565/2 · BUSINESS STUDIES · Paper 2 · Nov. 2023 · 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 advantages that may arise from overpopulation in a country. (10 marks)
(b) Discuss five reasons for the growth of Savings and Credit Cooperative Societies (SACCOs) in Kenya. (10 marks)
2. (a) Explain five factors that may influence a business to make payments by use of a cheque. (10 marks)
(b) The following balance sheet was prepared by the accounts clerk of Ufanisi Traders:
Ufanisi Traders — Balance Sheet as at 31/12/2022
| Details | sh. | Details | sh. |
|---|---|---|---|
| Land and buildings | 770,000 | Capital | 900,000 |
| Motor vehicles | 600,000 | Add: net profit | 282,000 |
| Furniture | 100,000 | 1,182,000 | |
| Stock | 90,000 | Bank loan | 400,000 |
| Stationery | 12,000 | Creditors | 47,000 |
| Debtors | 58,000 | Salaries owing | 21,000 |
| Cash | 20,000 | 468,000 | |
| 1,650,000 | 1,650,000 |
Calculate the following: (i) working capital; (3 marks) (ii) return on capital; (2 marks) (iii) current ratio; (2 marks) (iv) capital employed; (2 marks) (v) borrowed capital. (1 mark)
3. (a) Explain five factors that could lead to an increase in the supply of potatoes in the market. (10 marks)
(b) Explain five ways in which transport contributes to the economic development of the country. (10 marks)
4. (a) Explain five ways in which insurance companies promote the development of the Kenyan economy. (10 marks)
(b) Explain five monetary policies used by the Central Bank of Kenya to control money in circulation. (10 marks)
5. (a) The following is the trial balance of Jethan Traders as at 1st July 2022:
| Items | Dr (sh.) | Cr (sh.) |
|---|---|---|
| Stock | 75,500 | |
| Creditors | 450,400 | |
| Debtors | 350,000 | |
| Bank | 260,400 | |
| Fixed assets | 970,200 | |
| Cash in hand | 120,500 | |
| Capital | 1,300,000 | |
| Lighting due | 26,200 | |
| Totals | 1,776,600 | 1,776,600 |
During the month, the following transactions took place:
- July 5th: paid creditors sh. 228,000 by cheque in full settlement of a debt after deducting 5% cash discount;
- July 15th: withdrew sh. 100,000 from the bank account for office use;
- July 29th: received sh. 160,000 cash from a debtor after allowing a cash discount of sh. 40,000.
Record the above transactions in the relevant ledger accounts and balance them off. (10 marks)
(b) Explain five benefits of international trade. (10 marks)
6. (a) Discuss five factors to be considered when choosing a channel of distributing dry maize. (10 marks)
(b) Explain five merits of preparing a journal in a business. (10 marks)