BUSINESS STUDIES TOP KCSE PREDICTION - Baricho · 2020. 4. 18. · 2011 100.80 2012 103.50 2013 105.30 2014 108.00 Using year 2010 as the base year, determine the Consumer Price Index

BUSINESS STUDIES

TOP KCSE PREDICTION

(QUESTIONS & MARKING SCHEMES)

2019 SET OF MOCKS EXAMS

WHATSAPP MWALIMU RESOURCES FOR MORE RESOURCES 0735649658/0726426491

NOTES

EXAMS

SCHEMES OF WORK

LESSON PLANS

KCSE PREDICTIONS

KCPE PREDICITIONS

PAST KCSE & KCPE

NOVELS …

…AND MANY MORE

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ABOGETA QUALITY ASSURANCE EXAMINATIONS

(KISII CLUSTER)

FORM FOUR TRIAL 2, 2019

Kenya Certificate of Secondary Education

565/1 BUSINESS STUIES

PAPER ONE

TIME: 2HRS

INSTRUCTIONS

1. Answer all the questions in the spaces provided


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SECTION A

1. State four external factors that may positively influence the operations of a business

(4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

2. Outline four circumstances under which producers may prefer to sell goods directly to the

consumers. (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

3. Name four ways through which consumers can be cheated in their dealings with traders

(4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

4. The following information relates to Tamu Traders for the year ended 31st Dec. 2011

Sh

Fixed Assets 5,000,000

Current Assets 650,000

Net profit 300,000

Current liabilities 650,000

Sales 2,000,000

Closing stock 100,000

Opening stock 200,000


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Gross profit margin 20%

Calculate; (4mks)

a) Current ratio

b) Gross profit mark up

c) Rate of stock turn over

d) Capital employed.

5. Outline four circumstances under which a credit note may be issued. (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

6. The equation given below relate to quantity demanded and the quantity supplied at

equilibrium price.

Qde = 4P + 50

Qse = 8P + 30

Determine the equilibrium price and quantity (4mks)

7. Kendi started a shop dealing in ladies clothing but failed after two years. Outline four

factors that many have caused this failure (4mks)


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i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)…………………………………………………………………………………………………………………………………

8. Name the type of warehouse described below

Statement Type of warehouse

a) Goods can be stored before payment of custom duties

b) Individuals can hire storage facilities

c) Goods are stored from several manufacturers

d) Specialised goods are stored

9. State four ways in which the nature of goods would influence the choice of transport

(4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

10. Outline any four circumstances under which human wants may be fully satisfied (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

11. Highlight four ways in which business studies is useful to a community (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

12. State the books of original entry in which the following documents are used. (4mks)

a) Incoming invoice ………………………………………………………………………………………………………..

b) Incoming receipt ……………………………………………………………………………………………………….

c) Outgoing credit note …………………………………………………………………………………………………

d) Outgoing invoice ……………………………………………………………………………………………………..

13. State the type of ledger into which the following accounts would be found. (4mks)

Account Relevant ledger

a) Capital ………………………………………………………..


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b) Mueni (debtor) ………………………………………………………..

c) Kariuki (supplier) ……………………………………………………….

d) Bank ………………………………………………………

14. Outline any four advantages of operating in an open office layout. (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

15. George operates a petrol station in Nakuru. He insured his stock worth Ksh 2.4 million for

ksh 2 million. Later in the year stock worth ksh 600,000 was destroyed by fire. Calculate the

amount he was compensated and give a reason. (4mks)

16. State four characteristics of money (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

17. Name the rewards for the following factors of production (4mks)

Factor of production Reward

a) Employee

b) Machine

c) Minerals

d) Farmer

18. Outline four challenges that may be experienced by a country whose population is made up

of a large proportion of young people (4mks)


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i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

19. Highlight any four characteristics of perfect competition type of market structure (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

20. State the line of communication involved in each of the following. (4mks)

a) The manager of ABC company Ltd talking to the manager of XYZ company Ltd

…………………………………………………………………………………………………………………………………

b) A secretary asking for time off from her boss …………………………………………………………..

c) The production manager giving instructions to the secretary of the sales manager

……………………………………………………………………………………………………………………………………

d) The store keeper giving explanations to the chief accountant

…………………………………………………………………………………………………………………………………

21. State the effect of each of the following transactions on the balance sheet totals by writing

increase or decrease or no effect in each case. (4mks)

Transaction Effect

a) Bought machinery on credit

b) Withdrew cash from the bus for personal use

c) Purchased stock in cash

d) Paid outstanding loan by cheque

22. Outline the assumptions that the circular flow of income in a closed economy work under

(4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

23. The following balances were extracted from the books of Wanji traders for the year ended

30th June 2005. (4mks)


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Sh

Debtor 120,000

Creditor 60,000

Machinery 450,000

Cash in hand 70,000

Cash at bank 180,000

5 years bank loan 270,000

Stock 60,000

Prepare a balance sheet of Wanji traders as at 30th June 2005.

24. Outline four reasons for maintaining a cash book in a business enterprise. (4mks)

i) ……………………………………………………………………………………………………………………………………

ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………

25. Highlight four factors that should be considered when choosing a method of promoting a

product. (4mks)

i) ……………………………………………………………………………………………………………………………………


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ii)……………………………………………………………………………………………………………………………………..

iii)……………………………………………………………………………………………………………………………………

iv)……………………………………………………………………………………………………………………………………


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1

ABOGETA QUALITY ASSURANCE EXAMINATIONS

(KISII CLUSTER)

FORM FOUR TRIAL 2, 2019


565/2 BUSINESS STUIES

PAPER TWO

TIME: 2½HRS

INSTRUCTIONS

1. Answer any FIVE questions in the foolscaps provided

1. a) Outline any five differences between private limited liability company and public limited

liability company. (10mks)

b) Describe five accounting documents used in home trade. (10mks)

2. a) The table below shows the demand and supply schedules for product A in a week.

Price(sh) Quantity demanded Quantity supplied

(‘000’ tonnes) (‘000’ tonnes)

35 5 80

30 10 65

25 20 55

20 25 40

15 30 35

10 40 20

5 55 5

Use the information in the table above, draw the demand and supply curve showing the

market equilibrium for the produce. (10mk)

b) Explain five benefits that a firm may enjoy by preparing a business plan. (10mks)

3. a) Traders are required to observe ethical practices when carrying out product promotion.

Explain five reasons for observing such ethical practices (10mks)

b) Explain five benefits that may be realized by a country as a result of government policy

to relocate Industries to rural areas. (10mks)

4. a) Outline any five factors to consider while locating a ware house. (10mks)


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b) On 1stSeptember 2015, Miriam had sh 55,000 in hand and sh. 250,000 in bank. During

the month the following transactions took place.

Sep 2: Cash sales banked sh 35,260

Sep 3: Bought ribbons in cash sh 4,500

Sep 8: Paid Wangila, a creditor sh 94,000 by cheque in full settlement of his account

after deduction 6% cash discount.

Sep 12: Received a cheque for sh 58,800 from Wetu after allowing her cash discount of

sh 1,200

Sep 15: Paid salaries of sh 34,000 in cash

Sep 25: Withdrew sh 50,000 from bank for office use.

Sep 28: Anyango a debtor paid her account of sh 75,000 by cheque less 10% cash

discount.

Sept 30: Deposited all the cash into the bank except sh 13,700

Prepare a three column cash book and balance it off. (10mks)

5. a) Explain any five uses of National Income Statistics (10mks)

b) The following trial balance related to Tai Traders as at 31st December 2014

TAI TRADERS

TRIAL BALANCE

AS AT 31ST DECEMBER 2014

Details Dr (Ksh) Cr(Ksh)

Stock 10,000

Bank 3,500

Purchases 15,000

Sales 28,000

Returns 800 1,100

Rent 580

Insurance 950

Creditor 450

Carriage in 1,200

Discounts 300 1,620

31,750 31,750

Additional information

- Closing stock was valued at Ksh 2,500

- Carriage out was Ksh 1,200


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Required: Prepare trading profit and loss account. (10mks

6. a) Explain any five reasons why one would prefer to transport goods on road than rail.

(10mks)

b) On 1st January 1993 Makena started a business with sh 120,000 cash and sh 300,000 in

the bank.

The following transactions were done in the month of January 1993.

January 3: Bought goods worth sh 60,000 by cheque

January 10: Sold goods worth sh 35,000 cash

January 14: Bought goods worth sh 90,000 cash from Odero

January 18: Paid wages sh 18,000 by cash

January 20: Withdrew sh 40,000 from bank for office use.

Required;

Record the above transactions in the relevant ledger account, balance them off and extract a

trial balance. (10mks)


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ALLIANCE HIGH SCHOOL

NAME__________________________CLASS______________ADM_________TEACHER__________

Instructions to candidates:

a) Write your name and Admin No. and class in the spaces provided above

b) Answer all the questions in the spaces provided in the question paper

c) This paper consists of 12 printed pages, 25questons

d) Candidates should check the question paper to ascertain treat all the pages and questions

are printed as indicated in c) above

e) Candidates should answer the questions in English.

FOR EXAMINERS USE ONLY.

Question 1 2 3 4 5 6 7 8 9 10 11 12 13

14 15 16 17 18 19 20 21 22 23 24 25

PRETRIAL BUSINESS STUDIES

MAY 2019

PAPER: 565/1

TIME: 2 HOURS


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Page 2 of 12

1. State four elements of the demographic environment that may influence the operations of a

business (4mks)

a) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

b) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

c) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

d) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

2. Outline four circumstances under which goods may be transported by use of containers

( 4 mks)

a) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

b) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

c) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

d) ……………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………………………………..

3. The following information was extracted from the books of Salome Traders: Capital

Kshs.1,119,300, long term liabilities kshs.1,807,000; and current liabilities Kshs.978,700

Required:

a) Determine Salome Traders Rate of Return on Capital Employed if the business made a net

profit of Kshs.438,945 (3mks)

……………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………….………………

……………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………….……………………….

b) State the importance of the rate of return on capital employed. (1mk)

……………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………….………………

……………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………….……………………….


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4. Highlight four indicators of economic growth that may be observed as a country progresses

(4 mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

5. Chemi Chemi Ltd is a new cement manufacturer. Outline four factors that may encourage this

company to be established in Athi River town where other cement manufacturers are located

despite the obvious competition. (4mks)

a) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

6. Outline four ways through which a partnership may be formed. (4mks)

a) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………


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7. Give four reasons why it may be difficult for the Kenyan government to actualize the vision

2030. (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

8. State the principles of insurance described in the statements given below. (4mks)

a) Restoration the insured’s financial position after suffering loss from the insured risk.

……………………………………………………………………………………………………………………………………………………

…………………………………………………………………………………………………….……………………………………..……..

b) Existence of a very close relationship between the loss suffered and the insured risk

……………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………….…………………..……..

c) The insurer taking ownership of the remains of the destroyed property after the insured is

duly compensated.

……………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………..……………..……..

d) Proof that the insured will suffer direct financial loss if property is destroyed.

……………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………..……………………..……..

9. Highlight four items that would be included in the measurement of national income using the

income. (4 mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..


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d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

10. The table below shows general price changes over a period of five years:

Year Price (Ksh CPI

2010 90.00

2011 100.80

2012 103.50

2013 105.30

2014 108.00

Using year 2010 as the base year, determine the Consumer Price Index for years 2011, 2012,

2013, and 2014. (4 mks)

11. E- commerce is a recent trend in business. Outline four factors that have hindered the

expansion of this method of carrying out business activities. (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

12. Outline four levels of economic integration. (4 marks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..


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d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

13. The following information relates to Zawadi Traders rental income:

1.1.15 Had Ksh 50,000 in the rent income account at the beginning of the year

10.6.15 Received Ksh 120,000 from tenants

12.11. 15 Refunded Ksh 20,000 to a tenant who had vacated the premises

Required:

Prepare Zawadi Traders Rental Income Account. (4 mks)

………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

14. State four means of payment that may be provided by commercial banks to their customers.

( 4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

15. The equation below relates to quantity demanded and quantity supplied at the equilibrium

point

Qde = 4p + 50

Q5e = 8p + 30

Determine the equilibrium price and quantity (4mks)


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16. Outline four ways in which the Balance of Payments of a country may be improved

(4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………..……..

11. Identify the source documents into which the information given in the table below would be

recorded. (4mks)

Information Source Documents

a) Payment received from debtors

b) Purchase made on credit

c) Validating payments made by the

cashier

d) Requesting for additional payments

from a debtor

12. Highlight four factors that should be considered by a firm when deciding on the method to use

for promoting its products (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………


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13. Outline four features of money that enables it to facilitate the exchange of goods and services

(4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

14. Mamati has just taken a whole life policy and is complaining that the premiums charged are

too high. Outline four possible reasons why the premiums are too high (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………..……………………..

15. Highlight four characteristics of a monopolistic competitive market (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………


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16. The aggressive campaign for citizens to plan their families seems to be causing a decline in the

country’s population growth. Outline four possible effects of this (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

17. State four functions of commercial attaché’s. (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

18. Outline four benefits that may be realized when firms amalgamate 4mks

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………


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19. The following information relates to Liston traders for the period ended 31st March 2014

Opening stock shs.40,000

Sales shs.100,000

Closing stock 25% on cost of sales

Mark-up 25%

Prepare Liston Traders’ trading account (4mks)


too high. Outline four possible reasons why the premiums are too high. (4mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

21. Highlight four characteristics of a monopolistic competitive market. (4 mks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………


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Page 11 of 12

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

22. The aggressive campaign for citizens to plan their families seems to be causing a decline in

the country’s population growth. Outline four possible effects of this. (4 marks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

23. State four functions of commercial attach’es. (4 marks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

24. Outline four benefits that may be realized when firms amalgamate. (4 marks)

a) ………………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………..

b) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………….…………………………..

c) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………

d) ………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………


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25. The following information relates to Liston traders for the period ended 31st March 2014.

Opening stock Sh. 40,000

Sales Sh. 100,000

Closing 25% on cost of sales

Mark – up 25%

Prepare Liston Traders’ trading account. (4 marks)


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NAME……………………………….………...ADM.NO…………….CLASS…………

TEACHER………………………………………….

565/2

BUSINESS STUDIES

PAPER 2

MAY 2019

TIME 2 ½ HRS


PRE- TRIAL EXAMINAITON

Instructions to candidates

This paper consists of six questions

Answer any five questions

Write your answers in the booklet, foolscaps, All questions carry equal marks

QUESTION QUESTION MAXIMUM SCORE CANDIDATES SCORE

1. (a) 10

(b) 10

2. (a) 10

(b) 10

3. (a) 10

(b) 10

4. (a) 10

(b) 10

5. (a) 10

(b) 10

6. (a) 10

(b) 10

TOTAL


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2

1. a) Barter trade is the best. Oppose this with 5 well explained points.

b) The following information belongs to Dedaat Kazi Moto Traders.

Dedaat Kazi Moto Traders

Trial Balance

As at 31/12/2018

Particulars Debt Credit

Land 495,000

Furniture 160,000

3 year loan 200,000

Returns outwards/ inwards 7,000 6,000

Discounts 12,300 4,800

Carriage 10,000

Debtors / creditors 60,400 49,700

Stock on 1/1/18 18,800

Purchases / sales 110,000 360,000

Drawings 2,400

Cash 77,000

Bank 130,000

Commission 8,000 130,000

Rent 3,600 2,000

Repair 1,200

Insurance 5,000

Fixtures and fittings 54,800

Capital 259,000

1,025,500 1,025,500

i) Closing stock 20,500

ii) A ¼ of carriage relates to purchases (6mks)

Prepare i) Trading profit and loss account (4mks)

ii) Balance sheet (4mks)

2. a) Explain to Akinyi a business lady 5 reasons why she should operate a current account.

(10mks)

b) Explain 5 reasons why books of original entry / journals are used in accounting (10mks)

3. a) Explain 5 external business environmental factors that may affect a business (10mks)

b) Explain 5 differences between public limited companies and parastatals (10mks)

4. a) Explain 5 challenges / limitations facing consumer organizations in Kenya today (10mks)

b) There are plans to extend the SGR to Kisumu. Explain 5 advantages that may be accrued

from this (10mks)


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5. a) Unemployment is a major problem facing the youth in Kenya. Explain 5 ways that can be

used to solve this problem (10mks)

b) Explain 5 reasons that can lead to an insurance contract being terminated (10mks)

6. a) Explain 5 reasons why mail order business are not very popular in Kenya today

(10mks)

b) You have been provided with the following information from Karimi Wholesalers.

Record the information in a three column cash book and balance it off.

Feb 1st Started trading with cash 180,000 Bank 81,000(cr)

Feb 2nd Bought goods by cash 42,000/=

Feb 3rd Received cheques of the following amounts: Kamau, 4750, Ndayi 7600,

Justus 11400. They had been allowed to 5% discount.

Feb 4th paid the following accounts by cash. Michael 6,200, Sakaja 7,800, Tom 3,000

having deducted 10% cash discount.

Feb 5th Paid the following expenses by cash Water 2,000, postage, 3000/= rent

5,000/=

Feb 7th Deposited cash into bank 22,000/=

Feb 8th took cash for personal use 1,800/=

Feb 9th Received a cheque of 11,600/= from Kiplimo in full settlement of a debt of

12,000/=

Feb 10th Deposited all the cash into bank leaving a balance of 1,000/=


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565/1

NAME…………………………………………………..……INDEX NO ………....................

SCHOOL……………………………………………….CANDIDATES SIGN………………

565/1

BUSINESS STUDIES

PAPER 1

JULY/AUGUST 2019

FORM FOUR TERM II JOINT EXAMINATION 2019

Kenya Certificate of Secondary Education (K.C.S.E)

565/1

BUSINESS STUDIES

PAPER 1

INSTRUCTIONS TO STUDENTS:

Answer all questions.

All answers should be written in the spaces provided after each question.

All answers should be written in English.


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565/1

Answer all questions in the space provided.

1. State four reasons why development planning is necessary for a country. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

2. State four characteristics of money that enables it to perform its functions. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

3. State four circumstances under which a country’s terms of trade would be favourable. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

4. State four reasons why there is continued use of letters as a means of communication despite

advancement in communication technology. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

5. The following information was obtained from the books of account of Wangila Traders on 30th

June 2018.

Premises Ksh. 200,000

Furniture Ksh. 40,000

Capital Ksh. 677,400

Three years Co –operative loan Ksh. 24,000

Cash Ksh. 28,400

Motor vehicle Ksh.400,000

Creditors Ksh 30,000

Debtors Ksh. 23,000

Stock Ksh.40,000


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Prepare Wangila Traders balance sheet as at 30th June 2018 in the order of liquidity. (5marks)

6. Give four reasons why a good business structure is likely to lead to business success.(4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

7. Outline four demerits of government involvement in business activities. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

8. Give four reasons why road shows have become popular as a method of product promotion.

(4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………


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565/1

9. The diagram below shows the equilibrium point of demand and supply of fish in a certain market.

State the implication of the equilibrium point in that market. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

10. Give any four characteristics that will qualify a community to be termed as an economic resource.

(4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

11. Give three differences between perfect monopoly and monopolistic competition. (3marks)

Perfect monopoly Monopolistic competition


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12. State four groups of people who may be interested in the financial position of a Public Limited

Company. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

13. Give four business factors an entrepreneur is likely to take into consideration while evaluating a

business idea. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

v. ………………………………………………………………………………………………

14. State four activities that take place in a bonded ware house. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

15. The following balances were extracted from Nzoia Traders books of accounts for the year ended

31st Dec. 2017

Sales Ksh. 640,000

General expenses Ksh. 52,000

Salaries Ksh. 56,000

Cost of sales Ksh. 480,000


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a) Prepare The Trading Profit and Loss account for Nzoia Traders. (4marks)

16. Members of Tumaini Men Empowerment group wish to start a public limited company. Outline

four likely sources of capital for their company. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

17. State any four reasons why the national government of Kenya fights inflation. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………


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iv. ………………………………………………………………………………………………

18. Outline four problems that the Ministry of Economic Development and Planning is likely to

encounter while measuring national income using the output approach. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

19. Give four reasons why specialization and division of labour may be undesirable. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

20. Give any four emerging trends in office management. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

21. For each of the following transactions, indicate the book of original entry. (4marks)

Transaction Book of original entry

a) Returned goods bought on credit.

b) Sold goods on credit

c) Purchased machinery on credit

d) Purchased goods on credit

22. State four challenges experienced when using air transport in developing countries.(4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

23. Identify four consequences that a firm may suffer as a result of large scale operation.

(4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………


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iv. ………………………………………………………………………………………………

24. Give four circumstances under which a trader may issue a proforma invoice to potential buyer.

(4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………

25. Identify four policies available under Marine Insurance. (4marks)

i. ………………………………………………………………………………………………

ii. ………………………………………………………………………………………………

iii. ………………………………………………………………………………………………

iv. ………………………………………………………………………………………………


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565/2

NAME…………………………………………………………….. INDEX NO…………………..

SCHOOL…………………………………………………….. DATE…………………………..

565/2

BUSINESS STUDIES

PAPER 2

JULY/AUGUST 2019

TIME: 2 ½ HOURS

FORM FOUR TERM II JOINT EXAMINATIONS

565/2

BUSINESS STUDIES

PAPER 2

JULY/AUGUST 2019

TIME: 2 ½ HOURS

INSTRUCTIONS TO CANDIDATES

1. The paper consists of six questions.

2. Answer any FIVE questions.

3. All questions carry equal marks.

4. Write your answers on the foolscaps attached.

5. Answers should be written in English


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1. a) Explain five limitations of barter trade that led to the evolution of money.

(10marks)

b) Explain five types of goods that may be produced in an economy.

(10marks)

2. a) Explain four ways in which retailers are important to wholesalers. (8marks)

b) The following transactions took place in the business of Bumula Limited in the month of

July 2018:

July 1 - Started the business with capital in cash of sh. 150,000.

July 2- Opened a bank account and deposited sh. 30,000 from cash till.

July 3 –Bought buildings by cash sh. 60,000

July 4- Borrowed a loan from a bank in cash sh. 20,000

July 5 – Bought stationery by cheque sh. 6,000

July 6 - Repaid part of the bank loan by cheque sh. 10,000

Required:

i) Record the transactions in relevant ledger accounts and balance them off.

ii) Extract a trial balance on 6th July 2018

3. a) Explain five benefits that a country gets by belonging to a trading bloc. (10marks)

b) Outline five circumstances under which an insurance contract may be terminated.

(10marks)

4. a) Explain five circumstances under which a trader may offer after sales services to his

customers.

b) The following details were extracted from the books of Baba Yao

Traders on 31 st Dec. 2018

Kshs.


Capital 259,000

Gross profit 380,000

Drawings 83,000

Creditors 93,000

Premises 103,000

Debtors 123,000

Cash at bank 33,000

1 year bank loan 50,000

General Expenses 54,000

Commission received 20,000

Wages and salaries 132,000

Required

i) Prepare Baba Yao Traders profit and loss account for the year ended 31st Dec, 2018

(3marks)

ii) Prepare Baba Yao Traders’ balance sheet as at 31st Dec. 2018. (7marks)

5. a) For a perfect competition market to exist, there are several assumptions that are made.

Explain any five of these assumptions. (10marks)

b) Explain five clauses of a Memorandum of Association of a Public Limited Company.

(10marks)

6. a) Describe five channels that can be used to distribute imported agricultural goods.

(10marks)

b) Explain five ways in which filing of documents facilitates smooth running of an office.

(10marks)


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Page 1 of 4 Business Paper 2

565/2

BUSINESS STUDIES

PAPER 2

TIME 2 ½ HOURS

JULY AUGUST EXAM 2019


INSTRUCTIONS

• Answer five questions.

• All questions carry equal marks.

EXAMINERS USE ONLY

1

2 3 4 5 6 TOTAL


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Answer any five questions.

1. (a) Explain five benefits that may be realized by a county as a result of government

policy to relocate industries to rural areas. (10mks)

(b) Outline five characteristics of an efficient tax system. (10mks)

2. (a) Explain five benefits which may accrue to Kenya by being a member of the

African Development Bank (ADB) (10mks)

(b) The following trial balance relates to Chui Traders as at 31st December 2014.

Required prepare Chui traders trading, profit and loss account.

Chui Traders

Trial Balance

As at 31st Dec. 2014

Details

Dr (Ksh) Cr (Ksh)

Stock

10,000

Bank

3,500

Purchases

15,000

Sales

28,000

Returns

800 1,100

Rent

580

Insurance

950

Creditors

450

Carriage in

1,200

Discounts

300 1,620

31,750 31,750


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3. (a) Discuss five causes of unfavourable balance of payment for most developing

countries. (10mks)

(b) The following balances were extracted from the books of Rehema Traders on 1st

January 2007.

Kshs.

Capital

600,000

Creditors

180,000

Motor van

200,000

Furniture

200,000

Stocks

60,000

Debtors

80,000

Cash 240,000

The following transactions took place during the year ended 31st December 2007.

i. Sold furniture worth ksh. 60,000 for which ksh. 40,000 cash was received and the balance

was still outstanding at the end of the year.

ii. Purchased goods worth ksh 100,000 for which cash of ksh 70,000 was paid and the

balance was still outstanding at the end of the year.

iii. Cash ksh 10,000 was taken from the business by the proprietor to settle the spouse’s

hospital bill.

Required;

Draw Rehema Trader’s balance sheet at 31st December 2007 showing the items in their

relevant classes. (10mks)

4. (a) Discuss five factors that may be considered when choosing a method for

promoting a product. (10mks)

(b) Describe five features of economic resources. (10mks)


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5. (a) Explain five demerits that may be associated with water transport. (10mks)

(b) Explain five ways in which the government of Kenya may reduce the level of

unemployment. (10mks)

6. (a) Outline five differences between a public limited company and a partnership form

of business. (10mks)

(b) With the help of diagrams distinguish between movement along and shift in a

supply curve. (10mks)


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Page 1 of 6 Business Education Paper 1

NAME …………………………………………………………………………………………..

SCHOOL …………………………………………. DATE ……………………………………

565/1

BUSINESS STUDIES

PAPER 1

JULY 2019

2HRS

JULY/AUGUST EXAM


INSTRUCTIONS

• Write your name and school in the spaces provided above

• Answer all questions

• All answers should be written in the spaces provided below each question

• Candidate should answer the questions in English

For examiner’s use only

Questions

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Candidate

Score

TOTAL SCORE

Questions

20 21 22 23 24 25

Candidate

score


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1. State four complains that may be received from consumers by consumer association.

(i) (4mks)

(ii)

(iii)

(iv)

(4mks)

2. Identify the ledgers in which the following accounts are maintained.

ACCOUNT

LEDGER

(i) Pendo (Debtors)

(ii) Machinery

(iii) Rent

(iv) Capital

(vi) Juma (Creditor)

(i)

(ii)

(iii)

(iv)

3. Outline four benefits that accrue to a customer who uses Automated Teller Machine. (ATM). (4mks)

(i)

(ii)

(iii)

(iv)

4. State four circumstances under which air transport may be used to ferry goods. (4mks)

(i)

(ii)

(iii)

(iv)

5. The following information is related to Kerubo Traders for the year ended 31st December, 2006.

Opening Stock 24,000


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Carriage on sales 12,000

Purchases 370,000

Sales 442,000

Closing Stock 40,000

Other expenses 10% on Grows profit.

Prepare, profit and loss account for the year ended 31st December, 2006. (5mks)

6. The following are some of the documents used in home trade: Cash sale slip, Catalogue, invoice and

statement of account. Match each document with the appropriate description provided in the table

below. (4mks)

Description

Document

(a) Shows details of goods offered for sale.

(b)

(c) Give quantity, unit price and total amount to be

paid.

(d) show the transactions since the date of last

statement.

(e) Shows description of goods bought, prices and total

amount paid.

7. List three levels of inflation.

(i)

(ii)

(iii)

(3mks)

8. The following figures relates to Jumbo Traders for the year ended 31.12.13

Details Kshs.

Capital (31.12.13) 940,000

Net loss 20,000

Additional investment 420,000

Monthly drawings 5,000

Determine the capital as at 1.01.13. (4mks)


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9. Kenya has many youths. Outline four positive implications of them to the economy. (4mks)

(i)

(ii)

(iii)

(iv)

10. Mr. Nyambura operates a matatu business. State four factors in the internal environment that

may influence the business. (4mks)

(i)

(ii)

(iii)

(iv)

11. The capital of business does not remain static. Outline four circumstances under which the

capital of a business may change.

(i)

(ii)

(iii)

(iv)

(4mks)

12. State four disadvantages of using internet as a means of communication. (4mks)

(i)

(ii)

(iii)

(iv)

13. State four ways in which production activities may negatively impact on community health.

(4mks)

(i)

(ii)

(iii)

(iv)

14. Highlight four ways in which the running of public corporations may be improved. (4mks)

(i)

(ii)

(iii)

(iv)

15. The following diagram represents circular flow of income in a two sector closed economy.

Identify two factors represented by the errors labeled a and b in each case (4mks)

(i)

(ii)

(iii)


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(iv) (4mks)

16. Highlight four roles played by the broker in the chain of distribution. (4mk)

(i)

(ii)

(iii)

(iv)

17. Fill in the missing figures in the table below. (4mks)

FA CA C L

(a) 275,500 315,000 115,500

(b) 182,000 217,100

(c) 76,400 123,100 91,900

(d) 313,450 211,340 189,170

18. State three benefits that a farmer may derive from being a member of producer co-operative

society. (3mks)

(i)

(ii)

(iii)

19. Outline four features of indirect production. (4mks)

(i)

(ii)

(iii)

(iv)

20. Outline four challenges that may be encountered when measuring income using the output

approach. (4mks)

(i)

(ii)

(iii)

(iv)

21. Outline four tools of momentary policy that a government may use to reduce excess money

in circulation. (4mks)

(i)

(ii)

(iii)

(iv)

22. State four ways in which a good filling system may facilitate the operations in an office.

(4mks)

(i)

(ii)

(iii)


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(iv)

23. Zawadi operates a hardware business in her home town. Outline four methods she can use to

determine prices for her goods other than the forces of demand and supply. (4mks)

(i)

(ii)

(iii)

(iv)

24. State four features of a perfectly competitive market. (4mks)

(i)

(ii)

(iii)

(iv)

25. Outline four conditions under which a warehouse may be considered to be operating

efficiently. (4mks)

(i)

(ii)

(iii)

(iv)


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1

Name: _______________________________________ Adm No.: _________________________

Candidate’s Signature: ______________

Date: _____________________________

565/1

BUSINESS STUDIES

Paper 1

JUNE 2019

Time: 2 hours

KASSU JOINT EXAMINATION Kenya Certificate of Secondary Education

565/1

Paper 1

BUSINESS STUDIES

2 HOURS

Instructions

� Answer ALL the questions in the spaces provided.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

16 17 18 19 20 21 22 23 24 25

TOTAL


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2

1. Outline four reasons why food is considered basic want. (4mks)

i)......................................................................................................................................................

ii)...................................................................................................................................................

iii)................................................................................................................................................

iv).................................................................................................................................................

2. Highlight four reasons that can lead to the dissolution of a cooperative society. (4mks)

i).........................................................................................................................................................

ii).......................................................................................................................................................

iii)......................................................................................................................................................

iv).......................................................................................................................................................

3. The following table contains information relating to business A, B and C. Determine the

figures represented by W, X and Y. (4mks)

BUSINESS ASSETS CAPITAL LIABILITIES

A 620,000 230,000 W

B 420,000 X 500,000

C Y 500,000 300,000

i) W....................................................................................................................................................

ii)X....................................................................................................................................................

iii)Y..................................................................................................................................................

iv)Account for the value of X ..........................................................................................................


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3

4. State the discipline given to each of the following statements. (4mks)

STATEMENT DISCIPLINE

a) Study of activities that are carried out in an

office

b)study of trade and aids to trade

c)study of how human beings strive to satisfy

their unlimited wants using the limited

resources

d)study of the process of identifying business

opportunity and acquiring resources to start

and run a business

5. Identify any four roles of intermediaries in the chain of distribution. (4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii)......................................................................................................................................................

iv).....................................................................................................................................................

6. Advertising primarily aims at promoting a particular line of a product. Suggest four ways in

which advertising can be beneficial to the consumer. (4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii).......................................................................................................................................................

iv)......................................................................................................................................................

7. Agency banking is becoming increasingly popular among commercial banks in Kenya.

Highlight four benefits of this development to bank account holders. (4mks)

i).........................................................................................................................................................

ii)......................................................................................................................................................

iii)....................................................................................................................................................

iv)...................................................................................................................................................


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4

8. Outline four circumstances under which a business person may find air transport more

appropriate than water transport. (4mks)

i)...................................................................................................................................................

ii)................................................................................................................................................

iii)................................................................................................................................................

iv).................................................................................................................................................

9. Outline four problems encountered in measuring national income using output approach.

(4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii).......................................................................................................................................................

iv).....................................................................................................................................................

10. Mrs Atieno is the human resource manager to the ABC Holdings. Advise her on four ways

that can help improve the performance of the entire work force. (4mks)

i).........................................................................................................................................................

ii).......................................................................................................................................................

iii)......................................................................................................................................................

iv).....................................................................................................................................................


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5

11.On 1st January 2005, Kamau started a furniture shop with capital of Ksh120,000. During the

year he took Kshs12,000 for his sons birthday party. He also brought into the business private

furniture worth Ksh20,000. At the end of the period he had made a profit worth Ksh35,000.

Determine Kamau’s capital at the end of the period. (4mks)

12. State four fiscal policies that can be used to control inflation. (4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii).....................................................................................................................................................

iv)......................................................................................................................................................

13. Highlight four reasons why a business may find it necessary to adopt a landscape office

layout. (4mks)

i).......................................................................................................................................................

ii)......................................................................................................................................................

iii).......................................................................................................................................................

iv)......................................................................................................................................................


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6

14. The diagram below shows a demand curve D0D0 and D1D1

Price D0 D1

Ksh

D1

Do

Quantity demanded

Highlight four factors that account for the above phenomena. (4mks)

i).........................................................................................................................................................

ii).......................................................................................................................................................

iii)......................................................................................................................................................

iv)....................................................................................................................................................

15. State four functions of a proforma invoice as used in Home trade. (4mks)

i).....................................................................................................................................................

ii)..................................................................................................................................................

iii)...................................................................................................................................................

iv)....................................................................................................................................................

16. In the table below, state the journal whose source document is given. (4mks)

Source document Journal

Invoice issued

Payment voucher


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7

Incoming invoice

Receipt issued

Credit note issued

17. Outline four importance of pooling or risks to an insurance company. (4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii)......................................................................................................................................................

iv)......................................................................................................................................................

18. Mention four benefits of establishing several firms in an industry. (4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii).......................................................................................................................................................

iv).......................................................................................................................................................

19. In an oligopoly market structure, all firms face a kinked demand curve. Draw a kinked

demand curve and briefly outline the concept of price rigidity. (4mks)


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8

20. Differentiate between reproductive debt and dead-weight debt as used in public finance.

(4mks)

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

21. Outline four challenges that a young population poses to a country. (4mks)

i)........................................................................................................................................................

ii)........................................................................................................................................................

iii)...................................................................................................................................................

iv)......................................................................................................................................................

22. Highlight four 2030 development goals that the Kenya government aim to achieve. (4mks)

i).........................................................................................................................................................

ii)........................................................................................................................................................

iii).....................................................................................................................................................

iv).......................................................................................................................................................

