Accountant in Business (AB) (Test-1) (Sep19-Aug20)

ACCA Qualification
Test Name:
Accountant in Business (AB)
Time allowed:
2 hours
Pass Mark:
50%

This test contains 2 sections:

 Section A:
o 46 questions, each worth 1 or 2 marks
o 76 marks in total.

 Section B:
o 6 questions, each worth 4 marks
o 24 marks in total.

All questions within each section are compulsory.

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Section-A
1. Accounting packages sold by IT companies to small and medium enterprises currently offer
cloud accounting services.
Which of the following is a benefit to such businesses of using cloud accounting services?
The service provider cannot access the user's information

Data is stored in one single on-site location

Information is simultaneously available to multiple users

2. Performance and appraisal enables the organisation and the employee to assess progress made
in the job and evaluate strengths and weaknesses.
Which TWO of the following are additional purposes of appraisal?
Considering future education, training and development needs

Assessing future prospects in the organisation

Providing job instruction on key tasks

Reviewing the organisation's grades and salary scales

3. Northland, Southland, Eastland and Westland are four countries in Asia. The following
economic statistics have been produced for the year 20X7:

Country Northland Southland Eastland Westland

Change in GDP (%) -0.30 +2.51 -0.55 +2.12
Balance of payments current +550.83 -350.47 -150.90 +220.39
account ($m)
Change in consumer prices (%) +27.50 +15.37 +2.25 +2.15
Change in working population -4.76 +3.78 +1.76 -8.76
employed (%)
Which country experienced stagflation in the relevant period?
Westland

Southland

Northland

Eastland

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

4. Adam, Boris, Chow and Dev all work from home. Boris, Chow and Dev all report to the same
manager at the company's head office. Adam reports to Boris and has no communication with
the manager at head office. Boris, Chow and Dev never contact one another directly. Any
communications between them take place through their manager.
The pattern of communication described above is represented by which of the following?
The circle

The chain

The Y

The wheel

5. Who prefers training to be designed to allow time for analysis in accordance with Honey
and Mumford's classification of learning styles?
An activist

A pragmatist

A theorist

6. In relation to data protection laws, which TWO of the following should be classified as
personal data?
The payment record of Hardy Limited, a customer

The accountant's opinion of Abdul, the finance director

The absence record of Cheryl, an employee

7. Which TWO of the following sources of financial information about a company are
external reports?
Budgets

Variance reports

Statement of profit or loss

Statement of cash flows

8. A junior accountant has been placed in a situation which she thinks presents her with an
ethical dilemma.
Which of the following would NOT be a suitable question for the accountant to ask herself
when resolving her ethical dilemma?
Am I being loyal to my manager?

Could I defend my decision in the face of public scrutiny?

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Have I considered all the parties who may be affected by my decision?

Would an informed third party think my decision is fair?

9. Desmond works as part of a team. Whilst he is very good at turning ideas into practical
solutions, he can be somewhat inflexible and slow to respond to new opportunities.
Which of Belbin's team roles best describes Desmond?
Monitor-Evaluator

Implementer

Plant

10. Stakeholders are often categorised as external, connected and internal.

Which TWO of the following are examples of connected stakeholders?
A shareholder

A supplier

An executive director

A pressure group

11. A manager who can manage their time well is able to recognise and distinguish which tasks
are ____________ and ____________ .
Which TWO words correctly complete this sentence?
Important

Urgent

Necessary

12. Which types of goods tend to be bought and used together?

Substitutes

Complements

Inferior goods

Giffen goods

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

13. Which TWO of the following are potential effects of constructive conflict?
Defensive attitudes replace aggressive behaviour

Creativity and innovation is encouraged

Task focus takes precedence over social cohesion

A variety of solutions to problems is introduced

14. In relation to fraud prevention what objective should external auditors have in
designing and implementing their audit procedures?
A reasonable prospect of detecting irregular statements or records

The identification of every inconsistency or error within the records

To provide a systematic check of every recorded transaction

To verify pre-determined samples of all types of records

15. In which of the following structures would an employee be responsible to both the sales
department manager and the manager for product Alpha?
Matrix structure

Product structure

Functional structure

16. Adam is employed by a supermarket chain. His advertising campaign attracted hundreds of
new customers to the organisation, for which he was paid a bonus.
Which of the following describes the intrinsic reward that he received?
A sense of achievement

A financial compensation

17. An accounting system can independently download transactions from an organisation's

online bank account. The system can recognise certain key words in the bank transactions from
its own experience of processing such transactions. It then assigns the transactions to the
appropriate nominal codes and records the transactions in the correct accounts.
Which financial technology is the situation describing?
Machine learning

