KCSE Business Studies Topical Questions and Answers - ATIKA SCHOOL

Name the basic concept in population described in the statements given below:

28/11/2020

(a) Population size that is adequate for the full utilization of available resources in a Country.
(b) The average number of births per one thousand women in a year.
(c) When a country is experiencing higher death rates than birth rates.
(d) Where a bigger proportion of the population is comprised of people who are above 55 years old.

Answer

The basic concepts in population described ¡n the statements are:

Optimum population.
Fertility rate/birth rate
Declining population
Ageing population.

Explain five negative implications of a young population.

28/11/2020

Answer

Negative implications of a young population

High dependency ratio since the working population is low
Leads to low labour supply since they may not have attained the working age
Increases strain on government resources to carter for consumption of goods /services for the youth
High unemployment since the existing job opportunities do not march the demand
Creates pressure on social amenities hence leading to poor quality services
increased rural urban migration leading to the development of slums and high rate of criminal activities

Outline five assumptions associated with the circular flow of income in a two sector economy.

2/6/2020

Answer

Assumptions associated with the circular flow of income in a two sector economy

There are only two sectors/players in the economy.that is households and firms
Households spend all of their income on goods /services without making any savings
Firms spend all their revenues on factors of production /there is no reserving profits
There is no government interference /intervention
The economy is closed /no international trade
All outputs produced by firms is purchased by households/there is no surplus
There is no injections of income/additional investments/no financial sector

Describe the procedure for obtaining an insurance policy.

2/6/2020

Answer

Procedure for obtaining an insurance policy

Filing a proposal form the potential insured discloses all relevant materials /facts concerning the property or life to be covered
Determination of premium the proposer calculates the monthly premium tallying into account the material facts disclosed in the proposal form
Payment of first premium- upon acceptance of the insurer to cover the risks ,the insured is asked to pay the first premium
Issuance of cover note/binder-it serves as evidence that the insured is covered
Issuance of the policy-its issued within 30 days and contains all the terms and conditions of the cover

Explain five government initiated methods of consumer protection.

2/6/2020

Government initiated methods of consumer protection

Setting standards/KEBS to ensure quality specifications of goods and services are met
Weight and measure act department this ensures that the commodities sold are of the correct weight and measurements
Food and drugs and chemicals substance Act -this ensures that manufacturers do not include any harmful substances in food stuffs/drugs .labels should contain contents/ingredients
Public health Act this ensures that public business premises /buildings and equipment s are hygienic
Rent restriction/tribunal Act protects tenants from being exploited by landlords
Licensing of firms/trade licensing Act to control number of firms so as to ensure healthy competition among firms
Trade description Act this ensures that producers indicate genuine contents so as not to mislead the consumers

Explain five advantages of locating firms in different parts of the country.

2/6/2020

Answer

Advantages of locating firms in different parts of the country

Curbs rural-urban migration-this eases pressure on social amenities which tend to be found in areas with a concentration of many firms /urban areas
Creates employment /jobs to rural dwellers enabling them to earn an income
Avails a variety of goods which enhance consumer choice
Promotes even distribution of infrastructure across the country - this is required to facilitate the operation of the firms
Leads to transfer of (new)technology/skills for better utilization of resources across the country
Development of social amenities that improve the welfare of the people
Provides market for raw materials hence broadening the income sources for locals
Attracts auxiliary services such as banks which are beneficial to the society

Outline five benefits of a business to the society.

2/6/2020

Answer

Benefits of a business to the society

Provides goods and services required for the satisfaction of the members of the society
Exploits available resources in the society which will lead to the creation of employment
Avails a variety of commodities /services which enable people to have high /improved living standards
Leads to improvement of infrastructure which are required for the facilitation of trading activities
It attracts other auxiliary /support firms/banks/insurance/colleges that are important to the society
Leads to the development of technology /new ideas /skills for quality/quantity/efficient production

K.C.S.E Business Studies Q & A - MODEL 2019PP2QN4b

2/6/2020

The following information relates to Movaic Retailers for the month of July 2015:

Calculate:
(I) Mark-up
ii) Margin
(iii Total expenses
(iv) Net profit
(y) Rate of stock turnover

