05

Centre Candidate
Number Number

SOLOMON ISLANDS SCHOOL CERTIFICATE

2008

BUSINESS STUDIES

TUESDAY 23RD SEPTEMBER 8 AM TIME: 3 Hours Plus

10 mins. reading time

SECTION CONTENT MARK

A 30 Multiple Choice 30
B Short Answer Questions 35
C Long Answer Questions 35
-----
TOTAL 100

INSTRUCTIONS

1. Do not open this Booklet until you are told to do so.

2. Make sure both your center number and candidate number are
written in the spaces provided at the top right corner.
3. All questions are compulsory.
4. Answer each question in the space provided after each
question.
5. Equipment required:
- Blue or Black pen
- Ruler

THIS BOOKLET SHOULD CONTAIN 23 NUMBERED PAGES.

Choose the answer you consider to be correct in the MULTIPLE CHOICE
SECTION A and circle the corresponding letter on this page.

MULTIPLE CHOICE

Example: A B C D (You think B is the correct answer)

If you want to change your answer, cross out your first choice and circle your new
choice.

Example: A B C D (You now think D is the correct

answer)

1. A B C D 21. A B C D
2. A B C D 22. A B C D
3. A B C D 23. A B C D
4. A B C D 24. A B C D
5. A B C D 25. A B C D
6. A B C D 26. A B C D
7. A B C D 27. A B C D
8. A B C D 28. A B C D
9. A B C D 29. A B C D
10. A B C D 30. A B C D
11. A B C D
12. A B C D
13. A B C D
14. A B C D
15. A B C D
16. A B C D
17. A B C D
18. A B C D
19. A B C D
20. A B C D

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SECTION A: MULTIPLE CHOICE (30 MARKS)

You are to circle the BEST or the MOST correct answer. Answer
all questions in Section sheet provided on page 1 of this booklet.

1 Economics is the study of

A. How to earn more money through unlimited Resources.

B How to satisfy wants through the use of limited Resources
C. How best to use limited Resources
D. How to start a Business with the unlimited Resources.

2. The EQUIPMENT used to process canned fish represents which factor of

production?

A. Labour
B. Capital
C. Land
D. Enterprise

3. One of the effects of specialization is that people become more:-

A. dependent on others for goods and services

B. hesitant to produce more goods
C. Aware of community services
D. Dependent on imported goods and services.

4. Gross Domestic product (GDP) is a measure of

A. amount of money spent by Government per annum

B. total value of resources used per annum
C. total value of import per annum
D total value of production per annum.

5. The Solomon Islands Economy is a mixed Economy. This means that:

A. all Businesses are privately owned

B all Businesses have limited liability status.
C there is subsistence and civilization.
D Businesses are owned by Government and Private sector.

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6. If the supply of bettle-nuts in the Market is greater than the Demand for it,
the price of bettle- nuts will:

A. shift upwards
B. fluctuate
C. shift downwards
D. elastic forward.

7. The laws of Supply and demand confirm an increase in demand:-

A. leads to a rise in price and an increase in quantity traded.

B. leads to an increase in price and a decrease in quantity traded.
C. leads to a decrease in price and a decrease in quantity traded
D. leads to a decrease in price and an increase in quantity traded.

8. The Balance of the Current Account is equal to:

A. export plus import

B. balance of Trade plus net invisible
C. export minus from import
D. balance of trade minus import.

9. Export represents the flow of goods:

A. out of the country with a corresponding deficit

B. into the country with a corresponding surplus
C. into the country with a corresponding increase in Income
D. out of the country with a corresponding increase in Income.

10. The initial “PTY” LTD represents proprietorship limited because:

A. it is owned by a number of people

B. only people with money can share in it
C. they want to keep their operation limited
D. its shares can only be bought by selected people.

11. Which of the following Business entity is fully responsible to all its debts
apart from the owner when liquidated?

A. sole proprietorship
B. partnership
C. public company
D. private company.

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12. Tom decided to invest in an interest bearing deposit. Which of the following
is not a characteristic of this type of deposit?

