Business Studies P1 Questions and Answers - Wisdom Pre-Mock Form 4 Exams 2021/2022

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INSTRUCTIONS

  • Write your NAME, SCHOOL and INDEX NUMBER in the spaces provided.
  • Answer ALL questions provided in the spaces provided.
  • This paper consists of 10 printed pages and 25 questions.

FOR EXAMINERS USE ONLY

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Questions

  1. Outline three reasons why cash payment would be preferred to cheque payment. (3 marks)
  2. State four reasons why a farmer would prefer to transport a herd of cattle by rail rather than by road. (4 marks)
  3. State four advantages of using internet as a means of communication. (4 marks)
  4. State four measures which the Kenyan government can take to solve the unemployment problem. (4 marks)
  5. Highlight four roles played by an entrepreneur in the production process. (4 marks)
  6. The diagram below shows a demand curve for a firm operating in a given type of market structure. (4 marks)
    6 jhgauygda
    1. State the name which is given to such a demand curve. (1 marks)
    2. Indicate on the diagram the possible price and quantity. (2 marks)
    3. State the significant of the point labelled a. (1 mark)
  7. State four advantages of using intermediaries in the distribution of goods. (4 marks)
  8. Give four reasons facing cooperative societies. (4 marks)
  9. State four advantages of franking machine. (4 marks)
  10. The following information was extracted from the books of Venus traders.
    Rate of turnover. 3 times
    Mark-up. 20%
    Opening stock. Sh 160,000
    Closing stock. Sh 200,000
    Required
    1. Gross profit. (2 marks)
    2. Sales. (2 marks)
  11. Outline four factors that may hinder occupational mobility of labour. (4 marks)
  12. The following relate to Furaha Traders for the year 2020
    1. Closing capital (31.12.2020) sh 300,000
    2. The owner converted his personal computer valued at sh 35,000 into business use.
    3. The owner had withdrawn goods worth sh 40,000 for personal use.
    4. Incurred losses amounting to sh 65,000
      Determine Furaha Traders intial capital on(1.01.2006). (4 marks)
  13. For each of the following books of original entry, indicate the source document:

    Journal

    Source document

    Purchase journal

     

    Sales day book

     

    Petty cash book

     

    General journal

     
    (4 marks)
  14. Highlight four measures that a government may take to reduce the mortality rate in a country. (4 marks)
  15. The following balances were extracted from the books of Mavuno Traders for the year ended 31st march 2021.
    Gross profit. 186,200
    Discount allowed. 7,400
    Carriage outwards. 13,500
    Rent received. 34,300
    Office expenses. 19,600
    Salaries. 57,000
    Prepare a profit and loss for the ended 31st march 2021. (5 marks)
  16. State four factors that determine the amount of money held for transaction motive. (4 marks)
  17. State four objectives of product promotion. ( 4 marks)
  18. Highlight four difficulties faced in satisfaction of human wants. (4 marks)
  19. Highlight four factors under economic environment that positively affects the business. (4 marks)
  20. Outline any four measures that a firm should take to improve the performance of its labour force. (4 marks)
  21. List four reasons why distributors of goods would prefer to locate warehouse near it customers. (4 marks)
  22. Highlight four benefits of globalisation to business enterprise. (4 marks)
  23. Kazi moto insured a motor vehicle against fire with MotoMoto company by paying Kshs.300.000. later the car was destroyed at a garage and a compensation of Kshs. 4,000 were paid. Using insurance terms, state what each of the following stand for; (4 marks)
    1. Kazi Moto
    2. Fire
    3. Kshs 300,000
    4. Moto Moto Company
  24. State four responsibilities of a business to its customers. (4 marks)
  25. Show the effect of each of the following transaction to capital, assets and liabilities indicating if its increasing(+), decreasing(-) or nil (0).

    Transaction

    Capital

    Asset

    Liability

    a) Converted private house into business premises

         

    b) Paid creditors in cash

         

    c) Sold a business car valued at sh 400,000 for sh 300,000    

        on  credit

         

    d) Sold goods on credit

         
    (4 marks)


