Business Studies Paper 1 Questions and Answers - Form 3 End Term 1 Exams 2021

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  1. State four factors that determine the period which documents should be stored (4mks)
  2. In the table below identify the type of utility for each circumstance (4mks)
     Processing and packing of sugarcane in a sugarcane in a sugarcane factory        
     Selling shoes in a market  
     Transporting milk from Kiambu to Thika  
     Storing goods in a warehouse  
  3. Highlight four limitations of using consumer initiated methods in consumer protection (4mks)
  4. Highlight five ways in which consumer benefits from warehousing (5)mks)
  5. Identify four situations when deffered payments would be used (4mks)
  6. The figure below shows a shift in supply.
    State four possible causes that might have led to such a situation (4mks)
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  7. Identify four factors that affect the circular flow of income (4mks)
  8. A resource is something used by the business to achieve an objective. Identify four resources found in a business (4mks)
  9. Outline four features of monopoly structure of market (4mks)
  10. Outline four features of an insurable risk (4mks)
  11. Outline four measures that an employer can take to improve his/ her human resource (4mks)
  12. Highlight four benefits experienced by a holder of a credit card (4mks)
  13. Identify four reasons why one would prefer to use air transport to transport goods from one place to another (4mks)
  14. Outline four features that constitutes a market (4mks)
  15. Give four reasons why one would prefer to buy food first before buying a television (4mks)
  16. State four contents of a cover note (4mks)
  17. Identify the type of advertisement described below (4mks)
     Any mention of a person/ firm or media      
     Any paid form of impersonal presentation of a product made through mass communication media.  
     Presentation of a commodity to prospective buyers, face to face by a sales person with an aim of making sales  
     Process of information with a view of creating, promoting or maintaining good and favorable image of a firm  
  18. Identify four gaps in a market that may bring a business opportunity in a market (4mks)
  19. Identify four factors that may determine location of an office (4mks)
  20. State five reasons why a firm may decide to remain small in an economy dominated by large firms (4mks)
  21. Outline four measures an office may take to safeguard the organizations property (4mks)
  22. Outline four circumstances under which per capital income statistics would be a good indicator of the welfare of the citizen of a country (4mks)
  23. Outline four factors that may constitute an efficient transport system (4mks)
  24. Outline four factors that may account for predominant direct production in a country (4mks)
  25. In the space provided, indicate with a tick whether the information relates to preference shares or ordinary shares (3mks)
     Statement   Preference   Ordinary 
     Represent real owners of company     
     Rate of dividend is fixed    
     Has voting right    
     Redeemable    
     May be cumulative    
     Considered last in liquidation    


