KCSE BUSINESS STUDIES TOPICAL QUESTIONS AND ANSWERS - ATIKA SCHOOL

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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 negative implications of a young population.

31/5/2020

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

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