Business Studies Paper 2 Questions and Answers - Cekena Pre Mocks 2022

INSTRUCTIONS TO CANDIDATES

1. Write your name, and Index number in the spaces provided after the questions.
2. Sign and write the date of examination.
3. This paper consists of Six questions.
4. Answer any five questions in the spaces provided after the questions.
5. All questions carry equal marks
6. Candidates should answer the questions in English.
7. This paper consists of 3 printed pages, candidates should check to ascertain that all pages are printed as indicated and that no question is missing.

FOR EXAMINER’S USE ONLY

QUESTIONS

1.                                    
   1. As business expands, it experiences economies of scale such as division of labour and specialization. Explain Five benefit of the economy of scale mentioned to the business (10mks)
   2. Raju operate a large hardware business in a town in Kenya. A part from motor vehicle insurance policies, highlight giving reasons, five insurance policies that may be beneficial for this business. (10mks)
2.                        
   1. Explain Five guidelines followed when using public funds (10mks)
   2. Explain Five problems encountered in measuring National income using output approach (10mks)
3.                    
   1. Students of Kiburu mixed day secondary school undertakes business studies as a subjects in their curriculum. Explain Four benefits of this to the local community (8mks)
   2. The following balances were extracted from the books of Katiba Traders for the year ended 31st Dec 2012.
      Carriage inwards 27,900
      Carriage outwards 29,400
      Purchases 60,000
      Sales 120,000
      Stock (31/12/2012) 26,500
      Sales return 18,500
      Stock 1/1/2012 35,000
      Purchases return 45,000
      Rent income 100,000
      Discount received 6,800
      Salaries 14,400
      Rates 36,900
      Electricity 25,000
      Bad debt written off 2000
      Discount allowed 6,900
      Required; Prepare trading, profit and loss account for the year ended 31st Dec (12mks)
4.                    
   1. The government of Kenya is in the process of extending standard gauge way the standard rail Gauge way to Kisumu. Explain the benefits of this venture to the Kenya economy (10mks)
   2. The diagram below show the population and output per capita of China
      
      Explain five advantages China would get in her total population is found in the part marked Y (10mks)
5.                          
   1. ABZ limited operates a wholesale business .During the month of March 2021. The company carried out the following transactions
      March1: Credit sale to Ochupe and Njeri were Sh. 200,000 and 180,000 respectively
      March2: Credit purchase from Chebet sh. 150,000, Wambui sh.700,000 , Alfred sh 185,000. He also paid an advertisement expenses by cast sh. 48,000.
      March 5 : Credit sales to Abdalla sh 175,000, Mwangi sh 320,000, Ochupe sh. 135,000
      March 8 : Goods returned by Ochupe sh 2800 and Njeri sh, 3100
      March 12 : Goods returned by ABZ limited to Chebet sh, 30,000 and Alfred 25,000
      March 27 :Paid Wambui her debt in cash after deducting a cash discount of 5%
      March 28 : Received rent of sh 5,200 by bank
      March 29 : Sold goods on credit to Njeri shs 220,000 and Njau shs 150,000
      March : Goods returned by Njau shs 2,300
      Required : Prepare relevant day books (12mks)
   2. Explain five advantages of M-pesa (8mks)
6.                        
   1. Using a well labeled diagram, illustrate, the effect of reduced cost of production on equilibrium price and output (10mks)
   2. Explain five emerging issues in form of business units (10mks)

MARKING SCHEME

1.                            
   1.                    
      1. Output per worker is greatly increased thus increased productivity
      2. Encourages invention and innovation thus reducing the cost of production
      3. High quality goods and services are produced thus attracted more demand
      4. It saves on time thus maximizing on available labour
      5. Production is faster and efficient thus enable continuous supply and meet unexpected demand
   2.                    
      1. Workman’s compensation policy as it covers workers who may be injure in the course of their duties
      2. Cash on transit policy to cover any loss of cash enroute the bank
      3. Fidelity / guarantee policy so as to cover any loss caused by dishonesty of workers
      4. Fire policy which covers the losses caused by incidences of fire
      5. Sprinkle leakage policy to cover against leakage of fires fighting sprinkles affixed in the premium
      6. Goods on transit policy to cover goods being transported to/from the premium
      7. Windows/ glass policy – to0 cover damage to the windows and glass to the premises
2.                          
   1.                       
      1. Saction –Must get necessary approval from relevant authorities
      2. Maximum social benefit- The benefit of expenditure should spread to a considerable number of residence
      3. Flexibility –should be need driven /Change according to prevailing situation in the country/county
      4. Economy – Implement should ensure more money is allocated to tangible projects through in policy formulation and procedures
      5. Proper financial management -Implementers should have sound management policies to ensure no wastage of funds
   2.                  
      1. The decision of what goods and services to include
      2. Difficult to value goods not sold in the market
      3. Income generating activities that are considered illegal are not included
      4. Difficult to value goods kept as stocks especially in the private sector
      5. Difficult to measure the cost of wear and tear
      6. Difficult to differentiate the primary and intermediate output
      7. Difficult to value government output since they are not sold is the market
3.                            
   1.                 
      1. Help the society to appreciate the role of business in the provision of goods and services
      2. The community will understand the role of the government in business
      3. The community will have positive attitude towards work
      4. Equips the members of the community with skills to start and run a business
      5. Make the society appreciate the need for good business management practice
      6. Equips the society with knowledge of role of business in the society
      7. Assort members of the society to relate knowledge skill and attitude acquired to the day to day running of the business
   2. KATIBA TRADERS
      TRADING PROFIT & LOSS ACCOUNTS
      FOR THE YEAR ENDED 31ST DEC 2012
      

