565/1
BUSINESS STUDIES
PAPER 1
FORM 4
MARCH/APRIL 2017
TIME: 2 HRS.
CENTRAL KENYA NATIONAL SCHOOL (CEKENAS)
JOINT EVALUATION TEST – 2017
Kenya Certificate of Secondary Education (K.C.S.E.)
BUSINESS STUDIES PAPER 1
MARKING SCHEME
1.Four ways in which a society benefits from indirect production. (4 x 1
= 4 mks)
i) Employment opportunities
ii) High quality products.
iii) Wide variety of goods.
iv)Income from the sale of goods.
2. Advantages which make a company to have its shares quotes at a stock exchange. (4 x 1
= 4 mks)
i) Shares become easily transferable
ii) A quoted company is considered financially sound.
iii) The market value of shares is an indication of the progress of any company.
iv) A quoted company can get relevant and important information.
v) It is easy for a quoted company to sell us shares for raising long-term finance.
3. Factors that determine the period for which documents should be stored. (4 x1
= 4 mks)
i) Quality of the documents
ii) Cost of storing the documents.
iii)Availability of storage space.
v) Need for future reference.
4. Kirinyaga Manufacturers
Profit and Loss Account for the year end 31-12-2015
DR CR
Gross loss b/d 13,400 Commission received 7,900
Rent 1,200 Discount received. 38,400
Carriage Out 4,000
Insurance 10,200
Wages and Salaries 15,400
Net profit c/d 2,000
46,300 46,300
(8 x 1 = 8 mks)
5. Functions of an entrepreneur (4 x 1 = 4
mks)
i)To start a business
ii)To employ the other factors of production
iii)To look after production/manage/control
iv)To pay the rewards for the other factors of production
v)To market the products.
vi)To bear the risk of profit and loss.
6.
i) Catalogue
ii)Quotation
iii)Advice not
iv)Debit note
7. Reasons to prefer written communication to verbal communication (4 x 1
= 4mks)
i)It provides future reference
ii)It provides evidence for the message that has been sent.
iii)Can be used to send confidential messages.
iv) Message content may not be distorted before delivery to the recipient.
v)Similar copies of the message can be sent to different people at the same time.
8. Differences between spot cash and prompt cash
Spot cash -Payment is to be made when goods are handed over to the customer.
(2 mks)
Prompt cash -Refers to cash payment within a few days after the delivery of goods in
order to give the buyer time to examine the goods and check the invoice.
(2 mks)
9. Limitations of personal selling (4 x 1
= 4 mks)
i) Can be applied to limited areas only.
ii) The method is very expensive as the company is required to pay high amount of
commission to the
sales persons.
iii) Sales men may show their disfavor to the company by misrepresenting them or the goods.
iv) Sometimes customers may be cheated by the sales men because the goods supplied to
them can be
different from the goods shown to them.
v) Salesmen may not be devoted and sincere and may not work hard to create more demand
for the
products of their company.
10. Documents required by a public limited company. (4 x
1 = 4 mks)
i)Certificate of Incorporation
ii)Certificate of Trading
iii)Memorandum of Association
iv)Articles of Association
11. Features of liners. (4
x 1 = 4 mks)
i) They have fixed routes.
ii) They follow a fixed time table
iii) Their charges are fixed
iv) They travel at regular intervals
v) They call at specific ports along the routes at specific intervals.
12.
i) Privatisation – Changing of state owned co-corporations to public limited companies.
ii)Amalgamations/Merger-two or more business organizations combine and form one new
business
organization.
iii) Trusts. – Where a group of companies work together to reduce competition
iv) Absorptions/Take over’s –Refer to a business taking over another business by buying all
the assets
of the latter which then ceases to exist.
13. Methods of credit control adopted by the Central Bank. (4 x
1 = 4mks)
i)Bank rate policy
ii) Open market operation
iii)Reserve requirements
iv) Retaining of credit
v) Raising of lowering
vi) Use of selective credit control
vii)Direct action /moral persuation /publicity
14. Types of personal account. (3 x 1 = 3
mks)
i)Capital account.
ii)Creditors account
iii)Debtors account .
15. Four sources documents. (4 x
1 = 4 mks)
i) Cash receipt
ii) Invoice
iii) Credit note
iv) Debit note
v) Payment voucher
16. (4 x 1
= 4 mks)
i)No constant supply of goods.
ii) Price not stable
iii) Receive defective goods
iv) No inspection
v) Lack of variety of goods.
17. Incentives used by government to promote delocalization of industries. (4
x1 = 4 mks)
i) Offering free and cheap land
ii)Reduction of taxes
iii) Offering subsidies
iv) Offering direct financial assistance
v)Improvement of infrastructure
18.
Capital A/c
Bal c/d 100,000 Cash 100,000
100,000 100,000
Bal b/d 100,000
Cash-hand A/c
Sh. Sh.
Capital 100,000 Purchase 40,000
Fixtures & Fittings 10,000
100,000 Bal c/d 50,000
Bal b/d 50,000 100,000
Purchase A/c
Sh. Sh.
Cash –hand 40,000 Bal c/d 40,000
40,000 40,000
Bal. b/d 40,000
Fixture and Fittings A/c
Sh. Sh.
Cash A/c 10,000 Bal c/d 10,000
10,000 10,000
Bal b/d 10,000
(15 ticks @ 1/3 =
5mks)
19. Steps followed when making an Insurance claim
i) Notification the insurer
ii) Filling in the claim form
iii) Investigation of the claim
iv) Preparation of the assessment report
v) Payment of the claim
20 (3 x 1 = 3
mks)
i) Sales day book/Sales journal
ii) Returns inwards day book/Return inwards journal
iii) Purchases day book/purchases journal
21. Four circumstances under which a firm would be located near the market. (4 x 1
= 4 mks)
i)Where perishable products are being produced.
ii)Where fragile products are being produced.
iii)Where raw materials are cheaper to transport than the final products.
Iv)Where the market of products is centralized in one area.
22.
23. Negative effects of under population (4 x 1
= 4 mks)
i) Lack of adequate market for goods and services
ii) Provision of social amenities per head is very high
iii) Resources are not fully utilized.
iv) Low labour supply
v) Low production levels.
24. Characteristics of chain stores. (4 x
1 = 4 mks)
i) Purchases are centralized.
ii) Prices are standard for similar products in all branches
iii) Sales are decentralized.
iv) All branches deal in the same type of products
v) They are uniform in outward appearance and interior layout.
25. (4 x 1
= 4mks)
MR. NJOGU NYAMU
BALANCE SHEET
AS AT 1ST JANUARY 2015
ASSET KSHS CAPITAL & LIABILITIES KSHS
Land and Buildings 2,340,000 Capital 2,131,000
Stock of goods Trade Creditors 142,000
54,000
Bank Overdraft 240,000
Trade debtors
119,000
2,513,000
2,513,000
