1. Define the following terms as used in business studies                                                  (4marks)
2.  Production

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• Business ……………………………………………………………………………………………………………………………………………………………….………………………………
•  Distribution

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• Economics

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•  State four limitations of using the internet as a means of communication            (4marks)
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Below is a diagram showing the circular flow of income in a two-sector economy

1. Below is a diagram showing the circular flow of income in a two-sector economy

       Indicate the information represented by letters a,b,c, and d

1. …………………………………………………………………………………………
2. …………………………………………………………………………………………
3. …………………………………………………………………………………………
4. ………………………………………………………………………………………

1.  The following are averages price index of exports and imports for the year 2020 and 2021.

YEAR	AVERAGE PRICES FOR EXPORTS(KSH)	AVERAGE PRICES FOR IMPORTS(KSH)
2020	10,000	6,000
2021	12,000	3,000

Calculate the terms of trade using 2020 as the base year              (4 marks)

• Highlight four advantages of using a franking machine in an organization. (4 marks)

1. …………………………………………………………………………………
2. …………………………………………………………………………………
3. …………………………………………………………………………………
4. ………………………………………………………………………………
5. Record the following transactions of Kiambu traders in the relevant books of original entry                                                                                                                                           (4marks)

       2021: April 2: Sold an old machinery to Tabani stores on credit sh. 203,000

              April 4: Bought furniture from Kapiyo Art craft sh.80, 600 paying sh. 50,000 cheque

                and the balance to be paid later.

• Identify four problems that tend to limit the growth of small–scale retail business in rural Kenya.                                                                                                             (4 marks)

i.…………………………………………………………………………………

      ii.   …………………………………………………………………………………

     iii.   …………………………………………………………………………………

iv.  …………………………………………………………………………………

• In the spaces provided below indicate with a tick (ü) whether the following transactions

will increase, decrease or have no effect on capital                                               (4marks)

Transaction	Increase	Decrease	No effect
a) Sold a business van for cash
b) Converted a private computer to business use
c) Took stock from business for personal use.
d) The business made profit

• State four benefits of pooling of risks to the insurance company.                          (4marks)
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• Highlight four roles played by intermediaries to a producer in the chain of distribution.                                                                                                                                                     (4marks)
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• The balances below relate to Webuye stores for the year ended 31/12/2014.

                        Capital                         : 300,000

                        2 years loan                 : 230,020

                        Creditors                     : 95,200

                        Fixed assets                 : 480,000

                        Current assets              : 145,220

            Determine

1. Working capital                                                                                              (2marks)

b) Capital employed                                                                                            (2marks)

• Highlight four situations in which the opportunity cost concept may be used.         (4 marks)

1. …………………………………………………………………………………………..…………………………………………………………………………………………..………………………………………………………………………………………….………………………………………………………………………………………….

1. State four consequences that may arise due to poor arrangement of goods in a warehouse
   1. …………………………………………………………………………………………..
      1. …………………………………………………………………………………………..
         1. ………………………………………………………………………………………….
         1. ………………………………………………………………………………………….

1. State four ways in which a society benefits from indirect production. ( 4 marks)

i.         …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

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1. Outline four elements that may comprise the internal environment of a business.(4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

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• Outline four negative implications of rapid population growth in Kenya                   ( 4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

iv.        ………………………………………………………………………………………….

1. State four contents of partnership Act.                                                                        (4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

iv.        ………………………………………………………………………………………….

1. List four fundamental elements of transport.                                                (4marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

1. ………………………………………………………………………………………….

1. Indicate whether each of the following will cause movement along the curve or shift in the curve by writing either shift or movement.                                                             (4 marks)

Factor	Effect
Change in real income
Change in price of the product.
An increase in sales tax on a product
An increase in population

1. Highlight four circumstances under which the government may issue licenses. (4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

iv.        ………………………………………………………………………………………….

1. The cheque below was presented for payment by Alpha Technologies on 25/1/2020 and the bank refuse to pay.

Outline four reasons why the bank dishonoured the cheque.     (4marks)

1. …………………………………………………………………………………………………………………………………
   1. …………………………………………………………………………………………………………………………………
      1. …………………………………………………………………………………………………………………………………
      1. ………………………………………………………………………………………………………………………………….
2. Highlight four methods used by a monopolistic firm to differentiate its products.     ( 4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

iv.        ………………………………………………………………………………………….

• Mention our components of a good business plan.                                                       ( 4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

iv.        ………………………………………………………………………………………….

• Outline four unethical practices that are associated with product promotion. (4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        ………………………………………………………………………………………….

iv.        ………………………………………………………………………………………….

• Highlight four reasons why a trial balance may fail to balance.                                    (4 marks)

i.          …………………………………………………………………………………………..

ii.         …………………………………………………………………………………………..

iii.        …………………………………………………………………………………………. iv.        ………………………………………………………………………………………….