Big Data analytics

Automation

Robotics

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

18. Which TWO of the following are professional qualities expected of an accountant?
Courtesy

Independence

Social responsibility

19. The usual requirement for limited liability companies to keep proper records and books
of account is dictated by which of the following?
Generally accepted accounting practice

Auditing standards

National legislation

International accounting standards

20. E Co's corporate code of ethics makes commitments to a range of different stakeholders. The
commitment to one group of stakeholders highlights the company's supply chain policies which
include a commitment to 'Fairtrade' and the use of organic ingredients. It also highlights the
company's commitment not to test the company's products on animals.
Which commitment is this most likely to be?
Core principles

Financing commitment

Commitment to customers

Commitment to employees

21. Which TWO of the following are examples of standing data found on an employee's
payroll file?
Net salary

Rate of pay

Leave entitlement

22. Which TWO of the following are characteristics of an effective team?

Passive acceptance of decisions

Constructive criticism

Free and open communication

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

23. In relation to selection interviews which of the following is a description of the 'halo
effect'?
Making a conscious decision about interviewees based on placing greater emphasis on
personal characteristics rather than their technical knowledge and competence
Making positive judgements about the suitability of interviewees based on the
subconscious influence on the interviewer of the interviewee's personal traits
Assuming that all interviewees from a specific source, category or grouping will share the
same personal attributes and characteristics
Making a decision about the suitability of interviewees quite early on in the interview
process

24. Which of the following organisations would rely most heavily on value for money
indicators and efficiency rather than information on performance and profitability?
A local authority

A private accountancy college

A pension fund

A small retailer

25. JKL Co is a multinational organisation that produces pharmaceuticals. These are all
manufactured in different countries and each manufacturing facility has its own executive
organisation that operates autonomously.
This is an example of which type of organisational structure?
Matrix

Divisional

Product

Functional

26. The legal concept of _________ protects employees against arbitrary dismissal; that is
dismissal without good reason.
Which of the following correctly completes the sentence above?
Unfair dismissal

Wrongful dismissal

Constructive dismissal

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

27. Joanne works in the human resources department of CBA Co. One of her roles is to offer
advice to employees of the company who are experiencing personal difficulties such as stress,
personal relationship problems and other matters affecting their work. Joanne provides guidance
on a one-to-one and confidential basis, often referring employees to consultants or organisations
that can provide specialist advice.
What is Joanne's role in CBA Co?
Buddy

Counsellor

Coach

Mentor

28. Which TWO of the following are found within the first level of Schein's determinants of
culture?
Attitudes

Relationships between managers and staff

Norms of behaviour

29. Which TWO of the following are reasons for the increased participation of women in
the labour force?
Fewer part-time jobs

Growth of the service sector

Increase in the average age that women decide to have children

Increase in male dominated boards

30. All gifts and hospitality offered to a professional accountant by a client pose an ethical threat
and should be declined.
Is this statement true or false?
False

True

31. A company's published accounts will include an auditor's report.

To whom is the audit report addressed?
To the shareholders

To the management

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

32. A rapid expansion in the use of broadband technology by consumers has the most
impact on which of the following business processes?
Terms negotiated with suppliers

Order processing and distribution

Use of advanced manufacturing techniques

Quality management and control

33. To whom do the external auditors of a company owe a duty of reasonable care and
skill?
The directors

Existing and potential investors

The shareholders as a collective body

The company and individual shareholders

34. Stephan is planning his work for the day.

Once Stephan has decided what has to be done what should he now do in order to manage
his time effectively?
Deal with all matters marked as 'urgent' in his in-basket

Work on the most complex task first in order to get it out of the way

Work on the tasks that others are pressurising him to complete

Set priorities and schedule the work according to these priorities

35. The payables ledger section of the finance team relies on the purchasing department to
do which TWO of the following?
To inform them of payments received

To confirm the validity of invoices received from suppliers

To advise them of all purchase orders

36. Two departments have requested a new photocopier, but the company cannot afford two
machines. The proposed solution is to provide a shared access to a single new copier and place
the copier between the two departments.
What type of conflict resolution is this?
Win-win

Lose-lose

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Win-lose

37. TECA Co has to decide whether to replace its physical retail outlets with a call centre.
This decision relates to which component of the marketing mix?
Price

Place

Product

Promotion

38. Alison has carried out a training needs analysis for a team in her organisation and has
concluded that certain training requirements must be addressed.
What is the next action that she must take?
Establish how the training should be evaluated

Decide on the method of training

Define the precise training objectives

Align training needs with organisational needs

39. The following statements refer to the role of the International Federation of
Accountants (IFAC). Are each of the statements true or false?
. True False
IFAC is responsible for promoting ethical education standards