23. The following is a list of ledger accounts. Name the ledger book, in which they are

maintained. (4mks)

Account Ledger book

a)drawings


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9

b) Kamiritu (Customer)

c)Sales

d)Machinery

24. Define the following terms as used in International Trade. (3mks)

a) Terms of trade

............................................................................................................................................................

....................................................................................................................................................

b) Balance of trade

............................................................................................................................................................

.........................................................................................................................................................

c) Balance of payment

............................................................................................................................................................

.......................................................................................................................................................

25. The following balance sheet belongs to Dowling enterprises.

Dowling Enterprises

Balance sheet

As at 31/12/2015

Fixed Assets

Land 450,000

Vehicles 250,000

Fittings 7,500

707,500

Current assets

Stock 20,000

Debtors 12,500

Bank 8,000

Cash 5,000

45,500

Capital

Capital

543,000

Long term liabilities

Loan from KIE 100,000

Loan from ICDC 75,000

175,000

Current liabilities

Creditors 25,000

Salaries owing 10,000

35,000


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10

753,000

753,000

Required: Calculate ; (4mks)

a) Capital owned

b) Borrowed capital

c) Working capital

d) Capital employed


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KASSUJET 2019 1

Name……………………………………….ADM NO…………Class………………………

565/2

BUSINESS STUDIES

Paper 2

June 2019

KASSUJET EXAMINATIONS


BUSINESS STUDIES

2 Hours 30 Minutes.


a) This paper consists of six questions

b) Answer any five questions

c) Write your answers in the answer booklet

d) All questions carry equal marks

QUESTION 1 2 3 4 5 6 TOTAL

MARKS SCORE


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KASSUJET 2019 2

1. a) State and explain any five factors to consider when choosing an appropriate

means of communication. (10 marks)

b) Discuss five negative effects of inflation in the economy. (10 marks)

2 a) Illustrate using a diagram a circular flow of income and give four assumptions.

(10 marks)

b) Explain five challenges faced by a county government in service provision.

(10 marks)

3 a) Discuss any five problems associated with Barter system of exchanging goods.

b) On 1st June 2018, Ndovu Traders had cash in hand of Sh. 25,000 and Sh. 56,200

at bank. During the month, the following transactions took place:

2018

June 2 Cash sales, Sh. 42,000.

June 5 received a cheque of Sh. 70,500 from Abdala Traders after

deducting a 6% cash discount.

June 7 Paid salaries Sh. 24,000 in cash

June 9 Tenai settled his account of Sh.45,000 in cash and was allowed

Sh. l,800 cash discount.

June 12 Cash sales Sh. 46,500.

June 18 Paid Thuita's debt of Sh l00,000 by cheque after deducting 5%

cash discount.

June 24 Withdrew Sh.26,000 from the bank for office use.

June 30 Banked all the cash except Sh. 25,000.

Prepare a 3-column cashbook and balance it off on 30th June, 2018. (10marks)

4 a) Explain five ways in which the activities in a bonded warehouse are beneficial to

the government (10marks)

b) Explain any five methods that a county may put in place to prevent free

movement of goods and services from other countries. (10 marks)


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KASSUJET 2019 3

5 a) Unemployment is one of the major economic problems facing this country.

Describe any five measures that the Kenyan government may undertake to solve

unemployment.

b) Explain five principles that serve as a guide to a good public expenditure system

in a country. (10marks)

6 a) Big Sam intend to start a hardware business. Explain five characteristics he

should possess in order to be a successful entrepreneur (10marks)

b) The following information relates to Harun’s enterprises;

Details shs

Stock on 1st Jan 2012 430,000

Purchases 930,000

Sales 1,155,000

Carriage outwards 25,000

Carriage inwards 10,000

Returns outwards 20,000

Returns inwards 30,000

General expenses 100,000

Insurance 25,000

Stock on 31st Dec 2012 470,000

Required;

a) Prepare trading, profit and loss account (6 marks)

b) Calculate

i) Rate of Stock Turnover (2 mark)

ii) mark-up. (2 marks)

iii) Margin. (2 mark)


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Page 1 of 9

Name……………………………………………………Index number……………………

Candidate’s signature………………………. Date…………………………………

565/1

BUSINESS STUDIES

Paper 1

2 Hours

Kenya Certificate of Secondary Education (KCSE)

FORM FOUR

JULY 2019

BUSINESS STUDIES

Paper 1


• Write your name and index number in the spaces provided above.

• Sign and write the date of examination.

• Answer all the questions in the spaces provided.

For examiners use only

QUESTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

MARKS

QUESTION 18 19 20 21 22 23 24 25

MARKS

TOTAL MARKS

This paper consists of 11 printed pages. Candidates should check the question paper to ensure

that all the pages are printed as indicated and no questions are missing.

Answer ALL questions in the spaces provided.


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Page 2 of 9

1. Identify four difficulties that may make an individual not to satisfy most of his needs.

(4 marks)

a)…………………………………………………………………………………………...............

……………………………………………………………………………………………….........

b)…………………………………………………………………………………………...............

……………………………………………………………………………………………….........

c)………………………………………………………………………………………….............

………………………………………………………………………………………………

2. Highlight four characteristics of free resources. (4 marks)

a).........................................................................................................................................................

b)........................................................................................................................................................

c).........................................................................................................................................................

d)........................................................................................................................................................

3. Outline four measures that can be taken to improve the efficiency of parastatals in Kenya.

(4 marks)

a)……………………………………………………………………………………………...........

………………………………………………………………………………………………..........

b)…………………………………………………………………………………………..............

………………………………………………………………………………………………..........

c)…………………………………………………………………………………………...............

……………………………………………………………………………………………..............

d)…………………………………………………………………………………………………...

………………………………………………………………………………………......................


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4. State four factors that would influence the amount of money held by an individual for

transaction purposes. (4 marks)

a)…………………………………………………………………………………………................

……………………………………………………………………………………………..............

b)……………………………………………………………………………………………...........

………………………………………………………………………………………………..........

c)…………………………………………………………………………………………...............

………………………………………………………………………………………………..........

d)…………………………………………………………………………………………...............

………………………………………………………………………………………...................

5. State four measures that the government may employ to regulate and control business

activities. (4 marks)

a)……………………………………………………………………………………………............

………………………………………………………………………………………………...........

b)……………………………………………………………………………………………...........

………………………………………………………………………………………………..........

c)……………………………………………………………………………………………...........

………………………………………………………………………………………………..........

d)……………………………………………………………………………………………...........

……………………………………………………………………..................................................

6. Given below are books of original entry, state the source document used to prepare each

of the books. (4 marks)

Books Source document

(i) Cash book

(ii) Sales journal

(iii) Purchase journal

(iv) Sales return journal

..........................................................................

................................................................................

...............................................................................

.............................................................................


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7. Post the following transactions to the relevant ledger accounts.

a) Started business by depositing in the bank a cheque of shs. 100,000.

b) Withdrew Kshs. 20,000 cash from the bank for business use.

c) Tumanka a debtor paid shs. 40,000 cash.

d) Took shs.10, 000. from cash till for personal use.

(4mks)

8. Identify four ways through which manufacturers protect the consumers against

exploitation. (4 marks)

a)……………………………………………………………………………………………............

………………………………………………………………………………………………...........

b)……………………………………………………………………………………………............

………………………………………………………………………………………………............

c)……………………………………………………………………………………………............

………………………………………………………………………………………………..........

d)…………………………………………………………………………………………….........

……………………………………………………………………………………………….........


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9. List four sources of monopoly power for a firm in a market. (4 marks)

(i)………………………………………………………………………………………….............

(ii)……………………………………………………………………………………….................

(iii)…………………………………………………………………………………………...........

(iv)………………………………………………………………………………………….........

10. Outline any four benefits of “pooling of risks” to insurance company. (4 marks)

a)……………………………………………………………………………………………...........

……………………………………………………………………………………………….........

b)……………………………………………………………………………………………..........

………………………………………………………………………………………………........

c)……………………………………………………………………………………………........

………………………………………………………………………………………………........

d)…………………………………………………………………………………………….........

………………………………………………………………………………………………........

11. The diagram below shows a supply curve SoSo and SISI.

Highlight four factors that account for the above phenomena. (4 marks)

a)……………………………………………………………………………………………

………………………………………………………………………………………………

b)……………………………………………………………………………………………

………………………………………………………………………………………………

c)……………………………………………………………………………………………

………………………………………………………………………………………………

d)……………………………………………………………………………………………

………………………………………………………………………………………………


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12. Highlight four roles played by inter-mediaries in the chain of distribution. (4 marks)

a)…………………………………………………………………………………………................

………………………………………………………………………………………………..........

b)…………………………………………………………………………………………...............

………………………………………………………………………………………………............

c)…………………………………………………………………………………………................

………………………………………………………………………………………………............

d)……………………………………………………………………………………………............

………………………………………………………………………………………………..........

……………………………………………………………………………………………….........

13. Outline four uses of national income statistics (4 marks)

i).............................................................................................................................................

ii)...........................................................................................................................................

iii)..........................................................................................................................................

iv)..........................................................................................................................................

14. Highlight four methods that can be used by a country to solve the problem of deficit

balance of payment. (4 marks)

i).....................................................................................................................................................

ii).....................................................................................................................................................

iii)...................................................................................................................................................

iv)..................................................................................................................................................

15. Outline four positive implications of high population growth rate in a country. (4 marks)

a)……………………………………………………………………………………………..........

……………………………………………………………………………………………….........

b)……………………………………………………………………………………………........

………………………………………………………………………………………………........

c)……………………………………………………………………………………………........

……………………………………………………………………………………………….......

d)……………………………………………………………………………………………......

………………………………………………………………………………………………


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16. Highlight four reasons why hypermarkets are increasingly becoming popular in Kenya.

(4 marks)

i)…………………………………………………………………………………………………..

ii)………………………………………………………………………………………………….

iii)…………………………………………………………………………………………………

iv)…………………………………………………………………………………………………

17. For each of the following transactions, indicate with a tick (√) whether it will increase,

decrease or have no effect on the balance sheet totals. (4 marks)

Transaction Effect on the balance total

Increase Decrease No effect

(i) Borrowing sh

20,000 from bank

for paying creditors

(ii) Used sh 10,000

cash pay for loan

arrears

(iii) Sale of part of

business premises

(iv) Sale of goods

worth sh 5,000 for

sh 4,500

18. Outline four circumstances under which personal selling is appropriate. (4 marks)

i)……………………………………………………………………………………………………

ii)……………………………………………………………………………………………………

iii)…………………………………………………………………………………………………..

iv)…………………………………………………………………………………………………..

19. State four disadvantages of localization to a developing country (4 marks)

a) …………………………………………………………………………………………………

b) …………………………………………………………………………………………………

c) …………………………………………………………………………………………………

d) …………………………………………………………………………………………………


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20. The following information relates to NtutuTraders

Purchases sh 2,700,000

Return outwards sh 600,000

Closing stock sh 500,000

Opening stock sh 1,200,000

Margin 2/9

Calculate (i) Cost of sales (2 marks)

…………………………………………………………………………………………………

…………………………………………………………………………………………………

…………………………………………………………………………………………………

…………………………………………………………………………………………………

(ii) Gross profit (2 marks)

…………………………………………………………………………………………………

…………………………………………………………………………………………………

…………………………………………………………………………………………………

…………………………………………………………………………………………………

21. State the meaning and significance of the following terms used in international trade.

(i) Depreciation of the currency of

country.......................................................................................................................................

(ii) Determination of the terms of trade of a

country........................................................................................................................................

(iii)

Traderestrictions..........................................................................................................................

(iv) Common market.................................................................................................................

22. Outline four advantages of a business using E-mail in communication. (4 marks)

a) …………………………………………………………………………………………………

b) …………………………………………………………………………………………………

c) …………………………………………………………………………………………………

d) …………………………………………………………………………………………………


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23. Outline four economic conditions that would prevail in a country undergoing inflation.

(4 marks)

a) …………………………………………………………………………………………………

b) …………………………………………………………………………………………………

c) …………………………………………………………………………………………………

d) …………………………………………………………………………………………………

24. Indicate in the spaces provided whether the following taxes are either direct taxes or

indirect taxes. (4 marks)

Tax Types of tax

Corporation tax _________________________________

Capital gain tax _________________________________

Value added tax _________________________________

Income tax ________________________________

25. Indicate in the spaces provided, the account to be debited and account to be credited. (4 marks)

Transaction Account Debited Account Credited

(a) Started business by

depositing sh 80,000 in the

bank account of the business.

(b) Bought stock of goods

worth sh 20,000 from XYZ

retailers on credit.

(c) Returned goods worth sh

4,000 to XYZ retailers

(d) Paid XYZ retailers’ sh

15,000 cheque


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Page 1 of 3

565/2

BUSINESS STUDIES

PAPER 2

2 ½ Hours

Kenya Certificate of Secondary Education (KCSE)

FORM FOUR

JULY 2019

565/2

BUSINESS STUDIES

PAPER 2


• Answer any five questions in the separate answer booklet provided.

This paper consists of 3 printed pages. Candidates should check the question paper to ensure

that all pages are printed as indicated and no questions are missing.


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Page 2 of 3

1. (a) Explain five factors that will influence the choice of office layout to be adopted by a firm.

(10 marks)

(b) Explain five advantages of a country belonging to a trading bloc. (10 marks)

2. (a) Explain five differences between a public corporation and a private limited company.

(10 marks)

(b) Highlight five circumstances under which an insurance contract may be terminated.

(10 marks)

3. (a) Discuss five contributions of an efficient transport to the economic development of a

Country. (10 marks)

(b) Explain five benefits of retailers to wholesalers (10 marks)

4. (a) Describe five factors that may influence the firm’s decision on what products to produce.

(10 marks)

(b) Explain five challenges that may be experienced by a new entrepreneur who has just

establish a business in Kenya

5. (a) Explain five services offered by commercial banks to business people. (10 marks)

(b) The following transactions relates to David Traders for the month of December 2018.

Dec 1st started a business with sh. 200,000 in the Bank account.

2nd Bought furniture for sh, 50,000 and paid by cheque

3rd Sold goods on credit to Caleb shs, 20,000; Salau 10,000

4th Bought goods on credit from Rose sh 30,000; Kinga shs. 40,000

5th Returned faulty goods to Rose sh 5,000

6th Paid Rose on account by cheque less 10% cash discount.

7th Received faulty goods from Caleb shs. 2000

8th Received payment due from Caleb and Salau by cheque less 5% cash

discount.

9th Cash sales shs. 100,000

10th Paid for wages shs. 20,000 by cash and electricity shs.10,000 by cheque.

11th Deposited all the cash in hand into the bank account.

Required: Prepare a three column cash book duly balanced. (10 marks)


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6. (a) Discuss five factors to be considered when making a development plan in a less developed

countries. (10 marks)

(b) The following information was extracted from the books of James wholesalers for the

trading period ended June 2018.

Sh

Stock on 30.06.2017 40,000

Purchases 35,000

Sales 70,000

Return inwards 1,500

Return outwards 2,000

Discount allowed 2,100

Insurance 2,000

Transport 1,400

Discount received 8,000

Electricity 2,400

Rent received 3,000


Advertising 2,000

Stock 30. 06.2018 15,000

Prepare a trading profit and loss account for the year ended 30th June 2018. (10 marks)


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NAME ……………………………..……………………………….ADM NO. ……..…

DATE …………………………. CLASS …….. ………. SIGNATURE ………..

MWAKICAN FORM 4 JOINT EXAMINATION – 2019

TERM I

565/1

BUSINESS STUDIES

PAPER 1

TIME: 2 HOURS

Instructions for candidates a. Write your name and admission number in the spaces provided above.

b. Sign and write the date of examination in the spaces provided above.

c. Answer all the questions.

d. All answers should be written in the spaces provided.

e. This paper consists of six printed pages.

f. Candidates should answer all the questions in English.


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1. Highlight four ways in which Kenya may benefit from its natural resources endowment.

(4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

2. Outline four ways in which commerce satisfies human wants. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

3. Outline four circumstances that allow existence of monopolies in a country. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

4. The table below shows the source documents and their corresponding books of original entry. Identify the

correct book of original entry for each case.

Source Document Book of Original entry

i) Incoming invoice

ii) Outgoing receipt

iii) Incoming Credit Note

iv) Outgoing Credit Note

(4mks)

5. State four negative effects of unemployment. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………


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6. Outline four circumstances under which a manager of a company may use downward communication.

(4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

7. Highlight four factors that a producer considers before choosing a channel of distribution. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

8. The following information relate to meru traders for the year ended 31 December 2017.

Sales 1000,000.

Opening stock 100,000.

Closing stock 200,000.

Gross profits. 200,000

Calculate rates of stock turnover. (4mks)

Mwalimu Resources

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9. State whether the following represent injection into or leakages from the circular flow of income.

(4mks)

Item Injection/leakages

a) Savings

b) Taxes

c) Government expenditure

d) Investment

10. Name the factor of production that each of the following resource relate to (4mks)

Resource Factor of production

a) Manager

b) Equipment

c) Farmer

d) River

11. Outline four factors to be considered when choosing a means of reproducing documents in an office.

(4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

12. Outline four advantages of after sale services as a method of sales promotion to a customer. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

13. Outline four benefits of the newly constructed standard gauge railway line to Kenya’s economy. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………


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……………………………………………………………………………………………………………

14. In the spaces provided, indicate the account to be debited and to be credited in the following

transactions. (4mks)

Transaction A/C DEBITED A/C CREDITED

a Bought machine in cash

b Started business with sh.30,000 in cash

c Took sh.20,000 cash from business for

personal use

d Credit sales of old machine to Kamau

15. The following balances were extracted from the books of kumi kumi traders on 31st dec.2018.

Gross profit ksh.80,000

Rent 8,000


Salaries 10,000


Commission received 3,000

Maintenance expense 9,000

Debtors 10,000

Creditors 12,000

Required: prepare kumi kumi traders profit and loss account for the year ended 31 Dec 2018.

(4mks)


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16. Highlight four limitations of barter trade system. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

17. On 4th Feb 2018 Chari bought goods worth ksh.12000.Terms of payment were, trade discount 5% and cash

discount 10%. If payment is made within 30 days. If Chari paid on 27th Feb 2018 determine the amount he paid.

(4 mks)

18. Indicate whether each of the following business transaction will increase, decrease or have no effect on

balance sheet totals.

Transaction Effect

i) Buying stock in cash

ii) Buying stock on credit

iii) Withdrawing cash from bank for

personal use

iii) Received cash from a debtor

19. Highlight four purposes of public finance (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

…………………………………………………………………………………………………………… Mwalimu Resources


20. Name the type of insurance policy described by the following statements. (4mks)

Statement Type of policy

a) Cover losses caused by employees

dishonesty/fraud

b) Protects employees against

injuries while at work.

c) Cover damage on motor vehicle,

other people and property caused

by the vehicle.

d) Cover claims by the members of

public against a business

21. State four ways in which the nature of goods would influence the choice of transport means.

(4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

22. Identify the type of utility created from the following activities

ACTIVITY TYPE OF UTILITY

a. Crushing sugarcane to make sugar

b. Transporting sugar from the factory to the

supermarket

c. keeping sugar in a warehouse

d. Selling sugar in a supermarket 23. State four factors that influence the location of a firm (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

24. Highlight four ways in which running public corporation may be improved. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………


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25. Highlight four benefits of using Electronic filing system in an office. (4mks)

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………

……………………………………………………………………………………………………………


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1

Name_____________________________________ Class____________Adm. NO………….

565/2

FORM FOUR

BUSINESS STUDIES

Paper 2

March/April 2019

2 Hours

MWAKICAN JOINT EXAMINATION - MJET


1. Write your name, class and admission number in the space provided above.

2. This paper consists of six questions.

3. Answer any five questions.

4. Answers should be written in the space provided.

5. All questions carry equal marks.

6. Candidates should answer the questions in English.

For examiner’s use only

Questions Maximum score Candidates score

1 20

2 20

3 20

4 20

5 20

6 20

Total score


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2

1. a) Explain five features that differentiate a public corporation from a private limited company

form of business unit. (10 marks)

b) Kapa Oil Manufacturers have decided to eliminate wholesalers in their chain of distribution.

Outline five possible effects that would result if wholesalers were eliminated. (10 marks)

2. (a) Some developed countries have a huge population made up of ageing persons. Explain five

Problems this situation could present to such countries. (10 marks)

(b) Khwesa Traders had the following balances as at 31st December 2014.

Item Shs.

Building 540,000

Bank loan 472,000

Debtors 116,900

Creditors 227,000

Furniture 408,170


Motor vehicle 900,000


Lighting 25,200

Interest on loan 1,200


Rent received 120,000

Repairs on buildings 60,000

Repairs on furniture 72,030

Repairs on motor vehicle 300,000


Capital 1,400,000

Prepare:

(a) Profit and Loss Account for the year ended 31/12/2014.

(b) Balance sheet as at 31/12/2014. (10 marks)


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3

3. a)The saga of contaminated sugar and plastic rice has raised many questions in the economy.

Describe five roles of the Kenya Bureau of standards (KEBS) in consumer protection in

order to curb such commodities in the market. (10mks

b) Explain five measures that the government can take so as to improve the efficiency of the road

transport system in the country. (10mks)

4. (a)VP Shah shop sells all its goods at a margin of 20%. For the year ended 30th April 2006, the

trading activities were as follows.

Purchases sh. 80,000

Sales profit sh. 950,000

Net profit 5% of sales

Closing stock sh. 200,000

Calculate

a) The gross profit (2 marks)

b) The opening stock (4 marks)

c) Mark up percentage (2 marks)

d) The net profit. (2 marks)

(b)Explain five reasons that justify why the Kenyan Government is emphasizing on promoting

entrepreneurship in Kenya. (10 marks)

5. (a) In most secondary schools in Kenya, principals are accommodated in their own offices.

Explain five disadvantages associated with this kind of arrangement. (10 marks)

(b) The following were the balances of Kiboko Traders as at 1st January 2009. Cash

Sh.40,000, bank overdraft Sh.17,000. During the month the following transactions took place.

January

2nd: Mutiso a debtor settled his account of Sh.32, 000 by cheque of Sh.30,000


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4

4th: Paid salaries amounting to Sh.16, 000 by cash.

10th: Deposited Sh.12, 000 into the business bank account from the cash till.

14th: Settled Wayua’s account of Sh.40, 000 and she was allowed a discount of 1% through

a cheque.

16th: Deposited Sh.56, 000 in the bank from private resources.

17th: Sold goods for cash Sh.24, 000.

20th: Mutua, a debtor, settled his account by a cheque of Sh.16, 000 having been allowed a

discount of 2%.

24th: Purchased furniture Sh.10, 400 paying by cheque.

26th: Received Sh.7, 200 cash from Odhiambo.

30th: Banked all the available cash except Sh.3200.

Required: Prepare three column cash for Kubuka Traders (10 marks)

6.a) Kenya is in the process of developing a standard gauge railway line from Mombasa to

Malaba. Explain five benefits that a trader in Malaba will enjoy from this modern railway

line. (10 marks)

(b) )Outline five tools of monetary policy used by central bank (10 marks)


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©MOKASA II EVALUATION EXAMINATION 2019 1

NAME……………………………………ADM NO…………CLASS……

565/1

BUSINESS STUDIES

Paper 1

July 2019

MOKASA II JOINT EXAMINATIONS


BUSINESS STUDIES

2 Hours


a) Write your name, class and admission number in the spaces provided above

b) Answer all the questions

c) All answers should be written in the spaces provided in this paper

d) Check the question paper to ascertain that all questions are printed

e) Answer the questions in English

For Examiners Use Only

Question 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Marks

16 17 18 19 20 21 22 23 24 25


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1. Outline four reasons why filing is an important function of an organization.(4marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

2. Koech started a business dealing in ladies clothing ten years ago. His business has

gradually been growing and making more profits. Outline four reasons that may account

to this. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

3. The table below contains descriptions of some goods. Classify them as Consumer,

Intermediate, Free goods or Capital goods. (4marks)

Description Classification

a) Goods used in the production of

other goods but does not form part

of the finished products

b) Goods that are in their final state

of usage

c) Goods that are abundant in supply

and have no monetary value

d) Goods that are not ready for use

before they are further processed

4. Outline four examples of open trade credit used in home trade. (4marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………


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5. Outline four factors that determine the amount of money held by an individual for

speculative motive. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

6.Using a (+) for increase, (-) for decrease and (0) for no effect , indicate the effects of

the following transactions on Assets , Liabilities, Capital and the balance sheet totals.

(4 marks)

Description Assets Liabilities Capital Balance sheet

totals

a) Bought goods worth shs

5000 on credit

b) Sold goods worth shs7000

for shs8000 Cash

c) The Proprietor took goods

worth shs 2000 for

personal use

d) The Proprietor donated

personal motor vehicle

worth shs 500,000 to the

business

7. Outline four reasons that may have led to the change in quantities demanded of

commodity X in the market as shown in the schedule below. (4marks)

Time January February March April

Price (shs) 120 120 120 120

Quantities

demanded

6,000 4,000 2,800 2,000

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………


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8.The capital of Kimosop traders on 1st January 2018 was shs. 85,000. During the year,

additional investments of shs.50,000 and drawings of shs.60,000 were made. The capital

as at 31st Dec 2018 was 65,000. Calculate Kimosop trader’s profits or loss. (4 marks)

9. Highlight four reasons why the government may decide to reduce her shareholding in

public corporations to a level below 50%. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

10. State how the following components are treated in the measurement of national

income. (4marks)

National income component State whether added or subtracted

a). Transfer Payments

b). Depreciation

c). Subsistence farming

d). Net income from Abroad

11. State four differences between ordinary shares and preference shares. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………


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12. State four circumstances under which the use of face to face communication may be

appropriate. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

13.Highlight four disadvantages of using sea transport. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

14.Outline four circumstances under which a intermediaries is used in distribution of a

firms products. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………


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15. Balance the following ledger accounts and extract a trial balance as at 30th June 2015

(4 marks)

Dr Debtors a/c Cr Dr Capital a/c Cr

2/6/15 Bal b/d 7000 8/6/15 Cash 1500 2/6/15 Bal b/d 16000

Dr Cash a/c Cr Dr Creditors a/c Cr

2/6/15 Bal b/d 12,000 5/6/15 Creditors 2000 5/6/15 Cash 2000 2/6/15Bal b/d 3000

8/6/15 Debtors 1500

16. State four causes of structural unemployment. (4marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

17. Highlight four characteristics of a public warehouse. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………


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18. The following balance sheet belongs to Rivatex Traders.

Rivatex

Balance Sheet

As at 30th June 2019

Fixed Assets sh sh

Premises 90,000

Furniture and Fixtures 70,000

Land 140,000 300000

Current Assets

Cash 7000

Stock 15000

Bank 10000

Pre-paid rent 25000 57000

357,000

Sh

Capital 120,000

Add Profit 30,000

Net Capital 150,000

Long Term Liabilities


Short term liabilities

Bank overdraft 7,000

357,000

Required: Calculate

i) Working Capital (1 mark)

ii) Borrowed Capital (1 mark)

iii) Capital Employed (1 mark)

iv) Capital invested (1 mark)


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19. State four levels of inflation. (4marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

20.The following statements relates to a description of a certain type of tax. Identify

the tax and classify it as either direct or indirect tax. (4 marks)

Description Tax Classification

(a) A tax that is imposed on goods that are

manufacture and sold within a country.

(b) Tax usually levied on profits of companies

(c) Tax levied on the value that a business adds to a

product.

(d) Tax levied on personal wealth that goes beyond a

certain limit.

21.Record the following transactions in the relevant journals (4 marks)

2019

Feb 2: Bought goods on Credit worth shs6500 from Eldolink suppliers

Feb 8: Sold goods worth shs5000 on credit to Jamal.

Feb 12: Sold stock valued at shs8500 on credit to Musyoka

Feb 16: Bought goods worth shs3000 on credit from Jetlink traders


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22. John and Peter bought a Nissan matatu worth sh. 3,000,000. John paid sh. 2,000,000

and Peter sh. 1,000,000. They insured the matatu for a comprehensive cover for shs

2,500,000. Later the matatu was involved in an accident to a loss of sh 1,500,000. How

much were they compensated and give reasons in support of your answer? (4 marks)

23. Outline four reasons why subsistence production is discouraged in many countries.

(4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………


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24. Highlight four features of an Oligopoly market structure. (4 marks)

a)……………………………………………………………………………………………

b)……………………………………………………………………………………………

c)……………………………………………………………………………………………

d)……………………………………………………………………………………………

25. Describe the following terms of sale as used in international trade. (4 marks)

a) LOCO…………………………………………………………………………………….

………………………………………………………………………………………………

b) Free Alongside Ship …………………………………………………………………..

……………………………………………………………………………………………..

c) Cost & Freight…………………………………………………………………………...

………………………………………………………………………………………………

d) Franco……………………………………………………………………………………

………………………………………………………………………………………………


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565/2 MOKASA II JOINT EXAMINATION Page 1

MOKASA II JOINT EXAMINATION

565/2 BUSINESS STUDIES Paper 2

July, 2019 – 2½ hours

Name: …………………………………………………… Adm No.: ……………… Class …………..

Candidate’s Signature: ………………………………... Date: ………………………………………

Instructions to Students

(a) This paper consists of six questions.

(b) Answer any five questions.

(c) Answers should be written in the spaces provided after question six.

(d) All questions carry equal marks.

(e) This paper consists of 15 printed pages.

(f) Students should check the question paper to ascertain that all the pages are printed

as indicated and that no questions are missing.

(g) Students should answer the questions in English.

For Teacher’s Use Only

Question Maximum

Score

Candidate’s

Score

20

20

20

20

20

Total

Score


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1. a) Explain five ways in which the demographic environment may positively influence

business activities. (10 marks)

b) Explain five advantages that accrue to a firm due to increased production. (10 marks)

2. a) Explain five reasons for the popularity of using social media in product promotion.

(10 marks)

b) Explain five measures that a country may take to correct a balance of payment deficit.

(10 marks)

3. a) Explain five differences between a cooperative society and a private limited company.

(10 marks)

b) Outline five benefits that a country may derive by preparing a development plan.

(10 marks)

4. a) The table below shows the Gross Domestic Product (GDP) of a country X in the year

2014 to 2018.

Year 2014 2015 2016 2017 2018

GDP (Sh in millions) 19,201 27,304 33,092 41,067 54,689

Explain five factors that may have caused the above trend. (10 marks)

b) Explain five causes of demand pull inflation. (10marks)

5. a) Kenya is endowed with some economic resources yet it has failed to exploit them.

Outline five reasons that account for this. (10 marks)

b) On 1st May 2018, Sosiot traders had Sh.25,000 Cash in hand and Bank overdraft of sh

15,000. During the month the following transactions took place.

2018

May 3: Kipkurui ,a debtor settled his account of sh 12000 by cheque of sh 10,000

May 5: Paid rent by cash sh. 5000

May 6: Deposited sh. 2000 into the business bank account from the cash till.

May 8: Received sh 6000 Cash from Kamau, a debtor

May 10: Wanjiku a debtor settled her account of 15,000 by cheque, having been

allowed 20% discount.

May 15: Purchased Furniture worth sh 3,000 paying by cheque

May 18: Deposited sh 7,000 into the bank from private sources.

May 23: Received the following amounts in cash from debtors having deducted

cash discount of 5%. Kertich sh 7600, Brian sh 4750

May 25: Banked all the available Cash except sh 1000

Required: Prepare a dully balanced three column cash book. (10 marks)


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6. a) By aid of a diagram, explain how price of a commodity is determined by the forces of

demand and supply. (10 marks)

b) The following trial balance was extracted from the books of Rafiki traders as at 31st

December 2018.

Rafiki traders

Trial Balance

As at 31st December 2018

Dr. Cr.

(Sh.) (Sh.)

Purchases 420,000

Sales 855,000

Returns 12,000 20,000

Creditors 100,000

Debtors 63,000


Motor- vehicle 480,000

Cash in hand 65,000

Furniture 190,000



Capital 626,250

Drawings 88,000

Telephone 6,400

Insurance 8,200

Postage 3,850

Rent 19,600


Advertising 12,900

1,670,250 1,670,250

Additional information;

Stock as at 31st December 2018 amounted to shs.60,000.

Required:

(i) Prepare Rafiki traders trading profit and loss account. (6 marks)

(ii) A balance sheet as at 31st December 2018. (4 marks)


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Page 1 of 10 Lanjet Business pp1

Name: _______________________________________ Adm No.: ______________________

Candidate’s Signature: ________________________ Date: __________________________

565/1

BUSINESS STUDIES

Paper 1

JULY/AUG 2019

Time: 2 hours

LANJET JOINT EXAMINATION 2019 Kenya Certificate of Secondary Education

565/1

Paper 1

BUSINESS STUDIES

TIME: 2hours

INSTRUCTIONS

Answer ALL the questions in the spaces provided.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

16 17 18 19 20 21 22 23 24 25

This paper consists of 9 printed pages. Candidates should check the question paper to ascertain that all

pages are printed as indicated and that no pages are missing.

TOTAL


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1. Atieno is employed as a filing clerk at ministry of land offices. Highlight four challenges that the

office is facing as a result of Atieno’s incompetence. (4 marks)

i) ………………………………………………………………………………………

ii) ………………………………………………………………………………………

iii) ………………………………………………………………………………………

iv) ……………………………………………………………………………………....

2. For each of the following situations, name the most suitable means of payment to be used.

( 4 marks)

Situation Means

a) To pay salary of 50 employees using one cheque

b) Paying school fees for a student from Nairobi who is at

Nakuru school

c) Paying insurance premium to UAP Insurance

d) Njoki wishes to transfer kshs 100,000 immediately from

her account to Mwende’s account

3. Give four reasons why extractive level of production is the highest income earner in most third

world countries. (4 marks)

i) ………………………………………………………………………………………

ii) ………………………………………………………………………………………

iii) ………………………………………………………………………………………

iv) ………………………………………………………………………………………

4. The following extract is from Manga traders as at 31st December, 2018.

Kshs.

Capital 2,000,000.

Net profit 500,000.

Borrowed capital 1,430,000.

Fixed assets 2,880,000.

Current assets 2,350,000.

Current liabilities 1,300,000.


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Determine:-

i) Working capital (1 mk)

ii) Current ratio (1 mk)

iii) Capital employed (1 mk)

iv) Rate of return on capital employed (1 mk)

5. State four advantages of using social media to a business person. (4 marks)

i) ………………………………………………………………………………………

ii) ………………………………………………………………………………………

iii) ……………………………………………………………………………………

iv) ………………………………………………………………………………………

6. State whether the following taxes are direct or indirect (4 marks)

Type of tax Classification

a) Sales tax

b) Corporate tax

c) Value added tax

d) Excise duty

7. Indicate four indicators of workers who are poorly motivated in an organization (4 marks)

i) ………………………………………………………………………………………

ii) ………………………………………………………………………………………

iii) ……………………………………………………………………………………

iv) ………………………………………………………………………………………


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8. Name four advantages of operating a public limited company (4 marks)

i) ……………………………………………………………………………………..

ii) ………………………………………………………………………………………

iii) ………………………………………………………………………………………

iv) ………………………………………………………………………………...........

