Business Studies Questions and Answers - Form 2 End Term 3 Exams 2023

Instructions to Candidates

• ANSWER ALL QUESTIONS

1. Identify four importance of learning business studies to the country. (4 mks
2. Identify four factors that influence entrepreneurial practices in Kenya. (4marks)
3. State four types of utilities created through the production. (4 mks)
4. State four challenges encountered in the satisfaction of human wants (4 mks)
5. Identify four ways in which an office is important to a business. (4marks)
6. Outline four ways in which a well laid out business structure is likely to lead to success of the business. (4marks)
7. Identify four functions of a proforma invoice. (4marks)
8. Outline the importance of trade to a country. (4marks)
9. Highlight four drawbacks of direct production. (4marks)
10. State four advantages of sending parcels using courier firms. (4marks)
11. List four circumstances under which the location of a warehouse can be inappropriate. (4marks)
12. The following are descriptions of various insurance policies. Identify the name of the policy described by the statement. (4marks)
    

    Description	Policy
    Covers an organization against losses which might arise as a result of debtors failure to pay their debts
    Covers for the losses of profit due to interruption of business activities as a result of fire.
    Covers employees who may suffer injuries while on duty.
    Covers partial or total physical disability caused to a person due to injury.

13. Outline four functions of advertising firms to the producers. (4marks)
14. State four circumstances that will make the standard gauge railway more desirable than road. (4marks)
15. Outline four characteristics of sole proprietorship business (4 mks)
16. Give four limitations of consumer-initiated methods in consumer protection. (4marks)
17. In the table below, indicate the type of advertising which fits the description. (4 marks)
    

    Description	Type
    a) Create awareness about a product
    b) Promotes the name of the manufacturer
    c) Persuades a particular brand of a product
    d) Promotes a particular brand of a product

18. State four sources of business ideas (4 mks)
19. Explain five factors to be considered by a business when choosing a means of communication (10 mks)
20. Explain five differences between a sole proprietorship and a public limited company.(10 marks)
21. Explain the meaning of the following terms as used in insurance (8 marks)
    1. Indemnity
    2. Third party motor vehicle insurance.
    3. Contribution.
    4. Subrogation.

MARKING SCHEME

1. Identify four importance of learning business studies to the country. (4 mks)
   • Students acquire knowledge on how to be environmentally friendly.
   • Students learn skills on how to acquire resources and use these skills to create goods and services for the country.
   • Created goods/services earn foreign exchange.
   • Created goods help to reduce volume of imports hence check balance of payment problems.
   • Learners acquire practical skills on how to start and run businesses therefore create employment.
2. Identify four factors that influence entrepreneurial practices in Kenya. (4marks)
   • Government policy
   • Infrastructure
   • Levels of education and skills
   • Availability of markets
   • Availability of resources
   • Culture
   • Competition
   • Political stability
   • Natural factors
3. State four types of utilities created through the production. (4 mks)
   • Form utility
   • Place utility
   • Time utility
   • Possession utility
4. State four challenges encountered in the satisfaction of human wants (4 mks)
   • The resources required are scarce.
   • The wants are too many and varied to be fully satisfied.
   • The wants keep recurring making them difficult to satisfy fully.
   • Some wants are complimentary giving rise to new wants and thus difficult to fully satisfy.
   • The wants change with time and age making it difficult to satisfy them always.
5. Identify four ways in which an office is important to a business. (4marks)
   • Receiving and recording information
   • Distribution (dissemination) of information
   • Mailing
   • Reproduction of documents
   • Safeguarding and controlling of organization’s property
   • Communication
   • Filing
6. Outline four ways in which a well laid out business structure is likely to lead to success of the business. (4marks)
   • Each of the employees knows what is expected of him /her.
   • There will be no conflicts or confusion among the workers.
   • Teamwork is enhanced.
   • Ensures proper control which in turn promotes efficiency.
7. Identify four functions of a proforma invoice. (4marks)
   • A polite way of asking for payment before the goods are delivered.
   • Sent when the seller does not want to give credit.
   • Used by importers to get customs clearance before goods are delivered.
   • Issued to an agent who sells goods on behalf of the seller.
   • Sent to show what the buyer would have to pay if the order is approved.
   • Can be used to serve as a quotation.
8. Outline the importance of trade to a country. (4marks)
   • Helps a country to acquire what it cannot produce.
   • Enables a country to obtain a variety of goods and services.
   • Helps a country to dispose of its surplus produce.
   • Creates employment.
   • Encourages a country to specialize.
   • Promotes social relations and understanding between countries involved.
   • Source of income to the country
   • Ensures steady supply of goods and services.
9. Highlight four drawbacks of direct production. (4marks)
   • Goods and services are of low quality and quantity.
   • Encourages individualism.
   • Leads to low standards of living.
   • Can be very tiring.
   • Does not encourage invention and innovation.
   • A lot of time is wasted as one move from one job to another.
   • No one can provide all that he/she requires.
10. State four advantages of sending parcels using courier firms. (4marks)
    • Speed/ fast delivery
    • Safety/ security of the parcel
    • Direct /door to door services.
    • Proof of delivery
    • Proof of sending.
    • Insurance –in case of loss can be compensated.
    • Personal touch
    • Can deliver a variety of items.
    • Reliable.
    • Direct collection.
11. List four circumstances under which the location of a warehouse can be inappropriate. (4marks)
    • When it is not accessible/ poor infrastructure.
    • When it is away from the terminal/source of goods.
    • Where there is insecurity
    • Where there is no communication /no network.
12. The following are descriptions of various insurance policies. Identify the name of the policy described by the statement. (4marks)
    
