Kenya Certificate Of Secondary Education(KCSE 2013) Business Paper 1 with Marking Scheme

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  1. Outline four ways in which business studies may be of benefit to an individual. (4 marks)
  2. Highlight four external factors that may negatively influence the operations of a business. (4 marks)
  3. State four characteristics of a successful entrepreneur. (4 marks)
  4. State four functions of an office. (4 marks)
  5. Fill in the relevant branches of trade in the diagrams below: (3 marks)
    branches of trader kcse 2013
  6. The participants in a two sector economy are households and firms. Identify the relevant participants in each of the statements given below. (4 marks)
    two sector economy kcse 2013
  7. The following balances were extracted from the books of Wekesa Traders on 31st December, 2009.
    trial balance kcse 2013
    Using the above information, prepare Wekesa Trader’s Trial Balance on 31st December, 2009. (5 marks)
  8. The following information relates to Karibu traders for the year ended 31st December, 2008.
    business kcse 2013
    Determine owner’s capital using the information given above. (4 marks)
  9. State one type of unemployment relating to each of the following descriptions. (4 marks)
    1. Caused by alternating trading patterns occurring at similar times.
    2. Arises where workers have more skills and higher qualifications than the job requirements.
    3. Arises out of a mismatch between the skills possessed by potential employees and the location of the jobs available.
    4. Arises when people are unwilling to take up jobs due to low pay.
  10. Highlight four circumstances under which the capital of a business may change. (4 marks)
  11. Below are some entries in the cash book of Romano Traders for the month of July 2010.
    cash book kcse 2013
    State the meaning of the following entries. (4 marks)
    1. July 1, 2010 Balance b/d, bank column 100,000.
    2. July 2, 2010 cash shs 20,000 and bank shs 20,000.
    3. July 28, 2010 debtors shs 20,000.
    4. July 31, 2010 Balance c/d shs 10,000.
  12. Outline one circumstance under which each of the following source documents may be issued to a trader: (4 marks)
    1. Debit note
    2. Invoice
    3. Credit note
    4. Quotation
  13. Name four documents that may be required by the registrar of companies in order to register a public limited company. (4 marks)
  14. Outline four measures that a country can take to reduce the level of inflation. (4 marks)
  15. Outline four factors that may cause a producer to by-pass the wholesaler when distributing goods. (4 marks)
  16. Highlight four benefits that a country would get by developing her infrastructure. (4 marks)
  17. State four benefits of a bonded warehouse to the government. (4 marks)
  18. Outline four qualities of a successful salesperson. (4 marks)
  19. Highlight four factors that may cause the supply of curve shift to the right. (4 marks)
  20. Outline four positive effects that production activities may have on community health. (4 marks)
  21. State four basic features of a market. (4 marks)
  22. Outline four features of a parastatal. (4 marks)
  23. Outline four circumstances in which the government may be involved in business. (4 marks)
  24. Highlight four factors that a trader may consider when choosing a means of transport. (4 marks)
  25. State four reasons for privatizing public corporations.


