KCSE Business Studies Past Papers and Marking Schemes For all years
KCSE Business Studies Past Papers
KCSE Business Studies Past Papers and Marking Schemes For all years
KCSE Business Past Papers
Business Studies KCSE Paper 1
KCSE 2010
In the spaces provided below, indicate the type of utility created by each of the following commercial activities: (4 Marks)
Commercial activity Type of utility
Selling goods to customers …………………….
Transporting goods ………………………
Storekeeping ………………………
Making a chair ……………………….
Give five reasons why the government may find it necessary to start a
Name the types of warehouses associated with each of the statements given below. (4 Marks)
Statement Type of warehouse
Goods can be stored before payment of custom duty………………….… ii.Individual can hire storage facilities……………………………………… iii.Goods are stored from several manufacturers…………………………….. iv.Specialized goods are stored ………………………………………………
The figure below shows a shift in the supply curve of a given
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0 Q0 Q1 Quantity
Outline four factors that may have caused the shift in the supply curve from S0 to S1
(4 Marks)
The balances given below relate to Enotika Traders for the year ended 31st December, 2008.
Capital
?
2 Year Bank Loan
230,020
Creditors
95,200
Fixed assets
480,000
Current assets
145,220
Prepare a balance sheet as at 31st December, 2008. (5 Marks)
Give two reasons why a three column cashbook is used both as a journal and a ledger. (4 Marks)
The management of national debt, credit control and lender of last resort are some of the functions of the Central Bank. Match these functions with the statements given below. (3 Marks)
Statement
Function
i.
Repayment of Government securities as they mature.
ii.
Receipt of treasury bills to secure loans.
iii.
Directing commercial banks on the preferred sectors to
lend money.
State the meaning of the following terms of sale as used in international
(4 Marks)
LOCO………b) I.F……… c) F.A.S………d) F.O.Q…….
The manager of Tasa Limited constantly walks around various
State four merits of this style of management. (4 Marks)
State four reasons why the government should create an enabling environment for investors. (4 Marks)
Outline four differences between insurance and (4 Marks)
INSURANCE
ASSURANCE
State four factors that may influence the level of national (4 Marks)
Outline the difference between cash and credit (2 Marks)
The terms; capital employed, working capital, owner’s equity and borrowed capital are types of capital found in a Match each of the statements given below with the relevant type of capital. (3 Marks)
Statement Type of capital
Resource invested into the business by the owner ………………..
Excess of current assets over current liabilities ………………..
Amount invested into the business by outsiders ………………..
Outline four ways in which government expenditure may stabilize the economy of a country. (4 Marks)
State four problems associated with development ( 4 Marks)
State four services that a wholesaler may offer to a (4 Marks)
State four reasons why flower exporters would transport their produce by air rather than by sea. (4 Marks)
The diagram below represents the relationship between population and income per capita.
P (Axis)
The following information was extracted from the books of Helen
1/1/2008 31/12/2008
Shs Shs
Salaries pre-paid 24,800 52,400
Salaries paid – 48,200
Prepare a salary expense account using the above information. (5 Marks)
State four circumstances under which one may decide to start a personal business. (4 Marks)
Highlight four ways in which a business idea can be (4 Marks)
Outline five measures that a manager can take to improve the working environment in the office. (5 Marks)
Highlight four challenges that a person may encounter when using a cellphone (mobile phone).(4 Marks)
The diagram below represents the long-run equilibrium of a firm under monopolistic (4 Marks) Name the curves represented by letters a,b,c and d.(i.) a is.…(ii.) b is…..(iii.) c is…. (iv.) d is….
Price
P0
0 S (Axis)
State what is represented by P and S axes, and letters R and Q. (4 Marks)
P (axis)………ii. S (axis)…….……iii. R…………iv. Q…………….
0 Q0 Quantity
KCSE 2011
Identify the types of wholesalers described in the statements given
(4 Marks)
A wholesaler who trades in maize grain only…………………………………
A wholesaler who supplies goods to most of the traders in Kitui, Mbooni and Machakos districts in Eastern part of Kenya………………………………………………………….………………
A wholesaler who buys tomatoes from farmers in rural areas and sells the same to other wholesalers in urban areas…………………………………….
A wholesaler who trades in a wide variety of human medicine……………
Outline four factors that should be considered before buying office
(4 Marks)
Outline four malpractices by traders against which consumers may need protection by the (4 Marks)
State three features of an insurable (3 Marks)
Outline four ways of reducing the level of unemployment in (4 Marks)
State four services offered by a commercial bank to its (4 Marks)
List four sources of public (4 Marks)
Outline four reasons why countries may trade with each (4 Marks)
Outline four reasons why economic development is desirable to a
(4 Marks)
Indicate the reward associated with each of the factors of production in the table (4 Marks)
Factor of production
Reward
a.
Land
b.
Labour
c.
Capital
d.
Entrepreneurship
Outline four circumstances under which a co-operative society may be (4 Marks)
Highlight four features of a bonded (4 Marks)
Outline four factors that may be considered when measuring the size of a
(4 Marks)
The following transactions were extracted from the books of Sarah Traders for the month of March 2006.
March 10: purchased good on credit worth 200,000 from Salim Traders.
March 25: sold goods on credit worth Ksh. 420,000 to Shah
Record the above transactions in ledger accounts below: (4 Marks)
Salim Traders Account (b)Shah Traders Account
(c)Purchases Account (d) Sales Account
On 2nd November 2006, Oromo received an invoice for Ksh. 12,000. Terms of payment were trade discount 5% and cash discount 10%. If payment is made within 30 days. Determine the amount paid if payment was made on 28th November 2006. (4 Marks)
The following balances were extracted from the books of Nafula Traders as at 31st December 2005.
Current Liabilities 150,000
Net profit 50,000
Total assets 500,000
2 Year Bank Loan 100,000
Calculate the rate of return on capital. (4 Marks)
The information given below was extracted from the books of Amina Traders on 31st December 2006.
Purchases
260,000
Opening stock
75,000
Carriage on purchases
12,500
Closing stock 27,500
Goods were sold at a mark-up of 25%.
Using the information above, prepare Amina Traders’ Trading Account. (4 Marks)
State four benefits that a farmer may get by transporting produce to the market by (4 Marks)
Week
1
2
3
4
5
6
7
8
Quantity(Metric Tonnes)
505
485
430
375
340
290
215
195
The table given below represents the supply schedule of sukuma wiki (kales) for eight weeks in the month of January 2009.
Outline four causes of the trend in the table. (4 Marks)
Outline four ways in which households contribute to national income of a (4 Marks)
Outline four circumstances in which a trader may use oral
(4 Marks)
Outline four reasons why a firm may remain (4 Marks)
On 1st January 2007, Muthoni Traders Cash Book showed a credit balance of Ksh. 150,000 at the bank and debit balance of 25,250 in hand. During the month, the following transactions took place:
January 5: Made cash sales for Ksh. 21,500
January 16: Received a cheque for Ksh. 360,000 from a debtor.
January 28: Paid a creditor Ksh. 100,000; partly by a cheque of Ksh. 80,000 and the balance in cash.
Prepare a Two-column Cash Book for the month. (5 Marks)
MUTHONI TRADER
Date
Details
Cash (Ksh)
Bank (Ksh)
Date
Details
Cash (Ksh)
Bank (Ksh)
Dr. CASH BOOK Cr.
State four benefits that a trader may get by advertising products in a
(4 Marks)
The cost of consumer goods and services for a representative basket of an average family is given below.
Year 2006 2007
Prices (Ksh) 1,200 1,600
Determine the increase in Consumer Price Index using 2006 as the base year.
(4Marks)
KCSE 2012
Outline four circumstances under which cash with order may be
(4 Marks)
State four benefits that a farmer may derive from being a member of a Producer Co-operative (4 Marks)
Highlight three benefits of globalization to a business (3 Marks)
Highlight four ways in which consumers may protect themselves against exploitation by traders. (4 Marks)
Outline one circumstance under which each of the following telecommunication services may be used: (3 Marks)
Paging………… Facsimile (fax)…… iii. Radio call……….
The following information was extracted from the books of Marigi Traders on 30th June 2009. (4 Marks)
Item
Shs.
Purchases
720,000
Opening stock
165,000
Closing stock
?
Sales
980,600
Margin
20%
Prepare the Trading Account of Marigi Traders for the year ended 30th June 2009.
Outline four tools of monetary policy that a government may use to reduce excess money in (4 Marks)
Outline one circumstance under which each of the following types of inflation may (4 Marks)
(i.) Creeping inflation……………. (ii) Hyperinflation…………
State four forms of economic integration that may exist between
(4 Marks)
Highlight four problems of development planning that a country may (4 Marks)
Nyaboke operates a shop in a farming area. State four ways in which the farming community can benefit from the business activity. (4 Marks)
Outline four features of indirect (4 Marks)
State four factors that may lead to the success of a (4 Marks)
State four ways in which a good filing system may facilitate the operations in an office. (4 Marks)
Highlight four benefits that a country gets by encouraging trade among her (4 Marks)
Outline four challenges that may be encountered when measuring national income using the output approach. (4 Marks)
Highlight four measures that a government may take to reduce the mortality rate in a country. (4 Marks)
The following balances were extracted from the books of Highlife General Stores on 31st December, 2008. (5 marks)
Item
Shs.
Land and building
650,000
Stock
470,000
Bank overdraft
80,000
Debtors
350,600
10 Year Bank Loan
500,000
Creditors
220,000
Cash
50,00
Motor van
150,000
Capital
?
Prepare the Balance Sheet of Highlife General Stores as at 31st December, 2008.
Given the statements in the table below, indicate the type of entry to be made in the relevant ledger accounts: (4 Marks)
In the spaces provided in the table below, name the document Jambi Ltd would issue under the circumstance described: (4 Marks)
Circumstance
Document
to issue
i.
Jambi Ltd sold goods worth Sh. 54,000 on
credit to Jamilar Traders.
ii.
Osuri Enterprise which had bought goods worth Sh. 27,000 was erroneously charged for
only Sh. 25,000.
iii.
Guru Traders paid Sh. 33,900 by cheque to
Jambi Ltd for goods which had been supplied.
iv.
Goods sold to Jamilar Traders had been
overpriced by Sh. 4,000.
Outline four conditions under which a warehouse may be considered to be operating (4 Marks)
Highlight four advantages of promoting sales through the (4 Marks)
Zawadi operates a hardware business in her home Outline four methods she may use to determine prices for her goods other than the forces of demand and supply. (4 Marks)
Highlight four factors that a firm may consider when deciding on the goods to (4 Marks)
State four features of a perfectly competitive (4 Marks)
Statement
Type of entry
i.
An increase in revenue.
ii.
A decrease in an asset.
iii.
An increase in an expense.
iv.
A decrease in a liability.
KCSE 2013
Outline four ways in which business studies may be of benefit to an
(4 Marks)
Highlight four external factors that may negatively influence the operations of a (4 Marks)
State four characteristics of a successful (4 Marks)
State four functions of an (4 Marks)
Fill the relevant branches of trade in the diagram given (3 Marks)
The participants in a two sector economy are households and Identify the relevant participant in each of the statements given below: (4 Marks)
Statement
Participant
a.
Payment for goods and services
a………….
b.
Sale of factors of production.
b………….
c.
Payment for factors of production.
c…………..
d.
Sale of goods and services.
d…………..
The following balances were extracted from the books of Wekesa Traders on 31st December, 2009.
Items Shs.
Capital 500,000
Cash in hand 20,000
Buildings 200,000
Furniture
25,000
Motor vehicle
400,000
Creditors
18,000
Debtors
36,000
Bank
100,000
Bank loan
263,000
Using the above information, prepare Wekesa Traders’ Trial Balance on 31st December, 2009. (5 Marks)
The following information relates to Karibu Traders for the year ended 31st December, 2008.
Details Shs.
Fixed assets 1,840,000
Current assets 400,000
6 Year Bank Loan 600,000
Current liabilities 150,000
Determine owner’s capital using the information given above. (4 Marks)
State the type of unemployment relating to each of the following descriptions:
(4 Marks)
Caused by alternating trading patterns occurring at similar times……….
Arises where workers have more skills and higher qualifications than the job requirements………………………………………………………………….
Arises out of mismatch between the skills possessed by potential employees and the location of the jobs available…………………………………………………….
Arises when people are unwilling to take up jobs due to low pay…………
Highlight four circumstances under which the capital of a business may
(4 Marks)
Below are some entries in the cash book of Romano Traders for the month of July
Dr. CASH BOOK Cr.
Outline four factors that may make a producer to by-pass the wholesaler when distributing (4 Marks)
Highlight four benefits that a country would get by developing her (4 Marks)
State the meaning of the following entries.
(4 Marks)
State four benefits of a bonded warehouse to the (4 Marks)
Date
Details
Cash
(Ksh)
Bank
(Ksh)
Date
Details
Cash
(Ksh)
Bank
(Ksh)
2010
July 1
Bal b/d
15,000
2010
July 1
Bal b/d
100,000
July 6
Cash
20,000
July 6
Bank
20,000
July 20
Sales
15,000
July 15
Wages
5,000
July 28
Debtors
20,000
July 29
Stock
10,000
July 31
Bal c/d
10,000
Outline four qualities of a successful (4 Marks)
Highlight four factors that may cause the supply curve to shift to the
(4 Marks)
Outline four positive effects that production activities may have on community
July 1, 2010 Balance b/d, bank column, 100,000……………
July 6, 2010 Cash 20,000 and bank shs. 20,000………………
July 28, 2010 Debtors 20,000…………………………………
July 31, 2010 Balance c/d 10,000……………………………..
Outline one circumstance under which each of the following source documents may be issued by a trader: (4 Marks)
Debit note…… ……………………………………
Invoice…… ……………………………………….
Credit note… ………………………………………
Quotation……………………………………………
Name four documents that may be required by the registrar of companies in order to register a public limited company. (4 Marks)
Outline four measures that a country can take to reduce the level of
(4 Marks)
health. (4 Marks)
State four basic features of a (4 Marks)
State four features of a (4 Marks)
Outline four circumstances in which the government may be involved in (4 Marks)
Highlight four factors that a trader may consider when choosing a means of (4 Marks)
State four reasons for privatizing public (4 Marks)
KCSE 2014
The following are descriptions of features of human Identify the features that relate to the description in the spaces provided. (4 Marks)
Description
Feature
(a)
A person is unable to fully satisfy all wants.
(b)
Once satisfied, they have a tendency of being felt again.
(c)
Some wants are satisfied together.
(d)
The same want can be satisfied using different resources.
Name two occupations that relate to each of the production activities given below: (3 Marks)
(a)
Extraction
i.………………………
ii………………………
(b)
Construction
i.………………………
ii……………………….
(c)
Direct services
i.………………………
ii………………………
Outline four tasks that may be carried out by a receptionist in an
(4 Marks)
Highlight four circumstances in which a cheque may be used as a means of (4 Marks)
Highlight four activities that may be carried out in a stock exchange
(4 Marks)
Outline four features of liners in sea (4 Marks)
State five types of information that a manager may communicate to the
(5 Marks)
Explain the meaning of the following terms: (a)Insured….…(b) Insurance…..
In the spaces provided below, indicate whether the following factors cause movement along the demand curve or a shift of the demand (3 Marks)
Factor
Movement along or shift of
(a)
Change in income.
…………………….. the demand curve.
(b)
Change in price.
…………………….. the demand curve.
(c)
Change in weather
…………………….. the demand curve.
Highlight four roles played by the broker in the chain of (4 Marks)
The following diagram represent the circular flow of income in a two sector closed economy. (4 Marks)
a b
Identify two factors represented by each of the arrows labelled a and b.
Fill in the missing figures in the table below: (4 Marks)
FA
CA
C
L
(a)
275,500
……………
315,000
115,500
(b)
182,000
108,700
………….
217,100
(c)
………….
76,400
123,100
91,900
(d)
313,450
211,340
189,170
………..
Mheshimiwa Ltd had the following ledger account balances as at 31st May, 2010:
Details
Shs.
Purchases Sales
Returns outwards Returns inwards
D. Simola (Debtor)
P. Mwende (Creditor) Wages
Cash Capital
3,880
3,350
150
160
2,550
3,100
800
960
1,750
Required: PrepareMheshimiwa’s trial balance as at 31st May, 2010. (5 Marks)
The following is a format of the debit side of a three-column cash
Dr.
DATE
V
W
X
Y
Name the column labelled V, W, X and Y. (4 Marks)
Outline four functions of the International Bank for Reconstruction and Development. (4 Marks)
State four disadvantages of barter (4 Marks)
The following transactions relates to Jelimo Stores:
10th October 2010: Sold unused stationery for Sh. 3,000 on credit to Likia.
23rd October 2010: Bought a motor vehicle on credit from Onjwaria Motors for Sh. 700,000.
Required: Record the above transactions in the General Journal given below:
Date
Particulars
Folio
Dr.
Cr.
…….
……………
………
……..
…….
List four levels of (4 Marks)
Many countries in Africa, Latin America and Asia are considered to be under- developed. Outline four characteristics they have in common. (4 Marks)
Madam Emoro operates a matatu business. State four factors in the internal environment that may influence the (4 Marks)
Highlight four reasons for which businesses should observe ethical
State four merits of promoting products through personal (4 Marks)
The following information relates to Kiboko Traders as at 31st December,
Details
Shs.
Total drawings
400,000
Added investments
800,000
Capital on 31st December, 2010
7,000,000
Profit
3,100,000
Calculate Kiboko’s initial capital. (3 Marks)
Outline four positive implications of youthful population to an
PQ Ltd had the following balances as at 31st December, 2012. (4 Marks) Sales 23,498,000
Stock 1/1/2012 57,140
Returns inwards 27,200
Purchases 16,290,000
Stock 31/12/2012 86,340
Prepare PQ’s Trading Account for the year ended 31st December, 2012.
KCSE 2015
What are the reasons that would make an individual engage in business?
(4 Marks)
List four types of utility and the production activity associated with each of (4 Marks)
Outline four ways in which the office facilities effective handling of (4 Marks)
Highlight four factors that may influence a consumer to purchase products from a kiosk other than a (4 Marks)
State four circumstances under which hire purchase may be used to acquire (4 Marks)
Give four reasons for the increased use of mobile phones in (4 Marks)
Outline four methods that the Government of Kenya uses to regulate business (4 Marks)
State four disadvantages of using internet as a means of
(4 Marks)
State four differences between life assurance and general (4 Marks)
Give four reasons for observing ethical practices in product
(4 Marks)
The graph given below represents the demand and supply curves of
Price
Quantity dd/ss State four effects of a shift of the demand curve to the right. (4 Marks)
Outline four disadvantages that a manufacturer would suffer if wholesalers were eliminated from the chain of (4 Marks)
The following balance sheets was incorrectly
PEMBE TATU TRADERS BALANCE SHEET
FOR THE YEAR ENDED 31.12.12
Stock
5,000
Furniture Debtors Capital
50,000
7,000
66,000
123,00
Bank overdraft
5,000
Cash
9,000
19,000
Prepare a corrected balance sheet. (4 Marks)
The following figures relate to Jumbo Traders for the year ended 12.13.
Details
Shs.
Capital
940,000
Net Loss
20,000
Additional investment
420,000
Monthly drawings
5,000
Determine the capital as at 01.01.13. (4 Marks)
Identify the ledgers in which the following accounts are (5 Marks)
ACCOUNT
LEDGER
i.
Pendo (Debtor)
ii.
Machinery
iii.
Rent
iv.
Capital
v.
Juma (Creditor)
List three levels of (3 Marks)
Name the documents described by the statements given below are used in International Trade: (4 Marks)
Requests for payment before goods are delivered……..………………
Shows ownership or title of goods imported…………………………..
Shows the country of manufacture of goods….……………………….
Shows the transportation charges for goods……………………………
The following Purchases Returns Journal relates to Farasi Traders:
PURCHASES RETURNS JOURNAL
DATE
DETAILS
CREDIT NOTE
NO.
FOLIO
AMOUNT
2012
March
Ksh
1
Junior
R22
PL1
2,000
3
Mimi supplies
100
PL2
4,000
4
Kilimanjaro
30
PL5
5,000
GL4
11,000
Post the information above to the relevant ledger accounts. (4 Marks)
Outline four goals of development to a (4 Marks)
The following information relates to Kahawa Traders as at 31st December,
Stock 01.01.12 Ksh. 80,000
Stock 31.12.12 Ksh. 120,000
Purchases Ksh. 1,000,000
Margin 20%
Required: Prepare a trading account. (5 Marks)
State four reasons that make it necessary for firms to maintain a healthy (4 Marks)
Highlight four benefits of a business plan to an (4 Marks)
Outline four benefits of sea transport over air (4 Marks)
In which ways can an investor benefit from the stock exchange? (4 Marks)
State three clauses found in the Memorandum of (3 Marks)
KCSE 2016
State four external factors that may negatively influence the operation of a (4 Marks)
Highlight four benefits of a business plan to an (4 Marks)
State four ways in which a good filing system may facilitate the operations of an (4 Marks)
Highlight four activities that may be carried out in a stock exchange
(4 Marks)
Outline four circumstances under which a co-operative society may be (4 Marks)
Outline four methods that the government Kenya uses to regulate business (4 Marks)
State four ways in which a youthful population may be useful to an
(4 Marks)
Outline one circumstance under which each of the following telecommunication services may be used:
Paging……ii. Facsimile (fax)……. Radio call……….. iv. Telex……
The following transactions relates to Jelimo Stores: (4 Marks)
10th October 2010: Sold unused stationery for Sh. 3,000 on credit to Likia.
23rd October 2010: Bought a motor vehicle on credit from Onjwaria Motors for Sh. 700,000.
Required: Record the above transactions in the General Journal given below:
Date
Particulars
Folio
Dr.
Cr.
…….
……………
………
……..
…….
State four features of an insurable (4 Marks)
State four features of (4 Marks)
The graph given below represents the demand and supply curves of
Price
Quantity dd/ss
State four effects of a shift of the demand curve to the right. (4 Marks)
Outline four functions of World (4 Marks)
Outline four ways of reducing the level of unemployment in (4 Marks)
The following balances were extracted from the books of Highlife General Stores on 31st December, (4 Marks)
Item
Shs.
Land and building
650,000
Stock
470,000
Bank overdraft
80,000
Debtors
350,600
10 Year Bank Loan
500,000
Creditors
220,000
Cash
50,00
Motor van
150,000
Capital
?
Prepare the Balance Sheet of Highlife General Stores as at 31st December, 2015.
Outline four circumstances in which the government may be involved in (4 Marks)
ACCOUNT
LEDGER
i.
Pendo (Debtor)
ii.
Machinery
iii.
Rent
iv.
Capital
Identify the ledgers in which the following accounts are (4 Marks)
The following diagram represent the circular flow of income in a two sector closed (4 Marks)
a b
Identify two factors represented by each of the arrows labeled a and b.
State four reasons for privatizing public (4 Marks)
State four reasons for the increased use of cell phones in (4 Marks)
List four sources of public (4 Marks)
State two situations in which each of the following types of inflation may
(4 Marks)
Creeping inflation………… ii) Hyperinflation……………
Outline four factors that may make a producer to by-pass the wholesaler when distributing goods. (4 Marks)
Outline four goals of development to a (4 Marks)
Outline four characteristics of (4 Marks)
KCSE 2017
State four elements of the demographic environment that may influence the operations of a business. (4 Marks)
Outline four circumstances under which goods may be transported by use of (4 Marks)
The following information was extracted from the books of Salome Traders: Capital Ksh. 1,119,300, Long Term Liabilities Ksh. 1,807,000 and Current Liabilities Ksh. 978,700.
Required:
Determine Salome Traders rate of Return on Capital Employed if the business made a net profit of Ksh. 438,945. (4 Marks)
State the importance of the rate of return on capital (1 Mark)
Highlight four indicators of economic growth that may be observed as a country progresses. (4 Marks)
Chem Chemi Ltd is a new cement Outline four factors that may encourage this company to be established in Athi River town where other cement manufacturers are located despite the obvious competition. (4 Marks)
Outline three ways through which a partnership may be (3 Marks)
State four features of land as a factor of (4 Marks)
State the principles of insurance described in the statements given below:
(4 Marks)
Restoring the insured’s financial position after suffering loss from insured risk…………………………………………………………
Existence of a very close relation between the loss suffered and the insured risk…………………………………………………………..
The insurer taking ownership of the remains of the destroyed property after the insured is duly compensated……………………………….
Proof that the insured will suffer direct financial loss if property is
destroyed…………………………………………………………..
Highlight four items that would be included in the measurement of national income using the income approach. (4 Marks)
The table below shows general price changes over a period of five
Year
Price (Ksh)
CPI
2010
90.00
–
2011
100.80
–
2012
103.50
–
2013
105.30
–
2014
108.00
–
Using year 2010 as the base year, determine the consumer price index of 2011,2012,2013 and 2014. (4 Marks)
List four forms of retail businesses that a school leaver may engage
(4 Marks)
State four benefits of using the internet for office (4 Marks)
The following information relates to Zawadi Traders rental income: 01.01.15: Had Ksh. 50,000 in the rent income account at the beginning of the
10.06.15: Received Ksh. 120,000 from tenants.
12.11.15: Refunded Ksh. 20,000 to a tenant who had vacated the premises.
Required: Prepare Zawadi Traders Rental Income Account. (4 Marks)
State four means of payment that may be provided by commercial banks to their (4 Marks)
The equations given below relate to the quantity demanded and quality supplied at the equilibrium point.
𝑄𝑑𝑒 = 4𝑃 + 50
𝑄𝑠𝑒 = 8𝑃 + 30
Determine the equilibrium price and quantity. (4 Marks)
Outline four ways in which the balance of payments of a country may be (4 Marks)
Identify the source documents into which the information given in the table below would be recorded. (4 Marks)
Information
Source document
a.
Payments received from debtors
b.
Purchases made on credit.
c.
Validating payments made by the cashier.
d.
Requesting for additional payments from a debtor.
Highlight four factors that should be considered by a firm when deciding on the method to use for promoting its products. (4 Marks)
Outline four features of money that enables it to facilitate the exchange of goods and services. (4 Marks)
Outline four benefits of proper filing to an (4 Marks)
Highlight four characteristics of a monopolistic competitive (4 Marks)
The aggressive campaign for citizens to plan their families seems to be causing a decline in the country’s population growth. Outline four possible effects of (4 Marks)
State four functions of commercial attachẻs. (4 Marks)
Outline four benefits that may be realized when two firms form a (4 Marks)
Shaban started a shop dealing in ladies clothing but failed after two
Outline four factors that may have caused this failure. (4 Marks)
KCSE 2018
Outline four features of labour as a factor of (4 Marks)
Outline four ways in which peace within a country may encourage entrepreneurial (4 Marks)
State four duties of the office (4 Marks)
The document shown below is used in home
Identify the document……………………………………………. (1 Mark)
Outline three circumstances under which the above document may be (3 Marks)
State four measures that may be taken by the government to control
State four measures that may be taken by the government to curb (4 Marks)
Highlight four benefits of national income statistics to the
(4 Marks)
State four categories in which the various types of business partners may be (4 Marks)
Highlight four ways in which the government creates an enabling environment for the conduct of business in the country. (4 Marks)
Outline four roles of transport in the facilitation of (4 Marks)
State three circumstances under which firms would form a (3 Marks)
Outline four conditions under which a manufacturer would distribute his products through the (4 Marks)
State four reasons for maintaining a cash book in a business
(4 Marks)
Apart from the forces of demand and supply, list four other ways in which the price of a product may be set. (4 Marks)
Outline four factors that would make two people taking the same type of life assurance policy with the same insurer to pay different amount of premium.
State the line of communication involved in each of the following: (4 Marks)
The manager of ABC Company Ltd talking to manager of XYZ Company Ltd…………………………………………………………………..
A secretary asking for time off from her boss……………………..
The Production Manager giving instruction to the Secretary of Sales Manager……………………………………………………………..
The Store Keeper giving explanations to the Chief Accountant………
List four books of original entry that may be used to record transactions
Business
Assets (Sh)
Capital (Sh)
Liabilities (Sh)
A
40,000
–
15,734
B
–
158,300
61,500
C
17,670
5,680
–
D
67,000
–
24,705
Fill in the spaces in the table below: (4 Marks)
affecting stock. (4 Marks)
Highlight four external economies of scale that a firm may get when operating on large scale. (4 Marks)
The following information was extracted from the books of Leila Traders on 31st July, 2016:
Details
Sh.
Capital
90,000
Fixed assets
80,000
Cash in hand
20,000
Current liabilities
20,000
Stock
20,000
Net profit
15,000
Drawings
5,000
Calculate: Capital owned………(2 Marks) (b) Acid test ratio……. (2 Marks)
Watamu Enterprises had the following assets and liabilities on 1stMay
Particulars Sh.
Equipment 800,000
Capital 1,200,000
Creditors 100,000
Debtors 200,000
Stock 250,000
KCSE 2019
State whether the commodity or service given in the table below would satisfy a basic human want or secondary human want. (4 Marks)
Commodity/service
Class of human want
(a)
A shirt
(b)
Education
(c)
Housing
(d)
A packet of milk
(e)
Entertainment
(f)
Haircut
(g)
Green grams
(h)
A car
Outline four factors that make office managers to communicate in writing to
Cash at bank 50,000
The following transactions took place on 2nd May 2014:
Outline four reasons that would make an entrepreneur prepare a business
(4 Marks)
Identify the office equipment described in each of the statements below:
(4 Marks)
Description
Equipment
(a)
Used to make postage stamp impressions on envelopes.
(b)
Used to transmit verbal messages.
(c)
Used to store confidential documents and valuable
items.
(d)
Used to record and store information in audio tapes.
State four sources of government (4 Marks)
Outline four measures which may be taken by a government to address the problem of (4 Marks)
Highlight four benefits of personal selling to a (4 Marks)
Outline four channels that may be used for distributing imported
State four merits of a bonded warehouse to the (4 Marks)
Identify the source documents from which the information posted in the following journals would be extracted: (4 Marks)
Journal
Source Document
a)
Sales Return Journal
b)
Purchases Journal
c)
Cash Receipts Journal
d)
Sales Journal
State four ways through which leakages of national income may happen in a
four-sector economy. (4 Marks)
State four benefits of using computers in an (4 Marks)
Identify the factor of production that relates to each of the following
(4 Marks)
Resource
Factor of production
(a)
Supervision
(b)
Tractor
(c)
Trees
(d)
Owner
List four sources of business (4 Marks)
KCSE 2021
State four characteristics of a successful (4 Marks)
List four types of business (4 Marks)
Outline four challenges that may be faced in the satisfaction of human
(4 Marks)
Match four factors of production with their (4 Marks)
Highlight four factors that may be considered when choosing a means for transporting cash. (4 Marks)
State four ways in which the government may be involved in
(4 Marks)
Outline four benefits of a (4 Marks)
List four mailing services that facilitate (4 Marks)
On the diagram below, show the effects of increased (4 Marks)
Price Pe
Write the book-keeping equation for the business whose transactions are given (4 Marks)
-Started a business with Ksh. 10,000 cash.
-Acquired a loan of Ksh. 50,000 which was directly banked.
Outline four channels for distributing locally manufactured products to local (4 Marks)
Outline four limitations of barter (4 Marks)
State four features of an efficient tax (4 Marks)
Identify the book of original entry prepared from each of the following source (4 Marks)
Source document
Book of original entry
a)
Outgoing invoice
b)
Received receipt
c)
Copy of credit note
d)
Original invoice
List four types of capital in a (4 Marks)
Record each of the following transactions into their relevant ledger
0 Qe Quantity
2nd March: Started a business with 10,000 in cash.
(4 Marks)
Outline four factors that may influence a firms’s decision on the type of goods to produce. (4 Marks)
Highlight four benefits of localization of (4 Marks)
3rd March 2021: Bought goods worth Ksh. 12,000 on credit from Mawa
Outline four reasons that would make an organization prefer a landscape office over (4 Marks)
The following information was extracted from the books of Adow Traders on 31st December 2020.
Details
Ksh
5 Year Loan
256,700
Land
120,000
Cash
24,600
Creditors
37,400
Buildings
430,500
Prepare Adow Traders Balance Sheet as at 31st December, 2020. (4 Marks)
Jane decided to take an insurance cover for her car against theft from Sarufi Insurance Ltd. It was valued at Ksh.600,0000 and she was required to make month y payments of 6,000. Identify the appropriate insurance term for:
(4 Marks)
600,000………………………………….
Jane……………………………………………
Sarufi Insurance Ltd………………………….
Theft………………………………………….
Outline four difficulties that a country with a young population may
(4 Marks)
Identify the retailers described in the statements given (4 Marks)
Statements
Retailers
(a) Sells goods by displaying them along the
streets.
(b) Moves from one place to another on foot
selling their goods.
(c) Dispenses goods with the use of coin
operated machines.
(d) Meet on designated days in open grounds to
sell their goods.
Highlight four benefits of inflation to an (4 Marks)
Outline four benefits enjoyed by countries that participate in international
(4 Marks)
KCSE 2022
Identify the component of Business Studies described in each of the statements below. (4 Marks)
Statements
Component
(a) Systematic way of recording business transactions for
decision making.
(b) The study of trade and aids to trade.
(c) The study of how human beings strive to satisfy their
endless wants using the available scarce resources.
(d) The process of identifying a business opportunity and
getting necessary resources to start and run a business.
State four limitations of direct (4 Marks)
Kaimosi Traders owned a house whose book value was 1,000,000. They insured the house for Ksh. 800,000 against the risk of fire. Fire occurred and partly destroyed the house to the cost of Ksh. 800,000.
Required: (a) Work out the amount of compensation that Kaimosi Traders would receive. (3 Marks)
(b) State the reason for paying the amount as determined in 3(a) above. (1 Mark)
The diagram below represents the circular flow of income in a two-sector (4 Marks)
Goods and services
(d)
Identify what is represented by the letters (a), (b), (c) and (d)
Condition
Market structure
a)
The firm is the industry
b)
Buyers and sellers have complete knowledge
about market but cannot influence the market
c)
Few large firms that dominate the market
d)
Comprised of many sellers of differentiated
products.
Name the books of original entry in which the following transactions are (4 Marks)
Identify the market structure described by each of the conditions given below.
(4 Marks)
Source document
Book of original entry
a)
Bought goods on credit from
Kamau wholesalers
b)
Received Kibisu a debtor, returned
goods.
c)
Cash sales
d)
Sold an old tractor on credit
Outline three circumstances under which cash with order would be
(3 Marks)
State four non-tax sources of government (4 Marks)
Highlight four ways in which the economic environment may lead to business (4 Marks)
12.
13.
Outline four causes of cost-push inflation.
State four reasons for ethical practice in business.
(4 Marks)
(4 Marks)
Outline four circumstances under which a firm may be located near the market for its product. (4 Marks)
Explain the meaning of each of the following trends in business
(4 Marks)
Holding company………………………………………………
Amalgamation………………………………………………….
