Business Studies Paper 1 Questions and Answers - Catholic Diocese of Kakamega Mock Exams 2023

INSTRUCTIONS TO CANDIDATES

1. Write your name, school and index number in the spaces provided above
2. Sign and write the data of examination in the spaces provided above
3. Answer all the questions in spaces provided.

1. State four reasons for ethical practices in business (4marks)
2. State four characteristic of basic want  (4marks)
3. Apart from labour intensive method of production, give four other ways of reducing unemployment in Kenya.  (4marks)
4. State four non-tax sources of government resources   (4marks)
5.  

   DETAILS	KSHS
   Cash at bank	50,000
   Equipment	800,000
   Stock	250,000
   Capital	1,200,000
   Debtors	200,000
   Creditors	100,000

   The following transactions took place on 3^rd June 2018.
   
   1. Bought goods for resale Shs. 150,000 on credit
   2. Adabtor paid sh. 100,000 by claques
   3. Sold the equipment for sh. 900,000 cash required
      prepare Mama watoto enterprise balance shirt after the above transactions
      (4marks)
6. Outline four benefits of using mobile money (M-pesa) as a means of payment  (4marks)
7. Define the following terms as used in business studies     (4marks)
   1. Cartels
   2. Quoted company
   3. Holding company
   4. Check of system
8. Give four reasons that account for the need for consumer protection.  (4marks)
9. In Kenya, there is a wide gap between the rich and the poor. Highlight four factors that contribute to this disparity income distribution.  (4marks)
10. The diagram below shows the demand and supply curves of maize and the corresponding equilibrium price (PO) and quality (QO). On the diagram, show the new equilibrium quality and price as a result of an increase in the supply of maize.
    (4marks)
    
11. Outline four circumstances under which written communication may be used in an organization  (4marks)
12. State four ways in which consumers would suffer if there were no warehousing facilities (4marks)
13. State four policies likely to be offered under marine policies.  (4marks)
14. The following is a cashbook that was extracted from the books of Lureko Traders for the month of March 2008
    

    Date	Details	Folio	Cash	Bank	Date	Details	Folio	Cash	Bank
    2008					2008
    March 1	Capital		10,000	50,000	Mar 5	Furniture			8000
    20	Sales		8,000		10	Purchases			5000
    30	Bank	a	5,000		25	Salaries		5000
    					30	Cash	C1		5000
    					31	Bal	C/d	18000	32000
    			23000	50000				23,000	50,000
    	Bal	C/d	18,000	32,000

    Required: Indicate what happened on the dates given below
    1. March 1:
       (1 mark)
    2. March 20:
       (1 mark)
    3. March 25:
       (1 mark)
    4. March 30:
       (1 mark)
15. Fill in the missing figures in the table.
    (4 marks)
    

    Business	Assets	Capital	Liabilities
    A	a	25,300	20,700
    B	320,400	150,000	b
    C	620,125	c	233,100
    D	d	210,720	43,650

16. State four external diseconomies of scale that a firm may get  (4marks)
17. Outline four channels that can be used by Wafula enterprise to acquire commodities for sale from China to sell to local consumers.  (4marks)
18. Outline four negative implications of under population on country  (4marks)
19. State four expenses incurred in the process of distributing goods  (4marks)
20. List four forms of economic integration  (4marks)
21. In the table below classify the accounts given as either personal, impersonal or private
    

    Account	Account type
    Drawings
    Furniture
    Owino (a debtor)
    Salaries

    (4marks)
22. Outline four structural changes that characterize economic development  (4marks)
23. The following information related to Amani enterprises for the period ended 30th June 2019.
    Turnover                                          280,000
    Margin                                             40%
    Rates of stock turn over 6 times
    Expenses                                        40,000
    Calculate
    1. Gross profit   (2marks)
    2. Cost of sales  (1 mark)
    3. Net profit    (1 mark)
24. Outline four functions of the world bank  (4marks)
25. Highlight four ways in which inflation benefits an economy   (4marks)

MARKING SCHEME

1. State four reasons for ethical practices in business
   
   • To ensure workers are paid fairly and on time.
   • To create fairness in competition
   • To ensure that there is no discrimination of employees.
   • To ensure compliance with the country's laws/ regulation.
   • To avoid consumer exploitation
   • To ensure protection of the environment/hence no population
   • To promote the image of the business.
     (4mks)
2. Characteristics of basic wants
   
   • Are felt needs.
   • Cannot be postponed
   • Are universal
   • Satisfied first
   • One cannot do without them.
     (4mks)
3. Apart from labour intensive methods of production, give four other ways of reducing unemployment in Kenya.
   
