Business Organisation and Structure (Chapter 1) : Exam Packfab/F1

Exam PackFAB/F1
BUSINESS ORGANISATION AND STRUCTURE

(Chapter 1)
1. Which two of the following principles of classical management theory are challenged by adopting a
matrix structure?
a) Subordination of individual interest
b) Unity of command
c) Unity of direction
d) Decentralization of decision making
2. ABC co is currently investigating the possibility of selling products on the internet, in addition to
selling via the existing retail outlets. With which aspect of the marketing mix is the development
concerned?
a) Product
b) Price
c) Place
d) Promotion
3. As part of an efficiency drive, Newshire College has decided to move from a functional structure to a
matrix structure. Newshire College believes that this will reduce the duplication of support and
technical staff each of the five academic departments currently employ. Concern has been raised by
the academic standards’ board that the loss specialized staff will have negative impact on open
operations at five departments &, in turn reduce quality of graduates that newshire college present to
employment market each year. Which two of following are disadvantages of matrix structure?
a) Dilution of functional authority
b) Dual command and conflict
c) Too much academic specialism
d) High administration costs
4. Which of the following P’s is an accepted element of the marketing mix?

a) Place
b) Policy
c) Process
d) Position
5. Which two of the following describes the most usual impact of the informal organisation on the
business and the people working in it? Related with chapter 2
a) Informal information(grapevine communication) can be inaccurate and negative, causing stress
b) Informal networks discourage horizontal communication
c) Informal notifications tend to be slower than formal channels
d) Informal leaders may undermine(lessen the effectiveness) managerial authority(means power)
6. What is meant by downsizing in the context of organizational structure?

a) A widening of the span of control within a business
b) A reduction in the number of employees as a result of business changes.
7. Which two of the following are recognized features of social relationships? Related with chapter 2
a) They reinforce management wishes
SKANS School of Accountancy | Page 257

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b) They emerge naturally.

c) They reflect patterns of power and influence
d) They work against formal structures
8. An organization is setting its annual budgetary plan and is coordinating budgets over several
departments. During the process departmental managers are asked to report their expenditures
against the budget set in the previous year and decided on their expenditure needs for the coming
period. At which level of the Anthony hierarchy are the above decisions being made?
a) Operational
b) Formal
c) Strategic
d) Tactical
9. “An organization is structured in such a way that individuals have dual reporting lines they report to a
manager for their product line and to a regional area manager.”
a) Product
b) Matrix
c) Geographical
d) Functional
10. Which of the following is an advantage of the business organization?

1 To enable functional specialization
2 To increase control by the owner
3 To allow knowledge sharing
4 To facilitate expansion
a) 1,3,4
b) 2,4
c) 1,2,3,4
d) 1,3
11. “Teri has the task of checking the accuracy of delivery notes relating to raw materials used in her
company’s manufacturing process. She generates goods received notes and answers queries from
colleagues in the quality standards and availability of raw material”. in which of the following
business functions in Teri working?
a) Marketing
b) Procurement/ purchases
c) Accounting
d) Production
12. Mintzberg’s organizational configurations model decomposes the organistaion in to five basic parts.”
Which part of the organization consist analysis that designs systems and processes?
a) Operating core
b) Techno structure
c) Middle line
d) Support staff
13. “Informal structures are less efficient at meeting company objectives than formal structures.” Which
of the following describe the statement? Related with chapter 2
a) True all of the time

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b) True some of the time

c) False all of the time.
14. Are the following statements about tall organization structure true or false?
True False
● Each manger is responsible for relatively large departments with many employees.
● Managers provide considerable direction and have considerable control over others.
15. Are the following organizational structures as suggested by Mintzberg?

Yes No
● Virtual organization
● Machine bureaucracy
16. Which of the following describe the scalar chain of command?

a) Decisions are pushed down to the lowest possible level in an organistaion
b) The number of levels in an organistaion structure
c) Non routine decisions are taken at top level of management.
17. What are the two contributions of strategic apex?

a) Support financially
b) Control the management
c) Appraisal(evaluation)
18. Which of the following is not a stage in the strategic planning process?
a) Analysis
b) Implementation
c) Designs
d) Choice
There are three stages in the strategic planning
1. Strategic analysis. Strategic analysis is a process that involves researching an organization's
business environment within which it operates. Strategic analysis is essential to formulate
strategic planning for decision making and smooth working of that organization
2. Strategic choice. Strategic choice refers to the decision which determines the future strategy of a
firm. It addresses the question “Where shall we go”
3. Strategic implementation. Strategic implementation is a process that puts plans and strategies
into action to reach desired goals
19. Which of the following is not part of the “4 P’s” of the marketing mix?
a) Product
b) People
c) Place
d) Price

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20. An organization expects to undertake numerous different projects. Project groups will be set up,
drawn from the various departments, are then disbanded once the project is complete. What type of
organizational structures is this?
a) Departmental
b) Matrix
c) Functional
21. Which of the following is a feature of an informal organization? Related with chapter 2
a) Flexibility
b) Rigidity
22. An organization is spilt in to five departments --- production, finance, marketing, research and stores.
Which of the following describes this organizational structure?
a) Matrix
b) Entrepreneurial
c) Geographical
d) Functional
23. Which of the following organization could be said to be owned and democratically controlled by its
members?
a) Schools
b) Counsel
c) Cooperatives
d) Small private limited companies
24. Which of the following structure is best placed to address the need for coordination in very complex
situation?
a) Functional
b) Divisional
c) Matrix
d) Geographical
25. The scalar chain shows the number of people for whom a manager is directly responsible
Is this statement true or false?
a) True
b) False
26. Which of the following departments can provide detailed information about the level of revenues,
expenses and profits if the organization?
a) Marketing
b) Production
c) Finance
d) Human resource
27. Decentralization helps to empower the staff to address any operational problems and respond to
changes in external environment.
a) True
b) False
28. Which of the following is a potential advantage of centralization?

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a) Faster moving and more flexible organization

b) More accountability at lower levels
c) Teamwork and cooperation amongst employees
d) Greater efficiency, consistency across the organization
29. The practice of separation between ownership and control exists mainly for which type of
organizations?
a) Large publically limited companies
b) Small owner operated business
c) Partnership firms
d) NGO
30. Which of the following statement is correct?

a) The direct service provision department provides directly in a client’s premises.
b) The marketing department ascertains the current and future needs of customers
c) The finance departments serve purely a support functions
d) The administration department is responsible for developing new procedures and improving the
existing ones.
CULTURE & CONFLICT MANAGEMNET
(Chapter 2)
1. Hofstede examined differences between national cultures. Which of following is part of his analysis?
1. Individualism
2. Masculinity
3. Opportunity
a) 1,2, and 3
b) 2 and 3 only
c) 1 and 2 only
d) 1 and 3 only
2. Which two of the following are connected stakeholders?

a) Sales manager
b) Executive director
c) Supplier
d) Non-executive director
3. Which of the following statements reflects the stakeholder approach to decision making?
a) Various people have a legitimate interest in the business
b) All stakeholders have a financial interest in the business
c) Competitors are classed as stakeholders
d) Owners are the most important stakeholders.
4. Cyert and March described a coalition between stakeholders. Which two of the following are from this
coalition?
a) Lender
b) Shareholders
c) Supplier
d) Mangers

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5. Which author considered organization culture in the context of the following elements?
1. Artefacts
2. Espoused values
3. Basic assumptions
a. Hofstede
b. Ouchi
c. Schien
d. Handy
6. What is the prime interest of the shareholders of the organization?

a) Increase in sale values
b) Return on investment
c) Share price increase
d) Profit sharing
7. MNO CO. is an ACCA tuition provider. It has decide to use a reward system to help determine lectures
pay, based on lectures performance. Which two of following are fair criteria to assess individual
lectures?
a) Result of student satisfaction survey
b) Examination result
c) Number of students in the class
d) Company profits
8. HOFSTEDE devised a framework that describes dimensions of differences/values perspectives

between national cultures. Which cultural dimension is described as the degree of inequality among
people which the population of a country considered normal
a) Individualism versus collectivism
b) Uncertainty avoidance
c) Power distance
d) Masculinity versus femininity
9. Which writer on organization structures is associated which each of the following terms?
Hofstede Scholes
● Uncertainty avoidance
● Individualism/collectivism
10. An organisations is controlled by a key central figure, owner or founder. It is a small organization
where people all know each other and get on well. Which of the following is the culture of the above
organization as recognized by Handy?
a) Dominance
b) Power culture
c) Authority
11. To which the following cultural types, did Handy give the name of Greek god Athena?
a) Role culture
b) Task culture
c) Power culture
d) Person culture

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12. Which of the following according with Schein’s view of organizational culture?
a) Myths and legends weaken a culture
b) A strong culture makes the environment irrelevant
c) The culture should fit the environment
13. Which culture got matrix structure?

a) Role
b) Task
c) Power
d) Person
14. One model of organizational culture defines four basic types, namely power, role, and task and person
cultures. Which writer proposed this model?
a) Hofstede
b) Schein
c) Handy
d) Tuckman
15. Interest of customer and shareholders can often appear to conflict. Is this statement true or false?
a) True
b) False
16. Employees and finance providers belong to which two of the following stakeholder groups?
a) Internal, connected
b) External, internal
c) Connected, outsiders
d) Internal, suppliers
17. Which stakeholder have a particularly strong interest in an organization’s survival and growth?
a) Shareholders
b) Bankers
c) Employees and management
d) Suppliers
18. An organization which has high uncertainty avoidance is likely to adopt which of the following
cultures?
a) Power
b) Role
c) Task
d) Person
19. State whether the following statements about stakeholders mapping are true or false?
1 Stakeholders with a high level of power but low interest are most important.
2 Stakeholders with a low interest and power are of medium importance.
3 The least important stakeholder groups are those high interests and a high level of power.

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a) They are all true

b) They are all false
c) 1 and 2 are true
d) 1 and 3 are false
20. According to Charles handy four cultural types which of the following organizations would adopt a
role culture?
a) A large traditional corporate
b) An owner operated enterprise
c) An NGO
d) A partnership firm
21. The government is an external stakeholder of an organization. In which of the following ways does it
affect an organization?
1. Through the regulatory framework set by Government.
2. By monitoring the day to day activities of the organization
3. By selling the economic environment within which an organization is expected to operate.
4. By trying to influence the business of an organization.
a) All of the above

b) 1,2, and 3
c) 2 and 4
d) 1 and 3
22. What is meant by the grapevine?

a) The way unofficial information is communicated to employees
b) A formal communication of information
c) An informal communication network
d) Social relationship and behavioral norms
23. Which of the following is the potential advantage of an informal organization for a business?
a) Team work and cooperation
b) The grapevine effect
c) Escape from formal procedures and systems
d) Personal and social relationship among employees.
LEADERSHIP & MANAGEMENT
(Chapter 3)
1. A manager is currently addressed as 9.1 on Blake and Mouton managerial grid. Which two of the
following suggestions would improve the manager’s style and move closer to 9.9?
a) Attending a training course on motivation
b) Attending a training course on administration
c) Increase staff involvement in decision making
d) Reducing staff involvement in decision making

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2. Blake and Mouton identified two variable which determine the extent to which management combine
their concern for the task and their concern for the people. What name did Blake and Mouton give to
the leadership style with little focus on task but a high concern for people?
a) Produce
b) Team
c) Country club
d) Impoverished
3. Which of the following describes the ‘country club’ style of management identified by Blake and
Mouton managerial grid?
a) Little concern for people and little concern for the task
b) A little degree of concern for production for people
c) Encourages and supports people and overlooks inadequacies
d) Follows the traditions of scientific management.
4. Which two of the following are functions of the manager according to Drucker?
a) Profit seeking
b) Ensuring customer satisfaction
c) Motivating and communicating
d) Setting objectives
5. Which of the following writer on management is associated with human relation theory?
a) Drucker
b) Mintzberg
c) Fayol
d) Mayo
6. Which of the following describes the leadership quality of magnanimity, according to Bennis?
a) All people should be recognized as equal in value.
b) Leaders should listen to people without trying to impose their own will.
c) People should be credited for their success and personal responsibility should be taken for
failures.
d) Leaders should stick to their inner values even if another path is easier.
7. A company is transparent in its communications with the outside world. Which of the following
established categories of ethical behavior does this represent?
a) Accountability
b) Empowerment
c) Openness
d) Trust
8. Are the following key tasks of operational supervisions? Yes No

● Motivating employees
● Formulating strategy
9. Which of the following is the best definition of authority?

a) Legitimate use of power.
b) Accountability for action.
c) Responsibility to others.

