KCSE Business Studies Topical Questions and Answers

Features of oligopoly

1/4/2022

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Features of oligopoly

Industry is dominated by few large firms.
There is interdependence between firms.
Products are usually.
Firms practice non price competition.
There is usually collusion in the industry.
There are barriers to entry.

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Outline five differences between a public limited company and a partnership

24/9/2021

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Differences between public ltd companies and partnerships

Public limited companies	Partnerships
Minimum number of people who form it is seven. No maximum	Minimum is two and maximum 20 and 50 for professional partnerships
Liability is limited to number of shares on his	For limited partnership, liability to one’s contribution, general partners have no limited liability
Shares / ownership / interest is freely transferable	Any change requires the concept of all partners
Raises capital through sell of shares	Raise capital through contribution by members
Management by the elected board of directors	Management by partners themselves
Enjoys continuous life/ not affected by death of a member	Death / bankruptcy / insanity of a member leads to dissolution
Has legal entity separate from members	Partnerships and members are seen as one owners

Outline five differences between a public limited company and a partnership

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Explain four ways through which a public limited company may be dissolved.

21/12/2020

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Explain four ways through which a public limited company may be dissolved.

Ways through which a public limited company may be dissolved include:

A resolution by the shareholders to dissolve the company. When there is a unanimous decision by the shareholders to wind up the company during the annual general meeting.
Change in the country’s law that renders the activities of the company illegal/unlawful. When the laws of a country bars certain activities that the company may have been involved in.
Inability to repay financial debts on infringement of stakeholders’ rights.
Amalgamations/mergers - a company may be dissolved if it combines with another and a new one replaces the one combining/creates a new entity.
Take overs/acquisition/absorption - a company may be dissolved if it is taken over by another/or by the government through acquisition of majority shares hence redirection of its activities/loss of identity.
Realization of sustained / continuous losses. A company may be dissolved when it makes losses continuously to the extent of not being able to meet its recurrent expenditure/insolvency.
Court order for infringing on the law/granted to a complaint raised by stakeholders/acting ultravires.
Completion/fulfilment of task/activity/objective (for which the company was formed) hence making its continued existence unnecessary.
Failure to commence business within one year after incorporation thus contravening the company’s act.

Explain four ways through which a public limited company may be dissolved.

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State four reasons for privatizing public corporations.

21/12/2020

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State four reasons for privatizing public corporations.

Reasons for privatizing public corporations.

To improve efficiency in their operations.
To generate revenue to the government through sale of shares and taxes.
To enhance competition.
To increase public participation in economic activities of the country.
To reduce government expenditure.
To comply with conditions set by development partners and international donor agencies.
To enable the government to concentrate on other state responsibilities.
To minimize political interference.

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Outline four features of a parastatal.

21/12/2020

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Outline four features of a parastatal.

Features of a parastatal include:

Provide essential services.
Not profit motivated.
Is formed by an Act of Parliament.
Is mainly funded by the government.
Is managed by government appointees.
Any surplus earned is surrendered to the government.
Has limited liabilities.
Attachment to a government ministry.
Can be dissolved only through an act of parliament.

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Name four documents that may be required by the registrar of companies in order to register a public limited company.

21/12/2020

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Name four documents that may be required by the registrar of companies in order to register a public limited company.

Documents that may be required by the registrar of companies in order to register a public limited company include:

Articles of Association.
Memorandum of Association.
Prospectus.
List of directors.
Declaration.
Statement signed by directors.

Name four documents that may be required by the registrar of companies in order to register a public limited company.

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State four benefits that a farmer may derive from being a member of a Producer Co-operative Society. (4 marks)

19/12/2020

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State four benefits that a farmer may derive from being a member of a Producer Co-operative Society.

Benefits that a farmer may derive from being a member of a producer co-operative society include:

May receive inputs e.g. fertilizer at fair prices.
The society may get better prices for the member’s produce.
May get transport facilities for produce to the market.
May get better storage facilities for the produce.
The society may grade, package and process the produce for the member.
May receive input on credit from the society.
Can acquire skills on better methods of production.
May get dividends earned on shares held.

