Business Studies Paper 1 Questions and Answers - Asumbi Girls Highschool Pre-Mock Exams May-June 2022

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Instructions to candidates.

  1. Write your name and adm number in the spaces provided above.
  2. Sign and write the date of examination in the spaces provided above.
  3. Answer all the questions.
  4. All answers should be written in the spaces provided in this booklet.
  5. This paper consists of 7 printed pages.
  6. Candidates should check the question paper to ascertain that all the pages are printed as indicated and that no questions are missing.
  7. Candidates should answer all the questions in English.


QUESTIONS

  1. Give four reasons that would lead a consumer buying goods directly from a producer (4mks)
  2. Outline four advantages of using mobile phone money transfer services. (4mks)
  3. Outline four requirements that are needed for a smooth functioning of a warehouse (4mks)
  4. Outline four limitations that are imposed on limited partner by law. (4mks)
  5. Give four disadvantages of operating enclosed office layout. (4mks)
  6. Outline four characteristics of under development. (4mks)
  7. Highlight four ways through which the state is putting in place to bring sanity to the matatu sector. (4mks)
  8. Using the book keeping equation. Fill the table below.

    Assets

    Capital

    Liabilities

    a.

    4650

    3200

    1,505,000

    807,000

    b.

    930,000

    c.

    450,000

    d.

    75,000

    57,000

  9. Outline four factors that determine the size of a population in a country. (4mks)
  10. Nyamu traders had the following information for the month of October 2007
    sh
    Opening stock     200,000
    Closing stock      300,000
    Purchases          500,000
    Margin                20%
    Prepare its trading account for the month of October 2007. (4mks)
  11. Highlight four negative effects of inflation. (4mks)
  12. State four limitations of using the output method in measuring national income. (4mks)
  13. Give four advantages of using e-mail communication in business (4mks)
  14. State any four benefits of using E-commerce in transacting business in an organization. (4mks)
  15. Give any four conditions that a county’s terms of trade is likely to improve. (4mks)
  16. Highlight four sources of public finance. (4mks)
  17. Differentiate between generic competition and enterprise completion. (4mks)
  18. For each of the following transaction, indicate the account to be debited and the account to be credited.

    Transaction

    Account to be debited

    Account  to be credited

    a. Sold goods on credit to Juma

       

    b. Bought motor van by cash

       

    c. Paid Maina a credit by cheque

       

    d. Purchased goods on credit from Aku for resale

       
  19. On 1st July 2012, Mara traders had sh 6,000 cash in hand and bank overdraft of sh 2,000. During the month the following transaction took place.
    July 2: Received cheque from debitor of sh 50,000
    July 5: Paid rent sh 2,000 cash
    July 15: Withdrew sh 5,000 for personal use
    July 25: Banked all the cash except sh 1,000
  20. Outline four reasons why small scale firms continue to exist in an economy dominated by large scale firms. (4mks)
  21. Identify the trader described by each of the following statements given below. (4mks)

    Statement

    Trader

    a. A wholesaler who specializes in selling goods to another specialized wholesalers

     

    b. A wholesaler who moves from place to place selling goods

     

    c. Sells goods to the final consumer

     

    d. Sells goods along busy highways

     
  22. In the table below identify the information extracted from each of the following source documents. (4mks)

    Source of documents

    Information extracted

    Cash payment voucher

     

    Outgoing receipts

     

    Incoming invoice

     

    Outgoing credit note

     
  23. The mere existence of natural resources in a country does not necessarily contribute to economic progress unless some conditions prevail. State the four conditions. (4mks)
  24. State the significant of the following insurance policies of a business purpose. (4mks)
    1. Fidelity guarantee
    2. Public liability
    3. Theft and burglary
    4. Workman’s compensation
  25. The following diagram shows a shift in supply curve. (4mks)
    25 sssfsfs
    State four factors that many have led to such a shift


