KCSE Business Studies Topical Questions and Answers

Lunga, a sole trader, does not keep a complete set of accounting records. Information extracted from the records are as follows

15/12/2020

Lunga, a sole trader, does not keep a complete set of accounting records. Information extracted from the records are as follows

Additional information:
(i) Interest charged on debtors overdue accounts amounted to Kshs 2,000
(ii) Bad debts written off amounted to Kshs 4,200
Prepare trading, profit and loss account for the year ended 31 December 2007 (10 mks)

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The following table represents the price and quantity of a commodity

15/12/2020

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The following table represents the price and quantity of a commodity

(i) Plot the above information on a graph ( 5 mks)
(ii) Calculate the price elasticity of demand ( 5 mks)

(i) Plot the above information on a graph ( 5 mks) (ii) Calculate the price elasticity of demand ( 5 mks)

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Malamu Traders had the following balances s at 31 December 2008

15/12/2020

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Malamu Traders had the following balances s at 31 December 2008

Prepare:
(a) Profit and loss account for the year ended 31 December 2008
(b) Balance sheets as at 31 December 2008 ( 12 mks)

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Explain four services that the central Bank of Kenya may offer as a Banker to commercial banks

15/12/2020

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Explain four services that the central Bank of Kenya may offer as a Banker to commercial banks

Services that the central Bank of Kenya may offer as a Banker to commercial banks

Advising/information/education/publishing journals for commercial banks or financial matters.
Banker to commercial banks/accepts deposits by being in custody of the reserves received from commercial basis.
Supervising/ monitoring the operations of commercial banks /banking act
Providing a central cleaning horse where commercial banks settle debts due to each other /for cheques
Being a tender of the last resort to the commercial bans
Foreign exchange /buy /sell foreign currency to/ for a commercial banks
Icore of currency for commercial banks operations/replaces old currency/issue new notes/coins
Mediation/arbitration in case of disputes (between commercial banks)
Licensing- the operations of commercial banks
Repatriation of excess foreign currency/profit (broad) on behalf of commercial banks
Statutory management during financial crisis /receiverships

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Analyze the following document issued by Sheikh Traders

15/12/2020

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Analyze the following document issued by Sheikh Traders

Analyze the following document issued by Sheikh Traders
Required:
(i) Name the document above
(ii) Calculate the amount paid for the goods, if the debtor paid on 28th October 2008
(iii) Determine the net profit of the business if transaction (ii) above was Kshs 120.400 and the debtor paid for the goods on 15th November 2008

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Using a diagram, explain the circular flow of income in a two sector economy

15/12/2020

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Using a diagram, explain the circular flow of income in a two sector economy

a)using a diagram, explain the circular flow of income in a two sector economy.
House holds supply their resources (factors of provision) to various types of businesses and receive payment on the form of rent, wages and profit
On the other hand, businesses sell finished products to household and households pay for the goods and services received

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Explain five ways in which the government of Kenya may reduce the level of unemployment

15/12/2020

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Explain five ways in which the government of Kenya may reduce the level of unemployment

Ways in which the government of Kenya may reduce the level of unemployment

Diversification of the economy by encouraging the establishing of different industries /sectors to create employments opportunities
Transforming agricultural sector/rural sector to curb rural urban migration/ accepts egs of transformation as a naming (to create more jobs and reduce unemployment )
Transforming education /training sector/to improve on skills/ (this makes the graduates)acquire relevant skills.
Establishing on employment policy by government to make it easy for people to get jobs/Accept egs of policy as mention
Lending /setting of a fund to assist unemployed to stat income generating activities/accept egs of funds as a mention
Exporting Labour by assisting unemployed people to acquire jobs abroad /countries with labour deficiency.
Encouraging the informal /Jua Kali sector in order to promote self employment
Delocalization/ decentralization policy for balanced regional development/reduced rural urban irrigation
Population policy to control growth/have a labour force that the economy can absorb
To improve infrastructure in order to suitable economic activities /Accept egs of infrastructure as a raring.
Increase government expenditure to expand the size of the economy/ to finance development projects.
Effective use of natural resources to increase production activities accepts egs of natural resources as a mentor.
Income /wage policy to harmonize/eliminate differences between regions/sectors
Attract (Local /foreign) investments through vision incentives/to grow the economy accept egs of incentives as explanation
Receiving collapsed industries/projects by injector, funds/selling than /increased production activities

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The diagram below shows an oligopolist kinked demand curve DD and current price and quantity at P and Q respectively.

15/12/2020

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The diagram below shows an oligopolist kinked demand curve DD and current price and quantity at P and Q respectively.

