BUSINESS STUDIES PAPER 1 - 2019 KCSE KASSU JOINT MOCK EXAMS (QUESTIONS AND ANSWERS)

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ANSWER ALL THE QUESTIONS IN THE SPACES PROVIDED

  1. Identify the level of production for each of the following activities. (4mks)
     

           Activity

    Level of production

    (a)

    Painting a house

     

    (b)

    Constructing a road

     

    (c)

    Insuring a car

     

    (d)

    Dress making

     
  1. Outline four reasons why road transport is still the most referred mode of transport from Nairobi to Mombasa despite the introduction of Standard Gauge Railway (4 marks)
  2. Determine the initial capital of ABC business whose details are as follows:
    Capital on 31 dec 2001 was shs 120,000
    Net loss during the year was shs 70,000
    Drawings were shs 20,000 on a quarterly basis
    Owner’s investment was shs 20,000
  1. State any four functions of the central bank to the commercial banks
  2. The following transactions took place in the business of Onyuma during the month of June 2016.
    June03.2016- office furniture worth 80,000 was sold at 90,000 on credit to Butere restaurant.
    June 29.2016- Motor vehicle worth 1000,000 was bought from CMC motors paying 400,000 cash and the rest to be paid later.
  1. Outline four circumstances under which an insurance company may re-insure (4marks
  2. State four auxiliary services that may attract business enterprises in an area (4 marks)
  3. The table below shows the general change of price for a certain commodity over a period of five years.
     

    Year

    Price (Ksh)

    C P I

    (a)

    2008

    92.00

    -

    (b)

    2009

    100.80

    -109.56%

    (c)

    2010

    104.50

    -113.59%

    (d)

    2011

    105.30

    -114.46%

    (e)

    2012

    101.50

    -110.33%


    Required:
    Using year 2008 as the base year, determine the consumer price index for year 2009, 2010, 2011 and 2012  (4 marks)
  1. State any four challenges of a population made up of a large proportion of young people
  2. Highlight four forms of written communication that the minister of education could use to pass on information (4 marks)
  3. Mr. Musee had the following balances in his business on 1st Jan. 2008
    Motor van             65,000
    Cash at bank         52,400
    Machine                  6,800
    Creditors               15,900
    Debtors                 30,000
    Loan                         3,000
    Stock                     22,600
    The following transactions took place in the month of Jan. 2008
    Sold stock valued shs. 5000 for shs. 7,500 cash
    Exchange the motor van with a tractor valued at shs. 65,000
    The debtor paid by cash shs. 10,000
    Prepare: Mr. Musee’s balance sheet as at 31st Jan. 2008
  1. Identify any four characteristics of economic resources (4 marks
  2. State four features that make chain stores very unique                                                         (4 marks)
  1. Kenyans are more appealed by loans offered by SACCOs rather than those offered by commercial banks. Outline four reasons why this is so (4marks)
  2. Outline four challenges that a distributor of fresh milk is likely to face in his operations.
                                                                                                                                               (4MARKS)
  3. Outline four reasons why billboards have become very common medium of advertising in major urban centres (4 marks)
  1. State five ways in which the government finances its expenditure (4mks)
  2. In the recent past there has been development of malls in Nairobi. Highlight four disadvantages of such malls. (4 marks)
  3. Indicate the source document for each of the following books of original entry.             (4MARKS)
            BOOKS OF ORIGINAL ENTRY                             SOURCE DOCUMENT.
    1. Sales return daybook                                    ______________________________________
    2. Cash book                                                    ______________________________________
    3. Purchases journal                                         ______________________________________
    4. Purchase return journal                                 ______________________________________
  1. outline four consequences of poor arrangement of goods in a warehouse 4mks
  2. Highlight four causes of a shift of demand curve to the left (4 marks)
  3. State four benefits that a business in a politically stable country is likely to enjoy     (4marks)
  4. The information given below was extracted from the gbooks of amina traders on 31st december 2006
    Purchases                                                       260000
    Opening stock                                                75000
    Carriage on purchases                                  12500
    Closing stock                                                  27500
    Mark-up                                                         25%
    1. Using the information above, prepare Amina traders trading account 
    2. Differentiate between a perfect competition and monopoly market structure 10mks
  1. Highlight four ways in which Kenya Association of Manufacturers (KAM) ensures that their members do not exploit consumers. (4mks)


