KNEC KCSE Business Studies Paper 1 Question Paper / 2015 KCSE Gem Sub-County Joint Evaluation

Mention four ways in which the government participate in training businessmen in the country.

State four factors that limit the satisfaction of human wants.

Give four reasons why the governments draw their development plans.

Highlight four ways in which a firm would acquire dominance of a market.

Identify any four barriers to international trade that imposed by government.

Land is one of the factors of production. Outline four circumstances under which it may discourage the location of firms.

Give four reasons why manufacturing firm may offer after sale service to its consumers.

Tigen trders had the following balance as at 31st December 2012
shs
Opening stock 800,000
Closing stock 1,000,000
Sales 3,250,000
Rate of stock turnover 3 times
Calculate:
a) Cost of goods sold (2 marks)
b) Gross profit (2 marks)

Highlight four differences between bill of exchange and promissory note.

The government of a developing country intends to formulate an elaborate policy to address the widespread unemployment. Identify four areas of concern that the policy should look into.

Outline four monetary measures taken by the Central Bank to solve the problem of demand pull inflation.

Highlight four measures the state is putting in place to bring sanity in the matatu transport sector in Kenya.

Onyango intends to insure his motor vehicle with UAP insurance company. Outline the procedure he would follow to take the policy.

Indicate with a tick () in the relevant column whether each of the following business transactions will increase or decrease the capital account balance.

List any four business considerations taken into account when carrying out business opportunity evaluation.

Outline four canons of taxation.

Highlight circumstances under which the following chains of distribution are used.
a) Manufacturer → Consumer
b) Manufacturer → Retailer → Consumer
c) Producer → Marketing Board → Consumer
d) Manufacturer → Agent → Consumer

State four reasons why an entrepreneur would prefer a landscape type of office.

Highlight four factors that may have led to the shift in the demand curve from D0D0 to D1D1

State four reasons why John would prefer to obtain a loan from his Sacco but not from a commercial bank.

Kilunya traders had thefollowing transactions during the month of March 2010:
March 3: Sold goods to Waweru sh 800, Ken Sh 600 and Okwanya sh 700
March 4: Bought goods from Uwezo sh 15,000, Openo sh 2000.
March 6: Sold goods to Mayi sh 1200, Shiro sh 1500, paka sh 900
March 9: Sold goods to Launda sh 400
Required:
Enter the above transaction in the sales journal.

Outline four circumstances under which a public warehouse would be ineffective.

The following information was provided by Kisumu traders for the year ended 31^st December 2013.

Required.
Prepare Kisumu Traders Balance Sheet in order of permanency.

Outline four factors that a citizen would consider while holding money for day to day expenses.

Identify the accounts to be debited and accounts to be credited from the following transactions.

Mention four ways in which the government participates in training businessman in the country.
 Through organizing trade fairs shows and seminars.
 By sponsoring businessmen to colleges/universities/schools/tertiary levels to gain more business knowledge.
 Through direct training by Kenya Institute of Business Training (KIBT)
 Through the use of commercial attaches who train exporters on new ideologies/technology/market
requirements.
 Through the use of science and technology congresses.
 Through business studies curriculum in secondary schools.

State four factors that limit satisfaction of human wants.
 Due to levels of consumers income.
 Due to high of level of poverty/unemployment among most people.
 Due to poor health of individual consumers.
 The high commodity prices in the country/inflation.
 The scarcity of commodities in the country which limits consumers choice.
 Political instability/insecurity/civil strifes in the country which interfere with production.
 Low levels of education in the country which limit creativity.
 Inadequate cooperant factors of production in the country. (1 x 4 = 4 Mks)

Reasons for drawing development plans
 To rank development projects in order of priority.
 To ensure economic stability.
 To identify resource gap which needs to be filled.
 To identify complementary investment decisions.
 To achieve fair and balanced distribution of resources in the country.
 To achieve industrialization.
 To source for loans and grants from overseas.
 To promote/stimulate positive attitude.
 To coordinate investments in the whole country.
 To achieve economic stability.
 To help mobilise different sectors of the economy for greater productivity. (1 x 4 = 4 mks)

Ways of acquiring monopoly power.
 By increasing the scale of operation.
 By acquiring the ownership of a source of a raw material.
 By acquiring control over market channels.
 Acquiring control over market channels.
 By acquiring ownership of production right/patent/copyright.
 By lobbying the government to get exclusive rights to produce a particular product.
 By initiating mergers with and takeovers of other similar firms to increase the size of the firm.
(1 x 4 = 4 mks)

Identify any four barriers of international trade that are imposed by the government.
 Import quotas.
 Import ban/total ban/embargoes.
 Custom duties.
 Import/export licensing.
 Bottlenecks/red tapes/complicated producers.
 Foreign exchange control.
 Devaluation of domestic currency. (1 x 4 = 4 mks)

Reasons for offering after – sale services to consumers.
 To show customers how to handle sophisticated products.
 Keep track of the performance of the product.
 Improving corporate image.
 To attract customers.
 To retain existing customers. (1 x 4 = 4 mks)

Circumstances under which land may discourage the location of firms.
 Where the cost of land is very high.
 Incase the land is too hilly to access.
 If the available land is so limited that it does not leave space for future expansion.

