KCSE Business Studies Topical Questions and Answers

List four factors that are likely to hinder economic development in Kenya.

5/11/2021

0 Comments

List four factors that are likely to hinder economic development in Kenya. (4mks)

Four factors that are likely to hinder economic development in Kenya.

Low level of savings which leads to low investment, low productivity and low income.
Political instability which may discourage potential investors from investing.
Poor natural resource endowments in Kenya where some places are deserts and have no minerals.
Poor set up of economic institutions - poorly structured financial market, poorly set commodity markets, poorly established labour and capital markets inhibit economic development. In Kenya, cash crop farmers suffer because of this problem. Their produce is collected rate from their farms, inputs are provided much later the onset of the planting season, credit is given after a lot of struggle by the farmer and proceeds of the farmer produce is delayed and in some cases embezzled.
Lack of skilled manpower- hindering the exploitation of available natural resources.
High rates of population growth - where much of the income that is generated goes into providing basic requirements of life rather than to production activities.
Cultural beliefs and attitudes - which may prevent people from adopting modern methods of doing things and hence hindering economic development.

0 Comments

Name four possible barriers to international trade

5/11/2021

0 Comments

Name four possible barriers to international trade. (4mks)

Four possible barriers to international trade.

Language barriers.
Political differences among nations.
Wars.
Trade laws and regulations in different countries hinder international trade.
Trade restrictions imposed by governments.
Differences in currencies.
Poor means of transport and communication.
Long distances.
Cultural differences.
Physical barriers e.g mountains, rivers, lakes and oceans
Ignorance

0 Comments

Outline four ways in which the Central Bank controls the operations of commercial banks

5/11/2021

0 Comments

Outline four ways in which the Central Bank controls the operations of commercial banks. (4mks)

Four ways in which the central bank controls the operations of commercial banks.

By licensing commercial banks/approves establishment of commercial banks and issues them with a license.
By regulating the rates of interest that commercial banks charge their customers for loans borrowed.
By determining the cash ratio which determines the commercial banks’ ability to create credit.
By determining the liquidity ratio of commercial banks- which may limit the commercial banks’ ability to create credit.
By controlling the establishment of branches of the banks.
By determining the minimum capital requirements for the establishment of commercial banks.
By requiring the commercial banks to deposit a certain percentage for their customer’s deposits in the central bank.
By requiring that commercial banks maintain an account in the central bank, which facilitates the clearing process.
By setting the margin requirement. The central bank does this by setting the security requirements for applying for loans.

0 Comments

List four advantages of credit sales to a seller

5/11/2021

0 Comments

List four advantages of credit sales to a seller. (4mks)

Four advantages of credit sale to a seller.

The seller is able to create goodwill with his customers.
Selling on credit increases the businessman’s profit due to increased sales.
Goods sold on credit are usually sold at high prices, meaning higher profits to the seller.
The seller is able to increase his sales volume.

0 Comments

State four consequences of eliminating wholesalers from the chain of distribution

5/11/2021

0 Comments

State four consequences of eliminating wholesalers from the chain of distribution. (4mks)

Four consequences of eliminating wholesalers from the chain of distribution.

Manufactures may be forced to open up additional distribution outlets, which might increase their costs thereby lowering their profits.
The removal of wholesalers will in effect decrease the cost of distribution, hence higher profits to the producers.
Producers will not specialize since they will also be carrying out the distribution function, hence they will not enjoy the economic advantage of specialization.
Prices may be unstable in their absence since they help in stabilizing prices by storing large quantities of the produce.
Producers may need to establish additional storage facilities, which were previously provided by wholesalers, hence requiring them to raise more capital.
Retailers will be forced to buy in bulk thereby requiring them to have more capital, which may not be available.
Retailers may be forced to pay cash thereby requiring them to increase their capital base.
Manufacturers may be forced to break bulk, since the retailers may not be able to buy in large quantities.
Retailer may be forced to establish warehouse, which would require additional investment.

