Business Studies Paper 1 Questions and Answers - Chogoria Murugi Zone Pre Mock Exams 2023

INSTRUCTIONS TO CANDIDATES

• Answer all questions

1. State four elements of the external environment that may negatively affect business operations. (4mks)
2. Outline four factors that make office managers to communicate to their staff in writing. (4mks)
3. Highlight four disadvantages of monopoly markets. (4mks)
4. Identify the books of original entry used in recording each of the following transactions of Turkwel traders. (4mks)
   

   	Transactions	Books of Original Entry
   a)	Sold goods on credit to Atieno
   b)	Bought goods on credit from Chantal Traders for sh 4000
   c)	Zuma returned goods worth sh 8000
   d)	Turkwel returned goods worth sh 11000 to Simba Traders

5. State four roles played by Nairobi stock exchange in Kenyan economy. (4mks)
6. Name four types of warehouses. (4mks)
7. State four reasons why consumers have to make a choice between competing needs.  (4mks)
8. Filling in the missing figures
   

   	Fixed Assets	Current Assets	Capital	Liabilities
   a)	275,500		315,000	115,500
   b)	182,000	108,700		217,100
   c)		76,400	123,100	91,900
   d)	313,450	211,340	189,170

9. Highlight four functions of money. (4mks)
10. Identify the type of utility credited in the following circumstances. (4mks)
    

    	Activity	Utility
    a)	Capentry
    b)	Selling bread to students
    c)	Warehousing of goods imported
    d)	Carriage of cargo to the market

11. The following are policies issued under marine insurance, fleet policy composite policy, voyage policy, time policy.
    Identify the policy that suits the description listed below.
    

    	Description	Marine policy
    a)	Covers a ship within a specified period of time
    b)	Covers a ship on a particular journey
    c)	Different insurers covers a ship for the same
    d)	Covers many vessels against losses under one

12. This is Mutegi’s demand schedule for bread in a week.
    

    Price per loaf (shs)	No. of loaves demanded
    30	1
    20	2
    15	4
    12	6
    10	8
    5	12
    1	20

    Required: Draw the demand curve of Mutegi’s bread for a whole week. (4mks)
13. The following information was extracted from the books of Jupiter Traders
    Rate of stock turnover 3 times
    Mark up 20%
    Opening stock shs 160 000
    Closing stock shs 200 000
    Required:
    1. Gross profit (2mks)
    2. Sales (2mks)
14. Outline four business ethics that a trader should observe when dealing with customers, employees, and other businesses. (4mks)
15. Highlight four reasons why the government requires businesses to obtain licences.   (4mks)
16. The following information was obtained from the books of Jakayo Traders as at 1^st July 2010.
                                    Shs
    Furniture                 20 000
    Stock                      8 000
    Creditor                  7 000
    Cash bank              12 000
    Long term loan       10 000
    Prepare Jakayo’s balance sheet as at 1^st July 2010. (4mks)
17. State four circumstance under which cash with order is mostly practiced. (4mks)
18. Highlight four reasons why a producer of goods may use intermediaries to distribute his goods. (4mks)
19. Outline four tools of monetary policy that government may use to reduce excess money in circulation. (4mks)
20. Highlight four benefits that would accrue to a firm located near existing firms. (4mks)
21. Highlight four circumstance under which personal selling may be used as a strategy in product promotion. (4mks)
22. Give four measures that a government may take to reduce the mortality rate in a country. (4mks)
23. Highlight four benefits of using electronic filling system in an office. (4mks)
24. Give four factors that limit use of containers as a method of transporting goods in a developing country. (4mks)
25. Give four factors that influence the level of national income. (4mks)

