ACCA

Accountant in Business Mock Exam 1

Questions
(Duration: 3 hours)

LSAM

Paper F1

Mock Exam 1 - Questions

Answer ALL questions

QUESTION 1
Which of the following statements is true? A B C D

Partnerships offer the same benefits as limited companies Sole traders have no personal liability for business debts Limited companies are classed as a separate legal entity; therefore the shareholders are not personally liable for any debts of the business A partnership can be made up of no more than 20 partners (2 marks)

QUESTION 2
Which of the following is a feature of poor corporate governance? A B C D

The establishment of an audit committee Focus on maximising shareholder wealth Lack of dominance of the board by a single individual Supervision of staff in key roles (2 marks)

QUESTION 3
According to Fiedler, which of the following are true of psychologically close managers?

(i) (ii) (iii) A B C D

They tend to be reserved in their relationships with subordinates. They prefer to seek staff opinions rather than formal consultation methods. They are primarily people-orientated

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

QUESTION 4
Minzberg identified 9 managerial roles. Which of these managerial roles transmits factual and value based information to subordinates? A B C D

Liaison Monitor Disseminator Spokesperson (2 marks)

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 5
If a government increased its expenditure and reduced levels of taxation the effect would be to (i) _________ demand in the economy and to (ii) _______ the size of the Public Sector Net Cash Requirement (PSNCR).

Which words correctly complete this statement? A B C D

(i) reduce, (ii) reduce (i) stimulate, (ii) reduce (i) stimulate, (ii) increase (i) reduce, (ii) increase (2 marks)

QUESTION 6
Which of the following terms is used to describe the right to perform an action in an organisation? A B C D

Responsibility Authority Influence Power (2 marks)

QUESTION 7
Lo-cost Ltd offers its employees the following conditions as part of their employment:

(i) (ii) (iii) (iv)

Competitive salaries and bonuses Training programmes Safe and pleasant working conditions Considerate supervision

According to Herzbergs two-factor theory of motivation, which of the above factors will motivate employees in the long run to become more productive? A B C D

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

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 8
In relation to organisational structures which of the following is the correct definition of the phrase span of control? A B C

The number of employees that a manager is directly responsible for. The number of management levels in an organisational structure The number of levels in the hierarchy below a given manager (1 mark)

QUESTION 9
__________ 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 the above sentence? A B C D

Expert Executive Information Management Information Decision Support (2 marks)

QUESTION 10
Which of the following is classed as a connected stakeholder? A B C D

Government Shareholder Director Trade union (2 marks)

QUESTION 11
Which of the following is an example of cyclical unemployment? A B C D

Lay-offs among ski instructors in the summer months Automation of ticket sales at train stations resulting in the redundancy of ticket officers Recession in the building industry The restriction of employment in the car industry due to a powerful trade union keeping wages high. (2 marks)

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 12
Which of the following factors could influence the culture of an organisation?

(i) (ii) (iii) (iv) (v) A B C D

Past successes and failures experienced by the organisation. Senior management. The person who founded the organisation. The technology used by the organisation. The industry the organisation in.

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

QUESTION 13
Vrooms Expectancy Theory is an example of which type of motivational theory? A B

Content theory Process theory (1 mark)

QUESTION 14
Which of the following is consistent with a governments policy objective to slow the level of economic activity? A B C

An increase in taxation A fall in interest rates An increase in public expenditure (1 mark)

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 15
Which of the following are macro economic policy objectives?

(i) (ii) (iii) (iv) (v) A B C D

High taxation. Low inflation. Balance of payments equilibrium. Low interest rates. Low unemployment.

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

QUESTION 16
In an organisation which operates a system of good corporate, to whom should the internal audit department of an organisation report? A B C D

The Board of Directors The Finance Director The Audit Committee The Management Accountant (2 marks)

QUESTION 17
Which of the following social trends will have a direct impact on most businesses?

(i) (ii) (iii) (iv) A B C D

Increase in single member households. Falling birth rates. Increasingly diverse populations. Increasing attention paid by the general public to environmental issues.

