KCSE Business Studies Topical Questions and Answers - ATIKA SCHOOL

The following balances were extracted from books of Simba Traders for the year ended 31 December 2006,

13/12/2020

The following balances were extracted from books of Simba Traders for the year ended 31 December 2006,

The following balances were extracted from books of Simba Traders for the year ended 31 December 2006,

Additional information
(i) Motor vehicle is depreciated by Sh187 500 while furniture is to be depreciated by Sh16 050 per year.
(ii) Interest on loan is charged at 18% per year. This interest was still owing on 31 December 2006.
(iii) Rent unpaid on 31 December 2O06 was Sh 2400
Prepare
(a) Profit and loss account for the year ended 31 December 2006
(b) Balance sheet as at 31 December 2006.(12 marks)

Additional information (i) Motor vehicle is depreciated by Sh187 500 while furniture is to be depreciated by Sh16 050 per year. (ii) Interest on loan is charged at 18% per year. This interest was still owing on 31 December 2006. (iii) Rent unpaid on 31 December 2O06 was Sh 2400 Prepare (a) Profit and loss account for the year ended 31 December 2006 (b) Balance sheet as at 31 December 2006.(12 marks)

Additional information (i) Motor vehicle is depreciated by Sh187 500 while furniture is to be depreciated by Sh16 050 per year. (ii) Interest on loan is charged at 18% per year. This interest was still owing on 31 December 2006. (iii) Rent unpaid on 31 December 2O06 was Sh 2400 Prepare (a) Profit and loss account for the year ended 31 December 2006 (b) Balance sheet as at 31 December 2006.(12 marks)

Explain four circumstances in which a trader may offer after sales service to the buyer. (8 marks)

13/12/2020

Explain four circumstances in which a trader may offer after sales service to the buyer.

Circumstances in which a trader may offer after sales service to the buyer.

Where goods sold are of technical nature and may need advice/demonstration on use.
Where expertise is required in installation and the trader has technical knowledge/ability/backup.
Where the product is new in the market and the trader requires feedback on the product’s performance.
Where competition is stiff and the trader uses after sales services as a product promotional tool to win more customers and increase sales.
Where expertise is required in maintenance/service/repairs and the trader is able to provide the service.
Where it is the policy of the business as a way of improving customer relations and improve business image.
Where it is the government policy. the trader will have no option.
Where the nature of the product is such that is requires specialized transport and the trader can provide it.

Explain four circumstances in which a trader may offer after sales service to the buyer. (8 marks)

Explain six circumstances under which a country may restrict international trade. (12 marks)

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Explain six circumstances under which a country may restrict international trade.

Circumstances under which a country may restrict international trade.

Where there is need to protect local/infant industries which may not withstand competition foreign established foreign industries.
Where there is need to control dumping to prevent adverse effects on the economy.
Where balance of trade/payment continues to deteriorate to reduce payment on imports.
Where goods are hazardous/harmful for consumption in order to protect the health of consumers.
Where goods involved are a security risk to the country to ensure peace and stability.
Where it is necessary to counter the actions of trading partners as a retaliatory measure.
Where there is need to avoid imported inflation arising from overpriced imports.
Where it is politically expedient to do so in order to promote good governance in another country.
Where there is need to safeguard local employment which may be lost through entry of cheap imports.
Where there is need to avoid overdependence on imports which may lead to political blackmail.
Where there is need to avoid overexploitation of resources which may cause their depletion.
Where there is need to build reserves of strategic commodities to avoid shortages in meeting local demands.

Explain six circumstances under which a country may restrict international trade. (12 marks)

Describe four measures that the Government may put in place to reduce the amount of money in circulation. (8 marks)

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Describe four measures that the Government may put in place to reduce the amount of money in circulation.

Measures that the Government may put in place to reduce the amount of money in circulation.

Compulsory deposits/special deposits/increase minimum reserve requirements The Central bank may require that commercial banks deposit a certain amount of their cash with the central bank.
Selective credit control/credit rationing. The government through the central bank may require that certain sectors of the economy be assisted financially.
Open market operations. The government may instruct the central bank to sell
government securities/stocks/bonds in the open marker/stock exchange.
Raise interest rates - High interest rates may be offered for savings to encourage more deposits.
Raise cash/liquidity ratio thereby leaving commercial banks with less money to lend.
Raising the bank rate leading to credit/loans becoming more expensive.
Raising margin requirement to discourage borrowing.
Moral suasion by government appealing to commercial banks to reduce lending to the public.
Reducing government expenditure by suspending sonic projects.
Raising taxes to reduce disposable income hence lower purchasing power.
Surplus budgeting by spending less than the income raised.

Describe four measures that the Government may put in place to reduce the amount of money in circulation. (8 marks)

Memon Traders does not keep a complete set of accounting records. The following information relates to the year ended 31 December 2006.

13/12/2020

Memon Traders does not keep a complete set of accounting records. The following information relates to the year ended 31 December 2006.

Memon Traders does not keep a complete set of accounting records. The following information relates to the year ended 31 December 2006.

