Section A – ALL 46 questions are compulsory and MUST be attempted

1. A deontological approach to an ethical decision focuses on which of the following?

(1 mark)
A. The desired virtues of the decision taker
B. The duties of the decision taker
C. The consequences arising from the decision

2. Which of the following theorists suggested that leaders can emerge, rather than be
formally designated?
(2 marks)
A. Kotter
B. Heifetz
C. Adair
D. Mintzberg

3. M Company is listed on its country’s stock exchange, the following individuals serve on the
board of directors:
A is a non-executive director and is the chairman of the company.
B is the CEO and is responsible for the day-to-day running of the company.
C is a professional accountant and serves as a non-executive director.
D is the finance director and is an employee of the company.
E is a legal advocate and serves as a non-execute director.
F is the marketing director of a manufacturing company and serves as a non-execute director.
Which of the following is the most appropriate composition of directors for M Company’s
audit committee?
(2 marks)
A. C, D and E
B. A, B and F
C. A, E and F
D. C, E and F

4. Which of the following are advantages of having a formal procedure for recording sales?
(i) Transactions will be recorded consistently
(ii) Staff can refer to information if they have doubts
(iii) New staff can be trained more quickly
(1 mark)
A. (ii) only
B. (i), (ii), and (iii)
C. (i) and (iii) only

5. Kevin is an employee having an appraisal with his manager, Sunny. Sunny informs Kevin that
his performance has been poor throughout the year, giving a number of incidents and scenarios to
back up his statements. He concludes that he needs additional training during the following year in
order to improve his performance.
What type of appraisal has Kevin had?
(2 marks)
A. Tell and sell
B. Tell and listen
C. Problem solving
D. 360 degree

6. Within the UK, what is the usual purpose of codes of practice on corporate governance?
(2 marks)
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 best practice that companies should adopt
D. To provide a comprehensive framework for management and administration

7. Which of the following is a purpose of internal control?

(2 marks)
A. To provide reasonable assurance that the company can achieve its objectives
B. To ensure that all operational accounting data is totally accurate
C. To eliminate all risks arising from fraud and other criminal acts
D. To validate the financial statements of the company as a true and fair view

8. 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
(2 marks)
A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iv)
D. (iii) and (iv)

9. Under typical employment protection legislation, which of the following would be

classified as an ‘unfair’ reason for the dismissal of an employee?
(1 mark)
A. The employee was a member of a trade union
B. The employee was guilty of misconduct
C. The employee had a lack of qualifications or capability for the job

10. Of main sources of rules that regulate the behavior of businesses, by which of the
followings the minimum level of acceptable behavior is set?
(1 mark)
A. Ethics
B. Non-legal rules and regulations
C. Law

11. Which of the following is driven by intrinsic rewards?

(2 marks)
A. Mary, who wants good grades in her examination to secure a bonus
B. Tom, who sees achievement of his targets as a way of securing promotion
C. Jason, who has declined managerial appointments because he enjoys his current job
D. Allen, who tries to be the best in his team in order to build his reputation in the company

12. Mary has just been appointed as marketing manager at M Co., a supermarket.
What accounting information will be required by Mary to be successful in her role?
(i) Prices charged in the past and by competitors
(ii) Salaries of checkout staff
(iii) Customer demographics
(iv) Profitability by product
(2 marks)
A. (i), (iii) and (iv) only
B. (iii) only
C. (i), (ii), (iii) and (iv)
D. (i) and (iv) only

13. Within organizations regular meetings are held when a quorum of members are in attendance.
Which of the following is meant by the term ‘quorum’?
(2 marks)
A. All members are present
B. At least 90% of the members are present
C. The chair and office bearers are present
D. An agreed minimum number of members is present