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d) Position of influence. (When in a position and having the power of influence, you have a choice to
either be a positive or negative influence.)
10. A manager qualifying with the words ‘is that instruction clearly understood’? Manager would be
displaying which of the ASHRIDGES leadership styles?
a) Tells
b) Joins
c) Sells
d) Consults
11. What is managerial approach of Elton Mayo?

a) Managers persuade their employees to achieve organizational goals.
b) Psychological fulfillment doesn’t affect the productivity of employees.
c) Management needs to make a foundation of a structure of tasks and duties that need to be
performed.
d) The importance of groups in affecting the behavior of individuals at work.
12. What leadership style is mist appropriate at the forming stage of Tuckman’s model of team
development? Related to individual groups and team chapter
a) Coaching
b) Participating
c) Delegating
d) Direction
All team members are new and don’t know the other team members. They don’t have a proper
understanding of their roles and responsibilities and work independently. Here, the project manager
will work with an autocratic or directing style to avoid disorganization
13. Which of the following examines the working of an informal group?

a) Taylor’s scientific management theory.
b) X and Y theory
c) The Hawthorne experiment
d) Mayo’s hierarchy of needs

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14. When organization requires a major change in structure and or culture, how would the change be
described?
a) Transactional
b) Functional
c) Contraventional
d) Transformational
15. A manager makes all the decisions, but believes that employees should be motivated to accept them
in order to carry them out effectively. Which leadership approach is this an example of?
a) Sells
b) Joins
c) Consults
d) Tells
16. Which approach to leadership suggests that group performance is a result of the interaction of
leadership style and contextual favorableness?
a) Contingency
b) Trait
c) Functional
17. According to Kotter, leadership is primarily about managing which of the following?
a) Complexity
b) Challenge
c) Choice
d) Change

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18. A manger qualifying a statement with the words or else (used as a warning or threat)., would be
displaying which of the Ashridge leadership style?
a) Tells
b) Sells
c) Joins
d) Consults
19. One role of the manager is to represent the organization in all matters of formality. How did
Mintzberg defines this role?
a) Negotiator
b) Spokesperson
c) Figurehead
d) Entrepreneur
20. According to Kotter, management is primarily about managing which of the following?
a) Complexity
b) Challenge
c) Choice
d) change
INDIVIDUALS, GROUPS & TEAMS
(Chapter 4)
1. Javeria has been recently been appointed as team leader at DEF Engineering Co. He has changed the
layout of his section so that rather than facing forward, his team face each other around a round table.
Are the following statements true or false?
True False
● The new arrangement will help to satisfy the group‘s social needs.
● The new arrangement will increase output.
2. In order for group to operate effectively they must have certain basic parameter. Which of the
following are considered to be MAJOR parameters?
a) Group size
b) Group composition
c) Group norms
d) Member roles
3. Which two of the following are consequences of team ineffectiveness?

a) High labor turnover
b) High absenteeism
c) Low accident rate
d) High quality of output.
4. The sales department comprises five individuals who each have their own individual targets to meet.
The research department comprises four individuals with differing skills, who work together on
projects. The legal department comprises three experts, who take on various assignments on a
rotating basis. The system development department comprises six people drawn from various other
departments, given the task of developing and improving integrated system by consensus. Which two
departments are operating as teams as opposed to group?

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a) Research
b) Legal
c) Sales
d) System development
5. Which two of the following types of work are groups particularly good at?
a) Work organization
b) Ideas generation
c) Experimental
d) Analytical (the ability to make sense of data. ... Here's a simple definition for analytical skills: they
are the ability to work with data – that is, to see patterns, trends and things of note and to draw
meaningful conclusions from them.)
6. Are the following statements concerning Tuckman’s model of team development true or false?
True False
● At the forming stage, team members are likely to test the
tolerance of the system and the leader.
● Cliques, factions and power struggles are likely at the storming stage.
“Meaning of clique is a small knit group of people who do not readily allow others to join them”
Meaning of factions is a small organized group with in a larger one
7. Which of the following is recognized as a feature of group norms?

a) They formally define job roles
b) They always reinforce formal structures.
c) They define acceptable behaviors.
d) They are always explicitly (stated clearly and in detail) defined.
8. A member of the team is creative, imaginative and takes a strategic approach. She solves difficult
problems, but sometimes ignores details and is often too preoccupied to communicate effectively.
Which of BELBIN’S team roles is being described above?
a) Shaper
b) Specialist
c) Coordinator
d) Plant
9. Which two of the following are examples of ineffective behavior in the workplace?
a) Skepticism (negative thinking) that challenges conventional thinking (usual way of thinking)
b) Being free and open when communicating
c) Passive acceptance of decisions
d) Dominating discussion of meetings.
10. Which of the following is a feature of “group think”? (meaning of group think is a phenomenon that
occurs when a group of individuals reaches a consensus without critical reasoning or evaluation)
a) Cumbersome (meaning is slow moving) decision making
b) Mutual support and solidarity
11. At which stage of TUCKMAN’S model of team development will the team require delegating tasks and
projects from the leader?

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a) Forming
b) Norming
c) Storming
d) Performing
12. Which of the following is an advantage of group cohesion?

a) Increase likelihood of group think.
b) Reduces group influence
c) Increase member satisfaction
d) Reduces likelihood of group think
13.1 Calm (not showing or feeling nervousness, anger, or other strong emotions.)
a) Shaper
b) Monitor
c) Plant
d) Team worker
13. Which of the following is a characteristic of a team as opposed to a group?

a) Members have a common interest. (in a topic we studied that team share a common goal and
common interest is related with individuals)
b) Members possess complementary skills.
c) Members are individually accountable.
d) Members respond to demands of management.
14. Which of following do managers use to best build a sense of commitment to team’s shared objectives?
a) Expressing solidarity with other management.
b) Controlling competition within the team.
c) Providing feedback on progress of the team.
15. Which of the following reflects the informal organization?

a) Groups
b) Reports
c) Procedures
d) Teams
16. According to Belbin team role theory, which of the following describes the task role of the
coordinator?
a) Clarifies and synthesizes various ideas in an effort to tie together the work of the members.
b) Proposes goals, suggest ways of approaching tasks and recommends procedures for approaching a
problem or task.
c) Tries to assert control and manipulates the group through giving orders or interrupting others.
d) Summaries, points to departure from goals and raises questions about direction.
MOTIVATION
(Chapter 5)
1. Which of the following characteristics describes McGregor’s theory X management?
a) Enabling

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b) Liberating
c) Authoritarian
d) Developmental
2. A large employer offers promotion within its sales departments if sales targets are met. This is
integrated as a means of motivation. Sarah sees this as highly attractive (valence =0.9) but her
portfolio and past performance means that the sales target will be almost impossible (expectancy =
0.1). What is the motivational force using the vroom formula?
a) 1.0
b) 0.09
c) 1
d) 9
3. Which two of the following are good motivators according to Herzberg?

a) Advancement
b) Recognition by others
c) Extrinsic reward
d) Working conditions.
4. Because of their dislike for work most people prefer to be directed and tend to avoid talking on
responsibility and desire security above anything else. Which theories of McGregor are above
assumptions based on?
a) Theory x
b) Theory y
c) Theory z
5. In the context of motivational theories, vroom’s expectancy equation may be stated as which of the
following?
a) V=E*F
b) R=F*V
c) F=V*E
6. Which of the following is the highest level of need in Maslow’s hierarchy of needs?
a) Self actualization
b) Esteem
c) Belonging
d) Safety
7. Which two of the following are extrinsic rewards?

a) Promotion
b) Self esteem
c) Competence/ skills
d) Praise (means admiration or approval)
8. John is journalist. He loves the experiment of getting an exclusive story, seeing his name in print, and
the status that come from being a senior journalist. He is paid a good salary and has job security. He
likes the varied issues he has to cover each day. Which of the following are John’s intrinsic rewards?
1. Getting exclusives (relates with the feeling of a journalist)
2. Variety of work (challenging work)

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3. Status of position
4. Good salary
a) 1,3 and 4
b) 1,2 and 3
c) 2,3, and 4
d) 1 and 2 only
9. According to Herzberg, which two the factors are hygiene factors?

a) Status
b) Job security
c) Job condition
d) Promotional ability
10. Consider the following two statements.

1. Extrinsic rewards are the rewards that arise from the performance of a job itself. They would
include a sense of job satisfaction or a feeling of achievement from a job well done. false
2. Job enlargement refers to a deliberate and planned process of improving the responsibility,
challenge and creativity of a particular job. False Which of these statements is or are correct?
a) 1 only
b) 2 only
c) Both
d) Neither
11. When performance related pay be paid?

a) On meeting agreed targets
b) On appointment to position
c) On completion of probationary period
d) On promotion to higher grade
12. Which two of the following would Herzberg identifying as ‘motivational factors’?
a) Working conditions (change this option in a book)
b) Pay
c) Responsibility
d) Achievement
13. Which two of the following are extrinsic rewards?

a) Satisfaction
b) Promotion
c) Bonuses
14. Who proposed a theory of motivation based on meeting basic human needs?
a) Maslow
b) McGregor
c) Mintzberg

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PERSONAL EFFECTIVENESS & COMMUNICATION

(Chapter 6)
1. Which type of ineffective communication is described by the following?

Misunderstanding Person
● Use of specialist jargon which the recipient is unfamiliar with.
● In sufficient information shared, due to distrust between colleagues.
2. Which two of the following are principles of effective time management?

a) Organization
b) Reliability
c) Coordination
d) Focus
3. An instruction given to simultaneously to several subordinates reflects which pattern of

communication?
a) Circle
b) Y
c) Chain
d) Wheel
4. Verbal communication is used frequently in organisations. Are the following statements true or false
in relation to verbal communication?
True False
● Verbal communication hinders clarification.
● Verbal communication is time consuming unless participants are disciplined.
5. Which two of the following factors are considered to be disadvantages of communicating using a
formal report?
a) Can only be distributed internally.
b) One way form of information.
c) May required considerable time to read
d) Timing may be inconvenient.
One-way communication flows from a sender to a receiver, but nothing goes back in return. The sender
can use one-way communication to inform, entertain, persuade or command the audience. Some
examples of one-way communication include television, radio, writings, speeches and performances.
6. Which two of the following are benefits of counseling?

a) It allows management to solve employee problems
b) It removes the need for mentoring and coaching
c) It may help solve issues that can hinder productivity
d) It may help reduce time lost due to personal problems

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7. Through which form of communication do instructions flow down and reports flow back up?
a) Unity of direction (the entire organization should be moving towards a common objective in a
common direction)
b) Unity of command (each employee is responsible to only one manager)
c) Delegation (Delegation is the assignment of any authority to another person (normally from a
manager to a subordinate) to carry out specific activities)
d) Scalar chain (formal line of authority which moves from highest to lowest rank in a straight line/
hierarchy)
8. Would the following results from a lack of communication?

