KCSE 2014 Business Studies Paper 1 Questions with Marking Scheme

QUESTIONS

1. The following are distributions of features of human wants. Identify the features that relate to the descriptions in the spaces provided. (2 marks)
   
   
   
   
   
2. Name two occupations that relate to each other of the production activities given below: (3 marks)
   
   
   
   
   
3. Outline four tasks that may be carried out by a receptionist in an office. (4 marks)
   
   
4. Highlight four circumstances in which a cheque may be used as a means of payment. (4 marks)
   
   
5. State four activities that may be carried out in a stock exchange market. (4 marks)
   
   
6. State four features of liners in sea transport. (4 marks)
   
   
7. State five types of information that a manager may communicate to juniors. (5 marks)
   
   
8. Explain the meaning of the following terms: (4 marks)
   1. Insured
      
      
   2. Insurance
      
      
      
9. In the spaces provided below, indicate whether the following factors cause movement along the demand curve or a shift of the demand curve. (3 marks)
   
   
   
   
10. Highlight four roles played by the broker in the chain of distribution. (4 marks)
    
    
11. The following diagram represents the circular flow of income in a two sector closed economy.
    
    
    
    Identify two factors represented by each of the arrows labeled a and b. (4 marks)
    
    
12. Fill in the missing figures in the table below. (4 marks)
    
    
    
    
    
13. Mheshimiwa Ltd. had the following ledger account balances as at 31st May of 2010:
    
    
    
    Required: Prepare Mheshimiwa’s trial balance as at 31st May 2010. (5 marks)
    
    
    
14. The following is a format of the debit side of three-column cash-book. 
    
    
    
    Name the columns labeled V, W, X and Y. (4 marks)
    
    
15. Outline four functions of the International Bank of Reconstruction and Development. (4 marks)
    
    
16. State four disadvantages of barter trade. (4 marks)
    
    
17. The following transactions relate to Jelimo Stores:
    
    
    1. 10th October 2010, sold unused stationery for Sh 3,000 on credit to K. Likia.
    2. 23rd October 2010, bought a motor car on credit from Onjwaria Motors for Sh 700,000
       
       Required: Record the above transaction in the general ledger given below: (4 marks)
       
       
       
       
       
       
18. List four levels of inflation. (4 marks)
    
    
19. Many countries in Africa, Latin America and Asia are considered to be under-developed. Outline four characteristics they have in common. (4 marks)
    
    
20. Madam Emoro operates a matatu business. State four factors in the internal environment that may influence the business. (4 marks)
    
    
21. Highlight four reasons for which businesses should observe ethical practices. (4 marks)
    
    
22. State four merits of promoting products through personal selling. (4 marks)
    
    
23. The following information relates to KIboko Traders as at 31st December 2010.
    Details                         Shs
    Total drawings            400,000
    Added investments     800,000
    Capital on 31st December 2010 7,000,000
    Profit                           3,100,000
    
    Calculate Kiboko’s initial capital. (3 marks)
    
    
24. State four positive implications of a youthful population to an economy. (4 marks)
    
    
25. PQ Ltd had the following balances as at 31st December 2012.
    
                                            Shs
    Sales                               23 498 000
    Stock 1/1/2012 57          140
    Returns Inwards             27 200
    Purchases                     16 290 000
    Stock 31/12/2012          86 340
    
    Prepare PQ’s Trading Account for the year ended 31st December 2012. (5 marks)

