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Business Studies Paper 1 Question Paper

Business Studies Paper 1

Course:Secondary Level

Exam Year:2011

1. State the four advantages of division of labor and specialization. (4 marks)
2. The following is a list of ledger balances of Butere stationery as at 31st December 2009.
Purchases sh.60000
Sales sh.80000
Carriage outwards sh.40000
Return inwards sh.30000
Carriage inwards sh.15000
Provision for bad debts sh.8000
Rent income sh.57000
You are required to prepare a trial balance duly balanced. 4 marks
3. Highlight 4 reasons why a country like Kenya would be interested in knowing its population structure. 4 marks
4. Osundwa started business on 1st Jan 2009 and made the following transactions in the first week of the month.
Jan 1 deposited sh 2000 in the bank
3 withdrew sh 1000 for office use
5 bought goods for sh 2000 for Nabongo
7 paid Nabongo sh 2000 by cheque.
Prepare relevant ledger accounts. Balancing not allowed. 4 marks
5. On 1st April 2009, Sanju traders had sh 2000 cash in hand and sh25000 at bank. Later the following transactions took place;
April 3 cash sales sh 12000
4 paid salaries of sh 12800 by cheque
5 paid rent sh 2400 cash
6 deposited sh 10600 from cash till to the bank
7 Banked all except sh 500
Prepare a cash book duly balanced. 4 marks
6. Highlight four uses of a balance sheet. 4 marks
7. State four reasons why equity of a large business enterprise may change. 4 marks
8. Classify the following account balances into personal, nominal or real account. 4 marks
Item classification
a) Outstanding rent
b) Capital a/c
c) Commission received a/c
d) Furniture account

9. State the type of ledger account to which the following accounts relate. 4 marks
Account Type of ledger
a) Supplier
b) Motor vehicle
c) Commission expense
d) Prepaid rent

10. For each of the following transactions indicate the source document from which the transaction would be recorded. 4 marks
transaction Source document
a) Goods returned
b) Sale of good on credit
c) Correction of an over charge
d) Purchases on credit

11. Outline 4 negative consequences of under population. 4 marks
12. Highlight four circumstances under which a producer will sell directly to his customers. 4 marks
13. State 4 advantages of price mechanism. 4 marks
14. Indicate if the following factors will cause a shift or movement on the demand curve. 4 marks
Factor Effect
a) An increase in population
b) A change in real income
c) An increase in VAT of the product
d) A change in price of the good

15. The following diagrams represent different types of demand curves.
a) State the type of elasticity represented by each of the demand curves. 2 marks

Diagram 1:
Diagram 2:
b) For each of the demand situations represented in the diagrams, state whether the producer will increase or decrease the price in order to raise revenue. 2 marks
Diagram 1:
Diagram 2:

16. Draw and label a diagram to show the equilibrium price and output under monopolistic competition in the short run. 4 marks
17. Given: cost of sales sh 65000, general expenses sh 2800, capital sh 190000, profit margin 20%
Calculate the rate of net profit to capital. 4 marks
18. Outline four functions of the central bank. 4 marks
19. Highlight four problems encountered at the implementation stage of development planning. 4 marks
20. Outline four disadvantages of free trade. 4 marks
21. Identify the type of economic integration. 4 marks
a) Members abolish all tariffs, quotas and physical barriers to trade among themselves_________
b) Member countries establish a common external tariffs policy against imports from countries outside the economic grouping____________
c) Including a and b above, member countries also agree to allow full mobility of factors of production among themselves__________________
d) The most refined of all economic integration systems____________________
22. Differentiate between economic growth and economic development. 4 marks
23. State four feature of an underdeveloped country. 4 marks
24. State any four functions of the World Bank. 4 marks
25. Describe briefly how to arrive at credit sales in a debtors control account. 4 marks

Business Studies Paper 1 Question Paper

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