565/1/2

BUSINESS STUDIES

PAPER 1& 2

TIME: 2 MONTHS

PONGE SECONDARY SCHOOL

DEC HOLIDAY ASSIGNMENT 2019

BUSINESS STUDIES- FORM THREE

Kenya Certificate of Secondary Education

565/1/2

BUSINESS STUDIES

PAPER 1 & Paper 2

TIME: 2 MONTHS
 Instructions; Answer all questions

1. The information below relates to Munyambu traders as at 1st jan 2017

i.
Capital 13,730
ii.
Stock 5,000
iii.Debtors 200
iv.Stationery 1,560
v.Cash 1,000
vi.Premises 14,000
vii.Overdraft 2,500
viii.Creditors 1,370
ix.5 year loan 4,160
x.During the month ,the following transactions took place:
xi.Jan 2nd Received from debtors 150 by cheque
xii.7th sold goods worth sh 3,000 for sh 9,000 and deposited money in his
bank account
xiii. 27th paid sh.1,000 in cash part of the five year loan
Required: prepare a balance sheet as at 31st Jan 2017
2. A business enterprise had cash balance of sh. 50000 and an overdraft of sh. 15000 on 1st
February 2011.
Transactions conducted were as follow:
Feb 2: A debtor paid sh. 40000 by cheque.
Feb10: The business bought stock sh. 10000 in cash
Feb12: Creditors were paid ksh.5000 by cheque.
Feb 13: Sold goods sh. 30000 in cash.

Prepare a two column cash book to record the above transactions. Balance the cash book.
(4 marks)
3. State four errors that effect the agreement of a trial balance.(4 marks)

4. Complete the table below by indicating the relevant account to be debited and credited

Transaction Account debited Account

credited.
a) A debtor paid by Cheque
b) Bought goods on credit
c) Drew cash from bank for office
use
d) Paid cash to a creditor

5. The following relates to Jaba business for the year ended 31-12-2006
Capital as at 31-12-2006 sh.85000
Drawings for the year sh.13000
Net loss for the year sh. 6000
Extra capital introduced the year sh. 33000
 Determine his capital on 1-1-2006. 4mks

6. Kiriko traders started a business with shs 300,000 cash at bank on 1st July 2016.
During that month, the following transactions took place;

July 2nd withdrew shs 100,000 from the bank for office use
July 4th bought stock on credit worth shs. 53,000 from Musa traders
July 6th Withdrew shs. 10,000 from the bank for private use
July 8th purchased a computer worth shs. 20,000 by Cheque
July 10th Paid Musa traders shs. 12,000 by cash
Required
Open the relevant ledger, accounts and record the above transactions.
Balance the ledger accounts (10mks
7. On 1st July, 2016 Ekalale Traders had cash in hand sh. 85,200 and cash at bank sh.40,000 (Cr).
During the month, the following transactions took place:
July
2 cash sales sh. 42,630 was paid directly into the bank
5 Received a cheque of sh. 14,100 from Ruth in full settlement of her account.
9 Bought goods worth sh. 26,240 cash.
12. Cash sales sh. 42,950 payment received by cheque
15 Paid Ndoigo’s account of sh. 25,000 in cash less 5% cash discount.
17. Paid wages sh. 24,000 in cash
18 Withdrew sh. 16,000 from bank for office use.
20 Bought stationery sh.850 cash
22 Cheque received from Ruth was dishonoured.
28 Received a cheque of sh. 9,500 from Kemamo after he deducted a 5% cash discount
31 All cash was banked except sh.10, 000.

Required:
Prepare a three column cash book duly balanced. (10 Marks)

Q7.the following assets and liabilities appeared in the books of Katana Traders on 31st july 2005.
Land and building 750,000
Motorvehicle 250,000
Creditors 50,000
Stock of goods 100,000
Bank 90,000
Debtors 8,000
The following transactions took place between 1st August 2005 and August 5th 2006.
i. Katana brought some furniture into the business from his home worth sh20,000
ii. Credit purchases sh.40,000
iii. Paid a creditor by cheque sh 30,000
Required. Prepare Katana’s balance sheet as at 5th august 2006. (8mks)
6. Mr. Juma made the following transactions in his business during the year 2012.
1st Jan, 2012: Purchased a new motor lorry valued at sh.1, 800, 000 on credit from General
Motors.30th August 2012: Gave out an old motor bus valued sh.1, 000,000 to General Motors as
part payment for the lorry he purchased on credit.
27th Dec, 2012: Paid sh. 250,000 in cash and the balance by cheque to clear his debt with
General Motors. Prepare the General Motors account in Mr. Juma’s books.

7. On 1st June 2009, MULI ENTERPRISES had cash in hand sh. 87,000 and cash at bank
sh. 250,000.During the month, the following transactions took place.
 June 2, Sales (cash) sh. 50,000
 3, Paid salaries s.101, 500 by cheque.
 6, Received a cheque for sh. 76,800 from Mwelu after allowing her a cash discount of 4%.
 12, Bought office furniture by cheque sh. 85,000
 16, Settled Musau’s account of sh. 40,000 in cash, having deducted shs 800 cash discount.
 18, Received a cheque for shs 150,000 in respect of cash sales.
 21, Paid wages shs 24,000 in cash.
 22, Withdrew shs 30,000 from bank for office use.
 25, Withdrew shs 5000 cash for private use.
 28, Received shs 16500 cash from Kasiva in settlement of her account less shs 660 cash
discount.
 June 30, Deposited all the money into bank except shs 200.

Required: Prepare a three column cash book duly balanced.

9. The following are the assets and liabilities of classic furniture Enterprises as at 1st July, 2012
.Kshs.
 Furniture for sale 560,000
 Office furniture 150,000
 Creditor 155,000
 Drawings 40,000
 Debtor 85,500
 Premises 250,000
 Cash at Bank 130,000
 Net profit 60,000
 Cash in hand 5,500
 Bank loan 600,000
 Prepaid insurance 20,000
 Capital 426,000
Required.
Prepare the balance sheet of the business as at 1st July showing subtotals for:
(i) Fixed assets
(ii) Current assets
(iii) Long term liabilities
(iv) Current liabilities
10. Mr. Juma made the following transactions in his business during the year 2012.
1st Jan, 2012: Purchased a new motor lorry valued at sh.1, 800, 000 on credit from General
Motors.30th August 2012: Gave out an old motor bus valued sh.1, 000,000 to General Motors as
part payment for the lorry he purchased on credit.
27th Dec, 2012: Paid sh. 250,000 in cash and the balance by cheque to clear his debt with General
Motors. Prepare the General Motors account in Mr. Juma’s books.

Section B
2. Explain two types of business transactions
3. State four factors that may lead to a change in capital
4. Explain the two major classes of accounts
5. Mention any four types of ledgers
6. Explain any five sources of monopoly power
7. Discuss any five roles that intermediaries play in the distribution chain
8. Describe five advantages of open office layout
9. What are the disadvantages that a student may face after engaging in sole proprietorship
business after completes his/her course in form four
10. Discuss the importance of warehousing to business
11. Describe three areas where you are likely to get a business idea
12. State four reasons that may make a Cheque to be dishournered
13. Explain five challenges faced in the satisfaction of human wants.
14. Explain five reasons why it is easy to start a sole proprietor business organization
15. Explain any five factors that may influence the supply of mangoes in the economy.
16. Explain five roles played by intermediaries in the chain of distribution.
17. Describe any five accounting documents used in home trade.
18. Explain five problems that the insurance industry is facing in Kenya today.
19. Indicate in the space provided the account to debit and the account to credit in the following
transaction.