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Form 3 Business Studies Exams and Marking Schemes Free

NAME: …………………………………………………. ADM ………………..DATE………………..

CANDIDATE’S SIGN………..……………..…

565/2

BUSINESS STUDIES

PAPER 2

TIME: 2:30HOURS

JOINT EXAMINATION

FORM THREE BUSINESS STUDIES

PAPER 2

END OF TERM 3 EXAMINATION

INSTRUCTIONS TO CANDIDATES:

Write your name and index numbers in the spaces provided
All answers should be written in the spaces provided in this booklet.
Answer any five questions.

For Examiner’s Use Only

(a)

(b)

(a)

(b)

(a)

(b)

(a)

(b)

(a)

(b)

(a)

(b)

Total scores

Marks

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Explain five accounting documents used in home trade. [10 mks]
There has been a decline in demand for wooden furniture. Explain five factors that may have caused this trend. [10 mks]
Explain five features that differentiate a public limited company from a partnership. [10 mks]
Describe five common channels of distribution for the locally manufactured goods. [10mks]

The following balances were extracted from the books of Mageta traders on 31^st Jan 2015.

(Shs)

Land 82 000

Furniture 61 500

Debtors 17 700

Bank 91 000

Stock 18 600

Cash 10 800

10 yrs Bank loan 165 000

Creditors 34 100

Required: [10mks]

Determine the business capital
Prepare a Mageta Traders balance sheet as at 31^st Jan 2015.
Highlight five factors that may promote entrepreneurship in Kenyan. [10mks]
Explain five ways in which a warehouse may promote trade. [10mks]
Explain five problems that may be faced when measuring national income using the output approach. [10mks]
Outline five differences between open office layouts and enclosed office layouts. [10mks]
Explain five reasons for consumer protection. [10mks]
Outline four circumstances in which a trader may offer after sales service to the buyer. [10mks]
The following information was extracted from books of Mamboleo Traders in the month of September, 2014.

September 1 Had cash in hand shs. 15 500 and a bank overdraft of shs. 9 700.

September 3 Bought goods for sale shs. 12 300

September 5 Sold goods in cash shs. 8 500

September 9 Sold goods on credit shs. 10 000

September 12 Receive a cheque of shs. 9 000 from a debtor

September 15 Paid a creditor shs. 10 000

September 17 Paid wages shs. 2 600 in cash

September 19 Received a cheque shs. 23 400 from Samson for goods sold in January

September 23 Withdrew shs. 7 700 from the bank for office use.

September 24 Paid electricity bills by cheque of shs. 1 200

September 25 Received a cheque of shs. 11 500 from a debtor

September 26 Made cash sales of shs. 12 800

September 27 Purchased goods worth shs. 8 950 in cash

September 28 Paid water bills by cheque shs. 2 800

Required: Prepare a two column cash book. [10mks]

_______________________________________________________________________________________________

JOINT EXAMINATION

FORM THREE BUSINESS STUDIES

PAPER 2

END OF TERM 3 EXAMINATION

MARKING SCHEME.

Explain five accounting documents used in home trade. [10 mks]
Invoice which is sent by the seller to the buyer demanding payment for goods.
Debit note sent by the seller to the buyer to correct an undercharge in the invoice.

Credit note sent by the seller to the buyer to correct an overcharge in the invoice.

Receipt issued by the seller to a buyer when payment is made.
Statement of account sent by seller to the buyer showing details of transactions in a month.
Payment voucher used to validate payment for goods /services offered.

Bank deposit slip which shows evidence of payment into the bank account.

There has been a decline in demand for wooden furniture. Explain five factors that may have caused this trend. [10 mks]
Decline in consumers incomes reducing the buying ability hence less demand.
Fall in prices of substitutes [e.g plastic furniture’s] making them more affordable

Increase in price of wooden furniture making them unaffordable.

Unfavorable government policies e.g high taxes leading to higher prices hence unaffordable
Low seasons leading to fewer buyers
Unfavorable change in tastes and preferences making them undesirable.

Explain five features that differentiate a public limited company from a partnership. [10 mks]

Public limited company

Partnership

i. Membership is a minimum of seven shareholders

ii. Shareholders have limited liability

iii. Managed by people appointed by board of directors

iv. Regulated by articles/ memorandum of association and companies Act

v. No maximum membership

vi. Raises capital through sale of shares

vii. Has perpetual continuity

i. Membership is a minimum of two partners

ii. Partners have unlimited liability, incase of a limited partnership one partner must have unlimited liability

iii. Managed by partners themselves

iv. Regulated by partnership deed, Act / agreement

v. Has a maximum of 20 partners or 50 [professional partnerships]

vi. Raises capital through partners contribution

vii. Death, insanity or bankruptcy of partners may lead to dissolution.

