KCSE Business Studies Topical Questions and Answers

Outline the difference between cash and credit transactions.

16/12/2020

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Outline the difference between cash and credit transactions.

Difference between cash and credit transactions: .

In a cash transaction, both money and goods exchange hands between the buyer and the seller immediately while in a credit transaction, the transfer of goods and payment take place at different times.
Cash transactions require the use of a cash sale receipt while credit transactions rcqu8ire the use of an invoice.

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The following information relates to Kiboko Traders as at 31st December 2010.

15/12/2020

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The following information relates to Kiboko Traders as at 31st December 2010.

Calculate Kiboko’s initial capital. (3 marks)

Expected Response

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Fill in the missing figures in the table below: (4 marks)

14/12/2020

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Fill in the missing figures in the table below: (4 marks)

Expected Response

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The following balances were extracted from the books of Saku traders on 31 March 2008,Determine the net worth of the business as at 31st March 2008

14/12/2020

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The following balances were extracted from the books of Saku traders on 31 March 2008,Determine the net worth of the business as at 31st March 2008

Fixed assets 300,000
Current assets 123, 700
Creditors 84, 500
5 year loan 125,000

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State two characteristics of each of the following balance sheet elements: (a) Assets,(b) Liabilities.(4 marks)

13/12/2020

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State two characteristics of each of the following balance sheet elements: (a) Assets,(b) Liabilities

State two characteristics of each of the following balance sheet elements:
(a) Assets
(b) Liabilities.

Assets

Resource owned and controlled by the business.
Must have been acquired iii the past.
An item of value that can be measured reliably in monetary terms.
Future benefits associated with the net expected to be received by business entity.
They are fixed or current.

(b) Liability

A present obligation for a business to settle as a result of past commitments.
Settlement would reduce business assets.
Amount involved can be measured reliably in monetary terms.
Owed to outsiders.
They are long term or current/short term.

State two characteristics of each of the following balance sheet elements: (a) Assets,(b) Liabilities.(4 marks)

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The following information relates to Ole Traders as at 30th June 2007:Calculate capital for Ole Traders as at 30 June 2007: (4 marks)

13/12/2020

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The following information relates to Oie Traders as at 30th June 2007:Calculate capital for Ole Traders as at 30 June 2007:

Shs.
Machinery 200,000
Furniture 100,000
Premises 400,000
Debtors 160,000
Cash in hand 10,000
Bank overdraft 100,000
Creditors 40,000

Calculate capital for Ole Traders as at 30 June 2007:

The following information relates to Ole Traders as at 30th June 2007:Calculate capital for Ole Traders as at 30 June 2007: (4 marks)

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The following figures relate to Jumbo Traders for the year ended 31.12.13.

9/12/2020

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The following figures relate to Jumbo Traders for the year ended 31.12.13.

Expected Response

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The following balance sheet was incorrectly prepared:

9/12/2020

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The following balance sheet was incorrectly prepared:

Expected Response

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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

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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)

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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

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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)

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The following balances were extracted from the books of Highlife General Stores on 31st December 2015.

2/12/2020

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The following balances were extracted from the books of Highlife General Stores on 31st December 2015

Required: Prepare the balance sheet of Highlife General Stores as at 31st December 2015. (4 marks)

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The following information was extracted from the books of Salome Traders:

25/11/2020

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The following information was extracted from the books of Salome Traders:

Capital Ksh 1,119,300; Long term liabilities Ksh 1 ,807,000; and current liabilities Ksh 978,700.
Required

(a) Determine Salome Traders Rate of Return on Capital Employed if the business made a net profit of Ksh 438,945. (4 marks)

(b) State the importance of the rate of return on capital employed. (1 mark)

Importance of the rate of return on capital employed.

It enables the business to determine the rate at which net profit is generated in relation to the total investments into the business.
To compare the performance of the business with similar ones.
To compare the performance of the business over time.
Shows whether the finances of the business have been invested wisely or not.

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Fill in the spaces in the table below: (4 marks)

22/11/2020

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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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Outline the difference between cash and credit transactions.

Outline the difference between cash and credit transactions.

The following information relates to Kiboko Traders as at 31st December 2010.

Expected Response

Fill in the missing figures in the table below: (4 marks)

Expected Response

The following balances were extracted from the books of Saku traders on 31 March 2008,Determine the net worth of the business as at 31st March 2008

The following balances were extracted from the books of Saku traders on 31 March 2008,Determine the net worth of the business as at 31st March 2008

State two characteristics of each of the following balance sheet elements: (a) Assets,(b) Liabilities.(4 marks)

State two characteristics of each of the following balance sheet elements: (a) Assets,(b) Liabilities

The following information relates to Ole Traders as at 30th June 2007:Calculate capital for Ole Traders as at 30 June 2007: (4 marks)

The following information relates to Oie Traders as at 30th June 2007:Calculate capital for Ole Traders as at 30 June 2007:

The following figures relate to Jumbo Traders for the year ended 31.12.13.

Expected Response

The following balance sheet was incorrectly prepared:

Expected Response

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)

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.

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)

The following balances were extracted from the books of Highlife General Stores on 31st December 2015.

The following information was extracted from the books of Salome Traders:

(b) State the importance of the rate of return on capital employed. (1 mark)

Fill in the spaces in the table below: (4 marks)

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

Answer

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Outline the difference between cash and credit transactions.

Expected Response

Expected Response

The following balances were extracted from the books of Saku traders on 31 March 2008,Determine the net worth of the business as at 31st March 2008

State two characteristics of each of the following balance sheet elements: (a) Assets,(b) Liabilities

The following information relates to Oie Traders as at 30th June 2007:Calculate capital for Ole Traders as at 30 June 2007:

Expected Response

Expected Response

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.

​(b) State the importance of the rate of return on capital employed. (1 mark)

Answer

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(b) State the importance of the rate of return on capital employed. (1 mark)