KCSE 2019 Business Studies Paper 1 Questions With Marking Scheme

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KCSE 2019 Business Studies Paper 2 Questions With Marking Scheme

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INSTRUCTIONS

Answer all the questions

State whether the commodity or service given in the table below would satisfy a basic human want or a secondary human want. (4 marks)

Commodity/service		Class of human want
(a)	A shirt
(b)	Education
(c)	Housing
(d)	A packet of rice
(e)	Entertainment
(f)	Hair cut
(g)	Green grams
(h)	A car

Outline four factors that make office managers to communicate in writing to their staff. (4 marks)
The information given below was extracted from the books of Birika Traders on 31 December 2014: (4 marks)

Details Amount (Ksh)
Furniture and fittings 234,000
Debtors 67,500
Capital 157,900
Commission earned 13,200
Creditors 34,750
Drawings 21,800
5 year Bank Loan 114,450
Discount received 3,000

Required: Prepare Birika Traders Trial Balance as at 31 December 2014
Highlight four functions of an office in an organisation. (4 marks)
Outline four roles played by the Nairobi Securities Exchange in the Kenyan economy. (4 marks)
Name the basic concept in population described in the statements given below: (4 marks)
1. Population size that is adequate for the full utilisation of available resources in a Country.
2. The average number of births per one thousand women in a year.
3. When a country is experiencing higher death rates than birth rates.
4. Where a bigger proportion of the population is comprised of people who are above 55 years old
State the circumstance under which each of the following terms of trade would be applied in foreign trade. (4 marks)
1. Franco
2. Ex-works
3. In Bond
4. Free Alongside Ship .....
Complete the diagram below to illustrate the classification of trade. (3 marks)
Highlight four merits of using sales people to promote the sales of a particular product. (4 marks)

By use of the book keeping equation, determine the missing values in the table below: (4 marks)

FIXED ASSETS (Ksh)	CURRENT ASSETS (Ksh)	CAPITAL (Ksh)	LIABILITIES (Ksh)
1,593,600	(a) .................	900,900	1,151,600
812,700	1,953,750	(b) ..........	2,172,100
(c) ..............	781,295	1,010,000	664,030
1,320,920	1,450,050	1,260,860	(d) ..............

Outline four features that may indicate a country's state of underdevelopment (4 marks)
List four types of small-scale retail business that one can run without a shop. (4 marks)
Highlight four functions of the Department of External Trade in the Ministry of Industry, Trade and Cooperatives. (4 marks)
Outline four factors that Chemichemi Dairies would consider when selecting a channel to distribute their fresh milk. (4 marks)
State the relevant books of original entry into which information extracted from the source documents given below would be recorded: (4 marks)

Source Documents Books of original entry

(a) Incoming invoice (a)

(b) Outgoing credit note (b)

(c) Outgoing cash sale slip (c)

(d) Incoming debit note (d)
Outline four features of co-operative societies. (4 marks)
Highlight four factors which may lead to an increase in a country's national income. (4 marks)
The following information was extracted from the books of Jabali Traders on 31 December 2015.

Details Ksh
Purchases 84,375
Carriage out 7,400
Stock on 1/1/2015 67,900
Carriage in 9,170
Stock on 31/1/2015 17,970
Returns out 15,520
1. Determine net purchases. (3 marks)
2. State two reasons for preparing the trading account. (2 marks)
Identify the level of production into which the following workers belong: (4 marks)

Workers Level of Production

(a) Carpenter

(b) Nurse

(c) Maize farmer

(d) Mason

(e) Wholesaler

(f) Lumber

(g) Road engineer

(h) Insurer
Outline four characteristics of a good tax system. (4 marks)
Highlight four contributions of entrepreneurs to the growth of an economy. (4 marks)
Highlight four factors that may influence an individual's demand for money in order to com the transaction motive. (4 marks)

Determine the excess demand or excess supply from the combined demand and supply schedules of oranges given below: (4 marks)

PRICE(Ksh/Bag)	1800	1600	1400	1200	1000	800	600	400
Quantity demanded (Bags)	280	400	500	650	700	850	950	1000
Quantity supplied (Bags)	1400	1200	900	650	500	420	350	200
Excess Demand (Bags)
Excess Supply (Bags)

Outline four benefits of a bonded warehouse to the importer. (4 marks)
Apart from trains and motor vehicles, state four other means of transporting goods and people on land. (4 marks)

Marking Scheme

State whether the commodity or service given in the table below would satisfy a basic human want or a secondary human want. (4 marks)

Commodity/service		Class of human want
(a)	A shirt	*basic*
(b)	Education	*secondary*
(c)	Housing	*basic*
(d)	A packet of rice	*basic*
(e)	Entertainment	*secondary*
(f)	Hair cut	*secondary*
(g)	Green grams	*basic*
(h)	A car	*secondary*

