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

Business Studies

Instructions to candidates:

• Attempt all the questions in section A and any two in section B

Questions

SECTION A (Attempt all questions in this section)

1. State 4 reasons why people engage in business (4mks)
2. List the four types of partnerships (4mks)
3. State 4 characteristics of basic wants (4mks)
4. Outline 4 differences between free samples and gifts (4mks)
   

   Free Samples	Gifts

5. Nakuru wholesalers owned a motor vehicle valued at Kshs. 2,000,000 which they comprehensively insured for Kshs. 1,600,000. The vehicle was involved in an accident and was written off. Determine the amount of money Nakuru wholesalers should expect to get from their insurer (4mks)
6. Classify each of the following production activities as either primary or tertiary (5mks)
   Activity                                                                                Level of production
   Digging clay soil
   Construction of a bridge
   Selling of a shop
   Growing vegetables
   Transportation of medicine
7. State any five sources of business ideas (5mks)
8. List 4 reasons why most firms still prefer closed office layout to open office layout (4mks)
9. Outline 4 unethical practices that are associated with product promotion (4mks)
10. State 4 features of supermarkets (4mks)
11. List any four clauses of memorandum of association for joint stock companies (4mks)
12. The diagram below shows a shift in demand curve from d₀d₀ to d₁d₁.
    
    Identify four factors that have made the demand curve to shift from d₀d₀ to d₁d₁ (4MKS)

SECTION B 20 MARKS (Attempt any 2 questions in this section)

13. Outline five factors that may limit the use of containers as a method of transporting goods in a developing country. (10 marks)
14. Explain five essential qualities of a good warehouse (10mks)
15. Describe the procedures that should be followed when taking an insurance policy. (10mks)
16. Explain five factors considered by the insurer when determining premiums to be charged on a policy(10mks)

Marking Scheme

1. State 4 reasons why people engage in business (4mks)
   • To make profit
   • To provide goods and services
   • To dispose off surplus produce
   • To exploit individual talent
   • To keep oneself occupied or busy
     
     
2. List the four types of partnerships (4mks)
   
   • Ordinary partnership / General partnership.
   • Limited partnership.
   • Temporary partnership.
   • Permanent partnership
     
     
3. State 4 characteristics of basic wants (4mks)
   • One cannot do without them
   • They are felt needs
   • Cannot be postponed
   • They are satisfied first before secondary wants
     
     
4. Outline 4 differences between free samples and gifts (4mks)
   

   Free Samples	Gifts
   Similar to the product being promoted	Not necessarily related to the product
   Given before the product is bought	Given after buying the product
   Given for trial purposes	Creates brandy loyalty/retains the customers
   Induces potential customers to make a purchase	Makes the customers to buy goods in large quantities

5. Nakuru wholesalers owned a motor vehicle valued at Kshs. 2,000,000 which they comprehensively insured for Kshs. 1,600,000. The vehicle was involved in an accident and was written off. Determine the amount of money Nakuru wholesalers should expect to get from their insurer (4mks)
   • Compensation = sum assured/insured premium x loss
      Actual value
     1,600,000 x 1,600,000 = 1,600,00
      2,000,00
     
     
6. Classify each of the following production activities as either primary or tertiary (5mks)
   • Activity                                                  Level of production
      Digging clay soil                                      PRIMARY
     Construction of a bridge                        SECONDARY
     Selling of a shop                                    SECONDARY
     Growing vegetables                                   PRIMARY
     Transportation of medicine                        TERTIARY
     
     
7. State any five sources of business ideas (5mks)
   • Newspapers
   • Shows and exhibitions
   • Magazine articles
   • Hobbies
   • Listening to what people say
   • Spotting a market gap(niche)
   • Surveys
   • Vocational training and experience.
   • Listening to what people say
   • Waste products
     
     
8. List 4 reasons why most firms still prefer closed office layout to open office layout (4mks)
   • There is less noise
   • It presents a conducive working environment
   • It confers status to top level employees
   • There is privacy for confidential discussions
   • Provides security for valuable and sensitive items such as documents and cash
   • Air conditioning, lighting and heating in the room may be controlled according to the needs of the occupant.
   • It is easier to maintain
     
