Business Studies Paper 2 Questions and Answers - Form 3 End Term 3 2022 Exams

QUESTIONS

1.                    
   1. Outline five circumstances under which a business organization may choose to use written instead of verbal communication (10marks)
   2. Explain five benefits that may accrue to a community that is involved in trading activities (10marks)
2.                    
   1. Explain five drawbacks of using expenditure approach to measure a country’s National income (10marks)
   2. Explain five ways in which the government can provide an enabling environment for business enterprises (10marks)
3.                        
   1. Explain five circumstance under which a direct distribution channel may be preferable (10marks)
   2. Mulei enterprises have been using radio to advertise their products instead of television. Explain five advantages they realize by using radio over use of television (10marks)
4.                        
   1. Explain five causes of business success in Kenya (10marks)
   2. Explain five importance of an effective transport system in a country (10marks)
5.                          
   1. Explain five benefits that may accrue to a business organization which expands the scale of its operations (10marks)
   2. Nyundo Traders had the following assets and liabilities on 1st March, 2006
      

                     Shs.
      Capital 120,000
      Machinery 80,000
      Creditors 10,000
      Debtors 20,000
      Stock in trade 25,000
      Cash at bank 5,000

      On 2nd March, he had the following transactions

      1. Purchased goods for Shs.15,000 on credit
      2. Received a cheque for shs.10,000 from a debtor
      3. Sold the machinery for Shs.90,000 in cash
         Prepare his balance sheet on 2nd March, 2006
6.                          
   1. Discuss five main causes of unemployment in Kenya (10marks)
   2. The following information relates to Mutiso enterprises for the month of June 2011.
      

      2011
      June 1st: Credit purchases from Kalembe , Shs.38,000
      June 3rd: Purchased goods on credit from Wetangula, Shs.60,000
      June 5th: Returned goods to Kalembe, Shs.5,600
      June 20th: Purchases returns to Wetangula Shs.10,000
      June 30th: Credit purchases from Wetangula Shs.5,000

      Required: Enter the above information in the relevant ledger accounts and balance them. (10marks)

MARKING SCHEME

1.                    
   1. Circumstance under which business organization may choose written other than verbal communication.
      1. Where a permanent record is required for future reference in case of disputes and disagreements.
      2. Where the message being conveyed is confidential or secret.
      3. Where a message is technical in the nature
      4. Written messages are more easily accepted than verbal ones as evidence in a court of law.
      5. Where large audience is targeted. (5x2= 10marks) well explained points
   2. Five benefits that may accrued to community that is involved in trading activities.
      1. There will be an opportunity to utilize available resources that otherwise would have stayed idle.
      2. Creation of employment
      3. Leads to wide markets for goods and services produced.
      4. Variety of goods
      5. Improved infrastructure
      6. Disposal of surplus goods (5x2=10marks) well explained points
2.                              
   1. Drawbacks of using expenditure approach
      1. No accurate records of expenditure are kept especially in the private sector.
      2. Expenditure for the subsistence sector can be only be approximations due to lack of records in the sector.
      3. It suffers from the problem of double counting.
      4. Differentiating between final expenditure and intermediate expenditure may be difficult
      5. Fluctuating exchange rates may pose challenges especially in valuation of exports and imports.
   2. Ways in which government can provide an enabling environment
      1. Giving economic incentives such as lowering taxes to encourage establishment and growth of businesses.
      2. Improvement of infrastructure such as roads to enable businesses carry out their activities easily.
      3. Law and order to guard against losses that may arise from thuggery and lawlessness.
      4. Provision of credit at favourable terms
      5. Promoting use of appropriate technology (5x2= 10marks) well explained points
3.                    
   1. Circumstances under which a direct distribution channel may be preferable
      1. When the goods are perishable to avoid loss
      2. When the market is localized as many consumers are near.
      3. When it is expensive to use many intermediaries.
      4. If the produce is made according to consumers specifications requiring direct contact.
      5. In case it is a government policy. (5x2= 10marks) well explained points
   2. Advantages of radio over T.V on advertising
      1. Wide coverage
      2. Wide variety of languages used
      3. Use of dry cells
      4. Radios are cheaper to acquire
      5. Radios are portable
      6. Advertising is cheaper through radio than T.V (5x2= 10marks) well explained points
4.                            
   1. Causes of business success in Kenya
      1. Availability of cheap credit
      2. Proper planning in marketing
      3. Fair completion in the market
      4. Availability of skilled manpower
      5. Use of modern technology
      6. Favourable government policies (5x2= 10marks) well explained points
   2. Importance of an effective transport system
      1. Linking consumers to producers in time
      2. Employment creation
      3. Making goods and services more useful
      4. Improving peoples standards of living
      5. Availing a wide market for products. (5x2= 10marks) well explained points
5.                      
   1. Benefits that may accrue to a business organization which expands the scale of its operations
      1. The firm will be able to enjoy financing economies such as easy credit.
      2. Production economies. The firm will be able to access large quantities that attract quantity discount.
      3. The firm will be able to spread risks.
      4. The firm can afford modern machinery
      5. The firm can provide staff welfare (5x2= 10marks) well explained points
   2. Nyundo traders
      Balance sheet as at 2nd march, 2006
      

      	sh.		sh.
      Debtors	10,000	Capital	130,000
      Stock	40,000
      Cash at bank	15,000	Creditors	25,000
      Cash	90,000
      	155,000		155,000

      (20x½= 10marks)
6.                      
   1. Main Causes of unemployment in Kenya
      1. Rapid population growth
      2. In appropriate education system in the country
      3. Seasonality in production especially in agricultural and tourism sectors.
      4. Lack of capital for investment in order to generate job opportunities.
      5. Rural urban-migration (5x2= 10marks)
   2.                                  Purchases a/c
      

      2011	Shs.	2011	Shs.
      June 1. Kalembe	38,000	June 30. Balance c/d	103,000
      June 3. Wetangula	60,000
      June 30. Wetangula	5,000
      	103,000		103,000
      July 1 Balance b/d	103,000

                                        Kalembe a/c
      

      2011	Shs.	2011	Shs.
      June 5. Returns out	5,600	June 1. Purchases	38,000
      June 30. Bal c/d	32,400
      	38,000		38,000
      		July 1. Bal b/d	32,400

                                              Wetangula a/c
      

      2011	Shs.	2011	Shs.
      June 20. Returns out	10,000	June 3. Purchases	60,000
      June 30. Bal c/d	55,000	June 30. Purchases	5,000
      	65,000		65,000
      		July 1. Bal b/d	55,000

                                          Wetangula a/c
      

      2011	Shs.	2011	Shs.
      June 30. Bal c/d	15,600	June 5. Kalembe	5,600
      		June 20. Wetangula	10,000
      	15,600		15,600
      		July 1. Bal b/d	15,600

      (20x½= 10marks)