No.1. State four external factors that may negatively influence the operations of a business. (4 marks)
- Unfair competition.
- Inadequate technology.
- Unstable political environment.
- Unstable economic environment.
- Unfavorable legal frameworks.
- Unreliable supply systems.
- Strong consumer bargaining power.
- Poor physical facilities and infrastructure.
- Low population level.
- Unfavorable socio-cultural environment.
- Natural calamities.
No.2.10. Highlight four benefits of a business plan to an entrepreneur. (4 marks)
- Facilitates acquisition of loans from financial institutions and other financiers
- Provides guidance for opening new or expanding existing business / adaptability
- It acts as a management tool for the business / monitoring tool / identifies strengths
- It’s a tool for evaluating business performance
- It lays the strategy to be used in marketing the products
- It enhances the credibility of the business
- It’s a motivational tool
- To avoid mistakes
- Proper allocation of resources
- To determine how much resources are required e.g. labour, capital etc / source of capital
- Will help to identify the nature and scope of the market
No.3.State four ways in which a good filing system may facilitate the operations of an office. (4 marks)
- Easy retrieval of information.
- Office is kept tidy.
- Information is preserved for future reference.
- Security of documents is ensured.
- Facilitates quicker decision making.
- Ensures confidentiality of information by restricting access by unauthorized people
No.4. Highlight four activities that may be carried out in a stock exchange market. (4 marks)
- Buying and selling of shares.
- Mobilising savings for investment.
- Listing of companies.
- Issuing of new securities / raising capital.
- Publication of statistical information.
- Advising investors.
No.5. Outline four circumstances under which a co-operative society may be dissolved. (4 marks)
- By government order /change in the law.
- Where the co-operative continuously make losses.
- Where a stipulated majority of members agree to dissolve it .
- By a court order.
- Where the co-operative society has achieved objectives for which it was formed.
No.6. Outline four methods that the government of Kenya uses to regulate business activities. (4 marks)
- Licensing business activities
- Setting of standards
- Formulating of policies – enacting laws / legislation
- Setting quotas
- Enforcement of laws
- Imposing total ban
- Subsidizing businesses
- Price control
No.7. State four ways in which a youthful population may be useful to an economy. (4 marks)
- Less expenditure on social security and pension.
- Wider market for goods meant for the youth like clothing.
- Guaranteed continuous supply of labour.
- Flexibility and adaptability to technological changes which improve production.
- Faster growth of some sectors like the music, fashion and fast food industries.
- Increased innovation due to their adventurous nature.
No.8. Outline one circumstance under which each of the following telecommunication services may be used: (4 marks)
- Facsimile (fax)
- Radio call.
- When there is need to call a person to attend to an emergency in a specific location
- Where there is need to send a copy of a printed document urgently.
- When there is need to give co-ordinated information through a central point
- Sending and receiving written messages
No.9. The following transactions relate to Jelimo Stores:
- 10th October 2015 sold unused stationery for Sh 3,000 on credit to K. Likia.
- 23rd October 2015, bought a motor vehicle on credit from Onjwaria Motors for Sh 700,000.
Required: Record the above transactions in the general Journal given below:(4 marks)
|Oct. 10||K Likia||3,000|
|Stationery (sale of||3,000|
|stationery on credit)|
|Oct. 23||Motor vehicle||700,000|
|(purchase of motor vehicle|
No.10.State four features of an insurable interest. (4 marks)
- Presence of property rights or interest
- Potential insurable risk must be present
- The property must have monetary value
- The insurable risk must be legal
- There must be the possibility of suffering financial loss in case of a risk happening
No.11. State four features of a parastatal. (4 marks)
- Provide essential services.
- Not profit motivated.
- Is formed by an Act of Parliament.
- Is mainly funded by the government.
- Is managed by government appointees.
- Any surplus earned-is surrendered to the government.
- Has limited liabilities. ‘
- Attachment to a government ministry.
- Can be dissolved only through an act of parliament
No.12. The graph given below represents the demand and supply curves of milk:
State four effects of a shift of the demand curve to the right. (4 marks)
- The price will increase
- The quantity demanded will increase / demand will increase
- The equilibrium quantity shifts to right / increases
- The equilibrium price shifts upwards / increases
- The equilibrium point shifts upwards / right
No.13 .Outline four functions of the World Bank. (4 marks)
- Providing finances to reduce budgetary deficits
- Provide loans for development projects.
- Provide finance to correct and adverse balance of payments.
- Provide technical expertise to support development.
PP1 No.14. Outline four ways of reducing the level of unemployment in Kenya.(4mks)
- Diversification of the economy by encouraging the establishing of different industries /sectors to create employments opportunities
- Transforming agricultural sector to curb rural urban migration to create more jobs and reduce unemployment)
- Transforming education sector making graduates acquire relevant skills.
- Establishing an employment policy by government to make it easy for people to get jobs/Accept e.gs of policy as mention
- Lending /setting of a fund to assist unemployed to stat income generating activities/accept e.gs of funds as a mention
- Exporting Labour by assisting unemployed people to acquire jobs abroad /countries with labour deficiency.
