BUSINESS STUDIES PAPER 1 Marking Scheme - 2017 MURANG'A MOCK EXAMINATION

Importance of studying business studies.
- Acquire knowledge and skills to start a business.
- Provide knowledge for further studies.
- Appreciate the role of business in society.
- Acquire positive attitude towards work.
- Enhance cooperation and understanding.
- Understand the role of market forces in price determination.
- Any other relevant point. 4 x 1 = 4mks

Advantages of partnership over sole proprietorship
- Large capital is raised.
- Better decision done to consultation.
- Share losses /risks.
- Share responsibilities.
- Variety of talents. (4x1 = 4mks)

Identifying factors.
1. Internal
2. External
3. External
4. Internal 4 x 1 = 4mks
Characteristics of economic resources
- Scarcity
- Monetary value
- Uneven distribution.
- Combinability / complimentality.
- Have utility / usefulness.
- Transferability
- Mobility
- Alternative uses.
- Exhaustibility /renewability. 4 x 1 = 4mks

Role of warehousing in trade promotion.
- Ensure security of goods against theft.
- Ensure steady supply.
- Ensure continuity in production.
- Encourage production in large quantities.
- Provide services such as packaging / sorting/ blending/ grading/ trading.
- Protect goods against damage. 4 x 1 = 4mks

Circumstances that cause termination of insurance contract.
- When insured fails to act in utmost good faith.
- On maturity of the contract.
- If insured decides to discontinue the contract.
- If insured ceases to have insurable interest in the property.
- If insured fails to renew the contract.
- If court of law orders termination.
- When risk insured occurs and duly compensated. 4 x 1 = 4mks

Reasons for privatization.
- To raise revenue for the government.
- To encourage competition in the economy.
- Improve efficiency in management.
- To reduce government expenditure non performing/ loss making enterprises.
- To reduce excessive government control.
- To encourage foreign investors.
- To increase investment/ promote economic development in the economy.
- To confirm to IMF/ world board donor wishes. 4 x 1 = 4mks

Books of original entry
1. General journal
2. Cash receipt journal
3. Sales journal
4. Purchases returns/ returns outward journal. 4 x 1 = 4mks
Advantages of using M-pesa account
- Cheap to operate /less charges.
- Easy access/ readily available to customers.
- Money can be withdrawn easily.
- Money can be deposited easily.
- Utility bills can be paid.
- Transfer money from bank account to mpesa or vice versa
- It is safer to carry money in m-pesa account.
- Can buy airtime easily.
- Goods/ services can be paid.
- Make savings.
- Obtain soft loans. 4 x 1 = 4mks

Steps involved in personal selling.
- Identifying prospective customers.
- Preparing presentation.
- Establishing customer contract.
- Acquiring interest in the product.
- Dealing with objections.
- Choosing sales.
- After sale services. 4 x 1 = 4mks

Challenges of long channel in distributing farm produce.
- Some farm produce may perish before reaching consumers.
- May be expensive to consumers.
- May delay in reaching the market.
- May suffer contamination due to poor handling
- Theft cases may occur. 4 x 1 = 4mks

Identify documents.
- Advice note
- Proforma invoice.
- Debit note.
- Statement of account. 4 x 1 = 4mks

Circumstances when a firm chooses to operate on small scale basis.
- Where the market is small.
- Where services are personalized.
- Fear of emergence of e.g economies of scale.
- Government policies.
- Used to retain control. 4 x 1 = 4mks

Causes of demand pull inflation.
- Increased government expenditure.
- Increase in wages / incomes.
- Favourable credit by commercial banks.
- Shortage of goods and services.
- Decrease in income taxes.
- Increased personal expenditure instead of saving. 4 x 1 = 4mks
Negative implications of rapidly growing population in a country.
- Strain on available resources.
- Poor standard of living.
- High dependency rates.
- Strain on available public utilities.
- Increased crime rates.
- Shortage of food.
- Increase in unemployment levels.
- Inflation due to excess demand and limited supply. 4 x 1 = 4mks

Circumstances for transporting goods by train.
- When goods are bulky.
- When covering a long distance.
- When transporting goods which are not urgently required.
- When producer wants assurance of goods safety.
- When time schedule is fixed and goods required at specific time / date.
- When intended to cut on cost.
- When loading and off- loading facilities are required.
- When intended to avoid risk of accidents. 4 x 1 = 4mks

Reasons for offering after sale services.
- To keep track of the performance of the products.
- To show customers how to handle sophisticated products
- To improve corporate image.
- To generate extra income by sale of spare parts.
- To attract more customers.
- To retain existing customers. 4 x 1 = 4mks

Features of capital as a factor of production.
- It is man-made.
- It is a basic of production.
- It is subject to depreciation.
- Can be improved through technology.
- Its reward is interest. 4 x 1 = 4mks

Characteristics of direct production.
- Goods / services are of low quality.
- Small-scale production.
- There is little or no specialization.
- Mechanization is minimal.
- Production for own use. 4 x 1 = 4mks

Identifying office machines.
- Franking machine.
- Cash register.
- Paper shredder.
- Stapler. 4 x 1 = 4mks