Fundamentals Pilot Paper - Knowledge module

Accountant in Business

Do NOT open this paper until instructed by the supervisor.

This question paper must not be removed from the examination hall.

The Association of Chartered Certified Accountants

ALL FIFTY questions are compulsory and MUST be attempted

Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question.

1 An organisation which restructures through a major de-layering exercise has as a result moved to a shorter scalar chain and a narrower span of control.

Is the above statement true or false?

A True

B

False

2

~*-

A To maximise sales volume / _;

B To identify and anticipate customer needs ~~ •

C To persuade potential consumers to convert latent demand into exp . r

D To identify suitable outlets for goods and services supplied 0

(2 marks)

Which one of the following has become an establis&~e in corporate governance in recent years?

A An increasingly prominent role for non-exec~l._~

B An increase in the powers of extern~1 . or

C Greater accountability for directors are reach of their fiduciary duties

D A requirement for all companiCe~o IS an internal audit function

~V (2 marks)

In a higher education t hing~an~sation an academic faculty is organised into courses and departments, where

teaching staff repor c~rse programme managers and to subject specialists, depending on which course

they teach an rticular subject specialism.

(1 mark)

Which of the following is the main function of marketing?

3

4

andy's four cultural stereotypes, which of the following describes the above type of

C Power

D Person

(2 marks)

5 At what stage of the planning process should a company carry out a situation analysis?

A When converting strategic objectives into tactical plans

B When formulating a mission statement

C When validating the effectiveness of plans against outcomes

D When formulating strategic objectives

(2 marks)

2

6 Which one of the following is potential advantage of decentralisation?

A Greater control by senior management

B Risk reduction in relation to operational decision-making

C More accountability at lower levels

D Consistency of decision-making across the organisation

(2 marks)

7

Which one of the following is an example of a internal stakeholder?

8

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/~ .

~ (2 marks)

Ac,onHne to Mondolow, companies must pay most attention to ~ Q) hich group of stakeholders?

A Those with little pow", and little interes In the mmp,,\. 0 ......

B Those with a high level of power but little interes~tA.~

C Those with little power but a high level of interes in t e pany

D Those with a high level of pow", and a hlg~ .,,,,, In Ihe company

What I, tho responslblllty of a pueQoam'

A The establishment of de~ internal audit procedures

B The commissionin of fina al reporting standards

C ionee ating to accounting standards

B

An non-executive director

A

A shareholder

C

A manager

D

A supplier

(2 marks)

9

D

orcement of legal and compliance standards

(2 marks)

A True

B False

(1 mark)

11 Which one of the following is consistent with a government's policy objective to expand the level of economic activity?

A An increase in taxation

B An increase in interest rates

C An increase in personal savings

D An increase in public expenditure

(2 marks)

3

12 Martin is an experienced and fully trained shipbuilder, based in a western European city. Due to significant economic change in supply and demand conditions for shipbuilding in Martin's own country, the shipyard he worked for has closed and he was made redundant. There was no other local demand for his skills within his own region and he would have to move to another country to obtain a similar employment, and could only find similar work locally through undertaking at least a year's retraining in a related engineering field.

Which of the following describes the type of unemployment that Martin has been affected by?

A Structural unemployment

B Cyclical unemployment

Frictional unemployment

(2 marks)

C D

A Strengths, weaknesses, opportunities and threats ~

B Political, economic, social and technological factors W

~ ~~::; :~::~~:~o:h,:;,:"" NO

14 Which of the fn 11_10. I, data pretectlon 1"",~0.de slg o ed '0 protect?

A All private individuals and corporate ~s~lwh;m only regulated data is held

B All private individuals on WhO~~ data is held

C All private individuals on who any ta is held

D All private 10dl:\0~ entities 00 whom '"Y dat I, held (2 marks)

15 Which of the f ~~:. oew legislation would provide greater employment nppertunltles 10 large compames

Marginal unemployment

13

(2 marks)

New laws on higher compensation for employer breaches of employment contracts

(2 marks)

16 The total level of demand in the economy is made up of consumption, , government expenditure and

net gains from international trade.

Which of the following correctly completes the sentence above.

A Savings

B Taxation

C Investment

(1 mark)

4

17 Which set of environmental factors does a lobby group intend to directly influence?

A Political

B Technological

C Demographic

D Economic

(2 marks)

18 Adrian is the manager of a call centre. Consultants have advised him that by reorganising his

highly specific tasks the call centre will be able to increase the throughput of work signifi tl

increasing the number of sales calls made to the public. The reorganisation proposa~s u ·----with many workers, who feel that their jobs will become tedious and repetitive.