MARKING SCHEME

  1. Reasons why cash payment would be preferred to cheque payment.(3 marks)
    1. cash is a legal tender but cheque is not.
    2. where the debt to be paid is a small amount
    3. one need not have a bank account
    4. personal cheques can easily be dishonored
    5. bank charges are incurred when cashing a cheque.
    6. takes longer to obtain cash on a cheque/process is longer/takes time.
  2. Four reasons why a farmer would prefer to transport a herd of cattle by rail rather than by road (4 marks)
    1. economical/cheaper than road
    2. less prone to accidents/safer
    3. follow a scheduled timetable/can plan when to transport
    4. special loading/off-loading terminals.
    5. have special wagons for transporting cattles.
    6. possible to feed the animals while on teansit
  3. four advantages of using internet as a means of communication (4 marks)
    1. worldwide connectivity
    2. Send/receive e-mail
    3.  faster means of communication
    4. can advertise/promote goods on internet
    5. can buy/sell goods on internet as
    6. can hold a conference on the internet
    7. information/data can be downloaded/printed free of charge.
  4. four measures which the Kenyan government can take to solve the unemployment problem.(4 marks)
    1. control population growth
    2. encourage self-employment/educate people on self employment
    3. provide capital for people to set up businesses
    4. encourage investment in the country
    5. encourage use of labour intensive methods of production
    6. encourage people seek jobs outside the country
  5. four roles played by an entrepreneur in the production process.(4 marks)
    1.  taking risks/initiating production
    2. combining other factors of production
    3. making decisions
    4. rewarding other factors of production
    5. innovation and creativity
  6. The diagram below shows a demand curve for a firm operating in a given type of market structure.(4 marks)
    1. kinked demand curve (1 marks)
    2. on diagram show P0,P1,D0 and D1 (2 marks)
    3. most sellers tend to sell goods at prices determined at this point because any price above this will lead to a big loss of customers while price below this will lead ta an insignificant increase in sale/demand.(1 mark)
  7. Four advantages of using intermediaries in the distribution of goods(4 marks)
    1. Increase costs of making goods/makes goods expensive
    2. some goods may perish
    3. goods may be adulterated
    4. goods might get damaged due to mishandling
    5. delay delivery of goods to market when needed
  8. Give four reasons facing cooperative societies.(4 marks)
    1. lack of capital/finances
    2. political interference
    3. mismanagement and embezzlement of funds
    4. limited use of modern technology
    5. inability to attract qualified personnel due to low pay
  9. Four advantages of franking machine.(4 marks)
    1. produce neat work
    2. can print accurate postage amounts
    3. lessens theft/misuse of loose stamps by employees
    4. minimises loss of stamps
    5. can be used to print messages.
  10. The following information was extracted from the books of Venus traders.
    Rate of turnover. 3 times
    Mark-up. 20%
    Opening stock. Sh 160,000
    Closing stock. Sh 200,000
    1. Gross profit. (2 marks)
      • Rate of stock turnover=cost of sale/average stock
        Cost of sale. =3
        160,000+200,000
        2
        Cost of sale. =3
        180,000
        Cost of sale=540,000
        G.P=20% x540,000=108,000
    2. Sales = cost of sale + gross profit
      • =540,000+108,000=648,000 (2 marks)
  11.                      
    1. a long training period required.
    2. lack of skills required.
    3. fear of unknown/change
    4. high cost of training.
    5. lack of adequate information about opportunities in other fields.
  12. The following relate to Furaha Traders for the year 2020
    1. closing capital (31.12.2020) sh 300,000
    2. the owner converted his personal computer valued at sh 35,000 into business use.
    3. the owner had withdrawn goods worth sh 40,000 for personal use.
    4. incurred losses amounting to sh 65,000
      Determine Furaha Traders intial capital on(1.01.2006). (4 marks)
      • Intial capita=CC+D+L-I
        =300,000+40,000+65,000-35,000
        =195,000-35,000=160,000
  13. For each of the following books of original entry,indicate the source document:(4 marks)

    Journal

    Source document

    Purchase journal

    Purchases invoice,invoice received, original invoice

    Sales day book

    Sales invoice,invoice issued, copy of invoice

    Petty cash book

    Payment voucher

    General journal

    Invoice.

  14. Highlight four measures that a government may take to reduce the mortality rate in a country. (4 marks)
    1. availability of better health care
    2. food security
    3. Minimizing internal conflicts and wars
    4. improving environment sanitation
    5. control crime
    6. control use of drugs and alcohol
    7. disaster preparedness
    8. sensitization of public and personal hygiene/vaccination/stress/HIVAIDS
  15. The following balances were extracted from the books of Mavuno Traders for the year ended 31st march 2021.
    Gross profit. 186,200
    Discount allowed. 7,400
    Carriage outwards. 13,500
    Rent received. 34,300
    Office expenses. 19,600
    Salaries. 57,000
    Prepare a profit and loss for the ended 31st march 2021(5 marks)
    • Mavuno Traders
      Profit and loss account
      For the period ended 31st march 2021

      Carriage outwards.                   13,500

      Discount allowed.                      7,400                

      General expenses.                     19,600             

      Salaries.                                       57,000

      Gross profit b/d     286,200

      Rent received.           34,300

  16. State four factors that determine the amount of money held for transaction motive.(4 marks)
    1. the level of income
    2. the frequency of payment of an individual
    3. individuals spending habits
    4. availability of credit facilities.
    5. the rate of inflation/high price of commodities.
  17. State four objectives of product promotion.(4 marks)
    1. give information about a product.
    2. persuade to buy.
    3. create public interest to buy.
    4. sustain public interest to continue buying.
    5. reate sales.
    6. launch a new product.
    7. retain market.
  18. Highlight four difficulties faced in satisfaction of human wants.(4 marks)
    1. unlimited in number/too many.
    2. they are insatiable.
    3. they are complimentary.
    4. vary in urgency and intensity.
    5. lack of resources.
  19. Highlight four factors under economic environment that positively affects the business.
    1. decrease in tax
    2. increase in consumer's disposable income
    3. decrease in prices of goods and services.
    4. decrease in price of complimentary goods. (4 marks)
  20. Outline any four measures that a firm should take to improve the performance of its labour force.(4 marks)
  21. List four reasons why distributors of goods would prefer to locate warehouse near it customers. (4 marks)
  22. Highlight four benefits of globalisation to business enterprise.(4 marks)
    1. provide wide market.
    2. encourage collaboration among businesses from different countries
    3. share technology
    4. access to resources like raw materials from other countries
    5. facilitate sharing of research findings by businesses globally/sharing of information
  23.              
    1. insured
    2. risk
    3. premium
    4. insure
  24. State four responsibilities of a business to its customers. (4 marks)
    1. respond to their compliants
    2. proper labelling and packaging
    3. avoid misleading advertisement
    4. right quantity
    5. fair pricing
    6. offering safe products
    7. offering advices.
  25. Show the effect of each of the following transaction to capital,assets and liabilities indicating if its increasing(+),decreasing(-) or nil(0). (4 marks)

    Transaction

    Capital

    Asset

    Liability

    a)Converted private house into business premises

    +

    +

    0

    b)Paid creditors in cash

    0

    -

    -

    c)Sold a business car valued at sh 400,000 for sh 300,000 on  credit

    -

    -

    0

    d)Sold goods on credit

    0

    +

    0

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