BUSINESS STUDIES PAPER 1 - 2019 KCSE CEKENA MOCK EXAMINATION (QUESTIONS AND ANSWERS)

Instructions for candidates

• Answer all the questions.
• This paper consists of six printed pages.
• Candidates should answer all the questions in English.

1. Highlight four ways in which Kenya may benefit from its natural resources endowment.    (4mks)
2. Outline four ways in which commerce satisfies human wants. (4mks)

3. Outline four circumstances that allow existence of monopolies in a country. (4mks)

4. The table below shows the source documents and their corresponding books of original entry. Identify the correct book of original entry for each case.          (4mks)
   

   Source Document	Book of Original entry
   i)Incoming invoice
   ii)Outgoing receipt
   iii)Incoming Credit Note
   iv)Outgoing Credit Note

5. State four negative effects of unemployment. (4mks)

6. Outline four circumstances under which a manager of a company may use downward communication.    (4mks)
7. Highlight four factors that a producer considers before choosing a channel of distribution. (4mks)

8. The following information relate to meru traders for the year ended 31 December 2017.  
   Sales                                        1000,000.
   Opening stock                         100,000.
   Closing stock                          200,000.
   Gross profits.                          200,000
   Calculate rates of stock turnover.        (4mk)

9. State whether the following represent injection into or leakages from the circular flow of income.           (4mks)   
   

   	Item	Injection/leakages
   a)	Savings
   b)	Taxes
   c)	Government expenditure
   d)	Investment

                                                                                

10. Name the factor of production that each of the following resource relate to   (4mks)
    

    	Resource	Factor of production
    a)	Manager
    b)	Equipment
    c)	Farmer
    d)	River

11. Outline four factors to be considered when choosing a means of reproducing documents in an office. (4mks)
12. Outline four advantages of after sale services as a method of sales promotion to a customer. (4mks)
13. Outline four benefits of the newly constructed standard gauge railway line to Kenya’s e (4mks)

14. In the spaces provided, indicate the account to be debited and to be credited in the following transactions. (4mks) 
    

    	Transaction	A/C DEBITED	A/C CREDITED
    a	Bought machine in cash
    b	Started business with sh.30,000 in cash
    c	Took sh.20,000 cash from business for personal use
    d	Credit sales of old machine to Kamau

                                                                                        
15. The following balances were extracted from the books of kumi kumi traders on 31^st2018.
    Gross profit                             ksh.80,000
    Rent                                                 8,000
    Discount received                           2,000
    Salaries                                         10,000
    Discount allowed                             5,000
    Commission received                       3,000
    Maintenance expense                       9,000
    Debtors                                           10,000
    Creditors                                         12,000
    Required: prepare kumi kumi traders profit and loss account for the year ended 31 Dec 2018.      (4mks)

16. Highlight four limitations of barter trade system.    (4mks)
17. On 4^th Feb 2018 Chari bought goods worth ksh.12000.Terms of payment were, trade discount 5% and cash discount 10%. If payment is made within 30 days. If Chari paid on 27^th Feb 2018 determine the amount he paid.   (4 mks)                                    

18. Indicate whether each of the following business transaction will increase, decrease or have no effect on balance sheet totals.
    

    	Transaction	Effect
    i)	Buying stock in cash
    ii)	Buying stock on credit
    iii)	Withdrawing cash from bank for personal use
    iii)	Received cash from a debtor

19. Highlight four purposes of public finance               (4mks)
20. Name the type of insurance policy described by the following statements.       (4mks)
    

    	Statement	Type of policy
    a)	Cover losses caused by employees dishonesty/fraud
    b)	Protects employees against injuries while at work.
    c)	Cover damage on motor vehicle, other people and property caused by the vehicle.
    d)	Cover claims by the members of public against a business

21. State four ways in which the nature of goods would influence the choice of transport means.
22. Identify the type of utility created from the following activities
    

