Business Studies P1 Questions and Answers - Mangu High School Trial Mock Exams 2021/2022

INSTRUCTIONS TO CANDIDATES

• Write your name and index number in the spaces provided above
• Sign and write the date of examination in the spaces provided.
• Answer all the questions .(25 questions).
• All answers should be written in the spaces provided in this booklet.
• Candidates should answer all questions in English

For Examiners Use Only

TOTAL MARK = ___________

QUESTIONS

1. Outline four ways in which a good business structure is of benefit to a business organization (4mks 
2. Outline four difficulties that would be faced by an individual in the satisfaction of human Wants (4mks)
3. The following is a table of activities. Name the utility that is created by each activity. 4mks)
   

   Activity	Utility
   i) Making Chairs from timber
   ii) Shopkeepers selling sugar to consumers
   iii) Pharmacist delivering milk to a hospital
   iv) Delivering milk to consumers early in the morning

4. Using a diagram, illustrate how a decrease in demand occurs while holding all factors constant apart from price. (4mks)
5. State four circumstances under which it may be appropriate to use personal selling as a form of product promotion. (4mks)
6. K Ltd a manufacturing firm has been performing poorly in the recent past. Highlight four measures that they can take to improve their profitability. (4mks)
7. State four functions of commercial attaches. (4mks)
8. Give four reasons why some traders prefer to operate supermarket business (4mks)
9. State four reasons why short message service (SMS) is replacing letters as a way of communication (4mks)
10. Describe four channels used when importing commodities. (4mks)
11. Outline four emerging trends in office management. (4mks)
12. Give four benefits that are likely to result from a modern railway network in the country (4mks)
13. Outline four features of monopolistic competition (4mks)
14. State four merits of storing goods in a public warehouse (4mks)
15. The following account balances were extracted from the books of migingo traders on 30th April 2002
    Machinery 460000
    Stock 20,000
    Debtors 50,400
    Cash in hand 35,000
    Creditors 38,200
    Bank overdraft 65,900
    Determine capital as at 30th April 2012 (4mks)
16. The table below shows descriptions of different types of partners. Identify type of partners that match the description
    

    Description	Type of partner
    (a)    Do not contribute capitals (b)   Those whose private properties can be used to pay business costs (c)    Do not participate actively in management (d)   Are above 18 years of age

17. On 31st December 2013 Kiu Traders had made a turnover of Sh.80, 000 for the fear and had a closing stock of SH.10, 000. If the business was working at a margin of 20%, draw its trading account for the period ending 31st, December 2013 (4mks)
18. Outline four source documents used in recording transaction. (4mks)
19. On 1st March 2006 the cash book of Kericho traders showed cash and bank balances of sh. 15000 and sh 147000 respectively. The following transactions took place during the month
    May 3 cash sales sh 120, 000
    May 11 paid sh. 7,500 cash in respect to wages
    May 16 received a cheque of sh. 250,000 from a debtor
    May 26 withdrew sh. 25,000 from bank for office use.
    May 29 paid sh. 97,000 cash to creditor
    Prepare a two column cash book (4mks)
20. Explain the following terms as used in insurance
    1. Surrendervalue……………………………………………………………………………………………………………………………………………………………………………………
    2. Beneficiaries…………………………………………………………………………………….................................................................................................................................................
    3. Re – insurance……………………………………………………………………………………
    4. Cover note……………………………………………………………………………………… ………………….. (4mks)
21. Match the following description of errors with the type of errors made when keeping books of accounts (4mks)
    

    Description	Error type
    (a)    Occurs where errors is both the debit and credit balances are of equal amounts
    (b)   Occurs where a transaction is not recorded at all in the books
    (c)    Occurs when entries are made in the wrong class of accounts
    (d)   Occurs where both the debit and credit entries are made using  similar but erroneous figures

22. Give three reasons why the per capita income of a country may not change (3mks)
23. The diagram below shows a population pyramid for a certain country
    
    Give four challenges facing this country (4mks)
24. Show the accounts to be debited or credited for the following transactions (4mks)
    

    Transaction	debited	credited
    (a)    Paid wages in cash
    (b)   Took business  cash for private use
    (c)    Purchased office equipment on credit from Sao Ltd
    (d)   Paid telephone bill by cheque