Absorption………………………………………………………
Cartel……………………………………………………………
State whether the transactions given in the table below will cause Decrease,
Increase or No effect on the totals of the balance sheet. (4 Marks)
Statement
Effect
a)
Bought furniture in cash
b)
Deposited some money into the business
bank account from personal savings.
c)
Purchased goods on credit
d)
Withdrew money from the bank to pay
the child’s hospital bill
Highlight four benefits of product promotion to the (4 Marks)
Name the type of unemployment described in each of the following
Statement
Type of
unemployment
a)
Caused by change in production pattern during
the year influenced by weather conditions.
b)
Occurs repeatedly at similar times.
c)
The number of people employed exceeds those
that are required.
d)
Firms are willing to employ all people at thr prevailing wage rate but job seekers are not
willing to take up the jobs.
Outline four differences between primary wants and secondary
(4 Marks)
The following information relates to Maji Mazuri Traders for the month of December 2021.
DetailsKsh
Identify the type of financial institution described in each of the statements (4 Marks)
Statement
Type of financial institution
a)
Operates fixed deposit,
savings and current accounts.
b)
Advances loans in
proportion to one’s savings
c)
Sells houses through
mortgages
d)
Offers finance to start and
expand industrial enterprise.
Outline four benefits of electronic filing (4 Marks)
Highlight four benefits that Kenya may get from being a member of the East African Community. (4 Marks)
The following information relates to Roga Roga Traders for the year
Loan from Bank
24,000
Sales Ksh. 270,000
Stock
40,000
Margin 40%
Cash
60,000
Rate of stock turnover 6 times
Debtors
12,000
Salaries
8,000
Required:(a) Gross profit. (2 Marks)
Creditors
18,000
(b) Cost of goods sold. (1 Mark)
Furniture
16,000
(c) Average stock (2 Marks)
Work out the net worth of Maji Mazuri Traders. (4 Marks)
Outline four reasons that may make the Government protect
(4 Marks)
Highlight four reasons for locating bonded warehouses at the border
(4 Marks)
Outline four services that retailers may offer to the (4 Marks)
KCSE 2010
Business Studies KCSE P2 (2010-2022)
(a) Commodities A and B are Using two diagrams, explain how an increase in the supply of commodity A will affect the equilibrium price and quantity demanded of commodity B.
Explain five negative effects that inflation may have on the economy of a
(a) Explain five principles that distinguish co-operative societies from other forms of business organizations.
Explain five ways of making face-to-face communication
(a) Given information and required to prepare (i) a TPL (ii) a Balance Sheet
Explain three factors that should be considered when choosing a means of
(a) Explain five befits that a member country may get from economic
The information in the table below relates to product ZX whose unit price in the market is sh. 20.
Required: (i) Determine total costs, average costs and marginal costs at each level
(ii) Determine the units to be produced in order to maximize profits. 5 (a) Discuss five problems that a country may face when measuring her national
income using the output approach.
b) Explain five factors that an entrepreneur would consider when evaluating a business idea.
6 (a) Discuss five benefits that a customer may get by using Automated Teller Machine (ATMs) for financial transactions.
b) Amina operates a fleet of Public Service Vehicles (PSVs). Explain five possible risks she can insure her business against.
KCSE 2011
(a) Explain the following types of (i) Demand-pull inflation (ii) Cost- push inflation (iii) Imported inflation (iv) Structural inflation
b) Explain six factors that may hinder the development of a
(a) Explain five circumstances under which containerization may be used to transport
b) Explain the procedure for taking an insurance claim
(ii) A farmer’s house valued at sh. 1,200,00 was insured against fire for sh. 900,000 under the “with average clause”. Fire occurred and damaged the house causing a loss of sh. 500,000. Determine the value of compensation due to the farmer.
(a) Discuss five factors that may be considered when choosing a method for promoting a product.
b) Describe five features of economic
(a) Explain five befits that may accrue to an organization that adopts an open
b) Discuss five circumstances under which a partnership may be
(a) Amboseli Roses is a horticultural company producing Explain six
Unit produced (in tones)
Total fixed cost Sh.
Total variable cost
Sh.
Total cost Sh.
Total average cost
Sh.
Marginal cost Sh.
0
200
0
10
200
50
20
200
80
30
200
100
40
200
140
50
200
200
factors that may influence the choice of a channel for distributing its products.
b) Give four reasons for maintaining books of original
(a) Discuss five causes of unfavourable balance of payment for most developing
b) Given information and three transactions, required to prepare a balance sheet showing the items in their relevant classes.
KCSE 2012
(a) Explain five benefits of division of labour to an
b) Explain five ways in which computer may be used in an office
Price (sh)
Quantity demanded “000” tones
Quantity supplied “000” tones
35
30
25
20
15
10
5
5
10
20
25
30
40
55
80
65
55
40
35
20
5
(a) Given demand and supply schedules for product A in a week, required to draw demand and supply curves showing the market equilibrium for the product.
b) Explain five merits of direct taxes to the
(a) Explain five disadvantages that a country would suffer if she restricted trade with other countries.
b) Discuss five factors that may promote entrepreneurship in 4 (a) Explain five characteristics of property insurance.
b) Explain five elements of effective
(a) Given trial balance, required to prepare (i) a profit and loss account (ii) a balance sheet.
Describe four characteristics of
(a) A school leaver plans to start a retail Explain five types of small scale shops the person may start.
Explain five circumstances in which a firm may acquire a monopoly
KCSE 2013
(a) Explain five benefits that may accrue to a country with a large population of skilled labour force.
Outline five characteristics of an efficient tax
(a) Explain five benefits that Kenya may get as a member of
Explain five factors that may hinder economic development in Kenya. 3 (a) Explain five benefits that may be realized by a country as a result of
government policy to relocate industries to rural areas.
Given information and gross profit margin as 40% and required to prepare
A TPL
A balance sheet
(a) Explain five advantages of advertising to the
Given opening balance and some transactions and required to prepare a duly balanced three column cash book.
(a) Outline six circumstances under which a trader may use air
Explain four ways through which a public limited company may be 6 (a) With aid of a diagram, explain the effects of an increase in supply of a
commodity while its demand remains constant.
b) Explain five features of
KCSE 2014
(a) Explain five benefits a firm may enjoy by preparing a business
Explain five demerits that a country may suffer when the government becomes a major investor in business.
(a) Given opening balance and some transactions required to prepare a three column cash book,
Explain four reasons for which traders observe ethical practices in product
(a) Explain five objectives that may be achieved by establishing firms in different parts of a country.
Describe five accounting documents that are used in home
(a) Given balances and required to calculate financial ratios (i) turnover (ii) rate of stock turnover (iii) mark-up (iv) margin (v) net profit.
Explain five guidelines that should be followed by the government in its
(a) Explain five disadvantages that a developing country may suffer by liberalizing foreign trade.
Explain five features of monopolistic
(a) Apart from selling shares, explain five sources of finances for public limited
There has been a decline on the demand for wooden furniture. Explain five factors that may have caused this trend.
KCSE 2015
1 (a) Explain five uses of national income statistics to a country.
b) Discuss five principles that would lead to effective uses of government 2 (a) Explain five ways in which the consumer may benefit from warehousing.
b) Given transactions to prepare a two column cash
3 (a) Describe five characteristics of monopolistic competitive market.
b) Explain five features of human 4 (a) Given trial balance to prepare a TPL.
b) Explain five methods of determining the price of a product other than price
(a) Explain five trends in office
Explain five advantage of government involvement in
(a) Explain five benefits which may accrue to Kenya by being a member of African Development Bank (ADB)
Explain five features that are common o underdeveloped
KCSE 2016
1 (a) Explain five factors that may promote entrepreneurship in Kenya.
b) Explain five circumstances under which a partnership may be 2 (a) Explain five advantages of government involvement in business.
b) Traders are required to observe ethical practices when carrying out product promotion. Explain five reasons for observing such ethical practices.
(a) Explain five methods of determining the price of a product other than price
Explain five benefits that may be realized by a country as a result of government policy to relocate industries to rural areas.
(a) Given transactions to prepare a duly balanced three column cash
Given assets, capital and liabilities and few transactions to outline the effects of transactions on items of the balance sheet.
(a) Explain five guidelines that may be used by the government of a country to promote efficient use of her resources.
Explain five disadvantages that a country may face if she restricted trade with other countries.
(a) Given opening balances and few transactions to prepare a three column cash book and balance off.
Outline five reasons that may influence the government to start a
KCSE 2017
(a) Explain five ways in which the internal environment may contribute to the success of the business enterprise.
Describe five channels of distribution that a Kenyan manufacturer would use to ensure his goods reach consumers in another country.
(a) Explain five differences between chain stores and departmental
Given trial balance to prepare
(a) Explain five befits that a private limited company would get by converting to a public limited company.
Explain five disadvantages of using direct taxes to raise government 4 (a) Given transactions to prepare a two column cash book
b) Explain five factors that one may consider when selecting a means for
(a) Explain five demerits of the output approach in measuring national
Explain five circumstances under which a country may realize surplus in a balance of payments.
(a) Explain five methods that the government may use to increase supply of goods in the market.
Explain five factors that may promote the growth of entrepreneurship in
KCSE 2018
(a) Explain five circumstances that may lead to existence of business opportunity to be exploited by the entrepreneur.
Explain five factors that Chuma Steel manufacturer may consider when choosing a channel for distributing their products.
(a) Explain five clauses that must be specified in Memorandum of Association of a public limited company.
Given information and required: (i) to prepare trading account (ii) work out percentage mark-up (iii) calculate rate of stock turnover.
(a) Explain demerits of using carts as a means of transport in
Explain five types of direct taxes that the government may use to collect revenue from individuals and companies.
(a) The demand for soft drinks has been on Explain five factors that may have contributed to this.
Describe five forms of economic integrations that countries may join to promote international trade.
(a) Explain five differences between an open office and an enclosed
Given information and some transactions to prepare a balance
(a) Explain five problems of using national income statistics to compare the living standards of citizens of Kenya and Tanzania.
Given transactions to prepare two column cash
KCSE 2019
(a) Explain five services that may be offered by wholesalers to retailers,
Explain five differences between a sole proprietorship and a public limited
(a) Explain five negative implications of young
Given trial balance to prepare a TPL and find initial 3 (a) Explain five demerits of pipeline as a means of transport.
b) Explain five measures that may be taken to increase the volume of
(a) Given sales, cost of sales, average stock and expenses as 5% of Required to calculate: (i) Margin (ii) total expenses (iii) Net profit (v) rate of stock turnover.
Outline five benefits of a business to the
(a) Explain five advantages of locating firms in different parts of the
Explain five government initiated methods of consumer 6 (a) Describe the procedure of obtaining insurance policy.
Outline five assumptions associated with the circular flow of income in a two sector economy.
KCSE 2020
(a) Explain five measures that the government may take to solve youth unemployment in Kenya. (10 Marks)
Explain five reasons for consumer (10 Marks)
(a) Explain five principles of Government (10 Marks)
Explain five trends in office (10 Marks)
(a) Given transactions to post on relevant ledger (10 Marks)
Explain five benefits of intermediaries to the consumer in the chain of distribution. (10Marks)
(a) Explain five benefits of savings account to a (10 Marks)
Explain five ways in which a warehouse may promote (10 Marks) 5 (a) Given a trial balance to prepare: i) P&L account. (5 Marks)
ii) A balance (5 Marks)
b) Explain five benefits of communication to a (10 Marks)
6 (a) Explain five reasons that may take it necessary for the government to promote entrepreneurship. (10 Marks)
b) Explain five advantages of indirect production to the (10 Marks)
KCSE 2021
1 (a) Explain five circumstances under which a producer may sell goods directly to the consumer. (10 Marks)
Explain each of the following terms of sale as used in international trade:
(10 Marks)
Ex-works (ii) Cost and Freight (iii) FOB (iv) Landed (v) In Bond 2 (a) Explain five factors that may discourage entrepreneurship in Kenya.
(10 Marks)
(b) Explain five demerits of indirect taxes. (10 Marks)
(a) Explain five errors that may not be detected in a trial
(10 Marks)
Explain five documents prepared by the seller after receiving an order up to the point of delivery. (10 marks)
(a) Explain five reasons that may make a firm operate on a small (10marks)
Given information to prepare (i) Profit and Loss (6 Marks)
(I) Working (1 Mark)
( II) Return on Capital Employed. (3 Marks) 5 (a) Explain five reasons that make it necessary for the Government to train
business people. (10 Marks)
(b) Explain five problems that the Kenyan Government may experience when implementing the Vision 2030. (10 Marks)
6 (a) Explain five advantages of written communication. (10 Marks)
(b) Given transactions to prepare a Two-column Cash book. (10 Marks)
KCSE 2022
1 (a) Explain five circumstances under which a bank may dishonour a cheque. (10 Marks)
Explain five factors that may lead to an increase in the level of National Income of a country. (10 Marks)
2 (a) Explain five factors that may lead to dissolution of a co-operative society. (10 Marks)
Explain five features of underdeveloped (10 Marks) 3 (a) Given opening balances and few transactions to;
Prepare ledger (8 Marks)
Extract Trial (4 Marks)
(b) Explain four elements of a good transport system. (8 Marks)
4 (a) Explain five ways in which employees may contribute to the success of a business. (10 Marks)
(b) Explain five roles of the World Bank in promoting international trade.
(10 Marks) 5 (a) Explain five limitations of mobile phones in communication.
(10 Marks)
(b) Use the diagram given below to answer the questions that follow D1 D0
Price S
Pe0 e0
S
D1 D0
Quantity
Explain four effects of the shift in demand curve from Do to (8 Marks)
State what is represented by the shaded area. (2 Marks) 6 (a) Given a Trial Balance to Prepare a TPL and a Balance sheet. (12 Marks)
(b) Explain four reasons that may make Government departments adopt open office layout. (8 Marks)
Business Studies KCSE Paper 2 (2009-2020) Accounting Questions
KCSE 2009
2(b) The trial balance of Zakayo Traders as at 1 June 2008 is given below.
Details
DR (sh)
CR (sh)
Stock Creditors Debtors Bank
Fixed assets Cash Capital
Lighting due
76,500
350,000
260,400
970,200
120,500
450,400
1,300,000
27,200
1,777,600
1,777,600
During the month, the following transactions took place.
June 5Paid a creditor sh. 228,000 by cheque in full settlement of a debt after deducting a 5% cash discount.
June 15Withdrew sh. 100,000 from bank for office use.
June 28Received sh. 160,000 cash from a debtor after allowing cash discount of sh. 40,000.
Required: Record the above transactions in their relevant ledger accounts and balancethem off. (10 Marks)
5 (b) Malamu Traders had the following balances as at 31 December 2008.
Repairs on buildings Repairs on furniture Repairs on motor vehicles General expenses
Capital
60,000
72,030
300,000
102,100
1,400,000
Prepare: (i) Profit and loss account for the year ended 31 December 2008.
(ii) Balance sheet as at 31 December 2008. (12 Marks)
KCSE 2010
3(a) The following balances were extracted from the books of K100 Traders for the year ended 30th June 2008.
Items
Stock on 1stJuly 2007 Discount received Furniture
Motor vehicle Returns inwards Returns outwards Debtors Creditors Purchases Carriage on sales
Carriage on purchases Lighting
Sales Insurance Repairs Water bills
General expenses Cash
Capital Bank
Bank overdraft
Shs.
80,200
7,500
3,000,000
690,000
5,800
20,800
316,800
510,400
1,120,000
12,700
40,000
15,000
1,880,000
4,000
230,000
250,000
56,700
80,000
4,000,000
520,000
2,500
Building Bank loan Debtors Creditors Furniture Gross profit Motor vehicle
Discount allowed Lighting
Interest on loan Closing stock Rent received
540,000
472,500
116,900
227,000
408,170
520,600
900,000
142,000
25,200
1,200
72,500
120,000
Additional information: Stock on 30th June 2008 was valued at sh.120,000
Prepare:
(i) (i) Trading, profit and loss account for the year ended 30th June 2008. (9 Marks) (ii (ii) Balance sheet as at 30th June 2008. (5 Marks)
6(b) The following balances were extracted from the books of Rehema Traders on 1st January, 2007.
Capital Creditors Motor van Furniture Stock Debtors
Cash
Ksh.
600,000
180,000
200,00
200,00
60,000
80,000
240,000
The following transactions took place during the year ended 31st December, 2007:
Sold furniture worth 60,000 for which Ksh. 40,000 cash was received and balance was due at the end of the year.
Purchased goods worth Ksh. 100,000 for which cash of Ksh. 70,000 was paid and the balance was still outstanding at the endof the year.
Cash 10,000 was taken from the business by the proprietor to settle the spouse’s hospital bill.
Required:
Draw Rehema Traders’ balance sheet as at 31st December, 2007 showing the items in their relevant classes.(10 Marks)
KCSE 2012
5 (a) The following Trial Balance was prepared by Laketi Traders on 31st December, 2009.
Particulars
Dr(Shs)
Cr(Shs)
Premises
850,000
Debtors
650,500
Creditors
820,000
Motor vehicle
800,000
Equipment
550,500
Gross profit
1,960,200
Furniture
350,000
Stock
75,000
Bank
200,000
Cash in hand
150,000
General expenses
117,800
Discount received
66,100
Commission allowed
12,400
Insurance
7,500
Lighting
4,600
Salaries
78,000
Capital
1,000,000
3,846,300
3,846,300
Using the information given above, prepare:
A Profit and Loss Account(7 Marks)
A Balance (5 Marks)
KCSE 2013
3 (b)The following balances were extracted from the books of Solo Traders on 31st December, 2010.
Machinery Furniture Sales Opening stock Closing stock Purchases Rent income
General Expenses Debtors
Creditors Bank Cash
Capital
Shs
360,000
430,500
500,000
75,000
? 395,000
72,000
60,000
62,250
101,550
202,000
88,800
1,000,000
Additionalinformation:
Gross profit margin is stated at 40%
Prepare: (i) Trading, profit and Loss Account for the year ended 31st December, 2010. (5 ½ Marks)
(ii) Balance sheet as at 31st December, 2010.(4 ½ Marks)
4 (b) On 1st January 2011, Jumo Traders had Shs. 22,500 in cash and Shs. 250,000 at bank. During the month, the following transactions took place:
2nd Jan: Made cash sales of Shs. 465,200
5th Jan: Received a cheque for shs.451,250 from Kamau Traders in full settlement of their debt after allowing a 5% cash discount.
15th Jan: Paid Ndaru Traders Shs. 184,000 in cash after deducting a cash discount of Shs. 16,000.
20th Jan: Deposited Shs. 200,000 from cash till into the bank.
25th Jan: Paid wages Shs. 144,000 in cash.
28th Jan: Settled Mbago Trader’s account of Shs. 300,000 by cheque, less 15% cash discount.
29th Jan: Withdrew Shs. 250,000 from the bank for office use.
30th Jan: Deposited all the cash into the bank, except Shs. 59,700
Required: Prepare a duly balanced three column cash book.(10 Marks)
KCSE 2014
2 (a) on 1st January, 2012 Ndovu Traders had shs. 30,000 cash and shs. 75,000 at the bank.
During the month, the following transactions took place:
January2nd: Bought goods in cash worth shs. 15,500
January 5th: Received cash from Chui shs. 23,750 after allowing 5% cash discount.
January 8th:Withdrew shs. 8,900 from the bank for personal use. January 11th: Maro, a debtor settled her account of shs. 16,800 by a cheque of shs. 16,000
January 15th: Sales amounted to shs. 24,250 in cash. January 17th : Paid Furaha Traders shs. 29,100 in cash in full settlement of their account less 3% cash discount.
January 20th : Withdrew shs. 15,000 from the bank for business use. January 22nd: Koko, a debtor, settled her account of shs. 40,000 by cheque less 2.5% cash discount
January 25th: Paid wages shs. 21,000.
Required:Prepare a duly balanced three column cash book.(12 Marks)
4 (a) The following information relates to Bahati enterprises: Calculate:
(1 Mark)
Rate of stock turnover (3 Marks)
Mark (2 Marks)
(2 Marks)
Net (2 Marks)
KCSE 2015
2 (b) The following balances were 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 goods in cash shs. 8,500.
-September 9: Sold good on credit shs. 10,000
-September 12: Received a cheque of sh. 9,000 from a debtor.
-September 15: Paid a creditors 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 sh. 7,700 from the bank for office use.
-September 24: Paid electricity bills by cheque of 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 8,950 in cash.
-September 28: Deposited personal cash shs. 3,500 into the business account.
– September 30: Paid water bills by cheque sh. 2,800.
Required:Prepare a two-column cash book. (10 Marks)
Details
DR (Ksh)
CR (Ksh)
Stock Bank Purchases Sales Returns Rent Insurance Creditor Carriage in
Discounts
10,000
3,500
15,000
800
950
1,200
300
28,000
1,100
580
450
1,620
31,750
31,750
4 (a) The following trial balance relates to Chui Traders as at 31st December, 2014.
Additional information:
Closing stock was valued at 2,500.
Carriage out was 1,200
Required:
Prepare Trading, Profit and Loss Account. (10 Marks)
KCSE 2016
4 (a) On 1st January, Ndovu Traders had Ksh. 30,000 in cash and Ksh. 75,000 at the bank.
During the month, the following transactions took place. January 2:Bought goods in cash worth Ksh. 15,500
January 5: Received cash from Chui Ksh. 23,750 after allowing 5% cash discount.
January 8: Withdrew Ksh. 8,900 from the bank for personal use.
January 11: Maro, a debtor settled her account of Ksh.16,800 by a cheque of Ksh. 16,000.
January 15: Sales amounted to Ksh 24,250 in cash.
January 17: Paid Furaha traders Ksh 29,100 in cash in full settlement of their account less 3% cash discount.
January 20: Withdrew Ksh 15,000 from the bank for business use. January 22: Koko a debtor settled her account of Ksh 40,000 by cheque less 2.5% cash discount.
January 25: Paid wages Ksh 21,000 cash.
Required: Prepare a duly balanced three column cash book. (12 Marks)
4 (b) The following balances were extracted from the books of Rehema Traders on 1st January 2015.Ksh
KCSE 2017
2(b)The following Trial balance was extracted from the books of Ojwang Limited on 31st December, 2013.
Capital
600,000
Creditors
180,000
Motor van
200,000
Furniture
200,000
Stock
60,000
Debtors
80,000
Cash
240,000
Ojwang Limited Trial Balance
Details
Dr(Ksh)
Cr(Ksh)
Capital
Opening stock
200,000
800,000
Purchases
680,000
Returns
50,000
80,000
Discounts
80,000
45,000
Carriage inwards
42,000
Debtors and creditors
200,000
105,000
Sales
Motor vehicles
750,000
1,200,000
Furniture and fittings
250,000
Rent
50,000
60,000
Bank overdraft
Carriage outwards
30,000
42,000
As at 31st December, 2013
The following transactions took place during the year ended 31st December 2015:
Sold furniture worth Ksh 60,000 for which Ksh 40,000 cash was received and the balance was due at the end of the year.
Purchased goods worth Ksh 100,000 for which cash of Ksh 70,000 was paid and the balance was still outstanding at the end of the year.
Cash Ksh 10,000 was taken from the business by the proprietor to settle the spouse’s hospital bill.
Required: Outline the effect of each transaction on the items of the balance sheet. (8 Marks)
6 (a) On 1st September 2015, Gondi had Ksh 55,000 in hand and Ksh 250,000 at bank. During the month, the following transactions took place:
September 2: Cash sales banked Ksh 35,260
September 3: Bought ribbons in cash Ksh 4,500
September 8: Paid Wangila, a creditor Ksh 94,000 by cheque in full settlement of his account after deducting 6% cash discount
September 12: Received a cheque for Ksh 58,800 from Wetu after allowing her a cash discount of Ksh 1,200.
September 15: Paid salaries Ksh 34,000 in cash
September 25: Withdrew Ksh 50,000 from bank for office use
September 28: Anyango, a debtor paid her account of Ksh 75,000 by cheque less 10% cash discount
September 30: Deposited all the cash into bank except Ksh 13,700
Required: Prepare a three-column cash book and balance it off. (10 M)
Additional information: Closing stock was valued at Ksh.80,000.
Required: Prepare a TPL account. (10 Marks)
4(a) The following transactions relate to Dagoreti Enterprises for the month of March 2016.
March 1: Started business with Ksh 15,300 in cash and a bank overdraft of Ksh 8,200.
March 3: Made cash purchases of Ksh. 10,200 in cash.
March 4: Harrison, a debtor settled his account of Ksh 18,000 by issuing a cheque of Ksh. 13,400 and rest in cash.
March 5: Paid wages by cheque, Ksh. 5,000.
March 6: Received a cheque of Ksh. 9,310 from Chebet. March 7: Received cash, Ksh. 7,720 from Otieno.
March 8: Paid Hassan Ksh. 5,450 in cash.
March 9: Deposited Ksh. 6,000 from the office into the business bank account. March 10: Paid insurance Ksh. Ksh. 3,700 by cheque.
March 11: Paid Ksh. 3,900 for repairs in cash.
March 12: Received Ksh. 8,570 in cash from Mwende. March 13: Received a cheque of Ksh. 11.200 from Makokha March 14: Paid water bill Ksh. 2,590 by cheque.
March 15: Paid rent Ksh. 6,500 by cheque.
March 29: Took all the cash that was in the office and deposited it into the business bank account.
Required: Prepare a two-column cash book for the month of March 2016. (10 Marks)
KCSE 2018
2 (b)The following information was extracted from the books of Kisababu Traders on 31st December, 2014.
Details Ksh
Sales
84,000
Purchases
58,800
Opening stock
15,700
Stock on 31/12/2014
13,000
Returns out
1,500
Returns in
Required:
9,000
Prepare Kisababu Traders Trading Account for the period ending 31st December, 2014. (5 Marks)
Work out Kisababu Traders percentage Mark-up (2 Marks)
Calculate Kisababu Traders Rate of Stock (3 Marks)
KCSE 2018
5 (b) The following balances were extracted from the books of Mageta Traders on 1st July, 2016. ( 10 marks)
Details
Ksh
Furniture
56,000
Capital
80,000
Creditors
20,000
Debtors
25,000
Bank
11,000
Cash
8,000
The following transactions took place in the course of the month.
Paid a creditor 4,500 in cash.
Took 3,000 from the bank for family use.
Bought stock 18,600 on credit.
Acquired a 10 Year Bank Loan 165,000 which was credited to the business account.
Purchased land worth 82,000 paying by cheque.
Converted a family table worth 5,500 to business use.
Received 7,300 in cash from debtor.
Required:
Prepare Mageta Traders Balance Sheet at the end of July 2016. (10 Marks)
KCSE 2018
6(b) Use the transactions given below to prepare Jawabu Traders two column cash book for the month of February 2015.(10 Marks)
1stFeb: Had Sh. 12,500 cash and bank overdraft of Sh. 5,000.
2ndFeb: Used cash to pay for water bill sh 800, electricity sh 1,100 and wages sh 4,700.
3rdFeb: Received a cheque of sh 18,900 from a debtor. 5thFeb: Sold goods worth sh 7,150 in cash.
7thFeb: Paid for goods bought for resale worth sh6,400 by cheque.
9thFeb: Received a cheque of sh 13,000 from the co-operative society as earnings from dividends.
10thFeb: Withdrew sh2,500 from the bank for family use. 13thFeb: Received sh 15,900 in cash from a debtor.
15thFeb: Deposited sh 9,500 from the office into the business bank account.
17thFeb: Paid a creditor by cheque sh 4,390.
27thFed: Used all the money in the bank to purchase furniture leaving only a balance of sh. 2,010.
KCSE 2019
2 (b) The trial Balance given below was extracted from the books of Rakwaro Enterprises on 31 December 2015.
Rakwaro Enterprises Trial Balance
Details
Dr (Ksh)
Cr (Ksh)
Capital
Premises
400,000
720,000
Debtors Creditors
Bank
388,800
176,000
240,000
Cash
24,000
Drawing
28,000
Purchases Sales
Stock 1-1-2015
960,000
160,000
1,440,000
Returns inwards
16,000
Carriage inwards
6,800
Discount allowed
40,400
Salaries and wages
200,000
2,400,000
2,400,000
As at 31st December, 2015
KCSE 2020
3 (a) Post the following transactions to the relevant ledger accounts and balance them off.(10 Marks)
1/3/2018— Started a business with Ksh. 100,000 at bank.
2/3/2018— Bought motor vehicle worth Ksh. 800,000 on credit from
General Motors.
4/3/2018— Withdrew Ksh. 20,000 from bank for office use.
6/3/2018— Bought stock worth Ksh. 30,000 paying by cheque.
10/3/2018—-Made cash sales of Ksh. 15,000.
10/3/2018— Took cash Ksh. 8,000 to pay hospital bills.
KCSE 2020
5 (b) The following is an extract of trial balance from the books of Adan Traders as at 31st December, 2018.
Stock on 31 December 2015 was valued at Ksh. 280,400. Required: (i) Prepare Rakwaro Enterprises Trading Profit and Loss Account for the period ending 31 December 2015. (7.5 Marks)
(ii) Determine Rakwaro Enterprises initial capital. (2.5 Marks)
Adan Traders Trial Balance
As at 31st December, 2015
Details Dr (Ksh) Cr (Ksh)
Premises 1,120,000
Cash at bank
80,000
Discounts
15,000
2,400
Salaries and wages
27,000
Commission
16,000
9,000
Power and lighting
11,700
Furniture
Capital
49,000
1,301,800
Additional information:
Debtors and creditors 55,00037,300 Cash in hand 65,000
KCSE 2019
4 (a) The following information relates to Moyale Retailers for the month of july 2015:
Sales Ksh 50,000
Cost of sales Ksh. 40,000
Average stock Ksh. 20,000
Expenses were 5% of sales
Calculate:
Mark-up (2 Marks)
Margin (2 Marks)
Total (2 Marks)
Net (2 Marks)
Rate of stock (2 Marks)
Stock of gods on 31 December 2018 Ksh. 25,000. Gross profit Ksh. 120,000.
Required:
Prepare Adan Traders Profit and Loss Account for the periodended31 December 2018. (5 Marks)
Prepare a Balance Sheet as at 31 December (5 Marks)
KCSE 2021
4 (b) The following information was extracted from the books of Ushirika Traders as at 31st December, 2020. (10 Marks)
Details Ksh
Gross Profit 94,000
Commission received 32,000
Carriage Outwards 8,000
General Expenses 15,000
Discount Received 29,000
Total Fixed Assets
1,110,000
Insurance
17,000
Capital
490,000
Drawings
37,000
Long Term Liabilities
610,000
Discount Allowed
12,000
Commission Allowed
4,000
Current Liabilities
162,000
Current Assets
192,000
Salaries
22,000
Prepare a profit and Loss Account. (6 Marks)
(ii) Determine: (I) Working Capital. (1 Mark)
(II) Return on Capital Employed. (3 Marks)
6 (b) Use the transactions given below to prepare Patel Traders Two Column Cash Bok for the Month of February, 2020. (10 Marks)
1st Feb: Had Ksh 1,200ncash in hand and a bank overdraft of Ksh. 1,000 2nd Feb: Used cash to pay water bill Ksh. 200, electricity Ksh. 100 qnd waages Ksh. 400
3rd Feb: Received a cheque of Ksh. 14,000 from Daisy. 5th Feb: Sold goods worth Ksh. 7,000 in cash.
7th Feb: Paid for goods bought for resale worth Ksh. 5,000 by cheque. 9th Feb: Received a cheque of Ksh. 10,000 from Co-operative Society as earning from Dividends.
10th Feb: Withdrew Ksh. 2,000 from the bank for family use. 13th Feb: Received a cheque of Ksh. 10,000 from Petro.
15th Feb: Deposited Ksh. 1,000 from the office into the business bank account.
17th Feb: Paid Manu by cheque Ksh. 1,000.
27th Feb: used the money in the bank to purchase furniture leaving only a balance f Ksh. 2,000.
KCSE 2022
3(a) The following balances were extracted from the books of Mtito Andei Wholesalers on 1st October, 2021. (10 Marks)
Details Ksh
Bank 80,000
Cash 15,000
Juma (Creditor) 24,000
ICDC Loan 70,000
Motor Vehicle 210,000
Stock 45,000
Mangu (Debtor) 26,000
Capital 237,000
The following transactions took place in the first week of the month: October 2nd : Withdrew Ksh. 14,000 from the bank to pay Juma. October 3rd : Mangu paid his debt of Ksh. 10,000 cash
October 4th : Took loan from bank worth Ksh. 170,000 cash of which Ksh. 70,000 was used to clear Outstanding ICDC loan.
October 5th : Purchased goods worth Ksh. 40,000 in cash.
Required:
Record the above transactions into relevant ledger accounts and balance them off. (8 Marks
Extract a trial balance as at 3th October, (4 Marks)
6 (a) The following trial balance was extracted from the ledgers of Ushindi Traders 30th November, 2021. (10 Marks)
Ushindi Traders Tiral Balance
As at 30th November, 2021
Details DR (Ksh) CR (Ksh)
Capital 58,300
Sales 200,000
Purchases 111,000
Salaries 13,300
Rent Income 40,000
Stock 1/12/2020
12,500
Insurance
10,500
Telephone
9,500
Advertising
14,000
Premises
100,000
Furniture
16,000
Debtors
33,500
Creditors
53,000
Cash in hand
18,400
Cash at bank
12,600
351,300
351,300
Stock on 30th November was valued at Ksh. 8,500
Prepare the Trading, Profit and Loss Account for the year ended 30th November, 2021 and a Balance Sheet. (12 Marks)
KCSE Business Past Papers Answers.
KCSE 2010-2022 P1&P2
BUSINESS STUDIES
QUESTIONS
& MARKING SCHEMES
Business Studies KCSE 2010-2022 P1 Marking Scheme
7. Matching functions of the Central Bank. (3 Marks)
KCSE 2010
Type of utility created. (4 Marks)
Possession utility (ii)Place utility
Time utility (iv) Form utility
2. Reasons for government to start a parastatal. (4 Marks)
To increase revenue
To provide strategic goods and
To encourage foreign
To reduce foreign
To address special social
To create more employment
To take care of sensitive ventures like fire arms and printing money.
