NAME……………………………………………….

INDEX NO………

SCHOOL………………………………………….. DATE……………………………..

CLASS ................................... SIGN……………………………

565/1
BUSINESS STUDIES
PAPER 1
JUNE 2024
TIME: 2 HOURS
END OF TERM TWO EXAMINATION
Kenya Certificate of Secondary Education (K.C.S.E)

INSTRUCTIONS TO CANDIDATES
1. Write your name and index number in the spaces provided
2. Sign and write the date of the examination in the space s provided above
3. Answer all questions
4. All answers must be written in the space provided in this booklet
5. Do not remove any pages from this booklet

For Examiner’s Use Only

Question 1 2 3 4 5 6 7 8 9 10 11 12 13
Marks

Question 14 15 16 17 18 19 20 21 22 23 24 25
Marks
1. State four features of basic human wants. (4mks)
i. ………………………………………………………………………………..
ii. ………………………………………………………………………………..
iii. ………………………………………………………………………………..
iv. ………………………………………………………………………………..
2. State the most appropriate document as used in home trade. (4mks)

Description Document

a) A document that contains detailed

information of a good stocked by a
seller
b) A document that shows that the
amount owed have been reduced by
a certain amount
c) A document that contains all
information on all transactions
between a buyer and the seller for a
certain period of time
d) Shows that goods have been
dispatched by a seller to the buyer.
3. An entrepreneur may spot a gap in the market which may be converted into a business idea.
Identify four such gaps. (4 mks)
i. ………………………………………………………………………………………
…………………………………………………
ii. ………………………………………………...............................................................
...............................
iii. ………………………………………………………………………………………
………………………………………………..
iv. ………………………………………………………………………………………
………………………………………………..
4. Highlight four advantages of promoting sales through the internet. (4mks)
i. ……………………………………………………………………………………
ii. ……………………………………………………………………………………
iii. ……………………………………………………………………………………
iv. …………………………………………………………………………………….

5. The following items belong to Mbatia Wholesalers as at 31st Dec 2023

Motor vehicle 75,000

Stock 4,000
Overdraft 11,100
Creditors 5,740
Debtors 6,200
Commission paid 2,000
Cash 10,000
Returns Outwards 3,400
Returns Inwards 1,400
Capital 78,360
Required, draw Mbatia trial balance as at 31st December 2023 (4 mks)
6. With an aid of a diagram, show what happens to the equilibrium price and quantity when
demand increases and quantity supplied remains constant. (4mks)

7. Outline four differences between direct production and indirect production. (4 mks)
i. …………………………………………………………………….
ii. …………………………………………………………………….
iii. …………………………………………………………………….
iv. …………………………………………………………………….
8. Outline four trends in forms of business units. (4mks).
i. ……………………………………………………………………..
ii. ………………………………………………………………………
iii. ………………………………………………………………………
iv. ……………………………………………………………………….
9. State four conditions under which a warehouse may be considered to be operating
efficiently. (4 Marks)
i. …………………………………………………………………………….
ii. …………………………………………………………………………….
iii. …………………………………………………………………………….
iv. ……………………………………………………………………………

10. State four essential elements in communication. (4 mks)

 i. ………………………………………………………………………………
ii. ………………………………………………………………………………
iii. ……………………………………………………………………………….
iv. …………………………………………………………………………………

11. Highlight four methods of solving unemployment. (4 mks)

i. ………………………………………………………………………………
ii. ………………………………………………………………………………
iii. ………………………………………………………………………………
iv. ……………………………………………………………………………….
12. National income under expenditure approach in arrived by adding together expenditure on
all final goods and services in the economy. List down four components included in the
expenditure approach. (4mks)
i. ………………………………………………………………………………..
ii. ……………………………………………………………………………….
iii. ………………………………………………………………………………..
iv. ………………………………………………………………………………..
13. Given the following transactions of Chebet Retailers, identify the journals which the
transactions will be recorded. (4mks)
a) 1st Jan: Sold a motor car worth kshs.145, 000/- for kshs. 140,000/- to
Ken on credit. ---
b) 2nd May: Cash received from Tana of Kshs. 1,000 receipt no 001. ---
c) 6th August: Goods bought on credit worth Kshs. 900 invoice No. 013 from Esther
Traders. ---
d) 4th February: Credit sales to Tana Shs 400/-. ----

14. State four factors that a firm may consider when deciding on the goods to produce. (4 Marks)

i. ………………………………………………………………………………………………..

ii. ………………………………………………………………………………………………..

iii. ……………………………………………………………………………………………….
 iv. ………………………………………………………………………………………………..

15. County Government wants to increase taxes levied on parking. Highlight four principles that
they should consider before taking this move. (4mks)

i. ……………………………………………………………………………………………

ii. ……………………………………………………………………………………………..

iii. …………………………………………………………………………………………….

iv. ……………………………………………………………………………………………..

16. Highlight four methods government gets involved in business activities. (4mks)

i. ……………………………………………………………………………………..
ii. …………………………………………………………………………………….
iii. ……………………………………………………………………………………..
iv ……………………………………………………………………………………..

17. Highlight four costs that intermediaries relieve producers from in the process of distributing
goods and services. (4mks)
i. ……………………………………………………………………………………

ii…………………………………………………………………………………….

iii…………………………………………………………………………………….

iv…………………………………………………………………………………….

18. Buketi provided us with the following information.

Sales 200,000
Mark up ¼
Opening stock 30,000
Closing stock 25,000
Expenses 15,250
Calculate
 a) Gross profit (1mk)

b) Net profit (1mk)

c) Rate of stock turnover (2mks)

19. If you are asked to buy some office equipment, suggest four factors that you would put into
consideration. (4mks)
i. ………………………………………………………………………………….

ii. …………………………………………………………………………………

iii. ………………………………………………………………………………..

iv. …………………………………………………………………………………

20. Highlight four reasons that would make a trader reject payment by cheque. (4mks)
i. …………………………………………………………………………………….

ii. ……………………………………………………………………………………

iii. ……………………………………………………………………………………

iv. ……………………………………………………………………………………

21. State whether the following factors constitute internal or external environment to a business.
(4mks)
 Factor Environment
a) Shareholders resolutions

b) Firms physical infrastructure

c) Currency exchange rate

d) Cost of finance

22. State four differences between insurance and assurance. (4 mks)

23. Highlight four requirements for one to start a limited liability company. (4 mks)

i. ……………………………………………………………………………………

ii. …………………………………………………………………………………….

iii. …………………………………………………………………………………..

iv. ……………………………………………………………………………………

24. Outline four functions of commercial banks. (4 mks)

 i. ……………………………………………………………………………………..

ii. …………………………………………………………………………………….

iii. ……………………………………………………………………………………

iv. ……………………………………………………………………………………

25. State four types of capital in a business. (4 mks)

i. ………………………………………………………………………………………

ii. ……………………………………………………………………………………..

iii. ………………………………………………………………………………………

iv. ……………………………………………………………………………………….