CHANGAMWE JOINT EXAMINATION 2024
Kenya Certificate of Secondary Education
565/1
Paper 1
BUSINESS STUDIES MARKIMG SCHEME
1. Outline four commercial services that are useful to a manufacturer (4mks)
a) Warehousing
b) Transport
c) Communication
d) Insurance
e) Banking
2. Kamau operates a shop in a farming area. State four ways in which the farm community can benefit
from the business activity (4mks)
(i) They can buy farm inputs from the shop
(ii) They can buy consumer goods from the ship
(iii) They can get goods on credit
(iv) They can sell farm produce to the shop
(v) The shop can be used as a financial
(vi) The shop can offer employment opportunities to the locals
(vii) The shop can be used as a communication Centre in the village
3. State four sources of energy that are naturally available in Kenya but not fully exploited (4mks)
(i) Solar energy
(ii) Wind power
(iii) Geothermal/steam energy
(iv) Hydroelectric power/water
(v) Biogas power
4. Outline four ways in which the utility of a commodity is increased (4mks)
(i) Changing the form of a commodity to suit the needs of consumer
(ii) Transporting the commodity to where it is needed
(iii) Storing the commodity until it is required
(iv) Selling the commodity/exchange/change of possession of the goods
5. Outline four reasons why production in the subsistence sector is usually low (4mks)
(i) Limited use of modern technology
(ii) Limited use of capital
(iii) Does not involve exchange hence no surplus
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(iv) Lack of specialization
6. Use the cash book below to state the transactions that took place on 2nd, 5th and 7th of May 2010.
Cash Banks Cash Banks
Date Details Folio (shs) (shs) Date Details Folio (shs) (shs)
1-May Bal 100,000 250,000 2-May Creditors 30,000
3-May Rent 4,000
5-May Bank c₁ 20,000 5-May Cash c₁ 20,000
7-May James 11,000 6-May Drawing 12,000
8-May Bal c/d 104,000 211,000
120,000 261,000 120,000 261,000
8-May Bal b/d 104,000 211,000
Transaction;
(i) 2nd – A creditor paid by cheque Shs. 30,000
(ii) 5th – Withdrawal Shs. 20,000 for business use
(iii) 6th – Took Shs. 12000 for personal use
(iv) 7th – James a debtor paid by cheque.
7. State four errors that do not affect the agreement of a trial balance (4mks)
(i) Error of total omission
(ii) Error of original entry
(iii) Error of commission
(iv) Error of principle
(v) Compensating errors
(vi) Complete reversal of entry
8. Highlight the reasons that have made the use of credit cards (plastic money) popular as means of
payment (4mks)
(i) They are safer to carry
(ii) They are portable
(iii) They are prestigious to use
(iv) They allow one to obtain goods or services on credit
(v) They enhance the holders credit rating or credit worthiness
(vi) Some are accepted locally and internationally
9. Give four malpractices against which consumers may need protection (4mks)
(i) Overcharging/overpricing
(ii) Poor/inferior quality goods
(iii) Hoarding of goods
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(iv) Wrong measurements e.g underweight goods
(v) Misleading advertisements/false advertising
(vi) Unhygienic goods
(vii) Breach of contract
(viii) Expired goods
10. During a trader’s workshop, a speaker presented a speech on ethical issues in business. Highlight some
ethical issues that he may have raised, affecting business (4mks)
(i) Discriminate in business
(ii) Fairness in competition
(iii) Protection of environment while conducting business
(iv) Rights of employees
(v) Unfair means of achieving business objectives (bribery, corruption)
(vi) Consumer exploitation
11. List the four documents that should be prepared during the formation of a joint stock company (4mks)
(i) Memorandum of association
(ii) Article of association
(iii) List of directors
(iv) Statement from the directors that they are willing to be directors
(v) Statements from a lawyer or a director showing that all the legal requirements for formation
have been fulfilled.
