KCSE Business Studies Topical Questions and Answers

Amina operates a fleet of Public Service Vehicles (PSVs).Explain five possible risks she can insure her business against.

16/12/2020

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Amina operates a fleet of Public Service Vehicles (PSVs).Explain five possible risks she can insure her business against.

Possible risks that Amina can insure her business against include:

She can insure vehicles and other assets, against accidents.
Fire — vehicle and other assets can be insured against fire.
Cash in transit — can insure against loss of cash in transit to and from the bank.
Pilferage Can insure against loss of cash and other valuables through theft by employees.
Occupational hazards — employees can be insured against physical harm while on duty.
Third party claims — can insure against injuries to third parties emanating from the fleet.
Theft and burglary to cover the vehicles and other property against unauthorised or forceful access to the property.
Loss of profit and consequential loss due to business interruptions.

Amina operates a fleet of Public Service Vehicles (PSVs).Explain five possible risks she can insure her business against.

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Discuss five benefits that a customer may get by using Automated Teller Machines (ATMs) for financial transactions.

16/12/2020

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Discuss five benefits that a customer may get by using Automated Teller Machines (ATMs) for financial transactions.

Benefits that accrue to a customer who uses Automat teller machine ATMs include:

Customer can withdraw and deposit money at any time.
Customer can pay utility bills through the ATMs.
Fees charged FOR withdrawal is low compared to over-the-counter with drawls.
ATMs may be found even where banks are non-existent
The customer has a pin number which guarantees confidentiality.
Customer can use it to monitor his transactions with the bank by getting mini-statements.
Customers can deposit money or cheques at any time since it offers a twenty-four hour service.
Customers can make interbank withdrawals by use of visa cards.
ATM cards are visible and very easy to carry around.

Discuss five benefits that a customer may get by using Automated Teller Machines (ATMs) for financial transactions.

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Explain five factors that an entrepreneur would consider when evaluating a business idea.

16/12/2020

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Explain five factors that an entrepreneur would consider when evaluating a business idea.

Factors that an entrepreneur would consider when evaluating a business idea
include:

The profit margin to be earned from the investment. There should be a reasonable profit from the investment in order to cover all the operational expenses and get surplus.
Existing attitudes, practices and beliefs of the target market. The new product, service or business idea must be in line with the people’s attitudes, practices and beliefs if it has to be accepted and hence marketed.
Availability of appropriate technology. The technology to be used in producing the product or offering the service should be efficient and cost — effective.
Size and availability of the market.
Possibly of pre-testing (trial use)Jt should be affordable to allow customers to try out the new product first without having to purchase it and get feedback from them.
Availability of an effective channel of distribution. This will ensure the product is available ¡n the market do that customers buy it when they decide to.
Ability of the product to satisfy the immediate need of the buyer. The new product must be of tangible or felt benefit to the buyer hence making it very attractive.
Ease of usage. The new product or service should be easy for the buyers to understand and use since they may fail to buy the product if it is complex and difficult to use.
The level of competition. The entrepreneur should look at the systems used by the competitors and strategise accordingly. ‘
The payback period. This should be reasonable to allow the investor break even and recoup the capital invested.
The risks involved. These should be manageable and minimal to avoid unnecessary losses.

Explain five factors that an entrepreneur would consider when evaluating a business idea.

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Discuss five problems that a country may face when measuring her national income using the output approach.

16/12/2020

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Discuss five problems that a country may face when measuring her national income using the output approach.

Problems that may be faced when measuring national income using the output approach include:

Inadequate or incomplete data — difficulties will be experienced in valuation due to unavailability or inaccuracy of output figures.
Determination of goods and services to be included — difficulties regarding which goods and services to include in the calculation of national income.
Subsistence sector — problem arises in the valuation of output of the subsistence sector since the goods are never priced.
Value of stock — There is a problem on what to assign to the stock of goods to be included in the national income, whether it should be value at cost or at market price.
Price fluctuation — prices of goods may vary from time to time hence there is a problem of deciding whether to attach historical cost or market price.
Double counting. it may be difficult to distinguish between primary and intermediate output or between intermediate and final output.
Lack of qualified personnel who may be to compute and even collect data.
Inadequate finance capital equipment and technology to be used when gathering and compiling data.

Discuss five problems that a country may face when measuring her national income using the output approach.

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The information in the table below relates to product ZX whose unit price in the market is Shs 20.00.

16/12/2020

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The information in the table below relates to product ZX whose unit price in the market is Shs 20.00.

(i) Determine total costs, total average costs, and marginal costs at each level of output. (8 marks)
(ii) Determine the units to be produced in order to maximize profits.(2 marks)

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Explain five benefits that a member country may get from economic integration.

16/12/2020

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Explain five benefits that a member country may get from economic integration.