A. the money is in the safe place

B. it earns interest
C. it can be withdrawn at any time
D. it may be renewed for an extra term.

13. Who are the people who eventually pay for the operational cost?

A. Consumers
B. Producers
C. Private Business and Companies
D. Retailers.

14. Advertisements inform people of available goods and services.

It is therefore another means of:

A. communication
B. trade
C. convincing people
D. persuading people.

15. In business insurance gives protection. People grouped together to protect

themselves against:

A. natural disaster
B. theft of goods
C. enemies
D. risk of loss.

16. Which of the following is compulsory Insurance?

A. motor vehicle insurance

B. public liability insurance
C. accident insurance
D. workers compensation insurance.

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17 Which concept enforces Business to treat the personal affairs of the owner
as separated from the Business entity?

A. Monetary concept
B. Accounting period concept
C. Accounting entity concept
D. Accounting information concept.

18. The application of the Double Entry Book Systems states that:

A. for every transactions two different accounts must be affected

B. for every transactions one account is debited and one credited
C. two entries are made in two accounts
D. for every transactions total debit equal total credit.

19. A discount received account has a credit nature because it is:

A. a liability which is increasing

B. a revenues which is increasing
C. an owner’s equity which is increasing
D. an expense which is increasing.

20. Kanaka charged Kirio $1,000 interest on an overdue account. Kanaka made
this entry in the Cash Receipt Journal, which credited Kirio for $1,000. To
correct this error in the General Journal, which of the following statement is
correct?

A. Kirio will be debited with $1,000 and Interest revenue will be credited
with $1,000.
B. Kirio will be debited with $1,000 and Cash at bank will be credited
with $1,000.
C. Kirio will be debited with $2,000, Cash at bank will be credited with
$1,000 and Interest revenue will be credited with $1,000.
D. Kirio will be debited with $1,000, Interest revenue will be credited
with $1,000 and cash at bank will be credited with $2,000.

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21. Received $1,000 from Harry, after he was given a discount of $50. The
correct entry to record this into the Ledger will be:

A. debit cash at bank $1,000, debit discount allowed $50 and credit
sales $1050.
B. debit cash at bank $1,000, debit discount allowed $50 and credit
Harry $1050.
C. debit Harry account $1050, credit cash at bank $1,000 and credit
discount allowed $50.
D. debit cash at bank $1050 and credit discount allowed $50
and credit Harry account $1,000.

22. Sold Goods for Cash. The effect of this transaction to a balance sheet would
increase the:

A. asset and increase in owner’s equity

B. asset and decrease in owner’s equity
C. owner’s equity and decrease in liability
D. owner’s equity and decrease in asset.

23. Which of the following transaction does not affect owner’s equity?

A. Draw goods from the business

B. Sold furniture on credit
C. Bought inventories on credit.
D. Owner contributed additional cash into the business.

23. “Bought Equipment on credit”. The two accounts affected by this transaction
are:

A. Purchase and Creditor

B. Equipment and Debtor
C. Purchase and Equipment
D. Equipment and Creditor.

25. Bank Statement is the source document for:

A. Cash Receipt and Sales Journal

B. Cash Payment Journal and Purchase Journal
C. Cash Receipt and Cash Payment Journal
D. Cash at hand Journal.

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26. If the final balance in the Bank statement is $3,500 debit, there is $200 in
unpresented cheques and $400 in outstanding deposit, the final balance in
the Business Bank account is:

A. $3,300 credit
B. $3,300 debit
C. $3,700 credit
D. $3,700 debit

27. Assuming that the petty cash fund has an imprest amount of $200 and
during the month, the amounts paid are for Taxi fare $25, stationery $12,
cleaning $28 and postage $15, then the amount of money in the fund after
reimbursement is:

A. $80
B. $120
C. $60
D. $200

28. Calculate the amount of depreciation for the first Accounting period for a
Motor Vehicle that was purchased on 30th September 2007 for $18,000 and
has an expected residual value of $5,000 after 4 years. Depreciation is
calculated at 25% diminishing balance and balance date is 30th June, 2008.

