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Contents

Page

Finding questions

Question index .............................................................................................................................. v

Helping you with your revision.......................................................................................................viii

Using your BPP Practice & Revision Kit........................................................................................... ix

Passing the FAB/F1 exam............................................................................................................... x

Approach to examining the syllabus................................................................................................ xi

The Computer Based Examination ................................................................................................. xii

Tackling Multiple Choice Questions................................................................................................xiii

Using your BPP products..............................................................................................................xiv

Questions and answers

Questions .................................................................................................................................... 3

Answers .................................................................................................................................. 115

Exam practice

Mock exam 1 – Specimen Exam June 2014

 Questions ........................................................................................................................ 167

 Answers .......................................................................................................................... 183

ACCA’s exam answers............................................................................................................... 191

Mock exam 2 – Specimen Exam June 2014

 Questions ........................................................................................................................ 197

 Answers .......................................................................................................................... 211

Review form

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FAB/F1 ACCOUNTANT IN BUSINESS

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QUESTION INDEX

Question index

Time

allocation

Page

Marks Mins Questions Answers

Part A: The business organisation, its stakeholders and the

external environment

Business organisations and their stakeholders

Questions 1.1 to 1.8 13 16 5 115

The business environment

Questions 2.1 to 2.17 29 35 6 116

The macro-economic environment

Questions 3.1 to 3.14 23 28 8 117

Micro-economic factors

Questions 4.1 to 4.25 42 50 11 119

Section A MTQs

Questions 5.1 to 5.6 24 29 14 120

Part B: Business organisation structure, functions and

governance

Business organisation, structure and strategy

Questions 6.1 to 6.10 16 19 20 121

Organisational culture and committees

Questions 7.1 to 7.20 33 40 21 122

Corporate governance and social responsibility

Questions 8.1 to 8.12 19 23 25 124

Section B MTQs

Questions 9.1 to 9.6 24 29 27 125

Part C: Accounting and reporting systems, controls and

compliance

The role of accounting

Questions 10.1 to 10.26 43 52 32 126

Control, security and audit

Questions 11.1 to 11.14 23 28 37 128

Identifying and preventing fraud

Questions 12.1 to 12.16 27 32 39 130

Section C MTQs

Questions 13.1 to 13.6 24 29 41 131

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FAB/F1 ACCOUNTANT IN BUSINESS

Time

allocation

Page

Marks Mins Questions Answers

Part D: Leading and managing individuals and teams

Leading and managing people

Questions 14.1 to 14.20 33 40 47 132

Recruitment and selection

Questions 15.1 to 15.18 30 36 50 134

Diversity and equal opportunities

Questions 16.1 to 16.10 16 19 52 136

Individuals, groups and teams

Questions 17.1 to 17.17 28 34 54 137

Motivating individuals and groups

Questions 18.1 to 18.17 28 34 57 138

Training and development

Questions 19.1 to 19.17 28 34 60 140

Performance appraisal

Questions 20.1 to 20.13 22 26 63 142

Section D MTQs

Questions 21.1 to 21.6 24 29 65 143

Part E: Personal effectiveness and communication in

business

Personal effectiveness and communication

Questions 22.1 to 22.19 31 37 71 145

Section E MTQs

Questions 23.1 to 23.6 24 29 74 146

Part F: Professional ethics in accounting and business

Ethical considerations

Questions 24.1 to 24.20 33 40 79 147

Section F MTQs

Questions 25.1 to 25.6 24 29 82 148

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QUESTION INDEX

vii

Time

allocation

Page

Marks Mins Questions Answers

Mixed Banks

Mixed Bank 1: Questions 26.1 to 26.23 38 46 84 150

Mixed Bank 2: Questions 27.1 to 27.24 40 48 88 152

Mixed Bank 3: Questions 28.1 to 28.24 40 48 92 155

Mixed Bank 4: Questions 29.1 to 29.24 40 48 96 155

Mixed Bank 5: Questions 30.1 to 30.24 40 48 100 156

Mixed Bank 6: Questions 31.1 to 31.23 38 46 104 158

Mixed Bank 7: Questions 32.1 to 32.25 42 50 108 159

Mock exams

Mock exam 1 (Specimen Exam June 2014) 100 120 167 183

Mock exam 2 100 120 197 211

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viii

Helping you with your revision

BPP Learning Media – ACCA Approved Content Provider

As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use revision

materials reviewed by the ACCA examination team . By incorporating the ACCA examination team’s

comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning

Media Practice & Revision Kit provides excellent, ACCA-approved support for your revision.

Selecting questions

We provide signposts to help you plan your revision.

• A full question index

Attempting mock exams

There are two mock exams that provide practice at coping with the pressures of the exam day. We

strongly recommend that you attempt them under exam conditions. Mock exam 1 is the Specimen

Exam June 2014. Mock exam 2 reflects the question styles and syllabus coverage of the exam.

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USING YOUR BPP PRACTICE AND REVISION KIT

Using your BPP Practice & Revision Kit

Aim of this Practice & Revision Kit

To provide the practice to help you succeed in the examination for FAB Accountant in Business .To

pass the examination you need a thorough understanding in all areas covered by the syllabus and

teaching guide.

Recommended approach

 Make sure you are able to answer questions on everything specified by the syllabus and teaching

guide. You cannot make any assumptions about what questions may come up on your paper.

The examination team aims to discourage 'question spotting'.

 Learning is an active process. Use the DO YOU KNOW? Checklists to test your knowledge and

understanding of the topics covered in FAB Accountant in Business by filling in the blank spaces.

Then check your answers against the DID YOU KNOW? Checklists. Do not attempt any questions

if you are unable to fill in any of the blanks – go back to your BPP Interactive Text and revise

first.

 When you are revising a topic, think about the mistakes that you know that you should avoid by

writing down POSSIBLE PITFALLS at the end of each DO YOU KNOW? Checklist.

 Once you have completed the checklists successfully, you should attempt the questions on that

topic. Each question is worth 1, 2 or 4 marks and carries with it a time allocation of 1.2 minutes

per mark.

 You should attempt each bank of MCQs to ensure that you are familiar with their styles and to

practise your technique. Ensure that you read Tackling Multiple Choice Questions on page xiii to

get advice on how best to approach them.

 Once you have completed all of the questions in the body of this Practice & Revision Kit, you

should attempt the MOCK EXAMS under examination conditions. Check your answers against

our answers to find out how well you did.

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FAB/F1 ACCOUNTANT IN BUSINESS

Passing the FAB/F1 exam

FAB introduces students (who may not have a business background) to the business entity made up of

people and systems which interact with each other. There is a lot to learn, but none of it is particularly

difficult and a good grasp of these topics will help you in higher-level business papers (ACCA papers P1

and P3).

To access FIA and ACCA syllabuses, visit the ACCA website.

www.accaglobal.com

The exam

You can take this exam as a paper-based exam or by CBE. All questions in the exam are compulsory.

This means you cannot avoid any topic, but also means that you do not need to waste time in the exam

deciding which questions to attempt. There are 46 MCQs in the exam, worth either 1 or 2 marks, as

well as 6 multiple task questions worth 4 marks each and a mixture of MCQs and other types of OTQ

(number entry, multiple response and multiple response matching) in the CBE. This means that the

examination team is able to test most of the syllabus at each sitting. So you need to have revised right

across the syllabus for this exam.

Revision

This Kit has been reviewed by the FAB examining team and contains the Specimen exam. Working

through the questions in the Kit provides excellent preparation for the exam. It is important to tackle

questions under exam conditions. Allow yourself just the number of minutes shown next to the questions

in the index and don’t look at the answers until you have finished. For questions you answer incorrectly,

think about your answer and the correct answer. If you require further clarification, refer to the

explanation of the topic provided in your Interactive Text. Question practice is an essential part of your

revision, don’t neglect it!

Passing the exam

The following points will help you pass the exam.

 Read the question carefully.

 Don’t spend more than the allotted time on each question. Don’t become bogged down. If you

are having trouble with a question, stop, think, decide on your best option and answer the

question. Move on!

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APPROACH TO EXAMINING THE SYLLABUS

Approach to examining the syllabus

FAB is a two-hour paper. It can be taken as a paper based or a computer based examination.

The exam is structured as follows:

No of marks

30 compulsory multiple choice questions of 2 marks each 60

16 compulsory multiple choice questions of 1 mark each 16

6 compulsory multiple task questions of 4 marks each 24

100

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FAB/F1 ACCOUNTANT IN BUSINESS

xii

The Computer Based Examination

Computer based examinations (CBEs) are available for the first seven Foundation in Accountancy papers

(not papers FAU, FTM or FFM), in addition to the conventional paper based examination.

Computer based examinations must be taken at an ACCA CBE Licensed Centre.

How does CBE work?

 Questions are displayed on a monitor

 Candidates enter their answer directly onto the computer

 Candidates have two hours to complete the examination

 When the candidate has completed their examination, the final percentage score is calculated

and displayed on screen

 Candidates are provided with a Provisional Result Notification showing their results before

leaving the examination room

 The CBE Licensed Centre uploads the results to the ACCA (as proof of the candidate's

performance) within 72 hours

 Candidates can check their exam status on the ACCA website by logging into myACCA.

Benefits

 Flexibility as a CBE can be sat at any time.

 Resits can also be taken at any time and there is no restriction on the number of times a

candidate can sit a CBE.

 Instant feedback as the computer displays the results at the end of the CBE.

 Results are notified to ACCA within 72 hours.

CBE question types

 Multiple choice – choose one answer from four options

 Number entry – key in a numerical response to a question

 Multiple response – select more than one response by clicking the appropriate tick boxes

 Multiple response matching – select a response to a number of related part questions by

choosing one option from a number of drop down menus

For more information on computer-based exams, visit the ACCA website.

www.accaglobal.com/en/student/Exams/Computer-based-exams.html

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TACKLING MULTIPLE CHOICE QUESTIONS

xiii

Tackling Multiple Choice Questions

MCQs are part of all Foundations in Accountancy exams. You have to choose the option that best

answers the question. The incorrect options are called distracters. There is a skill in answering MCQs

quickly and correctly. By practising MCQs you can develop this skill, giving you a better chance of

passing the exam.

You may wish to follow the approach outlined below, or you may prefer to adapt it.

Step 1 Skim read all the MCQs and identify what appear to be the easier questions.

Step 2 Attempt each question – starting with the easier questions identified in Step 1. Read

the question thoroughly. You may prefer to work out the answer before looking at the

options, or you may prefer to look at the options at the beginning. Adopt the method

that works best for you.

Step 3 Read the options and see if one matches your own answer. Be careful with numerical

questions as the distractors are designed to match answers that incorporate common

errors. Check that your calculation is correct. Have you followed the requirement

exactly? Have you included every stage of the calculation?

Step 4 You may find that none of the options matches your answer.

 Re-read the question to ensure that you understand it and are answering the

requirement

 Eliminate any obviously wrong answers

 Consider which of the remaining answers is the most likely to be correct and

select the option

Step 5 If you are still unsure make a note and continue to the next question

Step 6 Revisit unanswered questions. When you come back to a question after a break you

often find you are able to answer it correctly straight away. If you are still unsure have a

guess. You are not penalised for incorrect answers, so never leave a question

unanswered!

After extensive practice and revision of MCQs, you may find that you recognise a question when you sit

the exam. Be aware that the detail and/or requirement may be different. If the question seems familiar

read the requirement and options carefully – do not assume that it is identical.

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FAB/F1 ACCOUNTANT IN BUSINESS

xiv

Using your BPP products

This Kit gives you the question practice and guidance you need in the exam. Our other products can also help

you pass:

 Interactive Text introduces and explains the knowledge required for your exam

 Passcards provide you with clear topic summaries and exam tips

 i-Pass CDs offer tests of knowledge against the clock

You can purchase these products by visiting www.bpp.com/learningmedia.

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Questions

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QUESTIONS

Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

 Organisations can achieve results which i……… cannot achieve by themselves.

 A ……………….. organisation (NGO) is an independent voluntary association of people acting together

for some common purpose (other than achieving government office or making money).

 Stakeholders are those individuals or groups that, potentially, have an interest in what the organisation

does. These stakeholders can be w……. the organisation, c….. to the organisation or external to the

organisation.

 G…………. p…… influences the economic environment, the framework of laws, industry structure and

certain operational issues. Political i…….. is a cause of risk.

 P……. is the right of the individual not to suffer unauthorised disclosure of information.

 A contract is a l…… b……. agreement.

 O……. is the contracting out of specified operations or services to an external vendor.

 The v…. c….. describes those activities of the organisation that add value to purchased inputs.

 The c…… e…….. is structured by five forces: barriers to entry; substitute products; the bargaining

power of c………; the bargaining power of suppliers; c……… rivalry.

 Equilibrium n…….. i…… is determined using aggregate supply and aggregate demand analysis.

 Demand pull i……. arises from an excess of aggregate demand over the productive capacity of the

economy.

 C…. p…. inflation arises from increases in the costs of production.

 Economic …….. may be measured by increases in the real gross national product (GNP) per head of the

population.

 Macroeconomic policy objectives relate to economic growth, i………, unemployment and the b…… of

p……..

 If a government decides to use fiscal policy to influence demand in the economy, it can choose either

e………. changes or t.. changes as its policy instrument.

 M…… p….. uses money supply, interest rates or credit controls to influence aggregate demand.

 A surplus or deficit on the balance of payments usually means a surplus or deficit on the c……. a…….

 The m….. e………….. refers to the immediate operational environment including suppliers, competitors,

customers, stakeholders and intermediaries.

 Elasticity, in general, refers to the relationship between two variables. Price elasticity of demand explains

the relationship between change in q…..demanded and changes in p…...

 I…… e…….. of demand measures the responsiveness of demand to changes in household income.

C…..elasticity of demand is determined by the availability of substitute (competitors') products.

 The effects of demand and supply conditions on markets can be analysed by studying the behaviour of

both demand and supply c……..

Do you know? – The business organisation, its stakeholders and the external environment

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FAB/F1 ACCOUNTANT IN BUSINESS

Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach

the exam.

 Organisations can achieve results which individuals cannot achieve by themselves.

 A non-governmental organisation (NGO) is an independent voluntary association of people acting

together for some common purpose (other than achieving government office or making money).

 Stakeholders are those individuals or groups that, potentially, have an interest in what the organisation

does. These stakeholders can be within the organisation, connected to the organisation or external to

the organisation.

 Government policy influences the economic environment, the framework of laws, industry structure and

certain operational issues. Political instability is a cause of risk.

 Privacy is the right of the individual not to suffer unauthorised disclosure of information.

 A contract is a legally binding agreement.

 Outsourcing is the contracting out of specified operations or services to an external vendor.

 The value chain describes those activities of the organisation that add value to purchased inputs.

 The competitive environment is structured by five forces: barriers to entry; substitute products; the

bargaining power of customers; the bargaining power of suppliers; competitive rivalry.

 Equilibrium national income is determined using aggregate supply and aggregate demand analysis.

 Demand pull inflation arises from an excess of aggregate demand over the productive capacity of the

economy.

 Cost push inflation arises from increases in the costs of production.

 Economic growth may be measured by increases in the real gross national product (GNP) per head of

the population.

 Macroeconomic policy objectives relate to economic growth, inflation, unemployment and the balance

of payments.

 If a government decides to use fiscal policy to influence demand in the economy, it can choose either

expenditure changes or tax changes as its policy instrument.

 Monetary policy uses money supply, interest rates or credit controls to influence aggregate demand.

 A surplus or deficit on the balance of payments usually means a surplus or deficit on the current

account.

 The micro environment refers to the immediate operational environment including suppliers,

competitors, customers, stakeholders and intermediaries.

 Elasticity, in general, refers to the relationship between two variables. Price elasticity of demand explains

the relationship between change in quantity demanded and changes in price.

 Income elasticity of demand measures the responsiveness of demand to changes in household income.

Cross elasticity of demand is determined by the availability of substitute (competitors') products.

 The effects of demand and supply conditions on markets can be analysed by studying the behaviour of

both demand and supply curves.

Did you know? – The business organisation, its stakeholders and the external environment

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QUESTIONS

1 Business organisations and their stakeholders 16 mins

1.1 'An organisation is a social arrangement which pursues collective........................................, which

controls its own performance and which has a boundary separating it from its environment.'

Which of the following words best completes this sentence?

A Profits

B Stakeholders

C Goals

D Tactics (2 marks)

1.2 What is the term given to the idea that the combined output of a number of individuals working together

will exceed that of the same individuals working separately?

A Sympathy

B Specialisation

C Synergy

D Systems thinking (2 marks)

1.3 Which one of the following statements is true?

A Limited company status means that a company is only allowed to trade up to a predetermined

turnover level in any one year.

B For organisations that have limited company status, ownership and control are legally separate.

C The benefit of being a sole trader is that you have no personal liability for the debts of your

business.

D Ordinary partnerships offer the same benefits as limited companies but are usually formed by

professionals such as doctors and solicitors. (2 marks)

1.4 An organisation is owned and run by central government agencies. The organisation is best described as

which of the following statements?

A A voluntary sector organisation

B A private sector organisation

C A public sector organisation (1 mark)

1.5 Which of the following groups may be considered to be stakeholders in the activities of a nuclear power

station?

(i) The government

(ii) Environmental pressure groups

(iii) Employees

(iv) Local residents

A (i), (iii) and (iv)

B (i), (ii), (iii) and (iv)

C (iii) only

D (i) and (iii) only (2 marks)

1.6 The term secondary stakeholders describes which group of stakeholders?

A Stakeholders who conduct transactions with the organisation

B Stakeholders who have a contractual relationship with the organisation

C Stakeholders who do not have a contractual relationship with the organisation (1 mark)

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1.7 Which of the following organisations would rely most heavily on value for money indicators and

efficiency rather than information on performance and profitability?

A A private accountancy college

B A local authority

C A small retailer (1 mark)

1.8 ADB is a business which is owned by its workers. The workers share the profits and they each have a

vote on how the business is run.

Which of the following best describes ADB?

A Public sector

B Private sector

C Not-for-profit

D Co-operative (2 marks)

(Total = 13 marks)

2 The business environment 35 mins

2.1 What is an acronym used to describe the key elements of an organisation's external environment?

A SWOT

B SMART

C PEST (1 mark)

2.2 Which of the following is not a legitimate method of influencing government policy in the interests of a

business?

A Employing lobbyists to put the organisation's case to ministers or civil servants

B Giving lawmakers non-executive directorships

C Offering financial incentives to public officials to use their influence on the organisation's behalf

D Attempting to influence public opinion, to put pressure on the legislative agenda

(2 marks)

2.3 ........................................ is an analysis of statistics on birth and death rates, age structures of people

and ethnic groups within a community.

Which word correctly completes the sentence?

A Ergonomics

B Economics

C Psychographics

D Demographics (2 marks)

2.4 A recent trend in organisation and management is the rise in 'virtual organisation' and 'virtual

teamworking'. To which of the following environmental (PEST) factors is this most directly attributed?

A Economic

B Socio-cultural

C Technological

D Political (2 marks)

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QUESTIONS

2.5 The stationery and printing company S Co, has recently upgraded its computers and printers so that

more production has become automated. Many middle managers will now be made redundant. This is

known as:

A Downsizing

B Delayering

C Outsourcing (1 mark)

2.6 In the context of 'best practice' employment protection law, in which of the following circumstances is

dismissal of an employee automatically considered unfair?

A Selection for redundancy on the basis of age

B Misconduct

C Marriage to an employee of a key competitor

D Incompetence (2 marks)

2.7 Which of the following socio-cultural trends will have a direct impact on most business organisations?

(i) Increasing ethnic and religious diversity in populations

(ii) Falling birthrates

(iii) Focus on 'green' issues

(iv) Increase in single-member households

A (iii) only

B (i) and (iii) only

C (i), (ii) and (iii) only

D (i), (ii), (iii) and (iv) (2 marks)

2.8 Porter's five forces model identifies factors which determine the nature and strength of competition in an

industry. Which of the following is not one of the five forces identified in Porter's model?

A Substitute products or services

B New entrants to the industry

C Bargaining power of customers

D Government regulation of the industry (2 marks)

2.9 For what function in an organisation would demographic information about social class be most

relevant?

A Human Resources

B Marketing

C Purchasing (1 mark)

2.10 Which of the following is a support activity in Porter's value chain model?

A Procurement

B Operations

C Marketing and sales

D Inbound logistics (2 marks)

2.11 Which of the following statements about the impact of technological developments is not true?

A Technology developments have supported corporate delayering

B Technology developments tend to adversely affect employee relations

C Technology developments creates risk for long-range product/market planning

D Technology developments offer significant advantages for corporate communications

(2 marks)

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2.12 BCD Co is a large trading company. Steve is the administration manager and is also responsible for legal

and compliance functions. Sheila is responsible for after sales service and has responsibility for ensuring

that customers who have purchased goods from BCD Co are fully satisfied. Sunny deals with suppliers

and negotiates on the price and quality of inventory. He is also responsible for identifying the most

appropriate suppliers of plant and machinery for the factory. Sam is the information technology manager

and is responsible for all information systems within the company.

According to Porter's value chain, which of the managers is involved in a primary activity as opposed to

a support activity?

A Steve

B Sheila

C Sunny

D Sam (2 marks)

2.13 What is the latest stage at which a new recruit to a company should first be issued with a copy of the

company's health and safety policy statement?

A On accepting the position with the company

B As early as possible after employment

C After the first few weeks of employment

D During the final selection interview (2 marks)

2.14 In Porter's five forces model, which of the following would not constitute a 'barrier to entry'?

A Scale economies available to existing competitors

B High capital investment requirements

C Low switching costs in the market (1 mark)

2.15 Three of the following strategies are closely related. Which is the exception?

A Downsizing

B Delegating

C Delayering

D Outsourcing (2 marks)

2.16 Which of the following would be identified as a cultural trend?

A Health and safety legislation

B Concern with health and diet

C Increasing age of the population (1 mark)

2.17 For demographic purposes, which of the following is not a variable in the identification of social class?

A Income level

B Lifestyle

C Occupation

D Education (2 marks)

(Total = 29 marks)

3 The macro-economic environment 28 mins

3.1 Which of the following is not an element of fiscal policy?

A Government spending

B Government borrowing

C Taxation

D Exchange rates (2 marks)

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QUESTIONS

3.2 Which of the following is associated with a negative Public Sector Net Cash Requirement?

A The government is running a budget deficit.

B The government's expenditure exceeds its income.

C The government is running a budget surplus.

D Public Sector Debt Repayment (PSDR) is high. (2 marks)

3.3 ........................................ taxes are collected by the Revenue authority from a business, which

attempts to pass on the tax to consumers in the price of goods.

Which word correctly completes this statement?

A Progressive

B Direct

C Indirect (1 mark)

3.4 If a government has a macro-economic policy objective of expanding the overall level of economic

activity, which of the following measures would not be consistent with such an objective?

A Increasing public expenditure

B Lowering interest rates

C Increasing taxation (1 mark)

3.5 The currency in country X is the Krone while country Y uses the Euro. Country Y has recently

experienced an increase in its exchange rate with Country X. Which of the following effects is likely to

result in Country Y?

A A stimulus to exports in Country Y

B An increase in the costs of imports from Country X

C Reducing demand for imports from Country X

D A reduction in the rate of cost push inflation (2 marks)

3.6 The following, with one exception, are 'protectionist measures' in international trade. Which is the

exception?

A Import quotas

B Subsidies for exporters

C Customs procedures

D Tariffs (2 marks)

3.7 Are the following statements true or false?

1 Frictional unemployment will be short term

2 Governments can encourage labour mobility if they want to reduce unemployment

A Both statements are true.

B Statement 1 is true and statement 2 is false.

C Statement 1 is false and statement 2 is true.

D Both statements are false. (2 marks)

3.8 Monetary policy is a government economic policy relating to:

1 Interest rates

2 Taxation

3 Public borrowing and spending

4 Exchange rates

Which of the above are correct?

A 1 and 4

B 2 and 3

C 2 and 4

D 3 and 4 (2 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

3.9 Which of the following organisations might benefit from a period of high price inflation?

A An organisation which has a large number of long-term payables

B An exporter of goods to a country with relatively low inflation

C A large retailer with a high level of inventory on display and low rate of inventory turnover

(1 mark)

3.10 Which of the following are the goals of macroeconomic policy?

1 Encouraging economic growth

2 Low unemployment

3 Achievement of a balance between exports and imports

4 Achieving zero inflation

A 1 and 2

B 2 and 3

C 2, 3 and 4

D 1, 2 and 3 (2 marks)

3.11 Which of the following is an example of cyclical unemployment?

A The entry of school leavers into the labour pool each year

B Lay-offs among agricultural labourers in winter

C Automation of ticketing services in tourism

D Recession in the building industry (2 marks)

3.12 A surplus on the balance of payments usually refers to a surplus or deficit on the

........................................ account.

Which word correctly complete this statement?

A Current

B Capital

C Financial (1 mark)

3.13 Northland, Southland, Eastland and Westland are four countries of Asia. The following economic

statistics have been produced for the year 2007.

Country Northland Southland Eastland Westland

Change in GDP (%) –0.30 +2.51 –0.55 +2.12

Balance of payments current account ($m) +5550.83 –350.47 –150.90 +220.39

Change in consumer prices (%) +27.50 +15.37 +2.25 +2.15

Change in working population employed (%) –4.76 +3.78 +1.76 –8.76

Which country experienced stagflation in the relevant period?

A Northland

B Southland

C Eastland

D Westland (2 marks)

3.14 ........................................ economic growth is determined by supply-side rather than by demand side

factors.

Which word correctly completes this statement?

A Actual

B Potential

C National (1 mark)

(Total = 23 marks)

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QUESTIONS

4 Micro-economic factors 50 mins

4.1 In a free market economy, the price mechanism:

A Aids government control

B Allocates resources

C Measures national wealth (1 mark)

4.2 The supply curve of a firm operating in a competitive market is its

A Marginal cost curve above the average variable cost curve

B Marginal cost curve above the average total cost curve

C Average total cost curve beyond the point where the marginal cost curve cuts it from below

D Average variable cost curve below the average revenue curve (2 marks)

4.3 A legal minimum price is set which is below the equilibrium price. What will be the impact of this?

A Excess of demand over supply

B Excess of supply over demand

C Nothing (1 mark)

4.4 Which one of the following would cause the supply curve for a good to shift to the right (outwards from

the origin)?

A A fall in the price of the good

B An increase in the demand for the good

C A fall in production costs of the good

D The imposition of a minimum price (2 marks)

4.5 When the price of a good is held above the equilibrium price, the result will be

A Excess demand

B A shortage of the good

C A surplus of the good (1 mark)

4.6 Which one of the following would not lead directly to a shift in the demand curve for overseas holidays?

A An advertising campaign by holiday tour operators

B A fall in the disposable incomes of consumers

C A rise in the price of domestic holidays

D A rise in the price of overseas holidays (2 marks)

4.7 Which of the following is likely to lead to a fall in the price of good Q which is a normal good?

A A rise in the price of good P, a substitute for good Q

B A fall in the level of household incomes generally

C A fall in the price of good T, a complement to good Q

D A belief that the price of good Q is likely to double in the next 3 months (2 marks)

4.8 According to the theory of the firm, which of the following statements describes an oligopoly?

A There are no barriers to entry into or exit from the market

B There is only one producer in the market

C There are four producers exerting considerable influence in the market

D There are many producers but they each use product differentiation to distinguish themselves

from each other (2 marks)

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4.9 Which of the following is not a substitute for carpets?

A Ceramic floor tiles

B Wooden floorboard

C Carpet underlay (1 mark)

4.10 Which of the following is not a complement to cars?

A Petrol

B Tyres

C Holidays (1 mark)

4.11 The demand for fashion goods is not influenced by:

A Price

B Allocative inefficiency among producers

C The distribution of income among households

D Expectation of future price changes (2 marks)

4.12 If the price of coffee falls, which one of the following outcomes would be expected to occur?

A A fall in the quantity of coffee demanded

B A rise in the price of tea

C A fall in the demand for drinking cups

D A fall in the demand for tea (2 marks)

4.13 What is an inferior good?

A A good of such poor quality that demand for it is very weak

B A good for which the cross elasticity of demand with a substitute product is greater than 1

C A good for which demand will fall as household income rises (1 mark)

4.14 Consider the price and demand for flower vases. The price of cut flowers goes up sharply. Which of the

following would you expect to happen?

A The demand curve for flower vases will shift to the left and their price will rise

B The demand curve for flower vases will shift to the right and their price will rise

C There will be a movement along the demand curve for flower vases and their price will go down

D The demand curve for flower vases will shift to the left and their price will go down

(2 marks)

4.15 Consider the price and demand for tickets to travel by sea ferry. The price of travelling by hovercraft (a

substitute form of travel) goes up. Which of the following would you expect to happen?

A The demand curve for sea ferry tickets will shift to the left, and their price will go down. More sea

ferry tickets will be sold.

B The demand curve for sea ferry tickets will shift to the right, and their price will go up. More ferry

tickets will be sold.

C The demand curve for sea ferry tickets will shift to the right and their price will go down. More

sea ferry tickets will be sold.

D The demand curve for sea ferry tickets will shift to the right and their price will go up. Fewer sea

ferry tickets will be sold. (2 marks)

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QUESTIONS

4.16 The summer demand for hotel accommodation in London comes mainly from foreign tourists. Demand

for hotel rooms in London in summer could be reduced by a fall in the price or value of which of the

following?

1 US dollars

2 Aeroplane tickets

3 Sterling

A Item 1 only

B Items 1 and 2 only

C Items 2 and 3 only

D Item 3 only (2 marks)

4.17 ABC produces a variety of soft drink. It has two competitors but all three producers use product

differentiation to distinguish themselves from each other. What type of market is this?

A Perfect competition

B Monopoly

C Monopolistic competition

D Oligopoly (2 marks)

4.18 Suppose that, in a certain advanced industrialised country, the government has applied price controls

over rents of both public and private rented accommodation for a number of years, and a serious

problem of widespread homelessness has built up. Just recently, the rent price controls have been

eased. Which of the following consequences should now occur?

1 An increase in homelessness

2 In the longer term, an increase in new building work

3 The provision of more rented accommodation

4 Fewer owner-occupied dwellings

A Consequences 1 and 2

B Consequences 2 and 3

C Consequences 3 and 4

D Consequences 1 and 4 (2 marks)

4.19 The demand curve for a resource may shift because of

A A change in the demand for a good whose production is dependent on the resource

B Concerns about potential harmful pollution from the resource

C A change in the price of a substitute resource

D All of the above (2 marks)

4.20 The income elasticity of demand for a product is high. This means that:

A Sales will fall only slightly when incomes of households fall

B Sales will rise sharply when incomes of households rise

C The good is an inferior good (1 mark)

4.21 Using the point method, what is the price elasticity of demand of product X as price falls from its current

price of $20 to $15?

Old New

Price 20 15

Quantity 10 15

A 0.5

B 1

C 1.5

D 2 (2 marks)

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4.22 Consumer surplus is:

A The excess between what consumers are prepared to pay for a good or service, and the prevailing

market price

B The indirect tax producers pay on a good or service

C The marginal utility gained by consuming one more unit of a good or service

D The indirect tax consumers pay on a good or service (2 marks)

4.23 Which combination of demand and supply curves would be appropriate for a firm attempting to increase

its profits by increasing its market share?

A Inelastic demand, inelastic supply

B Elastic demand, elastic supply

C Inelastic demand, elastic supply

D Elastic demand, inelastic supply (2 marks)

4.24 If the absolute value of the price elasticity of demand for dry white wine is greater than one, a decrease

in the price of all wine would result in:

A A more than proportional decrease in the quantity of dry white wine purchased

B A less than proportional decrease in the quantity of dry white wine purchased

C A less than proportional increase in the quantity of dry white wine purchased

D A more than proportional increase in the quantity of dry white wine purchased (2 marks)

4.25 Mr Smith has a limited income which restricts the number of different goods he can buy. Which one of

the following best describes the position at which Mr Smith's utility from purchasing different goods is

maximised?

A Marginal utility from each good is equal

B Marginal utility from each good is 0

C Ratio of marginal utility to price is equal for each good (1 mark)

(Total = 42 marks)

5 Section A MTQs 29 mins

5.1 (a) Are the following statements about elasticities true or false?

(i) If income elasticity is positive, the commodity is called an inferior good

(ii) If two goods are complements, the cross elasticity will be negative

(iii) If price elasticity is greater than 1, demand is said to be inelastic

(iv) Unrelated products would have a cross elasticity of infinity (2 marks)

(b) Which three of the following reasons would result in a shift of the demand curve to the right for a

normal good?

A A fall in the price of substitutes

B A change in taste towards a competitor good

C An increase in household incomes

D An expected future rise in the price of the good

E A rise in the price of complements

F An increase in population (2 marks)

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QUESTIONS

5.2 (a) A company has recently dismissed employees in the following circumstances:

Sarah was dismissed following disciplinary proceedings, although she was not guilty of

negligence, and was not given her contractual period of notice by the company.

Trevor was dismissed form the company immediately after committing an act that was found to

be grossly negligent.

Umberto, a relatively new employee who was showing a lot of promise, was dismissed after

telling management that he had joined a trade union.

Vanessa, having previously being rated as one of the best performing employees in the company,

was dismissed after management discovered she was pregnant.

For each of the following situations, classify whether the dismissal is:

A Unfair

B Wrongful

C Neither

(i) Sarah

(ii) Trevor

(iii) Umberto

(iv) Vanessa (2 marks)

(b) Are the following statements about redundancy true or false?

(i) In the event of redundancy, an employee with one year's continuous employment is

entitled to compensation

(ii) Redundancy can occur where an employer ceases to carry on business in a particular

location (2 marks)

5.3 (a) The following are steps that governments can take to influence certain areas.

A Tax incentives for investment

B Equal opportunities legislation

C Forbid takeovers

D Product safety standards

For each of the following areas, which government action will positively influence that area?

(i) Output capacity

(ii) Competition

(iii) Employment

(iv) Consumer protection (2 marks)

(b) For each of the following government policy tools, indicate whether they relate to

A Fiscal policy

B Monetary policy

(i) Borrowing

(ii) Taxation

(iii) Interest rates

(iv) Money supply (2 marks)

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5.4 (a) GHJ Co is a manufacturing company that makes one product. The production process is labour

intensive and as a result the product is highly specialised. GHJ Co also provides its customers

with maintenance and after sales service.

Department W uses materials and labour to produce the final product.

Department X stores the final product and delivers it to customers.

Department Y is in charge of advertising and promotion of the final product.

Department Z is responsible for providing spare parts to customers.

The following are all primary activities from Porter's value chain

A Operations

B After sales service

C Outbound logistics

D Marketing and sales

For each of the departments, select the corresponding primary activity listed above

(i) Department W

(ii) Department X

(iii) Department Y

(iv) Department Z (2 marks)

(b) Which two of the following factors indicate that suppliers have high bargaining power in an

industry?

A There are a large number of suppliers

B There is a lack of substitute products available

C Switching costs for customers are low

D The product supplied is highly differentiated

E Product quality is not important to customers (2 marks)

5.5 (a) Product BB15 has recently reduced its price by 5% which increased the sales volume by 12.5%.

This price change also caused a fall in the sales volume of product CC25 by 2.5%. There was no

change in the price of product CC25.

(i) What is the price elasticity of demand for product BB15?

(ii) What is the cross elasticity of demand?

(iii) Products BB15 and CC25 are

Which word correctly fills the blank above?

A Complements

B Substitutes

C Unrelated (3 marks)

(b) For a normal, but inferior good, the demand curve slopes to the right.

Which word from the list below correctly fills in the blank?

A Downwards

B Upwards

C Horizontally (1 mark)

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QUESTIONS

5.6 (a) Which THREE of the following statements reflect the activities of an NGO?

A They have targets for customer satisfaction

B They are almost always charities

C They are aimed at promoting social, political or environmental change

D They often raise funds through donations

E They are legally constituted organisations with commercial aims

F They are measured in terms of effectiveness and efficiency (3 marks)

(b) What acronym is generally used for performance measurement of an NGO?

A VFM

B ROCE

C PBIT

D SWOT (1 mark)

(Total = 24 marks)

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Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

 An ……. organisation always exists alongside the formal one.

 Organisations can be d……….. on a functional basis, a geographical basis, a product basis, a brand

basis, or a matrix basis. Organisation structures often feature a variety of these types, as h……

structures.

 In a d……. structure some activities are decentralised to business units or regions.

 The strategic apex exerts a pull to centralise, leading to the s……. structure.

 Span of control or 'span of management' refers to the number of s………. responsible to a s…….

 Recent trends have been towards d……… organisations of levels of management.

 R……….. may be pure, applied or development. It may be intended to improve products or processes.

 The ……….. function plans, organises, directs and controls the necessary activities to provide products

and services, creating outputs which have added value over the value of inputs.

 The …………. function manages an organisation's relationships with its customers.

 ……. …………….. ………….. (HRM) is concerned with the most effective use of human resources. It

deals with organisation, staffing levels, motivation, employee relations and employee services.

 Organisation c…… is 'the way we do things round here'.

 Harrison classified four types of culture, to which Handy gave the names of Greek deities.

– Power culture (….) is shaped by one individual

– Role culture (……) is a bureaucratic culture shaped by rationality, rules and procedures

– Task culture (…….) is shaped by a focus on outputs and results

– Existential or person culture (Dionysus) is shaped by the interests of individuals

 Within an organisation, c………….. can consist entirely of executives or may be instruments for joint

consultation between employers and employees.

 Good c…….. g……….. involves risk management and internal control, accountability to stakeholders

and other shareholders and conducting business in an ethical and effective way.

 The b….. should be responsible for taking major policy and strategic decisions.

 Division of responsibilities at the head of an organisation is most simply achieved by separating the

roles of C….and c….. e……….

 Audit committees of independent n…- ……….. directors should liaise with external audit, supervise

internal audit, and review the annual accounts and internal controls.

 Annual reports must convey a f… and b……. view of the organisation. They should state whether the

organisation has complied with governance regulations and codes, and give specific disclosures about

the board, internal control reviews, going concern status and relations with stakeholders.

Do you know? – Business organisation structure, functions and governance

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QUESTIONS

Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach

the exam.

 An informal organisation always exists alongside the formal one.

 Organisations can be departmentalised on a functional basis, a geographical basis, a product basis, a

brand basis, or a matrix basis. Organisation structures often feature a variety of these types, as hybrid

structures.

 In a divisional structure some activities are decentralised to business units or regions.

 The strategic apex exerts a pull to centralise, leading to the simple structure.

 Span of control or 'span of management' refers to the number of subordinates responsible to a superior.

 Recent trends have been towards delayering organisations of levels of management.

 Research may be pure, applied or development. It may be intended to improve products or processes.

 The production function plans, organises, directs and controls the necessary activities to provide

products and services, creating outputs which have added value over the value of inputs.

 The marketing function manages an organisation's relationships with its customers.

 Human resource management (HRM) is concerned with the most effective use of human resources. It

deals with organisation, staffing levels, motivation, employee relations and employee services.

 Organisation culture is 'the way we do things round here'.

 Harrison classified four types of culture, to which Handy gave the names of Greek deities.

– Power culture (Zeus) is shaped by one individual

– Role culture (Apollo) is a bureaucratic culture shaped by rationality, rules and procedures

– Task culture (Athena) is shaped by a focus on outputs and results

– Existential or person culture (Dionysus) is shaped by the interests of individuals

 Within an organisation, committees can consist entirely of executives or may be instruments for joint

consultation between employers and employees.

 Good corporate governance involves risk management and internal control, accountability to

stakeholders and other shareholders and conducting business in an ethical and effective way.

 The board should be responsible for taking major policy and strategic decisions.

 Division of responsibilities at the head of an organisation is most simply achieved by separating the

roles of Chair and chief executive.

 Independent non-executive directors have a key role in governance. Their number and status should

mean that their views carry significant weight.

 Audit committees of independent non-executive directors should liaise with external audit, supervise

internal audit, and review the annual accounts and internal controls.

 Annual reports must convey a fair and balanced view of the organisation. They should state whether the

organisation has complied with governance regulations and codes, and give specific disclosures about

the board, internal control reviews, going concern status and relations with stakeholders.

Did you know? – Business organisation structure, functions and governance

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6 Business organisation, structure and strategy 19 mins

6.1 Which of the following statements about an organisation chart is not true?

A An organisation chart provides a summary of the structure of a business.

B An organisation chart can improve internal communications within a business.

C An organisation chart can improve employees' understanding of their role in a business.

D An organisation chart can indicate functional authority but not line authority within a business.

(2 marks)

6.2 Which of the following is a correct definition of 'span of control'?

A The number of employees subordinate in the hierarchy to a given manager

B The number of levels in the hierarchy 'below' a given manager's

C The number of employees directly responsible to a manager (1 mark)

6.3 Which of the following terms is not used by Mintzberg in his description of organisational structure?

A Strategic apex

B Support base

C Technostructure

D Operating core (2 marks)

6.4 Y plc is a growing organisation which has recently diversified into a number of significant new product

markets. It has also recently acquired another company in one of its overseas markets.

What would be the most appropriate form of organisation for Y plc?

A Geographical departmentation

B Divisionalisation

C Functional departmentation (1 mark)

6.5 Which of the following principles of classical management is challenged by matrix management?

A Structuring the organisation on functional lines

B Structuring the organisation on geographical lines

C Unity of command

D Decentralisation of decision-making (2 marks)

6.6 Which of the following statements about the informal organisation is not true?

A The influence of the informal organisation was highlighted by the Hawthorne Studies, in the way

group norms and dynamics affected productivity.

B Informal organisation can pose a threat to employee health and safety.

C Informal organisation can stimulate innovation.

D Managers in positions of authority generally cannot be part of the informal organisation.

(2 marks)

6.7 Which one of the following is an advantage of centralisation?

A It helps to develop the skills of junior managers

B It avoids overburdening top managers in terms of workload and stress

C Senior managers can take a wider view of problems and consequences (1 mark)

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QUESTIONS

6.8 Which of the following statements is/are true?

(i) An informal organisation exists within every formal organisation

(ii) The objectives of the informal organisation are broadly the same as those of the formal

organisation

(iii) A strong, close-knit informal organisation is desirable within the formal organisation

A Statement (i) only

B Statements (i) and (iii) only

C Statements (ii) and (iii) only

D Statement (iii) only (2 marks)

6.9 What is an organisation which has removed the internal barriers which separate hierarchy levels and

functions and also between the organisation and its suppliers, customers and competitors known as?

A Modular organisation

B Hollow organisation

C Jobless structure

D Boundaryless organisation (2 marks)

6.10 Which of the following statements are true?

(i) With a shared service centre services are likely to be less tailored

(ii) The IT function is commonly provided using shared service approach

(iii) A shared service centre is not part of the organisation

A Statement (i) and (iii) only

B Statements (i) and (ii) only

C Statements (ii) and (iii) only (1 mark)

(Total = 16 marks)

7 Organisational culture and committees 40 mins

7.1 BZ Ness Ltd is an organisation with a strongly traditional outlook. It is structured and managed

according to classical principles: specialisation, the scalar chain of command, unity of command and

direction. Personnel tend to focus on their own distinct tasks, which are strictly defined and directed.

