565/1 &565/2 business studies
MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016 565/1
BUSINESS STUDIES PAPER 1
July / August 2016 TIME: 2 HOURS
1.State four external forces that may affect a business and its operations.(4 marks)
2.Apex limited has opened a factory in a rural shopping Centre called Baraka. Outline four ways in which the people living in
the surrounding areas may benefit from the factory.(4 marks)
3.Highlight four benefits Kenya is likely to get from exploitation of oil recently discovered in Turkana area.(4 marks)
4.Highlight four ways in which a firm can improve the productivity of its human resource.(4 marks)
5.Outline four factors to consider when deciding on a suitable location of an office.(4 marks)
6.In the spaces provided below, state the document to which each of the following statement relate.
StatementDocument
a) Inform the buyer when goods were dispatched and by what means
b) A request by seller for payment in advance
c) Used to correct an undercharge in an invoice
d) Shows details of the transactions between seller and buyer during a given period
(4 marks)
7.Amin plans to join Mwalimu National Sacco. Outline four benefits he is likely to enjoy.(4 marks)
8.Highlight four circumstances under which verbal communication may be ineffective.(4 marks)
9.Outline four reasons why a government may find it necessary to protect consumers(4 marks)
10.Highlight four factors that limit the use of containers in transport.(4 marks)
11.The table below contains descriptions relating to some type of warehouse. In the space provided, write the type of warehouse
to which each description refers.
DescriptionType
a) Used to store exports and imports
b) Any body can rent spaces in it for storing goods temporary
c) Operated for owners exclusive use
d) Owned and operated by farmers and manufacturers
12.State four benefits of after - sale services to the consumers.(4 marks)
13.The diagram below shows supply curves of two producers in different countries but of the same product.
XY
100
50100150200
Highlight four reasons why producer Y supplies more than producer X at the same price.(4 marks)
14. Upendo Traders insured their business premises against the risk of fire. Five months later, the premises were completely
destroyed by fire. Outline the procedure that they should follow before compensation is made.(4 marks)
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15. The following balances were extracted from Mwangaza traders books of accounts.
Shs.
Opening stock25,000
Closing stock35,000
Purchases190,000
Mark - up20%
Calculate:
i)Cost of sales(1mark)
ii) Gross profit(1 mark)
iii) Sales(1 mark)
iv) Rate of stock turnover(ROSTO)(1 mark)
Highlight four measures that the government may take to attract firms to an area.(4 marks)
16. Show the effect of each of the following transactions to capital, liabilities and assets indicating whether it is an increase (+) a
decrease (-) or a nil (0) .(4 marks)
TransactionsCapitalAssetLiability
a) Converted private land into business land
b) Paid creditors in cash
c) Sold a business van valued at shs. 600,000 from shs. 400,000 on credit
d) Sold goods on credit
17. Give four disadvantages of a long chain of distribution of goods to a buyer(4 marks)
18. For each of the following statements, give the type of unemployment described(4 marks)
Statements / DescriptionType of unemployment
a) Arise due to mismatch of skills and labour ,market demands.
b) A person has absolutely nothing to do
c) Arises when there is a change in methods of production
d) Arises when the number of people exceeds those that are required
19. The following balances were extracted from the books of Kipchoge as at 31st Dec, 2014
Shs.
Capital30, 000
Bank3, 400
Cash2, 700
Discount received200
Drawings300
Land6, 000
Furniture & Fittings19, 000
Sales4, 500
Prepare a correct trial balance as at 31 Dec 2014(5 marks)
20.Study the ledger accounts given below and write out the transactions that took place affecting the business of Huruma Ltd in
January 2008.
a)DrSales A/cCr
DateDetailsAmt.
2008
Jan 2Pendo50,000
b)DrCash A/CCr
DateDetailsAmt.
2008
Jan 15 Creditors30,000
c)DrPurchases A/CCr
DateDetailsAmt.
2008
Jan 10Bank20,000
d)DrEquipment A/CCr
DateDetailAmt
2008
Jan 20Cash10,000
e)DrDebtors A/CCr
DateDetailsAmt
2008
Jan 22Bank20,000
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21. List four items (transactions) which are recorded in a balance of payment account of a country.(4 marks)
22. The cost of consumer goods for a representatives of a household is given below:
YearPrice
20105000
20119000
Determine the increase in consumer price index using 2010 as the base year.(4 marks)
23. State the book of original entry used in recording each of the following transaction of Mrembo Traders.(4 marks)
TransactionsBook of Original entry
a) Mrembo returned goods worth shs. 4,000 to Boni traders
b) Malindi traders returned goods worth shs. 2000
c) Sold goods on credit to Mrima primary
d) Purchased goods on credit from Kilwa for shs. 10,000
24. As a student of B/studies, advice Mr. Maina on why he should open a current account to suit his business in a local bank.
(4 marks)
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MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016
565/2
BUSINESS STUDIES PAPER 2
JULY / AUGUST 2016
TIME: 2 HOURS
1.a) Give Five reasons why majority of Kenyans fear to borrow money from commercial Banks.(10 marks)
b) Differentiate between a public corporation and a public limited company.(10 marks)
2.a) Explain five factors that may influence a country to adopt a protectionist policy in international trader.
(10 marks)
b) Explain five factors that may be used to measure the size of a business enterprise.(10 marks)
3.a) The following balances relate to Maendeleo Electrical Enterprise as at 31st December, 2014.
Sh.
Machinery1,240,000
Stock190,000
Debtors150,000
Motor vehicle1,100,000
Cash- in- hand150,000
Creditors270,000
Bank overdraft130,000
10 year bank loan1,200,000
Capital1,660,000
Drawings750,000
Net profit320,000
Required:
Prepare a balance sheet as at 31st December, 2014 clearly showing:
i)Net capital
ii) Total current liabilities
iii) Total current assets
iv) Total fixed assets
b) Five ways in which an entrepreneur contributes to the production of goods.(10 marks)
4.a) Explain five factors that may influence the choice of distribution channel for milk.(10 marks)
b) On first October 2010, Makueni Traders had sh. 110,000 in hand and sh. 500,000 at bank. During the month, the following transactions took place.
October, 2010:
2: Cash sales directly banked sh. 70,520 3: Bought stationery in cash sh. 9,000
4: Bought stock worth sh. 40,000 and the payment was done by the end of the next month in cash.
5: Paid Josh, a creditor sh. 188,000 by cheque in full settlement of his account after deductions 6% cash discount
10: Received a cheque for sh. 117,600 from Esther after allowing her a cash discount of sh. 2,400 12: Sold goods worth sh. 10,000 to Eric on credit
16: Paid salaries sh. 62,000 in cash
20: Withdrew sh. 100,000 from bank for office use
24: Arnold, a debtor paid his account of sh. 150,000 by cheque less 10% cash discount 28: The owner took some stock worth sh. 5,000 home for family use 30: Deposited all the cash into bank except sh. 27,400. Required:
Prepare a three column cash book and balance it off.(10 marks)
5.a) Explain five ways large scale organisations are able to reduce their cost of production.(10 marks)
b) Explain five main causes of inflation in a country.(10 marks)
6.a) Explain five reasons that contribute to low tax revenue by the government through Kenya RevenueAuthority.
(10 marks)
b) Mr Utano, a retired civil servant intends to invest his retirement benefits in a retail business. Explain five factors that Mr.
Utano should consider before investing his money in the business.(10 marks)
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MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016
Kenya Certificate of Secondary Education (K.C.S.E.)