   • Increasing government expenditure
   • Controlling population growth
   • Encouraging private investment
   • Appropriate education
   • Making use of local resources
   • Improving infrastructure in rural areas.
   • Supporting local industries
   • Diversifying the economy
   • Exporting excess labour
     (4mks)
4. State four non-tax sources of government resources
   
   • Government borrowing / loans
   • Profits/proceeds from government investments/parastatals
   • Court fines/penalties
   • Interest on loans advanced by government agencies like KIE/ICAC
   • Licenses/fees
   • Rent/rates on government properties
   • Escheats/assets reverting back to the government upon death of owners without being claimed.
   • Proceeds from sale of government properties like land/shares
   • Fees e.g packing fees.
     (4mks)
5. 
   Mama Watoto enterprise balance sheet as at 3rd June 2018.
   

   Assets Stock      400,000	Capital             1,200,000
   Debtors    100,000	Add profit    100,000
   Bank        150,000
   Cash        900,000	Net capital     1,300,000
   	Liability Creditors     250,000
   -------------------------------------	-------------------------------------
   1,550,000	1,550,000

   (8 x 2 = 4)
6. Outline four benefits of using M-pesa as a means of payment
   
   • One can monitor transactions/provide statement
   • Fast as it conveyed through sms.
   • Convenient as it can be sent/received from any location.
   • Confidential/ secure as PIN is used.
   • Easy to use/agents provide assistance relatively cheaper
   • Transactions can be carried out any time.
   • M-pesa can be used to pay bills eg utilities/school fees with lots of ease. Cheaper/ affordable
     (4mks)
7. Define the following terms as used in business studies
   
   • Cartels: A group of related companies that agree to work together in order to control output/prices/market of their goods/services
   • Quoted company: Is a company that has been registered as a member of the stock exchange market.
   • Holding company: Is a company that has acquired 50% or more shares in one or more other companies.
   • Check of system: Is an arrangement where stated amount is deducted at source (by employer) and submitted to the SACCOS on behalf of an employees who is a member of the SACCO.
     (4mks)
8. Give four reasons that account for the need for consumer protection.
   
   • Product sold may be harmful/poisonous
   • Sellers may over price their products
   • Sellers may hoard goods
   • Sellers may give false advertisement
   • Commodities may have false labelling
     • Premises may be unsafe for inhabiting
   • Harassment by land lords/ladies.
   • Poor quality goods
   • Wrong measurement/ weight
   • Breach of contract by traders
   • False advertisement
     (4mks)
9. In Kenya, there is a wide gap between the rich and the poor. Highlight four factors that contribute to
   this disparity income distribution.
   
   • Corruption/outright stealing of a country's resources (for personal gams)
   • Nepotism /favourism in employment/ job opportunities.
   • Poor Kenyans are always victims of the vicious cycle of poverty.
   • Some people are politically advantaged over others
   • Disparity in access to education
   • Differences in individual/personal talent endowment
   • Disparity in natural resources endowment.
   • Some people being involved in violent robbery. Inheritance
   • Disparity in job renumeration
     (4mks)
10. 1.  The diagram below shows the demand and supply curves of maize and the corresponding equilibrium price (PO) and quality (QO). On the diagram, show the new equilibrium quality and price as a result of an increase in the supply of maize.
       
       (4mks)
11. Outline four circumstances under which written communication may be used in an organization
    
    • If the message is confidential in nature
    • If the information is detailed
    • If there is need to address many people (at once)
    • If there is need for a cheaper means
    • To avoid distortion of the message.
    • When communicating with people with hearing / talking impairments
    • Where there is need for future reference.
    • Where there is need for evidence (as in courts of law)
      (4mks)
12. State four ways in which consumers would suffer if there no war housing facilities
    
    • No constant supply of goods/ shortages
    • Goods would be more expensive
    • They would receive goods that have gone bad
    • They would receive goods that haven't been prepared for sale.
    • They would miss out on opportunity to inspect goods before buying.
      (4mks)
13. State four policies likely to be offered under Marine policy.
    