Additional information
Included in credit sales are drawings of stock ra1ued at Sh 25 000.
For the year ended 31 December 2006, determine the following:
(i) Total sales
(ii) Total purchases
(iii) Commission receivable
(iv) Insurance expense
(v) General expenses (10 marks)

Memon Traders does not keep a complete set of accounting records. The following information relates to the year ended 31 December 2006.

Explain five circumstances that would influence a producer to use wholesalers in distributing farm produce. (10 marks)

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Explain five circumstances that would influence a producer to use wholesalers in distributing farm produce.

Where the producer lacks adequate storage The wholesaler may relieve the producer of the storage costs
Where goods require bulk breaking. The wholesaler may re-package the goods in smaller quantities as required by customers.
Where there is need to prepare goods for final sale. The wholesaler may pack. brand. blend, grade sort and weigh goods to the relief of flic producer.
Where the market is wide and the goods have to be distributed far. The wholesaler will reach the consumer more easily.
Where the producer would want feedback on the market status. The wholesaler may reach consumers through the retailers and get feedback regarding the product more easily.
Where the producer would want to engage wholesaler to assist with advertising so as to save on costs.
Where the producer wants to sell in bulk since the wholesalers can afford to buy in large quantities.
Where the producer lacks transport. the wholesaler would relieve him of the cost.
Where it is the government policy to distribute through wholesalers then the producer would have no choice.
Where the marketing risks are high since the wholesalers can bear some of the risks.
Where flic producer wants to concentrate/specialize in production. then the distribution can be handled by wholesalers.
Where the producer needs to maintain fewer records by dealing with wholesalers who are few.

Explain five circumstances that would influence a producer to use wholesalers in distributing farm produce. (10 marks)

Explain five reasons why an effective filing system is important in an office, (10 marks)

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Explain five reasons why an effective filing system is important in an office,

Tidiness is maintained in the office as documents are arranged neatly.
Quick access to information since documents are coded/serialized.
Safety of information from damage by bad weather. fire etc is minimized.
Saves on storage space since documents are kept is a compact manner.
Encourages prompt decision making as information is readily available.
Encourages transparency and accountability since the movement of documents can be monitored.
Security of information/documnents against loss from theft and misplacement.
Safeguards secret and confidential information as documents are kept away from unauthorized access.
Facilitates storage/safekeeping of information/documents for future reference.

Explain five reasons why an effective filing system is important in an office, (10 marks)

Explain five ways in which effective management practices may contribute to the success of a business. (10 marks)

13/12/2020

Explain five ways in which effective management practices may contribute to the success of a business.

Ways in which effective management practices may contribute to the success of a business.

Proper planning is put in place so that good results can be anticipated and also accommodate future changes.
Relevant strategies may be established so as to achieve desired results.
Setting clear goals and objectives so as to achieve the intended results.
Providing and using organizational resources efficiently and effectively. This involves budgeting to avoid wastage and misuse.
Proper time management to ensure set activities (tasks) are accomplished within the required time.
Good supplier/customer/employee relations to attract and retain them (suppliers. employees and customers).
Corporate social responsibility is fostered. This builds on the image and reputation of the Company.
Compliance with legal requirements in order to operate smoothly and avoid conflict with law enforcement authorities.
Motivation of employees to increase productivity.
Proper organization to avoid overlap/duplication of duties.
Proper direction to ensure activities are geared towards achieving the set goals.
Identifying the required skills/training relevant staff for smooth running of the organization
Monitoring/evaluating/checking that planned activities take place in order to achieve desired results.
Proper co-ordination to reduce conflicts.

Explain five ways in which effective management practices may contribute to the success of a business. (10 marks)

On 1 September 2006, Igonji had Sh55 000 in hand and Sh 250 000 at bank.During the month, the following transactions took place:

13/12/2020

On 1 September 2006, Igonji had Sh55 000 in hand and Sh 250 000 at bank.During the month, the following transactions took place:

September 2 Cash sales banked Sh 35260
3 Bought ribbons in cash Sh 4 500
8 Paid Wangila, a creditor Sh 94 000 by cheque in full settlement of’ his account after deducting 6% cash discount
12 Received a cheque for Sh 58 800 from Wetu after allowing her a cash discount of Sh 1 200
15 Paid salaries Sh 34 000 in cash
25 Withdrew Sh 50 000 from bank for office use
28 Anyango, a debtor paid her account of Sh 75 000 by cheque less 10% cash discount.
30 Deposited all the cash into bank except Sh 13 700

Prepare a three column cash book arid balance it off. (10 marks)

September 2 Cash sales banked Sh 35260 3 Bought ribbons in cash Sh 4 500 8 Paid Wangila, a creditor Sh 94 000 by cheque in full settlement of’ his account after deducting 6% cash discount 12 Received a cheque for Sh 58 800 from Wetu after allowing her a cash discount of Sh 1 200 15 Paid salaries Sh 34 000 in cash 25 Withdrew Sh 50 000 from bank for office use 28 Anyango, a debtor paid her account of Sh 75 000 by cheque less 10% cash discount. 30 Deposited all the cash into bank except Sh 13 700 Prepare a three column cash book arid balance it off. (10 marks)

