BUSINESS PP2
MARKING SCHEME
1.(a)Explain FIVE factors that are likely to lead to high birth rate in Kenya. (10marks)
Ignorantopposition offamily planning methods by some people/communities.
Religious beliefs which encourage large families.
i SOinc countries child:en are viewed as 4souiCe of cheup labor.
Many families having many children where they strive to get a male child.
Early marriages prolonging the woman 's reproductive lije.
C
Some cultural beliefs/practices taking children as security during old age hence many
children.
People want to have many childrenin areas witha highmortality rate so that if some die
others will be lef. (2 x5= 10 marks)
b)
Date Details Fol Disc Cash Bank Date Details Folio Disc Cash Bank
Allo Rec
March Capital 870,000 250,00 March
1 Sales 60,000 3 Salaries 101,500
4000 13 Furniture 86,000
2 Henry 800 34,200
7 Sales 76,000 17 Maria
20 Bank C1 32,000 165,00 22 Wages 25,000
24 Alvin 1000 17,000 0 24 Cash 32,000
29 Cash C2 25 Drawing C1 4000
31 31 Bank C2 112,40
112,40 bal c/d 0 383,900
bal b/d 24,000
5000 196,000 603,40 800 196,00 603,400
0
24,000 383,90
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of property insuraneo
2. a) Explain FIVE characteristicsregularly. (10marks)
contract-renewable
I1is a term
I is acontract of insecurily-owner ts omCsdted upon ocCurrencp of risk
transferred
Policy cannot be assigned policy cdnnot be
Has nosurrender value
Insured nust have insurable intfrest in the property.
ioun.
1he policy can be used as security to vbtain
Uncertainty ofrisk-the risk may or may nol occur.
There is minimum limit to he amount 0j compenfation-it can be up to the value of the
property insured and thefsum insurd in case of under insurance.
b)Explain FIVE services thf the Central Bank of Kenya may offer to commercial banks.
(10marks)
Advising commercia/banks on commercia matters.
Accepts deposits bylbeing incustody of te reserves received fromcommercial banks.
Supenising the opfrations of commergal banks.
Providing a centrl clearing house where commercialbanks settle debts due toeach
other.
Being the lendr of the last resortfo the commercial banks.
Foreign Exchhnge-Buy and sellforeign currency to and for commercial banks.
Replaces oldcurrency and issle new notes and coins.
Arbitration in case of disputs between commercial banks.
Licensing the operations of tommercial banks
3. a) Explain FIVE differences between an open office and an enclosed office (10marks)
Open Office Enclosed Office
All staff workin one large roon Eachstaffis allowed a room from where they work.
b There is noconfidentiality in consultations and b Discussions and consultations are done in confidence.
discussions.
Senior staff sits together with the juniors hence no C Confers status on top level staff as thev are located in
status conferred. their own offices.
d Office eguipment and machines cannot be misused. Office equipment and machines like telephones are
easily misused since they are located in particular
offices.
Disruption and noise from colleagues is high due to Liule noise and disruption from colleagues since each
overcrowding. staff work from own offices.
Has fewerpartitions hence cheap to consiruct. Has more partitions hence costly to construct.
It's easy to supervse the staff since they are all in one I's difficult to supervise the sta] since they are in
room. different rooms.
h Promotes teanwork among employees, Encourages laxiy in oice.
Discourages absenteeism by employees. Encourages absenteeism by employees.
Equipmentand machines areeasily shared in the Equipment and machines are not easily shared in the
office. office.
k Easy to locate workers Diflicult to locate workers
b.
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Nkatha Traders
Trading, Profit and Loss Account
For the periodended 30h June 2021V
SHS SHS.
Opening stock
32,800V SHS.
