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00565/1 &565/2 business studies MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016 565/1 BUSINESS STUDIES PAPER 1 July / August 2016 TIME: 2 HOURS 1.State four external forces that may affect a business and its operations.(4 marks)2.Apex limited has opened a factory in a rural shopping Centre called Baraka. Outline four ways in which the people living inthe surrounding areas may benefit from the factory.(4 marks)3.Highlight four benefits Kenya is likely to get from exploitation of oil recently discovered in Turkana area.(4 marks)4.Highlight four ways in which a firm can improve the productivity of its human resource.(4 marks)5.Outline four factors to consider when deciding on a suitable location of an office.(4 marks)6.In the spaces provided below, state the document to which each of the following statement relate.StatementDocumenta) Inform the buyer when goods were dispatched and by what means b) A request by seller for payment in advance c) Used to correct an undercharge in an invoice d) Shows details of the transactions between seller and buyer during a given period (4 marks) 7.Amin plans to join Mwalimu National Sacco. Outline four benefits he is likely to enjoy.(4 marks)8.Highlight four circumstances under which verbal communication may be ineffective.(4 marks)9.Outline four reasons why a government may find it necessary to protect consumers(4 marks)10.Highlight four factors that limit the use of containers in transport.(4 marks)11.The table below contains descriptions relating to some type of warehouse. In the space provided, write the type of warehouseto which each description refers.DescriptionTypea) Used to store exports and imports b) Any body can rent spaces in it for storing goods temporary c) Operated for owners exclusive use d) Owned and operated by farmers and manufacturers 12.State four benefits of after - sale services to the consumers.(4 marks)13.The diagram below shows supply curves of two producers in different countries but of the same product.XY100 50100150200Highlight four reasons why producer Y supplies more than producer X at the same price.(4 marks)14. Upendo Traders insured their business premises against the risk of fire. Five months later, the premises were completelydestroyed by fire. Outline the procedure that they should follow before compensation is made.(4 marks)Page | 1565/1 &565/2 business studies 15. The following balances were extracted from Mwangaza traders books of accounts. Shs. Opening stock25,000Closing stock35,000Purchases190,000Mark - up20%Calculate:i)Cost of sales(1mark)ii) Gross profit(1 mark)iii) Sales(1 mark)iv) Rate of stock turnover(ROSTO)(1 mark)Highlight four measures that the government may take to attract firms to an area.(4 marks)16. Show the effect of each of the following transactions to capital, liabilities and assets indicating whether it is an increase (+) adecrease (-) or a nil (0) .(4 marks)TransactionsCapitalAssetLiabilitya) Converted private land into business land b) Paid creditors in cash c) Sold a business van valued at shs. 600,000 from shs. 400,000 on credit d) Sold goods on credit 17. Give four disadvantages of a long chain of distribution of goods to a buyer(4 marks)18. For each of the following statements, give the type of unemployment described(4 marks)Statements / DescriptionType of unemploymenta) Arise due to mismatch of skills and labour ,market demands. b) A person has absolutely nothing to do c) Arises when there is a change in methods of production d) Arises when the number of people exceeds those that are required 19. The following balances were extracted from the books of Kipchoge as at 31st Dec, 2014 Shs. Capital30, 000Bank3, 400Cash2, 700Discount received200Drawings300Land6, 000Furniture & Fittings19, 000Sales4, 500Prepare a correct trial balance as at 31 Dec 2014(5 marks)20.Study the ledger accounts given below and write out the transactions that took place affecting the business of Huruma Ltd inJanuary 2008.a)DrSales A/cCrDateDetailsAmt.2008Jan 2Pendo50,000b)DrCash A/CCrDateDetailsAmt.2008Jan 15 Creditors30,000c)DrPurchases A/CCrDateDetailsAmt.2008Jan 10Bank20,000d)DrEquipment A/CCrDateDetailAmt2008Jan 20Cash10,000e)DrDebtors A/CCrDateDetailsAmt2008Jan 22Bank20,000Page | 2565/1 &565/2 business studies 21. List four items (transactions) which are recorded in a balance of payment account of a country.(4 marks)22. The cost of consumer goods for a representatives of a household is given below:YearPrice2010500020119000Determine the increase in consumer price index using 2010 as the base year.(4 marks)23. State the book of original entry used in recording each of the following transaction of Mrembo Traders.(4 marks)TransactionsBook of Original entrya) Mrembo returned goods worth shs. 4,000 to Boni traders b) Malindi traders returned goods worth shs. 2000 c) Sold goods on credit to Mrima primary d) Purchased goods on credit from Kilwa for shs. 10,000 24. As a student of B/studies, advice Mr. Maina on why he should open a current account to suit his business in a local bank. (4 marks) Page | 3565/1 &565/2 business studies MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016 565/2 BUSINESS STUDIES PAPER 2 JULY / AUGUST 2016 TIME: 2 HOURS 1.a) Give Five reasons why majority of Kenyans fear to borrow money from commercial Banks.(10 marks)b) Differentiate between a public corporation and a public limited company.(10 marks)2.a) Explain five factors that may influence a country to adopt a protectionist policy in international trader.(10 marks)b) Explain five factors that may be used to measure the size of a business enterprise.(10 marks)3.a) The following balances relate to Maendeleo Electrical Enterprise as at 31st December, 2014.Sh.Machinery1,240,000Stock190,000Debtors150,000Motor vehicle1,100,000Cash- in- hand150,000Creditors270,000Bank overdraft130,00010 year bank loan1,200,000Capital1,660,000Drawings750,000Net profit320,000Required:Prepare a balance sheet as at 31st December, 2014 clearly showing:i)Net capitalii) Total current liabilitiesiii) Total current assetsiv) Total fixed assetsb) Five ways in which an entrepreneur contributes to the production of goods.(10 marks)4.a) Explain five factors that may influence the choice of distribution channel for milk.(10 marks)b) On first October 2010, Makueni Traders had sh. 110,000 in hand and sh. 500,000 at bank. During the month, the following transactions took place. October, 2010: 2: Cash sales directly banked sh. 70,520 3: Bought stationery in cash sh. 9,000 4: Bought stock worth sh. 40,000 and the payment was done by the end of the next month in cash. 5: Paid Josh, a creditor sh. 188,000 by cheque in full settlement of his account after deductions 6% cash discount 10: Received a cheque for sh. 117,600 from Esther after allowing her a cash discount of sh. 2,400 12: Sold goods worth sh. 10,000 to Eric on credit 16: Paid salaries sh. 62,000 in cash 20: Withdrew sh. 100,000 from bank for office use 24: Arnold, a debtor paid his account of sh. 150,000 by cheque less 10% cash discount 28: The owner took some stock worth sh. 5,000 home for family use 30: Deposited all the cash into bank except sh. 27,400. Required: Prepare a three column cash book and balance it off.(10 marks)5.a) Explain five ways large scale organisations are able to reduce their cost of production.(10 marks)b) Explain five main causes of inflation in a country.(10 marks)6.a) Explain five reasons that contribute to low tax revenue by the government through Kenya RevenueAuthority.(10 marks)b) Mr Utano, a retired civil servant intends to invest his retirement benefits in a retail business. Explain five factors that Mr.Utano should consider before investing his money in the business.(10 marks)Page | 4565/1 &565/2 business studies MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016 Kenya Certificate of Secondary Education (K.C.S.E.) BUSINESS STUDIES PAPER 1 Marking scheme 1.External factors that may affect business operations.i)Legal requirementsii)Economic factors eg. Consumer purchasing power , level of installing etciii)Political factors ie. Stability governanceiv)Technological advancementv)Social / cultural factorsvi)Market competitionvii)Natural factors2.Ways in which people of Baraka town will benefit from the factors of Apex Ltd.i)The people will get goods / services at fair prices due to their proximity to the factory / readily available goods andservices.ii)Surrounding community will get job opportunitiesiii)The factory may provide market for raw materials produced by the surrounding communityiv)The company may improve infrastructure such as roads , electricityv)The company may participate in community welfare activities such as education and health3.Benefits Kenya is likely to get from exploitation of oil in Turkana area.i)The country will earn and conserve foreign exchangeii)Employment opportunities will be creatediii)The supply of oil in the country may be stableiv)The people will enjoy low fuel pricesv)The government will earn revenuevi)The infrastructure of surrounding areas is likely to improvevii)The exploitation will accelerate economic activities in the surrounding areas / multiplier effectviii) Petro- chemical industries will get ready raw materials / inputsix)Foreign investors will be attracted due to low cost of productionx)The country BOP will improve drastically4.Ways of improving productivity of labour.i)Provide workers with more education and training.ii)Pay workers welliii)Offering awards or gifts to workersiv)Promotion of workersv)Ensure good relationship between workers and managementvi)Provide workers with good working tools and equipmentvii)Provide recreation facilities, welfare kits and social amenitiesviii) Good working conditionsix)Division of labour and specialization5.Factors to consider before you locate an officei)Operational costsii)Securityiii)Availability of labouriv)Space to facilitate expansionv)Availability of support servicesvi)Access to the office6.Documentsi)Advice Noteii)Proforma Invoiceiii)Debit noteiv)Statement of account7.Benefits Amin is likely to enjoy as a member of Mwalimu National SACCOi)He will get various types of loans eg. Emergency, school fees, development etcii)The loans attract low interest rates ie. 12% p.aiii)Members develop saving habits by making regular payments (shares)iv)Loans are guaranteed by members and not physical Assetsv)Requirement period can be variedvi)Members enjoy dividendsvii)Members enjoy banking services - FOSAPage | 5565/1 &565/2 business studies viii) Members fund are insured by CIS ix)When member dies , outstanding loans are waivedx)Members are given investments advise8.Ways in which verbal communication may be ineffective.i)Where there is age differenceii)Use of different languagesiii)Negative attitude / bias / prejudiceiv)Receiver has hearing problemv)Use of unfamiliar terminologiesvi)Noisevii)Poor timingviii) Poor listeningix)Pronounciation problemsx)Emotional response / fear / shyness9.Reasons why government protects consumers.i)Consumers are likely to be exploited by business people while pursuing profit motive.ii)Safeguards against poor health standardsiii)Consumers do not always know their rightsiv)Business people left on their own may lower standards of quality of productsv)Consumers are weak because they act individually hence can‘t safeguard their rights due to lack of collective bargain10.Limitations of containers.i)Containers are expensiveii)Special vehicles to transport containers are very expensiveiii)Special loading and offloading equipment required is expensiveiv)Container vessels required special special terminusv)Special goods require special containers like milkvi)Containers are of standardized sizes therefore require special vessels to transport some goods of irregular shapesvii)Does not require small quantities because if they are less, they will be mixed up with other goods.11.Type of warehousei)Bonded warehouseii)Public warehouseiii)Private warehouseiv)Producer warehouse12.Benefits of After sales services to the consumersi)Inspecting and checking the products at regular intervals to detect & repairii)They get warrantee on productsiii)They will get technical back up and advice on use of the productsiv)Receive transport services 4 goods boughtv)Installation and testing of the productvi)Guaranteeing the availability of spare parts13.Reasons why producer Y supplies more than producer X at the same pricei)Favourable climatic conditions in country Y than Xii)Lower cost of production in country Y than Xiii)More access to sudsidies in country Y than Xiv)Improved infrastructure in country Y than Xv)Lower cost of production in country Y and Xvi)Available factors of production in country Y and Xvii)Impact of peace / stability in country X and Y14.Insurance procedure.i)Report the occurance of fire to the relevant authority and the insurerii)Insured fills in the relevant claims form giving all the relevant informationiii)Insurer investigates the cause of the fireiv)Insurer evaluates the damages and estimates the lossv)Compesation is made / amount of loss suffered paid.15.Working:i)Cost of Sales=Opening stock+ purchases - closing stock=?=sh. 180,000?ii) Gross Profit=Cost Of Sales × Mark - up=?=sh. 36,000?iii) Sales=Cost of sales + Gross Profit=?=sh. 216,000?Page | 6565/1 &565/2 business studies iv) R.O.S.T.O=Cost Of Sales + Avg. StockAvg. Stock=?==sh. 30,000R.O.S.T.O=?? x 8 = 4 marks=6 times16. Attraction of firms in an area. i) Development of infrastructure ii) Provide business incentives like low taxes and subsidies iii) Ensure security iv) Provide credit facilities to investors v) Provide land at reasonable costs vi) Provide good transport and communication networks vii) Good health care facilities 17. CapitalAssetLiability??00????000012×= 4 marks18. Disadvantages of a long chain of distribution.i)Increased priceii)Chances of damage to goods due to handlingiii)Feedback to the manufacturer / producer is slowiv)Perishable goods will go badv)Likelihood of delay of goods.19. Type of unemployment.a)Technologicalb)Cyclicalc)Residuald)Structural20.Kipchoge‘sTrial BalanceAs at 31 Dec. 2014DRCRItemsShs.Shs.Capital30,000Bank3,400Cash2,700Discount received200Drawings300Land6,000Furniture & Fittings19,000Sales4,50034,70034,70021. Transactions affecting the business of Huruma Ltd. 2008 a) On 2nd Jan , the business sold goods on credit to Pendo amounting to shs. 50,000 b) On 15th Jan, the business paid cash to creditors shs. 30,000 c) On Jan 10, Huruma Ltd bought goods and paid by cheque shs. 20,000 d) On Jan 20, Huruma Ltd bought Equipment worth Shs. 10,000 cash e) On Jan 22, the business paid debtors by cheque shs. 20,000 22. Balance of payment transactions i)Visible / invisible exportsii) Visible / invisible importsiii) Inflow of cash from Kenyans abroadiv) Outflow of cash from non - KenyansPage | 7565/1 &565/2 business studies v) Inflow / outflow of private investments capital vi) Inflow of loans and grants from foreign gvt. / NGO‘S vii) Funds from IMF / world bank 23.× 100×100 = 180% 24. Books of original entry a) Purchases returns / returns outwards b) Sales returns / returns inwards c) Sales Journal / Debtors Journal d) Purchases / Creditors Journal 25. Reasons as to why Mr Maina should open a business current A/C i)No minimum balance is needed to maintain the A/cii)No restriction of withdrawals of fundsiii)Mr. Maina will be able to use cheque facilities for paymentsiv)He will receive monthly statement of Accountv)He will be allowed overdraft facilitiesvi)No maximum put on a single withdrawalPage | 8565/1 &565/2 business studies MAKUENI COUNTY CLUSTER PREPARATORY EXAMINATION 2016 BUSINESS STUDIES PAPER 2 Marking scheme 1.a) Reasons why majority of Kenyans fear to borrow loans from commercial banks.i)Banks charge high interest rates for their loansii) The procedure involved before one gets a loan is lengthy iii) Majority of Kenyans cannot offer security for the loans as required by banks iv) Many people fear the consequences of failing to pay the loan v) Individuals may have cheaper sources of loans eg. SACCO‘s vi) The rate of interest charged on bank loans are not fixed but can be varied according to prevailing economic situation in the country without consulting the borrower b) Public corporationPublic Limited Company1.Formed under the act of parliament.1.Formed under the company‘s act2.Fully owned by the government2.Owned by private persons who own shares3.Initial capital is provided by the state or through state3.Capital obtained through issue of shares, selling ofguaranteesdebentures or other loans4.Management appointed by the government (Board of4.Directors elected by the shareholdersdirectors)5.Formed to make profit5.Set - up to offer essential services to the public6.The profit made rest on the parliament6.The profits rest with the shareholders or creditors7.Auditing done by private auditor‘s7.Auditing done by government auditors8.Losses may lead to collapse of the business or8.Losses are sub sized for borne by the governmentborne by owners9.Political infinences especially due to nomination of9.No political infinence except the enacted lawsdirectors by the government10. Performs various functions.10. Perfoms specific functions and related activities2.a)Cause of protectionism policyi)To correct the deficit balance of paymence / trade.By reducing consumption of imports in the domestic market.ii)Protection of strategic industries.Some extremely important industries that a country cannot do without like agriculture and security, need protection fromforeign competition.iii)Prevention of dumpingTo protect consumers and producers against poor quality or low priced goods or harmful items from foreign marketsiv)Protection of local infant industriesCertain industries incur high cost in production in the initial stages and allowing imports from foreign producers can kill such industries v) Protection of cultural and social values Through interaction, people of particular country may borrow cultural values which can adversely affect the borrowers culture vi) Expanding market for local products Trade restrictions make it very hard for foreign suppliers to sell their products in the local market thereby increasing the share market for local producer large vii) Creation and protection by employment Discouraging imports leads to establishment of local industries to provide commodities that world have otherwise been imported, creating employment viii) Promoting self reliance Local producers to produce enough for the country to avoid shortages incase trade partner get into political conflict. b) Factors that may be used to measure the size of a business enterprise. i)Amount of capital investedii)Number of workersiii)The level of outputiv)Size of marketv)Profit madevi)Government policyvii)State of technologyviii) Nature of the products(Correct explanation (2×5=10mks)Page | 9565/1 &565/2 business studies 3.a)Maendeleo Electrical EnterpriseBalance SheetAs at 31st December , 2014Sh.Capital and Liabilities sh.sh.Fixed AssetsCapital1,660,000Machinery1, 240 000Add: Net profit320,000Motor vehicle1, 100 0001,980,0002, 340,000Less: Drawings750,000NET CAPITAL1,230,000Current AssetsStock190,000Long - term LiabilitiesDebtors150,00010 year bank loan1,200,000Cash150,000490,000Current / short - term liabilitiesCreditors270,000Bank overdraft130,000400,0002, 830,0002,830,000b)Ways in which an enterprenuer contributes to the production of goods.i)Identified viable business oppurtunitiesii)Provides guidelines on how production should be organizediii)Co- ordinates other factors of production should be organizediv)Provides capital necessary to cater for productionv)He assembles / marshals other factors of productionvi)He is the major decision makervii)He rewards all the factors of productionviii) He bears all risks / incurs all losses and enjoys all profits4.a) Factors influencing choice of distribution channel.i)Nature of milk - perishable product?Shorter / direct channelii)Cost of distribution- cost effectiveiii)Customes preference of how the product mightiv)Level of competitionv)The quantity of milk being suppliedvi)Need for technical personnelvii)Extent of the marketviii) Availability of middlemen / agents / inter - mediariesix)Government policy on distributionx)Number of buyers.(2b) Makueni Traders Cashbook For the month of October , 2010. DateDetailsFolioDiscountDateDetailsFolioDiscountCashBankAllowedCashBankreceivedOct,2010Oct,20101Bal bd110,000?500,000?3Stationery9,000?2Sales70,000?5Josh12,000?188,000?10Esther2,400?117,600?16Salaries62,000?20Bank100,000?20Cash100,000?24Anold15,000?135,000?30Bank111,600?30Bank111600?30Bal C/d27,400?646,720?17,400210,000934,72012,000?210,000934,7201Nov,201027,400?646,720?20 x ? = 10Page | 10565/1 &565/2 business studies 5.a) Reasons for low prices in large scale organization.i)They buy in bulk and so enjoy quantity discountii)They can afford advertising leading to more salesiii)They have bigger bargaining power for low interest loansiv)They are able to diversify products therefore spread risksv)They employ skilled manpowervi)They can sell in large quantity hence reducing average costvii)Acquire up - to - date technologyviii) Produce / mass production reducing selling expensesix)Ability to carry out research into better methods of productionb) Main causes of inflation in a countryi)Increased money supply due to provision of more credit facilitiesii)Increased government expenditure in excess of tax revenuesiii)Increased in wages without corresponding increase in output of goods / services due to trade union pressureiv)Increased cost of inputs such as oil and intermediate goodsv)Increased taxation such as VATvi)Shortages of goods and servicesvii)High cost of imports of both capital and finished goods.(2×5=10 mks)6.a)Reasons for low tax revenue by the government through KRA.i)Low national and per capita Income among the majorityii)High rates of unemployment among Kenyans hence low PAYEiii)Disparity in income distribution - majority are poor and not paying taxesiv)Negative attitude among the majority on payment of taxesv)High rates of tax evasion among Kenyansvi)Corrupt KRA officials who do not remit tax revenues / collusion with tax payers.vii)Very few categories of taxes by KRA (mainly on incomes)viii) High cost of tax collection exceeding revenues.b)Factors to consider before investing in a retail business.i)Profitability : A good business opportunity should generate high profitii)Availability of market : Ready market and large market for sale of goodsiii)Level of production : competition should be minimal to ensure continuity of operationsiv)Few risks : To minimize lossesv)Government policy: All legal requirements should be easy to fulfill to enable him start the businessvi)Labour requirement: Relevant labour required must be available to enhance smooth operationvii)Management : Should have the relevant managerial skills or it should be easy to hire or run the businessviii) Supply of inputs: there should be adequate supply of inputs for use in running operations of the businessix)Capital: The amount of money required in relation to the money available for investment should be enough.x)Growth prospects: Business having the possibility of growing / expanding.Page | 11565/1 &565/2 business studies MOKASA JOINT EVALUATION 565/1 BUSINESS STUDIES PAPER 1 MARCH/APRIL, 2016 TIME: 2 HOURS 1.Outline four ways the economic environment influence business activities(4 marks)2.List four personal attributes of an office staff(4 marks)3.Highlight four limitations of the methods used by the consumer to protect themselves against exploitation(4 marks)4.Outline four benefits of bonded warehouses to the government(4 marks)5.Distinguish between(4 marks)a) Derived demand and joint demandb) Shift and movement along demand curve6.Highlight four ways that may be used by a monopoly to differentiate a product market(4 marks)7.Outline four ways in which the Central Bank may use to reduce the amount of money in circulation(4 marks)8.For each of the following transactions, indicate the effect of each transaction on the balance sheet items as either increase,decrease or no change.(4 marks)TransactionEffect on AssetsEffects on liabilitiesEffect on CapitalDrawings of goods from the business The proprietor brought a personal van for the business use Borrowed KCB loan to pay a creditor Bought stock by cheque 9.The following transactions relate to the books of Amina traders as at 31st December 2015.Gross profit ...20,000Commission allowed ...200Carriage on sales ...4,000Discount received ...8,000Salaries ...6,000Rent ...2,000Discount revived ...400Commission received ...1,500Interest on bank loan ...500Prepare Amina‘s profit and loss account for the period ended 31st December, 2015.(5 marks)10.Outline the relationship between scarcity, choice and opportunity cost with respect to satisfaction of human wants.(4 marks)11.List four documents prepared by the buyer in home trade(4 marks)12.The National Transport Safety Authority (NTSA) is a department within the transport sector in Kenya. Highlight fourbenefits Kenyans enjoy due to the establishment of NTSA(4 marks)13.Outline four reasons why a firm would prefer to locate near the market of its products(4 marks)14.List three withdrawals in the circular flow of income(3 marks)15.Other than serving as a medium of exchange. Mention four other functions of money(4 marks)16.The following transactions relate to the books of kilimo holdings. Record them in the relevant ledger accounts. (4 marks)(i)1st January 2015, took a loan with ICDC of kshs. 50,000 receiving by cheque.(ii)5th January 2015, kelunyo, a debtor paid his account of kshs. 40,000 in cash.(iii) 10th January 2015, took money from bank, kshs. 50,000 for office use(iv) 12th January 2015, bought furniture kshs. 35,500 in cash17.Give the name of the insurance policy described in the following table(4 marks)DescriptionName of policyCovers ships while on a specified voyage and time Covers a specified peril when the ship is either being loaded, offloaded or serviced Covers cargo against loss or damage while being transported by ship One policy used to cover a number of ships belonging to one organization 18. Currently the government is selling state owned businesses to private investors. Highlight four benefits of such decisions. (3 marks)19.State four essentials of effective communication(4 marks)20.Outline four advantages of free gifts in product promotion(4 marks)21.List four costs incurred in the distributions of goods(4 marks)22.Highlight four merits of direct tax as a source of revenue to the government(4 marks23.Identify the level of occupation described by each of the following information(4 marks)Page | 12565/1 &565/2 business studies DescriptionOccupationA boy chasing hare for meat Britam insurance company selling their policies School carpenter making chairs for form ones Mr. Zuma counseling form four students 24. The following information relate to Kamau traders for the month of December 2015. Dec. 1- sold goods for kshs. 45,000 less 10% cash discount Dec 5 - Bought goods worth kshs. 4,000 in cash and was allowed a discount of 5% Dec 7 - a debtor paid kshs. 20,000 in full settlement of a debt of kshs 23,000 by cheque Dec 15 - Sold goods kshs. 70,000 on credit to jambo traders Dec 26 - Paid rent kshs. 16,000 by cheque Required: Post the above transactions to relevant journals(4 marks)25. Unemployment solving has been an agenda to most developing economies. Identify the type of unemployment being solved below.(4 marks)(i) Government initiating irrigation projects to ensure continuous production of food (ii) Retraining teachers to embrace use of technology in teaching and learning (iii) Government and private sectors inventing job advertisement sites for easy access by job seekers (iv) Parliament passing legislation that accommodate the disabled people to acquire jobs Page | 13565/1 &565/2 business studies MOKASA JOINT EXAMINATION 565/2 BUSINESS STUDIES PAPER 2 TIME: 2 ?Hours 1.(a) Explain five circumstances that can cause a business to succeed in their activities.(10marks)(b) Explain five problems facing the savings and credit cooperative societies in Kenya.(10marks)2.(a) A prudent tax system must meet certain essential qualities. Explain five indicators of a good tax system.(10marks)(b) Describe the procedure an insured must take when making an insurance claim.(10marks)3.(a) Ondari intends to promote his products. Explain five factors that he must take into account when deciding on whichmethod to use.(10marks)(b) Explain five weaknesses of using national income statistics as a measure of social welfare.(10marks)4.(a) Explain five factors that justify the existence of small scale firms in an economy.(10marks)(b) Bartenge Enterprises started business on 1st May 2014 with Shs. 250,000 consisting of: Cash at bank Shs.200, 000, Cash in Hand Shs. 30,000 and Furniture Shs. 20,000. The following transactions took place during the month of May. 3rd May 2014, Motor Van worth Shs. 85,000 and stock of Shs. 25,000 were bought on credit 6th May 2014, more stock worth shs.10,000 was bought by cash 9th May 2014, withdrew money from bank sh 50,000 for office use 15th May 2014, Sold stock at cost to a customer on credit for shs. 18,500 19th May 2014, received a cheque for the full settlement of a debt owed from the transaction of 15th may 2014 23rd May 2014, paid Shs. 65,000 by cheque for the motor van bought earlier on credit 31st May 2014, paid Shs. 20,000 cash for the stock bought on credit Required: Prepare the balance sheet of Bartenge Holdings as at 31st May 2014.(10marks)5.(a) Explain five problems that are faced by a country with a big population of ageing persons.(10marks)(b) Explain five differences between banking and non-banking financial institutions.(10marks)6.(a) Explain four reasons why upward communication should be encouraged in an organization.(8marks)(b) The following trial balance was extracted from the books of Lule Traders on 30th April 2015 Lule Traders Trial Balance As at 30th April 2015 Dr (Kshs.)Cr (Kshs.)Sales186,000Purchases115,560Stock 1.5.201437,760Carriage outwards3,260Carriage inwards2,340Returns4,4003,550Salaries24,470Electricity6,640Rent5,760Sundry expenses12,020Equipment24,000Furniture6,000Debtors45,770Creditors30,450Bank38,760Cash1,200Drawings20,500Capital128,440348.440348,440Stock as at 30.4. 2015 Shs. 49,980Required:a)Trading, profit and Loss account for the year ended 30th April 2015(8mks)b)Balance sheet as at 30th April 2015(4mks)Page | 14565/1 &565/2 business studies MOKASA JOINT EXAMINATION 565/2 BUSINESS STUDIES MARKING SCHEME. 1.Ways in which Economic environment influence business activities(4 marks)?Level of wages of the consumer?Taxes on income?Value of money/inflation/foreign exchange rate?Prices of other related goods2.Personal attributes of office worker(4 marks)?Good Hygiene?Proper Posture?Acceptable/good moral behavior?Good health?Good Physical appearance3 .Limitations of the consumer initiated methods to protect themselves against exploitation. (4 marks)?Lack of or limited government support?Deficiency of capital to finance their activities?Ignorance of consumers against their rights?Reluctance of many consumers to join the organization?Lack of consumers initiative to check on traders compliance on price and quality4Benefits of bonded warehouse to the government (4 marks)?Source of revenue?Used to control the entry of harmful products into the country?Government is able to control the quality of goods entering the country?Government is able to verify documents of goods on transit?The government is able to inspect the nature or type of goods imported?Government is able to check on illegal goods entering the country5 a) Joint demand-(Complimentary demand) applies to those commodities used together e.g. vehicle and petrol whereas derived demand is where demand of one commodity is due to demand of another commodity e.g. demand for input is as a result of demand of finished products(2 marks)b) Shift in the demand curve is due to change in demand of a commodity caused by factors other than price of that commodity whereas movement in the demand curve is a change in demand caused by changes in price of the commodity. (2 marks) 6.Methods/Ways of market separation/product differentiation(4 marks)? Geographically = exported goods are sold at cheaper price in the country of manufacture than in foreign country. ? Time-peak and off peak ? Type of demand e.g. demand for electricity of domestic use and commercial use ? Income e.g. in hospitals 7 Tools of monetary control(4 marks)? Increase in the bank rate ? Buying of government securities in the open market ? Increase cash or liquidity ratio ? Increase in compulsory deposit requirement ? Selective credit control ? Reduce margin requirement ? Request commercial banks to control credit. 8 decreaseNo effectdecreaseincreaseNo effectincreaseNo effectNo effectNo effectNo effectNo effectNo effect(4 marks) Page | 15565/1 &565/2 business studies 9 Amina Traders Profit and loss a/c For the period ended 31st dec 2015 ExpensesRevenueCommission allowed200Gross profit20,000Carriage on sales4,000Discount received400Discount allowed8,000Commission received1,500Salaries6,000Rent2,000Interest on Bank loan500Net profit c/d8,40021,90021,900Net profit b/d8,400(5 marks) 10. Relationship between scarcity, choice and opportunity cost.(4 marks)? Human wants are unlimited and yet resources used to satisfy them are scarce. ? Consumers make a list of wants in order of priority hence making a choice between the competing alternatives ? Having made a choice, the foregone alternative becomes the opportunity cost for the need that has been satisfied. 11. Documents prepared by the buyer(4 marks)? Letter of inquiry ? Local purchase order ? Goods received note ? Goods returned note ? IOU 12. Benefits of NTSA to the Kenyan people.(4 marks)? Unroadworthy vehicles have been removed hence reducing road accidents ? Use of speed limiter has reduced road accidents ? Carrying capacity has been limited hence reducing overloading and uncomfortability ? PSV are operated by people with certificates of good conduct comfortable of customers/there is order ? Drivers and conductors have uniforms that help in identifying them ? Yellow lines help identify PSV by their users ? Use of alcoblows has helped reduce the effect of drunk driving hence reducing accidents. ? Requirement that all PSVs be members of a SACCO for order, discipline and proper management of PSVs. Passengers can take their complains to the Sacco. 13. Reasons why a firm would locate near the market for products(4 marks)? Competing tool ? If the market is concentrated in one place ? If the product is heavy to avoid the cost of transportation ? The product is perishable ? It may be due to Government policy 14. Withrawals in the circular flow of income(3 marks)? Taxation ? Saving ? Imports 15. Functions of money other being a medium of exchange. ? It‘s a store of value ? A standard of deferred payment ? It‘s a measure of value ? Unit of account ? Facilitate the transfer of immovable property 16.DRBank accountCR1/1.2015 ICDC 500,00010/1/2015 Cash 50,000DRICDC A/CCR1/1/2015 Bank500,000DRKelunyo accountCR5/1/2015 Cash40,000Page | 16565/1 &565/2 business studies DRCash A/CCR12/1/2015 Furniture 35,500 5/1/2015 Kelunyo 40,00010/1/2015 Bank 50,000DRFurniture accountCR12/1/2015 Cash 35,50017.MARINE INSURANCE POLICIESDescriptionPolicyCovers ships on a particular voyage and timeMixed policyCovers a specified peril when the ship is either loaded or offloaded or servicedPort policyCovers cargo against loss or damage while being transported by shipMarine cargo policyOne policy used to cover a number of ships belonging to one ownerFleet policy18. Currently the government is selling state owned businesses to private investors. Highlight four benefits of such decisions. (4marks) i) To improve efficiency in their management. ii) To generate revenue for the government iii) Help to avoid unnecessary expenses/avoid wastage of resources iv) To meet donors conditions when soliciting for funds/foreign aid v) Helps to improve the quality of goods being produce as it leads to competition among investors vi) Helps to attract investors who will start similar firms. vii) Helps to reduce government expenditure curbing inflation. 19. State four essentials of effective communication.(4marks)i)Medium used should be appropriateii) Language used must be simple to understand iii) Information overload should be avoided iv) Both the sender and the receiver must have positive attitude while communicating. v) It must be free from distortion vi) Environment should be free from noise vii) Message should get to the intended recipient in good time. viii) The sender should have adequate knowledge of information being conveyed. 20. Outline four disadvantages of free gifts in product promotion.(4marks)i)It may be costly.ii) Some middlemen may keep away the giftiii) There is no assurance that the prospective customer would buy the product after getting the gift.iv) In an effort to get the gift, a customer may end up buying what he/she doesn‘t want/had not budgeted for.21. List four costs incurred in distribution of goods.(4marks)i)Transport costii) Product promotion expenses iii) Salaries and wages of workers iv) Packaging, blending and branding cost. v) Insurance costs vi) Storage charges 22. Highlight four merits of direct tax as a source of revenue to the government.(4marks)i)May be progressive hence equitableii) Simple to understand to both taxpayer and tax collector iii) Convenient to both tax payer and tax collector as time for collection is known . iv) Can be used to counter inflation. v) High revenue earning capacity as it expands naturally with economic growth.i.e elastic vi) May be used to redistribute wealth and resources equally. vii) Certain to both tax payer and tax collector. 23. Identify the level of occupation described by each of the following information.(4marks)Descriptionoccupationi)A boy hunting a hare for meatprimaryii)Britam insurance company selling their policiesTertiary(commercial services)iii)School carpenter making chairs for form onessecondaryiv)MrZuma counseling form four studentsTertiary (direct personal services)Page | 17565/1 &565/2 business studies 24. Kamau traders cash receipt journal DateparticularsReceiptLedgerDiscount allowedCashBanknofolioshsshs2015Dec 1sales4,50040,500Dec 17debtor3,00020,000Dec 15Sales70,0007,50040,50090,000Kamau tradersCash payment journalDateParticularsReceipt no.L.fDiscountCashBankreceivedshsshs2015Dec.5Purchases2003,800Dec.6Rent16,0002003,80016,000(2 marks) 25. Unemployment solving has been an agenda to most developing economies. Identify the type of unemployment being solved below.(4 marks)i) Kenya government initiating irrigation projects to ensure continuous food production…; seasonal unemployment ii) Retraining teachers to embrace the use of technology in teaching and learning; structural unemployment iii) Government and private sectors inventing job advertisement sites for easy access by job seeker; frictional /involuntary unemployment iv) Parliament passing legislation that accommodate the disable people to acquire jobs; residual unemployment Page | 18565/1 &565/2 business studies MOKASA JOINT EXAMINATION 565/2 BUSINESS STUDIES PAPER 2 MARKING SCHEME 1.(a) Circumstances that can cause a business to succeed in their activities-Where there is proper location of the business convenient for its operations.i.e Availability of customers.-Where there are favourable government policies it encourages growth and investment.-Where there is political stability and security thus creates certainty and confidence to entrepreneurs.-Where there is fair competition to enable business access markets for its goods and services-Where there is use of modern technology in production of goods and services promoting quality production.-Where there is adequate capital to run and expand the business.-Where there is availability of skilled and adequate labor matched to their job specialization-Where there is good customer relationship and care to attract and retain clients.-Where there is availability of good infrastructure for business to access its market and inputs.-Where there is proper marketing plans to increase sales.5 well explained points= 10mks(b) Problems facing the savings and credit cooperative societies in Kenya-Loan defaulting by members as some leave employment due to terminal illness, sacking and personal reasons.-Lack of management skills among members leading to poor management of societies.-Corruption and embezzlement of funds by official-Poor investment decisions by some officials leading to losses.-Stiff competition from commercial banks and micro financial institutions.-Late remittance of members contributions by employers.-High demand for loans against the receipts from monthly contributions.-Retrenchment of workers by both government and private sector has led to financial problems to the society.2. (a) Indicators of a good tax system a) Equity; Tax burden should be distributed among the tax payers according to their ability to pay b) Economy; Collection and administrative cost of the tax should not exceed tax revenue collected c) Flexibility; Tax system should be capable of being revised or changed in line with the changing economic conditions. d) Diversity; Different types of tax so that tax burden is on different groups of the society. e) Elasticity; Tax revenue should be capable of responding appropriately to changes in national income. f) Simplicity; The tax system should be understood by tax payers and the collectors. This motivates them to pay tax. g) certain; The one expected to pay should be clearly aware of how much he/she is paying. The tax collector/government should also be aware of how much it is supposed to collect from tax.5 well explained points= 10mks(b) Procedure an insured must take when making an insurance claim(10mks)? Notification of the insurer by the insured that the risk insured against has occurred. ? Filling a claim form. The insured is issued with a claim form to fill in giving details of the risk based on the principle of utmost good faith. ? Investigation of the claim. The insurer investigates the claim based on the information in the claim form. ? Preparation of the assessment report. The insurer assesses the assessors report on the extent of the loss. ? Payment of the claim .On the assessment of the claim, the insured prepares to compensate the insured. (5 well explained steps= 10mks) 3. (a) Factors that he must take account when deciding on which method of product promotion to use. ? Nature of the product ? Nature of the market/Target group ? Method used by competitors ? Government policy ? Cost of promotion method ? Objectives of the promoting firm.5 well explained points= 10mks(b) Weaknesses of using national income statistics as a measure of social welfare-It may be based on inaccurate data-Bulk of the wealth held by a few people/Unequal distribution of income-Wealth is created in the expense of peoples health/time for rest and recreation or leisure/no time for family etc.-Increased productivity but there is massive environmental pollution-Inflation i.e, the price level could have risen by the same proportion as per capita income.-Most of the income made due to improvement is all put into more investment and not on improving for instance own housing.Page | 19565/1 &565/2 business studies -Government may be using income earned on goods and services such as military facilities which does not directly improvespeople‘s standards of living.5 well explained points= 10mks4.(a) Explain five factors that justify the existence of small scale firms in an economy.?Small capital .some businesses remain small because of limitations of investment funds.?Where the market served is small .The market demand in a particular industry could be too small that it cannot accommodatelarge scale firms.?If the government demands so. The law may restrict the growth of firms.?Products that are designed to meet customer specification. There are services that require personal attention entrepreneurs thatinvest in such firms are compelled to operate them in small scale.?Desire to retain control by the owner. There are entrepreneurs that start firms and leave them to remain small for fear of lossof control and independence in management if the firm becomes large scale.?Rising costs of production. Some firms that would want to remain small because of fear of increasing cost of production withincrease in its level of production.?Risk of large scale enterprises. There are huge risks that face large scale enterprises despite the many benefits that accrue to it.To avoid such risks, firms may opt to remain small scale.?Expensive goods. Firms that are engaged in the production and sale of expensive and sell specialized goods are of small scalebecause the products they are dealing with are too expensive to call for mass production.?Quick decision making. In cases where the proprietors want to avoid delay in decision making, they may opt to maintain asmall business as it may require less consultations.?Simplicity of small firms. To avoid bureaucracy and complexities associated with large scale firms, a proprietor may wantto remain small scale.5 well explained points= 10mks(b)Bartenge TradersBalance SheetAs at 31st May 2014Fixed assetsKsh.Ksh.Equipment24,000√Capital128,440√Furniture6,000√Add net profit27,320√30,000155,760Current assetsKsh.Less drawings20,500√Stock49,980√135,260Debtors45,770√Short term liabilitiesBank38,760√Creditors30,450√Cash1,200√135,710165,710165,71010 ticks @ 1mk= 10mks 5. (a) Problems with an ageing population ? They provide a less mobile labour force- The older a person gets, the less willing they are to move from one place to another or even to change jobs. ? Low labour supply- Old people are less productive and thus cannot provide the much needed labour force ? High dependency levels- the old will be less productive and therefore will be highly dependent on the few working group who will then be strained while providing for their needs. ? The country becomes less progressive because it lacks the input of more energetic youth. ? May lead to unemployment- this may be due to the fall in demand for goods and services required by the youth. 5 well explained points= 10mks (b) Explain five difference between banking and non-banking financial institutions(10mks)BANKNON BANK FINANCIAL INSTITUTIONSOperate current accountsDo not operate current accountsControlled by the CBKNot controlled by CBKThey issue chequebooksNot allowed to issue chequebooksFormed to offer a wide range of financial servicesFormed to offer specific services in which they were formed for.They usually offer short term loansDesigned to offer medium and long term loansMust open accounts with the central bankMust open accounts with commercial banksThey provide forex servicesThey do not deal in forexMembers of clearing houseDoes not take part in clearing houseInvolved in credit creationNot involved in credit creationPage | 20565/1 &565/2 business studies 6.(a) Importance of encouraging upward communication in an organization-Facilitates quick feedback-Enables the management to receive and accommodate the views and sentiments of all staff in the organization whenmaking decisions-Enables a sense of belonging among workers thus motivating all members of staff-Encourages free dialogue between the junior and senior members of staff4 well explained points= 8mks(b)Lule TradersTrading, Profit and Loss accountDrFor the year ended 30th April 2015√CrCost of sales:Ksh.Ksh.Ksh.Opening stock37,760√Sales186,000√Add Purchases115,560√Less Returns In.4,400√Add carriage in.2,340√Net sales181,600117,900Less Returns out.3,550√114,350C.O.G.A.S152,110√Less Closing stock49,980√102,130Gross profit c/f79,470√181,600181,600Carriage outwards3,260√Gross profit b/f79,470Salaries24,470√Electricity6,640√Rent5,760√Sundry expenses12,020√Net profit27,320√79,47079,47016 Ticks @ ? Mark= 8 Marks Lule Holdings Balance Sheet As at 30th April 2015√ Fixed Assets:Ksh.Ksh.Motor Van85,000√Capital250,000√Furniture20,000√Current Liabilities:105,000Creditors25,000√Current Assets:Ksh.Stock16,500√Bank103,500√Cash50,000√170,000275,000275,0008 Ticks @ ? Marks= 4 Marks Page | 21565/1 &565/2 business studies KASSU JOINT EXAMINATION - 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Giving an example in each case, outline the difference between renewable and non-renewable resources(4 marks)2.State four reasons why diagonal communication needs to be encouraged in an organization.(4 marks)3.Mention four benefits enjoyed by a member of a producer cooperative society(4 marks)4.State four measures that the government can use to encourage increase in the country‘s volume of exports.(4 marks)5.Highlight four positive impacts of the physical environment on the operations of a business.(4 marks)6.Highlight four problems associated with monopoly market structure.(4 marks)7.Outline four role of the mass media in promoting consumer protection.(4 marks)8.Outline four services offered in agency banking as a trend in the banking sector.(4 marks)9.State the best type of machine one would use to perform the following tasks(4 marks)FunctionsName of machinei)Used to trim papers into desired sizesii)To post information to ledgers and to prepare payrollsiii)To transmit printed messages such as letters, maps, diagrams and photographsiv)To destroy sensitive but unwanted documents10.The following balance sheet belongs to Nyakwar Atiyo during the period ended 30th June 2000.Nyakwar Atiyo TradersBalance sheetAs at 30.06.2000AssetsKshsCapital + LiabilitiesKshMachinery45,000Capital65,000Current assetsCreditors45,000Stock7,750Short term liabilityDebtors1,375Bank loan10,000Bank25,37579,50079,500The following transactions took place on July 1 2000. (i) Paid creditors Sh 2000 by cheque. (ii) Nyakwar Atiyo took stock worth Shs 7500 from the business for his son‘s birthday. (iii) Motor vehicle previously owned by Nyakwar Atiyo values at sh 200,000 was converted into business vehicles. Required: Prepare the balance sheet of Nyakwar Atiyo traders as at 2nd July 2000. 11.Highlight four roles of advertising agencies in product promotion(4 marks)12.Distinguish between the following categories of government expenditure.(4 marks)a) Recurrent expenditureb) Capital expenditure13.Highlight four differences between hypermarkets and departmental stores.(4 marks)14.The information below was extracted from the books of Lemayian Traders for the year ended 31. 12. 2015Opening stock45,000Closing stock15,000Turnover340,000Margin25%Required:(i) Gross profit(2mks)(ii) Purchases(2mks)15.Distinguish between the following terms as used in National Income(3mks)a) Gross Domestic Productb) Gross National Productc) Per capita Income16.Highlight four ways in which the government of Kenya promotes entrepreneurial development(4mks)17.State four channels of distribution for importation of agricultural produce.(4mks)18.Outline four trends in transport sector.(4mks)19.Outline four benefits of indirect production.(4mks)20.Enter the following transactions in the relevant ledger accounts(4mks)2015 April 1 Janet Cosmetics started a business with Ksh. 150,000 cashPage | 22565/1 &565/2 business studies ,,3 Bought stock of goods for Sh. 40,000 and paid in cash,,6 Opened a bank account and deposited Sh. 60,000 from the cash till,,9 Purchased an office machine for Sh. 25,000 and paid by cheque21.Give four reasons why a producer may need to have their own warehouse(4mks)22.State the name of the source document used to record the following transactions(4mks)TransactionSource Documenta) Received goods returned by a buyer who bought them earlier on credit b) Making of payment to a casual workers at the end of the week c) Bought goods for sale from Gilanis Supermarkets on credit d) A customer, Adhiambo, send a cheque for goods she bought earlier on credit 23.Define the following terms as used in business studies(4mks)(i) Annuity (ii) Proposer (iii) Speculative risk (iv) Grace period 24.In the table below fill in the missing figures S,T,U and V.(4 mks)BusinessAssets(shs)Capital(shs)Liabilities(shs)A20,000S5,000B42,00032,000TCU17,00053,000D18,000V6,pute the consumer price index (CPI) from the following data giving explanation of your outcome(4mks)YearPrice20103002011375Page | 23565/1 &565/2 business studies KASSU JOINT EXAMINATION - 2016 BUSINESS STUDIES 565/2 PAPER 2 1.(a) Explain five principles of insurance.(b) Study the following table of the demand and supply of product x.Period 2010Price / unitsQtn dd / unitsJulyShs 300500AugustShs 300400SeptemberShs 300200OctoberShs 30080NovemberShs 30050Explain five factors that may have led to the trend above.2.(a) Giving the types of unemployment, state the causes of the remedies.(10 marks)(b) You are a sales executive with a local bank. Describe five steps that you must follow when sent to the field to promotethe products of the bank.(10 marks)3.(a) Discuss five reasons why a country‘s economy is showing slow increase in their National Income(10 marks)4.Explain five problems that are likely to face the process of implementation of well-prepared economic development plans(10 marks) 5. (a) On 1st June 2015, Ndovu Traders had cash in hand of sh.25,000 and sh.56,200 at bank. During the month, the following transactions took place: 2015 June 2 Cash sales, sh.42,000. June 5 Received a cheque of sh.70,500 from Kiptala Traders after deducting a6% cash discount. June 8 Paid salaries, sh24,000cash. June 9 Yegon settled his account of sh.45,000 in cash and was allowed sh.l,800cash discount. June 12 Cash sales sh46,500. June 18 Paid Tuitoek's debt of sh.l00,000 by cheque after deducting 5% cash discount. June 24 Withdrew sh.26,000 from the bank for office use. June 30 Banked all the cash except sh.25,000. Prepare a 3-column cashbook and balance it off on 30th June, 2015.(10 marks)(b)Explain five factors that may hinder effective communication in an organization.(10 marks)5.(a)Explain five factors that influence the choice of a product to produce.(10 marks)(b)Discuss five errors that may not be noticed in a trial balance.(10 marks)6.(a)Discuss five canons of public expenditure.(10 marks)(b)The following information was extracted from the books of Umeme Traders as at31st December 2009.ShsBank loan567,000Bank loan interest1,440Capital1,680,000Closing stock87,000Creditors272,400Debtors140,280Discount allowed170,400Electricity30,240Furniture489,804Furniture repairs86,436Gross profit624,720Maintenance on premise72,000Motor vehicle1,080,000Motor vehicle maintenance360,000Premise648,000Rent received144,000Sundry expenses122,520Prepare:(i) Profit and loss account for the year ended 31st December 2009.(10 marks)(ii) Balance sheet as at 31st December 2009.(10 marks)Page | 24565/1 &565/2 business studies KASSU JOINT EXAMINATION - 2016 565/1 PAPER 1 MARKING SCHEME 1.With an example in each case, the difference between renewable and non-renewable resources?Renewable resources are those whose supply can be restored when they are exhausted such as wood, HEP, solar energy etc.?Non-renewable resources are those whose supply cannot be restored once they are exhausted such as mineral deposits, coal,natural gas etc.2.Reasons why diagonal communication needs to be encouraged in an organization.?Promotes teamwork in an organization?It helps eliminate goal blindness?Assist in development of human resource because they can freely exchange ideas?Assist in coordination and harmonization of different activities in an office?It creates a sense of belonging among staff thus a motivating factor.3.Benefits enjoyed by a member of a producer cooperative society?Better/higher prices for their produce?Educated on better methods of production through seminars, field trips, etc?Provided better storage facilities?Enjoys reliable transport means?Provided with loans to expand their operations?Can obtain farm inputs on credit?Provided with grading, packing, and processing services4.Measures that the government can use to encourage increase in the country’s volume of exports?Offering export compensation schemes to exporters?Research to diversify foreign markets and products?Offering customs drawbacks?Lobbying for the removal of trade restrictions5.Positive impacts of physical environment on the operations of a business?Favourable climatic conditions favour agricultural businesses?Absence of floods means goods can efficiently reach the market?Good roads and other physical infrastructure enhances trade?Land with good terrain favours production activities. For instance it is cheaper to construct business structures6.Problems associated with monopoly market structure?Leads to charging of high prices?Causes the production of sub-standard products since there is no competition?It may cause unequal distribution of income?Too much monopoly power may be used to influence government to adopt unfavourable policies?Some may operate at excess capacity causing unemployment and wastage of resources7.Outline four role of the mass media in promoting consumer protection?They air or print information on traders who exploit consumers.?They advise consumer on their rights?They refuse to publish any false/misleading advertisement?They inform the government and other departments on traders who exploit consumers?They taste products in their laboratories or using their own experts then inform consumers?They investigate problems facing consumers and try to solve them8.Services offered in agency banking as a trend in the banking sector.?Customer deposits?Withdrawal from own account?Transfer of funds?Paying bills?Balance enquiries?Opening new accounts?Filling of loan application forms.Page | 25565/1 &565/2 business studies9.Type of machine one would use to perform the following tasksFunctionsi)Used to trim papers into desired sizesii)To post information to ledgers and to prepare payrollsiii)To transmit printed messages such as letters, maps, diagrams and photographsiv)To destroy sensitive but unwanted documentsName of machineGuillotineAccounting Machine Facsimile (Fax machine) Paper Shredders 10. New Balance Sheet for NyakwarAtiyo tradersWorkings:Stock= Shs.7,750 - 750Drawings= Shs. 750Creditors= Sh. 45,000 - 2,000Bank= sh 25,375 - 2000Capital= Sh. 65,000 + 200,000Added investment= Sh. 200,000Motor Vehicle= Sh. 200,000Fixed assetsKshs.Ksh.Machinery45,000√Motor vehicles200,000√= 7,000= 43,000= 23,375= Sh. 265,000NyakwarAtiyoBalance SheetAsa t 30.6.2000Capital65,000√Add additional capital200,000√245,000Less Drawings(750)√ Current assetsKshs.Short term liabilities264,250Stock7,000√Creditors2,500√Debtors1,375√Short term bank loan10,000√ 12,500Bank23,375√31,750276,750276,75010 ticks × ? = 5marks11.Roles of advertising agencies in product promotion?Help businesses in designing their trademarks, logos, and advertising materials?Book space and airtime for their customers in various media houses?Offer advisory services to their clients on selling techniques?Advertise on behalf of their clients?On behalf of their clients, they choose the appropriate media to use12.Distinguish between the following categories of government expenditures.i)Recurrent expenditure -refers to regular expenses incurred by the government in the provision of goods and servicese.g. salaries, fueling gov‘t vehicles, servicing public debt etc.ii) Capital expenditure—refers to government spending that goes into financing specific projects such as construction ofroads, railway lines, airports etc.13.Differences between hypermarkets and departmental stores.?Hypermarkets are located in the outskirts of town while departmental stores are found in town.?Hypermarkets offer a variety of goods while departmental stores deal in a particular line of goods?Hypermarkets comprises different businesses with different management while departmental stores comprises many singleshops under one management?Hypermarkets have ample parking space whereas departmental stores do not have.?With hypermarkets prices are not controlled hence can exploit whereas departmental stores sell at relatively low prices.14.The information below was extracted from the books of Lemayian Traders for the year ended31.12. 2015Opening stock45,000Closing stock15,000Page | 26565/1 &565/2 business studies Turnover340,000Margin25%Required:(i) Gross profitMargin=Gross profit × 100Saless25=Gp100340,000Gp=25× 340,000100Gross profit = Shs. 85,000(ii) PurchasesGP= Sales - CoGsCoGs= Sales - GP= 340,000-85,000= 255,000CoGs= Opening stock + Purchases - Closing stockPurchases= CoGs- Opening stock + Closing stock255,000 - 45,000 + 15,000= Ksh. 225,00015.Distinguish between the following terms as used in National Incomea)Gross Domestic Product-Is the value of all goods and services produced within a country during a particular year irrespective of who does it.b)Gross National Product-It is the value of all goods and services produced by the nationals of a country during the year irrespective of whether they areproduced locally or abroad.c)Per capita Income-Is the average income per person in a given year. It is obtained through dividing the amount national income by the totalpopulation16.Ways in which the government of Kenya promotes entrepreneurial development?Building or improving all infrastructure such as roads, sewerage systems etc?Improving the level of security?Lowering taxation/giving tax exemptions or holidays?Providing subsidies?Controlling the cost of electricity and petroleum products/make it affordable to encourage production17.Channels of distribution for importation of agricultural produce.?Foreign farmer→local consumer?Foreign farmer→local retailer→ local consumer?Foreign farmer→ local wholesaler →local retailer → local consumer?Foreign farmer→Local wholesaler→ local consumer?Foreign farmer → local agent→W/saler →Retailer→local consumer?Foreign farmer→Local Representative→W/saler→ Retailer→Local consumer18.Trends in transport sector.?Pipeline and containerization?Electric trains replacing diesel engines?Underground tunnels are constructed to ease congestions on surface?Development of planes with large carrying capacities?Introduction of speed governors to control speed.?Psv‘s fitted with music systems19.Benefits of indirect production.?High quality goods produced?Surpluses produced.no deficits in market?It is capital intensive reducing cost of labor?There is specialization in the production process which leads to efficiency and highquality?Modern technology is used promoting quality production.?It is less tiresomePage | 27565/1 &565/2 business studies ? Promotes standards of living as variety of goods are available 20. Enter the following transactions in the relevant ledger accounts Capital a/cCrDrCash a/cCr201520152015April 1 Cash 150,000April 1 Capital 150,000April 3 Purchases 40,000,,6 Bank60,000DrPurchase A/cCrDrBank A/cCr201520152015April 3 Cash40,000April 6 Cash60,000April 9 O. machine 25,000DrOffice Machine A/cCr2015April 9 Bank25,00021.Reasons why a producer may need to have their own warehouse?To enjoy complete control of operations in the warehouse?To design it to match their specific needs?In order to install special handling, storage and protection facilities which may not be available with a public warehouse?To avoid being tied down by rigid procedure of receiving and issuing of goods as is the case with public warehouses?In the long run, the cost of building own warehouse will be cheaper than the hiring of space in a public warehouse?The owner exercises full control and makes major decisions without having to consult any one22.Name of the source document used to record the following transactionsTransactionSource Documenta)Received goods returned by a buyer who bought them earlier on creditCopy of the Credit note/Retained credit noteb) Making of payment to casual workers at the end of the weekCash payment voucherc)Bought goods for sale from Gilanis Supermarkets on creditPurchase/Received/Original Invoiced) A customer, Adhiambo, send a cheque for goods she bought earlier on credit Copy/Retained Cash Receipt 23. Define the following terms as used in business studies (i) Annuity Is an agreed amount of money that an insurer agrees to pay to the insured annually until the latter‘s death (ii) Proposer This is a person wishing to take out an insurance cover (Prospective insured) (iii) Speculative risk This is a risk that when it occurs may result in loss or a profit (iv) Grace period This is the time allowed between the date of signing of the contract and the date of the payment of the first premium.24.In the table below fill in the missing figures S, T, U and V.S= Shs. 15,000T= Shs. 10,000U= Shs. 70,000V= Shs. 12,pute the consumer price index (CPI) from the following data giving explanation of your outcomeYearPrice20103002011375CPI= Price in the Year 2011×100%Price in the Year 2010= 375 × 100 =125%300This implies that price of goods has risen by 25% since 2010.Page | 28565/1 &565/2 business studies KASSU JOINT EXAMINATION - 2016 565/2 PAPER 2 MARKING SCHEME1.(a) Explain five principles of insurance. (i) Principles of indemnity This principle state that insured can only be compensated for the actual loss suffered. The aim of the insurance company is to compensate the loss suffers for what they have actually lost financially being returned to the same financial position but no to benefit them. (ii) Principle of utmost good faith or ―ubernima fides‖ At the time of signing the insurance contract the proposer is expected to give all the relevant material faults relating to the [property he wants to insure. (iii) Principle of insurance interest It states that, the insured should only insure property or life whose loss will affect him financially hence one cannot insure a friend‘s property. (iv) Principle of proximate cause For the insured to be compensated, there must be very close relationship between the loss suffered and the rick insured. (v) Principle of subrogation After the insured has been compensate, the remnant of the insured item becomes the property of the insurer. This ensures that the insured person does not make against (profit) out of insurance. (vi) Principle of contribution This principle state that where a person has insured the same property with more than one insurance company. Upon the occurrence of the event of loss, all the insurance company will share the loss proportionately. (b) Study the following table of the demand and supply of product x. Period 2010Price / unitsQtn dd / unitsJulyShs 300500AugustShs 300400SeptemberShs 300200OctoberShs 30080NovemberShs 30050Explain five factors that may have led to the trend above. (i) Government policy The government may have come up with policies that have discouraged the consumption of project x by levying heavy taxation on the product, lack of subsidies and laws and regulation that have discouraged consumption which have led to this trend. (ii) Uneven distribution of income Demand for goods and service is usually higher when incomes are distributed among many people as opposed to where incomes are in the hands of few people. A change in this trend explains that there is uneven distribution of incomes which has led to a decrease in the quantity demanded. (iii) Decrease in population There is a decrease in population which has led to a decrease in demand for goods x while the composition of the population in terms of its sex. Age, economic stats and education structure will also affect the demand for the product. (iv) Terms of sale The demand for goods and services can increase if and when favourable terms of sale are offered to consumers. The terms of sale my include offering goods on credit, giving discounts etc. So for this case may be these was a decrease in the availability of credit or introduction of tougher credit terms which has led to a reduction in demands for the goods and services. (v) Negative change in tastes fashion and preferences of consumers Individual‘s tastes have a great influence on the demand for a commodity. If the consumer develops a negative taste for a particular product, then this will clearly be reflected with a decrease in the quantity demanded. So in this case, the consumers might have a negative taste and a preference of product x. 2. (a) Giving the types of unemployment, state the causes of the remedies. (i) Structural unemployment This type of unemployment occurs when the supply of a particular category of workers exceeds the demand for the services e.g. supply for white collar jobs exceeds the job availability. So the possible cause for this unemployment occurs when the persons have different skills from those being demanded by the employers so the solution is to train the employees and also Page | 29565/1 &565/2 business studies the government is to introduce the appropriate forms of education in schools and institutions to equip the school-leavers with relevant skills and attitudes for the existing job opportunities. (ii) Frictional unemployment This is a short-term unemployment that occurs as people adjust to market changes for instance, by quitting an existing job to seek a new one. This may be caused by people becoming too selective when choosing the jobs they want which may not be available in the market. The possible solutions for this would be to export labourers where there are too many skilled people and the government to provide travel permits for people to take up jobs outside the country. (iii) Voluntary / real wage unemployment It occurs where people choose not to work because they consider the remuneration to be low. The possible cause for this is where there is low demand for goods and services due to low incomes which result to a decline in economic activities and consequently a decline in employment. The solution for this is to encourage firms to use appropriate methods of production such as labour intensive techniques to enable more people to be absorbed in the available jobs. (iv) Cyclical unemployment This is unemployment which arises due to situations in the economic activities over a period of time in a pattern known as trade cycle. The possible cause is where low demand for goods and services due to low incomes which result to a decline in economic activities. The solution is where the government needs to initiate major projects that increase the government expenditure. (v) Residual unemployment This unemployment arises due to handicaps such as mental disorders and blindness which hinder people from engaging in production activities. The possible solution for this is to encourage government to introduce foreign investors in many ways to cater for this people. (b) Steps that one must follow when sent to the field to promote the products of the bank through personal selling. (i) Identifying the prospective customers (ii) Preparing the presentation (iii) Establishing customer contacts (iv) Arousing interest in the products (v) Dealing with objections (vi) Closing the sale (vii) After-sale services 3. (a)Reasons why a country’s economy is showing slow increase in their National Income?Poor supply and low productivity of the labour force?Inadequate capital necessary for the exploitation of natural resources?Poor natural resource endowment?The technology used may be poor and inappropriate?Effects of political instability?Citizens‘s laziness and negative attitude towards work?Presence of a large subsistence sector?Low levels of foreign investment(b)Problems that are likely to face the process of implementation of well-prepared economic development plans.?Reliance on donor funding?Limited supply of domestic resources such as skilled personnel, finance and capital?Earlier failure to involve the local people in plan formulation?Natural calamities?Trying to implement unrealistic, over-ambitious plans?Lack of corporation among executing officers?Inflation?Lack of political will4. (a) On 1st June 2015, Ndovu Traders had cash in hand of sh.25,000 and sh.56,200 at bank. During the month, the following transactions took place: 2015 June 2 Cash sales, sh.42,000. June 5 Received a cheque of sh.70,500 from Kiptala Traders after deducting a6% cash discount. June 8 Paid salaries, sh24,000cash. June 9 Yegon settled his account of sh.45,000 in cash and was allowed sh.l,800cas discount. June 12 Cash sales sh46,500. June 18 Paid Tuitoek's debt of sh.l00,000 by cheque after deducting 5% cash discount. Page | 3000565/1 &565/2 business studies June 24 Withdrew sh.26,000 from the bank for office use. June 30 Banked all the cash except sh.25,000. Prepare a 3-column cashbook and balance it off on 30th June, 2015.(10mks)Ndovu Traders Three-column cash book√ 30 ticks × ? = 10mks√ (b) Explain five factors that may hinder effective communication in an organization.