Business Studies Paper 1 Questions and Answers - Form 4 End Term 2 2021

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BUSINESS STUDIES (565/1)
Time: 2 Hours

INSTRUCTIONS TO CANDIDATES

  1. Write your name and Admission number in the spaces provided above
  2. Answer all questions


QUESTIONS

  1. State the unit of carriage for each of the following modes of transport 4mks)

    Mode of transport  

    unit of carriage
    Porterage  

    ________________

    Cartage  

    ________________

    Sea

    ________________

     
     Air

    ________________

     
  2. Outline four elements of demographic environment that may influence the operation of a business. (4 marks)
  3. State four reasons why consumers have to make choices between competing wants. (4marks)
  4. In the spaces provided below, indicate the type of utility created by each of the following business activities (4marks)

    Business activity  

    Type of utility 
    Selling face masks to customers  
    Transporting onions  
    Storing onions in a granary  
    Making a camera  
  5. Outline four circumstances under which differed payment may be used (4marks)
  6. State four advantages of transacting business through the internet. (4marks)
  7. The following information relates to Mumbua traders for the year ended 31st April 2015.
     
      Shs.
    Cash at bank  30,000
    Cash in hand 40,000
    Current liability 500,000
    Sales 920,000
    Opening stock 150,000
    Closing stock 230,000
    Margin 25%
    Expenses

    15% of sales

    Determine
    1. Gross profit (1mark)
    2. cost of sales (1mark)
    3. Purchase for the year (1mark)
    4. Net profit (1mark)
  8. For each of the following transactions indicate the account to be debited and credited.4 marks

    Transaction  A/c debited  A/c credited 
    a)     Received discount from Top Suppliers    
    b)   Allowed discount to Shujaa Traders    
    c)    Sold furniture to Owuor in cash    
    d)    Took stock worth sh.200 for personal use    
  9. Identify four benefits of international trade to a country (4marks)
  10. Alice a retailer had a capital balance of sh.160,000 as at 30th June 2016. During the year ended June 30th 2017, the business made a profit of 130,000. Alice the proprietor made drawings of 1500 each month for her personal use. Compute the business capital as at 30th June 2017 (3marks)
  11. Highlight four reasons that would make an organization use cell phones for communication within and outside the organization. ( 4marks)
  12. State four benefits of “pooling of risks” to insurance company. (4marks)
  13. Outline four circumstances under which a firm may locate its operations near the source of raw materials. (4 marks)
  14. Highlight four measures that the government can take to reduce mortality rate in the country. (4marks)
  15. Many countries in Africa, Latin America and Asia are considered as under developed. Outline four characteristics underdeveloped countries have in common. (4marks)
  16. State four ways of improving service delivery in parastatals and state corporation. (4marks)
  17. State four locations in a country where bonded warehouse are likely to be found. (4marks)
  18. The following information was extracted from the books of Amani traders on 31st Dec 2010

    Commission received  22,000
    Sales 763,000
    Loan interest 52,500
    Purchases 474,000
    General expenses 30,000
    Drawings 96,000
    Rent 120,000
    Salaries owing 72,000
    Electricity pre paid

    85,000

    Prepare Amani traders trial balance for the month ended 31st Dec 2010.(5 marks)
  19. The diagram below shows a shift in supply curve form S0S0 to S1S1.
    19 khbuaguydguyag
    State four factors that may account for the above shift. (4marks).
  20. Outline four contributions of the households to the national income of a country. (4marks)
  21. State four circumstances under which a customer would prefer to be paid by a banker’s cheque. ( 4 marks)
  22. outline four benefits of becoming a member of a savings and credit cooperative society.(SACCO). (4marks)
  23. 23 Highlight four methods used by a monopolistic firm to differentiate products.(4marks)
  24. State four circumstances under which a business firm may use photocopying as a means of reproducing documents. (4 marks)
  25. Apart from government borrowing, outline four other sources of government revenue. (4marks)


MARKING SCHEME

  1. Unit of carriage
    • Human beings
    • Carts
    • Ships
    • Airplanes
  2. Elements of demographic environment that may influence operation of business
    • Population size
    • Geographic distribution of population
    • The population density
    • Distribution of population by sex/gender
    • Distribution of population by age
    • Population growth rate. 4x1=4
  3. Reasons why consumers have to make choices between competing wants
    • Wants are unlimited in number
    • Commodities differ in quality and others have salient features
    • There may be varieties of products that satisfy the same wants
    • Some wants are more urgent and intense than others
    • Due to limited/scarce resources
    • Some commodities sell at different prices
    • Consumers financial position vary with time
    • Some wants are recurrent
    • Human wants are competitive. 4 x 1 = 4mks
  4. utility created by each of the following business activities
    • Possession
    • Place
    • Time
    • Form 4x1=mks
  5. Circumstances under which differed payment may be appropriate
    • When the seller wants to attract or retain customers
    • When the seller wants to increase sales
    • When the seller wants to use credit facilities as a competing tool
    • When the seller want to dispose off slow moving stock
    • When credit worthiness of a customer is unquestionable 4x1=4
  6. Advantages of transacting business through the internet
    • Facilitates access to a worldwide market
    • It’s a faster way of doing business
    • Large and small businesses can transact internationally without discrimination.
    • Reduces paper work and number of transactions
    • Saves money in terms of sending, receiving and storing business information.
    • One can access other business information from the internet that can improve running of business.4 x 1 = 4 mk
  7. Gross profit
    1. Margin = Gp x 100
      Sales
      Gp = 25 x100
              920,000
      100Gp = 920000 x 25
      100                  100
      Gp = 230,000 1 mk
    2. cost of sales
      sales – Gp = 920,000 – 230,000
      = 690,000 1mk
    3. Purchase for the year
      COGS = OS + P + CI– RO – CS
      690,000 = 150,000 + P – 230,000
      = 770,000 1mk
    4. Net profit
      Gp – expenses
      230,000 – (15 x 920000) = 230,000 – 138,000
                                100
      = 92,000 1mk
  8. 8 x ½ = 4mks

