KCSE Business Studies Topical Questions and Answers

Explain five features that are common to underdeveloped countries. (10 marks)

12/12/2020

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Features that are common to underdeveloped countries

Features of under development include:

High population growth - the growth rate of population is higher than output.
Dominant large subsistence sectors - traditional subsistence sector such as agriculture tend to dominate the economies.
High level of poverty - large proportion of citizens live below the poverty line.
Low level of technology - due to lack of capital to acquire modem technology leading to low quantity/quality of output.
Disparity in income distribution - much of the wealth is in the hands of few individuals while majority are poor.
Low levels of savings - due to low per capita income leading to low investment.
Under utilization of natural resources - natural resources remain under exploited due to lack of capital / appropriate technology / skills/knowledge.
Low levels of investment due to limited markets/low savings/capital.
Poor governance - due to corruption/embezzlement/mismanagement of resources/misappropriation/lack of transparency/accountability.
Limited market/low demand - due to low levels of income.
High rates of unemployment - due to low levels of economic activities.
Negative social/cultural practices - which hinders production /consumption.
High levels of illiteracy - leading to ignorance/limited exposure.

features that are common to underdeveloped countries

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Explain five benefits which may accrue to Kenya by being a member of the African Development Bank (AFDB). (10 marks)

12/12/2020

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Benefits which may accrue to Kenya by being a member of the African Development Bank (AFDB)

Benefits that Kenya may enjoy by being a member of the African Development Bank (ADB/AFDB) include:

The country will obtain loans/credit for economic /social advancement/development.
Kenya will get technical assistance /expert advice/consultancy to strengthen and execute development programmes.
Kenya will get assistance in policy coordination / development formulation for effective implementation of projects.
The country will get technological assistance to utilize its economic resources.
The country will enjoy cooperation/support from regional economic institutions in Africa/internationally.
The country will gain from capital funding for public/private investment that boost development.
Promote better/effective use/management of funds/resources/accountability through oversight/monitoring by AFDB agencies.
Boosts the country’s credibility/image/credit standing - thus enabling it access more funds (from international lenders/development partners) since AFDB can guarantee the country for funding.
Kenya can get international platform/opportunity /forum - to promote its development agenda.
Cheap affordable credit/easy terms - due to low interest rates/longer repayment period.

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Explain five advantages of government involvement in business. (10 marks)

12/12/2020

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Advantages of government involvement in business

Advantages of government involvement in business include:

Provision of essential services/good at fair prices/affordable/reasonable.
Provision of large capital investment - undertake ventures that require large sums which private sectors may not be able to raise / without which development would be minimal.
Protection of citizens - from exploitation/malpractice by businesses.
Stimulation of economic development - by developing social amenities/infrastructure roads / injecting funds into economy through development projects.
Creation of employment - to create jobs for its citizens to earn a living/improve their standard of Living.
Income generation - to increase government revenue through licensing/taxation/to finance public expenditure.
Stabilization of the economy through regulation/market intervention.
Promotes equity/fairness in the distribution/use of resources.
Control use of resources through conservation/legislative measures / to ensure their sustainability.
Maintenance of law/order - for smooth operations of a country’s affairs.
Promotion of best practices - through encouraging adoption of ICT/good governance/social programmes/inclusivity.
Promotes investment in the country by creating an enabling environment.
Promotes country’s identity/image - through cultural programmes /branding initiatives

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Explain five trends in office management. (10 marks)

12/12/2020

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Trends in office management

Trends in office management:

Location - Organizations tend to move away from congested town centres to pen-urban areas/outskirts.
Use of modern equipment/computer/automation - organizations have adopted modern equipment / computers for efficiency to make work easier.
Open office layout /landscaped - adopted to facilitate supervision and economize on floor space/improve ambiance/comfort in the office.
Engagement of multi skilled staff able to carry out different tasks/ to save on labour costs! wage bill.
Innovative ways of motivating staff e.g.. tours, meals at work
Capacity building to develop staff skills.
Time management - use of biometric clocking system to control staff movement.
Customer care services/desk - to enhance customer satisfaction.
HIV/AIDs awareness/policy to sensitize employees/ avoid discrimination.
Stress management - to promote good health/coping of the work place.
Corporate social responsibility - to give back to the community.
Use of name tags/badges for identification of employees.