25. Give four reasons for the increased use of mobiles phones in banking. (4mks)

MARKING SCHEME

1. Outline four ways in which a good business structure is of benefit to a business organization(4mks)
   1. Facilitates easy control of workers
   2. Facilitates easy evaluation of workers
   3. Reduces confusion among workers
   4. Enhances teamwork (4x1=4mks)
2. Outline four difficulties that would be faced by an individual in the satisfaction of human
   Wants (4mks)
   1. Needs are unlimited
   2. Different tastes and preferences
   3. Government restrictions
   4. Different prices of goods
   5. Limited resources/income (4x1=4mks
3.                        
   1. Form
   2. Possession
   3. Place
   4. Place (4mks) (4x1=4mks)
4. Using a diagram, illustrate how a decrease in demand occurs while holding all factors constant apart from price (4mks)
   
   4x1
5. State four circumstances under which it may be appropriate to use personal selling as a form of product promotion (4mks)
   1. Its not easy to ignore like other methods
   2. Its more persuasive
   3. Immediate feed back about the product is got
   4. Seller is able to direct effort to a specific group
   5. Consumers are shown how to use a product
   6. Demonstration can be done
   7. Suitable for both the literate and illiterate (4x1=4mks)
6. K Ltd a manufacturing firm has been performimg poorly in the recent past. Highlight four measures that they can take to improve their profitabilility (4mks)
   1. Improve on personnel management
   2. Locate the business where customers are many
   3. Manage finances properly
   4. Improve on public relations
   5. Being more creative and innovative
   6. Managing debts carefully
   7. Getting more capital to finance operations
   8. Should invest in more research to find out better production method
7. State four functions of commercial attaches (4mks)
   1. Look for market for Kenyan goods abroad
   2. Organize trade tours for Kenyan traders
   3. Inform local producers of standards required and procedures in foreign countries
   4. Help in identifying agents in foreign countries for local producers
   5. Organize training for local businessmen abroad
   6. Avail information about selling opportunities in foreign countries (4x1=4mks)
8. Give four reasons why some traders prefer to operate supermarket business (4mks)
   1. Increase sales
   2. Lower operational costs
   3. Enjoy economies of sale
   4. Time is saved
9. State four reasons why short message service (SMS) is replacing letters as a way of communication (4mks)
   1. Cheap to use SMS services
   2. Faster than letters
   3. Can be sent to many at once
   4. Realiable-delivery reports are given (4x1=4mks)
10. Describe four channels used when importing commodities (4mks)
    1. Foreign exporter → wholesaler → retailer → consumer
    2. Foreign exporter → import trader → consumer
    3. Foreign exporter → import agent → consumer
    4. Foreign exporter → import agent → consumer
    5. Foreign exporter → import agent → wholesaler → retailer → consumer
    6. Foreign exporter → exporters representative → wholesaler → retailer → consumer
    7. Exporter → exporters representative → consumer
11. Outline four emerging trends in office management (4mks)
    1. Use of computers
    2. Using open plan office
    3. Merging duties of staff members
    4. Adapting customer care centers
    5. Use of modern communication methods
    6. Opening up offices away from town centers (4x1=4mks)
12. Give four benefits that are likely to result form a modern railway network in the country (4mks)
    1. Effective in transporting heavy and bulky goods
    2. Reduce damage of roads by vehicles
    3. Commodities will be transported cheaply over long distance
    4. Road and port congestion will reduce
    5. Pollution along the roads will reduce
13. Outline four features of monopolistic competition (4mks)
    1. Many sellers and buyers
    2. Products are differentiated
    3. No barriers to entry
    4. No firm has to control over factors of production
    5. Products are not perfect substitutes
    6. No interdependence in pricing between the firms (4x1=4)
14. State four merits of storing goods in a public warehouse (4mks)
    1. Goods can be sold without physical movement
    2. Traders do not incur costs of constructing their own warehouses
    3. Goods can be used as collateral to get short term loans
    4. Goods are insured
    5. Enables large scale buyers to accommodate bulk from small scale sellers
    6. Additional services e.g. repairs are provided
15. The following account balances were extracted from the migingo traders on 30th April 2002
    Machinery 460,000
    Stock 20,000
    Debtors 50,400
    Cash in hand 35,000
    Creditors 38,200
    Bank overdraft 65,900
    Determine capital as at 30th April 2012
    Total Assets                                         Total Liabilities
    Machinery 460,000
    Debtors 50,400
    Stock 20,000
    Cash in hand 35000
                         565,400                                   565,400
    Less liabilities
    Creditors 38200
    Bank overdraft 65900
                           104,100                                 104,100   
    Capital                                                           461,300
16. The table below shows descriptions of different types of partners. Identify type of partners that match the description
    

