Questions
Instructions to candidates
- Answer all the questions in the spaces provided
- Give the rewards to each of the following items related to factors of production. (4 marks)
- Manager …………………………………………………..
- Business owner …………………………………………………...
- Tractor …………………………………………………...
- Gold …………………………………………………...
- 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 - Identify four external physical factors that may compromise business performance. (4 marks)
- Outline four circumstances under which Hire purchase may be used in acquiring goods. (4 marks)
- State four demerits of using internet as a means of communication. (4 marks)
- Highlight four ways in which an investor may benefit from stock exchange market. (4 marks)
- State four negative effects of high taxation. (4 marks)
- Outline four ways in households contribute to the national income of a country. (4 marks)
- State four reasons why one would hire human porterage instead of pick-up to transport goods. (4 marks)
- Outline four benefits of commercial production. (4 marks)
- Identify four common characteristics between goods and services. (4 marks)
- The following information relates to Jabungu Traders.
Item
Land and building
Machinery
5 Year loan
2 Year loan
Creditor
Debtors
Stock
Cash
Bank overdraftShs
490 000
300 000
110 000
80 000
90 000
100 500
75 600
40 000
69 900- Working capital (1 mark)
- Capital employed (1 mark)
- Capital owned (1 mark)
- Borrowed capital (1 mark)
- State four ways through which the government may create an enabling environment. (4 marks)
- The following diagram relates to a market structure
- Identify the market structure related to the above diagram. (1 mark)
- State three features of the above market structure. (3 marks)
- In each of the following situations, state whether the demand or supply would normally increase, decrease or remain constant. (4 marks)
- If consumers expect the price of a commodity to decrease in the near future, the demand would
- If the price of mutton increases, the demand for beef is likely to
- If the demand for milk rises, the supply for vehicles is likely to
- If the demand for vehicles reduces, the supply of fuel is likely to
- Outline four consequences of poor filing in an organisation. (4 marks)
- Outline four contents of a business plan. (4 marks)
- State four reasons that may lead to the termination of an insurance policy. (4 marks)
- 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 B 526 900 iii. 826 000 1 065 300 C 2 346 400 612 700 iv. 391 700 952 650 321 000 1 275 000 D - A
- B
- C
- D
- Outline four characteristics of a bonded warehouse. (4 marks)
- 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)
- 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 - 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 year920 000
540 000
17 500
17 000 - Name four types of intermediaries in a chain of distribution. (4 marks)
- 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
- Give the rewards to each of the following items related to factors of production. (4mks)
- Manager - Salaries/wages/fees/commission
- Business owner - Profit
- Tractor - Interest
- Gold - Rent/royalties/rates
- 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 - Identify four external physical factors that may compromise business performance. (4mks)
- Poor infrastructure/roads
- Unfavourable climate
- Poor relief
- Inadequate water supply
- Insecurity
- In availability of power/electricity
Any 4 x 1 = 4marks
- Outline four circumstances under which Hire purchase may be used in acquiring goods. (4mks)
- When the buyer does not have enough money to pay at once
- When the product is expensive
- When the buyer wants to use the item immediately before completing payment
- When the buyer has regular income/salaried
- When the buyer desires to own luxurious items
- When the goods are durable in nature
- When the goods can generate income to pay immediately
Any 4 x 1 = 4marks
- State four demerits of using internet as a means of communication. (4mks)
- Most hardware are expensive to buy or acquire
- Accessing using internet is expensive/software
- Requires knowledge and skills to operate which some people may not have
- Prone to attack by fraudsters/hackers/lack of confidentiality
- Affected by disruptions/lack of network/links
- Can be affected by computer viruses
- There is limited internet connectivity in the country
- Maintenance cost is high
- Prone to network overhaul/configuration
- May be affected by lack of power/ power break outs
Any 4 x 1 = 4marks
- Highlight four ways in which an investor may benefit from stock exchange market. (4mks)
- Provide information on share prices that guides investors on when to buy/sell shares
- Provide market/mechanism for buying/selling share and other securities
- Protect investors interest by requiring quoted company to maintain certain standards of management
- Provide information of company performance that help investors to make investment decisions
- Listing share prices enables investor to monitor their wealth
- Encourage savings in form of shares
- Enables investors to spread risks
- Avails varieties of securities
Any 4 x 1 = 4marks
- State four negative effects of high taxation. (4mks)
- Deter savings
- Discourage people from working hard
- Hinder investments
- May cause inflation
- May not be equitable
- Interferes with proper resource allocation
- Can be expensive to collect
Any 4 x 1 = 4marks
- Outline four ways in households contribute to the national income of a country. (4mks)
- Consumption of goods
- Payment of taxes
- Provision of labour
- Provision of saving for investments/capital
- Provision of land
- Provision of entrepreneurship
Any 4 x 1 = 4marks
- State four reasons why one would hire human porterage instead of pick-up to transport goods. (4mks
- It is cheaper to hire than pick-ups
- It is suitable for small luggage
- It is convenient over short distances
- It is easily flexible/can offer door to door services
- It is readily available when needed
Any 4 x 1 = 4marks
- Outline four benefits of commercial production. (4mks)
- The quantity of goods produced is high
- The quality of goods produced is high
- It encourages specialization
- Goods are marketed hence earn income to the producer
- It is a source of revenue to the government
- It earns a country foreign exchange
Any 4 x 1 = 4marks
- Identify four common characteristics of goods and services. (4mks)
- The both have utility
- The both have money valu
- They both consume resources
- They are scarce
- They both have alternative uses
Any 4 x 1 = 4marks
- The following information relates to Jabungu Traders.
Item
Land and building
Machinery
5 Year loan
2 Year loan
Creditor
Debtors
Stock
Cash
Bank overdraftShs
490 000
300 000
110 000
80 000
90 000
100 500
75 600
40 000
69 900- Working capital (1mk)
- WC = CA – CL
= 216,100 – 159,900 √ = 56,200 √
- WC = CA – CL
- Capital employed (1mk)
- CE = FA + WC
= 790,000 + 56,200 √ = 846,200 √
- CE = FA + WC
- Capital owned (1mk)
- = TA – TL
= 1,006,100 – 349,900 √
= 656,200 √
- = TA – TL
- Borrowed capital (1mk)
- = 110,000 + 80,000 √
= 190, 000 √
8 ticks x ½ = 4mks
- = 110,000 + 80,000 √
- Working capital (1mk)
- 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
-
- Identify the market structure related to the above diagram. (1mk)
- Oligopoly
- 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
- Identify the market structure related to the above diagram. (1mk)
- In each of the following situations, state whether the demand or supply would normally increase, decrease or remain constant. (4mks)
- If consumers expect the price of a commodity to decrease in the near future, the demand would
- Decrease
- If the price of mutton increases, the demand for beef is likely to
- Increase
- If the demand for milk rises, the supply for vehicles is likely to
- Remain constant
- If the demand for vehicles reduces, the supply of fuel is likely to
- Reduce
- If consumers expect the price of a commodity to decrease in the near future, the demand would
- 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
- 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
- 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
- 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 - A - sh.43969√
- B - sh.1,161,400√
- C - shs 1,067,800√
- D - shs 390,350√
4 ticks x 1 = 4marks
- 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
- 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
- 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 - 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
- CC = OC + AI + NP – D
- 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
- 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 000June 2021 3rd Erick
Loss on disposal
Furniture
(Being a record of sale of furniture at a loss)13 400
1 60015 000
Indent account credited
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