Business Studies Paper 1 Questions and Answers - KCSE 2021 Past Papers

QUESTIONS

1. State four characteristics of a successful entrepreneur. (4 marks)
2. List four types of business activities. (4 marks)
3. Outline four challenges that may be faced in the satisfaction of human wants. (4 marks)
4. Match four factors of production with their corresponding rewards. (4 marks)
5. Highlight four factors that may be considered when choosing a means for transporting cash.(4 marks)
6. State four ways in which the government may be involved in business. (4 marks)
7. Outline four benefits of a partnership. (4 marks)
8. List four mailing services that facilitate communication. (4 marks)
9. On the diagram below, show the effects of increased demand. (4 marks)
   
10. Outline four factors that may influence a firm's decision on the type of goods to produce. (4 marks)
11. Highlight four benefits of localisation of firms. (4 marks)
12. Write the bookkeeping equation for the business whose transactions are given below. (4 marks)
    
    • Started a business with Ksh 10,000 in cash.
    • Acquired a loan of Ksh 50,000 which was directly banked.
13. Outline four channels for distributing locally manufactured products to local consumers. (4 marks)
14. Outline four limitations of barter trade. (4 marks)
15. State four features of an efficient tax system. (4 marks)
16. Identify the book of original entry prepared from each of the following source documents: (4 marks)
    

    	Source Document	Book of original entry
    a)	Outgoing invoice.
    b)	Received receipt.
    c)	Copy of credit note.
    d)	Original invoice.

17. List four types of capital in a business. (4 marks)
18. Record each of the following transactions into their relevant ledger accounts. (4 marks)
    
    • 2nd March 2021; started a business with Ksh 10,000 in cash.
    • 3rd March 2021; Bought goods worth Ksh 12,000 on credit from Mawa Enterprises.
19. Outline four reasons that would make an organisation prefer a landscape office over enclosed office layout. (4 marks)
20. The following information was extracted from the books of Adow Traders on 31st December, 2020. (4 marks)
    Details
    5 year loan - Ksh256,700
    land - Ksh120,000
    cash - Ksh24,600
    Creditors - Ksh37,400
    buildings - Ksh430,500
    Prepare Adow Traders Balance Sheet as at 31st December, 2021.
21. Jane decided to take an insurance cover for her car against theft from Serufi Insurance Ltd. It was valued at Ksh 600,000 and she was required to make monthly payments of Ksh 6,000. Identify the appropriate insurance term for: (4 marks)
    
    1. Ksh 600,000
    2. Jane
    3. Serufi Insurance Ltd
    4. Theft
22. Outline four difficulties that a country with a young population may experience. (4 marks)
23. Identify the retailers described in the statements given below. (4 marks)
    

    STATEMENTS	RETAILERS
    Sells goods by displaying them along the streets
    Moves from one place to another on foot selling their goods
    Dispenses goods with the use of coin operated machines
    Meet on designated days in open grounds to sell their goods

24. Highlight four benefits of inflation to an economy. (4 marks)
25. Outline four benefits enjoyed by countries that participate in international trade. (4 marks)

