Business Studies Paper 1 Questions and Answers - Lugari Constituency Joint Pre Mock Exams 2023

Instructions to Candidates

• This paper consists of 25 questions.
• Answer ALL questions in the spaces provided
• Candidates should answer the questions in English

1. State four disciplines associated with business studies.             (4 marks)
2. State four characteristics of an effective warehouse.                                                                   (4 marks)
3. The inflation rate in county moved from 6.1% to 7.6%. State four positive outcomes of this change             (4 marks)
4. Outline  four internal environment factors that may positively influence the operations of a business.           (4marks)
5. Give four reasons for the popularity of mpesa as a means of payment in Kenya.                    (4marks)                                       
6. Give four  differences between  a public limited company and a public corporation.              (4marks)
   
   

   Public Limited company	Public corparation
   (a)	(a)
   (b)	(b)
   (c)	(c)
   (d)	(d)

7. Other than the use computers in an office, mention four recent trends in office management.            (4 marks)
8. State any four principles that govern the operations of co-operative societies in Kenya.            (4 marks)
9. The table below represents quantity of commodity X demanded by consumer A and B.
    
   

   Price per unit of x	Quantity of x demanded by A in a week.	Quantity of commodity X demanded by B in a week.
   20	200	400
   10	200	600
   5	300	700
   2	400	800

   
   State four possible reasons why B demands more of commodity X at every price than A (4 marks)
10. Outline four ways in which a good business structure is of benefit to a business organization (4 marks)
11. Outline  four factors that determine the amount of money that an individual may hold in order to meet unexpected expenses (4 marks)
12. State four reasons why the government is involved in business activities.      (4 marks)
13. Mention four circumstances under which an entrepreneur may establish his/her business where other businesses already exist (4 marks)
14. State four benefits of advertising to a consumer.                 (4 marks)
15. Highlight four measures that a government may take to correct a balance of payment deficit in the county (4 marks)
16. Given below is a cash book extract from the books of accounts of Patel  Enterprises.
    
    

    Date	Details	F	DA	Cash	Bank	Date	Details	F	DR	Cash	Bank
    2009						2009
    1/12	Balance	b/d		1500	90000	14/12	Bank	c		30000
    2/12	Rono		2000	36000		20/12	Equipment				80000
    14/12	Cash	c			30000	30/12	Drawings			70000

    
    In relation to the entries appearing in the cash book extract state the transactions that took place at each of the following dates.
    1. 2nd Dec 2009
    2. 14th Dec 2009
    3. 20th Dec 2009
    4. 30th Dec 2009
17. Outline four ways in which the nature of a product influences the choice of distribution channel. (4 marks)
18. Mention four circumstances under which a retailer may return goods to a wholesaler. (4 marks)
19. State the characteristic of human want that match the descriptions given below. (4 marks)
    1. Satisfaction  of one want automatically leads to creation of another
    2. Some  human  wants are experienced by all human beings
    3. Human wants can not be fully satisfied.                     
    4. After some wants are satisfied they recur.                     
20. The following balances were obtained from the books of sunset traders as at 30th June, 2004.
    Stock 1st July 2003           45,000
    Purchases                        159,000
    Sales                                235,000
    Stock 30/June/2014          33,000
    Capital                              75,000
    Return outwards               3,000
    Operating expenses         13,000
    Calculate:
    1. Stock turnover rate.  (2 marks)
    2. Return on capital. (2 marks)
21. Highlight four reasons why the Kenya government encourages entrepreneurship in the country. (4 marks)
22. Distinguish the following types of goods as used in production.
    1. Producer goods and consumer goods. (2 marks)
    2. Intermediate goods and finished goods.     (2 marks)
23. Listed below are a set of transactions.In each case state whether the transaction will increase, decrease or have no effect on capital.          (4marks)
    
    

    Transaction	Effect
    (a) Additional cash invested by the owner.
    (b) Receiving cash from a debtor
    (c) Bought goods on credit
    (d) Owner takes some stock for own use

24. Mention four benefits that may be enjoyed in a country that is experiencing over- population (4 marks)
25. Identify the source documents used to record the following transactions in the books of original entry.           (4mks)
    
