Business Studies Paper 1 Questions and Answers - 2021 KCSE Eldoret Diocese Mock Exams

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Questions

Instructions to Candidates

  •  This paper consists of 25 questions.
  • Answer ALL questions in the spaces provided
  • Candidates should answer the questions in English

 

  1. State four benefits of learning business studies to a Kenyan student (4mks)
  2. Highlight four measures a business may take to ensure that its environment is conducive to its business activities (4mks)
  3. State four factors to consider when evaluating a viable business opportunity (4mks)
  4. Most organizations have come up with customer care desks. outline three functions that they play . (3mks)
  5. Identify the documents that each of the following descriptions refer to (4mks)
    Description Document
    Used to inform buyer that seller has received the order   
    Used to ask about the availability of goods.  
    Used to organize for transportation of goods between seller and buyer  
    Used to show goods sold on credit  
  6.  State four factors affecting the circular flow of income (4mks
  7. The following balances were extracted from the books of WINNICO Limited on 31stDecember 2020.
    Item Ksh.
    Capital 150,000
    Furniture  110,000
    Purchases 285,000
    Hawi (supplier) 180,000
    Sales 230,000
    Wages paid 41,000
    Return inwards  5,000
    Return outwards 15,000
    Cash  139,000
    Rent received  5,000
    Prepare the trial balance of the business as of 31st December 2020 (5mks)
  8. The information given below relates to Jomo Traders for the year ended 31stAugust 2021
    Rate of stock turn over 3 times
    Mark -up 20%
    Opening stock ksh. 90,000
    Closing stock ksh. 150,000
    Required
    1. Gross profit (2mks)
    2. Sales (2mks)
  9. Highlight four features of services . (4mks)
  10. State four causes of seasonal unemployment in Kenya (4mks)
  11. Highlight four circumstances under which the capital of a business may change (4mks)
  12. On 1 January 2006, Romano Traders started sh. 180,000 in cash and sh. 170,000 at bank. During the month, the following transactions took place:
    2006
    January 10 paid ABM Traders sh. 25,000 by cheque less sh. 1000 cash discount
                   16 sold goods for sh. 14,000 cash.
                   31 Banked all the cash except sh. 5,200
    Enter the above transactions in the relevant cash book and balance it off. (4mks)
  13. List four clauses of memorandum of association for joint stock companies (4mks)
  14. State four causes of demand- pull inflation (4mks)
  15. State four activities carried out in the process of distribution (4mks)
  16. Outline four structural changes that may take place when a country is experiencing economic development (4mks)
  17. State four reasons why it is suitable to locate a bonded warehouse at the point of entry of a country (4mks)
  18. Highlight four reasons why business still use radios to promote their products despite other highly advanced media (4mks)
  19. State four factors that may lead to an increase in market supply of a product (4mks)
  20. State reward of each factor of production (4mks)
  21. Highlight four methods used by a monopolistic firm to differentiate its products (4mks)
  22. Juma wholesalers owned a motor vehicle at ksh. 2,000,000 which they comprehensively insured for ksh. 1,600,000. The vehicle was involved in an accident and written off. determine the amount of money Juma wholesalers should expect to get from their insurer
  23. State four ways in which the government is involved in business activities. (4marks)
  24. State four ways in which the nature of goods would influence the choice of transport(4mks)
  25. State four advantages of locating a firm near the source of raw materials (4mks)