A. $2,438
B. $3,250
C. $3,375
D. $4,500

29. If the balance day is Wednesday 30th June, calculate the amount of accrued
wage if pay day is every Friday and the weekly wage account ( Five days a
week ) is $20,000.

A. $20,000
B. $8,000
C. $12,000
D. $16,000

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Use the following information in the Box to answer Question (30 )

OWNER’S EQUITY 31st December 2007

Opening Capital ( January 1st 2007) $ 100,000

Cash Contribution by Owner during the year $ 20,000
Drawing during the year $ 30,000
Closing Capital ( 31st December 2007) $ 150,000

30. The Net profit for the year is:

A. $10,000
B. $20,000
C. $60,000
D. $40,000

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SECTION B: SHORT ANSWER QUESTIONS (COMMERCE):
(35 MARKS)

Write your answers in the spaces provided

Question One: BACK GROUND TO BUSINESS ( 19 marks )

1A: Explain the three stages of production:-

i) a )…………………………………………………………………...........................
b )………………………………………………………………………………………..
c )…………………………………………………………………………………………
(3 Marks)

ii) Define Productivity…………………………………………………………………..

……………………………………………………………………………………………..
……………………………………………………………………………………………..
……………………………………………………………………………………………..
(1 Mark)

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1B: Study the graph and answer the questions below

DEMAND AND SUPPLY OF EGGS IN SOLOSO POULTRY FOR JUNE 2008

70

P 60 Supply curve

R 50

I 40

C 30

E 20
Demand
$ 10 Curve

00
5 10 15 20 25 30 35
QUANTITY ( DOZEN EGGS )

i) At the highest price how many are: -

1. Demanded……………………
2. Supplied……………………… (1 Mark)

ii) What is the Equilibrium:-

1. Price…………………………………………………………………
2. Quantity…………………………………………………………. (1 Mark)

iii) Describe what happen to the market force when the price was set at $50 per
Dozen?

................................................................................................................

................................................................................................................

................................................................................................................

(1 Mark)

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1C: Kepoiri is a fifth form school leaver at Betikama secondary
school. Despite all attempts to find a Job, He could not find
one. Although he is not that clever, he comes to you to seek
help to start a village store. Briefly explain the factors of
Productions on how he will start his store.

i) Land…………………………………………………………………………………………
……………………………………………………………………………………………..............
………………………………………………………………………………………………(1 Mark)

ii) Labour………………………………………………………………………………………
………………………………………………………………………………………………….
……………………………………………………………………………………………..(1 Mark)

iii) Capital……………………………………………………………………………………..
………………………………………………………………………………………………….
……………………………………………………………………………………………(1 Mark)

iv). Enterprise………………………………………………………………………………….
………………………………………………………………………………………………
……………………………………………………………………………………(1 Mark)

1D. Explain the following terms:

(i). Dual Economy. ………………………………………………………………….........

………………………………………………………………………………………………….
…………………………………………………………………………………………(1 Mark)

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 (ii) Public Sector. ……………………………………………………………………………..
.........................................................................................................................
.............................…………………………………………………………………………….
………………………………………………………………………………………..(1 Mark)

(iii) Quotas. ……………………………………………………………………………………

……………………………………………………………………………………………………..
………………………………………………………………………………………….(1 Mark)

(iv) Demand Pull. ……………………………………………………………………………

……………………………………………………………………………………………………..
…………………………………………………………………………………………..(1 Mark)

1E. INTERNATIONAL TRADE

From the following information provided below, calculate:

(i) Balance of Payment.

Merchandise Export = $ 650 million

Merchandise Import = $ 652 million
Service Receipts = $ 280.9 million
Service Payments = $ 319.1 million
Transfer Receipts = $ 152.6 million
Transfer Payments = $ 57.7 million
Capital Receipts = $ 221.4 million
Capital Payments = $ 220.2 million

SHOWS ALL YOUR WORKING AND GIVE YOUR ANSWERS BELOW.

(i) Balance of Payment.

