Business Studies Form 2 Questions and Answers - Term 3 Opener Exams 2021

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  • Answer all questions in the spaces provided.
  • This paper has TWO sections (SECTION A AND SECTION B)



  1. Resources are categorized broadly into economic and free resources. Identify any three
    free resources. (3mks)
  2. Give four reasons why it is difficult to satisfy human wants (4mks)
  3. State four methods of government involvement in business activities.(4mks)
  4. Highlight four circumstances under which a trader may choose to transport his/her goods using containers (4mks)
  5. State the types of advertisement described below: (4mks)
    1. It is meant to promote the name of the business enterprise---
    2. Aim at giving general information to the customers about the availability of a certain products---
    3. Using famous persons in the advertisement campaign---
    4. Aims at promoting the sales of a particular brand of a product---
  6. Distinguish between the following types of warehouses. (4mks)

    Public warehouses Private warehouses
  7. Highlight four causes of breakdown in communication (4mks)
  8. Identify four types of large scale retailers. (4mks)
  9. Commerce is the study of trade and aids to trade. List four aids to trade.(4mks)
  10. State four factors that are considered in determining premiums to charged.(4mks)
  11. Identify the terms given to each of the following statements. (4mks)

    Statements Terms 
    a) Transport goods from producers                                                   
    b) Activities carried out with a view of making profit  
    c) A person who uses a good or a service  
    d) Inreasing the usefulness of a good or a service  
  12. Extraction involves obtaining goods from their natural settings. Indicate four activities under extraction.(4mks)
  13. Highlight four disadvantages of enclosed office layout.(4mks)
  14. In the spaces provided below, indicate with a tick whether each of the following statements related to preferences or ordinary shares. (4mks)
     Statement Preference shares            Ordinary shares                 
     a)Represent ownership    
     b)Rate of divided is fixed    
     c)Has voting rights    
     d)Considered first in liquidation    
  15. Mr. Keboi sold goods on credit to Mrs. Chebe worth sh. 10,000.She was allowed a trade discount of 10%.The cash discount was quoted as follows:
    • 10% if she paid within two weeks
    • 5% if she paid after two weeks

      If she paid during the 3rdweek calculate the amount of money she paid.(4mks)

  16. Mr. Njoroge was paid his debt by use of a cheque of which he deposited it in the bank. After three days the cheque was dishonoured.Give four reasons that made this cheque to be dishonoured. (4mks)
  17. Classify the following business environments as either internal or external. (4mks)

    Business culture                                                                                       
    Shareholder's resolutions  
  18. Give three examples of small scale retailers without shops. (3mks)

SECTION B(Answer any three questions in this section)

  1. Explain five factors to consider when selecting an office equipment. (10mks)
  2. Explain five essentials of a warehouse. (10mks)
  3. Savings and credit cooperatives have been registering an increasing number of members. Explain five reasons for such a development (10mks)
  4. Describe any five roles of stock exchange market in an economy. (10mrks).



    • Air
    • sunlight
    • rain
    • oceans
    • River

    • they are too many /endless/unlimited
    • they keep on recurring
    • resources to satisfy them are scarce
    • they change with time, age and gender

    • regulation
    • training
    • trade promotion
    • provision of public utilities
    • enabling environment

    • where there is need to reduce damage to goods
    • when goods are liquid or flammable
    • where there is need to transport large quantities of goods at once
    • where there is need to save on time and labour
    • where he wants to reduce insurance costs

    • institutional advertisement
    • informational advertising
    • celebrity advertising
    • product advertising

  6. Public warehouse  Private warehouse 
     -serves the general public                   -serves the owner alone             
     -for commercial use  -for own use
     -stores variety of goods  -stores one class of commodity
     -located at strategic places  -located at convenient places for the owner 

    • lnappropriate language
    • wrong attitude
    • wrong timing
    • poor listening
    • choice of the wrong medium
    • prejudice
    • emotional responses
    • noise
    • misinterpretation of

    • supermarkets
    • chain stores
    • hypermarkets
    • Departmental stores
    • mail order stores

    • warehousing
    • banking
    • transport
    • communication
    • insurance
    • advertisement

    • health of the person
    • frequency of occurrence of previous losses
    • extent of the previous losses value of the property insured occupation of the insures
    • age of the person or property in question
    • location of the insured
    • period to be covered by the policy
    • residence of the insured

    • distribution
    • business
    • consumer
    • production

    • lumbering
    • fishing
    • mining
    • farming

    • there is no close supervision of workers
    • costly to construct and to maintain
    • encourage absenteeism
    • a lot of time is taken by officers when moving from one place to another
    • encourages laxity in office
    • reduces interaction between managements and other employees
    • possible misuse of office facilities

    • ordinary shares
    • preference shares
    • ordinary shares
    • preference shares

    • Trade discount=10/100× 10,000=sh 1,000
    • Cash discount=5/100× 9,000 = sh 450
    • Amount paid =10,000 –(1,000+450) = sh 8,550

    • insufficient funds in the account
    • signature of the account holder may differ from the specimen in the bank.
    • post-dated cheque
    • if the drawer has closed his account with the bank
    • when the cheque has been altered and the drawer and the drawer has not singed against it.

    • internal
    • external
    • external
    • internal

    • itinerant traders e.g. Hawkers
    • roadside sellers
    • open air market
    • automatic vending machine


    • cost
    • adaptability
    • possibility of hiring rather than buying
    • Durability
    • effect on staff morale
    • availability of complementary resources
    • availability of manpower
    • availability of a room
    • security of the equipment

    • Suitable location
    • proper building design
    • Appropriate equipment
    • Safety facilities
    • good transport system
    • good communication
    • adequate space
    • Appropriate staff
    • appropriate special facilities
    • proper recording system
    • compliance with law

    • easy savings since the deductions are made through check-off system
    • obtaining credit requires few procedures
    • interest charged on the loan is low compared to other financial institutions
    • loans require no collateral/security
    • member’s savings are safe since they are insured with the cooperative insurance company
    • in case of death the members beneficiaries do not lose the savings in cooperative nor are they called upon to pay any of the deceased money
    • they give different types of loans which is rare with other financial institutions

    • Facilitates buying of shares
    • Facilitates selling of shares
    • Provides useful information to potential investors
    • Creation of employment
    • Raises revenue for the government
    • Assist the companies to raise capital
    • Creates a culture of saving

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