565/1BUSINESS STUDIESTHEORYPaper 12 Hours

ALLIANCE BOYS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016

INSTRUCTIONS TO CANDIDATES

Write your name and Index Number in the spaces provided above. Sign and write date of examination in the spaces provided above. Answer ALL questions in the spaces provided. All workings MUST be clearly shown where necessary.

For Examiners use only.

Question 1 2 3 4 5 6 7 8 9 10 11 12 13

Marks

Question 14 15 16 17 18 19 20 21 22 23 24 25

Marks

Total` Marks

1. State four characteristics of services. (4mks)2. Outline four reasons why most developing countries rely on extractive Level of

production ` (4mks)3. Highlight four benefits to a business that uses e-mail in communication. (4mks)4. Mention four factors that influence entrepreneurship practices in Kenya. (4mks)5. Classify the following factors of a business as either internal or external business environment. (Use

a tick) (4mks)Factor Internal External

(a) Employees(b) Tools and equipments(c) Inflation(d) Political factor

6. The diagram below shows a shift of the demand curve of a commodity Yfrom DoDo to D1D1.

Outline four factors that may have caused the shift in the demand curve. (4mks)7. Outline four circumstances under which producers may prefer to sell goods directly to the

consumer. (4mks)8. State the type of unemployment to which each of the following statements relate.(4mks)

Statement Type of unemploymenta) Worker’s full capabilities are not completely utilized.b) High demand for labour during Peak Periodc) Demand for labour declines due to decrease in the supply of goods and servicesd) Exists in the period after a person looses a job and goes out in search of another.

9. . State the books of original entries in which the following documents are used. (4 mks)(a) Incoming Invoice(b) Incoming Receipt(c) Outgoing Credit Note(d) Outgoing Invoice

10. Write the following abbreviations in full. (4mks)(i) G.D.P(i) N.N.P(i) G.N.P

(i) D.P.I11. The document shown was issued by Jimcar traders to Mueni

Jimcar Traders Box 5 NakuruTo. Mueni Box 20 Kericho

No. 012Date: 20th June 2010

We have credited your account as follows.

To copies of receipt books returned by you to us.Sign_______________ Total

AmountSh Cts

15,000 0015,000 00

Outline four circumstances under which the above document may be issued. (4mks)12. The following balances were extracted from the books of Loliondo enterprises as at 6th Jan

2009.

Sh. (4mks)Land 150,000Prepaid Insurance 85,500Discount received 5,500Sales 5,000Purchases 18,000Capital 311,000Return Inwards 20,000Return outwards 6,000Creditors 1,500Bank 55,000Required: Prepare a trial balance.

13. Highlight four negative effects of development to an economy. (4mks)14. The following information relates to Rokito traders for the year ended 31st December 2011.

Sh.Fixed Assets 5,000,000Current assets 650,000Net Profit 300,000Current Liabilities 650,000Sales 2,000,000Closing stock 100,000Opening Stock 200,000Gross Profit Margin was 20%

(4mks)

Calculate(a) Current ratio(b) Gross profit mark-up(c) Rate of stock turnover(d) Capital employed

15. Outline four differences between Savings account and Current account as provided by commercial banks.

Savings account Current account

(i)

(ii)

(iii)

(iv)

16. The inflation rate in Kenya moved up from 6.4% to 9.5%. State four positive outcome of this change. (4mks)

17. Name the four ways through which consumers can be cheated in their dealings with traders(4mks)

18. The following correspondence has been received in the mail room, state the department to which each correspondence would be sent. (4mks)

Correspondence Department

(i) An invoice from a creditor

(ii) A cataloque from a supplier

(iii) A letter of application for job

(iv) A complaint from a customer

19. Outline four circumstances under which a sole – proprietorship may be dissolved (4mks)20. Wanjau started a business with sh. 60,000 as at 1st Jan 2010. During the year profits and

additional investments were sh. 50,000 and 60,000 respectively.At the end of the year Wanjau remembered that she had taken goods for her personal use and that as at 31st Dec.2010 her capital was sh. 19,500.Determine the value of goods that Wanjau had taken for her personal use.(4mks)

21. Highlight four factors that may be considered by an insurance firm before determining Premiums to be charged for life assurance policy. (4mks)

22. State four circumstances under which it would be appropriate to use signs to communicate in carrying out business activities.

23. Identify four limitations of human porterage as a means of transport.

24. State four factors to consider before incurring public expenditure.25. Give four current trends in product Promotion. (4mk)

ALLIANCE BOYS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. (a) Explain five reasons why it is important for a business person to prepare a business plan. (10marks)

(b) Explain five features that differentiate a perfect competition market from a monopoly market structure. (10marks)

2. (a) Explain five features that would make a producer to build his own warehouse rather than rely on a public one. (10marks)

(b) As at 1st July 2008 the cash book of Emori enterprise showed the following balances: Cash sh.20, 000 and a bank overdraft sh. 8,600.During the Month the following transactions took place.3/07/08: Nafula settled her account of sh. 16,000 by cheque of sh. 15,0006/07/08: Paid rent by cash sh. 8,00010/07/08: Deposited sh. 6,000 into the business bank account from the cash till15/07/08: Settled Wakulis account of sh. 20,000 and he allowed a discount of 1% by cheque.18/07/08: Deposited sh. 28,000 in the bank from private sources.21/07/08: Cash sales sh. 12,00024/07/08: Otieno a debtor settled his account by cheque of sh. 8,000 having

been allowed a discount of 20%.26/07/08: Purchased furniture of sh. 5,200 paying by cheque.28/07/08: Received sh. 3,600 cash from Nduta.30/07/08: Banked the cu crilable cash except sh. 1,600.Required:Draw up a three – column cash book. (10marks)

3. (a) Explain five challenges that may be experienced by a new entrepreneur who is intending to start a business in Kenya. (10marks)(b) Ijara investiment operates a whole sale business. The following transactions took place in the Month of may 2010.May 3: Sold goods on credit to Ayimba sh. 60,000.May 8: Purchased goods on credit from mjuaji stores sh. 120,000.May 12: Returned goods to Mjuaji stores worth sh. 6,000.May 16: Purchased goods on credit from Mjuaji stores sh. 160,000.May 22: Sold on credit to Mafala retailers sh. 150,000.May 23: Bought a new motor vehicle from Mashariki motors worth sh.

3,200,000.May 24: Ayimba returned goods worth sh. 10,000.May 29: Sold equipment worth sh. 840,000 on credit to chap limited.Required:

Record the above transactions in the relevant books of original entry for Ijara Investments (10marks)

4. (a) Explain five importance of National Income statistics to an economy. (10 marks)(b) Explain five principles of an efficient tax system. (10 marks)

5. (a) Explain any five circumstances under which a producer will find it necessary to transport goods by train. (10 marks)

(b) Explain five advantages of being a member of an Economic block such as the East African Community (E.A.C) to a country like Kenya. (10 marks)

6. (a) Explain five ways in which the government may positively influence business activities to a given area. (10 marks)

(b) Despite announcement by the government that the country has achieved 6% economic growth this has not been translated to economic development. Discuss five indicators of undevelopment currently being experienced in Kenya. (10 marks)

MANG’U HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIES

THEORYPaper 12 Hours

Answer all the questions in the spaces provided.1. Highlight four factors that determine the size of a firm. (4mks)2. Outline four reasons for collapse of small scale business units (4mks)3. Highlight four disadvantages of news papers as a means of advertising (4mks)4. Outline any four difficulties faced when satisfying human wants. (4mks)5. Give four reasons for popularity of consumer parcel service (4mks)6. State four benefits that people from your area may deceive from business enterprise

(4mks)7. Juma Munyacia sells all his goods at 25% above cost. His books gave the following

information as at 31st December 2004.

Stock 1st January 2004 98,720Stock 31st December 2004 126,000Sales for the year 600,000

Calculate the profit made by Munyalia (4mks)8. Highlight four reasons why a country would rely more on primary level of production.

(4mks)9. Highlight four ways in which commercial banks differ from non-bank Financial institutions.

(4mks)Commercial banks Non- bank financial institution

10. Outline four essential of a bill of exchange (4mks)11. Outline four ways in which the government protects consumers (4mks)12. Enumerate four features of a general insurance policy (12mks)13. Highlight four factors that a trader would consider in locating a warehouse. (4mks14. Highlight four factors that a trade would consider in locating a warehouse. (4mks)15. The figure below shows a shift in demand curve from D0D0 to D1D1.State four factors that

have caused the shift. (4mks)

.

16. State four reasons why the government imposes taxes (4mks)17. The following assets and liabilities belong to Munyasia stores as at 31st Marc h 2005.

Buildings sh 200,000, Debtors sh 8,000, creditors sh 32,000, stock sh24,000, call at bank sh 120,000, cash in hand sh 40,000 loan from HFCK sh 100,000 and capital sh 260,000.During the month of April 2005 the following transactions took placeApril 1 – sold goods worth sh 2100 cash2 – Paid creditors sh 8000 cash10 – Received sh 2000 from debtors cash.15 – Bought a motor van sh 350,000 paying by cheque.Prepare a balance sheet as at 15th April 2005 (5mks)

18. Outline four advantages of partitioned office layout (4mks)19. The following information relates to Alex traders .Determine the missing figures (3mks)

Assets capital Liability(a) 50,000 2000(b) 320,000 126,550(c) 15,431 600

20. Highlight four difficulties encountered in international trade (4mks)21. Complete the table below

Transaction Account to be debited A/C to be credited(a) Deposited money into the bank account.(b) Paid salaries buy cheque

22. State four problems encountered when measuring national income by expenditure approach. (4mks)

23. For each of the following transactions indicate in the appropriate columns the source documents and the books of original entry in which the transactions should be recorded.

Transaction Source document Book of original entry(a) Goods retained by a customer(b) Purchase of goods on credit

24. State the level of production in each of the following activities. (4mks)Activity Level of production

(a) Cooking meals for students(b) Harvesting maize(c) Distribution of kerosene(d) Boiling milk using electricity.

25. Globalisation is a term often used to donate business ownership and spread .Outline four merits of globalization of business units.

MANG’U HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. (a) Discuss any five weaknesses of using per capita income to measure standards of living in a country. (10mks)

(b) Explain any five negative consequences of a rapidly increasing population.(10mks)2. (a) Draw five differences between perfect competition and monopolistic competition

(10mks)(b) Explain five reasons why the Kenyan government would privatise its palatals

(10mks)3. (a) Describe four circumstances that would influence a produce to distribute his farm

produce directly to the market. (8mks)(b) The following trial balance was extracted from the books of Bumala traders on 31st

Dec 2011Trial BalanceBumala Traders

SalesPurchasesReturnsRentAdvertisingCommissionDebtors / creditorsStock 1/1/2011InsuranceDrawingsFurniture / fittingsCash in handPremisesCapital

Dr (shs)

340,00020,00016,00024,000

54,00060,00030,00040,000100,00015,000400,000

1,099,000

Cr(shs)720,000

18,000

9,00064,000

288,0001,099,000

Additional information;(i) Stock as at 31st December 2011 shs 52,000(ii) Rent accrued shs. 6,000(iii) Insurance paid in advanced sh.4,000

(iv) Commission due shs.5,000(v) Salaries along shs.21,000

Required;(a) Trading, profit and lost account for the year ended 31st December 2011.(b ) Balance sheet as at that date (12mks)

4. (a) Highlight five reasons why loans advanced by commercial banks in Kenya may not appeal to many people. (10mks)

(b) Describe the main economic problems that affects countries which mainly rely on Agriculture. (10mks)

5. (a) Explain five roles of the Nairobi stock Exchanged market in the Kenyan economy. (10mks)

(b) Explain the benefits of the new East African cooperation to Kenya. (10mks)6. (a) The following balances were obtained from the books of Nakhulo Traders on 31st

Dec 2011

Opening stockEquipment at costAccumulated depreciation on equipmentPurchasesSales

Shs. 60,000125,000 16,200161,000208,000

Land and buildingDiscount receivedReturns outwardsReturns inwardsSalariesTelephone chargesWater billsCreditorsDebtorsElectricity expencesBankCash in handDrawingsInsurance paid

100,000 7,500 25,000 27,000 22,000 5,000 2,100 15,00021,000 2,00068,00012,00019,000 1000

Additional information(i) Closing stock was valued at sh.72,000(ii) Telephone charges prepaid shs.1100(iii) Outstanding water bill shs. 1300(iv) Depreciation on equipment is 10% on cost carried inwards shs.11,000, carried

outwards shs.10,000Prepare;Trading, profit and loss account for year ended 31st Dec 2011.

(b) Explain five factors that make indirect taxes preferable to direct taxes as a means of raising government revenue. (10mks)

PRECIOUS BLOOD SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. Highlight four factors that may cause changes in the population of an area. (4 marks)2. Businesses should give something back to the communities in which they operate. State four parties that a

business should show social responsibility to. (4 marks)3. State four features of indirect production. (4 marks)4. Mention four factors that are considered in an office layout. (4 marks5. State four emotional qualities of an office worker. (4 marks)6. Highlight four features of open air market traders. (4 marks)7. Outline four information which is disclosed in a statement of account. (4 marks)

8. In the absence of a written partnership agreement, the provisions of the Partnership Act will apply. State four such provisions. (4 marks)

9. Describe four ways in which the government creates an enabling business environment.(4 marks)

10. State four elements of communication process. (4 marks)11. Mention four circumstances under which an insurance company may re-insure. (4 marks12. State four ethical issues in product promotion. (4 marks)13. Highlight four adverse effects of production activities on the environment and community

health. (4 marks)14. State four ways of determining prices for commodities in the market. (4 marks)15. Outline four factors that influence the level of national income in a country. (4 marks)16. Prepare the balance sheet of Baraka Traders from the following list of balances extracted

from his books as at 31st December 2005. (4 marks)Shs.

Machine 150 000Motor vehicles 200 000Stock 40 000Creditors 25 000Loan from KCB 100 000Bank 20 000Furniture 7 000Capital 292 000

17. The capital A/C of Mbele Kabisa Traders showed a balance of shs 50,000 as at 1st July 2004. For the year ended June 2005 the following information was available: (4 marks)

a) Proprietor brought in a personal car worth sh. 80 000 for business use.b) Net profit amounted to sh. 64 000.c) The proprietor withdrew sh. 32 000 cash for personal use.

Prepare the capital A/C as at 30th June 200518. List four types of source documents. (4 marks)19. State four principles of a good tax system. (4 marks)20. Mention four problems faced when computing price indices (CPI). (4 marks)21. The following trial balance was prepared by a book keeper but failed to balance.

Majengo Traders Trial Balance

As at 30th June 2003Dr CrShs shs

Fixed Assets 250,000Purchases 80,000Sales 120,000Creditors 45,000Debtors 22,000Stock 60,000Capital 247,000

449,000 375,000Prepare a corrected trial balance. (4 marks)

22. Highlight any four services offered by commercial banks to their clients. (4 marks)23. Outline four circumstances under which a company may be dissolved. (4 marks)24. The conditions given below are for a monopoly firm or a firm operating under perfect

competition. Write the correct market structure against each of the conditions in the spaces provided. (4 marks)Condition Market structure

a) Market structure determines price forthe product

b) There is free entry and exit.c) Product involved is homogeneous

25. Market structure regulates supply of the product26. State four reasons why parastatals have generally performed poorly in Kenya. (4 marks)

PRECIOUS BLOOD SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Explain five reasons why per capital income is not an indicator of better living standards in a country. (10 marks)

b) The table below shows the terms of trade for country A from year 2006 to 2009.Year Terms of Trade (%)2006 802007 772008 742009 68

Explain five factors that may have accounted for the trend in terms of trade of country A. (10 marks)

2. a) Explain five circumstances under which a high population growth may be3. desirable to a country. (10 marks)

b) Insurance is based on several principles: Explain five principles of insurance.(10 marks)

4. a) Explain five factors that influence the amount of money held by an individual for transaction motive. (10 marks)

b) Outline five circumstances under which signs may be used in communication.(10 marks)5. a) Explain four reasons why motor cycles form of transport has become a popular means of

transport in Kenya. (8 marks)b) The following trial balance relates to Kitui Millers Ltd as at 31st December 2011.

Kitui Millers LtdTrial Balance

As 31st December 2011Particulars Dr

shsCr shs

CapitalDrawingsCash at BankMachineryDebtorsCreditorsStock (1.1.2011)SalesPurchasesReturn inwardsReturn onwardsCarriage inwardsCarriage outwardsRent

800030,000360,00042 700

40000

325 000 10000

4000500018000

283,200

20 000

570 000

15000

Salaries and wagesDiscounts ReceivedGeneral expenses.

40000

14,500

897 200

9000

897 200Stock as at 31/12/2011 was valued at shs. 35,000Required:

i) Prepare a trading, profit and loss account for the year ended 31st December, 2011. (8 marks)

ii) Draw a balance sheet as at 31st December, 2011. (4 marks)6. a) Discuss the economic importance of natural resources. (10marks)

b) Explain any five negative effects of inflation in an economy. (10 marks)a) Explain four ways in which central bank of Kenya may reduce the supply of money in the

country. (8 marks)b) On 1st January 2012, Mlachake traders had cash in hand Ksh. 10,000 and cash at bank shs 15000. The following transactions took place during the month:

Jan 2: Bought goods in cash sh. 1500Jan 4: Paid salaries by cash sh 7500.Jan 5: Received cheques from the following debtors after allowing 2% discount in each case. Masy sh 980, kiplimo sh .1960.Jan 8: Settled the following accounts by cheque in each case deducting 5 % discount; Juma sh 3000, Kasani shs 1200.Jan 12: Bought machinery worth sh 7000, paid sh 5000 by cheque and the balance to be paid laterJan 20: Took sh 1000 for personal use from the business cash till.Jan 25: Cash sales sh 2000Jan 26: Received cash shs.3000 from Kioko, a Debtor.Jan 28: Brought in Sh 2000 cash from his personal savings.Jan 29: Banked all cash except sh. 1000

Required: Prepare a duly balanced three column cashbook. (12 marks)

MOI GIRLS SCHOOL ELDORET KCSE TRIAL AND PRACTICE EXAM 2016 Paper 1 565/1BUSINESS STUDIES2 Hours

1. Identify the macro-environmental factor affecting business operations as described by thefollowing statements. (4mks)(a) Laws and policies that regulate business activities(b) Affects buyer’s ability to buy commodities offered by a business(c) Firms selling similar products trying to out do each other in their efforts to maximize

profits(d) Dictates how people live and what products they consume

2. Give four reasons why discounts are granted. (4mks)3. Highlight four factors that must be considered before incurring public expenditure (4mks)4. State four measures that can be taken to control cost push inflation. (4mks)5. Give four characteristics of a partnership (4mks)6. The diagram below shows equilibrium price and quantity.

Draw a new demand curve on the diagram above showing a decrease in demand and the effect on; (4mks)(i) equilibrium price(ii) equilibrium quantity(iii) equilibrium point

7. Give four reasons why it would be advisable to take an endowment policy instead of a whole life policy (4mks)

8. Highlight four disadvantages of a long chain of distribution to a buyer. (4mks)9. Outline four differences between Economic growth and Economic development (4mks)

Economic growth Economic developmenta) a)

b) b)

c) c)

d) d)

10. Outline four limitations of National income statistics in comparing standards of living indifferent countries. (4mks)

11. Outline four features of Itinerant traders (4mks)12. Identify the tax system described by the following statements. (3mks)

(a) Tax payers pay a fixed percentage of their income as tax.(b) Amount of tax paid increases proportionately with increase in income(c) Type of tax which takes a higher proportion of low income earners as compared

to high income earners13. The following are some of the documents used in International trade; Proforma Invoice,

Consular Invoice, Certificate of origin and Indent. Match each document with the Appropriate description in the table below. (4mks)

Description Document(a) Prepared by an exporter giving details about the origin of

goods(b) Shows prices charged as certified by the importing

country’s officials(c) An order sent by an importer to an agent in the exporting

country(d) Enables the importer to initiate clearing of customs duty

early enough to avoid delays.14. Outline four advantages of a systematic arrangement of goods in a warehouse. (4mks)15. The information below was extracted from the books of Ssisa Stores for the year

ended 31.12.2011Opening stock sh.75,000Closing stock sh.25,000Turnover sh.900,000Margin 25%Determine: (5mks)

(a) Gross profit(b) Rate of Turnover

16. The following Trial balance was obtained from the books of East Traders for the yearended 30.06.2011

East TradersTrial Balance

As at 30.06.2011Details Debit (Shs.) Credit (Shs.)Gross profit 14,300Rent 7,500 4,200Bad debts 5,000Commission 3,500Insurance 2,000Fixed Assets 13,500Capital 6,000

28,000 28,000Prepare East Stores profit and loss account (4mks)

17. State four ways in which the government may promote local trade. (4mks)18. Outline four features of oligopoly as a market structure (4mks)19. For each of the following transactions identify the book of original entry in which the

transaction should be recorded.Transaction Book of Original entry

(a) Goods worth sh.4,000 returned by a client(b) Goods were purchased for sh.120,000 on credit(c) Returned goods worth sh.6,200 to the supplier(d) Sale of office furniture worth sh.80,000 on credit

20. Outline four circumstances under which sign language would be appropriate. (4mks)21. Outline four effects of an ageing population. (4mks)22. Highlight four factors that inhibit entrepreneurial development. (4mks)23. Outline four unethical issues in product promotion (4mks)24. Give four incertives that a government may give investors to encourage development of

firms in a certain area. (4mks)25. Highlight four advantages of using M-banking. (4mks)

MOI GIRLS SCHOOL ELDORET KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. (a) Businesses are adopting new technology in their operations. Explain five limitations of adoption of this practice. (10mks)

(b) Explain five reasons for trade restrictions (10mks)2. (a) Moto Moto Limited operates as a monopolist. Explain five possible factors that

may have made this firm acquire monopoly power. (10mks)(b) Explain five factors that may affect Economic planning process. (10mks)

3. (a) Describe five tools that the government uses to arrest a run away inflation(10mks)

(b) Unemployment is a problem in any economy in the world. Explain five measures that the Kenyan government may take to reduce this problem. (10mks)

4. (a) Mr. Kisuiya insured his house with an Insurance company for sh.1,000,000. Aftersome months Mr. Kisuiya’s house was completely destroyed by fire. Highlight

five reasons which may make the Insurance company not to compensate Mr. Kisuiya(10mks)

(b) Highlight any five distinguishing characteristics between a public limited Company and a public corporation. (10mks)

5. (a) The following balance sheet was extracted from the books of Kirui traders on1st April 2011.

Mrs. Kirui TradersBalance Sheet

As at 1st April 2011Shs. Shs.

Equipment 200,000 Capital 415,000Furniture 82,000 Mutai (Creditor) 27,000Stock 140,000Cash 20,000

442,000 442,000The following transactions took place during the month of April 2011.4.04.2011 Mrs Kirui sold her personal assets for sh.30000 receiving payment by

Cheque which she invested in the business.10.04.201 She purchased goods for sh.29000 on credit from Mutai

19.04.2011 She returned goods worth sh.3000 to Mutai after they were found defective

30.04.2011 She sold goods for sh.12000 cashRequiredOpen the relevant ledger accounts, record the above transactions and balance

them off. (12mks)(b) Explain four ways that a firm would adopt to improve the efficiency of labour as

a factor of production. (8mks)6. (a) Highlight five benefits of filing to an organization. (10mks)

(b) Explain five negative implications of production activities on the environment(10mks)

KAPSABET BOYS SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. State four reasons why business exist in the society. (4 mks) 2. From the following list of items, classify them to either internal or external

environment by ticking ( ) (4 mks)Internal External

(i) Employees(ii) Inflation(iii) Technology applied(iv) Invested funds(v) Cultural factors

(vi) Tools(vii) Entrepreneur(viii) Political factors

3. Identify four qualities of a good office messenger. (4 mks)4. Outline four circumstances under which an insurance company would refuse to compensate an

insured person. (4 mks)5. Outline four ways in which a government may regulate business in a country. (4 mks)6. Outline four reasons a consumer may take to satisfy unlimited wants. (4 mks)7. Many parastatals in Kenya have been found to be inefficient in their operations. State four

measures that can be taken to improve their efficiency. (4 mks)8. Outline four factors that may lead to the success of business. (4 mks)9. People hold money for various reasons. Identify the motive for holding money in each of the

following cases (4 mks)(i) To meet hospital expenses..(ii) To pay for daily milk from Mama Maziwa.(iii) To counteract future decline in prize(iv) To meet routine transport expenses

10. State ways in which society benefits from indirect production. (4 mks)11. Give disadvantages of long chain distribution of goods to buyers. (4 mks)12. Highlight reasons why customers may prefer to buy on credit purchase rather than on hire

purchase. ( 4 mks)13. The following relate to Ekerubo traders as at 30/09/2006.

Stock 1 -10-05 7,500Purchases 65,000Sales 85,000Return inwards 1,000Mark-up 25 %General expenses 12,200Required:Prepare a trading, profit and loss A/C for the period ended 30-9-2006 (4 mks)

14. Many changes have taken place in the transport sector. Identify any four of such changes. (4mks)

15. Mali had the following assets and liabilities in 1st January 2008.Premises 800,000Debtors 40,000Bank 80,000Creditors 70,000Cash 60,000Stock 62,000Bank loan 380,000Required:Prepare opening journal entries to record the above information.

Date Details Dr Cr

16. State reasons why it’s suitable to locate bonded warehouse at the point of entry. (4 mks)17. State the benefits that an investor could derive from a stock exchange market. ( 4 mks)18. The condition given below describes the various market structures. Write the correct market

structure against each of the conditions in the spaces provided.Condition Market Structure(a)Market structure determiner price for the product(b)There is free entry and exit.(c)Market structure with many sellers of different product.(d)Product involved is homogeneous

19. State four essentials of effective communication. (4 mks)20. The following balance sheet relates to Jubilee traders.

Jubilee TradersBalance sheet

As at 31st March 2011Equipement 45,000Debtors 20,000Cash 25,000 90,000

Capital 50,000Creditors 10,000Bank overdraft 30,000 90,000

The following transactions took place during the month of April 2011. (i) Received cash Kshs 15,000 from debtors(ii) Paid creditors Kshs 10,000 cash(iii) Bought office furniture for Kshs 20,000 cash.Prepare a balance sheet as at 30th April 2011. (4 mks)

21. The following table shows the quantity demanded for fish by two consumers; A and B.Price for fish Quantity of fish demanded by A per

week Quantity of fish demanded by B per week

20 1 510 2 75 3 92 4 11

State four possible reasons why B demands more fish at every price that A. (4 mks)22. Outline four factors that an entrepreneur will consider when determining the most viable

business opportunity. (4 mks)23. On 1st January 2007, Nancy Traders had shs 8000 in cash and sh. 60,000 at bank. During the

month, the following transactions took place.2005January 18 : Paid Shamisi Traders shs 17,000 by cheque less 2000 cash discount “ 20 : Sold goods for sh.24,000 cash less by 5 % discount.“ 29: Banked all the cash except 6,200.Required:Enter the above transactions in a three column cash book and balance it off. (5 mks)

24. Identify four major classes of taxation system. (4 mks)25. State four external diseconomies of scale that a firm may get. (4 mks)

KAPSABET BOYS SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. (a) Explain five differences between a chain store and a departmental store. (10 mks)(b) Outline the procedure to be followed by a salesperson in the process of personal selling.

(10 mks)2. (a) Masanga wanted to open an account with a commercial bank. Give five reasons why you

should advice him to open a current account.. (10 mks)(b) The use of motor cycles transport is becoming very popular in both rural and urban

areas of Kenya. Explain the limitation a business that relies on its use is likely to encounter. (10 mks)

3. (a) Discuss five factors that influence the levels of National Income in a country.(l0 mks)

(b) The following transactions took place during the month of June 2010 in Mali traders.June

1st: Started business worth shs 140,000 deposited into the bank accounts2nd : Bought equipments worth shs 9,000 and paid by cheque.8th : Received shs 6500 cash fron Kariuki who oved shs 7000 in full settlement ofThe account.14th : Withdrew shs. 10,000 of which shs 6000 was for office use and the rest was to

pay for his daughter’s medical bill.15th Settled Goma supplies account in cash of kshs.10,000 at a 10 % cash discount.24th :Purchased stationery for shs 20,000 paid by cheque.26th :Cash sales paid directly to the bank account shs. 12,00027th :Paid Mwangi a creditor in cash sh.4200 in full settlement his account of shs 4,50030th :Cash taking for the day shs. 3,800Enter the above transactions in relevant cash book as at 30th June 2010 and balance it off.

(l0 mks)4. (a) Explain five reasons why savings and credit co-operative societies are becoming

popular among Kenyan employees. (10 mks)(b) Bitare S.D.A is a new Secondary School. The Principal wishes to introduce filing of

documents in the school. Explain five factors that she will consider before choosing a filing system. (10 mks)

5. (a) With the aid of a diagram, explain the effects of an increase in supply to equilibrium

price and quantity of commodity. (10 mks)

(b) Describe five factors of a less developed country. (10 mks)

6. (a) Explain five factors that may lead to unfavorable terms of trade in a country.(l0 mks)

(b) Ekerubo shop sells all its goods at a margin of 20 % for the year ended 30th April 2006,

the trading activities were as follows;

Purchases Shs. 800,000

Sales Shs 950,000

Net profit 5 % of sales

Closing stock Shs 200,000

Calculate; (10 mks)

(i) The gross profit

(ii) The opening stock

(iii) The mark-up percentage

(iv) The net profit.

BAHATI GIRLS SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. State the characteristics of human wants that suit the following statemen (4mks)

Statement Characteristicsa) wants are so many compared to resourcesb) Once satisfied some wants are left again and againc) satisfaction of a given want gives rise to anothere) Everybody needs them in one form or another

2. Yator and Korir have been trading partners.Yator decided to breakaway from the partnership and commence his own business. State four benefits that he will derive from the undertaking.

(4mks)

3. For each of the following accounts title, Indicate whether it is real, nominal or personal (4mks)Account title Account typea) Waswa, a debtorb) Commission receivedc) Bankd)Purchases

4. Highlight four reasons why a country would like to know the structure of it’s population(4mks)

5. Identify four circumstances under which communication may be in effective (4mks)6. Mention five reasons why M-Pesa is becoming a very popular means of payment in Kenya

(4mks)7. The following diagram shows demands and supply carve of commodity.

State four things that will happen if the supply of the commodity is increased while demand remains constant (4mks)

8. Highlight four factors that contribute to demand pull inflation (4mks)9. Ukweli enterprises has a working capital of sh.200,000 and a current ratio of 3:1.Calculate

(i) Current assets (2mks) (ii) Current liabilities (2mks)

10. Highlight four circumstances under which a manufacturer would prefer to sell his products directly to consumers instead of middlemen

11. Highlight four uses of national income statistics to any country (4mks)12. Outline four measures which the government can take to encourage location of firms in an area

(4mks)13. On 1.1.09 the cash book of Kimende traders Cash and Bank balances of sh.3,500 and sh.20,000

respectively. The following transactions took place in the month.Jan 6, Cash sales sh.12,500 15, Receives a cheque of sh.45,000 from a debtor after deducting a 10%

discount. 31, Paid a creditor sh.28,500 after deducting 5%discount 31, Banked all cash leaving a balance of sh.100 in the cash tillPrepare a three column cash book. (4mks)

14. Kenya has been hard hit by H.e.p shortages in the recent past. State four alternative energy sources which should be promoted to meet the following demand (4mks)

15. Outline four circumstances under which a country may engage in trade restriction(4mks)

16. Outline four demerits of an indirect tax (4mks)

17. The following assets and liabilities belong to Mumbi as at 31.21.08Stock sh. 90,000

Land sh. 130,000Creditors sh. 65,000a) Calculate capital (1mk)b) In Jan, 2009 stock costing shy.30,000 was sold for sh.36,000 cash. Prepare a new balance

sheet as at 31.1.09. (3mks)18. Outline four circumstances under which a trader would use porters to transport goods.