September 2 Cash sales banked Sh 35260 3 Bought ribbons in cash Sh 4 500 8 Paid Wangila, a creditor Sh 94 000 by cheque in full settlement of’ his account after deducting 6% cash discount 12 Received a cheque for Sh 58 800 from Wetu after allowing her a cash discount of Sh 1 200 15 Paid salaries Sh 34 000 in cash 25 Withdrew Sh 50 000 from bank for office use 28 Anyango, a debtor paid her account of Sh 75 000 by cheque less 10% cash discount. 30 Deposited all the cash into bank except Sh 13 700 Prepare a three column cash book arid balance it off. (10 marks)

On 1 September 2006, Igonji had Sh55 000 in hand and Sh 250 000 at bank.During the month, the following transactions took place:

Explain five challenges that may be experienced by a country whose population is made up of large proportion of young people. (10 marks)

13/12/2020

Explain five challenges that may be experienced by a country whose population is made up of large proportion of young people.

High rate of unemployment as demand for jobs outstrips the available job opportunities.
Rate of crime/social evils may rise. As the youth remain idle, they are likely to resort to crime and other social evils as they look for means of survival.
Constraints on goods/services associated with young people as demand outstrips supply.
Dependency ratio will rise as economically active population will shoulder a bigger burden.
Reduced savings/investments. Investments will decline as a result of high rate of consumption by young people. This may lead to low development.
Low per capita income. Since the National Income will be spread over a large noncontributing population which may lead to a low standard of living.
Problem of raising government revenue which may force the government to divert resources meant for other sectors to cater for the young.
Low labour supply as many young people may not have attained the working age nor acquired the required skills and experience.

Explain five challenges that may be experienced by a country whose population is made up of large proportion of young people. (10 marks)

With the aid of a diagram, explain the behaviour of average cost curve in the short run for a firm with fixed production capacity.(10 marks)

13/12/2020

With the aid of a diagram, explain the behaviour of average cost curve in the short run for a firm with fixed production capacity.

With the aid of a diagram, explain the behaviour of average cost curve in the short run for a firm with fixed production capacity.(10 marks)

For a firm with fixed production capacity, the average costs are high in the beginning as they are divided among few production units. As production increases, the average costs fall, since the costs are divided among more production units (the firm experiences economies of scale). The average costs will then fall to a minimum level then start to rise again as more costs are incurred over time (the firm experiences diseconomies of scale).

Explain five features that differentiate a Public Limited Company from a partnership form of business. (10 marks)

13/12/2020

Explain five features that differentiate a Public Limited Company from a partnership form of business.

Explain five features that differentiate a Public Limited Company from a partnership form of business. (10 marks)

Outline four reasons why the government may use regulatory measures to protect consumers against exploitation. (4 marks)

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Outline four reasons why the government may use regulatory measures to protect consumers against exploitation.

Reasons why the government may use regulatory measures to protect consumers against exploitation.

The standards for operating business are low/unhealthy operations.
Generalized exploitation of consumers on weights and measures.
There is need for the government to enforce existing laws. for example:- trading licence.
Hoarding is taking place.
Unsafe buildings.
Substandard goods.
Unfair prices.
False advertising.
Breach of contract.

Outline four reasons why the government may use regulatory measures to protect consumers against exploitation. (4 marks)

Visitors to the offices of Triple B Enterprises have been complaining of lack of etiquette from the secretaries. Highlight four measures that the secretaries can take to improve the office etiquette. (4 marks)

13/12/2020

Visitors to the offices of Triple B Enterprises have been complaining of lack of etiquette from the secretaries. Highlight four measures that the secretaries can take to improve the office etiquette.

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Visitors to the offices of Triple B Enterprises have been complaining of lack of etiquette from the secretaries. Highlight four measures that the secretaries can take to improve the office etiquette. (4 marks)

Measures that the secretaries can take to improve the office etiquette.

Show respect to both colleagues and visitors.
Observe courtesy in dealing with people.
Be organized at work at all times.
B e honest/truthful in performing duties.
Co-operate with other workers. visitors and management.
Be punctual in offering service.
Be loyal to the organization.
Be diplomatic.
Make sound judgment.
Be accurate.
Have initiative.

Outline four benefits that accrue to a business person who uses the latest technology in record keeping. (4 marks)

13/12/2020

Outline four benefits that accrue to a business person who uses the latest technology in record keeping.

Benefits that accrue to a business person who uses the latest technology in record keeping.

Speedy customer service.
Confidentiality of business records.
Records can easily be retrieved.
Time saving.
Clean and tidy records produced.
Minimum storage space required! a large amount of information can be stored.
Accuracy is enhanced.
Cost of maintenance is lower.
Records not easily damaged.
Records not easily lost.
Business image is enhanced.
Less labour required/saves labour cost.

Outline four benefits that accrue to a business person who uses the latest technology in record keeping. (4 marks)

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