BUSINESS STUDIES
PAPER 1
Marking scheme
1.External factors that may affect business operations.
i)Legal requirements
ii)Economic factors eg. Consumer purchasing power , level of installing etc
iii)Political factors ie. Stability governance
iv)Technological advancement
v)Social / cultural factors
vi)Market competition
vii)Natural factors
2.Ways in which people of Baraka town will benefit from the factors of Apex Ltd.
i)The people will get goods / services at fair prices due to their proximity to the factory / readily available goods and
services.
ii)Surrounding community will get job opportunities
iii)The factory may provide market for raw materials produced by the surrounding community
iv)The company may improve infrastructure such as roads , electricity
v)The company may participate in community welfare activities such as education and health
3.Benefits Kenya is likely to get from exploitation of oil in Turkana area.
i)The country will earn and conserve foreign exchange
ii)Employment opportunities will be created
iii)The supply of oil in the country may be stable
iv)The people will enjoy low fuel prices
v)The government will earn revenue
vi)The infrastructure of surrounding areas is likely to improve
vii)The exploitation will accelerate economic activities in the surrounding areas / multiplier effect
viii) Petro- chemical industries will get ready raw materials / inputs
ix)Foreign investors will be attracted due to low cost of production
x)The country BOP will improve drastically
4.Ways of improving productivity of labour.
i)Provide workers with more education and training.
ii)Pay workers well
iii)Offering awards or gifts to workers
iv)Promotion of workers
v)Ensure good relationship between workers and management
vi)Provide workers with good working tools and equipment
vii)Provide recreation facilities, welfare kits and social amenities
viii) Good working conditions
ix)Division of labour and specialization
5.Factors to consider before you locate an office
i)Operational costs
ii)Security
iii)Availability of labour
iv)Space to facilitate expansion
v)Availability of support services
vi)Access to the office
6.Documents
i)Advice Note
ii)Proforma Invoice
iii)Debit note
iv)Statement of account
7.Benefits Amin is likely to enjoy as a member of Mwalimu National SACCO
i)He will get various types of loans eg. Emergency, school fees, development etc
ii)The loans attract low interest rates ie. 12% p.a
iii)Members develop saving habits by making regular payments (shares)
iv)Loans are guaranteed by members and not physical Assets
v)Requirement period can be varied
vi)Members enjoy dividends
vii)Members enjoy banking services - FOSA
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viii) Members fund are insured by CIS
ix)When member dies , outstanding loans are waived
x)Members are given investments advise
8.Ways in which verbal communication may be ineffective.
i)Where there is age difference
ii)Use of different languages
iii)Negative attitude / bias / prejudice
iv)Receiver has hearing problem
v)Use of unfamiliar terminologies
vi)Noise
vii)Poor timing
viii) Poor listening
ix)Pronounciation problems
x)Emotional response / fear / shyness
9.Reasons why government protects consumers.
i)Consumers are likely to be exploited by business people while pursuing profit motive.
ii)Safeguards against poor health standards
iii)Consumers do not always know their rights
iv)Business people left on their own may lower standards of quality of products
v)Consumers are weak because they act individually hence can‘t safeguard their rights due to lack of collective bargain
10.Limitations of containers.
i)Containers are expensive
ii)Special vehicles to transport containers are very expensive
iii)Special loading and offloading equipment required is expensive
iv)Container vessels required special special terminus
v)Special goods require special containers like milk
vi)Containers are of standardized sizes therefore require special vessels to transport some goods of irregular shapes
vii)Does not require small quantities because if they are less, they will be mixed up with other goods.
11.Type of warehouse
i)Bonded warehouse
ii)Public warehouse
iii)Private warehouse
iv)Producer warehouse
12.Benefits of After sales services to the consumers
i)Inspecting and checking the products at regular intervals to detect & repair
ii)They get warrantee on products
iii)They will get technical back up and advice on use of the products
iv)Receive transport services 4 goods bought
v)Installation and testing of the product
vi)Guaranteeing the availability of spare parts
13.Reasons why producer Y supplies more than producer X at the same price
i)Favourable climatic conditions in country Y than X
ii)Lower cost of production in country Y than X
iii)More access to sudsidies in country Y than X
iv)Improved infrastructure in country Y than X
v)Lower cost of production in country Y and X
vi)Available factors of production in country Y and X
vii)Impact of peace / stability in country X and Y
14.Insurance procedure.
i)Report the occurance of fire to the relevant authority and the insurer
ii)Insured fills in the relevant claims form giving all the relevant information
iii)Insurer investigates the cause of the fire
iv)Insurer evaluates the damages and estimates the loss
v)Compesation is made / amount of loss suffered paid.
15.Working:
i)Cost of Sales=Opening stock+ purchases - closing stock
=
=sh. 180,000
ii) Gross Profit=Cost Of Sales × Mark - up
=
=sh. 36,000
iii) Sales=Cost of sales + Gross Profit
=
=sh. 216,000
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iv) R.O.S.T.O=Cost Of Sales + Avg. Stock
Avg. Stock=
=
=sh. 30,000
R.O.S.T.O=½ x 8 = 4 marks
=6 times
16. Attraction of firms in an area. i) Development of infrastructure
ii) Provide business incentives like low taxes and subsidies iii) Ensure security
iv) Provide credit facilities to investors
v) Provide land at reasonable costs
vi) Provide good transport and communication networks vii) Good health care facilities
17.
CapitalAssetLiability
0
0
0
000
12×= 4 marks
18. Disadvantages of a long chain of distribution.
i)Increased price
ii)Chances of damage to goods due to handling
iii)Feedback to the manufacturer / producer is slow
iv)Perishable goods will go bad
v)Likelihood of delay of goods.
19. Type of unemployment.
a)Technological
b)Cyclical
c)Residual
d)Structural
20.Kipchoge‘s
Trial Balance
As at 31 Dec. 2014DRCR
ItemsShs.Shs.
Capital30,000
Bank3,400
Cash2,700
Discount received200
Drawings300
Land6,000
Furniture & Fittings19,000
Sales4,500
34,70034,700
21. Transactions affecting the business of Huruma Ltd. 2008
a) On 2nd Jan , the business sold goods on credit to Pendo amounting to shs. 50,000
b) On 15th Jan, the business paid cash to creditors shs. 30,000
c) On Jan 10, Huruma Ltd bought goods and paid by cheque shs. 20,000
d) On Jan 20, Huruma Ltd bought Equipment worth Shs. 10,000 cash
e) On Jan 22, the business paid debtors by cheque shs. 20,000
22. Balance of payment transactions
i)Visible / invisible exports
ii) Visible / invisible imports
iii) Inflow of cash from Kenyans abroad
iv) Outflow of cash from non - Kenyans
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v) Inflow / outflow of private investments capital
vi) Inflow of loans and grants from foreign gvt. / NGO‘S vii) Funds from IMF / world bank
23.× 100
×100 = 180%
24. Books of original entry
a) Purchases returns / returns outwards
b) Sales returns / returns inwards
c) Sales Journal / Debtors Journal
d) Purchases / Creditors Journal
25. Reasons as to why Mr Maina should open a business current A/C
i)No minimum balance is needed to maintain the A/c
ii)No restriction of withdrawals of funds
iii)Mr. Maina will be able to use cheque facilities for payments
iv)He will receive monthly statement of Account
v)He will be allowed overdraft facilities
vi)No maximum put on a single withdrawal
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MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016 BUSINESS STUDIES
PAPER 2
Marking scheme
1.a) Reasons why majority of Kenyans fear to borrow loans from commercial banks.
i)Banks charge high interest rates for their loans
ii) The procedure involved before one gets a loan is lengthy
iii) Majority of Kenyans cannot offer security for the loans as required by banks iv) Many people fear the consequences of failing to pay the loan
v) Individuals may have cheaper sources of loans eg. SACCO‘s
vi) The rate of interest charged on bank loans are not fixed but can be varied according to prevailing economic situation in the country without consulting the borrower
b)
Public corporationPublic Limited Company
1.Formed under the act of parliament.1.Formed under the company‘s act
2.Fully owned by the government2.Owned by private persons who own shares
3.Initial capital is provided by the state or through state3.Capital obtained through issue of shares, selling of
guaranteesdebentures or other loans
4.Management appointed by the government (Board of4.Directors elected by the shareholders
directors)5.Formed to make profit
5.Set - up to offer essential services to the public
6.The profit made rest on the parliament6.The profits rest with the shareholders or creditors
7.Auditing done by private auditor‘s
7.Auditing done by government auditors8.Losses may lead to collapse of the business or
8.Losses are sub sized for borne by the governmentborne by owners
9.Political infinences especially due to nomination of9.No political infinence except the enacted laws
directors by the government10. Performs various functions.
10. Perfoms specific functions and related activities
2.a)Cause of protectionism policy
i)To correct the deficit balance of paymence / trade.
By reducing consumption of imports in the domestic market.
ii)Protection of strategic industries.
Some extremely important industries that a country cannot do without like agriculture and security, need protection from
foreign competition.
iii)Prevention of dumping
To protect consumers and producers against poor quality or low priced goods or harmful items from foreign markets
iv)Protection of local infant industries
Certain industries incur high cost in production in the initial stages and allowing imports from foreign producers can kill such industries
v) Protection of cultural and social values
Through interaction, people of particular country may borrow cultural values which can adversely affect the borrowers culture
vi) Expanding market for local products
Trade restrictions make it very hard for foreign suppliers to sell their products in the local market thereby increasing the share market for local producer large
vii) Creation and protection by employment
Discouraging imports leads to establishment of local industries to provide commodities that world have otherwise been imported, creating employment
viii) Promoting self reliance
Local producers to produce enough for the country to avoid shortages incase trade partner get into political conflict.
b) Factors that may be used to measure the size of a business enterprise.
i)Amount of capital invested
ii)Number of workers
iii)The level of output
iv)Size of market
v)Profit made
vi)Government policy
vii)State of technology
viii) Nature of the products(Correct explanation (2×5=10mks)
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3.a)
Maendeleo Electrical Enterprise
Balance Sheet
As at 31st December , 2014
Sh.Capital and Liabilities sh.sh.