(a) Calculate the cost of goods sold.

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝑜𝑜𝑜𝑜 𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠

(b) Calculate the gross profit
Gross profit = Sales – cost of goods sold
= 3,250,000 – 2,700,000
= KSh. 550,000

 Education system reforms.
 Production methods to be adopted.
 Regional development of informal sector.
 Exploitation of natural resources.
 Export promotion and import regulation.
 Diversification of economic activities. (1 x 4 = 4 Mks)

Measures of solving the problem of demand – pull inflation.
 Increasing bank rates.
 Selling more government securities through OMO.
 Increasing the compulsory deposits.
 Lowering the cash ratio.
 Morally persuading banks not to give a lot of cash. (1 x 4 = 4 mks)

Highlight four measures that the state is putting in place to bring sanity to the transport sector in Kenya.
 Through the banning of night travels.
 Through re-introduction of alcoblow.
 Through insisting on licence for all PSV vehicles.
 Ensuring that all matatu have yellow bands along the length of vehicle.
 Through the use of speed cameras.
 Through introduction of highway courts to try traffic offenders.
 Through introduction of matatu saccos.
 Through use of uniforms/identification documents by PSV operators.
 Through use of double highways in Kenya. (1 x 4 = 4 Mks)

Outline the procedure involved in taking an insurance policy by the insured.
 The insured fills in proposal form.
 The insurer determines premiums to be paid.
 The insured then pays the firm premium.
 The insurer then issues cover note (binder) to the insured.
 The insured then issues policy to be insured 30 days from payment of first premium.

Business considerations taken into account when carrying out business opportunity evaluation.
 Size of market.
 Technology.
 Availability of raw material.
 Government policy.
 Amount of capital required.
 Level of completion the business is likely to face.
 Possibility of expansion.
 Difficulties in marketing.
 Security.
 Level of development of infrastructure.
 Impact of business operations on the environment.
 Level of risks involved in that kind of business.
 The profitability potential of the business.
 Culture and the traditions of the community where the business is located. (1 x 4 = 4 mks)

Outline four cannons of taxations
 The cannon of flexibility/elasticity.
 The cannon of economy.
 The cannon of equity.
 The cannon of simplicity.
 The cannon of certainty.
 The cannon of convenience.
 The cannon of diversity. (1 x 4 = 4 mks)

Highlight circumstances under which the following chains of distributions are used
(i) Manufacture → Consumer
 When goods are perishable.
 When goods are urgently needed.
 When goods are sensitive.
 When goods are few/small in quantity.
 When procedure has his own retail outlet.
 Where the government decides so.
(ii) Manufacturer → Retailer → Consumer
 When a producer has less finance to market his goods.
(iii) Producer → Marketing board → Consumer
 Where the producer has less finance to market his goods.
(iv) Manufacture → Agent → Consumer
 When the manufacturer exports products to foreign markets.

Reasons why most bank prefer a landscape office.
 Easy supervision by the management.
 Low construction cost.
 Easy location of workers.
 Minimises staff movement hence saving time.
 Low maintenance costs.
 Saving of floor space.
 Cheap to decorate.
 Decorations used to boost morale of the employees. (1 x 4 = 4 mks)

Factors that may lead to the demand curve to shift from D0D0 to D1D1
 Decrease in consumer’s income.
 Increase in price of complements.
 Decrease in price of substitutes.
 Decrease in population.

 Increase in taxation i.e PAYE
 Poor/bad weather conditions for agricultural products.
 Negative tastes and preference/fashion.
 Uneven distribution of income.
 Unfavourable terms of sale i.e. low discount levels.
 Future expectations of price decrease. (1 x 4 = 4 Marks)

State four reasons why John would prefer to obtain a loan from his Sacco but from commercial banks.
 Saccos charge low interest rates while commercial banks charge high interest rates.
 Saccos offer sense of ownership to members which is not there in commercial banks.
 No collateral are required by Saccos while commercial banks require collaterals.
 Sacco loans are insured by CIS while commercial banks loans are not insured.
 Saccos offer several types of loans while commercial banks offer one type of loan. (1 x 4 = 4 mks)​

Circumstances under which a public warehouse may be ineffective
 Where its location is not easily accessible.
 If the storage equipment is inadequate.
 Where the room for expansion is limited.
 Where the handling facilities are inappropriate and inadequate.
 Incase the warehouse does not meet the set legal requirement.
 Where the warehouse does not have access to essential services.
 Incase the secrurity/safety of the warehouse is poor. (1 x 4 = 4 mks)

Outline factors that a citizen would consider when holding money to pay day to day expenses.
 Size of the family.
 Level of income.
 Level of inflation.
 Interval between payments.
 Prices of commodities.
 Interval between incomes. (1 x 4 = 4 mkss)