Business Studies Paper 1 Questions and Answers - Sunrise Pre Mock Exams 2023

INSTRUCTIONS TO CANDIDATES

• Answer all the questions.

1. Highlight four ways in which a well laid out business structure is likely to lead to the success of the business. (4mks)
2. List four characteristics of money . (4mks)
3. Give the following transactions, indicate the account to debit and the account to credit. (4mks)
   

   Transaction	A/C to Dr	A/C to Cr
   (i) Received damaged goods from a customer (Ukweli traders)
   (ii)Received an invoice from a wholesaler Upendo traders
   (iii)Issued a credit note to Pwani traders
   (iv)Received rent by cheque

4. State four non- price competitions that firms in oligopoly market structures may engage in as an attempt to capture more customers and realize greater sales volume.  (4mks)
5. List four errors which may make the trial balance fail to balance.  (4mks)
6. The following information was extracted from the books of Juma stores on 31^st March 2010
                                               Sh
   Stock 1 st april 2010           8000
   Stock 31 st march 2011      9000
   Purchases                           4500
   Sales                                   21000
   Calculate
   1. Margin (2mks)
   2. Rate of stock turnover. (2mks)
7. State four factors that are likely to lead to a young population in a country. (4mks)
8. Record the following transaction in the relevant ledger account. (4mks)
   1. Kibet started business with sh.100, 000 in cash on 1^st Jan 2008.
   2. Bought motor van for sh.27, 500 cash on 2^nd Jan 2008.
   3. Fixtures bought on credit from shop flitters for sh.11, 500 on 3^rd Jan 2008.
   4. Paid amount owing in cash to shop flitters on 7^th Jan 2008.
9. Watch the following types of advertising with its appropriate description in the table below. Product advertising, informative advertising, institutional advertising, competitive advertising.   (4mks)
   

   Description	Type
   (a) Treats awareness about a product.
   (b) Promotes the name of manufacturer.
   (c) Persuade the consumer to buy a product.
   (d) Promotes a particular brand of product.

10. Calculate the net profit or loss made from the following details: (4mks)
    Drawing during the year     20,000
    Additional capital               120,000
    Capital on 31.12.2010       300,000
    Investment                          80,000
11. Give four reasons why the government levy taxes. (4mks)
12. State four reasons why Railway transport is unpopular in Kenya when compared to road.  (4mks)
13. For each of the following cases, name the motive for holding money. (4mks)
    

    Case	Motive
    a) To meet daily transport expenses.
    b) To meet any unforeseen circumstances.
    c) To take advantage of anticipated future in price.
    d) To pay for daily food requirement.

14. Enumerate four reasons why an insured may not be compensated despite an insured risk occurring. (4mks)
15. The following diagram shows demands and supply curve of commodity.
    
    State four things that will happen if the supply of the commodity is increased while demand remains constant. (4mks)
16. Highlight four ways in which the utility / usefulness of a product can be increased. (4mks)
17. Mention four ways in which the Kenyan government is creating an enabling environment to attract investments.  (4mks)
18. Give four differences between an ordinary share and a preference share. (4mks)
19. Trimer limited has opened a factory in a rural shopping Centre called Massawa. Outline four ways in which the people living in the surrounding areas may benefit from the factory. (4mks)
20. For each of the following transaction of Kinyua traders, identify the source document and the journal in which the information is recorded. (4mks)
    

    	Transaction	Source document	Journal
    (a)	He bought goods worth ksh.40,000 on credit from jitahidi
    (b)	Kinyua returned some goods in jitahidi traders worth ksh. 2000
    (c)	Peter a customer bought goods worth ksh.5,000 on credit
    (d)	Peter returned goods worth Ksh. 1000 to Kinyua traders