Communication is vertical, rather than lateral. Discipline is much prized and enshrined in the rule book

of the company.

From the scenario, what sort of culture does BZ Ness Ltd have, using Harrison's classifications?

A Role culture

B Task culture

C Existential culture

D Power culture (2 marks)

7.2 Which of the following statements is true?

A Strong values improve corporate performance

B Strong values can replace rules and controls in an organisation

C Strong values minimise conflict within an organisation

D Strong values are dangerous if they filter out 'uncomfortable' environmental information

(2 marks)

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7.3 Culture is the collective programming of the mind which distinguishes the members of one

........................................ from another.

Which word or phrase most accurately completes the definition?

A Nation

B Category of people

C Social class (1 mark)

7.4 Which of the following is not one of the terms used by Hofstede to describe a key dimension of culture?

A Power-distance

B Acquisitive/giving

C Individualism/collectivism

D Uncertainty avoidance (2 marks)

7.5 Which is the 'deepest' set of underlying factors which determine culture, and the hardest to manage?

A Values

B Rituals

C Assumptions (1 mark)

7.6 Who defined organisational culture as 'the set of shared, taken-for-granted implicit assumptions that a

group holds and that determines how it perceives, thinks about and reacts to its environment'?

A Maslow

B Schein

C Porter

D Mintzberg (2 marks)

7.7 Research has indicated that workers in country A display characteristics such as toughness and the

desire for material wealth and possessions, while workers in country B value personal relationships,

belonging and the quality of life.

According to Hofstede's theory, these distinctions relate to which of the following cultural dimensions?

A Masculinity – femininity

B Power – distance

C Individualism – collectivism

D Uncertainty avoidance (2 marks)

7.8 The research and development (R & D) function of a business:

(i) Is primarily concerned with market research

(ii) Can improve existing products as well as developing completely new products

(iii) Has been less important for firms manufacturing computers to meet an industry standard than for

those firms developing the next generation of computers

(iv) Is always undertaken under contract by specialist external consultancies

Which of the above statements are correct?

A (i) and (ii) only

B (ii) and (iii) only

C (i), (iii) and (iv) only

D (ii) and (iv) only (2 marks)

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QUESTIONS

7.9 Services have certain qualities which distinguish them from products. Because of their

........................................ , physical elements such as vouchers, tickets, confirmations and

merchandise are an important part of service provision.

Which of the following words most accurately completes the sentence?

A Intangibility

B Inseparability

C Variability

D Perishability (2 marks)

7.10 U Ltd produces a portfolio of products and focuses its efforts and resources on persuading customers to

buy them.

This is an example of which type of 'orientation'?

A Production

B Sales

C Marketing (1 mark)

7.11 Which of the following is/are objectives of human resource management?

1 To meet the organisation's social and legal responsibilities relating to the human resource

2 To manage an organisation's relationship with its customers

3 To develop human resources that will respond effectively to change

A 1 and 2

B 1 and 3

C 1

D 1, 2 and 3 (2 marks)

7.12 Jeff, Jane and Jaitinder work in different departments in the firm XYZ Co. They are members of the

permanent 'staff committee' which meets on a monthly basis to discuss staff issues such as pensions

and benefits. Their purpose is to listen to communication from staff within their department and raise

issues on behalf of their department at committee meetings. What is the name given to this type of

committee?

A Joint committee

B Task force

C Standing committee (1 mark)

7.13 Josh, Joanne, Ed, and Sue all work for D Co. Josh works in the finance department. Joanne works in the

human resources department. Ed is Sue's line manager in the purchasing department. Which one of the

staff members would be involved with payroll administration?

A Josh

B Joanne

C Ed

D Sue (2 marks)

7.14 Managers Jill and Paul are talking about how to resolve a business problem. Jill suggests that a

committee should be formed to discuss the issues. Paul argues that committees are:

(i) Time-consuming and expensive

(ii) They invite a compromise instead of a clear-cut decision

Which of these statements is true?

A Both (i) and (ii)

B (i) only

C (ii) only

D Neither statement is true (2 marks)

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7.15 Diane carries out routine processing of invoices in the purchasing department of L Co. Joanne is Diane's

supervisor. Lesley is trying to decide how many staff will be needed if some proposed new technology is

implemented. Tracey is considering the new work that L Co will be able to offer and the new markets it

could enter, once the new technology is well established.

Which member of L Co carries out tactical activities?

A Diane

B Joanne

C Lesley

D Tracey (2 marks)

7.16 Mr Q is manager of a division which is undergoing a business downturn. He tries to shelter the

workforce from the effects of downsizing: taking time for consultation, organising counselling and

refusing to institute compulsory redundancies.

Which one of the following cultural types identified in the Hofstede model is this manager most likely to

represent?

A Low power-distance

B Low masculinity

C Low uncertainty avoidance

D High individuality (2 marks)

7.17 Which of the following would not be an objective of stakeholder management in relation to major

suppliers?

A Continuity of supply

B Mutual dependency

C Information sharing (1 mark)

7.18 Janet works for a toy company called K Co. She telephones Mary at P Co on a daily basis to order parts.

Janet has no contact with customers but does deal with complaint letters from D Group, an organisation

against slave labour. D Group believe that K Co use slave labour in the toy manufacturing factories.

Which of the following are internal stakeholders of K Co?

A Janet only

B Janet and Mary at P Co

C Janet and D Group

D Janet, Mary and D Group (2 marks)

7.19 Josina has been appointed Chair of a remuneration committee. She is responsible for which one of the

following duties?

A Fixing the date and time of the next meeting

B Giving a ruling on matters in dispute

C Taking notes during the meeting (1 mark)

7.20 Ali is responsible for preparing and issuing documents prior to a meeting, then acting on and

communicating decisions following the meeting. What is his role?

A Committee secretary

B Committee member

C Committee Chair (1 mark)

(Total = 33 marks)

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QUESTIONS

8 Corporate governance and social responsibility 23 mins

8.1 Which of the following statements about corporate social responsibility is true?

(i) CSR guarantees increased profit levels

(ii) CSR adds cost to organisational activities and reduces profit levels

(iii) Social responsibility may have commercial benefits

(iv) Social responsibility is a concern confined to business organisations

A (i), (ii), (iii) and (iv)

B (i) and (iii)

C (ii) and (iv)

D (iii) only (2 marks)

8.2 Calum, Heidi and Jonas are managers for Zip Co. They have been told that their salary will be based on

company performance and that a bonus scheme will also be introduced. The bonus will also be related

to company performance. Which of the following best describes the approach to governance that Zip Co

is using?

A Stewardship theory

B Agency theory

C Stakeholder theory (1 mark)

8.3 Michael has been asked to prepare a presentation for the company directors on good corporate

governance. Which one of the following is he likely to exclude from his presentation?

A Risk management

B Internal controls

C Maximising shareholder wealth

D Accountability to stakeholders (2 marks)

8.4 Corporate governance is essentially of what significance?

A Control system

B Strategic importance

C Risk management (1 mark)

8.5 Which of the following is a feature of poor corporate governance?

A Domination of the board by a single individual

B Critical questioning of senior managers by external auditors

C Supervision of staff in key roles

D Lack of focus on short-term profitability (2 marks)

8.6 The tasks of which body include: monitoring the chief executive officer; formulating strategy; and

ensuring that there is effective communication of the strategic plan?

A The audit committee

B The Public Oversight Board

C The board of directors

D The nomination committee (2 marks)

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8.7 Which of the following would be included in the principles of Corporate Social Responsibility?

(i) Human rights

(ii) Employee welfare

(iii) Professional ethics

(iv) Support for local suppliers

A (ii) and (iii) only

B (i) only

C (ii), (iii) and (iv) only

D (i), (ii) and (iv) only (2 marks)

8.8 Which of the following is subject to the least direct regulation?

A Employment protection

B Corporate social responsibility

C Corporate governance (1 mark)

8.9 In most countries, what is the usual purpose of codes of practice on corporate governance?

A To establish legally binding requirements to which all companies must adhere

B To set down detailed rules to regulate the ways in which companies must operate

C To provide guidance on the standards of the best practice that companies should adopt

D To provide a comprehensive framework for management and administration (2 marks)

8.10 Who should set directors' reward and incentive packages, according to corporate governance provisions?

A The board of directors

B The nomination committee

C A remuneration committee made up of independent non-executive directors (1 mark)

8.11 What is the purpose of an Operating and Financial Review (OFR)?

A To provide the board of directors with a narrative statement by the audit committee of its findings

on the efficacy of internal operational and financial controls.

B To set out the directors' analysis of the business, in order to provide investors with a historical

and prospective view through the eyes of management.

C To provide a statement that the company is a going concern. (1 mark)

8.12 Which of the following are advantages of having non-executive directors on the company board?

1 They can provide a wider perspective than executive directors.

2 They provide reassurance to shareholders.

3 They may have external experience and knowledge which executive directors do not possess.

4 They have more time to devote to the role.

A 1 and 3

B 1, 2 and 3

C 1, 3 and 4

D 2 and 4 (2 marks)

(Total = 19 marks)

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QUESTIONS

9 Section B MTQs 29 mins

9.1 (a) Paul, Mary, Alan and Kate are having a board meeting of a newly formed company and they are

discussing the orientation of the company.

Paul believes that the company will actively need to persuade customers to buy their products.

Mary believes they should add additional features to their products, without carrying out market

research, and this will increase demand from customers.

Alan believes the products will sell as they are and the company should produce as many items

as it can.

Kate believes that they should research what customers need and value and adapt the products

to meet the findings of the research.

The following are types of orientation of a company

A Production orientation

B Product orientation

C Sales orientation

D Marketing orientation

For each board member, select the orientation they are recommending.

(i) Paul

(ii) Mary

(iii) Alan

(iv) Kate (2 marks)

(b) Breaking up the market into different groups, which each have common needs, wants and

preferences is known as

Which of the options below correctly fills the blank?

A Undifferentiated marketing

B Marketing mix

C Mass marketing

D Market segmentation (2 marks)

9.2 (a) The main levels of strategy in an organisation are as follows:

A Corporate

B Business

C Operational

For each of the strategic questions listed below, select the appropriate level of strategy from the

list above

(i) Which business should we be in?

(ii) Should we specialise in a profitable product?

(iii) How best can we market the products?

(iv) Should we segment the market? (2 marks)

(b) Which two of the following are advantages of centralisation?

A Decision makers have a greater awareness of local problems

B Managers are able to take a wider view

C Avoids overburdening top managers

D Help to develop junior managers

E Procedures and documentation can be standardised (2 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

9.3 (a) Company W focuses on autonomy of its employees. Task achievement is seen as more important

than working relationships. The company is impersonal and defends its business interests.

Company X has a strict task structure with written rules and regulations which are adhered to by

all employees. Dissent is not tolerated.

Company Y has a focus on good working relationships between employees and seeks consensus

on all business decisions.

Company Z has a flat organisation structure and a high level of employee participation in

decision-making.

Hofstede classified four main dimensions of cultural differences as follows

A Power distance

B Uncertainty avoidance

C Individualism

D Masculinity

For each company, select the dimension being displayed

(i) Company W

(ii) Company X

(iii) Company Y

(iv) Company Z (2 marks)

(b) According to Schein there are three determinants of culture. The first of these is the observable

level.

(i) Patterns of greeting styles and business formalities are known as

Which word correctly fills in the blank above?

A Behaviour

B Artefacts

C Attitudes

(ii) Concrete expressions such as design of office premises are known as

Which word correctly fills in the blank above?

A Behaviour

B Artefacts

C Attitudes (2 marks)

9.4 (a) The following four components of an organisation were identified by Mintzberg

A Operating core

B Support staff

C Strategic apex

D Middle line

For each of the following jobs, state which component they fit into.

(i) Canteen worker

(ii) Production worker

(iii) Sales manager

(iv) Director (2 marks)

(b) Which two of the following statements are not consistent with Handy's shamrock organisation?

A Self-employed technicians should be hired on a project-by-project basis

B The contingent work force consists of employees on long-term contracts

C The professional core should consist of full-time, fixed salary employees

D The organisation looks for ways that consumers can do part of the work of the

organisation (2 marks)

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QUESTIONS

9.5 (a) For each of the following tasks, select whether they are the responsibility of:

A The financial accounting department

B The treasury department

(i) Arranging an overdraft

(ii) Managing foreign currency exposure

(iii) Recording financial transactions

(iv) Cash budgeting

(v) Reporting to shareholders

(vi) Repaying loans (3 marks)

(b) Markets for trading short-term financial instruments such as certificates of deposit are known as

Which of the following correctly fills the gap above?

A Money markets

B Capital markets

C Venture capital (1 mark)

9.6 (a) Fill in the gaps in the King report’s summary of the role of the board below.

(i) To define the ________ of the company

(ii) To define the ________ by which the company will perform its daily duties

(iii) To identify the ________ relevant to the company

(iv) To develop a ________combining these factors

(v) To ensure ________ of the strategy (3 marks)

(b) Which of the following is NOT part of the role of a company secretary?

A Establishment and maintenance of a registered office

B Filing of annual returns

C Chairing management committee meetings

D Maintaining statutory books and records (1 mark)

(Total = 24 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

 A…….. is a way of recording, analysing and summarising transactions of a business.

 The two most important e………… financial statements are the statement of financial position and the

income statement. Reports produced for internal purposes include budgets and costing schedules.

 The income statement is a record of i….. generated and e…….. incurred over a given period.

 The statement of financial position is a list of all the ……..owned by a business and all the ……. owed

by a business at a particular date.

 The statement of …. …… shows sources of cash generated during a period and how these funds have

been spent.

 The p……. and s…. systems will be the most important components of most company accounting

systems.

 C…… should be regularly checked and any problems reported to management.

 A d……. may be described as a 'pool' of data, which can be used by any number of applications. Its use

is not restricted to the accounts department.

 S…….., too, are often used both in financial accounting and cost accounting.

 Internal controls should help organisations counter risks, maintain the quality of reporting and comply

with laws and regulations. They provide r…….. a……. that the organisations will fulfil their objectives.

 Controls can be classified in various ways including administrative and accounting; p……, detect and

correct; discretionary and non-discretionary; v……. and mandated; manual and automated.

 Internal auditors are e…….. of the organisation whose work is designed to add value and who report to

the audit committee. External auditors are from a……. f…… and their role is to report on the financial

statements to shareholders.

 An a….. t…… shows who has accessed a system and the operations performed.

 In a corporate context f….. can fall into one of two main categories: removal of funds or assets from a

business or the intentional misrepresentation of the financial position of a business.

 There are three broad pre-requisites or 'pre-conditions' that must exist in order to make fraud a

possibility: d………, m………. and …………...

 It is the responsibility of the ……… to take such steps as are reasonably open to them to prevent and

detect fraud.

 The growth of globalisation has created more opportunities for m….. l……… which governments and

international bodies are trying to combat with legislation.

Do you know? – Accounting and reporting systems, controls and compliance

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QUESTIONS

Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach

the exam.

 Accounting is a way of recording, analysing and summarising transactions of a business.

 The two most important external financial statements are the statement of financial position and the

income statement. Reports produced for internal purposes include budgets and costing schedules.

 The income statement is a record of income generated and expenditure incurred over a given period.

 The statement of financial position is a list of all the assets owned by a business and all the liabilities

owed by a business at a particular date.

 The statement of cash flows shows sources of cash generated during a period and how these funds

have been spent.

 The purchases and sales systems will be the most important components of most company accounting

systems.

 Controls should be regularly checked and any problems reported to management.

 A database may be described as a 'pool' of data, which can be used by any number of applications. Its

use is not restricted to the accounts department.

 Spreadsheets, too, are often used both in financial accounting and cost accounting.

 Internal controls should help organisations counter risks, maintain the quality of reporting and comply

with laws and regulations. They provide reasonable assurance that the organisations will fulfil their

objectives.

 Controls can be classified in various ways including administrative and accounting; prevent, detect and

correct; discretionary and non-discretionary; voluntary and mandated; manual and automated.

 Internal auditors are employees of the organisation whose work is designed to add value and who

report to the audit committee. External auditors are from accountancy firms and their role is to report

on the financial statements to shareholders.

 An audit trail shows who has accessed a system and the operations performed.

 In a corporate context fraud can fall into one of two main categories: removal of funds or assets from a

business or the intentional misrepresentation of the financial position of a business.

 There are three broad pre-requisites or 'pre-conditions' that must exist in order to make fraud a

possibility: dishonesty, motivation and opportunity.

 It is the responsibility of the directors to take such steps as are reasonably open to them to prevent and

detect fraud.

 The growth of globalisation has created more opportunities for money laundering which governments

and international bodies are trying to combat with legislation.

Did you know? – Accounting and reporting systems, controls and compliance

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FAB/F1 ACCOUNTANT IN BUSINESS

10 The role of accounting 52 mins

10.1 Joseph has just started his first job in an accountancy department. A qualified senior member of staff

explains to him what the main aim of accounting is. Which of the following options is the correct aim of

accounting?

A To maintain ledger accounts for every asset and liability

B To provide financial information to users of such information

C To produce a trial balance

D To record every financial transaction individually (2 marks)

10.2 Which of the following statements about accounting information is incorrect?

A Some companies voluntarily provide specially-prepared financial information to employees.

B Accounting information should be relevant, reliable, complete, objective and timely.

C Accountants have a strong obligation to ensure that company accounts conform to accounting

standards

D Charities and professional bodies do not have to produce financial statements in the same way as

businesses. (2 marks)

10.3 In a typical finance function, preparation of budgets and budgetary control would usually be the

responsibility of which of the following roles?

A The Financial Controller

B The Management Accountant

C The Treasurer (1 mark)

10.4 Three of the following are outputs of a payroll system, and one is an input to the system. Which is the

input?

A Credit transfer forms

B Time sheets

C Payroll analysis

D Pay slips (2 marks)

10.5 Which of the following is an aim of the control system relating to accounts payable and purchases?

A To ensure that all credit notes received are recorded in the general and payables ledger

B To ensure that goods and services are only supplied to customers with good credit ratings

C To ensure that all credit notes that have been issued are recorded in the general and receivables

ledgers

D To ensure that potentially doubtful debts are identified (2 marks)

10.6 Which of the following does company law require a statement of financial position to give?

A A true and fair view of the profit or loss of the company for the financial year

B An unqualified (or 'clean') report on the statement of affairs of the company as at the end of the

financial year

C A true and fair view of the statement of affairs of the company as at the end of the financial year

(1 mark)

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QUESTIONS

10.7 The following, with one exception, are areas in which an integrated accounting software package has

advantages compared to a series of separate (stand-alone) dedicated programs. Which is the exception?

A Efficiency in updating data

B Flexibility in preparing reports

C Data integrity

D Specialised capabilities (2 marks)

10.8 A ........................................ is a program which deals with one particular part of a computerised

business accounting system.

Which of the following terms correctly completes this definition?

A Suite

B Module

C Spreadsheet

D Database (2 marks)

10.9 All the following, with one exception, are examples of advantages of a computer-based accounting

system over a manual system. Which statement is the exception?

A Financial calculations can be performed more quickly and accurately

B Financial information can be presented to other business departments in a variety of forms

C There is much stronger provision for data security

D The system is easier to update as new information becomes available (2 marks)

10.10 A spreadsheet software application may perform all of the following business tasks except one. Which

one of the following is the exception?

A The presentation of numerical data in the form of graphs and charts

B The application of logical tests to data

C The application of 'What if?' scenarios

D Automatic correction of all data entered by the operator into the spreadsheet (2 marks)

10.11 The preparation and filing of accounts by limited companies each year is required by which of the

following?

A Codes of corporate governance

B National legislation

C International Accounting Standards

D Local Accounting Standards (2 marks)

10.12 All the following statements except one are examples of the advantages that a computer-based

accounting system used by a management accountant has over a manual system.

Which statement is the exception?

A A computer-based accounting system is easier to update as new information becomes available

B A computer-based accounting system will always reject inaccurate financial information input to

the system's database

C Financial calculations can be performed more quickly and accurately

D The management accountant can more readily present financial information to other business

departments in a variety of forms (2 marks)

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10.13 Gordon works in the accounts department of a retail business. He and his colleagues are looking at the

sales figures for various types of clothing. The director asks them to use exception reporting to

summarise their findings. Which of the following correctly defines the concept of 'exception reporting'

within a business context?

A The reporting of unusual events, outside the normal course of events

B The analysis of those items where performance differs significantly from standard or budget

C The preparation of reports on routine matters on an 'ad hoc' basis

D The scrutiny of all data as a matter of course, save in exceptional circumstances

(2 marks)

10.14 A small company's computer system comprises five desktop personal computers located in separate

offices linked together in an intranet within the same building. The computers are not connected to the

Internet and employees are not allowed to take storage media into or out of the building. Information

which the business' owner wishes to keep confidential to herself is stored in one of the computers.

Which one of the following statements can be concluded from this information?

A This company's computer system does not need a back-up storage system

B This company's computer system does not need a password access system

C This company's computer system does not receive email from customers or suppliers

(1 mark)

10.15 ........................................ Systems pool data from internal and external sources and make information

available to senior managers, for strategic, unstructured decision-making.

Which word or phrase correctly completes this sentence?

A Expert

B Decision Support

C Executive Support

D Management Support (2 marks)

10.16 All the following statements except one describe the relationship between data and information. Which

one is the exception?

A Information is data which has been processed in such a way as to be meaningful to the person

who receives it.

B The relationship between data and information is one of inputs and outputs.

C Data is always in numerical form whereas information is always in text form. (1 mark)

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QUESTIONS

10.17

INPUT DATA

DATABASE

APPLICATION

PROGRAMS

SALES

APPLICATIONS

STATISTICS

ETC

BRANCH AND

PERSONNEL

STATISTICS

ETC

STAFF

PAYROLL

ANALYSIS

ETC

OTHER

APPLICATIONS

What element of a database system is represented by the question mark in the above diagram?

A Database administrator

B Electronic point of sale system

C Data storage

D Database management system (2 marks)

10.18 Which of the following statements about data security is not true?

A Loss or corruption of data is almost always non-deliberate.

B New staff in particular pose a threat.

C It is impossible to prevent all threats cost-effectively.

D Smoke detectors are a form of data protection. (2 marks)

10.19 Office Automation Systems are designed mainly to increase the ........................................ of data and

information workers.

Which word correctly completes this sentence.

A Productivity

B Flexibility

C Decision-making capability (1 mark)

10.20 Which of the following user groups of financial and accounting information are likely to need, and have

access to, this information most?

A Managers of the company

B Shareholders of the company

C Financial analysis advisers (1 mark)

10.21 To whom should the internal audit department of an organisation report?

A The Finance Director

B The audit committee of the board of directors

C The shareholders (1 mark)

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10.22 Which of the following statements, in the context of computerised accounting systems, is not true?

A A database is a structured, centralised pool of data which can be accessed by a number of

applications.

B A spreadsheet is particularly useful for creating financial models.

C Computerised systems reduce the risk of errors in financial calculations.

D Information and Communication Technology (ICT) systems are more efficient than manual

systems for any task an accountant may have to perform. (2 marks)

10.23 Which function in an organisation is responsible for ensuring that only properly authorised purchases

which are necessary for the business are made?

A Goods inwards

B Finance/accounts

C Purchasing/procurement

D Production/operations (2 marks)

10.24 There is a need for co-ordinated information flow between sections and departments in accounting

management. To which of the following should the receivables ledger section give information about

overdue debts?

A Cost accounting staff

B The credit control department

C The payables ledger section (1 mark)

10.25 Which one of the following is not part of the regulatory system?

A GAAP

B International financial reporting standards

C IFAC

D The European Union (2 marks)

10.26 International Financial Reporting Standards are issued by which one of the following organisations?

A IASB

B ASB

C The European Union (1 mark)

(Total = 43 marks)

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QUESTIONS

11 Control, security and audit 28 mins

11.1 Which of the following is not an aim of internal controls?

A To enable the organisation to respond appropriately to business, operational and financial risks

B To eliminate the possibility of impacts from poor judgement and human error

C To help ensure the quality of internal and external reporting

D To help ensure compliance with applicable laws and regulations (2 marks)

11.2 Some controls are provided automatically by the system and cannot be by-passed, ignored or

overridden: for example, having to input a password to enter a computer system. These are classified as

........................................ controls.

Which term correctly completes this statement?

A Detect

B Mandated

C Non-discretionary

D Administrative (2 marks)

11.3 The mnemonic SPAMSOAP is often used to remember the range of financial control procedures. What

does the 'O' stand for in this mnemonic?

A Operations

B Organisation

C Oversight (1 mark)

11.4 Which of the following is not an internal check?

A Separation of duties for authorising, custody and recording

B Pre-lists, post-lists and control totals

C Bank reconciliations

D Systems for authorising transactions within specified spending limits (2 marks)

11.5 Which of the following statements about internal audit is true?

A Internal audit is an independent appraisal activity

B Internal audit is separate from the organisation's internal control system

C Internal audit is carried out solely for the benefit of the organisation's stakeholders

D The internal audit function reports to the finance director (2 marks)

11.6 The use of uninterruptible (protected) power supplies is a method of protecting data and IT systems from

what sort of security threat?

A Accidental damage

B Weather

C Hacking (1 mark)

11.7 Which of the following would be classed as a contingency control in an information system?

A Password-only access to the system

B System recovery procedures

C Audit trails (1 mark)

11.8 All of the following, with one exception, are inherent limitations of internal control systems. Which is the

exception?

A The costs of control

B Potential for human error and deliberate override

C The types of transactions controls are designed to cope with

D The independence of controls from the method of data processing (2 marks)

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11.9 Which of the following statements about external auditors is not correct?

A External auditors are appointed by the shareholders of a company

B The primary responsibility of external auditors is to investigate financial irregularities and report

them to shareholders

C External auditors may rely on the work of internal auditors, if they first assess its worth

D External auditors are concerned with the financial records and statements of the organisation

(2 marks)

11.10 In the context of audit, what are 'substantive tests' designed to accomplish?

A To establish whether internal controls are being applied as prescribed

B To identify errors and omissions in financial records

C To establish the causes of errors or omissions in financial records

D To establish an audit trail (2 marks)

11.11 Backing up computer files and storing copies of software in separate locations to the main system are

examples of which type of controls?

A Prevent

B Detect

C Correct (1 mark)

11.12 In the context of data security controls, ........................................ are records showing who has

accessed a computer system and what operations he or she has performed.

Which word or phrase correctly completes this definition?

A Passwords

B Audit trails

C Archives (1 mark)

11.13 Which type of audit is concerned with the monitoring of management's performance, concentrating on

the outputs of the system and the efficiency of the organisation?

A Systems audit

B Operational audit

C Probity audit

D Social audit (2 marks)

11.14 Which of the following circumstances would cast doubt on the external auditor's ability to rely on the

work of internal auditors?

A There is evidence that management and directors consistently act on internal audit

recommendations

B The internal audit function has a direct line of communication to the audit committee

C No audit manuals or working papers are available for inspection

D Internal auditors are recruited on technical qualifications and demonstrated proficiency

(2 marks)

(Total = 23 marks)

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QUESTIONS

12 Identifying and preventing fraud 32 mins

12.1 What is the term given to a method of fraud in the accounts receivable area, by which cash or cheque

receipts are stolen, and the theft concealed by setting subsequent receipts against the outstanding debt?

A Collusion

B Misrepresentation

C Teeming and lading (1 mark)

12.2 Which of the following activities create vulnerability to fraud?

(i) Calculating payslips

(ii) Preparing delivery notes

(iii) Paying supplier invoices

(iv) Meeting budgets and performance targets

A (iii) only

B (i) and (iii) only

C (i) and (ii) only

D (i), (ii), (iii) and (iv) (2 marks)

12.3 X plc has a bad debt policy whereby aged receivables who are obviously not going to pay, are written

off. The financial accountant does not enforce this policy.

This might be fraudulent insofar as it creates which of the following effects?

A It removes funds from the business

B It results in the understatement of profits and net assets

C It results in the overstatement of profits and net assets

D It results in the intentional overstatement of profits and net assets (2 marks)

12.4 Dishonesty is a ........................................ to act in ways which contravene accepted ethical, social,

organisational or legal norms for fair and honest dealing.

Which word correctly completes this statement?

A Motivation

B Pre-disposition

C Opportunity (1 mark)

12.5 All of the following, with one exception, are internal factors which might increase the risk profile of a

business. Which is the exception?

A Increased competition

B Corporate restructuring

C Upgraded management information system

D New personnel (2 marks)

12.6 Which of the following would most clearly present a personnel risk of fraud?

A Segregation of duties

B High staff morale

C Staff not taking their full holiday entitlements

D Consultative management style (2 marks)

12.7 All of the following, with one exception, are potential impacts on a business of removal of significant

funds or assets. Which is the exception?

A Fall in returns to shareholders

B Reduction in profits

C Increase in working capital

D Reputational damage (2 marks)

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12.8 Which of the following internal controls might be least effective in preventing fraud, if staff are in

collusion with customers?

A Physical security

B Requiring signatures to confirm receipt of goods or services

C Sequential numbering of transaction documents

D Authorisation policies (2 marks)

12.9 In a limited company, or plc, it is the ultimate responsibility of the ........................................ to take

reasonable steps to prevent and detect fraud.

Which word or phrase correctly completes this statement?

A The board of directors

B The external auditor

C The audit committee (1 mark)

12.10 Which of the following is not a key risk area for computer fraud?

A Hackers

B Lack of managerial understanding

C Inability to secure access to data

D Integration of data systems (2 marks)

12.11 Which two of the following stakeholders will be most directly affected if a business overstates its

financial position?

(i) Staff

(ii) Customers

(iii) Investors

(iv) Suppliers

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (ii) and (iv) (2 marks)

12.12 Which of the following would not form part of a fraud response plan?

A Suspending staff suspected of fraudulent activity

B Investigating the activities and contacts of a suspected fraudster

C Fraud awareness training and recruitment controls. (1 mark)

12.13 Only allowing purchasing staff to choose suppliers from an approved list is an example of what sort of

fraud prevention measure?

A Segregation of duties

B Appropriate documentation

C Limitation control

D Check control (2 marks)

12.14 Which of the following statements about fraud prevention is not true?

A Cash sales are an area of high risk of fraud.

B Performance-based rewards for managers reduce the risk of fraud.

C Emphasis on the autonomy of operational management may weaken controls.

D Fraud awareness and ethics education can reduce the risk of fraud (2 marks)

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QUESTIONS

12.15 . . . . . . . . . . . . . . . . . . . . . . . constitutes any financial transactions whose purpose is to conceal the origins of the

proceeds of criminal activity. Which word(s) completes the sentence?

A Fraud

B Money laundering

C Teeming and lading

D Misrepresentation of results (2 marks)

12.16 The initial disposal of the proceeds of an illegal activity into apparently legitimate business activity is

known as what?

A Placement

B Layering

C Integration (1 mark)

(Total = 27 marks)

13 Section C MTQs 29 mins

13.1 (a) The following are reasons why people might be interested in financial information about a large

public company.

A Assessing how effectively management is running the company

B To advise clients

C To assess tax payable by the company

D To assess the ability of the company to pay its debts

For each of the following users of financial information, select the appropriate reason for wanting

the information form the list above:

(i) Suppliers

(ii) Tax authorities

(iii) Shareholders

(iv) Financial analysts (2 marks)

(b) Only businesses need to prepare financial statements. Is this statement true or false?

(1 mark)

end of the financial year.

Which of the following correctly fills the blank?

A an informative

B a true and fair

C a GAAP compliant (1 mark)

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13.2 (a) QRT Co has just implemented a new computerised accounting package and also reinforced some

of its accounting controls. The new system has the following features

1. All accounting entries must balance or they cannot be entered.

2. A module exists so that non-current asset purchases can be authorised by the relevant

member of management.

3. Users are set up with passwords in order to login to the system.

4. An audit trail is produced so all transactions can be traced to the time of posting and the

individual who entered them.

For each of the following controls, identify if they are

A Discretionary

B Non-discretionary

(i) Balancing of accounting entries

(ii) Authorisation of non-current asset purchase

(iii) Password access to the system

(iv) Review of the audit trail (2 marks)

(b) audit is based on testing and evaluating the internal controls of an

organisation.

Which of the following correctly fills the blank?

A An operational

B A transactions

C A systems (1 mark)

false? (1 mark)

13.3 (a) The external auditor should design audit procedures to have a reasonable expectation of detecting

fraud. Everything else is the responsibility of the directors.

Which two of the following are advantages of computerised accounting systems over manual

systems?

A The risk of errors is eradicated

B Processing is faster

C Corrections can be made quicker

D Information is less accessible (2 marks)

(b) A is a program that deals with a particular part of the accounting system.

Which word fills in the blank above?

A Spreadsheet

B Database

C Module (1 mark)

A database does not need updating once it has been set up. (1 mark)

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QUESTIONS

13.4 (a) Which two of the following are examples of physical access controls?

A Door locks

B Automatic system back ups

C Intruder alarms

D Authorisation of purchases

E Physical inspection of inventory (2 marks)

(b) Check digits, control totals and limit checks are examples of which type of control?

A Output control

B Processing control

C Input control (1 mark)

Which word fills in the blank above?

A Integrity

B Contingency

C Security (1 mark)

13.5 (a) Stella is an external auditor who has observed some cash transactions that don't have any

supporting documentation. Upon further investigation she discovered that these payments are

made into bank accounts of the Finance Director's family. She discusses this with the audit

manager and they jointly decide not to take any further action.

James is also an external auditor and has discovered a fraud at one of his clients and has decided

he will make a report to his MLRO. At the same time he decides to inform the financial controller

of the client about making the report.

(i) Which of the following offences has been committed by Stella?

A Tipping off

B Failure to report

C No offence has been committed

(ii) Which of the following offences has been committed by James?

A Tipping off

B Failure to report

C No offence has been committed (2 marks)

(b) Elyse is transferring amounts of money from business to business to disguise the fact that the

money was originally the proceeds from criminal activity.

Laura is in the process of banking several small amounts of illegally obtained money with a

variety of banks in order to avoid anti-money laundering requirements.

(i) Which of the following phases of money laundering is being undertaken by Elyse?

A Placement

B Layering

C Integration

(ii) Which of the following phases of money laundering is being undertaken by Laura?

A Placement

B Layering

C Integration (2 marks)

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13.6 (a) Which of these is an example of an ‘internal check’?

A Adherence to internal policies

B Completeness of the accounting records

C Safeguarding of assets

D Use of control totals (1 mark)

(b) Categorise each of these statements as relating to the work of either internal or external audit:

(i) Work relates to the financial statements, and the financial records that underlie them

(ii) Designed to add value and improve an organisation's operations

(iii) Enables an opinion to be expressed on the financial statements

(iv) Report is to those charged with governance

(v) Work relates to the operations of the organisation

(vi) Independent of the company and its management (3 marks)

(Total = 24 marks)

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QUESTIONS

Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

 M……… is responsible for using the organisation's resources to meet its goals. It is accountable to the

owners: shareholders in a business, or government in the public sector.

 There are three basic schools of leadership theory: ….. ('qualities') theories, s…. theories and

………..(including situational and functional) theories.

 Effective r……… practices ensure that a firm has enough people with the right skills.

 Recruitment is a systematic process of (a) i……… and defining skill needs and (b) attracting suitably

skilled candidates.

 S……… tests can be used before or after interviews. Intelligence tests measures the candidate's general

intellectual ability, and personality tests identify character traits and behavioural preferences. Other tests

are more specific to the job (eg proficiency tests).

 E….. o……… is an approach to the management of people at work based on equal access to benefits

and fair treatment.

 Recruitment and s……. are areas of particular sensitivity to claims of d……….. – as well as genuine

(though often unintended) inequality.

 The concept of 'managing diversity' is based on the belief that the dimensions of i……… difference on

which organisations currently focus are crude and performance-irrelevant classifications of the most

obvious differences between people.

 P……..n is the process by which the brain selects and organises information in order to make sense of

it. People behave according to what they perceive – not according to what really is.

 A ….. is a collection of individuals who perceive themselves as a group. It thus has a sense of identity.

 A team develops in stages: forming, s……., n……., performing (Tuckman) and d…… or

mourning/adjourning.

 M……… is 'a decision-making process through which the individual chooses desired outcomes and sets

in motion the behaviour appropriate to acquiring them'. (Huczynski and Buchanan).

 McGregor suggested that a manager's approach is based on attitudes somewhere on a scale between

two extreme sets of assumptions: Theory … (workers have to be coerced) and Theory … (workers want

to be empowered).

 The main purpose of t…… and development is to raise competence and therefore performance

standards. It is also concerned with personal development, helping and motivating employees to fulfil

their potential.

 I……. is the process whereby a person is formally introduced and integrated into an organisation or

system.

 A…… is part of the system of performance management, including goal setting, performance

monitoring, feedback and improvement planning.

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Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach

the exam.

 Management is responsible for using the organisation's resources to meet its goals. It is accountable to

the owners: shareholders in a business, or government in the public sector.

 There are three basic schools of leadership theory: trait ('qualities') theories, style theories and

contingency (including situational and functional) theories.

 Effective recruitment practices ensure that a firm has enough people with the right skills.

 Recruitment is a systematic process of (a) identifying and defining skill needs and (b) attracting suitably

skilled candidates.

 Selection tests can be used before or after interviews. Intelligence tests measures the candidate's

general intellectual ability, and personality tests identify character traits and behavioural preferences.

Other tests are more specific to the job (eg proficiency tests).

 Equal opportunities is an approach to the management of people at work based on equal access to

benefits and fair treatment.

 Recruitment and selection are areas of particular sensitivity to claims of discrimination – as well as

genuine (though often unintended) inequality.

 The concept of 'managing diversity' is based on the belief that the dimensions of individual difference on

which organisations currently focus are crude and performance-irrelevant classifications of the most

obvious differences between people.

 Perception is the process by which the brain selects and organises information in order to make sense of

it. People behave according to what they perceive – not according to what really is.

 A group is a collection of individuals who perceive themselves as a group. It thus has a sense of

identity.

 A team develops in stages: forming, storming, norming, performing (Tuckman) and dorming or

mourning/adjourning.

 Motivation is 'a decision-making process through which the individual chooses desired outcomes and

sets in motion the behaviour appropriate to acquiring them'. (Huczynski and Buchanan).

 McGregor suggested that a manager's approach is based on attitudes somewhere on a scale between

two extreme sets of assumptions: Theory X (workers have to be coerced) and Theory Y (workers want to

be empowered).

 The main purpose of training and development is to raise competence and therefore performance

standards. It is also concerned with personal development, helping and motivating employees to fulfil

their potential.

 Induction is the process whereby a person is formally introduced and integrated into an organisation or

system.

 Appraisal is part of the system of performance management, including goal setting, performance

monitoring, feedback and improvement planning.

Did you know? – Leading and managing individuals and teams

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QUESTIONS

14 Leading and managing people 40 mins

14.1 Leaders may be distinguished from managers by the fact that they do not depend

on........................................ in the organisation.

Which of the following types of power correctly completes this statement?

A Expert power

B Position power

C Physical power (1 mark)

14.2 Which of the following writers is not a member of the school of management thought to which the

others belong?

A FW Taylor

B Elton Mayo

C Abraham Maslow

D Frederick Herzberg (2 marks)

14.3 Monica is a manager in the finance department of P Co and she has several staff working for her. She

has become quite friendly with most of her staff and they like her and appreciate that she does

everything she can to attend to their needs. Which type of managerial style does Monica have?

A Impoverished

B Task management

C Country club

D Dampened pendulum (2 marks)

14.4 According to Fielder, which of the following are true of psychologically distant managers?

1 They judge their staff on the basis of performance

2 They are primarily task-oriented

3 They prefer formal consultation methods rather than seeking staff opinions

4 They are closer to their staff

A 1 and 2

B 2 and 3

C 1, 2 and 3

D 1, 2, 3 and 4 (2 marks)

14.5 What is delegated by a superior to a subordinate?

A Authority

B Power

C Responsibility (1 mark)

14.6 Which of the following is not a technique of scientific management or Taylorism?

A Micro-design of jobs

B Work study techniques to establish efficient methods

C Multi-skilled teamworking

D Financial incentives (2 marks)

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14.7 What is the key contribution of the human relations approach to management?

A Awareness of the importance of group dynamics and worker attitudes as an influence on

productivity

B Concern for productivity and efficiency

C Awareness of the many different variables that influence and constrain a manager's behaviour

D Proof of a clear link between job satisfaction, worker motivation and business success

(2 marks)

14.8 Which of the following leadership styles gives the most discretion or decision-making power to

subordinates?

A Autocratic

B Consultative

C Democratic

D Persuasive (2 marks)

14.9 Of Mintzberg's nine managerial roles, which is being exercised by a manager who gathers information

from contacts within and outside the organisation?

A Leader

B Monitor

C Spokesperson

D Disseminator (2 marks)

14.10 ........................................ is the role at the interface between the operational core (non-managerial

workers) and management.

Which word or phrase correctly completes this definition?

A Middle line

B Junior management

C Supervision (1 mark)

14.11 According to research, which of the following statements is true of a consultative style of management,

compared to other styles?

A It is most popular among subordinates

B It is most popular among leaders

C It encourages the highest productivity (1 mark)

14.12 Which of the following terms is used to describe the 'right' to perform an action in an organisation?

A Responsibility

B Authority

C Influence

D Power (2 marks)

14.13 Which of the following is an 'interpersonal' role of management, in Mintzberg's classification of nine

managerial roles?

A Spokesperson

B Figurehead

C Negotiator

D Resource allocator (2 marks)

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QUESTIONS

14.14 John Adair's action-centred leadership model is part of which school of thought?

A Trait theories

B Style theories

C Contingency theories (1 mark)

14.15 Are the following statements true or false?

1 Adair's leadership model focuses on what leaders do and not what they are

2 The Ashridge leadership model proposes a democratic approach to leadership

A Both statements are true

B Statement 1 is true; statement 2 is false

C Statement 1 is false; statement 2 is true

D Both statements are false (2 marks)

14.16 Which leadership approach sees the leadership process in a context made up of three interrelated

variables: task needs, the individual needs of group members and the needs of the group as a whole?

A Action-centred leadership

B Contingency theory

C The managerial grid

D Dispersed leadership (2 marks)

14.17 ........................................ is the managerial function concerned with establishing a structure of tasks;

grouping and assigning them to appropriate units; and establishing lines of information and reporting to

support performance.

Which managerial function is referred to in this definition?

A Planning

B Organising

C Controlling (1 mark)

14.18 Which of the following is not one of Fayol's five functions of management?

A Planning

B Organising

C Motivating

D Commanding (2 marks)

14.19 According to Drucker, which one of the following is a management task?

A Informational

B Developing people

C Decisional (1 mark)

14.20 Which of the following writers put forward specific differences between the role of the manager and the

role of the leader?