MARKING SCHEME

1. Features of human wants as described are:
   1. Insatiable.
   2. Recurrent / Repetitive.
   3. Complementary.
   4. Competitive.
      (4 x 1 = 4 marks)
2. Occupations that relate to the production activities are:
   1. Extraction: 
      1. mining.
      2. fishing.
      3. lumbering.
      4. farming.
         (any 2 x 21 = 1 mark)
   2. Construction:
      1. bridge making
      2. road construction.
      3. ship building.
      4. masonry.
         (any 2 x 21 = 1 mark)
   3. Direct services:
      1. hairdressing.
      2. teaching.
      3. health care.
      4. entertaining.
         (any 2 x 21 = 1 mark)
3. Tasks that may be carried out by a receptionist in an office include:
   1. Receiving visitors to the organization.
   2. Receiving and routing telephone calls.
   3. Taking and passing messages.
   4. Dealing with simple petty cash for purchase of newspapers, tea etc.
   5. Supervising messengers.
   6. Keeping simple records.
   7. Distributing publications by the organization.
      (any 4 x 1 = 4 marks)
4. Circumstances in which a cheque may be used as a means of payment include:
   1. When the amounts involved in the transaction are high.
   2. When the seller insists on payment by cheque.
   3. When evidence of payment is required.
   4. When payment is to be directed into the payee’s account.
   5. When the terms of sale is cash with order.
   6. When there is need to ensure safety of the money being transferred.
      (any 4 x 1 = 4 marks)
5. Activities that may be carried out in a stock exchange market include:
   1. Buying and selling of shares.
   2. Mobilising savings for investment.
   3. Listing of companies.
   4. Issuing of new securities / raising capital.
   5. publication of statistical information.
   6. Advising investors.
      (any 4 x 1 = 4 marks)
6. Features of liners in sea transport include:
   1. Ferry passengers or cargo.
   2. Follow a regular time table / schedule.
   3. Call at ports at regular intervals.
   4. Follow a regular route.
   5. Form associations / conferences to protect themselves against unfair competition. 
   6. Charge fixed freightage and fare regardless of demand.
      (any 4 x 1 = 4 marks)
7. Types of information that a manager may pass to the juniors include:
   1. Instructions and directions.
   2. Explain policies of the organization.
   3. Give procedures to be followed in carrying out duties.
   4. Information on performance of juniors (evaluation).
   5. Invitation to meetings.
   6. Allocation / delegation of duties.
   7. Motivating / inspiring juniors.
   8. Giving solutions to juniors’ issues.
      (any 5 x 1 = 5 marks)
8. Meaning of terms:
   1. Insured:
      Is an individual or business unit that signs an insurance contract to be covered against a risk of loss and can therefore be compensated in the event of the loss occurring.
   2. Insurance:
      Is an arrangement (contract) in which the insured pays premiums to the insurer so as to be compensated in case of loss occurring as a result of an insured risk. (2 x 2 = 4 marks)
9. Indicating whether factors cause movement along the demand curve or a shift of the demand curve:
   1. Shift of the demand curve.
   2. Movement along the demand curve.
   3. Shift of the demand curve.
      (3 x 1 = 3 marks)
10. Roles played by the broker in the chain of distribution include:
    1. Linking the buyer and the seller.
    2. Bargaining for the principal.
    3. Passing information between the principal and the client.
    4. Facilitating access to a variety of goods and services to the buyer.
    5. Providing an avenue for the seller to access many buyers.
    6. Giving advice to buyers and sellers on market trends.
       (any 4 x 1 = 4 marks)
11. Factors represented by the arrows labelled a and b are:
    1.                
       1. Payment for goods and services.
       2. Factor services / inputs / factors of production.
          (2 x 1 = 2 marks)
    2.                    
       1. Payment for factor inputs.
       2. Goods and services.
          (2 x 1 = 2 marks)
          (Total = 4 marks)
12. Missing figures:
    1. CA = 155,000
    2. C = 73,600
    3. FA = 138,600
    4. L = 335,620
       (4 x 1 = 4 marks)
13.                                          
    

    Mheshimiwa’s
    Trial Balance as at 31st May 2010
    Details	Dr Shs	Cr Shs
    Purchases	3,880
    Sales		3,350
    Returns outwards		150
    Returns inwards	160
    D Simila (Debtor)	2,550
    P Mwende (Creditor)		3,100
    Wages	800
    Cash	960
    Capital		1,750
    	8,350	8,350