9. Janet observed that there are many small scale retail businesses in her home town that are

surviving despite the presence of large supermarkets. Write four reasons that may explain this

scenario. (4 mks)

i) ………………………………………………………………………………

ii) …………………………………………………………………………………

iii) ………………………………………………………………………………………

iv) ………………………………………………………………………………………

10. In the transactions below, indicate whether the balance sheet totals are going to

increase(+),decrease(-), or remain the same(No effect) (4 mks)

Transaction Effect

a) Sold some old furniture on credit

b) Borrowed a bank loan of Ksh 100,000 in cash

c) Sold stock worth Kshs 5,000 and was paid by cheque

d) The owner added kshs 20,000 to the business cash

from personal sources

11. The following table represents the demand for tomatoes.

Price of tomatoes

(Shs)

Quantity demanded of tomatoes per week (Kgs)

50 10

100 8

150 6

200 4

250 2

From the above demand schedule plot the demand curve for tomatoes. (4mks)


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12. Highlight four challenges that a new entrepreneur faces when carrying out business activities.

(4mks)

i) …………………………………………………………………………………………

ii) …………………………………………………………………………………………

iii) …………………………………………………………………………………………

iv) …………………………………………………………………………………………

13. Highlight four differences between monopoly and monopolistic market structures. (4mks)

i) …………………………………………………………………………………………

ii) …………………………………………………………………………………….......

iii) …………………………………………………………………………………………

iv) …………………………………………………………………………………………

14. Mention four features of capital as a factor of production. (4mks)

i) ..................................................................................................................................

ii) ……………………………………………………………………………………..

iii) ……………………………………………………………………………………

iv) ………………………………………………………………………………………

15. A TV set was sold for sh.20,000. If the buyer was allowed a trade discount of 5% and a

cash discount of 2% if payment is made within a month. Determine the amount received

by the seller if payment is made within 2 weeks. (4 mks)


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16. Give four reasons that make insurance companies decline to insure acts of nature such as

earth quakes, floods, etc. (4 mks)

i) ……………………………………………………………………………….....

ii) …………………………………………………………………………………

iii) …………………………………………………………………………………

iv) …………………………………………………………………………………

17. The following information was extracted from the books of soma label traders on 31st march,

2009

shs

Stock(1st April, 2008) 650,000

Purchases 2,400,000

Sales 3,200,000

Mark up 25%

Stock ( 31st march, 2009) x

Required:

Use the information above to prepare a trading account for the year ended 31st march, 2009.


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18. Highlight four reasons why a business plan is important to a business unit. ( 4 marks)

i) .......................................................................................................................................

ii) .......................................................................................................................................

iii) .......................................................................................................................................

iv) .......................................................................................................................................

19. Outline four reasons why different businesses merge (4 marks)

i) ..............................................................................................................................

ii) ..............................................................................................................................

iii) .............................................................................................................................

iv) ..............................................................................................................................

20. Name the element of transport represented by each of the following items (4 marks)

Item Element

a) Bus station

b) Bicycle

c) Railway line

d) Diesel engine

21. Mawingu company would like to erect billboards for product promotion purposes. Highlight

four short comings of using this method ( 4 marks)

i) .........................................................................................................................................

ii) ........................................................................................................................................

iii) .........................................................................................................................................

iv) .........................................................................................................................................

22. Record the following transactions in the relevant ledger accounts of Karua’s business. ( 4 mks)

I) Jan 20th : the owner took stock worth kshs 1500 to his aunt while on a visit

II) Feb 12th : bought a business motor cycle worth shs 80,000 on credit from Nakuru motors ltd.

III) March 18th : withdrew shs. 10,000 from bank for business use


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IV) Received an invoice on April 10th from summer wholesalers worth sh 50,000.

23. Outline four drawbacks that accrue to a society that practice subsistence production.(4 marks)

i) .......................................................................................................................

ii) .......................................................................................................................

iii) .......................................................................................................................

iv) ........................................................................................................................


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24. Highlight four measures that the government may use to control demand pull inflation.

( 4 marks)

a) .............................................................................................................................

b) ............................................................................................................................

c) .............................................................................................................................

d) .............................................................................................................................

25. Outline four reasons for maintaining a trial balance. ( 4 marks)

i) ..................................................................................................................

ii) ..................................................................................................................

iii) ..................................................................................................................

iv) ......................................................................................................................


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LANJET BUSINESS PP2 2019 Page 1 of 5

Name………………………………..………… Index No:……………………..……….

Date: ……………………………………….. Candidate’s Signature ………...…..……

565/2

BUSINESS STUDIES

PAPER 2

JULY/AUGUST 201

TIME: 2 ½ HOURS

LANJET CLUSTER JOINT EXAMINATION - 2019

Kenya Certificate of Secondary Education (K.C.S.E.)

565/2

Business Studies

Paper 2

TIME: 2 ½ Hours


• Write your name and index number on the answer booklet provided.

• This paper consists of six questions.

• Answer any five questions.

• All questions carry equal marks.

For Examiners Use Only

This paper consists of 5 printed pages. Candidates should check to ascertain that all pages are printed as indicated and that

no questions are missing.

QUESTION 1 2 3 4 5 6 TOTAL

MARKS


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ANSWER ANY FIVE QUESTIONS

1 (a)

Explain five benefits that may be realized by a country as a result of government policyto relocate indust

ries to rural areas. (10 marks)

b)Kenya has experienced a lot of loses through road accidents. Explain five measures the

government has taken to reduce further loss of lives. (10 marks)

2(a)Discuss five principles that would guide the Kenya’s Government on effective use of public

resources. (10 marks)

b)On1st Jan 2011,Tradelink Enterprise had 22,250 Cash and 250,000 in the Bank

2nd Jan. – Made cash sales of shs 465,200

5th Jan – Received a cheque for shs 451,250 from Kamau

Traders in full settlement of their debt after allowing a

5% cash discount.

15th Jan – Paid Ndaru Traders Shs 184,000 in cash after

deducting a cash discount of shs 16,000

20th Jan – Deposited shs 200,000 from the cash till into the bank

25th Jan – Paid wages shs 144,000 in cash

28th Jan – Settled Mbago Trader’s account of Shs 300,000 by

cheque, less 15% cash discount

29th Jan – Withdrew shs 250,000 from the bank for office use

30th Jan – Deposited all the cash into the bank, except

shs 59,700.

Required

Open a duly balanced Three Column Cash Book for the above transactions


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3.(a) The table below shows the age distribution of a country.

Age in years % of population

0 – 15 45

16 – 55 31

56 and above 24

Explain five negative economic implications of this age distribution to a country.

(10 marks)

b)Explain five services that the Central Bank of Kenya offers to commercial banks.

(10 marks)

4(a)Discuss Five characteristics of under developed countries

(b)The following balance sheet was prepared from the books of Kimani Traders.

Kimani Traders

Balance sheet

As at 31st Dec 2011

Sh sh sh

Fixed assets capital 280,000

Motor vehicle 600,000 long term liabilities

Furniture 80,000 680,000 bank loan (5 years) 500,000

Current assets short term liabilities

Stock 200,000 creditors 280,000

Cash 60,000 bank overdraft 20,000 300,000

Debtors 140,000 400,000

1,080,000 1,080,000

The following transactions then took place in January 2012

(i) Opened a bank account for the business and deposited shs 120,000 from personal

sources.

(ii) Paid part of the bank loan shs 40,000 by cash.

(iii) Bought goods worth shs 50,000 on credit.

(iv) Sold part of the furniture worth shs 10,000 in cash

Required:

Prepare Kimani Traders Balance Sheet as at the end of January 2012


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5.a)Explain five benefits to Kenya for being a member of the East African Community

Economic block.

(b) Explain five importance of Entrepreneurship to the development of the Kenyan economy.

(10 mks)

6(a)Describe four factors considered when choosing a means of communication. (8mks)

(b) The following trial and balance relates to business of Twiga Traders as at 30th June

2008.

Twiga Traders,

Trial balance,


Shs. Shs

Land and Buildings 750, 000

Cash at bank 45, 000

Prepaid rent 5, 000

Debtors/creditors 10, 000 15, 000

Opening stock 22, 500

Discounts 3, 000 1, 000

Purchases/sales 70, 000 160, 000

Wages 25, 000

Furniture 13, 500

Capital 771, 850

Carriage outwards 1, 150

Carriage inwards 2, 700

Returns 7, 500 9, 500

Lighting 6, 000

Commissions 4, 000

961, 350 961, 350

Closing stock was valued at shs 11, 000.

Required:

(a) Prepare a trading profit and loss account as at 30th June 2009.

(8mks)

(b) Calculate the following ratios:-


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(i) Rate of return on capital (1mk)

(ii) Margin (1mk)

(iii) Quick ratio (1mk)

(iv) Rate of stock return over (1mk)


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1

NYANDARUA WEST CLUSTERS EXAM

BUSINESS STUDIES 565/1

ANSWER ALL QUESTIONS


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2

1. State four characteristics of human wants (4mks)

a)

b)

c)

d)

2. Outline four ways in which utility of a good is created in production (4mks)

a)

b)

c)

d)

3. State four benefits that a farmer may derive from being a member of

producer co-operative society (4mks)

a)

b)

c)

d)

4. Highlight four ways in which consumers may protect themselves against

exploitation (4mks)

a)

b)

c)

d)

5. Highlight four factors a firm must take into account when deciding on the

product(s) to produce (4 mks)

a)

b)

c)

d)


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3

6. Below is a diagram of demand and supply curve

D0S0

S1

P E

Price P1 E1

S0 D0

S1

Q Q1

Quantity

Highlight four factors that may have led to the above behavior (4mks)

a)

b)

c)

d)

7. Mention four characteristics of good money (4mks)

a)

b)

c)

d)

8. State four ways in which human resource can positively influence the

internal environment of a business (4mks)

a)

b)

c)

d)

9. State four benefits that Kenya will derive from the completion of Standard

gauge railway (SGR) (4mks)

a)

b)

c)

d)

10. State four characteristics of a successful entrepreneur (4mks)

a)

b)

c)

d)


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4

11. Name four documents required by the registrar of companies in order to

register a Public Limited Company (4mks)

a)

b)

c)

d)

12. State four circumstances under which cash with order (CWO) may be used by

a business (4mks)

a)

b)

c)

d)

13. Outline four challenges that may be encountered in measuring National

income using the output approach (4mks)

a)

b)

c)

d)

14. Highlight four factors to be considered when choosing a method of product

promotion (4mks)

a)

b)

c)

d)

15. Identify the source documents into which the following information would

be recorded (4mks)

Information Source document i. Payment received from debtors

ii. Purchases made on credit

iii. Validating payments made by

cashier

iv. Sale of a fixed asset on credit

16. For each of the transaction state the account to be debited and the account to

be credited (4mks)

Transaction Account debited A/C

credited i. Deposited cash into the bank

ii. Owner withdrew cash for

personal use

iii. Purchased goods on credit

iv. Sold furniture by cheque


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5

17. The following information was obtained from Wamwangi traders as at 31st

December 2018

Shs Stock 1/1/2018 20000

Stock 31/12/2018 30000

Mark up 20%

Rate of stock turn over 7 times

Required

Prepare Wamwangi’s trading account for the year ended 31/12/2018

(4mks)

18. Muriuki prepared a trial balance for his business but it failed to balance. Help

him prepare a correct one (4mks)

MURIUKI TRIAL BALANCE AS AT 31ST DEC 2017

Fixed Assets Liabilities Land 110,000 Debtors 80,000

Creditors 60,000 Machinery 90,000

Capitals 230,000 Prepaid rent 10,000

400,000 180,000


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6

19. State the kind of information recorded in the following ledger accounts

i. Sales Ledger

ii. Private Ledger

iii. Nominal Ledger

iv. Cash book

20. State four components of a Business plan (4mks)

a)

b)

c)

d)

21. State four roles of Insurance Industry in Kenya (4mks)

a)

b)

c)

d)

22. Outline four measure used by the Central Bank to control supply of money in

the economy (4mks)

a)

b)

c)

d)

23. Highlight four features of perfect competition market (4mks)

a)

b)

c)

d)

24. Mention the four elements of transport . (4mks)

a)

b)

c)

d)


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7

25. State the type of unemployment described below (4mks)

i. Experienced where demand for goods and services is seasonal

……………………………………………………………………………………………………

ii. Occurs when a person seems to be employed but is mainly under

utilized

…………………………………………………………………………………………………….

iii. Occurs when jobs are available but one does not have the required

qualifications

…………………………………………………………………………………………………….

iv. Caused by Economic factors leading to poor performance of the

Economy

…………………………………………………………………………………………………….


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1

NAME:------------------------------------------------------------------------ADM.NO-----------------INDEX NO-----------

NYANDARUA WEST CLUSTERS

JULY/AUGUST 2019 EXAMINATIONS

565/2

BUSINESS STUDIES.

TIME 2 HOURS 30 MINUTES.

INSTRUCTOINS.

1.This paper consists of six [6] questions.

2All questions carry equal marks.

3.Answer five questions only.

4.Write your answers in English.


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2

1.a]Explain five characteristics of economic resources. [10 mks]

b]Explain five merits of using audio visual means of communication. [10 mks]

2. a]Explain five circumstances under which a partnership may be dissolved. [10 mks]

b]The following balances were extracted from the books of Kasuku traders on 30th June 2018.

Furniture 18,000 Debtors 40,000

Motal van 40,000 Creditors 50,000

Capital 75,000 Cash 4,000

C.F.C Loan 50,000 Bank 19,000

Stock 54,000.

The following transactions took place in the month of July 2018.

July 10 Kasuku traders received ksh. 15,000 from a debtor by cheque.

July 15 Bought more furniture worth ksh. 2,500 and paid in cash.

July 20 Took goods worth 14,000 for home use.

Required.Prepare a balance sheet as at 30th July 2018. [10 mks]

3. a]Describe five principles that guide insurance businesses in Kenya. [10 mks]

b]The following information relates to Rose holdings for May 2015.

May 1.Sold goods to Garry at ksh. 660.

May 5.Bought goods from K.N.T.C for ksh. 7500.

May 10 Bought three office machines at ksh 2,500 each on credit from Fine elecronics.

May 15 Goods worth ksh.1,850 were sold to Jack on credit.

May 18 She sold old furniture on credit to Twiga motols at KSH. 1,500 whose book value was

ksh.1000.

Required.Record the above transactions in appropriate journals. [10 mks]


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3

4. a]Explain five features of monopolistic competition. [10 mks]

b]Outline five differences between public and private warehouses. [10 mks]

5 .a]Explain five documents used in home trade that are prepared by the buyer. [10 mks]

b]Explain five ways in which the central bank of Kenya controls the operations of commercial

banks. [10mks]

6.a]The following transactions were extracted from the books of Furaha retailers.

April 1.Balance brought forward cash ksh 1,900 cash at bank ksh. 6500.

April 3.Sold goods in cash ksh. 1,200.

April 5. Paid transport by cheque ksh. 2,050.

April 7.Bought goods worth ksh.2,500 in cash less 5% cash discount.

Apri l 10.Paid postage charges by cheque ksh.3,000.

April 12.Furaha deposited ksh.600 from cash till to the business bank account.

April 13.Bought goods ksh .8400 by cheque.

April 15. Sold some old furniture for ksh 3,900 and received the money by cash.

April 17.Brought a table to be used in the business whose value was ksh.1,800.

April 18.Paid electricity bill by cheque ksh.2,100.

April 20.Sold goods goods against a cheque for ksh.6,600 whose value was ksh.6,850.

April 21.Took cash ksh 400 for family use..

April 26.Sold goods on credit to Kamani valued at ksh 4,500.

April 28.Received cash ksh.1,500 from Bidii stores.

April 30.Deposited all cash with the bank exceptksh.3,525.

Required to prepare a three column cash book duly balanced. [10 mks]

b]Draw a well labeled diagram to show the effect of increase in demand and increase in supply on

equilibrium point, equilibrium price and equilibrium quantity. [10mks]


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1 | P a g e @ S U K E L L E M O 2 0 1 9 5 6 5 / 1

NAME………………………………………… INDEX NO. …………………………

SCHOOL ………………………………………… SIGNATURE ………………………...

DATE ………………………... 565/1

BUSINESS STUDIES

PAPER 1

JULY 2019

TIME: 2 HOURS

SUKELLEMO JOINT EVALUATION TEST

Kenya Certificate of Secondary Education (K.C.S.E)


Answer all the questions in the spaces provided.

This paper consists of 8 printed pages. Candidates should check the question paper to ensure that all

pages are printed as indicated and no questions are missing

FOR EXAMINER’S USE ONLY

Question No 1 2 3 4 5 6 7 8 9 10 11 12 13

Marks

Question No 14 15 16 1 18 19 20 21 22 23 24 25

Marks


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2 | P a g e @ S U K E L L E M O 2 0 1 9 5 6 5 / 1

1. Identify four types of business activities. (4marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)…………………………………………………………………………………………………………

2. State four ways in which a consumer can make use of scarce resources to satisfy unlimited scarce

resources (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)…………………………………………………………………………………………………………..

3. Outline four utilities created in the process of production (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)………………………………………………………………………………………………………….

4. Outline four reasons why a new business may fail. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)………………………………………………………………………………………………………….

5. State the best type of machine one would use to perform the following tasks. (4 marks)

Function Type of machine

(a) To trim papers to the required sizes.

(b) To fold documents, put them in envelopes

and seal team.

(c) To make exact copies of a certain original

document.


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(d) To arrange papers in a required order.

6. Outline four features of mail-order business. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)…………………………………………………………………………………………………………

7. Highlight four circumstances under which business organizations may choose to merge.(4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)………………………………………………………………………………………………………….

8. Describe four characteristics of debentures. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)…………………………………………………………………………………………………………..

9. Identify the following Acts of Parliament used by the government to protect the consumer.

(4marks)

Description Act of Parliament

a) Requires that traders maintain high standards of

hygiene

b) Requires that traders use correct weighing equipment

c) Requires that producers do not include harmful

substances in products

d) Requires that traders only engage in businesses for

which they are permitted

10. State four ways in which the nature of goods would influence the choice of transport. (4 marks)

i)…………………………………………………………………………………………………………..


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ii)………………………………………………………………………………………………………….

iii)…………………………………………………………………………………………………………

iv)………………………………………………………………………………………………………….

11. Outline four circumstances under which a trader would prefer letter rather than telephone when

communicating with suppliers. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)………………………………………………………………………………………………………….

12. State four differences between insurance and assurance (4 marks)

Insurance Assurance

13. Highlight four ethical issues that a business should consider while engaging in product promotion.

(4 marks)

i)………………………………………………………………………………………………………….

ii)………………………………………………………………………………………………………….

iii)…………………………………………………………………………………………………………

iv)………………………………………………………………………………………………………….

14. Given below is supply for a commodity.


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Outline four causes of a shift to the right in the above diagram. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)…………………………………………………………………………………………………………..

15. State four reasons why the government encourages the location of firms in rural areas. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)………………………………………………………………………………………………………….

16. State four features of an oligopoly market structure. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)…………………………………………………………………………………………………………

iv)………………………………………………………………………………………………………….

17. Four circumstances under which intermediaries may be removed from the chain of

distribution.(4marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)…………………………………………………………………………………….................................

iv)…………………………………………………………………………………………..........................


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18. The diagram below represents the relationship between population and income per-capita

Q

P axis

R

S axis

State what is represented by: (4 marks)

i) P axis ________________________________

ii)S axis ________________________________

iii) R ________________________________

iv) Q ________________________________

19. State the effect of the following transactions on the balance sheet totals by writing increase,

decrease or no effect. (4 marks)

Transactions Effect

a) Bought machinery on credit

b) Withdrew cash from a business to pay his wife’s hospital

bill

c) Purchased stock in cash

d) Paid outstanding loan by cheque

20. The following is an extract of a Cashbook.

Date Details Cash Bank Date Details Cash BANK

May 2 Balance W May 6 Balance 60,000

12 Sales 20,000 19 Purchases 30,000

20 Were 50,000 22 Rent 6,000


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28 Sales 120,000 Bal c/d Y X

120,000 60,000 Z

Determine the figures represented by;

(i) W ____________________________

(ii) X ____________________________

(iii) Y ____________________________

(iv) Z ____________________________

21. The following balances relates to the retail business of Katana for the month of July 2016.

Sales 50,000

Expenses 10% of sales

Cost of goods sold 40,000

Calculate:

(i) Mark up. (1 mark)

(ii) Margin. (1 mark)

(iii)Total expenses. (1 mark)

(iv) Net profit. (1 mark)


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22. State four banking services that the Central Bank of Kenya provides to the government. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)…………………………………………………………………………………………………………

23. Highlight four factors that should be observed when coming up with a good tax system. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)………………………………………………………………………………………………………….

iv)………………………………………………………………………………………………………….

24. State four factors that can hasten economic development in a country. (4 marks)

i)……………………………………………………………………………………………………………

ii)…………………………………………………………………………………………………………..

iii)…………………………………………………………………………………………………………

iv)…………………………………………………………………………………………………………

25. A business had the following record for the year ended 31st December 2016.

Shs.

Capital as at 31/12/16 64,000

Net profit for the year 14,000

Capital as at 1st Jan 2016 42,000

Drawings for the year 18,000

Calculate the additional investments made during the year


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Name…………………………………………………………………………….Class ………….

Index Number………………………………….. ADM NO ………………

SUKELLEMO MOCK EXAMINATION

The Kenya certificate of secondary education


PAPER TWO

JULY 2019

TIME: 2 ½ HOURS

INSTRUCTIONS TO CANDIDATES:

1. .This paper consists of six questions.

2. .Answer any five questions.

3. Write your answers in the separate answer sheets provided.

4. All question carry equal marks.


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1. a. Explain five features that differentiate a public corporation from a public limited company

form of business unit. (10 marks )

b. Explain 5 benefits of a business plan to an entrepreneur (10 marks)

2. a. Explain 5 factors that may influence the level of national income of a country. (10 marks)

b. Kenya is looking forward to the realization of Vision 2030. Explain 5 obstacles that may

hinder the efforts made towards this dream. (10 marks)

3. a. Explain FIVE factors that one needs to consider when selecting an office equipment.

(10 marks)

b. Kitinga Enterprises runs a general Merchandise business. The transactions during

the month of June

2014 were as follows:

2014

June 1 - Bought on credit from Orina Ltd. goods worth shs. 100 000, received a

20% trade discount.

June 4 - Sold goods on credit to Rono Ltd. shs. 50 000 and allowed them a 10%

trade discount.

June 8 - Sent Rono Ltd. a credit note for goods returned, which had a value of

shs. 27 000.

June 10 - Sold goods on credit to Akinyi shs. 60 000

June 12 - Purchased goods from Wamalwa ltd for shs. 100 000 and he allowed a

30% trade discount.

June 15 - Purchased goods on credit from Nyambura shs. 55 000

June 16 - Sent Akinyi a credit note for goods returned worth shs. 6 000

June 18 - Wamalwa Ltd. sent us a credit note for sh.30 000 for goods returned.

June 19 - Received a credit note for goods returned to Orina worth sh.20 000

June 25 - Sold goods to Wairimu on credit sh. 25 000

June 27 - Sent Wairimu a credit note for sh.5 000 to rectify an overcharge on their

invoice.

June 28 - Sold goods on credit to Rono Retailers for sh. 56 000

June 29 - Purchased a Motor Van on credit from Awori Ltd. worth shs. 80 000

June 30 - Sold on credit old machinery to Nairobi Trading Company for sh.35 000

(prior to this owned machines worth shs. 100 000

Required: Make the necessary entries in the relevant books of original entry (10 marks)

(NB. Posting to the ledger Accounts is not necessary)

4. a) Explain 4 measures that may be taken by the central bank of Kenya to control the amount

of money in circulation. (8 marks)


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b) On l March 2019, L2020 Ltd had cash in hand Sh47,800 and a bank overdraft of

Sh23,400. During the month, the following transactions took place:

March 3 Cash sales Sh 6,500 paid directly into the bank.

4 Bought goods for Sh 15,000 and paid by cheque.

5 Received a cheque of sh 76,000 from Mary, after allowing her a cash discount

of 5%.

6 Cash sales Sh 50,000.

9 Received a cheque for Sh 76,500 from Nyaboke in settlement of her debts.

12 Settled Omollo's account for sh 34,200 in cash, having deducted sh 800 cash

discount

13 Paid insurance premium Sh 16,000 in cash.

l4 Paid Keith by cheque Sh 9,700 in full settlement of his account having

deducted 3% cash discount.

17 Cash sales Sh 150,000 paid direct into bank.

2l Withdrew Sh 30,000 from bank for office use.

23 Received a cheque of Sh 23,750 from Jabali in full settlement of his account

less 5% cash discount.

25 Paid wages of Sh 20,000 in cash.

26 Cheque received from Nyaboke was dishonoured.

29 Received sh 17,000 cash from Alvin in settlement of his account less sh 1,000

cash discount

30 Banked all cash except Sh 33,800.

Prepare a three-column cash book duly balanced. (12 marks)

5. (a) The following trial balance was extracted from the books of Namirama Traders as at 31st

December 2017.

Dr. Cr.

Stock on 1st Jan 2017 60,000

Purchases and sales 400,000 580,000

Returns 20,000 50,000

Debtors and Creditors 65,000 40,000

Premises 540,000

Machinery 200,000

Fixture and Fittings 100,000


Wages and Salaries 30,000

Discounts 25,000 32,000

Commissions 16,000 14,000

Cash in hand 70,000

Capital 818,000

1,534,000 1,534,000

Closing stock was. Sh. 70,000


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(i) A trading, profit and loss account for the period ended 31st December

2017

(ii) A balance sheet as at that date

(iii) Calculate the following; current ratio, rate of stock turn over, capital

employed and working capital. (12 marks)

b) Highlight 4 functions of wholesalers (8 marks)

6. a) You are given the following functions.

Q = 51 + 4P

Q =100 – 3P

Required:

i) Of the two options, identify which is the supply and demand functions (4 marks)

ii) Give reasons to your answers in (a) above (2 marks)

iii) Establish the equilibrium price and quantity ( 4armks)

b) Outline FIVE causes of Balance of payments deficits (10 marks)


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BUSINESS STUDIES

TRIAL 2, 2019

MARKING SCHEME

FORM FOUR PAPER 2

1. a) Differentiate between Private limited company and public limited liability company

(10mks)

Private limited company Public limited liability company

a) can be formed by minimum of 2

shareholders

a) Can be formed by a minimum of 7

shareholders

b) Formed by a maximum of 50

shareholders

b) Has no set maximum

c) Does not sell or advertise its shares

to the public

c) Advertise and sells its shares to the

public

d) Does not allow the transfer of shares

without consent from other

shareholders

d) Shares can be freely transferred from

one person to the other in the stock

exchange

e) Can start operating after receiving a

certificate of incorporation

e) Cannot start operating until it is

issued with the license of trading and

approval of the prospectus.

f) Audited financial statements need

not be published and filed with the

registered of companies

f) Audited financial statements must be

published and filed with register of

companies

b) – Invoice – Document sent by the seller to the buyer demand payment for goods

supplied.

- Debit note – A document sent from the seller to the buyer to correct undercharge in the

invoices.

- Credit note – Document sent by the seller to the buyer to correct overcharge.

- Receipt – It is a document issued from the seller to the buyer when payment is made for

goods

- Statement of account – Is a document sent from the seller to buyer showing details or

balances of tra-sections for the month


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- Payment voucher – A document used to validate payment for goods and services

rendered

- Consignment note – To support hire of carrier services

2. a)

b) – Used in sourcing for finance /capital/loans/credit – It can be used to convince -

financial Institutions and investors to fund the firm’scooperation. (10mks)

� A tool of evaluation / help in avoiding mistakes – can be used to determine whether

the firm is achieving its goals.

� A tool of management/help in avoiding mistakes – can be used for structuring

/implementation of firm’s activities.

� Give a firm competitive edge – Enable the firm to get better understanding of the

market.

� Motivational tools/creates team work – In accomplishing the objectives of the firm.

� Adaptability tool – Creates room to cope with changes

Any other relevant well explained 5 x 2=10mks

3. a) – To avoid misleading consumers – By not making false claim about their products.

- To ensure that consumers are not offended – By not making use of appeal that goes

against their cultural values.

- To avoid exploiting certain vulnerable groups since they lack the knowledge.

- To avoid negative influence on consumer (value and lifestyle) – That may lead to

immorality /ill health.

- To avoid portraying viral businesses negatively – In an attempt to capture market.

- To create a positive image /reputation of the business hence maintaining customers

loyalty / retain market share

- To abide by the law of the country so as to avoid lawsuit/conflict.

- To avoid environmental pollution – By using environmentally friendly promotional

materials.


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b) – Benefits that may be realized by a country as a result of government policy of

relocating industries to rural areas.

- Reduced income disparities/inequalities/even distribution income- As more people

have access to jobs/income generating activities.

- Availability of auxiliary services / subsidiary/service industry – which lead to (faster)

development of rural areas.

- Creates jobs/increased job opportunities / more jobs available/reduce unemployment

– In all regions of the country.

- Increased utilization of resources /factors of production – Locally available factors of

production (will be used) that would otherwise be idle.

- Balanced economic development – As economic activities/firms are spread throughout

the country.

- Minimizes pollution in one area- Thus believing the extreme/severe impact.

- Creation/expansion of market – For goods and services/raw materials produced in

rural areas


4. a) Factors to consider when locating a warehouse

- Availability of adequate security

- Availability of auxiliary services eg banks

- Enough land for future expansion

- Nearness to the point of production, sale or supply.

- Compliance with the government regulations

- Good means of transport – easily accessible to bring goods in and out of the

warehouse

- Good communications network – To easily pass information between the warehouse

and the customers/suppliers



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b) Miriam

3 column cash book

Date Details L.F Discou

nt

allowed

Cash Bank Date Details L.F Discount

received

Cash Bank

2015

Sep 1

Sept 2

Sept 12

Sept 25

Sept 28

Sep 30

Sept 30

Balance

Sales

Wetu

Bank

Anyango

Cash

Balance

b/d

C

b/d

1200

7500

55000

50000

250000

35260

58800

67500

52800

2015

Sep 3

Sep 8

Sep 9

Sep 25

Sep 30

Sep 30

Ribbons

Wangila

Salaries

Cash

Bank

Balance

C

c/d

6000

4500

34000

52800

13700

94000

50000

320360

8700 105000 464360 6000 105000 464360

13700

320360

5. a) Uses of National income

- Used to determine the performance of the economy – An increase of the N.1 may mean

better performance of the economy and vice versa.

- The country is able to determine the level of economic growth – By comparing the GDP

over several years.

- Helps investors to make informed decisions – On which sector to invest and when to

invest.

- Used by government as a tool of supporting their request for foreign aid.

- Comparing economic performance of different countries.

- Helps compete the standards of living between two countries.

- Helps government to understand the income distribution in the country.



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b) TAI TRADERS

TRADING PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST DECEMBER 2014

Sh sh

Opening stock 10000

Add purchases 15,000

Add carriage inwards 1,200

Less returns outwards 1,100

Net purchases 15,100

CGAFS 25,100

Less closing stock 2,500

C.G.S 22600

Gross profit c/d 4600

27,200

EXPENSES


Discount allowed 300

Insurance 950

Net profit c/d 4,350

6,800

Sales 28,000

Less sales returns 800

Net sales 27,200

27,200

Gross profit b/d 4,600

Add; Rent received 580


6,800

NB: Wrong gross profit correctly brought down to the P & L account a word.

Net profit derived from wrong gross profit award , but all other entries must be correct to

attract awarding.

6. a) – Road transport is suitable over short distances since it is relatively fast compared to

rail transport. (10mks)

- There is flexibility in road transport since collection and delivery can be done at the

convenience of the owner of the goods.

- Road transport can provide door to door service. This reduces the amount of handling

and increases the safety of the goods.

- Road transport provides for specially designed vehicles to transport specialized goods

e.g takers to transport oil etc


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- Road transport does not have a fixed schedule hence one can transport his goods at

any time.

- One can decide to own the vehicle so as to have more control since it is relatively cheap

compared to a train.

- If the quantity to be transported is small then road transport is mot appropriate.

- The road network in this country is better than that of the rail network.


b)

CASH IN HAND A/C

Dr Cr

CASH AT BANK A/C

Dr Cr

1993

Jan 1 capital 120,000

Jan 10 sales 35,000

Jan 20 Bank 40,000

195,000

Jan 20 Balance b/d 87,000

1993

Jan 14 purchases 90,000

Jan 18 wages 18,000

Jan 20 Balance c/d 87,000

195,000

1993

Jan 1 capital 20,000

200,000


1993

Jan 5 purchases 60,000

Jan 120cash 40,000


200,000


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CAPITAL A/C

Dr Cr

PURCHASES A/C

Dr Cr

SALES A/C

Dr Cr

1993

Jan 20 Balance c/d320,000

1993

Jan 1 cash 120,000

Jan 1 Bank200,000

320,000


1993

Jan 5 Bank 60,000

Jan 14 Cash 90,000

150,000


1993


150,000

1993

Jan 20 Balance c/d35,000

1993

Jan 10 Cash 35,000



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WAGES A/C

Dr Cr

Each entry 1 tick

MAKENA

TRIAL BALANCE

AS AT 20TH JANUARY 1983

Details Dr Cr

Cash

Bank

Capital

Purchases

Sales

Wages

87,000

100,000

150,000

18,000

320,000

35,000

355,000 355,000

Total ticks = 30

Total marks 30 x 1/3 = 10mks

1993

Jan 18 Cash 18,000


1993

Jan 20Balance c/d 18,000


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BUSINESS STUDIES

MARKING SCHEME

TRIAL 2, 2019

FORM FOUR PAPER 1

1. - Increase in customers income

- Increase in population

- Political stability

- Favourable climatic conditions

- Lack of competition

Any other relevant 4 x 1=4mks

2. – Where market is concentrated in e area/localized.

- Where the product is of technical nature

- Where the product is of high value

- Where the product is perishable

- Where the producer has high own retail outlet

- If the goods are produced as per customer’s specification

- If the producer requires immediate feed back

- When the consumer can but in bulk.


3. – Very high prices for products

- Hoarding of products

- False advertisement

- Harmful products

- Breach of contract

- Inferior quality goods


4. i) Current ratio = ��

�� =

650,000

650,000 = 1:1

ii) Gross profit mark up =��

�� × 100

Gross profits = Sales x margin = 20

100× 200,0000

= sh 400,000

Cost of sales = sales – Gross profit = 2,000-400,000 = 1,600,000

Mark up = 400,000

1600000× 100 = 25% or ¼

iii) Rate of stock turn over = ��

��

Average stock = ��

2


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= 100000�200000

2 = 150,000

Rate of stock turnover = 1600000

150000= 10.67 times

iv) Capital employed = Fixed Assets + Current Asset

= 5,000,000 + 650,000

= 5,650,000

5. – Incase of overcharge in invoice

- If goods have been returned

- If one was charged for goods not supplied.

- If cost of empty containers was included in the invoice

- If merited discount has not been deducted for the invoice


6. Qde = 4P + 50

Qse = 8P + 30

Qde = Qse

4P + 50 = 8P + 30

50-30 = 8P -4P

20

4=4�

4

P=5√√

q = 8P + 30

Q = 8 (5) + 30

= 40+ 30

Q = 70√√

7. – Poor location of the business (4mks)

- Stiff competition from other retailers

- Inadequate finances to meet the obligation of the business

- Kendi’s lack of commitment to the business

- Insecurity

- Improper management practices

- Poor customer relations

- Inappropriate pricing practices

- Political instability/wars

- Lack of market /low demand


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- Any other relevant 4 x 1=4mks

8. a) Bonded warehouse

b) Pubic warehouse

c) Wholesaler

d) Manufacturer’s

9. – Bulky goods (4mks)

- Perishable goods /Durability

- Flammable /inflammable

- Fragile

- Expensive/value of goods

- Heavy

10. – If resources are not scarce (4mks)

- If wants are not complimentary

- If want s are not habitual

- If wants are not competitive

- If wants are not recurrent

- If wants don’t very in urgency and intensity

NB: A candidate must use circumstantial words such as if, when, where and

incase to earn a mark.