Answer

ExpIan five measures that may be taken to increase the volume of exports

2/6/2020

Measures that can be taken to increase the volume of exports

Export compensation scheme where exporters are allowed to claim a certain amoint /percentage of the value of the exports to enable exporters sell at a lower price
Diversifying foreign markets to expand the market for exports /this increases the selling opportunity for local products in the countries
Devaluation of a country's currency which makes its exports cheaper /more attractive to foreign buyers
Encourage (foreign)investments in the country that is geared towards production of goods for exports
Lobbying for removal of trade restrictions /barriers increased by trading partners on the country's exports
Reduction of bureaucracy In acquisition of exports licences this makes it attractive to engage in foreign trade
Use of commercial attaches /government agencies to promote country's exports abroad

Explain five demerits of pipeline as a means of transport.

2/6/2020

Answer

Demerits of pipeline transport

Requires heavy initial capital which many cant afford/its expensive
Has limited alternative uses can only be used to transport fluids and gases
Prone to sabotage during war /acts of terrorism /can be easily interfered with by malicious people
Leakages/vandalism which may remain undetected for a long time .This may lead to loss and environmental pollution
Its not flexible.Once laid it can not be easily changed .also it can not deliver goods to the door step of the customer
Different products cannot be transported at ago it can only transport one product at ago
Expensive/difficult to monitor since it can cause contamination and loss of quality

K.C.S.E Business Studies Q & A - MODEL 2019PP2QN2b

31/5/2020

The Trial Balance given below was extracted from the books of Rakwaro Enterprises on
31 December 2015.

Stock on 31 December 2015 was valued at Ksh 280,400.

Required

Prepare Rakwaro Enterprises Trading Profit and Loss Account for the period

ending 31 December 201 5

Determine Rakwaro Enterprises initial capital.

Answers

INITIAL CAPITAL=Final capital-NP+D
=720000 - 337200 + 28000
=Shs 40800

Explain five differences between a sole proprietorship and a public limited company.

31/5/2020

Answer

Differences between sole proprietorship and public limited company

Sole proprietorships are formed by one person while the latter is formed by a minimum of 7
Sole proprietorship has unlimited liability while public companies don't
In sole proprietorship existence depends on the life of a sole proprietor while public ltd companies have perpetual life irrespective of life /death of shareholder
In sole proprietorship much of source capital is personal savings, in public ltd companies its from shares
Sole proprietorship is managed by the owner while in public ltd companies its managed by a board of directors
In sole proprietorship, few legal formalities are required while in public ltd companies formation procedure is long requiring many legal formalities
In sole proprietorship ,little capital is required while in public ltd companies ,a huge amount is required

Explain five services that may be offered by wholesalers to the retailers.

31/5/2020

Answer

Services that are offered by wholesalers to retailers:

Availing a variety of goods from different producers relieving the retailers of the burden of visiting the producers premises/meeting their different needs /choice

Breaking bulk into quantities desired by retailers /the retailers are able to purchase only in the quantities they can afford

Offer storage /warehousing services this relieves the retailer from the risks damage/cost of storage of goods/services

Provide credit/Trade credit/ financing to deserving retailers /which act as a source of capital deserving retailers/which act as a source of capital to them to be paid at a later date as agreed
Advertise goods/product promotion They advertise goods/product promotion to the benefit of retailers to find a ready market
They offer transport to the retailers relieving them the transportation cost

They inform/advice/educate the retailers on available offers for a certain commodity hence helping retailers to improve on their profit margin

Blending the goods they mix the goods to get a better/desired quality

Packaging the goods they put the goods in suitable containers/sizes/packages

Apart from trains and motor vehicles, state four other means of transporting goods and people on land

31/5/2020

Answers

Other means of transporting goods and people on land apart from
trains and motor vehicles are:

Use of animal transport.
Human portages
Use of carts.
Bicycles
Motorcycles.
Pipelines.

Outline four benefits of a bonded warehouse to the importer.