(4mks)19. For each of the following cases, identify the motives for holding money (4mks)

Case Motivesa) To meet daily transport expensesb) To meet any unforeseen circumstancesc) To take advantage of fall in share pricesd) To pay for any food requirements

20. Identify four differences between a supermarket and hypermarket (4mks)21. Give four instances under which an insurance company may find it necessary to re-insur

(4mks)22. Highlight four reasons why a development plan is important to a country (4mks)23. Tango limited wishes to promotes its products through advertising. Mention any four ethical

issues it must consider before engaging in advertising (4mks)24. State four uses of business plan (4mks)25. Highlight four ways in which HIV and AIDS has adversely affected business operations

(4mks)

BAHATI GIRLS SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. (a) Explain five ways by which business owner may ensure a condusive environment for this business (10mks)

(b) Explain five ways by which the central bank may reduce the amount of money in circulation in Kenya (10mks)

2. (a) Karemi owns a bakery in Kitale town. Explain five ways why he carried out division of labourin the process of baking bread in his factory. (10mks)

(b) Describe five measures by which the Kenyan government can take to improve on its balanceof its payment position (10mks)

3. (a) Explain four characteristics of an underdeveloped economy. (8mks)(b) The following trial balance belongs to Kipevu trades as at 30th June, 2004

KIPEVU TRADERSTrial balance as at30th June 2004

Stock on 30/6/03CapitalPurchase and salesDrawingsFurniture and fittingsMotor vehiclesDebtor and creditorsReturnsDiscount

Dr (shs)40,000

35,0006,00020,000150,0008,0002,000900

Cr (shs)

162,30070,000

12,0004,800800

Wages and salariesRentInsuranceCommissionBankcash

15,0003,5002,100400

6,000252,900

3,000

252,900g

REQUIRED(i) Prepare a trading profit and loss account(ii) Prepare a balance sheet as at 30th June 2004 (12mks)

4. (a) Jilo company wishes to have its goods distributed all over the country. Advise the company five factors it may consider before choosing the distribution channels (10mks)

(b) Kamwaru private company recently joined the Nairobi stock Exchange. Describe five benefitsof such a decision (10mk

5. (a) Explain five factors that may have contributes to the slow pace in the achievement of the East Africa community (10mks)(b) Wako Limited operators as a monopolist. Explain five factors that may have made the firm acquire monopoly power. (10mks)

6. (a) Discuss five circumstances under which an insurance contract may be terminated (10mks)(b) Explain five problems that consumers may encounter as they try to satisfy their wants

(10mks)

KABARAK HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. In the space provided, indicate the type of utility created by each of the given commercial activities. (4 marks)Activity Type of utility

a) Making chairs from timber b) Storing chairs in a workhousec) Transporting chairs to the marketd) Selling chairs to customers

2. Outline four considerations that a seller may take into account before giving credit to a customer.(4 marks)

3. Highlight four reasons why interest is charged on borrowed capital. (4 marks)4. List four source of government revenue. (4 marks)5. Outline four barriers to entrepreneurial development in Kenya. (4 marks)6. In the spaces provided, indicate the accounts to be debited and credited for each of the given

transactions. (4 marks)

Transaction Account to be Account to be credited

debiteda) Started a business with cash in hand.b) Paid wages in cash.c) Owner took some cash for personal use.d) Acquired some stock on credit.

7. Outline four strategies that a trader can use to attract / retain customers. (4 marks)8. Highlight four uses of an invoice to a seller of goods. (4 marks)9. Outline four demerits of using motor cycles as a means of transport. (4 marks)10. State four positive effects of an increase in population on the development of a country.

(4 marks)11. List four features of ordinary shares. (4 marks)12. Give four challenges that may face a business unit that does not file its documents.

(4 marks)13. In each of the following cases, indicate whether supply will increase, decrease or remain

constant. (3 marks)a) If the demand for coffee rises, the supply of tea is likely to b) If the prices of cars fall, the supply of petrol is likely toc) If the demand for beef increases, the supply of wood is likely to

14. Outline four ways in which m- banking is useful to account holders. (4 marks)15. The following information relates to ABC traders for the year ended 31 December. 2011.

Opening stock 80,000Closing stock 100,000Purchases 900,000

Mark- up 20%Calculate:i) Cost of goods sold.ii) Gross profit. (4 marks)

16. Outline four circumstances under which the use of gestures would be appropriate.(4 marks)17. Give four items of information that can be found in an insurance policy. (4 marks)18. In the spaces provided, indicate the quality of office workers that best fits each of the given

descriptions. (3 marks)Description Terma)Ability to observe working hours without delayb) Handling people politely and pleasantlyc) Commitment to ones institution

19. On 1st May. 2010, the cash book of Amua Traders had cash and bank balances of sh 3,500 and 18,000 respectively.During the month the following transactions took place;May 2 cash sales sh 12,500

6 paid sh 13,000 in cash for wages.14 A debtor paid sh 20,000 by cheque.20 Withdrew sh 30,000 from the bank for office use.30 Drew a cheque for sh 10,000 to pay a creditor. Prepare a two – column cash book duly balanced. (5 marks)

20. Name four errors that do not affect the agreement of a trial balance. (4 marks)21. State four problems encountered in development planning. (4 marks)22. Give four reasons why supermarkets attract many customers. (4 marks)23. The following balances were extracted from the books of Sila Traders on 31 st December.

2001.

ShGross profit 400,000Salaries 160,000Telephone 40,000Discount received 16,000Discount allowed 30,000Stationery 85,000

Prepare a profit and loss account for the period ended 31st December. 2001. (4 marks)

24. On 1st January 2009, Sembe stores had capital sh 600,000. At the end of the year, the following balances were available:

ShStock 70,000Creditors 50,000Debtors 30,000Bank overdraft 80,000Buildings 800,000Determine the net profit for the year. (5 marks)

25. Outline four negative effects of inflation. (4 marks)

KABARAK HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2a) Discuss five indicators of under – development in a country. (10 marks)b) Explain five advantages of pipeline as a mode of transporting oil products.(10 marks)

1. a) Explain five ways in which consumers benefit from warehousing services provided by wholesalers.(10 marks)

b) Describe five properties of good money. (10 marks)2. a) Outline five causes of unemployment in Kenya. (10 marks)

b) Explain five benefits of entrepreneurship in an economy. (10 marks)3. a) Highlight four benefits of having business enterprises located in one area. (8 marks)

b) Prepare a three column cash book from the following information for the month of May 2004 and balance it off.

May 1 Balances b/d cash sh 50,000, Bank sh 180,000May 1 Cash sales sh 3,000May 2 Paid the following creditors by cheque, N Mwangi sh 1,500, J .Mwaniki sh 16,000, N Mugo sh 1,200 after deducting 10% cash discount in each case.May 3 Received cheques from the following debtors after deducting 5% discount in each case E. Githinji sh 24,000, D.Nyamu sh 9,000, E. Mutua sh 1,400.May 5 Paid for repairs in cash sh 16,000May 10 Paid Juma in cash sh9,500May 15 Banked sh 6,000 from the cash tillMay 15 Received cash from P. Kavuniki sh 13,500 in full settlement of his account of sh 15,000.

a) Discuss five roles played by intermediaries in the chain of distribution. (10 marks)b) Highlight any five principles of government expenditure. (10 marks)

4. a) The following trial balance was extracted from the books of Baite Traders on 31st August. 2009. Dr (sh) Cr (sh)

Sales 350,000Purchases 160,000Cash at bank 290,000Return inwards 5,000Carriage inwards 20,000Carriage outwards 14,000Salaries and wages 10,000Debtors 56,000Creditors 90,000Stock 35,000Machinery 265,000Rent 25,000Discount received 18,000Lighting and heating 12,000Building 240,000Advertising 13,000Drawings 3,000Capital 667,000 1,150,000 1,150,000Additional information;

a) Stock on 31st August. 2009 was valued at sh 50,000. Required; Prepare Trading profit and loss account for the year ended 31st August. 2009. (12 marks)

Describe four problems associated with a sole proprietorship form of a business. (8 marks)

SACHO HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. Outline four ways that can be used by on organization to protect its properties and control their use.

2. State four services offered by advertising agencies in product promotion. (4mks)3. Highlight four reasons why Kenya needs to encourage the use of pipeline transport

(4mks)4. State circumstances under which the following services may be offered by the post officer in

entancing communication.i) Poste restanteii) Registered mailiii) Speed postiv) Business reply services

5. Outline four monetary tools used by central bank to control inflation in Kenya. 6. State four reasons why entrepreneurs need to prepare business plan 7. State four reasons why E or M banking is commonly used in Kenya these days. 8. Highlight four sources of monopoly power. 9. State four weaknesses of using National Income statistics in comparing the standards of

living of different countries. 10. Outline four reasons why young population may not be desirable to a country.

11. The table below represents the demand schedule for tea leaves for 6 months in 2010.

Outline four causes of the trend in the table.12. Highlight four uses of an invoice 13. State four macro environmental facilities that may affect business performances. 14. Outline four methods the Kenyan government may use to protect consumers. 15. Highlight four circumstances under which a business person may decide to build his own

warehouse instead of using a public warehouse. 16. The following information belongs to XYZ traders for as at 31.12.2010

Shs

Rent 5,000Debtors 20,000Drawings 10,000Stock 80,000Cash in hand 15,000Creditors 25,000Cash at bank 50,000

Calculate capital and prepare the trial balances of XY Z traders as at 31.12.2010 (5mks) 17. Outline four roles played by Nairobi stock exchange in enhancing the development of the

country. 18. Hekima traders had the following information in its records as t 1.12.2009

Shs.Cash at bank 5,000Trade debtors 20,000Stock 25,000Capital 120,000Machinery 80,000Creditors 10,000

On 2nd Dec. he had the following transactions: 4mks- Bought goods for Ksh 15,000 on credit- Sold the machine for Kshs. 90,000 received the money in cash.- Received a cheque for shs 10,000 from a debtor.Prepare Hekima’s balance sheet after the above transactions

19. Outline four circumstances under which an insurance company may not compensate the insured after a risk has taken place and there is loss.

20. Highlight four strengths of direct tax that make it commonly used by many countries as a source of revenue.

21. Vijana LTD transacted the following during the month of march 2005March 1: Sold an old machine on credit for Ksh.1000 to KK traders.March 2: Sold an old business car worth 100,000/= for shs. 120,000/- on credit to Dobi motors.March 3rd: Bought office furniture on credit from smart furniture worth Kshs. 10,000/=

March 4th: Sold an old computer valued at Kshs 20,000/= for Kshs 15,000/= on credit to John traders.Requirement:Make the entries in the journal proper. (4mks)

Months 1 2 3 4 5 6Quantity (Kgs) 200 400 600 800 1000 1200

22. The following information was extracted from the books of Nancy traders for the months ended 31.6.2009.

ShClosing Stock 10,000Purchases 120,000Opening stock 15,000

The average mark up for the goods sold was 40%Calculate.

i) Cost of sales. (1mk)ii) Gross profit (1mk)iii) Sales (1mk)

23. Given four reasons for import restriction measures taken by countries. 24. Outline four challenges being faced by Kenya in the crucial stage of implementing the vision

2030. 25. Open the relevant ledger accounts using the following information. (4mks)

1/2/2011 Started business with Kshs 10,000 in cash and Ksh 50,000 at bank.2/2/2011 Bough goods on credit from Lk traders worth Kshs 5,000.4/2/2011 Withdrew from the bank Kshs 2000 for office use.

SACHO HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Explain five factors that limit the adoption of modem technology in business operations.(10mks)b) Outline five differences between a public limited company and a partnership form of business.

2. a) Explain five circumstances under which monopolies exists in a given economy. (10mks)b) Outline five differences between a public limited company and a partnership form of business. (10mks)

3. a) Explain five benefits of “ pooling of risks” to an insurance industry. (10mks)b) On 1st January 2012 Manga traders had 180,000 cash in hand and a bank credit

balance of Shs.57,500. During the month the following transactions took place.3rd Jan: Cash sales Shs. 2,8004th Jan: A debtor settled his accent of sh. 90,00 by cheque10th Jan: Paid Salaries shs. 40,000 in cash.12th Jan: Took cash sh. 35,000 to settle on personal debt.23rd Jan: Received a cheque shs. 8460 from Ouru distribution after deducting 6% cash

discount.24th Jan: Deposits shs. 10000 in the bank from office cash.25th Jan: Purchased stock worth shs.8950 on credit from Ngumo distributors26th Jan: Cash sales banked directly shs.3800027th Jan: A cheque received on 4th from a debtors was dishonored. The bank

charged him 2500.29th Jan: Settled creditors account shs. 6000 b cheque less 3% cash discount.31st Jan: Bank all cash except shs.40,000Required:Prepared a three column cash book duly balanced (10mks)

4. a) Explain five effects of production activities on the environment and community health (10mks)

b) Explain five services that are offered by commercial banks to their customers. (10mks)5. a) Highlight five distinctions between savings and current account (10mks)

b) Explain five shortcomings of internet services. (10mks)6. a) Explain five disadvantages of progressive taxes. (10mks)

b) The following balances were extracted from the books of Mutua Traders for the year ended 31 Dec 2010 having proffered a trading account.

Dr. (sh) Cr. (Sh)Gross profit 38100Cash 105060Motorvan 603 000Capital 653560Equipment 200600Furniture 94400Creditors 74300Debtors 75900Discount received 26400Salaries 12400Carriage outward 14400Rent: income 12600Advertising 22200Insurance 9400Bank overdraft 412600

1,217560 1,217560Required:

a) Prepare a profit and loss account of Mutua Traders for the year ended 31st Dec 2001 (5mks)b) A balance sheet as at that date. (5mks)

STRATHMORE SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. Highlight four considerations that a firm would make when choosing the location of its office. (4marks)

2. Highlight four ways commercial banks have contributed to the rural development in Kenya. (4marks)

3. State four factors which may discourage many people from starting their own businesses. (4marks)

4. A wholesaler who buys goods from the producers incurs expenses. Outline four such expenses.(4marks)

5. Give four reasons why a country may find it necessary to raise import duties. (4marks)6. From the transactions below, state the accounts to be debited and to be credited.

(4marks)Transactions Debit Crediti) Begun a business with Ksh 10,000 in the bank

ii) Bought equipment in cash for Ksh 8,000iii) Transferred Ksh 60,000 to the bank from the cash till iv) Took cash Ksh. 7,000 to pay hospital bill

7. Outline four functions of retailers which benefit the consumers. (4marks)8. State four factors that determine premiums charged by insurance companies for life

policies. (4marks)9. State whether the following statements relating to private limited companies are true or

false. (4marks)

Statement True/Falsei) They advertise and invite the public to subscribe for their

shares and debentures through a prospectus.ii) They can start business after being issued with a certificate

of incorporation.iii) They are formed by a minimum of seven shareholdersiv) Their shares are dealt with in the stock exchange.

10. State the form of utility created by the activities listed below. (4marks)a) Exchangeb) Processingc) Transport

11. Warehousing12. Highlight four challenges faced in the satisfaction of human wants. (4marks)13. Outline four demerits of using television as a method of advertising a product. (4marks)

14. Highlight four reasons why a firm may be located close to other firms (4marks)15. Outline four positive effects of declining population. (4marks)16. A trader sold a bag of sugar at Ksh. 4000. The buyer was allowed a trade discount of 10% and cash

discount of 3%. If payment is made within one month. Calculate the amount the trader received if the trader paid within 15 days. (4marks)

17. The following information was extracted from the books of Kalema Traders on 30th June 11.Stock on July 1st 2010 - sh. 48,000.00Stock on June 30th 2011 – sh 42,000.00Purchases sh 140,000.00Sales sh. 205,000.00

Calculate (i) Cost of goods sold. (2marks) (ii) Mark up percentage (2marks)

18. The trial balance below relates to Mutua wholesalers and was wrongly prepared. Prepare a correct one. (4marks)

Accounts Dr. Cr.Shs Shs

Sales 20,000Capital 75,000Creditors 3,000Purchases returns 500Cash 86,200Purchases 6,000Sales returns 1,300Debtors 5,000 …

110, 0000 81,30019. Give four reasons why electric trains are uncommon in Africa yet it is the common trend in

other continents. (4marks)20. Outline four ways in which a warehouse is of importance to a manufacturer. (4marks)21. The conditions given below are for either a monopoly firm or a firm operating under prefect

competition. Write the correct market structure against each of the conditions in the spaces provided.

Conditions Market structurea) Market structure determines price of the products b) There is free entry and exit of firms in the marketc) Products involved are homogenousd) Market structure regulates supply of the product.

22. State four causes of cost push inflation. (4marks)23. Outline four principles of a good tax system. (4marks)24. List four elements that may comprise the external environment of a business. (4marks)

Study the diagram below and answer the question that follows.PriceKsh S0

S1

S0 S1

Quantity

State four factors that may cause the above change from S0S0 to S1S1. (4marks)25. Outline four circumstances under which sign language may be used in an organisation.

(4marks)

STRATHMORE SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Explain five characteristics of underdeveloped countries. (10marks)b) Discuss five measures that can be used to reduce unemployment in Kenya

(10marks)2. a) Explain five ways in which the central bank regulates the operations of commercial

banks in Kenya (10marks)b) Explain five roles played by insurance industry in promoting the development of

Kenyan economy. (10marks) 3. a) Highlight five roles of the Nairobi Stock exchange as a market for securities.

(10marks)b) During a trader’s workshop, a speaker presented a speech on ethical issues in

business. Highlight some ethical issues that he may have raised, affecting business. (10marks)

4. a) Discuss five benefits of filing office documents to an organisation. (10marks)b) Explain five benefits that a country derives from transporting oil through pipeline.

(10marks)5. a) Savings and credit cooperatives have been registering an increasing number of

members. Explain five reasons for such a development. (10marks)b) The following Trial balance was extracted from NDOLO’S STORES on 31st Dec 2009.

Dr. Cr.Shs Shs

Capital 250,000Stock 25,000Machinery 250,000Motor vehicles 87,000Purchases 360,000Sales 600000Returns inwards 40,000Returns outwards 20,000Discount received 5,000Carriage inwards 2,000

Carriage outwards 3,000Bad debts (written off) 80,000

General expenses 88,000 Debtors 18,000 Creditors 49,000 Rent 1,000 ……………………….

954,000 954,000 Additional information:-Closing stock was valued at sh. 22,000.Prepare NDOLO’S STORES; Trading, profit and loss accounts for year ending 31/12/2009.

6. a) The income approach is one of the methods used to measure the national income of the country.

Explain four types of incomes included in this approach. (8marks)

b) On 1st June 2009, MULI ENTERPRISES had cash in hand sh. 87,000 and cash at bank sh. 250,000.During the month, the following transactions took place.

June 2, Sales (cash) sh. 50,000

June 3, Paid salaries sh.101, 500 by cheque.

June 6, Received a cheque for sh. 76,800 from Mwelu after allowing her a

cash discount of 4%.

June 12, Bought office furniture by cheque sh. 85,000

June 16, Settled Musau’s account of sh. 40,000 in cash, having deducted shs

800 cash discount.

June 18, Received a cheque for shs 150,000 in respect of cash sales.

June 21, Paid wages shs 24,000 in cash.

June 22, Withdrew shs 30,000 from bank for office use.

June 25, Withdrew shs 5000 cash for private use.

June 28, Received shs 16500 cash from Kasiva in settlement of her account less

shs 660 cash discount.

June 30, Deposited all the money into bank except shs 25,000

Prepare a three column cash book and balance it off. (12marks)

ALLIANCE GIRLS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. State four limitation of direct production. (4mks)2. Highlight four roles of an entrepreneur to the economy of a country. 4mks)3. A modern office requires a computer to carry out multiple functions. Highlight any four.

(4mks)4. Highlight four reasons why the Mau escarpment is an important Natural resource. (4mks) 5. State four reasons why it is important for a business to keep financial Records: (4mks)6. Highlight the purpose of each of the following documents. (4mks)

Document Purpose

a)Delivery noteb)A debit notec)An invoiced)A statement of account

7. Juma a newly employed teacher has joined Mwalimu Sacco in Bungoma. Outline four benefits of membership to the society. (4mks)

8. Redraft the following balance sheet correcting any mistakes. (4mks)KIP’sBalance sheetAs at 31/8/2010

Ksh

Debtors 12000

Capital 40700Creditors 18000Computers 87500 158200

Cash 19000

Stock 12200

Coop loan 50000Bank overdraft 22000 103200

9. Highlight four measures taken by producers to ensure consumers are protected when using their products. (4mks)

10. State four benefits of a public warehouse to a consumer. (4mks)11. State four advantages of using E-mail for communication by a given enterprise. (4mks)12. Highlight four reasons why all motor vehicles are required to have insurance cover. (4mks)13. The following information relates to MUSIKO traders for the year ended 31/12/2011

Sales Ksh800,000 General expenses ksh120,000 Commission income Ksh40,000 Margin 20%

Calculatei) Mark-up percentage (2mks)ii) Net profit for the year ended 31/12/2011 (2mks)

14. State four importance of computing national income statistics in a country such as Kenya.

(4mks)15. The following table shows the demand for sugar in a certain town between the years 2006

and 2010 YEAR Quantity Demanded In Tons

2006 502007 702008 852009 722010 65

State four factors that contributed to the trend in demand for sugar between 2008 and 2010. (4mks)

16. State four reasons why it may be necessary for the Government to encourage new firms to be located in the rural areas. (4mks)

17. You are to enter up the purchases journal and the returns outwards journal from the following detailsOctober 1.credit purchases from Helen sh20,0002011 October 3. credit purchases from the following;

Dan sh12,000,Tom Ksh13,300 2011 October 5.Goods returned by us to Tom sh300 (4mks)

18. Recent data indicates that a large proportion of Kenya’s population comprises of the youth the ages of 10 to 20 years. State four benefits of this to the country. (4mks)

19. State four reasons why a country may find it necessary to control its imports. (4mks)20. Highlight four characteristics of money. (4mks)21. State four challenges being faced by Kenya in achieving its stated goal of vision 2030. 4mks)

22. Indicate whether the following types of taxes are direct or indirect. (4mks)

Type of tax State

a)Corporation tax

b)Value added tax

c)Income tax

d)Customs duty

23. State four recent trends adopted by many firms in product promotion. (4mks)

24. State four classification of goods and services. (4mks

25. State four challenges that a business without a plan will encounter in its operations. (4mks)

ALLIANCE GIRLS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

a) Highlight five reasons why the government trains business people (10mks) b) Explain five roles that intermediaries play in the distribution of goods and services. (10mks)

2. a) Discuss six reasons why many Kenyans are increasingly shopping in supermarkets. (12mks)

b) The Kenyan government has plans to construct a major seaport at Lamu. Explain four benefits that may accrue to the country from this new port at Lamu. (8mks)

3. a) Explain five advantages of a public limited company as a form of business. (10mks)

b) The following balances relate to Msafiri Traders as at 31st December, 2012:Sh.

Purchases 900,000Stock, 1/1/2012 230,000Buildings 1,200,000Motor vehicles 750,000Returns outwards 50,000Debtors 190,000Creditors 310,000Loan from IDB 600,000Cash at hand 130,000Cash at bank 270,000Drawings 100,000Capital 1,840,000

Net profit170,000

Stock, 31/12/2012 280,000Expenses (including carriage inwards, shs 150,000) 250,000

REQUIRED:i) Balance sheet as at 31st December, 2011. ii) Calculate:

- Mark-up percentage. (2mks

- Return on capital employed. (2mks)

4. a) Explain five principles that guide the tax system in a country. 10mks)b) Labour is one of the basic factors of production. Outline five measures that a

business can take to increase the productivity of its labour force. (10mks) 5. a) Describe five ways in which the price of a product can be determined in market.

(10mks) b) Explain five benefits of mobile phone money transfer services. 10mks)

6. a) On 1st June 2011, Nyati Traders had cash in hand of sh25,000 and sh56,200 at bank. During month, the following transactions took place:

2011June 2 Cash sales, sh42,000.June 5 Received a cheque of sh70,500 from Butala Traders after deducting a 6%

cash discount. June 8 Paid salaries, sh24,000 in cash June 9 Kivuitu settled his account of sh45,000 in cash and was allowed sh l,800 cas discount.June 12 Cash sales sh46,500.June 18 Paid Tuiei's debt of sh l00,000 by cheque after deducting 5% cash discount.June 24 Withdrew sh26,000 from the bank for office use. June 30 Banked all the cash except sh25,000. Prepare a 3-column cashbook and balance it off on 30th June, 2011.

(10mks)b) Outline five differences between oligopoly market and perfect competition market situation (10mks)

FRIENDS SCHOOL KAMUSINGA KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. Outline four ways in which horizontal communication may be used in a business organization. (4marks)

2. Outline four differences between a partnership and a sole proprietorship. (4marks)3. Identify the type of good described by each of the following statements (4marks)

Description Gooda) Owned by no one but the government b) Produced to be used in the production of other

goods.c) Available in abundance as gifts of natured) Have monetary value and human effort is needed

to obtain them4. State four possible consequences of poor arrangement of goods in a warehouse (4marks5. State four factors to be considered when determining premiums to be charged in life

assurance. (4marks)6. A firm near your residential area has been constantly releasing toxic wastes into the

environment. Outline four measures that you can take to stop the firm from doing so. (4marks)

7. An indirect tax has a room for voluntary payment. However it has its shortcomings. State four of such shortcomings. (4marks)

8. Outline four roles played by intermediaries in the chain of distribution. (4marks)

S1

S0

9. The following entries were made in the two column cash of Dot-com traders. Explain each of the entries. Date Details Cash Bank Date Details Cash Bank

1/12/113/12/115/12/11

Bal b/fSalescash

23,000 8,000

9,000

1/12/115/12/119/12/11

Bal b/fBank Purchases

9,00010,000

5,000

10. The following diagram shows a shift in supply of mangoes in Kathiani Market from S0 to S1

State four factors that may have led to the shift. (4marks)11. State four reasons why carbon copying is not a popular method in reproducing documents

in offices. (4marks)12. Outline four ways through which a business opportunity may exist. (4marks)13. Indicate in which ledger book transactions involving the following will be recorded.

(4marks)14.

Transaction Ledger Booka) Rent expensesb)

Credit purchases

c) Cash sales d)

Credit sales

14. Outline four limitations of the circular flow of income. (4marks)15. State four ethical issues that a firm is supposed to address in product promotion (4marks)16. The following balances were extracted from the books of Muli traders as at 31st March 2010

Shs.Fixed Assets 200,000Creditors 35,000Current assets 110,0004 year bank loan 150,000

Required;Determine the net worth of the business as at 31st march 2010 (4marks)

17. State four measures that the Kenyan government may adopt to promote her exports. (4marks

18. State four negative effects of inflation that Kenyans are facing today. (4marks)19. Outline four reasons why an entrepreneur would prefer to locate his business where similar

businesses already exist. (4marks)20. One of the functions of the office is to safeguard the organization’s property. State four

methods through which this function can be achieved. (4marks)21. Outline four causes of unemployment in Kenya. (4marks)22. Outline four functions of money. (4marks)23. State four disadvantages of division of labour and specialization. (4marks)24. The following transactions relate to Ostrich Ltd.

i) Started the business with Kshs. 10,000 cash and Shs. 15,000 at the business bank accountii) Paid Kavi a creditor Shs. 3,000 by cheque

Post the above transactions in the relevant ledger accounts (4marks)25. State four factors that may positively affect the productivity of labour (4marks)

Price

Quantity

FRIENDS SCHOOL KAMUSINGA KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Kasiva a coffee farmer in Nduni village wants to join Muthunzuuni farmers’ co-operative society. Explain five benefits that would accrue to her as a result of being a member of the society. (10marks)

b) Explain five roles played by advertising agencies. (10marks)2. a) Kenya is looking forward to the realization of vision 2030, explain five obstacles that may

hinder the efforts made towards this dream. (10marks)b) Explain five reasons why a properly drawn cheque may be dishonoured. (10marks)

3. a) The following trial balance relates to Nthoi’s enterprise as at 31st December 2011DR CRShs. Shs.

Drawings 60,000Land + buildings 700,000Cash in bank 115,000Stock 1.1.2011 18,000Purchases and Sales 500,000 1,000,000Debtors and Creditors 46,000 92,000Salaries and wages 85,000Carriage inwards 9,000Carriage outwards 12,000Motor vehicles 400,000Capital 909,000Water and lighting 36,000Insurance 40,000Returns 30,000 50,000

2,051,000 2,051,000Stock on 31st December 2011 was valued at kshs. 25,000. Required; prepare Nthoi’s Trading Profit and Loss Account for the year ended 31st

December 2011. (10marks)b) Explain five benefits that may accrue to a firm as a result of operating on large scale.

(10marks) 4. a) Explain five circumstances under which a producer of a certain commodity may find it

appropriate to sell his goods directly to the consumer. (10marks) b) Highlight five reasons why a country would be reluctant to adopt free trade policy with her

trading partners. 5. a) Explain five sources of short term finance to a business organization.

b) Tumetoka Mbali Traders maintains a petty cash book on imprest system with a float of kshs. 18,000. Reimbursement is usually made on the first day of the week. The following

payments were made on the first week of June 2012June 1st: Received Shs. 2,000 for reimbursement

3rd : Bought stamps for shs. 4004th : Bought stationery for shs. 1,0005th : Bought sugar for shs. 580 and paid postage shs. 8506th : Bought tealeaves for shs. 500 and stationery for shs. 6507th : Paid ostrich a creditor shs. 5,5007th : Received cash for reimbursement

Required;Prepare a petty cash book duly balanced using the following analysis columns, stationery, postage, travelling, staff tea, miscellaneous and ledger accounts.

(10marks)6. a) Explain five features of under development. (10marks)

b) Explain five limitations of relying on per capita income as a measure of living standards of people in a country. (10marks)

MOI GIRLS NAIROBI KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. Outline four challenges associated with the satisfaction of human wants. (4mks)2. Highlight four ways in which manufacturers can enhance consumer protection. (4mks)3. State four ways in which the government may influence the price of a commodity. (4mks)4. Outline four features of demand deposit account. (4mks)5. The balances below relates to Eureka Traders for the year ended 31st December 2010.

Shs. Capital ?2 year Bank loan 230,020Creditors 95,200Fixed assets 480,000Current assets 145,220

Determine the followingi.) Working capital. (2mks)ii.)Capital employed. (2mks)

6. Classify the following accounts as either real or nominal. (4mks) Account Class

a) Delivery vanb) Purchasesc) Insurance premiumd) Commission income

7. Highlight four measures that the government would undertake to provide investors with an enabling business environment. (4mks)

8. Outline four circumstances under which downwards communication would be appropriate in an organization. (4mks)

9. State four limitations of using national income statistics to compare the standards of living in different countries. (4mks)

10. State four merits of using indirect taxes to raise government revenue. (4mks)11. State four components of a business plan. (4mks)12. Outline four demerits of using pipeline to transport petroleum products. (4mks)13. Highlight four circumstances which may make personal selling appropriate as a way of product

Promotion. (4mks) 14. Maneno traders had the following balances as at 6thJanuary 2012. (4mks)

Land & building 150,000Cash in hand 25,500Creditors 15,000Bank overdraft 30,000Purchases 18,000Sales 30,000Returns inwards 5,000

Required;A trial balance as at 6thJanuary 2012

15. Outline four monetary methods that the government can use to control inflation.(4mks)

16. Name the office machines used to perform the following functions. (4mks)Function Machine

a) To fold documents, place them in the envelope and seal.

b) Used to transmit printed messages such as Letters ,maps diagrams and photographs

c) Reproducing documents from a master copy(stencil)

d) Printing postage impressions on the envelopes

17. Outline four distinctions between monopolistic competition and oligopoly. (4mks)Monopolistic competition Oligopoly(a)

(b)

(c)

(d)

18. Highlight four disadvantages of producer co-operative societies. (4mks)19. State four objectives of export processing zones in Kenya. (4mks)20. Outline four advantages of overpopulation in Kenya. (4mks)21. Highlight four benefits of a bonded warehouse to the government. (4mks)22. State four features of a departmental store. (4mks)23. Outline four conditions which are necessary for a successful development plan. (4mks)24. State four purposes of a three column cash book. (4mks)

25. Highlight four features of general insurance. (4mks)

MOI GIRLS NAIROBI KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Explain five benefits that would accrue to a businessman who uses a Liner rather than Tramps Steamers. (10mks)

b) Using a diagram, describe the effects of outward shift in supply curve on equilibrium price and quantity. (10mks)

2. a) Explain four measures that may be taken by the government to promote her export. (8mks)

b) The following Trial Balance was extracted from the books of Kisumu Auto spares as at 31stOct 2011

Kisumu Auto Spares Trial BalanceAs at 31st Oct 2011

DR CRCapital 653,560Motor vehicle 603,000Equipment 200,600Furniture 94,400Debtors 75,900Creditors 74,300Carriage on sales 14,400Discount Received 26,400Salaries 12,400Rent Income 12,600Sales 319,400Purchases 300,000Advertising 22,200Rates 9,400Stock 1-11-2010 61,500Bank 412,600Cash 105,060TOTAL 1,498,860 1,498,860Stock on 31stOctober 2011 was sh. 80,200

Required,(i) Prepare Trading ,Profit and Loss account for the year ended 31stOct 2011(ii) Prepare Balance sheet as at 31stOctober 2011 (12mks)3. a) Explain Five circumstances under which a manufacturer would find it advisable to distribute his

goods through wholesalers. (10mks)b) Explain five functions of the central bank of Kenya in the Economy. (10mks)

4. a) Distinguish between shares and debenture as a source of finance. (10mks)b) Outline five circumstances under which a firm will be located near the market for its

products. (10mks)5. a) The following information relates to Bizna Distributor Company for the year ended

31stDec 2009 shs

Gross profit 600,000Opening stock 285,000Sales 2,400,000Purchases 1,830,000

Expenses 360,000Closing stock 315,000Fixed assets 400,000Debtors 900,000Bank 35,000Current liabilities 438,000

Required calculate i) Margin (2 ½ mks)ii) Rate of stock turnover (2 ½ mks)iii) Return on capital employed (2 ½ mks)iv) Current ratio (2 ½ mks)

b) Explain five ways in which the Entrepreneur contributes to the production of goods. (10mks)6. a) Describe five means of payment that a trader may use to settle business debts. (10mks)

b) Explain five indicators of under development in Kenya. (10mks)

KENYA HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. In the spaces provided, state the type of insurance policy described in each case.(4mks)a) Premium are paid over a stated period with the sum assured payable when insured duesb) Covers a vehicle against all losses arising from its authorized use.c) Covers loss, damage or injury accidentally caused to other people by the insured ,

His property, employees, pets or agents.d) Covers goods and money lost in private and commercial premises.