Describe five common channels of distribution for locally manufactured goods. [10mks]

Producer consumer

Producer retailerconsumer

Producer wholsalerretailerconsumer

Producer wholsalerconsumer

produceragentwholesalerretailerconsumer

The following balances were extracted from the books of Mageta traders on 31^st Jan 2015.

(Shs)

Land 82 000

Furniture 61 500

Debtors 17 700

Bank 91 000

Stock 18 600

Cash 10 800

10 yrs Bank loan 165 000

Creditors 34 100

Required: [10mks]

Determine the business capital
Prepare a Mageta Traders balance sheet as at 31^st Jan 2015.

CAPITAL = ASSETS – LIABILITIES √ ¼

Total assets = shs. 82000+61500+17700+91000+18600+10800 √ ¼

Total liabilities = shs. 165000+34100 √ ½

Capital = shs. 281600 – 199100 = 82500 √ ¼ [4 x ¼ = 1mk

MAGETA TRADERS

BALANCE SHEET

AS AT 31^ST JANUARY 2015

KSHS.

Land 82 500 √

Furniture 61 500 √

Stock 18 600 √

Debtors 17 700 √

Bank 91 000 √

Cash 10 800 √

281 600

KSHS.

Capital 82 500 √

10 year Bank loan 165 000 √

Creditors 34 100 √

281 600

9×1 = 9 mks

Highlight five factors that may promote entrepreneurship in Kenyan. [10mks]
Government policies e.g low taxes which encourage the emergence and expansion of businesses
Training where the trainees are equipped with skills to start and run a business.

Presence of role models who act as an eye opener to the potential entrprenuers

Availability of capital for starting and running a business
Political stability that creates a suitable environment for a business.
Healthy competition that business owners can withstand.

High technology that leads to production of high quality and quantity of goods and services.
Availability of markets where the entrepreneurs can sell goods and services.

Explain five ways in which a warehouse may promote trade. [10mks]
Promote mass production since there’s a space for storage of raw materials and finished goods.
Stabilize prices by ensuring continuous supply of goods.

It enables preparation of goods through branding ,packing, sorting e.t.c

Creates time utility by ensuring that consumers Get goods when required.
Enables traders look for market while still in the warehouse.
Ensures security for goods since they are protected from theft.
Explain five problems that may be faced when measuring national income using the output approach. [10mks]
Inaccurate data: difficulties may be experienced due to poor record keeping.
Dertemination of goods and services to be included since some output may be as a result of illegal activities.

Price fluctuations since prices may vary from time to time.

Double counting where it may be difficult to differentiate intermediate and final output
Lack of qualified personnel to be used to collect and compile data.
Outline five differences between open office layouts and enclosed office layouts. [10mks]

Open office

Enclosed office

i. All staff work in one large room

ii. Cheap to construct

iii. Discourages absenteeism

iv. Easy location of staff

v. Promote sharing of machine

vi. Senior sit together with juniors hence no status conferred

i. Each staff is allocated a room from where they work

ii. Costly to construct

iii. Encourages absenteeism

iv. Hard to locate staff

v. Discourages sharing of machines

vi. Confer status of top level staff as they are allocated own offices

Explain five reasons for consumer protection. [10mks]
Unfair pricing by traders who may overcharge the consumers
Low quality goods that do not meet set standards

Protection from unsafe structures that endanger consumers life

Harmful products that are unfit for use by consumers
Underweight goods where the traders sell goods below the right weight.

Outline four circumstances under which a trader may offer after sales service to the buyer. [10mks]
Where goods sold are of technical nature requiring demonstration on use.
Where expertise is required in installation and the trader has technical knowledge

Where the product is new in the market and the trader requires feedback on products performance

Where competition is stiff hence the trader uses after sale services to win more customers.
When providing personalized services requiring direct contact customers.
The following information was extracted from books of Mamboleo Traders in the month of September, 2014.

September 1 Had cash in hand shs. 15 500 and a bank overdraft of shs. 9 700.

September 3 Bought goods for sale shs. 12 300

September 5 Sold goods in cash shs. 8 500

September 9 Sold goods on credit shs. 10 000

September 12 Receive a cheque of shs. 9 000

September 15 Paid a creditor shs. 10 000

September 17 Paid wages shs. 2 600 in cash

September 19 Received a cheque shs. 23 400 from Samson for goods sold in January

September 23 Withdrew shs. 7 700 from the bank for office use.

