Income and Budgeting

23 Grade 8 Pre-Technical Studies questions on Income and Budgeting, with worked marking schemes. 23 questions are available on this topic in full.

1. Question 1

   1 mark

   Setting aside part of one's income for future use is known as:

   A. Wasting

   B. Saving

   C. Spending

   D. Borrowing

   (1 mark)

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2. Question 2

   1 mark

   A small business owner finds that at the end of the month the total money earned is more than the total money spent. This favourable difference between income and expenditure is best described as a:

   A. Deficit

   B. Loss

   C. Surplus

   D. Debt

   (1 mark)

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3. Question 3

   1 mark

   A learner keeps a written record of all money received and spent each day. This record is known as a:

   A. Budget

   B. Loan agreement

   C. Receipt only

   D. Cash record/account

   (1 mark)

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4. Question 4

   1 mark

   Money earned occasionally from casual jobs such as fetching water during holidays is an example of:

   A. Fixed expenditure

   B. A savings account

   C. Irregular income

   D. Regular income

   (1 mark)

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5. Question 5

   1 mark

   A young entrepreneur earns money from selling vegetables at the market. This money is best described as:

   A. Income

   B. A budget

   C. Expenditure

   D. A loan

   (1 mark)

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6. Question 6

   1 mark

   A salary paid to a teacher every month is an example of:

   A. Interest

   B. A grant

   C. Irregular income

   D. Regular income

   (1 mark)

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7. Question 7

   4 marks

   Mary prepared a monthly budget with income KSh 8,000 and total planned expenses KSh 9,500.

   (a) Identify the budget problem.

   (b) Suggest two ways she can balance her budget.

   (4 marks)

   Marking scheme

   (a) 2 marks: The budget is in deficit because expenses (9,500) exceed income (8,000) by KSh 1,500. (b) 2 marks (1 each): Any two - cut/reduce unnecessary expenses (wants); increase income by earning more/selling something; postpone non-essential purchases; look for cheaper alternatives.

8. Question 8

   1 mark

   A budget is best defined as:

   A. A type of bank loan

   B. A list of debts owed

   C. A record of past spending only

   D. A plan showing expected income and how it will be spent

   (1 mark)

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9. Question 9

   6 marks

   Explain three importance of budgeting to a young person in Kenya.

   (6 marks)

   Marking scheme

   2 marks each (any 3): Helps plan how to spend money wisely and avoid overspending; encourages saving for future needs/goals; helps prioritise needs over wants; helps avoid unnecessary borrowing/debt; enables tracking of income and expenses; builds financial discipline/responsibility.

10. Question 10

    4 marks

    A Grade 8 learner wants to start a small business selling mandazi.

    (a) Suggest two sources of income the learner could use as start-up capital.

    (b) State two expenses the learner would include in the business budget.

    (4 marks)

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11. Question 11

    6 marks

    A learner receives a pocket money allowance of Ksh 1,500 at the start of the month and wants to manage it well.

    (a) Define a budget. (2 marks)

    (b) Explain TWO benefits the learner will gain from preparing a personal budget for her pocket money. (2 marks)

    (c) Distinguish between 'income' and 'expenditure'. (2 marks)

    (6 marks)

    Marking scheme

    (a) A budget is a financial plan that estimates expected income (money received) and how it will be spent (expenditure) over a given period of time. (2 marks) (b) Any TWO (1 mark each): It helps her plan and control her spending so she does not run out of money before the month ends; it helps her set priorities and meet her needs before wants; it enables her to save part of the money for future goals/emergencies; it helps avoid debt/borrowing. (c) Income is the money received or earned (e.g. pocket money, wages, allowances) coming in (1 mark); expenditure is the money paid out or spent on goods, services and needs (1 mark).

12. Question 12

    4 marks

    (a) Differentiate between income and expenditure.

    (b) Give one example of each.

    (4 marks)

    Marking scheme

    (a) 2 marks: Income is money received/earned (e.g. from work, sales, allowance) while expenditure is money spent on goods and services. (b) 2 marks (1 each): Income example - salary/pocket money/sales; expenditure example - buying food/paying rent/transport.

13. Question 13

    5 marks

    John earns a monthly income of KSh 15,000. His expenses are: rent KSh 6,000, food KSh 4,000, transport KSh 2,000.

    (a) Calculate his total expenditure.

    (b) Calculate his savings for the month.

    (c) State whether his budget is in surplus or deficit.

    (5 marks)

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14. Question 14

    5 marks

    A learner earns a weekly allowance of Ksh 500 and wants to manage it wisely by preparing a simple budget. (a) Define the term budget. (2 marks) (b) Explain three reasons why budgeting is important for the learner's personal money management. (3 marks)

    (5 marks)

    Marking scheme

    (a) A budget is a financial plan that estimates the expected income and how that money will be spent (expenditure) over a given period of time. (b) Three reasons budgeting is important: (i) It helps the learner to plan and control spending so that the money is used on the most important needs first and is not wasted. (ii) It enables the learner to save by setting aside part of the income, ensuring expenditure does not exceed income. (iii) It helps avoid debt and prepares for future or unexpected needs, encouraging discipline and responsibility in handling money.

15. Question 15

    1 mark

    The main purpose of preparing a personal budget is to:

    A. Give all money to friends

    B. Avoid earning income

    C. Increase spending on wants

    D. Plan and control the use of money to avoid overspending

    (1 mark)

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16. Question 16

    1 mark

    When total expenditure is greater than total income in a budget, the result is a:

    A. Surplus

    B. Profit

    C. Deficit

    D. Balance

    (1 mark)

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17. Question 17

    1 mark

    A pupil receives KSh 100 pocket money daily. Over a 5-day school week, the total income is:

    A. KSh 100

    B. KSh 50

    C. KSh 700

    D. KSh 500

    (1 mark)

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18. Question 18

    1 mark

    In budgeting, which of the following is classified as a 'need' rather than a 'want'?

    A. A gold watch

    B. A fashionable phone cover

    C. Food

    D. A video game

    (1 mark)

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19. Question 19

    1 mark

    A learner receives KSh 1,000 pocket money for the term and plans how to spend it on books, snacks and savings before spending. What is this written plan of expected income and expenditure called?

    A. An invoice

    B. A receipt

    C. A budget

    D. A ledger

    (1 mark)

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20. Question 20

    1 mark

    Which of the following actions best shows good financial management by a young person?

    A. Borrowing money to buy wants

    B. Saving part of the income and budgeting the rest

    C. Refusing to record any spending

    D. Spending all pocket money on sweets immediately

    (1 mark)

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21. Question 21

    1 mark

    Which of the following is an example of a fixed monthly expense in a household budget?

    A. Emergency medical costs

    B. Bonus airtime

    C. Money spent on snacks

    D. Rent

    (1 mark)

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22. Question 22

    1 mark

    A learner earns KSh 2,000 in a month and spends KSh 1,500. The KSh 500 that remains is called:

    A. A deficit

    B. A liability

    C. Savings/surplus

    D. Income tax

    (1 mark)

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23. Question 23

    4 marks

    Distinguish between a 'need' and a 'want' in budgeting, and give one example of each relevant to a learner.

    (4 marks)

    Marking scheme

    2 marks: A need is something essential for survival/basic living (e.g. food, school books, uniform); 2 marks: a want is something desired for comfort or pleasure but not essential (e.g. sweets, video game, fancy shoes). Correct example for each required.

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