MASENO SCHOOL
2025 MOCK EXAMINATION
Kenya Certificate of Secondary Education
565 / 1 - BUSINESSSTUDIES
Wednesday 16th July, 2025 MARKING SCHEME...........................
2.00 p.m. - 4.00p.m. Signature..............................................
1. State four components of economic business environment.
(4mks)
➢ Inflations
➢ Price flactuations
➢ Availability of credits
➢ Interest rates
➢ Consumer level of income
➢ Tax rates/subsidies
2. State four differences between oligopoly and perfect competition market. (4mks)
Oligopoly Perfect competition market
Composed of few but large firms in Composed of many sellers in the
the market market
There is interdependence among Firms make decisions independently
firms in decision making
Products have close substitutes Products are homogenous
There is government intervention There is government intervention
3. Use the table below to calculate the consumer price index in each case using the base year as 2023.
(4mks)
Commodity 2023 2024 CPI
1 Kg of sugar 40 50 25%
2 Kg of maize 30 40 33.3%
1 pair of socks 50 60 20%
1 packet of wheat 50 80 60%
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4. A retail owner has been underpaying his staff over a period of time. Highlight four ways in which the
business may be affected because of this malpractice. (4mks)
➢ They may be dishonest
➢ They may lose morale lowering the production
➢ High turnover of employees leading to inefficiency in production
➢ Reduced accountability due to high turnover of employees
➢ The production process may Stoll if key employees pull out without immediate
replacement.
5. State four activities under the extractive level of production. (4mks)
➢ Mining
➢ Lumbering
➢ Fishing
➢ Quarrying
➢ Farming
6. Identify the office equipment used to perform the following functions (4mks)
Functions Office equipment
Used for making shorthand dictations Dictaphone/dictating machine
Used for preparing cash receipt Cash register
Used for printing postage impressions Franking machine
on envelopes.
Used to transmit letters and maps Facsimile/fax machine
7. State any four limitations of consumer initiated methods in controlling consumer exploitation.
(4mks)
➢ Lack of government support
➢ Ignorance of the consumers about their rights
➢ Inadequate finance
➢ Reluctance of some consumers to join the associations.
➢ Consumers’ reluctance to report cases of non-compliance.
8. Outline four circumstances under which a business man may prefer to use a cargo ship over a cargo
plane. (4mks)
➢ When the goods are bulky
➢ When the goods are heavy
➢ When there is need to save on the transport cost
➢ When connecting areas that lack airports but are connected by water
9. State the effects of each of the following transactions on the balance sheet’s totals by writing
increase or decrease or no effect in each case. (4mks)
Transaction Effects
Bought machinery on credit increase
Withdrew cash from the business for decrease
personal use.
Purchased stock in cash No effect
Paid outstanding by cheque decrease
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10. Outline four circumstances under which high population growth would be desirable in an economy.
(4mks)
➢ When large workforce is required
➢ When a country wants to increase national income
➢ When there is emergence of war
➢ When there is large pool of resources which needs to be exploited
11. Highlight four sources of revenue to the county government of Kenya. (4mks)
➢ Taxes levied on production
➢ Fees\royalties earned from heritage sentence
➢ Allocation from the central government
➢ Taxes levied on individual income
➢ Appreciation on fixed assets like land
12. List four documents that are required before a public limited company can be allowed to operate.
(4mks)
➢ Memorandum of association
➢ Article of association
➢ Certificate of incorporation
➢ Prospectus
➢ Certificate of trading
13. State four situations in which the opportunity cost concept may be used in real life situation.
(4mks)
➢ Where resources are scares
➢ Where wants are many
➢ Where wants are compatible
➢ Where wants vary in urgency
14. State four challenges a person may experience when using Mpesa for most of his business
transactions. (4mks)
➢ Transaction fee is charged
➢ Network may be a problem
➢ Some people don’t accept Mpesa
➢ Can only be used by businesses which also use Mpesa services
➢ Can be subject to fraud.
15. State four importance of business activities in the economy. (4mks)
➢ Creates employment
➢ Allows for utilization of idle resources
➢ Allows for specialization and division of labour
➢ Leads to urbanization
➢ Avails a variety of goods.
➢ Leads to development of infrastructure.
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16. The following information was extracted from the books of Walwenda traders(4mks)
Sh
Opening stock 160,000
Closing stock 200,000
Purchases 1,800,000
Margin 20%
Calculate the value of his Sales.
