E1-231_E Finance and Accounting in Business

Mock Test 01
Dec 2024
Answer All Questions
Put your name/student number on every page or answer book.
Time: 90 minutes

1. True or False (0.4 marks each, total 2 marks)

Answer the following question by selecting the appropriate answer with an explanation.
You have to explain for false chosen answer.
Question 1
Corporate governance is a set of relationships between a company's management, its board, its
shareholders and other stakeholders

Question 2
Accountants need to be prepared to provide advice on how clients should account for technological
innovations

Question 3
Preference shares are always a type of debt capital

Question 4
Uncertainty denotes the inability to predict an outcome

Question 5
Preference shares carry the right to a fixed rate of dividend each year

2. Multiple Choices: (0.25 marks each, total 5 marks)

Answer the following question by selecting the appropriate answer.
Question 1
Manton plc has decided to support the launch of its latest product by means of a major television
advertising campaign. This is an example of
A. pull promotion
B. push promotion
C. a combination of pull and push promotion
D. personal selling

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Question 2
When a company's finance function prepares financial statements in accordance with legal rules and
accounting standards, it is engaged in the support activity of
A. record-keeping and stewardship
B. planning and control
C. external reporting
D. internal reporting

Question 3
Which of the following is a source of long-term finance?
A. Trade credit from suppliers
B. Bank overdraft
C. Factoring of trade debts
D. Mortgage on property

Question 4
Lan plc trains bankers. It has been established for over 30 years. Lan plc has a large operating core
which consists of all the well-qualified lecturing staff. They need to keep their teaching material
constantly updated to reflect current issues in the complex banking industry, and to ensure that the
company's courses remain competitive. The lecturers are supported by a large administrative team
which follows procedures to ensure the smooth delivery of courses. Which of the following
organisational structures does Lan plc have?
A. Entrepreneurial
B. Machine bureaucracy
C. Professional bureaucracy
D. Divisionalised

Question 5
Arkwright Ltd analyses huge quantities of data about a wide variety of issues from a wide variety of
sources. Arkwright Ltd is seeking competitive advantage from
A. its transaction processing system
B. big data
C. cybersecurity
D. its strategic planning process

Question 6
Three factors affect the motivation of employees in Ramble plc's accounting department:
I Working conditions
II Each employee's relationship with Reeta, the manager
III Challenging work

Reeta wants to classify the factors according to Frederick Herzberg's theory of hygiene factors and
motivating factors. Which of the factors are hygiene factors?
A. I and II only
B. II and III only
C. I and III only
D. I, II and III

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Question 7
The ability to meet the needs of the present without compromising the ability of future generations to
meet their own needs is known as
A. corporate responsibility
B. sustainability
C. business ethics
D. reversability

Question 8
Novel plc is establishing its accounting and finance function. The company has been told there are two
purposes of published, audited financial statements. These are to help users assess how effectively
managers are running a business, and to make judgements about the likely levels of risk and return in
the future. Which of the following user groups of Novel plc's published, audited financial statements is
most likely to use accounting information for these purposes?
A. Community representatives
B. Employees
C. Shareholders
D. Managers

Question 9
Tom Burns and G M Stalker classified organisations as 'mechanistic' or 'organic'. Which of the
following is an appropriate description of a mechanistic organisation?
A. Commitment to organisation's mission
B. Network structure of control
C. Relatively flexible job descriptions
D. Suitable for slow moving environments

Question 10
Manator Ltd has developed a new product for use in the nuclear power industry. Tests on the product
have been successful and the product has been given government approval for use in the UK. However,
a vocal group of lobbyists claim there is a danger to human health in the long term if the product leaks
into the water supply. The company now has an insurance policy to cover all the company's liabilities
in the event of a legal claim against the company following a leakage. Manator Ltd is managing the
risk through:
A. risk avoidance
B. risk reduction
C. risk transfer
D. risk acceptance

Question 11
A family-owned removals company has liquidity problems and needs an injection of funds. From the
following list identify which would be classified as a source of short-term finance for this company.
A. Share capital
B. Bank loan
C. Factoring
D. Commercial mortgage

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Question 12
The chief executive of Darley plc is considering several strategic options for the company. The Johnson
and Scholes criteria against which these can be judged are:
A. economy, effectiveness and efficiency
B. economy, expectation and efficiency
C. acceptability, congruence and feasibility
D. acceptability, suitability and feasibility

Question 13
Rianna is a senior manager with Vivra plc. She works in the finance function of the company, but has
no formal qualifications in finance. She is highly influential within the finance function with both
subordinates and also with managers who are more senior to herself. This is because of her ability to
motivate and persuade those around her with her personality and intellectual abilities. Rianna exhibits
which type of power within Vivra plc?
A. Referent power
B. Expert power
C. Legitimate power
D. Coercive power

Question 14
In the home computer market, laptop computers are an example of a:
A. product form
B. brand
C. product class
D. generic product

Question 15
Debesh and Mayghar are two sole traders who want to amalgamate their businesses. Both wantto retain
day-to-day control of their respective operations, but they do not want to be individually responsible for
the full extent of the merged business's borrowings. They want to keep their affairs as private as
possible. They should be advised to establish the merged business as:
A. a general partnership
B. public limited company
C. a limited liability partnership
D. a private limited company

Question 16
Maximising the wealth of its shareholders is the stated goal of Avernanche plc. The company's
objectives have been expressed as a hierarchy of primary and secondary objectives. Identify which of
the following is most likely to be Avernanche plc's primary business objective.
A. To increase the annual profit after tax by 125% in the next 10 years
B. To introduce an average of two new products each year for the next six years
C. To double the share price within the next 10 years
D. To become the market leader in four market segments within the next 10 years

Question 17

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 J Ltd is a very large company which makes and sells a number of unrelated products. These products
are sold in diverse markets around the world. J Ltd does not want a structure that creates dual command
within the organisation.

Which organisational structure would be most suitable for J?

A. Matrix
B. Entrepreneurial
C. Divisional
D. Functional

Question 18
Nextron plc manufactures washing machines. It has a 20% share of the UK market. The company
wants to increase its revenues so has decided to add tumble dryers to its range of products. In terms of
Ansoff's matrix, this represents a growth strategy of:
A. market penetration
B. product development
C. market development
D. diversification

Question 19
The information systems manager of Detrex plc wants all data input into the company's databases to be
complete and accurate. As part of his information management role, he makes use of range checks. The
use of range checks should help to deliver
A. completeness only
B. accuracy only
C. both accuracy and completeness
D. neither accuracy nor completeness

Question 20
Under a unitary board structure, a company's board of directors is responsible for both management of
the business and reporting to
A. the non-executive directors
B. the supervisory board
C. the company's employees
D. the company's shareholders

3. Short questions (1,5 marks each, total 3 marks)

Answer 2 out of 4 following questions.
Question 1
Why do companies need to pay attention to the stakeholders? Please give example of a company with 2
different type of stakeholders to explain the reasons?

Question 2
In your opinion, what are the 2 appropriate sources of finance for our university (UEB)? Please explain
why.

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Question 3
Can you give two examples of information system? Are they TPS, MIS or EIS? Please explain why.

Question 4
What is the difference between authority and power? Please give 2 examples to explain the difference.

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