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Business Studies Paper Two Question Paper
Business Studies Paper Two
Course:Secondary Level
Institution: Mock question papers
Exam Year:2006
FRIENDS SCHOOL KAMUSINGA
BUSINESS STUDIES
PAPER 2
MOCK EXAM – JULY/AUGUST 2006
TIME: 2½ HOURS
INSTRUCTIONS
? Answer any five questions
? All questions carry equal marks.
1. (a) Discuss six weaknesses of using per capita income to measure people’s standard of living. (10 marks)
(b) Dean Halal a sole trader keeps her petty cash book on imprest system. The balance of the Petty cash book on 30th June was shs. 1500. Given below are copies of the petty cash Vouchers.
Petty cash voucher petty cash voucher
Date 1st June No. 001 date 2nd June no. 002
Amounts for petrol shs 100 amount for tea shs 150
Signed: B Awinja Signed :V Mideva
Date Purpose Amounts Signed (received) by
3rd June Petrol 150 S. Opiyo
6th June Brooms 400 B. Akeyo
7th June Petrol 500 B . Awinja
8th June Stamps 200 A . Kiptoo
10th June Wages 600 B . Sambu
15th June Sugar 150 V. Mideva
17th June Typing paper 90 O . Pauline
20th June Sending telegrams 120 A . Kiptoo
Required:
(i) Draw up a petty cash book with the following analysis columns: Motor expense, tea, stationary, postage, wages and cleaning
(ii) Post the petty cash book to the general ledger. (10 marks)
2. (a) Discuss any five methods that the Kenyan government may use to solve the unemployment problem. (10 marks)
(b) The Kenyan government is in the process of privatizing Telecom Kenya. Explain five reasons to justify this action. (10 marks)
3. (a) Using appropriate diagrams describe the following as used in respect to price elasticity of demand. (10 marks)
i. Elasticity of equal to zero
ii. Elasticity is greater than 1
iii. Elasticity is less than 1
iv. Elasticity is equal to 1
(b) Khadija’s business maintains incomplete records. The following details about the business were available for the year ended 31st Oct. 2005.
i. Cash receipts
Debtors shs 618,000
Commission shs 312,500
ii. Cash payment
Creditors shs 392,000
Remt shs 23,800
Electricity shs 13,900
Telephone shs 6,500
iii. Estimates of the assets and liabilities of the business.
1/11/2004 31/12/2004
Motor van 390,000 360,000
Debtors 526,000 379,000
Rent due 12,300 16,800
Creditors 330,000 286,800
Electricity prepaid 4,850 6,900
Telephone prepaid 6,000 6,760
Cash in hand 483,600 977,900
Stock 24,500 29,300
iv. Khadija estimated that her cash sales was sh. 12,000 and from these proceeds shs paid shs. 5,000 for carriage outwards and then took shs. 7,00 as drawings.
Required
Prepare Khadija’s trading, profit and loss a/c for the year ended 31st Oct. 2005 and a balance sheet as at the same date. (12 marks)
4. (a) With the aid of a diagram explain how a firm under monopolistic competition may earn supernormal profits in the short run. (10 marks)
(b) Discuss any five factors to consider when evaluating a business opportunity. (10 marks)
5. (a) Kifaru enterprises had the following cash transactions for the month of July 2004
? 1st July – Cash sales Kshs 50,000 banked
? 1st July – Cash purchases of stationary Kshs 10,000
? 3rd July – received cheques from the following:-
o Mama safi account of Kshs 40,000 with 5% cash discount, Safina Ltd account of Kshs 60,000 settled with 5% cash discount.
? 7th paid Rambo Ltd account of shs. 70,000 by cheque after allowance of 10% cash discount
? 10th July bought office furniture worth Ksh 35,000 and paid office supplies Ltd shs 10,000 by cheque
? July 12th paid electricity bill with cheque shs 20,000
? July 13th withdraw a cheque of shs 60,000 for salaries
? July 16th paid by cash stationary shs 15,000
? July 18th cash sales shs 40,000
? July 19th cash sales made on 18th banked
? July 20th cash purchases of shs 40,000 by cheque with 5% discount
? July 25th cash sales of Ksh 60,000 with 5% discounts was banked
? July 29th drawings by cheques, 30,000
? July 30th Willis settled his account of shs 70,000 by cheque with a grant of 5% discount
Required
Draw Kifaru’s Enterprises three column cash book. (10 marks)
(b) Discuss five problems limiting the performance of commercial banks in Kenya.(10 marks)
6. (a) Explain the meaning of demand-pull inflation and cost –push inflation indicating clearly the main causes of each. (10 marks)
(b) Explain five factors that may lead to a surplus balance of payment in a country.(10 marks)
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