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BUSINESS STUDIES PAPER 1
MARKING SCHEME

1. characteristics of money
(a). Acceptable
(b). Portable
(c). Divisible
(d). Durable
(e). Generally stable
(f). Homogenous / Uniformity
(g).Scarce / limited in supply
(h). Easy to recognize
(i). Malleability.

2. External factors that may adversely affect efficient operations of a business.

(a). Political instability
(b). Corruption in the country
(c). Lengthy licensing procedures
(d). Insecurity in the country
(e). High cost of finances
(f). High taxation rates
(g). Inadequate factor inputs
(h). Poor weather conditions / climate for agro- based businesses
(i).Unstable exchange rate

3. Circumstances for photocopying

(a). When only a few copies are required
(b). When a method faster than duplicating is required
(c). When business wishes to use existing workers hence no needs for re- training.
(d). When the business does not need coloured copies.
4. Ways through which an efficient transport system may promote trade,
(a).Easy transportation of goods to the market
(b). Buyers and sales will connect from market to market easily
(c). Interior markets would be opened up for trade
(d).Quick / fast delivery hence less time wastage
(e). Lower transportation costs
(f). Stable commodity prices due to low transport costs.

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5. Benefits of buying directly from a Manufacturer

(a). Buys goods of high quality
(b). Can obtain goods of desired quantities
(c). Enjoys discounts hence cheap products
(d).Avoids delays during delivery
(e).May obtain goods on credit
(f). May obtain goods of his specification.

6. Four benefits of advertising products through the website

(a). Reaches a very wide / global market
(b). Relatively cheap method
(c). Has ilisual appeal
(d). Reduces paper work

7. Outline four features of co- operatives

(a). No member can contribute more than 5% of the capital
(b).Minimum of 10 members who are above 18years
(c). Members enjoy limited liability
(d). Established to provide services to members
(e). Guided by laws
(f). Membership is open and voluntary.
8. Give four reasons why most Kenyans do not operate bank accounts
(a). Most have low income levels
(b). Most have unstable incomes
(c ). Bank facilities are not close to the people
(d). Most are ignorant of the available banking services
(e). Bank requirements to open and operate accounts are unaffordable to most Kenyans
(f). Instability in the banking sector due to political influences and unstable bank rates discourage most
people from keeping money in banks.
9. Four advantages of indirect taxes.
(a). Can be avoided by consuming non- taxable products
(b). Has wide net / diversified
(c ). May discourage consumption harmful products by taxing them highly
(d). Economical because it is collected at source.
Effects of transaction on
10.
Assets Liabilities Capital
a) Increase Increase No effect
b) Decrease Decrease No effects
c) Increase No effects Increase
d) decrease No effects decrease

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11. Contributions of the households to the national income of a country

(a). Providing ready market for commodities produced
(b). Paying taxes to government
(c ). Providing labour to the firms
(d). Providing saving s & investments in the economy
(e). Offering capital to the firms to facilitate production
(f). Providing land o firms
(g). Providing entrepreneurship / management to the firms.

12. Salient features of a monopolistic market

(a). Market has many sellers
(b). Products sold are differentiated / Heterogeneous
(c). Acton of one firm affects the entire industry
(d). Firms engage in price wars.

13. (a). Invoice

(b). Receipt
(c). Debit note
(d). Credit note

14. Obstacles that may hinder the achievement of vision 2030

(a). Corruption
(b). Shortage of qualified personnel
(c ). Transfer of inappropriate plans from the developed world.
(d). Over – reliance on donors for funding
(e). Non – involvement of local stake holders in implementation
(f). Negative effects of inflation
(g). Lack of political will to fully implement the plan.

15. Benefits of entrepreneurship to the Kenya gov’t

(a). Revenue in terms of taxes
(b). Employment opportunities to its citizens
(c). Provision of goods and services to gov’t and its citizens
(d). Foreign exchange earnings from exports
(e). Growth of capital / investment / economy
(f). Lending / loan to government.

16. Condo Traders

Trading A/C For Period Ended 31.Dec 2008√
opening stock 2,500√ Sales 56,400√
add purchase 46,000√
G.A.S.F S 48,500
less closing stock 1,500√
C.O G.S 47,000√
Gross Profit c/d 9,400√
56,400√ 56,400

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17. Rewards to land as a factor of production

(a). Rates
(b). Royalties
(c ).leases
(d). Ret

18. Characteristics of bonded Warehouse

(a). Goods only released on production of a release warrant
(b). Under the control of governments customs officials
(c ). Goods are bonded until customs duty is paid
(d). Storage charges are charged on goods in the warehouse
(e). Goods may be sold while under bond
(f). Goods may be re – exported while in the bonded warehouse
(g). Goods may be prepared for sale while in the bonded warehouse

19. CPI 2001 =538 / 474 X100 = 113.5%√1

CPI 2002 = 625 / 474 X 10 0 =131.9%√1
CPI 2003 = 741 / 474 X 100 = 156.3%√1
CPI 2004 = 866 / 474 X 100 = 182.7%√1

20. Other Methods of determining Prices

(a). Action / bidding
(b). Price fixing by suppliers with no close competition e.g kplc
(c). Through government policy e.g taxation or subsidies
(d). Bargaining / haggling
(e). Price discrimination
(f). Retail price maintenance
(g). Through price leadership such as in oligopolies
(h). Tenders.
21.
GENERAL JOURNAL
Date Details F Dr Cr
31/12/2009 Land A/C 430,000
Motor vehicle A/C 641,000
Stock A/C 82,000
Bank A/C 54,000
Loan A/C 900,000
Accrued expenses A/C 79,000
Creditors 120,000
Capital A/C 347,000
Being record of closing balances

22. Matching statements with terms

(a). Premium
(b). Over – insurance
(c). Policy
(e). Co- insurance

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23. Reason why volume of exports from less developed countries to the developed countries tend to be low
(a). Use of out dated technology in production
(b). Inadequate capital to exploit available resources /low out put.
(c ). Poor entrepreneural culture leading to low production
(d). Poor governance / corruption instability
(e). Unfavorable government policy/ lack of support or local infant industries
(f). Unfair trading practices among developed trading partners
(g). Over – dependence on agriculture / unprocessed raw materials / exports.

24. Non – monetary measures for motivation employees

(a). Appreciation – recognition for any goods work
(b). Fringe benefits – e.g free medical scheme housing pension
(c ). Good working conditions / conducive working condition
(d). Guaranteed job security / ensuring job security
(e). Offering opportunities for staff development e.g through training / education
(f). Providing opportunities job advancements through promotion
(g), involving staff in decision – making so as to feel part of management

25. WESTGATE LIMITED

BALANCE SHEET
AS AT 31ST DECEMBER ,2013
Fixed Assets Capital 50,000
Buildings 32,000
Machinery 10,000 L- F liabilities
Furniture 8,000 40,000 2- year loan 30,000

Current Assets Current Liabilities

Stock 20,000 Unpaid salaries 15,000
Bank 25,000 Overdraft 5,000
cash 15,000 50,000 Creditors 10,000 30,000
110,000 110,000