IFAC is responsible for preparing and publishing global accounting standards

40. Which of the following systems is most relevant to the work of a procurement
manager?
An advanced manufacturing system that will reduce the length of the working capital
cycle
A satellite tracking system that will monitor and record deliveries of finished goods

A just-in-time system that will reduce inventories of raw materials

An internet-based customer order fulfilment system

41. According to Heifetz what should leaders do to facilitate change effectively?

Maintain psychologically close relationships and balance the needs of individuals and
teams with the need to achieve key tasks
Identify the members of the team who are most able to adapt and develop their
knowledge, competencies and skills over time

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)
Instill in team members an understanding of their need to adapt their values, attitudes and
behaviours over time
Create an environment of participation and involvement to ensure that team members are
fully aware of challenges that face them

42. DEF Co operates in a country where the government has adopted a principles-based
approach to regulation. Companies are encouraged to adhere to generally accepted good
standards of corporate governance. DEF Co wishes to reappoint two of its non-executive
directors to the board for a third term of three years. It believes that this is in the best interest of
the company and its shareholders. However the code of practice applicable to listed companies
such as DEF Co states that non-executive directors should serve a maximum of two terms of
three years.
What action should DEF Co take?
Seek permission from the government to reappoint the non-executive directors
Appoint new non-executive directors to replace those who have served two terms of three
years
Reappoint the non-executive directors and explain the reasons for its actions in the annual
report
Reappoint the non-executive directors and make no reference to this in its annual report

43. The sales team of GFE Co has been together for some time. The members have got to know
one another quite well, but they are still encountering difficulties in reaching consensus on
decisions.

Several team members have not yet got to the stage at which they fully trust others, and they are
reluctant to be totally open and honest about how they feel.
According to Tuckman's theory which stage of development has the team reached?
Norming

Performing

Storming

Forming

44. Which of the following statements about ethics is true?

(1) Ethics are a set of moral principles to guide behaviour
(2) If an action conforms with the law then it is ethical
Statement 2 only

Statement 1 only

Neither statement

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Both statements 1 and 2

45. Which of the following assesses the overall effectiveness of internal controls in an
organisation?
Systems audit

Probity audit

Internal check

Substantive tests

46. Hai is the minister responsible for the organisation of the civil service in his country.
Historically the civil service has been organised as a tightly controlled, bureaucratic structure. He
would like each department within the civil service to become focused on deliverables emanating
from their formal objectives and capable of responding to changing priorities quickly and
efficiently. Hai wants the civil service to become more accountable for results with department
managers being judged by their performance in well-defined spheres of activity.
With reference to Handy's cultural typologies what change in the organisation is Hai
seeking to achieve?
From a person culture to a task culture

From a role culture to a power culture

From a role culture to a task culture

From a task culture to a role culture

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Section B
Question-1: (4 marks)
Organisations have relationships with several types of stakeholders who themselves have varying
levels of power and interest in relation to business activities.
Complete the following sentences:
The stakeholders of an organisation are often categorised as internal, connected and external
stakeholders.
Internal stakeholders include parties such as: (1)
Connected stakeholders include (2)
External stakeholders include (3) and are most relevant when
analyzing (4)

Stakeholder analysis is carried out by many organisations using stakeholder mapping, and some
use the Mendelow grid as a framework for this analysis. This proposes different strategies
according to the level of power and interest. For example, Mendelow's theory suggests that those
who have a low level of power and a high level of interest should be
(5) while those with a high level of interest and a high level of
power should be (6)

When used in strategic planning, stakeholder analysis considers the company's potential
relationships with its stakeholders over a period of (7)

Most strategic writers consider that it is necessary to

(8) .

Select the correct options from the following list:

(1) (5)

(2) (6)

(3) (7)

(4) (8)

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Question-2:
Background
XXX Co is a multinational corporation manufacturing and selling all kinds of foods and
household goods. It has divided its activities into five distinctive product groups: health and
beauty, drinks, food, appliances and textiles. Each product group has its own management
structure and support functions, including administration, finance, human resources and
marketing.

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

ZZZ Co provides accountancy and tax advisory services. It operates from a small headquarters
but most of its advisers have no permanent office, because they frequently work at the premises
of clients, and at other times they work from home. When the advisers are at headquarters, a 'hot
desk' facility is provided, where advisers can take a free space anywhere in a large open plan
room. Very few face-to-face meetings are organised, as the company makes extensive use of
audio and video conferencing.
1.5 marks
Task 1
For each company, indicate the applicable organisational structure.
. Divisional Virtual Matrix
XXX Co

YYY Co

ZZZ Co

1.5 marks
Task 2
In relation to Schein's theory of organisation culture, indicate which THREE of the
following are elements of observable (or explicit) culture (at the first level of the model).

