Business Studies Paper 1 Questions and Answers - Pavement Pre-Mock Exams 2021/2022

INSTRUCTIONS TO CANDIDATES:

• Answer all the questions

1. Highlight four ways in which business studies may be of benefit to an individual. (4 marks)
2. Outline four features of economic resources. (4 Marks)
3. Highlight four characteristics of labour as a factor of production. (4 Marks)
4. List four sources of business idea. (4 Marks)
5. Highlight four demerits of a carbon copying in the reproduction of documents. (4 Marks)
6. Outline four differences between hire purchase and installment buying. (4 Marks)
7. Mention four current trends in forms of business units. (4 Marks)
8. Outline four duties of commercial attaches. (4 Marks)
9. Highlight four advantages of human porterage. (4 Marks)
10. Outline four ways that the government can use to influence the quantity of a commodity supplied.   (4 Marks)
11. List four factors that determine the size of a firm. (4 Marks)
12. Outline four factors that a producer would consider when selecting a distribution channel. (4 Marks)
13. Outline four challenges that may be encountered when measuring national income using income approach.
    (4 Marks)
14. The following information was obtained from the records of Biashara traders as at 31^st December 2014.
                                       Sh
    Long term loan           20,000
    Debtors                       6,000
    Cash at bank              24,000
    Creditors                    14, 000
    Furniture                    40,000
    Stock                         10,000
    Prepare Biashara Traders balance sheet as at 31^st December 2014.
15. The document shown was issued by Jimcar traders to Mueni
    
    Outline four circumstances under which the above document may be issued. (4marks)
16. The following information was extracted from the books of Sunrise Enterprise on 30^th June 2012
    

    Item	Shs
    Purchases	200,000
    Opening stock	44,000
    Closiing stock	52,000
    Mark-up	20%

    Prepare the Trading account of Sunrise Enterprise for the year ended 30th June 2012. (4 Marks)
17. Outline four circumstances under which sign language would be appropriate. (4 Marks)
18. Highlight four possible consequences that may arise due to poor arrangement of goods in a warehouse. (4 Marks)
19. Highlight four reasons that may necessitate insurance companies to re-insurance. (4 Marks)
20. Outline four ways in which a government may regulate business in a country. (4 Marks).
21. Outline four advantages of window display as a method of product promotion. (4 Marks)
22. Outline four negative effects of an ageing population in an economy. (4 Marks)
23. On 1 April 2014, Kama Traders had Sh 200,000 in cash and Sh 70,000 bank overdraft.
    During the month the following transactions took place.
    April 10:  A debtor settled his account of sh 500,000 by cheque less 5% cash
                   Discount.
    April 15:  Settled Jane’s account of sh 90,000 by cheque less 3% cash discount.
    April 30:  Banked all cash except sh 40,000.
    Enter the above information in the cash book given. (4 Mks)
    Cash book
    

    Dr										Cr
    Date	Details	Discount Allowed	Cash	Bank		Date	Details	Discount Received	Cash	Bank

24. Highlight four advantages of a fixed deposit account. (4 Marks)
25. State four sources of monopoly power. (4 Marks)

MARKING SCHEME

1. Benefits of business studies to an individual.
   
   • Assist individual in appreciating the role of business in provision of goods and service.
     
   • Assist individual to acquire self-discipline and positive attitude towards work.
     
   • Equips individual with abilities to promote cooperation in society through trade.
     
   • Enables individuals to understand the role of government in business activities.
     
   • Helps individuals to develop positive attitude towards the environment.
     
