2011 KCSE Business Studies Paper 1 Marking Schemes

Business Studies KCSE Paper 2 565/2  (2010-2020) Questions and Marking Schemes

1. Identify the types of wholesalers described in the statements given below. (4 Marks)
   a) A wholesaler who trades in maize grain only-
   Specialized Wholesaler
   b) A wholesaler who supplies goods to most of the traders in Kitui, Mbooni and Machakos districts in Eastern part of Kenya-Regional Wholesaler
   c) A wholesaler who buys tomatoes from farmers in rural areas and sells the same to other wholesalers in urban areas-
   Rack Jobber
   d) A wholesaler who trades in a wide variety of human medicine-General Line Wholesaler
2. Outline four factors that should be considered before buying office equipment. (4 Marks)
   (i) Space available
   (ii) Cost of the equipment
   (iii) Funds available
   (iv) Availability of manpower
   (v) Availability of complementary resources eg. electricity
   (vi) Adaptability possibility of hiring rather than buying
   (vii) Effect on staff morale
   (viii) Durability of the equipment
3. Malpractices by traders against which consumers need protection by the government. (4 Marks)
   (i) Overcharging
   (ii) Selling underweight goods
   (iii) Selling expired goods
   (iv) False advertisement/misleading information.
   (v) Hoarding
   (vi) Breach of contract
   (vii) Selling sub-standard goods/poor quality
4. State three features of an insurable interest. (3 Marks)
   i) Presence of property rights or interest
   ii) Potential insurable risk must be present
   iii) The property must have monetary value
   iv) The insurable risk must be legal
   v) There must be possibility of suffering financial loss in case of occurrence of risk
5. Outline four ways of reducing the level of unemployment in Kenya. (4 Marks)
   i) Exporting surplus manpower
   ii) Adopting appropriate education system to instill relevant skills
   iii) Encouraging informal sector (Jua Kali)/Encouraging self-employment
   iv) Increase government expenditure to expand economy
   v) Population control to avoid overpopulation
   vi) Diversification of economy by encouraging different industries
   vii) Delocalization of industries to ensure balanced regional balance
   viii) To improve infrastructure to support economic activities
   ix) Encouraging foreign investment by giving foreign investors incentives
   x) Adopting use of modern technology to increase production and reduce wastage
6. State four services offered by a commercial bank to its consumers. (4 Marks)
   i) Accepting deposits
   ii) Safekeeping of valuable items
   iii) Advancing loans
   iv) Offering foreign exchange services
   v) Offering advisory services on financial matters
   vi) Money transfer services
7. List four sources of public finance. (4 Marks)
   i) Taxes
   ii) Fines from courts
   iii) License fees
   iv) Borrowing
   v) Grants and foreign aid
   vi) Rent and rates for use of government property
   vii) Dividends and profits from government investments
   viii) Proceeds from sale of government property
   ix) Interest earned from loans advanced by government
   x) Escheats
8. Outline four reasons why countries may trade with each other. (4 Marks)
   i) To dispose of their surplus
   ii) To acquire what they do not have
   iii) To enhance bilateral ties/promote peace among trading partners
   iv) To enhance access of variety of goods for its citizen to improve their quality of life
   v) To earn foreign exchange
   vi) To create employment for their citizens.
   vii) To earn revenue through taxation
9. Outline four reasons why economic development is desirable to a country. (4 Marks)
   i) To improve standards of living of the citizens
   ii) To improve infrastructure
   iii) To create employment
   iv) To increase life expectancy of the citizens
   v) To improve social welfare of citizens
   vi) To reduce rural-urban migration
10. Indicate the reward associated with each of the factors of production in the table below. (4 Marks)

Factor of production
Reward
a.
Land
Rent/Rates/Royalties
b.
Labour
Wages/salaries
c.
Capital
Interest
d.
Entrepreneurship
Profits

11. Outline four circumstances under which a co-operative society may be dissolved. (4 Marks)
i) Where there is a court order to dissolve it.
ii) Where the objectives of the co-operative society have been achieved
iii) If majority of the members vote to dissolve it during AGM
iv) In case of mass withdrawal of members leaving less than ten
v) If the co-operative society is declared bankrupt
vi) In case of an order from commissioner of co-operatives to dissolve it.
vii) In case of continuous loss making.