(i) Name the curve represented by the gap WZ
(ii) State Why the curve WZ is vertical to price axis
(iii) Advice when the oligopolist can raise and lower the price of the commodity

Expected Responses

Refer to 9str paper MR curve /MC Curve/ disjoint in the MR where MC=MR curve i.e the equilibrium point.
Above price p /kink the demand curve is more /fairly elastic and less elastic/fairly inelastic below the price P0/Kuk/ if a firm raise price above P0 /Kerk other competing firm swill not follow suit bul if it lowers below P0 /Kirk all other low peting firms will follow suit.
When the eligopolist forms a collusion or a celtel with competing firms they can increase/lower /reduce the price.
When the oligopolies acquires a dominant position on the market/accept egs of dominant position
The price cannot be increased /decreased/rained because it is rigid at the kelik/OPO
The owner on roman II can be used as the answer far this section.

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The trial balance of Zakayo Traders as at June 2008 is given below

15/12/2020

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The trial balance of Zakayo Traders as at June 2008 is given below

During the month, the following transactions took place
2008

June 5 Paid a creditor Kshs 228,000 by cheque in full settlement of a debt after deducting 5% cash discount.
15 Withdrew Kshs 100,000 from bank for office use
28 Received Kshs 160, 000 cash from a debtor after allowing cash discount of Kshs 40, 000

Record the above transactions in the relevant ledger accounts and balance then off.

Expected Response

During the month, the following transactions took place 2008 June 5 Paid a creditor Kshs 228,000 by cheque in full settlement of a debt after deducting 5% cash discount. 15 Withdrew Kshs 100,000 from bank for office use 28 Received Kshs 160, 000 cash from a debtor after allowing cash discount of Kshs 40, 000 Record the above transactions in the relevant ledger accounts and balance then off.

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Explain five demerits that may be associated with water transport ( 10 marks)

15/12/2020

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Explain five demerits that may be associated with water transport

Demerits that may be associated with water transport

Relatively slow hence perishable /urgently needed goods may not be transported this way /take long when traveling
Limited availability only applicable where water is available
Waterways can be affected by adverse weather conditions such as droughts/freezing/storms/flooding.
Costs of maintaining/construction of ports/canals/waterways/harbor may be (relatively) high /expensive making it unaffordable for some countries
Waterways may not be navigable due to laugh terrain/ waterfalls/cataracts/rapids/shallowness/narrowness/inhabited by dangerous animals/rough waters.
High costs of units of carriage/vessels which may make them unaffordable to acquired/maintain
May be prone to piracy in the high seas /remote areas/may lead to Losses/may leads to losses/increased in insurable costs.

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Explain five measures that the government may take to improve the volume of exports ( 10 mks)

14/12/2020

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Explain five measures that the government may take to improve the volume of exports

Measures that the government may take to improve the volume of exports

Creation of export processing zones- Where the producers/exporters enjoy a Variety of inceptives/accept e.g. of investors as explanation.
Manufacturing under bond to encourage local manufacturers to produce exclusive for export.
Export compensation schemes/ subsides schemes by refunding a specific % age of value of goods/services exported/meeting part of the cost of production for exports.
Providing information on international markets through publications/seminars/workshops/educational tours
Financing those producing for exports by availing credit/loan to exporters.
Participating in international trade fairs/exhibitions/shows to expose the exporters their goods/services
Use of commercial attaches/other government agencies to promote exports/advertise/look for markets for exports.
Customs drawbacks by refunding tax on imported ran materials used to produce exports.
Devaluation of currency to make exports cheaper/increased demand
Improved infrastructure to facilitate export production/export trade/accept eggs of infrastructure as a mentioned
Entering into trade agreement/blocks/integration/groupings/cooperation to give preferential treatment to a cooling exports
Improving on quality/standardization/packaging to make exports more attractive Export credit guarantee scheme to insure/ compensate exporters against risks when selling overseas.
Export credit guarantee scheme to insure/compensate exporters against risks when selling overseas.
Tax rebates/ lowering of duties on exports/reduction of taxes on inputs used to produce goods for export to make them cheaper/increase their demand/to reduce cost of production.
Improve /adopt modern technology in order to increase the volume of goods for exports.