To provide essential goods and services at low
To stimulate economic
To take care of business that requires a large initial capital
3. Types of warehouses referred to are: (4 Marks)
Bonded warehouse (ii) Public warehouse (iii)Wholesalers warehouse (iv) Manufacturers warehouse
4. Factors that would have caused increase in supply.
Fall in cost of production
Fall in price of competitively produced
Technological progress/Increase in level of/advancement in technology
Favourable weather/climatic conditions e.g. adequate rainfall
Favourable government policies like reduced tax and increased subsidies
Future expectations of fall in price of the commodity
Entry of new firm in the industry
Increase in factors of production
Longer time
Less strikes
Increase in the price of jointly supplied goods
5. Enotika Traders balance sheet as at 31st December, 2008. Enotika Traders
Balance Sheet
As at 31st December, 2008
Fixed Assets 480,000
Capital 300,000
Current Assets 145,220
625,220
Long-Term Liabilities
2 Year Bank Loan 230,000 Current Liabilities
Creditors 95,200
625,220
Why a three-column cashbook is used both as a journal and a ledger. (4 Marks)
Cash transactions are entered in three-column cash book directly as they occur
Cash and Bank columns in the cash book act as a ledger and total balances are used to prepare trial balance
Both discount allowed and discount received columns acts as a journal and their total balances are transferred to the ledger.
Both of them have a ledger folio column for cross- referencing.
Repayment of Government securities as they mature-
Management of national debt.
Receipt of treasury bills to secure loans-Lender of last resort
Directing commercial banks on the preferred sectors to lend money-Credit control
8. Terms of sale as used in international trade. (4 Marks)
LOCO-this means that the price of goods quoted are as they are at the exporter’s warehouse/premises. The importer meets all other expenses of moving the good to his/her
I.F (Cost Insurance and Freight)- the price quoted includes the cost of goods, insurance and transport.
A.S (Free Alongside Ship)-the price quoted includes the
expenses from exporter’s premises to the dock including loading expenses. Importer meets other expenses.
O.Q (Free on Quay)- this means price quoted includes all expenses up to the quay.
9. Merits of Management by Walking Around. (4 Marks)
Manager gets the first-hand information
Manager gets immediate feedback from
It can help control misuse of resources since workers are cautious.
Manager can enhance interpersonal relations with works
Manager can address issues/problems as they arise
Manager can identify and manage absenteeism or
10. Why government create an enabling environment for investors. (4 Marks)
To minimize cost of doing
To expand tax base and increase
To enable them create more employment
To open new areas neglected by
To encourage utilization of local
To promote public-private sector relationship.
To enhance country’s economic
To spur economic
11. Differences between insurance and assurance. (4 Marks)
INSURANCE
ASSURANCE
It deals exclusively with
property
It deals exclusively with life
Cannot be used as a saving plan
Can be used as a saving plan
Has no surrender value
Has surrender value.
Has no maturity date
Has maturity date
Policy cannot be used as a security for a loan
Policy can be used as a security for a loan
In case of loss compensation is given to the insured
Compensation is given to beneficiaries in case of death
of assured
Sum insured depend with value of property
Sum assured depends with assured’s ability to pay
Principle of subrogation and
indemnity applies
Principles of subrogation and
indemnity does not apply
Factors that may influence the level of national
(i)Availability of natural factors. (ii)Availability of (skilled) labour.
(iii) Level of technology. (iv)Political stability.
(v) Attitude of citizens towards work. (vi)Size of subsistence sector.
(vii) Level of foreign investment. (viii)Amount and quality of capital.
(ix) Entrepreneurial culture. (x) State of Infrastructure
13. Difference between cash and credit transactions. (2 Marks)
In cash transaction goods and money are exchanged immediately/at same time while in credit transaction exchange of goods takes place and payment is done at a later
Evidence used in cash transaction is cash receipt while in credit transaction an invoice is
14. Matching types of capital. (3 Marks)
Statement Type of capital
Resource invested into business by the owner-Owner’s equity
Excess of current assets over current liabilities-Working capital
Amount invested into the business by outsider-Borrowed capital
15. Ways in which expenditure may stabilize the economy of a country. (4 Marks)
Provision of security which creates conducive environment for doing
Provision of social amenities to cater for social welfare of the citizens
Spending on infrastructure to improve efficiency in economic activities.
Provision of essential goods and services to the public to meet high
Provision of incentives to local industries to encourage production.
Spending on general government administration for effective operation of the
16. Problems associated with development planning. ( Marks)
(i) Inadequate funds. (ii) Political instability. (iii)Conflicts of interests. (iv) Lack of political goodwill. (v)Lack of enough specialists. (vi) Overambitious plans. (vii)Natural catastrophes/calamities(viii) Inadequate/inaccurate data.
17. Services offered by wholesaler to a manufacturer. (4 Marks)
Links the manufacturer to the
Breaks bulk on behalf of
Provides storage of goods on behalf of
Help manufacturer on distribution of
Offers advice and valuable information to
Products promotion on behalf of
18. Why transport flowers by air rather than by sea. (4 Marks)
Air transport is faster than sea transport in case flowers are urgently
Security of air transport is relatively higher than sea and thus flowers will be
Flowers are light in weight and hence appropriate to use air transport.
Flowers are highly perishable hence air transport which is faster than sea transport.
19. Letters represents (4 Marks)
P(Axis)-per capita income R-Under population
S(Axis)-Population Q-Optimum population
20. Salaries Expense Account (4 Marks)
Balance b/d 24,800
Cash 48,200
Profitt and Loss a/c 20,600 Balance c/d 52,400
73,000
73,000
DR Salaries Expense Account CR.
21. Circumstances to start a personal business. (4 Marks)
Where there is need to create
When there is need for additional
Where there is need to invest surplus
When there is need to utilize extra time
When one wants to be own
Where there is need to exploits one’s
22. Ways in which a business idea can be implemented.(4 Marks)
By creating a new
By improving on an existing
By improving the quality of
By expanding the range of services
By offering unique services/products.
By improving on process of production/inventing
23. Measures to improve the working environment an office.
Provision of adequate space for
Provision of adequate equipments and
Maintaining tidiness in the
Provision of proper and adequate
Provision of safety measures and
Provision of proper
Discouraging unnecessary
Decorating and beautifying the office to be
24. Challenge for using a cell phone (mobile phone). (4 Marks)
Diversification of economy by encouraging different industries
Delocalization of industries to ensure balanced regional balance
To improve infrastructure to support economic activities
Encouraging foreign investment by giving foreign investors incentives
Adopting use of modern technology to increase production and reduce wastage
6. State four services offered by a commercial bank to its consumers. (4 Marks)
Accepting deposits
Safekeeping of valuable items
Advancing loans
Offering foreign exchange services
Offering advisory services on financial matters
Money transfer services
7. List four sources of public finance. (4 Marks)
Taxes
Fines from courts
License fees
Borrowing
Grants and foreign aid
Rent and rates for use of government property
Dividends and profits from government investments
Proceeds from sale of government property
Interest earned from loans advanced by government
Escheats
8. Outline four reasons why countries may trade with each other. (4 Marks)
To dispose of their surplus
To acquire what they do not have
To enhance bilateral ties/promote peace among trading partners
To enhance access of variety of goods for its citizen to improve their quality of life
To earn foreign exchange
To create employment for their
To earn revenue through taxation
9. Outline four reasons why economic development is desirable to a country. (4 Marks)
To improve standards of living of the citizens
To improve infrastructure
To create employment
To increase life expectancy of the citizens
To improve social welfare of citizens
10. Indicate the reward associated with each of the factors of production in the table below. (4 Marks)
Factor of production
Reward
a.
Land
Rent/Rates/Royalties
b.
Labour
Wages/salaries
c.
Capital
Interest
d.
Entrepreneurship
Profits
Outline four circumstances under which a co-operative society may be dissolved. (4 Marks)
Where there is a court order to dissolve
Where the objectives of the co-operative society have been achieved
If majority of the members vote to dissolve it during AGM
In case of mass withdrawal of members leaving less than ten
If the co-operative society is declared bankrupt
In case of an order from commissioner of co-operatives to dissolve it.
In case of continuous loss
12. Highlight four features of a bonded warehouse.
i) They are usually located at the entry points. ii)Stores goods that are under bond.
Goods are released on production of release
Storage fees are charged on all goods stored in the warehouse.
Goods can be prepared for sale while still in the
Goods can be re-exported while still on
13. Outline four factors that may be considered when measuring the size of a firm. (4 Marks)
The volume of output
The number of employees
The amount of capital invested
The floor area covered by the firm premises
The level of technology used/method of production used
The sales volume
The market served
Salim Traders Account (b) Shah Traders Account
(c) Purchases Account (d) Sales Account
Mar 10 Salim Traders 200,000
15. On 2nd November 2006, Oromo received an invoice for Ksh. 12,000. Terms of payment were trade discount 5% and cash discount 10%. If payment is made within 30 days. Determine the amount paid if payment was made on 28th November 2006. (4 Marks)
5
𝑇𝑟𝑎𝑑𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 𝑥12,000 = 600 𝐴𝑚𝑜𝑢𝑛𝑡
100
= 12,000 − 600 = 11,400
10
𝐶𝑎𝑠 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 𝑥11,400 = 1,140 𝐴𝑚𝑜𝑢𝑛𝑡 𝑃𝑎𝑖𝑑
100
= 11,400 − 1,140 = 𝐾𝑠 10,260
𝐴 = 𝐶 + 𝐿
500,000 = 𝐶 + (150,000 + 100,000)
500,000 − 250,000 = 𝐶 => 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐾𝑠. 250,000
vi) To reduce rural-urban migration
𝑅𝑂𝐶 =
𝑁. 𝑃
𝐶
50,000
=
250,000
𝑥100% = 20%
17. Amina Traders on 31st December 2006
Amina Traders Trading Account
For the period ended31st December, 2006
State four benefits that a trader may get by advertising products in a newspaper. (4 Marks)
Wide coverage/message will/each many people
It has reference/evidence of message
Advertised message can last for a long
It allows detailed
Graphical details/pictures can be included.
Advertised message is readily acceptable by readers.
𝐶𝑃𝐼 = 𝑝1𝑥100 𝐶𝑃𝐼 2006 = 100%
𝑝0
18. State four benefits that a farmer may get by transporting produce to the market by road. (4 Marks)
1600
𝐶𝑃𝐼 2007 =
1200
1
𝑥100% = 133 %
3
1 1
Transporting is relatively
It is readily available
It is relatively flexible
𝐻𝑒𝑛𝑐𝑒, 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒 = 133
3
KCSE 2012
− 100 = 33 %
3
They are variety means of transport to choose
It is relatively cheap to hire
19. Causes of decrease in supply of Sukuma Wiki. (4 Marks)
Fall in price of kales
Outbreak of kales destroying kales
Prolonged drought
Increase in cost of farm inputs such as fertilizer/seeds
Use of inappropriate method of
Increased government taxation on
Off peak seasons
Increase in price of competitively produced products
Increase in price of substitutes such as cabbage making producers to shift to producing
20. Outline four ways in which households contribute to national income of a country. (4 Marks)
Consumption of goods and
Savings and
Provision of factors of
Payment of
21. Circumstances in which trader use oral communication.
Where there is need to bargain/negotiate.
Where there is need to explain use and features of
When selling over the
Where there is need to get immediate feedback from customers.
22. Outline four reasons why a firm may remain small.
Where the nature of product requires small-scale production
Where market is small
Lack of adequate funds for expansion
Lack of appropriate technology
Owner’s decision to remain small
Legal constraints/government policy
23. MUTHONI TRADER CASH BOOK
DR FOR THE MONTH OF JANUARY 2007 CR
Outline four circumstances under which cash with order may be used. (4 Marks)
Where the buyer is new to the
Where the buyer’s credit worthiness is in
Where CWO is the policy of the
Where the seller is operating a mail order store business.
Where the seller wants to avoid high cost of debt collection.
Where the seller needs working
2. Benefits to a farmer by being a member of a Producer Co-operative Society. (4 Marks)
May get farm inputs such as fertilizers at fair
May get dividends from shares
May get credit conveniently and at lower interest
May get education on best agricultural
The society may prepare goods for sale on behalf of the farmer.
May acquire skills on better methods of
May get transport facilities for their produce from the society.
May get storage facilities for their produce from the society.
3. Benefits of globalization to a business enterprise.
The business accesses wider market.
It makes it possible for countries to share methods of production.
Facilitates application of better technology for improved products.
Encourages collaboration among businesses from different
Facilitates sharing of research findings by businesses globally.
Enables business to take advantages of resources found in other parts of the world without
4. Ways in which consumers may protect themselves against exploitation by traders. (4 Marks)
Date
Details
Cash
Bank
Date
Details
Cash
Bank
Jan 1
Bal b/d
25,250
Jan 1
Bal b/d
150,000
“ 5
Sales
21,500
“ 28
Creditor
80,000
“ 16
Debtor
360,000
“ 28
Creditor
20,000
“ 31
Bal c/d
26,750
130,000
46,750
360,000
46,750
360,000
Feb 1
Bal b/d
26,750
130,000
Forming consumer
Complain through the media.
Reporting cases of exploitation to relevant authorities.
Demonstrating peacefully against
Avoiding traders identified as exploiters by refusing to buy from
Enlightening themselves about their rights as consumers.
5. Circumstance under which each of the following telecommunication services may be used: (3 Marks)
Paging-When there is need to call a person to attend to an emergency within an
Facsimile (fax)-Where there is need to send a copy of printed document
Radio call-When there is need to give coordinated information through a central
Marigi Traders Trading Account for the year ended 30th June Marigi Traders
Trading Account
For the year ended 30th June 2009 Opening Stock 165,000 Sales 980,600 Add: Purchases 720,000
COGA4S 885,000
Less: Closing Stock 100,520 Cost of goods sold 784,480
Gross Profit c/d 196,120
980600980,000
Monetary policy tools that a government may use to reduce excess money in circulation. (4 Marks)
Open market operations -Selling government
Raising bank interest rates on loans
Raising Cash/liquidity ratio for commercial
Giving directives for commercial banks to increase interest rates on loans
Increasing compulsory deposits for commercial bank in central
Selective credit control-restrict lending money to some sectors.
Use of moral persuasion to ensure reduction of supply of money in the
8. Outline one circumstance under which each of the following types of inflation may occur. (4 Marks)
Creeping inflation (a) Where general price levels rise gradually over a period of time usually at single
(b) Where the value of money tends to be stable over time and effects on the economy is not severe.
Hyperinflation– (a) Where the general price levels rise at a high rate usually more than two
(b) Where there is drastic loss in value of money and effects on the economy is very severe.
9. State four forms of economic integration that may exist between countries. (4 Marks)
Common Markets-to have common currency to increase free trade and full mobility of
Free Trade Area-where barriers such as tariffs and quotas are
Customs Unions-where member countries charge common external
Economic Unions-where common economic institutions like banks are set to deal with monetary
10. Highlight four problems of development planning that a country may experience. (4 Marks
Lack of accurate adequate data for planning
Unreliable data which may not be useful in
Overreliance on foreign donor
Lack of qualified planning experts/personnel
Private sector activities are not easily
Lack of political
Failure to include local people in
Rampant corruption where money meant for development planning is misused or
Natural calamities which disrupt the development
11. Benefits of a single shop to Nyaboke farming community (4 Marks)
They can buy farm inputs from the
They can buy consumer goods from the
They can buy goods on
They can sell some of farm produce to
The shop can be used as a communication
Nyaboke can employ some of
12. Outline four features of indirect production. (4 Marks)
There is use of modern
Goods produced are meant for sale.
Goods are produced in large
There is specialization in
Goods produced are of high
It encourages
13. State four factors that may lead to the success of a business. (4 Marks)
Availability of adequate
Proper location of the business
Good infrastructure.
Right choice of
Government support/Favourable government policies.
Aggressive
Political
Availability of skilled
Availability of
Proper debt
Availability of market/customers.
Good management of the
14. State four ways in which a good filing system may facilitate the operations in an office. (4 Marks)
It ensures easy retrieval of
It ensures office
It ensures security/safety of
Facilitates quicker decision
It saves on office
It ensures confidentiality of information by limiting access to unauthorized
15. Highlight four benefits that a country gets by encouraging trade among her citizens. (4 Marks)
Earns revenue from
Enhanced good relationship between communities/peace in the
Improved standards of living of its
Increased job opportunities for its
Improved infrastructure in the
Development of rural areas/remote
Country is able to dispose of its
16. Challenges encountered when measuring national income using the output approach. (4 Marks)
Inadequate output
Problem of deciding on what to
Problem of valuing output in subsistence
Price fluctuations/inflation.
Problem of illegal activities which are not included in measuring national
Problem of valuing government inputs are not factored in at market
Problem of deciding on which prices to use for goods kept as
17. Highlight four measures that a government may take to reduce the mortality rate in a country. (4 Marks)
Availing adequate modern medicines in
Improvement and equipping of health facilities to enhance their efficiency.
Ensuring peace/political stability to avoid death of people.
Sensitization and civic education on personal hygiene.
Disaster preparedness to reduce fatalities in case of disaster
Enforce traffic laws to reduce road
Control abuse of drugs by
Development of social amenities e.g entertainment halls to improve quality of life of its
18. Balance Sheet for Highlife General Stores as at 31st December, 2008. (5 Marks)
Highlife General Stores Balance Sheet
Fixed Assets
Land and Buildings
650,000
Capital 870,000
Motor Van
150,000
Long Term Liabilities
800,000
10 Year Bank Loan 500,000
Current Assets
Stock
470,000
Current Liabilities
Debtors
350,000
Creditors 220,000
Cash
50,000
870,000
Bank overdraft 80,000
1,670,000
1,670,000
As at 31st December, 2008
Statement
Type of entry
i.
An increase in revenue.
Credit entry
ii.
A decrease in an asset.
Credit entry
iii.
An increase in an expense.
Debit entry
iv.
A decrease in a liability.
Debit entry
Circumstance
Document to issue
i.
Jambi Ltd sold goods worth Sh.
54,000 on credit to Jamilar Traders.
Invoice
ii.
Osuri Enterprise which had bought goods worth Sh. 27,000 was erroneously charged for only Sh.
25,000.
Debit Note
iii.
Guru Traders paid Sh. 33,900 by
cheque to Jambi Ltd for goods which had been supplied.
Receipt
iv.
Goods sold to Jamilar Traders had
been overpriced by Sh. 4,000.
Credit Note
Name the document Jambi Ltd would issue. (4 Marks)
Conditions under which a warehouse may be considered to be operating efficiently. (4 Marks)
When it is conveniently
When it has proper building
When it has proper recording
When it has adequate handling
When it has adequate skilled
When it has good communication and transport
When it has adequate storage
When it has good security system in
22. Advantages of promoting sales through the internet.
Access to world markets for increased sales.
It is relatively fast to promote sales through the
Reduced cost of sales promotions since it is relatively cheaper.
It reduces paperwork of keeping
Instant receipt of order from all over the
23. Methods used to determine prices of goods other than the forces of demand and supply. (4 Marks)
Bargaining/haggling
Recommended Retail price
Tendering
Abiding to government set price/price control
Auctioning
Price collusion with other traders
24. Factors that a firm may consider when deciding on the goods to produce. (4 Marks)
Profitability/returns
Government policy
Availability of resources such as capital, raw materials, labour
Demand/market
Level of competition
Cost of production
25. Features of a perfectly competitive market. (4 Marks)
Large number of buyers and sellers.
There is no government
Products are homogeneous/identical
There is uniformity in buyers and sellers
The buyers have perfect knowledge of the
There is free entry and exit in the
There is perfect mobility of factors of
No transport cost is
Both buyers and sellers are price
KCSE 2013
1. Ways in which Business Studies may be of benefit to an individual. (4 Marks)
It equips the individual with skills and knowledge to start and run a business successfully.
It prepares the individual for future career in
It enables an individual to develop positive attitude towards the environment and care for it.
It enables an individual to develop positive attitude towards
It enables an individual to understand and appreciate the role of government in
It enables an individual to understand and appreciate the role of business in provision of goods and services in the society.
It enables an individual to coexist peacefully with the members of their
2. External factors that may negatively influence the operations of a business. (4 Marks)
Unfair/stiff
Insecurity
Use of inappropriate
Unfavourable government
Political
Decrease in population leading to reduced customers
Poor
Unfavourable socio-cultural factors
Natural
Strong consumer bargaining
3. State four characteristics of a successful entrepreneur.
(4 Marks)
Innovative and creative. (ix) Future oriented
(x) Information seeker
Problem solver (xi) Desire for feedback
Time (xii) Independent
Self-confident. (xiii) commitment to work
Risk (xiv) Good decision maker
Initiative
Goal-oriented/desires to
4. State four functions of an office. (4 Marks)
Filing
Receiving and recording information
Distribution of information
Reproduction of documents
Safeguarding and controlling organizations property
Communication centre
Administration centre
5. Classification of trade. (3 Marks)
Home trade/Local trade International trade/Foreign trade Retail trade & Wholesale trade Import trade & Export Trade
6. Relevant participants. (4 Marks)
Statement
Participant
a.
Payment for goods and services
Households
b.
Sale of factors of production.
Households
c.
Payment for factors of production.
Firms
d.
Sale of goods and services.
Firms
Wekesa Traders’ Trial (5 Marks)
Wekesa Traders Trial Balance
As at 31st December, 2009.
Particulars/Details
DR (Ksh)
CR (Ksh)
Capital
500,000
Buildings
200,000
Cash in hand
20,000
Furniture
25,000
Motor vehicle
400,000
Creditors
18,000
Debtors
36,000
Bank
100,000
Bank Loan
263,000
781,000
781,000
Calculation of owner’s capital. (4 Marks)
𝐶 = 𝐴 − 𝐿
𝐶 = (1,840,000 + 400,000) − (600,000 + 150,000)
𝐶 = 2,240,000 − 750,000
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝟏, 𝟒𝟗𝟎, 𝟎𝟎𝟎
9. State the type of unemployment relating to each of the following descriptions: (4 Marks)
Caused by alternating trading patterns occurring at similar times-Cyclical unemployment
Arises where workers have more skills and higher qualifications than the job requirements-Disguised/hidden unemployment
Arises out of mismatch between the skills possessed by potential employees and the location of the jobs available- Structural/Technological
Arises when people are unwilling to take up jobs due to low pay-Voluntary/Real wage unemployment
10. Circumstances under which the capital of a business may change. (4 Marks)
In case of
In case of drawings
In case of
In case of additional
11. Below are some entries in the cash book of Romano Traders for the month of July 2010.
Dr. CASH BOOK Cr.
Date
Details
Cash (Ksh)
Bank (Ksh)
Date
Details
Cash (Ksh)
Bank (Ksh)
2010
July 1
Bal b/d
15,000
2010
July 1
Bal b/d
100,000
July 6
Cash
20,000
July 6
Bank
20,000
July 20
Sales
15,000
July 15
Wages
5,000
July 28
Debtors
20,000
July 29
Stock
10,000
July 31
Bal c/d
10,000
State the meaning of the following entries. (4 Marks)
July 1, 2010 Balance b/d, bank column, shs. 100,000-
Bank Overdraft
July 6, 2010 Cash shs. 20,000 and bank shs. 20,000-
Contra entry
July 28, 2010 Debtors shs. 20,000-Cash received from debtor
July 31, 2010 Balance c/d shs. 10,000-Closing cash in hand
12. Circumstances under which documents may be issued by a trader: (4 Marks)
Debit Note-When correcting
Invoice-When demanding for payment of goods supplied.
Credit Note-When correcting an
Quotation-When replying to a specific letter of
13. Documents required by the registrar of companies in order to register a public limited company. (4 Marks)
Articles of
Declaration by
Memorandum Of
List of
Statement signed by directors
14. Measures a country can take to reduce level of inflation.
Reduce government
Increase personal income tax to reduce disposable
Introduce compulsory saving schemes like Pension
Increase interest rates on loans to make borrowing expensive.
Raising compulsory deposits by the commercial banks to central bank to reduce money available for
Enforce wage control to prevent wage increase.
Control level of prices through
Reducing taxes to reduce cost of production by producers to enable them reduce
Restricting imports to curb imported
Selling government securities in open market operations to reduce supply of money in
Restricting terms of hire purchase and credit terms to discourage
Regulate printing and minting of
Use of buffer stocks to stabilize
Giving subsidies to producers to reduce cost of production to enable them reduce
15. Outline four factors that may make a producer to by- pass the wholesaler when distributing goods. (4 Marks)
Having own retail
Dealing in perishable goods like bread which require shorter channels.
Dealing in technical goods which require elaborate after sales
Consumers and retailers buying in large
Need to keep price of goods
Limited geographical spread of the
Government
When the production is in small
Where the producer has enough storage
When goods are produced on
16. Benefits that a country would get by developing her infrastructure. (4 Marks)
Attraction of foreign
Increased per capital/ income.
Creation of employment
Easier/fast communication
Improved security.
Increased entrepreneurial activities
Improved health.
Enhanced industrialization
Increased production
Reduced cost of
Enhanced movements of goods and
Equitable development
17. Benefits of bonded warehouse to government. (4 Marks)
Enable the government to prevent entry of harmful goods into the country.
Enable the government to inspect goods while still under bond.
Enables the government to regulate the quantity of imports.
Enables the government to prevent entry of illegal goods into the country.
It is a source of revenue for the government from customs
Enables verification of documents for goods on transit.
Enables the government in checking of the quality of goods entering the
18. Qualities of a successful salesperson. (4 Marks)
Has adequate knowledge about the product
Good listener
Is a good
Have good command of
Is sensitive to customer
Is persuasive
Has a high sense of integrity/honesty.
Polite and courteous
Is presentable (neat and well groomed).
Persistent and patient
Has a high level of
Optimism
Confident
Adaptable/flexible
19. Factors that may cause the supply curve to shift to right.
Reduced cost of
Improved production methods/ improved technology
Entry of new firms into the
Future expectation of price fall/decrease
Reduced price of substitute
Favourable government subsidies e.g subsidies
Increase in price of complementary products
Reduced incidences of industrial strikes
Increase in factors of production
Bumper harvest/Favourable seasons
20. Positive effects that production activities may have on community health. (4 Marks)
Provision of safe
Provision of clean
A source of income which can be used to access medical
Provision of labour/job which leads to reduced stress and a chance to keep fit while
Provision of health facilities as a social responsibility.
Provision of recreational
Provision of health education to fight against diseases.
Provision of sewerage disposal plants which boosts community
Planting trees to improve the
21. State four basic features of a market. (4 Marks)
Availability of buyers and sellers
Availability of goods and
A platform/place for exchanging goods and services/conducting
Availability of medium of
Freedom to buy and
22. State four features of a parastatal. (4 Marks)
Provide essential
Not profit motivated.
Is formed by an Act of
Is mainly funded by the
Is managed by government
Any surplus earned is surrendered to the government.
Has limited
It is attached to a government ministry.
Can be dissolved only through an act of
23. Circumstances in which the government may be involved in business. (4 Marks)
When a business venture requires investment of large sums of money which individual entrepreneurs may not
When the goods or services to be provided are essential to the welfare of the
When there is need to protect citizens from exploitation by private
When the government desires to create employment for the
When the government needs to generate income through revenue collection.
When there is need to safeguard national
When the venture is strategic but provides low profits hence unattractive to private investors.
Where there are monopolies in the economy, the government gets involved in business to increase competition.
Where there is need to balance regional
Where there is need to reduce foreign dominance in the
Where there is need to attract foreign
24. Factors that a trader may consider when choosing a means of transport. (4 Marks)
Nature of goods – whether they are bulky/perishable/fragile.
Speed/urgency-where goods are to be delivered
Cost of transport-should be
Distance to be covered.
Availability of the
Packaging requirements for the
The risks
Availability of
Reliability of the
Flexibility of the
Comfortability of the
Need for special services.
25. Reasons for privatizing public corporations. (4 Marks)
Reasons for privatizing public
To improve efficiency in their
To generate revenue to the government through sale of shares and
To enhance
To increase public participation in economic activities of the
To reduce government
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
KCSE 2014
1. Features that relate to the description below. (4 Marks)
Description
Feature
(a)
A person is unable to fully satisfy
all wants.
Insatiable
(b)
Once satisfied, they have a
tendency of being felt again.
Repetitive/ Recurrent
(c)
Some wants are satisfied together.
Complementary
(d)
The same want can be satisfied
using different resources.
Competitive
Name two occupations that relate to each. (3 Marks)
Tasks that may be carried out by a receptionist in
Receiving visitors to the
Receiving and routing telephone
Taking and passing messages.
Dealing with simple petty cash for purchase of newspapers/tea
Supervising
Keeping simple
Distributing publications by the
4. Circumstances in which a cheque may be used. (4 Marks)
When the amounts involved is
When the seller insists on payment by
When evidence of payment is
When payment is to be directed into the payee’s
When the terms of sale is cash with
When there is need to ensure safety of the money being transferred.
5. Activities that may be carried out in a stock exchange market. (4 Marks)
Buying and selling of
Mobilizing savings for
Listing of
Issuing of new securities/raising
Publication of statistical
Advising
6. Outline four features of liners in sea transport. (4 Marks)
Follow a regular time table /
Call at ports at regular
Follow a regular
Charges are fixed regardless of
Form associations/conferences to protect themselves against unfair
7. State five types of information that a manager may communicate to the juniors. (5 Marks)
Instructions and
Explain policies of the
Give procedures to be followed in carrying out
Information on performance of juniors (evaluation).
Invitation to
Allocation/ delegation of
Motivating/ inspiring
Giving solutions to juniors’
Explain the meaning of the following terms: (4 Marks) (a)Insured– Is an individual or business that signs an insurance contract to be covered against a risk of loss and can therefore be compensated in the event of the loss occurring.
-Individual/organization taking the insurance cover.
(b) Insurance- Is an arrangement (contract) in which the insured pays premiums to the insurer so as to be compensated in case of loss occurring as a result of an insured risk.
9. Movement along/shift of the demand curve. (3 Marks)
Factor
Movement along or shift of
(a)
Change in income.
Shift of
(b)
Change in price.
Movement along
(c)
Change in weather
Shift of
Roles played by the broker in the chain of
Linking the buyer and the
Bargaining on behalf of the owner/seller.
Passing information between the owner/seller and the client.
Facilitating access to a variety of goods and services to the
Providing an avenue for the seller to access many buyers.
Giving advice to buyers and sellers on market
11. Factors in a two sector closed economy (4 Marks).
i) Payment for goods and
ii) Provision of factors of production.
i) Payment for factors of
ii) Provision of goods and services
12. Fill in the missing figures in the table below: (4 Marks)
FA
CA
C
L
(a)
275,500
155,000
315,000
115,500
(b)
182,000
108,700
73,600
217,100
(c)
138,600
76,400
123,100
91,900
(d)
313,450
211,340
189,170
335,620
Mheshimiwa Ltd Trial Balance As At 31st May,
Mheshimiwa Ltd Trial Balance
As At 31st May, 2010
Details
DR (Ksh)
CR(Ksh)
Purchases
3,880
Sales
3,350
Returns outwards
150
Returns inwards
160
D. Simila (Debtor)
2,550
P. Mwende (Creditor)
3,100
Wages
800
Cash
960
Capital
1,750
8,350
8,350
Name the column labeled V, W, X and Y. (4 Marks) Dr.
DATE
V–
Folio
W-
Discount Allowed
X–
Cash
Y–
Bank
Functions of the IBRD/World Bank. (4 Marks)
Provision of grants to member countries to foster economic
Issuance of loans to developing countries at lower rates for development
Provision of personnel/manpower to facilitate project appraisal.
Provision of experts to implement and manage identified projects.
Training of local personnel in project appraisal and implementation.
Supervise member countries’ management of public finance.
Approving development plans from member countries for funding.
Advising and recommending economic policies to be adopted by member
Promotes long term growth in international
16. State four disadvantages of barter trade. (4 Marks
Lack of double coincidence of
Problem of indivisibility of some
Perishability of some
Difficult to measure
Problems of portability of some
Lack of a standard for making deferred
Lack of unit of
17. Jelimo Stores General Journal.
List four levels of inflation. (4 Marks)
Creeping/Mild/Moderate inflation
Galloping/Rapid inflation
Hyperinflation/Run-away inflation
Stagflation
19. Outline four characteristics under-developed countries have in common. (4 Marks)
Low per capita
High population growth
Poor standards of
Low literacy
High levels of
Poor health
Low life
Over reliance on primary level of production/high levels of subsistence
High dependency
Poor
Low technological
Large income
Low levels of labour
20. State four factors in the internal environment that may influence the business. (4 Marks)
The management/structure.
Capital/finances.
The
Marketing strategy/handling of
Research and
Condition of the
Business
21. Highlight four reasons for which businesses should observe ethical practices. (4 Marks)
To ensure fair
To protect consumers/customers.
To protect the
To protect the rights of
To promote social
To maintain a positive
To abide by the country’s
To maintain
To promote positive cultural
22. State four merits of promoting products through personal selling. (4 Marks)
Enhances personal appeal between the buyer and the
Can effectively counteract customers negative attitudes towards the
Date
Particulars
LF
Dr.
Cr.
2010
Oct. 10
K.Likia a/c
Stationery a/c (Being record of sale of stationery on credit) Motor Vehicle a/c
Onjwaria Motors a/c (Being record of Purchase of motor vehicle on credit)
3,000
3,000
700,000
Oct. 23
700,000
703,000
703,000
Questions and complaints from customers are channeled directly to employees of the company and not
Demonstration on the use of the goods can easily be
Flexibility in presentation to suit customer
Provide immediate feedback from and to the clients
Effective in conducting market
𝐹. 𝐶 = 𝐼. 𝐶 + 𝐴. 𝐼 + 𝑃 − 𝐷
7,000,000 = 𝐼. 𝐶 + 800,000 + 3,100,000 − 400,000
7,000,000 − 800,000 − 3,100,000 + 400,000 = 𝐼. 𝐶
𝐼. 𝐶 = 3,500,000
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐾𝑠. 3,500,000 (3 Marks)
24. Outline four positive implications of youthful population to an economy. (4 Marks)
Less expenditure on social security and
Wider market for goods meant for the youth like clothing.
Guaranteed continuous supply of
Flexibility and adaptability to technological changes which improve
Faster growth of some sectors like the music, fashion and fast-food
Increased innovation due to their adventurous nature.
25. PQ’s Trading Account for the year ended 31st December, 2012. (4 Marks)
PQ Ltd Trading Account
For the Year ended 31st December, 2012.
Opening stock
57,140
Sales
23,498,000
Add: Purchases
16,290,000
Less: Returns
in 27,200
COGA4S
16,347,140
Net Sales
23,470,800
Less: Closing Stock
86,340
COGS
16,260,800
Gross Profit c/d 7,210,000
23,470,800
23,470,800
KCSE 2015
What are the reasons that would make an individual engage in business? (4 Marks)
Provision of goods and
Create
Exploitation of economic
Exploitation of individual’s creativity/innovation/talents/hobbies/skills.
