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KCSE CLUSTER TESTS 20

Business Studies Paper 1

1.

-Extraction / Extractive.

-Manufacturing.

-Construction.

-Processing.

-Services.

-Trade.

4 marks

2.

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

3.

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

4.

Services that facilitate communication in Kenya.

i. Courier services.

ii. Postal services.

iii. Telecommunication services.

iv. Mass media services

v. Internet services

4 marks

5.

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

6.

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

7.

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

8.


4 marks

9.

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

10.

i. Quotation.

ii. (Purchasing) order.

iii. Credit note.

iv. Statement of account.

4 marks

11.

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

12.

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

13.


4 marks

14.

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

15.

a) General ledger

b) Nominal ledger

c) General ledger

d) Cash book

4 marks

16.

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

17.

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

18.

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

19.

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

20.

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

21.


4 marks

22.

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

23.

Example of indirect tax.

i. Excise tax / duty.

ii. Custom duty.

iii. Export tax / duty.

iv. Value added tax

4 marks

24.

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

25.

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

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