- Encouraging the informal Jua Kali sector to promote self employment
- Delocalization/ decentralization policy for balanced regional development/reduced rural urban irrigation
- Population policy to control growth/have a labour force that the economy can absorb
- To improve infrastructure in order to have suitable economic activities /accept e gs of infrastructure as a rating.
- Increase government expenditure to expand the size of the economy/ to finance development projects.
- Effective use of natural resources to increase production activities
- Income /wage policy to harmonize differences between regions/sectors
- Attract (Local /foreign) investments through vision incentives/to grow the economy
- Reviving collapsed industries/projects by injector, funds/selling them /increased production activities
No.15. The following balances were extracted from the books of Highlife General Stores on 31st December 2015.
|Land and buildings||650,000|
|10 year Bank Loan||500,000|
Required: Prepare the balance sheet of Highlife General Stores as at 31st December 2015. (4 marks)
No.16. Outline four circumstances in which the government may be involved in business. (4 marks)
- When a business venture requires investment of large sums of money which individual entrepreneurs may not provide.
- When the goods or services to be provided are essential to the welfare of the citizens.
- When there is need to protect citizens from exploitation by private entrepreneurs.
- When the government desires to create employment for the citizens.
- When the government needs to generate income through revenue collection.
- When there is need to safeguard national security.
- When the venture is strategic but provides low profits hence unattractive to private investors.
- Where there are monopolies in the economy, the government gets involved in business to increase competition.
- Where there is need to balance regional development.
- To reduce foreign dominance in the economy.
- Where there is need to attract foreign investment.
No.17. Identify the ledgers in which the following accounts are kept.(4mks)
|Debtors||Sales / Debtors|
|Juma (Creditor)||Purchases / Creditors|
PP1 No.18. The following diagram represents the circular flow of income in a two sector closed economy
Identify two factors represented by each of the arrows labelled a and b. (4 marks)
a) (i) Payment for factor inputs,
Goods and services.
b) (i) Payment for goods and services.
Factor services / inputs / factors of production.
No.19. State four reasons for privatising public corporations. (4 marks)
- To improve efficiency in their operations.
- To generate revenue to the government through sale of shares and taxes.
- To enhance competition.
- To increase public participation in economic activities of the country.
- To reduce government expenditure.
- To comply with conditions set by development partners and international donor agencies.
- To enable the government to concentrate on other state responsibilities.
- To minimize political interference.
No.20. State four reasons for the increased use of cell phones in banking. (4 marks)
- Easy to transact / easy ownership
- It saves on time since there is no traveling and queuing for the services.
- The speed of transaction is fast / quick feedback.
- It reduces paper- work by eliminating the need for physical files and other documentations.
- The use of PIN enhances security
- Increased ownership of mobile phones
- Transactions can be conducted any time
- Reduce transaction costs (travel and bank charges)
- Easy access to transaction records
- It is a requirement by service providers (utility bills)
- Easy to obtain credit facilities e.g. M-Shwari loan
No.21. List four sources of public finance. (4 marks)
- Court fines
- Donor aid
- Treasury bonds and bills
No.22. State two situations in which each of the following types of inflation may occur.
- Creeping inflation (2 marks)
When the general price levels rise gradually/ single digit over a period of time usually at single digit. Where the value of money tends to be stable over time the effects on the economy is n o t severe.
- Hyperinflation (2 marks)
Where the general price rise at high rate/ usually more than two digits. Where there is drastic loss in the value of money effect on the economy is very severe
No.23. Outline four factors that may make a producer to by-pass the wholesaler when distributing goods. (4 marks)
- Having own retail outlet.
- Dealing in perishable goods like bread which require shorter channels.
- Dealing in technical goods which require elaborate after sales services.
- Consumers and retailers buying in large quantities.
- Need to keep price of goods low.
- Limited geographical spread of the market.
- Government policy.
- When the production is in small quantity.
- Where the producer has enough storage facilities.
- When goods are produced on order
No.24. Outline four goals of development to a country. (4 marks)
- Alleviation of poverty
- Attainment of high and sustainable economic growth
- Provision of adequate social amenities e.g. health
- Diversification of the economy to reduce over-reliance on a few products
- Alleviation of unemployment
- Attainment of more equitable distribution of incomes
- Enhancement / upholding of human freedom, rights and self esteem / democracy
- Provision of security
- Maintenance of political sustainability / good governance.
- Attainment of food security for population
- Alleviation of illiteracy
- Elimination of harmful cultural practices
- Improvement of infrastructure e.g. transport, communication, water
No.25. Outline four characteristics of services. (4 marks)
- Difficult standardize/ heterogeneous give to varying quality (over time)/ the quality cannot be uniform (from time to time) may be offered by sufficient people.
- Service cannot be stored for future/ service is only consumed at the time it is being offered/service capacity cannot be stored.
- Service cannot be touched/ it is intangible/ invisible can only be felt/experienced
- Services cannot be separated from service properties the provider must directly offer the service to the user
- Service is perishable service can only be enjoyed at the time the provider is available/ it expires after it is provided.
- Services cannot be owned by the buyer/ ownership cannot be transferred as the buyer only pays for the experience
- Services/ have utility to satisfy wants.
- Services are mobile since they can be received/ provided at different places/locations