…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
……………………………………………………………………………………………..(2 Marks)

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(ii) Give TWO (2) reasons why we trade internationally?
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
..............................................................................................................................
...............................................................................................................(2 Marks)

QUESTION TWO: BUSINESS ORGANISATION (6 MARKS)

2A: Study the information in the Box and Answer the following

a. ABC Finance Limited.

b. Fitzgerald and Screw face Proprietory (pty) Limited.
c. Saleni and Daizy Store.
d. Titita Furniture.

(i) Which of the above Business is a Public Company?

………………………………………………………………………………………(1/2 mark)

(ii) Which of the above Business is a Partnership?

………………………………………………………………………….................(1/2 mark)

(iii) Which of the above two (2) Businesses has an unlimited Liability status?
………………………………………………………………………………………….( 1 mark)

(iv). Give TWO (2) advantages of Fitzgerald and Screw face Property (pty) Limited
a)……………………………………………………………………………………………………
b)…………………………………………………………………………………………………
(1 mark)

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(v) The Community in Roviana Lagoon had involved themselves in Primary
Production. They decided to form a Co-operative Society. Explain what type
of Co-operative should they form, and give two benefits.

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
…………………………………………………………………………………………(3 Marks)

QUESTION THREE: Fill in the Blanks with the Words provided. (Use the
Words ONCE only) (10 MARKS)

Wholesaler Compensated - Business -Consumers

Employment Protection - Message - Persuasive
Raw Material Insure -Swift - Lower
Goods Pool - Written - Persuade
United Oral Costs - Trade…..production

Advertising brings together Producers and 1…………………….. .Producers try to

sell more of their Goods. They use 2………………………….and informative Methods.
The advantages of advertising brings everyone together, thus; stimulates
production and create 3…………………………. It can also lead to
4…………………………Progress. The Disadvantages of advertising is that it adds
onto the 5……………………………….cost of the Business. It may
6…………………………………. people to buy things they do not want and it may
make meaningless claims for products.

Communications are 7………………………passed from person to person. They may

be either 8…………………………..or written. Communication aid trade if they are

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9………………………and clear.10………………..........can be kept low and Prices can
be kept low.11……………………………….communication is very important as it is
simple and cheap.

Insurance gives 12………………………. against loss. People 13……………………….

together to protect themselves. Those wishing to 14………………. pay Premium.
The Premium makes up a 15………………………….. of money. The people who
suffer a loss are 16………………………… for their loss.

Transport is the method used for carrying 17………………………….. and services.

Transport aids 18………………………..It brings 19………………………….. to
manufacturers and produce to a market place and also carries consumers to
20………………………… and retailer.

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SECTION C: LONG ANSWER QUESTIONS ( ACCOUNTING ) 35 MARKS

QUESTION ONE: ACCOUNTING PROCESS (13 marks)

Hilda trading shop has the following transactions for the month of August 2008.

August 01: Hilda deposited $20,000 in the Business as capital.

August 05: Bought goods from Noro Mart $10,000. CHEQUE NO: 1152
August 06: Sold goods to Kiona $15,000. RECEIPT NO: 102
August 12: Sold goods to Maqere $800. INVOICE NO: 10
August 15: Paid Solomon Islands Broadcasting Corporation for Advertising
$2,000.
CHEQUE NO: 1153
August 20: Bought inventories from ABA Corporation $3,000. INVOICE NO:
24
August 25: Bought Furniture from Solcane Furniture limited $900. INVOICE
NO: 56
August 29: Returned damaged goods to ABA Corporation $250. CREDIT
NOTE NO: 33

August 31: Received $760 from Maqere in full settlement of account

RECEIPT NO: 103.

From the above transactions, you are required to prepare:-

i) CASH RECEIPT JOURNAL, CASH PAYMENT JOURNAL and GENERAL

JOURNAL.

ii) CASH AT BANK ACCOUNT, PURCHASE ACCOUNT and

MAQERE ACCOUNT.

JOURNAL ENTRIES (6 Marks)

CASH RECEIPT JOURNAL

Date Receipt Details Discount Amount Bank
Number allowed

(2.5 Marks)

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CASH PAYMENT JOURNAL
Date Cheque Details Discount Amount Bank
Number Received

(1.5 Marks)

GENERAL JOURNAL (Narration is not required!)

