Download BUSINESS STUDIES PAPER 1 (MARKING SCHEME) SUPAMO JET

BUSINESS STUDIES
PAPER 1
(MARKING SCHEME)
SUPAMO JET 2015
1.
-
Highlight four reasons why many people start businesses in Kenya.
to create employment for themselves and others
To provide goods and services
be own boss.
to earn profits
to make use of local resources.
to apply their talents/skills.
to make use of spare time.
to emulate other successful business people (role models)
2.
-
State four characteristics of labour as a factor of production.
it is a basic factor of production.
it is mobile: geographically/occupationally
cannot be stored/ is perishable
cannot be separated from the business.
labourers sell their labour not themselves.
It is human, with ability to think and get annoyed.
(4 marks)
3.
-
Outline four features of an-efficient transport system.
must have a wide coverage
affordable
fast-relay goods within time required.
reliable - capable of delivering goods in the required condition.
terminals – must be accessible.
safety and security
4.
A/C Debited
Ledger
A/C credited
Ledger
a)
Nzioka (debtor)
Sales ledger
Sales A/C
General Ledger
b)
Rent A/C
General 
Cash A/C
Cash book
5.
-
(Marks ½ x 8 = 4)
Outline four factors to be considered when evaluating a business idea.
the products the business will sell.
the market.
competition
Management
objectives of the business
profitability
government policy
availability of raw materials/ product
1
-
level of technology required
capital required
6.
-
State four advantages of using the internet as a means of communication.
it is fast
operates 24 hours/ day and night
it covers the whole word (global)/wide coverage
Information can be stored for future reference
product promotion can be done
it is relatively cheap
confidentiality is enhanced (use of password)
transactions can be done online.
7.
Outline four differences between life assurance and general insurance.
Life Assurance
-the insured risk is bound to happen
- It appreciates in value (sum assured
higher at maturity).
- May be used as security for a loan.
- Principles of indemnity, subrogation and
contribution do not apply.
- No limit to amount of cover.
-has surrender value
-one can insure life with different
companies
-is long term/ no renewal
(4 marks)
General Insurance
-the event insured against may or may not
happen.
-does not appreciate in value
- Cannot be used as security for a loan.
-Principles of indemnity, subrogation and
contribution do not apply.
- Value of property determines amount of
cover.
-does not have surrender value
-one is legally required to insure with only
one insurance company
-is a short term contract/ requires renewal
8. i) FRANCO: price quoted by the seller includes the cost of goods and all the other expenses
until the goods get to the buyer’s premises.
ii) F.O.R.: the price quoted includes the cost of goods and their movement to the nearest
railway station.
iii) LOCO: price quoted is the value of the goods as at the seller’s warehouse.
iv) C.I.F.: price quoted includes the value of the goods, transport to the ship, cost of freight
and insurance.
2
9.
MINGI RETAILERS
2 Column Cash Book
Dr
Date
2015
Mar 1
”
2
”
27
“
31
Details
Lf
Bal b/d
Sales
Debtors
Bal c/d
Bal
Cash
Bank
Date
2015
Mar 1
” 12
”
31
”
31
13,200
38,000
b/d
6,000 
_______ 50,000

51,200
====== 56,000
======
33,000
Details
Lf
Bal. b/d
Creditors
Rent
Bal. b/d
Bal. b/d
”
Cash
8,200 
10,000 
33,000
51,200
=====
Cr
Bank
56,000