14. Shared services organization make extensive use of outsourcing.

Is this statement true or false?
(1 mark)
A. True
B. False

15. Which of the following describes a GAAP?

(2 marks)
A. A collection of accounting rules assembled from different sources
B. An internationally agreed accounting standard
C. A legally binding protocol governing the preparation of financial statements
D. An advisory document issued by a body responsible for accounting standards
16. Northland is an emerging nation with a healthy economy. However, its government is concerned
that unemployment has risen from 3% to 5% of the working population. A recent study by
Northland’s central bank has revealed that there are many unfilled vacancies in growing industries,
but the workers who are making themselves available for work or becoming unemployed have the
wrong skills, or are located in the wrong regions, to meet the immediate demand for labor in areas of
economic growth.
Which type of unemployment does Northland demonstrate?
(2 marks)
A. Structural
B. Cyclical
C. Seasonal
D. Frictional

17. The company for which Steve works has refused to rectify environmental damage it has caused.
This rectification is a legal requirement. The company believes that the authorities in the country
concerned are too weak to enforce the law.
With which set of values are corporate values in conflict here?
(1 mark)
A. Professional values
B. Personal values
C. Societal values

18. Which of the following should be included in a corporate code of ethics?

(2 marks)
A. A detailed description of all of the commercial objectives of the company
B. The consequences for employees of violating the standards of behavior expected of them
C. A summary of the responsibilities of the individual directors of the company
D. A list of laws and regulations with which the company will comply

19. Country ABC is a country operating a balance of payments surplus on goods and services with
other countries. The demand for ABC products and services in other countries is very price elastic.
While demand in ABC for products and services from other countries is price inelastic.
If the value of the ABC currency falls against those of its international trading partners, what
will be the effect on ABC’s international trade situation?
(2 marks)
A. The value of imports will rise and the value of exports will fall
B. The value of imports will fall and the value of exports will rise
C. The value of both exports and imports will fall
D. The value of both exports and imports will rise

20. Tom works as part of team. Whilst he is very good at turning ideas into practical solutions, he
can be somewhat inflexible and slow to respond to new opportunities.
Which of Belbin’s team roles best describe Tom?
 (1 mark)
A. Plant
B. Monitor-Evaluator
C. Implementer

21. Which TWO of the following sources of financial information about a company are not
external reports?
(i) Budget
(ii) Statement of profit or loss
(iii) Statement of cash flows
(iv) Variance reports
(2 marks)
A. (i) and (iv)
B. (ii) and (iii)
C. (iii) and (iv)
D. (i) and (ii)

22. The performance of a non-governmental organization is most often measured in respect

of which of the following?
(1 mark)
A. Customer satisfaction
B. Profitability
C. Value for money

23. Kobe is the manager of an international company that manufactures and distributes baby food.
According to the company’s annual report the business has been adversely affected by several
factors this year. In country A abnormal weather conditions disrupted the transportation of exports.
Country B experienced a baby boom. Country C introduced a new law regulating packaging.
Country D introduced import restrictions for all products.
Which country has been affected by its social environment?
(2 marks)
A. Country A
B. Country B
C. Country C
D. Country D

24. Which of the following best describes the purpose of a public oversight board?
(1 mark)
A. To prepare primary legislation relating to the conduct of professional firms
B. To scrutinize the standards of business practice in professional firms
C. To provide detailed advice to professional firms on legal compliance and ethical standards

25. Which of the following is an example of a generic strategy outlined by Porter?

(1 mark)
A. Quality control
B. Customer focus
C. Cost leadership

26. P&M Ltd manufactures and sells computer games. It is currently considering the packaging,
quality and design of the computer games as part of a strategic review.
What element of the marketing mix is P&M Ltd reviewing?
(2 marks)
A. Product
B. Place
C. Price
D. Promotion

27. Which of the following characterises the preferred learning style of the ‘reflector’ as
suggested by Honey and Mumford?
(2 marks)
A. To observe and consider closely
B. To read and remember fully
C. To act quickly and incisively
D. To tackle practical issues meticulously

