Sheikh Osman Secondary ‫مدرسة شيخ عثمان الثانوية‬

School Gardo ‫في قرطو‬

NAME

CLASS
REG NO

BUSINESS AND ECONOMICS

FORM FOUR
MID-TERM EXAMINATIONS 2022-2023
TIME: 2 HOURS

INSTRUCTIONS

 This paper consist of 10 Pages, count now, if there is missing please inform to
the invigilator

 Answer ALL question

 Write your working on the space provided below the question and Calculators
are not allowed

 If you write wrong answer please delete and write right the answer clearly

 This paper consist of three parts

EXAM PARTS CATEGORY MARKS RESULT

MCQ
PART ONE 10
MATCHING
PART TWO 10
STRUCTURED QUESTIONS
PART THREE 80

TOTAL 100

Page 1 of 10
USE THIS AS ROUGH PAGE
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

Page 2 of 10
PART ONE: MULTIPLE CHOICE QUESTIONS. (10 M )
Circle the letter of the correct answer

1. Fixed costs do not change with changes in the quantity of

A. labor force C. output
B. raw materials D. goods
2. The item or economic activity on which tax is levied is called
A. Tax C. Tax base
B. Taxation D. Compulsory money
3. If the break even quantity of a company is 60 units while its price per unit is $25 and
variable cost per unit is $20. What is the fixed cost of that company?
A. $500 C. $250
B. $350 D. $300
4. Which of the following is considered as a variable cost in a company?
A. Monthly insurance fee C. Material costs

B. Advertising costs D. Watchman salary

5. When there is higher level of inflation and higher level of unemployment the situation
is:
A. Structural inflation C. Hyper inflation
B. Stagflation D. Imported inflation
6. If the price of a commodity is above the equilibrium price the result will be
A. Excess demand C. Equilibrium
B. Shift in demand D. Excess supply
7. If puntland government levies the same rate of tax for each person earning income then
puntland adapts the:
A. progressive taxation B. Regressive taxation
C. Proportional taxation D. Productive taxation
8. Net profit is calculated in the financial statement of
A. Trail balance
B. Trading Account
C. Profit and loss account
D. Balance sheet
9. Which of the following is the MOST important source of government revenue?
A. Fees B. Fines C. Interest D. Tax
10. Goods business bought for the purpose of reselling it is known as:
A. debtor B. Stock C. Creditor D. Payable

Page 3 of 10
PART TWO: Match the word in column A with their meaning in column B (10 M)

S/N Column A Letters Column B

1 Taxation A A situation where the total revenues are

less than total expenditures
2 Creditors B business organizations owned by the
government

3 Breakeven C A group of suppliers who are owed money

for goods the business has but not yet paid
for
4 Budget deficit D Movement of people into a country

5 Cost-push inflation E System of collecting income by the

government inform of compulsory
payments
6 Monopoly F The inflation caused by increase in cost of
production
7 Marginal Cost G A direct payment made to others in the
course of running a business.
8 Immigration H When sales revenue is equal to total costs

9 Public corporation I An increase in total cost that result from a

one-unit increase in output.

10 Explicit cost J A situation of the market with only one

seller

Page 4 of 10
PART THREE: STRUCTURED QUESTIONS (80 M )
QUESTION ONE: COST AND REVE 17 M
1. Hodan makes a product with a selling price of $30 per unit and variable costs per unit
of $16. The total fixed costs for the period are $1,400. What is the breakeven level
output?
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
…………………………………………………………………………… 3 marks
2. A new company produces 30 units of a product with a total variable cost of $180. The
company incurs a total cost of $340.
a) Calculate the fixed cost of the company 2 Marks
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
b) If the unit selling price of the product is 50, how much profit does the business make?
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
…………………………………………………………………………… 3 Marks
c) Define fixed costs and variable costs? 2 Marks
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
3. Given the table below calculate the missing figure A,B,C 3 marks
Fixed cost Variable cost Total cost
$1000 A______________ $ 1300
$1000 $400 B____________
C___________ $550 $1550
This illustration reveals the costs and revenues of Karaama Stationary. 4 marks