MARKING SCHEME

1. Characteristics of a successful entrepreneur include:
   1. Calculative risk taker.
   2. Hard working/industrious. 
   3. Innovative/Creative
   4. Proactive/takes initiative. 
   5. Time conscious/Punctuality vi. Good decision maker.
   6. Good planner.
   7. Has a strong desire to achieve/Goal oriented.
   8. Future oriented
   9. Desire for feedback
   10. Seek information
   11. Independent
   12. Self confidence
   13. Problem solver
   14. Commitment to work
   15. Patience/Persistence
   16. Aim at customer satisfaction
   17. Desire for high quality product     (Any 4 x 1= 4 marks)
2. Types of business activities include: om/membership-join/
   1. Extraction.
   2. Processing of raw materials.
   3. Manufacturing.
   4. Construction.
   5. Distribution of goods.
   6. Trade.
   7. Provision of services.   (Any 4 x 1= 4 marks)
3. Challenges that may be faced in the satisfaction of human wants include:
   1. Inadequate/limited/scarce resources
   2. Repetitive nature of some wants/keep coming back after satisfying them/Recurrent
   3. Competitive nature of wants requiring satisfaction using the same resources.
   4. Complementary nature of some wants making them require more resources to satisfy.
   5. The unlimited nature of wants
   6. Some wants are habitual/addictive.
   7. Insatiable
   8. Wants change e.g with time, age and gender
   9. Wants vary in urgency and intensity.   (Any 4 x 1= 4 marks)
4. Factors of production and their rewards includes;
   1. Land-rent/rate/ lease/royalty
   2. Capital - Interest
   3. Labour - Salaries/wages
   4. Entrepreneurship - Profit
5. Factors that may be considered when choosing a means for transporting cash include;
   1. Affordability of the means/cost
   2. Reliability
   3. Safety of means
   4. Speed of the means/urgency/fast
   5. Availability of the means
   6. Distance to be covered
   7. Security of means
6. Ways in which the government may be involved in business includes;
   1. As a consumer
   2. As a producer of goods and services/ As a provider
   3. Advisor of business people
   4. As a regulator of business e.g licensing
   5. As a distributor/seller
   6. As a trainer of business people
   7. As a facilitator of business activities eg financing
   8. As a promoter of business
   9. As a provider of an enabling environment for business   (Any 4 x 1= 4 marks)
7. Benefits of partnership includes;
   1. Quality decision making
   2. Large pool of capital
   3. Pool of different talents/Specialization
   4. Sharing of work/Division of labor
   5. Sharing of losses
   6. Some partners may have limited liability
   7. Easier to form compared to companies
8. Mailing services that may facilitate communication includes;
   1. Ordinary mail
   2. Speed post
   3. Email
   4. Express mail
   5. Poste restante
   6. Courier services
   7. Registered mail
   8. Business reply service    (Any 4x1= 4 marks)
9. Diagram showing the effects of increased demand
    
   (4x1=4 marks)
10. Factors that may influence a firm's decision on the type of good to produce include;
    1. Level of technology available
    2. Level of competition
    3. Financial capability
    4. Profitability of the product/Returns
    5. Cost of production
    6. Availability of market/Demand
    7. Government policy
    8. Availability of relevant factors of production
11. Benefits of localization of firms includes;
    1. Growth of a pool of labour
    2. Enhances interdependency among firms
    3. Growth of support industries e.g Banks
    4. Creates employment
    5. Improved infrastructures
    6. Large market for finished product
    7. Joint research is possible
    8. Waste disposal is easier
    9. Market for locally produced raw materials
    10. Growth of social amenities e.g hospitals
    11. Enhances security     (Any 4x1 = 4 marks)
12. The bookkeeping equation:
    Assets = Capital +liabilities
    Cash+bank = Capital + Loan
    10000+ 50000 = 10000+ 50000
       60000 = 60000
    (8 x ½ = 4 marks)
13. Channels for distributing locally manufactured products to local consumer includes;
    1. Manufacturer → Retailer → Consumer
    2. Manufacturer → Consumer
    3. Manufacturer → Wholesaler → Retailer → consumer
    4. Manufacturer → Marketing board → Wholesaler → Retailer → Consumer
    5. Manufacturer → Government Agency → Wholesaler → Retailer → Consumer   
    6. Manufacturer → Manufacturer Outet → Wholesaler → Retailer → Consumer
    7. Manufacturer →  Wholesaler → Consumer
    8. Manufacturer → Manufacturer's agent → Wholesaler → Retailer → Consumer    (Any 4 x 1 = 4 marks)
14. Limitations of barter trade:
    1. Perishable commodities may go bad/lacks store of value
    2. Hard to make payment in the future/lacks standard of deferred payment
    3. Some goods are indivisible
    4. It is difficult to ascertain value of some goods/lack of standard measure of value.
    5. Requires double coincidence of wants
    6. It's difficult to carry bulky/heavy goods
    7. Lacks unit of account  (Any 4 x 1 = 4 marks)
15. Features of an efficient tax system include:
    1. It should be equitable
    2. It should be certain
    3. It should be flexible
    4. It is economical
    5. It is simple
    6. It is convenient
    7. It should be elastic
    8. It should be diversified
16. Books of original entry for the source documents are:
    1. Sales journal/Debtors journal
    2. Cash payment journal/Cash disbursement journal
    3. Returns inwards/sales returns journal
    4. Purchases journal/creditors journal   (Any 4 x 1 = 4 marks)
17. Types of capital in a business includes:
    1. Capital employed
    2. Capital invested (owners equity)/share capital/capital owned
    3. Working capital/circulating capital
    4. Borrowed capital loan capital   (Any 4 x 1 = 4 marks)
18. Capital A/C
    

