KCSE Past Papers 2020 Business Studies Paper 1

Questions

1. List four external environmental factors that may influence the operations of a business.(4 marks)

2. State four characteristics of direct production.(4 marks)

3. Name the document described in each of the following statements:(4 marks)

(a) Used to demand for payment before goods are delivered

(b) Used as a reply to a specific letter of inquiry

(c) Informs the buyer that goods ordered for have been dispatched

(d) Used to correct an overcharge

4. Highlight four reasons for government involvement in business. (4 marks)

5. State four factors that may lead to a shift in demand as shown in the diagram below. (4 marks)

6. Outline four circumstances under which a trader would prefer to transport goods by air. (4 marks)

7. The following information was obtained from the books of Sindo Limited on 31 December 2015:

DetailsKsh
Capital24,000
Stock1,500
Debtors2,000
Machinery20,000
Cash4,000

Determine the total liabilities of the business. (3 marks)

8. Highlight four services that commercial banks offer to their customers. (4 marks)

9. Outline four reasons that may make Kenya restrict trade with other countries. (4 marks)

4. Classify the following resources as natural, man-made or human: (4 marks)

ResourceClassification
(a)Architect
(b)Boat
(c)Soda ash
(d)Driver

11. List four sources of capital that may be available to a sole proprietorship.

(4 marks)

12. Highlight four circumstances under which a firm may be located near the source of raw materials.

(4 marks)

13. The following information was extracted from the books of Kombo Traders on 30 April 2018:

DetailsKsh
Land and buildings150,000
Creditors1,500
Motor car120,000
Cash25,500
Capital311,000
Bank4,000
Sales5,000
Purchases18,000

Required

Prepare Kombo Traders Trial Balance.

(5 marks)

14. Outline four reasons that would make an entrepreneur prepare a business plan.

(4 marks)

15. Identify the office equipment described in each of the statements below:

(4 marks)

DescriptionEquipment
(a)Used to make postage stamp impressions on envelopes
(b)Used to transmit verbal messages
(c)Used to store confidential documents and valuable items
(d)Used to record and store information in audio tapes

16. State four sources of government revenue. (4 marks)

17. Outline four measures which may be taken by a government to address the problem of underdevelopment. (4 marks)

18. Highlight four benefits of personal selling to a trader. (4 marks)

19. Outline four channels that may be used for distributing imported goods. (4 marks)

20. State four merits of a bonded warehouse to the government. (4 marks)

21. ldentify the source documents from which the information posted in the following journals would be extracted: (4 marks)

JournalSource Document
(a)Sales Returns Journal
(b)Purchases Journal
(c)Cash Receipts Journal
(d)Sales Journal

22. State four ways through which leakages of national income may happen in a four-sector economy.

(4 marks)

23. State four benefits of using computers in an office.

(4 marks)

24. Identify the factor of production that relates to each of the following resources:

ResourceFactor of production
(a)Supervision
(b)Tractor
(c)Trees
(d)Owner

25. List four sources of business ideas.

Questions and Answers 2020 KCSE Business Studies paper 1

1. List four external environmental factors that may influence the operations of a business.Legal/regulatory issues/ Government policyEconomic factorsSociocultural factorsTechnological factorsPhysical facilities/infrastructureDemographic considerations (population)Political environment.Competitors SuppliersNatural factors e.g. climate Market/ customers Security

2. State four characteristics of direct production.Production is for own use / Subsistence production Low level of technology is used in production Good produced are often low qualityGoods are produced in low quantities/ no surplusProducer is involved in all stages of production/ lacks division of labourProducer earns no extra incomeProducer’s living standards lack varietyProducer strives to produce a variety of commodities/ lacks specialization

3. Name the document described in each of the following statements:(4 marks)

(a) Used to demand for payment before goods are delivered

– Proforma invoice

(b) Used as a reply to a specific letter of inquiry

– Quotation

(c) Informs the buyer that goods ordered for have been dispatched

– Advice note

(d) Used to correct an overcharge

– Credit note

4. Highlight four reasons for government involvement in business.Provide subsidized essential services/at low costTo protect citizens from exploitationTo create employment To earn revenueTo stimulate economic growthTo provide commodities that are too sensitive to be left in the hands of private investors e.g. printing of money and manufacture of firearmsTo prevent foreign dominance of the local economyTo provide commodities which private investors are unwilling to venture into due to low profitSafeguard national interest by controlling strategic industries To attract foreign investment

