Business Studies Paper 1 Questions and Answers - Mokasa II Mock Exams 2022

Questions

Instructions to Candidates

• Answer all the questions.
• All answers must be written in the spaces provided in this booklet.

1. Highlight four ways in which the internal environmental factors can lead to success of a business. (4mks)
2. Identify four personal factors that one would consider when evaluating a business opportunity. (4mks)
3. Outline four benefits of multinational businesses to a country. (4mks)
4. State four circumstances under which downward communication may be used in an organization. (4mks)
5. Outline four for reasons for the increased use of internet in product promotion. (4mks)
6. State four channels that a dairy farmer may use to distribute milk to consumers. (4mks)
7. Describe the procedure of balancing the ledger accounts. (4mks)
8. Outline four types of indirect taxes. (4mks)
9. Outline four components of business studies. (4mks)
10. Using the table given below identify the reward associated with the factor of production indicated. (4mks)
    

    Factor of production	Reward
    Manager
    Buildings
    Loan from a bank
    Owner of a business

11. Highlight four characteristics of mail order stores. (4mks)
12. Highlight four reasons why a trader may prefer to transport goods by railway rather than using road. (4mks)
13. Describe the following policies as used in insurance. (4mks)
14. Give four differences between Oligopoly and Monopoly market structures. (4mks)
    

    Oligopoly	Monopoly

15. The follwoing records were extracted from the books of Utumishi traders
    Debtors  = 6,000
    Bank = 2,000
    Capital  = 27,000
    Cash = 17,000
    Creditors  = 15,000
    Purchases 5,000
    Furniture 12,000
    Create a balance sheet from the records above
16. Identify the books of original entry associated with the following source documents. (4mks)
    

    Source documents	Journal
    Invoice received
    Receipt issued
    Credit note received
    Invoice issued

17. Give 4 characteristics of services,
18. In the space provided name the office equipment used to perform each of the following tasks. (4marks)
    

    Functions	Equipment
    a) Printing stamp impression on envelopes  b) Cutting paper into required sizes  c) Pinning papers together  d) Recording, processing, sorting & retrieving information

19. Reasons for government training include;
20. Highlight four ways in which a warehouse is useful to a trader. (4marks)
21. Outline the following terms. (4marks)
22. Using the balance sheet equation, fill the missing figures. (4mks)
    

    	Fixed assets	Current assets	Liability	Capital
    a	40 000	30 400	(i)	35 000
    b	100 000	(ii)	20 000	160 000
    c	50 920	50 000	73 000	(iii)
    d	(iv)	70 000	0	240 000

23. On January, 2021, Mingi traders had sh. 130,200 in cash and bank credit balance of sh. 56,000. The following transaction took place during the month.
    Jan 2: Cash sales sh. 12,000
    7: Took sh. 2,000 cash for his personal use
    12: Paid Mwangi a creditor sh. 8,200 cash.
    17: Sold goods to Jambo traders on credit worth sh.20,000
    18: Deposited sh.20, 000 into the business bank account from the cash till.
    31: Paid rent sh.7, 500 by cash
    Record the above information in a two column cash book. (4mks)
24. Highlight four characteristics of a saving account. (4mks)