Benefits that a member country may get from economic integration include:

Large market — The country gets additional market to sell her goods and services.
Promotion of peace — member countries have a deeper understanding of each other thus enhancing peace.
Increased mobility of factors of production. Labour, entrepreneurship and capital will to and from other countries with minimum restriction.
Improved infrastructure — There is likelihood that member countries will improve their infrastructure.
Opportunity to deal with any deficits in production — Member countries can get what they don’t have from other countries.
Increased variety of goods and services — due to increased range of gods at the disposal of the citizens of the member countries, they are able to satisfy varied needs since they have a wider choice.
Shared research information and common services — This reduces the cost of doing business and improves production by eliminating duplication.
Creation of employment. This is a result of increased economic activity.
Encourages specialization. Member countries concentrate on what they can produce better.
Increased economic bargaining power, This may lead to better balance of payment and terms of trade.

Explain five benefits that a member country may get from economic integration.

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Explain three factors that should be considered when choosing a means of transport.

16/12/2020

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Explain three factors that should be considered when choosing a means of transport.

Factors that should be considers in the choice of a means of transport include:

The nature of the commodity to be transported .Some goods are such that they can only be transported using a particular means of transport.
Cost — the commodity to be transported should have a sale value that is able to meet the cost of the means of transport chosen.
Urgency/speed — how urgently the commodity is required at the destination often dictates the means of transport chosen.
Reliability. Chose a means that is certain to deliver without fail.
The geographical distance to be covered. Some means of transport may not take goods to faraway places while some are not convenient over short distances.
Security. Chose a means that is less prone to damage, loss or theft.
Flexibility. Chose a means that is able to deliver door to door services.

Explain three factors that should be considered when choosing a means of transport.

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The following balances were extracted from the books of Kl00 Traders for the year ended 30th June 2008.

16/12/2020

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The following balances were extracted from the books of Kl00 Traders for the year ended 30th June 2008.

Additional information:
(i) Stock on 30th June 2008 was valued at shs 120,000.
Prepare:
(i) Trading, Profit and Loss accounts for the year ended 30th June 2008. (9 marks)
(ii) Balance sheet as at 30th June 2008. (5 marks)

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Explain five ways of making face-to-face communication effective.

16/12/2020

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Explain five ways of making face-to-face communication effective.

Ways of making face to face effective include:

Clarity of the message so as to avoid misunderstanding and ambiguity.
Use of non-verbal cues to clarify verbal messages.
Communicating parties being close to each other
Communicating parties use of a common language thus enhancing understanding of the message.
Making the message concise and brief to avoid unnecessary detail.
Good listening and being attentive
Positive attitude between the communicating parties
Use of simple language and non technical terms to make it easy for the receiver to understand.
Courtesy and respect between the sender and the receiver to avoid hostilities.
Tone variation to break monotony and sustain interest

Explain five ways of making face-to-face communication effective.

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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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Explain five negative effects that inflation may have on the economy of a country.

16/12/2020

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Explain five negative effects that inflation may have on the economy of a country.

Socio-political unrest. Generally people are unhappy and this may bring conflict, tension andpolitical unrest due to high cost of living.
Worsening balance of payment

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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.

The diagram below represents the long-run equilibrium of a firm under monopolistic competition. Name the curves represented by the letters a, b, c, and d.

16/12/2020

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The diagram below represents the long-run equilibrium of a firm under monopolistic competition.Name the curves represented by the letters a, b, c, and d.

Name the curves represented by the letters a, b, c, and d.
(i) a is
(ii) b is
(iii) c is
(iv) d is

The curves represented are:

a is marginal cost curve
b is average cost curve
e is average revenue curve/demand curve
d is marginal revenue curve.

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Highlight four challenges that a person may encounter when using a cellphone (mobile phone).

16/12/2020

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Highlight four challenges that a person may encounter when using a cellphone (mobile phone).

Challenges that may be faced when using a cell-phone (mobile phone) include:

May be damaging to the ears.
Are relatively expensive.
Calls or messages sent may be tapped.
Its use may be limited where there is lack of network.
May not be used under certain circumstances e.g. banking halls, public service
vehicles etc.
Possibility of loss of handset to thieves
Relatively expensive to operate
Requires constant charging
Prone to misuse
May experience network congestion

Highlight four challenges that a person may encounter when using a cellphone (mobile phone).

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Outline five measures that a manager can take to improve the working environment in the office.

16/12/2020

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Outline five measures that a manager can take to improve the working environment in the office.

Measures that a manager can take to improve the working environment in the office include:

Provision of proper and adequate lighting.
Maintaining tidiness in the office.
Provision of adequate space for working.
Provision of proper ventilation. .
Provision of relevant and adequate furniture and equipment.
Beautifying the office to give it a pleasant appearance.
Provision of smoking zones
Discouraging unnecessary noise
Provision of adequate equipment and furniture
Provision of welfare facilities
Provision of special facilities for the handicapped.
Provision of safety measures and gadgets

Outline five measures that a manager can take to improve the working environment in the office.

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Highlight four ways in which a business idea can be implemented.

16/12/2020

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

Ways in which a business idea can be implemented include:

Creating a new product.
Improving on an existing product.
Improving the process of production.
Improving the marketing strategies.
Offering unique services.
Improving the quality of services
Improving the quantity of goods
Expanding the range of services offered.