5. 5. State four factors that may lead to a shift in demand as shown in the diagram below.(4 marks)Decrease in consumer’s incomeUnfavourable government policies (increased taxes, strict licensing)Decrease in populationFuture expectation that prices will declineUnfavourable/off peak season for particular commoditiesNegative taste & preference for a particular product(or fashion) Availability of better substitutesReduced prices of substitute goods.Increase in price of complimentary goodsUnfavourable terms of sales

6. Outline four circumstances under which a trader would prefer to transport goods by air.(4 marks)When the goods are perishableWhen goods are urgently requiredWhen securing highly valuable goodsWhen accessing remote areas (not accessed by other means)/only means availableWhen goods are to be delivered over a long distanceWhen the business can afford to use it.When it is the policy of the business to transport goods by air

7. The following information was obtained from the books of Sindo Limited on 31 December 2015:

DetailsKsh
Capital24,000
Stock1,500
Debtors2,000
Machinery20,000
Cash4,000

Determine the total liabilities of the business.

(3 marks)

Total asset = 20,000+ 1,500 +2,000 +4,000 = 27,500

Capital = 24,000

Assets = Capital + Liabilities

Liabilities = Assets-Capital

= 27,500-24,000

=3,500

8. Highlight four services that commercial banks offer to their customers.

(4 marks)Accepting deposits(from clients)Lending money to clientsSafekeeping of valuable itemsEffects payments for clients/money transfer servicesProviding foreign exchange servicesGiving investment advice to clientsGuarantor to their customers when taking loans with other financial institutions.Acts as a referee/ trustee

9. Outline four reasons that may make Kenya restrict trade with other countries.

(4 marks)To protect local infant industries from unhealthy competitionTo safeguard against overdependence on foreign firms for essential commoditiesTo raise revenue through tariffsTo prevent dumping of substandard goods in the country.To curb against borrowing of unacceptable foreign cultureTo correct unfavourable balance of paymentsTo remind entry of harmful goodsTo protect strategic industriesRecreate employment opportunitiesTo make use of natural resources

4. Classify the following resources as natural, man-made or human:

(4 marks)

ResourceClassification
(a)Architect
(b)Boat
(c)Soda ash
(d)Driver
ResourceClassification
(a)ArchitectHuman
(b)BoatMan-made
(c)Soda ashNatural
(d)DriverHuman

11. List four sources of capital that may be available to a sole proprietorship.

(4 marks)Owner’s savingsContribution from friends/relativesBorrowing from financial institutions/friendsCredit buying (Trade credit, hire purchase)Ploughing back profits/retained earnings InheritanceLeasing of assetsRenting of assets

12. Highlight four circumstances under which a firm may be located near the source of raw materials.(4 marks)Where it is cheaper to transport finished goods than raw materialsWhere the firm needs to ease handling of bulky raw materialsWhen dealing with highly perishable raw materials to avoid spoilageIf the government policy requires the firm to be located near the source of raw materialsWhere the firm wants to control an important raw material Where the raw materials are fragile/brittleWhere the raw material is dangerous to carry over long distances When the firms needs to easy handling heavy raw materials

13. The following information was extracted from the books of Kombo Traders on 30 April 2018:

DetailsKsh
Land and buildings150,000
Creditors1,500
Motor car120,000
Cash25,500
Capital311,000
Bank4,000
Sales5,000
Purchases18,000

Required

Prepare Kombo Traders Trial Balance. (5 marks)

    Kombo Traders

Trial Balance

As at 30th April, 2018
ParticularsDr.
Shs
Cr
Shs
Land and buildings150,000
Motor car120,000
Bank4,000
Cash25,500
Creditors1,500
Sales5,000
Purchases18,000
Capital311,000
TOTALS       317,500317,500

14. Outline four reasons that would make an entrepreneur prepare a business plan.

(4 marks)To foresee and avoid mistakes that could be committed in futureTo identify, strengths and devise ways of dealing with the weaknesses of the businessIt’s a requirement by financiersTo help determine required resources and allocate them appropriatelyTo enable an entrepreneur identify potential marketTo enable the business organization avoid goal blindnessTo allocate resources appropriatelyTo use it as a monitory toolTo motivate employeesTo adapt future changes

15. Identify the office equipment described in each of the statements below:

(4 marks)