    (10 x 1/2 = 5 marks)
14. The columns:
    V is Folio
    W is Discount allowed
    X is Cash
    Y is Bank
    (4 x 1 = 4 marks)
15. Functions of the International Bank of Reconstruction and Development include:
    1. Provision of finance to member countries to foster economic development. 
    2. Issuance of loans to developing countries at concessionary rates for project development.
    3. Provision of personnel/manpower to facilitate project appraisal.
    4. Provision of experts to implement and manage identified projects.
    5. Training of local personnel in project appraisal and implementation.
    6. Supervise member countries’ management of public finance.
    7. Aproving development plans from member countries for funding.
    8. Advising and recommending economic policies to be adopted by member countries. 
    9. Promotes long term growth in international trade.
       (any 4 x 1 = 4 marks)
16. Disadvantages of barter trade include:
    1. Lack of double coincidence of wants.
    2. Indivisibility of some goods.
    3. Perishability of some goods.
    4. Difficult to measure value.
    5. Problems of portability of some goods.
    6. Lack of a standard for making deferred payments.
    7. Lack of unit of accounts.
       (any 4 x 1 = 4 marks)
17. Recording transactions into the general journal.
    

    Date	Particulars	Folio	Dr	Cr
    2010			Shs	Shs
    Oct. 10	K Likia Stationery (sale of stationery on credit)		3,000	3,000
    Oct. 23	Motor vehicle Onjwaria Motors (purchase of motor vehicle on credit)		700,000	700,000

    (4 x 1 = 4 marks)
18. Levels of inflation are:
    1. Hyper inflation/runaway.
    2. Galloping inflation/rapid.
    3. Stagflation.
    4. Creeping inflation/mild/moderate.
       (4 x 1 = 4 marks)
19. Characteristics of underdevelopment that are common among countries in Africa, Latin America and Asia include:
    1. Low per capita income.
    2. High population growth rate.
    3. Poor standards of living.
    4. Low literacy levels.
    5. High levels of unemployment.
    6. Poor health care.
    7. Low life expectance.
    8. Over reliance on primary level of production/high levels of subsistence production. 
    9. High dependency ratio.
    10. Poor infrastructure.
    11. Low technological levels.
    12. Large income disparities.
    13. Low levels of labour productivity.
        (any 4 x 1 = 4 marks)
20. Factors in the internal environment that may influence the operations of a matatu business include:
    1. The management/structure.
    2. Employees.
    3. Capital / finances.
    4. The owner.
    5. Marketing strategy / handling of customers.
    6. Research and development.
    7. Condition of the vehicle.
    8. Business culture.
       (any 4 x 1 = 4 marks)
21. Reasons for which businesses should observe ethical practices include:
    1. To ensure fair competition.
    2. To protect consumers/customers.
    3. To protect the environment.
    4. To protect the rights of employees.
    5. To promote social responsibility.
    6. To maintain a positive image.
    7. To abide by the country’s laws.
    8. To maintain suppliers.
    9. To promote positive cultural practices.
       (any 4 x 1 = 4 marks)
22. Merits of promoting products through personal selling include:
    1. Enhances personal appeal between the buyer and the seller.
    2. Can effectively counteract customers negative attitudes towards the product. 
    3. Questions and complaints from customers are channelled directly to employees of the company and not middlemen.
    4. Demonstration on the use of the goods can easily be done.
    5. Flexibility in presentation to suit customer needs.
    6. Provide immediate feedback from and to the clients.
    7. Effective in conducting market research.
       (any 4 x 1 = 4 marks)
23. Calculating Kiboko’s initial capital:
    IC = CC + - D - P - AI
    = 7,000,000 + 400,000 - 3,100,000 - 800,000
    = Shs 3,500,000
    (6 x 21 = 3 marks)
24. Positive implications of a youthful population to an economy include:
    1. Less expenditure on social security and pension.
    2. Wider market for goods meant for the youth like clothing.
    3. Guaranteed continuous supply of labour.
    4. Flexibility and adaptability to technological changes which improve production.
    5. Faster growth of some sectors like the music, fashion and fast food industries.
    6. Increased innovation due to their adventurous nature.
       (any 4 x 1 = 4 marks)
25.                            
     

    PQ Ltd Trading Account for the year ended 31 December 2012
    	Shs		Shs
    Opening stock	57,140	Sales	23,498,000
    Add: Purchases	16,290,000	Less: Returns in	27,200
    GAFS	16,347,140
    Less: Closing stock	86,340
    COGS	16,260,800
    GP c/d	7,210,000
    	23,470,800		23,470,800

    (10 x 1/2 = 5 marks)