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Explain five methods of determining the price of a product other than price control. (10 marks)

11/12/2020

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Methods of determining the price of a product other than price control

Five methods of determining the price of a product other than price control:

Bargaining/Haggling - terms of exchange is negotiated /argued/debated between buyers and sellers.
Demand and supply/price mechanism - Interactions between forces of demand and supply.
Auction - prices determined by the highest bidder.
Tendering - prices determined by the lowest bidder who meets the required specifications.
Price fixing/ retail price maintenance / recommended retail price - as producers / manufacturers / producer agree on the price of commodities.
Prices collusion - where different market players (such as sellers/buyers) conspire to fix the price.
Taxation/subsidies - which will influence the selling/buying price.
Private treaty - sale of property at a price agreed on by the seller and buyer without an intervening agency.

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The following trail balance relates to Chui Traders as at 31st December, 2014.

11/12/2020

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The following trail balance relates to Chui Traders as at 31st December, 2014.

Required
Prepare Trading, Profit and Loss Account. (10 marks)

Expected Response

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Explain five features of human wants. (10 marks)

11/12/2020

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Features of human wants

Features of human wants:

They are numerous and unlimited - when one is satisfied another crops up to take its place/begin at birth and end at death.
They continually change with time, age and gender. What is required when it is cold may not be the same as what is required when it is hot.
They arc habit forming - once an individual develops taste for a commodity he/she tends to use it over and over again.
Require resources - limitation in resources required means only a few human wants are fulfilled/require resources in order for them to be satisfied.
They are universal/common to all human beings - all human beings need goods and services for existence though quantities may vary.
They are competitive - wants compete for attention each yearning to be satisfied.
They vary in intensity - urgency/some wants are more felt than others e.g. Basic wants/some may not be postponed.
They are complimentary - satisfaction of one creates a second derived from the first. e.g. for the second to be satisfied, it requires to be complemented by the first while others are satisfied jointly.
Insatiable - wants cannot be fully satisfied.
Recurrent/repetitive - once satisfied they are felt again.

The following information was extracted from the books of Mamboleo Traders in the month of September, 2014.

11/12/2020

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The following information was extracted from the books of Mamboleo Traders in the month of September, 2014.

September 1 Had cash in hand, Shs 15,500 and a bank overdraft of Shs 9,700.
September 3 Bought goods for sale Shs 12,300 on credit.
September 5 Sold good in cash Shs 8,500.
September 9 Sold goods on credit Shs 10,000.
September 12 Received a cheque of Shs 9,000 from a debtor.
September 15 Paid a creditor Shs 10,000 in cash.
September 17 Paid wages Shs 2,600 in cash.
September 19 Received a cheque Shs 23,400 from Samson for goods sold in January.
September 20 Received Shs 6,700 from a debtor in cash.
September 23 Withdrew Shs 7,700 from the bank for office use.
September 24 Paid electricity bills by cheque Shs 1,200.
September 25 Received a cheque of Shs 11,500 from a debtor.
September 26 Made cash sales of Shs 12,800.
September 27 Purchased goods worth Shs 8,950 in cash.
September 28 Deposited personal cash Shs 3,500 into the business account.
September 30 Paid water bills by cheque Shs 2,800.

Required:
Prepare a two column cash book. (10 marks)

Expected Response

The following information was extracted from the books of Mamboleo Traders in the month of September, 2014.

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Explain five ways in which the consumer may benefit from warehousing. (10 marks)

11/12/2020

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Ways in which the consumer may benefit from warehousing

Ways in which the consumer may benefit from warehousing.

It helps maintain / improve quality of goods - this is mainly for goods that mature over time such as wine /for them to get goods when still fresh.
It ensures constant supply of goods - facilitates release of goods in the market regularly which minimize shortages/so as to get goods as/ when needed.
Preparation of goods for sale - goods are sorted, graded, packaged, blended, branded.
Availability of seasonally produced goods - consumers can access goods that are off season from the warehouse e.g. farm produce.
Stability in prices of goods - ensures constant supply of goods leading to stable prices throughout the year/due to minimal shortages.
Creates time utility - ensures that the consumer accesses and uses goods at appropriate time.
It enables the breaking of bulk - where he/she is able to buy goods in convenient /affordable quantities.
Availability of seasonally demanded goods. That are produced but only come to use at certain times/such as gumboots/umbrellas.
Availing a variety/different goods enabling him/her have a wider choice/satisfy different wants/tastes
Providing security - to avoid loss due to theft/pilferage.

