BUSINESS STUDIES PAPER 2 - KCSE 2019 BAHATI MOCK EXAMINATION (WITH MARKING SCHEME)

QUESTIONS

1.  
   1. Explain five methods and legislations which the Kenyan government has put in place to protect consumers.  (10 marks)
   2. Explain five characteristics of human wants.                                                                     (10 marks)
2.  
   1. Explain four advantages of a bonded warehouse to the importer.                                                (8marks)
   2. On 1^st January 2010, Umoja stores had cash in hand Kshs. 30,000 and at bank Shs. 105,000. The following transactions took place during the month of January 2010
      January         1^st        Bought goods in cash                         Shs. 20,000
      "                   2^nd        Paid salaries by cash               Shs. 65,000
      "                   4^th        Received a cheque from the following debtors after allowing 2% discount in each case Luka Shs. 9,800, Mwengesh Shs. 19,600, Raju Shs. 10,700 and Alice Shs. 24,500
      "                   8^th        Paid the following accounts by cheque and in each case deducting 5% discount: Mogi Shs. 30,000, Abdul Shs. 12,000 and Moses Shs. 40,000
      "                   10^th      Bought office machinery by cheque Shs. 50,000
      "                   13^th      Juma settled his account of Shs. 20,000 in cash having deducted 2% cash discount
      "                   15^th      Withdraw Shs. 10,000 for private use
      "                   18^th      Paid John Shs. 4,750 in cash having deducted 5% cash discount
      "                    22^nd      Cash sales Shs. 45,000
      "                    25^th      Received cash Shs. 29,100 from Aberi after having allowed him 30% cash discount
      "                    31^st      Banked all the cash except Shs. 12,000
      
      Required: prepare three column cash book and balance it off                                                (12mks)

3.  
   1. Explain five benefits of expanding railway transport in Kenya as witnessed in the recent past.  (10 marks)
      Outline five uses of National income statistics to a country.                                              (10 marks)

4.  
   1. Explain five limitations of using posters as a medium of product promotion (10mks)
   2. Explain five benefits that Kenya may realize if economically viable oil deposits were exploited in Turkana County         (10mks)

5.  
   1. Explain five services offered by commercial banks to their customers. (10marks)
   2. Describe five types of unemployment.                                                                          (10marks)
6.  
   1. Explain any five measures a country may adopt to increase its volume of exports. (10 marks)
   2. Explain five factors that encourage entrepreneurial development in Kenya.                     (10marks)

MARKING SCHEME

1.  
   1. Five methods and legislations which the Kenyan government has put in place to protect consumers
      • Weights and measures act- The government ensures that all equipment used for measuring products are accurate.
      • Food and drugs act- Government ensures that traders do not add harmful ingredients in the processing of their products
      • Sale of goods act/trade description act – This legislation ensures that traders do not give wrong description of their products regarding usage or quality.
      • Public health act – This legislation ensures that hygienic conditions are followed in the production of goods and provision of services.
      • Rent and tribunal act- This legislation ensures that landlords do not exploit their tenants by charging them unreasonable rates.
      • Licensing- Through issuance of licenses, the government is able to know the type and nature of business activities carried out by traders (protect consumers from harmful and illegal products).
      • Price control- Refers to a situation where the government set a price on certain product especially essential products, within which no trader can exceed.
      • Setting standards- The government through KEBS ensures that quality standards are            adhered to by producers and sellers.
      • Consumer safety act – Ensures and prohibits traders from selling harmful products to      consumers
        (Any 5 well explained x2=10marks)
   2. Characteristics of human wants
      • Insatiable - meaning that they cannot fully be satisfied because they are endless
      • Vary in urgency / intensity - different human wants have different level of urgency
      • Competitive - since resources are limited and wants are unlimited, they compete with each other in order to be satisfied first.
      • Recurrent- as once satisfied , some wants e.g. food, clothing are felt again and again
      • Complimentary- satisfaction of one want e.g. cars given rise to another want e.g. fuel
      • Universal - as all human beings have wants. All human beings require food, shelter and clothing
      • Resources - are required in order to be satisfied
      • Unlimited - as they are too many to be satisfied by the limited resources
        (Any 5 well explained x2=10marks 

2.  
   1. Highlight four advantages of a bonded warehouse to the importer (10marks)
      • The importer can prepare goods while in the bonded warehouse through packing / branding / grading / blending
      • The bonded ware house relieves the importer the costs of providing security / costs of security provided by the government
      • The bonded warehouse allows the importer time to look for a buyer / customer / market while goods are still in the warehouse.
      • The bonded warehouse allows the importer time to look for / raise funds to pay customs duties/ storage costs/ risks.
      • Goods may improve in quality thus improving in prices / to the advantage of the importer e.g. wines / spirits / tobacco
      • Relieves the importer worries of theft / leakage / storage risks
      • The importer can sell the goods while still under bond in which case the costs of customs duty are passed on to the new buyer.
      • The importer can re-export the goods thus evading duty.
      • Some goods lose weight reducing customs duty if based on weight.
        (Any 4 well explained x2=8marks)
   2.  
      

