BUSINESS STUDIES PAPER 1 - KCSE 2019 NYANDARUA PRE MOCK EXAMINATION

1. State four characteristics of human wants (4mks)
2. Outline four ways in which utility of a good is created in production (4mks)
3. State four benefits that a farmer may derive from being a member of producer co-operative society (4mks)
4. Highlight four ways in which consumers may protect themselves against exploitation                                                 (4mks)
5. Highlight four factors a firm must take into account when deciding on the product(s) to produce (4 mks)
6. Below is a diagram of demand and supply curve
   
   Highlight four factors that may have led to the above behavior (4mks)

7. Mention four characteristics of good money (4mks)
8. State four ways in which human resource can positively influence the internal environment of a business (4mks)
9. State four benefits that Kenya will derive from the completion of Standard gauge railway (SGR) (4mks)
10. State four characteristics of a successful entrepreneur (4mks)
11. Name four documents required by the registrar of companies in order to register a Public Limited Company (4mks)
12. State four circumstances under which cash with order (CWO) may be used by a business       (4mks)
13. Outline four challenges that may be encountered in measuring National income using the output approach (4mks)
14. Highlight four factors to be considered when choosing a method of product promotion       (4mks)
15. Identify the source documents into which the following information would be recorded        (4mks)
    

    Information	Source document
    i. Payment received from debtors
    ii. Purchases made on credit
    iii. Validating payments made by cashier
    iv. Sale of a fixed asset on credit

16. For each of the transaction state the account to be debited and the account to be credited         (4mks)
    

    Transaction	Account debited A/C credited
    i.Deposited cash into the bank
    ii.Owner withdrew cash for personal use
    iii.Purchased goods on credit
    iv.Sold furniture by cheque

17. The following information was obtained from Wamwangi traders as at 31^st December 2018
    

    	Shs
    Stock 1/1/2018	20000
    Stock 31/12/2018	30000
    Mark up	20%
    Rate of stock turn over	7 times

    
    Required
    Prepare Wamwangi’s trading account for the year ended 31/12/2018(4mks

18. Muriuki prepared a trial balance for his business but it failed to balance. Help him prepare a correct one (4mks)
    MURIUKI TRIAL BALANCE AS AT 31^ST DEC 2017
    

    Fixed Assets	Liabilities
    Land            110,000	Debtors             80,000
    Creditors     60,000	Machinery       90,000
    Capitals     230,000	Prepaid rent   10,000
    400,000	180,000

    
    

19. State the kind of information recorded in the following ledger accounts
    1. Sales Ledger
    2. Private Ledger
    3. Nominal Ledger
    4. Cash book

20. State four components of a Business plan (4mks)
21. State four roles of Insurance Industry in Kenya (4mks)

22. Outline four measure used by the Central Bank to control supply of money in the economy (4mks)
23. Highlight four features of perfect competition market (4mks)

24. Mention the four elements of transport . (4mks)

25. State the type of unemployment described below (4mks)
    1. Experienced where demand for goods and services is seasonal
    2. Occurs when a person seems to be employed but is mainly under utilized
    3. Occurs when jobs are available but one does not have the required qualifications
    4. Caused by Economic factors leading to poor performance of the Economy

MARKING SCHEME

1. Characteristics of human wants (1 x 4 = 4mks)
   1. Insatiable – Endless
   2. They are universal – affect everybody
   3. They are habitual
   4. They are complimentary
   5. Repetitive
   6. Competitive
   7. Vary in intensity and urgency
      (1 x 4 = 4 mks)

2.  
   1. Through making/ manufacturing –
   2. Through transport / distribution – place
   3. Through transport storage – time
   4. Through exchange - possession
      (1 x4 = 4mks)
3.  
   1. He may receive inputs at fair prices
   2. The co-operative may get better prices for members produce
   3. He may get transport for produce to market
   4. He may get better storage facilities
   5. The society may grade package and process his produce
   6. He may get credit facilities
   7. He may acquire skills/ better methods of production
      (1 x 4 = 4mks)
4.  
   1. Checking goods before buying
   2. Forming vigilant groups
   3. Enlightening themselves on their rights
   4. Reporting cases of exploitation
   5. Forming consumer organizations
   6. Boycotting cases of exploitation
   7. Take exploiter to court
   8. Complain through media
      (1 x 4 = 4mks)
5.  
   1. Profitability of the venture
   2. Level of competition
   3. Availability of resources
   4. Government policy
   5. Extent of demand/ market
   6. Cost of production
      (1 x 4 = 4mks)
6.  
   1. Reduction in the cost of production
   2. Improvement in the state of technology
   3. Decrease in prices of related goods
   4. Favorable Government policies e.g tax reoluction
   5. Favorable climatic conditions
   6. Availability of factors of production
   7. Characterists of good money
      (1 x 4 = 4mks)
7.  
   1. Stability
   2. Scarcity
   3. Divisibility
   4. Durability
   5. Homogeneity
   6. Malleability
8. How human resource positively influences internal business environment ( 1 x 4 = 4mks)
   1. Availability of labour
   2. Skills that the labour has
   3. Willingness and ability to work
   4. Availability of tools and equipment
   5. Conducive working environment
   6. Motivated workers
   7. Benefits of S.G.R (1 x 4 = 4mks)
9.  
   1. Creation of employment opportunities
   2. Quick delivery of goods and services
   3. Increased production of goods and services
   4. Enhanced industrialization since raw material can be moved easily
   5. Equitable development especially in the dry Ukambani region
   6. Wider market for goods and services
   7. Higher Government revenue