DescriptionEquipment
(a)Used to make postage stamp impressions on envelopes
(b)Used to transmit verbal messages
(c)Used to store confidential documents and valuable items
(d)Used to record and store information in audio tapes
DescriptionEquipment
(a)Used to make postage stamp impressions on envelopesFranking machine
(b)Used to transmit verbal messagesTelephone / radio call
(c)Used to store confidential documents and valuable itemsSafe / cabinet
(d)Used to record and store information in audio tapesDictaphone / dictating machine / recorder

16. State four sources of government revenue. (4 marks)Court finesRent & rates received for use of government propertyLicense feesDividends & profits earned from its investmentsTaxesInternal borrowing External borrowingProceeds from sales of government property Interest earned on loansGrants and donations

17. Outline four measures which may be taken by a government to address the problem of underdevelopment. (4 marks)Increasing(government) investments to create more job opportunitiesControl population explosion to reduce overdependence & pressure on resourcesImprove infrastructure to ease communication, movement and access to inputsImprove technology for maximum utilization of natural resourcesImprove education system to alleviate illiteracy & impart appropriate skillsIncome redistributionInvest in social amenities to foster welfareProvision of incentives to promote culture of savings and investmentEncourage good governance to promote self-relianceSensitizing and legislation on outdated cultural practices

18. Highlight four benefits of personal selling to a trader. (4 marks)The trader is able to reach both literate and illiterate customers Able to demonstrate the uses and capabilities of a productThe trader is able to get immediate feedbackCan tailor the presentation to suit the needs of individual customersFacilitates establishment of interpersonal relationship with clients which promotes repeat purchaser/ create customer loyaltyEnables the trader to focus on a targeted group of customersSeller has opportunity to get information on competitors from the buyers May promote instant salesIts more persuasive and convincing customers

19. Outline four channels that may be used for distributing imported goods.

(4 marks)foreign producer → agent → wholesaler → retailer → consumer foreign producer → local wholesaler → retailer → consumerforeign producer → local consumerforeign producer → local wholesaler → consumer foreign producer → local retailer → consumerforeign producer →local agent → wholesaler → retailer → consumer foreign producer → local producer → local producer representative → wholesaler → retailer → consumer

20. State four merits of a bonded warehouse to the government.

(4 marks)Enable the government to earn revenueEnable the government to control the quality quantity of goods importedHelps the government prevent importation of harmful commodities Enables the government to curb tax evasionHelps the government collect statistics on imported goods goods on transitEnables the government to inspect goods entering the country/ type of goodsIt helps the government solve the problem of unemploymentEnables the government control quantity of goods imported

21. ldentify the source documents from which the information posted in the following journals would be extracted:

(4 marks)

JournalSource Document
(a)Sales Returns Journal
(b)Purchases Journal
(c)Cash Receipts Journal
(d)Sales Journal
JournalSource Document
(a)Sales Returns JournalOutgoing credit note/ issued
(b)Purchases JournalPurchases invoice/incoming/ received
(c)Cash Receipts JournalCopy of cash sale receipt/cash receipt
(d)Sales JournalSales invoice/ outgoing invoice

22. State four ways through which leakages of national income may happen in a four-sector economy. (4 marks)Savings by householdsGovernment taxes on citizens and firmsPayment for importsTransfer payments by governmentForeign aid and grants by governmentRetained profits by firms

23. State four benefits of using computers in an office. (4 marks)

Facilitates easy communication through the internetThey are efficient in preparation and reproduction of documents/saves time

They reduce paperworkThey are capable of storing huge volumes of information Facilitates easy access to information( retrieving of information)Facilitate E- commerce.Output is presentable/ neatEnhances security of documents( information) It is labour saving

24. Identify the factor of production that relates to each of the following resources:

ResourceFactor of production
(a)Supervision
(b)Tractor
(c)Trees
(d)Owner
ResourceFactor of production
(a)SupervisionLabour
(b)TractorCapital
(c)TreesLand
(d)OwnerEntrepreneurship

25. List four sources of business ideas.Print media e.g. newspaper, journals and magazinesElectronic media e.g. television, computer Vocational trainingHobbies/TalentsListening to what people say Unutilized waste materialsObserving established entrepreneurs/ role models ExperienceResearch and development/surveys Shows and exhibitionsSpotting a market gap BrainstormingBusiness seminar/ workshops