BUSINESS PAPER 1 - 2019 LAINAKU JOINT MOCK EVALUATION EXAMINATION

1. Outline four factors that may lead to dishonoring of a cheque (4 marks)
2. State four circumstances when a high population growth rate may be desirable. (4 marks)
3. Highlight four benefits that accrue to an entrepreneur who prepares a business plan. (4 marks)
4. Give four differences between ordinary shares and preference shares. (4 marks)
5. State four reasons why the government issues licenses to business people. (4 marks)
6. Outline four factors that would influence the amount of money held by an individual for transaction purpose. (4 marks)
7. Name the international trade documents that relates to each of the following statements: (4 marks)
   

   	Statement	Document
   (a)	Gives details about the origin of the goods.
   (b)	Gives title to the goods traded.
   (c)	Used to place the order for goods to be imported from a specific exporter.
   (d)	Written by a commercial attaché of the importing country showing current prices of goods being exported.

8. State four problems that are usually encountered in the formulation stage of a development plan. (4 marks)
9. Give four circumstances when pipeline would be more preferred as a means of transport. (4 marks)
10. Name four source documents which are used to provide information used to make entries in the books of accounts. (4 marks)
11. Complete the table below for business A, B, C and D.
    

    BUSINESS	ASSETS	LIABILITIES	CAPITAL
    A	W	250,000	700,000
    B	85,000	30,000	X
    C	420,000	Y	120,000
    D	600,000	175,000	Z

12. State four benefits a trader receives from warehousing. (4 marks)
13. Highlight four emerging issues in communication. (4 marks)
14. State four factors that influence the fertility rate of a population. (4 marks)
15. Outline four expenditure items that are included in the measurement of national income under the expenditure approach. (4 marks)
16. The following information relates to Kawira Traders on 31^st January 2018:
    Opening stock                          40,000
    Purchases                               480,000
    Gross profit                            100,000
    Mark-up                                       25%
    Calculate:
    1. Closing stock. (2 marks)
    2. Rate of stock turnover for the year. (2 marks)

17. Highlight four ways in which the demographic environment affects the performance of the business.(4marks)                                                                                                                                                                  
18. State four factors to consider when making a choice of channel to use in distributing locally produced agricultural products. (4 marks)
19. Outline four benefits received by a student who finished form four and had done business studies as a subject. (4 marks)
20. Indicate which accounts to be debited and which accounts to be credited from the following transactions: (4 marks)
    

    	Transaction	A/c Dr	A/c Cr
    (a)	Proprietor took cash Sh. 18,000 and paid rent
    (b)	Brought in personal table and made it to be a business asset.
    (c)	A debtor paid Sh 80,000 by cheque.

21. Matuu Wholesalers insured their business worth Ksh. 2,850,000 for Ksh. 2,300,000 against fire. Eight months later, fire destroyed the business leading to a loss of Ksh. 1,248,000. Calculate what the insurance company compensated the business (4 marks)
22. Give four trends and emerging issues in office management. (4 marks)
23. Highlight four decisions made when deciding which goods and services to produce. (4 marks)
24. Outline how the following utilities are fulfilled: (4 marks)
    

    	Utility	How it is fulfilled
    (a)	Place
    (b)	Form
    (c)	Time
    (d)	Possession.

25. Outline four factors that a county government should consider before spending their county money. (4marks)

MARKING SCHEME

1. Outline four factors that may lead to dishonoring of a cheque (4 marks)
   Signature differs with specimen in bank
   Post dated cheque
   Stale (more than six months)
   Insufficient funds in the account
   Errors in the cheque
   Torn /defaced cheque
   Alternations which are not signed

2. State four circumstances when a high population growth rate may be desirable. (4 marks)
   When large market is needed to be offered by the high population;
   When large labour is needed;
   When a pool of talents and gifts is needed;
   When there is need of utilizing resources to the maximum;
   Where there is need to improve technology.
   Any 4 relevant answers; 4*1=4 mks
   NB: The answer should reflect circumstantial condition, i.e. should start with when, where, if, incase.