Fixed AssetsCapital1,660,000
Machinery1, 240 000Add: Net profit320,000
Motor vehicle1, 100 0001,980,000
2, 340,000Less: Drawings750,000
NET CAPITAL1,230,000
Current Assets
Stock190,000Long - term Liabilities
Debtors150,00010 year bank loan1,200,000
Cash150,000
490,000Current / short - term liabilities
Creditors270,000
Bank overdraft130,000
400,000
2, 830,0002,830,000
b)Ways in which an enterprenuer contributes to the production of goods.
i)Identified viable business oppurtunities
ii)Provides guidelines on how production should be organized
iii)Co- ordinates other factors of production should be organized
iv)Provides capital necessary to cater for production
v)He assembles / marshals other factors of production
vi)He is the major decision maker
vii)He rewards all the factors of production
viii) He bears all risks / incurs all losses and enjoys all profits
4.a) Factors influencing choice of distribution channel.
i)Nature of milk - perishable product
Shorter / direct channel
ii)Cost of distribution- cost effective
iii)Customes preference of how the product might
iv)Level of competition
v)The quantity of milk being supplied
vi)Need for technical personnel
vii)Extent of the market
viii) Availability of middlemen / agents / inter - mediaries
ix)Government policy on distribution
x)Number of buyers.(2
b)
Makueni Traders Cashbook
For the month of October , 2010.
DateDetailsFolioDiscountDateDetailsFolioDiscountCashBank
AllowedCashBankreceived
Oct,2010Oct,2010
1Bal bd110,000500,0003Stationery9,000
2Sales70,0005Josh12,000188,000
10Esther2,400117,60016Salaries62,000
20Bank100,00020Cash100,000
24Anold15,000135,00030Bank111,600
30Bank11160030Bal C/d27,400646,720
17,400210,000934,72012,000210,000934,720
1Nov,
201027,400646,720
20 x ½ = 10
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5.a) Reasons for low prices in large scale organization.
i)They buy in bulk and so enjoy quantity discount
ii)They can afford advertising leading to more sales
iii)They have bigger bargaining power for low interest loans
iv)They are able to diversify products therefore spread risks
v)They employ skilled manpower
vi)They can sell in large quantity hence reducing average cost
vii)Acquire up - to - date technology
viii) Produce / mass production reducing selling expenses
ix)Ability to carry out research into better methods of production
b) Main causes of inflation in a country
i)Increased money supply due to provision of more credit facilities
ii)Increased government expenditure in excess of tax revenues
iii)Increased in wages without corresponding increase in output of goods / services due to trade union pressure
iv)Increased cost of inputs such as oil and intermediate goods
v)Increased taxation such as VAT
vi)Shortages of goods and services
vii)High cost of imports of both capital and finished goods.(2×5=10 mks)
6.a)Reasons for low tax revenue by the government through KRA.
i)Low national and per capita Income among the majority
ii)High rates of unemployment among Kenyans hence low PAYE
iii)Disparity in income distribution - majority are poor and not paying taxes
iv)Negative attitude among the majority on payment of taxes
v)High rates of tax evasion among Kenyans
vi)Corrupt KRA officials who do not remit tax revenues / collusion with tax payers.
vii)Very few categories of taxes by KRA (mainly on incomes)
viii) High cost of tax collection exceeding revenues.
b)Factors to consider before investing in a retail business.
i)Profitability : A good business opportunity should generate high profit
ii)Availability of market : Ready market and large market for sale of goods
iii)Level of production : competition should be minimal to ensure continuity of operations
iv)Few risks : To minimize losses
v)Government policy: All legal requirements should be easy to fulfill to enable him start the business
vi)Labour requirement: Relevant labour required must be available to enhance smooth operation
vii)Management : Should have the relevant managerial skills or it should be easy to hire or run the business
viii) Supply of inputs: there should be adequate supply of inputs for use in running operations of the business
ix)Capital: The amount of money required in relation to the money available for investment should be enough.
x)Growth prospects: Business having the possibility of growing / expanding.
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MOKASA JOINT EVALUATION 565/1
BUSINESS STUDIES PAPER 1
MARCH/APRIL, 2016 TIME: 2 HOURS
1.Outline four ways the economic environment influence business activities(4 marks)
2.List four personal attributes of an office staff(4 marks)
3.Highlight four limitations of the methods used by the consumer to protect themselves against exploitation(4 marks)
4.Outline four benefits of bonded warehouses to the government(4 marks)
5.Distinguish between(4 marks)
a) Derived demand and joint demand
b) Shift and movement along demand curve
6.Highlight four ways that may be used by a monopoly to differentiate a product market(4 marks)
7.Outline four ways in which the Central Bank may use to reduce the amount of money in circulation(4 marks)
8.For each of the following transactions, indicate the effect of each transaction on the balance sheet items as either increase,
decrease or no change.(4 marks)
TransactionEffect on AssetsEffects on liabilitiesEffect on Capital
Drawings of goods from the business
The proprietor brought a personal van for the business use
Borrowed KCB loan to pay a creditor Bought stock by cheque
9.The following transactions relate to the books of Amina traders as at 31st December 2015.
Gross profit ...20,000
Commission allowed ...200
Carriage on sales ...4,000
Discount received ...8,000
Salaries ...6,000
Rent ...2,000
Discount revived ...400
Commission received ...1,500
Interest on bank loan ...500
Prepare Amina‘s profit and loss account for the period ended 31st December, 2015.(5 marks)
10.Outline the relationship between scarcity, choice and opportunity cost with respect to satisfaction of human wants.
(4 marks)
11.List four documents prepared by the buyer in home trade(4 marks)
12.The National Transport Safety Authority (NTSA) is a department within the transport sector in Kenya. Highlight four
benefits Kenyans enjoy due to the establishment of NTSA(4 marks)
13.Outline four reasons why a firm would prefer to locate near the market of its products(4 marks)
14.List three withdrawals in the circular flow of income(3 marks)
15.Other than serving as a medium of exchange. Mention four other functions of money(4 marks)
16.The following transactions relate to the books of kilimo holdings. Record them in the relevant ledger accounts. (4 marks)
(i)1st January 2015, took a loan with ICDC of kshs. 50,000 receiving by cheque.
(ii)5th January 2015, kelunyo, a debtor paid his account of kshs. 40,000 in cash.
(iii) 10th January 2015, took money from bank, kshs. 50,000 for office use
(iv) 12th January 2015, bought furniture kshs. 35,500 in cash
17.Give the name of the insurance policy described in the following table(4 marks)
DescriptionName of policy
Covers ships while on a specified voyage and time
Covers a specified peril when the ship is either being loaded, offloaded or serviced Covers cargo against loss or damage while being transported by ship One policy used to cover a number of ships belonging to one organization
18. Currently the government is selling state owned businesses to private investors. Highlight four benefits of such decisions.
(3 marks)
19.State four essentials of effective communication(4 marks)
20.Outline four advantages of free gifts in product promotion(4 marks)
21.List four costs incurred in the distributions of goods(4 marks)
22.Highlight four merits of direct tax as a source of revenue to the government(4 marks
23.Identify the level of occupation described by each of the following information(4 marks)
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DescriptionOccupation
A boy chasing hare for meat
Britam insurance company selling their policies School carpenter making chairs for form ones Mr. Zuma counseling form four students
24. The following information relate to Kamau traders for the month of December 2015. Dec. 1- sold goods for kshs. 45,000 less 10% cash discount
Dec 5 - Bought goods worth kshs. 4,000 in cash and was allowed a discount of 5%
Dec 7 - a debtor paid kshs. 20,000 in full settlement of a debt of kshs 23,000 by cheque Dec 15 - Sold goods kshs. 70,000 on credit to jambo traders
Dec 26 - Paid rent kshs. 16,000 by cheque
Required:
Post the above transactions to relevant journals(4 marks)
25. Unemployment solving has been an agenda to most developing economies. Identify the type of unemployment being solved
below.(4 marks)
(i) Government initiating irrigation projects to ensure continuous production of food
(ii) Retraining teachers to embrace use of technology in teaching and learning
(iii) Government and private sectors inventing job advertisement sites for easy access by job seekers (iv) Parliament passing legislation that accommodate the disabled people to acquire jobs
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MOKASA JOINT EXAMINATION 565/2
BUSINESS STUDIES PAPER 2
TIME: 2 ½Hours
1.(a) Explain five circumstances that can cause a business to succeed in their activities.(10marks)
(b) Explain five problems facing the savings and credit cooperative societies in Kenya.(10marks)
2.(a) A prudent tax system must meet certain essential qualities. Explain five indicators of a good tax system.(10marks)
(b) Describe the procedure an insured must take when making an insurance claim.(10marks)
3.(a) Ondari intends to promote his products. Explain five factors that he must take into account when deciding on which
method to use.(10marks)
(b) Explain five weaknesses of using national income statistics as a measure of social welfare.(10marks)
4.(a) Explain five factors that justify the existence of small scale firms in an economy.(10marks)
(b) Bartenge Enterprises started business on 1st May 2014 with Shs. 250,000 consisting of: Cash at bank Shs.200, 000, Cash in Hand Shs. 30,000 and Furniture Shs. 20,000. The following transactions took place during the month of May.
