Business Studies Paper 1 Questions and Answers - Mathioya Mock Exams 2022

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Questions

INSTRUCTIONS TO CANDIDATES

  • Answer ALL the questions

 

  1. List four characteristics of direct production. (4 marks)
  2. The following features relate to warehousing. Indicate the most suitable type of warehousing. (4 marks)
       Feature Type
     a  Used to store goods until excise duty is paid  
     b  Most located at strategic points and available at a fee  
     c  Used to store non-dutible goods from within or outside the country  
     d  Usually designed to suit one’s specifications  
  3. Outline four circumstances that would make an office manager to replace an existing machine with a modern one (4 marks)
  4. The following information relates to Gaturu Traders for the month of July 2013
    July 1: Bal b/f: Cash 280,000 (Dr) and Bank 80,000 (Cr)
    July 4: Received cheque shs 150,000 from a debtor
    July 9: Paid Kelvin shs. 40,000 by cheque for goods bought at shs 66,000 and the balance in cash
    July 10: Sold stock worth shs 20,000 cash
    Enter the above transaction in relevant cash book (4 marks)
  5. State four disadvantages of barter trade (4 marks)
  6. Antony had the following balances at the end of the trading period on 31st Dec. 2014
     Details:
    Cash 
    Creditors 
    Premises 
    Fixtures 
    Bank loan 
    Vehicles 
    Debtors
      Ksh.
    40 000
    140 000
    400 000
    180 000
    160 000
    100 000
    70 000
    Prepare his balance sheet at the end of the trading period (4 marks)
  7. Name the factors of production the following resources relate to (4 marks)
       Description  Occupation
     a  receptionist  
     b machinery   
     c Wind   
     d Owner   
  8. Associate each of the following statements with the correct type of partner described (4 marks)
    1. A partner who is under age: ……………………………………………………………
    2. A partner who contributes capital: ………………………………………………………
    3. A partner who is inactive: ………………………………………………………………
    4. A partner with unlimited liabilities: ……………………………………………………
  9. The following diagram represents the circular flow of income in a two sector closed economy
    Bsp1q09
    Identify two factors represented by each of the arrows labelled a and b (4 marks)
  10. Name four documents that may be required by the registrar of companies in order to register a public limited company (4 marks)
  11. State four benefits that a trader may get by advertising products in a newspaper. (4 marks)
  12. State four roles of intermediaries in the chain of distribution. (4 marks)
  13. By use of the book keeping equation, determine the missing values in the table below. (4 marks)
     Asset (Ksh) Capital (Ksh)  STL (Ksh)  LTL (Ksh) 
     2 052 500 900 900   151 600 
     2 766 450 350 850  1 821 250 
     c 1 010 000  464 030  200 000 
     2 770 970 1 260 860  932 000 
  14. The national income is measured using the expenditure method given as; Y=C+I+G+(X-M)
    State what each of the following letters represents (4 marks)
    C
    I
    G
    (X-M)
  15. Murang’a Traders had the following information for the month ending 31st Jan 2015
       Sh.
    Opening stock 
    Closing stock 
    Purchases 
    Margin
     200 000
    300 000
    500 000
    20%
    Prepare: Murang’a Traders Trading Account for the year ended 31st Jan, 2015 (4 Marks)
  16. Outline four factors that may limit a country’s ability to attain its budgetary estimates (4 marks)
  17. Outline four characteristics of a good business opportunity. (4 marks)
  18. State four principles of public expenditure (4 marks)
  19. Outline four negative effects of overpopulation in a nation (4 marks)
  20. The table below shows the price for a 2kg packet of Unga for various months in the year 2010. Calculate the consumer price index for each month (4 marks)
       Month Price (Shs)  Consume price index 
     a January  100   
     b February  80   
     c March  120   
     d April  140   
  21. List four forms of retail shops that a school leaver may engage in (4 marks)
  22. Highlight four importance of Subsidiary Books (4 marks)
  23. State four reasons why short message services (sms) is replacing letters as a way of communication (4 marks)
  24. Highlight four disadvantages of cartage transport (4 marks)
  25. The figure below shows a shift in demand for a commodity from D0D0 to D1D1. (4 marks)
    Bsp1q25
    State four possible causes of this situation (4 marks)

