Business Studies Paper 1 Questions and Answers - Nginda Girls Mock Examination 2023

Instructions

Write your name and index number in spaces provided above.
Sign and write the date of the examination in the spaces provided above.

QUESTIONS

In the table below, fill in the correct discipline from the given statements (4mks)

STATEMENT	DISCIPLINE
Systematic way of recording business transactions
Study of trade and aids to trade
Activities carried out in an office
Study of how human beings strive to satisfy their wants using scarce resources.

Outline four benefits that a consumer gets from warehousing. (4mks)
Outline four circumstances under which a producer may opt to sell his product directly to the consumer. (4mks)
Amina complains to her friend that nowadays she is finding it increasingly hard to satisfy her needs. Give four reasons why she may be finding herself in such a situation.
State four uses of general journal as a book of original entry. (4mks)
Highlight four types of complains that consumers organization may receive from consumers. (4mks)
The following information relates to Juma traders as at 30th June 2011.
- Capital 96 600
- Debtors 29 520
- Creditors 24 670
- Motor vehicle 79 000
- Cash 11 250
- Stock 1 500
  Prepare a trial balance (4mks)

Match the following definition with appropriate external business environment. (technological,legal-political;economic and social- cultural) (4 mks)

DEFINITION	BUSINESS ENVIRONMENT
Close monitoring of business and passing laws and policies to regulate them.
Level of know-how, efficient use of tools.
Customs, values and beliefs that regulate behaviour of people.
Factors that affect the buyers’ ability to buy goods and services offered by business

Outline four factors influencing amount of money held for precautionary motive. (4mks)
Judy a business lady has joined Facebook. Give four business related benefits she can get from being a user of Facebook. (4mks)
Outline four assumptions to the circular flow of income in a two-sector economy. (4mks)
Highlight the functions of the following documents used in international trade. (4mks)
1. Certificate of origin
2. Indent
3. Bill of landing
4. Commercial invoice
Outline four benefits of indirect production to an economy. (4mks)
Highlight four circumstances under which insurance company may decline to compensate the insured after the occurrence of the risk
The following information relates Kamoko traders as at 31st December 2022.
(Sh)
Fixed assets 400,000
Stock 120,000
Current liabilities 60,000
Net profit of the year 100,000
Calculate:
1. Rate of return on capital employed
2. Current ratio
Highlight four factors that a firm may consider when deciding on goods to produce (4mks)
Classify each of the following items of government expenditure as development or recurrent. (4mks)

Item

Type of expenditure

Purchase of medicine for hospital

Construction of new roads

Payment of teachers’ salary

Purchase of a tractor for agricultural use
State four reasons why hyper-markets are becoming very popular in kenya. (4mks)
Outline four differences between perfect competition and monopolistic product market. (4mks)
Perfect competition Monopolistic
Outline four factors that have limited containerization in transportation of goods. (4mks)
Highlight four factors that promote entrepreneurial culture in a country. (4mks)
Highlight four factors that may lead to shift of demand curve to the right. (4mks)
State four principles that distinguish cooperative society from other forms of business organizations. (4mks)
Outline four circumstances under which the capital of a business may change.(4mks)
Mary has been appointed as a manager in a company. State four measures that she will take to improve the efficiency of workers. (4mks)

MARKING SCHEME

In the table below, fill in the correct discipline from the given statements (4mks)

STATEMENT	DISCIPLINE
Systematic way of recording business transactions	Accounting
Study of trade and aid of trade	Commerce
Activities carried out in an office	Office practice
Study of how human beings strive to satisfy their wants using scarce resources.	Economic

Outline four benefits that a consumer gets from warehousing. (4mks)
1. Steady flow of goods
2. Ensure stability of prices of goods
3. Consumer get value added goods
4. ensures consumers demand are met especially during peak season
5. Consumer can inspect goods before they buy
6. Consumers enjoy variety of goods
Outline four circumstances under which a producer may opt to sell his product directly to the consumer. (4mks)
1. If products are perishable/bulky
2. If market is concentrated in one area
3. A small firm may not use intermediary
4. If the competitors of the firm do not use intermediaries
5. If it is a government policy
6. If the product is of high value
7. If the product is fragile
Amina complains to her friend that nowadays she is finding it increasingly hard to satisfy her needs. Give four reasons why she may be finding herself in such a situation.
1. Amina might be having scarce resources
2. Amina’s needs might be changing as she grows
3. he might be having comping needs
4. Amina’s needs may be continuously repeating once satisfied
5. Amina’s wants may be complementary
State four uses of general journal as a book of original entry. (4mks)
1. To record purchase of fixed assets on credit
2. To record sale of fixed assets on credit
3. Record opening entries
4. Collection of errors
5. Writing off bad debts
6. Closing entries and other transfers
7. Issues of share and debentures by companies
Highlight four types of complains that consumers organization may receive from consumers. (4mks)
1. Unfair/overpricing/overcharging
2. False advertising
3. Hoarding of goods by traders
4. Breach of contract
5. Selling of substandard goods
6. Poor hygienic conditions
7. Expired goods
8. Poor quality/harmful goods

The following information relates to Juma traders as at 30th June 2011.