3rd May 2014, Motor Van worth Shs. 85,000 and stock of Shs. 25,000 were bought on credit 6th May 2014, more stock worth shs.10,000 was bought by cash
9th May 2014, withdrew money from bank sh 50,000 for office use
15th May 2014, Sold stock at cost to a customer on credit for shs. 18,500
19th May 2014, received a cheque for the full settlement of a debt owed from the transaction of 15th may 2014 23rd May 2014, paid Shs. 65,000 by cheque for the motor van bought earlier on credit 31st May 2014, paid Shs. 20,000 cash for the stock bought on credit Required:
Prepare the balance sheet of Bartenge Holdings as at 31st May 2014.(10marks)
5.(a) Explain five problems that are faced by a country with a big population of ageing persons.(10marks)
(b) Explain five differences between banking and non-banking financial institutions.(10marks)
6.(a) Explain four reasons why upward communication should be encouraged in an organization.(8marks)
(b) The following trial balance was extracted from the books of Lule Traders on 30th April 2015
Lule Traders Trial Balance
As at 30th April 2015
Dr (Kshs.)Cr (Kshs.)
Sales186,000
Purchases115,560
Stock 1.5.201437,760
Carriage outwards3,260
Carriage inwards2,340
Returns4,4003,550
Salaries24,470
Electricity6,640
Rent5,760
Sundry expenses12,020
Equipment24,000
Furniture6,000
Debtors45,770
Creditors30,450
Bank38,760
Cash1,200
Drawings20,500
Capital128,440
348.440348,440
Stock as at 30.4. 2015 Shs. 49,980
Required:
a)Trading, profit and Loss account for the year ended 30th April 2015(8mks)
b)Balance sheet as at 30th April 2015(4mks)
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MOKASA JOINT EXAMINATION 565/2
BUSINESS STUDIES MARKING SCHEME.
1.Ways in which Economic environment influence business activities(4 marks)
Level of wages of the consumer
Taxes on income
Value of money/inflation/foreign exchange rate
Prices of other related goods
2.Personal attributes of office worker(4 marks)
Good Hygiene
Proper Posture
Acceptable/good moral behavior
Good health
Good Physical appearance
3 .Limitations of the consumer initiated methods to protect themselves against exploitation. (4 marks)
Lack of or limited government support
Deficiency of capital to finance their activities
Ignorance of consumers against their rights
Reluctance of many consumers to join the organization
Lack of consumers initiative to check on traders compliance on price and quality
4Benefits of bonded warehouse to the government (4 marks)
Source of revenue
Used to control the entry of harmful products into the country
Government is able to control the quality of goods entering the country
Government is able to verify documents of goods on transit
The government is able to inspect the nature or type of goods imported
Government is able to check on illegal goods entering the country
5 a) Joint demand-(Complimentary demand) applies to those commodities used together e.g. vehicle and petrol whereas
derived demand is where demand of one commodity is due to demand of another commodity e.g. demand for input is as
a result of demand of finished products(2 marks)
b) Shift in the demand curve is due to change in demand of a commodity caused by factors other than price of that
commodity whereas movement in the demand curve is a change in demand caused by changes in price of the commodity.
(2 marks)
6.Methods/Ways of market separation/product differentiation(4 marks)
Geographically = exported goods are sold at cheaper price in the country of manufacture than in foreign country. Time-peak and off peak
Type of demand e.g. demand for electricity of domestic use and commercial use Income e.g. in hospitals
7 Tools of monetary control(4 marks)
Increase in the bank rate
Buying of government securities in the open market Increase cash or liquidity ratio
Increase in compulsory deposit requirement Selective credit control
Reduce margin requirement
Request commercial banks to control credit. 8
decreaseNo effectdecrease
increaseNo effectincrease
No effectNo effectNo effect
No effectNo effectNo effect
(4 marks)
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9
Amina Traders Profit and loss a/c
For the period ended 31st dec 2015
ExpensesRevenue
Commission allowed200Gross profit20,000
Carriage on sales4,000Discount received400
Discount allowed8,000Commission received1,500
Salaries6,000
Rent2,000
Interest on Bank loan500
Net profit c/d8,400
21,90021,900
Net profit b/d8,400
(5 marks)
10. Relationship between scarcity, choice and opportunity cost.(4 marks)
Human wants are unlimited and yet resources used to satisfy them are scarce.
Consumers make a list of wants in order of priority hence making a choice between the competing alternatives Having made a choice, the foregone alternative becomes the opportunity cost for the need that has been satisfied.
11. Documents prepared by the buyer(4 marks)
Letter of inquiry
Local purchase order Goods received note Goods returned note IOU
12. Benefits of NTSA to the Kenyan people.(4 marks)
Unroadworthy vehicles have been removed hence reducing road accidents Use of speed limiter has reduced road accidents
Carrying capacity has been limited hence reducing overloading and uncomfortability
PSV are operated by people with certificates of good conduct comfortable of customers/there is order Drivers and conductors have uniforms that help in identifying them
Yellow lines help identify PSV by their users
Use of alcoblows has helped reduce the effect of drunk driving hence reducing accidents.
Requirement that all PSVs be members of a SACCO for order, discipline and proper management of PSVs. Passengers can take their complains to the Sacco.
13. Reasons why a firm would locate near the market for products(4 marks)
Competing tool
If the market is concentrated in one place
If the product is heavy to avoid the cost of transportation The product is perishable
It may be due to Government policy
14. Withrawals in the circular flow of income(3 marks)
Taxation Saving Imports
15. Functions of money other being a medium of exchange. It‘s a store of value
A standard of deferred payment It‘s a measure of value
Unit of account
Facilitate the transfer of immovable property
16.DRBank accountCR
1/1.2015 ICDC 500,00010/1/2015 Cash 50,000
DRICDC A/CCR
1/1/2015 Bank500,000
DRKelunyo accountCR
5/1/2015 Cash40,000
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DRCash A/CCR
12/1/2015 Furniture 35,500
5/1/2015 Kelunyo 40,000
10/1/2015 Bank 50,000
DRFurniture accountCR
12/1/2015 Cash 35,500
17.MARINE INSURANCE POLICIES
DescriptionPolicy
Covers ships on a particular voyage and timeMixed policy
Covers a specified peril when the ship is either loaded or offloaded or servicedPort policy
Covers cargo against loss or damage while being transported by shipMarine cargo policy
One policy used to cover a number of ships belonging to one ownerFleet policy
18. Currently the government is selling state owned businesses to private investors. Highlight four benefits of such decisions.
(4marks)
i) To improve efficiency in their management. ii) To generate revenue for the government
iii) Help to avoid unnecessary expenses/avoid wastage of resources iv) To meet donors conditions when soliciting for funds/foreign aid
v) Helps to improve the quality of goods being produce as it leads to competition among investors vi) Helps to attract investors who will start similar firms.
vii) Helps to reduce government expenditure curbing inflation.
19. State four essentials of effective communication.(4marks)
i)Medium used should be appropriate
ii) Language used must be simple to understand iii) Information overload should be avoided
iv) Both the sender and the receiver must have positive attitude while communicating.
v) It must be free from distortion
vi) Environment should be free from noise
vii) Message should get to the intended recipient in good time.
viii) The sender should have adequate knowledge of information being conveyed.
20. Outline four disadvantages of free gifts in product promotion.(4marks)
i)It may be costly.
ii) Some middlemen may keep away the gift
iii) There is no assurance that the prospective customer would buy the product after getting the gift.
iv) In an effort to get the gift, a customer may end up buying what he/she doesn‘t want/had not budgeted for.
21. List four costs incurred in distribution of goods.(4marks)
i)Transport cost
ii) Product promotion expenses
iii) Salaries and wages of workers
iv) Packaging, blending and branding cost.
v) Insurance costs
vi) Storage charges
22. Highlight four merits of direct tax as a source of revenue to the government.(4marks)
i)May be progressive hence equitable
ii) Simple to understand to both taxpayer and tax collector
iii) Convenient to both tax payer and tax collector as time for collection is known . iv) Can be used to counter inflation.
v) High revenue earning capacity as it expands naturally with economic growth.i.e elastic vi) May be used to redistribute wealth and resources equally.
vii) Certain to both tax payer and tax collector.