YES NO
● Poor awareness of corporate objectives at lower levels of the organization.
● A reduction in coordination and control.
9. Which two of the following are included as part of the 5cs of effective communication? (clarity,
correctness, concreteness, conciseness, consideration)
a) Clear
b) Concise
c) Coordination
10. The grapevine is an internal communication channel it is deemed to have features which are not
associated with the formal channel. Which of the following is the feature of the grapevine compared
with formal communication channels?
a) More positive
b) More speedy
c) More accurate
11. Which of the following shows the correct sequence within the communication cycle?
a) Sender, medium, decoded message, encoded message, receiver.
b) Sender, decoded message, encoded message, medium, receiver.
c) Sender, encoded message, medium, decoded message, receiver
d) Sender, medium, encoded message, decoded message, receiver.
12. Which two of the following activities should be carried out by a mentor?
1. Helping to draw out personal development plan
2. Guiding a learner through a work experience
a) 1 only
b) 2 only
c) 1 and 2
RECRUITMENT & SELECTION

(Chapter 7)
1. Which two of the following statements are true?

a) Job analysis aids good management
b) All goals must be expressed as quantities

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c) A manager should priorities tasks
2. What is the first phase involved in human resource planning?

a) Auditing the current personnel
b) Forecasting future demand for labor
c) Planning recruitment policy
d) Controlling the effective use of human resources

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3. MTQ:
“Selection is a simple on-way process – all that is required is to ensure that the organization chooses
the right candidate.”
TASK 1:
Identify which TWO of the following are stages in the selection process, by selecting TWO of the
letters from (a, b, c and d)
a) Calculating retention rates
b) Job analysis
c) Screening applications
d) Taking up references
TASK 2:
Select which TWO of the following should be assessed when choosing a candidate from applicants for
an advertised vacancy.
a) Development of potential and future promotion opportunities
b) Each candidate’s formal qualifications against the person specification
c) Experience of each applicant against that of other applicant.
TASK 3:
Which ONE of the following is a measure of the efficiency of the recru8iment and selection process?
a) Absenteeism
b) Offer-acceptance rate (Taken as a percentage, this rate represents the percent chance that someone
will accept a job offer from your company. For example, if you extend 10 offers within a given year,
and 7 candidates accept those offers, your offer acceptance rate would equal 70%. Typically, the
higher this number is, the better.)
c) Stability Index (An employee stability index measures the degree of change (or stability) in your
workforce. It can therefore increase your organization's ability to make informed decisions around
workforce planning and development.)
d) Staff turnover
“What is efficient recruitment and selection process

An efficient process means that you have a consistent way of making hiring decisions.
Utilize a method such as a post-interview consensus meeting or a scoring system,
wherein each interviewer weighs in their opinion and the interview panel or team
comes to a decision as quickly as possible.”
TASK 4:
Two well-known systems of identifying, the personal characteristics of the ideal candidate are
Rodger’s Seven Point Plan and Fraser’s Five-Fold Grading System. Which of the following is related
with foster five-point plan?
a) Circumstances
b) Intelligence
c) Motivation
d) Physical appearance
DIVERSITY & EQUAL OPPURTUNITY
Exam PackFAB/F1
(Chapter 8)
1. Which two of the following statements about the benefits of equal opportunities policy are correct?
a) The organization can benefit from wide source of talent
b) The workforce is increased and productivity is improved
c) It motivates the workforce to seek development and promotion
d) It reduces the need to interview candidates for employment
2. Which of the following is no a benefit of having a diverse workforce?

a) Increased innovation and creativity
b) Boarder range of skills
c) Ability of hire best talent from labor pool
d) The company can pay lower wages
3. MTQ:
Diversity in the workplace can still be a sensitive issue, particularly if some employees believe that
there is great diversity and equal opportunities but other employees feel that there is still
discrimination at work.
Task 1:
Select form the list which follows the feature that distinguishes:
Diversity Equal opportunities
● Government initiated
● Inclusive
● Legally driven
● Opportunity focused
● Proactive
● Problem focused
Task 2:
Discrimination in the workplace is regulated in many countries to ensure that people have equal
access to jobs and equal benefits once hired. In the UK, for example, discrimination against an
employee is unfair on arbitrary grounds.
Which TWO of the following situations give rise to unfair discrimination?

a) A recently-married female worker is not short-listed for a promotion on the grounds that she
might be thinking about starting a family
b) An older employee is asked to take early retirement because new management wants the company
to have a younger image.
c) Company cars and an executive canteen are benefits for directors and managers but not for other
employees.
d) Mary has been awarded £1,000 for serving with the company for 10 years and James has been
awarded for £2,000 for serving 15 years with the company.
TRAINING & DEVELOPMENT
(Chapter 9)

Exam PackFAB/F1
1. “Peter has recently been posted by wind energy company be Zephxz to the country of Expatria There
he attended, during working hours, a course at his workplace on the history and culture of Expatria.
He also attends an evening course at a local university on the assessment of wind energy sites?”
Education Training
History and culture of Expatria
Assessment of wind-energy sites
2. “Steve has always felt that he learns more effectively by doing a task rather than watching someone
else do it and by feeling rather than thinking about the experience Ronnine on the other hand, prefers
to watch the task being performed and then think about the experience”.
Which TWO of the following learning styles are evident in Steve and Ronnie, according to Kolb’s
theory?
a) Accommodating (have an experience) (feel and do) Steve
b) Converging (plan the next step) (find solutions to practical problems)
c) Assimilating (draw conclusions) (watch and think) Ronnie
d) Diverging (learn from the experience) (feel and watch)
3. Which of the following describes the approach of the ‘Theorist’ in Honey and Mumford’s learning
styles?
a) Deliberate testing(activist)
b) Actual experience(pragmatist)
c) Observation and review(reflector)
d) Forming rational schemes
4. A learner ponders experiences, observation them for many different perspectives, and thinking about
what to do before they do anything:
Which of Honey and Mumford’s learning styles does this learner embody?
a) Activist
b) Theorist
c) Pragmatist
d) Reflector
5. Which of the following first stage of describes the Kolb’s learning cycle, where the person is learning
something new?
a) Concepts and generalizations 3
b) Concrete experiences 1
c) Observation and reflection 2
d) Concepts in new situations 4
6. Which of the following characterizes the preferred learning styles of the “reflector” as suggested by
Honey and Mumford?
a) To observe and consider closely
b) To tackle practical issues meticulously (pragmatist)
c) To act quickly and incisively (activist)
d) To read and remember fully (theorist)
7. Are the following statement regarding Honey and Mumford’s learning styles true or false?
True False
● Activist prefer a theoretical approach to training rather

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than a hand on approach

● Reflectors needs to work at their own pace, thinking out
their conclusions carefully
8. “An employee has been identified as very good at trying out ideas to see if they work in practice, and
aiming to find improved methods”.
Which of Honey and Mumford’s learning styles is represented by this employee?

a) Theorist
b) Reflector
c) Pragmatist
9. Which of the following is a characteristic of the second stage of Kolb’s learning cycle, observation and
reflection?
a) The person learns something new 1
b) The person assesses how and when to apply what has been learned 4
c) A new experience is accepted or rejected 3
d) An experience is reviewed 2
10. Which of the following is NOT one of Honey and Mumford’s learning style?
a) Activism
b) Pragmatism
c) Theorism
d) Imaginisim
11. What is the next stage in the employment process after an employee has been successfully recruited?
a) Orientation
b) Induction
c) Counseling
d) Familiarization
12. Which of the following is the primary purpose of an employee development programme?
a) The organization is capable of meeting its human resource needs
b) All staff is professionally qualified
c) All staff is always trained to the maximum level of their ability
d) All managers have the correct skills to enable them to complete their immediate tasks.
PERFORMANCE APPRAISAL
(Chapter 10)
1. “A manager seeks the views of an appraiser’s colleagues, associates, clients, customers and
subordinates before making an assessment of his performance and effectiveness in the previous
quarter”
Which type of appraisal is undertaken above?
a) Upward appraisal
b) Multi-person comparison
c) Peer review
d) 360 degree feedback

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2. What is the correct order for the following elements of the appraisal process?
1 Self-review
2 Completion of documentation
3 Agreement of objectives
a) 3,2,1
b) 2,3,1
c) 1,2,3
d) 1,3,2
3. A problem with appraiser is that one serious fault can sometimes lead an appraiser to reduce grading
in other areas.
What term is used to describe this situation?

a) Horns effect (the horns effect is the tendency for a single negative attribute to cause raters to
mark everything on the low end of the scale. One bad attribute seems to spoil the bunch.) same as
pitch fork effect
b) Central tendency
c) Halo effect
d) Recent past inertia
4. Stainslay carefully reviewed sales data for the year to evaluate the performance of the sales staff.
Using objective criteria, he decided who should be recommended for promotion and what feedback
should be given to each employee. He then called in the staff for their appraisals to inform them of his
decisions.What is the MAIN barrier to effective appraisal in the above scenario?
a) Appraisal as confrontation (means appraiser is biased and making arguments)

b) Appraisal as judgment (manager act as a judge, jury therefore it seems to become a one sided
process
c) Appraisal as an annual event
d) Appraisal as bureaucracy (means arrogant but legally correct)
5. What is the term used to describe an incentive scheme based on output, calculated as a fixed price per
item produced within a standard unit of time?
a) Merit rating
b) Promotion
c) Profit sharing
d) Payment by result
6. “Cliff is Claire’s supervisor and is about to conduct her appraisal interview. He is hoping that the
interview will motivate Claire to improve her performance and also identify areas where she needs
further professional development. Which of the following is another purpose of the appraisal?
a) Teaching Clair how to perform an unfamiliar task

b) Communicating the company’s mission to Claire
c) Following to Claire’s recent staff needs and aspirations
d) Familiarizing Claire with the safety rules of the organization
7. Which of the following would be involved as a part of an effective appraisal system?

