Business Studies Paper 1 Marking Scheme
KCSE CLUSTER TESTS 20
Business Studies Paper 1
-Extraction / Extractive.
-Manufacturing.
-Construction.
-Processing.
-Services.
-Trade.
4 marks
Circumstances when cheque payment may be preferred.
i. Where large sums of money is to be paid.
ii. Where there is need to make payment without travelling.
iii. Where there is need for future reference of payment.
iv. Where there is need to use it as a negotiable instrument.
v. Where there is need to enhance security as it can be crossed.
vi. Where it is the business policy to pay by cheque.
4 marks
Benefits of public corporation to the public.
i. They provide essential goods / services to the public.
ii. Their goods / services are provided at subsidized rates.
iii. They provide employment opportunities to the public.
iv. Their goods / services are provided all over the country. v
4 marks
Services that facilitate communication in Kenya.
i. Courier services.
ii. Postal services.
iii. Telecommunication services.
iv. Mass media services
v. Internet services
4 marks
Ways in which land influences location of firms
i. Land as a source of raw material.
ii. Land as a source of power.
iii. Land as a source of water.
iv. Conducive climatic condition.
v. Space / room for expansion.
vi. Topography of land.
4 marks
Essential features of any market.
i. Presence of buyers.
ii. Presence of sellers.
iii. Presence of commodity to be bought / sold.
iv. Availability of a medium of exchange.
v. Interaction between sellers and buyers.
vi. Consideration / price for the product for sale.
4 marks
Factors limiting the success of trade agreement among African countries.
i. Production of similar goods / services.
ii. Poor communication network.
iii. Poor transport network.
iv. Political instability.
v. Differences in weight / measure/ exchange rates.
vi. Difference in currency value.
vii. Difference level of economic development.
viii. Cultural difference among the trading countries.
4 marks
4 marks
Sources of business ideas.
i. Brain storming.
ii. Carrying out research.
iii. Copying successful entrepreneurs.
iv. Listening and participating in general conversation.
v. Use/new use of waste products
vi. Newspapers / magazine articles.
vii. Hobbies.
viii. Vocational training and experience.
ix. Spoting a market gap (niche).
4 marks
i. Quotation.
ii. (Purchasing) order.
iii. Credit note.
iv. Statement of account.
4 marks
Ways of regulating business activities by the government.
i. Controlling licensing of business activities.
ii. Formulation of fiscal policies.
iii. formulation of monetary policies
iv. Fixing quotas.
v. Giving guidelines and directives.
vi. Enacting laws.
vii. Imposing total bans.
viii. Establishing regulatory and law enforcing bodies e.g. CBK , TLB and law courts.
4 marks
Advantage of rail transport.
i. Low costs of transport over long distance.
ii. Large carrying capacity.
iii. Offer comfort to passengers by providing a variety of services.
iv. Offer special facilities for carrying special types of goods.
v. There are special loading and off loading facilities at terminal.
vi. They follow regular timetables.
vii. Security of goods / services is more enhanced due to police.
viii. Less prone to accidents.
ix. Provide warehousing facilities for storage of goods at the terminal
4 marks
4 marks
Limitation of national income statistics as a measure of the standard of living
i.Data used may not be accurate
ii.National income figures do not reflect the distribution of income
iii.Consumption pattern / lifestyle are not constant
iv.It does not show the proportion of income spent on productive and non productive activities
v.High income could be at the expense of the citizen’s social welfare.
vi.The figure may not reflect depreciation / appreciation of assets.
4 marks
a) General ledger
b) Nominal ledger
c) General ledger
d) Cash book
4 marks
Advantages of Barter trade to the society:
i. It improves social interaction between parties involved
ii. People can access goods / services they are not able to produce
iii. People can be exposed to good cultural practices from other communities
iv. It enhances specialization in the production of goods / services
v. It does not require common medium of exchange for trade to take place
vi. Surplus goods / services can be disposed off through exchange
vii. One may get goods / services required immediately upon exchange unlike in money trade
4 marks
Ways of protecting organization’s properties
i. Employing watchmen to enhance security
ii. Installing security lights / alarms
iii. Installing electric fence
iv. Ensuring physical care by people using the property
v. Keeping record of movement / usage of each property
vi. Proper repairs / regular servicing / maintenance
4 marks
Ways by which business resources may cause success of business.
i. Human resource / use of qualified employees to enhance productivity
ii. Financial resources / use of adequate finance to acquire machines /employees/ qualified personal to enhance productivity
iii. Technology / use of modern technology to enhance productivity
iv. Physical facilities / adequate building to enhance business operation
4 marks
Features of a bonded warehouse
i. Used to store imported goods whose custom duty has not been paid
ii. Most of them are located at terminal
iii. Goods in bonded warehouse are released on production of a warehouse warrant
iv. There is time limit for which goods should be held in bonded warehouse
v. Any services provided is at a fee
4 marks
a) Surrender value- The amount that the insurer pay the insured if he / she discontinue the contract at a date prior to that on which it is due to mature
b) Proposer-This is the person who wishes to be insured.
c) Re – insurance - When an insurance company insures itself with another bigger insurance company .
d) Binder- It is a temporary document acting as evidence of the policy being in force
4 marks
4 marks
Characteristic of an optimum population
i. There is maximum utilization of resources.
ii. The population is capable of enjoying highest standard of living.
iii. There is no strain on the use of available resources.
iv. Any population beyond optimum may lead to a lower per capita income.
v. Any population below optimum may find it impossible to utilize all the available resources efficiently.
4 marks
Example of indirect tax.
i. Excise tax / duty.
ii. Custom duty.
iii. Export tax / duty.
iv. Value added tax
4 marks
Causes of inflation in an economy
i. Increase money supply
ii. Increase government expenditure in excess of tax revenue
iii. Increase in wages without corresponding increase in output
iv. Increase cost of input / oil/ intermediate goods
v. Increase taxation
vi. Balance of payment surplus and inflow of foreign funds
vii. Shortage of goods / services
viii. High cost of imports (of both capital and finished goods)
4 marks
a) April 1 invested in the business cash sh . 20 000 and Bank sh . 60 000
b) April 5 :paid for furniture sh 12 000 by cheque
c) April 25 :paid for insurance sh. 6000 in cash
d) April 30 : Transferred sh 5000 from bank to cash / Took sh 5000 from bank for business use.
4 marks