    

    Transaction	Source document
    (a) Credit purchases
    (b) Sales returns
    (c) Sales returns
    (d) Cash purchases

MARKING SCHEME

1. Disciplines of business studies.
   • Accounting
   • Economics
   • Commerce
   • Office practice
                            Any 4 correct points x 1 = 4 Marks
2. Characteristics of   an  effective  warehouse.
   • Suitable location
   • Proper building design
   • Appropriate equipment/facilities.
   • Good transport  and  communication system.
   • Adequate space.
   • Appropriate staff.
   • Compliance with the law
                            Any 4x1=4mks
3. Positive  outcomes  of increased inflation from 6.1% to 7.6%.
   • Debtors may pay less in real terms.
   • Sellers may earn more.
   • Motivates people to work order to cope with rise in inflation.
   • Better utilization of available resources .
   • Increased production in order to maintain living standards.
                                                                                                   Any 4x1=4mks
4. Factors that may positively influence the internal operations of a business.
   • A well laid out business structure.
   • Adequate human resources.
   • A positive business culture.
   • Good management style.
   • Clear objectives.
   • Good decision by the owners.   
5. Reasons why mpesa means of payment is popular in Kenya.
   • Confidentiality/safety secret PIN on the account.
   • The service is easy to use.
   • Money transfer is instant/fast.
   • It is convenient as the sender and the receiver need to go to nearest agent to transact.
   • Mpesa agents are located in most parts of the country.
   • The charges for mpesa transactions are relatively low.           Any 4x1=4mrks
6. Differences between a public limited company and a public corporation.
   
   

   Public Limited Company	Public Corporation
   a) Owned by shareholders.	a) Owned by the Government
   b) Formed under the companies Act.	b) Formed by an Act of Parliament
   c) Main source of capital is sale of share	c) Capital comes from the Government
   d) Directors are elected by shareholders	d) Directors appointed by the government.
   e) Formed  mainly to make profits	e) Formed to provide essential services.
   f) Profits shared by shareholders as dividends.	f) Profits go to the government.