Outline four factors that make office managers to communicate in writing to their staff. (4 marks)
- Confidentiality. The confedentiality of the message is enhanced by written means
- Accuracy. The mesage is delivered in its original from without distortion
- Completeness of message/written forms may be able to pass long detailed illustrations
- Future reference. The message may form a basis for making decisions in future
- Reliability of the means. This is a trusted means of communicating in institutions
- Economy. It is cost effective since it is affordable
- Accesibility. It is easily accessible to all staff members
- Acceptability. It is the acceptable means of official communication in institutions
- Evidence. It is a proof of communication
The information given below was extracted from the books of Birika Traders on 31 December 2014: (4 marks)
Details Amount (Ksh)
Furniture and fittings 234,000
Debtors 67,500
Capital 157,900
Commission earned 13,200
Creditors 34,750
Drawings 21,800
5 year Bank Loan 114,450
Discount received 3,000

Required: Prepare Birika Traders Trial Balance as at 31 December 2014
Highlight four functions of an office in an organisation. (4 marks)
- An administration centre of the organisation
- The communication centre of the organisation
- A centre of processing data
- Production/reproduction of documents
- Management of records/fling
- Public relations centre for the organisation/customer care
- Safe guarding of the organisation's assets
- personnel functioons are coordinated from the office
- Mailing
Outline four roles played by the Nairobi Securities Exchange in the Kenyan economy. (4 marks)
- A measure of the country's economic performance as reflected in the prices of shares
- Sets the value of securities based on the forces of demand and supply
- Ensures safety of transactions since the financial health of listed companies is usually verified
- Promotes economic growth through disinvestment and reinvestment
- Promotes local ownership of companies through sale and purchase of shares
- Provides ready amrket for the sale and purchase of shares hence improving liquidity
- Promotes saving and investment among the population
- raising revenue for the government
- Creation of employment
- Provides useful information to investors
Name the basic concept in population described in the statements given below: (4 marks)
1. Population size that is adequate for the full utilisation of available resources in a Country.
  - Optimum population
2. The average number of births per one thousand women in a year.
  - Fertility rate/birth rate
3. When a country is experiencing higher death rates than birth rates.
  - Declining population
4. Where a bigger proportion of the population is comprised of people who are above 55 years old
  - Ageing population
State the circumstance under which each of the following terms of trade would be applied in foreign trade. (4 marks)
1. Franco
  - When the price quoted covers all expenses till goods reach the premises of the buyer
2. Ex-works
  - When the price quoted only covers the cost of production and while they are within the manufacturer's warehouse
3. In Bond
  - When the price quoted covers all the expenses until goods are delivered in a bonded warehouse in the country of destination
4. Free Alongside Ship(F.A.S)
  - Where the price quoted covers all expenses to the point where the goods are next to the ship
Complete the diagram below to illustrate the classification of trade. (3 marks)
Highlight four merits of using sales people to promote the sales of a particular product. (4 marks)
- It gives a personal touch which elicits positive response from potential clients.
- It can be used to target specific groups of customers.
- It is flexible since the message can be tailored to suit the needs of each client.
- Allows for demonstration on product usage.
- Source of immediate feedback from the buyer.
- Buyer's questions/concerns are immediately addressed.
- It leads to more sales since customers may be convinced by persuasive sales people
- Facilitats collection of data

By use of the book keeping equation, determine the missing values in the table below: (4 marks)

FIXED ASSETS (Ksh)	CURRENT ASSETS (Ksh)	CAPITAL (Ksh)	LIABILITIES (Ksh)
1,593,600,	(a) *458,900*	900,900	1,151,600
812,700	1,953,750	(b) *594,350*	2,172,100
(c) 892,735	781,295	1,010,000	664,030
1,320,920	1,450,050	1,260,860	(d) 1,510,110

Outline four features that may indicate a country's state of underdevelopment (4 marks)
- High disparities in income distribution.
- High population growth rate.
- Dominance of the subsistence sector.
- High levels of poverty/ Low per capita in Tome
- Low levels of savings and investment.
- High levels of unemployment.
- Low levels of technology.
- Over reliance on developed countries.
- Underutilization of natural resources.
- Poor infrastructure
- High levels of illiteracy
- Poor health facilities
- Poor governance
- Outdated cultural practices
- High dependance ratio
List four types of small-scale retail business that one can run without a shop. (4 marks)
- hawking
- peddling
- road-side selling
- open air market trading
- Automatic vending by use of a machine
- On-line selling
Highlight four functions of the Department of External Trade in the Ministry of Industry, Trade and Cooperatives. (4 marks)
- Develop bilateral and multilateral trade agreements to accord preferential treatment to Kenyan exports.
- Educating Kenyan exporters on trade regulations and practices in other countries.
- Intervene on behalf of Kenyan traders in resolving trade disputes between Kenyan traders and foreign clients.
- Arrange for trade fairs, shows and exhibitions for Kenyan goods in foreign countries.
- Expand and diversity foreign markets for Kenyan goods.
- Inform Kenyan producers on the available selling opportunities in other countries.
Outline four factors that Chemichemi Dairies would consider when selecting a channel to distribute their fresh milk. (4 marks)
- Length of the channel due to perishability of the milk.
- The geographical spread of their customers.
- The resources at the firms' disposal like milk cooling plants, distribution vans etc/role played by the intermediaries
- Pricing of the milk and cost of the channel.
- The nature of competition
- The prevailing market risks.
- The government policy on milk distribution.
- Needs to free storage space.
- Reliability of the Channel.