MARKING SCHEME

  1. Level of production.
    • Tertiary
    • Secondary
    • Tertiary.
    • Secondary
  1. Outline four reasons why road transport is still the most referred mode of transport from Nairobi to Mombasa despite the introduction of Standard Gauge Railway (4 marks)
    • Bases are readily available unlike SGR which has to be booked in advance.
    • Road transport is relatively flexible in terms of terminals unlike SGR where terminals are far away from the town.
    • Easy/convenient to book a bus than a train of SGR.
    • Bus terminals are located in the town centers unlike the SGR terminals – away from the towns.
  2. Determine the initial capital of ABC business whose details are as follows:
    Capital on 31 dec 2001 was shs 120,000
    Net loss during the year was shs 70,000
    Drawings were shs 20,000 on a quarterly basis
    Owner’s investment was shs 20,000
    O.C=C.C+L+D-I
    O.C= 120,000+70,000+(20,000×4)-20,000 =120,000+150,000-20,000=250,000
  1. State any four functions of the central bank to the commercial banks
    • Banker to commercial banks
    • Sells foreien exchange to commercial banks
    • Controls commercial banks
    • Lender of last resort
    • Acts as central clearing house to facilitate clearing of cheques arising from inter-bank transactions
    • Advisor to commercial banks
  1. General Journal

    DATE

    DETAILS

    F

    DR

    CR

    June 03

    Butere restaurant A/c
               Office furniture A/c
               Gain on disposal

    (being sale of office furniture at a gain on credit)

     

    90,000

    80,000

    10,000

    June 29

    Motor van A/c

                Cash A/c
                CMC Ltd A/c

    (being purchase of motor vehicle partly in cash and partly on credit)

     

    1,000,000

    400,000

    600,000

  1. circumstances under which an insurance company may re-insure (4 marks)
    • Incase the value of the property is high
    • Incase of High risk of loss
    • Incase of high Number of risks insured
    • Incase of Need to spread the risk
    • Incase if its the Government policy
  1. State four auxiliary services that may attract business enterprises in an area     (4 marks)
    • Health services
    • Banking services
    • Insurance services
    • Communication services
    • Social services
  1. The table below shows the general change of price for a certain commodity over a period of five years.

     

    Year

    Price (Ksh)

    C P I

    (a)

    2008

    92.00

    -

    (b)

    2009

    100.80

    -109.56%

    (c)

    2010

    104.50

    -113.59%

    (d)

    2011

    105.30

    -114.46%

    (e)

