565/1 · BUSINESS STUDIES · Paper 1 · Dec. 2022 · 2 hours
Instructions: Answer all the questions in the spaces provided. Non-programmable silent electronic calculators may be used.
1. Identify the component of Business Studies described in each of the statements below. (4 marks)
| Statement | Component | |
|---|---|---|
| (a) | Systematic way of recording business transactions for decision making. | |
| (b) | The study of trade and aids to trade. | |
| (c) | The study of how human beings strive to satisfy their endless wants using the available scarce resources. | |
| (d) | The process of identifying a business opportunity and getting the necessary resources to start and run a business. |
2. State four limitations of direct trade. (4 marks)
3. Kaimosi Traders owned a house whose book value was Ksh 1,000,000. They insured the house for Ksh 800,000 against the risk of fire. Fire occurred and partly destroyed the house at a cost of Ksh 800,000.
(a) Work out the amount of compensation that Kaimosi Traders would receive. (3 marks)
(b) State the reason for paying the amount as determined in 3(a). (1 mark)
4. The diagram below represents the circular flow of income in a two-sector economy.
Identify what is represented by the letters (a), (b), (c) and (d). (4 marks)
5. Name the books of original entry in which the following transactions are recorded. (4 marks)
| Transaction | Book of original entry | |
|---|---|---|
| (a) | Bought goods on credit from Kamau Wholesalers. | |
| (b) | Kibisu, a debtor, returned goods. | |
| (c) | Cash sales. | |
| (d) | Sold an old tractor on credit. |
6. Outline three circumstances under which cash with order would be preferred. (3 marks)
7. State four non-tax sources of Government revenue. (4 marks)
8. Highlight four ways in which the economic environment may lead to business success. (4 marks)
9. Outline four circumstances under which a firm may be located near the market for its product. (4 marks)
10. Explain the meaning of each of the following trends in business ownership: (a) holding company; (b) amalgamation; (c) absorption; (d) cartel. (4 marks)
11. Identify the market structure described by each of the conditions given below. (4 marks)
| Condition | Market structure | |
|---|---|---|
| (a) | The firm is the industry. | |
| (b) | Buyers and sellers have complete knowledge about the entire market but cannot influence the market. | |
| (c) | Few large firms that dominate the market. | |
| (d) | Comprised of many sellers of differentiated products. |
12. Outline four causes of cost-push inflation. (4 marks)
13. State four reasons for ethical practice in business. (4 marks)
14. State whether the transactions given in the table below will cause a decrease, an increase or no effect on the totals of the balance sheet. (4 marks)
| Transaction | Effect | |
|---|---|---|
| (a) | Bought office furniture in cash. | |
| (b) | Deposited some money into the business bank account from personal savings. | |
| (c) | Purchased goods on credit. | |
| (d) | Withdrew money from the bank to pay the child's hospital bill. |
15. Highlight four benefits of product promotion to the producer. (4 marks)
16. Name the type of unemployment described in each of the following statements. (4 marks)
| Statement | Type of unemployment | |
|---|---|---|
| (a) | Caused by change in production pattern during the year influenced by weather conditions. | |
| (b) | Occurs repeatedly at similar times. | |
| (c) | The number of people employed exceeds those that are required. | |
| (d) | Firms are willing to employ all people at the prevailing wage rate but job seekers are not willing to take up the jobs. |
17. Outline four differences between primary wants and secondary wants. (4 marks)
18. The following information relates to Maji Mazuri Traders for the month of December 2021.
| Details | Ksh |
|---|---|
| Loan from bank | 24,000 |
| Stock | 40,000 |
| Cash | 60,000 |
| Debtors | 12,000 |
| Salaries | 8,000 |
| Creditors | 18,000 |
| Furniture | 16,000 |
Work out the net worth of Maji Mazuri Traders. (4 marks)
19. Outline four reasons that may make the Government protect consumers. (4 marks)
20. Identify the type of financial institution described in each of the statements below. (4 marks)
| Statement | Type | |
|---|---|---|
| (a) | Operates fixed deposit, savings and current accounts. | |
| (b) | Advances loans in proportion to one's savings. | |
| (c) | Sells houses through mortgages. | |
| (d) | Offers finance to start or expand industrial enterprises. |
21. Outline four benefits of electronic filing systems. (4 marks)
22. Highlight four benefits that Kenya may get from being a member of the East African Community. (4 marks)
23. The information below relates to Roga Roga Traders for the year 2021: sales Ksh 270,000; margin 40%; rate of stock turnover 6 times. Calculate the: (a) gross profit; (2 marks) (b) cost of goods sold; (1 mark) (c) average stock. (2 marks)
24. Highlight four reasons for locating bonded warehouses at border points. (4 marks)
25. Outline four services that retailers may offer to the consumer. (4 marks)