Business Studies Paper 1 Questions and Answers - Form 3 End Term 3 2022 Exams

QUESTIONS

1. Outline four reasons why cash payment would be preferred to cheque payment (4marks)
2. State four problems consumers can encounter in the process of satisfying their wants (4marks)
3. State four reasons why Kenya has not been able to utilize her natural resources fully (4marks)
4. Highlight four conditions necessary for business to maintain a healthy business environment (4marks)
5. Listed in the table below are various forms of production. For each form of production, indicate (√) the correct classification in the appropriate column.
   

   Forms of production	Primary	Secondary	Tertiary
   Farming
   Transportation
   House building
   Retailing

6. From the following information prepare a three column cash book duly balanced (4marks)
   2010
   May 1: Balances brought for forward: - Bank 2000 (cr)
                                                                 Cash 1000
   May 5: Received Sh.7800 Cash from Wambua after deducting 2½% cash discount.
   May 14: Deposited Sh.8800 from the cash till to the bank
   May 24 Paid wages of Sh.800 by cheque
7. Outline four circumstances that would make an office manager to replace an existing machine with a modern one (4marks)
8. Outline four measures that can be taken to improve efficiency of parastatals in Kenya (4marks)
9. Outline four factors that an entrepreneur would consider in deciding whether a business opportunity is worth investing (4marks)
10. Mutua owned a motor vehicle valued at Ksh.1,000,000. He comprehensively insured the car at Sh. 800,000. The motor vehicle was involved in an accident and declared write off. Calculate the amount he should get from the insurer. (4marks)
11. Highlight four circumstances under which owners equity may change (4marks)
12. The diagram below shows a shift in supply curve from So So to S1, S1
    
    State four factors that may account for the above shift
13. Highlight four measures a government may take to attract firms to an areas (4marks)
14. Give four ways in which a manufacturer in monopolistic competition may use to differentiate his products from those of rival firms. (4marks)
15. Study the following diagram and state the missing terms (4marks)
    
    A ………………………………….…………………………………………………………………….
    B ………………………………………………………………………………………………………..
    C ……………………………………..…………………………………………...……………………..
    D ……………………………………………………………….………….……………………………
16. Outline four negative effects of ageing population in an economy. (4marks)
17. State the term given to each of the following disciplines.
    1. Study of how man strives to satisfy his unlimited wants using limited resources
    2. Study of trade and aids to trade
    3. Systematic way of recording business activities used for decision making
    4. Study of the process of identifying business opportunities and acquiring necessary resources to start the business
18. Outline four reasons that have led to the growth of savings and co-operative societies in Kenya (4marks)
19. The following information shows the financial position of Achoki Traders as at 1st May 2010
    Kshs.
    Capital 130,000
    Cash in hand 40,000
    Rent owing 12,000
    Furniture 110,000
    Debtors 20,000
    Stock 60,000
    Trade creditors 38,000
    Bank overdraft 50,000
    Prepare trial balance of the business (4marks)
20. Outline four expenses that intermediaries incur in the process of distributing goods (4marks)
21. Outline four benefits that consumers get from warehousing (4marks)
22. Highlight four reasons why it is important for a business to develop affective communication (4marks)
23. Outline four reasons why the government regulates business activities in the country (4marks)
24. State four factors that may discourage the use of pipeline as a means of transporting petroleum in Kenya. (4marks)
25. State any four benefits of using E-commerce in transacting business in an organization (4marks)

MARKING SCHEME

1. Reasons why cash payment is preferred to cheque payment
   • Cash is a legal tender but a cheque is not
   • Where the debt to be paid is a small amount
   • One need not have a bank account
   • Personal cheques can easily be dishonoured
   • Bank charges are incurred when cashing a cheque Any (4x1= 4marks)
2.                    
   • Human wants are unlimited/endless and cannot be satisfied with the limited natural resources
   • They are recurrent in nature
   • The changing nature of wants renders the consumers unable to satisfy new emerging wants.
   • The complementary nature of wants makes it not easy to satisfy one want leaving out the other to be satisfied later
   • They are competitive in nature make it difficult for some consumers to decide which to be satisfied first and which will follow.
   • Limited resources Any (4x1= 4marks)
3. Reasons why Kenya has not fully exploited her natural resources
   • Poor technology
   • Lack of qualified labour
   • Lack of enough information on the availability of resources.
   • Lack of capital to exploit the resources
   • Poor infrastructure to allow accessibility Any (4x1= 4marks)
4.                      
   • Pollution is reduced
   • Business uses environmentally friendly chemicals
   • Using recyclable packaging
   • Information passed to consumers is not false
   • Local resources are utilized well to avoid depletion. Any (4x1= 4marks)
5.                                      
   

   Forms of production	Primary	Secondary	Tertiary
   Farming	√
   Transportation			√
   House building		√
   Retailing		√

   (4ticks x 1= 4marks)
6.  Dr.                                                 3 – column cash book                                    Cr.
   

