Business Studies Paper 2 Questions and Answers - Maranda High Pre Mock Exams 2023

INSTRUCTIONS TO THE CANDIDATES  

• Answer ALL FIVE questions  
• All questions carry equal marks  
• All working must be shown  

1.  
   1. Explain five importance of transport to business (10mks).
   2. Explain five ways through which commercial banks facilitate transfer of  money in kenya (10mks).  
2.  
   1. Explain five trends in office management (10mks).  
   2. Explain five measures Kenyan government can put in place to control  unemployment (10mks).  
3.  
   1. Other than price mechanism, explain five other methods of determining the  price of a product (10mks). 
   2. Explain procedure involved in making an insurance claim (10mks).
4.  
   1. Explain five disadvantages of mail order stores (10mks).  
   2. Prepare a three column cash book from the following information (10mks). 
      Jan 2020 1: Juma started business with sh.80, 000 cash and sh.200, 000 at bank. 
                      3: Bought furniture by cheque shs. 20,000
                      5: bought goods by cheque sh. 70,000
                      8: Received cash from chemai sh.19, 000 having allowed him a cash   Discount of  
                          sh. 1,000.
                      9: paid Muthoni sh. 30,000 by cheque less 10% cash discount. 
                    12: cash sales of sh. 14,000.
                    16: received a cheque of sh. 27,500 from Ngondi in full settlement of his   Account of          
                          sh 30,000.
                    20: Received a cheque of 12,600 from Maranga after allowing a cash   Discount of 
                          10%.
                    25: Took cash to the bank sh.32, 000
                    28: paid salaries sh. 10,000 in cash.
                    31: Took 5,000 from bank to pay the son hospital bill.
5.  
   1. Explain five benefits of consumer protection (10mks).  (
   2. the following trial balance relates to Chui traders as at 31 December, 2014. 
                                                          Chui traders  
                                                          Trial balance  
                                                    As at 31 December 2014 
      

      particulars	Dr (shs).	Cr (shs).
      stock	10,000
      bank	3,500
      purchases	15,000
      sales		28,000
      returns	8,00	1,100
      rent		580
      insurance	950
      creditor		450
      .Carriage in	1,200
      discounts	300	1,620
      total	31,750	31,750

      Additional information 
      1. closing stock was valued at shs. 2,500
      2. Carriage out was shs. 1,200. 
         Prepare trading, profit and loss account (10mks).   

