KCSE Business Studies Topical Questions and Answers - ATIKA SCHOOL

Cheru Traders does not keep a complete set of books of accounts. The following information was extracted from her books of accounts.

10/12/2020

Cheru Traders does not keep a complete set of books of accounts. The following information was extracted from her books of accounts.

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.

Explain four functions of money. (8 marks)

10/12/2020

Explain four functions of money.

Used / serves as a medium of exchange. Money can be exchanged for goods/services removing the problem of barter/ can be used to buy goods/ serves as it is generally accepted as a medium of exchange.
Measure of value: Value of goods / services can be compared / estimated / determined/ calculated / assigned.
Store of value: value of goods / services can be stored in form of goods / services are recorded in terms of money.
Standard of deferred payments / money assist of conduct business on credit / where payment are made later.
Unit of account. Values of goods /services are recorded on term of money.

Explain four functions of money. (8 marks)

Using a diagram, explain how a monopolist firm determines its output. (10 marks)

10/12/2020

Using a diagram, explain how a monopolist firm determines its output.

Using a diagram, explain how a monopolist firm determines its output. (10 marks)

Outline five factors that may limit the use of containers as a method of transporting goods in a developing country. (10 marks)

10/12/2020

Outline five factors that may limit the use of containers as a method of transporting goods in a developing country.

Specialized equipment which are expensive. The method calls for specialized equipment for handling goods which are lacking/expensive to buy/use/maintain. Accept examples of specialized equipment e.g. handling and offloading machines.
Organization personnel/talents/training/operational/management skills needed for the method may be lacking/training may be expensive.
Volume of business may not be large enough/warrant the heavy investment/volume of business may be low.
Initial capital needed for the system/not easily available/expensive.
The method requires re-degrading of existing ports/reconstructing part which is quite expensive.
Use of medium technology which is limited/lacing/not readily available/limited medium technology (in a developing country) which may slow the rate of processing goods.
General resistances to change by stakeholders/interested/affected parties of people generally resist change.

Outline five factors that may limit the use of containers as a method of transporting goods in a developing country. (10 marks)

Explain five disadvantages that a country may experience from imposing trade restrictions on trading partners. (10 marks)

10/12/2020

Explain five disadvantages that a country may experience from imposing trade restrictions on trading partners.

Retaliation by other trading partners/countries leading to reduction in exports.
Low/foreign exchange earnings due to reduced exports.
Curtailed transfer of technology/factors of production that may lead to poor quality production/low quality of products/low output.
Lack of variety of/limited products which restricts consumers’ choice.
Poor international relations which may lead to conflicts among consumers/may not get assistance in times of calamity/needs.
Leads to increased unemployment due to reduced trading activities.
May suffer balance of payment as a result of reduced income of exports.
Reduced competition leading to low quality goods/services/inefficient firms/exploitation of consumers.

Explain five disadvantages that a country may experience from imposing trade restrictions on trading partners. (10 marks)

Vertical Divider

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)

10/12/2020

Musi Enterprises are considering to market their imported products direct to consumers.Outline five reasons that may be influencing them to make this decision.

It may that the goods are produced according to customer specifications
The firm may be having their own retail outlet/distribution facilities.
The market may be localized/near (in terms of geographical location).
The goods may be expensive and middlemen cannot be able to stock them.
The goods may be of a technical nature/require after sales services.
The goods may be perishable (and the firm may want to deliver them fast to the consumer).
The firm may want to have direct contact with customers/get immediate feedback/create good impression.
Where customers order for goods direct from the trader/firm
If there are no middlemen
Where government policy requires goods to be sold directly to consumers.
Where the goods imported are in small quantities.
Where the size of the market is small.
Where the firm would maximize profits by selling directly to consumers.
When there is stiff competition.
Where the rest of distributors time in middlemen make the price of products high/expensive

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)

Outline five benefits that a Savings and Credit Co-operative society (SACCO) provides to its members.(10 marks)

10/12/2020

Benefits that a Savings and Credit Co-operative society (SACCO) provides to its members.

