KCSE SET 2 2024
BUSINESS STUDIES PAPER 1
MARKING SCHEME
1. Importance of learning business studies to an individual. (4 mks)
Students acquire knowledge on how to be environmentally friendly.
Students learn skills on how to acquire resources and use these skills to create
goods and services for the country.
Created goods/services earn foreign exchange.
Created goods help to reduce volume of imports hence check balance of payment
problems.
Learners acquire practical skills on how to start and run businesses therefore
create employment.
2. Factors that influence entrepreneurial practices in Kenya. (4marks)
Government policy
Infrastructure
Levels of education and skills
Availability of markets
Availability of resources
Culture
Competition
Political stability
Natural factors
3. Importance of an office in a business (4marks)
Facilitates receiving and recording information
Distribution (dissemination ) of information
Facilitates mailing
Facilitates reproduction of documents
Safeguarding and controlling of organization’s property
Facilitates communication
Facilitates filing
4. Outline four ways in which a well laid out business structure is likely to lead
to success of the business.
(4 Marks)
Each of the employees know what is expected from them
There will be no conflicts or confusion among the workers
Teamwork is enhanced
Ensures proper control which in turn promotes efficiency
5. Forms of economic integration
(4 Marks)
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Free Trade Area
Preferential Trade Area
Customs Union
Common Market
Economic Union
6. Importance of trade to a country.
(4marks)
Helps a country to acquire what it cannot produce.
Enables a country to obtain a variety of goods and services.
Helps a country to dispose of its surplus produce.
Creates employment.
Encourages a country to specialize.
Promotes social relations and understanding between countries involved.
Source of income to the country
Ensures steady supply of goods and services.
7. The quantity demanded and supplied of a certain commodity can be expressed
as Qd=50+16p and QS= 20+20p respectively.
i) Equilibrium price (2marks)
50+16p = 20+20p
. 20p-16p = 50 -20
4p= 30 P= 7.5
ii) Equilibrium quantity ( 2 marks)
Q = 50+ 16p
= 50 + 20(7.5)= 140 units
Or
Q = 20 + 20(7.5) = 140 units
8. Disadvantages of direct production. (4marks)
Goods and services are of low quality and quantity.
Encourages individualism
Leads to low standards of living
Can be very tiring
Does not encourage invention and innovation.
A lot of time is wasted as one move from one job to another.
No one has the ability to provide all that he/she requires.
9. Circumstances under which the location of a warehouse can be inappropriate.
(4marks)
When it is not accessible/ poor infrastructure e.g roads
When it is away from the terminal/source of goods.
Where there is insecurity
Where there is no communication /no network.
Where there is no electricity
Where the terrain is poor
10. Circumstances under which a trader may decide to transport his goods by
air (4marks)
If the goods are perishable in nature since they go bad/get damaged.
If the goods are of high per unit value since they are prone to theft.
Where goods require to arrive al the destination promptly.
Where security of goods is of valuable consideration.
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Where other means of transport are unavailable.
Where distance to be covered is too large.
Where it ¡s the policy of the business which needs to be followed.
Where destination is remote making it inaccessible by other means
11. Outline four characteristics of sole proprietorship business
(4 mks)
Owned by one person
Managed by the owner with help of family members
Has unlimited liabilities
Main source of capital is owners contribution
Its life is limited to the life of the owner
Formed under the business names Act
It is not a separate legal entity from the owner
12. A business had the following record for the year ended 31 st December
2018(4 Marks)
Final = Opening + Net + Additional – drawings – Net
Capital capital profit investments
64,000 = 42,000 + 14,000 + Ai – 18,000
64000 = 38,000 + AI
Additional = 64,000 – 38,000
investments
Ans = Shs. 26,000
13. limitations of consumer initiated methods in consumer
protection.(4marks)
Inadequate support by the government
Insufficient finance / capital
Ignorance of consumers
Reluctance of consumers to join these associations
Apathy: lack of initiative from consumer to report cases of exploitive traders.
