Business Studies P1 Questions and Answers - Nambale Mock Exams 2021/2022

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Instructions To Candidates

  • Write your name and index number in the spaces provided above.
  • Sign and write the date of extermination in the spaces provided above.
  • Answer all questions in the spaces provided


  1. State four ways in which the learning of business studies in secondary school can be of benefit to the Kenyan economy. (4mks)
  2. Highlight four ways in which an individual consumer can ensure that he/she is not exploited by traders. (4mks)
  3. Identify four measures that can be put in place by a business to safeguard its property. (4mks)
  4. Kenya is experiencing a growing boda boda transport. Highlight four challenges that are facing this means of transport. (4mks)
  5. Identify four circumstances under which a monopolist could practice price discrimination. (4mks)
  6. Following is a list of business transactions. Indicate the effect of these transactions on the balance sheet totals. Use (+) for increase, (-) for decrease and (NE) for no effect. (4mks)


    Effect on balance sheet totals


    The business took a bank loan of Sh. 100,000 and used the whole amount to pay creditors



    Bought furniture worth Sh. 35,000 then paid cash Sh. 20,000 and the balance to be paid later.



    An old computer worth Sh. 10,000 was disposed at Sh. 8,500 cash.



    Bought stock of goods for sale on credit for Sh. 22,000

  7. Outline four roles played by the banking sector in an economy. (4mks)
  8. Mention four circumstances under which an insurance claim may be honoured. (4mks)
  9. Highlight four factors that are likely to lead to demand-pull inflation. (4mks)
  10. State four reasons why a manufacturer may sell directly to the consumer. (4mks)
  11. On 1st January 1999 Kibet started a business with a capital of Kshs. 25,000 in cash. The following transactions took place during the first week of the month:
    Jan 2: Bought stock of goods Kshs. 10,000 cash
    Jan 5: Took cash to the bank Kshs. 8,000
    Jan 6: Cash sales Kshs. 5,000
    Enter the above transactions in the relevant ledger accounts and balance them off. (4mks)
  12. State four reasons for the popularity of personal selling as a means of promoting products by firms. (4mks)
  13. Highlight four reasons that account for low living standards in a country with high per capita income.(4mks)
  14. State the meaning of the following terms as used in the process of satisfaction of human wants. (4mks)
    1. Scarcity
    2. Choice
    3. Opportunity cost
    4. Scale of preference
  15. Outline four ways in which mobile phone money transfer services have facilitated trade in the economy. (4mks)
  16. Identify four aspects of the legal and political environment of a business. (4mks)
  17. The following transactions relates to the business of Amina Traders during the month of May 2010.
    May 5: Returns inwards of Kshs. 15,000 from Aswani.
    May 7: Issued a credit note to Andanje worth Kshs. 7,500
    May 11: Andrew, a customer returned goods worth Kshs. 11,000
    May 13: Sent a credit note of Kshs. 10,000 to Wambua
    May 23: Goods worth Kshs. 6,500 were returned by Atieno.
    Enter the above transactions in the relevant day book. (4mks)
  18. Highlight four factors to be considered when evaluating a business idea. (4mks)
  19. Outline four roles of Kenya Institute of Business Training. (4mks)
  20. Using the following information regarding the supply of cabbages in Eldoret Municipal Market, draw a supply curve. (4mks)

    Price (Kshs.)

    Quantity (Kg)











  21. State four benefits of warehousing to the consumer. (4mks)
  22. Identify four measures which the Kenyan government can take to solve the unemployment problem. (4mks)
  23. Highlight four possible effects of taxation in an economy. (4mks)
  24. Outline four factors that may limit the development of a developing country. (4mks)
  25. State four reasons why parastatals have generally performed poorly in Kenya. (4mks)