   • Equips the individual with knowledge and skills required to evaluate business performance.
     Any 4 x 1 = 4Mks
2. Features of economic resources.
   • Scarce in supply.
   • Have money value.
   • Unevenly distributed.
   • Have utility.
   • Have alternative uses.
   • Can change ownership
   • Can be combined
   • Can be complimentary
     Any 4 x 1 = 4 Mks
3. Characteristics of labour as a factor of production.
   • A basic factor of production.
   • Cannot be stored
   • Labour cannot be separated from labourer.
   • Labourers sell their labour and not themselves
   • Labour is mobile
   • It is human, with ability to think and capacity to get annoyed.
     Any 4 x 1 = 4 Mks
4. Sources of business idea.
   • Newspapers
   • Shows and exhibitions
   • Magazine articles
   • Hobbies
   • Vocational training and experience.
   • Survey.
   • Waste products
   • Spotting a market gap(Niche)
     Any 4 x 1 = 4 Mks
5. Demerits of carbon copying in the reproduction of documents.
   1. Not convenient for many copies.
   2. Copies could be misaligned.
   3. Poor quality copies.
   4. Difficult to produce different colours.
   5. Copies of photographs cannot be reproduced.
      Any 4 x 1 = 4 Mks
6. Differences between hire purchase and Installment buying.
   

   Hire purchase	Installment buying
   (a) Buyer does not become the owner of the goods on taking their possession.	(a) The buyer becomes the owner of the goods on taking their possession.
   (b) The buyer cannot resell the goods since he is not the legal owner.	(b)Can resell the goods as he/she is the legal owner of the goods.
   (c) Hire purchase prices is usually higher than the price of goods bought on credit	(c) Price of goods bought on installment is lower than that of the same goods bought on hire purchase.
   (d) If the buyer defaults in paying any installment goods may be repossessed by the owner	(d)Goods cannot be repossessed if the buyer defaults payment but the buyer can be sued.

