Business Studies
EXAM SAMPLE # 2
2 1/2 hours
Answer any five questions
1. a) Explain six reasons why a new business may fail. (12 marks)
b) Explain four advantages of transacting business through ecommerce. (8marks)
2. a) Explain six sources of Government revenue for development expenditure. (12 marks)
b) Karani does not keep a complete set of accounting records. During the year ended 30 June 2006, the following balances were extracted from the books of accounts.
|
|
Sh. |
| Stock | 140000 |
| Motor vehicle | 500000 |
| Land and buildings | 2500000 |
| Cash in hand | 120000 |
| Cash at bank | 240000 |
| Debtors | 80000 |
| Creditors | 120000 |
| Long-term loan | 1400 000 |
| Plant and Machinery | 600 000 |
Additional information:
- Karani drew sh. 140 000 from the business for private use.
- Opening capital was sh.2 000 000 as at 1 July 2005.
- Additional capital during the year was sh. 120 000.
(i) Prepare statement of affairs for the year ended 30 June 2006. (6 marks)
(ii) Determine profit or loss for the year ended 30 June 2006. (2 marks)
3. a) Explain five ways in which the Agricultural Finance contributes to economic development in Kenya. (10 marks)
b) Explain five factors that could affect the quantities of cabbages supplied in a market. (10 marks)
4. a) Explain five strategies that a small-scale firm could adopt to expand so as to enjoy economies of scale. (10 marks)
b) Explain five benefits that could accrue to a customer who buys goods from a
departmental store. (10 marks)
5. a) Discuss five reasons why Less Developed Countries are reluctant in implementing free trade agreement. (10 marks)
b) Draw a diagram to show how equilibrium price and output are determined under monopoly. (10 marks)
6. a) Explain five features that you would consider in establishing a warehouse for imported goods. (10 marks)
b) The following Trial Balance was prepared from the books of Mugambi Traders for the year ended 31 December 2005.
Mugambi Traders
Trial Balance
|
DR – Sh |
CR – Sh |
|
| Land and | 500 000 | |
| Buildings | 940 000 | |
| Capital | 200 000 | |
| Plant & | 300 000 | |
| Machinery | 200 000 | |
| Motor Vehicles | 10 000 | |
| 10 year bank loan | 100000 | |
| 3 year ICDC loan | 60 000 | |
| Stock | 60 000 | |
| Debtors | 100 000 | 20 000 |
| Creditors | 20 000 | |
| Accrued expenses | 40 000 | |
| 1 320 000 | 1 320 000 |
(i) Prepare A balance sheet for the year ended 31 December 2005. Determine:
- Working Capital
- Capital Employed
- Borrowed Capital (10 marks)
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