Business Studies Paper 1 Questions and Answers - Bunamfan Cluster Pre Mock Exam 2022

INSTRUCTIONS TO CANDIDATES

• Answer all the questions 
• Candidates should answer the questions in English.

Questions

1. Highlight three benefits of business to a society.(3 marks
2. State four advantages of locating a firm near the source of raw materials.(4 marks)
3. Highlight four trends in communication. (4 marks)
4. Outline four advantages of a rapidly growing population. (4 marks)
5. Outline four ways through which peace within a country benefits a business.(4 marks)
6. Primary level is the major contributor of gross domestic product in developing countries as compared to other levels of production.State four reasons for this.(4 marks)
7. State four advantages of using intermediaries in the distribution of goods.(4 marks)
8. Highlight four differences between acooperative societies and private limited company. (4 marks)
9. State four advantages of using modern technology in an office. (4 marks)
10. The following information was extracted from the books of Venus traders as at 31st December 2020:
    

    Details	shs
    5 years loan  Land  Cash  Creditors  Building	256,700 120,000 24,600 37,400 |430,500

    Prepare Venus traders balance sheet as at 31st December 2020.(4 marks)
11. Outline four factors that may hinder geographical mobility of labour. (4 marks)
12. The following relate to Furaha Traders for the year 2020
    1. closing capital (31.12.2020) sh 300,000
    2. the owner converted his personal computer valued at sh 35,000 into business use.
    3. the owner had withdrawn goods worth sh 40,000 for personal use.
    4. incurred losses amounting to sh 65,000
       Determine Furaha Traders intial capital on(1.01.2006). (4 marks)
13. For each of the following source documents ,indicate the book of original entry:(4 marks)
    

    Source document	Book of original entry
    Received receipt
    Incoming invoice
    Outgoing credit note
    Incoming cash sale slips

14. Highlight four measures that a government may take to reduce the mortality rate in a country. (4 marks)
15. The following balances were extracted from the books of Mavuno Traders for the year ended 31st march 2021.
    

    Gross profit.  Discount allowed.  Carriage outwards.  Rent received.  Office expenses.  Salaries

    186,200 7,400 13,500 34,300 19,600 57,000

    Prepare a profit and loss for the ended 31st march 2021(5 marks)
16. State four factors that determine the amount of money held for precautionary motive. (4 marks)
17. State four methods of sale promotion a business may adopt.(4 marks)
18. State four reasons why consumers have to make a choice between competing needs.(4 marks)
19. Identify the retailers described in the statement given below (4marks)
    

    Statement	Retailers
    a)sell goods by displaying them along the street
    b)move from one place to another on foot selling their products
    c)Dispenses goods with the use of coins operated machines
    d)Meet on designated days in open ground to sell their goods.

20. State four ways a business can use to motivate it's work force.(4 marks)
21. List four types of businesses activities. (4 marks)
22. Highlight four benefits of selling goods online. (4 marks)
23. Identify four circumstances under which an insurance contract may be terminated.(4 marks)
24. State four characteristics of a successful entrepreneurs.(4 marks)
25. Show the effect of each of the following transaction to capital,assets and liabilitiesindicating if its increasing(+),decreasing(-) or nil(0). (4 marks)
    

    Transaction	Capital	Asset	Liability
    a)Converted private house into business premises
    b)Paid creditors in cash
    c)Sold a business car valued at sh 400,000 for sh 300,000 on credit
    d)Sold goods on credit

Marking Scheme

1. Benefits of business studies to a society. (3 marks)
   • Business studies is meant to prepare learners to function as informed consumers, producers and workers in the society.
   • Equips the individual with skills and knowledge to manage a business.
   • Prepares one for future career in business/employment
   • Enables one to relate issues affecting business
   • Enables one to relate business activities taking place globally
   • Enables one to identify business opportunities to venture into.
   • Prepares one for further studies
   • Enables the individual to think ethically and make sound judgments in day to day activities.
   • Makes an individual to appreciate the role of government in business.
   • Make individual disciplines and have positive attitudes towards work.
2. Four advantages of locating a firm near the source of raw materials 4 MKS)
   • Reduced transport cost
   • Reduced storage cost for raw materials
   • Continuous production as there constant supply of raw materials
   • Firm can getFresh supplies and undamaged of raw materials
   • Firm can select quality of raw materials it desires
3. Four trends in communication. (4 marks)
   • Use of computers/internet
   • Use of mobile phone
   • E-mail
   • Use of SMS
   • Introduction of customer care services
4. Four advantages of a rapidly growing population. (4 marks)
   • Wide market for goods /services.
   • Better utilization of resources .
   • Creates a pool of labour supply /skilled labour force.
   • Enhance creativity and innovation.
   • Stimulates investments.
   • Promotes labour mobility.
5. four ways through which peace within a country benefits a business.(4 marks)
   • Increase production and supply of raw materials
   • Free movement of goods and services
   • Free movement of labour and other factors of production
   • Increased sale volume as more customers can access the business/increased profit
   • Decrease in loss as a result as vandalism,theft and damage of business property
6.   
   • inappropriate technology
   • Inappropriate skills
   • Inadequate capita
   • Overrelince on subsistence production.
7. State four advantages of using intermediaries in the distribution of goods- Reducing transaction between producers and consumers
   • Breaking bulk
   • Accumulating bulk
   • Taking of holding goods
   • Providing finance to producers
   • Product promotion
   • Transporting goods
   • Storage goods
8. four differences between cooperative societies and private limited company. (4 marks)
   