23. Identify the level of occupation described by each of the following information.(4marks)
Descriptionoccupation
i)A boy hunting a hare for meatprimary
ii)Britam insurance company selling their policiesTertiary(commercial services)
iii)School carpenter making chairs for form onessecondary
iv)MrZuma counseling form four studentsTertiary (direct personal services)
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24.
Kamau traders
cash receipt journal
DateparticularsReceiptLedgerDiscount allowedCashBank
nofolioshsshs
2015
Dec 1sales4,50040,500
Dec 17debtor3,00020,000
Dec 15Sales70,000
7,50040,50090,000
Kamau traders
Cash payment journal
DateParticularsReceipt no.L.fDiscountCashBank
receivedshsshs
2015
Dec.5Purchases2003,800
Dec.6Rent16,000
2003,80016,000
(2 marks)
25. Unemployment solving has been an agenda to most developing economies. Identify the type of unemployment being solved
below.(4 marks)
i) Kenya government initiating irrigation projects to ensure continuous food production…; seasonal unemployment
ii) Retraining teachers to embrace the use of technology in teaching and learning; structural unemployment
iii) Government and private sectors inventing job advertisement sites for easy access by job seeker; frictional /involuntary unemployment
iv) Parliament passing legislation that accommodate the disable people to acquire jobs; residual unemployment
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MOKASA JOINT EXAMINATION 565/2
BUSINESS STUDIES PAPER 2
MARKING SCHEME
1.(a) Circumstances that can cause a business to succeed in their activities
-Where there is proper location of the business convenient for its operations.i.e Availability of customers.
-Where there are favourable government policies it encourages growth and investment.
-Where there is political stability and security thus creates certainty and confidence to entrepreneurs.
-Where there is fair competition to enable business access markets for its goods and services
-Where there is use of modern technology in production of goods and services promoting quality production.
-Where there is adequate capital to run and expand the business.
-Where there is availability of skilled and adequate labor matched to their job specialization
-Where there is good customer relationship and care to attract and retain clients.
-Where there is availability of good infrastructure for business to access its market and inputs.
-Where there is proper marketing plans to increase sales.5 well explained points= 10mks
(b) Problems facing the savings and credit cooperative societies in Kenya
-Loan defaulting by members as some leave employment due to terminal illness, sacking and personal reasons.
-Lack of management skills among members leading to poor management of societies.
-Corruption and embezzlement of funds by official
-Poor investment decisions by some officials leading to losses.
-Stiff competition from commercial banks and micro financial institutions.
-Late remittance of members contributions by employers.
-High demand for loans against the receipts from monthly contributions.
-Retrenchment of workers by both government and private sector has led to financial problems to the society.
2. (a) Indicators of a good tax system
a) Equity;
Tax burden should be distributed among the tax payers according to their ability to pay
b) Economy;
Collection and administrative cost of the tax should not exceed tax revenue collected
c) Flexibility;
Tax system should be capable of being revised or changed in line with the changing economic conditions.
d) Diversity;
Different types of tax so that tax burden is on different groups of the society.
e) Elasticity;
Tax revenue should be capable of responding appropriately to changes in national income.
f) Simplicity;
The tax system should be understood by tax payers and the collectors. This motivates them to pay tax.
g) certain;
The one expected to pay should be clearly aware of how much he/she is paying. The tax collector/government should also be
aware of how much it is supposed to collect from tax.5 well explained points= 10mks
(b) Procedure an insured must take when making an insurance claim(10mks)
Notification of the insurer by the insured that the risk insured against has occurred.
Filling a claim form. The insured is issued with a claim form to fill in giving details of the risk based on the principle of utmost good faith.
Investigation of the claim. The insurer investigates the claim based on the information in the claim form. Preparation of the assessment report. The insurer assesses the assessors report on the extent of the loss. Payment of the claim .On the assessment of the claim, the insured prepares to compensate the insured.
(5 well explained steps= 10mks)
3. (a) Factors that he must take account when deciding on which method of product promotion to use.
Nature of the product
Nature of the market/Target group Method used by competitors Government policy
Cost of promotion method
Objectives of the promoting firm.5 well explained points= 10mks
(b) Weaknesses of using national income statistics as a measure of social welfare
-It may be based on inaccurate data
-Bulk of the wealth held by a few people/Unequal distribution of income
-Wealth is created in the expense of peoples health/time for rest and recreation or leisure/no time for family etc.
-Increased productivity but there is massive environmental pollution
-Inflation i.e, the price level could have risen by the same proportion as per capita income.
-Most of the income made due to improvement is all put into more investment and not on improving for instance own housing.
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-Government may be using income earned on goods and services such as military facilities which does not directly improves
people‘s standards of living.5 well explained points= 10mks
4.(a) Explain five factors that justify the existence of small scale firms in an economy.
Small capital .some businesses remain small because of limitations of investment funds.
Where the market served is small .The market demand in a particular industry could be too small that it cannot accommodate
large scale firms.
If the government demands so. The law may restrict the growth of firms.
Products that are designed to meet customer specification. There are services that require personal attention entrepreneurs that
invest in such firms are compelled to operate them in small scale.
Desire to retain control by the owner. There are entrepreneurs that start firms and leave them to remain small for fear of loss
of control and independence in management if the firm becomes large scale.
Rising costs of production. Some firms that would want to remain small because of fear of increasing cost of production with
increase in its level of production.
Risk of large scale enterprises. There are huge risks that face large scale enterprises despite the many benefits that accrue to it.
To avoid such risks, firms may opt to remain small scale.
Expensive goods. Firms that are engaged in the production and sale of expensive and sell specialized goods are of small scale
because the products they are dealing with are too expensive to call for mass production.
Quick decision making. In cases where the proprietors want to avoid delay in decision making, they may opt to maintain a
small business as it may require less consultations.
Simplicity of small firms. To avoid bureaucracy and complexities associated with large scale firms, a proprietor may want
to remain small scale.5 well explained points= 10mks
(b)
Bartenge Traders
Balance Sheet
As at 31st May 2014
Fixed assetsKsh.Ksh.
Equipment24,000√Capital128,440√
Furniture6,000√Add net profit27,320√
30,000155,760
Current assetsKsh.Less drawings20,500√
Stock49,980√135,260
Debtors45,770√Short term liabilities
Bank38,760√Creditors30,450√
Cash1,200√135,710
165,710165,710
10 ticks @ 1mk= 10mks
5. (a) Problems with an ageing population
They provide a less mobile labour force- The older a person gets, the less willing they are to move from one place to another or even to change jobs.
Low labour supply- Old people are less productive and thus cannot provide the much needed labour force
High dependency levels- the old will be less productive and therefore will be highly dependent on the few working group who will then be strained while providing for their needs.
The country becomes less progressive because it lacks the input of more energetic youth.
May lead to unemployment- this may be due to the fall in demand for goods and services required by the youth.
5 well explained points= 10mks
(b) Explain five difference between banking and non-banking financial institutions(10mks)
BANKNON BANK FINANCIAL INSTITUTIONS
Operate current accountsDo not operate current accounts
Controlled by the CBKNot controlled by CBK
They issue chequebooksNot allowed to issue chequebooks
Formed to offer a wide range of financial servicesFormed to offer specific services in which they were formed for.
They usually offer short term loansDesigned to offer medium and long term loans
Must open accounts with the central bankMust open accounts with commercial banks
They provide forex servicesThey do not deal in forex
Members of clearing houseDoes not take part in clearing house
Involved in credit creationNot involved in credit creation
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6.(a) Importance of encouraging upward communication in an organization
-Facilitates quick feedback
-Enables the management to receive and accommodate the views and sentiments of all staff in the organization when
making decisions
-Enables a sense of belonging among workers thus motivating all members of staff
-Encourages free dialogue between the junior and senior members of staff
4 well explained points= 8mks
(b)
Lule Traders
Trading, Profit and Loss account
DrFor the year ended 30th April 2015√Cr
Cost of sales:Ksh.Ksh.Ksh.
Opening stock37,760√Sales186,000√
Add Purchases115,560√Less Returns In.4,400√
Add carriage in.2,340√Net sales181,600
117,900
Less Returns out.3,550√114,350
C.O.G.A.S152,110√
Less Closing stock49,980√
102,130
Gross profit c/f79,470√
181,600181,600
Carriage outwards3,260√Gross profit b/f79,470
Salaries24,470√
Electricity6,640√
Rent5,760√
Sundry expenses12,020√
Net profit27,320√
79,47079,470
16 Ticks @ ½ Mark= 8 Marks
Lule Holdings
Balance Sheet
As at 30th April 2015√
Fixed Assets:Ksh.Ksh.
