Questions

1. State four advantages of operating a partnership form of business. (4mks) a) ...................................................................................................

b) ...................................................................................................

c) ...................................................................................................

d) ...................................................................................................

2. Outline four risks against which a shopkeeper may insure. (4mks) a) .................................................................................................

b) ..................................................................................................

c) ...................................................................................................

d) ..................................................................................................

3. Give four ways in which a government may participate in the operations of a state corporation. (4mks) a) .....................................................................................................

b) ....................................................................................................

c) ...................................................................................................

d) ................................................................................................... .

4. Outline four considerations that a seller should take into account before giving credit to

a new customer. (4mks) a) ....................................................................................................

b) .................................................................................................

c) ................................................................................................

d) ....................................................................................................

5. The table below shows some of the occupations in production. Indicate the level of production associated with each of the occupations. (4mks) Occupation Level of production a) Mining _________________

b) Oil refining _________________

c) Insurance _________________

d) Teaching _________________

6. What are the advantages of personal selling as a method of sales promotion? (4mks)

a)` .....................................................................................................

b) .....................................................................................................

c) .....................................................................................................

d) ....................................................................................................

7. The diagram below shows the demand and supply curves of a certain commodity and the corresponding equilibrium price (Po) and quantity (Qo). On the diagram, show the new equilibrium quantity and price as a result of an increase in the supply of the commodity. (4mks) 8. Give four assumptions that are associated with perfect competitor. (4mks) a) ...................................................................................................

b) ......................................................................................................

c) ......................................................................................................

D So Price Eo Po So D Qo Quantity . d) ........................................................................................................

9. List four types of unemployment in an economy and give the cause for each. (4mks)

a) ...................................................................................................... ...

b) ...................................................................................................... ...

c) ....................................................................................................... ...

d) ........................................................................................................ ...

10. What benefits may accrue to manufacturing firm that uses modern technology? (4mks) a) ....................................................................................................... ...

b) ..................................................................................................... .... c) ..................................................................................................... ...

d) ..................................................................................................... ...

11. Highlight four benefits of using electronic filing system. (4mks) a) ....................................................................................................... ...

b) ....................................................................................................... ...

c) ....................................................................................................... ...

d) ....................................................................................................... ...

12. State four social responsibilities that a manufacturing firm should have on the community. (4mks) a) .......................................................................................................

b) ........................................................................................................

c) .......................................................................................................

d) ........................................................................................................

13. What factors may encourage entrepreneurship in Kenya (4mks) a) ...................................................................................................... ...

b) ...................................................................................................... ...

c) ...................................................................................................... ... .

d) ...................................................................................................... ...

14. Highlight four characteristics of economic resources. (4mks)

a) ...................................................................................................... ...

b) ...................................................................................................... ...

c) ...................................................................................................... ...

d) ...................................................................................................... ...

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

b) ...................................................................................................... ...

c) ..................................................................................................... ......

d) ....................................................................................................... ...

16. 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 a) Bought machinery on credit __________________

b) Withdrew cash from the business for person use __________________

c) Purchased stock in cash __________________

d) Paid outstanding loan by cheque. __________________

17. The following balances were extracted from the books of Chebi Traders for the month ended 31 March 2005. Sh. Sales 420,000 Purchases 240,000 Motor Van 300,000 Equipment 120,000 Debtors 80,000 Creditors 40,000 Expenses 160,000 Capital 440,000 . Prepare trial balance of Chebi Traders for the month ended 31 March 2005. (4mks)

18. The following balances were extracted from the books of Chombo Wholesalers for the year ended 31 Dec 2005. Shs. Sales 500,000 Purchases 320,000 Opening stock(1.1.2005) 80,000 Closing 31.12.2005 40,000 Debtors 140,000 Creditors 90,000 Calculate a) margin b) Current ratio c) Rate of stock turnover (4mks)

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

b) ................................................................................................

c) ................................................................................................

d) ................................................................................................

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

a) .............................................................................................

b) ............................................................................................. c) .............................................................................................

d) .............................................................................................

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

b) ...............................................................................................

c) ...............................................................................................

d) ................................................................................................

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

a) ...............................................................................................

b) ............................................................................................... c)............................................................................. .....................

22 State four types of complaints that a consumer organization may receive from consumers. (4 marks) (a) ...........................................................................................

(b) .............................................................................................

(c) ............................................................................................

(d) ..........................................................................................

23 The following terms relate to mommunitaction: vertical, horizontal, formal and informal. Write the appriate term of communication associated with each of the following statements. Statement Terms

(a) A manager gives instructions to a supervisor in division h

(b) Rumours going around that the most disciplined workers will be rewarded.

(c) A manager issues a general circular to the empl o

(d) Prefects discussing discipline in their school

24. Outline three features of a Re - insurance company

a) ............................................................................................ ............................................................................................

b) ............................................................................................ ............................................................................................

c) ............................................................................................ ............................................................................................

4. A firm wishes to introduce a new product into the market. Outline four factors that should be considered in choosing an appropriate medium for promotion.

a) .......................................................................................... ..........................................................................................

b) . .......................................................................................... .........................................................................................

c) .......................................................................................... ..........................................................................................