State the relevant books of original entry into which information extracted from the source documents given below would be recorded: (4 marks)

Source Documents	Books of original entry
(a) Incoming invoice	*(a) Purchases journal/bought journal*
(b) Outgoing credit note	*(b) return inwards journal/sales return inward*
(c) Outgoing cash sale slip	*(c) cash receipts journal/cash book*
(d) Incoming debit note	*(d) purchases journa/bought journal*

Outline four features of co-operative societies. (4 marks)
- Formed by a minimum of ten members.
- Run by a management committee.
- Governed using by-laws.
- Surplus/profits is distributed to members.
- It is a separate legal entity from the members.
- It has limited liability.
- It has perpetual succession
- Its main source of capital is the shares contributed by members
- It is formed by people with common interest
- it has no maximum memberships.
- No single member to own more than 15% of the total share capital
Highlight four factors which may lead to an increase in a country's national income. (4 marks)
- A stable political environment.
- Technological advancement.
- Vibrant entrepreneurship.
- Increased supply of skilled labour.
- Increased access to capital.
- Optimal utilization of available natural resources
- Positive attitude of citizends towards work
- reduced level of subsistence sector
- Increased foreign investment
The following information was extracted from the books of Jabali Traders on 31 December 2015.
Details Ksh
Purchases 84,375
Carriage out 7,400
Stock on 1/1/2015 67,900
Carriage in 9,170
Stock on 31/1/2015 17,970
Returns out 15,520
1. Determine net purchases. (3 marks)
2. State two reasons for preparing the trading account. (2 marks)
  - Enables the business to determine the valné/cost of goods sold in a given period.
  - It reveals the amount of revenue generated from the sale of stock in a given year henceals het Sales
  - It helps to determine whether the business has made a loss or a profit from the sale of stock in a given year.
  - It can help gauge the performance of a business if compared across different years.
  - It can help to compare the performance of a business to that of others

Identify the level of production into which the following workers belong: (4 marks)

Workers	Level of Production
(a) Carpenter	Secondary
(b) Nurse	*Tertiary*
(c) Maize farmer	*Primary*
(d) Mason	*Secondary*
(e) Wholesaler	*Tertiary*
(f) Lumber	*Primary*
(g) Road engineer	*Secondary*
(h) Insurer	*Tertiary*

Outline four characteristics of a good tax system. (4 marks)
- Equitably distributes the tax burden according to the payers' ability to pay/Equity
- Certain and clearly defines what he payer is expected to pay.
- Convenient and easy for the tax payer to meet the tax obligations/convenience
- Economical and allows the tax to be collected at the least cost/economy
- Flexible enough to allow for adjustments according to prevailing conditions/Flexibility
- Diverse as to capture as many sources as possible/diversity
- Simple enough to be understood by all tax payers/simplicity
- Elastic and able to generate more revenue with improved economic performance/elasticity
Highlight four contributions of entrepreneurs to the growth of an economy. (4 marks)
- They create employment by establishing businesses.
- They make use of locally available resources which would have been idle.
- They improve the citizens' standard of living by offering them a source of income.
- Their ventures become a training ground for local labour which then becomes skilled
- They save the country foreign exchange which would have been spent on imports. Savings on imports
- Promote technological advancement through their creativity.
- Promote entrepreneurial culture by being eye openers to other people who then start their own businesses.
- Promote the accumulation of capital by ploughing back their - profits/Formation a capital
- Promite development of infrastructure
- Reduces rural - urban migartion
- Reduces foreign dominance of the economy
- Source of government revenue
Highlight four factors that may influence an individual's demand for money in order to com the transaction motive. (4 marks)
- The individual's level of income/earning.
- The frequency of payments by the individual.
- The individual's spending habits.
- The rate of inflation Price H comments
- The number of dependants supported by the individual.
- Availability of credit.
- The frequency of income/individual's earning.

Determine the excess demand or excess supply from the combined demand and supply schedules of oranges given below: (4 marks)

PRICE(Ksh/Bag)	1800	1600	1400	1200	1000	800	600	400
Quantity demanded (Bags)	280	400	500	650	700	850	950	1000
Quantity supplied (Bags)	1400	1200	900	650	500	420	350	200
Excess Demand (Bags)	-	-	-	0	200	430	600	800
Excess Supply (Bags)	1120	800	400	0	-	-	-	-

Outline four benefits of a bonded warehouse to the importer. (4 marks)
- The importer can sell the goods before paying duty hence transferring the burden to the buyer.
- Goods can be prepared for final sale while still in bond
- Gives the importer time to arrange for payment of duty.
- The importer can look for market while goods are still in bond.
- Some goods like wine, can improve in quality and value while still in bond.
- Security is provided for the goods while they are in bond.
- Some may lose weight hence the importer pay less tax
Apart from trains and motor vehicles, state four other means of transporting goods and people on land. (4 marks)
- use of animal transport
- Human portage
- Use of carts
- Bicycles
- Motorcycles
- Pipelines