______
56,000
======
50,000
” 31
(Marks 2x ½ = 4 marks)
10. Give four possible reasons behind business success in Kenya.
Ability to manage people.
proper location/availability of customers.
availability of raw materials or stock of goods.
adequate finance.
lack of stiff competition.
favourable government policy
good infrastructure
political stability
commitment to business.
proper management of finances.
proper debt management.
good public relations.
being creative and innovative.
11.
-
Outline four government initiated methods of consumer protection.
public health act
weights and measures act.
sale of goods act
food and drugs act.
rent tribunal act.
Kenya beareau of standards.
price control/regulation
building and construction safety and standards act
licensing
awareness campaigns
3
12.
-
Causes of shift in demand curve
decrease in consumer income.
decrease in price of substitutes.
increase in price of complementary goods.
unfavourable government policy e.g. high taxes
Decrease in population.
unfavourable terms of sale.
Change in tastes against product.
Future expectation of decrease in prices.
13.
-
State four components in the economic environment of a business.
level of consumer incomes.
taxation rates.
general prices of goods and services.
interest rates/ cost of borrowing
14.
-
Outline four fiscal measures of controlling inflation.
reducing government spending.
increase in income taxes.
reducing indirect tax.
subsidizing production.
government producing commodities that are in short supply.
15.
20 x 500,0000 = 100,000
100
500,000 – 10,000 = shs.400,000 
Discount = 400,000 – 392,000 = 8,000 
2 8000
x 100 = 2% 
1 4000,000
16.
-
Highlight four importance of warehousing to consumers.
steady supply of goods.
stability in prices.
quality goods – kept in good condition.
goods are prepared for sale – branding, blending, sorting, packing.
consumers can inspect goods before buying.
some goods improve in quality while stored.
goods are brought closer.
variety of goods
4
17.
List four channels of distribution used to import maize in Kenya.
Foreign farmer → local wholesaler → local consumer
Foreign farmer → local wholesaler → local retailer → Local consumers
Foreign farmer → Agent → local wholesaler→ local retailers → Local consumers.
Foreign farmer → Local Consumer.
18.
–
-
advantages of pay as you earn (PAYE) tax as a source of government revenue.
Economical in collection.
Tax revenue is certain.
Equitable – flexible
can be expanded to cover more areas.
simple to understand.
does not affect price of goods and services.
brings redistribution of wealth.
society is conscience.
19.
a)
b)
c)
d)
oligopoly
perfect competition.
monopoly
monopolistic competition.
20.
-
circumstances under which a firm would be located near the market for its products.
Where products are perishable.
Where products are fragile.
Where there is need to reduce the costs.
Where government policy requires that the firms be located in that area.
Markets and raw materials are located in the same area.
Where goods are specialized and require after sales services.
21.
-
important documents that are required in the registration of a public company.
Memorandum of association.
articles of association
list of directors.
declaration of compliance with registration requirements.
statement signed by directors accepting to act as directors.
prospectus.
22.
-
Highlight four ways of decreasing imports.
imposing/increasing customs duty
imposing quotas on imports/ ban
foreign exchange control.
administrative drawbacks.
devaluation of currency
5
23.
253 x 100
247
=
102.43%
262 x 100
247
=
274 x100
247
=
110.93
285 x 100
247
=
115.38%
24.
-
106.07%
ways in which the Central Bank acts as a banker to the government.
Keeps government accounts.
receives finances/revenues on behalf of government.
safeguards finances for government.
repays foreign loans on behalf of government.
financial advisor to government
purchasing, selling, government securities on behalf of government.
25.
Gross profit
CGAS
=
20 x sales
100
=
20 x 800,000 = 160,000
100

=
=
Opening stock + purchases
250,000 + 700,000 = 950,000
Sales – GP = 80,000 – 160,000
=
640,000
Closing stock
=
950,000 – 640,000 = 310,000
CGS
=
6
Opening stock
Add purchases
C.G.A.S.
Less Closing Stock
C.G.S.
Gross Profit %
Expenses
Net Profit c/d
MAVUNO TRADERS
Trading, Profit and Loss Account
For the year ended 31st Dec. 2010
Shs.
250,000
Sales

700,000
950,000
310,000
640,000
160,000
800,000
Gross Profit
b/d
10,000
160,000
165,000 
175,000
Commission Income
=========

Net profit b/d.
(Marks 8 x ½ = 4 marks)
7
Shs.
800,000
800,000
15,000
175,000
165,000