10.  
    1. Successful entrepreneur (1 x 4 = 4mks)
    2. Good time manager
    3. Desire to achieve
    4. Independence
    5. Commitment to work
    6. Innovative/creative
    7. Optimistic
    8. Self confidence
    9. Desire for feedback

11. Documents for registering Public Limited Company (1 x 4 = 4mks)
    1. Memorandum of Association
    2. Articles of association
    3. List of directors and their consent
    4. Statement of share capital
    5. Prospectus
    6. Declaration of compliance with Law
12.  
    1. Circumstances of using cash with order (1 x 4 = 4mks)
    2. When it is a mail order business
    3. When the buyer is new to the seller
    4. If the buyers credit worthiness is in doubt
    5. Where it is the seller’s Policy not to give credit
    6. When the seller does not want to incur bad debts
    7. When the seller wants to avoid high cost of debt collection
13. Problems of measuring National Income using output approach (1 x 4 =4mks)
    1. Deciding on what goods and services to include
    2. Some income earning activities are illegal
    3. Determining the value of National output due to inflation
    4. Valuation of output in subsistence sector
    5. Valuation of stock and working progress
    6. Possibility of valuing government output
14. Factors to consider when choosing a method of product promotion (1 x 4 = 4mks)
    1. Cost of the method should be affordable
    2. Geographical area of coverage / extent of the market
    3. Target group/ type of consumer
    4. Speed/ urgency of the message
    5. Availability of the method
    6. Nature/type of product
    7. Government policy
    8. Impression/ intended impact
15. Source documents (1 x 4 = 4mks)
    1. Cash recipient journal
    2. Purchases journal
    3. Payment voucher
    4. General journal

16. Accounts to be credited and debited (1 x 4 = 4mks)
    

    Debit	Credit
    Bank	Cash
    Drawings	Cash
    Purchases	Creditors
    Bank	Furniture

    
    

17. WAMWANGI TRADING ACCOUNT FOR THE YEAR ENDED 31/12/2018
    

    Shs.	Shs.
    Opening stock  20000	Sale 218250
    Add purchases 185000
    C. G. A. S       205000
    Less closing stock    30000
    C. G. S        175000
    Gross profit   43250
    218250	218250

    
    Hint: C. G.S = 175000                        G. P = 43250              Sales = 218250

18. Muriuki’s corrected Trial Balance (4 mks)
    Muriuki Trial Balance as at 31/12/2017
    Fixed Assets         Shs                 Capital         230000
    Land                           110000       short term liabilities
    Machinery                  90000           creditors     60000
    Debtors                      80000
    Prepaid rent              10000
    = 290000              290000

19.  
    1. Sales ledger – Records all credit sales of a business
    2. Private ledger – Records owners capital and drawing / exclusively used by owner(s)
    3. Nominal ledger – Maintains revenue and expense accounts such as sales and Purchases
    4. Cash book – Contains cash and Bank accounts

20. Components of a business plan (1 x 4 = 4mks)
    1. Business description name location e.t.c
    2. Product description – goods and services provided
    3. Skills needed/ Types of employees
    4. Management personnel
    5. Market served
    6. Amount of finance required
    7. Projections
    8. Summary
       (1 x 4 = 4mks)
21.  
    1. Employment
    2. Mobilizing savings
    3. Revenue to the government
    4. Creating confidence in investors
    5. Continuity of business
    6. Spreading risk
    7. Measure used by C. B. K to control money supply (1 x 4 = 4mks)
22.  
    1. Bank supply
    2. Open Market Operations (OMO)
    3. Cash and liquidity ratio
    4. Selective Credit
    5. Compulsory deposits
    6. Direct actions
23. Feature of perfect competition
    1. Uniform buyers and sellers
    2. No government interference
    3. There’s freedom of entry and exit
    4. Many buyers and sellers
    5. No excess demand or supply
       (1 x 4 = 4mks)
24.  
    1. Units of carriage
    2. Method of propulsion
    3. Way
    4. Terminals
25. Types of unemployment
    1. Seasonal
    2. Hidden/disguised/underemployment
    3. Structural
    4. Cyclical