      Opening stock	35000	Sales	120,000
      Add purchase	60,000	Less sales return	18500
      Add carriage inward	27900	Net sales	10,500
      Less return out	4500
      Costs of goods available for sale	118,400
      Less closing stock	26400
      Cost of goods sold	91900
      Gross profit c/d	9600
      Expense
      Carriage outwards	29400	Gross profit b/d	9600
      Salaries	14400	Add revenue
      Bad debt write off	2000	Rent income	100,000
      Rates	36900	Discount received	6800
      Discount allowed	6900
      Electricity	25000
      Net profit c/d	88200
      	114600		114600
      		Net profit b/d	88200

4.                
   1.                    
      1. Speedy delivery of goods – Foster / timely distribution
      2. Large bulky goods – carry more good at once / reduce cost
      3. Lower the cost of transport – producers pay them
      4. Reduces damage on congestion – Reduces traffic jam and accidents
      5. Reduces damage on roads –Most trucks will be so replaced by train
      6. Comfortable commuter service – Passengers can be moved conveniently
      7. Reduces pollution –Environmentally friendly
   2.                    
      1. Widening market due to increase demand
      2. Better utilization of resources as the people compete for the scarcely available resources
      3. Creates a pool of labor supply thus creates availability and lower cost of labour
      4. Enhances creativity as people scramble for the limited opportunities / resources
      5. Promotes labour mobility as people seek greener pasture
      6. Stimulates investments due to limited employment opportunities/ reduce poverty levels
5.                                    
   1.                  
      

      Sales Journal
      Date	Particular	Invoice no.	L.f	Amount
      March1 March1 March5 March5 March5 March 29 March29	Ochupe Njeri Mwangi Abdalla Ochupe Njeri Njau			200,000 180,000 320,000 175000 135000 220000 150,000

      Sales Requires Journal
      Date	particular	Credit note no.	L.f	Amount
      March 8 March 8 March 30	Ochupe Njeri Njau			2800 3100 2300

      Particular Journal
      Date	particular	Credit note no.	L.f	Amount
      2/3 2/3 2/3	Chebet Wambua Alfred			150,000 700,000 18,500

      Cash payment Journal
      Date	particular	receipt  no.	Discount received	Cash	Bank
      2/3 27/3	Advertisement exp Expenses wambui		35000	4,800 665,000

      Cash Payment Journal
      Date	particular	receipt  no.	Discount allowed	Cash	Bank
      28/3	Rent				5200

      Purchase
      Date	particular	Credit note no.	L.f	Amount
      26/3 12/3	Chebet Alfred			30,000 25000

   2.  
      1. Saves time
      2. Withdrawal can be done any time
      3. They are conveniently placed
      4. Have access to account balance
      5. Can pay utility bills
      6. Cheap to operate
      7. Safer to use
      8. Can deposit money in bank account
      9. Can withdraw money from the bank
6.                          
   1. 
      A decrease in cost of production will increase the quantity supplied resulting to
      1. A forward shift of the SS curve
      2. Increase equilibrium quality
      3. Reduced equilibrium price
      4. A forward shift of the equilibrium point
   2.                  
      1. Franchising – Where a business permits another the right to manufacture, distribute its products using the name of the firm that gives the right at a fee
      2. Amalgamation / mergers- Two or more business combine to form one new business
      3. Holding companies - A company that requires 51% or more ownership or more companies which will be subsidence’s and her control but separate identities
      4. Check of system – Money is deducted at the source by the employees and submitted to the SACCO
      5. Burial benevolent fund - A system by SACCOs to assist members financially for burials
      6. FOSA – Account provided by the SACCO to their members to enable deposit or withdraw money currently
      7. Globalization – Businesses conduct their full all over the world through technology such as e-commerce
      8. Cartels – A group of wild companies that has agreed work together in order to control output market and price of their goods and services