Paper F1

ACCA

Accountant in
Business
Mock Exam 2

Answers
(Duration: 3 hours)

LSAM

Mock Exam - 2 (Answers)

ANSWER 1
A
The statement is true as it is the correct definition of limited liability.

ANSWER 2
D
The secretary is involved with all of the administration of the meeting including fixing the time
and date, preparing the agenda, taking notes during the meeting, circulating them after the
meeting and dealing with any correspondence from committee members. A, B and C are all
roles of the chairman.

ANSWER 3
D
A is describing a cost leadership strategy, B a differentiator and C an organisation with a
focus strategy.

ANSWER 4
D
B would be monitored under the political heading and A and C would be monitored under the
social/demographic heading.

ANSWER 5
D
Fayol and Taylor believed in 'one best way' the optimum way to organise the firm and do
the individual job.

ANSWER 6
C
Classical, demand and supply are all theories on how to manage the economy.
The classical view is to do nothing. If the government does not interfere, the economy will
move into equilibrium with full employment.
Demand side or Keynesian view is that there is more than one equilibrium of supply/demand
and the government needs to intervene to move to a better equilibrium quicker. Government
spending then stimulates economic growth and money is repaid through increases in future
tax revenue.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

Supply side theories state that equilibrium will occur when supply is equal to demand in all
markets of the economy.
The economy will naturally gravitate to the equilibrium unless hindered by market
imperfections such as inflation or minimum wages. The role of government is to remove these
imperfections.

ANSWER 7
C
The other important objectives are: ensuring that consistency and fair play are maintained;
enabling both sides of an argument to be stated; minimising the effect of bullying tactics;
ensuring a proper record of all the proceedings is kept.

ANSWER 8
A
Motivation is the urge to achieve goals, the drive to excel. It is concerned with why people
choose to do one thing rather than another and with the amount of effort or intensity of action
that people put into their activities.
Rarely being absent from work on grounds of illness, pride in belonging to the company and
being content with remuneration are all characteristics of satisfied (as opposed to motivated)
workers.

ANSWER 9
B
Other ways in which mentors can assist include giving advice on administrative problems
facing the new recruit and helping to tackle projects by pointing the recruit in the right
direction.

ANSWER 10
A
The other main reasons are: employees will be motivated in the knowledge that they operate
in an environment of good ethical corporate behaviour; good ethics should be seen as a
driver of profitability; an ethical framework is part of good corporate governance and suggests
a well-run business.

ANSWER 11
D
In situations A, B and C the decision makers bear a major share of the wealth effects of their
decisions.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

ANSWER 12
B
The statement is false. Improvement in the work of individuals is the underlying objective; this
should lead to an improvement in the achievements of the organisation as a whole.

ANSWER 13
A
The Directors as a whole are responsible for the production of the financial statements
however this responsibility is often delegated within the company to the Finance Director (FD)
or Chief Financial Officer.

ANSWER 14
B
The statement is false. The key purpose of an accounting function should be to produce
financial information for use in making decisions, not justifying them.

ANSWER 15
B
Window dressing may involve sales made just before the year end being the subject of
inflated invoices which are corrected by the issue of credit notes in the new year.

ANSWER 16
A
Other objectives include: ensuring the accuracy and completeness of the accounting records;
the timely preparation of reliable financial information; the safeguarding of assets; the
prevention and detection of errors and fraud.

ANSWER 17
A
In extreme cases of inflation the function of money may break down, leading to civil unrest
and even war.

ANSWER 18
C
There should be a division of responsibilities so that one person could not set up a fictitious
employee with their own bank details and pay them, or process a payrise or bonus for
themselves.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

ANSWER 19
A
Power culture is characterised by one central source of power, few procedures and rules.

ANSWER 20
A
An audit committee can set the agenda for internal audit, receive internal audit reports and is
able to ensure that internal audit is properly resourced since it has a voice at main board
level.

ANSWER 21
B
Task roles include setting objectives, planning tasks, allocating responsibilities, opinionseeking, decision-making and evaluating.

ANSWER 22
D
The emphasis in marketing on pre-empting and meeting customers needs gives rise to a
belief system that places the customer at the centre of organisational activity.

ANSWER 23
C
Accountability is about answering to or reporting to an upward requirement.

Authority is the right of someone often by virtue of their position in the hierarchy to make
decisions or give orders.

Empowerment is the process whereby greater authority and discretion is given to lower levels
in the organisational hierarchy.

Super-ordination is a process whereby something is higher than something else in a

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

ANSWER 24
A
McGregor presented two opposite sets of assumptions made by mangers about their staff.
These assumptions, which he called Theory X and Theory Y, are implicit in most approaches
to supervision. Theory X people dislike work, need direction and avoid responsibility. Theory
Y people are at the opposite end of the continuum and find work as natural as rest and play.

