BUSINESS STUDIES
PAPER 1
- Name the discipline of business studies described in the statements below: (4marks)
- The systematic way of recording business activities for easier decision making
- The study of how human beings strive to satisfy their unlimited wants using the available scarce resources
- The study of the activities involved in the process of identifying a business opportunity and acquiring the necessary resources to start and run a business
- The study of trade and aids to trade……………………………………………..
- Outline four external factors that may negatively influence the operations of a business (4marks)
- State four circumstances under which a trader would adopt a policy of cash with order (C.W.O). (4marks)
- Highlight four functions of an office in an organization. (4marks
- The following balances were extracted from the books of Wekesa Traders on 31st December 2009.
Items Kshs Capital
Cash in hand
Buildings
Furniture
Motor vehicle
Creditors
Debtors
Bank
Bank loan500,000
20,000
200,000
25,000
400,000
18,000
36,000
100,000
263,000 - Identify four legislations used by the government to protect Kenyan consumers against unscrupulous traders (4marks)
- The following information relates to Kimani Traders
Purchases
Returns outwards
Closing stock
Opening stock
Margin2,700,000
600,000
500,000
1,200,000
2/9- Cost of sales (2marks)
- Gross profit (2marks)
- State three features of basic human wants (3marks)
- Outline four reasons why an increase in per capita income may not necessarily lead to rise in the standard of living of the citizens. (4marks)
- State the relevant books of original entry into which information extracted from the source documents given below would be recorded. (4marks)
Source Documents Book of Original Entry Incoming invoice Outgoing credit note Outgoing cash sale slip Incoming debit note - Highlight four features of co-operative societies. (4marks)
- Outline four measures that the Kenya government may take to curb the problem of unemployment. (4marks)
- State four factors that may cause the supply curve to shift to the right. (4marks)
- By use of the balance sheet equation, determine the missing figures in the table below. (4marks)
Business Assets (shs) Capital (shs) Liabilities (shs) A 40,000 15,734 B 158,300 61,500 C 17,670 5680 D 67,000 24,705 - List four types of small scale retail business that one can run without a shop (4marks)
- Highlight four measures the government of Kenya can take to decrease the amount of money in circulation. (4marks)
- Outline four circumstances under which a trader may use air transport. (4marks)
- Highlight four factors that would make two people taking the same type of life assurance policy with the same insurer to pay different amounts of premium. (4marks)
- State four benefits of a bonded warehouse to the government. (4marks)
- Outline four functions of a general journal as a book of prime entry. (4marks)
- Regina, a university graduate wants to start a business. State four areas she can source business ideas from. (4marks)
- The following balance sheet belongs to Nyakwar Atiyo during the period ended 30th June 2020.
Nyakwar Atiyo Traders
Balance sheet
As at 30.06.2020Assets
Machinery
Current assets
Stock
Debtors
Bank
..
45,000
7,750
1,375
25,375
79,500Capital + liabilities
Capital
Bank loan
Creditors
65,000
10,000
45,000
79,500- Paid creditors Sh 2000 by cheque.
- Nyakwar Atiyo took stock worth Shs 7500 from the business for his son‘s birthday.
- Motor vehicle previously owned by Nyakwar Atiyo values at sh 200,000 was converted into business vehicles.
Required: Prepare the balance sheet of Nyakwar Atiyo traders as at 2nd July 2020. (4 Marks)
- Outline four factors that may be considered when measuring the size of a firm. (4marks)
- Highlight four challenges that a person may encounter when using a cellphone. (4marks)
- State four qualities of a successful salesperson. (4marks)
MARKING SCHEME
- Name the discipline of business studies described in the statements below: (4marks)
- The systematic way of recording business activities for easier decision making
- Accounting
- The study of how human beings strive to satisfy their unlimited wants using the available scarce resources
- Economics
- The study of the activities involved in the process of identifying a business opportunity and acquiring the necessary resources to start and run a business
- Entrepreneurship
- The study of trade and aids to trade
- Commerce
- Commerce
- The systematic way of recording business activities for easier decision making
- Outline four external factors that may negatively influence the operations of a business (4marks)
- Political instability
- High taxation by the government
- Declining population/low population
- Poor infrastructure/unfavorable physical environment
- Stiff competition
- Poor technology/unavailability of modern technology
- State four circumstances under which a trader would adopt a policy of cash with order (C.W.O). (4marks)
- Where the buyer’s creditworthiness is questionable.