   Cooperative	Private limited company
   1. main objective is service to members	1.main objective is to make profit
   2. formed by minimum of ten members and no maximum	2.formed by a minimum of two and no maximum
   3. Main source of capital is members contribution	3.main source of capital is sale of shares
   4. Managed by a committee of members	4.managed by one or two directors
   5. firmed through cooperative act	5.formed throy company act

9. four avatages of using modern technology in an office. (4 marks)
   • Fast/speed
   • Accuracy
   • Presentable outcome
   • Ease flow of communication
   • Reduces cost of communication
10.          
    

    Venus Traders Balance sheet As at 31st December 2020
    Land Cash Building	120 000 24 600 430 500	Capital Creditors 5-year loan	280 500 37 409 256 700
    574 600		574 600

11. Four factors that may hinder geographical mobility of labour. (4 marks)
    • Poor transport network
    • Political instability/insecurity
    • Family ties
    • Health of a person
    • Age of a person
    • Expected renumeration
12. The following relate to Furaha Traders for the year 2020
    1. closing capital (31.12.2020) sh 300,000
    2. the owner converted his personal computer valued at sh 35,000 into business use.
    3. the owner had withdrawn goods worth sh 40,000 for personal use.
    4. incurred losses amounting to sh 65,000
       Determine Furaha Traders intial capital on(1.01.2006). (4 marks)
       • INITIAL CAPITAL _ 300,000
13. For each of the following source documents ,indicate the book of original entry (4 marks)
    

    Source document	Book of original entry
    Received receipt	Cash payment journal
    Incoming invoice	Purchases journal
    Outgoing credit note	Sales journal
    Incoming cash sale slips	Purchases journal

14. four measures that a government may take to reduce the mortality rate in a country. (4 marks)
    • reduce accident on roads
    • Fast response to emergency cases
    • Ensures security/political stability
    • Provide better health care
    • Ensures food security
15. The following balances were extracted from the books of Mavuno Traders for the year ended 31st march 2021.
    

    Gross profit.   Discount allowed.   Carriage outwards.   Rent received.   Office expenses.   Salaries.

    186,200 7,400 13,500 34,300 19,600 57,000

    Prepare a profit and loss for the ended 31st march 2021(5 marks)
16. State four factors that determine the amount of money held for precautionary motive. (4 marks)
    • Level of income- the higher the income the higher the amount of money held for precautionary motive.
    • Family status- high class families tend to hold more money for precautionary motive than low class families.
    • Age of the individual- the aged tend to hold more money for precautionary motive than the young since they have more uncertainties than the young.
    • Number of dependant- the more the dependants one has, the more the money they are likely to hold for precautionary motive.
    • Individual’s temperament- pessimists tend to hold more money for precautionary motives than the optimists because they normally think things will go wrong.
    • Duration between incomes- those who earn money after a short time are likely to keep less money than those who earn money after a long time.
17. State four methods of sale promotion a business may adopt.(4 marks)
    • Psychological selling
    • Free sample
    • Free gift
    • Coupons
    • Use of Promotional convoy
    • Loss leader
18. four reasons why consumers have to make a choice between competing needs.(4 marks)
    • Because resources available for satisfying human wants are limited
    • Because human wants vary in urgency and intensity
    • Because there is variation in tastes and preferences of human wants
    • Because human wants are too many to be satisfied at once
19.    
    1. roadside seller
    2. hawkers
    3. automated vending machine
    4. open air market
20. Four ways a business can use to motivate it's work force.(4 marks)
    • Timely payments
    • Promotion based on merits
    • Involving worker's in decisiy making
    • Recognizing efforts
    • Organizing sports,games,team building among workers
    • Training of workers
21.    
    • Extraction
    • Manufacturing
    • Processing
    • Provision of services
    • Trade
    • Distribution
22. four benefits of selling goods online. (4 marks)
    • Faster buying process. Customers can spend less time shopping for what they want. ...
    • Store and product listing creation. ...
    • Cost reduction. ...
    • Affordable advertising and marketing. ...
    • Flexibility for customers. ...
    • Product and price comparison. ...
    • No reach limitations. ...
    • Faster response to buyer/market demands.
23. four circumstances under which an insurance contract may be terminated.(4 marks)
    • When the insured is compensated
    • When the risk has occurred
    • If it is not for a legal purpose.
    • Failure to renew a contract.
    • When the insurer is finally wound.
    • Not obeying i.e. going against the principle of uberima fides.
    • Insolvement.
    • When the parties don't have legal capacity to contract.
24.    
    • abilty to solve problems
    • Intiative
    • Future/goal oriented
    • Good decision maker
    • Creative
25. Show the effect of each of the following transaction to capital,assets and liabilities indicating if its increasing(+),decreasing(-) or nil(0). (4 marks)
    

    Transaction	Capital	Asset	Liability
    a)Converted private house into business premises	+	+	0
    b)Paid creditors in cash	0	-	-
    c)Sold a business car valued at sh 400,000 for sh 300,000 on credit	-	-	0
    d)Sold goods on credit	-	+	0