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STUDY QUESTION BANK

ACCAPaper F1 | ACCOUNTANT IN BUSINESS

Foundations in AccountancyPaper FAB | ACCOUNTANT IN BUSINESS

For Examinations to August 2015

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2014DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved. (i)

ACCA

PAPER F1/FAB

ACCOUNTANT IN BUSINESS

STUDY QUESTION BANK

For Examinations to August 2015

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(ii) 2014DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.

No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the author, editor or publisher.

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

2014DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved. (iii)

CONTENTS

Question Page Answer Marks Date worked MCQ 1 The Business Organisation 1 1001 19 MCQ 2 Stakeholders in Business Organisations 3 1001 11 MCQ 3 The Business Environment 4 1002 29 MCQ 4 The Macro-Economic Environment 7 1004 19 MCQ 5 The Micro-Economic Environment 8 1005 8 MCQ 6 Organisational Structure 9 1005 17 MCQ 7 Organisational Culture 10 1006 12 MCQ 8 Committees in the Business Organisation 12 1006 6 MCQ 9 Governance and Social Responsibility in Business 12 1007 13 MCQ 10 Business Accounting & Finance Functions 13 1007 9 MCQ 11 External and Internal Audit 14 1008 15 MCQ 12 Law and Regulation Governing Accounting 16 1008 11 MCQ 13 Financial Systems, Procedures and IT Applications 17 1009 20 MCQ 14 Internal Control and Security 19 1010 19 MCQ 15 Business Fraud 20 1011 13 MCQ 16 Leadership, Management and Supervision 22 1011 21 MCQ 17 Recruitment and Selection 24 1012 17 MCQ 18 Equal Opportunities and Diversity 26 1013 8 MCQ 19 Individuals, Groups and Teams 27 1013 22 MCQ 20 Motivating Individuals and Groups 29 1014 18 MCQ 21 Training and Development 31 1015 20 MCQ 22 Performance Appraisal 33 1015 12 MCQ 23 Personal Effectiveness 34 1016 9

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ACCOUNTANT IN BUSINESS (F1/FAB) STUDY QUESTION BANK

(iv) 2014DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.

CONTENTS

Question Page Answer Marks Date worked MCQ 24 Information within Business 35 1016 14 MCQ 25 Communication within Business 37 1017 14 MCQ 26 Ethics and Ethical Behaviour 38 1018 15

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2014DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved. 1

MCQ 1 THE BUSINESS ORGANISATION

1.1 Which items best describe an organisation?

A Working together, collective goals, controlled performance B Team work, clear rules, collective goals C Synergy, clear roles, accepted leader D Defined hierarchy, clear objectives, formal rules (2 marks)

1.2 Which of the following best describes public sector entities?

A Traded on the stock market B Include charities and NGOs C Owned by the government D Have the objective of influencing government policy (2 marks)

1.3 A cooperative (collective) would be characterised as ________, while Microsoft would be a ________ company.

Which words correctly complete this sentence?

A a not-for-profit organisation, public sector B a charity, profit driven C meeting the needs of its members, publicly traded D an NGO, listed (2 marks)

1.4 A computer company has identified that there is demand for a lower-cost laptop to be included in its product range.

Which two departments would most likely be tasked with achieving this?

A Purchasing, Research and Development B Research and Development, Marketing C Marketing, Manufacturing D Purchasing, Direct service provision (2 marks)

1.5 Which elements characterise the concept of service?

A varied, tangibility, imperishable B consistency, tangibility, simultaneity C tangibility, inconsistency, simultaneity D variability, simultaneity, perishability (2 marks)

1.6 Marketing is a process which identifies, anticipates and satisfies customer needs profitably.

Is this statement True or False?

A True B False (1 mark)

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2 2014DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.

1.7 The main decision under place a marketing manager has to take when reviewing the marketing mix is whether to sell directly or indirectly to customers.



1.8 What are the elements of the purchasing mix?

A Price, quality, promotion, place B Promotion, price, distribution, place C Quantity, quality, price, delivery D Quantity, quality, place, delivery (2 marks)

1.9 According to Professor Kotler, the key elements of a marketing concept are: _______ ,

_______, ________ , ________ and ________.

Which five words, in correct order, complete this sentence?