11. – It enables one to acquire knowledge and skills to start and run a business. (4mks)

- It equips on with basic economic concepts

- It enables one to understand and appreciate the importance of business activities

in the society

- Makes the members of society to appreciate the need for business management

practices.

- Assist individuals to acquire self discipline and positive attitude towards work.

- Equips individuals with abilities to promote co-operation in society than trade.


12. a) Purchases journal (4mks)

b) Cash payment journal

c) Return inwards/sales returns journal

d) Sales journal

13. a) Private/general ledger (4mks)

b) Sales/debtors ledger

c) Purchases/creditors/bought ledger Mwalimu Resources


4

d) Cash book

14. – Easy supervision of workers (4mks)

- Construction cost is low because partitions are few

- Easy location of workers

- Staff movement is minimized thus saving time used in passing information

- Office equipment and machinery are not misused due to close supervision of

workers.

- Promotes teamwork among employees

- Maintenance cost low

- Floor space is saved

- It is cheap to decorate


15. Compensation = ��

�� √ (4mks)

2,000,000 × 600,000

2,400,000√

= sh 500,000√

Reason: He had under insured √

16. – Divisibility (4mks)

- Scarcity

- Malleability

- Acceptability

- Durability

- Portability

- Recognisability


17. – Salary (4mks)

- Interest

- Rents/rates /loyalties

- Profit

18. – Increased dependency ratio on the young who may not yet fit in the job market.

(4mks)

- The labour supply in the market will be low as many young people may not have

attained working age.


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- Move resources are used to feed the young and less is available for savings and

investment.

- Most expenditure is diverted to providing goods and services for the young and

other vital sectors are neglected

- Many young people being released on the job market may create unemployment.

- Young people particularly if they are idle tend to engage in social evils such as

crime.


19. – Perfect knowledge of the market by both the buyer and the seller. (4mks)

- Homogeneous product

- No government intervention

- Factors of production have perfect mobility

- Free entry and exit of the players in the market.


20. – Horizontal communication (4mks)

- Upward vertical communication

- Downward diagonal communication

- Upward diagonal communicateon

21. a) Increase

b) Decrease

c) No effect

d) Decrease

22. – Household spend all their income in buying the goods and services from the firm

and none is saved. (4mks)

- The firms sell all their goods to the households.

- There is no government intervention in the circular flow.

- There is no leakage or withdrawals from the closed economy.

- The firms spend all income renewed on production of goods and services.

- The firms spend all income on production of goods and services.

Mwalimu Resources


6

23. WANJI TRADERS

BALANCE SHEET

AS AT 31ST DECEMBER 2008

Sh

Machinery 450,000√

Stock 60,000√

Debtor 120,000√

Bank 180,000√

Cash 70,000√

880,000

Sh

Capital 550,000√

5 year loan 270,000√

Creditor 60,000√

880,000

8x½=4mks

24. – To reduce the number of entries made into the general ledger (4mks)

- To easily oral cash balances/show cash balances at a glance.

- To enhance specialization in book keeping by allocating different ledgers to

different workers.

- To easily monitor cash inflow (receipts)

- To show the sources of funds into the business

- To show the expenditure in the business

- To easily monitor the cash outflow (payment)

- To show discount allowed to the debtor

- To show discount received from creditors

25. – Cost of the method (4mks)

- Geographical area to be covered /extent of the market/distance to be covered.

- Target group/type of consumers/nature of the market segrement

- Speed of the medium /urgency of the message/time

- Nature /type of the product

- Intended impression/impact

- Methods used by competitors



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BUSINESS STUDIES

PAPER 565/2

PRE-TRIALS MAY 2019

TIME: 2 HOURS

MARKING SCHEME.

1. a) Barter trade is the best. Oppose this with 5 well explained points.

• There is need for double coincidence of wants

• Some goods are perishable

• It is difficult to carry heavy and bulky goods

• Some goods may be difficult to divide and if divided by lose value

• Barter trade lacks standard measure of value

b) The following information belongs to Dedaat Kazi Moto Traders.

5 well explained points no splitting

2 marks or zero if there is no explanation

Dedaat Kazi Moto Traders

Trial Balance

As at 31/12/2018

Particulars Debt Credit

Land 495,000

Furniture 160,000

3 year loan 200,000

Returns outwards/ inwards 7,000 6,000


Carriage 10,000

Debtors / creditors 60,400 49,700

Stock on 1/1/18 18,800

Purchases / sales 110,000 360,000

Drawings 2,400

Cash 77,000

Bank 130,000

Commission 8,000 130,000

Rent 3,600 2,000

Repair 1,200

Insurance 5,000

Fixtures and fittings 54,800

Capital 259,000

1,025,500 1,025,500

i) Closing stock 20,500

ii) A ¼ of carriage relates to purchases 6mks

Prepare i) Trading profit and loss account 4mks


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ii) Balance sheet 4mks

DEDAAT KAZI MOTO TRADERS

TRADING PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31/ 12/2018

Dr.

Opening Stock

Purchases 110,000

Add carriage in

Less Return Out

Net purchases

Goods available for sale

Less closing stock

Cost of goods sold

Gross profit

Carriage out

Discount allowed

Commission

Rent

Repair

Insurance

Net profit

110,000

2,500

112,500

6,000

18,800

106,500

125,300

20,500

104,800

248,200

353,000

7,500

12,300

8,000

3,600

1,200

5,000

231,400

269,000

Sales

Less return in

Gross profit b/d

Discount Received

Commission Received

Rent Received

360,000

7,000

353,00

353,000

248,200

4,800

14,000

2,000

269,000


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DEDAAT KAZI MOTO TRADERS

BALANCE SHEET

FOR THE YEAR ENDED 31/ 12/2018

Dr.

Fixed Assets

Land

Furniture

Fixture / Fittings

Current Assets

Stocks

Debtors

Cash

495,000

160,000

54,800

20,500

60,400

77,000

709,800

157,900

867,700

Capital

Add net profit

Less drawings

Net capital

Long Term liability

3 year loan

Current liabilities

Overdraft

Creditors

130,000

49,7000

259,000

231,400

490,400

2,400

488,000

200,000

170,700

867,700

40 x ¼ = 10mks

2. a) Explain to Akinyi a business lady 5 reasons why she should operate a current account.

• Overdraft facility is offered

• There is the cheque system

• One can withdraw all the amount

• Any amount can be withdrawn

• There is periodic statement given

• No restrictions on how many times one can withdrawn

• Any amount can be deposited at any time

• Postdated cheques can be used to pay even when there is no money I the account.

b) Explain 5 reasons why books of original entry / journals are used in accounting 10mks

• to relieve the ledger avoid the

• from becoming very bulky

• journal have more information / details

• help to minimize fraud

• assist in tracing errors

• can be used for delegation of duties

• they are used for the preparation of duties

• they are used for the preparation of final accounts control accounts

5 x 2mks 10mks


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3. a) Explain 5 external business environmental factors that may affect a business 10mks

• Political / legal

• Economic social cultural

• Technological

• Demographic physical environment - Terrain

• Competitive environment

Stating 1 neat explanation 1mk

Splitting is allowed.

b) Explain 5 differences between public limited companies and parastatals 10mks

• Public ltd companies are owned by private individuals, parastatals are owned by

government

• PLC are financed by the owners parastatals are financed by the government

• Board of management for xxxx are appointed by shareholders for parastatals,

appointment is by the government

• PLC are created through registration to the Registrar of companies parastatals are

created by an Act of parliament

• PLC issues shares to the public thrugh a prospectus parastatals are not permited.

• P.L.C accounts are auditors privately

• Parastatals usually formed to provide a certain essential service, good while PLC can

provide any good or service.

4. a) Explain 5 challenges / limitations facing consumer organizations in Kenya today

• Lack of support from the government

• Reluctance of members to pursue cases

• Lack of enough funds to fiancé cases in court

• Corruption in society

• Ignorance of consumers about their rights

• Reluctant of consumers to join the organization 5 x 2 = 10mks

b) There are plans to extend the SGR to Kisumu. Explain 5 advantages that may be accrued

from this

• Faster movement of people

• Faster movement of cargo and raw materials

• Removal of the many trucks which damage the roads

• Reduced accidents on the Kenyan roads

• Reduced traffic jams / delay

• More comfortable movement by the people

• Opening the area for more development

• More safety for cargo people due to enhanced security

• High volume of cargo and more passengers can be moved

• Reduced pollution by reducing the number of trucks buses on the road


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5. a) Unemployment is a major problem facing the youth in Kenya. Explain 5 ways that can be

used to solve this problem 10mks

• Use appropriate technology

• Reduce the population growth rate

• Introduce appropriate education

• Encourage labour intensive method of production

• Develop the rural areas to reduce rural urban migration

• Diversity the economy introduce variety of economic activities

• Encourage employment in the private sector

• Encourage foreign investment

• Maximum use of local resources

5 x 2 = 10mks

b) Explain 5 reasons that can lead to an insurance contract being terminated 10mks

- Expiry of the contract period

- Compensation of the insured

- If the policy is surrendered by the policy holder

- Lack of good faith by either the insurer or insured

- Failure to pay premiums by the policy holder

- Transfer of property insured to another party who is not part of the contract.

6. a) Explain 5 reasons why mail order business are not very popular in Kenya today 10mks

- Theft of goods by post office workers

- Limited kind of goods can be sold

- Makes the goods more expensive

- Goods, mail parcel in Kenya may not be transported / delivered due to the buyer

promises

- There is high cost of advertisement

- It is not possible to inspect the goods before delivery

- There is no personal contact between the buyer and the sector

- No credit facility is offer

b) You have been provided with the following information from Karimi Wholesalers.

Record the information in a three column cash book and balance it off

Feb 1st Started trading with cash 180,000 Bank 81,000(cr)

Feb 2nd Bought goods by cash 42,000/=

Feb 3rd Received cheques of he following amounts: Kamau, 4750, Ndayi 7600, Justus

11400. They had been allowed to 5% discount.

Feb 4th paid the following accounts by cash. Michael 6,200, Sakaja 7,800, Tom 3,000

having deducted 10% cash discount.

Feb 5th Paid the following expenses by cash Water 2,000, postage, 3000/= rent

5,000/=

Feb 7th Deposited cash into bank 22,000/=

Feb 8th took cash for personal use 1,800/=

Feb 9th Received a cheque of 11,600/= from Kiplimo in full settlement of a debt of

12,000/=


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Feb 10th Deposited all the cash into bank leaving a balance of 1,000/=

CASH BOOK

DATE DETAILS DISCOUNT

ALL

CASH BANK DATE DETAILS DISCOUNT CASH BANK

Feb 1

Feb 3

Feb 7

Feb 8

Feb 10

Bal b/d

Kamau

Ndayi

Justus

Cash ( c)

Kiplimo

Cash ( c)

250

400

600

400

180,000

4,750

7,600

11,400

22,000

11,600

87,600

Feb 1

Feb 2nd

Feb 4

Feb 4

Feb 4

Feb 5

Bal B/d

Purchases

Michael

Sakaya

Tom

Water

Postage

Rent

Bank ( c)

Drawings

Bank ( c)

Bal c/d

620

780

3000

42,000

5,880

7020

2700

2000

3000

5000

22000

1800

89600

1000

81,000

62,950

Bal b/d

1,650 180,000

1,000

144,950

63,950

1,700 180,000 144,950


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MAY 2019

PRETRIALS

BUSINESS STUDIES PAPER 1

MARKING SCHEME

1. State four elements of the demographic environment that may influence the operations of a

business 4mks

a) Size of the population

b) Geographical distribution of the population

c) Composition of population by sex and age

d) Population growth rate / birth rate/ attrition rate / immigration rate

e) Income distribution

f) Levels of education and training

2. Outline four circumstances under which goods may be transported by use of containers

a) If goods are fragile therefore require protection from damage

b) Where goods are highly valuable and therefore need protection from theft

c) Where goods are regular in shape, hence can easily be packed

d) Where there is need to utilize space more efficiently in the unit of carriage

e) Where specialized machines for loading and offloading are available

f) If there is need to save on labour

g) Where there is need to save on insurance and transport costs

h) Where special goods are to be transported e.g. perishables and flammable goods

3. The following information was extracted from the books of Salome Traders: Capital

Kshs.1,119,300, long term liabilities kshs.1,807,000; and current liabilities Kshs.978,700

Required:

a) Determine Salome Traders Rate of Return on Capital Employed if the business made a net

profit of Kshs.438,945 3mks

CE = C + CTL = 1,119,300 + 1M807,00

= 2,926,300

Therefore; RRCE = NP X 100 = 438,945 X 1000 CE 2,926,300

= 15%

b) State the importance of the rate of return on capital employed 1mk

- It enables the business to determine the rate at which net profit is generated in relation to

the total investments put into the business


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4. Highlight four indicators of economic growth that may be observed as a country progresses

a) Increase in national income

b) Improved infrastructure

c) Improved social amenities eg better health care and housing

d) Increased life expectancy

e) Improvement in levels of education and training

f) Low unemployment levels

g) Increased industrialization

5. Chemi Chemi Ltd is a new cement manufacturer. Outline four factors that may encourage this

company to be established in Athi River town where other cement manufacturers are located

despite the obvious competition. 4mks

a) Availability of raw materials in the area

b) Availability of labour, both skilled and unskilled

c) Government policy encouraging localization

d) Reliable/ advanced infrastructural facilities e.g. roads and power supply

e) If Chemi Chemi is dependent on other firms for raw materials, or vise-versa

f) Nearness to a large market in Nairobi and its environs

6. Outline four ways through which a partnership may be formed. 4mks

a) A simple written agreement between parties

b) An oral agreement between parties

c) Actions by parties implying agreement to conduct business together (estoppels)

d) A signed legal agreement (partnership deed)

e) Use of the partnership act where there is no known agreement.

7. Give four reasons why it may be difficult for the Kenyan government to actualize the vision

2030 4mks

- Overambitious development plans - that are not in tandem with economic realities

- Inadequate skilled manpower to carry out research a draw up good plans

- Insufficient capital for research and implementation of development plans

- Over reliance on donor funding that may not be forth coming, hence stalled projects

- Inadequate / inaccurate data on the economic situation, therefore poorly done plans

- Borrowed development plans that may not match local economic situations

- Poor political support / good will

- Occurrence of natural calamities such as floods cause diversion of funds meant for projects

- Corruption and embezzlement of funds leading to incomplete or poorly done projects

- Non-involvement of local communities in project implementation, therefore resistance

-

8. State the principles of insurance described in the statements given below 4mks

a) Restoration the insured’s financial position after suffering loss from the insured risk.

INDEMNITY

b) Existence of a very close relationship between the loss suffered and the insured risk

PROXIMATE CAUSE


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c) The insurer taking ownership of the remains of the destroyed property after the insured is

duly compensated.

SUBROGATION

d) Proof that the insured will suffer direct financial loss if property is destroyed.

INSURABLE INTEREST

9. Highlight four items that would be included in the measurement of national income using the

income

a) Salaries and wages earned by workers / personal earnings by households

b) Interest received for use of capital / borrowed capital

c) Profits made by firms

d) Dividends received by shareholders

e) Rent received for use of land and buildings

f) Stock and capital goods appreciated

g) Net income from abroad

10. The table below shows general price changes over a period of five years

Year Price (kshs) CPI

2010 90.00

2011 100.80 100.8 X 100 = 112 90

2012 103.50 103.5 X 100 = 115 90

2013 105.30 105.3 X 100 = 117 90

2014 108.00 108 X 100 = 120 90

11. Factors that have hindered the expansion of E-commerce as a method of carrying out business

activities

- High initial cost of acquiring ICT equipment

- Need for training / hiring staff to handle the technology may be expensive

- Negative attitude towards change / new technology by staff

- Complementary materials could be expensive to acquire

- Expensive spare parts / technical services in-case of breakdown

- Increased fraud / cyber crime

- The ICT infrastructure is not available in some areas

12. Four levels of economic integration

- Preferential trade area

- Free trade area

- Customs Union

- Common market

- Economic union


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13. Zawadi Traders Rental Income account each 12 x 1/3 = 4mks

Rental income

Dr Cr

12/1/15

31/12/15

Tenant

Bal c/d

20,000

150,000

170,000

1/1/15

10/6/15

Bal b/d

Tenants

50,000

120,000

170,000

14. Means of payment that may be provided by commercial banks to their customers

- Cheques

- Standing orders

- Credit transfers

- Credit cards

- Bank drafts / Bankers cheques

- Direct cash deposit / deposit slips

- M-banking

- Electronic funds transfer

15. The equation below relates to quantity demanded and quantity supplied at the equilibrium

point

Qde = 4p + 50

Q5e = 8p + 30

Determine the equilibrium price and quantity 4mks

4p + 50 = 8p + 30

20 = 4p

P = 5 (equilibrium price)

Equilibrium quantity = (5 x 4) + 50

= 20 + 50 = 70

16. Outline four ways in which the Balance of Payments of a country may be improved 4mks

a) Restriction of imports

b) Diversification of exports

c) Exports promotion

d) Devaluation of currency

e) Value addition of exports

f) Incentives to attract foreign direct investments

g) Total ban on some commodities

h) Negotiation for better terms of trade


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17. Identify the source documents into which the information given in the table below would be

recorded. 4mks

Information Source Documents

a) Payment received from debtors

Outgoing receipts / issued receipts/ duplicate

receipts

b) Purchase made on credit

Incoming invoice / purchases invoice/

received invoice / bills]

c) Validating payments made by the

cashier

Payment voucher / cash payment voucher

d) Requesting for additional payments

from a debtor

Debit note

18. Highlight four factors that should be considered by a firm when deciding on the method to use

for promoting its products 4mks

a) The target audience e.g. Youth or the aged

b) The cost of the method should be affordable

c) If the message is urgent a quick means such as radio is appropriate

d) Level of demand of the product

e) Availability of the promotional medium

f) Competitors promotional strategies

g) Government policy / legal requirements

h) Durability / life span of the method

i) Geographical coverage

19. Outline four features of money that enables it to facilitate the exchange of goods and services

4mks

- General acceptability as a medium of exchange

- Cognoscibility / authenticity of the medium

- Portability / ease of carrying

- Portability / ease of carrying

- Divisibility into smaller denominations without losing value

- Made of homogenous / uniform material

- Stability in value

- Durability / long lasting

- Scarcity / not readily available

- Not easy to forge


too high. Outline four possible reasons why the premiums are too high 4mks

a) Mamati could be advanced in age, therefore attracting high premiums on his life cover

b) Mamati could be living in an area prone to crime, conflicts or natural calamities

c) Mamati could have taken a policy of high value sum assured

d) Mamati could have taken an endowment policy for a short period of time

e) Mamati could be engaged in a high risk occupation such security services


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f) Mamati could have been in poor health condition when taking the policy cover

21. Highlight four characteristics of a monopolistic competitive market 4mks

a) A large number of sellers and buyers who act independently

b) There is no barrier to entry and exit from the market / industry

c) Sellers offer products that are similar but differentiated

d) O single firm has control over the market or factors of production

e) Firms set their own prices depending on its cost of production

f) Aggressive marketing / promotional costs are incurred by the firms.

22. The aggressive campaign for citizens to plan their families seems to be causing a decline in the

country’s population growth. Outline four possible effects of this 4mks

a) Shrinking market for goods and services

b) Reduced labour supply to firms

c) Reduced innovation and inventions/ creativity

d) Reduced pressure on land and invention / creativity

e) Reduced pressure on land and social amenities

f) Reduced dependency burden

g) Reduced social evils such as crime

23. State four functions of commercial attaché’s. 4mks

a) Educating and advising exporters on trade regulations and practices of other countries

b) exploring new markets for their country’s products abroad (expanding and diversifying

foreign markets)

c) Organizing trade fares and exhibitions of local goods in foreign markets

d) Keeping statistics on trade volumes with the foreign country

e) Providing information about available market opportunities in foreign countries to local

producers

f) Picking sales agents abroad for local producers

g) Representing the government in foreign conferences on trade

24. Outline four benefits that may be realized when firms amalgamate 4mks

a) Increased capital base / capitalization

b) Increased market share

c) Increased influence / control of the market / prices

d) Increased pool of skilled manpower / expertise

e) Increased volume of output

f) Reduced competition in the market

g) Reduced cost of production due to economies of scale


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25. The following information relates to Liston traders for the period ended 31st March 2014

Opening stock shs.40,000

Sales shs.100,000

Closing stock 25% on cost of sales

Mark-up 25%

Prepare Liston Traders’ trading account 4mks

Solution

Sales = 100.00

Closing stock = 0.25 x 100,000 = 25,000

Opening stock = 40,000

Profit margin = 1 = 1

4 + 1 5

GP = 1

Sales 5

Therefore; GP = 1/5 X 100,00 = 20,00

C.G.S = Sales – GP = 1000 – 20,000 = 80,000

C.G.S = OS + P – CS

P = 80,000 + 25,000 – 40,000 = 65,0000

Therefore

Liston traders

Trading account

For the period ended 31st March 2014

Shs. Shs.

Opening stock

Add: Purchases

Less: closing stock

C.G.S

Gross profit

Left side correct

40,000

65,000

105,000

25,000

80,000

20,000

100,00

Sales

Gross profit c/d

100.00

100,000

20,000

(right side correct)


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©FORM FOUR TERM II EXAM 565/1

FOURM FOUR TERM II JULY/AUGUST EXAMINATION

BUSINESS STUDIES PAPER 1 MARKING SCHEME

565/1

1. State four reasons why development planning is necessary for an country. (4marks)

i. To guide /enable capital formation. ii. To evaluate/appraise projects.

iii. To reduce unemployment. iv. To ensure balance in the development of the economy. v. To initiate long term projects.

vi. To obtain (additional) funding. vii. To ensure optimum utilization of resources.

viii. To motivate citizens. (1 mark x any 4 = 4 marks)

2. State four characteristics of money that enables it to perform its functions. (4marks)

i. (Money )is portable ii. (Money )is durable

iii. (Money) is generally acceptable. iv. (Money) is divisible (in various denominations) v. (Money) is cognizable/recognizable

vi. (Money) is malleable vii. Is stable in value.

viii. Is scarce (in supply. ix. Is difficult to forge.

(1 mark x any 4 = 4 marks)

3. State four circumstance under which a country’s terms of trade would be favourable.

(4marks)

i. When there is increase in the demand of a country’s exports. ii. If there is decrease in the supply of exports(in the world market)

iii. Where there is fall in demand for imports. iv. If there is high supply of imported goods. v. If there is increase in the quality of a country’s exports.

vi. Where a country export manufactured/processed products. vii. Where a country imports primary products.


4. State four reasons why there is continued use of letters as a means of communication despite

advancement in communication technology. (4marks)

i. Letters serve as evidence of communication. ii. Some letters are (relatively) cheap.

iii. It’s suitable for confidential communication. iv. Can accommodate detailed /complex information. v. Its not prone to distortion of message.

vi. Can be used for future reference. vii. Can be addressed to many people.



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5. The following information was obtained from the books of account of Wangila traders on 30th

June 2018. Premises Ksh. 200,000 Furniture Ksh. 40,000 Capital Ksh. 677,400 Three year Co –operative loan Ksh. 24,000 Cash Ksh. 28,400 Motor vehicle Ksh.400,000 Creditors Ksh 30,000 Debtors Ksh. 23,000 Stock Ksh.40,000 Prepare Wangila Traders balance sheet as at 30th June 2018 in the order of liquidity (5marks)

Wangila Traders

Balance sheet As at 30th June 2018

CURRENT ASSETS KSH CURRENT LIABILITES KSH Cash 28,400√ Creditors 30,000√ Debtors 23,000√ Stock 40,000√ FIXED ASSETS LONG TERM LIABILITES Premises 200,000√ 3 yrs co-operative loan 24,000√ Motor vehicles 400,000√ Capital 677,400√ Furniture 40,000√ 731,400 731,400

Totals balanced √

10 x ½ = 5 (No mark if items are not in the required order)

6. Give four reasons why a good business structure is likely to lead to business success.(4marks) i. Each employee knows what is expected of him or her.

ii. There will be harmony among the workers iii. Team work is enhanced. iv. Proper control which enhance efficiency. v. There will be proper organization of activities.

vi. It will be easy to identify the workers /skills required. vii. Enables proper co-ordination of activities.

viii. It allows for proper evaluation of work. ix. Allows faster flow of information.



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7. Outline four demerits of government involvement in business activities. (4marks)

i. Political appointees in managerial positon kept even if performing poorly. ii. May continuously make loses/draining tax payers money.

iii. Most government enterprises are expensive to start/operate which require heavy capital investment.

iv. Corruption/embezzlement of founds are common. v. Its unnecessary destruction from the functions of governance.

vi. Poor management. vii. May scare away investors/ unfair competition to private investors.

viii. Makes it expensive to do business. (1 mark x any 4 = 4 marks)

8. Give four reasons why road shows have become a popular method of product promotion.

(5marks)

i. Reaches many potential buyers. ii. Attractive to buyers.

iii. Entertaining. iv. Use of gifts/free samples v. Enhances business image.

vi. Educate buyers on use of products. (1 mark x any 4 = 4 marks)

9. The diagram below shows the equilibrium point of demand and supply of fish in a certain

market.

State the implication of equilibrium point in that market. (4marks)

i. All commodity brought to the market are sold. ii. Both the buyers and the sellers are satisfied with the prevailing price.

iii. There is no surplus/excess supply. iv. There is no shortage/excess demand. v. Any increase in price creates surplus.

vi. Prices below equilibrium will lead to shortages in the market. (1 mark x any 4 = 4 marks)


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10. Give any four characteristics that will qualify a commodity to be termed as an economic

resource. (4marks)

i. It must have monetary value. ii. It must be scarce.

iii. It must have alternative uses. iv. It must have ability to satisfy a human want. v. They must be unevenly distributed.

vi. Must be able to change ownership. vii. Must be able to be combined (in various quantities) to produce goods and services.


11. Give 3 differences between perfect monopoly and monopolistic competition. (3marks)

i. In perfect monopoly, there is a single frim (who dictates the market) while in monopolistic corruption, there are many firms (no single frim can influence the market.)

ii. Under monopoly, the product have no close substitute while under monopolistic competition products are close substitutes (through differentiated.)

iii. Under monopoly there is barrier to entry into the market while under monopolistic competition there is entry into the market.

iv. Monopoly- single frim have control over factors of production while monopolistic competition, no single firm have control over a factor of production. (1 mark x any 4 = 4 marks) N/B: Accept table format.

12. State four groups of people who may be interested in the financial position of a public

committed company. (4marks)

i. Investors ii. Shareholders.

iii. Managers

iv. Employees

v. Customers

vi. Creditors/Suppliers. vii. The government


13. Give four business factors an entrepreneur is likely to take into consideration while

evaluating a business idea. (4marks)

i. Market availability. ii. Availability of raw materials.

iii. Availability of required technology. iv. Availability of relevant skills/labour v. Government policy.

vi. Level of competition. vii. Infrastructure.

viii. Security. ix. Profitability. x. Capital required.



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14. State four activities that takes place in a bonded ware house. (4marks)

i. Goods are inspected. ii. Storage of goods.

iii. Certificate of origin is verified. iv. Custom duties is determined or satiffied. v. Release warrants (are checked before goods are releases.)

vi. Goods are received. (1 mark x any 4 = 4 marks)

15. The following balances were extracted from Nzoia traders books of accounts for the year ended 31st Dec. 2017 Sales Ksh. 640,000 General expenses Ksh. 52,000 Salaries Ksh. 56,000 Cost of sales Ksh. 480,000 a) Prepare Trading profit and loss account for Nzoia Traders. (4marks)

Nzoia Traders Trading Profit and Loss A/c

for the year ended 31st Dec 2017 Dr Cr

Shs sh Cost of sales 480,000√ Sales 640,000√ Gross profit c/d 160,000√

640,000√ 640,000 EXPENSES Gross profit b/d 160,000√ General expenses 52,000√ Salaries 56,000√ Net profit 52,000√ 1,60,000 160,000

½ mark x 8 ticks= 4 marks 16. Members of Tumaini Men Empowerment Group wish to start a public limited company.

Outline four likely sources of capital for their company. (4marks)

i. Shares ii. Debentures

iii. Loans (from financial institutions) iv. Ploughed back profit. v. Leasing/hiring.

vi. Obtaining goods on credit. vii. Sale of assets.

viii. Sale and lease back. ix. Invoice discounting. x. Bank overdraft.



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17. State any four reasons why the national government of Kenya fights inflation.(4marks)

i. To restore people’s confidence in the local currency. ii. To ensure fair distribution of income in economy.

iii. To encourage savings/capital accumulation. iv. To correct balance of payment deficits. v. To curb civil unrest (due to high prices)

vi. To enhance stable economic growth. vii. To guard against unemployment (caused by low saving and low investments.)


18. Outline problems that the Ministry of Economic Development and planning is likely to

encounter while measuring national income using output approach. (4marks)

i. Difficulty on deciding which goods to produced. ii. Difficulty with subsistence production(surplus)

iii. Illegal activities to be included or not. iv. Difficulty to value goods kept in stock. v. Fluctuation of prices of some resources.

vi. Failure to distinguish between intermediate and final products/double counting. (1 mark x any 4 = 4 marks)

19. Give four reasons why specialization and division of labour may be undesirable.(4marks)

i. Leads to monotony of work/boredom. ii. Hinders creativity.

iii. May lead to unemployment (due to dependency on one trade) iv. Encourages use of machines which may cause unemployment. v. May make a country dependent on other countries

vi. May lead to social problems (by bringing people together.) vii. Workers have no pride in the final products.

viii. If few people stop working due to technical fault, the whole process of production stops.


20. Give any four emerging trends in office management. (4marks)

i. Increase computerization/use of machines/automation. ii. Change from enclosed to open/landscape office plan.

iii. Introduction of customer care service/desk. iv. Merging of duties/employing multitasked workers. v. Employee’s identification badges.

vi. Out sourcing of services. vii. New ways of motivating staff.



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21. For each of the following transactions, indicate the book of original entry. (4marks) Transaction Book of original entry

a) Returned goods bought on credit. Purchases returns journal b) Sold goods on credit Sales journal c) Purchased machinery on credit Journal proper/Genera journal/journal d) Purchased goods on credit Purchases journal


22. State four challenges experienced by use of air transport in developing countries.

(4marks)

i. Causes air pollution. ii. Air fields/terminals are not available in all places.

iii. Cannot be conveniently used to carry heavy/ bulky goods. iv. It’s expensive to acquire/maintain aircraft. v. Require highly trained man power/expensive to train man power.

vi. It’s expensive to hire. vii. It’s expensive to construct/maintain air fields.

viii. In case of accidents the results are catastrophic. (1 mark x any 4 = 4 marks)

23. Identify four consequences that a firm may suffer as a result of large scale operations.

(4marks)

i. Large losses may arise due to changes in consumer taste. ii. Large firms are difficult/expensive to manage (which may result into losses.)

iii. Losses may arise due to firm operating below capacity. iv. Difficult to acquire adequate funds for expansion (may cause big loses.) v. Problems with waste management

vi. Facilities may be overstretched due to increase in demand. vii. Difficult to get necessary labour.

viii. High operating expenses. ix. Poor relations between management and workers.


24. Give four circumstances under which a trader may issue a proforma invoice to potential buyer. (4marks)

i. When the buyer is new to the seller. ii. When credit worthiness of potential customers is in doubt.

iii. If the trader needs immediate cash. iv. If goods dealt in are (very) expensive. v. If he/she does not want to give goods in credit.

vi. If the importer may need it for custom clearance (1 mark x any 4 = 4 marks)


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25. Identify four policies available under marine Insurance. (4marks)

i. (Marine) hull policy ii. (Marine) cargo policy

iii. Port policy iv. Voyage policy. v. Floating policy

vi. Time policy vii. Mixed policy

viii. Fleet policy ix. Composite policy



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©FROM IV SECOND TERM EXAM 565/2

FORM FOUR END TERM II JULY/AUGUST EXAMINATION BUSINESS STUDIES PAPER 2 MARKING SCHEME 565/2

1. a) Explain five limitations of barter trade that led to the evolution of money. (10marks) (i) Requires double coincidence of wants i.e. there must be somebody who has exactly what you want and he wants what you have/where is difficult to come by. (ii)(Barter trade) lacks a standard measure of value. It is difficult to determine how much of a commodity to be exchanged for another. (iii)Indivisibility of some commodities. Some commodities could not be divided into smaller units without losing value e.g. a goat cannot be divided without killing it. (iv)Perishability of commodities. Some commodities cannot be stored for a long period (to be used in future exchanges) without them going bad. (v)Inconvenience in transporting some good/bulky/heavy. Some commodities are difficult/expensive to carry (from one place to another looking for a trading partner) (vi)Lack of standard measure for deferred payment. When payment was to be made in future, use of goods and services for the payment was difficult because by the time the person is paid, either the value of the commodity or his needs would have changed/due to change in value of goods. (vii)Lack of unit of account. It is difficult to calculate/keep records of values of different commodities.

(Any 5 x 2 = 10 marks) b) Explain five types of goods and services that may be produced in an economy. (10marks)

i. Free goods are those goods that are available in abundance/as gifts of nature/have no price attached.

ii. Economic goods are those that are scarce in supply/have money value/and human efforts is required to obtain them.

iii. Producer goods are those produced to be used in producing others. iv. Consumer goods are goods that are ready for use by final consumer/can be used to

satisfy human wants directly. v. Perishable goods are goods that go bad (very) easily unless stored using special

facilities. vi. Durable goods are those that will continue giving service for a long time without

spoilage. vii. Public goods are those that belong to no one in particular/but are owned by the

government/all of people collectively. viii. Private goods are those owned by individuals/groups of individuals in their private

capacities. ix. Intermediate goods are those that need to go through further processing before use x. finished goods are final products that come out of production in the required form

ready for use. 2. a) Explain four ways in which retailers are important to wholesalers. (8marks)

i. (Retailer) relieves wholesalers transportation costs by transporting goods from wholesale to their retail shops (for customers to buy).

ii. Relieves wholesalers from marketing risks such as price fluctuation/by buying goods from wholesale and selling to customers/bad debts.

iii. Relieves wholesalers from warehousing risks such as theft/dead stock/ by storing goods they have bought from wholesalers.

iv. Give wholesalers (important market) feedback (on product)which they use to improve their business/from customers(market)

v. Relieves wholesalers from advertising expenses by advertising products bought from wholesalers.

vi. Finances the wholesalers by paying for goods bought.


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vii. Links wholesalers to consumers who may be scattered over a wide area. viii. Can prepare goods for sale on behalf of wholesalers through branding/sorting.

ix. Can break bulk on behalf of wholesalers/by dividing goods into smaller/convenient quantities/size.

x. Offer after sale services on behalf of wholesalers/relieving the wholesaler of the cost of after sale service.

(4 x 2= 8 marks) b) The following transactions took place in the business of Bumula Limited in the month of July 2018: July 1 - Started the business with capital in cash of sh. 150,000. July 2- Opened a bank account and deposited sh. 30,000 from cash till. July 3 –Bought buildings by cash sh. 60,000 July 4- Borrowed a loan from a bank in cash sh. 20,000 July 5 – Bought stationery by cheque sh. 6,000 July 6 - Repaid part of the bank loan by cheque sh. 10,000 Required: i) Record these transactions in ledger accounts and balance them off.

