2022 Mock Examinations Business Studies Paper 1 with Answers-Kapsabet High School
Instructions:
⢠Attempt ALL questions in the spaces provided.
1. State four challenges that a business without a plan will encounter in its operations. (4mks)
2. An entrepreneur may spot a gap in the market which may be converted into a business idea. Identify four such gaps. (4mks)
3. List down four trends in business ownership (4mks)
4. Outline four differences between Direct production and Indirect production (4mks)
5. The following balances were extracted from the books of Kariuki traders on 31st March 2018 Fixed assets 300,000
Current assets 123,700
Creditors 84,500
5 year bank loan 125,000
Determine the networth of the business as at 31st March 2018 (4mks)
6. Highlight four similarities between a bill of exchange and a promissory note. (4mks)
7. Indicate the type of journal in which each of the following transactions would be recorded.(4mks)
Transaction Type of journal
i. Goods previously sold on credit were returned
ii. Goods bought on credit
iii. Goods sold for cash
iv. Motor vehicle sold on credit
8. Outline four ways of solving unemployment. (4mks)
9. Outline four ways in which commercial attachees may promote trade between their country and other countries. (4mks)
10. On 1st January 2017 Mr. Nyachae started a business with Ksh. 10,000 in cash. The following transactions took place during the first week of his business commencing
2nd January Deposited Sh. 5,000 in the bank 3rd January Purchased stationery worth Sh. 1,000 in cash. 4th January Bought goods worth Sh. 2,000 by cheque
Enter the above transactions in the relevant âTâ accounts. (4mks)
11. Outline four differences between insurance and assurance. (4mks)
12. Give four ways in which consumers benefit from advertising (4mks)
13. State four features of monopolistic competition (4mks)
14. Outline four requirements for one to start a limited liability company as one of the forms of business units. (4mks)
15. State four characteristics of chain stores type of retail business. (4mks)
16. Identify the type of communication described below. (4mks)
Description | Type of communication | |
---|---|---|
a) Principal addressing students on assembly | | |
b) Rumuors going round that the most hardworking employee will be awarded | | |
c) Student group discussion in a class | | |
d) An employee seeking for permission | | |
17. Highlight four reasons why E-mail is increasingly becoming popular as a means of communication. (4mks)
18. Give four implications of a declining population (4mks)
19. Highlight four items that affect the asset stock. (4mks)
20. Classify the following accounts into personal, private, real or nominal (4mks)
Account | Type of account |
---|---|
i) Office equipment | |
ii) Debtor | |
iii) Capital | |
iv) Salaries | |
21. Name what the letters a, b, c and d represent in the circular flow of income. (4mks)
22. Omolo insured his house worth sh. 5,000,000 for sh. 4,000,000. His house was damaged by fire to
the tune of sh. 3,000,000. Calculate how much Omolo was compensated. (4mks)
23. Identify any four Trade malpractices that consumers need protection against. (4mks)
24. Outline four functions of commercial banks (4mks)
25. State four types of capital in a business. (4mks
MARKING SCHEME
1. Challenges faced by a business without a business plan
i. Workers will not be motivated.
ii. Since financiers need this document, it will be difficult to access more finances.
iii. There will be very many mistakes
iv. It will not be able to identify strengths and weaknesses
v. It will be difficult to know the finances required.
vi. Allocation of resources will be difficult.
vii. Potential investors will not have a reference document
2. Gaps in a business
i. Poor quality goods and services
ii. High prices of products
iii. Low quantities
iv. Unavailability of a given product in the market
v. Lack of after sales services
vi. Lack of varieties of goods and services
3. Trends in business ownership
i. Privatization
ii. Globalization
iii. Amalgamation/merger
iv. Franchising
v. Internet
vi. Absorptions/take overs
vii. Holding companies
viii. Cartels
ix. Multinationals
x. Front Office Savings Account
4. Differences between direct production and indirect production.
Direct production | Indirect production |
---|---|
i) Production is meant for one’s own consumption | Production is meant for sale |
ii) Production is done on small scale | Production is done on large scale |
iii) Poor quality produce | High quality produce |
iv) Simple methods of production used i.e no use of machines | Modern technology extensively used |
v) No specialization | There is specialization |
vi) No surplus production | There is surplus production for the market |
5. Determining the networth
Assets = Capital + Liabilities
Capital = Assets – Liabilities
Total Assets
Total liabilities
Fixed assets 300,000 creditors 84,500
Current assets 123,700 5 year bank loan 125,000
423,700 209,500
Networth = 423,700 – 209,500
=214,2OO
6. Similarities between a bill of exchange and a promissory note
i. Both can be discounted before maturity
ii. Both are acknowledgement of a debt
iii. Both are negotiable from one person to another
iv. Both allow debtors time to organize for payment.