2. State FOUR circumstances under which a seller would require a buyer to pay cash with order C.W.O. (4mks)

3. State FOUR ways in which the nature of goods would influence the choice of transport.(4mks)

4. Highlight FOUR limitations of consumer initiated methods in consumer protection. (4mks5. Give FOUR difficulties faced by human beings in satisfying human wants. (4mks)6. State FOUR services offered to commercial banks by the central bank of Kenya. (4mks)7. List FOUR sources of public finances. (4mks)8. Give FOUR reasons why an office is necessary in any organization. (4mks)9. The diagram below shows a shift in demand for rice.

Identify FOUR factors that could have made the demand curve shift from DoDo to D1D1. (4mks)10. State FOUR ways in which the stock of a business may change.(4mks)11. Outline FOUR benefits of business ethnics. (4mks)

12. The following information related to businesses A,B ,Cand D

BUSINESS ASSESTS LIABILITIES CAPITALA 250,000 M 150,000B N 400,000 600,000C 150,000 60,000 PD 350,000 Q 250,000Determine the figures represented by M,N,P, and Q (4mks)

13. Record the following transactions in a two column cash book of Magunga Traders and balance it off. (4mks)

2012 January 1 – Balance b/d - cash sh 10,000

- bank sh 25,000January 2 – Bought stock in cash sh 6,000January 7 – Cash sales shs 2,500January 12 – With drew cash from bank for office use sh 4,000January 1st – Paid wages in cash sh . 3,000January 31st – Received sh 4,500 from Otaro, a debtor by cheque

Magunga TradersTwo Column Cash book for the month of Jan 2012

Dr Cr

Date Particulars Cash Bank Date Particulars Cash Banks

14. The following account balances were obtained from the books of Kaswanga Traders on 30th June 2011.

ShLand and buildings - 200,000Current assets - 420,000Furniture - 60,000Motor car - 240,000Capital - 480,000Current liabilities - 440,000

Required : Prepare a trial balance for Kaswanga Traders as at 30th June 201115. The following information was extracted from the books of Gembe Retailers for the year ended

31st December,2010

ShCost of sales 1,200,000Stock as at 1.1.2010 160,000Stock as at 31.12.2010 240,000Calculate the rate of stock turnover. (4mks)

16. The following balances were extracted from the books of Watber Traders as at 31st December, 2009.

ShCapital 620,000Motor van 300,000Stock 140,000Furniture 100,000Debtors 120,000Creditors 60,000Bank 20,000Additional information:On 31st December, 2009 Watber Traders receiver cheques amounting to Sh 40,000From debtors as part payment of their accountsPrepare Watber Traders balance sheet as at 31st December,2009. (4mks)

17. Name the factor of production that each of the following resources relate to. (4mks)

Resource Factor of productiona) Accountant

b) Motor vehicle

c) Water

d) Owner

18. State FOUR benefits that a government gets from a bonded warehouse. (4mks)19. List FOUR features of effective communication. (4mks)20. Give FOUR disadvantages of a long chain of distribution of goods to a buyer. (4mks)21. Outline FOUR features of a sole proprietorship form of business organization.(4mks)22. List FOUR causes of business failure. (4mks)23. State FOUR reasons why a cheque may be dishonoured by a bank. (4mks)24. State FOUR circumstances under which a trader would advertise his products over the radio

instead of television. (4mks)25. On 1 -8-2010, Onyango bought goods on credit quoted at sh 200,000.Terms of sale were 20%

trade discount and 10% cash discount if payment was made on 29 – 8- 2010

Calculate the amount paid of payment was made on 26 – 08 – 2010.

KENYA HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Discuss FIVE factors which influence geographical mobility of labour. (10mks)b) Explain FIVE characteristics of good money. (10mks)

2. a) Describe FIVE factors that encourage entrepreneurship in Kenya. (10mks)b) Highlight FIVE adverse effects of localization of firms in an economy.

3. a) Discuss FIVE factors that a government should consider when deciding on a good tax system. (10mks)

b) Explain FIVE factors which may hinder economic development. (10mks)4. a) Discuss FIVE advantages of trade restrictions to a country. (10mks)

b) Describe FIVE merits of public corporations. (10mks)5. a) Explain FIVE challenges that may be experienced by a country whose population is

made up of a large proportion of young people. (10mks)b) On 1st December 2009, Kamau had sh. 55,000 in hand and sh. 250,000 at bank. During

the month, the following transactions took place.December 2 cash sales banked sh. 35,260 3 Bought stationery in cash sh. 4,5008 Paid Odongo a creditor sh. 94,000 by cheque in full settlement of his account after deduction 6% cash discount 12 received a cheque for sh 58,800 from Wafula after allowing him a cash discount of sh. 1,20015 paid salaries sh. 34,000 in cash 25 Withdrew sh. 50,000 from bank for office use. 28 Anyango, a debtor paid her account of sh. 75,000 by cheque less 10% cash discount30 Deposited all the cash into the bank except sh. 13,700Prepare a three column cash book and balance if off. (10mks)

6. a) Explain FIVE uses of National Income statistics.b) The following trial balance was extracted from the books of Mawego Traders 31st

December 2010.MAWEGO TRADERS

TRIAL Balance as at 31st December,2010 Dr Cr

(shs) (shs)Gross profit 380,000Closing stock 274,000Capital 259,000Drawings 83,000Creditors 93,000Premises 103,000Debtors 123,000Cash at bank 33,000Bank loan ( 2 years)

50,000

General expenses 54,000Commission received

20,000

Wages and salaries

132,000

802,000 802,000

Prepare:i) Profit and loss account for the year ended 31st December 2010. (4mks)ii) Balance sheet as at 31st December 2010. (6mks)

MARANDA SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 1 / 565/BUSINESS STUDIES2 Hours

1. Outline four importance of business studies in a society. (4 marks)2. Determine the missing figures represented by Q, R, S and T. (4 marks)

Business Capital Assets LiabilitiesABCD

5,5009,300

S1,940

16,000R

27,600T

Q15,00016,0002,850

3. Highlight four reasons why government participates in business activities. (4 marks) 4. Highlight four negative consequences of inflation. (4 marks)5. Motor bike transport, popularly known as Boda boda is an upcoming business in Ikutha District.

State four disadvantages of this business. (4 marks)6. Highlight four expenses incurred by a wholesaler when he buys goods from a producer.(4 mark)7. The following are some of the source documents used in accounting; credit note issued, cash sale

receipt, credit note received and invoice issued. Match each of the following books of original entry with the relevant source document (4 marks)

Book of original entry Source document a) Sales returns book b) Sales day book c) Purchases returns book d) Cash book

8. Outline four factors that may determine the amount of rent charged for the use of land as a factor of production. (4 marks)

9. Highlight four reasons why the government taxes its citizens. (4 marks)10. Indicate the term described by the following statements. (4 marks)

Statement Terma) Inability of a business to meet its financial

obligations. b) A company that acquires 51% or more shares

of another company. c) A business that takes over another business

by buying off all its assets and liabilities. d) A business grants another right to

manufacture and distribute its branded products using its name.

0

Price (sh)

Quantity (units)20

100

150E

D

S

SD

Maximum price

11. Indicate whether the following accounts are personal, nominal or real. (4 marks)12.

Account Typea) Rent b) Discounts c) Creditors d) Land

13. Name four types of utilities created in each of the following circumstances. (4 marks) Circumstances Utilities i) A dairy farmer who delivers milk to Brookside diaries. ii) Mama Mboga selling vegetables in an open air marketiii) Freshly harvested fruits are stored in a granary. iv) Recycling waste .

14. The following information was extracted from the books of KM Stores. Rate of stock turnover 3times Opening stock Sh.80,000Closing stock Sh.100,000Mark-up 20%

Determine the gross profit. (4 marks) 15. Give four reasons why plastic money is increasingly being used in business transactions.

(4 marks)16. State four items that constitute to injections in the circular flow of income. (4 marks)17. Give four limitations of Automatic Teller Machines (ATMs) used by commercial banks to

provide services for consumers. (4 marks)18. The institutional memory of an organization depends on how well records are kept.

Highlight four functions of documents in an organization. (4 marks) 19. State four factors hindering development planning. (4 marks) 20. Outline four risks against which a shopkeeper may insure. (4 marks) 21. The following diagram shows the equilibrium price of good X as set by the forces of demand

and supply.

Suppose the government sets the maximum price at Sh.100 which is below the equilibrium price, highlight four effects of such a move. (4 marks)

22. Anyango is employed as a saleslady by Biashara Traders. She is paid a basic salary of Sh.3,000 per month and a commission based on her sales as follows:- 1.5% on the first Sh.100,0002% on the next Sh.50,0002.5% on the next Sh.75,0003% on any sales above Sh.225,000During the year 2009, Anyango received a monthly income of Sh.41,575.Calculate her total sales for the year 2009 (show all your calculations). (4 marks)

22. Highlight four circumstances under which a firm would be located near the market for its products. (4 marks)

23. Give four reasons why many business persons prefer mobile phones to landline telephon(4 marks)

24. Highlight four importance of economic integration in Kenya. (4 marks)25. List four factors that may limit the number of entrepreneurs in an area. (4 marks)

MARANDA SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. a) Explain five ways in which private warehouses differ from public warehouses. (10marks) b) Discuss the economic importance of natural resources. (10marks)

2. a) Explain five features of monopolistic competition. (10marks) b) Discuss five advantages of M-banking. (10marks)

3. a) Outline five ways in which peace in a country may encourage entrepreneural development.(10marks)

b) Highlight five factors that influence the level of national income in a country.(10marks)4. a) Explain five circumstances in which a trader may offer after sales services. (10marks)

b) Identify and explain five methods of reprography that can be used in an office. (10marks) 5. a) Explain four roles of stock exchange as a market for securities in the economy. (8marks)

b) The following trial balance was extracted from the books of Mzalendo Traders as at 31 st Dec 2011.

Mzalendo Traders Trial balanceAs at 31st Dec. 2011

A/C Title Dr (Sh) Cr (Sh) Fixed assets Current assets Rent income Discounts General expensesCarriage inwards Purchases /sales Returns Stock 01/01/2011 Drawings Current liabilities Capital

292,60078,000

3,00089,00028,000280,0004,60046,00033,000

23,0002,000

474,0007,000

53,000295,200

854,200 854,200

Stock on 31st Dec. 2011 was Sh. 54,000.

Required:

i) Prepare trading, profit and loss accounts for the year ending 31st December 2011.

(8marks)

Calculate;

ii) Rate of return on capital employed.

(2marks)

iii) Rate of stock turn over. (1mark)

iv) Gross profit margin as a percentage. (1mark)

6. a) Explain five determinants of economic growth. (10marks)

b) The following transactions relate to Busbul Traders for the month of December 2011.

Dec 1: Started a business with Sh.200,000 in the bank account.

Dec 2: Bought furniture for Sh.50,000 and paid by cheque.

Dec 3: Sold goods on credit to Tila Sh.20,000, Katu Sh.10,000.

Dec 4: Bought goods on credit from Kahama Sh.30,000, Kanga Sh.40,000.

Dec 5: Returned faulty goods to Kahama Sh.5,000.

Dec 6: Paid Kahama on account by cheque less 10% cash discount.

Dec 7: Received faulty goods from Katu Sh.2,000.

Dec 8: Received payment due from Tila and Katu by cheque less 5% cash discount.

Dec 9: Cash sales Sh.100,000.

Dec 10: Paid wages Sh.20,000 by cash and electricity Sh.10,000 by cheque.

Dec 11: Deposited all cash in hand into the bank account.

Required:

Prepare a three column cash book duly balanced (10marks)

NAIROBI SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016565/1BUSINESS STUDIESTHEORYPaper 12 Hours

1. State any four circumstances under which air transport may be used. (4mks)2. Highlight four ways in which productivity of labour can be improved. (4mks)3. Outline any four differences between public companies and parastatals. (4mks)

Public Companies Parastatals (i) ………………………………………(ii) ………………………………………(iii) ……………………………………(iv) ……………………………………

(i) …………………………………………(ii) …………………………………………(iii) …………………………………………(iv) …………………………………………

4. Outline four reasons why the government issue licences to drivers. (4mks)5. State four emerging trends in product promotion. (4mks)6. Outline any four reasons why the Kenya government levy taxes on some commodities.

(4mks)7. Highlight any four functions of the central bank.8. Indicate books of original entry for the following transactions. (4mks)

Transaction Book of Original entry(a) Sold goods on credit(b) Bought computer on credit(c) Withdrew money from bank for personal use.(d) Bought goods on credit

9. Identify any four main obstacles to the implementation of development plans in many developing countries. (4mks)

10. State the department where the following functions are carried out. (4mks)

Function Department(a) Deals with staff recruitment and human resource development (b) Collects, records and analyses all business transactions.(c) Changes Raw materials to finished goods.(d) Selling finished products.

11. Outline four circumstances under which sign language may be appropriate. (4mks)12. State four reasons why people may prefer to take an endowment policy other than

a whole life policy. (4mks)

14. By use of a well labeled diagram, show the effect of an increase in supply of a product on equilibrium price and quantity. (4mks)

15. State four characteristics of a perfectly competitive market (4mks)16. Highlight four services offered by wholesalers to producers. (4mks)17. The following information was extracted from the books of Kibukwo Traders on 31

December 2010.

Gross Profit 100,000Carriage outwards 2,000Electricity expense 3,000Accrued electricity expense 1,000Commission Income 500Rent 5,000Prepaid Rent 2,000

Using the information given above prepare Kibukwo’s Profit and Loss Account for the period ended 21/12/2010. (4mks)

1. List four factors which may influence the level of national income in Kenya. (4mks)2. State four reasons why a manufacturer would sell his products directly to the consumer. (4mks)3. Outline four measures that Kenya may take to control population explosion.4. The information given below relates to Kapkures stores on 31 December 2009. (4mks)

Stock (1/1/2009) 37,500Purchases 136,250Stock 31/12/2009 13,750Margin 20%Expenses 2,000Using the information given above calculate:

i) Cost of Salesii) Gross profitiii) Salesiv) Net profit

5. State any four advantages of a bonded warehouse to the government. (4mks)6. Highlight any four factors that determine the size of the firm. (4mks)7. The following are transactions of Chumba Traders for the month of January 2011.

January Balances: Cash shs. 100,000 (Dr) Bank shs. 20,000 (Cr) 1 Purchased stock worth sh. 42,000 and was given 2% cash discount. 2 Sold goods worth shs. 120,000 and received cash after allowing 4%

discount.Required: Enter the above transactions in a three column cashbook and balance it off (4mks)

8. State any four advantages that Kenya will enjoy by being a member of East African Community.(4mks)

9. Gloria started business with Ksh. 20,000 in cash on 1st January 2009.Jan. 1: Bought stock worth 10,000 in cash.Jan. 2: Sold goods worth Ksh. 5,000 receiving a cheque payment.Jan. 3: Took cash worth Ksh. 1,000 for personal use.Open the ledger accounts and post the above transactions. (4mks)

NAIROBI SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016Paper 2

1. (a) Explain five reasons why the demand for a commodity may not significantly rise with a

decrease in its price. (10mks)(b) Highlight five differences between shares and debentures. (10mks)

2. (a) Explain five problems associated with the output approach in computation of national income of a country. (10mks)

(b) Outline five measures that the Kenyan Government may take to reduce unemployment. (10mks)

3. (a) The following Trial Balance relates to Katiba Traders for the year ended 31st January 2008CapitalLand & BuildingsMachineryFurnitureDebtorsCreditorsOpening stockBankCashSalesSales returnsPurchasesPurchases ReturnsGeneral ExpensesCarriage InwardsCarriage OutwardsRent ReceivedCommission ReceivedSalaries and WagesElectricityInsurancePostageDrawingsBank Loan

140,00043,20040,000

156,000

2,200120,000

18,000

80016,000

2,400800

1,800

12,0001,4003,000

6002,000

220,000

100,000

30,800

2,400

5,0002,000

200,000TOTAL 560,200 560,200Note: Closing Stock on 31st January 2008 was valued at Kshs. 5,000., Prepare:(i) Trading, Profit and Loss Account for the year ended 31st January 2008. (8mks)(ii) Balance Sheet as at 31st January 2008. (4mks)

(b) Highlight four reasons that may make an insurance company to refuse to compensate the insured in the even that a risk occurs. (8mks)

4. (a) Explain five factors that may lead to a deficit in balance of payment in a country. (10mks)(b) Explain five importance of a warehouse to a trader. (10mks)

5. (a) Explain five importance of filing documents in an organization. (10mks)(b) A manufacturing company operates on imprest of sh. 10,000. On 1/6/06 the petty cashier

had a balance of sh. 4,000. She received a reimbursement to restore it on 5/6/06. The following transactions took place during the month:

June 8: Paid Amos a small scale creditor Shs. 500.June 9: Paid postage Sh. 300June 10: Paid for cleaning Sh. 480June 11: Bought stamps for Sh. 180June 12: Paid for cleaning Sh. 750June 13: Paid for traveling Sh. 400June 14: Paid for tea leaves Sh. 450June 15: Paid for stationary Sh. 430Required:

Prepare a Petty Cash book for the manufacturing firm for the month of June 2006 with the following analysis columns. (10mks)

Travelling ii.) Cleaning iii) Stationary iv) Postal v) Tea6. (a) Explain five considerations to be made when deciding on a good tax system. (10mks)

(b) Outline five changes that may take place when a country is experiencing economic development. (10mks)

ALLIANCE BOYS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. Characteristics of Services

- They are intangible- They are inseparable from those providing them- Services are highly perishable- Quality of services cannot be standardized.- Price paid for services is fore experience but not for ownership.

2. Reasons why most Developing Countries still rely on extractive level of production.- Storage of capital- Lack of skilled manpower- Lack of modern technology- Heavy reliance in subsistence production- Good climate hence engage in Agricultural production.- Natural resources available hence engage in primary production.

3. Benefits of a business that uses e-mail.- It is fast in sending and receiving information- It is relatively cheap- It makes it possible to communicate with persons far away in other continents.- Information obtained can be kept as hard as soft copy for future reference.

4. Factors that influence entrepreneurship- Infrastructure- Presence of credit facilities - Information available about markets- Government policy of business ownership - Level of taxation- Legal controls- Political stability- Security available.- Level of Technology.

5. Environmental factors(a) Internal(b) Internal(c) External(d) External

6. Factors that might have caused the shift.- A decrease in the people’s income- A decrease in the price of the substitute- An increase in the price of a complementary product.- Deterioration in terms of sale e.g. Lower Discount.- Where there is expectation that true price of the product will fall in the near future.- The introduction of a new but cheaper substitute

7. Circumstances under which producers may prefer to sell their produce directly to the consumers.- Where the consumers are localized.- Where the product is of technical nature- Where the product is of very high value.- Where the produce is perishable- Where the producer has his own retail outlet.- Where the producer is producing goods as per the customers specification.- Where true producer requires immediate feedback from consumers.- Where the level of competition in the market is very high.- Where the level of production is very low- Where the consumers prefer buying directly from the producers.- Where the producer does not want to share the profits with middlemen.- Where that is a government policy.

8. Types of unemployment(a) Disquised hidden(b) Seasonal(c) Structural(d) Frictional

9. Books of original entry(a) Purchases Journal(b) Cash payment journal(c) Returns journal(d) Sales journal

10. Abbreviations in full(i) Gross Domestic Product(ii) Net National Product(iii) Gross National Product

(iv) Disposable personal income.11. Circumstances for issuing a credit note

- If Mueni had been overcharged- If mueni had returned some goods due to damage.- If Mueni was charged for goods not supplied.- If Mueni returned empty containers whose cost was included in the voice.- If Mueni had merited some discounts which was not deducted from the invoice.

12. LOLIONDO Enterprises

TRIAL BALANCE AS AT 6 TH JANUARY 2009 .

DR CRLand 150,000Prepaid Insurance 85,500Purchases 18,000Return In 20,000Disc. Received 5,500Sales 5,000Capital 311,000Return Out 6,000Creditors ___________ 1,500

329,000 329,000

13. NEGATIVE EFFECTS OF DEVELOPMENT- It may lead to rural – urban migration- It may lead to high levels of environmental degration.- It leads to emergence of social evils in the urban centres such as prostitution and

crimes.- It leads to the loss peoples traditional moral values- It leads to stretching of social amenities in urban centres such as housing medical

facilities and education facilities.

14. (i) Current Ratio. =

CurrentAssetsCurrentLiabilities

=

650 ,0000650 ,000 = 1:1

(ii) Gross profit mark-up

=

GrossPr ofitCost of Sales x 100%

(a) Gross Profit = Margin x sales

=

20100

x 2,00 ,000 = 400 ,000

(b) Cost of sales = Sales – Gross Profit= 2,000,000 – 400,000= 1,600,000= 25% or ¼

ALTERNATIVE IConvert margin to mark-up

20100 x20

x 100 = 2080x 100 = 25 %

ALTERNATIVE IIConvert Margin to mark – up15−1 = 1

4or 25 %

3. Rate of Stock Turn Over

=

Cost of salesAverage Stock

= 100 ,000 + 200 ,0002

=150,000

Stock turn over =

1,600 ,000150 ,000

= 10.67 times4. Capital Employed

= Fixed Assets + Current Asset= 5,000,000 + 650,000= 5,650,000

OrCapital + Net profit + Current Liabilities= (4,700,000 + 300,000) + 650,000= 5,650,000

15. Differences between Savings and Current Account

Savings A/C Current A/C1. Funds are not withdrawn by use of a cheque2. A minimum Balance must be maintained in the A/C for it to remain operational3. Frequency of withdrawal may be regulated by the bank policy.4. Overdraft are not usually allowed5. Acertain minimum deposit maintained on the Account may qualify to earn interest.6. A notice is required in case one wishes to withdraw beyond a certain maximum.

1. A cheque is usually used to withdraw money from the Account.2. No minimum balance is required when making withdrawals from the A/C.3. Any amount of money can be withdrawn at any time as there is no restriction on the maximum to be withdrawns.4. May allow overdraft to customers.5. Money on this Account does not earn interest.6. There is no restrictions on the frequency of withdrawal from the Account.

16. Positive outcome of Inflation.(i) Debtors may benefit(ii) Businessmen may benefit (iii) Workers may be encouraged to work hard.(iv) Borrowers profits generated by businessmen.(v) Increases profits generated by businessmen.(vi) Increases production

(vii) Better use of available resources.17. Forms of consumer exploitation.

(i) Very high prices for products (ii) Inferior quality good(iii) Misleading information about a product misleading advertisements.(iv) Harmful products

(v) Hoarding of products(vi) Breach of contracts

18.(i) Account / Finance

(ii) Purchasing(iii) Personnel /Human resources

(iv) Administration19. Circumstances under which a sole proprietor business may be dissolved.

- If the owner decides to transfer the business to another person.- If a court of law orders that the business be dissolved.- Where the continued existence of the business is in breach of the law.- Where time objective for the establishment of the business has been achieved.- If the owner of the business is declared bankrupt- If the owner of the business dies.- If the owner decides to close down the business.- If the owner becomes incapacitated or insane.

- If the business makes continous heavy losses.

20.Closing Capital = Opening Capital + Additional Investment + Profit – Drawings

19,500 = 60,000 + 50,000 + 60,000 – D= 170,000 – 19,500= 150,500

21. Factors that may be considered by insurance company before determining premium to be charged for life Assurance policy.- Age of the insured- Occupation of the assured- Health status of the Assured - Amount / sum assured- Length of contract

22. USE OF SIGNS IN COMMUNICATION- Where there is language barrier- When given direction e.g. road signs.- When one or both parties are deaf.- When silence is required e.g. hospital

23. Limitation of Human porterage- Limited carrying capacity- Very slow speed.- Unsuitable for long distance since people get tired quickly- Limited protection against damage by extreme weather conditions.

24. Factors to consider before Incurring public expenditure- Whether the expenditure is sanctioned or approved by the relevant authority generally the parliament.- The social benefit occurring to the society in order to provide maximum benefit.- Whether there is proper financial management, proper record keeping of Accounts- How flexible the expenditure is to allow alternations depending on the circumstances prevailing in the market.- How economical the expenditure is to avoid wastage of scarce resources.- How easily is it for the expenditure to be expanded or reduced.

25. Current trends in product promotion.(i) Internet(ii) Intensification of personal selling

(iii) Promotion convoy(iv) Mobile phones.

ALLIANCE BOYS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. (a) Explain five reasons why it is important for a business person to prepare a business

plan. (10marks)(b) Explain five features that differentiate a perfect competition market from a

monopoly market structure. (10marks)

2. (a) Explain five features that would make a producer to build his own warehouse rather than rely on a public one. (10marks)

(b) As at 1st July 2008 the cash book of Emori enterprise showed the following balances: Cash sh.20, 000 and a bank overdraft sh. 8,600.During the Month the following transactions took place.3/07/08: Nafula settled her account of sh. 16,000 by cheque of sh. 15,0006/07/08: Paid rent by cash sh. 8,00010/07/08: Deposited sh. 6,000 into the business bank account from the cash till15/07/08: Settled Wakulis account of sh. 20,000 and he allowed a discount of

1% by cheque.18/07/08: Deposited sh. 28,000 in the bank from private sources.21/07/08: Cash sales sh. 12,00024/07/08: Otieno a debtor settled his account by cheque of sh. 8,000 having

been allowed a discount of 20%.26/07/08: Purchased furniture of sh. 5,200 paying by cheque.28/07/08: Received sh. 3,600 cash from Nduta.30/07/08: Banked the cu crilable cash except sh. 1,600.

Required:Draw up a three – column cash book. (10marks)

3. (a) Explain five challenges that may be experienced by a new entrepreneur who is intending to start a business in Kenya. (10marks)

(b) Ijara investiment operates a whole sale business. The following transactions took place in the Month of may 2010.May 3: Sold goods on credit to Ayimba sh. 60,000.May 8: Purchased goods on credit from mjuaji stores sh. 120,000.May 12: Returned goods to Mjuaji stores worth sh. 6,000.May 16: Purchased goods on credit from Mjuaji stores sh. 160,000.May 22: Sold on credit to Mafala retailers sh. 150,000.May 23: Bought a new motor vehicle from Mashariki motors worth sh.

3,200,000.May 24: Ayimba returned goods worth sh. 10,000.May 29: Sold equipment worth sh. 840,000 on credit to chap limited.

Required:Record the above transactions in the relevant books of original entry for Ijara

I nvestments.(10marks)

MANG’U SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. - Number of employees

- Volume of output- Floor area covered- Capital invested- Production method used- Market served- Sales volume

2. - Poor location- Insufficient capital- Stiff competition- Poor management

3. - Does not cater for illiterate

- Message may be read only once because people are used to newspaper for that particular Place

- May not reach the rural areas where transport system is very poor- Expensive to book a space in the newspaper

4. - Too many to satisfy- Limited resources- Problem of lending one to satisfy first- Habitual- Repetitive- Change with time- Age and gender

5. - Reliable- Fast / quick- Secure- Flexible

6. - Create employment- Outlet for new invention among the people- Income generation- To be own boss- Offering special services- Proper utilization of space time

7. - Make – up = 25%- Margin = 20%

- Margin =

20100

×600 ,000

- G.P = SH 120, 0008. - If the country is enclosed with a lot of natural resources

- If it lacks sufficed production skills- To venture in to manufacturing- Where the natural resources (raw materials) set a high prices at the international

market.- Incase it has good trade relationship with partners- If a strong indigenous culture exists favouring local extraction industries.- Where climatic factor favour a certain product.

9.Commercial bank NBF- Clear cheques- Give short-term loans- Give loans for variety of purpose-Offer current account facilities- Provides means of payment- Exchange foreign currency

- Do not clear cheques- Give long-term loans- Give loans for specific of purpose- No current account facilities- Do not Provides means of payment- Do not exchange foreign currency

SECTION B10. - Paye must be named

- Date for payment must be determined- Should be unconditional- Amount of money should be clearly indicates- Bear a revenue stamp- Should be signed by the drawer

11. - Food and drugs act

- Trade description act- Consumer safety act- Weight and measure act- Setting standards for products- Public health act- Licensing- Price legislation

12. - A contract of indemnity- Has no surrender value- Premiums change depending on the degree of risk being covered- Short term contract- Can not be assigned to somebody else.- Compensation is pegged on the maximum value of the property

13. - Accessibility- Space- Electricity- Security- Availability of communication networks

14. - Minimises the risk of loss or damage- Saves time / labour in loading and offloading due to use of machines.- Special containers are available for goods requiring special attention- Insurance premiums are low for risks are less.- Reduce congestion on roads- Space is saved when containers are used- Containers are fitted with devices which make movement and handling easy.

15. - High price of production- Heavy taxation- Decrease in population- Decrease in price of substitutes- Decrease in consumer incomes.

16. - Raise revenue for government expenditure- Discourage consumption of harmful products- Protect local industries by discouraging importation of certain goods- Reduce income inequalities in the country- Control inflation by reducing money supply.- Encourage delocalization of industries by taxation urban people more.- Correct balance of payment by taxing imputs higher.

17. Munyasia store Balance sheet

As at 15 th April 2005 shs Fixed assetsBuildings 200,000Motoruan 35,000 235,000 Current AssetsStock 22,000Debtors 6,000Cash at bank 85,000Cash at hand 36,000 149,000 384,000

Capital 260,000Loan form HFCK 100,000 Creditors 24,000

384,000

18. - Minirial distribution of office workers by movement- There is privacy to staff- Possible to separate office staff of various levels and status.- Makes easier to monitor use of office equipment- Gives organized appearance

19. - 48,000- 193,450- 16.,031

20. - Language barrier- Difference in weights and measurement leading to complication in transactions- Difference in currency value- Long distance involved- Immobility of factors of production- Restrictions and controls imposed by different countries eg quotas, tariffs and

exchange controls. - Exporters and importers lacking knowledge of foreign markets.

21.Dr CrBank CashSalaries Bank

22. - Difficult to obtain accurate figure peoples expenditure- Difficulty in estimating expenditure of substance consumption- Difficulty in obtaining accurate figure on expenditure for citizens of a country who

live abroad.- Difficult to estimate depreciation.- Problem of double unity- Fluctuation of exchange rate especially in evaluating imputs and exports.- Problem of differentiating intermediate and finished products.

23.-Source document -Book of original entry-Invoice - Purchases returns journal-Invoice -Purchases journal

24. - Tertiary- Primary

- Secondary- Primary

25. - Encourage formation of multinational corporations- Earns revenue to the government.- Enables integration of important function eg production- Unification and integration of industrial activities across the countries.- Opens opportunities for business ownership by people in various countries.- Enables collaboration of firms in different countries in respect to trade areas.- Facilities applications of better technology for improved and cheaper products.

MANG’U SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME

1. (a) Wrong / inaccurate data for population and income figures give wrong percentage income.- Changes in value of money due to devaluation increases per capita income

but does not reflect improvement in peoples welfare. - Income distribution if there is inequitable income distribution the welfare

standards have not improved even with increased in per capital income.- Social costs – Rural urban migration for those working in industrial sector

may cause stain on family relationships but increase per capita income.- Increase in number of high priced / valued goods that raises per capita

income but not improvement in standards of living.- Increase no per capita as a result of over working / little recreation leads to

poor standards of leaving.- Per capita income is got from arithmetical calculations which may not reflect

a true picture of rise / fall in standards of living / welfare standards.(Any 5x2=10mks)

(b) - Low standards of living- Dependency burden- High level of unemployment- Rise in social problems- Strain on social amenities- Food shortage (5x2)well explained =10mks)

2. (a)Monopolistic Perfect compensation(i) Firms produce / cell similar but differentiated products.(ii) Have their own price and out put policy (iii) Faced with normal demand curve(iv) Spend a lot of money in advertising(v) Firms operate at excess capacity

(i) Firms produce / cell homogeneous products

(ii) They are price takers & output adjustors

(iii) Perfectly elastic demand curve(iv) Firms do incur cost of advertising (v) No excess capacity

(Matching differences Any 5x2=10mks)(b) - To improve efficiency

- Generate revenue for governments- Reduce control by the government- To reduce government expenditure- Attract foreign investors / private investors (Explained 5x2=10mks)

3. (a) - Where the producer does not require specialized storage for safety of goods- Where goods do not require bulk breaking- Where the gods do not need to brand, pack, blend, preparation before they

reach customers.- Where the customers are concentrated in one area.- Where the produce wants to save on time. (No splitting Any 5x2=10mks)

(b) Bumala Traders Trading Profit and Loss Account

For the year ended 31/12/2011 Shs shs

Opening stock 60,000Purchases 340,000Less returns 18,000 322,000G.A.S 382,000Less closing stock 52,000COS 330,000GP c/d 370,000 700,000Rent 16,000Add curved 6,000 22,000Advertising 24,000Insurance 30,000Less Advance 4,000 26,000Salaries 21,000Profit c/d 291,000 384,000

Shs shsSales 720,000L.Returns 20,000 700,000

700,000GP b/d 370,000Commuss 9,000Add due 5,000 14,000

384,000

Bulala TradesBalance sheetAs at 31/12/2011

F.A shs shsFormative / Fittings 100,000Premiers 400,000 500,000CADebtors 54,000Stock 52,000Insure prepaid 4,000Commiss due 5,000Cash 15,000 130,000 630,000

Shs shsCapital 288,000Less Drawings 40,000 Add net profit 248,000 539,000 291,000 539,000C.CCreditors 64,000Rent accured 6,000Salaries 21,000 91,000 630,000

4. (a) - The high rate of interest charged on these loans.- Not many people have accounts with commercial banks- Involves lengthy formalities- Many people fear the consequences of failing to repay the loans.- Many people do not recognize property that they can offer as security for the loans.- High population- The rural population is too high as compared to cultivable land.- Shortage of capital – due to shortage of capital old methods of cultivating are adapted.- Inadequate irrigation facilities – This results into low agricultural production - Lack of skills – Most of the farm workers are untrained or insufficiently trained.- Seasonal changes – Farming depends on changes in seasons.