28. Peter runs a small consultancy firm which he established several years ago building on the
contracts he made with his previous company. He has found that he delivers high quality results
when the work is interesting to him and the environment is conductive to his working style. Peter
encourages the five consultants that work in his firm to develop business in the same way offering a
high level of discretion on work that is accepted and declined by them. He exerts little direct authority
over his team provided it delivers an acceptable return to the company.
Peter’s firm is an example of which of Charles Handy’s cultural typologies?
(2 marks)
A. Task
B. Person
C. Power
D. Role

29. The audit committee and remuneration committee of a company are examples of which
of the following?
(2 marks)
A. Ad hoc committees
B. Management committees
C. Executive committees
D. Standing committees

30. What impact would a stronger British pound relative to the US dollar have on an
organization that solely imports into the UK from the USA?
 (1 mark)
A. Decrease the cost of imports
B. Increase the cost of imports
C. No effect on the cost of imports

31. The economic forecast produced by the government of MIT predicts that the total aggregate
demand in the country will be $200 billion by the end of the current year. The Ministry of Finance has
now received the following revised figures that will affect the original forecast.

Activity Change in value ($ billion)

Consumer spending -15
Total government expenditure on capital projects +10
Imports +7
The purchase of industrial buildings, plant and machinery +8
Total expenditure by local government +7
Exports +4
Which of the following is the level of aggregate demand when adjusted for these figures?
(2 marks)
A. $214 billion
B. $207 billion
C. $251 billion
D. $210 billion

32. Hofstede devised a framework that describes dimensions of differences between national
cultures.
Which cultural dimension is described as ‘the degree of inequality among people which the
population of a country considers normal’?
(2 marks)
A. Uncertainty avoidance
B. Individualism versus collectivism
C. Masculinity versus femininity
D. Power distance

33. As a longstanding customer, Walter has been highly critical of Fly Co, an airline which he claims
has provided him with bad service and poor value for money for many years. He has written many
letters and has made numerous telephone calls, all expressing his concerns. Having now inherited a
large block of voting shares in Fly Co, Walter can now voice his complaints at the annual
shareholders’ meeting for the first time.
With reference to Mendelow’s theory, what is the implication of this development?
(2 marks)
A. Fly Co could previously have expended minimal effort on Walter’s concerns, but it must now
keep him informed
B. Fly Co should previously have kept Walter informed, but it must now treat him as a key player
C. Fly Co should previously have kept Walter satisfied, but it must now regard him as a key player
D. Fly Co should always expend minimal effort on Walter’s concerns as nothing changes

34. Which of the following describes a pluralist approach to ethical decision taking?
(2 marks)
A. The decision taker will seek to satisfy some of the demands of all those affected
B. Actions will be determined by the personal preferences of the decision taker
C. Decisions will be taken in order to satisfy all the needs and desires of the majority of those
affected
D. The decision will optimize the demands of the majority and the minority of those affected

35. As you start the audit of Z Company, you tell a colleague that you are very short of money.
Overhearing this, the finance director of Z Company offers you a short term load, on very favorable
terms.
Which of the principles from the IESBA (IFAC) Code of Ethics is threatened here?
(1 mark)
A. Trust
B. Objectivity
C. Professional behavior

36. Which of the following are consequences of a failure to comply with the legal
requirements of maintaining financial records?
(i) Fines
(ii) Prosecution
(iii) Difficulties raising finance
(iv) Unqualified audit report
(v) Damaged reputation
(vi) Qualified audit report
(2 marks)
A. (i), (ii), (v) and (vi) only
B. (i), (ii), (iii) and (iv) only
C. (i), (ii), (iii), (iv) and (v) only
D. (i), (ii), (iii), (v) and (vi) only

37. Which of the following is a role of the Chairman of a company?

(1 mark)
A. To issue the agenda in advance of board meetings
B. To manage the operations of the company
C. To sign the minutes of board meetings

38. Many organizations strive to ensure that they have a fully diverse workforce to allow them to
compete in the fast-changing business environment.
Which of the following is a benefit to an organization of operating a diversity policy in
recruitment?
(2 marks)
A. The organization will have lower recruitment costs
B. The organization will be able to access a potentially wider pool of talent
C. The organization will have a lower staff turnover ratio
D. The organization will have more senior management positions

