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Business Studies Paper 2 Question Paper

Business Studies Paper 2

Course:Secondary Level

Exam Year:2009

BUSINESS STUDIES PAPER 2 2009
565/2
BUSINESS STUDIES
Paper 2
Oct./ Nov. 2009
2 ½ hours
1. (a) Explain five features of sole proprietorship form of business ( 10 mks)
(b) Explain five measures that the government may take to improve the volume of
exports ( 10 mks)
2. (a) Explain five demerits that may be associated with water transport ( 10 mks)
(b) The trial balance of Zakayo Traders as at June 2008 is given below
DR Cr
Kshs Kshs
Stock 76, 500
Creditors 450,400
Debtors 350,000
Bank 260,400
Fixed assets 970,200
Cash 120,500
Capital 1,300,000
Lighting due 27, 200
1., 777, 600 1, 777, 600
During the month, the following transactions took place
2008
June 5 Paid a creditor Kshs 228,000 by cheque in full settlement of a debt
after deducting 5% cash discount.

15 Withdrew Kshs 100,000 from bank for office use
28 Received Kshs 160, 000 cash from a debtor after allowing cash
discount of Kshs 40, 000
Record the above transactions in the relevant ledger accounts and balance then
off. ( 10 mks)
3. (a) The diagram below shows an oligopolist kinked demand curve DD and current
price and quantity at P and Q respectively.

(i) Name the curve represented by the gap WZ
(ii) State Why the curve WZ is vertical to price axis
(iii) Advice when the oligopolist can raise and lower the price of the commodity
( 10 mks)
(b) Explain five ways in which the government of Kenya may reduce the level of
unemployment ( 10 mks)
4. (a) Using a diagram, explain the circular flow of income in a two sector economy
(b) Analyze the following document issued by Sheikh Traders
Required:
(i) Name the document above
(ii) Calculate the amount paid for the goods, if the debtor paid on 28th October
2008
(iii) Determine the net profit of the business if transaction (ii) above was Kshs
120.400 and the debtor paid for the goods on 15th November 2008
( 10 mks)
5. (a) Explain four services that the central Bank of Kenya may offer as a
Banker to commercial banks ( 8 mks)
(b) Malamu Traders had the following balances s at 31 December 2008
Kshs
Building 540,000
Bank Loan 472,500
Debtors 116,900
Creditors 227,000
Furniture 408, 170
Gross profit 520,600
Motor vehicle 900,000
Discount allowed 142,000
Lighting 25,200
Interest on loan 1,200
Closing stock 72,500
Rent received 120,000
Repairs on buildings 60,000
Repairs on furniture 72,030
Repairs on motor vehicles 300,000
General expenses 102,100
Capital 1,400,000
Prepare:
(a) Profit and loss account for the year ended 31 December 2008
(b) Balance sheets as at 31 December 2008 ( 12 mks)
6. (a) The following table represents the price and quantity of a commodity
Month Price Quantity
January 80 2,000
February 40 5,000

(i) Plot the above information on a graph ( 5 mks)
(ii) Calculate the price elasticity of demand ( 5 mks)
(b) Lunga, a sole trader, does not keep a complete set of accounting records.
Information extracted from the records are as follows
1 January 2007 31 December 2007
Kshs Kshs
Stock 75,000 136,400
Pre- paid salaries - 8, 000
Creditors 142, 500 158,400
Debtors 120,000 335,000
Furniture & Equipment 820,000 754,400
18% loan from bank 200,000

Cash summary for the year was as follows
Cash Summary
Kshs Kshs
Balance b/d 460,800 Payment to creditors 660,500
Bad debts 16,000 Loan (31/12/2007 50,000
Receipts from debtors 750,000 Salaries 48,000
Purchases 135,400
Interest on loan 30,000
Balance c/d 302,900
1,226, 800 1,226,800
Additional information:
(i) Interest charged on debtors overdue accounts amounted to
Kshs 2,000
(ii) Bad debts written off amounted to Kshs 4,200
Prepare trading, profit and loss account for the year ended 31 December
2007 (10 mks)__

Business Studies Paper 2 Question Paper

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