3.  
   1. Benefits of expanding railway transport in Kenya
      • Has large carrying capacity hence can carry a lot of goods
      • Cheap since charges are low
      • Convenient - follow fixed time table for departure arrival thus users can plan movement/ receipt of goods
      • Safe/ secure as cases of theft / accidents are minimal
      • Special wagons from transporting special goods
      • Warehouse at railway stations enable users to store goods awaiting to be dispatched / collected.
        (Any 5 well explained x2=10marks)
   2. Uses of national income statistics
      • Shows the country average standard of living of the people
      • Used as a tool/ basis of economic planning
      • Helps a country to know the contribution of several sectors of the economy to national growth.
      • Used to show a country’s performance in different countries
      • Used to show a country’s performance in different periods
      • Used to reveal how national wealth of a country is distributed among its citizens
      • Helps investors to make investment decisions from the data collected by undertaking market trends
        (Any 5 well explained x2=10marks)

4.  
   1. Limitations of using posters as a medium of product promotion
      • Posters are a silent media of product promotion and may fail to attract the attention of the passers by
      • They have little or no entertainment valve-hence they may not hold the attention of passers by
      • Posters are affected by weather conditions and wear very fast
      • Public often destroy them hence may not be seen by many
      • Posters may not pass any message to the blind people hence not valuable to them
      • Posters are only suitable for literate people –hence have no advertising value to the illiterate
        (Any 5 well explained x2=10marks)
   2. Benefits that Kenya may realize if economically viable oil deposits were exploited in Turkana
      • There will be savings of foreign exchange which is currently used to pay for imported oil.
      • There will be an increase in the level of employment since may people will be employed in the oil industry.
      • The level of incomes for the people in the country will improve.
      • The government will earn foreign exchange from the exportation of oil.
      • The cost of production for goods and services may go down, since the current high cost of imported products make production of goods expensive.
      • The cost of transport will come down, because oil products will be cheaper.
        (Any 5 well explained x2=10marks)

5.  
   1. Services offered by commercial banks to their customers
      • Safekeeping of valuable items for their clients such as wills, title deeds, jewellery etc.
      • Lending money / loans / overdrafts etc.
      • Receiving deposits from their clients through various accounts that are provided.
      • Facilitates transfer of money through cheques, credit transfer, standing orders etc.
      • Trustee services – act as management trustee of property or business of deceased clients.
      • Advisory services on financial and investment matters.
      • Facilitates international payment through letters of credit.
      • Referee services – act as referees to their clients during credit status inquiry.
        (Any 5 well explained x2=10marks)
   2. Describe five types of unemployment.10marks
      • Involuntary unemployment; it occurs when people are actively looking for jobs at the existing wage rate but cannot get them.
      • Disguised unemployment; occurs when the number of people employed exceeds those that are required and workers full capabilities are not fully utilized
      • Frictional unemployment; it occurs when people lose jobs and go looking for new ones
      • Residual unemployment; affects people who are physically or mentally challenged as employers may find it difficult to employ them
      • Structural unemployment; occurs when demand for labor declines due to either changes in the method of production or a decrease in supply of goods and services
        (Any 5 well explained x2=10marks)

6.  
   1. Measures a country may adopt to increase its volume of export
      • Engaging in international trade fair/exhibition to promote the home products
      • Devaluation of its own currency to make export cheap
      • Lowering taxes on exports to make them cheap
      • By diversifying on its exports to increase the market.
      • Offering subsidies to firms that are involved in production of export goods
      • Reducing the length /procedure for acquiring licenses for exporting products
      • Adopting modern technology to export products to make them fashionable/High quality/more attractive to customers
      • Offering customs drawbacks – The government refunds either in full or part of custom duty paid on imported raw materials if finished product is exported.
      • Lobbying/Negotiate with trading partners for removal of trade restrictions placed on the country’s exports
        (Any 5 well explained x2=10marks)
   2. Factors that encourage entrepreneurial development in Kenya
      • Improved infrastructure; good roads, adequate security, availability of water, electricity will encourage entrepreneurial development.
      • Favorable government policies such as lessening tax burden by providing tax holidays, providing incentives and simplifying procedures and cost of obtaining relevant legal documents required
      • Availability of market for goods and services/Expanding market due to devolution of services
      • Increased accessibility to education and training/Expanded capacity to provide training for better skills to entrepreneurs.
      • Availability of resources/Increased accessibility to credit from commercial financial institutions and also from the government through government initiated projects like uwezo fund and women enterprise funds.
      • Political stability/absence of political chaos/No inter-clan fighting creates a conducive environment for entrepreneurs to venture into varied investments with confidence.
      • Favorable natural conditions/enough rainfall for agro-based businesses.
        (Any 5 well explained x2=10marks)