Dr Capital account Cr Date Details F Amount Date Details F Amount 6/7/10 Bal c/d√ 150,000√ 1/7/10 Cash √ 150,000√

Dr Cash Account Cr Date Details F Amount Date Details F Amount 1/7/10 4/7/10

Capital√ Loan√

150,000√ 20,000√ 170,000√

2/7/10 3/7/10 6/7/10

Bank √ Buildings√ Bal c/d√

30,000√ 60,000√ 80,000√ 170,000√

Dr Bank Account Cr

Date Details F Amount Date Details F Amount 2/7/10

Cash √

30,000√ 30,000

5/7/10 6/7/10 6/7/10

Stationery√ Loan √ Bal c/d√

6,000√ 10,000√ 14,000√ 30,000


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Dr Building Account Cr Date Details F Amount Date Details F Amount 3/7/10

Cash√ 60,000√

6/7/10 Bal c/d√ 60,000

Dr Loan Account Cr

Dr Stationery Account Cr Date Details F Amount Date Details F Amount 5/7/10

Bank

6,000√

6/7/10 Bal c/d√ 6,000√

36 x ¼ = 9 marks

ii) Extract a trial balance on 6th July 2018

BUMULA TRADERS Trial Balance

As at 6th July 2018 √ ITEM DR (SHS CR(SHS) Capital 150,000√ Cash 80,000√ Bank 14,000√ Building 60,000 Loan 10,000√ Stationery 6,000√ 160,000 160,000

6 x ½ = 3 marks

3. a) Explain five benefits that a country gets by belonging to a trading bloc. (10marks) i) A wider market for a country’s products created/where it can sell its products/due to

many countries. ii) Encourages specialization / Each country can concentrate on production of goods

and services that it can produce cheaply/efficiently/which it has comparative advantage.

iii) High quality products due to specialization/competition among member countries. iv) Promotes peace among people (of the involved countries)as they interact/co-operate

with each other. v) Bigger bargaining power when dealing with non-member countries/hence better

terms of trade.

Date Details F Amount Date Details F Amount 5/7/10 6/7/10

Bank√ Bal c/d√

10,000√ 10,000√ 20,000

4/7/10

Cash√

20,000√ 20,000


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vi) Co-ordinate development of industries by assigning industries to each other/to create balanced development/avoid unnecessary duplication.

vii) Employment creation due to free mobility within a wider area/more jobs available in other countries.

viii) Easy access to better technology from other countries/that leads to production of more/better quality goods/efficient operations.

ix) Access to skilled labour/experts from other countries/that enable efficiency in production.

x) Firms (in any member country) enjoy economies of scale since there will be maximum utilization of existing resources /due to increased market.

xi) Faster trading operations because of reduced procedure of importing/exporting goods.

xii) Improvement in infrastructure/Member countries will co-operate in improving the roads in the area hence reducing the cost of doing business.

xiii) Access to cheap products due to competition. (any 5 x 2= 10)

b) Outline five circumstances under which an insurance contract may be terminated. (10marks) i) When the policy expires since it becomes invalid after expiry. ii) Failure by insured to pay premiums (as agreed) since it will mean failure to renew

the contract. iii) When the risk insured against has occurred and insured has fully been

compensated. iv) When the insurer discovers that the insured does not have insurable interest in the

property/since he does not stand to suffer financial loss. v) When the insured voluntarily decides to terminate the contract as he no longer wishes

to be party to the contract. vi) When it is discovered that the insured did not give honest information while

taking the policy therefore going against the principle utmost good faith. vii) Change of law that makes the subject of insurance illegal.

Dissolution of the insurance company which lapse the contract. (Any 5 x 2= 10 marks

4. a) Explain five circumstances under which a trader may offer after sales services to his customers.

i. When goods are of technical nature so as to guide the customer on how to use them. ii. When there is need for demonstrations on how to use the goods.

iii. Where expertise is required on installation and the trader has the technical ability/knowledge required.

iv. Where a product is new in the market and getting local experts may be difficult. v. Where competition is stiff and the trader uses after sales service as a product

promotional tool/need to be close to consumers. vi. Where (specialized) transport is required and the trader can afford to provide.

vii. Where expertise is required in maintaining/servicing and the trader is able to provide.

viii. Where it is the policy of the trader. He uses it as an option of providing customer relations.

ix. If there is need to improve business image/retain market/ so as to create customer royalty to the frim.

x. Where this is the government policy the trader has no option/that must be followed by the trader.


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b) The following details were extracted from the books of Baba Yao Traders on 31 st Dec. 2018 Kshs. Closing stock 274,000 Capital 259,000 Gross profit 380,000 Drawings 83,000 Creditors 93,000 Premises 103,000 Debtors 123,000 Cash at bank 33,000 1 year bank loan 50,000 General Expenses 54,000 Commission received 20,000 Wages and salaries 132,000 Required i) Prepare Baba Yao Traders profit and loss account for the year ended 31st Dec,

2018 (3marks) Baba Yao Traders

Profit and Loss Account For the year ended 31st Dec 2010√

Sh Expenses Wages and salaries 132,000√ General Expenses 54,000√ Net profit c/d 214,000√ 400,000

Sh Gross profit 380,000√ Commission received 20,000√ 400,000

½ mark x 6 ticks = 3 marks

ii) Prepare Baba Yao Traders’ balance sheet as at 31st Dec. 2018. (7marks)

Baba Yao Traders Balance Sheet

As at 31st Dec 2010√ ½ mark x 14 ticks = 7 marks

½ x14 = 7 marks

sh sh Fixed Asset Premises 103,000√ Current Assets Stock 274,000√ Debtors 123,000√ Cash at bank 33,000√ 430,000 533,000 √

sh sh Capital 259,000√ Add net profit 214,000√ 473,000 Less drawings 83,000 390,000 Current liabilities Creditors 93,000√ Bank loan (1 yr 50,000√ 533,000√


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5. a) For a perfect competition market to exist, there are several assumptions that are made. Explain any five of these assumptions. (10marks)

i. A larger number of sellers. Sellers are so many that one/ a few sellers action has no effect on the market/no single seller can influence price.

ii. A large number of buyers. Buyers are so many that a separate action of each of them has no effect on the market.

iii. Homogeneity (uniformity)of the product. Commodities from different producers are identical in all aspect/such that one cannot differentiate them.

iv. Perfect knowledge of the market. Each buyer /seller knows everything about the market/no one can trade at any trade at any price other that the equilibrium price.

v. Freedom of entry exit. The buyers /sellers have freedom to enter/leave the market at will/therefore no restrictions to entry/exit.

vi. Uniformity of buyers/sellers. All buyers are identical in the eyes of the sellers/there is no advantage of selling to a particular buyer/ there is also no advantage of buying from a particular seller.

vii. No government influence. The price prevailing in the market is strictly determined by the forces of demand and supply/such as fixation/regulations/ subsidies

viii. No excess supply/demand. Sellers are able to sell all they supply in the market/ Buyers are able to buy all they require without (deficit in the supply.

ix. Perfect mobility of factors of production from one job to another/from one geographical area of production to another.

x. No transport costs. It is assumed that all firms are located at one central place/no firm incurs (extra) transport costs.

Any 5 x 2= 10 marks b) Explain five clauses of a Memorandum of Association of a public limited company.

(10marks) i. Name clause – states the name of the proposed company ending with the word

“Limited” ii. The object clause- This clause sets out the activities that the company should engage

in. iii. Situation clause-(Give the location of the official office of the company/head quarter iv. Liability clause- A statement that the liabilities of the members are limited(to shares) v. Capital clause- this clause discloses the amount of capital which the business can

raise/division of capital into(units)of equal value called) shares/that the authorized share capital.

vi. Declaration clause- A clause containing a declaration signed by promoters stating that they wish to form a company/undertake to buy shares in the proposed frim.

(5 x 2 = 10 marks)


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6. a) Describe five channels that can be used to distribute agricultural goods.(10marks)

Foreign Producers/farmer

.(i) (ii (iii) (iv) (v) (vi) (vii)

Foreign Co-operative Local Foreign Foreign Wholesalers Co-operative Marketing Board Local Retailers foreign marketing Local

Local wholesalers Local Retailers Board wholesalers Local wholesalers Local Retailers Local Retailers Local wholesalers Local retailers 2 marks for a complete channel (5 x 2= 10 marks)

b) Explain five ways in which filing of documents facilitates smooth running of an office. (10marks)

i. Easy retrieval of documents since documents are kept systematically. ii. Records kept safety for future reference/since it makes documents to stay

longer. iii. Ensure the office space is used economically hence the staff can get ample

working space/reduce cost of office space. iv. Ensures safety/documents from theft v. Ensures the office is kept neat as it gives order in arrangement of documents.

vi. Cross-reference is made possible hence it is an aid to memory. vii. Ensure security of documents from damages/loss

viii. Ensure that documents are not accessed by unauthorized person. ix. Ensures office tidiness by proper filing of papers.

(5 x 2= 10 marks)

Local Consumers


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FORM 4 DIOCESAN MOCK 2019

BUSINESS STUDIES PAPER 1 MARKING SCHEME

1. State four complains that may be received from consumers by consumer associations.

(4mks)

(i) Poor quality of goods and services/damaged.

(ii) Incorrect weight and measures.

(iii) Unfair pricing.

(iv) Contra – band items/prohibited goods.

(v) Misleading advertisement.

(vi) Break of contract

2. Identify the ledgers in which the following accounts are maintained. (5mks)

ACCOUNT LEDGER

(i) Pendo (Debtors) Sales ledger

(ii) Machinery General ledger

(iii) Rent General ledger

(iv) capital Private ledger

(v) juma (Creditor) Purchases ledger

3. Outline four benefits that accrue to a customer who uses Automated Teller Machine.

(A.T.M). (4mks)

(i) Saves time.

(ii) Withdrawing any time.

(iii) Can pay utility bills.

(iv) Withdrawals can be done for one on behalf.

(v) It is highly portable.

(vi) Safer to use.

4. State four circumstances under which air transport may be used to ferry goods.

(4mks)

(i) Where urgency is important.

(ii) Where goods are perishable.

(iii) Where goods are of high value/expensive goods.

(iv) Where safety is crucial.

(v) When goods are to be transported over long distances.

(vi) When the goods are fragile and need minimal handling.

5. The following information is related to Kerubo Traders for the year ended 31st

December, 2006.

Other expenses 10% on Grows profit.

Prepare, profit and loss account for the year ended 31st December, 2006. (5mks)


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Kerubo traders

Trading ,profit and loss Account


Add purchases 370,000 - 394000


Cost of goods sold 354,000

Gross profit c/d 88,500

442,500

Expenses

Carriage on sales 12,000

Other expenses 8,850


88,500

Sales 442,500

442,500

Gross profit b/d 88,500

88,500

6. The following are some of the documents used in home trade. Cash sale receipt,

Catalogue, invoice and statement of account. Match each document with the appropriate

description provided in the table below. (4mks)

Description

Document

(a) Shows details of goods offered for sale.

Catalogue

(b) Give quantity, unit price and total amount to be

paid

Invoice

(c) Show the transactions since the date of last

statement. Statement of account

(d) Shows description of goods bought, prices and total

amount paid. Cash sales slip

7. List three levels of inflation. (3mks)

(i) Moderate inflation

(ii) Galloping inflation

(iii) Hyper-inflation

8. The following figures relates to Jumbo Traders for the year ended 31.12.13

Details Kshs.

Capital (31.12.13) 940,000

Net loss 20,000

Additional investment 420,000

Monthly drawings 5,000

Determine the capital as at 1.01.13. (4mks)


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FC = IC + AL – Net loss – Drawing

940,000 = 1C+420,000 – 20,000 – 12(5000)

940,000 = 1C+420,000 – 80,000

1C = 940,000 – 340,000

Initial Capital = Kshs. 600,000

9. Kenya many youths. Outline four positive implications of them to the economy.

(4mks)

(i) Less expenditure on social security and pension

(ii) Wider market for goods meant for the youth like clothing.

(iii) Guaranteed continuous supply of labour.

(iv) Availability of diverse talents.

(v) Energetic and highly productive team.

(vi) Flexibility and adaptability to technological changes which improve

productions.

(vii) Faster growth of some sectors like the music, fashion and fast food industries.

10. Mr. Nyasimba operates a matatu business. State four factors in the internal environment

that may influence the business. (4mks)

(i) Marketing strategy/handling of customers.

(ii) Business culture.

(iii) Research and development.

(iv) Condition of the vehicle.

(v) Technology e.g. car track, cashless payment.

(vi) Business resources.

11. The capital of business does not remain static. Outline four circumstances under which

the capital of a business may change. (4mks)

(i) When the business makes profit.

(ii) When the business makes losses.

(iii) When the owner draws cash/goods for personal use/drawings.

(iv) When the owner makes additional investment into the business/additional

capital.

12. State four disadvantages of using internet as a means of communication. (4mks)

(i) Information may not reach all the targeted groups.

(ii) There is lack of confidentiality.

(iii) It is relatively expensive.

(iv) The information provided is not reliable.

(v) Message can easily be misinterpreted.

13. State four ways in which production activities may negatively impact on community

health. (4mks)

(i) Congestion – congestion is created as more people come to look for work.


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(ii) Social evils e.g. immorality.

(iii) Solid waste pollution which may cause many diseases.

(iv) Environmental degradation which may lead to health problems.

(v) Air pollution which causes airborne diseases.

(vi) There will be global warming.

14. Highlight four ways in which the running of public corporations may be improved.

(4mks)

(i) Ensuring that appointment for senior and technical posts are done on merit.

(ii) Continuous training of staff for development.

(iii) Exercising the supervisory role of the government.

(iv) Setting performance target to be achieved.

(v) Reduce policy interference.

(vi) Creating public awareness

15. The following diagram represents circular flow of income in a two sector closed

economy.

Identify two factors represented by the arrows labeled a and b. in each case

(4mks)

(a) (i) payment for factor inputs

(ii) Goods and services

(b) (i) payment for goods and services.

(ii) Factor input/services/factor of production.

16. Highlight four roles played by the broker in the chain of distribution. (4mks)

(i) Links the buyer and the seller.

(ii) Providing an avenue for the seller to access many buyers.

(iii) Bargaining for the principal.

(iv) Passing information between the principal and the client.

(v) Giving advices to buyers and sellers on market trends.

17. Fill in the missing figures in the table below.

FA CA C L

(a) 275,5000 155,000 315,000 115,500

(b) 182,000 73,600 217,100

(c) 138,600 76,400 123,100 91,900

(d) 313,450 211,340 189,170 335,620

18. State three benefits that a farmer may derive from being a member of producer co-

operative society. (3mks)

(i) May receive inputs (e.g. fertilizer) at fair prices.

(ii) May receive input on credit from the society.

(iii) May get better storage facility, for the produce.

(iv) May get transport facilities for produce to the market.

(v) The society may get better prices for the members produce.


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19. Outline four features of indirect production. (4mks)

(i) Goods are produced in large quantities.

(ii) Promotes interdependence.

(iii) There is specialization in production.

(iv) High quality goods are produced.

(v) Modern technology is extensively used/capital intensive.

(vi) Goods are produced for sale.

20. Outline four challenges that may be encountered when measuring income using the

output approach. (4mks)

(i) Inadequate output data.

(ii) How to value output in the subsistence sector is a challenge.

(iii) Deciding on the price to use for the goods that have been kept as stock.

(iv) Some activities earning income are considered illegal and not included in the

measurement of national income.

(v) Deciding on what goods and services to include in measuring national

income.

21. Outline four tools of monetary policy that a government may use to reduce excess money

in circulation. (4mks)

(i) Omo – to sell government securities through the central bank.

(ii) Bank rate – raising interest rates on loans to banks.

(iii) Cash/liquidity can be raised for commercial banks.

(iv) Directives – can be given to commercial banks to reduce money supply.

(v) Raising margin requirements – raise the value of assets required as security

for loans.

(vi) Selective credit control – freeze lending to some sectors of the economy

22. State four ways in which a good filing system may facilitate the operations in an office.

(4mks)

(i) Office is kept tidy.

(ii) Facilitates quicker decision making.

(iii) Security of document is ensured.

(iv) Information is preserved for future reference.

(v) Easy retrieval of information.

(vi) Ensures confidentiality of information by controlling access by unauthorized

people.

23. Zawadi operates a hardware business in her home town. Outline four methods she use to

determine prices for her goods other than the forces of demand and supply. (4mks)

(i) Bargaining/Haggling.

(ii) Abiding by the government policy.

(iii) Tendering – offers are invited to quote for a price. Goods are sold to buyers

with the quotation that best meets Zawadi,s expectations.


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(iv) Bidders make offers for goods and the bidder with the highest offer takes the

goods (sale by auction)

24. State four features of a perfectly competitive market. (4mks)

(i) Large number of buyers and sellers.

(ii) No government interference in the market.

(iii) Uniformity of buyers and sellers.

(iv) No shortage nor excess in supply or demand

(v) Free entry and exit of firms.

(vi) No transport costs are incurred.

(vii) The buyers and sellers have perfect knowledge of the market conditions.

25. Outline four conditions under which a warehouse may be considered to be operating

efficiently. (4mks)

(i) It should be convenient located

(ii) Proper record keeping/inventory.

(iii) Good communication network.

(iv) Should have suitable building and equipment.

(v) Security system should be in place.

(vi) It should be managed by qualified personnel.

(vii) Good transport system.

(viii) Operational procedures and guidance should be in place.


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Page 1 of 7 Business Paper 2 Marking Scheme

JULY/AUGUST BUSINESS PAPER 2 MARKING SCHEME 2019

1. (a) Explain five benefits that may be realized by a county as a result of government

policy to relocate industries to rural areas. (10mks)

i. Reduce income disparities/inequalities/uneven distribution of income.

ii. Increased job opportunities/there will be more jobs which will reduce

unemployment in all regions of the country.

iii. Availability of auxiliary services – citizens would enjoy more and better

auxiliary services like transport which will lead to development in rural

areas.

iv. Increased utilization of resources/factors of production hence the citizens

would earn rewards associated with them/that would otherwise be idle.

v. Reduced congestion in towns thus relieving pressure or strain on urban

resources.

vi. Improved social amenities in rural areas thus improving welfare.

vii. Minimizes pollution in one industrial area/town thus relieving the area of

external/severe impact.

(b) Outline five characteristics of an efficient tax system. (10mks)

i. Equity – the tax should be fair/just/easy to administer. Cost of collection

should be relatively lower than tax levied equitable.

ii. Economical: It should be cheap/cost effective the cost collection should be

relatively low.

iii. Flexibility – It should be adaptable to all circumstances/conditions/subject to

revision.

iv. Simplicity – It should be easily understood/administered.

v. Elasticity – Proceeds from taxation should be capable of

expanding/contracting in line with changes in population.

vi. Should have maximum benefit to the tax payer through provision of

quality/sufficient goods/services.

vii. Difficult to evade – should not create loophole for people to escape/dorge to

pay.

2. (a) Explain five benefits which may accrue to Kenya by being a member of the African

Development Bank (ADB) (10mks)

i. Kenya will get technical advice on planning and implementation of

development plans.

ii. Kenya may borrow loans from ADB if it is in financial crisis to meet its

demand.

iii. Kenya may be assisted to exploit natural resources appropriately hence no

resources will be left idle.


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iv. ADB will cooperate with various economic institutions in the country in

order to bring about development.

v. Encourages cooperation among countries. ADB enhances growth in a

country.

(b) The following trial balance relates to Chui Traders as at 31st December 2014.

Chui Traders

Trial Balance


Details Dr (Ksh) Cr (Ksh)

Stock 10,000

Bank 3,500

Purchases 15,000

Sales 28,000

Returns 800

1,100

Rent 580

Insurance 950

Creditors 450

Carriage in 1,200

Discounts 300 1,620

31,750 31,750

Chui Traders

Trading, profit and loss account For the year ended 31st Dec. 2014

Opening stock 10,000 Sales 28,000

Add purchases 15,000 Less R inward 800

Less return outwards 1,100 Net sales 27,200

Add carriage in 1,200

Cost of goods A for sale 25,100

Less closing stock 2500

Cost of sales 22,600

Gross profit c/d 4,600

27,200 27,200

Expenses Gross profit b/d 4,600

Insurance 950 Discount received 1,620

Discount allowed 300 Rent received 580


6800 6800


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3. (a) Discuss five causes of unfavourable balance of payment for most developing

countries. (10mks)

i. Reliance on primary products/raw materials for export which fetch low

prices in the international market.

ii. Too much reliance on foreign borrowing yet such loans are repaid with

interest.

iii. Heavy/high importation of finished goods whose values are very high/spend

more on them.

iv. High demand/performance towards foreign goods/imports most consumers

in developing countries have a belief that they are of better quality hence end

up spending more on them.

v. Decrease in demand for export hence lowering the countries earning.

vi. Low bargaining power – the developing countries have very little say in

international trade forum/cannot influence the world economic order in their

favour hence end up earning less on exports.

vii. Natural calamities – many developing countries are easily affected by natural

disasters e.g. drought which adversely affect their production.

(b) The following balances were extracted from the books of Rehema Traders on 1st

January 2007.

Kshs.

Capital 600,000

Creditors 180,000

Motor van 200,000

Furniture 200,000

Stock 60,000

Debtors 80,000

Cash 240,000

The following transactions took place during the year ended 31st December 2007.

I. Sold furniture worth ksh. 60,000 for which ksh. 40,000 cash was received and

the balance.

II. Purchased goods worth ksh. 100,000 for which cash of ksh. 70,000 was paid

and the balance was still outstanding at the end of the year.

III. Cash ksh. 10,000 was taken from the business by the proprietor to settle the

spouse’s hospital bill.

Required;

Draw Rehema Trader’s balance sheet at 31st December 2007 showing the items in

their relevant classes.

Rehema Traders

Balance sheet


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Fixed assets

Motor van 200,000

Furniture 140,000 340,000 Capital 600,000

Current

Assets

Less

drawings

10,000

Stock 160,000 Net capital 590,000

Debtors 160,000 Short

liabilities

Cash 200,000 460,000 Creditors 210,000

800,000 800,000

(10mks)

4. (a) Discuss five factors that may be considered when choosing a method for promoting a

product. (10mks)

i. Cost: the organization should choose promotion method that is

affordable/cheaper.

ii. Size of the market: the firm should choose a method that can effectively serve

the number of consumers available.

iii. Nature of the product: technical products may require

demonstration/personal selling; firms should choose a method that is

appropriate for the type of the product.

iv. Target groups: the organization should choose a method that appeals to the

relevant target groups.

v. Speed of the medium or method in relation to urgency of the message.

vi. Intended impression/impact: a firm may choose a method that can best

achieve the desired impression.

vii. Frequency/duration of the message; if the message requires repetition/losts

tony; a firm should choose a medium that is appropriate.

(b) Describe five features of economic resources. (10mks)

i. Scarce – they are found in small quantities compared to the many uses into

which they have to be put hence not sufficient to satisfy all human wants.

ii. Monetary value; they have a price/reward attached to them which have to

be paid for their use or transfer.

iii. Unevenly distributed; they are not distributed uniformly in the society hence

some people/regions/countries have more resources than others.

iv. They have utility; they are used to satisfy human wants/to produce goods

and services.

v. They can be transferred from one person to another in terms of

ownership/possession.


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vi. Combinability; they can be used in different proportions to produce

goods/services.

vii. They have alternative uses; they can be used for different purposes.

5. (a) Explain five demerits that may be associated with water transport. (10mks)

i. Relatively slow hence perishable/urgently needed goods may not be

transferred this way.

ii. Limited availability; only applicable where water is available.

iii. Water ways can be affected by adverse weather conditions such as

drought/freezing/storms/flooding.

iv. High cost of the unit of carriage/vessels which may make them unaffordable

to be acquired and maintained.

v. May be prone to piracy in the high seas/remote areas/which may lead to

losses leading to increased insurable costs.

vi. Cost of maintaining/construction of ports/canals may be relatively high

making it unaffordable for some countries.

vii. Waterways may not be navigable due to rough terrain/waterfalls/cataracts

etc.

(b) Explain five ways in which the government of Kenya may reduce the level of

unemployment.

i. Diversification of the economy by encouraging the establishment of

different industries/sectors to create employment opportunities.

ii. Transforming education/training sector to improve on skills, this enables

the graduates to acquire relevant skills.

iii. Encouraging the informal/jua kali sector in order to promote self

employment.

iv. Effective use of natural resources to increase production activities.

v. Population policy to control growth/have a labour force that the economy

can absorb.

vi. Delocalization policy for balanced regional development to reduce rural –

urban migration.

vii. Exporting labour by assisting unemployed people to acquire jobs abroad in

countries that are labour deficiency.

6. (a) Outline five differences between a public limited Company and a partnership form of

business. (10mks)

Public limited company Partnership

Minimum number of seven members

and no maximum number of members

Minimum number of two members and

maximum of 20 members and 50 for

professional partnership.

Has limited liability Has no limited liability

Shares are freely transferable Any change in membership or transfer

of shares requires consent of all


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members.

Management is by elected board of

management

Management is by partners

Has perpetual life Has limited life

Is a separate legal entity Is not a separate legal entity

(b) With the help of diagrams distinguish between movement along and shift in a supply

curve. (10mks)

Movement along the supply curve is determined by change in price of acomodity

From the graph, it is seen quantity supplied at P1 is Q1. If the price increases to P2 the

quantity also increases to Q2. While if the price decreases to P3, the quantity supplied also

decrease to Q3.

The price/quantity combination moves along the supply curve from a to c.

Apart from the price of the commodity, a change in any other factor that influences supply

of the commodity will lead to new supply curves as shown on the diagram.

c


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An increase in supply results to a shift of supply curve from S1S1 to S2S2

A decrease in supply results into a shift in supply curve from S1S1 to S3S3.


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MARKING SCHEME

• 1. Outline four reasons why food is considered basic want.

• a) Enables us to stay alive

• b) Gives us energy to function normally

• c) Helps us to stay healthy

• d) it is important for growth

• e) it is a source of warmth

2. Reasons that can lead to the dissolution of a cooperative society. (4mks)

• Due to a court order

• Order from commissioner of co-operatives

• Voluntary dissolution by members

• Withdrawal of members from the society leaving less than ten members

• If the society is declared bankrupt

3.

W - 390,000

X – 80,000

Y – 800,000

iv) Business B is insolvent

4. i) Office practice

ii) commerce

iii) economics

iv) entrepreneurship


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5. Factors that has led to a shift of demand curve to the right. (4mks)

- increase in the price of substitute good

- increase in population

- increase in disposable income of the consumer

- Favourable terms of sale

- expectation of an increase in the price of the product in the near future

- favourable government policies

- changes in tastes, fashions and preference in favour of due commodity

- decrease in price of complimentary product

- equal distribution of income

6. Ways in which advertising can be beneficial to the consumer. (4mks)

• They educate them on the usage of the product

• They inform them on the products availability

• They guide them on where to get the product

• The outlines all the features about the product including prices to the customer

• Competitive advertisement may lead to improved quality of goods to benefit the customer

• Information on different prices through competitive advertisement makes the customer to

benefit from the reduced prices

7. Agency banking becoming increasingly popular among commercial banks in Kenya. Highlight

four benefits of this development to bank account holders. (4mks)

- one can withdraw money from their account any day of the week even when banks are closed

- can deposit money into their account any where

- Will avoid the long queues which are common in the banking halls

- they can pay their utility bills any time

- can check their bank account balances

8. Circumstances under which air transport is preferred to water transport

- where the goods are urgently required

- when the goods being transported are perishable

- when the goods involved are not heavy and bulky


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- If the cost of transportation is not a factor to determine the means

- If the goods being transported are of a very high value

9. Outline four problems encountered in measuring national income using output approach.

- valuation problem due to non-availability or inaccurate data.

- problem of deciding the goods and services to include

- challenges of valuation of output in subsistence sector

- problem of differentiating primary inputs from intermediated inputs

- fluctuation of prices

10. Ways that can help to improve the performance of the entire work force. (4mks)

• Providing training/refresher courses

• Providing for their welfare

• Allowing them time for recreation/with family/leave/off duty

• Promotion/transfer on merit

• Providing the necessary support equipment/resources

11. On 1st 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.

Solution

Final capital – initial capital + additional capital + net profit – drawings

Final capital = 140,000 + 20,000 + 35,000 – 12,000

= Kshs183,000

12. Fiscal policies that can be used to control inflation

- Increasing tax imposed on individuals and firms income

- Reducing government spending

- Reducing tax on production

- Subsiding production

- Producing commodities that are in short supply


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- Regulating prices for essential goods and services

- Rationing the amount of goods that one can purchase at a given time

13. Advantages of landscaping office layout

- it promotes teamwork among the employers

- it makes sharing of office equipment possible and therefore reducing the costs of buying more

- supervision of workers is easy since the manager may be at a raised ground

- maintenance cost is low

- there is easy location of workers

- it discourages absenteeism of employees

- it is easy to decorate

- decoration found in the office creates an attractive and conducive environment to work in

- it enhances the image of the firm

14. Factors that has led to a shift of demand curve to the right (4mks)

- increase in the price of substitute good

- increase in population

- increase in disposable income of the consumer

- Favorable terms of sale

- expectation of an increase in the price of the product in the near future

- Favourable government policies

-changes in tastes, fashions and preference in favour of the commodity

- decrease in price of complimentary product

- equal distribution of income

15. State functions of proforma invoice

- polite way of asking for payment before the goods are delivered

- send when the seller does not want to give credit

- sued by importers to get customs clearance before goods are delivered

- issued to an agent who sells on behalf of the seller

- when the buyer has returned some goods for various reasons and those goods had been previously

invoiced


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16. Type of Journal

- sales journal

Cash payment journal / cash book

- purchases journal

- cash receipt journal

- sales return journal

17. Outline four importance of pooling risks to an insurance company

- creates a common pool of funds from regular premiums from different clients

- enables the insurance company to compensate those who suffer loss form insured risks

- insurance company is able to spread risks over a large number of insured people

- surplus funds can be invested in

- it can meet its operating costs by using the pooled funds

- enables the insurance company to calculate premiums to be paid by each client

- enables the insurance company to re-insure itself with another insurance company

18. Mention four benefits of establishing several firms in an industry

- leads to proper use of by-products

- leads to interdependence in terms of technology

- proper co-ordination of waste disposal

- stimulates economic growth


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19. In an oligopoly market structure, all firms face a Kinked demand curve. Draw a kinked demand

curve and briefly outline the concept of price rigidity (4mks)

Price

a

P1

Po

b (Kink)

P2

c

Q1

Qo Q2 Quantity

All firms in the market face a rigid price P0 and a Kinked demand curve abc. Any firm selling at a price

higher will lose a big number of customers while that trying to charge a price lower than the rigid price will

not benefit significantly in terms of increase in sales because other firms will also lower theirs.

20. Differences between reproductive debt and dead-weight debt in public finance

- Reproductive debt is a public / national borrowing that the government uses to finance projects that

generate revenue and in the long run may help in servicing of other debts while

- Dead-weight is a borrowing that a government uses to finance projects that do not generate revenue /

recurrent expenditure e.g paying servants


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21. Challenges that a young population poses to a country

- high dependency ratio

- Low labour supply as many have not attained working age

- educe saving s and investments due to high rate of consumption

- diversion of government expenditure to cater for the young welfare

- increased social evils / crimes

-,high rate of unemployment

22. Development goals that the Kenya government aims to achieve in 2010.

- eliminate illiteracy

- improve health standards

- eliminate reduce poverty by increasing per capita income

- reduce imbalance in regional development

- provide basic human wants e.g food shelter

- reduce unemployment levels

- improve the social amenities and the access to these services

- diversity economic activities to reduce over reliance on few production activities

- providing opportunities for self-advancement e.g education

- enhance environment conservation

- provide an enabling environment for business activities to take place

23. The following is a list of ledger accounts. Name the ledger book in which they are maintained

(4mks)

Account Ledger book

• Drawings Private ledger

• Kamiritu (Customer) Sales/Debtors ledger

• Sales Nominal ledger

• Machinery General ledger


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24. Outline the difference between the following terms as used in International Trade (3mks)

• Terms of trade

This is the rate at which a country’s exports exchanges against her imports. It is the value of

a country’s exports relative to that of her imports.

• Balance of trade

This is the difference between the value of visible exports and the value of visible imports

over a given period of time usually one year.

• Balance of payment

This is the difference between the receipts from all exports in a country and the payments

to all her imports.

15. State functions of proforma invoice.

a) Polite way of asking for payment before the goods are delivered.

b) Send when the seller does not want to give credit.

c) Used by importers to get customs clearance before goods are delivered.

d) Issued to an agent who sells goods on behalf of the seller.

e) When the buyer has returned some goods for various reasons and those goods had


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25. The following balance sheet belongs to Dowling enterprises.

Dowling Enterprises

Balance sheet

As at 31/12/2015

Fixed assets

Land

450,000

Vehicles

250,000

Fittings

7500 707,500

Current assets

Stock

20,000

Debtors

12,500

Bank

8,000

Cash

5,000 45,100

753,000

Capital

Capital

543,000

Long term liabilities

loan from KIE

100,000

loan from ICDC

75,000 175,000

Current liabilities

Creditors

25,000

Salaries owing

10,000 35,000

753,000


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Required: Calculate;

a) Capital owned= kshs 543,000

b) Borrowed capital =kshs 100,000+35,000=kshs 135,000

c) Working capital =C.A –C.L

=45,500-36,000

=Kshs 10,500

d) capital employed= C.O+L.T.L

=543,000+175,000=Kshs 718,000


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565/2

BUSINESS STUDIES

KASSU-JET EXAMINATIONS

JUNE EXAMINATIONS

PAPER TWO

MARKING SCHEME


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2

1. a) State and explain any five factors to consider when choosing an appropriate

means of communication. (10 marks)

• Affordability of the means-the most reasonably priced means should be chosen

• Confidentiality-if the information is confidential choose the most confidential

means. Registered mail is the most preferred

• Availability-choose the means that is easily accessible

• Effectiveness-the means chosen should have a desired effect

• Reliability –the means should provide assurance that the message will reach the

recipient at the right time, right place and in the right form.

• Evidence-means should provide record of message conveyed.

• Accuracy-choose the most exact means e.g written means

• speed- where speed is necessary choose telephone ,telex as they are fast.

b) Five negative effects of inflation in the economy. (10 marks)

• Discourages savings as people tend to hold the money they have due to increase

in prices.

• Increased interest rates to compensate lenders for the fall in value of money.

• Creditors lose since they lend when value is high are receive from debtors when

the value is low.

• Conflict between employers and employees due to high cost of living

• Worsening balance of payment as exports become more expensive leading to fall

in demand

• Loss of confidence on local currency which may necessitate change of currency

• May fuel unemployment due to closure of firms

• Adverse effects on investment due to increased cost of operation

• Reduced profits due to reduced sales volumes


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2 .a) Illustrate using a diagram a circular flow of income and give four assumptions.

(10 marks)

Assumptions

• There are only two sectors household and firms

• Firms use all their incomes to acquire factors of production

• No government intervention

• The economy is closed

• Households uses all their incomes on goods and services

b) Challenges faced by a county government in service provision. (10 marks)

• Poor planning and implementation of policies due to lack of expert and good will

among participants

• Inadequate capital resources involving finances and human resources

• Poor technology which hinders effective transfer of needed services.

• Limited skilled and high level man power because most appointees are politically

influenced.

• Corruption and embezzlement of funds are rampant in government offices

because poor control

• Most projects are expensive enterprises which require heavy investments in terms

of personnel and training

• Political misunderstanding between central government and county government

household

firms

Factors of

productio

n

Payment for

factors Goods and

services

Expenditure on

goods and

services


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3 a) Five problems associated with Barter system of exchanging goods.