a) Name the labeled letters

a) Z_______________
b) M_______________
c) N_______________
d) W______________

Page 5 of 10
QUESTION TWO: POPULATION, EMPLOYEMNT AND INFLATION 16 M
1. Population refers to the total number of people found in a given area at specific time
period. Using the information in table to answer the following question. (4 marks)
Population Birth Death
2000 50 25
Calculate:-
A. Crude birth rate
………………………………………………………………………………………
………………………………………………………………………………………
B. Crude death rate
………………………………………………………………………………………
………………………………………………………………………………………
1. Hassan spent so.sh 20,000 per month in 2019 for his family’s upkeep. In 2020, he
spent so.sh 25,000 per month to maintain his family at the same level of living.
A. Calculate the consumer price index for the period of 2020. (2 marks)
…………………………………………………………………………………
…………………………………………………………………………………
………………………………………………………………………………….
B. Calculate the inflation rate of 2020 (2 marks)
…………………………………………………………………………………
…………………………………………………………………………………
………………………………………………………………………………….
2. A country has a total unemployed people 50,000 persons. The total labor force of
the country is 2,000,000.
a. Calculate the unemployment rate of that country.
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………. (3 marks)
b. State any two reasons for the higher unemployment rate
………………………………………………………………………………………
………………………………………………………………………. (2 marks)
3. Define the following terms (3 marks)
a. Inflation rate
…………………………………………………………………………………
…………………………………………………………………………………
b. Demography
…………………………………………………………………………………
…………………………………………………………………………………
c. Unemployment
…………………………………………………………………………………

Page 6 of 10
QUESTION THREE: DEMAND AND SUPPLY 2 12 MARKS

1. Given the following information answer all of the following questions

Price Quantity demanded Quantity supplied Surplus Shortage
3 80 0
6 70 10
9 60 30
12 50 50
15 40 70
18 30 90
a. Identify the equilibrium price and equilibrium quantity (2 Marks)
Equilibrium price: ________________ Equilibrium Quantity: _________________
b. Complete the surplus/shortage columns by calculate each of them. (2 Marks)
c. Draw the demand and supply curves on the same diagram. (3 Marks)

d. Briefly explain the concepts of

i. Shortage 1 Mark
_________________________________________________________________
_________________________________________________________________
ii. Surplus 1 Mark
_________________________________________________________________
_________________________________________________________________
2. Calculate the price elasticity of supply given that:
P1= 16 P2= 20 QS1= 11 QS2= 24 3 Marks
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________

Page 7 of 10
 QUESTION FOUR: PUBLIC FINANCE 15 MARKS
1. Outline three components of public finance 3 Marks
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
2. State three principles of taxation 3 Marks
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
3. Differentiate the following 3 Marks
a. Surplus budget
_______________________________________________________________
b. Deficit budget
_______________________________________________________________
c. Balanced budget
_______________________________________________________________
4. Suppose the puntland government levies a 6% of VAT. Calculate the value added
and tax paid by each manufacturer 3 Marks
Product Sales($) Value added($) Value added
tax($)
Wheat 50
Flour 70
Bread 90
5. State the three types of tax rate structures 3 Marks
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
QUESTION FIVE: ACCOUNTING AND BOOK-KEEPING 20 MARKS
1. Complete the missing numbers in the table below. 3 Marks
Asset Liability Capital
4500 1500 A……………………

B.......................... 600 800

....
2500 C…………………… 1600
….

Page 8 of 10
2. Classify the following into assets, liability, revenues and expenses 4 marks
Item Asset Liability Revenue Expense
Debtors
Rent
Commission received
Account payable
3. Hady has a total assets of sh.so 6,000 and total liabilities of sh.so 2,000. The net
profit for the year was sh.so 1,000 and during the year Hady’s drawings amounted to
sh.so 800. Calculate the amount of capital at the end (final capital)
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………… 3 Marks
4. The following is trail balance of Horizon Enterprises
Horizon Enterprises
Trial balance as at 31 Dec 2022
Accounts Dr (USD) Cr (USD)
Property and equipment 600
Trade receivables 30
Opening stock 80
Purchase 200
Sales 360
Carriage inward 15
Carriage outward 13
Discount received 30
Return inward 18
Return outward 16
Business rates 15
General expenses 12
Advertising expense 17
Trade payables 80
Bank 150
Drawings 26
3 year Loans 90
Capital 600

Notes
The closing stock is USD 120
Requirements:

Page 9 of 10
a) Prepare the income statement for the year ended 31 Dec 2022
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
……………………………………………….. 6 marks
b) Prepare the balance sheet as at 31 Dec 2022

………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………
…………………………………………………………………4 marks
DREAM LESS, WORK HARD

BY: A.A.A HADY

Page 10 of 10