(10 marks)(i) Noise barriers: It refers to a loud, surprising, irritating or unwanted sound that disrupts the effective communication process. It may be from telephone interruptions that cause disturbance in the process of communication. (ii) Choice of inappropriate channel: In accordance with the importance and the intensity of the message, a proper channel must be selected. If a poor channel is selected, it is likely that the message gets distorted or does not have the desirable effect. (iii) Information overload: Care must be taken when providing the amount of information to others lest they may lose it due to the information being overloaded. It is worth mentioning that while managing the people, a manager must make out how capable is a particular employee in processing the message and how much information can be provided to him or her. (iv) Poor Timing: Although urgent needs of a business do not specify any timing, there may be some rare cases. However, the timing of providing a particular message to others should be appropriate. If the information is communicated at the eleventh hour, it may result in resentment and causing the employees to lose the interest in performing particular activity. (v) Physical distractions: physical distractions may cause disturbances to the effective communication process. Such as, telephone interruptions or visitors walk in on the manager and subordinates in the middle of a discussion. (vi) Improper and inadequate information: one of the facts that spells the difference between effective and ineffective communication is the quality of a message. A good message contains meaningful and appropriate information while it incorporates language rules with proper choice of words. A poor message whether spoken or written does not produce intended effect, while it creates ambiguity and leads to misinterpretations. (vii) Poor body language attracts negative responses from others, whereas displaying poor body language not only makes bad impression on others, but also takes somebody‘s attention away from the effective communication process. (viii)Listening skills; good listening skills lead to full apprehension of a message, while poor listening distorts the message. 5. (a) Explain five factors that influence the choice of a product to produce.(10 marks)(i) Market/Supply-gap: The size of the unsatisfied market demand which constitute a source of business opportunity will dictate, to a great extent the need to select a particular product. The product with the highest chances of success as reflected in its demand will be selected. In essence, there must be existing obvious demand for the selected product. (ii) Finance/Fund: The size of the funds that can be mobilized is another important factor. Adequate fund is needed to develop, produce, promote, sell and distribute the product selected. (iii) Availability of and Access to Raw Materials: Different products require different raw materials. The source quality and quantity of the raw materials needed are factors to be seriously considered, Are the raw materials available in sufficient quantities? Where are the sources of raw materials located? Are they accessible? Could they be sources locally or imported? Satisfactory answers should be provided to these and many other relevant questions. (iv) Technical Implications: The production process for the product needs to be considered. There is need to know the technical implications of the selected product on the existing production line, available technology and even the labour force. The choice of a particular product may require either acquisition of the machineries or refurbishing of the old ones. The product itself must be technically satisfactory and acceptable to the user. Page | 31565/1 &565/2 business studies (v) Profitability/Marketability: Most often, the product that has the highest profit potential is often selected. However, a product may be selected on the basis of its ability to utilize idle capacity or complement the sale of the existing products. The product must be marketable. (vi) Availability of Qualified Personnel: Qualified personnel to handle the production and marketing of the product must he available. The cost of producingthe product must be kept to the minimum by reducing wastages. This is achievable through competent hands. (vii) Government Policies: This is quite often an uncontrollable factor. The focuses of government policies can significantly influence the selection of product. For instance, a package of incentives from government for a product will boost its production. (viii)Government objectives: The contributions of the product to the realization of the company‘s short and long range objectives must be considered before selection. For instance, the company goal maybe the achievement of sale growth, sales stability or enhancement of the company‘s social value. (b) Discuss five errors that may not be noticed in a trial balance.(10 marks)(i) Error of omission This is an error where a transaction is completely omitted from the books. No entries were made at all for the transaction. It is as if the transaction has not existed. (ii) Error of commission In this case, double entry was observed but the transaction was posted to a wrong account of the same class. For example goods sold to John was correctly credited to Revenue (Sales) account but debited to Jane‘s account. (iii) Error of principle Double entry observed but an entry made in the wrong class of account. For example, payment by cheque for vehicle repairs correctly credited to bank account but debited to vehicle account instead. In this case, not only the account is wrong (vehicle instead of vehicle repairs) but also the class of account is different. Vehicle account is a real account (asset) whereas vehicle repairs account is a nominal account (expense). (iv) Error of original entry The transaction was correctly recorded according to the double entry system but with the wrong amount. For example, payment of telephone expenses in cash of shs560 was credited to cash account and debited to telephone expenses account but by shs600 in both accounts. (v) Complete reversal of entries For a given transaction, the account to be debited was credited and the account to be credited was debited. For example, goods sold to Nadia for shs500 was debited to Revenue (Sales) account and credited to Nadia‘s account, both by shs500. (vi) Compensating errors Errors on the debit side of the ledger have been set off by errors on the credit side of the ledger. For example, vehicle account (debit balance) and commission received account (credit balance) were both understated by shs200. (vii) Error of duplication A transaction was recorded twice in the ledger. Double entry was observed in each case. (viii)Error of transposition For a given transactions, double entry was correctly observed but the figures inamount were not written in the correctorder. Examples are: writing shs450instead of shs540, shs71 instead of shs17, shs1 425 instead of shs1 452, etc. Forexample, cash received from Sam shs164 was debited to cash account and credited to Sam‘s account at shs146. 6. (a) Discuss five canons of public expenditure.(10 marks)(i) The Principle of Maximum Social Advantage: The government expenditure should be incurred in such a way that it should give benefit to the community as a whole. The aim of the public expenditure is the provision of maximum social advantage. If one section of the society or one particular group receives benefit of the public expenditure at the expense of the society as a whole, then that expenditure cannot be justified in any way, because it does not result in the greatest good to the public in general. So we can say that the public, expenditure should secure the maximum social advantage. (ii) The Principle of Economy: The principle of economy requires that government should spend money in such a manner that all wasteful expenditure is avoided. Economy does not mean miserliness. By economy we mean that public expenditure should be increased without any extravagance and duplication. If the hard-earned money of the people, collected through taxes, is thoughtlessly spent, the public expenditure will not confirm to the cannon of economy. (iii) The Principle of Sanction: According to the principle, all public expenditure should be incurred by getting prior approval from the competent authority. The sanction is necessary because it helps in avoiding waste, extravagance, and overlapping of public money. Moreover, prior approval of the public expenditure makes it easy for the audit department to scrutinize the different items of expenditure and see whether the money has not been overspent or misappropriated. (iv) The Principle of balanced Budgets: Every government must try to keep its budgets well balanced. There should be neither ever recurring surpluses nor deficits in the budgets. Ever recurring surpluses are not desired because it shows that people are unnecessarily heavily taxed. If expenditure exceeds revenue every year, then that too is not a healthy sign because this is considered to be the sign of financial weakness of the country. The government, therefore, must try to live within its own means. Page | 3200565/1 &565/2 business studies (v) The Principle of Elasticity: The principle of elasticity requires that public expenditure should not in any way be rigidly fixed for all times. It should be rather fairly elastic. The public authorities should be in a position to vary the expenditure as the situation demands. During the period of depression, it should be possible for the government to increase the expenditure so that economy is lifted from low level of employment. During boom period, the state should be in a position to curtail the expenditure without causing any distress to the people. (v) Equity/No unhealthy effect on Production and Distribution: The public expenditure should be arranged in such a way that it should not have adverse effect on production or distribution of wealth in the country. Public expenditure should aim at stimulating production and reducing inequalities of wealth distribution. If due to unwise public spending, wealth gets concentrated in a few hands, then its purpose is not served. The money really goes waste then. Page | 33565/1 &565/2 business studies NANDI NORTH AND NANDI CENTRAL JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/1 PAPER 1 1.State four auxiliary services to business.(4mks)2.State four trends in office management.(4mks)3.Outline four factors that have lead to the decline in mortality rate in Kenya.(4mks)4.Highlight four ways in which HIV/AIDS prevalence has negatively affected business activities.5.Outline four challenges that a distributor of fresh milk is likely to face in his / her operations.(4mks)6.Highlight four reasons why ethical practices should be observed by the business.(4mks)7.Differentiate the following terms:-(a) Scarcity and choice.(2mks)(b) Opportunity cost and scale of preference.(2mks)8.Highlight four factors that may positively influence an internal business environment.(4mks)9.The following balances were obtained from the Books of Mtema Traders as at 31st July 2010SHS.Purchases18,000Capital46,000Bank83,500Advertising1,500Furniture26,000Debtors11,000Stock25,000Prepare a trial balance as at 31st July 2010.(4mks)10.Outline four factors that may reduce the supply of cabbages in the local market.(4mks)11.Sherry traders had the following assets and liabilities as at 1st January 2004.SHS.Furniture350,000Debtors45,000Cash7,000Creditors48,000For the year ended 31st December 2004,(i) Additional capital was Shs. 24,000(ii) Drawings wereShs. 20,000(iii) Net profit wasShs. 34,000Determine the capital as at 31st December 2004.(4mks)12.Outline four circumstances under which a credit note can be issued.(4mks)13.National income from expenditure approach is calculated as follows:NI=C + I + G + (X-M)State the meaning of the following:(4mks)(i) C……………………………………………………………………………………………………………… (ii) I:……………………………………………………………………………………………………………… (iii) G …………………………………………………………………………………………………………….. (iv) X-M:…………………………..……………………………………………………………………………… 14. Highlight four reasons why a wholesaler may decide to sell goods through a retailer instead of selling directly to consumers. (4mks) 15. An entrepreneur may spot a gap in the market which may be converted into a business idea. Name four such gaps. (4mks)16.Outline any three types of partnerships.(3mks)17.List four ways in which consumers may be exploited by business organizations.(4mks)18.Give four reasons why human portage remains popular among many communities in Kenya.(4mks)19.State any four categories of telecommunication services.(4mks)20.Kivory Youth Group wants to start a warehouse service business in their ward. State any four essential factors they shouldconsider for their warehouse to function effectively.(4mks)21.List any four varieties of insurance policies that the owners of a supermarket may find useful for the business.(4mks)22.Chetambe retail shop carried out the transactions given in the table below. For each transaction, state the source of documentand respective book of original entry.(4mks)TransactionSource DocumentBook of Original Entry(i)Sold goods on credit(ii)Informed customer of an under charge(iii)Sold goods for cash(iv)Received allowance for goods returned to supplierPage | 34565/1 &565/2 business studies 23. The following was obtained from the Books of Keino Traders. SHS.Opening stock25,000Purchases250,000Closing stock30,000Carriage inwards15,000Purchases returns5,000Sales400,000Sales returns50,000Calculate:-(i)Cost of goods sold.(3mks)(ii)Net sales(1mk)(iii)Gross profit(1mk)24.Mark with a tick to indicate in the appropriate column the financial statement in which each of the items in the table belowwould appear.(4mks)ItemTrading AccountProfit & Loss A/c.Balance SheetOpening stock Capital Carriage in Discount received Carriage out Cost of Sales Turn Over Bank Overdraft 25.Outline any four indicators of economic development.(4mks)Page | 35565/1 &565/2 business studies NANDI NORTH AND NANDI CENTRAL JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/2 PAPER 2 1.(a) Outline five ways in which an entrepreneur contributes to production of goods.(10mks)(b) Discuss five statutory measures used by the government to control inflation.(10mks)2.(a) Explain emerging issues in transport in Kenya.(10mks)(b) Record the following transactions in Akili Traders‘ Three-Column Cashbook and balance it off on 31st January 2015. (10mks) Jan 1 Balance b/d Cash Kshs. 200,000 Dr. Bank - Kshs. 15,000Cr Jan 2 Cash sales Kshs. 145,000 Jan 6 Paid for motor expenses Kshs. 2,000 Jan 7 Paid salaries in cash Kshs. 50,000 Jan 9 Bought stationeries in cash Kshs. 1,000 Jan 14 Settled Kalyet‘s account of Kshs. 60,000 by cheque less 3% cash discount. Jan 18 Received a cheque of 84,600 from Koech after deducting 10% cash discount. Jan 21 Cash sales paid direct into the bank 340,000 Jan 23 Kaigat settled his account of 2,600 by cheque after deducting 5% cash discount. Jan 24 Received cheque from the following debtors after deducting 10% discount in each case; Chuma Kshs, 3,000, Buko 28,000 and Matapei 9,000 Jan 25 Paid consultancy salaries in cash Shs. 2,000 Jan 29 Credit purchase of Shs. 10,000 Jan 31 Banked all except 4,200 3.(a) Explain five types of indirect taxes.(10mks)(b) Outline five differences between a public limited company and a public corporation.(10mks)4.(a)The following trial balance was extracted from the ledgers of Baraka Traders for the year ended 31st December 2015.BARAKA TRADERSTRIAL BALANCEAS AT 31ST DECEMBER 2015DetailsDR(KShs.)CR (Kshs.)Sales855,000Purchases420,000Sales returns12,000Purchases returns20,000Creditors165,000Debtors63,000Motor vehicles480,000Cash in hand65,000Furniture190,000Carriage inwards14,000Stock280,000Capital626,250Drawing88,000Telephone6,400Insurance8,200Postage3,850Rent19,600Discount Received4,000Advertising12,900Discount allowed7,3001,670,2501,670,250On 31st December 2015, the business had closing stock valued at Shs. 60,000.Required:(i) The Trading, Profit and Loss Account for the year ended 31st December 2015.(8mks)(ii) A Balance Sheet as at that date.(4mks)(b)According to a recent info-track findings, unemployment is a major problem facing the youth in Kenya. Explain fivemeasures that the Kenyan government should take to alleviate the problem.(10mks)5.(a)Explain various methods used by the Kenyan government to improve its exports.(10mks)(b)Explain five benefits that are enjoyed by business enterprise operating in large scale.(10mks)6.(a) Explain five features of perfect competition market.(10mks)(b) Explain five benefits of mobile banking to customers.(10mks)Page | 36565/1 &565/2 business studies NANDI NORTH AND NANDI CENTRAL JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Auxiliary services to business (Aids to trade)?Transport?Communication?Warehousing / storage?Banking?Product promotion / Advertising?Insurance2.Trends in office management.?Use of computers to perform different tasks.?Customer care to deal with customer issues.?Use of closed circuit television (CCTV) for surveillance.?HIV/AIDS awareness in the office.?Stress management to reduce stress at work place.?Use of better office layout e.g. adoption of open plan offices.?Signing of performance contract by workers.?Team-building among different categories of office staff.3.Factors that have lead to decline in mortality rate in Kenya.?Improved / balanced diet?Technological advancement hence improved standards.?Development of modern medicine and hospitals.?Advanced environmental sanitation and hygiene.?Elimination of internal conflicts due to stable government / peace and security.4.Ways in which HIV / AIDS prevalence has negatively affected business activities.?Regular absenteeism of workers / owner / loss of time.?Low productivity due to poor health.?Loss of market.?Increase in dependency ratio.?Loss of skilled labour.?Resources being used to provide care for patients.5.Challenges that a distributor of fresh milk is likely to face in his / her business.?Milk is perishable / likely to go sour easily.?Transport problems.?Lack of ready market.?Price instabilities.?Competition from other products.?Lack of / inadequate / shortage of resources.6.Reasons for ethical practices in business.?To ensure workers are paid fairly and on time.?To ensure that there is no discrimination of employees.?To create fairness in competition.?To ensure rights of employees are protected / upheld.?To avoid corruption / ensure responsible promotion.?To avoid consumer exploitation.?To ensure protection of the environment / hence no pollution.?To ensure compliance with country‘s laws and regulations.7.Differentiating terms(i)Scarcity refers to limited / inadequate in supply while Choice is selecting one item instead of the other(s).(ii)Opportunity cost - value of the foregone alternative where choice has been made while scale of preference is a list of wants inthe order of their importance.8.Factors that positively influence internal business environment.?Adequate resources?Trained / skilled manpower?A workable business structure?Innovative / creative entrepreneur?Motivated employees?Good management practices (by the owner)Page | 37565/1 &565/2 business studies ?SMART goals and objectives?Adoptable business culture.9. Mtema Traders Trial Balance As at 31/07/2010 Name of the AccountDR (Shs)CR (Shs)Purchases18,000√Creditors46,000√Capital83,500√Bank48,000√Advertising1,500√Furniture26,000√Debtors11,000√Stock25,000√129,500129,500Penalize for no title / not balancing totals.(8 x ? = 4 marks)10.Factors that may reduce the supply of cabbages.?Fall in price of cabbages?Unfavourable government policy e.g. reduction in subsidy.?Unfavourable natural factors e.g. poor climate / weather.?Increased cost of production of cabbages.?Non-availability of inputs e.g. fertilizers.?Difficulty for other firms to enter industry.?Use of poor methods of technology e.g. instead of using herbicides one uses normal weeding.?When the price of cabbages is expected to rise in future.11.A= C + LC= A - L= (350,000 + 45,000 + 7,000) - (48,000)= Kshs. 354,000√√C.C = O.C + I + P - D=354,000√ + 24,000√ + 34,000√ - 20,000√= Kshs. 392,000 √√√for correct figure / value and sign (+,-_)(8 x ? = 4mks)12.Circumstances under which a credit note is issued.?When the buyer has been overcharged due to overpricing / or calculation errors in the invoice.?When some goods have been returned / due to damage to the seller.?Where the buyer was charged for goods not supplied.?Where goods not ordered are delivered.?Where the buyer returns empty packing container for which he had paid.?When goods are damaged but retained by the buyer.13.Meaning of the following:C - Expenditure on consumer goods. I - Expenditure on capital goods / Investments G - Government expenditure X - M - Expenditure on exports less expenditure on imports or expenditure on net exports. NB: The word expenditure must be captured in every point.(4 x 1 = 4 marks)14.Reasons why wholesaler sells goods to consumers through retailers.?When there is a need to reduce transport cost or where there is a challenge in transport.?If the wholesaler wants to share risks involved in the distribution of goods.?Where the market is geographically spread thus expensive for wholesalers.?Where the wholesaler does not want to prepare goods for sale (packing, sorting, grading, etc)?Where the wholesaler does not have adequate capital to set wholesale outlets / for distribution.?In case the wholesaler does not want to break the bulk for goods.?Where the wholesaler does not want to engage in after-sale service and product promotion.?Where the wholesaler does not have adequate storing space.15.Gaps of a business idea in the market.?Poor quality of goods / services.?Insufficient quantities of products / shortages of goods.Page | 38565/1 &565/2 business studies? Poor service delivery.? High prices of goods / unaffordable prices.? Lack of varieties.? Inavailability of products needed by customers.16.Three types of partnerships.? Ordinary partnership / General partnership.? Limited partnership.? Temporary partnership.? Permanent partnership.17.Ways consumers could be exploited.? High prices for goods / services.? Failure to maintain healthy standards.? Non-compliance with contract agreements.? Misleading advertisements.? Poor quality goods.? Wrong weights and measures.? Failure to disclose ingredients of a product.18.Reasons for continued use of human portage.? Seasonal and impassable roads to motorists.? Cheap and affordable to use.? Rough and steep terrain.? Small quantity of goods to transport.? Short distances involved.19.Categories of telecommunication services.? Fixed line telephone lines.? Mobile telephone services.? Telegram services? Internet services / E-mail.? Information bureaus20.Essential factors of a warehouse.? Specialized buildings? Conveniently located? Installation of handling equipments.? Security systems to safeguard the goods from theft or damage by weather or people.? Qualified human resources to run the warehouse.? Good road and other communication network.? Compliance with the law of the land.21.Varieties of general accident cover.? Consequential loss? Personal accident insurance? Fidelity guarantee policy? Theft insurance / Burglary? Employers liability / Workers compensation / Industrial injury.? Cash in transit / goods on transit.? Bad debt.? Motor vehicle insurance.? Public liability.? Sprinkler leakage.? Fire22.TransactionSource Document(i)Sold goods on creditOutgoing Invoice(ii)Informed customer of an under chargeOutgoing DebitNote(iii)Sold goods for cashOutgoing Receipt(iv)Received allowance for goods returned to supplierIncoming CreditNoteBook of Original EntrySales JournalGeneral JournalCash bookReturn outwardjournal/Purchase returns journal. Page | 39565/1 &565/2 business studies 23.(i) Opening Stock-Kshs.25,000Add purchases-250,000Less: Purchases returns5,000245,000Add carriage in15,000√260,000Goods available285,000√Less closing stock30,000√Cost of goods sold255,000√6 x ? = 3mks(ii) Net salesSales400,000Less sales returns50,000√Net sales350,000√? x 2 = 1mk(iii) Gross Sales350,000Less cost of sales255,000Gross profit95,000√? x 2 = 1mk24.ItemTrading AccountProfit & Loss A/c.Balance SheetOpening stock√Capital√Carriage in√Discount received√Carriage out√Cost of Sales√Turn Over√Bank Overdraft√(8 x ? = 4mks)25.Indicators of development?Access to education?Level of employment?Access to food and shelter?Level of infrastructural development?Level of research and development?Level of technology?Level of savings and investment.Page | 40565/1 &565/2 business studies NANDI NORTH AND NANDI CENTRAL JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/2 PAPER 2 1. (a) Five ways in which an entrepreneur contributes to production of goods. ? Provide necessary capital to carry out production (initial capital) ? Identify viable business opportunities to invest in. ? Provide guidelines on how production should be organized. ? Assemble other factors of production in appropriate proportions. ? Provide necessary working capital. ? Rewards other factors of production - rent, salaries and interest. ? Controls and manages the business. ? Bears all the risks. (b) Five statutory measures used by the government to control inflation. (i) Use of price controls - used to curb profit push inflation by setting limit beyond which prices should not sell. (ii) Restricting imports (a) Used to curb imported inflation (b) Done by reducing the quantities of imports / value of imports. (c) Local alternatives can be used. (iii) Controlling exports Done by restricting exports of commodities experiencing shortages / total ban of exportation of such commodities / essential commodities. (iv) Controlling wages and salaries Used to curb wage push and demand pull inflation through curbing the powers of unionists. (v) Restricting terms of hire purchase and credit terms of sale. -Done through increasing the rate of interest on hire purchase and trade credit contracts and reducing the payment period.-Increasing the amount required as down payment to curb demand, pull inflation on durable goods.2. (a) Discuss emerging issues in transport in Kenya. ? Acquisition of planes that have large carrying capacity. ? Increasing use of motorcycles due to its small carrying capacity and door to door delivery service / flexibility / accessibility to areas with poor road network. ? Electric trains to replace diesel engines - faster, environmental friendly. ? Use of multiple roads / dual roads to ease congestion in urban areas. ? Underground tunnels for trains to ease congestion on the surface. ? Construction of bypasses to ease congestion in central business areas. ? Mobile traffic courts to deal with traffic offenders on the spot. (b) AKILI TRADERS THREE COLUMN CASH BOOKDateParticulL/Fars1.1.15Balb/d2.1.15SalesG.L18.1.15KoechS.L21.1.15SalesS.L23.1.15KaigatS.L24.1.15ChumaS.L24.1.15BukoS.L24.1.15MatapeiS.L31.1.15cashC31/1/15 Bal.B/dDisc AllCashBank200,000√145,000√9,400√ 84,600√340,000√130√ 2,470√300√ 2,700√2,800√ 25,200√900√ 8,100√285,800√13,530345,000√ 748,870√√42,000√ 675,000√DateParticularsL/F1.1.15BalB/d6.1.15Motpr exp.G.L7.1.15SalariesG.L9.1.15StationeriesG.L14.1.15KalyetP.L25.1.15ConsultancyG.L31.1.15BankC31.1.15BalDiscCashBankRec15,000√2,000√50,000√1,000√1,800√58,200√2,000√285,800675,670√ √4,200√1,800√ 345,000748,870 (30 x 1/3 = 10mks) 3. (a) Five types of taxes. ? Sales tax - levied on the value / quantities of sales made. ? Value added tax - levied on value that the business adds to product during processing / manufacturing. ? Import duty - charged on goods entering the country. ? Excise duty - imposed on goods manufactured and sold within the country. Page | 41565/1 &565/2 business studies ?Import duty - levied on exports to discourage exportation of such products.?Income tax (PAYE) - levied on salaries of employees.?Capital gain tax - levied on appreciation of assets.?Corporate tax - levied on profit of companies.?Custom duty - levied on goods entering or leaving the country.(b)Five differences between a public limited company and a public corporation.Public Limited CompanyPublic CorporationEstablished under a company‘s act.Established under the act of parliament.They are profit driven as they provide goods and services,They are service driven as they are formed to provideessential services that are in public interest.Board of directors are elected by shareholders during theBoard of directors are appointed by the government.AGM.Financed by shareholders through the sale of shares to theFinanced by the government.public.Formed, owned and operated by shareholders.Formed, owned and operated by the Central government.4.(a)Baraka TradersTrading, Profit and Loss AccountFor the Year Ended 31st December 2015√Opening stock280,000√Sales855,000√Add: Purchases420,000√Less: Sales returns12,000√Add: Carriage inwards14,000√Net sales843,000√Less Returns outwards20,000√Net Purchases414,000√Cost of goods available for sale694,000√Less closing stock60,000√Cost of goods sold634,000√Gross profit c/d209,000√843,000843,000ExpensesTelephone6,400√Gross profit b/d209,000√Insurance8,200√Discount received4,000√Postage3,850√Rent19,600√Advertising12,900√Discount allowed7,300√Total expenses58,250√Net profit c/d154,750√213,000213,000Net profit b/d145,750(24 x 1/3 = 8mks) Baraka Traders Balance Sheet As at 31st December 2015 Fixed assetsCapital626,250√Motor Vehicle480,000√Add: Net profit154,750√Furniture190,000√Less: Drawings88,000√670,000√Net capital693,000√Current AssetsCurrent LiabilitiesStock60,000√Creditors165,000√Debtors63,000√Cash65,000√188,000√858,000√858,000(12 x 1/3 = 4mks)Page | 42565/1 &565/2 business studies (b) Measures taken by the government to solve unemployment. ? Empower the youths financially through access to cheap loans and credit facilities to assist in establishing business e.g. youth enterprise fund. ? Diversification of economic activities, in order to curb seasonal and structural unemployment. ? Adopt policies that encourage use of labour intensive methods of production / Discourage use of capital intensive methods of production through imposing high taxes on capital goods and through legislation. ? Increase government expenditure on projects that create job opportunities. ? Encourage direct foreign investment especially those that use labour intensive methods. ? Develop rural areas as to reduce rural urban migration and create employment opportunities in rural areas / Enhance balanced regional development. ? Encourage development of informal sector (jua kali) this will enable many youths to be self-employed. 5. (a) Various methods used by the Kenyan government to improve its exports. ? Removing or reducing trade barriers which discourage exports trade. ? Offering custom drawbacks - refund manufacturers custom duty paid if they import raw materials. ? Manufacture and export the finished products rather than exporting raw materials that are cheap. ? Use export compensation schemes. Exporter is allowed to claim from the government a certain percentage of the value products export to enable exporter charge less hence increasing demand in the world market. ? Assisting exporter to get new markets for their products through commercial attaches. ? Joining trading blocks like COMESA in order to widen market. ? Carrying out product promotional activities abroad on behalf of the exporter. (b) Five benefits that are enjoyed by business enterprise operating in large scale. ? Marketing economies - able to employ more effective marketing strategies and distribution channels hence large sales volume. ? Risk bearing economies - its able to diversify its production activities to cover a wider area hence spreading the risks. ? Technical economies - its able to hire specialized labour and machinery more economically. ? Managerial economies - it is able to offer competitive salary and better prospective career advancement hence attracts highly skilled staff that is able to make viable decision that increase the business productivity. ? Research economies - it can afford to carry out research in new methods of production, new markets and new products to meet consumer demand hence recording high sales volumes. ? Financial economies - have easy access to credit facilities hence enabling it to expand its operations. Can get credit at low rates. ? Welfare economies ? It can afford to offer welfare facilities e.g. recreation, health and housing hence attracting skilled labour force. This increases their productivity. 6. (a) Five features of perfect competition market ? There is a large number of buyers and sellers hence no single buyer or seller can influence the price and output of the product. ? The products dealt with are homogeneous - products are similar in all aspects hence no special advantages of disadvantages in buying from a particular producer. ? All firms are price takers - a change of price by one producer will not affect the market since each supplies a neglible amount of the total output. ? No government interference since the prices are determined by forces of demand and supply. ? No transport costs since it is assumed that buyers and sellers are located together. ? Perfect mobility of factors of production such as land, labour, capital and entrepreneurship are assumed to be perfectly mobile. ? No excess demand or supply - sellers are able to sell all that they bring to the market. Equally buyers are able to buy all that they need. ? Free entry or exit - buyers and sellers have no restrictions to enter or leave the market. ? Perfect knowledge of the market by both buyers and sellers in relation to pricing and output. (b) Five benefits of the mobile banking to customers. ? It enables a customer to access funds in his / her account without travelling to the bank. ? Enables the customer to pay utility bills without travelling hence saving on transport cost. ? Facilitate transfer of money cheaply and faster compared to other means of money transfer. ? Enables one to top up mobile airtime automatically. ? It promotes ecommerce as one can sell or buy on - line. ? Enables one to check his account balance. ? Enables one to know when salary has been entered into the account. ? One can request for mini statements. Page | 43565/1 &565/2 business studies NANDI EAST, NANDI SOUTH & TINDERETSUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Mention four small-scale retailers with shops.(4mks)2.State four methods of government participation in business activities.(4mks)3.Outline four importance of intermediaries in the chain of distribution.(4mks)4.Highlight four features of a fixed deposit account.(4mks)5.State four differences between subsistence production and large-scale production.(4mks)6.Outline four documents needed to start a company.(4mks)7.Mention four factors that may have caused the Demand curve to shift to the right.(4mks)D1D0PriceD1D0Quantity8.Henry‘s business had a mark-up of 25%. Calculate his margin.(4mks)9.State four reasons why a Business Plan is important to an entrepreneur.(4mks)10.State four elements of transport.(4mks)11.Outline four uses of national income statistics.(4mks)12.Outline four characteristics of underdevelopment.(4mks)13.Outline any four duties of a manager.(4mks)14.Highlight any four benefits of a bonded warehouse to the government.(4mks)15.Read the following transactions and state the accounts to be debited or credited.(4mks)(i) Started business with sh. 50,000 in cash. (ii) Sold goods worth sh. 30,000 receiving a cheque. (iii) A debtor, Onyango returned goods to the business worth sh. 5,000. (iv) Withdrew sh. 20,000 from the bank for business use. TransactionDebitedCredited(i) (ii) (iii) (iv) 16.State the functions of the following documents as used in international trade.(4mks)(i) Consumer invoice(ii) Certificate of origin17.Outline any four components of external business environment.(4mks)18.Outline any four barriers to verbal communication.(4mks)19.Highlight any four demerits of a young population.(4mks)20.Outline any four sources of finance to the county government of Nandi apart from taxes.(4mks)21.List four reasons why a business exists.(4mks)22.Kenya government has embarked on a policy of establishing industries away from each other. State any four benefits thatthis policy may achieve.(4mks)23.The following information relates to Nyangores Traders as at 31st December 2000.Shs.Cash20,000Creditors35,000Repaid rent2,000Bank overdraft5,000Premises50,000Accrued salary4,000Prepare Nyangores Traders Balance Sheet as at December 2000.(4mks)24.Outline any four current trends in product promotion.(4mks)25.State any four circumstances under which partnership may be dissolved.(4mks)Page | 44565/1 &565/2 business studies NANDI EAST, NANDI SOUTH & TINDERETSUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES 565/2 PAPER 2 1.(a) In every business, there are documents containing information that forms a basis of making entries in the Books ofAccounts. Explain five types of these documents.(10mks)(b) Explain five reasons for the increased use of M-Pesa among Kenyans today.(10mks)2.(a) Mrs. Baraka, a trader had the following cash transactions starting 1st January 2016.Jan1Balance b/d cash 5,000 bank 15,0002Bought goods for sale and paid by cheque 4,0009Paid insurance 150 cash12Received 250 cash from Mr. Kibet14Deposited 1,000 in the bank16Received by cheque 2,000 from Mchana20With drew 7,500 from bank for office use.23Paid wages 900 by cheque.26Received payment of 7,500 cheque from Joy Enterprises after allowing discount of shs. 10028Paid electricity 3,000 cash30Paid water 1,500 in cash31Settled Korir Traders account of sh. 2,250 and received a 10% discount.Enter the above transactions in a three-column cashbook.(12mks)(b) Explain four means of payment provided by the post office.(8mks)3.(a) Highlight five differences between perfect competition market and monopolistic competition market.(10mks)(b) Discuss five factors that should be considered when buying office equipment.(10mks)4.(a) Explain five ways through which inflation may be controlled other than the use of monetary policy.(10mks)(b) Outline five circumstances that would make a person prefer a taxi rather than a matatu.(10mks)5.(a) The table below shows prices and quantity of a crate of tomatoes supplied at Kapsabet Market for the last quarter of year2015.MonthQuantities suppliedPriceOctober20,0001,000November30,0001,000December35,0001,000Explain five factors that may have led to the change in quantities supplied.(10mks)(b) Outline five uses of a computer in an organization.(10mks)6.(a) Mr. Rotich‘s car which had been insured against accident with Amaco Insurance was involved in an accident. Describethe procedure he would follow to claim compensation.(10mks)(b) The following trial balance was extracted from the Books of Nandi Hills Enterprises for the year ended 31/12/2014. Nandi Hills Enterprises Trial Balance As at 31st December 2014 DrCrCapital250,000Drawings33,000Opening stock47,000Purchases300,000Sales420,000Returns Inwards4,000Returns outwards7,000Carriage outwards10,000Carriage inwards28,000Discount allowed4,000Furniture25,000Motor vehicle145,000Creditors55,000Discount received14,000Premises100,000Debtors50,000746,000746,000Closing stock was valued at shs. 55,000 while depreciation on motor vehicles was shs. 15,000.Required:(i) Trading, Profit and Loss Account for the year ended 31st December 2014.(6mks)(ii) Balance Sheet as at 31st December 2014.(4mks)Page | 45565/1 &565/2 business studies NANDI EAST, NANDI SOUTH & TINDERETSUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Four small-scale retailers with shops.?Single shops (unit shops)?Tied shops?Kiosks?Market stalls?Canteens?Mobile shops(4 x 1 = 4mks)2.Methods of government participation in business activities.?Through regulation of business activities.?Through training people e.g. at the Kenya Business Training Institute (K.B.T.I.)?Through trade promotion.?Through provision of public utilities.?Creating an enabling environment for business.(4 x 1 = 4mks)3.Importance of Intermediaries in the Chain of distribution.?Reduce the number of transactions between manufacturers and buyers.?They assist in breaking bulk.?They assist in storage of goods.?They assist in transportation of goods.?They assist in product promotion.?They assist in customs clearance.?They assist in accumulation of stock and hence stabilizing prices.?They assist in documentation in international trade.?They assist in debt collection on their principals behalf e.g. auctioneers.?They assist in establishing contracts between buyers and sellers e.g. brokers.?Assist in preparation of goods for sale e.g. packing, grading, branding, sorting, blending etc.?Assist in availing variety of goods to consumers.?Help in sharing risks involved in the process of distribution such as sudden decrease in prices, perishing of goods, fall indemand etc.?Assist in financing by way of selling goods on credit to the next intermediary or consumer.(4 x 1 = 4mks)4.Features of a Fixed Deposit Account.?Involves large amounts of money to operate.?Are contractual in that maturity is pre-determined e.g. 12 months, 3 years etc.?No mid-term withdrawals or additional deposits are allowed.?Banks can lend (trade with) the entire amount of fixed deposits with certainty within the contract period.?Fixed deposits earn fairly good interest, compared with savings deposits.?An account holder who breaches the contract loses his interest and is penalized.?Fixed deposits can be used as security for other forms of credit such as overdrafts.?A fixed deposit account stands expired at the end of the contract period. The account holder must withdraw the principal andthe accrued interest.(4x1 = 4mks)5.Differences between subsistence production and large-scale production.Subsistence productionLarge-scale production(i) Goods and services are for one‘s own consumption.(i) Production is meant for re-sale.(ii) Low quantity of goods and services is produced.(ii) There is surplus production of goods and services.(iii) There is very little invention and innovation.(iii) Invention and innovation is very much encouraged.(iv) The quality of goods produced is low.(iv) The quality of goods produced is high.(v) There is little use of modern technology, tools or(v) There is use of advanced technology and tools.equipment.6.Documents needed to start a company.?Memorandum of Association.?Articles of Association?List of Directors?Statement from the Directors that they are willing to be Directors.?Statement from a lawyer or a director showing that all the legal requirements for formation have been fulfilled.7.Factors that may have caused a shift of the demand curve to the right.?Incomes of the people could have increased.?The tastes, fashions and preferences for the commodity could have changed favourably.?Total population in the country could have increased.Page | 4600565/1 &565/2 business studies ?The prices of substitutes could have increased.?Government policy (increase in subsidies, reduction of taxes.?Seasonal changes.?Future expectations of increase in prices.?Future expectations of decrease in quantities supplied.?Decrease in price of complementary goods.(4 x 1 = 4mks)8.Henry‘s MarginRelationship between margin and mark-up.If mark-up is 25%=25=1√√1004The margin is:11?1?4 ? 1? ? 20% √√ ? ?5? 5100 ? 20 ? (4 x 1 = 4mks)?9.Reasons why a Business Plan is important to an Entrepreneur.? A business plan shows how capital will be raised and allocated.? It guides the entrepreneur to avoid making misstates.? The plan motivates one to achieve the set targets.? It is usually required by institutions or people who are likely to finance the project.? A plan is used to test the dreams and ideas of the entrepreneur.? A plan removes uncertainty and worry when starting a business.? It is used to evaluate the business by comparing the set goals and the achieved results.10.Elements of transport.? The Way? Unit of Carriage? Method of Propulsion? Terminal11.Uses of National Income Statistics.? To show the average standard of living of people in that country.? To determine the country‘s economic development.? To get the country‘s net worth / its actual income.? To know the contribution of various sectors of the economy to the national growth.? The use as a tool and basis of economic planning.? To show to the prospective investors, foreign or local.? To use for comparison with other countries.? To show how the national wealth is distributed among its citizens.? To compare performance in different periods.12.Characteristics of underdevelopment.? There is a rapid population growth rate.? National income is usually very low resulting in low per capita income.? The unemployment problem is more severe.? Infrastructure in the rail and road networks is not well developed.? There is low life expectancy and high mortality rate.? There is lack of an entrepreneurial culture and people tend to be risk averse.? Overdependence on agricultural sector which has low level of income.? The gap between the rich and the poor is very wide.? Low level of technology, people tend to use traditional ways of production.? Lack of capital due to low savings resulting in very low level of investments.? High reliance on developed nations and donors for financial assistance.? Under-utilization of natural resources.? High dependency ratio.13.Any four duties of a manager in an office.? Staffing? Building and safeguarding wage of an organization.? Advising owner on matters of the business / organization.? Providing a comfortable working environment.? Policy formulation.? Planning activities of an organization.? Reporting matters of the organization to the owner or employees.? Delegations of duties to staff members.14.Benefits of a bonded warehouse to the government.(4 x 1 = 4mks)(4x1 = 4mks)(4x1 = 4mks)(4x1 = 4mks)(4x1 = 4mks)Page | 47 565/1 &565/2 business studies ?To check quality of goods.?Helps in enforcing government policies on imports and exports.?Helps in collection of data and statistics.?Assist to detect illegal goods.?Helps in collection of excise and customs duties.(4x1 = 4mks)15.Accounts to be credited or debitedTransactionDebitedCredited(i)CashCapital(ii)BankSales(iii)Sales returnsOnyango (Debtor)(iv)CashBank16.Functions of:?Consular invoice - shows that prices of goods are correct, fair and current.?Certificate of origin - shows the country which the goods being exported have come from.ponents of external business environment.?Customers?Demography?Economic factors?Socio-cultural factors?Political factors?Legal factors?Competitions?Intermediaries?Technical changes(4x1 = 4mks)18.Barriers to effective communication.?Poor listening?Lack of common language?Use of technical language?Poor timing?Negative attitude?Distortion of messages through incorrect means used to transmit.(4x1 = 4mks)19.Demerits of young population.?Low savings.?Low labour supply.?High dependency ratio.?May lead to low per capita income.?More money / resources is set aside by the government to cater for the young e.g. schools, hospitals etc.(4x1 = 4mks)20.Sources of finance to the county government.?Fines and penalties.?Income from sale of county government owned property.?Recovery of principal amount and interest of loans.?Charges i.e. receipts by the government for services rendered.?Income generated from tourism etc.(4x1 = 4mks)21.Reasons why a business exists.?To make profit.?As an outlet of new innovation.?To utilize spare time.?To utilize local resources.?Source of goods.?For prestige.(4x1 = 4mks)22.Advantages of delocalization.?Lead to even development.?Helps to reduce structure unemployment.?Social amenities may be spread throughout the country.?Industries will be more secure i.e. they will not be easy targets for enemies.?May lead to development of infrastructure.?Minimize pollution.?Utilization of resource.(4x1 = 4mks)Page | 48565/1 &565/2 business studies 23.Nyangores TradersBalance SheetAs at 31st December 2000Premises50,000√Capital28,000√√Cash20,000√Prepaid rent2,000√Creditors35,000√Accrued salary4,000√Bank overdraft5,000√72,00072,000(8 x ? = 4mks)24.Current trends in production promotion.?Use of electronic bill boards.?HIV / AIDS awareness?Catering for the right of the needy.?Digital advertising screens.?Use of websites.?Road shows and convoys.?Catering for the right of the youth.?Gender sensitivity awareness.(4 x 1 = 4mks)25.Dissolution of a partnership.?If the business is rendered illegal.?By a court order.?When a partner dies.?When the losses are persistent.?If it was temporary.?Incase the partner decides to close.(4x1 = 4mks)Page | 49565/1 &565/2 business studies NANDI EAST, NANDI SOUTH & TINDERETSUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES 565/2 PAPER 2 1. (a) Five types of the documents that makes Books of Accounts. (i) Invoice - This is a document sent by the seller to the buyer demanding payment for goods supplied. It shows details of goods sold / bough on credit / source document for sale. (ii) Debit Note - A document sent by the seller to the buyer to correct undercharge. Used when the invoice shows a lesser amount than what is actually owed / additional invoice / when empty containers have not been returned (and hence to be charged). (iii) Credit Note - A document sent by the seller to the buyer to correct an overcharge / It is used when goods are returned to the seller / because they are defective / not the ones ordered / they were not required. (iv) Receipt - This is a document issued by the seller to the buyer when payment is made for goods / services in cash. (v) Consignment note - to support hire carriage services / shows transport charges. (vi) Bank deposit slips - Evidence of paying money into bank / source document for cash receipt. (vii) Bank statement - a summary / details of transaction between traders and bank. (viii) Statement of account - This is a document sent by the seller to the buyer showing details of transactions for one month with a running balance shown with each entry / closing / opening balance. (ix) Payment voucher - A document used to validate payment for services / goods rendered. It is used by a cashier and signed by the service provider / payee / recipient / documenting goods for petty cash book. (x) Remittance evidence note - This is a document that accompanies a cheque issued for settlement of a debt. It provides information on the payment. Naming (underlined) 1 mark, otherwise 2 marks for correct naming and explanation. (b) Advantages of M-pesa ? Saves time - Mpesa shops are available everywhere. ? Withdrawing any time - as long as the shops are opened. ? Conveniently placed - in all towns. ? Access to account balances / extra information - through phone. ? Can pay utility bills - e.g. electricity bills. ? Can deposit any time - as long as the shops are opened. ? M-pesa can be used to buy goods and services - in a shop / petrol station. ? Cheaper to operate - less charges. ? Safer to use - has private pin / password. ? Withdrawals can be done for oneself behalf - with an ID. ? Can deposit money in the bank account - through M-banking. ? Can withdraw money from the bank - through M-banking. Naming (underlined) 1 mark, otherwise 2 marks for correct naming and explanation. (Maximum 5x2 = 10 marks)2.(a) Three-column Cash Booke 2016 ailsioc.hkeailsioc.hkAllowe2016AllowdedJan 1. b/d ?5, 000? 15,000?Jan 5chases ?4,000?12 . Kibet?250?8 urances?150?14h ?1,000?14k?1,000?16hana?2,000?20h?7,500?20 nk ?7,500?23ges?900?26?1007,500?28ctricity?3,000?30ter?1,500?31 rir?225?2,025?31. c/d?5,075?13,100?100?12,70025,500225?12,75025,5001. b/d5,07513,100NB: If no / wrong dates subtract 1 mark from each side. (b) Means of payment provided by the Post Office. (i) Postal Order: It is a means of payment in fixed denominations brought from the Post Office to remit money to a payee. It can be cashed at any Post Office. (ii) Money Order: A means through the Post Office issued to the remitter by filling a form and paying the amount to be remitted. It is cashed at a specific Post Office named on it. (iii) Postage Stamps: are used to make payments of little amounts of money. Page | 50565/1 &565/2 business studies (iv) Postapay: means of instant transfer of money via internet offered by the Post Office. Payee can only receive payment through the post offices or Postapay agents. 3. (a) Differences between Perfect Competition and Monopolistic competition.fect Competition(i) Goods are homogenous(ii) Perfect knowledge of market conditions.(iii) Demand curve for individual firms isperfectly elastic.(iv) Firms are price takers.(v) All firms earn normal profits in the longrun.nopolistic competition(i) Goods are differentiated.(ii) No perfect knowledge of market competition /conditions.(iii) Demand curve for individual firms is highly elastic.(iv) Firms can influence price to some extent.(v) Possible for firms to earn supernormal profits in thelong run depending on the degree of productdifferentiation. (b) Factors to consider when buying office equipment. ? Cost of buying / maintaining the equipment: If cost is high consider the most affordable. ? Quality of equipment - Consider the long lasting / best quality appropriate for its use. ? Durability of the equipment - should choose the most durable. ? Manpower / Personnel to operate the equipment - choose equipment that the personnel can operate / look for / train personnel. ? Availability of spare parts - choose an equipment whose spare parts are readily available /affordable. ? Space / room for the equipment - choose an equipment that can fit the available rooms / avail the rooms. ? Comfort / security of workers - choose equipment that are not injurious to workers health / comfort. ? Effect on morale of workers - choose equipment in accordance with government policy. Naming - 1 mark, otherwise 2mks for naming and expansion.(max. 2 x 5 = 10 marks)4.(a) Ways through which inflation may be controlled other than the use of monetary policy. ? Taxes should be reduced to reduce disposable income hence lowering consumption expenditure. ? Restriction of imports / impose heavy tariffs to make people switch their spending on imports to locally produced goods in order to curb imported inflation. ? Price legislation / price control as a temporary measure of keeping prices stable. ? Use of wage policies / checking on trade unions to avoid increase in wages. ? Increase general production of goods and services to avoid shortages. ? Reduce public expenditure such as construction of roads / extensive electrification, free public goods and services to reduce demand for goods and services. ? Appropriate regulation of printing national currency. Mention 1 mark otherwise 2 marks.(5 x 2 = 10 marks)(b) Circumstances under which a person would prefer a taxi over a matatu. ? When using a route which is not used by matatus since taxi can go any route. ? When transporting valuable goods which require special handling. ? When the traveler wants to save time as taxis fills up quickly. ? When there is need for privacy as matatus are used by the general public. ? When a comfortable means is required since the passenger decides on the number of passengers to be carried. ? When there is an emergency e.g. sickness, at night. ? Where one wants to create a good impression since taxi is more prestigious. ? Where a traveler wants to use a taxi for a long period as taxi can be hired for a long period of time. Mention 1 mark otherwise 2 marks.(5 x 2 = 10 marks)5. (a) Causes of increase in supply of tomatoes. ? Reduction in cost of production / reduction in price of input: makes production of tomatoes affordable to most suppliers. ? Improved technology: makes supply more and of higher quality. ? Availability of government incentives i.e. increased subsidies / reduction in taxes: reduces the cost of production thereby increasing supply. ? Favourable natural factors: such as good weather and absence of pests and diseases increases supply. ? Entry of new firms: increases quantity supplied. ? Availability of factors of production: lead to increase in production of tomatoes. ? Anticipation of increase in demand: leading to an increase in production. Mention 1 mark otherwise 2 marks.(5 x 2 = 10 marks)(b) Uses of a computer in an office.? Inventory control - it can accurately keep a record of stock at hand, receipts and issue.? It can be used to process accounting transitions and prepare ledger accounts and payrolls.Page | 51565/1 &565/2 business studies ?Data storage - it can store information relation to the Business.?Used in communication services such as internet, intranet and website.?Used for entertainment such as music, video and games.?Product promotion / marketing production through internet, website.?To carry out market research using internet.Mention 1 mark otherwise 2 marks.(5 x 2 = 10 marks)6.(a)Procedure for claiming compensation.?Notifying the insurer - immediately the risk insured occurs, the insured should notify the insurer.?Filling a claim form - Insured fills a claim form, giving details relating to the occurrence of the risk.?Investigation of the claim - The insurer investigate the claim to ascertain whether the cause of loss has any direct connectionwith the risk covered.?Preparation of the assessment report - assessors prepare a report concerning the extent of loss suffered.?Payment of claim - on receiving assessors report, insurance company makes arrangement to pay the insured, which concludesthe contract between the insurer and the insured.(b) Nandi Hills Enterprise Trading, Profit & Loss A/c For the year ended 31/12/2004 Opening Stock47,000√Sales420,000√Add Purchases300,000√Less Returns inwards4,000√Add Carriage inwards28,000√416,000328,000√Less Returns outwards7,000√321,000321,000√Cost of goods available for sale368,000Less: Closing Stock55,000√Cost of goods sold313,000√Gross profit103,000√416,000416,000Carriage outwards10,000√Gross profit103,000√Discount allowed4,000√Discount received14,000√Depreciation on motor vehicle15,000√Net Profit8,800√117,000117,000Net Profit b/d8,800(18 x ? =6mks Nandi Hills Enterprise Balance Sheet√ As at 31/12/2004 Fixed Assets Premises100,000√Capital250,000√Furniture25,000√+ Net profit88,000√Motor vehicle145,000- Drawings( 33,000)- Depreciation15,000130,000√√Net capital305,000√Current AssetsDebtors50,000√Creditors55,000√Stock55,000√360,000360,000(12 x ? = 4 marks) Page | 52565/1 &565/2 business studies KANGEMA / MATHIOYA SUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Below are some factors that influence the operation of a business. By use of a tick indicate in the appropriate column theBusiness environment associated with each of the factors.4mksFactorMicroMacroa) Political factors b) Economic recession c) Business structures b) Human resources 2.Give four basic factors of production with their respective rewards.4mksFactors of productionRewardi) ii) iii) iv) 3.Outline four advantages of warehousing to a consumer4mks4.Outline four sources of oligopoly power.4mks5.In the table below classify the accounts as personal, nominal, real or private.4mksAccountAccount typeMachinery Kamau( creditor) Electricity bill Rent income 6. On 1st of October 2009 Sambu bought goods on credit quoted at Kshs.240,000. Terms of sales were 20% trade discount and 10% cash discount if payment was made on 29TH October 2009. Calculate the amount paid if payment was made on 26th October 2009.4mks7.For each of the following sources document name the relevant day book.4mksSource DocumentDaybookInvoice issued Credit note received Cheque received Invoice received 8.Diana, Peter and James have been running a business as a partner without a written agreement. Advice them on the followingmatters as per the partnership Act.4mksa) Profit and loss sharing b) Salary to partners c) Loans given to the business by the partner d) Admission of a new partner 9. State whether each of the following transactions increased, decreased or had no effects on the balance sheet totals. 4mks TransactionsEffect on balance sheet totalsa) Bought office equipment in cash b) Paid a creditor by cheque c) Used business cash to pay dowry d) Converted private room for business 10. State four emerging trends in Matatu PSV transport sector in Kenya.4mks11. State four circumstances under which photocopying may be used to reproduce documents in a school.4mks12. The following is a cash book that was extracted from Manyatta traders for the month of February 2009.Page | 53565/1 &565/2 business studies Manyatta Traders Cash book for the month of February 2009 DateParticularsDisc.CashBankDateParticularsDisc.recCashBankAll20042004Feb 1Bal b/d2,0005,000Feb 15Bank C115,00012Wanjala1,00019,00026Njeru85017,00015Cash C115,00027Bal c/d6,0003,0001,00021,00020,00085021,00020,00028Bal b/d6,0003,000Describe the transactions which took place on the dates given below.4mksi)February 1ii)February 12iii) February 15February 2613. State four specific objectives of advertising as a tool of sales promotion.4mks14. Apart from government borrowing, outline four other sources of government revenue.4mks15. Give four reasons that make insurance companies decline to insure acts of nature.4mks16. Using the accounting equation, fill in the missing figures in the following table.4mksLiabilities(shs)Assets (shs)Capital(shs)a)45,82028,700b)43,737211,000c)348,170170,340d)148,390108,93017. Identify four barriers to international trade that are imposed by governments.4mks18. The diagram below shows a shift in supply curve from S0S0 to S1S14mksS1PRICES0S1S00Quantity Supplied State four factors that may account for the above shift.4mks19. Give four basic characteristics of a business idea.4mks20. The table below shows the age distribution of a country.Page | 54565/1 &565/2 business studies AgePercentage %0-154516-553156 and above24State four negative economic implications of this age distribution to a county.4mks21. Identify four factors that may lead to an increase in the level of national income of a country.4mks22. Mention four adverse effects of inflation.4mks23. Outline four functions of Kenya Bureau of standards.4mks24. Identity four circumstances under which sign language may be used to communicate.4mks25. The central bank is a banker to the government. Outline four banking services it provides to the Kenya government.4mks Page | 55565/1 &565/2 business studies KANGEMA / MATHIOYA SUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.a) Explain five principles that guide the operations of an insurance company.10mksb) Explain five features that differentiate a private limited company from a public limited company.10mks2.a) Outline five differences between monopolistic competition and monopoly types of markets.10mksb) The following balances were extracted from the books of mathioya- kangema traders on 1st Jan 2015Capital920,000Building300,000Machinery250,000Debtors100,000Creditors200,000Bank280,000Stock190,000The following transactions took place during the year ended 31st Dec 2015. i) Sold goods for Shs. 160,000 receiving sh. 100,000 through a cheque and balance was to be settled the following year. ii) Sold machinery worth sh.150,000 for sh. 100,000 and payment was made through the bank iii) Sh. 50,000 was withdrawn from the bank for office use. Required: Prepare MathioyaKangema balance sheet as at 31st Dec 2015 showing the ledger balances in the appropriate classes. 10mks 3.a) Explain five advantages of division of labour and specialization in the production process10mksb) Outline five characteristics of an economic union form of integration.10mks4.a) Explain five limitations of using per capita income in measuring people standard of living.10mksb) Explain five problems that a country could face in development planning.10mks5.a) The table below shows the market demand for commodity B from year 2000 to year 2005 in a given town. Highlight fivefactors that may have contributed to the trend in demand.10mksYEARQuantity demanded( kgs)2000100,000200198,000200290,000200385,000200460,000200555,000b) The Kenyan government has been imposing taxes on various commodities. Give five reasons for this taxation. 10mks6.a) Wholesalers can be classified based on their method of operation. Describe four types of whole salers under thisclassification.8mksb) The trial balances shown below was extracted from the ledger accounts of Maendeleo Traders as at 31st Dec 2015.Page | 56565/1 &565/2 business studies MaendeleoTreaders Trial Balance As at 31st Dec 2015 DetailsDrCrShsShsSales and purchases301,000680,000Returns35,00024,000Discounts3,5004,000Insurance8,000Office expenses85,000Carriage inwards55,000Carriage outwards8,500Rent Received50,000Salaries and180,000Stock wages(1st Jan 2015)45,000Creditors60,000Debtors50,000Premises400,000Capital493,000Bank loan360,000Land500,0001,671,0001,671,000Stock on 31st Dec. 2015 was sh. 30,000Required:Prepare Maendeleo Traders trading, Profit and Loss account for the period ended 31st Dec. 2015.12mksPage | 57565/1 &565/2 business studies KANGEMA / MATHIOYA SUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES PAPER 1 Marking scheme 1.Below are some factors that influence the operation of a business. By use of a tick (?) indicate in the appropriate column thebusiness environment associated with each of the factors.4mksFactorMicroMacroa) Political factors?b) Economic recession?c) Business structures?b) Human resources?2.Give four basic factors of production with their respective rewards.4mksFactors of productionRewardi) LandRent /Royaltyii) LabourSalaries and wagesiii)Entrepreneurshipprofitiv)Capitalinterest3.Outline four advantages of warehousing to a consumer?Steady flow of goods to him.?Protects goods from physical damage and adverse conditions of goods.?stable prices as a result of steady flow of goods?can insect goods before buying?get quality goods /helps packet and grade1X4=4mks4.Outline four sources of oligopoly power.4mks?When huge capital investment is required / barriers to entry?A few firms hold patent that relate to the technique of production of the product.?A few controlling a source of raw materials used in the production of the product?some firms may merge with others as takeover?A few firms may enjoy large scale economies and offer lower prices for their products thus driving out competitors.1x4=4mks5.In the table below classify the accounts as personal, nominal, real or private.4mksAccountAccount typeMachineryRealKamau( creditor)PersonalElectricity billNominalRent incomeNominal4x1=4mks6.On 1st of October 2009 Sambu bought goods on credit quoted at Kshs.240,000. Terms of sales were 20% trade discount and10% cash discount if payment was made on 29TH October 2009. Calculate the amount paid if payment was made on 26thOctober 2009.4mksTrade Discount=Price to be paid= 240,000-48,000 =192,000Cash discount=Amount paid= 192,000 -16,200= ksh. 72,0007.For each of the following sources document name the relevant day book.4mksSource DocumentDaybookInvoice issuedSales JournalCredit note receivedPurchase return journalCheque receivedCash receipt journalInvoice receivedPurchase journal8.Diana, Peter and James have been running a business as a partner without a written agreement. Advice them on the followingmatters as per the partnership Act.4mksa) Profit and loss sharingshare profit and loss equallyb) Salary to partnersno salary to partnersc) Loans given to the business by the partner5% interest on loans advance by a partnerd) Admission of a new partnerAll partners must agree before a new partner isadmitted. Page | 58565/1 &565/2 business studies 9. State whether each of the following transactions increased, decreased or had no effects on the balance sheet totals. 4mksTransactionsEffect on balance sheet totalsa) Bought office equipment in cashNo effectb) Paid a creditor by chequeDecreasedc) Used business cash to pay dowryDecreasedd) Converted private room for businessIncreased10. State four emerging trends in Matatu PSV transport sector in Kenya.4mks? Introduction of uniform for drivers and conductors ? Yellow line for all PSV matatus ? availability of certificate of good conduct for crews ? installation of speed governors ? intensified use of safety belts ? intensified use of alcohol blow 11. State four circumstances under which photocopying may be used to reproduce documents in a school.4mks? when limited number copies are required.? When exact photographic reproduction is necessary? when copies are urgently required because it is faster? where there is no need to re-type /write the original copy? where there is no need for special training for operators.4x1=4mks12. i) February 1Balance brought forward shs. 2,000 cash in hand and shs. 5,000 cash at Bankii) February 12Received 19,000 shillings cash from Wanjala having deducted 1,000shillings cash discountiii) February 15deposit shs. 15,000 from the cash till to the business bank accountiv) February 26paid Njeru 17,000 shillings by cheque after deducting 850 shillings discount13. State four specific objectives of advertising as a tool of sales promotion.4mks? to inform the prospective buyers about the availability of products ? persuade customers to buy ? to create link between buyers and manufacturers ? to retain the existing market ? to create demand /create new markets /create sales ? to supplement other methods of sales promotion such as personal selling4x1=4mks14. Apart from government borrowing, outline four other sources of government revenue.4mks? taxes ? fees eg government utilities like gate charges ? Fines and penalties ? grants ? interest and divided on loans and investments ? Appropriate in aids.4x1=4mks15. Give four reasons that make insurance companies decline to insure acts of nature.4mks? the loss may affect many people at a go ? the value of the loss may not easily be determined ? the loss is unpredictable ? there might be very few people willing to be involved to form a pool ? it may not be easy to determine premiums to be paid ? the possibility of the risk occurring is certain.4x1=4mks16. Using the accounting equation, fill in the missing figures in the following table.4mksLiabilities(shs)Assets (shs)Capital(shs)a)45,82074,52028,700b)43,737211,000167,263c)348,170518,510170,340d)39,469148,390108,9304x1=4mk 17. Identify four ? quotas ? import bans ? import export custom ties ? import export licensing(complicated procedures0 ? foreign exchange control ? moral persuasion eg Buy Kenya build Kenya4x1=4mksPage | 59565/1 &565/2 business studies 18. ? increase in cost of production ? shortage of inputs ? exit of firms from the industry ? price of related products is low ? use of poor technology ? future expectations of decrease in price ? unfavouarable natural factors /weather ? price of the product has reduced4x1=4mks19. Give four basic characteristics of a business idea.4mks? what products or services to sell ? the market to sell the goods and services ? how the business will run ? objectives of the business ? the pricing of the products4x1=4mks20. More expenditure on premium of basic needs ? high dependence ratio ? low saving and investment in the economy ? dependence on foreign aid to increase investment ? increase in imports ? balance of payment problems4x1=4mks21. Identify four factors that may lead to an increase in the level of national income of a country.4mks ? availability of human resources ? availability of natural resources ? high levels of technology in production ? good governance /political stability ? increased foreign investment ? good entrepreneurial culture.4x1=4mks22. Mention four adverse effects of inflation.4mks? reduction in profit ? wastage of time shopping around for reasonable prices ? conflicts between employers and employees ? decline in standards of living ? loss of creditors ? loss of confidence in the monetary system ? discourages savings 23. Outline four functions of Kenya Bureau of standards.4mks? Carrying out testing of measuring apparatus to relate accuracy level of established standards ? putting stamp of approval to show the established standards have been made ? making regular inspection to ensure that the standards are adhered to ? prosecute those who violate the set standards.4x1=4mks24. Identity four circumstances under which sign language may be used to communicate. 4mks ? language used must be understood ? must be free from noise ? use of appropriate simple and clear language ? Must be free from distortion ? medium used must be appropriate ? information over load should be avoided4x1=4mks25. The central bank is a banker to the government. Outline four banking services it provides to the Kenya government. ? banking services the central bank it provides to the Kenya government ? giving financial advice to the government ? receiving payments on behalf of the government from foreign donors/income tax ? giving credit /loan to the government ? making various payments on behalf of the government ? collecting credits /loans from other sources on government behalf4x1=4mksPage | 60565/1 &565/2 business studies KANGEMA / MATHIOYA SUB-COUNTIES JOINT EVALUATION 2016 BUSINESS STUDIES PAPER 2 Marking scheme 1.a) Explain five principles that guide the operations of an insurance company.10mks?Insurable interest- insured can only insure /be compensated for a property which causes him financial loss?Utmost good faith/Uberrimafedei- insured /insurer should disclose relevant materials facts honestly (relating to the contract)?Proximate cause - the cause of the loss should have a fairly close /direct connection /relation with the actual /real risk insured?indemnity-compensation of risk should restore the insured to his /her previous financial position before the occurrence of riskinsured?Subrogation -once insured in fully compensated the right /claim in the destroyed property belongs to the insurer?Contribution- in case of double insurance the concerned insurers share proportionately towards the loss.5x2=10mksb)Explain five features that differentiate a private limited company from a public limited company.10mksPRIVATE LTD CO.PUBLIC LTD CO.?formed by a min. of two to 50 shareholders-formed by min. of 7 and no upper limit?Restricts the transfer of shares- there is free transfer of shares?does not advertise its shares to public-invites public to subscribe for its shares?it starts operating after receiving cert.