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Explain five features of sole proprietorship form of business

14/12/2020

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Explain five features of sole proprietorship form of business

Features of sole proprietorship form of business

Owned /formed by in person who provides the capital/starts the business.
Faster decision making/ (ultimate) decision made by the proprietor/ alone since he/she does not need to consult/has no one to consult.
Has limited life as its existence depends on the hope of the owner
Business owner has unlimited capital/management skills
Owner bears all the risks/losses of the business (alone) since he /she has no one to share with
Business owner has unlimited liability since personal property/assets may be attached
Managed by the owner with /without assistance of family members/ employees/which is tiring/forced to work for long hours.
Sole trader /enjoys all the profits alone since he/she has no one to share with
Easy /simple formation as if requires few /no legal formality/might only require a trading license
Flexibility/adaptability to change/accept e.g. of change as explanation
Secrecy/ confidentiality of information/ operation / no other people have access
Not a legal entity as the owner and the business are treated as one/the same.

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KAMAT owned a motor vehicle valued at Kshs 1,000,000. He comprehensively insured the car at Kshs 800,000. The motor vehicle was involved and declared a write off. Calculate the amount KAMAT should get from the insurer.

14/12/2020

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KAMAT owned a motor vehicle valued at Kshs 1,000,000. He comprehensively insured the car at Kshs 800,000. The motor vehicle was involved and declared a write off. Calculate the amount KAMAT should get from the insurer.

KAMAT owned a motor vehicle valued at Kshs 1,000,000. He comprehensively insured the car at Kshs 800,000. The motor vehicle was involved and declared a write off. Calculate the amount KAMAT should get from the insurer.

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Outline four benefits that accrue to the government as a result of privatization of public enterprises

14/12/2020

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Outline four benefits that accrue to the government as a result of privatization of public enterprises

Benefits of privatization of public corporations

Government obtains revenue from proceeds/ sale of shares
Offers opportunities for private citizens to participate in business
To enhance efficiency in the management
Reduce government expenditures
Obtain revenue from taxes
Attain foreign aid
Attract foreign investment

Outline four benefits that accrue to the government as a result of privatization of public enterprises

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Highlight four factors that must be considered before incurring public expenditure

14/12/2020

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Highlight four factors that must be considered before incurring public expenditure

Factors before incurring public expenditure

Maximum social benefit/equity
Waste must be discouraged/economy
Flexibility/elasticity – possibility to vary expenditure according to the circumstances.
Sanctions-expenditure must be determined by a certain authority
Sound financial administration-accuracy and systematic/certain

Highlight four factors that must be considered before incurring public expenditure

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KCSE BASED BUSINESS STUDIES Q & A

Lunga, a sole trader, does not keep a complete set of accounting records. Information extracted from the records are as follows

Lunga, a sole trader, does not keep a complete set of accounting records. Information extracted from the records are as follows

The following table represents the price and quantity of a commodity

The following table represents the price and quantity of a commodity

Malamu Traders had the following balances s at 31 December 2008

Malamu Traders had the following balances s at 31 December 2008

Explain four services that the central Bank of Kenya may offer as a Banker to commercial banks

Explain four services that the central Bank of Kenya may offer as a Banker to commercial banks

Analyze the following document issued by Sheikh Traders

Analyze the following document issued by Sheikh Traders

Using a diagram, explain the circular flow of income in a two sector economy

Using a diagram, explain the circular flow of income in a two sector economy

Explain five ways in which the government of Kenya may reduce the level of unemployment

Explain five ways in which the government of Kenya may reduce the level of unemployment

The diagram below shows an oligopolist kinked demand curve DD and current price and quantity at P and Q respectively.

The diagram below shows an oligopolist kinked demand curve DD and current price and quantity at P and Q respectively.

The trial balance of Zakayo Traders as at June 2008 is given below

The trial balance of Zakayo Traders as at June 2008 is given below

Explain five demerits that may be associated with water transport ( 10 marks)

Explain five demerits that may be associated with water transport

Explain five measures that the government may take to improve the volume of exports ( 10 mks)

Explain five measures that the government may take to improve the volume of exports

Explain five features of sole proprietorship form of business

Explain five features of sole proprietorship form of business

KAMAT owned a motor vehicle valued at Kshs 1,000,000. He comprehensively insured the car at Kshs 800,000. The motor vehicle was involved and declared a write off. Calculate the amount KAMAT should get from the insurer.

KAMAT owned a motor vehicle valued at Kshs 1,000,000. He comprehensively insured the car at Kshs 800,000. The motor vehicle was involved and declared a write off. Calculate the amount KAMAT should get from the insurer.

Outline four benefits that accrue to the government as a result of privatization of public enterprises

Outline four benefits that accrue to the government as a result of privatization of public enterprises

Highlight four factors that must be considered before incurring public expenditure

Highlight four factors that must be considered before incurring public expenditure

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