5. (a) - Facilitates buying/ selling of shares- Creation of employment- Raise revenue for the government- Measuring a county’s economic progress- Safeguarding investors interests- Assist company to raise capital- Promotes the culture of saving- Avails a variety of countries

(b) - Increased job opportunities- Widens the market for local products- Saves foreign exchange, which could have been fused towards to import

goods from non-member countries- Earns the government revenue taxation - Leads to specialization- Helps development of infrastructure to member countries.- Creates congestion, hence quality goods / services.

6. (a) Nakhulo Traders Trading profit and loss Account

For the year ended 31st Dec 2011 Shs shs

Opening stock 60,000Purchases 161,000Add coming inward 11,000 172,000Less Returns out 25,000 147,000 207,000Less closing stock 72,000COS 135,000GP c/d 46,000 181,000

Telephone 5,000Prepaid 1,100 3,900Water bills 2,100Add due 1,300 3,400Depreciation on equip 12,500Carriage out 10,000Salaries 22,000Electricity expenses 2,000Insurance 1,000 54,800

Shs shsSales 208,000Less Returns 27,000 181,000

181,000GP b/d 46,000Dis received 7,500Net loss 1,300

54,800

(b) - Indirect taxes cannot be evaded as payment is made with purchases- They stimulate effects as people shift to maintain their living standards- They are more broad based (cover more people)- They are cheaper to administer- Indirect taxes are more equitable since all consumer tend to pay an equal

amount per unit consumed.

PRECIOUS BLOOD KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME

1. – Age groups-Distribution patterns-Growth rate-Levels of education- Movement patterns. (any 4 points = 4 marks)

2. -Employees-Suppliers-Government-Community-General public.-Customers. ( Any 4 points = 4 marks)

3. - production is carried out mainly on large scale-Goods and services produced are mainly for sale.-Modern technology is employed.-Surplus goods are produced.-It enhances division of labour and specialization.-Goods and services produced are of high quality.-Wide variety of goods and services are produced.-There is more interdependence among producers.-It is more pronounced in developed economics. (Any 4 points for 4 marks)

4. – Cost of construction should be affordable.- Size of staff to avoid overcrowding or unnecessary free space.- Maintenance and running costs should be within reach.- Nature of the organization’s work to decide the most appropriate layout.- Effect of staff morale to avoid negative impact on performance.- Flexibility for ease of redesigning and reorganization.- Space available to determine if it is adequate.- Security for office and personal property.- Legal requirements. (any four points 4 marks)

5. – Tolerance - Respect other peoples opinions.- Adaptable – willing to accept change.- Humility – humble- Temperature – able to control his/her emotions.- Prudence – careful when making judgment or decisions- Diligence – keen and thorough in his /her work.

(Any 4 for 4 marks)6. – Assemble in market places on designated market days.

-Display their wares on the ground and make shift structures.-Deal in a wide variety of items e.g. foodstuffs.-Traders selling particular items are found in particular parts of the market.

-Traders normally visit different market days of the week. ( Any four points 4 marks)7. opening balance on the account.

-All the invoices issued for goods supplied.-All the receipts for payments made.-The debit notes issued.-The credit notes issued.- The closing balance. ( Any 4 for 4 marks)

8. All partners are equal.-Profits/losses to be shared equally.-No salaries is to be paid to any partner.-No interest on capital.

-No interest is to be charged on drawings.-Prescribed rate of interest is to be paid on loans by partners to the business.-All partners are presumed to be active.

(Any 4 points for 4 marks)10. – Giving economic incentives e.g. low taxes, subsides etc.

-Putting up and improving infrastructure.-Ensuring law and order.-Providing easy credit terms.-Developing social amenities e.g. hospitals, schools etc.-Enhancing favourable laws and reputations.-Facilitating use of appropriate technology.-Preservation and conservation of natural resources and environment.-Simplifying procedures in starting and running businesses.-Ensuring good governance and political stability. (Any four points for 4 marks)

- Sources /sender-Message-Medium-Receivers-Response /feedback. (Any 4 for 4 marks)

11. – Where it is a government policy.-When there is reed to spread risks insured by the company.-Where the value of the insured property is too high for the risk to be born by only one insurer.-When the possibilities of the risk occurring are very high.-When the company covers so many different risks.

(Any 4 answers for 4 marks)12. -Should not give false /misleading information about the products.

-Should not promote sales with genuine products but actually sell counterfeits.-Contents of the massage should not be offensive to the public.- The message should not cast competitors in bad light.

(Any 4 answers for 4 marks)13. Depletion of productive resources e.g. forest.

-Degradation of environment.-Air and water pollution.-Improper disposal of solid and plastic waste.-Crime and other anti – social activities.-Diverse effects on the ozone layer.-Diseases and poor health due to chemical handling in factories.-Psychological diseases e.g. stress, poor social human relations, noise of industrial life which may lead to hearing problems etc.

14. -Price mechanism.-Haggling /bargaining.-The government-Recommending or price fixing by producer / seller. (Any 4 x 1 = 4 marks)

15. Natural resource endowment.-Availability of capital or man made resources.-Human resources.-Social - cultural attitudes of the people.-Levels of technology.-Foreign investments.-Type of governance and political situation prevailing in the economy.

(Any 4 x1 =4 marks)

16 Baraka Traders Balance sheet

As at 31 st Dec 2005Fixed Shs ShsMachinesMotor vehicleFurniture

Current AssetsStockBank

150,000200,000 7,000

40,00020, 000417,000

Capital

L.T.LLoan from KCB

Current liab.Creditors

292,000

100,000

25,000417,000

8 @ ½ = 4 mks

17.Dr CAPITAL A/ C Cr

Shs Shs

Drawings Bal c/d

32,000162,000194,000

Bal. b/dAdditional investmentNet profit

Bal b/d

50,00080,00064,000194 000162,000

8 @ ½ = 4 mks18 . – Cash sale receipt.

- credit note- nvoice- -Debit note- Payment voucher. (4 x1 =4 marks)

19. – Equity - Economy - Certainty- Convenience- Flexibility- Diversity- Elasticity- Simplicity (Any 4 x 1 =4 marks)

20. – Difficult to determine what to constitute the baskets.- Varying prices of commodities in different places.- Choosing the base year in which the prices should be stable.- Difficult to ensure that correct weights are allocated to every item.- Lack of adequate and accurate data on prices and consumer expenditure.- Changing consumer tastes and preferences.

(Any 4 x 1 = 4 marks)

21.

Majengo Traders Trial Balance As at 30th June 2003

PARTICULARS DRShs.

CRShs

Fixed AssetsPurchasesSalesCreditorsDebtorsStockcapital

250,000 80,000

22,00060,000

120,000 45,000

247,000412,000

412,000

8 @ ½ = 4 marks22. – Accepting deposits.

-Lending.-Providing advice.-Safe custody of valuable items.-Acting as trustees.-Acting as guarantors and referees.-Issuing letters of credit. ( Any 4 x1 =4 marks)

23. -Voluntarily by shareholders - If declared bankrupt /insolvent.

-As a result of a change in law rendering its activities illegal.-Voluntary by creditors.If it acts Ultra-vires.(Any 4 x 1=4 marks)

24. – Monopoly.-Perfect competition-Perfect competition-Monopoly. (4 x 1 =4 marks)

25. -Widespread corruption / embezzlement of funds.-Poor management.-Lack of accountability.-Political interference-Stiff competition from the private sector.-SPoor customer relationship/insensitivity to customers.( Any 4x1 =4 marks)

PRECIOUS BLOOD KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. a) Reasons why per capital income is not an indicator of better living stands in a country.

i) Statistical problem/inaccurate data:-Data collection may be inaccurate meaning that the national income figures might be inaccurate hence wrong per capital income.

ii) Changes in the value of money /currency.-If the currency has been devalued,there can be a change in value of money which may not necessarily represent changes in the people’s welfare.

iii) Income distribution /inequality in income distribution:-National income may be high but if the national cake is in the hands of a few, one cannot say that people’s welfare is improved.

iv) Nature of the products;

-If the products are not meant to satisfy immediate wants, then an increase in per capital income may not lead to a higher economic welfare.

v) Social costs/negative impact on the population and environment;-Some developments may leave citizens worse than before an increase in national income such includes pollution, congestion, migration which strains family relationships, environmental disruptions etc.

vi) Inappropriate application of National income:-The per capital income may appear to be high but most of the income has been used in a way that did not benefit majority of the population.

vii) Change in population:-If a static population is assumed, a false state of higher economic welfare may be the result.

viii) Quantity of goods and services.-Increase in per capital income may be as a result of inflation but not increase in the

quantity of goods and services. (5 x 2 = 10 marks)b) Factors that may have accounted for the decline in terms of Trade.

-Higher prices of imports compared to exports of a country.-Fall in exchange rates which makes imports expensive.-Competition from similar products from other countries which lower demand hence lower export prices.-Devaluation of local currency which makes imports expensive and exports cheap.-Prices of exports remain constant while those of imports increase.-Prices of imports remain constant while those of exports decline.(5 x 2 = 10 marks)

2 a) Circumstances under which a high population growth may be desirable.-Where there is need to increase market demands.-Where there is need to increase labour supply /where a country is expecting low levels of labour supply.-When the government requires to boost a large army for defense/security purposes

-Where the country wants to attract more investments both foreign and local through increased consumption by the high population.-If the government wants to reap the benefits of specialization and division of labour.-When there is need to fully utilize the country’s resources.( 5 x 2=10 marks)

b) Principles of insurance -urberimae fidei / utmost goodfaith:The client is required to furnish the insurer with all the details regarding the risk to be covered.-indemnity The insured should be restored to the original financial position he was in before the loss occurred.- contribution:When the risk occurs two or more insurers share the loss, in proportion to the sum-insured with each.-subrogation Once the insured is fully compensated for the loss suffered he/she is not supposed to gain out of the loss.-insurable interestOne should only insurer property that he/she stands to suffer a direct financial loss in case the risk insured against occurs.-proximate causeFor the insured to be compensated there must be a very close connection between the loss suffered and the risk insured against. (5 x 2 =10marks)

3. a) Factors influencing the amount of money held for transaction motive.-The level of household/individual income:The higher the amount of income the higher the amount of money that an individual would hold for transaction motive.-The price level/cost of livingThe higher the cost of living the higher the amount of money and individual would hold.-The number of dependants an individual has /family size: Individual with a large family will keep large amount of money for transaction purpose.- The possibility of getting credit:The more difficult it is, the higher the amount an individual would hold for transacting propose.-Lifestyle of an individual / psychological environment.An individual with an expensive lifestyle or high income neighborhood will hold more money for transactions purpose.-Pattern of payment /interval between paymentWeekly wage earner will need to hold less than a person who receives his salary monthly.

(5 x 2 = 10 marks)b) Circumstances under which signs may be used in communication?

-When the recipient is deaf.-Is the communicator is dump.-Incase one is communicating a secret message.-When silence is vital e.g. in hospitals.-Where environment is noisy e.g. in a factory.-Where the communicators are far apart but can see each other.

-When the communicator and the recipient lack a common spoken language. (5 x 2 =10marks)

4. a) Reasons for motor cycles popularity.-Cheap to buy, hence affordable to many low income earners.-Maintenance costs are low.-Flexible means of transport which can offer door to door services.-Cheap to hire as compared to other means e.g. motor vehicles.-Convenient to the users, since they are readily available.-fast /saves time.

( 4 x 2 =8marks)

b) i) Kitui Millers Ltd

Trading, profit and Loss AccountFor the year ended 31st December 2011

Shs Shs Sh shsOpening stockAdd: purchases

Less: Returns outwards

Add : carriage inwards

C.O.g.a.f.sLess: closing stockC.o.g.sGross profit c/d

Expenses Carriage outwardsRent Wages and salariesGeneral expenses

325000 15000310,000 4,000

5000 18000 40000

40,000

31400035400035000319000241000560,000

77500

SalesLess : Returns inwardsNet sales

Gross profit b/dDiscount received

570,000 10,000

560,000

560,000

241000 9000

250,000

Net profit c/d 14500 17250

0

250,000

( 16 x ½ = 8 marks)

ii) Kitui Millers LtdBalance sheet

As at 31st December 2011shs shs shs shs

Fixed AssetsMachinery

Current AssetsStock DebtorsBank

350004270030000

360,000

107 700467 700

Capital Add: Net profit

Less Drawings

S.T.Lcreditors

283200172500455700 8000

447700

20000467700

( 8 x ½ =4 marks)5. a) The economic importance of natural resources.-They provide raw materials for industries.-They bring foreign exchange to the country when exported.-They are a source of energy.-They provide settlement for both human beings and wildlife.-They are a source of food.-They create employment when they are being exploited. (5 x 2 = 10marks)b) Negative effects of inflation in an economy.-Erosion of people’s purchasing power leaving them poorer than they were before inflation.-Loss of confidence in the local currency by the citizens. This results to the people preferring to use other country’s currency.-Lowering of people’s standard of living since the cost of living becomes higher.-It discourages savings as well as investment by individuals and firms.-It may result to high interest rates which make the cost of acquiring credit/finance to be very high.-It may result to emergence of black markets in the country.-It can even result to political instability in the country. (5 x 2 = 10 marks)

6. a) Ways in which central bank of Kenya may reduce the supply of money in the country.

-Bank rate :It’s the rate at which the central bank lends to commercial banks. The rate is raised in order to discourage borrowing and therefore reducing money supply.-Open market operations: The central bank sells treasury bills and bonds in the market.-Special deposits /compulsory deposits /minimum reserve requirements. These are raised upwards.-Cash ratio/ liquidity ratio: The ratio is increased in order to reduce money supply.- moral persuasion: The central bank may appeal /request/persuade credit rationing.-Directives/ instructions to financial institution to landless (4 x 2 = 8 marks)

b) Three Column Cashbook

Dr CrDate particul

arsL.f Disc

allowshs

cash shs

Bank shs

Date particulars

L.f

Disc Revshs

Cashshs

Bankshs

2012Jan 1Jan 5Jan 5Jan 25Jan 26Jan 28Jan 29

Balance Mary KiplimoSalesKiokoCapitalCash

Balance

b/d

C

b/d

2040

60

10,000

200030002000

17000

1000

150009801960

6000

23940

14950

2012Jan 2Jan 4Jan 8Jan 8Jan 12Jan 20Jan 29

Jan 29

PurchasesSalariesJumaKasaniMachineryDrawingsBank

Balance

C

c/d

15060

210

15007500

10006000

100017000

285011405000

14950

23940

24 x ½ = 12 marks

MOI GIRLS ELDORET KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME

1. Macro – Environmental factor(a) Legal – Political environment(b) Economic environment(c) Competitive environment(d) Cultural environment (4 x 1 = 4mks)

2. Reasons why discounts are granted(a) Influence the buyer to purchase goods in bulk(b) Providing profit margins to other traders(c) Encourage credit customers to pay their debts promptly(d) Encourage off-season purchase of goods or services. (4 x 1 = 4mks)

D2

D2S

S D

D

E1

E2

QE2 QE1 Quantity

PE2

PE1

Price

3. Factors considered before incurring public expenditure.(a) Whether the expenditure is sanctioned or approved by the relevant authority(b) Whether the expenditure provides maximum social benefit’(c) Flexibility of expenditure to meet prevailing economic situations(d) How economical the expenditure is to avoid wastage(e) Whether there is proper financial management / maintenance of proper records.

(Any 4 x 1 = 4mks)4. Measures taken to control cost push inflation

(a) Reducing tax on production(b) Subsiding production(c) Controlling wages and salaries(d) Price controls(e) Restricting imports (Any 4 x 1 = 4mks)

5. Characteristics of a partnership(a) Formed by a minimum of two partners and maximum of twenty partners

(professionals are allowed up to fifty partners)(b) Partners have unlimited liability with the exception of limited partners.(c) Has no perpetual existence(d) Share profits equally or in proportion to ones capital contribution(e) Contribute capital equally or as per agreement(f) Actions of a partner on behalf of others is binding(g) Controlled by the Partnership Act. (Any 4 x 1 = 4mks)

6. Effect on equilibrium position due to a decrease in demand.

(4 x 1 = 4mks)7. Reasons why it is advisable to take an endowment policy instead of a whole life policy.

(a) Premiums are paid only during an agreed period(b) Compensation is paid after the expiry of an agreed period(c) Assured benefits unless death preceeds the expiry of the agreed period(d) Acts as a saving plan for future investment (4 x 1 = 4mks)

8. Disadvantages of a long chain of distribution(a) Leads to increased prices of goods(b) There is likelihood of delay of goods(c) There are chances of damage of goods(d) Perishable goods go bad due to delay (4 x 1 = 4mks)

9. Differences between economic growth and economic developmentEconomic growth Economic development

a) An increase in the size of a a) An increase in the size and

country’s national income quality of a country’s national income.

b) Number of people living in absolute poverty can increase despite increase in national income

b) Number of people living in absolute poverty does not increase

c) Increase in national income could be due to increase in incomes of only a few people.

c) Increase in national income is attributed to general increase of incomes of majority of people in a country

d) No tendency to bridge the gap between the rich and poor

d) Tends to bridge the gap between the rich and the poor.

(4 x 1 = 4mks)

10. Limitations of national income statistics in comparing standards of living in different countries.(a) Different currencies making conversion tedious(b) Different goods and services may be used in computing national income(c) Disparity in distribution of income(d) Different needs and tastes of people living in different countries may not give a true

and fair picture of the standard of living. (4 x 1 = 4mks)11. Features of Itinerant traders

(a) Are very persuasive(b) Their prices are not controlled(c) Are found mainly in densely populated areas(d) Move around selling their goods (4 x 1 = 4mks)

12. Tax system(a) Proportional tax(b) Progressive tax(c) Regressive tax (3 x 1 = 3mks)

13. Document used in International trade(a) Certificate of origin(b) Consular invoice(c) Indent(d) Proforma invoice (4 x 1 = 3mks)

14. Advantages of a systematic arrangement of goods in a warehouse(a) Breakages of goods would be minimized(b) Pilferage of goods would be reduced(c) Space available would be properly utilized(d) Easy to do stock taking(e) Contamination of goods would be reduced(f) Accessibility would be enhanced (any 4 x 1 = 4mks)

15. Determination of Gross profit and Rate of Turnover(a) Gross profit

Margin =

Gross ProfitSales

{25100

= Gross Pr ofitsh . 900000 }

Gross profit =

sh . 900 ,0004 = sh.225000

(b) Rate of turnover =

Cost of salesAverage stock

Cost of sales = sales – Gross profit= sh.900000 – sh.225000 = sh.675000

Average stock =

Opening stock + closin g stock2

= sh .75000 + sh . 250002

=

sh . 1000002 = sh.50000

Rate of turnover =

sh . 675000sh . 50000 = 13.5 times

(5 x 1 = 5mks)

16. Preparation of profit and loss accountEast Traders

Profit and Loss AccountFor the period ending 30.6.2011

Dr. Cr.

Rent 7,500 Gross profit b/d 14,300

Bad debts 5,000 Rent received 4,200Insurance 2,000 Commission

received3,500

Net profit c/d

7,500

22,000 22,000Net profit b/d 7500

(8 X ½ = 4mks)17. Ways in which the government may promote local trade

(a) Advising business people on matters such as legal formalities(b) Training business persons on appropriate ways of carrying out business(c) Offering business persons financial assistance to enable them to start and run their

Businesses.(d) Providing incentives such as tax exemptions to encourage local businesses(e) Organising shows, trade fairs and exhibitions through which local traders may

promote their goods and services.(f) Creating an enabling environment for businesses to thrive

(Any 4 x 1 = 4mks)18. Features of oligopoly

(a) Industry is dominated by few large sellers(b) There is interdependence between the firms/ mutually interdependent(c) Products are usually differentiated or homogeneous(d) Firms practice non-price competition(e) There is usually collusion in industry(f) There are barriers to entry (Any 4 x 1 = 4mks)

19. Book of original entry

(a) Sales returns / Return inwards journal(b) Purchases journal(c) Purchase returns / return outwards journal(d) General journal (4 x 1 = 4mks)

20. Circumstances under which sign language would be appropriate (a) Where there is no common verbal language(b) Where one party is deaf or dumb(c) Where there is a lot of noise / interruption(d) Where silence must be observed(e) Where there is need to emphasize / reinforce verbal communication(f) Where meaning of the signs is well understood by the two parties.(g) Where it is the only means of communication

(Any 4 x 1 = 4mks)21. Effects of an ageing population

(a) Old people tend to provide a less mobile labour force(b) Low labour supply is likely as old people tend to be less productive(c) High dependence of old people on working population

(d) Society becomes less progressive as it lacks the input of the energetic youth

(e) May lead to unemployment due to fall in demand for goods and services required by the Youth (Any 4 x 1 = 4mks)

22. Factors that inhibit entrepreneurial development(a) Unfavourable government policy e.g high tax(b) Poor infrastructure such as roads, power supply and water systems(c) Lack of relevant education and skills(d) Lack of market(e) Lack of resources such as capital, human resources, physical resources and

technology(f) Unable to cope with competition(g) Political instability (Any 4 x 1 = 4mks)

23. Unethical issues in product promotion(a) Cheating on permanence of the product(b) Cheating on ingredients of the product(c) Not disclosing side effects of the product(d) False pricing(e) Negative effects of the environment such as pollution(f) Social cultural conflicts (Any 4 x 1 = 4mks)

24. Incentives that encourage development of firms in a certain area(a) Offering free or cheap land(b) Reduction of taxes(c) Offering subsidies(d) Offering direct financial assistance(e) Improvement of infrastructure (Any 4 x 1 = 4mks)

25. Advantages of M-banking(a) Mobile phone airtime top up(b) Mini-statement requisition(c) Checking of account balances(d) Paying utility bills without going to the bank(e) Transfering money from the bank to the mobile phone(f) Automatically know when salary has been entered into the account

(Any 4 x 1 = 4mks)

MOI GIRLS ELDORET KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME

1. (a) Limitations of adoption of new technology(i) Insufficient capital / high cost of acquiring and maintaining new technology.(ii) Some technologies are advancing very fast requiring continous updating which is

expensive.(iii) Adoption of new technology may lead to lay-off / increase in unemployment

problems(iv) New technology require hiring new staff or retraining them which is expensive.(v) New technology increases cost of goods in the short-run.(vi) It increases prices of goods thus discouraging potential customers.(vii) Some technologies have side-effects e.g computers affects the eyesight.(viii) Breakdown of some machines may lead to losses or interruption of business

operation(ix) Some technology may lead to environmental degradation e.g disposal of waste,

which calls for measures which is expensive.(Any 5 x 2 = 10mks)

(b) Reasons for trade restrictions(i) Protection of infant or new industries(ii) Expansion of domestic market(iii) Correction of balance of payment deficits(iv) To discourage dumping(v) Creation of employment in the domestic economy(vi) To avoid importation of harmful goods. (Any 5 x 2 = 10mks)

2. (a) Sources of monopoly power(i) Control of an important factor of production which other firms may not be able to

access(ii) Legal restrictions. Other firms might not be allowed by the government or law to

operate a competing business(iii) High initial capital which other firms might not be able to raise(iv) Size of the market. The market can be small that can only be served by one firm, a

new firm coming in will lead to losses.(v) Restrictive practices (5 x 2 = 10mks)(b) Factors affecting economic planning processes.(i) Lack of accurate or detailed data(ii) Existance of large subsistence sector(iii) Inadequate qualified personnel(iv) Problems of private sector(v) Transfer of inappropriate development plan e.g from other countries(vi) Reliance on donor funding(vii) Inadequate domestic resources(viii) Failure to involve local people in planning(ix) Natural calamities

(Any 5 x 2 = 10mks)3. (a) Tools the government can use to arrest run away inflation

(i) Open market operation, this is through sell of securities

(ii) Margin requirement; varying of margin requirement e.g lowered margin requirement leads to reduced credit advance to borrowers.

(iii) Cash ration. Increased cash ratio reduces the amount that the commercial banks are left to lend.

(iv) Selective credit contro(v) Compulsory deposits to the central bank by commercial banks(vi) Liquidity ration. Commercial banks may be required to increase proportion of liquid

assets.(vii) Bank rate. Central bank increases the rate at which it lends to commercial bank;(viii) Moral suasion. Urging commercial to restrain lending

1 mk mention, 1 mk explanation

(Any 5 x 2 = 10mks)(b) Measures to reduce unemployment(i) Increase government expenditure so as to stimulate aggregate demand(ii) Encouragement of local and foreign investors through offering various incentives(iii) Protection of local industries from foreign competition to maintain acceptable

employment level domestically.(iv) Population growth measures(v) Encourage early retirement so that early retirees can start businesses from

retirement benefits.(vi) Education reforms that impart appropriate skills(vii) Offering incentives that encourage the use of labour intensive techniques.(viii) Finding market for locally produced goods

(Any 5 x 2 = 10mks)4. (a) Reasons which may make an insurance firm not to compensate

(i) When the loss is caused intentionally by the insured(ii) When the insurance company is insolvent(iii) If Mr. Kisuya has no insurable interest in the property(iv) It may be because he had not insured his house against fire(v) Late claim for compensation(vi) Provision of false information about the property / self(vii) Misrepresentation of facts

(b)Public corporation Public Ltd. Company- Formed under Act of parliament - Formed under companys’ Act- Owned by shareholders - Owned by state/public / government- Board of directors appointed by the government

- Managed by board of Directed elected by shareholders

- Has unlimited liabilities - Liabilities limited by share capital contribution

- Profits if any go to state/government - Profits are shared by shareholders- Not required by law to publish final accounts

- Are required by law to publish final accounts

- Initial capital is provided by state / government

- Raise capital through sale of shares to the public

- Performs specific functions - Performs various functions- Provide essential services - Are profit motivated/oriented- Appointments are political/ political influence

- Has minimal political interference

- Winding depends on government - Winding is made by shareholders- Audited by private Auditors - Audited by the government

No splittingAny (5 x 2 = 10mks)For correct matching of differences

5. (a)Dr. Equipment A/C Cr.April 1 Bal b/d 200,000 April 30 Bal c/d 200,000

Dr. Furniture A/C Cr.April 1 Bal b/d 82,000 April 30 Bal c/d 82,000

Dr. Stock A/C Cr.April 1 Bal b/d 140,000 April 1 Trading A/c

140,000

Dr. Cash A/C Cr.April 1 Bal b/d 20,000 30 sales 12000 32000

April 30 Bal c/d 32,000 32,000

Dr. Bank A/C Cr.April 1 Capital 30,000 April 30 Bal c/d 30,000

Dr. Capital A/C Cr.April 30 Bal c/d 445,000

445,000

April 1 Bal b/d 415,000“ 4 Bank 30,000 445,000

Dr. Creditors (Mutai) Cr.April 19 Purchases Return 3,000 Bal c/d 53,000 56,000

April 1 Bal b/d 27,000 10 Purchases 29,000 56,000

Dr. Purchases A/C Cr.April 10 Mutai (Creditor) a/c 29,000

April 19 Trading a/c 29,000

Dr. Purchases Return Cr.April 30 Trading a/c 3,000 April 19 Mutai (Creditor a/c) 3,000

Dr. Sales a/c Cr.April 30 Trading a/c 12,000

April 30 Cash a/c 12,000

24 ticks x ½ = 12mks(b) Ways of improving efficiency of labour(i) Improve their working conditions(ii) Make them part of owners through shares(iii) Introduce them to advance technology(iv) Set performance contracts(v) Regular review of salary and fringe benefits(vi) Give yearly bonuses to hardworking employees(vii) Regular communication with employees

(Any four well explained points 4 x 2 = 8mks)6. (a) Benefits of filing

(i) Neatness in the office(ii) Reduce loss of documents(iii) Easy retrieval of information(iv) Minimise damage(v) Increase confidentiality of information

(vi) Ensure proper storage for future reference(vii) Help save on space(viii) Safeguard(b) Impleation of production activities on the environment(i) Air pollution because toxic omissions(ii) Water pollution due to refuse from production units(iii) Noise pollution from production firms(iv) Destruction of the landscape(v) Creation of green house effect because of too much smoke(vi) Solid waste pollution which leave bid sites to watch(vii) Social evils and crimes which come as a result of bring people together.

KAPSABET BOYS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. (i) Create employment

(ii) Utilize resources(iii) Improve the living standards(iv) Generate income

- Utilize free time- Provide goods and services.- For self activation- As a hobby.

2.Internal External

(i) Employees (ii) Inflation (iii) Technology applied (iv) Invested funds (v) Cultural factors (vi) Tools (vii) Entrepreneur (viii) Political factors

3 (i) Should be polite(ii) Should be honest(iii) Should be eloquent speaker(iv) Should be disciplined

-Loyal- Punctuality- Respect-Accurate- Diplomatic.

4 (i) If the insured person cannot prove that he or she has suffered a direct financial loss.(ii) If the insured suffers a risk that he or she has not insured.(iii) If the insured has no insurable interest in the subject matter(iv) If the insured did not act in ‘utmost good faith’ when he took tie insurance.(v) Where the policy was not in force.

5. (i) By licensing of business in the country(ii) Imposing taxation

(iii) Setting standards for both locally produced and imported goods(iv) Formulation of rules & regulation that must be adhered to in various

businesses operations.(v) Fixing quotas(vi) Imposing total ban on new businesses

6. (i) A consumer has to make a choice.(ii) A consumer should have a scale of preference(iii) A consumer should use opportunity cost(iv) A consumer should conserve resources.

7. (i) Eliminate corruption practices(ii) Employing qualified staff(iii) Enforcing a law to punish errant staff(iv) Motivating staff through better housing, salaries, health facilities.(v) Reduce undue influence by the government officials.

8. (i) Presence of good infrastructure /well developed(ii) Proper allocation of resources(iii) Relevant entrepreneurial skills(iv) Use of modern technology(v) Availability of market(vi) Availability of capital(vii) Good customer relations(viii) Favourable government policies.(ix) Proper time management.

9. (i) Precautionary(ii) Transaction(iii) Speculative(iv) Transaction.

10. (i) Better quality goods(ii) A variety of goods(iii) Better utilization of resources(iv) Create employment opportunities(v) Leads to high standards of living(vi) Facilitates exchange rate

11. (i) Feedback to the manufacturers or producers is low(ii) Increase costs incurred(iii) Perishability of perishable goods. Hence low quality.(iv) Damage of goods due to over handling(v) Delay on delivery of goods.

12. (i) There is no deposit required or down payment before goods are released.(ii) Ownership of goods is passed on to the buyer immediately.(iii) It is a cheaper method of purchasing.(iv) Goods cannot be reposed.(v) Goods are released as the customer is the legal owner.

13. Ekerubo

TradersTrading profit and loss A/C

For the period ended 30th September 2006

Opening stock 7,500Add purchase 65,000 72,000Less closing stock 31,000Cost of sales 41,500Gross profit c/d 42,000 84,000

Less general expenses 12,200Net profit c/d 30,000 42,500

Sales 85,000Less returns 1,000

84,000Gross profit b/d 42,500

42,500

Net profit b/d 30,300

14. (i) Introduction of speed governors(ii) Introduction of safety belts(iii) Use of unleaded petrol and low sulphur diesels(iv) The effect of the ever rising global prices(v) Outlawing of matatu cartels.

15.

Date Details Dr Cr1 Jan 2008 Premises

DebtorsBankCashStockBank loanCreditorsCapital

800,00040,00080,00060,00062,000

1042,000

380,00070,000592,0001042,000

16. (i) To prevent entry of harmful illegal goods(ii) For easy collection of custom duties.(iii) For easy inspection of imported goods(iv) To prevent smuggling of goods(v) For easy re-exportation of goods.

17. (i) Ready market for buying and selling shares.(ii) Setting of daily prices of the quoted companies shares(iii) Calculating of the stock exchange index which acts a barometer of the

economic performance of a country.

(iv) Spreading of risks by investors through an assortment of shares — publishing of important statistical data.

18. (a) Monopoly(b) Perfect competition(c) Monopolistic competition(d) Perfect competition

19.) i) Sender(ii) Message(iii) Medium(iv) Encoding(v) Receiver(vi) Feed-back.

20

Jubilee TradersBalance sheet

As at 30th April 2011Equipment 45,000Office furniture 20,000Debtors 5,000Cash 10,000 80,000

Capital 50,000Bank overdraft 30,000 80,000

(iii) Availability of security(iv) The level of competition(v) The liquidity period /playback period.

23.