MARKING SCHEME

  1.                      
    • If they are perishable
    • Made on demand/specification
    • If he/she is close to producer
    • If the goods are technical
    • If he/she is buying large amount
  2.                        
    • Keeps record, reference
    • Is fast
    • Easy to use
    • Is cheap
  3.                      
    • Equipment
    • Appropriate staff
    • Proper building
    • Proper recording system
    • Appropriate special facilities
  4.                  
    • Limited partner is not allowed to take part in management
    • The death, withdrawal or bankruptcy of a limited partner cannot cause the dissolution of a business
    • A person may be as a partner without the consent of existing limited partner.
    • Any difference on matters pertaining to business can only be decided by a majority of the general partner.
  5.                      
    • Costly to construct and maintain
    • No close supervision
    • Encourage laxity
    • A lot of time is wasted by workers moving from one place to other possible misuse of office facilities
  6.                  
    • Over dependence of foreign aid
    • High production growth rate
    • Unequal distribution of income
    • Low per capital income
    • Low level of saving
    • Under utilization on natural resources
  7.                  
    • Banning
    • Re-introducing alcoblows
    • Ensuring that matatus are not overloaded
    • Ensuring that vehicles are fitted with safety belts
    • Insist that all matatus should be fitted with speed governors
    • Licensing of all PSV vehicles.
  8.              
    1.  7,850
    2. 698,000
    3. 480,000
    4. 132,000
  9.                    
    1. Fertility rates
    2. Birth rate
    3. Mortality rate
    4. Migration rates
  10. Nyamu traders
    Trading A/C
    For the month ended 30th October, 2007

    Dr

    Cr

    Opening stock                                      200,000

    Add purchases                                     500,000

                                                                 700,000

    Less closing stock                                300,000

                                                                 400,000

    Gross profit c/d                                    100,000

                                                                  500,000

    Sales                       500,000

     

     

     

     

     

                                   500,000

  11.                                     
    • Reducing on profit
    • Wastage of time
    • Conflicts between employees and employers
    • Loss of creditors
    • Discourage savings
  12.                      
    • Possibility of double entry
    • Estimation of subsistence sector may be difficult
    • Hard to collect data on illegal activities
    • Difficult to determine output from abroad.
  13.                        
    • One can send messages that contain photograph
    • Ability to communicate to more than one person
    • Faster because information is sent at a press of button
    • There is evidence of communication
    • One can access the message using either
  14.                        
    • Facilitate access of large market
    • Faster way of doing business
    • Reduces paper work
    • Saves on the cost of sending, receiving and storing information
    • One can access important business information which would be used to enhance running of the business.
  15.                        
    • Price of imports declines while that of export remains constant
    • Price of imports remains constant while those of export increases
    • Price of imports declines while that of export increases.
    • Price of both import and export increases but export increases more
  16.                
    • Fines imposed by court on offenders
    • Proceedings from sale of government property
    • Rent and rates paid for the use of grit property
    • Taxes
    • Government borrowing
    • Dividends and profits earned by the government direct investment
  17. General competition refers to competition when products are used for the same purpose eg cinemas and discos while enterprise competition are a king of competition which is found where firm’s product are similar to those of other firms eg local shoes competing with imported shoes.
  18.              
          Account debited                 Account credited
    1. Juma a/c debtor                 Sales a/c
    2. Motor van a/c                     Cash a/c
    3. Maina a/c credits                 Bank a/c
    4. Purchase a/c                       Aku a/c
  19. Mara traders
    Two column cash book

    Date

    Particulars

    Cash

    Bank

     

    Date

    Particulars

    Cash

    Bank

    July 1

            2

          25

    Bal b/d

    Debtors

    Cash (c)

    6,000

     


    6,000

    50,000

    3,000

     


    53,000

     

    July 1

            5

           15

           25

           31

    Bal b/d

    Rent

    Drawing

    Bank

    Bal c/d

    2,000

    3,000

    1,000

    6,000

    2,000

    5,000

    446,000

       53,000

    12 ×1/3 = (4 marks)
  20.                
    • Size of the market
    • Nature of the product
    • Simplicity of the firm
    • Legal constraints
    • Rising cost of production
    • Flexibility of small firms
  21.                            
    1. Bulk jobbers
    2. Mobile wholesalers
    3. Retailers
    4. Roadside sellers
  22.                      
    • Unreceipted petty payment/receipt
    • Cash sales
    • Credit purchases
    • Returns inwards
  23.                
    • Knowledge of their existence
    • Knowledge of extremely technology
    • Availability of necessary skilled personnel
    • Know how using the resource
  24.                    
    • To crown the insured for losses suffered due to dishonest employee.
    • To protect third parties against accidental body injury, damage or loss to protect as a result of connection with insured business.
    • To cover loss of property arising from stealing or forceful entry or extra from premises by violent or forceful news.
    • To protect workers and domestic servant against injury, sickness, death arising not of their employment
  25.                        
    • Deterioration in technology
    • Increased cost of production
    • Future expectation of price increase
    • Reduction in the price of goods that are jointly produced
    • Setting in of natural calamities eg floods and drought
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