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

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.

6.                
   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)
7.                      
   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)
      
   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)
8.                    
   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.

6.                  
   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

7.                
   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

8.            
   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.