Date Particular Discount allowed

Cash Bank Date Particulars Discount received

Cash Balance

2007Jan 1Jan 20Jan 29

Feb 1

Bal b/dSales Cash (B)

Bal b/d

1200

1200

800022,800

6200

60,000

24,600

53,800

2007Jan 18

Jan 29Jan 29

Shawn Traders

Bank (c)Bal .c/d

2000

2

2000

24,6006,200

15,000

53,800

24. (i) Progressive taxation(ii) Proportional taxation(iii) Regressive taxation(iv) Digressive taxation

25 (i) Scramble for raw materials(ii) Unavailability of land for expansion(iii) Scramble for available labour.(iv) Competition for available market(v) Easy target especially in times of war.

KAPSABET BOYS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. (a)

Departmental stores Chain storeAll department operate under one roof Have braches all over the countryEach department deals with a different line of goods

All branches sell similar goods

Stocks a wide variety of goods Stocks a limited variety of goodsPurchases are decentralized Purchases are centralizedEach department sets its own price Prices are uniform in all branches

(b) (i) Acquiring as much information about the product as possible enable him to convince and demonstrate.

(ii) Identify potential customers(iii) Approaching the potential customer at the right time determines whether he will

sell or not(iv) Arousing interest in the product to the customer.(v) Dealing with any objection from the customer and proceeds to make a sale.

(vi) Actual sale. Salesman convinces the customers and proceeds to make a sale.(vii) Concluding the sale by drawing necessary documents collection of sale revenue and

handing over of products(viii) Providing of after –sales-services

2. (a) Current accounts have the following advantages;-current holders can get overdraft facilities-any amount of money can be withdrawn at any time without giving notice.-The account holder can conveniently make payment using cheques-No minimum balance is required to be maintained in current accounts-Cheques serve as evidence of payment to current account holder

-Periodic statements showing deposits and withdrawals can be provided to the account holder-Purchases can be made using post-dated cheques.These are cheques to be honored at a later date.

(b) (i) Not convenient over long distance as it makes the transportation cost very expensive.(ii) Adverse weather conditions e.g. heavy rainfall habour transportation. (iii) A business that deals in bulky goods and large quantities incures higher costs as motorcycles carry small quantities of goods.(iv) It is prone to accidents due to untrained motorcycle operators which in great losses.(v) Not all comfortable as vehicles for the passengers. (vi) Serious injuries or fatalities results when accidents occur.

3 (a) Political stability in a country:. Presence of political stability leads to high levels of economic activities hence high national income.(b) Level of technology: Adoption technology by a country may lead to increase in productivity leading to increase in national income.(c) National resource endowment in a country: A country endowed with natural resources with proper exploitation it will generate high national income. (d) Levels of entrepreneurship in the county. If people have been able to develop business or acquire it they are likely to be productive leading to increase in national income.(e) Accuracy of the national income accounting:(e)Three column cash book

Date Details Dis.all

Cash Bank Date Details Dis.R Cash Bank

1.6.108.6.1014.6.1026.6.1030.6.10

CapitalKariukiBankSalesSales

‘c’500

500

6,50010,000

3,800

20300

140,000

12,000

152,0

2.6.1014.6.1014.6.1019.6.1024.6.1027.6.1030.6.10

EquipmenCashDrawingsGomaStationeryMwangiBalance

C

c/d

100

300

1300

40009000

42003100

20300

900010000

20,000

113,000

152,000

4. (a) (i) Easy credit terms because few procedures are required to obtain credits.(ii) Incase of death the members beneficiaries do not loose the savings in the cooperative.(iii) The member’s savings are safe because they are insured.(iv) Easy savings since the deductions are made through a check-off system.

(v) The interest charged on loans is low compared to that charged by other financial institutions.

(b) (i) Affordability of the system.(ii) Easy of reference. The system should provide for easy retrieval of documents.(iii) Elasticity of the system to provide for future expansion of the system.(iv) The confidentiality of information in the document.(v) Duration at which the document should be retained.

5. (a) Effects of increase in supply to the equilibrium price and quantity of a commodity.

The supply curve shifts to from so to sl.The equilibrium price decrease from peo to pel -‘The equilibrium quantity increases from Qeo to Qe 1.(b) (i) High level of illiteracy due to inadequate educational facilities.

(ii) Inadequate infrastructure due to limited capital.(iii) Over dependence on foreign aid.(iv) Low per capita income(v) Low level of productivity.

6. (a) (i) Political stability: A country facing political instability her level of exports will decrease leading to unfavourable terms of trade.(ii) Increase in demand for imports: May lead to an increase in prices of imports and price of export remain constant terms of trade will become unfavorable.(iii) Appreciation of foreign currencies: this makes imports expensive which may lead to worsening terms of trade.(iv) An increase in a country’s export and reduction in prices of exports also prices of imports remain constant will lead to unfavourable terms of trade;(v) Devaluation of a country’s currency: This makes exports cheaper while imports become expensive leading to deterioration of the terms of trade

(b) (i) Gross profit =margin = gross profit 100% (2 mks)Sales

20 950,000 100

Since margin =20% Mark up=1= ¼ =25%5-1

Cost of salesMark up =G.P 100%

Therefore 25%=G.P 100% 1 cost of sales

Hence 25% cost of sales=G.P 10025% cost of sales =190,000100

Cost of sales =19,000,00025 (2mks)

=760,000 Therefore opening stock + Purchases – closing stock =cost of sales.

O.S +800000-200000=760,000O.S =760-600000

=160,000 (4 mks)( iv) Net profit =5% of sales

5 950000 (2 mks)100

=47,500 10 ticks =10mks

BAHATI GIRLS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. (a) Insatiable/unlimited/varied

(b) Recurrent/Repetitive(c) Interdependent(d) Universal (4x1)=(4mks)

2. - Decision making and implementation will be fast- Trader will have close and personal conduct with customer and cater for their needs

effectively- Enjoys profit alone- He will be able to maintain top secrets of the business operations- Few legal procedures required to set up the business

(4x1)=(4mks)3. (a) Personal

(b) Nominal(c) Real(d) Nominal (4x1)=4mks

4. - To know the size of the economically active portion of population- To enable the government plan for social amenities required- To enable the government provide basic infrastructure to its people

- To enable the government plan for security by decongesting congested areas which are prone to insecurity (4x1)=(4mks)

5. - If language used is complex- Poor choice of media to use- Failure to plan before communicating- If there is lack of network coverage- Existence of negative altitude- Difficult in understanding non-verbal cues (4x1)=(4mks)

6. - Secret PIN conserves confidentiality- Speedier delivery of cash- Accessibility to most M.pesa retail outlets- Affordability since cost is low- Very secure if the right phone number is used- Easy to use since agents assist clients (4x1)=(4mks)

7. - The price of the commodities will be lowered- Equilibrium quantity increases- Equilibrium price decreases

- The supply of the commodity will increase at the same rate(4x1)=(4mks)8. - Increase in government expenditure

- Effects of credit creation by commercial banks- Increase in money income- General shortages of goods and services- Decrease in taxation in personal incomes (4x1)=(4mks)

9. WC = CA_CL = 200,000CR = CR =3

CL 1 (1)

CA = 3CL ∴3CL _ CL =200,000

2CL = 200,000

CL =

200 ,0002

=100,000(1)∴ CA = 3CL (1)

= 3X100,000 = SH 300,000 (1)

(4mks)10. - If goods are very sensitive items eg arms

- If he has his own retail outlet- If goods are highly perishable- If the sale is by tender- If the business is small scale- If he wants to demonstrate/explain how to use (4x1)=(4mks)

11. - A tool of economic and development planning- For comparison purposes- Determine economic growth and development- To measure standards of living- Measures contribution of various sectors- Determine income distribution (4x1)=(4mks)

12. - Provides social amenities- Reduce the rate of taxation- Give subsidies- Provide efficient transport and communication network- Provide security in an area- Provide free land- Provide loans at low interest rates. (4x1)=4mks

13. Three column cash BookDr CrDate

Details

Dis all Cash Bank Date

Detail Dis R Cash Bank

2009Jan 1

6

15

31

Bad b/dSalesDebtorCash’c’

5,000

350012,500

20,00

45,00015,900

Jan 1

Jan 21

Jan 31

Creditor

Bank’c’

Bal c/d

1500

15,900

100

28,500

52,400

5000

16,000

80,900

1500

16000

80,900

¼ x16 =4marks14. -Solar

-Geothermal-Wind power- uclear (4x1)=4mks

15. -Correct unfavorable Balance of payment-Control dumping-Create employment in the local economy-General revenue from the customs taxes-Promote independent and sovereign status-Protection of local infant industries (4x1)=4mks

16. -May fuel inflation-Less equitable-Can be avoided-May interfere with resource allocation-Uncertainty in revenue yield-Lack of contributors awareness-Expensive in collection (4x1)=4mks

17. (a) C = S_L =220,000 _ 65,000 = sh 155,000 (1)

(b) Mumbi’s Balance sheet

As at 31/1/09

(½ x6=3mks)

18.-When the distance is short-When other means are not available-Where there are no fixed routes-Relatively cheap (4x1) =4mks

19. -Transactionary-Precautionary-Speculative-Transsactionary (4x1)=4mks

20.Supermarket Hypermarket- One business in one room- There is self service- There is no bargaining- There are no after sales service- Found in town centers

- Many business in one room- Customers are served- There is bargaining- After sales- services given- Found in the outslarts of towns

Land 130,000Stock 60,000Cash 36,000

226,000

Capital 155,000Add net profit 6,000 161,000Creditors 65,000

226,000

21. -If the property is of high value-When chances of loss are high-If the number of risks covered are many-If it is a way of spreading risks -When it is a requirement by the government (4x1)=4mks

22. -Appropriate resource allocation-Stimulation effort-Support foreign aid bargain-Project evolution-Long term decision marking-Avoid duplication-Promoting Balance in regional development (4x1)=4mks

23. -Avoid false/misleading advertisement-Disclosure of side effects of products-Avoid false pricing-Give negative effects of production on the environment-Take care of social-cultural conflicts caused by advertisements-Target necessary audience (4x1)=4mks

24. -It is used to justify the decisions and actions-It is used as a blue print-It is used as financing tool-It is used to avoid panic and uncertainty in the process of starting a business-It is used as a tool to seek for and raise funds-It is used as a tool for testing the dreams and ideas of the entrepreneur

(4x1)=4mks25. -Business may/lose qualified/professional staff through AIDS

-Some business resources are used to care for aids patients-Business may lose market for its products (customers)-Regular absenteeism of the infected workers/loss of official main hours -Low productivity due to ill health/low esteem/lack of enthusian to work/stigmatization (4x1)=4mks

BAHATI GIRLS HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME

1. (a) - By sweeping and picking gabbage around the business- Tightening security, e.g. fencing, employing watchmen- Locating the business where customers are available- Limiting noise in the business- Employing qualified staff- Planting flowers (Any 5 pts x2) (10mks)

2. (a) - In order to make workers faster- In order to make work easier- In order to increase production- In order to make the workers be inventive and innovative- In order to save time- So that the workers be efficient in the work (5x2)

(b) - Carrying out import substitution strategy- Carrying out export promotion strategy

- Restricting imports into the country- Exporting finished products instead of raw materials

- Improving infructure (5x2)

3. (a) - Unemployment

- Poor developed infrastructure

- Low educative level

- Low technological level

- Large subsistence sector

- Dependancy on other countries for essential goods (5x2)

(b) KIPEVU TRADERS:

Balance sheet as at 30th June 2004. Dr Cr

Fixed Assets

Furniture and fittings 20,000

Motor vehicles 150,000

170,000

Current assets.

Debtors 8,000

Cash at hand 6,000

14,000

184,000

Capital 164,000

Add profit 900

164,900

Less drawings 6,000

Net capital 158,900

Current liabilities

Creditors 22,100

184,000

184,000

4. (a) KIPEVU TRADERSTrial balance as at 30th June 2004:Dr Cr

Opening stock 4,000Add purchases 35,000 ½

Cost of goods as 39,0000Less returns outward ½ 4,800

34,200 Gross profit c/d 33,800 EXPENSES: DISCOUNT 900 Wages 15,000 Rent 3,500 Insurance 2,100 Commission 400

21,900 Net profit c/d 12,700 34,600

Sales 70,000Less sales return 2,000Net sales ½ 68,000 ½

Gross profit b/d 33,800 ½ Add discount 800

34,600

Net profit b/d. 34,60012,700 ½

Total= (8mks)

KIPEVU TRADERSBALANCE SHEET

As at 30th June 2004FIXED ASSATSMotor vehicles 150,000Furniture 20,000 ½

170,000CURRENT ASSETSStock 34,200Debtors 8,000Cash 6,000 ½ 48,200

218,200

Capital 162,300 ½ Less drawings 6,000 ½ Add profit 12,700Net profit ½ 169,000 ½ CURRENT LIABILITY:Creditors 12,000 ½

218,200 ½

Total = mks.

4. (a) Factors to be considered before choosing a distribution channel- Nature of the product- Geographical concentration of the market- Availability of the intermediaries

- Nature of the market- Government policy- Cost of distribution channel- Value of product

(b) Benefits of joining the Nairobi stock exchange- Facilitates buying of shares- Facilitates selling of shares- Safeguarding investors interests – This is achieved by requiring the company

that wants to be quoted to attain standards of performance- Provides useful information - provides timely, accurate and reliable

information to investors which enable them to make decisions on investment choices

- Assists company to raise capital- Creation of employment – brokers and their agents- Raising revenue for the government e.g. taxes, licence fees, rent and rates- Availing variety of securities- Fixing of prices- Measures a county’s economic progress- Promote the culture of saving

5. (a) Factors that may have contributed to the slow pace in the achievement of EAC- Differences in economical and political ideologies- Lack of a common currency – makes trade between the country difficult- Similar products produced by the countries- Poor infrastructure- External interference- Mistrust by leaders- Political problems – causing leaders not to concentrate on the affairs of the

EAC- Failure by member countries to provide funnels for the secretariats operators

(b) Sources of monopoly power- Patent rights – copy rights- High initial cost of investment- Ownership of production rights- Where the size of the market is small to warrant other players- Amalgamation- Where a firm gains internal economies of scale- Where a firm has absolute control of raw materials required

- Where a firm controls the technology that is applied in the production of particular product

6. (a) Circumstances under which an insurance contract may be terminated- Where the principle of at most good faith was violated- Where the insured ceases to have insurable interest in the property insured- Where the insured has been compensated- Where the policy matures and is settled – life- Where the insured person decides to terminate the contract- Where a court of law orders termination- Where the insured fails to remit premiums- Where the insured company is declared bankrupt

(b) Problems encountered by consumers as they try to satisfy their wants- Means of satisfying wants are limited due to scarcity of resources- Wants keep on recurring

- Wants value in urgency and intensity- Wants are habitual- Some wants are essential for survival thus can not be postponed - Wants change with age- Some wants are complementary – Satisfaction of wants requires satisfaction

of another- Competitive nature of some wants – - Wants are numerous/ unlimited

KABARAK HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME

1. a) Formb) Timec) Placed) Possession

2. a) Availability of stock/goods b) Repayment period c) Value / volume of goods needed by the customer. d) Frequency of the customer in the business.

- Creditworthiness of the customer- Knowledge of the customer- Policy of the business- Need to attract / retain customers

3. a) To reward capital as a factor of production. b) To take care of loss in money value over time. c) To limit the amount borrowed. d) To shorten the credit period.

- To raise incomes for the lenders.4. a) Taxation b) Fees c) Fines / penalties d) Borrowings

- Sale of government property / shares.- Surplus from public institutions.- Donations / grants from well wishers.

5. a) Lack of knowledge / training. b) High cost of credit. c) Poor infrastructure. d) Insecurity.

- Political instability- Prohibitive licensing procedures- Lack of social amenities e.g. water, electricity- Corruption- High poverty levels / low demand for products.

6. a) Cash capital b) Wages cash c) Drawings cash

d) Purchases creditor7. a) Selling quality goods / services

b) Offering credit facilities. c) Honesty in business operations. d) Operating in a clean environment.

- Confidentiality in dealing with customers.- Selling the right volume weight of goods.- Good communication skills.- Proper public relations.

8. a) Evidence of goods sold on credit. b) Demands payment for goods sold on credit.

c) Records credit transactions for future use.d) Provides information for recording books of accounts.

9. a) Prone to accidents. b) Low carrying capacity. c) Exposed to adverse weather conditions. d) Lack insurance cover.

- Cause noise pollution- Lack of basic operation skills.

10. a) Adequate supply of labour. b) Wider market for products.

c) Stimulates economic activities / productivity. d) Creation of employment opportunities.- Optimum exploitation of natural resources.- Variety of talents.- Enhances creativity.- Mass production.- Adoption of efficient methods of operation.

11. a) Have full voting rights. b) Variable rate of dividends c) Earns dividends only when business is profitable.

d) Irredeemable – cannot be bought back by the company.- Held by the real owners of the company.- Residual treatment in payment of dividends.

12. a) The office may be untidy / disorderly. b) Documents may get dirty / torn.

c) Takes a lot of time to trace needed information. d) Documents may get lost through theft.- The documents occupy a lot of office space.- Documents may be damaged by bad weather / pests.- Leakage of business secrets.- May lead to slow /poor decision – making.

13. a) Decreaseb) Increasec) Remain constant.

14. a) Airtime top – up b) Checking of account balances. c) Getting mini statements. d) Transfer of funds.

- Access to banking services any time / 24/7.- Withdraw of cash from agents.- Convenient payment of utility bills eg water, electricity.

15. i) Opening stock 80,000

Add: purchases 900,000 GAS 980, 000 Less: closing stock 100,000 Cost goods sold 880,000 2 ii) Mark -up =Gross profit COGS

20 GP 100 880,000

GP = 176,000 216. a) When there is a language barrier.

b) When there is need to reinforce the spoken word. c) When the environment is very noise. d) When there is need to maintain confidentiality / secrecy.

- When there is need not to disturb other people.- When one party is deaf / dumb.

17. a) Name of the insurer. b) Name of the insured. c) The sump insured / assured. d) The risk(s) insured against.

- The policy period.- The amount / frequency of premiums to be paid.- The condition for compensation.

18. a) Punctuality b) Courtesy c) Loyalty.

19. Cash - BookDate Details Cash Bank Date Details Cash Bank2010May 1 2 14 20 31

Bal b/dSalesDebtorBankBal c/d

Sh3,50012,500

30,000

Sh18,000

20,000

2,000

2010May 6 20 30 31

WagesCash cCreditor Bal c/d

Sh13,000

33,000

Sh

30,00010,000

46,000 40,000 46,000 40,000

½ X10 ticks =5 20. a) Total omission of a transaction. b) Commission c) Complete reversal of entries d) Original entry

- Compensation- Principle.

21. a) Iinadequate financial resources. b) Inadequate human resources. c) Lack of accurate data. d) Natural calamities / emergencies

- Inadequate political will.- Bureaucratic red tape / rigidity.

22. a) Stocking a wide variety of goods. b) Selling goods at relatively cheaper prices. c) Free packaging of the goods bought.

=

d) Self- service saves time.- Price tags on goods facilitate shopping.- Ready assistance by the attendants.- Ability to benefit from promotional items / rewards.- Satisfaction of shopping needs under one roof.

23. Sila Traders Profit and loss Account For period ended 31st Dec., 2001___________________________________________________________________

Salaries 160,000 Gross profit b/d 400,000Telephone 40,000 Discount received 16,000Discount allowed 30,000Stationary 85,000Net profit c/d 101,000 _________

416,000 416,000 8 x ½ = 4 marks

24. Capital as at 31st December, 2009 Capital = Assets – Liabilities

= 900,000 – 130,000 = 770,000 Final capital – initial capital = Net profit 770,000 - 600,000 = 170,000 5 x 1 = marks25. a) Law standards of living b) Increased cost of production. c) Reduced savings. d) Loss of confidence in money.

- Retarded economic growth.- Industrial unrest / strikes.- Increased interest rates.- Capital flight.- Insecurity.- Balance of payment deficit.- Unfair distribution of incomes.

KABARAK HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. Indicators of under-development

-High poverty level due to low productivity / incomes -Higher population growth rate compared to the rate of economic growth -Low labour productivity due to inadequate inappropriate education/training -Unemployment due to low economic productivity/few production activities. -Low literacy levels due to unavailable /unaffordable education opportunities -Low levels of technology leading to low production -Food insecurity due to use of traditional methods of production -Under-utilization of resources due to lack of the requisite capital -Over-independence on donor aid for development and recurrent expenditure. -Dominance of subsistence sector as opposed to production for commercial purposes. -Disparity in income distribution leading a widening gap between the rich and the poor

-Low levels of savings leading to low investments -High dependency ratio as a large proportion of the population depend on the working few -Corruption as the leaders use their positions to enrich themselves-Impunity as the political class operates without regard for the laws of the land /political instability.

Any 5x2=10marks b) Benefits of pipeline mode of transport

- The underground pipes are exposed to less danger of damage / robbery. Reduced accidents

- It lowers the chances of oil spills on the roads Environmental friendly

- It does not cause pollutions to the surrounding.Economical

- It depends on generated pressure to move large volumes of the oil products over long distances Continuous flow

- It facilitates supply 24/7 with minimal labour involvement Substitutes tankers

- This reduces damage to the surfaces traffic congestion and delays to other motorists All weather

- Not affected by bad climatic conditions e.g. rain. - Low maintenance cost - It is flexible can pass through mountainous areas - Less interruptions

Any 5 well explained points 5x2=10maks 2.a) Benefits of warehousing to consumers

-Regular/steady supply of goods at all times -Wide variety of goods for the consumers to choose from -Stable prices by releasing adequate volumes of goods to the market to meet consumer demand. -Preparation of goods for sale through blending, packaging, breaking the bulk, branding. -Providing goods at convenient locations to the benefit of consumers throughout the market. -Protection of goods against damage / loss of utility / usefulness -Inspection of goods by government officials to ensure they are fit for human consumption. -Keeping of strategic reserves/buffer stocks to be used in the event of emergencies

5x2 =10marks b) Properties of good money

- Accessibility –generally appreciated by all the people concerned - Scarcity – limited in supply so as to maintain its value - Durability – ability to last long with minimal physical wear and tear- Divisibility – into smaller units / denominations without loss of value / to pay

small debts - Portability – light to carry around easily /conveniently - Stability – ability to retain its value so as to maintain its credibility / purchasing

power - Complexity – not easy to forge / imitated / counterfeit

-Cognoscibility – have special features to differentiate genuine money from fake money

-Homogeneity – uniformity / identical to avoid confusion / doubts

-Marketability – the material should be easy to cost into required shapes/sizes/to print/inscribe on 5 x 2 = 10 marks

3. a) causes of unemployment- Rapid population increase - Inadequate factors of production - Rural urban migration - Use of inappropriate technology - Lack of product market - Season ability in production - Inappropriate education system - Job selection

2x5 = 10marks for well explained points b) Importance of entrepreneurship -Job opportunities are created -Utilization of local resources -Use of modern technology / promotion of technology -Establishment of entrepreneurial culture in a country -More wealth is created -Raising standards of living -Increase in consumers choice of goods. -Development of infrastructure e.g. roads.-Earns foreign exchange -Stabilizing prices – due to increased competition- Reduction of foreign domination by foreigners 2 x 5 = 10 mks

4. a) Benefits of localization-Common pool of labour-Improved infrastructure -Attract large population / market -Proper disposal of waste -Development of subsidiary industries-Creation of employment -Development of social amenities

4 x 2 =8 marks fully explained points

b)THREE COLUMN CASHBOOK

DATE DA CASH BANK DATE DETAILS DISCOUNT RECEIVED

CASH BANK

2004 Sh Sh Sh 2004 Sh Sh Sh

May 1 1May 3 3 3May 15 15

Bal b/dSalesE GithinjiD. NyamuE. MutuaCash C1

P Kavuniki

120045070

1500

3220

500003000

13500

66500

180000

22800855013306000

218680

May 2 2 2 5 10 15 20

N. MwangiJ. MwanikiN. MugoRepairsJumaBank C1

Bal c/d

1501600120

1870

1600095006000

35000

66500

1350144001080

201850

218680

24 x ½ = 125. a) Roles played by intermediaries

a) Reducing transactions-Lower the numbers of interactions between the producers and the final consumers

b) Breaking bulk-Package the goods in small volumes as desired by the customers

c) Accumulating bulk - Buy small volumes of goods from small scale producers and then sell the gathered large quantities to the large scale cusforces e.g. maize

d) Provide variety of goods- Stock a wide variety of goods from varieties producers for the consumers to choose from

e) Storage-Keep goods in safe conditions until demand arises leading to fairly stable prices

f) Transport- Have goods to locations that are convenient to the customers

g) Feedback - Pass the in formation gathered from consumers to the producers

h) Risk – taking – distributions 5 x 2 = 10 marks

b) Principles of government expenditure-Maximum benefit – government should spent money on projects that benefit many people in the country -Economical use – a good public expenditure ensures that costs of administration is low - Elasticity / flexibility – public expenditure should respond readily both upward and downward to changes of the economy - Sound proper financial management by keeping records and auditing - Sanctions by relevant authority e.g. parliament - Budgetary control 5 x 2 = 10 well explained points.

6. a) Baite Traders

Trading profit and loss accountFor the period ended 31st Aug 2009

24 X ½ =12 marks6 (b) Problems of a sole trade

-Lack of adequate capital to expand - Unlimited liability -Lacks perpetual continuity -Suffers losses done -No division and specialization of labour-Limited management skills - Poor decision making process 4 x 2 = 8 marks well explained points

SACHO HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. Ways to be used by an organization to protect its properties and control.

i) Entrancing security against theft.ii) Ensuring physical care by people using the property.iii) Keeping records of movement and usage of each of the property.iv) Taking insurance cover.v) Proper repair servicing and maintenance. (4 points )(4mks)

2. Services offered by advertising agencies.i) Help organizations in designing their trade marks, Logos and advertising materials.ii) Book space and air time for their clients in varies media.iii) Offer advertising services to their clients on selling techniques.iv) Advertise on behalf of their clients the appropriate media to be used.

4 points 4 mks3. Reasons why Kenya needs to encourage transport.

i) It is cheap to maintain after construction.ii) it is labour saving ( Saves labour expenses) as it is capital intensive.iii) Large volume of the product is delivered quickly.

Sh ShOpening stock 35,000Add purchases 160,000Add carriage in 20,000Net purchase 180,000G.A.S 215,000Less closing stock 50,000Cost of goods sold 165,000Gross profit c/d 180,000

345,000Advertising 13,000Carriage outwards 14,000Salaries &wages 10,000Lighting& heating 12,000 49,000Net profit c/d 174,000

223,000

Sh ShSales 350,000Less returns in 5,000

345,000

345,000Gross profit b/d 180,000Rent income 25,000Discount received 18,000

223,000

iv) Can deliver the product for 24 hours( 24 hr operation)v) Is environmental friendly as pipes are laid underground.vi) Reduces accidents on our roads by tankers.vii) Reduces congestion on our roads by tankersviii) Reduces road damage by tankers.ix) Pipes can be laid even in areas of poor topography. (4 points) = 4mks

4. Circumstances under which the following can be used in enhancing communication.i) Poste restante:- used by travellers ( Business travelers) who wish to receive

letters while away from their posts offices books.ii) Registered Mail:-Used when sending important documents and parcels that require

extra security.iii) Speed post:- Used when sending parcels and letters that are urgent.iv) Business reply services:- Used by the business when it waits its customers to reply to

its correspondence quickly or promptly. 4 point = 4 mks5. Monetary tools used to control inflation in Kenya.

i) Increasing the rate of interest on lending to commercial banks.ii) Selling of government securities in open market operation.iii) Using selective credit control measure.iv) Directing commercial banks for example to inexperience to discourage borrowers.vii) Requesting / persuading control on lending.

6. Reasons for preparing business plans.i) Help to avoid mistakes.ii) Help to identify strengths and weaknesses of the business.iii) Increasing commercial banks cash/ liquidity ratio.iv) Increasing compulsory deposit by commercial banks with central bank.v) Helps to determine the amount of finance required.vi) Helps in appropriate allocation of resources.vii) It acts as motivating factor to other markets.viii) Helps in adaptability to future changes. (4 points ) = 4mks)

7. Reasons for the common use of E/M banking in Kenya.i) Enables one to top up our time automaticallii) One is able to know the status of expected salary in his account.iii) One is able to get ministatements concerning his bank account.iv) One is able to know his/ her account balances easily through mobile phone.

(Access account balances)v) One is able to transfer money from the bank to the mobile phone ( withdraw money

from his account) using mobile phone.vi) One can pay utility bills using m – banking services.vii) One can buy goods from registered traders. 4 points 4mks

8. Sources of monopoly power.i) Control of an important input in production.ii) Ownership of production rights .iii) Internal economies of scale.iv) Small size of the market served.v) Additional costs by other firms.vi) Where a group of firms combine to act as one.vii) Restrictive practices.viii) Where initial capital required is large.

9. Weakness of using National income statistics in comparing the stands of living of different countries.i) Different currencies used.

ii) Different goods and services used in computing national income by different countries.

iii) Disparity in income distributioniv) Different needs and tasks of people living in different countries. 4 points (4mks)

10. Reasons why young population may not be desirable to a country.i) High dependence ratio.ii) High rate of unemployment.iii) Increased social evils/ crime.iv) Low labour supply.v). Pressure on goods and services.vi) Reduced savings and insertment.viii) Diversion of government expenditure.

11. Factors resulting to an increase in demand .i) Possibility of decrease in price.ii) May be the taste and preference for the product was very positive.iii) May be the there was a trend of increasing population.iv) May be there was there interfacing a trend of increasing income to the household.v) Possibility of seasonal changes being in favour of the product.vi) Possibility of income being distributed fairly possibility of terms of sale being better.vii) Future expectations of increase in price or decrease in quality being supplied.

ix) Better government policy such as decrease intakes increase in subsidiers or increase in time for taking the product.

x) May be a continued increase in the prices of substitutes such as coffee.xi) May be a decrease in the prices of complementary goods like sugar. 4 points ( 4mks)

12. Uses of an invoice.i) Demand payment for goods sold on credit.ii) Used as a source document for making entries in the books of discounts.iii) Shows details of goods sold for example prices, Quantity, terms of sale.iv) Used as document of future reference. 4mks

13. Macro – environmental factors that affect business performance.i) Economic environmentii) Demographic environment.iii) Legal political environment.iv) Technological environment.v) Cultural environmentvii) Competitive environment.viii) Physical environment. 4 point ( 4mks)

14. Methods the Kenyan government uses in protecting consumers.i) Setting up standards.ii) Weight and measures act.iii) Licenses.iv) Food and drugs act.v) Sale of goods act.vi) Public health act.

15. Circumstances where a business may build his own warehouse instead of using a public ware house.i) When one wants to have full control of the warehouse.ii) When these is need to provide special storage facilities.iii) When one does not want to incur hiring expenses or when hiring costs are high.iv) When there is need to avoid long procedures involved in hiring a public ware housev) Where the business person wants to design the warehouse as per his wish.vii) Price control actsviii) Rent and tribunal act

(4 points (4mks)16.

XYZ TRADERSTRIAL BALANCE

AS AT 31.12.2010

A/C NAME DR. SHS CR SHS8 ticks½ mk ( 4mks)Debtors

DrawingsStockCash in HandCreditorsCash at BankCapital

20,00010,00080,00015,000

50,000

175,000

25,000150,000

175,000

Debtors drawings + Stock + cash in hand + cash at bank- creditors = capital20,000 + 10,000 + 80,000 + 15,000 + 50,000 – 25,000∴ 175,000 – 25,000 = capital

150,000 = capital 1mk17. Roles played by Nairobi Stock exchange

i) Facilitate buying of sharesii) Facilitates the selling of shares .iii) Safe guards investors interests.iv) Provide useful information to investors.v) Assists companies to raise capital through the issue of new shares.vi) Creates employment.vii) Raises revenue to the government through taxes.viii) Measures the countries economic progress.ix) Promotes the culture of saving 4 points 4mks

18.HEKIMA TRADERSBALANCE SHEET

AS AT 2ND 12/2009ASSET

Capital 130,000Cold profit 10,000

140,000

C.A Liab.Stock 40,000 Creditors 25,000Cash 90,000Bank 15,000Debtors 10,000 155,000

155,000

155,000

8 ticks ½ mk each4 points

19. Circumstances under which an insurance company may not compensate the insured.i) When the cause of the loss is not the risk that is insured.ii) If the insured is proved to have given false information about the property insured (

Not complying with the principal of utmost good faith)iii) When the insured does not follow proper procedure involved in.iv) When it is proved that the insured does not have insurable interest in the property

destroyed.v) When the loss is caused deliberately/ unintentionally.vi) If the insurance company is insolvent.

vii) If there is delay in reporting the incident to the insurance company. 4 points ( 4mks)20. Strengths of direct tax.

i) Economical in collectionii) Tax revenue in certainiii) Equitable /fairness in contribution.iv) Does not affect prices of goods and services.v) Brings re- distribution of wealth.vi) The society is conscious.vii) Simple to understand.viii) Desirableix) Elastic / Flexible 4 points ( 4mks)

21.VIJANA LTD

JOURNAL PAPERformat ½ mk

Date Particulars Dr/Shs Cr. (Shs)2005 march 1

2.

KK traders a/c( Being a record of an old machine sold on credit)Dobi tradersA/cCar A/cGain on disposal A/cBeing and old business car sold on credit at a gain?

