Business Studies paper 1 Questions and Answers - Samia Joint Mock Examination 2023

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  • This paper consists of twenty five questions.
  • Answer All the questions.
  • Write your answers in English.
  1. State four reasons why itinerant traders are becoming increasingly popular in Kenya. (4marks)
  2. State four factors that lead to ineffective services in a warehouse. (4marks)
  3. Classify the following factors as either internal or external business environment. (4marks)
     Factors                      Business
     (a) Political factor  
     (b) Economic recession  
     (c) Business structure  
     (d) Employees  
  4. State four reasons why one would prefer partnership instead of sole proprietorship. (4marks)
  5. Highlight four ways in which a monopolistic competition differs from a pure monopoly. (4marks)
  6. The following balances were obtained from the books of Omweri traders.
    Sales - 360,000
    Opening stock - 50,000
    Gross profit - 25% of sales
    Closing stock - 70,000
    1. Cost of goods sold. (2marks)
    2. Rate of stock turnover (2marks)
  7.  State four ways a country may benefit from high population (4marks)
  8. Outline four advantages of transporting oil by pipeline rather than by road. (4marks)
  9. State four reasons why consumers find it difficult to satisfy their needs. (4marks)
  10. Using the diagram drawn below state the effect of shift in supply as indicated. (4marks)
  11. State four sources of government revenue. (4marks)
  12. Secretarial bureaus are usually found in urban centres. State four reasons that may account this type of location. (4marks)
  13. Name the insurance policy a school can take to cover the following risks. (4marks)
     Risk  Insurance policy
     (a) Losses arising from debtors failure to pay their debts  
     (b) Injury caused by a school dog to a passer-by  
     (c) Loss of cash when being transported to the bank  
     (d) Loss of goods through dishonesty of an employee  
  14. Record the following transactions in the general journal of Velma Traders. (4marks)
    1. On 2nd January 2009 sold office equipment to Faith Traders on credit for sh. 20,000
    2. On 5th January 2009 bought motor vehicle sh. 300,000 on credit from Sarah enterprises.
    3. On 10th January 2009, bought lawnmower on credit for sh. 70,000 from Veronica.
    4. Wrote off a debt of sh. 50,000 due from Mueke on 12th January 2009.
  15. Outline four services that facilitate communication. (4marks)
  16. Highlight four limitations of adopting a new technology in business. (4marks)
  17. Record the following transactions in the relevant ledger accounts. (4marks)
    June 1: Ochieng started a business with sh. 50,000 cash
    June 4: Bought office equipment for sh. 2,000
    June 6: Deposited sh. 12,000 into the business bank account.
    June 8: Bought stock worth sh. 10,000 by cheque.
  18. State four factors that influence the amount of money held by an individual for precautionary motive. (4marks)
  19. Below is a two column cash book.
    Describe the transactions that took place on the dates
    1. 1/2/2022 
    2. 3/2/2022
    3. 4/2/2022 
    4. 6/2/2022
  20. Outline four circumstances under which a manufacturer would prefer to sell his product directly to customers instead of selling through intermediaries. (4marks)
  21. State four factors that may cause the capital of a business to change and how. (4marks)
  22. State four benefits a producer is likely to experience from using shows, trade fairs and exhibitions to promote his/her products. (4marks)
  23. State four uses of a business plan. (4marks)
  24. State demerits of government involvement in business. (4marks)
  25. Outline four characteristics of under-developed countries. (4marks)


    • They are convenient; they go to where the customers are.
    • They sell on cash basis hence no bad debts.
    • They are more responsive to customer demands due to personal contact.
    • They are flexible in making business decisions.
    • Only require a trading licence to operate.
    • Have no fixed prices hence can sell more items.
    • Have low operating costs since they do not need to pay rents of high salaries.
    • Unqualified personnel
    • Inadequate security and safety.
    • Improper recording system
    • Improper building design
    • Poor location of the warehouse
    • Poor infrastructure.
    • External
    • External
    • Internal
    • Internal
    • Easy to raise capital in partnership than in sole proprietorship
    • There is sharing of responsibilities hence not tedious
    • Some partners have limited liabilities
    • There is sharing of ideas to better decision.
    • In monopolistic competition there are many firms while in a pure monopoly there is only one firm.
    • In a monopolistic completion there is product differentiation while in pure monopoly there is no product differentiation.
    • In a monopolistic competition, there is free entry and exit of goods while in a pure monopoly there is no entry or exit of goods.
    • In the long run, monopolistic competitive firms make normal profits whereas monopolistic firms make profit in the long run.
    1. Cost of goods sold
      Cost of goods = Sales – G. Profit
      360,000 – (25100 x 360,000)
      360,000 – 90,000
                    = 270,000

