KCSE Practice Paper – Business Studies Paper 1 (2008)

July 5, 2011 Facebook Twitter LinkedIn Google+ KCSE Exams

1. State four advantages of division of labour. (4 marks)

2. Outline four features of a Private Limited Company. (4 marks)

3. State four ways in which a warehouse is of importance to a manufacturer. (4 marks)

4. The diagram below shows total cost curve of a firm in the short-run

Calculate the average variable cost of the firm. (4 marks)

5              Outline four benefits that may accrue to a business person who uses e-mail to communicate.  (4 marks)

6              Outline the meaning of the following terms as used in accounting:

  • (a)          Contra Entry………………………………………………………………..    (2 marks)
  • (b)          Cash discount……………………………………………………………..     (2 marks)

7              For each of the following transactions in the table below, indicate in the spaces provided, the source document from which the transaction would be recorded. (4 marks)

No. Transaction Source document
(a) Sales of goods on credit
(b) Correction of an under charge
(c) Goods returned
(d) Purchases on credit

8              State the type of ledger account to which each of the following accounts relates: (4 marks)

Transaction Source document
(a) Sales of goods on credit
(b) Correction of an under charge
(c) Goods returned
(d) Purchases on credit

9. The following balances were extracted from the books of Solai Traders as as at 31st May 2006.


  • Current assets                      220, 000
  • Capital                                    425,000
  • Net profit                   85,000
  • Creditors                   98,200
  • Accrued expenses    11,800


  • (a)  Working Capital         (2 marks)
  • (b)  Return on Capital    (2 marks)

10. On 31 December 2005, Kiwa had accrued expenses of Sh.24, 000. On 31st December, 2006, the accrued expenses were SH.30, 000. In 2006 expenses paid for amounted to Sh.85, 000.

Determine the expenses for the year 2006.   (4 marks)

11. Outline the circumstances under which each of the following characteristics of human wants may be observed:

  • (a) Complementary wants      (2marks)
  • (b) Wants become habitual    (2 marks)

12. Outline four factors that an entrepreneur should consider before setting up a manufacturing business.  (4 marks)

13. Outline four requirements for opening a current account with a commercial bank. (4 marks)

14. Outline four factors that a trader would consider in choosing a mode of transport. (4 marks)

15. State four reasons why ethical practice is necessary in product Promotion.  (4 marks)

16. The economy of a country X has grown at the rate of 10% per annum for the last two years. However, the standard of living among the citizens has not changed. Outline four reasons that may have contributed to this trend. (4 marks)

17. The figure below shows a decrease in demand for a commodity from DD to D1D1.

State four possible causes that have led to this situation. (4 marks)

18. The following information relates to Ole Traders as at 30th June 2007:


  • Machinery                             200,000
  • Furniture                              100,000
  • Premises                               400,000
  • Debtors                                  160,000
  • Cash in Hand                          10,000
  • Bank Overdraft                    100,000
  • Creditors                                 40,000

Calculate capital for Ole Traders as at 20 June 2007:  (4 marks)

19. Outline the purpose of a trial balance as used in bookkeeping.  (4 marks)

20. State two characteristics of each of the following balance sheet elements: (4 marks)

  • (a)  Assets
  • (b)  Liabilities

21. Outline four measures that a government may put in place to reduce high inflation in a country. (4 marks)

22. Elephant Enterprises acquired a building valued at sh 1,000,000 on 1 Jnauary 2007. The building was insured with two insurance companies. Zebra and Simba for sh 600,000 and sh 400,000 respectively. In May 2007, fire damaged the building, causing Elephant Enterprises to suffer a loss of 20% of the building value. Determine contribution made by Simba and Zebra to cover the loss. (4 marks)

23. Outline four benefits that accrue to a business person who uses the latest technology in record keeping.  (4 marks)

24. Visitors to the offices of Triple B Enterprises have been complaining of lack of etiquette from the secretaries. Highlight four measures that the secretaries can take to improve the office etiquette.  (4 marks)

25. Outline four reasons why the government may use regulatory measures to protect consumers against exploitation.  (4 marks)

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