1000

120,000

1000100,000

20,000

121,000 121,0007 x ticks x ½ mk= 3 ½ mk+ ½ mk= 4 mks

22. i) Cost of sales = Opening stock +Purchase – closing stock ½ mk

15,000 + 120,000 + 15,000= 150,000 ½ mk

ii) Gross profit

Mark up =

GPC .O .S

× 100

401

= x150 ,000

× 100

401

= x1500

= 15000 4

60,000Lop = 60,000 ½ mk

iii) Sales = C.O S+ up= 150, 000 + 60,000 ½ mk= 210,000 ½ mk

23. Reasons for import restriction by countries..i) Protection of local infant industries.ii) Protection of strategic industries.iii) Creation and protection of employment.iv) Prevention of dumpingv) Preservation of balance of trade ( Avoid balances of trade deficit)vi) Protection of cultural and social values.vii) Expanding market for local products.viii) Promoting self reliance ( 4points = 4 mks

24. Four challenges being faced by Kenya in this crucial stage of implementing itsvision 2030.i) Reliance on donar fundingii) Lack of domestic resources e.g finance.iii) Failure to involve local people in planningiv) National calamitiesv) Over- ambitions plansvi) Lack of co – operation among the executive parties.vii) Inflationviii) Lack of political willix) Corruption amongst the officials 4 points ( 4mks)

25. Dr. Capital a/c Cr

1.2.2011 cash 10,0001.2.2011 Bank 50,000

Dr. Cash a/c Cr

1.2.2011 capital 10,000 4.2.2011 Bank 2,000

Dr. Purchase a/c Cr

2.2. 2011 LK traders 5,000

Dr. LK LID A/c Cr.

2.2. 2011 purchases 5,000

Dr. Bank A/c Cr. 1.2.2011 capita 50,000 4.2.2011 cash 2,000

8 ticks ½ mkeach = 4mks

SACHO HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. a) Limitations of adopting new technology.

- Insuffient capital / High cost of acquiring and maintaining new technology.- Some technology is advancing very fast requiring continours updating which s

expensive.- Adoption of new technology may lead to lay – off / increase in unemployment

problems.- Require hiring of new staff or retaining them which is expensive.- It increases cost of goods in the short run.- Increases prices of goods thus discouraging potential customers.- Some technology may have side effects e.g computers affect eye- sight.- Breakdowns of some machines may lead to losses or interruption of business

operations.- Some technology may lead to environmental degreation e.g disposal of waste

products which call for measures which is expensive. (5 x 2 ) = 10b) Differences between public limited company and partnership.

PUBLIC LIMITED COMPANIES PARTNERSHIPMinimum number of seven members Minimum number of two membersNo maximum number of members Maximum of 20 members and 50 for

professional partnershipHence limited liability Any change requires consent of all partnersShares are freely transferable Raise capital through contribution of

members.Management by elected board of directors

Management by partners

Enjoys continuous life Limited lifeSeparate legal entity Partnerships and members are seen as one.

2. a) Circumstances under which monopolies exists.- Where the firm controls the source of raw materials.

- Where the product can only be efficiently produced by one firm.- Where forms merge/ Amalgamate to operate as one firm.- Where the capital out lay is too huge denying entry of any new firm in the

market.- When the government establishes a firm to provide essential goods/ services.

( 2 x 5 )b) Factors that influence the level of development of a country.

i) Labour supply: A country with skilled and knowledgeable labour will be more developed than a country with semi skilled labour.

ii) Capital: Most developed countries have a large pool of capital which it uses to develop all sectors in a country.

iii) Entrepreneurship and co – ordinatedion of all other factors of production will lead to high and effective production hence will be highly developed.

iv) Land: A country with a lot of natural resources will utilize than hence be developed.

v) Level of technology: A country with the latest level of technology will produce modem items hence have a large market leading to development.

vi) Political Stability: A country that is politically stable will attract many industries locally act foreign investors thus leading to development.

3. a) Benefits of “ Pooling of risks”- It enables for compensation of those who have suffered losses.- It reduces the burden per pool as it is shared by all insured.- The industry is able to invest the balance and earns income ( i.e by investing

inestates)- The industry is able to meet its operating costs.- Not all those who insure risks can suffer losses, hence the industry make profits.- The company has the funds to re-insure itself against other insurance companies.

b)Date Details D.A Cash Bank Date Details D.R Cash Bank2011 2011Jan 1 Balance BF 18,000 Jan 1 Balance BF 57,500 3 Sales 21,800 10 Salaries 40,000 4 Debtors 90,000 12 Drawings 35,000 2

3Ouru 540 5460 24 Bank 10,000

24.

Cash 10,000 27 Bank 90,000

26.

Sales 38,000 ” Charges 2,500

31.

Cash 103800 29 Reditor 180 5820

31 Bank 10830031 Balance c/d 40,000 98880

540 201800 254700 180 201800 254700Jan 31

Balance b/d 40,000 98800

( 20 x ½ ) = 104. a) Effects of production activities

- Pollution i.e pollution is caused by industrial waste that is discharged into rivers affecting both human and aquatic life.

- Degrading the environment i.e excessive use of the environment such as mineral’s leads to their exhaustion- this affects balance in the ecosystem such as spread of Malaria.

- Depletion of energy sources i.e excessive use of energy avalanche i.e excessive agricultural activities causing cleaning of forests which leads to soil erosion.

- Rural urban migration caused by perceived existence of jobs in urban areas thus reducing rural areas levels of production.

- Transport: when goods are being transported to the final consumer, congestion on roads.

- Increase and lowers the temple of authorities and vehicles emit dangerous fumes which may lead to respiratory infections on people. ( 5 x 2)

b) Services offered by commercial banks to their customers.i) Safekeeping of valuable items commercial banks act as custodian of valuable items

for their clients e.g wills, title, deeds & jeweler.ii) They lend money to their clients in form of loans, overdrafts of discounting bills of

exchange ad promising notes.iii) They receive money deposits from their clients commercial banks operate three

types of accounts for this purpose- savings, current and fixed deposit accounts.

iv) Facilitate international payments through letters of credit.v) They advice their clients on financial and investment matters.vi) They act as management trustees of properties of business of decreased clients.vii) They act as referees for their clients during a credit status inquiry.( 5 x 2)

5. a) Differences between savings and current accounts.Savings Account Current Account- Withdrawals are restricted - Withdrawal are not restricted.- A fixed minimum balance is required

- No minimum balance is required at time of withdrawals.

- No cheques books are issued - Cheque books are issued- Interest paid on deposit balance - No interest is paid on deposit balance- No overdraft is allowed - Overdraft can be given on request - Bank statement is only issued on request

- Bank statement is provided at the end of every month.

b) Shortcomings of internet services.- Information may not be secure since many people can access it.- Information can be diverted by competition who knows the password.- Computer may be invaded by computer by virus hence losing all the information.- It can be used to transmit harmful information e.g terrorism. Drugs etc.- It may show or take long to access services.- Computers, have to go through a mass of information.- One needs to be computer literate.- Encourages pornography. ( 5 x 2)

6. a) Disadvantages of progressive taxes.- The taxes are difficult to understand.- They are difficulty to measure utility.- It is a away of punishment to hard/ work.- It breeds corruption for it can be evaded.- It hampers social welfare.- It can lead to scope of tax evasion.- It doesn’t encourage capital formula (5 x 2)

MUTUA TRADERSPROFIT & LOW ACCOUNT

FOR THE YEAR ENDED 31 DEC 2001Shs. Shs.

Carriage Outwards 14400 Gross Profit b/f 38100Salaries 12,400 Discount Received 26,400Advertising 22200 Rent income 12,600Insurance 9400Net Profit 18,700

77100 77100MUTUA TRADERS

BALACE SHEETAS AT 31ST DEC 2001

FIXED ASSETS SHS SHS SHS SHSMotivation 603100 Capital 653,560Equipment 200600 Add: Net profit 18,700Furniture 94400 898,000 672260Current Assets Current LiabilitiesStock 80200 Bank overdraft 412,600Debtors 75900 Creditors 74,300

Cash 105060 486,9002612601,159,160 1,159,160

( 20 x ½ ) = 10STRATHMORE SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME Considerations when choosing a location of an office.● Space – Should be enough for future expansion. Access- Easy to be reached by worker’s and clients Security- For visitors, workers and equipment/property. Support services- Should be available e.g Transport, Insurance, communication etc. Public image- Whether location is prestigious or not. Good location depicts a successful firm Physical surrounding Running costs. (4 x1 = 4marks)

1. Ways by which commercial banks promote rural development● Encouraging savings Advancing loans to farmers and rural entrepreneurs Increasing employment opportunities. Accepting deposits Offering foreign exchange services. Promoting infrastructural development.

2. Factors discouraging many people from starting their own business. ● Inadequate capital & unavailability of consultancy services. Absence of role models- lack of entrepreneurial culture Absence of government support and good will Negative societal attitudes & beliefs Few people with personal drive, motivation, initiative etc. (4 x 1 = 4marks)

3. Expenses incurred by wholesalers. ● Actual cost of buying stock Storage cost Transport cost Advertising cost Insurance cost Salaries & wages Packing & blending expenses (4 x 1 = 4marks)

4. Reasons for raising imports duties● To raise revenue To control importation of harmful goods To protect local industries from collapse To protect citizens from unemployment To prevent importation of inferior/harmful goods To correct balance of payment deficit situation. To control imported inflation To promote self sufficiency. (4 x 1 = 4marks)

5.

(½ x 8 = 4marks)

Debit CreditBank√ Capital√Equipment√ Cash√Bank√ Cash√Drawings√ Cash√

6. Functions of benefiting consumers● Give credit facilities

Break bulk Give advisory services Provide storage Avail variety of goods Pack, blend, brand goods. (4 x1 = 4marks)

7. Factors determining life policy (insurance)premiums● Age of the insured. Occupation of the insured Sum assured Health status of the insured Frequency of occurrence of risk insured. Residence of the insured. (4 x 1 = 4marks)

8. (4 x1 = 4marks)True/False

i) Falseii) Trueiii) Falseiv) false

9. Forms of utility createda) Possession b) Form c) Place d) Time (4 x 1 = 4marks)

10. Challenges faced in satisfaction of human wants● Too many and varied wants. Scarce resources Human wants keep on changing with age, time, gender etc. Human wants are recurring (4 x 1 = 4marks)

11. Demerits of using television as a method of advertising● Are expensive to buy Reach a small audience- only those owning T.Vs Language barrier especially for the illiterate. May be affected by power disruptions Messages take short time. (4 x 1 = 4marks)

12. Reasons for location of firms close to others● Use products from others as raw materials To enjoy better infrastructure To receive materials from other firms when afresh To adhere to government policy To have control over source of raw materials To enjoy a pool of labour To be able to dispose of its products to other firms.(ready market0 (4 x 1 =4marks)

13. Positive effects of declining population● Reduced government expenditure Enabling a country to attain optimum population. Reduce pressure on land and other resources Reduce dependency of unemployed on the employed.

14. Calculating amount the traders received if buyer paid in 15 daysPrice => sh. 4000Trade discount => 10 x 4000

100= 400

Net amount = 4000-400 = 3600Cash discount =>3 x 3600

100

Net amount paid = 3600 - 108

3,49215. i) Cost of goods sold

COGS = purchases + open stock – closing stock.√= 140,000 + 48,000 - 42000√= 146000√ 2 marks

ii) Mark up percentage = Gross profit x 100 Cost of sales√

Gross profit = sales – cost of sale= 205,000-146000= 59,000√

Mark up = 59,000 x 100 146,000= 40.41√ 2 marks

16. Correcting a trial balance Wholesalers

Trial balanceAs at …………

…… Dr CrSales 20,000√Capital 75,000√Creditors 3,000√Purchases returns 500√Purchases 6,000√Cash 86,200√Sales Returns 1,300√Debtors 5,000√

98,500 98,500 (8 x ½ = 4marks)17. Reasons why electric trains are not common in Africa

● Inadequacy of capital / poverty Shortage of power/ electricity Mismanagement of railway transport Absence of visionary leadership – not given priority to development of rail transport.

(4 x 1 = 4marks) 18. Importance of a warehouse to a manufacture

● Goods can be produced in advance to meet unexpected customer demand. Production is done steadily without rush Production can be continuous-thus offering steady supply. Goods are protected from physical damage. Manufacturer can store raw materials Good protected from pilferage Goods can be prepared for sale. (4 x 1 = 4marks)

19. Condition Market structure

a) Monopoly/perfect competitionb) Perfect competitionc) Perfect competitiond) Monopoly

20. Causes of cost push inflation● Increase in cost of inputs Increase in cost of energy Increase in cost of labour – wages & salaries Increase in cost of land Increase in cost due to taxes and factors of production. Increase in profit margin Reduction in subsidies. (4 x 1 = 4marks)

21. Principles of a good tax system● Equity● Simplicity Flexibility Certainty

Economy

Convenience Diversified Ability to pay (4 x 1 = 4marks)

22. Elements comprising external environment of a business● Political Economic /Market Social cultural Technological Legal structure Demography Physical/Geographical/natural The public/media/lobby groups Competitive (4 x 1 = 4marks)

23. Causes of shift of supply the supply curve to the right.● Favourable climatic conditions Expectation of future price increases Decrease in costs of production Reduction of taxes on factor inputs Subsidisation by the government. (4 x 1 = 4marks)

24. Circumstances under which sign language may be used When in a noisy environment When communicating to a dump person When in a crowded place When the message is confidential When the distance separating the two communicating parties is long When using unfamiliar language to each other

STRATHMORE SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME

1. a) Characteristics of underdeveloped countries-Presence of a low per capita income-A rapid population growth rate-High level of dependency-Inadequate capital resource-Low rate of savings-Dominated by subsistence economy.-Dominance of foreign firms. Any five well explained points (5x2 = 10 marks)

b) Measures that can be taken to reduce unemployment● Control of population growth Diversification of the agricultural sector Diversification of industries Use of appropriate technology Relevant education system Any five well explained points (5x2 = 10 marks)

2. a) Ways in which central bank regulates the operation of commercial banks in Kenya● Bank rates-Raising or lowering rates to control lending.-O.M.O –Open Market Operations e.g selling or buying Government securities.-Cash/liquidity ratio requirements- requiring commercial banks to hold a certain proportion

of total deposits in liquid form.-Compulsory deposits requirements.-Selective credit control-Directives.-Moral suasion- appealing to commercial banks. Any five well explained points (5x2 = 10 marks)b) Role played by insurance industry in promoting the development of Kenyan economy● Employment creation Revenue to government Ensuring continuity of business. Spreading risks so that each contributes a little Promote investor confidence- to invest in risk ventures. Encourages savings e.g life policies. Investments from premiums by insurance companies.

Any five well explained points (5x2 = 10 marks)3. a) Role of the Nairobi stock exchange as a market for securities

● provides a ready market for people who wish to buy or sell their shares. Sets a price for every security Helps the public to invest in public companies. Eases the transfer of shares, which enables sellers to dispose of their investments. Publishes useful information about various companies that is used by investors and

relevant parties. It monitors the financial affairs of every company whose shares are traded on the stock

exchange. Its performance index is used as a measure of the country’s economic progress.

Any5 well explained points (5x2 = 10 marks)

b) Ethical issues affecting business● Discrimination in business -Fairness in competition.-Protection of environment while conducting business.-Rights of employees.

-Unfair means of achieving business objectives (bribery, corruption)

-Consumer exploitation. Any five well explained points (5x2 = 10 marks

4. a) Benefits of filing office documents to an organization

● Filing of documents in an office makes it tidy, otherwise it would make the office

disorganized if

documents are thrown all over the place any order.

It makes it possible for an organisation to make references where necessary. In case the documents are not kept, it may be difficult for information to be accessed when needed at some future date.

Documents can easily get lost or stolen if not filed. Filing ensures that documents are kept in secure places which minimizes lose, theft or misplaced.

It takes a shorter time to access documents than when they are not filed which would waste a lot of time trying to look for them.

It saves space otherwise documents that are not filed and kept end up taking a lot of

space.

b) Benefits a country derives from transporting oil through pipeline● Reduced road accidents as congestion of tankers on roads is reduced. Environmental pollution is reduced as pipelines do not emit gases or smoke. Cost of handling oil is reduced since fewer workers are employed. Traveling by road to various parts of the country takes a shorter time due to reduced

congestion on roads. There is no worry of return journey as pipes transport oil in one direction. It ensures regular supply after construction as they are more durable and operates 24

hours. Pipelines are not easily affected by bad weather, strikes and insecurity along highways.

Their supply is permanently fixed.5. a) Savings and credit cooperatives are registering increased number of members.

Reasons are● Easy savings since the deductions are made through check off system which does not

require efforts by members. Obtaining credit requires few procedures before its approved. The interest charged on loan is low as compared to other financial instructions. Loans require no collateral/security. Except for members pay slips /shares. Member’s savings are safe since they are insured with the cooperative insurance

company. Incase of death the members beneficiaries do not lose the savings in cooperative / nor

are they called upon to pay any of the deceased money. They give different types of loans which is rare with other financial institutions.

Any five well explained points (5x2 = 10 marks)

b) NDOLO STORES TRADING, PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST DEC. 2003 .

Opening stock 25000 Sales 600000Add purchases 360000 less return inw. 4000056000Add carriage inw. 2000

362000Less return out 20000 342000Goods av. for sale 367000Less closing stock 22000Cost of sales/ Cost of goods sold 345000Gross profit c/d 215000 ………………………………………………………

360000 560000

General expenses 88000 Gross profit b/d 215000Carriage out. 3000 add discount recv. 5000 Rent 1000Bad debts 80000 172000Net profit c/d 48000 .

220000 Net profit b/d 48000

(20 x ½ = 10marks)6. a) types of income included in income approach

● Income from formal and informal employment e.g salaries and allowances.-Profit made- This includes profit from both the public and private sector enterprises-Rent- This is income earned from use of land.- Interest on money borrowed and used.

GDI = wages + profits + interest + rent.b)

MULI ENTERPRISESTHREE COLUMN CASH BOOK

Date Details Disc. Allowed

Cash Bank Date Details Disc. Received

Cash Bank

2009 1/6 Bal b/d 87,000√ 250,000√ 2009

2/6 Salaries 101,500√

2/6 Sales 50,000√ 12/6 Furniture6/6 Mwelu 3,200√ 76,800 16/6 Musau 800 39,200√18/6 Sales 150,000 21/6 Wages 2,400√22/6 Bank 30,000√ 22/6 Cash 30,000√28/6 Kasiva 660√ 16,500√ 25/6 Drawings 5000√30/6 Cash c 90300√ 30/6 Bank c 90,300√

30/6 Bal c/d 25,000√ 350,600√3,860 183,500 567,100 800 183,500√ 567,100√

24 x1/2 = 12 marks

ALLIANCE GIRLS SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016 BUSINESS STUDIES PAPER 1

MARKING SCHEME1. Limitation of direct production.

Possible in limited sectors e.g. agriculture Poor quality products No income generation Limited employment opportunities Quantity supplied is low

2. Roles of an entrepreneur to the economy. Produce goods or service Promote both local and international trade Promote development of infrastructure Create wealth and reduce poverty levels Create employment opportunities Promote use of technology Satisfaction of human wants

Resource mobilization.3. Functions of a computer in a modern office.

Data recording Data processing Communication Internet access Printing of documents

4. Reasons for the importance of Mau escarpment as a natural resource. Water catchment Forest cover Habitat for wildlife Tourist attraction Generation of hydro-electric power Human settlement Economic activities e.g. farming

5. Importance of financial records to a business Helps to calculate profits or losses made Helps to determine credit worthiness of a debtors Important in attracting investors Used by the government to calculate tax payable Used by lenders to determine suitability of a firm in a loan applications. Used to determine growth of an enterprise Used for comparison with competitors Used in decision making by managemt

6. Purpose of the following documents.Document Purpose

Delivery note To indicate goods received in good orderDebit note To correct an undercharge An invoice To request payments for goods deliveredStatement of account

Summary of monthly transactions between a buyer and a seller.

7. Benefits of joining a savings and credit cooperative Encourages savings

Encourages investments e.g. buying a vehicle or land Earns dividends every year Provides education to its members In case of bereavement, caters for the family members. Gives normal loans and emergency loans and other forms of credit Interest charged on the loans is cheaper compared to commercial banks.

8. KIP’SBalance sheetAs at 31. 8. 2010

a

9.Measures taken by producers to ensure that consumers are protected.

Writing instructions Giving a caution Indicating ingredients used Indicating expiry date Giving contacts, address and phone numbers Indicating stamp of approval from Kenya bureau of standards Prepare goods from the factory fit for consumption Indicate retail price on the packet

10. Benefits of a public warehouse to a consumer. Ensure a continuous supply of a product Enables stocking of a variety enabling exercise of choice Stocking when in excess and releasing to the market gradually ensures price

stability Enables to respond to large orders from a consumer Quality of some products may increase while in storage e.g. wine.

11. Advantages of using E-mail for communication. It is fast in sending messages It allows for immediate feedback It has a record for future reference Allows confidential messages to be send It is economical to send messages It reduces on the use of papers Can be used globally/internationally Service is available for 24hrs

12. Reasons why all motor vehicles are required to have a policy cover

F.A KSHComputers 87500

C.AStock 12,200 Debtors 12,000

Cash 19,000 43200 130700

kshCapital 40700LTL Coop loan 50000

STLCreditors 18000

Bank overdraft 22000

130700

It is a legal requirement Facilitates compensation to victims of an accident by an insurance company. Enables the owner to have a replacement after occurrence of a risk. Encourages people to invest in the transport sector.

13. To calculate i) Mark-up %

x x 100 = 20% or 1/5 Sales

Mark up

x x 100 = 25% or 1/4 800000

X= ksh 160000Therefore 800, 0000 - 160,000 = 640,000Therefore 160000 x 100 = 25% or 1/4

640,000 ii) Net profit

C.P + commission income – expenses 160,000 + 40000 – 120,000 = sh. 80,000

14. Importance of computing national income statistics in a country. Measures the income per capital e.g. living standards of its citizens. Measures economic growth Planning purposes by the government Basis of investment decisions Means of inter-country comparisons Basis for equitable distribution of income

15. Factors contributing to a drop in quantity demanded. Reduction/fall in consumer income Fall in price of a close substitute Increase in price levels Government policies e.g. increase in tax levels, reduction in subsidies. Future expectations of a fall in price lands Changes in consumer taste preferences and fashions.

16. Reasons for delocalization of firms Increase production of goods or services Reducing rural-urban migration Promoting rural infrastructure development thus leading to balanced development of a

country Creating more employment opportunities Creating wealth/reducing poverty levels Encourage growth of auxiliary services e.g. banking, insurance, warehousing.

17. Purchases journalDate Retails FOL Amount

Ksh Oct 1 Helen 002 20,000 Oct 3 Dan 003 12,000 Oct 3 Tom 005 13,300 Totals posted to purchases A/ C (Dr) 45,300 Purchase returns journals. Date Retail FOL Amount

KshOct 05 Tom 005 300

Totals posted to purchases returns (cr) 30018. Benefits of a youthful population in a country.

Provide a ready market for a wide range of products e.g. mobile phones, clothes Provides both skilled and unskilled labour Creativity and innovation leads to new products in the market. Developing young entrepreneurs in the country Promotes the use of modern technology Promotes the knowledge industry with increased demand for schools, colleges and

universities.19. Reasons for controlling imports in a country

To correct an unfavorable balance of payment situation. To protect local firms from unfair competition. To generate revenue To discourage importation of certain products. To create employment opportunities.

20. Highlight characteristics of money Homogenous Scarcity in supply to maintain its value Is divisible Stable in value Acceptable Portable Recosnisability

21. Challenges faced by Kenya in achieving its stated goal of vision 2030. Grandiose projects e.g. resort cities when locals are living in abject poverty Not involving many people in coming up with various projects known as flagships e.g.

second port in Lamu. Reliance on donor support to finance many projects, this may come with strings

attached. Kenya is limited in terms of skilled manpower, capital and use of technology thus

awarding many contracts to outsiders e.g. the Chinese; with locals only providing casual labourers

Many locals are being displaced to pave way for the projects e.g. expansion of the Airports, a second port in Lamu.

Some projects have yet to take off Displacements of populations to pave way for the projects. E. Nairobi’s J.K airport

22. Type of Tax State

a) Corporation taxb) Value added taxc) Income taxd) Customs duty

Direct taxIndirect taxDirect taxIndirect tax

23. Recent trends adopted by firms in product promotion. Road shows Competitions with winners being awarded cash and assorted prizes. Rewarding customer loyalty e.g. safaricoms “bonga points” Firms coming up with customer care departments. Festival season promotion activities e.g. discounts.

24. Classification of goods and services-Free and economic goods-Durable and perishable goods-Material and immaterial goods-Public and private goods-Intermediate goods and finished goods.

25. Challenges of operating a business without a plan-Non-registration of a firm-Non-continuity of a business-Inability to obtain loans and other credit facilities.-Lack of staff motivation.

ALLIANCE GIRLS SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016 BUSINESS STUDIES PAPER 2

MARKING SCHEME1. a) Reasons why the govt trains business people.

(i) Expose them to modern/new/efficient developments/trends in managing/running/operating businesses.

(ii) Educate them on how to identify business opportunities.(iii) Expose them to problems facing businesses/solutions to problems facing

businesses.(iv) Educate them on proper business ethics/accept examples of ethics.(v) Educate them on how to (best) use available resources/maximize

profits/minimize losses.(vi) Inform them of available business opportunities in the country/other

countries.(vii) Expose them to govt policies that affect business in the country.

5 x 2 = 10 mks No splitting1. b) Roles that intermediary play in distribution of goods.

(i) Provides a link between producers and consumers/reduces the(ii) Number of transactions between producers and consumers/producers are linked to various

consumers/consumers are linked to various producers.(iii) Breaks bulk to allow consumers buy/get goods in convenient sizes/on behalf of producers.(iv) Accumulates bulk from various (small-scale) producers/that is convenient to large-

scale consumers.(v) Provides transport to producers/consumers.

(vi) Stores goods for producers/until required by consumers.(vii) Provides a variety of goods to consumers/from various producers/at one place.(viii) Provides finance to the producer by promptly paying the producer.

(ix) Carries out product promotion on behalf of producers/by passing relevant information about products to consumers.

(x) Assist in market research by passing information about the market to producers.(xi) Take up risks in distribution of goods by

(xii) Possessing/transporting/storing of goods/on behalf of producers.(xiii) Availing goods to consumers at convenient locations/by ensuring steady supply of goods

to consumers.(xiv) Prepare goods for sale by sorting/grading/branding/accept any example of

preparation for sale as explanation.5 x 2 = 10 mks

1 Mk - mention, 2 mks - otherwise.2. a) Why many Kenyans are shopping in supermarkets.

i) Goods are sold at lower prices due buying in bulk/leading to savings for the buyer.ii) Variety of goods therefore the buyer can get most of what he needs/saves time

looking for what one needs.iii) Quick/fast shopping since prices are fixed/no time is wasted on

bargaining/prices are shown on the goods/there is self-service/orderly arrangement of goods.

iv) Goods are packed for the customer to make it easy to carry.v) Additional benefits to the customer from the promotional methods used by the

supermarkets, e.g. shopping/smart cards, gifts, free samples, prize winning competitions, special price offers, etc.

vi) Convenient to shop in due to their location (at the centre of town)/private shopping/one can easily notice what he needs.

vii) Its prestigious/fashionable since it can be used as a form of recreation.viii) (Many supermarkets) accept alternative forms of payment that are more

convenient/safe to use (than money)/such as credit/debit cards/accept example of means of payment as explanation.

6 x 2 = 12 mks1 mk - mention, 2 mks - otherwise.

2. b) Benefits of the new port at Lamu.i) Employment to people during construction of the port/provision of services at the i) port/resulting from developments around the port.ii) Open up the area around the port for development/accept examples of

development as explanation/roads/electricity/water/schools/hospitals/etc.iii) Cheap to import goods through sea transport/leading to reduced prices of imports.iv) Cheap/easy to export goods through sea/making exports affordable.v) Ease congestion at the port of Mombasa leading to faster flow/processing of goods

on transit.vi) Help connect the country to other countries (in the hinterland)/South

Sudan/Ethiopia leading to wider market for the country's products/raw materials for industries in the country.

vii) Encourage development in the northern part of the country that will utilize resources in the region/through more/improved infrastructure/accept examples of infrastructure as explanation/pipeline/railway line/airports/roads/etc.

viii) Earn the revenue for govt from handling exports/imports of other countries/South Sudan/Ethiopia/taxation of imports/exports.

ix) Establishing of settlement schemes for indigenous people/people displaced by the port/proper land ownership.

x) Supply of power to the residents around the port.

xi) Enhanced security against theft/robbery/terrorism/that encourages establishment of businesses/tourism.

xii) Establishment of social amenities/public utilities that benefit theresidents/such as schools/hospitals/recreation places/ etc.

4 x 2 = 8 mks1 mk - mention, 2 mks - otherwise.

3. a) Advantages of public limited company.i) Wide range of capital/large capital base making it easy to expand/from the many

shareholders/accept examples of sources of capital as explanation.ii) (Shareholders) have limited liability - owners can only lose the capital

contributed/their private property cannot be used to pay business debts.iii) Specialized/efficient management since they can afford to employ

qualified/experienced managers.iv) Shares/ownership is freely transferable without affecting the capital of the

company/which attracts investors/without seeking permission from other shareholders.

v) Continuity of the company even where there's death/insanity/bankruptcy/withdrawal of shareholders.

vi) (Enjoys) economies of scale due to large size/operation/since most are large/accept examples of economies of scale as a naming.

vii) Employees are efficient/(highly) productive since the company can afford motivation (schemes)/which leads to high quality goods/services/accept examples of motivation as explanation.

viii) Has a separate legal existence from the owner/(since) it can own property/enter into legal contracts/agreements/sue in its own name.

ix) Shareholders participate in the running/operations of the company throughmaking major decisions (during the AGM).

5 x 2 = 10 mks

1 Mk - mention, 2 mks - otherwise.Msafiri traders

Balance sheet as at 31st December 2011Assets Liabilities

KSh KshFixed Assets Capital 1,840,000

Buildings 1,200,000 Add: Net profit 170,000Motor vehicle 750,000 1,950,000 2,010,000

Less: Drawings 100,000 1,910,000

Current Assets L/T LiabilitiesStock 280,000 Loan from IDB 600,000Debtors 190,000 Current LiabilitiesBank 270,000 Creditors 310,000Cash 130,000 870,000

2,820,000 2,820,000

ii) Mark-up= Gross profit Cost of sales Gross profit = net profit + expenses = 170,000 + 100,000 = sh270, 000

Cost of sales = op. stock + purchases + carriage in - returns outwards – closing stock = 230,000 + 900,000 + 150,000 - 50,000- 280,000 = sh670, 000 Mark-up = 270,000 x = 40.298% 670,000.

½ mk x 4 ticks = 2 mks.

Return on capital employed:= Net profit x 100

Capital employed Capital employed = owner's capital + L/T liabilities. = 1,910,000 + 600,000 = sh2, 510,000.Return on capital employed = 170,000 x 100

2,510,000 = 6.77%/6.8/7.0%. ½ mks x 4 mks = 2 mks.

4. a) Principles of taxation.i) Equity - the tax should be charged according to ability to pay.ii) Certainty - the tax to be paid should be clearly defined/the tax payer should be

informed about the rate of the tax/time of payment/amount to pay/etc.iii) Convenience - collection/payment of tax should not be cumbersome/mode of

payment/collection should be comfortable to tax payer/collector.iv) Economy - administration cost of the tax should not exceed revenue from the

tax/lower cost of collection compared to amount collected (from the tax).v) Flexibility - it should be possible to revise/vary/change/adjust the tax easily to be in

line with changing economic situations/prevailing conditions.vi) Diversity - there should be a wide variety of taxes applied to yield enough/sufficient

revenue/cover entire (taxable) population/suit different tax payers/ensure equity.vii) Elasticity - the tax revenue/collected should be able to respond to

changes in national income/realize more income when economy isbooming.

viii) Simplicity - (tax system) should be easy to understand/know how itworks/easy to apply.

ix) Not oppressive - the tax should not be too high as to discourage (hard)work. 5 x 2 = 10 mks 1mk - mention, 2 mks = otherwise. 4. b) Measures to improve productivity of labour.

i) Provision of training/education/capacity-building to improve efficiency of the workers/improve their ability to perform their duties.

ii) Competitive/increased remuneration/salaries/wages/allowances to beiii) in line with similar businesses/ to cover increased standards of living.iv) Provision of efficient/modernv) Tools/equipments/machinery/technology that leads to improved quality of work/makes

work easier /smoothvi) Improving working conditions that makes working

comfortable/enjoyable/workers to produce more/better.vii) Improving working relations amongst the workers/between workers and management.viii) Allowing workers to be part owners by buying shares/ownership in the business/so as to

create interest in the success of the business.ix) Giving incentives/rewards that boost the work output/such as paid

holidays, certificates/commendation letters, material/financialrewards/etc/for improved performance.

5 x 2 = 10 mks1 Mk - mention, 2 mks - otherwise.