Motor Van85,000√Capital250,000√
Furniture20,000√Current Liabilities:
105,000Creditors25,000√
Current Assets:Ksh.
Stock16,500√
Bank103,500√
Cash50,000√170,000
275,000275,000
8 Ticks @ ½ Marks= 4 Marks
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KASSU JOINT EXAMINATION - 2016 BUSINESS STUDIES
565/1
PAPER 1
1.Giving an example in each case, outline the difference between renewable and non-renewable resources(4 marks)
2.State four reasons why diagonal communication needs to be encouraged in an organization.(4 marks)
3.Mention four benefits enjoyed by a member of a producer cooperative society(4 marks)
4.State four measures that the government can use to encourage increase in the country‘s volume of exports.(4 marks)
5.Highlight four positive impacts of the physical environment on the operations of a business.(4 marks)
6.Highlight four problems associated with monopoly market structure.(4 marks)
7.Outline four role of the mass media in promoting consumer protection.(4 marks)
8.Outline four services offered in agency banking as a trend in the banking sector.(4 marks)
9.State the best type of machine one would use to perform the following tasks(4 marks)
FunctionsName of machine
i)Used to trim papers into desired sizes
ii)To post information to ledgers and to prepare payrolls
iii)To transmit printed messages such as letters, maps, diagrams and photographs
iv)To destroy sensitive but unwanted documents
10.The following balance sheet belongs to Nyakwar Atiyo during the period ended 30th June 2000.
Nyakwar Atiyo Traders
Balance sheet
As at 30.06.2000
AssetsKshsCapital + LiabilitiesKsh
Machinery45,000Capital65,000
Current assetsCreditors45,000
Stock7,750Short term liability
Debtors1,375Bank loan10,000
Bank25,375
79,50079,500
The following transactions took place on July 1 2000.
(i) Paid creditors Sh 2000 by cheque.
(ii) Nyakwar Atiyo took stock worth Shs 7500 from the business for his son‘s birthday.
(iii) Motor vehicle previously owned by Nyakwar Atiyo values at sh 200,000 was converted into business vehicles.
Required: Prepare the balance sheet of Nyakwar Atiyo traders as at 2nd July 2000.
11.Highlight four roles of advertising agencies in product promotion(4 marks)
12.Distinguish between the following categories of government expenditure.(4 marks)
a) Recurrent expenditure
b) Capital expenditure
13.Highlight four differences between hypermarkets and departmental stores.(4 marks)
14.The information below was extracted from the books of Lemayian Traders for the year ended 31. 12. 2015
Opening stock45,000
Closing stock15,000
Turnover340,000
Margin25%
Required:
(i) Gross profit(2mks)
(ii) Purchases(2mks)
15.Distinguish between the following terms as used in National Income(3mks)
a) Gross Domestic Product
b) Gross National Product
c) Per capita Income
16.Highlight four ways in which the government of Kenya promotes entrepreneurial development(4mks)
17.State four channels of distribution for importation of agricultural produce.(4mks)
18.Outline four trends in transport sector.(4mks)
19.Outline four benefits of indirect production.(4mks)
20.Enter the following transactions in the relevant ledger accounts(4mks)
2015 April 1 Janet Cosmetics started a business with Ksh. 150,000 cash
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,,3 Bought stock of goods for Sh. 40,000 and paid in cash
,,6 Opened a bank account and deposited Sh. 60,000 from the cash till
,,9 Purchased an office machine for Sh. 25,000 and paid by cheque
21.Give four reasons why a producer may need to have their own warehouse(4mks)
22.State the name of the source document used to record the following transactions(4mks)
TransactionSource Document
a) Received goods returned by a buyer who bought them earlier on credit
b) Making of payment to a casual workers at the end of the week
c) Bought goods for sale from Gilanis Supermarkets on credit
d) A customer, Adhiambo, send a cheque for goods she bought earlier on credit
23.Define the following terms as used in business studies(4mks)
(i) Annuity (ii) Proposer
(iii) Speculative risk (iv) Grace period
24.In the table below fill in the missing figures S,T,U and V.(4 mks)
BusinessAssets(shs)Capital(shs)Liabilities(shs)
A20,000S5,000
B42,00032,000T
CU17,00053,000
D18,000V6,000
25.Compute the consumer price index (CPI) from the following data giving explanation of your outcome(4mks)
YearPrice
2010300
2011375
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KASSU JOINT EXAMINATION - 2016 BUSINESS STUDIES
565/2
PAPER 2
1.(a) Explain five principles of insurance.
(b) Study the following table of the demand and supply of product x.
Period 2010Price / unitsQtn dd / units
JulyShs 300500
AugustShs 300400
SeptemberShs 300200
OctoberShs 30080
NovemberShs 30050
Explain five factors that may have led to the trend above.
2.(a) Giving the types of unemployment, state the causes of the remedies.(10 marks)
(b) You are a sales executive with a local bank. Describe five steps that you must follow when sent to the field to promote
the products of the bank.(10 marks)
3.(a) Discuss five reasons why a country‘s economy is showing slow increase in their National Income(10 marks)
4.Explain five problems that are likely to face the process of implementation of well-prepared economic development plans
(10 marks)
5. (a) On 1st June 2015, Ndovu Traders had cash in hand of sh.25,000 and sh.56,200 at bank.
During the month, the following transactions took place:
2015
June 2 Cash sales, sh.42,000.
June 5 Received a cheque of sh.70,500 from Kiptala Traders after deducting a6% cash discount. June 8 Paid salaries, sh24,000cash.
June 9 Yegon settled his account of sh.45,000 in cash and was allowed sh.l,800cash discount. June 12 Cash sales sh46,500.
June 18 Paid Tuitoek's debt of sh.l00,000 by cheque after deducting 5% cash discount.
June 24 Withdrew sh.26,000 from the bank for office use.
June 30 Banked all the cash except sh.25,000.
Prepare a 3-column cashbook and balance it off on 30th June, 2015.(10 marks)
(b)Explain five factors that may hinder effective communication in an organization.(10 marks)
5.(a)Explain five factors that influence the choice of a product to produce.(10 marks)
(b)Discuss five errors that may not be noticed in a trial balance.(10 marks)
6.(a)Discuss five canons of public expenditure.(10 marks)
(b)The following information was extracted from the books of Umeme Traders as at
31st December 2009.
Shs
Bank loan567,000
Bank loan interest1,440
Capital1,680,000
Closing stock87,000
Creditors272,400
Debtors140,280
Discount allowed170,400
Electricity30,240
Furniture489,804
Furniture repairs86,436
Gross profit624,720
Maintenance on premise72,000
Motor vehicle1,080,000
Motor vehicle maintenance360,000
Premise648,000
Rent received144,000
Sundry expenses122,520
Prepare:
(i) Profit and loss account for the year ended 31st December 2009.(10 marks)
(ii) Balance sheet as at 31st December 2009.(10 marks)
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KASSU JOINT EXAMINATION - 2016 565/1
PAPER 1
MARKING SCHEME
1.With an example in each case, the difference between renewable and non-renewable resources
Renewable resources are those whose supply can be restored when they are exhausted such as wood, HEP, solar energy etc.
Non-renewable resources are those whose supply cannot be restored once they are exhausted such as mineral deposits, coal,
natural gas etc.
2.Reasons why diagonal communication needs to be encouraged in an organization.
Promotes teamwork in an organization
It helps eliminate goal blindness
Assist in development of human resource because they can freely exchange ideas
Assist in coordination and harmonization of different activities in an office
It creates a sense of belonging among staff thus a motivating factor.
3.Benefits enjoyed by a member of a producer cooperative society
Better/higher prices for their produce
Educated on better methods of production through seminars, field trips, etc
Provided better storage facilities
Enjoys reliable transport means
Provided with loans to expand their operations
Can obtain farm inputs on credit
Provided with grading, packing, and processing services
4.Measures that the government can use to encourage increase in the country’s volume of exports
Offering export compensation schemes to exporters
Research to diversify foreign markets and products
Offering customs drawbacks
Lobbying for the removal of trade restrictions
5.Positive impacts of physical environment on the operations of a business
Favourable climatic conditions favour agricultural businesses
Absence of floods means goods can efficiently reach the market
Good roads and other physical infrastructure enhances trade
Land with good terrain favours production activities. For instance it is cheaper to construct business structures
6.Problems associated with monopoly market structure
Leads to charging of high prices
Causes the production of sub-standard products since there is no competition
It may cause unequal distribution of income
Too much monopoly power may be used to influence government to adopt unfavourable policies
Some may operate at excess capacity causing unemployment and wastage of resources
7.Outline four role of the mass media in promoting consumer protection
They air or print information on traders who exploit consumers.
