Business Studies Paper 1 Questions and Answers - Form 3 End Term 3 Exams 2023

ANSWER ALL QUESTIONS

1. Identify any four disciplines of business studies.
2. State four ways in which internal environment of a business may negatively affect its activities. (4 marks)
3. Outline four benefits that accrue to a society that practice indirect production (4 mks)
4. State difficulties faced by consumers as they strive to satisfy their wants. (4 mks)
5. Tuk-tuks are a common phenomenon in the urban areas. State four disadvantages of using these means of transport. (4 marks)
6. Give any four circumstances under which it would be advisable for a manufacturer to sell her products directly to the consumer. (4 marks)
7. State the type of unemployment relating to each of the following descriptions. (4 marks)
   1. Caused by alternating trading patterns occurring at similar times.
   2. Arises where workers have more skills and higher qualifications than the job requirements
   3. Arises out of a mismatch between the skills possessed by potential employees and the location of the jobs available
   4. Arises when people are unwilling to take up jobs due to low pay
8. Highlight four advantages of government involvement in business activities in Kenya. (4mks)
9. Highlight four forms of written communication that the minister of education could use to pass on information. (4 marks)
10. The diagram below shows the current demand for petrol.
                                                         
    1. What is the effect of a fall in the prices of cars on demand for petrol? Give a reason for your answer (2 marks)
    2. Draw a new demand curve on the diagram above to show the effect of a fall in price of cars. (2 marks)
11. State four features of a monopolistic market. (4 marks)
12. Outline four circumstances under which a gap may exist in the market. (4 marks)
13. Highlight the procedure of claiming an insurance claim. (5 marks)
14. State four factors that may be considered when measuring the size of a firm. (4 mks)
15. The diagram below shows the circular flow of income in a two-sector economy. Indicate what the letters A, B, C and D represents. (4 marks)
                                             
    A –
    B –
    C –
    D –
16. The following are balances from the books of Gakoigo traders as at 31st December 2015.
           Furniture                                             80,000
           Debtors                                               20,000
           Creditors                                             40,000
           5 years KCB loan                               300,000
           Motor vehicles                                    400,000
           Cash at hand                                      20,000
           Cash at bank                                      120,000
           3 years NBK loan                               150,000
           Stock                                                  75,000
           Capital                                                225,000
           Prepare Gakoigo traders trial balance as at 31^st December,2015. (4 marks)
17. Identify the type of advertisement described by each of the following statements. (4 marks)
    

    Statement	Type of advertisement
    (i) Promotes the name of the manufacturer.  (ii)Creates awareness about a product.  (iii)Uses names of famous persons to promote a product.  (iv)Portrays a product as better than others

18. Highlight three major types of office layouts. (3 mks)
19. State the effects of the following transactions on the balance sheet totals. whether an increase, decrease or no effect. (4 marks)
                                                Transaction                                                      Effect
    1. Owner took cash from the business to buy food for his family.
    2. Received a cheque from a debtor.
    3. Issued a cheque to clear a loan.
    4. Bought goods on credit.
20. Outline four benefits that would make Zainabu to join a savings and credit co-operative society (SACCO) (4 marks)
21. On 1^st January 2005, Kamau started a furniture shop with capital of Kshs 120,000. During the year he took Kshs12,000 for his son’s birthday party. He also brought into the business private furniture worth Kshs 20,000. At the end of the period, he had made a profit worth Kshs 35,000. Determine Kamau’s capital at the end of the period. (4 marks)
22. Outline four consequences of poor arrangement of goods in a warehouse. (4 mks)
23. Highlight four advantages of paying for transactions using a cheque. (4 mks)
24. Outline four documents required by the registrar of companies to facilitate registration of Limited Companies (4 marks)
25. Outline four features of a supermarket ( 4 marks )

