565/2 · BUSINESS STUDIES · Paper 2 · Mar. 2022 (KCSE 2021) · 2½ hours
Instructions: This paper consists of six questions. Answer any five questions. All questions carry equal marks. Non-programmable silent electronic calculators may be used.
1. (a) Explain five circumstances under which a producer may sell goods directly to the consumer. (10 marks)
(b) Explain each of the following terms of sale as used in international trade: (i) ex-works; (ii) cost and freight; (iii) FOB; (iv) landed; (v) in bond. (10 marks)
2. (a) Explain five factors that may discourage entrepreneurship in Kenya. (10 marks)
(b) Explain five demerits of indirect taxes. (10 marks)
3. (a) Explain five errors that may not be detected by a trial balance. (10 marks)
(b) Explain five documents prepared by the seller after receiving an order up to the point of delivery. (10 marks)
4. (a) Explain five reasons that may make a firm operate on a small scale. (10 marks)
(b) The following information was extracted from the books of Ushirika Traders as at 31st December 2020.
| Details | Ksh |
|---|---|
| Gross profit | 94,000 |
| Commission received | 32,000 |
| Carriage outwards | 8,000 |
| General expenses | 15,000 |
| Discount received | 29,000 |
| Total fixed assets | 1,110,000 |
| Insurance | 17,000 |
| Capital | 490,000 |
| Drawings | 37,000 |
| Long-term liabilities | 610,000 |
| Discount allowed | 12,000 |
| Commission allowed | 4,000 |
| Current liabilities | 162,000 |
| Current assets | 192,000 |
| Salaries | 22,000 |
(i) Prepare a profit and loss account. (6 marks)
(ii) Determine: I. working capital; (1 mark) II. return on capital employed. (3 marks)
5. (a) Explain five reasons that make it necessary for the Government to train business people. (10 marks)
(b) Explain five problems that the Kenyan Government may experience when implementing Vision 2030. (10 marks)
6. (a) Explain five advantages of written communication. (10 marks)
(b) Use the transactions given below to prepare Patel Traders' two-column cash book for the month of February 2020. (10 marks)
| Date | Transaction |
|---|---|
| 1st Feb | Had Ksh 1,200 cash in hand and a bank overdraft of Ksh 1,000 |
| 2nd Feb | Used cash to pay water bill Ksh 200, electricity Ksh 100 and wages Ksh 400 |
| 3rd Feb | Received a cheque of Ksh 14,000 from Daisy |
| 5th Feb | Sold goods worth Ksh 7,000 in cash |
| 7th Feb | Paid for goods bought for resale worth Ksh 5,000 by cheque |
| 9th Feb | Received a cheque of Ksh 10,000 from the Cooperative Society as earnings from dividends |
| 10th Feb | Withdrew Ksh 2,000 from the bank for family use |
| 13th Feb | Received a cheque of Ksh 10,000 from Petro |
| 15th Feb | Deposited Ksh 1,000 from the office into the business bank account |
| 17th Feb | Paid Manu by cheque Ksh 1,000 |
| 27th Feb | Used the money in the bank to purchase furniture, leaving only a balance of Ksh 2,000 |