A Bennis

B Heifetz

C Fielder

D Blake and Mouton (2 marks)

(Total = 33 marks)

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15 Recruitment and selection 36 mins

15.1 Which of the following would be classed as a 'selection' rather than a 'recruitment' activity?

A Job description

B Designing application forms

C Screening application forms (1 mark)

15.2 A recruitment manager has prepared a statement of the key duties, tasks and reporting responsibilities

involved in a particular job, as the basis for job interviewing.

What name would be given to such a statement?

A Job analysis

B Job description

C Job advertisement

D Personnel specification (2 marks)

15.3 In the context of personnel specifications, the Seven Point Plan (Rodger) does not explicitly include

which of the following headings?

A Physical make-up

B Interests

C Motivation

D Circumstances (2 marks)

15.4 What is the current trend in human resource management?

A Centralise recruitment and selection within HR

B Devolve recruitment and selection to line managers

C Devolve recruitment and selection to the Board (1 mark)

15.5 Selection tests such as IQ tests and personality tests may not be effective in getting the right person for

the job for several reasons. Which of the following criticisms of the tests is not justified, however?

A Test results can be influenced by practice and coaching rather than genuine ability

B Subjects are able to deliberately falsify results

C Tests do not completely eliminate bias and subjectivity

D Tests are generally less accurate predictors of success than interviews (2 marks)

15.6 In a selection interview, the interviewer asks: 'Surely you'd agree that objectivity is a key requirement for

an auditor?'

What sort of question is this?

A Open

B Closed

C Problem-solving

D Leading (2 marks)

15.7 Which of the following is a disadvantage of a large panel or selection board interview compared to

individual or one-to-one interviews?

A A number of people see the candidate at one sitting

B Specialists can ask a questions about technical areas of the work

C Questions tend to be more varied and more random

D There is less opportunity for personal rapport with the candidate (2 marks)

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QUESTIONS

15.8 In the context of selection interviews, which of the following describes the 'halo effect'?

A A tendency for people to make an initial judgement based on first impressions, and then letting

this colour their later perceptions.

B An effect whereby the interviewer changes the behaviour of the applicant by suggestion

C A tendency to mentally assign people to a group and then attribute to them the traits assumed to

be characteristic of the group as a whole

D An effect whereby the interviewer attributes to the applicant beliefs, attitudes or feelings which he

has himself (2 marks)

15.9 Selection tests which focus on aptitude, intelligence and personality factors are called

........................................ tests.

Which word correctly completes this sentence?

A Proficiency

B Psychometric

C Standardised

D Sensitive (2 marks)

15.10 In the context of selection, what is an assessment centre?

A A place where candidates are taken to undergo group assessments

B A series of tests and interviews undergone by an individual candidate over several days

C A series of tests, interviews and activities undergone by a group of candidates over several days

D A technique for assessing large numbers of candidates, usually for junior positions, in a costeffective

manner (2 marks)

15.11 Which of the following statements about reference checking is true?

A References provide objective information about a job candidate

B Personal references are particularly valuable in assessing the qualities of a candidate

C At least two employer references are desirable (1 mark)

15.12 Job descriptions have advantages for use in all but one of the following areas of human resource

management. Which is the exception?

A Job evaluation

B Training needs analysis

C Recruitment

D Employee flexibility (2 marks)

15.13 A financial consultancy firm has a job vacancy for a junior office assistant at one of its offices. Which of

the following would be the most suitable external medium for the job advertisement?

A Accountancy journal

B National newspapers

C Local newspapers (1 mark)

15.14 A policy of internal promotion, as opposed to external recruitment, can have positive and negative

effects. Which one of the following would be negatively effected by such a policy?

A Innovation

B Succession planning

C Induction times (1 mark)

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15.15 Which of the following is not a primary aim of a job selection interview?

A Comparing the applicant against job requirements

B Getting as much information as possible about the applicant

C Giving the applicant information about the job and organisation

D Making the applicant feel (s)he has been treated fairly (2 marks)

15.16 In which of the following circumstances would an organisation be better off carrying out its own

recruitment, rather than using recruitment consultants?

A The organisation has a strong, traditional culture, but is now looking to introduce greater

innovation and flexibility

B The organisation does not have a specialist recruitment function, but is looking to recruit on a

large scale for the first time

C The organisation uses outside consultants in many areas of its business, and is used to managing

their services effectively

D The organisation has complex cultural, business and technical selection criteria for its staff, but is

considering using a consultancy for the first time, because it requires new people urgently in order

to exploit an opportunity (2 marks)

15.17 ........................................ are capacities that lead to behaviours that meet job demands within the

parameters of the organisational environment.

Which word correctly completes this sentence?

A Attributes

B Skills

C Competences (1 mark)

15.18 The first stage in the recruitment process is:

A To write a job description

B To write a person specification

C To identify a vacancy

D To liaise with recruitment consultants (2 marks)

(Total = 30 marks)

16 Diversity and equal opportunities 19 mins

16.1 Sound business arguments can be made for having an equal opportunities policy. Which of the following

reasons apply?

1 To show common decency and fairness in line with business ethics

2 To widen the recruitment pool

3 To attract and retain the best people for the job

4 To improve the organisation's image as a good employer

A 1, 2 and 3

B 2 and 3

C 1 and 3

D 1, 2, 3 and 4 (2 marks)

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QUESTIONS

16.2 Which of the following correctly describes the purpose of current Equal Pay regulations?

A To ensure that there is no element of sexual or racial discrimination in determining pay rates

B To provide that job evaluation must be used in determining pay rates

C To provide that women have the right to equal pay to work of equal value to that of men

D To ensure that women have the right to equal pay to men in the same job (2 marks)

16.3 Which of the following statements are true?

1 Taking active steps to encourage people from disadvantaged groups to apply for jobs and training

is classed as positive discrimination.

2 Diversity in the workplace means implementing an equal opportunities policy.

A They are both true.

B 1 is true and 2 is false.

C 1 is false and 2 is true.

D They are both false. (2 marks)

16.4 Members of a religious minority in a workplace are frequently subjected to jokes about their dress and

dietary customs, and a bit of name-calling, by non-religious workmates. They find this offensive and

hurtful – even though their colleagues say it is 'just a bit of fun'.

What type of discrimination (if any) would this represent?

A Victimisation

B Indirect discrimination

C Harassment (1 mark)

16.5 Which of the following is a potential business benefit of a corporate diversity policy?

A Compliance with equal opportunities legislation

B Respect for individuals

C Better understanding of target market segments

D Efficiency in managing human resources (2 marks)

16.6 Which of the following statements about disability discrimination law is not true?

A The requirements only effect employers of more than 20 employees

B Employers must adjust working arrangements or the physical features of premises to remove any

disadvantage to disabled people

C For an individual to be defined as a disabled person, the physical or mental impairment must

have an adverse effect of more than 12 months' duration

D Public bodies have additional duties to protect and promote equality for disabled people

(2 marks)

16.7 Which of the following would constitute direct discrimination?

A Setting age limits or ranges in an employment advertisement

B Offering less favourable terms to workers on flexible hours contracts

C Using word-of-mouth recruitment in a predominantly male workforce (1 mark)

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16.8 A job interviewer asks a woman about her plans to have a family. She eventually does not get the job,

because she lacks qualifications which are listed as essential in the person specification. However, she

later finds out that men who attended interviews were not asked questions about their plans to have a

family.

Which of the following statements correctly describes the situation?

A The woman would have a successful claim of direct sexual discrimination

B The woman would have a successful claim of indirect sexual discrimination

C The organisation has laid itself open to a claim of indirect sexual discrimination, but such a claim

would not be successful

D The organisation has not laid itself open to any claim of discrimination (2 marks)

16.9 The concept of ........................................ is based on the belief that the dimensions of individual

difference on which organisations currently focus are crude and performance-irrelevant, and that an

organisation should reflect the range of differences within its customer and labour markets.

Which words correctly complete this sentence?

A Equal opportunity

B Cultural divergence

C Managing diversity (1 mark)

16.10 Which of the following is an example of 'positive discrimination' rather than 'positive action' on equal

opportunities?

A Selecting a certain number of people from ethnic minorities for jobs, regardless of job-relevant

selection criteria

B Using ethnic languages in job advertisements

C Setting targets for the number of people from ethnic minorities that the organisation would like to

see in managerial positions (1 mark)

(Total = 16 marks)

17 Individuals, groups and teams 34 mins

17.1 Which of the following is most clearly a sign of an ineffective group?

A There is disagreement and criticism within the group

B There is competition with other groups

C Members passively accept work decisions

D Individuals achieve their own targets (2 marks)

17.2 A team leader is having difficulties with conflict in the team, due to 'clashes' or incompatibilities in the

personalities of two of its members. The leader draws up a list of options for managing the problem.

Which option, from the following list, would be the least practicable?

A Educate the members about personality differences

B Encourage the members to modify their personalities

C Remove one of the members from the team (1 mark)

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QUESTIONS

17.3 At the Soli-Darretty Bros factory, a project team has been put together by management. The team are

engaged in debating how they are going to approach the task, and who is going to do what. Some of

their first ideas have not worked out but they are starting to put forward some really innovative ideas:

they get quite excited in brainstorming sessions, and are uninhibited in putting forward their views and

suggestions. Factions are emerging, not only around different ideas, but around two dominating

individuals who always seem to disagree.

At what stage of Tuckman's group development model is this team?

A Forming

B Storming

C Norming (1 mark)

17.4 ........................................ are mental states (made up of thoughts, feelings and intentions) which

influence an individual's response to all objects and situations with which they are related.

Which word correctly completes this definition?

A Personality traits

B Perceptions

C Attitudes

D Emotional intelligences (2 marks)

17.5 For which of the following applications is teamworking not best suited?

A Ideas generation for innovation

B Co-ordination of different functions

C Crisis decision-making

D Co-ordination of geographically dispersed workers (2 marks)

17.6 If a team is bogged down in argument, and discussion is turning hostile, which of the following types of

contribution would the team leader seek to discourage?

A Bringing-in

B Blocking

C Summarising

D Testing understanding (2 marks)

17.7 Which of the following is not a key tool of team building?

A Members identify with the team

B Members are as alike as possible

C Members commit to shared objectives (1 mark)

17.8 Grant is a member of a project team. His colleagues in the team rely on him to read and check complex

project documentation. Grant has a keen eye for detail and often identifies minor details in documents

that others miss but may be of significance. Despite the diligent approach, Grant always meets his

deadlines. However, some of Grant's colleagues feel frustrated when he refuses to involve others. He can

hold up progress as he will not agree to the team signing off project documents until all of his concerns

are fully discussed.

According to Belbin's team roles theory, Grant is an example of which of the following?

A Implementer

B Completer – finisher

C Monitor – evaluator

D Shaper (2 marks)

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17.9 What is the most important attribute of a 'group', which distinguishes it from a random crowd of people?

A Purpose

B Conformity

C Identity (1 mark)

17.10 In Belbin's model of team roles, which of the following is most important for a well-functioning team?

A A mix and balance of team roles

B Nine members, so that all roles are filled

C A focus on functional/task roles, not process roles

D As few members as possible (2 marks)

17.11 A team is winding up a challenging project that it has been working on for some time. Next week, the

same team will go on to a new project with quite different challenges.

Which stage of the group development model is this team likely to be going through?

A Norming

B Dorming

C Adjourning (1 mark)

17.12 Which of the following would be an effective technique for encouraging healthy team solidarity?

A Discouraging competition with other groups

B Encouraging competition within the group

C Encouraging members to express disagreements

D Discouraging members from expressing disagreements (2 marks)

17.13 Which of the following theories suggests that people behave according to other people's expectations of

how they should behave in that situation?

A Team identity theory

B Role theory

C Hero theory (1 mark)

17.14 An organisation has set up a team in which any member of the team can perform the full range of its

tasks. The manager is able to share out tasks between members according to who is available to do a

given job when it is required.

What sort of team organisation does this describe?

A Multi-disciplinary team

B Multi-skilled team

C Self-managed team

D Virtual team (2 marks)

17.15 Team-member Tom is one of those people who is dynamic and thrives on pressure. He tends to be the

one who challenges and pushes other team members, sometimes annoying or upsetting them – but also

getting the team past difficult periods.

Which of Belbin's team roles does Tom exercise?

A Plant

B Co-ordinator (chair)

C Implementer

D Shaper (2 marks)

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QUESTIONS

17.16 A team is having a brainstorming session and one member suggests 'Let's move on to something else as

we're getting nowhere'. What type of contribution is this?

A Proposing

B Supporting

C Blocking

D Shutting out (2 marks)

17.17 Team-leader Arnica has given a briefing stating the current situation and asking for suggestions to move

the project on. What stage is the team current at?

A Forming

B Storming

C Norming

D Performing (2 marks)

(Total = 28 marks)

18 Motivating individuals and groups 34 mins

18.1 Phil T Luker & Son offers its employees a reward package which includes salary and company car. Its

factory is safe and clean and rather smart. The work is technically challenging and employees are

encouraged to produce innovative solutions to problems.

Which of the rewards offered by the firm is a form of intrinsic reward?

A The salary

B The car

C The work (1 mark)

18.2 Which of the following is not a category in Maslow's hierarchy of needs theory?

A Physiological needs

B Freedom of inquiry and expression needs

C Need for affiliation

D Safety needs (2 marks)

18.3 Keepham (Hungary) Co offers its employees:

(i) Sensible company policies

(ii) Good salaries and bonuses

(iii) Considerate supervision

(iv) Training programmes

According to Herzberg's two-factor theory, which of these things will satisfy employees in such a way as

to motivate them to superior effort in the long-term?

A (ii) only

B (iv) only

C (ii) and (iv) only

D (i), (ii), (iii) and (iv) (2 marks)

18.4 What term is given, in motivation theory, to the things people value and choose to pursue?

A Goals

B Innate needs

C Satisfaction (1 mark)

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18.5 Willy Dewitt-Ornott works in Sales. There is always a sales competition at the year end and the winner

is likely to be made team leader. Willy's quite certain that he will be able to win and that he will have

more responsibility, which he would like. But he would also have to work much longer hours, and he is

quite reluctant to do this for family reasons.

If an expectancy equation were used to assess Willy's motivation to work hard at the end of the year,

based on the information given, which of the following results would you expect to see?

A Valence would be high, expectancy high, motivation high

B Valence would be high, expectancy low, motivation low

C Valence would be around 0, expectancy high, motivation low

D Valence would be around 0, expectancy high, motivation high (2 marks)

18.6 All of the following, with one exception, are alternative terms for the same thing. Which is the exception?

A Motivator factor

B Hygiene factor

C Environmental factor

D Maintenance factor (2 marks)

18.7 The five core dimensions which contribute to job satisfaction are skill variety, task identity, task

significance, ........................................ and feedback.

Which of the following is the dimension missing from the above list?

A Recognition

B Advancement

C Autonomy

D Rewards (2 marks)

18.8 Participation can motivate employees by making them take 'ownership' of the task and increasing their

commitment. In which of the following circumstances, however, would this not happen?

A Participation is genuine

B The purpose of participation is made clear

C Everyone is allowed to participate equally

D Efforts at participation are maintained for a reasonable period (2 marks)

18.9 The management of Guenguiss Cans Co runs a 'tight ship', with clocking-on timekeeping systems, close

supervision and rules for everything. 'Well,' says the general manager, 'if you allow people to have any

freedom at work, they will take advantage and their work rate will deteriorate'.

Which of Douglas McGregor's 'theories' does this management team subscribe to?

A Theory X

B Theory Y

C Theory Z (1 mark)

18.10 Application of process theories to motivation in practice involves all but one of the following measures.

Which is the exception?

A Clarifying intended results

B Giving feedback on actual results

C Immediacy of reward following results

D Consistency of reward for results (2 marks)

18.11 Which of the following is a potential problem with individual performance-related pay (PRP) as a

motivator?

A Its effect on organisational communication

B Its relevance to business objectives

C The fact that it does not relate to individuals' wage or salary grades

D Its effect on team motivation (2 marks)

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QUESTIONS

18.12 The following, with one exception, are claimed as advantages for job enrichment as a form of job redesign.

Which is the exception?

A It increases job satisfaction

B It enhances quality of output

C It replaces monetary rewards

D It reduces supervisory costs (2 marks)

18.13 According to Maslow's hierarchy of needs, which of the following is the final 'need' to be satisfied?

A Self-realisation

B Self-actualisation

C Esteem needs

D Physiological needs (2 marks)

18.14 Job evaluation puts a relative value on jobs primarily on the basis of which of the following factors?

A Equity

B Job content

C Market rates of pay (1 mark)

18.15 In Vroom's expectancy theory, what is meant by 'valence'?

A The strength of an individual's preference for a given outcome

B The strength of an individual's motivation to act in a certain way

C The strength of an individual's belief that acting in a certain way will obtain the desired outcome

(1 mark)

18.16 Eva Moor-Drudgery used to pack chocolate bars into boxes of three dozen. Her job has been redesigned,

so that she now packs them, applies a 'sell-by' date stamp, cellophanes the box and applies a

promotional sticker.

Of which form of job redesign is this an example?

A Job rotation

B Job enlargement

C Job enrichment (1 mark)

18.17 Which job design technique was advocated by the scientific management school?

A Empowerment

B Micro-division of labour

C Division of labour

D Job enlargement (2 marks)

(Total = 28 marks)

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19 Training and development 34 mins

19.1 Trainee Sara is unhappy in her current training programme, because it is too 'hands on': she is required

to attempt techniques before she has had a chance to study the underlying principles first. She spends

the evenings trying to read ahead in the course textbook.

Which of Honey and Mumford's learning styles is probably Sara's preferred style?

A Reflector

B Pragmatist

C Theorist (1 mark)

19.2 Which of the following is not a characteristic of a 'learning organisation'?

A The generation and transfer of knowledge

B Support for learning and development by all members

C A scientific approach to problem-solving, in order to minimise risk and error

D Willingness to continuously transform itself in response to a changing environment

(2 marks)

19.3 Which of the following statements about training is most likely to be the foundation of an effective

training policy?

A Training is the responsibility of the HR department

B Training is all cost and no quantifiable benefit

C The important thing is to do lots of training

D Training can be an effective solution to some performance problems (2 marks)

19.4 ........................................ is 'the planned and systematic modification of behaviour through learning

events, programmes and instruction which enable individuals to achieve the level of knowledge, skills

and competence to carry out their work effectively'.

Which word correctly completes this definition?

A Conditioning

B Training

C Education (1 mark)

19.5 The learning cycle developed by David Kolb is a process for ........................................ learning.

Which of the following words correctly completes this sentence?

A Programmed

B Experiential

C Action

D Reflection (2 marks)

19.6 All the following, with one exception, are clear benefits of training and development for an organisation.

Which is the exception?

A Increased organisational flexibility

B Less need for detailed supervision

C Enhanced employability of staff members

D Improved succession planning (2 marks)

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QUESTIONS

19.7 Which of the following are 'on the job' training methods?

(i) Day-release

(ii) Job rotation

(iii) Coaching

(iv) Temporary promotion

A Method (iii) only

B Methods (i) and (iii) only

C Methods (ii), (iii) and (iv) only

D Methods (i), (ii), (iii) and (iv) (2 marks)

19.8 You have been asked to comment on the most effective approach for training accounts staff in the use of

a new payroll system. Which of the following arguments would you put forward for choosing an on-thejob

approach?

A Ability of learners to concentrate on the learning process

B Risk of errors

C Relevance to the informal customs and practices of the department

D Application of learned skills to the job (2 marks)

19.9 The effectiveness of a training scheme may be measured at different levels. Which of the following levels

would be most appropriate for a team leader seeking to evaluate a training programme designed to

improve the productivity of her section?

A Level 1: trainee reactions

B Level 2: trainee learning

C Level 3: job behaviour

D Level 5: ultimate value (2 marks)

19.10 ........................................ development is a process whereby employees are offered a wide range of

developmental opportunities, rather than focusing on skills required in the current job.

Which word or phrase correctly completes this sentence?

A Management

B Career

C Personal (1 mark)

19.11 Peter has been identified, using Honey & Mumford's learning styles questionnaire, as a Pragmatist

learner. He is now preparing a personal development plan to improve his sales skills. Which of the

following training methods is he most likely to include in his plan?

A On-the-job coaching by his supervisor

B A group workshop in 'interpersonal skills practice'

C Personal development journaling

D A computer-based training module on sales (2 marks)

19.12 The HR manager of a firm has been asked to explain to the finance director the quantifiable benefits of

training programmes. Which of the following might she hesitate to put forward?

A Increased speed of working

B Increased accuracy of work

C Increased employee satisfaction (1 mark)

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19.13 1 The growth or realisation of a person's ability and potential through the provision of learning and

educational experiences.

2 The planned and systematic modification of behaviour through learning events, programmes and

instruction which enable individuals to achieve the level of knowledge, skills and competences to

carry out their work effectively.

Which of the following is correct?

A 1 is the definition of development and 2 is the definition of training

B 1 is the definition of education and 2 is the definition of development

C 1 is the definition of training and 2 is the definition of development

D 1 is the definition of education and 2 is the definition of training (2 marks)

19.14 Which of the following documents would be part of a formal training needs analysis exercise?

A An email reminding you that a new piece of legislation is about to come into effect

B A health and safety officer's report showing that a department failed its assessment in a recent

fire evacuation drill

C A set of competence standards for your job or department

D Feedback from a colleague about the standard of your work (2 marks)

19.15 ........................................ is learning through a network of computers or the internet (but not standalone

CD-Rom or tuition software), so that learning support is available from online tutors, moderators

and discussion groups.

What term is used for this learning technology?

A E-learning

B Computer based training

C Blended learning

D Computer based assessment (2 marks)

19.16 The stages of Kolb's experiential learning cycle are as follows.

1 Draw conclusions from the experience

2 Have an experience

3 Plan the next steps

4 Reflect on the experience

Which is the correct order?

A 2, 4, 1, 3

B 2, 3, 4, 1

C 2, 4, 3, 1 (1 mark)

19.17 What is a competence framework mainly used for?

A To identify present level of competence

B To identify training needs

C To evaluate training success or failure (1 mark)

(Total = 28 marks)

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QUESTIONS

20 Performance appraisal 26 mins

20.1 Which of the following is not a purpose of performance appraisal?

A Job evaluation

B Identification of training needs

C Succession planning (1 mark)

20.2 A manager is assessing the performance of her team members. In accordance with the appraisal system

of the organisation, she has been given a list of characteristics and performance elements, with notes on

how to interpret and apply the terms: 'integrity', 'punctuality' and so on. She is required to comment on

how each appraisee measures up in terms of each factor.

Which appraisal technique is this organisation using?

A Overall assessment

B Grading

C Behavioural incident

D Guided assessment (2 marks)

20.3 All of the following, except one, are sound principles for devising performance measures. Which is the

exception?

A They should be related to actual key tasks of the job

B They should be easily achievable

C They should be within the control of the individual

D They should be observable or measurable (2 marks)

20.4 In an appraisal interview, the manager tells the subordinate how he has been assessed – good and bad

– and then gives him a chance to put questions, suggest improvement targets, explain shortcomings and

identify problems.

Using Maier's classification, what is the name given to this approach to appraisal interviewing?

A Tell and sell

B Tell and listen

C Problem solving

D Sell and listen (2 marks)

20.5 Which of the following is likely to be the most objective approach to appraisal?

A Self appraisal

B Peer appraisal

C Upward appraisal

D 360-degree feedback (2 marks)

20.6 ........................................ is 'a process to establish a shared understanding about what is to be

achieved, and an approach to managing and developing people in order to achieve it'.

Which two words correctly completes this definition?

A Performance appraisal

B Performance management

C Peer appraisal (1 mark)

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20.7 Which of the following are meaningful criteria for measuring the effectiveness of an appraisal scheme?

(i) Serious intent

(ii) Fairness

(iii) Efficiency

(iv) Co-operation

(v) Results

A (ii), (iii) and (v) only

B (iii) and (v) only

C (i), (ii), (iii) and (iv) only

D (i), (ii), (iii), (iv) and (v) (2 marks)

20.8 ........................................ is the name given to gathering of appraisals from the individual, superiors,

subordinates, peers and co-workers and customers.

Which word or phrase correctly completes this sentence?

A Multi-source feedback

B Management by objectives

C Performance management (1 mark)

20.9 Appraisal is a complex human relations and political exercise. Which of the following is not necessarily a

helpful factor in the design of an appraisal scheme?

A The purpose of the system is positive and clearly expressed

B There is reasonable standardisation throughout the organisation

C Time is allowed for appraisee preparation and appraiser training

D There is an implied link between assessment and reward (2 marks)

20.10 Which of the following is not a barrier to effective appraisal?

A Appraisal is seen as a way of wrapping up unfinished business for the year

B Appraisal is seen as conforming to Human Resource procedures

C Appraisal is seen as an opportunity to raise workplace problems and issues

D Appraisal is seen as an annual event (2 marks)

20.11 Which one of the following criteria would not be suitable for evaluating an appraisal system?

A Serious intent

B Fairness

C Bonuses awarded (1 mark)

20.12 Which of the following is an advantage to all employees of having a formal appraisal system?

A Suitable promotion candidates are identified

B It provides a basis for medium- to long-term HR planning

C Individual objectives are related to the objectives of the whole organisation

D It provides a basis for reviewing recruitment and selection decisions (2 marks)

20.13 A sales team is assessed according to the number of sales calls made, number of leads generated, and

number and value of sales made.

Which appraisal technique is described in this example?

A Behavioural incident

B Rating scale

C Guided assessment

D Results-oriented (2 marks)

(Total = 22 marks)

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QUESTIONS

21 Section D MTQs 29 mins

21.1 (a) Peter, Gloria, Shirley and Matthew are part of a newly formed team.

Peter is a reliable employee who likes to take ideas from other people and turn them into actions.

He is not very flexible and tends to be resistant to change or new possibilities.

Gloria is a dynamic individual who responds best when under pressure. She is driven to

overcome any obstacles, but has a tendency to hurt other people's feelings.

Shirley is single-minded and dedicated to her work. She has a lot of specific knowledge, but only

contributes to discussions on these areas and lacks the ability to see the bigger picture.

Matthew is strategically minded. He likes to see all the available options before judging them. He

has a proven track record of good judgements, but can be overly critical and does not inspire

others that he works with.

Belbin identified the following team roles:

A Shaper

B Monitor-Evaluator

C Implementer

D Specialist

For each team member listed below, select the appropriate team role from the list above:

(i) Peter

(ii) Gloria

(iii) Shirley

(iv) Matthew (2 marks)

(b) occurs when an individual is penalised for giving information in a

discrimination claim against an employer.

Which word correctly fills in the blank?

A Indirect discrimination

B Harassment

C Victimisation (1 mark)

Encouraging individuals from disadvantaged group to apply for groups is known as positive

action. (1 mark)

21.2 (a) Do the following statements relate to

A Extrinsic rewards

B Intrinsic rewards

C Incentives

(i) A feeling of achievement

(ii) A promise of additional time off for meeting a target

(iii) Working conditions

(iv) Salary (2 marks)

(b) Which two of the following steps would be classified as job enrichment?

A Giving an employee freedom to decide how the job should be done

B Increasing the number of tasks an employee participates in

C Transferring an employee from one job to another

D Encouraging employee participation in planning decisions of superiors

E Dividing a job up into a small number of sequential tasks (2 marks)

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21.3 (a) Shaun likes to understand basic principles and take a hands-off approach based on logical

argument. He wants to participate in a structured training programme which is run by teachers.

Louise needs to work at her own pace and tends to be fairly slow and cautious in her learning.

She likes to observe things, take time to think about them and then produces a carefully thoughtout

conclusion.

Susan only likes to study if she can see a link to a real practical problem. She likes to learn new

techniques through on-the-job training, but tends to discard good ideas which require some

development to work properly.

Tony is flexible and optimistic, but does not have any patience with theories. He wants to receive

hands-on training and enjoys practical problems.

Honey and Mumford classified the four following learning styles:

A Theorists

B Reflectors

C Activists

D Pragmatists

For each of the following individuals, select the correct learning style from the list above:

(i) Shaun

(ii) Louise

(iii) Susan

(iv) Tony (2 marks)

(b) Which two of the following are off-the-job training methods?

A Job rotation

B Computer-based training

C Temporary promotion

D Demonstration

E College courses (2 marks)

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QUESTIONS

21.4 (a) George, Helen, Josh and Leigh are all on development programmes.

George is learning skills that are not directly required in his current role, but should allow him to

contribute more flexibly and innovatively to the organisation in the future whichever role he is in.

Helen is gaining experience of each of the different functions in her company as well as a variety

of position and work settings as preparation for increased responsibility in the future.

Josh is receiving training to ensure his professional standards in his accountancy work are

maintained and enhanced through education, development and training.

Leigh is partway through a series of planned secondments within her department and has

recently been working in two project group for implementing new systems.

The following are all different approaches to development:

A Management development

B Personal development

C Professional development

D Career development

For each of the following individuals, select the development approach they are on:

(i) George

(ii) Helen

(iii) Josh

(iv) Leigh (2 marks)

(b) Which TWO of the following are necessary for a training programme to be effective?

A Training should be expensive

B There should be clear objectives

C Training should be off-the-job

D There should be timely feedback

E Training should be on-the-job (2 marks)

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21.5 (a) Company W assess the performance of its sales staff by the number of clients visited and the

number of products they each sell.

Company X rates its managerial staff. Each manager is awarded a score from 1 (excellent) to 4

(poor), based on feedback from subordinates and superiors.

Company Y appraises the performance of its staff through assessors commenting on a number of

desired characteristics and performance elements.

Company Z compares attributes displayed by its staff to a series of attributes that indicate either

unsatisfactory or unsatisfactory performance in their job role.

The following are different types of appraisal techniques

A Guided assessment

B Grading

C Behavioural-incident method

D Results-oriented scheme

For each company, select the type of appraisal scheme being used:

(i) Company W

(ii) Company X

(iii) Company Y

(iv) Company Z (2 marks)

(b) The manager does not criticise, but instead discusses issues with the employee. The employee is

encouraged to think things through and commits to personal improvement.

Which of Maier's three approaches to appraisal interviews is this an example of?

A Tell and sell

B Tell and listen

C Problem-solving (1 mark)

Performance appraisal can be used to identify potential candidates for promotion.

(1 mark)

21.6 (a) What type of power is best used to describe the behaviour of a manager who is refusing a request

for one of his team members to help with the workload of another department?

A Expert power

B Negative power

C Coercive power

D Physical power (1 mark)

(b) Fiedler, Heifetz and Bennis are theorists who wrote about management and leadership. Match

each of the statements below with each theorist’s findings.

(i) Individuals at all levels can exert a leadership influence

(ii) There are ‘psychologically close’ and ‘psychologically distant’ managers

(iii) The manager ‘does things right’ while the leader ‘does the right thing’ (3 marks)

(Total = 24 marks)

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QUESTIONS

Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

 T… is a scarce resource and managers' time must be used to the best effect.

 The c….. of c……..n will impact on the effectiveness of the communication process. The characteristics

of the message will determine what communication tool is best for a given situation.

 C………. is an interpersonal interview, the aim of which is to facilitate another person in identifying and

working through a problem.

 Counselling is facilitating others through the process of d…… and e…….g their own problems: it is

primarily a non-directive role.

 Communication is a two-way process involving the t…… or e……. of information and the provision of

feedback. It is necessary to direct and co-ordinate activities.

 Communication in an organisation flows d……, u……, s……. and d……….

 Data and information come from s……. both inside and outside an organisation. An organisation's

information systems should be designed so as to obtain – or capture – all the relevant data and

information required.

 I…….. communication supplements the f……. system.

 B……… to communication include 'noise' from the environments, poorly constructed or coded/decoded

messages (distortion) and failures in understanding caused by the relative position of the senders and

receivers.

Do you know? – Personal effectiveness and communication in business

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Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach

the exam.

 Time is a scarce resource and managers' time must be used to the best effect.

 The channel of communication will impact on the effectiveness of the communication process. The

characteristics of the message will determine what communication tool is best for a given situation.

 Counselling is an interpersonal interview, the aim of which is to facilitate another person in identifying

and working through a problem.

 Counselling is facilitating others through the process of defining and exploring their own problems: it is

primarily a non-directive role.

 Communication is a two-way process involving the transmission or exchange of information and the

provision of feedback. It is necessary to direct and co-ordinate activities.

 Communication in an organisation flows downwards, upwards, sideways and diagonally.

 Data and information come from sources both inside and outside an organisation. An organisation's

information systems should be designed so as to obtain – or capture – all the relevant data and

information required.

 Informal communication supplements the formal system.

 Barriers to communication include 'noise' from the environments, poorly constructed or coded/decoded

messages (distortion) and failures in understanding caused by the relative position of the senders and

receivers.

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QUESTIONS

22 Personal effectiveness and communication 37 mins

22.1 If a supervisor in the Sales department requests the help of the HR Director in a complex disciplinary

matter, what direction is the communication flow?

A Vertical

B Horizontal

C Diagonal (1 mark)

22.2 What name is given to the process whereby an individual defines objectives and formulates action plans

for learning with a view to improving his or her own effectiveness?

A Coaching

B Mentoring

C Counselling

D Personal development planning (2 marks)

22.3 The following, with one exception, are potential problems for time management. Which is the exception?

A An open door policy of management

B A sociable work group

C An assertive style of communication (1 mark)

22.4 Jared is the leader of a virtual team which stays in contact via email. Team members send all messages

to Jared, who forwards them to the rest of the network.

Which communication pattern is reflected in this situation?

A The circle

B The 'Y'

C The wheel

D The all-channel (2 marks)

22.5 You are a sales representative who routinely visits customers in their homes and places of business to

present the latest products and take orders (where inventory is available).

Which of the following technology tools will most directly enhance your effectiveness?

A Computer telephony integration

B Electronic Data Interchange (EDI)

C Mobile communications (1 mark)

22.6 Which of the following areas is not an advantage of using email as a communication tool?

A Security

B Speed

C Multiple recipients

D Versatility (2 marks)

22.7 Counselling is essentially a/an ........................................ role.

Which of the following words correctly completes this statement.

A Advisory

B Non-directive

C Task-related (1 mark)

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22.8 Which of the following is not an attribute of communication through an informal organisational network

or 'grapevine'?

A Fast

B Selective

C Accurate

D Up-to-date (2 marks)

22.9 The following, apart from one statement, are measures for encouraging upward communication in an

organisation. Which is the incorrect statement?

A Suggestion schemes

B Management by Walking Around

C Exception reporting (1 mark)

22.10 In the radio signal model, which of the following shows the correct order in which a message is

transmitted?

A Feedback, Sender, Decoded message, Coded message, Receiver

B Sender, Decoded message, Coded message, Feedback, Receiver

C Coded message, Sender, Decoded message, Receiver, Feedback

D Sender, Coded message, Decoded message, Receiver, Feedback (2 marks)

22.11 Which of the following communication mechanisms is designed to improve upward communication?

A Notice boards

B Organisation manual

C Team meetings

D Team briefings (2 marks)

22.12 What is the technical term given to a fault in the communication process where the meaning of the

message is lost 'in translation' from intention to language, or from language to understanding?

A Noise

B Redundancy

C Distortion

D Feedback (2 marks)

22.13 According to Leavitt, which one of the following communication patterns is the fastest in terms of

problem solving?

A Y

B Circle

C Chain

D Wheel (2 marks)

22.14 Which of the following best defines coaching?

A Developing the individual by helping to build on skills and overcome weaknesses

B Provision of one-way instruction on formal tasks required to carry out the immediate job

C Offering career guidance in order to maximise the individual's potential

D Provision of objective advice to overcome the individual's personal problems (2 marks)

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QUESTIONS

22.15 Which of the following statements about non-verbal communication is not true?

A Non-verbal cues can be used to reinforce or undermine spoken messages

B People pay less attention to non-verbal cues than to what is being said

C Non-verbal cues include tone of voice and silences

D Non-verbal cues are a key source of feedback (2 marks)

22.16 In the context of work planning and personal development planning, a SMART framework is often used

as a checklist of the characteristics of effective goals.

What does the 'M' in SMART stand for?

A Manageable

B Measurable

C Motivational (1 mark)

22.17 ABC has promised customer DEF that a product will be delivered on a certain date. The product is in

fact delivered nearly a month late. As a direct result DEF misses an important deadline and has to pay

penalties.

In what way has ABC failed DEF?

A Failed to communicate

B Failed to meet deadlines

C Failed to comply with job specifications

D Failed to deliver the exact product needed (2 marks)

22.18 When considering a personal development programme for an employee, what should be the first stage?

A Planning a learning and development programme

B Establishing learning targets

C Broadening the employee's knowledge and experience

D Setting up a competence framework (2 marks)

22.19 Which of the following situations may give rise to a source of positive or constructive conflict?

A Hostility between employees

B The task is lost sight of due to individual arguments

C A dispute focuses attention on individual contributions (1 mark)

(Total = 31 marks)

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23 Section E MTQs 29 mins

23.1 (a) Which two of the following conditions would show that a task is important to an organisation?

A The task will satisfy a key customer

B The task comes in an email marked urgent

C The task will add value to the organisation

D The task has already been delegated by two superiors (2 marks)

(b) Are the following statements true or false?

(i) A meeting without a clear objective will always give value to everyone attending for the

time taken.

(ii) Time management can be improved by setting aside times when an individual is not

contactable by others. (2 marks)

23.2 (a) Trevor, Joss, Michael and Leona are all managers in HGF Co experiencing conflict in their teams.

Trevor responds to conflict by encouraging the individuals to bargain and negotiate.

Joss puts emphasis on the task in hand and stresses that the group effort must be superior to

individual effort.

Michael likes to use his power as manger to force a settlement on his team. This causes some

resentment amongst his team members.

Leona ignores the conflict in the hope that the issue is trivial and the team will then continue to

operate as normal.

The following are management responses to conflict:

A Denial

B Compromise

C Dominance

D Integration/Collaboration

For each manager, select the response that they use to conflict.

(i) Trevor

(ii) Joss

(iii) Michael

(iv) Leona (2 marks)

(b) Are the following statements about conflict resolution true or false?

(i) Compromises result in all parties being satisfied

(ii) A win-win situation is rare, but is the best solution to conflict resolution

(iii) A lose-lose situation is not possible

(iv) Win-lose situations can result in damaged relationships within the team (2 marks)

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QUESTIONS

23.3 (a) Is each of the following either

A Data

B Information

(i) Completed questionnaires for market research

(ii) Company website page

(iii) Calculations showing whether an investment is profitable

(iv) A individual employee's test score

(v) Variance reports for a department manager

(vi) The average employee assessment grade for a company (3 marks)

(b) A five-year cash forecast would be classified as which of the following levels of information?

A Operational

B Management

C Strategic (1 mark)

23.4 (a) On 1 August, the financial controller of XYZ Co is told it is her responsibility to let everyone in the

finance department know about a compulsory meeting to be held on 15 September.

The financial controller sends an email to all members of the finance department, informing them

about the time, date, place and purpose of the meeting. The email is sent on 13 September.

Which of the following desirable qualities of formal communication is lacking in this scenario?

A Clarity

B Recipient

C Medium

D Timing (2 marks)

(b) Which three of the following statements about informal communication are true?

A The grapevine operates outside the place of work

B Information is not divulged randomly

C It can bypass secretive management

D The grapevine fills a gap created by an ineffective formal communication system

E It is less current than formal communication

F It relates to internal politics (2 marks)

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23.5 (a) Which two of the following are examples of misunderstanding in the communication process?

A Slang is used in task instructions

B A meeting goes on for too long for participants to pay attention to everything

C An email sent to all employees using IT jargon

D The sender of an email has not included details of the location of the meeting

E A manager is constantly dealing with queries from subordinates and misses a meeting

(2 marks)

(b) occurs when an individual thinks that they have been wrongly treated by a

colleague or supervisor.

Which of the following correctly fills the blank?

A Indirect discrimination

B Direct discrimination

C A grievance (1 mark)

Which of the following is the correct term for this loss of meaning?

A Feedback

B Distortion

C Noise (1 mark)

23.6 (a) Peggy, Operations Director at X Ltd, has delegated the task of identifying reasons for recent

bottlenecks in manufacturing processes to Susan. This will involve Susan in interviewing relevant

operators, foremen and supervisors, and also liaising with other departments, to establish why

the bottlenecks are occurring. Peggy would like a report on her desk in two weeks’time as she is

due to report to the board. Susan is worried about the project, as she is very busy with her

routine workload.

Place the suggested steps below in the correct order, so that Susan can plan her time effectively.

(i) Identification of information sources within the business

(ii) Collation of information

(iii) Establishing priorities with Peggy

(iv) Sequencing of interviews with relevant staff

(v) Delegation of routine tasks

(vi) Report writing (3 marks)

(b) Jim has been asked to coach John in certain technically demanding aspects of his accounting

role in order to improve John’s performance. Which of the following is he unlikely to do as part of

this work?

A Show John where to find company information on relevant accounting standards

B Demonstrate the company’s new accounting software

C Invite John to the annual audit planning meeting

D Help John to prepare for his upcoming appraisal (1 mark)

(Total = 24 marks)

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QUESTIONS

Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

 Organisations are not autonomous; they exist to serve some e…… p……, usually manifested in a group

such as shareholders in a company or trustees of a charity. In particular, the strategic apex must not

lose sight of this accountability.

 All managers have a duty of f…. s…… to the external purpose of the organisation and this lies most

heavily on the shoulders of those at the strategic apex.

 E…. and …….. are about right and wrong behaviour. Western thinking tends to be based on ideas

about duty and consequences. Unfortunately, such thinking often fails to indicate a single clear course

of action.

 E…..thinking is also influenced by the concepts of virtue and rights.

 Ethical c……. by all members should be a major concern for management. Inside the organisation, a

c……… based approach highlights conformity with the law.

 An i……. based approach suggests a wider remit, incorporating ethics in the organisation's values and

culture.

 Organisations sometimes issue codes of conduct to ……..

 As an accountant, your values and attitudes flow through everything you do professionally. They

contribute to the trust the wider c……… puts in the profession and the perception it has of it.

 The ……….. ………… ………… ……… (IFAC) is an international body representing all the major

accountancy bodies across the world. Its mission is to develop the high standards of professional

accountants and enhance the quality of services they provide.

Do you know? – Professional ethics in accounting and business

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FAB/F1 ACCOUNTANT IN BUSINESS

Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach

the exam.

 Organisations are not autonomous; they exist to serve some external purpose, usually manifested in a

group such as shareholders in a company or trustees of a charity. In particular, the strategic apex must

not lose sight of this accountability.

 All managers have a duty of faithful service to the external purpose of the organisation and this lies

most heavily on the shoulders of those at the strategic apex.

 Ethics and morality are about right and wrong behaviour. Western thinking about ethics tends to be

based on ideas about duty and consequences. Unfortunately, such thinking often fails to indicate a

single clear course of action.

