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Business Paper 2 Question Paper

Business Paper 2

Course:Secondary Level

Exam Year:2011

1. (a) The use of motor cycle transport is becoming very popular in both rural and urban areas of
Kenya. Explain the limitations a business that relies on its use is likely to encounter. (10mks)

(b) Explain five factors that would influence a firm to venture into producing new products. (10mks)

2 (a) Explain five reasons why savings and credit co-operative societies are becoming popular
among Kenyan employees. (10mks)

(b) Explain five principles of an efficient tax system. (10mks)

3. (a) Explain five roles of commercial banks in the development of a country’s economy. (10mks)
(b) Highlight five indicators used to evaluate a country’s economic development. (10mks)
4. (a) Oria Shop sells all its goods at a margin of 20%. For the year ended 30th April 2006, the
Trading activities were as follows;
Purchase shs. 80,000
Sales sh. 950,000
Net profit 5% of sales
Closing stock shs.200,000

Calculate:
a) The Gross Profit
b) The opening Stock
c) Mark-up percentage
d) The net profit.

(b) Explain five features that distinguish departmental stores from other large scale retail shops(10mks)

5 (a) Explain assumptions that will make a two sector economy to hold. (10mks).

(b) Illustrate using a well labeled diagram the effect of an increase in consumer income on
equilibrium price and quantity. (10mks)

6 (a) Prepare a duly balanced three column cash book from the following information extracted from
the books of Jiko Traders.

Jan 1st Balance b/d cash shs. 4,000 bank shs. 27,000
“ 4th Settled Olweny creditors account of sh. 8,000 by cheque having deducted
6% cash discount.
“ 8th Received sh. 6,000 cash from Mutoma Traders
“ 16th Deposited shs. 4,500 to the bank account
“ 24th Withdrew sh. 9,200 from the bank for private use.
“ 29th Received sh.19,950 from Kawawa by a cheque after allowing 5% discount.
“ 31st Banked all the cash leaving shs 1,500 in the office (8mks)

(b)Distinguish between perfect competition and monoploy in product markets. (12mks)

Business Paper 2 Question Paper

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