Business Studies Paper 1 Questions and Answers - KCSE Prediction Papers 2022

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Instructions to Candidates

  • Answer all questions
  • All answers must be written in the spaces provided.
  • All questions carry equal marks


Questions

  1. Mr. Odhiambo has started a Kiosk in Nambale Town. Outline FOUR functions that he will perform as the owner of the business. (4mks)
  2. Indicate the type of journal in which each of the following transactions could be recorded. (4mks)
    NO. TRANSACTION TYPE OF JOUNAL
    a)  Bought a computer on credit   
    b)  Returned goods previously bought on credits  
    c)  Sold goods on credit   
    d)  Bought shares in a company   
  3. Taaka a retailer had a capital balance of sh. 320,000 as at 30th June, 2008. During the year ended 30th June 2009, the business made a net profit of sh.80, 000. Mokaya the proprietor made drawings of 4,000 each month for his personal use. Compute the business capital as at 30th June2009. (4mks)
  4. Give FOUR differences between a public limited company and private limited company. (4mks)
  5. State FOUR reasons why iterant traders are becoming increasing popular in Kenya. (4mks)
  6. Given below is a cash book extracted from the books of accounts of Patel Enterprises. (4mks)
    2009     sh sh sh 2009        
    1/12  Balance b/d     1500 90,000 14/12 Bank C 30,000  
    2/12  Rono    2000 38,000   20/12 Equipment     80,000
    14/12 Cash C     30,000 30/12 Drawings   7,000  
    In relation to the entries appearing in the cash book extract, state the transaction that took place on each of the following dates. (4mks)
    1. 2nd December 2009
    2. 14th December 2009
    3. 20th December 2009
    4. 30th December 2009
  7. State FOUR reasons for increase in popularity of micro-finance institutions. (4mks)
  8. A successful manufacturing firm has been constantly releasing toxic waste into a nearby river. Outline FOUR measures that consumers can take to stop the firm from such malpractices. (4mks)
  9. Highlight FOUR disadvantages of using machines in an office. (4mks)
  10. State FOUR factors that a person would consider when hiring a warehouse. (4mks)
  11. State FOUR ways f determining the prices of commodities in the market. (4mks)
  12. State whether each of the following transactions will increase, decrease or have no effect on balance sheet totals. (4mks)
    NO. TRANSACTION EFFECT
    a)  Paid a creditor in cash  
    b)  Bought a motor van on credit  
    c)  A debtor paid by cheque  
    d)  Owner   
  13. Outline FOUR classifications of goods and services produced in an economy. (4mks)
  14. Highlight four benefits that accrue to a country that has a very high population. (4mks)
  15. Give FOUR fiscal measures that a government may use to control inflation. (4mks)
  16. Give FOUR situations when oral communication may be used in an office. (4mks)
  17. State FOUR uses of a business plan. (4mks)
  18. Outline FOUR circumstances under which a manufacture would prefer to sell his products directly to consumers instead of selling through intermediaries. (4mks)
  19. Highlight FOUR principles which guide the government in its expenditure. (4mks)
  20. Highlight FOUR factors that hinder expansion of railway transport in Kenya. (4mks)
  21. Give FOUR roles of ethical practices in Business. (4mks)
  22. Two following diagrams represent the circular flow of income between firms and household in an economy. Identify the flows labeled A, B, C and D and list them in the space provided. (4mks)
    1
  23. Mention FOUR circumstances under which an insurance company may re-insure. (4mks)
  24. The following information relates to Kizito traders for the year ended 31st December 2009.
    Gross Profit 140,000
    Salaries 20,000
    Electricity charges 8,000
    Discount allowed 6,000
    Discount received 26,000
    Prepare a profit and loss account for Kizito Traders for the year ended 31st December 2009. (4mks)
  25. State FOUR features of indirect production. (4mks)


 



 

 

 

 



