BUSINESS STUDIES FORM 2 TOPICAL QUESTIONS

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 FORMS OF BUSINESS UNITS
The topic entails:

• The basis of classification of business units e.g. sole proprietorship.

• Classification of business units on the basis of meaning, features, ownership, formation,
sources of capital, merits and demerits, circumstances under which each form will be
dissolved.
• Trends in business ownership.

1. State four requirements necessary to secure a loan from the SACCO’s

2. Give four hitches faced by the government of Kenya in the endeavor to privatize state

firms

3. Outline five benefits of becoming a member of a savings and credit cooperative society

(SACCO)

4. In the spaces provided below, write the type of partner described by each of the following

statements

(i) One who is below 18years of age

(ii) One who has unlimited liability

(iii) One who gets involved in the daily running of the business

(iv) One who allows his/her name to be used in the business

5. Otwoma intends to start a business. Give four reasons why it is advisable for him to start a

retail business shop instead of buying shares in a public limited company

6. State four circumstances that may lead to the dissolution of a partnership

7. State four features of incorporated business units

8. List four documents that are required before a public limited company is allowed to operate
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 in the country

9. List four documents that are required before a public limited company is allowed to operate

in the country

10. Highlight four ways in which the running of public corporations is ineffective in this country

11. You have been charged with a duty of preparing an article of Association for your company;

state four items that you will include in your article of Association

12. Honey intends to join a consumer Co-operate society; Highlight four benefits she would get by

being a member of the society

13. State four features of multinational corporation

14. State four type of partnership businesses

FORMS OF BUSINESS UNITS

1 Explain five advantages that Melinda could derive by investing in shares of a public limited

2 The following information was extracted from books of Chunga Traders for the period ending

31/12/2000:- Fixed assets – 350,000

Drawings – 50,000

Creditors – 50,000

Cash – 60,000

Discount received 4,000

Rent – 12,000

Bank overdraft – 10,000

Debtors – 20,000

Stock (31/12/2000)-30,000

Commission received – 6,000

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 Gross profit – 80,000

Electricity – 3,000

Stock (11/1/2000) – 50,000

Salaries – 20,000

Calculate:- (i) Working capital

(ii) Capital employed

3 Distinguish between a public corporation and a public ltd company

4 Describe the procedure that a shareholder would follow in selling share through the stock

exchange.

5 Challenges faced by the savings and credit cooperative societies

6. The Kenya Government has been privatizing its parastatals to would be investors. Explain any

five benefits of the privatization process to the government

7. Explain five differences between private limited companies and public limited companies

8 Discuss five benefits that the Kenyan government may get by privatizing a state corporation

9 Describe five circumstances under which limited liability companies may be liquidated

10 Describe five distinctions between a public ltd company and public corporation

11 Distinguish between a public limited company and a private limited company

12 Katwaa is a member of Bidii savings and credit Co-operative. (SACCO). What benefits

does she enjoy for being a member of the SACCO

GOVERNMENT AND BUSINESS

The topic entails:-

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 • Reasons to why the government involves in business and various ways through which
• Merits and demerits of government in business activities
• Discussion of meaning of consumer protection, the rationale for it and the various
methods by which consumers may be protected.

1. State four reasons why the government issues licenses to businesses

2. State any four limitation of consumer initiated methods in compating exploitation.

3. Highlight four services offered by the local authorities in Kenya

4. Outline four ways in which the government creates enabling environment for business

5. Local leaders would like to see more business enterprises established within Ugenya.

Outline four measures the government can take to encourage investments in this region

6. Limitations of consumer initiated methods of consumer methods

7. State four reasons why some local authorities in Kenya find it difficult to provide public utility

8. List four types of complaints that a consumer organization may receive from consumer

9. State four reasons why some local authorities in Kenya find it difficult to provide public utilities

10. State four ways in which the government is involved in business activities

GOVERNMENT AND BUSSINESS

1. Explain four methods used by the government to protect consumers

2. Explain four methods used by the government to protect consumers

3. Name and explain four ways in which the government gets involved in business

activities

4. Discuss five ways in which the Kenyan government can provide an enabling business

environment to encourage the young upcoming entrepreneurs

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5. Outline five ways in which the department of external trade promotes a

country’s external trade

- TRANSPORT
The topic entails:

• Definition/meaning and importance of transport

• Discussing the various essential elements of transport
• Differentiate between mode and means of transport
• Discussing the advantages and disadvantages of the various means of transport
• Identifying factors considered in choice of an appropriate means of transport and
implication of each factor to business.
• Trends in transport in relation to business.