 Ethical thinking is also influenced by the concepts of virtue and rights.

 Ethical conduct by all members should be a major concern for management. Inside the organisation, a

compliance based approach highlights conformity with the law.

 An integrity based approach suggests a wider remit, incorporating ethics in the organisation's values

and culture.

 Organisations sometimes issue codes of conduct to employees.

 As an accountant, your values and attitudes flow through everything you do professionally. They

contribute to the trust the wider community puts in the profession and the perception it has of it.

 The International Federation of Accountants (IFAC) is an international body representing all the major

accountancy bodies across the world. Its mission is to develop the high standards of professional

accountants and enhance the quality of services they provide.

Did you know? – Professional ethics in accounting and business

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QUESTIONS

24 Ethical considerations 40 mins

24.1 Managers are said to have a ........................................ responsibility (or duty of faithful service) in

respect of the entities whose purposes they serve.

Which term correctly completes this sentence?

A Financial

B Ethical

C Fiduciary (1 mark)

24.2 What is the name given to an approach to ethical decision-making which considers the 'right' decision to

be the one which results in the greatest good to the greatest number of people in a given situation?

A Utilitarianism

B Deontology

C Virtue ethics (1 mark)

24.3 X plc is trying to get a trading permit, for which it qualifies. Unfortunately, there is a backlog at the

issuing office, and X plc has been notified that there will be a delay in the processing of its permit. The

divisional manager offers a donation to the issuing office's staff welfare fund, if the official concerned will

expedite the paperwork.

Which of the following statements is true of this action?

A It is not unethical, because the money is offered for positive purposes.

B It is not unethical, because X plc is legally entitled to the benefit it is claiming.

C It constitutes bribery.

D It constitutes grease money. (2 marks)

24.4 Which of the following is an approach to ethics which combines a concern for the law with an emphasis

on managerial responsibility?

A Compliance based

B Integrity based

C Environmental based

D Economic based (2 marks)

24.5 Farrah works in the sales tax section of the accounts department of BCD Co. When the finance director

is on holiday, Farrah notices that BCD Co has not been paying the correct quarterly amounts to the

authorities. Farrah had suspected this for some time and decides to contact the authorities to tell them

about the fraud. This disclosure is known as...................................

What two words correctly complete the sentence?

A Confidentiality breach

B Corporate conscience

C Whistle blowing (1 mark)

24.6 Which of the following would raise ethical issues for a manufacturer of fast-moving consumer goods?

(i) The materials used in manufacture of the goods

(ii) The quality of the goods

(iii) How the goods are advertised

(iv) How much its raw materials suppliers pay their staff

(v) How the goods are packaged

A (ii) and (iii) only

B (i), (ii) and (iii) only

C (ii), (iii) and (v) only

D (i), (ii), (iii), (iv) and (v) (2 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

24.7 Reliability, responsibility,........................................ , courtesy and respect are the personal qualities

expected of an accountant.

Which of the following words correctly complete this statement?

A Accountability

B Social responsibility

C Timeliness

D Ambition (2 marks)

24.8 You have been asked to work on a major investment decision that your company will be making, and

discover that your brother-in-law is the managing director of a firm that may benefit from the outcome of

the decision. You have no intention of allowing this to influence the advice you give your firm, and you

know that your brother-in-law will not try to influence you in any way.

What professional quality would make you consider handing this task to a colleague, or otherwise

raising questions with your superiors?

A Scepticism

B Accountability

C Independence of mind

D Independence in appearance (2 marks)

24.9 Which of the following would not represent an ethical objective in relation to employment practices?

A Guarantee of minimum wages

B Proactive health, safety and welfare promotion

C Promotion of workforce diversity

D Employability training (2 marks)

24.10 Of the three main sources of rules that regulate the behaviour of businesses, the minimum level of

acceptable behaviour is set by which?

A Non-legal rules and regulations

B Ethics

C The law

D Society (2 marks)

24.11 The directors' deliberations must be balanced by taking into account everyone who has a legitimate

interest in the company and respecting their rights and views.

This statement describes which concept?

A Fairness

B Openness

C Probity (1 mark)

24.12 Which of the following statements is a definition of probity?

A Open and clear disclosure of all relevant information

B Telling the truth and not misleading stakeholders

C Accepting the blame or credit for decisions

D Answerable in some way for the consequences of its actions (2 marks)

24.13 Holders of public office should not place themselves under any financial or other obligation to outside

individuals or organisations that might influence them in the performance of their official duties.

This statement refers to which concept?

A Independence

B Reputation

C Integrity (1 mark)

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QUESTIONS

24.14 Which one of the following is not part of a corporate code of ethics?

A Professional ethics

B Organisational culture

C Organisational self-interest (1 mark)

24.15 Abner is the lead partner on the audit of DEF Inc. The client often gives Abner corporate hospitality at

major sporting events and small gifts, such as a bottle of spirits, on his birthday.

Which threat does this represent?

A Self-interest

B Self-review

C Advocacy

D Intimidation (2 marks)

24.16 XYZ carries out the audit of Delta Products Inc. Delta Products Inc is in financial trouble and XYZ has

had to qualify the audit report for the past two years. The managing director of Delta blames the

qualified audit reports for her firm's continuing problems. She is threatening to sue XYZ for poor work if

they qualify the audit report for this year.

What threat does this represent?

A Familiarity

B Intimidation

C Self-interest

D Self-review (2 marks)

24.17 Which of the following is not a conflict of interest?

A An ACCA member is in direct competition with a client on a contract

B An ACCA member is married to a director of the client

C An ACCA member is an officer of the client company but does not deal with the client's affairs

D An ACCA member is part of a joint venture with a competitor of the client (2 marks)

24.18 You have been asked to prepare management accounts while a colleague is on holiday. Your supervisor

tells you that the accounts should be printed out and left on each manager's desk.

You query whether the accounts should be put in an envelope marked 'confidential' but you are told not

to bother in order to save costs. What problem does this cause you?

A Confidentiality

B Unprofessional behaviour

C Objectivity

D Integrity (2 marks)

24.19 Which of the following statements reflects a relativist view of ethics?

A There is an unchanging set of ethical principles that apply in all situations

B The subject to all ethical situations is the self

C The ethics appropriate for a given situation will depend on the conditions at the time

(1 mark)

24.20 Which one of the following statements is a criticism of absolutism?

A It is based on a fundamental contradiction

B It takes no account of changing norms in society

C It leads to a culture of anything goes

D It promotes the pursuing of short-term selfish desires (2 marks)

(Total = 33 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

25 Section F MTQs 29 mins

25.1 (a) Which two of the following are criticisms of relativism?

A It takes no account of evolving norms

B It leads to a philosophy of anything goes

C It makes short-term desires equivalent to longer-term interests

D It is based on a fundamental contradiction

E A consensus may not be possible (2 marks)

(b) Are the following statements about social responsibility true or false?

(i) Social responsibility action is likely to have an adverse effect on shareholders' interests in

the short term

(ii) An environmental audit involves assessing the opportunities and threats to an organisation

(iii) Only governments are concerned with social responsibility

(iv) Guaranteeing employees a minimum 'living wage' is an example of social responsibility

(2 marks)

25.2 (a) Are the following statements about ethics true or false?

(i) The teleological view of ethics is based on duty

(ii) Bribery can sometimes be legal

(iii) Virtue ethics suggests that managers should incorporate values such as fairness and

loyalty into their decision-making

(iv) An accountant's ethical behaviour serves to protect the public interest (2 marks)

(b) Which two of the following are criticisms of absolutism?

A It takes no account of evolving norms

B It leads to a philosophy of anything goes

C It makes short-term desires equivalent to longer-term interests

D It is based on a fundamental contradiction

E Whatever source is used, human interpretation will lead to different views

(2 marks)

25.3 (a) The following are qualities you can see in an accountant

Reliability

Independence

Courtesy

Respect

Scepticism

Timeliness

Accountability

Social responsibility

Which four of these boxes show personal qualities expected of an accountant? (2 marks)

(b) Which two of the following are fundamental principles from ACCA's Code of Ethics?

A Integrity

B Leadership

C Objectivity

D Truthfulness

E Accountability (2 marks)

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QUESTIONS

25.4 (a) YRT Co is a firm of external auditors which has Company W, Company X, Company Y and

Company Z among its audit clients.

Company W is currently being sued by one of its suppliers. YRT Co has offered legal services and

will defend them in this legal case.

The audit partner of Company X has been a member of the external audit team for the past 15

years and has good relationships with the senior management of Company X.

The financial controller of Company Y is the daughter of the audit manager from YRT Co.

Company Z does not have an experienced financial department and so YRT Co helps to prepare

the financial statements of Company Z in advance of the external audit.

The following are types of conflicts of interest:

A Familiarity threat

B Advocacy threat

C Self-review threat

D Self-interest threat

In the case of each of the following clients, which of the above conflicts of interest exists?

(i) Company W

(ii) Company X

(iii) Company Y

(iv) Company Z (2 marks)

(b) Which of the following would give rise to a threat of intimidation?

A Litigation against the external auditor by an audit client

B Provision of taxation services as well as audit services

C An audit partner is on the board of a client (1 mark)

Which of the following correctly fills the blank?

A Legal guidelines

B Moral principles

C Professional regulations (1 mark)

25.5 (a) JKL Co is a small firm of external auditors with a small number of clients. Almost 20% of its

revenue comes from one client. The client still has not settled the invoice from the previous year's

audit in the hope that this will strengthen their position in negotiating a lower price for this year's

audit.

Which two of the following conflicts of interest exist in this situation?

A Self-review threat

B Advocacy threat

C Self-interest threat

D Familiarity threat

E Intimidation threat (2 marks)

(b) Are the following statements true or false?

(i) When dealing with ethical dilemmas ACCA students must follow ACCA's code of conduct.

(ii) Professional ethics should not be followed at the expense of contractual obligations.

(iii) There is a public expectation that accountants will act ethically.

(iv) A prospective audit firm quoting a significantly lower fee for assurance work than the

current auditors charge does not raise a threat of a conflict of interest.

(2 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

25.6 (a) Corporate codes of ethics are published by organisations in order to communicate values to

stakeholders. Give a reason why each of the following stakeholders might be interested in what

an organisation does.

(i) Customers

(ii) Employees

(iii) Local communities (3 marks)

(b) The Chairman’s report of Fairmind states that “We are a competitive business, yet we are fair

and open. Obtaining information about competitors by deception is strongly condemned. Making

disparaging comments about competitors should be avoided.'

Which of the following safeguards would be most effective in ensuring that these standards are

maintained?

A A system of fines for employees who are in breach of the code

B Effective education and training for all staff

C External review of Fairmind’s ethics policy

D Rewarding employees who report on colleagues’ ethical breaches (1 mark)

(Total = 24 marks)

26 Mixed Bank 1 46 mins

26.1 Systems are sometimes described as either open or closed.

When a system is closed it is:

A Incapable of further technical enhancement

B Protected from unauthorised access

C Isolated from its external environment (1 mark)

26.2 A company has placed a job advertisement for a full time employee and a part time employee. The part

time employee's terms are less favourable than the full-time employee's terms. What type of

discrimination is this?

A Direct discrimination

B Indirect discrimination

C Victimisation (1 mark)

26.3 What is the main focus and role of the accounting function?

A To pay employee salaries

B To provide information to external auditors

C To record financial information

D To estimate how much to spend on production (2 marks)

26.4 Which of the following is a benefit of decentralisation?

A Decisions are made at one place in the organisation

B Reductions in bureaucracy

C Better crisis management

D Improves the motivation of junior managers (2 marks)

26.5 A narrow span of control would be suitable where

A The team is not dispersed across a wide area

B The work is of a routine nature

C There is little similarity between team members' work

D The team is very experienced (2 marks)

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QUESTIONS

26.6 When analysing the current situation in a business, a consultant will review the general environment

surrounding it.

Which of the following would not be included in this analysis?

A New legislation coming into effect in six months' time

B Activities of overseas competitors

C Interest rates

D Independence of the non-executive directors (2 marks)

26.7 How might the purchasing manager work closely with the accounting function?

A Processing expense claims

B Seeking prompt payment from customers

C Managing the prompt payment of suppliers

D Recording staff salaries (2 marks)

26.8 Many organisations are described as bureaucratic. When the team, was first coined, bureaucracy was

regarded as being highly efficient and there are still cases where a bureaucratic approach is appropriate.

However, bureaucracy has some undesirable features. Can you identify three from the list below?

(i) It relies on the expertise of its members – not through standardised skills but by the importance

of the mix of skills

(ii) Committees and reports slow down the decision-making process

(iii) Innovation is difficult

(iv) Over-prescriptive rules produce a simplistic approach to problems

A (i), (ii) and (iii)

B (i), (iii) and (iv)

C (ii), (iii) and (iv)

D (i), (ii) and (iv) (2 marks)

26.9 Mr Warner, your department manager, is weighing up the benefits and disadvantages of off-the-shelf

packages that have been customised so that they fit the organisation's specific requirements. From his

list below can you identify two disadvantages of customisation?

(i) It may delay delivery of the software

(ii) The user is dependent on the supplier for maintenance of the package

(iii) The company will not be able to buy 'add-ons' to the basic package

(iv) It may introduce bugs that do not exist in the standard version

A (i) and (ii)

B (i) and (iii)

C (i) and (iv)

D (ii) and (iii) (2 marks)

26.10 In the short run, firms will continue to supply customers provided that they cover

A Fixed costs

B Marginal costs

C Variable costs (1 mark)

26.11 Which of the following is not an advantage of a matrix structure?

A Dual authority

B Greater flexibility

C Employee motivation

D Improved communications (2 marks)

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26.12 Which of the following parties has the main responsibility for good corporate governance?

A The board of directors

B The audit committee

C The non-executive directors (1 mark)

26.13 Which of the following statements is not true in respect of the relationships between directors,

shareholders and auditors?

A Auditors are the agents of shareholders

B Shareholders are accountable to auditors

C Auditors report to shareholders on the financial statements prepared by directors

D Directors are accountable to shareholders (2 marks)

26.14 Which of the following statements correctly describes the principal purpose of the external audit of a

company within the UK?

A To assist management in the preparation of the company's periodic financial statements

B To examine and express an opinion on the company's periodic financial statements

C To prevent and detect fraud within the company (1 mark)

26.15 A record showing who has accessed a computer system is called:

A An audit trail

B A computer trail

C A password trail (1 mark)

26.16 Alf Sparks is a manager of a small team designing and building a new management information system.

The various levels of management that will be using the system will all have different information

requirements but the qualities of good information are the same at each level. He is describing these

qualities to his team.

Which of the following would be included in his explanation?

(i) Comprehensive

(ii) Relevant

(iii) Accurate

(iv) Authoritative

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

26.17 External auditors may place reliance on internal auditors' work.

Is this statement correct?

A External auditors need to assess the work of internal audit first

B Internal auditors are not independent and so cannot be relied upon

C Yes, always (1 mark)

26.18 Which of the following costs, which might be incurred before or during the development of an

information system, are capital costs?

(i) Hardware purchase costs

(ii) Costs of testing the system

(iii) Software purchase costs

(iv) Installation costs

A (i), (ii) and (iii)

B (i), (ii) and (iv)

C (ii), (iii) and (iv)

D (i), (iii) and (iv) (2 marks)

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QUESTIONS

26.19 Who appoints external auditors?

A Chairman

B Finance director

C Shareholders (1 mark)

26.20 Control over cash receipts will concentrate on three main areas.

Receipts must be .......................... promptly

The record of receipts must be ..........................

The loss of receipts through theft or accident must be ..........................

A Banked, complete, prevented

B Counted, accurate, reported

C Banked, accurate, avoided

D Reported, accurate, prevented (2 marks)

26.21 There are three broad pre-requisites or 'pre-conditions' that must exist in order to make fraud a

possibility.

What are they?

A Deception, criminality and opportunity

B Dishonesty, criminality and opportunity

C Dishonesty, motivation and opportunity

D Deception, motivation and opportunity (2 marks)

26.22 The identification within a client company of financial problems, a dominant chief executive, poor

internal control, unusual transactions, or a high-technology environment, are all indicative of:

A Increased scope for potential fraud

B A higher than normal risk audit

C Inadequacies in the systems of reporting

D The presence of going concern problems (2 marks)

26.23 Data and information come from sources both inside and outside an organisation.

Which of the following represent data or information captured from within the organisation?

(i) Information about personnel from the payroll system

(ii) Market information on buying habits of potential customers from the marketing manager

(iii) Information on decisions taken from the minutes of a meeting

(iv) Value of sales from the accounting records

A (i), (ii) and (iii)

B (i), (ii) and (iv)

C (ii), (iii) and (iv)

D (i), (iii) and (iv) (2 marks)

(Total = 38 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

27 Mixed Bank 2 48 mins

27.1 Which three of the following did Henri Fayol include in his five functions of management?

(i) Motivating

(ii) Co-ordinating

(iii) Commanding

(iv) Controlling

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

27.2 Which one of the statements below best describes contingency theory?

A Organisational design will be determined by a number of factors all of which depend on the

others

B Companies must plan for changes to their organisation

C Companies should focus on the short-term as the future is uncertain (1 mark)

27.3 Peter Drucker grouped management activities or operations into five categories.

Which of the following is not one of those categories?

A Setting objectives

B The job of measurement

C Planning and control (1 mark)

27.4 Different types of power may be exercised within an organisation any different individuals.

Which type of power is associated with formal authority?

A Resource power

B Expert power

C Position power (1 mark)

27.5 Rensis Likert identifies four management styles. What are they?

A Benevolent autocratic, participative, democratic, exploitative autocratic

B Benevolent authoritative, participative, exploitative authoritative, democratic

C Exploitative autocratic, benevolent autocratic, participative, laissez faire

D Benevolent autocratic, consultative participative, exploitative, laissez faire (2 marks)

27.6 A company has established a project team to design a new information system. The team has had a few

meetings to discuss how they are going to tackle the work, and who would do what, but some early

ideas have been unsuccessful. Group members are still putting forward a number of very innovative

ideas, but they often disagree strongly with each other. The group members appear to be dividing into

two 'camps' each of which has an unofficial 'leader'. These two individuals agree about very little and

appear to dislike each other. According to Tuckman, which stage in development has the project team

reached?

A Norming

B Performing

C Storming (1 mark)

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QUESTIONS

27.7 In the context of human resource planning, which two of the following documents are the outputs of a

process of job analysis?

(i) Human resource plan

(ii) Job description

(iii) Person specification

(iv) Performance appraisal

A (i) and (ii)

B (i) and (iii)

C (ii) and (iv)

D (ii) and (iii) (2 marks)

27.8 Belbin described the most effective character mix in a team. This involves eight necessary roles, which

should ideally be balanced and spread in a team.

A person who is highly strung, extrovert and passionate about the task fits into which of Belbin's roles?

(i) Plant

(ii) Completer Finisher

(iii) Resource investigator

(iv) Shaper

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

27.9 Which one of the following team member roles is not from Belbin's list of group rules?

A Shaper

B Plant

C Attacker

D Finisher (2 marks)

27.10 Which of the following are positive aspects of teamworking?

(i) Control

(ii) Work organisation

(iii) Knowledge generation

(iv) Decision making

A (i), (ii) and (iii)

B (i) and (ii)

C (i), (ii) and (iv)

D All four (2 marks)

27.11 Tuckman identified four stages in group development, which occur in a particular order. What is the

order in which the stages occur?

A Forming, storming, norming, performing

B Forming, storming, performing, norming

C Storming, norming, forming, performing

D Storming, forming, performing, norming (2 marks)

27.12 'The justification for empowering workers, or removing levels in hierarchies that restrict freedom, is that

not only will the job be done more effectively but the people who do the job will get more out of it in

terms of growth, challenge, responsibility and self-fulfilment'.

The thinking is in line with which management writer?

A Herzberg

B Fayol

C Taylor

D Weber (2 marks)

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FAB/F1 ACCOUNTANT IN BUSINESS

27.13 Bruce has been on a training course to help him develop his negotiation skills and learn some new

techniques.

He has been practising three of these back in the office – can you identify them?

(i) Look for a wide variety of possible solutions

(ii) Try to develop options that would result in mutual gain

(iii) Create a trusting supportive atmosphere in group

(iv) Define the problem carefully

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

27.14 There are many different methods of communication, each with its own features and limitations. Can

you identify the three features/advantages of conversation as a communication technique from the list

below?

(i) Requires little or no planning

(ii) Gives a real impression of feelings

(iii) Complex ideas can be communicated

(iv) Usually unstructured so can discuss a wide range of topics

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

27.15 Which of the following would Herzberg class among 'hygiene factors'?

(i) Salary

(ii) Job security

(iii) Gaining recognition

(iv) Challenging work

A (ii) and (iv) only

B (i) only

C (i), (ii), (iii) and (iv)

D (i) and (ii) (2 marks)

27.16 Vocabulary and style should contribute to the clarity of message in a presentation. It is recommended

that short simple sentences are used and the presenter should avoid certain expressions. Which three

from the following list should be avoided?

(i) Acronyms

(ii) Jargon

(iii) Colloquialisms

(iv) Double meanings

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

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QUESTIONS

27.17 Electronic mail has so many features and advantages that it is easy to forget that there may be

limitations associated with it. Can you identify the disadvantages of email from the list below?

(i) People may not check their email regularly

(ii) Complex images do not transmit well

(iii) Requires some computer literacy to use effectively

(iv) Lack of privacy – can be forwarded without your knowledge

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

27.18 For a formal meeting, in which order would you expect the following items to appear on the agenda?

1 Subjects for discussion

2 Minutes of previous meeting

3 Date of next meeting

4 Any other business

5 Apologies for absence

6 Matters arising

A The sequence is 5, 2, 6, 1, 4, 3

B The sequence is 5, 2, 1, 6, 3, 4

C The sequence is 2, 5, 1, 6, 3, 4 (1 mark)

27.19 A 360o (or multi-source) appraisal collects feedback on an individual's performance from sources such

as the person's immediate superior and also his or her immediate subordinates. Identify these other

sources from the list below.

(i) Peers

(ii) Customers

(iii) Self-appraisal

(iv) Family and friends

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

27.20 What type of appraisal occurs when employees judge managers?

A Peer

B Traditional

C Upward (1 mark)

27.21 Which one of the following is not a general aim of an appraisal system?

A Identify potential

B Deal with grievances

C Reward attainment

D Measure performance (2 marks)

27.22 Which one of the following is the person least likely to be requested to fill out feedback forms for use in

a 360 degree appraisal of a sales account manager?

A Accounts payable clerk

B Credit sales clerk

C Direct customer (1 mark)

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27.23 Which of the following is not a characteristic of a learning organisation?

A Learning climate

B Enabling accounting

C Reward flexibility (1 mark)

27.24 Upward appraisal is used by some businesses. This involves staff giving their opinions on the

performance of their managers. There are problems with this method, which include three of the

following.

Can you identify them?

(i) Employee point scoring

(ii) Fear of reprisal

(iii) The chance of bias is increased

(iv) Lack of authority

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

(Total = 40 marks)

28 Mixed Bank 3 48 mins

28.1 Which of the following is an acronym used to describe the key elements of an organisation's external

environment?

A PERT

B PEST

C SWOT (1 mark)

28.2 Henry Mintzberg categorised five basic components of an organisation.

Which two of the following statements describes the work of the technostructure of an organisation?

1 Designing systems

2 Organising and controlling work

3 Standardising work

4 Securing inputs

A 1 and 2

B 1 and 3

C 2 and 3

D 3 and 4 (2 marks)

28.3 Which of the following is a correct definition of the term 'span of control'?

A The number of employees reporting to one manager

B The number of managers to whom one employee reports

C The number of levels in the hierarchy

D The number of employees at each level of the organisation (2 marks)

28.4 To whom is the internal auditor accountable?

A The directors of the company

B The employees of the company

C The shareholders of the company (1 mark)

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QUESTIONS

28.5 SPAMSOAP is a mnemonic for the types of internal control employed by an organisation.

Which two of the following are types of internal control included in SPAMSOAP?

1 Output

2 Arithmetic

3 Preventative

4 Physical

A 1 and 2

B 1 and 3

C 2 and 3

D 2 and 4 (2 marks)

28.6 Which of the following are typical responsibilities of the financial accountant in a large organisation?

1 Inventory valuation

2 Sales invoicing

3 Project appraisal

4 Payroll

A 1 and 2

B 2 and 4

C 1 and 4

D 3 and 4 (2 marks)

28.7 Who was responsible for developing the 'Situational Leadership' model?

A Blake and Mouton

B Katz and Kahn

C Hersey and Blanchard

D Tannenbaum and Schmidt (2 marks)

28.8 Which of the following statements accurately describes a multi-disciplinary team?

A All team members collaboratively decide how to organise their work

B All team members have different skills and specialisms which they pool

C All team members can perform any and all of the group's tasks

D All team members are jointly responsible for the leadership of the team (2 marks)

28.9 Which two of the following are examples of content theories of motivation?

1 Maslow's hierarchy of needs

2 Vroom's expectancy theory

3 Herzberg's two factor theory

4 Adam's equity theory

A 1 and 2

B 2 and 4

C 2 and 3

D 1 and 3 (2 marks)

28.10 Which two of the following are examples of 'on the job' training?

1 Formal training courses

2 Mentoring by a colleague

3 Self study courses

4 Secondments to other departments

A 1 and 2

B 2 and 3

C 3 and 4

D 2 and 4 (2 marks)

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28.11 If a manager in the purchasing department requests the help of the Human Resources Director in

preparing for a difficult appraisal, what direction is the communication flow?

A Vertical

B Horizontal

C Diagonal (1 mark)

28.12 Honey and Mumford classified four different learning styles.

Which of the following statements accurately describes the reflector?

A Prefers to understand principles

B Prefers to think things through first

C Prefers to try things 'hands on'

D Prefers to see practical examples (2 marks)

28.13 'An organisation is a social arrangement which pursues collective........................................, which

controls its own performance and which has a boundary separating it from its environment.'

Which of the following words best completes this sentence?

A Ambitions

B Duties

C Goals (1 mark)

28.14 From the list below, pick out two of Mintzberg's organisational components

(i) Strategic apex

(ii) Technicians

(iii) Specialists

(iv) Support staff

A (i) and (ii)

B (ii) and (iii)

C (i) and (iv)

D (ii) and (iv) (2 marks)

28.15 Which of the following are examples of weak financial control procedures?

A Suppliers not being paid on time

B Debtors not paying within credit limits

C Excessive bad or doubtful debts

D All of the above (2 marks)

28.16 In a typical finance function, budgets and budgetary control would usually be the responsibility of which

of the following roles?

A The Financial Controller

B The Management Accountant

C The Chief Executive (1 mark)

28.17 Which function in an organisation is responsible for ensuring that only properly authorised purchases

which are necessary for the business are made?

A Dispatch

B Internal audit

C Purchasing/procurement (1 mark)

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QUESTIONS

28.18 What is the term given to a method of fraud in the accounts receivable area, by which cash or cheque

receipts are stolen, and the theft concealed by setting subsequent receipts against the outstanding debt?

A Collaboration

B Topping and tailing

C Teeming and lading

D Understating sales (2 marks)

28.19 Which of the following are purposes of a receivables control account?

(i) A sales ledger control account provides a check on the arithmetical accuracy of the personal

ledger

(ii) A sales ledger control account helps to improve separation of duties

(iii) A sales ledger control account ensures that there are no errors in the personal ledger

(iv) Control accounts deter fraud

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

28.20 A ........................................ is a program which deals with one particular part of a computerised

business accounting system.

Which of the following terms correctly completes this definition?

A Suite

B Module

C Spreadsheet (1 mark)

28.21 Power arising from an individual's formal position in the organisation is called:

A Coercive power

B Legitimate power

C Expert power

D Negative power (2 marks)

28.22 What is the most important attribute of a 'group', which distinguishes it from a random crowd of people?

A Leadership

B Goals

C Function

D Identity (2 marks)

28.23 Which of Belbin's nine roles does the following description apply to? Single-minded, self-starting,

dedicated.

A Chairman

B Specialist

C Co-ordinator

D Teamworker (2 marks)

28.24 Which of the following is a category in Maslow's hierarchy of needs theory?

A Self determination

B Need for affiliation

C Safety needs (1 mark)

(Total = 40 marks)

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29 Mixed Bank 4 48 mins

29.1 William Ouchi identified three types of control.

Which of the following is not one of those?

A Bureaucratic control

B Market control

C Output control

D Clan control (2 marks)

29.2 From the list below, identify the one that doesn't have the attributes of a group.

A The finance department of an organisation

B An orchestra

C A football team

D Five pop fans (2 marks)

29.3 Which of the following is most clearly a sign of an ineffective group?

A Internal disagreement and criticism

B Passive acceptance of work decisions

C Competition with other groups (1 mark)

29.4 A leader may be distinguished from a manager by lack of dependency on:

A Position power

B Expert power

C Personal power

D Physical power (2 marks)

29.5 Delegation is needed in organisations to enable a distribution of work in the organisation. Select the two

best reasons why managers may be reluctant to delegate.

(i) Doesn't trust staff to carry out delegated tasks

(ii) Wants to control all activities under his or her responsibility

(iii) The organisation is dynamic and turbulent with constant changes

(iv) Is new and doesn't know how competent staff are

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv) (2 marks)

29.6 Bill has been on a training course to learn negotiation skills. Which of the following are negotiation

skills.

(i) Look for a wide variety of possible solutions

(ii) Define the problem carefully

(iii) Evaluate progress towards objectives

(iv) Try to develop objectives resulting in mutual gains

A (i), (ii) and (iii)

B (ii), (iii) and (iv)

C (i), (ii) and (iv)

D (i), (iii) and (iv) (2 marks)

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QUESTIONS

29.7 Leadership involves activities that are generally people-centred. Which of the following doesn't fall into

this category?

A Creating the culture

B Inspiring and motivating others

C Reconciling individual needs with the requirements of the organisation

D Allocating scarce resources (2 marks)

29.8 Which of the following describes an employee duty, rather than an employer duty under Health and

Safety legislation?

A To keep all plant and machinery up to a necessary standard

B To ensure all work practices are safe

C To take reasonable care of themselves (1 mark)

29.9 Every organisation has a boundary that separates it from its environment. From an organisation's point of

view, which two of the following would be part of the organisation's environment?

(i) Shareholders

(ii) Customers

(iii) Sales team

(iv) Purchasing department

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv) (2 marks)

29.10 Which of the following disciplinary actions may be used only if it is (they are) provided for in the

employee's contract of employment?

(i) Suspension without pay

(ii) Dismissal

(iii) Demotion

(iv) Suspension with pay

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv) (2 marks)

29.11 Which type of culture according to Handy's cultural models would best fit with a matrix structure?

A Person

B Role

C Power

D Task (2 marks)

29.12 Who said 'Culture is the way we do things around here'.

(i) Handy

(ii) Schein

(iii) Harrison

(iv) Deal and Kennedy

A (i) only

B (i) and (ii)

C (i) and (iii)

D (iv) only (2 marks)

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29.13 Which of the following are connected stakeholders to an organisation?

1 Employees

2 Suppliers

3 Managers

4 Customers

A 1 and 3

B 1 and 4

C 2 and 4

D 2 and 3 (2 marks)

29.14 Henry Mintzberg categorised five basic components of an organisation.

Which of the following statements describes the work of the strategic apex of an organisation?

A Ensuring the organisation pursues its objectives and serves the needs of its owners and

stakeholders

B Securing inputs and processing and distributing them as outputs

C Organising, planning and controlling work and acting as an interface (1 mark)

29.15 Which of the following are typical responsibilities of the management accountant in a large organisation?

1 Processing sales invoices

2 Reconciling cash balances with bank statements

3 Planning and preparing budgets

4 Appraisal of capital investment projects

A 1 and 3

B 2 and 4

C 1 and 4

D 3 and 4 (2 marks)

29.16 Lack of control over which of the following activities can lead to the fraudulent practice of teeming and

lading?

A Non-current asset register

B Budgetary system

C Inventory management

D Sales ledger and receipts (2 marks)

29.17 Which of the following statements identifies three broad requisites for fraud?

A Collusion, opportunity, motivation

B Dishonesty, opportunity, motivation

C Opportunity, collusion, dishonesty (1 mark)

29.18 Which type of audit is concerned with the evaluation and testing of the internal controls within an

organisation?

A Systems

B Management

C Transactions (1 mark)

29.19 To which of the following cultural types did Charles Handy give the name of the Greek god Dionysus?

A Power/club culture

B Person culture

C Role culture

D Task culture (2 marks)

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QUESTIONS

29.20 Which of the following describes the 'impoverished' style of management identified by Blake and

Mouton's managerial grid?

A High concern for people and a low concern for the task

B Low concern for people and a high concern for the task

C Low concern for people and low concern for the task (1 mark)

29.21 According to Belbin, the success of a group can depend on the balance of individual skills and

personality types.

Which of the following statements are characteristics of the 'shaper'?

A Calm, self confident and controlled – coordinating and operating through others

B Concerned with the relationships within the group, supportive and tends to diffuse conflict

C Highly-strung, outgoing and dynamic and committed to the task

D Orderly, conscientious, anxious and ensures that timetables are met (2 marks)

29.22 Which of the following statements describes the correct sequence between sender and receiver within

the communication cycle?

A Encoded message, medium, decoded message

B Medium, encoded message, decoded message

C Decoded message, encoded message, medium (1 mark)

29.23 According to the Ashridge studies on leadership style, what is most important to subordinates about the

style of their leader?

A Consultation

B Direction

C Consistency (1 mark)

29.24 Which of the following must be in a job description?

1 Reporting lines

2 Salary

3 Hours of work

4 Job content

A 1 and 3

B 2 and 4

C 1 and 4

D 2 and 3 (2 marks)

(Total = 40 marks)

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30 Mixed Bank 5 48 mins

30.1 Which two of the following are advantages of computerised accounting packages over manual systems?

1 They make it easier to see where a mistake has been made

2 They can be used by non-specialists

3 They provide more consistent processing than manual systems

4 They are less expensive to implement

A 1 and 2

B 1 and 4

C 3 and 4

D 2 and 3 (2 marks)

30.2 Which of the following is normally subject to the most direct government regulation?

A Employment protection

B Corporate social responsibility

C Corporate governance (1 mark)

30.3 Fish and chips are considered complementary products. If the price of fish rises, what will the impact be

in demand for chips?

A Rises

B Stays the same

C Falls (1 mark)

30.4 For which two of the following does the external auditor have responsibility?

1 Evaluating the efficiency of systems and procedures

2 Reporting to shareholders

3 Detecting fraud

4 Giving an opinion on financial statements

A 1 and 2

B 1 and 3

C 2 and 4

D 3 and 4 (2 marks)

30.5 A medium sized manufacturing firm produces a number of reports, for example, production and

materials reports, marketing reports, personnel reports and financial reports.

Which two of the following would you expect to see in a production and materials report?

1 Transport costs

2 Wastage rates

3 Labour utilisation figures

4 Sales analyses

A 1 and 2

B 2 and 3

C 2 and 4

D 3 and 4 (2 marks)

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QUESTIONS

101

30.6 Which of the following is a feature of a structured decision?

A There is a formal process for decision-making

B The decision variables are very complex

C The information needed for decision-making is unpredictable

D The manager's experience and intuition play a large part in making the decision

(2 marks)

30.7 Who was responsible for developing the 'two-factor theory' of motivation?

A Herzberg

B Maslow

C Vroom (1 mark)

30.8 Which of the following statements describes coercive power?

A Power associated with a particular role or status

B Power associated with physical force or punishment

C Power associated with control over physical resources

D Power associated with individual personality and attitudes (2 marks)

30.9 Which two of the following are parts of the job of a supervisor?

1 Managing team performance

2 Co-ordinating departmental objectives

3 Developing strategic plans

4 Organising the work of others

A 1 and 3

B 1 and 4

C 2 and 4

D 2 and 3 (2 marks)

30.10 Which of the following employee selection methods has the highest 'predictive validity': that is, which is

best at predicting a candidate's performance in the job?

A Interviews

B Personality testing

C Assessment centres

D Work sampling (2 marks)

30.11 The concept of ………………… is based on the belief that the types of individual difference which are

protected by anti-discrimination legislation are crude and irrelevant to successful performance, and that

an organisation can benefit from embracing all kinds of difference.

Which words correctly complete this sentence?

A Equal opportunity

B Managing diversity

C Diversification (1 mark)

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30.12 Kolb provides a useful descriptive model of adult learning.

Which of the following is the correct sequence of the four stages of the learning cycle?

A Active experimentation, observation and reflection, abstract conceptualisation, concrete

experience

B Concrete experience, abstract conceptualisation, active experimentation, observation and

reflection

C Abstract conceptualisation, observation and reflection, active experimentation, concrete

experience

D Concrete experience, observation and reflection, abstract conceptualisation, active

experimentation (2 marks)

30.13 Which of the following features of organisational structure is not associated with flexibility and

adaptability?

A Horizontal structure

B Shamrock organisation

C Scalar chain (1 mark)

30.14 Which of the following is the role of the secretary of a committee?

A Guiding discussion in committee meetings

B Selecting members of the committee

C Taking and circulating minutes of the meeting

D Determining the agenda of the meeting (2 marks)

30.15 Which of Handy's 'gods' is associated with 'power culture'?

A Zeus

B Apollo

C Athena

D Dionysus (2 marks)

30.16 Which of the following factors help shape an organisation's culture?

(i) The person who founded the organisation

(ii) The failures and successes experienced by the organisation

(iii) Recruitment and selection

(iv) The industry the organisation is in

(v) Labour turnover

A (ii) and (iv) only

B (i), (ii) and (iv) only

C (ii), (iii) and (iv) only

D (i), (ii), (iii), (iv) and (v) (2 marks)

30.17 In the context of the different levels of objectives that an organisation may pursue, environmental

protection regulations would represent which of the following categories?

A Primary economic objective

B Non-economic, social objective

C Responsibility

D Boundary (2 marks)

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QUESTIONS

103

30.18 Three of the following are recognised advantages of a framework-based approach to ethical codes.

Which is the exception?

A Encourages proactive discussion of issues

B Encourages consistent application of rules

C Suits complex situations and evolving environments

D Encourages professional development (2 marks)

30.19 The following, with one exception, are 'building blocks' for team building. Which one is the 'blockage'?

A Diverse mix of personalities

B Members do not challenge or criticise

C Regular reviews of performance (1 mark)

30.20 Which one of the following would be identified as a problem with the role of non-executive director?

A External stakeholder security

B Time available to devote to the role

C Objective viewpoint (1 mark)

30.21 In the context of corporate social responsibility, which two of the following might 'sustainability' involve?

(i) Using local suppliers

(ii) Maintaining long-term relationships with suppliers

(iii) Minimising energy consumption

(iv) Ethical employment practices

A (i) and (ii)

B (i) and (iii)

C (ii) and (iv)

D (iii) and (iv) (2 marks)

30.22 ………………………… is the study of the aggregated effects of the decisions of individual economic

units (such as households or businesses).

Which word correctly completes this sentence?

A Demographics

B Globalisation

C Macro-economics (1 mark)

30.23 Government can directly affect an organisation by influencing

1 Demand

2 Capacity expansion

3 Competition

A 1 and 2

B 1 and 3

C 2 and 3

D 1, 2 and 3 (2 marks)

30.24 In relation to fraud prevention, what objective should external auditors have in designing and

implementing their audit procedures?

A A reasonable prospect of detecting irregular statements or records

B The identification of every inconsistency or error within the records

C To provide a systematic check of every recorded transaction

D To verify pre-determined samples of all types of records (2 marks)

(Total = 40 marks)

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31 Mixed Bank 6 46 mins

31.1 Which of the following groups are the owners of a limited company?

A Non-executive directors

B Stakeholders

C Shareholders (1 mark)

31.2 Which of the following correctly describes the meaning of Mintzberg's term: 'technostructure'?

A Analysts such as accountants and workplanners, whose objective is to effect standardisation in

the organisation

B The range of technology needed for effective organisational performance

C The organisation of shopfloor workers and their supervisors in a manufacturing environment

D The central strategy-setting component of organisation structure (2 marks)

31.3 Z plc sources a range of complex components from suppliers which are critical to the quality of Z plc's

final product. Any disruption to the supply of these components will mean that Z plc cannot maintain its

service levels to its own customers.

In the purchasing of these components, which two of the following are least likely to be a component of

Z plc's supply strategy?

(i) Long-term partnership relations with key suppliers of the components

(ii) A small number of suppliers of the components

(iii) Outsourcing production of the product to low-cost countries

(iv) Consolidating purchases of the components and sourcing from a single supplier to reduce

sourcing costs

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv) (2 marks)

31.4 In Robert Anthony's hierarchy, which of the following is the term given to the process of establishing

means to corporate ends, mobilising resources and innovating?

A Strategic management

B Tactical management

C Operational management (1 mark)

31.5 ……………….. is the system by which organisations are directed and controlled by their senior officers.

Which two words correctly complete this definition?

A Corporate governance

B Strategic management

C Executive directorship

D Internal controls (2 marks)

31.6 Which of the following statements is true of a 'progressive tax'.

A It takes a higher proportion of a poor person's salary than of a rich person's.

B It takes the same proportion of income in tax from all levels of income.

C It takes a higher proportion of income in tax as income rises. (1 mark)

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QUESTIONS

105

31.7 In employment protection law, which of the following would constitute unfair dismissal?

A Dismissal because the employer has ceased to carry on the business

B Dismissal because the employer has relocated the place of work

C Dismissal because demand for the type of work done by the employee(s) is expected to decline

D Dismissal because the employee is pregnant (2 marks)

31.8 Various groups of people might be interested in financial information about an organisation, for various

reasons.

Match up each of the following groups with the primary nature of their interest in financial information.

Groups Interest

(i) Shareholders 1 Ability to maintain and repay loans

(ii) Financiers 2 Potential social contributions and impacts

(iii) Employees 3 Management stewardship

(iv) Public 4 Attainment of performance objectives

A (i)2, (ii)4, (iii)1, (iv)3

B (i)4, (ii)3, (iii)2, (iv)1

C (i)1, (ii)2, (iii)3, (iv)4

D (i)3, (ii)1, (iii)4, (iv)2 (2 marks)

31.9 The website of a university contains a dedicated site for academic researchers, giving them access to the

university's archived material, if they register and obtain a password to enter the site.

Of which type of network is this an example?

A Internet

B Intranet

C Extranet (1 mark)

31.10 Which of the following is a feature of an ineffective job advertisement?

A It narrows the pool of people who might go on to apply for the job

B It provides all information necessary to make an application

C It maximises the attractiveness of the job and organisation to potential applicants

D It is relevant and appropriate to the nature of the job and the desired applicants

(2 marks)

31.11 There are three pre-requisites for fraud: motivation, opportunity and dishonesty. Match each of these

with the most immediate control strategy from the following list.