Exam PackFAB/F1
a) A redesign of a person’s post and pay structure

b) An effective presentation of organizational objectives
c) Understanding of staff needs and aspirations(a strong desire, or aim; ambition)
d) An informal discussion about problems at work
8. What are the benefits of the appraisal process for the employers?
1 Identifying employee’s strengths
2 Identifying employee’s weakness
3 Improving communication
a) 1,2 and 3
b) 1 and 2
c) 2 and 3
d) 1 and 3
9. Which of the following describes a rating scale used for performance assessment?
a) Employees being judged from poor to excellent
b) Employees being judged on the basis of reports delivered by manager
c) Employees being assessed on the basis of report delivered by colleagues
d) Employees being ranked on the basis of their overall achievements.
INFORMATION SYSTEMS
(Chapter 11)
1. “From home working to possible, it is necessary to be able to assess files both at home and at work,
and to communicate quickly with colleagues.”
Which TWO of the following information technology features would enable this?
a) Integrated database
b) Email messaging
c) Secure broadband internet access
d) Firewalls (firewall is a security device — computer hardware or software — that can help protect
your network by filtering traffic and blocking outsiders from gaining unauthorized access to the
private data on your computer. ... Firewalls can provide different levels of protection.)
2. Which TWO of the following are attributes of good quality information?

a) Predictable
b) Reliable
c) Detailed
d) Timely
3. “For home working to be possible, it is necessary to be able to access files both at home and at work,
and to communicate quickly colleagues.”
Which TWO of the following information technology features would unable this?
a) Integrated database
b) Email messaging
c) Secure broadband internet access
d) Firewalls

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4. Which of the following statements are true for an internal management information system?
1 It focuses on recording transactions
2 It supports decisions operational level
3 It reports on the organization’s current performance
a) 1 and 2
b) 2 and 3
c) 1 and 3
5. What is the purpose of an intranet?

a) To enable staff to communicate with customers
b) To communicate information efficiently to employees
c) To communicate information efficiently to customers
d) To enable to communicate with each other
6. What does the term EIS and stand for

a) Executive Intelligence System
b) Electronic Information System
c) Executive Information System
d) Exceptional Information Software
7. What is good information?

a) Relevant
b) Reliable
c) Timely
d) Complete
e) All of above
8. Which TWO of the following are advantages of an extranet?

a) Quicker transactions with suppliers
b) Ability to easily gather information on your competitors
c) Better communication links with customers
ETHICAL CONSIDERATIONS
(Chapter 12)
1. Which of the following best defines a corporate code of ethics?
a) Policy statements of a company to define moral standards for its employees
b) Behavioral principles laid down by a professional body
c) Detailed procedures laid down by a company for its staff
d) Moral standards that apply to all companies
2. Why should ACCA members following the Code of Ethics and Conduct?
1 Failure to do so could lead to disciplinary action
2 Failure to do so could lead to prosecution (prosecution is a criminal court proceeding against
someone)
3 Failure to do so could damage the reputation of the accounting profession
4 Failure to do so could lead to poor quality work

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a) 1,3 and 4 only

b) 2,3 and 4 only
c) 1 and 2 only
d) 1,2,3 and 4
3. Which of the following are ways in which an organization could recognize ethical issues?
1 Appoint ethical champions (someone who is honest and follows good moral standards)
2 Embrace ethics in its value statements
3 Include ethical dimensions in human resource management
4 Include ethical in its mission statement
a) 1,2 and 4 only

b) 1 and 3 only
c) 1,2,3 and 4
d) 2 and 4 only
4. Which of the following directly concerned with the concept of ethics?

1 The study or morality and philosophy
2 The study of choice and action
3 The study of the environment and sustainability
a) 1 and 2 only
b) 2 and 3 only
c) 1,2 and 3
d) 1 and 3 only
5. Which of the following are typically included in a corporate code of ethics?

a) Statement of ethical principles
b) Lists of acceptable and unacceptable conduct
c) Terms of employment
d) Corporate value statements
6. Which of the purpose of an organizational code of ethics?

a) To summarize the legislation which applies to an organization’s business
b) To specify the rules of etiquette in dealing with customers and suppliers
c) To identify charitable activities and causes supported by the organization
d) To guide moral behavior in situation employees are likely to encounter
7. Which of the following is NOT one of the fundamental principles of the IFAC code of ethics?
a) Integrity
b) Confidentiality
c) Openness
d) Objectivity
8. Are the following statements true or false?

True False
● Professional always gets paid high salaries

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● Professional always operate within ethical rule
9. Which of the following bodies is responsible for the issue of international guidance for the
accountancy profession?
a) Standards Advisory Council (SAC)
b) International Accounting Standards Committee Foundation (IASCF)
c) International Federation of Accountants (IFAC)
d) International Accounting standards Board (IASB)
SAC is A body of experts who advise the International Accounting Standards Board (IASB) on priorities in
setting accounting standards.
IASCF is a The International Accounting Standards Committee (IASC) Foundation is the private sector
independent body responsible for the development and promulgation of a single set of high quality
international accounting standards
10. Which of the following accountancy activities may involve ethical decisions?
1 Preparing balance sheet
2 Auditing a small business
3 Submitting a client’s tax return
a) 1,2 and 3
b) 1 and 3
c) 1 only
d) 3 only
11. A Co. and B Co. are competitors in the oil industry who, between them, have a 90% market share. The
chief executives of the two companies meet at a conference and have a private meeting at which they
make several agreements.
Which of the following agreement represents an unethical agreement?

a) An agreement to set prices at a particular level
b) An agreement to commence research into environmental issues
c) An agreement to transport oil across a shared pipeline
d) An agreement to develop join technology for future use
12. Which terms describes the study of moral principles used to determine right from wrong in dealings
of organization with others
a) Corporate Governance
b) Transactional Analysis
c) Business Altruism
d) Business Ethics
CORPORATE GOVERNANCE & SOCIAL RESPONSIBILITY
(Chapter 13)
1. In relation non-executive directors, which TWO of the following are recommendations of best practice
in effective corporate governance?
a) Their term of office should be open ended, or reappointment should be automatic
b) They should contribute to strategy and take part in board decisions
c) They should be rewarded using share option schemes

Exam PackFAB/F1
d) They should not take part in day to day running of the company
2. Which of the following are examples of the social responsibilities of a business?

1 Concern of the natural environment
2 Policies of diversity
3 Compliance with United Nations resolutions
4 Support for charitable causes
a) 1 and 3 only
b) 1,2,3 and 4
c) 2 only
d) 1 and 4 only
3. Which of the following reflect the corporate governance responsibilities of a non-executive director?
1 To protect executive directors
2 To scrutinize other directors
3 To provide an independent perspective
a) 2 and 3only
b) 3 only
c) 1 and 2 only
d) 1,2, and 3
4. In relation to non-executive directors, which TWO of the following are recommendations of best
practice in effective corporate governance?
a) Their term of office should be open ended or reappointment should be automatic
b) They should contribute to strategy and take part in board decisions
c) They should be rewarded using share option schemes
d) They should not take part in day to day running of the company
5. Are the following statements true or false in relation to the directors of an organization?
True False
● They are accountable to shareholders
● They must be full time employees within the organization
6. “JKL Co. is a restaurant chain.”

Are the following statements about JKL Co. true or false?
True False
Buying locally grown organic products will reduce JKL’s impact on the environment
Limiting JKL Co’s damage to the environment is likely to improve its efficiency
7. “A Co. and B Co. are competitors in the oil industry who, between them, have a 90% market share The
Chief Executive of the two companies meet at a conference and have a private meeting at which they
make several agreements.” Which of the following represents an unethical agreement?
a) An agreement to develop join technology for future use
b) An agreement to transport oil across a shared pipeline
c) An agreement to set prices at a particular level

Exam PackFAB/F1
d) An agreement to commence research into environmental issues
8. Are the following responsible for determining the duties of the internal auditor?
Yes No
Management
Shareholders
9. “XYZ, and IT company has been criticized by its employees who believe that level of remuneration it
pays to its non-executive directors is too high”
Which of the following is a suitable way of calculating the remuneration package for non-executive
directors?
a) A fixed fee which steps up incrementally each year
b) A fixed percentage of the profits of the organization
c) A fixed fee plus share option up to the value of the fixed fee
d) A fixed daily rate for the amount of time they commit
10. Which TWO of the following are responsibilities of the chair of a committee?
a) Co-ordinating
b) Encouraging debate
c) Making the final decision
d) Taking minutes (agenda, purpose) of the meeting
MICRO - ECONOMICS
(Chapter 14)
1. Under which one of the following circumstances will the firm have to absorb all the increase in
indirect tax(VAT) itself, being unable to pass on any of it to the consumer?
a) Relatively elastic demand (means there is a small change in price leads to a large change in
quantity)
b) Perfectly inelastic demand
c) Unit elastic demand
d) Perfectly elastic demand
2. The government wishes to expand the demand for wind energy by 10% and estimates the price
elasticity of demand for wind energy is to be (-)2. The government should grant a subsidy sufficient to
reduce the price of wind energy by:
a) 5%
b) 10%
c) 20%
d) 2%
3. The cross elasticity of demand between tennis socks (X) and tennis shoes (Y) is estimated at (-)4.
What price reduction in tennis shoes will be needed to increase demand for tennis socks by 12%?
a) 4%
b) 6%
c) 3%
d) 12%

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4. The utility is a maximum when which one of the following conditions apply? OMIT THIS QUESTION
a) Average marginal utility are identical for all products
b) The ratio of marginal utility to price is the same for all products purchased
c) The ratio of average utility to price is the same for all products purchased
d) The ratio of total utility to price is the same for all products purchased
5. A university decides to raise tuition fees to increase the total revenue it receives form students. This
strategy will work if the demand for education at that university is:
a) Unit elastic
b) Inversely related to price
c) Perfectly elastic
d) Inelastic
e) Elastic
6. As you move down a straight-line-downward-sloping demand curve, the price elasticity of demand:
a) Becomes less elastic
b) Is unit elastic the whole length of the demand curve
c) May become more or less elastic depending on the slope of the demand curve
d) Becomes more elastic
e) Remains constant because the slope is constant
7. The bust fare charged by the local bus company is £2.00 during the morning rush hour, but only
£1.50 during the yearly afternoon. This can be explained by the fact that the demand for bus rides
during the morning rush hour is__________; but during the early afternoon the demand for bus
ride is__________;
a) Perfectly elastic; perfectly inelastic
b) Less elastic; more elastic
c) More elastic; less elastic
d) Unit elastic; inelastic
e) Perfectly inelastic; relatively inelastic
8. If the income elasticity of a demand for a good is negative, then the good is:
a) A Giffen good (A Giffen good is a low income, non-luxury product. Demand for Giffen goods rises
when the price rises and falls when the price falls. In econometrics, this results in an upward-
sloping demand curve, contrary to the fundamental laws of demand which create a downward
sloping demand curve. examples of Giffen goods can include bread, rice, and wheat. These goods
are commonly essentials with few near-dimensional substitutes at the same price levels. The idea
is that if you are very poor and the price of your basic foodstuff (e.g. bread) increases, then you
can't afford the more expensive alternative food (meat) therefore, you end up buying more bread
because it is the only thing you can afford.)
b) An inferior good
c) A luxury good
d) A normal good
e) An income neutral good
9. At a price of £11.00, quantity demand is 90; and at a price of £9.00, quantity demanded is 110. The
price elasticity of demand is:
a) 0.1
b) -1
c) 0

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d) -1.22
e) -0.82
10. Total utility will be a maximum when:

a) Marginal utility is zero
b) Marginal utility is negative
c) Marginal utility equals total utility
d) Marginal utility is positive
e) Marginal utility equals average utility
11. Price elasticity of demand refers to shifts in the demand curve for a product.
a) True
b) False
12. We might expect a fall in price for a product with a relatively price elastic demand to raise total
revenue.
a) True
b) False
c)
13. Tennis racquets and tennis balls are likely to have a positive cross-elasticity of demand.
a) True
b) False
14. We might expect the income elasticity of demand for health-related services to the positive in sign
(means normal good) and relatively high in size.
a) True
b) False
15. The ‘Veblen effect’ (Veblen effect is related with giffen goods means high price goods leads high
demand as we discussed in the previous question) supports a downward-sloping demand curve.
a) True
b) False
16. A positive income elasticity of demand will indicate that a rise in real income will shift the demand
curve to the right (increase).
a) True
b) False
17. A government seeking to raise revenue should increase taxes on products with relatively elastic
demands.
a) True
b) False
18. If the price of a product is unchanged, a rightward shift in the firm’s demand curve will increase the
consumer surplus available. (explanation of consumer surplus is Consumer surplus is an economic
measurement of consumer benefits. Consumer surplus happens when the price that consumers pay
for a product or service is less than the price they're willing to pay..)
a) True

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b) False
19. A rise in the price of a product is likely to raise total revenue where price elasticity of demand is unit
elastic.
a) True
b) False
20. Different types of washing-up liquid are likely to have a positive cross-elastic of demand
a) True
b) False
21. The price elasticity of demand is a measure of demand sensitivity to:

a) Supply changes
b) Price changes
c) Income changes
d) Changes in tastes
e) Changes in the prices of other goods
22. Which of the following is not a determinate of the demand sensitivity to price changes?
a) Income level
b) Whether the good is a basic item
c) Time to adjust
d) The availability of substitute goods
e) The number of producers in the market

Exam PackFAB/F1
23. MTQ:
The following diagram refers to the demand and supply for a good:
Price $ Supply
Quantity
Task 1: (consider the outward shift in demand curve)

Write down three of the following possible explanations for the shift in demand curve from D0 TO d1
by selecting three of the letters from below:
a) A fall in price of substitutes
b) A price has led to an increase in supply
c) A rise in consumer income
d) Consumers expect prices to rise in future
e) The good has a very low price elasticity of demand
f) The price of complementary goods has fallen
Task 2:
1. An outward shift (right ward shift) in the supply curve would lead to __________ in price and the
change in price will be greatest when the demand for the goods is __________.
i. Select which of the following fills Gap 1:

a) A fall
b) An increase
ii. Select which of the following fills Gap 2:

a) Price elastic`
b) Price inelastic
2. The effect of a government subsidy for the production of this good would be to shift the supply curve
to the __________ causing __________ in its price.
iii. Select which of the following fills Gap 3:

a) Left
b) Right
iv. Select which of the following fills Gap 4:

a) A fall
b) An increase

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MACRO - ECONOMICS
(Chapter 15)
1. “In the short term, those seeking employment are not always in the right place, or may not have the
right skills, to fill vacancies that are available”
Which of the following types of unemployment does this phenomenon describe?

a) Frictional unemployment
b) Structural unemployment
c) Seasonal unemployment
d) Cyclical unemployment
2. The control of which two of the following are objectives of macro-economic principles?
a) Profitability
b) Inflation
c) Security
d) Employment
3. Which of the following are characteristic of pure public good?