    • Time policy
    • Voyage policy
    • Floating policy
    • Mixed policy
    • Marine hull policy
    • Marine cargo policy
    • Port policy
    • Composite policy Construction policy Freight policy
    • Third party policy
      (4mks)
14.  
    1. Paid salaries shs. 5000 in cash
    2. State business with Shs, 10,000 cash in hand and shs. 50,000 cash at bank.
    3. Sold goods worth sh. 8000 in cash
    4. Withdrew shs. 5000 from bank for office use.
15.  
    1.  46,000
    2.  170,000
    3.  387,025
    4. 254,370
16. State four external diseconomies of scale that a firm may get
    
    • Scramble / competition for raw materials
    • Unavailability of land for expansion
    • Scramble for available labour
    • Competition for the available market
    • Easy target especially in time of war Pollution
    • Foreign manufacturer
    • Foreign wholesale
    • Agent
      (4mks)
17. Outline four channels that can be used by Wafula enterprise to acquire commodities for sale from China
    • Foreign exporter   →   Foreign wholesale   →   Retailor   →   Local consumer
      
    • Foreign manufacturer   →   Agent   →   Local consumer
      
    • Foreign Agent   →   Import Agents   →   Local consumer
    • Foreign exporter   →   Import Agents   →   Wholesaler   →   Retailer   →   Local consumer
    • Foreign manufacturer   →   wholesaler   →   local consumer
      
    • Foreign manufacturer   →   retailer   →   local consumer
      
    • Foreign manufacturer   →   local consumer
      (4mks)
18. Outline four negative implications of under population on country
    
    • Limited labour supply
    • Limited market
    • Under utilization of resources
    • Lack of specialization
    • Uneconomical to provide goods and services
    • Reduce price of economic development.
      (4mks)
19. State four expenses incurred in the process of distributing goods
    
    • Storage costs
    • Transport costs
    • Advertising costs
    • Insurance costs
    • Actual purchasing of stock
    • Packing and blending.
      (4mks)
20. List four forms of economic integration
    
    • Preferential trade arca
    • Common markets
    • Customs unions
    • Free trade areas
    • Economic union
    • Political union
      (4mks)
21. In the table below classify the accounts given as either personal, impersonal or private
    

    Account	Account type
    Drawings	Private
    Furniture	Impersonal
    Owino (a debtor)	Personal
    Salaries	Impersonal

    (4mks)
22. Outline four structural changes that characterize economic development
    
    • Increase in per capital income
    • Increase in employment rates
    • Reduction in poverty/income inequalities
    • Improved infrastructures
    • Increased social facilities
    • Increased in equitability in resource distribution
    • Increased in literacy level/ reduction in illiteracy.
    • Shift from agriculture to manufacturing
    • Improvement in health facilities
    • Advancement in technology
    • Improvement on entrepreneurial ability
    • Diminishing subsistence production
    • Democratic administration
    • Good governors
      (4mks)
23. The following information related to Amani enterprises for the period ended 30th June 2019.
    Turnover                                          280,000
    Margin                                             40%
    Rates of stock turn over 6 times
    Expenses                                        40,000
    
    1. Gross profit
       Margin =  GP   
                      sales
        40  = GP  
       100     sales
       2     =     GP       
       5          280,000
       
       5  GP = 560,000 
       5                5
       GP = 112,000
       (2mks)
    2. Cost of sales
       = Sales - GP
       = 280,000-112,000
       = 168,000
    3. Net profit
       = GP - Expenses
       = 112,000 - 40,000
       = Kshs. 72,000
       (1mk)
24. Outline four functions of the world bank
    
    • Providing finances to reduce budget deficits
    • Provide loans for development projects
    • Provide finance to correct an adverse balance of payments opportunities
    • Act as a guarantor to member country
    • Advices member country on suitable project
    • Stabilizes exchange rates
    • Sets up international standards for trade
    • Trains local personnel
    • Evaluates development plans for member countries
    • Encourages economic reforms
    • Approves development plans   (4mks)
25. Highlight four ways in which inflation benefits an economy 
    
    • Mild inflation gives activities to investors who in turn creates employment opportunities
    • Increases production
    • Sellers may earn more
    • Debtors may pay less
    • Motivates people to work
    • Promotes better use of available resources.   (4mks)