    Dr	sh                     Cr
    	2/3/2021 Cash 10000

    
    Cash A/c
    

    Dr             sh	Cr
    2/3/2021   Cash 10000

    
    Purchases A/c

    Dr                                         Sh	Cr
    3/3/2021  Mawa Enterprises 12000

    
    Mawa Enterprises A/c
    

    Dr	sh                               Cr
    	3/3/2021    Purchases 12000

    ( 16 x ¼ = 4 marks)
19. Reasons that would make an organization prefer a landscape office over enclosed office layout:
    1. Promote team work.
    2. Promote sharing of office equipment
    3. Ease of supervision of staff
    4. Improves the image of the organization
    5. Comfortable working environment
    6. Discourages absenteeism
    7. It is cheaper to decorate the office.
    8. Reduced average cost of maintenance
    9. Flow of work is faster
    10. Easy location of workers.
    11. Difficult to misuse office equipment.   (Any 4 x 1=4 marks)
20.                                                       ADOW TRADERS
                                                          BALANCE SHEET
                                            AS AT 31^ST DECEMBER 2020/2021
    

    Land                    120 000	Capital                    281 000
    Buildings              430 500
    	5 year loan              256 700
    Cash                       24 600
    	Creditors                    37 400
    575 100	575,100

    8 x ½ = 4 marks
21. Appropriate insurance terms are:
    1. Sum Insured
    2. Insured
    3. Insurer
    4. Risk/Peril/Contingent/Hazard     (Any 4 x 1=4 marks)
22. Difficulties experienced by a country with young population:
    1. Large unemployment levels
    2. Increased social evils because of idleness
    3. Pressure on goods and services used by the young
    4. Low levels of saving and investment
    5. High dependency levels
    6. Increased government expenditure on service for the youth
    7. Low access to experienced labor/low supply of experienced labor     (Any 4 x 1=4 marks)
23. The retail traders are:
    1. Road side seller/trader
    2. Hawker
    3. Automated vending machine
    4. Open air market retailers/traders     (Any 4 x 1=4 marks)
24. Benefits of inflation to an economy include:
    1. Seller makes more profit
    2. Workers put in more effort to cope with the effect of inflation motivation to hard work
    3. Debtors pay less in terms of value of money
    4. Consumer becomes more economical/better use of available resources
    5. Increased production/supply
    6. Increase innovation and creativity      (Any 4 x 1=4 marks)
25. Benefits that a country enjoys by participating in the international trade include:
    1. Get what is not produced in the country
    2. Get a variety of goods
    3. Promote job creation opportunities/employment creation
    4. Disposal of surplus goods/wider market
    5. Improved qualities of goods due to competition
    6. A country fully exploits her resources
    7. Increased level of technology out of transfer
    8. Improved standard of living of the citizens A country earns revenue
    9. Promotes peace with other countries
    10. A country can get assistance during calamities
    11. Promote specialization
    12. A country can obtain goods cheaply
    13. Facilitates movement of factors of production e.g labor      (Any 4 x 1=4 marks)