-has to wait for license of trading to start bussinessof incorporation ?managed by at least one director who-managed by at least 2 directors and max.notstated by law?may be principal owner or elected among shareholders5x2=10mks2.a) Outline five differences between monopolistic competition and monopoly types of markets.10mksmonopolymonopolistic competition? markets made up, of one sujpplier /seller? Firms may earn supernormal profits in the longrun? products are heterogeneous /not close substitutes? single firms may have control over factors of prod.? firm is usually large in size? entry into the market is restricted? price discrimination is possibleb)-market made up of many suppliers- firms earn normal profits in the long run -products are homogenous /close substitutes -No single firm has control over the factors of -involved firms usually small in size - entry to the market is free-price discrimination not possible esp. in long run5x2=10mks Mathioya -kangema tradersBalance sheetAs at 31st Dec 2015Fixed assetsBuilding300,000capital870,000Machinery100,000400,000short term liabilitiesCurrent assetscreditors200,000Stock30,000Debtors160,000Bank430,000Cash50,000670,0001,070,0001,070,0003.a) Explain five advantages of division of labour and specialization in the production process10mks?individual skills are developed in a particular area?output per worker is greatly increased?production of standardized goods /uniformity?maximize use of machinery in production which makes production fast and efficient?development of new talents?saves time- since there is less time spent money from one activity to anotherPage | 61565/1 &565/2 business studies ?less use of mental and physical efforts as workers become used to routine job they expand less mental and physical efforts?production of high quality goods?reduces training time?facilitates planning and management.5x2=10mksb) Outline five characteristics of an economic union form of integration.10mks?free trade in all goods and services?freedom of migration?single currency in use?joint economic institution eg central bank?development of common infrastructure?free flow of capital?common environmental regulations?No national differences in taxation5x2=10mks4.a) Explain five limitations of using per capita income in measuring people standard of living.10mks?At the problem of handling illegal activities that generate income to the receipt?lack of accurate data of population?lack of accurate data of national population?time spent on production versus recreation.?does not take intro consideration the effects of production activities on the environment e.g environment degradation andspollution?economic growth does not necessarily measures development?Does not show the distribution of grass national output among the citizen of a country.b) Explain five problems that a country could face in development planning.10mks?reliance on donor funding which if it is not released then it becomes difficult for projects to take off?inadequate domestic resources such as killed personal finance capital?failure by local to support the implementation especially if they were not involved during plan formulation?some plans are overambitious and are meant to please donors and are thus difficult to implement?Lack of cooperation among the executing parties makers it hard to implement development plans?lack of political will to implement plans makes the plans papers just on the shelves?existence of large substitute sector makes planning unrealistic?transfer of inappropriate development plans may assume that development plans that have worked in more developedcountries are likely to work in less developed countries but may end up failing.5x2=10mks5.a)?increase in price of the commodity making it unaffordable?increase in price of complimentary goods?decrease in consumer income reducing their purchasing power?negative changes in taste /fashion/ preferences?decrease in population reducing number of consumers?unfavourable government policy discouraging use of the commodity?expectations of future decrease in price hence postponing purchases.b)The Kenyan government has been imposing taxes on various commodities. Give five reasons for this taxation.10mks?increase government revenue through taxation?discourages consumption of harmful products-increase in tax increase their price making the unaffordable?discourages imports hence protects local infant industries /social values?reduce inequality in income distribution through progressive taxation?control inflation -income tax reduce disposable income5x2=10mks6.a) Wholesalers can be classified based on their method of operation. Describe four types of whole salers under thisclassification.8mks?Cash and carry wholesalers-sell goods to retail on self services basis and do not provide transport?mobile /truck wholesaler- use vehicles to sell goods from one place to another /combine buying , selling and delivery in oneoperation.?rack jobbers- specialized in sealing particular products to other specialized wholesalers?Drop shippers -do not have stores of their own.4x2=8mksPage | 62565/1 &565/2 business studies b) MazendeleroTrders Trading profit and loss account DrFor the period ended 31st Dec 2015CrOpening stock45,000sales680,000Add: purchases301,000less: R inwards35,000Add:C. inwards55,000net sales645,000Less: R. outwards24,000332,000Cost of goods available for sale377,000Less: closing stock30,000Cost of sales347,000Gross profit c/d298,000645,000645,000Discount allowed3,500Insurance8,000Revenue298,000Office expenses85,000discount received4,000Carriage outwartds8,500Rent received50,000Salaries and wages180,000Net profit67,000352,00352,000Page | 63565/1 &565/2 business studies KERICHO SUB-COUNTY JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Outline four benefits that Kipngetich a student would get from studying Business studies.(4 marks)2.State four circumstances when cash may be used as a means of payment.(4 marks)3.State three steps involved in the satisfaction of human wants.(3 marks)4.State four equipments that can be used in a school to reproduce exams.(4 marks)5.Highlight four major challenges that may face a developing country in its quest to adopt containerization as a method oftransport.(4 marks)6.Describe the following types of warehouse.i)Bonded warehouseii) Public warehouseiii) Consumers warehouseiv) Private warehouse7.Using the balance sheet equation fill in the missing figures into the following tables.Capital (Shs)Liabilities (shs)Assets (Sh)a)21,92030,341b)2,19219,840c)3,7731,591d)73,000100,9208.Kenya will soon start exploiting oil in Turkana. State four challenges that is likely to be faced in exploiting oil in Kenya.(4 marks)9.State three features of an insurable interest.(3 marks)10.Differentiate between 'breaking bulk' and 'accumulating bulk'(4 marks)11.Highlight four benefits of globalization to a business enterprise.(4 marks)12.Give two reasons why a three column cash book is used as a journal and a ledger.(4 marks)13. Nyeri county has lately been experiencing a decline in the birth rate, State four reasons for this decline.(4 marks)14. The table below represents the supply of milk for eight weeks in the month of January and February 2009.Week12345678Litres195215290340375430485505Outline four causes of the trend in the table.(4 marks)15. State four services offered by a commercial bank to its consumers.(4 marks)16. Give four examples of Direct taxes.(4 marks)17. Outline four ways in which firms contribute to National income of a country.(4 marks)18. Outline for Barriers to International trade.(4 marks)19. Give four reasons for observing ethical practices in product promotion.(4 marks)20. Outline four benefits of using whatsapp in communication.(4 marks)21. Highlight four transactions that can be recorded through the General journal (Journal proper(4 marks)22. If the price of 1kg of flour was shs 45 per kilogram in 2003 andin 2004 the price rose to shs 50. Calculate the consumerprice index (CPI).(4 marks)23. State four benefits that subsistence produced may get by participating in exchange of goods.(4 marks)24. The balances given below were extracted from the ledger accounts of penny profit traders as at 30th June, 2005. Prepare profitand loss account and determine the Net profit or loss made by the business for the period ended 30th June 2005.ShsInsurance15,000Rent received50,000Discount received25,000Discount allowed10,000Salaries and wages30,000Carriage outwards20,00025. Highlight four importance of entrepreneurship.(4 marks)Page | 64565/1 &565/2 business studies KERICHO SUB-COUNTY JOINT EVALUATION 2016 BUSINESS STUDIES 565/2 PAPER 2 Answer any FIVE questions. 1.a) Explain FIVE ways in which external environment can negatively affect a business.(10 marks)b) Describe FIVE features of a less developed country.(10 marks)2.a) The following information relates to the business of Kipisigs Traders for the week ended 29th Feb 2016.Feb 24thStarted business with shs 24,000 in thebank.Feb 25 thBought goods worth shs 18,000 by cheque.Feb 26 thSold goods for cash shs 18,900Feb 28 thCash sales worth Kshs 5,625Feb 29 thPaid commission Kshs 900 in cash.RequiredPrepared ledger accounts and balance them off.(10 marks)b)Explain five benefits that could accrue to a customer who buys goods from a department store.(10 marks);3.a)Explain five ways in which inflation can be controlled by the government.(10 mks)b)Explain five disadvantages of persuasive advertising to consumers.(10 mks)4.a)Describe five circumstances when a country may be forced to control her imports.(10mks)b)Explain five roles played by licensing as a government regulatory tool.(10 mks)5a)The following Trial balance was prepared from the books of Kaitui Traders as at 31 st Dec. 2015.Kaitui TradersTrial balanceDrCrLand and buildings500,000Capital940,000Plant and machinery200,000Motor vehicles300,00010 yr bank loan200,0002 year LCDC loan100,000Stock100,000Debtors60,000Creditors60,000Accrued expenses20,000Cash at bank100,000Cash at hand20,000Drawings40,0001,320,0001,320,000Prepare A balance sheet as at 31.12.2015 i) Determine ? Working capital. ? Capital employed ? Borrowed capital(10 marks)ii) Explain five roles played by intermediary in the chain of distribution.6a)Explain five services that the central bank of Kenya offers to commercial banks.(10 marks)b)Explain five measures being used by the government to control high rate of unemployment in Kenya.(10 marks)Page | 65565/1 &565/2 business studies KERICHO SUB-COUNTY JOINT EVALUATION 2016 BUSINESS STUDIES PAPER 1 Marking scheme 1 . ?Equips individuals with skill and knowledge to manage business.?Prepares him for future career.?Enables one to relates issues affecting business/ problems to its environment.?Enables one to relate issues affecting business activities taking place globally.?Enables one to identity business opportunities to venture.?Prepares one for further studies.?Enables him to think critically and make sound judgement.?Enables an individual to appreciate the role of government in business.?Makes an individual be disciplined and have positive attitude towards work.?Enables an individual to appreciate and take care of environment.?Appreciate the role of technology in the county?Enables him to evaluate business performance.?Enables him to learn other subjects.?Enhance cooperation for members of a society.2.?Where the amount involved is small?Where the payee does not accept other forms of payments?When it‘s the only means available?Where the payee requires cash urgently?Where there is need to avoid expenses associated with other means of payment.?When the credit of the buyer is doubtful.3.?Creation of goods?Distribution of goods?Consumption of goods4.i)Duplicatorii)Printeriii)Photocopier5.?Need for specialized machines which are expensive.?Need for specialisation personnel to handle loading and off-loading machines.?Volume of business may not be big enough to warrant such as investment.?Containers are expensive to construct /buy?Requires redesigning of port and port facilities to accommodate containers.?Lack of modem technology needed in containerization.?General resistance from stake holders.6.?Bonded warehouse - mainly operated by government to hold goods pending customs and excise clearance.?Public warehouse - owned as a business for letting out space to businesses that required temporary storage for their goods.?Consumer warehouse - owned by large scale consumers who buy goods in large scale / bulk.?Private warehouse - owned by businesses to store their own goods.7.i)8421ii)17,648iii)5,364iv)27,9208. ? Unfavourable weather conditions / high temperature ? Displacement of people. ? Poor infrastructure. ? Inadequate technology ? Lack of specialists / professionals. ? Insecurity. Page | 66565/1 &565/2 business studies 9. ? Presence of property rights are interests. ? Potential insurance risk must be present ? Property must have monetary value ? Insurable risk must be legal ? There must be possibility of suffering a financial loss in case of a risk happening. ? It applies to both life and property. 10. a) Breaking bulk - reduces sizes of commodities that are large to small. b) Accumulating bulk - assembling smaller quantities to form large quantities. 11. ? Facilitates application of better technology for improved products. ? Encourages collaboration among businesses from different countries. ? Makes it possible to share new production techniques. ? Facilitates sharing of research binding. ? Enables business enterprises to take advantages of resources found in other parts of the world. ? Wider markets. ? Leads to transfer of capital from rich states to poor countries. 12. ? It is a subsidiary book because it contains a list of discount received and discounts allowed. ? It is a ledger because it contains that cash and bank accounts. 13. ? Delayed marriages ? Craving for higher standards of living ? Desire t give children better lives than parents ? Where a small family is considered fashionable. ? Due to decline in mortality rates. 14. ?increase in price of milk?favourable weather?decrease in cost of animal feeds?use of appropriate technology?favoruable government policies?Political stability / security?Increase in factors of production15.?Acceptance of deposits?Safeguarding valuable items.?Advancing loans, overdrafts.?Offering management services.?Advisory services.?Foreign exchange services.?Act as intermediary between saves and borrowers.?Act as referee?Remittance services,?Trustee services.?k) Act as guarantors?Acts as agents e.g. receiving interest on behalf of customers.16.?Income tax?Corporation tax?Capital gain tax?Estate duty?Graduated tax17.?Employment?Production of goods and services.?Payment / income for factors of productionPage | 67565/1 &565/2 business studies ?Source of revenue to the government e.g. taxes.?Improve infrastructure in the country.?Attracts auxiliary services to the community.?Corporate social responsibility.18.?Physical barriers?Language barriers.?Inadequate means of transport and communication,?Restrictive practices by government.?Socio-cultural barriers.?Political differences?Complexity of currency convertibility?Poor infrastructure .e.g. road etc.19.?To ensure fair competition among businesses.?Ensures consumers interest is protected?Ensures that the business comply with the law.?It protects the environment from degradation?Improves the image of the business.?Maintain morality in the society20.?Relatively cheap to send / use?Can be used to send both written and oral communication?Can be used to send complex documents.?Can be referral later./ future reference.21.?Opening journal entries?Purchasing of fixed asset on credit?Sale of fixed assets on credit?Correction of errors.?Closing entries.?Changes in the value of assets, liability and capital.?Year end adjustments.22. x 100 x 111% =111-100 =11% 23. ?Earns an income?Disposing of surplus?Improve hiss skills through specialization.?Quality products will be produced.?More goods will be produced.?Improve his living standard through income carried.24 Penny Profit Traders Profit and loss a/c For the year ending 30th June 2005 Insurance expenses 15,000Gross profit b/d75,000Discount allowed 10,000Rent Received50,000Salaries and wages 30,000Discount received25,000Carriage outwards 20,000Net profit c/d 75,000150,000150,000Page | 68565/1 &565/2 business studies 25. ? Creation of employment. ? Formation of capital ? Reducing rural-urban migration ? Raising standards of living. ? Saving on imports. ? Improving infrastructure. ? Reducing foreign dominance of the economy ? Making use of local resources. ? Promotion of technology. ? Promotion of entrepreneurial culture. Page | 69565/1 &565/2 business studies KERICHO SUB-COUNTY JOINT EVALUATION 2016 BUSINESS STUDIES PAPER 2 Marking scheme 1.a)?Stiff competition - affects the market of the product by reducing the demand.?Unfavourable political environment e.g. lack of government support / restrictive practices etc?Negative social-cultural factors beliefs / values / attitudes i lifestyles that affect the business.?Unfavourable legal factors / laws that do not encourage business operations /activities / expansion.?Unfavourable economic conditions e.g. inflation, high interest rates, unstable currency which affects business activities.?Inadequate supply of raw materials / high cost of raw materials leading to increase cost of production.?Inadequate labour supply / skilled labour which may lead to ineificiency in business performance.?Technological factors which may be expensive to acquire / may lead to production of poor quality goods.?Environmental / physical factors / unfavourable climatic conditions / rugged landscape may hinder proper transportation /delay distribution of goods /inflate transport costs.any 5 fully explained points * 2 = 10 marksb)?Low capital accumulation - due to low income, a less developed country experience low savings which result in low capitalformation.?Unequal distribution of income - only a few individual own most of the resources while majority share very little of thenational resources, thus they live below the poverty line.?High level of unemployment - the small modern sector relies on imported and inappropriate technology. This leaves amajority of the able and willing people unemployed.?High population growth rate - lack of education and cultural belief make most communities to emphasise on large families.This results into a high population growth rate.?Over dependence on agricultural sector - the agricultural sector is taken as a traditional sector which is familiar and adoptable.However, it has a low and uncertain yield, which makes the country's national output low and unpredictable.?Relatively low standards of living - due to low income and productivity, the communities have low standards of living2.a)DrCapital a/cCrBai c/d24.000Bank24,00024,00024,000DrBank a/cCrCapital24,000Purchases18,000Bal c/d6,00024,00024,000DrCash a/cCrSales18,900Rent/150Sales5,625Commission^900Bal c/d23,47524,52524,525DrSales a/cCrBal c/d24,525Cash18,900Cash5,62524,52524,525DrPurchases a/cCrBank18,000Bal c/d18,00018,00018,000Page | 70565/1 &565/2 business studies DrCommission a/cCrCash900Bai c/d900900900DrCommission a/cCrBank150Bal c/d15015015020 ticks x ? = 10 marksb)?Access to specialised goods/ service from the relevant / shops / particular type of goods. Personalised / attention to customers.?Access to auxiliary / after sales services - which may easily be available within the shops.?One can save time by shopping under one roof.?Prices of goods are relatively low = making consumers save/ buy more .?One can access a variety of goods under one roof.?Use of credit i debit cards - relieving customer the need of carrying cash.?Access new products which a customer may?not have been aware of.any 5 fully explained point x2 - 1 0 marks3.a)?Institute price control on specific industries as a temporary way of keeping prices stable.?Control consumption of imports through imposition of import duties / quotas which led to the transfer of controlling importedinflation.?Sales of treasury bond .securities to the public to reduce the amount of money in circulation.?Control on the level of exports to help build reserve stocks which will maintain adequate supply in the price level.?Through / controlling foreign exchange. Lowers the amount of imports and hence controls imported inflation?Reduce spending in order to reduce demand for goods.any 5 fully explained points x 2 = 10 marksb)?It pressures consumers into buyfng what thej may not need.?It has no educational value to consumers.?It promotes impulse buying, resulting into misallocation of resources by consumers.?It often involves false claims intended to persuade consumes to buy the product.?It results in unnecessary high prices of products to consumers.any 5 fully explained point y2 ~ 10 marks4.a)?When it wants to control imported inflation.?When local businesses are collapsing due to competition from imported goods /protection of local industries.?When a country is experiencing balance of payment deficits.?When the country wishes to become self sufficient.?When imported goods have adverse effects on citizens in protection of unemployment.?When imported goods are inferior / pass policy against dumping. any 5 fully explained points x 2 - 1 0 marksb)?Licensing provides the government with a platform to monitor the type of goods moving in and outside the country.?Through licensing the government can get the total number of businesses operating in the country?Licensing is used by the government a tool to provide illegal business activities.?Licensing ensures that professional standard as stipulated by the government are adhered to against which a license can bewithdrawn for a business which does not stick to the standards.?Ensures that business people do not provide harmful goods and services to the citizens.?Ensures that there is a healthy competition between people involved in the same business activities.?It is a source of revenue to the government.any 5 fully explained points x 2 = 10 marksPage | 71565/1 &565/2 business studies 5.a)KAITU TRADERS BALANCE SHEET AS AT 31/12/2015 Fixed assets Land and building500,000Capital940,000Plant and machinery200,000Less drawing(40,000)Motor vehicle300,000900,000Current assets10 yrs loan200,000Stock100,0003 yrs loan100,000Debtors60,000Cash at bank100,000Creditors60,000Cash in hand20,000Accrued expenses20,0001,280,0001,280,000a) Working capital= 280,000 - 80,000= 200,000b) Capital employed= 1,280,000 - 80,000=1,200,000ORF A + N 1,000,000 + 200,000 - 1,200,000 c) Borrowed capital = long term liabilities = 300,0006 x /2- 3 marksb)?Breaking the bulk?Accumulating bulk?Products promotion?Provide variety of goods.?Pass information to the consumers/ producers.?Reducing the transactions between producers and consumers.?Avail financiers.five fully explained points *2 - 1 0 marks6.a)?Accepts deposits for safe-keeping i.e. banker to commercial banks.?Licenses the operation of commercial bank Supervises the banking operations.?Provide clearing house for interbank transaction.?Ask as a mediator / arbitrator for commercial bank in case of any disputes.?Lends money to commercial banks.?Provide advisory services on banking on economic matters to commercial banks.?Provide them with currency?Replaces old notes and coins with new ones.?It repatriates excess foreign currency.any five fully explained points * 2 = 1 0 marksb)?Providing referent education system to equip the youth with relevant skills required to be self employment.?Controlling population growth rate to match with the rate of job creation.?Adopting / using appropriate technology in order to generate more jobs.?Establishing youth development funds as sources of capital to start their own business. Maximum utilization ofnaturalresources e.g. utilizing all idle land.?Increasing the informal / jua kali sector since it encourages self employment.?Controlled inflation to make labour affordable by many firms / increase demand.any five fully explained points * 2 = 1 0 marks Page | 7200565/1 &565/2 business studies KIMA JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Identify four gaps that may create a business opportunity in a market.(4 marks)2.Classify the following factors as either micro or macro business environment.(4 marks)a) Business culture b) Tax rates c) Employees d) Level of competition 3. The following diagram illustrates a change in supply. Outline four factors responsible for the change of the supply curve from SS to S1 S1.(4marks)4.State four ways on how the government can ease traffic congestion in towns.(4 marks)5.State any four adverse effects of inflation.(4 marks)6.Outline four positive effects of declining population.(4 marks)7.State four factors that determine the premiums charged by insurance companies for life policies.(4 marks)8.The information relates to Mamboleo Traders as at 31-12-2010.Fixed assets800,000Stock240,000Current liabilities120,000Net profit200,000Calculatei)Return on capital employed(2 marks)ii) Current ratio(2 marks)9.State four benefits of a public warehouse to a consumer.(4 marks)10. State four benefits of a public warehouse to a consumer.(4 marks)11. Name the ledger book in which the following information is posted.(4 marks)a) Total of purchases journalb) Individual accounts of debtorsc) Fixed assets accounts;d) Accounts of credit suppliers12. Outline four circumstances under which written communication may be preferred.(4 marks)13. State four measures that may be taken by the Kenyan government to solve unemployment problem.(4 marks)14. Record the following transactions in a two-column cash book and balance it off; (4 marks) Jan 1st opening balances: Cash sh 3000, bank overdraft sh 8000 Jan 2nd Bought goods worth sh 2000 and paid by cheque Jan 3rd Received a cheque of sh 2900 from a debtor Jan 4th paid wages sh 1000 DateDetailsL.FCashBankDateDetailsL.FCashBank15. Give four reasons why a country may adopt protectionism in international trade.(4marks)16. State four roles of customer care desks.(4marks)17. State four reasons why a producer may involve wholesalers in distributing .products.(4 marks)18. Outline four benefits public finance.(4marks)19. Outline four benefits of privatisation to Kenyan economy(4marks)20. Mention four benefits that consumers may get from small scale retailers.(4marks)Page | 73565/1 &565/2 business studies 21. For each of the following source documents, name the relevant day book where it can be used in recording transactions. (4 marks) SOURCE DOCUMENTDAY BOOKa) Invoice received b) Credit note copy c) Invoice retained d) Credit note original 22. Give four disadvantages of credit cards.(4 marks)23. State four factors determining the size of a farm.(4 marks)24 Highlight four human resource management activities that contribute to business success.(4 marks)25. Redraft the following balance sheet by correcting any mistakes.(4 marks)RICH‘SBalance sheet As at 31/8/2015Debtors12000Stock12,200Capital40700Co-op- loan50,000Creditors18000Bank overdraft 22,000Computers875000Cash19000158200 Page | 74565/1 &565/2 business studies KIMA JOINT EVALUATION 2016 BUSINESS STUDIES 565/2 PAPER 2 1.a)Explain five benefits of entrepreneurship to the Kenyan economy.(10 marks)b)Explain five guidelines under which insurance companies .operate.(10 marks)2.a)Explain five factors that determine the level of national income.(10 marks)b)Explain five factors that may affect economic planning process.(10 marks)3.a)Explain five ways in which internal business environment affect the business operations.(10 marks)b)The following transactions took place in the business of Shujaa Enterprise during the month of March 2015.2015 March1st: Credit purchase from Maisha sh 20,000, Ndovu sh 5,000, Kingi sh 12,000 3rd: Credit sales to Kombo sh 6000, Mamboleo sh 8000, Ndugu sh 10,000 8lh: Goods returned to Shujaa Enterprises from Kombo sh 500, Ndugu sh 1000 12th: Goods returned by Shujaa Enterprises to Kingi sh 1500, Ndovu sh 500 Required; Record the above information in the relevant books of original entry.(10 marks)4.a)Differentiate between a private warehouse and a public warehouse.(10 marks)b)Explain five ways through which commercial banks facilitate payment(10marks)5.a)Explain five circumstances under which personal selling may be appropriate as a method of product promotion.(10 marks)b )The following trial balance was extracted from Milka traders on 31st Dec 2015.DrCrShShCapital250,000Stock25000Machinery250,000Motor vehicle87000Purchase360,000Sales600,000Returns inwards40,000Returns outwards20,000Discount received5,000Carriage inwards2000Carriage outwards3000Bad debts (written off)80,000General expenses88,000Debtors18,000Creditors49,000Rent1000954.000954.000Additional information;Closing stock was sh. 22000Prepare Milka traders Trading, profit and loss account for the year ending 31/12/2015.(10marks)6.a)Describe five channels followed in exporting agricultural product.(10 marks)b)Explain five characteristics of a perfect competition market.(10 marks)Page | 75565/1 &565/2 business studies KIMA JOINT EVALUATION 2016 BUSINESS STUDIES PAPER 1 Marking scheme 1.Gaps that may create a business opportunity?Poor services?Inavailability of products?Insufficient / inadequate / not enough goods?Unaffordable prices?Poor quality services / goods1 x 4-4 m k s2.a) Microb) Macroc) Microd) Macro1 x 43.Factors responsible for change of supply curve?Decrease in cost of production?Availability of factors of production?Improved state of technology?Favourable government policy / reduced taxation / increased supply?Future expectation of decrease in price?Entry of new firms into the industry?Favourable natural factors1 x 44.How to ease congestion in towns?Use of buses instead of minibuses / Nissans?Widening of roads / dual carriage ways?Underground trains / tunnels?Fly overs?Increasing parking fees?Restricting low capacity vehicles from CBD1 x 45.Adverse effects of inflation?Reduction in sales of the firm?Decline in standards of living as goods cannot be afforded?Retardation of economic growth?Loss of confidence in the monetary system of?an economy?Conflicts between employer and employees?Wastage of time as one looks for cheaper goods?Effects on balance of payment1 x 46.Effects of declining population?Reduced government expenditure?Enabling a country to attain optimum population?Reduced pressure on land and other resources?Reduced dependency of unemployed or the employed?Reduction of congestion?Reduced crime rate1 x47.i)Age of the assuredii)Occupation of the assurediii) Sum assurediv) Health status of the assuredv) Frequency of occurrence of risk assuredvi) Residence of the assured1 x 48.i)Return on capital employedCE= FA + CA - CL= 800,000 + 240,000 - 120,000 ?= 920,000 ?Return on capital= N.P x 100 C.E=x 100 ?= 21.7% ? ?ii)Current ratio==2 ?= 2:14 x?=29.Why consumers make choices?Due to limited / scarce resources / income?Unlimited / wide / variety/ many needs?Government policy on goods / restrictions?Different tastes / preference / fashions?Quality priority1 x 4Page | 76565/1 &565/2 business studies 10.Benefits of public warehouses to consumers?Ensures continuous supply of a product?Enables stocking a variety enabling exercise of choice?Stocking ensures price stability?Enabling to respond to large orders from consumers?Quality of some products increase1 x 411.a) General ledger? Sales ledger? General ledger? Purchases ledger1 x 412.?When there is need for future references?If it is cheaper than other forms of communication?When the message to be delivered is confidential?When there is need for messages to be used as evidence?When addressing many people?When there is need to avoid distortion of the message1 x 413.?Encouraging employment in the private sector?Adopting labour intensive method of production?Adopting relevant education system?Diversification of economic activities?Developing rural areas to create more jobs?Encouraging direct foreign investment?Encouraging use of local resources?Population control14.Two CBDateDetailsFCashBankDateFDetailsCashBankJan. 1Bal b/d3,000Jan. 1Bal b/dUS8,000Debtor2,9002Purchas2,0004es1,000Bal c/d7,100Wages2,000Bal b/d3,00010,0003,00010,00015.Why a country may adopt trade protectionism?To stimulate creation of jobs in local industries?Protect infant industries?Protect strategic industries?Conserve foreign exchange reserves?Improve terms of trade1 x 416.Customer care desks?Ensure that clients are attended fast enough Attend customer complaints?Attend to any inquiry?Building confidence in clients (efficient services)?Advice management of issues and complaints1 x 4=417.?To save producers problem at storage?To relieve the producer problem distribution?To be relieved off risks e.g. fall in price?To conduct market research?To prepare goods for sale e.g. bulk breaking, branding, sorting?To facilitate product promotion?To get finances to enable producers continue operatinga n y4 x1= 418.Outline four sources of public finance?Fines imposed by courts on offenders?Rents and rates paid for use of government property?Licence fee paid by those who want to operate business?Dividends and products earned government from direct investment?Proceeds from sale of govt property?Taxes?Government borrowing1 x 4Page | 77565/1 &565/2 business studies KIMA JOINT EVALUATION 2016 BUSINESS STUDIES PAPER 2 Marking scheme 1.a) Benefits of entrepreneurship?Creation of employment helping people to earn a living and improve their standards of living?Reducing rural urban migration as entrepreneurs set businesses in rural areas and employ local people who would otherwisemove to urban areas in search of jobs?Saving on imports - local entrepreneurs are able to produce goods / services that substitute imports helping the country toreduce the amount spent on imports?Improving infrastructure - leads to development of roads, security leading easy / faster movement of goods / people?Reducing foreign dominance in the economy by encouraging local entrepreneurs to participate in various business activities?Making use of local resources that could otherwise be idle?Promotion of technology as entrepreneurs are very creative?Promotion of entrepreneural culture as successful entrepreneurs act as eye openers to potential entrepreneurs who view themas role models?Avail a variety of quality goods / services to citizens helping to improve their standards of living.5 x 2 = 1 0 mksb) Principles / guidelines of insurance?Utmost good faith / uberrima fidesperson taking insurance should disclose all material facts relating to the person or property being insured ?Insurable interestone should only insure property that he/she stands to suffer a direct financial loss incase the risk insured against occurs ?Indemnityaim of insurance is to be insured back to the financial position he/she was just before the occurrence of the risk insured against ?Proximate causefor the insured to be compensated, there must be a very close relationship between the loss suffered and the risk insured against ?Subrogationwhatever remains of the property insured after the insured has been compensated according to terms of the policy becomesthe property of the insurer?Contributionincase the insured insures property with more than one insurance company covering the same risk, in the event of loss, all theinsurers contribute proportionately in order to compensate the insured.5 x 2 = 1 0 maks2.a) National income?Entrepreneurship cultureA country with many hardworking businessmen will invest more hence increasing national income?Political stabilityA country that is politically stable will encourage more production activities to take place and increase national income?Availability of technology / improvement in technologya country that uses modem technology in production will increase its output / production and level of national income ?Availability of capitala country with adequate capital will invest more and generate more / a lot of national income ?Availability of laboura country with large labour force which is skilled will utilise it to increase the level of national income?Availability of natural resourcea country with many / well endowed with natural resources like minerals will exploit them hence high national income.b) Factors affecting economic planning process?Lack of accurate data collected from the preliminary stages?Existence of large subsistence sectors?Inadequate personnel to collect the data and analyse it and manpower to implement?Problem of private sectors - they can not give correct information?Transfer of inappropriate development plan e.g. from developed countries to underdeveloped?Reliance on donor funding?Inadequate domestic resources / natural resources?Failure to involve local people in planning the economy?Natural calamities e.g. floods, hailstones, drought etc,Page | 78565/1 &565/2 business studies 3.a) Effects of internal business environment on business operations-Business structure / organisation as well as defined structures set up allows duties to be allocated to the right peoplehence higher productivity-Business policies-Rules that are well defined make it easier for employees to interpret them accordingly-Human resources-Well trained and experienced workforce can increase productivity of business. Employees need to be paid well toprevent them from quitting for better payment-Financial resources-Availability of physical resources can ensure efficient operation of the business-Business cultureA positive relationship between the business and its employees will make them perform in their duties. Good relationshipwith the customers increases demand for its goodb)Purchases day bookDateDetailsInvoice noL.F.Amount2015march 1MaishaPL20,000NdovuPL5,000KingiPL12,000Total posted to Purchase AC (DR)37,000Sales daybookDateDetailsInvoice noL.F.AmountMarch 3KomboSL6,0003NdovuSL6,0003Ndugu10,000Total posted to Purchase AC (Cr)24,000Purchases returns daybookDateDetailsCreditL.F.Amountnote NoMarch 12KingiCredit NoPL1,5003NdovuPL5,000Total posted to Purchase AC (Cr)6,500DateDetailsCreditL.F.AmountNote noMarch 8KomboSL500NduguSL1,000Total posted to Purchase AC (Cr)1,5004. Private ware house i) Insurance of goods is optional ii) Used by owners only iii) Less documentation is involved in handling goods iv) Usually small in size since its for owners use only v) Located at traders / manufacturers premises vi) Owned by manufactures / retailers privately Public warehouse i) Goods must be insured ii) Used by members of public iii) More documentation is involved iv) Bigger in size in order to meet public demand v) Located mainly in towns / terminals vi) Could be owned by wholesalers individuals business who operate warehousing as a business b) Services of commercial banks to clients ? Standing orders ? An instruction from a client to the bank to be deducting a given amount of many periodically until the order is revoked Credit transfer A client to the bank transfers tire payment of credit to a bank so as the bank pays on his/her behalf from his client ? Bank drafts ? A cheque drafted at the bank by the cashier of the bank Page | 79565/1 &565/2 business studies ?Travellers cheque?Are given cheques which can be cashed at specific banks anywhere in the country Credit cards?Are issued to frequent and reliable clients to assist them undertake any transaction and the bank issuing bank is liable to payLetters of credit Are issued to traders doing business in international trade to enable them secure credit Cheques5 x 2 = 10 mks5.a) Explain five circumstances under which personal selling may be appropriate as a method of product promotion?When launching a new product because it requires a lot of awareness creation persuasion and convincing?When a product is tailored to meet customers specifications because customers have got varying tastes and preferences?When demonstrations are required especially for technical products?When the value of the product is high to avoid the risks of losing such products if other methods were used?When the organisation can afford to finance the sales force as the cost of maintaining them may be very high?Where the market is concentrated in one area as the cost of accessing the market is reduced if personal selling is used.5 x 2 = 10 mks Milka Traders Trading, Profit & Loss A/c For the year ended 31 December 2003 ShsShsShsctsOpening stock25,000Sales600,000Add purchase360,00040,000560,000+ C inwards2,000Less returns out20,000342,000Gas367,000Less C. stock22,000COS345,000Gross profit c/d215,000560,000560,000General expenses88,000Gross profit b/d215,000Carriage out3,000Add disc. Received5,000Rent1,000Bad debts80,000Net profit c/d48,000220,000220,000Net profit48,00020 x ? = 10 mks6.a)?Farmer marketing board -> foreign consumers?Farmer —agent - foreign wholesaler - foreign retailer -foreign consumer?Farmer foreign wholesaler foreign retailer foreign consumer?Farmer -foreign retailer -foreign consumer?Fanner -foreign fanner‘s representative - foreign wholesaler -foreign retailer - foreign consumer?Farmer foreign consumer5 x 2 - 10mksb)?Large number of buyers / sellers such that action of single buyer / seller cannot affect the market?Homogeneity / uniformity of the product - products from different producers are identical in all aspects?Wide knowledge of the market - therefore no single seller /' buyer can affect the business at any price otherthan theequilibrium price?Freedom of entry / exit - there are no barriers to entry or exit to or from the market?Uniformity of buyers and sellers - therefore no benefit of selling or buying from a particular buyer or seller?No government interference - in form of taxes, subsidies, quotas, price control / price prevailing in the market is determinedstrictly by interplay of demand and supply?No excess demand / supply - buyers are able to buy all they want / sellers are able to sell all they supply to the market?No transport costs as buyers and sellers are located in one areaPage | 80565/1 &565/2 business studies NTIMA JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Identify four gaps that may exist in a market that may lead to abusiness opportunity.(4 marks)2.State four features of land as a factor of production.(4 marks)3.Highlight four reasons as to why many organisations are preferring open office layout.(4 marks)4.Outline four reasons why shopping malls have become popular in Kenya.(4 marks)5.Indicate with a tick (V) whether the following items fall in the internal or external business environment.(4 marks)FactorInternalExternala) Price levels in the countryb) Business employersc) Cultural practices6.List four money transfer services offered by commercial banks in Kenya.(4 marks)7.Highlight four circumstances under which a partnership business would be preferred to a sole proprietorship.(4 marks)8.Identify the element of transport to which each of the following items relate.(4 marks)(a) Diesel (b) Port (c) School bus (d) Lake 9.Mwiti has a retail shop in Meru town valued at Ksh. 1,500,000. He insured the business with an insurance company for sh.1,000,000 against fire. After six months a fire broke out and destroyed 80% of the business.Determine the amount ofcompensation that he can claim from the insurance company.(4 marks)10.Identify the type of advertising described by each of the following :(4marks)DescriptionType of advertisinga) Meant to promote a company's name or image b) Uses popular personalities to advertise c) Aims at promoting the sales of a new or existing product d) Aims at giving full information about a product 11.Outline four factors that may lead to decline in supply of a commodity.(4marks)12.State four problems that may be experienced by a country that is overpopulated.(4marks)13.State four users of a balance sheet.(4marks)14.On 1st July 2012, Meru traders had the following balances:puter45,000Capital136,000Creditors20,000Furniture80,000Bank26,000Cash5.000The following transactions took place on 2nd July 2012 : ? purchased a motor van for sh.400,000 on credit from Shah motors ? paid a creditor sh. 13,000 by cheque ? bought furniture for sh.8000 by cheque Prepare a balance sheet as at 2nd July 2012 after the above transactions had taken place.(4 marks)15.Record the following transactions in Kanana‘s Ledger accounts.2014Jan 1 : Credit sales to Mawira Ksh.60,000Jan 2 : Credit purchases from Mutua Ksh. 120,000(4 marks)16.State four positive effects of inflation in a country.(4 marks)17.Highlight four causes of unfavourable balance of payments.(4 marks)18.Identify the source document used to make entries in the following journals.(4 marks)JournalSource documenta) Sales journal b) Returns inwards journal c) Petty cash book d) Cash payment journal Page | 81565/1 &565/2 business studies 19. State four factors that hinder economic development in most African countries.(4marks)20. The following information relates to Muindi Traders.Stock (1/1/2011)30.000Stock (31/12/2011)15,000Purchases150,000Mark up20%Prepare the trading account for the period ended 31/12/2011.(4marks)21. Highlight four benefits that accrue to a firm that expands its scale of operation.(4marks)22. Identify four ways in which goods are prepared for sale in a warehouse.(4 marks)23. List four examples of direct taxes.(4 marks)24. Highlight four channels that can be used to export goods from Kenya to South Africa.(4marks)25. List four assumptions of the circular flow of income in a two sector closed economy. (4 marks)Page | 82565/1 &565/2 business studies NTIMA JOINT EVALUATION 2016 BUSINESS STUDIES 565/2 PAPER 2 1.a) Explain five problems encountered when measuring national income of a country.(10 marks)b) Explain five reasons why a country imposes taxes on her citizens.(10 marks)2.a) Explain five ways of improving the efficiency of a warehouse.(10 marks)b) The following transactions related to Kioko Traders for the month of May 2012 May 2: Sold goods on credit to Asunta sh.24, 000 and Janet sh.32, 000 May 8: Bought goods on credit from Patel Traders sh.80, 000 May 12: Asunta returned goods worth sh.4, 000 May 15: Purchased goods on credit from Karoki sh.68, 000 and Petero sh.62, 100 May 20: Goods worth sh. 12,000 were returned to Patel Traders and goods worth sh.6, 000 to Karoki May 23: Goods sold on credit to Asunta sh. 16,000, Tom sh.22000 and Joseph sh.26, 000 May 27: Goods returned by Janet sh.4, 000 May 30: Purchased a motor vehicle on credit worth sh. 1,000,000 from General motors Prepare the relevant journals.(10 marks)3.a) Explain five features of a monopoly.(10 marks)b) Explain five benefits that may accrue to a community involved in home trade.(10 marks)4.The following balances were extracted from the books of Mutwiri Traders for the year ended 31st December 2011.Shs.Gross profit76,200Stock (31 st Dec.)160,400Cash210,120Motor vehicle1,206,000Capital1,207,120Equipment401,200Furniture188,800Creditors248,400Debtors151,800Discount received52,800Salaries24,800Carriage outward28,800Rent income25,200Advertising44,400Insurance18,800Bank overdraft825,400Required:(i) Prepare a profit and loss A/C for Mutwiri Traders for the year ended 31 st Dec.2011.(5 marks)(ii) Prepare a balance sheet as at 31 st Dec.2011.(5 marks)b) Using a diagram illustrate the effects of a rightward shift in supply curve on equilibrium price and quantity. (10 marks)5.a) Explain five reasons why a business may replace an old machine with a new one.(10marks)b) Explain five factors that hinder entrepreneural activities in a country.(10marks)6.a) Explain five reasons for trade restrictions by a country.(10marks)b) Explain five reasons why a country should undertake development planning.(10marks)Page | 83565/1 &565/2 business studies NTIMA JOINT EVALUATION 2016 BUSINESS STUDIES 565/1 PAPER 1 Marking scheme 1.Gaps that may exist in a market leading to a business opportunity?In availability of products?Poor quality products?insufficient quantities being offered?Unaffordable prices in the market?Where customers are not well served / poor services4 x 1 = 4mks2.Features of land as a factor of production?It is a basic factor of production / production cannot take place without it?Its supply is fixed?It lacks geographical mobility?It has occupational mobility?Quality is not homogeneous?Productivity of land may be increased by increasing quantity and quality of capital?It is subject to the law of diminishing returns?It is a natural resource?Its rewards are rent / lease / loyalty rates4x1= 4mks3.Reasons why many organisations prefer open office layout?Easy supervision of workers?Construction cost is low because partitions are few?Easy location of workers?Staff movement is minimised thus saving lime in passing information?Office equipment and machinery are not misused due to close supervision of workers?Office equipment and machinery can be shared?Promotes teamwork amongst employees?Maintenance cost is low?Floor space is saved?It is cheap to decorate?Discourages absenteeism by employees4x1= 4mks4.Reasons why shopping malls have become popular in Kenva?Offer extensive parking facilities?Customers do all their shopping in one building hence saves time?Shopping mails save on space which reduces rents and rates?Usually open for long hours?They accept credit cards?They offer a wide variety of goods?They are convenient to shop in since they provide services such as restaurants, post offices, reading rooms etc.?Are usually situated in town centres4x1 = 4mks5.External?Internal?External?Internal4x1= 4mks6.Money transfer services offered by commercial banks in Kenva?Cheques (personal cheques)?Bankers cheque (bank overdrafts)?Standing orders?Electronic fund transfer?Direct debit?Travellers cheques?Mobile phone money transfer services?Credit transfers4x1= 4mks7.Circumstances under which a partnership business would be preferred to a sole proprietorshipPage | 84565/1 &565/2 business studies ? Where there is possibility of raising more capital in a partnership ? Where the partners bring in different talents and skills enhancing specialisation ? Incase the partner can share the workload ? If it ensures that when losses occur partners shall share them ? Where it leads to better decision making due to discussion of decisions by partners before implementation ? Where the partnership ensures limited liability for most partners4x1= 4mks8.Elements of transport? Method of propulsion? Terminal? Unit of carriage? Way4x1= pensation= value of policy x lossvalue of propertyLoss= 80 x 1,500,000 ?= 1,200,000 ?100compensation= 1000000 x 1200000 S 1500000= Ksh.800,000 ?4x1= 4mks10.Types of advertising?Institutional advertising?Celebrity advertising?Product advertising?Informative advertising4x1= 4mks11.Factors that may lead to decline in supply?Increase / rise in the cost of production?In availability / scarcity of factors of production?Poor state of technology?Unfavourable government policy?Future expectation of increase in prices?Unfavourable natural factors / calamities?Products out of season / inappropriate time?Withdrawal of firms from the industry?Production of firms from the industry?Rise in price of products due to strikes or power failure?Fall in the price of its by-product4x1= 4mks12.Problems experienced by a country that is overpopulated?Strain on the available social amenities?Low standards of living due to reduced incomes?Encouraging rural-urban migration?High dependency level?Imbalance in demand and supply especial;; excess demand?Food shortage / food insecurity?Increase in crime rate e.g, stealing?Environmental degradation?Development of informal settlements / slums4x1= 4mks13.Users of a balance sheet?Financiers / lenders use it to know whether the business is at a position to pay back?Shareholders use it to determine whether the;: funds are invested wisely?Government requires the documents for: taxation purposes?Potential investors can use it to make decisions such as which shares to buy?Management the financial position of business at a given time4x1= 4mks14.Meru Traders Balance sheet as at 2nd July2012Furniture88,000Capital136,000Computer45,000Creditors407,000Motorvan400.000543.000Bank5.000Cash5.000543,000543,000543.0008 x ? = 4mksPage | 85565/1 &565/2 business studies 15. DrSales A/CCr1/1/2014 Mawira60,000DrMawira (Debtor) A/CCr1/1/201$ Sales60,000DrPurchases A/CCr2/1/2014 Mutua120,000DrMutua (creditor) A/CCr2/1/2014 Purchases120,00012 x ? =4mks16.Positive effects of inflation in a country?Debtors benefit by paying less in real terms in future?Sellers may earn more by buying at low price and selling when prices are high?Motivation to work as people try to cope with the higher prices?May lead to increased production?There is better use of available resources i.e. in a more economical way4x1= 4mks17.Causes of unfavourable balance of payment?Unfavourable / deterioration in a country‘s terms of trade?Reduced demand for the country‘s exports?Increase in demand for imports?Restriction by trading partners?Less capital inflow compared to outflow?Over valuation of domestic currency?Devaluation of currency by a trading partner4x1= 4mks18.Source documents?Outgoing invoice / copy of sales invoice?Credit note?Payment voucher / cash payment voucher?Receipt4x1= 4mks19.Factors that hinder economic development?Low natural resource endowment / low quantities of natural resources?Inadequate capital?Low levels of technology?Poor human resource endowment / lack of skilled labour?Political instability?High population growth rate?Insecurity?Negative social-cultural factors4x1= 4mk20.Muindi TradersTrading accountFor the period ended 31st Dec.2011shs.shs.Opening stock30,000Sales198,000Add purchases150,000Less closing stock15,000Cost of sales165,000Gross profit c/d33,000198.000198.0008 x ? =4 mks21.Benefits that accrue to a firm that expands its scale of operation?Marketing economies?Technical economies?Financial economies?Staff welfare economies?Research economies?Managerial economies?Risk bearing economies4x1= 4mksPage | 86565/1 &565/2 business studies 22. Ways in which goods are prepared for sale in a warehouse ? By branding ? By packaging ? Through sorting ? By blending ? Breaking bulk ? By grading4x1= 4mks23. Examples of direct taxes ? Personal income tax ? Corporation tax ? Stamp duty ? Estate / death duty ? Wealth tax ? Capital gains tax ? Capital transfer / gift tax4x1= 4mks24. Channels that can be used to export goods ? Local producer - foreign consumer ? Local producer — retailer - foreign consumer ? Local producer - wholesaler - retailer - foreign consumer ? Local producer —wholesaler —foreign consumer NB: ? local and foreign aspects should be brought out ? Arrows should be drawn and directed properly ? Accept other complete channels 4x1= 4mks 25. Assumptions of the circular flow of income ? The economy has only two players; firms and households ? There is not government involvement ? There is no foreign trade / the economy is closed ? Households use all their incomes to acquire goods produced by firms ? Firms spend all their revenues on acquisition of factor services from households 4x1= 4mks Page | 87565/1 &565/2 business studies NTIMA JOINT EVALUATION 2016 BUSINESS STUDIES 565/2 PAPER 2 Marking scheme 1.a) Problems encountered when measuring national income?Transfer payments poses a problem as it is difficult to impute the proportion of income constituted by those transfers?Inaccurate data / inadequate data where there could be underestimation or overestimations?Price fluctuations may devalue or over value the income figures?Ignoring illegal goods / services yet they constitute generated income?Subsistence sector goods and services are not marketed hence unaccounted for?Differentiating between final expenditure and intermediate expenditure may be difficult which may lead to double counting?Lack of qualified personnel to collect and compile data?Lack of adequate resources to finance the gathering of relevant information?Valuing of government output - many services are not sold in the open market(5x2=10mks)b)Reasons why a country imposes taxes on citizens?Raise government revenue - to cater for various government expenditure?Reduce income disparity - by facilitating fair distribution of incomes and resources by taxing rich more?Discourage consumption - of harmful products and engagement in illicit activities?Control inflation - by reducing money supply through reduction of people‘s disposable income?Correct unfavourable balance of payments- by taxing imported products more to discourage importation?Influence business location e.g. high tax on urban centres make entrepreneurs to go to rural areas?To subsidize various undertakings for the benefit of the society5x2= l0mks2.a) Five ways of improving the efficiency of a warehouse?Ensuring that there is proper adequate handling equipment - to handle goods safely and easily?Ensuring that the staff is well trained and motivated - so as to enhance their performance?To ensure that legal requirements are followed to avoid conflict with law enforcers?Provision of sufficient loading / off loading areas - to avoid congestion and delays?Ensure there is adequate security - to avoid theft of goods and safety of workers?Ensure proper use of space - by proper arrangement of goods?Ensure there is proper system of inventory control to monitor stock movements to avoid theft?Ensure there is safety equipment / personnel - to take care of pests, fire, water leaks to safeguard goods from damage5x2=10mksb)Sales JournalDateParticularsAmount2012Shs.May 2Asunta24,000Janet32,000May 23Asunta16,000Tom22,000Joseph26,000120,000Purchase JournalDateParticularsAmount2012Shs.May 8Patel traders80,000May 15Karoki68,000May‖Petero62,100210,000Sales returns JournalDateParticularsAmount2012ShsMay 2012Asunta4,000May 27Janet4,0008,000 Page | 88565/1 &565/2 business studies Purchase Returns Journal DateParticularsAmount2012Shs.May 20Asunta12,000Janet6,00018,000General JournalDateParticularsDrCr2012Motor vehicleShs.May 30General motors1,000,000(being purchase of motor1,000,000vehicle on credit)20 x ? =10mks3.a) Five features of monopoly?There exists only one single seller of the product?No close substitute or rival suppliers of the product?The demand curve steeply slopes from left to right because monopolist cannot have control of both price and output at thesame time?Price discrimination is possible?May produce low quality products due to lack of competition?Prices are fixed by the supplier?Difficult for other firms (suppliers) to enter the market5x2 = 10mksb) Benefits accruing to a community involved in home trade?Variety of goods / services - enhance consumer choice?Promotes peace and harmony - among trading partners as they interact?Source of government revenue - from licences, fee, taxes on goods etc.?Employment - those engaged in trading activities?Improved infrastructure - to facilitate movement of people and goods?Utilization of locally available resources - that would have otherwise remained idle?Sale / disposal of surplus - minimising wastage?Improved technology -due to exchange of ideas leading to improved quality5x2= l0mks4.a) i)Mutwiri TraderProfit and Loss A/CFor the year ended 31st Dec 2011ShsShsSalaries24,800G.P b/d76,200Carriage outwards 28,000+ discount rec.52,800Advertising44,400Rent income25,200Insurance18,800N.P37,400154,200154,20010 x ? = 5mksii)Mutwiri TradersBalance SheetAs at 31st Dec 2011F. AssetsshsshsshsMotor vehicle1,206,000Capital1,207,120Equipment401,200+NP37,400Furniture188,8001,796,0001,244,520C. AssetsLiabilitiesStock160,400Creditors248,400Cash210,120Bank overdraft825,400Debtors151,800522,3202,318,3202,318,32010 x ? =5 mks Page | 8900565/1 &565/2 business studies b) The effects of a rightward shift in supply on equilibrium price and quantity (i) A rightward shift in supply / increase in supply brings about a drop in equilibrium price (Po to P1) (ii) A rightward shift in supply / increase in supply brings about an increase in equilibrium quantity (Qo to Q1 ( 10x1 =l0mks 5.a) Reasons why a business may replace an old machine?Adaptability - when the machine is not able to cope with new changes / obsolete?Lack of spare parts - which makes it difficult to service / repair?When it has affected the office - morale negatively to improve performance?When the complementary resources e.g. power are lacking yet the new one can use the new resources?When the manpower available for its operation is no longer available?When its no longer secure to store the machine in the premises which makes it endangered?When it suffers from occassional breakdown hence making it expensive to operate 5 x 2 =10mksb) Factors that hinder entrepreneural activities?Unfavourable government policies which tend to discourage establishment of businesses e.g. high taxation?Poor infrastructure which discourage smooth running of businesses?Lack of adequate knowledge and skills to start and manage businesses?Lack of market which discourages establishment of new businesses / continuation of the existing ones?Inadequate resources to start / run businesses smoothly?Stiff competition with cheap and higher quality imports making demand for local goods to decline hence closure of localbusinesses?Political instability creating a poor environment for businesses to start / thrive?(Unfavourable) culture - some values and norms discourage establishment of businesses / consumption(5x2 = l0mks)6a) Reasons for trade restrictions?Protection of local industries from foreign cheaper products which may lower demand for local goods?Protection of strategic industries for steady supply of extremely essential goods?Creation and protection of employment by protecting local industries?Prevention of dumping to reduce unfair competition with foreign cheaper goods?Preservation of balance of trade where imports value need to be less than export value?Protection of cultural and social values where foreign traders may bring in negative cultures in the country?Expanding market for local products by reducing importation of foreign cheaper or higher quality goods?Promoting self reliance by avoiding overreliance on imported goods incase the exporting country stops supplying forwhatever the reason( 5x2=10mks)b) Reasons for development planning?Appropriate resource allocation to avoid / reduce wastage?Stimulation of efforts by showing possible achievements which makes people to apply greater efforts?Supports foreign aid bargain because the plan is used to convince donors to give resources?Project evaluation - as implementation of the project is done on the basis of pre-determined criteria contained in the plan?Long term decision making because the plan contains a long term view for making decisions?Avoiding duplication - to avoid establishment of similar industries in same localities?Promoting balance in regional development?by avoiding establishment of industries in same localities?Correct imperfections in the market - like presence monopolies and oligopolies which contribute to misallocation of resources(5x2 = 10mks) Page | 90565/1 &565/2 business studies GATUNDU SOUTH FORM FOUR 2016 EVALUATION EXAM BUSINESS STUDIES 565/1 PAPER 1 1.Highlight four ways in which business studies may be of benefit to an individual.(4 Mks)2.Outline four features of economic resources.(4 Mks)3.Highlight four characteristics of labour as a factor of production.(4 Mks)4.List four sources of business idea.(4 Mks)5.Highlight four elements of a carbon copying in the reproduction of documents.(4 Mks)6.Outline four differences between hire purchase and installment buying.(4 Mks)7.Mention four current trends in forms of business units.(4 Mks)8.Outline four duties of commercial attaches.(4 Mks)9.Highlight four advantages of human porterage.(4 Mks)10.Outline four ways that the government can use to influence the quantity of a commodity supplied.(4 Mks)11.List four factors that determine the size of a firm.(4 Mks)12.Outline four factors that a producer would consider when selecting a distribution channel.(4 Mks)13.Outline four challenges that may be encountered when measuring national income using income approach.(4 Mks)14.The following information was obtained from the records of Biashara traders as at 31st December 2014.Sh.Long term loan20,000Debtors6,000Cash at bank24,000Creditors14, 000Furniture40,000Stock10,000Prepare Biashara Traders balance sheet as at 31st December 2014.15.Highlight four advantages of trade restriction.(4 Mks)16.The following information was extracted from the books of Sunrise Enterprise on 30th June 2012ItemShsPurchases200,000Opening stock44,000Closing stock52,000Mark - up20%Prepare the Trading account of Sunrise Enterprise for the year ended 30th June 2012.(4 Mks)17.Outline four circumstances under which sign language would be appropriate.(4 Mks)18.Highlight four possible consequences that may arise due to poor arrangement of goods in a warehouse.(4 Mks)19.Outline four factors that may hinder economic developments.(4 Mks)20.Highlight four reasons that may necessitate insurance companies to re-insurance.(4 Mks)21.Outline four advantages of window display as a method of product promotion.(4 Mks)22.Outline four negative effects of an ageing population in an economy.(4 Mks)23.On 1 April 2014, Kama Traders had Sh 200,000 in cash and Sh 70,000 bank overdraft.During the month the following transactions took place.April 10A debtor settled his account of sh 500,000 by cheque less 5% cash discount.April 15:Settled Jane‘s account of sh 90,000 by cheque less 3% cash discount.April 30:Banked all cash except sh 40,000.Enter the above information in the cash book given.(4 Mks)Cash bookDrCrDateDetailsDiscountCashBankDateDetailsDiscountCashBankAllowedReceived24. Highlight four advantages of a fixed deposit account.(4 Mks)25. State four sources of monopoly power.(4 Mks)Page | 91565/1 &565/2 business studies GATUNDU SOUTH FORM FOUR 2016 EVALUATION EXAM BUSINESS STUDIES 565/2 PAPER 2 1.(a) Explain five external business environments and how they influence a business negatively.(10 Mks)(b) Describe five types of unemployment.(10 Mks)2.(a) Explain five services a wholesaler may offer to a manufacturer.(10 Mks)(b) Outline five measures that a country may take to correct her Balance of payments (B.O.D) deficit.(10 Mks)3.(a) Explain any five principles of insurance.(10 Mks)(b) Highlight five measures that the Kenya government should take to control the high rate of inflation.(10 Mks)4.(a) Explain five services commercial banks may offer to a customer.(10 Mks)(b) Explain five factors that influence the level of national income.(10 Mks)5.(a) Outline five differences between a public limited company and a cooperative society.(10 Mks)(b) Describe five channels that may be used to distribute an exported agricultural product.(10 Mks)6.(a) Explain four services that facilitate communication. (8 Mks)(b) The following trial balance was prepared from the books of Joska Traders as at 31st Dec 2014. Joska Traders Trial balance As at 31st Dec. 2014. DrCrShsShsSales90,000Purchases60,000Returns Inwards8,000Returns Outwards2,000Carriage Inwards4,000Carriage Outwards300Stock (Jan 2014)10,000Rent6,000Creditors10,000Debtors29,000Interest expense1,800General expense700Capital17,800119,800119,800Page | 92565/1 &565/2 business studies GATUNDU SOUTH FORM FOUR 2016 EVALUATION EXAM BUSINESS STUDIES PAPER 1 Marking schemes1.Benefits of business studies to an individual.? Assist individual in appreciating the role of business in provision of goods and service.? Assist individual to acquire self discipline and positive attitude towards work.? Equips individual with abilities to promote cooperation in society through trade.? Enables individuals to understand the role of government in business activities.? Helps individuals to develop positive attitude towards the environment.? Equips the individual with knowledge and skills required to evaluate business performance.2.Features of economic resources.? Scarce in supply.? Have money value.? Unevenly distributed.? Have utility.? Have alternative uses.? Can change ownership? Can be combined? Can be complimentary3.Characteristics of labour as a factor of production.? A basic factor of production.? Cannot be stored? Labour cannot be separated from labourer.? Labourers sell their labour and not themselves? Labour is mobile? It is human, with ability to think and capacity to get annoyed.4.Sources of business idea.? Newspapers? Shows and exhibitions? Magazine articles? Hobbies? Vocational training and experience.? Survey.? Waste products? Spotting a market gap(Niche)5.Demerits of carbon copying in the reproduction of documents.? Not convenient for many copies.? Copies could be misaligned.? Poor quality copies.? Difficult to produce different colours.? Copies of photographs cannot be reproduced.6.Differences between hire purchase and Installment buying.Any 4 x 1 = 4MksAny 4 x 1 = 4 MksAny 4 x 1 = 4 MksAny 4 x 1 = 4 MksAny 4 x 1 = 4 MksHire purchase(a) Buyer does not become the owner of the goods ontaking their possession.(b) The buyer cannot resell the goods since he is notthe legal owner.(d) Hire purchase prices is usually higher than theprice of goods bought on credit(e) If the buyer defaults in paying any installmentgoods may be repossessed by the owner7.Current trends to forms of business units.? Holding companies.? Cartels.? Privatisation? Absorptions ( take over)? Mergers (amalgamation)? Check off system.? Burial Benevolent funds? Front office savings account? Franchising? Trusts? Globalisation? Performance Contract8.Duties of commercial attaches? Explore and identify new markets for more export.? Research and analyse markets for exports from their home countries.Installment buying(a)The buyer becomes the owner of the goods ontaking their possession.(c)Can resell the goods as he/she is the legal ownerof the goods.(b)Price of goods bought on installment is lower thanthat of the same goods bought on hire purchase. (c) Goods cannot be repossessed if the buyer defaultspayment but the buyer can be sued.Any 4 x 1 = 4 Mks) ?Keep statistics of products eg volumes, packaging sizes and methods of manufacturing.Page | 93565/1 &565/2 business studies ?Attend meetings, seminars and workshops on trade pattern‘s of the countries and keep data of new markets for exports?Publish and advertise their countries exports in business journals and magazines?Select buyers, agents and distributors of the home country‘s exports.Any 4 x 1 = 4 Mks)9.Advantages of human porterage.?Could be the only means of transport available.?Compliments other means of transport.?Flexible as it has no fixed time table?May be a cheap means compared to other means.?Readily available when required.?Convenient over short distance.Any 4 x 1 = 4 Mks10.Ways the government can use to influence the quantity of a commodity supplied.(i)Taxation.(ii)Subsides(iii)Quotas(iv)Price control4 x 1 = 4 Mks11.Factors that determine the size of firm.?Number of Employees.?Volume of out put.?Floor area covered by premise.?Capital invested?Market served.?Sales volume.4 x 1 = 4 Mks12.Factors to consider when selecting a distribution channel.?Nature of the product.?Nature of the market?Role of intermediaries.?Resources and size of the firm?Competitors?Government policy?Marketing RisksAny 4 x = 4 Mks13.Challenges encountered when measuring national income using income approach.?Transfer payment- since it is difficult to impute proportion of income constituted by those transfers.?Problem of inaccurate data.?Due to price fluctuation - very difficult to calculate national income accurately.?Problem of handing illegal and unrecorded economic activities.4 Mks14.BIASHARA TRADERSBALANCE SHEETAs at 31st December 2014Furniture40,000?Capital46,000?Debtors6,000?Long-term loan20,000?Stock10,000?Creditors14,000?Cash at bank24,000?