KNEC KCSE Business Studies Paper 1 Question Paper / 2015 KCSE Tharaka South Joint Examination

State four external factors that may positively influence the operations of a business.

State four reasons why consumers have to make a choice between competing needs.

Give four reasons why a sole proprietor business may remain small size.

State four problems that a country may suffer when the government becomes a major investor in business activities.

State the meaning of the following terms as used in cash book.
(a) Contra entry
(b) Folio column

State four circumstances that may influence a firm to locate its operation near the source of raw materials.

For each of the following transactions,indicate the source documents from which the following transactions would be recorded.
Transaction Source document
(a)Sales of goods on credit
(b)Correction of an overchange
(c)Goods returned by customer
(d)Purchase on credit

The following balances were extracted from the books of Neno Traders for the year ended 31 December 2014.
Shs.
Opening stock 20,000
Capital 80,000
Gross profit 18,620
Discount allowed 740
Carriage outwards 1,350
Rent received 3,430
General expenses 1,960
Salaries and wages 5,700
Prepare profit and loss account.

Outline four advantages of division of labour.

Highlight four ways of generating business ideas.

State four problems that may interfere with the effectiveness of face to face communication.

State four reasons why it is suitable to locate bonded warehouse at the point of entry of goods in a country.

Outline four ways in which households contribute to national income.

Mention four roles played by intermediaries in the distribution channel.

Indicate whether the following taxes are Direct or Indirect.

Tax Type of tax
(a)corporation tax
(b)value added tax(VAT)
(c)Capital gains tax
(d)Excise

Kamwenje a sole proprietor who operates a private school bought balnkets for sh.100, 000.The terms of sale were 20% trade discount and 5% cash discount if payment was made within two weeks. Calculate the net amount he paid after one week.

State four factors that could hasten the economic development of a country.

A businessman owned a motor vehicle valued sh.1, 000,000.He comprehensively insured it for sh.800, 000.It was involved in an accident and declared a write off. Calculate the amount he should get from the insurer.

State four reasons for which traders observe ethical practices in product promotion.

State four factors that determine the period for which documents should be filed.

On 1 December 2014,Rangi Traders had sh.13,200 in cash and bank balance of sh.56,000.The following transactions took place during the month
December
“ 2 cash sales sh.12, 000
“ 15 paid a creditor sh.7200 by cheque
“ 27 Received a cheque for sh.24, 500 from debtor
“ 30 Paid rent sh.7, 500 in cash
Record the above information in a two column cash book and balance it off.

State four factors that may lead to unfavourable terms of trade.

Highlight four features of business assets.

The cost of consumer goods for a representative of a household is given below.
Year Prices
2013 12,000
2014 16,000
Determine the increase in consumer price index using 2013 as the base year.

Positive external factors
− Fair competition
− Appropriate technology
− Stable political environment
− Stable economic environment
− Favorable government policy/legal framework
− Reliable supply system
− Weak consumer bargaining power
− Security
− Positive publicity
− Good physical infrastructure
− High population/market
− Favourable social-cultural environment. (any 4×1= 4 marks)

Reasons why consumers have to make a choice
− Unlmited needs/wide variety
− Limited income/ resources
− Government policy on goods/government restrictions
− Different taste/ preference/ fashion/quality
− Cannot be permanently satisfied (any 4×1=4 marks)

A Why a sole proprietor remain small
− To meet needs of few customers
− Little capital for expansion
− No collateral to borrow funds for expansion
− Decision by owner to remain small
− Limited technology/ limited specialization
− Fear of risks associated with large business
− Need for personal attention to customers

Problems when government becomes a main investor.
− Discourage investment due to unfair competition
− Poor quality goods/ services due to lack of competition
− Limited choices for consumers
− Inefficiency leading poor productivity
− Burden to tax-payer due to continuous losses
− Lack of accountability/Transparency
− Unstable management/frequent changes in their management.
− Political interference leading to unethical practices.
− Bureaucracy/ Red-tape leading to rigidity. (any 4×1=4 marks)

Contra-entry-A transaction that affect both cash and bank accounts. (2 marks)
Folio column-reference page on the relevant account. (2 marks)

Locating firm near source of raw materials
− Where raw materials are bulky/heavy
− Where constant supply of raw materials is required.
− Where raw materials are highly perishable/fragile
− Where competition of raw material is high.
− Where government policy dictates so.
− Where there is need to save on cost.
− Where firm could like to give constant advice. ( any 4×1= 4 marks)

a) Sales invoice/outgoing invoice
b) Credit note
c) Credit note

d) Purchase invoice/incoming invoice. (any 4×1=4 marks)

Advantages of division of labour
− Increased output
− Development of individual skills.
− Quality goods
− Maximum use of machinery
− Development of new talents
− Encourage invention innovation
− Reduce training time (any 4×1=4 marks)
​

Ways of generating business ideas.
− Information from the media/accept example
− Trade fairs/shows/exhibitions
− Personal skills/hobbies/talents
− Formal/vocational Training
− Market research/ survey
− Using events/occasions e.g. wedding; sports etc.
− Identifying waste products
− Listening to what people say
− Identifying market gap/ niche
− Copying/ improving existing idea or producy.
− Combining business ideas. (any 4×1=4 marks)

Problems interfering to face to face communication
− Distance between communicating parties
− Where two parties do not speak same language
− Where language command is not of the same level.
− Where one party may be too domineering
− Noise
− Poor timing/mood
− Prejudice
− Unclear gestures
− Information over load (any 4×1= 4 marks)

Location bonded warehouse at point of entry.
− Prevent entry of harmful/dangerous goods
− Prevent exit of goods without legal authority.
− Easing inspection of imported goods
− Easing collection of custom duties
− Easing re-export of goods. (any 4×1=4 marks)

Ways in which households contribute to national income.
− Consumption of goods
− Payment of taxes
− Provision of labour
− Provision of savings for investments/capital
− Provision of land
− Provision of entrepreneurship.

Roles played by intermediaries
− Reducing transactions between producers and consumers
− Bulk breaking
− Accumulating (assembling bulk)
− Risk taking
− Provision information to producers about consumers
− Product promotion/advertising
− Provision of storage facilities
− Transportation
− Availing goods to consumers
− Guarantor to the government. (any 4×1=4 marks)

a) Direct
b) Indirect
c) Direct
d) Indirect (any 4×1=4 marks)

Services that central bank offer to the government.
− Accept deposits for safekeeping
− Issue currency on behalf of government
− Arrange and pay public debts on behalf of government.
− Advice the government on financial matters. (any 4×1=4 marks)

a) Direct
b) Indirect
c) Direct
d) Indirect (any 4×1=4 marks)

Factors hastening economic development
− Industrialization
− Infrastructure/social amenities
− Education and training
− Use of modern technology
− Good medical facilities
− Economic endowed/natural resources
− Strong entrepreneurial culture.

Factors determine the length of storage of documents.
− Cost of storage
− Information contained in the documents
− Need for future reference
− Purpose of documents

Causes of unfavorable terms of trade
− Appreciation of foreign currency
− Higher increase in the price of imports
− Low/fall in demand for exports
− Depreciation/Devaluation of local currency
− Competition from similar export products
− Increase/high demand for imports

Features of assets
− Fixed/current assets
− Must have been acquired in the past.
− Resources owned and controlled by business
− Items of value/measured in monetary terms