Control strategies

1 Recruitment reference checking

2 Disciplinary codes

3 Internal checks and controls

(i) Motivation

(ii) Opportunity

(iii) Dishonesty

A 1(i), 2(ii), 3(iii)

B 1(iii), 2(i), 3(ii)

C 1(ii), 2(iii), 3(i)

D 1(iii), 2(ii), 3(i) (2 marks)

31.12 In which one of the following areas does a database system have significant advantages?

A Data security

B Data privacy

C Development cost

D Data management (2 marks)

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31.13 The …………. Studies is the name given to experimental social research initiated by Elton Mayo, which

identified the influence exercised by social needs and informal groups in the workplace, and gave rise to

the human relations school of management.

Which word correctly completes the sentence?

A Hofstede

B Hawthorne

C Ashridge

D Mintzberg (2 marks)

31.14 In strategic planning, what is the purpose of environmental scanning?

A To monitor PEST factors

B To appraise SWOT factors

C To monitor competitive forces (1 mark)

31.15 What is the main focus of International Accounting Standards (IASs)?

A Financial control

B Accountancy training

C Financial reporting

D Corporate governance (2 marks)

31.16 A large supermarket chain has purchased land for a new out-of-town shopping development in an area

of recognised natural beauty. The organisation is now preparing plans for infrastructure development

(road access, parking, power) and construction.

C D

A B

Level of interest

Power

High

Low

High

Into which quadrant of the above power/interest matrix would the organisation place local nature

appreciation groups, and what strategy does this indicate?

A Consult and involve

B Keep informed

C Keep satisfied

D Minimal effort (2 marks)

31.17 What is a fraud response plan?

A A strategy for preventing and controlling fraud

B A framework of disciplinary rules and sanctions to be applied when fraud is discovered

C A strategy for investigating and dealing with the consequences of suspected or identified fraud

(1 mark)

31.18 In which one of the following areas is economic growth most clearly beneficial, as an objective of macroeconomic

policy?

A Employment

B Public services

C Environment (1 mark)

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QUESTIONS

107

31.19 According to Warren Bennis, which two of the following attributes distinguishes a leader, as opposed to

a manager?

(i) Administers and maintains

(ii) Focuses on people

(iii) Innovates

(iv) Focuses on systems

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv) (2 marks)

31.20 Comfy Dentiality, a large dental practice, is concerned with the security of its patient records. The

manager amends the disciplinary rules of the practice, so that unauthorised disclosure of data by

personnel can be made grounds for dismissal.

What type of approach to data security does this reflect?

A Correction

B Detection

C Threat avoidance

D Deterrence (2 marks)

31.21

Referring to the above diagram of an appraisal system, identify which of the following labels correctly

fills each of the missing labels A, B and C.

Labels:

1 Assessment interview

2 Follow up action

3 Criteria for assessment

A A1, B2, C3

B A2, B3, C1

C A3, B1, C2

D A1, B3, C2 (2 marks)

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31.22 What set of environmental factors is most directly influenced by birth and mortality rates?

A Political

B Economic

C Social

D Technological (2 marks)

31.23 In the context of rewarding team performance, team-based rewards and bonuses are more effective if

individual team members' contributions and work patterns are largely …………………

Which word correctly completes this sentence?

A Independent

B Interdependent

C Isolated (1 mark)

(Total = 38 marks)

32 Mixed Bank 7 50 mins

32.1 In a payroll system, which of the following actions would not require authorisation, as a standard control

measure?

A Engagement or discharge of employees

B Changes in pay rates

C Statutory deductions from pay

D Overtime payments (2 marks)

32.2 At a chocolate manufacturing company, one of the production mixers has recently been made

redundant. Fellow shop-floor staff are outraged: he was 'the only one who knew anything about

chocolate' and they had relied on his judgement for years. Protests are ignored. A week later, cement is

found in a batch of crunchy bars. Two weeks later, staff refuse to work overtime. The mixer is finally

reinstated.

Which two types of power are illustrated in this scenario by the mixer and the shop floor staff?

(i) Position power

(ii) Expert power

(iii) Personal power

(iv) Negative power

A (i) and (ii)

B (ii) and (iii)

C (ii) and (iv)

D (iii) and (iv) (2 marks)

32.3 In a particular work team, Jemima is acknowledged to be the 'ideas' person who 'thinks outside the box'

with creative solutions to difficult problems. However, she tends to look at the big picture, not at the

details. Frank spots the gaps in Jemima's suggestions, and encourages the team to consider other options.

Match each character in this scenario with the role that they occupy in Belbin's team role model.

Characters Roles

A Jemima 1 Monitor-Evaluator

B Frank 2 Team worker

3 Plant

A A1, B2

B A1, B3

C A2, B2

D A3, B1 (2 marks)

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32.4 Which of the following statements about outsourcing is true?

A In order to maintain control, the organisation should outsource activities in areas of its own core

competence.

B Outsourcing to external contractors harnesses specialist expertise, but at the cost of lost

economies of scale.

C Outsourcing carries commercial and reputational risks. (1 mark)

32.5 Victor Vroom's 'expectancy theory' is an example of which type of motivational theory?

A Content theory

B Process theory

C Hierarchy theory (1 mark)

32.6 In the context of improving organisational communication, which one of the following would be helpful

measures in addressing the problem of information overload on managers?

A Using email

B Introducing reporting by exception

C Holding regular staff meetings

D Speed reading training for managers (2 marks)

32.7 Which one of the following is represented by Blake and Mouton's managerial grid?

A The balance in a manager's leadership style between concern for the task and concern for people

and relationships

B The success of a manager's performance, for the purposes of appraisal

C A manager's position on the continuum between concern for task and concern for people and

relationships

D A matrix organisation structure, combining functional and line authority (2 marks)

32.8 In the context of selection interviewing, which two of the following types of question might you use to

pin down a candidate who seems reluctant or unable to give a definite answer?

(i) Open

(ii) Closed

(iii) Leading

(iv) Probing

A (i) and (ii)

B (i) and (iii)

C (i) and (iv)

D (ii) and (iv) (2 marks)

32.9 In the context of motivation, workers may have the attitude that work is not an end in itself, but a

means to other ends, through earning financial rewards.

What term is given to this attitude?

A Theory Y

B Job enrichment

C Instrumental orientation (1 mark)

32.10 In the context of performance appraisal, what does the term 'tell and listen' refer to?

A An approach to appraisal interviewing

B An approach to upward appraisal

C A barrier to effective appraisal (1 mark)

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32.11 Which of the following statements about training and development is false?

A A gap between current performance and required performance is a learning gap which requires

training.

B Training and development activities can have measurable benefits for organisations.

C Education may form part of training, which in turn may form part of employee development.

D A 'learning organisation' is one which facilitates the learning of all its members.

(2 marks)

32.12 According to the hierarchy of needs (a motivational theory put forward by Maslow) which two of the

following rewards might you pursue in order to have your esteem needs satisfied?

(i) Opportunity to undertake further professional development

(ii) Award of a departmental prize for your performance

(iii) Receiving praise on an achievement from your work team

(iv) Being invited to join colleagues for lunch

A (i) and (ii)

B (ii) and (iii)

C (iii) and (iv)

D (i) and (iv) (2 marks)

32.13 If a team has been functioning for some time, it may grow complacent with its performance, and start to

devote more attention to relationship and power issues with in the group.

In the group development model, which of the following terms would be used for this stage of the team's

development?

A Forming

B Norming

C Dorming

D Storming (2 marks)

32.14 In a typical recruitment and selection process, in what order would the following steps be carried out.

Assign each a number in the sequence, from 1 (first) to 5 (last).

(i) Preparing job descriptions

(ii) Selection interviewing

(iii) Reference checking

(iv) Selection testing

(v) Preparing person specifications

A 1(i), 2(ii), 3(iii), 4(iv), 5(v)

B 1(ii), 2(iv), 3(i), 4(iii), 5(iv)

C 1(iii), 2(i), 3(v), 4(ii), 5(iv)

D 1(i), 2(v), 3(ii), 4(iv), 5(iii) (2 marks)

32.15 One of the distinctions between coaching and mentoring is that a ……………. is not usually the

immediate superior of the person being helped.

Which word correctly completes this sentence?

A Coach

B Mentor (1 mark)

32.16 A popular approach to self development is for employees to reflect on work incidents, and assess

whether and how they might adjust their behaviour to gain more successful outcomes in future.

On which school of learning theory is this approach based?

A Behaviourist psychology

B Cognitive psychology

C Contingency theory

D Learning styles (2 marks)

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32.17 Which two of the following factors establish the independence of an internal auditor?

(i) The auditor's mandatory authority

(ii) The auditor's involvement in the activities being appraised

(iii) The auditor's own professionalism

(iv) The auditor's freedom from accountability

A (i) and (ii)

B (i) and (iii)

C (i) and (iv)

D (ii) and (iv) (2 marks)

32.18 A manager is coming up to retirement in a year's time. In which of the following circumstances would

the organisation be most likely to consider external recruitment, rather than internal promotion, to fill the

position?

A The organisation has a policy of staff development and succession planning

B The organisation is looking to introduce a culture of innovation for the first time

C The organisation has a very strong managerial culture, which it wishes to preserve

(1 mark)

32.19 In which one of the following areas is there an advantage to using formal off-the-job training courses as

opposed to on-the-job or experiential learning methods?

A Level of risk for acquiring new skills

B Relevance of learning to the job

C Application of learning to the job

D Continuity of work effort (2 marks)

32.20 …………………… occurs when a person is penalised for giving information or taking action is pursuit of

a claim of discrimination.

Which word or words correctly complete this statement?

A Direct discrimination

B Indirect discrimination

C Victimisation (1 mark)

32.21 Which of the following would be considered a potentially sensitive or negative element of an effective

equal opportunities policy?

A Flexible working and career break programmes

B Monitoring numbers and performance of ethnic minority staff

C Diverse job interview panels

D Counselling and disciplinary policies on discrimination (2 marks)

32.22 Which of the following checks would the external audit function be responsible for?

A Separation of duties for independent proving of work

B Arithmetic checks on the accuracy of data recording and calculation

C Creating and preserving records that confirm accounting entries

D Considering whether directors act on internal audit information (2 marks)

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32.23 The effectiveness of training programmes can be evaluated using a five-level model by Hamblin. Assign

the correct number from 1 to 5 to each of the following levels.

(i) Ultimate value

(ii) Changes in job behaviour

(iii) Trainee reactions

(iv) Trainee learning

(v) Impact on organisational results

A 1(i), 2(ii), 3(iii), 4(iv), 5(v)

B 1(iii), 2(iv), 3(ii), 4(v), 5(i)

C 1(ii), 2(iii), 3(iv), 4(i), 5(v)

D 1(iii), 2(i), 3(v), 4(ii), 5(iv) (2 marks)

32.24 In the context of data security, which two of the following are examples of physical access controls to

protect computer equipment or data storage media?

(i) Card entry systems

(ii) Back-up controls

(iii) Personal identification numbers

(iv) Logical access systems

A (i) and (ii)

B (ii) and (iii)

C (i) and (iii)

D (ii) and (iv) (2 marks)

32.25 An organisation's employees are one of its connected stakeholders.

Is this statement true or false?

A True

B False (1 mark)

(Total = 42 marks)

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Answers

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1 Business organisations and their stakeholders

1.1 C Rationale: Collective goals or aims are a feature of organisations.

Pitfalls: Watch out for closely related terminology like 'goals' and 'tactics'. You might have thought

'tactics' would fit here, but they are the lower level plans of functions: they may not be shared by

the organisation as a whole.

Ways in: If you didn't know the definition, you could have got to the answer by ruling out the

other options. Stakeholders doesn't fit 'pursues'; profits are not the objective of all organisations;

and tactics are at a lower level than goals.

1.2 C Rationale: Synergy is the 2 + 2 = 5 factor, and is one of the key reasons for the formation of

teams and organisations.

Pitfalls: You need to read all the options carefully, especially if they look similar and all 'sound'

plausible.

Ways in: You should be able to define the other options, to confirm that they do not fit the

definition given.

1.3 B Rationale: In a limited company, the owners (shareholders) are separate from the managers of

the concern (board of directors).

Pitfalls: Some options look plausible because of the wording. 'Limited' doesn't mean 'only being

allowed to trade up to' – but looks as if it might. The second half of the statement about

partnerships is true – but this doesn't mean that the first half is also true.

Ways in: You should have been able to rule out A (no company's turnover is limited), C (sole

traders do have personal liability for debts: they do not have 'limited liability') and D (ordinary

partnerships are different from limited companies).

1.4 C Rationale: Such an organisation is part of the public sector. The voluntary sector comprises

charities and other organisations whose members are volunteers. Private sector comprises nongovernmental

organisations, such as limited companies.

Pitfalls: Watch out for 'public' and 'private' sector terms – and be able to distinguish clearly

between them.

1.5 B Rationale: All these groups have a legitimate stake in the enterprise: the government, as a

regulator; employees, as participants in the business; and environmental pressure group and local

residents, because of potential impacts.

Pitfalls: Don't forget external stakeholders!

1.6 C Rationale: Secondary stakeholders are stakeholders who do not have a contractual relationship

with the organisation. Primary stakeholders are stakeholders who do have a contractual

relationship with the organisation.

1.7 B Examiner's comments. The examiner commented that many students struggled with this

question. Measures such as value for money or efficiency are often used in not-for-profit

organisations such as local authorities. Students should not restrict their studies to the public

sector perspective.

1.8 D Rationale: A co-operative is a business which is owned by its workers or customers, who share

the profits. Others features include open membership, democratic control, distribution of surplus

in proportion to purchases and promotion of education.

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2 The business environment

2.1 C Rationale: PEST stands for Political, Economic, Socio-cultural and Technological.

Pitfalls: SWOT (Strengths, Weaknesses, Opportunities, Threats) is a related exercise, as PEST

data is fed into the O/T part of the business appraisal.

Ways in: You could eliminate as many distractors as you could identify: SMART (Specific,

Measurable, Attainable, Relevant, Time-bounded) refers to objective-setting.

2.2 C Rationale: This would be interpreted as corruption. The other options are usually legitimate

methods of influence. Although B may be questionable in some parts of the world, in others like

the UK it is perfectly legitimate.

2.3 D Rationale: The statement defines demographics. Ergonomics is a study of the interaction of

humans and their environments (used in design of office equipment and furniture, for example).

Psychographics is the study of psychological factors (used in selection testing, for example).

Ways in: You could eliminate as many distractors as you could define in other ways.

2.4 C Rationale: Virtual organisation is the collaboration of geographically dispersed individuals and

teams, specifically using the latest information and communication technology (ICT) enablers: the

Internet, web-conferencing and so on.

2.5 B Rationale: Information technology has enabled managers or staff 'lower down' the hierarchy to

make decisions previously made by middle management. This is known as delayering.

Pitfalls: You may have been tempted to think that this was downsizing. Downsizing, however,

means reducing staff from all levels or layers in the business.

Ways in: It is 'layers' of middle management that have been removed. This may help to direct you

to the answer 'delayering'.

2.6 A Rationale: This constitutes unfair selection for redundancy (on the basis of recent age

discrimination legislation): redundancy is potentially fair grounds for dismissal as long as the

basis of selection is fair. Options B and D are potentially fair grounds: there should be a

reasonable attempt at performance or disciplinary management (warnings, training etc). You may

have hesitated over C, but this is an example of 'substantial reasons' that would be considered by

a tribunal.

Ways in: You could narrow the options by considering that there must be some way for

companies to dismiss incompetent or deliberately obstructive employees.

2.7 C Rationale: Increasing diversity has an impact on HR policies in regard to equal opportunity and

prevention of discrimination. Falling birthrates creates an aging workforce and skill shortages. All

organisations need to take account of environmental regulation and consumerism. An increase in

single-member households will impact on some organisations: notably, those which market goods

and services to this segment (eg single-serve pack sizes), but the questions said 'most'

organisations.

Pitfalls: You need to think through a range of compliance, marketing and skilling issues when

appraising socio-cultural factors.

2.8 D Rationale: The other forces are bargaining power of suppliers and rivalry amongst current

competitors in the industry.

Pitfalls: The five forces model is basic: you really need to learn the details …

2.9 B Rationale: Socio-economic groupings are often the basis on which markets are segmented, so

that products/services and marketing messages can be targeted appropriately (to people with the

right levels of income, aspiration, education and so on). You might have paused over Human

Resources, because social class includes education factors, but the data cannot be used to

predict skill availability.

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2.10 A Rationale: Procurement, technology development, HR management and infrastructure are support

activities. Inbound and outbound logistics, operations, marketing/sales and service are primary

activities.

2.11 B Rationale: Technology is no longer regarded purely as a threat to job security: it can also support

higher-level skilling, options for home-working, cleaner and safer work environments, better

employee communications (eg through an intranet) and so on. Option A is true, because IT systems

support lower-level decision making and direct communication between strategic apex and

operational staff: replacing the role of middle management. Option C is true, because new

technologies reduce product life cycles: products and processes can swiftly become obsolete. Option

D should be obviously true: think of email at one end of the scale, and 'virtual organisations' at the

other.

2.12 B Examiner's comments: The examiners commented that only 31% of students chose the correct

option. Steve, Sam, and Sunny all have support roles and the words 'administration' and

'information technology' should have immediately indicated a support role for Steve and Sam.

Sunny's procurement role was not so clear cut but the responsibilities for dealing with the suppliers

are sufficient to conclude that Sunny also has a support role.

2.13 B Examiner's comments: The examiner commented that only 20% of students chose the correct

option. Options A and D are incorrect because there is no certainty that the job will be offered or

accepted. Option C is incorrect because waiting a few weeks leaves the employee open to risks in

those weeks.

2.14 C Rationale: Low switching costs means that it will be easy for customers to change from existing

suppliers to a new supplier: this would facilitate entry to the market. The other options should

clearly pose difficulties to a new entrant: not yet big enough to benefit from economies of scale

(against competitors who are); high start-up costs; high degree of recognition of and loyalty to

existing brands.

2.15 B Rationale: Outsourcing (contracting some of the firm's activities to external providers) and

delayering (removing levels of the organisation hierarchy) are strategies for downsizing (reducing

the number of staff permanently or directly employed by the firm). Delegating is the process

whereby a superior gives a subordinate part of his or her own authority to make decisions.

2.16 B Rationale: Option A may reflect a cultural trend (increasing expectation of quality of working life,

say), but it is a compliance issue. Option C is a demographic trend.

2.17 B Rationale: Lifestyle is generally considered a reflection of economic status and conditions, not a

determinant of them. (For market segmentation purposes, for example, lifestyle factors are often

measured in terms of attitudes, interests and opinions, rather than purely economic factors.)

3 The macro-economic environment

3.1 D Rationale: Exchange rates are a target of monetary policy: government policy on the money

supply, the monetary system interest rates, exchange rates and the availability of credit. Fiscal

policy is government policy on the three other options.

Pitfalls: This whole syllabus area is full of fine distinctions in terminology, which lend themselves

to testing in a Multiple Choice and Objective Testing format.

Ways in: If you knew that there was a distinction between fiscal and monetary policy, you might

have identified exchange rates as the only monetary issue.

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3.2 C Rationale: A budget surplus occurs when a government's income exceeds its expenditure: there is

a negative PSNCR or PSDR. When a government's expenditure exceeds its income, so that it

must borrow to make up the difference, there is a positive PSNCR and we say that the

government is running a budget deficit.

Ways in: If you recognised that a negative PSNC means no borrowing, you might have been able

to start eliminating some options …

3.3 C Rationale: The definition clearly distinguishes an indirect tax (eg sales tax) from a direct tax,

which is paid direct by a person to the Revenue authority (eg income tax, corporation tax, capital

gains tax and inheritance tax). Option A refers to the proportion of income taken by a tax.

3.4 C Rationale: Increasing taxation lowers demand in the economy because people have less of their

own money after tax for consumption or saving/investment. Increasing public expenditure should

increase the level of consumer demand. Decreasing taxation has the opposite effect. Lowering

interest rates should stimulate investment (by companies) and consumer expenditure, even if only

after a time lag.

3.5 D Rationale: An increase in the exchange rate makes a country's exports more expensive to

overseas buyers, and imports cheaper: it therefore has the opposite of the first three effects. The

lower cost of imports, however, is likely to reduce the rate of domestic inflation.

Pitfalls: The permutations of increases/decreases in interest rate can be confusing: ensure that

the logic makes sense to you!

Ways in: You could group options B and C together (increased cost = reduce demand): since

both cannot be the answer, and there is only one answer, neither of these options can be correct.

This gets you quite a long way towards the solution … So if you don't know an answer, don't

panic: logic can often help!

3.6 B Rationale: Subsidies for exporters will encourage domestic exports, but will not help to protect

domestic producers against overseas producers. The other options are tariff (taxes and duties on

goods entering the country) and non-tariff barriers to trade.

3.7 A Rationale: Frictional unemployment occurs when there is difficulty in matching workers quickly

with jobs. This means that frictional unemployment is temporary and short term and so

statement 1 is true. A government can encourage labour mobility by offering individuals financial

assistance with relocation expenses and by improving the flow of information on vacancies. This

means that statement 2 is true.

3.8 A Rationale: Government policy on taxation, public spending and public borrowing relates to fiscal

policy. Government policy on interest rates and exchange rates are part of the monetary policy.

3.9 A Rationale: Debts lose 'real' value with inflation: a company that owes a lot of money would

effectively pay less (in real terms) over time. The other organisations would suffer because:

inflation would make exports relatively expensive and imports relatively cheap; business might be

lost due to price rises; and the cost of implementing price changes would be high.

3.10 D Rationale: The four main objectives of macroeconomic policy relate to economic growth, stable

(not zero) inflation, unemployment and the balance of payments (balance between exports and

imports).

3.11 D Rationale: Recession is part of the business cycle: demand for output and jobs falls, and

unemployment rises until recovery is well under way. Option A is an example of frictional

unemployment; option B of seasonal unemployment; option C of technological unemployment.

Pitfalls: It is easy to confuse cyclical with seasonal unemployment, or frictional unemployment

that occurs on a seasonal basis (eg option A). You need to associate cyclical employment firmly

with business cycles.

3.12 A Rationale: It is particularly tempting to equate a trade surplus or deficit with a 'profit' or 'loss' for

the country, but this is not the case.

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3.13 A Examiner's comments. The examiner commented that some students struggled with this

question. Stagflation occurs when economic growth (defined by the change in national income in

a period) is low or negative, and inflation is high. So the relevant figures are percentage change in

GDP and change in consumer prices. Northland and Eastland both experienced negative growth,

however, Northland had a high level of price inflation as well and so A is the correct option.

3.14 B Rationale: Potential growth is the rate at which the economy would grow if all resources were

utilised: it is therefore determined by factors in the capacity of the economy (supply side), such

as increases in the amount of resources available, or in the productivity or resources. Actual

growth is determined both by growth in output (supply side) and aggregate demand (demand

side). Option C was merely a distractor.

4 Micro-economic factors

4.1 B Rationale: In a free market economy, it is the interaction of supply and demand through the price

mechanism that determines what should be produced and who should get it.

4.2 A Rationale: The supply curve for a perfectly competitive firm is its marginal cost curve above the

average variable cost curve. The firm will not continue to produce if price is less than average

variable cost.

4.3 C Rationale: Nothing. A minimum price (floor price) only leads to excess supply if it is set higher

than the equilibrium price.

4.4 C Rationale: The other options relate to movements along the supply curve.

4.5 C Rationale: The effect of price being above the equilibrium (market clearing) price is that supply

will extend and demand will contract.

4.6 D Rationale: A rise in the price of overseas holidays will lead to a movement along the demand

curve rather than a shift in the demand curve.

4.7 B Rationale: Generally, if incomes fall, demand will fall.

4.8 C Rationale: A is one of the conditions for a perfect market, B is a monopoly and D is monopolistic

competition.

4.9 C Rationale: Carpet underlay is a complement to carpet.

4.10 C Rationale: An increase in demand for cars will lead to an increase in demand for petrol and tyres.

It will not increase the demand for holidays although people may use their cars to go on holiday.

4.11 B Rationale: This is a supply-side factor.

4.12 D Rationale: Coffee and tea are substitute products. Thus, a fall in the price of coffee will result in

higher demand for coffee and lower demand for its substitute product, tea. The price of tea might

therefore fall. Demand for drinking cups is probably insufficiently related to the consumption of

coffee to make them a complementary product to coffee. Even so, lower coffee prices would be

likely to raise the demand for drinking cups rather than reduce it.

4.13 C Rationale: The term 'inferior good' is a technical term in economics. An example of such a good

might be small 'starter' homes.

4.14 D Rationale: It is assumed that cut flowers and flower vases are complementary goods. The rise in

price of cut flowers will have an adverse effect on demand for flower vases, and the demand

curve for flower vases will shift to the left. Given no change in supply conditions for vases, the

new equilibrium price for vases will be lower.

4.15 B Rationale: As sea ferry tickets and hovercraft tickets are substitute goods, an increase in the price

of hovercraft tickets will cause a shift to the right (increase in demand) for sea ferry tickets. Given

no change in supply conditions, the consequence will be an increase in the number of sea ferry

tickets sold, at a higher price than before.

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4.16 A Rationale: A fall in the price of sterling would make London hotels cheaper for foreign tourists. A

fall in the price of aeroplane tickets would make London cheaper to visit for foreign tourists.

Events 2 and 3 would lead to a rise in demand for hotel rooms. In contrast, a fall in the value of

the US dollar would make the UK more expensive to visit for US tourists and tourists from other

countries where the US dollar is widely used, and demand for hotel rooms in London would fall.

4.17 C Rationale: This is an example of monopolistic competition.

4.18 B Rationale: When rent controls are eased, the effect is similar to raising or removing minimum

prices in the rented housing market. We should expect higher rents, more supply of housing, and

a closing of the gap between demand for rented housing and supply of rented accommodation.

Changes 2 and 3 should therefore occur. The reverse of Change 1 should happen, and

homelessness should decrease. Given widespread homelessness, it is unlikely that the easing of

rent controls will have any effect on demand for owner-occupied dwellings.

4.19 D Rationale: All of the above.

4.20 B Rationale: The income elasticity of demand measures the responsiveness of demand to changes

in consumers' incomes. An 'inferior' good has a negative income elasticity: as incomes fall, more

is bought.

4.21 D Rationale: Percentage change in quantity = 50%. Percentage change in price = 25%.

4.22 A Rationale: Consumer surplus is the excess between what consumers are prepared to pay for a

good or service and the prevailing market price they have to pay to purchase it.

4.23 B Rationale: To increase market share requires greater quantities of the firm's products to be both

demanded and supplied. To sell more, a firm needs to lower price. For this to be profitable,

demand must be elastic. To produce more, supply must also be elastic.

4.24 D Rationale: Assuming a normal good, a decrease in price results in a greater quantity being

demanded. Given that demand is price elastic, the increase in quantity will be proportionally

greater than the price fall.

4.25 C Rationale: Imagine you can buy a second car for $10,000 or buy a bike for $100 and they both

give you the same extra utility. You wouldn't choose to buy the car as you're paying much more to

achieve the same utility as you could get from buying the bike. If you get 10 times more utility for

one thing compared to another you'd be prepared to pay 10 times more for it.

5 Section A MTQs

5.1 (a) (i) False An inferior good would have negative income elasticity

(ii) True

(iii) False If price elasticity is less than 1, demand is said to be inelastic

(iv) False Unrelated products has a cross elasticity of zero.

(b) C, D and F

5.2 (a) (i) B Wrongful dismissal relates to the method of dismissal

(ii) C This dismissal would not be classified as unfair or wrongful

(iii) A This dismissal is unfair to the employee

(iv) A This dismissal is unfair to the employee

(b) (i) False There is no entitlement to compensation with less than 2 years' continuous

employment

(ii) True

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5.3 (a) (i) A Tax incentives will encourage investment which will increase output capacity

(ii) C Forbidding takeover will mean more competitors in an industry and encourages

competition

(iii) B Equal opportunities will positively influence employment

(iv) D Product safety standards will ensure a minimum safety level for consumers

(b) (i) A

(ii) A

(iii) B

(iv) B

5.4 (a) (i) A

(ii) C

(iii) D

(iv) B

(b) B, D If there are a lack of substitutes then the customer has less choice of suppliers and

similarly if the product is highly differentiated.

5.5 (a) (i) 12.5%/–5% = –2.5

(ii) –2.5%/–5% = +0.5

(iii) B Since the cross elasticity of demand is positive, the products are substitutes.

(b) A An inferior good still has a downward sloping demand curve, but less of the product is

demanded when incomes rise.

5.6 (a) C, D and F The description 'NGO' generally applies to groups whose primary aim is not a

commercial one, aimed at promoting social, political or environmental change. NGOs are not

necessarily charities, although they tend to raise funds through donations. They are measured in

terms of effectiveness and efficiency, rather than customer satisfaction or profit targets.

(b) A NGOs are measured on their effectiveness and efficiency in how they manage their

resources – ‘ value for money’

6 Business organisation, structure and strategy

6.1 D Rationale: Line authority can easily be shown on the organisation chart.

Pitfalls: You may have hesitated if you didn't know the difference between functional authority

(where an expert department has authority over the activities of other departments in the areas of

its expertise eg the HR department setting recruitment policy for the sales and production

departments) and line authority (direct authority flowing down the chain of command). However,

you only needed to know the meaning of line authority to see that the statement was untrue.

Ways in: You may have paused to ask whether an organisation chart can improve internal

communications, but it does in one key way: by highlighting the length and complexity of lines of

communication between people who need to co-ordinate their work.

6.2 C Rationale: This is the definition of span of control: all the others are distractors.

Pitfalls: All the distractors are plausible: note the need to think them through carefully. Option A

is close to the correct definition – but if you think about it, the number of subordinate employees

includes all those below the manager, whereas span of control is direct reports only.

6.3 B Rationale: Support base is not one of Mintzberg's components of organisation structure: the other

correct terms are middle line and support staff.

Pitfalls: The basic terminology of well-known models is must-learn material!

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6.4 B Rationale: While there may be elements of functional and geographical organisation, Y plc's

situation suits divisionalisation: more or less autonomous product and regional businesses, with

co-ordination from head office. 'Diversification' and 'acquisition' are good pointers to

divisionalisation.

Pitfalls: Don't get sidetracked by the link between 'overseas markets' and 'geographical'.

6.5 C Rationale: Matrix organisation is based on dual command: the classical principle of unity of

command is 'one person, one boss'.

6.6 D Rationale: Option A is a fact. Option B is true, because of informal 'short cuts' which are often

developed and shared, by-passing health and safety rules and procedures. Option C is true,

because the 'grapevine' encourages knowledge sharing and multi-directional communication.

Option D is not true: managers can feed information into the grapevine and be part of their own

informal networks.

6.7 C Rationale: A centralised organisation is one in which authority is concentrated in one place. If all

decisions are made in the same place then it will be easier for the decision-makers to see the

'bigger picture' and therefore understand the consequences of their decisions. Options A and B

are advantages of decentralisation, where decisions are delegated.

6.8 A Rationale: Statement (i) is true. Statement (ii) is not, because the informal organisation has its

own agenda. Statement (iii) is not, because a strong informal organisation with its own agenda

can undermine the formal organisation: create damaging rumours, safety/quality shortcuts,

distractions from task goals etc.

6.9 D Rationale: This describes a boundaryless organisation. A hollow organisation splits people and

activities into core and non-core. In modular organisations different elements or components of

the product or service the organisation produces are outsourced to different suppliers. In a jobless

structure the employee becomes not a job-holder but a seller of skills.

6.10 B Rationale: The shared service centre is created within the organisation and is a part of it,

although its relationship is similar to that of an external service provider.

7 Organisational culture and committees

7.1 A Rationale: The role culture is a bureaucratic or mechanistic culture, as described in the scenario.

Task culture is project-focused; existential culture is person-focused; and power culture is leaderfocused.

Pitfalls: If you didn't know Harrison's model well, you might have confused 'focus on the task'

(see in the scenario) with a task culture, or the strong central leadership with a 'power' culture.

7.2 D Rationale: This is a problem with strong cultures (and ultra-cohesive groups).

Pitfalls: The other statements are plausible: you need to come up with counter-arguments to

show that they are not always true. B is most plausible because it makes a limited claim that

values 'can' replace rules: think of health and safety or financial controls, however, to disprove

the claim.

Ways in: You could rule out two of the statements because they are dogmatic (so that just one

counter-example would make them untrue).

7.3 B Rationale: There are many spheres of culture: nation, ethnic group and social class are only three

of them. 'Culture' applies to categories of people including genders, social classes and

organisations.

7.4 B Rationale: The fourth dimension in Hofstede's model is masculinity-femininity.

7.5 C Rationale: Assumptions are foundational ideas that are no longer even consciously recognised or

questioned by the culture, but which 'programme' its ways of thinking and behaving. Values and

beliefs are the next level up: they are consciously held concepts which give meaning to the next

level up again – observable factors such as rituals, artefacts and behaviour.

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7.6 B Rationale: This is just a case of learning who is associated with which theory and definition. For

the FAB/F1 exam, the theorists' names are important.

7.7 A Examiner's comments: The examiner commented that only 27% of students chose the correct

answer. Make sure that you learn the distinctions between the cultural dimensions.

7.8 B Rationale: R & D tends to be concerned with product research (not market research), and many

organisations have internal R & D functions.

Pitfalls: Be aware of the difference between product and market research.

Ways in: If you were able to rule out statement (i), you were only left with two options to choose

from – and you should be able to rule out statement (iv) if you know any organisations with an

internal R & D department, leaving you with the correct option.

7.9 A Rationale: Intangibility refers to the fact that there are no material or physical aspects to a

service: physical elements help to reduce this effect, and make the provision concrete for the

customer. Inseparability and perishability refer to the fact that services are created and consumed

at the same time: they cannot be stored – and pose challenges to demand forecasting and

scheduling. Variability refers to the fact that services are specific to the situation and cannot

easily be standardised.

Ways in: What do physical elements do for a customer purchasing eg a train ride or legal advice?

If you knew the meaning of the term 'intangible', the answer to this question would get you to the

correct answer.

7.10 B Rationale: A sales orientation assumes that customers must be persuaded to buy the products

that the firm produces. A production orientation assumes that customer will buy whatever is

produced: the focus of the firm is on meeting demand. A marketing orientation seeks to

determine the needs, wants and values of customers and to produce what customers want to

buy.

Pitfalls: Don't confuse selling and marketing!

7.11 B Rationale: HRM is concerned with the most effective use of human resources. It deals with

staffing levels, motivation, employee relations and employee services. It is the marketing function

which manages an organisation's relationship with its customers, not HRM. Note that

increasingly, HRM is undertaken by line managers as well or instead of HR departments.

7.12 C Rationale: A standing committee is formed for a particular purpose on a permanent basis. Joint

committees are formed to co-ordinate the activities of two or more committees: they need not be

permanent. Task forces are specifically not permanent: they fulfil their allocated task and then

wind up.

Pitfalls: The confusion of related terminology is often the target of testing.

7.13 A Rationale: HR and line departments generally provide details of salary/wage rates, time sheets

etc – but the finance department generally administers payroll, so Josh is likely to be responsible.

7.14 A Rationale: Time, expense and compromise decisions are some of the disadvantages of a

committee so Paul is correct. There are, however, many advantages to committees as well.

7.15 C Rationale: Diane and Joanne work at operational level as they are concerned with routine

activities. Lesley is at an intermediate level and is managing resources. She is therefore part of

tactical management. Tracey is concerned with direction setting for the business and is therefore

part of strategic management.

7.16 B Rationale: Low masculinity (or femininity) is about high regard for values such as focus on

relationships and quality of working life, and the acceptability of such values for both men and

women: Mr Q's nurturing style would score on this dimension. His approach does not really say

anything about power-distance (command-and-control v delegation-and-involvement). There are

elements of uncertainty-avoidance in his attempt to minimise staff insecurity – but this would be

high UA, not low UA.

Pitfalls: Don't confuse the masculine/feminine dimension with straightforward gender stereotypes!

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7.17 B Rationale: Dependency increases stakeholder power and creates risks and constraints. A buyer

would not necessarily want a supplier to be dependent on its business (for ethical reasons), any

more than it would want to be dependent on a supplier (for bargaining and supply risk reasons).

Pitfalls: You may have hesitated over information-sharing, because of intellectual property and

confidentiality issues – but it is necessary for high-interest, high-power 'key players'.

7.18 A Rationale: Internal stakeholders include employees and management and so Janet is the only

internal stakeholder. Customers and suppliers (like Mary at P Co) are connected stakeholders.

Pressure groups such as D Group are external stakeholders.

7.19 B Rationale: All the other options are duties of the Committee secretary.

7.20 A Rationale: You should have been able to rule out the chair of a committee. An ordinary

committee member will receive communications, not produce them.

8 Corporate governance and social responsibility

8.1 D Rationale: Statement (i) is incorrect, because there is no such 'guarantee'; statement (ii) because

it is not necessarily so, and statement (iv) because other organisations (eg charities, government

bodies) are often more concerned with social responsibility than businesses.

Ways in: It is always worth checking to see if logic helps. Words like 'guarantee' often signal an

untrue statement, because they make such extreme claims. And if statement (i) is therefore

incorrect, you've halved your options. It should then be obvious that (iv) is incorrect (if you think

about a hospital, say).

8.2 B Rationale: Agency theory suggests that managers will look after the performance of the company

if doing so serves their own interests: hence performance incentives and rewards. Stewardship

theory views the managers as stewards of the assets of the firm. Stakeholder theory argues that

managers have a duty of care to a range of organisational shareholders.

Ways in: You could have ruled out Option C as irrelevant, and then worked on the implications of

stewardship and agency.

8.3 C Rationale: The objective of corporate governance is overall performance, enhanced by good

supervision and management, within best practice guidelines. Business is to be conducted in a

way that is both ethical and effective from the perspective of all stakeholders – not just

shareholders.

8.4 B Rationale: Corporate governance includes the selection of senior officers (with influence over the

future direction of the organisation), and relationships between the organisation and its key

stakeholders. It is therefore regarded as being of strategic importance.

8.5 A Rationale: This is a feature of poor corporate governance because it makes way for self-interested

decision-making. The others may 'look' like negatives, but are in fact the opposites of three other

features of poor corporate governance: lack of independent scrutiny; lack of supervision; and an

emphasis on short-term profitability (which can cause pressure to conceal problems or

manipulate accounts).

Ways in: You could have got to the answer with logic, with a sound grasp of corporate

governance – but it would be worth learning the list of features of poor corporate governance, so

you can recognise them in an exam question.

8.6 C Rationale: These are some of the roles fulfilled by the board. The audit committee reviews

financial statements, audit procedures, internal controls and risk management. The Public

Oversight Board monitors and enforces legal and compliance standards. The nomination

committee oversees the process for board appointments.

Pitfalls: You need to be able to distinguish clearly between all the various participants in the

corporate governance system.

Ways in: Strategy formulation should have steered you towards the correct answer.

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8.7 D Rationale: Professional ethics concern the individual ethical sphere, not the wider sphere of

Corporate Social Responsibility which operates at the level of the firm. All of the others are CSR

principles: human rights as a component of ethical trading and investment; employee welfare as

part of ethical employment; and support for local suppliers as an example of sustainability.

Pitfalls: The combinations were designed to test if your thinking was limited to internal

organisational matters or commercial matters.

8.8 B Rationale: Employment protection is just one example of an area which is subject to law.

Corporate governance is an area which is subject to codes of best practice (and law in some

countries). CSR is therefore the area subject to least regulation and most managerial discretion.

8.9 C Examiner's comments: The examiner commented that only 47% of candidates answered this

question correctly. Codes of practice are usually associated with a principles-based approach

(rather than a rules-based approach) and so options A and B should have been easily eliminated.

The words 'guidance' and 'should adopt' were the key words to lead to the correct option.

8.10 C Rationale: Only Option C fulfils the requirement for full independence of the body that sets

directors' remuneration (to avoid directors' awarding themselves unjustifiable rewards!). A

nomination committee has the separate task of overseeing board appointments.

8.11 B Rationale: This is the definition used by the Accounting Standards Board. Option C is another

corporate governance report that may be required. Option A is just a distractor.

8.12 B Rationale: 4 is incorrect and can actually be problematic for non-executive directors. Nonexecutive

directors often have limited time to devote to the role as they are likely to have other

time consuming commitments.

9 Section B MTQs

9.1 (a) (i) C

(ii) B Adding additional features but without actually researching what customers want is

product orientation, which is a variant of production orientation.

(iii) A

(iv) D

(b) D This is known as market segmentation.

9.2 (a) (i) A Corporate strategy is concerned with what types of business the organisation is in.

(ii) B Business strategy is how an organisation approaches a particular market area.

(iii) C This relates to a functional decision and therefore is at the operational level.

(iv) B Business strategy is how an organisation approaches a particular market area.

(b) B, E The other statements are advantages of decentralisation or delegation.

9.3 (a) (i) C This company has a high individualism culture.

(ii) B This company has a high uncertainty avoidance culture.

(iii) D This company has a low masculinity culture.

(iv) A This company has a low power distance culture.

(b) (i) C Attitudes are patterns of collective behaviour such as greeting styles, business

formalities, social courtesies and ceremonies.

(ii) B Artefacts are concrete expressions such as architecture and interior design, dress

code and symbols.

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9.4 (a) (i) B Support staff provide ancillary services.

(ii) A Production is part of the operating core, taking inputs and converting them into

outputs.

(iii) D Middle managers such as a sales manager form the middle line of an organisation.

(iv) C The board would form the strategic apex of the organisation.

(b) B, C Although there are employees in the professional core, pay should be tied to performance.

Also the contingent work force consists of part-time and temporary workers who

experience short periods of employment.

9.5 (a) (i) B

(ii) B

(iii) A

(iv) B

(v) A

(vi) B

The treasury department plans and controls the sources and uses of funds by the organisation.

(b) A Money markets are markets for trading short-term financial instruments.

9.6 (a) (i) To define the purpose of the company

(ii) To define the values by which the company will perform its daily duties

(iii) To identify the stakeholders relevant to the company

(iv) To develop a strategy combining these factors

(v) To ensure implementation of this strategy

(b) C Chairing management committee meetings is part of the usual responsibilities of the CEO.

10 The role of accounting

10.1 B Rationale: This is the main or overall aim of accounting.

10.2 D Rationale: Non-commercial undertakings still prepare annual financial statements, for

accountability to their trustees, members or funding bodies.

10.3 B Rationale: The Management Accountant provides information for management: cost accounting,

budgets and budgetary control and financial management of projects. The Financial Controller is

responsible for routine accounting, accounting reports, cashiers' duties and cash control. A

Treasurer would be responsible for treasury management: raising and investing funds and cash

flow control.

10.4 B Rationale: Time sheets are used to calculate hours worked and overtime, in order to calculate

gross pay (before deductions). The system information for management (payroll analysis),

information for employees (pay slips) and methods of payment (credit transfer forms), are all

outputs.