-80,00080,000?8 ticks x ? = 4 Mks15.Advantages of trade restriction?Protection of local infant industries/Strategic industries.?Prevent dumping.?Creation and protection of employment.?Preservation of Balance of trade/balance of payment.?Protection of cultural and social values?Expanding market for local products.?Promoting self relianceAny 4 x 1 = 4 Mks)16.SUNRISE ENTREPRISETRADING ACCOUNTFOR THE YEAR ENDED 30TH JUNE 2012.Opening stock44000?Add Purchases200000?Sales230,400??244000Less closing stock52000?Cost of goods sold192000?Gross profit c/d38400?230400230,4008 Ticks x ? = 4 MksPage | 94565/1 &565/2 business studies 17.Circumstances under which sign language would be appropriate.?When the environment is noisy.?Where the audience is not literate?Where the message is intended to reach a large number of people.?Where there is need to reinforce and clarify a written message.4 x 1 = 4 Mks18.Possible consequences as a result of poor arrangement of goods in a ware house.?Theft of goods.?Delays in clearance.?Damage of goods.?Decline in quality of goods due to contamination4 x 1 = 4 Mks19.Factors that may hinder economic development.?Low natural resource endowment.?Inadequate capital.?Poor technology.?Poor Human resource endowment.?Unfavourable Domestic environment.Any 4 x 1 = 4 Mks)20.Reasons that may necissate insurance companies to re- insure.?Where the value of property is great.?When chances of loss through the insured risks are high.?When the insurance company has insured many different risks?When the insurance company wishes to share liability in the event a major loss occurring.?Government takes it a legal requirement for an insurance to re-insure.Any 4 x 1 = 4 Mks21.Advantages of window display as a method of product promotion.?Relatively cheap method of product promotion.?The method may induce the customer to buy the product displayed.?The display enables customers to get features of the product such as colour, size and price before making a decision whetherto buy or not.?Customers who are attracted into the shop are likely to buy other products other than those on display. 4 x 1 = 4 Mks)22.Negative effects of ageing population in an economy.?High dependence of old people on working population.?Old people tend to provide a less mobile labour force.?Low labour supply as old people tend to be less productive.?Society become less progressive as it lacks input of energetic youth.?Lead to unemployment due to fall in demand of goods and services required by the youth.Any 4 x 1 = 4 Mks23.KAMA TRADERS CASH BOOK.DateDetailsDACashBankDateDetailsDRCashBank20142014ABal b/d200,000?AprilBal b/d70,000?pr1il 1 10Debtor25,000?475,000?15Jane2,700?87,300?30Cash160,00030Bank ?160,000?8 ticks x ? = 4 Mks24.Disadvantages of fixed deposit account.?The amount deposited in the account earns relatively high interest than in other accounts.?Deposit held in the account can be used as a security for a loan.?There is no ledger charge on the account.?Restricted withdrawal encourage saving.?The account holder has time to plan for the money deposited in the account.Any 4 x 1 = 4 Mks25.Sources of monopoly power.?Where a firm has total ownership of right of production.?Where the firm controls an important raw material.?Where the firms command a substantial market share (market best served by one firm)?Where the capital outlay/invested is large.?Where a group of firms combine to form a new business?Where the firm enjoys greater internal economies of scale.Any 4 x 1 = 4 MksPage | 95565/1 &565/2 business studies GATUNDU SOUTH FORM FOUR 2016 EVALUATION EXAM BUSINESS STUDIES PAPER 2 Marking schemes 1(a) Five external factors that would influence the business negatively.?Social/cultural beliefs of the people if the culture is against the consumption of the product being traded/if product beingtraded is against the values of the people.?Political effect;?Political instability may make business fail/high taxation/un conducive legal systems are not conducive for business.?Technological changes;?Failure to adopt high levels of technology may result to poor quality/low quantities.?Competition;?Cutthroat competition may impact negatively to the business/closing down.?Lack of required suppliers - Business may experience shortages/irregular supplies.?Economic environment - purchasing power/ inflation/High interest on loans/tariffs by trading partners boast/lower demandfor the products.?Legal factors - changes in laws/regulation may require new ways of conducting business/adjustments for business tocontinue/operation.?Lack of intermediaries to distribute goods to consumers/may not reach consumers/leading to loss of market.5 x 2 = 10 Mks(b) Types of unemployment.?Seasonal- Experienced where demand for certain goods/services is seasonal such as in tourism/agriculture/uniform.?Cyclical unemployment. Caused by economic factors leading to poor performances in the economy. Such as continuouserosion of people purchasing power due to lack of income/high taxation.?Structural unemployment.?Occurs where jobs are available but one lacks requisite qualifications/ can be caused by improvement in technology/one doesnot know how to handle new machines.?Technological unemployment caused by advanced technology/machines replacing human labour eg Tea picking machines?Frictional unemployment.?Caused by industrial upheavals such as power outages/immobility of labour/depletion of raw materials/machinery breakdown.?Disguised unemployment/underemployment.?A situation where a person seems employed but is mainly under utilized.?Voluntary unemployment.?Where work is available but a person is unwilling to work.?Keynesian unemploymentcaused by decreased in demand for product (leading) to reduction in production/workers laid off.5 x 2 = 10 Mk 2. (a) Service a wholesaler may give to a manufacturer. ? Provide manufactures with finance by buying goods in cash. ? Provide wholesalers with market information as they gather information about demand and supply and pass it to manufacturers. ? Help manufacturers distribute the product ie when they buy goods and sell them to retailers/consumers. ? Assist in preparing goods for sale eg packing, branding, sorting, packaging and blending. ? Relieve manufacturers the problem of storage by buying goods in large quantities and keeping them in their own stores. ? Help in product promotion through activities such as advertising, displays etc. ? Reducing transactions between the manufacturers and the retailers by buying goods in very large quantities. ? Breaking the bulk ie buying in large quantities and selling in small quantities to retailers/consumers. 5x 2 = 10 Mks) (b) Measures to correct BOP deficit. ? Diversification of exports by increasing the range of products to be exported. ? Reducing volume of imports - by increasing import duty/exchange controls. ? Increasing the volume of exports - Done by providing export - incentives such as export compensation scheme/customs drawback etc. ? Get financial assistance from IMF/ World Bank/ ie finances to clear the deficit. ? Borrow funds from international lenders or other countries/use funds obtained to offset deficit. ? Devaluation of currency/lowering the value of economy‘s currency relative to other currencies/this makes exports cheaper increasing their demand.(5 x 2 = 10 Mks)3. (a) Principles of insurance. (i)Principle of indemnity.Insurance aims at restoring the insured to the financial position he/she was in before the loss occurred/not benefithim/her.(ii)Insurance interest.The insured must prove that the occurrence of the loss will cause him/her financial loss.Page | 96565/1 &565/2 business studies (iii)Utmost good faith (uberrimaefidei) - the insured must disclose all material/relevant information that may affect theinsurance contract(iv)Proximate cause.There must be a fairly close connection between the cause of the loss and the risk insured. (v)Subrogation.Incase of total loss and full compensation, the insurer assumes the rights the insured had on the property destroyed. (vi)Contribution.Incase of property being insured by more than one firm, all insurers share the burden of compensation in proportion of coverage of the risk.5 x 2 = 10 Mks)(b) Measures Kenya government should take to control high rate of inflation. ? To control /regulate prices of goods/services to ensure prices do not go beyond the price limit. ? Increased/stimulate production of goods/services to avoid shortages/keep pace with changes in demand. ? Wage policies/control wages/salaries by increasing paye (check on trade unions pressure to avoid increase in wages. ? Restricting imports to curb imported inflation by looking for alternative supply/diversification. ? Controlling exports to curb shortages in the local market by use of quotas/total ban. ? Raising Bank rates to discourage borrowing. ? Use of open market operations - to mop up excess liquidity from the economy. ? Increased/raise liquidity ratio - to reduce lending capacity of commercial banks. ? Selective credit control - commercial banks to discriminate in lending/lend only to certain sectors of the economy. 5 x 2 = 10 Mks 4.(a) Services offered to customers by commercial banks.?Accepting deposits for safe keeping.?Transfer of money as a means of payment such as standing orders/credit transfers/cheques etc.?Lending facilities - offer loan facilities/ advances/overdrafts.?Advice - on financial matters such as taxation/investments.?Foreign exchange services - sell/buy foreign currency.?Safe custody. - keep valuable items for clients safely.?Act as stock exchange agents Channels for buying new shares by public/buying on behalf of clients.?Discounting Bills of exchange - before maturity/accept promissory notes from (trusted) clients.?Act as trustees - undertake management of properties of client (who may be away)?Act as guarantors/referees.Can stand surety on behalf of clients seeking credit from other financial institutions.5 x 2 = 10 Mks)(b) Factors influencing the level of national income.?Natural resource endowments eg in terms of quantity and quality. High endowment of resources lead to high levels of N.I &vice versa?Government policy/political climate - political stability encourage both local & foreign investors thereby increasing GDP/NI.?Technology/methods of production - use of advanced technology/modern methods of production increases output and henceNI.?Attitude towards work - Hardwork leads to production of more goods leading to high N.?Human resource - Availability of enough and qualified /appropriate labour force lead to high production of quality goods.?Availability of capital/man made resources that help produce more goods/services increasing output and hence NI.?Entrepreneurshipie people with ability to organize factors of production in correct proportions thereby increasing output andhence Ni.?Foreign investment! Increased foreign investment increase production of goods & services raising the level of NI.5.(a) Differences between cooperatives and public limited companies.CooperativesPublic limited cos1Formed by a min of 101Min 7 members /shareholders2Registered by commissioner of cooperatives2Registered by registrar of companies3Managed by committee elected by members at3Managed by Board of directorsAGM4Governed by cooperative by - laws4Governed by Articles of Association5Formed with service motive (to serve members)5Formed for profit motive6Members have acommon bond6Members have nothing in common7Controlled by government through the ministry7There is no government controlof cooperative development.b). Five channels of distribution for exported Agricultural products.(i)Local farmer/producer→Foreign consumer.(ii)Local farmer/producer→(foreign) wholesaler→(Foreign) retailer→ Foreign consumers(iii)Local farmer/producer→ (foreign) agent→ (foreign) wholesaler→ (foreign) retailer→ FC.(iv)LF/P→(Foreign) wholesaler →FC(v)LF/P→(F) R→ FCPage | 97565/1 &565/2 business studies NB:- Must start with local producer/farmer and end with final foreign consumer. Arrows must be shown.(5 x 2 = 10 Mks)6.(a) Services that facilitate communication.? Postal service - Delivering registered, express and ordinary mail through postal corporation. ? Business reply service - where business people give their customers already stamped envelopes to use when replying to letters. ? Courier services - provided by private individuals or organizations by delivering parcels, documents or letters using fast means of transport. ? Franking - when customers/organizations are allowed by postal corporation to use a franking machine to affix postage stamp impression on letters. ? Post Restante - service provided to visitors who may not have fixed address. ? Telephone services - provided by firms eg Airtel, Safaricom, telkometc for a fee. ? Broadcasting services ie radio and television services. ? Printing media services - written communication to pass information ie newspapers, magazines etc. 4 x 2 = 8 Mks) (b)Joska TradersTrading Profit & Loss A/CFor the period ended 31stdec. 2014.ShsShsShsShsOpening stock10,000Sales90,000+ Purchases60,000-Returns in8,00082,000Carriage in4,00064,000-Returns out2,00062,000Goods available72,000-Closing stock10,000Cost of sales62,000Gross profit c/d20,00082,00082,000Carriage out300Gross Profit b/d20,000Rent6,000Interest expense1800General expenses700Net Profit11,20020,00020,000s (ii) (a) Mark up = GP x 100% = 20,000 x 100% = 32.25% CS62,000(b) Margin = GP x 100% = 20,000 x 100% = 24.39%NS82,000(c) R.O.S.T.O = Cost of sales = 62,000 = 6.2 timesAverage stock10,00Total = 24 x ? = 12 MarksPage | 98565/1 &565/2 business studies KIRINYAGA CENTRAL SUB-COUNTY EFFECTIVE FORTY JOINT EXAMINATION - 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Outline four types of business activities.(4 marks)2.Highlight four disadvantages of specialization.(4 marks)3.Outline four circumstances that would make an office manager to replace an existing machine with a modern one.(4 marks)4.Outline four qualities of an office worker.(4 marks)5.Give four benefits of operating a small scale retail business over a large scale retail business.(4 marks)6.Ndovu bought 200 blankets at Sh.500 each on credit. The terms of sale were 20% trade discount, 10% quantity discount and5% cash discount if payment is made within two weeks. Calculate the amount paid if payment is made after one week.(4 marks)7.Outline four circumstances under which a sole proprietorship may be dissolved.(4 marks)8.State four functions of commercial attachees.(4 marks)9.State the unit of carriage for each of the following modes of transport.(3 marks)Mode of transportUnits of carriage(a) Sea(b) Portage(c) Road10.State four reasons why short message services (SMS) is replacing letters as a way of communication.(4 marks)11.Outline four reasons why an ageing population may not be desirable to a country.(4 marks)12.List four reasons why a producer would not need a lot of warehousing facilities.(4 marks)13.Highlight four insurance policies that a business person may find useful for his/her business.(4 marks)14.Highlight four circumstances under which it may be appropriate to use personal selling to promote products.(4 marks)15.Indicate whether each of the following factors influence demand or supply of a commodity.(3 marks)FactorDemand or Supply(a) Changes in the prices of inputs.(b) Change in tastes and preferences.(c) Changes in technology.16.Highlight four characteristics of a perfect competitive market.(4 marks)17.Highlight four problems which may be encountered when measuring national income using output approach.(4 marks)18.On 1st July 2012, Mara traders had Sh.6,000 cash in hand and bank overdraft of Sh.2,000. During the month the followingtransactions took place:2012 July 2: Received cheques from debtors totaling to Sh.50,000 July 5: Paid rent Sh.2,000 cash. July 15: Withdrew Sh.5,000 from the bank for personal use. July 25: Banked all the cash except Sh.1000 Prepare a Two-column Cash Book for the month.(5 marks)19.The following is an extract of a bank account of Komu traders for the month of June 2015.Bank account2015Shs2015ShsJune 1Balance b/d200,000June 5Salim traders50,000June 10Kombo10,000June 20Electricity5,000June 25Cash20,000June 30Balance c/d135,000210,000210,000State the transactions that took place on the following dates: (a) June 5:……………………………………………………………………………… (b) June 10:…………………………………………………………………………….. (c) June 20:…………………………………………………………………………….. (d) June 25:…………………………………………………………………………….. 20.State four advantages of using subsidiary books of accounts.(4 marks)21.State four banking services that the Central Bank of Kenya provides to the government.(4 marks)22.The average consumer price for a 90kg bag of maize for the year 2012 and 2013 is shown below.Year20122013PricesKsh.3000Ksh.4000Page | 99565/1 &565/2 business studies Calculate the increase in Consumer Price Index using 2012 as the base year.(4 marks)23. Outline four causes of balance of payments disequilibrium.(4 marks)24. Highlight four ways in which Kenya is likely to benefit from preparing a proper development plan.(4 marks)25. The following information was extracted from the books of Amani traders on31st December 2014.ShsCommission received22,000Sales763,500Loan interest52,500Purchases474,000General expenses30,000Drawings96,000Rent120,000Salaries owing72,000Electricity pre-paid85,000Prepare Trial Balance of Amani traders for the month ended 31st December 2014.(5 marks)Page | 100565/1 &565/2 business studies KIRINYAGA CENTRAL SUB-COUNTY EFFECTIVE FORTY JOINT EXAMINATION - 2016 BUSINESS STUDIES 565/2 PAPER 2 1.(a)Kibugi Wholesalers intends to construct a warehouse. Explain five measures that Kibugi wholesalers should take toensure smooth functioning of the warehouse.(10 marks)(b)Explain five ways in which commercial banks facilitate payment on behalf of their customers.(10 marks)2.(a)Your school intends to place an order with Elimu Company limited for the supply of some urgently required laboratoryequipment. Explain five reasons why it would be advisable for the school to use e-mail instead of telephone whenplacing the order.(10 marks)(b)Most third world countries have been experiencing inflation.Explain five negative effects of inflation in the countries.(10 marks)3.(a)Country X is experiencing high levels of unemployment. Explain five measures that she may take to solve theunemployment problems.(10 marks)(b)Explain five advantages of buying goods on hire purchase terms.(10 marks)4.(a)Karoki a newly employed Clerk has been assigned the task of filing documents. Explain to him five characteristics heshould consider when choosing a filing system.(10 marks)(b)Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantit(10 marks)5.(a)Explain five circumstances under which a manufacturer would prefer to sell his products direct to consumers instead ofselling through middlemen.(10 marks)(b)The headline for yesterday‘s newspaper was ―Mwangaza company limited has been dissolved!‖ Explain fivecircumstances that could have led to the dissolution.(10 marks)6.(a)Explain any five reasons why the government and other organizations are engaged in consumer protection. (10 marks)(b)The following trial balance was extracted from the books Mzalendo traders on 30th April 2005.Dr(shs)Cr(shs)Sales115,560Stock 1/5/200437,760Carriage outwards3,260Carriage inwards2,340Return inwards4,400Return outwards3,550Salaries24,470Electricity6,640Rent5,760Sundry expenses12,020Equipment24,000Furniture6,000Debtors45,770Creditors30,450Bank38,760Cash1,200Drawings20,500Capital128,440348,440348,440Stock at 30th April 2005 was 19,980Required:Prepare: (a) Trading, profit and loss account for the year ended 30th April 2005.(10 marks)Page | 10100565/1 &565/2 business studies KIRINYAGA CENTRAL SUB-COUNTY EFFECTIVE FORTY JOINT EXAMINATION - 2016 BUSINESS STUDIES PAPER 1 Marking scheme 1. Type of business activities. (a) Extraction of raw materials. (b) Processing of raw materials. (c) Manufacturing of goods. (d) Construction. (e) Distribution of goods. (f) Buying and selling of goods/trade. (g) Provision of services.(Any 4 x 1 = 4 marks)2.Disadvantages of specialization.?Leads to monotony of work hence boredom.?Hinders creativity of people.?Makes a worker dependent on one trade.?Encourages use of machines leading to unemployment.?Makes a country to be dependent on other countries.?Brings many people together leading to social problems such as crimes and prostitution.?Lack of pride in the final product.?Production can stop due to a technical fault.(Any 4 x 1 = 4 marks)3.Circumstances that would make an office manager to replace an existing machine with a modern one.?Obsolescence/machine has outlived its usefulness.?Where a faster machine is required.?Where maintenance costs are higher than cost of acquiring modern machine.?Where there is need for increased production.?Where training skills have changed.?Where high quality works is required.?Where he wants to save on labour.?Where there is need to improve image of company.?If the new one is capable of multiple use.?If the new machine will save on space.?If the machine is capable of reducing fraud.(Any 4 x 1 = 4 marks)4.Outline four qualities of an office worker.(a) Courtesy. (b) Respect. (c) Loyalty. (d) Diplomacy. (e) Initiative. (f) Cooperation. (g) Good grooming. (h) Punctuality. (i) Good health. (j) Accuracy.(Any 4 x 1 = 4 marks)5.Benefits of operating a small scale retail business over a large scale retail business.?Easy to raise capital to start the business.?The business is highly flexible.?Quick decision-making.?Requires less legal procedures during formation.?Able to keep top business secrets.?Does not have too much government control.?Exposed to fewer risks due to their small sizes.?They are not heavily taxed compared to big businesses.(Any 4 x 1 = 4 marks)6.Calculation of discounts.Shs.Shs.Total amount (200 x 500) ?100,000 ?Less: Trade discount20100? 100 ,00020,000 ??Quantity discountPage | 10200565/1 &565/2 business studies10100Less:5100? 100 ,000Cash discount? 70 , 00030 ,00010,000 ???70 ,0003,500 ??Amount paid66,500 ??(8 x ? = 4 marks)7.Circumstances under which a sole proprietorship may be dissolved.?If the owner decides to dissolve the business.?When there is a change in laws of the country that makes the business illegal.?When the proprietor has achieved his/her objective.?When the court orders that it is dissolved for engaging in unlawful activities.?When the owner of the business dies, becomes too ill to operate or is declared bankrupt.?When the business continuously make heavy losses making it unprofitable to operate.?When business is unable to pay its debts.(Any 4 x 1 = 4 marks)8.Functions of commercial attaches.?Explore and identify new markets for more exports.?Research and analyze markets for exports from their home countries.?Publicize and advertise their country‘s exports.?Select buyers, agents and distributors of the home country‘s exports.?Organize visits to trade fairs and exhibitions for business people from their home countries.?Inform traders in their home countries of the standards required for exports.?Make detailed reports on commercial activities that may help improve the exports from their countries.(Any 4 x 1 = 4 marks)9.Units of carriage.Mode of transportUnits of carriage(a) SeaShips(b) PortageHuman beings(c) RoadMotor vehicles(Any 3 x 1 = 3 marks)10.Reasons why short message services (SMS) is replacing letters as a way of communication.?They are economical than letters/they are cheaper.?They are faster than letters.?They provide immediate feedback.?The same message can be sent to many people at once.?The message can be retained for future reference.?SMS services operate 24 hours so long there is network in the area/one can receive the message anytime.?They are secure.?Reliable/delivery report is given.?Increased ownership of mobile phones.(Any 4 x 1 = 4 marks)11.Reasons why an ageing population may not be desirable to a country.?Deficiency of an economically active labour/low labour supply.?Increase in welfare costs.?Need to import labour that affects the foreign exchange reserves.?Dependency ratio increases.?Rigidity to change.?Fall in demand for goods and services required by the youth.?Less progressive/low savings/low investments.(Any 4 x 1 = 4 marks)12.Reasons why a producer would not need a lot of warehousing facilities.?If the business is located near the consumers.?Where the goods produced are highly perishable.?Where his scale of production is low.?Where there are intermediaries to take the role of storage.?Where the demand of goods is higher than what is produced.?If dealing with fast moving goods.?Where goods are produced on order.(Any 4 x 1 = 4 marks)13.Policies that a business person may find useful for his/her business.(a) Fire.(h)Personal accident.(b) Bad debts.(i)Consequential loss policy.(c) Workmen‘s compensation.(j)Motor accident policy.(d) Cash on transit.(k)Fidelity guarantee.(e) Goods in transit.(l)Life assurance.Page | 103565/1 &565/2 business studies (f) Theft and burglary.(m)Glass insurance.(g) Public liability.(n)Sprinkler leakage.(Any 4 x 1 = 4 marks)14.Circumstances under which it may be appropriate to use personal selling topromote products.?When launching a new product.?When a product is tailored to meet customer‘s specification.?When demonstration is required/good are of technical nature.?When the value of the product is high to avoid the risk of losing the item.?When the organization can afford to finance the sales force.?Where the market is concentrated in one area.?Where the seller want to provide immediate feedback to consumer.?When the seller want to target specific customers.?When the seller want to secure immediate contracts.(Any 4 x 1 = 4 marks)15.Indicate whether each of the following factors influence demand or supply of a commodity.FactorDemand or Supply(a) Changes in the prices of inputs.Supply(b) Change in tastes and preferences.Demand(c) Changes in technology.Supply(Any 3 x 1 = 3 marks)16.Characteristics of a perfect competitive market.?Large number of buyers and sellers.?The buyers and sellers have perfect knowledge of the market conditions.?No government interference in the market.?No transport costs incurred.?Free entry and exit of firms in the industry.?Identical or homogeneous products are produced.?Uniformity of buyers and sellers.?No excess or shortage on demand and supply.?Buyers and sellers are price takers.?Perfect mobility of factors of production.(Any 4 x 1 = 4 marks)17.Problems which may be encountered when measuring national income using output approach.?Deciding on what goods and services to include in measuring national income.?Inadequate output data.?Some activities earning income are considered illegal and not included in the measurement of national income.?Determining the value of national output due to change in prices.?How to value output in the subsistence sector.?Deciding on the price to use for the goods that have been kept as stock.?Possibility of double counting/differentiating primary from intermediate inputs.?Problem of valuing government output as it is not sold in the market.?Inaccu rate data.(Any 4 x 1 = 4 marks)18.Two-column cash book.Mara traders cash book for the month of July 2012DateParticularsCashBankDateParticularsCashBank2012KshsKshs2012KshsKshsJuly 1Balance b/d6,000 ?July1Balance b/d2,000 ?2Debtors50,000 ?5Rent2,000 ?25Cash (c)3,000 ?15Drawings5,000 ?25Bank (c)3,000 ?31Balance c/d1,000 ?446,000 ?6,00053,0006,00053,000(10 x ? = 5 marks) 19. The transactions that took place on the following dates: (a) June 5: Paid Salim traders Shs.50,000 by cheque. (b) June 10: Received a cheque of Shs.10,000 from Kombo. (c) June 20: Paid electricity 5000 by cheque. (d) June 25: Deposited Shs.20,000 in the bank.(4 x 1 = 4 marks)20.Advantages of using subsidiary books of accounts.?To reduce details to be recorded in the ledger accounts/reduce the bulkiness of the ledger.?Act as back up data from which other information may be extracted if need arise/used for future reference.?Contain information in details about description of transactions (such as units, trade discounts and terms of sale).Page | 10400565/1 &565/2 business studies ?The journal is used to trace and locate errors made when recording transactions.?To ensure that double entry is adhered to.?To minimize and discourage fraud which enhance accountability.?Acts as diary/record of transactions as they occur.?Used to prepare control or total accounts.(Any 4 x 1 = 4 marks)21.Banking services that the Central Bank of Kenya provides to the government.?Accept government deposits for safe keeping.?Issues currency on behalf of government.?Arranges and pays public debt on behalf of the government.?Financial advisor to the government.?Keeps government accounts.?Collecting credit on behalf of the government.?Making various payments on behalf of the government.?Giving credit to the government.?Receiving payment on behalf of the government from various sources.(Any 4 x 1 = 4 marks)22.Calculation of the increase in consumer price index.Base year 2012 = 100%40003000? 100 ? = 133.3% ?Increase = (133.3% - 100) ? = 33.3% ?OR(4000 - 3000) ? = 1000 ?1000 ? 100 ? = 33.3% ?(4 x 1 = 4 marks)(4 x 1 = 4 marks) 300023.Causes of balance of payments disequilibrium.?Increased demand for imports leading to increased import prices.?Appreciation of foreign currency making imports expensive.?Devaluation of local currency making imports expensive and exports cheap.?Fall in demand for a country‘s export.?Unfavourable terms of trade.?Natural calamities e.g. drought leading to supply shortage.?Decrease in the volume of exports.?Overdependence on a few exports products.?Nature of imports and exports.?Over reliance on foreign borrowing.?An economic order favouring developed countries in the world.(Any 4 x 1 = 4 marks)24.Ways in which Kenya is likely to benefit from preparing a proper development plan.?Proper resources allocation.?Stimulate effort.?Support foreign aid bargaining.?Project evaluation.?Long term decision making.?Avoiding duplication of industries.?Helps in promoting balance in regional development.?To help in evaluating the performance of the economy.?Helps to correct high inequalities in income distribution in the country.?May coordinate different bodies and ministries of the government.(Any 4 x 1 = 4 marks)25.Amani traders profit and loss accounts.Amani TradersTrial balanceAs at 31st December 2014DetailsDR (Shs)CR (Shs)Commission received22,000 ?Sales763,500 ?Loan interest52,500 ?Purchases474,000 ?General expenses30,000 ?Drawings96,000 ?Rent120,000 ?Salaries owing72,000 ?Electricity prepaid85,000 ?857,500 ?857,500 ?Page | 105565/1 &565/2 business studies KIRINYAGA CENTRAL SUB-COUNTY EFFECTIVE FORTY JOINT EXAMINATION - 2016 BUSINESS STUDIES PAPER 2 Marking scheme 1.(a) Kibugi Wholesalers intends to construct a warehouse. Explain five measures that Kibugi wholesalers should take toensure smooth functioning of the warehouse.(10 marks)?Ensure the warehouse is conveniently located/accessible to the workers and the users.?Ensure the warehouse adequate handling equipment, machines and tools for ease of operation.?Ensure the warehouse is spacious enough to allow easy storage, movement accommodation and accessibility of goods bypersonnel.?Ensure the warehouse is fitted with safety and security equipment protection of goods and personnel against risks e.g. fire.?To ensure proper system of inventory control to monitor stock movement to avoid fraud pilferage and theft.?Provision of sufficient loading and off loading equipment to avoid congestion and delays.?Ensure adequate preservation of the goods stored against damage.?Ensure there is efficient transport system to ease movement of goods in and out of the warehouse.?Ensure that the laid down legal procedures are followed e.g. public health, Licensing etc.?Ensure that the staff is well qualified, trained and motivated to enhance their performance.?Ensure there are proper communication systems between the warehouse and the clients.Underlined is the naming Any 5 splitting5 x 1 = 5mks Naming5 x 1 = 5mks Qualification Total 10mks(b) Explain five ways in which commercial banks facilitate payment on behalf of their customers.(10 marks)a.Standing orders. A customer making regular payments could instruct the bank to make the payments for an agree period oftime until he makes changes to the instruction in writing.b. Credit transfer. Customer with several payments to make at a certain time may write only one cheque and then fill a credit transfer form which instructs the bank who is to be paid and how much. c. Credit cards. The customer obtains goods without paying for them in cash from a retail outlet that accepts the cards. The buyer signs a voucher which is later presented to the bank by the seller for payment. d.Cheques. The bank issues the customers with a cheque book which they use for payments.e.Mail transfer. This is where the bank would remit the payment through mail on behalf of the customer.f.Banker‘s cheque/bank draft. This is a cheque drawn by one bank to another the people making the payment buys the chequeand makes the payment to creditors who don‘t accept personal cheques.g.Letter of credit. This is where banks guarantee payment to exporters on behalf of their clients who have imported goods.h.Traveler‘s cheques. This is used to assist travelers in/out of the country to settle their debts in the country they are visiting.i.Telegraphic transfer. This is whereby bank remits money by use of cables/telephone on behalf of their customers.j.Through M-pesa.Any 5 x 1 = 5mks Naming5 x 1 = 5mks Explanation Total 10mks NB: The naming must come out clearly 2. (a) Your school intends to place an order with Elimu Company limited for the supply of some urgently required laboratory equipment. Explain five reasons why it would be advisable for the school to use e-mail instead of telephone when placing the order.(10 marks)? Emails provide evidence for use in case of a dispute ? Email messages are more confidential hence able to maintain secrets/information can‘t get to unauthorized persons. ? Messages are received without distortion i.e. is reliable. ? It is affordable to send messages via email. ? Messages can be stored for future reference. ? Emails can be sent to several people at once. ? It can provide detailed and complex information such as tables, statistics and graphs. Any 5 x 1 = 5mks Naming 5 x 1 = 5mks Explanation Total 10mks (b) Most third world countries have been experiencing inflation. Explain five negative effects of inflation in the countries. (10 marks) ? Inflation discourages savings. People resort to wanton consumption since the goods are expensive. ? It leads to high interest rates hence high cost of borrowing, low investment and increased unemployment. ? It leads to low standards of living especially for people with fixed income because the value of their earning is eroded by inflation. ? Money lenders lose the real value of their money if interest rate does not change accordingly. ? Runaway inflation may lead to social political unrest especially among the low income earners as commodities become almost unaffordable to the common mwananchi. ? Worsening balance of payment since exports become dear/expensive leading to a fall in their demand. Page | 10600565/1 &565/2 business studies ? The gap between the rich and the poor widens. The rich become richer and the poor poorer. ? It adversely affects the implementation of development plans since the costs escalate to unprecedented proportions. ? Citizens may lose confidence in their local currency and opt to use foreign currencies. Any 5 x 1 = 5mks Naming 5 x 1 = 5mks Explanation Total 10mks 3.(a) Country X is experiencing high levels of unemployment. Explain five measures that she may take to solve theunemployment problems.(10 marks)? To check population growth/family planning. ? Use of appropriate techniques of production such as labor intensive methods of production. ? Promote the informal sector such as jua kali. ? Boost agricultural sector to reduce rural urban migration. ? Exporting surplus labour to other countries. ? Delocalization of firms. ? Protect local industries from unfair foreign competition e.g. enforce anti-damping rules. ? Diversification of economic activities in the country. ? Subsidize local industries. This would make the firm more competitive locally and internationally. ? Have appropriate education and training curriculum. Such curriculum should emphasize self employment as opposed to being employed by others. ? To ensure there is security to attract foreign investors. ? Develop basic infrastructure to spur investment. ? Discourage people holding tracks of idle land to increase land use. ? Increase government expenditure on development activity. Any 5 x 1 = 5mks Naming 5 x 1 = 5mks Explanation Total 10mks (b) Explain five advantages of buying goods on hire purchase terms.(10 marks)? A buyer is able to take possession of goods after the payment of the first installment. ? Installments are spread over a reasonable period of time hence does not cause financial strain to the buyer. ? After sale service are offered to buyers. ? No security is required apart from the item bought hence reducing the cost of credit. ? The buyer uses the goods before clearing debt. ? Payment is predetermined hence the buyer can budget his income. ? Buyers can afford to buy expensive items, which they cannot afford otherwise. ? Can afford to buy a variety of goods at the same time. ? It is a kind of saving in form of goods.Any 5 x 1 = 5mks Naming5 x 1 = 5mks Explanation Total 10mks4.(a) Karoki a newly employed Clerk has been assigned the task of filing documents.Explain to him five characteristics he should consider when choosing a filing system.(10 marks)? Compatibility. Able to save on office space. ? Accessibility. Allow easy retrieval of documents. ? Safety. It should protect the document against damage. ? Economical. Should be within the financial ability of the organization. ? Suitability. Should suit the needs of the firm. ? Elasticity. Should be capable of expanding or contracting when need arises. Any 5 x 1 = 5mks Naming 5 x 1 = 5mks Explanation Total 10mks (b) Using a diagram illustrate the effects of a positive shift of a demand curve on the equilibrium point, price and quantity. (10 marks)Price ??Pe1?PeoDoSoD1??E1 ??Eo??So??D1 Do ?Qeo Qe1?Quantity ??Page | 107565/1 &565/2 business studies 14 ticks x ? = 7mks explanation. The increase in demand shifts the demand from DoDo to D1D1 causing the equilibrium point to move higher and equilibrium price and quantity to increase from Peo to Pe1 and Qeo to Qe1 respectively. (3 marks) Total (10 marks) 5.(a) Explain five circumstances under which a manufacturer would prefer to sell his products direct to consumers instead ofselling through middlemen.(10 marks)? If the goods are perishable to prevent them from going bad. ? To enable him to provide after sale services to buyers e.g. repair and maintenance. ? To minimize the cost of using middlemen and maximize the profits. ? If he has his own retail outlet. ? In case it is the policy of the business. ? If the market is concentrated in one area. ? If the goods are to be produced at the buyers specification. ? If goods produced are in small quantities. ? If the value of goods is too high.Any 5 x 1 = 5mks Naming5 x 1 = 5mks Explanation Total 10mks (b) The headline for yesterday‘s newspaper was ―Mwangaza company limited has been dissolved!‖ Explain five circumstances that could have led to the dissolution.(10 marks) ? When a court of law declares a company bankrupt after establishing that it is unable to pay its debts. ? When a company joins another in the way of consolidation, amalgamation or merger. The two companies are dissolved and a new one is formed. ? Takeovers acquisition absorptions or nationalization of a company. The company taken over ceases to exist. ? Continued loss making to a point of inability to pay its current expenditures such as salaries and other bills. ? Ultra vires. Where the management acts contrary to what the memorandum of association provides e.g. undertaking an activity that is not provided by the memorandum of association. ? Voluntary dissolution. Passing a resolution in a general meeting that the company be dissolved. ? Liquidation by the creditors after undergoing receivership. ? Revocation of certificate of incorporation by the registrar of companies. ? Change in the company law that renders the activities of the company illegal or unlawful. ? If the company does not commence business in the stipulated period i.e. one year after incorporation. ? If the number of shareholders fall below the required minimum. Minimum of seven for a public company and two for a private company. Any 5 x 1 = 5mks Naming 5 x 1 = 5mks Explanation Total 10mks 6.(a) Explain any five reasons why the government and other organizations are engaged in consumer protection.(10 marks)?To ensure consumers obtain goods of high quality. Consumers have a right to obtain commodities that will satisfy their wants according totheir expectation i.e. Traders to sell genuine not counterfeit goods.?To ensure that consumers obtain the right quantity and size of a commodity. Traders should use accurate weighing and measuringequipments.?To ensure health standards are maintained in production of goods so as to safeguard the health of consumers.?To ensure that fair prices are charged on commodities to give consumers value for their money.?To protect the consumers from false advertising which may mislead consumers on ingredients/side effects of the goods produced.Any 5 x 1 = 5mks Naming 5 x 1 = 5mks Explanation Total 10mks (b) Mzalendo Traders Trading profit and loss account For the year ended 30th April 2005 Opening stock37,760 ?Sales186,000 ?Add; Purchases115,560 ?Less; Return inwards4,400 ?Carriage inwards2,340 ?117,900 ?Less; Return outwards3,550 ?114,350 ?Cost of goods available for sale152,110 ?Less; closing stock_11,980 ?Cost of goods sold132,130 ?Gross profit c/d49,470 ?181,600181,600Expenses3,260 ?Gross profit b/d49,470 ?Carriage outwards24,470 ?Net loss c/d2,680 ?Salaries6,640 ?Electricity5,760 ?Rent12,020 ?12,020Sundry expenses52,15052,150Page | 108565/1 &565/2 business studies KAHURO / MURANG’A EAST JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Outline four characteristics of direct production.(4mks)2.Highlight four challenges faced by consumer organizations in carrying out their mandate of consumer protection.(4mks)3.In the spaces provided, indicate whether each of the following statements relate to preference shares or ordinary shares.StatementTypes of shares(i)Has voting rights(ii)Rate of dividend is fixed(iii)Considered first in liquidation(iv)Represent ownership4.Highlight four characteristics of economic resources.(4mks)5.State four ways in which the Kenyan currency qualifies as good money.(4mks)6.List four causes of structural inflation.(4mks)7.Highlight four positive effects of a declining population.(4mks)8.Highlight four uses of a Bill of Lading in international trade.(4mks)9.State four ways in which the nature of goods would influence the choice of transport.(4mks)10. Outline four features of a re-insurance company.(4mks)11. Below are some of the factors that influence the operations of a business. Indicate with a tick (√) in the appropriate columnthe business environment associated with each of the factor.(4mks)FactorsInternal EnvironmentExternal Environment(i)Customers preference(ii)Objectives of the business(iii)Exchange rates(iv)Personnel knowledge and skills12. Using a well labelled diagram, illustrate movement along the demand curve.(4mks)13. Highlight four functions of Kenya Bureau of Standards.(4mks)14. The following information relates to Amani Traders for the period ended 30th April 2012.Shs.Opening stock45,000Closing stock?Purchases720,000Sales980,000Sales returns30,000Carriage inwards20,000Margin20%Prepare Amani Traders‘ Trading Account.(5mks)15. Highlight four methods that are used by a monopolistic firm to differentiate products.16. Nyandudo is employed as a filing clerk in Jagoni Hospital. Highlight four challenges the hospital is facing in it‘s filing fromNyandudo‘s incompetence.(4mks)17. Give four circumstances when it would be appropriate to use signs and gestures to communicate in business.(4mks)18. Indicate using a tick (√) the type of balance that each of the following accounts usually has.AccountDebit balanceCredit balance(i)Capital(ii)Returns inwards(iii)Rent received(iv)Cash in hand19. Outline four types of expenditure included in measuring national income.(4mks)20. List four factors that may influence the methods of distribution of agricultural products from the farm.(4mks)21. For each of the following transactions, state the source document and the book of original entry in which the transactionswould be recorded.( 4mks)TransactionSource DocumentBook of original entry(i)Goods returned to a supplier(ii)Sale of goods on credit(iii)Payment to a creditor(iv)Purchase of goods on credit22. Outline the challenges that less developed countries are likely to experience as they implement their development plans.(4mks)Page | 109565/1 &565/2 business studies 23. For each of the following situations, name the most suitable means of payment to be used. (4mks) SituationMost suitable means(i)A trader wishes to pay fifty of his creditors using one cheque for supplies received.(ii)Paying school fees for a student from Nyeri who is at Nairobi School.(iii)Paying Insurance Premiums monthly to CIC for a Life Cover.(iv)Wairimu wishes to instantly transfer Shs. 50,000 from her account to another account.24. Chumo industries want to open a warehouse for her products. Give the management some advice on four factors it shouldconsider in establishing the warehouse.(4mks)25. Identify three ways of generating a business idea.(3mks)Page | 110565/1 &565/2 business studies KAHURO / MURANG’A EAST JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/2 PAPER 2 1.(a) Explain five guidelines that should be considered when designing a good tax system.(10mks)(b) Abdula, a manufacturer exhibited his goods at a local trade show. However, his sales did not increasesignificantly thereafter. Outline five reasons that may have led to lack of significant sales increase.(10mks)2.(a) Kazungu has located his manufacturing firm away from the source of raw materials he uses.Explain five challenges he is likely to experience as a result of the location.(10mks)(b) On 1st July 2011, Mananga had cash at Bank sh. 136,500 and cash in hand sh. 3,250. During the month,the following transactions took place.July2:Cash sales Sh. 42,630 paid directly into bank.July3:Received a cheque for Sh. 14,100 from Murungi in full settlement of a debt.―8:Bought goods for Sh. 26,240 and paid by cheque.12:Cash sales 42,450.14:Paid Ochako by cheque Sh. 23,750 in full settlement of his account less 5% cash discount.15:Paid wages Sh. 24,000 in cash.16:Withdrew sh. 36,000 from bank for office use.18:Bought stationary in cash Sh. 750.20:Cheque received from Murungi was dishonoured.28:Paid salaries by cheque for Sh. 48,600.30:All cash was banked except Sh. 5,000.Required:Prepare a Three-Column Cashbook duly balanced.(10mks)3.(a)Outline five differences between perfect competition market and oligopolistic markets.(10mks)(b)Explain five measures that a country may take to correct a balance of payment deficit.(10mks)4.(a)Outline five circumstances under which the government of a country would encourage high population.(10mks)(b)Explain five monetary policy measures that the government may take to control demand pull inflation.(5mks)5.(a)Highlight five differences between an open plan office and enclosed office layout.(10mks)(b)Explain five activities that may be carried out in the process of distributing goods.(10mks)6.(a)Explain five factors that may negatively affect the demand for a product in the market.(10mks)(b)The following trial balance was extracted from the Books of Kabati Traders onDecember 31st 20-2.DrCrShs.Shs.Sales370,400Purchases290,000Returns15,00010,000Carriage in6,000Carriage out4,200Advertising12,000Commission23,000Cash50,800Discounts4,90016100Salaries and wages22,500General expenses8,300Machinery405,000Stock27,500Capital390,900Debtors56,200Creditors73,250Bank overdraft18,750902,400902,400Stock on 31st December 20-2Sh. 35,000Prepare the Trading, Profit and Loss Account for the period ended 31st December 20-2 and a balance sheetas at that date.(10mks)Page | 111565/1 &565/2 business studies KAHURO / MURANG’A EAST JOINT EXAMINATIONS 2016 BUSINESS STUDIES PAPER 1 Marking scheme 1.Characteristics of direct production.?Production usually in small scale.?Production usually for own consumption.?Use simple methods of production.?Low quality produce/products.?Encourage individualism.?Does not encourage specialization and division of labour.?Low volume of goods produced.(4 x 1 = 4mks)2.Challenges facing consumer organizations?Lack of adequate support by the government.?Lack of sufficient information from consumers.?Ignorance on the side of consumers about their rights.?Lack of adequate funds / capital to support their programmes.?Lack of initiative / apathy by the consumers.(4 x 1 = 4mks)3.(a) Ordinary shares(a) Preference shares(b) Preference shares(c) Ordinary shares(4 x 1 = 4mks)4.Characteristic of economic resources.(a) Have money value (b) Have alternative uses. (c) Can change possession. (d) Scarce in supply. (e) Have utility. (f) Can be combined to produce other goods. (g) Can be complementary.(4 x 1 = 4mks)5.Characteristics of Kenyan currency.?It is light in weight hence portable.?It is scarce.?It is difficult to forge.?It is generally accepted as a medium of exchange.?It is divisible in different denominations.?It is fairly stable in value.(4 x 1 = 4mks)6.Causes of structural inflation.?Shortage of resources.?Lack of skilled manpower.?Poor infrastructure.?Poor allocation of resources.?Poor or outdated technology.(4 x 1 = 4mks)7.Positive effects of a declining population.?Reduced unemployment.?Reduced government expenditure.?Reduced pressure on the available resources.?Better standards of living incase the country was experiencing over-population.?Reduced crime rate / social evils.?Reduced dependency ratio.(4 x 1 = 4mks)8.Uses of Bill of Lading.?It acts as an evidence that goods have been actually received by the ship.?It acts as a contract of carriage between the shipper and the exporter.?It is used in customs clearance.?It enables the importer / his agent to collect goods from the ship.?It shows the freight charges.(4 x 1 = 4mks)9.Ways in which the nature of goods influence choice of transport.?If goods are perishable a fast means is required / appropriate.?If goods are fragile a smooth means is required.?If goods are highly valued a safe and secure means is required.?If goods are bulky an appropriate means should be used.?If goods are urgently needed, a faster means will be used.(4 x 1 = 4mks)Page | 112565/1 &565/2 business studies 10. Features of a re-insurance company. ? Commands large financial resources. ? The company guarantees compensation. ? Deals with corporate insurance clients. ? Government has a stake in a re-insurance company.? Empowered by law to insure other insurance companies.11.FactorsInternal environmentExternal environment(a)√(b)√(c)√(d)√12.? PriceDXP1?P0Y?P2ZDQ1Q0Q213. Functions of Kenya Bureau of standards.? Formulating standards of quality and safety.? Prosecuting traders who violate the set standards.(4 x 1 = 4mks)Quantity (4 ticks x 1 = 4mks) ? Putting stamps of approval on goods that have met established standards. ? Testing samples of products to ascertain their quality. ? Disseminating information to consumers about quality of goods. ? Publishing journals, magazines and periodicals. ? Research and development of standards. ? Making regular inspection of business premises to ensure standards are met.(4 x 1 = 4mks)14. AMANI TRADERS TRADING ACCOUNT FOR THE PERIOD ENDED 30/4/2012 Opening stock45,000 ?Sales980,000 ?Add: Purchases720,000 ?Less: Returns inwards30,000 ?Add: Carriage inwards20,000 ?Net sales950,000 ?Goods available for sale785,000 ?Less: Closing Stock(25,000) ?Cost of sales760,000 ?Gross profit c/d190,000 ?950,000950,000(10 x ? = 5mks) 15. Methods used to differentiate goods by a monopolistic firm. ? Branding ? Packaging in different sizes. Page | 113565/1 &565/2 business studies ?Pricing?Blending into different colours.?Persuasive advertising.?Designing.?Trade marks / salient features.(4 x 1 = 4mks)16.Challenges the hospital faces due to incompetence of the filing clerk.?Insecurity of documents / loss of documents.?Difficult to retrieve / access documents.?Untidy documents / spoilage of documents.?Loss of guarantee for future reference.?Lack of confidentiality / privacy / secrecy.?Untidy/unpleasant work place/office.(4 x 1 = 4mks)17.Circumstances when it is appropriate to use signs and gestures in business.?When the recipient is deaf.?When silence is vital e.g. in hospital.?Where the environment is noisy e.g. in factories.?Where communicating confidential message.?Where there is need to emphasize a point.?Where there is a language barrier.(4 x 1 = 4mks)18. (a) Credit (b) Debit (c) Credit (d) Debit(4 x 1 = 4mks)19.Expenditures included in measuring national income.?Government expenditure?Personal expenditure?Investment?Imports(4 x 1 = 4mks)20.?Nature of product e.g. perishable, fragile.?Government policy?Nature of the market.?Cost of distribution.(4 x 1 = 4mks)21.Source DocumentBook of original entry(a)Credit note receivedPurchases returns journal(b)Invoice issued / sales invoiceSales journal(c)ReceiptThree column cash book / cash payments journal(d)Invoice received / purchases invoicePurchases journal(8 x ? = 4mks)22.Challenges likely to be faced by less developed countries as they implement their development plans.?Failure to get expected funding.?Natural calamities.?Conflict among the executing parties.?Lack of political will.?Inadequate domestic resources.?High rate of inflation.?High population growth rate.?Where the development plan is over ambitious.(4 x 1 = 4mks)23.Means of payment most suitable for situations(a) Credit transfers(b) Bankers cheques / Bank drafts(c) Standing orders / Bankers order(d) EFT - Electronic Funds Transfer(4 x 1 = 4mks)24.Factors considered when establishing the warehouse.?Should be in an ideal location to receive and release goods.?Should have well trained and qualified staff.?Should have good inventory recording system.?Should be near a good transport and communication systems.?Should be secure.Page | 114565/1 &565/2 business studies ? Should have necessary equipment. ? Should be spacious. ? Ensure legal procedures are followed. ? Proper building and structure appropriate for the type of goods to be stored.(4 x 1 = 4mks) 25. Ways of generating business idea. ? By building on ones hobbies, skills and interests. ? Identifying a market gap / market niche. ? Improving on an existing business. ? By combining and copying two existing ideas. ? Through reading newspapers, journals, books etc. ? Recycling waste materials. ? Carrying out market research. ? Listening to what people say. ? By brainstorming. ? Through vocational training and experience.(3 x 1 = 3mks)Page | 115565/1 &565/2 business studies KAHURO / MURANG’A EAST JOINT EXAMINATIONS 2016 BUSINESS STUDIES PAPER 2 Marking scheme 1.(a) Guidelines to be considered when designing a good tax system. ( 5 x 2 = 10mks)?Equity: The tax system should be equitable in that it does not impose greater burden on some citizens.?Convenient: It should be convenient to both the tax payers and the collectors in terms of when, where and how it is collected.?Certainty: The tax payer should know what their actual tax liabilities are.?Flexibility: It should be flexible to fit in with changing economic conditions.?Economy: The tax yield should be greater than the cost of collection.?Diversity: it should be diversified in order to cover wide base.(b) Reasons that may have led to lack of significant sales increase when Abdula exhibits his goods in a local trade show.?Low attendance at the exhibition.?People attending the exhibition may not have comprised of potential customers.?The quality of his goods may not have been impressive.?The cost of the goods may have been beyond the reach of potential customers.?The product may not have been culturally acceptable.?The economic environment may not have been conducive.?There might have been other manufacturers with similar goods.?People attending the exhibition were not convinced / poor salesmanship / poor exhibition.2.(a) Challenges Kazungu is likely to experience as a result of locating the factory far from the source of raw materials.?Damaged raw materials: as they are transported for long distances.?Interruption of production: due to lack of continuous supply of raw materials arising from their delay.?Competition for the raw materials: with other producers who have advantages over Kazungu as they may be located near thesource.?High storage cost: due to stocking large quantities of raw materials to avoid would be stock-outs.?Loss of stock: Due to spoilage / theft while the raw materials are on transit.MARANGA TRADERS(b)CASH BOOK FOR THE MONTH OF JULY 2011DateDetailsFoD.CashBankDateParticularsFoD.RCashBank2011lioA2011lioJuly 1Balance b/d3,250136,500July 8Purchases36,240?2Sales??14Ochako1,25023,750?3Murungi42,630?15Wages?24,000?12Sales14,100?16Cash36,000?16Bank42,45018Stationary750?29Nyoje?20Murungi14,100?30Cash36,00028Salaries48,600??51,950?30Bank51,950?31Bal c/d5,000?109490?81,700245,1801,25081,700245,180(20 x ? = 10mks)3.(a) Differences between perfect competition market and oligopolistic markets (5x2 = 10mks)Perfect CompetitionOligopolistic market? Has many sellers and buyers.? Has few sellers and many buyers.? Deals in homogenous products.? May deal in differentiated products.? Actions of one firm has no effect on the market.? Actions of one firm may affect the market.? Has perfectly elastic demand curve.? Has kindled demand curve.? Price is determined by interplay of demand and? Price is determined by the firms through pricesupply.wars, collusions and non-price competition.(b) Measures a country may take to correct a balance of payment deficit. (5 x 2 = 10mks)?Increasing the volume of exports: This may be done through provision of export incentives e.g. export compensation scheme.?Reducing the volume of imports: This is done through increasing import duty and exchange controls.?Devaluation of currency: i.e. lowering the value of a country‘s currency relative to other currencies. This makes exportscheaper, hence more exports are made.?Diversification of exports: i.e. increasing the range of commodities to be exported.?Borrow funds from international bodies or other countries.?Get assistance of funds from IMF and the World Bank.Page | 116565/1 &565/2 business studies 4.(a) Circumstances under which the government of a country would encourage high population (5 x 2 = 10 marks)?When the government wants to have enough labour force.?When the government wants to have high security i.e. high population enhance security.?When the government wants to have enough market i.e. high population provide enough market.?When the government wants its resources to be fully utilized.?When the government have enough resources to cater for high population.(b) Monetary policy measures that the government may take to control demand-pull inflation in the country (5 x 2 = 10mks)?Increase bank rates to reduce demand for loans / amount of money in circulation.?Selling government securities to reduce excess money in circulation.?Increase cash / liquidity ration to reduce money available for lending.?Increase compulsory deposit to reduce amount of money in circulation.?Use selective measure to discourage lending.?Moral suasion / persuasion - government appealing to commercial banks to limit their lending in order to reduce moneysupply.5.(a) Differences between an open office plan and enclosed office layout (5 x 2 = 10 marks)Open Office LayoutEnclosed Office Layout? A large room where employees work from.? Small cubicles occupied by one or two officers.? No privacy for confidential discussions.? Provides privacy for confidential discussions.? Low construction and maintenance cost as it requires? High construction and maintenance cost as itfew partitions.requires many partitions.? Minimum staff movement thus saves time when? Time wastage as staff move from one office topassing information.another to pass information.? Close supervision discourages absenteeism.? Encourages absenteeism due to lack of closesupervision.? Noise from machines and employees may cause? Limited interruptions from machines andinterruptions.employees.? Does not give prestige to officers.? Gives prestige / status to officers.? Air conditioning, lighting, heating in the room may? Air conditioning, lighting and heating can benot be conducive to all.regulated to suit the need(s) of the officer(s).(b) Activities that may be carried out in the process of distributing goods (5 x 2 = 10 marks)?Transport - movement of goods from one place to another.?Warehousing / storing - keeping goods until the time they would be required.?Insurance - ensuring security of the goods as they are stored or being transported by taking an insurance cover.?Preparation of goods for sale - involves activities such as blending, sorting, branding, packing etc.?Communication - passing messages / information from one person to another.?Trading - passing ownership from one person to another through buying and selling.6.(a) Factors that may negatively affect the demand for a product in the market (5x2=10 marks)?Negative taste and preferences towards the commodity.?Low prices of substitutes.?Increase in price of its complimentaries.?Low levels of population.?Unfavourable government policies e.g. increased taxes.?Increase in price of the product.?Future expectation of a fall in the price of the product.Page | 117565/1 &565/2 business studies (b)Kabati TradersTrading Profit and Loss Account ?For the Period ended 31st December 20-2Sh.Sh.Sh.Sh.Opening stock27,500 ?Sales370,400 ?Add: Purchases290,000 ?Less:Add: Carriage inwards6,000?296,000Returns in15,000 ?355,400Less: Returns out10,000 ?COGAFS313,500 ?Less: Closing Stock35,000 ?Cost of sales278,500 ?Gross profit c/d76,900 ?355,400355,400Carriage outwards4,200 ?Gross profit b/d76,900?Advertising12,000 ?Commission23,000?Discount allowed4,900 ?Discount Received16,100?Salaries and wages22,500 ?General expenses8,300 ?Net profit64,100 ?116,000116,000KabatiTradersBalance Sheet ?As at 31st December 20-2Machinery405,000?Capital390,900?Stock35,000?Add:Debtors56,200?Net Profit64,100?Cash50,800?455,000?Creditors73,250?Bank Overdraft18,750?547,000547,000(30x ? = 10mks) Page | 118565/1 &565/2 business studies CENTRAL KENYA NATIONAL SCHOOLS JOINT MOCK - 2016 BUSINESS STUDIES 565/1 PAPER 1 1.State four reasons why consumers have to make a choice between competing need.(4mks)2.Highlight four advantages of having inland container depots (ICDS) in Nairobi, Kisumu, Eldoret and Malaba.(4mks)3.State four various sources of public finance.(4mks)4.Highlight four gaps in society that may give rise to a business opportunity.(4mks)5.Highlight four reasons why mail order business is not very popular in Kenya.(4mks)6.Outline four favourable factors for a business to thrive.(4mks)7. A supplier writes a credit note to a trader state three reasons that could have led to this.(3mks)8.Write the account to debit and credit in the following transactions written below.(4mks)TransactionA/c to debtA/c to credit(a)Returned damaged goods to supplier(b)Received rent by cheque.(c)Took cash for personal use.(d)Customer returned ordered goods.9.Highlight four advantages of delocalization of industries.(4mks)10.The following information relate to Sika Investment Ltd for the year ended 30th June 1997.Sh.Opening stock185,000Sales240,000Expenses180,000Purchases410,000Net profit140,000Closing stock205,000Machinery500,000Debtors150,000Cash at hand25,000Accrued rent140,000AFC loan (10yrs)150,000Capital415,000Bank overdraft60,000Bank110,000Creditors85,000Required:Prepare Sika Investment Ltd balance sheet as at 30th June 1997.(5mks)11.Indicate the type of insurance losses described by the following circumstances.(a) Matter insured is not completely destroyed but cost of salvage is more than the wreckage.(1mk)(b) Loss occurring by deliberate action of the ship master to save the screw.(1mk)(c) Loss occurring on a ship accidentally.(1mk)(d) Loss occurring and the matter insured is completely lost.(1mk)12.Indicate the type of journal in which each of the following transactions would berecorded.(4mks)TransactionType 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.13.State the law relating to each of the following:(i) Demand:(ii) Supply.14.State four factors to be considered when deciding on office layout.(4mks)15.Highlight four ways in which the Central Bank acts as a Banker to the government.(4mks)16.Identify the legislation meant to protect consumers that each of the following description refers to.(4mks)DescriptionLegislation(a) Ensures that traders or producers do not cheat consumers by giving false descriptions of goods.…………………………….……(b) Prohibits traders and manufacturers from includingsubstance that might harm consumers in a product.………………………….………(c) Ensures that all weighing equipments are correctand accurate.………………………….………Page | 119565/1 &565/2 business studies (d) Ensures that the landlord‘s do not overcharge their tenants.………………………….………17.Outline four problems that a country may face when measuring her national income using the income approach.(4mks)18.List down four securities that are traded at Nairobi stock exchange market.(4mks)19.The following information relates to Kuwa‘s business for the year ended 31st May profitSh.20,000Working capitalSh.30,000Return on capital20%EmployedDetermine the value of:(i) Capital employed.(2mks)(ii) Fixed assets.(2mks)20.Outline four factors that may account for predominant direct production in developing countries.(4mks)21.Outline four reasons why a business person may prefer written communication to verbal communication.(4mks)22.The following information relates to Murang‘a traders for the year ended 30th September 2006.Sh.Stock 30th Sep 2006124,000Stock 1st Oct 2005200,000Purchase for the year380,000Sales440,000Return inwards20,000Carriage inwards4,000Carriage outwards1,500Prepare the business trading account for the year ended 30th Sep 2006.(4mks)23.Identify four indicators of economic development in a country.(4mks)24.Highlight the role of consumer organizations in consumer protection.(4mks)25.State four methods usually used in trade restrictions.(4mks)Page | 120565/1 &565/2 business studies CENTRAL KENYA NATIONAL SCHOOLS JOINT MOCK - 2016 BUSINESS STUDIES 565/2 PAPER 2 1.(a)The following transactions took place in the business of Darasile Traders in Kisumu year 2013.July 1st: Started business with capital in cash Kshs.150,000.July 2nd: Opening a bank account and deposited Kshs.30,000. July 3rd: Bought buildings in cash Kshs.60,000. July 4th: Borrowed a loan in cash Kshs.20,000. July 5th: Bought stationery by cheque worth Kshs.6,000. July 6th: Repaid part of the loan by cheque Kshs.10,000. Required: (i) Record the above transactions in their various ledger accounts.(6mks)(ii) Prepare a trial balance.(4mks)(b)Explain five features of a good filling system.(10mks)2.(a)Describe five ways in which non-banking financial institutions differ from the commercial banks.(10mks)(b)Explain five importance of a business plan to an upcoming entrepreneur.(10mks)3.(a)Outline the factors that the government should consider when deciding on a good tax system.(10mks)(b)Outline five differences between private limited companies and public corporation.(10mks)4.(a)Outline five benefits that Kenya will reap after the completion of the Lamu Port and Lamu South Sudan-Ethiopiacorridor (Lapset) project whose construction is underway.(10mks)(b)Other than monetary policy, outline other five measures that can be used to control inflation.(10mks)5.(a)Explain five causes of unemployment in Kenya today.(10mks)(b)Explain five insurance policies that the owner of a private school may find useful for his or her school.(10mks)6.(a)Highlight five differences between a tied shop and a single shop.(10mks)(b)On 1st November 2012, Sigora Co. Ltd had a balance of Sh.12,000 at the bank and Sh.2500 in hand. During the monththe following transactions took place.Nov 1st: Cash sales Sh.2500, cash purchase Sh.1750. 3rd: Paid the following accounts by cheque. Kiprop Sh.1500 less 5% cash discount. Sigei Sh.2000 less 5% cash discount. Nasiku Sh.2100 less 3% cash discount. 5th: Received the following amounts from debtors Ondiek Sh.1200 in cash. Jane Sh.3850 in cash and Mueni by cheque Sh.2050 after allowing her Sh.300 cash discount. 14th: Paid office cash to the bank Sh.2000. 17th: Cash sales Sh.8500. 8th: Bought goods worth Sh.300 0 on credit from Mwau enterprises. 22nd: Mueni paid her account of Sh.5000 by cheque less 10% cash discount. 28th: Withdrew all the money from the bank for office use except Sh.1000. 29th: Paid salary cash Sh.8000. 30th: A cheque received from Mueni on Nov 5th was dishonoured. Required: Prepare Sigora Co. Ltd three column cash book.(10mks)Page | 121565/1 &565/2 business studies CENTRAL KENYA NATIONAL SCHOOLS JOINT MOCK - 2016 BUSINESS STUDIES 565/1 Marking scheme 1. ?Due to unlimited need of consumers.?Due to different taste / preferences of the consumer.?Due to government policy on goods.?Due to different prices of goods.?Limited resources or income.?Due to different cultures and beliefs.2.?It makes the containers and their use accessible to importer‘s and exporters from land.?Facilitate easier handling of containers in Kenya by discongesting container traffic at the port.?ICD‘s makes it possible for door to door delivery of goods to be undertaken in land.?The business men in the interior do not need for more specialized packing as if goods were to be transported in smallerpackages thus reducing packing cost.3.?Taxes?Fines?License fee?Borrowing from external sources.?Public debts?Sales of government assets4.?In availability of products.?Poor quality products.?Insufficient quantities.?Unaffordable prices?Poor services.5.?There are high cost of advertising.?Inspection of goods by the customer is not possible.?The variety of goods that can be sold is limited.?No personal contact between buyer and seller.?Suitable only for the iterate.?Problems arising in the post office may affect the business.6.?Availability of raw materials.?Availability of land for location and expansion.?Adequate security.?Availability of market.?Clean natural environment.7.?Due to mathematical errors leading to overcharge.?Price overcharges.?Unordered items in the invoice?Failure to deduct the allowed discounts.?Return of damage goods.8.DebitCreditPurchase returnPurchaseBankRent incomeDrawingsCashSalesSales return9.?It minimises the damage that may arise in case of sabotage.?Development of auxiliary sources.?Reduces level of pollution.?Brings about balance regional growth.?Reduces rural - urban migration.?Reduce congestion in the urban areas.Page | 122565/1 &565/2 business studies ? Creates employment opportunities to the rural people. ? Development of the infrastructure in the rural areas. 10Sika Investment LtdBalance sheetAs at 30th June 1997Fixed assetsCapital415,000Machinery500,000+Net profit140,000Current Assets555,000Stock205,000L.T.LDebtors150,000AFC loan150,000Bank110,000C.LCash25,000Bank overdraft60,000Accrued rent140,000Creditors85,000990,000990,0001 / 2 x 10 = 5 mks 11. (a) Contrucctive total loss (b) General average loss (c) Particular average loss (d) Actual total loss 12. ?Sales return journal?Purchase journal?Cash receipt journal?General journal13.Demand - All other factors remaining constant, the lower the price of a commodity the higher the quality demanded and viseversa.Supply - All factors held constant, the lower the price of a commodity the lower the quality supplied and vise versa.14.?Staff to be accommodated.?Minimal movement.?Easy supervision of staff.?Proximity to equipment.?Working space.15.?Keeping government accounts.?Managing government borrowing.?Financial advisor to the government.?Receiving payment of behalf of government.16.Trade description act.Goods and drug act Weight and measures act Rent and tribunal control act. 17. ?Fluctuation of prices.?Inclusion of transfer payment.?Inaccurate data.?Existence of large scale subsistence sector.?Difficult to obtain accurate figures from people working abroad.18.?Preference shares.?Treasury bills.?Treasury bonds.?Ordinary sharesPage | 123565/1 &565/2 business studies 19. (a) RO.C.E = N.P x 100 C.E20= 20,000100C.E(1 mk)C.E= 20,000 x 10020= 100,000(1 mk)(b) C.E= F.A + W.C100,000 = x + 30,000(1 mk)x= 100,00 - 30,000x= 70,000(1 mk)20.?Reliance on poor technology which cannot facilitate production for market.?Low incomes?Poor resource endowment.?Lack of appropriate skills?Inadequate market for goods21.?It can be retained for future reference.?Suitable for confidential messages.?Can be reproduced.?Can be re-read.22.Muranga TradersTrading A/CDrFor the year ended 30 /9 / 06CrOpening stock200,000Sales440,000Purchase380,000- Return inward20,000+ Carriage in4,000Net sales420,000384,000C.O.G AS584,000Gross loss c/d40,000- Closing stock124,000C.G.S460,000460,000460,0008 x 1/2 = 4 mks23.?Shifting from agricultural to manufacturing.?Reduction in illiteracy.?Increase in technology and improvement in entrepreneurial ability.?Improvement in health facilities.?Reduction in the gap between the poor and the rich.24.?Collecting complains from consumers.?Seeking legal redress against offenders.?Educating consumer‘s on their rights.?Taking consumer complains to the relevant government bodies of KEBS.25.?Custom import duty.?Quotas.?Total ban?Trade agreements.?Administrative controls.?Foreign exchange control.Page | 12400565/1 &565/2 business studies CENTRAL KENYA NATIONAL SCHOOLS JOINT MOCK - 2016 BUSINESS STUDIES 565/2 Marking scheme Darasarite Trades Trial Balance As at 6 /72013 Name of accountsDebit (sh)Credit (sh)Capital150,000Cash80,000Bank14,000Loan10,000Stationery6,000Building60,000160,000160,000(b) Features of a good fitting system. ? Simplicity - Simple to understand and operated. ? Suitability - Appropriate to the needs of the business concerned. ? Elastic - Flexible to cater for future changes. ? Safety: Provide protection to documents against loss, misplacement on theft. ? Accessible - Information can be easily retrieved. ? Economic - It should not be expensive to start and maintain.