September 24 Paid electricity bills by cheque of shs. 1 200

September 25 Received a cheque of shs. 11 500

September 26 Made cash sales of shs. 12 800

September 27 Purchased goods worth shs. 8 950 in cash

September 28 Paid water bills by cheque shs. 2 800

Required: Prepare a two column cash book. [10mks]

MAMBO LEO TRADERS

TWO COLUMN CASH BOOK

FOR THE MONTH OF SEPT. 2014 √

Date	Details	Folio	Cash	Bank	Date	Details	Folio	Cash	Bank
2014 SEPT					2014 SEPT
1 √	Bal √	b/d	15 500 √		1 √	Bal √	b/d		97 00√
5 √	Sales √		8 500 √		3 √	Purchases √		12300 √
12√	Debtors √			9000 √	15 √	Creditors √		10 000 √
19 √	Samson √			23400 √	17√	Wages √		2600 √
23 √	Bank √	c	7700 √		23 √	Cash √	c		7700 √
					24	electricity			1200
					27√	Purchases √		8950√
25√	Debtor √			11500√	28 √	Water bill√			2800√
26 √	Sales √		12800√
					30^th √	Bal √	c/d	10650 √	22500 √
			44500	43900				44500	43900

NB: 50 ticks x ¹/₅= 10 mks

_____________________________________________________________________________________________________

NAME..……………………………………ADM No.…….. …………….

CLASS……………………………………….SIGN………………………..

565 /1

BUSINESS

FORM THREE

END TERM THREE

Time: 2 Hours

JOINT EVALUATION EXAMS

INSTRUCTIONS TO CANDIDATES

Write your name and admission No. in the spaces provided above.
Answer all the questions in the spaces provided

FOR EXAMINER’S USE ONLY

Question	1	2	3	4	5	6	7	8	9	10	11	12
Marks

Question		13	14	15	16	17	18	19	20	21	22	23	24	25
Marks

1 a) Outline four reasons why organizations need to safe keep documents in files (4mks)

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..………………………………………………

Give the four components of business studies (4mks)

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

List four reasons why a business may fail (4mks)

4.Use the table below to outline four differences between basic wants and secondary wants

(4mks)

Basic wants	Secondary wants

Identifyfour activities in the extractive level of production (4mks)

Outline four ways in which partners may be classified (4mks)

Highlight four characteristics of mail order store (4mks)

Outline the meaning of the following terms as used in accounting (4mks)

i)Networth of a business

………………………………………………………………………………………………………………………………………………………………………………………………………………………………

ii)Business transaction

iii) Cash transaction ……………………………………………………………………………………..

vi)Credit transaction

State four main factors that may limit the level of a country’s national income. (4mks)

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………

Identify four ways in which a business may be of benefit to people in the surrounding area (4mks)

……………………………………………………………………………………………………………………………………………………………………..……………………………………………………….………………………………………………………………………………………………………………

………………………………………………………………………………………………………………

for each of the transaction shown in the table below, state the balance sheet items affected by each transaction and the manner in which it is affected using (+) for increase and (-) for decrease. (4mks)

Transaction	Balance sheet item(s) increased	Items affected items decreased
a)Start of a business with Ksh.80,000 cash
b)Borrowing of Sh. 30,000 from a bank for business use
c)Banking of business profit of Ksh 12,000 into the business account
d)Sale of part of business premise for cash Sh.25,000.

State four ways of increasing efficiency and effectiveness of human porterage (4mks)

……………………………………………………………………………………………………………………………………………………………………..………………………………………………………

The following information relates to Makuyu Traders. Determine the missing figures. (4mks)

	Assets	Liabilities	Capital
a)	50000	70000	A
b)	320000	B	280000
c)	C	14360	12000
d)	67,000	D	27,705

14.Post the following transactions in the ledger books of Embakasi traders (4mks)

March 1/2013 commenced business with sh. 150,000 cash at bank

March 5/2013 bought machinery in credit for sh. 9500

Give four reasons that make insurance companies decline to insure acts of nature (4mks)

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….……………………………………………………………………

………………………………………………………………………………………………………………

Name 4 sources of business ideas. (4mks)

State 4 office etiquette of a business person. (4mks)

Mention four main types of demand. (4mks)

19.State four principle of cooperatives. (4mks)

Name 4 methods of government involvement in business (4mks)

…………………………………………………………………………………………………………………………………………………………………..;…………………………………………………………

List four types of unemployment. (4mks)

Name 4 barriers of effective communication. (4mks)

………………………………………………………………………………………………………………

Name 4 types of life assurance contracts (4mks)

24.Outline 4 benefits of a bonded warehouse to the importer. (4mks)

Give 4 characteristics of oligopoly market structure. (4mks)

_______________________________________________________________________________________________

JOINT EXAMINATION

FORM THREE TERM3 BUSINESS STUDIES PP1

MARKING SCHEME

1 a) Outline four reasons why organizations need to safe keep documents in files (4mks)

-not to fall in unauthorized hands

-protect from damage

-not to get lost

-keep thieves at bay

-avoid misplacement

2.Give the four components of business studies (4mks)

-Economics

-commerce

-office practice

-accounting

-entrepreneurship

3.List four reasons a business may fail

i) Lack of capital
ii) unfair/stiff competition

iii) Poor pricing

iv)Political instability

v) Lack of planning

4.Use the table below to outline four differences between basic wants and secondary wants

