NAME……………………………………...............CLASS………INDEX NO.................

565/1
BUSINESS STUDIES
PAPER 1

TIME:2 HOURS

MAXIMUM REVISION SERIES-5 TERM III 2022

Kenya Certificate of Secondary Education

231/1
BUSINESS STUDIES
PAPER 1

TIME:2 HOURS

INSTRUCTIONS TO THE CANDIDATES

➢ Sign and write your Name and Index Number in the spaces provided above.
➢ Answer all the questions in the spaces provided.
➢ Additional pages must NOT be inserted.
➢ Candidates may be penalized for recording irrelevant and incorrect spelling especially of
technical terms.

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1. Identify four types of business activities. (4marks)
i)………………………………………………………………………………………………..
ii)……………………………………………………………………………………………….
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
2. State four ways in which a consumer can make use of scarce resources to satisfy unlimited
scarce resources (4 marks)
i)…………………………………………………………………………………………………..
ii)………………………………………………………………………………………………….
iii)…………………………………………………………………………………………………
iv)………………………………………………………………………………………………….
3. Outline four utilities created in the process of production (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
4. Outline four reasons why a new business may fail. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
5. State the best type of machine one would use to perform the following tasks. (4 marks)
Function Type of machine
(a) To trim papers to the required sizes.
(b) To fold documents, put them in
envelopes and seal team.
(c) To make exact copies of a certain
original document.
(d) To arrange papers in a required
order.

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6. Outline four features of mail-order business. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………

7. Highlight four circumstances under which business organizations may choose to merge.
(4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
8. Describe four characteristics of debentures. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
9. Identify the following Acts of Parliament used by the government to protect the consumer.
(4marks)
Description Act of Parliament
a) Requires that traders maintain high standards
of hygiene
b) Requires that traders use correct weighing
equipment
c) Requires that producers do not include
harmful substances in products
d) Requires that traders only engage in
businesses for which they are permitted

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10. State four ways in which the nature of goods would influence the choice of transport.
(4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
11. Outline four circumstances under which a trader would prefer letter rather than telephone
when communicating with suppliers. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
12. State four differences between insurance and assurance (4 marks)
Insurance Assurance

13. Highlight four ethical issues that a business should consider while engaging in product
promotion. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………

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14. Given below is supply for a commodity.

Outline four causes of a shift to the right in the above diagram. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
15. State four reasons why the government encourages the location of firms in rural areas.
(4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
16. State four features of an oligopoly market structure. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………

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17. Four circumstances under which intermediaries may be removed from the chain of
distribution. (4marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)……………………………………………………………………………………................
iv)………………………………………………………………………………………….........
18. The diagram below represents the relationship between population and income per-capita

P axis

S axis
State what is represented by: (4 marks)
i) P axis
ii)S axis
iii) R
iv) Q
19. State the effect of the following transactions on the balance sheet totals by writing increase,
decrease or no effect. (4 marks)
Transactions Effect
a) Bought machinery on credit
b) Withdrew cash from a business to pay his wife‟s
hospital bill
c) Purchased stock in cash
d) Paid outstanding loan by cheque

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20. The following is an extract of a Cashbook.
Date Details Cash Bank Date Details Cash BANK
May 2 Balance W May 6 Balance 60,000
12 Sales 20,000 19 Purchas 30,000
es
20 Were 50,000 Rent 6,000
22
28 Sales 120,000 Bal c/d Y X
120,000 60,000 Z

Determine the figures represented by;

(i) W……………………………………………………………………………
(ii) X……………………………………………………………………………
(iii) Y……………………………………………………………………………
(iv) Z……………………………………………………………………………

21. The following balances relates to the retail business of Katana for the month of July 2016.
Sales 50,000
Expenses 10% of sales
Cost of goods sold 40,000
Calculate:
(i) Mark up. (1 mark)

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(ii) Margin. (1 mark)

(iii) Total expenses. (1 mark)

(iv) Net profit. (1 mark)

22. State four banking services that the Central Bank of Kenya provides to the government.
(4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
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23. Highlight four factors that should be observed when coming up with a good tax system.
(4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
24. State four factors that can hasten economic development in a country. (4 marks)
i)………………………………………………………………………………………………
ii)………………………………………………………………………………………………
iii)………………………………………………………………………………………………
iv)………………………………………………………………………………………………
25. A business had the following record for the year ended 31st December 2016.
Shs.
Capital as at 31/12/16 64,000
Net profit for the year 14,000
Capital as at 1st Jan 2016 42,000
Drawings for the year 18,000

Calculate the additional investments made during the year

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NAME…………………………………………………………….DATE ………….

INDEX NUMBER…………………………………….. ADM NO ………………

565/2
BUSINESS STUDIES
PAPER 2

TIME:2 HRS 30 MINUTES

MAXIMUM REVISION SERIES-5 TERM III

The Kenya certificate of secondary education
BUSINESS STUDIES 565/2
PAPER TWO
TIME: 2 ½ HOURS

INSTRUCTIONS TO CANDIDATES:

1. .This paper consists of six questions.