    2012

    101.50

    -110.33%

  1. State any four challenges of a population made up of a alarge proportion of young people
    • High rate of unemployment/ demand for jobs
    • Rate of crime/ social evils may rise as many are idle
    • Constrain / pressure on foods and services
    • High dependency ratio will rise
    • Reduce investment / savings as a result of high rate of consumption.
    • Low per capital income spread over a large non producing population
    • Problem of raising government finance
  1. Highlight four forms of written communication that the minister of education could use to pass on information(4 marks)
    • Circulars
    • Letters
    • Memos
    • Reports
    • SMSs
    • Notices
    • E-mails
    • Minutes
  1. Njogu had the following balances in his business on 1st Jan. 2008
    Motor van      65,000
    Cash at bank  52,400
    Machine          6,800
    Creditors        15,900
    Debtors          30,000
    Loan                3,000
    Stock               22,600
    The following transactions took place in the month of Jan. 2008
    Sold stock valued shs. 5000 for shs. 7,500 cash
    Exchange the motor van with a tractor valued at shs. 65,000
    The debtor paid by cash she. 10,000
    Prepare Mr. Musee’s balance sheet as at 31st Jan. 2008
    BS111
  1. characteristics of economic resources (4 marks)
    • Have money value
    • They are scarce
    • Unevenly distributed
    • Can be combined in various proportions
    • have utility
    • Have alternative uses
    • Can change ownership
    • Can be complimentary
  1. State four features that make chain stores very unique (4 marks)
    • Purchases are centralized.
    • Prices are standard for all the products in all the branches.
    • Sales are decentralized.
    • All branches deal in the same type of products.
    • They are uniform in outward appearance and interior layout.
  1. Kenyans are more appealed by loans offered by SACCOs rather than those offered by commercial banks. Outline four reasons why this is so (4marks)
    • Saccos offer loans at low interest rates
    • Saccos offer a variety of loans eg. education, development
    • Saccos require fewer legal formalities
    • Outstanding loans are lifted off by saccos upon member’s death
    • Once a member dies, there is double refund.
  2. Outline four challenges that a distributor of fresh milk is likely to face in his operations.(4MARKS)
    • Perishability of milk
    • Competition from other traders
    • Lack of transport
    • Spillage
    • Low productivity
    • Lack of storage facilities.
  1. Outline four reasons why billboards have become very common medium of advertising in major urban centres. (4 marks)
    • They are positioned at strategic positions where they can be read by many people.
    • The advertising message is not heavily worded and this makes it possible for the message to be understood and remembered easily.
    • They can convey messages for a long time as they are relatively permanent.
    • They are conspicuous and hence attractive to audience
  1. State five ways in which the government finances its expenditures.
    • Fines imposed by courts on offenders.
    • Rent and rates paid for the use of government property.
    • License fee paid by those who want to operate business.
    • Dividends/profits earned from government direct investments.
    • Interests earned on loans advanced by the government to firms.
    • Proceeds from the sale of government property eg privatization of parastatals.
    • Taxes -Compulsory levies by government on individuals and business organizations.
    • Government borrowing, Internally and Externally.
  1. Highlight four disadvantages malls (4 marks)
    • Might have Slow response to market changes
    • Serves limited number of customers especially those with cars.
    • Requires large amount of capital to start
    • Threatens other retail and wholesale businesses offering same products
    • Requires large space not available in central business districts
    • Prices are not controlled and can exploit consumers
    • Might have management problems
  1. Indicate the source document for each of the following books of original entry. (4MARKS)
    • Credit note
    • Receipts
    • Outgoing credit note
    • Incoming credit note.
  1. outline four consequences of poor arrangement of goods in a warehouse 4mks
    • Time wastage when releasing goods
    • Breakage of goods
    • Accidents to personnel
    • Chances of pilferage/theft of goods
    • Difficult to mopnitor movement of goods
    • Wastage of space
  2. causes of a shift of demand curve to the left                              (4 marks)
    • Decrease in the income of the consumer
    • Reduction in the prices of related products
    • Unfavorable government policy
    • Decrease in the population
    • Poor taste, fashion and preferences
    • Future expectation of decrease in the price of the product
    • Poor weather
    • Uneven distribution of income
    • Bad terms of sales
  1. State four benefits that a business in a politically stable country is likely to enjoy     (4marks
    • attracting foreign investment
    • higher profits
    • reduced brain-drain
    • equitable/balanced development in the country
    • increased local investment.
  1. Differences between a perfect completion and monopoly market structure.

    Perfect completion

    Monopoly

    1

    Has large number of sellers

    1

    Hass one seller

    2.

    Products are homogenous/identical in all aspects

    2.

    Product sold does not have close substitutes.

    3.

    Free exit and entry of firms into the market.

    3.

    There is restriction difficult for firms to enter into the market.

    4.

    Prices determined by forces of demand and supply.

    4.

    Prices set/fixed by the producer.

    5.

    No preferential or discrimination treatment to consumers by any firm or producer.

    5

    Price discrimination may be practised.

    6.

    Each firm has too small or insignificant share of the total market output.

    6.

    A monopolist has full control and share of quantity of product supplied in the market.

    7.

    Produce/sell high quality products to attract customers due to high competition.

    7.

    Product/sell low quality products due to lack of competition.

  1. The information given below was extracted from the gbooks of amina traders on 31st december 2006
    Purchases                                            260000
    Opening stock                                     75000
    Carriage on purchases                         12500
    Closing stock                                      27500
    Mark-up                                              25%
    Using the information above, prepare Amina traders trading account
    BS224
  2. ways in which Kenya Association of Manufacturers(KAM) ensures that their members do not exploit consumers.                (4 mks)
    • They ensure that their members follow business ethics and do not take advantage of the ignorance of the consumers to exploit them.
    • They work together to deal with complaints from consumers and take strict measure against members found to have violated consumer rights.
    • They set higher standards of quality for products and services produced by their member.
    • They investigate consumer complaints against their members and ensure the right action is taken if the allegations are found to be true.
    • They educate and inform consumers on the features, processing, effective usage and identification of given products.

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