The proposal to reorganise the work of the call centre utilises principles pu~ard by w lch school of

management thought? •

A The human relations school ~

B The empirical school OW

C The scientific school

D The administrative school Y

'9 The orlglna role of the "".U"'" •• unction waf:i the foll.w'"g?

A Providing management information r ~

B Recording financial informatior ~

C Maintaining financial control V

D Managing funds e"'d,"'~

~,: whilst tax evasion I, an illegal activity - .... ~'Lue or false?

(2 marks)

(2 marks)

(1 mark)

21 The system used by a company to record sales and purchases is an example of which of the following?

A A transaction processing system.

B A management information system

C An office automation system

D A decision support system

(2 marks)

5

22 The implementation of a budgetary control system in a large organisation would be the responsibility of the internal auditor.

Is this statement true or false?

A True

B False

(1 mark)

c

A national utilities company

D

A financial services provider

(2 marks)

(2 marks)

25

A B

(1 mark)

26 Farrah, Gordon, Helene and Ian work in the finance department of X Co, which has separate financial accounting and management accounting functions. Farrah deals with payroll, the purchase ledger and sales invoicing. Gordon's duties involve inventory valuation, budgetary control and variance analysis. Helene deals with fraud prevention

and detection, and internal control. Ian carries out risk assessments, investment appraisals and assists in project planning.

Which member of the department works in the financial accounts function?

A Farrah

B Gordon

C Helene

Dian

(2 marks)

6

27 In an economic environment of high price inflation, those who owe money will gain and those who are owed money will lose.

Is this statement true or false?

A True

B False

(1 mark)

28 To whom is the internal auditor primarily accountable?

A The directors of the company

B The company as a separate entity

C The shareholders of the company

D The employees of the company

(2 marks)

29

A B C D

(2 marks)

30

(2 marks)

31 What is the primary responsibility of the external auditor?

A To verify all the financial transactions and supporting documentation of the client

B To ensure that the client's financial statements are reasonably accurate and free from bias

C To report all financial irregularities to the shareholders of the client

D To ensure that all the client's financial statements are prepared and submitted to the relevant authorities on time

(2 marks)

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32 Which of the following are substantive tests used for in the context of external audit of financial accounts?

A To establish whether a figure is correct

B To investigate why a figure is incorrect

C To investigate whether a figure should be included

o To establish why a figure is excluded

(2 marks)

33 : 'h:,:~'ext of fraud, 'teeming and lading' I, most likely to D."U' In which area ~,t

B Ouality control y ""

Co Advertising and promotion ~~.

Despatch

(2 marks)

In order to establish ,n effective inte rn ,1 control ....... that wG,e the prospect of fraud, which one of the following should be considered first? '" ~

A Recruitment policy and checks on new personner A. V

B Identification of areas of potential risk. ~ V--

C Devising of appropriat sanctions fOG"(~ ~hevlou,.

D Segregation of dull es I, ""'''(;

35 The leadership style that leaS~edgeS the contribution that subordinates have to make is

Which word correc c PI:~t'~i~'sentence?

34

(2 marks)

A B

(1 mark)

36 Renata has attended a leadership development course in which she experienced a self-analysis exercise using the Blake and Mouton managerial grid. The course leader informed her that the results suggested that Renata demonstrated a 9.1 leadership style, which suggested that she is highly focused on achieving the objectives of the team.

What other conclusion may be drawn in relation to Renata's leadership style?

A She maximises the involvement of her team

B She demonstrates little concern for people in the team

C She balances the needs of the team with the need to complete the task.

o She favours psychologically close managersubordinate relationships

(2 marks)

8

37 Jackie leads an established team of six workers. In the last month, two have left to pursue alternative jobs and one has commenced maternity leave. Three new staff members have joined Jackie's team.

Which one of Tuckman's group stages will now occur?

A Norming

B Forming

C Performing

D Storming

(2 marks) 38 Richard is a highly enthusiastic member of his team. An extrovert by nature, he is CU~~UC;"t;ve. H,

responds to new challenges positively and has a capacity for contacting people exploring thing new. However,

his attention span is short and he tends to become less involved in a task onc IS initial in erest has passed .

•

of the following?

