KCSE Business Studies Topical Questions and Answers

K.C.S.E Business Studies Q & A - MODEL 2019PP2QN2b

31/5/2020

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The Trial Balance given below was extracted from the books of Rakwaro Enterprises on
31 December 2015.

Stock on 31 December 2015 was valued at Ksh 280,400.

Required

Prepare Rakwaro Enterprises Trading Profit and Loss Account for the period

ending 31 December 201 5

Determine Rakwaro Enterprises initial capital.

Answers

INITIAL CAPITAL=Final capital-NP+D
=720000 - 337200 + 28000
=Shs 40800

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Explain five differences between a sole proprietorship and a public limited company.

31/5/2020

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Answer

Differences between sole proprietorship and public limited company

Sole proprietorships are formed by one person while the latter is formed by a minimum of 7
Sole proprietorship has unlimited liability while public companies don't
In sole proprietorship existence depends on the life of a sole proprietor while public ltd companies have perpetual life irrespective of life /death of shareholder
In sole proprietorship much of source capital is personal savings, in public ltd companies its from shares
Sole proprietorship is managed by the owner while in public ltd companies its managed by a board of directors
In sole proprietorship, few legal formalities are required while in public ltd companies formation procedure is long requiring many legal formalities
In sole proprietorship ,little capital is required while in public ltd companies ,a huge amount is required

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Explain five services that may be offered by wholesalers to the retailers.

31/5/2020

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Answer

Services that are offered by wholesalers to retailers:

Availing a variety of goods from different producers relieving the retailers of the burden of visiting the producers premises/meeting their different needs /choice

Breaking bulk into quantities desired by retailers /the retailers are able to purchase only in the quantities they can afford

Offer storage /warehousing services this relieves the retailer from the risks damage/cost of storage of goods/services

Provide credit/Trade credit/ financing to deserving retailers /which act as a source of capital deserving retailers/which act as a source of capital to them to be paid at a later date as agreed
Advertise goods/product promotion They advertise goods/product promotion to the benefit of retailers to find a ready market
They offer transport to the retailers relieving them the transportation cost

They inform/advice/educate the retailers on available offers for a certain commodity hence helping retailers to improve on their profit margin

Blending the goods they mix the goods to get a better/desired quality

Packaging the goods they put the goods in suitable containers/sizes/packages

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Apart from trains and motor vehicles, state four other means of transporting goods and people on land

31/5/2020

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Answers

Other means of transporting goods and people on land apart from
trains and motor vehicles are:

Use of animal transport.
Human portages
Use of carts.
Bicycles
Motorcycles.
Pipelines.

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Outline four benefits of a bonded warehouse to the importer.

31/5/2020

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Answer

Benefits of a bonded warehouse to the importer include:

The importer can sell the goods before paying duty hence transferring the burden to the buyer.
Goods can be prepared for final sale while still in bond.
Gives the ¡importer time to arrange for payment of duty.
The importer can look for market
Some goods like wine, can improve in quality and value while still in bond.
Security is provided for the goods while they are in bond.

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Determine the excess demand or excess supply from the combined demand and supply schedules of oranges given below

31/5/2020

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Determine the excess demand or excess supply from the combined demand and supply schedules of oranges given below

Answer

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Highlight four factors that may influence an individual’s demand for money in order to fulfill the transaction motive

31/5/2020

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Answer

Factors that may ¡influence an individuals’ demand for money in
order to fulfill the transaction motive Include:

The individuals level of income/earnings
The frequency of payment by the individual.
The individual’s spending habits.
The rate of inflation
The number of dependants supported by the individual
Availability of credit.
The frequency of income/individual’s earning.

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Highlight four contributions of entrepreneurs to the growth of an economy.

31/5/2020

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Answer

Contributions of entrepreneurs to the growth of an economy
include:

They create employment by establishing businesses.
They make use of locally available resources which would have been idle.
They improve the citizens’ standard of living by offering them a source of income.
Their ventures become a training ground for local labour which then becomes skilled’
They save the country foreign exchange which would have been spent on imports
Promote technological advancement through their creativity.
Promote entrepreneurial culture by being eye openers to other people who then start their own businesses.
Promote the accumulation of capital by ploughing back their profits,

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Outline four characteristics of a good tax system.

31/5/2020

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Answer

Characteristics of a good tax system include:

Equitably distributes the tax burden according to the payers’ ability to pay.
Certain and clearly defines what the payer is expected to pay.
Convenient and easy for the tax payer to meet the tax obligations.
Economical and allows the tax to be collected at the least cost
Flexible enough to allow for adjustments according to prevailing conditions.
Diverse as to capture as many sources as possible
simple enough to be understood by all tax payers
Elastic and able to generate more r venue with improved economic performance

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Identify the level of production into which the following workers belong:

31/5/2020

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Answer

Levels production ¡n which the workers belong are:

Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary.

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The following information was extracted from the books of Jabalí Traders on 31 December2015.

31/5/2020

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(a)Determine net purchase

Answer

Determining net purchases:
Purchases          84,375
Add: Carriage in 9,170
                                =93545
Less: returns out 15,520
Net purchases   = 78025

(b)State two reasons for preparing the trading account

Reasons for preparing the trading account include:

Enables the business to determine the value/cost of goods sold in a given period.
It reveals the amount of revenue generated from the sale of stock in a given year
It helps to determine whether the business has made a loss or a profit from the sale of stock in a given year.
It can help get the performance of a business if compared across different years.
It can help to compare the performance of a business to that of others