BUSINESS STUDIES PAPER 1 Marking Scheme - 2017 KITUI MOCK EXAMINATION

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  1.   Advantages of using modern technology in production (4 marks)
    • It leads to increased output
    • It leads to high quality products
    • Products can be standardized
    • Reduces the cost of production as less labour is require
    • Saves time as production is done faster 4 x 1 = 4 marks
  1.   Types of companies that a consumer organization may receive form consumer
    • Sale of poor quality good s and service
    • Unfair pricing of goods
    • Non-compliance to building regulations
    • Poor hygiene conditions
    • Sale of harmful goods
    • Incorrect weight and measures  4 x 1 = 4 marks
  1.   Features of parastatals
    • Formed by an act of parliament
    •  Initial capital is provide by the government
    • They are set up to perform certain specific functions on behalf of the government
    •  They have limited liabilities
    • They are managed by board of directors appointed by the government   4 x 1 = 4 marks
  1.   Reasons why ethical practical is necessary in product promotion
    • To encourage selling of quality goods
    • To ensure compliance with existing government legislation
    • To safeguard cultural practices
    • To encourage disclosure of information about the product
    • To curb environment degradation
    • To safeguard consumers against misleading advertisement  4 x 1 = 4 marks
  1.   Advantages of hire purchase to the buyer
    • The buyer acquire possession and use of goods immediately after making a down payment
    • Buyer is able to buy high value and experience items easily
    • Installments to be paid are pre-determined so than buyer can budget for the amount
    • People with regular employment can make arrangement for monthly installment to be paid directly by employer through check off system 4 x 1 = 4 marks
  1.  
    • Nominal ledger
    • Cashbook                                           
    • Sales ledger
    • Purchases ledger   4 x 1 = 4 marks
  1.   Factors that may make a producer to by-pass a wholesaler when distributing goods
    • When dealing with perishable good
    • When dealing with goods which are technical in nature
    • When the firm is located near the market
    • When there is need to keep price of goods low
    •  When the demand for the product is very high  4 x 1 = 4 marks
  1.   Factors that would lead to unfavourable terms of trade to a country
    • If the prices of imports increase while those of export decline
    • If the prices of imports remain constant while those of export increase
    • If the prices of export remain constant while those of imports increase
    • Both prices increase but the increase in price of imports is higher than those of imports
    • Both prices decrease but the decrease in price of exports is higher than that of imports. 4 x 1 = 4 marks
  1.  
    • Credit note issue
    • Sales invoice
    • Credit note received
    • Cash sale receipt 4 x 1 = 4 marks
  1. Reasons why flower exporters would transport their produce by air rather than by sea
    • Air transport is faster
    • Flowers perishable require a faster means
    • Security of air transport is relatively high
    • Flowers are light in weight
    • Flowers are not bulky 4 x 1 = 4 marks
  1. Circumstances that may necessitate re-insurance
    • When the value of the property is very high
    • When chances of the loss occurring through injured risk is very high
    • When the insurance company has insured many similar risks which would make it difficult to compensate
    • When the insurance company wishes to spread risks 4 x 1 = 4 marks
  1. Net worth = Total asset – Total liabilities
    = (300,000 + 123,000)  – (125,000 + 84,500) 
    = 432, 700 – 209, 500
    = 214, 200   (4 marks)
  1. Problems associated with development planning
    • Lack of accurate or detailed data
    • Lack of qualified personal
    • Existence of large substance sector
    • Transfer of inappropriate development plan
    • Lack of political will
    • Inflation
    • Lack of funds to carry out projects 4 x 1 = 4 marks
  1. Demerits of indirect tax
    • May fuel inflation as it directly increase the prices of goods services
    • Its less equitableCan be avoided by people who do not consume the taxed commodity
    • Uncertainty in revenue yield
    • Expensive to collect 4 x 1 = 4 marks
  1. Factors that may limit entrepreneurs in an area
    • Insecurity
    • Poor infrastructure
    • Unfavourable government policy political instability
    • Stiff competition
    • Political instability 4 x 1 = 4 marks
  1. Challenges encountered when measuring national income using the output approach
    • The problem of valuation due to non-availability or inaccuracy of the output figures especially in the private sector
    • The problem of deciding on the goods and service to include
    • The problem of valuing output in the subsistence sector
    • The problem of changing prices
    • The problems of differentiating primary inputs form intermediated inputs 4 x 1 = 4 marks
  1. Factors resulting to an increase in demand
    • Possibility of decrease in price
    • Possibility of income being distributed fairly
    • May be there was increase in population
    • May be the tastes and preferences for the product was positive
    • May be the incomes of households have increased  4 x 1 = 4 marks
  1. Basic features of a market
    • Availability of buyers
    • Availability of sellers
    • Availability of goods and services
    • Availability of medium of exchange 4 x 1 = 4 marks
  1. External factors that may negatively influence the operation of a business
    • Low consumer income which leads to low demand
    • Poor infrastructure
    • Negative government policies
    • Adverse climatic conditions
    • Low population / poor market 4 x 1 = 4 marks
  1. Negative effects of inflation
    • Reduction in profit for business
    • Wastage of time as people shop around for reasonable prices
    • Conflicts between employers and employees as employees demand for raise in salaries and wages
    • Decline in standard of living
    • Less to creditors
    • Adverse effect on balance of payment 4 x 1 = 4 marks
  1. Benefits to a business that uses its own warehouse
    • The owner has full control over its operations
    • The owner may design it according to his / her own specification
    • The owner does not incur cost of hiring space unlike with public warehouse
    • The owner is not tied down by long procedures of issuing and receiving goods 4 x 1 = 4 marks

  2.  
    ans p1 q228 x ½ = 4 marks
  1. Reasons why hypermarkets are becoming increasing popular in Kenya
    • Operates for longer hours
    • Alternative and convenient for shop in
    • Accept debit / credit cards
    • Security is guaranteed
    • Availability of auxiliary services
    • Have extensive parking space 4 x 1 = 4 marks
  1. Negative implication of the population distribution
    • High dependency ratio
    • High rate of unemployment
    • Increased social evils
    • Low labour supply
    • Pressure on goods and services consumed by young population 4 x 1 = 4 marks
  1. Measures that a manager can take to improve the working environment in an office
    • Show respect to both colleagues and visitors
    • Observe courtesy in dealing with people
    • Be organized at work all times
    • Be honest, trustful in performing duties
    • Be punctual in offering services 4 x 1 = 4 marks

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