KCSE 2011 Business Paper 1 Questions with Marking Scheme

1. Identify the types of wholesalers described in the statements given below; (4 marks)
   1. A wholesaler who trades in maize grain only.
   2. A wholesaler who supplies goods to meet of the traders in kiti, Mbooni and machakos districts in Eastern part of Kenya.
   3. A wholesaler who buys tomatoes from farmers in rural areas and sells the same to other wholesaler in urban areas.
   4. A wholesaler who trades in a wide variety of human medicine.
      
      
2. Outline four factors that should be considered before buying office equipment . (4 marks)
   
   
3. Outline four malpractices by trader against which consumers may need protection by the government.
   
   
4. State three features of an insurable interest. (3 marks)
   
   
5. Outline four ways of reducing the level of unemployment in Kenya. (4 marks)
   
   
6. State four services offered by a commercial bank to its consumers. (4 marks)
   
   
7. List four sources of public finance. (4 marks)
   
   
8. Outline four reasons why countries may trade with each other. (4 marks)
   
   
9. State four reasons why economic development is desirable to a country. (4 marks)
   
   
10. Indicate the reward associated with each of the factors of production in the table below.(4 marks)
    
    
    
    
11. Outline four circumstances under which a co-operative society may be dissolved. (4 marks)
    
    
12. Highlight four features of a bonded warehouse. (4 marks)
    
    
13. Outline four factors that may be considered when measuring the size of a firm. (4 marks)
    
    
14. The following transactions were extracted from the books of Sarah traders for the month of March 2006.
    March 10: purchased goods on credit worth ksh 200000 from Salim traders
    March 25 ,sold goods on credit worth KSH ,420000 to Shah trades
    Record the above transactions in the ledger accounts below: (4 marks)
    
    
    
    
    
15. On 2^nd November 2006 ,Oromo received an invoice for Ksh 12000. Terms of payment were trade discount 5% and cash discount 10% ,if payment is made within 30 days. Determine the amount paid if payment was made on 28^th November 2006. (4 marks)
    
    
16. The following balances were extracted from the books of Nafula Traders as at 31st December 2005
    
    
    
    
    
17. The information given below was extracted from the books of Amina traders on 31st December 2006
    
    
    
    Using the information given above prepare Amina Trading Account. (4 marks)
    
    
18. State four benefits that a farmer may get by transporting produce to the market by road. (4 marks)
    
    
19. The table given below represents the supply schedule of sukuma wiki (kales) for eight weeks in the month of January and February 2009
    
    
    
    Outline four causes of the trend in the table .(4 marks)
    
    
20. Outline four ways in which households contribute to national income in a county. (4 marks)
    
    
21. Outline four circumstances in which a trader may use oral communication. (4 marks)
    
    
22. Outline four reasons why a firm may remain small, (4 marks)

MARKING SCHEME

1. Types of wholesalers
   • Specialized wholesaler
   • Regional wholesaler
   • Rack jobbers
   • General line wholesaler
     (4 x 1 mark = 4 marks)
2. Factors to consider before buying office equipment include: 
   • space available
   • use of which it be put
   • technological trends in the industry
   • funds available
   • skills available
     (Any 4 x 1 mark = 4 marks)
3. Malpractices by traders against which consumers may need protection by the government include:
   • selling of contraband goods
   • overcharging
   • selling under weight goods
   • selling expired goods
   • giving misleading information about the product
   • hoarding
     (Any 4 x 1 mark = 4 marks)
4. Features of insurable interest include:
   • presence of property rights or interest
   • potential insurable risk must be present
   • the property must have monetary value
   • the insurable risk must be legal
   • there must be the possibility of suffering financial loss incase of a risk happening
     (Any 3 x 1 = 3 marks)
5. Ways of reducing the level of unemployment in Kenya include:
   • encouraging self-employment
   • establishment of more labour intensive industries impart the right skills through education and training expanding the market for agricultural goods
   • exporting surplus manpower
     (Any 4 x 1 mark = 4 marks)
6. Services offered by a commercial bank to its customers include:
   • acceptance of deposits
   • safeguarding valuable items
   • advancing loans offering management and consultancy services
   • advisory services on financial matters
   • foreign exchange services
     (Any 4 x 1 mark = 4 marks)
7. Sources of public finance include:
   • taxes
   • licences
   • court fines
   • donor aid fees treasury bonds and bills
     (Any 4 x 1 mark = 4 marks)
8. Reasons why countries may trade with each other include:
   • to sell their surplus
   • to enhance bilateral ties
   • to acquire what they are not able to produce
   • protect special interest
   • to improve the quality of life of their citizens/improve access to a variety of goods
     (Any 4x 1 mark = 4 marks)
9. Reasons why economic development is desirable to a country include:
   • improve standard of living of the citizens
   • improve infrastructure
   • create employment
   • increase life expectancy
   • reduce rural-urban disparity
   • improve the social welfare of citizens
     (Any 4 x 1 mark = 4 marks)
10. Factors of production and rewards they earn:
    

    Factors of production	Reward
    Land	Rent
    Labour	Wages/Salaries
    Capital	Interest
    Entrepreneur	Profit

