Business Studies Paper 1 Questions and Answers - Bondo Joint Mocks Exams 2022

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Questions

Instructions to candidates

  • Answer all the questions in the spaces provided

 

  1. Give the rewards to each of the following items related to factors of production. (4 marks)
    1. Manager …………………………………………………..
    2. Business owner …………………………………………………...
    3. Tractor …………………………………………………...
    4. Gold …………………………………………………...
  2. State the type of document described by each of the following statements. (4 marks)
     Description  Document
     i. Show from which country the goods are coming from  
     ii. Written by an exporter authorizing his bank to sell goods on his behalf  
     iii. Allow importer to get goods on credit and cannot be changed by the importer without the exporter’s permission  
     iv. Help in quicker clearance and is issued by a country’s official abroad  
  3. Identify four external physical factors that may compromise business performance. (4 marks)
  4. Outline four circumstances under which Hire purchase may be used in acquiring goods. (4 marks)
  5. State four demerits of using internet as a means of communication. (4 marks)
  6. Highlight four ways in which an investor may benefit from stock exchange market. (4 marks)
  7. State four negative effects of high taxation. (4 marks)
  8. Outline four ways in households contribute to the national income of a country. (4 marks)
  9. State four reasons why one would hire human porterage instead of pick-up to transport goods. (4 marks)
  10. Outline four benefits of commercial production. (4 marks)
  11. Identify four common characteristics between goods and services. (4 marks)
  12. The following information relates to Jabungu Traders.
     Item
    Land and building 
    Machinery 
    5 Year loan
    2 Year loan 
    Creditor
    Debtors 
    Stock 
    Cash 
    Bank overdraft
     Shs
    490 000
    300 000
    110 000
    80 000
    90 000
    100 500
    75 600
    40 000
    69 900
    Calculate the following
    1. Working capital (1 mark)
    2. Capital employed (1 mark)
    3. Capital owned (1 mark)
    4. Borrowed capital (1 mark)
  13. State four ways through which the government may create an enabling environment. (4 marks)
  14. The following diagram relates to a market structure
    bSp1q14
    1. Identify the market structure related to the above diagram. (1 mark)
    2. State three features of the above market structure. (3 marks)
  15. In each of the following situations, state whether the demand or supply would normally increase, decrease or remain constant. (4 marks)
    1. If consumers expect the price of a commodity to decrease in the near future, the demand would
    2. If the price of mutton increases, the demand for beef is likely to
    3. If the demand for milk rises, the supply for vehicles is likely to
    4. If the demand for vehicles reduces, the supply of fuel is likely to
  16. Outline four consequences of poor filing in an organisation. (4 marks)
  17. Outline four contents of a business plan. (4 marks)
  18. State four reasons that may lead to the termination of an insurance policy. (4 marks)
  19. Complete the table given below (4 marks)
     Owner’s Equity (sh)  Long term liabilities (sh)  Short term liabilities (sh)  Fixed assets (sh)  Current assets (sh)
     i. A  759 510  265 700  812 000  652 900 
     ii. 675 800 966 700  458 000  526 900 
     iii. 826 000   1 065 300 2 346 400  612 700 
     iv. 391 700  952 650 321 000  1 275 000 
    1. A
    2. B
    3. C
    4. D
  20. Outline four characteristics of a bonded warehouse. (4 marks)
  21. As money continued to develop, precious metals, gold and copper gained more acceptances for use as form of money than other commodities. Give four reasons for this. (4 marks)
  22. Name the account to be debited and the one to be credited in each of the following transactions. (4 marks)
     Transaction  A/c to be debited   A/c to be credited
     i. Proprietor withdrew cash from bank for personal use    
     ii. Sold goods and payment was to be received later    
     iii. Paid a creditor by cheque    
     iv. Proprietor bought in cash from personal savings    
  23. The following information was extracted from the books of Omollo stores during the year ended 31 st August 2021.
       Sh.
    Capital as at 31 st August 2021 
    Capital as at 1 st September 2020 
    Monthly drawings 
    Net profit for the year
    920 000
    540 000
    17 500
    17 000
    Determine the additional capital during the year. (4 marks)
  24. Name four types of intermediaries in a chain of distribution. (4 marks)
  25. Record the following transactions in the appropriate diary for the month of June 2021.
    June 2021
    1st Bought furniture on credit from Wahu Traders worth sh, 25,000
    2nd Exchanged a Motor van whose book value is sh. 240,000 for a machine valued at sh.280, 000
    3rd Sold Furniture valued at Sh. 15,000 on credit to Erick for sh. 13,400 (4 marks)