5. a) Ways in which the price of a product can be determined in a market.

i) (Forces of) demand and supply - the willingness /ability of buyers/consumers to buy and the willingness/ability of sellers/producers to sell/the quantity demanded and the quantity supplied sets the equilibrium/exchange price/the price at which the quantity demanded equals the quantity supplied.

ii) Auctioning/bidding - where buyers bid/compete for the product (by suggesting the prices they are willing to pay) and the product is sold to the highest bidder/at the highest price.

iii) Haggling/bargaining - sellers and buyers argue/bargain/haggle/discuss various possible prices until they agree/compromise on the price at which the product is exchanged/sold.

iv) Tendering - prospective sellers quote/suggest the price at which they are willing/able to sell and the buyer selects the lowest/appropriate price (at which he buys the product).

v) Price fixing by the producer/seller - the producer/seller fixes/sets/recommends the price at which the product should be sold.

vi) Price fixing by the govt - the govt sets the price at which all sellers offer the product to the market/buyer.

5 x 2 - 10 mks1 mk - mention, 2 mks - otherwise.

5. b) Benefits of mobile phone money transfer services.i) Confidentiality - a secret PIN is used to access information on the accounti) Ease of use - as the agent assists in carrying out the transaction/can is used even by

illiterate people/easy to understand.ii) Fast transfer of money to the receiver/without delay.iii) Convenience - the agents (where money can be deposited/withdrawn) are located close

to the user/the service is easily accessible to the users/agents/phones are found throughout the country/even in remote places/one can send/receive money at any place.

iv) Affordability - the charges for sending/receiving money is low/affordable.v) Security/safety - sending money is quite safe/reliable (so long as the correct

pin/receivers phone number is used)/its more safe than carrying cash/one needs a pin to send/receive money.

vi) Acceptability - many people accept it as a way of transferringmoney/means of payment.

vii) Facilitates m-banking - money can be withdrawn/transferred themobile phone through bank ATM machines/transferred to/from bankaccounts.

viii) No account maintenance fee for keeping money in the mobile phone.ix) Short/simple procedure to register for the service.

5 x 2 = 10 mks 1 mk - mention, 2 mks - otherwise.

Nyati Traders 3-column cash book For the month of June 2011

Date Details Disc. All. Cash Bank Date Details Disc. Rec.

Cash Bank

2011 shs shs shs 2011 shs shs ShsJune 1 Bal. b/d 25,000 56,200 June 8 Salaries 24,000June 2 Sales 42,000 June 18 Tulei 5,00

095,000

June 5 Butala 4,500 70,500 June 24 Cash 26,000

TrJune 9 Kivuitu 1,800 43,200 June 29 Elect 8,750June 12 Sales 46,500 June 30 Bank 24,950June 24 Bank 26,000 June 30 Bal. c/d 25,000 130,650June 30 Cash 124,950

6,300 182,700 251,650 5,000 182,700 251,650

July 1 Bal. b/d 25,000 130,65C

½ mk x 20 ticks = 10 mks.6. b) Differences between oligopoly and perfect competition market

situations

price takers.iii) Product sold/produced is differentiated/made different by colour/name/quality/shape/etc.

iii) Product sold/produced is homogeneous (in colour/shape/quality/etc).

iv) Barriers/restrictions to entry (in the market)/exit.

iv) No barriers to entry/exit/free entry/exit.

v) Price wars exist/used to determine price.

v) No price wars/all firms sell at same/uniform price.

vi) Extensive advertising/promotion of the products.

vi) No need forPromotion/advertising/there’s perfect

knowledge about the market.vii) Govt has control over

the firms.vii) No govt control/influence.

viii) Factors of production are immobile/not easily switched from production of one product to another.

viii) Factors of production are (perfectly) mobile/can easily be switched from one production to another/more profitable lines.

ix) Transport costs are incurred.

ix) No transport costs are incurred.

2 mks x 5 well matched and explained points = 10 mks.

FRIENDS SCHOOL KAMUSINGA KCSE TRIAL AND PRACTICE EXAM 2016 BUSINESS STUDIES PAPER 1

MARKING SCHEME1. Outline four ways in which horizontal communication may be used in a business

organization. (4marks)-To create teamwork within the departments-To exchange ideas in order to develop human relations-To reduce goal blindness among different departments.-To co-ordinate and harmonize different activities.-To create a sense of belonging among departmental heads.

2. Outline four differences between a partnership and a sole proprietorship. (4marks) Sole proprietorship Partnership

Capital is from the proprietor Management is by one person Losses and liabilities are borne by one

person Formed through an individual’s

decision Owned by one person

capital is contributed by the partners partners share management

responsibilities losses and liabilities are shared by

partners formed through partners agreement Owned by between 2 – 20 partners.

3. Identify the type of good described by each of the following statements(4mark)Description Gooda) Owned by no one but the government Public goodb) Produced to be used in the production of other goods. Producer goodc) Available in abundance as gifts of nature Free good

d)Have monetary value and human effort is needed to obtain them Economic good4. State four possible consequences of poor arrangement of goods in a warehouse

(4marks)-high breakage of goods-pilferage of goods will be high-misuse of space-delays in retrieving the goods-difficulties in stock taking-high contamination of goods

5. State four factors to be considered when determining premiums to be charged in life assurance. (4marks)-Age-Length of insurance contract-Occupation of the assured-Health status of the assured-Amount of the sum assured-Residence of the assured.

6. A firm near your residential areas has been constantly releasing toxic wastes into the environment. Outline four measures that you can take to stop the firm from doing so.

Q (4marks)-Report to NEMA-Sue the firm-Talk to the firm and look for a solution-Have the firm relocated or closed-Mobilize locals to boycott buying the firm’s products.

7. An indirect tax has a room for voluntary payment. However it has its shortcomings. State four of such shortcomings. (4marks)-May fuel inflation-Less equitable-Can be avoided-Has uncertainty in revenue yield-Lacks contributor’s awareness

-May interfere with resource allocation 8. Outline four roles played by intermediaries in the chain of distribution. (4marks)

-Accumulation of bulk-Breaking bulk-Financing

S1

S0

-Provide information-They assume risks from producers

9. The following entries were made in the two column cash of Dot-com traders. Explain each of the entries.

Date Details Cash Bank Date Details Cash Bank1/12/113/12/115/12/11

Bal b/fSalescash

23,0008,0009,000

1/12/115/12/119/12/11

Bal b/fBank Purchases

9,00010,000

5,000

-Opened business with kshs. 23,000 cash and a bank overdraft of shs. 5,000-Cash sales of shs. 8,000 payment received by cheque -Deposited shs. 9,000 from the cash till into the business bank account-Cash purchases of shs. 10,000 payment made by cash.

10. The following diagram shows a shift in supply of mangoes in Kathiani Market from S0 to S1

State four factors that may have led to the shift. (4marks) Increased cost of production Unfavourable climatic conditions Poor state of technology Unfavourable government policies Poor state of roads Unavailability of inputs

11. State four reasons why carbon copying is not a popular method in reproducing documents in offices. (4marks)-Produces low quality documents-Its slow-Documents fadeout easily-Misalignment of documents-Tedious and tiresome-Outdated method of reproducing documents.

12. Outline four ways through which a business opportunity may exist. (4marks) -Inavailability of goods and services in the market-Overpriced goods and services-Inadequate goods and services-Poor services -Low quality goods.

13. Indicate in which ledger book transactions involving the following will be recorded.(4marks)

Transaction ledger Booka) Rent expenses Nominal ledgerb) Credit purchases Purchase Ledgerc) Cash sales Cash bookd) Credit sales Sales ledger

14. Outline four limitations of the circular flow of income. (4marks)-It assumes there are only two sectors in the economy-It assumes no savings and investments-Assumes no government intervention-Assumes a closed economy i.e. no foreign trade.

15. State four ethical issues that a firm is supposed to address in product promotion (4marks)

-Protect the ecological environment-Products promoted by the organization should be genuine-Adverts should contain true information about the product-Code of how the employees should deal with the members of public-Adverts should respect people’s culture

16. The following balances were extracted from the books of Multi traders as at 31st March 2010

Shs.Fixed Assets 200,000Creditors 35,000Current assets 110,0004 year bank loan 150,000Determine the net worth of the business as at 31st march 2010 (4marks) A = C + LCapital = Assets - LiabilitiesC = (FA + CA) – (Creditors + 4year bank loan)C = 310,000 – 185,000 = 125,000

17. State four measures that the Kenyan government may adopt to promote her exports. (4marks)

- Pay export compensation to exporters-Allow waivers for custom duty on raw materials meant for production of exports-Negotiate for preferential treatment on Kenya products abroad.-Simplify export procedures-Sponsor exhibitions for Kenyan goods abroad.

18. State four negative effect of inflation that Kenyans are facing today. (4marks)-High prices of goods and services-Low savings and investments-Decline in living standards due to low purchasing power.-Inavailability of bank credit due to high interest rates.

19. Outline four reasons why an entrepreneur would prefer to locate his business where similar businesses already exist. (4marks)-Enjoy ready and available labour-Already developed market-Availability of auxiliary services-Developed infrastructure-Combined efforts in waste disposal.

20. One of the functions of the office is to safeguard the organization’s property. State four methods through which this function can be achieved. (4marks)-Keeping records on movement and usage of the property-Taking insurance cover-Repairs, servicing and maintenance -Ensure physical care by people using the property-Enhancing security against theft.

21. Outline four causes of unemployment in Kenya. (4marks)-Irrelevant education system-Rapid population growth-Use of inappropriate technology-Rural – urban migration-Inadequate co-operate factors

-Seasonality in production 22. Outline four functions of money. (4marks)

-Medium of exchange-Unit of account-Store of value-Transfer of immovables -Measure of value-Standard deferred payments.

23. State four disadvantages of division of labour ad specialization. (4marks)-Makes man be machine like creature-Leads to monotony and boredom-Hinders innovation and creativity-Narrows one’s opportunities

24. The following transactions relate to Ostrich Ltd. a) Started the business with Kshs. 10,000 cash and Shs. 15,000 at the business bank accountb) Paid Kavi a creditor Shs. 3,000 by cheque Post the above transactions in the relevant ledger accounts. (4marks)

Cash A/c Bank A/c Capital 10,000 Capital 15,000 Kavi 3,000

Kavi A/C Capital A/c Bank 3,000 Cash 10,000

Bank 15,000

25. State four factors that may positively affect the productivity of labour. (4marks) -Better training of the employees-Motivation of the employees – welfare facilities-Good state of health-A conducive working environment-Better job description-Better remuneration

FRIENDS SCHOOL KAMUSINGA KCSE TRIAL AND PRACTICE EXAM 2016 BUSINESS STUDIES PAPER 2

MARKING SCHEME1. Benefits of joining a producer co-operative society

She will be able to obtain better prices for her coffee Farm inputs on credit Cheap loans Better storage facilities Education on better methods of production Better and reliable transport means – feeder roads.

Any five relevant points with explanation 2 x5 = 10mksa) Role played by advertising agencies i. Offer selling techniques / promotion techniques

ii. Design and arrange installation of neon signsiii. Create employment opportunitiesiv. Source of revenue to the governmentv. Design trademarks , logos e.t.c

vi. Booking space and time in various media Any five relevant points with explanation 2 x 5 = 10mks

2. a) Challenges in realization of vision 2030 Lack of basic resources Lack of political good will Failure to involve the local people in plan formulation stage Natural calamities Over reliance on donor funding Lack of co-operation and co-ordination between the executing parties and formulators.

Any relevant points with explanation 2 x 5 = 10mks

b) Reasons why a properly drawn cheque will be dishonoured Could be post dated May be stale Insufficient funds in the account Death, insanity or bankruptcy of drawer Amount in words differing from amount in figures Alterations not signed against

Any five relevant points with explanation 5 x 2 = 10mks

3.a)

NTHIO’S TRADING PROFIT & LOSS A/C FOR THE YEAR ENDED 31ST DECEMBER 2011

DR CROpening stockAdd Purchases Add carriage inwards

Less return outwards Cost of goods for salesLess Cost of goods soldGross profit

Expenses Salaries & wagesCarriage outwardsWater & LightingInsurance

Net profit C/d

18,000√500,000√

9,000√527,000√

50,000√477,000√

25,000√452,000√518,000√970,000√

85,000√12,000√36,000√40,000√

173,000√345,000√518,000√

Sales Less return InwardsNet sales

Gross profit B/d

1,000,000√30,000√

970,000√

970,000√518,000√√

518,000√

20 x ½ = 10mksb) Economies of scale Buying economies Marketing economies Financial economies Production economies Research economies Spreading risks Any five relevant points with explanation 5 x 2 = 10mks

4. a) Why a producer will sell directly If he intends to sell at low price Where the goods are perishable If the market is close to him If he has his own outlets If the goods are technical in nature Incase of highly expensive goods

Any five relevant points with explanation 5 x 2 = 10mksb) Reasons for a country being reluctant to adopt free trade policy

Loss of revenue to the government Social – cultural interference Killing domestic infant industries Dumping Balance of payments deficits Unemployment

Any five relevant points with explanation 5 x 2 = 10mks5.

a) Sources of short term finance Trade credit Bank credit / overdraft Factoring Invoice discounting Hire purchase Discounting bills of exchange Any five relevant points with explanation 5 x 2 = 10mks b)

TUMETOKA MBALI TRADERSPetty Cash Book as at 7th June 2012

Dr Date Details Total Stationery Postage Travelling Staff tea Misc Ledge a/c

16,0002,000

June 20121134556666

Bal b/fReimburseStampsStationeryStaff teaPostageStaff teaStationeryTransportRepairsOstrich

4001000

580850500650

116020005500

1000

650

400

850

1160

580

500

20005500

7

7Reimburse

126405,360

1650 1250 1160 1080 2000 5500

18,000 18,00020 x ½ = 10mks

6a) Features of underdevelopment High poverty levels Disparity in incomes High population growth rate Low levels of technology High unemployment levels Low savings / investments Underutilized resources.

Any five relevant points with explanation 5 x 2 = 10mksb) Limitations of per capita income Does not consider income distribution Statistical problems Inflationary tendencies Does not show the nature of products Does not show peoples sacrifice.

=10mks Any five relevant points with explanation 5 x 2

MOI GIRLS - NAIROBI KCSE TRIAL AND PRACTICE EXAM 2016 BUSINESS STUDIES PAPER 1 MARKING SCHEME

1. Challenges of satisfying human wants.a)- Problem of making choices b)- problem of scarce resources C- Problem of competing wantsd)- Problem of recurring wants e)- Problem of satisfying complementary wants.

2. Ways in which manufacturers enhance consumer protectiona)-Indicating expiry dates on productsb)-Indicating the recommended retail pricesC-Indicating any side effects of the product d)-Ensuring that their agents are ethicale)-Avoiding misleading advertisementsf)-Giving guarantee to customers on durable electrical appliances which may fail to function.

3. Ways in which government influence price of a commoditya)-Taxation may increase the price b)-Subsides may reduce the price.C-Legislation may increase / decrease the priced)-Price control /price ceiling e)-Price decontrol /price liberalization

4. Features of demand deposit A/ca)-Deposits of any amount can be made at any time.b)-Minimum cash balance must not be maintained in the account

c)-Withdrawal of any amount can be done without giving prior notice.d)-Cheque books are issued to account holders to use as a means of paymente)-Monthly statements are issued to the account holders.f)- Overdraft facilities are allowed to the account holders.g)-The account holder do not earn any interest on the account balance

5. (i) Working capital Current Assets-Current liabilities(145,220-95,200)=50,020 2x1mk=(2mks)

(ii) Capital employedFixed Assets +Working capital(480,000+50,020)

=530,020 2x1=(2mks) 6. (a) Real account (b) Nominal account (c) Nominal account (d) Nominal account 7. Measures that government may undertake to provide an enabling business environment

a)- Provision of adequate securityb)-Provision of good transport / communication system / infrastructureC-Offering subsidies d)-Instituting legal measures / regulations to shield local industries e)-Tax concession / relief to motivate new investors

8. Circumstances under which downward communication would be appropriate:a)-When training junior staff b)-When delegating duties to the junior staffc)-When dealing with those involved in misconduct d)-When giving rewards to staff e)-When solving problems facing employeesf)-When evaluating the performance of employees

9. Limitaion of National income statistics in comparing standards of living in different countriesa)-Difference in values of different currenciesb)-Difference in the baskets of goods / servicesC-Disparity in income distribution in different countriesd)-Difference in taste / needs of people in different countries

10. Merits of using indirect tax to raise revenue(a) Convenient to pay (b) Not easy to evade (c)Has wide coverage / reaches the pocket of all income groups(d) Economical to collect(e)It is elastic / flexible hence adaptable to economic changes.

11. Components of a business plan.a)-The product to sellb)-The target market c)-The management structure d)-The capital structuree)-The extent of competitionf)-The executive summary

12. Demerits of pipeline to transport petroleuma)-Installation cost is very high

b)-It is prone sabotage hence loss of productc)-Where leakage is not detected immediately, heavy losses occurd)-It has no return journey e)-It can be used to transport gas / liquid products onlyf)-Leakage may cause environmental pollution.

13. Personal selling may be appropriate;a)-Where the firm has adequate resourcesb)-Where the market is concentrated in one localityc)-Where the product is of high unit valued)-When there is need for demonstratione)-When introducing a new product in the marketf)-Where there is need to address individual need/ requirement / consumer specification

14. Maneno TradersTrial balance as at 6th January 2012

PARTICULARS DR CRLand and BuildingCash in hand PurchasesReturn inwardsCreditors Bank overdraftSalesCapital

150,000 25,500 18,000 5,000

15,000 30,000 30,000 123,500

198,500 198,500

(8x½mk = (4mks)15. Monetary policy of controlling inflation

a)-Use of bank rate policyb)-Use of cash ratioc)-Use of liquidity ratiod)-Use of open market operatione)-Use of selective credit control f)-Use of special/ compulsory deposits

16. (a) Composite machine(b). Facsimile/ fax machine(c)Duplicating machine(d) Banking machine

17. Distinction between Monopolistic competition and Oligopoly MONOPOLISTIC COMPETITION OLIGOPOLY

(i) Many firms in the industry(ii) Freedom of entry / exit(iii) Products are differentiated(iv) Firms set their even prices on

cost of production(v) Firms make normal profits in

the long run.

-Few firms in the industry-Restriction / barriers to entry-Products are homogenous or differentiated-Firms are interdependent in their output/pricing-Firms can make super- normal profits in the long run

18. Disadvantages of producer co-operativesa)-Most of them cannot attract qualified staff due to inadequate financeb)-Some cannot be able to raise enough / adequate capitals as majority of their members are low income earners c)-Majority are poorly managed leading to poor performanced)-Most of them are affected by political interferencee)-Withdrawal of members affects their operation / capital base

f)-They suffer from embezzlement of funds by the management19. Objectives of EPZ in Kenya

a)-To increase productive capital / investment capitalb)-To generate employment opportunitiesc)-To encourage the transfer of technology / capitald)-To develop backward linkages e)-To diversify export of products/markets

20. Advantages of over-populationa)-Increased labour mobility which enhances economic productivityb)-Increased market for goods /services which enhances production C)-Adequate supply of labour d)-Increased innovation / creativitye)-Cheap labour due to excess supply

21. Advantages of bonded warehouse to the governmenta)-Enables the government to collect information on goods importedb)-Enables the government to raise revenue from customs duty paidc)-The government is able to control the entry of illegal goods in the countryd)-Verification of the type /nature of goods imported become easier

22. Features of departmental stores (a). Offer variety / wide range of goods (b). Sell their goods at relatively lower prices (c).They are attractive / convenient to shop in (d).Usually situated in town centres (e).Each department is managed by a departmental manager23. Conditions necessary for a successful development plan

a)-Establishment of a planning body b)-Availability of adequate statistical datac)-Fixing realistic targets and prioritiesd)-Maintenance of proper balance in the economye)-Incorruptible and efficient administrationf)-Proper development policyg)-Non-interference by politicians/political goodwill.

24. Purpose of a three column cash booka)-Recording cash receipts by businessb)-Recording discount allowed by the businessc)-Recording discount received by the businessd)-Recording cash payment by the businesse)-Recording payment made by chequesf)-Recording receipts made by chequesg)-Showing the cash balances brought down / forwardh)-Showing bank balances brought forward / down

25. Features of general insurance a) -The policy cannot be assigned to anybody elseb)-Policy is a contract of indemnityc)-The policy is usually renewable / short contract /termd)-Insured must have insurable intereste)-The policy has no surrender value f)-Compensation attached to actual value of loss / to the sum insured.

MOI GIRLS - NAIROBI KCSE TRIAL AND PRACTICE EXAM 2016 BUSINESS STUDIES PAPER 2

MARKING SCHEME1 (a) Benefits accruing to a trader using a liner to transport goods.

i). Liners have fixed schedule/ time table which enables a trader to plan the transportation

ii). Liners have fixed rates / fares which allows for budgeting.iii). Liners are more reliable than tramps because they don’t change routes making the

trader to be more confidentiv). Can carry bulky / heavy / more goods at a time.v). Cover longer distances than trampsvii). May provide discounts to its regular users.

(Any 5×2=10mks) 1 (b) D So√

Po Eo√ S2√ Price √ So E1√ P1 (10 ticks × 1= 10mks)

S1√ D√

Qo Q1

Quantity √-An increase in equilibrium quantity from Qo to Q1. √-A decrease in equilibrium price from Po to P1 √

2a). Measures that may be taken by the government to promote export trade.i). Providing export subsidy thus making it cheaper for exporterii) .Looking for more markets abroad through KETA enabling more to be exportediii). Organizing fairs and exhibitions in foreign countries to create awareness.iv). Encouraging production of high quality goods to increase their competitiveness.v). Easy export licensing for exporters to facilitate export licensingvi). By using commercial attaches to promote country’s goods in foreign countries to

create awareness.vii). Diversifying her export commodities for market security / cushion slump in demandviii). Lowering duties on imported raw materials meant for export to encourage re-

exportationix). By establishing export processing zones, EPZs which enhance more exportsx). By entering into bilateral trade agreement with other trading partners to improve

their terms of trade.

2b) Kisumu Auto SparesTrading, profit and loss accountFor the year ended 31st Oct 2011

Shs. Shs.Opening stock 61,500√Add purchases 300,000√COGAS 361,500√Less closing stock 80,200COGS 281,300√Gross profit c/d 38,100√ 319,400

Carriage on sale 14,400√

Sales 319,400√

319,400Gross profit b/d 38,100√Discount received 26,400√

Advertising 22,200√Rates 9,400√Salaries 12,400√Net profit dd 18,700√ 77,100

Rent income 12,600√

77,100 14× ½ =7mks Kisumu Auto Spares

Balance sheet As at 31stOct 2012

Fixed Assets Shs. Shs.Motor vehicles 603,000√Equipment 200,600√Furniture 94,400√ 898,000Current AssetsStock 80,200√Debtors 75,900√Cash 105,060√ 261,060 1,159,060

Capital 653,560√Add. Net profit 18,700√ 672,260Current liabilitiesCreditors 74,300√Bank 412,600√ 486,900

672,260+672,260+486,900 1,159,060

10× ½ =5mks 3a. Circumstances under which a manufacturer would use wholesalers to distribute his products

i) Where the market is spread out thus making it uneconomical and expensive for the producer to sell directly.ii).Where the producer does not have adequate capital to set up his own distribution networkiii).If there is a government policy which separates the functions of producing, wholesaling and retailing.iv).Where the nature of goods requires the wholesaler to carry out certain services eg breaking of bulk, blending, sorting etc.v).Where the producer lacks transport facilities which can be provided by the wholesalervi).Where there are small scale retailers who are likely to buy from wholesalers and not directly from the manufacturer.vii).Where the manufacturer has no ability to manage distribution outlets. (Any 5×2=10mks) 3b). Functions of the central bank of Kenya in the economy.

i). Currency issue- CBK issues currency notes and coins. It regulates the supply of money in the economy.

ii). Banker to the government – CBK accepts deposits from the government for safe keeping. It also manages national debt and advises the government on economic and financial matters.

iii) .Banker to commercial banks - CBK provides banking services to commercial banks.iv). Controller of commercial banks – CBK directs and advises commercial banks on their

operations.v). Lender of last resort – CBK lends money to the government and commercial banks in

times of crisis.vi) .Credit control – CBK regulates the amount of money in circulation thus limiting the

lending capacity of commercial banks and stabilizes the economy.

vii). Custodian of foreign currency reserves – CBK regulates the inflow and outflow of foreign exchange in the economy.viii). Clearing house – CBK facilitates clearance of interbank indebtedness arising from

cheques drawn on each other. (Any 5×2=10mks)

4a) Differences between shares and debentures Shares Debentures

i) Unit of capital in a companyii) Shareholders are owners of

companyiii) Shares earn dividends from

profits made.iv) Dividends are only paid

when profits are madev) Capital investment that

does not require securityvi) Holders have voting rightsvii) At dissolution they are paid

last

i)Unit of a loan advanced to a public limited companyii)Debenture holders are creditor to the companyiii)Debentures earn interest which is an expense to the companyiv)Interest on debentures must be paid with or without profit v)May or may not require securityvi)Have no voting rightsvii) Have first priority payments during dissolution.

(Any 5×2=10mks)b).Circumstances under which a firm would be located near the market for its products.

i) When the products are perishable thus require fast deliveryii) When the products are bulky / heavier than the raw materialsiii) When the products are fragile to avoid loses through breakageiv) When its cheaper to transport raw materials than the final productv) When the raw materials are in the same location as the market for the productvi) When it is the government policy that firms locate near their marketsvii) When the unit value of the products is high/ may pose security threat during

transportation(Any 5×2=10mks)

5 a) .i. Margin =Gross profit/sales ×100√ =600,000/√ 2,400,000 ×100=25%√√ (5× ½=2 ½mks)

ii). Rate of stock turnover=cost of sales/average stock√√=1,800,000/300,000√√=6times √√ (5×½=2 ½ mks)

iii). ROCE=Net profit/Capital employed × 100√ =240,000/1,212,000 × 100√√√=19.8%√√

(5 ×½ =2 ½mks) iv). Current ratio = Current Assets: √√Current liabilities = 1,250,000√ : 438,000√ =2.85:1√√ (5×½=2½mks)

5b). Ways in which an entrepreneur contributes to the production of goods. i) Identifies viable business opportunities ii) Provides guidelines on how production should be organized iii) Provides the capital necessary to carry on production iv) Hires /provides all other factors of production v) Bears all the risks vi) Decides how/ where/ when / what to invest in the business vii) Rewards all the factors of production.

(Any 5×2=10mks)

6a) .Means of payment a trader uses to settle his debtsi). Cash-where a trader accepts or uses currency notes and coins for paymentii). Bills of exchange –where a trader discounts or uses an acceptance bill of exchange

to pay.iii). Debit cards that allows traders to make payment without carrying moneyiv). Money order-means of payment provided by the postal corporation on request.v). Cheque –order to the bank to pay the person named the amount indicated in the

chequevi). Postal order – means of payment sold by the postal corporation in fixed

denominations.vii). Credit transfer- means of paying a large group of people using a single chequeviii). Standing order- An order by an account holder to his bank to pay a fixed sum of

money to a named person /institution until the order is revoked. ix). Credit cards that allow traders to make payments without carrying money (Any

5×2=10mks)6b). Indicators of underdevelopment in Kenya

i). High poverty level where majority live below the dollar rate per dayii). Low income earnings where majority of the labour force are unskillediii) High level of malnutrition since majority can not afford the basic foodstuff for

sustenance iv). Poor infrastructure /inadequate infrastructure due to misuse / misallocation of

fundsv). High level of illiteracy as majority can not afford to educate their children due to

high cost of educationvi). High unemployment level due to inappropriate education/ skills/training /few job

opportunities / vacancies vii). Disparity in income levels due to corruption / embezzlement of funds

(Any 5×2=10mks)

KENYA HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. a) Whole life policy

b) Comprehensive policyc) Public liability / third party policyd) Burglary insurance policy / theft policy

2. Circumstances under which a seller would require a buyer to pay cash with order (C.W.O)- When the buyer is new to the seller- When the buyers’ credit worthiness in doubt- To avoid bad debts- When the seller is in urgent need of cash- To avoid expenses in following up debts- When the policy of the seller is not to advance credit- Where the seller is operating mail order business

3. Ways in which the nature of goods would influence the choice of transport.- If goods are perishable , a fast and appropriate means is required - If the goods are highly valued, a safe and secure means is required .- If the goods are urgently required , a fast means would be used.- If the good is bulky, a convenient means would be used.- If goods are fragile , they require a smooth mean of transport.

- If goods are inflammable , they required special containers- Liquids require special containers or pipeline- Shape

4. Limitations of consumer initiated methods in consumer protection- lack of adequate support by government- lack of sufficient information from consumers to consumers protection bodies- Ignorance on the part of consumers about their rights- Lack of initiative (apathy) on part of consumers- Lack of capital to sponsor their programmes - Ignorance on the part of consumers about avenues so follow.

5. Difficulties faced by human beings in satisfying human wants- Human wants are too many to be satisfied- Resources to satisfy them- Problem of deciding which wants to satisfy first - They are recurrent- Some are habit forming in nature- Wants change with time , age, gender and hence people must look for resources to

satisfy them.6. Services offered to commercial banks by the central banks in Kenya

- Accepting deposits from commercial banks- Advice commercial banks on financial matters- Supervices the operations of commercial banks- Acts as clearing house of cheques- Gives loans to commercial banks as lender of last resort- Source of currency for commercial banks operations- Replacement of old currencies- Selling and buying of foreign currencies

7. Sources of public finances.- Fines imposed by courts on offenders- Rents and rates paid for the use of government property- Licence fees paid by those who want to operate business- Dividends and profits earned from the government direct investment- Interest earned on loans advanced by the government to firms - Proceeds from the sales of government property- Taxes- Government borrowing

8. Reasons why an office is necessary in any organization- To facilitate communication- To safeguard organizations property- To enhance reproduction of documents- For administrative purposes- To link the organization with other organizations such as government

9. Factors that could have made the demand curve shift from D0D0 to D1D1

- High price of production- Heavy taxation- Decrease in population- Decrease in price of substitutes ( low)- Decrease in consumer incomes- NB: No mark for general factors of demand.

10. Ways in which the stock of a business may change

- Goods being sold- Purchasing of new stock- Goods being returned by customers- Returning goods to suppliers

11. Benefits of business ethics- Creates faireness in competition- Ensures protection of the environment- Ensures rights of employees are upheld- Avoids consumer exploitation.- Eliminates use of unfair means of achieving the objectives of the business

12. M = 100,000N = 1,000,000P = 90,000Q = 100,000

13.MAGUNGA TRADERS

TWO COLUMN CASH BOOK FOR THE MONTH OF JAN. 2012Dr CrDate Particulars Cash Bank Date Particulars Cash Banks

20122012

Jan 1 Balances b/d 10,000

25,000 Jan 2 Purchase 6,000

7 Sales 2,550 12 Cash (C1) 4,00012 Bank ( C1) 4,000 15 Wages 3,00031 Otaro

4,50031 Balance c/d 7,500 25,500

16,500 29,500 16,500 29,50031 Balance b/d 7,500 24,500

( 8 ticks x ½ = 4mks)

14. KASWANGA TRADERS TRIAL BALANCE AS AT 30TH JUNE 2011

DR(shs)

CR(shs)

Land and building 200,000Current assets 420,000Furniture 60,000Motor car 240,000 480,000Capital 180,000Current liabilities 440,000

( 8 ticks x ½ = 4mks)15. Rate of stock turnover = cost of sales

Average stock Average stock = Opening stock + Closing stock

2

= 160,000 + 240,000 2

= 400,000 2

Rate of stock turnover = 1,200,000 C 200,000 = 6 times ( 8 ticks x ½ = 4mks)

16. WATBER TRADERS BALANCE SHEET AS AT 31ST DECEMBER 2009

FIXED ASSESTS SH SH SHMotor van 300,000 Capital 620,000Furniture 100,000 400,000CURRENT ASSETS CURRENT LIABILITYStock 140,000 Creditors

60,000Debtors 80,000Bank 60,000 280,000 680,000 680,000

680,000( 8 ticks x ½ = 4mks)

17. a) Labourb) Capitalc) Landd) Entreprenuer

18. Benefits a government gets from a bonded warehouse.- Government is able to monitor the inflow of imports into the country/ quantity /

statistics- Collects duty /custom duty- Government is able to control entry of harmful goods- Government is able to verify documents of goods in transit- Government is able to inspect goods ( types of goods)

19. Features of effective communication.- Language used must be understood- Language must be simple and clear- No noise- Not ambiguous- Positive attitude for both sender and receiver- Medium should be suitable- Timing should be suitable- Feedback

- Information overload should be avoided20. Disadvantages of a long chain of distribution of goods to a buyer

- Increased price- Likelihood of delay- Chances of damage to goods due to handling- Feedback to manufacturer / producer is slow- Perishable goods will go bad.

21. Features of a sole proprietorship form of business organization- Easy to form- Enjoy profits alone- Owned by one person- Unlimited liabilities- Quick decision making- Small capital invested- Personal contacts to customers- Uses family labour- Usually small scale- No division of labour

22. Causes of business failures- Insufficient funds – the entrepreneur may underestimate the start up capital and

operational capitla. When the entrepreneur is unable to access additional finance, the business is likely to fail.

