Business Studies

December 30, 2008 Facebook Twitter LinkedIn Google+ KCSE Exams


2 1/2 hours

Answer any five questions

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

b) Explain four advantages of transacting business through ecommerce. (8marks)

2. a) Explain six sources of Government revenue for development expenditure. (12 marks)

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.

Stock 140000
Motor vehicle 500000
Land and buildings 2500000
Cash in hand 120000
Cash at bank 240000
Debtors 80000
Creditors 120000
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.2 000 000 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. (6 marks)

(ii) Determine profit or loss for the year ended 30 June 2006. (2 marks)

3. a) Explain five ways in which the Agricultural Finance contributes to economic development in Kenya. (10 marks)

b) Explain five factors that could affect the quantities of cabbages supplied in a market. (10 marks)

4. a) Explain five strategies that a small-scale firm could adopt to expand so as to enjoy economies of scale. (10 marks)

b) Explain five benefits that could accrue to a customer who buys goods from a

departmental store. (10 marks)

5. a) Discuss five reasons why Less Developed Countries are reluctant in implementing free trade agreement. (10 marks)

b) Draw a diagram to show how equilibrium price and output are determined under monopoly. (10 marks)

6. a) Explain five features that you would consider in establishing a warehouse for imported goods. (10 marks)

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 – Sh CR – Sh
Land and 500 000
Buildings 940 000
Capital 200 000
Plant & 300 000
Machinery 200 000
Motor Vehicles 10 000
10 year bank loan 100000
3 year ICDC loan 60 000
Stock 60 000
Debtors 100 000 20 000
Creditors 20 000
Accrued expenses 40 000
1 320 000 1 320 000

(i) Prepare A balance sheet for the year ended 31 December 2005. Determine:

  • Working Capital
  • Capital Employed
  • Borrowed Capital (10 marks)

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  1. njuguna sammy said on February 6, 2011 10:41 am:

    sincerely i really admire your high level stardards questions,i was a studen at makerere university pursued bcom at the moment am teaching business studies in shiner’s girls high school in kindly requesting you to give me a direction on how i could be loggig in business questions on net and specifically accounting questions.thanks alot

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