7. Current trends to forms of business units.
   1. Holding companies.
   2. Cartels.
   3. Privatisation
   4. Absorptions ( take over)
   5. Mergers (amalgamation)
   6. Check off system.
   7. Burial Benevolent funds
   8. Front office savings account
   9. Franchising
   10. Trusts
   11. Globalisation
   12. Performance Contract
       Any 4 x 1 = 4 Mks)
8. Duties of commercial attaches
   • Explore and identify new markets for more export.
   • Research and analyse markets for exports from their home countries.
   • Keep statistics of products eg volumes, packaging sizes and methods of manufacturing.
   • Attend meetings, seminars and workshops on trade pattern’s of the countries and keep data of new markets for exports
   • Publish and advertise their countries exports in business journals and magazines
   • Select buyers, agents and distributors of the home country’s exports.
     Any 4 x 1 = 4 Mks)
9. Advantages of human porterage.
   1. Could be the only means of transport available.
   2. Compliments other means of transport.
   3. Flexible as it has no fixed time tableMay be a cheap means compared to other means.
   4. Readily available when required.
   5. Convenient over short distance.
      Any 4 x 1 = 4 Mks
10. Ways the government can use to influence the quantity of a commodity supplied.
    1. Taxation.
    2. Subsides
    3. Quotas
    4. Price control
       4 x 1 = 4 Mks
11. Factors that determine the size of firm.
    1. Number of Employees.
    2. Volume of output.
    3. Floor area covered by premise.
    4. Capital invested
    5. Market served.
    6. Sales volume.
       4 x 1 = 4 Mks
12. Factors to consider when selecting a distribution channel.
    1. Nature of the product.
    2. Nature of the market
    3. Role of intermediaries.
    4. Resources and size of the firm
    5. Competitors
    6. Government policy
    7. Marketing Risks
       Any 4 x 1  = 4 Mks
13. Challenges encountered when measuring national income using income approach.
    1. Transfer payment- since it is difficult to impute proportion of income constituted by those transfers.
    2. Problem of inaccurate data.
    3. Due to price fluctuation – very difficult to calculate national income accurately.
    4. Problem of handing illegal and unrecorded economic activities.
       Any4 x 1 = 4 Mks
14.                                         BIASHARA TRADERS
                                               BALANCE SHEET
                                         As at 31^st December 2014
    Furniture           40,000✔                     Capital                    46,000✔
    Debtors              6,000✔                      Long-term loan       20,000✔
    Stock                10,000✔                      Creditors                14,000✔
    Cash at bank    24,000✔
                              80,000                                                        80,000✔
      8 ticks x ½ = 4 Mks)
15. Circumstances for issuing a credit note
    • If Mueni had been overcharge
    • If mueni had returned some goods due to damage.
    • If Mueni was charged for goods not supplied.
    • If Mueni returned empty containers whose cost was included in the voice.
    • If Mueni had merited some discounts which was not deducted from the invoice.
      Any4 x 1 = 4 Mks
16.                                   SUNRISE ENTREPRISE
                                       TRADING ACCOUNT
                            FOR THE YEAR ENDED 30^TH JUNE 2012.
    Opening stock                 44000✔
    Add Purchases              200000✔                Sales          230,400✔
                                          ✔244000
    Less closing stock           52000✔
    Cost of goods sold        192000✔
    Gross profit c/d               38400✔                                                     
                                          230400                                       230,400   
    8 Ticks x ½ = 4 Mks
17. Circumstances under which sign language would be appropriate.
    1. When the environment is noisy.
    2. Where the audience is not literate
    3. Where the message is intended to reach a large number of people.
    4. Where there is need to reinforce and clarify a written message.
       4 x 1 = 4 Mks
18. Possible consequences as a result of poor arrangement of goods in a ware house.
    1. Theft of goods.
    2. Delays in clearance.
    3. Damage of goods.
    4. Decline in quality of goods due to contamination
       4 x 1 = 4 Mks
19. Reasons that may necessitate insurance companies to re- insure.
    1. Where the value of property is great.
    2. When chances of loss through the insured risks are high.
    3. When the insurance company has insured many different risks
    4. When the insurance company wishes to share liability in the event a major loss occurring.
    5. Government takes it a legal requirement for an insurance to re-insure.
       Any 4 x 1 = 4 Mks
20. Ways through which the government regulates business in Kenya
    1. By licensing of business in the country
    2. Imposing taxation
    3. Setting standards for both locally produced and imported goods
    4. Formulation of rules & regulation that must be adhered to in various businesses operations.
    5. Fixing quotas
    6. Imposing total ban on new businesses
21. Advantages of window display as a method of product promotion.
    1. Relatively cheap method of product promotion.
    2. The method may induce the customer to buy the product displayed.
    3. The display enables customers to get features of the product such as colour, size and price before making a decision whether to buy or not.
    4. Customers who are attracted into the shop are likely to buy other products other than those on display.
       4 x 1 = 4 Mks)
22. Negative effects of ageing population in an economy.
    1. High dependence of old people on working population.
    2. Old people tend to provide a less mobile labour force.
    3. Low labor supply as old people tends to be less productive.
    4. Society become less progressive as it lacks input of energetic youth.
    5. Lead to unemployment due to fall in demand of goods and services required by the youth.
       Any 4 x 1 = 4 Mks
23.                                                        KAMA TRADERS CASH BOOK.
    

    Dr										Cr
    Date	Details	Discount Allowed	Cash	Bank		Date	Details	Discount Received	Cash	Bank
    2014 April 1	Bal b/d		200,000✔			2014 April 1	Bal b/d			70,000✔
    10	Debtor	25,000✔		475,000✔		15	Jane	2,700✔		87,300✔
    30	Cash			160,000		30	Bank		160,000✔

    8 ticks x ½ = 4 Mks
24. Disadvantages of fixed deposit account.
    1. The amount deposited in the account earns relatively high interest than in other accounts.
    2. Deposit held in the account can be used as a security for a loan.
    3. There is no ledger charge on the account.
    4. Restricted withdrawal encourage saving.
    5. The account holder has time to plan for the money deposited in the account.
       Any 4 x 1 = 4 Mks
25. Sources of monopoly power.
    1. Where a firm has total ownership of right of production.
    2. Where the firm controls an important raw material.
    3. Where the firms command a substantial market share (market best served by one firm)
    4. Where the capital outlay/invested is large.
    5. Where a group of firms combine to form a new business
    6. Where the firm enjoys greater internal economies of scale.
       Any 4 x 1 = 4 Mks