(5 x 2 = 10 mks)2.Page | 125565/1 &565/2 business studies (a) Differences between NBFI and commercial banks. ? NBFI do not provide current A/C while commercial banks provide current A/C facilities. ? NBFI provide long-term loans while commercial banks provide medium and short term loans. ? NFBI are not regulated (supervised) by central bank while commercial banks are regulated by central bank. ? NBFI provides finance strictly to specific sectors while commercial banks do not restrict their financial provision (Assistance) ? NBFI do not participate in clearing since they do not have cheque facilities, while commercial banks participate in clearing house. ? NBFI do not provide facilities for safe keeping of valuable items while commercial banks provide safe keeping facilities. ? Commercial banks exchange foreign currency while NBFI do not exchange foreign currency. (b) Importance of a business plan. ? Helps in avoiding occurrence of mistakes. ? Identification of strength and weakness of a business. ? Determination of the amount of finance required. ? Appropriate allocation of resources. ? Its a requirement by financiers. ? Its a tool for control in evaluating the perform of business by comparing the planned activities with actual performance. ? Adaptability: It gives a business room to accommodate any unforeseen changes that may occur in future. ? Acts as a motivating factor to the employees. 3. (a) Principles of a good tax system. ? Equity:-:A good tax system should ensure that there is fairness in payment of tax.? Certainty -The tax that an individual or firm is supposed to pay should be clear in terms of amount,time and manner in which it should be paid.? Economy:-The cost of collecting and administering tax should be lower than the revenue to be collected.? Convenience:- The tax levied should be convenient to both contributor and the collector.? Flexibility:-A good tax system should be readily adoptable to changing circumstances such as change in price levels.? Diversity:-A good tax system should be diversified so that it meets revenue requirements of the country.(b) Difference between private Ltd company and public corporation.Private Ltd company(i) Formed under the company Act(ii) Owned by shareholders.(iii) Managed is appointed by shareholders. (iv) Its profit motivated.(v) Profits are shared by the shareholders (vi) Capital is provided by the shareholders.4.Public corporation(i) Formed under act of parliament.(ii) Owned by government jointly with private investors. (iii) Management is appointed by the government. (iv) Main motive is to offer essential services to the public(v) Profit go to the government.(vi) Capital is provided by the government (a) Benefits of the Lapset Project whose construction is underway. ? It will reduce over-dependence on Kenya‘s main port of Mombasa thus decongesting it and reducing delays. ? It will provide job opportunities to many Kenyan. ? Increase trade co-operation between Kenya and the neighboring countries. ? It will open (develop) Kenya‘s largely under developed Northern region. ? Reduced cases of insecurity in the Northern Kenya. (b) Measures of controlling inflation other than the monetary policy. ? Reducing government spending :- Which has an effect of having more money in circulation which may bring about demand -pull inflation. ? Increase in income taxes - The government may increase tax rates so as to reduce consumer‘s disposable income, this lowers the levels of spending thereby controlling demand - pull inflation. ? Reducing tax on production - This will reduce the cost of production leading to reduced prices which helps in controlling cost - push inflation. ? Subsidising production - When the government subsidise the production cost which lead to reduced prices. This way cost-push inflation will be curbed. ? Producing commodities that are in short supply - With increased supply, prices are likely to go down thereby controlling inflation. ? Controlling wages and salaries to reduce to reduce cost of production through reduced wages and salaries cost-push inflation is curbed. ? Price control - The government sets price limit beyond which various commodities should not sell at. ? Restricting imports - This is to curb imported inflation. ? Restricting terms of hire purchase and credit terms of sales. ? Controlling of exports - The government may either restrict or totally ban the exportation of the said product. Page | 12600565/1 &565/2 business studies 5. (a) Causes of unemployment in Kenya. ? Rapid population growth - The population is growing at a faster rate at which the economy is expanding. ? Use of inappropriate technology in production i.e use of capital intensive methods instead of labour intensive. ? Inappropriate education system which impact skills that does not match with the realities of the labour market. ? Seasonality in production. Seasonal variation creates unemployment during off peak season. ? Lack of adequate market for goods which discourage production of goods and services. ? Inadequate cooperant factors imputs. ? Rural to urban migration contributes to rural under development. (b) Insurance policies that the owner of a private school may find useful. (i) Fire insurance. He/she may cover properties such as buildings (classrooms) against fire. This type of insurance cover loss or damage of property caused by fire. (ii) Burglary / Theft cover. This policies cover losses arising from activities of robbers and thieves e.g robbers may break into the school buildings and carry away various items including money. The school would be compensated for both losses of items and damages on the buildings by robbers. (iii) Workmen‘s compensation policy / employer‘s accident liability. It covers employees who many suffer injuries while on official duty. (iv) Public liability policy. This policy covers losses, injuries or damages caused accidentally by a business or its employees to the members of the public. (v) Fidelity guarantee policy. He / she may protect the school against losses arising from activities of dishonest employees e.g money lost or stolen by accountants or school bursar. (vi) Motor vehicle insurance policies. These policies may be useful aimed at covering school buses from losses arising from accident. 6.(a)Tied shopSingle shop1. The proprietor is normally the manufacturer1. Owner by individuals2. It sells products from a single manufacturer‘s.2. It sells product‘s from different manufacturer.3. The shops usually have the some designs.3. The design of the shop is according to the owner‘swish4.Prices of good‘s are determined by the4. Prices of goods are determined by differentmanufacturer.manufactures or shop owners.5.The operator are usually trained by the5. The operator‘s are not trained by the manufactures.6.Dealership can be withdrawn by the6. The owner is at liberty to stock whatever he or shemanufacturer if the operator stock competingwishes to stock.products.b)Page | 12700565/1 &565/2 business studies KAMDARA JET EXAMINATION BUSINESS STUDIES 565/1 PAPER 1 1.State FOUR reasons why consumers satisfy basic wants before secondary wants(4 marks)2. State FOUR factors determining the supply of labour in an economy(4 marks)3.Jitegemee, a very young entrepreneur would like to start a business in Makadara center. Outline four factors that would showthe existence of a business opportunity within the center(4 marks)4.Highlight fourmonetary policy measures used to regulate circulation of money in an economy(4 marks)5.Highlight fourways in which ethical practices in business ensures that consumers are not exploited( 4 marks)6.Outline four consequences of a poor filing system in an organization(4 marks)7.Highlight four features that distinguish co-operative societies from other forms of business units(4 marks)8.Highlight four measures to alleviate the balance of payment problems(4 marks)9.The following information was extracted from MaweMbili traders for the year ended 31st December, 2015KSHMachinery460,000Cash in hand80,000Debtors130,000Creditors60,000Prepaid salaries20,0004 year loan280,000Accrued rent30,000Required: Prepare a balance sheet of Mawembili traders as at 31st December, 2015 10. Study the diagrams below and answer the question that follows:-PriceD1PriceDoD0D1DoD0(i)Quantity(ii) QuantityState the factors that may cause the above change from diagram (i) to (ii)(4 marks)11. Givefourreasons why railway transport is not competitive in Kenya.(4 marks)12. The following balances were extracted from the books of Asena Enterprises on 30th June, 2006.Shs.Gross profit120,000Rent Income100,000Dividends received200,000Salaries300,000Carriage outwards10,300Discount allowed21,000Prepare Asena's Enterprises profit and loss account for the year ended 30th June,2006.(4 marks)Page | 128565/1 &565/2 business studies 13. Indicate the source document and the book of original entry in which each of the following transactions should be recorded NoTransactionsSource documentBook of original entrya)Purchase of goods on creditb)Payment of cash to a creditorc)Sale of goods on creditd)Sale of fixed asset for cash14. Atemo is the head of the marketing team at ABC Company that has recorded tremendous increase in volume of sales over thelast four years. Highlight four attributes that she possess.(4 marks)15. Outlinefour features of a monopolistic market(4 marks)16. state four positive implications of a large population in a country(4marks)17 Outline four circumstances under which an Insurance company may re- Insure.(4 marks)18. State four importance of development planning.(4 marks)19. Record the following transactions in a two column cash bookand balance it off as at January 12th2008(4mks)January 1Started business with capital sh. 10,000 cash and sh. 25,000 bank overdraft2bought stock in cash sh. 6,0003cash sales sh. 2,5007bought stock worth sh. 5,000 on credit12withdrew cash from bank for office use sh. 4,00020. The following are types of internal and external environments Technological, Business structure, Demographic and physical.In the table below , write the type of environment that suits the description.(4 marks)DescriptionEnvironmenti)A duty roster of workers in an organizationii) An increase in demand of an organizations product as a result of an increase in population.iii)An organization engaging the services of G4 Security.iv)Use of e-commerce in the marketing of the organization‘s product.21. Mention four circumstances under which verbal communication would be used in an organization.(4 marks)22. In each of the followingcases, state thetype of inflation described.(4 marks)a) The unrest inLibya hasresulted to an increase in the price of oil. b) The price of bread hasgone up to Shs.60 due to Increase in the price of Wheat. ______________________ c) A lot of Money incirculation hasled to the general increase of price. d) A rise in price due to uneven growth in Some sectors ofthe economy. _______________________ 23. State FOUR economic effects of taxation to a country's economy.(4 marks)24. State four merits of storing goods in a public warehouse(4mks)25. Highlight FOUR circumstances under which a seller would require a buyer to pay cash with order. (C.W.O)(4marks)Page | 129565/1 &565/2 business studies KAMDARA JET EXAMINATION BUSINESS STUDIES 565/2 PAPER 2 1.(a) Explain five factors that may contribute to low level of National Income.(10 mks)(b) Explain five reasons for trade restriction(10 mks)2.(a) Explain five advantages that may be associated with operating a tied shop.(10 mks)(b) Explain five challenges of a young population.(10 mks)3.(a) Explain five circumstances under which a pro-forma invoice may be used(10 mks)(b) Kisii Traders had the following balances as at 31st December 2014.ShsBank Loan 3 years472,500Buildings540,000Creditors227,000Debtors116,900Furniture408,170Gross profit520,600Motor vehicle900,000Discount allowed142,000Lighting25,200Interest on loan1,200Closing stock72,500Rent Received120,000Repairs on buildings60,000Repairs on furniture72,030Repairs on motor vehicle300,000General expenses102,100Capital1,400,000Prepare:(i) Profit and loss account for the year ended 31st December 2014.(ii) Balance sheet as at 31st/12/2014.(10 Marks)4.(a) Explain five reasons that may make an insurance company refuse to compensate the insured in the event that a riskoccurs.(10Marks)(b) Explain five circumstances under which a manufacturer would sell his goods directly to a consumer.(10 Marks)5.(a) Explain five differences between direct tax and indirect tax.(10 Marks)(b) Explain five ways in which advertising agencies assist in sales promotion.(10Marks)6.(a) The use of motor cycle transport is becoming very popular in both rural and urban areas of Kenya. Explain thelimitations a business that relies on its use is likely to encounter.(10Marks)(b) The following information relates to Malindi Traders for the year ended31st December 2015.ShsTotal current assets587,500Total Fixed assets720,000Total current liabilities32,500Total long term liabilities357,500Net Profit50,000Capital625,000Sales1,000,000Opening stock50,000Closing stock25,000Margin20%Calculate:(i) Working capital(2 mks)(ii) Current ratio(2 mks)(iii) Mark-up percentage(2 mks)(iv) Rate of stock turnover(2 mks)(v) Return on capital(2 mks)Page | 130565/1 &565/2 business studies KAMDARA JET EXAMINATION BUSINESS STUDIES 565/1 Marking schemes 1.Why consumers satisfy basic wants before Secondary wants.?Human wants are felt needs?their nature cannot allow man to postpone their satisfaction?scarce resources?Basic wants are needed for survival.2.State four factors determining the supply of labour in an economy ( 4 mks)?The size of population.?Number of hours worked per day / week.?Size of population in the working age.?Willingness of people to work for salaried employment.?Gender policies regarding participation in paid employment.?Government policies governing migration in and out of a country .3.Factors showing the existence of a Business opportunity. (4mks)?Unavailability of products?poor quality goods?Insufficient quantities?Unaffordable prices?poors services?Need to use by-products4.Monetary policy measures used to regulate circulation of money.(4mks)?Selective credit control?Cash/ liquidity ratio requirement?Directives and request / moral persuasion?Open market operation?Bank rate?Compulsory deposit requirement.5.How to ensure consumers is not exploited.(4mks)?ensure production of high quality goods?ensure traders sell at fair prices?ensure traders sell goods of right quantity?ensure traders don‘t give false information on goods produced.6.Consequences of poor filing system (4mks)?documents may be accessed by unauthorized persons?Difficult to retrieve a document when needed?Documents may become dirty/damaged?untidy office?Documents can easily get lost?Wastage of time when trying to retrieve the documents7. Distinguishing characteristics of cooperatives (4mks) ? open and voluntary membership ? Limited interest on share capital ? offers education to members ? Democratic administration ? service to members 8.MEASURES TO ALLEVIATE BALANCE OF PAYMENT PROBLEMS?-increasing the volume of exports through various ways such as export compesation, custom draw back? Through restriction of imports from other Nations by use of methods such as custom duties , quotas etc ? By reducing expenditure in the country‘s embassies abroad to reduce capital out flow to abroad ? By reducing the number of government delegates going abroad officially ? By reducing the number of students studying abroad which involves payment of money to foreign uni versities ? Through deflationary technique by lowering the prices of our local goods in order to create demand for the products in the international market ? Through creation of trading blocs in order to encourage more traders ? By encouraging foreign investments and inflow of capital through giving investors incentives such as tax holiday etc ? Through devaluation of local currency to make export cheaper and export more good Page | 131565/1 &565/2 business studies 9. .MAWE MBILI TRADERSBALANCE SHEET?AS AT 31st DECEMBER 2015ShsShsShsShsFIXED ASSETSCapital320,000?Machinery460,000?LONG TERM LIABILITIESCURRENT ASSETS4 Year Loan280,000?Debtors130,000?CURRENT LIABILITIESCash80,000?Creditors60,000?Prepaid salaries20,000 ?230,000Accrued rent30,000?90,000 690,000690,000Marks(8x1/2) 10. State the factors that may cause the above change from diagram (i) to (ii) ? Level of consumer incomes increase ? Positive change in price of substitute goods ? Decrease in price of complimentary goods ? favorable Government policies ? Positive Change in taste / preferences ? Increase in population ? Future expectation of an increase in price 11. Reason why railway transport is not competitive in Kenya. ? Slow means of transport ? It is not flexible ? Cannot be used to carry goods over short distances ? Cannot be used to transport perishable goods. ? Not accessible in all parts of the country. ? And any other relevant point award 1mk for 4 points 4mks 12. The following balances were extracted from the books of Asena Enterprises on 30th June 2006 Gross profit120,000Rent income100,000Dividends received200,000Salaries300,000Carriage outwards10,300Discount allowed21,000Prepare Asena enterprises profit and loss account for the year ended 30thJune , 2006(4 mks)ASENA ENTERPRISESDr.P & L A/CCRfor the year ended 30th June, 2006KshsKshs.Salaries300,000?Gross profit120,000‘?Carriage out10,300?Rent income100,000?Discount allowed21,000?Dividends received200,000?Net profit c/ d88,700??420,000420,0008x ? = 4 mks13. .SOURCE DOCUMENTBook of original entrya) Invoice received-purchases journalb) Receipt received -Cash Book/cash receipts journalc) Invoice issued-Sales journald) Receipt Issued-General journal(4 marks)14. Atemo is the head of the marketing team at ABC Company that has recorded tremendous increase in volume of sales over thelast four years. Highlight four attributes that she possess. (4 marks)i)Knowledgeable about the productPage | 132565/1 &565/2 business studies ii) Well trained in marketing strategies/skills iii) Punctual/time consciuos iv) Keeping appointments /meeting deadlines v) She has negotiations abilities/public relations 15. Characteristics of a Monopolistic market ? Many sellers and many buyers ? Differentiated products ? The firm is a price maker - determines its own price ? Free entry into and exit from the Industry 16. Positive implications of a large population ? increased market demand ? Enough labour supply ? diversity talents ? technology advancement 17. Circumstances under which Insurance Company may re-insure. ? High risk of loss ? high number of loss ? Need to spread the risk ? Government policy ? high value 18. Importances of development planning ? reduces unemployment ? guides and enables capital formation ? enhances overall balance in regional development ? initiates and implements long term projects ? enable the governmentt. to obtain foreign funding ? enable optimum utilization of resources. 19. TWO COLUMN CASH BOOK DateDetailsLFCashBankDateDetailsLFCashBankJanuaryJanuary1Capital10,0001Capital25,0003Sales2,5002Stock6,00012BankC4,00012CashC4,00013Bal c/d29,00013Bal c/d10,50016,50029,00016,50029,00030Balb/d1050030Bal b/d29,00016 Ticks x1/4 20. Business environments a. Business structure b. Demographic c. Physical d. Technological 21. Circumstances under which verbal communication can be used. ? where immediate feedback is required ? when addressing a large crowd ? if its the policy of the organization ? when personal appeal is required ? if the message being set is urgent ? If the matter requires discussion ? when no other form of communication can be used 22. In each of the following cases , state the type of inflation described.(4 marks)? imported inflation? cost push? Demand - pull? Structural inflationPage | 133565/1 &565/2 business studies 23. State four economic effects of taxation to a country’s economy (4 mks) ? It can lead to reduction in foreign capital ? It can lead to reduction of consumption as disposable income is reduced ? It can discourage saving by individuals and companies ? Some types of taxes may lead to inequality in the distribution of income and wealth ? Heavy taxes may affect peoples morale to work for monthly wages. 24. State four merits of storing goods in a public warehouse (4mks) (a) Goods can be sold without physical movement (b) Traders do not incur costs of constructing their own warehouses (c) Goods can be used as collateral to get short term loans (d) Goods are insured (e) Enables large scale buyers to accommodate bulk from small scale sellers (f) Additional services e.g repairs are provided 25. . Highlight four circumstances under which a seller would require a buyer to pay cash with order (C.W.O) ? If the customer is new to a seller ? When the buyer‘s credit worthless is in doubt ? When the policy of the seller is not to advance credit ? If the business is being conducted through the post ? When the seller wants money for restocking Page | 134565/1 &565/2 business studies KAMDARA JET EXAMINATION BUSINESS STUDIES 565/2 Marking schemes 1. (a) Explain factors that contribute to low level of National Income . ? Political instability - When there is no peace in the country the production of goods and services is affected. ? Level of technology - The use of low level of technology or outdated methods of production. ? Land - Where a country is not endowed with national resources. ? Low labour supply. Labour with less skills. ? Inadequate capital and use of simple tools in production. ? Negative attitude of citizens towards work. ? In a country where the subsistence sector is large. ? The production of goods and services may be low in a country experiencing reduced foreign investment. 5 x 2mks = 10 mks (b) Explain five reasons for Trade Restriction. ? To protect local infant industries which are not able to compete with established firms from other countries. ? To protect strategic industries that is, industries that are extremely important and a country cannot do without them. ? To create employment opportunities by encouraging establishment of local industries and also ensuring that the existing industries continue to provide employment to those already employed. ? To prevent dumping where a country may try to dispose off its sub-standard products by selling them cheaply to another country. ? To rectify a balance of trade deficit. ? To protect culture and social values by curtailing the importation of harmful cultures from other trading countries. ? To expand market for local products. ? To promote self-reliance to ensure that a country does not suffer incase of a political conflict with a trading partner. (5 x 2 mks = 10 mks)2.(a) Explain advantages that may be associated with operating a Tied shop ? Similar appearance of the tied shops makes them easily identifiable by the customers. ? The product promotion is done by the manufacturer; hence the operator will not incur cost of production. ? The operator is able to compete adequately since he is assured of quality goods from the manufacturer. ? The operator will not experience any shortages of stocks as he is assured of continued supply of stocks from manufacturer. ? The operator can receive credit supply of goods from the manufacturer.10 mks)(b) Explain five challenges of young population. ? High dependence ratio on the working population. ? High rate of unemployment because of many young people enteringthelabour market while the job opportunities are not available. ? Increased social evils/crimes brought about by large numbers ofyouths who are idle. ? Lowlabour supply - as many of the youths may not have attained theworking age. ? Pressure on goods and services required by the youth. ? Reduced savings and investment - high dependency ratio leads to lowsavings which in turn leads to low investment. ? Diversion of government expenditure from other needy sectors to cater for the welfare of the youths. (5 x 2 mks = 10 mks) 3. (a) Five circumstance under which a pro-forma invoice may be used. ? When there is need to ask for payment before the goods are delivered. ? When the seller does not want to give credit. ? It may be used by importers to get customs clearance before the goods are delivered. ? When one wants to give it to an agent who sells goods on behalfof the seller. ? When one wants to show the buyer what he/she would pay ifthe order is approved. ? Where one wants to use it to serve as a quotation.( 5 x 2Marks =10Marks)Page | 135565/1 &565/2 business studies (b)Kisii TradersProfit and loss accountfor the year ended 31st December, 2014.ExpensesShsShsDiscount142,000Gross profit b/d520,600Lighting25,200Rent Received120,000Interest on loan1,200Repairs on buildings60,000Repairs on furniture72,030Net loss c/d61,930Repairs on motor vehicle300,000General expenses102,100702,530702,530Net loss b/d61,930Kisii Traders Balance sheet as at 31st /12/2014 Fixed Assets sh Buildings540,000Capital1,400,000Furniture408,170Less net loss61,930Motor vehicle900,000Net Capital1,338,0701,848,170Long Term LiabilitiesCurrent AssetsBank loan 3 years472,500Stock72,500Short term liabilitiesDebtors116,900Creditors227,000189,4002,037,5702,037,570(10 x ? = 5 mks)4.(a) Reasons that may make an insurance company refuse to compensate the insured in the event of risk occurrence?if the loss was not as a result of the insured risk/ if there was no close connection between the loss and risk insured?If the cause of the loss is caused deliberately by the insured?If the cause of the loss is as a result of a natural catastrophe?If by the time of the loss the insured had no insurable interest?If the insurer discovers that the principle of utmost good faith at the time of effecting the policy was not adhered to?If the risk insured violated the laws of the country?If the insured had not paid the first premium / stopped paying Premiums(10mks)(b)Circumstances under which a manufacturer would sell his goods directly to the consumer?If goods are perishable.?Incase of sensitive items such arms.?If the sale is by tender.?Incase he wants to provide after - sale services.?If he is dealing with items of small quantities.?If he wants to maximize profit.?To ensure consumers are not exploited in price.Explaining (2x5 = 10 mks)5.(a) Differences between direct tax and indirect tax.Direct TaxIndirect TaxiThe impact and incidence are on the same personImpact and incidence may be on different persons.iiThe tax can be evaded by falsifying information aboutIt is not possible to evade as those who buy the taxed commodityincomes or just ignoring payment.have to pay the tax.iiiIt is deterrent to workIt stimulates effort as people work harder to earn more income tomaintain their current standards of living.ivDoes not affect prices of goods and servicesIt is inflationaryvCannot be avoidedCan be avoided by people who do not consume the taxed product.viTax revenue is certain and may be calculated fairlyTax revenue is uncertain as it is not easy to forecast sales.accurately in advanceviiEquitableLess equitableviiiSociety is consciousContributor is not consciousixEconomical in collectionExpensive in collection Page | 136565/1 &565/2 business studies (b) Ways in which advertising agencies assist in sales promotion ? They undertake advertising and other promotional work on behalf their Client ? Advise on selling techniques and promotional policies ? Assist in designing trademarks and logos of packaging materials ? Select appropriate media to be used ? Book space and time in various media houses on behalf of clients5 x 2 mks = 10 mks6. (a) Limitations of a business that relies on the use of motor cycle transport. ? Limited carrying capacity of a business producing bulky goods and thosewith a lot of mass ? This means of transport is prone to bad weather condition especially heavy rains limit its use on muddy roads. There is lose of time as one shelters quiet often during rains to avoid good spoilage ? It is not convenient over long distances as this is likely to make it more expensive in terms of fuel used and tiresome ? The wear and tear on a motor bike is higher especially where it has to lift heavy loads. This increases the cost of maintenance ? Traffic reports and studies on our road use reveal that this form of transport is prone to accidents as compared to other means of transport. This would imply loses to the businessmen( 5 x 2 Marks= 10 Marks)(b)(i) Working capital = current-currentAssetsLiabilities= 587, 500 - 32,5001 mk = 555,0001mk (ii) Current ratio = currentAssets : Currentliabilities 587,500 : 32,5001mk =18.0769 : 11mk(iii) Mark up percentageMargin to mark-up20% =?=?1mk25%1mk(iv) Rate of stock turnover=C.O.G.SAverage stock= 50,000 + 25,000 = 2Ave. stock= 37,500?Margin = 20% = GP x 100=G.P. x 100=200,000Sales1,000,000C.O.G.S. = Sales - G.P. = 1,000,000 - 200,000 = 800,000?R.O.S.T. = 800.000?=21.33 times??37,500(v) Return capital= N.P. X 100 =50,000? x100 = 8%??Capital625,000?( 5 x 2 Marks =Marks)Page | 137565/1 &565/2 business studies GITHUGURI JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/1 PAPER 1 1. State four f actors that distinguish primary wants from secondary wants.(4 marks)2. Hellen the new manager, outshine Company limited, is considering turning the office layout from being an open office layout to a landscape layout. Outline four changes she can adopt.( 4mks)3. Unique furniture enterprises is a small scale business in making high quality furniture for executive officer. From this statement, indicate four reasons that would make the firm use a direct channel of distribution (4mks) 4. Using the following transactions, state the name of the account to be debited and the account to be credited. ( 4 marks) TransactionTA/c debitedA/c Credited(i) Made cash sales of sh 2,000 (ii) Purchased machine by cheque (iii) paid a creditor sh3,000 cash (iv) withdraw sh10,000 for business Use. 5.Name four types of business resources.( 4 marks)6.Give four reasons that make insurance companies decline to insure acts of nature.( 4 marks)7.Distinguish between Oligopoly and perfect competition product markets.(4mks)8.The following balances were extracted from the books of Sitaki Mambo traders as at 31st December, 2015Sh.Cash at bank12,500Cash in hand7,500Wages due3,500Creditors11,500Loan from bank60,000Motor vehicles100,000Equipment + Machinery50,000Stock25,000Debtors30,00Prepare a balance sheet for Sitaki Mambo traders as at 31st December 2015(4mks)9.Indicate the form of external environmental factor described by the statement below.( 4 marks)DescriptionExternal environmental factor(i) Introduction of Mutotho law to curb excessive beer taking. (ii) Religions sect that is against medicine (iii) Construction of the superhighway. (iv) Price wars between safaricom and Yu mobile companies. 10 Highlightfour advantages a seller have by changing from counter service to self service to customers. ( 4 marks) 11 Funny Traders, had the following assets and liabilities as at 1st January, 2015 Sh Furniture + equipments350,000Debtors45,000Cash7,000Creditor48,000For t he year ended 31st December, 2015 there was: (i) Additional capital introduced amounting to sh34,000. (ii) Drawings made during the year amounting to sh20,000. (iii) Net profit amounting to sh34,000. Determine the capital of the business as at 31st December, 2015.(4mks)12 Givefour benefits that Kenya deriver by being a member of East African Community.(EAC)( 4 marks)13 Outlinefour disadvantages of mining as an economic activity.(4 marks)14 Outlinefour currents trends in the transport sector in Kenya.(4 marks)15 The table below shows source document state the book of original entry in which the information from these sourcedocuments would be recorded(4 marks)Source documentsBooks of original entry(i) Invoice received (ii) retained receipt (iii) Invoice retained (iv) Credit note received. Page | 138565/1 &565/2 business studies 16 Givefour reasons why a country like Kenya needs to have a good development plan.(4mks)17 Indicatefour methods that a large scale firm may adapt to reduce the cost of its operation.(4 marks)18 Statefour benefits of indirect production to a country.(4 marks)19 Highlightfour benefits that may accrue to a trader who decides to operate a current account.(4 marks)20 Givefour reasons why a high rate of inflation is undesirable to a country.(4 marks)21 Name any four statistics associated with measurements of national income.(4 marks)22 Apart from government borrowing, outline four other sources of government revenue.(4 marks)23 Highlightfour measures consumers may take to satisfy their unlimited wants using limited resources. (4 marks)24 Statefour distinctive features of a parastatal(4 marks)25 Statefour measures that Kenya government may take to attract firms to an area.(4 marks)Page | 139565/1 &565/2 business studies GITHUGURI JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/1 PAPER 1 1.(a) Explain five characteristics of economic resources.(10mks)(b) Discuss five factors that influence the growth of a business unit.(10mks)2.(a) Explain five causes of unemployment in Kenya.(10mks)(b) Draw five differences between a public limited company and a partnership.(10mks)3.(a) Explain five reasons why a firm would prefer trade credit to a bank loan.(10mks)(b) On 1st January 2015, Ngunjiri had shs.15,000 in hand and bank overdraft of sh.25,000.During the month the following transactions took place:January2:Cash sales directly banked sh40,360―4;Bought stock of goods in cash sh.2,400―6:Received a cheque of sh.97,800 from Karanja after allowing him a cash discount of Sh. 2,200.―9:Paid Mung‘athia, a creditor sh.65,800 by cheque after deducting 6& cash discount.―14;Paid salaries sh.8,000 in cash.―17:Mwatela, a debtor settle his account of sh.75,000 by cheque less 10% cash discount.―24;Withdraw sh.30,000 from bank for office use.―28:Bought stationery in cash sh.10,000.―31;Withdraw sh.7,000 from bank for private use.RequiredPrepare the three column cash book duly balanced.( 10 marks)4.(a) Discuss five circumstances under which a trader may choose to transport goods by a motor cycle.(10mks)(b) Explain five services that retailers render to consumers.(10 marks)5.(a) Explain five factors to consider in determining an appropriate channel for distribution of goods.(10 marks)(b) Explain five roles of entrepreneurship to the economy of Kenya.( 10 marks)6.(a) Explain four services that the Central Bank of Kenya offers to Commercial Banks.( 8mks)(b) The following trial balance was extracted from the books of Jua Kali Trader as at 30th June 2016 JUA KALI TRADERS TRIAL BALANCE AS AT 30TH JUNE, 2016 ParticularsDr.Cr.___________________________________sh.______________sh_________Capital818,000Premises540,000Machinery200,000Furniture and fittings100,000Stock on 1st July 201560,000Purchases and sales400,000580,000Returns20,00050,000Debtors and creditors65,00040,000Discounts25,00032,000Commissions16,00014,000Carriage outwards8,000Wages and salaries30,000Cash in hand70,0001,534,0001,534,000Stock as at 30th June 2016 was sh.70,000(i) Prepare Jua Kali Traders trading, profit and loss account for the period ended 30th June 2016.(7mks)(ii) A balance sheet as at that date.( 5 marks)Page | 140565/1 &565/2 business studies GITHUGURI JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/1 Marking scheme1.What distinguishes primary wants from secondary wants.? Are essential for life/can‘t do without.? Are felt needs.? Can‘t be postponed? Are used every day? Are universal? Must be satisfied before secondary wants.2.changes to adopt in a landscape layout.? Have a carpets on the floor.? Put music in the background? Paint pictures on the wall? Install animal curvings? Put potted plants in the office? Have large animals in the office. E.g. parrot3.Why use a direct channel? It operates on a small scale.? High quality goods requiring security? Products requiring less handling due to their nature/can break easily.? Products are tailor made/for specific buyer4.TransactionA/c Debited(i) Made cash salesCash in handii) Purchased a machine by chequeMachine(iii) Paid a creditor sh3,000 by cashcreditor(iv) Withdraw sh 10,000 forCash in handbusiness use.Any 4 @ 1 mks = 4mksAny 4 @ 1mk = 4mksA/c CreditedsalesCash at bankCash in handCash at bank 5.Four types of business resources?Financial?Human resources?Physical?TechnologyAny 4 @ 1mk = 4mks6.Why acts of nature are not insures?Loss may affect many people?Value of loss may not be easily determined.?Loss in unpredictable?May not be easy to determine premiums.7.Distinguish betweenOligopoly__________________________________________Perfect competition________________? Few sellers & buyers? Many buyer and sellers.? Single seller influence market? Single seller cannot influence market.? Entry is restricted? Entry + exit of new firms not restricted.? Firm set the price? Forces of demand? Differentiated products? Homogenious productsPage | 141565/1 &565/2 business studies 8.SITAKI MAMBO TRADERSBALANCE SHEET____AS AT 31/12/2015_________________________AssetsCapital + LiabilitiesFixed AssetsShsHshshEquipmentsCapital150,000Long term liabilitiesMachinery50,000Loan60,000Motor Vehicles100,000150, 000Current AssetsShort term liabilitiesStock25,000Wages due3500Debtors30,000Creditors1150015,000Cash at bank12,500Cash in hand7,50075,000225,000225,0009. External environment factors ? legal political ? social - cultural ? physical -? competitive 10 Advantages of self services ? Customers have freedom to make choice ? Fewer sales people ? Can lead to impulse buying ? Leads to reduction of administrative costs. 11 350,000 + 45,000 + &000 - 48,000 = 402,000 402,000 - 48,000 = 354,000 Capital as at 31st December, 2015 = = 354,000 + 34,000 + 34,000- 20,000 = 402,000 12 Benefits of EAC ? Employment ? Enhanced peace ? High quality due to competition ? Sharing of research findings ? Wider market ? Free movement of re sources 13 Mining disadvantages ? Its expensive ? Machines are pollutant ? Environmental degradation ? People displacement ? Causes death when mines collapse. 14 Current trends in transport sector ? Super highway ? Bi - passes ? Dual carriage ? Containerization ? Electric trains ? Use of boda bodas 15 Book of original entry a) Purchase journal b) Cash receipt journal/Analysis cash boo c) Sales journal d) Purchase return journal 16 Reasons for Development plan ? To be able to allocate resources. ? To be used as basis for evaluating projects. ? Provide basis for decision making Page | 142565/1 &565/2 business studies ? To identify resource gaps. 17 ways of reducing costs of operation ? Buy goods in bulk to get discounts. ? Buy goods in bulk to reduce on transport. ? Sell goods in bulk to reduce unit cost. ? Make use of technology to reduce labour cost 18 Advantages of indirect production ? Quality goods produced. ? Large output ? Encourages specialization ? Employ use of modern technology. 19 Benefits of Current A/c ? Able to get overdraft ? No minimum account balance. ? Deposition of money any time ? Use of cheques ? Gets monthly bank statements. ? Withdrawn of large amount without notice. 20 Disadvantages of Inflation ? Unequal redistribution of wealth ? Loss to creditors ? Retards economic growth ? Discourages savings 21 Natural Income statistics ? Gross Domestic Product (G.D.P) ? Net Domestic P:roduct (NDP) ? Gross National Product (GNP) ? Net National product (NNP) ? Per capital Income (PCI) 23 Solutions to satisfy unlimited resources ? Make a choice ? Prepare a scale of preference ? Conserve resource ? Turn out new product. 22 Government sources of revenue ? Taxes ? Fines & Penalties ? Profits for Parastatals ? Grants ? Escheats 24 Distinct features of parastatals ? Fully govt owned ? Formed by an act of parliament ? Not necessarily profit oriented ? Initial capital provided by govt. ? Directors appointed by govt. 25 how government can attract firms in an area ? Offering cheap land ? Tax reduction ? Offering direct financial assistance ? Improvement of infrastructure. Page | 143565/1 &565/2 business studies GITHUGURI JOINT EXAMINATIONS 2016 BUSINESS STUDIES 565/2 Marking scheme1.(a) Characteristics of economic resources ? Have utility - they have ability to be used. ? Have money value - They have a value at which they can be exchanged for ownership. ? Have alternative use - They can be put into different uses. ? Scarce in supply - They are not available in sufficient quantities. ? Can be combined - They can be combined so as to produce different goods and services. ? Can change ownership from one person to another through sale. ? Can be complementary - Different resources can be used together. ? They are distributed - they are available in varying quantities at different places; Any well explained point @ 2 mks = 10mks (b) Factors that influence the growth of a business unit. ( 10 marks) ? Capital - If capital is available the business will grow and expand as it is required to buy raw materials and pay for other expenses. If not the business will not grow. ? Security - Security in an area will ensure business continuity hence growth but where it is missing it will not grow. ? Political stability - When there is stability in an area, business will move smoothly but when it lacks, they will be closed most of the time and may even be destroyed through strikes and commotions. ? Raw Materials - A business requires raw materials to continue producing but if they are missing it has to close. ? Market - Business require customers if they have to grow because they provide finances. If there is no market the business will stop.Any well explained point@ 2mks = 10mks.2. (a) Causes of Unemployment in Kenya. ? Rapid population growth - As the labour force entering the labour market will be rising at higher rate than the economy can absorb. ? Use of inappropriate technology - where a country with high labour supply resorts to use of capital intensive methods of production. ? Rural to urban migration - High influx in urban areas expand the work force that cannot be absorbed by the labour market in towns. ? In appropriate education system . - When the education system does not equip; the youth/learners with skills required in the labour market. ? Lack of product market, - lack of demand or reduction in demand for products discourages production which leads to unemployment. ? Job selection. - Where job seekers prefer white collar jobs making them not to take up the available blue collar jobs. ? Seasonality in production . - Seasonal nature of some jobs create unemployment during the off-peak seasons. ? In adequate co-operant factors inputs. - Insufficiency of factors of production that need to be combined with labour limit expansion of job opportunities. This cause unemployment. ? Poor planning and mismanagement - Mismanagement of public resources lead to collapse of many institutions resulting in reduction of employment opportunities. (b) Difference between a public limited company and partnership Public Limited Co.Partnership_______________________(i) It has a minimum of 7 members and noMaximum.(ii) Members have limited liabilities to the debts of the firm.(iii) Death, insanity or bankruptcy of a member does affect the firm.(iv) It is managed by a board of directors.(v) Capital is contributed through sale of shares mainly.3.(i) Minimum membership is 2 and maximum20/50 for professionals.(ii) Some partners have unlimited liabilities to the debts of the firm.(iii) Death, insanity or bankruptcy of aMember cases the partnership to dissolve . (iv) It is managed by active partners. (v) Members contribute the same amountof money to raise capital (a) Reasons why a firm would prefer trade credit to a bank loan ? There is no interest charged when goods are taken on credit but loan have to be paid with interest. ? No collateral is required when taking goods on credit but a loan requires collateral. ? Acquiring a bank loan involves long procedures while trade credit does not involve long procedures. Page | 144565/1 &565/2 business studies ? Money borrowed from a bank can be channeled to other uses but not so with goods taken on credit. ? To get a loan a firm must have a healthy bank account which I not possible hence firms will go for trade credit. ? The collateral pledged for a loan may not be used by the firm during the loan period but that does not occur when taking goods on credit.Any well explained point @ 2 mks = 10 mksTHREE COLUMN CASH BOOKDrCrDateDetailsL.Disc.CashBankDateDetailsL.FDisc.CashBankfAllSh.Sh.Rec.Sh.Sh.Sh.Sh.1/1/2015BalanceB/f15,0001/1/2015BalanceB/f25,0002/1/2015Sales40,3604/1/2015Purchases2,4006/1/2015Karanja2,20097,8009/1/2015Mung‘athia4,20065,80017/1/2015Mwatela7,50067,80024/1/2015BankC30,00014/1/2015Salaries8,00024/1/2015CashC30,00028/1/2015Stationeries10,00031/1/2015Drawings7,00031/1/2015BalanceC/d24,60077,860______________9,70045,000205,6604,20045,000205,66031/1/2015Balanceb/d24,60077,8604. (a) Circumstances under which a trader may choose to transport goods by motor-cycle (boda boda) ? If the goods to be transported in small in quantity since a motor cycle may not transport large quantities. ? If there no goods roads since a motor cycle does not require good roads to move. ? If the weather is conducive such as where it is not rainy as goods can be spoilt by rain as motor cycle are open. ? If the distance is short - motor cycles are suitable and fast over short distance. ? If the area is secure - since motorcycles are open, it may be risky to transport valuable goods using them unless the place is secure. (b) Services that retailers render to consumers ? Breaking the bulk - Retailers divide he goods into smaller quantities that consumers can afford and in which they require. ? Regular supply of goods. - By storing goods needed by consumers thus ensuring continuous supply hence maintaining the price of goods. ? Provision of credit facilities.- Since retailers are in close contact with their customers, they may give credit facilities tocredit worth customers.? Advice - They advice consumers on choice and use of products. ? Offer a variety of goods. - Retailers stock a wide variety of goods from different suppliers hence enabling consumer to have a wide choice of goods. ? After scale services. - Retailers stock a wide variety of goods from different suppliers hence enabling consumers to have a wide choice of goods. ? After sale services. - Retailers offer services like free transport, installation, repair, maintenance services etc to the consumers. ? Availing products at the right place and time. - Retailers move goods from producers and stock them. Since they are close to consumers they provide goods to then at easy and at the right time. 5. Factors that may be considered in determining the appropriate channel for distribution of goods. ? Nature of the market. - In a market where consumers are concentrated in one area, a short channel is used. On the other hand where customers are spread over a wide area, along channel is used. ? Nature of the product. - Heavy and bulk products as well as perishable product require a short channel ? Government policy - A firm can only use a channel that is allowed by law. Page | 145565/1 &565/2 business studies ? Marketing risk: - When producers want to avoid risk involved in distribution, then a long channel is used where goods are sold through intermediaries . ? Role of the intermediaries. - A firm should select a channel that would provide services required by the goods. ? Competitors. - If a firm wishes to have direct competition, it will use a channel being used by its competitors. On the other hand if it wished to avoid direct competition it will select a different channel. ? Resources: - A firm with small financial resources requires a short channel. ? Size of the firm. - A small firm requires a short channel. ? Value and technical nature of the product. - A high value product requires a short channel. Likewise products that require specialized services require a short channel. (b) Roles of entrepreneurship to the economy of Kenya.(10mks)? Creation of employment opportunities - As the owners of the business are self employed and they also employ other people. ? Raises standards of living . - As salaries paid to those employed enable them to buy goods and services they require. Also entrepreneurship help to avail a variety of quality products to people. ? Saves on import. - as entrepreneurship produce goods and services that are substitutes to imports. ? Leads sto formation of capital. - As profits earned by entrepreneurship can be saved and later used to expand the business or start a new business. ? It leads to promotion of technology. - As entrepreneurship are very creative and come up with new methods of production. ? Leads to development of an entrepreneurial culture. - A successful entrepreneurs act as role models to potential entrepreneurs. ? Makes use of local resources. - Entrepreneurship make it possible for exploitation o f local resources that would otherwise have remained idle. ? Reduces foreign dominance of the economy. - As participation of local entrepreneurs in business activities help to reduce investments by foreigners. ? Reduces rural to urban migration. - As entrepreneurs setup; business in rural areas and employs local people. ? Improving infrastructure - As where many businesses have been set up, the government is likely to improve infrastructure like roads, electricity etc. 6. (a) Services that the Central bank of Kenya offer to Commercial banks. ? Lenders of last resort; - Central bank is the last institution where commercial banks obtain loans if they are unable to get finances elsewhere. ? A bank to commercial banks. - As commercial banks operate accounts with the central bank. ? Clearing of cheques; - Central bank facilitates the clearing of cheques between different commercial banks through its clearing house. ? Controlling commercial banks. - By giving them instructions on the lending procedures and proper banking practices. ? Controlling of monetary system. By controlling the lending capacity of commercial banks thus regulating the amount of money in circulation. ? Link to external finances . - It links the commercial banks to international financial institution and other central banks. (b) (i)JUA KALI TRADERSTRADING, PROFIT AND LOSS ACCOUNTDRFOR THE PERIOD ENDED 30TH JUNE 2016CRSh.Sh.Opening Stock60,000Sales580,000Add: Purchases400,0 00Less: Returns inwards20,000Less: Returns outwards50,000Net sales560,000Goods available for sale410,000Less: closing stock70,000Cost of goods sold340,000Gross profit C/d220,000560,000560,000ExpensesGross profit b/d220,000Carriage outwards8,000Revenues /IncomesWages and salaries30,000Discount allowed25,000Discount received32,000Commission allowed16,000Commission received14,000Net profit C/d187,000266,000266,000Net profit b/d187,000Page | 146565/1 &565/2 business studies (ii)JUA KALI TRADERSBALANCE SHEETAS AT 30TH JUNE 2016_______________________________________ASSETSCapital + Liabilities_______________Sh.Sh.Fixed AssetsCapital818,000Premises540,000Add: Net profit187,000Machinery200,000Net Capital1,005,000Furniture & fittings100,000Current AssetsLong Term liabilitiesStock70,000Short term liabilitiesCash in hand70,000Debtors65,000Creditors40,0001,045,0001,045,000Page | 147565/1 &565/2 business studies KUWED JOINT ASSESSMENT EXAMINATION - 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Give four functions of an entrepreneur in production.(4 Marks)2.Highlight four reasons behind the continued use of letters in communication despite the presence of other newer means ofcommunication.(4 Marks)3.Outline four characteristics of a chain store.(4 Marks)4.Indicate the type of journal in which each of the following transactions would be recorded.(4 Marks)TransactionJournali)Purchase of goods on credit.ii)Disposal of an old machinery on credit.iii)Goods previously bought on credit returned to the firm.iv)Correction of an error in an account.5.Highlight four ways in which monopoly power may arise(4 Marks)6.Outline four benefits of a retailer to a producer(4 Marks)7.The following information relates to Kamongo Traders for the year ending 31st Dec. 2010.Shs.Additional investment900,000Drawings300,000Closing capital7,000,000Profit3,200,000Required: Kamongo‘s initial capital(4 Marks)8.State three advantages of using a celebrity in advertising.(3 Marks)9.Mention five characteristics of money.(5 Marks)10.The following information relates to Makini Traders for the year ending 31st December 2015.Shs.Margin15%Sales640,000Purchases480,000Stock on 1/1/2015130,000Closing stock?RequiredTrading Account of Makini Traders for the year ending 31st December 2015.(5Marks)11. List four reasons why the government imposes taxes on Kenyan citizens.(4 Marks)12. The following table shows the price of 2kg of maize flour 1 loaf of bread, and 1 packet of milk in 2013 and 2014 with theirweights.ItemsPricesWeights20132014Flour80852Bread50601Milk40603Required:Calculate Consumer Price Index (C.P.I) for the year 2014 for the basket of goods composed of the three items using theWeighted Average Method and determine level of inflation.(4 Marks)13. Outline four ways in which the government involves itself in business activities(4 Marks)14. Give four characteristics of goods.( 4 Marks)15. State four factors that may cause the supply curve to shift to the left.(4 Marks)16. Outline four factors that may influence the level of National income of a country(4 Marks)17. Give four factors that may make a manager to hire rather than buy a new office equipment.( 4 Marks)18. Highlight three features of indirect production(3 Marks)19. Outline four requirements meant to enable a warehouse operate efficiently.(4 Marks)20. Highlight the procedure followed in taking an insurance policy(5 Marks)21. Below is a cashbook of Achieng for the month of July 2014.AchiengPage | 148565/1 &565/2 business studies Three Column Cashbook For the month of July 2014 Dr.Cr.DateDetailsLFD/ACashBankDateDetailsLFDRCashBank20142014July 1Bal. b/f8,000July 1Bal b/f4,000July 7Sales10,000July 8Electricity700July 10Bank?C‘3,000July 10Cash?C‘3,000July 14Mbuni300700Outline the transactions that took place on1st (Cr. Side) 7th , 8th 10th(4 Marks)22. Outline four internal factors that may negatively affect the operations of a business.(4 Marks)23. State the effect of the following transactions on the balance sheet totals by indicating increase, decrease or no effect in eachcase.( 4 Marks)TransactionEffecti)Bought machinery on credit.ii)Withdrew cash from business for personal use.iii)Paid outstanding loan by cheque.iv)Purchased stock by cash.24. Give four forms of economic integration.(4 Marks)25. Highlight three factors that are taken into account when measuring the size of a firm(4 Marks)Page | 149565/1 &565/2 business studies KUWED JOINT ASSESSMENT EXAMINATION - 2016 BUSINESS STUDIES 565/2 PAPER 2 1. The following information was extracted from the records of Subira Wholesalers for the month of March 2015. General JournalDateParticularsFDRCR2015Bad debts written of A/C......Dr60,000MarchNjuguna A/C.....Cr.60,000Bad debt owed by Njuguna written offSales JournalDateParticularsAmountMarch1Njuguna100,0006Maria90,000Total sales on Credit for the month190,000Purchase JournalDateParticularsAmountMarch4Aoko40,0006Ndumberi60,000Total purchse on Credit for the month100,000Sales Returns JournalDateParticularsAmountMarch21Njuguna6,000Total sales Return for the month6,000Post the information to the relevant ledger accounts(10 Marks)b) Explain five reasons behind the limited use of rail transport in Kenya(10 Marks)2a) Explain five differences between a co-operative society and a public corporation(10 Marks)b) Explain five benefits that Kenya will obtain by participating in external trade (10 Marks)3a) Explain five advantages of external economies of scale that a firm may enjoy (10 Marks)b) The following information was extracted from the records of Mwema Enterprises for the period ending 31st December 2015Shs.Capital250,000Purchases90,000Carriage inwards2,400Carriage outwards4,000Stock on 1/1/201550,000Stock on 31/2/201550,000Sales240,000Insurance11,800Salaries24,900Discount allowed6,800Discount received3,900Debtors50,000Creditors31,000Bank29,000Cash93,300Machinery256,000Commission carried43,300Requiredi)Trading profit and Loss A/C(8 Marks)ii)Balance sheet(4 Marks)4a) Explain five challenges Kenya faces in implementing its economic plan(10 Marks)b) Explain the following terms as they are used in population: (i) Fertility rate (ii) Over population (iii) Emigration (iv) Declining population (v) Population structure(10 Marks)5a) Milele Enterprises would like to partition its office. Explain five benefits the firm may get if it uses the enclosed office plan.(10 Marks)b) Explain five features of land as a factor of production.(10 Marks)6a) Highlight five circumstances under which a proforma invoice can be used.(10 Marks)b)Explain five measures the Kenyan government may take to solve unemployment in the country(10 Marks)Page | 150565/1 &565/2 business studies KUWED JOINT ASSESSMENT EXAMINATION - 2016 BUSINESS STUDIES 565/1 Marking scheme 1.Functions of an entrepreneur?Risk tanker?Organizes other factors of production?Pays for labour?Starts the business?Enjoys profit/losses?Controls the business2.Reasons for continued use of letters?Letters can be referred to in future.?They are expensive to send.?Can be detailed since they can carry explanations.?Diagrams and pictures may be incorporated to augment the written information.3.Characteristics of chain stores.?Branches have similar outlook.?Branches sell similar goods.?Prices are standardized in all branches.?Goods can be transferable from one branch to another where the demand is better.4.Types of journalsa) Purchases journal b) General journal c) Purchases returns journal d) General journal 5.Ways in which monopoly power may arise.?If a form has a secretive production technique.?If a firm has a strategic control over strategic inputs/raw materials?If the venture requires large substancial capital?If the form is set up as a state monopoly /given exclusive legal rights of production?If the forms merge/amalgamate/combine or get absorbed by others into one firm.?If the firm has patent rights/copy rights?If the market is best served by one firm more economically( 4 x 1 = 4Mks)6.Benefits of a retail to producer?Provides market research?Can conduct product promotion?May provide finance through advance payment.?Saves producer on market rises associated with products.?Provides storage for his/her goods.(4 x 1 = 4 Mks)7.Determining intial capitalCC- IC + A.I + NP - DI.C= C.C + D - NP - A.I= 7,000,000+ 300,000- 3,200,000- 900,000√= 3,200,000√8.Advantages of using celebrity in advertising?Required little or no introduction to consumers.?Consumers will attach/associate product with success.?Easy to remember the advert the moment they see celebrity(3 x 1 = Mrks)9.Characteristics of money?Durability?Cognzability?Malleability?Divisibility?Scarcity?Partability(5 x 1 = 5 Mrks)Working10.Margin = G.P x 100Sales15= G.P100640,000Page | 151565/1 &565/2 business studies G.P= 0.15 x 640,000= Sh. 96,000 √ Cost of sales = Sales - G.P = 640,000 - 96,000 = Sh. 544,000 √ Closing stock = Opening stock + Purchases - Cost of sales = 130,000 + 480,000) - 544,000√= Sh. 66,000 √UWEZO TRADERSTrading AccountFor the year ended 31/12/2015Shs.Shs.Opening stock130,000 √Sales640,000√Add: Purchases480,000 √Cost of goods available610,000Less: Closing stock 66,000 √ Cost of sales Gross profit544,000√96,000√ 640,000640,00011. Reasons for taxation ? To raise government revenue ? Redistribution of income. ? Promote economic development ? Protect socio- cultural values ? Control economy (inflation) ? Rectify /influence prices ? Restrict import trade/correct balance of payment disequilibrium ? Protect infant/local industries. 12. Consumer price index (85 x 2) + (60 x 1) + (60 x 3) x 100 √ (80 x 2) + (50 x 1) + (40 x 3) 410 x 100 √ 330= 124.24 √Level of inflation 124.24 - 100 = 24.24% √ 13. Methods of government involvement ? Regulation ? Training ? Trade promotion ? Provision of public utilities ? Providing an enabling environment. 14. Characteristics of goods ? Tangible /visible ? Can be stored ? Can be separated from the owner/provider ? Quality can be standardized. ? Payment is for ownership/exchange ? Not always perishable. 15. Causes of a negative shift in supply curve. ? Increased in cost of production ? Poor technology ? Decreased subsidies ? Increased taxation ? Decrease in factors of production ? Exit of firms from the industry ? Rise in industrial unrest ? Decrease in the price of a jointly ? supplied good. ? Rise in the price of a competitively ? produced good/service Page | 152565/1 &565/2 business studies ? Worse climatic condition in case of agribusiness. ? Constriction of the import quota. ? Poor infrastructure ? Future expectations in rise in prices. 16. Factors that influence national income. ?Level of technology?Amount of capital?Political stability?Abundance of natural resources?Availability and quality?Infrastructural development.?Entrepreneurial culture of the citizens.17.Reasons for hire rather than buying office equipment.?To transfer cost of maintenance to owner.?To transfer the cost of buying a new equipment to owner.?Where the skills to operate the equipment is lacking in the organization.?If the equipment is needed temporarily to avoid it being idle while not being used.18.Features of indirect production?Results in surplus?Produce meant for sale?Involve use of modern technology?Involve specialization?Produce high quality?Promotes interdependence.19.Essentials of an efficient warehouse.?Should have a good location.?Should have appropriate building structure.?Should have adequate space?Should have necessary facilities.?Should have trained and devoted personnel?Should be accessible by users.?Should be a good inventory control system.?Should have a good storage facilities.20.Procedure of taking insurance policy.1.Filling proposal form.2.Survey conducted by insurer/valuation of asset to determine risk.3.Payment of premium.4.Issuance of the cover note.5.Issuance of the policy.21. 1ST -Bank overdraft7th Sales by cheque Kshs.10,0008th Paid electricity by cash70010th Contra entry of ksh3,00022. Internal factors negatively affecting business. ? Poor structure ? Poor business culture0 ? Poor /unclear objectives ? Inadequate resources ? Poor customer relations 23. a) Increase b) Decrease c) No effect d) Decrease 24. Forms of economic intergration ? Free trade areas. ? Customs union ? Common market ? Economic union 25. Factors determine the size of a firm. ? Level of capitalization /finance /resources ? Market share ? Level of output ? Amount of labour force ? Nature of the products ? Owners preference ? Annual income/turnover ? Government policy ? Cost of production ? State of technology Page | 153565/1 &565/2 business studies KUWED JOINT ASSESSMENT EXAMINATION - 2016 BUSINESS STUDIES 565/2 Marking scheme1.Dr.Bad Debts Written of A/CCr.DateParticularsAmountDateParticularsAmount2015March 8Njuguna A/C60,000 √Dr.Njuguna A/CCr.DateParticularsAmountDateParticularsAmount20152015March 1Sales A/C100,000 √March 8Bal. Debts A/C60,000√March 21Sales Ret. A/C60,000√Dr.Maria A/CCr.DateParticularsAmountDateParticularsAmountMarch2015A/C90,0002015Dr.Aoko A/CCr.DateParticularsAmountDateParticularsAmount20152015March 4Purchases A/C40,000√Ndumberi A/CDr.Cr.DateParticularsAmountDateParticularsAmount20152015March 6Purchases A/C60,000√Dr.Sales A/CCr.DateParticularsAmountDateParticularsAmount20152015March 31Sales Journal190,000√Dr.Purchases A/CCr.DateParticularsAmountDateParticularsAmount20152015March 31Purchases Journal100,000March 31DrSales Returns A/CCr.DateParticularsAmountDateParticularsAmount20152015March 4Sales Ret.6,000b) Reasons why rail transport is not commonly used in Kenya. ? Limited network - the means is only available in certain parts of the country. ? High cost of construction. It is very expensive to come up with railway tracks and locomotives. ? Unfavourable terrain - the country is not flat to encourage construction of railway tracks. ? Low investment- little investment has taken place in the railway sector ? Faster options - availability of road and air transport has made people to ignore to use rail transport 2 a) Differences between a co-operative and public corporation. ? i) Run by managementi) Run by board of directorscommitteeii) Members are ownersii) Government is the main owneriii) Operate with by lawsiii) Operates under Act that formed itiv) Formed under cooperative Act.iv) Formed under a specific Act of parliamentv) Audited by private auditorsv) Audited by auditor generalvi) Holds annual delegates meetingvi) No holding of annual general meeting.vii) Operates under Ministry Department ofviii) Operates under a specific of Departmentco-operativesMinistryPage | 154565/1 &565/2 business studies b) Benefits of international trade ?Variety of goods- a country is likely to obtain a variety of goods of which it does not have.?International understanding - due to the interdependence of countries it promotes peace and understanding.?Transfer of technology- International trade facilitates transfer of technology from developed countries to less developedcountries.?Avoids wastage- a country is able to dispose off surplus produce in the world market.?Earns foreign exchange - a country manages to obtain foreign currency which facilitates international trade.?Revenue- the government is able to collect revenue through taxes on imports /exports.?vii) Employment- the trade creates employment opportunities for a country‘s citizens.?International assistance- it is possible for countries to be assisted incase of international calamities?Quality products- possible to access quality products due to heavy competition of different firms.3.a)Benefits of External Economies scale?Accessibility of relevant pool of labour. A firm can recruit already experienced workface from other firms of similar nature,e.g NTV getting presenters from citizen TV.?Improved infrastructure : A group of firms may pool their resources to upgrade infrastructure in their area of operation e.groads, electricity, water etc.?Ancillary services: The existence of firms in a particular area may attract other service industries to that area e.g post offices,banks, insurance companies, entertain spots, etc.?Co- operation amongst firms. Firms in a central place may have a lot to learn from each other in the way of consultationsand sharing?Easy acess to inputs; some firms depend on others to get their inputs e.g a nail maker may conveniently get inputs if locatedclose to steel maker.?Easy access to market. Some firms would find it easier to dispose off their output to the neighbouring firms which would usethem as their inputs.? Specialization in the line of production. Firms may agree to breakdown the process of production so that an individual firm will be producing only a part of the whole product e.g in the manufacture of automobile, individual firms would make tyres, engine blocks, glassware, wiring system , etc. ? Economes of joint operation; Firms may find it convenient to do certain tasks together to minimize the overall cost. MWEMA ENTERPRISESTRADING, PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 31/12/2015Opening stock50,000Sales240,000Add: Purchases90,000Carriage in2,40092,400 Goods Av. For sale142,400Less closing stockCost of sales50,000Gross profit42,400197,600Carriage out240,000240,000InsuranceG.P b/d197,600Salaries4,000Disc receivedDis. Allowed11,800Comm.3,900N.P24,900received6,80043,300197,300 244,800244,800(16 ticks x ? = 8 Marks) Page | 155565/1 &565/2 business studies MWEMA ENTERPRISES BALANCE SHEET AS AT 31ST DECEMBER 2015 Machinery256,000Capital250,000Stock50000Add N.P197,300Debtors50,000Net capital447,300Bank29,000Creditors31,000Cash93,300478,300478,3008 x ? =4 Marks4a) Challenges in the implementation of economic plans .?Inadequate resource - inadequate finance resources may slow the implementation of plans.?Overambitious plans- overestimates in plans may have it difficult to implement the plans.?Bureaucracy - red tape/government /rules and regulation may slow down the implementation of the plans.?Inflation /increase in prices- the plans may suffer due to increase in prices between formulation and implementation.?Change in lender term- the donor may change lending conditions which may affect implementation plan.?Political interference- political may interfere with the implementation.?Inappropriate technology- the technology chosen may not be appropriate for the plans to be implemented.b) Explanations of terminologies used in population?Fertility rateThis is the rate at which one thousand women give birth within one year /It is also the number of children in average a woman will bear in her productive years. ?Over populationThis is the situation where the size of the population is too much compared to that country‘s resources /The population is too high than what is needed to provide labour to exploit natural and man made resources of the country /The available goods and services are too low to support that population. ?EmigrationMoving out of an area. ?Declining populationsRefers to a population that has been reducing over time.?Population structure.Refers to the composition of population according to age, sex, income distribution and levels of literacy.5a) Benefits of an enclosed office plan?Privacy and confidentiality is enhanced .?There are minimal disruptions from noise and movements within the office.?Creates a conducive working environment for the occupants- concentration in work is easy e.g in accounts.?Security of files and other equipment is enhanced.?An enclosed office is prestigious to the occupant and the entire organization.?Spread of airborne diseases and other infections is limited.?The occupant would control air conditioning, lighting and heating to a level comfortable to him/her.?Respect among workers is improved since seniors are given own offices.b)Features of land as a factor of production?Basic factor of production. Production cannot take place without land.?Lack geographical mobility- land cannot be moved geographically from one location to another.?Uneven in quality - the land quality differs from one place to place.?Suffers from diminishing returns after some time the quality of land reduces.?Quality can be improved - use of technology and fertilizers can improve the quality of land.6a) Circumstances where a proforma invoice may be issued.?Where the seller does n to have enough finance.?When the seller does not intend to sell on credit.?Where the importer wants to get custom clearance before goods arrive in the country.?When the seller wants the prospective buyer to know the amount he will be expected to pay when goods are finallydelivered.?When the buyer wish to use it to seek funds to finance that purchase.?If the quotation is not issued.Page | 156565/1 &565/2 business studies ? When the retailer (buyer) wants to calculate the expected profit margin from the stock he intends to buy. ? If goods are custom made. b Solution to unemployment ? Use of labour intensive methods of production - there is need to use more labourers in employment than machines. ? Change of relevant education system. Education system to be market driven. ? Export labour. Excess labour should be exported to other countries. ? Populations control. Need to reduce number of children being born. ? Increasing government expenditure . Government projects will increase more employment opportunities. ? Favourable government policies such as early retirement, one man-one job. ? Minimum utilization of resources. Exploitation of local resources to create job opportunities. ? Balanced regional development to reduce rural urban migration. Page | 157565/1 &565/2 business studies RAISMARADE JOINT EXAMINATIONS COUNCIL BUSINESS STUDIES 565/1 PAPER 1 1.Outline four factors that may limit a person‘s ability to satisfy human wants.(4mks)2.Give four circumstances under which a business person may prefer to use automatic vending machines.(4mks)3.Identify four reasons why Rongo Enterprises Limited, a manufacture of q popular soft drive, would find it necessary torepeatedly advertise its products.(4mks)4.The table below contains descriptions relating to the type of cash terms used in home trade. Name the type which eachdescription refers to.(4mks)DescriptionCash itemWhen payment of goods and services is paid within seven days after delivery Payment to be received immediately the seller delivers the goods to the buyers. Occurs when payment is made as soon as goods or services are provided to the buyer When the buyer is required to pay for the goods or services when placing an order. 