565/2 · BUSINESS STUDIES · Paper 2 · Dec. 2022 · 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 bank may dishonour a cheque. (10 marks)
(b) Explain five factors that may lead to an increase in the level of national income of a country. (10 marks)
2. (a) Explain five factors that may lead to the dissolution of a co-operative society. (10 marks)
(b) Explain five features of underdeveloped countries. (10 marks)
3. (a) The following balances were extracted from the books of Mito Andei Wholesalers on 1st October 2021:
| Details | Ksh |
|---|---|
| Bank | 80,000 |
| Cash | 15,000 |
| Juma (creditor) | 24,000 |
| ICDC loan | 70,000 |
| Motor vehicle | 210,000 |
| Stock | 45,000 |
| Mangu (debtor) | 26,000 |
| Capital | 237,000 |
The following transactions took place in the first week of the month:
- Oct 2: Withdrew Ksh 14,000 from the bank to pay Juma.
- Oct 3: Mangu paid his debt of Ksh 10,000 in cash.
- Oct 4: Took a loan from the bank worth Ksh 170,000 cash, of which Ksh 70,000 was used to clear the outstanding ICDC loan.
- Oct 5: Purchased goods worth Ksh 40,000 in cash.
(i) Record the above transactions in their relevant ledger accounts and balance them off. (8 marks)
(ii) Extract a trial balance as at 5th October 2021. (4 marks)
(b) Explain four elements of a good transport system. (8 marks)
4. (a) Explain five ways in which employees may contribute to the success of a business. (10 marks)
(b) Explain five roles of the World Bank in promoting international trade. (10 marks)
5. (a) Explain five limitations of mobile phones in communication. (10 marks)
(b) Use the diagram given below to answer the questions that follow.
(i) Explain four effects of the shift in the demand curve from D₀ to D₁. (8 marks)
(ii) State what is represented by the shaded area. (2 marks)
6. (a) The following trial balance was extracted from the ledgers of Ushindi Traders on 30th November 2021.
| Details | Dr (Ksh) | Cr (Ksh) |
|---|---|---|
| Capital | 58,300 | |
| Sales | 200,000 | |
| Purchases | 111,000 | |
| Salaries | 13,300 | |
| Rent income | 40,000 | |
| Stock 1/12/2020 | 12,500 | |
| Insurance | 10,500 | |
| Telephone | 9,500 | |
| Advertising | 14,000 | |
| Premises | 100,000 | |
| Furniture | 16,000 | |
| Debtors | 33,500 | |
| Creditors | 53,000 | |
| Cash in hand | 18,400 | |
| Cash at bank | 12,600 | |
| Total | 351,300 | 351,300 |
Stock on 30th November 2021 was valued at Ksh 8,500. Prepare the business's trading, profit and loss account for the year ended 30th November 2021 and a balance sheet as at that date. (12 marks)
(b) Explain four reasons that may make Government departments adopt an open office layout. (8 marks)