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2010 KCSE Business Studies Revision P2-002

06 Nov

2010 KCSE Business Studies Revision P2-002

565/2

Time: 2 ½ Hours

BUSINESS STUDIES PAPER 2

INSTRUCTIONS TO CANDITATES:

  1. Answer any FIVE questions.
  2. All questions carry equal marks.

1. a) Discuss five tools used by the  Central bank to control the monetary  policy in a country.                                                                                                                                                              (10mks)

b) The world has been experiencing global economic recessions. Explain five effects of this economic recession in Kenya.                                                                                                        (10mks)

2. a) The following trial balance relate to  Gatundia Traders as at  31st Dec 2009.

Gatundia Traders

Trial balance

As at 31st Dec 2009.

Dr.                                     Cr.

Fixed assetsStock 1/1/2009

Purchases & sales

Bad debts

Debtors & Creditors

Salaries

Cash

Bank

Return in & outwards

General expenses

Capital

Shs.

82,000

12,500

70,000

4,000

10,500

14,000

2,500

 

1,500

5,200

202,200

Shs.

 

 

95,000

 

8,500

 

 

7,500

2,400

 

88,800

202,200

 

Additional information

i)                    Closing stock valued at shs. 6,500.

ii)                  Salary outstanding    2,800.

Required

i)                    Profit and loss account as at 31st Dec 2009.

ii)                  Balance sheet as at that date.                                                                                     (10mks)

b) Explain five benefits that will accrue to a trader who sell goods on cash basis only             (10mks)

3. a) Explain five reasons why the Government imposes tax on its Citizens.                              (10mks)

b) The following information was obtained from Kathure’s Business for the year ended 30th June 2009.

Creditors opening balance            shs. 165,000

Debtors opening balance              shs. 263,000

Payment to creditors’                    shs. 296,000

Receipts from debtors’                 shs. 309,000

Discount allowed                           shs. 34,000

Discount received                         shs. 29,500

Purchases return                            shs. 44,600

Sales return                                   shs.36, 400

Debtors closing balance                shs. 189,500

Creditors closing balance              shs. 143,400

Required

i)                    determine credit sales

ii)                  Determine credit purchases                                                                                        (10mks).

4. a) Explain five benefits that will accrue to Kenya from joining the East African Community.                                                                                                                                                           (10mks).

b) Discuss five negative effects of inflation in the Kenyan economy.                                     (10mks).

5. a) Discuss five reasons for disequilibrium in Balance of payment in Developing countries.                                                                                                                                                              (10mks).

b) Explain five factors that limit the size of the firm.                                                             (10mks).

6. a) Hussein Traders had the following balances as at June 1st 2009.

Cash shs 10,000

Bank shs  4300.

During the month of June, the following transactions took place.

June 3.  Fatuma a debtor settled her account of shs 8.000 by cheque of shs 7,500

6. Paid rent in cash shs 4,000.

10. Deposited shs3000 into the business Bank account from the cash box.

15. Settled Obama’s account of shs 10,000and allowed him a discount of 1% .

18. Deposited shs 14,000 in the Business Bank account from private sources.

21. Cash sales shs 6,000.

24. Wanjiku a debtor settled her account of shs 4,000 having been allowed a discount of 20%.

26. Purchased furniture shs 2,600 by cheque.

28. Received shs 1,800 cash from Mohammed.

30. Bank all the cash in the cash box except shs 800.

Required

i) Prepare a three column cash book and balance it off.                                                         (10mks).

b) Explain three reasons why its better for Kenya to borrow internally rather than from external sources.                                                                                                                                (6mks).

c) Use a diagram to explain the incidence of tax under perfectly inelastic demand.                   (4mks).

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End

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Posted by on November 6, 2010 in Business Studies, Paper 2

 

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