                                                                               MARKING SCHEME

1. Identify any four disciplines of business studies.
   • Accounting
   • Commerce
   • Office practice
   • Entrepreneurship
   • Economics
2. State four aspects of internal environment of a business may negatively affect its activities. (4 marks)
   • Weak and inflexible organizational structure.
   • Poor communication.
   • Poor organizational culture
   • Poor management policies and styles
   • Poor marketing approach
   • Poor facilities
   • Uncommitted owners
   • Unskilled workers
3. Outline four benefits that accrue to a society that practice indirect production (4 mks)
   • High quality goods/services due to market competition
   • Use of modern technology thus better-quality goods/ services.
   • Result in surplus production
   • Leads to creation of employment e.g., in production, distribution.
   • Promote interdependence among people/ community leading to peaceful cohesion.
   • Lead to higher standards of living due to variety/ better priced quality products.
   • Make country earn foreign exchange.
   • Lead to specialization in the society leading to better quality goods and services.
4. State difficulties faced by consumers as they strive to satisfy their 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. Tuk-tuks are a common phenomenon in the urban areas. State four disadvantages of using these means of transport. (4 marks)
   • Cause congestion / traffic jam
   • Low passenger carrying capacity.
   • Relatively slow
   • Not fully covered and may expose passengers to natural hazards.
   • Cannot carry heavy and bulky goods.
   • Contributes to pollution in the urban centers.
6. Give any four circumstances under which it would be advisable for a manufacturer to sell her products directly to the consumer. (4 marks)
   • If the goods are perishable
   • If the market is small
   • If the product is bulky / heavy
   • If the products are of high value
   • If there are no middlemen
   • If the consumers are near the manufacturer / proximity.
7. State the type of unemployment relating to each of the following descriptions. (4 marks)
   • Cyclical.
   • Disguised / hidden.
   • Structural / technological.
   • Voluntary / real wage
8. Highlight four advantages of government involvement in business activities in Kenya. (4mks)
   • Creates/ securing of employment opportunities.
   • Prevents/ protects citizens from exploitation.
   • Encourages entrepreneurial culture through training and business funding.
   • Maintenance of law/ order
   • Provision of essential goods/ services at affordable.
   • Provision of large capital investment which the private sector may not be able to raise.
   • Stimulation of economic development through development projects.
   • Income generation through licensing/ taxation.
   • Provision of low profit / unprofitable goods which are unattractive to private sector.
   • To provide risky goods that may be threat to national security.
   • To provide sensitive goods that may adversely affect stability of economy.
   • To encourage local participation/ reduce foreign dominance in bid to build local capacity.
   • To break monopolistic tendencies by starting competitive businesses.
   • To avoid wasteful competition thereby promoting efficient use of resources.
9. Highlight four forms of written communication that the minister of education could use to pass on information. (4 marks)
   • Circulars
   • Letters
   • Memos
   • Reports
   • SMSs
   • Notices
   • E-Mails
10.  
    1. What is the effect of a fall in the prices of cars on demand for petrol? (2 marks)
       • More cars will be demanded, and this would increase the demand for petrol at the same price.
    2. Draw a new demand curve on the diagram above to show the effect of a fall in price of cars. (2 marks)
                                                 
11. State four features of a monopolistic market. (4 marks)
    • Free entry and exit
    • Many firms though each is too small to attract the either market,
    • Firms sell products that are (relatively) close substitutes of one another.
    • Presence of non-price competition
    • Product differentiation
    • There is wide knowledge of the market conditions for both sellers and buyers.
12. Outline four circumstances under which a gap may exist in the market. (4 marks)
    • Where the quality of products available is low.
    • Where the prices in the market are high.
    • Where the quantity of products in the market are inadequate
    • Where a certain product is not available in the market
    • Where credit facilities are not available
    • Where existing firms do not provide after sale services
13. Highlight the procedure of claiming an insurance claim. (5 marks)
    • Notifying the insurer
    • Filling a claim form
    • Investigation of the claim
    • Preparation of the assessment report
    • Payment of the claim
14. State four factors that may be considered when measuring the size of a firm. (4 mks)
    • The level or volume of output
    • The number of employees
    • The capital invested.
    • The production methods (technology) used.
    • The market served.
    • The floor area covered by the firm’s premises.
    • The sales volume
15.  
    • A – Factors of production
    • B – Goods and services
    • C – Payment for factors of production
    • D – Payment for goods and services
16. The following are balances from the books of Gakoigo traders as at 31st December 2015.
                                                                 Gakoigo traders
                                                                    Trial balance
                                                               As at 31/ 12/ 2015√√
                                           