12. State four expenses that are incurred in the process of distributing goods (4mks)
(i) Selling costs
(ii) Transport costs
(iii) Warehousing costs
(iv) Insurance costs
(v) Selling costs
13. Given below are transactions to Buda traders for each of the transactions, indicate in the column below
the account to be debited and the account to be credited (4mks)
Transaction a/c to be debited a/c to be credited
(i) Paid salaries in cash Salaries a/c Cash a/c
(ii) Withdraw cash from bank for office use Cash a/c Bank a/c
(iii) Paid telephone bill by cheque Telephone a/c Bank a/c
(iv) Purchased office equipment on credit from Office equipment a/c Eldoret Holding a/c
Eldoret Holdings
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14. Highlight four ways in which Kenya is likely to benefit from preparing a proper development plan
(4mks)
(i) Enables mobilization and allocation of resources
(ii) Can be used to secure foreign aid
(iii) It enables coordinated investments to prevent regional imbalances
(iv) It helps to minimize wastage or duplication of industries
(v) It is used to increase the rate of capital formation
(vi) It is used to evaluate projects at different stages of implementation to assess whether they are
in line with expected outcome.
15. Highlight four principles of government expenditure (4mks)
(i) Maximum social benefits
(ii) Economy
(iii) Sanction
(iv) Proper financial management
(v) Flexibility/elasticity
(vi) Equity
16. The following information was extracted from the books of Kiambu traders
Ksh.
Opening stock 160,000
Closing stock 200,000
Purchases 1,800,000
Margin 20%
Calculate Kiambu trader’s sales (4mks)
Margin = G.P = Sales – Cost of sales
Sales Sales
20 = 160000+1800000-200000
100 S
20 = S – 1,760,000
100 S
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20S = 100 S - 1760000
20S = 100S – 1,760,000
80S = 1,760,000
80 80
Sales = 2,200,000
17. Apart from the price mechanism, state other ways in which prices of goods and services are determined
(4mks)
(i) Through haggling/bargaining
(ii) By tender/tendering
(iii) Through auction
(iv) By the government through price control
18. State the four forms of economic integration (4mks)
(i) Free trade area
(ii) Common market
(iii) Custom union
(iv) Economic union
19. State the type of insurance/assurance cover Mshamba should take in the following circumstances.
Circumstance Type of Policy
(i) To cover against theft of his property at home Burglary policy
(ii) To take a short period cover in case one is Term policy
participating in motor car rally
(iii) To cover loss of cash or goods through theft by any Fidelity guarantee
of his employees
(iv) To cover damage to his/her car, property in the car Comprehensive policy
and damage to other vehicles
20. Outline four assumptions that would make a two-sector economy to hold (4mks)
(i) There is no government influence
(ii) Firms spend all their income in hiring factors of productions
(iii) Households use all their income in buying good & services from other countries
(iv) The country has only two sector the firm and households.
21. Outline four causes of unemployment in Kenya today (4mk)
(i) High population growth rate
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(ii) Inappropriate education system
(iii) Seasonality in production/poor climatic conditions
(iv) Poor government policy or job creation
(v) Low demand for goods and services which leads to closure of industries
(vi) Choice of production method; choice of capital intensive methods where labour is abundant
22. State the journal that deals with each of the following types of transaction (4mks)
Types of transaction Journal
(i) Sale of fixed asset on credit General Journal/journal
proper
(i) Correction of errors General Journal
(i) Credit purchases Purchases Journal
(i) Return of goods by customers Sales Returns
23. Highlight four factors a trader may consider when determining the appropriate means of transport
(4mks)
(i) Cost
(ii) Security
(iii) Reliability
(iv) Distance
(v) Nature of goods
24. Outline the qualities of a good sales person (4mks)
(i) Attractive personality, smart, well-groomed e.t.c
(ii) Ability to study customer’s psychology
(iii) Possess good communication skills
(iv) Polite and courteous
(v) Honest and sincere
(vi) Have a good command of languages
25. Give four reasons why firms choose to remain small in an economy dominated by large firms (4mks)
(i) Size of the market
(ii) Nature of the market
(iii) Flexibility of small firms
(iv) Quick decision making
(v) Belief that a small firm is more manageable
(vi) Rising cost of production
(vii) Need to retain control
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