5.Outline four factors that determine the choice of office layout in an organization.(4mks)6.State four factors that may lead to the supply curve to shift as shown in the diagram below.(4mks)SOSIprice SOSI7.Outline four features that are used to classify the different market structures.(4mks)8.In the spaces provided indicate whether each of the following sentences relate to verbal or audio visual communication.(4mks) statementverbalAudio visualMessage has a lasting impact on the receivers It does not provide evidence of the message passed on to the recipient. Allows for the participation of the parties involved. Instant feedback is obtained 9.Give four characteristics of land that distinguish it from other factors of production.(4mks)10. Highlight four factors that may limit the exploitation of Kenya‘s natural resources.(4mks)11. List four accounts that can be used to record changes in stock.(4mks)12. For each of the following transactions, indicate in the spaces provided the accounts to be debited and credited, and the type ofledger in which the accounts is maintained.(4mks)TransactionAccount (Dr)LedgerAccount (Dr)LedgerSold goods on credit to Kibet Paid salaries in cash Donated personal savings to the business Bought good on credit Page | 158565/1 &565/2 business studies 13.Enter the following transactions in a single column cash book and balance it off.(4mks)2013 August 2nd commenced business with Sh. 14.000 cash and 200,000 at the bank. 2013 August 3rd made cash sales amounting to sh. 6,000 2013 August 5th received cash 16,000 from Marwa, a debtor. 2013 August 12th paid for motor expenses Sh. 7,000 in cash. 2013 August 13th drew Sh. 30,000 from bank for office use. 14.Outlinefour benefits a consumer get rom an efficientchannel of distribution.(4mks)15.Outline four causes of unemployment in a country.(4mks)16.State four errors which cannot be detected by the trial balance.(4mks)17.State circumstances that may lead to the creation of an oligopoly.(4mks)18.The following information was extracted from the books of Migori Traders on 31st December 2015.Stock 1st Jan30,000Sales500,000Purchases300,000Return in5,000Purchases return20,000Carriage in5,000Stock 31st Dec 201570,000Sales and wages20,000Commission received5,000Repairs5,000Prepare;Trading account(3mks)(a) Profit and loss account(2mks)19.The table below shows estimated values for a certain country in millions of dollars.US$Wages and salaries450,000Income from rent30,000Profit of corporation40,000Net interest80,000Indirect taxes70,000Subsidies200,000Depreciation80,000Net income from abroad50,000From the above table calculate;(a) The gross domestic produce(2mks)(b) Gross national product(2mks20.Outline four advantages of delocalization of firms.(4mks)21.State four functions of consumer Association.(4mks)22.Outline four factors that may limit the number of entrepreneurs in a country.(4mks)23.In the table below, indicate the type of insurance policy described.(4mks)DescriptionInsurance type(i) Taking a policy to cover against loss arising from a dishonest worker. (ii) Taking a policy to cover against loss of profit arising from business closure. (iii) Cover workers who may be injured when they are officially on duty. (iv)cover a motor vehicle against all possible risks 24.Outline four factors that may influence the fertility rate of a population.(4mks).25.In the table below, indicate the book of original entry from which the source document mentioned is used to initially record.(4mks)Source documentBook of original entry(i)Sales invoice(ii) Retained receipt(iii) Credit note original(iv) Petty cash voucherPage | 159565/1 &565/2 business studies RAISMARADE JOINT EXAMINATIONS COUNCIL BUSINESS STUDIES 565/2 PAPER 2 1.(a) Explain five problems that a developing county may encounter when measuring her national income.(10mks)(b) Ouru manufactures policy is to distribute goods through wholesalers. Highlight five benefits Ouru Manufactures may enjoy.(10mks)2.(a) Outlinefive functios of commercial banks.(10mks)(b) Outlinefive circumstances under which an entrepreneur would prepare a business plan.(10mks)3.(a) Highlightfive differences between a private limited company and a public corporarion.(10mks)(b) The following information relate to Maganda traders for the year 2012.Shs.Capital340,000Gross profit108,000Cost of sales162,000Cost of stock turn over6 timesExpenses40,000From the above information, calculate; a) Turn over b) Margin c) Net profit d) Average stock e) Rate of turn on capital(10mks)4.(a) The table below shows population trend of Namibia over a period of five years.Yearpopulation200829,000,000200928,000,000201026,000,000201125,000,000201224,000,000Given that the country had an optimum population at the end of 2009, explain possible effects of the population trend on the country‘seconomy.(10mks)(b) Rongo Enterprises have decided to construct their own warehouse.Explain five benefits they are likely to derive.(10mks)5.(a) Explain five advantages enjoyed by a customer who utilizes M-Banking.(10mks)(b) The following information was extracted from Sansora Ltd in the year 2013.March1: credit purchases from Obwocha Sh. 1200; Agwate sh. 3000 and Nyamamba Sh. 2500.5:credit sales to Okero Shs. 2000; Michieka Shs. 4,300 and Omwenga Shs. 3,300.10:credit purchases from Onyancha Shs. 2,700; Obwocha Shs. 6,600 and Ombaki Shs. 3,300.20:returned goods to Obwocha Shs. 250 and Onyancha Shs. 700.26:credit sales to Bundi Shs. 850, Tendu Shs. 630 and Okello Shs. 900.30:Goods returned by Bundi Shs. 150 and Michieka Shs. 130.Required;Enter the above transactions in their relevant day books.(10mks)6.(a) There has been less us of containerization to transport goods in Kenya. Explain five possible causes.(10kms)(b) The following balance sheet was extracted from the books of Pramukh traders for the year ended 31st August 2012. Pramukh Traders Trial Balance As at 31st August, 2012 DetailsDr.Cr.machinery30000Land and Building60000Motor vehicle400007 year bank loan40000stock20000Cash at bank20000Debtors160003 year AOB loan30000creditors16000Cash in hand12000Drawings14000Bank overdraft22000Capital104000212000212000Required;a) Prepare a balance sheet as at 31st August, 2012.b) Determine;i)Working capitalii)Capital employediii) MKLDBorrowed capitalPage | 160565/1 &565/2 business studies RAISMARADE JOINT EXAMINATIONS COUNCIL BUSINESS STUDIES 565/1 Marking scheme 1.Factors that limit a person’s ability to satisfy human wants.?Unlimited nature of wants?Wants are recurrent?Wants change with time, age, gender etc?Scarcity of resources to satisfy them?Wants are complimentary in nature?Wants are competitive1 x 4 = 4mks2.Circumstances under which a business may prefer to use an automatic vending machine?If the business operates 24hrs?Where there is no need of employing someone?Where there is limited space?To reduce fraud?If the type of product can be sold using the method3.Reasons why Rongo Enterprise Limited, a manufacturer of a popular soft drive would find it necessary to repeatedlyadvertise it.?To make new customers aware of the product?To educate the ciustomers on new uses of the product.?To maintain custome4r‘s loyalty?To announce new prices?To advertise company‘s public image?To correct misleading information that customers may have acquired.?To cope with competition from other producers.4.(1) prompt(2) cash on delivery(3) spot cash(4) cash with order5.Factors that determine the choice of office layout in an organization?Staff movement within the office?Working space for each worker?Ease of supervision?The cost of construction?Cost of maintenance?How it affects the flow of workm?Machines to be used in the flow of work?The legal requirements of ventilation, lighting, etc?How it enhances the image of the organization6.Factors that may lead the supply curve to shift to the right?If there is an improvement in technology?Favourable weather?Entry of new firms?Reductionreduction in the cost of production?A decrease in the price of a substitute?An increase in the price of complimentary produce?An increase in government subsidies?A reduction in taxes on factors of production7.(i) number of buyers(ii) number of sellers(iii) uniformity of the produce(iv) the ease and difficulty of entering the market8.(i) audio- visual(ii) verbal(iii) verbal(iv) verbal9.Characteristics of land as a factor of production?Gift of nature?Size is limited?It is geographically immobile?Undergoes diminishing returns?It is not homogenous?Its productivity is increased by increasing units of capital and labour10.Factors that may limit the exploitation of Kenya’s natural resourcesPage | 161565/1 &565/2 business studies ? Lack of capital ? Lack of appropriate technology ? Poor infrastructure ? Lack of market ? Unfavourable government policies ? Political instability ? Insecurity ? Lack of skilled personnel 11. purchases AC Sales AC Sales return AC Purchases Return AC Drawing AC Capital AC 12. accounts DrledgerCrledgerkibetsalessalesgeneralsalarynominalcashCash/bankCash/bankCash book/ generalcapitalpurchasepurchasesgeneralcreditorpurchasedrawingsprivatecargeneral13.Cash A/CDateParticularsfolioamountDateParticularsfolioamount20132013Aug 2ndCapital14,000Aug 12expenses7,0003rdSales6,0005thMutua16,00013thBank30,00013thBalc/d113,000120,000120,00013thBalb/d113,00Bank A/CDateParticularsfolioamountDateParticularsfolioamount20132013Aug 2ndCapital200,000Aug 13cash30,00013thBalc/d170,000200,000200,00013thBalb/d170,000Page | 162565/1 &565/2 business studies 14.Benefits of an efficient chain of distribution?Able to get a variety of goods?Can get quality goods?Can get a steady supply of goods?Canenjoy steady prices?Can get goods at an affordable price15.Causes of an employment in Kenya?High population growth?Rural- urban migration?Inappropriate technology?Inappropriate education system?Seasonal changes?Inappropriate capital?Low decrease for goods and services?Scarcity of land16.Errors that cannot be detected by a trial balance?Error of commission?Error of complete reversal of entries?Error of omission?Error of principle?Error of original entry?Compensating error17.Circumstances that can lead to the creation of an oligololy?Where it is not easy for othr firms to enter the market because of heavy capital?Where a firm controls a vital input in production?Where a firm has exclusive rights of producing a produce?Where a market can accommodate only a few a firms18. Migori Traders Trading Account As for the period ended 31st Dec, 2015 Dr.Cr.Opening stock30,000Sales500,000Add purchases 300,000Add carriage in5,000Less sales return in5,000305,000Less purchases return 20,000375,000Goods available for sale405,000Net sales495,000Less closing stock70,000Cost of sales160,000Goss profit c/d495,000Gross profit b/d160,000Migori tradersProfit and loss accountDr.Cr.Salaries and wages20,000Gross profit160,000Repairs5,000Commission received13,000Net profit c/d148,000173,000Net profit b/d173,000Page | 163565/1 &565/2 business studies 19. GDP= wages and salaries450,000Income from rent30,000Profit of corporations40,000Net80,000Subsidies200,000800,000 Less taxes70,000730,000GDP= 730,00 Million $GNP = 730,000 + 50,000 = 780,000 dolllars20.Advantages of delocalization of firms?Able to use local resources?Leads to redistribution of development?Reduce rural to urban migration?Can reduce pollution?Create employment21.functions of a consumer association?Educating consumers on their rights?Collecting complaints from consumers?Seeking legal readers on behalf of consumers?Forwarding complaints to relevant authorities22.Factors that limit the number of entrepreneurs in a country?Lack of market?Lack of capital?Poor infrastructure?Insecurity?Political instability?Lack of qualified personnel23.?Fidelity guarantee?Consequential loss?Workman‘s compensation?Comprehensive motor vehicle policy24.Factors that may influence the fertility rate of a population?Level of literacy among women?Government policy?Cultural beliefs?Cost of bringing up children?Availability of medical facilities?Religious factors?Economic significance of large families25.?Sales journal?Cash receipt journal/ analysis cash book/ cash book?Return outward/ purchase return journal?Petty cash bookPage | 164565/1 &565/2 business studies RAISMARADE JOINT EXAMINATIONS COUNCIL BUSINESS STUDIES 565/2 Marking scheme1a)problems a developing country may encounter in measuring her national income?All substitute production and all other nonmarket production may not be valued?Determining what to include and what not to include e.g illegal activities. They are nonmarket production activities to beincluded.?Inadequate and inaccurate data; Most production activities may not be recorded.?Lack of qualified personnel to collect and record data?Lack of adequate resources to gather and compile relevant data?Danger of double counting where there are transfer documents such as student grants, pension and where the value ofintermediate is involved?Problems of using market prices where indirect taxes and subsidies have to be taken care of.?Appreciation in the value of the assets over the years?Problems of estimating depreciation when calculating net national incomeany correct five x2mks = 10mksb)benefits Ouru Manufacturers may enjoy when distributing goods through wholesalers.?Wholesalers transport goods to their premises rom manufacturers and then transport to retailers.?Storage- wholesalers buy goods from producers and store them until they are demanded.?Break bulk- wholesalers buy goods in large quantities and sale them in small quantities?Acts as a link- they distr8ibute goods belonging to producers to the retailers?Offer market information to the manufacture.-they advice customers on matters related to the product and also give feedbackto the producer.?Finance producer- Wholesalers buy goods on cash from manufacturers?Product promotion-wholesalers advertise goods on behalf of producers?Prepare goods for sale by parking, grading, sorting etc. On behalf of producers.5 x 2 =10mks2 a)Functions of commercial banks?Accepting deposits for safe keeping?Providing lending facilities in form of loans to their customers?Providing means of payment suchas standing orders, cheques, credit facilities e.t.c?Safe custody of valuable items to their clients?Providing foreign exchange services by buying / selling foreign currency?Acts as trustees by managing properties o behalf of their customers?Acts as agents of stock exchange through channeling new share to public?Discounting the bills of exchange and accepting promisory notes.?Acts as guarantors/ referees for clients seeking credit transactions from other business units?Issue letters of credit on behalf of the clients5 x 2 =10mksb)circumstances under which an entrepreneur would prepare a business plan?When attracting funding- it is used to attract funding from potential investors and lenders as is justifies the viability of thebusiness.? When one wants to avoid mistake- it minimizes the impact of disruption of business activities as a result of unforeseen circumstances b7y anticipating challenges and possible setbacks. ? When one wants a blueprint for starting andoperating a business.-It guides the owner /management‘s decision and actions on day to day business. ?When atool for evaluation is requiredIt is used to evaluate business performance to see ifit‘s achieving the set objectives?When the owners wants to determine the finances required to start the business?When identifying customers.It enables one to target appropriate customers to buy the product.5 x 2 =10mks3a)Private limited companyPublic corporationi. Formed under company act(i) Formed by an act of parliamentii. Financed by shareholders(ii) Financed by the governmentiii. Owned by individuals(iii) Owned by governmentiv. Managed by directors appointed by shareholders.(iv) Managed by board of Directors appointed byv.Formed to provide any type of goods/ servicesgovernmentfor profit motive(v) Formed to provide essential goods/ servicesvi.Losses may lead to collapse of the company(vi) Losses subsidized by governmentvii. No political influence(vii) Political influence is eminent.b)Page | 165565/1 &565/2 business studies Information Capital340,000Gross profit108,000Cost of sales162,000Rate of turn over 6 timesExpenses40,000i.Turnover = G.P + Cost of sales=108,000 + 162,000=270,000ii.Margin=G.P/sales x 100% =108,000/270,000x 100% = 40%iii.Average stock = R.O.S.T.O = Cost of sales/ average stock6 = 162,000/AVSAVS = 162,000/6= profit = G.P- expenses=108,000- 40,000= 68,000v.Rate of return on capital=NP/capital x 100%=68000/340000 x 100 %=20%4 a)possible effects of the population trend on the Namibia’s economy?The country‘s cannot be fully utilized due to luck of sufficient labour?Provision of infrastructure like roads, hospitals , water become uneconomical due to high cost per head involved.?A declining population will lead to a fall in demand of goods/services in smaller markets.?It will lead to a reduced level of investment in the country?A declining population may lead to less pressure on land and other resources?It may lead to reduced dependency ratio as the number of working persons are more due to low birth rates.b)benefits that Rongo Enterprise may derive from constructing their own warehouse.?Bulk buying; they can buy stock in large scale because they have storage facilities?They can be able to meet market demands since they stock the right quantities required by the customers.?Seasonal goods can be stocked in order to satisfy customer‘s seasoned needs?Variety of goods can be stocked to promote customer‘s satisfaction?Security of goods is offered untiln they are demanded.?Preparation of goods for sale such as branding, parking, sorting while in the warehouse is made easier.?Suitable design- they can construct a warehouse suitable for their own needs?Construction of one‘s warehouse is economical5a)advantages enjoyed by a customer who utilizes M-Banking services.?One can pay utility bills withouy going to the bank?One can check the account balance at any time?One can request for a mini-statement?One can top up his or her mobile phone airtime automatically?It‘s possible to transfer funds from his/her phone to the bank and vice-versab)(i)Purchases journalDateDetailsInvoice No.Ledger folioAmount2013 March1Obwocha12001Agwata30001Nyamamba250010Onyancha270010Obwocha660010Ombaki3300Total puchases to purchases a/c(Dr)19,300(ii)Sales journalPage | 166565/1 &565/2 business studies DateDetailsInvoice No.Ledger folioAmount2013 March5Okello20005Michieka43005Omwenga85026Bundi63026Tendi900S26OkeroTotal sales posted to sales a/c (Cr) 10,180 (iii)Purchases Return/ return outwards journalDateDetailsInvoice No.Ledger folioAmount2013 March20Obwocha25020Onyancha700Total puchases posted to returns a/c (Cr) 950 Sales Return/ return inwards journal DateDetailsInvoice No.Ledger folioAmount2013 March30Bundi15030Michieka130Total sales posted to returns a/c (Dr)280? x 20= 10mk 6. (a) five possible causes of less use of containerization to transport goods in Kenya ? They are expensive to buy and maintain ? They are unsuitable for irregular shaped goods ? They require special loading and offloading facilities which are expensive ? They require special terminals ? They are uneconomical for transporting small volume of goods ? It requires specially designed vehicles to transport containers.Any five well explained5 x 2 =10mks(b)Page | 167565/1 &565/2 business studies Pramukh Traders Trial Balance As at 31st August, 2012 AssetsShs.Current LiabilitiesShs.Cash in hand12,000Creditors16,000Debtors16,000Bank overdraft22,000Cash at bank20,000Long term liability;Stock20,0007 year Bank loan40,000Fixed assets3 year Bank loan30,000Machineries30,000Capital104,000Motor Vehicle40,000-drawing 140090,000Land and Building60,000198,000198,000? x 14= 7mksWorking capitalWorking capital= CA-CL= 68000- 38000=30,000Capital Employed;Capital employed = F.A +WC=130,000 + 30,000 = 160,000Borrowed CapitalBorrowed capital = total of long term liabilities =40,000 = 30,000 = 70,0003mksTotal 10mks Page | 168565/1 &565/2 business studies KIRINYAGA WEST SUB-COUNTY EFFECTIVE ‘40’ EXAMINATION 2016 BUSINESS STUDIES 565/1 PAPER 1 1.Highlight four reasons why Irene who is joining form one next year should take business studies as oneof her subjects(4mks)2.Outline four benefits that may accrue to a community that is involved in trading activities(4mks)3.Outline four circumstances under which a business would choose to transport goods by air(4mks)4.Outline four distinctive features of a monopoly type of market(4mks)5.Highlight four ways in which business may be affected by demographic enviroment(4mks)6.For each of the following transactions state whether the transaction will cause an increase a decreaseor has no effect on the balance sheet totals(4mks)TransactionEffect on balance sheet totals(a) Bought a business machine on credit (b) A debtor paid an amount owing by cheque (c) Paid on a creditor the amount owing in cash (d) Converted a personal car to a business car. 7.Outline four factors that influence an individual to hold money for transaction motive(4mks)8.Highlight four reasons why a person may prefer to run a business as a sole proprietor(4mks)9.Give four reasons that may make it difficult for a government to privatise some parastatals(4mks)10. Name four acts of parliament enacted to protect consumers(4mks)11. Give four factors that influence the level of national income in a country(4mks)12. The following information relates to Haraka Traders for the year ended 30th June 2014Net salesShs.400,000ExpensesShs.30,000Margin20%Rent RevenueShs.20,000Carriage outwardsShs.10,000Prepare Haraka traders profit and loss Account for the year ended 30th June 2014(5mks)13. Outline four characteristics of chain stores(4mks)14. Outline four ways in which warehousing facilitates trade(4mks)15. Using two diagrams , distinguish between upward movement along a demand curve and a shift of the demand curve to the right(4mks)16. On 1st January 2015 , Ndonga bought goods on credit quoted at Kshs. 120,000, terms of sale where 20% trade discount and10% cash discount if payment was made before 18th January 2015. Calculate the amount paid if payment was made on 15thJanuary 2015(4mks)17. In a current trend in banking, bank customers are allowed to use their ATM cards to shop for goods and services . State fourbenefits of this trend to the customer(4mks)18. State three difficulties of measuring national income using income approach(3mks)19. Highlight four measures that a country would take in order to correct balance of payment deficit(4mks)20. The following balances were extracted from the books of Paul retailers for the year ended 31 st Dec 2014ShSales600,000Purchases420,000Stock on 1/1/2014180,000Stock on 31/12/2014140,000Calculate(i) Mark up(2mks)(ii) Rate of stock turnover(2mks)21. Identify four situtations that make it ideal to use gestures in communication(4mks)22. Name four market gaps that may prompt an entreprenuer to start a business(4mks)23. State the type of unemployment described in each of the following(4mks)(a) Where people have temporarily lost jobs and are seeking for new ones (b) Where people are rendered jobless at certain period of the year (c) Where people lost jobs due to change in technology (d) Where people lose jobs during period of economic recession 24. Outline four features of a good transport system(4mks)25. Outline four main features of an endowment policy in life assurance(4mks)Page | 16900565/1 &565/2 business studies KIRINYAGA WEST SUB-COUNTY EFFECTIVE ‘40’ EXAMINATION 2016 BUSINESS STUDIES 565/2 PAPER 2 1(a) China is one of the most populated country in the world. Discuss five challenges such a country is likelyto experience(10mks)(b) Explain five circumstances underwhich a co-operative society may be dissolved(10mks)2(a) Describe five office etiquatte qualities that a school secretary should observe while carrying out her work(10mks)(b) Study the supply curve belowExplain five possible causes of the above change in supply curve(10mks)3(a) Explain five benefits that a manufacturer would get by building his own warehouse(10mks)(b) The following transactions relates to Jua Kali traders for the month of May 2014 May 10: Started business with Kshs. 20,000 in cash 15: Bought goods worth Ksh 10,000 on credit 18: Sold goods Kshs 5000 cash 20: Paid electricity Kshs. 200 in cash 30: Received commission shs. 500 in cash Required (i) Prepare ledger accounts and balance them off(5mks)(ii) Extract a Trial balance(5mks)4 a) Discuss five factors that are likely to raise a country‘s National icome(10mks)b) Explain five reasons for taxation(10mks)5 a) Outline four differences between life assurance and general Insurance(8mks)b) The following transactions relate to Magunandu Traders during the month of May 2011 May 1: Credit sales to Maina Ksh. 500 invoice No 005 May 3: Credit sales to Njeri Kshs 1000 May 4: Sold goods worth Ksh 5000 to Mwende on credit May 10: Sold goods on credit to Wanjiru Ksh. 1500 May 20 : Credit sales to Maina Kshs. 1000 Required (i) Prepare Magunandu‘s sales day book(6mks)(ii) Post the various amounts to the relevant ledger accounts(6mks)6(a) Explain five internal business environments that may negatively influence business operations(10mks)(b) Differentiate between commercial banks and Non- banking institutions(10mks)Page | 170565/1 &565/2 business studies KIRINYAGA WEST SUB-COUNTY EFFECTIVE ‘40’ EXAMINATION 2016 BUSINESS STUDIES 565/1 Marking scheme 1. Reasons why Irene should take business studies a). To learn basic skills to start and run a business b). It is a career subject c). To learn basic business terms d). To appreciate the role of government in business 2. Benefits that accure to a community involved in trading activities a). Acquires commodities if cannot produce b). Disposes surplus produce c). Acquires foreign exchange d). Maintains peace and harmony with trading parties 3. Circumstances under which a business would choose air transport ?If goods are required urgently?If goods are perishable?If goods are higly valuable?If the goods need less handling?If they are to be transported to a far off place4.Distinctive features of a monopoly type of market?One supplier?Many buyers?Barriers to entry in the market?Seller determines the price5.Ways in which business may be affected by demographic environment?Size of population affects size of market?Population age affects type of goods produced?Education levels affect availability of labour?Population gender determines types of good produced?Education levels determine quality of labour6.a). Increaseb). No effect c). Decrease d). Increase 7.Factors that influence an individual to hold money for transaction motive(4mks)a). Level of income b) Interval between receipts of incomes c) Individuals spending habits d) Price of commodities e) Availability of credit 8.Reasons why a person may prefer to run a business as a sole proprietor(4mks)?Easy decision making?Enjoys all profits alone?It is flexible?To be their own boss9.Reasons that may make it difficult for a govenment to privatise some parastals?Need to prevent foreign dominance?Need to create employment?Need to provide essential goods and service to citizens?Need to provide sentisive goods10.Acts of parliament enacted to protect consumers?Public health act?Weights and measure act?Sale of goods actPage | 17100565/1 &565/2 business studies ?Food and drugs act11. Factors that influence the level of national income?Capital?Land?Labour supply?Political stability?Entrepreneurship12 Gross profit = 20/100 x 400,000 = Sh. 80,0000Haraka TradersProfit and Loss AccountFor the period Ended 30th June 2014Expenses30,000Gross profit B/d80,000Carriage outward10,000Rent Revenue20,000Net profit c/d60,000100,00100,000Net profit B/d60,00013. Characteristics of chain store a). Purchase are centralised b). Prices are standard c). Have uniform outward appearance d) All branches deal in the same type of product 14. Ways in which warehousing facilitates trade(4mks)?Enable steady supply of goods?Enable stability in prices?Goods improve/maintain quality?Goods can be prepared for sale15(a) Upward movement(b) Shift to the right 18. Required amount= 80 x 120,000100Shs. 96,000Amount Paid= 90 x 96,000100Shs. 86,400Page | 172565/1 &565/2 business studies 17. Benefits of using ATM to purchase goods ?Convenient to carry around?Safer than carrying cash?Used when banking services are not available?Encourages control of expenditure18. Difficulties of measuring national income using income approach?In accurate data?Illegal incomes?Exclusion of tranfer earnings?Fluctuation in prices affects profits earned by firms19. Measures taken to correct balance of payment deficit?Decrease the volume of imports?Increase to volume of exports?Encourage foreign investment?Devaluation of currency?Restrict out flow of capital20. Mark up - Gross profit x 100 C.O.S G.P.= Sales - Cost of salesCost of sales = 180,000+420,000-140,000 = Shs 460,000 Gross profit = Sh ( 600,000-460,000 = Shs 140,000 Mark up= 140,000 x 100460,000 = 30.43% (ii) Rate of stock turnover(2mks)R.O.S.T. = Cost of goods sold Average stock = Average stock = O.S+ C.S = 180,000+ 140,000 22160,000R.O.S.T = 460,000= 2.875 times160,00021. Situations that make it ideal to use gestures?If the message is confidential?When conveying message in a noisy environment?Where it is the only means available?Where it is the only means that can be understood?Where it is the policy of the institution22. Market gaps that may prompt an entrepreneur to start a business?Lack of proudcts?Poor quality products?High prices?In adequate quantities?Poor customer services23. Types of unemployment a). Frictional b) Seasonal c) Structural d) Cyclical 24. Features of a good transport system a). Safe b) Flexible c) Reliable d) Cost effective 25. Features of an endowment policy in life assurance ?Compensation is after a certain duration of time?Premiums are paid for a certain duration of time?Saving plan?Assured decids on the maturity datePage | 17300565/1 &565/2 business studies KIRINYAGA WEST SUB-COUNTY EFFECTIVE ‘40’ EXAMINATION 2016 BUSINESS STUDIES 565/2 Marking scheme 1. a)Challenges experienced by overpopulated countries?Strain on social amenities?Low standard of living?Environmental degradation?Rural/urban migration?Increase in social evils and crimes?Unemployment?Food shortageb)Circumstances under which a co-operative society may be dissolved?Incase of court order?If the society is declared bankrupt?If members withdraw leaving less than ten?Incase members voluntarily decide to dissolve?If it complete it‘s purpose?If the commissioner of co-op orders its closure2.a)Office etiquette qualities that a school secretary should obeserve?Respect?Honesty?Punctuality?Courtesy?Loyaltyb)Possible causes of the charge in the supply curve?Decrease in cost of production?Availability of factors of production?Improved technology?Favourable government policies?Future expectation of decrease in the price?Favourable natural factors3(a)Benefits that manufacturer would get by building his own warehouse?Full control over it‘s operations?Warehouse can be designed according to specification?Owner can be designed according to specification?Owner is not tied by procedures of receiving and isssuing goods?Owner doesn‘t incur cost hiring?Availability of special handling equipment that may not be available in public warehouseb)(i) Ledger AccountsPage | 17400565/1 &565/2 business studies Trial balance JUA KALI TRADERS TRIAL BALANCE AT AT 30TH MAY 2016 DETAILSDrCrCash25,300Electricity200Purchases10,000Capital20,000Sales5,000Commission500Creditor10,000Totals35,50035,0004.a)Factors that may raise a country’s national income?High level of technology?Availability of Natural resources?Availability of capital?Political stability?Increased foreign investment?Availability of entrepreneurs?Positive altitude towards workb)Reasons for taxation?To control inflation?Discourage importation of certain commodities?Raise government revenue?Influence consumption of certain commodities?Influence location of firms?Reduce in equialities in income distribution?Correct unfavourable , balance of paymentTop Grade Predictor PublishersPage | 17500565/1 &565/2 business studies 5(a) Life assurance- Not contract of indeminty - A saving plan- Risk must occur- Doesn‘t require renewal - Has surreder value6General Insurance- A contract of Indemnity - Not a saving plan - Risk may not occur - Requires annual renewal - Has no surrender value (a) Internal business environments that may negatively influence business operations?Inadequate capital?Unskilled employees?Insufficient employees?Poor business structure?Negative business culture eg not respecting the employees and customers?Poor management skills?Poor decision making?Poor business objectives(b) Differences between commercial banks and non-banking institutionCommercial banksNon-banking institutions- Provides all types of accounts- Mainly offers saving and fixed deposits- Provide short term and medium term ways- Provide medium and long term- No restricted finance- Restricted finance- Provide foreign exchange- Provide finance for capital- Participate in cheque clearance- Do not participate in cheque clearancePage | 17600565/1 &565/2 business studies THARAKA NORTH / SOUTH SUB-COUNTIES JOINT EXAMINATION 565/1 BUSINESS STUDIES PAPER 1 1.Highlight four elements that may make the external business environment.(4 marks)2.State four kinds of information which can be extracted from the Articles of Association.(4 marks)3.The diagram below represents the demand for the supply of a commodity in the market.DSPrice (shs)P0 P1SDQ 0Quantity (kg)State the effect of fixing the price.a) Above price PO(2 marks)b) Below price PO.(2 marks)4.Give four reasons for maintaining journals.(4 marks)5.The following balances were extracted from the books Lion Traders as at 30th June 2012.ShsSales1,400Carriage out6,000Discount allowed11,000Discount received5,000Returns in12,000Rent income3,000Purchases2,000Bank150,000Capital159,000From the above information, prepare a trial balance.(5 marks)6.State the three levels of production.(3 marks)7.Outline four factors which may limit the effectiveness of a warehouse.(4 marks)8.State four benefits that would accrue to a firm located in an area well served by efficient transport system.(4 marks)9.Outline four ways through which the central bank of Kenya acts as a banker to the government.(4 marks)10.What are the reasons for public finance?(4 marks)11.State four factors that may limit the number of entrepreneurs in an economy.(4 marks)12.State four unethical practices in product promotion.(4 marks)13.State the effects of each of the following transactions on balance sheet total by indicating increase decrease or no effectsa) Proprietor paid creditor in cash...b) Proprietor bought a motor cycle on credit... c) A debtors paid proprietor by cheque... d) Proprietor deposited additional money into business bank account ... 14. The following information was extracted from the books of Waiganjo traders for the year ending 31st December 2014 ShsSales400,000Purchases520,000Opening stock100,000Closing stock80,000Calculate the rate of stock turn over.(4 marks)15.State four benefits of using electronic filing system in office.(4 marks)16.Give four reasons why small scale businesses are popular to local investors in rural areas.(4 marks)17.State four ways that Kenya is likely to benefit from having inland container depots.(4 marks)18.State four ways in which local resources can be managed to alleviate unemployment problems in Kenya. (4 marks)19.Outline four negative effects that inflation may have in a country.(4 marks)20.On 2nd June 2010, Gamma received an invoice for shs 120,000. Terms of payment were trade discount 5% and cash discount 10% ifpayment is made within 30 days, Determine the amount paid if payment was made on 30th June 2010.(4 marks)21.State four problems that a country may suffer when the government becomes a major investor in business.(4 marks)22.State four challenges associated with development planning.(4 marks)23.Highlight four factors which may lead to an increase in the level of National income.(4 marks)24.State four conditions that must be met for an insurance contract to be valid.(4 marks)25.State four merits of transacting business through e-commerce.(4 marks)Page | 177565/1 &565/2 business studies THARAKA NORTH / SOUTH SUB-COUNTIES JOINT EXAMINATION 565/2 BUSINESS STUDIES PAPER 2 Answer any FIVE questions. 1.a)Explain five diseconomies of scale which a business enterprise may experience as a results of expansion.(10 marks)b)Discuss five advantages that a developing country may enjoy by liberalizing foreign trade.(10 marks)2.a)Outline five factors that facilitate entrepreneurial development in an economy.(10 marks)b)Describe five channels of distribution of imported goods.(10 marks)3.a)On 1st June 2015, Mwala had shs 250,000 in bank and shs 55,000 cash in hand.During the month the following transactions took place. June 2: Cash sales banked shs 35,260 June 3: Bought stationary in cash shs 4,500 June 8: Paid Meme, shs 94,000 by cheque in full settlement of his account after deducting 6% cash discount. June 12: Received a cheque for shs 58,800 from Rehema after allowing her a cash discount of shs 1,200 June 15: Paid wages shs 30,000 in cash June 20: Paid water bill shs 4,000 in cash June 25: Withdrew shs 50,000 from bank for office use. June 28: Mugo a debtor paid his account of shs 75,000 by cheque less 10% cash discount. June 30: Deposited all the cash into the bank except shs 13,700 Required: Prepare a three column cash book and balance it.(12 marks)b)Explain four functions of money.(8 marks)4.a)Explain five factors that influence a firm's decision of type of goods or services to produce.(10 marks)b)Explain five merits of having an open office plan in an organisation.(10 marks)5.a)Explain five functions of wholesalers(10 marks)b)Describe five circumstances in which a firm may acquire monopoly power.(10m ark)6.a)The following trial balance relates to union traders as at 30th September 2015,Union traders trial balance.As at 30th September 2015Dr. (Sh)Cr. (Sh)Land and building1,527,000Debtors and creditors20,00030,000Cash100,000Purchase and sales140,000320,000Opening stock45,000Discount6,0002,000Salaries and wages50,000Commission8,000Power and lighting12,000Returns15,00019,000Carriage in5,400Carriage out2,300Capital1,543,7001,922,7001,922,700Additional information : Closing stock was shs 22,000Required : Prepare trading, profit and loss account(10 marks)b)Explain five ways in which communication enhances trading activities today.(10 marks)Page | 178565/1 &565/2 business studies THARAKA NORTH / SOUTH SUB-COUNTIES JOINT EXAMINATION 565/1 BUSINESS STUDIES Marking scheme 1.Elements of external environment?Business?Political?Economical?Social cultural?Technological?Legal structure?Customers?Intermediaries?Geographical?Demographical?Suppliers of raw materials?Competition4 x 1 = rmation from articles of association?Rights of shareholders/voting rights?Methods of calling meetings?Rule governing election of officials?Rule regarding preparation/Auditing of accounts?Power /duties /rights of directors?List /name of directors?Declaration?Statement of agreement signed by directors?The issue /transfer of shares4 x 1 = 4mks3.a) Above P. excess supply(2mks)b) Below P. excess demand(2mks)4.Reasons for maintaining journals?To reduce details to be recorded in ledgers?For future reference/act as back up data?Contain information in details?Used to trace/locate errors?Ensure double entry rule is adhered to?To minimise /discourage fraud?Act as diaries/recorded transactions as they occur?Used to prepare control/total accounts4 x 1 = 4mks5. Lion Traders Trial Balance As at 30th June 2012 DetailsDr (shs)Cr (shs)Sales14,000üCarriage out6,000üDiscount allowed11,000üDiscount received5,000üReturns‘ in12,000üRent income3,000üPurchases2,000üBank10,000üCapital159,000ü181,000181,000Page | 179565/1 &565/2 business studies 6.Level of production?Primary?Secondary?Tertiary3 x 1 = 3mks7.Factors limiting effectiveness of warehouse?Unsuitable/inconvenient location?In appropriate/lack of proper equipment?Lack of qualified personnel/staff?Poor recording system/poor inventory system?Non compliance with law?Lack of adequate security?Inadequate space/poor building design?Poor transport network/communication system4 x 1 = 4mks8.Benefits of locating firm in an area well served by efficient transport?Facilitate easy delivery of raw materials?Facilitate movement of goods to the market?Ease workers‘ movement to and from work?Gain access to auxiliary services eg banks?To reduce cost and make production cheaper4 x 1 = 4mks9.Services of central bank to the government?Issue currency?Accepts deposits for safe keeping?Arranges and pays public debts?Advises government before major economic decisions are made any other relevant point4 x 1 = 4mks10.Reasons for public finance?Provision of essential goods/services?Controlling of consumption of certain products?Encourage consumption of certain products?Promoting balance regional development?Redistribution economic stability?Creating a conducive business environment?Raising finance for the government4 x 1 = 4mks11.Factors limiting number of entrepreneurs?Lack of interest in personal business?Inadequate market for product?Inability of land/lack of land?Lack of skills?In availability of raw materials?Lack of ability to borrow?Lack of capital?Insecurity?Poor infrastructure?Government policy?Lack of labour4 x 1 = 4mks12.Unethical practices?Giving false/misleading information about product?Promoting sales with genuine product but actually selling counterfeits?The content of the message may be offensive to the public?False pricing of product?Not disclosing side effects of the product?Negative effect on environment?Social cultural conflicts?Cheating on ingredients of the product?Use of prizes to be won which may not exist4 x 1 = 4mks13.a) Decreaseb) Increasec) No effectsd) Increase4 x 1 = 4mksPage | 180565/1 &565/2 business studies 14.Cost of goods sold= OS + P - CS= 100,000 + 520,000 - 80,000 = sh 540,000 Average stock =OS + CS = 100,000 + 80,000 22= sh 90,000Rate of stock turnover= cost of goods soldaverage stocks= 540,00090,000= 6 times4 ticks x 1 = 4mks15.Benefit of using electronics filing?Easy to access the information?Reduces cost of materials?Requires less storage facilities?Involve less paper work?Ensures safety/security of documents?Reduces pollution/environment friendly4 x 1 = 4mks16.Why small business are popular?Require little capital?Easy to manage/control?Flexible?Easy to start/form/require few legal requirements?Little/few risks?Cheaper to operate/low operating costs?Top security4 x 1 = 4mks17. Benefits from inland container depots?Fasten loading /offloading?Proper handling of goods?Enhance safety?Reduce packing cost?Possible for door to door delivery4 x 1 = 4mks18. Managing resources to alleviate unemployment?Government funding entrepreneurs?Carrying out research?Training new talents?Sensitization?Promoting using mass media?Improve infrastructure?Provide incentives to entrepreneurs?Reclamation of waste land4 x 1 = 4mks19. Negative effects of inflation?Discourage saving?Increase in interest rate/high cost on credit?People with fixed income are hard hit/suffer more?Lenders loose?Social political unrest/instability/bring conflict?Worsening balance of payment?Unfair/uneven distribution of income?Low income earness/unemployed are hard hit?Hampers preparation of development plan/budget?Loss of confidence in currency?Adverse effect on investments4 x 1 = 4mks20. Invoice price120,000Less trade discount(5/100 x 120,000)( 6,000)114,000Less cash discount(10/100 x 114,000)(11400)102,6004 ticks x 1 = 4mksPage | 181565/1 &565/2 business studies 21. Problems when government is a major investment ?Discourage private investment?Poor quality goods/services?Limited choices for consumer?Inefficiency?Burden to tax prayers/increase government expenditure?Lack of accountability/transparency?Unstable management?Political interference?Bureaucracy /red-tape4 x 1 = 4mks22. Challenges associated with development planning?Inadequate data?Inaccurate data?Inadequate funds?Inadequate supply of specialists?Political instability/conflicts?Conflict of interest?Over ambitions plans?Natural catastrophes?Lack of political good will?Donor withdrawal4 x 1 = 4mks23. Causes of high level of income?Availability of human resources/labour supply?Availability of capital?Culture that encourages entrepreneurship?Availability of land/natural resources?High level of technology?Political stability/goods governance?Foreign investment4 x 1 = 4mks24. Conditions for contract?Must be for legal purposes?Insured and insurer must have legal capacity to contract?Terms and conditions must be acceptable by both parties?Payment of premiums must be made?Risk must be insurable4 x 1 = 4mks25. Merits of e-commerce?Access to large markets/global market?Large and small businesses can use internet?Fast/quick?Reduces paper work?Cheap way /saves cost?One can access other information4 x 1 = 4mksPage | 182565/1 &565/2 business studies THARAKA NORTH / SOUTH SUB-COUNTIES JOINT EXAMINATION 565/2 BUSINESS STUDIES Marking scheme 1. a)Diseconomies of scale?Complexity of management due to expanded operation?Delay in decision making due to increase red-tape /bureaucracy?High cost per unit after the optimal size has been reached?Poor labour relation due to lack of direct contact with management?Inflexibility due to shifting costs to other lines/over investment in the existing business.?High cost of inputs due to exhaustion of existing sources?Marketing diseconomies due to limited size of market?Technical diseconomies due to use of outdated/obsolete technology.1mk for mention otherwise 2mks for explanationb)Advantages of liberalizing foreign trade?Variety of goods/services giving people a choice to satisfy different consumer needs?Access to goods/services it does not produce by bying them from other countries.?International peace/understanding is created due to independence.?Enhances specialization in production of goods/services in which it has the greatest comparative advantages.?Generates revenue through taxes paid by exporters/importers in the country.?Dispose surplus goods/services thereby avoiding wastage.?Creation of employment for those engaged in trading activities thereby increasing standard of living.?Acquiring technology/skills from other countries?Each foreign exchange which it can use to pay for its imports.?Able to get goods/assistance from other countries during times of calamities.?Promote health competition among local /foreign producers thereby producing quality goods.1mk for mention otherwise 2mks for explanation2.a)Factors that facilitate entrepreneurial development?Good infrastructural development in an economy?Favourable government policy?Increased levels of skills?Availability of market/demand?Availability of resources /capital /labour?Fair level of competition?Political stability?Natural factors/land5 x 2 = 10mksb)Channels of distribution of imported goodsa. Foreign producers ? local consumers b. Foreign producers? foreign agent ?local consumer c. Foreign producer? foreign agent? local agent ?local consumer d. Foreign producer ?local agent ?local consumer e. Foreign producer ?foreign agent? local agent ?local wholesaler ?local consumer f.Foreign producer? foreign agent ?local agent??local retailer ?local consumerg. Foreign producer? foreign agent? local agent ?local wholesaler ?local retailer ?local consumerh. Foreign producer? foreign agent? local wholesaler? local consumeri.Foreign producer ?foreign agent? local retailer? local consumerj.Foreign producer ?foreign agent ?local wholesaler? local retailer ?local consumerk. Foreign producer? local agent ?local wholesaler? local retailer? local consumerl.Foreign producer? local agent? local retailer ?local consumerm. Foreign producer ?local agent ?local wholesaler ?local consumern. Foreign producer ?local wholesaler ?local retailer ?local consumero. Foreign producer ?local wholesaler ?local consumerp. Foreign producer ?local retailer ?local consumerUse of arrows/statement any 5 x 2 = 10mksPage | 183565/1 &565/2 business studies 3.a)DateDetailsD.ACashBankDateDetailsD.RCashBankJuneJune1Bal b/d ?55,000250,0003Stationary?45002Sales ?352608Meme ?60009400012Rehema?12005880015Wages ?3000025Bank C?50,00020Water bill?400028Mugao?75006750025Cash C?50,00030Cash C ?52,00030Bank ?5280030Bal c/d ?13700320,3608700105,000464,3606000105,00046436036 ticks x 1/3 = 12mksb)Functions of money?Medium of exchange as it can be exchanged for goods/services since it is generally accepted?Measure of value as value of goods/services can be compared and determined?Store of value a goods/services can be sold and their value stored inform of money.?Standard for deferred payments as it assists to conduct business on credit?Unit of account as value of goods/services are recorded in terms of money.4.a)Decision on what to produce?Government policy - product should be in line with existing government policy.?Capital requirement as it can produce a product it can afford to finance.?Market as it can produce with ready market.?Competition should be fair.?Profitability one to generate high profits.Any 5 x 2 = 10mksAny other relevant pointb)Merits of open office plan?Easy supervision of employee performance they are in the same room?Economy of the space as it has not been lost through partitions.?Minimal cost as it is cheap to construct/maintain/decorate?Sharing of resources /facilities thus avoiding wastage?Fast /easy communication between workers as they are found in the same room?Flexibility as it is easy to re-arrange /redesign when need arises?Enhanced team work by sharing ideas/friendship promoted?Faster flow of work due to reduce movement?Discourage absenteeism/lateness due to closer supervision?Discourage misuse of office resources thus promoting accountability?Discourage laziness/idleness since worker can see each other?Easy/faster location of staff since they work in the same room1mk for mention otherwise 2mks for explanation5.a)Functions of wholesalers?Act as link between producer and retailer?Transport of goods from producer to their premises/to retailers?Storage/warehousing to ensure continuous supply?Price stability by storing goods when production is high and releasing them during law production season.?Reducing operational costs. As they act as a vital link between producer and retailers.Page | 184565/1 &565/2 business studies ?Advise to both producer and retailer about pricing/use of goods?Advertise goods they deal in?Preparing goods for sale by blending/grading/packing/sorting etc?Financing trade by paying producers cash1mk for mention otherwise 2mksb)Acquiring monopoly power?If the farm has secretive production technique which denies other firms the use of technique.?If the firm has control over strategic inputs thus making the firm to have sole access to inputs.?If the venture requires large capital other firms may not be able to raise leaving the field to one firm.?If the firm enjoys greater economies of scale thus producing at a lower cost than others.?If the firm is set up as state monopoly thus shutting out competition.?If firms merge/amalgamate /combine to become only producer.?If the market is the best served by one firm more economically other firms entering may make less due to low sales, hence thefirm remains dominant.?If the firm has patent right/copy right which bars others from selling the product. 1mk for mention otherwise 2mks6.a)Union TradersTrading, Profits and Loss A/CFor the year ended 30th September 2015shsshsOpening stocks45,000?Sales320,000?Add Purchases140,000?Less returns in15,000?185,000?Net sales105,000?Add carriage in5400?190,000?Less returns out19,000?Goods for sale171,400?Less closing stock22,000 ?CO GS149,000?GP c/d155,600?305,000105,000Salaries/wages50,000?GP b/d155,600?Power/Lighting12,000?Add discount return 2000?Carriage out2,300?Add commission8000?Net profit c/d95300?165,600165,600Any 20 ticks x ? = 10mksb)How communication enhances trading activities?Giving and receiving information between the firm and outsiders/within departments?Classification of issues to avoid confusion?Enhances public relations so as to promote corporate image to members of the public.?Starting and influencing action by communicating their ideas and ensure they are implemented.?Improve customer services through handling customers inquiries and giving feed backs?Co-ordination of departments for linkage of activities to achieve harmony at work.?Giving assurances through appreciating good work of an employee.1mk for mention otherwise 2mks for explanationPage | 185565/1 &565/2 business studies GEM SUB-COUNTY FORM 4 JOINT EVALUATION 565/1 BUSINESS STUDIES PAPER 1 1.Outline four reasons why cash payment is preferred to cheque payment.(4 marks)2.Identify four types of insurance policies relevant to a supermarket owner.(4 marks)3.Outline four challenges that a firm would experience as a result of expansion of the entire industry in which it is found.(4 marks)4.Outline four factors that affect business activities and which the business has control over.(4 marks)5.Outline four features of a good filing system in a firm.(4 marks)6.For each of the following transactions indicate the account to be debited or credited.TransactionA/C debitedA/C crediteda) Received discount from Top suppliers b) Allowed discount to Shujaa Traders c) Sold furniture to Owuor on credit d) Took stock worth sh.200 for personal use 7.State four advantages of using the internet as a means of communication.(4 marks)8.Highlight four ways in which transport is important to a business.(4 marks)9.State four circumstances under which a producer would sell his goods directly to the consumer.(4 marks)10.State four characteristics of basic human wants.(4 marks)11.In the spaces provided state the source document for each of the subsidiary books given below.(4 marks)Subsidiary bookSource documenta) Sales Journal b) Purchases journal c) Returns inwards journal d) Returns outwards journal 12.State four advantages of using direct taxes to collect revenue in a country.(4 marks)13.Identify the type of utility created by the following activities.(4 marks)ActivitiesUtilityi) Keeping heavy clothes till rainy day ii) A student buying a text book from a bookshop iii) Transporting bread to a school canteen iv) Making lockers for students 14. The following formula is used in National Income Computation. Y = C + I + G + (X - M)Identify what each of the following letters stand for, C,I,G & M15. The table below relates to four different businesses, insert the correct values for A, B, C and D.(4marks)FirmAssetsCapitalLiabilities12,310,642A486,9322B40,38596,4833941,68231,685C43,104,611D395,34816. The population of the youth in country X is likely to be 3/4 of the total population in ten years time. Highlight four challengesPage | 186565/1 &565/2 business studies this country will face at this point in time.(4 marks)17.Highlight four factors that determine the amount of money held by an individual for transaction motive.(4 marks)18.The following information relates to Kembe Traders as at 31st December 2008(4 marks)Rate of stock turnover3 timesMark up 20% Opening stock sh.160,000 Closing stocksh.200,000Required : Determinei)Gross profitii) Sales19.Outline the procedure followed in personal selling.(4 marks)20.State four reasons why an entrepreneur needs to prepare a business plan.(4 marks)21.State four reasons why parastatals perform poorly in Kenya.(4 marks)22.Highlight four features of a public warehouse.(4 marks)23.Identify four methods through which the government gets involved in business.(4 marks)24.State four limitations of trade restrictions to a country.(4 marks)25.The following balances were extracted from the books of Highway stores on 31st Dec. 2015Items Shs.Land and buildings650,000Stock470,000Bank overdraft80,000Debtors350,000Ten year loan500,000Creditors220,000Cash50,000Motovan150,000Required :i)Prepare a balance sheet for Highway Stores as at 31st Dec. 2015.(4 marks)Page | 187565/1 &565/2 business studies GEM SUB-COUNTY FORM 4 JOINT EVALUATION 565/2 BUSINESS STUDIES PAPER 2 1.a) Explain FIVE ways in which the efficiency of a warehouse can be enhanced.(10 marks)b) The following table represents the supply of sweet potatoes for three (3) months.Price per kgYear (2016)(shs)Quantity supplied (kg)January100100,000February10090,000March10080,000Explain FIVE reasons to account for the change in quantity supplied of sweet potatoes in the market.(10 marks)2.a) Many schools in Kenya have purchased school buses through Hire Purchase Finance. Explain anyFIVE reasons why many companies are offering hire purchase schemes to their customers.(10 marks)b) Explain FIVE current trends in Kenya‘s banking sector.(10 marks)3.a) Outline FIVE differences between a private company and a public corporation.(10 marks)b) The following transactions relate to Mamboleo Retailers for the month of September 2014 Sept 3 Sold goods on credit to Bukachi sh.14000 and Janet sh.18000 Sept 9 Bought goods on credit from Shaban Traders sh.45000 Sept 14 Bukachi returned goods worth sh.2500 Sept 18 Purchased goods on credit from Nambaka sh.36000 and Janet sh.1200 Sept 22 Goods worth sh.7000 were returned to Shaban Traders and goods worth sh.4000 to Nambaka Sept 24 Sold goods on credit to Bukachi sh.9000 Sept 26 Goods returned by Nehemiah sh.3000 Sept 30 Bought a generator worth sh.450,000 on credit from Dynomite power company Required : Prepare the relevant journals.(10 marks)4.a) Expain FIVE measures the Kenyan government may take to curb unemployment.(10 marks)b) Discuss FIVE reasons why per capita income may not be a perfect measure of standards of livingbetween differentcountries.(10 marks)5.a) Kenya, Uganda, Tanzania, Burundi and Rwanda are members of the East African cooperation.Explain FIVE benefits that these countries will enjoy from such an economic integration.(10 marks)b) Explain FIVE characteristics of economic resources.(10 marks)6.a) Outline FOUR roles played by advertising agencies in Kenya.(4 marks)b) The following information relates to Baraka traders.Baraka TradersTrial Balance as at 31/12/2012DetailsDr (shs)Cr (shs)Capital100,000Motor vehicle100,000Machinery16,000Stock (1/1/2012)12,000Debtors33,500Cash18,000Bank12,800Creditors45,000Sales200,000Purchases120,000Carriage inwards2,000Returns1,2001,000Carriage on sales4,000Discounts3,0004,000Salaries2,0001,000Rent500Insurance10,000Telephone9,000Electricity8,000351,500351,500Closing stock was valued at sh.8000Required :i)The trading profit and loss account.(8 marks)ii) The balance sheet(4 marks)Page | 188565/1 &565/2 business studies GEM SUB-COUNTY FORM 4 JOINT EVALUATION 565/1 BUSINESS STUDIES Marking scheme 1.Outline four reasons why cash payment is preferred over cheque payment?Cash is legal tender but cheque is not?When the amount is small?Bank account is not a requirement for cash payment?Personal cheques can easily be dishonoured?No bank charges incurred as is the case in cheques?Cash is immediate while cheque may have to wait4mks2.Insurance policies relevant to a supermarket owner?Fidelity guarantee?Workman‘s compensation?Sprinkler leakage?Cash In transit?Third party policy?Personal accident cover4mks3.Outline four challenges that a firm would experience as a result of expansion in the entire industry?Scramble for raw materials?Scramble for land for expansion?Scramble for available labour?Competition for available markets?Easy target especially in times of war4mks4.Outline four factors that affect business activities and the business has control over them?Business structure?Business culture?Business resources?Business objectives?Business owners4mks5.Outline four features of a good filing system in a firm?Should be simple?Should be compact?Should be easily accessible?Should be neat?Should be flexible?Should be economical?Secure / safe?Suitable4mkss6.For each of the following transaction, indicate the accounts to be debited and the account to be creditedTransactionA/C debitedA/Ccreditedi) Received discountTop suppliersDiscountfrom top suppliersreceived ii) Allowed discount toDiscount allowedShujaaShujaa traders iii) Sold furniture toCashFurnitureOwuor in cashiv) Took stock worthDrawingsPurchasessh.200 for personaluse4mks Page | 189565/1 &565/2 business studies 7.State four advantages of using internet as a means of communication?Worldwide connectivity?Helps send / receive email?Faster means of communication?Can advertise goods on internet?Helps in holding conference online?Helps in selling goods online?Helps download and print data4mks8.Highlight four ways in which transport is important to a business?Helps bridge a gap between producer and consumer?Encourages specialisation?Ensures constant supply of goods and services?Ensures stability of prices of commodities?Helps dispose off surplus produce?Improves usefulness of a product?Avails variety of products4mks9.State four circumstances under which a producer would sell directly to a consumer?When the product is highly perishable?When the product is too costly?When the product is tailored to meet customer‘s specifications?When the goods are too sensitive in nature?When the government requires so?When the goods are few?When the market is concentrated / producer is closer to consumer4mks10.State four characteristics of basic human wants?One cannot do without them?They are felt needs?They are satisfied before secondary wants?They cannot be postponed4mks11.State the source document for each of the following subsidiary booksSubsidiarySource documenti) Sales journalSales / outgoing / invoiceissued ii) Purchases journalPurchases / incoming invoice/ receivediii) Return inwards journalOutgoing / issued credit noteiv) Return outwardsIncoming / received creditjournalnote12. State four advantages of using direct taxes to collect revenue in a country?They are progressive / equitable?The poor are exempted?It is certain?It is convenient i.e. tax collected at time of earning?Guarantees fair redistribution of wealth?Creates sense of citizenship?Economical in terms of collection?It is elastic / flexible?It is desirable i.e. only affects disposable income and not prices4mksPage | 19000565/1 &565/2 business studies 13.Identify the types of utility created by the following activitiesi)Timeii) Possessioniii) Placeiv) Form4mks14.Identify what the following letters stand for?C - expenditure on consumer goods?I - expenditure on capital goods?G - government expenditure?M - payment for imports4mks15.Identify the values represented by the following lettersAssetsCapitalLiability2,310,6421,823,710486,392136,86840,38596,483941,68231,685909,9973,104,6112,709,263395,3484mks16.The population of the youth in country X is likely to be three quarters of the total population in ten years time. Highlight fourchallenges this country is likely to face at this time?High dependency ratio?High rate of unemployment?Increased social evils?Law labour supply?Pressure on goods / services used by the youth?Reduced savings / investment?Diversion of government expenditure towards needs of the youth4mks17.Outline four factors that determine the amount of money held by an individual for transaction motive?Amount of income?Size of household?Price levels in the economy?Spending habits?Age of individual?Level of inflation4mks18.i)Gross profitROSTO = COGS COGS= 3180,000COGS= 540,000Mark up = GPCOGSG.P=20540,000100G.P = sh.108,0002mksii)SalesSales= COGS + GP= 540,000 + 108,000= 648,0002mksPage | 191565/1 &565/2 business studies 19.Outline the procedure followed in personal selling?Identify the prospective customer?Establishing contact with the prospective customer?Arousing the interest on the product?Dealing with objections on the product?Closing the sale?After sale service4mks20.State four reasons why an entrepreneur needs to prepare a business plan?To attract funding?To test ideas on paper before putting them into practice?Basis of evaluating performance?Blue print for winning business?Helps in identifying weaknesses and strengths4mks21.State four factors that make parastatals to perform poorly in Kenya?Widespread corruption / embezzlement of funds?Poor management?Political interference?Lack of accountability?Stiff competition from private sector?Poor customer relations4mks22.Highlight four features of a public warehouse?Offer storage space for the public?Insurance of goods is mandatory?Have extensive documentation?Managed as a business in its own right?Usually big in size?Usually situated near main transport terminal4mks23.Identify four methods through which the government gets involved in a business?Regulation?Training?Trade promotion?Creating enabling environment?Provision of public utilities4mks24.State four limitation of trade restrictions to a country?Leads to retaliation?Limited markets?Hampers technology transfer?Reduction in revenue collection?May lead to BOP deficit25.Highway StoresBalance sheetAs at 31st Dec. 2015Land & buildings650,000Capital870,000Motorvan150,00010 yrs loan500,000Stock470,000Creditors220,000Debtors350,000Bank overdraft80,000Cash50,0001,670,0001,670,000? x 8 = 4mks Page | 192565/1 &565/2 business studies GEM SUB-COUNTY FORM 4 JOINT EVALUATION 565/2 BUSINESS STUDIES Marking scheme 1. a)Ways in which the efficiency of a warehouse can be improved?Ensuring appropriate / proper buildings to suit / match the type of goods to be stored?Suitable / appropriate / adequate facilities / equipment (such as forklifts etc) for effective handling of goods?(Should be linked to) good / appropriate / efficient / reliable transport network system to facilitate movement of goods in / outof the warehouse?Linked to good / appropriate / efficient / reliable communication network / system to facilitate easier contact with clients /suppliers / other concerned parties?Sufficient space to allow easy movement / accommodation of goods / personnel?Qualified / (well) trained staff / skilled / efficient staff to enhance proper / efficient management / functioning of thewarehouse?Appropriate storage facilities depending on the type of goods to be stored (accept examples of storage facilities as anexpansion e.g. refrigeration for goods requiring cold storage)?Proper recording system / inventory control to ensure monitoring of goods moving in / out of the warehouse?Compliance with legal requirements / govt policies to avoid conflicts with authorities / govt. (accept examples of legalrequirements as a mention)?Adequate security to ensure protection of goods / personnel (from theft / robbery / burglary / pilferages)2 x 5 = 10mks Splitting 1mk mention otherwise 2mks for a fully explained point Total 10mks b)Explain five reasons to account for the change in quantity supplied of potatoes in the market?Poor climatic conditions (which do not favour the production of potatoes) hence decrease in supply of potatoes?Increase in the cost of production limiting of producer to produce more hence decrease in supply for potatoes?Increase in price of substitute product hence a decrease in supply?Unfavourable government policies which do not favour mass production of potatoes (hence decrease in supply of potatoes)?Change in the goals of the firm which do not favour increase in production of potatoes?Exit / withdraw of firms from the industry / market causing a decrease in supply of potatoes?Poor methods of production resulting to reduction in potatoes produced (hence a decrease in supply)?Expectations of future increase in price of potatoes hence the producer supply less?Inadequate factors of production limiting the producers ability to produce potatoes in large quantity (hence a decrease insupply of potatoes)?Incidence of strikes- (workers go on strike )which interferes with the supply of potatoes (hence a decrease in supply)1mk mention, otherwise 2mks each for any 5 fully explained pointsTotal 10mks2.a)Explain five reasons why many companies are offering hire purchase schemes to their customers?They earn higher profits since they charge higher interest rates?It increases their sales volumes?Use of check off system reduces non-payment by salaried customers?Goods / products are repossessed by the companies if buyers default in payment?If goods are repossessed, no refund is made by seller / companies?Ownership of goods remain with the seller / companies until full payment of products or 3/4 of payment has been madeany 5 x 2 = 10mks b) Explain five current trends in Kenya‘s banking sector ? Increased / widespread use of Automatic Teller machines ATMs / ATM cards has enabled banks to offer services to clients / purchase from designated retail outlets (using ATM cards / debt cards) ? Networking of branches / computerised services has facilitated ability to transact business from any branch countrywide / faster processing of transactions e.g. clearing of cheques take less time (accept examples of computerised services as a mention) ? Relaxation of conditions relating to operation of bank accounts since features of specific account types across different banks are no longer uniform (but keep on changing in line with competitive market) / accept examples of relaxed conditions as an expansion e.g. saving accounts - with cheque books) ?Easier credit conditions - variety of loan products / loans with minimal requirements are now available (to attract morecustomers)?Customer care services to cater for customers who may require personalised / specialised advice / assistance?Banking services by Micro-Finance Institutions through provision of basic banking services e.g. Faulu Kenya, Front OfficeService Activities (FOSA, KWFT) accept examples of micro-finance institution as expansion)Page | 193565/1 &565/2 business studies ?Emergence of Agency banking whereby some financial institutions allow some businesses to provide financial services ontheir behalf (accept benefits of agency banking as explanation)?Liberisation of foreign exchange dealings / licensing of forex bureaux has enabled clients to access foreign exchange servicesmore conveniently / readily?E-banking has enabled clients to carry out some banking transactions by use of computers online?M-banking - customers can carry out some banking transactions via mobile phones e.g. balance inquiries / salary depositalerts / airtime top up / payment of bills / cheque book ordering etc.?Restructuring / rationalizing of operations by merging / closing some branches / introducing new outlets / retrenching (toimprove service delivery)1mk for mentioning otherwise 2mks for any five well explained pointsTotal 10mks3.a) Differences between private company and public corporationPrivate CompanyPublic Corporation1.Owned by a minimum of 2 and a maximum1. Owned by government which control over 50%of 7 membersshareholding2.Do not allow public to subscribe to its shares2. May allow public to subscribe to its shares3.Formed through companies Act3. Formed through act of parliament4.Managed by at least 2 directors4. Managed by a board of directors appointed bythe president or cabinet secretary5.Source of capital is majorly from the members5. Initial source of capital is from the governmentcontribution6.Do not allow members of public to scrutinise6. Allow members of public to scrutinise itsits books of accountsbooks of accountsany 5 x 2 = 10mksb) Preparation of relevant JournalsSales journal / diary / day bookInvoiceDateDetailsNo.LFAmount (sh)201414,0003/9Bukachi18,0003/9Janet9,00024/9BukachiTotals to be posted to sales A/C41,000Purchases journal / diary / day book InvoiceDateDetailsNo.LFAmount (sh)20149/9Shaban Traders45,00018/9Nambaka36,00018/9Janet1,200Totals posted to thesales A/C82,200Page | 194565/1 &565/2 business studies Sales returns / return inwards journal / diary / daybook Credit DateDetailsNoteLFAmount (sh)201414/9Bukachi2,50026/9Nehemiah3,000Totals to be posted to sales returns A/C5,500Purchases returns / return outwards journal / diary / day book CreditAmountDateDetailsNote no.LF(sh)201422/9Shaban Traders7,00022/9Nambaka4,000Totals to be posted to purchases returns A/C11,000The journal / journal proper / general journal DateDetailsFolioDrCr2014 30/9Generator450,000Dynomite power company450,000To record generator bought on credit from Dynomite power Co. 20 x ? = 10mks Notes : i) Award only if the title of the journal is correctly written ii) Date and details must be correct iii) Deduct ?mk for each journal incase invoice / credit note number columns are missing or not labelled 4. a) Explain five measures the Kenyan government may take to curb unemployment ? Population policy / check population growth rate / ensure population is growing at the same rate as the economy by adopting strategies that limit family size (accept examples of strategies as explanation) ? Retraining / redesigning / transforming the education sector / system / adopting relevant education system with a view to emphasise (acquisition) of skills required by existing labour market / reduce job selectivity / promote multi - tasking ? Establishment of appropriate employment policies e.g. adopting labour intensive techniques / setting appropriate retirement age / giving incentives to firms that absorb more workers to make it easy for people to get jobs ?Transforming the agricultural / rural sector by providing adequate/ better social amenities/ initiating(new) incomegenerating projects / setting favourable govt policies / reclamation of land / improvement of infrastructure etc to curb ruralurban migration?Diversification of the economy by introducing a variety of economic activities to guarantee employment throughout the year?Encourage domestic / foreign investments (by creating an enabling environment) through enhancing security / tax reduction /exemption / subsidies / allowing foreign investors to repatriate profits home etc.?Optimum / effective utilization of local (natural) resources to grow the economy / through various incentives / to expand thenumber of persons (gainfully) employedPage | 195565/1 &565/2 business studies ?Development / encouragement of jua kali / informal sector through incentives like subsidies / lowering / reducing taxes /training / credit facilities etc (to encourage self employment)?Delocalization policy/ spreading of industries in different parts of the country thereby ensuring balanced regionaldevelopment / reduced rural urban migration / labour supply in an area does not exceed available job opportunities?Adoption of appropriate income / wage policies thereby harmonising incomes / reducing / eliminating wide wage / incomedisparities between sectors / regions / genders?Increasing government expenditure to expand / increase the size of the economy / finance devt projects?Setting up specific Funds (e.g. YEF, UWEZOFUND etc) to assist the unemployed start / run / expand income generatingactivities?Exporting labour by assisting the unemployed to acquire jobs abroad / in countries with labour deficiencies?Improve infrastructure to stimulate / support economic activities (accept examples of infrastructure as a naming)?Reviving collapsed / inactive industries / projects by injecting funds / selling them / increasing production activities? Protecting local (infant) industries to guarantee employment of citizens / avoid competition from similar imported products b) Discuss five reasons why per capita income may not be a perfect measure of standard of living between different countries ? Different countries use different currencies meaning high per capita income in one country does not mean its better / low per capita income does not mean a country is worse off (since what a given amount of money can buy in one country may not be the same quantity it may buy in another) ? Different countries have different levels of inflation - high per capita income in a country where inflation is high may not indicate high living standards / lower per capita income in one country where inflation rate is lower does not mean they are badly off ? Population in different countries have different tastes / preferences / difference in basket of commodities ? Higher per capita income in one country may not indicate a higher standard of living since tastes / preferences in that country may be expensive / low per capita income in one country may mean inexpensive tastes of commodities and hence not necessarily lower standards of living ? Different countries may have different levels of accuracy of data Its not easy to determine the country with higher / lower standards of living since there are high chances of inaccurate / unreliable data / information on population, incomes, GDPs etc. ? Different countries do not have similar income distributions One country may have a more even / uneven income distribution than the other making it difficult to gauge where living standards are higher / lower ? Difference in level of sacrifice / effort in different countries A country with higher per capita income may have simply attained that due to sacrifice / hardwork / extra effort and vice versa and cannot be presumed to have a higher standard of living than a country where workforce is lazy ? Expenditure of different countries on special needs / emergencies / calamities / social needs vary A country may have a higher per capita income but with huge expenditure on wars, diseases, famine, natural calamities / social needs and vice versa ?Different countries have different size of subsistence sectors / non- marketed output / unpaid goods / servicesA country may have low per capita income than another but with a large volume of non-marketed output and vice versa?Expenditure of products not meant for immediate satisfactionSome country may spend huge amounts of money on projects that may be completed in years ahead (making it difficult tocompare welfare at present)5.a) Explain five benefits that countries within East African cooperation enjoy from economic integration?Extension of markets - (expansion of markets) for locally produced goods / allows the East African countries to produce morein order to cater for the expanded market?Creation of industries - the large market resulting from the East African cooperation leads to establishment of large industries/ maximum utilisation of the existing production plants? Trade promotion - by allowing free movements of goods within East African countries will eventually lead to specialise along lines of cooperative advantage. Specialisation promotes trade hence creating new opportunities for trade ? Competition - the enlargement markets tend to encourage competition between the East African firms, this will promote efficiency in production and therefore high quality goods will be produced by these countries in order to embrace competition ? Research - research institutions are likely to be established for the purpose of increasing efficiency in production, each member country, will strive to produce very high quality products which cater for the needs of the people in East Africa any 5 x 2 = 10mks b)Characteristics of economic resources?They are scarce / limited in supply?They have money / monetary value?They have utility?They can change ownership / transferability?They can be combined to produce other goods and services2 x 5 = 10mks6.a)Roles of advertising / promotional agencies?They undertake advertising / promotional tasks on behalf of their clients?They advice their clients on promotional / selling methods / techniques?They assist firms in designing their trade marks / trade names / logos / packaging materialsPage | 196565/1 &565/2 business studies ?They select appropriate media suitable for advertising their client‘s products?They book space / time in various media house for advertising on behalf of their clients?They undertake creative work for advertisement like artwork / copywriting production2 x 4 = 8mksb)i)Baraka TradersTrading, Profit and Loss AccountFor the period / year ending 31/12/2012DrCrOpening stock12,000Sales200,000Add: purchases120,000Less: sales /ret. inwards1,200Add: carriage inwards2,000Net sales198,800122,000Less: return outwards1,000121,000Goods available for sale133,000Less: closing stock8,000Cost of sales125,000Gross profit c/d73,800198,800198,800ExpensesGross profit b/d73,800Carriage on sales4,000Discount received4,000Discount allowed3,000Salaries1,000Salaries2,000Rent received500Insurance10,000Telephone9,000Electricity8,000Net profit c/d43,30079,30079,30024 ticks x 1/3 = 8mkii)Balance sheetBaraka TradersBalance sheetAs at 31st December 2012Fixed assetsCapital100,000Motor vehicle100,000Add: net profit43,300Machinery16,000Net capital143,300Current assetsCurrent liabilitiesStock8,000Creditors45,000Debtors33,500Cash18,000Bank12,800188,300188,30012 ticks x 1/3 = 4mks Page | 19700565/1 &565/2 business studies KANDARA SUB-COUNTY FORM 4 JOINT EVALUATION 565/1 BUSINESS STUDIES PAPER 1 1.Outline four factors to take into consideration when planning an office layout.