Business Studies Questions and Answers - Form 4 Mid-term Exams Term 1 2022

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QUESTIONS

Instructions:
Answer all the questions in the spaces provided

  1. State four ways in which the government may motivate its industries to delocalize. (4mks)
  2. Highlight any four solutions to the unemployment problem in Kenya. (4mks)
  3. The following information belongs to the business of Kadogo retailers as at 31st March 2020.
    Purchases 1800
    Opening stock 1000
    Carriage in 400
    Purchases returns 200
    Closing stock 600
    1. Calculate (a) the average stock. (2mks)
    2. The cost of sales. (2mks)
  4. Outline any four factors considered by a business proprietor before allowing credit to a customer. (4mks)
  5. Mention any four contents of a business plan. (4mks)

SECTION B
Answer all questions in this section.

  1.                
    1. Explain two differences between an oligopoly and a monopoly. (4mks)
    2. Global enterprises stated business with sh. 500,000 in cash on 1st December 201,
      December 2: Deposited sh. 300,000 cash into the bank
      8: Purchased goods in cash sh. 25,000
      11: Took Sh. 30,000 cash for personal use.
      19: Paid wages sh. 100,000 by cheque
      25: Cash sales sh.75, 000
      30: Paid wages sh. 100,000 by cheque.
      Required:
      Enter the above transactions in Global enterprises ledger accounts. (6mks)
  2.                      
    1. The following diagram represents the circular flow of income between firms and households in an economy. Identify the flows labeled A,B, C and D. ( 4 Marks)
      7 aihduhaida
    2. Dorcas holdings had the following balances on 31st December 2019.
                         Sh
      Furniture 240,000
      Debtors 160,000
      Creditors 80,000
      Stock 80,000
      Bank 120,000
      Cash 24,000
      Salaries due 64,000
      Required:
      1. Calculate Dorcas holdings capital as at 31st December 2019. (2mks)
      2. Prepare opening entries in Dorcas’ General Journal. (4mks)
  3.                    
    1. Outline two advantages of using the internet as a means of communication. (4mks)
    2. Explain three circumstances under which a high population growth maybe desirable. (6mks)

MARKING SCHEME

  1. State four ways in which the government may motivate its industries to delocalize. (4mks)
    • By giving entrepreneurs free/cheap land to construct their factories.
    • By giving tax incentives e.g. reductions, waivers, holidays, concessions e.t.c
    • By giving cheap loans to entrepreneurs.
    • By providing security to the new industries.
    • By providing subsidies to those industries who are willing to delocalize.
    • By providing appropriate infrastructure.
    • By providing social amenities e.g. schools and hospitals
  2. Highlight any four solutions to the unemployment problem in Kenya. (4mks)
    • Adopting a relevant education system that will encourage Kenyans to accept the jobs that are available.
    • Diversification of production activities.
    • Population control to reduce /lower birth rates.
    • Adopting the appropriate methods of production e.g. labour.
    • Intensive methods in agriculture, construction e.t.c
    • Rural development to reduce rural-urban migration
    • Enhancing exploitation of the natural resources.
    • Increasing government expenditure in areas like road construction, building of houses, dams, tree-planting, e.t.c.
  3. The following information belongs to the business of Kadogo retailers as at 31st March 2020.
    Purchases 1800
    Opening stock 1000
    Carriage in 400
    Purchases returns 200
    Closing stock 600
    1. Calculate (a) the average stock. (2mks)
      Average stock = opening stock +closing stock
                                                        2
      = 1000 + 600
                  2
      = 800
    2. The cost of sales. (2mks)
      cost of sales = opening stock + purchases + carriage in – purchase
      = returns – closing stock
      = 1000 + 1800 + 400 – 200 -600
      = 2400
  4. Outline any four factors considered by a business proprietor before allowing credit to a customer. (4mks)
    • Quantity of goods that the customer wants to buy.
    • The proprietor’s wish/need to retain old customers
    • The customers ability to pay/credit worthiness
    • The frequency with which the customers buys.
    • The businessman knowledge of the customer
    • The character/honest/ reliability of the customer.
    • Availability of adequate stock
  5. Mention any four contents of a business plan. (4mks)
    • The mission and vision of the firm.
    • The objectives of the business
    • The promoters/owners of the firm
    • The organization structure of the firm.
    • The location and address of the firm.
    • The capital required by the firm and how to raise it.
    • The profitability of the business.
    • The risks that may affect the business.
    • Market analysis e.g. size, competition, demand e.t.c
    • External factors/influences e.g. government laws/policies, economic activities, monetary policies, etc.

SECTION B
Answer all questions in this section.