    Description	Type of partner
    (a)    Do not contribute capitals (b)   Those whose private properties can be used to pay business costs (c)    Do not participate actively in management (d)   Are above 18 years of age	Nominal Ordinary/general Dormant Major

17. On 31st December 2013 Kiu Traders had made a turnover of Sh.80,000 for the fear and had a closing stock of SH.10,000. If the business was working at a margin of 20%, draw its trading account for the period ending 31st, December 2013 (4mks)
    KIU Traders Trading a/c
    For the period ending 31/12/2014
    

    Cost of goods available for sale 74,000√√ Less closing stock                    10,000√  Cost of sales                           64,000 Gross profit                             16,000√                                                  80,000

    Sales 80,000√                                          80,000

18. Outline four source documents used in recording transaction.
    1. Invoice
    2. Debit note
    3. Credit note
    4. Receipts
    5. Payment voucher
    6. Cash sale slip
19. On 1st March 2006 the cash book of Kericho traders whowed cash and bank balances of sh. 15000 and sh 147,000 respectively. The following transactions took place during the month
    May 3 cash sales sh. 120,000
    May 11 paid sh. 7,500 cash in respect to wages
    May 16 received a cheque of sh. 250,000 from a debtor
    May 26 withdrew sh. 25,000 from bank for office use.
    May 29 paid sh. 97,000 cash to creditor
    Prepare a two column cash book
    Two column cash book
    Dr                                                    Cash book                                          Cr
    
    

    Date	Particulars	BF	cash	bank	Date	particulars	cash	Bank
    2006 May 1	Bal. b/d		15000	147,000	2006 May 11	wages	7500
    May 3	Sales		120,000		May 26	Cash		25,000
    May 16	Debtors			25,000	May 29	Creditors	97000
    May 26	Bank		25,000		May 31	Bal.c /d	55,500	372,000
    			160,000	397,000			160,000	397,000
    June 1	Bal. b/d		55,500	372,2000

20. Meaning of insurance terms
    1. Surrender value – Amount of money that is refundable to the insured by insurer incase the insured has terminated the contract before maturity.
    2. Beneficiaries- People named named in a life assurance policy to be paid in event of death of the assured.
    3. Re – insurance – An insurance company insuring the same property it has covered with another insurance company called the re – insurer.
    4. Cover note – a document issued by an insurance company to insured when the insured has paid the first premium while awaiting the policy to be processed.
21. Match the following description of errors with the type of errors made when keeping books of accounts (4mks)
    

    Description	Error type
    (a)    Occurs where errors is both the debit and credit balances are of equal amounts	Compensating errors
    (b)   Occurs where a transaction is not recorded at all in the books	Error of omission
    (c)    Occurs when entries are made in the wrong class of accounts	Error of principle
    (d)   Occurs where both the debit and credit entries are made using  similar but erroneous figures	Error of original entry

22. Give three reasons why the per capita income of a country may not change (3mks)
    1. When total output and total population increase at the same rate
    2. When total output and total population decrease at the same rate
    3. When total output and total population remain constant
23. The diagram below shows a population pyramid for a certain country
    
    Give four challenges facing this country (4mks)
    1. High dependency ratio
    2. Low labour supply in the country
    3. Reduced savings and investments
    4. Diversion of government expenditure
    5. Likelihood of high unemployment rates
    6. Increase in social evils by the idle young population
24. Show the accounts to be debited or credited for the following transactions (4mks)
    

    a/c to debit	a/c to credit
    (a)    Wages	Cash
    (b)   Drawings	Cash
    (c)    Office equipment	Sao ltd
    (d)   Telephone bill	Cash at bank

25. Give four reasons for the increased use of mobile phones in banking. (4mks)
    1. Fast in transacting business
    2. Reduce s paper work
    3. May be used to pay utility bills
    4. One can access account balance
    5. Safe to use (use of secret pin) i.e. reduce risk of carrying cash
    6. May be used to buy airtime
    7. Easy transfer of funds from one account to another
    8. Easy to monitor ones financial transactors details
    9. Easy transfer of money from account to phone for other transactions.