1 Excludable
2 Non-excludable
3 Rival
4 Non-rival
a) 1 and 4
b) 1 and 3
c) 2 and 3
d) 2 and 4

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public good is a good that is both non-excludable and non-rivalrous. This means that individuals cannot
be effectively excluded from its use, and use by one individual does not reduce its availability to others. ...
Pure public goods are those that are perfectly non-rivalrous in consumption and non-excludable.
In economy a good or service is called excludable if it is possible to prevent people or consumer who have
not paid for it. And a good or service is called non excludable if nonpaying people or consumers cannot be
prevented from assessing of it.
4. Through which TWO of the following ways can a government exercise formal authority ( formal
authority means is the authority provided by an organization or the law to an individual enabling him
to carry out certain actions in accordance with his own will and without the need to consult others.)
a) Campaigning. (work in an organized and active way towards a particular goal, typically a political
or social one. “people who campaigned against child labour")
b) Lobbying. (Lobbying, any attempt by individuals or private interest groups to influence the
decisions of government; in its original meaning it referred to efforts to influence the votes of
legislators, generally in the lobby outside the legislative chamber. Lobbying in some form is
inevitable(unavoidable) in any political system.)
c) Regulation or deregulation
d) Direct action
5. Which of the following are monetary policy instruments?

1 Government expenditure
2 Interest rates
3 Special deposits
4 Funding
a) 1,3 and 4
b) 2,3 and 4
c) 1,2 and 3
d) 1,2 and 4
6. Which TWO of the following groups will be “losers” during a period of rapid inflation?
a) Savers
b) Borrowers
c) Business with large overdrafts
d) Non-unionised labor (used to refer to a company or organization that does not employ workers
who belong to a union, or a person who does not belong to a union: non-union
employers/employees).
7. Which of the following is an example of a fiscal policy tool?

a) Lowering tax rates
b) Controlling the money supply
c) Changing interest rates
8. Which of the following instruments is used as part of fiscal policy?

a) Exchange rates
b) Government spending
c) Interest rates
d) Credit controls (credit control is the system used by businesses and central bank to make sure
that credit is given only to borrowers who are likely to be able to repay it)

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9. Is each of the following represents an element of the total level of demand in the economy?
Yes No
● Investment in capital goods
● Saving
10. A government decides to increase the ratio of personal income tax.
What is the most likely consequence for business activity?

a) An increase in the sale of luxury items
b) An increase in the sale of luxury items
c) A decrease in the sale of luxury items
d) A decrease in the sale of necessary items
11. Which of the following can be used as fiscal policy

1 Taxation
2 Government borrowing(PSNCR)
3 Interest rates
4 Government expenditure
a) 1,2 and 4
b) 3 and 4
c) 1,2 and 3
d) 2,3 and 4
12. Which of the following statement is/are true?

a) The economic cycle activity is usually characterized by continued period of growth
b) The economic cycle activity is usually characterized by period of stagnation
c) The economic cycle activity is usually characterized by continued period of decline
d) The economic cycle activity is usually characterized by periods of growth followed by period of
decline
13. Macro-economics is the study of?

a) The economy as a whole
b) The local and regional economy
c) The organization as a whole
d) The individual elements that make up the economy
14. An economy is facing deflation and unemployment. In which particular phase of business cycle,
economy exist?
a) Boom
b) Prosperity
c) Recession
d) Depression

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15. Y country’s economy is badly facing declining trend in the prices and increase in unemployment.
Which type of budget will recommended by the policy makers?
a) Balance Budget (A balanced budget (particularly that of a government) is a budget in which
revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the
accounts "balance"). More generally, it is a budget that has no budget deficit, but could possibly
have a budget surplus.)
b) Deficit Budget (where expenses are high so govt increase its expenditure to provide facilities to
the public)
c) Surplus Budget
d) Break-up Budget
16. MTQ:
Task 1:
The gross domestic product (GDP) of a country is the total production of goods and services in the
economy over a period of time. The companies of GDP are consumption investment, government
spending and net exports. Any change in GDP is likely to have an impact of important variables in the
economy such as:
A The rate of inflation
B The level of cyclical unemployment
C The level of structural unemployment
D `The surplus on the government budget
E The deficit on the current account of the balance of payments

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Required:
i. Write down which three of the above variables will FALL if there is a FALL in gross domestic
product by selecting THREE of the letters from (A, B, C, D & E)
___A,D & E_________________
ii. Write down which of the above variable will not be affected if there is a FALL in gross
domestic product from (A, B, C, D & E)
_________C___________
Task 2:
Identify which of the following could be a reason for an increase in demand in an economy, by
selecting all that apply.
a) A large rise in rate of return expected by businesses on new investment
b) An improvement in the balance of payment current account
c) An increase in rates of personal income tax
d) A significant fall in the average proportion of income that is saved
Task 3:
Identify which of the following events would reduce supply in an economy, by selecting all that apply.
a) A change to employment legislation which reduces the average weekly number of hours that can
be worked
b) A steep increase in the price of imported oil and gas
c) An increase in availability of credit as a result of increased deregulation in the financial system
(related with increase in supply)
d) An increase in labor productivity as a result of the widespread application of new technology
(related with increase in supply)
BUSINESS ENVIRONMENT
(Chapter 16)
1. “The introduction of new technology in Company A has enable management to simplify and flatten
the structure of the organization in order to improve efficiency.”
a) Downsizing (reduction in total number of employees)
b) Delayering (reduction in level of hierarchy)
c) Outsourcing
d) Franchising
2. Which TWO of the following would you consider when undertaking a PESTEL analysis?
a) Training opportunities
b) Economic factors
c) Environmental issues
d) Productivity targets
3. “The world economy is suffering from rapidly increasing oil prices and global warming is a major
concern to a growing group of consumers. This situation is forcing car manufacturers to investigate
ways in which they can produce more fuel efficient vehicles. ”
Based on this statement, which two PEST factors are pressurizing the car manufacturers to produce
fuel efficient cars?

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a) Legal
b) Political
c) Economic (oil prices)
d) Social (fuel efficient vehicles)
4. In an ageing population, for which two of the following is there likely to be an increased demand?
a) Employment
b) Health care
c) Education
d) Social services
5. Which of the following is an example of a political influence within the PEST framework?
a) Decisions by strategic managers
b) Public concern about environmental issues
c) The prevailing rate of interest
d) A decision by a supra-national body (Examples include the EU, UNICEF, WTO,)
6. Study of which of the following trends accurately describes ‘demography’? ( the study of statistics such
as births, deaths, income, or the incidence of disease, which illustrate the changing structure of
human populations.)
a) Population
b) Employment
c) Economic
d) Globalization
7. Which of the following is an example of generic strategy outlined by Porter?

a) Resource efficiency
b) Customer focus
c) Cost leadership
d) Quality control
8. Which of the following is a prime motive for a company to outsource?

a) To improve specialist job opportunities
b) To improve working conditions
c) To achieve cost reductions and efficiency
d) To increase control over operations
9. Which of the following is an example of a generic strategy outlined by Porter?

a) Customer focus
b) Quality control
c) Resources efficiency
d) Cost leadership
10. Which TWO of the following examples of government policies designated to deal with an increasingly
ageing population?

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a) Subsidized nursing care

b) Raising the retirement age
c) Increasing the number of university places
d) A reduction in personal taxation
11. Which of the following are responsible for health and safety in workplace?
1 The employee
2 The employer
a) 1 only
b) Neither 1 nor 2
c) 1 and 2
d) 2 only
12. Which of the following is an example of a social or demographic factor that can influence or constrain
a business?
a) Change in interest rates
b) An increase in health and safety legislation
c) Slowing of the birth rate
13. Nisha, the managing director of a small business which design and manufactures specialist lighting
equipment, is considering whether to enter the market for floodlighting sports venues. There are
already large suppliers of such equipment. Nisha knows that unit costs would be substantially lower
for higher production volumes and that most floodlighting installations will be new sports venues
whose developers are not tied to any particular supplier, but prefer to accept the lowest tender.
Do the following competitive factors constitute barriers to entry, for Nisha’s business, into the
floodlighting market for sports venues?
Yes No
● Economies of scale in manufacturing
● Switching costs for venue developers
14. Which term best describes the removal of middle levels of management from an organization?
a) Descaling (to remove the hard deposit formed by chemicals in water from (a kettle, pipe, etc))
b) Delayering
c) Outsourcing
d) Downsizing
15. Are the following statements True or False?

True False
● Quality of service can improve customer relation
which will reduce market costs
● Providing quality service is more important where
competition is not based on price
16. Which of the following statements defines Porter’s three generic strategies?
1 An organization must follow the actions of its competitors

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2 An organization must analyze its environment and choose an appropriate

3 An organization must reflect the wishes of its owners
a) 2 only
b) 1 and 3
c) 1 only
d) 2 and 3
17. Which of the following reasons for a member of staff leaving a business would be classed as
’avoidable’?
a) Pay disputes
b) Disciplinary action
c) Long-term illness
d) Redundancy
18. Hiram has decided to set up a business offering a range of products designed for customers over the
age of 60. He feels that this will allow him to avoid direct competition with other companies and also
let him charge his customer a premium for his products.
Which of Porter’s generic strategies in this most consistent with?

a) Non-frills (without unnecessary extras, especially ones for decoration or additional comfort).
b) Differentiation
c) Cost leadership
d) Focus (this scenario is related with differentiation focus)
19. Which of the following is not a data security issue?

a) Theft of business data
b) Corruption of data due to virus infection
c) Unauthorized use of data
d) Destruction of data by fire or flood
20. From the following list, which of the following are supra-national sources of legal authority?
1 United Nations Resolutions
2 European Parliament Acts
3 World Trade Organisation Agreements
4 European Court Rulings
a) All of them
b) None of them
c) 1,3 and 4
d) and 4
21. Which of the following is an example of how businesses and organizations are affected by monetary
policies?
a) Government spending and investment determine the levels of service that can by monetary
policies? (fiscal policy)

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b) Personal taxation levels affect consumer demand for goods and services (fiscal policy)
c) Corporation tax affects the level of investment that can be made by organization (fiscal policy)
d) High interest rates increase the cost of investment and depress consumer demand for credit
22. It had been said that in many countries, , people consider themselves more as individuals and less as
member an established social grouping, for instance; age and class grouping:
What will be the impact of this on organizations?