A needs, demands, wants, value and satisfaction

B meeting customer needs, gaining competitive advantage, products, transactions and relationships

C quality, quantity, price, markets and products

D needs, products, value, exchange and markets (2 marks) 1.10 Your company is providing accountancy services for small and medium sized enterprises.

You are heavily dependent on your employees.

Which three Ps do you have to add to the ordinary four Ps of the marketing mix?

A Productivity, processes and physical evidence B Production, processes and physical evidence C People, processes and physical evidence D People, processes and procurement (2 marks)

1.11 Segmentation of a market has to do with dividing the market into distinct subsets of

customers in order to be able to target the market with a distinct marketing mix and position yourself accordingly.

Is this statement True or False for the production function?


(19 marks) SA

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MCQ 2 STAKEHOLDERS IN BUSINESS ORGANISATIONS

2.1 The bi-directional nature of stakeholders means that stakeholders can affect both the achievement of an organisations objectives and how an organisation uses its resources.



2.2 In a publicly traded company, the shareholders rely on the independent auditors to verify financial statements prepared by management. This reduces ____________.

Which phrase best completes the sentence:

A monitoring costs B stakeholder dissatisfaction C the agency problem D shareholder conflict (2 marks)

2.3 The bank and shareholders are part of which group of stakeholders?

A External B Internal C Unrecognised D Connected (2 marks)

2.4 Which of the following best describes the activities of a company lobbyist?

A Attempts to influence legislation on behalf of a company B Attempts to influence a companys objectives C Searches for specialist employees on behalf of a company D Takes direct action against the activities of a company (2 marks)

2.5 The tax authority of a city has little interest in the affairs of a chain of car dealerships except that they pay their taxes. However, if the companys taxes are incorrectly paid or paid late the authority can charge high penalties.

According to Mendelow, what should the car dealership do?

A Keep the tax authorities satisfied B Treat the tax authorities as key players C Keep the tax authorities informed D Put minimal effort into dealing with the tax authorities (2 marks) SA

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2.6 A community action group has been formed in response to a planned shopping mall in the center of the citys historic district. The development company has hired a public relations firm to attempt to influence public opinion in their favour.

Which of the following best describes the situation?

A Grassroots lobbying B Agency conflict C Lobbyist actions D Stakeholder conflict (2 marks)

(11 marks)

MCQ 3 THE BUSINESS ENVIRONMENT

3.1 Which of the following is a source of supra-national legal authority?

A City of Stockholm B Government of Indonesia C European Union D State of California (2 marks)

3.2 Which of the following best relates to data protection?

A The idea that individuals have rights if an organisation holds information about them

B A company policy that requires data security (e.g. passwords on computers)

C Laws that are enacted to punish hackers, identity thieves, and other cyber criminals

D Software to thwart hackers (e.g. anti-virus and firewall software) (2 marks)

3.3 When completing an application form to purchase financial services from a bank, you are requested to check/tick a box if you wish to receive details of other products sold by the bank and their associates.

Which principle of data protection does this example refer to?

A Data should be processed in accordance with the rights of the individual B Data shall be adequate, relevant and not excessive C Personal data shall not be kept longer than necessary D Personal data shall be processed fairly and lawfully (2 marks)

3.4 A company sold an old computer at an auction with a customer database still on the hard drive. This computer did not have a password or any database security features enabled.

This company has violated principles of:

A Data protection only B Data security only C Data protection and data security D Data safety, data security and data protection (2 marks)

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3.5 Job descriptions, discipline policies and instructions on the use of equipment are all tools that management can use to promote health and safety in the workplace.



3.6 David was standing on his chair to shout good news about gaining a new client to the rest of his colleagues. He fell off the chair and broke his arm.

Who is responsible for the accident?

A Davids company B The chair manufacturer C David D Both David and Davids company (2 marks)

3.7 According to Demographic Transition Theory, at what stage do death rates fall whilst birthrates remain unchanged?

A Stage 2: developing counties B Stage 5: post-industrial countries C Stage 4: Fully developed countries D Stage 1: Pre-industrial societies (2 marks)

3.8 When the workforce is aging, which statement is true?

A The cost of that workforce will be lower B The cost of that workforce will remain constant C The cost of that workforce will be higher D The additional costs of that workforce will be covered by the government.