31/5/2020

Answer

Benefits of a bonded warehouse to the importer include:

The importer can sell the goods before paying duty hence transferring the burden to the buyer.
Goods can be prepared for final sale while still in bond.
Gives the ¡importer time to arrange for payment of duty.
The importer can look for market
Some goods like wine, can improve in quality and value while still in bond.
Security is provided for the goods while they are in bond.

Determine the excess demand or excess supply from the combined demand and supply schedules of oranges given below

31/5/2020

Determine the excess demand or excess supply from the combined demand and supply schedules of oranges given below

Answer

Highlight four factors that may influence an individual’s demand for money in order to fulfill the transaction motive

31/5/2020

Answer

Factors that may ¡influence an individuals’ demand for money in
order to fulfill the transaction motive Include:

The individuals level of income/earnings
The frequency of payment by the individual.
The individual’s spending habits.
The rate of inflation
The number of dependants supported by the individual
Availability of credit.
The frequency of income/individual’s earning.

Highlight four contributions of entrepreneurs to the growth of an economy.

31/5/2020

Answer

Contributions of entrepreneurs to the growth of an economy
include:

They create employment by establishing businesses.
They make use of locally available resources which would have been idle.
They improve the citizens’ standard of living by offering them a source of income.
Their ventures become a training ground for local labour which then becomes skilled’
They save the country foreign exchange which would have been spent on imports
Promote technological advancement through their creativity.
Promote entrepreneurial culture by being eye openers to other people who then start their own businesses.
Promote the accumulation of capital by ploughing back their profits,

Outline four characteristics of a good tax system.

31/5/2020

Answer

Characteristics of a good tax system include:

Equitably distributes the tax burden according to the payers’ ability to pay.
Certain and clearly defines what the payer is expected to pay.
Convenient and easy for the tax payer to meet the tax obligations.
Economical and allows the tax to be collected at the least cost
Flexible enough to allow for adjustments according to prevailing conditions.
Diverse as to capture as many sources as possible
simple enough to be understood by all tax payers
Elastic and able to generate more r venue with improved economic performance

Identify the level of production into which the following workers belong:

31/5/2020

Answer

Levels production ¡n which the workers belong are:

Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary.

The following information was extracted from the books of Jabalí Traders on 31 December2015.

31/5/2020

(a)Determine net purchase

Answer

Determining net purchases:
Purchases          84,375
Add: Carriage in 9,170
                                =93545
Less: returns out 15,520
Net purchases   = 78025

(b)State two reasons for preparing the trading account

Reasons for preparing the trading account include:

Enables the business to determine the value/cost of goods sold in a given period.
It reveals the amount of revenue generated from the sale of stock in a given year
It helps to determine whether the business has made a loss or a profit from the sale of stock in a given year.
It can help get the performance of a business if compared across different years.
It can help to compare the performance of a business to that of others

Highlight four factors which may lead to an increase in a country’s national income.

31/5/2020

Answer

Factors which may lead to an increase in a country’s national income
include:

A stable political environment
Technological advancement
Vibrant entrepreneurship.
increased supply of skilled labour
Increased access to capital. ,
Optimal utilization of available natural resources

Outline four features of co-operative societies.

31/5/2020

Features of co-operative societies

Answer

Features of co-operative societies include:

Formed by a minimum often members
Run by management committee.
Governed using by —laws.
Surplus/profits is distributed to members.
It is a separate legal entity from the members.
It has limited liability.
it has perpetual succession
Its main source of capital is the shares contributed by members

Outline four features of co-operative societies

State the relevant books of original entry into which information extracted from the source documents given below would be recorded

31/5/2020

Answer

Relevant books of original entry into which information extracted from the source documents would be recorded are:

Purchases journal
Returns inwards journal
Cash receipts journal/cash book
Purchases journal.

Outline four factors that Chemichemi Dairies would consider when selecting a channel to distribute their fresh milk.

31/5/2020

Answer

Factors that Chemichemi dairies would consider before selecting a
channel to distribute their fresh milk include:

Length of the channel due to perishability of the milk.
The geographical spread of their customers.
The resources at the firms’ disposal like milk c ling plants,distribution vans
Pricing of the milk and cost of the channel.The nature of competition.
The prevailing market risks.
The government policy on milk distribution.
Needs to free storage space.

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