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Discuss five principles that would lead to effective use of government resources. (10 marks)

11/12/2020

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Principles that would lead to effective use of government resources

Principles that would lead to effective use of government resources:

Economy - requires proper planning to avoid /minimize wastage/ensure maximum benefit.
Sanction - Authority should be sought from relevant bodies/parliament before committing public finance.
Maximum /optimal social benefit - resources should be used only on projects that improve social welfare / quality of life of the citizens /to benefit as many people as possible.
Flexibility - expenditure should be able to be adjusted to reflect the prevailing circumstances.
Equity - distribution of resources should be fair to all sectors/regions/minimize incidents of inequalities /imbalances.
Productivity - more resources should be spent on development projects than on nonproductive projects I on projects that yield high returns
Surplus - savings should be spent on emergencies and fill the revenue gap between collection and projection / expenditure should be less than (total) revenue collected.
Elasticity - expenditure should be capable of being expanded/contracted in line with the size of the economy.
Good/proper financial management to ensure accountability/good governance/transparency through proper record keeping.

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Uses of National income statistics to a country.

10/12/2020

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Uses of National Income Statistics to a country

Uses of National income statistics to a country.

Indicator/measure of standard of living - an improvement/increase of national income indicates/improved welfare/improved standard of living I vice versa.
Comparison of standard of living between countries - countries with high national income are deemed to have high standard of living and vice versa.
Assessing performance of the economy over time - the period with high national income is considered to be better off.
Economic Planning - comparing performance in different sectors and regions helps the government in planning for better! efficient allocation/use of resources.
For investment decision - Data obtained can be used by entrepreneurs to make decision on the sector, when and amount of capital to invest.
Provide information on distribution/contribution of income - this helps the government to address income/production disparities eg. through subsidies and tax relief.
To attract foreign aid/donor funding, when a country shows strong economic growth/when experiencing challenges to finance its development/for budgetary support.
Calculate/determine per capita income - by dividing national income by the population.
Compare standards of living in a country between different years/periods. The year/period the NY is high is said to have a high standard of living/vice versa.

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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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In which ways can an investor benefit from the stock exchange? (4 marks)

10/12/2020

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Ways an investor benefit from the stock exchange

Ways in which an investor may benefit from the stock exchange include:

Provide information on share prices that guides investors on when to buy / sell shares.
Provide market /mechanism for buying / selling shares I other securities.
Protecting investor interest by requiring quoted companies to maintain certain standards of management.
Provide information on company performance that help investors to make investment decision.
Listing share prices enables investor to monitor their wealth.
Encourage savings in form of shares.
Enables investors to spread risks by buying different types of shares/port folio.
Avails a variety of securities to chose from.

In which ways can an investor benefit from the stock exchange?

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Outline four benefits of sea transport over air transport. (4 marks)

10/12/2020

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Benefits of sea transport over air transport

Benefits of sea transport over air transport include:

Large carrying capacity which is ideal for bulky/heavy goods.
Sea transports large quantities of goods.
Low cost of transportation over long distances.
Special ships are available for carrying special goods.
Its more economical to operate.

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Highlight four benefits of a business plan to an entrepreneur. (4 marks)

10/12/2020

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Benefits of a business plan to an entrepreneur

Benefits of a business plan to an entrepreneur include:

Facilitates acquisition of loans from financial institutions and other financiers.
Provides guidance for opening new or expanding existing business.
It acts as a management / monitoring tool for the business.
It’s a tool for evaluating business performance.
It lays the strategy to be used in marketing the products.
It enhances the credibility of the business.
It is a motivational tool.
To avoid mistakes.
Proper allocation of resources.

Vertical Divider

Highlight four benefits of a business plan to an entrepreneur

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State four reasons that make it necessary for firms to maintain a healthy environment. (4 marks)

10/12/2020

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Reasons that make it necessary for firms to maintain a healthy environment

Reasons that make it necessary for firms to maintain a healthy environment include:

To protect /safeguard human health eg. employees, customers, surrounding community;
To maintain the ecological balance;
To conserve natural resources I raw materials;
For sustainable economic development;
For environmental conservation;
To comply with the set laws;
As part of corporate social responsibility;
To enhance corporate.