Business Studies Paper 1 Questions and Answers - Lanjet Joint Mock Exams 2022

INSTRUCTIONS

Answer ALL the questions in the spaces provided.

QUESTION

1. State four types of business activities carried out in Kenya. (4mks)
2. Suggest four reasons for the increase in motor cycle accident. (4mks)
3. State four circumstances in which sign language may be preferred. (4mks)
4. The following information was extracted from the books of Rono traders.
   Rate of stock turn-over 3 times
   Mark-up 20%
   Opening stock sh 60,000
   Closing stock sh 120,000
   Calculate;
   1. Cost of goods sold (2 marks)
   2. Gross profit (1 mark)
   3. Purchases (1 mark)
   4. Sales (1 mark)
5. Suggest four factors that influence the amount of money that individual own for transaction motives. (4mks)
6. State the best type of machine one would use to perform the following tasks. (4mks)
   

   Functions	Name of machine
   i) Used to trim papers into desired sizes.
   ii) To post information to ledgers and to prepare payrolls
   iii) To transmit printed message such as letters, maps, diagrams and photographs
   iv) To destroy sensitive but unwanted documents.

7. Highlight four forms of economic integration. (4mks)
8. The equation given below relate to quality demanded and quantity supplied at the equilibrium point. (4mks)
   Qde = 4p + 50
   Qse = 8p + 30
   Determine the equilibrium price and quantity.
9. Indicate whether the following items are falling in real nominal or private accounts. (4mks)
   1. Sales –
   2. Carriage inwards –
   3. Capital -
   4. Fixtures aid fittings –
10. Outline four factors that influence the choice of product in the market. (4mks)
11. Outline four reasons why there is need for ethical practices in business. (4mks)
12. Outline the type of unemployment in an economy given by the following statements (4mks)
    1. Unemployment occurs when people lose jobs and go working for new ones –
    2. Unemployment that occurs when people are actively looking for jobs at the existing wage rate but cannot get them -
    3. Unemployment that occurs repeatedly at similar times –
    4. Unemployment that occurs when demand for labour declines due to either changes in the method of production or decrease in the supply of goods and services –
13. Name four essentials elements of transport. (4mks)
14. Outline four benefits to a business that uses its own warehouse. (4mks)
15. Outline four characteristics of property insurance. (4mks)
16. Give four advantages of personal selling as a method of sales promotion. (4mks)
17. Mention four circumstances under which the market may be the main factor in determining the location of a firm. (4mks)
18. Outline four ways in which households contribute to national income of a country. (4mks)
19. The diagram below represents the relationship between population and income per capita. (4mks)
    
    State what is represented by P and S axis and letter R and S.
20. State two characteristics of each of the following in the balance sheet. (4mks)
    Assets –
    Liabilities - 
21. Indicate the type of journal in which each of the following transactions would be recorded.(4mks)
    

    Transaction	Journal
    a) Goods previously sold on credit were returned
    b) Goods bought on credit
    c) Goods sold for cash
    d) Motor vehicle sold on credit

22. Outline four benefit of direct taxation to the government. (4mks)
23. Chania Traders have a licence to export manufactured goods. Highlight four distribution channels they could use to have their goods reach foreign consumers. (4mks)
24. State four characteristics of labour as a factor of production. (4mks)
25. State Four methods that are used to protect consumers. (4mks)

MARKING SCHEME

1. State four types of business activities carried out in Kenya. (4mks)
   1. Extraction of raw material of trade.
   2. Processing of raw materials
   3. Distribution
   4. Construction
   5. Trade
   6. Provision of services
2. Suggest four reasons for the increase in motor cycle accident. (4mks)
   1. Over speeding
   2. Lack of appropriate riding skills
   3. Ignorance of the highway codes
   4. Un road worthy motorcycles
   5. Overloading
   6. Poor state of roads
3. State four circumstances in which sign language may be preferred. (4mks)
   1. If the sender and receiver can see each other.
   2. When communicating with a deaf
   3. When passing secret/ confidential message
   4. Where the environment is noisy
   5. Where there is need to maintain silence.
4. The following information was extracted from the books of Rono traders.
   Rate of stock turn-over 3 times
   Mark-up 20%
   Opening stock sh 60,000
   Closing stock sh 120,000
   Calculate;
   1. Cost of goods sold
      R.O.S.T = C.O.G.S
                  Average stock
      A.S = 60,000 + 120,000 = 90,0000
                            2
      3 = C.O.G.S = 270,000
             90,000
   2. Gross profit
      Mark-up = Gross Profit = 1 = G.P = 270,000 x 1 = 540,000
                         C.O.G.S        5  270,000                5
   3. Purchases
      C.O.G.S = opening stock + Purchases – closing stock
      270,000 = 60,000 + P – 120,000
      Purchases = 330,000
   4. Sales
      Sales = C.O.G.S + Gross Profit
      270,000 + 54,000 = 324,000
5. Suggest four factors that influence the amount of money that individual own for transaction motives. (4mks)
   1. Interval between receipts of incomes.
   2. Individual spending habit
   3. Price of commodities
   4. Availability of credit
   5. Individual’s level of income.
6. State the best type of machine one would use to perform the following tasks. (4mks)
   

   Functions	Name of machine
   i) Used to trim papers into desired sizes.	Guillotine
   ii) To post information to ledgers and to prepare payrolls	Accounting machine
   iii) To transmit printed message such as letters, maps, diagrams and photographs	Fax machines
   iv) To destroy sensitive but unwanted documents.	Paper shredders