0 Comments

Outline four main functions of an office in any business organization

5/11/2021

1 Comment

Outline four main functions of an office in any business organization. (4mks)

Four main functions of an office in any business organization.

Receiving and sending out information.
Sorting and dissemination of information/information is sorted out and passed on to the relevant members of staff.
Storing of information e.g in files, computer disks and other storage devices.
Reproduction of documents e.g printing, photocopying and duplication.
Safeguarding the organization’s property and recording its movement and usage.

1 Comment

Highlight four factors that may hinder the expansion of small scale business enterprises.

5/11/2021

0 Comments

Highlight four factors that may hinder the expansion of small scale business enterprises. (4mks)

Four factors that may hinder the expansion of small scale business enterprises

Inadequate capital may cause a business to remain small because without capital a business may not be able to expand.
Lack of entrepreneurial skills may hinder the expansion of the business.
Lack of adequate security may discourage businessmen from expanding their business to avoid incurring high losses in case of a robbery.
Low purchasing power of consumers/the size of market is small.
Employment of unskilled labour causes poor performance which leads to the stagnation of a business.
Small businesses face stiff competition from larger and well-established businesses forcing them to remain small.
Most small-scale businesses are located in rural areas, where the infrastructure is poor, a situation that hinder their expansion.
The subsistence lifestyle of consumers in rural areas leads to low business activity which inhibits the growth of the small businesses in the rural areas.
Poor lending policies.

0 Comments

State four limitations of billboards as a tool of product promotion.

5/11/2021

0 Comments

State four limitations of billboards as a tool of product promotion. (4mks)

Four limitations of billboards as a tool of product promotion.

They can be destroyed by weather, since they are exposed to the elements of nature.
They can be vandalized, since no security is provided for them.
They are not useful to the blind persons since they can neither see nor read the message.
They can be ignored since they are silent.
The do not target a particular group of consumers.
They are expensive to erect and maintain.
They may cause obstructions to motorists if they are not well erected.

0 Comments

Outline four reasons that have led to the growth of the savings and credit Co-operative Societies in Kenya.

5/11/2021

0 Comments

Outline four reasons that have led to the growth of the savings and credit Co-operative Societies in Kenya. (4mks)

Four reasons that have led to the growth of the savings and credit co-operative societies in Kenya.

Because they enable people to save according to their abilities
They offer different types of loans to meet the needs of the members.
They charge relatively low rates of interest for loans borrowed.
They offer easy lending conditions with few formalities involved in the application for the loan.
The government supports their establishment so as to empower the people.
The members enjoy profits made by the co-operative in terms of dividends.
Members have a sense of ownership of the co-operative since they manage it themselves.
A loan is written off in case a member dies before he is through with repayments, unlike the case with other financial institutions, which will continue to demand payment.
The co-operative give the beneficiaries double a member’s savings if he dies while still a member.

0 Comments

Highlight four benefits that may be derived from an efficient road transport system in the country.

5/11/2021

0 Comments

Highlight four benefits that may be derived from an efficient road transport system in the country. (4mks)

Four benefits that may be derived from an efficient road transport system in the country.

Workers are able to get to work and back to their homes in good time.
Ease in the delivery of raw materials to industries and finished goods to the market.
Reduced cost of transportation, which may lead to a decrease in the price of goods.
Low maintenance costs of motor vehicles since the vehicles do not break down oftenly.
Easy access to Auxiliary services, like banks and insurance.
Buyers and sellers are able to move easily from one market to another.
Goods can easily be moved from an area with excess supply to an area with a shortage.
Helps in the stabilization of prices since goods are availed in the market at all times.
Help to ensure that there is a steady supply of goods in the market at all times.
Helps to widen the market since many parts of the country are accessible.

