NAIROBI COUNTY JOINT EXAMS-2018

565/1 - BUSINESS STUDIES PAPER 1 - MARKING SCHEME

1.
(i) Place utility.
(ii) Time utility.
(iii) Possession utility.
(iv) Form utility. (any 4x1 = 4mks)
2.
(i) Expenditure by households (private expenditure).
(ii) Expenditure on capital goods (investment).
(iii) Government expenditure.
(iv) Net income from abroad (Exports – Imports).
(v) Taxes
(vi) Subsidies
(vii) Depreciation. (any 4x1 = 4mks)
3.
(i) Offer loans to member countries.
(ii) Give technical advice and support.
(iii) Maintenance of stable exchange rate.
(iv) Give member countries debt receipt.
(v) Provide sufficient international liquidity.
(vi) Promote consultation and cooperation.
(vii) Assisting member countries with balance of payment deficits. (any 4x1 = 4mks)
4.
(i) Information may not be secure since other people may access it.
(ii) Information can be diverted by competitors who know the password.
(iii) Computer may be invaded by virus that will interfere with computer programme.
(iv) Could be used to transmit harmful information e.g. terrorisms, drugs and pornography.
(v) It may be slow (taking longtime to access information).
(vi) One needs to be computer proficient / literate,
(vii) Expensive to install.
(viii) Computers require electricity. (any 4x1 = 4mks)
5.
(i) Rise in wages and salaries.
(ii) Increase in profit margin.
(iii) Increase in indirect taxes.
(iv) Increase in cost of inputs other than labour.
(v) Reduction in subsidies. (any 4x1 = 4mks)
6.
(i) Operate at excess capacity i.e. below optimum capacity.
(ii) Charge higher prices.
(iii) Poor quality goods and services.
(iv) Limit variety of goods in the market / lack of freedom of choice.
(v) May limit the output (create shortage). (any 4x1 = 4mks)
7.
(i) Collecting credits on behalf of the government from various sources.
(ii) Getting credit from other sources on behalf of government.
(iii) Making various payment on behalf of government.
(iv) Giving financial advice to the government.
(v) Giving credits to the government.
(vi) Receiving payments on behalf of the government from sources such as foreign donors / income tax
department / customs department. (any 4x1 = 4mks)

8. Calculation of Initial capital.

C.C. = I.C + p + I – D
I.C = C.C. – P – I + D
I.C = 120,000 + 60,000 – 38,000 – 50,000
I.C = Sh. 92,0000 (any 4x1 = 4mks)
9.
(i) Sale of government property.
(ii) Borrowing from other sources.
(iii) Sales of shares held in business.
(iv) Budget allocation.
(v) Negotiating for write offs. (any 4x1 = 4mks)
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10.
(i) The cost of after sale services is finally passed on to the buyer.
(ii) It may be inconveniencing / unnecessary where the dealer requires the goods to be bought from
his premise.
(iii) The dealer may create monopoly hence exploit the buyer / the buyer is tied down to one trader.
(iv) The dealer can run out of spare parts hence cause delays in operations.
(v) The service may be given when the product is still new and has few problems.
(vi) The service charge can be unrelated to the actual work done and usually too high.
(vii) A lot of time / money will be spent if the customer and supplier are far apart. (any 4x1 = 4mks)
11.
(i) Statistics obtained is used for economic planning.
(ii) Statistics is used to distribute national resources e.g. CDF, Bursary etc.
(iii) Statistics obtained is used to determine boundaries i.e. districts, countries etc.
(iv) Statistic obtained is used to determine per capita income.
(v) Statistics is used to establish population structure.
(vi) Statistic is used to determine the number of security personnel for adequate provision of security.
(any 4x1 = 4mks)
12.
(i) Reduce overdependence on Kenya’s main port of Mombasa.
(ii) It will open up under developed Northern Frontier region.
(iii) Increase trade cooperation between Kenya and neighbouring countries.
(iv) Will help reduce cases of banditry / insecurity in Northern frontier.
(v) Will lead to increase in exports due to increase in exit points.
(vi) Will enhance the creation of job opportunities. (any 4x1 = 4mks)
13.
(i) It is a legal requirement
(ii) To motivate workers to provide quality goods and services.
(iii) To cater for their medical expenses when they are hospitalized.
(iv) To ensure that employees have financial security later after retirement.
(v) To encourage the saving habit among employees. (any 4x1 = 4mks)
14.
(i) Improve the workers welfare.
(ii) Develop a workable business structure.
(iii) Develop and adopt an effective business culture.
(iv) Set smart objectives.
(v) Avail the necessary resources to be used by business e.g. finance.
(vi) Apply proper management policies and styles.
(vii) Train workers to get knowledge, skills and experiences needed for the job. (any 4x1 = 4mks)
15.
(i) There should be ease of movement.
(ii) There should be ease of flow of work.
(iii) There should be ease of coordination of staff / work.
(iv) There should be no obstruction of light and ventilation by furniture and equipment.
(v) There should be ease of communication. (any 4x1 = 4mks)
16.
(i) May lead to rural-urban migration.
(ii) May lead to high levels of environmental degradation.
(iii) May lead to emergence of social evils such as prostitution and crime in the urban centres.
(iv) Stretching of social amenities in urban centres such as housing, medical facilities, educational
facilities etc. (any 4x1 = 4mks)
17.
(i) There will be excess demand.
(ii) There will be less supply in the market.
(iii) There will be hoarding of goods.
(iv) Black market situation may develop / some traders will secretly sell at higher price.
(v) Some suppliers will be unwilling to supply at low price. (any 4x1 = 4mks)
18.
(i) Unfavourable government policies e.g. high taxes.
(ii) Poor infrastructure e.g. poor roads and communication.
(iii) Lack of relevant education and skills.
(iv) Limited market.
(v) Inability to cope with competition.
(vi) Political instability.
(vii) Shortage of resources i.e. capital human resource etc. (any 4x1 = 4mks)

