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

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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

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