Capital 96 600
Debtors 29 520
Creditors 24 670
Motor vehicle 79 000
Cash 11 250

Stock 1 500
Prepare a trial balance (4mks)
JUMA TRADERS
TRIAL BALANCE
AS AT 31ST JUNE 2011

Details	Dr	Cr
Capital		96,600
Debtors	29,520
Creditors		24,670
Motor vehicle	79,000
Cash	11,250
Stock	1,500
	121,270	121,270

Match the following definition with appropriate external business environment. (4mks)

DEFINITION	BUSINESS ENVIRONMENT
Close monitoring of business and passing laws and policies to regulate them.	Legal-political
Level of know-how, efficient use of tools.	Technological
Customs, values and beliefs that regulate behaviour of people.	Social-cultural
Factors that affect the buyers’ ability to buy goods and services offered by business	Economic

Outline four factors influencing amount of money held for precautionary motive. (4mks)
1. Level of income
2. Age of an individual
3. Family status
4. Number of dependants
5. Occurrence of risk
6. Pay intervals
7. Life expectation
Judy a business lady has joined Facebook. Give four business related benefits she can get from being a user of Facebook. (4mks)
1. She can advertise her business online
2. She can sell her product online
3. She can conduct market research online
4. She can get useful information from other entrepreneurs online
5. She can get business ideas online.
Outline four assumptions to the circular flow of income in a two-sector economy. (4mks)
1. There are only two sectors in the economy
2. There is no foreign trade
3. There is no government intervention.
4. Household spend all their income on goods and service produced by firms.
5. Firms spend all their time revenue on factors of production provided by households.
Highlight the functions of the following documents used in international trade. (4mks)
1. Certificate of origin – Shows the country of manufacture of the import. Can enable an importer to enjoy preferential privileges if the country is a member of a common trading block.
2. Indent – It is an order made by importer and sent to an agent in exporting country.
3. Bill of landing- A document prepared by ship owner that contains goods to be transported from exporter’s port to importer’s port.
4. Commercial invoice- A document sent by exporters to importers demanding for payment.
Outline four benefits of indirect production to an economy. (4mks)
1. Creation of employment
2. Generation of government revenue
3. Goods are produced in large quantities due to use of new technology
4. Goods produced are of high quality
5. No boredom since there is specialization.
Highlight four circumstances under which insurance company may decline to compensate the insured after the occurrence of the risk.
1. When the loss is not reported within stipulated time
2. When the loss is intentional
3. When the insured had stopped paying premiums
4. When the insured did not follow the right procedure for claiming
5. If the insured did not disclose or obey the principle of outmost good faith
6. When the insured had no insurable interest in the property insured.
7. If there was no close relationship between risk insured and the cause of a loss.
The following information relates Kamoko traders as at 31st December 2022.
(Sh)
Fixed assets 400,000
Stock 120,000
Current liabilities 60,000
Net profit of the year 100,000
Calculate:
1. Rate of return on capital employed
  Capital employed =fixed asset +current asset -current liabilities
  =400,000+120,000 – 60,000
  460,000
  R.O.R.CE =N. profit x100
  Capital employed
  100,000/ x100
  460,000
  =21.7%
2. Current ratio
  C. R = C. A
  C. L
  =120,000
  60,000
  =2:1
Highlight four factors that a firm may consider when deciding on goods to produce (4mks)
1. Profitability
2. Size of the market
3. Cost of production
4. Government policy
5. Availability of labour
6. Availability of capital
7. Time period
8. Price of good
9. Availability of raw material
10. Level of technology
11. Level of competition

Classify each of the following items of government expenditure as development or recurrent. (4mks)

Item	Type of expenditure
Purchase of medicine for hospital	Recurrent
Construction of new roads	Development
Payment of teachers’ salary	Recurrent
Purchase of a tractor for agricultural use	Development

State four reasons why hyper-markets are becoming popular in Kenya today. (4mks)
1. They are open for long hours
2. They provide ample parking space
3. They are located in accessible areas served by good road net work
4. They offer a variety of goods
5. They allow customers to buy on credit by accepting credit cards
Outline four differences between perfect competition and monopolistic product market. (4mks)
Perfect competition Monopolistic
1. Many buyers and sellers Many buyers and sellers operat independently
2. Commodities of each seller are identical Commodities are similar but differentiated.
3. Products are not advertised Heavy advertisement to counter competition.
4. Firms are price takers Firms are price makers
5. Products are perfect substitute to each other Products are not perfect substitute due to other. differentiation.
Outline four factors that have limited containerisation in transportation of goods. (4mks)
1. Containers are expensive to acquire
2. It is capital intensive hence leads to unemployment
3. Use of modern technology which is limited/lacking
4. unsuitable for transporting small quantities
5. Unsuitable for transporting irregular shaped goods
Highlight four factors that promote entrepreneurial culture in a country. (4mks)
1. Favourable government policy
2. Availability of security
3. Political stability
4. Availability of capital
5. Good governance
6. Presence of good role model
7. Fair competition
8. Developed infrustructure
Highlight four factors that may lead to shift of demand curve to the right. (4mks)
1. Increase in consumers disposable income
2. Increase in population
3. Favourable terms of payment
4. Positive taste/preference/fashion
5. A future expectation of increase in price
6. Favourable government policy
State four principles that distinguish cooperative society from other forms of business organizations. (4mks)
1. Democratic control/administration
2. Voluntary membership/open membership
3. Limited interest on share capital
4. Educate their member
5. Cooperate with other cooperatives
6. Non-profit motivated
7. Repayment of dividend
8. Political/religious neutrality
9. Limited number of shares one can buy
Outline four circumstances under which the capital of a business may change. (4mks)
1. When the business makes profit
2. When the business makes losses.
3. When the business owner draws cash/goods for personal use
4. When the owner makes additional investment into the business.
Mary has been appointed as a manager in a company. State four measures that she will take to improve the efficiency of workers. (4mks)
1. Making the goals clearer to them
2. Training workers on how they can carry out their work
3. Offering incentives to workers
4. Listening to their views
5. Ensuring the task you give them matches with their skill.