Business Studies Paper 1 Questions and Answers - Cekena Pre Mocks 2022

INSTRUCTION

1. Write your name, class, Admission number and name of your school in the spaces provided
2. Answer all questions
3. This paper consists of 25 questions
4. All your answers must be written in the spaces provided in the question paper

QUESTIONS

1. Outline Four sources of government revenue (4mk)
2. State Four reasons why consumer should satisfy basic wants before secondary wants (4mks)
3. Give Four reasons why consumers need protection (4mks)
4. Outline Four factors that transaction motive depend on (4mks)
5. Outline Four gaps that may influence an entrepreneur in the market (4mks)
6. The following balances were extracted from the books of Kombo Traders for the year ended 31st Dec 2021
                Shs.
   Sales 500,000
   Purchases 320,000
   Stock 31,12,21 40,000
   Stock 1,1,2 80,000
   Debtor 140,000
   Creditors 90000
   Calculate
   1. Margin (2mks)
   2. Current ratio (1mk)
   3. Rate of stock turnover (1mk)
7. State Four benefit of indirect production to the society (4mks)
8. Mention Four transaction that are recorded in the general journal (4mks)
9. State the use of the following documents used in home trade (4mks)
   1. Proforma invoice
   2. Quotation
   3. Advice note
   4. Credit note
10. Outline Four benefits of communication to a business (4mks)
11. State Four aspects of office etiquette that an office worker should possess in order to do his/her duties effectively and efficiently (4mks)
12. Prepare a trial balance from the following balances extracted from the books of Ojwang’s business on 30th June 2006 (4mks)
                   Shs.
    Capital 80,000
    Cash 53000
    Furniture 10000
    Purchases 15000
    Sales 8000
    Rent 6000
    Salaries 9000
    Bank loan 5000
13. Outline Four internal environmental factors that positivity influence the operations of a business (4mks) 
14. Outline Four ways in which households contributes to the national income of a country (4mks)
15. State Four ways in which nature of goods would influence the choice of transport (4mks)
16. The graph below represents the demand and supply curves of milk
    
    State Four effects of a shift of the demand curves to the left (4mks)
17. List Four benefits of a bonded warehouse to the government (4mks)
18. This following figures relate to the Jumbo trader for the year ended 31/12/13
    Details                   Shs
    Capital 31/10/13 940000
    Net loss 20000
    Additional investments 420000
    Monthly drawings 5000
    Determine the capital as at 1/1/2013 (4mks)
19. Highlight Four factors that should be considered when deciding on the method to use to promote a firms products (4mks)
20. In the spaces provided below indicate with a tick whether each of the following statements relate to preferences of ordinary shares (4mks)
    

    Statement	Preferences shares	Ordinary shares
    a.) Represent ownership
    b.)Rate of dividend is fixed
    c.)Has voting rights
    d.)Considered, first in liquidation

21. Highlight Four benefits of locating firms in different parts of the country (4mks)
22. Highlight Four factors that determine country’s Fertility (4mks)
23. Highlight Four circumstances under which a manufacturer may prefer to sell goods directly to the consumers (4mks)
24. Highlight Four features of a monopoly (4mks)
25. State the principle of insurance to which of the following statements relates (4mks)
    1. There is a close connection between the cause of loss and the actual risk insured against, for the compensation to be effected.
    2. A person can only insure property whose destruction would result to a financial loss to him/her
    3. Restoring the insured to the financial position he/she was in, just before the risk occurred .
    4. Once an insured is fully compensated for loss suffered, the insured is not supposed to gain out of the loss