(4mks)

Basic wants	Secondary wants
Requirements for life	One can do without them
Necessary for survival	Make life comfortable
Cannot be postponed	Can wait for later use
Appear first in scale of preference	Are last in scale of preference
Are felt needs	Aren’t felt

5.Identify four activities in the extractive level of production (4mks)

-farming

-fishing

-mining

-timbering (lumbering)

-Hunting

6.Outline four ways in which partners may be classified (4mks)

-role played by partners

-liabilities of the partners for business debt

-ages of parties

-capital contribution

7.Highlight four characteristics of mail order store (4mks)

-goods are sold through the post office

-have large warehouses

-don’t deal with perishable goods

-customers don’t visit selling premises

-there is heavy advertisement

-goods are dispatched through CWO basis or COD basis

8.Outline the meaning of the following terms as used in accounting (4mks)

i)Network of a business –it is simply the difference between total assets and total liabilities also referredtoo as capital which comprises of owners contribution plus profits less drawings

ii)Business transaction–any dealing between two or more people (parties) that can be assigned a monetary value

iii)Cash transactionwhere both parties of an exchange are executed immediately

vi)Credit transactionwhere goods or services are sold or bought and payment is made at a later date

9.State four main factors that may limit the level of a country’s national income. (4mks)

-poor entrepreneurial culture in the country

-low level of technology

-negative altitudes towards work by citizens

-lack of adequate resources

-political instability

-lack of co-operant factors of production

10.Identify four ways in which a business may be of benefit to people in the surrounding area (4mks)

-job opportunities

-goods and services to satisfy their needs

-increase in economic activities

-outlet for the producers to sell their products

-People become sensitive to the needs of their environment

-Improves life of people living standards

11.a) Assistcash increased(cash)

Capital increased (capital)

b) Assist increased (Bank)

Liabilitiesincreased (creditors)

c) Assit increased (Bank)

Capital increased (Capital)

d) Assist decreased (promises)

Asset increased (cash)

12.State four ways of increasing efficiency and effectiveness of human porterage

-shortening distance travelled

-creation of pathways

-Lighten the load

-Feeding porters properly

-Better pay

-Security pathways

-lightening pathways

-coach them

-on ettiquaette

13.The following information relates to Makuyu Traders. Determine the missing figures. (3mks)

	Assets	Liabilities	Capital
a)	50000	70000	A
b)	320000	B	280000
c)	C	14360	12000
d)	67,000	D	27,705

A)Assets – liabilities 50,000-70,000= – 20,000

B)Assets – capital = 320,000-280,000 = 40,000

C)capital +liabilities = 14360 + 12000 = 26360

D) 4295

14.Post the following transactions in the ledger books of Embakasi traders (4mks)

March 1/2013 commenced business with sh. 150,000 cash at bank

March 5/2013 bought machinery in credit for sh. 9500

Dr Capital A/c Cr

March 2013

1 bank 150,000

Dr BankA/c Cr

March 1

Capital 150,000

Dr Machinery A/c Cr

March 5 creditor 9500

Dr CreditorsA/c Cr

2013 march

machinery 9500

15.Give four reasons that make insurance companies decline to insure acts of nature (4mks)

–loss may affect many people at ago

-loss is unpredictable

-people not willing to form pool

-not easy to determine premium

-value of loss may be undeterminable

16.Name 4 sources of business ideas. (4mks)

Newspapers
Shows & exhibitions
Magazines articles
Waste products

17.State 4 office etiquette of a business person. (4mks)

Respect
Punctuality
Loyalty
Honesty

18.mention four main types of demand. (4mks)

Joint demand
Competitive demand
Derived demand
Composite demand

19.State 4 principles of cooperatives. (4mks)

Voluntary & open membership
Democratic Administration
Limited interest on share capital
Promotion of education to member

20.Name 4 methods of government involvement in business (4mks)

Regulation
Training
Trade promotion
Provision of public utilities

21.list four types of unemployment in an economy. (4mks)

Cyclical unemployment
Frictional unemployment
Seasonal unemployment
Structural unemployment
Involuntary unemployment

22.Name 4 barriers of effective communication. (4mks)

Language barrier
Poor listening
Negative attitude
Poor timing

23.Name 4 types of life assurance contracts (4mks)

Term insurance
Whole life assurance
Endowment
Annuities

outline four benefits of a bonded warehouse to the imports. (4mks)

Goods can be prepared for sale
Security is provided while goods are on bond
Give importers time to arrange for payment of duty
Goods can be sold before payment of duty
Importer can look for market of products

Give 4 characteristics of oligopoly market structure. (4mks)

A few large firms
Presence of price wars
High interdependence of firms
Kinked demand curve
Formation of cartels

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