    Transaction

    A/c debited

    A/c credited

    a)    Received discount from Top Suppliers

    Disc. Received

    Top Suppliers

    b)   Allowed discount to Shujaa Traders

    Disc. Allowed

    Shujaa Traders

    c)    Sold furniture to Owuor in cash

    Cash

    Furniture

    d)   Took stock worth Sh. 200 for personal use

    Drawings

    Stock

  9. Benefits of international trade to a country
    • Enable a country to sell (dispose of its surplus)
    • Enable a country to acquire goods and services which its unable to produce locally
    • A source of government revenue when import taxes are received
    • Creates employment to people when they engage in various trading activities
    • Enable a country to get variety of goods 4x1=4 marks
  10.                                    
    • Opening capital 160,000
      Profit 130,000
      Drawing 1500 x 12 18,000
      Closing capital ?
      Cc = OC x P – D
      160,000 + 130000 – 18000
      = 272,000 3 marks
  11. Reasons that would make an organization use cell phones for communication within and outside the organization
    • One gets immediate feedback
    • It is fast and can be used to send urgent messages
    • The sender has a good opportunity to convince and persuade the recipient
    • There is personal appeal
    • It is not very expensive particularly for making calls for a short duration of time
    • It can be used even when both the sender and recipient are far apart 4x1=4mks
  12. Benefits of pooling of risks to insurance company
    • Enables insurance company to compensate those who suffer loss when risks occur.
    • Enables insurance company to create a common pool of funds
    • Enables insurance company to spread risks over a large over a large number of insured.
    • The surplus funds can be invested e.g giving out loans or buying shares in real estates
    • Enables company to meet operating cost by using the pooled funds
    • Enables insurance company to calculate premiums to be paid by each client 4x1=4mks
  13. Circumstances under which a firm may locate near source of raw materials
    • When raw materials are bulky
    • Where constant supply of raw materials is required to ensure continuous production
    • Where raw materials are highly perishable
    • Where the firm would like the raw materials to ensure the production of right quality.
    • Where the government policy gives incentives to industries that set up near source of raw materials
    • Where the market of the product is concentrated near the source of raw materials 4x1=4
  14. Measures that the government can take to reduce mortality rate.
    • Availing better health care
    • Ensure food security
    • Minimize internal conflicts and wars
    • Improve the environment
    • Vaccination
    • Disaster preparedness
    • Alleviating poverty
    • Control crime 4x1 = 4
  15. Characterics of underdeveloped countries
    • Low per capita income
    • High population growth rate
    • High degree of pervert
    • Low literacy levels
    • High level of unemployment
    • Poor health care
    • Low life expectancy
    • Over reliance on primary level of production
    • Poor infrastructure
    • Outdated cultural practices 4x1 = 4.
  16. Ways of improving service delivery in parastatals and state corporation
    • Regular auditing of books of accounts
    • Setting targets to be achieved by all firms
    • Retrenching some of the idle workers
    • Make them adapt modern technology
    • Employing qualified /skilled managers
    • Workers signing performance contract 4 x 1 = 4
  17. Locations in country where bonded warehouses are likely to be found
    • Along the airport
    • Along the sea port
    • Along the border town
    • Along the railway terminals 4x1=4
  18.                                      
     AMANI TRADERS
    TRIAL BALANCE
    AS AT 31ST DEC 2010
    Item Dr Cr
    Commission received    22,000
    Sales   763,000
    Loan interest 52,500  
    Purchases 474,000  
    General expenses 30,000  
    Drawings 96,000  
    Rent 120,000  
    Salaries owing   72,000
    Electricity pre paid

    85,000

     
      857,500 857,500
  19. Factors that cause a decrease in the quantities of good supplied
    • Increase in the cost of production
    • Unfavourable weather conditions
    • Unfavourable government policies e.g high taxation
    • Low level of technology/use of outdated technology
    • In availability of factors of production
    • Strikes of workers
    • Exit of firms from the industry 4x1=4mks
  20. Contributions of households to the national income of a country
    • Providing a ready market for commodities produced
    • Providing labour for firms
    • Paying taxes to the government
    • Providing savings and investments in the country
    • Providing land to firms
    • Offering capital to firms to facilitate production. 4 x 1 = 4mks
  21. Circumstances under which a customer would prefer to be paid by a bankers cheque
    • When debtors financial status in a doubt
    • When there is fear of delay in payment
    • When the amount involved is large
    • in case the traders deals in different currencies 4x1=4 marks
  22. Benefits of becoming a member of a savings and credit cooperative society (SACCO)
    • Will get advice on area of finances
    • Earn interest on investment
    • Receive loans at low interest
    • Receive credit facilities
    • Assisted in times of problems (benevolent)
    • Source of savings
  23. Methods used by a monopolistic firm to differentiate products. 4mks
    • Packaging in different sizes
    • Branding
    • Blending into different colours
    • Trademarks/salient features
    • Persuasive advertisement
    • Pricing
  24. Circumstances under which a business firm may use photocopying as a means of reproducing documents
    • When high quality copies are required
    • When copies are required fast since it quicker than duplicating or printing
    • When coloured copies are required
    • When there is no need for comparison with original
    • When the business does not want to pollute the environment
  25. Sources of government revenue
    • Taxes
    • Fines and penalties
    • Escheats
    • Interests and dividends on loans and investments
    • Profits form parastatals of public investments
    • Fees from government utilities like national parks
    • Proceeds from sale of government property
    • Rent and rates paid for use of government property.

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