(4 marks)2.Outline four drawback of inflation to a country's economy.(4 marks)3.Outline four functions of the international Bank for Reconstruction and Development.(4 marks)4.Outline four ways in which commercial bank facilitate business activities in Kenya.(4 marks)5.Highlight four principles of insurance.(4 marks)6.Indicate in the table the type of advertisement described.(4 marks)DescriptionType of advertisementi)Used to promote a company nameii)Where a product is advertised using a popular personiii)Seeks to promote the sales of a new or existing productiv)where the emphasis is to give full information about a product.7.State four factors that may limit the effectiveness of a warehouse.(4 marks)8.The following diagram represents equilibrium price and quantity for a market. Outline four effects of a shift in demand curveto the left(4 marks)PriceDS(shs )PeeSDQeQuantity9.Highlight four factors that may hinder the expansion of small business enterprises.(4 marks)10. Outline four limitations of using National Income statistics to measure Standards of Living in a country.(4 marks)11. State four ways through which face-face communication can be made more effective.(4 marks)12. Outline four distinctions between perfect competition and monopoly.(4 marks)13. Outline four factors that may hinder a country's development.(4 marks)14. Highlight four activities that may be carried out in the Nairobi Securities Exchange market.(4 marks)15. Name the factor of production associated with each of the rewards listed below.(4 marks)RewardsFactor of productionCommission Royalties Interest Profit 16. State the type of unemployment relating to each of the following descriptions.(4 marks)Page | 198565/1 &565/2 business studies a) Caused by alternating trading patterns occurring at similar times. b) Arises where workers have more skills and higher qualification than the job requirements. c) Arises out of a mismatch between the skills possessed by potential employees. d) Arises when people are unwilling to take up jobs due to low pay 17.Highlight four roles of entrepreneurship in an economy.(4 marks)18.Highlight four principles of taxation.(4 marks)19.State four ways in which the government can influence an increase in demand for a product(4 marks)20.State four advantages of air transport over road transport.(4 marks)21.Identify the term of payment associated with the following statements.(4 marks)StatementTerms of payment1Payment is made when goods are delivered2Payment is remitted alongside the order3Payment is made instantly upon purchase of goods4Payment is made within seven days upon purchase of pute the missing figures and fill in the blank spaces.(4 marks)CapitalFixed AssetsCurrent AssetsLong term LiabilitiesShort term Liabilities40,0009,00015,0006,00082,000100,00094,00072,000103,000100,000150,00070,000150,00063,00027,00023,00023.Identify the type of ledger appropriate for the following accounts.(4 marks)AccountType of ledgeri)Land accountii)Debtor Kamau accountiii)Creditor Kandara Wholesalers accountiv)Electricity expense account24.Record the following transaction in the cash book below. Duly balanced.(5 marks)On 1st Jan 2015, Mugo traders had shs 22,500 in cash and shs 250,000 at bank. During the month, the following transactionstook place.5th JanReceived a cheque of shs 45,250 form Wacu traders in full settlement of her debt after allowing a 5% cashdiscount.25th JanPaid Kandara traders shs 15,000 cash after deducting a cash discount of shs 600.30th JanDeposited all cash into the bank except shs 500.25.The following information relates to Gakarara traders for the year 2015.(3 marks)shsNet sales320,000Margin25%Expenses35,000Rate of Stock Turnover6 timesFrom the information above, calculatei)Gross profit(1 mark)ii) Cost of goods sold(1 mark)iii) Net profit(1 mark)Page | 199565/1 &565/2 business studies KANDARA SUB-COUNTY FORM 4 JOINT EVALUATION 565/2 BUSINESS STUDIES PAPER 2 Answer any FIVE questions. 1.a) Explain five merits of pay as you earn (PAYE) system of tax collection(10 marks)b) The table below shows the demand and supply schedules for product A in a week.Price (Sh)Quantity demanded (kgs)Quantity supplied (kg)40560301040202020102510Using the information given in the table above, draw the demand and supply curves showing the market equilibrium for theproduct.(10 marks)2.a)Explain any four uses of a computer in an office.(8 marks)b)Journalise the following transactions through a general journal.(12 marks)Jan1Sold an old typerwriter on credit to Githumu academy worth shs 53,0006Bought an old sofa set on credit from Murata Sacco, for shs 8,00010Proprietor converted his personal saloon car for business use worth Kshs 150,00012Paid wages shs 6,000 cash.3.a)Explain five services rendered by a retailer to the consumers.(10 marks)b)Explain five benefits that a customer may get by using Automated teller machines. (ATMs) for financial transactions.(10 marks)4.a)Explain five benefits that Kenya may get by being a member of common market for East and South Africa States(COMESA)(10 marks)b)Explain five factors that one may consider when evaluating a business opportunity.(10 marks5.a)Explain five benefits that could be enjoyed by a person who takes out an endowment insurance policy.(10 marks)b)Describe five principles that distinguish cooperative societies from other forms of business organisations.(10 marks)6.a)Outline five ways in which a society benefits from indirect production.(10 marks)b)The following information was extracted from the books of Zamzam traders as at 31st December 2015KshPurchases70,000Sales170,000Stock (1 Jan 2015)20,000Capital240,000Bank overdraft145,000Cash3,000Discount allowed5,000Discount received7,000Return outwards5,000Return inwards4,000carriage on purchase2,000Rent and rates30,000Commission received2,200Machinery40,000Motor vehicles70,000Debtors20,000Creditors30,000Drawings70,000Wages and salaries200,000Additional information:i)Stock on 31st Dec. 2015 was 15,000ii)Wages and salaries accrued at 31st Dec. 2015 Kshs 10,000iii)Prepaid rates shs 6,000iv)Provide depreciation as follows;Machinery shs 4,000Motor vehicle 10% on costv)Drawings of stock 2,000/=Required:Prepare Zamzam traders trading, profit and loss account for year ended 31st Dec 2015.(10 marks)Page | 200565/1 &565/2 business studies KANDARA SUB-COUNTY FORM 4 JOINT EVALUATION 565/1 BUSINESS STUDIES Marking schemes 1.Factors to consider in office layout?cost of construction - should be affordable?size of the staff - avoid overcrowding / unnecessary free space?maintenance and running cost - should be within reach?nature of the organisation‘s work?effect on staff morale - avoid negative impact on performance?space available - to determine if adequate?security for office and personal property?legal requirements4mks2.Drawbacks of inflation?rise in prices of goods and services?increased pressure for higher wages and salaries by trade unions?decreased consumer purchasing power?loss to creditors / lenders as rate of interest is fixed?loss of confidence in monetary system?imports become more expensive leading to unfavourable B.O.P?uneven distribution of income?reduced savings?hampers effective implementation of developmental plans?escalation of price of real estates?erosion of long term investment e.g. pension3.Functions of international bank for reconstruction and development?loans at low interest to finance economic development activities?provision of grants?fighting against corruption and poor governance?loans for balance of payment deficit?advice on economic challenges?technical assistance and personnel to run countries economic programmes4mks4.Functions of commercial banks?accept deposits?give loans?issuance of letters of credit?provision of means of transfer payments?custodian of valuable items?financial advice?trustees?discounting of bills of exchange promisory notes?guarantors / referees?late night facilities e.g. ATM4mks5.Principles of insurance?utmost good faith?indemnity?subrogation?proximate cause?contribution?insurable interest4mks6.Types of advertisingi) Institutional advertisingii) Celebrity advertisingiii) Product advertisingiv) Informative advertising4mks7.Factors which may limit the effectiveness of a warehouse?unsuitable and inadequate space?poor / lack of proper handling equipment?poor location?unqualified and incompetent staff?lack of good security?failure of comply with legal requirements?poor recording system4mksPage | 20100565/1 &565/2 business studies 8.Effects of a shift of the demand curve to the left on the equilibrium price and quantity?reduction in price from Pe0 to Pe1?decrease in equilibrium quantity from Qe0 to Qe1?shift of equilibrium to the left from Eo to E1?shift in demand curve from DDo to DD1D0 Price D1SE0 Pe0 Pe1E1S Quantity9.Factors that may hinder the expansion of a small business enterprise?small size of the market?nature of the product?simplicity of the organisation?legal constraints?inadequate capital?limited entrepreneurial skills?shortage of skilled manpower?belief that a small firm is more manageable10.Limitations of using national income statistics to measure standard of living?use inaccurate data?unfair distribution of income?changes in consumption patterns and lifestyle?does not show percentage of income spent on unproductive activities?high income could be at the expense of citizens social welfare?may not reflect depreciation or appreciation of assets?population figures may not have been taken into account11.Ways through which face to face communication can be made more effective?clarity of the message to avoid misunderstanding?proximity / nearness of communicating parties?use of common language?positive attitude between communicating parties?good listening?proper timing?free from noise?audibility13.Differences between perfect competition and monopoly market14.i) Many firms in the industryi) Single firm in the industryii) Free entry and exitii) Barrier to entryiii) Price determined through price mechanismiii) Price determined by the selleriv) Cannot practice price discriminationiv) Practices price discriminationv) No government interferencev) Government may allow firm monopoly powerPage | 202565/1 &565/2 business studies 13.Factors hindering a country's development?lack of advanced technology?poor infrastructure?lack of capital?high population growth rate?limited natural resources?inappropriate education system?inappropriate land reforms?political instability?negative social cultural practices?over-dependence of foreign aid14.Activities carried out at the Nairobi security exchange market?buying of shares?selling of shares?fixing prices of various securities?provide useful information to investors through publication of business magazines or journals?measures the economic progress of a country4mks15.Factors of production?labour?land?capital?entrepreneurship16.Types of unemployment?cyclical unemployment?disguised / hidden unemployment?structural / technological?voluntary unemployment / real wage17.Roles of entrepreneurship in an economy?creation of employment?use of available local resources?development of new technology?creation of wealth?enhancing entrepreneurial culture?generation of income for self and government?innovation and creativity18.Highlight four principles of taxation?equity?economy?certainty?flexibility?diversity?elastic?simple19.Ways in which the government can influence an increase in the demand for a product?reduction in taxes (indirect taxes)?provision of subsidies?maintainance of good governance / political stability?impose taxes on substitute goods?reduce taxes on consumers income?increase government expenditure?provision of an enabling environment for business4mks20.Advantages of air transport over road transport?suitable for perishable / fragile goods?access to remote areas?connects to different continents?fastest means of transport?secure for valuable goods?minimal loss due to theft?fixed timetable / reliability21.Terms of payment?COD?CWO?spot cash?prompt cashPage | 203565/1 &565/2 business studies 22. CA10,000ST liabilities 40,000Capital- 17000FA13700023.?General ledger?Sales ledger?Purchases?Nominal ledger24.DateDetailsDisc. all.CashBankDateDetailsDisc. rec.CashBank1/1/15Bal b/d22,500250,00025/1/15Kandara traders600150005/1/15Wacu traders2381.545,25030/1/15Bank7,00030/1/15Cash7,00030/1/15Bal c/d50032,2002381.5822,500302,25060022,500302,25030/1/15Bal b/d500302,25010 ticks x ? = 5mks 25. Gross profit = GP x 100 net sales G.P = 25 of sales = 25 x 320,000 100100= 80,000(1mk)ii) Cost of good sold = net sales - G.P= 320,000 - 80,000= 240,0001mkiii) Net profit = G.P expenses= 80,000 - 35,000= 45,0001mkPage | 20400565/1 &565/2 business studies KANDARA SUB-COUNTY FORM 4 JOINT EVALUATION 565/2 BUSINESS STUDIES Marking schemes 1. a)Merits of pay as you earn (PAYE) system of tax collection?certain to both tax payer and tax collector in terms of amount and time?progressive in nature - hence equitable?tax payers are conscious of their contribution / keen on how its utilised?its elastic / as economy grows the amount collected expands?can be used to control inflation - reduces disposal income?economical in collection -collect at the source?its simple to understand5 x 2 = 10mksb)Demand and supply curvesPrice 40S30Equilibrium pricee2010Sd102030Quantity 20NB:4050Quantity60 Scale must be correctly used for award of a mark on each of the axis10 x 1 = 10mks2.a)Uses of a computer in an office?typing / through programs such as word processing and keyboards?preparation of payrolls / information about employees renumeration can be processed through computers and payrolls,payslips produced?accounting / through accounting programs e.g. excel, financial transactions are not only keyed in but also analysed andfinancial statements produced?stock records for stock control - information about goods bought, issued and balances are automatically processed through thecomputer?communication - information can be relayed from individual to individual, organisation to organisation etc. by means of theinternet and intranets?filing - institutional records can be stored either in the internal storage and external storage devices e.g. flash disksb)Jan 1stGithumu academy ü53,0002015Office equipment ü53,000Being sale of an old typewriter oncredit to Githumu academy) üJan 6thFurniture ü8,0002015Murata Sacco ü8,000(Being purchase of an old sofa set oncredit from Murata Sacco üJan 10thMotor vehicle ü150,000Capital ü150,000(Being a record of conversion of asaloon car for business use) üJan 12thWages ü6,000Cash ü6,000Being payment of wages in cash üPage | 205565/1 &565/2 business studies 3.a) Functions of retailers to consumers?break bulk - they sell goods in small quantities as per the need of consumers?give advice - on the choice and use of goods?they stock a variety of goods from different suppliers - convenient places?they store goods and sell them when they are required - ensures continuous supply of goods?transportation- provide transportation- they transport goods from producers / wholesalers and bring them nearertoconsumers?they may offer credit facilities due to their close contact with customers hence assessment of credit worthiness?provide a link between consumers and suppliers?they may offer after-sale services to consumers e.g. installation, repair5 x 2 = 10mksb) Benefits of using ATMs?access banking services 24 hours - as ATM‘s operate day and night / located outside banking halls?fast / saves on time?can be used to pay utility bills e.g. electricity, water?enables acquisition of goods and services from designated outlets e.g. supermarkets, petrol station?cheap to use - because of low charges and elimination of transport expenses?convenient to use as one can access financial services through agency banking, other commercial banks e.g. Visa5 x 2 = 10mks4.a) Five benefits of COMESA to Kenya?a wider market is created for goods and services produced in the region?Kenya is able to specialise in the production of those goods and services it is best endowed with?promotion of peace and understanding with other member countries due to interaction?it enhances access to a wider variety of goods and services which satisfy different consumer needs?acquires high quality goods and services produced due to high competition from members?creation of employment for individuals living within the region / elimination of work permits?improved infrastructure due to increased economic activities / joint infrastructure development?increased production of goods as a result of people engaging in different business activities to satisfy the wider market5 x 2 = 10mksb) Factors that an entrepreneur would consider when evaluating a business opportunity?profitability / reasonable profit from the investment / inorder to cover all the expenses / get surplus?appropriate technology / should be efficient / cost effective / available?size / availability of the market / demand should be adequate?government policy / legal requirements should be favourable / easy to be met / to operate smoothly?level of competition should be fair / healthy / capable to cope with?inputs / supplies should be readily available?capital should e adequate to start to operate?risks involved / should be minimal / manageable5 x 2 = 10mks5.a) Benefits of an Endowment policy?saving plan - get compensation either on the expiry of contract period or death?compensation in case the insured dies / compensation to the beneficiaries?security - can be used as a security for finance?incase the contracts expires before the insured dies, he enjoys compensation?can secure a loan for medical / education purposes5 x 2 = 10mksb) Principles of cooperative societies?open and voluntary membership / no discrimination. Free to join and leave?democratic administration / one man one vote?limited interest on capital / limited return on capital in terms of interest?cooperation with other cooperatives e.g. in purchasing and selling the produce / leads to low costs?education to members on cooperative activities e.g. on voting rights6.a) Benefits of indirect production to a society?goods and services produced are of high quality due to use of machines / technology?it avails a wide variety of goods and services in the society?it enhances interdependence among producers in the society thus promoting peace?trading activities provide employment to people in society i.e. self employment and employment?large scale production / due to use of improved technology?there is use of modern technology which reduces the cost per unit?it promotes division of labour and specialisation / high quality products are produced / large output5 x 2 = 10mksPage | 206565/1 &565/2 business studies b)ZamZam TradersTrading, Profit and Loss accountFor year ended 31st Dec. 2015Opening stock20,000Sales170,000Add: purchases70,000Less: sales returns(4,000)Carriage inward2,000Net sales166,00092,000Less: return outward5,000COGAS87,000Less: closing stock15,00072,000Less: drawings of stock2,000Cost of goods sold70,000Gross profit c/d96,000166,000166,000Rent and rates30,000Gross profit b/d96,000Less: prepaid6,00024,000Discount received7,000Wages and salaries 200,000Commission received22,000Add: accrued wages10,000210,000Net loss c/d139,800Depreciation onmotor vehicle7,000Depreciation on machinery4,000245,000245,000Net loss b/d139,80020 x ? = 10mks Page | 207565/1 &565/2 business studies GUCHA SOUTH EVALUATION TEST (GSET) 565/1 BUSINESS STUDIES PAPER 1 1.Highlight four advantages of using rail transport to transport goods.(4 marks)2.Outline four limitations of direct production.(4 marks)3.State four reasons why a business may prefer to use electronic mail instead of postal mail to communicate.(4 marks)4.Outline four ways in which political stability in a country is of benefit to a business growth.(4 marks)5.State four types of errors that may be disclosed by a trial balance.(4 marks)6.The table below shows the changes in population size in Kenya between the year 1999 to the year 2002YearTotal population199950,000,000200046,000,000200142,000,000200238,000,000State four factors that might have contributed towards the population trend above.(4 marks)7.State four external diseconomies of scale.(4 marks)8.The following information relates to Undugu traders for the year ended 31st December 2015Average stock50,000Rate of stock turnover3 timesMark up20%From the above information determine :i)Cost of goods sold(2 marks)ii)The gross profit(2 marks)9.Omwega traders had the following balances on 30th June 2009.(5 marks)Sales420,000Motorvan 300,000Purchases240,000Equipments120,000Debtors80,000Creditors 40,000Expenses 160,000Capital440,000Prepare a trial balance for Omwega traders as at 30th June 2009.(5 marks)10.The following balance were extracted from the books of Nyachenge discount centre for the year ended 31st December 2010Cash20,520Bank160,230Premises 800,000Debtors40,000Creditors 40,0002 year loan62,000Stock2500Prepare a balance sheet as at 31st December 2010.(5 marks)11.Mention any four sources of government revenue.(4 marks)12.Identify three advantages of a sole proprietorship.(3 marks)13.Highlight the five stages of obtaining an insurance policy cover.(5 marks)14.State four sources of monopoly power.(4 marks)15.Highlight four internal weaknesses that may affect business performance.(4 marks)16.For each of the following transactions given below indicate in the appropriate columns the source document and the book of original entry.(4 marks) TransactionSource documentBook of original entryPurchase of goods on credit Sale of desks on credit Payment to a creditor Goods returned by a client 17. Identify three functions of a proforma invoice.(3 marks)18. Outline four reasons that may make it difficult to realise the satisfaction of human wants.(4 marks)19. State three reasons that make people hold onto money in form of cash.(3 marks)20. State four reasons why most companies have adopted the use of road shows to promote their products.(4 marks)21. Recent studies have shown that the Kenya‘s national income has been growing steadily. Give four reasons to account for this.(4 marks)22. Outline four emerging trends in office management.(4 marks)23. Highlight four ways through which demand-pull inflation may be controlled.(4 marks)24. State four benefits of a bonded warehouse to the government.(4 marks)25. The following transaction refer to Ratemo Traders for the month of December 2015.Dec. 2ndCash sales Ksh.30,000‖ 8Took cash Ksh.15000 to bank‖ 10 Withdrew Ksh.10,000 from bank for office usePrepare a two column cash book and balance it off as at 31/12/2015.(4 marks)Page | 20800565/1 &565/2 business studies GUCHA SOUTH EVALUATION TEST (GSET) 565/2 BUSINESS STUDIES PAPER 2 Answer any five questions. 1. a) Explain five challenges that may be experienced by a new entrepreneur who is intending to start a business in Kenya. (10 marks)b) Explain five measures that the government can take to reduce income inequalities among citizens in a country.(10 marks)2.a) Explain five roles played by the insurance industry in the economy of Kenya.(10 marks)b) Explain five methods that can be used by a country to solve the problem of deficit balance of payment.(10 marks)3.a) Explain five problems that consumers may encounter as they try to satisfy their wants.(10 marks)b) The diagram below represents a change in supply for milk in Nyamarambe market. Price S 1 S 0 S 1S 0O1QuantityExplain five factors that may be responsible for the change in the above diagram.(10 marks)4.a)Explain five limitations of using oral communication.(10 marks)b)Prepare a duly balanced three column cash book from the following information extracted from the books of Omwamitraders.(10 marks)Jan 1st Balance b/d cash sh.4,000, Bank Sh.27,000 Jan. 4th Settled Olweny creditors account of shs.8000 by cheque having deducted 6% cash discount Jan 8th Received shs.6,000 cash from Mutoma traders Jan 16th Deposited shs.4,500 to bank account Jan 24th Withdrew shs.9200 from bank for private use Jan 29th Received shs.19950 from Kahawa by cheque after allowing 5% discount Jan 31st Banked all the cash leaving shs.1500 in the office 5.a)Discuss five ways of improving the efficiency of a warehouse.(10 mark)b)Most African countries are categorised as underdeveloped economies. Explain five characteristics that justify thisstatement.(10 marks)6.a)Many youths in Kenya remain unemployed. Explain six measures that can be taken to solve unemployment in Kenya.(12 marks)b)The following balances were extracted from the books of Ongware traders as at 31st December 2015Sales during the year amounted to Ksh.2,000,000Stock on 1st Jan. 2015 was shs.100,000 Stock on 31st Dec. 2015 was shs.200,000 Creditors shs.250,000 Bank overdraft shs.400,000 Cash in hand shs.150,000 Gross profit margin was 20% Calculate : i)Current ratioii) Cost of goods soldiii) Mark upiv) Rate of stock turnover(8 marks)Page | 20900565/1 &565/2 business studies GUCHA SOUTH EVALUATION TEST (GSET) 565/1 BUSINESS STUDIES Marking scheme1.?????2.???????3.?????4.???????5.??????7.?????8.Advantages of using rail to transport goods.Has capacity to carry heavy and bulky goods.Cheaper over relatively long distances on land.Has fixed schedules and hence enable one plant the journey.Has special containers for carrying special goods like petrol.Goods are more safe because of less handling.any 4 × 1 =- 4 marksLimitations of direct production.Law quality goods produced.Low quantity good are produced.Does not encourage innovation and invention.A lot of time is wasted as one moves from one job to another.Does not encourage use of modern technology.Leads to low living standards.Discourages specialization.any 4 × 1 = 4 marksReasons why people may prefer electronic mail rather than posted mail to communicate. It is fasterIt is more secure.Provides immediate feedbackIt is cheapEnhances prestige.any 4 × 1 = 4 marksWays through which political stability in a control is of benefit to a business. Attract labour required by business.General security of a business is assured.Have a better access to auxiliary service.Production activities will go on well.Easy access to raw materials.Easy access to capital for expansionDecreased cost of doing business.any 4 × 1 = 4 marksTypes of errors disclosed by a trial balance.Arithmetic error in balancing ledger accounts.Arithmetic error in balancing the trial balance.Failure to favour the rule of double entry.Transferring a wrong balance to a trial balanceDifferent amounts for same transaction.Misleading figures on the trial balance due to poor writing.any 4 × 1 = 4 marksExternal diseconomies of scaleScramble for available raw materials.Scramble for available land for expansion.Scramble for available labour.Scramble for available market.Scramble for other production inputs.any 4 × 1 = 4 marksCo st o f salesR S T O ?3 ? C SAv erage st o ck 50,00 0Co sto fsales?150,00 0/?Gro ssp ro fitMa rkup?20? GCo st o f salesP 100150,00 0GP?30,00 0Page | 210565/1 &565/2 business studies 9.Omwega Traders.Trial BalanceFor the year ended 30th June 2009ParticularsDr.Cr.Purchases240,000Sales420,000Motor Van300,000Equipment120,000Debtors80,000Creditors40,000Expenses160,00Capital440,000900,000900,00010 × ? = 5 marks 10. Nyachenge Discount centre Balance sheet As at 31st Dec. 2010 Assets Premises800,000Capital921,250Debtors40,000LIABILITIESStock2,500Creditor40,000Bank160,2302 year loan62,000Cash20,5201,023,2501,023,25010 × ? = 5 mark11.Sources of government revenue.?Fines imposed by courts on offender.?Rent and rates paid for the use of government property.?Licence fee paid by those who want to operate businesses?Dividends and profit earned from government direct investments.?Interest earned on loan, advanced by government to firms.?Proceeds from sales of government property.?Taxes.?Government borrowing.any 4 × 1 = 4 marks12.Advantages of sole proprietorship?Few legal requirements during formation.?Decision making and implementation is fast.?The proprietor exercise direct and personal control on the business.?A sole trader is accountable to him / herself?A sole trade is able to maintain top secrete of his/her business.?A sole trader enjoys all the profits alone.?A sole trader can get assistance from the family members.?A sole trader has personal contact to his/her customers.13.Five stage involved in obtaining an insurance policy.?Filling a proposal form.?Determining of a premium to be paid.?Payment of the first premium?Issuing cover note (binder)?Issuing of policy5 × 1 = 5 marks14.Sources of monopoly power?Financial factors.?Control of an important input in production.?Ownership of production rights.Page | 211565/1 &565/2 business studies ?Size of the market?Additional costs of other firms.?Where a group of firms combine to act as one?Restrictive practices.any 4 × 1 = 4 marks15.Internal weaknesses that may affect business performance.?Inadequate skills / inexperience / lack of knowledge among employees.?Outdated machine / technology.?Inadequate finance.?Poorly laid goals and objectives.?Poor managerial skills.4 × 1 = 4 marks16.For each of the following transaction given below indicated in the appropriate columns the source document and the book oforiginal entry in which the transaction should be recorded.TransactionSourceBook of originalDocumenentrytPurchases of goods onPurchasesPurchases journalcreditinvoiceSales of debts on creditSales invoiceGeneral journalPayment to a creditorPaymentPetty cash bookvoucherGoods returned by aCredit noteSales returnsclientjournalany 4 × 1 = 4 marks17.Identify three functions of a pro-forma invoice?Serves as a polite request for payment before goods are sent to the buyer.?Used to serve the same purpose as a quotation.?Used by importers to get customs clearance before goods are sent.?Sent when the seller does not want to sell goods on credit to the buyer.?It is sent to the buyer to show him / her what he / she would have to pay upon the arrival of goods.3 × 1 = 3 marks18.Reason why satisfying human wants may be difficult?Age?Health status.?Government policies.?Geographical distance?Change in taste and preference?Inadequate resources?Sex?Security level4 × 1 = 4 marks19.Three motives for holding of money in cash?Transaction motive?Precautionary motive?Speculative motive3 × 1 = 3 marks20.Reasons why most companies have adopted road show to promote their products.?Allow for immediate feedback.?Demonstration on the usage of technical goods is possible.?Reaches a big audience.?Reaches both literate and illiterate persons.?Different language can be used.?It is appealing.4 × 1 = 4 marks21.Reasons for Kenya economic growth?Increased availability of labour of various kinds from unskilled, semi skilled and skilled.?Improved security.?Improved use of modern technology in research and production.?Supportive government policies such as low taxation, subsidies and loans.Page | 212565/1 &565/2 business studies ?Increased number of entrepreneur as role models.4 × 1 = 4 marks22.Emerging trends in office management?Location of office outside city and town centres to allow for easy accessibility and reduced noise pollution.?Increased use of mobile phones for communication in offices.?Use of computers for information storage.?Change from enclosed office layout to landscape office layout to maximize on production.?Introduction of entertainment electronic office to spell boredom among clients.?Introduction of easy furniture in offices to enhance comfort among workers and clients.4 × 1 = 4 marks23.Ways of controlling demand-pull inflation?Reduction in government expenditure.?Increase in production of goods and services.?Family planning to reduce increasing population growth.?Increased use of modern technology to increase the quantity of goods supplied.?Increase in income tax?Subsidizing production.?Reduction tax on production4 × 1 = 4 marks24.Benefits of a bonded warehouse to the government.?Source of government revenue.?Government able to control the entry of harmful goods.?Government able to verify documents of goods on transit.?Government able to control the quality of goods entering the country?Government able to control the quantity of goods entering the county.?Government able to check on illegal goods entering the country?Government able to inspect type or nature of goods imported.4 × 1 = 4 marks25.Two column cashbookDateDetailsL.fCashBankDateDetailsL.fCashBank2/12Sales30,0008/12Cash15,0008/12Bank15,00010/12Bank10,00010/12Cash10,00031/12Bal c/d25,0005,00040,00015,00040,00015,00031/12Bal b/d25,0005,000Page | 213565/1 &565/2 business studies GUCHA SOUTH EVALUATION TEST (GSET) 565/2 BUSINESS STUDIES Marking scheme 1.a) Challenges that may be experienced by a new entrepreneur in Kenya?Inadequate capital / funds to sustain / expand.?Inadequate skills / poor management.?Unfriendly / poor government policies e.g. high taxes which are unfavourable to the growth /expansion of the business.?Poor infrastructure / poor roads which may hinder access to markets or inputs.?Inappropriate technology which may results in less quantity or poor quality products.?Unfair competition.?Inadequate manpower to run the business effectively/ labour supply.?Poor pricing which might make the product to be too expensive to attract buyer or too cheap to sustain the business.?Inadequate market.any 5 points well explained × 2 = 10 marksb) Measures the government can take to reduce income inequalities.?Equitable development - its expenditure should be spread fairly across all sectors / regions of the economy / country.?Creation of jobs to enable as many people as possible to earn income from employment.?Fair taxation policies - to ensure that those who earn more are taxed higher / more than those who earn less.?Affirmative action - in order to assist economically marginalised groups / people / regions to uplift themselves economically.?Provision of loans - to assist / encourage people to start businesses to earn an income.?Social welfare - to provide a living income to the old aged unemployed people.?Provide social amenities e.g. schools and hospitals fee / at subsidized cost to the general public.any 5 points × 2 = 10 marks2.a) Roles played by the insurance industry in the economy.?Encourage investment in the economy - by providing protection against financial losses giving confidence for investment incommercial activities.?Creates employment opportunities - many people are employed hence improving their living standards.?Policies provide security for loans - life policies can be used as collateral for acquiring loans for investment.?Revenue to the government - tax from insurance firms is a source of revenue to the government.?Economical growth - insurance firms invest in the economy stimulating economic growth in a country.?Savings - Life policies are used as a saving plan and on maturity the money can be invested.any 5 points well explained × 2 = 10 marksb) Methods used by a country to solve deficit balance of payment problem?Control of imports - a country can control imports using total ban, increase tariffs or issue quotas etc.?Increase the volume of exports - a country may give incentives to encourage exports.?Devaluation of home currency - this will encourage exports and discourage imports.?Encourage foreign investment in a country so as to produce goods for export.?Through import substitution - a country can put up industries to produce goods for home consumption instead of importing.?Giving subsidies to local manufacturer in order to increase exports.?Using foreign reserves - a country can exchange reserves and gold to offset its deficit.?Borrowing from other countries - a country can borrow from another country so that such money can be used to offset adeficit balance of payment.any 5 well explained pts × 2 = 10 marks3.a) Problems encountered by consumers as they try to satisfy their wants.?Means/ resources of satisfying their wants are limited due to scarcity.?Wants keep on recurring.?Wants are habitual and hence require one to continue looking for resources to satisfy them?Some wants are essential for survival thus can not be postponed.?Wants change with age, time and gender.?Some wants are complimentary - satisfaction of one want requires satisfaction of another.?Competitive nature of some wants.?Wants are numerous/ unlimited.any 5 points × 2 = 10 marksb)Factors leading to the decrease / contraction of supply.?Increase in costs of production for the milk.?Decrease / unfavourable demographic structure i.e. decrease in number of people rearing cows and poor structure.?Reduced income rate per household - hence reduced purchasing power which discourage suppliers.?Decrease in market price of milk in the market.?Decrease in price of alternative milk / milk products e.g. powder / packet milk.?Unfavourable government policies .e.g. high taxes on milk or animal feeds.?Natural factors e.g. prolonged drought leading to high expenditure on grass and other feeds.?Exit of suppliers from the market i.e. some animals keepers quit the market or dispose / sell their cows.Page | 214565/1 &565/2 business studies ?Time /season - May be a time / season more cows are not productive / being milked - hence reduced quantity brought into themarket.any 5 points × 2 = 10 marks4.a) Limitations of using oral communication?Lacks record for future reference?May be costly where the sender and receiver are far apart.?May not be suitable for confidential messages since unauthorised person may listen.?Limited reach - especially where the audience is large / widespread.?Inappropriate gestures / body language - may lead to misinterpretation of the message / communication and hence beingineffective.?Not suitable for technical /complicated messages e.g. technical drawings and charts.?Mostly prone to distortion of the message especially when a messenger / second person is involved.any 5 points × 2 = 10 marksb)DiscountDiscountDateDetailsFolioAll.CashBankDateDetailsFolioRec.CashBankJan 1stBal b/d4,60027,000Jan 4thOlweny4807,520Jan 8thMutoma6,000Jan 16thBank'c'4,500Jan 16thCash'c'4,500Jan 24thDrawings9,200Jan 29thKahawa105019,950Jan 31stBank'c'4,600Jan 31stCash'c'4,600Jan 31stBal c/d1,50039,330105010,60056,05048010,60056,050Feb 1stBal b/d1,50039,33020 × ? = 105.a) Ways of improving the efficiency of warehouse.?Ensuring that there is proper handling equipment to handle goods safety / easily.?Ensuring that staff / management are well trained / motivated hence enhancing their performance.?Ensure proper use of space to allow easy movement/ accommodation of goods / people.?Ensuring adequate security to avoid theft of goods.?Ensure proper system of inventory control /record system to monitor stock movement, avoid fraud, losses etc?Ensure that legal requirements adhered to for smooth running / to comply with laid down laws.?Ensure adequate communication facilities for effective communication within or without the warehouse.?Ensure adequate transport/ better roads to move goods and workers in and out of the warehouse.any 5 points × 2 = 10 marksb) Characteristics of underdevelopment economy?High levels of unemployment?Poor development of infrastructure.?Low education levels?low technological levels?large subsistence sector -production for own consumption?dependency on other countries for essential goods.?High population growth rateany 5 points × 2 = 10 marks6.a) Measures which can be taken to solve unemployment problems in Kenya.?Rural development - develop rural areas to create jobs and to avoid rural-urban migration.?Adoption of the relevant education system - adoption of education system that emphasis on skills that are required by thelabour market.?Population control - controlling population through family planning to reduce the number entering the labour market.?Increase in government expenditure - increasing expenditure on projects hence creating more jobs.?Encouraging the use of local resources - the government to encourage investment on economic activities that use locallyavailable raw materials.?Encouraging direct foreign investment - e.g. by reducing taxes and guaranteeing security in order to create jobs.?Improvement of the informal sector - by providing appropriate training and finances in this sector to encourage selfemployment.Page | 21500565/1 &565/2 business studies b)i)Current ratio= Current assets : current liabilities. ü=(cash + stock + debtors ) : (creditors + bank overdraft)=(150,000+200,000+300,000) : (250,000 + 400,000)=650,000 : 650,000= 1 : 14 × ? = 2 marksii)Cost of Goods soldCOGS = sales - gross profit.= 2,000,000 - GPGPM arkup?GPM arg in ?SalesGPCOGS400 , 000120%???155?22 ,000 ,0001, 600 , 0004GP? 25 %,000 ,000OR2 ,000 ,00015GP ? M ark up ?55 ? 1 GP?400,0001COGS?shs?2,000,000?400,000??4(25% )?Shs1,600,000iv) Rate of stock turn over.CostofsalesRO STO ?A verage stockO pening stock ? closing stockA verage stock ?? 100 , 000 ? 2002, 000 2? Shs 150, 0001, 600 ,000RO STO ?1 , 500 , 000 ?1067timesPage | 216565/1 &565/2 business studies VIHIGA SUB-COUNTY JOINT 565/1 BUSINESS STUDIES PAPER 1 1.State four features of consumer goods and services(4 mks)2.Outline four characteristics of a perfectly competitive Market structure(4 mks)3.State four advantages of operating a public limited company( 4 mks)4.Outline four ways in which the government creates an enabling environment for business(4 mks)5.The following information relates to Mungoma Traders for the year ended 31st Dec 2015Gross profit140,000Salaries20,000Discount Allowed8,000Discount Received26,000Prepare a profit and Loss Account for Mungoma Traders for the year ended 31st Dec 2015.( 4 mks)6.For each of the following transactions , indicate in the spaces provided the book of original entry in which eachtransaction would be recorded( 4 mks)TransactionBook of Original EntryBought office furniture on credit Withdrew cash for personal use Sold goods on credit Returned goods bought for sale on credit 7. Record the following transactions in the cash book of Kamau Traders for the Month of May 2016 and balance it . (5 mks)2016Jan 1: Cash in hand shs 10,000. Cash at Bank shs 20,000.―10 : Paid Lucy shs 8,800 and Toms shs11,000 after deduction 12% cash discount inEach case.― 30 : Banked all the cash leaving ksh 1,200 in the cash book.8.State four reasons why few Kenyans take out Life assurance policies(4 mks)9.For each of the following transaction, indicate in the spaces provided the account to be debited the account to becredited and the ledger in which it is maintained.( 4 mks)TRANSACTIONACCOUNT TO BELEDGERACCOUNT TO BELEDGERDEBITEDCREDITEDSolds goods to Otieno on credit sh 5,000 Paid rent in cash shs 3,000. 10.State four advantages of direct taxation( 4 mks)11.Outline four causes of ―Cost -push‖ inflation( 4 mks)12.State Four factors that influence decisions on What type of goods and services to be produced by a firm(4 mks)13.State Four problems that developing contries face in implementing their development plans(4 mks)14.State four ways that the government of kenya can use to solve the unemployment problem in the country. (4 mks)15.For each case of the following cases, name the motive for holding Money(4 mks)CASEMOTIVETo meet daily transport expenses To pay hospital bills. To take advantages of anticipated future fall in prices. To buy daily food requirements. 16.State the document to be applied in each of the following statements.Page | 217565/1 &565/2 business studies STATEMENTDOCUMENTSA S request by a seller for advance payment Used to correct undercharge in an invoice To reply to a specific letter of inquiry To inform the buyer when the goods are dispatched and by what means. 17.State four ethical issues that need to be considered in management and running of a business enterprise .( 4 mks)18.Highlight Four benefits that are attributed to personal selling as a method of sales promotion( 4 mks)19.State four ways through which the government May cause a decrease in the supply of a commodity( 4 mks)20.State Four benefits of free trade to the citizens of a country( 4 mks)21.The following balances were extracted from the books of Mungano Traders as at 31st Dec 2015(4 mks).Motor Vehicles80,000Plant and Machinery70,000Loan from bank60,000Stock25,000Debtors30,000Creditors15,000Cash at Bank20,000Prepare a balance sheet for Mungano Traders as at 31st Dec. 2015.( 4 mks)22.Outline Four ways in which households contribute to national income of a country(4 mks)23.State four advantages of public warehouse to retailers( 4 mks).24.State three basic human wants that individuals in society have( 3 mks).25.The following information was extracted from the books of Ambwere Trader for the year ended 31st Dec 2015 .Cost of sales1,200, 000Stock as at 1.1.2015160,000Stock as at 31.12. 2015 240,000Calculate the rate of stock turn over( 4 mks)Page | 218565/1 &565/2 business studies VIHIGA SUB-COUNTY JOINT 565/1 BUSINESS STUDIES Marking scheme 1. ?They are produced for final consumption?They are produced using producer goods.?They may be durable /used over and over again.?They may be for single use/used only once e.g bread,sugar2.?There are many buyers?There are many sellers?There is free entry to the market.?There is free exit to the the market.?There is perfect mobility of factors of production?No transport costs.?There is perfect knowledge about the market?The products are homogeneous.3.?Shares are freely transferable?Day to day management is entrusted to qualified managers?Raising of capital is easier and less expensive.?The death of a shareholder does not affect the company/ continuity.?There is limited liability.4.?Passing legislation that support and promote businesses.?Offering incentives to encourage investment e.g tax?Provision of credit through govt. institutions?Creating a pool of qualified manpower.?Improving infrastructure?provision of a stable political atmosphere.5.MUNGOMA TRADERSPROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST Dec 2015Salaries20,000Gross profit140,000Electricity changes8,000Discount Received26,000Discount Allowed6,000Net profit132,000166,000166,000TransactionBook of Original Entry6.Bought office furniture on creditGeneral journalWithdrew cash for personal usePCB/CPJSold goods on creditSales journal /sales day bookReturned goods bought for sale on creditReturns outwards /journal7.DateDETAILSDISCOUNTCASHBANKDATEDETAILSDISC.CASHBANKALLOWEDRECEIVED20162016JAN 1Bal/b/d10,00020,000JAN.10LUCY1,2008,800Cash8,800―10TOMS1,50011,000―30BANK8,800Bal c/d1,2009,00010,00028,8002,70010,00028,8000Bal. b/d1,2009,000Page | 219565/1 &565/2 business studies 8. ?Ignorance of the importance of these policies.?Wide spread poverty/low incomes?Fear of losing their money because of past experience of collapse of companies.?Lack of enough knowledge to interprate policies?Corruption and embezzlement of funds by official resulting in delayed compensation.9.TRANSACTIONACCOUNT TO BELEDGERACCOUNT TO BELEDGERDEBITEDCREDITEDSolds goods toDebtor/OtienosalessalesNorminalOtieno on creditsh 5,000Paid rent in cash shsRent expenseNorminalCashCash book3,000.10.?It is equitable because it is progressive in nature .?It is economical to collect and pay as it is collected at source.?It is certain -tax payer is sure of the time and amount to pay.?It is elastic and flexible.?It helps to reduce income inequalities.?Simple and easily understood by tax payers.?Convinient - tax burden to spread over the year.11.?Rise in wages and salaries?Increase in taxes?Increase in profit -margins?Increase in the cost of inputs and labour.?Reduction in subsidedies12.?Consumers preferences?Whether the firm is product or market oriented.?Level of competition.?Level of technology.?Management role?f Financial viability?Unmeet needs?Need for quality or fashionable produce.13.?Over-ambitous plans?Lack of qualified personnel?Lack of finance?Curruption and mismanagement?Political instability?Lack of political goodwill.?Disparity between budgeted and actual costs.?Reliance on foreign aid.14.?Control population growth rates?Give incentives to investors thereby creating employment.?Mobilise domestic savings and invest in processing industries?Create good political climate condusive for investment.?Appropriate technology to be used in production/encourage use of labour intensive?Methods.?Encourage optimum utilization of resources.?Education reform to make people self reliant.?Encourage private investments both local and foreign.?Encourage rural development by encouraging investors in rural areas.?Diversify agricultural and industrial production.?Create international co-operation to expand market for local industries.Page | 220565/1 &565/2 business studies CASEMOTIVE15.To meet daily transport expensesTransactionaryTo pay hospital bills.PrecautionaryTo take advantages of anticipated future fallin prices.SpeculativeTo buy daily food requirements.Transactionary16.STATEMENTDOCUMENTA request by a seller for advance paymentProforma -invoiceUsed to correct undercharge in an invoiceDebit noteTo reply to a specific letter of inquirycatalogueTo inform the buyer when the goods dispatched and byAdvice notewhat means.17.?Respect for and compliance with the law?Honesty in carrying out business?Fairness in dealing with customers?Loyalty with regard to workers, customers, suppliers.?Confidentiality with regard to third parties.?Trust for meaningful and lasting relationships.?Social responsibility.18.?There is immediate feedback?Opportunity to demonstrate.?Clarifications can be done.?Creates confidence and mutual trust.?Possible to observe customers reactions.19.?High taxation which lowers output.?Quantity restriction which limits supply of a given commodity.?Licensing- which may reduce the number of licensed producers.?Allocation of resources- taking back some resource e.g Land.?International trade restrictions- restricting importation of certain goods.20.?Variety of goods/improved wellbeing.?Cheap goods/lower prices?Adequate market/ increased out put.?Good relations /minimal conflicts.?Technological transfer/better methods of production.Mungoma tradersBalanc sheet as at 31st december 2016.Capital150,000Motor vehicle80,000Loan60,000Plant and machinery70,000Creditors15,000Stock25,000Debtors30,000Cash at Bank20,000225,000225,0008x ? = (4 mks) Page | 221565/1 &565/2 business studies 22 . ?Consumption of goods?Payment of taxes?Provision of labour?Provision of savings for investment /capital?Provision of land?Provision of entrepreneurship.23.?Retailers can rent space to stoke their goods.?Retailers have a place to break -bulk.?Retailers can blend and repackage goods.?Goods can be stored until they mature.?Retailers do not have to construct their own warehouses.?Retailers can sell goods while in the public warehouse.?Goods are insured ( against damage, caused by fire, theft)?Have the necessary equipment and machinery?Protection against adverse weather condition ( rain, sun, humidity)?Ensures constant supply of goods24. a Food b Shelter c Clothing 25 Average stock =240,000 + 160,000 =200,0002 R.O.S.T=Cost of sales =1,200,000=6 timesAverage stock200,000Page | 222565/1 &565/2 business studies NYERI COUNTY FORM 4 JOINT ASSESSMENT 565/1 BUSINESS STUDIES PAPER 1 1.State four advantages of advertising through the radio.(4 marks)2.Identify the type of goods described by the following statements given in the table.(4 marks)StatementsType of goodi) Used to create other goods ii) Require further processing inorder to have utility iii) Government is obligated to provide them to her citizens iv) Goods that are bought more frequently by consumers to satisfy common wants 3.The following statements refer to different office layouts. Identify the type of office layout explained in the followingstatements.(3 marks)a) All staff members operate from the same roomb) Senior managers are assigned separate rooms from where they coordinate activities.c) High class office designed to enhancing the image of the organisation.4.State four ways in which the government may be involved in training entrepreneurs in Kenya.(4 marks)5.Outline four ways in which the consumer can address the challenge of scarce resources in the satisfaction of human wants.(4 marks)6.Highlight four ways of making a warehouse efficient in its operations.(4 marks)7.State four factors that influence the demand for a product. (4 marks)8.Outline four difficulties encountered when determining the national income using the output approach.(4 marks)9.Outline four features of mail order businesses.(4 marks)10.The following transactions took place in the month of January 2015 for Karuku Retailers.Jan 12thSales to Juma worth shs.200,000 invoice no. 23120thSales to Kiama worth sh.150,00026thSales to Mercy worth sh.125,000Required : A sales journal for Karuku.(5 marks)11.Highlight four circumstances for using the short message service (SMS) to communicate.(4 marks)12.Outline the significance of each of the following insurance policies a trader may take for his business.(4 marks)a) Fidelity guarantee b) Workman‘s compensation c) Public liability d) Consequential loss 13.Identify four rights of a partner as expressed in the Partnerships Act of 1963.(4 marks)14.The following balances were extracted from the books of Murungari General stores.shs.Premises350,000Creditors150,0005yrs bank loan100,000Motor vehicle200,000Bank overdraft250,000Stock170,000Debtors120,000Cash60,000Prepaid rent22,000Capital?Required :Prepare a balance sheet as at 30th April 2014.(5 marks)Page | 223565/1 &565/2 business studies 15. On 1st April 2015, Nyamothe Retailers has sh.20,000 in cash and sh.45,000 at bank. During the month of April the following transactions took place : April 2nd Credit sales to Juma sh.5,000 12thCash sales directly banked sh.15,00016thPaid rent 8,000 and wages 2,000 all in cash18thCredit purchases from Kamau 20,00020thPaid telephone bills by cheque shs.12,00029thDeposited all the cash into bank except sh.1000Required :Prepare dully balanced two column cash book.(5 marks)16. Outline four ways through which an entrepreneurs may generate business ideas.(4 marks)17. The following information was extracted from the books of Bizna Traders for the month ended 29th February 2016Shs.Rent received4,000Discount allowed10,155Discount received5,144Gross profit23,005Carriage outwards6,000Salaries19,637Depreciation expenses2,000Required :Prepare a profit and loss account for the business for the month ended 29th Feb.2016(5 marks)18. Mention four factors that may discourage decentralisation of industries in a country.(4 marks)19. Outline four factors that can hinder timely implementation of a development plan.(4 marks)20. Outline the procedure of balancing a ledger account.(3 marks)21. Give four reasons why free trade is not suitable to a developing country.(4 marks)22. Outline four ways in which a good transport system contributes to economic development of a country.(4 marks)23. Outline four fiscal measures that are used by government to control inflation.(4 marks)24. Outline three ways through which the competitive environment would positively influence a business enterprise.(3 marks)25. Outline four reasons why a trader may prefer a direct channel of distribution.(4 marks)Page | 224565/1 &565/2 business studies NYERI COUNTY FORM 4 JOINT ASSESSMENT 565/2 BUSINESS STUDIES PAPER 2 1.a)Explain five factors that should be considered when choosing a filing system.(10 marks)b)Explain five differences between perfect competition and monopoly market.(10 marks)2.a)Explain five factors which have contributed to increased trading activities.( 10 marks)b)Explain five factors that have led to increased use of containerization.( 10 marks)3.a)Outline four challenges facing Consumer Association in Kenya.(8 marks)b)Luanda Traders had the following balances at 1st Jan 2015Cash Sh. 180,000 (Dr.) Bank Sh. 67,000 (Cr.)During the month of Jan 2015, the following transaction took placeJan 2 cash sales Sh. 14,500Jan 6 Mwangi a debtor settled his account of Sh. 45,000 by cheque less 5% cash discountJan8Sold goods on credit with Sh. 25,000Jan 14 Paid salaries in cash 50,000 Jan 18 Settled Laboso‘s account of 60,000 by cheque less 3% cash discount. Jan 21 Received a cheque of 84,000 from Rotich after deducting 10% cash discount Jan22 Cash purchases paid by cheque sh. 65,000 Jan 24 Cash sales worth 340,000 directly banked Sh. 300,000 cash into the account Jan 28 Took cash 39,000 for children‘s school fees Jan 31 Banked all cash except Sh. 36,000 Prepare a dully balanced three column cash book(12 Marks)4.a)Explain five characteristics of general insurance(10 Marks)b)Outline five measures that can be used to curb the rapidly increasing population in Kenya.(10 Marks)5.a)Explain four benefits of mobile phone money transfer services.( 8 marks)b)The following trial balance was extracted from the books of J.B. Traders as at 31st Dec. 2014.J.B. TRADERSTRIAL BALANCEAS AT 31.12.2014DetailsDr.Cr.Purchases and Sales140,000190,000Stock (1.1. 2014)25,000Advertising8,000Debtors and Creditors21,00022,200Returns3,0004,800Salaries28,000Cash5,000Bank Overdraft20,200Capital177,600Rent20,800Land & Premises164,000414,800414,800Stock on 31/12/2014 was valued at sh. 13,000Required: Prepare a Trading Profit and Loss account for the period ended 31/12/2014 and a balance sheet as at 31/12/2014(12 Marks)6.a) Explain five principles of public expenditure(10 Marks)b) Explain five benefits that may accrue to a business organization that expands its scale of operations.