KNEC business 2007 Exam past paper

Exam year:2007

High School Past Papers

1. State four types of complaints that a consumer organization may receive from consumers. (4 marks)

(a) ……………………………………………………………………………….

(b) …………………………………………………………………………………

(c) ………………………………………………………………………………..

(d) ………………………………………………………………………………

2. The following terms relate to communication: vertical, horizontal, formal and informal.

Write the appriate term of communication associated with each of the following statements.

Statement Terms
(a) A manager gives instructions to a supervisor in her division
(b) Rumours going around that the most disciplined workers will be rewarded.
(c) A manager issues a general circular to the employees
(d) Prefects discussing discipline in their school

3. Outline three features of a Re – insurance company

a) ………………………………………………………………………………..

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b) ………………………………………………………………………………..

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c) ………………………………………………………………………………..

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4. A firm wishes to introduce a new product into the market. Outline four factors that should be considered in choosing an appropriate medium for promotion.

a) ………………………………………………………………………………

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b) ………………………………………………………………………………

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c) ………………………………………………………………………………

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5. The diagram below shows the current demand for petrol.

 

a) What is the effect of a fall in the price of cars on demand for petrol? 2mks)

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b) Draw a new demand curve on the diagram above to show the effect of a fall in price or cars. (2mks)

6. State four ways in which production activities may negatively impact on community health.

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

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b) ……………………………………………………………………….………………

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

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

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7. Outline four negative effects of an ageing population to an economy. (4mks)

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

b) ……………………………………………………………………….………………

c) ……………………………………………………………………….………………

d) ……………………………………………………………………….………………

8. The following are some of the accounts available to customers in the Kenyan banking industry: Current account, savings account and Fixed deposit account. Give the account that corresponds to each of the descriptions given below. (4mks)

Description Type of Account
(a) Account holders require to deposit a specific initial amount as well as maintain a minimum balance
(b) Account holder may deposit and withdraw money whenever they want without maintaining a minimum balance
(c) Banks pay interest on the deposit at comparatively higher rates.
(d) Money may be deposited at any time and interest is earned if a specified balance is maintained

9. The following are some of the documents used in home trade: Cash sale receipt, catalogue, invoice and statement of account. Match each document with the appropriate description provided in the table below.

Description Document
(a) Shows details of goods offered for sale.
(b) Give quantity, unit price and total amount to be paid.
(c) Shows transactions since the date of last statement.
(d) Shows description of goods bought, prices and total amount paid.

10. The following diagram represents equilibrium position of a firm under perfect competition.

Label the parts represented by the letters a,b,c, and d

a) ……………………………………………………………………………………..

b) ……………………………………………………………………………………..

c) ……………………………………………………………………………………..

d) ……………………………………………………………………………………..

11. State four circumstances under which air transport may be used to ferry goods (4mks)

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

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

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

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

12. On 1 January 2006, Mzalendo Traders sh.180000 in cash and sh.170000 at bank.

During the month, the following transactions took place:

2006

January 10 paid ABM Traders sh.25, 000 by cheque less sh.1000 Cash discount.

16 Sold goods for sh. 14,000 cash, less 5% discount

31 Banked all the cash except sh.5200

Enter the above transactions in cash book extract given below and balance it off.(5mks)

DR CASH BOOK EXTRACT CR

Date particular Discount allowed cash Bank Date Particulars Discount received Cash Bank
Sh. Sh. Sh. Sh. Sh.

13. Outline four benefits to abusiness that uses its own warehouse. (4mks)

a) …………………………………………………………….……………………..

b) …………………………………………………………….……………………..

c) …………………………………………………………….……………………..

d) …………………………………………………………………………………..

14. Identify the book of original entry used in recording each of the following transactions of Soya Traders. (4mks)

Transaction Book of original entry
(a) Sold goods on credit to Wanjau for sh.20,000
(b) Bought goods on credit from Saipei Traders for sh. 1000.
(c) A chieng returned goods worth sh.6000
(d) Soya returned goods worth sh.11000 to Nzome Traders.

15. The following information related to Kerubo Traders for the year ended 31 December,

2006.

Sh.

Opening stock 24,000

Carriage on sales 12,000

Purchases 370,000

Sales 442,500

Closing stock 40,000

Other expenses 10% on Gross profit.