1. State four circumstances that make rail transport more desirable than road

2. Highlight four measures that the government can take to make road transport in our

country to be more efficient

3. Marine transport is one of the important means of transport is Kenya. Give four disadvantages

of this form of transport

4. Outline three features of tramps that distinguish them from other sea transporters

6. Outline four factors that have limited adoption of containerization in Kenya

7. G4S Limited Company offer courier services to provide safe transportation services.

Highlight four other services offered by G4S Limited

8. Outline four differences between liners and tramps as in sea transport

9. Bucket ltd is an international pharmaceutical company. Under what circumstances can the firm

send its products to customers by air transport?

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TRANSPORT

1 Explain five benefits that will accrue to a country due to use of pipeline in transporting

oil products

2 Highlight five circumstances under which a trader may choose to transport goods by rail.

3 Discuss the factors that influence the choice of distribution channel

4 Kenya and Uganda are making efforts to improve their railway transport system. What are

the benefits of this form of transport

5 Discuss the advantages of pipeline as a mode of transporting oil products

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 COMMUNICATION
The topic entails;
- Meaning of communication

- Discussion of how communication contributes towards the success of

business.
- Distinguishing between form and means of communication

- Various means of communication and circumstances under which they

are used.
- Advantages and disadvantages of the various means.
- Discussion of factors that hinder effective communication.
- Discussion of factors to consider in choice of a means of communication.

- Identifying services that facilitate communication and circumstances

under which they are used.
- Identifying trends in communication e.g. cell phones, internet etc.

1. The following are special delivery services provided by the post office:-post rest
ante,

speed post, business reply service, express delivery. Match each

description with the term

a) The arrangements to deliver the mail starts at the sender’s post office

b) The arrangement to deliver the mail starts at the addressees post office

c) Services offered to travelers who wish to receive correspondence while

away from home

d) Service that relieves the customer of postage expenses

2. State four advantages of sending parcels using courier firms

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 3. Outline four reasons why communication may not be effective

4. State four essential components for communication to take place

5. List four forms of communication

6. State four circumstances under which verbal communication may be preferred to

written

communication in a business enterprise

7. State any four current trends in communication in Kenya today

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-COMMUNICATION
1. Explain five positive effects of introducing mobile phones in communication
industry in Kenya.

2. Explain any five benefits that may accrue to an organization that uses
effective communication

3. Outline five disadvantages of sirens as a form of communication that is

popular with ambulances and the police

4 Discuss five advantages of mobile phones in communication

5 Explain five factors which may hinder effective communication

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 WAREHOUSING
The topic entails;

- Meaning and importance of warehousing to business

- Outline the essentials of a good warehouse
- Distinction between the various types of \warehouses as well as the advantages and
disadvantages of each type of warehouse.

1. State four functions of warehousing

2. Under what circumstances can the location of a warehouse be seen to be inappropriate

3. State four reasons why it is suitable to locate a bonded warehouse at the point of entry of a

country

4. Outline four benefits of a bonded warehouse to the government

5. Outline four circumstances that would hinder a warehouse form functioning effectively

6. State four reasons why goods may delay in a warehouse

7. State four functions of the purchases department of a ware house

8. State four advantages of warehousing to a retailer

WAREHOUSING
1. Discuss five ways of improving the efficiency of a warehouse

Ness

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 INSURANCE
The topic entails;

- Meaning, purposes and principals of insurance.

- Discussion of classes of insurance and the basis of the classification
- Distinction between Re-insurance and contribution and circumstances under which each may
be necessary.
- Explain the procedure for obtaining an insurance policy and claiming of compensation.

