KNEC business 2006 Exam past paper

Exam year:2006

High School Past Papers

  1. State four advantages of operating a partnership form of business. (4mks)
    1. ………………………………………………………………………………………
    2. ………………………………………………………………………………………
    3. ………………………………………………………………………………………
    4. ………………………………………………………………………………………
  2. Outline four risks against which a shopkeeper may insure. (4mks)
    1. ………………………………………………………………….…………………
    2. …………………………………………………………………..…………………
    3. ………………………………………………………………………………………
    4. …………………………………………………………………..…………………
  3. Give four ways in which a government may participate in the operations of a state corporation. (4mks)
    1. ……………………………………………………………………..…………………
    2. …………………………………………………………………….…………………
    3. ………………………………………………………………………………………
    4. ………………………………………………………………………………………
  4. Outline four considerations that a seller should take into account before giving credit to a new customer. (4mks)
    1. ……………………………………………………………………………………….
    2. ……………………………………………………………………….……………
    3. ……………………………………………………………………………………
    4. ……………………………………………………………………….………………
  5. The table below shows some of the occupations in production. Indicate the level of production associated with each of the occupations. (4mks)

Occupation Level of production

a) Mining _________________

b) Oil refining _________________

c) Insurance _________________

d) Teaching _________________

6. What are the advantages of personal selling as a method of sales promotion? (4mks)

a)` ……………………………………………………………………..…………………

b) ……………………………………………………………………..…………………

c) ……………………………………………………………………..…………………

d) …………………………………………………………………….…………………

7. The diagram below shows the demand and supply curves of a certain commodity and the corresponding equilibrium price (Po) and quantity (Qo). On the diagram, show the new equilibrium quantity and price as a result of an increase in the supply of the commodity. (4mks)

 

8. Give four assumptions that are associated with perfect competitor. (4mks)

a) ………………………………………………………………………………………

b) …………………………………………………………………………………………

c) …………………………………………………………………………………………

d) ………………………………………………………………………..…………………

9. List four types of unemployment in an economy and give the cause for each. (4mks)

a) ……………………………………………………………………………………………

b) ……………………………………………………………………………………………

c) ………………………………………………………………………….…………………

d) …………………………………………………………………………..…………………

10. What benefits may accrue to manufacturing firm that uses modern technology? (4mks)

a) ………………………………………………………………………….…………………

b) …………………………………………………………………………..……………….

c) …………………………………………………………………………..………………

d) …………………………………………………………………………..………………

11. Highlight four benefits of using electronic filing system. (4mks)

a) ………………………………………………………………………….…………………

b) ………………………………………………………………………….…………………

c) ………………………………………………………………………….…………………

d) ………………………………………………………………………….…………………

12. State four social responsibilities that a manufacturing firm should have on the community. (4mks)

a) ………………………………………………………………………….………………

b) …………………………………………………………………………..………………

c) ………………………………………………………………………….………………

d) …………………………………………………………………………..………………

13. What factors may encourage entrepreneurship in Kenya (4mks)

a) ……………………………………………………………………………………………

b) ……………………………………………………………………………………………

c) ……………………………………………………………………………………………

d) ……………………………………………………………………………………………

14. Highlight four characteristics of economic resources. (4mks)

a) ……………………………………………………………………………………………

b) ……………………………………………………………………………………………

c) ……………………………………………………………………………………………

d) ……………………………………………………………………………………………

15. Give four reasons why one would prefer a letter to a telephone to send a message. (4mks)

a) …………………………………………………………………………….………………

b) ……………………………………………………………………………………………

c) ……………………………………………………………………………..………………

d) …………………………………………………………………………….………………

16. State the effect of each of the following transactions on the balance sheet by writing increase, or decrease or no effect in each case.

Transaction Effect

a) Bought machinery on credit __________________

b) Withdrew cash from the business for person use __________________

c) Purchased stock in cash __________________ d) Paid outstanding loan by cheque. __________________

17. The following balances were extracted from the books of Chebi Traders for the month ended 31 March 2005.

Sh.

