INSTRUCTIONS TO CANDIDATES
- Write your name, and Index number in the spaces provided after the questions.
- Sign and write the date of examination.
- This paper consists of Six questions.
- Answer any five questions in the spaces provided after the questions.
- All questions carry equal marks
- Candidates should answer the questions in English.
- This paper consists of 3 printed pages, candidates should check to ascertain that all pages are printed as indicated and that no question is missing.
FOR EXAMINER’S USE ONLY
Question |
Maximum Score |
Candidate’s Score |
1 |
20 |
|
2 |
20 |
|
3 |
20 |
|
4 |
20 |
|
5 |
20 |
|
Total Score |
100 |
|
QUESTIONS
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- As business expands, it experiences economies of scale such as division of labour and specialization. Explain Five benefit of the economy of scale mentioned to the business (10mks)
- Raju operate a large hardware business in a town in Kenya. A part from motor vehicle insurance policies, highlight giving reasons, five insurance policies that may be beneficial for this business. (10mks)
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- Explain Five guidelines followed when using public funds (10mks)
- Explain Five problems encountered in measuring National income using output approach (10mks)
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- Students of Kiburu mixed day secondary school undertakes business studies as a subjects in their curriculum. Explain Four benefits of this to the local community (8mks)
- The following balances were extracted from the books of Katiba Traders for the year ended 31st Dec 2012.
Carriage inwards 27,900
Carriage outwards 29,400
Purchases 60,000
Sales 120,000
Stock (31/12/2012) 26,500
Sales return 18,500
Stock 1/1/2012 35,000
Purchases return 45,000
Rent income 100,000
Discount received 6,800
Salaries 14,400
Rates 36,900
Electricity 25,000
Bad debt written off 2000
Discount allowed 6,900
Required; Prepare trading, profit and loss account for the year ended 31st Dec (12mks)
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- The government of Kenya is in the process of extending standard gauge way the standard rail Gauge way to Kisumu. Explain the benefits of this venture to the Kenya economy (10mks)
- The diagram below show the population and output per capita of China
Explain five advantages China would get in her total population is found in the part marked Y (10mks)
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- ABZ limited operates a wholesale business .During the month of March 2021. The company carried out the following transactions
March1: Credit sale to Ochupe and Njeri were Sh. 200,000 and 180,000 respectively
March2: Credit purchase from Chebet sh. 150,000, Wambui sh.700,000 , Alfred sh 185,000. He also paid an advertisement expenses by cast sh. 48,000.
March 5 : Credit sales to Abdalla sh 175,000, Mwangi sh 320,000, Ochupe sh. 135,000
March 8 : Goods returned by Ochupe sh 2800 and Njeri sh, 3100
March 12 : Goods returned by ABZ limited to Chebet sh, 30,000 and Alfred 25,000
March 27 :Paid Wambui her debt in cash after deducting a cash discount of 5%
March 28 : Received rent of sh 5,200 by bank
March 29 : Sold goods on credit to Njeri shs 220,000 and Njau shs 150,000
March : Goods returned by Njau shs 2,300
Required : Prepare relevant day books (12mks) - Explain five advantages of M-pesa (8mks)
- ABZ limited operates a wholesale business .During the month of March 2021. The company carried out the following transactions
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- Using a well labeled diagram, illustrate, the effect of reduced cost of production on equilibrium price and output (10mks)
- Explain five emerging issues in form of business units (10mks)
MARKING SCHEME
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- Output per worker is greatly increased thus increased productivity
- Encourages invention and innovation thus reducing the cost of production
- High quality goods and services are produced thus attracted more demand
- It saves on time thus maximizing on available labour
- Production is faster and efficient thus enable continuous supply and meet unexpected demand
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- Workman’s compensation policy as it covers workers who may be injure in the course of their duties
- Cash on transit policy to cover any loss of cash enroute the bank
- Fidelity / guarantee policy so as to cover any loss caused by dishonesty of workers
- Fire policy which covers the losses caused by incidences of fire
- Sprinkle leakage policy to cover against leakage of fires fighting sprinkles affixed in the premium
- Goods on transit policy to cover goods being transported to/from the premium
- Windows/ glass policy – to0 cover damage to the windows and glass to the premises
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- Saction –Must get necessary approval from relevant authorities
- Maximum social benefit- The benefit of expenditure should spread to a considerable number of residence
- Flexibility –should be need driven /Change according to prevailing situation in the country/county
- Economy – Implement should ensure more money is allocated to tangible projects through in policy formulation and procedures
