Business Studies Paper 2 Questions - Mumias West Pre Mock Exams 2023

Instructions to Candidates

1. This paper consists of FIVE questions.
2. Answer any five questions.
3. All questions carry equal marks.
4. Candidates should answer the questions in English.

For Examiner’s Use Only

QUESTIONS

1.                          
   1. Explain FIVE reasons for which traders observe ethical practices in product promotion. (10 marks)
   2. Explain FIVE benefits that may be realized by a country as a result of government policy to relocate industries in rural areas. (10 marks)
2.              
   1. Explain FIVE benefit of wholesalers in local trade. (10 marks)
   2. Mukangala Traders had Ksh.3, 000 in hand and Ksh. 15,000 at bank on 1st February, 2007. The following transactions took place during the first week of February 2007.
      Feb. 2. A debtor settled his account of Ksh.19, 000 by cash after deducting 5% cash discount.
      Feb. 3. Deposited Ksh. 12,000 from cash into the bank account.
      Feb. 4. Paid Kabwire Ksh.18, 000 by cheque in full settlement of his account of Ksh.19, 000.
      Feb. 5. Took cash Ksh.1, 000 for personal use.
      Feb. 6. Bought stock paying Ksh. 2,000 by cash and a balance of Ksh.7, 000 to be paid later.
      Feb. 6. Paid wages Ksh.2, 500 by cheque, electricity Ksh.1, 500 by cash.
      Feb. 7. Received Ksh.7, 200 by cheque from a debtor after he had deducted a cash discount of 10%.
      Feb. 9. Took all the cash in hand to bank leaving a balance of Kshs.550 only.
      Record the above information in a three column cash book and balance it off. (10 marks)
3.                      
   1. Outline FIVE differences between land and labour as a factor of production. (10 marks)
   2. The Kenya government has several sources of revenue to finance its activities. Explain FIVE reasons why the government imposes tax on goods and services. (10 marks)
4.                        
   1. Explain FIVE factors that a potential investor will consider when evaluating a business opportunity. (10 marks)
   2. Explain FIVE reasons why a Public Limited Company may prefer to raise finance through issue of ordinary shares instead of debentures. (10 marks)
5.                  
   1. Explain FIVE ways of enhancing efficiency in communication. ( 10 marks)
   2. Explain FIVE methods that Central Bank uses to increase money in circulation. (10 marks)
6.                  
   1. Explain FIVE advantages of road transport over rail transport. (10 marks)
   2. The following information was extracted from Tamu Tamu Traders as at 31st Dec, 2022.
      

      	Shs.
      Purchases	2,600,000
      Sales	4,000,000
      Closing stock	100,000
      Sales returns	40,000
      Capital	1,950,000
      General expenses	120,000
      Rent expenses	46,000
      Telephone bills	48,000
      Salaries and wages	360,000
      Discount received	36,000

      Required;
      
      1. Prepare the trading, profit and loss account for the period ending 31st December, 2022. (7 marks) ii) Calculate;
         1. Return on capital. (2 marks)
         2. Gross profit margin. (1 mark)