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19.
(i) Certificate of Trading => Authorizes the business to commence its business activities.
(ii) Certificate of Incorporation => Shows that a company has been duly registered as a separate legal
entity.
(iii) Memorandum of Association => shows the relationship between company and outsiders.
(iv) Articles of Association => shows the rules and regulation to be used in the internal organism /
operation of a company. (any 4x1 = 4mks)
20.
(i) Nature of the product.
(ii) Nature of the market.
(iii) Convenience of an intermediary.
(iv) Resources and size of the firm.
(v) Competitors.
(vi) Government policy. (any 4x1 = 4mks)
21.
Dr. Sales a/c Cr. Dr Purchases a/c. Cr.

1/1/2010 Debtors 15,000 2/1/2010 Creditors 5,000

Dr. Debtor a/c Cr. Dr Bank a/c. Cr.

1/1/2010 Sales 15,000 2/1/2010 Bank 5,000 4/1/2010 Debtors 20,000 2/1/10 Creditors 3,000

Dr. Creditors a/c Cr.

3/1/2010 Bank 3,000 2/1/2010 Debtors 5,000

NB: - There must be date.

- Label Dr. and Cr.
- Correct side.
- Correct amount and heading. (8 x ½ = 4mks)
22.
(i) Delivery Note.
(ii) Packaging Sheet.
(iii) Consignment Note.
(iv) Advise Note.
(v) Invoice. (any 4x1 = 4mks)
23.
(vi) Where the size of the market is small.
(vii) The nature of the product may require that it be produced in small quantities.
(viii) Simplicity of the organization.
(ix) Flexibility of small firms.
(x) Belief that small firms are more manageable.
(xi) Where production cost rise steeply when production quantities increases.
(xii) Need to retain control.
(xiii) To avoid legal formalities associated with large scale organization. (any 4x1 = 4mks)
24.
(i) When dealing with perishable goods.
(ii) When demand is very high.
(iii) If located near the market.
(iv) If he deals with goods that require order / if goods are manufactured on order.
(v) If goods are of high value.
(vi) Where there is middlemen with warehouses.
NB: Answers to begin with when, where and if. (any 4x1 = 4mks)
25.
(i) The demand and supply of the shares.
(ii) Recent performance of the company.
(iii) Popularity of the company’s products.
(iv) General performance of the economy.
(v) Political stability.
(vi) Company’s level of social responsibility.
(vii) Changes made in the management of the company.
(viii) Announcements or rumours of mergers. (any 4x1 = 4mks)