To earn a profit/income/livelihood
To be self-reliant and independent/ to be own
To make use of leisure
To utilize idle resources
For prestige
To take advantage of government incentives eg.Hustler fund
2. List four types of utility and the production activity associated with each of them. (4 Marks)
Utility
Production Activity
(i) Time utility
Storage/Warehousing
(ii) Place utility
Transport/Distribution
(iii) Possession utility
Buying/trading/exchange
(iv) Form utility
Processing/manufacturing/
construction
Outline four ways in which the office facilities effective handling of documents. (4 Marks)
Receiving documents
Recording documents
Reproducing documents
Distributing/mailing documents
Storing/filing of
Employing qualified
Safeguarding
Provision of relevant
4. Factors influencing consumer to purchase from a kiosk other than a supermarket. (4 Marks)
Kiosks may sell on
Kiosks bring goods closer to
Kiosks provide sizes/quantities consumer can
Kiosk owners have personal contact/touch with
Kiosks may be accessed beyond the normal working routine when the need
Kiosks may allow for
Kiosks may offer advice to their
To promote the kiosk
5. Circumstances under which hire purchase may be used to acquire goods. (4 Marks)
When the buyer does not have enough money to pay at once.
When the product is
When the buyer wants to use the item immediately before completing
When the buyer is a salaried employee/has regular income.
When the buyer desires to own luxurious
When the buyer wants to save in the form of
When the goods are durable in
When the goods can generate income to pay the installments.
6. Reasons for increased use of mobile phones in banking.
Paying through mobile phones is safer than carrying cash.
It is easier to transact over mobile phones.
It is convenient because transactions can be conducted anywhere.
It saves on time since there is no travelling and queuing for the services.
The speed of transaction is
It reduces paper work by eliminating the need for physical files and other
The use of PIN enhances
Increased ownership of mobile phones/affordability of mobile
Transactions can be conducted at any
Reduced transaction
Easy access to transaction
7. Methods that the Government of Kenya uses to regulate business activities. (4 Marks)
Licensing business activities
Setting up standards through KEBS
Formulation of policies/enacting laws/legislation
Setting quotas
Enforcement of laws
Imposing bans
Giving subsides to businesses/producers
Taxation
Price
8. Disadvantages of using internet in communication.
It is prone to network overload (congestion).
Most hardware required is expensive to
Accessing/using the internet is expensive since it requires data bundles or WIFI
Requires knowledge and skills to
Prone to attack by fraudsters/hackers.
Affected by lack / disruptions of network/links.
It may be affected by computer
Limited internet connectivity.
It may be affected by power
9. Differences between life assurance and general insurance.
LIFE ASSURANCE
GENERAL INSURANCE
It deals with life
It deals with property
It is usually a long-term contract
It is usually a short-term
contract/annual
Can be used as a saving plan
Cannot be used as a saving plan
Has surrender value.
Has no surrender value
Has maturity date
Has no maturity date
Risk is certain/must occur
Risk may or may not occur
Policy can be used as a security for a
loan
Policy cannot be used as a
security for a loan
Compensation is given to beneficiaries in case of death of
assured
In case of loss compensation is given to the insured
Sum assured depends with assured’s
ability to pay
Sum insured depend with value
of property
Principles of subrogation and
indemnity does not apply
Principle of subrogation and
indemnity applies
Reasons for observing ethical practices in product promotion. (4 Marks)
To ensure fair competition among
To ensure consumer’s interests are protected eg. No false advertisement or
To ensure that businesses comply with the
To protect the environment from
To improve the image of the
To maintain morality in the society/cultural/moral
11. Effects of a shift of demand curve to the right. (4 Marks)
The price will
The quantity demanded will increase/demand will increase.
The equilibrium quantity shifts to the right/increases.
The equilibrium price shifts upwards/increases.
The equilibrium shifts upwards to the
12. Outline four disadvantages that a manufacturer if wholesalers were eliminated (4 Marks)
Manufacturer will have to break bulk
Manufacturer will have to incur cost of storage;
Manufacturer will have to incur cost of transporting goods to the retailers;
Manufacturer will have to incur cost of advertising / promoting products;
Manufacturer will have to bear risks associated with distribution eg. damages, fall in prices;
Manufacturer will have to prepare goods for sale packing, branding, sorting etc;
Manufacturer will have to carry out market research;
Manufacture will have to give credit to retailers who are
13. The Balance Sheet As At 31st December, 2012.
(4 Marks)
The following figures relate to Jumbo Traders for the year ended 12.13.
Details
Shs.
Capital
940,000
Net Loss
20,000
Additional investment
420,000
Monthly drawings
5,000
Determine the capital as at 01.01.13. (4 Marks)
𝐹. 𝐶 = 𝐼. 𝐶 + 𝐴. 𝐼 − 𝐿 − 𝐷
940,000 = 𝐼. 𝐶 + 420,000 − 20,000 − (5,000𝑥12)
940,000 − 420,000 + 20,000 + 60,000 = 𝐼. 𝐶
600,00 = 𝐼. 𝐶
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 as at 01.01.13 was Ksh. 600,000
15. Identify the ledgers in which the following accounts are maintained. (5 Marks)
ACCOUNT
LEDGER
i.
Pendo (Debtor)
Sales/Debtors
ii.
Machinery
General
iii.
Rent
Nominal
iv.
Capital
Private
v.
Juma (Creditor)
Purchases/Creditors
List three levels of inflation. (3 Marks)
Creeping/Mild/Moderate inflation
Galloping/Rapid inflation
Hyperinflation/Run-away inflation
Stagflation
17. Name the documents described by the statements given below are used in International Trade: (4 Marks)
Requests for payment before goods are delivered-
Pro-forma invoice
Shows ownership or title of goods imported-
Bill of Landing
Shows the country of manufacture of goods-
Certificate of Origin
Shows the transportation charges for goods-
Freight Note
Post the information to the relevant ledger
(4 Marks)
Dr MIMI Supplies A/c Cr
Dr Kilimanjaro A/c Cr
PEMBE TATU TRADERS BALANCE SHEET
AS AT 31ST DECEMBER, 2012.
Fixed Assets Capital 66,000 Furniture 50,000
Current Assets Short Term Liabilities
Stock 5,000 Bank Overdraft 5,000
Debtors 7,000
Cash 9,00021,000
71,00071,000
Dr Purchases Returns A/c Cr
19. Goals of development to a country. (4 Marks)
Alleviation of poverty
Attainment of high and sustainable economic
Provision of adequate social amenities eg. health
Diversification of the economy to reduce over-reliance on a few
Alleviation of
Reduce income disparities/inequalities/attain equitable income distribution
Enhancement/upholding of human rights,self-esteem and freedom/democracy.
Maintenance of political stability/good
Attainment of food security for
Provision of
Alleviation of
Technological
Elimination of harmful cultural
20. Kahawa Traders Trading Account. (5 Marks) Working
Benefits of sea transport over air transport. (4 Marks)
Large carrying capacity which is ideal for bulky/heavy
Sea transports large quantities of
Low cost of transportation over long
Special ships are available for carrying special
Its more economical to
24. In which ways can an investor benefit from the stock exchange? (4 Marks)
Getting a variety of securities/shares to choose
Getting information on share prices that guides him/her on when to buy /sell
Access to a platform/market for buying or selling shares and other
His/her interests being protected as quoted companies are required to maintain certain standards of
Access to information on companies’ performance that help him/her to make investment decisions.
Being encouraged to save in form of
Spreading risks by buying different types of
20
𝑀𝑎𝑟𝑔𝑖𝑛 =
1 1 1
= , 𝑀𝑎𝑟𝑘 − 𝑢𝑝 = =
25. State three clauses found in the Memorandum of
100 5
5 − 1 4
Association. (3 Marks)
1 𝐺. 𝑃
𝑀𝑎𝑟𝑘 − 𝑢𝑝 = =
4 960,000
𝐺. 𝑃 = 240,00
Sales= 𝐶𝑂𝐺𝑆 + 𝐺. 𝑃
𝑆𝑎𝑙𝑒𝑠 = 960,000 + 240,00 = 1,200,000
Kahawa Traders Trading Account
For the year ended 31st December, 2012
Opening Stock 80,000 Sales 1,200,000
Add: Purchases 1,000,000
COGA4S 1,080,000
Less: Closing Stock 120,000 Cost of goods sold 960,000 Gross Profit c/d 240,000
1,200,0001,200,000
Reasons that make it necessary for firms to maintain a healthy environment. (4 Marks)
To enhance corporate/good image.
To protect/safeguard human health eg. employees, customers, surrounding
To maintain the ecological
To conserve natural resources / raw
For sustainable economic
For environmental
To comply with the set
As part of corporate social
22. Benefits of business plan to an entrepreneur. (4 Marks)
It acts as a motivational
It helps to avoid
It enhances proper allocation of
It is a requirement by financiers/Facilitates acquisition of loans from financial institutions
It is a requirement by the government/compliance purposes
For adaptability/cater for future changes
Provides guidance for opening new or expanding existing business.
It acts as a management / monitoring/control tool for the business.
It is a tool for evaluating business
It lays the strategy to be used in marketing the
It enhances the credibility of the
Name clause
Liability clause
Capital clause
Situation clause
Declaration
The Objects clause
KCSE 2016
1. State four external factors that may negatively influence the operation of a business. (4 Marks)
2. Highlight four benefits of a business plan to an entrepreneur. (4 Marks)
It acts as a motivational
It helps to avoid
It enhances proper allocation of
It is a requirement by financiers/Facilitates acquisition of loans from financial institutions
It is a requirement by the government/compliance purposes
For adaptability/cater for future changes
Provides guidance for opening new or expanding existing
It acts as a management / monitoring/control tool for the
It’s a tool for evaluating business
It lays the strategy to be used in marketing the products.
It enhances the credibility of the
3. State four ways in which a good filing system may facilitate the operations of an office. (4 Marks)
It ensures/enhance easy retrieval of
It ensures office tidiness/office is kept
It ensures security/safety of
It facilitates quicker decision
It saves on office
It ensures confidentiality of information by limiting access to unauthorized
4. Highlight four activities that may be carried out in a stock exchange market. (4 Marks)
Buying and selling of
Mobilizing savings for
Listing of
Issuing of new securities/raising
Publication of statistical
Advising
5. Outline four circumstances under which a co-operative society may be dissolved. (4 Marks)
Where there is a court order to dissolve
Where the objectives of the co-operative society have been
If majority of members voluntarily decide to dissolve it during AGM.
In case of mass withdrawal of members leaving less than
In case of an order from commissioner of co- operatives to dissolve
If the co-operative is declared
6. Outline four methods that the government Kenya uses to regulate business activities. (4 Marks)
Licensing
Setting of standards through KEBS
Taxation
Price control
Formulating of laws and policies/legislation.
Bans, Quotas and Subsidies
7. State four ways in which a youthful population may be useful to an economy. (4 Marks)
Increased creativity and
Wider market for good used by
Guaranteed continued supply of
Reduced government expenditure on social security and pensions.
Faster growth of some industries such as fashion and
Flexibility in embracing modern
8. Outline one circumstance under which each telecommunication services may be used: (4 Marks)
Paging-Where there is need to call person to attend to an emergency within a
Facsimile (fax)-where there is need to send a printed document
Radio call-Where there is need to give coordinated information through a central
Telex-Where there is need to send and receive written messages urgently through
9. The following transactions relates to Jelimo Stores:
(a) 10th October 2010: Sold unused stationery for Sh. 3,000 on credit to K. Likia.
23rd October 2010: Bought a motor vehicle on credit from Onjwaria Motors for Sh. 700,000.
Required: Record the above transactions in the General Journal given below: (4 Marks)
Date
Particulars
Folio
Dr. (Ksh)
Cr. (Ksh)
2010
Oct. 10
K.Likia a/c
Stationery a/c (Being a record of sale of stationery on credit) Motor Vehicle a/c
Onjwaria a/c (Being a record of purchase of motor
vehicle on credit)
3,000
3,000
700,000
700,000
Oct. 23
703,000
703,000
State four features of an insurable interest. (4 Marks)
The insurable interest must be
The property must have monetary
Potential insurable risk must be
Presence of property rights or interest (You can only insure your property)
There must be possibility of suffering financial loss in case of occurrence of
11. State four features of parastatal. (4 Marks)
Formed to provide essential goods and services.
Main source of capital is government
Formed by an Act of
Has limited
Is managed by government
Can be dissolved only through an act of
It is not profit motivated
12. Effects of a shift of the demand curve to the right.
The equilibrium quantity increases/shifts to the
The equilibrium price increases/shifts upwards
The equilibrium point shifts upwards/ to the right
The price will
The quantity demanded will increase/demand will
13. Outline four functions of World Bank. (4 Marks)
Provision of finance to member countries to foster economic development.
Provision of loans to developing countries at lower rates to finance development
Provisions of grants to developing countries to finance social amenities.
Training of local personnel in project appraisal and implementation.
Approving development plans for member countries for funding.
Advancing loans to member countries to correct balance of payment
Providing technical assistance and personnel to help countries run their economic
14. Ways of reducing the level of unemployment in Kenya.
Adopting appropriate education system to instill relevant
Encouraging informal sector (Jua Kali) to encourage self- employment.
Increase government expenditure to expand the
Population control to avoid over-population.
Diversification of the economy by encouraging different sectors/industries.
Delocalization of industries to ensure balance regional
To improve infrastructure to support economic
Encouraging foreign investments by government giving foreign investors
Adopting use of modern technology to increase production and reduce
15. Highlife General Stores Balance Sheet
As at 31st December, 2015
Fixed Assets Capital 870,000 Land and Buildings 650,000
Motor Van 150,000Long Term Liabilities 800,000 10 Year Bank Loan 500,000
Current Assets
Stock 470,000 Current Liabilities
Debtors 350,000 Creditors 220,000
Cash 50,000870,000Bank overdraft 80,000
1,670,000 1,670,000
Circumstances which may be involved in business.
When a business venture requires huge investment which individual entrepreneurs may not
When the goods or services to be provided are essential to the welfare of the citizens.
When there is need to protect citizens from exploitation by private
When the government desires to create employment for the citizens.
When the government needs to generate income through revenue
When the venture is strategic but provides low profits hence unattractive to private investors.
Where there are monopolies in the economy, the government gets involved in business to increase competition.
Where there is need to provide sensitive goods that cannot be left in hand of private sector e.g production and sale of firearms.
Where there is need to balance regional
Where there is need to reduce foreign dominance in the economy.
Where there is need to attract foreign
When there is need to safeguard national
17. Types of Ledgers which the following accounts are kept.
ACCOUNT
LEDGER
i.
Pendo (Debtor)
Sales/Debtors
ii.
Machinery
General
iii.
Rent
Nominal
iv.
Capital
Private
Two factors represented by arrows labeled a and b)i) Payment for goods and services.
ii) Provision of factors of production.
c) i) Payment for factors of production.
ii) Provision of goods and services
19. State four reasons for privatizing public corporations.
To improve efficiency in their
To reduce government
To enhance
To minimize political
To increase public participation in economic activities of the
To generate revenue through taxation and sale of
To enable the government to concentrate in other state responsibilities.
20. Reasons for the increased use of cell phones in banking.
Affordability of cell phones/ increased ownership of cell phones.
They save on time since transactions are
Easy access of one’s bank
It is easy to access credit facilitates e.g M-Shwari loans
They are convenient as transaction can be conducted any time.
Use of PIN to access one’s account enhances
It reduces costs such as traveling expenses, bank counter charges.
They reduce paperwork by reducing need for physical documentation
21. List four sources of public finance. (4 Marks)
Taxes (viii) Fines from courts
Borrowing loans (ix) License fees
Grants and foreign aid (x) Escheats
Rent and rates for use of government property
Dividends and profits from government investments
Proceeds from sale of government property
Interest earned from loans advanced by government
22. State two situations in which each of the following types of inflation may occur. (4 Marks)
Creeping inflation (a) Where general price levels rise gradually over a period of time usually at single
Where the value of money tends to be stable over time and effects on the economy is not
Hyperinflation– (a) Where the general price levels rise at a high rate usually more than two
Where there is drastic loss in value of money and effects on the economy is very
23. Outline four factors that may make a producer to by- pass the wholesaler when distributing goods. (4 Marks)
Having own retail
Dealing in perishable goods like bread which require shorter channels.
Dealing in technical goods which require elaborate after- sale
Consumers and retailers buying in large
Need to keep price of goods
Limited geographical spread of the market.
Government
When the production is in small
Where the producer has enough storage
When goods are produced on order
24. Goals of development to a country. (4 Marks)
Alleviation of poverty
Attainment of high and sustainable economic
Provision of adequate social amenities eg. health
Diversification of the economy to reduce over-reliance on a few
Alleviation of
Reduce income disparities/inequalities/attain equitable income distribution
Enhancement/upholding of human rights and
Provision of
Maintenance of political stability/good
Attainment of food security for
Alleviation of
Technological
Elimination of harmful cultural
25. Outline four characteristics of services. (4 Marks)
They are
They cannot be
They cannot be
Quality cannot be
They are highly
They cannot change possession/cannot be separated from provider
KCSE 2017
1. Elements of the demographic environment that may influence the operations of a business. (4 Marks)
The population
The birth
The population density
The death/mortality
Distribution of population by sex/gender.
The population growth
The distribution of population by
Immigration and emigration rate
2. Circumstances under which goods may be transported by use of containers. (4 Marks)
Where goods are fragile and require
Where goods are regular in shape and can be packed in containers.
Where there is need to minimize handling of goods at port of entry and while in
Where there is need to cut down on insurance cost since it reduces
Where there is need to cut down on transport cost since containerization is
Where goods are highly perishable and requires special attention.
Where goods are of high value and need to be secure from theft while in
3. (a) Salome Traders rate of Return on Capital Employed
𝐶𝐸 = 𝐶 + 𝐿𝑇𝐿 = 1,119,300 + 1,807,00 = 2,926,300
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 =
𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑
5. Chem Chemi Ltd is a new cement manufacturer. Outline four factors that may encourage this company to be established in Athi River town where other cement manufacturers are located despite the obvious competition. (4 Marks)
Availability of raw materials in Athi River
Skilled labour is readily available in Athi river
Market is readily available in Nairobi and its environs
There is ready supply/source of power
Government policy encourages establishment of such firms in Athi River which is also an EPZ
An established transport system that eases operations
Availability of well-developed social amenities like schools, stadia, sewage system and water supply
An established communication
Availability of security
Availability of auxiliary services like banks
6. Outline three ways through which a partnership may be formed. (3 Marks)
A simple written agreement between
An oral agreement between the
A signed legal agreement (partnership deed)
Adopting provision of Partnership Act where there is no known
Action by parties implying agreement to conduct business
7. Features of land as a factor of production. (4 Marks)
It is a basic factor of production
It is a natural
𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
=
𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒��
= 438945 𝑥100%
2926300
= 15%
𝑥100%
Its supply is
It lacks geographical
It is subject to the law of diminishing
Its quality is not
(b) Importance of the rate of return on capital employed.
It enables the business to determine the rate at which net profit is generated in relation to the total investments into the business/rate of return on capital
It helps to compare the performance of the business with similar
It helps to compare the performance of the business over time.
It helps the potential investors to know whether to invest or
It shows whether the business finances have been invested
4. Indicators of economic growth as a country progresses.
Increased national income/GNP
Increased provision of social amenities g.stadia
Increased national output/GDP
Reduced income disparities/inequalities
Increased standards of
Improved health care facilities
Increased per capita
Increased democracy/good governance
Increased job
Increased industries/industrialization
Improved housing for the
Reduction of negative cultural practices
Reduced dependency/increased self-reliance
Improved technology
Increased literacy levels. Increased
Increased entrepreneurial practices
It is occupationally
Its productivity can be varied by varying the
Its reward is rent/rates/royalties.
8. Principles of insurance described below. (4 Marks)
Restoring the insured’s financial position after suffering loss from insured risk-Indemnity
Existence of a very close relation between the loss suffered and the insured risk-Proximate cause
The insurer taking ownership of the remains of the destroyed property after the insured is duly compensated-Subrogation
Proof that the insured will suffer direct financial loss if property is destroyed-Insurable interest
9. Items that would be included in the measurement of national income using the income approach. (4 Marks)
Salaries/wages or personal earnings by households
Interests received for use of capital
Profits made by public enterprises
Income from exports/ net income from abroad
Payments for imports
Transfer payments
Depreciation on capital
Dividends received by shareholders
Rent received for the use of land
Ploughed back profits by firms
Stock appreciation
10. Determine the consumer price index of 2011,2012,2013 and 2014. (4 Marks)
Year
Price (Ksh)
𝑷𝟏
𝑪𝑷𝑰 = 𝒙𝟏𝟎𝟎%
𝑷𝟎
2010
90.00
90/90×100=100%
2011
100.80
100.8/90×100=112%
2012
103.50
103.5/90=115%
2013
105.30
105.3/90=117%
2014
108.00
108/90=120%
List four forms of retail businesses that a school leaver may engage in. (4 Marks)
Kiosks (viii) Roadside selling
Canteens (ix) Hawking
Tied shops (x) Peddling
Single shops (xi) Mobile shops
Market stalls (xii) Open market trading
Operating an Automatic Vending Machine
Selling through the internet/Online business/shop
12. State four benefits of using the internet for office communication. (4 Marks)
Reduced costs of communication
Provides unlimited space for
A fast means of
Provides a source of information for
Facilitates quick decision making /quick
Reduce paperwork and the need for paper
Accords convenience while communicating/easy to
Communication can take place at all
Information can be passed to many people in different places at the same time
13. The following information relates to Zawadi Traders rental income:
01.01.15: Had Ksh. 50,000 in the rent income account at the beginning of the year.
10.06.15: Received Ksh. 120,000 from tenants.
12.11.15: Refunded Ksh. 20,000 to a tenant who had vacated the premises.
Required: Prepare Zawadi Traders Rental Income Account.
(4 Marks)
Dr Rental Income A/c Cr.
Date
Details
Amount
Date
Details
Amount
12.11.15
Tenants
20,000
1.1.15
Bal b/d
50,000
31.12.15
Bal c/d
(P&L)
150,000
10.06.15
Tenants
120,000
170,000
170,000
State four means of payment that may be provided by commercial banks to their customers. (4 Marks)
Cheques (vi) Telegraphic transfers
Bank drafts/bankers cheque (vii) Use of credit/debit cards
Standing orders (viii) Electronic funds transfer
Travellers cheques (ix) M-Banking/ E-Banking
Credit transfer (x) Direct cash deposit
15. The equations given below relate to the quantity demanded and quality supplied at the equilibrium point.
𝑄𝑑𝑒 = 4𝑃 + 50
𝑄𝑠𝑒 = 8𝑃 + 30
Determine the equilibrium price and quantity. (4 Marks)
𝐴𝑡 𝐸𝑞𝑢𝑎𝑙𝑖𝑏𝑟𝑖𝑢𝑚, 𝑄𝑠𝑒 = 𝑄𝑑𝑒 8𝑃 + 30 = 4𝑃 + 50
8𝑃 − 4𝑃 = 50 − 30
4𝑃 = 20, 𝑃 = 5
𝑃𝑒 = 5,
𝑄𝑒 = 4𝑥5 + 50 = 70
16. Outline four ways in which the balance of payments of a country may be improved. (4 Marks)
Restriction of imports
Diversification of exports
Export promotion
Devaluation of country’s currency/local currency
Deflation/reduced money supply
Value addition to increase the value of the exports
Encourage foreign investments in the country
Restriction of outflows of capital
Encourage capital inflow
17. Source documents into which the information given in the table below would be recorded. (4 Marks)
Information
Source document
a.
Payments received from
debtors
Outgoing/issued/copy of receipts
b.
Purchases made on
credit.
Incoming/received/purchases invoice
c.
Validating payments
made by the cashier.
Cash payment voucher/payment voucher
d.
Requesting for additional
payments from a debtor.
Debit note
Factors to consider when deciding on the method to use for promoting its products. (4 Marks)
Nature of the product
Availability of the promotional media
The competitor’s promotional strategies
Objective of the promoters
The cost of the method
Government policy/legal requirements
The target audience
Geographical coverage of the method
The level of demand for the product
Lifespan of the method
The urgency of the promotional message
19. Features of money that enables it to facilitate the exchange of goods and services. (4 Marks)
Cognizability/authenticity
Stability in value
Scarcity/Limited in supply
General acceptability as a medium of exchange
Durability
Portability/easy to carry
Malleability
Made of homogeneous/uniform material
Not easy to forge/difficult to imitate
Divisibility/ can easily be converted to smaller denominations without losing value
20. Benefits of proper filing to an organization. (4 Marks)
Vital documents will be kept for future reference/evidence
Easy retrieval and accessibility of documents
Economic use of available space
Documents are kept safe from damage
Limits accessibility of documents to only authorized persons
Aids in keeping office tidy/neat
May help the organization to keep some documents for the length of time as specified in law
Keeps the documents neat
Documents are secured from loss
21. Characteristics of a monopolistic market. (4 Marks)
There are large number of buyers and sellers who act independently
There are no barriers to entry and exit from the industry
The sellers offer similar products that are only differentiated
No single firm has control over the factors of production
Firm sets their own prices
Buyers and sellers have perfect knowledge of the market
Firms incur large selling /promotional costs
22. The aggressive campaign for citizens to plan their families seems to be causing a decline in the country’s population growth. Outline four possible effect.(4 Marks)
Reduced pressure on land
Shrinking market for goods and services/low market
Reduced levels of unemployment
Reducing government expenditure on the provision of social amenities
Reduced dependency ratio
Low labour supply
Reduced social problems like crime, lack of housing
Possibility of attaining optimum population
May lead to increased savings and investments
23. State four functions of commercial attaches. (4 Marks)
Educating and advising exporters on trade regulations in other countries
Expansion and diversification of exports
Organizing for trade fairs and exhibitions of local goods in foreign markets
Expansion and diversification of foreign markets
Providing information about available selling opportunities in foreign countries to local producers
Development of bilateral and multilateral trade agreements
Select buyers, agents, and distributors of home country’s exports
Assists sales mission from home country by organizing education tours for them
Make detailed report on commercial activities that may help to improve exports
Keep statistics of products like volume, packaging, and methods of manufacturing
Research and analyze markets for exports from home country
Attend meetings, seminars and workshop on trade pattern
Publish and advertise their country’s exports in business journals and magazines
24. Benefits that may be realized when two firms form a merger. (4 Marks)
Increase in volume of output
Increased control over suppliers
Increased influence on the market/ customers
Reduced cost of operation as a result of economies of scale
Access to larger capital
Increased ability to control prices of the product
Elimination of unhealthy competition
Ability to employ more qualified personnel
Increase in quality of output
Combined talents and skills which may result to better management.
25. Factors that caused failure of women clothing business.
Poor location of the business may have made it inaccessible to customers
Stiff competition from other retailers
Inadequate finances to meet the obligation of the business
Shaban’s lack of commitment to the business
Insecurity
Improper management practices
Poor customer relations
Inappropriate pricing practices
Political instability/wars
Lack of market/low demand
Unfavourable government policies
Poor marketing strategies
Inadequate stock
Lack of suitable
KCSE 2018
1. Features of labour as a factor of production. (4 Marks)
It is a basic factor of production
Labour is a human resource/has ability to think and get annoyed
It is occupationally mobile
It is geographically mobile/can move from one place to another.
It cannot be stored
It earns salaries or wages
It is not separable from the labourer/provider
The quality of labour is variable/cannot be
Labourers sell their labour but not themselves
2. Ways in which peace within a country may encourage entrepreneurial development. (4 Marks)
Entrepreneurs are assured of the safety of their investment/lives hence encouraged to invest
Funds are availed for investment instead of being spent on provision of security
There is free movement of factors of production which motivates trade
There is free interaction between people which encourage sharing of business ideas
Reduced cost of insurance due to low risks
Increased markets since even foreigners feel free to trade with the locals
Stable complimentary institutions like banks and warehouses which encourage business
More foreign investors will be attracted into the country
3. State four duties of the office clerk. (4 Marks)
Handling mails
Operating various office machines
Filing and indexing
Record keeping/simple book-keeping/petty cash
Helps in store-keeping
Ordering/receiving/storing/issuing of stationery
Reproduction of documents
a) Identify the document-Credit Note(1 Mark) b)Circumstances under which the document may be
When correcting arithmetic errors resulting to
Where the buyer has been charged higher prices than the recommended prices.
When items included in the invoice were not delivered
When a deserved discount was not
When the buyer has returned some goods e.g., damaged goods, poor quality
When empty crates and containers included in invoice was returned.
5. State four measures that may be taken by the government to control inflation. (4 Marks)
Reduce government
Increase personal income tax to reduce disposable income.
Introduce compulsory saving schemes like Pension Fund.
Increase interest rates on loans to make borrowing expensive.
Raising compulsory deposits by the commercial banks to central bank to reduce money available for lending.
Enforce wage control to prevent wage
Control level of prices through
Reducing taxes to reduce cost of production by producers to enable them reduce
Restricting imports to curb imported
Selling government securities in open market operations to reduce supply of money in
Restricting terms of hire purchase and credit terms to discourage
Regulate printing and minting of money.
Use of buffer stocks to stabilize
Giving subsidies to producers to reduce cost of production to enable them reduce
6. Measures that may be taken by the government to curb unemployment. (4 Marks)
Adopting appropriate education system to instill relevant
Encouraging informal sector (Jua Kali) to encourage self-employment.
Increase government expenditure to expand the economy.
Population control to avoid over-population.
Diversification of the economy by encouraging different sectors/industries.
Delocalization of industries to ensure balance regional balance.
To improve infrastructure to support economic activities.
Encouraging foreign investments by government giving foreign investors
Adopting use of modern technology to increase production and reduce
7. Benefits of national income statistics to the government.
It provides information that is used in planning/making policies.
Provides statistics of measuring economic growth of the country.
Provides information that is used to measure standards of living of
Provides information that is used to compare economic performance of a country over
It provides information that is used to compare economic performance of the country with other countries.
Provides information used to compare standards of living f people in different
8.
Business
Assets (Sh)
Capital (Sh)
Liabilities (Sh)
A
40,000
24,266
15,734
B
219,800
158,300
61,500
C
17,670
5,680
11,990
D
67,000
42,295
24,705
Fill in the spaces in the table below: (4 Marks)
Categories for classification of partners. (4 Marks)
According to their age.
According to their liability in the business
According to their capital contribution to the
According to their role played in running the
10. Ways in which the government creates an enabling environment for business in the country. (4 Marks)
Provision of credit facilities at favourable
Ensuring political stability/peace
Training/educating the population to create a pool of skilled manpower.
Marketing final products for producers
Provision of essential social amenities like water and sewerage, health and
Favourable policies / easy procedures like licensing, subsidies and favourable
Provision of good
Provision of
Ensuring good governance/transparency and
Providing loan guarantee to traders.
11. Roles of transport in the facilitation of trade. (4 Marks)
Facilitates movement of factors of production and other inputs like raw materials
Enables goods to be moved to the market from their point of production /enables buyers to move to the market
Adds value to goods and services by moving them to the point of consumption /utility
Opens up new markets
Makes it possible for the exploitation of natural resources
Allows for specialization since it allows people to access goods produced elsewhere
Promotes mass production since goods can be moved to be stored and sold
Saves time and avoids
12. Circumstances under which firms would form a cartel.
Where there is need to control output by each firm
When there is need to be in control of market prices
Where there is need to eliminate stiff competition among the firms
Where there is need to restrict entry of new firms into the market
Where there is need to increase the firms bargaining power
Where there is need to guarantee the income hence financial strength of the firms
13. Conditions under which a manufacturer would distribute his products through the wholesaler. (4 Marks)
When it is the dictate of a government
When the manufacturer needs time to concentrate on production.
When he wants to avoid the high costs of
Where it is too expensive to distribute using the manufacture’s own outlet
Where wholesalers prefer to market the product under their own brand names
Where the manufacturer wants to avoid marketing risks like drop in
When the wholesaler provides ready cash while purchasing in
Where the manufacturer needs to free storage
Where manufacturers requires wholesalers to prepare goods for
Where the manufacturers requires wholesalers to undertake product
Where market is widely spread
14. State four reasons for maintaining a cash book in a business enterprise. (4 Marks)
To reduce the number of entries made to the general
To easily avail cash balances / show cash balances at a glance.
To enhance specialization in book-keeping by allocating different ledgers to different workers.
To easily monitor the cash inflows (receipts).
To easily monitor the cash outflows (payments).
To show discount allowed to
To show discount received from
15. Ways in which the price of a product may be set.
Auction
Haggling/Bargaining
Retail price maintenance/Recommended Retail Price
Tendering
Through taxation and
Price control/ legislation
Price collusion
16. Factors that would make two people taking the same type of life assurance policy with the same insurer to pay different amount of premiums. (4 Marks)
Differences in their ages
Differences in their
Differences in their pace of
Differences in their ability to pay
Differences in their health
Differences in maturity of their
17. State the line of communication involved in each of the following: (4 Marks)
The manager of ABC Company Ltd talking to manager of XYZ Company Ltd-Horizontal communication
A secretary asking for time off from her boss-Upward vertical communication
The Production Manager giving instruction to the Secretary of Sales Manager-Downward diagonal communication
The Store Keeper giving explanations to the Chief Accountant-Upward diagonal communication
18. List four books of original entry that may be used to record transactions affecting stock. (4 Marks)
Purchases Journal
Purchases Returns Journal/Returns Outward Journal
Sales Journal
Sales Returns Journal/Returns Inward Journal
19. Highlight four external economies of scale that a firm may get when operating on large scale. (4 Marks)
Access to skilled labour.
Enjoy improved
Improved
Easy disposal of
Ready market from surrounding
Enjoy joint market
Readily available complimentary services g warehousing, banking
Government support/Favourable
20. Calculate:
a) 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑜𝑤𝑛𝑒𝑑 = 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
= (80,000 + 20,000 + 20,000) − 20,000
= 100,000 (2 Marks)
b)𝐴𝑐𝑖𝑑𝑡𝑒𝑠𝑡 𝑟𝑎𝑡𝑖𝑜 = 𝑐𝑢𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 −𝑠𝑡𝑜𝑐𝑘
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
= 40,000−20,000 = 20,000 = 1 (2 Marks)
21. Watamu Enterprises Balance Sheet As at 2nd May, 2014
(5 Marks)
Watamu Enterprises Balance Sheet
As at 2nd May, 2014
Current Assets
Stock
400,000
Capital 1,300,000
Current Liabilities
Debtors
100,000
Creditors
250,000
Cash at bank
150,000
Cash
900,000
1,550,000
1,550,000
Outline four merits of indirect taxes. (4 Marks)
Tax payment is voluntary/can be avoided
It is not easily
It is more convenient as it is paid in
It is
It stimulates effort to
It promotes equality
More revenue can be raised as it broad.
23. Ways in which the technological environment may improve business performance. (4 Marks)
Increased output/mass
Lower cost per unit of production / reduced cost of production.
Minimal incidences of fraud/theft.
High quality
Improved business image /
Increased sales.
Better communication.