• Lacks Double coincidence of wants-there must exist somebody who has exactly

what you want and wants what you have which is difficult in reality

• Lacks standard measure of value-hence difficulty in determining how much of a

commodity can be exchanged for another.

• Indivisibility of some goods-as some commodities cannot be divided into smaller

units without loss of value

• Perishability of commodities-some commodities cannot be stored for a long

period to be used in future for exchange purpose without them going bad unless

stored under special conditions.

• Lack of standard deferred payment-since the value of goods can change with

time hence payment in future may be difficult

• Lacks unit of account hence record keeping is difficult.

• Hinders specialization as one tends to produce everything due to lack of double

coincidence of wants.

b) Ndovu Traders

Three-column cash book

Dr Cr

Date Details Dis.All

wd

Cash Bank Date Details Dis.

Rcvd

Cash Bank

2018

June 1

2

5

9

12

24

30

Balance

b/d

Sales

Abdalla

Tenai

Sales

Bank (c1 )

Cash (c2 )

4,500

1,800

6,300

25,000

42,000

45,000

46,500

26,000

184,500

56,200

70,500

135,500

262,200

2018

June 7

18

24

30

30

Salaries

Thuita

Cash ( c1 )

Bank ( c2 )

Balance c/d

5,000

5,000

24,000

135,500

25,000

184,500

95,000

26,000

141200

262200


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(10 marks)

4. a) Five ways in which the activities in a bonded warehouse are beneficial to

the government (10marks)

• They enables the government to collect revenue inform of import taxes

• It enable the government to control the imports

• It enables the government to check on harmful and illegal goods that can

injure people

• It enables the government to collect statistics on imports that it can use for

budgeting.

• It enables the government to check the quality and standard of goods

imported into the country

b) Five methods that a county may put in place to prevent free movement of goods

and services from other countries.

• Tariffs which increases the price of commodities they are levied on hence

reducing their demand

• Quotas which restricts the quantity and value of a commodity to be imported

• Administrative bottlenecks which involves the introduction of complicated

procedures to be followed in order to import

• Foreign exchange control where its acquisition is made difficult hence paralyzing

trade.

• Moral persuasion where the government appeals to importers to willfully restrict

the importation of commodities

5 a) Five measures that the Kenyan government may undertake to solve

unemployment.

• Encourage population control measure e.g. Allow use of contraceptives/family

planning to reduce population growth.

• Delocalization of industries to create jobs in the rural areas to reduce rural—

urban migration.


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• Introducing appropriate forms o education –This enables the students to acquire

relevant and practical skills to the economic activities and the existing job

opportunities.

• Developing the informal sector i.e. the jua kali by lowering their taxes or

increasing subsidies to create self-employment.

b) Explain five principles that serve as a guide to a public expenditure system in a

country (10marks)

• Sanctions; Every public expenditure must be approved by the relevant

authority like parliament.

• Maximum social benefit; Any public expenditure must be incurred in such a

way that majority of the citizens are able to reap maximum benefit from it

e.g. improved living standards and quality of life.

• Flexibility /elasticity-The policy on public expenditure should be flexible

enough to meet prevailing economic situations i.e. it should be possible to

increase or decrease the expenditure on projects depending on the prevailing

circumstances e.g. during drought, it should be possible to spend on famine

relief.

• Economy-public expenditure should be planned carefully and prudently to

avoid any possible waste.

• Proper financial management (Accountability)-public funds should be well

managed. This should be facilitated by maintenance of proper records which

should be audited as required.

• Productivity-The biggest proportion of public expenditure should be spent on

development projects and less on non-development projects.

• Equity-Government expenditure should be distributed equitably to all sectors

of the economy in order to reduce income and wealth inequalities.

• Surplus-Surplus revenue collected should be saved for emergencies or for

when collection of revenue is below projections.


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6 a) Big Sam intend to start a hardware business. Explain five characteristics he

should possess in order to be a successful entrepreneur (10marks)

• Desire to achieve-An entrepreneur is a person who wishes to excel and

has the drive to succeed while competing with others. He/she always tries

to accomplish something new.

• Ability to solve problems-An entrepreneur is expected to struggle with

determination to get solutions even under difficult situation so that the

business can succeed.

• Risk taker-Entrepreneurs take viable business ventures even when they

are not sure of the returns. They assess situations and take calculated

risks.

• Initiative –An entrepreneur should be aggressive in implementing ideas

well ahead of other businesses so that he/she can be ahead of them.

• Time consciousness-An entrepreneur should be able to use time wisely and

avoid wasting it. A wise and quickly implemented decision may mean

success in business whereas time lost may mean failure.

• Creativity and innovation-An entrepreneur should be able to generate new

ideas as well as think of the best ways of putting them into practice.

• Independence and self-confidence-Entrepreneurs are their own bosses

and should believe in their ability to do things and succeed.

• Persistence and patience-An entrepreneur should not give up when

challenges arise. Sometimes, he/she takes time and make a repeated action

or adopts a different course of action in order to overcome such challenges

so as to reach the target

• Decisive-Entrepreneurs have strong problem, solving and decision making

skills. The business environment is such that decision has to be made

quickly to respond to any situation that may arise.

• Persuasive-Convincing people to believe in their ideas and buy their

products keeps entrepreneurs in business


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• Goal-oriented-Entrepreneurs are achievers who work towards set goals.

They continually monitor progress to determine whether they are achieving

the goals they have set and where improvements need to be made.

• Seek information-Entrepreneurs use various methods to get the relevant

information that is necessary for the success of the business.

• Concern for high quality products-An entrepreneur should strive to cope

or beat the existing standards of quality. This will enable him/her succeed

in a competitive market.

• Commitment to work-An entrepreneur places priority on getting tasks

accomplished. To achieve this he/she may make extra ordinary personal

sacrifice e.g. working until very late.

• Concern for customer satisfaction-An entrepreneur should ensure that

customers are satisfied so as to continue being/remain loyal to the

business.

• Desire to feedback-An entrepreneur should be interested in knowing how

the business is performing.

b)

Harun Enterprises

Trading, profit and loss account

for the period ended 31st Dec 2012


Add purchases 930,000

Add carriage inwards 10,000

1,370,000

Less return outwards 20,000

1,350,000


880,000

Gross profit c.d 245,000

1,125,000


Insurance 25,000


Net profit c.d 95,000

245,000

Sales 1,155,000

Less return inwards 30,000

1,125,000

1,125,000

Gross profit b.d 245,000

245,000


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i) ROSTO=C.OS/A.S

=880000/450000

=2times

ii) Mark up=G.P/C.O.S*100

=245000/880000*100

=27.8%

iii) Margin=GP/NS*100

=245000/1125000*100

=21.78%


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Page 1 of 5

565/2 BUSINESS STUDIES PAPER 2

MARKING SCHEME - 2019

1. a) Factors influencing choice of office layout

- Number of office staff where there is large number of office staff the organization

will prefer open layout which will accommodate many

- Quality of office equipment where the office has limited equipment it will prefer

open layout for easy sharing

- Availability of funds. Where the office has problems of funds will prefer open

layout which has less cost of partitioning

- Duties performed in an office. If the duties need confidentiality then closed office

layout will be preferred for privacy

- Type of workers. If workers are those who require close supervision then adopt

open layout for easy monitoring

b) Advantages of belonging to a trading bloc.

- Widens market for goods by eliminating barriers which prevent movement of goods

from one country to another

- Faster trading operations because of reduced procedures of importing and exporting

goods

- Improvement in infrastructure, member countries will cooperate in improving the

roads in the area hence reducing the cost of operations when conducting trade

- promotes regional specialisations. Every country will specialize in producing goods

in which it has comparative advantage resulting to efficiency in member country

- establishing regional bank which will provide loans to firms in member states for

expansion.

2.a)

Public co-oporation Private limited company

- owned by the state / government Owned by share holders

- formed under the act of parliament - formed under companies act

- financed by the government (initial capital) - contribution from share holders financing

- profits’ enjoyed by the government - profits enjoyed by share holders

- losses suffered by the government - losses suffered by share holders

- managed by directors appointed by the

president

- managed by directors appointed by

shareholders

- main objective to offer essential services - main objective to maximize profits

b) Circumstance for termination of insurance policy

- When the policy expires since it becomes invalid after expiry

- Failure to pay premiums as agreed because it will be a breach of contract


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- When the risk insured has occurred and the property has fully been compensated as

it will be a new property

- When the insurance company discovered that the insurer does not have insurance

interest

- When the insured voluntarily decides to terminate the contract or surrender value in

the endowment and whole life policy

- When it is discovered that the insured did not give accurate information

while taking the policy since he will have violated insurance policy

3. a) Contribution of transport system in economic development in a country

- Creates employment, giving them a source of income

- Encourages large scale production by transporting surplus goods to areas of

deficiency

- It promotes industrialization by ensuring constant supply or raw materials to the

firm and finished product from the firm

- Promotes specialization by allowing people to concentrate in producing what they

can produce cheaply and exchange through transport

- It minimizes wastage by ensuring that perishable goods are taken to the market

when they are still in fresh state

- Source of government revenue through levies on fuel, driving license fees

- Enabling the government to get fund to finance development projects.

B) Benefits of retailers to wholesaler - Relieves wholesalers’ transportation costs by transporting goods from wholesale to

their retail shops for customers to buy

- Relieves wholesalers from marketing risks of price fluctuation by buying the goods

from wholesale and selling to customers.

- Relieves wholesalers from warehousing risks of theft, dead stock by storing goods

they have bought from wholesalers

- Gives wholesalers important market feed back on product which they use to

improve their business

- Relieves wholesalers from advertising expenses by advertising products bought

from wholesalers

4. (a) i) Availability of resources :– resources availability in a firm will enable a

firm to produce more Commodity for which it can access inputs easily and cheaply.

ii) Consumer tastes: - The firm has to produce what the customers prefer.

iii) Level of competition:- Firms will prefer to produce where there is less

competition for inputs and market for products.

iv) Availability of technology: - Firms will choose to produce products that

they have the skills and know how to produce.

v) Gov’t policy:- firms will consider to produce products that are within the

law to avoid production to illegal grounds.


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vi) Consumers cultural beliefs and practices which influence their pattern of

demands and consumption behaviour.

vii) Availability of raw materials and other inputs – i.e some raw materials are

seasonal while others are not easily available. Naming 1 mk.

Otherwise 2 mks. (2 x 5 = 10mks)

(b) i) In adequate capital:- funds to sustain / run / expand due to lack of

unilateral / insecure loans.

ii) Inadequate skills / poor management to manage to operate the business

properly.

iii) Unfriendly / poor gov’t policies such as high taxation which is

unfavorable for growth.

iv) Poor infrastructure / poor roads may hinder in access the market / inputs.

v) Poor pricing which might make the product to be too expensive to

attract buyers / to help to sustain the business.

vi) Inappropriate technology which may rest in loss quantity / poor quality

products.

vii) Inadequate market due to become of buyers/ customers / due to cultural

practices / beliefs customers.

viii) Unfair competition where it may be two high for the new entrepreneur /

the new entrepreneur.

ix)Inadequate manpower to operate / run the business affectively.

(5 x 2 = 10 mks)

5. (a) Services offered by commercial banks to business people.

i) Accepts deposits thereby mobilizing domestic savings and enabling

efficency and convenience in transacts by accepting deposits in the main

accounts i.e current accounts savings and fixed deposits account.

ii) Lends money to individuals, private business, governments in forms of

loans and overdrafts

iii) Safe keeping of valuables such as title deeds, share certificates, Jewellery

and wills for safety.

iv) Provides money transfer facilities commercial banks provide convenient

methods of transferring money through facilities such as standing orders,

credit transfer, cheques e.t.c

v) Provision of foreign exchange services - Most commercial banks operate a

foreign exchange department where customers foreign requirements are

catered for

vi) Giving advice on investment and management of funds to their clients on

available investment opportunities and the best ways of managing their

funds

vii) Provide trustee services – Commercial banks may undertake to manage

the property left behind by a deceased client on behalf of its inheritors

viii) Acts a guarantor or referee who would want to get goods on credit or

secure loans

(5 x 2 = 10mks)

Mention 1mk otherwise 2mks


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(b) David Traders

Three column cash book

As at 31st Dec 2018

Date Details L.F D.A Cash Bank Date Details LF DR Cash Bank

1st /12

8/12

9/12

31/12

Capital

Caleb

Salau

Sales

Cash

c

1000

400

1400

100000

100000

200000

19000

7600

80000

306600

2/12

3/12

6/12

10/12

11/12

31/12

31/12

Furniture

Purchases

Rose

Wages

Electricity

Bank

Balance

c

c/d

2500

2500

20000

80000

100000

50000

40000

22500

10000

184100

306600

(20 x

½ = 10mks)

6. (a) - Period to be covered by the plan. Is it long term or short term plan

- Goals to be achieved by the plan which included long term and short term goals

- Resources available (both material and human resources) and how they are to be

allocated

- Whether the plan covers both public and private sectors or is it a partial plan covering

one sector of the economy e.g. agriculture

- Sources of revenue to implement the plans

- The intended ways of spending government revenue in implementing the plans

- Ways and means of implementing the plans

(4 x 2 =

10mks)

Mention 1mk otherwise 2mks

(b)

JAMESWHOLE SALES

Trading profit and loss account

For the year ended 30th June,2019

shs shs


+ Purchases 350,000

- Returns towards 2,000 33,000

C.G.A.S 73,000

- Closing stock 15,000

C.G.S 58,000

G profit bal c/d 10,500

68,500

shs shs

Sales 70,000 ______

- Sales returns 1,500 68,500

68,500

G.P bal b/d 10,500


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Expenses


Insurance 2,000

Transport 1,400

Electricity 2,400


Advertising 2,000 14,900

N. profit c/d 6,600

21,500


Rent received 3,000 21,500

______

21,500

Net profit bal b/d 6,600

(20 x ½ = 10mks)


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565/1 BUSINESS STUDIES PAPER 1

MARKING SCHEME 2019

1. - Unlimited wants/wants are many/ numerous - The resources required are limited. - The finances/funds/money required is limited/not enough. - Human wants keeps on changing with time/circumstances. - Wants vary with urgency/intensity. (4 x 1 = 4mks) 2. Characteristics of free resources

- Gifts of nature e.g. sunshine, air, rain - Provided/consumed freely. - Plenty in supply - Have no money value.

Any 4 x 1 = 4mks 3. - Employments qualified staff. - Eliminating political influence in parastatals. - Restricting the parastatal to make it viable/competitive. - Motivating employees. - Strengthening supervision/monitoring of staff. - Application of modern technology (4 x 1 = 4mks) 4. - The spending habits of individuals. - The size of an individual’s money income. - The price levels. - The effects of inflation/deflation. - The intervals between pay days. (Any 4 points x 1 = 4mks) 5. - Licensing. - Formulation of fiscal and monetary policies. - Quotas. - Guidelines and directives. - Enacting laws e.g. weights and measures Act. - Price control. - Total ban. (Any 4 points x 1 = 4mks) 6. (i)Receipt

(ii)Invoice/outgoing/issued (iii)Invoice/Incoming/received (iv)Credit note 1x4=4mks


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7.

Capital A/C Shs.

Bank 100,000

(8 x ½ = 4mks) 8. - Promoting production of high quality goods - Maintain standards specified for each product - Ensuring that their members give correct/ accurate/ fair description of their goods - Maintaining/ insisting on their fair prices for their products - Maintaining/ using proper packaging for their products in order to avoid easy contamination - Dealing with customer complains so as to create consumer confidence (4 x 1 = 4mks) 9. Four sources of monopoly power. (4mks) (i) Control of an important input in production (ii) Ownership of production rights (iii) Internal economies of scale (iv) Size of the market (v) Additional cost by other firms (vi) Where a group of firms combine to act as one. (v) Restrictive practices (vi) Financial factors 10. (a) Enables an insurance company to create a common pool of funds (b) Enables insurance company to compensate those who suffer loss when risk occurs (c) Enables insurance company to spread risks over a large number of insured people (d) The surplus funds can be invested e.g giving out loans or buying shares in real estates (e) Enable company to meet operating cost by using the pooled funds (f) Enables insurance company to calculate premiums to be paid by each client (4 x 1 = 4mks)

Bank A/C Shs Capital 100,000

Shs. Bank 100,000

Cash A/C Shs Bank 20,000 Bingwa 40,000

Shs. Drawings 100,000

Tumanka A/C Shs.

Cash 40,000

Drawings A/C Shs Cash 10,000

Shs. Bank 100,000


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11. Factors that account for a fall in supply (a) Increase in cost of production (b) Inadequate inputs (c) Exit of firms from the industry (d) Price of other related products is low (e) Use of poor technology (f) Future expectation of decrease in price (g) Unfavorable natural factors/ weather (h) Unfavorable government policy

4mks) 12. - Break bulk - Accumulate bulk - Risk bearing - Finance provider - Advice producers and consumers - Carry out product promotion - Avail a variety of goods (4 x 1 = 4mks) 13. (i)Indicators of standards of living

(ii)Comparing standards of living in different countries (iii)Assessing the performance of the economy over time (iv)Assisting the government to plan the economy (v)Assist in making appropriate investment decisions (vi)To calculate the per capita income (vii)To attract foreign aid and investment (Any 4x1=4marks)

14. (i)Borrowing from other countries. A country can borrow from another country so that

such money can be used to offset a deficit balance of payment (ii)Control imports. A country can control a deficit balance of payment by controlling imports using total ban, tariffs and quotas (iii)Increase the volume of exports. A country can correct its deficit by increasing or encouraging exports (iv)Evaluation of home currency. This will encourage exports and discourage imports (v)Through import substitution. A country can put up industries to produce goods for home consumption instead of importing (vi)Encourage foreign investment in a country so as to produce goods for export (vii)Using foreign reserves. A country exchange reserves and gold to offset its deficit (viii)Use of customs. Draw backs to encourage export of goods and services (ix)Giving subsidies to local manufacturers in order to increase exports Any (4mks)

15. - Provide security to the country - Provide market for goods and services - Due to high consumption rate, it would attract foreign investment - Enhances specialisation of labour - The countries resources would be fully exploited

Any 4 x 1 = 4mks


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16. -Easily accessible -One stop-shop-arrange of goods and services -Parking space is available -Availability in auxiliary services -Operate for long hours -Accept debit/credit cards -They offer after sale services -Security guaranteed -They are located away from hassles of the city -Attractive and convenient shop in

-Saves on space/land rates 17. (i) No effect (ii) Decrease (iii) No effect (iv) Decrease 4 x 1 = 4mks 18. -When launching a new product

-When a product should meet customers’ specification -When demonstration is required -When the value of the product is high -When organization can afford to finance the sales force -When market is concentrated in an area 1x4 = 4mks

19. Disadvantages of localisation

- Regional imbalance in development - Negative effects on environment e.g. pollution - Rural – urban migration - Increase in crime rates - Spread of diseases - High rate of unemployment - Undesirable during sometime e.g. times of terrorism

Any 4 x 1 = 4mks

20. Cost of sales =opening stock + Net purchases√ (½) – Closing stock = 1 200 000 + {2, 700,000 (½)√ – 600 000} – 500 000 = 2 800 000(1) Mark up = 2 = 2 √(½ ) 9-2 7 Mark up = Gross profit Cost of sales = G.P = 2 √½ 2, 800 00 7 G.P = 2/7 x 2 800 000 = 800 000 √(1)


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21. (i)Falling of the price /exchange rate of a country’s currency against a foreign currency due

to free forces of demand and supply in the foreign exchange market Significance-making exports cheaper and imports expensive (ii)This is the decreasing rates at which a country exports exchange with its imports Significance less imports exchange with more exports worsening balance of payment of a country (iii)Are barriers to free international trade imposed by government Significance done with the imposed on protecting domestic economy (mention of protection should be accepted as significance) (iv)It is a form of economic integration/association agreement where a number of countries agree to eliminate restrictions on production among themselves

4 x 1 = 4mks 22. Advantages of using E-mail in communication in business.

- One can send messages that contain photographs and diagrams - Ability to communicate to more than one person at the same time - There is evidence of communication - It is possible to forward the information to other businessmen - One can access the message using either PC, Mobile phone e.t.c.

Any relevant 4 x 1 = 4mks 23. Economic conditions that would prevail in a country undergoing inflation

- Income is redistributed unevenly - Rise in interest rates - Discouragement of investment - Competition for higher incomes - Loss of vale of local currency - Retardation of economic growth - Balance of payment problems

Any 4 x 1 = 4mks

24. Types of tax - Direct - Direct - Indirect - Direct

4 x 1= 4mks 25. Account debited Account credited (a) Bank Capital (b) Purchases XYZ retailers (c) XYZ retailers Purchases returns (d) XYZ retailers Bank 8 x ½ = 4mks


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BUSINESS STUDIES FORM 4 PAPER 1

MARKING SCHEME

1. – Source of foreign exchange

− Provision of raw materials

− Creation of employment as the natural resources are extracted. − Provision of land for erecting buildings. − Source of government revenue

− Providing energy e.g. solar, geothermal e.t.c. − Source of food

2. – Through transportation, goods reach their required destination.

− Through warehousing goods stored meet unexpected demand

− Through advertising consumers are informed of the goods in the market. − Through banking, they save and store money for future needs and for safety reasons. − Through trade where consumers gets what they do not produce. − Through communication, information flows from buyer to sellers (vice versa) − Through insurance business risks are reduced

3. – Where a firm has a copyright/patent rights on a product

- Where technology to produce a particular product is only available to one firm

- Where market size is too small to accommodate several firms

- Where a firm has absolute control of inputs (raw materials) required in the production of a particular product.

- Where the initial capital is too large thus making other firms unable to join the industry. 4. – Purchases Journal

− Cash receipts journal − Purchases Returns Journal/Return Outwards Journal − Sales returns Journal/Returns Inwards Journal

5. State four negative effects of unemployment. - Increased social evils

− Increased dependency ratio

− Reduced savings/investment − Low living standards

− Increased corruption

6. Outline four circumstances under which a manager of a company may use downward communication. (4mks)

- When delegating duties. - When training juniors.


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- When solving any problems facing workers. - When evaluating performance. - When inspiring and motivating junior.

7. Highlight four factors that a producer considers before choosing a channel of distribution.

(4mks)

- Nature /types of the product.

- Resources and size of the firm. - Government policy. - Nature of the market. - Channels used by competitors. - Marketing risks. - The role of intermediaries

8. The following information relate to meru traders for the year ended 31 December 2017.

Sales 1000,000.

Opening stock 100,000.

Closing stock 200,000.

Gross profits. 200,000

Calculate rates of stock turnover. (4mks)

Rate of stock turnover = cost of goods sold √

Average stock Cost of goods sold = sales – Gross profit √ = 1,000,000 – 200,000 = 800,000√

Average stock = Opening stock + Closing stock √ 2

= 100000+ 200000 √ 2 = 150,000 √ Rate of stock turn over = 800,000 150,000√ = 5.33 times √√ Note: if a student shows correct answer without working only award two ticks 8 x ½= 4 mks 9. State whether the following represent injection into or leakages from the circular flow of income.


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Savings Leakages Taxes Leakages Government expenditure Injections Investments Injections

10. Name the factor of production that each of the following resource relate to (4mks)

Resource Factor of production

Manager Labour

Equipments Capital

Farmer Entrepreneurship

River land

11. Outline four factors to be considered when choosing a means of reproducing documents in an office. (4mks)

- Sources/availability of power. - Availability of the complimentary resources. - Number of copies required/needed

- The quality required - Cost of reproduction

- Availability of the methods

12. Outline four advantages of after sale services as a method of sales promotion to a

customer. (4mk

- Receives technical advice on usage /uses

- May be assisted on installation at no cost/subsidised cost. - Guarantee/warranty is given for a period

- Consumer may obtain servicing for some time at a lower cost or for free

- May obtain spare parts at a lower cost - May save on transport costs.

13. Outline four benefits of the newly constructed standard gauge railway line to Kenya’s

economy. (4mks)

- More employment opportunities

- Faster movement of goods/people

- Generate income to the government - Growth of tourism industry

- Reduction of congestion on roads


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- Reduction of damage on road by trucks

- Open up areas along the SGR to growth. - Growth of urban centers/ Towns

14. In the spaces provided, indicate the account to be debited and to be credited in the

following transactions. (4mks)

Transaction A/C DEBITED A/C CREDITED

a Bought machine in cash Machine √ Cash √

b Started business with sh.30,000 in cash Cash √ Capital √

c Took sh.20,000 cash from business for personal

use

drawing √ Cash √

d Credit sales of old machine to Kamau Kamau debtor √ Office Machine √

8x ¼ =4mks

15. The following balances were extracted from the books of kumi kumi traders on 31st

dec.2018. Gross profit ksh.80,000 Rent 8,000 Discount received 2,000 Salaries 10,000 Discount allowed 5,000 Commission received 3,000 Maintenance expense 9,000 Debtors 10,000 Creditors 12,000

Required: prepare kumi kumi traders profit and loss account for the year ended 31 Dec 2018.


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KUMI KUMI TRADERS

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST DEC. 2017

Expenses Gross profit b/d 80,000 √

Rent 8,000 √ Discount received 2,000 √

Salaries 10,000 √ Commission received 3,000 √

Discount allowed 5,000 √

Maintenance expense 9,000 √

Net profit c/d 53,000 √

85,000 85,000

Net profit b/d 53,000

(8x1/2 = 4mks)

16. Highlight four limitations of barter trade system. (4mks) - Lack of standard measure of value

- It requires double coincidence of wants

- Indivisibility of most commodities

- Perishability of some products

- Lack of standard measure for deferred payments

- Transportation hardships 17. On 4th Feb 2018 Chari bought goods worth ksh.12000.Terms of payment were, trade discount 5%

and cash discount 10%. If payment is made within 30 days. If Chari paid on 27th Feb 2018 determine

the amount he paid. (4 mks)

-Determination of the amount to be paid Invoiced shs.1200

Trade discount ��

�� = shs.600 √

12000 – 600 = shs. 11400 √

Cash discount ��

�� = shs.1140 √

Amount paid by Jomo 11400 – 1140 = shs.10260 √


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18. Indicate whether each of the following business transaction will ‘increase’ ‘decrease’ at no effect in the balance sheet totals.

Transaction Effects i) Buying stock in cash No effect ii) Buying stock on credit Increase iii) Withdrawing cash from bank for personal

use decrease

iv) Received cash from a debtor No effect

19. Purpose of public finance - To provide essential goods and services - To control consumption of certain products

- Redistribution of wealth - To promote balanced regional development - To raise government revenue

- To control balance of payment deficit - To encourage consumption of certain products

20. Name the type of insurance policy described by the following statements. (4mks)

Circumstances Type of policy

i) Losses by employees negligence Fidelity guarantee

ii) Protect employees injuries at work Workman’s compensation/employers liability

iii) Cover damage on motor vehicle, other people and property caused by the motor vehicle

Comprehensive motor vehicle policy

iv) Cover claims by members of public against a business

Public liability

21. State four ways in which the nature of goods would influence the choice of transport means. (4mks)

- If goods are perishable, a fast means is required

- If goods are fragile, a smooth means is required

- If goods are highly valued, a safe and secure means is required

- If goods are urgently required, a fast means is required

- If goods are bulky, an appropriate means is required

22. Identify the type of utility created from the following activities


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ACTIVITY TYPE OF UTILITY

a. Crushing sugarcane to make sugar Form

b. Transporting sugar from the factory to the

supermarket

Place

c. supermarket keeping sugar in a warehouse Time

d. Selling sugar in a supermarket possession

23. State four factors that influence the location of a firm (4mks)

- Availability of raw materials

- Market availability

- availability of labour(human resource) - Appropriate transport and communication network

- Adequate power and water supply

- Government policies

- Availability of auxiliary services eg banks ,insurance

- Room for expansion

- Effect of firms on the environment

24. Highlight four ways in which running public corporation may be improved. (4mks) - Ensuring that appointment of senior and technical post is done on merit.

- Exercising supervision role of the government. - Measures to curb corruption

- Continuous training of the staff for development. - Establishing incentives systems for motivation to the staff.

- Setting performances targets to be achieved.

- Privatization.

25. Highlight four benefits of using Electronic filing system in an office. (4mks) - Easy access

- Reduction of labour costs/materials

- Less storage facilities/less space

- Less paper work

- Enhanced security of documents

- Environmental friendly. - Saves time. - Offers safety/security. - Presentable work


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- Easily portable


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FORM FOUR BS P2 MARKING SCHEME

1. (a) Explain five features that differentiate a public corporation from a private limited

company form of business unit. (10 marks)

Public Corporation Private Limited Company

1. Initial capital is usually provided by the

government.

2. Established through legislation by an

act of parliament.

3. Managed by a board of directors

appointed by the government.

4. Profits are issued to dividends and the

government to the members.

5. Non-profit motivated.

1. Initial capital comes from the

shareholders.

2. Established by promoters according to

the company’s act.

3. Managed by one or two directors elected

by shareholders.

4. Profits are distributed and the

shareholder on dividends.

5. Usually established to earn profits.

b) Kapa Oil manufacturers have decided to eliminate wholesalers in their chain of

distribution. Outline FIVE possible effects of eliminating wholesalers. (10 marks)

− Manufacturers would set up distribution centers /depots or warehouses which are additional

costs to manufacturers.

− The cost of distribution may be increased and the subsequent increase passed on to

consumers inform of higher prices.

− The retailers would have to go to manufacturers, which is an additional cost to retailers.

− The producers would have to break the bulk because retailers may not afford to buy in large

quantities.

− Manufacturers may be required to extend credit facilities to retailers, which require

additional record keeping capital.

− Due to additional functions to producers, it will reduce their efficiency in production.

− Prices may fluctuate due to unsteady flow of goods.

(any five well explained points @ 2=10mks)


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2. (a) Some developed countries have a huge population made up of ageing persons. Explain

Five problems this situation could present to such countries. (10 marks)

(i) There will be less mobile force / rigidity to change and work in some areas.

(ii) Lack of input of more energetic youth- reduced productivity.

(iii) Low active labour supply-leading to high cost of employment.

(iv) Loss of job opportunities; low demand for goods/services leading to loss of jobs.

(v) High level of dependency hence less saving and investments.

(vi) Lack of creativity and innovations: low quality of goods.

(vii) high cost of providing social benefits to the aged-overburdening the tax payer.

(b) Khwesa Traders had the following balances as at 31st December 2014.

Item Shs.

Building 540,000

Bank loan 472,000

Debtors 116,900

Creditors 227,000

Furniture 408,170


Motor vehicle 900,000


Lighting 25,200



Rent received 120,000

Repairs on buildings 60,000


Repairs on motor vehicle 300,000


Capital 1,400,000

Prepare:

(a) Profit and Loss Account for the year ended 31/12/2014.


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3

(b) Balance sheet as at 31/12/2014. (10 mks)

KHWESA TRADERS

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31/12/12

Discount allowed 142,000 Gross Profit 520,600

Lighting 25,200 Rent Received 120,000


Repairs on building 60,000


Repairs on motor vehicles 300,000

General expenses 102,100 Net Loss c/d 61,930

702,530 702,530

Net Loss b/d 61,930

6 mks)

KHWESA TRADERS

BALANCE SHEET

AS AT 31/12/12

Fixed assets

Building 540,000 Capital 1,400,000

Furniture 408,170 Less: net Loss 61,930

Motor vehicle 900,000 Capital invested 1,338,070

Long Term Loan

Bank loan 472,500

Current assets

Stock 72,500

Debtors 116,900 Current Liabilities

Creditors 227000

2,037,570 2,037,570


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4

4 mk

Total = 10 mks

3.a) The saga of contaminated sugar and plastic rice has raised many questions in the

economy.Describe five roles of the Kenya Bureau of standards (KEBS) in consumer

protection in order to curb such commodities in the market. (10mks)

(i) It set standards on the quality that must be met by both the locally produced goods

as well as the imported goods.

(ii) It ensures that harmful goods are neither produced nor imported into the

country by inspecting all imported goods & local goods.

(iii) It provides quality assurance experts services to the producers to ensure

that they produce high quality goods.

(iv) It requires that all foods are well labeled and packed so as to ensure that

such food is protected and that the right information on the product is

passed to the consumers.

(v) It takes legal action against those who operate outside the set standards.

(vi) It ensures that all products are tested to ensure quality and that they bear a

KEBS mark of quality on their package.

(vii) Ensure that the equipment used by producers to measure time, weight

volume and length is correct for the consumer to get accurately measured

goods.

(viii) Ensure that imported goods are inspected to ensure that they are of the

right standards.

(5x2=10mks)

b) Explain five measures that the government can take so as to improve the efficiency of the

road transport system in the country.

- Improving the road network system by tarmacking more roads particularly

in rural areas.


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5

- Ensuring that vehicles do not exceed their load capacities as this causes

damage to roads.

- Educating the providers and the consumers of roads transport services of

their moral obligation to observe the traffic code.

- Improving rail transport so as to ease congestion on roads.

- Undertaking regular maintenance of roads to ensure that they are in good

condition at all time.

- Ensuring that there is strict adherence to traffic laws.

- Ensuring that only trained and licenced people are allowed to drive

vehicles on the roads.

- Ensuring that corruption is eradicated on the roads, by imposing heavy

panalties on those who practice it.

- Establishment of bypass road systems in the outstirts of urban centres

does not have to pass through it.

(5x2=10mks)

4. a) VP Shah shop sells all its goods at a margin of 20%. For the year ended 30th April

2006, the trading activities were as follows.

Purchases sh. 80,000

Sales profit sh. 950,000

Net profit 5% of sales

Closing stock sh. 200,000

Calculate net profit.

a) The gross profit

b) The opening stock

c) Mark up percentage

d) The net profit.

i) The gross profit

Gross profit = sales – costs of sales – ½


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6

½

ii) The opening stock

C.O.S = O.S + purchase = C.S ½

C. O. S = sales – G.P

C.O.S = 950,000 – 190,000 ½

= 760,000

O.S = 760,000 – 80,000 + 200,000

680,000 + 200,000 = 880,000

760,000 = opening stock + 600,000 ½

760,000 – 600,000 = O.S ½

160,000 = opening stock ½

iii) Mark up percentage

Mark- up =

= 25%

iv) The net profit = 5% of sales

N.P ½

= 47,500 1 (10x1=10mks)

(b) Explain five reasons that justify why the Kenyan Government is emphasizing on

promoting entrepreneurship in Kenya. (10 marks)

(i) Employment creation :to earn a living


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7

(ii) Improves infrastructure: for fast movement of goods/service/information to the market

(iii) Leads to innovation/creativity higher quality of goods/low cost of production

(iv) Revenue generation : though payment of taxes

(v) Leads to entreprenuerial culture: thus broaden more sectorsfor self employment

(vi) Provision of goods/services –diversification of production activities/provide variety of

goods/services

(vii) Exploitation of resources: thus no idle / unutilized resources (5 x 2 = 10 marks)

5.(a) In most secondary schools in Kenya, principals are accommodated in their own offices.

Explain five disadvantages associated with this kind of arrangement. (10 marks)

(i) It doesn’t allow for close supervision of workers.

(ii) It encourages unauthorized absenteeism by the staff.

(iii) Encourages misuse of office facilities such as telephone and internet.

(iv) It reduces interaction between management (the principal) and the rest of the staff

members.

(v) A lot of time is taken by officers moving from one office to another.

(vi) It is costly to construct and maintain.