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

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 18
Porters five forces model identifies external factors that determine the potential profitability and therefore attractiveness of a particular industry. Which of the following is one of these forces? A B C

Bargaining power of buyers Government regulation of the industry Fiscal policy (1 mark)

QUESTION 19
Which of the following best describes a cost leadership strategy in a price sensitive market? A B C D

Products are cheap but of inferior quality Competitors quality is matched at a lower cost Products are of superior quality Prices are slightly above those of competitors (2 marks)

QUESTION 20
The human resources department has no role in preventing fraud in an organisation.

Is this statement true or false? A B

True False (1 mark)

QUESTION 21
Which of the following are consequences of a failure to comply with the legal requirements of maintaining financial records?

(i) (ii) (iii) (iv) (v) (vi) A B C D

LondonSAM

Fines. Prosecution. Difficulties raising finance. Unqualified audit report. Damaged reputation. Qualified audit report.

(i), (ii), (v) and (vi) only (i), (ii), (iii) and (iv) only (i), (ii), (iii), (iv) and (v) only (i), (ii), (iii), (v) and (vi) only (2 marks)
6 F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 22
Employing lobbyists to put the organisations case to ministers or civil servants is a legitimate method of influencing government policy in the interests of a business.

Is this statement true or false? A B

True False (1 mark)

QUESTION 23
Managers are said to have a __________ responsibility (or duty of faithful service) to the organisations that they serve.

Which of the following terms correctly completes this sentence? A B C D

Financial Fiscal Ethical Fiduciary (2 marks)

QUESTION 24
Which of the following is an aim of internal control? A B C D

To eliminate the possibility of poor judgement To ensure the total accuracy of internal and external reporting To eliminate the risk of human error To help ensure compliance with applicable laws and regulations (2 marks)

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 25
Which of the following would raise ethical issues for a manufacturer of chocolate?

(i) (ii) (iii) (iv) (v) A B C D

The materials used in the production of the chocolate. The quality of the chocolate. How the chocolate is advertised. How much its cocoa supplier pays its staff. How much it pays its own staff.

(i) and (ii) (i), (ii) and (iii) only (i), (ii), (iii) and (v) only (i), (ii), (iii), (iv) and (v) only (2 marks)

QUESTION 26
Which of the following are owners of a limited company? A B C

Non-executive directors Stakeholders Shareholders (1 mark)

QUESTION 27
Which of the following is an advantage of procedures manuals? A B C D

Keeping the procedures up to date is straightforward Staff initiative is not stifled since flexibility can be built in to the procedures A manual can be provided to all staff to ensure easy access to procedures The manual will normally enable the system to be quickly understood via the inclusion of a flowchart (2 marks)

QUESTION 28
In the context of data security which of the following is an example of a physical access control to protect computer equipment? A B C D

Data back ups Card entry systems Logical access systems Anti-virus software (2 marks)

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 29
What is the main aim of accounting? A B C D

To produce a trial balance To record every transaction individually To provide financial information to users of such information To maintain ledger accounts for every asset and liability (2 marks)

QUESTION 30
In the regulatory framework surrounding financial accounting, which body has the key objective of developing a single set of enforceable global accounting standards? A B C D

The International Accounting Standards Board The International Accounting Standards Committee The International Financial Reporting Interpretations Committee The European Union (2 marks)

QUESTION 31
Which of the following is a blockage to building a successful team? A B C D

Diverse mix of personalities Clear objectives Members who do not challenge or criticise Regular reviews of performance (2 marks)

QUESTION 32
If a government was to announce that any profit made on a business investment was to be tax free which department of an organisation will this have the greatest impact? A B C D

Financial Accounting Management Accounting Treasury Marketing (2 marks)

LondonSAM

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 33
Overstating overtime worked is unethical but is not fraudulent.

Is this statement true or false? A B

True False (1 mark)

QUESTION 34
In which of the following activities would the accounting department co-ordinate with the purchasing or buying function?