- Where the seller is operating a mail order business.
- If it’s the policy/culture of the business.
- Where the buyer is new to the seller.
- Where the buyer is a minor.
- Highlight four functions of an office in an organization. (4marks)
- Mailing
- Safeguarding the organization property
- Customer care services
- Filing/management of records
- Distribution/dissemination of information.
- A centre for processing data
- An administration centre for the organization.
- The following balances were extracted from the books of Wekesa Traders on 31st December 2009.
Items Kshs Capital
Cash in hand
Buildings
Furniture
Motor vehicle
Creditors
Debtors
Bank
Bank loan500,000
20,000
200,000
25,000
400,000
18,000
36,000
100,000
263,000
- Using the above information, prepare Wekesa Traders Trial Balance on 31st December 2009. (5marks)
Wekesa Traders
Trial Balance
As at 31/12/2009PARTICULARS DR CR Capital 500 000 Cash in hand 20 000 Buildings 200 000 Furniture 25 000 Motor vehicles 400 000 Creditors 18 000 Debtors 36 000 Bank 100 000 Bank on loan 263 000 781 000 781 000
- Using the above information, prepare Wekesa Traders Trial Balance on 31st December 2009. (5marks)
- Identify four legislations used by the government to protect Kenyan consumers against unscrupulous traders (4 marks)
- Weights and measures act
- Trade description act
- Sale of goods act
- Rent tribunal act
- Public health act
- The following information relates to Kimani Traders
Calculate:- Cost of sales (2marks)
- C.O.S = O.S + (purchases – returns outwards) – C.S
(1,200,000 + (2,700,000 – 600,000) – 500,000)
= 2,800,000
- C.O.S = O.S + (purchases – returns outwards) – C.S
- Gross profit (2marks)
Mark – up = 2/9-2 = 2/7
Mark – up = G.P/C.O.S
2/7 = G.P/2,800,000 = Shs 800,000
- Cost of sales (2marks)
- State three features of basic human wants (3marks)
- They cannot be postponed
- One cannot do without them/ They are necessary for survival
- They are satisfied before secondary wantsThey are universal
- Outline four reasons why an increase in per capita income may not necessarily lead to rise in the standard of living of the citizens. (4marks)
- Per capita figures may be high but income may be unevenly distributed
- Inflation may affect the purchasing power of the citizens
- Those not involved in the generation of the national income are also included in the calculation
- Increased per capita income may be as a result of citizens working for long hours at the expense of their health and leisure time
- High taxes may erode the real value of per capita income
- State the relevant books of original entry into which information extracted from the source documents given below would be recorded. (4marks)
Source Documents Book of Original Entry Incoming invoice Purchases journal/ bought journal Outgoing credit note Returns inwards journal/
sales returns journalOutgoing cash sale slip Cash book/cash receipts journal Incoming debit note Purchases journal/ bought journal - Highlight four features of co-operative societies. (4marks)
- Formed by a minimum of 10 membersRun by a management committee
- Governed using by-laws
- It has perpetual succession/Has continuity
- It has limited liability
- It has no maximum membership/membership is infinite
- Its main source of capital is the shares contributed by members
- No single member is allowed to own more than 5% of the total share capital
- Its formed by people with common interest/problem
- Surplus profit is distributed to members
- Has separate legal entity from the members
- Outline four measures that the Kenya government may take to curb the problem of unemployment. (4marks)
- Controlling population growth
- Increasing government expenditure
- Diversification of economic activities
- Partnering with the private sector to create more employment
- Kenya should export excess labour
- Adoption of policies that encourage use of labour intensive methods of production
- Adopting a relevant education system
- Encouraging direct foreign investment
- Development of rural areas/delocalisation of industries
- Availing investment funds through favorable crdit like Youth Fund and Uwezo Fund
- Encourage efficient exploitation and use of locallty available resources
- State four factors that may cause the supply curve to shift to the right. (4marks)
- Favorable natural factors
- Improvement in technology
- Entry of new firms into the industry
- Decrease in cost of production
- Favorable government policies/low taxation/increased subsidies
- Availability of factors of production