(10 Marks)Page | 225565/1 &565/2 business studies NYERI COUNTY FORM 4 JOINT ASSESSMENT 565/1 BUSINESS STUDIES Marking scheme 1.Advantages of advertising through the radio?Serves many people at the same time hence reaches more people at once?Use of different local languages make adverts clearer?More appealing as it can be accompanied by music?Advert can be repeated many times?Can have a specific target audience to be more effective?Used even in remote areas where other methods cannot reach?Serves both literate and illiterate audience?It is cost effective / cheaper?It is fast, takes a short time to be relayed4mks2.Types of goods described by statements?Producer goods / capital goods?Intermediate goods?Public goods / social goods?Convenience goods4mks3.Type of office layout explained by statementa) Open office layoutb) Partitioned / enclosed office layoutc) Landscaped / panaromic office layout4.Ways in which government may train entrepreneurs?Through organising shows, trade fairs and exhibitions?Conferences and seminars / workshops?Use of commercial attachees who train exporters on market technology?Providing relevant curriculum in schools, polytechnics, colleges, institutes of technology and universities?Publishing business journals, reports, periodicals, books, magazines etc.?Sponsoring short business courses for business people?Through mass media - radio, television, newspapers, government website etc4mks5.Ways in which consumers can address the challenge of scarcity of resource?Drawing up a scale of preference?Rationing / using resources sparingly / reasonable amounts?Avoiding wastages through careful planning on what to use / proper budgeting?Recycling waste products?Regenerating / restoring used up resources?Engage in production of simple items?Change of lifestyle to avoid unnecessary expenditure?Reduce the family size / dependency ratio?Look for alternative sources of additional income4mks6.Ways of making a warehouse efficient in its operation?Suitable location to facilitate receipt and release of goods?Establishing proper structures in line with goods stored?Provide appropriate equipment for storage, movement, weighing?Install safety facilities for protection against damages?Ensure security against losses, theft?Provide adequate space to allow storage and movement?Employ qualified staff to attend the goods?Ensure proper recording systems to properly monitor movement of goods?Comply with the law?Have a good transport system for easy access?Ensure proper communication channels?Clearly outline procedures to be followed when receiving and releasing goods?Provide special facilities for special goods - refrigeration, air conditioning4mks7.Factors that influence demand for a product?Price of the product?Consumers incomes?Prices of related goods?Changes in population?Government policies?Seasons, weather conditions?Future expectations of price changesPage | 226565/1 &565/2 business studies ?Tastes and preferences?Social cultural factors4mks8.Difficulties encountered when determining the national income using output approach?Inaccurate data / information?Problem of valuing government output as it is not sold in the market?Deciding on which goods and services to include in measuring national income is a problem?Inadequate output data?Price fluctuations affect valuation of output?Illegal activities that bring output are not included in the measurement?Double counting of output at different levels of production?A large subsistence sector that has no records?Problem of differentiating intermediate inputs from primary inputs?Goods in stock are difficult to value4mks9.Features of mail order businesses?Use the post office or courier service to deliver goods to their customers?Sales are strictly on cash under the terms cash on delivery or cash with order?Deal with limited varieties of goods?Orders are done online / through mail / all transactions are done through post / online?Carry out heavy advertising to popularise their business in the dailies?No personal contact between business and customers?Well designed catalogues, price lists are used to display their products4mks10.Preparing a sales Journal for KarukuSales JournalInvoiceDateDetailsNo.LFShs.2015 Jan 12Juma ü231SL1200,000" 20Kiama ü232SL2150,000" 26Mercy ü233SL3125,000" 26Total posted to thesales a/c in the ügeneral ledger (Cr)475,00015 x 1/3 = 5mks i)Proper date award a tickii) Correct details entered award a tick iii) Award a tick for correct invoice number iv) Award a tick for the correct amount and total v) Award a tick for a good narration 11.Circumstances for using SMS to communicate?When there is need to save on cost?Where the parties are both literate?When there is need to have immediate feedback?If both the sender and recipient have phones?Where there is need for evidence?Where there is need to store information for future reference?Incase the message is to be given to several people?If the sender wants to be brief and straight to the point12.Outline significance of insurance policiesa) Fidelity guarantee - to offset losses arising from dishonesty of employees b) Workman‘s compensation - so that if workers are injured in the line of duty they are compensated instead of pushing liability to the employer c) Public liability - to relief the insured of any liability claims when their activities bring out losses to third parties d) Consequential loss - to cushion the business for the loss of profits due to disruption of its activities by fire outbreak 4mks Note : significance must come out properly 13.Rights of a partner as outlined in the partnership Act of 1963?Right to an equal share of profits?Right to inspect the books of accountPage | 227565/1 &565/2 business studies ?Right to decision making / management?Right to be compensated incase of incurring losses on behalf of the business?Right to the consulted on admission of a new partner4mks14. Preparing a balance sheet Murungari General stores Balance sheet As at 30th April 2014 Fixed assetsshs.shs.Capital & liabilitiesshs.Premises350,000Capital422,000Motor vehicle200,000Total F.A550,000Long term liabilitiesCurrent assets5yr bank loan100,000Stock170,000Debtors120,000Current liabilitiesPrepaid rent22,000Creditors150,000Cash60,000Bank overdraft250,000Total C.A.372,000Total C.L.400,000922,000922,00010 x ? = 5mksi)Title must be given for marking to take placeii) Accept a correct balance sheet entries even if the items are not classified / order not requirediii) Penalise any item wrongly classified15.Preparing a two column cash bookDrNyamothe Two Column Cash BookCrDateDetailsFCashBankDateDetailsFCashBank20152015April 1Balance b/d20,00045,000April 16Rent8,000" 12Sales15,000" 16Wages2,000" 29CashC19,000" 20Telephone12,000" 29BankC19,000" 29Balance c/d1,00057,00020,00069,00020,00069,00010 x ? = 5m Note: Award a tick only if date, details and amount are all correct 16. Ways through which an entrepreneur may generate a business idea ?Improving on an existing idea?Combining two existing ideas?Listening to what people say?Reading books, magazines, newspapers, journals, periodicals?Gaining from wastes / making use of wastes?Surveying and researching?Brainstorming / consultations with business people?Building on ones skills, hobbies and interests?Vocational training and experience?Attending trade shows, fairs and exhibitions?Identifying market gap / niche / spotting market gap?Innovation and creativityNote:Page | 228565/1 &565/2 business studies Do not accept sources but award for ways e.g. magazines are not methods but source reading is the way 17. Preparing a trading account Bizna TradersProfit and Loss AccountFor the month ended 29/2/2016Operating expensesGross profit b/d23,005Carriage outwards6,000Discount received5,144Discount allowed10,155Rent received4,000Salaries19,637net loss c/d5,643Depreciation expenses2,00037,79237,79210 x ? = 5mks18.Factors that may discourage decentralisation of industrialization?Inadequate capital to develop infrastructure?Tax incentives offered by the government lead to increased burden for tax payers?Improvement of security in rural areas imply increased government expenditure?Difficult to attract professionals in rural / remote areas?High costs of land / unavailability of land?Lack of social amenities / public utilities in the rural areas - water, health etc.?Lack of power in rural areas?Low market in the rural areas?Insecurity in rural areas?Lack of support services / auxilliary services such as banking, insurance etc.4mks19.Factors that hinder timely implementation of development plans?Lack of political goodwill?Over ambitious plans?Lack of adequate funding?Corruption / lack of transparency?Effects of inflation?Unforeseen costs / disasters etc.?Poor estimates due to lack of adequate data?Poor accounting systems that give inaccurate data?Lack of support at grassroot level?Lack of skilled personnel to implement plans20.Procedure of balancing a ledger account?Identify the ledger account / title account?Find the totals of debit side and credit side?Get the difference between debit total and credit total?Insert the difference on the side with the smaller total and label it as balance c/d?Confirm and put the equal totals of the two sides and double underline each?Transfer the account balance to the side with the greater total below it as balance b/d6 x ? = 3mks Notes Steps must follow each other correctly If a candidates makes a mistake at any point, mark up to that point 21. Reasons why free trade is not suitable to a developing country ?Encourages dumping of low quality goods?Threatens domestic industries due to unfair competition?Denies goverment revenue as there are no duties?May result to importation of harmful goods?Leads to unfavaourable B.O.P?Government lack statistics on flow of goods in and out of the country?Compromises a country‘s political ideology?May cause mass unemployment?Limits consumer choice?Loss of opportunity to obtain cheaper goods4mks22.Ways how transport contributes to economic developmentPage | 229565/1 &565/2 business studies ?Creates employment for the citizens - drivers, touts etc.?Encourages specialization?Increases production / mass production?Promotes industrialisation?Minimises wastages as goods are marketed?Source of government revenue used in developing infrastructure?Increased supply of labour and raw materials?Widens the market?Encourage exploitation of natural resources4mks23.Fiscal measures that are used to control inflation?Increasing direct taxes / income taxes?Restricting the imports?Reducing government expenditure / spending?Subsidizing production?Reducing taxes on imports to increase supplies?Reducing taxes on imports?Wage legislation / restricting increase on salaries?Use of buffer stocks?Import substitution policy4mks24.Ways through which competitive environment would positively influence a business?Brings quality goods?Triggers research for better methods?Improves on efficiency of the firm?Helps to create new varieties?Helps to reduce costs of operation through research?Encourages collaboration in research and waste disposal3mks25.Reasons why a trader may use direct channel of distribution?Where there is need to keep prices low?To meet customers specifications incase of orders?To prevent spoilage of goods that are perishable?To prevent fragile goods from breakages?Where intermediaries are not available?To take advantage of a localised market?To comply with the government law?To get direct feedback from consumers?To maximise profits by eliminating intermediaries?To maintain its control over the product4mksPage | 230565/1 &565/2 business studies NYERI COUNTY FORM 4 JOINT ASSESSMENT 565/1 BUSINESS STUDIES Marking scheme 1.a) Factors considered when choosing a filing system?Economy - selecting the filing system that would be cheap to maintain / one which business can afford?Nature of the documents - where documents are official, written etc system chosen should be able to meet this requirement?Time needed for the documents - the length the documents should be retained in the firm?Confidentiality - where there is need to keep privacy and prevent documents accessed by wrong people /secrecy required?Flexibility - need to have a system that accommodates future changes in the business?Suitability - a system that fits the needs of the business?Size of the documents / compactness - where the volume is big, a system that is able to hold more in a small space?Elasticity - ability of a system to be expanded or contracted?Retrieval - ease of retrieving the documents when required for use?Legal requirements - where the government dictates or outlines the system, the business must comply?Simplicity - ease of operation, a system that is simple to understand and usemention 1mkexpansion1mkMark only the first five pointsany 5 @ 2 = 10mksb)Differences between perfect and monopoly market structuresPerfect competitionMonopoly marketa) Consists of many sellersa)Made up of one sellerb) Product is homogeneous (uniformity ofb)Product is the only one in the marketproducts)c) Many firms make the industryc)The firm is the industryd) No government influenced)Government interferese) Free entry and exite)Entry and exit restrictedf) No transport costs incurredf)Transport costs are incurredg) There is perfect knowledge in the marketg)There is restricted flow of informationh) No firms controls the raw materials h)The firm controls the source of raw materialsi) Firms earn normal profitsi)Firms earns supernormal profitsj) Demand curve is horizontal for each firm j)Demand curve is steep and downward slopingk) Price determined by market forces / firms k)Price determined by the monopoly firm / firmis price giverl) No price discriminationl)Price discrimination is commonNotei)No half a mark for any pointii)Any 5 @ 2mks = 10iii)Points must match for any mark2.a)Factors that contribute to increased trading activities?High levels of unemployment - may people result to business activities to create self employment?Improved security - this has increased confidence in starting businesses?Cheap labour - increased population provide cheap supply of labour?Improved technology - this has created an avenue to engage in business online?Improved transport network - help in the movement of raw materials and labour to the firms and finished goods to themarkets?Availability of power - rural electrification and government vision of connecting every part with power has increasedbusiness opportunities?Supportive government policies - policies like Kazi kwa Vijana has encouraged businesses?Large population - this offers wide market for products?Easy access to loans / credit facilities - this has encouraged many people to open up businesses?Exposure to business opportunities - increased training, seminars and workshops for young entrepreneurs?Improved communication network - allows flow of information that provide business ideasstate 1mk, expand 1mkany 5 at 2 = 10mksb)Factors that have led to increased uses of containerisation?Low insurance premiums - goods transported under this mode attract cheap insurance premiums due to consolidation?Security of goods - goods are protected against loss by theft as containers are sealed by the exporter (consigner)?Safety of goods - goods are protected against damages, breakages and handling is reducedPage | 231565/1 &565/2 business studies ?Large carrying capacity / spacious - containers are large in size and thus hold more goods at a time?Special containers - special goods are packed in special containers to maintain their standards?Economy of space - due to stucking containers occupy small space on the trucks, trains or ships?Adequate handling facilities - handling equipment are used at the ports and loading points make it easier?Cheap - carry large quantities using the same transport fees on the roads, rail lines and on water?Improved port facilities - ports authorities have improved their port facilities that allow quick off loading and unloading at theterminus?Inland container depot - establishment of the container depot at Embakasi has increased the use of containerisation10mks3.a)Challenges facing consumer associations?Lack of sufficient education to consumers - consumers are not aware of their rights and thus take no action?Consumer apathy - consumers do not report exploitative actions by traders?Inadequate funds / finances - the associations lack funds to carry their activities related to consumer protection?Low membership - few consumers are unaware of their existence and thus do not join?Lack of sufficient government support - many consumer organisations are not supported by the government as they are seenas human rights groups?Lack of political goodwill - politicians do not support consumers in their fight for their rights?Individualism - consumers prefer to act individually when buying goods or handling unfair traders, they do not unite andcomplain as a group1mk stating 1mk expansionotherwise 2any 5 @ 2 = 10mksb)Luanda tradersThree column cashbook for Jan. 2015DrCrDateDetailsFDACashBankDateDetailsFDRCashBank20152015Jan 1Balanceb/d180,000Jan.1Balanceb/d67,000" 2Sales14,500Salaries50,000"6Mwangi2,25042,750Laboso1,80058,200"21Rotich9,50084,600Purchases65,000" 24Sales40,000300,000Drawings39,000" 31CashC1109,500BankC1109,500Balanceb/d36,000346,65011,650234,500536,8501,80036,000346,650Feb. 1Balanceb/d36,000346,65024 x ? = 12mks Notes: i) Format with all required columns must be correct ii) Each entry must have a correct date, details and amount for a tick iii) Totals must be correct for both sides to get a tick for cash and bank iv) D.A and D.R correct totals attract each a tick v) A title for a three column should be present - if missing but format and columns have correct titles continue marking 4. a)Characteristics of general insurance?Premium charged is dependent on the degree of risks / number of risks or value of the property higher premiums are chargedfor higher risks)?It is a contract of indemnity - compensation is done for the financial loss to the owner?It is a short term contract - insurance contract ends after a specific period and must be renewed annually to be in force?Policy cannot be assigned - the owner cannot transfer the policy to a next of kin. Incase of sale, the contract expires?It has no surrender value - if the policy holder terminates the contract prematurely, he is not entitled of any refund?There must be insurable interest in the property - one can only insure his own property and not another persons; owner mustsuffer financial loss incase of occurrencePage | 232565/1 &565/2 business studies ?There is a maximum limit to the amount of compensation usually upto the value of the property insured?The policy cannot be used as a collateral - holder cannot use it to acquire a loan as security?Contract of contribution applies - in case of underinsurance the insurer shares the loss with the insured?Uncertainity - the risk may or may not happen, risk is not guaranteed of occurring?Principle of subrogation applies - the insured should not benefit from the scrap or benefits from third partiesany 5 @ 2 = 10mksb)Outlining measures used to curb rapidly increasing population?Family planning inorder to reduce the number of children one will get during the child bearing period?Raising the marriage age through legislation so as to reduce the fertility rate?Raising the cost of bringing up a child hence making it difficult to cater for their needs which makes them to reduce thenumber of children?Limiting the number of children to give birth per woman via legislation?Raising the level of education to change the culture and attitudes of the society?Increasing employment opportunities for women to engage them more at work as an alternative of bringing up children?Create public awareness about the benefits of smaller familiesNo splittingany 5 well outlined points @ 2 = 10mks5.a)Benefits of mobile phone banking?Ease of use - mobile phones are easy to operate and access the account?Speedy transfer of money - money is sent and received without delays?Security - it is more secure and safe as a phone is used by the owner for monetary transactions?Cheap to use - some banks charge very little fees for the use of banking services?Facilitates loan facilities - owners can access loans through mobile phones?Utility bills - easy to pay bills by the customers - water, power, airtime?Service is available for 24 hours convenient for the account holder?Statement of account - account holders can access their statement from the phone?Provide a record - transactions through mobile phone have evidence of records for any future reference?Banking services become cheaper in terms of costs and time at the touch of the button, o transport costs?Instant feedback is available for any transactionany 4 each 2 = 8mksstate 1, explain 1 otherwise 2mks eachb)J.B TradersTrading, Profit and Loss A/CFor the year ended 31/12/2014Opening stock25,000Sales190,000Purchases140,000Less: returns in3,000Less: returns out4,800Net sales187,000Net purchases135,200Cost of goods available160,200Less: closing stock13,000Cost of goods sold147,200Gross profit c/d39,800187,000187,000Operating expensesGross profit b/d39,800Advertising8,000Net loss c/d17,000Salaries28,000Rent20,80056,80056,800Net loss b/d17,00014 x ? = 7mks Page | 233565/1 &565/2 business studies J.B Traders Balance sheet As at 31/12/2014 AssetsCapital and LiabilitiesLand & premises164,000CapitalStock13,000Opening capital177,600Debtors21,000Less: net loss17,000Cash5,000Closing capital160,600LiabilitiesCreditors22,200Bank overdraft20,20042,400203,000203,00010 x ? = 5mks Title must be written for any marking to start 6. a) Principles of public expenditure ?Sanctions : It must be approved or authorised by a relevant body?Maximum social benefit -must be incurred in order to benefit majority of the citizens?Flexibility - should be capable of being adjusted inorder to meet the prevailing economic changes?Economy - should be cheap to administer and avoid public waste?Proper financial management - should be well managed by maintaining proper records for transparencyany 5 @ 2 = 10mksstate 1, expansion 1b) Benefits that accrue to a business that expands its operations?Firms are able to enjoy marketing economies - large volumes of sales at cheap rates?Advertising economies - firm is able to finance advertising campaigns to capture a wider market?Financial economies - the firm has wider access to capital sources through credit?Reduced operational costs - average cost of production lowers as output increases?Personnel economies / labour - firm is able to attract professional or qualified personnel for better operations?Purchasing economies - the firm is able to buy in bulk and enjoy huge trade and quantity discounts on stocks / raw materials?Technological economies - the firm can afford modern technology for improved qualities and quantities?Staff welfare economies - the firm is able to offer welfare to the staff that motivates its workers?Managerial economies - the firm is able to get professionals in the managerial posts that improve efficiency of production?Spreading risks - the firm is able to spread its risks?Research economies - the firm can carry out research for future development of the firmany 5 @ 2 = 10mks Page | 234565/1 &565/2 business studies WESTLANDS FORM FOUR JOINT EVALUATION 565/1 BUSINESS STUDIES Marking scheme 1.State four benefits that your friend Evans will get by studying Business as a subject.?will equip him with skills and knowledge and attitude start and run business effectively.?will prepare him for future career in business.?a good foundation for him to further his studies.?will develop positive attitude towards work and self discipline.?will enable him to think creatively/ critically and make sound / rational judgement.?will appreciated the role of government in business.?will be able to identify business opportunities to invest in.?will be able to relate issues affecting business to its environment.?would acquire necessary skills, knowledge and attitude for self and national development.?would appreciate the role of business in society.?understand the need of ethical practices in business management.?will enable him evaluate business performance?will appreciate the role of information technology in business.?will develop positive attitude towards the environment.?Will understand the role of auxiliary services in business (e.g transport, warehousing, banking etc)?Would appreciated the role of market forces in determine prices of goods and series.2.The government of Kenya has put in place measures to protect consumers against malpractices by business people.Identify the four Acts that safeguards consumers under the following provisions:(4 marks)ProvisionActAll business premises and social halls must meeta)acceptable hygienic conditionPublic Health Actb)Drinks and drugs must have labels of ingredientsusedFood and Drugs Act c)Landlords should not overcharge tenantsRent and Tribunal Actd)Measuring and weighing equipment must be correct and accurateWeights and Measures Act 3.Highlight four factors that can be used to conclude that safaricom is a large firm.(4 marks)?Large number of employees.?Has a large market share / many customers.?Large capital investment / many shareholders.?High volume of output.?has large floor are covered by premises / many agents countrywide.?uses modern technology / better production methods / employees are specialised / employs division of labour.?Has large volume of sales.?High turnover / large amount of annual income earnings.?It has a winder geographical coverage spread across the country.4.XYZ company Ltd enjoys the benefits of monopoly status. Give four problems a consumer of XYZ company productsis likely to encounter. (4 marks)?Poor quality products due to lack of competition.?He / she cannot exercise choice / limited variety.?Limited quantity of products/ possibility of hoarding?Possibility of price discrimination / overcharging of goods and services / high prices.?Poor customer service / customer complaints may not be heard.?Possibility of market segregation / customer segregation / discrimination based on status.?Experince shortages that are artificial.5.Many departments both at national and county governments have been accused of mismanaging public revenue. Statefour measures these governments should put in place to deal with this challenge4 marks)?Must sanction / approve their expenditure through their parliaments.?Ensure that expenditure benefit many people / maximum social benefit.?Avoid wastage and unnecessary expenses / Economy.Page | 235565/1 &565/2 business studies ?Proper audits must be done on all public expenditure / proper financial management.?Funds must be distributed to all sectors of the economy / equity.?Must allocate revenue to sectors according to the prevailing economic situation / flexibility/ elasticity.?Their expenditure must develop the country / productivity.?Expenditure to be administered strictly and accurately and to be subjected to periodic scrutiny.6.Outline four benefits that accrue to a society that practices commercial productions.?Quality goods due to market competition.?Use of modern technology, thus better quality goods.?Results in surplus production.?Creates employment to distributors of surplus produce.?Leads to better utilization of societal resources.?Creates variety of goods / services to the society.?Promotes interdependence among people / communities leading to peaceful cohesion .?Leads to higher standards of living due to variety of better priced goods.?Makes the country to earn foreign exchange.?Leads to specialization in the society which leads to better quality goods.7.Give four characteristics of a book that qualifies it to be a good(4 marks)?Tangible / can be touched.?Visible can be seen?Can be stored for future use / not perishable?Its ownership can be transferred from one person to another.?Can be separated from producers.?It's products can be standardized in terms of sizes, colour, appearance and quality.?Can be moved from one place to another?has monetary value8.Ways in which political stability in a country is of benefit to a business?The business is able to access raw materials with ease.?Easier to attract labour that it requires.?Enhanced continuity of business operation hence constant supply of goods.?Buyers can access market with ease and confidence.?The business can expand to other areas without restriction.?Lower cost of doing business.?Better access and maintenance of credit facilities (e.g loans, creditors) for its expansion.4 × 1 = 49.State the office equipment used to perform the task given in the table below.TASKEQUIPMENTCutting papers into requireda)sizesGuillotine b)Communicates one way onlyPagerc)Used to prepare cash receiptsCash registerd)Printing stamp impression on envelopesFranking machine 10.Highlight four importance of hometrade.4 marks)?Enables individuals to get goods and services they do not have.?Enhances specialisation and division of labour.?Promotes optimal uses of available resources.?Creates link between producers and consumers who could be far apart.?Government gets revenue form taxes and licence fees.?Promotes interdependence / peaceful co-existence among trading communities.?Assures consumers of steady supply of goods and services.?Enhances specialisation and division of labour?Promotes value addition in goods as they change hands.?Contributes to job creation.?Enables producers to dispose off surplus produce.?Avails a wide variety of products.11.Apart from cartels, identify four trends in business ownership. 4 marks)?privatization?Globalization?holding companies?Franchising?Burial and benevolent fundPage | 236565/1 &565/2 business studies ?Trusts?Take overs / absorptions?Nationalisation?Mergers / Amalgamation12. Traders have been complaining about poor service delivery in Bungoma warehouse. Give four causes of this.(4 marks)?Unsuitable / poor location that inconveniences the traders?Inappropriate equipment.?Not secure/ inadequate safety / poor security systems.?Inadequate and unqualified personnel to serve customers.?Inadequate space / some traders miss space to keep the goods.?Unadherehence to government policy / storing illegal goods.?Unclear and poor inventory control systems.?Lack of special facilities for special goods/ wastage of their goods/ damage to their goods.?Lack of clear procedures leading to delays in receiving and releasing of goods to traders.?Untidy environment.?Poor specialized facilities to store special goods.13. Mkulima stores has just been swept away by the raging waters arising fro heavy rains. Outline the procedure theowner should follow in claiming compensation from his insurer.(4 marks)?Notify the insurer of the occurrence of loss /Report the loss to the insurer (within 48 hours)?Filling a claim form issued by the insurer.?Investigation of the clam and assessment of investigation report.?Effecting compensation by the insurer (upon satisfaction that the claim is valid)14. In the table below, state FOUR differences between Non-bank financial institution and commercial banks.Non bank financialinstitutioni)Mainly offer savings -and fixed depositaccounts only.ii)Mainly provide-medium andlong-term finance.iii)Provide finance to-specific sectors.iv)They must open-account withcommercial banks oftheir choice sincethey need the chequeclearing service ofthe commercialbanks.v)They do not operate -current accounthence they cannotoffer overdraftfacilities.vi)They are not allowed -Commercial banksProvide all types ofaccounts (i.e.savings current and fixed deposit a/c Provide short-termand medium termfinanceProvide financeto all sectors of the economy without restriction They do not need toopen account withnon-bank financialinstitutionsSince they operatecurrent account theyoffer overdraftfacilitiesThey issue cheque to issue cheque books books, hence theyto their customersare members ofhence they are notclearing house.members of clearinghouse.15.Identify the type of unemployment explained below.(4 marks)?The type of unemployment where an individual is able to work, work is available but he/she is unwilling to work voluntaryunemployment.?A type of unemployment where jobs are there but one does not have requisite qualification or there is change in the techniqueof production structural unemployment.?A type of unemployment where a worker's full capabilities are not completely utilized Disguised unemployment.?A type of unemployment caused by advancement in technology, with machines replacing human labour Technologicalunemployment.Page | 237565/1 &565/2 business studies 16. Outline four factors that may cause a change in capital in the operating business. (4 marks) ?Additional investment : This is when the owner of the business decides to loving more money into the business to sustain it orexpand it.?Net profit : This is the return realised by the business in its trading activities. The profit is re-invested into the business.?Net loss : This is the opposite of the profit and its effect is reduce the business capital and assets.?Drawings: This is any money or property taken away from the business by the owner(s) for non-business use / for personaluse. Drawings decreases both assets and capital in the business.?Increase in the value of fixed assets a few fixed assets especially land gain value over time . (This is called appreciation) ithas the effect of increasing assets and capital of a business.?Loss of value of fixed assets. (Depreciation). Most of fixed assets lose value through tear and wear and this ultimate byreduce the assets and capital of the business.17. Give the statements in the table below, indicate the type of entry to be made in the relevant ledger account. (4 marks)StatementType of entryi)An increase in liabilityCredit entryii)An increase in an expensesDebit entryiii)A decrease in an assetCredit entryiv)Drawings in the businessDebit entry18.Highlight four factors which may contribute to improvement of the national income of a country. (4 marks)?Properly educated and trained man-power - Able to produced better quality and quantity goods and services, ultimately highincomes.?Natural resource endowment such as minerals, good climate tourism attraction sites water bodies etc.?Technological advancement - A country with modern technology (machinery and skills will ultimately generate higherincomes.?Availability of capital / equipments / manmade resources.?Country's infrastructural development - A country with well established roads, electricity, communication, networks andrailway is likely to have higher output.?Higher values of country's exports compared to imports.?Availability of foreign / investments.?Political stability, certainty, sanity and security.?Positive entrepreneurial culture19.Distinguish between movement along supply curve and shift in supply curve. (4 marks)Movement along supply curveShift in supply curveBrought about by change in quantitiesBrought about by changes in quantity supplied as a result of changes insupplied as a result of change infactors other than the price of commodity such factors may include,price of a commoditystate of technology, cost of production, government polices etc.Has one curveHas at least two curves20.State four uses of cashbook.(4 marks)?Shows the source of money received by the business in cash?Shows receipts of cash through the bank / cheques.?Shows payments both in cash and bank?Helps in reducing entries made to general ledger (Cash and bank account are combined to form a cash book.?Promotes specialisation in book keeping by allocating different ledgers to different employees.?Eases monitoring of cash flow in and out of the business.?A three column cash book shows total discounts allowed or received during a given period, including to whom or fromwhom.21.For each of the following transaction in the table below, indicate in the spaces provided, the source document fromwhich the transactions would be recorded. (4 marks)Source documentTransactioni)Sales invoice / outgoing invoiceSale of goods on creditii)Debit noteCorrection of an underchargeiii)Purchases invoice / incomingGood brought on creditinvoiceiv)credit note issuedGoods returned to the sellerPage | 238565/1 &565/2 business studies 22.State four negative effects of inflation to a country's development (4 marks)?Inflation discourages savings. People tend to spend more of their incomes as opposed to saving for further investment.?It leads to increase in interest rates hence high cost of borrowing.?Contributes to decline in standards of living for people earning fixed/incomes.?Lenders loose borrowers - The money value of the amount lent out falls below the lending time and repaying time duringinflation.?Fall in investments and increase levels of unemployment - increase spending during inflation reduces savings thus lowamounts on investment. Low investments leads to low levels of employment.?Worsening balance of payment since people tend to buy more imports in their bid to avoid buying locally produced goods,thus leading to more imports compared to exports.?It adversely affect the implementation of development plans since costs increases to unprecedented levels.?Citizens may lose confidence in their local currency and opt to use foreign currencies.?Investments in the country are affected by high costs of credit and other operating costs thus leading to closure and thislenders people jobless.?Emergence of black markets.?Erosion of peoples purchasing power. (Citizens become poorer than they were before inflation)?Constant agitation of higher wages by trade unions and strikes by workers.23.Highlight four problems that may be encountered in development planning. (4 marks)?Inadequate human resources with relevant skills.?Inappropriate use of technology?Over reliance on donor funding.?Lack of political goodwill?Insecurity in the country?Inadequate funds / capital / resources.?Poor research on policy issues.?lack of well researched / thought project proposals.?difficulty in planning for a large subsistence sector.?Conflict of interest / corruption / lack of cooperation among stakeholders.?High costs of collecting statistics and plan implementation.?Use of unreliable and inaccurate data.?Formulation of over-ambitious plans / unrealistic goals.?presence of private sector whose activities are difficult to coordinate.24.Mention FOUR reasons why different countries realise different teams of trade.?Nature of commodities being exported primary products fetch lower prices compared to those of manufactured goods. - Acountry whose exports are mainly raw materials is likely to experience unfavourable terms of trade while a country dealingwith manufactured exports will experience favourable terms of trade.?Nature of imports - Countries that import manufactured goods pay higher prices for such goods while one that imports cheapraw materials may experience favourable terms of trade.? Total quantity supplied where many countries supply a commodity into the world market, this tend to depress / lower its prices.- A country relying on such a product may experience unfavourable terms of trade. A country that relies on exportation of a commodity that is low in supply in the world market, may experience a favourable terms of trade. ? Trade restrictions by trading partners - a country may take measures that are aimed at reducing imports from trading partners e.g. increase in taxes and quotes. - If the other country does not retaliate the country that has put restrictions may end up exporting more thereby creating an imbalance in terms of trade. ? Availability of substitutes - A county may experience favourable terms of trade if the exports by the country do not have close substitutes. This is because a country may always be able to sell its products at high prices without affecting its demand. - If the products has many substitutes then the prices are likely to be low in the world market. 25. a) Working capital = Current assets - current liabilities. = (490,000 - 140,000) ü = 350,000 b) Capital employed = fixed assets + working capital. (1,750,00 + 350,000) ü = 2,100,000 ü Page | 239565/1 &565/2 business studies WESTLANDS FORM FOUR JOINT EVALUATION 565/2 BUSINESS STUDIES Marking scheme 1. a)Circumstances under which a business man would prefer written communication (10 marks)?If the information is required later for (future) reference.?If the message is confidential since letters provide privacy.?Where the message is detailed since written communication will provide room for detailed / length explanations.?Where there is need for the information to be reproduced to reach more parties.?Where there is need to cut on costs since it is relatively cheaper to use.?If evidence of communication will be required in the figure.1 mentionotherwise 2 × 5 = 10b)Factors to be considered before implementing the investment decision.?Profit to be earned the investment should be able to earn reasonable profit to enable him have a surplus after paying operatingexpenses.?Level of competition - The competition should be fair / healthy to enable him to cope.?Size of market - It should be large to enable make sales.?Government policy on the investment should be easy to meet.?Amount of capital required / available should be adequate to start /run the business.?Availability of inputs - They should be easily available / readily available to enable continuous production.?Management skills required - He should have the skills required to run / operate the business.?Pay back period should not be too long.?Beliefs / culture of target market in order for him to make sales.mention 1Otherwise 2 × 52.a)Measures that the central bank can take to control the amount of money in circulation (10 marks)?Bank rate - This is the rate at which the central bank lends to commercial banks. It can be varied to encourage / discouragelending.?Open market operation - The central bank can sell / buy securities to increase / reduce lending?Special deposit / compulsory deposit. The central bank requires other financials institutions to have a certain percentage ofdeposits deposited in the central bank. The amount can be varied to encourage /discourage lending.?Cash ration / liquidity ratio - The ratio of cash to total deposits may be varied to increase /reduce money supply /reduced toincrease money supply.?Moral persuasion - The central bank may appeal / request / restrain lending. The bank may require commercial banks toreduce lending by persuading them / increase lending by persuading them?Selective control - The central bank may require commercial banks to lead money to certain projects only in order to reducethe money in circulation.?Directives - Central bank can use it s authority to direct financial institutions to lend more / less.?Margin requirement - The central bank may reduce / increase the requirement to reduce / increase the money in circulationMention 1Otherwise 2 × 5b)Principles of insurance and their significance (10 marks)?Insurable interest - The insurable can only insure a matter that will cause him / her direct financial loss preventing insuranceof property that will cause one financial loss.?Indemnity - Insurance is aimed at restoring one to the financial position they were in before occurrence of loss - It preventsinsurance cos from benefiting the insured.? Utmost good faith - it requires the parties involved in insurance it disclose all relevant facts relating to the contract it prevents the insured form withholding important information of the matter insured. ? Proximate cause - for the insured to be compensated, the loss must be caused / triggered by the insured risk. This prevents the insured form claiming if loss is caused by a risk that was not insured. ?Contribution - In cases where the insured covers the same matter with more than one insurer, in the event of loss all insurerscontribute proportionately to compensate the insured.N/B - Principle must be named otherwise no mark for explanationMention 1Explanation - 15 × 2 = 13.a)Measures that the government may put in place to reduce the level of inflation.?Use of monetary policies to reduce money supply. - e.g. raising bank rates, open market operation?Use of fiscal policies / increasing taxation on incomes in order to reduce peoples purchasing power.?Restricting imports in order to reduce imported inflation.Page | 240565/1 &565/2 business studies ?Wage polices / controlling wages to avoid increase in wages that may cause inflation.?Price legislation the government can fix maximum prices to be charged on goods.?Use of buffer stocks to sustain supply of goods during times of shortages.?Appropriate regulation of printing of national currency.?Stimulation of production of goods to keep pace with changes in demand.?Reduce public expenditure .?Increase personal income taxes to discourage consumption?Use price control measures especially of essential goods.Mention 1Explanation - 1,5 × 2 = 10 marksb)Benefits of containerization to a business.?It has a large carrying capacity to accommodate many goods.?Minimal damage to goods as the material used to make containers is metallic. This protects goods from damage by badweather conditions.?safety of goods - They are safe from theft / pilferage as containers remain sealed upto point of destination.?Low insurance premiums due to reduced risks of theft / damage?Easy to load / off load due to use of modern handling equipment.?Reduced cost of handing due to use of modern technology.?They are easy to move since they're fitted with handling devices.?Special goods can easily be moved in specially designed containers.mention 1Explanation 15 × 24.a)Challenges faced by a country that is over populated.(8 marks)?Landlessness due to pressure on land .?Low quality of goods / services since demand is higher than the resources can cope with.?Decline in standards of living due to increased unemployment.?High levels of unemployment since there available job opportunities and inadequate for the large population.?Insufficient food supplies leading to starvation.?Inflationary tendencies since demand for foods may be higher than supply.?May cause balance of payment deficit as a country may import more than it is exporting.?Low saving leading to low investment.?Low level of industrialization as most resources are used for satisfying basic wants.?Environmental degradation due to over exploitation of resources.?Increase in social evils due to unemployment?Political instability as many people are dissatisfied /jobless.mention - 1Explanation -4 × 2 = 8b)Enter the information in relevant ledge a/c and balance them.DrBank a/cCrJune 1Capital205,000June 13Creditors5,000June 2Debtors10,000June 13Creditors15,000June 30Bal c/d195,000215,000215,000June 30Bal c/d195,000DrCapital a/cCrJune 30 Bal c/d205,000June 1Bank205,000205,000205,000DrPurchases a/cCrJune 5Mambo10,050June 30Bal c/d35,600June 5Kimani25,55035,60035,600Page | 241565/1 &565/2 business studies June 30Bal c/d35,600DrCreditors a/cCrJune 13Bank5,000June 5Purchases10,050June 13Bank15,000June 5Purchases25,550June 30Bal b/d15,600June 30Bal b/d35,60035,600June 30Bal b/d15,600DrSales a/cCrJune 30Bal c/d12,600June 8Debtors12,60012,60012,600June 30Bal b/d12,600DrDebtors a/cCrJune 5Sales12,600June 20Bank10,000June 30Bal c/d2,60012,60012,600June 30Bal b/d2,600? × 24 = 12 marks5.a)Factors leading to trade restriction by a country.?To reduce inflow of goods that may be harmful to the citizens.?Exploitation of natural resources. To enable a country to exploit her resources that would be otherwise idle.?Self reliance - To reduce dependence o other countries and create self reliance.?Protection of infant industries from unfair competition by established industries form other countries.?It helps prevent dumping of low quality goods from other countries.?To correct balance of payment deficit by limiting imports.?Earn government revenues by imposing tariffs on goods.?Protection of local culture which may be eroded through interaction with foreigners.?To avoid trade with countries suffering from inflation.?To avoid depletion of local resources through over exploitation.1 - mention1 - explanation5 × 2b)Advantages of locating a business where other similar businesses are operating. (10 marks)?Availability of auxiliary services that come up in the area to serve other industries?Availability of required labour as people to localized regions to seek jobs.?Market- There may be will be a market for their goods from workers in the other firms.?Well developed infrastructure as the government find it necessary to improve infrastructure in areas that are localised.?Easier access to raw materials which they may get from other industries in the region.?Exchange of ideas with other firms that may lead to improved methods of production / products.?Easy disposal of wastes as firms can pool resources together to come up with ways of disposing waste.?Firms may easy join together and lobby for issues affecting them.?Development of social amenities which will come up to serve the firms.?Subsidiary industries may come up and utilize by products of the firms.Mention 1Explanation 15 × 26a)Challenges faced by a producer who sells directly to a consumer.?Losses /bad debts as a result of some c consumers failing to pay.?Lack of storage facilities as consumers may not buy goods in large quantities.?Inability to cover /reach the whole market especially if consumers are widespread.Page | 24200565/1 &565/2 business studies ?Financial problems as some consumers may not buy in cash.?High cost of distribution especially if consumers are widespread.?Failure to concentrate on production activities as time has to be spent distributing goods.?Spoilage of goods in cases where goods are perishable and are not sold in good time.mention 1Explanation 12 × 5SMART OPERATORS ENTERPRISETRADING, PROFIT AND LOSS A/CFOR THE PERIOD ENDING 31ST DEC. 2014Opening stock350,000Sales1,200,000Add purchases500,000Sales Ret.4,000Carriage inward15,000N. Sales1,196,000515,000512,800Less: purchases2200Returns862,800Less: Closing stock33,000COGS829,800GP c/d366,2001,196,0001,196,000Carriage Out19,400G.P b/d366,200Rent15,000Disc received7,800Salaries16,500Disc allowed7,500Electricity16,000Total exp.74,400N. P c/d299,600374,000374,000a) i) MarkupG PC OG S? 100 ?366200? 100829800 ?44131%~44%b) Rate of stock turnoverCOGS?829800350, 00 0 ? 33, 00 0Ave stock?8298002?191500? 4 33 times Page | 243565/1 &565/2 business studies NANDI EAST / TINDERET SECONDARY SCHOOL BUSINESS STUDIES PAPER 1 Pre - mock 565/1 1.State four reasons why people start business.(4 marks)2.State four characteristics of land as a factor of production.(4 marks)3.Suggest four reasons why an organization should use landscape office layout.(4 marks)4.State four disadvantages of trains as a means of transport.(4 marks)5.For each of the following transactions indicate the account to be debited and account to be credited and the ledger in whicheach account would be maintained.(4 marks)TRANSACTIONACCOUNT TO BELEDGERACCOUNT TO BE CREDITEDLEDGERDEBITEDa)Sold goods to Kipruto shs.100,000 on creditb)Paid shs. 25,000 in cash for rent6.Outline four factors to be considered when evaluating a business idea.(4 marks)7.State four methods of determining prices other than price mechanism.(4 marks)8.The following information relates to Malugei Enterprises for the year ended 30th June 2014.Salessh. 480,000Stock (01/07/2013)sh. 60,000)Stock (30/06/2014)sh. 36,000Margin25%Determine:i)Gross profitii) Cost of salesiii) Net purchasesiv) Rate of stock turnover(4 marks)9.Highlight four functions of money.(4 marks)10.Mention four ways through which the government can ensure a clean environment.(4 marks)11.State four functions of a cash book.(4 mark)12.State four main daybooks (journals)(4 marks)13.Name four circumstances under which a partnership may be dissolved(4 marks)14.Name four contents of Memorandum of association.(4 marks)15.Highlight four dangers of locating a firm in a central place.(4 marks)16.Outline four challenges that a distributor of fresh milk is likely to face in his/her operations.(4 marks)17.Outline four contributions of households to the national income of a country.(4 marks)18.Outline four advantages of a declining population.(4 marks)19.State four reasons why a trader would use a cheque to make payments as opposed to using cash.(4 marks)20.Mention any four types of bill of exchange.(4 marks)21.State any four essential elements in communication.(4 marks)22.State any four principles of insurance.(4 marks)23.State four types of warehousing.(4 marks)24.State four reasons why the government issue trade licenses.(4 marks)25.Outline four characteristics of basic wants.(4 marks)Page | 244565/1 &565/2 business studies NANDI EAST/TINDERET SECONDARY SCHOOLS EXAMINATION (NETSSE) 2016 BUSINESS STUDIES 565/2 Pre - mock PAPER 2 Answer ANY FIVE questions in the answer sheets provided. 1. (a) Explain any five uses of national income statistics(10mks) (b) Describe any five channels that can be used to distribute locally manufactured goods.(10 mks) 2. (a) Explain five differences between monopoly and oligopoly market structures.(10 mks) (b) Mr.Kiharu started a business on 1st January 2014 with cash in hand sh.50,000and cash at bank sh.19,000(CR) His transactions for the first two weeks ending on 16th January 2013,were as follows: January1:Bought furniture worth shs.10,000 by cash2:Deposited sh.5200 cash in the business bank account form the cash till.4:sold goods to Michael worth sh 7900 on credit5:Mr.Hiharu disposed off a van at shs.70000 receiving payment of sh.2700 by cheque and the balance incash.6:Paid rent sh.1720 cash12:Paid salaries shs.2200 by cheque13:Received donations shs.15000 by cheque14:Withdrew cash shs.10000 for personal use16:Transferred all cash into the bank except shs.1200Required: Prepare Mr.Kiharus‘s two column cash book duly balanced. 3. (a) Explain five factors that may limit the use of pipeline as a mode of transport in a country.(10 mks) (b) Explain five roles played by the Nairobi Stock Exchange (NSE) market in Kenyan economy.(10 mks) 4. (a) Explain any five benefits that may accrue to a business organization which use e-mail to communicate.(10 mks) (b) Explain any five limitations of advertising goods in newspapers.(10 mks) 5.(a) Explain any five circumstances under which a firm would be located near the market of its p[roducts.(10 mks)(b) Explain any five motives which influence a person to keep money for transactive purposes.(10 mks)6.(a) Explain any five current trends in office management.(10 mks)(b) The trial balance given below was extracted from the books of account of Kapkenda traders at 31st Dec.2015. Kapkenda Traders Trial Balance As At 31st Dec.2015. DetailsDr.Cr.Purchases and sales6253881,000,000Returns42755388Capital150,000Land and Buildings120,000Discounts48291139Drawings27459Debtors and creditors7182061040Stock28284Furniture and fittings81,000Cash43797Miscellaneous expenses87695Carriage outwards14112012345671234567Closing stock was valued at sh.68964Required:Prepare:i.Trading,profit and losss account for Kapkenda Traders for the year ended 31st Dec.2015.ii.A balance sheet as at 31st December 2015.(5 marks)Page | 245565/1 &565/2 business studies NANDI EAST/TINDERET SECONDARY SCHOOLS EXAMINATION (NETSSE) 2016 Business Studies Paper 1 Pre - mock MARKING SCHEME 1.Reasons why people start businesses:?To be one‘s own boss?To make use of a talent?To make profit?To earn a living?To serve the community?To make use of local resources?To create employment for themselves and others.?To provide goods and services?To make use of spare time.?To emulate other successful business people(role models)2.Characteristics of land as a factor of production:?It is a basic factor of production that is production cannot take place without it.?Its supply is fixed?It lacks geographical mobility?Quality of land is not homogenous; productivity of one piece of land is different from that of another.?Productivity of land can be increased by increasing quantity and quality of capital.?It is subject to the law of diminishing returns.?It is natural resource.3.Reasons why nan organization should use landscape office layout:?It creates a relaxed atmosphere for the workers?It is more attractive and beautiful?The image of the organization/firm is enhanced.?It promotes good working relations and co-operation among workers.?Equipment and office facilities may be shared among employees.?The plants or flowers used break the monotony of open spaces.4.Disadvantages of trains as a means of transport:?Not flexible as trains follow a strict timetable.?Railway lines are expensive to construct and maintain.?Not all areas are served by railway lines.?Trains are expensive to acquire and maintain?Unsuitable for transporting urgently required or perishable goods as it is low.?Unsuitable for transporting goods over short distances.5.A/C DebitedLedgerA/C creditedLedgera)Kipruto(debtor)Sales ledgerSales a/cGeneral ledgerb)Rent A/CGeneralCash a/cCash book6.Outline four factors to be considered when evaluating a business idea.(4 marks)?The products the business will sell.?The market.?Competition?Management?Objectives of the business?Profitability?Government policy?Availability of raw materials/product?Level of technology required?Capital required?Methods of determining prices other than price mechanism:7.Methods of determining prices other than price mechanism:?Auction?Price fixing: usually done by suppliers who have no competitors e.g. KPLC?Government policy through price controls,taxation,subsides?Haggling/bargainingPage | 246565/1 &565/2 business studies ?Price discrimination: where a sup[plier charges different customers?Sale by tender8.(i)gross profit=margin × sales=0.25 × 480,000= sh 120,000 (ii) Cost of sales = sales -gross profit =480,000-120,000= sh 360,000 (iii) Purchases = cost of sales-opening stock closing stock =360,000-60,000+36,000= sh 336,000(iv) Average stock = (opening stock + closing stock) ÷2=(60,000+36,000) ÷2= Sh 48,000Rate of stock turnover=cost of sales ÷average stock=360,000÷48,000=7.5 times(4×1=4 marks)9.Functions of money(4 marks)?It is a medium of exchange for goods and services?It is a measure of value of goods and services(a measure of wealth)?It is a store of value (one can store his wealth in terms of money)?It is used for transfer of immovable assets such as land and buildings.?It is a standard for deferred payments (present debts are settled in future in terms of money)?It is a unit of account(value of goods and services are recorded in books of account in money terms.)10.Ways through which the government can ensure a clean environment.(4 marks)?Through training of personnel and fostering of education on environment conservation issues.?Through formulating and passing laws that will prevent degradation of the natural environment.?Through awards to individuals, firms or institutions that play a key role in the conservation of the natural environment.?Through provision of funds that will be used in research into better methods of production that are environment friendly.?By encouraging and promoting the conservation of the forest cover.11.Functions of cashbook(4 marks)?To reduce entries made to the general ledger.?To enhance preparation of cash budgets and decisions on business liquidity?Shows the source of money received by a business?Show how business money has been spent.?Access to cashbook is limited is limited to a few trustworthy persons.?It enhances specialization in bookkeeping by allocating different ledgers to different workers.?The cash received and paid is shown on the same page this makes the balances be available easily.?It eases the monitoring of cash flow in and out of the business.?All transactions somehow end up at cashbook point as receipts or payments. IN this case the management can keep watch andcontrol over all transactions at the cashbook point.?A three-column cashbook shows total discounts allowed and /or received during a given period, including to whom or fromwhom.12.Main daybooks/journals(4marks)?Sales journal?Sales returns journal?Purchases journal?Purchases returns journal?Cash receipts journal?Cash payments journal?General journal.13.Circumstances under which a partnership may be dissolved(4 marks)?At the end of the duration of the partnership i.e. completion of intended project?On notice by one or more of the partners.?On death of a partner, insanity or bankruptcy of any of the partners?A court order?A government legislation rendering a partnership business illegal?On mutual agreement among partners.14.Contents of a memorandum of association:?Name clause?The object clausePage | 247565/1 &565/2 business studies ?Situation clause?Liability clause?Capital clause?Declaration clause15.Dangers of locating firms in a central place.(4 marks)?Causes rural-urban migration?May lead to development of slums.?High population in an area will cause congestion?Contributes to escalation of crimes in urban areas.?Other firms may collapse when key firm, which attracted the others in the first place, goes under.?Health hazards will come up due to poor living conditions.?Could provide a good target by an enemy during war and terrorism?Leads to unbalanced regional development.?Leads to pollution in the localized area.16.Challenges that a distributor of fresh milk is likely to face in his/her operations.?Problems of handling the product e.g. hygienic containers?Competition from other milk traders?Insecurity?Lack of good transport facilities?High perishability of milk.?Lack of market?Government policy e.g. The Dairy Board requirement and regulations.?Lack of storage facilities such as coolers.17.The contribution of households to the national income of a country.?They consume goods and services?They pay taxes to the government?They provide labour to the economy?They provide savings for investment in the economy thus creating capital?They provide land?They provide entrepreneurship to the economy18.The advantages of a declining population:?Less pressure on economic resources?Reduces government expenditure on public utilities?Improved standard of living?Reduces unemployment?Reduces budgetary deficits?Crime rate is likely to decrease19.Reasons why a trader would use a cheque to make payments as opposed to using cash.?A cheque is easy to carry?It is safer than cash?The counterfoil acts as evidence of payment?One does not need to travel when making payment?A cheque can be endorsed, that is, transferred to third party.20.Types of bills of exchange.(4marks)?Sight bill?Trade bill?Accommodation bill of exchange?Foreign bill?Inland bill21.Essential elements in communication.(4 marks)?The sender?The receiver?The message?The channel?Feedback22.Principles of insurance(4 marks)?Utmost good faith?Subrogation?Proximate cause?Insurable interest?IndemnityPage | 248565/1 &565/2 business studies ? Contribution 23. Types of warehouses.(4 marks)? Bonded warehouse ? Free warehouse ? Private warehouse ? Public warehouse ? Retailers warehouse ? Wholesalers warehouse ? Manufacturers warehouse 24. Reasons why the government issues trade licenses.(4 marks)? To avoid illegal businesses in the country ? To ensure that professional service providers are genuine ? To control import and export of goods ? To raise revenue ? To avoid concentration of businesses in one line of trade or a particular area. 25. Characteristics of basic human wants.(4 marks)? One cannot do without them. ? They are felt needs ? They cannot be postponed ? They are satisfied before secondary wants. Page | 249565/1 &565/2 business studies NANDI EAST/TINDERET SECONDARY SCHOOLS EXAMINATION (NETSSE) 2016 BUSINESS STUDIES 565/2 Pre - mock PAPER 2 Answer ANY FIVE questions in the answer sheets provided. 1.(a)Explain any five uses of national income statistics(10marks)?Accessing the performance overtime by comparing national income in two different periods, the government can consider theperiod with higher national income to be better off.?Comparing the standards of living in different countries. The national income figures are used to compare the standards oflivingin different countries where the country with higher national income is derived to have higher standards of living.?Assisting the government to plan the economy national income statistics are used by the government in planning.?Investment decision-potential investors use data provided by national income statistics to understand market trends and makeappropriate investment decision.?Assisting the government to plan the economy-national income statistics are used by the government in planning.indicator of the standard of living-an improvement in the size of national income indicator increased standards of living of thecitizens.(b)Describe any five channels that can be used to distribute locally manufactured goods.(10 marks)?Local producer→Agent→Wholesaler→Retailer→Local consumer?Local producer→Whosaler→Rtyailer→local consumer?Local producer→ consumer?Local producer→ manufacturer‘s Representative?Wholesaler → Retailer→ local consumer?local producer→ wholesaler→ local consumer?local producer→ Retailer→ Local consumer2.(a)Explain five differences between monopoly and oligopoly market structures.(10 marks)MonopolyOligopolyi. There is one firm in the industryi. The market is dominated by few firmsii. There are no price wars hence no competitionii. There is existence of non-price competition.iii. The firm is independent in relation to the output andiii. There is high level of interdependence in relation topricing strategiespricing and output.iv. The monopoly is a price makeriv. The sellers are price takesv. Products have no close substitutes.v. The differentiated products are close substitutes ofvi. The firm faces a downward sloping demand curveeach other.vi. The firm faces a kinked demand curve. (b) MR KIHARU‘S CASHBOOK For the month of January 2015. DATEDETAILSCASHBANKDATEDETAILSCASHBANK2013JAN 1Bal b/d50,000JAN 1Bal b/d19000JAN 2Cash5200JAN 2Bank5200JAN 5M. van47,30022700JAN 6Rent1720JAN 13Donations15000JAN 12Salaries2200JAN 16Cash79180JAN 14Drawings10000JAN 16Bank79180JAN 16Bal c/d12001008809730012208097300122080Bal b/d12001008803.(a)Explain five factors that may limit the use of pipeline as a mode of transport in a country.(10 marks)?Easy targets for sabotage. They usually cover long distance in remote areas or jungles.?Expensive for small quantities. It is not economical to transport small volumes of items.?Suitable for liquids and gases. Cannot transport one product at a time this prevents its popularity?High costs of construction-initial costs involved in construction are usually very high.?Heavy losses of leakages-leakages along the pipeline may be disastrous and can lead to huge losses if not identified quickly.Page | 250565/1 &565/2 business studies ?Require qualified personnel and modern equipment. This is to help in controlling and monitoring movement. These are quiteexpensive.?Environmental degradation. In case of leakage it can harm marine life and people.(b)Explain five roles played by the Nairobi Stock Exchange (NSE) market in Kenyan economy.(10 marks)?Facilitates the buying and selling of shares amongst citizens.?Mobilizing savings-It helps to mobilize savings by providing an opening for buying of shares and prevent misuse of funds.?Indicator of performance.NSE provides an indicator of the company‘s performance when prices go up.?Safeguarding inventor‘s interests. This is achieved by requiring companies that want to be quoted to attain certain standardsof performance.?Assist companies to raise capital.?Raising revenue for the government ie.by collecting dues and fees from activities carried out in the stock exchange market.?Protection of investors‘ interests.NSE helps to monitor the activities of various listed companies thereby safeguarding theinterest of the investor.4.(a)Explain any five benefits that may accrue to a business organization which use e-mail to communicate.(10 marks)?Saves on the cost of sending/receiving information.?Reduces paper work.?Saves on the cost of storing information?It is fast.?Facilitates acess to a larger number of recipients?One can send messages that certain photograph and diagrams.?There is evidence of communication.?It is possible to forward the information to other businessmen.(b)Explain any five limitations of advertising goods in newspapers.(10 marks)?Not all potential customers are able to read newspapers?The newspapers may be written in a language or medium that is not familiar to many customers?It is expensive to buy newspapers and many people cannot afford.?It is expensive to advertise using newspaper as one incurs extra cost.?Newspapers are not able to discriminate between the intended group and others?Newspapers may not reach all parts of the country.?Newspapers have a short life and therefore easily discardedAny five well explained points@2 marks5.(a)Explain any five circumstances under which a firm would be located near the market of its products.(10 marks)?When the products are perishable thus require fast delivery.?When the products are bulky/heavier than raw materials.?Where the products are fragile to avoid losses through breakage?When it is cheaper to transport raw materials than the final product.?When the raw materials are in the same location as the market for the product.?Where the government policy requires so.?When the unit value of the product is high/may pose security threat during transport(b)Explain any five motives which influence a person to keep money for transactive purposes.(10 marks)?Individual‘s level of income. The more a person‘s income is, the more he/she is likely to hold.?Interval between receipts of incomes. The longer the internal between the receipt of money and the next one, the more moneyis expected to be kept for transactive motives.?Individual‘s spending habits. It will depend on lifestyle of the individual e.g. someone who spends a lot of money on luxurieswill tend to hold more money than the one who spends money only on basic needs.?Price of commodities-where the prices of commodities are high, consumers tend to hold a lot of money as opposed to whenprices are low.?Availability of credit.-people who are assured of short term credit facility hold little amount of money for daily transactions.On other hand people without access to credit to credit facilities hold comparatively more money in order to finance theirdaily activities.?Any five well explained points.@2 marks.6.(a)Explain any five current trends in office management.(10 marks)?Use of computers to process and store data?Teleconferencing has reduced the cost of attending meetings/seminars.?Location of offices in sub-urban/outskirts of town.?Adoption of open office plan?Use of cell phones in the office for communication?Introduction of public relations department to attend to customers complains?Many traditional office procedures and routines are becoming outdated as offices adopt the element of automation?Office staff putting on similar uniforms on specific days of the week or weekends for identification.?Emergence of glass-storey buildings.Any five well explained points@2 marks.Page | 251565/1 &565/2 business studies (b) i) Trading,profit and losss account for Kapkenda Traders for the year ended 31st Dec.2015. Kapkenda‘s trader‘sTrading Profit and Loss Account.For the year ended 31 st December 2015DrCrOpening stock28284Sales1000000Purchases625388Less: returns in4275Loss: Returns5388620000Net sales995725Cost of goods avail.648284Less. closing stock68964Cost of goods sold579320Gross profit c/d416405995725995275Discount allowed4829Gross profit416405Miscellaneous expenses87695Discount received18139Carriage outward140020Net profit c/d202000434544434544Net profit b/d202000ii.A balance sheet as at 31st December 2015.(5 marks)Kapkenda tradersBalance sheetAs at 31st December 2015Fixed assetsOpening capital150000Land & building120000Add : net profit202000Furniture & fittings81000201000352000Less: drawings27459Current assetsClosing capital324541Stock68964Current liabilitiesDebtors71820Creditors61040Cash43797184581385581385581Page | 252565/1 &565/2 business studies KEIYO SOUTH JOINT EXAMINATIONS BUSINESS STUDIES 565/1 Pre - mock PAPER 1 1.List four items common in partnership agreement(4 marks)2.State four importances of journals.(4 marks)3.Duka traders had goods worth Ksh. 150,000 which was insured for Ksh. 100000 against the risk of fire. Fire occurred and thegoods were partially destroyed, the loss being Ksh. 90,000. Calculate how much compensation was paid by the insurancecompany to Duka traders.(4 marks)4.A debit note is a document sent by a seller to a buyer to correct an under price. State three reasons that may result in anundercharge.(3 marks)5.Give four circumstances in which downward communication is used.(4 marks)6.State four factors which lead to an increase in supply of a product.(4 marks)7.The following information relates to Biashara traders as at 31st December 2010.ShsBuilding200, 000Bank120,000Creditor100,000Furniture120,000Cash20,000Stock100,000Debtors50,000Bank Loan200,000Prepare the balance sheet of the business as at 31st December 2010.(5 marks)8.State four causes of unemployment in Kenya.(4 marks)9.Highlight four factors that influence the level of National Income.(4 marks)10.State four factors that may cause a business to succeed.(4 marks)11.Give four ways in which the capital of a business may change.(4 marks)12.State four functions of advertising agencies in our country.(4 marks)13.State four essential elements of a warehouse.(4 marks)14.Give four characteristics of a monopoly.(4 marks)15.Outline four drawbacks of Barter Trade.(4 marks)16.List four external factors that may affect a firm.(4 marks)17.Messages may be received through various means in an Office. State four of these means.(4 marks)18.Explain the following terms as used in Business(4 marks)i)Cartelii) Amalgamationiii) Privatizationiv) Holding Company19.State four methods used by government to protect consumers in our country.(4 marks)20.Highlight four ways in which Business can avoid or reduce pollution in our county.(4 marks)21.State four ways through which the price of a commodity may be determined.(4 marks)22.Given below are transactions relating to Ushindi Limited. For each of the transactions, indicate in the columns below theaccount to be debited and credited.(4 marks)TransactionsAccount Dr.Account Cr.a. Paid rent in cash b. Paid electricity bill by cheque c. Cash sales d. Withdrew cash from bank for office use. e. Purchased equipments on credit from Rafiki Motors. 23.State four uses of a two- Column cash Book.(4 marks)24.Outline four errors which although present the Trial Balance would still balance.(4 marks)25.State four elements of a transport system.(4 marks)Page | 25300565/1 &565/2 business studies KEIYO SOUTH JOINT EXAMINATIONS BUSINESS STUDIES 565/1 Pre - mock PAPER 1 1.List four items common in partnership agreement(4 marks)?Name of the partnership?Address of the head office?Location and area of the operation of the business?The term of the partnership?Objective of the business?Capital contributed by each partner?Rate of interest on capital.?Drawings of partner‘s e.g. to the business?Procedures of dissolving the partnerships.2.State four importance of journals.(4 marks)?To relieve the ledger of too many details.?Journals contain more details not found in ledgers.?Handled by different people hence minimizing chances of fraud and promote efficiency.?Facilitates tracing of errors.?Contain information useful when preparing control accounts.pensation=×loss=×90,000=60,0004.State three reasons that may result in an undercharge.(3 marks)?Mistakes in calculation?Price undercharges on item.?Omissions of items in the invoice( 3×1mks)5.Give four circumstances in which downward communication is used.(4 marks)?Training juniors?Evaluating performance?Delegating duties?Solving problems facing the women?Motivating juniors6.State four factors which lead to an increase in supply of a product.(4 marks)?Improved method of provision?Decreased cost of production?Increased population?Increase in price e.g. jointly produced product?Reduced taxes?Increased government incentives?Fear of the future fall in prices?Favourable weaker conditions(Agricultural products)Any 4×1=4 marks)7. 8.State four causes of unemployment in Kenya.(4 marks)? rapid population growth ? use of inappropriate technology ? rural urban migration ? inappropriate education system ? inadequate co-operant factor inputs ? seasonality in production ? Lack of product market.Any 4×1=4 mks9.Highlight four factors that influence the level of National Income.(4 marks)Page | 254565/1 &565/2 business studies ?Labour supply?Amount and quality of capital?Availability of entrepreneurs?Land level of technology?Political stability?Attitude of citizens towards work?Size of the subsistence sector?Foreign investment.Any 4×1=4 marks10.State four factors that may cause a business to succeed.(4 marks)?Knowledge of business management skills?Technical knowledge of the goods and services being traded.?Good ethics and integrity?Adequate research in the business?Good record keeping of business transactions?Proper credit management.?Proper financial management.Any 4×1=4 marks11.Give four ways in which the capital of a business may change.(4 marks)?Profit?Loss?Drawings?Added investments12.State four functions of advertising agencies in our country.(4 marks)?They help organizations in designing their trademarks, logos and advertising material?They book space and airtime for their customers in various media?They offer advisory services to their clients on selling techniques?They advertise on behalf of their clients?They choose the appropriate media to be used.any 4×1=4 marks13.State four essential elements of a warehouse.(4 marks?Suitable location?Proper language design?Appropriate equipment?Safety facilities?Good transport systems?Good communication?Adequate space?Appropriate age?Appropriate special facilities?Proper recording system?Compliance with law.14.Give four characteristics of a monopoly.(4 marks)?There is only one supplier for the entire market?The commodity supplied does not have close substitutes?Difficult for other traders to enter the market.?Prices are fixed by the supplier?Price discrimination may be possible15.Outline four drawbacks of Barter Trade.(4 marks)?Requires a double coincidence of wants?Lacks measure of value?Indivisibility of some commodities?Perishability of some commodities?Lack of standard measure of value?Lacks unit of account?Hinders specialization16.List four external factors that may affect a firm.(4 marks)?Physical environment?Customers?Government?Economy?Competitors?Suppliers?CommunityPage | 255565/1 &565/2 business studies ?TechnologyAny4×1=4 marks17.Messages may be received through various means in an Office. State four of these means.(4 marks)?letters?Telephones(cellphone/landline)?Telex?Facsimile(Fax)?Face to face?Competitors.Any 4×1=4 marks18.Explain the following terms as used in Business(4 marks)i)CartelCartel-Group of related companies that agree to work together in order to con troll output, prices and market of their goods and services. ii)AmalgamationAmalgamation-where two or more business organization combine and form one new business organization iii)PrivatizationPrivatization-changing state owned corporation to public limited companies.iv)Holding CompanyHolding company-company that acquires 51% or more shares in one or more other companies.19.State four methods used by government to protect consumers in our country.(4 marks)?Setting of standards?Weighing and measures act?Licenses?Food and drugs?Trade Description Act/Sale of goods Act.?Public health Act?Price control?Rent and Tribunal ActAny 4×1 marks20.Highlight four ways in which Business can avoid or reduce pollution in our county.(4 marks)?Air pollution may be avoided by non-polluting sources of energy such as electricity.?Water pollution avoided by not channeling effluents from factories to water bodies.?Solid waste pollution avoided by using proper methods of waste disposal such as using dustbins.?Noise pollution may be avoided by fixing silencers onto machines that produce loud noise.?Light pollution may be avoided by providing workers with goggles that protect them from intense light.21.State four ways through which the price of a commodity may be determined.(4 marks)?Price mechanism?Government intervention i.e. price control?Bargaining/haggling?Auction?tendering22.Given below are transactions relating to Ushindi Limited. For each of the transactions, indicate in the columns below the account to bedebited and credited.(4 marks)TransactionsAccount Dr.Account Cr.a.Paid rent in cashRentcashb. Paid electricity bill by chequeelectricitybankc.Cash salescashsalesd. Withdrew cash from bank for office use.cashbanke.Purchased equipment on credit from Rafiki Motors.equipmentRafiki motors23.State four uses of a two- Column cash Book.?To record cash received?To record cash payment?To record cheques received?To record cheques issued?To determine cash and bank balances?Used as a ledger account?Cash book balance is used to prepare the bank reconciliation statement.Any 4×1=4 marks24.Outline four errors which although present the Trial Balance would still balance.(4 marks)?Error of total omission?Error of original entry?Error of commission?Compensating errors?Complete reversal of entries?Error of principleAny 4×=4 marks25.State four elements of a transport system.(4 marks)?A means of transport?Unit of carriage?Method of propulsion?Terminals.4×1=4 marksPage | 256 ................
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