0 Comments

State four problems the consumers encounter in the process of satisfying their wants

5/11/2021

0 Comments

State four problems the consumers encounter in the process of satisfying their wants. (4mks)

Problems the consumer encounter in the process of satisfying their wants.

Human wants are un-limited/endless and cannot be satisfied with the limited natural recourses. Hence, consumers are faced with the problem of choice.
The recurrent nature of their wants. Hence, the consumer has to keep satisfying them as they arise.
The changing nature of wants renders the consumer unable to satisfy new emerging wants.
The complementary nature of wants makes it not easy to satisfy one want leaving out the other to be satisfied later .
The competitive nature of some human wants makes it difficult for the consumer to decide which want to be satisfied first and which will follow.
Limited resources do not match the many human wants/few resources available to satisfy the many wants.
Increases in prices of goods lower the purchasing power of many consumers.

0 Comments

Name four ways of sending letters through the post office

5/11/2021

0 Comments

Name four ways of sending letters through the post office. (4mks)

Four ways of sending letters through the post office

Ordinary post
Registered mail.
Express mail for faster delivery.
Poste restante
Business reply service
Telex
E-mail/E-letter
Speed post
Fax

0 Comments

Indicate with a tick in the relevant column whether each of the following business transactions will increase or decrease the capital account balance.

5/11/2021

0 Comments

Indicate with a tick in the relevant column whether each of the following business transactions will increase or decrease the capital account balance. (3mks)

(a) Increase
(b) Decrease
(c) Decrease

0 Comments

On 1 May 2012, Nyaboke Traders had sh.160, 000 in cash and sh. 30, 000 bank overdraft. During the month, the following transactions took place.

5/11/2021

1 Comment

On 1 May 2012, Nyaboke Traders had sh.160, 000 in cash and sh. 30, 000 bank overdraft. During the month, the following transactions took place.

May 20 received a cheque for sh. 90, 000 from a debtor
25 Paid telephone bills sh. 5, 000 in cash
30 Withdrew Sh. 40, 000 from bank for office use
From the above information prepare Nyaboke Trader cash book and balances it off. (4mks)

Solution

1 Comment

The following balances were extracted from the books of Anyang wholesalers for the year ended 31 December, 2010

5/11/2021

0 Comments

The following balances were extracted from the books of Anyang wholesalers for the year ended 31 December, 2010

Sh.
Sales………………………………………800, 000
Purchases…………………………………420, 000
Opening stock (1.1.2010) …………90, 000
Closing stock (31.12.2010)……………50, 000
Debtors……………………………………130, 000
Creditors…………………………………90, 000

Calculate (4mks)

(a) Margin

(b) Current ratio

(c) Rate of turnover

0 Comments

The following balances were obtained from the books of Ole Nkanai Traders for the month ended 29 February 2012.

5/11/2021

0 Comments

The following balances were obtained from the books of Ole Nkanai Traders for the month ended 29 February 2012.

Sh.
Purchases………… 24, 000
Sales……………… 420, 000
Equipment………… 120, 000
Furniture………… 300, 000
Debtors………… 60, 000
Creditors……… 20, 000
Expenses……… 140, 000
Capital………… 420, 000

Prepare a Trial balance of Ole Nkanai Traders for the month ended 29 February 2012. (5mks)

0 Comments

Indicate the book of original entry used in recording each of the following transactions of Alex Traders.

5/11/2021

0 Comments

Indicate the book of original entry used in recording each of the following transactions of Alex Traders. (4mks)

(a) Purchase Journal
(b) Sales Journal
(c) Purchase Return Journal
(d) Sales Return Journal

0 Comments

The average consumer price for a tin of maize for various years in Trans-mara is shown in the table below.

5/11/2021

0 Comments

The average consumer price for a tin of maize for various years in Trans-mara is shown in the table below.

The average consumer price for a tin of maize for various years in Trans-mara is shown in the table above.

