MOKASA Joint Evaluation Examination Business Paper 1 2016- Pre MOCK

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  1. Outline four ways the economic environment influence business activities. (4 marks)

    -Level of wages of the consumer
    -Taxes on income
    -Value of money/inflation/foreign exchange rate
    -Prices of other related goods

  2. List four personal attributes of an office staff. (4 marks)

    -Good Hygiene
    -Proper Posture
    -Acceptable/good moral behavior
    -Good health
    -Good Physical appearance

  3. Highlight four limitations of the methods used by the consumer to protect themselves against exploitation (4 marks)

    -Lack of or limited government support
    -Deficiency of capital to finance their activities
    -Ignorance of consumers against their rights
    -Reluctance of many consumers to join the organization
    -Lack of consumers initiative to check on traders compliance on price and quality

  4. Outline four benefits of bonded warehouses to the government. (4 marks)

    -Source of revenue
    -Used to control the entry of harmful products into the country
    -Government is able to control the quality of goods entering the country
    -Government is able to verify documents of goods on transit
    -The government is able to inspect the nature or type of goods imported
    -Government is able to check on illegal goods entering the country

  5. Distinguish between: 
    1. Derived demand and joint demand (2 marks)

      Joint demand-(Complimentary demand) applies to  those commodities used together e.g  vehicle and petrol whereas derived demand is where demand of one commodity is due to demand of another commodity eg demand for input is as a result of demand of finished products

    2. Shift and movement along demand curve (2marks)

      Shift in the demand curve is due to change in demand of a commodity caused by factors other than price of that commodity whereas movement in the demand curve is a change in demand caused by changes in price of the commodity.

  6. Highlight four ways that may be used by a monopoly to differentiate a product market. (4 marks)

    -Geographically = exported goods are sold at cheaper price in the country of manufacture than in foreign country.
    -Time-peak and off peak
    -Type of demand eg demand for electricity of domestic use and commercial use
    -Income eg in hospitals

  7. Outline four ways in which the Central Bank may use to reduce the amount of money in circulation (4 marks)

    -Increase in the bank rate
    -Buying of government securities in the open market
    -Increase cash or liquidity ratio
    -Increase in compulsory deposit requirement
    -Selective credit control
    -Reduce margin requirement
    -Request commercial banks to control credit.

  8. For each of the following transactions, indicate the effect of each transaction on the balance sheet items as either increase, decrease or no change. (4 marks)

     

    Transaction Effect on Assets Effects on liabilities Effect on capital
    Drawings of goods from the business

     decrease

     No effect

     decrease

    The proprietor brought a personal van for the business use

     increase

     No effect

     increase

    Borrowed KCB loan to pay a creditor

     No effect

     No effect

     No effect

    Bought stock by cheque

     No effect

     No effect

     No effect



  9. The following transactions relate to the books of Amina traders as at 31st December 2015.
    Gross profit ............................................................................................. 20,000
    Commission allowed .............................................................................. 200
    Carriage on sales .................................................................................... 4,000
    Discount received ................................................................................... 8,000
    Salaries .................................................................................................. 6,000
    Rent ........................................................................................................ 2,000
    Discount revived .................................................................................... 400
    Commission received ............................................................................. 1,500
    Interest on bank loan .............................................................................. 500

    Prepare Amina’s profit and loss account for the period ended 31st December, 2015. (5 marks)

     mokasa16pp1a9

  10. Outline the relationship between scarcity, choice and opportunity cost with respect to satisfaction of human wants. (4 marks)

    -Human wants are unlimited and yet resources used to satisfy them are scarce.
    -Consumers make a list of wants in order of priority hence making a choice between the competing alternatives
    -Having made a choice, the foregone alternative becomes the opportunity cost for the need that has been satisfied.

  11. List four documents prepared by the buyer in home trade (4 marks)

    -Letter of inquiry
    -Local purchase order
    -Goods received note
    -Goods returned note
    -IOU

  12. The National Transport Safety Authority (NTSA) is a department within the transport sector in Kenya. Highlight four benefits Kenyans enjoy due to the establishment of NTSA (4 marks)

    -Unroadworthy vehicles have been removed hence reducing road accidents
    -Use of speed limiter has reduced road accidents
    -Carrying capacity has been limited hence reducing overloading and uncomfortability
    -PSV are operated by people with certificates of good conduct comfortable of customers/there is order
    -Drivers and conductors have uniforms that help in identifying them
    -Yellow lines help identify PSV by their users
    -Use of alcoblows has helped reduce the effect of drunk driving hence reducing accidents.
    -Requirement that all PSVs be members of a SACCO for order, discipline and proper management of PSVs. Passengers can take their complains to the Sacco.

