Business Studies Paper 1 Questions and Answers - Moi Tea Mock Examinations 2022

Questions

Instructions To Candidates

• Answer ALL the questions.
• All answers must be written in the spaces provided.

1. Highlight four principles of insurance. (4 mks)
2. Outline four effects of a competitive environment on Business activities. (4 mks)
3. State four characteristics of a perfect competition market. (4 mks)
4. Outline four differences between a good and a service. (4 mks)
5. Match the following statements with the correct source documents. (4 mks)
   

   	Statement	Source document
   (i)	A document that serves as an evidence that cash has been received or paid out.
   (ii)	A document that shows the details of all the expenses incurred, the amount of money spent and the purpose of incurring such an expense.
   (iii)	A document sent by the seller to the buyer demanding payment for goods or service delivered.
   (iv)	A document written by a supplier and sent to a buyer informing him / her that his / her account with the supplier has been debited.

6. This is the Mitegi’s demand schedule for Bread in a week.
   

   Price per loaf (shs)	No of loaves demanded
   30 20 15 12 10 5 1	1 2 4 6 8 12 20

   Required:
   Draw the demand curve of Mutegi’s Bread for a whole week. (4 mks)
7. Highlight four importance of business studies to a learner. (4 mks)
8. Using the balance sheet equation. Fill the missing figures in the following table. (4 mks)
   

   	Assts	Capital	Liabilities
   (i)	21,920	?	30 341
   (ii)	?	2192	19 840
   (iii)	3773	1591	?
   (iv)	240	150	?

9. Outline four roles played by the stock exchange market as a market for securities. (4 mks)
10. Highlight four factors which may influence choice of a distribution channel. (4 mks)
11. Outline four advantages of a bonded warehouse. (4 mks)
12. Match the following documents with their relevant uses. (4 mks)
    

    	Statement	Documents
    (i)	This is a document which briefly describes the goods a seller stocks
    (ii)	A documents sent by the seller to the buyer when an inquiry is specific in mature.
    (iii)	A document sent to a prospective buyer to inform him/her that the order has been received and it is being acted upon.
    (iv)	A document sent by the buyer when goods get damaged on the way and returned to the seller.

13. Highlight our goals of economic development. (4 mks)
14. Outline the type of unemployment in an economy and give the cause for each. (4 mks)
    1. Unemployment occurs when people lose jobs and go looking 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 a decrease in the supply of goods and services.
15. Outline four reasons why there is need for ethical practices in business. (4 mks)
16. Highlight four problems encountered in measuring national income using the output approach method. (4 mks)
17. Match the following uses with the appropriate office equipment. (4 mks)
    

    	Uses	Office equipment
    (i)	It is a machine that is used for preparing cash receipts
    (ii)	It is a machine used for trimming documents into required shapes and size.
    (iii)	A machine which is used for cutting unwanted documents into tiny pieces to avoid such documents getting into the wrong hands.
    (iv)	A machine which is used to complex calculations.

18. Explain the meaning of the following terms of sale as used in international trade. (4 mks)
    1. F.O.B. (Free on Board)………………………..……………………………………
    2. LOCO or ex-warehouse or ex- works………………………………...……………
    3. F.O.R. (Free on Rail)……….………………………………………………………
    4. In bond ……………………..………………………………………………………
19. Highlight four ways how consumers can protect themselves from exploitation from unscrupulous wholesalers / traders. (4 mks)
20. Outline four criteria used in determining the size of the firm. (4 mks)
21. Outline four tools that the central bank of Kenya uses to control monetary policy. (4 mks)
22. Calculate the gross profit given the margin of 1/6 and the cost of goods sold to be 400,000/=. (4 mks)
23. Highlight four advantages of operating a current account. (4 mks)
24. Outline four factors that influences the choice of product in the market.
25. List four essential of an effective communication.

Marking Scheme

1.    
   • Insurable interest
   • Doctrine of utmost Good faith "uberimma fides"
   • Indemnity
   • Proximate cause
   • Subrogation
2.         
   • Increased quality of products/goods
   • Prevents business from adapting monopolistic practices
   • Relatively competitive prices for similar products
   • Businesses invest more in advertising and marketing.
3.       
   • Homogenity (uniformity) of the product
   • Uniformtity of buyers and sellers
   • Perfect knowledge of the market to everyone
   • No government interference
   • Large number of buyers and sellers
   • Freedom of entry and exit
4.      
   

   Goods	Services
   Can change value over time	Cannot change in value since they cannot be stored
   They are tangible	They are intangible
   Most can be seen	Cannot be seen
   Can be stored	Cannot be stored
   Not all goods are perishable	Services are highly perishable
   Can be standardised	Cannot be standardised

     
5.    
   

   	Statement	Source document
   (i)	A document that serves as an evidence that cash has been received or paid out.	Cash receipts
   (ii)	A document that shows the details of all the expenses incurred, the amount of money spent and the purpose of incurring such an expense.	Petty cash voucher
   (iii)	A document sent by the seller to the buyer demanding payment for goods or service delivered.	Invoice
   (iv)	A document written by a supplier and sent to a buyer informing him / her that his / her account with the supplier has been debited.	Debit note

6.    
   