  1. Ways in which Business Studies may benefit an individual include:
    1. Equips the individual with skills and knowledge to manage a business.
    2. Prepares one for future career in business.
    3. Enables one to relate issues affecting business to its environment.
    4. Enables one to relate issues affecting business activities taking place globally.
    5. Enables one to identify business opportunities to venture into.
    6. Prepares one for further studies.
    7. Enables an individual to think creatively and make sound judgement.
    8. Makes an individual to appreciate the role of government in business.
    9. Makes individual disciplined and have positive attitude towards work.
      Any 4 x 1 = 4 marks
  2. External factors that may influence the operations of a business negatively include:.
    1. Unfair competition.
    2. Inadequate technology.
    3. Unstable political environment.
    4. Unstable economic environment.
    5. Unfavourable legal framework.
    6. Unreliable supply system.
    7. Strong consumer bargaining power.
    8. Poor physical facilities and infrastructure.
    9. Low population level.
    10. Insecurity.
    11. Unfavourable socio-cultural environment.
    12. Natural calamities.
  3. Characteristics of a successful entrepreneur include:-
    1. Innovative and creative.
    2. Hardworking.
    3. Goal-oriented/desires to achieve.
    4. Time conscious.
    5. Self confident.
    6. Risk taker.
    7. Good decision maker.
    8. A good net worker.
    9. A good communicator.
    10. Should be ethical.
    11. Should be flexible.
    12. Future oriented. Any 4 x 1 =  4 marks
  4. Functions of the office include:
    1. Collecting information.
    2. Receiving information.
    3. Storing information.
    4. Distributing information.
    5. Production and reproduction of documents.
    6. Centre for administration.
    7. Mailing.
    8. Communication centre.
    9. safeguarding and controlling
    1. Households.
    2. Households.
    3. Firms.
    4. Firms.
  7. Wekesa Traders
    Trial Balance
    As at 31st December, 2009
    Details Dr Cr
    Capital    500,000 
    Buildings 200,000  
    Cash in hand 20,000   
    Furniture  25,000  
    Motor vehicle  400,000  
    Creditors    18,000
    Debtors  36,000  
    Bank 100,000  
    Bank Loan   263,000
      781,000 781,000
  8. Determining owner’s capital.
    C = A-L
    = 2,240,000 - 750,000
    = 1,490,000
    1. Cyclical unemployment.
    2. Disguised/hidden unemployment.
    3. Structural unemployment/technological.
    4. Voluntary unemployment/real wage.
  10. Circumstances under which the capital of a business may change are:-
    1. When the business makes profit.
    2. When the business makes losses.
    3. When the owner draws cash/goods for personal use/drawings.
    4. When the owner makes additional investment into the business/additional capital. 4x1 = 4 marks
  11. Meaning of the entries:
    1. Bank overdraft.
    2. Contra entry.
    3. Cash received from debtor.
    4. Closing cash in hand.
    1. When correcting undercharge.
    2. When demanding payment for goods supplied.
    3. When correcting an overcharge for goods supplied/empty packaging returned/ goods returned.
    4. When replying to a specific letter of inquiry. 4x1 = 4 marks
  13. Documents that may be required by the registrar of companies in order to register a public limited company include:-
    1. Articles of Association.
    2. Memorandum of Association.
    3. Prospectus.
    4. List of directors.
    5. Declaration.
    6. Statement signed by directors.Any 4 x 1 = 4 marks
  14. Measures that a country can take to reduce the level of inflation include:
    1. Increase income taxes to reduce the disposable income available to consumers.
    2. Reduce government expenditure.
    3. Introduce compulsory saving schemes like Pension Fund.
    4. Reduce exports.
    5. Enforce wage guidelines to control wage increase.
    6. Control prices by legislation.
    7. Increase interest rates on loans.
    8. Increase imports in case of shortages.
    9. Raising the margin requirements.
    10. Regulate printing and minting of money.
    11. Use of buffer stocks to stabilize prices. Any 4 x 1 = 4 marks
  15. Factors that may make a producer to by pass the wholesaler when distributing goods include:-
    1. Having own retail outlet.
    2. Dealing in perishable goods like bread which require shorter channels.
    3. Dealing in technical goods which require elaborate after sales services.
    4. Consumers and retailers buying in large quantities.
    5. Need to keep price of goods low.
    6. Limited geographical spread of the market.
    7. Government policy
    8. When the production is in small quantity.
    9. Where the producer has enough storage facilities.
    10. When goods are produced on order. Any 4 x 1 = 4 marks
  16. Benefits that a country would get by developing her infrastructure include:-
    1. Attraction of foreign investment.
    2. Creation of employment opportunities.
    3. Improved security.
    4. Improved health.
    5. Increased production levels.
    6. Enhanced movements of goods and services.
    7. Increased per capital/ income.
    8. Increased exploitation of available resources.
    9. Increased entrepreneural activities.