Highlight four ways in which a business idea can be implemented.

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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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The following information was extracted from the books of Helen Traders;

16/12/2020

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The following information was extracted from the books of Helen Traders;

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The diagram below represents the relationship between population and income per capital.

16/12/2020

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The diagram below represents the relationship between population and income per capita.

State what is represented by P and S axes, and letters R and Q.
(i) P(axis) .
(ii) S (axis) .
(iii) R
(iv) Q

The letters represent. ‘

P Income per capita
S Population
R Under population
Q Optimum population

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State four reasons why flower exporters would transport their produce by air rather than by sea.

16/12/2020

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State four reasons why flower exporters would transport their produce by air rather than by sea.

The flower exporter would choose air transport over sea due to the following reasons:

Air transport is faster than sea transport.
Flowers and perishable require faster means.
Flowers have a very high per unit value
Security of air transport is relatively high.
Flowers are light in weight
Flowers are not bulky.

State four reasons why flower exporters would transport their produce by air rather than by sea.

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State four services that a wholesaler may offer to a manufacturer.

16/12/2020

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State four services that a wholesaler may offer to a manufacturer.

Services that a wholesaler may offer to a manufacturer include:

Links the manufacturer with the retailers.
Breaks bulk on behalf of manufacturer.
Provides storage on behalf of manufacturer.
Provides working capita! when they pay for goods.
Assists in the distribution of goods.
Promotes the products on behalf of the manufacturer.
Relieves the manufacturer of risks like price fluctuations,expiry of goods offers valuable information about the goods

State four services that a wholesaler may offer to a manufacturer.

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State four problems associated with development planning.

16/12/2020

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State four problems associated with development planning.

Problems associated with development planning include: Inadequate data

Inadequate funds
Inadequate supply of specialists
Political instability/conflicts
Conflict of interests
Inaccurate data
Overambitious plans
Natural catastrophes
Lack of political goodwill

State four problems associated with development planning.

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Outline four ways in which government expenditure may stabilize the economy of a country.

16/12/2020

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Outline four ways in which government expenditure may stabilize the economy of a country.

Ways in which government expenditure stabilizes the economy of a country include:

Provision of security - This creates an enabling environment for economic activities.
Creation and maintenance of administrative departments. These are created for effective operation of a country’s economy.
Social services - This enhances the welfare of the population for effective participation in economic activities.
Spending on infrastructure - It improves efficiency in production and distribution of goods and services in the economy.
Advancement of non-interest earning capital to entrepreneurs during economic recess.
Provision of basic goods and services through subsidies
Promoting local industries by giving them incentives.

Outline four ways in which government expenditure may stabilize the economy of a country.

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The terms capital employed, working capital, owner’s equity and borrowed capital are types of capital found in a business. Match each of the statements given below with the relevant type of capital.

16/12/2020

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The terms capital employed, working capital, owner’s equity and borrowed capital are types of capital found in a business. Match each of the statements given below with the relevant type of capital.

Matching statements on capital with types of capital

Owner’s equity
Working capital
Borrowed capital

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Outline the difference between cash and credit transactions.

16/12/2020

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Outline the difference between cash and credit transactions.

Difference between cash and credit transactions: .

In a cash transaction, both money and goods exchange hands between the buyer and the seller immediately while in a credit transaction, the transfer of goods and payment take place at different times.
Cash transactions require the use of a cash sale receipt while credit transactions rcqu8ire the use of an invoice.

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Amina operates a fleet of Public Service Vehicles (PSVs).Explain five possible risks she can insure her business against.

Discuss five benefits that a customer may get by using Automated Teller Machines (ATMs) for financial transactions.

Explain five factors that an entrepreneur would consider when evaluating a business idea.

Discuss five problems that a country may face when measuring her national income using the output approach.

The information in the table below relates to product ZX whose unit price in the market is Shs 20.00.

Explain five benefits that a member country may get from economic integration.

Explain three factors that should be considered when choosing a means of transport.

The following balances were extracted from the books of Kl00 Traders for the year ended 30th June 2008.

Explain five ways of making face-to-face communication effective.

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

Explain five negative effects that inflation may have on the economy of a country.

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

The diagram below represents the long-run equilibrium of a firm under monopolistic competition.Name the curves represented by the letters a, b, c, and d.

Highlight four challenges that a person may encounter when using a cellphone (mobile phone).

Outline five measures that a manager can take to improve the working environment in the office.

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

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

The following information was extracted from the books of Helen Traders;

The diagram below represents the relationship between population and income per capita.

State four reasons why flower exporters would transport their produce by air rather than by sea.

State four services that a wholesaler may offer to a manufacturer.

State four problems associated with development planning.

Outline four ways in which government expenditure may stabilize the economy of a country.

The terms capital employed, working capital, owner’s equity and borrowed capital are types of capital found in a business. Match each of the statements given below with the relevant type of capital.

Outline the difference between cash and credit transactions.

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