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KCSE CLUSTER TESTS 27

Business Studies Paper 1

1.

a)-Problem of making choices
b)-problem of scarce resources
C-Problem of competing wants
d)-Problem of recurring wants
e)-Problem of satisfying complementary wants.

4 marks

3.

a)-Taxation may increase the price
b)-Subsides may reduce the price.
C-Legislation may increase / decrease the price
d)-Price control /price ceiling
e)-Price decontrol /price liberalization

4 marks

5.

(i) Working capital
Current Assets-Current liabilities
(145,220-95,200)
=50,020 2x1mk=(2mks)
(ii) Capital employed
Fixed Assets +Working capital
(480,000+50,020)
=530,020= 2x1=(2mks)

4 marks

6.

(a) Real account
(b)Nominal account
(c)Nominal account
(d)Nominal account

4 marks

7.

a)- Provision of adequate security
b)-Provision of good transport / communication system / infrastructure
C-Offering subsidies
d)-Instituting legal measures / regulations to shield local industries
e)-Tax concession / relief to motivate new investors

4 marks

8.

a)-When training junior staff
b)-When delegating duties to the junior staff
c)-When dealing with those involved in misconduct
d)-When giving rewards to staff
e)-When solving problems facing employees
f)-When evaluating the performance of employees

4 marks

9.

a)-Difference in values of different currencies
b)-Difference in the baskets of goods / services
C-Disparity in income distribution in different countries
d)-Difference in taste / needs of people in different countries

4 marks

10.

(a) Convenient to pay
(b) Not easy to evade
(c)Has wide coverage / reaches the pocket of all income groups
(d) Economical to collect
(e)It is elastic / flexible hence adaptable to economic changes.

4 marks

11.

a)-The product to sell
b)-The target market
c)-The management structure
d)-The capital structure
e)-The extent of competition
f)-The executive summary

4 marks

12.

a)-Installation cost is very high
b)-It is prone sabotage hence loss of product
c)-Where leakage is not detected immediately, heavy losses occur
d)-It has no return journey
e)-It can be used to transport gas / liquid products only
f)-Leakage may cause environmental pollution.

4 marks

13.

a)-Where the firm has adequate resources
b)-Where the market is concentrated in one locality
c)-Where the product is of high unit value
d)-When there is need for demonstration
e)-When introducing a new product in the market
f)-Where there is need to address individual need/ requirement / consumer specification

4 marks

14.

4 marks

15.

a)-Use of bank rate policy
b)-Use of cash ratio
c)-Use of liquidity ratio
d)-Use of open market operation
e)-Use of selective credit control
f)-Use of special/ compulsory deposits

4 marks

16.

(a) Composite machine

(b). Facsimile/ fax machine

(c)Duplicating machine

(d) Banking machine

4 marks

17.


4 marks

18.

a)-Most of them cannot attract qualified staff due to inadequate finance

b)-Some cannot be able to raise enough / adequate capitals as majority of their members are low income earners

c)-Majority are poorly managed leading to poor performance

d)-Most of them are affected by political interference

e)-Withdrawal of members affects their operation / capital base

f)-They suffer from embezzlement of funds by the management

4 marks

19.

a)-To increase productive capital / investment capital

b)-To generate employment opportunities

c)-To encourage the transfer of technology / capital

d)-To develop backward linkages

e)-To diversify export of products/markets

4 marks

20.

a)-Increased labour mobility which enhances economic productivity
b)-Increased market for goods /services which enhances production

c)-Adequate supply of labour

d)-Increased innovation / creativity

e)-Cheap labour due to excess supply

4 marks

21.

a)-Enables the government to collect information on goods imported

b)-Enables the government to raise revenue from customs duty paid

c)-The government is able to control the entry of illegal goods in the country

d)-Verification of the type /nature of goods imported become easier

4 marks

22.

(a). Offer variety / wide range of goods

(b). Sell their goods at relatively lower prices

(c).They are attractive / convenient to shop in

(d).Usually situated in town centres

(e).Each department is managed by a departmental manager

4 marks

23.

a)-Establishment of a planning body

b)-Availability of adequate statistical data

c)-Fixing realistic targets and priorities

d)-Maintenance of proper balance in the economy

e)-Incorruptible and efficient administration

f)-Proper development policy

g)-Non-interference by politicians/political goodwill

4 marks

24.

a)-Recording cash receipts by business

b)-Recording discount allowed by the business

c-Recording discount received by the business

d)-Recording cash payment by the business

e)-Recording payment made by cheques

f)-Recording receipts made by cheques
g)-Showing the cash balances brought down / forward

h)-Showing bank balances brought forward / down

4 marks

25.

a) -The policy cannot be assigned to anybody else

b)-Policy is a contract of indemnity

c)-The policy is usually renewable / short contract /term

d)-Insured must have insurable interest

e)-The policy has no surrender value

f)-Compensation attached to actual value of loss / to the sum insured.

4 marks

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