Calculate the consumer index using year 2008 as the base year. (4mks)

0 Comments

Outline four negative effects of a high taxation in an economy

5/11/2021

0 Comments

Outline four negative effects of a high taxation in an economy. (4mks)

Negative effects of high taxation in an economy

Level of savings will go down.
Level of investments will go down
Level of production will go down.
It acts as a disincentive to hard work.
Level of foreign capital inflows will go down since many foreign investors will shift their production units to other countries with lower tax regimes.
The level of smuggling may increase as importers try to evade the tax.
The increased cost of production may lead to increases in prices, which result in inflation.

0 Comments

State four factors that encourage entrepreneurship in Kenya

5/11/2021

0 Comments

State four factors that encourage entrepreneurship in Kenya (4mks)

Factors that encourage entrepreneurship in Kenya

Government support/favourable government policies/funding
Entrepreneurial culture /cultural practices that encourage entrepreneurship.
Availability of capital/loans/credit facilities
Political stability/non political interferences
Availability of market/market information
Good infrastructure
Availability of security.
Health/fair competition.
Need for self-actualization/fulfillment.
Need to exercise power.
Need for self-reliance.
Good governance.
Availability of technology
Employment creation for self/others.
Training/Education in entrepreneurship.
Presence of role models.
Need for individual security against old age, sickness, or hardship.
Need for recognition by society/peer

0 Comments

Outline four circumstances that lead to a trader declining in giving credit facilities to customers

5/11/2021

0 Comments

Outline four circumstances that lead to a trader declining in giving credit facilities to customers. (4mks)

Circumstances leading to a trader declining in giving credit facilities to customers

Incase of unreliable customers/uncredit worthy customers.
Where stock level is too low.
Where customer has doubtful character.
Where customer order for goods beyond the ability of the seller.
When it is a business policy.
Where customers provide for longer credit period.
When the rate of stock turn-over is high

0 Comments

The Manager of ENOOSAEN Sugar Company has vowed improve the company’s yield by 60% through labour motivation. State four ways by which he can achieve this.

5/11/2021

0 Comments

The Manager of ENOOSAEN Sugar Company has vowed improve the company’s yield by 60% through labour motivation. State four ways by which he can achieve this.

Ways of labour motivation

Provision of adequate facilities.
Ensure proper remuneration.
Offer fringe benefits e.g lunch, trips etc.
Encourage positive competition.
Provide recreational facilities.
Training of workers.
Promote good working conditions.
Involve workers in decision making process.
Allocate duties according to areas of specialization.
Promote workers on merit.
Promote awards/rewards/gifts for good work attained.
Paying the workers promptly.
Provide them with job security.
Encourage team work.

0 Comments

Explain five factors that influence the level of natural development of a country

25/9/2021

0 Comments

Factors that influence level of development of a country

Labour supply
A country with well skilled and knowledgeable labour will be more developed than a country with semi skilled labour
Capital
Most developed countries have large pool of capital. Most countries with large pool of capital will be able to use it to develop all sectors in a country
Entrepreneurship
A country with good management and coordination of the other factors of production will lead to high and effective production hence it will be highly developed
Land
These are the resources a country has. A country with a lot of natural resources will utilize them and hence developed
Level of technology
A country with latest aid modern technology will produce modern items hence have large market leading to development
Political stability
This is the main key point in a country that is politically stable will attract many industries both locally and foreign investors hence this will lead to development

0 Comments

Describe the importance of the structure for economic growth

25/9/2021

0 Comments

Importance of age structure for economic growth

Individuals do not contribute equally to production
Supply of labour depends on the proportion of the workforce
Economically active in population depend on the age structure
Age structure assist the government in planning
The proportion of dependants influence the pace of economic growth