39. The cross elasticity of demand for two products has been calculated as 0.86.
Which of the following pairs of products is consistent with such a value?
(2 marks)
A. Bread and butter
B. Printers and ink cartridges
C. Books and motor fuel
D. Bus tickets and train tickets

40. ZBG is an ACCA tuition provider. It has decided to use a reward system to help determine
lecturers’ pay, based on the lecturers’ performance.
Which TWO of the following are fair criteria to assess individual lecturers’ performance?
(i) Company profits
(ii) Examination results
(iii) Number of students in the class
(iv) Result of student satisfaction survey
(2 marks)
A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iv)
D. (iii) and (iv)

41. Which of the following cases of fraud will have the effect of reducing the profit figure
shown in the financial accounts of a company?
(1 mark)
A. Increasing the value of sales in order to facilitate money laundering
B. Increasing the depreciation of an asset in order that it may be purchased later from the
company for less than it is worth
C. Increasing the value of inventory in order to steal goods from the warehouse

42. The sales team of ABC Co has been together for some time. The members have got to know
one another quite well, but they are still encountering difficulties in reaching consensus on decisions.
Several team members have not yet got to the stage at which they fully trust others, and they are
reluctant to be totally open and honest about how they feel.
According to Tuckman’s theory which stage of development has the team reached?
(2 marks)
A. Performing
B. Storming
C. Norming
D. Forming
43. Mary is the head of finance in a multinational company. She wishes to ensure that all accounts
staff processing financial information in the accounting system use generally accepted, common
terminology to minimize the possibility of misunderstanding. She has informed accounts staff that
they should in the future refer to creditors as account payable, to debtors as accounts receivables
and to assess such as buildings, plant and machinery as non-current assets.
Mary’s guidance is based on source information produced by which of the following?
(1 mark)
A. IFAC
B. IASB
C. IFRS interpretations Committee

44. LJP Company operates train and bus services throughout its home country, as well as some
overseas services. LJP Company dominates the market, but has one major competitor.
In the context of Porter’s five forces model, which of the following is an example of the threat
of substitutes to LJP Company?
(2 marks)
A. A decision by GVS Company, an airline, to diversify into land transport systems, with bus and
train services targeted at business users
B. A large increase in the costs of inventory for the bus division, imposed by a company that
manufactured all of LJP Company’s fleet of buses
C. The launch of new, high speed train services on all major domestic and overseas routes by JVM
Company, LJP’s main competitor
D. The launch of a free, user-friendly and easily downloadable video conferencing package by ITX
Company, a multinational software producer

45. Which TWO of the following statements are true?

(i) All goals must be expressed as quantities
(ii) Job analysis aids good management
(iii) Delegation is a sign of weak management
(iv) A manager should prioritize tasks
(2 marks)
A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iv)
D. (iii) and (iv)

46. With which category of motivational theory is the work of Vroom concerned?
(1 mark)
A. Process
B. Content
Section B – ALL SIX questions are compulsory and MUST be attempted

1. Background

ABC is a large company that provides banking services, such as saving accounts and loans, to
customers in several countries across Asia through their chain of high-street bank.

The company has a manager for each branch. These managers report to a regional manager, who
looks after a large number of branches. All regional managers report directly to the Board of
Directors.

ABC has a significant internal audit department which is required to ensure compliance to the large
number of rules and regulations that the bank has to follow.