Encourage members/help to save (big making regular contribution)
Provide loan facilities to members based on member’s contribution.
Members receive dividends based on their shares/they give dividends to their members.
Members are educated/advised on cooperative activities/their rights/their obligations.
Some SACCOS have front office banking facilities/front office services for their members.
They give interest to their members.
They charge low interest on loans.
They insure member’s contributions/members loans are written off on death.
They give loans on easy terms/conditions.
Members savings/new contribution is doubled upon death of a member.

Outline five benefits that a Savings and Credit Co-operative society (SACCO) provides to its members.(10 marks)

Explain five benefits that may accrue to a community that is involved in trading activities. (10 marks)

10/12/2020

Benefits that may accrue to a community that is involved in trading activities.

There will be an opportunity to utilize available resources that would otherwise have stayed idle/the community will be able to utilize idle resources.
There will creation of employment for those engaged in trading activities/ various/different trading action
Trade will also lead to expanded / wide markets for goods / services (produced)
Variety of goods/services (for exchange will be available giving people a choice/to satisfy different consumer needs.
Growing/increased income/earning of income to purchase/continue more goods/services
New business/more business opportunities (will be started as people’s needs continue to increase/more business opportunities to provide support services/other services.
Increased production of goods/services making more goods/services available to the community/when these meet consumer needs.
Entrances specialization/division of labour/improve quality of goods due to exchange of goods/services/which leads to quality goods/services.
Improved technology due to exchange of ideas/skills, machinery, employment.
Poorer/understanding due to interdependence/interaction.
Sale/disposal of surplus goods/services to minimize wastage.
Factors goods/services they don’t produce by buying them from others.
Improved infrastructure e.g. roads, amenities, railways

Explain five benefits that may accrue to a community that is involved in trading activities. (10 marks)

The following trial balance was extracted from the books of Fula Traders on 31st December 2005.

10/12/2020

The following trial balance was extracted from the books of Fula Traders on 31st December 2005.

The following trial balance was extracted from the books of Fula Traders on 31st December 2005.

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.

Explain four ways that a government can use to finance a budget deficit.( 8 marks)

10/12/2020

Ways that a government can use to finance a budget deficit.

(Inflationary financing) Borrowing from the central bank through overdrafts / short term loans / accept use of examples to explain.
Borrowing from international money markets / agencies / financial institutions / non- banking financial institutions such as IBRD / IMF /World Bank / PBR / provides funds / revenue for government / accept use of examples.
Borrowing from capital markets such as ICDC / insurance companies / AFC / NPCK / procedure by selling bonds.
Borrowing from domestic money markets such as commercial banks / selling treasury bills and / bonds / promissory notes / I.O.U.
Borrowing from other countries / multilateral / Bilateral borrowing through loans / buying goods / services on credit.
Borrowing from members of the public by selling treasury bills / bonds/ promissory notes.
Grants / donations / from donor countries / finances / individuals.
Printing more currencies
Imposing conditions / new / taxation in related goods / services / increased government revenue / raise funds.

Explain four ways that a government can use to finance a budget deficit.( 8 marks)

Over the years southern Star has grown into a large business enterprise. Explain five diseconomies of scale which it may experience.(10 marks)

9/12/2020

Over the years southern Star has grown into a large business enterprise. Explain five diseconomies of scale which it may experience.

Natural resources / land ./ gifts of nature / accept gift of nature - a country endowed with natural resources can produce more good / services / can generate income.
- A Country not well endowed with natural resources may produce less goods /services / can generate less income

Over the years southern Star has grown into a large business enterprise. Explain five diseconomies of scale which it may experience.(10 marks)

Explain five factors that may influence the level of national income of a country. (10 marks)

9/12/2020

Factors that may influence the level of national income of a country.

