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Business Studies Paper 2

Answer any five question

a) Explain five benefits realized by a country that computes its National income.

b) Explain five benefits a business may enjoy when transacting business through internet.

20 marks


a) Explain five differences between a private company and a public limited company.

b) Using a well labeled diagram, explain how the prevailing equilibrium price and quantity may be affected by general increase in supply.

20 marks


a) The office is considered as a nerve centre in every business organizations.

Explain three reasons for this.

b) The following trial balance was extracted from the books of Mumias Traders as at 30th July 2012

NB: Stock on 30th June was valued at Kshs.150,000 Required:

i) Trading Profit and Loss account for the Period ended 30th June 2012

ii) Balance Sheet as at 30th June 2012

20 marks


a) Prices of most essential commodities have increased in the recent past in Kenyan economy.

Explain five measures that can be taken to control inflation.

b) Explain five merits of a high population in a country.

20 marks


a) Safaricom company had a prize winning competition called ‘Kwachua Ushinde’. Prizes could only be won through buying the products.

Explain five benefits a company could get from such a scheme.

b) Discuss five problems faced by countries that engage in direct production.

20 marks


a) Kenya is currently facing the problem of increased number of hawkers.

Discuss four problems caused by this large number of hawkers in the urban centres.

b) The following transactions relates to Maruti Distributors. Journalise them and then post to the relevant ledger accounts.

March 4th - Sold goods on credit worth Sh.92,000 to Wamukoya General shop.

March 6th - Purchased a computer worth Sh.120,000 from Nandwa Electronic
settling it partly with old furniture worth Sh.35,000 and the rest to be
paid after two months.

March 8th Wamukoya General shop returned goods worth Sh. 10,000.

March 17th Purchased goods worth Sh.84,000 on credit from Ruai traders.

March 26th Returned goods worth Sh.5,000 to Ruai traders.

20 marks

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