  1.                  
    1. Explain two differences between an oligopoly and a monopoly. (4mks)

      Oligopoly

      Monopoly

      There is heavy advertisement or product promotion by firms  

      There is no heavy product promotion and advertisement

      The firms face kinked demand curves

      The demand curve is downward sloping

      The products are differentiated

      The products are identical

      There is interdependence between firms in pricing and output

      There is independence in decision making on pricing

      There are few large firms in the industry

      There is only one large firm

    2. Global enterprises stated business with sh. 500,000 in cash on 1st December 201,
      December 2: Deposited sh. 300,000 cash into the bank
      8: Purchased goods in cash sh. 25,000
      11: Took Sh. 30,000 cash for personal use.
      19: Paid wages sh. 100,000 by cheque
      25: Cash sales sh.75, 000
      30: Paid wages sh. 100,000 by cheque.
      Required:
      Enter the above transactions in Global enterprises ledger accounts. (6mks)

      Cash account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 1

      Capital

      b/d

      500,000

      Dec 2

      bank

       

      300,000

      Dec 25

      Sales

       

       75,000

      Dec 8

      Purchases

       

       25,000

       

       

       

       

      Dec 11

      Drawings

       

       30,000

       

       

       

       

      Dec 30

      bal

      cd

      220,000

       

       

       

      575,000

       

       

       

      575,000

      Dec 30 Bal b/d 220,000
      Capital account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 30

      Bal

      c/d

      500,000

      Dec 1

      Cash

      b/d

      500,000

       

       

       

       500,000

       

       

       

      500,000

       

       

       

       

      Dec 30

      bal

      b/d

       500,000

      Bank account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 2

      Cash

       

      300,000

      Dec 19

      Wages

       

      100,000

       

       

       

       500,000

      Dec 30

      Wages

       

      100,000

       

       

       

       

      Dec 30

      bal

      c/d

       100,000

       

       

       

      300,000

       

       

       

      300,000

      Dec 30

      bal

      b/d

      100,000

       

       

       

       

      Purchase account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 30

      Cash

       

      25,000

      Dec 30

      Bal

      c/d

      25,000

       

       

       

      25,000

       

       

       

      25,000

      Dec 30

      bal

      b/d

      25,000

       

       

       

       

      Drawings  account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 11

      Cash

       

      30,000

      Dec 30

      bal

      c/d

       

      30,000

       

       

       

      30,000

       

       

       

      30,000

      Dec 30

      Bal

      b/d

      30,000

       

       

       

       

      Wages account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 19

      Bank

       

      100,000

      Dec 30

      Bal

      c/d

      200,000

      Dec 30

      Bank

       

      100,000

       

       

       

       

       

       

       

      200,000

       

       

       

      200,000

      Dec 30

      bal

      b/d

      200,000

       

       

       

       

      Sales  account

      Date

      Details

      Folio

      Amount

      Date

      Details

      Folio

      Amount

      Dec 30

      bal

      c/d

      75,000

      Dec 25

      Cash

       

      75,000

       

       

       

      75,000

       

       

       

      75,000

       

       

       

       

      Dec 30

      Bal

      b/d 

      75,000

  2.                
    1. The following diagram represents the circular flow of income between firms and households in an economy. Identify the flows labeled A,B, C and D.
      • A – factors of production /factor services
      • B- payment for factor services
      • C – payment for goods and services
      • D- goods and service
    2. Dorcas holdings had the following balances on 31st December 2019.
      Sh
      Furniture 240,000
      Debtors 160,000
      Creditors 80,000
      Stock 80,000
      Bank 120,000
      Cash 24,000
      Salaries due 64,000
      Required:
      1. Calculate Dorcas holdings capital as at 31st December 2019. (2mks)
        C= A-L
        Total assets total liabilities
        Furniture 240,000 creditors 80,000
        Debtors 160,000 salaries due 64,000
        Stock 80,000 144,000
        Bank 120,000
        Cash 24,000
        624,000
        C= 624,000 – 144000
        = 480,000
      2. Prepare opening entries in Dorcas’ General Journal. (4mks)

        Date

        Details

        Dr

        Cr

        01/01/2019

        Furniture

        240,000

         

         

        Debtors

        160,000

         

         

        Stock

          80,000

         

         

        Bank

        120,000

         

         

        Cash

         24,000

         

         

        Capital

         

        480,000

         

        Creditors

         

          80,000

         

        Salaries  due

         

         64,000

         

        Being a record of opening entries

        624,000

        624,000

  3.            
    1. Outline two advantages of using the internet as a means of communication. (4mks)
      • It is a faster means of communication
      • Information can be downloaded and printed.
      • Product promotion can be done over the internet.
      • One can communicate with others all over the world.
      • It enables buying and selling of products over the internet.
    2. Explain three circumstances under which a high population growth maybe desirable. (6mks)
      • When population increase creates a wider market for goods and services, thus attracting both local and foreign investors.
      • When population increases creates a wider market for goods and services, thus attracting both local and foreign investors.
      • When population increases the labour supply, leading to payment of low wages which may become an incentive to entrepreneurs.
      • When populating increase creates pressure on available resources which creates higher efficiency, new innovations and improved technology in the country.
      • When increased population enables the government to recruit many people into armed forces for defense/security.

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