Human resources / labour / working population / manpower
A country with skilled /(highly) trained / large manpower can produce quality/quantity goods/services / can generate high income.
A country with unskilled / or untrained / small manpower can produce low quality / quantity goods / services can generate low income.
Natural resources / land ./ gifts of nature / accept gift of nature
a country endowed with natural resources can produce more good / services / can generate income.
A Country not well endowed with natural resources may produce less goods /services / can generate less income.
(Level of ) technology
High level of technology may produce low quality / quantity of goods / services / generate high income.
Low level of technology may produce low quality / quantity goods / services / generate low income.
Capital (equipment) / man – made resources / accept if manmade resources e.g. infrastructure buildings.
Availability of capital / manmade resources (goods) makes production easy / preserves production (resulting in increased natural income) / may generate high income.
Lack of capital / or makes production different / reduces production / may generate low income.
Foreign investment
Investments from abroad may increase natural income to the country / increase production of goods / services / investments abroad may increase national income.
Reduction of foreign investment may reduce production of goods / services / income.
Good governance / political stability
Production of goods / services / investments / income increase as a result of good governance / political stability creates confidence in investors.
Poor governance / political instability reduces savings / investment / damages / investment / reduce incomes / production of goods / services.
Culture / entrepreneurship
Culture that encourages hared / work / entrepreneurship reduces production of goods / services / may generate low income.
Culture that encourages hard / work / entrepreneurship reduces production of goods / services / may generate low income.

Explain five factors that may influence the level of national income of a country. (10 marks)

The following balances were extracted from the books of Wanji Traders for the year ended 30 June 2005.Prepare a balance sheet of Wanji Traders as at 30 June 2005. (4 marks)

8/12/2020

The following balances were extracted from the books of Wanji Traders for the year ended 30 June 2005. Prepare a balance sheet of Wanji Traders as at 30 June 2005.

	Shs
Debtors	120000
Creditors	60000
Machinery	450000
Cash in Hand	70000
Cash in Bank	180000
5 year Loan	270000
Stock	60000

The following balances were extracted from the books of Wanji Traders for the year ended 30 June 2005.Prepare a balance sheet of Wanji Traders as at 30 June 2005. (4 marks)

Study the table below and calculate the values represented by the letters a, b, c and d.(4marks)

8/12/2020

Study the table below and calculate the values represented by the letters a, b, c and d.

Outputs units (sh)	Total cost(sh)	Marginal Cost (sh)	Average fixed costs (sh)	Variable Costs (sh)	Average total costs (sh)
0	4000	0	(a)	0	-
1	4200	200	4000	(b)	4200
2	5400	(c)	2000	700	2700
3	6600	1200	1333	867	(d)

Study the table below and calculate the values represented by the letters a, b, c and d.(4marks)

Outline four benefits to a trader who operates a small retail outlet. (4 marks)

8/12/2020

Benefits to a trader who operates a small retail outlet.

He needs only a small amount of capital.
He gives personal attention to customers.
His operations can be flexible.
Outlet is easy to manage
There is legal requirement.
He does not have to share profits with anyone
Maintains business

Outline four benefits to a trader who operates a small retail outlet. (4 marks)

State four problems that a planner may encounter in development planning. (4mks)

8/12/2020

Problems that a planner may encounter in development planning.

Lack of adequate information.
Bureaucratic rigidities.
Inadequate political good will.
Inadequate financial resources.
Inadequate human resource.

State four problems that a planner may encounter in development planning. (4mks)

Outline four ways that the World Bank may use to assist developing countries to improve their economy. (4mks)

8/12/2020

Ways that the World Bank may use to assist developing countries to improve their economy.

Providing finances to reduce budgetary deficits
Provide loans for development projects.
Provide finance to correct and adverse balance of payment.
Provide technical expertise to support development.

Outline four ways that the World Bank may use to assist developing countries to improve their economy. (4mks)

State four factors that may cause inflation in an economy.(4mks)

8/12/2020

Factors that may cause inflation in an economy.

Increase money supply unaccompanied by proportionate increase in the output of goods and services.
Increase in government expenditure.
Abnormal speculation and hoarding goods to create artificial shortages hence raising prices of goods.
Uncontrolled increase in costs of productions.
Increase in profit margin.
Reduction in subsidy.

State four factors that may cause inflation in an economy.(4mks)

Outline four benefits of direct taxation to the government. (4mks)

8/12/2020

Benefits of direct taxation to the government.

The tax collected at source and hence predictable
It is simple to administer.
The tax has a wide base and therefore more is collected.
A small change in tax rate is not easily felt by the taxpayer.