Marking Scheme

  1. List four characteristics of direct production. (4 marks)
    • Goods are of low quality
    • Goods are of low quantity
    • Production is in small scale
    • Little or no specialization
    • Mechanization is minimal
    • Production is mainly for own use/ No commercial exchange
    • Promotes individualism
    • Does not encourage invention and innovation/creativity
    • Skills used cannot be improved
    • Tools used cannot be improved
  2. The following features relate to warehousing. Indicate the most suitable type of warehousing (4 marks)
       Feature Type
     a  Used to store goods until excise duty is paid  bonded/Exercise warehouse
     b  Most located at strategic points and available at a fee  Public warehouse
     c  Used to store non-dutible goods from within or outside the country  Free warehouse
     d  Usually designed to suit one’s specifications  Private warehouse
  3. Outline four circumstances that would make an office manager to replace an existing machine with a modern one (4 marks)
    • Obsolescence-where the machine has outlived its usefulness
    • Where a more efficient machine is required
    • Where maintenance costs are higher than cost of acquiring modern machine
    • Where there is need for increased production
    • Where training skills have changed
  4. The following information relates to Gaturu Traders for the month of July 2013
    July 1: Bal b/f: Cash 280,000 (Dr) and Bank 80,000 (Cr)
    July 4: Received cheque shs 150,000 from a debtor
    July 9: Paid Kelvin shs. 40,000 by cheque for goods bought at shs 66,000 and the balance in cash
    July 10: Sold stock worth shs 20,000 cash
    Enter the above transaction in relevant cash book (8x1/2=4 marks)
    •    
      Two Column cashbook        
      Dr   Cr
      Date Details Cash  Bank    Date Details  Cash  Bank 
       2013         2013      
       July 1 Bal b/d  280 000      July 1 Bal b/d    80 000 
       July 4 Debtor    150 000    July 9 Kelvin  26 000  40 000 
       July 10 Sales  20 000      July 10 Bal c/d  274 000  30 000
          300 000  150 000        300 000  150 000 
  5. State four disadvantages of barter trade (4 marks)
    • Lack of double coincidence of wants
    • Indivisibility of some goods
    • Perishability of some goods
    • Difficult to measure value
    • Problems of portability of good
    • Lack of standard for making deferred payments
    • Lack of unit of account
  6. Antony had the following balances at the end of the trading period on 31st Dec. 2014
     Details:
    Cash 
    Creditors 
    Premises 
    Fixtures 
    Bank loan 
    Vehicles 
    Debtors
      Ksh.
    40 000
    140 000
    400 000
    180 000
    160 000
    100 000
    70 000