(2 marks)

3.9 Which of the following best describes the term carbon footprint?

A The impact an organisations use of sustainable power has on the environment

B A measure of the emission of greenhouse gases by organisations or individuals

C The effect on the reserves of oil and gas from manufacturing, transportation and power generation

D Prehistoric footprints from extinct, large land animals captured in carbon-based fossils (2 marks)

3.10 The information systems (IS) strategy should drive the business strategy as IS is often the most expensive function in a business.



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3.11 A logistics company has developed a unique extranet website for its customers - they can choose the method of delivery to match their carbon footprint, see exactly where their shipments are at any time on a map of the world and the route it is taking.

What is the potential competitive advantage?

A Growth B Cost leadership C Strategic Alliance D Differentiation (2 marks)

3.12 Which of the following is a disadvantage of outsourcing IS?

A A key resource will be dealt with by an external provider B Enables management to concentrate resources on key activities C Risk management and planning is more assured D Cost effective for smaller entities (2 marks)

3.13 Michael Porters 5 Forces model is used to determine the profit potential of an individual business.



3.14 The number and quantity of new entrants in an industry depends on which one of the following?

A Switching costs of suppliers B The profit potential of the industry C Barriers to entry D The threat of substitute products (2 marks)

3.15 For supermarkets, ______________ is/are _________ because of their relative size compared to suppliers.

Which words, in order, best complete this sentence?

A barriers to entry, high B the threat of substitute products, low C the bargaining power of customers, high D the power of buyers, high (2 marks)

3.16 Which list includes Porters Generic Strategies?

A Differentiation focus, price focus, cost focus B Cost leadership, cost focus, price leadership C Market leadership, marketing focus, differentiation D Cost leadership, differentiation, niche focus (2 marks)

(29 marks)

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MCQ 1 THE BUSINESS ORGANISATION

Item Answer Justification

1.1 A A contains the most general descriptors related to an organisation. Teamwork, synergy, accepted leader are elements of teams, rather than organisations.

1.2 C Public Sector relates to government. This should not be confused with publicly traded which means that the company is listed on a recognised stock exchange and can sell its shares to the general public. Any entity in the public sector would normally not have shares.

1.3 C Microsoft is not a public sector business, whilst a cooperative is not defined as being an NGO or a charity.

1.4 A The marketing department would have already identified the need; the manufacturing department would build it to the determined specifications with direct service provision dealing with after sales service and maintenance. Therefore, purchasing and R&D would work together in designing the system and sourcing the necessary components at the appropriate price.

1.5 D Service provision characteristics include variability, intangibility, perishability, simultaneity and ownership.

1.6 A True.

1.7 A True. How the product is distributed (i.e. logistics of storage and transportation). How the product is placed in front of the customer.

1.8 C

1.9 D Needs also covers wants and demands. Value covers satisfaction and quality. Exchange relates to transactions and relationships.

1.10 C People corporate culture, motivation, attitude, skills, commitment. Process procedures, capacity, speed, access. Physical evidence environment, facilities, packaging, brochures, business cards.

1.11 A Kotler

MCQ 2 STAKEHOLDERS IN BUSINESS ORGANISATIONS


2.1 B False. Bi-directionality in this case means to affect and to be affected by the organisation. The statement given is uni-directional in that both elements relate to the business only. The impact on the stakeholder is not given.

2.2 C Agency problem refers to the inherent conflict of interest between the owners of a company and the managers of that company. The managers may wish to pursue their own interests rather than those of the shareholders. By carrying out an independent audit of the financial statements produced by the directors for the shareholders, the auditors are reporting on the truth and fairness of the statements. The auditors will also act as a deterrent to the directors perpetrating any fraud as the auditors are expected to carry out their work to have a reasonable expectation of detecting fraud and material error.

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2.3 D Connected stakeholders, whilst external, can be identified as connected because they will usually have a contractual right that connects them to the business. Other examples include suppliers, customers, auditors, trade unions. Pure external stakeholders do not have core connections with the business (e.g. no contractual rights with the business). They include governments, local communities and pressure groups. Internal stakeholders are intimately related to the organisation (e.g. employees, directors). Unrecognised stakeholders are exactly that groups not recognised as having stakeholder rights by the company.