Wider market /
Faster conduct of business transactions
24. Identify the types of ledger in which each of the following accounts would be found: (4 Marks)
Account
Type of ledger
a
Otieno (Buyer)
Debtors/Sales ledger
b
Carriage outwards
Nominal ledger
c
Mueni (Supplier)
Creditors/Purchases ledger
d
Cash at bank
Cash book
Ways in which the introduction of money helped eliminate problems faced in barter trade. (4 Marks)
Money eliminates the need for double coincidence of wants since it is a medium of
Stores the value of perishable goods by selling them and keeping the money for future
Ensures that commodities exchanged are of comparable values by offering a standard measure of
Helps in the exchange of indivisible commodities since it can be divided into smaller denominations without losing
Money provides a unit of account by which goods and services are valued unlike in barter trade.
Money is a standard of deferred payment whereas it was not possible to make payments in the future under the barter
Money enables exchange/transfer of fixed property like
Money helps to solve the problem of transporting heavy and bulky goods because is
20,000 20,000 1
KCSE 2019
1. State whether basic human want or secondary human want. (4 Marks)
Commodity/service
Class of human want
(a)
A shirt
Basic
(b)
Education
Secondary
(c)
Housing
Basic
(d)
A packet of milk
Basic
(e)
Entertainment
Secondary
(f)
Haircut
Secondary
(g)
Green grams
Basic
(h)
A car
Secondary
Outline four factors that make office managers to communicate in writing to their staff. (4 Marks)
Confidentiality-the confidentiality of the message is enhanced by written
Accuracy – the message is delivered in its original form.
Completeness of the message – written forms may be able to pass long/detailed
Future reference – the message may form the basis for decision making in
Reliability of the means – this is the trusted means of communicating in
Economical-it is cost effective since it is affordable
/ relatively cheaper.
Accessibility – it is easily accessible to all staff members.
Acceptability – it is the acceptable means of official communication in
Evidence-it is a proof of
Desired impression – shows the seriousness of the message
3. Prepare Birika Traders Trial Balance as at 31st December, 2014.
Birika Traders Trial Balance
As at 31st December, 2014
DETAILS
DR (KSH)
CR (KSH)
Furniture and Fittings
234,000
Debtors
67,500
Capital
157,900
Commission earned
13,200
Creditors
34,750
Drawings
21,800
5 Year Bank Loan
114,450
Discount Received
3,000
323,300
323,300
Functions of an office in an organization. (4 Marks)
Filing
Mailing
Reproduction of documents
Distribution/dissemination of information
Receiving and recording information
The communication centre for the organization
Safeguarding and controlling the organization’s property
An administration centre for the organization
Public relations centre for the organization/customer care
5. Roles played by the Nairobi Securities Exchange in the Kenyan economy. (4 Marks)
Sets the price / value of securities based on the forces of demand and
Ensures safety of transactions since the financial health of listed companies is usually verified / safeguards
investor’s interest.
Promotes saving and investment among the
Raising revenue to the
Creation of
Provides useful information to
Promotes economic growth through disinvestment and reinvestment.
Promotes local ownership of companies through sale and purchase of shares.
Provides ready market for (for sale and purchase) of shares hence improving
Measure of the country’s economic performance as reflected in the prices of
6. Name the basic concept in population described in the statements given below: (4 Marks)
Population size that is adequate for the full utilization of available resources in a country-Optimum population
The average number of births per one thousand women in a year-Birth rate
When a country is experiencing higher death rates than birth rates-Declining population
Where a bigger proportion of the population is comprised of people who are above 55 years old-Ageing population
7. Circumstance under which each of the following terms of trade would be applied in foreign trade. (4 Marks)
Franco : when the price quoted covers all expenses till goods reach the premises of the buyer/free of
Ex-Works: when the price quoted only covers the cost of production and while they are within the
manufacturer’s warehouse.
In bond: when the prices quoted covers all expenses until goods are delivered in a bonded warehouse in the country of
Free Alongside Ship (F.A.S) : where the price quoted cover all expenses to the point where goods are next to the ship
8. Complete the diagram below to illustrate the classification of trade. (3 Marks)
Home trade/
Local trade
International trade
/Foreign trade
Retail
trade
Wholesale
trade
Import
trade
Export
trade
Merits of using salespeople to promote the sales of a particular product. (4 Marks)
It gives personal touch which elicits positive response from potential
It can be used to target specific group of
It is flexible since the message can be tailored to suit the needs of each
Allows for demonstration on product
Source for immediate feedback from the
Buyer’s questions / concerns are immediately addressed.
It leads to more sales since customers may be convinced by persuasive sales
Facilitates collection of
10. By use of book keeping equation, determine the missing values in the table below. (4 Marks)
FIXED ASSETS
(Ksh)
CURRENT ASSETS
(Ksh)
CAPITAL
(Ksh)
LIABILITIES
(Ksh)
1,593,600
a) 458,900
900,900
1,151,600
812,700
1,953,750
b) 594,350
2,172,100
c) 892,735
781,295
1,010,000
664,030
1,320,920
1,450,050
1,260,860
d) 1,510,110
Features that may indicate a country’s state of underdevelopment. (4 Marks)
High disparities in income distribution
Underutilization of natural resources
High population growth rate
Poor infrastructure
High dependency ratio
High levels of illiteracy
Dominance of subsistence sector
Poor health facilities
High levels of poverty/low capita income
Poor governance
Low levels of savings and investment
Outdated cultural practices
High levels of unemployment
Over-reliance on developed countries
Low levels of technology
Low levels of industrialization
Low labour productivity due to inadequate co-operant factors
12. List four types of small-scale retail business that one can run without a shop. (4 Marks)
Hawking
Peddling
Roadside selling
Open air market trading
Automatic Vending by use of machines
Online selling
13. Functions of Department of External Trade in the Ministry of Industry, Trade & Co-operatives. (4 Marks)
Develop bilateral and multilateral trade agreements to accord preferential treatment to Kenyan
Educating Kenyan exporters on trade regulations and practices in other
Intervene on behalf of Kenyan traders in resolving trade disputes between Kenyan traders and foreign clients.
Arrange for trade fairs, shows and exhibitions for Kenyan goods in foreign
Expand and diversify foreign markets for Kenyan goods.
Inform Kenyan producers on the available selling opportunities in other
14. Factors to consider when selecting a channel to distribute fresh milk. (4 Marks)
Reliability of the
Length of chance since milk is highly
Government policies on distribution of
The geographical spread of
The cost of the
The level of competition in sale of
Role played by intermediaries e.g. cooling
15. Book of original entry into which information extracted from the source documents given. (4 Marks)
Source documents
Books of original entry
(a) Incoming invoice
a) Purchases journal/
bought journal
(b) Outgoing credit note
b) Sales returns journal/
returns inward journal
(c) Outgoing cash sale slip
c) Cash Receipts journal/
Cash book
(d) Incoming debit note
d) Purchases journal/
bought journal
Outline four features of co-operatives societies. (4 Marks)
Formed by a minimum of ten members and has no maximum membership
Managed/Run by a management committee
Governed using by-laws
Profit is distributed to members in form of dividends
It is a separate legal entity from the members
It has limited liability
It is formed by people with common interest
No single member is allowed to own more than 50% of the total share capital
17. Factors which may lead to an increase in a country’s national income. (4 Marks)
A stable political environment
Technological advancement
Vibrant entrepreneurship
Increased supply of skilled labour
Increased access to capital
Optimal utilization of available natural resources /land
Positive attitudes of citizens towards work
Reduced level of subsistence sector
Increased foreign investment
18. Determine net purchases. (3 Marks)
b) State two reasons for preparing the trading account.
Enables the business to determine the cost of goods
It reveals the amount of revenue generated from the sale of stock in a given year/reveal net
Helps to determine whether the business has made a loss or a profit from the sale of stock in a given
It can help to gauge the performance of a business if compared across different
It can help compare performance of a business with
To facilitate the preparation of a profit and loss
19.
Workers
Level of production
(a)Carpenter
Secondary
(b)Nurse
Tertiary
(c)Maize farmer
Primary
(d)Mason
Secondary
(e)Wholesaler
Tertiary
(f) Lumber
Primary
(g)Road engineer
Secondary
(h)Insurer
Tertiary
Identify the level of production for the workers.(4Marks)
Characteristics of a good tax system. (4 Marks)
Equitably distribute the tax burden according to the payers’ ability to pay/equity
Certain and clearly defines what the payer is expected to pay/certainty
Economical and allows the tax to be collected at the least cost/economical
Convenient and easy for the tax payer to meet the tax
Flexible enough to allow for adjustments according to prevailing conditions/flexibility
Diverse to capture as many sources as possible/diversity/broad based
Simple enough to be understood by all tax payers/ simplicity
Elastic and able to generate more revenue with improved economic conditions/elasticity
21. Highlight four contributions of entrepreneurs to the growth of an economy.
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/saving on imports
Promote technological advancement through their creativity.
Promote entrepreneurial culture by being eye openers to other people who start their own businesses
Promote the accumulation of capital by ploughing back their profits /formation of capital
Promote development of infrastructure
Reduces rural-urban migration
Reduces foreign dominance of economy
Source of government revenue e.g., Taxes and fees
22. Factors that may influencing an individual’s demand for money for transaction motive. (4 Marks)
The individual’s level of income
The frequency of payments by the individual
The individual’s spending habits
The rate of inflation/price of commodities
The number of dependents supported by the individual
Availability of credit
The frequency of income / individual’s earning / interval between receipts of income
23. Determine the excess demand and excess supply.
PRICE
(Ksh/Bag)
1800
1600
1400
1200
1000
800
600
400
Quantity Demanded
(Bags)
280
400
500
650
700
850
950
1000
Quantity Supplied
(Bags)
1400
1200
900
650
500
420
350
200
Excess Demand
(Bags)
–
–
–
0
200
430
600
800
Excess
Supply (Bags)
1120
800
400
0
–
–
–
–
Benefits of a bonded warehouse to the
The importer can sell the goods before paying the duty hence transferring the burden to the buyer
Goods can be prepared for final sale while still in bond
e.g. branding, blending etc.
Gives the importer time to arrange for payment of duty
The importer can look for market while goods are still in bond
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
Some goods may lose weight hence importer pays less tax
25. Means of transporting goods and people on land.
Use of animal transport
Human porterage
Use of carts/cartage
Bicycles
Motorcycles
Pipelines
Tuk-tuk/tri-cycles
KCSE 2020
1. List four external environmental factors that may influence the operations of a business. (4 Marks)
Legal/regulatory issues/government policy
Political factors
Economic factors
Competitors/competition
Socio-cultural factors
Suppliers
Technological factors/Technology
Natural factors e.g. climate
Infrastructure
Market/customers
Demographic considerations (population)
Security
2. State four characteristics of direct production. (4 Marks)
Production is for own use/subsistence production
Low level of technology is used in production
Goods produced are often of low quality
Goods are produced in small quantities /No surplus
The producer is involved in all stages / process of production /lack of division of labour
The producer strives to produce a variety of commodities/lack of specialization
The producer’s living standards is low for lack of variety
3. Document described in each of the following statements.
Used to demand for payment before goods are delivered-Pro-forma invoice
Used to reply to a specific letter of inquiry-Quotation
Informs the buyer that goods ordered for have been dispatched-Advice Note
Used to correct an overcharge-Credit Note
4. Reasons for government involvement in business.
To provide essential goods and
To protect citizens from exploitation by
To create
To earn
To attract foreign
To stimulate economic
To provide sensitive goods that cannot be left in hand of private
To prevent foreign dominance of the
To venture into businesses that requires huge investments beyond ability of private
5. Factors that lead to a Decrease in Demand.(4 Marks)
Decrease in consumer’s income
Unfavourable government policies e.g.increased taxes
Decrease in population
Future expectation that price will decline
Unfavourable seasons/off peak season for particular commodities
Negative taste and preference for a particular product (out of fashion)
Availability of better substitutes
Reduced prices of substitute goods
Increase in price of complimentary goods
Unfavourable terms of sale
6. Circumstances under which a trader would prefer to transport goods by air. (4 Marks)
When the goods are perishable since it is
When goods are urgently
When goods are highly valuable since it is
When accessing remote areas not accessible by other means
When the business can afford to use
Where it is the most easily accessible/available.
When it is the policy of the business to transport goods by
7. Determine the total liabilities of the business. (3 Marks)
𝐴 = 𝐶 + 𝐿
20,000 + 1,500 + 2,000 + 4,000 = 24,000 + 𝐿
27,500 = 24,000 + 𝐿
27,500 − 24,000 = 𝐿
3,500 = 𝐿; 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = 𝐾𝑠. 3,500
8. Services that commercial banks offer to their customers.
Accepting deposits/safekeeping of customers money
Lending money to customers/credit facilities
Safekeeping of valuable items e.g. title deed
Providing foreign exchange
Offer money transfer
Acts as guarantors when customers are taking loans with other institutions
Offer trusteeship
Offer financial advisory
9. Outline four reasons that may make Kenya restrict trade with other countries. (4 Marks)
To protect local infant industries from unhealthy competition
To create employment opportunities
To safeguard against overdependence on foreign firms for essential commodities
To raise revenue through tariffs
To curb against borrowing of unacceptable foreign culture
To prevent dumping of substandard goods in the country
To correct unfavourable balance of payments
To restrict entry of harmful goods
To protect strategic industries
To make use of natural local resources
10. Classify the following resources as natural, man-made or human: (4 Marks)
Sources of capital for sole proprietorship. (4 Marks)
Personal/Owner’s savings
Ploughing back profits/retained earnings(profits)
Donations from friends/relatives
Credit buying (trade credit/hire purchase)
Borrowing from financial institutions/friends
Inheritance
Renting and Leasing of property
12. Circumstances under which a firm may be located near the source of raw materials. (4 Marks)
Where it is cheaper to transport finished goods than raw materials
Where the firm needs to ease handling of bulky raw materials
When dealing with highly perishable raw materials to avoid spoilage
If the government policy requires the firm to be located near the source of raw materials
Where the raw materials are fragile/brittle
Where the raw material is dangerous to carry over long distances
Where the firm need to ease handling heavy raw materials
13. Kombo Traders Trial Balance As at 30th April, 2018.
(5 Marks)
Kombo Traders Trial Balance
As at 30th April, 2018
DETAILS
DR (KSH)
CR (KSH)
Land and buildings
150,000
Creditors
1,500
Motor car
120,000
Cash
25,500
Capital
311,000
Bank
4,000
Sales
5,000
Purchases
18,000
317,500
317,500
Reasons that would make an entrepreneur prepare a business plan. (4 Marks)
To foresee and avoid mistakes that could be committed in future
To identify strengths and devise ways of dealing with the weaknesses of the business
It is a requirement by financiers
To enable the business organization avoid goal blindness
To allocate resources appropriately
To use it as a monitoring tool (Tool of control)
To be able to motivate employees
To adapt to future changes/For adaptability
15.
Description
Equipment
a)
Used to make postage stamp
impressions on envelopes.
Franking machine
b)
Used to transmit verbal messages.
Telephone/ Radio call
c)
Used to store confidential
documents and valuable items.
Safe/Cabinet
d)
Used to record and store
information in audio tapes.
Dictaphone/ Dictating machine
Identify the office equipment described below.
Resource
Classification
(a)
Architect
Human
(b)
Boat
Man-made
(c)
Soda ash
Natural
(d)
Driver
Human
State four sources of government revenue. (4 Marks)
Taxes
Fines from courts
License fees
Borrowing
Grants and foreign aid
Rent and rates for use of government property
Dividends and profits from government investments
Proceeds from sale of government property
Interest earned from loans advanced by government
Escheats
17. Measures which may be taken by a government to address the problem of underdevelopment. (4 Marks)
Increasing government investments to create more
Control of population to reduce pressure on
Improve infrastructure to support economic
Improve technology to increase productivity and reduce wastage.
Improve education system to alleviate illiteracy and impart appropriate
Income redistribution to reduce income
Improve and develop social amenities to foster welfare of citizens.
Legislating against outdated/backward cultural
Encouraging good governance to promote peace and stability.
Provision of incentives to promote investments and saving culture.
18. Benefits of personal selling to a trader. (4 Marks)
The trader is able to reach both literate and illiterate customers
Able to demonstrate the use and capabilities of a product
The trader is able to get immediate feedback
Can tailor the presentation to suit the needs of individual customers
Facilitates the establishment of interpersonal relationship with clients which promotes repeat purchase/create customer loyalty
Enables the trader to focus on a targeted group of customers
Seller has the opportunity to get information on competitors from buyers
May promote instant sales
It is more persuasive and convincing to customers
19. Channels for distributing imported goods. (4 Marks)
Foreign producer Local consumer
Foreign producer Retailer Local consumer
Foreign producer Wholesaler Local consumer
Foreign producer Wholesaler Retailer Local consumer
19. Reasons why government protect consumers. (4 Marks)
To ensure that products offered for sale are of good
To ensure that products offered for sale are of right
To ensure health standards are maintained for good health of
To ensured consumers are not overcharged.
To ensure building construction and safety standards are maintained to avoid loss of lives and property in case they
To protect consumers from false advertising by traders who may give false
To protect consumers from sale of harmful products that may adversely affect their
To protect consumers against breach of contract from traders who may fail to honour terms and conditions of
To ensure traders do not hoard products causing artificial shortage/ensure commodities are readily available to
20. Types of financial institutions. (4 Marks)
Commercial banks
Savings and Credit Co-operatives Societies/SACCOS
Housing Finance companies
Development Banks/Development Finance institutions
𝑮𝒓𝒐𝒔𝒔 𝒑𝒓𝒐𝒇𝒊𝒕 = 𝟒𝟎𝒙𝟐𝟕𝟎,𝟎𝟎𝟎 = 𝑲𝒔𝒉. 𝟏𝟎𝟖, 𝟎𝟎𝟎
𝟏𝟎𝟎
b) 𝑺𝒂𝒍𝒆𝒔 = 𝑪𝑶𝑮𝑺 + 𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
COGS=270,000-108,000 COGS=Ksh. 162,000
c) 𝑹𝑶𝑺𝑻𝑶 = 𝑪𝑶𝑮𝑺
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒕𝒐𝒄𝒌
𝟔 = 𝟏𝟔𝟐,𝟎𝟎𝟎
𝑨𝒗𝒆𝒓𝒂𝒈𝒆.𝑺𝒕𝒐𝒄𝒌
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒕𝒐𝒄𝒌 = 𝟏𝟔𝟐,𝟎𝟎𝟎
𝟔
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒕𝒐𝒄𝒌 = 𝑲𝒔𝒉. 𝟐𝟕, 𝟎𝟎𝟎
24. Reasons for locating bonded warehouses at border points
To ease collection of custom duties by the
To ease inspection of imported products by the government.
To ease re-exportation of goods when
To ease inspection of goods before they are
To save on transportation costs to the bonded warehouses.
To avoid entry or exit of illegal goods into the country
To control the quality of goods entering the
To control the quantities of goods entering the
To avoid dumping of products into the country
25. Services offered by retailers to consumers. (4 Marks)
They offer credit facilities to
They offer after-sale services such as transportation
They stock variety of goods and services
They offer advice and information about the product
They break bulk/ divide commodities to small quantities convenient to
They avail commodities to places convenient for consumers.
Ensure steady supply of products leading to stable prices
They prepare goods for sale such as sorting,
Business Studies KCSE 2010-2022 P2 Marking Scheme
KCSE 2010
1. (a) Market Equilibrium for Commodity A and B.(10 Marks)
Commodity A
Discourages savings and investment since during inflation people tend to spend most of their earnings on basic needs leaving little or nothing to save or
Leads to retardation/slow of economic growth as production are
Leads to unfavourable balance of payments since imports are more than
P0
Price P1
Explanation
0 Q0 Q1 Quantity
2 (a) Principles that distinguish co-operative societies from other forms of business organizations. (10 Marks)
Democratic administration/control. Decisions are made by members on a one-man-one-vote
Open and voluntary membership:-members can join or exit at will/freely.
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
Co-operation with other co-operatives. They do this in order to share ideas and experiences at different levels for
Increase in supply of A causes decrease in price from P0 to
Due to reduced price, consumers are likely to buy more of A as quantity increase from Q0 to Q1 and less of B as shown
Commodity B
P0
Price P1
benefit of their members.
Limited interest on share capital. The capital paid is meant for running the society’s affairs rather than generating
Promotion of education to members. The co-operatives are obliged to educate their staff, management and the members in
Provision/payment of dividends to members. They distribute their surplus income to members depending on shares/deposit.
Political and religious neutrality. The co-operative societies are not supposed to favour, align or identify with any political or religious
Offer of utmost service to members. They are formed to carter for members’ interests and welfare.
Explanation
0 Q1 Q0 Quantity
(b) Ways of making face to face effective. (10 Marks
Clarity of the message so as to avoid misunderstanding and ambiguity.
Demand for B decreases from Q0 to Q1 as the price decreases
from P0 to P1.
This causes a shift in demand curve from D0D0 to D1D1 creating a new equilibrium quantity Q1 and equilibrium Price P1 at equilibrium point e1
(b) Explain five negative effects that inflation may have on the economy of a country. (10 Marks)
It leads to loss by creditors as they lend money when the value is high and are paid when value is
It leads to reduction in firms profits as sales volumes reduce since buyers buy
It wastes time as a lot of time is wasted in shopping around for reasonable prices and also firms may waste a lot of time adjusting their price lists to reflect new
It leads to industrial unrest/strikes as employees demand for pay rise to cope with increased
It leads to decline in standards of living as consumers’ purchasing power decreases which may make them unable to cater for some of their human wants.
Leads to unemployment as production activities are low due to low demand of goods and
Use of non-verbal cues to clarify and reinforce verbal messages.
Communicating parties being close to each other to avoid shouting/not
Communicating parties to use of a common language thus enhancing understanding of the
Making the message concise and brief to avoid unnecessary
Good listening and being attentive so as to understand the message being
Positive attitude between the communicating parties to avoid prejudice.
Use of simple language and non technical terms to make it easy for the receiver to
Having courtesy and respect between the sender and the receiver to avoid
Tone variation to break monotony and sustain interest for the
3. (a) (i) K-100 P&L Account. (9 Marks)
K-100 Traders
Trading Profit and Loss Account For the period ended 30th June, 2008
Opening stock 80,200 Sales 1,880,000 Add: Purchases 1,120,000 Less: Returns In5,800 Add: Carriage in 40,000 Net Sales 1,874,000 Less: Returns out 20,8001,139,200
COGA4S 1,219,400
Less: Closing stock 120,400
Cost of goods sold 1,099,400
Gross profit c/d 774,800
1,874,0001,874,000
Expenses Gross Profit b/d 774,800
Water bill 250,000 Discount Received 7,500
Repairs 23,000
Carriage on Sales 12,700
Lighting 15,000
Insurance 4,000
General Expenses 56,700
Net profit c/d 213,900
782,300 782,300
(ii) K-100 Traders Balance sheet. (5 Marks)
K-100 Traders Balance Sheet
As at 31st December, 2008
Fixed Assets Capital 4,000,000
Furniture 3,000,000 Add: Net Profit 213,900
Motor Vehicle 690,000 3,690,000 4,213,900
Current Assets Current Liabilities
Stock 120,000 Creditors 510,400
Debtors 316,800 Bank Overdraft 2,500
Bank 520,000 512,900
Cash 80,0001,036,800
4,726,800 4,726,800
Factors that should be considers in the choice of a means of transport. (10 Marks)
The nature of the commodity to be transported— durable, perishable, bulky or heavy goods can only be transported using particular
Cost of transportation — means chosen should be affordable/not too
Urgency/speed — urgently required goods requires fastest means of
Chose a means that is certain to deliver without fail/on right time and form for the goods.
The (geographical) distance to be covered. Some means are appropriate/convenient for long distances while others are appropriate/ convenient over short
Choose a means that is less prone to damage, loss or theft.
Choose a means that is able to deliver door to door services if you need so.
Availability of the means. Chose a means that can be readily found and is within your
Volume/quantity of the goods. Choose a means with the capacity to carry all the
4. (a) Benefits that a member country may get from economic integration. (10 Marks)
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
Increased mobility of factors of production. Labour, entrepreneurship and capital will move to and from other countries with minimum
Improved infrastructure — There is likelihood that member countries will improve their infrastructure due to increased production
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
Shared research information and common services — This reduces the cost of doing business and improves production by eliminating
Creation of employment. This is a result of increased economic
Encourages specialization. Member countries can concentrate on what they can produce
Increased economic bargaining power. This may lead to better balance of payment and terms of
5. (a) Problems that may be faced when measuring national income using the output approach.
Inadequate or incomplete data — difficulties will be experienced in valuation due to unavailability or inaccuracy of output
Difficulty in determination of goods and services to be included — there is difficulty in determining goods and services to include, for instance, do we include services for a housewife?
Difficulty in evaluating output in subsistence sector — problem arises in the valuation of output of the subsistence sector since the goods are never
Difficulty in valuing 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
Problem of 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.
Problem of double counting. It may be difficult to distinguish between primary and intermediate output or between intermediate and final
Lack of qualified personnel who may be to compute and even collect
Inadequate finance, capital equipment and technology to be used when gathering and compiling
(b) Factors that an entrepreneur would consider when evaluating a business idea. (10 Marks)
Returns on investment/Profitability/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. There should be adequate consumers for the goods or services to be provided.
Availability of an effective channel of distribution. This will ensure the product is available in the market do that customers buy it when they decide
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
The level of competition. The entrepreneur should look at the systems used by the competitors and strategize accordingly.
The payback period. This should be reasonable to allow the investor break even and recoup/recover the capital invested.
The risks involved. These should be manageable and minimal to avoid unnecessary losses.
6 (a) Benefits that accrue to a customer who uses ATMs.
Customer can withdraw and deposit money at any
Customers can deposit money or cheques at any time since it offers a twenty-four hour
Customer can pay utility bills such as electricity through the ATMs.
Fees charged for withdrawal is low compared to over-the- counter
ATMs may be found even where banks are non-existent hence convenient and easily accessible to
The customer has a pin number which guarantees confidentiality and safety for his/her
Customer can use it to monitor his transactions with the bank by getting mini-statements.
Customers can make interbank withdrawals by use of visa cards.
ATM cards are secure and very easy to carry
b) Possible risks that Amina can insure her PSV business against. (10 Marks)
Accidents-She can insure her vehicles against road
Fire — vehicle and other assets can be insured against
Loss of cash in transit — can insure against loss of cash in transit to and from the
Pilferage of goods — can insure against loss of cash and other valuables through theft by
Occupational hazards — employees can be insured against physical harm while on
Third party claims — can insure against injuries to third parties emanating from the fleet/vehicles.
Theft and burglary to cover the vehicles and other property against been stolen/robbed.
Loss of profit and consequential loss due to business interruptions.
KCSE 2011
1 (a) Explaining the types of inflation. (8 Marks)
Demand-Pull inflation-Refers to a progressive increase in the general level of prices of products brought about by an expansion in demand. There is too much money chasing very few
Cost-Push inflation– Refers to progressive increase in the general price levels brought about by a general increase in the cost of
Imported inflation-Refers to a sharp rise/increase in prices of domestic products resulting from importation of primary goods and inputs at higher
Structural inflation– Refers to a persistent increase in prices of products resulting from failure of the economy to meet the general increase in demand. (4 x 2 = 8 Marks)
(b) Factors that may hinder the development of a country.
Low demand for goods and services which discourages production activities hence interfering with
Inadequate capital which leads to low levels of savings and investments by
Negative socio-cultural practices which may hinder production and consumption of certain goods and services.
Inadequate foreign exchange which limits access to imports hence affecting production and consumption.
Limited entrepreneurial abilities resulting into inefficiency in
Poor management of resources arising from inadequate skills, corruption and poor governance which limit the extent of growth and
Poor nutrition and disease prevalence which renders some of the people unproductive as well as channeling much of the income into provision of health care instead of
Use of inappropriate technology which compromises the quantity and quality of goods and services
2. (a) Circumstances under which containerization may be used to transport goods. (10 Marks)
Where bulky goods are imported. Bulky goods are usually transported by sea where containers are used.
Where specialized equipment are available for handling
Where container terminals are available- containerization require container terminals which are specially built to handle
Where specialized means of transport like railways are
Where security of goods need to be guaranteed. Goods of very high value and those that are risky require high level of security which is guaranteed by
Where skilled personnel are available. The handling of containers requires specially trained workers to handle and manage
b) (I) Procedure for making an insurance claim. (5 Marks)
Notifying the insurer of the loss suffered. The insured should inform the insurer immediately or within 24 hours in case of occurrence of risk
Filling a claim form from the insurer. The insurer issues an official claim form where the insured indicates details relating to loss suffered/occurred
Carrying out investigation to determine or ascertain the cause of loss. Once they receive the claim form the insurer uses their experts (assessors) to determine the cause and extent of the
Insurance company making a report. Assessors make reports of their findings in their
Payment of the claim/Compensation-If claim is valid, the insured is compensated depending on the loss
𝑺𝒖𝒎 𝑰𝒏𝒔𝒖𝒓𝒆𝒅 𝑿 𝑳𝒐𝒔𝒔
4 (a) Benefits to an organization that adopts open office plan. (10 Marks)
Easy supervision. It is easy to monitor employee’s performance since they are in the same
Economy of space. More floor space is available since space has not been lost through
Minimal cost. It is cheap to construct and
Sharing of resources. It makes possible for joint use of office
Easy communication. Communication between workers and departments is made easier and faster since there are no physical barriers between
Easy reorganization. It is easy to re-arrange the office when need
(II) 𝑪𝒐𝒎𝒑𝒆𝒏𝒔𝒂𝒕𝒊𝒐𝒏 =
(5 Marks)
𝑽𝒂𝒍𝒖𝒆 𝒐𝒇 𝒑𝒓𝒐𝒑𝒆𝒓𝒕𝒚
Enhanced teamwork. Employees work as a team and learn to be
900,000𝑥500,000
𝐶𝑜𝑚𝑝𝑒𝑛𝑠𝑎𝑡𝑖𝑜𝑛 =
1,200,000
= 𝐾𝑠 375,000
3. (a) Factors to consider when choosing a method of promoting a product. (10 Marks)
Cost of the method. The organization should choose a promotion method that is
Geographical area of coverage. The organization should choose a method that will reach the customers in their various locations. Target group. The organization must choose a method that appeals to the relevant target group.
Speed of the medium or method in relation to urgency of the message. The organization should choose a method that will reach the customers within the desired time
Nature of the product. Different methods may be chosen depending on the nature of the product e.g. technical products may require demonstrations best achieved through personal selling.
Nature of the promotional message. The organization should choose a method that will best present the various aspects of the
(b) Features of economic resources. (10 Marks)
They are scarce in supply. They are found in small quantities compared to the many uses into which they have to be put and hence not sufficient to satisfy all human
They have monetary Value. They have a price attached to them which have to be paid for their use.
They are unevenly distributed. They are not distributed uniformly in society; hence some people, regions or countries have more of the resources than
They can be combined in various They can be used in different proportions to produce goods and services.
They have utility/usefulness. They are used to satisfy human wants (have utility).
They can change ownership/possession/ Transferability They may be transferred from one person to another in terms of
(b) Circumstances under which a partnership may be dissolved include: (10 Marks)
Where objectives of the business has been This is if partnership was formed for a definite time and for a particular objective.
Where there is mutual agreement among partners to dissolve the business. Partners can agree to terminate the
In case of bankruptcy, death or insanity of a general partner. This is because there would be no guarantee for creditors to be paid their
In case of change in law that makes the operations of the partnership illegal.
Where there is continued disagreement/Internal dissension among partners – where partners disagree irreconcilably, then the partnership may be terminated.
In case of persistent/continuous loss making which renders the business unable to meet its financial obligations.
In case of a court order to dissolve the business. For instance if court find out that the partnership has engaged in fraudulent activities.
5. (a) Factors that may influence the choice of a channel for distributing flowers. (12 Marks)
Nature of the flowers. Flowers are perishable and therefore need a short channel in order to be distributed
Cost of distribution. The cost of different channels of distribution should be considered and choose cheapest channel.
Nature of the market. If consumers are widespread, then agents/long channel may be necessary to reach
Tastes and preferences of consumers. Consumers may have specific preferences which might require the personal attention of the producer hence use of a shorter
Level of competition. Where competition is high, the producer will have to close to the consumers and will therefore use a short channel of
Quantity of flowers. If the quantity of flowers to be sold is large, then more middlemen/long channel may be
Availability of technical personnel. If the producer does not have the required technical personnel, then he may have to use a longer channel.
Government policy. Flowers distributors must adhere to the government requirements in flower
(b) Reasons for maintaining books of original entry.(8 Marks)
Relieve ledger accounts from being too bulky. Journals reduce details to be recorded in the ledger
Act as back-up data from which other information may be extracted if need
Contain information which acts as reference such as units, trade discounts and terms of
The general journal is used to correct errors made when recording
May be used by business which does not keep complete record of accounts to start doing
The three-column cash book is used as a book of original entry as well as a
6. (a) Causes of unfavourable balance of payment for most developing countries. (10 Marks)
Reliance on primary products for export. Most developing countries mainly export primary agricultural products which fetch low prices in the international
Heavy importation of finished goods. Most developing countries import finished manufactured goods whose values are very high hence spending more on
Use of low levels of technology in production. Most developing countries rely on low levels of technology in production which compromises the quality of their exports and also lowering their value
Too much reliance on foreign borrowing. Most developing countries finance their development projects through heavy borrowing yet such loans are repaid with heavy
Susceptibility/Prone to natural calamities. Many developing countries are easily affected by natural disasters like drought which adversely affect their production.
Preference towards foreign goods. Most consumers in developing countries prefer goods manufactured in foreign countries in the belief that they are of better
Unfavourable world economic order. The developing countries have very little say in international trade forums and cannot influence the world economic order in their
(b) Rehema Traders Balance sheet. (10 Marks)
Rehema Traders Balance Sheet
As at 31st December, 2007
Fixed Assets Capital 1,000,000
Premises 850,000 Add: Net Profit 1,806,000
Motor Vehicle 800,000 2,806,000
Equipment 550,500
Furniture 350,0002,5500,500
Current Assets Current Liabilities
Stock 75,000 Creditors 820,000
Debtors 650,500
Bank 200,000
Cash 150,0001,075,000
3,626,000 3,626,000
KCSE 2012
1 (a) Benefits of division of labour to an organization.
(10 Marks)
Less time is spent in completing a job – there is less movement by workers while changing from doing one work to another.
Increased production- people become more effective and efficient at their jobs as they do it repeatedly hence increasing
Standardized goods – goods produced are of uniform quality which enhances customer satisfaction and the firm’s
Increased use of machines – work can be automated leading to lower costs of
Enhanced management – this facilitates control, co- ordination and
High quality goods produced – people concentrate in doing jobs for which they are best suited which improves quality of
Increased creativity and innovation – the organization may tap workers talents and skills which may help to modify existing products, develop new products, initiate new methods of production or discover new
Improved efficiency due to better use of resources hence avoiding wastage.