A
B C D

Liaison with suppliers to obtain a credit account and negotiate credit terms which are acceptable Ensuring there are sufficient raw materials in stock for planned production Discussion of advertising and promotion budgets Systems design and development to make purchasing easier

(2 marks)

QUESTION 35
Which of the following internal controls might be least effective in preventing fraud if staff are colluding with customers? A B C D

Physical security Authorisation policy Sequential numbering of transaction documents Requiring signatures to confirm receipt of goods or services (2 marks)

QUESTION 36
Charlie is the leader of a team which tends to communicate via e-mail. Team members send all messages to Charlie who checks the content of the messages and then forwards them on to the other team members if he feels they need to be made aware of any of the information. Which communication pattern is Charlie using in his team? A B C D

The Y The wheel All channel The circle (2 marks)

LondonSAM

10

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 37
Gerry has just had his performance appraisal. He was told that his work was unacceptable and if he doesnt improve in the next two months he will be dismissed. What approach was used in Gerrys appraisal? A B C D

Tell and sell approach Tell and listen approach Problem solving approach 360 degree approach (2 marks)

QUESTION 38
Which of the following orientations places the customer at the centre of organisational activity? A B C D

Sales orientation Production orientation Product orientation Marketing orientation (2 marks)

QUESTION 39
Experiential learning (Kolb) theory suggests that learning is a continuous cycle with four stages, all of which have to be completed for new knowledge to be fully acquired. What are the four stages? A B C D Experience, reflection, abstract observation and active conceptualisation Experience, active experimentation, abstract conceptualisation, observation and reflection Education, active experimentation, abstract conceptualisation, observation and reflection Education, experimentation, observation, reflection 2 marks)

QUESTION 40
A large management consultancy has implemented a matrix structure. Many of the consultants work in temporary project teams. Which of Handys cultural types would you expect to see in this organisation? A B C D

Role Culture Power Culture Task Culture Person Culture (2 marks)

LondonSAM

11

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 41
In the context of audit, what are substantive tests designed to accomplish? A B C D

To establish the causes of errors and omissions in financial records To identify errors and omissions in financial records To establish whether internal controls are being applied as prescribed To test dangerous substances for their safety when being used (2 marks)

QUESTION 42
A female employee is frequently subject to rude jokes of a sexual nature made by her male colleagues and comments about her weight and appearance. The woman finds this offensive and hurtful however her colleagues tell her that they dont mean anything by their comments and it is just friendly banter.

What type of discrimination is the female employee subject to? A B C D

Direct discrimination Indirect discrimination Victimisation Sexual harassment (2 marks)

QUESTION 43
Job descriptions are beneficial for organisations in all of the following circumstances with the exception of one. Which is the exception? A B C D

Writing a recruitment advertisement Screening candidates Employee flexibility Identifying training needs (2 marks)

QUESTION 44
The Cadbury Committee described corporate governance as the system by which companies are directed and controlled Is this statement true or false?

A. True B. False
(1 mark)

LondonSAM

12

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 45
Inflation has a number of causes and solutions. Which of the following scenarios describes cost-push inflation? A. The underlying cost of factors of production (raw material and labour) increases and this is reflected in an increase in output prices as firms seek to maintain their profit margins B. The national currency weakens increasing the cost of imports in a country where imports are significant to the economy C. Demand for goods and services in the economy grows faster than the ability of the economy to supply these goods and services, i.e. too much money is chasing too few goods D. The money supply in the economy is increased boosting demand for goods and services. The expansion in demand is however occurring faster than the expansion in the supply of goods and services (2 marks)

QUESTION 46
Which of the following is an example of fraud which could be carried out by third parties? A. B. C. D. Window dressing Teeming and Lading Skimming schemes Pyramid schemes (2 marks)

QUESTION 47
Which one of the following is an example of work the internal auditors might do in a company? A. B. C. D. Carrying out special assignments (e.g. fraud investigations) Preparing accounts Dealing with customer complaints Reconciling supplier statements to the accounting systems

(2 marks)

QUESTION 48
Recruitment is choosing from a number of candidates the one most suitable for a specified position. Is this statement true or false?

A. True B. False
(1 mark)

LondonSAM

13

F1 - Accountant in Business

Mock Exam 1 - Questions

QUESTION 49
Which of the following are qualities of information that is useful for decision making purposes?

(i) (ii) (iii) (iv) (v) A B C D

Low cost. Relevant. Authoritative. Complete. Precise to the 2 decimal places.

(i), (ii) and (iii) only (i), (ii), (iv) and (v) only (ii), (iii) and (iv) only (i), (ii), (iii), (iv) and (v) (2 marks)

QUESTION 50
Who is responsible for the production of financial statements that give a true and fair view? A B C D

The audit committee The Board of Directors The finance director The finance department (2 marks)

LondonSAM

14

F1 - Accountant in Business