PRIME MINISTER’S OFFICE REGIONAL ADMINISTRATION AND LOCAL GOVERNMENT

MID TERM EXAMINATION - MARCH 2026

BUSINESS STUDIES FORM TWO

TIME : 2:30 hours

INSTRUCTIONS

1. This paper consists of sections A, B and C with a total of nine (9) questions.
2. Answer all questions in the space provided.
3. Section A carries fifteen (15) marks, section B forty (40) marks and section C carries forty five (45) marks.
4. All writing must be in blue or black ink, except drawings which must be in pencil.
5. Communication devices, and any unauthorized materials are not allowed in the assessment room.
6. Write your Assessment Number at the top right hand corner of every page.

SECTION A (15 Marks)

Answer all questions in this section.

1. For each of the items (i) – (x), choose the correct answer from among the given alternatives and write its letter in the box provided.

(i) A sole proprietorship is a business owned and managed by

1. two or more people
2. one person
3. the government
4. shareholders

(ii) The main advantage of a sole proprietorship is

1. limited liability
2. quick decision making
3. large capital
4. separation of ownership and management

(iii) Warehousing helps businesses mainly by

1. increasing production costs
2. stabilizing prices and ensuring continuous supply
3. reducing the quality of goods
4. eliminating middlemen completely

(iv) The process of transforming raw materials into finished goods is called

1. distribution
2. production
3. exchange
4. consumption

(v) Microfinance institutions mainly provide services to

1. large corporations
2. low-income individuals and small entrepreneurs
3. international companies
4. government departments

(vi) Entrepreneurship is best defined as

1. working for someone else
2. taking risks to organize factors of production to start and run a business
3. saving money in a bank
4. buying goods for resale only

(vii) One major challenge faced by sole proprietors is

1. unlimited liability
2. too many owners
3. difficult decision-making
4. separation of ownership and control

(viii) The main purpose of cooperatives is to

1. maximize profits for shareholders
2. improve the economic and social welfare of members
3. produce goods for export only
4. compete with large companies

(ix) Which of the following is NOT a factor of production?

1. Land
2. Labour
3. Capital
4. Profit

(x) The document that shows how a business will be started and operated is called

1. ledger
2. business plan
3. invoice
4. receipt.

2. Match the items in LIST A with the most appropriate description or reward in LIST B.

SECTION B (40 Marks)

Answer all questions in this section.

3. Define the following terms as used in Business Studies:

1. Sole proprietorship
2. Warehousing
3. Production
4. Microfinance (
5. Entrepreneurship

4. State five advantages of sole proprietorship.

5. Explain four importance of warehousing to businesses and the economy.

6. Differentiate between production and distribution (give four points).

SECTION C (45 Marks)

Answer all questions in this section.

7. (a) Explain the meaning of the term “business formation”.

(b) Outline five steps involved in forming a small business.

8. (a) State four factors of production.

(b) For each factor named in (a) above, give one example and explain its importance in a sole proprietorship business.

9. Juliana started a tailoring business named “Juliana Designs” as a sole proprietorship. She uses her personal savings as capital, makes all decisions alone, keeps all profits, and bears all losses.

(a) Identify the type of business ownership Juliana is using.

(b) State four advantages Juliana enjoys from this type of business.

(c) State three disadvantages Juliana faces.

(d) Suggest two ways Juliana can overcome one of the disadvantages you mentioned.

THE PRIME MINISTER’S OFFICE,  THE REGIONAL ADMINISTRATION AND LOCAL GOVERNMENT

FORM TWO MID TERM ASSESSMENT 

065 BUSINESS STUDIES

TIME: 2:30 MARCH, 2026 

INSTRUCTIONS 

1. This paper consists of section A, B and C with a total of ten (10) questions.
2. Answer all the questions in the space provided
3. Section A carry fifteen (15) marks, section B carry forty (40) marks and section C carry forty-five (45) marks.
4. All writings must be in black or blue ink except diagram which must be in pencil.
5. Communication device and any unauthorized materials are not allowed in the assessment room.
6. Write your Assessment NAME at the right corner of every page.