Pitfalls: It is worth sorting out the inputs, processing and outputs of any financial system.

10.5 A Rationale: All the other aims relate to the control system relating to receivables and sales.

Pitfalls: You have to get straight in your mind which transactions and controls relate to

payables/purchases and which to receivables/sales.

Ways in: Careful reading of the question should allow you to eliminate options B and D

immediately (sales/supply, not purchases). You then have to think how credit notes work – but

the fact that Option A mentions the 'purchase' ledger, and Option C the 'sales' ledger should lead

you to the right answer.

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10.6 C Rationale: Option A refers to the statement of profit or loss, not the statement of financial

position. Option B refers to audit reports.

Pitfalls: If you were in a hurry, you might have selected option A immediately you saw the words

'true and fair'. Avoid such mistakes by reading through all question options carefully, keeping an

open mind.

10.7 D Rationale: An integrated package is expected to do everything, so it may have fewer facilities

than specialised modules (especially as it also requires more computer memory). The other

options are advantages of integration: ability to update multiple records from one data entry;

ability to extract data from all relevant sources to compile specified reports; and less likelihood of

discrepancies in different records.

10.8 B Rationale: A suite is a set of several modules. A spreadsheet is a type of program, and a format

for displaying and processing data: it is often used to integrate data from accounting modules for

decision-support and management information systems. A database is a collection of data.

10.9 C Rationale: The system does not by itself provide for data security: appropriate controls have to be

designed and implemented by users. Computer files are as vulnerable to theft and wilful damage

as manual files, and are perhaps even more vulnerable to corruption or loss of data through user

error.

10.10 D Rationale: Unfortunately: 'garbage in, garbage out!'…

10.11 B Examiner's comments: The examiner commented that only 36% of students got this question

correct. Mandatory reports to government and shareholders are required under national

legislation. Codes of corporate governance are principles-based and voluntary in nature.

International and local Accounting Standards do affect the content and presentation of accounts

but it is national legislation which dictates the requirements for preparation and filing of accounts

10.12 B Rationale: 'Garbage in, garbage out'!

10.13 B Rationale: Exception reporting focuses attention on those items where performance differs

significantly from standard or budget.

Pitfalls: The word 'exceptional' was placed in other options as a distractor!

10.14 C Rationale: Back-up storage, virus detection software and password protection are basic security

requirements of any computer system, regardless of whether they are connected to the Internet.

Because this system is not so connected, however, it cannot receive email.

Pitfalls: Make sure you distinguish between intranet (internal network) and Internet (world wide

network), and read questions carefully to see which is being discussed.

10.15 C Rationale: This is the definition of an Expert System. It is distinguished from a DSS by supporting

decision-making at a higher and less structured level. Expert systems draw on a knowledge base

to solve well-defined technical problems.

Pitfalls: 'Management', 'Expert' and 'Decision' were plausible distractors: make sure you can

distinguish between the different types of system, and how they contribute to decision-making

and problem solving.

10.16 C Rationale: Data is any kind of unprocessed information, and information is any kind of processed

information.

10.17 D Rationale: The DBMS is the software that builds, manages and provides access to a database.

Data storage is carried out in the database itself. The database administrator is a person (not a

part of the system) who controls the system. EPOS is a form of data collection and input.

10.18 A Rationale: Data can be lost or corrupted as the result of deliberate actions such as fraud,

sabotage, commercial espionage or malicious damage – as well as human error. The other

statements are true: new staff pose a security risk because of the risk of human error (if they are

inexperienced or untrained); it is impossible to prevent all threats (important to be realistic!); and

smoke detectors are an example of protection from physical risks (in this case, fire).

Pitfalls: Don't forget physical security measures: you may have discounted Option D too quickly.

Data security also involves protection against fire, flood, interruption of power source and so on.

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10.19 A Rationale: OAS systems, with functions such as word processing, digital filing, email, schedulers

and spreadsheets, are primarily designed to streamline administrative tasks: document

management, communication, data management.

10.20 A Rationale: Managers need most information, at a significant level of detail, to enable them to

make planning and control decisions. They have special access to information, because they can

arrange to obtain the information they need through the accounting system. Shareholders are

entitled to certain information, focused on particular areas of interest (mainly profits). Financial

analysts may only have access to public information and reports.

10.21 B Rationale: In order to control the risks of fraud and error, the internal audit department should be

separate from the finance department.

10.22 D Rationale: A quick phone call may be a more efficient way of obtaining or giving information than

email, for example. You may have hesitated over Option C because of often-stated warnings

about 'garbage in, garbage out'. The risks of input error are the same – but computerised systems

reduce the further risk of computation errors.

10.23 C Rationale: The purchasing or procurement function is responsible for authorising purchases (and

suppliers) and approving. The other functions contribute, however: production, by requisitioning

only needed items; goods inwards, by checking that what was purchased is what is in fact

received; and accounts, by seeking proper documentary evidence and authorisation for payment.

10.24 B Rationale: This should be obvious from the context (debts represent goods bought on credit:

hence, credit control) – but make sure that you could define the roles of all the other options, if

you needed to!

10.25 C Rationale: IFAC is the International Federation of Accountants. It produces an ethical code but it is

not part of the regulatory system.

10.26 A Rationale: International Financial Reporting Standards are issued by the IASB.

11 Control, security and audit

11.1 B Rationale: Options A, C and D were identified as aims of internal controls in the Turnbull report.

However, the report also states that even a sound system of internal control reduces, but does

not eliminate, the possibilities of poorly judged decisions, human error, deliberate circumvention

of controls and unforeseeable circumstances. Systems only provide reasonable (not absolute)

assurance.

Ways in: If you had to guess, you could probably see that option B is an exaggerated claim. Look

out for options that say 'always' or 'never' or 'total', in a similar vein: these are much more likely to

be untrue than true, in the complex world of business…

11.2 C Rationale: Non-discretionary controls are as described: as opposed to discretionary controls

which are subject to human choice. 'Mandated' is a similar idea, but mandated controls are

required by law and imposed by external authorities (as opposed to voluntary controls, chosen by

the organisation). Detect controls are controls designed to detect errors once they have happened.

Administrative controls are to do with reporting responsibilities, communication channels and

other means of implementing policies.

Pitfalls: There is so much terminology in this area: fertile ground for exam questions. Be able to

use distinctions within classifications (as in 'discretionary and non-discretionary', or 'prevent,

detect, control') as well as across classifications, as in this question.

11.3 B Rationale: Organisation in this context means identifying reporting lines, levels of authority and

responsibility to ensure that everyone is aware of their control responsibilities. The full mnemonic

stands for: Segregation of duties; Physical; Authorisation and approval; Management;

Supervision; Organisation; Arithmetical and accounting; and Personnel.

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11.4 D Rationale: This is an internal control, rather than an internal check. Internal checks are more

about dividing work (so that the work of one person can be independently proved by that of

another) and using 'proof measures' to ensure the accuracy of records and calculations: options A,

B and C are examples.

11.5 A Rationale: Internal audit is independent, but is still part of the internal control system: it is a

control which examines and evaluates the adequacy and efficacy of other controls. Internal

auditors should report direct to the audit committee of the board of directors (in order to preserve

independence). It is external audit which is for the benefit of shareholders: internal audit is a

service to management.

Ways in: Once you realised that the options were circling round different aspects of the definition

of internal audit, and the difference between internal and external audit, you would be better able

to sort out which statement was given to you 'straight' – and which were opposites of the true

points.

11.6 B Rationale: This should be straightforward if you think through what the potential threats involve.

Lightning strike or electrical storms are a key cause of power supply failures and surges which

may effect computer functions. Fire and accidental damage are also physical threats to data and

equipment. Hacking is a non-physical threat involving unauthorised access to data (possibly

resulting in data theft or destruction).

11.7 B Rationale: System recovery procedures are set in place for activation in the event of breakdown,

to get the system up and running again: this is a contingency control, because it plans for a

'worst case scenario'. Password access is an example of a security control: protecting data from

unauthorised modification, disclosure or destruction of data. Audit trails (showing who has

accessed a system and what they have done).

Pitfalls: There is a lot of vocabulary and procedure in this area: make sure that you could answer

questions on a variety of different data security controls.

11.8 D Rationale: It would be a limitation if controls depended on the method of data processing. The

others are limitations, because: the costs of control must not outweigh the benefits; there is

always potential for both human error and deliberate override of controls by management; and

controls are designed to cope with routine transactions, not non-routine transactions.

11.9 B Rationale: The primary responsibility of the external auditor is to report to shareholders on

whether the client's financial statements are accurate and free from bias ('true and fair'). The

other options are true.

11.10 B Rationale: Substantive tests 'substantiate' the figures in the accounts. They are used to discover

whether figures are correct or complete, not why they are incorrect or incomplete, or how the

figures 'got there'. Option A is the aim of compliance tests.

11.11 C Rationale: Correct controls are designed to enable the organisation to minimise the effect of

errors: in this case, restoring data from the back-ups if the main data store is corrupted. Prevent

controls are designed to prevent errors from happening in the first place, and detect controls are

designed to detect errors once they have happened.

11.12 B Rationale: Audit trails enable system administrators to maintain security, check transactions (in

order to identify errors and fraud), recover lost transactions and monitor the use of network

resources. Passwords are access controls and archives are long-term back-up storage: both are

good system controls.

Pitfalls: There is lots of terminology in this area: get to grips with all the basic terms and

procedures.

11.13 B Rationale: A systems audit is based on the testing and evaluation of internal controls. A probity

(or transaction) audit checks account entries to identify errors or omissions which may indicate

fraud. A social audit measures the social responsibility or social impacts of the business.

Pitfalls: This is another area of distinctive clusters of terminology: make sure you can identify

operational, systems and transactions audits – and the types of tests they use (compliance v

substantive).

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11.14 C Rationale: This may suggest that internal audit work is not properly planned, reviewed or

documented: a failure of due professional care. The other options show good status, scope and

technical competence.

12 Identifying and preventing fraud

12.1 C Rationale: Collusion is working with another party (eg customers or suppliers) to commit fraud.

Misrepresentation is stating that something is so, when it is not, in order to mislead (eg

overstating profits).

12.2 D Rationale: Payslips can be deliberately miscalculated to pay extra amounts. Staff may collude

with customers to under-record quantities of despatched goods on delivery notes so the customer

pays less: conversely, employees may collude with suppliers to pay invoices for larger quantities

than were actually delivered. Option (iv) may have made you hesitate: it seems such a positive,

desirable thing! However, profits in excess of target may be siphoned off, with less scrutiny once

targets have been met.

12.3 D Rationale: One form of fraud is the intentional misrepresentation of the financial position of the

business. Bad debt policy may be unenforced deliberately, in order to overstate profits.

12.4 B Rationale: This is an important distinction in making sense of the three prerequisites for fraud:

dishonesty (a willingness to act dishonestly), motivation (an incentive or reason to act

dishonestly) and opportunity (an opening to act dishonestly).

12.5 A Rationale: Increased competition is a risk factor (because it may put pressure on managers to

manipulate results) – but it is an external factor. The others are internal factors which increase

risk because they disrupt supervision and control (options B and C) or introduce unknown factors

(option D).

Pitfalls: Look carefully at question stems for qualifier key words such as 'internal' and 'external'.

12.6 C Rationale: This may seem like normal behaviour in a 'workaholic' office culture, but failure to take

full holiday entitlement may signal an employee trying to prevent a temporary replacement from

uncovering a fraud. The other options are factors in reducing risk: lack of segregation enables

fraud to go undetected; low staff morale is often a motive for fraud (in retaliation against the

firm); and an autocratic management style may prevent questioning.

Pitfalls: Ensure that you know what 'segregation of duties' means: otherwise, it might look like a

risk factor (because it sounds like allowing people to work independently and unsupervised, say).

12.7 C Rationale: There is a reduction in working capital, which makes it more difficult for the company

to operate effectively, potentially resulting in corporate collapse. The other effects should be

obvious (remember, we are talking about removal of funds or assets and not overstatement of

profits and/or net assets). Reputational damage refers to loss of shareholder and market

confidence in the organisation's management when the fraud emerges.

12.8 B Rationale: This should be clear from the context, because of the collusion with customers (if you

remembered what collusion was). Physical security refers to keeping assets under lock and key:

not to be dismissed as a fraud prevention measure! Sequential numbering works because it is

easy to spot if documents are missing. Authorisation policies increase checks and

accountabilities.

12.9 A Rationale: The directors are responsible for the conduct of the business, the deterrence and

detection of fraudulent (and other dishonest) conduct, and the reliable reporting of financial

information. The responsibility of the external auditor is only to express an opinion on the

financial statements, although audit procedures should have a reasonable expectation of

detecting misstatements arising from fraud. The audit committee reviews the organisation's

performance in fraud prevention, but also reports to the board.

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12.10 C Rationale: There are plenty of ways of securing access to data, using available software tools:

password protection, encryption and so on. (Of course, the firm has to use them, but that is a

separate issue!) Hackers are unauthorised people breaking into the system. Lack of managerial

understanding creates loopholes in controls, and the ability to conceal fraud by technical staff.

Integrated systems also help to conceal fraud, by ensuring that alterations to records are

consistent: fewer discrepancies to trigger investigation.

12.11 C Rationale: Investors will be making decisions (and taking risks) on inaccurate information.

Suppliers will extend credit without knowing the true financial position of the company. (Staff and

customers will eventually be effected if shortfalls in working capital threaten the business …)

12.12 C Rationale: These are measures for fraud prevention and control. A fraud response plan

specifically deals with investigating and dealing with the consequences of identified frauds. This

includes taking immediate steps to secure the security of records that will be investigated (option

A) and launching an investigation into the method and extent of fraud (option B).

12.13 C Rationale: Limit controls limit opportunity for fraud: another example is limiting access to the

computer network by means of passwords. Segregation of duties means ensuring that functions

which together facilitate fraud are performed by different individuals: eg separating the cheque

signing function from the authorisation of payments. Appropriate documentation involves

recording, authorising and tracking transactions through purchase requisitions, orders, invoices

and so on.

12.14 B Rationale: Performance-based rewards increase pressures and motivation for managers to

manipulate results.

Ways in: A good approach for these sorts of question is to work systematically through the

options to eliminate those which are clearly true. That way, even if you are left with an option

you are not sure about (because performance-related pay for managers is such a popular

strategy, say), it is the best option you've got.

12.15 B Rationale: The statement is the definition of money laundering.

12.16 A Rationale: The order is placement, layering and integration.

13 Section C MTQs

13.1 (a) (i) D Suppliers will want to know whether the company is able to pay its debts.

(ii) C Tax authorities want to assess whether tax paid is adequate for the level of profits.

(iii) A Shareholders want to assess the effectiveness of management in performing its

stewardship function.

(iv) B Financial analysts need information to advise investors whether to invest or not.

(b) False Charities and public sector organisations also need to prepare accounts.

13.2 (a) (i) B This control is built in to the system

(ii) A This control can be bypassed so is discretionary

(iii) B This control is built in to the system

(iv) A This control can be bypassed so is discretionary

(b) C Operational audits can be concerned with any sphere of a company's activities and a

transactions audit aims to detect fraud.

and honestly in order for them to be effective.

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13.3 (a) B, C Information is more accessible in a computerised system and the risk of errors is reduced

rather than eradicated.

(b) C This is the definition of a module.

13.4 (a) A, C These controls are designed to restrict physical access.

(b) C These are all examples of input controls.

13.5 (a) (i) B By not reporting suspicions of fraud, Stella is committing an offence.

(ii) A By informing the financial controller, James is tipping off the client and may

prejudice the investigation.

(b) (i) B Layering involves the transfer of monies from business to business or place to place

to conceal the original source.

(ii) A Placement is the initial disposal of the proceeds of criminal activity into apparently

legitimate business activity or property.

13.6 (a) D Internal checks are checks on day to day transactions, where the work of one person is

proved independently, or is complementary to the work of another. A control total is a

total of any sort, used by comparing it with another total that ought to be the same. The

other options in the question are features of the overall internal control system.

(b) (i) External audit

(ii) Internal audit

(iii) External audit

(iv) Internal audit

(vi) Internal audit

(vii) External audit

14 Leading and managing people

14.1 B Rationale: Position power is legitimate organisational authority, by virtue of a position in the

organisation hierarchy: managers depend largely on it for their influence. Leaders are often

required to exercise informal, interpersonal forms of influence, such as person power (charisma,

inspiration) and expert power (valued knowledge). Physical power (intimidation) should be used

by neither managers nor leaders!

Pitfalls: the classifications of power are a rich source of related terminology, and hence a

potential source both of confusion – and of exam questions!

14.2 A Rationale: Frederick Taylor is associated with scientific management. The other writers are

associated with the human relations school, focusing on the role of 'higher order' needs (such as

challenge and interest in the work) in human motivation.

Ways in: You could halve your options by realising that Maslow and Herzberg belong to the same

school: therefore the 'odd one out' must be one of the other two.

14.3 C Rationale: The 'country club' is low-task, high-people focus and 1.9 on Blake and Mouton's

managerial grid. This describes Monica. Impoverished is 1.1 (both low), task management is 9.1

(all about the task), and dampened pendulum is 5.5 (swinging between the two extremes).

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14.4 C Rationale: Psychologically distant managers (PDMs) maintain distance from their subordinates

and they prefer formal procedures rather than informal ones, for example, a formal consultation

method.

Ways in: Hopefully you were able to rule out the fourth statement and therefore option D.

Psychologically close managers are closer to their subordinates. If you remembered that PDMs

prefer formal procedures then you may have been able to work out that statements 1, 2 and 3 were

correct.

14.5 A Rationale: The essence of delegation is that the superior gives the subordinate part of his or her

own authority. Power is not conferred by the organisation, so it cannot be delegated: it must be

possessed. The most important thing to note is that responsibility is not delegated: the superior

makes the subordinate responsible to him for the authority he has delegated, but he remains

responsible for it to his own boss.

Pitfalls: It is easy to confuse these concepts, which is why they would make an excellent exam

question.

14.6 C Rationale: Skilling was an important aspect of scientific management – but multi-skilled team

working wasn't. Taylor's approach to job design (referred to in option A) was to break jobs down

into single, simple tasks which were given to an individual as a whole (specialised, repetitive) job

for an individual. The other options are key techniques (which, as a question in the Pilot Paper

pointed out, are still prevalent in some work environments today …)

14.7 A Rationale: Option B is not a central concern of human relations: rather, this could apply to the

scientific management school. Option C is a contribution of the contingency school. Option D has

not yet been provided by any school of management or motivation theory: apart from anything

else, business success depends on factors other than the productivity of the workers.

14.8 C Rationale: Democratic is a 'joins' style: decision is more or less by vote or consensus.

Consultative means that the leader takes subordinate views into account, but still makes the

decision. Autocratic is basically a 'tells' style and persuasive is a 'sells' style.

14.9 B Rationale: The monitor role involves scanning the environment and gathering information from a

network of contacts. As spokesperson, the manager can then provide information on behalf of the

department or organisation to interested parties. As disseminator, (s)he can also spread relevant

information to team members. The role of leader means hiring, firing and training staff.

Pitfalls: Options B, C and D are all information roles, so the distinction between them is quite

fine. However, questions have been set at this level of detail, so such models are worth learning.

14.10 C Rationale: This is the key definition of the supervisory role: it is between non-managerial and

managerial, acting as an information filter and overlap (since supervisors both do operational

work and fulfil some managerial functions at a low level). Middle line and junior management are

higher, since they are already managerial positions.

14.11 A Rationale: A consultative style is the most popular among subordinates, although a 'sells' style is

perceived to be most used by leaders – and a 'tells' style encourages the highest productivity in

many circumstances.

14.12 B Rationale: Responsibility is the duty to perform an action. Power is the ability to perform an

action (and in particular, to influence others). Influence is a process by which a person can direct

or modify the behaviour of another person.

Pitfalls: These are fine distinctions in meaning – but they underpin the idea of management and

leadership and are an excellent source of potential exam questions.

14.13 B Rationale: Interpersonal roles are based on the manager's formal authority: they include the roles

of figurehead, leader and liaison. Informational roles are based on the manager's position in

internal and external information networks: they include monitor, spokesperson and disseminator.

Decisional roles relate to the work of the manager's department: entrepreneur, disturbance

handler, resource allocator and negotiator.

14.14 C Rationale: Contingency theories are based on the belief that there is no 'one best way' of leading

but that effective leaders adapt their behaviour to changing variables. Adair's model sees the

leadership process in a context made up of the task needs, individuals' needs and group needs.

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Examiner's comments. This question was not handled quite as well as some others. Students

must ensure that they understand the main principles associated with the management theories

in the study guide.

14.16 A Rationale: This is a description of John Adair's action-centred leadership model. Contingency

theory is more general: indeed, Adair's model is within the contingency school of thought. The

managerial grid is based on two dimensions: concern for task and concern for people. Dispersed

leadership (Heifetz) is the idea that individuals at all organisational levels can exert a 'leadership

influence'.

14.17 B Rationale: Planning is about determining objectives and how to reach them. Controlling is

measuring and adjusting activities in line with plans.

Ways in: even if you didn't recognise the description of organising, you could probably have

eliminated the other options.

14.18 C Rationale: Fayol's five functions of management are: planning, organising, commanding, coordinating

and controlling. It is assumed that subordinates will carry out a command whether

motivated or not.

14.19 B Rationale: Drucker grouped the work of the manager into five categories, the fifth being

developing people. The other options are from Mintzberg's managerial role types.

14.20 A Rationale: Heifetz wrote on dispersed leadership, Fielder carried out research on the notion of

leadership and Blake and Mouton published the managerial grid.

15 Recruitment and selection

15.1 C Rationale: Screening means sorting through application forms received, in order to separate out

candidates which are clearly ineligible for the vacancy, immediately worth short-listing and so on.

It is selection because it is part of the process of measuring candidates against requirements, and

selecting those who are most suitable. Recruitment is the process of defining requirements and

reaching potential applicants.

15.2 B Rationale: This is job description rather than job analysis, because a job description is the

statement produced from a process of job analysis. This is job description rather than personnel

specification, because it addresses the requirements of the job, rather than the qualities of the

ideal job holder or person. Job advertisement is just a distractor.

Pitfalls: The difference between job description and personnel specification has cropped up

frequently in exams over the years. There is potential for confusion: remember that one describes

the 'job', the other the 'person' …

15.3 C Rationale: 'Motivation' is a heading in an alternative method of person specification (the Five

Point Pattern of Personality, by J Munro Fraser). Rodger's Seven Points are: physical make-up,

attainments (qualifications), general intelligence, special aptitudes, interests, disposition

(temperament) and circumstances.

15.4 B Rationale: The current trend is to devolve recruitment and selection (among other HRM activities)

increasingly to line managers, who handle recruitment within their own departments.

15.5 D Rationale: All the other criticisms about the reliability of selection tests are valid – and yet tests

are still more reliable than interviews at predicting performance in the job!

15.6 D Rationale: A leading question pushes the interviewee to give a certain answer. (In this case, it is

obvious that the interviewer expects the interviewee to agree.) An open question requires selfexpression;

a closed question invites a one word either/or answer, and a problem-solving question

presents candidates with a situation and asks them to say how they would deal with it.

Pitfalls: This is an easy aspect of interviewing technique to set questions on: make sure you can

identify all types of questions.

14.15 B

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15.7 C Rationale: This is a disadvantage because there may not be a clear interview strategy, and

candidates may have trouble switching from one topic to another. Option A is an advantage,

because it reduces individual bias, and saves time in sharing assessments (eg compared to a

series of one-to-one interviews). Option B is an advantage, because a single interviewer may not

be able to spot candidate weaknesses in technical areas. Option D is an advantage, because

personal rapport may lead to favourable bias on the part of an interviewer.

15.8 A Rationale: These are all different types of bias and errors of judgement in interviewing. Option A

is halo effect. Option B is contagious bias. Option C is stereotyping. Option D is projection.

Ways in: Stereotyping is probably the most recognisable of the options, so you could at least

narrow your options by ruling out option C.

15.9 B Rationale: Proficiency tests focus on current ability to perform tasks. 'Standardised' is a desirable

quality of any type of test, meaning that it is applicable to a representative sample of the

population being tested. 'Sensitive' is another desirable quality meaning that the test can

discriminate between different candidates.

15.10 C Rationale: Assessment centres are group assessments, usually used for higher-level positions,

because of the time and costs involved in exploring candidates' personalities and skills in depth.

Pitfalls: Don't fall for the common trap of thinking that an assessment 'centre' is a place!

15.11 C Rationale: Two employer references provide necessary factual information and comparison of

views (to minimise bias). The other options are untrue: option A because references are highly

subjective and/or deliberately limited; option B because personal references are selected to be

supportive (you can choose your friends in a way you can't choose your employers!).

15.12 D Rationale: Job descriptions can be narrow and restrictive, giving people a limited sense of what is

their 'job' and what isn't. This can create demarcation lines which prevent people from flexibly

switching tasks, or working effectively in multi-skilled teams. The other options are all potential

uses of job descriptions, because they clearly state all the elements of a job: for calculating their

value to the organisation (job evaluation), identifying gaps in job holders' ability (training needs

analysis) and preparing selection criteria (recruitment).

15.13 C Rationale: A professional journal would not be read by the target audience. National newspapers

will be too expensive, given that most of the audience will not be the firm's target group: low level

positions are more likely to attract local applicants.

Pitfalls: If asked about choice of advertisement media, you need to think about cost and

audience targeting together.

15.14 A Rationale: Succession planning develops managers in order to ensure managerial continuity over

time – and internal promotion is a key way of grooming managers for higher positions. Induction

time would be shorter, because an internal promotee is already familiar with the organisation's

culture, structures, systems and personnel. Innovation is not necessarily supported by internal

promotion, because it does not bring 'new blood' into the organisation.

15.15 B Rationale: 'Maximum' information is not the point of interviews: squeezing as many questions as

possible into the time allowed can restrict the flow of communication and put unnecessary

pressure on the candidate, while a lengthy open-ended interview will be costly. The relevance of

the information for selection is more important.

15.16 D Rationale: The key factors here are the urgency, and the fact that the consultants do not know

the organisation: there is not enough time to give the consultants an adequate understanding of

the complex recruitment needs. In option A, consultants would bring a 'fresh eye' and avoid

bringing the same old types of people into the organisation. In option B, consultants would

provide expertise and resources to handle large-scale recruitment, which the organisation lacks

in-house. In option C, the organisation can be confident that use of consultants would not be

resented and resisted.

Ways in: It helps if you have a checklist in your head of reasons to outsource recruitment: 'new

blood', resources/expertise and internal support would certainly be on that list. 'Lead time to brief

consultants on the needs of the organisation' would be on the list of reasons not to use

consultants …

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15.17 C Rationale: Attributes are simply 'characteristics' of any kind. Skills are learned behaviours, rather

than capacities.

15.18 C Rationale: This should have been fairly straightforward. It would be quite difficult to write a job

description or a person specification if a vacancy had not first been identified.

16 Diversity and equal opportunities

16.1 D Rationale: As well as compliance with relevant legislation, these are the main arguments for

having an equal opportunities policy. It is good HR practice to attract and retain the best people

for the job, regardless of race or gender.

16.2 C Rationale: The right to equal pay for work of equal value was established by the Equal Pay

(Amendment) Regulations 1984. This does not imply that the woman has to be in the same job

(option D). Job evaluation is recommended as a way of establishing relative values of jobs, but is

not compulsory (option B). Equal Pay deals only with sexual discrimination – not race or other

grounds.

16.3 D Rationale: Positive discrimination refers to actions being taken which give preference to a

protected person, regardless of genuine suitability and qualification for the job. Statement 1 is not

positive discrimination as the steps are only taken to encourage people to apply. It does not say

that they will necessarily be accepted.

Diversity goes further than equal opportunities. The ways in which people meaningfully differ in

the work place include not only race and ethnicity, age and gender but personality, preferred

working style, individual needs and goals and so on.

16.4 C Rationale: Harassment is the use of threatening, intimidating, offensive or abusive language or

behaviour focused on the race, religious belief, sex or sexual orientation of another person. This

sounds like victimisation, but victimisation is a separate form of discrimination, involving

penalising someone because they are involved in a claim of discrimination against an employer.

16.5 C Rationale: A business can better understand (and meet) the needs of market segments if it

employs representatives of those segments: this is a business benefit, because it enhances

customer loyalty, sales revenue, profitability etc. Option A is a legal/moral benefit (and addresses

equal opportunities rather than diversity). Option B is a benefit to employees in a diverse

organisation. Option D is not true of diversity, which requires significant management investment

and less 'standardised' HR solutions.

16.6 B Rationale: The duty is to make 'reasonable' adjustments. The other statements are true.

16.7 A Rationale: Now that age discrimination legislation is in force, this would be direct discrimination

(akin to saying 'blue-eyed, English-speaking people only need apply'). The other options may well

be construed as indirect discrimination.

16.8 C Rationale: The organisation has laid itself open to a claim of indirect discrimination, because if

the selection decision had been made on the basis of a question asked of a woman but not of

men, it may have been construed as such. (This rules out options D and A.) The claim would not

succeed (ruling out option B) because the organisation would be able to justify the apparently

discriminatory conditions on non-discriminatory (job-relevant) grounds.

Pitfalls: You need to get to grips with the basics of how this works, and recognise examples when

you see them.

16.9 C Rationale: Equal opportunity is a narrower concept based on eradicating discrimination based on

the crude dimensions of individual difference. The other options are just distractors.

16.10 A Rationale: Positive discrimination (treating a minority group 'unfairly' well) is not permitted,

except in relation to training provision. 'Quotas' are positive discrimination, because selection

decisions cannot be justified on non-discriminatory grounds: 'targets' (as in option C) are 'positive

action' – because they lead organisations to encourage under-represented groups to apply for

jobs, and make non-discrimination a performance measure for selectors.

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17 Individuals, groups and teams

17.1 C Rationale: Members of an effectively functioning group will take an active interest (as opposed to

option C) in decisions affecting their work. Option A is healthy, particularly in avoiding problems

that occur when groups seek consensus at all costs (eg 'group think'). Option B is healthy, as it

unites and stimulates the group. Option D can be a sign that the group is supporting the

performance of its members – not just that they are focusing on their own performance at the

expense of the group.

Pitfalls: If you were trying to go by 'common sense' instead of knowledge, you might think that

intra-team disagreement and inter-team competition were negatives: not so. The examiner does

not set 'trick' questions, but questions can be designed to separate those who have studied from

those who are guessing!

17.2 B Rationale: Personality is a relatively stable and distinctive concept: it is very difficult (if not

impossible) to change personality, and the attempt has radical effects! The other options are

constructive approaches to handling personality clashes in a team.

17.3 B Rationale: This is typical of 'storming' behaviour. Forming would be more tentative: just getting to

know one another. Norming would be further along in the process of settling into shared values

and behaviours.

Pitfalls: Don't assume that 'storming' is all about conflict! If you did this, you might have

mistaken this description for norming, say.

Ways in: Underline some key words in the micro-scenario: 'debating', 'factions', 'disagree' …

17.4 C Rationale: This is the definition of attitudes. Personality traits are relatively stable, enduring

qualities of an individual's personality (eg 'impulsiveness'). Perceptions are how people 'see'

things, according to how the brain selects and organises information. Emotional intelligence is a

concept popularised by Daniel Goleman to describe awareness of, and ability to manage, one's

own emotions and those of others. None of these concepts is explicitly mentioned in the syllabus

– but you are required to know something about the 'characteristics of individual behaviour', so it

is worth getting to grips with some of the basics.

Ways in: Perceptions are about thinking, emotions are about feeling – and the question asked for

something that combines thinking, feeling and intention. So you could probably rule out B and D.

17.5 C Rationale: Teams are not the best vehicle for crisis decision-making, because group decisionmaking

takes longer, and decisions may protect the team at the expense of the right (possible

tough) solution. Teams are, however, great for decision-making where the hearing of different

viewpoints is beneficial. They are also great for ideas generation (think of group brainstorming)

and coordination (teams are often cross-functional). You might have hesitated over option D, but

it is important to realise that distance is now no obstacle to team working (think of virtual teams,

connected by IT and communications links).

Pitfalls: Don't forget 'virtual' teams in your thinking.

17.6 B Rationale: Blocking (or difficulty stating) is where members put obstacles in the way of

proposals: this may be a positive contribution in circumstances where the proposals are risky or

unrealistic – but it is probably contributing to the problem here. Bringing-in is encouraging the

contribution of others; summarising, drawing together passages of discussion; testing

understanding, checking whether points have been understood. They are generally supportive

behaviours, which could be used to get the team back into constructive discussion.

17.7 B Rationale: 'Compatibility' is not the same as 'homogeneity': teams need diversity, in order to have

a mix and balance of contribution and roles. The other options correspond to team identity, and

shared objective: two of the key tools of team building.

17.8 B Examiner's comments: The examiner commented that only 33% of the students chose the

correct answer. They key words in the question were 'keen eye for detail', 'always meets

deadlines' and 'reluctant to involve others'. These phrases are typical characteristics of a

completer-finisher.

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17.9 C Rationale: The definition of a group is, basically, 'any collection of people who perceive

themselves to be a group' (Handy). Identity means that there are acknowledged boundaries to a

group, which define who is 'in' and who is 'out', 'us' and 'them'. Groups may have a defined

purpose, but not always. Conformity can be an attribute of groups or crowds.

Pitfalls: Note that this wasn't a question about the difference between a group and a team –

although this too would make a good exam question…

17.10 A Rationale: This should be straightforward if you have understood the Belbin model. A healthy

team has a mix and balance of roles. However, members can adopt more than one role, or switch

roles as required: there need not be nine members with fixed roles. Belbin argues that it is the

process roles (how people behave, contribute and interact with others), rather than the functional

roles (technical skills and operational knowledge) that impact on team functioning – although

functional roles are still important for getting the task done!

17.11 C Rationale: Adjourning is where the group sees itself as having fulfilled its purpose, and there is a

process of disconnecting from the task and group – because there will have to be a renegotiation

of aims and roles for the new task. Dorming is where a group grows complacent about

performance. Norming is a much earlier stage in the cycle, where the group reaches agreement

about work methods, roles and behaviours.

Pitfalls: Dorming and adjourning are all late stages of group development, and can be confused if

you are not clear about them. Although 'forming, storming, norming and performing' is better

known, these additional stages are part of Tuckman's model.

17.12 C Rationale: Competition with other groups enhances solidarity, and competition within a group

destroys it, so options A and B are the opposite of solidarity-enhancing. Option D would lead to

'group think': inability to confront problems, lack of criticism of poor decisions, false consensus. It

may create high solidarity, but not healthy solidarity.

17.13 B Rationale: A role may be seen as a part you play: people sometimes refer to wearing 'different

hats' in different situations or with different groups of people.

17.14 B Rationale: A multi-skilled team is one which brings together versatile individuals who can

perform any of the group's tasks. Multi-disciplinary (or multi-functional) teams bring together

individuals with different skills and specialisms, so that their skills can be pooled or exchanged.

Self-managed teams are given discretion to plan their own task sharing and work methods,

within defined task objectives: there is no suggestion that this is the case here. A virtual team is a

geographically dispersed team, connected by information and communication technology (ICT)

links.

17.15 D Rationale: The Shaper is the 'dynamo' of the team: one of the forms of leadership in Belbin's

model. The Plant is the ideas person and creative problem-solver. The Co-ordinator is the

chairperson, clarifying goals, delegating, promoting decision-making. The Implementer is the

person who turns ideas into practical actions.

Pitfalls: There are several 'leader' roles in Belbin's model: you need to distinguish between them.

The Plant is an ideas leader; Resource investigator an entrepreneur; Co-ordinator a task

organiser; and the Shaper an interpersonal leader.

17.16 D Rationale: You may have hesitated between C and D. However blocking is putting obstacles in

the way of a proposal without offering any alternatives; whereas shutting-out is interrupting or

overriding others and taking over.

17.17 D Rationale: The team is executing its task and the team briefing is dealing with progress to date.

18 Motivating individuals and groups

18.1 C Rationale: Intrinsic rewards are 'part of' the work itself: extrinsic rewards are 'external' to the work

itself.

Pitfalls: Potential confusion between intrinsic and extrinsic: a classic exam test!

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18.2 C Rationale: Affiliation is actually a category in another need model by David McClelland. The other

options are Maslow's (although freedom of inquiry and expression overarches the hierarchy itself).

18.3 B Rationale: In Herzberg's theory, only training is a 'motivator factor'. The others are all 'hygiene'

factors: if they are inadequate, employees will be dissatisfied, but even if they are got right, they will

not provide lasting satisfaction or motivation. Herzberg argued that satisfaction comes only from the

job.

Pitfalls: Herzberg is frequently examined, and examiners are frustrated to see students get the

basics of the theory wrong! Make sure you can sort the motivator factors from the hygiene

factors.

18.4 A Rationale: Goals are things people choose to pursue: each individual will have their own goals,

which may vary with time, circumstances and other factors. The idea of innate (in-born,

instinctive) needs is that they are biological or psychological imperatives, common to all people.

(This is what makes it possible to have need theories with discussion of only a few innate needs.)

Satisfaction arises when a goal is achieved.

18.5 C Rationale: Willy's expectancy (expectation that by working hard he will be given the team

leadership) is high, but valence (importance to Willy of becoming a team leader) is neutral,

because he has both positive and negative feelings about it. Since Motivation = E × V, if V is 0,

motivation is also 0.

Pitfalls: Make sure you get valence and expectancy the right way round, and that you recognise

why Willy's valence is 0.

Ways in: Work through the equation, calculating your own values for V and E …

18.6 A Rationale: Herzberg used the other three terms to describe the same set of factors: the ones that

maintain morale but do not positively motivate (maintenance); prevent dissatisfaction but do not

promote satisfaction, in the same way that hygiene prevents ill-health but does not promote wellbeing

(hygiene); and that relate to the environment of work rather than to the work itself

(environmental). The opposite set of factors is 'motivator' factors in the work itself, which –

according to Herzberg – positively create satisfaction and motivation to superior performance.

Pitfalls: An exam question may refer to hygiene factors by any one of its three names, so it is

worth using this question to check that you know them all!

18.7 C Rationale: Autonomy is a degree of freedom or discretion in the job: the removal of restrictive

controls.

Ways in: You may have spotted that all the core dimensions are all intrinsic to the job itself: they

are all what Herzberg would call 'motivator' factors. You could then eliminate some of the options

that are clearly extrinsic to the job, or 'hygiene' factors …

18.8 C Rationale: Participation will only work if the individual has the ability and information to

participate effectively (the principle of 'capacity'): otherwise, they will feel frustrated and under

pressure. You may have hesitated over option D, but this is necessary for people to take

participation seriously (the principle of 'consistency').

18.9 A Rationale: Theory X is the managerial assumption that most people dislike work and

responsibility and will avoid them if possible they have to be coerced and controlled to work

adequately – hence the kinds of management measures described. Theory Y is the managerial

assumption that people can be motivated to accept challenge and responsibility and contribute

willingly to the firm – resulting in a quite different management style!

Pitfalls: You really do need to know which way round X and Y are! (If it helps, think of X as a

'cross' against workers' names …)

18.10 C Rationale: Options A, B and D are essential for an individual to work out how much effort will be

required, and whether it will be worth it for the rewards expected (due to consistency) to be

available. However, 'immediacy' is not necessarily required: people may have a high tolerance for

'delayed gratification', and be willing to wait for rewards as long as they have a reasonable

expectation that they will eventually accrue. (As a student, for example, you may be working

sacrificially hard now, in order to gain qualifications that will benefit your career in several years'

time.)

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18.11 D Rationale: Team members may work for individual rewards, rather than contributing to the

group, especially since there is a problem offering rewards for less measurable criteria such as

team-work. Option A is clearly a benefit. Option B is a benefit of PRP because it relates rewards

directly to business objectives. You may have hesitated over option C but this is a benefit because

PRP is a way of rewarding employees when there is no other way to do so (eg because they have

reached the top of the salary/wage range their position is eligible for).

18.12 C Rationale: Job enrichment cannot offer management a cheap way of motivating employees: even

those who want enriched jobs will expected to be rewarded with more than job satisfaction. The

other options have been found in practice to be benefits of job enrichment.

18.13 B Rationale: According to Maslow, self-actualisation is the final 'need' to be satisfied. It is the

fulfilment of personal potential. Maslow claims that this can rarely be satisfied.

Ways in: It might be worth memorising the triangular diagram and perhaps adding pictures to

help you remember.

Pitfalls: You may have hesitated over option A but this was just a fictitious distracter. Esteem

needs and physiological needs are lower down the hierachy.

18.14 B Rationale: Job evaluation focuses on job content, to measure the relative value of jobs, compared

to each other, not their worth in money terms. Actual pay levels are set with reference to the

other options, among others.

18.15 A Rationale: Option A is valence (V). Option C refers to 'expectancy' (E). Option B is 'force of

motivation (F): the product of valence and expectancy. Hence the equation: F = V × E.

18.16 B Rationale: Eva's new tasks are of the same skill level and responsibility as her original task, so

her job has been horizontally enlarged rather than vertically enlarged (which would be job

enrichment). If she had gone from just packing one shift, to just stamping on the next shift (and

so on), this would have been job rotation.

Pitfalls: Any area like this where students frequently confuse similar terminology is ripe for

examining. Read, think and check your answers carefully, to avoid careless errors!

18.17 B Rationale: Micro-division of labour (or job simplification) is breaking down jobs into their smallest

possible components, and having one person carry out one component. Division of labour (option

C) is specialisation, but not to this extent. Job enlargement implies greater task variety, and

empowerment, greater task significance and responsibility.

19 Training and development

19.1 C Rationale: The Theorist seeks to understand basic principles and to take an intellectual, 'hands

off' approach prior to trying things. Pragmatists are the opposite. You may have hesitated over

option A, but Reflectors learn by thinking things through, rather than necessarily by applying

theoretical concepts.

Pitfalls: This is an area ripe for exam questions, because of the clarity of the style classifications.

Make sure you can identify the label to go with a description and vice versa.

Ways in: You could probably rule out Pragmatist quite quickly, because of Sara's dislike of 'hands

on' methods.

19.2 C Rationale: The scientific approach to problem-solving is a characteristic of learning organisation,

but this involves experimentation and learning by testing ideas and making mistakes. Learning

organisations have a high tolerance for risk, and regard errors as learning opportunities.

Ways in: If you don't recognise the concept or model, don't give up and guess: think through the

options and how they relate to each other. A question phrased 'which is not…?' suggests that you

are looking for the 'odd one out'. If you look at the options, you should find three that are

compatible with each other – leaving one that isn't.

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19.3 D Rationale: This is a positive and realistic view of the benefits and limitations of training: not all

performance problems are amenable to training, and may need other sorts of intervention

(discipline, counselling, equipment repair, job re-design, motivation and so on). Option A would

fail to involve trainees and line managers, who are key stakeholders in training. Option B would

limit training provision, ignoring its significant benefits. Option C would fail to design training

programmes appropriately for specific training needs and learner style preferences.