17. Identify the type of advertisement described by each of the following statements. (4 marks)
    

    Statement	Type of advertisement
    (i)Promotes the name of the manufacturer.  (ii)Creates awareness about a product.  (iii)Uses names of famous persons to  promote a product.  (iv)Portrays a product as better than others.	(i) Institutional  (ii)Informative  (ii)Celebrity  (iv)Competitive / persuasive

18. Highlight three major types of office layouts. (3 mks)
    • Partitioned/enclosed office layout.
    • Open office layout
    • Landscape office layout
19. State the effects of the following transactions on the balance sheet totals. whether an increase, decrease or no effect. (4 marks)
               Transaction                                                                            Effect
    1. Owner took cash from the business to buy food for his family - Decrease.
    2. Received a cheque from a debtor                                             - No effect.
    3. Issued a cheque to clear a loan                                                - Decrease.
    4. Bought goods on credit                                                             - Increase.
20. Outline four benefits that would make Zainabu to join a savings and credit co-operative society (SACCO) (4 marks)
    • Encourage members to save by making regular contributions.
    • Provides loan facilities to members based on members contributions.
    • They give loans on easy terms / conditions.
    • Give dividends to members based on their share contribution.
    • Member’s savings / share contributions are doubled upon death of a member.
    • Educate the members on co- operative activities.
    • They charge low interest rates on loans.
21. On 1^st January 2005, Kamau started a furniture shop with capital of Kshs120,000. During the year he took Kshs12,000 for his son’s birthday party. He also brought into the business private furniture worth Kshs20,000. At the end of the period, he had made a profit worth Kshs35,000. Determine Kamau’s capital at the end of the period. (4 marks)
    Final capital = initial capital + additional capital + net profit – drawings
    Final capital = 140,000√ + (20,000 + 35,000) √ – 12,000√
                        = Kshs183,000√
22. Outline four consequences of poor arrangement of goods in a warehouse. (4 mks)
    • Time wastage when releasing goods.
    • Breakage of goods
    • Accidents to personnel
    • Chances of pilferage/theft of goods
    • Difficult to monitor movement of goods.
    • Wastage of space.
    • Possible /loss of government revenue in bonded warehouse
    • Limits use of holding equipment’s machines in the warehouse.
    • Increased overhead costs/labor costs.
23. Highlight four advantages of paying for transactions using a cheque. (4 mks)
    • A Cheques is secure
    • Convenient to carry in case of large amount.
    • Payment can be made without physical movement.
    • A Cheque serve as source document/proof of payment.
    • A Cheque can be discounted before maturity.
    • A Cheque can be endorsed.
24. Outline four documents required by the registrar of companies to facilitate registration of Limited Companies (4 marks)
    • Memorandum of Association
    • Articles of Association
    • Declaration of Compliance
    • List of directors
    • Director’s statement
    • Statement of company’s share capital
25. Outline four features of a supermarket ( 4 marks )
    • Requires large capital to start.
    • They stock a wide variety of goods.
    • Offers self service facilities.
    • Goods have price tags or bar codes.
    • Prices of goods are fixed.
    • No credit facilities are offered.
    • Sell at comparatively low prices.
    • Goods are systematically arranged for easy selection.
    • Shoppers are provided with baskets or trolleys for convenience.
    • There is minimal interaction between buyer and seller.
    • There are employees who pack goods for customers at the pay points.