Marking Scheme

  1. Mr. Odhiambo has started a Kiosk in Nambale Town. Outline FOUR functions that he will perform as the owner of the business. (4mks)
    • Starts the business, Makes decisions
    • Runs the business, Earns profits
  2. Indicate the type of journal in which each of the following transactions could be recorded. (4mks)
    NO. TRANSACTION TYPE OF JOUNAL
    a)  Bought a computer on credit  General Journal 
    b)  Returned goods previously bought on credits Returns outwards journal 
    c)  Sold goods on credit  Sales journal 
    d)  Bought shares in a company  General journal 
  3. Taaka a retailer had a capital balance of sh. 320,000 as at 30th June, 2008. During the year ended 30th June 2009, the business made a net profit of sh.80, 000. Mokaya the proprietor made drawings of 4,000 each month for his personal use. Compute the business capital as at 30th June2009. (4mks)
    • F,C =1. C+I.N.V +P-L-D- 1mk
    • F,C = 320,000 + 80,000 – ( 4,000 *12) 1mk
    • F,C = 400,000 – 48,000 1mk
    • F,C = 352,000 1 mk
  4. Give FOUR differences between a public limited company and private limited company. (4mks)
    PUBLIC COMPANY PRIVATE COMPANY
    Formed by a minimum of 7 shareholders and no set maximum
    Managed by 2 -3 directors
    There are free transfer of shares
    Advertises shares to the public
    Formed by 2 -50 shareholders
    Managed by 1- 2 directors
    Restricts transfer of shares
    Does not advertise the shares to the public
  5. State FOUR reasons why iterant traders are becoming increasing popular in Kenya. (4mks)
    • Requires less capital to start
    • No premises are required
    • Sell fast moving goods
    • Few legal formalities required
    • Located along busy streets thus more sales
  6. Given below is a cash book extracted from the books of accounts of Patel Enterprises. (4mks)
    2009     sh sh sh 2009        
    1/12  Balance b/d     1500 90,000 14/12 Bank C 30,000  
    2/12  Rono    2000 38,000   20/12 Equipment     80,000
    14/12 Cash C     30,000 30/12 Drawings   7,000  
    In relation to the entries appearing in the cash book extract, state the transaction that took place on each of the following dates. (4mks)
    • 2nd December 2009 Rono Traders settled his account of 40,000 and was allowed 2,000 cash discount
    • 14th December 2009 Withdrew 30,000 from the bank for office use
    • 20th December 2009 Bought office equipments worth 80,000 and paid by cheque.
    • 30th December 2009 The owner took cash worth 7,000 for personal use
  7. State FOUR reasons for increase in popularity of micro-finance institutions. (4mks)
    • They require less capital to operate
    • They offer small loans which are easily payable.
    • Less security for loans are require.
    • They use digital platforms which attract more clients.
    • They do not consider CRB restrictions
  8. A successful manufacturing firm has been constantly releasing toxic waste into a nearby river. Outline FOUR measures that consumers can take to stop the firm from such malpractices. (4mks)
    • Report the incidence to the authorities.
    • Boycott products from the firm
    • Advocate for their rights through human rights activists
    • Form consumer organization to champion for their rights
  9. Highlight FOUR disadvantages of using machines in an office. (4mks)
    • May cause unemployment
    • Some cause noise pollution
    • Breakdown of machine may cause stoppage of production
    • Most machines are expensive to acquire.
    • Most machines require skilled personnel
  10. State FOUR factors that a person would consider when hiring a warehouse. (4mks)
    • Adequate space
    • Specialized machines for handling goods.
    • Good transport and communication
    • Skilled record keeping
  11. State FOUR ways f determining the prices of commodities in the market. (4mks)
    • Price mechanization
    • Government intervention
    • Bargaining /haggling
    • Tendering
    • Auctioneering.
  12. State whether each of the following transactions will increase, decrease or have no effect on balance sheet totals. (4mks)
    NO. TRANSACTION EFFECT
    a)  Paid a creditor in cash Decrease 
    b)  Bought a motor van on credit Increase 
    c)  A debtor paid by cheque No effect
    d)  Owner  Decrease 
  13. Outline FOUR classifications of goods and services produced in an economy. (4mks)
    • Producer and consumer goods
    • Public and private goods
    • Materials and non-materials goods
    • Durable and perishable goods
    • Finished and intermediate goods
  14. Highlight four benefits that accrue to a country that has a very high population. (4mks)
    • Provides wider markets for goods
    • Produces large labour force
    • Increased invention and innovation
    • Growth of jua Kali Industries
  15. Give FOUR fiscal measures that a government may use to control inflation. (4mks)
    • Increase direct taxes
    • Reduce government expenditure
    • Increase subsidies
    • Increase indirect taxes to reduce purchasing power.
  16. Give FOUR situations when oral communication may be used in an office. (4mks)
    • Where immediate feedback is required
    • In case of a meeting
    • Where information is confidential
    • Where gestures are to be used.
    • Where clarification is needed.
  17. State FOUR uses of a business plan. (4mks)
    • It is a motivating factor
    • Allocation of resources
    • Helps to know strengths and weaknesses of the business
    • It’s a required by financiers
  18. Outline FOUR circumstances under which a manufacture would prefer to sell his products directly to consumers instead of selling through intermediaries. (4mks)
    • Where the market is concentrated
    • Where production is on an order.
    • Where the product is highly perishable
    • Where the manufacturer has means of distributing
  19. Highlight FOUR principles which guide the government in its expenditure. (4mks)
    • Sanction, Maximum social benefit
    • Economical, Financial management
    • Flexibility
  20. Highlight FOUR factors that hinder expansion of railway transport in Kenya. (4mks)
    • Lack of political good will
    • Poor management
    • Lacks flexibility
    • It’s expensive to construct
    • Trains are costly
  21. Give FOUR roles of ethical practices in Business. (4mks)
    • Ensures that rights of employees are upheld.
    • Ensures consumers are not exploited
    • Ensures conservation of environment
    • Ensures fair play during completion
  22. Two following diagrams represent the circular flow of income between firms and household in an economy. Identify the flows labeled A, B, C and D and list them in the space provided. (4mks)
    • Provision of factors of production
    • Payment for the factors of production
    • Provision of goods and services
    • Payment for the goods and services
  23. Mention FOUR circumstances under which an insurance company may re-insure. (4mks)
    • Where it is a government policy
    • There is the need to spread risks
    • Where the value of the property is too high
    • Where the company has covered many risks.
  24. The following information relates to Kizito traders for the year ended 31st December 2009.
    Gross Profit 140,000
    Salaries 20,000
    Electricity charges 8,000
    Discount allowed 6,000
    Discount received 26,000
    Prepare a profit and loss account for Kizito Traders for the year ended 31st December 2009. (4mks)
    Kizito Traders
    Profit and loss account
    For the period ended 31st December 2009

    Expenses Incomes
    Salaries 20,000
    Electricity charges 8,000
    Discount allowed 6,000
    Net Profit c/d 132,000
    166,000 

    Gross profit b/d 140,000
    Discount received 26,000


    166,000
    Net profit b/d 132,000
  25. State FOUR features of indirect production. (4mks)
    • Production is carried out on large scale
    • Commodities are mainly for sale
    • Modern technology is applied
    • Encouraged division of labour and specialization
    • High quality products are produced.
    • There surplus production

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