Business Studies
565/1
Paper 1
Time: 2 Hours
PREDICTION EXAMINATION 3 FOR KCSE 2021/2022
INSTRUCTIONS TO CANDIDATES
a) Write your name and Index number in the spaces provided above.
b) Write the date of examination in the spaces provided above.
c) Answer ALL the questions.
d) ALL answers must be written in the spaces provided in this booklet.
e) Do not remove any pages from this booklet.
f) This paper consists of 8 printed pages.
g) Candidates should check the question paper to ascertain that all the pages are printed as
indicated and that no questions are missing.
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 characteristics of human wants. (4 marks)
2. Mutinda operates a retail shop at Kangundo market. His business has attracted customers
than his competitors. Stare four external environmental factors which might have led to this
(4 marks)
3. Highlight four circumstances that may make a producer to opt for intermediaries in the
distribution channel. (4 marks)
4. Prices of goods and services can be determined in the market through the interaction of
the forces of demand and supply. Name four other methods of price determination.(4 marks)
5.Consumers in Kakuyuni shopping centre are complaining of traders selling expired goods.
State other four ways in which they can protect themselves against such malpractices.
(4 marks)
6.Identify four contents of a cheque that make it valid. (4 marks)
7.Outline four measures being taken by the Kenyan government to reduce road carnage
in Kenya. (4 marks)
8.State four main sources of public finance. (4 marks)
9.List four reasons why Alice, who is joining form one next year should take business
as one of her subject. (4 marks)
10. State the appropriate communication term for each of the following statements. (4 marks)
Statement Term
a) School driver reporting to the principal.
b) Romours that the school has received a bus
donation from the president.
c) Heads of departments in a meeting.
d) A supervisor giving instructions to a junior
officer.
11. State four unethical practices that are common in Kenyan advertisements.
(4
marks)
12. Highlight four effects of HIV and AIDs to businesses in Kenya.
(4
marks)
13. Many parastatals in Kenya has been found to be inefficient in their operations.
State four measured that can be taken to improve their efficiency.
(4
marks)
14. State the type of unemployment to which each of the following statements relate.
(4 marks)
Statement Type of employment
(a) Workers full capabilities are not completely
utilized.
(b) High demand for labour during peak period.
(c) Demand for labour declines due to decrease in the
supply of goods and services.
(d) Exists in the period after a person looses a job and
goes out in search of another.
15. Outline four fiscal measures that can be taken by the government to control inflation.
(4 marks)
16. The number of insured in Kenya has increased by 25% in the last two years. State four
likely reasons for this trend.
(4
marks)
17. The following details were extracted from the books of Mumo traders for the year
ending 30th June 2013.
Sh
Stock of goods on 1/7/2013 120,000
Stock of goods on 30/6/2013 100,000
Purchases 650,000
Return outwards 40,000
Return inwards 30,000
Sales 900,000
Required:
Prepare the trading account for the period ending 30th June 2013.
(4
marks)
18. In the space provided state the source document for each of the following subsidiary
books given below.
(4 marks)
Subsidiary book Source document
(a) Sales journal
(b) Purchases journal.
(c) Return inward journal.
(d) Cash book
19. Kenya is one of those developing countries that are experiencing low national incomes.
State four reasons that have contributed to this. (4 marks)
20. State four reasons why it is suitable to locate bounded warehouse at the point of entry.
(4
marks)
21. For each of the transactions given in the table below, state whether the transaction will
cause increase or decrease in assets, liabilities or capital on the balance sheet (4 marks)
Transaction Effects on balance
sheet
Increase decrease
(a) Bought a business machine on
credit
(b) A debtor paid an amount owing by
cheque.
(c) Paid a creditor the amount owing in
cash.
(d) Borrowed money from a bank to
expand the business receiving money
by cheque.
22. Record the following transaction in a two column cash book of Sengani traders and
balance it off. (4 marks)
1st Jan 2010: Started business with sh. 20,000 cash and sh. 45,000 at bank.
4th Jan: Sold goods on credit to make sh. 2,800.
5th Jan: deposited sh 5,000 into bank.
12th Jan: Bought goods in cash 3000
15th Jan: Sold a personal motorcycle and deposited sh.40, 000 into business bank account.
20th Jan: Paid salaries sh. 8000 by cheque.
22nd: Received a cheque of sh. 2000 from mark , a debtor.
23. Mutomo traders had the following balances as at 31/12/2010
Land and building 150,000
Cash in hand 25,500
Creditors 15,000
Bank overdraft 30,000
Purchases 18,000
Sales 30,000
Return inwards 5000
Required:
A trail balance as at 31/12/2010 (4 marks)
24. Highlight any four benefits that mobile phone money transfer service offers to users.
(4
marks)
25. Mention four factors that influence entrepreneurship practices in Kenya. (4 marks)
