TERM 2 2021
MID TERM EXAMS
FORM 3 BUSINESS STUDIES 
TIME: 1HR 30MINS
TOTAL MARKS: 50
NAME…………………………………………………….………..CLASSS……..ADM……

INSTRUCTIONS
- Write your name, admission and class in the spaces provided
- Answer ALL questions in the spaces provided.

1. State four reasons that would make an individual engage in business.			 (4mks)

2. State four reasons why a new business may fail.						 (4mks) 

3. Outline four benefits that a saving and credit co-operative society (SACCO) provides 	(4mks)

4. State four principles of insurance 								(4mks)

5. The diagram below shows supply of a certain commodity.

 Outline four factors that may have caused the shift in the supply curve from So SO to S1 S1. (4mks)

6. Outline four reasons why a firm may remain small.					 (4mks)

7. The diagram below represent the circular flow of income in a two sector closed economy.
       
Identify four factors represented by each of the arrows labeled  1 – 4			. (4mks)
1……………………………………………………………………………………………………
2……………………………………………………………………………………………………
3……………………………………………………………………………………………………
4……………………………………………………………………………………………………
8. The following balances were extracted from the Books of Anestar traders for the year ended 30th June 2019
							sh.
	Capital				                 550,000
	Debtors					  120,000
	Creditors					  60,000
	Machinery					  450,000
	Cash at hand					  70,000
	Cash at bank					  180,000
	5 years loan					  270,000
	Stock						  60,000
Prepare Anestar traders balance sheet as at 30th June 2019.					 (4mks)

9. Explain the following four types of unemployment. 					(8mks)
Seasonal unemployment

b. Frictional unemployment

c. Cyclical unemployment

d. Involuntary unemployment.

10. The following balances were extracted from the books of Mwangi traders on 1st January 2020
	Details				sh.
	Furniture			56,000
	Capital			        80,000
	Creditors			20,000
	Debtors			25,000
	Bank			       11,000
	Cash				8,000
During the month, the following transactions took place.
Paid a creditor sh. 45,000 in cash.
Took sh. 3,000 from the bank for family use.
Bought stock for sh. 18,600 on creditor.
Acquired a 10 year bank loan sh. 165,000 which was paid to the business bank account.
Purchased land worth sh. 82,000 paying by cheque.
Converted a family table worth sh. 5,500 to business use.
Received sh. 7,300 in cash from a debtor.   
Prepare Mwangi traders balance sheet as at 31st January 2020. 				(10mks)