  13. Outline four reasons why a firm would prefer to locate near the market of its products (4 marks)

    -Competing tool
    -If the market is concentrated in one place
    -If the product is heavy to avoid the cost of transportation
    -The product is perishable
    -It may be due to Government policy

  14. List three withdrawals in the circular flow of income (3 marks)

    -Taxation
    -Saving
    -Imports

  15. Other than serving as a medium of exchange. Mention four other functions of money (4 marks)

    -It’s a store of value
    -A standard of deferred payment
    -It’s a measure of value
    -Unit of account
    -Facilitate the transfer of immovable property

  16. The following transactions relate to the books of kilimo holdings. Record them in the relevant ledger accounts. (4 marks)
    1. 1st January 2015, took a loan with ICDC of kshs. 50,000 receiving by cheque.
    2. 5th January 2015, kelunyo, a debtor paid his account of kshs. 40,000 in cash.
    3. 10th January 2015, took money from bank, kshs. 50,000 for office use
    4. 12th January 2015, bought furniture kshs. 35,500 in cash

  17. Give the name of the insurance policy described in the following table. (4 marks)

    Description Policy 
     Covers ships on a particular voyage and time 

     Mixed policy

    Covers a specified peril when the ship is either loaded or offloaded or serviced

     Port policy

    Covers cargo against loss or damage while being transported by ship

     Marine cargo policy

    One policy used to cover a number of ships belonging to one owner

     Fleet policy



  18. Currently the government is selling state owned businesses to private investors. Highlight four benefits of such decisions. (3 marks)

     i) To improve efficiency in their management.
    ii) To generate revenue for the government
    iii) Help to avoid unnecessary expenses/avoid wastage of resources
    iv) To meet donors conditions when soliciting for funds/foreign aid
    v) Helps to improve the quality of goods being produce as it leads to competition among investors
    vi) Helps to attract investors who will start similar firms.
    vii) Helps to reduce government expenditure curbing inflation.

  19. State four essentials of effective communication (4 marks)

     i) Medium used should be appropriate
    ii) Language used must be simple to understand
    iii) Information overload should be avoided
    iv) Both the sender and the receiver must have positive attitude while communicating.
    v) It must be free from distortion
    vi) Environment should be free from noise
    vii) Message should get to the intended recipient in good time.
    viii) The sender should have adequate knowledge of information being conveyed.

  20. Outline four advantages of free gifts in product promotion. (4 marks)

     i) It may be costly.
    ii) Some middlemen may keep away the gift
    iii) There is no assurance that the prospective customer would buy the product after getting the gift.
    iv) In an effort to get the gift,a customer may end up buying what he/she doesn’t want/had not budgeted for.

  21. List four costs incurred in the distributions of goods. (4 marks)

     i) Transport cost
    ii) Product promotion expenses
    iii) Salaries and wages of workers
    iv) Packaging, blending and branding cost.
    v) Insurance costs
    vi) Storage charges

  22. Highlight four merits of direct tax as a source of revenue to the government. (4 marks)

     i) May be progressive hence equitable
    ii) Simple to understand to both taxpayer and tax collector
    iii) Convenient to both tax payer and tax collector as time for collection is known.
    iv) Can be used to counter inflation.
    v) High revenue earning capacity as it expands naturally with economic growth.i.e elastic
    vi) May be used to redistribute wealth and resources equally.
    vii) Certain to both tax payer and tax collector.

  23. Identify the level of occupation described by each of the following information (4 marks)

    Description  Occupation 
     A boy chasing hare for meat

     primary

     Britam insurance company selling their policies 

     Tertiary(commercial services)

     School carpenter making chairs for form ones

     secondary

     Mr. Zuma counselling form four students

     Tertiary (direct personal services)



  24. The following information relate to Kamau traders for the month of December 2015.
    Dec. 1- sold goods for kshs. 45,000 less 10% cash discount
    Dec 5 – Bought goods worth kshs. 4,000 in cash and was allowed a discount of 5%
    Dec 7 – a debtor paid kshs. 20,000 in full settlement of a debt of kshs 23,000 by cheque
    Dec 15 – Sold goods kshs. 70,000 on credit to jambo traders
    Dec 26 – Paid rent kshs. 16,000 by cheque

    Required:
    Post the above transactions to relevant journals. (4 marks)

     
    cash receipt journal


  25. Unemployment solving has been an agenda to most developing economies. Identify the type of unemployment being solved below. (4 marks)
    1. Government initiating irrigation projects to ensure continuous production of food

      Seasonal unemployment

    2. Retraining teachers to embrace use of technology in teaching and learning

      Structural unemployment

    3. Government and private sectors inventing job advertisement sites for easy access by job seekers

      Frictional/involuntary unemployment

    4. Parliament passing legislation that accommodate the disabled people to acquire jobs

       Residual unemployment


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