Prepare Trading profit and Loss Account for the year ended 31 December, 2006. (5mks)

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

16. The average consumer price for a500g container of cooking fat for various years is shown in the table below.

year Consumer price

Kshs.

Consumer price

Index

2000

2001

2002

2003

47

53

62

74

100

Calculate the consumer price index using year 2000 as the base year .(3mks)

17. State four ways that may be used to control the amount of money in circulation by the central Bank of Kenya.

a) ………………………………………………………………………………

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b) ………………………………………………………………………………

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c) ………………………………………………………………………………

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d) ……………………………………………………………………………..

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18. Outline four differences between a good and a service. (4mks)

a) ………………………………………………………………………………

b) ………………………………………………………………………………

c) ………………………………………………………………………………

d) ………………………………………………………………………………

19. Highlight four factors that could influence mobility of capital as a factor of production. (4mks)

a) ……………………………………………………………………………..

b) ……………………………………………………………………………..

c) ……………………………………………………………………………..

d) ……………………………………………………………………………..

20. State four advantages of an open office layout to an organization. (4mks)

a) …………………………………………………………………………….

b) …………………………………………………………………………….

c) …………………………………………………………………………….

d) …………………………………………………………………………….

21. Highlight four ways in which the running of public corporations may be improved. (4mks)

a) ………………………………………………………………………………

b) ………………………………………………………………………………

c) ………………………………………………………………………………

22. State four reasons why countries may decide to trade with each other. (4mks)

a) ……………………………………………………………………………

b) …………………………………………………………………………….

c) ……………………………………………………………………………..

d) ……………………………………………………………………………..

23. Outline four benefits that accrue to a customer who uses automated teller machine (ATM) banking service. (4mks)

a) ………………………………………………………………………………

b) ………………………………………………………………………………

c) ………………………………………………………………………………

d) ………………………………………………………………………………

24. State four factors that could hasten the economic development of a country. (4mks)

a) ………………………………………………………………………………

b) ………………………………………………………………………………

25. Outline four elements that may comprise the external environment of a business. (4mks)

a) …………………………………………………………………………….

b) …………………………………………………………………………….

565/2

Business studies

Paper 2

Octo. /Nov. 2007

2 ½ hours.

1. a) Explain six reasons why a new business may fail (12mks)

b) Explain four advantages of transaction business through e-commerce. (8mks)

2. a) Explain six sources of government revenue for development expenditure. (12mks)

b) Karani does not keep a complete set of accounting records.During the year ended 30 June 2006, the following balances were extracted from the books of accounts.

Sh.

Stock 140,000

Land and buildings 500,000

Cash in hand 2500,000

Cash at bank 120,000

Credit 240,000

Long term loan 1400.000

Plant and machinery 600,000

Additional information:

  • Karani drew sh. 140,000 from the business for private use.
  • Opening capital was sh.2000 000 as at 1 July 2005
  • Additional capital during the year was sh.120,000.

i) Prepare statement of affairs for the year ended 30 june 2006

ii) Determine profit or loss for the year ended 30 june 2006

3. a) explain five ways is which the Agriculture Finance Corporation(AFC)

b) Explain five factors that could affect the quantities of cabbages supplied in a

market. (10mks)

4 a) Explain five strategies that a small – scale firm could adopt to expand so as to enjoy

economies of scale. (10mks)

b) Explain five benefits that could accrue to a customer who buys goods from a departmental store. (10mks)

5. a) Discuss five reasons why less developed countries are reluctant in implementing

free trade agreement. (10mks)

b) Draw a diagram to show how equilibrium price and output are determined under-

monopoly. (10mks)

6. a) Explain five features that you would consider in establishing a warehouse for

imported goods. (10mks)

b) The following trial balance was prepared from the books of Mugambi Traders for the year ended 31 December 2005

Mugambi Traders

Trial Balance

Dr Cr

Kshs Kshs

Land and buildings 500,000

Capital 940,000

Plant & Machinery 200,000

Motor Vehicles 300,000

10 year bank loan 200,000

3 year ICDC loan 100,000

Stock 100,000

Debtors 60,000

Creditors 60,000

Accrued expenses 20,000

Cash at Bank 100,000

Cash in hand 20,000

Drawings 40,000

1,320,000 1320,000

Prepare

(i) A balance sheet for the year ended 31 December 2005

(ii) Determine

  • Working capital
  • Capital employed
  • Borrowed capital ( 10 marks)
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