12. Highlight four features of a bonded warehouse.
    i) They are usually located at the entry points.
    ii)Stores goods that are under bond.
    iii) Goods are released on production of release warrant.
    iv) Storage fees are charged on all goods stored in the warehouse.
    v) Goods can be prepared for sale while still in the warehouse.
    vi) Goods can be re-exported while still on bond.
13. Outline four factors that may be considered when measuring the size of a firm. (4 Marks)
    i) The volume of output
    ii) The number of employees
    iii) The amount of capital invested
    iv) The floor area covered by the firm premises
    v) The level of technology used/method of production used
    vi) The sales volume
    vii) The market served
    14.
    a) Salim Traders Account (b) Shah Traders Account
    Mar 10 Purchases 200,000 Mar 25 sales 420,000
    (c) Purchases Account (d) Sales Account
    Mar 10 Salim Traders 200,000 Mar 25 Shah T. 420,000
14. On 2nd November 2006, Oromo received an invoice for Ksh. 12,000. Terms of payment were trade discount 5% and cash discount 10%. If payment is made within 30 days. Determine the amount paid if payment was made on 28th November 2006. (4 Marks)
    𝑇𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡=5100𝑥12,000=600 𝐴𝑚𝑜𝑢𝑛𝑡=12,000−600=11,400 𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡=10100𝑥11,400=1,140 𝐴𝑚𝑜𝑢𝑛𝑡 𝑃𝑎𝑖𝑑=11,400−1,140=𝐾𝑠ℎ 10,260
15. 𝐴=𝐶+𝐿
    500,000=𝐶+(150,000+100,000) 500,000−250,000=𝐶 =>𝐶𝑎𝑝𝑖𝑡𝑎𝑙=𝐾𝑠ℎ.250,000 𝑅𝑂𝐶=𝑁.𝑃𝐶=50,000250,000𝑥100%=20%
16. Amina Traders on 31st December 2006
    Amina Traders
    Trading Account
    For the period ended31st December, 2006
    Opening stock 75,000 Sales 400,000
    Add: Purchases 260,000
    Add: Carriage in 12,500 272,500
    COGA4S 347,500
    Less: Closing stock 27,500
    Cost of goods sold 320,000
    Gross profit c/d 80,000
    400,000 400,000
17. State four benefits that a farmer may get by transporting produce to the market by road. (4 Marks)
    i) Transporting is relatively fast.
    ii) It is readily available
    iii) It is relatively flexible
    iv) They are variety means of transport to choose from.
    v) It is relatively cheap to hire
18. Causes of decrease in supply of Sukuma Wiki. (4 Marks)
    i) Fall in price of kales
    ii) Outbreak of kales destroying kales
    iii) Prolonged drought
    iv) Increase in cost of farm inputs such as fertilizer and seeds
    v) Use of inappropriate method of production.
    vi) Increased government taxation on kales.
    vii) Off peak seasons
    viii) Increase in price of competitively produced products
    ix) Increase in price of substitutes such as cabbage making producers to shift to producing them.
19. Outline four ways in which households contribute to national income of a country. (4 Marks)
    i) Consumption of goods and services.
    ii) Savings and investments.
    iii) Provision of factors of production.
    iv) Payment of taxes.
20. Outline four circumstances in which a trader may use oral communication. (4 Marks)
    i) Where there is need to bargain/negotiate.
    ii)Where there is need to explain use and features of product.
    iii) When selling over the counter.
    iv) Where there is need to get immediate feedback from customers.
21. Outline four reasons why a firm may remain small.
    i) Where the nature of product requires small-scale production
    ii) Where market is small
    iii) Lack of adequate funds for expansion
    iv) Lack of appropriate technology
    v) Owner’s decision to remain small
    vi) Legal constraints/government policy
23. State four benefits that a trader may get by advertising products in a newspaper. (4 Marks)
    i) Wide coverage/message will/each many people
    ii) It has reference/evidence of message exists.
    iii) Advertised message can last for a long time.
    iv) It allows detailed messaged.
    v) Graphical details/pictures can be included.
    vi) Advertised message is readily acceptable by readers.
24. 𝐶𝑃𝐼=𝑝1𝑝0𝑥100 𝐶𝑃𝐼 (2006 )=100%
    𝐶𝑃𝐼 (2007)=16001200𝑥100%=13313% 𝐻𝑒𝑛𝑐𝑒,𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒=13313−100=3313%
    Business Studies KCSE Paper 2 565/2  (2010-2020) Questions and Marking Schemes