    1. Equip the leaner with knowledge and skills he/she can use to start and run a business comfortably without necessarily the need for further training.
    2. Assist the learner to develop ability for inquiry, critical thinking and rational judgment.
    3. Assist the learner to acquire self-discipline and positive attitude towards work.
    4. Enables the learner the basic economic issues in society.
  2. By making sure commodities are not hoarded and that a regular supply is maintained.
    By ensuring that health and safety regulation are adhered to.
    By ensuring that health and safety regulations adhered to
    By dealing with complaints about defective items.
    By ensuring that essential goods and services are available and that their prices are fair.
  3. Provision of maximum security
    Provision of relevant documents like title deeds to safeguard land
    Maintenance for good records to avoid fraud
    Holding individuals responsible for the properties they are in charge
    Monitoring movements for equipments in and out
    Keeping inventory records
    Keeping store under key and lock.
  4. (May not be suitable for transporting heavy and bulky goods over long distances as compared to railways.
    causes congestion on roads
    Not suitable for transporting perishable goods
    Boda boda are prone to accidents
  5. When there is inelastic demand for the products
    When there is elastic demand in another market
    When there are tow different markets which are geographically separated
    When consumers of the same commodity are ignorance of the existing of the tow markets.
    1. no effect (NE)
    2. Increase (+)
    3. Decrease ( - )
    4. Increase (+ )
  7. Accepting deposits
    Lending money
    Safekeeping of valuable items like title deeds
    Giving advice on investment and management of funds
    Acting as a guarantor or referee to customers
  8. When the principle of utmost good faith was not honoured by the insured
    If the insured has no insurable interest in the property at the time the of less
    If the insured fails to follow the laid –down procedure for claiming compensation.
    If the loss occurred due to willful action, insured pa at the time the loss occurred
    1. Effects of credit creation by the commercial banks
    2. General shortage of goods and services
    3. Increase in consumer expenditure
    4. Increase in government expenditure
    5. Increase in money incomes.
    1. When launching a new product
    2. When a product is tailored to meet customers specifications
    3. When demonstration of product is required
    4. When the value of the product is high
    5. When the market is concentrated in one area
    6. when the organization can afford to finance the sales force
    11 bhaftrdsa
    1. It takes care of both literate and illiterate prospective customers
    2. Sales People are able to obtain first-hand information about the market which can be used to improve the product.
    3. Its more flexible than other methods. A marketer is able to meet the needs of each individual customer
    4. If provides an opportunity to establish interpersonal relationships which may about a respect purchase
    5. It is directed to specific prospective customers unlike advertising which is directed to all customers.
    1. High population growth rate
    2. Dominance of subsistence sector in the economy
    3. Under-utilization of natural resources
    4. Disparity income distribution
    5. Laws level of saving and investment
    1. Scarcity- Refers to the limited supply for resources compared to the demand for them.
    2. Choice – The act of selecting which want to satisfy first with the limited resources
    3. Opportunity cost – What is forgone by choosing to satisfy a particular want
    4. Scale of preference – A list of wants in order of their importance.
    1. It allows one to send money to another using the mobile phone
    2. it allows one to buy goods from registered traders
    3. It allows one to access the account balance
    4. It allows one to pay utility bills
    1. Licences
    2. Taxes
    3. Subsidies
    4. Adherence to Kenya Bureau of standards
    5. Trade Description Act





    Amount (SH)


    7th may

    13Th May








    Sales Return journal         



    Voucher No




    5TH May

    11TH May

    23rd May












    1. What [products pr services the business will sell
    2. Who the business will sell to (market)
    3. where the business will be located
    4. How the business will run
    5. Why the business is needed (objectives)
    1. Educate business people on efficient methods of operating business
    2. Expose business people to modern developments in management
    3. Expose business people to problems facing them and their possible solutions
    4. Impart proper business ethics
    5. Educate business people on how to use available resources to minimize costs and maximize profits
    graph jagydta 
    1. It ensures there is a steady supply of goods so they are available to consumers on a regular basis
    2. It facilitates the stability of prices to the consumers
    3. Consumers can meet unexpected demands due to existence for a warehouse
    4. Consumers can inspect the goods before they can buy them

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