     
9. Outline 4 unethical practices that are associated with product promotion (4mks)
   • Give false information about a product
   • Not disclosing side effects of a product
   • Overpricing of goods
   • Cheating on ingredients of goods
   • Advertising with negative effects on the environment
   • Promoting genuine products but sell counterfeits
     
     
10. State 4 features of supermarkets (4mks)
    • Require large capital to invest
    • Stocks variety of goods
    • Offers self service facilities
    • Goods have price tags
    • No credit facilities are offered
    • Sale at comparatively low prices
    • Prices of goods are fixed
      
      
11. List any four clauses of memorandum of association for joint stock companies (4mks)
    • Name clause
    • Objective clause
    • Liability clause
    • Capital clause
    • Declaration clause
      
      
12. The diagram below shows a shift in demand curve from d0d0 to d1d1.
    Identify four factors that have made the demand curve to shift from d0d0 to d1d1 (4MKS)
    • Future expectation in the increase of price
    • Increase in price of complementary goods
    • Increase in population
    • Positive taste towards the product
      
      
13. Outline five factors that may limit the use of containers as a method of transporting goods in a developing country. (10 marks)
    • Specialized equipment which are expensive. The method calls for specialized equipment for handling goods which are lacking/expensive to buy/use/maintain.
    • Organization personnel/talents/training/operational/management skills needed for the method may be lacking/training may be expensive.
    • Volume of business may not be large enough/warrant the heavy investment/volume of business may be low.
    • Initial capital needed for the system/not easily available/expensive.
    • The method requires re-degrading of existing ports/reconstructing part which is quite expensive.
    • Use of medium technology which is limited/lacing/not readily available/limited medium technology (in a developing country) which may slow the rate of processing goods.
    • General resistances to change by stakeholders/interested/affected parties of people generally resist change.
    • May not be suitable for goods with irregular shapes
      
      
14. Explain five essential qualities of a good warehouse (10mks)
    • The warehouse should be conveniently located / type of warehouse
    • The warehouse should be managed by qualified personnel
    • Operational procedures and guidelines should be in place
    • security systems should be in place e.g cctv alarms, fire extinguishers.
    • should have suitable buildings / well designed
    • appropriate equipment e.g cold rooms
    • compliance with the law- A warehouse should be operated according to the requirements of the law
    • Adequate space- A warehouse should be spacious enough to allow easy movement and accommodation of goods and personnel.
    • Proper record keeping- There should be a proper recording system in a warehouse to ensure that all movement of goods is properly monitored.
    • Good transport system- A warehouse should be linked with a good and appropriate transport network to facilitate movement of goods in and out of the warehouse.
    • Good communication network - A warehouse should have a good communication network to or system for easy contact with its clients suppliers.
    • Appropriate staff – Warehouse staff should be well trained and efficient for proper management and efficient functioning of a warehouse.
    • Proper building design- A warehouse should be designed in a way that it accommodates the intended goods.
      
      
15. Describe the procedures that should be followed when taking an insurance policy. (10mks)
    • Filling a proposal form
      • A person intending to take an insurance policy fills in a proposal form from the insurance company. The form is designed in such a way that it guides the applicant on the details required.
    • Determining the premium to be paid
      • once the company receives the form it studies the facts given in and makes decision on whether to accept to cover the risk. If the application is accepted the insurer calculates the amount of premium to charge the applicant.
    • Payment of the first premium
      • After the insurance company has accepted to cover the risk and premiums are calculated the insured pays the first premium.
    • Issuing of cover note (Binder)
      • The insured is issued with a cover note after paying the first premium. The document serves as evidence that the person to whom it is issued is insured and would be compensated incase of a loss arising from the insured risk.
    • Issuing of the policy
      • The policy is the actual document of contract between the insurer and the insured. It contains terms and conditions of the insurance cover. The document is issued within thirty days and once issued it replaces the cover note.
        
        
16. Explain five factors considered by the insurer when determining premiums to be charged on a policy(10mks)
    • Health of the person
    • Frequency of occurrence of risks
    • Extend of previous losses
    • Residence of the insured
    • Occupation of the insured
    • Value of the property insured
    • Age of the person or the property in question
    • Period to be covered by the policy