    	ACTIVITY	TYPE OF UTILITY
    a.	Crushing sugarcane to make sugar
    b.	Transporting sugar from the factory to the supermarket
    c.	keeping sugar in a warehouse
    d.	Selling sugar in a supermarket

23. State four factors that influence the location of a firm (4mks)
24. Highlight four ways in which running public corporation may be improved. (4mks)
25. Highlight four benefits of using Electronic filing system in an office. (4mks)

MARKING SCHEME

1.  
   • Source of foreign exchange
   • Provision of raw materials
   • Creation of employment as the natural resources are extracted.
   • Provision of land for erecting buildings.
   • Source of government revenue
   • Providing energy e.g. solar, geothermal e.t.c.
   • Source of food

2.  
   • Through transportation, goods reach their required destination.
   • Through warehousing goods stored meet unexpected demand
   • Through advertising consumers are informed of the goods in the market.
   • Through banking, they save and store money for future needs and for safety reasons.
   • Through trade where consumers gets what they do not produce.
   • Through communication, information flows from buyer to sellers (vice versa)
   • Through insurance business risks are reduced

3.  
   • Where a firm has a copyright/patent rights on a product
   • Where technology to produce a particular product is only available to one firm
   • Where market size is too small to accommodate several firms
   • Where a firm has absolute control of inputs (raw materials) required in the production of a particular product.
   • Where the initial capital is too large thus making other firms unable to join the industry.

4.  
   • Purchases Journal
   • Cash receipts journal
   • Purchases Returns Journal/Return Outwards Journal
   • Sales returns Journal/Returns Inwards Journal

5. State four negative effects of unemployment.
   • Increased social evils
   • Increased dependency ratio
   • Reduced savings/investment
   • Low living standards
   • Increased corruption

6. Outline four circumstances under which a manager of a company may use downward communication. (4mks)
   • When delegating duties.
   • When training juniors.
   • When solving any problems facing workers.
   • When evaluating performance.
   • When inspiring and motivating junior.

7. Highlight four factors that a producer considers before choosing a channel of distribution. (4mks)
   • Nature /types of the product.
   • Resources and size of the firm.
   • Government policy.
   • Nature of the market.
   • Channels used by competitors.
   • Marketing risks.
   • The role of intermediaries

8. The following information relate to meru traders for the year ended 31 December 2017.
     

9. State whether the following represent injection into or leakages from the circular flow of income.  
   

   Savings	Leakages
   Taxes	Leakages
   Government expenditure	Injections
   Investments	Injections

10. Name the factor of production that each of the following resource relate to   (4mks)
    

    Resource	Factor of production
    Manager	Labour
    Equipments	Capital
    Farmer	Entrepreneurship
    River	land

11. Outline four factors to be considered when choosing a means of reproducing documents in an office. (4mks)
    • Sources/availability of power.
    • Availability of the complimentary resources.
    • Number of copies required/needed
    • The quality required
    • Cost of reproduction
    • Availability of the methods

12. Outline four advantages of after sale services as a method of sales promotion to a customer. (4mk
    • Receives technical advice on usage /uses
    • May be assisted on installation at no cost/subsidised cost.
    • Guarantee/warranty is given for a periodConsumer
    • may obtain servicing for some time at a lower cost or for free
    • May obtain spare parts at a lower cost
    • May save on transport costs.

13. Outline four benefits of the newly constructed standard gauge railway line to Kenya’s e (4mks)
    • More employment opportunities
    • Faster movement of goods/people
    • Generate income to the government
    • Growth of tourism industry
    • Reduction of congestion on roads
    • Reduction of damage on road by trucks
    • Open up areas along the SGR to growth.
    • Growth of urban centers/ Towns

14. In the spaces provided, indicate the account to be debited and to be credited in the following transactions. (4mks)  
    

    	Transaction	A/C DEBITED	A/C CREDITED
    a	Bought machine in cash	Machine √	Cash √
    b	Started business with sh.30,000 in cash	Cash √	Capital √
    c	Took sh.20,000 cash from business for personal use	drawing √	Cash √
    d	Credit sales of old machine to Kamau	Kamau debtor √	Office Machine √