1 They will have to undertake more direct marketing
2 They will have to differentiate their products (customers demand more about customized
products)
3 They will have to focus more on diversity issues (there should be no discrimination)
a) 1 and 2
b) 1 only
c) 2 only
d) 1,2 and 3
23. Which strategies would a university follow in response to an ageing population?

1 Downsizing
2 Seek more experienced lecturers
3 Promoting life-long learning]
a) 2 and 3
b) 1,2 and 3
c) 1 and 2
d) 3 only
24. For which TWO types of business or organization are social or demographic changes especially
significant?
a) A commercial landscaping business(economy)
b) Hospitals
c) Manufacturing of power plant equipment(technology)
d) Home building companies
25. Information and data are items potentially at risk of security breaches. Which TWO of the following
basic principles of data security?
a) Passwords should be kept confidential
b) Password should be used
c) Password should be e-mailed to peers
26. ABC CO. is a multinational which is building a factory in the developing country. ABC Co wants to
operate its business in an ethical manner.
Which TWO features of the factory in the developing country should be the same as in ABC Co’s
factories in developing countries in order to achieve ethical business practice?
a) Product quality control
b) Salaries (related with HR policies)
c) Holiday entitlement (related with HR policies)
d) Safety standard

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27. MTQ:
It is essential for organizations to ensure that adequate health and safety by measures are in place to
meet legal requirements, to reduce the threat of accidents and resulting compensation claims to meet
their moral obligation to protect employees and visitors.
Items of personal protective equipment include:

A Ear muffs
B Cut-resistant gloves
C Goggles
D Hard hat
E High visibility vest
F Safety footwear
G Waterproof clothing
Task 1:
Select ONE item of protective equipment for each of the following jobs: (from A to G)
● Commercial sea fishing _____g_____
● Hand spraying fruit trees with pesticides _____c_____
● Domestic refuse collection (waste collection) _b_____
● Motorway maintenance _____e_____
Task 2:
To whom must a UK construction company provide personal protective equipment?
Select all that apply.
a) Construction site managers
b) Credit controller
c) Independent contractors such as electricians
d) Quantity surveyor
e) Temporary construction workers

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ROLE OF ACCOUNTING
(Chapter 17)
1. Which of the following is an example of the core work carried out by the financial accountant in a
large organization which also employs as a management accountant?
a) Budgeting (management accountant)
b) Breakeven analysis (management accountant)
c) Preparing corporate reports

d) Investment appraisal (management accountant)
2. Which TWO of the following are functions of the accounts department in a large organization?
a) Sending invoices to customer
b) Payment of employees
c) Purchase of raw materials
d) Reconciliation of goods inward notes with deliveries
3. Which TWO of the following do variances reports help in determining?

a) Efficiency of labor
b) Efficiency of materials usage
c) Anticipated expenditure (budgetary reports)
d) Overhead recovery rates (budgetary reports)
A variance report is a document that compares planned financial outcomes with the actual financial
outcome. In other words: a variance report compares what was supposed to happen with what happened.
Usually, variance reports are used to analyze the difference between budgets and actual performance.
Budget reporting is the process by which a company measures its actual achievement against its targeted
figures. This helps it to see if it is on track to meet its business objectives. It also enables the company to
take corrective action where it is required.
4. “XYZ Co. has failed to prepare its financial accounts in time for its general meeting “if the accounts
are not laid out before the shareholders of the company. Which of the following will be liable?
a) The chief executive
b) The finance director
c) The board of directors
d) The company as a separate entity
5. “Harry is the purchasing manager of GH Co. biscuit manufacturing company. The company is about
to use a new supplier of flour “on which matters will Harry need to consult with accounts department?
1 Setting up a payables account
2 Arranging payment terms
3 Placing orders
4 Negotiating delivery days
a) 2 and 3 only
b) 1 and 2 only
c) 1,2,3 and 4

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d) 3 and 4 only
6. In which order do the main components of sales cycle usually take place with respect to credit
transaction, after the order has been received?
a) Invoice sent, good dispatched, customer pays
b) Goods dispatched, customer pays, invoice sent
c) Customer pays, invoice sent, goods dispatched
d) Good dispatched, invoice sent, customer pays
7. “University friends, Debbie and Heidi, start work at ABC Fragrance Co; Debbie in marketing and
Heidi in accounting” in what respect would Debbie and Heidi have to liaise at work?
1 Setting price of products
2 Conducting market research
3 Designing advertising campaigns
4 Calculating market share
a) 1 and 2
b) 1 and 4
c) 2 and 3
d) 3 and 4
8. “JKL Co manufactures pet food. The company is developing a new ‘cat treat’ product”.
In which TWO ways will the production department and the accounting function liaise in respect of
this product?
a) Purchasing of raw material
b) Checking of deliveries from suppliers
c) Deciding on production quantity
d) Estimation of materials quantities to determine unit costs
9. Are the following statements true or false?

True False
● Preparing financial statements at the year end is the responsibility
of management accounting function
● Managing a company’s affairs so as to minimize its Tax liability is
the responsibility of the financial reporting function
Financial reporting includes the following: External financial statements (income statement, statement of
comprehensive income, balance sheet, statement of cash flows, and statement of stockholders' equity).
10. “Mark has recently been appointed as a financial controller (financial accountant) in a large
manufacturing organization”
“Which of the following circumstances, if they occurred, would represent potential ethical issues for
Mark to deal with?”
1 Fraudulent behavior
2 Widespread bullying
3 Discriminatory behavior
a) 1,2 and 3

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b) 1 and 2 only
c) 1 and 3 only
d) 2 only
11. Which accounting technique or functions is MOST useful to a purchasing department when making
decisions about capital equipment purchases?
a) Investment appraisal (Investment appraisal is the analysis done to consider the profitability of an
investment over the life of an asset alongside considerations of affordability and strategic fit.)
b) Receivables analysis
c) Treasury management (Treasury Management can be understood as the planning, organizing and
controlling holding, funds and working capital of the enterprise in order to make the best possible
use of the funds, maintain firm's liquidity, reduce the overall cost of funds, and mitigate
operational and financial risk)
d) Ratio analysis (Ratio analysis is a quantitative method of gaining insight into a company's
liquidity, operational efficiency, and profitability by studying its financial statements such as the
balance sheet and income statement.)
12. An organization that produces good quality accounting information ensures that it has which TWO of
the following qualities?
a) Effectiveness
b) Comprehensibility
c) Detail
d) Timeliness
13. The managers of Grinwald Co are currently discussing the possibility of changing from a manual
accounting system to a computerized accounting system.
The following statements are made about manual accounting system.
True False
● They reduce the speed at which repetitive data can be processed
● They reduce the risk of errors
14. Which of the following are ADVANTAGES of effective services provision?

1 More satisfied customers improve the company’s reputation
2 Reduce marketing costs in the future as customer are retained
3 Reduction in cost of distribution
4 Reduced waged costs in the services department during periods of low activity
a) 2,3 and 4 only

b) 1,2 and 3 only
c) 1,2,3 and 4
d) 1 and 2 only
15. Are the following DISADVANTAGES of using a computerized accounting system?

Yes No
1. A computerized system can only be used by IT specialists
2. Identifying fraud or error from an audit trail can be more difficult

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An audit trail is a step-by-step record by which accounting or trade data can be traced to its source. Audit
trails are used to verify and track many types of transactions including accounting transactions. An audit
trail usually begins with the invoice receipt.
16. A module is a program that deals with one particular part of a business accounting system.
Which of the following is the name given to a set of several modules?
a) Ledger
b) Spreadsheet
c) Package
d) Database
● Accounting package (any accounting software is known as accounting package)
● Module (Accounting software records and processes accounting transactions using modules that
include accounts payable, accounts receivable, and payroll. Together, these modules function as
an accounting information system or accounting package.)
● Suit( sets of several modules is known as suit)
17. “The management accountant is discussing the potential impact of a deep price out on the highest
selling product of the company “which other department would be consulted about this decision?
1 Purchasing
2 Production
3 Sales
a) 1 and 3 only
b) 1,2 and 3
c) 1 and 2 only
d) 2 and 3 only
18. Which of the following are financial accounting tasks?

1 Classifying
2 Summarizing
3 Communicating
a) 2 and 3 only
b) 1 and 2 only
c) 1 and 3 only
d) 1,2 and 3
19. “The financial director of Foxtor Co. has recently employed three managers; a financial controller, a
treasurer and a management accountant, to help with the increasing workload of the accounting
function”.
Which TWO of the following responsibilities will be assigned to the management accountant?
a) Cash flow control(treasurer)
b) Raising funds by borrowing(treasurer)
c) Investment appraisal of projects
d) Cost accounting

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20. Which TWO of the following items could appear in a company’s statement of cash flows?
a) Interest expense paid
b) Deprecation of non-current assets
c) Repayment of share capital
d) Accruals
21. Which of the following is normally part of the work of the management accountant an organization?
a) Preparing financial statements
b) Investment appraisal
c) Recording financial transactions
d) Payroll administration
22. Which of the following are deemed to be advantages of integrated software? Is a collection of software
designed to work similar programs. A good example of integrated software is Microsoft office which
contains programs used in an office environment (excel, outlook, word etc)
1 It reduces the duplication of direct entries
2 It can offer an increased variety of reports
3 It provides greater security
a) 1 and 3 only
b) 2 and 3 only
c) 1,2 and 3
d) 1 and 2 only
23. Who, in companies is usually responsible for determining financial policy matters?
a) Management accountant
b) Finance director(head of the finance department)
c) Treasurer
24. Who, known as the father of modern accounting, is generally accepted as having written the first book
to be printed which described double entry book keeping?
a) Francis Beacon
b) Leonardo da Vinci
c) Luca Pacioli
d) Thomas Stevens
25. The concept of double-entry bookkeeping involves which of the following?

a) Recoding every transaction as income or expenses
b) Ensuring every transaction has an equal opposite entry
c) Entering every transaction as revenue or capital
26. Are the following statements, about management accounting reports, true or false?
True False
● Management accounting reports are free from external regulation
● Management accounting reports are used by shareholders

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27. “CP Dell Co buys materials costing $3,000”
The first step is to record the transaction in which of the following?

a) General ledger
b) Statement of financial position
c) Income statement
d) Day books
28. Which of the following is included in working capital?

a) Retained earnings
b) Share capital
c) Loan notes
d) Prepayments
29. Which of the following as an advantage of just-in-time (JIT) purchasing strategy? Is a cost accounting
purchasing strategy. you purchase goods so that they are delivered just as they are needed to meet
customer demand. With JIT when you get customer orders you plan purchases. You purchase the
minimum number of items to meet customer demand.
1 Bottlenecks (is a situation that stops a process or activity from progressing) in supply are avoided
2 Delivery frequency is reduced (delivery frequency is high in JIT)
3 Inventory holding costs are minimized
a) 1,2 and 3
b) 1 and 2 only
c) 1 and 3 only
d) 3 only
30. Which of the following are advantages of having a formal procedure for recording sales?
1 Transactions will be recorded consistently
2 Staff can refer to information if they have doubts
3 New staff can be trained more quickly
a) 2 only
b) 1 and 3 only
c) 1,2 and 3
31. Which of the following is a function of good trade payable system?