    2. Rate of stock turnover
      Rosy = cost of sales
      Average stock
      Average stock = 50,000 + 70,000
      = 60,000
      = 270,000
      = 4.5 times
    • There is increased labour mobility
    • Bigger market for goods and services.
    • Adequate supply of cheap labour.
    • High demand for goods and services.
    • Increased innovation.
    • Transport cost are reduced
    • Regular supply is assured
    • Loss through accidents is reduced.
    • Cases of theft of oil are reduced.
    • Transportation of oil is faster.
    • Less damages of roads.
    • Less road accidents.
    • Resources required to satisfy then are limited.
    • Wants are competing hence difficult to choose on which want to satisfy first.
    • The changing nature of wants makes it complicated.
    • Human wants keep on recurring
    • They are unlimited hence cannot be satisfied fully.
    • Equilibrium point shifts to the right downwards.
    • Equilibrium process moves downwards from Pe0 to Pe0.
    • Equilibrium quantity moves from Qe1 to Qe1 to the right.
    • Supply curves shifts from left to right i. e. S0S0 to S1S1.
    • Taxes
    • Fines
    • Licence fees.
    • Grants
    • Sale of government assets.
    • Interest on loans.
    • Nearness to market or customers
    • Nearness to communication services.
    • Nearness to maintenance services
    • Availability of qualified personnel.
    • Bad debts policy
    • Public liability policy
    • Cash transit policy
    • Fidelity guarantee policy.
  14.                                                         General Journal 
     Date  Details  Dr (sh)  Cr (sh)
     2009 Jan. 2nd   Faith traders a/c
     Office equipment a/c
     (Being a record of sale of office equipment on credit.
     20,000  20,000
     2009 Jan 5th  Motor vehicle a/c
     Sarah enterprises a/c
     (To record purchase of motor vehicle on credit.)
     200,000  200,000
     2009 Jan 10th  Lawn mower a/c
     Veronicah a/c
     (To record purchase of lawn mower on credit)
     70,000    300,000
     2009 Jan 31st  Bad debt a/c
     Mueke a/c
     (To record bad debts written off)
     50,000  50,000
    • Mail services e.g. Securicor currier
    • Electronic media e.g. T,V
    • Print media e.g. News paper
    • Telephone services
    • Internet services
    • May require long capital to put in place.
    • Requires trained personnel
    • Resistance to change by some employees
    • The team of the unknown by a proprietor.
    Dr                     Cash a/c                                      Cr. 
     Date  Details  Amount  Date  Details  Amount
     1/6/20  Capital  50,000



     office equip



    Dr                      Bank a/c                             Cr
      Date  Details  Amount   Date   Details   Amount
     6/6/20   cash  12,000  5/6/20  Purchases  10,000

     Dr.                    Capital a/c                           Cr.
     Date  Details  Amount  Date  Details  Amount 
           1/6/20  Cash  50,000

     Dr.                    Purchase a/c                        Cr.
     Date  Details  Amount Date   Details  Amount 
     8/6/20  Bank  10,000      

    Dr.                    office equipment                    Cr.
      Date  Details  Amount  Date   Details  Amount 
     4/6/20  cash   2,000       
    • The level of income
    • The family status
    • The age of the individuals
    • The number of dependent’s one has
    • The duration between incomes of an individual.
    • 1/2/2022 The proprietor had cash sh.3000
    • 3/2/2022 The proprietor paid for equipment
    • 4/2/2022 Sold goods worth sh. 7000and has paid by cheque.
    • 6/2/2022 paid Jumashs. 1000 by cheque
    • Where the manufacturer wants to save on commissions and discounts.
    • Where the goods are fragile.
    • Where the goods are of technical nature.
    • Where the manufacturer would like to avoid price increases by intermediaries.
    • Where the manufacturer would like to maintain his/her reputation by offering after-services.
    • Profit realized increases the business capital.
    • Losses incurred reduces the business capital.
    • Additional investment increases the business capital.
    • Drawings reduces the business capital.
    • Enable producers and traders to display their products for sale.
    • Gives opportunity for producers and traders to advertise their products.
    • Gives an opportunity for producers to attract their customers so as to answer their questions.
    • Enables the producers and traders to launch new products in the market.
    • Enables producers to get new ideas on how to improve on their products.
    • Serves as a management tool.
    • Helps allocate business resources
    • Used to acquire loans from financiers
    • Used to and sell business
    • Helps sound business decisions.
    • May come away foreign investors
    • May create monopoly business if it is the only provide
    • Lack of Innovation
    • Political Interference
    • Low GDP per capita
    • Inadequate infrastructure
    • High population growth rates
    • Low human development indicators
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