(b) The following were the balances of Kiboko Traders as at 1st January 2009. Cash

Sh.40,000, bank overdraft Sh.17,000. During the month the following transactions took

place.

January 2nd : Mutiso a debtor settled his account of Sh.32,000 by cheque of Sh.30,000

4th : Paid salaries amounting to Sh.16,000 by cash.

10th: Deposited Sh.12,000 into the business bank account from the cash till.

14th: Settled Wayua’s account of Sh.40,000 and she was allowed a discount of

1% through a cheque.

16th: Deposited Sh.56,000 in the bank from private resources.

17th: Sold goods for cash Sh.24,000.

20th: Mutua, a debtor, settled his account by a cheque of Sh.16,000 having been

allowed a discount of

2%.

24th: Purchased furniture Sh.10,400 paying by cheque.


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8

26th: Received Sh.7,200 cash from Odhiambo.

30th: Banked all the available cash except Sh.3200.

Required: Prepare a three column cash for Kubuka Traders

KIBOKO TRADERS

(b) Dr THREE COLUMN CASH BOOK FOR THE MONTH OF JANUARY

2009 Cr

Dat

e

Details Foli

o

D.A Cash Bank Date Particula

rs

Foli

o

D.R Cash Bank

200

9

Jan

1

2

10

16

17

20

20

30

Balance

Mutiso

Cash

Capital

Sales

Mutua

Odhiam

bo

Cash

b/d

C1

C2

2,000

�

1,632

�

3632

40,000

�

24,000

�

7,200 �

71,000

30,000

�

12,000

�

56,000

�

16,000

�

40,000

�

154,000

2009

Jan

1

4

10

14

24

30

Bal

Salaries

Bank

Wayua

Furnitur

es

Bank

Bal

b/d

C1

C2

c/d

400

�

400

16,000

�

12,000

�

40000

�

3,200 �

71,000

17,000

�

39,600

�

10,400

�

87,000

�

154,00

0

NB: C1 and C2 if not indicated don’t award. (20 x ½ = 10mks)


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9

6.a) Kenya is in the process of developing a standard gauge railway line from Mombasa to

Malaba. Explain five benefits that a trader in Malaba will enjoy from this modern railway

line. (10 marks)

● wide market: provide access wide market to increase sales

● Saves on cost of transport- higher profit margins

● Faster transport- avoids delay of goods to market

● Security of goods- safety of goods against theft/damage

● Containerization- eases handling of goods/improved safety

(b)Outline five tools of monetary policy used by central bank (10 marks)

● bank rate:

● Open market operation

● Selective credit controls

● Cash ratio/;Liquidity ratio

● Margin requirements

● Compulsory deposits

● Moral persuasions

Mention 1mk otherwise 2 marks x 5 = 10mks


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MOKASA II JOINT EXAMINATION

565/2 BUSINESS STUDIES Paper 2

July, 2019 – 2½ hours

Name: …………………………………………………… Adm No.: ……………… Class …………..

Candidate’s Signature: ………………………………... Date: ………………………………………

Instructions to Students

(a) This paper consists of six questions.

(b) Answer any five questions.

(c) Answers should be written in the spaces provided after question six.

(d) All questions carry equal marks.

(e) This paper consists of 15 printed pages.

(f) Students should check the question paper to ascertain that all the pages are printed

as indicated and that no questions are missing.

(g) Students should answer the questions in English.

For Teacher’s Use Only

Question Maximum

Score

Candidate’s

Score

20

20

20

20

20

Total

Score


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1. a) Explain five ways in which the demographic environment may positively influence

business activities. (10 marks)

b) Explain five advantages that accrue to a firm due to increased production. (10 marks)

2. a) Explain five reasons for the popularity of using social media in product promotion.

(10 marks)

b) Explain five measures that a country may take to correct a balance of payment deficit.

(10 marks)

3. a) Explain five differences between a cooperative society and a private limited company.

(10 marks)

b) Outline five benefits that a country may derive by preparing a development plan.

(10 marks)

4. a) The table below shows the Gross Domestic Product (GDP) of a country X in the year

2014 to 2018.

Year 2014 2015 2016 2017 2018

GDP (Sh in millions) 19,201 27,304 33,092 41,067 54,689

Explain five factors that may have caused the above trend. (10 marks)

b) Explain five causes of demand pull inflation. (10marks)

5. a) Kenya is endowed with some economic resources yet it has failed to exploit them.

Outline five reasons that account for this. (10 marks)

b) On 1st May 2018, Sosiot traders had Sh.25,000 Cash in hand and Bank overdraft of sh

15,000. During the month the following transactions took place.

2018

May 3: Kipkurui ,a debtor settled his account of sh 12000 by cheque of sh 10,000

May 5: Paid rent by cash sh. 5000

May 6: Deposited sh. 2000 into the business bank account from the cash till.

May 8: Received sh 6000 Cash from Kamau, a debtor

May 10: Wanjiku a debtor settled her account of 15,000 by cheque, having been

allowed 20% discount.

May 15: Purchased Furniture worth sh 3,000 paying by cheque

May 18: Deposited sh 7,000 into the bank from private sources.

May 23: Received the following amounts in cash from debtors having deducted

cash discount of 5%. Kertich sh 7600, Brian sh 4750

May 25: Banked all the available Cash except sh 1000

Required: Prepare a dully balanced three column cash book. (10 marks)


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6. a) By aid of a diagram, explain how price of a commodity is determined by the forces of

demand and supply. (10 marks)

b) The following trial balance was extracted from the books of Rafiki traders as at 31st

December 2018.

Rafiki traders

Trial Balance


Dr. Cr.

(Sh.) (Sh.)

Purchases 420,000

Sales 855,000

Returns 12,000 20,000

Creditors 100,000

Debtors 63,000


Motor- vehicle 480,000

Cash in hand 65,000

Furniture 190,000



Capital 626,250

Drawings 88,000

Telephone 6,400

Insurance 8,200

Postage 3,850

Rent 19,600


Advertising 12,900

1,670,250 1,670,250

Additional information;

Stock as at 31st December 2018 amounted to shs.60,000.

Required:

(i) Prepare Rafiki traders trading profit and loss account. (6 marks)

(ii) A balance sheet as at 31st December 2018. (4 marks)


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MOKASA II MARKING SCHEME 2019

BUSINESS STUDIES

PAPER ONE

1. Outline four reasons why filing is an important function of an organization. (4mks)

� Documents are protected from loss and landing into un authorized hands.

� It aids in office tidiness and efficiency

� Documents are kept neat and tidy

� An important aid to memory- reference can be made anytime and in future.

� Ensures that information is stored systematically and thus can be retrieved

easily when needed.

2. Koech started a business dealing in ladies clothing ten years ago. His business has

gradually been growing and making more profits. Outline four reasons that may account

to this.

� Adequate capital

� Availabilities of adequate labour

� Proper marketing plans

� Fair competition

� Use of modern technology

� Political stability

� Adequate market

� Appropriate pricing policies

� Good time management

� Good infrastructure

� Proper business planning

� Good customer relations

� Favourable government policies


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3. The table below contains descriptions of some goods. Classify them as either

Consumer, Intermediate, Free goods or Capital goods.

(4marks)

Description Classification

a)Goods used in the production of

other goods but does not form part of

the finished products

Capital goods

b)Goods that are in their final state of

usage

Consumer goods

c)Goods that are abundant in supply

and have no monetary value

Free goods

d)Goods that are not ready for use

before they are further processed

Intermediate goods

4 Outline four examples of open trade credit used in home trade. (4mks)

� Simple credit (prompt cash)

� Monthly credit

� Budget accounts

� Trade credit

� Credit card facilities

5. Outline four factors that determine the amount of money held by an individual for

speculative motive.

� Level of income

� Individual s temperament (pessimistic/optimistic)

� Duration between incomes

� Family status

� Number of dependants.


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6. Using a (+) for increase, (-) for decrease and (0) for no effect , indicate the effects of

the following transactions on Assets , Liabilities, Capital and the balance sheet totals.

(4 marks)

Description Assets Liabilities Capital Balance sheet

totals

a)Bought goods worth

5000/=on credit

+ + 0 +

b)Sold goods worth 7000/= for

8000/= Cash

+ 0 + +

c)The Proprietor took goods

worth 2000/= for personal use

- 0 - -

d)The Proprietor donated

personal motor vehicle to the

business

+ 0 + +

16 ×�

�= 4 ��

7.Outline four reasons that may have led to the change in quantities demanded of

commodity X in the market as shown in the schedule below. (4mks)

Time January February March April

Price (shs) 120 120 120 120

Quantities

demanded

6,000 4,000 2,800 2,000

� Decrease in consumer’s income

� Consumers may have expected a further decrease in prices

� There might have been decrease in the general population

� Government may have increased the taxation on that commodity

� Consumers may have developed a dislike to the commodity i.e. of fashion


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� There might have been increase in the price of complimentary goods

� There might have been a decrease in the price of substitute to the commodity

8. The capital of Kimosop traders on 1st January 2018 was shs. 85,000. During the year,

additional investments of shs.50,000 and drawings of shs.60,000 were made. The capital

as at 31st Dec 2018 was 65,000. Calculate Kimosop trader’s profits or loss.

(4 marks)

CC = OC + P + 1 – D

P = CC – OC – 1 + D

= 65,000 – 85,000 – 50,000 + 60,000

= -10,000

= Loss = 10,000

9. Highlight four reasons why the government may decide to reduce her shareholding in

public corporations to a level below 50%. (4 marks)

� To raise government revenue

� To reduce the tax burden of financing poor performing parastatals

� To encourage healthy competition among the businesses into the country

� To improve on the management in the running of the businesses

� To deal with the problem of corruption, misuse of funds and mismanagement of

resources in parastatals

� Increased private sector participation

10 State how the following components are treated in the measurement of national

income. (4marks)

National income component State whether added or subtracted

a). Transfer Payments Subtracted

b). Depreciation Subtracted

c). Subsistence farming Added

d). Net income from Abroad Added


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11. State four differences between ordinary shares and preference shares.

Preference shares Ordinary shares

- Have a fixed rate of sharing dividends

- Have a prior claim of dividends over

ordinary shares

- Have no rating rights

- If the company is liquidated, they are

paid first.

-cummulative

-may be redeemable

- No fixed rate of sharing dividends

- Have a claim of dividends after

preference shares

- have voting rights

- If the company is liquidated they are

paid laid

-non cumulative

-non-redeemable

12. State four circumstances under which the use of face to face communication may be

appropriate. (4 marks)

� When there is need for immediate feedback

� If the message being passed is confidential

� When there is need to persuade and convince the other person

� When addressing a large number of people at once e.g when in a meeting

� When the parties involved are close to each other

� When the message being communicated is informal

13 Highlight four disadvantages of using sea transport. (4marks)

� It is very slow hence not suitable for transporting perishable and agent goods and

services

� It is not flexible as it does not offer door to door services

� Ships are very expensive to buy and maintain hence many countries cannot afford


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� It is very expensive to construct and maintain a port hence many countries cannot

afford

� Water transport is easily disrupted by poor weather e.g. rainstorms, strong winds

� Water transport is only used where there is water.

� Some water ways might not be navigable especially if they have rapids,

dangerous animals and hyalines

� It is expensive to provide facilities at the port hence many countries cannot afford

� It may be affected by piracy which causes great loses

14. Outline four circumstances under which a intermediaries is used in distribution of

a firms products.

� Where the market is widely spread out.

� Where the market is full of risks

� Where it is a government policy

� Where the producer lacks storage facilities

� Where the producer wishes to specialize in production and leave distribution

function to intermediaries.

� Where it is means used by competitors

� Where there is need to break bulk

� Where the firm produces large quantity of commodities.

� Where the products are not perishable

� where the firm cannot afford to sell directly

� -


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15. Balance the following ledger accounts and extract a trial balance.

Dr Debtors a/c Cr Dr Capital a/c Cr

Bal b/d 7000 Cash 1500 Bal c/d 16000 Bal b/d 16000

Bal c/d 5500 16000 16000

7000 7000 Bal b/d 16000√

Bal b/d 5500√

Dr Cash a/c Cr Dr Creditors a/c Cr

Bal b/d 12,000 Creditors 2000 Cash 2000 Bal b/d 3000

Debtors 1500 Bal c/d 11500 Bal c/d 1000

13500 13500 3000 3000

Bal b/d 11500√ Bal b/d 1000√

Trial Balance


Details Dr Cr

Debtors

Capital

Cash

Creditors

Total

5500√

11500√

17000

16000√

1000√

17000

8 ×�

�= 4 ��


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16 .State four causes of structural unemployment. (4mks)

� Change in the method of production/mechanization/capital intensive methods

� Technological change

� Widespread change in government policies

� Decrease in demand for products

17. Highlight four characteristics of a public warehouse. (4 marks)

� A rental fee is charged on goods stored.

� Strategically located near road junctions, bus stations, airports, railway stations

border points and sea ports.

� Goods are prepared for sale through branding and packing

� Goods are insured against risks such as damages by fire and theft

� Goods can be sold without their physical movement from the warehouse.

� more Documentation

� The owner of the goods have no direct control over the goods stored.

� They are situated far away from the liner’s premises

18. The following balance sheet belongs to Rivatex Traders.

Rivatex

Balance Sheet


Fixed Assets sh

sh

Premises 90,000

Furniture and Fixtures 70,000

Land 140,000

300000

Current Assets

Cash 7000

Sh

Capital 120,000

Add Profit 30,000

Net Capital 150,000

Long Term Liabilities


Short term liabilities


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Stock 15000

Bank 10000

Pre-paid rent 25000

57000

357000


357,000

Required: Calculate

i)Working Capital (1 mark)

W.C= C.A- C.L

57,000-7000= 50,000

ii)Borrowed Capital (1 mark)

L.T.L= 200,000

iii)Capital Employed (1 mark)

T.A-C.L

357000-7000=350,000

iv)Capital Owned (1 mark)

Shs120,000

19 .State four levels of inflation.

(4mks)

� Hyper/runaway inflation

� Galloping/rapid inflation

� Stagflation

� Creeping/Mild/moderate inflation


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20.The following statements relates to a description of a certain type of tax. Identify the

tax and classify it as either direct or indirect tax.

Description Tax Classification

(a) A tax that is imposed on goods that are

manufacture and sold within a country.

Excise duty Indirect

(b) Tax usually levied on profits of companies Corporation

tax

Direct

(c) Tax levied on the value that a business adds to a

product.

Value added

tax (V.A.T)

Indirect

(d) Tax levied on personal wealth that goes beyond a

certain limit.

Wealth tax Direct

21. Record the following transactions in the relevant journals (4 marks)

2019

Feb 2: Bought goods on Credit worth 6500/= from Eldolink suppliers

Feb 8: Sold goods worth 5000/= on credit to Jamal.

Feb 12: Sold stock valued at 8500/= on credit to Musyoka

Feb 16: Bought goods worth 3000/= on credit from Jetlink traders

Purchases Journal

Date Particulars Invoice No. Ledger Folio Amount

2019

Feb 2

Feb 16

Eldolink Suppliers

Jetlink Traders

Totals posted to purchases

a/c (Debit)

6500√

3000√

9500


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Sales Journal

Date Particulars Invoice No. Ledgers Folio Amount

2019

Feb 8

Feb 12

Jamal

Musyoka

Totals posted to

Sales a/c (Cr)

5000√

8500√

13500

22.John and Peter bought a Nissan matatu worth sh. 3,000,000. John paid sh. 2,000,000

and Peter sh. 1,000,000. They insured the matatu for a comprehensive cover for

2,500,000. Later the matatu was involved in an accident to a loss of sh 1,500,000. How

much were they compensated and give reasons in support of your answer?

Compensation = Sum insured x Value loss

Actual value of the property

2,500,000 x 1,500,000

3,000,000 = shs1,250,000

For @ John - 2/3 x 1,250,000 = shs833,333

Peter - 1/3 x 1,250,000 =shs 416,667

Reason: Under insurance

23. Outline four reasons why subsistence production is discouraged in many

countries. (4 marks)

� Leads to production of low quantity and quality goods

� It discourages invention and innovation

� Limited variety of goods is produced

� Low leves of technology is applied


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� Wastage of time as one moves from one productive activity to another

24. Highlight four features of an Oligopoly market structure. (4 marks)

� Few large scale sellers

� Barriers to entry of new firms in the market

� Firms are price givers or makers

� There is price rigidity causing a kinked demand curve

� There can be pure oligopoly where products are identical or differentiated

through branding

� Goods dealt in are close substitutes

� There may be price wars

� Tacit collusion

� There may be non price competition

� Firms are interdependent in terms of price,market share and output decision.

25. Describe the following terms of sale as used in international trade. (4 marks)

a) LOCO…………………………………………………………………………………….

………………………………………………………………………………………………

b)Free Alongside Ship ……………………………………………………………………..

……………………………………………………………………………………………..

c) Cost & Freight…………………………………………………………………………...

………………………………………………………………………………………………

d) Franco……………………………………………………………………………………

………………………………………………………………………………………………


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Lanjet 2019 Business studies marking scheme

Name: _______________________________________ Adm No.: _____________________

Candidate’s Signature: __________

Date: __________________________

565/1

BUSINESS STUDIES

Paper 1

JULY/AUG 2019

Time: 2 hours

LANJET JOINT EXAMINATION 2019


MARKING SCHEME

565/1

Paper 1

BUSINESS STUDIES

TIME: 2hours

INSTRUCTIONS

• Answer any FIVE questions.

• Use the material provided.


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1. Atieno is employed as a filing clerk at ministry of land offices. Highlight four

challenges that the office is facing as a result of Atieno’s incompetence. (4 marks)

i) Insecurity/loss of documents.

ii) Access of information by unauthorized persons.

iii) Difficult to retrieve /access documents.

iv) Untidy/unpleasant office.

v) Lack of confidentiality/secrecy.

vi) Poor communication.

vii) Loss of guarantee for future reference.

2. For each of the following situations, name the most suitable means of payment to be

used. ( 4 marks)

Situation Means

a) To pay salary of 50 employees using one cheque Credit transfer

b) Paying school fees for a student from Nairobi who is at

Nakuru school

Bankers cheque/ bank

draft

c) Paying insurance premium to UAP Insurance Standing orders

d) Njoki wishes to transfer kshs 100,000 immediately from

her account to Mwende’s account

Electrical fund tranfers

3. Give four reasons why extractive level of production is the highest income earner in

most third world countries. (4 marks)

i) Poor technology to engage in other sectors.

ii) Existence of vast/abundant of natural resources.

iii) Government policies that favor agricultule.

iv) Shortage of capital for manufacturing.

v) Lack of skills required for secondary stage

vi) Limited market for finished goods due to poverty.


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vii) Favourable weather for agriculture.

viii) Negative cultural behaviours that difer growth of secondary sector.

ix) Presence of a large substance sector.

4. The following extract is from Manga traders as at 31st December, 2018.

Kshs.

Capital 2,000,000.

Net profit 500,000.

Borrowed capital 1,430,000.

Fixed assets 2,880,000.

Current assets 2,350,000.

Current liabilities 1,300,000.

Determine:-

i) Working capital =C.A-C.L

=2,350, 000-1,300, 000 √

=1,050,000√

ii) Current ratio= ��

��

= ��

�=

.�

1.81:1 √

iii) Capital employed =C.O+BC

2,500,000+1,430,000√ =3,930,000√

iv) Rate of return on capital employed

=�,

�,�,�100√

=25% or

�√ (8x

� marks)


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5. State four advantages of using social media to a business person. (4 marks)

i) Immediate feedback from customers.

ii) Wide coverage/wider market.

iii) Can advertise/promote his products.

iv) Flexible- can be used outside office.

v) Can sell online/ get orders.

vi) Message can be more detailed e.g. use of graphics, sound, photos.

vii) Can target specific customers.

viii) Easy to convince/persuade.

6. State whether the following taxes are direct or indirect ( 4 marks)

Type of tax Classification a) Sales tax Indirect b) Corporate tax Direct c) Value added tax Indirect d) Excise duty indirect

7. Indicate four indicators of workers who are poorly motivated in an organization (4

marks)

i) More accidents/breakages.

ii) Aggressive /uncooperative.

iii) Late coming absenteeism.

iv) High level of antisocial behavior.

v) High rate of claim of sickness.

vi) Leaving work earlier than expected.

8. Name four advantages of operating a public limited company

i) Easy to raise capital.

ii) Continuity/ perpetrial existence.

iii) Has limited liability.


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iv) Qualified management.

v) Wider source of capital.

vi) Easy to transfer shares.

9. Janet observed that there are many small scale retail businesses in her home town

that are surviving despite the presence of large supermarkets. Write four reasons that

may explain this scenario.

i) Easy to start.

ii) Belief that they are easy to manage.

iii) Flexibility.

iv) May offer credit.

v) Easy to attract/ retain customers.

vi) Consumer’s ignorance.

vii) Nature of product being sold.

viii) Owner’s commitment due to personal interest.

10. In the transactions below, indicate whether the balance sheet totals are going to

increase(+),decrease(-), or remain the same(RC)

Transaction Effect

a) Decrease (-)

b) Increase (+)

c) No effect (RC)

d) Increase (+)


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11. The following table represents the demand for tomatoes.

Price of tomatoes

(Shs) Quantity demanded of

tomatoes per week (Kgs)

50 10

100 8

150 6

200 4

250 2

From the above demand schedule plot the demand curve for tomatoes. (4mks)

12. Highlight four challenges that entrepreneurs face when carrying out business

activities. (4mks)

i) Lack of skills.

ii) Competition

iii) Poor transport network.

iv) Lack of funds/ access to loans.

v) High cost of finance.

vi) Regenerative culture.

vii) Lack of government support.

viii) Lack of b/s consultancy.

ix) High energy/fuel cost.

x) Corruption/harassment.

10

8

Price 6

4

2

50 100 150 200 250 quantity


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13. Highlight four differences between monopoly and monopolistic market structures.(4mks)

monopoly monopolistic

1. One supplier for entire market 1. There are many sellers

2. Commodity does not have a close substitute

2. Commodities similar but highly differentiated

3. Difficult for other forms to enter market

3. No barriers to entry or exit

4. Firm spends only on informative adverting

4. Heavy expenditure on persuasive advertising

5. There is price discrimination 5. No price discrimination

6. Price fixed by supplier 6. Interdependence in price fixing

14. Mention four features of capital as a factor of production. (4mks)

i) Its man-made

ii) Basic factors of production.

iii) Its subject to depreciation through wear/tear

iv) Can be improved through technology.

v)

15. A TV set was sold for sh.20, 000. If the buyer was allowed a trade discount of 5%

and cash discount of 2% if payment is made within a month. Determine the amount

received by the seller if payment is made within 2 weeks. (4 mks)

�

�20,000 = 1000

Amount to be paid = 20,000-1000

=19,000

Cash discount = �

�19,000 = 380

Amount paid finally = 19,000-380=18,620


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16. Give four reasons that make insurance companies decline to insure acts of nature

such as earth quakes, floods, etc.

i) The loss may affect many people at once.

ii) The value of loss may not be easily determined.

iii) Very few people may be willing to be involved to form a pool.

iv) Not easy to determine premiums to be paid.

v) Loss is unpredictable.

vi) Possibility of risk occurring is certain.

17. the following information was extracted from the books of soma label traders on 31st march, 2009

shs Stock (1st April, 2008) 650,000 Purchases 2,400,000 Sales 3,200,000 Mark up 25% Stock (31st march, 2009) x Required: Use the information above to prepare a trading account for the year ended 31st march, 2009.

Soma label

Trading account

for the year ended 31st march 2009

Dr Cr Opening stock 650,000√ Purchases 2,400,000√ Goods available 3,050,000 Less, closing stock 490,000√ Cost of sales 2,560,000 Gross profit 640,000√ 3,200,000

Sales 3,200,000√ 3,200,000 Gross profit b/d 640,000

Mark up= 25%=

� ; margin=

�

Gross profit= �

�3,200,000 = 640,000√


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Cost of sales= 3,200,000- 640,000= 2,560,000√

Closing stock= 3050000- 2560000= 490000√

(8x

�=4 marks)

18. Highlight four reasons why a business plan is important to a business unit. ( 4 marks)

i) A tool of raising capital.

ii) Helps in identifying strength and weakness.

iii) Assists in allocation of resources.

iv) Helps to avoid making mistakes.

v) Provides a tool for control to avoid inefficiencies and wastage,

vi) It’s a motivating factor.

vii) Helps in controlling completion.

viii) Helps in reducing uncertainties and risks.

19. Outline four reasons why different businesses merge ( 4 marks)

i) To eliminate wasteful completion.

ii) To expand capital base.

iii) Enjoy economic of scale.

iv) Attract credit facilities.

v) Increase human resources.

vi) To earn high profits.

vii) Lower cost of operation.

viii) Enable diversification of operation.

20. Name the element of transport represented by each of the following items ( 4 marks)

Item Element

a) Bus station Terminal

b) Bicycle Unit of carriage

c) Railway line Way

d) Diesel engine Methods of propulsion


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21. Mawingu Company would like to erect billboards for product promotion purposes. Highlight

four short comings of using this method ( 4 marks)

i) Prone to vandalism.

ii) Exposed to elements of weather.

iii) Not useful to the blind.

iv) Can distract motorists.

v) Can be easily ignored. –they are silent

vi) Do not target a particular group.

vii) May be too many in one place hence not effective.

22. Record the following transactions in the relevant ledger accounts of Karua’s business.

( 4 mk) I) Jan 20th : the owner took stock worth kshs 1500 to his aunt while on a visit II) Feb 12th: bought a business motor cycle worth shs 80,000 on credit from Nakuru

motors ltd. III) March 18th: withdrew shs. 10,000 from bank for business use IV) Received an invoice on April 10th from summer wholesalers worth sh 50,000.

Dr drawing cr Jan 20 purchases 1500

Dr motor cycle cr Feb 12th Nakuru motor 80,000

Dr Nakuru motors cr Feb 12th motor cycle 80,000

Dr cash cr March 18th bank 10,000

Dr bank cr March 18th cash 10,000

Dr summer wholesalers cr 10th April purchases 50,000

Dr purchases cr Jan 20th purchases 1500 April 10th summer wholesalers 50,000


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23. Outline four drawbacks that accrue to a society that practice subsistence production.

(4 marks)

i) Poor quality goods.

ii) Low standard of living.

iii) Production in small scale.

iv) No mechanization/specification.

v) Lack of creativity/innovation.

24. Highlight four measures that the government may use to control demand pull

inflation. ( 4 marks)

i) Increase lending rates selling government secunutues.

ii) Increase cash liquidity ratio.

iii) Increase compulsory deposits.

iv) Selective credit control.

v) Reduce government spending.

vi) Increase income taxes.

vii) Control wages and salaries.

25. Outline four reasons for maintaining a trial balance. ( 4 marks)

i) Check accuracy of ledgers.

ii) Summary of information in ledgers.

iii) Quick reference of balances.

iv) For preparation of financial accounts.


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Bust paper 2 1((a)Benefits that may be realized by a country as a result of government policy to relocate industries to rural areas include: (i)Increased availability of variety of goods and services as a result of newbusinesses in the area. (ii)Availability of auxiliary services - citizens would enjoy more and better auxiliary services like transport. (iii)Increased job opportunities - there will be more jobs available that would reduce unemployment. (iv)Increased utilisation of locally available resources - locally available factors of production will be used and the citizens would earn rewards associated with them. (v)Improved standard of living as development of the rural areas increases the quality and variety of goods and services. (vi)Reduced congestion in towns - this would benefit the few citizens remaining in the city. (vii)Balanced economic development as economic activities are spread throughout the country. (viii)Transfer of technology to rural areas which leads to production of better quality goods/services. (ix)Creation of market for goods/services produced in rural areas. 2b) Measures the government has taken to reduce further loss of lives i) Removal of unroad-worthy vehicles which may cause accidents. ii) Installation of bumps to reduce speeds which may cause accidents iii) Heavy penalties to motorists who disobey traffic rules. iv) Limit number of passengers in vehicles to avoid overloading v) Ensuring that public service vehicles have speed governors to limit the speed vi) Making sure that passengers have safety belts to minimize casualties incase of an accident. vii) Construction of duo carriage roads and bypass to ease congestions which may cause accidents. viii) Making sure that public service vehicles/all vehicles are driven by qualified drivers. ix) Restriction on travelling hours/ensure drivers have ample time to rest before driving e.g public

service vehicles not allowed to travel at night. 5pointsx2=10 marks Any 5 @ 2 = 10 marks

2. (a) Describe five principles of public expenditure. (l0mks)

i. Sanctions Public expenditure must be approved by the relevant authority.

ii. Maximum social benefit Should be incurred in a way that majority of the people are able to reap maximum benefit out of it.

iii. Adaptability Should be flexible enough to meet the prevailing economic situation


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iv. Economy Should be incurred in the most economical way by avoiding any possible waste.

v. Proper financial management (4×2=8 marks)

TRADELINK ENTERPRISES

THREE COLUMN CASHBOOK FOR JAN 2011 Date Details folio Discount

allowed cash Bank Date Details folio Discount

received cash bank

1st Jan 2011 2nd Jan 2011 5th Jan 2011 20th Jan 2011 29th Jan 30th Jan 30th Jan

balbld sales cash bank cash balbld

C1 C2 C3

23750√

22250√ 465200√ 250,000√

250,000√ 451,250√ 200,000 150,000√

15th Jan 20th Jan 25th Jan 28th Jan 29th Jan 30th Jan 30th Jan

Ndaru traders Bank Wages Mbago Cash Bank balcid

C1 C2 C3

16000√ 45000√

184000√ 200000√ 144000√ 150000√ 59700

255000√ 250000√ 546250

61000√ 737,700√ 1051250√ 61000√ 737700√ 1051250√

59700

546,250

24 x ½

=12

marks

3(a) Negative economic implications of given age distribution. • About 45% of the total population consists of those below 15 years. This implies more

expenditure has to be directed towards provision of education, health etc/

• There is high dependency ratio which adversely effects savings and investments of the working population.

• There is need to plan for creation of employment opportunities to cater for the expected increase in labour force.

• Industries are likely to produce mainly goods used by the young population at the expense of the needs of adult population.

• The country may be forced to import such goods as food and medicine which leads to balance of payments problems.

There will be little or no exports as the majority of the population who are young consume everything. (4x2 = 8mks

b) Services of central bank to commercial banks.

i) Banker to the commercial bank by safe keeping. ii) Provides clearing house facilities for cheque arising from interbank activities.


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iii) Lender of last resort to commercial banks when they have no other source to borrow from.

iv) Issue of currency, notes and coins for use by commercial banks. Also replaces worn out currency.

v) Maintains an account for foreign exchange rates, sells and buys foreign currency to and from commercial banks.

vi) Provides advisory services to commercial banks on banking and economic matters.

4(a) Indicators of under development.

(i) High level of poverty where many people live below poverty line. (ii) Disparity in income distribution – There are many people whose income are very low while minority earn very high income. (iii) Low level of savings and investment: Low per capita income in Kenya make them have little or nothing to save. (iv) High population growth rate that leads to low per capita income. (v) Rural to urban migration in search of jobs and other social amenities in urban areas. (vi) Over dependence on agricultural sector. (vii) capital deficiency in form of finance, machines and equipments. (viii) Cultural bottle necks where many countries are ties in traditional customs and beliefs which are rigid to adjust to the upcoming and existing structures of development. (10 mks) Any 5 point well explained (2 mks each)

(b) Kimani traders Balance sheet As at 31st January 2012 Fixed assets sh sh sh sh Motor vehicle 600,000 capital 400,000√√ Furniture 70,000√ 670,000long term liabilities Current assets bank loan (5 years) 460,000√ Stock 250,000√ short term liabilities Cash 30,000√√ creditors 330,000√ Debtors 140,000 bank overdraft 20,000 350,000 Bank 120,000√ 540,000 1,210, 000√ 1,210,000 Each mark (√) 1 mark 10 x1=10 marks

5a) Fivebenefits of being a member of economic bloc such as East African Community.

- A wider market is created for goods and services produced in the country. - A country will be able to specialize in the production of goods and services they are best endowed.


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- Promotion of peace and understanding among member countries in the region. - Increased employment for people in the region. - There will be improvement of infrastructure in the region due to increased economic activities. - Increased economic bargaining power in trading activities. - Higher quality goods and services are produced due to competition.

(Any 5 well explained @ 2marks = 10marks) b)

- Creation of employment

• Entrepreneurs start business and create employment

• Attracts foreign investors

• As business strive and grow it attracts foreign investors who invest in business locally making use of local resources

• Entrepreneurs made use of local resources in their industries as raw materials in the production process

• As different business are started in the country it leads to provision of a variety of goods and services

• Savings on imports – local entrepreneurs are able to produce goods that are substitute to imports

• Successful entrepreneurs get as eyes openers to potential entrepreneurs who view them as role models.

6. (a) Describe five factors considered when choosing a means of communication. (l0mks)

i. Cost of the means — A cost effective means should be selected by the sender. ii. Distance between the sender and the receiver for example telephone are preferred for

a long distance communication. iii. Need for confidentiality means face to face offer room to ascertain the environment

around you. iv. Urgency/Speed, means like telephone is fast over long distances v. Need for evidence written communication would appropriate when evidence is

required. vi. Desired impression vii. Reliability of the means: the sender should use a means that provides the assurance of

reaching the intended recipient. viii. Accuracy of the means

(any 5 x 2 10)


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(b) Twiga Traders

Trading, Profit and loss Account

Dr for the year ended 30th June, 2008 Cr Shs Shs Shs

Opening Stock 22,5000 Sales 160,000 Add Purchases 70,000 LessReturn in 7,500 Add carriage in 2,700 152,500

72,700

Less Return out 9,500

63,200 C.O.G.A.S 85,700 Less closing stock 11,000 Cost of goods sold 74,700 Gross profit C/d 77,800 152,500 152,500

Discount allowed 3,000 Gross profit b/d 77,800 Wages 25,000 Commissions 4,000 Carriage outwards 1,150 Discount received 1,000 Lighting 6,000 Net profit transferred 47,650 To B/Sheet 82,800 82,800

24 x ⅓ = 8mks

(i) Rate of return on capital = Net Profit x 100 Capital = 47,650 x 100 771,850 = 61.21% ≈ 61%.

(ii) Margin = Gross Profit x 100


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Net sales = 77,8000 x 100 152,500 = 51.02% ≈ 51%

(iii) Quick ratio = Current Assets - Stock Current liabilities

= 71000 - 11,000 15,000 = 60,000 15,000 = 4:1

(iv) Rate of stock-turn over = Cost of goods sold Average stock = 74,700 22,500+ 11,000 2 = 74,700 33,500 = 2.2 times ≈ 2 times.


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1

MARKING SCHEME 565/2 .

NYANDARUA WEST CLUSTERS PRE-MID YR 2019.

1.a]Characteristics of economic resources are;-

� Are scarce/limited in supply-----one cannot have all economic resources they may want.

� Have money value----you can attach monetary value on them.

� Have utility----are useful and can satisfy a want.

� Most are transferable---some can be moved from one place to another eg man made resources

� Are unevenly distributed----some areas /country have more than others.

� Have alternative uses---- usage can be changed to areas of better/more returns.

� Can be combined to produce goods---different raw materials can be combined to come up with

a new product.

�

b]Merits of audio visual means of communication.

� Permanent record can be made---information can be saved in form video tapes/compact discs

� Fast means ---hence good for urgent messages eg message sent through Tv reaches viewers

immediately.

� Immediate feedback is possible---one can study reaction of receiver on spot.

� Possible to reach many people at once---a group of people can receive the message at once.