- Proper financial management -Implementers should have sound management policies to ensure no wastage of funds
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- The decision of what goods and services to include
- Difficult to value goods not sold in the market
- Income generating activities that are considered illegal are not included
- Difficult to value goods kept as stocks especially in the private sector
- Difficult to measure the cost of wear and tear
- Difficult to differentiate the primary and intermediate output
- Difficult to value government output since they are not sold is the market
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- Help the society to appreciate the role of business in the provision of goods and services
- The community will understand the role of the government in business
- The community will have positive attitude towards work
- Equips the members of the community with skills to start and run a business
- Make the society appreciate the need for good business management practice
- Equips the society with knowledge of role of business in the society
- Assort members of the society to relate knowledge skill and attitude acquired to the day to day running of the business
- KATIBA TRADERS
TRADING PROFIT & LOSS ACCOUNTS
FOR THE YEAR ENDED 31ST DEC 2012
Opening stock 35000 Sales 120,000 Add purchase 60,000 Less sales return 18500 Add carriage inward 27900 Net sales 10,500 Less return out 4500 Costs of goods available for sale 118,400 Less closing stock 26400 Cost of goods sold 91900 Gross profit c/d 9600 Expense Carriage outwards 29400 Gross profit b/d 9600 Salaries 14400 Add revenue Bad debt write off 2000 Rent income 100,000 Rates 36900 Discount received 6800 Discount allowed 6900 Electricity 25000 Net profit c/d 88200 114600 114600 Net profit b/d 88200
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- Speedy delivery of goods – Foster / timely distribution
- Large bulky goods – carry more good at once / reduce cost
- Lower the cost of transport – producers pay them
- Reduces damage on congestion – Reduces traffic jam and accidents
- Reduces damage on roads –Most trucks will be so replaced by train
- Comfortable commuter service – Passengers can be moved conveniently
- Reduces pollution –Environmentally friendly
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- Widening market due to increase demand
- Better utilization of resources as the people compete for the scarcely available resources
- Creates a pool of labor supply thus creates availability and lower cost of labour
- Enhances creativity as people scramble for the limited opportunities / resources
- Promotes labour mobility as people seek greener pasture
- Stimulates investments due to limited employment opportunities/ reduce poverty levels
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Sales Journal Date
Particular
Invoice no.
L.f
Amount
March1
March1
March5
March5
March5
March 29
March29
Ochupe
Njeri
Mwangi
Abdalla
Ochupe
Njeri
Njau
200,000
180,000
320,000
175000
135000
220000
150,000
Sales Requires Journal Date
particular
Credit note no.
L.f
Amount
March 8
March 8
March 30
Ochupe
Njeri
Njau
2800
3100
2300
Particular Journal Date
particular
Credit note no.
L.f
Amount
2/3
2/3
2/3
Chebet
Wambua
Alfred
150,000
700,000
18,500
Cash payment Journal Date
particular
receipt no.
Discount received
Cash
Bank
2/3
27/3
Advertisement exp
Expenses
wambui
35000
4,800
665,000
Cash Payment Journal Date
particular
receipt no.
Discount allowed
Cash
Bank
28/3
Rent
5200
Purchase Date
particular
Credit note no.
L.f
Amount
26/3
12/3
Chebet
Alfred
30,000
25000
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- Saves time
- Withdrawal can be done any time
- They are conveniently placed
- Have access to account balance
- Can pay utility bills
- Cheap to operate
- Safer to use
- Can deposit money in bank account
- Can withdraw money from the bank
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A decrease in cost of production will increase the quantity supplied resulting to- A forward shift of the SS curve
- Increase equilibrium quality
- Reduced equilibrium price
- A forward shift of the equilibrium point
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- Franchising – Where a business permits another the right to manufacture, distribute its products using the name of the firm that gives the right at a fee
- Amalgamation / mergers- Two or more business combine to form one new business
- Holding companies - A company that requires 51% or more ownership or more companies which will be subsidence’s and her control but separate identities
- Check of system – Money is deducted at the source by the employees and submitted to the SACCO
- Burial benevolent fund - A system by SACCOs to assist members financially for burials
- FOSA – Account provided by the SACCO to their members to enable deposit or withdraw money currently
- Globalization – Businesses conduct their full all over the world through technology such as e-commerce
- Cartels – A group of wild companies that has agreed work together in order to control output market and price of their goods and services
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