3. Highlight four benefits that accrue to an entrepreneur who prepares a business plan. (4 marks)
   He/ she is able to allocate/ distribute resources well;
   He/ she is able to avoid simple mistakes;
   He/ she is able to get finances easily from the financiers, e.g. banks.
   He/ she is able to compare and assess business growth from time to time;
   It is a motivating factor as a result of achieving goals and objectives.
   Any 4 correct answers; 4*1=4 mks

4. Give four differences between ordinary shares and preference shares. (4 marks)
   

   Ordinary shares	Preference shares
   Have voting rights	no voting rights
   Receive dividends last	receive dividends last
   Do not have a fixed rate of dividends	have fixed rate of dividends

   
   Any 4 correct answers; 4*1=4 mks
   NB: No splitting of marks

5. State four reasons why the government issues licenses to business people. (4 marks)
   To collect/ raise revenue/ income;
   To regulate unfair competition;
   To control harmful products being sold to the consumers;
   To regulate illegal businesses;
   To control goods leaving and entering the country;
   To ensure those engaged in business meet the professional requirements;
   To ensure that traders engage only in trade activities that they are licensed for.
   Any 4 correct answers; 4*1=4 mks.

6. Outline four factors that would influence the amount of money held by an individual for transaction purpose. (4 marks)
   Individual’s level of income;
   Individual’s spending habits;
   Prices of commodities;
   Interval between receipts of income;
   Availability of credit;
   Any 4 correct answers; 4*1=4 mks

7. Name the international trade documents that relates to each of the following statements:
   

   	Statement	Document
   (a)	Gives details about the origin of the goods.	Certificate of origin
   (b)	Gives title t	Bill of landing
   (c)	Used to place the order for goods to be imported from a specific exporter.	Closed indent
   (d)	Written by a commercial attaché of the importing country showing current prices of goods being exported.	Consular invoice

   4*1 =4 mks

   4*1 =4 mks

8. State four problems that are usually encountered in the formulation stage of a development plan. (4 marks)
   Inadequate data;
   Unreliable data;
   Inappropriate planning models;
   Problem of controlling the private sector;
   Lack of qualified planning personnel/ manpower;
   Inadequate and inappropriate equipment;
   Existence of larger subsistence sector;
   Lack of proper research on policy issues;
   Any 4 correct answers; 4*1=4 mks

9. Give four circumstances when pipeline would be more preferred as a means of transport. (4 marks)
   When high volume of fuel is needed;
   When traffic jam needs to be avoided;
   When less labour is needed;
   Where there is need to maintain roads;
   Where there is need to minimize/ avoid road accidents;
   Incase supply is needed continuously;
   Where there is need to control environmental pollution.
   Any 4 relevant answers; 4*1=4 mks

10. Name four source documents which are used to provide information used to make entries in the books of accounts. (4 marks)
    Invoice;
    Receipt;
    Debit note;
    Credit note;
    Payment voucher.
    Any 4 correct answers; 4*1=4 mks

11. Complete the table below for business A,B,C and D.
    

    BUSINESS	ASSETS	LIABILITIES	CAPITAL
    A	W=950,000	250,000	700,000
    B	85,000	30,000	X=55,000
    C	420,000	Y=300,000	120,000
    D	600,000	175,000	Z=425,000

12. State four benefits a trader receives from a warehouse. (4 marks)
    Goods are safe/ secure from being stolen;
    Able to look for transfers/ customers;
    Can prepare the goods for sale while still in warehouse;
    Can receive transport services;
    Can receive credit services;
    Customers can view the goods while in the warehouse, hence creating demand;
    Can sell goods while in the warehouse; hence transfer cost of paying the expenses to the customer, e.g. customs duty.
    Any 4 correct answers; 4*1=4 mks

13. Highlight four emerging issues in communication. (4 marks)
    Development of paperless offices;
    Transformation of the language of Sheng among the youth;
    Wide use of mobile phones;
    E-mail replacing normal males;
    Internet use.
    4*1 =4 mks

14. State four factors that influence the fertility rate of a population. (4 marks)
    Economic status of population;
    Education levels;
    Health levels;
    Society’s level of morality/ social customs;
    Government policy on population;
    Political attitude towards family size;
    Natural calamities;
    Technological progress;
    Age and sex structure of population;
    Marriage role among those in productive age brackets.
    Any 4 relevant answers; 4*1=4 mks

15. Outline four expenditure items that are included in the measurement of national income using expenditure approach. (4 marks)
    Consumer expenditure;
    Government expenditure;
    Imports expenditure (international trade);
    Expenditure by firms on capital goods or investments.
    4*1 =4 mks