Marking Scheme

1. Highlight four ways in which the internal environmental factors can lead to success of a business. (4mks)
   • A well laid out business structure
   • Well trained /motivated manpower
   • Adequate finance for its operations
   • Established physical resources
   • High level/appropriate technology/invention and invention
   • A positive business culture
   • Committed owner(s) of the business
2. Identify four personal factors that one would consider when evaluating a business opportunity. (4mks)
   • Skills
   • Commitment
   • Interest
   • Objectives
3. Outline four benefits of multinational businesses to a country. (4mks)
   • Transfer of new technology to the country
   • Training of local people in various skills
   • Transfer of capital to the country/capital inflow
   • Increased research in the countries’ economies on production and investment
   • Employment to people of the country
   • Provision of a variety of goods/services in the country.
   • Markets of raw materials.
   • Increased investments and saving in country.
   • Revenues to Government in form of taxes
4. State four circumstances under which downward communication may be used in an organization. (4mks)
   • When giving instructions to junior workers
   • When giving directives to junior workers
   • When explaining policies of the firm
   • When disciplining the workers
   • When promoting the workers
   • When giving feed back to the workers on their performance
   • When delegating duties
   • When clarifying issues
   • When motivating workers e.g. rewarding.
5. Outline four for reasons for the increased use of internet in product promotion. (4mks)
   • It reaches the worldwide audienceThe delivery of the advert is instant
   • It is long lasting
   • The advert can be conveyed to a group of people simultaneously
   • An immediate feedback can be got
   • It combines the audio, visual and written elements necessary in advertisement for effective impact.
   • It is cost effective
6. State four channels that a dairy farmer may use to distribute milk to consumers. (4mks)
   • Farmer (Producer) marketing board retailer consumer.
   • Farmer (Producer) co – operative society marketing board wholesaler retailer consumer.
   • Farmer (Producer) marketing board wholesaler retailer consumer.
   • Farmer (Producer) wholesaler retailer consumer.
   • Farmer (Producer) retailer consume
   • Farmer (Producer) consumer
7. Describe the procedure of balancing the ledger accounts. (4mks)
   • Identify the account title
   • Find the total on each side.
   • Subtract the total of the smaller side from the total of the bigger side.
   • Insert the difference (account balance) on the side with the smaller total as a balance carried down ( c/d ) to make the two sides equal.
   • Confirm that the totals of the two sides are equal by writing the totals at the same level and double underscoring them.
   • The account balance should be recorded on the opposite side below the totals as balance brought down ( b/d)
8. Outline four types of indirect taxes. (4mks)
   • Sales tax
   • Value added tax (V.A.T.
   • Export duty
   • Import duty
   • Excise duty
9. Outline four components of business studies. (4mks)
   • Commerce-This is the study of trade and aids to trade
   • Accounting- This is a systematic way of recording business transactions to be used in decision making
   • Economics- This is the study of how human beings strive to satisfy their endless wants using the available scarce
   • resourcesEntrepreneurship- This is the study of the activities involved in the process of identifying a business opportunity and acquiring the necessary resources needed to start and run a business.
   • Office Practice- This refers to all activities that are carried out in an office e.g communication, filing, clerical work and reproduction of documents.
10. Using the table given below identify the reward associated with the factor of production indicated. (4mks)
    

    Factor of production	Reward
    Manager	Salary
    Buildings	Rent
    Loan from a bank	Interest
    Owner of a business	profit

11. Highlight four characteristics of mail order stores. (4mks)
    • Goods are dispatched, mostly on cash with order or cash on delivery basis
    • Transactions are carried out online
    • They advertise through means such as the print media, electronic media, journals and cinemas
    • Customers do not visit the selling premises
    • They have their own warehouse
12. Highlight four reasons why a trader may prefer to transport goods by railway rather than using road. (4mks)
    • Trains are safe since their minimal cases of accidents.
    • Trader can plan for the transport of his/her goods as trains follow a fixed time table
    • They have shunting facilities which help deliver the goods conveniently.
    • They are relatively cheaper when transporting large quantities due to economies of scale.
    • Trains are economical for transporting heavy and bulky goods over long distances due to their large carrying capacity.
    • They are not affected by traffic congestion hence no delays
13. Describe the following policies as used in insurance. (4mks)
    • Endowment insurance policy -This is a life assurance policy where the assured is required to pay regular premiums for a specified period of time and the sum assured is paid at maturity. In case the assured dies before the expiry of the period, the sum assured is paid to his/her beneficiaries
    • Fidelity guarantee policy- This is a policy that protects one against losses arising from activities of his/her dishonest employees.
    • Marine hull policy- This policy covers the ship against loss or damage as a result of risks at sea
    • Composite policy- This policy applies where several insurance companies have insured a particular ship against the same risk
14. Give four differences between Oligopoly and Monopoly market structures. (4mks)
    

    Oligopoly	Monopoly
    a). There exists few but large firms	There is one single seller
    b). Products offered have close substitutes	Products offered do not have close substitutes
    c). There is no price discrimination	Price discrimination may be possible in different markets
    d). Non price competition exists e.g product differentiation	There is no competition
    e). Prices are determined by price wars/collusion/cartel/kinked demand curve	They are determined by the seller