7. Recent trends in office management.
   • Office structure/prestigious landscape office plans.
   • Automation which is the use of machine at place of work.
   • Location of offices in the outskirts of towns.
   • Merging duties to reduce costs.
   • Employment identification. E.g use of badges/names tags.
   • Out sourcing where businesses contract services from other business.
   • Use of casual uniforms /branded uniforms on Fridays/weekends.
                                                                                                       Any 4x1=4mks
8. Principles that govern the operations of co-operative societies in Kenya.
   • Voluntary membership.
   • Democratic administration.
   • Education for members.
   • Limited interest on share capital.
   • Dividend to members.                  Any correct 4 @ 1 Mark = 4 Marks
9. Reasons why B demands more of commodity X at every price than A. (4mks)
   • B may be having more income than A.
   • B may be having a large family than A
   • B may be having a positive taste towards commodity X than A.
   • B may be lacking substitute for commodity x while A has that substitute. Any 4x1=4mks
10. Ways in which a good business structure is of benefit to a business organization(4mks)
    • Facilitates easy control of workers
    • Facilitates easy evaluation of workers
    • Reduces confusion among workers
    • Enhances teamwork                    (4x1=4mks)                                Any 4x1=4mks
11. Factors that determine the amount of money that an individual may hold in order to meet unexpected expenses.
    • Level of income.
    • Family status.
    • Age of an individual.
    • Number of dependants.
    • Individuals temperament /attitude towards life.
    • Duration between incomes /frequency of obtaining income.   Any 4x1=4mks
12. Reasons why the government is involved in business activities.
    • To create employment.
    • To attract foreign investment.
    • To provide essential  goods and services.
    • To produce goods and services that require a large amount of capital.
    • To provide goods  and services that are too sensitive to be left in private hands.
    • To prevent foreign dominance.
    • To protect consumers from exploitation.                         Any 4x1=4mks
13. Circumstances under which an entrepreneur may establish his/her business where other business already exists.
    • When he wants to benefit from the already existing or available trained and skilled labor force.
    • When he want to benefit from the already available improved infrastructure.
    • When he want to benefit from services such as banking and insurance that will be readily available.
    • When he want to benefit from complementally industries /goods that will be readily available.
    • If he want to benefit from joint research with other business.
    • If he want to benefit from already available market /readily available market from other firms.
    • If he wants to benefit from the joint disposal of wastes products with other firms.                      Any 4x1=4mks
14. Benefits of advertising to a consumer. 
    • Consumers are educated on how to use the goods.
    • Consumers are informed about the offers in the market
    • Consumers benefit from reduced prices from competitive advertising.
    • Information about the price and other features of the product is availed.
    • Customers enjoy wide variety of goods produced as firms strive to outdo each other.
    • Consumers are made aware of goods available in the market.
    • Consumers are informed on where to get the product.                            Any 4x1=4mks
15. Measures that a government may take to correct a balance of payment deficit in the county.
    • Export promotion.
    • Import restriction.
    • Devaluation of a county’s currency.
    • Diversification of exports.
    • Encouraging foreign investment into the county.
    • Restricting capital outflow                        4x1=4mks
16.  
    1. Received cash kshs 36,000 from Rono having allowed him a discount of sh 2,000.
    2. Deposited sh.30,000 in to the bank from the cash till.
    3. Bought equipment worth kshs 80,000,paying by cheque.
    4. Patel owner took sh 7,000cash from business for personal use.
17. Ways in which the nature of a product influences the choice of distribution channel.
    • Perishable goods require shortest channel than durable products .
    • Bulky products require shorter channels.
    • Highly valuable goods require short channels.
    • Technical goods require shorter channels.
    • Heavy goods require short- channel than light goods.                       4x1=4mks
18. Circumstances under which a retailer may return goods to a wholesaler.
    • Incase they are damaged.
    • Incase the quality is different from the one requested for /incase of poor quality than expected.
    • Incase they are of the wrong type / where the description /order differs from what has been supplied.
    • Incase excess quantity being supplied.                 4x1=4mks
19.  
    1. Complementary
    2. Universal
    3. Insatiable
    4. Recurrent/repititive
20. Calculate:
    1. Stock turnover rate.  ( R. O.S.T) 
       Rate of stock turn over = cost of sales
                                               Average stock
       cost of Sales = opening stock + purchase – return outwards − closing stock
          = 45,000 + 159,000− 3,000 − 33,000
          = 168,000
       Average stock = Opening Stock +Closing Stock
                                                          2
                               = 45,000+33,000
                                             2
                               = 39,000
                 R.O.S.T. = 168,000
                                    39,000
                                = 4.3076
                                = 4 TIMES                                 2ticks x1=2mks
    2. Return on capital (R.O.C) = NET profit
                                                   Capital invested
           NP = GP– EXPENSES
         5400= 67000 −13000
         ROC = 54000 = 18 or  0.72:1 or 18:25 or 72%
                     75000    25                                            2ticks x1=2mks
21. Importance of entrepreneurship.
    • It helps in creation of employment.
    • Helps to reduce rural - urban migration.
    • Raise standards of living.
    • Saving on imports.
    • Improving of infrastructure.
    • Reducing foreign dominance.
    • Promotion of technology
    • Promotion of entrepreneurial culture..
    • Making use of local resources.
22. Distinguish between :
    1. Producer goods and consumer goods.
       • Producer goods are goods which are used in the creation production of other goods e.g machinery /traders while consumers goods are goods that already satisfy needs and wants of a consumer /they are meant for immediate  consumption e.g drinks, clothes,books . 1x2=2mks
    2. Intermediate goods and finished goods.
       • Intermediate goods are goods that are not ready for use before they are further processed. E.g sugarcane /wood/wheat/skins/while finished goods are final products that come out of production in the required from (output)e.g ugali from maize flour/furniture from timber.  1x2=2mks
23.  
    1. Increase
    2. No effect
    3. Increase
    4. Increase                       4x1=4mks
24. Benefits that may be enjoyed by a country that is experiencing over- population.
    • 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.               4x1=4mks
25.  
    1. Incoming invoice
    2. Outgoing credit note
    3. Outgoing receipt
    4. Incoming invoice                     Any 4x1=4mks