Business Studies Paper 1 Questions and Answers - MECS Cluster Joint Mock Examinations 2022

QUESTIONS

1. A business is required to maintain a healthy environment free from pollution. State four ways in which the environment may be polluted(4mks)
2. State four characteristics of human wants.( 4mks) 
3. Outline four ways in which a developing country like Kenya may benefit from entrepreneurship. (4mks)
4. Give four reasons why filing is important in an office. (4mks)
5. Highlight four Factors which may render face to face communication ineffective. (4mks)
6. State four banking services that the central bank of Kenya provides to the government. (4mks)
7. Highlight four factors that may lead to an overcharge in an invoice (4mks)
8. The following transactions relate to upendo enterprises for the month of July 2022
   July 1    balance b\d cash 20000, bank over draft 5000
   July 10   paid juma a creditor sh, 2000 cash in full settlement of his account of sh. 2100
   July 20  received a cheque of sh. 30000 from Pato a debtor having deducted 20% cash discount
   JULY 30  withdrew sh. 8000 from bank for office use
   REQUIRED   record the above transactions in a three column cash book (4mks)
9. Calculate the missing figures in the table below. (4mks)
   

   Capital	Assets	Liabilities
   80000		70000
   	300000	20000
   600000	1000000
   	600000	40000

10. State four reasons that account for the need for consumer protection.(4mks)
11. Outline four features of a private limited company(4mks)
12. Indicate the type of journal in which each of the following transaction would be recorded.  (4mks)
    

    TRANSACTION	JOURNAL
    Good sold for cash
    Purchases of office furniture on credit
    Goods bought on credit
    Goods bought on credit returned to supplier

13. Indicate the type of utility created by each of the following activity.(4mks)
    

    Milling wheat grain in to flour
    Transporting wheat grain
    Selling bread in a shop
    Storing grains in silos

14. Outline four disadvantages of a long chain of distribution of goods to a buyer. (4mks)
15. State four benefits of advertising to a consumers(4mks)
16. State four uses of national income statistics(4mks)
17. Outline four ways in which a youthful population may be useful to a country.(4mks)
18. The following information relates to Wakesho traders as at 31st July 2022
    

    Details	shs
    Furniture and fittings	130000
    Debtors	70000
    Commission accrued	10000
    Creditors	50000
    Drawings	20000
    Discount received	1000
    Bank overdraft	5000
    Bank loan	10000
    Capital	55000

    Required; prepare Wakesho traders trial balance as at 31st July 2022. (4MKS)
19. State four sources of government revenue. (4mks)
20. Highlight four factors that could lead to a faster economic development in a country. (4mks)
21. State four factors that insurance companies consider before determining premium to be paid. (4mks)
22. Indicate the effect of the following transactions on the capital of a business. Use increase, decrease or no effects(4mks)
    

    Transactions	Effects
    Owner took cash from the business for personal use
    Payment of business expenses in cash
    Owner deposited additional cash from personal savings
    The business made loss from trading

23. The cost of consumers goods and services for a representation basket of  an average family is given below.
    

    Year	2020	2021
    Price(shs)	2000	3000

    Determine the increase in consumer price index using 2020 as the base year.(4mks)
24. State four features of perfectly competitive market structure  (4mks)
25. The following information was extracted from tamu tradersas at 31 dec 2021
    Fixed assets  40000
    Stock   12000
    Current liabilities   6000
    Profits for the year  10000
    Calculate;  
    1. Rate of return on capital employed  (2mks)
    2. Current assets (2mks)

MARKING SCHEME

1.      
   • Releasing smoke and poisonous gases into the air
   • Noise pollution
   • Channeling liquid waste into rivers
   • Producing strong lights which may be dangerous to human sight
   • Dumping solid waste carelessly
2.      
   • Unlimited/endless/insatiable 
   • Vary in intensity and urgency
   • They are competitive
   • Recurrent/repetitive 
   • Some are universal
   • Some are habitual
   • Requires resources 
   • They are complimentary
3.      
   • Through creation of employment 
   • Promotion of entrepreneurial culture 
   • Making use of local resources 
   • Promotion of technology
   • Formation of capital
   • Savings on import
   • Improvement of infrastructure 
4.      
   • Keeps the office tidy
   • Safety of documents
   • Easy retrieval of documents’
   • Protect information against unauthorized hands 
   • Saves on space 
   • For future reference  
5.      
   • Use of un familiar language
   • Use of unfamiliar nonverbal signs
   • Wrong timing
   • Prejudice
   • Poor listening skills
   • Noise
   • Emotional responses
   • Any other correct answer
6.      
   • Accepts governments deposits 
   • Issuing currency on behalf of government.
   • Arranges and pays public debts
   • Advice on monetary issues 
   • Acts as guarantor to government
   • Lender to the government
7.      
   • Overpricing of goods 
   • \mistake in calculating discounts 
   • Arithmetic mistakes
   • Charges for items not delivered
   • \
8. 
   