19.4 B Rationale: Conditioning may have sounded familiar if you only read as far as 'modification of

behaviour', but it involves specific repetition-and-reward techniques. Education is the gradual

acquisition of knowledge, by learning and instruction, often leading to qualifications.

Pitfalls: This kind of related terminology lends itself to exam questions. Training, education and

development all involve 'learning', but the learning experiences are of different types, and with

different overall aims.

19.5 B Rationale: The learning cycle is experiential learning or 'learning by doing'. 'Action learning'

sounds similar, but is actually a specific learning method by which managers are brought

together as a problem-solving group to discuss real work issues. Programmed learning is highly

structured learning, which doesn't apply here. Reflection is a way of thinking about what you

have learnt.

19.6 C Rationale: 'Employability' refers to an individual's having a portfolio of skills and experience that are

valuable in the labour market, thus enhancing his or her mobility (and ability to get a job outside

the present employer). This is a double-edged sword for the organisation: it is socially responsible

and fosters employee satisfaction but may also cause a skill drain to other organisations. You should

be able to see how training contributes to the other options, and why they are benefits for the

organisation.

Pitfalls: Look out for qualifier keywords like 'for an organisation' (that is, not 'for the individual').

Think carefully through 'which is the exception?' questions, too. Logically, an option may be an

exception for more than one reason: in this case, because it isn't a benefit (but a drawback) or

because it isn't a benefit to the organisation (but a benefit to the individual). In a well designed

question, you should get the same answer either way!

19.7 C Rationale: Day release is 'off-the-job', because the learning comes from the employee's attending

a college or training centre one day per week. The other methods are all 'on the job'.

Pitfalls: Note the variety of 'on the job' methods: don't forget to include job rotation (which you

might otherwise connect with job design and Herzberg) and temporary promotion (which you

might not think of as training).

19.8 D Rationale: On-the-job approaches support 'transfer of learning': skills are learned in the actual

context in which they will be applied – so application is seamless. Options A and B are

advantages of off-the-job training: the learners don't have the distraction of other work duties,

and errors while learning are less likely to have real consequences. You may have hesitated over

option C, but there is a risk that by learning on the job, people will pick up 'bad habits' and shortcuts

– rather than best practice.

19.9 C Rationale: Level 1 measures how employees rated the training. Level 2 measures how much they

learned: what they know or can do that they didn't do before. However, for a manager concerned

with departmental productivity, the important thing is whether the trainees applied what they

learned effectively to the job: Level 3. Level 5 is the impact of training on the wider 'good' of the

organisation and its stakeholders: this kind of information is usually only available (and worth the

cost of gathering and analysing it) at senior management level.

19.10 C Rationale: Option A relates specifically to management effectiveness and succession; option B to

planning opportunities for new challenges and learning through career moves (whether vertical or

lateral).

19.11 A Rationale: A Pragmatist likes to learn in 'hands-on' ways that have a direct link to real, practical

problems – so on-the-job practice is ideal. Option B would suit an Activist – a similar style,

enjoying practical, active, participative learning, but without the need to see a work-related

'payoff'. Option C would suit a Reflector, since a journal offers opportunity for learning through

reflection. And option D would suit a Theorist, with a preference for structured intellectual study.

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Pitfalls: The pairs of 'hands off' and 'hands on' styles are quite similar: don't confuse them. It may

help to relate each style to a different stage of Kolb's learning cycle, to make them more distinct.

The Pragmatist focuses on the job; the Reflector reflects on what happened; the Theorist seeks to

understand it; and the Activist plans to try something new.

19.12 C Rationale: Employee satisfaction would not be regarded as a quantifiable benefit – unless it could

be correlated directly with figures such as reduced absenteeism and labour turnover (although it

would be difficult to relate this specifically to training, as opposed to other effects).

Pitfalls: Watch out for qualifier keywords in the question like 'quantitative' or 'qualitative'

(benefits, characteristics). Examiners don't try to trick you – but they do like you to read questions

carefully!

19.13 A Rationale: It is important to separate development, training and education in your mind for this

syllabus. Development is the growth of a person's potential. Training is a planned learning event.

Education is knowledge that is acquired gradually by learning or instruction.

19.14 C Rationale: A formal training needs analysis involves systematic study (at the level of the

individual, job or department) of the required level of competence, the present/actual level of

competence and any gap between them. The other options are all ways in which learning needs

may 'emerge' in the course of work: option A through monitoring developments in your field;

option B as a 'critical incident' and option D as on-going performance feedback.

19.15 A Rationale: It is the networked aspect that makes e-learning different from CBT (using stand-alone

computers). Blended learning involves learning using a combination of different methods and

technologies: this would be the correct option if the learning support was available from face-toface

tuition, say.

Pitfalls: Learning technologies is fertile territory for exam questions, because there are so many

closely-related methods and terms (coaching, mentoring etc).

Ways in: Just about anything with an 'e-' in front of it, these days, is about the internet – not

stand-along computers, so you should be able to rule out option B.

19.16 A Rationale: This is Kolb's learning cycle which is a 'learning by doing' approach. It puts the learner

in an active problem-solving role and encourages them to formulate and commit themselves to

their own learning objectives.

Ways in: Simplified, this learning by doing approach involves:

Act  Analyse action  Suggest principles  Apply principles  Act ... and so on 

19.17 A Rationale: This can then be used to plan for the other options.

20 Performance appraisal

20.1 A Rationale: Job evaluation is a method of measuring the value of a job, not the performance of the

person holding the job. The other options are key applications of performance appraisal.

(Succession planning is a form of promotion or potential review, aimed at identifying future

managers.)

Pitfalls: This is a common source of confusion (akin to the difference between job descriptions

and person specifications in recruitment).

20.2 D Rationale: Overall assessment is narrative comment without the guidance on how the terms

should be applied. Grading uses rating scales (definitions of performance on each characteristic

from 1-5, say). Behavioural incident methods compare specific behaviours against typical

behaviour in each job.

20.3 B Rationale: Achievable (which is part of the SMART objectives framework) is different from 'easily

achievable': one of the key points of performance measures is that they should be motivational,

which means that they should be at least a little bit challenging.

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20.4 B Rationale: This manager tells in the first part and listens in the second part of the interview,

taking on a dual role as critic and counsellor – and not assuming that all performance problems

are the fault of the employee himself. Tell and sell would be more one-sided ('selling' simply

being gaining acceptance of the evaluation and improvement plan). Problem-solving is even more

of a collaborative, proactive process, with the manager in the role of coach. Sell and listen is not

an appropriate method.

20.5 D Rationale: 360-degree is, by definition, a 'rounded' view of an individual's performance from the

appraisee, colleagues, superiors, subordinates and relevant business contacts. Self appraisal is

likely to be biased by self-perception; peer appraisal by team relationships; and upward appraisal

by subordinates' fear of reprisals.

20.6 B Rationale: This is the definition of performance management. It differs from performance

appraisal in its emphasis on collaboration, objective-setting and on-going management.

20.7 C Rationale: These are all valid criteria. The fifth criteria would be relevance not results.

20.8 A Rationale: Multi-source feedback is another term for 360-degree feedback or appraisal.

Management by objectives and performance management are both approaches to collaborative

objective-setting, on-going development and periodic review.

20.9 D Rationale: This is a double edged sword: a link between assessment and reward may motivate

employees to take appraisal seriously, but can also make it threatening if they fear that they

haven't done well. Moreover, there are other factors in setting rewards – and if there isn't a real

connection between a positive appraisal and a meaningful reward, the 'implication' that there is

will only undermine the appraisal system. The other options are clearly positive.

20.10 C Rationale: Options A, B and D were identified as barriers to effective appraisal by Lockett:

'appraisal as unfinished business' (distracting from future-focused improvement planning);

'appraisal as bureaucracy' (a mere form-filling exercise); and 'appraisal as an annual event' (where

on-going performance management is required). Lockett also identified 'appraisal as

confrontation' as a barrier, but this is not what is implied by Option C, which reflects a genuine,

job-relevant, problem-solving approach.

20.11 C Rationale: Although appraisals can be used to measure the extent to which an employee is

deserving of a bonus, it cannot be used to measure the effectiveness of the appraisal scheme

itself. Funds may not be available for bonuses but this does not mean that the appraisal system

is ineffective. Appraisals must be carried out with serious intent and managers must be

committed to the system. The system should be fair and reasonably objective.

20.12 C Rationale: This is an advantage because it gives the individual a greater sense of meaning and

contribution to the organisation. It is also an advantage to the organisation – as are all the other

options. You may have hesitated over Option A: this would certainly be an advantage to

appraisees identified for promotion – but not everyone.

20.13 D Rationale: This involves setting specific targets and standards of performance, and measuring

performance against them. Behavioural incident focuses on job behaviours; rating scales are the

same as grading; and guided assessment is narrative comment on defined characteristics.

21 Section D MTQs

21.1 (a) (i) C

(ii) A

(iii) D

(iv) B

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These all relate to the descriptions of Belbin's team roles.

(b) C Victimisation occurs when an individual is penalised for giving information in a

discrimination claim against an employer.

21.2 (a) (i) B Intrinsic rewards arise from the performance of the work

(ii) C An incentive is a promise or offer of a reward

(iii) A Extrinsic rewards are separate from the job itself and dependent on the decisions of

others

(iv) A Extrinsic rewards are separate from the job itself and dependent on the decisions of

others

(b) A, D C is job rotation and B refers to job enlargement. E is job simplification.

21.3 (a) (i) A

(ii) B

(iii) D

(iv) C

These all relate to the classifications of Honey and Mumford.

(b) B, E The other options are all on the job training methods.

21.4 (a) (i) D Personal development can help to foster employee job satisfaction, commitment

and loyalty.

(ii) A This may include the development of management/leadership skills or management

education such as an MBA.

(iii) C This is an example of continuing professional development (CPD). CPD is based on

the belief that a professional qualification is the basis for a career lifetime of

development.

(iv) B The trend for delayered organisations reduces opportunities for promotion, so

opportunities are planned for sideways or lateral transfers.

(b) B, D For training to be effective there should be timely feedback and also clear objectives for

the training. Training does not need to be on or off the job to be effective, it can be either.

Training does not need to be expensive to be useful.

21.5 (a) (i) D This scheme is based on the results achieved by the sales staff.

(ii) B Each manager is graded on their performance.

(iii) A This is a guided assessment method.

(iv) C This method concentrates on employee behaviour measured against typical

behaviour in each job.

(b) C This is a problem solving approach.

21.6 (a) B Negative power is the use of disruptive behaviour to stop things from happening.

(b) (i) Heifetz: theory of dispersed leadership

(ii) Fiedler: contingency theory; people become leaders partly because of their own attributes

and partly because of their situation

(iii) Bennis: put forward specific differences between managers and leaders

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22 Personal effectiveness and communication

22.1 C Rationale: The communication here is both upwards and 'sideways'.

22.2 D Rationale: Personal development planning is something the individual does for his or her own

improvement and learning, although a coach, mentor or counsellor may facilitate this process.

Options A, B and C are all types of 'developmental relationships': a coach helps a trainee for a

brief period to work on job-relevant skills; a mentor helps a less experienced person over the long

term to work on more general personal development issues; and a counsellor helps an individual

to work through emotional or social issues or problems.

Pitfalls: These are distinct roles: make sure you can identify them correctly.

22.3 C Rationale: An assertive style of communication will help in time management, because it enables

you to say 'no' (appropriately) to interruptions and unscheduled demands. The other options are

problems: options A and B are invitations to waste time in non-essential communication.

22.4 C Rationale: The wheel has a central figure who acts as a hub for all messages between members.

The circle involves a message going from one person to another. The 'Y' involves a message going

from person to person up a chain, until it reaches someone who is in contact with more than one

person. And all-channel involves everyone sending messages to everyone else.

Ways in: If you can visualise the situation, it helps: you could then eliminate the circle and allchannel,

at least.

22.5 C Rationale: A mobile phone enables both colleagues and customers to reach you when you are out

of the office. It also enables you to call the office eg to check inventory availability of items, place

immediate orders and so on. (If you had a laptop, this would be even better: you could have

direct connection with office systems.) Options A and B all involve linked computer systems, so

are not relevant.

22.6 A Rationale: Security is a key vulnerability of email: there is no guarantee of privacy (and a risk of

accidentally sending the message to the wrong person). The other options are significant

strengths, however. If you hesitated over D, think about how email can be used for

memos/reports/letters, and how many formats (visual, audio) can be 'attached' to email

messages.

22.7 B Rationale: Counselling is facilitating others through the process of defining and exploring their

own issues and coming up with their own solutions: this is relatively non-directive. Advising is a

relatively directive role: offering information and recommendations on the best course of action to

take. Counselling is often not directly task-related: it is often about helping employees to

formulate learning goals or to cope with work (or non-work) problems.

22.8 C Rationale: The grapevine is a 'rumour mill': information is often inaccurate and exaggerated.

Communication is, however, fast, selective (in that information is not randomly passed on to

everyone) and up-to-date (information is often more current than in the formal system).

22.9 C Rationale: Exception reporting may improve the quality of upward communication (making it

more selective), but it does not encourage it: if anything, it may create a culture in which staff

don't 'bother' their superiors with information. The other options are all ways of encouraging

upward flow of information and ideas – which otherwise tends to be rare in organisations.

22.10 D Rationale: The sender encodes the message and transmits it through a medium to the receiver

who decodes it into information. The answer cannot be A since you need to have a message to

feedback on before you provide the feedback.

Ways in: It might help you to picture the radio signal diagram in your mind.

22.11 C Rationale: Notice boards are unsuitable for upward communication, and organisation manuals

and team briefings are for downward communication.

Pitfalls: You needed to be aware of the nature of a team briefing, which is for information and

instructions to be given (downward) to a team.

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22.12 C Rationale: Noise is the other main type of communication problem: interferences in the

environment in which communication takes place, affecting the clarity, accuracy or arrival of the

message. Redundancy is a positive principle in this context: you can use more than one form of

communication, so that if one message does not get through (perhaps because of noise or

distortion), another may. Feedback is an essential part of the communication cycle: it is the

response which indicates to the sender whether the message has been correctly received.

22.13 D Rationale: The wheel was the fastest and the Y was the second fasted in Leavitt's experiment.

The chain was the slowest. The reason was the fact that messages came through and were

distributed from a central source.

Examiner's comments. The examiner commented that around 50% of students got this question

wrong and highlighted the point that students must clearly understand the key definitions within

the syllabus. For example, coaching is not one-way so option B could immediately be eliminated.

It is important to look for key words (clues) to the right answer.

22.15 B Rationale: Research shows that people pay more attention to non-verbal cues in interpreting

what someone means than they do to the words themselves. The other statements are true.

Pitfalls: You may have wrongly selected option C if you associated non-verbal communication too

narrowly as 'body language': be aware of the full range of non-verbal signals that can be given or

received.

22.16 B Rationale: SMART is 'Specific, Measurable, Attainable, Relevant and Time-bounded', although

versions differ. Options A and C are both very plausible – and also qualities of effective goals –

but you wouldn't want to replace 'measurable', which is essential (otherwise, how will you know

when you've reached your goal?).

22.17 B Rationale: You may have considered failing to communicate, but you are not given enough

information in the scenario to assume that this is the case.

22.18 D Rationale: A competence framework sets out what an employee should be able to do and ought

to know.

22.19 C Rationale: Focusing attention on an individual's contribution may be constructive, if it brings the

employees involved to realise what each contributes.

23 Section E MTQs

23.1 (a) A, C These are two of the conditions of an important task. The other is that the potential

consequences of failure are long-term, difficult to reverse, far reaching and costly.

(b) (i) False Meetings without objectives can be a waste of time for all those attending.

(ii) True Constant interruptions from others can prevent work being completed. Setting aside

time for these tasks will improve tie management.

23.2 (a) (i) B Compromise involves bargaining, negotiating and conciliating.

(ii) D Integration/collaboration involves emphasis being put on the task and individual

esteem being subordinate to the needs of the group.

(iii) C Dominance is the application of power or influence to settle the conflict.

(iv) A Ignoring the issue is known as denial.

(b) (i) False Even positive compromises only result in half-satisfied needs.

(ii) True Win-win situations can result in mutual respect and co-operation.

(iii) False Compromise comes into the category.

(iv) True If one team member gets what they want at the expense of another, relationships

within the team may break down.

22.14 A

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23.3 (a) (i) A This is raw material to be processed.

(ii) B This has been processed and then presented.

(iii) B This has been processed and then presented.

(iv) A This is raw material to be processed.

(v) B This has been processed and then presented.

(vi) B This has been processed and then presented.

(b) C Strategic information will help senior managers with long-term planning.

23.4 (a) D The email has been sent too close to the date of the meeting, when the financial controller

could have sent it much earlier. The medium, clarity and recipients of the email are all

suitable for the communication.

(b) B, C, F The grapevine operates inside the place of work, the grapevine is most active when

the formal communication network is active and informal communication is more

current than formal information.

23.5 (a) A, C Slang or jargon could create misunderstanding if the recipient of the communication is

unaware of the meaning.

(b) C This is the definition of a grievance.

23.6 (a) (i) Establishing priorities with Peggy

(ii) Delegation of routine tasks

(iii) Identification of information sources within the business

(iv) Sequencing of interviews with relevant staff

(v) Collation of information

(vi) Report writing

One of the most important things is for Susan to establish priorities with Peggy. This will enable her to

delegate some of her routine work to enable her to make some time for the project.

(b) D. This option would appear to apply more closely to a mentoring role

24 Ethical considerations

24.1 C Rationale: 'Fiduciary' means 'of trust'. Although this is a terminology question, it addresses the

important point that all managers (and organisations) are accountable to some external entity and

purpose.

24.2 A Rationale: Utilitarianism is based on 'usefulness': the greatest good of the greatest number.

Deontology is an alternative approach based on absolute moral principles (or categorical

imperatives): what is morally 'right' in a situation. Virtue ethics is a belief in pursuing positive

moral qualities, which flow out into behaviour.

24.3 D Rationale: Grease money refers to payments for benefits to which the company is legally entitled

– just to 'oil the wheels'. Bribery is payment for benefits to which the company is not legally

entitled – to 'bend the rules'! In either case, this is unethical (and in some situations, illegal) –

regardless of the legitimacy of the claim or the purposes to which the payment is (supposedly)

put.

Pitfalls: Know the difference between extortion, bribery, grease money, gifts and hospitality.

24.4 B Rationale: The emphasis on managerial responsibility is a feature of the integrity or values-based

approach to ethics management. A concern for the law alone is a compliance based approach.

Options C and D are examples of responsibilities.

24.5 C Rationale: Option B is irrelevant, and option A is incorrect, since whistle-blowing gives some

protection to employees from being in breach of confidentiality.

24.6 D Rationale: These are all potential ethical issues. Materials used impacts on product safety and

eco-friendliness (eg for recycling). Quality is a safety and customer satisfaction issues. Advertising

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poses issues of truth and non-manipulation. You may have hesitated over supplier labour

practices, but this is a key area of ethical sourcing. It can cause significant damage to corporate

reputations. Packaging raises issues of safety/perishability, eco-friendliness and truthful product

labelling.

24.7 C Rationale: Accountability and social responsibility are classed as professional qualities, not

personal qualities. Ambition is a personal quality – but is not considered essential in a

professional ethics context: it can even pose ethical dilemmas …

Pitfalls: You need to read the question stems carefully to pick up fine distinctions such as

'personal' and 'professional'.

24.8 D Rationale: Independence in appearance means avoiding situations that could cause a reasonable

observer to question your objectivity. In the scenario, this is a risk – while independence of mind

(free from actual partiality) isn't. The pure distractors were plausible because of the possibility of

raising questions (scepticism) with your superiors (accountability) – but irrelevant.

24.9 D Rationale: Employability training helps employees to get other employment but it is not an ethical

objective.

24.10 C Rationale: The saying is: 'the law is a floor'. By meeting non-legal regulations (including the rules

of your workplace) you should meet a higher standard of behaviour than the legal requirements.

Ethical behaviour is a higher moral standard, based on society's expectations and principles.

24.11 A Rationale: This is a definition of fairness.

24.12 B Rationale: Option A is a definition of openness, C is responsibility and D is accountability.

24.13 C Rationale: The statement is the definition of integrity made by the UK Nolan Committee on

Standards in Public Life.

24.14 C Rationale: Organisational self-interest is a threat to independence and a source of conflict of

interest. The other options are different varieties of ethical systems.

24.15 A Rationale: A firm or a member of an assurance team should not accept gifts or hospitality unless

the value is clearly insignificant. In this case, it is likely that the cost of corporate hospitality at

major sporting events will be significant.

24.16 B Rationale: This is a case of intimidation. You may have been tempted to pick self-interest but the

threat of legal proceedings makes this intimidation.

24.17 C Rationale: The fact that the ACCA member does not deal with the client's affairs is a safeguard

against a conflict of interest.

24.18 A Rationale: The issue for you is confidentiality, as the accounts are likely to contain sensitive

information and should definitely not be left lying around. You may have wondered about

unprofessional behaviour but this would apply to your supervisor rather than you.

24.19 C Rationale: Statement A refers to absolutism and Statement B refers to egoism.

24.20 B Rationale: Statements A and C are criticisms of relativism and Statement D refers to egoism.

25 Section F MTQs

25.1 (a) B, D It is argued that relativism leads to a philosophy of anything goes and the statement that

all statements are relative is an absolute (therefore non-relative) statement.

(b) (i) True Social responsibility costs money and goes against the idea of maximising

shareholder wealth.

(ii) False An environmental audit monitors things such as legal compliance with environment

regulations or emissions levels.

(iii) False As can be seen in many examples, a number of companies take socially

responsible actions.

(iv) True This is an example of a company being socially responsible.

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25.2 (a) (i) False This is the deontological view. Teleology is based on consequences.

(ii) False Bribery involves payment for services that the organisation is not legally entitled to.

(iii) True Virtue ethics suggest managers should incorporate such virtues into their daily

behaviour.

(iv) True This is a key reason why accountants should behave ethically.

(b) A, E Absolutism takes no account of 'advances' in morality and if human interpretation leads to

different views there cannot be universal agreement.

25.3 (a) A, C, D, F The professional qualities that an accountant should demonstrate are reliability,

responsibility, courtesy, respect and timeliness.

(b) A, C The fundamental principles are integrity, confidentiality, objectivity, professional behaviour

and professional competence and due care

25.4 (a) (i) B YRT Co is threatening its independence by taking the client's position in the legal

case.

(ii) A Since the audit partner has a long-term relationship with the audit client, there is a

familiarity threat.

(iii) D A self-interest threat exists if there are close personal relationships between the

client and the audit team.

(iv) C Where the external auditor helps to prepare the financial statements there is a clear

self-review threat.

(b) A Litigation gives rise to a threat of intimidation. The others give rise to self-interest threats.

particularly important.

25.5 (a) C, E Because it is important for JKL Co to retain this client, due to significance of the revenue,

there is a self-interest threat here. The client is also looking to intimidate the auditors over

the fee negotiations.

(b) (i) True ACCA students and members must always follow ACCA's code of conduct.

(ii) False Professional ethics should be followed even if this is at the expense of a contractual

obligation.

(iii) True The public expects all professionals to act in an ethical manner.

(iv) False This process is known as lowballing and raises a significant self-interest threat,

particularly if the firm want to offer more profitable non-audit services as well.

25.6 (a) (i) Customer purchases may be influenced by ethical considerations

(ii) Employees need to know what is expected of them

(iii) Local communities may need reassurance that the organisation will act as a ‘good citizen’

(b) B The most effective way to ensure standards are maintained is to instil the standards into

the company culture. Staff training is the only way to ensure that standards are

communicated, and that staff understand the implications of any violation.

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26 Mixed Bank 1

26.1 C The correct answer is isolated from its external environment.

The difference between an open and a closed system is very basic, and depends on the

relationship the system has with its environment. A system being closed to protect from

unauthorised access merely refers to the system's security arrangements. Incapability of further

technical enhancement refers to a stage in the system's life cycle.

26.2 B This is indirect discrimination because most part time employees are women. If it were direct

discrimination then the advert would actually state that women had less favourable terms.

26.3 C The correct answer is: To record financial information.

This is its basic, original role and is still the best way to describe its part in the modern business

organisation.

26.4 D The correct answer is: Improves the motivation of junior managers.

While the other options may arise in a decentralised organisation, they are not necessarily

features that are specifically associated with decentralisation.

26.5 C The correct answer: There is little similarity between team members' work.

Where there is little similarity in work, subordinates will not be able to help each other, and will

rely more heavily on their managers.

Where the work is routine, or the team very experienced, team members will require less support

so a wider span may be appropriate. the wider the geographical dispersion, the narrower the

span.

26.6 D The correct answer is: Independence of the non-executive directors.

This will be examined in the internal position audit of the company rather than the environmental

analysis which looks at matters external to the company.

26.7 C The correct answer is: Managing the prompt payment of suppliers.

The purchasing manager will be concerned with all aspects of supplier management (eg

discussing prices, discounts, delivery lead times, specifications, chasing late deliveries,

sanctioning payments).

26.8 C The correct answers are: Committees and reports slow down the decision-making process.

Innovation is difficult; over prescriptive rules produce a simplistic approach to problems.

The other statement describes the adhocracy, which is complex and disorderly and does not rely

on standardisation to co-ordinate its activities. It also relies on the expertise of its members, but

not through standardised skills.

26.9 C The correct answers are: It may introduce bugs that do not exist in the standard version. It may

delay delivery of the software.

Customisation should not stop the company from being able to buy 'add-ons' to the basic

package. In fact they are sometimes used to give the package more flexibility to suit particular

needs. Dependence on the supplier for maintenance is also a disadvantage of ready-made

packages.

26.10 C In the short run, firms will continue to supply customers provided that they cover variable costs.

They will incur fixed costs whether they produce any output or not. Therefore provided revenues

cover variable costs and therefore make a contribution towards fixed costs, it is beneficial for the

firm to continue producing.

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26.11 A The correct answer is: Dual authority.

Dual authority may lead to conflict between the managers involved.

The advantages of such a structure are:

– Greater flexibility

– Improved communication

– Motivating employees

26.12 A The correct answer is: The board of directors.

As with all company-specific matters it is the directors who are primarily responsible for the

implementation of procedures, which follow best practice with regard to the current corporate

governance advice.

26.13 B The correct answer is: Shareholders are accountable to auditors.

All the other statements are true. Both directors and auditors are agents of the shareholders and

their primary duties relate to them.

26.14 B The correct answer is: To examine and express an opinion on the company's periodic financial

statements.

This is a Companies Act requirement. The other responses are specific director responsibilities.

26.15 A An audit trail shows who has accessed a system and the operations performed.

26.16 B The correct answers are: Authoritative, Accurate, Relevant.

It should be accurate – in the sense of correct for the purpose. Inaccurate information is of little

use for strategic, tactical or operational purposes. Authoritative means that the source of the

information should be reliable. It must also be relevant to the user's needs. Information that is

not needed for a decision should be omitted, no matter how 'interesting' it might be. If the

information is comprehensive, it may be more wide ranging than it needs to be. It needs to be

complete ie include everything that is needed.

26.17 A The correct answer is: External auditors need to assess the work of internal audit first.

Although some of the procedures that internal audit undertake are very similar to those

undertaken by the external auditors, the whole basis and reasoning of their work is fundamentally

different.

26.18 D The correct answer is: Hardware purchase costs; installation costs; software purchase costs.

Capital costs, which are capitalised and then depreciated, include installation, hardware

purchase and software purchase costs. The remaining costs are revenue items which are

expensed as incurred.

26.19 C The correct answer is: Shareholders.

It is very important that external auditors are independent of the company's management.

26.20 A The correct answer is: Banked, complete, prevented.

In any business controls over cash receipts are fundamental if the company is to keep a healthy

cash position.

26.21 C The correct answer is: Dishonesty, motivation and opportunity.

If one or more of them can be eliminated, the risk of fraud is reduced.

26.22 B The correct answer is: A higher than normal risk audit.

The instances given are all examples of inherent risk or control risks and therefore they would be

indicative of higher risk audit.

Certain of the factors combined, such as a poor internal control environment coupled with a

dominant chief executive, might raise the auditors' suspicions of fraud, but not necessarily.

However, they would all increase the overall risk of the audit.

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26.23 D The correct answer is: information about personnel from the payroll system. Value of sales from

the accounting records. Information on decisions taken from the minutes of a meeting.

Data and information captured from internal sources come from transaction systems, such as the

payroll system and the sales ledger, or is communicated formally or informally, as in a decision

taken at a meeting.

Although the type of information is circulated within the organisation, it is captured from outside.

For example, the source of the market information is the market itself, which is clearly external to

the organisation.

27 Mixed Bank 2

27.1 B The correct answers are: Controlling, Co-ordinating, Commanding.

Fayol wrote that to manage is to forecast and plan, to organise, to command, to co-ordinate and

to control. Commanding is the exercise of centralised authority and leadership. Co-ordinating

involves harmonising the activities of all groups towards the common objective. Controlling is

measuring performance and accounting for deviations from plans. Writers after Fayol substituted

functions such as motivating and consulting for commanding.

27.2 A The correct answer is: Organisational design will be determined by a number of factors all of

which dependent on the others.

These factors include elements such as the company's objectives, the environment, the staff, the

culture, the management style, the tasks carried out, the structure and the technology used.

27.3 C The correct answer is: Planning and control.

The five categories are setting objectives, organising the work, motivation, the job of

measurement and developing people. Planning and control are included within setting objectives

and measurement. Drucker gave more emphasis to the 'human resource' aspects of management

than writers on classical management theory such as Fayol.

27.4 C The correct answer is: Position power.

Position power or legitimate power is conferred by the authority linked to a formal position within

the organisation structure.

27.5 B The correct answer is: Benevolent authoritative, participative, exploitative authoritative,

democratic.

These are Likert's four management styles.

27.6 C The correct answer is: Storming.

This is the storming stage, as identified by Tuckman. During this stage, conflict can be quite

open. Objectives and procedures are challenged and risks are taken. However, there is a

considerable amount of enthusiasm within the group and new ideas emerge. So too do political

conflicts, as leadership of the group becomes an issue. This appears to be the situation described

in the question.

27.7 D Job analysis involves finding out what are the task, skill and knowledge requirements of a job.

This information is then output in the form of a job description (tasks, duties, objectives and

standards of a job) and a person specification (reworking of the job description in terms of the

kind of person needed to perform the job). A human resource plan (option (i)) is a much broader

statement of the future skill requirements of the organisation as a whole, and how they will be

met (by recruitment, training, retention and so on). A performance appraisal (option (iv)) analyses

how a job holder does the job – not the nature of the job itself.

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27.8 D The correct answer is: Shaper.

All of Belbin's roles are important to the effective functioning of a team.

You should familiarise yourself with all nine roles.

– Plant

– Shaper

– Resource investigator

– Monitor evaluator

– Company worker

– Completer finisher

– Team worker

– Chairman

– Specialist

27.9 C The correct answers are: Shaper, Plant, Finisher.

The shaper is a leader role, where the role holder spurs the team to action. The plant provides

the creative thinking in the team, while the finisher's actions are directed to the completion of the

task.

Attacking is a type of group behaviour identified by Rackham & Morgan.

27.10 D The correct answer is: All four.

A team is a number of people with complementary skills who are committed to a common

purpose for which they hold themselves basically accountable. This is a control mechanism

which improves work organisation by using knowledge from a broad range of perspectives to

evaluate decision options.

27.11 A The correct answer is: Forming, storming, norming, performing.

Forming is the stage where the team comes together. Storming happens next; the group reassesses

its targets and (hopefully) trust between group members develops. Norming is a period

of settling down, when the group established norms and procedures for doing their work.

Performing then occurs; the team sets to work to execute its task and the difficulties of

development no longer hinder it.

27.12 A The correct answer is: Herzberg.

Herzberg found that people's behaviour in the workplace was affected by more than their physical

and social needs; the content of the work itself had an effect on motivation and performance.

27.13 C The correct answers are: Define the problem carefully; Try to develop options that would result in

mutual gain. Look for a wide variety of possible solutions.

Bruce's course would have covered many approaches to resolving problems. The negotiation

techniques you should have identified include trying to develop options that would result in

mutual gain; defining the problems carefully and looking for a wide variety of possible solutions.

Evaluating progress towards objectives and creating a trusting supportive atmosphere in the

group will enhance the project team's performance but would not be considered negotiation

techniques.

27.14 C The correct answers are: Usually unstructured so can discuss a wide range of topics; Requires

little or no planning. Gives a real impression of feelings.

The feature is an advantage associated with other types of communication. Complex ideas that

require deeper consideration are probably best communicated in written form, or perhaps in a

presentation. Holding a meeting is the main communication technique for allowing multiple

options to be expressed. However, an effective chairperson is needed if all sides are to be heard.

27.15 D Hygiene factors are extrinsic or environmental factors (salary and job security), while motivator

factors are to do with the satisfactions of the work: challenging work is clear in this category –

and recognition could be in either.

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27.16 B The correct answers are: Colloquialisms, Jargon, Double meanings.

Colloquialisms should only be used in informal conversation and jargon should be avoided,

although it may be used where it is an excellent form of shorthand and unique to the particular

organisation, provided it remains comprehensible and is understood by all parties. Acronyms can

be used freely as long as they are explained.

27.17 D The correct answers are: Lack of privacy – can be forwarded on without your knowledge. People

may not check their email regularly. Requires some computer literacy to use effectively.

Complex images can be included as an attachment to an email and there is no limitation on their

transmission.

27.18 A The correct answer is: The sequence is 5, 2, 6, 1, 4, 3.

The sequence of items on an agenda is apologies for absence, approving the minutes of the

previous meeting, matters arising out of the minutes, the main items of business on the agenda

(subjects for discussion), any other business (items not on the agenda) and finally deciding the

date of the next meeting.

27.19 A The correct answers are: Peers; Self-appraisal; Customers.

Peers or co-workers could be members of a team or people receiving or providing services.

Customers can be a useful source, especially for sales staff. Knowing what customers think of you

helps to improve your technique.

When individuals carry out their own self-evaluation, it is a major input to the appraisal process

because they can identify the areas of competence that are relevant to the job and their own

relative strengths.

27.20 C The correct answer is: Upward.

There is a current trend towards this more progressive appraisal system where subordinates

appraise their superiors.

Potential problems with this method may include:

– Fear of reprisal

– Vindictiveness

– Unwillingness of superior to respond to feedback

27.21 B The correct answer is: Deal with grievances.

Grievances should be dealt with by a formal mechanism separate from the appraisal process. If a

grievance arises during appraisal it should be dealt with using the normal grievance procedure.

27.22 A The correct answer is: Accounts payable clerk.

It is unlikely that the accounts payable clerk will be asked. The others will all come in contact

with the sales manager and therefore potentially could be asked to assist with completing the

appraisal forms required by 360 degree feedback process.

27.23 B The correct answer is: Enabling accounting.

Enabling accounting is a made up term here, and sounds like a rather dubious practice for a

business. Accounting should be a well-controlled and regulated process.

The other options are all characteristics of a learning organisation.

27.24 C The correct answers are: Fear of reprisals; Employee point scoring; Lack of authority.

The advantages of upward appraisal are that the subordinates feel more involved, managers

receive objective feedback and can therefore improve their performance.

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28 Mixed Bank 3

28.1 B PEST

28.2 B Designing systems and standardising work.

28.3 A The number of employees reporting to one manager.

28.4 A The directors of the company.

28.5 D Arithmetic, physical.

28.6 B Sales invoicing and payroll.

28.7 C Hersey and Blanchard.

28.8 B All team members have different skills and specialisms which they pool.

28.9 D Maslow and Herzberg.

28.10 D Mentoring and secondment.

28.11 C Diagonal, the manager is in a different function and also below the director.

28.12 B Prefers to think things through first.

28.13 C Rationale: Collective goals or aims are a feature of organisations.

28.14 C The others are distractors! Make sure you do know these technical terms as the examiner could

set a similar question to trip you up.

28.15 D All of these are examples of weaknesses in financial controls.

28.16 B Rationale: The Management Accountant provides information for management: cost accounting,

budgets and budgetary control and financial management of projects.

28.17 C Rationale: The purchasing or procurement function is responsible for authorising purchases (and

suppliers) and approving.

28.18 C

28.19 C

28.20 B Rationale: A suite is a set of several modules. A spreadsheet is a type of program, and a format

for displaying and processing data: it is often used to integrate data from accounting modules for

decision-support and management information systems.

28.21 B This is also known as 'position' power.

28.22 D Rationale: The definition of a group is, basically, 'any collection of people who perceive

themselves to be a group' (Handy). Identity means that there are acknowledged boundaries to a

group, which define who is 'in' and who is 'out', 'us' and 'them'.

28.23 B Specialist.

28.24 C Safety needs is one of the needs in Maslow's hierarchy.

29 Mixed Bank 4

29.1 C Output control. Ouchi assumed that output control was part of market control, where it is

possible to price output of a system effectively and where there is external competition as a

reference.

29.2 D Five pop fans. They are a random collection of people. They have no common purpose, or

common leader and they do not see themselves as having a common identity.

29.3 B Passive acceptance of work decisions. Members of an effectively functioning group will take an

active interest in decisions affecting their work, rather than passively accepting them.

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29.4 A Position power. A leader is someone who does not have to rely on position power alone.

29.5 A These suggest a lack of trust by the manager toward staff. The other reasons are likely to lead to

reduced delegation in themselves.

29.6 C Evaluating progress towards objectives will enhance team performance but would not be

considered a negotiation technique.

29.7 D Allocating scarce resources. This could be concerned with people as a resource but is not peoplecentered.

29.8 C To take reasonable care of themselves. Although there is an employer duty of care towards

employees, this does not cover employee negligence or stupidity.

29.9 A These are groups outside the organisation's boundary, in its environment. The others are within

the boundary and belong to the organisation system.

29.10 A Suspension without pay or demotion. Dismissal is a course of action an employer can take

although not provided for specifically in the employee's contract of employment.

29.11 D Task. The matrix structure requires a culture that reacts quickly to change and focuses on

particular projects or tasks as dictated by the needs of the business. A task culture will suit this

best as it focuses an achievement of the task above all else, and is very flexible and reactive to

changes in the environment.

29.12 B This quote is variously attributed to Schein and Handy. An organisation's culture is exclusive,

shared and gives its participants a sense of community.

29.13 C The others are internal stakeholders.

29.14 A B is 'operating core', C is 'middle line'.

29.15 D

29.16 D Teeming and lading is the theft of cheque receipts. Setting subsequent receipts against the

outstanding debt conceals the theft.

29.17 B All three are essential: dishonesty, opportunity and motivation.

29.18 A

29.19 B

29.20 C The worst of both worlds.

29.21 C The shaper thrives on pressure.

29.22 A

29.23 C Consistency was found to be more important to subordinates than any particular style.

29.24 C Salary and hours of work will be in the employment contract.

30 Mixed Bank 5

30.1 D In fact it may be more difficult to see where a mistake has been made.

30.2 A The other areas are dealt with by a combination of best practice, codes and some legislation.

30.3 C Because chips are a complementary product to fish, a rise in the price of fish will lead to a fall in

the demand for chips.

30.4 C 1 and 3 are the responsibility of the internal auditor, and ultimately of management.

30.5 B

30.6 A

30.7 A

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30.8 B Coercion means compelling someone to do something.

30.9 B 2 and 3 will generally be carried out by higher levels of management.

30.10 D Work sampling (via portfolios of work or trial periods, say) have the highest reliability (followed

closely by cognitive selection tests). Personality testing and assessment centres (group selection

exercises) are slightly less reliable. Interviews, ironically, have a very low predictive power – at

about the same level as reference checking.

30.11 B Equal opportunity is a narrower concept, based on securing non-discrimination on the basis of

those 'crude' dimensions of individual difference (sex, age, disability and so on). Diversification is

from an organisational strategy involving widening its range of products/markets.

30.12 D This may also be worded as: have an experience, review the experience, conclude from the

experience and plan the next steps.

30.13 C The scalar chain is the downward flow of delegated authority in an organisation and the need for

reports to flow back 'up': it is often a source of slow communication and rigidity (eg in

bureaucracies). Horizontal structure allows the flow of information and decisions across

functional (vertical) boundaries: it is a key approach to flexibility. The 'Shamrock' is a form of

numerical flexibility, where a firm has a core staff and a various peripheral 'leaves' which it can

draw on as the demand for labour fluctuates.

30.14 C Minute-taking is one of the roles of the secretary, who essentially provides administrative support

to the committee. A is the role of the chair, while B and D may be imposed on the committee by

the authorities to which it reports.

30.15 A Apollo is associated with role culture; Athena with task culture; Dionysus with person culture.

30.16 D The founder influences culture through founding values; history/experience through creating

expectations and stories; recruitment and selection by choosing people who will 'fit' (or change)

the culture; industry by having its own culture; and labour turnover by allowing people who don't

'fit in' to 'get out'.

30.17 D Boundaries are the rules that restrict management's freedom of action: they include legislation,

regulation and contractual agreements. Responsibilities are obligations which a company

voluntarily undertakes. The primary economic objective relates to optimal resource-conversion (eg

profitability). Non-economic, social objectives modify management behaviour in line with

stakeholder expectations.

30.18 B A framework approach sets out principles and guidelines, rather than detailed rules to cover every

specific situation. This leads to listed advantages – but not to consistent application, since there

is a high degree of discretion in applying guidelines to different cases.

30.19 B Failure to challenge or criticise is not a positive thing, in this context, but a symptom of poor

communications: the 'building block' would be developing a climate in which people can speak

their minds, constructively. The other options describe positive building blocks in the areas of

membership, review and control and objectives. (The terminology of 'building blocks' and

'blockages' is drawn from a model by Woodcock, but it is not essential to know this.)

30.20 B This is a major problem for non-executive directors, because they are likely to have other

commitments. You should have had to think through the other options, however. Some of the

advantages of non-executive directors are that they offer a comfort factor for third parties such as

investors and suppliers; they have a wider perspective and (hopefully) no vested interest; and

they have a combination of knowledge/expertise and detachment.

30.21 B Using local suppliers is part of the government's sustainability strategy, as it develops and

preserves local business, employment and communities. Minimising energy consumption

conserves resources. The other two options are not directly related to sustainability goals.

30.22 C Macro-economics looks at a complete national economy or economic system: factors such as

economic activity and growth, inflation, unemployment and the balance of payments. The other

options are pure distractors, drawn from other disciplines.

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30.23 D These are three of the ways that government can directly affect the economic structure, according

to Porter. Demand is affected as the government is a major customer. Governments can affect

capacity expansion, for example, by using taxation policies to encourage investment in

equipment. Government can introduce regulations and controls within an industry which may

affect growth and profits and may therefore affect competition.

Examiner's comments. The examiner commented that only 36% of students got this question

correct. The examiner stated that it is important for students to be realistic about what the

external auditing function can achieve. (In other words, common sense should help to answer

this type of question.)

