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SUBA- MBITA JOINT 565/2 BUSINESS STUDIES PAPER 2 MARKING SCHEME 1. 2. a) Discuss five factors that influence choice of product promotion. - Cost of using the medium - Literacy levels of the target group - Geographical coverage of the medium - Quality of advertisement - Appeal of the medium to the target group - Accessibility of the medium by the target group - Urgency of the information to be passed. 5x2=10mks b) Explain any FIVE use of National income statistics. - To provide information on the relative size of the various sections of the economy and their contribution. - To provide a breakdown on consumer expenditure, govt. expenditure, levels of instrument and total tax’s paid to the government. - To provide information on the performance of the economy over a period of time. - A measure of the standard of living of the people in a country. - To provide information on the types of factor incomes within the economy. - To determine the level of economic development. -To address income disparities. - To aid government in planning. 5x2=10mks a) Explain FIVE causes of balance of payment disequilibrium. - Fail in volume of exports - Deterioration in the country’s terms of trade. - Increase in the volume of imports. - Restriction by trading partners. - Less capital inflow compared to outflow. - Over-valuation of domestic currency. - Devaluation of currency by a trading partner. - Difference in the price of imports and exports. - Unfavourable terms of trade. - Natural calamities e.g drought. - Oversetiance on foreign borrowing. - An economic order favouring developed countries. 5x2=10mks ©2015 SUBA – MBITA Sub County Academic Committee 1 565/2 Business Studies Marking Scheme b) The following information was extracted from the final accounts of Suba traders on 31st sept 2012. Sh. Sales 150,000 Purchase 65,000 Stock(2/9/2011) 18,000 Fixed assets 100,000 Current assets 45,000 Current Liability 37,000 Total expense 10,000 st Stock (31 sept 2012) 12,500 Calculate the following financial ratio; i) Margin Margin = gross profit x 100 Net sales Gross profit = sales – cost of goods sold = sh. 150,000 – sh(18,000 + 65,000 – 12,5000) = sh.150,000 – sh. 70,500 = sh. 79,500 Sh 79500 x100 Margin = sh150000 = 53% ii) Mark up Mark up = gross profit x 100 Cost of goods sold sh 79500 x100 = sh 70500 = 112.77% = 113% iii) Return on capital Net profit x 100 Capital employed Net profit = gross – total expenses = sh. 79,500 – sh. 10,000 = sh. 69,500 iv) Working capital ratio v) Rate of stock turn over. ©2015 SUBA – MBITA Sub County Academic Committee 2 565/2 Business Studies Marking Scheme 3. a) Explain FIVE ways in which commercial banks facilitate transferring of money from one place to another. - Standing order - Through credit transfer - Bank draft or bankers cheque - Credit cards - Travellers cheque - Telegraphic transfer - Mobile banking b)Explain FIVE feature of oligopoly market structure - There are a few large sellers in the market. - The firms produce homogeneous or similar products - There is interdependence among the firms - There is rigidity of price 4. a) Explain five problems that may interfere with the effectiveness of face to face communication. - If these is noise in the environment - Negative attitude between the two parties - Language barrier between the two parties - Lack of concentration by the parties - Age difference between the parties - Physical distance between the parties - Poor timing of the message Any 5x2=10mks b) The cash book of angaine wholesalers showed a cash balance of Sh. 10,000 and bank balance of Shs. 5,000 on September 1, 2013. The following transactions took place during that month. 6th Bought goods Sh. 2,000 in cash 8th Paid Auma Sh 10,000 by cheque less 10% cash discount 12th Sold goods Sh.5,000 by cheque 15th Deposited Sh 2,000 cash into business bank account. 20th Withdraw Sh 1,000 from the bank account for personal use. 26th Received cash Sh.4,500 from Keino after deducting 10% discount 30th Paid usage Sh. 1,000 by cheque. Required; Prepare a three column cash book to record the above transactions and balance it completely. Date Details F Disc Cash Bank Date Details F Disc allow Rec st th 1 sep Bal b/d 10000 5000 6 Purchase 12th sep Sales 5000 8th Auma 1000 th th 15 sep Cash c 2000 15 Bank c 26th sep Keino 250 4500 20th Drawing 30th Wages 30th Bal b/d 250 14500 12000 1000 1st oct Bal b/d 10500 Cash Bank 2000 9000 2000 10500 14500 1000 1000 1000 12000 1000 ©2015 SUBA – MBITA Sub County Academic Committee 3 565/2 Business Studies Marking Scheme 5. a) Explain FIVE principle of public expenditure. - Maximum social benefit - Elasticity - Economy - Sanation - productivity - Equity - Surplus b) Explain FIVE feature of chain stores. - They are owned by the same firm or organization - They sell the same line of goods - They have standard prices for all their goods in all the branches - The shops have a similar designed and operate under one name - They are managed from a central place 6. a)Explain Five circumstances under which a public limited company would be dissolved. - Failure to commence business within one year after registration - Insolvency or bankrupts where the company cannot pay its debts - Through a decision by the shareholders to voluntarily wind up - When there is amalgamation - When membership fall below the minimum that is required by law - Deregistration by the registrar of companies due to failure to comply with the law - Accomplishment of purchase or expiry of period of operation b) Explain FIVE causes of unemployment. - High population growth rate - Low demand for goods and services - Minimum-wage laws - Shortage of capital - Inappropriate education system - Inappropriate choice of production methods - Employment time lags ©2015 SUBA – MBITA Sub County Academic Committee 4 565/2 Business Studies Marking Scheme