They advise consumer on their rights
They refuse to publish any false/misleading advertisement
They inform the government and other departments on traders who exploit consumers
They taste products in their laboratories or using their own experts then inform consumers
They investigate problems facing consumers and try to solve them
8.Services offered in agency banking as a trend in the banking sector.
Customer deposits
Withdrawal from own account
Transfer of funds
Paying bills
Balance enquiries
Opening new accounts
Filling of loan application forms.
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9.Type of machine one would use to perform the following tasks
Functions
i)Used to trim papers into desired sizes
ii)To post information to ledgers and to prepare payrolls
iii)To transmit printed messages such as letters, maps, diagrams and photographs
iv)To destroy sensitive but unwanted documents
Name of machine
Guillotine
Accounting Machine Facsimile (Fax machine) Paper Shredders
10. New Balance Sheet for NyakwarAtiyo traders
Workings:
Stock= Shs.7,750 - 750
Drawings= Shs. 750
Creditors= Sh. 45,000 - 2,000
Bank= sh 25,375 - 2000
Capital= Sh. 65,000 + 200,000
Added investment= Sh. 200,000
Motor Vehicle= Sh. 200,000
Fixed assetsKshs.Ksh.
Machinery45,000√
Motor vehicles200,000√
= 7,000
= 43,000
= 23,375
= Sh. 265,000
NyakwarAtiyo
Balance Sheet
Asa t 30.6.2000
Capital65,000√
Add additional capital200,000√
245,000Less Drawings(750)√
Current assetsKshs.Short term liabilities264,250
Stock7,000√Creditors2,500√
Debtors1,375√Short term bank loan10,000√ 12,500
Bank23,375√31,750
276,750276,750
10 ticks × ½ = 5marks
11.Roles of advertising agencies in product promotion
Help businesses in designing their trademarks, logos, and advertising materials
Book space and airtime for their customers in various media houses
Offer advisory services to their clients on selling techniques
Advertise on behalf of their clients
On behalf of their clients, they choose the appropriate media to use
12.Distinguish between the following categories of government expenditures.
i)Recurrent expenditure -refers to regular expenses incurred by the government in the provision of goods and services
e.g. salaries, fueling gov‘t vehicles, servicing public debt etc.
ii) Capital expenditure—refers to government spending that goes into financing specific projects such as construction of
roads, railway lines, airports etc.
13.Differences between hypermarkets and departmental stores.
Hypermarkets are located in the outskirts of town while departmental stores are found in town.
Hypermarkets offer a variety of goods while departmental stores deal in a particular line of goods
Hypermarkets comprises different businesses with different management while departmental stores comprises many single
shops under one management
Hypermarkets have ample parking space whereas departmental stores do not have.
With hypermarkets prices are not controlled hence can exploit whereas departmental stores sell at relatively low prices.
14.The information below was extracted from the books of Lemayian Traders for the year ended
31.12. 2015
Opening stock45,000
Closing stock15,000
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Turnover340,000
Margin25%
Required:
(i) Gross profit
Margin=Gross profit × 100
Saless
25=Gp
100340,000
Gp=25× 340,000
100
Gross profit = Shs. 85,000
(ii) Purchases
GP= Sales - CoGs
CoGs= Sales - GP
= 340,000-85,000
= 255,000
CoGs= Opening stock + Purchases - Closing stock
Purchases= CoGs- Opening stock + Closing stock
255,000 - 45,000 + 15,000
= Ksh. 225,000
15.Distinguish between the following terms as used in National Income
a)Gross Domestic Product
-Is the value of all goods and services produced within a country during a particular year irrespective of who does it.
b)Gross National Product
-It is the value of all goods and services produced by the nationals of a country during the year irrespective of whether they are
produced locally or abroad.
c)Per capita Income
-Is the average income per person in a given year. It is obtained through dividing the amount national income by the total
population
16.Ways in which the government of Kenya promotes entrepreneurial development
Building or improving all infrastructure such as roads, sewerage systems etc
Improving the level of security
Lowering taxation/giving tax exemptions or holidays
Providing subsidies
Controlling the cost of electricity and petroleum products/make it affordable to encourage production
17.Channels of distribution for importation of agricultural produce.
Foreign farmer→local consumer
Foreign farmer→local retailer→ local consumer
Foreign farmer→ local wholesaler →local retailer → local consumer
Foreign farmer→Local wholesaler→ local consumer
Foreign farmer → local agent→W/saler →Retailer→local consumer
Foreign farmer→Local Representative→W/saler→ Retailer→Local consumer
18.Trends in transport sector.
Pipeline and containerization
Electric trains replacing diesel engines
Underground tunnels are constructed to ease congestions on surface
Development of planes with large carrying capacities
Introduction of speed governors to control speed.
Psv‘s fitted with music systems
19.Benefits of indirect production.
High quality goods produced
Surpluses produced.no deficits in market
It is capital intensive reducing cost of labor
There is specialization in the production process which leads to efficiency and highquality
Modern technology is used promoting quality production.
It is less tiresome
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Promotes standards of living as variety of goods are available
20. Enter the following transactions in the relevant ledger accounts
Capital a/cCrDrCash a/cCr
201520152015
April 1 Cash 150,000April 1 Capital 150,000April 3 Purchases 40,000
,,6 Bank60,000
DrPurchase A/cCrDrBank A/cCr
201520152015
April 3 Cash40,000April 6 Cash60,000April 9 O. machine 25,000
DrOffice Machine A/cCr
2015
April 9 Bank25,000
21.Reasons why a producer may need to have their own warehouse
To enjoy complete control of operations in the warehouse
To design it to match their specific needs
In order to install special handling, storage and protection facilities which may not be available with a public warehouse
To avoid being tied down by rigid procedure of receiving and issuing of goods as is the case with public warehouses
In the long run, the cost of building own warehouse will be cheaper than the hiring of space in a public warehouse
The owner exercises full control and makes major decisions without having to consult any one
22.Name of the source document used to record the following transactions
TransactionSource Document
a)Received goods returned by a buyer who bought them earlier on creditCopy of the Credit note/Retained credit note
b) Making of payment to casual workers at the end of the weekCash payment voucher
c)Bought goods for sale from Gilanis Supermarkets on creditPurchase/Received/Original Invoice
d) A customer, Adhiambo, send a cheque for goods she bought earlier on credit Copy/Retained Cash Receipt
23. Define the following terms as used in business studies
(i) Annuity
Is an agreed amount of money that an insurer agrees to pay to the insured annually until the latter‘s death (ii) Proposer
This is a person wishing to take out an insurance cover (Prospective insured) (iii) Speculative risk
This is a risk that when it occurs may result in loss or a profit (iv) Grace period
This is the time allowed between the date of signing of the contract and the date of the payment of the first premium.
24.In the table below fill in the missing figures S, T, U and V.
S= Shs. 15,000T= Shs. 10,000
U= Shs. 70,000V= Shs. 12,000
25.Compute the consumer price index (CPI) from the following data giving explanation of your outcome
YearPrice
2010300
2011375
CPI= Price in the Year 2011×100%
Price in the Year 2010
= 375 × 100 =125%
300
This implies that price of goods has risen by 25% since 2010.
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KASSU JOINT EXAMINATION - 2016 565/2
PAPER 2
MARKING SCHEME
1.
(a) Explain five principles of insurance.
(i) Principles of indemnity
This principle state that insured can only be compensated for the actual loss suffered. The aim of the insurance company is to compensate the loss suffers for what they have actually lost financially being returned to the same financial position but no to benefit them.
(ii) Principle of utmost good faith or ―ubernima fides‖
At the time of signing the insurance contract the proposer is expected to give all the relevant material faults relating to the [property he wants to insure.
(iii) Principle of insurance interest
It states that, the insured should only insure property or life whose loss will affect him financially hence one cannot insure a friend‘s property.
(iv) Principle of proximate cause
For the insured to be compensated, there must be very close relationship between the loss suffered and the rick insured.
(v) Principle of subrogation
After the insured has been compensate, the remnant of the insured item becomes the property of the insurer. This ensures that the insured person does not make against (profit) out of insurance.
(vi) Principle of contribution
This principle state that where a person has insured the same property with more than one insurance company. Upon the occurrence of the event of loss, all the insurance company will share the loss proportionately.
(b) Study the following table of the demand and supply of product x.
Period 2010Price / unitsQtn dd / units
JulyShs 300500
AugustShs 300400
SeptemberShs 300200
OctoberShs 30080
NovemberShs 30050
Explain five factors that may have led to the trend above.
(i) Government policy
The government may have come up with policies that have discouraged the consumption of project x by levying heavy
taxation on the product, lack of subsidies and laws and regulation that have discouraged consumption which have led to this trend.
