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565/1 Business Studies Paper 1 Question Paper

565/1 Business Studies Paper 1

Course:Secondary Level

Exam Year:2011

Name________________________________________________ Index No: _________________
Signature___________________
Date ______________________

565/1
BUSINESS STUDIES
PAPER 1
2 HOURS
JULY/AUGUST 2011

FORM FOUR CLUSTER EXAMINATION 2011
Kenya Certificate of Secondary Education
BUSINESS STUDIES
PAPER 1
2 HOURS

INSTRUCTION TO CANDIDATES

a) Write your name and index number in the spaces provided above
b) Sign and write your date of examination in the spaces provided above
c) Answer all the questions
d) All answers must be written in the spaces provided in this booklet
e) Do not remove any pages from this booklet
f) This paper consists of 8 printed pages
g) Candidates should check the question paper to ascertain that all the pages are printed as indicated and that no questions are missing.

For Examiners use only.
Question 1 2 3 4 5 6 7 8 9 10 11 12 13
Marks
Question 14 15 16 17 18 19 20 21 22 23 24 25
Marks

This paper consist of 8 printed pages

Please Turn Over
1. Highlight four characteristics of free resources (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
2. Give four features of incorporated business organizations (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
3. Give four emerging developments in the banking industry (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
4. For each of the following transactions, indicate with a tick (v) whether it will increase,
decrease or have no effect on the balance sheet totals (4mks)

Transaction Effect on the balance total
Increase Decrease No effect
(i) Borrowing sh 20,000 from bank for paying creditors
(ii) Used sh 10,000 cash pay for loan arrears
(iii) Sale of part of business premises
(iv) Sale of goods worth sh 5,000 for sh 4,500

5. State any four causes of balance of payment deficit (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) ___________________________________________________________________________

6. For each of the following statements, state whether it’s true or false as regards circular flow of
income in a four sector closed economy.
(i) Firms and households do not pay tax to the government__________________________

(ii) Households save part of their income in banks and other institutions________________

(iii)Firms receive payments from exports abroad_________________________________

(iv) Business firms reverts to commercial banks to raise capital _____________________
(4mks)
7. List four properties of a well drawn cheque (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
8. State four disadvantages of localization to a developing country (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
9. The following information relates to Kivai Traders
Purchases sh 2,700,000
Return outwards sh 600,000
Closing stock sh 500,000
Opening stock sh 1,200,000
Margin 2/9
Calculate (i) Cost of sales (2mks)

(ii) Gross profit (2mks)

10. State four advantages of self employment (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
11. State four characteristics of subsistence production in Kenya (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
12. Match the following statements with the correct description of the aspect as
regards population (4mks)
(i) Population that is adequate for full utilization Young population
of available resources Declining population
(ii) Situation of insufficient labour compared
to other factors Optimum population
(iii) Population where majority are above 55 years Ageing population
(iv) Higher death rate than birth rate cause population
to decrease Under population

13. On 31st December 2006, Boresha had paid rent in advance of sh 25 000. On 31st December
2007 the rent prepaid was sh 34,000 while accrued rates amounted to sh 10,000. During
the year 2007, rent paid amounted to sh 110,000.
Prepare the rent and rates account for the year (4mks)

14. Outline four advantages of a business using E-mail in communication (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
15. The diagram below shows the supply curve of maize in the last two seasons. Give the
attributes causing the shift (4mks)

So
S1

Price

So
S1

Quantity
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
16. Outline four economic conditions that would prevail in a country undergoing inflation (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
17. With Kenya targeting Millenium Development Goals and Vision 2030, planning has become
key component in their realization. Outline four qualities of a good development
plan (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) ___________________________________________________________________________
18. Indicate in the spaces provided whether the following taxes are either direct taxes or
indirect taxes. (4mks)
Tax Types of tax
Corporation tax _________________________________
Capital gain tax _________________________________
Value added tax _________________________________
Income tax _________________________________
19. Piracy along Somali coastline continue to hurt seaborne trade and transport. Give four
adverse effects of the above trend. (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________
20. The following balances were obtained from the books of Jansen Traders on
30. 06. 2010
shs
Plant and Machinery 1,400,000
Turnover 1,540,000
Interest on loan 200,000
Prepaid rent 70,000
Accrued salaries 353,340
Furniture and fixtures 500,200
Gross profit 427,260
Repairs on motor vehicle 150,000

Prepare trial balance of Jansen traders for the month ended 30.6.2010 (4mks)

21. The following is a demand curve XYZ of a firm

Y x

P y
Price
Z

0 Q x
Output

(a) State the elasticity of demand portrayed by the two portions of the demand curve
XY: _______________________________________________________________

YZ: _______________________________________________________________
(2mks)
(b)What is the name given to point y (1mk)
_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
(c) Identify the market structure depicted (1mk)
_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
22. Mutune is the owner of Jambo enterprises worth 2 million, insurance cover worth 1.5 million
has been placed on the property. If the property was damaged to the tone of sh 300,000.
Determine how much will Mutune get from insurance as compensation and reason. (4mks)

23. The following features relate to warehousing. Indicate the most suitable type of warehouse
described.
(i) Used to store locally produced goods until excise duty is paid____________________
(ii) Mostly situated in entry points and are available at a fee ________________________
(iii) Warehouse used to store non-dutiable goods originating from within or outside the
Country____________________________
(iv) Warehouse can be designed to suit one’s particular needs _______________________
(4mks)
24. Indicate in the spaces provided, the account to be debited and account to be credited (4mks)
Transaction Account Debited Account Credited
(a) Started business by depositing sh 80,000 in the bank account of the business.
(b) Bought stock of goods worth sh 20,000 from XYZ retailers on credit.
(c) Returned goods worth sh 4,000 to XYZ retailers
(d) Paid XYZ retailers’ sh 15,000 cheque

25. The recent disaster of death in both aquatic and marine life at Lake Naivasha could have been
avoided. Suggest four ways of averting such in future. (4mks)
a) _____________________________________________________________________________
b) _____________________________________________________________________________
c) _____________________________________________________________________________
d) _____________________________________________________________________________

565/1 Business Studies Paper 1 Question Paper

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