14. In the table below, indicate the type of advertising which fits the
description. (4 Marks)
Description Type
a) Create awareness about a product Informative advertising/pry
demand
b) Promotes the name of the manufacturer Institutional advertising
c) Persuades a particular brand of a product Persuasive/competitive advertising
d) Promotes a particular brand of a product Product advertising
15. Factors to be considered by a business when choosing a means of
communication(4 Marks)
Nature of information ie length of the message, confidentiality etc
Urgency/ speed/ time
Distance/ destination
Availability
Need for evidence/ future reference
Reliability
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Impression to be created
State the meaning of the following terms as used in insurance (4 Marks)
Indemnity: this is a principle where insured is restored to the original financial position
before the loss occurred.
Third party motor vehicle insurance: covers damages suffered by persons other than the
owner.
Contribution: where more than one insurance covers are taken for the same property against
the same risk, in case of a loss the insurance companies shall contribute proportionately to
compensate the insured
Subrogation –Once an insured is fully compensated for loss suffered, whatever remains
belongs to the insurer
16. Features of a monopolistic market
(4 Marks)
Many independent buyers and sellers. Therefore there is no major influence in
terms of price and quantity of product
Close substitutes: the products are close substitute, but differ by branding, names,
shapes, colour and scent
Free entry and exit: no barriers for new firms that wish to join or leave
Wide knowledge of the market: buyers and sellers are all aware of the price/output
and factor condition of the commodity
No firm controls the factors of production. firms acquire factors of production at the
prevailing market price/condition
17. Dr Capital A/c
Cr
1.2.2011 cash 10,000
1,2,2011 Bank 50,000
Dr Cash a/c
cr
1.2.2011 capital 10,000
4.2.2011 Bank 2,000
Dr Purchases a/c
cr
2.2.2011 LK Trdaders
5,000
Dr LK Traders a/c
cr
2.2.2011 purchases 5000
Dr Bank a/c
cr
1.2.2011 Capital 50,000 4.2.2011 Cash
2000
(8x1/2 = 4 mks)
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NB: date and details must be correct to score.
18. Principles that guide a
government in spending public finance (4 Marks)
Maximum social benefit
Efficient allocation (wealth distribution)
Proper financial management
Flexibility –allow changes
Economy in spending
Surplus /reserve
19. Negative implications of ageing population in a country (4 Marks)
Low labour supply/shortage of labour/man power
High dependency burden as majority are 65years and above
Strain on economic resources to carter for the welfare of the aged eg health and
homes
Low standards of living /low per capita income since national income is spread over
a large non-productive population.
Rigidity to change
Less progressive/low/savings and low investment
20. Factors that may cause
demand- pull inflation too occur in a country (4 Marks)
a. Increased government expenditure
b. Increase in population
c. Expectation of price increment
d. General shortage of goods and services
e. Increased credit creation by commercial banks
f. A fall in savings
g. Increased in money incomes
21. Source documents Books of original entry
i. Invoice received Purchase journal
ii. Credit note received Purchases returns / returns outward journal
iii. Receipt issued Cash receipt journal
iv. Credit note issued Sales returns journal
22. The following information relates to Mumbua traders for the year ended
31st April 2020.
. Gross profit
i) Margin = Gp x 100
Sales
Gp = 25 x100
920,000
100 Gp = 920000 x 25
100 100
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Gp = 230,000 1 mk
ii) cost of sales
sales – Gp = 920,000 – 230,000
= 690,000 1mk
iii)Purchases for the year
COGS = OS + P + CI– RO – CS
690,000 = 150,000 + P – 230,000
= 770,000 1mk
iv) Net profit
Gp – expenses
230,000 – (15 x 920000) = 230,000 – 138,000
100
= 92,000 1mk
23. Money transfer facilities offered by commercial banks
(4 Marks)
Cheques
Credit transfer
Bank drafts/bankers cheques
Standing orders
Telegraphic transfers
Debit cards
Electronic funds transfer
24. Problems encountered at the plan implementation stage in economic
planning and development
(4 Marks)
Reliance on donor funding
Lack of domestic resources
Failure to involve local people in planning
Occurrence of natural calamities
Over ambitious plans
Lack of co-operation among the executing parties
Effects of inflation
Lack of political goodwill
©The Kenya National Examinations Council.
