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

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Highlight four factors which may lead to an increase in a country’s national income.

31/5/2020

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Answer

Factors which may lead to an increase in a country’s national income
include:

A stable political environment
Technological advancement
Vibrant entrepreneurship.
increased supply of skilled labour
Increased access to capital. ,
Optimal utilization of available natural resources

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Outline four features of co-operative societies.

31/5/2020

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Features of co-operative societies

Answer

Features of co-operative societies include:

Formed by a minimum often members
Run by management committee.
Governed using by —laws.
Surplus/profits is distributed to members.
It is a separate legal entity from the members.
It has limited liability.
it has perpetual succession
Its main source of capital is the shares contributed by members

Outline four features of co-operative societies

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State the relevant books of original entry into which information extracted from the source documents given below would be recorded

31/5/2020

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Answer

Relevant books of original entry into which information extracted from the source documents would be recorded are:

Purchases journal
Returns inwards journal
Cash receipts journal/cash book
Purchases journal.

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Outline four factors that Chemichemi Dairies would consider when selecting a channel to distribute their fresh milk.

31/5/2020

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Answer

Factors that Chemichemi dairies would consider before selecting a
channel to distribute their fresh milk include:

Length of the channel due to perishability of the milk.
The geographical spread of their customers.
The resources at the firms’ disposal like milk c ling plants,distribution vans
Pricing of the milk and cost of the channel.The nature of competition.
The prevailing market risks.
The government policy on milk distribution.
Needs to free storage space.

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Highlight four functions of the Department of External Trade in the Ministry of Industry, Trade and Cooperatives.

31/5/2020

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Answer

Functions of the Department of external trade in the ministry of Industry, Trade and Co-operatives include:

Develop bilateral and multilateral trade agreements to accord Preferential treatment to Kenyan exports.
Educating Kenyan exporters on trade regulations and practices in other countries.
Intervene on behalf of Kenyan traders in between Kenyan traders and foreign clients.
Arrange for trade fairs, shows and exhibition for Kenyan goods in foreign countries
Expand and diversity foreign markets for Kenyan goods
Inform Kenyan producers available selling opportunities in other countries.

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List four types of small-scale retail business that one can run without a shop.

31/5/2020

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Answer

small scale retail business that one can run without a shop include:

Hawking
Peddling
road side selling
Open air market trading.
Automatic vending by use of a machine
On-line selling

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Outline four features that may indicate a country’s state of underdevelopment

31/5/2020

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Answer

Features that may indicate a country’s state of underdevelopment
include:

High disparities in income distribution.
High population growth rate.
Dominance of the subsistence sector.
High levels of poverty
low levels of savings and investment.
High levels of unemployment.
Low levels of technology.
Over reliance on developed countries.
Under utilization of natural resources

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By use of the book keeping equation, determine the missing values in the table below:

30/5/2020

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Answer

The missing values ¡n the table are:

458,900
594,350
892,735
1,510,110

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Highlight four merits of using sales people to promote the sales of a particular product

30/5/2020

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Answer

Merits of using sales people to promote the sales of a particular product include:

It gives a personal touch which elicits positive response from potential clients.
It can be used to target specific groups of customers.
It is flexible since the message can be tailored to suit the needs of each client.
Allows for demonstration on product usage.
Source of immediate feedback from the buyer.
Buyer’s questions/concerns are immediately addressed
It leads to more sales since customers may be convinced persuasive salespeople.

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Complete the diagram below to illustrate the classification of trade.

30/5/2020

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Complete the diagram below to illustrate the classification of trade.

Answer

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State the circumstance under which each of the following terms of trade would be applied in foreign trade.

30/5/2020

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Franco
Ex-works
In Bond
Free Alongside Ship

Answer

Circumstances under which each of the terms of trade would be
applied in foreign trade are:

Franco: when the price quoted covers all expenses till goods reach the premises of the buyer
Ex-works: when the price quoted only covers the fraction and while they are within the manufacturer’s warehouse.
In bond: when the prices quoted covers all expenses until goods are delivered in a bonded warehouse in the country of destination.
Free alongside ship (F.A): Where the price quoted cover all expenses to the point where the goods are next to the ship.

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Outline four factors that make office managers to communicate in writing to their staff.

30/5/2020

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Factors that make office managers to communicate in writing to their staff

Answers

Factors that make office managers to communicates to their staff inwriting include:

Confidentiality. The confidentiality of the message is enhanced by
written means
Accuracy. message is delivered in its original form without
distortion.
Completeness of message. Written forms may be able to pass detailed
illustrations.
Future reference. The message may form a basis for decision making
in the future.
Reliability of the means This ¡s a trusted means of communicating
in institutions.
Economy. It is cost effective since it is affordable.
Accessibility. It ¡s easily accessible to all staff members.
Acceptability.it is the acceptable means of official communication in
institutions.

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Highlight four functions of an office in an organisation.

29/5/2020

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Functions of an office in an organisation

Functions of an office in an organization include:

An administration centre for the organization.
The communication centre for the organization.
A Centre for processing data.
Production and reproduction of documents.
management of records
Public relations centre for the organization
Safe guarding of the organization’s assets.
Personnel functions are coordinated from the office

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Outline four roles played by the Nairobi Securities Exchange in the Kenyan economy.

29/5/2020

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Roles played by the Nairobi Securities Exchange in the Kenyan economy

Answer

The roles played by the Nairobi securities exchange in the Kenyan
economy include:

A measure of the country’s economic performance as reflected in the prices of shares.
Sets the price/value of securities based on the forces of demand and supply.
Ensures safety of transactions since the financial health listed companies is usually verified.
Promotes economic growth through disinvestment and reinvestment
Promotes local ownership through sale and purchase of shares.
Provides ready market for sale and purchase shares hence improving liquidity.
Promotes saving and investment among the population

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The Trial Balance given below was extracted from the books of Rakwaro Enterprises on31 December 2015.

Required

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Answer

Answer

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Answer

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

Answer

Answer

Answer

Answer

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(a)Determine net purchase

Answer

(b)​State two reasons for preparing the trading account

Answer

Features of co-operative societies

Answer

Answer

Answer

Answer

Answer

Answer

Answer

Answer

Complete the diagram below to illustrate the classification of trade.

Answer

Answer

Factors that make office managers to communicate in writing to their staff

Answers

Functions of an office in an organisation

Roles played by the Nairobi Securities Exchange in the Kenyan economy

Answer

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

(b)State two reasons for preparing the trading account