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For Examinations to August 2015

STUDY QUESTION BANK

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ACCA

Paper F1 | ACCOUNTANT IN BUSINESS

Foundations in Accountancy
Paper FAB | ACCOUNTANT IN BUSINESS

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ACCA

PAPER F1/FAB

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ACCOUNTANT IN BUSINESS

STUDY QUESTION BANK

For Examinations to August 2015

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

CONTENTS
Question

Page

Answer Marks

The Business Organisation

1001

19

MCQ

Stakeholders in Business Organisations

1001

11

MCQ

The Business Environment

1002

29

MCQ

The Macro-Economic Environment

1004

19

MCQ

The Micro-Economic Environment

1005

MCQ

Organisational Structure

1005

17

MCQ

Organisational Culture

10

1006

12

MCQ

Committees in the Business Organisation

12

1006

MCQ

Governance and Social Responsibility

in Business

12

1007

13

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MCQ

10

Business Accounting & Finance Functions 13

1007

MCQ

11

External and Internal Audit

14

1008

15

MCQ

12

Law and Regulation Governing

Accounting

16

1008

11

Financial Systems, Procedures and

IT Applications

17

1009

20

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MCQ

MCQ

13

Date worked

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

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

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ACCOUNTANT IN BUSINESS (F1/FAB) STUDY QUESTION BANK

CONTENTS
Question

Page

Answer Marks

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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MCQ

Date worked

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

MCQ 1 THE BUSINESS ORGANISATION
Which items best describe an organisation?
A
B
C
D

Which of the following best describes public sector entities?

A
B
C
D

1.3

(2 marks)

Traded on the stock market

Include charities and NGOs
Owned by the government
Have the objective of influencing government policy

1.2

Working together, collective goals, controlled performance

Team work, clear rules, collective goals
Synergy, clear roles, accepted leader
Defined hierarchy, clear objectives, formal rules

(2 marks)

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

________ company.

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1.1

Which words correctly complete this sentence?

A
B
C
D
1.4

a not-for-profit organisation, public sector

a charity, profit driven
meeting the needs of its members, publicly traded
an NGO, listed

(2 marks)

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

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Which two departments would most likely be tasked with achieving this?
A
B
C
D

1.5

(2 marks)

Which elements characterise the concept of service?

A
B
C
D

1.6

Purchasing, Research and Development

Research and Development, Marketing
Marketing, Manufacturing
Purchasing, Direct service provision

varied, tangibility, imperishable

consistency, tangibility, simultaneity
tangibility, inconsistency, simultaneity
variability, simultaneity, perishability

(2 marks)

Marketing is a process which identifies, anticipates and satisfies customer needs profitably.
Is this statement True or False?
A
B

True
False

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(1 mark)

ACCOUNTANT IN BUSINESS (F1/FAB) STUDY QUESTION BANK

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.
Is this statement True or False?
A
B

What are the elements of the purchasing mix?

A
B
C
D

1.9

(1 mark)

Price, quality, promotion, place

Promotion, price, distribution, place
Quantity, quality, price, delivery
Quantity, quality, place, delivery

1.8

True
False

(2 marks)

According to Professor Kotler, the key elements of a marketing concept are: _______ ,
_______, ________ , ________ and ________.

needs, demands, wants, value and satisfaction

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

relationships

quality, quantity, price, markets and products

needs, products, value, exchange and markets

(2 marks)

Your company is providing accountancy services for small and medium sized enterprises.
You are heavily dependent on your employees.

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1.10

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

Which three Ps do you have to add to the ordinary four Ps of the marketing mix?
A
B
C
D

1.11

Productivity, processes and physical evidence

Production, processes and physical evidence
People, processes and physical evidence
People, processes and procurement

(2 marks)

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?
A
B

True
False

(1 mark)
(19 marks)

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

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.
Is this statement True or False?
A
B

(1 mark)

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:

2.3

(2 marks)

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

A
B
C
D

2.4

monitoring costs
stakeholder dissatisfaction
the agency problem
shareholder conflict

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A
B
C
D

External
Internal
Unrecognised
Connected

(2 marks)

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

Attempts to influence legislation on behalf of a company
Attempts to influence a companys objectives
Searches for specialist employees on behalf of a company
Takes direct action against the activities of a company

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A
B
C
D

2.5

2.2

True
False

(2 marks)

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
B
C
D

Keep the tax authorities satisfied

Treat the tax authorities as key players
Keep the tax authorities informed
Put minimal effort into dealing with the tax authorities

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(2 marks)

ACCOUNTANT IN BUSINESS (F1/FAB) STUDY QUESTION BANK

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
B
C
D

Grassroots lobbying
Agency conflict
Lobbyist actions
Stakeholder conflict

(2 marks)

MCQ 3 THE BUSINESS ENVIRONMENT

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

A
B
C
D

(2 marks)

Which of the following best relates to data protection?