a) Appropriate discount to credit customers
b) Early receipt of sum due
c) Accurate record of banking
d) Effective record of purchase invoices
32. “ABC Co. is a furniture manufacturer; Timber is purchased from a variety of suppliers and used to
produce furniture on customer’s order”
Accounting Purchasing
● Approving payments to suppliers
● Processing payments to suppliers

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33. Which of the following software technologies would integrate accounting system application packages
use to store information?
a) Browser
b) Database
c) Work processor
d) Spreadsheet itself known as database
34. Claire is employed by XYZ Co. her major tasks are as follows:
1 Researching and selecting advantageous sources of project finance
2 Monitoring working capital usage
3 Monitoring foreign currency movements
Which department is she most likely to be working with?

a) Financial management (Financial management refers to the strategic planning, organising,
directing, and controlling of financial undertakings in an organisation or an institute. It also
includes applying management principles to the financial assets of an organisation,) is related
with treasurer
b) Financial accounting and reporting (Financial accounting is a specialized branch of accounting
that keeps track of a company's financial transactions. Using standardized guidelines, the
transactions are recorded, summarized, and presented in a financial report or financial statement
such as an income statement or a balance sheet.) is related with finance controller
c) Management accounting
35. Which TWO of the following are benefits preparing budgets?

a) Detecting the fraud and error
b) Proving a measure of expected performance
c) Establishing an asset register
d) Prediction of resources required in future
36. The accounting function interacts with other business functions. With which function does the
accounting department discuss pricing
a) Marketing
b) Production
c) Pricing
37. Which two of the following are specific problems of computer based system?
a) Information is insufficient details
b) Data may be overwritten (When data is overwritten, new information is recorded over the old
information. At the same time, unused file system clusters are used to record new information.
This happens when, after data is lost, the user continues to use the disk for various purposes and
writes new files over the old ones.)
c) Lack of primary records (primary records An original document that contains original signatures,
seals, etc.)
d) Information is processed too quickly
38. Brain is employed XYZ Co. in a typical week, his tasks are as follows:
1 Calculating standard (estimated) costs of production
2 Analyzing variances between actual and budgeted costs
3 Preparing cash flow forecasts

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a) Purchasing
b) Management Accounting
c) Treasury
d) Financial Accounting and Reporting
39. Which TWO of the following are responsibilities of the management accounting function in an
organization?
a) Credit Control
b) Preparing cash flow budgets
c) Determining variable costs of production
40. SOFP tells us about intrinsic state (means permanent or internal) of organization. This statement is?
a) True
b) False
41. Who is responsible for the preparation of Financial Statements that represents a true and fair view of
the organization?
a) Directors
b) External auditors
c) Managers
d) Internal auditor
42. Who is at financial risk in private limited company?

a) Employees
b) Shareholders
c) Managers
d) Directors
43. What is good financial information?

a) Relevant
b) Reliable
c) Timely
d) Complete
e) All of the above
44. Information from which of the following documents is entered into the payables ledger?
a) Customer statement
b) Customer invoice
c) Supplier invoice
d) Supplier statement
45. In the purchase cycle, what should happen between placing an order and paying for it?
a) Supplier sends a credit note
b) Supplier sends an e-mail
c) Supplier send an invoice

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d) Supplier sends a statement
46. Which TWO productions related functions should be performed by the accounting department?
a) Calculating production cost variances
b) Preparing a purchases and wages budget
c) Estimating production quantities
d) Making decisions to which products to make
47. What is the main purpose of financial statements?

a) To communicate information between directors and managers
b) To inform employees about company progress
c) To report information to stakeholders
d) To give best picture of your company to the public
48. The objective for which of the following bodies include the establishment of high quality professional
standards in financial reporting and the promotion of convergence of these standard frontiers?
a) IFAC (International federation of accountants)
b) IASB (The International Accounting Standards Board)
c) IASC (International accounting standard committee)
d) ICSA (Institute of Chartered Secretaries and Administrators)
● PURPOSE OF IFAC to establish and promote adherence to high quality international standards,
to facilitate collaboration and cooperation with member bodies, and to serve as spokesperson for
the international profession on relevant public policy issues.
● PURPOSE OF IASB the primary purpose of the IASB is to develop a single set of high quality,
understandable and enforcement accounting standard that require high quality, transparent and
comparable information in financial statements as well as in the other financial reporting to help
users of the financial statements to participate in ...
● the purpose of IASC is to improve and harmonise financial reporting primarily through the
development of International Accounting Standards and the promotion of the use of those
Standards in the general purpose financial statements pub- lished by business enterprises.
49. Are the following statements True/False?

True False
● Role of management accountant is to provide information
that can be used in decision making
● Role of financial accountant is to provide information that
can be used in decision making
50. MTQ:
Financial statements are a primary source of financial information
Task 1:

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Annual financial statements typically include a statement of financial positions, a statement of

comprehensive income, a statement of change in equity and a statement of cash flows.
A A bonus issue of shares
B Amounts owed to suppliers
C Proceeds from the sale of an office building
D Selling and distribution costs
Required:
In which financial statement for a manufacturing company would amounts for the following he
found? (Select one from A, B, C & D).
A B C D
● Cash flows
● Changes in equity
● Comprehensive income
● Financial position
Task 2:
Different types of management accounting report have different purposes:
a) To compare performance with targets
b) To define the types of expense associated with a product
c) To estimate income and expense for a period
d) To evaluate operating efficiency
e) To provide a comparison for actual results
f) To monitor trends in overspending or under spending
Required:
Identify the purpose(s) above with the associated report. (Select All who apply from a,b,c and d).
● Budgets ____c and d______
● Cost schedules ______b____
● Variance reports ______a, e and f__
A cost schedule is a table showing the total costs of production at different levels of output
INTERNAL CONTROLS & AUDIT
(Chapter 18)
1. Are the following objectives of an internal control system?
Yes No
● To express an opinion on financial statements
● To ensure that the assets of the company are safeguarded
2. The following roles should report to the finance director.

Is this statement true or false
True False
Treasurer
Internal Auditor
3. Which of the following are credit control weaknesses within a credit sales system?

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1 Credit limits are applied unilaterally (of an action or decision) performed by or affecting only one
person, group, or country involved in a situation, without the agreement of another or the others.)
by the credit controller
2 Dispatches are sequentially numbered
3 Receipts from customers are banked infrequently
a) 1 and 3 only
b) and 3 only
c) 1,2 and 3
d) 1 and 2 only
4. Which of the following is an important element of internal control function?

a) Duplication of work
b) Risk assessment
c) Autonomous processes
d) Delegation of authority
5. Which of the following are TRUE of internal auditors?

1 Internal auditors review the control system and recommend improvements
2 Internal auditors consider whether the financial statements give a true and fair view
3 Internal auditors consider only the financial aspects of the business
4 Internal auditors report to the management of the company
a) 4only
b) 1,2,3 and 4
c) 1 and 4 only
d) 1,2 and 3 only
6. To whom is the external auditor responsible?

a) The shareholders
b) The audit committee
c) The government
d) The board of directors
7. When internal controls in a receivables system are weak. Which TWO of the following may occur?
a) Invoices may be paid for goods never delivered
b) Invoices may be issued for wrong amounts
c) Invoices may be paid wrong suppliers
d) Invoices may be issued and go unrecorded
8. Becky checks invoices from suppliers against goods received notes before paying the invoices.
This is an example of which of the following classification of internal control?

a) Prevent, detect and correct controls
b) Discretionary and non-discretionary controls
c) Systems and process controls
d) Voluntary and mandated controls

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9. “Tyrad Co. has recently been formed. Its owners are uncertain are to who is legally responsible for
maintaining proper records and safeguarding the assets of the company”
Which of the following has these legal responsibilities?

a) The external auditors
b) The board of directors
c) The finance director
d) The internal auditor
10. Do financial control procedures exist specifically to ensure the following?

Yes No
● Financial transactions are properly recorded
● The assets of the business are safeguarded
11. Which of the following could lead to an increased risk of errors in the recorded purchases figure?
1 Centralized ordering system
2 Not getting detailed price quotations
3 Recording invoices for goods not yet received
4 Decentralized purchasing system
a) 1 and 2 only
b) 2,3 and 4 only
c) 1,2,3 and 4
d) 3 and 4 only
12. Do the following reflect the duties of the audit committee?

Yes No
● Liaison with external auditors
● Liaison with internal auditors
13. “The computer system of Tara Co. has recently been damaged and program files have been
destroyed.”
Which of the following types of controls should the company have in place to deal with such an event?
a) Integrity controls
b) Processing controls
c) Security controls
d) Contingency controls (disaster recovery plan)
14. “Apart from his main duty, an auditor also reviews, identifies and analyses causes uneconomic and
analyses causes of uneconomic and inefficient practices in assigned areas of responsibility, which
might lead to the discovery of poor control system or to the potential for fraud.”
a) External
b) Internal

Exam PackFAB/F1
c) Connected
d) None of the above
15. Which TWO of the following controls used by a business are forms of output control?
a) Range checks
b) Control total
c) Investigation of error report
d) Labelling of all disks used
16. The main purpose of IAS is to insure consistency in ____________________
Which TWO words complete this sentence?

a) Financial accounting
b) External auditing
c) Company administration
d) Internal system
17. Are the following control procedures concerned with the prevention or detection of errors?
Prevention Detection
Producing monthly bank reconciliation statements
Checking invoices from suppliers against goods received notes
18. Which of the following are general controls?

1 Password required at login
2 Training on new systems
3 Sequential numbering
a) 1 and 3
b) 1 and 2
c) 2 and 3
19. “John conducts a regular review of supplier signatures on delivery notes. “this is a control relating to
which of the following
a) Cash receipts
b) Ordering
c) Goods inwards
d) Credit control
20. Which TWO of the following are important functions of internal audit?
a) Verifying the financial statements
b) Monitoring the risk management strategy
c) Reviewing accounting control systems
d) Reporting to shareholders

Exam PackFAB/F1
21. Which of the following gives a reasonable assurance that the financial statements are free from
material fraud and error and does not guarantee the accuracy of financial statements?
a) Internal auditor
b) External auditor
c) Internal control
d) Review
22. Which of the following should be included in a job description of an internal auditor?
1 Identifying and testing the operation or controls
2 Making recommendation on improving systems
3 Considering whether the company is a going concern
4 Reviewing operational procedures
a) 1,2, 3 and 4
b) 2,3 and 4
c) 1,2 and 4
d) 1,2 and 3
23. Which is the purpose of substantive test?

a) To identify financial irregularities (Examples of financial irregularities include corruption,
embezzlement, misuse of funds, fraud, theft, accounting violations,)
b) To investigate errors (means the sources of error should be discussed)
c) To verify the accuracy of financial information
24. Segregation of duties is an important part of good internal financial control system. Which two of the
following duties should be segregated in a sales control system?
a) Dispatch of inventory
b) Issue of invoice
c) Issue of purchase orders
d) Payment of invoice
25. An internal control system provides the directors with ____________________ that their
objectives are reached.
Which two words complete this sentence?

a) Reasonable assurance
b) Conditional assurance
c) Complete assurance
d) Absolute assurance
26. Which TWO of the following would indicate a strong control environment?
a) Participation of those charged with governance
b) High turnover staff at all levels
c) Frequent changes of organizational structure
d) Good communication of ethical levels

Exam PackFAB/F1
27. Which TWO of the following are control objectives of cash?

a) To ensure that all cash receipts are properly collected, recorded and banked
b) To ensure that all cash payments are for proper purpose
c) To prepare cash flow forecasts
28. Which of the following are true about an external audit?