1. Kazi moto insured a motor vehicle against fire with MotoMoto company by paying

Kshs.300.000. later the car was destroyed at a garage and a compensation of Kshs. 400,000

were paid. Using insurance terms, state what each of the following stand for ;

a) Kazi Moto

b) Fire

c) Kshs 300,000

d) Moto Moto Company

2. Give the significance of the following principles to both the insurer and insured

i) Utmost good faith

ii) Indemnity.....

iii) Contribution

iv) Insurable interest..

3. The following are description of various insurance policies. Identify the name of the policy

described by the statement:

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 Description Policy

1 Covers an organization against losses which might arise

as a result of debtors failure to pay their debts

2 Covers for the loss of profit due to interruption of

business activities as a result of fire

3 Covers employees who may suffer injuries while on

official duties

4 Covers partial or total physical disability caused to a

person due to injury

4. State four reasons why few Kenyan take out life assurance policy

5. Define the following types of marine insurance losses:-

(a) Total constructive loss

(b) General average loss

6. State four conditions necessary for the operation of the principle of indemnity in insurance

7. Highlight four characteristics of an insurable scheme

8. Outline four benefits of the “Pooling of risks” to an insurance company

9. Describe the procedure of acquiring an insurance policy

10. A private warehouse owner insured his warehouse valued at Kshs.400, 000 for Kshs600, 000
against risk of fire. The warehouse was later destroyed completely by fire including goods worth
shs 100,000.

Required:

i) Determine the amount of compensation paid by the insurance company

ii) Give a reason for your answer in (i) above

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 INSURANCE
1. Under what circumstances can an insurance company fail to compensate the insured in the

event of occurrence of the insured risk?

2. Describe the procedure for taking up an insurance policy

3. Your father wants to insure his life with British American Insurance Company. As a Business

Studies student, explain to him five benefits of life assurance

4. Explain five principles of insurance

PRODUCT PROMOTION
The topic entails:

(i) Meaning and purpose of product promotion and its impact on the business
performance.
(ii) Discussion of the various methods of production with characteristics of each method;
advantages and disadvantages of each method.
(iii) Discuss factors that influence choice of a product promotion medium as well as
advantages and disadvantages of each.
(iv) Discuss ethical issues in product promotion and how these issues affect the business.
(v) Discuss the emerging issues and explain their impact on the business.

1. Below are terms used in sales promotions:-

-Competitive advertising

-Product advertising

-Informative advertising

- Institutional advertising

-Primary demand advertising

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 Identify the most appropriate term described in each of the following case,

i) Aims at increasing the sales volume of the company’s entire range of products

ii) Provides relevant information about producers products

iii) Seeks to popularize the business enterprise offering goods for sale

iv) Seeks to promote the sale of a new variety of a company’s creations

2. Outline four benefits that accrue to a company by using a prize winning competition to promote

its products

3. Outline four steps involved in personal selling

4. State any three forms of after sales services offered to customers

5. State the functions of advertising agencies to the producers

6. Elgon industries a producer of sweets and chocolates wants to launch its products in the

market. Outline four factors the firm should consider when choosing an appropriate medium

for promotion

7. List four after sale services that a seller may offer to attract more buyers for his products

PRODUCT PROMOTION

1. Highlight five benefits that a firm gets from the use of customers care services as part

of its operation

2. Highlight five circumstances under which persuasive advertising may be used

3. Explain five benefits that consumers are likely to enjoy from product differentiation

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4. Jogoo business enterprise has been using salesmen to market their products. Highlight

five benefits of this strategy to the company

5. Explain five circumstances under which personal selling would be the most appropriate

method of promoting a product

6. A manufacturer exhibited his goods in a local trade fair. However, his sales didn’t increase

significantly thereafter. Outline five reasons that may have led to lack of significant sales

increase

7. Highlight five sales promotional methods which may be used by traders to increase their sales

8. Advertising in the newspapers is one way of promoting sales of goods. Highlight five limitations
of advertising goods in newspapers

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