A

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

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

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3.2

City of Stockholm
Government of Indonesia
European Union
State of California

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3.1

(11 marks)

3.3

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

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

(2 marks)

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
B
C
D

3.4

Data should be processed in accordance with the rights of the individual

Data shall be adequate, relevant and not excessive
Personal data shall not be kept longer than necessary
Personal data shall be processed fairly and lawfully

(2 marks)

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
B
C
D

Data protection only

Data security only
Data protection and data security
Data safety, data security and data protection

(2 marks)

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

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.
Is this statement True or False?
A
B

3.6

True
False

(1 mark)

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.

A
B
C
D

According to Demographic Transition Theory, at what stage do death rates fall whilst
birthrates remain unchanged?
A
B
C
D

3.8

Stage 2: developing counties

Stage 5: post-industrial countries
Stage 4: Fully developed countries
Stage 1: Pre-industrial societies

The cost of that workforce will be lower

The cost of that workforce will remain constant
The cost of that workforce will be higher
The additional costs of that workforce will be covered by the government.

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3.10

(2 marks)

When the workforce is aging, which statement is true?

A
B
C
D

3.9

(2 marks)

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3.7

Davids company
The chair manufacturer
David
Both David and Davids company

Who is responsible for the accident?

(2 marks)

Which of the following best describes the term carbon footprint?

A

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

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

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

Prehistoric footprints from extinct, large land animals captured in carbon-based

fossils
(2 marks)

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

Is this statement True or False?

A
B

True
False

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(1 mark)

ACCOUNTANT IN BUSINESS (F1/FAB) STUDY QUESTION BANK

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
B
C
D

Which of the following is a disadvantage of outsourcing IS?

A
B
C
D

3.13

(2 marks)

A key resource will be dealt with by an external provider

Enables management to concentrate resources on key activities
Risk management and planning is more assured
Cost effective for smaller entities

(2 marks)

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

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3.12

Growth
Cost leadership
Strategic Alliance
Differentiation

Is this statement True or False?

A
B
3.14

True
False

The number and quantity of new entrants in an industry depends on which one of the
following?
Switching costs of suppliers
The profit potential of the industry
Barriers to entry
The threat of substitute products

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A
B
C
D

3.15

(1 mark)

(2 marks)

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

Which words, in order, best complete this sentence?

A
B
C
D

3.16

barriers to entry, high

the threat of substitute products, low
the bargaining power of customers, high
the power of buyers, high

(2 marks)

Which list includes Porters Generic Strategies?

A
B
C
D

Differentiation focus, price focus, cost focus

Cost leadership, cost focus, price leadership
Market leadership, marketing focus, differentiation
Cost leadership, differentiation, niche focus

(2 marks)
(29 marks)

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

MCQ 1 THE BUSINESS ORGANISATION
Justification

1.1

A contains the most general descriptors related to an organisation. Teamwork,

synergy, accepted leader are elements of teams, rather than organisations.

1.2

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

Microsoft is not a public sector business, whilst a cooperative is not defined as

being an NGO or a charity.

1.4

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

Service provision characteristics include variability, intangibility, perishability,

simultaneity and ownership.

1.6

True.

1.7

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

1.9

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

1.10

People corporate culture, motivation, attitude, skills, commitment. Process

procedures, capacity, speed, access. Physical evidence environment, facilities,
packaging, brochures, business cards.

1.11

Kotler

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Item Answer

MCQ 2 STAKEHOLDERS IN BUSINESS ORGANISATIONS

Item Answer

Justification

2.1

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

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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1001

ACCOUNTANT IN BUSINESS (F1/FAB) STUDY QUESTION BANK

Justification

2.3

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 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

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

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.

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Item Answer

MCQ 3 THE BUSINESS ENVIRONMENT

Item Answer

Justification

3.1

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

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

3.3

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

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.

1002

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STUDY QUESTION BANK ACCOUNTANT IN BUSINESS (F1/FAB)

Justification

3.5

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

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

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

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

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

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.

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Item Answer

3.11

Unique means distinguishing itself from its competition differentiation.

3.12

B, C and D are all advantages of outsourcing.

3.13

False. The model relates to an industry and a market as a whole.

3.14

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

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

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

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