Outline four benefits of direct taxation to the government. (4mks)

The following balances were extracted from the books of Chombo Wholesalers for the year ended 31 Dec 2005.

8/12/2020

The following balances were extracted from the books of Chombo Wholesalers for the year ended 31 Dec 2005.

Calculate
a) margin
b) Current ratio
c) Rate of stock turnover (4mks)

The following balances were extracted from the books of Chombo Wholesalers for the year ended 31 Dec 2005.Calculate a) margin b) Current ratio c) Rate of stock turnover (4mks)

The following balances were extracted from the books of Chebi Traders for the month ended 31 March 2005.Prepare trial balance of Chebi Traders for the month ended 31 March 2005.(4mks)

8/12/2020

The following balances were extracted from the books of Chebi Traders for the month ended 31 March 2005. Prepare trial balance of Chebi Traders for the month ended 31 March 2005.

Prepare trial balance of Chebi Traders for the month ended 31 March 2005.

The following balances were extracted from the books of Chebi Traders for the month ended 31 March 2005.Prepare trial balance of Chebi Traders for the month ended 31 March 2005.(4mks)

State the effect of each of the following transactions on the balance sheet by writing increase, or decrease or no effect in each case.(4mks)

8/12/2020

State the effect of each of the following transactions on the balance sheet by writing increase, or decrease or no effect in each case.

Transaction	Effect
Bought machinery on credit
Withdrew cash from the business for person use
Purchased stock in cash
Paid outstanding loan by cheque.

Increase
Decrease
Not effect
Decrease

State the effect of each of the following transactions on the balance sheet by writing increase, or decrease or no effect in each case.(4mks)

Give four reasons why one would prefer a letter to a telephone to send a message. (4mks)

8/12/2020

Reasons why one would prefer a letter to a telephone to send a message.

Provides evidence
Can be filed for future reference
Relatively cheap
Appropriate for complex messages
Appropriate for confidential information

Give four reasons why one would prefer a letter to a telephone to send a message. (4mks)

Highlight four characteristics of economic resources. (4mks)

8/12/2020

Characteristics of economic resources.

Vertical Divider

Highlight four characteristics of economic resources. (4mks)

Scarcity
Have monetary value
Are unevenly distributed
Are capable of alternative uses
Can be combined in various proportions
Have utility usefulness

What factors may encourage entrepreneurship in Kenya (4mks)

8/12/2020

Factors that may encourage entrepreneurship in Kenya

Use of relevant business curriculum in learning institutions/vocational training
Government support in development of entrepreneurs/ subsidies
Existence of models in entrepreneurship/ role models
Access to business finance /capital
Need for a job

What factors may encourage entrepreneurship in Kenya (4mks)

Click to set custom HTML

Primary Resources

K.C.P.E Past Papers
Pri - Primary 1 Level
Pri - Primary 2 Level
Grade 1
Grade 2
Grade 3
Grade 4
Standard 5
Standard 6
Standard 7
Standard 8
English
Kiswahili
Social Studies
Science
Mathematics
Kenya Sign Language
I.R.E
H.R.E
Notes
Termly Questions
Mocks
K.C.P.E Past Papers

College Resources

E.C.D.E
P.T.E
D.T.E
Technical Diploma
Technical Certificate
Business Diploma
Business Certificate
Higher Diploma
K.A.S.N.E.B Resources
K.M.T.C Resources
Varsity Resources

Secondary Resources

Other Useful Links

Contact Us

Manyam Franchise
P.O Box 1189 - 40200 Kisii
Tel: 0728 450 424
Tel: 0738 619 279
Tel: 0763 450 425
E-mail - sales@manyamfranchise.com

Photos used under Creative Commons from USEmbassySA, zeesenboot, puliarf, 7C0, wuestenigel, focusonmore.com, nlintheusa, internetsense

business studies questions and answers form 3, business paper 2 questions and answers, business questions and answers, business studies topical questions, business form 2 questions and answers, atika school business studies, business studies questions and answers, business studies questions and answers form 1, business studies paper 1 questions and answers, business studies questions and answers form 3, business studies questions and answers form 2, business studies form 1 questions and answers pdf, business paper 2 questions and answers, kcse business studies revision questions