ACCA F1 Revision Mock - Answers J11

ACCA

Paper F1

Accountant in Business June 2011

Revision Mock – Answers

To gain maximum benefit, do not refer to these answers until you have completed the revision mock questions and submitted them for marking.

ACCA F1 : ACCOUNTANT IN BUSINESS

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© Kaplan Financial Limited, 2011

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REVIS ION MOCK ANSWERS

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1 C

Operational plans are short-term, detailed and practical strategies that are mainly concerned with control. Business is another name for tactical.

2 C

The three stages (in order) are: Analysis, Design & Choice.

3 B FALSE

Matrix structures involve jointly operating a divisional and functional structure. This tends to lead to an increase in the number of managers and an increase in administration. This will normally make it expensive to run.

4 A

A manager’s span of control is the number of people that he or she is directly responsible for.

If employees are skilled and motivated, they will need less management – allowing a wider span of control. The other three factors would all be likely to narrow the manager’s span of control.

5 D

Try not to get confused between self-fulfilment and ego. Self-fulfilment involves enabling employees to feel that they have achieved something worthwhile, such as by offering them a challenging role or allowing them to be creative.

Ego needs involve employees need to be esteemed by other people. Large pay rises and job titles would therefore tend to help meet these needs.

6 B

The increase in disposable income is likely to cause demand-pull inflation. Demand for goods and services may well increase faster than the ability of country A to supply them. This will cause prices to rise.

7 B, FALSE

The definition given is of intrinsic rewards. Extrinsic rewards are rewards that are dependent on the decisions of others, such as pay rises and benefits. They are separate to the job itself.

8 C

Openness is not a fundamental principle. The others are professional behaviour and professional competence and due care.


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9 D

The classical approach would be to do nothing. Monetarists (also known as supply-side economists) recommend that governments only act to remove market imperfections that might prevent the market from reaching equilibrium. The Finance Minister therefore seems to be recommending a Keynesian approach.

10 B

The level of pay received has no bearing on whether accountancy would be classed as a profession. The other three are all correct.

11 A

Pay disputes could be avoided by an employer. Disciplinary action and redundancy are classed as ‘discharge’ while employee illness would be seen as ‘unavoidable’.

12 A

Manager S has been plotted at (9,1) – a high degree of concern for production, but little concern for people. (5,5) is ‘middle of the road’, (1,9) is ‘country club’ management while (9,9) is ‘team management’.

13 A

Both statements are correct by definition.

14 B

An ES (or an expert system) holds specialist or expert knowledge (in this case about taxation) and allows non-experts to interrogate the system for information, advice and recommended decisions – in this case, what H’s tax liability is for the year.

15 C

By definition.

16 B

Internal audit is not required for all companies – usually only large or public companies, as well as public bodies. In addition, management – not the internal auditors themselves – decide on the scope of the internal auditor’s work.

17 D

Hiram is opting for a focussed approach – targeting one niche market. Note that no-frills is not one of Porter’s generic strategies.

18 B, FALSE

While it is true that the FD may have a role in selecting the auditor for his company, the shareholders have the final decision in appointing an auditor. This means that the auditors have a duty to report to the shareholders.


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19 D

Raw materials are in plentiful supply, indicating low supplier power.

However, given the ability of customers to switch to other paint manufacturers or other products, such as wallpaper, the power of customers and of substitutes appears to be of concern.

In addition, given the existence of large competitors and the high capital cost of entering the market, barriers to entry would seem to be high.

20 C

Team workers tend to be concerned with building and maintaining relationships within the group.

21 C

Misuse of data, such as customer details, is not a data security issue – instead it is a data protection issue. Data protection is concerned with the protection of individuals against the misuse of their information.

22 B

The team is norming – the stage at which groups establish the norms under which the group will operate.

23 A

All of the examples given are of supra-national authority, relating to more than one country.

24 B

Frictional unemployment is the short-term unemployment people face when they are temporarily between jobs. Structural is caused by a structural change in the economy, leading to some skills no longer being required. Real wage unemployment is caused by artificially high wages.

25 D

The other three are correct for financial accounting.

26 D

Authorisation controls would include getting approval for submitting expense claims.

Physical controls would include appropriate security for assets.

27 B

The fourth part of the marketing mix is promotion.

28 A, TRUE

By definition.


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29 C

Don’t get confused between group and panel interviews. Group interviews are where several candidates are interviewed together. While K may feel stressed by the interview, a stress interview will occur where a candidate is deliberately placed under stress by an aggressive interviewer.

30 D

The other group of learners are reflectors, who prefer to step back and ponder/observe others before taking action.

31 B

There is no need for collusion as a fraudster may act alone.

32 A

A is correct – in smaller companies there should be at least two non-executives. They are not involved in the day-to-day running of the company and should have no links to the executive directors, as this may impair their independence. In addition, they should not act for a prolonged period of time as this may also impair their independence.

33 C

This is the responsibility of the Standards Advisory Committee.

34 B

While treasurers will deal with cash management (amongst other things) they do not produce cash flow statements – this is part of the role of a financial accounting function. C and D would both be undertaken by a management accountant.

35 A

Interest tends to be cheaper than dividends. However, a company cannot normally suspend debt repayments if it can no longer afford them – this is only possible with dividends. Dividends are not an allowable deduction, but interest is. Finally, shareholders would not normally receive any security on their investment, meaning that D is also incorrect.

36 D

This would be sent to the customer with details of the goods to be despatched. A goods despatched note would be next, to be signed by the customer on receipt. Finally, the invoice would be sent to the customer. Goods received notes would be part of the purchasing cycle.

37 D

Research has indicated that the all-channel is the best to use for solving complex problems. The wheel tends to be the fastest and the circle the slowest.


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38 C

Power cultures occur where there is one major source of power within the business – in this case that source is B.

39 B

The employees are being motivated by being offered rewards that improve their quality of life and the quality of life of their families, rather than just pure financial returns. This would tend to indicate a feminine culture.

40 A

This is referent power. Legitimate power is where a manager is obeyed because of their position within the organisation. Expert power exists when a manager is obeyed because they have more expertise and knowledge than their subordinates. Coercive power involves the use of threats or punishments.

41 B

By definition.

42 B, FALSE

This is false – it is the management of a company that is responsible for establishing internal controls. Internal audit then evaluates these systems.

43 C

The government has high power and low interest. Mendelow would therefore suggest that it needs to be kept satisfied.

44 D

Shareholders have a contractual relationship with a company, so they are likely to be categorised as connected.

45 B

Any unethical activities should be reported internally first of all. If the situation is not resolved, the accountant can seek advice from the ACCA and/or his lawyers. If this still does not resolve the problem, he should resign from his post.

46 A

Typically, committees will make decisions relatively slowly due to the need for consensus between members. The other three statements are correct.

47 B, FALSE

Procurement is a secondary activity.


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48 D

Hiring a diverse workforce would not enable a business to pay lower wages as this would be discriminatory.

49 C

Omar is communicating with a more senior employee of the company who works in a different department. This is an example of diagonal communication. Vertical communication is between a subordinate and a superior, while horizontal is between members of staff at the same level within the organisation. Lateral is another name for horizontal.

50 A

Informal learning is intentional, but not highly structured. Coaching and mentoring are prime examples of this. Formal is more structured and is often class-room based, while incidental is unplanned and is often a by-product of some other activity. Tacit is not a style of learning.

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ACCA F1 Revision Mock - Answers J11