    
    8x ¼ =4mks

15. The following balances were extracted from the books of kumi kumi traders on 31^st2018.
    Gross profit                             ksh.80,000
    Rent                                                 8,000
    Discount received                           2,000
    Salaries                                         10,000
    Discount allowed                             5,000
    Commission received                       3,000
    Maintenance expense                       9,000
    Debtors                                           10,000
    Creditors                                         12,000
    Required: prepare kumi kumi traders profit and loss account for the year ended 31 Dec 2018.    (8x1/2 = 4mks)
    
    
    

16. Highlight four limitations of barter trade system.                                                        (4mks)
    • Lack of standard measure of value
    • It requires double coincidence of wants
    • Indivisibility of most commodities
    • Perishability of some products
    • Lack of standard measure for deferred payments
    • Transportation hardships

17. On 4^th Feb 2018 Chari bought goods worth ksh.12000.Terms of payment were, trade discount 5% and cash discount 10%. If payment is made within 30 days. If Chari paid on 27^th Feb 2018 determine the amount he paid.   (4 mks)  
    • Determination of the amount to be paid
      

18. Indicate whether each of the following business transaction will ‘increase’ ‘decrease’ at no effect in the balance sheet totals.
    

    	Transaction	Effects
    i)	Buying stock in cash	No effect
    ii)	Buying stock on credit	Increase
    iii)	Withdrawing cash from bank for personal use	decrease
    iv)	Received cash from a debtor	No effect

19. Purpose of public finance
    • To provide essential goods and services
    • To control consumption of certain products
    • Redistribution of wealth
    • To promote balanced regional development
    • To raise government revenue
    • To control balance of payment deficit
    • To encourage consumption of certain products
20. Name the type of insurance policy described by the following statements. (4mks)
    

    	Circumstances	Type of policy
    i)	Losses by employees negligence	Fidelity guarantee
    ii)	Protect employees injuries at work	Workman’s compensation/employers liability
    iii)	Cover damage on motor vehicle, other people and property caused by the motor vehicle	Comprehensive motor vehicle policy
    iv)	Cover claims by members of public against a business	Public liability

21. State four ways in which the nature of goods would influence the choice of transport means.   (4mks)
    • If goods are perishable, a fast means is required
    • If goods are fragile, a smooth means is required
    • If goods are highly valued, a safe and secure means is required
    • If goods are urgently required, a fast means is required
    • If goods are bulky, an appropriate means is required

22. Identify the type of utility created from the following activities
    

    	ACTIVITY	TYPE OF UTILITY
    a.	Crushing sugarcane to make sugar	Form
    b.	Transporting sugar from the factory to the supermarket	Place
    c.	supermarket keeping sugar in a warehouse	Time
    d.	Selling sugar in a supermarket	possession

23. State four factors that influence the location of a firm    (4mks)
    • Availability of raw materials
    • Market availability
    • availability of labour(human resource)
    • Appropriate transport and communication network
    • Adequate power and water supply
    • Government policies
    • Availability of auxiliary services eg banks ,insurance
    • Room for expansion
    • Effect of firms on the environment

24. Highlight four ways in which running public corporation may be improved. (4mks)
    • Ensuring that appointment of senior and technical post is done on merit.
    • Exercising supervision role of the government.
    • Measures to curb corruption
    • Continuous training of the staff for development.
    • Establishing incentives systems for motivation to the staff.
    • Setting performances targets to be achieved.                      

25. Highlight four benefits of using Electronic filing system in an office.   (4mks)
    • Easy access
    • Reduction of labour costs/materials
    • Less storage facilities/less space
    • Less paper work
    • Enhanced security of documents
    • Environmental friendly.
    • Saves time.
    • Offers safety/security.
    • Presentable work
    • Easily portable