Date Details Folio DEBIT CREDIT

(2 Marks)

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GENERAL LEDGER ACCOUNT. (7 MARKS)

CASH AT BANK ACCOUNT

(4 Marks)

PURCHASES A/C

(1.5 Marks)

MAQERE A/C

(1.5 Marks)

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 QUESTION TWO: ACCOUNTING FOR CASH (4 MARKS)

(i) PETTY CASH ( 2 marks)

Complete the Re-imbursement Procedure in the PETTY CASH BOOK below

PETTY CASH BOOK

Date Voucher Detail Receipt Payment Cleaning Postage Travel Sundry

Number
2/1/08 - Petty cash
advance 150
CHQ
no: 564
6/1/08 001 Taxi fare 12 12
8/1/08 002 Cleaning 10 10
12/1/08 003 Coffee/ 15 15
Sugar
16/1/08 004 Milo 60 60
18/1/08 005 Stamp 16 16
22/1/08 006 Bus fare 9 9
25/1/08 007 Envelope 8 8
130 10 24 21 75

ii) BANK RECONCILIATION. (2 Marks)

Examine the table below and calculate the missing Amounts

BANK ACCOUNT BANK ACCOUNT
‘A’ ‘B’
Balance as per Bank statement $4,000 Debit $4,000 Credit
Deposit not yet Credited $1,200 $1,350
Unpresented Cheque 500 960

Balance as per cash at Bank ……………credit …………..debit

account

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QUESTION THREE: BALANCE DAY ADJUSTMENT. (17 Marks)

The following Trial Balance has been extracted from the Books of TOLOKO
TRADING.

TOLOKO Trading Trial Balance as at 31st December 2007

ACCOUNT NAMES DEBIT CREDIT
Capital 77,000
Drawing 8,000
Stock (1 January 2007)
st 18,000
Account receivable 12,500
Furniture 6,000
Land and Building 90,000
Motor Car 54,000
Office Equipment 10,000
Good will 8,000
Copy right 5,000
Shares in Glen Grow Company 4,000
Government Bonds 5,100
Accumulated depreciation- Motor Car 14,000
Accumulated depreciation- Office Equipment 2,000
Accounts Payable 9,000
Bank Overdraft 8,000
Long term Loan 64,000
Return outward 2,000
Purchases 95,000
Cartage on Purchase 8,000
Advertising 4,000
Wages and Salaries 27,900
Insurance 4,900
Interest on Loan 2,000
Return Inward 3,000
Sales 180,800
Rent received 7,000
Commission received 1,600

$365,400 $365,400

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Additional information relating to TOLOKO Trading for the year ending 31st
December 2007.

1. Stock on Hand at 31st December 2007 $25,000

2. Accrued Advertising $ 400

3. Accrued Rent $ 3,000

4. Commission received but not yet earned $ 600

5. Insurance Paid in advance $ 500

6. Depreciation Office Equipment 20 % - Reducing Balance Method.

7. TOLOKO Trading reported a NET PROFIT OF $54,500

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REQUIREMENT:

You are required to prepare a fully classified Balance sheet as at 31st December
2007.
(NARRATIVE STYLE)

TOLOKO TRADING
Balance sheet as at 31st December 2007
$$ $$ $$ $$ $$
PROPRIETORSHIP
*
Add net profit

This is represented by
CURRENT ASSET
*
*
*
*

Less CURRENT
LIABILITIES
*
*
*
*
WORKING CAPITAL
Add NON CURRENT ASSET
(FIXED ASSET)
Motor Vehicle $54,000
Less Acc. Depn – MV $14,000 $40,000
Office Equipment $10,000
Less Acc. Depn – O/Equipment
*
*

(INTANGIBLE ASSET)
*
*
(INVESTMENT)
*
*

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LESS NON CURRENT
LIABILITIES
*

THE END

FOR OFFICIAL USE ONLY

ACTUAL
SECTIONS MARKS SCORE

A 30

B 35

C 35

TOTAL 100

Marker’s Initial

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