KCSE Past Papers 2014 Business Studies Paper 2 (565/2)

1 (a) Explain five benefits that a firm may enjoy by preparing a business plan. ( l0 marks)

(b)Explain five demerits that a country may suffer when the government becomes a major investor in business. (10 marks)

2 (a) On first January 2012, Ndovu Traders had shs 30,000 in cash and shs 75,000 at the bank. During the month, the following transactions took place:

January 2nd:Bought goods in cash Worth shs 15,500

5th: Received cash from Chui shs 23,750 after allowing 5% cash discount.

8th: Withdrew shs 8,900 from the bank for personal use.

11th: Maro, a debtor settled her account of shs 16,800 by a cheque of shs 16,000.

15th: Sales amounted to shs 24,250 in cash.

17th: Paid Furaha traders shs 29,100 in cash in full settlement of their account less 3% cash discount.

20th: Withdrew shs l5,000 from the bank for business use.

22nd: Koko a debtor, settled her account of shs 40,000 by cheque less 2.5% cash discount.

25th: Paid Wages shs 21,000 in cash.

Required;

Prepare a duly balanced three column cash book. (12 marks)

(b) Explain four reasons for which traders observe ethical practices in product promotion. (8 marks)

3 (a)Explain five objectives that may be achieved by establishing firms in different parts of the country (10 marks)

(b) Describe five accounting documents that are used in home trade. (10 marks)

4 (a) The following information relates to Bahati enterprises:

Details Shs

Stock 1*‘ January 2012 430 .000

Purchases 930,000

Sales 1,155,000

Carriage outwards 25 .000

Carriage inwards 10,000

Returns outward 20 .000

Returns inwards 30,000

General expenses 100.000

Insurance 25 .000

Stock 31st December 2012 470,000

Calculate:

(i) Turnover(1 marks)

(ii) Rate of Stock Turnover(3 marks)

(iii) Mark up(2 marks)

(iv) Margin(2 marks)

(v) Net profit(2 marks)

(b) Explain five guidelines that should be followed by the government in its expenditure. (10 marks)

5. (a) Explain five disadvantages that a developing country may suffer by liberalizing foreign trade. (10 marks)

(b) Explain five features of monopolistic competition. (10 marks)

6. (a) Apart from selling shares, explain five sources of finance for a public limited company. (10 marks)

There has been a decline in the demand for wooden furniture. Explain five factors that may have caused this trend. (10 marks)