(b) Ways in which a computer may be used in an office.
(10 Marks)
Data processing – data can be keyed into the computer which then sorts, organizes, analyzes and gives meaningful output.
Storage of information/data – a computer has various storage devices where information can be kept for future reference.
A tool for communication – A computer can be linked to the internet and other work stations to enhance sharing of information.
Production of documents – can be used as a word processor to produce both soft and hard
Assist in research – a computer provides a link with various sites where information can be sourced for research
Assist in decision making – it has special programmes and models which may facilitate the decision making process for
A tool of supervision can be used to monitor employee activities on-line.
Can be used for training and staff development – it is a tool for training during staff orientation and
Entertainment – the computer has accessories for games, music and movies’, which can be used for relaxation while working. (Any 5 x 2 = 10 Marks)
5 (a) Demand and Supply Curve. (10 Marks)
35
30
25
20
15
10
5
0 10 20 30 40 50 60 70 80 90
Merits of direct taxes to the government. (10 Marks)
Economical to collect – it provides higher revenue at lower costs of administration since collection is executed at the source e.g. PAYE.
Tax revenue is certain – the government knows the amount of tax, the manner and time of payment, hence budget and plan for it. It is also difficult to
Convenient for both taxpayer and the collector – it is collected from the source at regular intervals making it easy and very
It enhances price stability – it is a useful tool for maintaining stable prices by affecting disposable income and consequently influencing aggregate
Ensures equity – the progressive nature of direct taxes distributes tax burden equitably, thus the government is able to redistribute wealth by heavily taxing those who earn more as opposed to those earning
Simple to determine – Every wage level falls into predictable tax
Easy to administer -.It is very difficult to evade hence very easy to administer as the collection points are also fewer as opposed to collecting tax directly from individuals.
It is elastic/flexible – it expands with increased income and population. (Any 5 x 2 = 10 Marks)
3 (a) Disadvantages that a country would suffer if she restricted trade with other countries. (10 Marks)
Development of monopolies – Monopolies may emerge due to lack of competition from possible rivals exposing consumers to
Reduced consumer choice – trade restrictions reduces the variety of goods and services available to consumers leading to lower standards of
Trading conflicts – trading partners are likely to retaliate, leading to conflicts between the countries
Poor quality goods – protected domestic industries may produce poor quality goods and services due to lack of competition from established
Lack of growth of infant industries – overprotected infant industries may not grow from infancy always seeking for continued protection.
Reduced production capacity – this results from the reduced market as a result of the trade restrictions hence under-exploitation of available
Misallocation of resources – it may force a country to use her resources in areas where she has no comparative advantage.
Costly to the government – this may happen if measures like subsidies are used to enhance restrictions by encouraging import
Encourages smuggling which leads to entry of counterfeit goods and loss of government revenue.
(b) Factors that may promote entrepreneurship in Kenya.
(10 Marks)
Government support /Favourable government policies on funding and regulation of business activities may encourage the emergence and expansion of business ventures.
Training in entrepreneurship – trainees are equipped with skills and knowledge to undertake entrepreneurial activities.
Favourable cultural practices – some cultural practices encourage entrepreneurship through early exposure to business
Availability of role models – interaction with successful business people may inspire
Availability of capital – capital for starting and expanding a business may facilitate
Positive peer group influence – people may be encouraged to venture into business if they associate with friends who encourage them to do
Availability of adequate market – people venture into business to satisfy customers where there is a gap in their needs.
Availability of good infrastructure – This facilitates access to markets.
Political stability/security. This encourages investment and fosters security. (Any 5 x 2 = 10 Marks)
4 (a) Characteristics of property insurance. (10 Marks)
The value of premium charged is dependent on the degree of risk. Higher premium will be paid for risks of high degree and vice versa.
It is a contract of indemnity – the owner of the insured property is compensated for the loss of the property upon occurrence of the
It is a short term contract – the insurance contract ends after a specific period of time usually one year and must be renewed for the policy to continue being in
Cannot be assigned to beneficiaries. The owner of the property insured is the only one to be compensated – it cannot be assigned to a next of kin or to another individual.
It has no surrender value – should the insured stop payment of premium before expiry of the contract, he/she is not entitled to any refund from the
There must be an insurable interest in the property to be insured. The insured must be in a position to suffer financial loss in the event of the risk covered happening in order to claim
There is a maximum limit to the amount of compensation
– This can be up to the value of the insured property in case of over insurance and the sum insured in case of under insurance.
The risk insured is uncertain/involves pure risks – it may or may not
(b) Elements of effective communication. (10 Marks)
Sender – This is the source of the message. The person who send the
Message – This is the information to be
Channel – This is the medium to be used in conveying the information/message.
Receiver – This is the party (person) to whom the message is sent/intended.
Feedback – This is the receiver’s reaction or response to the
Encoding – This is the process of forming / generating the message.
Decoding – This is the process of interpreting the message so received. ( Any 5 x 2 = 10 Marks)
5 (a) i) Laketi Traders Profit and Loss Account. (5 Marks)
Quality cannot be standardized. Varying quality over time hence it is difficult to standardize the service offered since the quality cannot be uniform from time to
Cannot be stored for future use – service is only consumed at the time it is being offered and any unused service capacity cannot be
Service cannot be touched – it is intangible and can only be felt or experienced. Service cannot be separated from the service provider – the provider must directly offer the service to the
Service is highly perishable – service can only be offered at the time the provider is
Is inseparable from provider/services cannot be owned by the buyer – ownership cannot be transferred from the provider to the buyer. The buyer only pays for the experience.
6 (a) Types of small scale retail shops that a school leaver may start. (10 Marks)
Single/unit shops – where the person can sell a wide range of goods in a small fixed
Kiosk – the person can put up a simple semi-permanent structure and sell fast moving
Tied shop – the person can operate from a permanent building but sell products of a particular
Market stall – the person can hire a permanent bench/stall from the county council/municipal market from where to sell
Canteen – the person can rent a room from an institution and stock goods from different
Mobile shop – the person can acquire or hire a vehicle from where to sell goods by moving from one place to
Automatic vending machines – can hire or buy coin- operated machines for selling goods.
(b) Circumstances in which a firm may acquire monopoly power. (10 Marks)
If the firm has patent rights/copyright which bars other firms from producing/ selling the
If the firm has control over strategic inputs. This makes the firm to have sole access to inputs used in the production of the
If the firm is the only one with large capital required for the venture. Other firms may not be able to raise the capital leaving the field to one
If the firm enjoys economies of scale. This enables the firm to produce at a lower cost than the other
If the firm is set up as a parastatal and given exclusive rights of production of a particular product by the
If firms merge and form one big firm/incase of mergers (amalgamation). When firms join together to form one large firm, this gives them advantage due to
If it is the first firm in a small market that is served by one firm more economically. New firms entering the market may make losses due to low
KCSE 2013
1 (a) Benefits that may accrue to a country with a large proportion of skilled labour force. (10 Marks)
Saving on foreign exchange that would have been used to pay expatriates/ imported
Production of high quality goods/services as the workers are experts in their respective areas.
Increased output of goods/services as the workers are competent due to exploitation of
Reduction in cost of production since the labour tends to be efficient/less
Increase in purchasing power/demand due to higher incomes/salaries
Reduction in dependency ratio since the employment rate is
Enhances creativity/innovation/research leading to new/improved/variety of goods/services.
Promotes specialization/division of labour leading to faster
Ease/simplify setting of wage/employment policy due to abundance/ availability of skilled labour/may reduce labour strife/unrest.
Increased government revenue due to-income taxes levied.
Increased foreign exchange due to export of skilled labour.
Enhances entrepreneurial culture since skilled labour is more willing to undertake
Adaptability/flexibility as they are ready to embrace changes. (Any 5x 2 = 10 Marks)
(b) Characteristics of an efficient tax system.
Equity – the tax should be fair and just/people should be taxed according to their income.
Economical – it should be cheap and easy to administer/cost effective/cost of collecting should be lower than the
Convenience – method of payment should be convenient to the tax payer/ favourable to tax
Certainty – tax payer/collector should know what, when and how to pay/collect.
Flexibility – where tax is used as an instrument of national policy, it should be adaptable to all
Simplicity – it should be easily
Elasticity – proceeds from taxation should be capable of expanding/contracting in line with changes in income/population.
Diversity/wide base. There should be wide range/variety of taxes/should net many tax
Difficult to evade. Should not create loopholes for people to avoid paying tax. (Any 5x 2 = 10 Marks)
2 (a) Benefits that Kenya may get as a member of COMESA.
Expanded market for its goods and services as can trade with members of
Reduced costs of operating businesses as a result of increased scale of
Production of competitive/quality goods and services as Kenya is able to specialize in area which it can produce
Promote peace and understanding/possibility of political cooperation among COMESA members due to improved peace and understanding as trade
Increased variety of goods to choose from as can import from various trading
Improved infrastructure as a result of increased economic activities which facilitate easy conduct of
Creation of employment opportunities due to increased trading activities with COMESA
Attracts investment due to greater
Lower prices of goods due to abolition/decrease of tariffs among COMESA
Encourages specialization where countries enjoy comparative advantage.
Easy transfer of modern technology from COMESA members. (Any 5×2 = 10 Marks)
(b) Factors that may hinder economic development in Kenya.
Inaccessibility to appropriate technology leading to low quality/quantity.
Inadequate research data. Which limits production activities in a country as their likely to use low level of
Poor development
Inadequate skilled labour force. Lack of enough skilled labour leads to low production limiting on economic development.
Inadequate natural resource endowment. Inadequate natural resources such as minerals, crude oi affects country development
Brain drain-where skilled manpower seek greener pastures in other countries.
Low demand for goods/services which limits production activities.
Negative socio-cultural practices which discourages some business activities as some businesses are likely to close down in those
Inadequate/lack of foreign exchange which limits a country foreign
Poor governance/corruption where public funds are misused, stolen or misappropriated. (Any 5 x 2 = 10 Marks)
3 (a) Benefits that may be realized by a country as a result of government policy to relocate industries to rural areas.
Increased availability of variety of goods and services as a result of new businesses in the
Availability of auxiliary services – citizens would enjoy more and better auxiliary services like
Increased job opportunities – there will be more jobs available that would reduce
Increased utilization of locally available resources – locally available factors of production will be used and the citizens would earn rewards associated with
Improved standard of living as development of the rural areas increases the quality and variety of goods and services.
Reduced congestion in towns – this would benefit the few citizens remaining in the
Balanced economic development as economic activities are spread throughout the
Transfer of technology to rural areas which leads to production of better quality goods/services.
Creation of market for goods/services produced in rural areas.
(b) (i) Soilo Traders TPL. (5 ½ Marks)
Soilo Traders
Trading Profit and Loss Account For the period ended 31st December, 2010
Opening stock 75,000 Sales 500,000
Date
Details
D.A
Cash
Bank
Date
Details
D.R
Cash
Bank
2011
2011
Jan 1
Bal b/d
22,500
250,000
Jan 15
Ndaru
16,000
184,000
Jan 2
Sales
465,200
Jan 20
Bank c
200,000
Jan 5
Kamau
23,750
451,250
Jan 25
Wages
144,000
Jan 20
Cash c
200,000
Jan 28
Mbago
45,000
255,000
Jan 29
Bank c
250,000
Jan 29
Cash c
250,000
Jan 30
Cash c
150,000
Jan 30
Bank c
150,000
106,000
Jan 31
Bal c/d
59,700
546,250
23,750
737,700
1,051,250
61,000
737,700
1,051,250
Jan 31
Bal b/d
59,700
546,250
Add: Purchases 395,000
COGA4S 470,000
Less: Closing stock 170,000 Cost of goods sold 300,000 Gross profit c/d 200,000
500,000500,000
Expenses Gross Profit b/d 200,000 General Expenses 60,000 Rent income 72,000 Net profit c/d 212,000
272,000272,000
Net profit b/d 212,000
(ii) Soilo Balance Sheet. (4 ½ Marks)
Soilo Traders Balance Sheet
As at 31st December, 2010
Fixed Assets Capital 1,000,000
Machinery 360,000 Add: Net profit 212,000
Furniture 430,500790,500 1,212,000
Current Assets Current Liabilities
Stock 170,000 Creditors 101,550
Debtors 62,250
Bank 202,000
Cash 88,800 523,050
1,313,550 1,313,550
(a) Advantages of advertising to the consumers. (10 Marks)
Consumers become aware of existence of a product and where it can be
May help consumers to know offers available in the
Consumers enjoy high quality goods resulting from competitive advertising. /Producers seek to maintain very high standards of
Makes it easy for consumers to choose products from a variety offered in the market based on their advertised quality and
Protects consumers from exploitation since they are aware of prices and quality of items and can therefore enforce their rights.
Communicates changes about the producer like new product lines, change of name and physical address. This enhances convenience for the
Educates the consumers on the proper use of products where advertising messages involve demonstrations of product usage.
Entertainment by use of drama/music/plays used in various advertising media.
Aiding budget/planning as they are made to know about price and existence of
May enjoy lower prices due to high competition which may force some sellers to decrease
(a) Circumstances under which a trader may use air transport. (12 Marks)
Where goods are highly perishable so that they do not go bad since air transport is
Where goods to be transported are highly valuable since air transport is more secure.
Where goods are needed urgently as air transport is
Where security of goods is needed as air transport is very safe and secure
Where other means of transport are not
When accessing areas which other means cannot access for instance on top of
Where distance to be covered is too large for instance from one continent to
Where the policy of the business is to transport goods by air. ( Any 6x 2 = 12 Marks)
(b) Ways through which a public limited company may be dissolved. (8 Marks)
Where there is a court order to dissolve it. A company can be dissolved if court orders so for instance if there is complaints from creditors or found culpable after law
In case of a resolution by the shareholders to dissolve the company. Shareholders can agree unanimously or by majority vote to dissolve the
Where there is change in law that renders the activities of the company illegal/
In case of amalgamation/mergers of two or more companies to form one big company different from the previous ones. The companies that merged cease to
In case of takeover/acquisition/absorption – a company may be dissolved if it is taken over (bought) by another
When the company acts ultra-vires. A company may be dissolved if it engages in activities which it was not registered to
In case of completion/fulfillment of task/activity/objective for which the company was formed hence making its continued existence unnecessary.
In case of insolvency. Inability to repay financial debts makes the company insolvent and may therefore be dissolved.
In case of continuous loss making which makes it difficult to run it
Where the company has failed to commence the business within one year after incorporation thus contravening the Companies Act. (Any 4×2=8 Marks)
6 (a) The effect of an increase in the supply of a commodity while the demand remains constant. (10 Marks)
Price
P0 P1
0 Q0 Q1 Quantity
Explanation;
The (equilibrium) price of a commodity will fall from Po to
The (equilibrium) quantity supplied increases from Q0 to
The equilibrium point moves downwards from E0 to E1. A new equilibrium point E1 is
The supply curve shifts to the right from SoSo to
The increase in supply causes excess supply/surplus. This lowers price to the new equilibrium price P1 and equilibrium quantity Q1. Diagram – 8 Marks
Explanation – 2 Marks Total = 10 Marks
(b) Features of oligopoly. (10 Marks)
Firms are interdependent in decision making. Firms keenly observe each others’ actions/decision hence acting in any way triggers counter reactions (from other firms).
Firms deal in similar but differentiated products. The products are close substitutes of each other and are only differentiated in terms of aspects like colour/packaging/ shapes/pricing/branding.
Firms may engage in non-price competition/collusive oligopoly. Firms may engage in non-price competition such as aggressive advertising/after sales services/market segmentation/fixing
Unpredictability of behaviour/uncertainty since firms under oligopoly keep reacting to market changes differently/actions taken by other firms within the market may take others by surprise.
The market is made up of a few large firms since such firms operating under oligopoly tend to have a large capital outlay/make extensive use of modern technology in their production activities/control substantial share of the
There are barriers to entry such as large capital requirement/investment required to be a player in this market/the level of technology involved may keep off possible entrants into the market/intimidation/collusion.
Firms may engage in price wars/rivalry/cut throat competition which may lead to survival/collapse of some firms.
May lead to price rigidity/kinked demand occasioned by fear of other firms’
There may be price leadership where the dominant firm dictates the market price/rules the
KCSE 2014
1 (a) Benefits that a firm may enjoy by preparing a business plan. (10 Marks)
It helps in sourcing for finance/capital/loans. It can be used to convince financial institutions and investors to fund the firm’s
Used as a tool for evaluation. It can be used to determine whether the firm is achieving its goals and objectives/ help to make necessary adjustment/changes/ for supervision
Used as a tool for management. It can be used for structuring the implementation of the functions /tool for planning, organizing, directing, staffing, coordinating budgeting/communicating.
Gives the firm a competitive edge. It enables the firm to get a better understanding of the market and
It helps in proper allocation of resources. Enhances efficiency in the use of the resources of the firm. It ensures that the resources available are allocated and used in the best way possible without
Used as a motivational tool. It inspires the management
/employees /creates team work in accomplishing the objectives of the firm.
Used as a framework /blue print/guide for implementing a new business, thus assisting management in decision/actions on the (possible) strengths, weaknesses, opportunities and threats on a day to day
For adaptability. Helps in accommodating and incorporating future changes in the
(b) Demerits that a country may suffer when the government becomes a major investor in business. (10 Marks)
Discourage private investment. The move may discourage private investment due to unfair competition and acquisition of monopoly powers/unfavourable
Poor quality goods and services. The quality of goods and services may be compromised due to lack of competition. Government employees also lack enthusiasm since there is no profit
Limited choices for consumers. Where the government is the only provider of good/service, consumers may be denied a variety to choose
Inefficiency leading to low/poor productivity/continuous
Burden to tax payers. The investments may drain public resources by increasing government expenditure in situations where the enterprise is not able to sustain itself/makes losses (burdening tax payers).
Lack of accountability/transparency/corruption. Managers of government-run businesses tend to misappropriate and embezzle public funds/ misuse public
Unstable management. Government-run businesses are prone to frequent changes in their management occasioned by changing political
Political interference/patronage. Appointment of cronies/nepotism and unethical practices may lead to social discontent.
Bureaucracy/red tape. Leading to rigidity/slow response to market changes. (Any 5 x 2 = 10 Marks)
2. (a) Ndovu Traders Three Column Cash Book. (12 Marks)
Ndovu Traders
Three Column Cash Book
For the Month of January, 2012
Date
Details
D.A
Cash
Bank
Date
Details
D.R
Cash
Bank
2012
2011
Jan 1
Bal b/d
30,000
75,000
Jan 2
Purchases
15,500
Jan 5
Chui
1,250
23,750
Jan 8
Drawings
8,900
Jan 11
Maro
800
16,000
Jan 17
Furaha
900
29,100
Jan 15
Sales
24,250
Jan 20
Cash c
15,000
Jan 20
Bank c
15,000
Jan 25
Wages
21,000
Jan 22
Koko
1,000
39,000
Jan 25
Bal c/d
27,400
106,000
3050
93,000
130,000
900
93,000
130,000
Jan 25
Bal b/d
27,400
106,100
Dr Cr
Reasons for which traders observe ethical practices in product promotion. (8 Marks)
To avoid misleading the consumers by not making false claims about their
To ensure that consumers are not offended by not making use of appeals that goes against their cultural
To avoid exploiting certain vulnerable groups like children since they lack the knowledge and experience to understand and evaluate the purpose of persuasive appeals.
To avoid negative influence on the consumers’ values and lifestyles that may lead to immorality and ill health like glorifying the image of alcohol and
To avoid portraying rival businesses negatively in an attempt to capture the market or gain undue
To create a positive image/reputation of business hence maintaining customer
To abide by the laws of the country to avoid lawsuits/ conflicts/frictions with law enforcement agencies/ government. (Any 4 x 2 = 8 Marks)
3. (a) Objectives that may be attained by establishing firms in different parts of the country. (10 Marks)
To reduce rural-urban migration. Setting up firms in several parts of the country may curb the influx of people from rural to urban areas. This helps to retain the productive population in the rural
To utilize local resources/factors of production/untapped resources. Establishing firms in various parts of the country will enhance the use of idle resources in those areas.
To create employment opportunities. This is a sure way of creating employment opportunities in several parts of the country which improves the standard of
To provide balanced regional development. Creating firms in various parts of the country will ensure that all parts grow/ develop at the same rate/time.
To promote development of infrastructure. Setting up of firms will encourage the growth of infrastructure like roads, power which promotes business activities.
To promote development of social amenities such as schools and hospitals. When firms are set up in various parts of the country, social amenities will also be developed. This improves the social welfare of the
To reduce social problems hence avoiding/minimizing pollution/crime/ prostitution/drug abuse/theft.
To promote urban growth hence encouraging growth of market/economy/ commercial activities.
To reduce congestion in certain areas in order to ease pressure on
To reduce effects of concentrated pollution which may negatively affect the
To minimize effects/impact of calamities/terrorism/catastrophe which may polarize the economy.
To reduce income disparities/inequalities as people will be engaged in production
(b) Accounting documents that are used in home trade.
Invoice. This is a document sent by the seller to a buyer demanding for payment for goods supplied.
Debit note. A document sent by the seller to the buyer to correct an undercharge. It is issued when the invoice shows a lesser amount than what is actually
Credit note. A document sent by the seller to the buyer to correct an overcharge. It is issued when goods are returned to the
Receipt. This is a document issued by the seller to the buyer when payment is made for goods /
Statement of account. This is a document sent by the seller to the buyer showing details of transactions for the month with a running balance shown with each
Consignment note supports hire of carriage services/shows transport charges
Payment voucher. A document used to validate payment for service/goods rendered. It is issued by a cashier and signed by the service provider/ payee/
Remittance advice note. This is a document that accompanies a cheque issued for settlement of a debt. It provides information on the
A1E (Authority to Incur Expenditure). It is a written document with instructions allowing one to spend institutional funds up to a certain amount.
Bank deposit slip – As a source document for cash book/evidence of payment into the bank
(b) Features of monopolistic competition. (10 Marks)
Many sellers and buyers. The market is comprised of many sellers and buyers who operate
Free entry and exit into the market. There are no barriers to entry into, or exit from the
Commodities sold are very close substitutes. Firms sell similar products but which are highly differentiated by names, shapes, colour and
All firms earn normal profits in the long run. Some firms may earn supernormal profits in the short
Firms are independent. There is little interdependence in terms of pricing and quantities to
Entry or exit of a firm does not significantly affect the market. None of the firms can influence the market supply by joining or leaving the
No single firm has control over the factors of production. All
880,000
880,000
firms acquire the factors at the prevailing market rates and
𝐺𝑃
𝑀𝑎𝑟𝑔𝑖𝑛 =
𝑆𝑎𝑙𝑒𝑠
245,000
=
1,125,000
= 21.78%
conditions.
Perfect knowledge of the market. Buyers and sellers are aware
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 = 𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 − 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
= 245,000 − 25,000 + 100,000 + 25,000
= 95,000
(b) Guidelines/Principles of govt. expenditure. (10 Marks)
Economy – requires proper planning to avoid
/minimize wastage/ensure maximum benefit.
Sanction – Authority should be sought from relevant bodies/parliament before committing public
Maximum /optimal social benefit – resources should be used only on projects that improve social welfare / quality of life of the citizens Ito benefit as many people as
Flexibility – expenditure should be able to be adjusted to reflect the prevailing
Good/proper financial management to ensure accountability/good governance/ transparency through proper record
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 / on projects that yield high returns
Elasticity-expenditure should be capable of being expanded/contracted depending on size of
5. (a) Disadvantages that a developing country may suffer by liberalizing foreign trade. (10 Marks)
May lead to dumping of inferior products into the country from developed
May cause over exploitation of resources leading to their depletion.
May lead to loss of jobs due to closure of firms due to high competition from big companies from foreign
May contribute to deterioration of balance of payment as developing countries import more than they
Cultural values and beliefs may be eroded due to unrestricted trade/interaction between locals and foreigners. May lead to borrowing of unwelcomed/foreign
Entry of harmful goods such as beauty creams and illegal drugs which has adverse effects on consumers’
May lead to slow economic development due to over dependence on other countries for supplies/raw
May lead to brain drain as trained manpower move to developed countries that provide better pay and
of the prices, quantities and other market factors.
6. (a) Sources of finance for a public limited company apart from the sale of shares. (10 Marks)
Leasing and renting out properties which can be used to generate
Borrowing from financial institutions in the form of loans, bank overdraft and
Trade credit. Buying goods for re-sale on credit so as to pay at a later date.
Buying properties on hire purchase. Buying goods and paying for them on installment
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
Retained profits. Profits made are not shared out as dividends but ploughed back into the
Discounting bills of exchange. Receiving payment from financial institutions at a discount against bills of exchange before their
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. (Any 5 x 2 = 10 marks)
(b) Factors that may have caused a decline in the demand for wooden furniture. (10 Marks)
Decline in consumer incomes. This may reduce their purchasing power hence less able to afford the
Fall in the price of substitutes. Furniture made from other materials like plastic and metal may be
Increase in the price of wooden furniture. This makes the furniture to be out of reach for most
Unfavourable government policy such as increased taxes on timber products hence making the furniture more
Unfavourable change in tastes and preferences. Consumers may be purchasing more plastic and metallic
Decline in population. A decrease in population will lead to reduced numbers of potential and actual
Future expectations of price fall. Consumers may be anticipating a fall in price in the future hence currently suspend buying.
KCSE 2015
1. (a)Uses of National income statistics to a country. (10 Marks)
Indicator/measure of standard of living – an improvement/increase of national income indicates/improved welfare/improved standard of living / vice
Comparison of standard of living between countries
countries with high national income are deemed to have high standard of living and vice
Assessing performance of the economy over time – the period with high national income is considered to be better
Economic Planning – comparing performance in different sectors and regions helps the government in planning for better/ efficient allocation/use of
For investment decision – Data obtained can be used by entrepreneurs to make decision on the sector, when and amount of capital to
Provide information on distribution/contribution of income
this helps the government to address income/production disparities e.g. through subsidies and tax
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
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. Any 5 x 2 (10 marks)
(b) Principles that would lead to effective use of government resources. (10 Marks)
Economy – requires proper planning to avoid
/minimize wastage/ensure maximum benefit.
Sanction – Authority should be sought from relevant bodies/parliament before committing public
Maximum /optimal social benefit – resources should be used only on projects that improve social welfare / quality of life of the citizens Ito benefit as many people as
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 / on projects that yield high returns
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. Any 5 x 2(10 marks)
2. (a) Ways in which the consumer may benefit from warehousing. (10 marks)
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 and
Availability of seasonally produced goods – consumers can access goods that are off season from the warehouse e.g. farm
Stability in prices of goods – ensures constant supply of goods leading to stable prices throughout the year/due to minimal
Creates time utility – ensures that the consumer accesses and uses goods at appropriate
It enables the breaking of bulk – where he/she is able to buy goods in convenient /affordable
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.
There are many independent buyers and sellers of the commodity.
The products are close substitutes/differentiated /similar but differ by names shape/colour package/
Free entry / exit – there are no barriers for new firms that require to supply the same commodity nor are there barriers for those wishing to exit the market. Firms’ decision to enter or leave is influenced by profits or
Wide knowledge of market. As buyers /sellers are aware of price/output market factors
Firms set their own prices – prices are set depending on cost incurred and demand in the
No single firm controls any factor of production – firms acquire factors at prevailing market prices /
Individual firms have highly elastic/gently sloping demand curve since commodities are close
It is possible for a single/some firms to dominate/influence market price through extensive advertising/product promotion/differentiation.
All firms earn normal profits in the long run since supper normal profits attract new firms/losses make forms to leave/quit. (Any 5 x 2=10 Marks)
(b) Features of human wants. (10 Marks)
They are numerous and unlimited – when one is satisfied another crops up to take its place/begin at birth and end at
They continually change with time, age and What is required when it is cold may not be the same as what is required when it is hot.
They are habit forming – once an individual develops taste for a commodity he/she tends to use it over and over
Require resources – limitation in resources required means only a few human wants are fulfilled/require resources in order for them to be
They are universal/common to all human beings – all human beings need goods and services for existence though quantities may
They are competitive – wants compete for attention each yearning to be
They vary in urgency and intensity – urgency/some wants are more felt than others eg. basic wants/ some may not be postponed.
Some are complimentary – satisfaction of one creates a second want may lead to another. e.g if you buy a car you have to buy
Insatiable – wants cannot be fully satisfied
Recurrent/repetitive – once satisfied they are felt again.
4. (a) Chui Traders; Trading Profit and Loss Account.
(10 Marks)
Chui Traders Trading Profit and Loss Account
For the period ended 31st December, 2014
Opening stock 10,000
Add: Purchases 15,000 Add: Carriage in 1,200
Less: Returns Out 1,100 15,100
Sales 28,000 Less: Returns In 800 Net Sales 27,200
COGA4S
25,600
Less: Closing stock
2,500
Cost of goods sold
22,600
Gross profit c/d
4,600
Expenses
27,200
27,200
Gross Profit b/d 4,600
Carriage outwards 1,200
Discount Allowed 300
Rent income 580
Discount Received 1620
Insurance
950
Net profit c/d
4350
6,800
6,800
Five methods of determining the price of a product other than price control. (10 Marks)
Bargaining/Haggling – terms of exchange is negotiated
/argued/debated between buyers and sellers.
Demand and supply/price mechanism – Interactions between forces of demand and
Auction – prices determined by the highest
Tendering – prices determined by the lowest bidder who meets the required
Price fixing/ retail price maintenance / recommended retail price – as producers / manufacturers / producer agree on the price of
Prices collusion – where different market players (such as sellers/buyers) conspire to fix the
Private treaty – sale of property at a price agreed on by the seller and buyer without an intervening
5. (a) Trends in office management. ( 10 Marks)
Location of offices in sub-urban areas – Organizations tend to move away from congested town centres to sub-urban
Use of modern equipment/computer/automation – organizations have adopted modern equipment /computers for efficiency and to make work
Adopting open office layout /landscaped – adopted to facilitate supervision and economize on floor space/ improve ambiance/comfort in the
Engagement of multi skilled staff able to carry out different tasks/ to save on labour costs/ wage
Use of innovative ways of motivating staff eg. tours, meals at work, capacity building to develop staff
Use of biometric clocking system to control staff movement and save on
Establishing customer care services/desk – to enhance customer satisfaction.
HIV/AIDS awareness/policy to sensitize employees/ avoid discrimination.
Stress management policies – to promote good health/coping of the work
Engaging in corporate social responsibility – to give back to the
Use of name tags/badges for easy identification of
(Any 5 x 2=10 Marks)
(b) Advantages of government involvement in business.
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 which spur economic
Protection of citizens – from exploitation/malpractice by businesses.
Stimulation of economic development – by developing social amenities/ infrastructure roads / injecting funds into economy through development
Creation of employment – to create jobs for its citizens to earn a living/improve their standard of
Raising revenue for the government- to increase government revenue through licensing/taxation/ to finance public
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
Promotion of best practices – through encouraging adoption of ICT/good governance/social programmes/inclusivity.
Reduce foreign dominance / promote a country’s sovereignty by regulating foreign participation / encouraging local participation in the
Promotion of entrepreneurship cultures by encouraging business ownership /training / funding
Promotes investment in the country by creating an enabling environment. Any 5 x 2 (10 Marks)
6. (a) Benefits that Kenya may enjoy by being a member of the African Development Bank (ADB/AFDB).
The country will obtain loans/credit for economic
/social advancement/ development.
Kenya will get technical assistance /expert advice/consultancy to strengthen and execute development
Kenya will get assistance in policy coordination / development formulation for effective implementation of
The country will get technological assistance to utilize its economic
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
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
Kenya can get international platform/opportunity
/forum – to promote its development agenda.
Cheap affordable credit/easy terms – due to low interest rates/longer repayment
(b) Features of under developed countries. (10 Marks)
High population growth rate – the growth rate of population is higher than
High rates of unemployment – due to low levels of economic
High levels of illiteracy – leading to ignorance/limited exposure
High level of poverty – large proportion of citizens live below the poverty
Poor governance – due to corruption/embezzlement/mismanagement of resources/misappropriation/lack of transparency/accountability.
Low level of technology – due to lack of capital to acquire modern 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
Low levels of savings – due to low per capita income leading to low
Negative social/cultural practices – which hinders production /consumption.
Dominant large subsistence sectors – traditional subsistence sector such as agriculture tend to dominate the
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.
Limited market/low demand – due to low levels of
KCSE 2016
1. (a) Explain five factors that may promote entrepreneurship in Kenya. (10 marks)
Government support/ favourable government policies/ funding regulation (of business activities) may encourage the emergence expansion of business
Training/ in education entrepreneurship/ trainees are equipped with skills/ knowledge to undertake entrepreneurial activities to start
Entrepreneurial culture/ cultural practices that encourage entrepreneurship through early exposure to business activities opportunities/ positive attitude towards
Presence of role model interaction with successful business people who may inspire/ create interest in entrepreneurship/ business
Availability of capital/ loans/ credit facilities for start expanding a
Political stability/ non political interference that creates a conducive environment for starting/ running expanding business.
Availability of market/ market information for buying goods and services
Availability of security- that ensure safety of businesses/ property/ business
Healthy/ fair competition that business owners can withstand/be safe with
Availability of appropriate technology that can lead to the production of desired quality/ quantity of goods/services.
(b) Explain five circumstances under which a partnership may be dissolved. (10 marks)
Where intended objective of the business has been completed. In case of a temporary
Where there is mutual /voluntary agreement among partners / where the partners agree among themselves to dissolve the
Where the business is declared
In case of change in law/ government policy that makes the operation of the partnership
In case of continued/irreconcilable disagreement among partners then the partnership may be terminated.
In case of death, insanity, bankruptcy or terminal disease of a (real)
In case of persistent losses in operation /where the business has continued making losses making it difficult to
Where there is court order to dissolve the
In case of a formal written request by one /some partners to dissolve the
2. (a) Explain five advantages of government involvement in business. (10 Marks)
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
Protection of citizens – from exploitation/malpractice by businesses.
Stimulation of economic development – by developing social amenities/ infrastructure roads / injecting funds into economy through development
Creation of employment – to create jobs for its citizens to earn a living/improve their standard of
Raising revenue for the government- to increase government revenue through licensing/taxation/ to finance public
Reduce foreign dominance / promote a country’s sovereignty by regulating foreign participation / encouraging local participation in the
Promotion of entrepreneurship cultures by encouraging business ownership /training / funding businesses.