Marking Scheme

  1. Give the rewards to each of the following items related to factors of production. (4mks)
    1. Manager  - Salaries/wages/fees/commission
    2. Business owner  - Profit
    3. Tractor - Interest
    4. Gold - Rent/royalties/rates
  2. State the type of document described by each of the following statements. (4mks)
     Description  Document
     i. Show from which country the goods are coming from  Certificate of origin
     ii. Written by an exporter authorizing his bank to sell goods on his behalf  Letter of hypothecation
     iii. Allow importer to get goods on credit and cannot be changed by the importer without the exporter’s permission  Letter of credit
     iv. Help in quicker clearance and is issued by a country’s official abroad  Consular invoice
  3.  Identify four external physical factors that may compromise business performance. (4mks)
    1. Poor infrastructure/roads
    2. Unfavourable climate
    3. Poor relief
    4. Inadequate water supply
    5. Insecurity
    6. In availability of power/electricity
      Any 4 x 1 = 4marks
  4. Outline four circumstances under which Hire purchase may be used in acquiring goods. (4mks)
    1. When the buyer does not have enough money to pay at once
    2. When the product is expensive
    3. When the buyer wants to use the item immediately before completing payment
    4. When the buyer has regular income/salaried
    5. When the buyer desires to own luxurious items
    6. When the goods are durable in nature
    7. When the goods can generate income to pay immediately
      Any 4 x 1 = 4marks
  5. State four demerits of using internet as a means of communication. (4mks)
    1. Most hardware are expensive to buy or acquire
    2. Accessing using internet is expensive/software
    3. Requires knowledge and skills to operate which some people may not have
    4. Prone to attack by fraudsters/hackers/lack of confidentiality
    5. Affected by disruptions/lack of network/links
    6. Can be affected by computer viruses
    7. There is limited internet connectivity in the country
    8. Maintenance cost is high
    9. Prone to network overhaul/configuration
    10. May be affected by lack of power/ power break outs
      Any 4 x 1 = 4marks
  6. Highlight four ways in which an investor may benefit from stock exchange market. (4mks)
    1. Provide information on share prices that guides investors on when to buy/sell shares
    2. Provide market/mechanism for buying/selling share and other securities
    3. Protect investors interest by requiring quoted company to maintain certain standards of management
    4. Provide information of company performance that help investors to make investment decisions
    5. Listing share prices enables investor to monitor their wealth
    6. Encourage savings in form of shares
    7. Enables investors to spread risks
    8. Avails varieties of securities
      Any 4 x 1 = 4marks
  7. State four negative effects of high taxation. (4mks)
    1. Deter savings
    2. Discourage people from working hard
    3. Hinder investments
    4. May cause inflation
    5. May not be equitable
    6. Interferes with proper resource allocation
    7. Can be expensive to collect
      Any 4 x 1 = 4marks
  8. Outline four ways in households contribute to the national income of a country. (4mks)
    1. Consumption of goods
    2. Payment of taxes
    3. Provision of labour
    4. Provision of saving for investments/capital
    5. Provision of land
    6. Provision of entrepreneurship
      Any 4 x 1 = 4marks
  9. State four reasons why one would hire human porterage instead of pick-up to transport goods. (4mks
    1. It is cheaper to hire than pick-ups
    2. It is suitable for small luggage
    3. It is convenient over short distances
    4. It is easily flexible/can offer door to door services
    5. It is readily available when needed
      Any 4 x 1 = 4marks
  10. Outline four benefits of commercial production. (4mks)
    1. The quantity of goods produced is high
    2. The quality of goods produced is high
    3. It encourages specialization
    4. Goods are marketed hence earn income to the producer
    5. It is a source of revenue to the government
    6. It earns a country foreign exchange
      Any 4 x 1 = 4marks
  11. Identify four common characteristics of goods and services. (4mks)
    1. The both have utility
    2. The both have money valu
    3. They both consume resources
    4. They are scarce
    5. They both have alternative uses
      Any 4 x 1 = 4marks
  12. The following information relates to Jabungu Traders.
     Item
    Land and building 
    Machinery 
    5 Year loan
    2 Year loan 
    Creditor
    Debtors 
    Stock 
    Cash 
    Bank overdraft
     Shs
    490 000
    300 000
    110 000
    80 000
    90 000
    100 500
    75 600
    40 000
    69 900
    Calculate the following
    1. Working capital (1mk)
      • WC = CA – CL
        = 216,100 – 159,900 √ = 56,200 √
    2. Capital employed (1mk)
      • CE = FA + WC
        = 790,000 + 56,200 √ = 846,200 √
    3. Capital owned (1mk)
      • = TA – TL
        = 1,006,100 – 349,900 √
        = 656,200 √
    4. Borrowed capital (1mk)
      • = 110,000 + 80,000 √
        = 190, 000 √