Sales 420,000

Purchases 240,000

Motor Van 300,000

Equipment 120,000

Debtors 80,000

Creditors 40,000

Expenses 160,000

Capital 440,000

Prepare trial balance of Chebi Traders for the month ended 31 March 2005. (4mks)

18. The following balances were extracted from the books of Chombo Wholesalers for

the year ended 31 Dec 2005.

Shs.

Sales 500,000

Purchases 320,000

Opening stock(1.1.2005) 80,000

Closing 31.12.2005 40,000

Debtors 140,000

Creditors 90,000

Calculate

      1. margin
      2. Current ratio
      3. Rate of stock turnover (4mks)

19. Outline four benefits of direct taxation to the government. (4mks)

a) ……………………………………………………………………………………

b) ……………………………………………………………………………………

c) ……………………………………………………………………………………

d) ……………………………………………………………………………………

  1. State four factors that may cause inflation in an economy. (4mks).
    1. …………………………………………………………………………………
    2. …………………………………………………………………………………
    3. …………………………………………………………………………………
    4. …………………………………………………………………………………
  2. Outline four ways that the World Bank may use to assist developing countries to improve their economy. (4mks)

a) …………………………………………………………………………………

b) ………………………………………………………………..…………………

c) ………………………………………………………………..…………………

d) ……………………………………………………………………………………

22. State four problems that a planner may encounter in development planning. (4mks)

a) …………………………………………………………………..………………

b) ………………………………………………………………..…………………

c)………………………………………………………………….. …………………

d)…………………………………………………………………. …………………

565/2

BUSINESS STUDIES

Paper 2

Oct./ Nov. 2006

2 ½ hours

1. a) Explain five factors that may influence the level of national income of a country . (10 marks)

b) Over the years southern Star has grown into a large business enterprise. Explain

five disadvantages that economies of scale  may experience. (10 marks)

2. a) Explain four ways that a government can use to finance a budget deficit.

( 8 marks)

(b) The following trial balance was extracted from the books of Fula Traders on 31st

December 2005.

Fula Traders

Trial Balance

as at 31.12. 2005

Dr. Cr.

Sh. Sh.

Sales 600,000

General Expenses 60,000

Rent expense 10,000

Commission Received 20,000

Motor Vehicle 600,000

Furniture 240,000

Cash 50,000

Creditors 180,000

Debtors 120,000

Purchases 400.000

Sales Returns 20,000

Capital 700,000

1, 500,000 1,500,000

Additional information

  • Stock on 31 December 2005 was valued at sh. 60,000
  • Depreciation to be provided for as follows:

Motor Vehicle 20% p.a on Cost

Furniture 10% p.a on cost

Prepare:

i) Trading, profit and Loss Account for the year ended 31 December 2005.

ii) Balance Sheet as at 31 December 2005. (12 marks)

 

3 a) Explain five benefits that may accrue to a community that is involved in trading activities. (10 marks)

b) Outline five benefits that a Savings and Credit Co-operative society (SACCO) provides to

its members. (10 marks)

4 a) Musi Enterprises are considering to market their imported products direct to consumers.

Outline five reasons that may be influencing them to make this decision. (10 marks)

b) Explain five disadvantages that a country may experience from imposing trade restrictions

on trading partners. (10 marks)

5. a) Outline five factors that may limit the use of containers as a method of transporting goods

in a developing country. (10 marks)

b) Using a diagram, explain how a monopolist firm determines its output. (10 marks)

6. a) Explain four functions of money. (8 marks)

b) Cheru Traders does not keep a complete set of books of accounts. The following

information was extracted from her books of accounts.

1.1.05 31.12.05

Sh. Sh.

Stock 920,000 1,200,000

Debtors 400,000 540,000

Creditors 800,000 950,000

During the year, cash received from debtors was sh. 1,400,000 while cash paid to creditors amounted to sh. 2,000,000. Cash sales were for Sh. 250,000 while cash purchases amounted to sh. 320,000. Carriage inwards was for sh. 46,000.

Other relevant information.

  • Returns inwards were Sh. 42,000.
  • Cheru had taken goods amounting to sh. 50,000 for personal use.

i) Determine total sales.

ii) Determine total purchases.

iii) Prepare Trading Account for the period ended 31 December 2005.

(12 marks)