Business Studies Paper 1 Questions and Answers - Eagle II Joint 2021 Mock Exams

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Business Studies Paper 2 Questions and Answers - Eagle II Joint 2021 Mock Exams

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Instructions to candidates:

Answer all the questions

State four reasons for the existence of businesses in the society. 4 marks
State four positive implications of a large population in a country (4marks)
State four features of a chain store (4mks)
Outline four measures that can be taken by an officer to safeguard organization’s property. 4 marks
State four reasons why SACCOs are popular in Kenya. 4 marks
Outline four causes of business success. 4 marks
Identify four factors that influence the level of capital of a business enterprise. 4marks)
Outline four circumstances under which a trader would use informative advertising. 4 marks
State four complaints that a consumer organization may receive from consumers. 4 marks

Indicate the source document and the book of original entry in which each of the following transactions should be recorded

No	Transactions	Source document	Book of original entry
a)	Purchase of goods on credit
b)	Payment of cash to a creditor
c)	Sale of goods on credit
d)	Sale of fixed asset for cash

List four means of audio-visual communication that may be used in an organization. 4 marks
State four ways in which demographic environment may positively affects the business operations. 4marks
Outline four features of a monopolistic market (4 marks)
Highlight four benefits of the matatu reforms in Kenya. 4 marks
State the effects of the following transactions on the balance sheet totals. (4 mks)
1. Bought a piece of land Ksh. 500,000 in cash ……………………………………………..
2. Paid a creditor through a cheque Kshs. 50,000 …………………………………………….
3. Sold a personal car Ksh. 300,000 and deposited the amount in the business bank account.
  ………………………………………………………………………
4. Took Kshs. 10,000 to pay for his son’s school fees ……………………………………………
State four merits of warehousing to a retailer. 4 marks
State four factors that a trader may consider before selling goods on credit. 4 marks
State the term that best fit each of the following description. (4 Marks)
1. Money brought into the business by owner _______________________________________
2. Goods bought for resale ______________________________________________________
3. Money withdrawn by owner of business for personal use ____________________________
4. Money borrowed from outsiders by owner of the business for business use
Highlight four challenges faced by consumers in the satisfaction of human wants (4mks)
Ouma enterprise started business one year ago with an investment of Ksh 1200 000. At the end of the year his capital was Ksh 1600000 and his monthly drawing was ksh 20000,
Calculate his profit for the year ( 4marks)

The following cashbook was prepared by Jomo Traders for the month of July 2016.
Dr Jomo traders’ Cash book cr

Date	Details	Lf	cash	Bank	Date	Details	LF	cash	Bank
2016 July 2 July 8 July 18 July 25	Balance Sales Akinyi Sales	b/d	Y 20,000	50,000 120,000 170,000	2016 July 4 July 13 July 21 July 27	Balance Purchases Rent Balance	b/f c/d	6,000 P 60,000	60,000 30,000 Q R

Calculate the missing figures. (4mks)
Y =
P=
Q=
R=

Outline four reasons why a firm may remain small. (4 Marks)
Outline four features of a money (4 marks)
State the term given to each of the following statements as used in insurance. 4 marks
1. Transfer of an insurance policy to another person. _________________________________
2. Temporary policy document ___________________________________________________
3. Act of designation of people to be beneficiaries. ____________________________________
4. Regular payments by a policy holder _____________________________________________
Give four ways through which prices of goods and services may be determined. (4mks)

MARKING SCHEME

State four reasons for the existence of businesses in the society. 4 marks
- earn profit/income
- create employment
- provide goods/services
- be own boss/independent
- utilise extra resources
- utilise spare time
- offer special services
- act as outlet of new information.
State four positive implications of a large population in a country (4marks)
- increased market demand for goods and services
- Enough labour supply
- diversity talents
- technology advancement/innovation hence specialization
- encourage investment
- Maximum utilization of resources
- Promotes labour mobility
State four features of a chain store (4mks)
1. Owned by the same business organization
2. Managed and controlled by a central administration at the head office
3. Each shop is managed by a branch manager accountable to the head office
4. Goods are sold strictly on cash basis
5. The prices are standard in shops
6. Goods can be transferred from one shop to another
7. Mainly deal in fast moving goods such as household goods
Outline four measures that can be taken by an officer to safeguard organization’s property. 4 marks
- Ensuring physical care by people using the property
- enhancing security against theft eg employing CCTV/employing guards/fencing
- Keeping proper records of movement and usage of each property
- Physical stock taking of each property
- Taking insurance cover
- Proper repairs, servicing and maintenance of property.
State four reasons why SACCOs are popular in Kenya. 4 marks
- they provide easy access to loans/few formalities needed to obtain loans
- they offer cheap loans to members/ low interest on loans
- offer many types of loans to members
- incase a member dies, the outstanding loan is written off.
- incase a member dies, his/her beneficiaries are given double the amount of savings.
- members contributions are channeled through checkoff system which is convenient.
Outline four causes of business success. 4 marks
- proper management
- proper location/ready market or customers
- proper financial management
- adequate finance/adequate capital
- good public relations
- proper market research
- proper pricing of goods
- fair competition
- right choice of business
- good time management.
Identify four factors that influence the level of capital of a business enterprise. 4marks)
1. Net profit /ploughed back profits/dividents✔
2. Additional investment/new investment ✔
3. Loss made✔
4. Drawings
Outline four circumstances under which a trader would use informative advertising.
- when introducing a new product in the market.
- when a trader is informing the consumers about changes in pricing/packaging of a product
- when a trader wants to remove customer’s prejudice about a product
- when a trader wants to increase the sales of an existing product.
- when a trader wants to maintain sales of an existing product.
State four complaints that a consumer organization may receive from consumers. 4 marks
- poor quality of goods and services
- incorrect weights and measures
- unfair pricing/overcharging
- poor hygienic conditions
- expired goods
- non-compliance to building regulations
- hoarding by traders.