    (4 x 1 mark = 4 marks)
11. Circumstances under which a co-operative society may be dissolved include:
    • by Government order
    • where the co-operative continuously make losses
    • where stipulated majority of members agree to dissolve it 
    • by a court order
    • where the co-operative society has achieved objectives for which it was formed
      (Any 4x 1 mark = 4 marks)
12. Features of a bonded warehouse include:
    • mostly located at points of entry into a country like the ports
    • stores goods that are under bond
    • guarantees payment of customs duty to customs authority
    • very spacious to accommodate even bulky goods like motor vehicles
    • must issue release warrants to owners of goods for customs clearance
    • works hand in hand with customs officials for inspection of goods
      (Any 4 x 1 mark = 4 marks
13. Factors that may be considered when measuring the size of a firm include:
    • the level or volume of output
    • the number of employees
    • the capital invested
    • the production methods (technology) used
    • the market served
    • the floor area covered by the firm's premises
    • the sales volume
      (Any 4 x 1 mark = 4 marks)
14. Ledger Accounts
    1.     
       

       Salim traders Account
       .	Ksh. March 10: Purchases 200,000

    2.  
       

       Shah traders Account
       March 25: Sales Ksh. 420,000	.

          
    3.    
       

       Purchases Account
       March 10: Salim Traders Ksh. 200,000	.

         
    4.     
       

       Sales Account
       .	March 25: Shah Traders Ksh. 420,000

       (4 x I mark = 4 marks)
15. 
    

    Amount Paid	Ksh
    Invoice price Less: Trade discvount (12,000 x 5%)	12,000 600
    	11,400
    Less: Cash discount (11,400 x 10%)	1,140
    	10,260

16. Calculation of rate of return on capital
    C= A-L
    = 500,000 - (150,000 + 100,000) 
    =500,000 - 250,000
    = 250,000
    ROROC = NP x 100
    = 50,000 x 100
    250,000
    = 20%
    (8 x , mark = 4 marks)
17.     
    

    Amina Traders Trading Account for th year ended 31st December, 2006
    	KSh	Ksh		Ksh
    Opening stock Purchases Add: Carriage	260,000 12,500	75,000 272,000	Sales 320,000 x 125               100	400,000
    		347,500
    Less: closing stock Cost of goods sold		27,500 320,000
    Gross profit  320,000  x 25  100,000		80,000
    		400,000		400,000

18. Benefits that a farmer may get by transporting her produce to the market by road include:
    1. Relatively flexible
    2. Relatively cheap
    3. Relatively available
    4. Relatively fast
    5. Variety of means of road transport
       (Any 4 x 1 mark = 4 marks)
19. Causes of the declining supply of sukuma wiki include:
    1. fall in the price of kales (sukuma wiki) may have discouraged producers (farmers) as they opt to produce other goods
    2. there may have been an outbreak of diseases affecting the sukuma wiki
    3. there may have been prolonged drought which affects the sukuma wiki
    4. there may have been increased cost of farm inputs like fertilizer and seeds
    5. the farmers could be using inappropriate technology to produce the sukuma wiki 
    6. this may just be the ploughing time and many farmers have not yet planted sukuma wiki
       (Any 4 x 1 = 4 marks)
20. Ways in which households may contribute to national income of a country include:
    1. consumption of goods
    2. payment of taxes
    3. provision of factors of production
    4. provision of savings for investment
       (4 x 1 mark = 4 marks)
21. Circumstances in which a trader may use oral communication include:
    1. when there is need to negotiate a deal
    2. when there is need to explain the use and features of a product
    3. when there is need for immediate feedback
    4. when there is need to give an immediate compliment when selling over the counter
       (4 x 1 mark = 4 marks)
22. Reasons why a firm may remain small include:
    1. Target market is small
    2. Limited production capacity
    3. Nature of the product
    4. Owner's decision to remain small
    5. Inadequate appropriate technology
       (4 x 1 mark = 4 marks)
23. Two-column cash book for the month of January
    

    Receipts				Payments
    Date	Details	Cash	Bank	Date	Details	Cash	Bank
    2007		Ksh.	Ksh.	2007		Ksh.	Ksh.
    Jan 1 Jan 5 Jan 16 -	Balance b/d Sales Debtor -	25,250 21,500 -  - 46,750	- - 360,000 - 360,000	Jan 1 Jan 28 Jan 28 Jan 31 .	Balance b/d Creditor Creditor Balance c/d .	- - 20,000 26,750 - 46,750	150,000 80,000 - 130,000 - 360,000
    Feb 1	Balance b/d	26,750	130,000

    (10 x ½ mark = 5 marks)
24. Benefits that accrue to a trader who advertises products in a newspaper include:
    1. wide coverage - message can reach a lot of people
    2. evidence of the message exists
    3. graphical details can be included
    4. a trader has a chance to compete with other traders
    5. a trader has a chance of increasing sales.
       (4 x 1 mark = 4 marks)
25. Calculation of the increase in consumer price index
    Base year    2006 = 100%
    ∴1600 x 100=133%
    Increase ( 133 - 100)=33%
    (4 x 1 mark - 4 marks)