State four benefits that a farmer may derive from being a member of a Producer Co-operative Society. (4 marks)

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Apart from selling shares, explain five sources of finance for a public limited company. (10 marks)

19/12/2020

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Sources of finance for a public limited company

Sources of finance for a public limited company apart from the sale of shares include:

Borrowing from financial institutions in the form of loans, bank overdraft and mortgage.
Trade credit.
Buying goods for re-sale on credit so as to pay at a later date
Hire purchase.
Buying goods and paying for them on installment basis.
Debentures.
Borrowing from members of the public for which interest is paid at a fixed rate and over a predetermined period of time.
Sale and leaseback.
Selling an asset like a building and then hiring it back for a specified period of time.
Retained profits.
Profits made are not shared out as dividends but ploughed back into the business.
Discounting bills of exchange.
Receiving payment from financial institutions at a discount against bills of exchange before their maturity.
Use of reserves / provisions.
The company may make use of funds set aside for depreciation, tax and bad debts to finance its day to day operations.

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Discuss circumstances under which a partnership may be dissolved.

17/12/2020

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Discuss circumstances under which a partnership may be dissolved.

Circumstances under which a partnership may be dissolved include:

Expiry of time or accomplishment of purpose. Where the partnership was formed for a definite time or a particular purpose, the expiry of time and accomplishment of purpose terminates the partnership.
Mutual agreement among partners - where the partners agree among themselves to terminate the partnership.
Bankruptcy of a general partner - where a court declares the value of one of the general partner’s property insufficient to settle his or her debts.
Change in law that makes the operations of the partnership illegal.
Permanent inability of a general partner to perform or fulfil his part of the partnership agreement either as a result of disease, insanity or death.
Internal dissension among partners - where partners disagree irreconciliably, then the partnership may be terminated.
Persistent losses in operation - where the business has continued to operate at a loss, then it is terminated.
Fraud, mistake or misrepresentation - where the partnership was formed under fraud, mistake or misrepresentation, a Court of Law may order its dissolution.

Discuss circumstances under which a partnership may be dissolved.

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Outline four circumstances under which a co-operative society may be dissolved.

16/12/2020

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Outline four circumstances under which a co-operative society may be dissolved.

Circumstances under which a co-operative society may be dissolved include:
by Government order

where the co-operative continuously make losses
where stipulated majority of members agree to dissolve it
by a court order
where the co-operative society has achieved objectives for which it was formed

Outline four circumstances under which a co-operative society may be dissolved.

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Describe five principles that distinguish co-operative societies from other forms of business organizations.

16/12/2020

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Describe five principles that distinguish co-operative societies from other forms of business organizations.

Principles that distinguish co-operative societies from other forms of business organizations include:
Democratic control. Decisions are made by members on a one-man-one-vote basis.
Voluntary membership:-members are affiliated to co-operatives freely and may also exit freely.
Political/religious neutrality. Co-operative societies are not supposed to favour, align or identify with any political or religious grouping.
Co-operation with other co-operatives. They do this in order to share ideas and experiences at different levels.
Limited interest on share capital. The capital paid is meant for running the society’s affairs rather than generating interest.
Promotion of education to members. The co-operatives are obliged to educate their staff. management and the members in general.
Repayment of dividends. They distribute their surplus on a prorate basis.
Offer of utmost service to members. They are formed to carter for members interests and welfare.
Limited number of shares to be held by any single member. This is to avoid dominance or control of the business by one or just a few members.

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Commodities A and B are substitutes. Using two diagrams, explain how an increase in the supply of commodity A will affect the equilibrium price and quantity demanded of commodity B.

16/12/2020

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Commodities A and B are substitutes. Using two diagrams, explain how an increase in the supply of commodity A will affect the equilibrium price and quantity demanded of commodity B.

State four circumstances under which one may decide to start a personal business.

16/12/2020

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State four circumstances under which one may decide to start a personal business.

Circumstances under which one would decide to start a personal business include:

Where there is need to create employment.
Where additional income is needed.
Where there is need to apply business skills acquired.
Where there is need to invest surplus hinds.
Where one has a business idea to implement.
where one wants to become his own boss
Where there is a market niche/gap
Where there is need to use one’s talents or hobbies
Where there is need to make use of space and time

State four circumstances under which one may decide to start a personal business.

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Give five reasons why the government may find it necessary to start a parastatal.

15/12/2020

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Give five reasons why the government may find it necessary to start a parastatal.

Reasons why the government may find it necessary to start a parastatal include:

To provide strategic goods and services
To increase revenue collection
To encourage import substitution industries
To encourage foreign investment
To reduce foreign influence
To address special social needs
To take care of sensitive ventures like fire arms, and printing of money
To take care of businesses that requires a large initial capital
To create more employment opportunities
To stimulate economic development
To provide essential goods and services at low costs.