Describe the importance of the structure for economic growth

0 Comments

Explain five short comings of Internet services

25/9/2021

0 Comments

Shortcomings of internet services

Information may not be secure since many people can access it (hacking)
Information can be diverted by competitors who know the password
Computer may be invaded by computer virus hence loosing all the information
Can be used to transmit harmful information e.g. terrorism, drugs e.t.c
It may be slow or taking long to access services
Computers have to go through a mass of information
One needs to be computer literate
Encourages pornography

0 Comments

<<Previous

Forward>>

​List four factors that are likely to hinder economic development in Kenya. (4mks)

Name four possible barriers to international trade. (4mks)

Outline four ways in which the Central Bank controls the operations of commercial banks. (4mks)

​List four advantages of credit sales to a seller. (4mks)

State four consequences of eliminating wholesalers from the chain of distribution. (4mks)

​Outline four main functions of an office in any business organization. (4mks)

Highlight four factors that may hinder the expansion of small scale business enterprises. (4mks)

State four limitations of billboards as a tool of product promotion. (4mks)

​Outline four reasons that have led to the growth of the savings and credit Co-operative Societies in Kenya. (4mks)

Highlight four benefits that may be derived from an efficient road transport system in the country. (4mks)

​State four problems the consumers encounter in the process of satisfying their wants. (4mks)

​Name four ways of sending letters through the post office. (4mks)

​Indicate with a tick in the relevant column whether each of the following business transactions will increase or decrease the capital account balance. (3mks)

​On 1 May 2012, Nyaboke Traders had sh.160, 000 in cash and sh. 30, 000 bank overdraft. During the month, the following transactions took place.

Solution

​The following balances were extracted from the books of Anyang wholesalers for the year ended 31 December, 2010

​Calculate (4mks)

(a) Margin

​(b) Current ratio

(c) Rate of turnover ​

​The following balances were obtained from the books of Ole Nkanai Traders for the month ended 29 February 2012.

​Prepare a Trial balance of Ole Nkanai Traders for the month ended 29 February 2012. (5mks)

Indicate the book of original entry used in recording each of the following transactions of Alex Traders. (4mks)

​The average consumer price for a tin of maize for various years in Trans-mara is shown in the table below.

​Calculate the consumer index using year 2008 as the base year. (4mks)

​Outline four negative effects of a high taxation in an economy. (4mks)

​State four factors that encourage entrepreneurship in Kenya (4mks)

Outline four circumstances that lead to a trader declining in giving credit facilities to customers. (4mks)

​The Manager of ENOOSAEN Sugar Company has vowed improve the company’s yield by 60% through labour motivation. State four ways by which he can achieve this.

Categories

Archives

List four factors that are likely to hinder economic development in Kenya. (4mks)

List four advantages of credit sales to a seller. (4mks)

Outline four main functions of an office in any business organization. (4mks)

Outline four reasons that have led to the growth of the savings and credit Co-operative Societies in Kenya. (4mks)

State four problems the consumers encounter in the process of satisfying their wants. (4mks)

Name four ways of sending letters through the post office. (4mks)

Indicate with a tick in the relevant column whether each of the following business transactions will increase or decrease the capital account balance. (3mks)

On 1 May 2012, Nyaboke Traders had sh.160, 000 in cash and sh. 30, 000 bank overdraft. During the month, the following transactions took place.

The following balances were extracted from the books of Anyang wholesalers for the year ended 31 December, 2010

Calculate (4mks)

(b) Current ratio

(c) Rate of turnover

The following balances were obtained from the books of Ole Nkanai Traders for the month ended 29 February 2012.

Prepare a Trial balance of Ole Nkanai Traders for the month ended 29 February 2012. (5mks)

The average consumer price for a tin of maize for various years in Trans-mara is shown in the table below.

Calculate the consumer index using year 2008 as the base year. (4mks)

Outline four negative effects of a high taxation in an economy. (4mks)

State four factors that encourage entrepreneurship in Kenya (4mks)

The Manager of ENOOSAEN Sugar Company has vowed improve the company’s yield by 60% through labour motivation. State four ways by which he can achieve this.