Marking Scheme

  1. State four benefits of learning business studies to a Kenyan student.
    • To relate knowledge, skills, and attitudes to day to day.
    • Skills necessary to start a business.
    • Appreciate role of business in provision of goods and services.
    • Appreciate need for good business practices.
    • Self-discipline and positive attitude towards work.
    • Understand the role of government in business activities.
    • Understand the role of communication and information technology.
    • Develop positive attitude towards the environment.
  2. Highlight four measures a busto ensure that its environment is conducive to its business activities.
    • Ensuring the business operates in surrounding that are clean and attractive to customers.
    • Ensuring that legal requirements and conditions have been fulfilled i.e., relevant permits and licenses have been obtained.
    • That all government taxes are paid promptly
    • Suppliers to the business paid promptly for their services.
    • Ensuring the goods and services priced in relation to their quality.
  3. State four factors to consider when evaluating a viable business opportunity.
    • Potential profits
    • Availability of market
    • Availability of raw materials
    • Amount of capital required
    • Level of competition
    • Security
    • Government policy
    • Level of development of infrastructure.
    • Future growth
    • Acceptance by the community
    • Cost of capital
    • Ability to manage
  4. Most organizations have come up with customer care desks. Outline functions that they play.
    • Advise management on issues and complaints
    • Attend to any enquiry
    • Build confidence in clients (efficient service)
    • Attend to complaints
    • Ensure that clients are attended to fast enough
  5. Identify the documents that each of the following descriptions refer to. 
    Description Document
    Used to inform buyer that seller has received the order Acknowledgements note
    Used to ask about the availability of goods Letter of inquiry
    Used to organize for transportation of goods between seller and buyer Consignment notes
    Used to show goods sold on credit  Invoice
  6. Name four factors affecting the circular flow of income
    • Savings-leakages
    • Taxes- leakages
    • Government expenditure
    • Investments
    • Foreign trade
  7.          
     WINNICO Limited
    Trial Balance
    As at 31st December 2020. 
    Item Dr. 
    Ksh. 
    Cr.
    Ksh. 
    Capital   150 000
    Furniture 110 000   
    Purchases 285 000  
    Hawi (supplier)   180 000
    Sales    230 000
    Wages paid  41 000  
    Return inwards  5 000  
    Return outwards    15 000
    Cash 139 000  
    Rent received    5 000
      580 000 580 000
  8.      
    1. ROSTO=(cost of sales )/(average stock)
      3=(COST OF SALES)/120,000
      Cost of sales =KSH. 360,000
      20=(G.P)/360,000 x100
      =KSH.72,000
    2. G.P =72,000 + 360,000
      =KSH. 432,000
  9. Characteristics of services
    • They are intangible and invisible as they are not in material form.
    • They can’t be stored for future use-perishable.
    • Quality can’t be standardized.
    • They are inseparable from the provider.
  10. State four causes of seasonal unemployment in Kenya
    • Decline in the supply of certain raw materials
    • Temporary employment/contract workers
    • Economic depression/decline in economic activities
    • Voluntary resignation due to greener pastures
    • Interdictions i.e. temporary stoppage or termination of employment
  11. Highlight four circumstances under which the capital of a business may change (4marks)
    • Profit increases capital
    • Losses reduces capital
    • Additional investment increases capital
    • Drawings reduces capital
  12.    
            Romano Traders
    Two column cash Book
    Date Details Cash Bank   Date Details Cash Bank
    2006         2006      
    Jan 1 Capital  180 000  170 000   Jan 10  ABM 1 000 25 000
    Jan 16 Sales  14 000            
    Jan 31  Cash    187 800   Jan 31 Bank  187 800  
              Jan 31 Bal c/d 5 200 342 800
        194 000 367 800       194 000 367 800
     
  13. List four clauses of memorandum of association for joint stock companies
    • Name clause
    • Objective clause
    • Liability clause
    • Capital clause
    • Declaration clause
  14. State four causes of demand-pull inflation
    • Increase in government expenditure
    • Effects of credit creation by the commercial banks
    • Increase in money incomes
    • General shortage of goods and services
    • Increase in consumer’s expenditure
  15. State four activities carried o u t in the process of distribution (4mks)
    • Handling
    • Storage
    • Packing/packaging
    • Transportation
    • Grading
    • Blending
    • Sorting
    • Breaking the bulk
  16. Outline four structural changes that may take place when a country is experiencing economic development
    • Shift from agriculture to manufacture
    • Reduction in illiteracy levels
    • Increase in skilled manpower
    • Improvement in health facilities
    • Improvement in technology
    • Improved infrastructure
    • Improved balance of payment
  17. State four reasons why it is suitable to locate a bonded warehouse at the point of entry of a country
    • For easy re-exporting.
    • For easy inspection of imports.
    • To prevent the entry of harmful goods /dangerous goods.
    • To prevent exit without legal authority.
    • For easy collection of custom duties.
  18. Highlight four reasons why businesses still use radios to promote their products despite other highly advanced media
    • Wider geographical cover
    • Serves both the literate and illiterate members of the society.
    • Different radio channels can cast in different languages
    • Blind can get the message
    • Able to reach many people at the same time
    • Radio is accessible even in the remote areas
    • Allows repetition of message
    • Affordable /cheaper to advertise.
  19. State four factors that may lead to an increase in market supply of a product. (4 marks)
    • Increase in the price of the product
    • Fail in the cost of production
    • Availability of cheap credit
    • Government policy.
    • Decrease in prices
    • When the demand is high
    • Future expected fall in price
  20. State reward for each factor of production. (4marks)
    • Capital -interest
    • Land-rent /rates/royalties/lease fees
    • Entrepreneurship -profit
    • Labour-wages/salaries /professional fees/commission
  21. Highlight 4 methods used by a monopolistic firm to differentiate its products
    • Branding
    • Packaging in different sizes
    • Pricing
    • Blending into different colours
    • Persuasive advertising
    • Trademarks
    • Juma wholesalers owned a motor vehicle valued at Kshs. 2,000,000 which they comprehensively insured for Kshs. 1,600,000. The vehicle was involved in an accident and written off. Determine the amount of money Juma wholesalers should expect to get from their insurer
      Compensation = sum assured/insured premium x loss
                                      Actual value
      1,600,000 x 1,600,000 = 1,600,00
        2,000,00
  22. State four ways in which the government is involved in business activities
    • Regulation
    • Training
    • Internal trade promotion
    • Eternal trade promotion
    • Service provisions
    • Creation of enabling environment
    • Consumer protection
  23. State four ways in which the nature of goods would influence the choice of transport.
    • If goods are perishable a fast and appropriate means is required
    • If goods are fragile, a smooth means of transport is required
    • If goods are highly valued, a safe and secure means is required
    • If goods are urgently required, a faster means is used
    • If goods are bulky an appropriate means will be used
  24. State four advantages of locating a firm near the source of raw materials. (4 marks)
    • Reduce transport cost
    • Get quality raw materials
    • Enhance continuous production
    • Avoid wastage of raw materials
    • Reduce its cost of production. 
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