2. .Answer any five questions.

3. Write your answers in the separate answer sheets provided.

4. All question carry equal marks.

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1. a. Explain five features that differentiate a public corporation from a public limited company
form of business unit. (10 marks )

a. Explain 5 benefits of a business plan to an entrepreneur (10 marks)

2. a. Explain 5 factors that may influence the level of national income of a country.
(10 marks)

b. Kenya is looking forward to the realization of Vision 2030. Explain 5 obstacles that may
hinder the efforts made towards this dream. (10 marks)

3. a. Explain FIVE factors that one needs to consider when selecting office equipment.
(10 marks)

b. Kitinga Enterprises runs a general Merchandise business. The transactions during

the month of June 2014 were as follows:

2014

June 1 - Bought on credit from Orina Ltd. goods worth shs. 100 000, received a 20%
trade discount.
June 4 - Sold goods on credit to Rono Ltd. shs. 50 000 and allowed them a 10%
trade discount.
June 8 - Sent Rono Ltd. a credit note for goods returned, which had a value of
shs. 27 000.
June 10 - Sold goods on credit to Akinyi shs. 60 000
June 12 - Purchased goods from Wamalwa ltd for shs. 100 000 and he allowed a
30% trade discount.
June 15 - Purchased goods on credit from Nyambura shs. 55 000
June 16 - Sent Akinyi a credit note for goods returned worth shs. 6 000
June 18 - Wamalwa Ltd. sent us a credit note for sh.30 000 for goods returned.
June 19 - Received a credit note for goods returned to Orina worth sh.20 000
June 25 - Sold goods to Wairimu on credit sh. 25 000
June 27 - Sent Wairimu a credit note for sh.5 000 to rectify an overcharge on their
invoice.
June 28 - Sold goods on credit to Rono Retailers for sh. 56 000
June 29 - Purchased a Motor Van on credit from Awori Ltd. worth shs. 80 000
June 30 - Sold on credit old machinery to Nairobi Trading Company for sh.35 000
(prior to this owned machines worth shs. 100 000

12
 Required: Make the necessary entries in the relevant books of original entry (10 marks)
(NB. Posting to the ledger Accounts is not necessary)

4. a) Explain 4 measures that may be taken by the central bank of Kenya to control the amount
of money in circulation. (8 marks)

b) On l March 2019, L2020 Ltd had cash in hand Sh47,800 and a bank overdraft of
Sh23,400. During the month, the following transactions took place:

March 3 Cash sales Sh 6,500 paid directly into the bank.

4 Bought goods for Sh 15,000 and paid by cheque.
5 Received a cheque of sh 76,000 from Mary, after allowing her a cash discount
of 5%.
6 Cash sales Sh 50,000.
9 Received a cheque for Sh 76,500 from Nyaboke in settlement of her debts.
12 Settled Omollo's account for sh 34,200 in cash, having deducted sh 800 cash
discount
13 Paid insurance premium Sh 16,000 in cash.
l4 Paid Keith by cheque Sh 9,700 in full settlement of his account having deducted
3% cash discount.
17 Cash sales Sh 150,000 paid direct into bank.
2l Withdrew Sh 30,000 from bank for office use.
23 Received a cheque of Sh 23,750 from Jabali in full settlement of his account
less 5% cash discount.
25 Paid wages of Sh 20,000 in cash.
26 Cheque received from Nyaboke was dishonoured.
29 Received sh 17,000 cash from Alvin in settlement of his account less sh 1,000
cash discount
30 Banked all cash except Sh 33,800.

Prepare a three-column cash book duly balanced. (12 marks)

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5. (a) The following trial balance was extracted from the books of Namirama Traders asat
st
31 December 2017.
Dr. Cr.
st
Stock on 1 Jan 2017 60,000
Purchases and sales 400,000 580,000
Returns 20,000 50,000
Debtors and Creditors 65,000 40,000
Premises 540,000
Machinery 200,000
Fixture and Fittings 100,000
Carriage outwards 8,000
Wages and Salaries 30,000
Discounts 25,000 32,000
Commissions 16,000 14,000
Cash in hand 70,000
Capital 818,000
1,534,000 1,534,000

Closing stock was. Sh. 70,000

(i) A trading, profit and loss account for the period ended 31st December
2017
(ii) A balance sheet as at that date
(iii) Calculate the following; current ratio, rate of stock turns over, capital
employed and working capital. (12 marks)

b) Highlight 4 functions of wholesalers (8 marks)

6. a) You are given the following functions.Q

= 51 + 4P
Q =100 – 3P
Required:

i) Of the two options, identify which is the supply and demand functions(4
marks)

ii) Give reasons to your answers in (a) above (2 marks)

iii) Establish the equilibrium price and quantity (4 marks)

b) Outline FIVE causes of Balance of payments deficits (10 marks)

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