MARKING SCHEME

1. Outline Four sources of government revenue (4mk)
   1. Grants and donations
   2. Licensing fee
   3. Court fines
   4. Rents and rates received for use of government
   5. Dividends and profits earned from investments
   6. Internal borrowing
   7. Profits from sale to government assets/properties
   8. External borrowing
   9. Escheats
   10. Interest earned from loans
   11. Grants and donations
2. State Four reasons why consumer should satisfy basic wants before secondary wants (4mks)
   1. They are felt needs
   2. They are essential for human suirvival
   3. They cannot be postponed
   4. They are universal
3. Give Four reasons why consumers need protection (4mks)
   1. To protect them from unfair pricing by traders
   2. To protect them from consuming low/ poor/ inferior quality goods and services
   3. Be shielded from misleading / false advertisement / information about products.
   4. Safeguarding them from occupying unsafe structures / building that endanger consumers life
   5. To protect them from harmful / unhygienic / expired products
   6. To protect them from breach of contract / failure to honor to contract
   7. Underweight/ undersized goods
   8. Socially unacceptable goods / services/ sale of offensive goods and services
   9. Illegal goods / services
   10. Unhygienic environment/ premises
4. Outline Four factors that transaction motive depend on (4mks)
   1. individuals’ level of income
   2. Interval between receipts of income / frequency of receiving income
   3. Individual spending habits
   4. Prices of commodities
   5. Availability of credits
5. OutlineFour gaps that may influence on entrepreneur in the market (4mks)
   1. Low quality of goods and services
   2. Unavailability of product in the market
   3. Insufficient quantities / shortage of goods or services
   4. Highly priced products / unaffordable products
   5. Limited variety of products in the market
6. The following balances were entranced from the books of Kombo Traders for the year ended 31st Dec 2021
   Sales Shs.
   Sales 500,000
   Purchases 320,000
   Stock 31,12,21 40,000
   Stock 1,1,2 80,000
   Debtor 140,000
   Creditors 90000
   Calculate
   
   1. Margin
      Gross profit/sales x 100
      Shs (80,000 + 320000 - 40,000)
      = Shs 360000
      360000/500000x 100
      = 72% (2mks)
   2. Current ratio (1mk)
      = (Current Assets)/(Current liabilties)
      = (140,000+40000)/90000
      =180000/90000
      = 2/1 or 2:1
   3. Rate of stock turnover (1mk)
      =(Costs of good sold )/(Average stock)
      =((80,000+320000))/(80,000+40,000@2) =400000/60,000 =6.66 times = 7 times
7. State Four benefit if indirect production to the society (4mks)
   1. Improved standards of living because of high quality products
   2. Adequate quality of products due to surplus production
   3. Availability of employment opportunities because of the various levels of production
   4. Stable prices of products because of large scale production
   5. Improve infrastructure e.g roads
   6. improve societal cohesion because many people come together to trade
   7. Maximum utilization of available resources
   8. Improves social amenities of hospitals / schools
   9. High quality services are produced
   10. High quality goods are produced
8. MentionFour transaction that are recorded in the general journal (4mks)
   1. Purchases of fixed assets on credit
   2. Sell of fixed assets on credit
   3. Opening entries
   4. Closing entries and other transfers
   5. Correction of errors
9. State the use of the following documents used in home trade (4mks)
   1. Proforma invoice
      Used to demand for payments before goods are delivered
   2. Quotation
      Used to reply for specific letter of inquiry
   3. Advice note
      Informs the buyer that goods order have been dispatched
   4. Credit note
      Used to correct an overcharged
10. Outline Four benefits of communication to business (4mks)
    1. Increased sales because of product promotion
    2. Helps clarify issues / points to avoid confusion
    3. Promotes team work through Consultation / sharing of ideas
    4. Improves / enhance the image/ reputation of business
    5. Increased employees motivation due to clarification of goals /objectives
    6. Facilitate decision making within the business for better management
    7. Enhances coordination between the department to ensure that all work towards achieving the set-objectives .
    8. Helps maintain positives relationship with stokeholders
11. State Four aspects of office etiquette that an office worker should possess in order to do his/her effectively duties and efficiently (4mks)
    1. Should be loyal /display loyalty
    2. Should be honest/ uphold honesty
    3. Observe punctuality
    4. Have courtesy / Be courteous
    5. Cooperate with others
    6. Respect others
12. Prepare a trial balance from the following balances extracted four the books of Ojwang’s business on 30th June 2006
    Ojwang’s Business
    Trial balance
    As at 30th June 2006
    

    Details	Dr.(Shs)	Cr. (Shs)
    Capital Cash Furniture Purchases Sales Rent Salaries Bank loan	53000 10000 15000   6000 9000	80,000       8000     5000
    	93000	93000

    (8 x ½ = 4) mks
13. Outline Four internal environmental factors that possibly the operations of a business (4mks)
    1. Good management style / business structure
    2. Hard working / industrious /Committed/highly skilled emoloyees / workers
    3. Adequate capital /finances business / resources
    4. Committed owners / owners with clear / smart objectives
    5. Good marketing strategies/ handling of customers
    6. Good research and development
    7. Use of modern technology
    8. A culture of hard work / Good business culture
14. Outline Four ways in which households contributes to the national income of a country (4mks)
    1. Provision of labor
    2. Provision of land
    3. Provision of capital / Savings investments
    4. Provision of entrepreneurship
    5. Payment of taxes
    6. Consumption of goods and services
15. State Four ways in which nature of goods would influence the choice transport (4mks)
    1. Perishable goods require fast means of transport
    2. Fragile goods require a smooth / safe/ secure means of transport
    3. Valuable / highly valued goods require a secure means
    4. Urgently needed goods require a fast means
    5. Heavy and bulky goods require convenient/ spacious means of transport
16. The graph below represents the demand and supply curves of milk
    