   Date	Details	D/C all	Cash	Bank	Date	Details	D/C Rec	Cash	Bank
   2010		Shs.	Shs.	Shs.	2010		Shs.	Shs.	Shs.
   May 1	Balance b/d		1000√		May 1	Balance b/d			2000√
   May 5	Wambua	200√	7800√		May 14	Bank C		8800√
   May 14	Cash C			8800√	May 24	Wages			800√
   					May 30	Balance c/d			6000√
   		200	8800	8800				8800	8800
   July 1	Balance b/d			6000

   8x½= 4marks
7.                          
   • Obsolescence – has outlived its usefulness
   • Where a faster machine is required
   • Where maintenance costs are lighter than cost of acquiring modern one
   • Where there is need for increased production
   • Where training skills have changed
8.                    
   • Employment of qualified staff
   • Enforcement of Laws to punish errant staff
   • Control errant staff
   • Reducing undue influence by the government
   • Restructuring them to make them competitive Any 4x1=4marks
9. Factor that an entrepreneur would consider in deciding a business opportunity is worth investing
   • Capital
   • Return (pay off)
   • Competition
   • Market availability Any 4x1=4marks
10. Compensation claim = Sum insured x Loss     
                                         Actual value
    = 800,000 x 1,000,000
       1,000,000
    = Sh.800, 000  (4marks)
11. Circumstances under which owners equity may change
    • When business makes profit
    • When business makes loss
    • Where there is drawings
    • When new capital is introduced (4x1= 4marks)
12. Factors accounting for the shift in supply curve
    • Increase in cost of production
    • Shortage of inputs
    • Exit of firms from the industry
    • Price of related products is high
    • Punitive government policy e.g. high taxations
    • Use of poor technology Any (4x1= 4marks)
13.                    
    • Provide business incentives
    • Improve transport.
    • Provide credit facilities to investors
    • Provide land at reasonable cost
    • Improve communications
    • Provide health care services
14. Ways of differentiating products
    • Through branding
    • Through wrapping
    • Through packaging
    • Through colouring
    • Through shaping
    • Through blending
15. Missing terms (given diagram)
    1. = Factors of production
    2. = Payment to factors of production
    3. = Expenditure on goods and services
    4. = Sale of goods and services
16.                            
    • Less mobile labour force/old people display rigidity
    • Less labour supply
    • High levels of dependence
    • Lack of creativity and innovativeness
    • Loss of job opportunities because of decline in the demand for goods used by the youth.
      (4x1= 4marks)
17. Terms for various disciplines as given
    • Economics
    • Commerce
    • Accounting
    • Entrepreneurship
18.                          
    • Enables members to save
    • Loans at low interest rates
    • Offers different categories of loans
    • Easy to obtain loans
19. Achoki Traders trial balance as at 1.5.2010
    

    	Debit	Credit
    Capital		130,000
    Cash in hand	40,000
    Rent owing		12,000
    Furniture	110,000
    Debtors	20,000
    Stock	60,000
    Trade creditors		38,000
    Bank overdraft		50,000
    	230,000	230,000

    8x½= 4marks
20. Expenses incurred by intermediaries when distributing goods
    • Storage
    • Advertising
    • Insurance
    • Salaries/wages
    • Blending/branding/packaging etc. (4x1= 4marks)
21.                          
    • They are assured of steady supply of goods
    • Key are assured of quality goods
    • Stable prices
    • They get goods in convenient quantities
    • They get a variety of goods Any (4x1= 4marks)
22.                              
    • Leads to better performance
    • Leads to efficiency in operations
    • Improve customer relations
    • Leads to efficient management
    • Leads to creation of business relations
23. Reasons why the government regulates business
    • To control unhealthy/wasteful competition
    • To curb illegal business
    • To protect consumers against malpractices by traders
    • To control environmental degradation
    • To stabilize the economy etc (4x1= 4marks)
24. Factors that discourage pipeline means of transporting petroleum in Kenya
    • Prone to sabotage in the remote areas
    • Easy for fuel to be pilferaged
    • Not economical for small values of the products
    • Initial capital outlay is quite light
    • Cost of monitoring the pipeline is high (4x1= 4marks)
25. Benefits of E-commerce in transacting business in an organization
    • Facilitates access to a large market
    • Large and small business can transact business through the internet without discrimination.
    • A fast way of doing business
    • Reduces paper work since many dealings are on line.
    • Saves on the cost of sending, receiving and storing information.