    Prepare his balance sheet at the end of the trading period (4 marks)
       Sh   Sh 
     Cash 40 000  Capital  490 000 
     Premises 400 000  Creditors  140 000 
     Fixtures 180 000  Bank-loan  160 000 
     Vehicles 100 000     
     debtors 70 000     
       790 000   790 000 
  7. Name the factors of production the following resources relate to (4 marks)
       Description  Occupation
     a  receptionist  Labour
     b machinery   Capital
     c Wind   Land
     d Owner   Entreprenuership
  8. Associate each of the following statements with the correct type of partner described (4 marks)
    • A partner who is under age: …………………Minor Partner…………………………
    • A partner who contributes capital: ……………Real Partner………………….……
    • A partner who is inactive: ……………………Dormant/Sleeping/Passive…………
    • A partner with unlimited liabilities: …………General Partner……………..………
  9. The following diagram represents the circular flow of income in a two sector closed economy
    Identify two factors represented by each of the arrows labelled a and b (4 marks)
    1.    
      1. Payment of factors inputs
      2. Goods and Services
    2.  
      1. Payment for goods and service
      2. Factors services/Inputs/factors of production
  10. Name four documents that may be required by the registrar of companies in order to register a public limited company (4 marks)
    • Articles of association
    • Memorandum of association
    • Prospectus
    • List of directors
    • Declaration of directors
  11. State four benefits that a trader may get by advertising products in a newspaper. (4 marks)
    • Wide coverage-message can reach a lot of people
    • Evidence of the message exists
    • Graphical details can be included
    • A trader has a chance to compete with other traders
    • A trader has a chance of increasing sales
    • A trader can choose a suitable page
    • Easy to locate an advert
  12. State four roles of intermediaries in the chain of distribution. (4 marks)
    • Accumulate bulk
    • Breaking bulk
    • Advice
    • Prepare goods for sale
    • Store goods until they are needed
    • Transport goods to where they are needed
    • Product promotion
  13. By use of the book keeping equation, determine the missing values in the table below (4 marks)
  14. The national income is measured using the expenditure method given as; Y=C+I+G+(X-M)
    State what each of the following letters represents (4 marks)
    • C-Consumer expenditure
    • I-Investment Expenditure
    • G-Government Expenditure
    • (X-M)-Net Exports
  15. Murang’a Traders had the following information for the month ending 31st Jan 2015
    Prepare Murang’a Traders Trading Account for the year ended 31st Jan, 2015. (4 Marks)
    Murang'a Traders
    Trading Account
    For the month ended 31st January 2015    
       Sh    Sh
     Opening Stock 200 000   Sales 500 000  
     Add Purchases 500 000     
     Cost of Goods available for sale  700 000    
     Less Closing stock  300 000    
     Cost of goods sold  400 000    
     Gross profit c/d  100 000    
      500 000   500 000
        Gross profit b/d 100 000
  16. Outline four factors that may limit a country’s ability to attain its budgetary estimates (4 marks)
    • Poor collection of resources
    • High rate of tax evasion/avoidance
    • Failure to secure external debt
    • Overestimation/ambitious plans
    • High cost of collection
    • Political interference
    • Inflation
    • Tax embezzlement/collusion between tax payer and collector
  17. Outline four characteristics of a good business opportunity (4 marks)
    • Availability of raw materials
    • Availability of relevant skills
    • A good opportunity should give good profit
    • There should be adequate market for the goods or services
    • The technology should be available
    • It should be easy to join and exit the industry
    • It should be easy to join and exit the industry
    • It should be easy to manage the business
    • There should be favourable government policies
    • Capital required should be available
    • There should be fair competition
  18. State four principles of public expenditure (4 marks)
    • Sanctions
    • Maximum social benefit
    • Flexibility
    • Economy
    • Proper financial management
  19. Outline four negative effects of overpopulation in a nation (4 marks)
    • Strain on available social amenities
    • Low standard of living
    • Encouraging rural urban migration
    • High dependency ratio
    • Imbalance in demand and supply
    • Food shortage
    • Increase in crime rate
    • Environmental degradation
  20. The table below shows the price for a 2kg packet of Unga for various months in the year 2010. Calculate the consumer price index for each month (4 marks)
       Month Price (Shs)  Consume price index 
     a January  100  100% 
     b February  80   80%
     c March  120   120%
     d April  140   140%
  21. List four forms of retail shops that school leaver may engage in (4 marks)
    • Single shop/Unit shop/Duka/Stores
    • Kiosk
    • Tied shop
    • Market stalls
    • Canteen
    • Mobile shop/stores
    • Exhibition stalls/shop/store
  22. Highlight four importance of Subsidiary Books (4 marks)
    • Relieves the ledger accounts of too many records
    • Gives details not found in the ledger accounts
    • May be used for reference
    • Minimises chances of fraud/enhances efficiency
    • Helps in detection of errors
  23. State four reasons why short message services (sms) is replacing letters as a way of communication (4 marks)
    • Cheap to use sms services
    • Faster than letters
    • Can be sent to many people at once
    • Provide immediate feed back
    • It is reliable
    • It is prestigious
  24. Highlight four disadvantages of cartage transport (4 marks)
    • It is slow compared to vehicles
    • Cartage has smaller carrying capacity compared to buses and trains
    • Not suitable for transporting fragile goods as they can easily break
    • Movement of carts is affected by heavy traffic especially in urban areas
    • Not suitable for transporting expensive goods since they would be susceptible to theft
    • Not suitable for long distances
    • Carts are nuisance to other road users
    • Use of animals for transportation is against human rights
    • The figure below shows a shift in demand for a commodity from D0D0 to D1D1.
  25. State four possible causes of this situation (4 marks)
    • Fall in price of complimentaries
    • Rise in household income
    • Rise in price of substitutes
    • Expected increase in price of the commodity
    • Favourable government policies

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