� Sustain/attract attention of receiver ---message can be made to entertain the audience.

� Possible to combine different means to reinforce message--- use of still pictures,pictures on

motion,different sounds to create unique attention.

� Can have high retension rate---receive can register scene in they mind hence possible to recall.

2.a]Termination of partnership.

� Court order---if formed under fraud/breach of partnership agreement.

� Continued/persistent loss making---making it unable to meet its obligation.

� Change of law/government policy---making its operations unlawful/illegal.

� Mutual agreement of members---where partners agree to terminate their business.

� Internal disagreements among partners---hence not able to agree on how to run their business.

� Bankruptcy o f genera l partner ---court declares his/her total assets cannot settle debts.

� If it was temporary partnership---having achieved its objectives/experily of time it was

undertaking.

� Permanent inability of general partner---making one not be able his/her duties due to

illness/sickness.

� Request by some partners to dissolve—others abiding by their request/wish.


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b] Kasuku traders

Balance sheet

As at 31/7/2018√

Capital 61,000√

C.F.C Loan 50,000√

Creditors 50,000√

Furniture 20,500√

M. Van 40,000√

Stock 40,000√

Debtors 25,000√

Bank 34,00√

Cash 1,500√

161,000 161,000

N/B For heading to score must be at 31/7/2018 as instructed.

10 x 1 =10mks

3.a]Principles of insuarance

� Principle of indemnity---in an event of loss from an insured risk,insurer restore the

insured back to the financial position he/she was before the loss occurred.

� Principle of contribution---occurrs when insured insures same property with more than

one insurer,in an event of loss the insurers share the loss proportionally.

� Principle of utmost good faith/uberrima fides---insured expected to disclose all material

facts about the item being insured whether asked or not by the insurer.Failure to

disclose or being untruthful may cause the insurer not compensate in an event of loss.

� Principle of subrogation---when insuredis compensated remains of insured item to be

surrended to the insurer.It ensures the insured does not benefit out of insurance.

� Principle of proximate cause—ensures that there was a very close relationship between

the risk insured and the actual cause of loss for insurer to compensate.Loss suffered

must arise directly from the risk insured against.

� Principle of insurable interest---insured can only insure property that he/she can

financially suffer loss if destroyed.


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b]Journals.

Sales journal√

Date Details Invioce no. L.P Amount

May 2 Garry√ 660√

May 15 Jack√ 1,850√

Purchases journal√

Date Details Invoice no. L.P Amount

May 5 K.N.T.C√ 7,500√

General journal

Date Details L.P DR CR

May 10 Office machines √ 7,500√

Fine electronic√

[purchase of office

machine on credit]√

7,500√

May 18 Twiga motors√

1,500√

Furnature√ 1,000√

Profit & loss√ 500√

[sale of old furn. At

a profit on credit]√


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4.a]Features of monopolistic.

� Free entry/exit from the market—no barriers to stop one to enter / exit in the market, such

decisions influenced by profits/losses.

� Products are similar[close substitutes]—each firm differentiates their products by use of colour

/names/shapes/packaging etc.

� Wide knowledge of the market---both buyers and sellers are aware of prices and quantities and

other market forces.

� Firms are independent---when making decisions on prices and quantities to produce.

� Market has many buyers /sellers---who act independently allowing level play ground in the

market.

� Exit/entry of a single firm does not affect the market----no firm can influence the price or

supply by joining or leaving.

� No single firm has control over factors of production—all firms acquire them at prevalling

market rates.

� All firms earn normal profits in the long run---high profits makes other firms to enter while

losses causes others to leave.

4.b]warehousing

PUBLIC PRIVATE

Requires a licence to operate

Does not require a licence to operate

Owned by a retailer/wholesaler/producer Owned by anybody who wishes to operate

business of renting space

Usually small in size Usually big in size

Insurance for goods stored is optional Insurance for stored goods is a must.

Can specialize on certain goods Usually designed for general goods

Usually near owners business Usually located near terminals

No splitting of marks either 0 mk or 2 mks for each difference


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5.a]Documents used in home trade.

• Letter of inquiry—buyer sends to supplier to inquire/ask information about certain goods.

• Order—request made by the buyer for supply specified goods in it.

Or LPO[Local purchase order] –an official designed form used by businesses when buying goods.

• Goods received note--- buyer informs the seller he/she has received the goods.

• Goods returned/damaged note---buyer sends it when goods received do no match order

sent/goods are demaged.

• IOU[I owe you]—note prepared by the buyer to inform the seller he/she still has not paid

his/her debt.

6.a]3 column cash book.

Dr Three column cash book for the month of September CR

Date Particulars D.A Cash Bank Date Particulars D.R Cash Bank

Sep.

1

Bal b/f√ 1,900√ 6,500√ Sep 5 Transport√ 2,050√

‘’

3

Sales√ 1,200√ ‘’ 7 Purchases√ 125√ 2,375√

‘’

12

Cash√ 600√ ‘’ 10 Postage√ 3,000√

‘’

15

Furniture√ 3,900√ ‘’ 12 Bank√ 600√

‘’

17

Addational

capital√

1,800√ ‘’ 18 Electricity√ 2,100√

‘’

20

Sales√ 300√ 6,600√ ‘’ 21 Drawings√ 400√

‘’

28

Furaha√ 1,500√ ‘’ 30 Bank√ 3,400√

‘’

30

Cash√ 3,400√ ‘’ 30 Bal c/d√ 3,525√√ 9,950√√

300 10,300 17,100√ 125 10,300 17,100√


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40x1/4=10mks

b]Demand and supply diagram.

S1√

P0√ E0√

S1

12X1/2=6MKS

Price decreases from po to p1, √ quantity demanded and supplied increases from qo to q1√ √

& equilibrium point falls to a lower position. √

4X1=4MKS

D0

√√

D0√

D1

D1√

S0√

S0

P1√

Q0√ Q1√

Output √

Price √

E1√


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NYANDARUA WEST CLUSTER EXAM

MARKING SCHEME



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1. Characteristics of human wants (1 x 4 = 4mks)

i) Insatiable – Endless

ii) They are universal – affect everybody

iii) They are habitual

iv) They are complimentary

v) Repetitive

vi) Competitive

vii) Vary in intensity and urgency

2. (1 x 4 = 4 mks)

i) Through making/ manufacturing –

ii) Through transport / distribution – place

iii) Through transport storage – time

iv) Through exchange - possession

3. (1 x4 = 4mks)

i) He may receive inputs at fair prices

ii) The co-operative may get better prices for members produce

iii) He may get transport for produce to market

iv) He may get better storage facilities

v) The society may grade package and process his produce

vi) He may get credit facilities

vii) He may acquire skills/ better methods of production

4. (1 x 4 = 4mks)

i) Checking goods before buying

ii) Forming vigilant groups

iii) Enlightening themselves on their rights

iv) Reporting cases of exploitation

v) Forming consumer organizations

vi) Boycotting cases of exploitation

vii) Take exploiter to court

viii) Complain through media

5. (1 x 4 = 4mks)

i) Profitability of the venture

ii) Level of competition

iii) Availability of resources

iv) Government policy

v) Extent of demand/ market

vi) Cost of production


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6. (1 x 4 = 4mks)

i) Reduction in the cost of production

ii) Improvement in the state of technology

iii) Decrease in prices of related goods

iv) Favorable Government policies e.g tax reoluction

v) Favorable climatic conditions

vi) Availability of factors of production

7. Characterists of good money (1 x 4 = 4mks)

i) Stability

ii) Scarcity

iii) Divisibility

iv) Durability

v) Homogeneity

vi) Malleability

8. How human resource positively influences internal business environment ( 1 x 4 =

4mks)

i) Availability of labour

ii) Skills that the labour has

iii) Willingness and ability to work

iv) Availability of tools and equipment

v) Conducive working environment

vi) Motivated workers

9. Benefits of S.G.R (1 x 4 = 4mks)

i) Creation of employment opportunities

ii) Quick delivery of goods and services

iii) Increased production of goods and services

iv) Enhanced industrialization since raw material can be moved easily

v) Equitable development especially in the dry Ukambani region

vi) Wider market for goods and services

vii) Higher Government revenue

10. Successful entrepreneur (1 x 4 = 4mks)

i) Good time manager

ii) Desire to achieve

iii) Independence

iv) Commitment to work

v) Innovative/creative

vi) Optimistic

vii) Self confidence

viii) Desire for feedback


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11. Documents for registering Public Limited Company (1 x 4 = 4mks)

i) Memorandum of Association

ii) Articles of association

iii) List of directors and their consent

iv) Statement of share capital

v) Prospectus

vi) Declaration of compliance with Law

12. Circumstances of using cash with order (1 x 4 = 4mks)

i) When it is a mail order business

ii) When the buyer is new to the seller

iii) If the buyers credit worthiness is in doubt

iv) Where it is the seller’s Policy not to give credit

v) When the seller does not want to incur bad debts

vi) When the seller wants to avoid high cost of debt collection

13. Problems of measuring National Income using output approach (1 x 4 =4mks)

i) Deciding on what goods and services to include

ii) Some income earning activities are illegal

iii) Determining the value of National output due to inflation

iv) Valuation of output in subsistence sector

v) Valuation of stock and working progress

vi) Possibility of valuing government output

14. Factors to consider when choosing a method of product promotion (1 x 4 = 4mks)

i) Cost of the method should be affordable

ii) Geographical area of coverage / extent of the market

iii) Target group/ type of consumer

iv) Speed/ urgency of the message

v) Availability of the method

vi) Nature/type of product

vii) Government policy

viii) Impression/ intended impact

15. Source documents (1 x 4 = 4mks)

i) Cash recipient journal

ii) Purchases journal

iii) Payment voucher

iv) General journal


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16. Accounts to be credited and debited (1 x 4 = 4mks)

Debit Credit Bank Cash

Drawings Cash

Purchases Creditors

Bank Furniture

17. WAMWANGI TRADING ACCOUNT FOR THE YEAR ENDED 31/12/2018

Shs. Shs.

Opening stock 20000 Sales 218250

Add purchases 185000

C. G. A. S 205000

Less closing stock 30000

C. G. S 175000

Gross profit 43250

218250 218250

Hint: C. G.S = 175000 G. P = 43250 Sales = 218250

18. Muriuki’s corrected Trial Balance (2

1x 8 = 4 mks)

Muriuki Trial Balance as at 31/12/2017

Fixed Assets Shs Capital 230000

Land 110000 short term liabilities

Machinery 90000 creditors 60000

Debtors 80000

Prepaid rent 10000

= 290000 290000

19.

i) Sales ledger – Records all credit sales of a business

ii) Private ledger – Records owners capital and drawing / exclusively used by

a. owner(s)

iii) Nominal ledger – Maintains revenue and expense accounts such as sales and

i. Purchases

iv) Cash book – Contains cash and Bank accounts


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20. Components of a business plan (1 x 4 = 4mks)

i) Business description name location e.t.c

ii) Product description – goods and services provided

iii) Skills needed/ Types of employees

iv) Management personnel

v) Market served

vi) Amount of finance required

vii) Projections

viii) Summary

21. (1 x 4 = 4mks)

i) Employment

ii) Mobilizing savings

iii) Revenue to the government

iv) Creating confidence in investors

v) Continuity of business

vi) Spreading risk

22. Measure used by C. B. K to control money supply (1 x 4 = 4mks)

i) Bank supply

ii) Open Market Operations (OMO)

iii) Cash and liquidity ratio

iv) Selective Credit

v) Compulsory deposits

vi) Direct actions

23. Feature of perfect competition

i) Uniform buyers and sellers

ii) No government interference

iii) There’s freedom of entry and exit

iv) Many buyers and sellers

v) No excess demand or supply

24. (1 x 4 = 4mks)

i) Units of carriage

ii) Method of propulsion

iii) Way

iv) Terminals

25. Types of unemployment

i) Seasonal

ii) Hidden/disguised/underemployment

iii) Structural

iv) Cyclical


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SUKELEMO JET BUSINESS STUDIES PAPER 2

MARKING SCHEME

1. a. Explain five features that differentiate a public corporation from a public limited company form of business unit. ( 10 mks )

Public Corporation Public Limited Company

Initial capital is usually provided by the

government.

Established through legislation by an act

of parliament.

Managed by a board of directors

appointed by the government

Profits are distributed to the government

and to shareholders as dividends

Non-profit motivated.

Can increase its capital by inviting

members of the public to subscribe to its

shares

Owned by government

Auditor general audits its books of

accounts

Financial statements presented to

parliament

Initial capital comes from the

shareholders.

Established by promoters according to

the company’s act.

Managed by a board of directors elected

by shareholders.

Profits are shared by shareholders as

dividends

usually established to earn profits.

Can increase its capital by getting more

funding from the government

Owned by shareholders

Audited by private auditors

f.s published in the press and presented

to shareholders

b. Explain 5 benefits of a business plan to an entrepreneur (10 marks)

(i) Avoiding mistakes. It enables identification of mistakes so that they can be corrected in advance.

(ii) Identifying strengths to be sustained and weaknesses where remedial action can be taken immediately.

(iii) Requirement by financiers. Financial institutions sometimes ask for a business plan before they can accept to finance a business.

(iv) Allocation of resources. It enables resources to be allocated appropriately to ensure they are not underutilized or misused.

(v) A motivating factor. It makes employees aware of the direction being taken by the business and inspires them to work towards that direction.

(vi) Adaptability. A good plan allows flexibility in the use of business resources in line with future changes.

(vii) Facilitates/guides decision making needed to run a business on a day to day basis.


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(viii) Enables a business to identify potential customers, right prices for its products, promotional activities, distribution channels and its competition

(ix) Enables a business to identify its staff requirements: number of employees, skills, tasks to be done, and how to pay them.

(x) Determination of amount of finance required. The plan identifies financial needs of the business and possible sources of financing.

(xi) Helps the entrepreneur to plan and budget properly. (xii) Useful in evaluating performance of the business to determine if it is achieving its

intended purpose. (xiii) Tool of control. It makes it possible to assess actual performance with set standards and

correcting any deviations 2. a. Explain 5 factors that may influence the level of national income of a country

(i) Human resources. A country with skilled human resources can produce quality goods and generate high income.

(ii) Natural resources. A country endowed with natural resources can produce more goods hence generate more income.

(iii) Technology. A country with high level of technology may produce high quality goods hence generate high income.

(iv) Capital. Availability of capital increases production leading to increased national income.

(v) Foreign investments. Investments from abroad may increase production of goods hence increasing national income to the country.

(vi) Political stability. Political stability creates confidence in investors hence increasing investments generation of national income.

(vii) Entrepreneurship. A culture that encourages entrepreneurship increases production of goods hence generation of more income.

b. Kenya is looking forward to the realization of Vision 2030. Explain 5 obstacles that may

hinder the efforts made towards this dream. (10mks) � Lack of adequate and accurate data as record are rarely kept by society and

firms leading to poor or unreliable plans

� Shortage or inadequate finances or capital hence some projects are never

completed or it is difficult to collect revenue and compute information and

prepare good plans

� Political instability and insecurity affects plans since its difficult and costly to

plan and implement and can lead to destruction of projects

� Copying of imported plans from developed countries which do not suit local

conditions and communities as they differ in culture, and level of development

hence end up failing

� Preparation of overambitious plans which are very costly to implement and

some turn up to be white elephants or are abandoned leading to wastage or

failed projects

� Lack of community support hence people reject some projects or do not

recognize the usefulness of some projects since they were not involved in the

planning


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� Existence of large subsistence and private sector hence difficult to get

information and coordinate their activities as the government doesn’t have

direct control

� Inflation which increase the cost of the projects hence some projects are never

completed

� Lack of trained or skilled manpower to plan and implement the projects as

expatriates are used which is expensive

� Natural calamities or disasters usually destroy some projects e.g drought hence

wasting resources or increase costs of the projects

� Over reliance on foreign loans and grants has made some projects not to be

completed when donors fail to remit the funds

� Political interference in implementation and preparation of plans and lack of

political goodwill has led to mismanagement of projects or failure of projects to

be completed

� Poor technology will hinder the preparation and implementation of quality

plans and projects

� Lack of adequate capital to prepare plans and implement some plans has led to

some plans being just mere paper work

3. a) Explain FIVE factors that one needs to consider when selecting an office equipment. (10 marks) • Cost of the equipment – buy an equipment that you can afford

• Cost of repair- buy an equipment that you can afford the repair coat

• Quality of machine – buy one that has attractive features, designs

• Spare parts – must be easily and readily available

• Type of work – the machine should be able to do the intended work

• Durability – the machine should be long lasting to serve you for a long time without

breaking down

• Effects on staff morale - it should encourage workers to work hard or be more

efficient

• Safety or comfort of workers – buy a machine that workers will feel comfortable

and relaxed to work with or will not injure workers

• Space saving – so that you economize space in the office

• Adaptability – so that it can cope up with future changes in the volume of work

• Availability of personnel – who can operate and repair the machine

b. Kitinga Enterprises runs a general Merchandise business. The transactions during

the month of June

2014 were as follows:

2014 June 1 - Bought on credit from Orina Ltd. goods worth shs. 100 000, received a 20%

trade discount.

June 4 - Sold goods on credit to Rono Ltd. shs. 50 000 and allowed them a 10%

trade

discount.

June 8 - Sent Rono Ltd. a credit note for goods returned, which had a value of


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shs. 27 000.

June 10 - Sold goods on credit to Akinyi shs. 60 000

June 12 - Purchased goods from Wamalwa ltd for shs. 100 000 and he allowed a 30%

trade discount.

June 15 - Purchased goods on credit from Nyambura shs. 55 000

June 16 - Sent Akinyi a credit note for goods returned worth shs. 6 000

June 18 - Wamalwa Ltd. sent us a credit note for sh.30 000 for goods returned.

June 19 - Received a credit note for goods returned to Orina worth sh.20 000

June 25 - Sold goods to Wairimu on credit sh. 25 000

June 27 - Sent Wairimu a credit note for sh.5 000 to rectify an overcharge on their

invoice.

June 28 - Sold goods on credit to Rono Retailers for sh. 56 000

June 29 - Purchased a Motor Van on credit from Awori Ltd. worth shs. 80 000

June 30 - Sold on credit Old machinery to Nairobi Trading Company for sh.35 000

(prior to this owned machines worth shs. 100 000

Required: Make the necessary entries in the relevant books of original entry (10 mks)

(NB. Posting to the ledger Accounts is not necessary)

SOLUTION

JOURNALS Purchases Journal

Date Details LF Invoice No. Amount (shs.) 11/6/05 Orina ltd. 80,000√ 12/6/05 Wamalwa ltd. 70,000√ 15/6/15 Nyambura 55,000√ Total to Purchases A/c 205,000√

Purchase Returns Journal

Date Details LF Credit note

No. Amount (shs.)

18/6/05 Wamalwa ltd. 30,000√ 19/6/05 Orina ltd. 20,000√ Total to Purchases Returns A/c 50,000

Sales Journal

Date Details LF Invoice No. Amount (shs.) 4/6/05 Rono Retailers 45,000√ 10/6/05 Akinyi Retailers 60,000√ 25/6/05 Wairimu Retailers 25,000√ 28/6/05 Rono Retailers 56,000√ Total to Sales A/c 186,000√


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Sales Returns Journal

Date Details LF Invoice No. Amount (shs.) 8/6/05 Rono Retailers 27,000√ 16/6/05 Akinyi Retailers 6,000√ 27/6/05 Wairimu Retailers 5,000√ Total to Sales Returns A/c 38,000√

Mumbo Sparks General Journal

Date Details Debit Credit 29/6/05 Motor Vehicle A/c 80,000√ Awori A/C 80,000√ To record purchase of motor vehicle

on credit

30/6/05 Nairobi Trading co. A/C 35,000√ Machinery A/C

To record sale of machinery on credit 35,000√

@ √ ½ x20 = 10 marks

4. Explain 5 measures that may be taken by the central bank of Kenya to control the

amount of money in circulation. (10 mks)

• bank rate –the rate at which lends to commercial banks it can be raised during

inflation and lowered during inflation

• open market operations (OMO) – central bank may sell or buy securities in the

open market; selling is done during inflation and bought during deflation

• compulsory deposits – central bank may require other financial institutions to

lower a certain percentage of deposits deposited in central bank

Increased during inflation and decreased during deflation

• Cash ratio/liquidity ratio – ratio of cash /liquid assets to deposits may be

increased during inflation and reduced during deflation

• Moral suasion /persuasion – central bank may appeal /request other financial

institutions to exercise restraint in lending / regulate their lending habits

• Selective credit control – the commercial banks may be required by central bank

to approve loans to specified types of projects e.g agriculture, manufacturer

• Direct /directives/instructions – central bank can use its authority to direct /

instruct the financial institutions to lend more/less /apply credit spheres/credit

expansion/varying margin requirement


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b). On 1 June 2019, L2020 Ltd had cash in hand sh 87,000 and cash at bank sh 250,000.

During the month, the following transactions took place:

2019 June 2 Cash sales sh 60,000.

3 Paid salaries sh 101,500 by cheque. 7 Received a cheque of sh 76,000 from Mary, after allowing her a cash discount of 5%. 13 Bought office furniture by cheque sh 86,000. 17 Settled Omollo's account for sh 34,200 in cash, having deducted sh 800 cash discount. 20 Received a cheque for sh 165,000 in respect of cash sales. 22 Paid wages sh 25,000 in cash. 24 Withdrew sh 32,000 from the bank for office use. 25 Withdrew sh 4,000 cash for personal use. 29 Received sh 17,000 cash from Alvin in settlement of his account less sh 1,000 cash discount. 30 Deposited all the money into the bank except sh 24,000.

Prepare a three column cash book duly balanced. (10 marks )

SOLUTION 3-Column cash book

Date Details Disc Cash Bank Date Details Disc Cash Bank

All Rec

2019√ 2019√

Mar 1√ Balance b/d√ √ 47,800√ Mar 1√ Bal. b/d√ 123,400√√

3 Sales√ 6,500√ 4 Purchases 15,000√

5 Mary√ 4,000√ 76,000√ 12 Omollo√ 800√ 34,200√

6 Sales√ 50,000√ 13 Insurance√ 16,000√

9 Nyaboke√ 76,500√ 14 Keith√ 300√ 9,700√

17 Sales√ 150,000√ 21 Cash √ 30,000√

21 Bank√ 30,000√ 25 Wages√ 20,000√

23 Jabali√ 1,250√ 23,750√ 26 Nyaboke√ 76,500√

29 Alvin√ 1,000√ 17,000√ 30 Bank√ 40,800√√

30 Cash√ 40,800√√ 31 Bal.c/d√ 33,800√ 118,950√√

6,250√ 144,800√ 373,550√ 1,100√ 144,800√ 373,550√

60 ticks x �

� = 12 marks


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5. (a) The following trial balance was extracted from the books of Namirama Traders as at 31st December 2017.

Dr. Cr. Stock on 1st Jan 2017 60,000 Purchases and sales 400,000 580,000 Returns 20,000 50,000 Debtors and Creditors 65,000 40,000 Premises 540,000 Machinery 200,000 Fixture and Fittings 100,000 Carriage outwards 8,000 Wages and Salaries 30,000 Discounts 25,000 32,000 Commissions 16,000 14,000 Cash in hand 70,000 Capital 818,000 1,534,000 1,534,000 Closing stock was. Sh. 70,000

(i) A trading, profit and loss account for the period ended 31st December 2017

(ii) A balance sheet as at that date (iii) Calculate the following; current ratio, rate of stock turn over, capital employed and working capital. (12 marks)

SOLUTION

Namirama Traders Trading, Profit and loss A/C

For the period ended 31st December 2013

Op. Stock 60,000 Sales 580,000 Add Purchases 400,000 Less S.rate

20,000 Less P. returns 50,000 350,000 GAS 410,000 Less Cl. Stock 70,000

C.O.S 340,000 Gross profit 220,000

560,000 560,000


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Carriage outwards 8,000 Gross prifit 220,000

Wages 30,000 Disc rec. 32,000

Dis. Allowed 25,000 Comm Rec. 14,000

Comm Allowed 16,000 Net profit 187,000

266,000 266,000

Namirama Traders Balance Sheet


Fixed assets Capital and liabilities Premises 540,000 Capital 818,000 Machinery 200,000 net profit 187,000 1,005,000 Fixt & fitting 100,000 840,000 Current Assets Current liabilities Stock 70,000 Creditors 40,000 Debtors 65,000 Cash 70,000

205,000 1,045,000 1,045,000

Working capital = CA – CL

205,000 – 40,000 = 165,000

Capital employed = FA + WC or CL + LTL = 840,000 + 165,000 = 1,005,000 or 1,005,000 + 0 = 1,005,000 Current ratio – =CA:CL = 205,000 : 40,000 = 205 : 40 = 41 : 8 ROSTO = cost of sales/ evg stock = 410,000/60,000 + 70,000/2 = 410,000/65,000 = 6.307 times = 6 times


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b) Highlight 5 functions of wholesalers (10 marks)

i) Wholesalers transport goods from the producers to their premises and from their premises to the customers.

ii) They buy and store goods until they are required. iii) They break bulk by buying goods in large quantities and selling them in smaller

quantities. iv) They offer market information to producers and also advise their customers on matters

related to the products. v) They are a link between the producers and the retailers. vi) They provide finance by buying goods on cash from manufacturers and selling them on

credit to the retailers. vii) They advertise goods they deal in and hence increase customer awareness and possible

sales viii) They prepare goods for sale by packing, branding, sorting, grading, packaging

and blending. 6. a) You are given the following functions. Q = 51 + 4P Q =100 – 3P

Required: i) Of the two options, identify which is the supply and demand functions(2mks)

SOLUTION

Q = 51+ 4P is the Supply function

Q= 100 – 3P is the Demand function

ii) Give reasons to your answers in (a) above (2mks) iii)

SOLUTION

Q= 51+ 4P is supply function because quantity supplied increases with increase in

price

Q= 100- 3P is demand function because quantity demanded decreases with increase

in price


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iv) Establish the equilibrium price and quantity (4mks)

SOLUTION

Q=51 +4P

Q= 100-3P

51+ 4P = 100-3P

4P + 3P =100 -51

7P = 49

P = 7

Q=51 + 4P

= 51 + 4(7)

= 51+ 28

Q = 79

Equilibrium price = sh 7

Equilibrium quantity = 79

b.. Outline FIVE causes of Balance of payments deficits (10 mks)

SOLUTION

Causes of B.O.P deficit − Adverse weather conditions like drought or floods; This leads to shortage s in the supply of

agricultural products in the domestic market which results in reduced exports and reduced imports. − Increased demand for imported inputs e.g for capital goods which leads to high capital outflow

hence possible deficits. − Dependence on a few exports that may be adversely affected by demand changes on the world

market, This makes a country to earn less from exports relative to imports. − Nature of exports and imports , where imports are mainly expensive manufactured goods as

opposed to primary products exported by a certain country.this means more capital outfow. − Trade ties which restrict a country in terms of quantity and number of trade partners which in turn

denies the country a chance to source better prices for its exports. − Ambitious development plans that require more than a country can afford resulting to dependence

on imports from development partners − Devaluation of currency by a Trading partner making imports cheaper and exports more expensive. − High import consumption resulting from wasteful import consumption behavior leading to

excessive imports @2 x 5 = 10 marks

( the cause must be accompanied with HOW it creates a deficit for maximum marks )


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SUKELLEMO JOINT EVALUATION TEST 2019

565/1

BUSINESS STUDIES P1

Marking Scheme

1. Identify four types of business activities -Extraction -Processing of raw materials -Manufacturing -Construction -Distribution of goods -Trade -Provision of services (4 x 1 = 4mks) 2. State four ways in which a consumer can make use of scarce resources to satisfy unlimited scarce resources -- A consumer can make a choice among competing wants using scale of preference -- A consumer can conserve the available resources -- A consumer can recycle some resources -- Resources that is multipurpose to be used --- A consumer to be innovative and create new products (4 x 1 =4mks) 3. Outline four utilities created in the process of production (4 marks) Form Utility-changing the form of goods through activities such as processing, manufacturing Time Utility –Keeping/storing of goods until the time when they are required Place Utility – Closing the geographical gap between the producer and consumer through transport Possessive – Change of ownership of goods through trade (4 x 1 =4mks) 4. Outline four reasons why a new business may fail. − Inadequate capital (don’t accept lack of:-) − Inappropriate marketing strategies thus low sales. − Unfair, unhealthy competition. − Inefficient management skills. − Inadequate manpower − Inappropriate technology or poor technology. (4 x 1 =4mks) 5. State the best type of machine one would use to perform the following tasks. (4 marks) a)Guillotine b) Composite machine c) Photocopiers d) Collator (4 x 1 = 4mks) 6. Outline four features of mail-order business. -They sell goods through the post office -They advertise through print/ electronic media, e.t c -Transactions are carried out through the post office -Customers do not visit the business premises -Sell mainly on COD or CWO terms


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- may have large warehouses 7. Highlight four circumstances under which business organizations may choose to merge. -Where persistent decline in profitability exists -Where there is a need to control output -Where there is intention to venture into new lines of business -Where there is need to control wider market/increase sales -Where there is need to expand capital base -Where there is intention to venture into new markets -Where there is need to bring on board new skills/competences -Where there is need to share research information/ findings 8. Describe four characteristics of debentures. -Carry a fixed rate of interest -Interest is paid whether the company has made profits or not -On dissolution, debenture holders are paid first before shareholders -May be redeemable or irredeemable (4 x 1 =4mks) 9.Identify the following Acts of Parliament used by the government to protect the consumer. (4mks a) Public health act b)Weights and measures act c) Food and drug act − d) Licensing act. (4 x 1 =4mks) 10. State four ways in which the nature of goods would influence the choice of transport. (4 marks) -If goods are perishable, a fast and appropriate means is used -If goods are fragile, a smooth means of transport is used -If goods are highly valued, a safe and secure means is required -If goods are urgently required, a faster means is used -If goods are bulky and heavy, they require spacious and heavier/strong means to withstand the

weight (4 x 1 =4mks) 11. Outline circumstances under which a trader would prefer letters rather than a telephone when

communicating with suppliers -When there is need to have a permanent record for future reference -When the message is complicated in nature and recipient business needs time to study and

understand the message -When the content of the message needs to remain confidential -When the message is long and detailed -When similar message is meant for many people circulars can be used -Where the telephone is not available letters can be used -When the message is not urgent (4 x 1 =4mks)


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12. State four differences between insurance and assurance (4 marks) Insurance Assurance

I. Protection offered to property (against unforeseen risks)

i) Protection offered to life ( against unforeseen risks)

II. Risk insured against may or not happen

ii) Risks insured against must happen (and time is not known)

III. The insurance contract is renewable after every year (short term)

iii) Insurance contract is for life and does not require renewal ( long term)

IV. Compensation is given to owner of property in case of loss/uncertain

iv) Compensations are given to beneficiaries in case of death/uncertain

V. A replacement for the good lost can be given/contract of indemnity

v) Lost life can never be replaced/not a contract of indemnity

VI. Has no surrender value vi) Has a surrender value VII. Policy cant be used as collateral to

secure loans vii) Policy can be used as collateral to

loans VIII. Has no maturity date viii) Has a maturity date

IX. Principle of subrogation applies ix) Principle of subrogation does not apply

X. Cannot be used as a savings scheme x) Can be used as a savings scheme XI. Sum insured depends on the blanket

value of the insured property/not adjustable

xi) Sum insured depends on the ability to pay the premium/can be adjusted

XII. Proof of insurable interest xii) No need of proof of insurable interest at the time of death

XIII. Policy cannot be assured xiii) Policy can be assured

(4 x 1 =4mks) 13. Highlight four ethical issues that a business should consider while engaging in product promotion.

(4 marks) - Cheating on the performance of products - Cheating on ingredients used - Not disclosing the side-effects of products - False pricing - Negative effects on the environment - Social cultural conflicts 14. Outline four causes of a shift to the right in the above diagram. - Use of modern technology in production -Reduction in cost of production i.e. (low tax, increase in subsidies) - Favorable weather conditions. - Increase in supply of inputs and raw materials. -Favourable government policy (offering subsidies and low tax) -Increase in number of producers. -Reduction in prices of related products.


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-When producers expect price increase in the future. (4 x 1 =4mks) 15. State four reasons why the government encourages the location of firms in rural areas. -The need to create balanced regional development -In order to reduce rural urban migration -To open up under developed areas. -To create more jobs in areas. -To exploit idle natural resources in various areas. -To improve infrastructure in various areas. − -To improve social facilities in various areas. (4 x 1 =4mks) 16.State four features of an oligopoly market structure. (4 marks) - Few sellers/firms. - Firms are large in size. - Interdependence of firms in the industry. - Deal with products that are differentiated. - Rivalry among firms resulting to price wars. - Has a kinked demand curve. (4 x 1 = 4mks) 17.Four circumstantiates under which a intermediaries may be removed from the chain of distribution.(4mks) -If goods are being sold through tendering -In case the business can afford the cost of distribution -If the market is small -If the goods are technical in nature /require demonstration -If the goods are made to customers’ specifications -If the goods are perishable -If goods are dangerous/risky (4 x 1 =4mks) 18.State what is represented by: i) P axis - Per – capita income ii) S axis - Population iii) R - Over population iv) Q - Optimum point (4 x 1 =4mks) 19. State the effect of the following transactions on the balance sheet totals by writing increase, decrease or no effect. (4 marks) . a) Increase b) Decrease c) No effect d)Decrease (4 x 1 =4mks) 20. Determine the figures represented by; (i) W = 40,000 (ii) X = 80,000 (iii) Y = 54,000


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(iv) Z = 170,000 (4 x 1 =4mks) 21 The following balances relates to the retail business of Katana for the month of July 2016. Sales 50,000 Expenses 10% of sales Cost of goods sold 40,000 . (i) Mark up = Gross profit = 10,000 = ¼ √√ (1mk) Cost of sales 40,000 (ii) Margin = Gross profit = 10,000 = 20% 1/5√√ (1mk) Sales 50,000 Or Margin = 1 = 1/5√√ (1mk)

4+1 (iii) Total expenses = 10 x 50,000 = Sh. 5,000√√ (1mk) 100 (i) Net profit = Gross profit – Expenses 10,000 – 5,000 = sh. 5,000√√ (1mk) 22. State four banking services that the central Bank of Kenya provides to the government. (4 mks) - Accepts government deposits for safe keeping. -Banker to the government -Issues currency on behalf of government -Arrange and pays public debt on behalf of the government. -Advises government (on monetary policies) -Intervene in foreign currency market on behalf of the government (controls foreign exchange) -Acts as a guarantor of government loans (local and abroad ) − -Lender to the government (4 x 1 =4mks) 23. Highlight four factors that should be observed when coming up with a good tax system Characteristics of a good tax system (4mks) -Equitable -Certain -Convenient -Economical -Flexible -Ability to pay -Diversified -Simplicity (4 x 1 =4mks) 24. State four factors that can hasten economic development. -Industrialization -Presence of a strong entrepreneurial culture -Improvement of infrastructure -Presence of natural resources -Increase of social amenities -Improvement of education -Use of modern technology/capital


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-Good governance/democracy (4 x 1 =4mks) 25. A business had the following record for the year ended 31st December 2016. Shs. Capital as at 31/12/16 64,000 Net profit for the year 14,000 Capital as at 1st Jan 2016 42,000 Drawings for the year 18,000 Calculate the additional investments made during the year CC = OC + P + I – D 64,000 = 42,000 + 14,000 + I – 18,000 64,000 =38,000 + I I = 64,000 – 38,000 I = 26,000


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