Promotes investment in the country by creating an enabling
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
Maintenance of law/order – for smooth operations of a country’s
Promotion of best practices – through encouraging adoption of ICT/good governance/social programmes/inclusivity. (Any 5 x 2=10 Marks)
(b) Traders are required to observe ethical practices when carrying out product promotion. Explain five reasons for observing such ethical practices. (10 Marks)
To ensure there is fair competition in business to promote business
To protect consumers/customers against adverse
To protect and conserve the environment and avoid environmental adverse effects such as global
To protect the rights of employees and ensure are productive and happy in their
To promote social responsibility of the business organizations and the society around
To maintain a positive image of the business organization to the
To abide by the country’s laws and avoid legal
To maintain suppliers, creditors and financiers to ensure business run
To promote positive cultural practices in the society and ensure positive interactions with the
3. (a) Explain five methods of determining the price of a product other than price control. (10 Marks)
Bargaining / haggling – where the price is agreed between buyers and
Forces of demand and supply / price mechanism interactions between forces of demand and
Auction – where the price determined through bidding and sold to the highest
Tendering – where the suppliers are asked to submit their tenders and awarded to he (lowest) bidder who meets the required specifications.
Recommended retail price/Retail price maintenance- where price is set/fixed by the manufacturers/producers.
(Price) collusion – where different market players such as buyers / sellers conspire to fix the
Through government taxation / subsidy – which will influence the selling / buying
Private treaty – a sale of property at a price agreed on by the seller and buyer without an intervening
(b) Benefits that may be realized by a country as a result of government policy to relocate industries to rural areas.
Increased availability of variety of goods and services as a result of new businesses in the area,
Availability of auxiliary services – citizens would enjoy more and better auxiliary services like transport,
Increased job opportunities – there will be more jobs available because of many business activities which would reduce unemployment.
Increased utilization of locally available resources – locally available factors of production will be used and the citizens would earn rewards associated with
Improved standard of living as development of the rural areas increases the quality and variety of goods and services.
Reduce rural-urban migration/Reduced congestion in towns – this would benefit the few citizens remaining in the
Balanced economic development as economic activities are spread throughout the
Transfer of technology to rural areas which lead to production of better quality goods/services.
Creation of market for goods/services produced in rural areas.
4. (a) Ndovu Traders Three-Column Cash book.
(12 Marks)
Ndovu Traders Three-Column Cash book
Date
Details
D.A
Cash
Bank
Date
Details
D.R
Cash
Bank
2015
2015
Jan 1
Bal b/d
30,000
75,000
Jan 2
Purchases
15,500
Jan 5
Chui
1,250
23,750
Jan 8
Drawings
8,900
Jan 11
Maro
800
16,000
Jan 17
Furaha
900
29,100
Jan 15
Sales
24,250
Jan 20
Cash c
15,000
Jan 20
Bank c
15,000
Jan 22
Koko
1,000
39,000
Jan 30
Bal c/d
27,400
106,000
3,050
93,000
130,000
900
93,000
130,000
Jan 30
Bal b/d
27,400
106,100
Dr For the month of January 2015 Cr
b) Rehema Traders
Balance Sheet
Fixed Assets
Capital
600,000
Motor Van 200,000
Less: Drawings
10,000
Furniture 140,000
340,000
590,000
Current Assets
Stock 160,000
Debtors 100,000
Cash 200,000460,000
800,000
Current Liabilities
Creditors 210,000
800,000
As at 31st January, 2015
(a) Principles that would lead to effective use of government resources. (10 Marks)
Economy – requires proper planning to avoid
/minimize wastage/ensure maximum benefit.
Date
Details
D.A
Cash
Bank
Date
Details
D.R
Cash
Bank
2015
2015
Sep 1
Bal b/d
55,000
250,000
Sep 3
Ribbons
4,500
Sep 2
Sales
35,260
Sep 8
Wangila
6,000
94,000
Sep 12
Wetu
1,200
58,800
Sep 15
Salaries
34,000
Sep 25
Bank c
50,000
Sep 25
Cash c
50,000
Sep 28
Anyango
7,500
67,500
Sep 30
Bank c
52,580
Sep 30
Cash c
52,800
Sep 30
Bal c/d
13,700
320,360
8,700
105,000
464,360
6,000
105,000
464,3600
Sep 30
Bal b/d
13,700
320,360
Sanction – Authority should be sought from relevant bodies/parliament before committing public
Maximum /optimal social benefit – resources should be used only on projects that improve social welfare / quality of life of the citizens Ito benefit as many people as
Flexibility – expenditure should be able to be adjusted to reflect the prevailing
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 / on projects that yield high returns
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.
(b) Explain five disadvantages that a country may face if it restricts trade with other countries. (10 Marks)
Reduced competition – leading to low quality goods and services.
Reduced/ low consumer goods – trade restriction reduces the availability of goods and services available to consumer leading to low state of
Retaliation/ trading partners are likely to retaliate – leading to loss of business (between two involved/ reduced export/ imports).
Reduced/ low investment – due to limited trading opportunities
Reduced limited market – hence under exploitation of available resources/ reduced production
Inappropriate allocation of resources – It may force the use her resources in areas where she has no comparative interest/ not best suited in.
Cost to the government – (This may happen) if measures are used (to enhance restriction /by encouraging import substitution) meet part of the
Reduced revenue/ loss of government revenue which could have been earned from import and export of goods and services.
Leads to increased unemployment due to reduced trading activities.
Poor international relations which may lead to conflicts/ friction, among countries/ may not get assistance in times of
Curtailed transfer of technology/ factors of production that may lead to poor quality goods low quantity of products.
Reduced/ limited supply of goods/ services which may adversely affect consumers (access /examples of adverse effect as explanation)
Encourages smuggling/ black marketing leading to loss of revenue/ entry of counterfeit goods/
Outline five reasons that may influence the government to start a parastatal. (10 Marks)
To provide strategic/essential goods and services to the public at affordable/low
To increase revenue collection to help to meet its expenditure.
To encourage import substitution industries so as to discourage
To encourage foreign investment into the country so as to increase production activities and create
To reduce foreign influence/dominance in a particular sector for the good of the
To invest in business that requires large initial capital which could not be available to private
To take care of sensitive ventures which cannot be left in hands of private
To create employment for its citizens
To stimulate economic development in the country and ensure balanced regional
To promote healthy competition with private sector for the good of the
KCSE 2017
1. (a) Ways in which the internal environment may contribute to the success of a business enterprise.
A functional / proper / good business structure: Formal arrangement of functions / the relationship of people that is directed towards achievement of organizational goals
Employment of qualified / skilled / experienced / adequate personnel / when correct labour force is acquired /correctly matched to their jobs, then performance is
Proper / appropriate allocation of available financial resources to ensure money is used where it most profitable.
Adequate capital finances will enable a business to carry out its operations smoothly / expand
Availability / access to relevant physical resources like buildings / machinery / furniture / other equipment to compliment human
Innovativeness / inventions / creativity / research and development through continuous improvement on methods of production which boosts the quantity and quality of
Positive business culture-productivity is enhanced when culture matches the expectations / beliefs / values of the
Good objectives/setting good objectives that are measurable, specific and achievable to encourage staff.
Good / proper management style through planning
/directing /organizing / coordinating / controlling activities of the organization.
Motivated / supportive owners arising from fair returns on capital
(b) Channels of distribution that a Kenyan manufacturer would use to ensure their goods reach in another country.
Local manufacturer Foreign consumer
Local manufacturer Wholesaler Foreign consumer
Local manufacturer Retailer Foreign consumer
Local manufacturer Wholesaler F. Retailer Foreign consumer
Local manufacturer Import Agent Foreign consumer
Local manufacturer Import Agent Retailer Foreign consumer
Local manufacturer Import Agent Wholesaler Foreign consumer
Local manufacturer Import Agent Wholesaler F. Retailer Foreign consumer
2. (a) Differences between chain stores and departmental stores. ( 10 Marks)
Chain stores
Departmental stores
i)
Have many branches in different
parts of the country
Have different shops under the
same roof
ii)
Purchases are centralized
Purchases are made per
department
iii)
Sales are decentralized
Sales are centralized
iv)
Have standard prices in all their
branches
Prices vary in each department
according to products sold
v)
They are uniform in outward appearance and interior layout.
Each department is different in outward appearance and interior layout.
vi)
They have centralized management
Each department has its own manager hence different managements
vii)
Slow moving goods in one
branch can be moved to another where demand for them is higher
Slow moving goods in one
department cannot be moved to another department
viii)
They sell similar products in all
their branches.
Sell different products in different
departments/shops.
ix)
Usually located in town centres
Usually located in outskirts/sub-
urban areas.
Ojwang Limited; Trading Profit and Loss
Ojwang Limited
Trading Profit and Loss Account
For the period ended 31st December, 2013
Opening stock 200,000 Sales 1,200,000 Add: Purchases 680,000 Less: Returns In 50,000 Add: Carriage in 42,000 Net Sales 1,150,000 Less: Returns Out 80,000 642,000
COGA4S 842,000
Cost of goods sold
762,000
Gross profit c/d
388,000
Expenses
1,150,000
Carriage outwards
30,000
Less: Closing stock 80,000
1,150,000
Gross Profit b/d 388,000 Discount Received 45,000
Discount Allowed 80,000 Rent income 60,000 Net profit c/d 333,000
493,000493,000
Net profit c/d 333,000
3. (a). Benefits that a private limited company would get by converting to a public limited company include:
Ability to raise larger amounts of capital / converting to a public limited company it will enable the firm to access more funds by selling shares to members of the public through stock
Easy transferability of shares / shareholders can freely transfer the shares bought in public limited companies when need arises / without consultations / restrictions..
Increased transparency / accountability. The
shareholders must scrutinize / approve the company’s Annual audited Accounts / which must also be published.
Increased public confidence / goodwill / positive image in the company. This is due to increased exposure to the public / control by the stock exchange.
Freedom from interference from owners since owners has no direct managerial control.
Increased professionalism / specialization in management. Since they can afford to attract / pay professional managers / staff to run the company on behalf of the
Higher chances of continuity / survival / the firm are assured of continuity since shares can be freely transferred / membership can be changed without affecting the
Date
Details
LF
Cash
Bank
Date
Details
LF
Cash
Bank
2016
2016
Mar 1
Capital
15,300
Mar 1
Capital
8,200
Mar 4
Harrison
4,600
13,400
Mar 3
Purchases
10,200
Mar 6
Chebet
9,310
Mar 5
Wages
5,000
Mar 7
Otieno
7,720
Mar 8
Hassan
5,450
Mar 9
Cash
C1
6,000
Mar 9
Bank
C1
6,000
Mar 12
Mwende
8,570
Mar 10
Insurance
3,700
Mar 13
Makokha
11,200
Mar 11
Repairs
3,900
Mar 29
Cash
C2
10,640
Mar 14
Water bill
2,590
Mar 15
Rent
6,500
Mar 29
Bank
C2
10,640
Mar 29
Bal c/d
0
24,560
36,190
50,550
36,190
50,550
Mar 29
Bal b/d
0
24,560
Can enjoy more /larger economies of scale due to increased scale of production; (Accept examples of economies of scale as an explanation).
Can be quoted / listed at the stock exchange leading to sound management / close supervision.
Can advertise sale of shares to the (public) newspapers / mass media which can attract new / more investors / give it more
Enhanced ability to borrow funds by sale of debentures / from the public / due to larger asset base / collateral ability
Better management / policy direction since it is run by a more competent Board of Directors
/professionals
Disadvantages of using direct taxes to raise revenue include: (Any 5 × 2 = 10 Marks)
It is paid in lump sum / at once / advance leading to taxpayers feeling the
Reduced ability to invest due to reduced profits.
Reduced purchasing power/Afford less goods / services / disposable income hence leading to low standards of living / poor
Not an adequate source of government revenue as most people in developing countries are low income earners. Limited amount of tax revenue from this source due to limited tax base / limited
Reduced ability to save as it reduces disposable income of the
High taxes may encourage capital freight / foreign investors may transfer capital to other countries due to decline in profit margin / high costs of doing business.
It may cause labour unrest / strife as workers demand higher pay to absorb the higher
It is complex / complicated due to many / numerous accounting / formalities to be
It is compulsory to those whose income it is imposed / within the tax bracket leaving them with no
Discourages hard work as it directly affects the taxpayers’ income / reduces disposable
Direct taxes are very unpopular with the citizenry. The burden of paying this tax is borne directly with the individual tax payer. Thus no room to shift / share / transfer the burden.
Gives the taxpayer motivation to evade tax payment / may easily be evaded. The taxpayer may falsify records in order not to pay tax/pay less
Non-consultation of taxpayers in the determination of the tax rate / the determination of the rate / amount of tax to be paid is at the discretion of tax authorities which may overburden the taxpayer / discourage payment / encourage evasion.
Taxpayers are not involved in the expenditure of the tax revenue / there is low civic involvement and call for government accountability / taxpayers do not make decisions on government expenditure hence leading to lack of accountability / poor governance .
Factors that one may consider when selecting a means of communication include: (Any 5 × 2 = 10 Marks)
Confidentiality / secrecy of the message. The means should safeguard the content of the message from being accessed by unauthorized
Accuracy / precision / preciseness of the means. The means should be able to deliver the message in its original form / without
Urgency of the message / speed of the means. The means should be fast enough to ensure timely delivery of the
Affordability / cost of the means. The sender must be able to meet the cost of the means chosen to ensure it is
Nature of the message. An appropriate means should be chosen if the message is very complex / detailed / technical.
Need for future reference / record. The means must be able to provide evidence if future reference will be required.
Reliability / certainty of the means. Should be able to deliver the information to the receiver as
Availability of the means. Means chosen should be readily available/you can only use what is
Distance / distribution of the audience / recipients means chosen should be capable of reaching / covering the audience / recipients wherever they
Security/safety of the message. The means should guard against loss / theft of information
Intended / desired impression. The means should be able to create the desired effect / impact /
Government’s policy. If the government requires that communication be done in a certain way he/she has no option.
Business / organization policy. If the business has prescribed ways of communicating, then the policy has to be
Type / nature of audience / recipients. The means chosen should be suitable / appropriate for the needs of the audience /
Size of the audience / number of recipients. The means chosen should be capable of reaching all the audience / recipients
Capacity of the means. Should allow the required volume of information to be passed / at an agreed speed.
(a) Demerits of the output approach in measuring National Income include: (Any 5 × 2 = 10 Marks)
Problem of valuing government output / services since they may not be paid for / not sold at market price / are
Problem of subsistence output /sector since goods / services are not offered for sale / marketed / difficult to value.
Difficult of deciding what goods or services to include/ unpaid for household chores / do it yourself activities and yet they are produced using resources thereby leading to understating the national output / income.
Difficult in valuing stock at the end of the accounting year / in store / unsold stock as it differs with their value at the production time / at the current moment / cost.
Fluctuation in prices which may cause output to appreciate or depreciate in
Problem of double counting / may be difficult to distinguish between intermediate and finished/final goods.
It is difficult to determine / estimate the value /rate of depreciation hence failure to record accurately the value of capital goods / fixed
Inaccurate / incomplete data. Leading to wrong valuation / overstatement / understatement of national output / due to poor record
Inadequate finance / capital / equipment / technology that limits computation of
Inadequate / unqualified personnel / unskilled personnel leading to inefficiency in collection / valuation / computation of output
Problem of illegal products. Illegal products such as illicit alcohol and bhang generate income which is not included in calculation of national
(b) Circumstances under which a country may realize surplus in its balance of payment include: (Any 5 × 2 = 10 Marks)
When a country exports highly valued finished goods
/ manufactured products since they fetch higher prices in the international market.
Reduced volume of imports which lowers expenditure of imported products.
When the country aggressively promotes its
This will create more market for exporting goods thus increasing the country’s earnings
When the country devalues its currency. This makes imports more expensive forcing consumers to buy locally produced goods / exports becomes more cheaper and are sold in large volumes
When the country enjoys favourable economic order / bargaining power. The country may be able to influence the world market prices to favor its
When the country diversifies its exports / the country increases the range of its exports. This makes the country to increase the volume of
Increased volume / demand of exports thus higher export earnings
Improved terms of trade hence high export earnings compared to import expenditure
Devaluation of foreign currency making exports cheaper / imports expensive
Increased investments in the country which increases production for
Political stability which creates a conducive environment to produce for
Increased capital inflow such as receipt of foreign grants as compared to capital outflow (giving grants).
6. (a) Methods that the government may use to increase the supply of goods in the market include: ( 10 Marks)
Reduce the taxes / levies on producers / production / tax holidays. This causes a reduction in the cost of production hence motivating producers to increase production.
Increase subsidies in production. The government meets part of production cost making production more
Eliminating quotas in production. By not limiting the quantity of goods to be produced / the producers are free to supply as much as they can to the
Setting favourable producer prices / the government fixes the prices of produce at a high level which encourages emergency of new producers / expansion of new businesses to supply more to the
Improving access to credit / the government extends loans to producers through bodies like KIE and ICDC to boost investment in production / credit at low interest
Facilitating marketing / government may form agencies that may produce to cushion producers / stabilize selling prices such as
Availing new research findings / technology to producers / new methods of production from government research bodies like KARI and KEFRI to help boost
Improve on infrastructure to facilitate production / movement of
Ensure political stability which encourages production / boost investor
Increased government expenditure on establishment of new / expansion of existing production
Simplifying / ease the procedure of starting / engaging in business / production /reduced bureaucracy / red tape to boost
(b) Factors that may promote the growth of entrepreneurship in Kenya include: (10 Marks)
Good infrastructure which facilitates access to markets /
Political stability / non-political interference that creates a conducive environment for starting / running / expanding a
Availability of security that ensures safety of business property /
Availability of market / market information / demand where people can sell goods / services to satisfy their
Healthy / fair completion that business owners can withstand / cope
Availability of technology that can lead to production of the desired quality / quantity of goods and services
Development of a positive entrepreneurial culture that values individuals who are successful entrepreneurs / recognizes / holds them highly / through early exposure to business
Adopting a relevant education / curriculum / training in business is made part of the curriculum hence preparing the youth at an early age to become entrepreneurs.
Presence of role models / successful businessmen who are an encouragement / motivation / inspiration
to the youth / would be entrepreneurs to also go into business.
Government support / favourable policies passed by the government that put in place institutions that support entrepreneurship like Youth Fund / Hustler Fund.
Encouraging jobs in the informal sector such as jua kali / since formal employment is becoming difficult to secure entrepreneurship.
Availability of finances / financial institutions support businesses / providing loans to entrepreneurs hence supporting the growth / expansion / operation of
Positive peer influence / when people see their peers succeeding in business they get motivated /also try their hands at
Good governance that ensures transparency / accountability in conduct of business
KCSE 2018
1. (a) Circumstances that may lead to the existence of a business opportunity to be exploited. ( 10 Marks)
Lack of some products / services / goods -Customers may need / require products / services which are not easily found in the
Higher prices of goods / services -Existing market prices may be unnecessarily high hence offering them at relatively lower prices (would create an opportunity).
Excess demand / shortage / inadequate supply (of goods or services -When the quantities of goods available in the market are not sufficient, an opportunity to supply more exist.
Low / poor quality / substandard products -Hence creating a room for provision of better / high quality goods / services.
Lack / poor / inadequate after sales services – An opportunity will exist where (better) services are offered after buying / selling of goods or services.
Unmet socio-cultural needs / conditions / market niche – Goods / services which target the society’s existing attitudes / practices / beliefs which existing products may not be
Innovation /invention / creativity – Discovery of new technology/ products which may lead to reduced costs of production / (general) efficiency (presents an opportunity).
Need for variety / lack / limited variety – to widen
Where there is disaster / catastrophe / occurrence of disaster – which creates needs /
Seasonal events /change in fashion – which creates needs
/ requirements.
Exploitation of natural resources – which stimulates growth of business
Implementation of development projects – which spurs business activities
Growth of population – which creates demand for goods / services
Change in government policy – which creates demand for goods and services/encourages establishment of new businesses.
(b) Factors that Chuma steel manufacturers may consider when choosing a channel for distributing their products.
(10 Marks)
The (geographical) spread of customers. If the customers are spread over a wide area, then a longer channel would be preferable / use of intermediaries / middlemen
Size of market. Where it is small use direct / short channel.
Cost of channel. Should choose / use channel that is affordable /
Government policy. Chuma steel manufacturers must adhere to government regulation on the distribution of steel
Marketing risks involved. Where marketing risks are
company. It also contains their personal information and number of shares held by each.
higher, more middlemen should be involved to spread
(ii) 𝑴𝒂𝒓𝒌 − 𝒖𝒑 =
(2 Marks)
𝑪𝑶𝑮𝑺
such risks.
Durability of the steel products. Since steel products are not easily spoilt, long channel can be used in their distribution.
Level of competition. Shorter channels should be used if
𝑀𝑎𝑟𝑘 − 𝑢𝑝 = 15,000 𝑥100
60,000
𝑀𝑎𝑟𝑘 − 𝑢𝑝 = 25%
(iii) 𝑹𝑶𝑺𝑻𝑶 = 𝑪𝑶𝑮𝑺
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒔𝒕𝒄𝒌
(3 Marks)
there is stiff/high competition.
Resources / size of the firm. If the firm has limited resources / small in size, then a longer channel is
Availability of intermediaries. Chuma steel manufacturers can only use intermediaries which are
Need to maintain pricing of steel products. Shorter channels will be preferred where the prices are to be kept low by avoiding the
Volume / quantity of output. If large use a long
Use a short channel to maximize / get higher profits
2. (a) Clauses found in MOA of a PLC. (10 Marks)
Name clause-states the name of the company which must end with the name ―Limited/Ltd‖. The name should be unique i.e. not used by any other
The objects clause-states the objectives/activities of the company which is registered to
Situation clause-states the physical location and addresses of the registered head
Liability clause–informs the members of the public that shareholders have Limited
Capital clause-states the amount of capital that the company is authorized to raise. The total share capital, value of each share and number of
Declaration clause-it contains declaration by the directors (promoters) about their wish to register the
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑡𝑜𝑐𝑘 = 15,700+13,000 = 14,350
2
𝑅𝑂𝑆𝑇𝑂 = 60,000 = 4.181 times
14,350
3. (a) Demerits of using carts as a means of transport in towns. (10 marks)
Not suitable for transporting goods over long distances such as from one country to another since are pulled/pushed by humans or
Not suitable for carrying very heavy / bulky goods / large volumes of goods since their carrying capacity is limited.
They are slow. Carts are prone to delays occasioned by their slow
Not suitable for transporting valuable goods. Lack of security as goods transported by carts are prone/exposed to theft / making it unsuitable means for transporting valuable
Their movement is affected by extreme / adverse / poor weather conditions like rainfall leading to stoppage or delays.
Carts offer minimal safety to goods against damage by elements of weather such as rain / hot sun / dust /wind.
May cause traffic jam/accidents. Carts are a nuisance / inconvenience motor vehicles / other road users since they are slower / cause obstruction/ pulled
Not suitable for use after night falls as it is not safe for the handlers/may be against
(b) Types of direct taxes used by government to collect taxes from individuals and companies. (10 Marks)
Personal income tax (PAYE)-this is tax levied on income of individuals such as salaries and wages.
Corporate/corporation tax-this is tax levied on profits made by companies/businesses.
Capital transfer tax/gift tax-this is tax levied on value of property transferred from one person to another as a
Capital gains tax-this is tax charged when an asset is sold at a price higher than the book
Stamp duty-this is tax charged on transfer of land from one person to another after sale.
Estate/death duty-this is tax charged when property of dead person is transferred to another person/inheritor.
Wealth tax-this is tax levied on personal wealth that goes beyond certain
Withholding tax-this is tax levied on savings such as pension and dividends held by
Residential rental income tax-this is tax charged on rents collected by landlords and
Property tax/Land Rates-tax levied by the county government on improvement of land or buildings by land owner in the
NB: Must mention the word “tax/duty” to score.
4. (a) Factors that may have contributed to increased demand for soft drinks. (10 Marks)
Favourable pricing / fall in price. The soft drinks are priced at a value that consumers can easily
Increasing consumer income. People are able to buy more products / have high purchasing power due to increased earnings.
High prices of substitutes. Most of the products in the market that can serve as substitutes are highly priced hence not preferred by buyers / making buyers to prefer soft
Favourable tastes / preferences / fashions / trends. More consumers now like soft drinks as compared to other drinks.
Favourable government policies / lower taxed / increased subsidies. Which keep the prices of soft drinks down / stable / affordable (hence encouraging their consumption).
(General) increase in population. With more people, more of the products are
Equitable distribution of income among consumers. Since many people have access to income, they are able to buy more of the
High / peak / festive seasons which make people to indulge in more consumption of soft
Expectation of future increase in price hence making people to buy more
Anticipation of future fall in supply which may make people to buy more
Fall in price of complimentary goods since they are used jointly/together.
Aggressive Marketing / Sales Promotion. More consumers are attracted to soft drinks due to intense advertising / other promotional
(b) Forms of economic integration that countries may join to promote international trade. (10 Marks)
Free Trade Area-This is economic integration where all trade barriers are removed between the member countries while each country retains its own barriers towards non-member
Preferential Trade Area –In this form of integration, trade barriers are reduced among the member nations while the barriers are applied at normal rates for trading activities with non-member nations.
Customs Union –In this form of integration, tariffs and other trade barriers are removed between member countries while their trade policies are harmonized with regard to treatment of trade with the rest of the
Common Market –This integration goes beyond harmonizing trade policies and removal of trade barriers but also allows for free movement of labour and capital among member
Economic Union –Member countries set up common institutions like central banks / adopt use of common currency (monetary system) / and have common public services like railway
Political Union / Legislative Union / State union –This involves unification of countries / share a central government (recognized by other states as a
5.
Open office
Enclosed office
i)
All/most staff works in one
room.
Each/few staff is allocated
a room.
ii)
Encourages team work.
Discourages team work.
iii)
Sharing of office equipment
is possible.
No sharing, each office
has its equipments
iv)
Easy to supervise employees since are in one
room.
Difficult to supervise employees since they are
in different rooms.
v)
Cheaper to construct since has few partitions
Relatively expensive to construct since have many
partitions.
vi)
Discourages absenteeism since one is easily
noticeable.
Encourages absenteeism since each worker has a
room/office.
vii)
Does not guarantee safety
for personal valuables
Guarantee safety for
personal valuables
viii)
Easy and cheap to decorate.
Difficult and relatively
expensive to decorate all offices.
ix)
Difficulty to keep the office tidy since is used by many
people.
Easy to clean and keep the office tidy.
x)
Easy flow of
communication
Slow flow of
communication.
xi)
Easy location of staff since they are in one room.
Difficult in location of staff since are in different
rooms.
xii)
There may be overcrowding of employees
There is no overcrowding of employees.
xiii)
Economical in use of floor
space
Uneconomical in use of
floor space.
xiv)
There is lack of confidentiality in
consultations/discussions.
There is confidentiality in consultations/discussions.
(a) Differences between open office and enclosed office. (10 Marks)
(b) Mageta Traders (10 Marks) Balance Sheet
As at 31st July, 2016
Fixed Assets Capital 82,500
Land 82,000 Long Term Liabilities
Furniture 61,500143,50010 Year Bank Loan 165,000
(b) Jawabu Traders Two-Column Cash book.
Jawabu Traders Two-Column Cash book
Dr For the month of February, 2015 Cr
Current Assets
Stock 18,600
Debtors 17,700
Bank 91,000
Cash 10,800 138,100
281,600
Current Liabilities
Date
Details
LF
Cash
Bank
Date
Details
LF
Cash
Bank
2015
2015
Feb 1
Bal b/d
12,500
Feb 1
Bal b/d
5,000
Feb 3
Debtors
18,900
Feb 2
Water Bill
800
Feb 5
Sales
7,150
Feb 2
Electricity
1,100
Feb 9
Co-op S.D
13,000
Feb 2
Wages
4,700
Feb 13
Debtor
15,900
Feb 7
Purchases
6,400
Feb 15
Cash
C
9,500
Feb 10
Drawings
2,500
Feb 15
Bank
C
9,500
Feb 17
Creditor
4,390
Feb 27
Furniture
21,100
Feb 28
Bal c/d
19,450
2,010
35,550
41,400
35,550
41,400
Feb 28
Bal b/d
19,450
2,010
Creditors 34,100
281,600
(a) Problems of using national income statistics to compare living standards of citizens of Kenya and Tanzania include; (10 Marks)
The two countries may have used different currency whose values/ purchasing power differs (to calculate their national income) hence different standards of measure.
One country could be having a large subsistence sector whose income may not have been included in the measure of their income /understating their national
Disparity in income distribution / levels of income distribution in one country may be too skewed compared to the other which may have a fair income distribution.
The countries may have different preferences / tastes hence lack of a common measure / due to different
The two countries could be different in terms of resources endowment hence different abilities to generate
The climatic conditions in the two countries may be different leading to difference in demand and
Production activities may affect the health of citizens in the two countries differently hence have no time for leisure / spend more on
The political realities /stability in the two countries could be different affecting security /peace of mind
/contentment of citizens.
The degree of accuracy of national income statistics is also different in both countries due to inaccurate data / incomplete data / unskilled
The two countries may have different economic priorities such as consumption versus development projects / consumption versus military
The two countries may have different price levels / inflation which distorts the true value of goods /
The two countries may have different working conditions which affect the quality of life in one country more than the
KCSE 2019
1. (a) Services that may be offered by wholesalers to the retailers. (10 Marks)
Availing a variety of goods from different producers relieving the retailers of the burden of visiting the producers’
They break bulk into quantities desired by retailers. The retailers are able to purchase only in the quantities they can
They offer storage services. This relieves the retailer from the risks of damage and cost of storage of
They provide credit facilities to deserving retailers which act as a source of capital to
They advertise goods to the benefit of retailers who obtain a ready
They offer transport to the retailers relieving them of transportation costs and the hustle of looking for means of transport.
They inform retailers on available offers for certain commodities. This may help retailers improve on their profit
Prepare goods for sale to the benefit of the retailers by sorting, packaging, blending, packing and
(b) Differences between sole proprietorship and PLC.
(10 Marks)
(b) (i) Rakwaro Enrerprises TPL. (7 ½ Marks)
Sole proprietorship
Public Limited Company
i)
Formed by one person.
Formed by a minimum of
seven promoters.
ii)
Proprietor has unlimited
liability.
Shareholders have limited
liability.
iii)
Existence depends on the life of the sole trader.
It has perpetual existence irrespective of death of
shareholders.
iv)
Main source of capital is
personal savings.
Main source of capital is sale
of shares.
v)
Managed by the sole trader.
Managed by a board of
directors.
vi)
Few legal formalities are required in formation.
Formation procedure is long requiring many legal
formalities.
vii)
Require little capital to start.
Require huge amount of
capital to start.
viii)
Quick decision making
since there is no consultation.
Slow decision making because
there is consultation from shareholder and directors.
ix)
Maximum ownership is one
person.
No maximum number of
owners.
x)
Starts trading after receiving
business license.
Starts trading after receiving
certificate of incorporation.
Rakwaro Enterprises Trading Profit and Loss Account
For the period ended 31st December, 2015
Opening stock 160,000
Add: Purchases 960,000
Add: Carriage in 6,800966,800
COGA4S 1,126,800
Less: Closing stock 280,400
Cost of goods sold 846,400
Gross profit c/d 577,600
1,424,000
Expenses
Discount Allowed 40,400
Salaries and Wages 200,000
Net profit c/d 337,600
577,600
Sales 1,440,000
Less: Returns In 6,000 Net Sales 1,424,000
1,424,000
Gross Profit b/d 557,600
557,600
(a) Negative implications of a young
There is high dependency ratio since the working population is
It leads to unemployment since existing job opportunities do not match the
Leads to low labour supply since they may not have attained the working age or the required
It diverts government resources to cater for consumption of goods for the youth hence hindering implementation of other development
It creates pressure on social amenities e.g. schools hospitals, recreation
May lead to increased social evils such as crime and prostitution due to lack of jobs/idleness.
Increased rural —urban migration leading to the development of
There is low saving and investment due to high expenditure on
There is low investment leading to low production of goods and
Low per capita income due to high dependency
Possible political instability due to inability to control and maintain the growing
(b) Benefits of a business to the society. (10 Marks)
Provides goods and services required for the satisfaction of the needs of members of the
Exploits available resources in the society. Such resources would otherwise remain
Creates employment which enables people to earn This enables members of the society to afford their day-to- day needs.
Avails variety of commodities which enables people to have high/improved living
It leads to improvement in the infrastructure such as roads which facilitates trading
It attracts other auxiliary firms such as banks, insurance and warehousing to the benefit of the
Leads to development of better technology and new ideas for quality
It encourages specialization which leads to better quality goods and services being produced and consumed in the society.
Encourages development of social facilities such as stadia and cinema which improve
Earns the government revenue through taxation in order to provide public
Helps save on foreign exchange through local production of goods previously imported. (Any 5×2=10 Marks)
5. (a) Advantages of locating firms in different parts of the country. (10 Marks)
Curbs rural-urban migration. This eases pressure on social amenities which tend to be found in areas with a concentration of many
Creates employment opportunities to rural dwellers enabling them to earn an
It avails a variety of goods in all parts of the country which enhance consumer choice/improving living standards.
Promotes even distribution of infrastructural development across the country. This is required to facilitate the operations of the firms in the different parts of the
It leads to transfer of new technology and skills for better utilization of resources across the
Leads to development of social amenities such as schools, hospitals and security in various parts of the country.
Attracts auxiliary services such as banks and insurance in different parts of the
Provides market for raw materials found in various parts
(ii) 𝑇𝑜𝑡𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 = 5
100
𝑥 50,000 = 𝐾𝑠. 2,500
of the country. This broadens the income sources for locals in every part of the country.
(iv) 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 = 𝑔𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 − 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 = 10,000 − 2,500 = 𝐾𝑠. 7,500
(v) 𝑅𝑂𝑆𝑇𝑂 = 𝐶𝑂𝐺𝑆
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑡𝑜𝑐𝑘
40,000
Reduce disparities in income distribution since people in all parts of the country are engaged in income generating activities.
Balanced regional development that open up
𝑅𝑂𝑆𝑇𝑂 =
20,000
marginalized areas.
𝑅𝑂𝑆𝑇𝑂 = 2 𝑇𝑖𝑚𝑒𝑠
Promotes growth of urban centres that encourage production (Any 5 x 2 =10 Marks)
(b) Government initiated methods of consumer protection.
Setting standards/KEBS to ensure that goods and services are of required quality and
Licensing of firms to control the number of firms so as to eliminate unhealthy competition.
Price control. Government sets price beyond which consumers should not be charged.
Weights and Measures Act. This ensures that the commodities sold are of the correct weight and measurement.
Foods and Drugs Act. This ensures that manufacturers do not include any harmful substances in food stuffs and drugs.
Public Health Act. This ensures that public business premises/buildings are hygienic and adhere to safety standards.