21. State four roles of intermediaries in the chain of distribution. (4mks)
22. Name four types of printed messages that may be sent through facsimile (4mks)
23. Highlight four benefits of national income statistics to a country (4mks)
24. Outline four ways in which natural resource may be of benefit to a country. (4mks)
25. Outline four difficulties faced by human being in satisfying their wants. (4mks)

MARKING SCHEME

1. Ways in which a well laid out structure is likely to lead to the success of a business.  (4mks)
   1. Each employee knows what is expected of him or her
   2. Minimizes conflict or confusion in performing duties.
   3. Everyone is aware of their line of reporting
   4. Enhances team work among the employees
   5. Ensures proper control of activities and use of resources
2. Features of money. (4mks)
   1. Acceptability
   2. Divisibility
   3. Portability
   4. Durability
   5. Stability
   6. Homogeneity
   7. Cognisability
   8. Scarcity
   9. Malleability
3.  
   

   A/C to Dr	A/C to Cr
   Returnin wards A/C Purchase A/C Return in wards A/c Bank A/C	Ukweli: Traders A/c Upendo Traders A/c Pwani Traders A/c Rent income A/c Rent income A/c

4. Non- price competitions by oligopoly market structure. (4mks)
   1. Intense advertising
   2. Use of credit facilities to persuade customers
   3. Offering favourable terms of payment
   4. Proper market research and development
   5. Product improvement such as packaging and branding
   6. Offering after sales services to attract and retain customers.
5. Errors that may make the trial balance fail to balance.  (4mks)
   1. Posting the wrong amount
   2. Errors in balancing an account
   3. Posting on the wrong side of the account
   4. Entry of a balance on the wrong side of the trial balance\
   5. If one of the account balances is not posted to the trial balance
   6. Transposing of figures when posting balances to the trial balance e.g 4002 instead of 2004
   7. Arithmetic errors when getting totals of the trial balance
6.  
   1. Margin =      G.p        x 100
                     Net sales
      G.P = sales – cost of goods
            = 21000 – (8000 + 4500 – 9000)
      = 21000 − 3500
      = 17500
      Margin = 17500 x 100 = 83.3%
                     21000
   2. Rate of stock turnover = cost of goods sold
                                                Average stock
                                          = 35000
                   (8000+ 9000) = 35000
                             2               8500
                                         = 0.41
7. Factors that are likely to lead to a young population. (4mks)
   1. High birth rates
   2. High mortality rates among the ageing population
   3. Little life expectancy
   4. Low mortality rate among the youth
8.   
   
9. Advertisement   (4mks)
   1. Informative.
   2. Institutional
   3. Competitive
   4. Product
10. C.C = O.C + NP + I – D (4mks)
    NP = CC – OC – I + D
    NP = 300,000 – 80,000 – 120,000 + 20,000
11.  
    1. To raise government revenue
    2. To control consumption of harmful products
    3. To redistribute incomes
    4. To control the level of imports
    5. To influence the allocation of resources or to control business activities
    6. To control inflation by reducing disposal income or prices
    7. Can be used as one way of protecting strategic domestic industries
    8. Can also be used to reduce rural-urban migration by establishing industries in rural areas.
    9. Can also be used to stabilize their economies through the preparation of a surplus or deficit budget.
12. Reasons why railway transport is unpopular. (4mks)
    1. Expensive to construct.
    2. Slow over short distances.
    3. Expensive to hire over short distance.
    4. Not flexible in providing door to door services.
    5. Have unlimited coverage.
13.  
    1. Transaction
    2. Precaution
    3. Speculative
    4. Transaction
14. Reasons why an insured may not be compensated despite an insured risk occurring. (4mks)
    1. Wrong claiming procedure.
    2. Cause of the risk was deliberate.
    3. Late / delayed reporting.
    4. Insurer had no funds / bankrupt.
    5. Had lied.
15. The figure below shows a shift in the supply curve of a given commodity.
    Supply increased, demand constant. (4mks)
    1. The price of the commodities will be lowered
    2. Equilibrium quantity increases
    3. Equilibrium price decreases
    4. The supply of the commodity will increase at the same rate.
16. Highlight four ways in which the utility / usefulness of a product can be increased.   (4mks)
    1. By changing the form / converting raw materials to finished goods
    2. Through transportation / distribution
    3. Through warehousing / storage
    4. Through trade / exchange
17. Mention four ways in which the Kenyan government is creating an enabling environment to attract investments. (4mks)
    1. Ensuring law and order / security
    2. Providing credits / loans on easy terms
    3. Giving economic incentives eg low taxes, subsidies and cheap land.
    4. Putting up and improving infrastructural facilities eg roads, communication, water and electricity
    5. Development of social amenities such as recreational facilities, hospitals, schools and housing.
    6. Simplifying procedure in starting and running businesses
    7. Ensuring good governance and political stability
    8. Preservation and conservation of natural resources and environment
    9. Enacting favourable laws and regulation
18. Give four differences between an ordinary share and a preference share
    

