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565/2 Business Studies Question Paper
565/2 Business Studies
Course:Business Studies
Institution: Form 4 question papers
Exam Year:2010
565/2
BUSINESS STUDIES
PAPER 2
JULY/AUGUST. 2010
TIME 2HRS.
LAICOMET FORM FOUR EXAM 2010.
565/2
BUSINESS STUDIES
PAPER 2
2 ½ HRS.
INSTRUCTIONS TO CANDITATES:
1. Answer any FIVE questions.
2. All questions carry equal marks.
3. Answer your questions in the answer booklet provided.
1. a) Discuss five tools used by the Central bank to control the monetary policy in a country. (10mks)
b) The world has been experiencing global economic recessions. Explain five effects of this economic recession in Kenya. (10mks)
2. a) The following trial balance relate to Gatundia Traders as at 31st Dec 2009.
Gatundia Traders
Trial balance
As at 31st Dec 2009.
Dr. Cr.
Fixed assets
Stock 1/1/2009
Purchases & sales
Bad debts
Debtors & Creditors
Salaries
Cash
Bank
Return in & outwards
General expenses
Capital Shs.
82,000
12,500
70,000
4,000
10,500
14,000
2,500
1,500
5,200
202,200 Shs.
95,000
8,500
7,500
2,400
88,800
202,200
Additional information
i) Closing stock valued at shs. 6,500.
ii) Salary outstanding 2,800.
Required
i) Profit and loss account as at 31st Dec 2009.
ii) Balance sheet as at that date. (10mks)
b) Explain five benefits that will accrue to a trader who sell goods on cash basis only (10mks)
3. a) Explain five reasons why the Government imposes tax on its Citizens. (10mks)
b) The following information was obtained from Kathure’s Business for the year ended 30th June 2009.
Creditors opening balance shs. 165,000
Debtors opening balance shs. 263,000
Payment to creditors’ shs. 296,000
Receipts from debtors’ shs. 309,000
Discount allowed shs. 34,000
Discount received shs. 29,500
Purchases return shs. 44,600
Sales return shs.36, 400
Debtors closing balance shs. 189,500
Creditors closing balance shs. 143,400
Required
i) determine credit sales
ii) Determine credit purchases (10mks).
4. a) Explain five benefits that will accrue to Kenya from joining the East African Community. (10mks).
b) Discuss five negative effects of inflation in the Kenyan economy. (10mks).
5. a) Discuss five reasons for disequilibrium in Balance of payment in Developing countries. (10mks).
b) Explain five factors that limit the size of the firm. (10mks).
6. a) Hussein Traders had the following balances as at June 1st 2009.
Cash shs 10,000
Bank shs 4300.
During the month of June, the following transactions took place.
June 3. Fatuma a debtor settled her account of shs 8.000 by cheque of shs 7,500
6. Paid rent in cash shs 4,000.
10. Deposited shs3000 into the business Bank account from the cash box.
15. Settled Obama’s account of shs 10,000and allowed him a discount of 1% .
18. Deposited shs 14,000 in the Business Bank account from private sources.
21. Cash sales shs 6,000.
24. Wanjiku a debtor settled her account of shs 4,000 having been allowed a discount of 20%.
26. Purchased furniture shs 2,600 by cheque.
28. Received shs 1,800 cash from Mohammed.
30. Bank all the cash in the cash box except shs 800.
Required
i) Prepare a three column cash book and balance it off. (10mks).
b) Explain three reasons why its better for Kenya to borrow internally rather than from external sources. (6mks).
c) Use a diagram to explain the incidence of tax under perfectly inelastic demand. (4mks).
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