Business Studies Paper 1 Questions and Answers - Asumbi Girls High School KCSE Mock 2021

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  • Answer ALL the questions


  1. State four reasons why people satisfy basic wants before secondary wants. (4 mks)
  2. Write the type of accounts the following items fall under (4 mks)
    a Discount received  
    b buildings  
    c Creditor kemboi  
    d capital  
  3. Highlight four assumptions of the circular flow of income in a two-sector economy (4 mks)
  4. Highlight four reasons why it is suitable to locate a bonded warehouse at a point of entry of a country. (4 mks)
  5. State the type of unemployment described below (4 mks)
    a People lose jobs and spend time looking for a new job  
    b Unemployment occurs repeatedly at similar times  
    c Affects certain occupations such as the construction industry  
    d Workers unwilling to accept the current wage rate  
  6. State four reasons why a businessperson would prefer to use current account. (4 mks)
  7. Highlight four ways that can be used to correct unfavorable balance of payment. (4 mks)
  8. State four internal economies of scale. (4 mks)
  9. Indicate with a (+) for increase, (-) for decrease and a (0) for no change in totals of the balance sheet following the transactions below: (4 mks)
    a A debtor paid by cash  
    b Paid creditors by cheque  
    c Bought goods on credit  

    Withdrew cash from bank for office use

  10. A trader wants to import a car from Japan. List four possible channels of distribution he will use. (4 mks)
  11. Outline four benefits that accrue to business organizations that use the latest technology in record keeping. (4 mks)
  12. Highlight four ways in which a business idea can be implemented. (4 mks)
  13. Outline any four ways through which producers co-operatives help agricultural development in Kenya. (4 mks)
  14. Identify four types of small scale retail business without shops that wambui can run without a shop. (4 mks)
  15. Why would an exporter prefer to use container services as a method of transport? (4 mks)
  16. The diagram shows a shift of a supply curve for a certain commodity. (4 mks)
    State four reasons why the supply curve could have shifted from S0 to S1
  17. Given the items of Njoroge Wholesalers on 1st July 2000 (5 mks)
    Building 780 000
    Net loss 43 000
    Additional investment 8 400
    Stock 45 000
    Creditors 32 000
    Debtors 29 000
    Loan 240 000
    Overdraft 60 000
    Weighing machine 17 000
    Cash 30 000
    Prepare a balance sheet as at that date
  18. Highlight three features of cartels (3 mks)
  19. The following are some of the terms used in international trade. Write the following initials in full. (4 mks)
    1. F.O.B
    2. C.I.F
    3. F.A.S
    4. F.O.R
  20. The following information relates t to Maji Mazuri Traders as at 31. 12. 2010. (4 mks)
    Fixed assets
    Current liabilities
    Net profit for the current year
    1. Working capital (2 mks)
    2. Rate of return on capital employed (2 mks)
  21. Outline four factors that may limit te development of a less-developed country. (4 mks)
  22. Highlight four factors that should be considered by a firm when deciding on the method to use for promoting its products. (4 mks)
  23. Identify four types of taxes based on structure of taxes. (4 mks)
  24. Highlight four problems associated with determining consumer price index in an economy. (4 mks)
  25. A farmer’s house valued at ksh. 1,200,000 was insured against fire for ksh. 900,000 under the ‘average clause’. Fire occurred and damaged the house causing a loss of ksh. 500,000. Determine the value of compensation due to the farmer. (4 mks)

Marking Scheme

    • They can’t be postponed
    • They are felt needs
    • Limited resources
    • One can’t do without them
    • Nominal account
    • Real account
    • Creditors
    • Private
    • They are only two sectors in the economy
    • Households spend all their incomes on goods and services produced by the firm
    • Firms spend all their revenue on factors of production provided by households
    • No government intervention
    • The economy is closed
    • Facilitates easy collection of revenue
    • Control entry of harmful goods
    • For easy re-exportation
    • To enable inspection of goods
    • To collect information on goods entering the country
    • Enables the country to control quality and quantity of goods
    • Frictional
    • Cyclical
    • Erratic/casual
    • Voluntary
    • Overdraft facilities are available
    • Payments are made very conveniently because cheques are used
    • Not required to maintain any minimum balance
    • Bank statements are usually sent to the account holder regularly
    • Decreasing the volume of imports
    • Increasing the volume of exports
    • Encouraging foreign investment into the country
    • Devaluation of currency
    • Restricting outflow of capital
    • Marketing economies
    • Financial economies
    • Risk bearing
    • Managerial
    • Technical
    • Research
    • Welfare
    • No effect
    • Decrease
    • Increase
    • No effect
    • Foreign producer → local wholesaler → retailer → consumer
    • Foreign producers → local consumer
    • Foreign producer → local wholesalers → consumer
    • Speedy customer service
    • Confidentiality of business records
    • Records can easily be retrieved
    • Clean and tidy records produced
    • Minimum storage space required
    • Accuracy is enhanced
    • Information is easily portable
    • Labour saving
    • Creating a new good
    • Improving on an existing product
    • Improving the process of production
    • Improving the marketing strategies
    • Offering unique services
    • Improving the quality of services
    • Help farmers get better prices for their produce
    • Assist farmers input at free or reduced prices or on credit
    • Offer useful advise on farming
    • Grant loans for farmer’s development
    • Provide a channel of distribution of loans offered by the government to relevant members
    • Provide better storage facilities for the products
    • Hawking/peddling
    • Road side selling
    • Open air market trading
    • Automatic vending
    • Online selling
    • easy handling of goods
    • less damage to goods
    • safety because they are sealed at the loading points
    • low premium charges due to less risks
    • use of specially designed containers for special goods
    • reduced inspection hence less disturbance to goods
    • Increase in cost of production
    • Inavailability of factors of production
    • Reduction of other related products
    • Poor state of technology
    • Unfavorable government policy
    • Unfavorable natural factors
    • Formed when a group of manufacturers agree to act as one
    • Fix prices
    • Fixing quantity to be supplied
    • Free on Board
    • Cost Insurance and Freight
    • Free Alongside Ship
    • Free on Rail
    • Working capital = current asses – current liabilities
      120,000 – 60,000 = 60,000
      Rate of return on capital employed
      100,000/460,000 x 100 = 21. 73%
    • Low natural resource endowment
    • Inadequate capital
    • Poor technology
    • Poor human resource endowment
    • Unfavorable domestic environment
    • Cost
    • Nature of the product
    • Target group
    • Objectives of the promoting firm
    • Methods used by competing firms
    • The law
    • Regressive
    • Proportional
    • progressive
    • Determining basket of goods or commodities
    • Difficulty in determining the base year
    • Differences in prices of goods
    • Difficulty in the choice of the average to be used
  24. ( 900,000 x 500, 000) / 1,200,000 =375,000

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