Give five reasons why the government may find it necessary to start a parastatal.

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Explain five features of sole proprietorship form of business

14/12/2020

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Explain five features of sole proprietorship form of business

Features of sole proprietorship form of business

Owned /formed by in person who provides the capital/starts the business.
Faster decision making/ (ultimate) decision made by the proprietor/ alone since he/she does not need to consult/has no one to consult.
Has limited life as its existence depends on the hope of the owner
Business owner has unlimited capital/management skills
Owner bears all the risks/losses of the business (alone) since he /she has no one to share with
Business owner has unlimited liability since personal property/assets may be attached
Managed by the owner with /without assistance of family members/ employees/which is tiring/forced to work for long hours.
Sole trader /enjoys all the profits alone since he/she has no one to share with
Easy /simple formation as if requires few /no legal formality/might only require a trading license
Flexibility/adaptability to change/accept e.g. of change as explanation
Secrecy/ confidentiality of information/ operation / no other people have access
Not a legal entity as the owner and the business are treated as one/the same.

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Outline four benefits that accrue to the government as a result of privatization of public enterprises

14/12/2020

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Outline four benefits that accrue to the government as a result of privatization of public enterprises

Benefits of privatization of public corporations

Government obtains revenue from proceeds/ sale of shares
Offers opportunities for private citizens to participate in business
To enhance efficiency in the management
Reduce government expenditures
Obtain revenue from taxes
Attain foreign aid
Attract foreign investment

Outline four benefits that accrue to the government as a result of privatization of public enterprises

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Explain five features that differentiate a Public Limited Company from a partnership form of business. (10 marks)

13/12/2020

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Explain five features that differentiate a Public Limited Company from a partnership form of business.

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Outline four features of a Private Limited Company. (4 marks)

13/12/2020

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Outline four features of a Private Limited Company.

Features of a Private Limited Company.

Must have at least one director.
Shares not freely transferable.
Public not allowed to subscribe for shares/ shares not advertised, /no prospectus needed.
Has a minimum membership of two shareholders.
Can start trading on receipt of a certificate of incorporation.
Does not need to have the authorized minimum share capital before commencing operation.

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Explain five ways is which the Agriculture Finance Corporation(AFC),contribute to economic development in Kenya (10mks)

12/12/2020

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Explain five ways is which the Agriculture Finance Corporation(AFC),contribute to economic development in Kenya

Ways is which the Agriculture Finance Corporation(AFC) contribute to economic development in Kenya

Loans/ credit – give loans/ credit to farmers for crop/ livestock production/ farm development/ on easy terms/ specific purposes.
Training/education – organize training courses/ seminars/ workshops for farmers on farm management/
Advisory services- on farm management/agricultural improvement
Create employment – facilitate employment by stimulating growth in agricultural improvement.
Improving production - more / variety of products are produced / of improved quality/ by financing/ carrying out research in agriculture
Improved income by facilities growth in agricultural industry.
Earning foreign exchange through increased exports of agricultural goods
Generates government revenue through interests and on loans.
Channel for donor funds to finance agricultural projects

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Highlight four ways in which the running of public corporations may be improved. (4mks)

11/12/2020

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Highlight four ways in which the running of public corporations may be improved.

Four ways in which the running of a public corporation may be improved include

Ensuring that appointment for senior and technical posts are done on merit
Exercising the supervisory role of the government
Continuous training of staff for development
Setting performance targets to be achieved
Establishing incentive system for motivation
Creating public awareness
Restructuring the corporations ( retrenching)
Reduce policy interference
Reducing monopolistic tendencies

Highlight four ways in which the running of public corporations may be improved. (4mks)

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Outline five benefits that a Savings and Credit Co-operative society (SACCO) provides to its members.(10 marks)

10/12/2020

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Benefits that a Savings and Credit Co-operative society (SACCO) provides to its members.

Encourage members/help to save (big making regular contribution)
Provide loan facilities to members based on member’s contribution.
Members receive dividends based on their shares/they give dividends to their members.
Members are educated/advised on cooperative activities/their rights/their obligations.
Some SACCOS have front office banking facilities/front office services for their members.
They give interest to their members.
They charge low interest on loans.
They insure member’s contributions/members loans are written off on death.
They give loans on easy terms/conditions.
Members savings/new contribution is doubled upon death of a member.