MARKING SCHEME

1.  
   1. Explain five importance of transport to business (10mks).
      • Linking consumers to producers-which enables the consumers to obtain the goods they need.  
      • Employment creation-transport help in solving unemployment problems by providing job  opportunities to drivers. 
      • Promotes specialisation-by producers concentrating on production while other people carry out  distribution  
      • Making goods and services more useful- where goods are moved from where they are least  required to place where are more required 
      • Improving people’s living standards by enabling consumers to get a variety of goods and  services to choose from 
      • Availing a wide market for products-by enabling producers access far markets they could not  have accessed without transport. 
      • Increased production due to widen markets 
      • Promoting development of industries-through transportation of raw material on time to the  factory  
      • Avoiding wastage-by disposing the surplus by taking them to the areas they are required
   2. Explain five ways through which commercial banks facilitate transfer of money in kenya  (10mks). 
      • Credit transfer- is a method of paying many people using one cheque 
      • Standing order-is an instruction to the bank by its customer to be paying a certain amount of money to a named person or institution after a given interval until a specified date or until  otherwise instructed 
      • Telegraphic money transfer-method of remitting money by commercial bank where the sender  fills telegraphic form 
      • Electronic money transfer-is a method of transferring money from one account to another  where computers are used. 
      • Cheque-is written order by the drawer to a bank to pay on demand a specified amount of  money to the person named as the payee or the bearer
2.  
   1. Explain five trends in office management (10mks).
      • Use of computers in printing, communication for example internet. 
      • Adopting of either open or landscape office to ensure that customers are satisfactory served.
      • Public relations department to educate customers on the use of organization’s products.  
      • Use of mobile phones that enables officers to carry out their official duties even when they are  away from work stations 
      • Location of offices in suburban areas to reduce on administrations cost, have enough parking  space, to avoid traffic jams. 
      • Use biometric clocking systems for monitoring attendance of employees 
      • Use of identification cards for identification of office staff 
      • Working from home to prevent the spread of corona virus  
      • Use of CCTV’S to enhance on performance of activities/ security
   2. Explain five measures Kenyan government can put in place to control unemployment  (10mks). 
      • Encouraging employment in private sector for people to be self-employed.  
      • Adopting policies that encourage the use labour intensive method of production as opposed to  capital intensive in order to absorb surplus labourforce.  
      • Adopting a relevant education system that emphasize the skills required in the labour market to  avoid unemployment caused by mismatch of skills acquired and skills required on job market 
      • Diversification of economic activities to ensure people are employed throughout the year Increased government expenditure on projects that create more jobs to the youth 
      • Rural development- by locating firms in rural areas to provide job opportunities to control  urban unemployment 
      • Encouraging direct foreign investment especially those using labour intensive method will have  the effect of increasing more jobs 
      • Encouraging the use of local resources –employment will be created for those who are involved  in their provision. 
      • Population control will control the number of people entering the labour market.  
3.  
   1. Other than price mechanism, explain five other methods of determining the price of a  product (10mks). 
      • Price control where the government fixes the highest price beyond which a commodity should  not be sold. 
      • Taxation where an increase in tax on a commodity increases/determine the level of the price of  a commodity 
      • Subsidies reduces the cost of producing a commodity hence lead to a lower price level 
      • Haggling/bargaining –this is where the price is arrived at through negotiation Auction-this is where the price of a commodity is set through bidding 
      • Tendering – this is where the buyers are invited to quoted prices independently the one who  quotes based on terms and conditions is the one who determine the price 
      • Farmer fix price –this where the producers decides on price based on cost and demand of the  commodity
   2. Explain procedure involved in making an insurance claim (10mks).
      1. Notifying the insurer. The insured informs the insurer immediately the risk occurs
      2. Filling the claim form- by giving details relating to the occurrence of the risks.  
      3. Investigating the claim – the insurer launches an investigation to ascertain whether the loss  is as result of insured risk.  
      4. Preparation of assessment report- the assessors prepare a report concerning the extent of  the loss. 
      5. payment of the claim – the insurance company compensate the insured by either repairing  the property/ giving out cash/ replacing the damaged property with new one.
4.  
   1. Explain five disadvantages of mail order stores (10mks).
      • High cost of advertising increases the price of the goods
      • Inspection of goods may not be possible because the buyer and the seller are far apart
      • The variety of the goods that can be sold is limited since durable goods only are handled
      • Personal contacts between the buyer and the seller is not possible because all the  dealings are through post office
      • The methods is mainly suitable to those who can read and write
      • Problems arising in the post office may affect the business for example strikes
   2. Prepare a three column cash book from the following information (10mks).
      

      DR 3 column cash book Cr 

      date

      details

      lf

      Dis.all

      cash

      bank

      date

      lf

      Dis.

      cash

      bank

      2020 Jan1   8   12  16  20  25

      Capital Chemai  Sales  Ngondi  Maranga cash

      1,000  2500 1400  4900

      80,000  19,000  14,000 11300

      200000  27500  12600 32000  272100

      .

      2020  Jan3  5   9   25  28  31  31

      Furniture Purchase Muthoni  Bank  Salaries   Drawings Bal c/d

      3000  3000

      32000 10000 71000  11300

      20000  70000  27000  5000  15010  27210

5. 1. Explain five benefits of consumer protection (10mks).
      • To ensure that commodities are of good quality, since traders can sell counterfeit  products to consumers.
      • To ensure that commodities offered for sale are of right quantity and sizes because  traders can sell underweight goods to consumers
      •  To ensure that health standards are maintained because traders may offer products at  poorly ventilated premises/unhygienic places
      •  To ensure that buildings construction and safety standards are maintained because  traders can sell their products in unsafe structures.  
      • To ensure that fair prices are charged for the commodities. Since business people can  overcharge consumers
      • To protect from false advertising because traders may persuade consumers to buy  product they do not require/ taking advantage of ignorance of consumers
      • To ensure that consumers are protected from the sale of harmful commodities which  could adversely affect their health/ selling expired products to consumers
      • To protect the consumers against breach of contract. Because traders might fail to  honour contracts entered into with consumers as regards the sale of commodities.  
   2. The following trial balance relates to Chui traders as at 31 December, 2014. 
      Prepare trading, profit and loss account (10mks). 
      Chui traders 
      Trading profit and loss account 
      For the period ended 31 Dec 2014 
      

      Shs.           Shs. Opening stock                         10,000 Purchases             15,000  Carriage inwards    1,200   Less returns out      1,100        15,100  Goods available for sale           25100 Less closing stoc                      2500  Cost of sales                             22,600  Gross profit c/d                           4,600                                                    27200    Expenses                                  shs.  Insurance                                 950 Dis allowed                              300 Carriage out                             1,200 Net profit                                  4350                                                  6,800

      Sales                               28,000   Less returns inward           800                                           27200   Gross profit                        4600   Rent received                      580  Dis received                       1620                                              6800