Task 1
The company is currently analyzing its structure using Mintzberg’s structural configurations
model. Classify each of the following staffs within the model.
(2 marks)
Technostructure Middle line Operating Core Strategic apex
Bank tellers ☐ ☐ ☐ ☐
Board of Directors ☐ ☐ ☐ ☐
Internal auditors ☐ ☐ ☐ ☐
Regional managers ☐ ☐ ☐ ☐

Task 2
ABC is considering how to structure its organization to achieve the maximum efficiency possible.
The Board of Directors has identified four possible structural configurations as identified by
Mintzberg’s model.
A Simple structure
B Professional bureaucracy
C Divisionalised structure
D Machine bureaucracy

The following two sentences contain gaps which specify a particular type of structure. Select
the type of structure that appropriately fills the respective gap.
(2 marks)
(i) ABC could formalize all roles within the organization, increasing bureaucracy to ensure that all
workers act in a standardized way. Some employees, who are members of a banking union have
complained that such a shift to a _______ would lead to significant dissatisfaction amongst ABC’s
workers.

(ii) ABC’s Board currently makes all strategic decisions for the organization, with very little control
being devolved down to more junior managers. They are concerned that this _______ will hinder the
company’s future ability to grow.
2. Background

XXX Co is a multinational corporation manufacturing and selling all kinds of foods and household
goods. It has divided its activities into five distinctive product groups: health and beauty, drinks, food,
appliances and textiles. Each product group has its own management structure and support
functions, including administration, finance, human resources and marketing.

YYY Co is a large consultancy, operating in many countries. Each of its consultants reports to a
general manager. Owing to the unpredictable and flexible nature of the demands placed upon them,
any of the consultants can be assigned to a team leader to enable their specialisms to be applied to
specific tasks and projects. The consultants can have multiple responsibilities, reporting to different
managers, at the same time.

ZZZ Co provides accountancy and tax advisory services. It operates from a small headquarters but
most of its advisers have no permanent office, because they frequently work at the premises of
clients, and at other times they work from home. When the advisers are at headquarters, a ‘hot desk’
facility is provided, where advisers can take free space anywhere in a large open plan room. Very
few face-to-face meetings are organized, as the company makes extensive use of audio and video
conferencing.

Task 1
For each company, indicate the applicable organizational structure.
(1.5 marks)
Divisional Virtual Matrix
XXX Co ☐ ☐ ☐
YYY Co ☐ ☐ ☐
ZZZ Co ☐ ☐ ☐

Task 2
In relation to Schein’s theory of organization culture, indicate which THREE of the following
are elements of observable (or explicit) culture (at the first level of the model).
(1.5 marks)
A. Values
B. Behavior
C. Beliefs
D. Artefacts
E. Attitudes
F. Assumptions

Task 3
In relation to Mintzberg’s organization theory, indicate which of the following is the term used
to describe those involved in standardizing processes and finding the best way of doing
jobs.
(1 mark)
A. Strategic Apex
B. Technostructure
C. Middle Line
D. Support Staff
E. Operating Core
3. Background

Porter’s value chain examines the various activities that make up an organization’s operations.

Task 1
Which activity from Porter’s value chain is being described below?
(2 marks)
Service Operation Procurement Infrastructure
The transformation of inputs into ☐
☐ ☐ ☐
outputs
Purchasing of materials as well as ☐
☐ ☐ ☐
other resources
How the firm is organized ☐ ☐ ☐ ☐
Any activities that occur after the point ☐
☐ ☐ ☐
of sale

Task 2
According to Porter’s five forces model, which TWO of the following would tend to indicate
there is a low threat of new entrants to the market?
(2 marks)
A. Low capital requirements
B. Patents exist on major product lines
C. Access to distribution channels is not restricted
D. Large numbers of suppliers of raw materials
E. Low switching costs for customers
F. Existing firms in the market are large
G. Rapidly expanding market
4. Background
There are basically three schools of leadership theory: traits theory, style theory, and contingency
theory.