   DATE	DETAILS	F	DA	CASH	BANK	DATE	DETAILS	F	DR	CASH	BANK
   JULY 1	BAL	B/D		20000		JULY 1	BAL	B/D			5000
   20	PATO	SL	7500		30000	10TH	JUMA	PL	100	2000
   30	BANK	C		8000		30	CASH	C			8000
   							BAL	C/D		26000	17000
   			7500	28000	30000				100	28000	30000

9. 
   

   Capital	Assets	Liabilities
   80000	150000	70000
   280000	300000	20000
   600000	1000000	400000
   520000	600000	40000

10.        
    • Harmful products 
    • Overpricing by sellers
    • Products sold may be poor products
    • Hoarding of goods by sellers
    • False adverts by sellers
    • Commodities may have false labeling
11.        
    • Must have at least one director 
    • Shares are not freely transferable
    • Can start trading on receipt of certificate of incorporation
    • No authorized minimum share capital
    • Maximum of fifty share holders
    • Shares are not advertised
12. 
    

    Transactions	Effects
    Owner took cash from the business for personal use	Cash receipt journal/cash book
    Payment of business expenses in cash	General journal
    Owner deposited additional cash from personal savings	Purchases journal
    The business made loss from trading	Return outwards/purchases return journals

13.       
    • Form utility
    • Place utility
    • Possession utility
    • Time utility
14.        
    • Increases price of goods 
    • High chances of delays 
    • May damage goods due to handling by many people
    • Perishable goods may go bad
    • Feedback to producer may be slow
15.      
    • Information on offers 
    • Informs on uses of products 
    • Enables producer to compare different products 
    • High quality goods due to competition
    • Competition may result into lower prices
16.      
    • Indicators of standards of living 
    • Comparison of standards of living between different countries
    • Assessing performance of economy over time 
    • Government use it in planning
    • Helps investors to make to make investment decision
    • Compare economic performance over different 
17.      
    • Less expenditure on social security
    • Winder market for youth related products 
    • Growth in sectors such as music, fashions 
    • High mobile labour
    • Increased innovation and inventions
    • Youths are more adaptable to changes in technology
    • Continuous supply of labour
18. WAKESHO TRDERS 
    TRIAL BALANCE
    AS AT 31/07/22
    

    Details	DR(shs)	CR(shs)
    Furniture and fittings	130000
    Debtors	70000
    Commission accrued		10000
    Creditors		50000
    Drawings	20000
    Discount received		1000
    Bank overdraft		5000
    Bank loan		10000
    Capital		55000
    TOTALS	220000	220000

19.      
    • Taxes 
    • Government borrowing
    • Rents and rates 
    • Seles of government properties 
    • Fees eg license fees 
    • Court fines 
    • Grants and donations 
    • Income from government businesses
20.      
    • Abundant natural/economic resources 
    • Industrialization
    • Use of modern technology
    • Improved infrastructure 
    • Investments on research
21.      
    • Value of insurance policy/life
    • Occupation of the insured
    • Time the policy covers 
    • Age of the assured person/ property
    • Health of the assured
    • Sum assured

22. Transactions	Effects
    Owner took cash from the business for personal use	Decrease
    Payment of business expenses in cash	No offects
    Owner deposited additional cash from personal savings	Increase
    The business made loss from trading	Decrease

23. ³⁰⁰⁰/₂₀₀₀ × 100=150%
    150-100 =50%
24.        
    • Large number of buyers and sellers
    • Perfect knowledge about the market
    • No government interference
    • No transport cost
    • Free entry and exit of firms from the market
    • Homogeneity of products 
    • Perfect mobility of factors of production
25. Calculate;  
    1. C.E = F.A + C.A –C.L
             = 40000+12000 -6000
             = 46000
       ROCE = ^NP/_CE x 100
       ¹⁰⁰⁰⁰/₄₆₀₀₀ X100=21.7%
    2. ^CA/_CL
       ¹²⁰⁰⁰/₆₀₀₀
       2:1