Rent and Tribunal Act. This protects tenants against hike of rent without
Trade Description Act/Sale of Goods Act. This ensures producers indicate genuine contents of the product to avoid misleading
Hire Purchase Act. Protects consumers against unfair repossession of
Anti-Counterfeit Act. This protects consumers from being sold goods that are not
Transport Licensing Act. This protects consumers/travelers/passengers from being ferried in unroadworthy vehicles and incompetent
6. (a) Procedure for obtaining an insurance policy
Filing a proposal form. The potential insured/proposer discloses all relevant material facts concerning the property or life to be
Determination of premium to be paid — the insurance company calculates the monthly premiums taking into account the material facts disclosed in the proposal
Payment of first premium — upon acceptance of the insurer to cover the risk, the insured is asked to pay the first
Issuance of cover note/binder — upon payment of first premiums, the insured is issued with cover note/binder which serves as evidence that the insured is
Issuance of the policy — it is issued within 30 days and contains all the terms and conditions of the
(b) Assumptions associated with the circular flow of national income in a two sector economy. (10 Marks)
There are only two sectors/players in the economy, that is, households and
Households spend all their income on payment for goods and services without making any
Firms spend all their revenues on factors of production without reserving any profits for
There is no government interference through taxation and licensing.
The economy is closed, that is, there is no international trade.
All output (goods and services) produced by firms is purchased by
No financial sector to inject income through investment or lending.
KCSE 2020
1. (a) Measures that the government may take to solve youth unemployment in Kenya. (10 Marks)
Adoption of relevant / changing / improving education system that equips the youth with relevant skills (e.g. artisan, carpentry) / makes the youth
Adoption of policies that encourage use of labour intensive methods of production. To use / employ / absorb
/ more labour / increase job opportunities.
Diversification of economic activities that provide variety of production activities (e.g. mixed agriculture, ICT) by encouraging / establishing different industries / sector.
Increasing government spending in projects that employ the youth e.g. Kazi Mtaani/Kazi Kwa Vijana.
Encouraging rural development / in order to attract firms / minimize rural-urban migration.
Improve infrastructure in order to stimulate economic activities.
Control population growth so as to have a labour force that the economy can absorb/sustain.
Export labour by assisting the unemployed (youth) to acquire jobs abroad / countries with labour
Lending / setting up a firm to assist the unemployed to start income generating activities /accept examples of a firm as a
Protect local industries from foreign competition so that they can expand / absorb more labour.
Encourage / promote the informal sector / Jua-Kali sector in order to promote self-employment.
Delocalization / decentralization of firms that reduces rural urban migration / increased job opportunities in any part of the country / any value addition can be
Income / wage policy to harmonize / eliminate differences between regions /
Attract local / foreign investment to grow the economy / increase production
Revive collapsed firms / industries / projects to increase production activities by injecting more funds to collapsed industries /firms.
Establish employment policy to make it easy for the youths to get jobs /accept examples of employment policies as a mention.
Encourage maximum utilization / better / full utilization of available (natural) resources to increase production activities.
Setting up vocational / TVET institutions to train youths on practical
Partner with the private sector to steer community based projects that involve the youth.
(b) Reasons why consumers need protection. (10 Marks)
To avoid unfair pricing by traders who may overcharge them.
To prevent sale of Low / poor / inferior quality goods such as sale of counterfeits (instead of the original goods that do not meet the set
To avoid misleading / false information/ advertising (about products) which may give wrong impression about the product / cheat on the performance of the product?
To avoid unsafe structures / construction of substandard / structures / buildings that endanger / threaten life of consumers / that do not meet minimum safety
To avoid hoarding of goods which is usually meant to increase prices/deny consumers access to goods/services.
To prevent sale of harmful products e.g. selling skin lightening creams to ignorant client / that are unfit for consumption / can cause damage / problems to
To prevent breach of contract, that is, failure to honour contracts on the part of
To prevent sale of underweight / undersize goods / services where some traders sell goods below the weight / size paid for / give less service to consumers / cheat consumers on the weight/ size of the
To prevent sale of socially unacceptable goods / services. Some traders sell offensive goods / services / that erode the morality of the
To avoid sale of illegal goods / services. Some traders are unlicensed / unprofessional / unqualified to provide some goods and services.
To ensure hygienic environment/premise. Ensures traders do not do their business in dirty environment which can endanger consumers
2. (a) Principles of government spending. (10 Marks)
Economy – requires proper planning to avoid
/minimize wastage/ensure maximum benefit.
Sanction – Authority should be sought from relevant bodies/parliament before committing public
Maximum /optimal social benefit – resources should be used only on projects that improve social welfare / quality of life of the citizens Ito benefit as many people as
Flexibility – expenditure should be able to be adjusted to reflect the prevailing
Good/proper financial management to ensure accountability/good governance/ transparency through proper record
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 / on projects that yield high returns
Elasticity – expenditure should be capable of being expanded/contracted in line with the size of the economy.
(b) Trends in office management. (10 Marks)
Location of offices in sub-urban areas – Organizations tend to move away from congested town centres to sub- urban areas/outskirts.
Use of modern equipment/computer/automation – organizations have adopted modern equipments/computers for efficiency to make work
Adopting open office layout /landscaped – adopted to facilitate supervision and economize on floor space/ improve ambiance/comfort in the
Engagement of multi skilled staff able to carry out different tasks/ to save on labour costs/ wage
Use of innovative ways of motivating staff such as tours, meals at work, capacity building to develop staff
Use of biometric clocking system to control staff movement and save on
Establishing customer care services/desk – to enhance customer satisfaction.
HIV/AIDS awareness/policy to sensitize employees/ avoid discrimination.
Stress management policies – to promote good health/coping of the work
Engaging in corporate social responsibility – to give back to the community such as Wings To Fry
Use of name tags/badges for easy identification of employees.
Outsourcing – contracting out non-core activities service providers.
Performance contracting to ensure set targets are
Ethical practices to enhance good governance / zero tolerance to corruption.
Branding / rebranding to enhance corporate image / identity.
Increased use of internet / emails /social media / extranet / intranet for communication /conferencing / accessing information. (Any 5 × 2 = 10 Marks)
3 (a) Ledger Accounts. (10 Marks)
Dr Capital a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
30/3/18
Bal b/d
100,000
1/3/18
Bank
100,000
100,000
100,000
30/3/18
Bal b/d
100,000
Dr Bank a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
1/3/18
Capital
100,000
4/3/18
Cash
20,000
6/3/18
Purchases
30,000
30/3/18
Bal c/d
50,000
100,000
100,000
30/3/18
Bal b/d
50,000
Dr Motor Vehicle a/c Cr
Dr General Motors a/c Cr
Dr Cash a/c Cr
Dr Purchases a/c Cr
Dr Sales a/c
Cr
Dr Drawings a/c Cr
Benefits of intermediaries in the chain of
Breaking bulk / dividing goods into smaller quantities that can be conveniently be purchased by
Accumulation of bulk to ensure a steady supply of goods (throughout the year) / satisfy large
Avails a variety of goods (to the consumers) from different producers / that consumers can choose from / to satisfy different
They offer advisory services to the consumers about the goods in the market / usage / price /
Avails the goods closer to the consumers which relieves / saves the consumers the cost of travelling / transport /
Provide storage / warehousing enabling the consumers to get goods at the time they need them / in good
Date
Details
LF
Amt
Date
Details
LF
Amt
2/3/18
G.
Motors
800,000
30/3/18
Bal c/d
800,000
800,000
800,000
30/3/18
Bal b/d
800,000
Promote / advertises goods that creates awareness of availability / existence of good / that makes the consumers make informed choices / decision when buying
Selling goods on credit enabling consumers to afford more / expensive
May offers transport to consumers which relieves them the burden of transporting goods to their
Date
Details
LF
Amt
Date
Details
LF
Amt
30/3/18
Bal c/d
800,000
2/3/18
M.Vehicle
800,000
800,000
800,000
30/3/18
Bal b/d
800,000
Offers after sale services such as installation to enhance product usage / increase customer
Passing of (important) information / feedback (between consumers and producers) which improves the quality of goods produced / price / availability /
4 (a) Benefits of savings account to a customer. (10 Marks)
Date
Details
LF
Amt
Date
Details
LF
Amt
4/3/18
Bank
C
20,000
10/3/18
Drawings
8,000
10/3/18
Sales
15,000
30/3/18
Bal c/d
27,000
35,000
35,000
30/3/18
Bal b/d
27,000
Allows the customer to save by accumulating small amounts of money since withdrawals are
Minimal fees are charged on the account making it more attractive / affordable compared to current account.
Customers can earn interest on the account balance/deposits as an income / which increases the account
Date
Details
LF
Amt
Date
Details
LF
Amt
6/3/18
Bank
30,000
30/3/18
Bal c/d
30,000
30,000
30,000
30/3/18
Bal b/d
30,000
Requires little deposit to open which makes it accessible / use compared to other
Customers may get bank loan on the basis of the savings
Encourages customers to invest from the
Deposits can be made into the account anytime to the convenience of the customer/compared to fixed account.
Date
Details
LF
Amt
Date
Details
LF
Amt
30/3/18
Bal c/d
150,000
10/3/18
Cash
15,000
15,000
15,000
30/3/18
Bal b/d
15,000
Account holders are issued with identification cards which may also act as a debit
(b) Ways in which warehousing may promote trade.
Promote mass production / by allowing the producer to continue producing goods/ since there is space for storage of (finished) goods / raw
Date
Details
LF
Amt
Date
Details
LF
Amt
10/3/18
Cash
8,000
30/3/18
Bal c/d
8,000
8,000
8,000
30/3/18
Bal b/d
8,000
Stabilizes prices by regulating the flow of goods / storing the surplus / releasing the goods when
Ensures continuity of supply / steady supply of goods / by storing them and releasing them when need
It facilitates the preparation / processing of goods for sale by branding /sorting /packaging.
Creates time utility by ensuring that consumers get goods when
Ensure safety of goods from physical damage /the damaging effects of weather /pests.
May add value to some goods such as wine / some goods can improve in quality / taste (better) when they stay for long time/ fetch better prices / better satisfaction of
Enables traders to look for market / sale goods while they are still in the
Ensure seasonally demanded goods are stored until required.
Bonded warehouses help to store goods awaiting clearance by customs authority /allow the importer to look for money to pay for custom
Security of goods /since they are protected from theft / pilferage
5 (a) ( i) Adan Traders
Profit and Loss Account
Expenses
Discount Allowed Salaries and Wages
15,000
27,000
Gross profit b/d 120,000 Discount Received 2,400
Commission Received 9000
Commission Allowed
16,000
Power and Lighting
11,700
Net profit c/d
61,100
For the period ended 31st December, 2018
131,400131,400
Net Profit b/d 61,100
(ii) Adan Traders
Balance Sheet
Fixed Assets
Capital
1,301,800
Premises 1,120,000
Add: Net profit
61,100
Furniture
49,000
1,169,000
1,362,900
Current Assets
Stock 25,000
Debtors 55,000 Cash at Bank 80,000
Cash in hand 65,000 225,000
1,394,000
Current Liabilities
Creditors 37,300
1,400,200
As at 31st July, 2018
Benefits of communication to a business. (10 Marks)
Enhances coordination(between departments) ensuring they all work towards achieving objective of the
Helps maintain a positive relationship with (other) stakeholders for smooth operation / reducing
Facilitates the decision making process (within the business) for better
Increased employee motivation due to clarification of goals /objectives
Better performance / improved productivity due to clear targets setting and
Increased sales due to effective product
Improved harmony / peaceful understanding (in the business) due to minimal conflicts /since issues are clarified /challenges are
Improved image / reputation (of the business) / corrects negative attitude / perception which elevate the standing of the business in the market / in the eyes of the
Helps to clarify issues / points so as to avoid confusion / to be well
Enables a business to get information / obtain / send information from internal / external sources (that can be useful to the business).
Enhances / promotes teamwork through consultations / sharing of ideas /
Facilitates / promotes research which helps to improve process / activities in the
6 (a) Reasons that make it necessary for the government to promote entrepreneurship. (10 Marks)
Job / employment creation-Through trading / production activities / for others / may boost economic activities in the country / trading activities may boost employment opportunities in the
Opening up of remote parts of the country-Trading activities may attract support industries / auxiliary services such as banks / development of infrastructure in some areas
To raise living standards –Trade usually brings goods that some areas may not be in a position to produce hence (higher living standards) by availing a variety of goods to them.
To reduce rural to urban migration –When (more) people engage in business activities in the rural set up / (it may serve to lower the rate of rural-urban migration).
To promote innovation / creativity –Entrepreneurship encourages use /development of new technology / ideas / products which (in turn) results into high quality / quantity production.
To make use of local resources –The government may desire to put all the available resources into proper use to increase production to avoid them being
To save on imports /foreign exchange –By producing commodities locally (rather than buying from outside the country).
To reduce foreign dominance for business in the country-By encouraging local people to invest in business
To generate more revenue to the government –Where the business pay taxes to the
To promote entrepreneurial culture –Where successful businessmen act as role models / mentors for future entrepreneurs.
To encourage production of a variety of goods / services- So as to satisfy different consumer tastes / widen their choice.
To encourage production of goods for exports Which generates foreign
Promote capital formation / accumulation As a result of investment / savings. (Any 5 × 2 = 10 Marks)
(b) Advantages of indirect production to the society.
(10 Marks)
KCSE 2021
1 (a) Circumstances under which producers may sell goods directly to the consumers. (10 Marks)
Access to enough quantity of goods due to surplus production.
Improved living standards due to income / profit generated through trade.
They have access to many choices due to a variety of goods produced in the
Encourage competition leading to fair prices / quality goods and
Availability of employment opportunities since many people are engaged in various stages of
The society enjoys improved infrastructure / roads which may be put up to support business
activities / facilitate movement / production.
Improves the social cohesion /peace / harmony since many people are brought together from different areas to trade / due to
Maximum / optimum utilization of (available) resources since production is meant for sale/leading to increased production.
High quality goods produced due to use (better) / (advanced) technology /
It encourages specialization / division of labour which leads to efficiency in product / better quality
The society enjoys improved social amenities such as schools and hospitals/which may be put up to support business
The society enjoys improved auxiliary services suchs as banks and insurance which are put up to support business activities.
Encourages trade / exchange many people to get what they cannot produce / leading to generation of income to owners / government through
Can lead to steady supply of goods since there are many producers who may engage in similar production activities.
Promote creativity / innovation which leads to new ideas / product / technology
Encourages use of machines which makes production more (Any 5 × 2 = 10 Marks)
When the sizes of the market served is small that the producer can access all the buyers/economically serve the entire
If the product is highly perishable that can easily go bad if the long channel is
If the producer wants to get immediate feedback about the performance of the
If the product is technical in nature that requires demonstration/installation/maintenance/after sale
If the product is tailored to meet customer satisfaction/produced according to the customer’s specification/made to order in order to satisfy individual needs/tastes/preferences.
When the producer wants to avoid further increase in prices of the product/avoid high cost of distribution to make the product affordable/competitive.
If its government’s policy which directs those goods should be distributed directly to the consumers and so the producer has to comply.
If it is the policy of the business which requires that all goods must be sold directly to the consumers. That has to be adhered to/for whatever
If the producer has enough /adequate resources. To set up retail outlets/distribution outlets/buy distribution vehicles/hire sales
When goods are of very high value /expensive and middlemen are unwilling /unable to stock
Where the consumer order / goes directly to buy from the producer /by being able to meet sales conditions / being in proximity with the
If competition is stiff / high. In order to capture a higher share of the market.
If there are no appropriate middlemen. The producer has no choice.
If the market is concentrated at one place / near the It will be cheap to reach consumers / save on distribution costs.
If the volume of the output is small. Making it uneconomical to involve
If there is need to maximize profit: Avoiding the cost of using middlemen. (Any 5 × 2 = 10 Marks)
(b) Terms of sale as used in international trade. (10 Marks)
Ex-works /Ex-warehouse / Ex-factory-The price quoted includes only the cost of goods as they leave the place of manufacture / the warehouse of the exporter other expenses are to be met by the
Cost and Freight-The price quoted includes the cost of goods, loading cost and freight charges up to the port of
Free on Board (FOB)-The price quoted includes the cost of goods, handling and loading charges up to the ships. All other expenses are borne by the
Landed-The price quoted includes all expenses up to the port of destination as well as offloading
In bond-The price quoted includes all expenses of handling goods from the manufacturer’s premises until they are delivered in a bonded warehouse in the receiving
2 (a) Factors that may discourage entrepreneurship in Kenya.
Unfavourable government policy/ imposing high taxes which discourage production of certain commodities / increases the cost of
Poor entrepreneurial culture / lack of adequate role models in the society to inspire / motivate the would-be
Inadequate / lack of market due to low purchasing power
/high level of poverty / low incomes.
Poor transport network /infrastructure /utilities. Making it difficult/expensive to access raw materials /market.
Insecurity in some areas that discourage entrepreneurs from investing /getting materials /accessing the market in such areas.
Inadequate natural resource endowment / raw materials / land leading to low
In availability /inaccessibility/inappropriate technology. That leads to production of poor quality/non competitive
Political instability. May create unconducive /harsh
/unfavourable environment for entrepreneurs to invest.
Unfair /unhealthy/stiff competition which makes investment very expensive /uncompetitive /from cheap /inferior
Limited access to capital /inadequate capital /credit /finance is costly /hard to access which makes it difficult to start and run
Corruption /poor governance which increases the cost of doing
Poor education /training leading to lack of skills to start /run business.
Unfavourable /negative cultural practices leading poor/negative consumption /practices /choices /discouraging starting / running of
Bureaucracy /Red tape/ legal constraints /controls. Making it to complex /expensive / difficult to start /run business
(b) Demerits of indirect taxes. (10 Marks)
Expensive in collection as it is collected from various points /the government is forced to employ many inspectors to enforce the
There is uncertainty in revenue collection /revenue is collected only when goods /services are
May lead to a reduction in demand since it increases the prices of the commodities/fuels inflation as it directly increases the prices of goods and services thereby erodes consumer’s purchasing
Lack of civic awareness which makes tax payer not take active interest in government expenditure /since the tax amount is hidden in the price of the
Encourages tax evasion / easy to evade as traders falsify records to avoid payment of the tax / to declare less tax collected.
Low savings / investment as consumers spends more of their incomes on
Less equitable / regressive / unfair as the burden falls heavily on the poor who spend a larger proportion of income on
May lead to misallocation of resources as people buy more of the goods that are not
Can be avoided by people not buying the taxed goods / services.
3 (a) Errors that may not be detected in a trial balance.
Error of omission-Occurs when a transaction took place but not recorded at
Error of original entry-Occurs when both the debit and credit entries are made using similar but erroneous figures recorded in the
Error of principle-Occurs when entries are made correctly but in the wrong class of
Error of commission –Occurs when entries are made in the wrong accounts of the same class with the correct amounts.
Compensating errors-Occurs where the errors are such that in both the debit and credit balances are of equal magnitude so they cancel
Transposition error-Occurs when the sequence of figures are
Error of complete reversal of entries-Occurs where the entries are entered on the wrong sides of the relevant accounts. (Any 5 × 2 = 10 Marks)
(b) Documents prepared by a seller after receiving an order up to the point of delivery. (10 Marks)
Acknowledgement Note –To inform the buyer that the order has been received and appropriate action is being taken.
Packing Note -The document shows the details of goods packed.
Advice Note-Sent to inform the buyer when the goods are dispatched.
Delivery Note –it show the details of goods to be delivered for verification
Consignment Note – a document showing terms of carriage /used when means of transport is
Pro-forma Invoice -Polite request for payment before the goods are
4 (a) Reasons that may make a firm to operate on a small scale.
Little capital requirement-if the firm has a small amount of capital to operate
Government policy favouring small-scale business- if the government policy that encourages existence of small enterprise in order to create more
Need to retain control as the management /owner is in charge of all the activities of the
Flexibility as small firms are responsive to changing market requirements that large firms may
Type /nature of product /where business offers personal services /requires personal touch which can only be best provided by an individual / small
Existence of a special market /small market/ niche market served by offering specialized services /appropriately / best handled by small scale
Ease of management as small scale firms have few departments /workers /scale of operation /few crises to manage.
Quick decision making due to few levels of managerial
/hierarchy/consultation.
Legal constraints which may hinder the firm to expand /legal requirements which may be difficult to fulfill to enable the firm to
Decision of the owner to operate on small scale out of his
/her own choice.
(b) Patel Traders Profit and Loss Account. (6 Marks)
(b) Problems the Kenya government may experience when implementing the vision 2030. (10 Marks)
Inadequate /limited resources like skilled personnel/ human resource to interpret /translate plans into reality
/effectively implement the plans.
Over reliance on foreign Aid /donor funding whose remittance is uncertain thus the plan may fail to take off
/completed.
Failure by the local people to support the plan because they were not involved during the formulation of the
Outbreak of natural calamities may lead to diversion of the funds meant to finance the
Some unrealistic aspects of the plan /overambitious plan that are difficult to
Inflation which makes the cost of implementation to rise
/increase beyond the allocated funds.
Lack of political goodwill /if there is no political commitment to start /complete projects, it remains on paper.
Non observance of sequence /timeliness of implementing the plan /the logical order is not followed leading to incomplete /stalling of projects /white
Imported models /plans that are inappropriate for local situations / needs.
Corruption /poor governance that leads to loss /misuse of funds meant for implementation of the
ii) 𝑅𝑂𝐶𝐸 = 𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑
𝑥100
Political instability that derails / delays implementation
/destroys projects.
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑 = 𝑊𝐶 + 𝐹. 𝐴
= 30,000 + 1,110,000
= 1,140,000
Insecurity that may hinder / delay /derail implementation of
Poor /lack of coordination /corporation among implementing parties /agencies.
Inadequate /limited finance /capital to effectively fund
/pay for the plan.
77,000
𝑅𝑂𝐶𝐸 =
1,140,000
𝑅𝑂𝐶𝐸 = 6.754%
𝑥100
Lack /inaccessibility of appropriate technology to implement /actualize
Inaccurate /inadequate data leading to inaccurate
Existence of a large private sector whose goals /objectives
may be in conflict with those of the government.
5 (a) Reasons that make it necessary for the government to train business people. (10 Marks)
To improve their skills by exposing them to basic management
To expose /educate them on modern /current trend of business operations like effective methods of advertising/keeping books of accounts /stock-taking.
To expose business people to possible solution /possible problems affecting them like raising capital/identify investment
To impart proper business ethics so as to avoid consumer exploitation /ensure fair
To educate them on efficient use of the available resources so as to minimize cost /maximize profit.
To inform them on various available profitable business opportunities /market /gaps to be
To sensitize business people on government initiatives that are beneficial to them like SME
To educate them about government policies regarding business activities. (Any 5 × 2 = 10 Marks)
6. (a) Advantages of written communication. (10 Marks)
It is a permanent record that can be used for future reference.
Suitable for official communication /formal communication where information has to be passed through prescribed channels /procedures.
Secure the confidentiality of communication as it is accessed by the intended receiver only /can be used to pass secret/confidential
It is more authentic /accurate /it retains its original content since it is not easily distorted/misreported.
Suitable for detailed messages-Allows for inclusion of detailed /complex information as different forms can be used to reinforce/illustrate facts such as charts,
It may be economical since forms of written communication are relatively cheap when used for mass communication
/use of e-mail.
Can be addressed to many people as the original document can be reproduced into many copies.
Can be used as evidence to settle disputes /in a court of law / to support facts / solve
Suitable for the hearing / visually impaired persons to send / receive message /
(a) Circumstances under which bank may dishonour a cheque. (10 marks)
If the cheque is post-dated. It is presented to the bank before the maturity
In case of insufficient funds in the account of the drawer.
When the amount in words differs from the amount in figures hence decision on which figure to pay arise
If there are alterations /changes on the cheque which are not countersigned
If the signature on the cheque differs from the specimen signature held by the bank thus its authenticity is in doubt
When the cheque is stale/outdated. It is presented six months after the date of
If the (account) holder is dead and the bank is aware of the fact/
If the drawer becomes bankrupt/insane thereby losing contractual capacity to transact/and the bank is
If the drawer’s account is closed/ not operational hence cannot be used
If the cheque has omissions thus making it invalid/accept examples of omissions as
If the cheque is forged and the bank is able to confirm/detect. If the cheque is defaced
/torn/dirty/making its contents illegible/doubtful.
If the drawer instructs the bank not to pay(a particular cheque) based on the reason known to him
/her/accept examples of valid reasons as explanations.
When a customer is presenting a crossed cheque to be paid across the counter instead of depositing in the account. (Any 5×2=10 Marks)
(b) Factors that may lead to an increase in the level of National income in a country. (10 Marks)
Political stability. Encourages investors/increased activities (thus high levels of national income).
Use of appropriate /modern/better technology to produce high quality /quantity goods/services/increase
(When citizens have) positive attitude towards work productivity is
Increased foreign investments may bring more injections in the domestic economy/ increased production (thereby increasing the level of national income).
Existence/availability of /well established entrepreneurial culture promotes (effective) exploitation of available resource endowment /to enhance productivity
Availability of adequate/ sufficient capital will enhance production of high quantity /quality goods/services (which attract better returns).
Discovery of natural resource to be exploited for production.
Good governance /accountability/ transparency leading to better use of resources /efficient production /attract
Reduced subsistence sector /increased market sector where most of what is produced is sold/ that will generate
Favourable/ improved terms of trade leading to increased export
(xi) Increase in skilled /trained labour/manpower
leading to increased/ /efficient/quality production.
(Enhanced) security that encourages
Improved infrastructure that leads to more
/efficient production / fast flow of goods/services/accept examples of improved infrastructure as a mention.
Better/ maximum/ optimum/ increased use of existing / idle resources that leads to increased production of goods/services that creates a conducive.
Favourable government policies that creates a conducive environment for production/
2 (a) Factors that may lead to dissolution of cooperative societies. (10 Marks)
Persistent /continuous disagreements (among the members) to an extent that they cannot be reconciled
Mutual agreement (among the members) to dissolve hence left with no option but to wind up/ one member requests for dissolution and his wish granted /for whatever reason
Insolvency /bankruptcy .When the cooperative is unable to meet its financial obligation
(iv) A court order (forcing dissolutions of the cooperatives)
/government may order for its dissolution in the interests of the public/its members/ for engaging in illegal activities.
(Mass) withdrawal of members leaving less than ten/ minimum required by
Change of law/ government policy that makes the activities of the cooperative
(vii) If it has achieved its objectives (for which it was formed)
hence makes its continued existence unnecessary.
If it has achieved its objectives (for which it was formed) hence make its continued existence unnecessary
Amalgamations/mergers/absorptions to serve their members better/share resources /enjoy economies of scale
/which makes them loose their original identity
(b) Features of underdeveloped countries. (10 Marks)
overdependence /overreliance on foreign aid/countries to fund /finance development projects
/leading to political blackmail / vulnerability
Underutilization/under exploitation of natural resources due to inadequate / inappropriate technology
/skills/knowledge
High rates of unemployment due to low levels of industrial development/ low levels of life expectancy
/high mortality rates
Inadequate health care/ malnutrition leading to low levels of life expectancy /high mortality rates
Unfavourable balance of payments due to low/subsistence productivity /high rates of imports for producer goods/low value exports/ poor terms of trade
Underdeveloped /poor infrastructure due to limited capital /which hinders mobility of goods/ services/accept examples of poor infrastructure as a mention.
Large/ overdependence on subsistence sector due to inadequate skilled labour/capital necessary for production/ leading to low outputs/income/ accept causes /consequences of subsistence sector as a qualification/
High population growth rate /overpopulation/ high birth rate where the growth rate is higher than the national output/ resources/accept negative consequences of overpopulation as a
High levels of poverty /low per capita income where a large proportion of citizens live below poverty line/survive on less than a dollar a
Low levels of technology due to lack of capital/ which leads to low quality/quantity of goods/services
Unequal/ disparity in income distribution where much of the wealth/ income is in the hands of a few people/where the majority of the people are low
Low levels of savings due to low per capita income
/leading to low investments
Low levels of investments due to small/limited market/ low savings/ low capital
Poor governance due to corruption
/embezzlement/lack of accountability /transparency / misappropriation/ mismanagement of resources
Limited market/ low demand due to low levels of income
Negative socio-cultural practices which hinder consumption /production.
Political instability/insecurity which hinders investment/production
Poor social amenities leading to poor services
Large pool of unskilled labour due to inappropriate education system
Poor plans/policies due to inadequate data/ being over ambitious
Limited entrepreneurial skills/culture due to lack of role models/ entrepreneurial education
High levels of illiteracy due to ignorance/ limited exposure
3 (a) (i) Bank a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 1
Bal b/d
80,000
Oct 2
Juma
14,000
Oct 5
Bal c/d
66,000
80,000
80,000
Oct 5
Bal b/d
66,000
Dr Juma a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 2
Bank
14,000
Oct 1
Bal b/d
24,000
Oct 5
Bal c/d
10,000
24,000
24,000
Oct 5
Bal b/d
10,000
Dr Mangu a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 1
Bal b/d
26,000
Oct 3
Cash
10,000
Oct 5
Bal c/d
16,000
26,000
26,000
Oct 5
Bal b/d
16,000
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 1
Bal b/d
15,000
Oct 4
ICDC Loan
70,000
Oct 3
Mangu
10,000
Oct 5
Purchases
40,000
Oct 4
ICDC Loan
170,000
Oct 5
Bal c/d
85,000
195,000
195,000
Oct 5
Bal b/d
85,000
Dr Cash a/c Cr
Dr Bank Loan a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 5
Bal c/d
170,000
Oct 4
Cash
170,000
170,000
170,000
Oct 5
Bal b/d
170,000
Dr ICDC Loan a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 4
Cash
70,000
Oct 1
Bal b/d
70,000
Oct 5
Bal c/d
0
70,000
70,000
Oct 5
Bal b/d
0
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 5
Cash
40,000
Oct 5
Bal c/d
40,000
40,000
40,000
Oct 5
Bal b/d
40,000
Dr Purchases a/c Cr
Dr Motor Vehicle a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 1
Bal b/d
210,000
Oct 5
Bal c/d
210,000
210,000
210,000
Oct 5
Bal b/d
210,000
Dr Stock a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 1
Bal b/d
45,000
Oct 5
Bal c/d
45,000
45,000
45,000
Oct 5
Bal b/d
45,000
Dr Capital a/c Cr
Date
Details
LF
Amt
Date
Details
LF
Amt
2021
2021
Oct 5
Bal c/d
237,000
Oct 1
Bal b/d
237,000
237,000
237,000
Oct 5
Bal b/d
237,000
3(a)(ii) Mtito Andei Wholesalers
Trial Balance As at 5th October, 2021
Details
Dr (Ksh)
Cr (Ksh)
Bank
66,000
Juma (Creditor)
10,000
Mangu (Debtor)
16,000
Cash
85,000
Bank Loan
170,000
Purchases
40,000
Motor Vehicle
210,000
Stock
45,000
Capital
237,000
462,000
417,000
Essentials/elements of a good transport system include
The unit of carriage. Any vessel/means/motor vehicles/ships/trains/ aero planes/bicycles/carts etc. used to transport /move goods from one place to another.
The way-Route/path/road/pipeline/air/airways/water/ railways/canals/seaways etc followed by the vessel from one place to the next.
Terminal. Loading/offloading/starting/ending places for the vessels/units of carriage/bus stops/railway stations/airports/sea ports/harbours /docks
Method of propulsion. Refers to the driving force /source of power /petrol/diesel/solar/engine/animal power/draughtsman etc. that make the unit of carriage to move.
Safety to prevent damage/injury to goods/people
Security to prevent theft/loss of goods/services
Affordability /economical to reduce on costs/expenses of moving goods/services/people
Availability /accessibility can easily be found /reached when needed
Efficiency ability to provide quality goods/services with little/no
Speed ability to deliver goods/services on time /without delay
Convenience ability to meet the needs of (different) users
Reliability ability to carry out its functions without
Flexibility ability to adjust according to the needs of the user.
4 (a) Ways in which employees may contribute to the success of a business include: (10 Marks)
Qualified/skilled/trained employees will produce/offer quality goods/services
Employees who have skills that match the job requirements lead to minimal wastage
Proper time management by employees will enable the business to offer timely delivery of services/goods
Employees who treat customers well. Improves the image of the business
Disciplined / obedient employees do not need a lot of supervision /are responsible/lead to reduced operational costs
Quality/good/proper decisions made in the interests of the
Pass (positive) feedback (from customers) for improvement of the
Innovative /creative employees lead to better /new goods/services.
Committed /hardworking employees which leads to increased productivity.
Loyalty/positive attitude protects the interests of the business.
Teamwork which leads to harmony/synergy/cooperation.
Goal oriented which leads to meeting of targets/objectives of the
Self-driven/ self-motivated employees that perform tasks with minimal/no supervision/without
Practicing integrity /ethical behaviour since they are able to do the right thing even when not observed
/supervised.
(b) Roles of the World Bank in promoting international trade include. (10 Marks)
Providing (medium and long term ) loans used in financing balance of payments deficit/development projects/budgetary support/ foreign
Giving financial aid/grants to be used in producing goods (for the world market) / for development
Set up international standards that must be met to access world market /so as to create fairness/ fair competition
Advice (member countries) on the best suitable projects to invest in /to diversify their exports/on economic policies
Act as a guarantor to member countries who want to obtain (bilateral) loans (for development/production of exports).
Encourages technology transfer among member states to enable them exploit natural resources /in order to create wealth.
(vii) Stabilizes/ control the major (world) currencies
/exchange rates to ensure international prices charged (for imports and exports) remain stable.
Coordinate formation of partnerships/ integration to facilitate sharing of knowledge/ research findings/expertise (for mutual development)
Provision of personnel /manpower/ experts to facilitate project appraisal / implementation / management / identification.
Training of local personnel in project appraisal
/implementation/ management/ identification.
Approving /evaluating development plans from member countries for
Promote private investment/ investors by giving loans guaranteed by native / home countries
Promotion of good governance to avoid loss/ misuse of public funds/resources/by fighting corruption/ embezzlement of
May enhance better performance by senior staff as they act as role
Reduces corruption/fraud/misuse of office resources as employees’ actions are easily monitored/does not give room for soliciting for bribes thus promoting accountability / integrity/ethical behaviour of employees
Debtors
33,500
Bank
12,600
Cash
18,400
73,000
189,000
By Editorial Team
The Education News Hub Editorial Team is made up of vibrant and experienced editors. Brian Yano is an accomplished longtime Digital Media Journalist at Educationnewshub.co.ke with a great passion for research and fact-checking. He delivers engaging content across diverse topics, with a special interest in Education matters. On her part, Yvonne Kemunto is a journalist, dedicated to unraveling stories that matter. With a keen eye for detail and a passion for storytelling, she brings a fresh perspective to the world of media. Her commitment to detail and excellence shines through in every piece she crafts. Our newest member of the Editorial Team is Jennifer Mumbo. She is a Seasoned Multimedia Journalist with several years' experience; dating back to 2018. Jennifer has a passion for education, sports, tech, politics and entertainment. You can reach the editors at educationnewshub3@gmail.com.