    10. Easier/faster communication.
    11. Reduced cost of production.
    12. Enhanced industrialization.
    13. Equitable development.Any 4 x 1 = 4 marks
  17. Benefits of a bonded warehouse to the government include:-
    1. A source of data for planning purposes.
    2. Enable the government to control entry of harmful goods.
    3. Enable the government to inspect goods while still under bond.
    4. Enables the government to regulate the quantity of imports.
    5. The government uses it to check illegal goods entering the country.
    6. A source of revenue from customs duty.
    7. Enable verification of documents on transit.
    8. Enable checking of the quality of goods. Any 4 x 1 = 4 marks
  18. Qualities of a successful sales person include:-
    1. Has adequate product knowledge.
    2. Is a good communicator.
    3. Is sensitive to customer needs.
    4. Has a high sense of integrity/honesty.
    5. Is presentable (neat and well groomed).
    6. Is persuasive.
    7. Has a high level of commitment.
    8. Good listener.
    9. Have good command of language.
    10. Polite and courteous.
    11. Persistent and patient Any 4 x 1 = 4 marks
  19. Factors that may cause the supply curve to shift to the right include:-
    1. Reduced cost of production.
    2. Bumper harvest.
    3. Increase in the price of complementary goods.
    4. Government incentives to producers e.g. subsidy.
    5. Entry of new firms into the market.
    6. Reduced price of substitute goods.
    7. Improved production methods.
    8. Reduced incidences of industrial strikes.
    9. Availability of the factors of production.
    10. Future expectation of a fall in price. Any 4 x 1 = 4 marks
  20. Positive effects that production activities may have on community health include:-
    1. Provision of safe products.
    2. Provision of clean water.
    3. A source of income which can be used to access medical services.
    4. Provision of labour/occupation which leads to reduced stress and a chance to keep fit while working.
    5. Provision of health facilities as a social responsibility.
    6. Provision of recreational facilities.
    7. Provision of health education to fight against diseases.
    8. Provision of sewerage disposal plants which boosts community sanitation.
    9. Planting trees to modify the environment. Any 4 x 1 = 4 marks
  21. Basic features of a market include:-
    1. Availability of buyers.
    2. Availability of goods/services.
    3. A platform for conducting transactions.
    4. Availability of sellers.
    5. Availability of medium of exchange.
    6. Freedom to buy and sell. Any 4 x 1 = 4 marks
  22. Features of a parastatal include:-
    1. Provide essential services.
    2. Not profit motivated.
    3. Is formed by an Act of Parliament.
    4. Is mainly funded by the government.
    5. Is managed by government appointees.
    6. Any surplus earned is surrendered to the government.
    7. Has limited liabilities.
    8. Attachment to a govenment ministry.
    9. Can be dissolved only through an act of parliament. Any 4 x 1 = 4 marks
  23. Circumstances in which the government may be involved in business include:-
    1. When a business venture requires investment of large sums of money which individual entrepreneurs may not provide.
    2. When the goods or services to be provided are essential to the welfare of the citizens.
    3. When there is need to protect citizens from exploitation by private entrepreneurs.
    4. When the government desires to create employment for the citizens.
    5. When the government needs to generate income through revenue collection.
    6. When there is need to safeguard national security.
    7. When the venture is strategic but provides low profits hence unattractive to private investors.
    8. Where there are monopolies in the economy, the government gets involved in business to increase competition.
    9. Where there is need to balance regional development.
  24. To reduce foreign dominance in the economy.
    1. Where there is need to attract foreigh investment. Any 4 x 1 = 4 marks
    2. Factors that a trader may consider  when choosing a means of transport include:-
    3. Nature of goods -  whether they are bulky, perishable or fragile.
    4. Speed/urgency - where goods are to be delivered quickly.
    5. Cost of transport - should be economical.
    6. Distance to be covered.
    7. Availability of the means.
    8. Packaging requirements for the goods.
    9. The risks involved.
    10. Availability of terminals.
    11. Reliability of the means.
    12. Flexibility.
    13. Comfortability.
    14. Need for special services. Any 4 x 1 = 4 marks
  25. Reasons for privatizing public corporations.
    1. To improve efficiency in their operations.
    2. To generate revenue to the government through sale of shares and taxes.
    3. To enhance competition.
    4. To increase public participation in economic activities of the country.
    5. To reduce government expenditure.
    6. To comply with conditions set by development partners and international donor agencies.
    7. To enable the government to concentrate on other state responsibilities.
    8. To minimize political interference. Any 4 x 1 = 4 marks
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