Business Questions and Answers - Form 4 Mid Term 2 2022

QUESTIONS

1. The following balances were extracted from the books of Chombo wholesalers for the year ended on 31st December 2005. (6mks)
                                                   sh.
   Sales                                   500,000
   Opening stock (1.1.2005)    80,000
   Closing stock (31.12.2005   40,000
   Purchase                             320,000
   Debtors                               140,000
   Creditors                              90,000
   Calculate;
   1. Margin
   2. Current Ratio
   3. Rate of stock turnover
2. State four problems that a planner may encounter in development planning. (4mks)
3. The average price for a 500g container of cooking fat for various years is shown in the table below. (4mks)
   

   Year	Consumer price Kshs	Consumer price index
   2017	47	100
   2018	53
   2019	62
   2020	74
   2021	80.

   Use 2017 as the base year.
4. State four guidelines that should be followed by the government in its expenditure. (4mks)
5. Country X has been experiencing an upward trend in the price of petrol as a result of rise in inflation. State four steps that can be taken to minimize expenditure on this product. (4mks)
6. What measures would country take in order to correct balance of payment deficit? (4mks)
7. The following transactions relate to Jelimo stores:
   
   1. 10th October 2010, sold unused stationery for kshs. 3,000.
   2. 23rd October 2010, bought a motor vehicle on credit from Onjwarice motors for sh 700,000 required; Record the above transaction in the general ledger given below. (4mks)
8. The equation given below relate to quantity demanded and quality supplied at the equilibrium point;
   Qde = 4P + 50 Qse = 8P + 30
   Determine the equilibrium price and quantity. (4mks)
9. The following diagram represents the circular flow of income in a two sector closed economy.
   
   Identify two factors represented by each of the arrows labeled a and b. (4mks)
10. Highlight four benefits of communication to a business. (4mks)
11. What benefits may accrue to manufacturing firm that uses modern technology. (4mks)
12. Ethics is crucial in the success of a business. Outline the role played by the ethics. (4mks)

MARKING SCHEME

1.      
   1. Margin = Gross profit X 100%
                         Sales
      500,000 – (320,000 + 80,000 – 40,000
                         500,000
      140,000 X 100% = 28%
      500,000
   2. Current Ratio
      Current Asset = 2:1
      Current liabilities
   3. Rate of stock turnover
         Cost of sales =          360,000      = 360,000
       Average stock     80,000 + 40,000    120,000
      = 3 times
2.        
   1. Lack of adequate information/ accurate information.
   2. Inadequate financial resources.
   3. Inadequate human resources
   4. Inadequate/ lack of political good will.
   5. Bureaucratic rigidities.
      Consumer price = Price of the commodity in the current year X 100%
                                             Price of the commodity in base year
      2018: 53 X 100% = 113% = 112.76%
                47
      2019: 62 X 100% = 131.9 = 132%
                 47
      2020: 74 X 100% = 157.4 = 157%
                47
      2021: 80 X 100% = 170.2 = 170%
3.      
   1. Maximum social benefit.
   2. Flexibility
   3. Sanctions
   4. Economy
   5. Proper financial management
4.      
   1. Use of alternative source of energy
   2. Set maximum price legislation
   3. Reduce tax on the product
   4. Improve road networks
   5. Increase tax on complementary goods
   6. Encourage public service vehicles with higher carrying capacity.
5.      
   1. Decreasing the volume of imports.
   2. Increasing the volume of imports
   3. Encouraging foreign investment into
   4. Devaluation of currency.
   5. Restricting outflow of capital
6.      
   

   Date	Particulars	Folio	DR	CR
   2010 October 10 October 23	K. Likia a/c stationery (being a record of sale of stationery on credit) Motor vehicle a/c Onjwana motors a/c (Being a record of purchase of motor vehicle on credit)		3000 700,000	3000 700,000

   8. 4P + 50 = 8P + 30
   50 – 30 = 8P – 4P
   ²⁰/₄ = P
   P = 5
   Equilibrium price shs 5
   Equilibrium quantity
   4P + 50
   4 X 5 + 50
   = 70
7.        
   1. Payment for goods and series
      Factors of production (land, labor, capital, entrepreneur)
   2. Payment for factor inputs
      Sale of goods and services
8.      
   1. Giving and obtaining information
   2. Clarifying issues and points
   3. Enhancing public relations
   4. Starting and influencing action
   5. Improving customer service
   6. Giving instructions
   7. Coordinating department of the firm
9.      
   1. Increase level of input
   2. Improvement of service delivery
   3. Saving on production time
   4. Standardization of production
   5. Lower production of waste
   6. Reduction of waste
   7. Better quality goods.
10.      
    1. Ensure fair play in competition
    2. Ensure rights of employees are protected
    3. Ensure that the right people are assigned the right jobs
    4. Ensure that the customers are always fairly treated.