Marking Scheme

  1. State four factors that determine the period which documents should be stored (4mks)
    • Availability of storage
    • Cost of storage
    • Information in the document
    • Need for future reference
    • Purpose of document
  2. In the table below identify the type of utility for each circumstance (4mks)
     Processing and packing of sugarcane in a sugarcane in a sugarcane factory  Form utility     
     Selling shoes in a market Possession utility
     Transporting milk from Kiambu to Thika Place utility
     Storing goods in a warehouse Time utility
  3. Highlight four limitations of using consumer initiated methods in consumer protection (4mks)
    • Lack of support from the government
    • Lack of sufficient information from consumer protection bodies
    • Ignorance on the part of consumers
    • Lack of initiative on the part of consumers
    • Lack of capital to sponsor their programmes
  4. Explain four ways in which consumer benefits from warehousing (4mks)
    • Steady supply of goods
    • Stability of prices
    • Get goods on convenient sizes due to bulk breaking in warehouse
    • One can inspect goods before buying
    • Quality of some goods may increase
  5. Identify four situations when differed payments would be used (4mks)
    • When credit worthiness of a customer is unquestionable
    • When seller wants to attract customers
    • When the seller wants to retain customers
    • When seller wants to use credit facilities as competiting tools
    • When seller wants to increase sales
    • When in need to dispose slow moving goods
  6. The figure below shows a shift in supply.
    State four possible causes that might have led to such a situation (4mks)
    • High cost of production
    • Inadequate time
    • Unfavorable government policies
    • Future expectations of price increase
    • Unfavorable weather conditions
  7. Identify four factors that affect the circular flow of income (4mks)
    • Investment
    • Government
    • Savings
    • Foreign trade
  8. A resource is something used by the business to achieve an objective. Identify four resources found in a business (4mks)
    • Human resource
    • Financial resource
    • Technological resource / technology
    • Physical resource
  9. Outline four features of monopoly structure of market (4mks)
    • One supplier for entire market
    • Commodity has no close substitute
    • Difficult of entry into the market by other firms
    • Prices are fixed by supplier
    • Price discrimination is possible
  10. Outline four features of an insurable risk (4mks)
    • Can be predicted in terms of probability of occurrence
    • Resulting financial loss aring from their occurrence can be accurately determined
    • The number of people likely to suffer from the risk can be determined
    • The number of people likely to suffer from the risk can be determined.
  11. Outline four measures that an employer can take to improve his/ her human resource (4mks)
    • Offering reasonable renumeration
    • Offering training and refresher courses
    • Availing all necessary equipment
    • Giving all opportunityfor promotion and training
    • Providing fringe benefits such as transport and cheap housing
  12. Highlight four benefits experienced by a holder of a credit card (4mks)
    • Saves one the inconvenience of carrying large sums of money
    • Safe to carry card than cash
    • The hoder can get goods and cash from specific sellers without immediate payments
    • One way of increasing ones credit rating
    • Visa card holders can obtain money from specified banks not necessarily his/her bank
  13. Identify four reasons why one would prefer to use air transport to transport goods from one place to another (4mks)
    • If the distance involved is long such as cross continental
    • If the goods to be moved are perishable
    • When transporting urgently needed goods
    • Where goods to be transported are fragile
    • If goods are of high value
    • When it is the only means available
  14. Outline four features that constitutes a market (4mks)
    • The product (good to be sold)
    • Existence of buyers
    • Existence of sellers
    • A place or location
    • Interaction of buyers and sellers (exchange of goods and services)
    • Existence of money (medium of exchange)
  15. Give four reasons why one would prefer to buy food first before buying a television (4mks)
    • Food is essential for survival
    • The limited resources available to satisfy the two
    • Need of food cannot be postponed
    • Food is a felt need
  16. State four contents of a cover note (4mks)
    • Name of the insurer
    • Name of insured
    • Date of taking insurance cover
    • Sum insured
    • Sum insured
    • Period of cover
    • Premium payable
    • Risk covered
    • Subject matter covered
  17. Identify the type of advertisement described below (4mks)
     Any mention of a person/ firm or media   Publicity   
     Any paid form of impersonal presentation of a product made through mass communication media.  Advertising
     Presentation of a commodity to prospective buyers, face to face by a sales person with an aim of making sales Personal selling
     Process of information with a view of creating, promoting or maintaining good and favorable image of a firm Public relations
  18. Identify four gaps in a market that may bring a business opportunity in a market (4mks)
    • Unavailability of a product
    • poor quality of a product offered
    • Insufficient quantities supplied
    • Unaffordable prices
    • Poor services
  19. Factors determining location of an office (4mks)
    • Availability of space
    • Level of security
    • Access to other support services such as banking
    • Availability of labour
    • Easy access to the roads
  20. State five reasons why a firm may decide to remain small in an economy dominated by large firms (4mks)
    • Small size of market
    • Nature of the market
    • Simplicity of the organization
    • Quick decision making
    • Flexibility of small firms
    • Rising cost of production
    • Need to retain control
    • Legal constraints
  21. Outline four measures an office may take to safeguard the organizations property (4mks)
    • Taking insurance cover
    • Employing security guards
    • Physical stock taking
    • Recording movement and use of property
    • Proper repairs and use of property
    • Physical care by users
  22. Outline four circumstances under which per capital income statistics would be a good indicator of the welfare of the citizen of a country (4mks)
    • When national income is evenly distributed among citizens
    • When national income are in real terms and allowances made to cater for price fluctuations
    • When output per year is based on essential and final goods consumed by masses
    • When real statistics on population are real and not projection used
  23. Outline four factors that may constitute an efficient transport system (4mks)
    • efficient cost to the user
    • speed should match the cost
    • should have reliability and regularity
    • should have flexibility and convenience
    • should provide comfort to users
    • should provide safety to both passengers and goods
  24. Outline four factors that may account for predominant direct production in a country (4mks)
    • Reliance of low level of technology
    • Low income due to poverty limiting production
    • Negative attitude towards commercialization
    • Poor resource endowment
    • Lack of market for some goods
    • Lack of skills
  25. In the space provided, indicate with a tick whether the information relates to preference shares or ordinary shares (3mks)
     Statement   Preference   Ordinary 
     Represent real owners of company          √
     Rate of dividend is fixed      √  
     Has voting right         √
     Redeemable      √  
     May be cumulative      √  
     Considered last in liquidation         √
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