7.    
   • It equips the learner with knowledge and skills necessary to start and run a business comfortably
   • Assist the learner in appreciating the role of business in provision and goods and services
   • Assist the learner to acquire self-discpline and positive attitude towards work.
   • Helps the learner to develop positive attitudes towards the environment.
8.       
   

   	Assts	Capital	Liabilities
   (i)	21,920	-8421	30 341
   (ii)	22032	2192	19 840
   (iii)	3773	1591	2182
   (iv)	240	150	90

9.    
   • Creation of employment
   • Raising revenues for the government
   • Provides useful information
   • Fixing of prices of the commodities
   • Facilitating buying and selling of shares
   • It also assist companies to raise capital
   • Safeguarding investors interest
   • It also promotes the culture of savings
10.       
    • Nature of the product
    • Managing risks
    • Roles of intermediaries
    • Resources and size of the firm
    • Nature of the market
    • Government policy|
    • Competitors
11.           
    • It helps the government to crack on illegal goods entering the country
    • It is also a source of revenue to the government
    • Goods in the bonded warehouse are secure
    • It also gives the importer time to look for market
    • Imports can also prepare the goods for sale while in the bonded warehouse.
    • Some goods in the bonded warehouse also improves in quality
    • The government can also be able to verify documents for goods in transit.
12.    
    

    	Statement	Documents
    (i)	This is a document which briefly describes the goods a seller stocks	Catalogue
    (ii)	A documents sent by the seller to the buyer when an inquiry is specific in mature.	Quotation
    (iii)	A document sent to a prospective buyer to inform him/her that the order has been received and it is being acted upon.	Acknowledgement note
    (iv)	A document sent by the buyer when goods get damaged on the way and returned to the seller.	Goods returned note

13.    
    • Eliminating or reducing poverty
    • Reduce employment
    • Reduce disparities in income distribution
    • Provides important human basic needs such food, shelter , health and protection.
14.      
    1. Unemployment occurs when people lose jobs and go looking 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 unemployment/ involuntary
    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 a decrease in the supply of goods and services.
       • Structural unemployment
15.     
    • To avoid cheating of permanence of the product
    • To avoid false pricing
    • To ensure that there is no negative impact on environment
    • To ensure that they disclose side effects
    • To ensure that they avoid social cultural conflicts
16.      
    • By valving illegal activities like drugs trafficking and smuggling
    • The problem of valuing output of the subsistence sector
    • The problem of changing prices
    • Problem of differentiating primary inputs from intermediate inputs
    • By valuing government output since many of its service are not sold in the market.
17.       
    

    	Uses	Office equipment
    (i)	It is a machine that is used for preparing cash receipts	Cash register
    (ii)	It is a machine used for trimming documents into required shapes and size.	Guillotine
    (iii)	A machine which is used for cutting unwanted documents into tiny pieces to avoid such documents getting into the wrong hands.	Paper shredder
    (iv)	A machine which is used to complex calculations.	Computer

     
18.      
    1. F.O.B. (Free on Board) - Prices  quoted includes the movement of goods when they are in the ship.
    2. LOCO or ex-warehouse or ex- works - The price quoted covers the goods as they are in the exporter's premises. The importer has to meet the costs of moving the goods from the export premises. 
    3. F.O.R. (Free on Rail) - Prices  quoted include the expenses for transporting the goods from the sellers warehouse upto the nearest railing station.
    4. In bond - Quoted includes all expenses incurred until the goods are delivered in the bonded warehouse. The importer therefore meets all other charges such as storage charges and custom duties.
19.       
    • Boycott buying fro  their shops
    • Report to relevant authorities
    • Take them to court
    • Form consumer cooperatives (on shops)
    • Education on their rights 
    • Confirm/ ensure quality before purchase
20.       
    • Level of sales / profits
    • Number of employees
    • Size of space/ floor
    • Size of market
    • Cost of production
21.     
    • Open market operations
    • Bank rate
    • Selective control
    • Liquidity ratio (cash ratio)
    • Compulsory deposits
    • Requests, moral persuasion, directives
22.       
    • Margin= 1/6
      Mark up = 1/6-1 = 1/5
      mark up = gross profit
      cost of sales
      1/5 = GP/ 400,000
      1/5 x GP/400,000 = 80000
      GP = 80,000
23.     
    • There is overdraft facilities
    • Account holder is not required to maintain any minimum balance
    • It is possible to deposit any amount at any time during the working hours
    • Use of cheques by the account holder series as an evidence of the payments made
    • Payments can be made even if there is insufficient funds in the account by use of post-dated cheques.
24.        
    • Price
    • fashion
    • Design
    • Quality
    • Government policy
25.      
    • The sender/ communicator
    • The message
    • medium/ the channel
    • The receiver
    • The feedback