MARKING SCHEME

1.  
   • political instability
   • Unfavorable demo graphic factors
   • Unfavorable economic environment
   • Use of poor technology
   • Unfavorable legal political environment
   • Unfavorable social cultural factors
   • Stiff market competition
   • Unfavorable physical environment
2.  
   • Confidentiality
   • Accuracy
   • Completeness of message
   • Future reference
   • Reliability of the means
   • Economy
   • Accessibility
   • Acceptability
3.  
   • Exploitation of customers
   • Limiting entry of other firms
   • Restriction of customer choice
   • Absence of competition – leads to inefficiency
   • Increase in price of products
4.  
   1. Sales journal / debtors journal
   2. Purchase journal / creditors journal
   3. Sales returns journal / return inwards journal
   4. Purchase returns journal / return outwards journal
5.  
   • Measure of country’s economic performance
   • Setting price of securities
   • Safeguard investors interest
   • Raise govt revenue
     Creation of employment
   • Provide useful info. To investors
   • Facilitate buying shares
   • Facilitate selling shares.
6.  
   • Private
   • Public
   • Bonded
   • Wholesalers
   • Specialised
   • Producers
   • Free.
7.  
   • Due to diff. prices of goods.
   • Limited resources / income
   • Diff. tastes / preference of customers.
   • Unlimited needs of customers.
   • Govt. policy eg restriction or total ban
8.  
   1. 115 000
   2. 73 600
   3. 138 600
   4. 335 620
9.  
   • Used as a medium of exchange
   • Unit of account
   • Measure of value
   • Store of value
   • Standard of deffered payment
   • Transfer of immovable asses.
10.  
    1. Form
    2. Possesive
    3. Time
    4. Place
11.  
    1. Time
    2. Voyage
    3. Composite
    4. Fleet
12.  
    
13.  
    1. Gross profit
         COGS    = ROST
       AV Stock
                COGS        
       (160000+200000)
                    2
       COGS = 540 000
       G.P = ²⁰/₁₀₀ × 540 000
       G.P = 108 000
    2. sales = COGS + GP
                 = 540 000 + 108 000
                 = 648 000
14.  
    • No discrimination of employees in promotions, recruitment, training, remuneration and assigning duties.
    • Healthy competition
    • Protecting environment when carrying out business activities
    • Protect customers against exploitation
    • Comply with govt policies
    • Avoid discrimination of customers
15.  
    • To control illegal businesses in a country
    • To control types of goods entering and leaving the country.
    • To raise govt revenue
    • To regulate number of businesses in a country.
    • To ensure those engaging in professional activities meet requirement of their professions.
    • To ensure that traders engage only in licenced businesses.
16. Jakayo’s Trades
    Balance sheet
    As tst 1 st July 2010

    Furniture       20000  Stock              8000  Cash Bank    12000                        40000

    Capital                  23000  Long term loan     10000  Creditors                 7000                                40000

    8 @ ½ = 4 mks
17.  
    • If the business is conducted thro’ post office eg mail order
    • If customer is new to the business
    • If credit worthiness is in doubt
    • If it is the business policy
    • If the goods involved are produced to the customer specifications
    • If seller requires cash urgently
    • If seller needs to avoid the bother and expenses of debt collection.
    • If seller intends to minimize keeping records relating to debts.
18.  
    • Where market is spread out.
    • Poor infrastrustructure making it difficult to distribute goods.
    • Where products require ready finance which can be provided by intermediaries.
    • Management problems ie manufacturer is unable to manage distribution outlets.
    • Where nature of goods requires middlemen to carry out certain services.
    • Where government policy dictates
    • Where producer waits to distribute risks.
19.  
    • Selling securities in the open market.
    • Raising bank rates
    • Raising cash / liquidity ration
    • Raising margin requirements
    • Instituting selective crdit control
    • Issue contraction directives.
20.  
    • Assess to market
    • Access to security
    • Social amenities available.
    • Access to raw materials
    • Interdependence of firms
    • Enjoy existing infrasture
    • Availability of auxiliary services.
21.  
    • If good are tailor made to customer specifications.
    • If introducing new product in the market.
    • If products require installation
    • If products are technical – require demonstration.
    • If goods are of high value
    • If market is concentrated.
22.  
    • Avail better health care.
    • Food security
    • Minimizing internal conflicts and war
    • Improving environmental sanitation
    • Sensitization on public and personal hygiene
    • Disaster preparedness e.g. floods, droughts etc
    • Apply measures to reduce road accidents
    • Control drugs and alcohol.
23.  
    • Easy access of information
    • Reduction of labour costs
    • Less storage facilities
    • Easy updating
    • Less paper work
    • Environmental friendly
    • Use of network
    • Safe since there’s use of password
    • Presentable outlook
    • Highly portable
24.  
    • Specialised equipments which are expensive
    • The volume off outputs may opt be large enough to warrant the leaving investments
    • Skills needed for the method may be lacking or expensive.
    • Initial capital needed is high
    • The method requires re degrading of existing ports construction which is expensive.
    • General resistance to change by stakeholders.
25.  
    • Natural resource endowment
    • Capital
    • Human resources / labour
    • Technological advancement
    • Availability of foreign investment
    • Political stability security
    • Infrastructural devpt.
    • Availability of entrepreneurship.