According to Belbin's team roles theory, Richard displays the charac~

A Monitor-evaluator ~

: :::"~e;OVdg't"' '" 0

D Company worker r A. V

V-- (2 marks)

3. Wh;ch 0"' of the fo"ow;"g statements ;O~tiO" to monetary ""","', ln ''''0''',"," w.h H er zberg's Two-Factor theory?

A Pay increases are a powerful ICor: ivator

B Inadequate monetary re~~werful dissatisfier

C Monetary rewards re mOTPortant than non-monetary rewards

D Pay can never s as. motivator

(2 marks)

Members arrive at decisions by consensus

D Members' work in cooperation

(2 marks)

41 According to Victor Vroom:

Force (or motivation) = x expectancy

Which of the following words completes Vroom's equation.

A Needs

B Valence

C Opportunity

(1 mark)

9

42 According to Handy's 'shamrock' organisation model, which one of the following is becoming progressively less important in contemporary organisations?

A The permanent, full-time work force

B The part-time temporary work force

C The role of independent sub-contractors

D The role of technical support functions

(2 marks)

~*~.

~

44 Poor quality , ate ral communication will result in which"'" 100

: Lack of direction 0 V

C Lack of delegation

D Lack of control

(2 marks)

45 Role playing exercises using ~Ording and playback would be most effective for which type of training?

A Developme~to el s:f"-

B Regulatio ce

C Disse ti of hnical knowledge

43 Which pattern of communication is the quickest way to send a message?

A

The circle

B

The chain

C

The Y

D

The wheel

(2 marks)

(2 marks)

46 In the context of marketing, the 'four P's' are price, place, promotion and _

Which word correctly completes this sentence?

A Processes

B Production

C Product

(1 mark)

10

47 In relation to employee selection, which type of testing is most appropriate for assessing the depth of knowledge of a candidate and the candidate's ability to apply that knowledge?

A Intelligence testing
B Personality testing
C Com petence testi ng
0 Psychometric testi ng
(2 marks) 48 A company has advertised for staff who must be at least 1.88 metres tall and have been in4Wluous full-time

employment for at least five years. ~.~ .....

Which of the following is the legal term for this unlawful practice? .. "'

A DI",d discrtrnination ~ •

:0 ~:~~:~::tii:c:imination o~

Implied discrimination.

(2 marks)

.9 Gloria has the responsibility to work with selected m r;~e" 10 her 0",,"1,,1100. He, objective I, to help the trainees over the medium to long-term With~~areer development. Supporting and encouraging

them to fulfil their potential is an integralCJf ro. Gloria has no involvement in the technical content of the

trainee managers' work.

:hIC:,:d:e foll_Io. roles ;"'0 .

B Counsellor

C Mentor •

o

(2 marks)

i ti expectations and problems. He adopts a non-judgmental approach and offers suggestions and guidance.

50

n example of which approach to performance appraisal?

A Tell and sell approach

B Tell and listen approach

C Problem solving approach

o 360 degree approach

(2 marks)

End of Question Paper

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Pilot Paper F1 Accountant in Business

Answers

1 B 2 B 3 A 4 B

26 A 27 A 28 A 29 C

8

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/~ .

34B ~

::: o~ 37~

~

r~l~

CJv 42 A

18 C 43 D

:~: ~'f :~ ::;~~ :~

25~~ 50 B

C

31 B

5

D

30 D

6

7

C

32 A

D

33 A

9

D

10 B

11 D

12 C

13 B

14 B

15 B

16 C

17 A

Rationale for answers

1 B The span of control is concerned with the number of subordinates reporting directly to one person. The scalar chain concept relates to the number of levels in the management structure. Therefore delayering causes a reduction in levels of management, with each manager having more subordinates.

2 B The basic principle that underlies marketing is that it is a management process that identifies and anticipates customer needs.

The other distractors in the question refer to specific activities undertaken by a marketing function.

3 A Successive reports on corporate governance (Cadbury, Higgs, etc.) have highlighted the increasingly prominent role that nonexecutive directors should take in large organisations. This has become an established best practice.

4 B The task culture is appropriate where organisations can accommodate the flexibility required to adjust management and team structures to address the tasks that must be fulfilled. This is very common in large consultancy firms.

5 0 A situation analysis is carried out when deciding on strategic objectives. The organisation will have already decided on its mission statement and goals.

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6 C
7 C
8 0
9 0
10 B
11 0
12 C
13 B
14 B
15 B
16 C
17 A
18 C 19 B

20 A

21

22

Greater accountability at lower levels will lead to greater empowerment of those taking decisions and hence greater motivation and commitment, but will lead to less control and potentially more inconsistency.

A manager is employed by the organisation and is therefore a constituent part of it. All the others are known as 'connected' stakeholders.