SECTION A (15 MARKS)

Answer all questions in this section.

1. For each of the item (i)- (x), choose the correct answer from among the given alternatives and write its letter in the box provided below.

(i) Organization owned and operated by people with similar needs are called……...

1. Microfinance 
2. Corporation 
3. Enterprise
4. Cooperative

(ii) Keeping aside part of personal earnings for future use refers to ……….

1. Debt 
2. Saving 
3. Serving
4. Loan

(iii) Borrowing funds from institutions with the agreement of repaying them with interest over a specific time refers to ……….

1. Financial business 
2. Raising fund 
3. Loan
4. Deferred payment

(iv) The process of making payment for purchased products at a later date refers …….

1. Purchases 
2. Borrowing 
3. Deferred payment
4. Cash payment

(v) Ms. Zainabu always cooks food for her family. What type of production does she engage in?

1. Food production 
2. Direct production 
3. Domestic production
4. Indirect production

(vi) Juma buys bread daily for his family. In this case, Juma is acting as a:

1. Distributor 
2. Retailer 
3. Manufacturer
4. Consumer

(vii) A family spends money on clothing, housing, water and holiday. Which of the following is NOT a basic consumer need?

1. Clothing 
2. Housing 
3. Holiday
4. Water

(viii) A carpenter is making tables. He has wood, nails and tools. He also has customers. Which of the following is NOT an input for production?

1. Capital 
2. Land 
3. Consumer
4. Labour

(ix) Neema grows maize for maize for sale while her cousin helps her grandmother with farm work without payment. Which activity is NOT considered as a business?

1. Running a grocery shop.
2. Selling maize at the market.
3. Helping grandmother without pay.
4. Providing transport service.

(x) Naathan starts a small activity where she buys used clothes and sells them at a profit. Which of the following best describes what Naathan is doing?

1. Consumption 
2. Business 
3. Production
4. Scarcity

Answers

2. Match the items from LIST A with those in LIST B by writing the letter of a correct option beside the corresponding item number in the table provided.

Answers

SECTION B (40 MARKS)

Answer all questions in this section

3. Differentiate the following basic terms used in business studies.

1. Skilled labour and Unskilled labour.
2. Goods and services
3. Business and Business studies.
4. Sales Day book and Purchases Day book.
5. Sole proprietorship and Entrepreneurship

4. Jamila wants to open a small shop. With reasons, advise her on the categories of goods can sell. Five (05) points.

5. Assume you are doing a business groundnuts in your locality. You have reached a point where you have more customers than what you sell. Describe ways you may use to finance your business. Five (05) points.

6. Bunigonzi co-operative shop made the following Purchases during the month of January 2026.

• Jan 1, Bought from RTC Mbogwe 100bags of Rice @ 5,000 and 50 bags of sugar @7,000.
• Jan 5, Bought from Mangi Ltd 10 boxes of cooking oil fat@ 3,000 and pairs of Sandal @2,000.
• Jan 10, Bought from Moshi Traders 20 pairs of bed sheet@7,000 and 50 shirts@ 3,000.

REQUIRED: Prepare Bought Journal from the above transaction.

SECTION C (45 MARKS)

Answer all question in this section.

7. Based on the challenges faced by sole proprietorship in your local community, choose any business which you can establish and write a project to propose creative six (06) ways or solutions to address the challenges you might encounter.

8. Ms. Johari plans to establish a small business with projected operating expenses of Tshs 700,000/= for the year and revenues from sales of Tshs. 1,000,000/= for one year.

1. What will be the profit or loss?
2. If the business earns Tshs. 200,000, what will its profits or loss be?

9. Mrs Naniah inherited her late brother’s warehouse. However, she is worried that she will not be able to operate it because she is unaware of all activities conducted in a warehouse. So, Mrs Naniah decided to hire an assistant to help her in running the warehouse. As Mrs Naniah.