    

    Description	Policy
    Covers an organization against losses which might arise as a result of debtors failure to pay their debts	Bad debt cover
    Covers for the losses of profit due to interruption of business activities as a result of fire.	Consequential loss policy
    Covers employees who may suffer injuries while on duty.	Workman’s compensation policy
    Covers partial or total physical disability caused to a person due to injury.	Personal accident cover

13. Outline four functions of advertising firms to the producers. (4marks)
    • Undertake all the artwork and creative work in the good e.g., by suggesting the shape packaging etc.
    • They advise producers on selling and promotional policies.
    • They plan advertising campaigns for manufactures.
    • Reserve and pay for space or time for the media on behalf of the trader.
    • Assist in designing packages.
14. State four circumstances that will make the standard gauge railway more desirable than road. (4marks)
    • When goods are bulky
    • When the distance is long
    • When transporting livestock
    • Where railway tracks. /Shunting is laid.
15. Outline four characteristics of sole proprietorship business (4 mks)
    • Owned by one person.
    • Managed by the owner with help of family members.
    • Has unlimited liabilities.
    • Main source of capital is owner’s contribution.
    • Its life is limited to the life of the owner.
    • Formed under the business names Act.
    • It is not a separate legal entity from the owner.
16. Give four limitations of consumer-initiated methods in consumer protection. (4marks)
    • Lack of support by the government
    • Lack of finance
    • Ignorance of consumers
    • Reluctance of consumers to join these associations.
    • Apathy: lack of initiative from consumer to report cases of exploitive traders.
17. In the table below, indicate the type of advertising which fits the description. (4 marks)
    
    

    Description	Type
    a) Create awareness about a product	Informative advertising
    b) Promotes the name of the manufacturer	Institutional advertising
    c) Persuades a particular brand of a product	Persuasive/ competitive advertising
    d) Promotes a particular brand of a product	Product advertising

18. State four sources of business ideas (4 mks)
    • Newspapers
    • Shows and exhibitions.
    • Magazine articles
    • Hobbies
    • Vocational training and experience
    • Surveys
    • Waste products
    • Listening to what people say
    • Spotting a market gap
19. Explain five factors to be considered by a business when choosing a means of communication (10 mks)
    • Nature of information i.e., length of the message, confidentiality etc.
    • Urgency/ speed/ time
    • Distance/ destination
    • Availability
    • Need for evidence/ future reference.
    • Reliability
    • Impression to be created.
20. Explain five differences between a sole proprietorship and a public limited company. (10 marks)
    

    Sole Proprietorship	Public Ltd Company
    Formed by one person.	Formed by a minimum of seven promoters.
    Proprietor has unlimited liability.	Shareholders have limited liability.
    Existence depends on the life of sole trader.	Has perpetual life irrespective of life or death of shareholders.
    Main source of capital is personal savings.	Main source of capital is sale of shares.
    Managed by the sole trader.	Managed by a board of directors.
    Require little capital to start.	Require a huge amount of capital to start.
    Maximum ownership is one person	No maximum number of owners

21. Explain the meaning of the following terms as used in insurance (8 marks)
    1. Indemnity: this is a principle where insured is restored to the original financial position before the loss occurred.
    2. Third party motor vehicle insurance: covers damages suffered by persons other than the owner.
    3. Contribution: where more than one insurance covers are taken for the same property against the same risk, in case of a loss the insurance companies shall contribute proportionately to compensate the insured
    4. Subrogation –Once an insured is fully compensated for loss suffered, whatever remains belongs to the insurer.