        8 ticks x ½ = 4mks
  13. State four ways through which the government may create an enabling environment. (4mks)
    • Providing subsidies
    • Provision of loans/credit facilities
    • Reduction of tax rates
    • Licensing to ensure healthy competition
    • Training /educating business people
    • Providing good infrastructure
    • Getting market for locally produced goods
    • Providing security
      Any 4 x 1 = 4marks
  14.      
    1. Identify the market structure related to the above diagram. (1mk)
      • Oligopoly
    2. State three features of the above market structure. (3mks)
      • Firms are interdependent in decision making
      • Firms deals in products that are homogenous/simila
      • Firms engage in non-price competitions
      • There is unpredictability/uncertainty in behavior
      • The market is made up of few but large firms
      • There are barriers to entry and exit
      • Firms may engage in price wars/price rivalry
      • It has kinked demand curve
      • There may be price leadership
        Any 3x 1 = 3marks
  15. In each of the following situations, state whether the demand or supply would normally increase, decrease or remain constant. (4mks)
    1. If consumers expect the price of a commodity to decrease in the near future, the demand would
      • Decrease
    2. If the price of mutton increases, the demand for beef is likely to
      • Increase
    3. If the demand for milk rises, the supply for vehicles is likely to
      • Remain constant
    4. If the demand for vehicles reduces, the supply of fuel is likely to
      • Reduce
  16. Outline four consequences of poor filing in an organisation. (4mks)
    • Documents can be misplaced
    • Documents may be accessed by unauthorized persons
    • The office will look untidy
    • Documents may be damaged
    • A lot of space may be wasted
    • Documents may become dirty
    • It will be difficult to retrieve documents when required
      Any 4 x 1 = 4marks
  17. Outline four contents of a business plan. (4mks)
    • Name of the business
    • Product to be sold
    • Personnel to manage the business
    • Amount of finance required
    • Market to be served
    • Types of employees required
    • Projection
    • Summary of the plan
      Any 4 x 1 = 4marks
  18. State four reasons that can lead to termination of an insurance policy. (4mks)
    • Lapse of time
    • Surrender of the policy
    • If the insured fails to pay premiums
    • Upon occurrence of the risk hence compensation
    • Death of the assured
    • Maturity of the policy
    • Sale of the property to another person/ party
      Any 4 x 1 = 4marks
  19. Complete the table given below (4mks)
     Owner’s Equity (sh)  Long term liabilities (sh)  Short term liabilities (sh)  Fixed assets (sh)  Current assets (sh)
     i.  43 969 759 510  265 700  812 000  652 900 
     ii. 675 800 966 700  458 000  1 161 400 526 900 
     iii. 826 000   1 065 300 1 067 800 2 346 400  612 700 
     iv. 391 700  952 650 321 000  1 275 000  390 350
    1. A  - sh.43969√
    2. B - sh.1,161,400√
    3. C - shs 1,067,800√
    4. D - shs 390,350√
      4 ticks x 1 = 4marks
  20. Outline four characteristics of a bonded warehouse. (4mks)
    • Goods can be bonded until custom duty is paid
    • Goods are released only on production of release warrant
    • Located at points through which goods enter a country
    • Used for keeping imported goods as they await clearance
    • Owned by the government
    • A customs officer is usually located at the warehouse
      Any 4 x 1 = 4marks
  21. As money continued to develop, precious metals, gold and copper gained more acceptance for use as form of money than other commodities. Give four reasons for this. (4mks)
    • They were durable
    • They had a high value
    • They were scarce
    • They were portable
      Any 4 x 1 = 4marks
  22. Name the account to be debited and the one to be credited in each of the following transactions. (4mks)
     Transaction  A/c to be debited   A/c to be credited
     i. Proprietor withdrew cash from bank for personal use  Drawings a/c   Bank a/c
     ii. Sold goods and payment was to be received later  Debtor a/c   Sales a/c
     iii. Paid a creditor by cheque  Creditor a/c   Bank a/c
     iv. Proprietor bought in cash from personal savings  Cash a/c   Capital a/c
    8 ticks x ½ = 4mks
  23. Determine the additional capital during the year. (4mks)
    • CC = OC + AI + NP – D
      920,000 = 540,000 + AI + 17,000 – (17,500 X 12)√
      920,000 = 540,000 +AI + 17,000 – 210,000√
      920,000 = 347,000 = AI
      AI = 920,000 – 347,000√
      = SH. 573,000√
      4 ticks x 1 = 4marks
  24. Name four types of intermediaries in a chain of distribution. (4mks)
    • Wholesalers
    • Retailers
    • Commission agents
    • Brokers
    • Clearing and forwarding agents
    • Marketing boards
    • Cooperatives
      Any 4 x 1 = 4marks
  25. Record the following transactions in the appropriate diary for the month of June 2021.
     Date   Details   DR(Shs)  CR(Shs)
     June 2021 1st  Furniture

           Wahu
           (being record of purchase of purchase of furniture on credit)
     25 000 25 000 
     June 2021 2nd  Machine
             Motor van
             Gain on exchange
             (Being record of exchange of motor van for machine at a gain)
     280 000 240 000
    40 000 
     June 2021 3rd  Erick
            Loss on disposal
            Furniture
            (Being a record of sale of furniture at a loss)
     13 400
    1 600
    15 000 
    NB ; Account debited is recorded first
           Indent account credited

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