2.4 A A lobbyist acts on behalf of an organisation usually for or against particular or proposed legislation. So a company lobbyist acts in the interests of the company that engages their services. Do not confuse lobbyist with activists who act against a company. As an example, Greenpeace engage lobbyists to support or derail particular environmental legislation (e.g. the building of a third runway at London Heathrow airport) they also take activist and pressure action directly against companies (e.g. the occupation of oil rigs due to be sunk in the North Sea or harassment of whaling ships).

2.5 A So long as the car dealership pays their taxes on time and for the correct amount, the tax authorities will take little interest in their activities, apart from occasional visits to check the books and records. They do, however, have high power (being supported by legislation) should there be a need to use it. If the taxation authorities start to take a keen interest in the activities of the business, then they can quickly become a key player.

2.6 D The development company, its shareholders, employees, potential customers, the local community and the action group are all stakeholders in the project. Their different needs are in conflict (certainly the development company and the community action group). There appears to be no conflict between the directors and shareholders, thus no agency problems. Lobbying would be part of the actions taken by each of the stakeholder groups in support of their conflict.

MCQ 3 THE BUSINESS ENVIRONMENT


3.1 C A supra-national body is outside of a national jurisdiction. In the EU, the legal systems of national governments are supplemented by various laws and regulations issued by the EU. The UN and WTO are further examples.

3.2 A Concerns the potential damage and injury that can be caused to individuals by the misuse of their personal data.

3.3 D By completing and signing a form containing personal data, authority is being given for that data to be lawfully processed for the purpose indicated on the form. By checking the box, authority is being given for that data to be used for other (stated) purposes and by other (stated) entities.

3.4 C Data protection has been breached as the data may be used for unauthorised purposes. Data security concerns protecting the integrity of the data this has been breached as the data was not deleted before the computer was sold nor was it encrypted.

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3.5 A True. A formal health and safety policy/manual; job descriptions; design of work systems; regular training and instruction of employees; communication to employees (e.g. notice boards, bulletins, accident notes); disciplinary procedures; health and safety officers; employee counselling and management responsibility (e.g. awareness, attitude, actions) are all tools to promote health and safety.

3.6 C Standing on his chair is not required by his job and his chair is not designed for this activity. (Note: If he had been encouraged to do so by his manager, then his employers would be liable)

3.7 A Post-industrial countries are in the process of switching to service industries birth rates tend to fall significantly. Fully developed countries have low birth rates and low death rates. Pre-industrial countries have high birth rates and high death rates, thus the population is generally static.

3.8 C In any given job, employees who have been doing that job for a long period of time tend to be paid at a higher rate that employees just starting the same job. This usually reflects higher skill levels, experience, customer orientation and loyalty.

3.9 B There are various definitions, one being The total set of GHG (greenhouse gas) emissions caused directly and indirectly by an individual, organisation, event or product. All are of a similar theme based around the emissions of greenhouse gases. Environmental, ecological and social footprints are similar measures. See www.footprint.wwf.org.uk to calculate a personal footprint.

3.10 B False. The overall strategy that drives a business is the business strategy. All other functions are used to ensure the success of that strategy. Thus IS strategy must be geared to ensure achievement of the business strategy.

3.11 D Unique means distinguishing itself from its competition differentiation.

3.12 A B, C and D are all advantages of outsourcing. 3.13 B False. The model relates to an industry and a market as a whole.

3.14 C Players already in the market will attempt to make it more difficult for new entrants to enter their market. Barriers to entry include high capital costs, economies of scale, product differentiation, limit on distribution channels, regulations, supplier and customer loyalty.

3.15 D Supermarkets (as an industry) take a significant proportion of a suppliers production. Many of the suppliers to individual supermarket chains are relatively small and depend very heavily on the continued buying of their product by the supermarket.

3.16 D Developed from the five forces model cost leadership, differentiation and focus (or niche). SA

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This ACCA Study Question Bank has been reviewed by ACCA's examining team and includes:

Question practice for every topic

Model answers and workings

Tutorial notes

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