No	Transactions	Source document	Book of original entry
a)	Purchase of goods on credit	Invoice received	purchases journal
b)	Payment of cash to a creditor	Receipt received	Cash Book/cash receipts journal
c)	Sale of goods on credit	Invoice issued	Sales journal
d)	Sale of fixed asset for cash	Receipt issued	General journal

List four means of audio-visual communication that may be used in an organization 4 marks.
- siren
- television
- photographs
- signs
State four ways in which demographic environment may positively affect the business operations. 4marks
- growing/high population
- better education/jobs/literate population
- proper/even geographical distribution
- high birth rates
- low death rates
- appropriate age distribution
- appropriate sex distribution
Outline four features of a monopolistic market (4 marks)
- Free entry/exit from the market,
- Products are similar(close substitutes)
- Wide knowledge of the market
- Market has many buyers /sellers
- Exit/entry of a single firm does not affect the market
- No single firm has control over factors of production
Highlight four benefits of the matatu reforms in Kenya. 4 marks
- reduced cases of accidents on roads
- qualified drivers and touts operating the Kenyan roads
- government collects revenue through proper taxation and licensing
- there is comfort and safety of passengers facilitated by use of safety belts.
- Unroad worthy vehicles have been removed from roads.
- vehicles are adequately insured.
State the effects of the following transactions on the balance sheet totals.(4 mks)
1. Bought a piece of land Ksh. 500,000 in cash No effect
2. Paid a creditor through a cheque Kshs. 50,000 decrease
3. Sold a personal car Ksh. 300,000 and deposited the amount in the business bank account. increase
4. Took Kshs. 10,000 to pay for his son’s school fees decrease
State four merits of warehousing to a retailer. 4 marks
- continuous supply of goods in the market
- preparation of goods for sale in the warehouse.
- protect goods from damage
- safeguard goods from theft
- look for market while goods are in the warehouse
- some goods improve in quality
- meet unexpected demands from consumers during off peak season
State four factors that a trader may consider before selling goods on credit. 4mks
- credit worthiness of the buyer
- repayment period
- availability of adequate stock
- amount of goods the customer wants
- honesty or reliability of the customer
- frequency at which the customer buys from the seller
- sellers intention to attract and retain customers.
The term that best fit each of the following descriptions (4 Marks)
1. Capital
2. Stock
3. Drawings
4. Loan (Liabilities
Highlight four challenges faced by consumers in the satisfaction of human wants (4mks)
- Low incomes /poverty/unemployment
- political instability
- High prices of goods and services
- Scarcity of goods and services
- Human wants vary in urgency and intensity
- Human wants are recurrent /repetitive
- Human wants compete for the scarce resources
- Human wants are insatiable –numerous/endless
Ouma enterprise started business one year ago with an investment of Ksh 1200 000. At the end of the year his capital was Ksh 1600000 and his monthly drawing was ksh 20000. Calculate his profit for the year ( 4marks)
Final capital = initial capital + Additional investment + Profit – Drawings
1,600,000 = 1,200,000 + P – 20,000
P = 1,600,00 – 1,180,000
Profit = sh.420,000
The following cashbook was prepared by Jomo Traders for the month of July 2016.
- Y = Ksh 40,000
- P= ksh. 54,000
- Q= ksh.80,000
- R= ksh170,000
Outline four reasons why a firm may remain small. (4 Marks)
- Flexibility of small firms
- Require little capital to start.
- Small firms are simple
- Quick decision making
- Small size market
- Need to retain control
- Belief that small firms are more manageable
- Legal constraints/ government policies
- Need to retain control
- Nature of products which are best offered by small firms
Outline four features of a money (4 marks)
- acceptability,
- homogeneity
- cognisability
- scarce
- stability
- divisibility
- durability
- malleability
- portability
- complexibility
State the term given to each of the following statements as used in insurance. 4 marks
1. Assignment
2. Cover note/ binder
3. Nomination
4. Premiums
Give four ways through which prices of goods and services may be determined. (4mks)
1. Price mechanism/forces of demand and supply
2. Government policy/taxation/price control/
3. Haggling/bargaining
4. Tendering
5. Recommended retail price
6. Collusion/cartels
7. Auctioning