KNEC KCSE Business Studies Paper 2 Question Paper 2015 – Machakos County Trial
Answer any five questions.
1.
(a) Explain FIVE methods of payments offered by commercial banks in Kenya. (10 marks)
(b) Highlight FIVE reasons as to why a high national income may not necessarily mean better welfare for the citizens of a country. (10 marks)
20 marks
2.
(a) Kapa Oil manufacturers have decided to eliminate wholesalers in their chain of distribution. Outline FIVE possible effects that would result if wholesalers were eliminated. (10 marks)
(b) Differentiate between a perfect competition from a monopolistic competition. (10 marks)
20 marks
3.
(a) Explain FIVE causes of inflation in an economy. (10 marks)
(b) Outline FIVE challenges that Kenya faces when trying to implement her development plans. (10 marks)
20 marks
4.
(a) Explain FIVE reasons why a public limited company may prefer to raise finance through issue of
ordinary shares instead of debentures. (10 marks)
(b) The following balances were extracted from books of Masaku Traders for the year ended 31/12/2004
Rent
Lighting
Water
Salaries
Commission received
Discount allowed
Discount received
Gross profit
General expenses
Stock
Motor Vehicle
Furniture & equipment
Debtors
Creditors
Bank
Cash
Capital
Prepare
(i) Profit and loss a/c for the year ended 31/12/2004 (5½ marks)
(ii) Balance sheet as at 31/12/2004 (4½ marks)
10 marks
5.
(a) Explain SIX measures that the Government of Kenya may take to control her persistent Balance of
payment deficit. (12 marks)
(b) Outline FOUR differences between endowment policy and whole life policy. (8 marks)
20 marks
6.
(a) Explain FIVE factors that limit the usage of Railway as a means of transport. (10 marks)
(b) The accounts of Hakuna Matata Traders showed the following balances on 1st January 2014.
Details
Cash
Debtors
Creditors
Stock
Bank loan
Motor vehicle
Sh.
250,000
60,000
42,000
30,000
120,000
310,000
The following transactions took place during the month of January 2014.
Jan 2: Bought stock worth Sh. 50,000 on credit.
Jan 3: Cash sales Sh. 80,000
Jan 5: Received Sh. 20,000 cash from debtors
Jan 10: Paid part of loan Sh. 70,000 cash
Jan 12: Paid creditors Sh. 52,000
Jan 16: Bought office furniture Sh. 45,000 cash
Jan 20: Paid salaries Sh. 40,000 cash
Jan 25: Deposited Sh. 100,000 into the bank
Required:
Record the above transactions in the relevant ledger accounts and balance the accounts on 31st
January 2014. (10marks)