Task 1
Which two of the following management styles show much interest in the staff according to
Blake and Mouton managerial grid?
(2 marks)
A. The country club style
B. The impoverished style
C. The team style
D. The middle of the road style

Task 2
For each style described, select the appropriate term that is being described.
(2 marks)
Tells Sells Consults Joins
The manager retains the decision-making
authority but seeks to elicit other opinions before ☐ ☐ ☐ ☐
reaching a decision.
The manager makes decisions, issues orders and
☐ ☐ ☐ ☐
expects obedience
The manager makes the decisions and tries to
persuade staff that it represents their best ☐ ☐ ☐ ☐
interests.
Here the leader joins with the staff and operates
from within the team, seeking to reach a ☐ ☐ ☐ ☐
consensus decision
5. Background

Jonah is the executive director responsible for branch operations in a large company in the banking
sector. The branch managers are all very experienced as he has decided to increase the limits on
loan applications they can agree without having to refer them to head office. However, he is not sure
that they will all welcome such authority, so he has instructed the lending department to monitor their
performance closely.

Kate has received an expenses claim from Judyta, but one item is not supported by a valid receipt,
Judyta explained that this was mislaid. Kate and Judyta do not get on well, but Kate is sure that
Jodyta is honest, so she allows the claim.

Marek’s sales team has under performed significantly for several months, and a decision has been
taken by his line manager that 30% of the team must be dismissed. Marek understands that he is
partially to blame for their under performance, so he did not give them as much support as they
needed. In response to the decision, he has offered to resign his position.

Leila has been warned by her manager that her performance has not been up to standard, and that
great improvement is necessary. Leila replied that she understood that this was the case, but
informed her manager that she had problems with some of her colleagues who were deliberately
leaving some of the most difficult tasks for her to do.

Task 1
For each individual indicate which organizational value is demonstrated.
(2 marks)
Accountability Trust Empowerment Openness
Jonah ☐ ☐ ☐ ☐
Kate ☐ ☐ ☐ ☐
Marek ☐ ☐ ☐ ☐
Leila ☐ ☐ ☐ ☐

Task 2
Indicate which branch of ethics is demonstrated by each of the following statements.
(2 marks)
Deontological Utilitarian Pluralist Egoist
The individual takes a decision that
reflects his or her own particular ethical
view, recognizing that others may ☐ ☐ ☐ ☐
disagree but convinced that it is the right
thing to do.
The individual takes a decision based ☐
on the view that it will benefit the
☐ ☐ ☐
greatest number of people, even though
the interests of minorities may be
compromised.
The individual takes a decision that will
not be universally popular, but is
☐ ☐ ☐
consistent with the fundamental ☐
principles governing the event.
The individual takes a decision that is a
compromise between the views of
dissenting groups, recognizing that ☐ ☐ ☐ ☐
none will be fully satisfied, but all will
accept it.
6. Background

Stakeholders are individuals or groups whose interests are directly affected by the activities of an
organization.

Kevin is the head of research and development department of ZBG, a private sector in mobile
phone industry. Recently, he has come up with the new design of next generation mobile phone of
ZBG. The new design needs a high-tech raw material, so he urgently wants to know if the existing
supplier can provide this.

Cathy, the leader of a health group, declares some raw materials used in the manufacturing of ZBG
mobile phone are harmful to the respiratory system of humans. She says she has got the evidences
and will publish them later.

Elton is the partner of an advertising agency, which helps to promote the products of ZBG. He just
works out an innovative advertising idea for ZBG’s product and will show it to the BOD of ZBG next
Monday.

May, the production manager of ZBG, is formulating the production budget for the next month. Once
finished, she will announce the budget to all the employees in her department.

Task 1
Select the type of stakeholder of ZBG carried out by each person.
(2 marks)
Internal Connected External
Kevin ☐ ☐ ☐
Cathy ☐ ☐ ☐
Elton ☐ ☐ ☐
May ☐ ☐ ☐

Task 2
In the situations described, each person will need to communicate with others to carry out their
objectives.
For each person below, select the type of communication they would need to use to achieve
their objective.
(2 marks)
Slides Telephone E-mail Report
Kevin ☐ ☐ ☐ ☐
Cathy ☐ ☐ ☐ ☐
Elton ☐ ☐ ☐ ☐
May ☐ ☐ ☐ ☐