5. The diagram below shows the current demand for petrol. o Qo Quantity a) What is the effect of a fall in the price of cars on demand for petrol? 2mks) ..................................................................................................... ....................................................................................................

b) Draw a new demand curve on the diagram above to show the effect of a fall in price or cars. (2mks) 6. State four ways in which production activities may negatively impact on community health. a) ..................................................................................................... ...................................................................................................

b) .................................................................................................... .....................................................................................................

c) ..................................................................................................... .....................................................................................................

d) ..................................................................................................... ....................................................................................................

7. Outline four negative effects of an ageing population to an economy. (4mks)

a) .....................................................................................................

b) ....................................................................................................

c) ....................................................................................................

d) ....................................................................................................

8. The following are some of the accounts available to customers in the Kenyan banking industry: Current account, savings account and Fixed deposit account. Give the account that corresponds to each of the descriptions given below. (4mks) Price Do Po Do . Description Type of Account

(a) Account holders require to deposit a specific initi amount as well as maintain a minimum balance a

(b ) Account holder may deposit and withdraw money whenever they want without maintaining a minim balance

(c) Banks pay interest on the deposit at comparativel rates. y

(d ) Money may be deposited at any time and interest earned if a specified balance is maintained i

9. The following are some of the documents used in home trade: Cash sale receipt, catalogue, invoice and statement of account. Match each document with the appropriate description provided in the table below. Description Document

(a) Shows details of goods offered for sale.

(b) Give quantity, unit price and total amount to b

(c) Shows transactions since the date of last state m

(d) Shows description of goods bought, prices an d amount paid.

10. The following diagram represents equilibrium position of a firm under perfect competition. . Label the parts represented by the letters a,b,c, and d a) ..................................................................................................

b) .................................................................................................

. c) ..................................................................................................

d) ..................................................................................................

11. State four circumstances under which air transport may be used to ferry goods (4mks)

a) .....................................................................................................

b) .....................................................................................................

c) .....................................................................................................

d) .....................................................................................................

12. On 1 January 2006, Mzalendo Traders sh.180000 in cash and sh.170000 at bank. During the month, the following transactions took place: 2006 January 10 paid ABM Traders sh.25, 000 by cheque less sh.1000 Cash discount. 16 Sold goods for sh. 14,000 cash, less 5% discount 31 Banked all the cash except sh.5200 Enter the above transactions in cash book extract given below and balance it off.(5mks) Date particul a Discou n allowed cash Bank Date Particul aDiscoun receive d Cash Bank y (a) (b) (c) (d) Output x Price . Sh. Sh. Sh. Sh. Sh. 13. Outline four benefits to abusiness that uses its own warehouse. (4mks) a) ................................................................................................

b) ................................................................................................

c) ................................................................................................

d) ...............................................................................................

14. Identify the book of original entry used in recording each of the following transactions of Soya Traders. (4mks) Transaction Book of original entry (a) Sold goods on credit to Wanjau for sh.20,000 (b) Bought goods on credit from Saipei Traders for 1000. (c) A chieng returned goods worth sh.6000 (d) Soya returned goods worth sh.11000 to Nzome T

15. The following information related to Kerubo Traders for the year ended 31 December, 2006. Sh. Opening stock 24,000 Carriage on sales 12,000 Purchases 370,000 Sales 442,500 Closing stock 40,000 Other expenses 10% on Gross profit. Prepare Trading profit and Loss Account for the year ended 31 December, 2006. (5mks) ............................................................................................................ ............................................................................................................ . ............................................................................................................ ............................................................................................................ ............................................................................................................ ............................................................................................................ ............................................................................................................ ....................................

16. The average consumer price for a500g container of cooking fat for various years is shown in the table below. year Consumer price Kshs. Consumer price Index 2000 2001 2002 2003 47 53 62 74 100 - - - Calculate the consumer price index using year 2000 as the base year .(3mks) 17. State four ways that may be used to control the amount of money in circulation by the central Bank of Kenya. a) .......................................................................................... ..........................................................................................

b) .......................................................................................... ..........................................................................................

c) .......................................................................................... ..........................................................................................

d) ......................................................................................... ..........................................................................................

18. Outline four differences between a good and a service. (4mks) a) ..........................................................................................

b) ..........................................................................................

c) .......................................................................................... .

d) ..........................................................................................

19. Highlight four factors that could influence mobility of capital as a factor of production. (4mks) a) .........................................................................................

b) .........................................................................................

c) .........................................................................................

d) .........................................................................................

20. State four advantages of an open office layout to an organization. (4mks)

a) ........................................................................................

b) ........................................................................................

c) ........................................................................................

d) ........................................................................................

21. Highlight four ways in which the running of public corporations may be improved. (4mks) a) ..........................................................................................

b) ..........................................................................................

c) ..........................................................................................

22. State four reasons why countries may decide to trade with each other. (4mks)

a) .......................................................................................

b) ........................................................................................

c) .........................................................................................

d) .........................................................................................

23. Outline four benefits that accrue to a customer who uses automated teller machine (ATM) banking service. (4mks) a) ..........................................................................................

b) ..........................................................................................

c) .......................................................................................... d) ..........................................................................................

24. State four factors that could hasten the economic development of a country. (4mks) a) ..........................................................................................

b) ..........................................................................................

25. Outline four elements that may comprise the external environment of a business. (4mks) a) ........................................................................................

b) ........................................................................................ . 565/2 Business studies Paper 2 Octo. /Nov. 2007 2 hours. 1. a) Explain six reasons why ad)............................................................................ .....................