7. Highlight four forms of economic integration. (4mks)
   1. Free trade Area
   2. Custom Union
   3. Common Market
   4. Economic Union
8. The equation given below relate to quality demanded and quantity supplied at the equilibrium point. (4mks)
   Qde = 4p + 50
   Qse = 8p + 30
   Determine the equilibrium price and quantity.
   4p + 50 = 8p + 30
   50 - 30 = 8p – 4p
   5 20 = 4p
      4       4
   P = 5
   Qde = 4 x 5 + 50 = 70
   Qse = 8 x 5 + 30 = 70
   Price = sh5
   Quantity = 70
9. Indicate whether the following items are falling in real nominal or private accounts. (4mks)
   1. Sales – Nominal
   2. Carriage inwards – Nominal
   3. Capital - Private
   4. Fixtures aid fittings – Real
10. Outline four factors that influence the choice of product in the market. (4mks)
    1. Price
    2. Design
    3. Quality
    4. Government policy.
    5. Alternative available
    6. Variety e.t.c
11. Outline four reasons why there is need for ethical practices in business. (4mks)
    1. To avoid environmental pollination
    2. In order to create fairness in competition
    3. Ensures rights of employees are upheld
    4. Avoids consumer exploration
    5. It creates fairness in competition
    6. It ensures no discrimination in business.
12. Outline the type of unemployment in an economy and give the cause for each. (4mks)
    1. Unemployment occurs when people lose jobs and go working for new ones – Frictional unemployment
    2. Unemployment that occurs when people are actively looking for jobs at the existing wage rate but cannot get them - Open involuntary unemployment
    3. Unemployment that occurs repeatedly at similar times – Cyclical unemployment
    4. Unemployment that occurs when demand for labour declines due to either changes in the method of production or decrease in the supply of goods and services – Structural unemployment
13. Name four essentials elements of transport. (4mks)
    1. Model/ way
    2. Terminus
    3. Method of propulsion
    4. Units of carriage
14. Outline four benefits to a business that uses its own warehouse. (4mks)
    1. It can be tailored to meet ones specifications
    2. Space is always guaranteed
    3. Can be conveniently located
    4. The business maintains a continuous supply of goods
    5. Saving increases for not renting storage space
    6. Goods can be processed in the warehouse
    7. Goods are safe from theft
15. Outline four characteristics of property insurance. (4mks)
    1. Premium charged depends on degree of risk
    2. It’s a contract of indemnity
    3. It’s a short term contract
    4. The policy cannot be assigned to the next of kin
    5. It has no surrender value
    6. It cannot be used.
16. Give four advantages of personal selling as a method of sales promotion. (4mks)
    1. Creates good relationship between customer and the seller
    2. The seller has a chance to explain/ demonstrate the use of the product
    3. The seller corrects information regarding the demand of the product.
    4. Ability to tailor the product according to customers need
    5. Seller can persuade the customers to buy/ negotiate
17. ention four circumstances under which the market may be the main factor in determining the location of a firm. (4mks)
    1. Where the final product is heavy
    2. Where the final product is fragile
    3. Where the final product is highly perishable
    4. Where the final product is bulky
    5. When rendering personal service
    6. When competition for the market is highly
18. Outline four ways in which households contribute to national income of a country. (4mks)
    1. Consumption of goods
    2. Payment of taxes
    3. Provision of labour
    4. Provision of savings for investments
    5. Provision of entrepreneurship
19. The diagram below represents the relationship between population and income per capita. (4mks)
    
    State what is represented by P and S axis and letter R and S.
    • P axis – income per capita
    • S axis – population
    • R – Under population
    • Q – optimum population
20. State two characteristics of each of the following in the balance sheet. (4mks)
    • Assets –
      1. A resource owned and controlled by the business.
      2. Must have been acquired in the past
      3. They can be fixed or current
      4. An item of value that can be measured reliably in monetary value.
    • Liabilities -
      1. A present obligation for a business to settle as a result of past commitments
      2. Settlement would reduce business assets
      3. Owned to outsiders
      4. They can either be long-term and short-term
21. Indicate the type of journal in which each of the following transactions would be recorded. (4mks)
    

    Transaction	Journal
    a) Goods previously sold on credit were returned	Sales return journal
    b) Goods bought on credit	Purchases journal
    c) Goods sold for cash	Cash receipt journal
    d) Motor vehicle sold on credit	General journal

22. Outline four benefit of direct taxation to the government. (4mks)
    1. It is simple to administer
    2. Economical to collect
    3. Simple to understand
    4. Equitable payment according to income
    5. The tax is wide base and therefore more is collected
    6. Does not affect prices of goods and services
    7. The tax is collected at the source and hence predictable
23. Chania Traders have a licence to export manufactured goods. Highlight four distribution channels they could use to have their goods reach foreign consumers. (4mks)
    1. Chania traders → Foreighn consumers
    2. Chania traders →  Retailers →  Foreign consumer
    3. Chania traders →  Wholesalers →  Retailer →  Foreign consumer
    4. Chania traders →  Wholesalers →  Foreign consumers
    5. Chania traders →  Agents →  Wholesalers  → Retailers →  Foreign consumers
       NB: The answer must start with Chania Traders and end with Foreign Consumer.
24. State four characteristics of labour as a factor of production. (4mks)
    1. It cannot be stored
    2. It is a basic factor of production
    3. It is mobile
    4. It cannot be separated from the labourer
    5. It can be improved through training and experience
25. State three methods that are used to protect consumers. (4mks)
    1. Consumers initiated methods
    2. Governmental initiated methods
    3. Non-governmental organization initiated methods.