- Future expectation of decrease in prices
- By use of the balance sheet equation, determine the missing figures in the table below. (4marks)
Business Assets (shs) Capital (shs) Liabilities (shs) A 40,000 -24 266 15,734 B -219 800 158,300 61,500 C 17,670 5680 -11 990 D 67,000 -42 295 24,705 - List four types of small scale retail business that one can run without a shop (4marks)
- On-line selling
- Road side selling
- Hawking
- Peddling
- Open air market trading
- Automatic vending by use of a machine
- Highlight four measures the government of Kenya can take to decrease the amount of money in circulation. (4marks)
- Increasing bank rate
- Selling government securities to Kenyans through OMO
- Increasing cash/liquidity ratio requirement
- Directive to commercial banks to increase their lending interest rates
- Increasing the compulsory deposit amount
- Requests by central bank to commercial banks to contract credit activities
- Increasing the number of sectors under selective credit control measure
- Outline four circumstances under which a trader may use air transport. (4marks)
- When transporting perishable goods
- In case the goods are of high vale
- Where distance to be covered is too large
- In case of an emergency delivery required
- Where security of goods is of valuable consideration
- Where other means of transport are unaivailable
- Where destination is remote making it inaccessible by other means
- If it’s the policy of the business
- Highlight four factors that would make two people taking the same type of life assurance policy with the same insurer to pay different amounts of premium. (4marks)
- Financial capability
- Age difference
- Health status
- Occupation
- Residence
- Period to be covered
- State four benefits of a bonded warehouse to the government. (4marks)
- Helps the government to collect revenue
- Helps to prevent entry of illegal goods
- Helps to prevent entry of harmful goods
- The government is able to know the volumes of goods entering into the country
- The government is able to control the qualities of goods entering into the country
- The government is able to inspect type or nature of goods imported
- The government is able to verify documents for goods in transit
- Outline four functions of a general journal as a book of prime entry. (4marks)
- For recording issue of shares and debentures by companies
- Recording purchase of a fixed asset on credit
- Recording sale of a fixed asset on credit
- Writing off bad debts
- Correction of errors
- Recording opening entries for a new business or a business that was not keeping records
- Regina, a university graduate wants to start a business. State four areas she can source business ideas from. (4marks)
- Print media e.g. newspapers, journals & magazines
- Electronic media e.g. TV, computer
- Hobbies/talents
- Unutilised waste materials
- Listening to what other people say
- Spotting a market niche/gap
- Brainstorming
- Shows and exhibitions
- Observing established entrepreneurs/role models
- Research and development
- Experience
- Business seminars/workshops
-
Nyakwar Atiyo Traders
Balance sheet
As at 30.06.2020Assets
Machinery
Motor vehicles
Current assets
Stock
Debtors
Bank
.
..
45,000
200,000
7,000
1,375
25,375
.
276,500Capital + liabilities
.
Capital
Add Additional capital
Less drawings
Net capital
Bank loan
Creditors.
.
65,000
200,000
(750)
264,250
10,000
2,500
276,750 - Outline four factors that may be considered when measuring the size of a firm. (4marks)
- Production methods
- Amount of capital invested
- Market served
- The number of employees
- Volume of output
- Floor area covered by premises
- Sales volume
- Highlight four challenges that a person may encounter when using a cellphone. (4marks)
- Its prone to damage
- Needs constant recharging/electricity is an extra requirement
- Possibility of loss of handset to thieves
- Relatively expensive to maintain
- Its use may be limited where there is lack of network
- It can cause ear cancer
- Calls or messages sent may be tapped
- May not be used under certain circumstances e.g. banking halls, public service vehicles
- State four qualities of a successful salesperson. (4marks)
- Well-groomed and presentable
- Possess good communication skills
- Be intelligent and tactful to understand the mood of customers
- Have good knowledge of the product
- Have prior knowledge of the customers
- High level of commitment/hardworking
- High sense of integrity/honesty
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