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Business Studies Paper 2 Question Paper
Business Studies Paper 2
Course:Secondary Level
Institution: Kcse question papers
Exam Year:2006
565/2
BUSINESS STUDIES
Paper 2
Oct./ Nov. 2006
2 ½ hours
1. a) Explain five factors that may influence the level of national income of a country .
(10 marks)
b) Over the years southern Star has grown into a large business enterprise. Explain
five diseconomies of scale which it may experience. (10 marks)
2. a) Explain four ways that a government can use to finance a budget deficit.
( 8 marks)
(b) The following trial balance was extracted from the books of Fula Traders on 31st
December 2005.
Fula Traders
Trial Balance
as at 31.12. 2005
Dr. Cr.
Sh. Sh.
Sales 600,000
General Expenses 60,000
Rent expense 10,000
Commission Received 20,000
Motor Vehicle 600,000
Furniture 240,000
Cash 50,000
Creditors 180,000
Debtors 120,000
Purchases 400.000
Sales Returns 20,000
Capital 700,000
1, 500,000 1,500,000
Additional information
- Stock on 31 December 2005 was valued at sh. 60,000
- Depreciation to be provided for as follows:
Motor Vehicle 20% p.a on Cost
Furniture 10% p.a on cost
Prepare:
i) Trading, profit and Loss Account for the year ended 31 December 2005.
ii) Balance Sheet as at 31 December 2005. (12 marks)
3 a) Explain five benefits that may accrue to a community that is involved in trading activities.
(10 marks)
b) Outline five benefits that a Savings and Credit Co-operative society (SACCO) provides to
its members. (10 marks)
4 a) Musi Enterprises are considering to market their imported products direct to consumers.
Outline five reasons that may be influencing them to make this decision. (10 marks)
b) Explain five disadvantages that a country may experience from imposing trade restrictions
on trading partners. (10 marks)
5. a) Outline five factors that may limit the use of containers as a method of transporting goods
in a developing country. (10 marks)
b) Using a diagram, explain how a monopolist firm determines its output. (10 marks)
6. a) Explain four functions of money. (8 marks)
b) Cheru Traders does not keep a complete set of books of accounts. The following
information was extracted from her books of accounts.
1.1.05 31.12.05
Sh. Sh.
Stock 920,000 1,200,000
Debtors 400,000 540,000
Creditors 800,000 950,000
During the year, cash received from debtors was sh. 1,400,000 while cash paid to creditors
amounted to sh. 2,000,000. Cash sales were for Sh. 250,000 while cash purchases amounted
to sh. 320,000. Carriage inwards was for sh. 46,000.
Other relevant information.
- Returns inwards were Sh. 42,000.
- Cheru had taken goods amounting to sh. 50,000 for personal use.
i) Determine total sales.
ii) Determine total purchases.
iii) Prepare Trading Account for the period ended 31 December 2005.
(12 marks)
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