ANSWER 25
B
Database systems reduce the possibility of departments holding conflicting data on the same
subject (data redundancy).

This is an advantage of databases as the data is held in a central point which can be
accessed by staff from different departments.

ANSWER 26
A
Standard questions ensure each interviewee gets the same questions whether or not the
interviewer likes them.

ANSWER 27
A
The three levels of control are strategic, tactical and operational.

ANSWER 28
D
A refers to seasonal unemployment
B describes fictional unemployment
C refers to structural unemployment

ANSWER 29
C
External auditors are appointed by the shareholders and are therefore accountable to them.
The external auditor should be someone independent from outside the company and should
not be accountable

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

ANSWER 30
B
Shaper the task leader
Resource Investigator an extrovert and networker, someone who looks for alternative
solutions
Team worker holds the team together by being supportive

ANSWER 31
A
Induction is the process of familiarisation when someone commences a new job. Recruitment
is the process of attracting a pool of candidates to apply for a position. The probationary
period is the trial period when an employee starts a job where he or she has to prove they are
capable of doing the job well before being offered the job on a permanent basis.

Appraisal is the review of an individuals performance and assessment of their potential.

ANSWER 32
D
In an entrepreneurial structure the owner/manager takes all the decisions therefore they are
made quickly and ensure they are congruent with the organisations goals

ANSWER 33
B
The statement is false.

Research has shown that the words that are spoken account for 10% of the impact of
communication. 40% is from the tone of voice and 50% from an individuals body language.

ANSWER 34
B
Masculinity is when traditionally masculine values such as material success and achievement
are dominant.

High uncertainty avoidance exists when there is a dislike of risk and uncertainty.

Low power distance is when an equality is power is not accepted.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

ANSWER 35
C
Connected stakeholders can be viewed as having a contractual relationship with the
organisation and includes shareholders, lending bankers, suppliers and customers.

Central Government and pressure groups are external stakeholders.

Directors are internal stakeholders.

ANSWER 36
C
The four learning styles identified by Honey and Mumford are theorist, reflector, activist,
pragmatist.

ANSWER 37
C
Where there are areas where Taylors principles are still relevant, most modern theorists
would argue that a more progressive approach is needed where workers can be motivated by
other methods than tight control and financial reward

ANSWER 38
B
The centralised patterns of communication are the wheel, chain and Y. Circle and all channel
are decentralised as they do not rely on one central source of communication.

ANSWER 39
D
An effective appraisal is one where the employee and manager work together to solve
problems. It should not be dominated by either the manager or the appraisee.

ANSWER 40
B
The four stages of Kolbs learning cycle are concrete experience, reflective observation,
abstract conceptualisation and active experimentation.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

ANSWER 41
C
Job enlargement involves increasing the number of activities an individual is involved with.

Job rotation is the planned rotating of staff between jobs to alleviate monotony and provide a
fresh job challenge.

ANSWER 42
D
A refers to an entrepreneurial structure
B is typical of a functional structure
C describes a divisional structure
In a matrix structure individuals will have dual command, a functional manager and a
divisional manager. This can cause conflict between departments and stress for the
individual.

ANSWER 43
B
The statement is false.

A long scalar chain is associated with a narrow span of control.

ANSWER 44
B
A describes a budget deficit. Government income comes from taxation.

ANSWER 45
B
The statement is false.

Equal opportunity is the belief that their should be an equal chance of a worker being able to
apply for a position, be selected for that position, being trained, promoted and treated fairly
irrespective of their sex, race, disability or marital status.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

Diversity expands horizons beyond equality issues and builds on recognised approaches to
equal opportunities. It is the creation of an environment in which employees can flourish and
benefit the organisation, themselves and society in general.

ANSWER 46
A
The treasury department will monitor foreign exchange and try to minimise the companys
exposure to foreign exchange losses.

ANSWER 47
B
The team is at the storming stage of team development where the team faces conflict over
roles, objectives and norms of behaviour.

ANSWER 48
B
This is classed as age discrimination so therefore is unfair dismissal. Options A and C are fair
grounds for dismissal.

ANSWER 49
A
The key objective of the International Accounting Standards Board (IASB) is to develop a
single set of global accounting standards.

The IASB replaced the International Accounting Standards Committee in 1990.

The International Financial Reporting Interpretations Committee provides guidance on the use
of standards in practice if there is any confusion over a standard or conflict between
standards.

The European Union has little involvement with international accounting standards.

ANSWER 50
C
Margaret is likely to go to work to satisfy her social needs since she has no family to support.
She could be motivated by allowing her to work in a team or have more flexibility in her role.

LondonSAM

F1 - Accountant in Business

Mock Exam - 2 (Answers)

LondonSAM

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F1 - Accountant in Business