1 The auditor detects fraud and other irregularities
2 The auditor gives an opinion on whether the financial statements give a true and fair view
3 The auditor reports on whether the company has kept proper accounting records.
4 The auditor assesses whether the valuation (means that the monetary worth of something,
especially as estimated by a valuer). of the company is accurate
a) 2 and 4 only
b) 1,2 and 3 only
c) All of the above
d) 2 and 3 only
29. Why do companies need internal controls?

a) To ensure they gain new customers and markets
b) To detect and prevent fraud or error
c) To keep track of their competitors and suppliers
30. MTQ 1:
Task 1:
Complete the following definition.
“Assurance engagement” means an engagement in which __ express _______________ designed
to enhance of degree of _______________ of the _______________ about the outcome of the
evaluation or measurement of a _______________ against _______________.
1. Select which of the following fills Gap 1:
a) An auditor
b) A practitioner

a) A conclusion
b) An opinion

a) Confidence
b) Reliability

a) Intended users
b) Reliable party

a) Results
b) Subject matter

Exam PackFAB/F1
6. Select which of the following fills Gap 6

a) Criteria
b) Standards
Task 2:
Types of assurance services include:
a) Audit of historic financial statements
b) Evaluation of internal control
c) Information assurance
d) Project assurance
e) Quality assurance
f) Review of historic financial information
Required:
Which TWO of the above services are usually carried out by the external auditor. Select Two from
(a,b,c,d,e,f)
31. MTQ 2:
An internal control system, no matter how well designed and operated, cannot provide management
with absolute assurance that the objectives of internal are met.
Complete the following sentences about inherent limitations in an internal control system.
Task 1:
Human __________ in decision-making can be at fault and a breakdown in internal control can
occur because of human ___________
a) Error
b) Judgement
c) Nature
d) Rights

a) Error
b) Judgement
c) Nature
d) Rights
Task 2:
Controls can be circumvented (find a way around or overcome a problem or difficulty) by the
__________ of two or more people or inappropriate management __________ of internal
control.
a) Behavior
b) Collusion

Exam PackFAB/F1
c) Communication
d) Conflict

a) Override (use one's authority to reject or cancel)
b) Oversight (an unintentional failure to notice or do something.)
c) Skills
d) Supervision
Task 3:
Below are listed six considerations of limitations of internal control.
a) Fewer employees may limit the extent to which segregation of duties is practicable
b) Cost of internal control should not exceed the benefits derived
c) Growth in business activities may render controls ineffective
d) Management may fail to take appropriate action
e) Management must judge the nature and extend of the controls it chooses to implement
f) Oversight by an owner-manager may compensate for limited segregation of duties
Require:
Which TWO of the above are specific to smaller entities by selecting TWO from (a,b,c,d,e,f).
Explanation for MTQ 30

DEFINITION an assurance engagement is one in which a practitioner expresses a
conclusion designed to enhance the degree of confidence of the intended users other
than the responsible party about the outcome of the evaluation or measurement of a
subject matter against criteria.
In the case of an audit, the responsible party is the management of the company, the
practitioner is the audit firm and the users are primarily the shareholders. Agreed
subject matter – in the case of an audit, this would be the annual accounts of a
company.
Assurance services are audit activities that provide an independent, objective

assessment of financial statements or compliance efforts. These compliance,
regulatory, and financial statement audits are all considered assurance services. the
different types of assurance services include auditing and financial projections.
● Auditing Assurance Service.
● The Audience for Assurance Services.
● Financial Assurance Services.
● Non-Financial Assurance Services.

Exam PackFAB/F1
General controls Examples include

● making regular back-ups of data and storing them off-site;
● having an IT help-desk and IT training for staff;
● keeping computers in locked rooms;
● having a disaster recovery plan;
● all computers have log in codes;
● anti-virus software and firewalls;
application control examples include

1. Input controls
Data input controls ensure the accuracy, completeness, and timeliness of data during its
conversion from its original source into computer data, or entry into a computer
application. Examples are given below:
● Format checks: These ensure that information is input in the correct form. For
example, the requirement that the date of a sales invoice be input in numeric
format only – not numeric and alphanumeric.
● Range /Reasonableness checks: These ensure that input data is rejected or
highlighted if it is outside pre-set parameters. For example, where an entity
rarely, if ever, makes bulk-buy purchases with a value in excess of $50,000, a
purchase invoice with an input value in excess of $50,000 is rejected for review
and follow-up.
● Compatibility/dependence checks: These ensure that data input from two or
more fields is compatible. For example, a sales invoice value should be
compatible with the amount of sales tax charged on the invoice

Exam PackFAB/F1
● Sequence checks: ensure that sequential input of documentation/data is

maintained. These facilitate completeness of processing by ensuring that
documents processed out of sequence are rejected. For example, where pre-
numbered goods received notes are issued to acknowledge the receipt of goods
into physical inventory, any input of notes out of sequence should be rejected.
● Control totals: These also facilitate completeness of processing by ensure that
pre-input, manually prepared control totals are compared to control totals input.
For example, the total of all the invoices, such as the gross value, is manually
calculated. The invoices are input, the system aggregates the total of the input
invoices’ gross value and this is compared to the control total. This helps to
ensure completeness and accuracy of input.
● Existence checks: the system is set up so that certain key data must be entered,
such as supplier name, otherwise the invoice is rejected. This helps to ensure
accuracy of input
● Check digit verification: Check digits are used to protect against the transposition
of data i.e. errors arising due to accidental reversal of digits. This process uses
algorithms to ensure that data input is accurate.
● Document counts: The number of invoices to be input are counted, the invoices
are then entered one by one, at the end the number of invoices input is checked
against the document count. This helps to ensure completeness of input
2. Processing controls
Processing controls exist to ensure that all data input is processed correctly and that
data files are appropriately updated accurately in a timely manner. For example, the
balance carried forward on the bank account in a company’s general (nominal) ledger.
3. Output controls
Output controls exist to ensure that all data is processed and that output is distributed
only to prescribed authorized users.
IDENTIFICATION & PREVENTION OF FRAUD

(Chapter 19)

Exam PackFAB/F1
1. “The payroll function for an organization is often a high risk for fraud.”
Which of the following payment system weaknesses will make fraud more likely?
1 Inadequate time keeping arrangements
2 No independent personnel function
3 Poor wage distribution procedures
4 Wide management span of control
a) 1,3 and 4
b) 1,2 and 4
c) 2,3 and 4
d) 1,2 and 3
2. Which TWO of the following are prerequisites for fraud in circumstances where duties are not
segregated?
a) Motivation
b) Collusion
c) Collaboration
d) Dishonesty
3. Teeming and landing is a type of corporate fraud that involves which of the following?
a) Theft of cash or cheques
b) Incorrect descriptions of items
4. Bill is employed as accountant at Povey Co. he has not recorded any of the inventory returns to Povey
Co. from a customer.
Which of the following type of fraud has Bill committed by the above action?
a) Fictitious trading expenses
b) Inventory undervaluation
c) Understatement of sales
d) Theft of inventory
5. In a recent audit, it was discovered that Kynaston Co. deliberately overstated its inventory.
a) Reported profit will be higher than it should be
b) Capital will be understated
c) Payables will be undervalued
6. “Alan is an auditor who has discovered a suspected serious fraud at a client’s business.”
a) The shareholders
b) The police
c) The audit committee
d) The management
If Alan is considered as internal auditor than the answer is c and d but if we considered Alan as an
external auditor than the answer is a and c. depending upon the scenario
7. “Banks obtain a major source of funds from individuals opening up bank accounts”
Under present international regulation, when a company suspects that it has encountered a
transaction which involves money laundering. Which choice of action is it required to undertake?

Exam PackFAB/F1
True False
Inform the external auditors
Inform the appropriate regulatory authorities
8. “ABC Co. has accounting department with four staff. There is a high staff turnover so many staff is
new, with exception of Derek. Derek, an unqualified accountant, has been with the company for five
years. During that time, he has dedicated himself to his job and never even taken any holidays. He is
mainly responsible for maintaining receivables and also acts as the cashier.”
What features of ABC Co. increase the risk of fraud?

1. High staff turnover
2. Derek is unqualified
3. Derek has never taken holidays
4. Lack of segregation of duties
a) 1,2,3
b) 1,3,4
c) 1,2,3,4
d) 1 only
9. Which of the following mat indicate an increased risk of fraud in an organization?

1 High staff turnover
2 Disgruntled unhappy staff
3 Culture of non-compliance with policies and regulations
4 Authoritarian senior management
a) 2,3 and 4
b) 1,2 and 3
c) 1,2 and 4
d) 1,3 and 4
10. “The director of JOOS Co. suspects that Peter, their financial accountant is guilty of fraud”
Which of the following control strategies would reduce Peter’s motivation, but not necessarily his
opportunity to commit fraud?
a) Greater equity in pay and rewards
b) Authorization procedures for expense claims
c) Segregation of duties
d) Security checks
11. Which two of the following are examples of internal controls that could be introduced to prevent
fraud?
a) Segregation of duties
b) Corporate restructuring
c) Autocratic management style
d) Recruitment policies
12. Which of the following explains why a company’s financial profits may be under reported?

Exam PackFAB/F1
a) To convince a bank to provide a loan

b) To discourage fraud
c) To entice investors
d) To minimize tax liability
13. External auditor is responsible for identification and prevention of fraud. This statement is?
a) True
False

Business Organisation and Structure (Chapter 1) : Exam Packfab/F1

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Exam PackFAB/F1

BUSINESS ORGANISATION AND STRUCTURE

4. Which of the following P’s is an accepted element of the marketing mix?

6. What is meant by downsizing in the context of organizational structure?

SKANS School of Accountancy | Page 257

b) They emerge naturally.

10. Which of the following is an advantage of the business organization?

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b) True some of the time

15. Are the following organizational structures as suggested by Mintzberg?

16. Which of the following describe the scalar chain of command?

17. What are the two contributions of strategic apex?

SKANS School of Accountancy | Page 259

28. Which of the following is a potential advantage of centralization?

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a) Faster moving and more flexible organization

30. Which of the following statement is correct?

2. Which two of the following are connected stakeholders?

SKANS School of Accountancy | Page 261

6. What is the prime interest of the shareholders of the organization?

8. HOFSTEDE devised a framework that describes dimensions of differences/values perspectives

SKANS School of Accountancy | Page 262

13. Which culture got matrix structure?

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a) They are all true

a) All of the above

22. What is meant by the grapevine?

SKANS School of Accountancy | Page 264

8. Are the following key tasks of operational supervisions? Yes No

9. Which of the following is the best definition of authority?

SKANS School of Accountancy | Page 265

11. What is managerial approach of Elton Mayo?

13. Which of the following examines the working of an informal group?

SKANS School of Accountancy | Page 266

SKANS School of Accountancy | Page 267

3. Which two of the following are consequences of team ineffectiveness?

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7. Which of the following is recognized as a feature of group norms?

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12. Which of the following is an advantage of group cohesion?

13. Which of the following is a characteristic of a team as opposed to a group?

15. Which of the following reflects the informal organization?

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3. Which two of the following are good motivators according to Herzberg?

7. Which two of the following are extrinsic rewards?

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9. According to Herzberg, which two the factors are hygiene factors?

10. Consider the following two statements.

11. When performance related pay be paid?

13. Which two of the following are extrinsic rewards?

SKANS School of Accountancy | Page 272

PERSONAL EFFECTIVENESS & COMMUNICATION

1. Which type of ineffective communication is described by the following?

2. Which two of the following are principles of effective time management?

3. An instruction given to simultaneously to several subordinates reflects which pattern of

6. Which two of the following are benefits of counseling?

SKANS School of Accountancy | Page 273

8. Would the following results from a lack of communication?

RECRUITMENT & SELECTION

1. Which two of the following statements are true?

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c) A manager should priorities tasks