The organisation must constantly be aware of the needs of stakeholders with a high level of power and the ability to influence the organisation profoundly. Management decisions must therefore take most account of the needs of this group of stakeholders.

The primary aim of a pu blic oversight board is to eli minate or mini mise any actual or potential breaches of legislative requirements and to ensure compliance with regulations applicable to organisations within their terms of reference.

The ageing population trend is caused by decreasing birth rate and a decreasing mortality rate.

An Increase In public expenditure should Increase the level of consumer demand and henc~~~

would also be achieved by other measures, such as a reduction In taxation or a reduction .. , I,.~t s

Frictional unemployment arises even when there are unfilled vacancies In the eco y It IS because there IS never a perfect

match between the types of job available and their location with the skills of tho e g wttk and where they live.

Any environmental scan analyses the external factors that affect an organls~c

and technological factors Q'V

Data protection legislation IS formulated to protect the Interests of ta sub cts who are private Individuals Not all data is

regulated '" ~

Diversity policies are Intended to reduce recruitment anl!!!:*-.¥es and processes that enable discrimination to arise on the basis of gender, race, lifestyle and age, therefore s~wlden access of employment

The components of effective demand In the ec~ consumer spending, Investment by enterprises, central and local government expenditure and the net galo;"ational trade

Lobby groups are primarily estaCJ inf nce political decision takers, such as the government and Individual

lawmakers

SCientific management prl~ er the ways In which the factors of production (land, labour, capital and the

entrepreneurial function) ca bined to maximise efficiency In production The founding principles are based on the

work of Frederick WI low Ta r The reorganisation of the call centre follows these principles

. . .

fU1lrt"ll&1W:lglnated from the need to record transactions completely and accurately. Other requirements naturally

stage.

orruc activity This

Tax evasion is

The internal auditor is not responsible for implementing systems, but is involved in monitoring the effectiveness of these systems.

23 C Public ultilities companies often have national or local monopolies and it is therefore necessary for their pricing structures to be subject to the scrutiny of a regulatory body.

24 B An interest rate is the price of money. The output of the treasury function is directly affected by the price of funds to the organisation and the returns that can be made from surplus funds.

25 B The IASB aims to promote consistency incorporate reporti ng by creating financial reporti ng standards to which major businesses are expected to adhere.

26 A Payroll, purchase ledger and sales invoicing are core functions within the responsibility of the financial accountant.

27 A Where price inflation is high the value of money reduces consistently over time. Those who owe money (debtors) therefore pay back less capital in real terms, and interest rates seldom adjust adequately to compensate for this.

28 A The internal auditor must have the right to report and is most accountable to the highest level of management (Directors) in the organisation. They must be free of influence from any individual manager, irrespective of seniority.

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29 C A computerised system can be costly to set up, though this disadvantage is essentially a short-term issue, as the running costs should offset this over time. A computer system should also reduce transaction processing time and the incidence of errors.

30 0 Systems audit is concerned with the effectiveness of the system itself and not the processes, activities or values of the organisation.

31 B The external auditor has to ensure that the financial statements of the organisation truly reflect the activities of the business in the relevant accounting period. This assessment should be independent and therefore free from subjectivity on the part of the management of the client organisation.

32 A Substantive tests verify the accuracy of the financial information.

34 B

35 B

36 B

37 B

38 C

39 B

40 C

41 B

42 A

43 0

44 B

45

46

The fi rst of these

a n me pOI nt scale with reference to

According to Herzberg, money is a hygiene factor (or dis tisf

whether each Individual Increase In monetary re~1 given becomes a right'

Consensus Implies coming to decisions Ce ~c table, paying due regard to the Input of all members of the team. Victor Vroom defines 'valence' as ~~reference for a given outcome.

Handy's theory suggests th~~anent workers are both expensive and inflexible in comparison with other elements of the shamrock. These oth ts are part-time workers and independent contractors. A fourth leaf can be getting the

customer to do the k.

... .. ..

The wheel fa ilita mission of the message directly to all receivers and therefore transmits most quickly

is horizontal. Therefore, poor quality communication will result in poor coordination between team

47 C Competence testing evaluates and validates knowledge and the ability to apply these to given situations. It assesses whether the individual can actually do specified tasks.

48 B A height restriction is a form of indirect discrimination on the grounds of gender. On average, men are taller than women.

49 C A mentor has a longer-term role than buddies, counsellors or instructors.

50 B The 'tell and listen' approach encourages input from the individual, promoting participation the process by the appraisee.

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