Name…………………………………………… Index No…………………/…….
School………………………………………….. Candidates Signature……………
Date………………………
565/2
BUSINESS STUDIES
Paper 2
July/August 2011
2 ½ Hours
NAKURU DISTRICT SEC SCHOOLS K.C.S.E TRIAL
EXAMINATIONS-2011
Kenya Certificate of Secondary Education (K.C.S.E)
565/2
BUSINESS STUDIES
Paper 2
July/August 2011
2 ½ Hours
INSTRUCTIONS TO CANDIDATES
Answer ANY FIVE questions in the answer sheet provided.
All questions carry equal marks
This paper consists of 3 printed page
Candidates should check the question paper to ensure that all the
Papers are printed as indicated and no questions are missing
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1. (a) Discuss FIVE negative effects of advertising to a business (10mks)
(b) Explain FIVE laws that the government may put in place to control inflation (10mks)
2. (a) Explain FIVE sources of monopoly power (10mks)
(b) With the help of a diagram illustrate how the market forces determine the
equilibrium Price and quantity 10mks)
3. (a) Discuss FIVE benefits that may accrue to business A and B if they merge (10mks)
(b) Explain FIVE ways through which commercial banks lend money to business
persons (10mks)
4. (a) The following Trial Balance was extracted from the books of Safari Traders as at
31st Dec. 2009
Dr Cr
Purchases 7000,000
Stock 1/1/09 172,000
Sales 1,300,000
Capital 240,000
Bank overdraft 135,000
Cash 6,000
Discount 48,000 30,000
Returns 20,000 19,000
Carriage –out 50,000
Rent 58,000
Commission 20,000
Machinery 220,000
Debtors 90,000
Drawings 50,000
Wages and salaries 290,000
General expenses 40,000
1,744,000 1,744,000
Additional information
(i) Stock on 31/12/09 was shs.140, 000
(ii) Wages and salaries accrued as at 31st /12/09 amounted to shs.7,000
(iii) Prepaid general expenses were shs.6, 000 by Dec. 31st 2009.
Required
(i) Trading Profit and Loss account for the period ended 31/12/09 (9mks)
(ii) Balance sheet as at 31/12/09 (5mks)
(b) Explain THREE factors that may lead to a firm requiring a larger office space (6mks)
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5. (a) Explain FIVE circumstances under which a country may experience a decline in her
Terms of trade (10mks)
(b) Explain FIVE unethical business practices that would lead to unfair business
Competition (10mks)
6. (a) Explain FIVE reasons why a county should have a development plan (10mks)
(b) On July 1st 2004 MF had cash in hand shs.46, 000 and cash at bank ashs, 159,000.
during the month the following transactions took place.
July 2 owner contributed cash of shs.80,000 into the business
3 Received a bank loan of shs.100, 000 that was credited to the bank account
4 Bought 5 seats for the business at a cost of shs.12, 000 each paid by cheque
5 Deposited shs.60, 000 into the bank
10 Received cheque of shs.40, 000 from Odongo
12 Received a cheque of shs.28, 000 from a debtor who owned shs.30, 000 as full
Settlement of his account
16 Paid a creditor who was owed shs.50, 000 by cheque being allowed 4% cash
Discount.
17 Withdrew shs.20, 000 for business use.
20 Paid wages shs.10, 000 in cash, electricity shs.30, 000 by cheque
24 Deposited all cash in hand into the bank and was left with a balance of
Shs.10, 000
Required
Extract a three-column cashbook dully balanced (10mks)
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