka) or Luka ( dishonoured cheque)
      - Luka only no score.

    1. Types of partners in Partnership. 10 mks
      • Active partners – partners who take part in the day to day running /operation of the business.
      • Dormant/passive/sleeping partners – parners who do not take part in the day to day running of the business.
      • Real partners – Partners who actually contribute capital in partnership, can be active partners.
      • Major partners – Those who have attained the age of majority ie 18 years can take part in management of the business.
      • Minor partners – partners who are less than 18 years old. Share profits, cannot be active partners.
      • General partners – partners whose liability to the debts of the business is unlimited
        • Limited partners-partners whose liabities are limited/not personally responsible for business debts.
        • Quasi/nominal partners- partners who allow the partnership to use their name for prestige/to influence customers .
    2. Shift in demand curve to the left.
      Dia = 8 mks
      Text = 2 mks
      • Demand curve shifts to the left
      • Equilibrium points shifts from e0 to e1
      • Equilibrium price reduces from Peo to Peo1
      • Equilibrium quantity reduces from qeo to qe1
        4 x ½ mk = 2 mks
    1. Advantages of advertising to the consumers . (10 marks)
      • Consumers become aware of existence of a product and where it can be found.
      • Consumers enjoy high quality goods resulting from competitive advertising.
      • Makes it easy for consumers to choose products from a variety offered in the market based on their advertised qualities and contents.
      • Entertainment by music, drama, animations and plays.
      • May enjoy lower prices due to competition.
      • Correct misconceptions about a product hence assist in decision making.
      • Aiding in budgeting and planning since prices and existence of products are announced.
      • Communicates changes about a product, where found, new names, thus reducing stress on consumers.
      • Consumers are made aware of proper use of a product to avoid wastage/accidents/damages.
      • Protects consumers from exploitation by traders as they are aware of prices.
        NB: Advantage must come out to score.

    2. Circumstances under which a monopoly power may be created. (10mks)
      • Where a single firm hold secretive production techniques/knowledge thus denying other firms a chance to produce.
      • If a firm/XYZ has control over a strategic input/raw material used in production.
      • Where a firm enjoys great economies of scale thus lowering costs such that other firms cannot cope.
      • Where the government have given production rights/patents/ licenses to a single firm.
      • Where market is small and best served by a single firm profitably.
      • Where firms amalgamate/combine/join and act as a single firm.
      • Where only one firm can amass the capital outlay required to produce the commodity.
        NB: Circumstances must come out clearly to score.

    1. Characteristics of a good filing system. (10mks)
      • Simplicity-easy to understand and operate.
      • Economical-should not be expensive to start and operate/be relatively cheap/cost effective.
      • Suitability-appropriate/fit the needs of the business concerned.
      • Elasticity-should be flexible to cater for future needs /expansion.
      • Safety-provide protection against damages/theft/loss/landing into unauthorized hands.
      • Accessibility-information should be easily accessed/retrieved without disturbing other documents.
      • Compactness-not occupying too much space.
        NB: STATING = 1MKS
      FOR YEAR ENDING 30TH JUNE, 2018✓
      Opening stock   22,500✓ Sales 160,000✓
      Add: C.INWARDS
        Less: R. inwards 7,500✓
        72,700   Net sales 152,500✓
      Less R. out 9,500 ✓ 63,200    
      G.A.F.S   85,700✓
      Less: Closing stock    11,000✓
      C.O.G.S   74,700✓
      Gross Profit c/d   77,800✓
          152,500   152,500
      Disc. Allowed
      Carriage outwards
      Net Profit c/d
      Gross profit b/d
      Disc. Received
          82,800   82,800
            Net Profit b/d 47,650
      20*1/2=10 Marks

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