15. Debtors = 6,000
    Bank 14,000-12,000 = 2,000
    Capital 30,000-3,000 = 27,000
    Cash 18,000- 3,000+ 2,000 = 17,000
    Creditors 10,000+5,000 = 15,000
    Purchases 5,000
    Furniture 12,000
    

    Utumishi traders Balance sheet As at August 21, 2022
    Sh		Sh
    Furniture Cash Bank Debtor Stock	12 000  17 000 2 000 6 000 5 000	Capital  Creditors	27 000  15 000
    	42 000		42 000

16. Identify the books of original entry associated with the following source documents. (4mks)
    

    Source documents	Journal
    Invoice received	Purchases journal
    Receipt issued	Cash receipts journal
    Credit note received	Return outwards journal
    Invoice issued	Sales journal

17. Characteristics of services,
    • Are intangible.
    • Cannot be stored,
    • Quality cannot be standardized.
    • Inseparable from provider.
    • Cannot be seen.
18. In the space provided name the office equipment used to perform each of the following tasks. (4marks)
    

    Functions	Equipment
    a) Printing stamp impression on envelopes b) Cutting paper into required sizes  c) Pinning papers together  d) Recording, processing, sorting & retrieving information	Franking Machine Guillotine Stapler Computer

19. Reasons for government training include;
    • To expose business persons to modern developments in management.
    • Introduce modern technology and skills in management
    • Educate the business people on efficient methods of operating a business e.g., effective methods of advertising and keeping books of accounts.
    • Expose business people to problems/ challenges facing them and their possible solutions for example, problems of raising capital and identifying investment opportunities.
    • Impart proper business ethics e.g. good customer relations and honesty.
    • Creating awareness of the available profitable business opportunities in their environment.
    • Expose business people to government policies regarding business activities in the country.Educate business people on how to use available resources to minimize costs and maximize profits.
    • Expose people to other opportunities that exist in the import and export market
    • Expose them on environmental conservation measures/need
20. Highlight four ways in which a warehouse is useful to a trader. (4marks)
    • A trader can look for market while goods are in the warehouse
    • Goods can be prepared for sale
    • Goods can be sold while in the warehouse
    • Goods are protected from damage
    • Goods can improve in quality hence improving the selling price
21. Outline the following terms. (4marks)
    • Economies of scale - Benefits accruing to a business due to expansion
    • Delocalization - This is establishments of firms in different parts of the country.Firm - A single unit of business organization that brings together factors of a given commodity
    • Industry - It consist all firms producing the similar products.
22. Using the balance sheet equation, fill the missing figures. (4mks)
    • sh. 35,400
    • sh. 80,000
    • sh. 27,920
    • sh 170,000
23. On January, 2021, Mingi traders had sh. 130,200 in cash and bank credit balance of sh. 56,000. The following transaction took place during the month.
    Jan 2: Cash sales sh. 12,000
    7: Took sh. 2,000 cash for his personal use
    12: Paid Mwangi a creditor sh. 8,200 cash.
    17: Sold goods to Jambo traders on credit worth sh.20,000
    18: Deposited sh.20, 000 into the business bank account from the cash till.
    31: Paid rent sh.7, 500 by cash
    Record the above information in a two column cash book. (4mks)
    

    MINGI TRADERS TWO COLUMN CSH BOOK FOR THE MONTH OF JANARY 2021
    date 2002	Particulars	Folio	Cash	Bank	Date	Particulars	Folio	Cash	Bank
    01/1/2021	Bal		130 200		01/1/2021	Balance b/d			56 000
    02/1/2021	Sales		12 000		07/1/2021	Drawings		2 000
    18/1/2021	Cash (c)			20,000	12/1/2021	Mwangi		8 200
    					18/1/2021	Bank (c)		20 000
    					31/1/2021	Rent		7 500

24. Highlight four characteristics of a saving account. (4mks)
    • There is minimum initial deposit that varies from bank to bank.
    • A minimum balance is maintained at all times.
    • The withdrawals are up to a certain maximum within a given period. Withdrawal above this maximum will require notice.
    • Account holders are issued with a pass book or a debit card (ATM card) for deposits and withdrawals.
    • Overdraft facilities are not allowed.
    • Ordinarily, withdrawals across the counter can only be done by the account holder.
    • The balance on the account above a certain minimum earns some interest