    State Four effects of a shift of the demand curves to the left (4mks)
    1. The price will decrease / fall / drop
    2. The quantity demand will decrease
    3. The equilibrium quantity shifts to the left/ decreases
    4. The equilibrium price shift downward / decreases
17. List Four benefits of a bonded warehouse to the government (4mks)
    1. Enables the government to curb taxes evasion
    2. Enables the government to earn revenue through custom duties
    3. Enables the government to control quality / quantity of goods imported
    4. Enables the government to prevent importation of harmful commodities
    5. Enables the government to collect statistical data on imported good / goods transit
    6. Helps the government to solve the problems of unemployment/ joblessness
    7. Enables the government to inspect the type of goods entering the country
18. This following figures relate to the Jumbo trader for the year ended 31/12/13
    Details Shs
    Capital 31/10/13 940000
    Net loss 20000
    Additional investments 420000
    Determine the capital as at 1/1/2013 (4mks)
    
    1. Kshs (940,000 + (20,000) + (5000 X 12) -420,000)
       = Kshs 600,000
19. HighlightFour factors that should be considered when deciding on the method to use to promote firm products (4mks)
    1. The costs of the method
    2. Geographical area of coverage / extent / size of the market
    3. Target group/ type of consumers/nature of market segment
    4. Speed of medium / method in relation to the urgency of the message
    5. Nature of product / type of products
    6. Technical products required demonstrations
    7. Nature of the message
    8. Nature of the consumers / size of the market to be reached
    9. The intended impression / impact
20. In the spaces provided below indicate with a tick whether each of the following statements relate to preferences of ordinary shares (4mks)
    1. Ordinary shares
    2. Preferences shares
    3. Ordinary shares
    4. preferences shares
21. Highlight Four benefits of locating firms in the different part of the country (4mks)
    1. Curbs rural – urban migration easing pressure on social amenities
    2. creates employments / jobs to rural dwellers enabling them to earn income
    3. Avails to wide variety of goods hence enhance consumers choice
    4. Promotes equal/ even distribution of infrastructure / development
    5. Leads to transfer of technology/ social amenities/ school/ hospitals/security
    6. Provides market for raw materials/ goods and services
    7. Full utilization of local resources
    8. Reduced/ minimize pollution in particular areas
    9. Reduced/ minimize effect of terrorism/ catastrophes/ calamities
    10. Reduce income inequality
    11. Balanced/ equitable/ even regional development
    12. Reduced social problems e.g development slums
    13. Promotes growth of towns/ urbanization
22. Highlight Four factors that determine country’s Fertility (4mks)
    1. Age and sex structure of the population
    2. The incidence of bareness
    3. Social / cultural attitudes towards child – bearing before marriage
    4. Social significance of children to parents
    5. The marriage rate among people in the productive age bracket
23. Highlight Four circumstance under which a manufacture may prefer to sell goods directly to the consumers (4mks)
    1. Where the product is highly technical
    2. Where the product is perishable
    3. Where the market is small / localized
    4. Where the producer would want to get immediate feedback
    5. Where there is stiff competition
    6. Where it is the policy of the business
    7. Where it is the policy of the government
24. Highlight Four features on a monopoly (4mks)
    1. There exists only one producer for the entire market
    2. the product of the firm does not have close substitute
    3. There is no free entry of the new firm in the market
    4. Prices are fixed by the producer / supplier
    5. Price discrimination is possible
    6. Sales of substandard / inferior quality products is possible
25. State the principle of insurance to which of the following statements relates (4mks)
    1. There is a close connection between the cause of loss and the actual risk insured against, for the compensation to be effected.
       Proximate cause / doctrine of proximate cause
    2. A person can only insure property whose destruction would result to a financial loss to him/her.
       Insurable interest
    3. Restoring the insured to the financial position he/she was in just before the risk occurred.
       Indemnity
    4. Once an insure is fully compensated for loss suffered the insured is not supposed to gain out of the loss
       Subrogation