- High interest on loans- Poor judgments of the marked e.g producing goods not required by the market- Composition – on entrepreneur who produces products which do not match quality

of other existing products may be edged out of the market.- Poor marketing strategies – If the entrepreneur is not able to make consumers

aware of his product, then he is likely to fail due to poor sales- Poor customer relations- Poor time management e.g opening late and closing early.- Poor pricing practices- Poor knowledge in book- keeping.- Poor managerial skills and unqualified staff- Improper debt management

23. Reasons why a cheque may be dishonoured by a bank- If the drawer has insufficient funds in his / her account - If the amount in words differs from the amount in figures- When the cheque is post – dated i.e presented for payment before the date written

on it.- When the cheque is stale i.e presented for payment after the expiry date( normally

six months from the date of issue)- If the signature of the drawer differs from the specimen in the bank- If the cheque has be altered and the drawer has not signed against alteration- When the drawer instructs the bank to stop payment- When the cheque is defaced or multiliated thus rendering the contents illegible- When the bank learns about the death , insanity or bankruptcy of the drawer.- If the drawer has closed his / her account with the bank - If the cheque contains errors which need to be corrected - When a customer is presenting a crossed cheque to be paid a cross the counter

24. Circumstances under which a trader would advertise his products over the radio instead of television.

- Where a large audience is targeted for reaching at the same time- Where the targeted group is of low income- Where it is cheaper to advertise through radio than television- Where visual impression are not necessary- Where there is need to use a local language

25. Trade discount = 20 x 200,000 100

= 40,000Payment after trade discount = 200,000 – 40,000

= sh 160,000Cash discount = 10 x 160, 000

100= sh 16,000

Amount paid by Onyango = 160,000 – 16,000 = sh 144,000

( 4 ticks x 1 = 4mks)KENYA HIGH SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME

1. a) Factors which influence geographical mobility of labour- Ignorance of opportunity elsewhere - Adverse climatical conditions elsewhere - Expenses involved in relocating to another place e.g transport costs, change

of residence and school for one’s children etc- Language barriers- Security and political stability of a given region.- Social ties that bind one to his / her community- Government policy e/g immigration rules may hinder the movement of

people to other countries.(Any 5 well explained points x 2 = 10mks)

b) Characteristics of good money- General acceptability- Portability- Durability- Divisibility- Stability value- Cognizability- Homogeneity

(Any 5 well explained points x 2 = 10mks)2. a) Factors that encourage entrepreneurship in Kenya

- Use of relevant business curriculum in learning institutions and vocational tranings

- Government support in development of entrepreneurs.- Existence of conditioning institution - Access to business finance- Need for a job- Need to be own business- Make more money than now- Encouragement from family members,relatives and friends- Availability of infractucture

- Availability of market- Hobbies , interest and talents- Modern technology- Positive cultural practices

(Any 5 well explained points x 2 = 10mks)b) Adverse effects of localization of firms in an economy- Congestion e.g in schools,hospitals etc.- Housing problems / development of slums- Leads to urban unemployment- Leads to environmental degradation- Increased criminal activities / social problems.- Security risks- easy attack by terrorists

(Any 5 well explained points x 2 = 10mks)

3. a) Factors that a government should consider when deciding on a good tax system- Certainty- Convenience- Economy- Equity- Elasticity- Flexibility- Diversity (Any 5 well explained points x 2 = 10mks)b) Factors which may hinder economic development- Inadequate capital which hampers production , leading to low economic

growth- Use of inappropriate technology which reduces productivity- Poor human resource endowment- Lack of infrastructure such as road and communication networks- Inability to save- Rapid population growth against low incomes- Attitudes and beliefs may also hinder economic development- Resource limitations e.g inadequate quantities of natural resources

(Any 5 well explained points x 2 = 10 mks)4. a) Advantages of trade restrictions to a country.

- Protection of infant or new industries- Expansion of domestic markets- Correction of a balance of payment deficit- Discourages dumping- Creation of employment opportunities- Reduces dependency of a country on another and therefore the country

becomes safe in case of misunderstanding- A country exploits fully its resources- The government earns revenue which it can use finances projects in the

country(any 5 well explained points x2 = 10 mks)

b) Merits of public corporations - Initial capital is readily available because it is provided by the government- Provides goods and services at affordable prices- Some parastatals are monopolies hence need not to incur advertising costs- They can be bailed out by the government when in financial difficulties

- Legal entity- Limited liability- Provide revenue to the government- Promote economic development- Have ability to hire and employ highly specialized labour force.

(any well explained points x2 = 10mks)5. a) Challenges that might be experienced by a country whose population is made up of

a large.- High rate of unemployment – demand for jobs will increase- Rate of crime may rise – as the youth remain idle, they are likely to resort to

crime as they look for means of survival.- Pressure on goods/ services associated with young people –due to increase

in demand , the supply may be outrostriped- Dependancy ratio will rise as economically active population will shoulder a

bigger economic burden.- Reduced investment / savings – investment will decline as a result of high

rate of consumption by young people- Low per capita income – since national income is spread over a large non –

contributing population, the living standards will be low.- Problem of raising government finance which force the government to divert

resources meant for other sectors to cater for the young people- Low labour supply as many young people may not have attained the working

age.(any 5 well explained points x 2 = 10mks)

b)

KAMAUThree column cash book for the month of Dec.2009

Dr. Cr.DATE Particula

rsDiscount allowed

Cash(shs)

Bank (shs)

DATE Particulars Discount receiver

Cash (shs)

Bank(Shs)

2009 2009Dec 1 Balanced

b/d55,000 250,00

0Dec.3 Stationery 4,500

2 Sales 35,260

8 Ondongo 6,000 94,000

12 Wafula 1,200

58,800

15 Salaries 34,000

25 Bank ( C1)

50,000 25 Cash (C1) 50,000

28 Anyango 7,500

67,500

30 Cash (C2) 52,800

30 Bank (C2) 52,800

30 Balance c/d 13,700

320,360

8,700

105,000 464,360 6000 105,000 464,360

Jan 1 Balance b/d

13,700 320,360

( 20 ticks x ½ = 10 mks)6. a) Uses of National Income statictics

- Helps to balance all sectors and regions of the economy by allocating resources equally to all parts

- Stimulates people’s efforts by setting target which all struggle to achieve.- Attracts foreign investments by providing information on various sectors with

opportunities- Helps to evaluate performance of the economy hence a basis for future

developments- Helps to safeguard the interests of the community which private investors are

unable to provide.- Helps to create more employment opportunities by starting projects that are labour

intensive.(Any 5 well explained points x2 = 10mks)

b) i) Mawego Traders

Profit and Loss account for the year ended 31/12/2010

EXPENSES SH SH shs

General expenses 54,000 Gross profit b/d 380,000

Wages and salaries 132,000 186,000 Add: Commission received 20,000

Net profit c/d 214,000 400,000

400,000 400,000

Net profit b/d 214,000

( 8 ticks x ½ = 4mks)

(ii) Mawego Traders

Balance Sheet

As at 31st December 2010

SH SH Shs Shs

FIXED ASSET

Premises 103,000 Capital 259,000

Add: Net profit 214,000

CURRENT ASSETS 473,000

Stock 274,000 Less: Drawings 83,000

Debtors 123,000 Net capital 390,000

Cash at bank 33,000 430,000 Long term liability

Bank loan 50,000

CURRENT LIABILITY

Creditors 93,000

533,000 533,000

(12 ticks x ½ = 6mks)

MARANDA SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME

1. Importance of business studies in a society. -Helps the learner to understand the role of government in business activities. -Helps society to appreciate the role of communication and information technology in modern business management. -Helps the society to acquire self discipline and positive attitude towards work. - Helps learner to understand business and its environment. - Equips society with knowledge and skills to evaluate business performance.

(1x4 = 4marks) 2.

Business Capital Assets Liabilities ABCD

5,5009,30011,6001,940

16,00024,30027,6004,790

10,50015,00016,0002,850

(1x4 = 4marks) 3. Reasons for government participation in business activities

-To generate income -To attract foreign investment -To create confidence in the economy -To venture in business where private sector is not willing to invest due to low profit margins -To provide essential goals and services -To invest in areas of national interest

4. Negative consequences of inflation -Reduction in profits -Wastage of time-Conflicts between employers and employees -Decline in standards of living -Loss to creditors -Retardation of economic growth-Adverse effects on balance of payment -Loss of confidence in monetary system -Discourages savings

5. Disadvantages of Boda boda transport business in Ikutha district -Low carrying capacity -Unlicenced drivers -Lack of insurance cover

-Lack of spare parts. -Prone to accidents due to speed -Health hazard (respiration) due to lack of protective clothes.

6. Possible expenses incurred by a wholesaler when he buys goods from a producer -Actual cost of goods -Transport cost -Advertising cost -Storage cost -Insurance cost

-Salaries and wages Q-Packing and wages

7. Source documents Credit note issued.Invoice issued Credit note received Cash sale receipt

8. factors determining the amount of rent for land -Duration the land is being rented -The location of land -The use of which the land is being put -Demand for such land -The size of land being rented

9. Reasons why government taxes its citizens -To raise revenue -To discourage consumption of harmful products -To protect local industries by discouraging importation of certain goods -To reduce income inequalities in the country -To control inflation by reducing money in circulation. -To encourage delocalization of industries -To correct balance of payment problem by taxing imports heavily. -To discourage importation or production of unwanted goods by taxing them highly.

10. Terms -Insolvency -Holding company -Absorption -Franchising

11. a) Nominal b) Nominal c) Personal d) real

12. i) Place ii) Possession iii) Time iv) Form

13. Rate of stock turn over = Cost of goods sold Average stock

Average stock = 80,000 + 100,000 = Ksh.90,000 1

2 Cost of goods sold = 3x90,000 = Kshs.270,0001

Mark – up = Gross profit Cost price

Gross profit = 20 x 270,000 1= Kshs.54,000 1

100 14. Reasons for increased use of plastic money

a) Convenient for payment in large sums of money b) More secure than notes and coins c) One can enjoy credit facilities d) Most businesses readily accept credit cards e) Time saving f) It improves ones credit rating / credit worthinessg) Easy to carry around / portable

15. Injections to circular flow of income -Government expenditure-Investment -Private consumption / consumption by house holds -Exports

16. Limitation of ATMs - Expensive to install

- Ignorance of some customers on how to operate them. - Customers are inconvenienced when the machine is out of order. - No personalized service - Limited amount of money withdrawable than one can withdraw over the counter. - No access to money when the card is lost.

17. Provide evidence of a business transaction-Can be used for further reference -Can be used as a follow up in credit transaction -Can provide information useful for other business purposes.

18. Problems hindering development planning o Inadequate data o Inadequate specialists o Political instability o Inaccurate data o Over ambitious plans

19. Possible risks which a shopkeeper may insure -Theft and barglary -Cash and goods on transit -Bad debts -Consequential loss -Fire insurance

20. Effects of charging a price lower than the equilibrium price o There will be excess demand hence shortage o Rationing of goods o Queuing for commodity o Traders may hoard the goods o Black marketing

21. Total commission = 41,575 – 3000 = Ksh.38,575 1

1.5 x 100,000 = Ksh.1,500100 1

2 x 50,000 = Ksh.1,000 100

2.5 x 75,000 = Ksh.1,875 100

Total commission = Ksh.4, 375

Ksh. 38,575 – 4,375 = Ksh.34, 200

100 x 3 x X = 34,200 x 100 3 100 3

X = Ksh. 1,140,000 1

Total sales = 100,000 + 50,000 + 75,000 + 1,140,000 = Ksh.1,365,000 1

22. Circumstances under which a firm would be located near the market for its products

o Where the firm is producing perishable goods o Where the firm is producing fragile goods o Where raw materials are cheaper to transport than finished goods o Where the market for the produce is located in one area.

23. Reasons why business persons prefer mobile phones to landline o Business persons can be contacted anytime o They can make or receive calls anywhere there is network o Mobile phone is portable o They are faster o It has internet facility o One can bank and withdraw money through the phone. o One can send a message for ordering goods through the phone.

24. Importance of economic integration to a country o Encourage specialization o Availing high quality and cheap production o Promoting peace o Co-ordinating development of industries o Helping in employment creation

25. Factors that may limit the number of entrepreneurs in an area - Poor infrastructural facilities - In availability of resources - Inappropriate education - Unfavorable government policies - Lack of market - Stiff competition

MARANDA SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. (a) Circumstances for use of air transport.

When the good is giffen / inferior such that a fall in its price makes the consumer afford more of the superior goods.

When consumers expect the price of a commodity to continue falling and so they postpone their present consumption.

When the price fall as a result of reduced quality, this makes consumers to shift to better alternatives.

When the consumer income decline / reduce which lower their purchasing power such that a fall in price of a good cannot attract consumer.

When there is a change in taste / preference / fashion, this makes the consumers no to buy the product whose price has decreased if its not their preference.

Where there is decline in population in a locality such that a decrease in price of a commodity would not yield high demand.

(1mk for mention – underlined and 2mks for a well explained point)(b)

Shares Debentures

(i) Share is a unit of capital.(ii) Shareholders are owners of the

company.(iii) Shares are paid dividends.(iv) Irredeemable.(v) No fixed rate of return.(vi) Have voting rights.

(i) It is a unit of loan to a company.(ii) Debenture holders are Creditors

to the company.(iii) Debenture holders get interest.(iv) Usually redeemable.(v) Fixed rate of return.(vi) No voting rights.

(2mks for every difference)2. (a)

The problem of valuation due to unavailability or inaccuracy of output especially in the private sector.

The problem of deciding on the goods and services to include e.g. whether the output of a house wife should be included or not.

The problem of valuing output in the subsistence sector e.g. housewives work. Problem of valuing government output since many of its services are not sold in the market. Problem of price fluctuation, when price keeps changing. Problem of differentiating primary inputs from intermediate inputs between final and

intermediate inputs e.g. molasses and sugar. Valuing illegal activities e.g. illegal drugs.

(1mk for mention – underlined and 2mks for a well explained point) (b)

Increase government expenditure to stimulate aggregate demand, hence the level of production.

Encourage local private investment to increase productivity. Diversify the Kenya economy to create more employment opportunities. Protect local industries from unfair competition in order to maintain employment levels. Find market for locally produced goods through aggressive export promotion in order to

expand production capacities of local industries. Encourage labour intensive methods of production. Population control. Review of education system to be in line with market demand. Avail credit. Avail infrastructure. Peace and stability. Provide subsidies to encourage production. Reduce taxes.

3. (a) (i)

KATIBA TRADERSTRADING PROFIT AND LOSS ACCOUNT

FOR THE PERIOD ENDED 31ST JANUARY 2008 SHS SHS.

Opening Stock 2,200√ Sales 30,800√Purchases 16,000√ Less Sales Returns 800√Add: Carr Inw 800√ 30,000√

16,800Less: Purch. Ret 2,400√ 14,400√Cost of Goods avail for sale 16,600√Less Closing Stock 5,000√Cost of Goods Sold 11,600√Gross Profit C/d 18,400√

30,000 30,000General Expenses 2,400√ Gross Profit b/d

18,400√Carriage Outwards 1,800√ Rent received

5,000√Salaries and Wages 12,000√ Commission received

2,000√Electricity 1,400√Insurance 3,000√Postage 600√Net Profit 4,200√√

25,400√ 25,400(24 ticks x 1/3 = 8mks)

(ii)KATIBA TRADERSBALANCE SHEET

AS AT 31ST JANUARY 2008

Fixed Assets SHS. SHS.Land and Buildings 140,000√ Capital 220,000√Machinery 43,200√ Add: Net Profit 4,200√Furniture 40,000√ 224,200

223,200 Less Drawings 2,000√Current Assets 222,200Stock 5,000√Debtors 156,000√ Long Term LiabilitiesBank 120,000√ Bank Loan 200,000√Cash 18,000√ Current Liabilities

299,000√ Creditors 100,000√

522,200 522,200

12 ticks @ 1/3 = 4mksNB: (i) For every foreign entry in the balance sheet penalize (subtract marks)

(ii) For the wrong Net Profit properly used in the balance sheet award.

(b) If the loss was not as a result of the insured risk / if there was no close connection between

the loss and the insured risk. If the cause of the loss is cased deliberately by the insured. If the cause of the loss is 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 affecting the

policy. If the risk insured violated the laws of the country.

(2mks for every highlighted point – no splitting of marks i.e. 2 or 0)4. (a)

Unfavourable terms of trade as value of exports will be lowered. Increased demands for imports. Reduced demand for the country’s export. Repayment of foreign loans. Devaluation of currencies of trading partners. Reduced capital inflow. Restriction by trading system.

(1m for mention otherwise 2mks for every explained point)(b)

Stable prices as goods are kept until prices improves. Steady supply of product as the goods are released when needed. Check wastage as goods are kept until demanded. Can allow trader to prepare goods for sale as they are in the warehouse. Protection from damage and adverse weather as warehouses are well constructed. Look for market while goods are in store. Help in quality promotion e.g. (tobacco and banana) as they ripen while in warehouse.

(1mk for mention otherwise 2mks for every explained point)

5. (a) Easy retrieval of documents as the tiles are kept in an organized manner. Makes office very tidy as documents are released when needed. Documents are safe from adverse weather conditions e.g. rain, wind. Document are kept neat in files. Documents kept away from unauthorized persons which ensures protection of

secrets. Saving on space as documents are kept in files / filing cabinets. Information for future reference is kept, can be easily accesed, Filed documents used as evidence in case of disputes.(1mk for mention otherwise

2mks for every explained point)

(b) PETTY CASH BOOK

RECEIPT Details Amount PAYMENTSShs. Date Shs. Travel Cleaning Stationary Tea Postal L/Acc

4,000 1 Bal b/d6,000 5 Reimbursement

8 Amos 500 5009 Postage 300 300

10 Cleaning 480 48011 Stamps 180 18012 Travelling 400 40013 Cleaning 750 75014 Tea leaves 450 45015 Stationary 430 430

3,490 400 1,230 430 450 480 50030 Bal. c/d 6,510

10,000

10,000

30 Bal. b/d 6,510

6. (a) Equitable – fairness in payment of the tax. Certain – should be clear in terms of amount, time and manner in which it should be paid. Convenient to the contributor and the collector. Economic – the cost of collecting and administering should be lower than the revenue. Diversity – should meet revenue requirement of the country. Flexibility – should be capable of changing in accordance with changes in National Income. Elastic – it should allow the government to increase revenue as need arises.

(1mk for mention otherwise 2mks for every explained point)(b)

Shift from agricultural to manufacturing sector. Reduction in illiteracy. Increase in skilled manpower. Improvement in health facilities. Increase in technology and improvement in entrepreneurial ability. Good housing facilities. Improved infrastructure. (2mks for every explained point – no splitting of marks)

NAIROBI SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 1MARKING SCHEME1. Challenges encountered in the satisfaction of human wants.

- Too many to be fully satisfied.- Resources required are scarce.- Some are complimentary and attract other wants.- Some are habitual yet habits are hard to break.- Are repetitive hence cannot be satisfied and once for all.- They are competitive hence don’t give way to each other.NB: Do not accept general characteristic of human wants. The challenge must be brought out.

4 x 1 = 4mks

2. Circumstances under a perfectly competitive market structure may exist.

- Where there are many buyers and sellers.- Where buyers and sellers have perfect knowledge about the market condition.- Where there is no transport costs incurred.- Where the products are homogeneous.- Where there is no government influence/interferance.- Where there is freedom of entry and exit.- Where the factor of production are perfectly mobile. 4 x 1 = 4mks

3. Measures that the sender of a message should take in order to enhance effective communication.- Ensure there is silence as the message is delivered.- Be adequately prepared inroder to give complete information.- Use a language in which he is conversant inorder to avoid broken speech.- Speak audibly so that he can be clearly heard by the receiver.- Ensure to be delivers the message at an appropriate time, when the receiver is ready to listen.- Use of an appropriate mediums of communication to guarantee reception.- Use of appropriate gestures that are understood by the receiver to avoid confusing receiver.

4 x 1 = 4mks NB:The action taken by sender must come out clearly

4. Features of direct production.- It practised on a small scale.- Low quality good are produced.- Low levels of output.- Simple method of production are used.- Producer engages in multiple production / no specialization.- Producer not innovative.- Goods produced not for sale / not in surplus / own consumption.NB: Do not accept disadvantages of direct production e.g. individualism.

4 x 1 = 4mks5. Functions of money.

- It’s a measure of value.- Its a unit of account.- Its a store of value.- Its a standard for deferred payments.- Its a medium exchange. 4 x 1 = 4mks

6. (i) 15,000(ii) 79,000(iii) 28,000(iv) 92,000 4 x 1 = 4mks

7. Conditions that must be fulfilled before an insurer can agree to compensate a client.- The client must report the occurrence of the risk with in the stipulated period of time.- The risk must not have been intentionally caused by client / not deliberate.- The insured must have insurable interest at the time that loss occurred.- The policy must be in force / up to date with premium payments.- The policy document must be availed to the insurer.- The loss suffered must be significant to warrant compensation.- The assessment report must have recommended compensation.

- A claim form must be filled with honesty. 4 x 1 = 4mksNB: The condition met by client must come up clearly.

8. Benefits that may occurred to a firm as a result of increasing the scale of production.- Technical economies / It can afford to use modern technology leading to efficiency

in production.- Welfare economies / It can afford to offer welfare benefits to its workers hence

motivate them.- Marketing economies / It buy in bulks and receive quantity discount making the

goods cheaper / saves on product promotion.- Research economies/ The firm can afford to carryout research into better methods

of production.- Financial economies / The firm has asserts to offer as collateral to secure huge

loans.- Risk bearing economist / The firm has different products hence if one of the

product fails it can survive on earnings from other products / diversification.4 x 1 = 4mks

9. Maji Maji Trial BalanceAs at 30th June 2012

Accounts Dr CrCarriage outwardsOutstanding loanBad debtsReturn inwardsCarriage inwardsInsurance Capital PrepaymentsReturn outwards

9,000

4,000 10,000

7,000 35,000

15,000

25,000

50,000

5,000 80,000 80,000

Closing stock was Sh.5000 10 x ½ = 5mks

10. Circumstances under which deferred payment is accepted to a trader.- If the seller does not doubt the credit worthiness of the buyer.- If the seller wishes to attract more customers.- If the seller is not in urgent need of money / can wait.- If the trader want to use credit sales as a competitive tool- If amount involved is small hence the seller is not afraid of taking the risk.

4 x 1 = 4mks11. Factors that influence the choice of a suitable distribution channel for agricultural

produce.- Nature of the produce.- Availability of middlemen / need for value addition.- Government policy.- Cost of the distribution channel / financial resources of the producer.- Nature of the market.- Marketing risks. 4 x 1 = 4mks

12. Factors of production.

- Capital- Land- Labour- Enterprenuer 4 x 1 = 4mk

13. Services rendered by producer cooperative societies to their members.- Sell firm inputs at fair prices / on credit.- Give loans at low interest rate.- Give advice on proper farming methods.- Carryout research and pass findings to farmers.- Look for market for their members produce.- Facilitate payment for farmers.- Offer transport facilities for their members produce to the factory.- They process, blend and pack members produce.- Store members produce awaiting sale. 4 x 1 = 4mksNB: Service must come out clearly

14. Methods used to reproduce document in an office.- Carbon copying.- Printing.- Photocopying- Duplicating 4 x 1 = 4mks

15. Negative effects of unemployment.- Labour is lost as it cannot be stored.- Increased social evils and crime rate.- High stress levels leading to aggression.- Reduces savings and investments.- Increases the dependency ratio.- Leads to low standard of living / poverty- Encourages brain drain.- Increases corruption 4 x 1 = 4mk

16. Sources of public finance in Kenya.- Taxes levied on commodities/incomes.- Fines charged in courts of law to offenders- Profit earned from government business.- Fees charged for government services.- Borrowing - internal and external borrowing. 4 x 1 = 4mks

17. Use of a bill of landing in international trade.- It gives evidence of receipt of goods for shipment.- It proves ownership of goods by the buyer / importer.- Shows condition of goods when they were availed for shipment.- Used to claim goods on / arrive at port.- Serves as evidence of contract between the seller and the shipping company.

4 x 1 = 4mks

18. Transaction Accounted debited Account credited(a) Purchases a/c Cash a/c (b) Bank a/c Motor van a/c (c) Jamas a/c Purchases returns

a/c

(d) Drawings a/c Purchases a/c 8 x ½ = 4mks19. Factors that can slow down a country’s rate of economic development.

- Corruption and embezzlement of funds.- Inadequate capital.- Low natural resource endowment.- Use of outdated technology.- Inadequate skilled labour.- Unfavorable government polices.- Political instability / poor governance.- In ability to attract foreign investors.- Poor infrastructure. 4 x 1 = 4mks

20. Gaps that may exist in a market creating a business opportunity.- Quality gap / poor quality of goods.- Quantity gap / low quantity / inadequate supply of goods.- Price / high price.- Varieties gap / limited variety of goods to choose from. 4 x 1 = 4mks- Poor services.

21. Element of transport.- The way / surfaces on which units of carriage move.- The unit of carriage / vessels in which goods are transported.- Terminals / points of loading and off loading.- Method of propulsion - power that enable units of carriage to move.

4 x 1 = 4mks22. Securities traded at the Nairobi stock exchange market.

- Shares (ordinary and preference shares)- Corporate bonds.- Treasury bills.- Treasury bonds. 4 x 1 = 4mks

23. Benefits of operating a private warehouse.- Unlimited access by the owner.- No rent charges.- Designed according to owner’s specification.- Easy to access/nearness to owner.- Guarantees safety of goods due to proper handling.- Owner has full control of the warehouse. 4 x 1 = 4mks

24. Preference for small business by an entrepreneur.- Where market for his products is limited/small.- Where he has little capital which cannot finance big business.- Where he wishes to avoid the complexities of managing a large business.- Where there are legal restrictions interfering with expansion e.g. import quotas.- If he wishes to enjoy the flexibility associated with operating a small business.4 x 1 = 4mks

25. Activities found in primary level production.- Farming.- Fishing- Mining.- Lumbering. 3 x 1 = 3mks

NAIROBI SCHOOL KCSE TRIAL AND PRACTICE EXAM 2016BUSINESS STUDIES PAPER 2MARKING SCHEME1. (a) Benefits of international trade to consumers.

- They are able to access a wide variety of goods (local and imports) to choose from

- They get high quality goods due to a stiff competition.- They enjoy continuous supply of commodities as shortages are addressed

through importation.- They get commodities at fair prices due to competition.- They are able to acquire safe products due to inspection of goods at the

ports.- They are able to get commodities that are not locally produced by buying

abroad.- They are likely to enjoy high living standards due to availability of goods to

buy.5 x 1 = 5mksNaming 1mk Otherwise 2mks

(b) Factors that may influence a firms decision on the types of goods and services of produce.- Government policy - The product chosen should be in line with the existing

government policy.- Capital requirement - The firm can only produce a commodity whose

production cost it can finance.- Profitability - A firm should produce a commodity which is likely to generate

high profit / with high demand.- Market - A firm should produce a commodity with a ready market / high

demand.- Technology - A farm should produce a commodity whose required

technology is available / affordable to the firm.- Level of competition - A firm should produce a commodity with less

competition / whose competition it can withstand.5 x 1 = 5mksNaming 1mkExpansion 1mk

NB: Naming should be neutral i.e. not +ve or negative2. (a) Factors that may inhibit implementation of a development plan for

a country.- Lack of political goodwill / commitment - political parties have their own manifestos / which they pursue at the expense of existing development plans.- Elusive donor funds - Donors do not avail funds as scheduled causing delay / retardation of projects.- Over ambitious plans - Which are difficult to implement.- Lack of fund to finance development projects.- Inflation - Which increases the cost of projects leading to retardation.- Alienation of some stake holders - Making them lack commitment to implement the plan

5 x 2 = 10mksNaming 1mk Otherwise 2mks

(b) Function of the control bank.- Supervision of activities of commercial banks in order to ensure that they are meeting the laid down conditions/standards.

B

A

C

P1

PO

P2

Q1 QO Q2

Price

Quantity

- Advice commercial banks on financial matters.- Issue of currency notes and coins to circulate as legal tender.- Credit control in order to control inflation.- Banker to the government e.g. receiving loans on behalf of the government.- Lender of last resort when commercial banks are unable to raise funds from any other sources.- Licensing commercial banks before commencing trading activities.- Banker to commercial banks by accepting deposits for safe keeping.- Custodian of foreign exchange reserves.- Administering public debts e.g. paying loan borrowed from I.M.F.

5 x 2 = 10mksNaming 1mk

Expansion 1mk3. (a) Movement along a demand curve.

At the price Poquantity Qo is demanded. An increase in price to P1 reduces the quantity demanded from Qo to Q1 causing backward movement from A to B along the demand curve. A decrease in price to P2 increases the quantity demand to Q2 causing a forward movement from A to C along a demand curve. 10 x 1 = 10mksNB: Arrows must be used to show the direction of the movement, otherwise no tick.

(b) Tools of monetary policy used to curb inflation.- Raising the bank rate inorder to make loans expensive and discourage borrowing.- Selective lending to limit the number of that qualifies for loans.- Raising liquidity / cash ratio - reduce amount of money available to commercial banks for lending.- Introducing compulsory deposits so that commercial banks have less money available for lending.- Raising the margin requirements so that the collateral provided secures a lower loan.- Moral suasion so that commercial banks lower their lending for the sake of the economy.- Open market operation - Sale of government securities in order to move deposits from commercial bank to central bank. 5 x 2 = 10mks

Naming 1mkExpansion 1mk

NB: Candidate must reveal the action taken.4. (a) (i) Working capital = Current assets - Current liabilities.

(12,000 + 180,000 + 140,000 + 40,000) - (100,000 + 80,000) = Ksh. 300,000

(ii) Current ratio =

Current assetsCurrent liabilities =

480 ,000180 ,000 = 8:3

(iii) Rate of stock turn over =

Cost of salesAverage stock

Cogs = (80,000 + 640,000) - 120,000 = 600,000

Average stock =

(80 ,000 + 120 ,000 )2 = 100,000

R.O.ST =

600000100000 = 6 times

(iv) Mark up =

Gross profitC .O .G .S

Gross profit = 708,000 - 600,000 = 108,000

Markup =

108000600 ,000 x 100 = 18%

(v) Margin = gross profit sales =

108000708000 x 100 = 15.25%

(vi) Return on capital =

Net profitCapital invested

Net profit = Gross profit - Expenses = 108,000 - 8,000= 100,000

Return in capital =

100000500000 x 100

= 20% (12 x 1 = 12mk (b) Limitations of debentures as a source of capital for a company.

- They are not popular among investors hence the company is not sure of raising adequate capital- Debentures holders earn a fixed rate of interest regardless of the profits made by the company.- They attract high interest making them an expensive source of finance.- Some are redeemable which can inconvenience the company as it refunds the capital.- Some are secured against the assets of the company which can easily be lost incase of inability to pay.- Debenture holders can sue the company if not paid their interest leading to liquidation of the company.- Debentures holders do not participate in decision making hence they do not assist the company (in decision making) no matter how good they may be.(4 x 2 = 8mks)

Naming 1mkExpansion 1mk

5. (a) Precautions that a drawer can take inroder to ensure that his cheques do not bounce.

- Ensure that his signature is exactly like the specimen in the bank so that the bank doe not question its genuineness.- Ensure he has sufficient funds in his account before issuing any cheque.

- Ensure he countersigns against any alterations made on the cheque so that the payee is not blamed for them.- Ensure that the amount in figures is exactly the same as in words to avoid doubt.- Confirm the names of the payee before writing the cheque so that he can correctly identify himself in the bank.- Alert the payee in case of a postdated cheque so that he does not deposit it before the due date. (5 x 2 = 10mks)

Naming 1mkExpansion 1mk

(b) Kiganjo tradersProfit & Loss A/C

For the year ended 31st Dec 2011

Net profit b/d 47,500

Kiganjo traders Balance sheet As at 31st Dec 2011

6. (a) Procedure of starting a business by an entrepreneur.

(i) Generating the business idea e.g. by reading business articles in the

newspapers.

(ii) Identifying of gap in the market to create a business opportunity.

(iii) Evaluate the business opportunity inorder to assess its viability.

Carriage on salesInsurance Commission allowedBad debtsNet profit c/d

18000 4800 5500 40,000 47500

Gross profitRent income

80,000 35,800

115800 115,800

Fixed assetsPremises Motor van FurnitureCurrent assets

StockDebtors

248000 180000 19000

25,000 65,500

47,000

90500 537,500

Capital+ Net profit

Current liabilities Creditors Bank overdraft

390,000 47,500 437,500

60,000 40,000

_______537,500

(20 x ½ = 10mks)

(iv) Prepare a business plan to get a plan for action / to raise funds.

(v) Get capital register and start business. (5 x 10 = 10mks)

(b) Ways in which the use of containers is sea transport enhances security of

cargo.

- Containers are completely sealed hence difficult for thieves to open and

steal.

- Containers have a tough body which protects goods from damage incase of

accident.

- Containers shelter the goods from harsh weather conditions which can

damage them.

- There are special containers for transporting special goods.

- Containers are too heavy for thieves to steel and carry away.

- Containers are not labelled to reveal content.

- Containers are not transparent hence do not reveal contents.

(5 x 2 = 10mks)

Mention 1mk otherwise 2mks

BOOKFLYER PRECISE PUBLISHERS BUSINESS STUDIES 170