Task 3 1 mark

In relation to Mintzberg's organisation theory, indicate which of the following is the term
used to describe those involved in standardising processes and finding the best ways of
doing jobs.

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Question-3: (4 marks)

Most large companies must engage the services of an external auditor.

Complete the following by filling the gaps.
The external auditor of a company is appointed by the (1) each
year. The contract between the company and the external auditor is a
(2)
The primary duty of the external auditor is to submit a report to the
(3) , the primary purpose of which is to
(4) that the financial statements of the company
(5)
Auditors carry out various types of test. (6) tests are used to ascertain whether
numerical data is correct or not, and (7) tests are carried out to determine
whether controls are working correctly.
In discharging their duties, auditors must not allow bias, conflict of interest or undue influence
to affect their work. This requirement is referred to as (8)

Select the correct options from the following list:

(1) (5)

(2) (6)

(3) (7)

(4) (8)

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Question-4: (4 marks)
There are a range of theorists and theories on the nature and style of leaders, managers and about
the objectives of management as a key functional role in business.

Select the correct options to complete the following text

Professor John Adair's action-centered leadership model, sometimes referred to as the
(1) , focuses on what leaders need (2) , in contrast
to the traits theory that focuses on (3)

Adair suggests that leaders must strike a balance in respect of three activities: achieving the task,
maintaining the group (or team) and (4)

The leader who focuses excessively on acheiving the task resembles the
(5) leader as described in the Blake and Mouton managerial grid,
whereas the leader who attempts to empathise excessively with the team could be described in
the Blake and Mouton model as adopting the (6) style

Adair's model has been put into practice by many companies who require leaders to bring
working groups together on a regular basis to consider policies, products, people and other
relevant issues in order to enhance better working relationships. These forums are referred to as
(7)

Generally, Adair's approach favours the (8) approach to leadership.

Select the correct options from the following list:

(1) (5)

(2) (6)

(3) (7)

(4) (8)

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Question-5: (4 marks)
Jacques, Ki, Larissa and Maureen are all specialists employed by a local government
authority.

Jacques visits tenants who rent houses and apartments from the authority. His job is to
deal with tenants who are experiencing financial difficulties. It involves helping them to
draw up a true picture of their financial position and from that prioritise their expenditure
in order to enable them to resolve or minimise their difficulties. The end result of
Jacques' interviews is a plan of action that will enable them to remain in their homes.

Ki works with the negotiators in the procurement department. The negotiators are highly
experienced, but Ki's job is to add value to their efforts by helping them to develop their
strengths and overcome their weaknesses. She describes her work as a continuous
process of reviewing in order to improve.

Larissa works in the human resources function. As the authority has several hundred
employees, some of them experience personal difficulties such as divorce, separation,
addiction and so on. Larissa helps employees to address their personal issues in order
to overcome them. Larissa sometimes refers employees to specialist agencies.

Maureen also works in the human resources department. She works closely with new
employees on an individual basis in order to help them integrate with their colleagues.
She encourages each individual to prepare a plan through which they will take the
learning experiences of the induction programme into the workplace, and then guides
them over a four month period, helping them to achieve their targets and address any
specific difficulties they encounter. Maureen describes her role as 'a process for
informal communication of knowledge and social support'.

For each individual, state whether they are involved in coaching, counselling or
mentoring.
. Mentoring Counselling Coaching
Jacques

Ki

Larissa

Maureen

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Accountant in Business (AB) (Test-1) (Sep19-Aug20)

Question-6:
Background
XYZ Bank is a regional financial institution. Its internal audit department reports to the finance
director.

Sam is an internal auditor for XYZ Bank. While carrying out an inspection at a branch office, he
identified a large cash payment that was not backed up with documentation or other records.
Sam decided to refer the matter to Raj, his immediate manager.

Raj was keen to sign off the audit visit, as it was scheduled to be completed by the end of that
day. He told Sam that having dealt with the branch for eight years there was never a problem
with this branch and that the manager was extremely diligent and honest. Raj added that he had
known the manager since his school days and was sure that there was a perfectly good
explanation. The manager who processed the transaction left the bank several months ago and
now works abroad.

Raj told Sam that if he was unhappy with signing off the audit he would leave it to his
professional judgement, but he would be inclined to leave the matter as it was very unlikely that
there had been any irregular behaviour.
2 marks
Task 1

Select the TWO threats to independence that have created an ethical dilemma.

2 marks
Task 2
The banking regulator has informed XYZ Bank that it is inappropriate for the internal audit
department to report to the the finance director
Select the TWO parties to which it would be appropriate for the internal audit department
to report
The company secretary

The chief executive officer

The board of directors

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