Business Paper 1 Questions and Answers - Cekenas Mock Exams 2022

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  1. Outline four methods of Trade restriction used by the government. (4mks)
  2. State the effects of the following transactions on the balance sheet totals by writing increase decrease or no effect in each case. (4mks)
    1. Bought machinery on credit………………………………
    2. Withdrew cash from the business for own use …………………………………………
    3. Purchased stock in cash ………………………………………………….
    4. Paid outstanding loan by cheque ……………………………………..
  3. List four benefits that may be enjoyed by Kenyans as a result of government initiatives to expand road and railway network in the country. (4mks)
  4. Highlight four circumstances under which a firm would prefer open office layout. (4mks)
  5. Outline four limitations of Barter trade. (4mks)
  6. The following information was extracted from the books of Mangi traders on 30th June 2009.
    Item  Sh
    Opening stock
    Closing stock
    720 000
    980 000
    Additional information.
    Margin 20%
    Required: Prepare the Trading account for Mangi trades for the year ended 30th June 2009. (4mks)
  7. Identify four factors that influence entrepreneurial practices in Kenya. (4mks)
  8. Stima insured his house worth sh. 800 000 for sh. 700 000 and unfortunately the house was destroyed by an inferno and he sustained losses worth sh. 600000. Calculate the amount the amount of money that Stima should claim from the insurance company as a compensation and comment. (4mks)
  9. State four reasons for popularity of WhatsApp as trend in communication. (4mks)
  10. State four negative effects of overpopulation in a nation. (4mks)
  11. State the type of unemployment relating to each of the following descriptions. (4mks)
    1. Caused by alternating trading patterns occurring at similar times.
    2. Arises when a worker has more skills and higher qualification than the job requirement.
    3. Arises out of mismatch between the skills possessed by a potential employee and the job available.
    4. Arises when people are unwilling to take up jobs due to low pay.
  12. Highlight four ways in which a warehouse may be useful to a trader. (4mks)
  13. Outline four distribution channels of locally produced agricultural products. (4mks)
  14. Outline four levels of inflation. (4mks)
  15. State four measures that a consumer may undertake to satisfy the unlimited human wants. (4mks)
  16. Give four differences between shares and debentures. (4mks)
  17. Highlight four factors that a firm must take in the account when choosing on the products to produce . (4mks)
  18. Below is a demand and supply curve. Highlight the factors that may have caused the supply curve to shift right ward. (4mrks)
  19. Outline four circumstance under which a trader can issue a credit note to a customer. (4mks)
  20. Highlight four advantages of indirect tax. (4mks)
  21. Highlight four duties of commercial attaches in trade promotion. (4mks)
  22. Outline four advantages of using celebrities in product promotion. (4mks)
  23. Highlight four features of perfect competition market. (4mks)
  24. Outline four problems encountered in development planning. (4mks)
  25. Identify the book of original entry in which the following transactions can be recorded. (4mks)
    Transaction Book of original Entry
    (i) Paid salaries by cheque
    (ii) Returned goods to a supplier
    (iii) Sold goods on credit
    (iv) Bought delivery van on credit


    1. Use of Tariff
    2. Use of quotas
    3. Imposing total Ban
    4. Administrative bottleneck/complicated procedure.
    5. Mora persuasion.
    6. Foreign exchange control.
    1. Increase
    2. Decrease
    3. No effects
    4. Decrease
    1. Improved standard of living.
    2. Creation of more jobs opportunities.
    3. Increased production/ mass production.
    4. Promote specialisation.
    5. Creating a wider market for goals.
    6. Promoting development of industries.
    7. Providing linkage between producer and consumer.
    8. Avoid wastage since good can be transported easily to the market.
    1. Where there is need to promote team work.
    2. Where there is need to reduce maintenance cost.
    3. Where there is need to save cost of buying office equipment.
    4. Where there is need to reduce cost of production.
    5. Where there is need to discourage absenteeism.
    1. Indivisibility of some commodities.
    2. Lack of standard measure of value.
    3. Inconvenience in transporting some goods.
    4. Lack of accounts
    5. Hinder specialization.
    6. Perishability of commodities.
    7. Require double of coincidence wants.
    8. Lack of standard of deferred payments.