31 Mixed Bank 6

31.1 C The shareholders are the owners, as they provide the capital for the business.

31.2 A This is the definition of the 'technostructure' in Mintzberg's components of structure. D defines the

'strategic apex' component of the model.

31.3 C Secure continuity of supply and quality are Z's priorities. Long-term partnership helps secure both

(i), while having a small number of suppliers avoids the risk of supplier failure (ii).

31.4 B This is the definition of tactical management, carried out by middle management. Strategic

management is at a higher level of establishing corporate direction and policy: carried out by

senior management. Operational management is at a lower level of implementing the tactical

plans: carried out by supervisors and operatives.

31.5 A Strategic management is a process which may or may not be carried out in a given organisation.

Executive directorship and internal controls are elements of corporate governance.

31.6 C This is the definition of a progressive tax (such as income tax in general). Option A is a 'regressive'

tax (such as road tax) which is the same for all people. Option B is a 'proportional tax' (such as

Schedule E income tax within a limited range of income).

31.7 D The first three are circumstances defined as redundancy. Dismissal on the grounds of pregnancy

is automatically considered to be unfair dismissal.

31.8 D This should be straightforward if you work through the options.

31.9 C Researchers may connect to this network via the internet (world wide web), and the university

may have an intranet for its own lecturers and students. An extranet, however, is an intranet that

is accessible to authorised 'outsiders', using a valid username and password.

31.10 C Job advertisements must be positive, but they should also be honest, in order to manage

applicants' (and future employees') expectations. Options B and D should be obvious. You may

have hesitated over option A, but advertisements should encourage unsuitable applicants to rule

themselves out before applying (and wasting the organisation's time).

31.11 B Motivation is the incentive to behave dishonestly: one part of this equation is the risks, and

whether they are worth the rewards – so strong disciplinary penalties for fraud are a disincentive.

Opportunity is having an opening for fraud: internal checks and controls (such as segregation of

duties and authorisations) limit those openings. Dishonesty is a predisposition or tendency to

behave unethically: it needs to be spotted early – ideally before a person joins the organisation!

31.12 D The database concept encourages management to regard data as an organisational resource,

which needs to be properly managed. However, there are problems of data security and privacy,

due to the potential for unauthorised access and sharing. If the organisation develops its own

system from scratch, initial development costs will be high.

31.13 B The studies were carried out at the Hawthorne Plant of Western Electric. The Ashridge studies

are a study in leadership styles (tells, sells, consults, joins). Hofstede's model describes

dimensions of difference in national cultures.

30.24 A

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31.14 A Political, Economic, Socio-cultural and Technological (PEST) factors are the external factors

which may impact on the organisation. SWOT (strengths, weaknesses, opportunities and threats)

incorporate data from the environmental scan, by analysing PEST factors that present

opportunities and threats: however, the name given to this process is corporate appraisal. Option

C would be called competitive intelligence.

31.15 C IASs are standards for financial reporting: the preparation of financial statements and accounts.

They are used as bases and benchmarks for companies and national standard-setting systems.

31.16 B Local nature appreciation groups would have high interest (due to potential environmental

impacts) but relatively low power: because of their high interest, though, they might be able to

band together or lobby to increase their power. So a 'keep informed' strategy is appropriate to

segment B.

31.17 C Fraud response relates specifically to investigation and damage minimisation (not prevention),

including: actions that will be taken to protect the security of records that will be required for

identification; protection of vulnerable assets; investigation procedures; and crisis management.

Implementing this plan would be the responsibility of a fraud officer.

31.18 B A growing economy is more easily able to provide welfare services without creating a heavy tax

burden on the community. Growth has potential adverse effects for employment, where some

sections of the population are unable to adapt to demands for new skills. It also has potential

adverse effects for the environment, in terms of resource usage, pollution, emissions etc.

31.19 B Options (i) and (iv) are managerial attributes.

31.20 D Deterrence is an approach which seeks to minimise threats due to deliberate action, by creating

penalties to 'put people off' attempting the action. Correction is an approach to ensure that

vulnerabilities are dealt with when found. Detection is an approach to identifying vulnerabilities

and attacks (eg keeping a log of patient records accessed or removed). Threat avoidance means

eliminating a threat (eg by changing the system so no unauthorised access is possible).

31.21 C This should be straightforward if you think systematically through the process.

31.22 C In the PEST model, social factors include demographics: the study of population structures and

characteristics. Birth and mortality rates affect population numbers, distribution (if they are

unequal in different areas) and age structure (lower birth and mortality rates creates an ageing

population).

31.23 B Interdependence of team members is important, because no-one feels they could earn higher

rewards on their own: everyone's contribution is necessary, and everyone 'pulls their weight'.

32 Mixed Bank 7

32.1 C Non-statutory deductions (such as pension contributions) should be authorised, to prevent money

being 'siphoned' off via non-existent deductions. However, statutory deductions are nondiscretionary:

they cannot not be authorised!

32.2 C The production mixer has expert power, because he has knowledge that is recognised and valued

by the rest of the staff. The shop-floor staff exercise negative power: the power to disrupt

operations. Neither have position power (organisational authority), nor (as far as we know)

personal power, or charisma.

32.3 D In Belbin's model, the Plant is the ideas person; the Monitor-Evaluator the discerning critic; and

the Team worker the diplomatic relationship-builder.

32.4 C There are several risks associated with outsourcing: being locked in to an unsatisfactory

relationship; losing in-house assets and knowledge; sharing confidential information; and

'reputational' risk (if the supplier gives poor service, or is found to be unethical in its practices,

say). The other statements are untrue: an organisation should not outsource its 'core

competences' (areas of unique and non-replicable competitive advantage); outsourcing often

creates economies of scale (taking advantage of the larger dedicated resources of the contractor);

and outsourcing still incurs significant costs, including internal costs of managing the

relationship.

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32.5 B Process theories explore the process by which individuals come to value, select and explore

goals: in other words, how people become motivated. Content theories (including Maslow's

hierarchy of needs and Herzberg's two-factor theory) explore the needs that motivate people to

act in certain ways: in other words, what motivates people.

32.6 B Reporting by exception means only reporting to managers when there is a deviation from plan.

Options A and C would increase information flow. Option D would not address the problem:

information overload is about excessive complexity as well as volume!

32.7 A This is straightforward, if you recall the managerial grid. It does not represent a continuum

(option C) because it assumes that the two things are compatible: they can both be high or low

at the same time. The grid can be used in appraisal, to focus attention on the manager's

approach, but does not indicate 'success' or effectiveness (option B).

32.8 D Closed questions pin the candidate down to either/or options. Probing questions push for an

answer where a candidate is being vague. Open questions wouldn't work here, because they give

the candidate space to answer in any way (s)he wishes. You may have hesitated over leading

questions, but these would encourage the candidate to give a particular reply, suggested by the

interviewer – not to pin down what the candidate meant.

32.9 C An instrumental orientation accounts for why some people take jobs offering high monetary

rewards rather than intrinsic interest or job satisfaction (up to a certain point). Option B is a form

of job design which more or less assumes the opposite: that people seek intrinsic satisfactions in

work itself. Option A is irrelevant, relating to McGregor's Theory X and Theory Y.

32.10 A 'Tell and listen' is one of Maier's three approaches to appraisal interviewing: 'tell and sell' and

'problem-solving' are the other two approaches.

32.11 A A gap between current 'competence' and required 'competence' may be amenable to learning or

training. A gap between current 'performance' and required 'performance', however, may be

caused by other problems to do with supervision, systems, resources, motivation and other

factors. The other options are true.

32.12 B Esteem needs are for recognition and respect from others. Statement (i) would be selfactualisation

and statement (iv) would be a social need.

32.13 C This is the definition of dorming. Forming is a 'getting to know each other' stage; norming the

development of agreed ways of behaving; and storming a stage of conflict and testing.

32.14 D This should be straightforward, if you work through the options carefully. A person specification is

prepared from a job description. Testing follows interviewing, as a more rigorous form of

selection. Reference checking comes last, as it only applies to candidates who are potentially

going to be offered a job.

32.15 B A coach is often the trainee's immediate superior: indeed, coaching is accepted as a style of

management/leadership. A mentor is not usually the immediate superior of the protégé, so that

there can be open, confidential discussion of work and non-work issues.

32.16 B Cognitive psychology argues that the human mind uses feedback information on the results of

past behaviour to make rational decisions about whether to maintain successful behaviours or

modify unsuccessful behaviours, according to the outcomes we want. Behaviourist psychology

focuses on the relationship between stimuli and responses: we are 'conditioned' to respond in

ways that are repeatedly positively reinforced (rewarded) and to avoid behaviours that are

repeatedly negatively reinforced (punished). Option C is not a learning theory, and option D is a

particular learning model (by Honey & Mumford) not relevant here.

32.17 B The third element in the auditor's independence is the responsibility structure – which does not

mean freedom from accountability (statement (iv)). The internal auditor is accountable to the

highest executive level in the organisation (preferably the audit committee of the board of

directors). Statement (ii) is the opposite of independence: internal auditors should not install new

procedures or systems, or engage in activities, which they will later have to appraise – as this

might (or might be seen to) compromise their independence.

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32.18 B Cultural change is a good reason to seek 'new blood' in management, rather than promote people

who are used to thinking in familiar ways. Options A and C argue for internal promotion as a

matter of policy and staff retention (option A) and as a way of preserving culture (option C).

32.19 A Off-the-job training allows people to make mistakes in learning, without the costs and

consequences of making the same mistakes on the job. However, formal courses may not always

be directly relevant to the circumstances of the job and workplace (option B), and it may not be

easy to 'transfer learning' from the classroom to the job, for various reasons (option C).

Meanwhile, formal courses take people away from work (option D). You could think of options B,

C and D as advantages of on-the-job training.

32.20 C Remember that direct discrimination is less favourable treatment of a protected group. Indirect

discrimination is when requirements cannot be justified on non-discriminatory grounds.

32.21 B This is likely to be a sensitive issue. How do you identify job applicants' ethnic origins without

potentially causing offence or suspicion? How do you apply particular performance monitoring to

ethnic minority staff without seeming to discriminate? All the other options are much more

straightforward!

32.22 D The first three options are internal checks to an internal control system. External auditors will

need to check that directors and management act on any internal audit recommendations.

32.23 B The lowest level is how trainees feel about the training: this is an inexact measure of results.

Level 2 is trainee learning, measuring what the trainees have learned (what they know or can do

at the end of the course, compared to pre-training tests): the likely focus of trainers. Level 3 is

changes in job behaviour, which measures whether learning has been applied successfully to the

job: the likely focus of departmental managers. Level 4 is whether these changes result in

measurable performance gains for the organisation: the likely focus of senior management's costbenefit

analysis of training. Level 5 (which many organisations never reach) is evaluating impacts

on 'wider' goals such as greater social responsibility.

32.24 C Physical access controls are basically 'lock and key' systems – basic though that may sound! Card

entry and PIN systems are ways of identifying yourself (by swipe card and keypad entry

respectively) in order to gain authorised entry to an area or storage device. Logical access

systems are non-physical access controls, involving password-protected access to data in the

system. Back-ups are not access controls at all: they are integrity and/or contingency controls.

32.25 B Connected stakeholders include shareholders, customers, suppliers and financiers. Don't confuse

this with internal stakeholders which include employees and management.

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Mock Exams

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FIA

Paper FAB

Accountant in Business

Mock Examination 1

Specimen Exam June 2014

Question Paper

Time allowed 2 hours

This paper is divided into two sections:

Section A – ALL 46 questions are compulsory and MUST be attempted

Section B – ALL SIX questions are compulsory and MUST be attempted

DO NOT OPEN THIS PAPER UNTIL YOU ARE READY TO START UNDER

EXAMINATION CONDITIONS

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Section A

ALL 46 questions are compulsory and MUST be attempted

1 The major purpose of the International Accounting Standards Board (IASB) is to ensure consistency in

Which two words complete the sentence above?

A Financial control

B Corporate reporting

C External auditing (1 mark)

2 The leadership style that least acknowledges the contribution that subordinates have to make is .

Which word correctly completes the sentence above?

A Authoritarian

B Autocratic

C Assertive (1 mark)

3 In relation to the management of conflict, which of the following approaches will maximise the prospect

of consensus?

A Acceptance

B Negotiation

C Avoidance

D Assertiveness (2 marks)

4 Darragh has been appointed to the management team of a professional football club. His role includes

coaching, mentoring and counselling young players who have just signed contracts with the club for the

first time.

The following are his main activities:

1 Helping the young players to settle in during their first week

2 Identifying each player's key skills and encouraging them to develop new skills

3 Advising the players on addressing personal issues, such as managing their finances

4 Helping the players to anticipate opponents' reactions

Which of the following matches the correct role to carry out in each of the four activities?

A 1. Mentor 2. Counsellor 3. Coach 4. Counsellor

B 1. Mentor 2. Coach 3. Counsellor 4. Coach

C 1. Mentor 2. Coach 3. Counsellor 4. Mentor

D 1. Counsellor 2. Mentor 3. Coach 4. Counsellor (2 marks)

5 In order to ensure that the policies of an organisation are consistent with the public interest, on which of

the following should the directors of a company focus?

A The long-term welfare of the shareholders

B Compliance with legal requirements and codes of governance

C The collective well-being of stakeholders (1 mark)

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6 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

C Frictional unemployment

D Marginal unemployment (2 marks)

7 Which of the following is the MAIN function of marketing?

A To maximise sales volume

B To identify and anticipate customer needs

C To persuade potential consumers to convert latent demand into expenditure

D To identify suitable outlets for goods and services supplied (2 marks)

8 The following are sanctions used against companies for potentially unlawful actions:

1 Investigation of its financial affairs by a government department or agency

2 Imposition of a fine by the government's company registration body

3 Refusal of the external auditor to sign the financial accounts

4 Suspension of dealings in securities by the stock exchange

Which of the above are the consequences of a listed company failing to file its accounts?

A 1 and 2

B 1 and 3

C 2 and 4

D 3 and 4 (2 marks)

9 The overall average age of a population in a country is directly dependent on two demographic factors:

Birth rate and death rate.

Assuming equal rates of change, which of the following must lead to an overall ageing of the population?

Birth rate Death rate

A Rising Rising

B Falling Rising

C Rising Falling

D Falling Falling (2 marks)

10 Gils is conducting an appraisal interview with his assistant Jill. He initially feeds back to Jill areas of

strengths and weaknesses of performance but then invites Jill to talk about the job, her aspirations,

expectations and problems. He adopts a non-judgemental approach and offers suggestions and

guidance.

This is an example of which approach to performance appraisal?

A Tell and sell approach

B Tell and listen approach

C Problem solving approach

D 360 degree approach (2 marks)

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11 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)

12 The following are examples of business information:

(1) Annual forecasts of revenues and costs for a department

(2) Product development plans for the next 2 – 3 years

(3) Targets agreed by key managers at their performance appraisal interviews

Which of the above would be classified as tactical information?

A 1, 2 and 3

B 1 and 3 only

C 2 and 3 only (1 mark)

13 Wasim is the Customer Services Manager in a large leisure park. The forthcoming weekend is going to

be the busiest of the year, as it is a public holiday. Wasim has to cope with several absentees, leaving

him short-staffed in public areas of the park. His manager has told him that he expects him to catch up

with some administrative reports that were due last week. Wasim also has to arrange for six new staff to

be trained, who will be arriving imminently.

In order to manage his workload most effectively, what should Wasim do?

A Prioritise the tasks in relation to the most important business outcomes

B Deal with the reports that the manager insists be prepared

C Train the new recruits

D Carry out some of the work that the absentees would normally do (2 marks)

14 In order to discharge their duties ethically, finance directors must ensure that the information published

by their organisations provides a complete and precise view of the position of the business, without

concealing negative aspects that may distort the reader's perception of its position.

This duty describes which of the following ethical principles?

A Probity

B Honesty

C Independence

D Objectivity (2 marks)

15 Which of the following is a purpose of the International Federation of Accountants?

A Agreement of legally binding financial reporting standards across all member accountancy

organisations

B Prevention of international financial crimes, such as money laundering and insider dealing

C Promotion of ethical standards in all member organisations

D Development of universally applicable detailed rules to deter inappropriate behaviours

(2 marks)

16 The following government policies can be used to expand or slow down the level of economic activity.

1 Taxation

2 Public expenditure

Which of the following combinations of policy would maximise expansion of the economy?

A Increase 1 and increase 2

B Increase 1 and reduce 2

C Reduce 1 and increase 2

D Reduce 1 and reduce 2 (2 marks)

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17 Neill works as the procurement manager of JL Company, a large services company.

Information provided by Neill is most relevant to which of the following elements of the marketing mix?

A Physical evidence

B Distribution (or place)

C Price

D Processes (2 marks)

18 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 Competence testing

C Psychometric testing (1 mark)

19 Malachi has been asked by his manager to obtain information about ABC Company, which is bidding for

a contract offered by Malachi's company in the near future. The two statements which he will be using

as his sources are the statement of financial position (SOFP) and the statement of profit or loss (SOPL).

The information he is required to obtain is as follows:

1 The equity of the company

2 Operating costs as a percentage of turnover

3 Long-term borrowings

4 Liquidity

Which of the following correctly matches the above items of information with the financial statements in

which they would be found?

1. 2. 3. 4.

A SOFP SOPL SOPL SOFP

B SOPL SOFP SOFP SOPL

C SOPL SOFP SOPL SOFP

D SOFP SOPL SOFP SOPL

(2 marks)

20 Linh owns a busy restaurant. She has had complaints from regular customers about diners failing to

control their noisy and unruly children, which is spoiling their dining experiences.

Which of the following courses of action would be regarded as a pluralist solution to this problem?

A Setting aside a separate section of the restaurant for families with children

B Not accepting bookings from families with children

C Advising customers that the restaurant is a family restaurant before they book

D Taking no action, assuming that those who complain will always be a minority (2 marks)

21 Which of the following is data protection legislation primarily designed to protect?

A All private individuals and corporate entities on whom only regulated data is held

B All private individuals on whom only regulated data is held

C All private individuals on whom any data is held (1 mark)

22 The system used by a company to summarise 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)

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23 The following are stakeholders of a business organisation:

1 Manager

2 Customer

3 Executive Director

4 Supplier

Which of the above are CONNECTED stakeholders?

A 1, 2 and 3

B 2 and 4

C 2 and 3 only

D 3 and 4 (2 marks)

24 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)

25 Role playing exercises using video recording and playback would be most effective for which type of

training?

A Development of selling skills

B Regulation and compliance

C Dissemination of technical knowledge

D Introduction of new processes or procedures (2 marks)

26 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.

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

1 She maximises the involvement of her team

2 She demonstrates little concern for people in the team

3 She balances the needs of the team with the need to complete the task

4 She is highly focused on achieving the objectives of the team

A 1 and 2

B 2 and 4

C 1 and 4

D 2 and 3 (2 marks)

27 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)

28 The following are duties of either internal or external auditors:

(1) Confirming that the financial accounts present a true and fair view

(2) Confirming that there are appropriate policies for preventing and detecting fraud

(3) Confirming that the financial accounts have been prepared in accordance with legal requirements

Which of the above are the roles of an external auditor?

A 2 and 3

B 1 and 2

C 1 and 3 (1 mark)

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29 Professional accountants must demonstrate integrity at all times.

Which of the following best describes the meaning of integrity?

A Applying consistently high moral values

B Maintaining a neutral and unbiased view on all business decisions

C Provide timely and accurate information free from errors (1 mark)

30 The following are either characteristics of a co-operative or of a public limited company:

1 Maximising the excess of income over expenditure not a primary objective

2 Members can vote according to the number of shares owned

3 Shares can be bought and sold through personal transactions of the members

4 All members are invited to attend the annual general meeting and participate in decisions at the

meeting

Which of the above are the characteristics of public limited companies?

A 2, 3 and 4

B 2 and 3 only

C 2 and 4 only

D 3 and 4 only (2 marks)

31 A company has advertised for staff who must be at least 1·88 metres tall and have been in continuous

full-time employment for at least five years.

Which of the following is the legal term for this practice?

A Direct discrimination

B Indirect discrimination

C Victimisation

D Implied discrimination (2 marks)

32 Which one of the following statements is correct in relation to monetary rewards in accordance with

Herzberg's two-factor theory?

A Pay increases are a powerful long-term motivator

B Inadequate monetary rewards are a powerful dissatisfier

C Monetary rewards are more important than non-monetary rewards

D Pay can never be used as a motivator (2 marks)

33 In a higher education teaching organisation an academic faculty is organised into courses and

departments, where teaching staff report both to course programme managers and to subject specialists,

depending on which course they teach and upon their particular subject specialism.

According to Charles Handy's four cultural stereotypes, which of the following describes the above type

of organisational structure?

A Role

B Task

C Power

D Person (2 marks)

34 Which pattern of communication is the quickest way to send a message to all intended recipients?

A The circle

B The chain

C The Y

D The wheel (2 marks)

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35 Kelly wants to explain a business problem to Pawel on the problem on the telephone.

Who will be involved in 'encoding' the communication that takes place?

A Kelly

B Pawel

C Kelly and Pawel (1 mark)

36 Which of the following types of new legislation would provide greater employment opportunities in large

companies?

A New laws on health and safety

B New laws to prevent discrimination in the workplace

C New laws making it more difficult to dismiss employees unfairly

D New laws on higher compensation for employer breaches of employment contracts

(2 marks)

37 What is the responsibility of a Public Oversight Board?

A The establishment of detailed rules on internal audit procedures

B The commissioning of financial reporting standards

C The creation of legislation relating to accounting standards

D The monitoring and enforcement of legal and compliance standards (2 marks)

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

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

significantly, as well as increasing the number of sales calls made to the public. The reorganisation

proposals are unpopular 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 put forward by which school of

management thought?

A The administrative school

B The empirical school

C The scientific school (1 mark)

39 The aggregate level of demand in the economy is made up of government expenditure, __________,

__________ and net gains from international trade.

Which of the following correctly completes the sentence above?

1 Savings

2 Taxation

3 Investment

4 Consumption

A 1 and 3

B 2 and 3

C 3 and 4

D 1 and 4 (2 marks)

40 In the context of marketing, the 'four Ps' ae price, promotion, and .

Which TWO words correctly complete the above sentence?

1 Product

2 Positioning

3 Place

A 1 and 3

B 1 and 2

C 2 and 3 (1 mark)

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41 Which one of the following is a potential advantage of decentralisation?

A Risk reduction in relation to operational decision-making

B More accountability at lower levels

C Consistency of decision-making across the organisation (1 mark)

42 FKT Company is considering the introduction of a code of ethics following media criticism of its selling

practices.

Which of the following is most important when deciding on the content of the proposed code of ethics?

A The minimum acceptable standards of behaviour and conduct of employees (KEY)

B The legal requirements affecting the sales of core products and services

C The main issues of concern to customers who have made complaints

D The generally accepted standards by other companies operating in the same sector

(2 marks)

43 Ahmed is preparing his personal development plan. He is particularly concerned about how others see

him.

In order to analyse this aspect of his personal development plan further, Ahmed should consider which

of the following?

A Problems and strengths

B Strengths and opportunities

C Strengths and weaknesses (1 mark)

44 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)

45 In the context of fraud, 'teeming and lading' is most likely to occur in which area of operation?

A Sales

B Quality control

C Advertising and promotion

D Despatch (2 marks)

46 Which of the following statements is true in relation to the average revenue function of a business in a

perfect market?

A It is diagonal

B It is horizontal

C It is vertical (1 mark)

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Section B

ALL SIX questions are compulsory and MUST be attempted

1 Here are four short references to the function of management:

A There are essentially five functions of management that apply to any organisation

B Individual and group behaviour at work is a major factor in productivity.

C Management is the development of a true science of work.

D The manager of a business has one basic function – economic performance.

Required:

(a) Identify the description above which is associated with each of the following theorists, by

selecting A, B, C, D or None.

(i) Peter Drucker

(ii) Elton Mayo

(iii) Henry Mintzberg

(iv) F W Taylor

Note: The total marks will be split equally between each part. (2 marks)

(b) Below are listed five functions of management.

A Planning

B Organising

C Managing

D Monitoring

E Motivating

Required:

Write down which two of the above are those functions identified by Fayol by selecting TWO of

the letters from (A, B, C, D, E). (2 marks)

(4 marks)

2 (a) XYZ Company installed a computer system to handle its main accounting functions including

accounts receivables, accounts payables and payroll. Management has a number of concerns

about access to the system and are considering a number of controls to overcome those

concerns.

The following are types of control they are considering:

A General control

B Application control

Required:

Classify the following as either A (General control) or B (Application control):

(i) Locking the computer room to prevent access to non-employees.

(ii) Limiting access to the payroll system by making it password protected.

(iii) Taking backup of data files each evening and holding backup copies off-premises.

(iv) Providing basic IT training to the entire staff to prevent errors in using the system.

Note: The total marks will be split equally between each part. (2 marks)

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(b) A company has considerable cash collections on a regular basis. The cashier receives the cash,

records it and then banks it at the end of each day. Since a single person is responsible for

access to cash, the financial director is concerned that fraud and error may occur in cash

handling and recording. He proposes use of appropriate internal controls to prevent any such

errors or misappropriations.

The following are specific examples of internal controls used in business:

A Segregation of duties

B Induction and training

C Authorisation limit

D Internal audit

The following sentences contain gaps which specify the appropriate internal control which could

be used to prevent fraud and errors.

Fraud and errors in handling cash can be prevented through 1 since no one individual could

record and process a complete transaction.

Required:

(i) Select the correct internal control which appropriately fills gap 1 above; i.e. select A, B, C

or D. (1 mark)

Even if such a measure were introduced, the possibility exists that staff could act together to

perpetrate fraud and bypass this control. This can be prevented through 2 as it would ensure

awareness of the heavy sanctions to be imposed in cases of dishonesty.

(ii) Select the correct internal control which appropriately fills gap 2 above; i.e. select A, B, C

or D. (1 mark)

(4 marks)

3 There are a number of ways of developing staff on a one-to-one basis within organisations. Each has its

own strengths and weaknesses and is appropriate in different work situations.

Examples of types of development include coaching, mentoring, counselling and appraising.

Required:

(a) For each type of development below, which work situation is most appropriate?

A An interview to help another person to identify and work through a problem.

B A longer term relationship in which a more experienced person encourages an individual's

personal and career development.

C An approach whereby a trainee is put under the guidance of an experienced employee

who shows the trainee how to perform tasks.

D An interview, the aim of which is to review performance and identify training and

development needs.

(i) Coaching. Select ONE of A, B, C or D

(ii) Mentoring. Select ONE of A, B, C or D

(iii) Counselling. Select ONE of A, B, C or D

(iv) Appraising. Select ONE of A, B, C or D

Note: The total marks will be split equally between each part. (2 marks)

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(b) An organisation uses mentoring as a form of one-to-one personal development.

A Determine remuneration

B Decide promotions

C Career and personal development

D Resolve a grievance

E Demonstrating how to perform

F Using experienced staff for training

G Providing a role model for an employee

Required:

Which TWO of the above are benefits of this approach? Select TWO from (A, B, C, D, E, F, G).

(2 marks)

(4 marks)

4 Sport-4-Kidz is a charitable organisation that operates a sports centre in a large city.

The land on which the playing fields and facilities are located is held on behalf of the charity by Donna

and Dietmar, the two trustees. Donna and Dietmar simply hold the land on behalf of Sport-4-Kidz and

play no role in running the charity. They are rarely contacted by the management of the charity.

However, they are the only people who are able to enter into contracts in relation to the land and its use.

Sport-4-Kidz is managed and operated by a management committee. The committee has decided on a

major expansion of facilities by building a new sports hall. The committee has the power to legally bind

the charity in all matters other than the land. Their decisions are overseen by the government charity

regulator, which generally sanctions the charity's decisions except in relation to financial reporting.

The management committee is negotiating with four building companies.

The proposed expansion of the facilities has angered the local residents, many of whom are concerned

about heavy building site traffic and the danger posed to their children. Many believe that the design of

the new sports hall is ugly and insensitive. Three well-respected local politicians serve on the residents'

committee.

(a) The following are types of stakeholder:

A Internal stakeholder

B External stakeholder

C Connected stakeholder

Required:

For each of the following, indicate whether they are internal, connected or external stakeholders.

(i) Donna and Dietmar. Select one of A, B or C

(ii) Members of the management committee. Select one of A, B or C

(iii) The four building companies. Select one of A, B or C

(iv) Local residents. Select one of A, B or C

Note: The total marks will be split equally between each part. (2 marks)

(b) Complete the following sentences about Sport-4-Kidz stakeholders, with reference to Mendelow's

grid.

The local residents exert 1 and should be 2

(i) Select which ONE of the following fills Gap 1:

A high power, low interest

B high power, high interest

C low power, low interest

D low power, high interest

Write down A, B, C or D.

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(ii) Select which ONE of the following fills Gap 2:

A treated as a key player

B kept satisfied

C kept informed

Write down A, B, or C.

The building companies exert 3 and should be 4

(iii) Select which ONE of the following fills Gap 3:

A high power, low interest

B high power, high interest

C low power, low interest

D low power, high interest

Write down A, B, C or D.

(iv) Select which ONE of the following fills Gap 4:

A treated as a key player

B kept satisfied

C kept informed

Write down A, B, or C.

Note: The total marks will be split equally between each part. (2 marks)

(4 marks)

5 Accounting bodies set out a code of ethics to establish ethical behaviour requirements for professional

accountants.

(a) The following are qualities you might see in a professional at work:

Integrity

Honesty

Trustworthiness

Expertise

Professional behaviour

Confidentiality

Respectfulness

Objectivity

Required:

Write down which of the FOUR boxes from (A–H) contain fundamental principles of ethical

behaviour from the IFAC (IESBA) and ACCA codes of ethics. (2 marks)

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(b) The following are desirable characteristics of professions and vocations:

A Acting in the public interest

B Highly skilled

C Ethical codes of conduct

D Governance by association

E Highly valued services

F Training requirement

G Process of certification

H Qualification by examination

Required:

Select FOUR of the characteristics from the list above, which distinguish a profession from an

occupation. (2 marks)

(4 marks)

6 Company A is an accountancy professional body which has a tall structure and a high level of

centralisation. The span of control is very narrow. Subordinates have minimal latitude for selfdetermination

or to influence decision-making and mainly concentrate on carrying out highly prescribed

and defined roles.

Company B is a financial services company which gives a wide ranging role to its traders and promotes

cultural values such as assertiveness, risk appetite, and a high degree of competition between

employees. The employees are usually young and unmarried, and work and socialise together for long

hours at a frenetic pace.

Company C is a research and development company where the business is divisionalised by product.

Staff work very flexibly and often need to communicate laterally to achieve objectives through ad hoc

projects and collaboration. There are no formal rules about reporting structures, or about set starting or

finishing times. Staff are rewarded on the basis of creativity and innovation.

Company D is a family company which is highly controlled by the owners and the CEO is the main

shareholder. There is a very low staff turnover, but employees are expected to be very loyal to the

company and are often required to work long hours and carry out tasks outside their normal range of

duties. Relationships between employees and managers are very informal and close and the rights of

employees and their overall interests are strongly defended by the owners when challenged.

The following are dimensions used by Hofstede to classify types of organisational culture:

1. High 2. Low

A Power distance A1 A2

B Uncertainty avoidance B1 B2

C Individualism C1 C2

D Masculinity D1 D2

Required:

(i) For Company A select which combination of dimensions apply from the grid above.

(For example A1) (1 mark)

(ii) For Company B select which combination of dimensions apply from the grid above.

(For example A1) (1 mark)

(iii) For Company C select which combination of dimensions apply from the grid above.

(For example A1) (1 mark)

(iv) For Company D select which combination of dimensions apply from the grid above.

(For example A1) (1 mark)

(4 marks)

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Answers to Mock Exam 1

DO NOT TURN THIS PAGE UNTIL YOU HAVE

COMPLETED THE MOCK EXAM

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ACCA Examiner’s answers. The Examiner’s answers to all the questions in Mock Exam 1 are included after this

section.

SECTION A

1 B The IASB seeks to promote consistency in corporate reporting by creating internationally accepted

financial reporting standards.

2 B This is the least participative of the styles in the Ashridge model.

3 B Negotiation gives the best opportunity for the two sides in a conflict to converge their positions.

The other options either involve backing down, forcing a position, potentially increasing conflict,

or leaving the issue unresolved.

4 B Mentors usually help staff on broader work related development, including orientation and

induction. Coaches work on developing specific skills of the job itself, while counsellors work with

people on a personal level, perhaps if they are having non-work related or emotional problems.

5 C By considering the collective well-being of all stakeholders an organisation will make decisions

that are in the public interest.

6 A Because of the particular circumstances of the scenario where someone is made redundant from

an industry in decline where skills cannot be easily transferred, where re-training might take a

long time or where work is not available in the short term within a reasonable geographic

proximity, this is classed as structural unemployment.

7 B The basic principle that underlies marketing is that it is a management process that identifies and

anticipates customer needs. The other distracters in the question refer to specific activities

undertaken by a sales or promotion function.

8 C The normal sanctions in such a case is that fines are imposed on companies by the registration

body of the company and, where listed, the company may be delisted by the stock exchange

authorities. Although the option wasn’t included, sanctions against responsible directors may also

be imposed.

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

10 B The ‘tell and listen’ approach encourages input from the individual, promoting participation in the

process by the appraisee.

11 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.

12 B Tactical information is medium term in nature and so does not include the long term product

development plans, but does include annual forecasts and targets from performance appraisals.

13 A An employee with a range of tasks or objectives to achieve and pressures to achieve them to set

deadlines, should always prioritise tasks in accordance to business importance. Deciding on other

criteria such as pressure applied by colleagues, whether someone is absent or not or simply

because a task is urgent may damage wider business objectives.

14 D A professional accountant acting in accordance with fundamental ethical principles is

demonstrating objectivity when they give a complete and precise view, which by implication

means that negative aspects should not be concealed or positive aspects accentuated.

15 C IFAC has no legal powers against businesses, nor does it set financial reporting standards. It is an

accounting association member body which promotes educational and ethical standards of

behaviour amongst its member bodies, through a code of ethics and behaviour, but does not

prescribe detailed rules on this.

16 C Increasing taxation leaves individuals with less disposable income for expenditure within the

economy thereby slowing economic activity. The same effect is caused by a reduction in

government expenditure. Therefore economic activity can be stimulated by reducing taxation and

increasing government expenditure.

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17 C Information on purchase costs of finished goods or raw materials is important in establishing the

price of a product. In terms of the marketing mix, this information is most relevant to the price

element as prices should be set at least to cover cost and give an acceptable level of profit.

18 B Competence testing is most appropriate when testing a specific skill.

19 D The key correctly matches the information required to the particular financial statement in which

they are to be found.

20 A The pluralist solution is to cater for the needs of more than one stakeholder group without

seriously compromising the interests of any individual group. Therefore setting aside a special

area for families with children while having an adults only section would achieve this. The other

options involve adversely affecting the rights of one or other group of stakeholders in some way.

21 B Data protection legislation applies only to regulated data and is designed to protect the interests

of private individuals only.

22 A A transaction processing or office automation system would mainly concern the recording of

transactional data and would provide a summary. A decision-support system would analyse

information.

23 B is correct because customers and suppliers deal closely on a transactional basis with the

organisation, but are not internal stakeholders like managers and executive directors.

24 A In a period of high price inflation the value of money is reduced over time, so those who owe

money are better off and those who are owed money lose out.

25 A Role playing exercises are most effectively used for skills development, including sales training.

Other common business applications include effective selection interviewing and performance

appraisal interviewing.

26 B The Blake and Mouton managerial grid enables leadership styles to be categorised on a nine

point scale with reference to concern for production and concern for people. Renata is therefore

highly concerned with the task and much less interested in her team as individuals.

27 B Internal auditors are responsible for monitoring the effectiveness of systems, not implementing

them.

28 C External auditors are responsible for ensuring that the financial statements show a true and fair

view and that they comply with legal requirements. Directors are responsible for ensuring that

systems are in place to prevent and detect fraud.

29 A Integrity is often described as being honest and applying morality to decisions. Accuracy relates

to professional competence and being neutral does not indicate morality.

30 B Only shareholders have voting power related to the number of shares that they own. Members of

a co-operative organisation can vote but will only have one vote. Co-operatives may be owned by

members, but ownership stakes cannot be exchanged between members unless the members

belong to limited companies.

31 B To discriminate against someone on the grounds of characteristics which are predominately

associated with their sex, gender, nationality or religion is illegal. As women are generally shorter

than men, to restrict admission on the basis of height, indirectly discriminates against women.

The other options are either direct discrimination, or other illegal and undesirable employment

practices.

32 B According to Herzberg, money is a hygiene factor (or dissatisfier). Although it is a powerful shortterm

motivator, it is questionable whether each individual increase in monetary reward will have

a major long-term effect. According to Herzberg, ‘A reward once given becomes a right’.

33 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.

34 D The wheel facilitates transmission of the message directly to all receivers and therefore transmits

most quickly.

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35 C In a two-way communication link, both parties need to encode messages and both have to

decode them in order for the communication to be understood.

36 B Equal opportunity policies widen opportunity and enlarge the potential pool of employees to

recruit from. The other options either indirectly or directly reduce the potential for staff turnover

and therefore limit the number of job vacancies available at any point in time.

37 D The primary aim of a public oversight board is to eliminate or minimise any actual or potential

breaches of legislative requirements and to ensure compliance with regulations applicable to

organisations within their terms of reference.

38 C Maximising efficiency in production (as in the scenario) is a feature of scientific management..

39 C The components of effective demand in the economy are consumer spending, investment by

enterprises, central and local government expenditure and the net gains from international trade.

40 A The four Ps are Price, Promotion, Product and Place.

41 B Decentralisation involves having greater authority and power at lower levels of the organisation

and accountability goes with this power.

42 A Compliance with legal requirements may not eliminate unethical behaviour. The issues of

concern to those who complain may not be fully representative of issues of concern to customers

in general. Other companies in the sector may not be concerned about ethical behaviour.

43 C Using SWOT analysis, the strengths and weaknesses are the relevant points as these are internal

to the individual and these are the factors that would influence the opinions of others.

44 B As new members are about to join the group, essentially the group is reforming which is the start

of a new group development process. The other options are all later stages in group development

as identified by Tuckman.

45 A Teeming and lading involves the theft of cash and is a type of fraud that is carried out by

manipulating transactions. There would be most potential for this fraud within the sales

department where cash may be received and remitted.

46 B The demand curve in a perfect market is horizontal, because they can sell as much as they want

at the prevailing market price and nothing at all at a higher price.

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SECTION B

1 (a) (i) D Drucker emphasised the economic objective of managers in business

(ii) B Mayo investigate dindividual and group behaviour at work, as a factor in

productivity.

(iii) None Mintzberg described managerial roles, arguing that management is a disjointed,

non-systematic activity.

(iv) C Taylor pioneered the scientific management movement and sought the most

efficient methods.

(b) A, B Fayol classified five functions of management: Planning, Organising, Commanding, Coordinating

and Controlling.

2 (a) (i) A

(ii) A

(iii) A General controls relate to the environment in which the application is operated.

(iv) B Application controls are controls that prevent, detect and correct errors.

(b) (i) A Segregation of duties would prevent one individual recording and processing a

complete transaction.

(ii) B Awareness and training would make staff aware of sanctions in cases of

dishonesty.

3 (a) (i) C Coaching involves a trainee being put under the guidance of an experienced

employee.

(ii) B Mentoring is a long-term relationship where a more experienced person encourages

career and personal development.

(iii) A Counselling is an interpersonal interview to help an individual identify and work

through a problem.

(iv) D Appraisals are part of performance management and can be used to establish areas

for improvement and training and development needs.

(b) C, G Mentoring is a long-term relationship where a more experienced person encourages career

and personal development and can also be a role model.

4 (a) (i) C Donna and Dietmar are connected stakeholders as they are trustees of the charity.

(ii) A The management committee are internal to the charity as they can legally bind the

charity.

(iii) C The building companies are in negotiation with the management committee and

therefore are connected stakeholders.

(iv) B Local residents will always be external stakeholders.

(b) (i) B Residents have high interest due to the anticipated effects of the development, but

due to the involvement of the local politicians they also have high power.

(ii) A Stakeholders with high power and high interest should be treated as key players.

(iii) D The building companies have high interest in the decision to award the building

contract.

(iv) C Stakeholders with low power and high interest should be kept informed.

5 (a) A, E, F, H The fundamental principles are Integrity, Confidentiality, Objectivity, Professional

behaviour and Professional competence and due care.

(b) A, C, D, G These qualities distinguish a profession from an occupation.

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6 (i) A1 High power distance cultures accept greater centralisation, a top-down chain of command

and closer supervision.

(ii) D1 High masculinity cultures clearly differentiate gender roles. Masculine values of

assertiveness, competition, decisiveness and material success are dominant.

(iii) B2 Low uncertainty avoidance cultures respect flexibility and creativity. They have less task

structure and written rules. There is more tolerance of risk, dissent, conflict and deviation

from norms.

(iv) C2 Low individualism cultures emphasise interdependence, reciprocal obligation ansd social

acceptability. The organisation is seen as a family.

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ACCA's exam answers

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SECTION A

1 B The IASB aims to promote consistency in corporate reporting by creating financial reporting

standards to which major businesses are expected to adhere.

2 B The Ashridge model identifies for styles: autocratic; authoritarian; consultative; laissez-faire (or

participative). The first of these is the least participative.

3 B Negotiation gives the best opportunity for the two sides in a conflict to converge their positions.

The other options either involve backing down, forcing a position, potentially increasing conflict,

or leaving the issue unresolved.

4 B Mentors usually help staff on broader work related development, including orientation and

induction. Coaches work on developing specific skills of the job itself, while counsellors work with

people on a personal level, perhaps if they are having non-work related or emotional problems.

5 C The board of directors are responsible for the well being of a wide group of constituencies,

including shareholders, but also employees and other internal, external and connected

stakeholders.

6 A Because of the particular circumstances of the scenario where someone is made redundant from

an industry in decline where skills cannot be easily transferred, where re-training might take a

long time or where work is not available in the short term within a reasonable geographic

proximity, this is classed as structural unemployment.

7 B The basic principle that underlies marketing is that it is a management process that identifies and

anticipates customer needs. The other distracters in the question refer to specific activities

undertaken by a sales or promotion function.

8 C The normal sanctions in such a case is that fines are imposed on companies by the registration

body of the company and, where listed, the company may be delisted by the stock exchange

authorities. Although the option wasn’t included, sanctions against responsible directors may also

be imposed.

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

10 B The ‘tell and listen’ approach encourages input from the individual, promoting participation in the

process by the appraisee.

11 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.

12 B Annual targets and management forecasts from performance appraisals indicate medium term

planning horizons which are both tactical in nature, whereas product development plans for 2-3

years are longer term strategic objectives.