Purchases 228,200 Sales 362,500N
Add Carriage in Less Returns Inwards 9,900V
9,100V
Less Returns out 16.400V 220.900
GAFS
253,700V
Less Closing stock
29,500V
COS 352,600
224,200 Gross profit c/d 128,400V
Gross Profit c/d
128,400VN Discount received 2,700
-352,600N
Discount allowed 5,400/
Carriage outwards 17,500/
Rates and insurance 11,600V
Wages and salaries 41,800V
Net profit c/d 54,800V
131,100 131,100
(20ticks x1/2=10mks)
4. (a) There has been a decline in the demand for wooden furniture.
Explain FIVE factors
that may have caused this trend.
(10 marks)
Decline in consumers' income reducing their purchasing power / hence less able to afford
the furniture.
Fall in the price ofsubstitutes / furniture made from other
be cheaper making them more afordable. materials e.g. plastic metal - may
Increase in the price ofa wooden furniture- This makes the furniture to be out of
most consumers. reach for
Unfavorable government policies -hence making the furniture more expensive/
unaffordable.
NB mention of aspecific government policy
Unfavorable /dislikelchange in taste /fashionaccept/preference- making them repulsive /
unattractive / undesirable.
Decrease/ decline inpopulation - which lead to reduced numbers
CUStoners. ofpotential and actual
Lowseason - lead to few buyers / low sales.
Expectations of afuture fall in price - hence customers will suspend /postpone
buying.
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insurance claim,
(b)Explainthe procedure of making an (10 marks)
Notit: or intorm the insurer of the ocerence tne isk insured leading to the loss.
Fillthe oficialclaim form firom the i7S1e 3 g the details of the event and the
the event.
circumstances leading to the occIrence of
Theinsurer caries out an investigationto erermine the cause of loss and the amount.
The inserer prepares assessment report imaicang the extent of damage and loss suffered.
The amount of compensation is determined yrom ihe report and compensation paid.
NOTE: (i) No splitting of marks.
(ii) Wrong procedure in a given step awara jollowing steps zero
5. (a) Other than bidding, explain FIVE other methods of determining the price of a
product in a market. (10 marks)
Bargaining haggling terms of exchange is negotiated/argued/debated between buyers and
sellers
Pricecontrol the price is set by the government beyond which the seller cannot exceed/
below which the buyer cannot go
Auction price are determined by the highest bidder
Recommended retail price Iretail price maintenance/producers price fixing where the
producer imanfacturer suggests/proposes/endorse the price of commodities
Price collusion/cartels where diferent players conspire to fx the price
Taxation/subsidy which increase/reduce the selling/ buying price
Private treay a sale ofproperty at aprice agreed on by the seller and buyer without any
intervening agency
(b) Explain FIVE differences between private limitedcompanies and partnerships forms of
business units. (10marks)
Private company Partnership
Have a minimum of2 shareholders to 50 members The business is owned by wo or more
persons with a marimum of twenty for
ordinary partnership
2. The business can be managed by one director or two The business is managed bv active
if big partners jointly
3 Do not alow the transfer of shares 3. They do nÍt deal with shares but
members contribution
4. Allmenmbers have limited liabilities 4 One partner has unlimited liability
exceptother who have limited liabilities.
5. Separate legal entity 5. No separate legalentity
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0. (a) Explain clearly with aid of a diagram the change of
in supply of a cquilibrium as a resultof increaAse
commodity. (10marks)
D
price
S,
Pe
E
Pe
S
S D
Qe Qe
Quantity
(b)Explain FIVE uses of national income statistics. (10marks)
"Used to measure the standards of living of people in a country. When per capita income
is high the standards of living are high and vice versa.
"Used to measure the rate of economic development. When national income is high the
rate of economicdevelopment is high.
"Used to compare the standards of living invarious countries through the use of per
capita income figures since when its high in one country than the other, the lifestyles
are high inthat countrythan the other.
"It helps the government in economic planning as it provides useful information on
various sectors that is required by planners. /for resource allocation.
"Used to compare the living standards in one country in various years since a
year with
a high national income shows higher standards of living.
"Used to attract investors by providing useful information about diferent
sectors
"Used to determine per capita income by dividing the National income by the
total
population.
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