    ORDINARY SHARE	PREFERENCE SHARE
    (i) Paid dividend after preference shares	(i) Paid dividends before ordinary share
    (ii) Have voting rights	(ii) No voting rights
    (iii) Are not cumulative in nature	(iii) May be cumulative nature
    (iv) Possers own the company	(iv) Possers are not owners of the company

19. Ways in which people of MASAWA town will benefit from the factory of Trimex Ltd.   (4mks)
    1. The people will get goods / services at fair prices due to their proximity to the factory / readily available goods and services.
    2. Surrounding community will get job opportunities
    3. The factory may provide market for raw materials produced by the surrounding community
    4. The company may improve infrastructure such as roads , electricity
    5. The company may participate in community welfare activities such as education and health
20. For each of the following transaction of Kinyua traders, identify the source document and the journal in which the information is recorded.(4mks)
    

    	Transaction	Source document	Journal
    (a)	He bought goods worth ksh.40,000 on credit from jitahidi	Purchase/incoming invoice	Purchase Journal
    (b)	Kinyua returned some goods in jitahidi traders worth ksh. 2000	Received credit note/incoming credit note	Purchase return journal
    (c)	Peter a customer bought goods worth ksh.5,000 on credit	Sales/outgoing invoice	Sales journal
    (d)	Peter returned goods worth Ksh. 1000 to Kinyua traders	Issued/outgoing credit note	Sales journal

21. Four roles of intermediaries in the chain of distribution    (4mks)
    1. Accumulating bulk.
    2. Breaking bulk.
    3. Help to bring goods closer to the final consumer.
    4. Advising consumers on the choice and use of goods.
    5. Prepare goods for sale.
    6. Store goods until they are needed.
22. Four types of printed messages that may be sent through facsimile  (4mks)
    1. Letters.
    2. Photographs.
    3. Maps
    4. Charts
    5. Diagrams.
23. Four benefits of national income statistics to a country. (4mks)
    1. Used to distribution of national wealth.
    2. the standards of living of people in a country.
    3. Assist investors in making investment decision.
    4. Assist a country in planning its economy.
    5. Show Indicate the contribution of each sector to the national income.
    6. Used to compare the standards of living of people in different countries.
    7. Provides information which is used in making economic policies/ annual budgets.
24. Outline four ways in which natural resource may be of benefit to a country.  (4mks)
    1. Their exploitation creates employment
    2. Provides raw materials for industries enable us get goods and services.
    3. They are used to generate income for a country/ foreign income.
    4. They are basic factors for sustenance of a life
    5. Provide natural habitat
    6. Provide energy eg HEP .
25. Difficulties of satisfying human wants. (4mks)
    1. Unlimited human wants.
    2. Resources to satisfy human wants are inadequate /scarce.
    3. Human wants (some) change with time, age, gender.
    4. Some are habitual.
    5. They are insatiable/repetitive/ recurring.
    6. Problems of choice.