16. The following information relates to Kawira Traders on 31^st January 2018:
    Opening stock                         40,000
    Purchases                                480,000
    Gross profit                             100,000
    Mark-up                                  25%
    Calculate:
    Closing stock. (2 marks)
    Markup = GP/ Cogs
    25/100 = 100,000/ Cogs
    Cogs = (10,000 * 100) / 25
    Cogs = 400,000
    Cogs = OS + P – CS
    400,000 = 40,000 + 480,000 – CS
    CS = 520,000 – 400,000
    =120,000
    6 ticks * ¹/₃ = 2 mks
    Rate of stock turnover for the year. (2 marks)
    ROSTO = COGS/ A.S.
    A.S. = (0.5 + CS) / 2 = (40,000 + 120,000) / 2 = 80,000
    ROSTO = 400,000 / 80,000 =5 times
    4 ticks @ ½ = 2 mks

17. Highlight four ways in which the demographic environment affects the performance of the business. (4 marks)
    High population creates wider market;
    Large population may cause security/ moral threat to business;
    Population offers labour for business;
    t brings innovation and invention for better technological advancements.
    May provide raw materials.
    4*1 =4 mks

18. State four factors to consider when making a choice of channel to use in distributing locally produced agricultural products. (4 marks)
    Consumers/ market
    Nature of products
    Firm’s characteristics;
    Level of competition/ competitors;
    Marketing risks;
    Government policy;
    Middlemen cost and characteristics.
    Any 4 relevant answers; 4*1=4 mks

19. Outline four benefits received by a student who finished form four and had done business studies as a subject. (4 marks)
    It is a career subject;
    Can be able to start and run a business;
    Is able to appreciate the role of government in business;
    Is able to appreciate the role of business in society;
    Will have self-discipline;
    Will utilize skills acquired for self-development.
    Any 4 relevant answers; 4*1=4 mks

20. Indicate which accounts to be debited and which accounts to be credited from the following transactions: (4 marks)
    

    	Transaction	A/c Dr	A/c Cr
    (a)	Proprietor took cash Sh. 18,000 and paid rent	Rent	Cash
    (b)	Brought in personal table and made it to be a business asset.	Furniture/ Table	Capital/ Investment
    (c)	A debtor paid Sh 80,000 by cheque.	Bank	Debtor
    (d)	Transferred Sh 20,000 to a private bank account.	Drawings	Bank

    Matuu Wholesalers insured their business worth Ksh. 2,850,000 for Ksh. 2,300,000 against fire. Eight months later, fire destroyed the business leading to a loss of Ksh. 1,248,000. Calculate what the insurance company will compensate. (4 marks)8 * ¹/₂ = 4 mks
    Compensation = (Value of policy * Loss) / Value of property = (2,300,000 * 1,248,000) / 2,850,000 = 1,007,158    
    4 ticks * 1= 4 mks

22. Give four trends and emerging issues in office management. (4 marks)
    More open and landscape office layouts;
    Introduction of public relations departments;
    Improved security, e.g. use of CCTV cameras;
    Extensive use of computers and computerized systems;
    Use of modern office furniture and equipment;
    Health, Safety and Exercise and breakout areas;
    Use of identification name tags.
    Any 4 relevant answers; 4*1=4 mks

23. Highlight four decisions made when deciding which goods and services to produce. (4 marks)
    Demand/ market scope for the goods and services to produce;
    The cost of production;
    Government policies affecting production;
    Availability of resources;
    Availability of technology;
    Skills requirement;
    Financial viability;
    Return on investment.
    Any 4 correct answers; 4*1=4 mks

24. Outline how the following utilities are fulfilled: (4 marks)
    

    	Utility	How it is fulfilled
    (a)	Place	Transport
    (b)	Form	Manufacturing/ Production
    (c)	Time	Warehousing/ Storage
    (d)	Possession.	Selling/ Trade

    4*1 =4 mks

25. Outline four factors that a county government should consider before spending their county money. (4 marks)
    There should be flexibility in spending;
    There should be sanctioning before spending;
    It should be economical;
    It should yield maximum social benefits;
    There should be proper financial management.
    Any 4 correct answers; 4*1=4 mks