(ii) Uneven distribution of income
Demand for goods and service is usually higher when incomes are distributed among many people as opposed to where
incomes are in the hands of few people. A change in this trend explains that there is uneven distribution of incomes which has led to a decrease in the quantity demanded.
(iii) Decrease in population
There is a decrease in population which has led to a decrease in demand for goods x while the composition of the population in terms of its sex. Age, economic stats and education structure will also affect the demand for the product. (iv) Terms of sale
The demand for goods and services can increase if and when favourable terms of sale are offered to consumers. The terms of sale my include offering goods on credit, giving discounts etc. So for this case may be these was a decrease in the availability of credit or introduction of tougher credit terms which has led to a reduction in demands for the goods and services.
(v) Negative change in tastes fashion and preferences of consumers
Individual‘s tastes have a great influence on the demand for a commodity. If the consumer develops a negative taste for a
particular product, then this will clearly be reflected with a decrease in the quantity demanded. So in this case, the consumers might have a negative taste and a preference of product x.
2.
(a) Giving the types of unemployment, state the causes of the remedies.
(i) Structural unemployment
This type of unemployment occurs when the supply of a particular category of workers exceeds the demand for the services
e.g. supply for white collar jobs exceeds the job availability. So the possible cause for this unemployment occurs when the persons have different skills from those being demanded by the employers so the solution is to train the employees and also
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the government is to introduce the appropriate forms of education in schools and institutions to equip the school-leavers with relevant skills and attitudes for the existing job opportunities.
(ii) Frictional unemployment
This is a short-term unemployment that occurs as people adjust to market changes for instance, by quitting an existing job to seek a new one. This may be caused by people becoming too selective when choosing the jobs they want which may not be available in the market. The possible solutions for this would be to export labourers where there are too many skilled people and the government to provide travel permits for people to take up jobs outside the country.
(iii) Voluntary / real wage unemployment
It occurs where people choose not to work because they consider the remuneration to be low. The possible cause for this is where there is low demand for goods and services due to low incomes which result to a decline in economic activities and consequently a decline in employment. The solution for this is to encourage firms to use appropriate methods of production
such as labour intensive techniques to enable more people to be absorbed in the available jobs. (iv) Cyclical unemployment
This is unemployment which arises due to situations in the economic activities over a period of time in a pattern known as trade cycle. The possible cause is where low demand for goods and services due to low incomes which result to a decline in economic activities. The solution is where the government needs to initiate major projects that increase the government expenditure.
(v) Residual unemployment
This unemployment arises due to handicaps such as mental disorders and blindness which hinder people from engaging in production activities. The possible solution for this is to encourage government to introduce foreign investors in many ways to cater for this people.
(b) Steps that one must follow when sent to the field to promote the products of the bank through personal selling.
(i) Identifying the prospective customers
(ii) Preparing the presentation
(iii) Establishing customer contacts (iv) Arousing interest in the products
(v) Dealing with objections (vi) Closing the sale
(vii) After-sale services
3.
(a)Reasons why a country’s economy is showing slow increase in their National Income
Poor supply and low productivity of the labour force
Inadequate capital necessary for the exploitation of natural resources
Poor natural resource endowment
The technology used may be poor and inappropriate
Effects of political instability
Citizens‘s laziness and negative attitude towards work
Presence of a large subsistence sector
Low levels of foreign investment
(b)Problems that are likely to face the process of implementation of well-prepared economic development plans.
Reliance on donor funding
Limited supply of domestic resources such as skilled personnel, finance and capital
Earlier failure to involve the local people in plan formulation
Natural calamities
Trying to implement unrealistic, over-ambitious plans
Lack of corporation among executing officers
Inflation
Lack of political will
4.
(a) On 1st June 2015, Ndovu Traders had cash in hand of sh.25,000 and sh.56,200 at bank. During the month, the following transactions took place:
2015
June 2 Cash sales, sh.42,000.
June 5 Received a cheque of sh.70,500 from Kiptala Traders after deducting a6% cash discount. June 8 Paid salaries, sh24,000cash.
June 9 Yegon settled his account of sh.45,000 in cash and was allowed sh.l,800cas discount. June 12 Cash sales sh46,500.
June 18 Paid Tuitoek's debt of sh.l00,000 by cheque after deducting 5% cash discount.
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June 24 Withdrew sh.26,000 from the bank for office use. June 30 Banked all the cash except sh.25,000.
Prepare a 3-column cashbook and balance it off on 30th June, 2015.(10mks)
Ndovu Traders
Three-column cash book√
30 ticks × ½ = 10mks√
(b) Explain five factors that may hinder effective communication in an organization.(10 marks)
(i) Noise barriers: It refers to a loud, surprising, irritating or unwanted sound that disrupts the effective communication process. It may be from telephone interruptions that cause disturbance in the process of communication.
(ii) Choice of inappropriate channel: In accordance with the importance and the intensity of the message, a proper channel must be selected. If a poor channel is selected, it is likely that the message gets distorted or does not have the desirable effect. (iii) Information overload: Care must be taken when providing the amount of information to others lest they may lose it due to the information being overloaded. It is worth mentioning that while managing the people, a manager must make out how capable is a particular employee in processing the message and how much information can be provided to him or her. (iv) Poor Timing: Although urgent needs of a business do not specify any timing, there may be some rare cases. However, the timing of providing a particular message to others should be appropriate. If the information is communicated at the eleventh hour, it may result in resentment and causing the employees to lose the interest in performing particular activity.
(v) Physical distractions: physical distractions may cause disturbances to the effective communication process. Such as, telephone interruptions or visitors walk in on the manager and subordinates in the middle of a discussion. (vi) Improper and inadequate information: one of the facts that spells the difference between effective and ineffective communication is the quality of a message. A good message contains meaningful and appropriate information while it incorporates language rules with proper choice of words. A poor message whether spoken or written does not produce intended effect, while it creates ambiguity and leads to misinterpretations.
(vii) Poor body language attracts negative responses from others, whereas displaying poor body language not only makes bad impression on others, but also takes somebody‘s attention away from the effective communication process. (viii)Listening skills; good listening skills lead to full apprehension of a message, while poor listening distorts the message.
5.
(a) Explain five factors that influence the choice of a product to produce.(10 marks)
(i) Market/Supply-gap: The size of the unsatisfied market demand which constitute a source of business opportunity will dictate, to a great extent the need to select a particular product. The product with the highest chances of success as reflected in its demand will be selected. In essence, there must be existing obvious demand for the selected product. (ii) Finance/Fund: The size of the funds that can be mobilized is another important factor. Adequate fund is needed to develop, produce, promote, sell and distribute the product selected.
(iii) Availability of and Access to Raw Materials: Different products require different raw materials. The source quality and
quantity of the raw materials needed are factors to be seriously considered, Are the raw materials available in sufficient
quantities? Where are the sources of raw materials located? Are they accessible? Could they be sources locally or imported? Satisfactory answers should be provided to these and many other relevant questions.
(iv) Technical Implications: The production process for the product needs to be considered. There is need to know the technical implications of the selected product on the existing production line, available technology and even the labour force. The choice of a particular product may require either acquisition of the machineries or refurbishing of the old ones. The product itself must be technically satisfactory and acceptable to the user.
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(v) Profitability/Marketability: Most often, the product that has the highest profit potential is often selected. However, a product may be selected on the basis of its ability to utilize idle capacity or complement the sale of the existing products. The product must be marketable.
(vi) Availability of Qualified Personnel: Qualified personnel to handle the production and marketing of the product must he
available. The cost of producingthe product must be kept to the minimum by reducing wastages. This is achievable through competent hands.
(vii) Government Policies: This is quite often an uncontrollable factor. The focuses of government policies can significantly influence the selection of product. For instance, a package of incentives from government for a product will boost its production.
(viii)Government objectives: The contributions of the product to the realization of the company‘s short and long range objectives must be considered before selection. For instance, the company goal maybe the achievement of sale growth, sales stability or enhancement of the company‘s social value.
(b) Discuss five errors that may not be noticed in a trial balance.(10 marks)
(i) Error of omission
This is an error where a transaction is completely omitted from the books. No entries were made at all for the transaction. It is as if the transaction has not existed.
(ii) Error of commission
In this case, double entry was observed but the transaction was posted to a wrong account of the same class. For example goods sold to John was correctly credited to Revenue (Sales) account but debited to Jane‘s account. (iii) Error of principle
Double entry observed but an entry made in the wrong class of account. For example, payment by cheque for vehicle repairs
correctly credited to bank account but debited to vehicle account instead. In this case, not only the account is wrong
(vehicle instead of vehicle repairs) but also the class of account is different. Vehicle account is a rea
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