7. Types of journal
i. Sales returned journal
ii. Sales journal
iii. Cash receipt journal
iv. General journal
8. Methods of solving unemployment
i. Encouragement of local and foreign investment to increase production activities
ii. Use of appropriate technology
iii. Adoption of a relevant education system
iv. Population control
v. Encouraging informal sector in order to encourage self-employment
vi. Transforming rural sector in order to reduce rural-urban migration.
vii. Increased government expenditure
viii. Diversification of the economy
9. Ways in which commercial attatches may promote trade between their country and other countries
i. Assist in organizing trade fairs and exhibitions
ii. Advise exporters on standards and legal requirements
iii. Carrying out market research
iv. Provide information about business opportunities
v. Aid in facilitating payments
10. Preparation of ledger accounts. (Title must exist)
11. Differences between insurance and assurance
nsurance Assurance
i) Has no surrender value Has a surrender value
ii) The insurance contract is renewed
yearly Insurance contract is for life and does not
require renewing
iii) Has no maturity date Has maturity date
iv) There must be proof of insurable
Interest There is no proof of insurable interest
v) Risk insured may or may not happen Risk insured against must happen
vi) Principle of subrogation/ Indemnity
applies Principle of subrogation/Indemnity does
not apply
vii) Cannot be used as a saving scheme Can be used as a saving scheme
viii) Protection is offered to property Protection is offered to life
12. Ways in which consumers benefit from advertising
i. Consumers get entertained from the adverts
ii. It informs consumers about offers in the market
iii. Consumers are guided on where to get the products
iv. Consumers enjoy a variety of products
v. Competitions lead to quality products
vi. Consumers are made aware of the products in the market
vii. Consumers get cheaper prices due to competition
13. Features of monopolistic competition.
i. Firms set similar prices
ii. There is free entry and exit
iii. Factors of production are not controlled
iv. There is perfect knowledge in the market
v. Sellers sell differentiated products
vi. There are many buyers and sellers
vii. Actions of one firm are closely monitored by other firms
14. Requirements for one to start a limited liability company as one of the business units
i. Memorandum of association
ii. Article of association
iii. List of directors
iv. Declaration of compliance
v. Statement of share capital showing the total amount of capital that the company wishes to raise and it’s division into shares
15. Characteristics of a chain store
i. Similar shop appearance and name
ii. Sell similar types of products
iii. Charge standard prices for their products
iv. All purchases are centralized
v. Goods are freely transferable from one branch to another
vi. Administration is done from the head office
vii. Operate several branches in the country
viii. Sales are decentralized
16. Types of communication
i. Downward communication
ii. Informal communication
iii. Horizontal/lateral
iv. Upward
17. Reasons why E-mail is increasingly becoming popular as a means of communication
i. It is relatively cheap
ii. It is fast
iii. It can be used for future reference
iv. There is easy access to information
v. There is easy retrieval of information
vi. It is confidential in nature
vii. It has immediate feedback
viii. It is used worldwide
ix. One can send detailed information through attatchment of documents.
18. Implications of a declining population(Both positive and negative)
i. Less government expenditure on social amenities
ii. Increased job opportunities in a country
iii. Less pressure on economic resources
iv. Leads to even distribution of income in a country
v. Improved standards of living of the people
vi. Less man power
vii. Less market/ demand
viii. Under utilization of resources
19. Items that affect the asset stock
i. Sales
ii. Sales retuns
iii. Purchases
iv. Purchases returns
20. Types of accounts
i. Real account
ii. Personal account
iii. Private account
iv. Nominal account
21. Causes of shift of the demand curve to the right ( Must qualify)
i. increase in the level of consumer incomes
ii. Increase in the price of substitute goods
iii. Decrease in price of a complimentary good.
iv. Population increase
v. Future expectation of an increase in price
vi. Favorable government policies e.g low taxation in consumers income
vii. Favorable change in taste/preference/fashion
22. Insurance compensation
Compensation = Valueof Policy x Loss
Value of property
4,000,000 x 3, 000, 000
SOOO 000
= 2,400,000
23. Trade malpractices that consumers need protection against
i. False advertisement
ii. Overpricing
iii. False measurements
iv. Misleading advert
v. Poor hygienic standards
vi. Unhealthy structures
vii. Hoarding
viii. Breach of contract
24. Functions of commercial banks
i. Accepting deposits
ii. Transfer of money
iii. Lending money
iv. Collecting payments on behalf of customers
v. Remitting payments on behalf of customers
vi. Facilitating trade
vii. Providing safe custody of valuables
viii. Acting as trustees
ix. Provide foreign exchange services
x. Acting as referees for their clients
25. Types of capital in a business
i. Working capital
ii. Borrowed capital
iii. Capital owned
iv. Capital employed
v. Fixed capital