    Opening stock           165,000
    Purchase                   720000
    COGAS                    885, 000
    Less Closing stock    101,000
    Cost of goods sold    784,000
    Gross profit c/d          196000
    Sales 980,000

    Gross profit b/d 196, 000 
    1. Government policy
    2. Level of education and skills.
    3. Infrastructure
    4. Availability of markets.
    5. Availability of resources
    6. Culture
    7. Competition.
    8. Political stability.
    9. Natural factors
  8. Compensation. = value of the policy x loss
                                      value of property
    700000 x 600000
    = sh 525,000
    This is because he under-insured his house.
    1. It offers unlimited messaging.
    2. It has no hidden costs.
    3. It is possible to send a document.
    4. Video calling is available.
    5. It offers international messaging.
    6. It is simple to use.
    1. Strain on available social amenities.
    2. High dependency ratio
    3. Increase in crime rate.
    4. Imbalance in demand and supply.
    5. Food shortage
    6. Environmental degradation.
    7. Encourage rural-urban migration.
    1. Cyclical unemployment
    2. Disguised / hidden unemployment
    3. Structural/ Technological.
    4. Real/ voluntary.
    1. Good can be produced in advance to meet unexpected demands.
    2. Provide security to good from theft/loss.
    3. Ensure preparation of good for sale.
    4. Give the trader time to look for market.
    5. Some good may improve in quality.
  13. Producer(/Farmer) → consumer
    Producer/(Farmer) → Retailer Consumer.
    Producer Co-operative → Marketing board Consumer.
    Producer/(Farmer) → Wholesaler Consumer
    Producer(Farmer) → Wholesaler Retailer Consumer.
    1. Hyper/Run-away inflation
    2. Rapid inflation
    3. Stagflation
    4. Moderate/ mild inflation.
    1. Has to make choice.
    2. Drawing scale of preference.
    3. Conserving resources
    4. Should have opportunity cost.
    5. Recycling waste products.
    6. Should invent new products.

  16. Shares Debentures
    (a)A unit of capital for a company
    (b)Shareholders are owners of the company
    (c)Shareholder earn dividends from profit made.
    (d)Dividends on shares are made when company makes profit.
    (e)Shares cannot be withdrawn until the company dissolves.
    (f)Ordinary shareholders have voting right, hence involved in decision making.
    (a)A loan advanced by the public to a company.
    (b) Debentures holders are creditors to a company.
    (c)Debentures earn interest which is an expense to the company.
    (d)Interest accrued every year and is payable whether a company make profit or not.
    (e)Debentures can be withdrawn
    (f)Debentures holders have no say in running of a company. 
    1. Profitability of the venture.
    2. Level of competition
    3. Availability of resources.
    4. Government policy.
    5. Availability of a market.
    6. Cost of production.
    7. Level of technology.
    8. Skilled labour required.
    1. Reduction in the cost of production.
    2. Improvement in the state technology.
    3. Decrease in prices of other substitute commodities.
    4. Favourable government policies like reduction in taxes.
    5. Conducive climatic conditions.
    6. Increase in price of the commodity.
    7. Expected future decrease in price of the commodity.
    1. If the customer returned empty cases or container which were earlier included in pricing.
    2. If there was price overcharge in the invoice.
    3. If some items were included in the invoice yet they were not actually delivered.
    4. Due to arithmetic errors leading to an overcharge.
    5. Where the customer returns goods due to wrong order.
    1. Tax payment is voluntary.
    2. Not possible to evade.
    3. Can be used selectively to achieve a given objective.
    4. It is flexible.
    5. More revenue can be raised as it is broad based.
    6. It is convenient.
    7. It stimulates effort.
    1. Publish and advertise their country’s export in journalist/ Magazines.
    2. Select buyers, agents and distributors of the home countries export.
    3. Explore and identify new markets for more export opportunities.
    4. Research and analyse markets for more export from their home countries.
    5. By informing local traders on procedures required for exporting their product.
    6. Informs trader in their home countries of standards required for exports.
    1. They help in increasing recognition.
    2. Give life into a failing brand.
    3. Help people in remembering advertisement.
    4. They influence consumer purchases.
    5. Attract new users.
    6. Build awareness of a product.
    1. Uniformity of buyer and seller.
    2. Perfect mobility of factors of production.
    3. No government interference.
    4. Large number of buyers and seller
    5. No transport cost.
    6. There is wide knowledge of market
    1. Failure to involve local people at planning stage.
    2. Overambitious plan
    3. Lack of domestic resources.
    4. Reliance of donor funding.
    5. Lack of qualified personnel.
    6. Natural calamities.
    1. Cash payment Journal
    2. Purchases Returnal Journal
    3. Sales Journal
    4. General Journal.
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