𝟏
𝑴𝒂𝒓𝒈𝒊𝒏 = 𝟐𝟎% =
𝟓
𝟏 𝑮𝑷
𝑴𝒂𝒓𝒌𝒖𝒑 = =
𝟒 𝑪𝑶𝑮𝑺
𝑪𝑶𝑮𝑺 = 𝒐𝒑𝒆𝒏𝒊𝒏𝒈 𝒔𝒕𝒐𝒄𝒌 + 𝒑𝒖𝒓𝒄𝒉𝒂𝒔𝒆𝒔 − 𝒄𝒍𝒐𝒔𝒊𝒏𝒈 𝒔𝒕𝒐𝒄𝒌
𝟏𝟔𝟎, 𝟎𝟎𝟎 + 𝟏, 𝟖𝟎𝟎, 𝟎𝟎𝟎 − 𝟐𝟎𝟎, 𝟎𝟎𝟎
𝑺𝒉. 𝟏, 𝟕𝟔𝟎, 𝟎𝟎𝟎
𝟏, 𝟕𝟔𝟎, 𝟎𝟎𝟎
𝑮𝑷 =
𝟒
𝑺𝒉. 𝟒𝟒𝟎, 𝟎𝟎𝟎
𝑺𝒂𝒍𝒆𝒔 = 𝑪𝑶𝑮𝑺 + 𝑮𝒑
𝟏, 𝟕𝟔𝟎, 𝟎𝟎𝟎 + 𝟒𝟒𝟎, 𝟎𝟎𝟎
= 𝑺𝒉. 𝟐𝟐𝟎, 𝟎𝟎𝟎
17. Outline four procedures followed in personal selling. (4mks)
➢ Identifying the prospective buyer
➢ Preparing for the presentation
➢ Establishing customer contacts
➢ Arousing interest in the product
18. State four expenses that are incurred in the process of distributing goods. (4mks)
➢ Actual cost of buying the goods
➢ Transport cost
➢ Storage cost
➢ Advertising cost
➢ Insurance cost
➢ Salaries and wages
➢ Packing and blending
19. State four features of insurable interest. (4mks)
➢ There should ownership or financial relationship
➢ There should be legal right to insure
➢ The financial loss should be measurable
➢ Should be recognized by law
➢ Should be based on good faith
➢ Should be pure and not speculative
20. On 1st Jan 2015 the cash book of Meja traders had cash and bank balances of sh.10,000 and
sh.20,000(Cr) respectively. Transactions that took place during the month were;
Jan 2nd: Cash sales sh.12,000
10th: Paid sh.2,000 cash in respect of wages.
15th: Received a cheque of sh.35,000 from a debtor
25th: Withdrew sh.5,000 from the bank for office use.
29th paid sh.3,000 cash to accreditor
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Required;
Prepare a two-column cash book for the month (4mks)
Meja Traders
Dr Two Column Cash Book Cr
Date Details folio cash Bank Date Details folio Cash Bank
1/1/15 Bal bf 10,000 1/1/15 Bal bf 20,000
2/1/15 Sales 12,000 10/1/15 Wages 2,000
15/1/15 Debtors 35,000 25/1/15 Cash C 5,000
25/1/15 Bank C 5,000 29/1/15 Creditors 3,000
21. The following balances were extracted the books of Furaha enterprise on 31st December 2022.
Sh
Fixed assets 3,000,000
Current assets 500,000
Creditors 700,000
4 year loan 1,500,000
Calculate the networth of the above business as at 31st Dec 2022 (4mks)
Networth=A-L
Total assets=3,000,000+500,000=3,500,000
Total liabilities=700,000+1,500,000=2,200,000
Sh.1,300,000
22. Outline four benefits of using social media such as WhatsApp groups for communication in an
office. (4mks)
➢ There’s broadcast messaging
➢ There’s remote communication
➢ There’s user-friendly interface
➢ It’s cost-effective
➢ There’s easy sharing of media and files
➢ Supports Group communication
23. The table below is an extract of a general journal of Shirandula enterprises. (4mks)
Date Details Folio Dr Cr
sh sh
2011 Walaguzi traders a/c 80,000
Aug 5th Tractor a/c 80,000
Aug 10th Butere restaurant a/c 90,000
Office furniture a/c 80,000
Gain on disposal a/c 10,000
th
Aug 20 Ali traders a/c 50,000
Loss on disposal a/c 30,000
Machine a/c 80,000
Aug 28th Amani Enterprises a/c 200,000
Motor vehicle a/c 200,000
Required; Give narrations of transactions that took place on;
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i) Aug 5th -Being a sale of tractor worth sh.80,000 to Walaguzi traders on credit
ii) Aug 10th -Being sale of office furniture worth sh.80,000 for sh.90,000 on credit.
iii) Aug 20th -Being sale of a machine worth sh.80,000 for sh.50,000 to Ali traders on credit.
iv) Aug 28th -Being sale of Motor vehicle on credit to Amani Enterprises
24. Highlight four goals of economic development. (4mks)
➢ Improved standards of living
➢ Reduction of poverty
➢ Employment creation
➢ Sustainable economic growth
➢ Equitable distribution of income and wealth
➢ Economic diversification
➢ Industrialization and infrastructure development
25. State four forms of economic integration that may exist between countries. (4mks)
➢ Common market
➢ Free trade area
➢ Customs union
➢ Economic union
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