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State three clauses found in the Memorandum of Association. (3 marks)

10/12/2020

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Clauses found in the Memorandum of Association

Clauses found in the Memorandum of Association include:

Name clause
Liability clause
Capital clause
Situation clause
Objects clause
Association and subscription clause
Declaration clause.

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State four advantages of operating a partnership form of business. (4mks)

6/12/2020

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Advantages of operating a partnership form of business.

Vertical Divider

There is possibility of raising more capital
Partners bring in different talents and skills/ specialization
Partners can share the work load
Where losses occur, partners share them
Decisions are discussed by partners before implementation/ better decision
Few legal requirements/easier to start

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Outline five reasons that may influence the government to start a parastatal. (10 marks)

5/12/2020

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Reasons that may influence the government to start a parastatal

To provide strategic goods and services.
To increase revenue collection.
To encourage import substitution industries/to discourage importation.
To encourage foreign investment.
To reduce foreign influence.
To address special social needs.
To take care of sensitive ventures.
To take care of business that requires a large initial capital.
To create employment.
To provide goods & services all over the country.
To stimulate economic development.
To provide essential goods and services at low cost.
To promote competition with private sector in security.
To provide goods and services with low returns (low profits).
To regulate business activities.

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Explain five circumstances under which a partnership may be dissolved. (10 marks)

4/12/2020

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Circumstances under which a partnership may be dissolved

Temporary partnership/(expiry of time / accomplishment of purpose / where the partnership was formed for a definite time /for a particular purpose) hence the expiry of time / accomplishment of purpose terminates the partnership
Mutual / voluntary agreement among partners / where the partners agree among themselves (to terminate the partnership), when they may have no alternative for whatever reason.
Bankruptcy! insanity of a partner where (a court declares) the value of one of the partner’s property insufficient to settle his or her debt. /due to loss of contractual capacity.
Change in law / government policy that makes the operation of the partnership illegal.
Permanent inability of a partner to perform / fulfill part of the partnership agreement either as a result of diseases / ill health / incapacitation.
Internal dissension /disagreement among partners / disagree irreconcilably then the partnership may be terminated.
Persistent losses in operation / where the business has continued to operate at a loss then it is terminated hence making it difficult to meet its financial obligations.
Court orders (where the partnership was formed under) due to fraud /mistake /misrepresentation /breach of law /partnership agreement court of law may order it dissolution.
Request by one /some partners to dissolve the partnership hence having to abide by their wish /granting their wish.
Withdrawal /admission of a partner which changes the status of the partnership.
Death of a partner which alters the composition of a partnership / which may necessitate a new agreement /arrangement.

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Features of oligopoly

Differences between public ltd companies and partnerships

Public limited companies

Partnerships

Explain four ways through which a public limited company may be dissolved.

State four reasons for privatizing public corporations.

Outline four features of a parastatal.

Name four documents that may be required by the registrar of companies in order to register a public limited company.

State four benefits that a farmer may derive from being a member of a Producer Co-operative Society.

Sources of finance for a public limited company

Discuss circumstances under which a partnership may be dissolved.

Outline four circumstances under which a co-operative society may be dissolved.

Describe five principles that distinguish co-operative societies from other forms of business organizations.

Commodities A and B are substitutes. Using two diagrams, explain how an increase in the supply of commodity A will affect the equilibrium price and quantity demanded of commodity B.

​​Related Business Studies Quiz and Answers on Forms of Business Units Form 2 Level

State four circumstances under which one may decide to start a personal business.

Give five reasons why the government may find it necessary to start a parastatal.

Explain five features of sole proprietorship form of business

Outline four benefits that accrue to the government as a result of privatization of public enterprises

Explain five features that differentiate a Public Limited Company from a partnership form of business.

Outline four features of a Private Limited Company.

Explain five ways is which the Agriculture Finance Corporation(AFC),contribute to economic development in Kenya

Highlight four ways in which the running of public corporations may be improved.

Benefits that a Savings and Credit Co-operative society (SACCO) provides to its members.

Clauses found in the Memorandum of Association

Advantages of operating a partnership form of business.

Reasons that may influence the government to start a parastatal

Circumstances under which a partnership may be dissolved

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Related Business Studies Quiz and Answers on Forms of Business Units Form 2 Level