F1 Midterm Exam

Name:________________

Please circle the best answer for each question below.

1. A country is experiencing high demand and high inflation. Which

of the following is most likely?

A. Productivity of the country has increased

B. Long-run aggregate supply has increased
C. Long-run aggregate supply has not increased

2. The implementation of a budgetary control system in a large organization

would be the responsibility of the internal auditor.

Is this statement true or false?

A. True
B. False

3. Robert has a span of control of two. This means that he has:

A. Two main job responsibilities

B. Two employees who report directly to him
C. Two bosses whom he directly reports to
D. Two different departments that he has been attached to

4. An organization that has a large number of managerial layers is called a:

A. Flat organisation
B. Tall organisation
C. Narrow organisation
D. Wide organization

5. Business organization will contain only formal groups.

A. True
B. False

6. According to Charles Handy’s four cultural stereotypes, which of the

following organisations would adopt a role culture?

A. A large traditional corporate

 B. An owner / operated enterprise
C. A NGO
D. A public sector organization

7. In mendelow’s stakeholder mapping system, stakeholders are cateorised

in terms of their:

A. Interest and power

B. Influence and money
C. Influence and power
D. Interest and money

8. Standing committees operate on an on-going basis. They are put

together to serve a particular function and meet periodically.

A. True
B. False

9. Changing consumer tastes represent what type of environmental factor?

A. Political
B. Technological
C. Social
D. Economic

10. The price of a particular set of goods and services has increased
over time. This represents the existence of:

A. Balance of Payments equilibrium

B. Full employment
C. Deflation
D. Inflation

11. When an organization reduces its number of managerial layers it is said

to be:

A. Downsizing
B. Delayering
C. Rightsizing
D. Rightlayering

12. Country Ruraltania imports $500 million worth of goods and services and
also exports $275 million worth of goods and services. Ruraltania will
have:

A. A current account deficit

B. A current account surplus
 C. A current account equilibrium

13. To increase sales, Perfect Pizza decides to introduce a “buy one –get
one free” scheme. This is on example of which one of the 4 “Ps” of
marketing?

A. Product
B. Price
C. Place
D. Promotion

14. The accounting and purchasing departments perform very

different functions and therefore do not share any relationship.

A. True
B. False

15. Excel plc has made payments of salaries to its office staff,
consulting fees to its lawyer and taxes to the government. Recording
and classifying these expenses under different categories is the
responsibility of it’s:

A. Management accountant
B. Internal auditor
C. Financial accountant
D. Cost accountant

16. Which of the following is not a function of an internal auditor?

A. Determining whether an organisation is maintaining adequate records

B. Ensuring that the assets of an organisation are safeguarded and in
good working order
C. Stating that the financial statements of the organisation are true and
fair
D. Determining whether the operations of the organisation are running
effectively and efficiently

17. Which of the following is most likely to be tall organisation?

A. A large multinational bank

B. An internet start up organisation
C. A law firm
D. None of the above

18. The grapevine represents the way gossip is spread across an

organisation?
 A. True
B. False

19. Michael turner is the billionaire chairman of a group of 17

companies. He owns a majority stake in each of these companies and
has a hands-on style of leadership. Which of Handy’s for four cultures is
his organization likely to fall under

A. Zeus organisation
B. Apollo organisation
C. Athena organisation
D. Dionysus organisation

20. External stakeholders have a financial link with the organization.

A. True
B. False

21. Which of the following is true for an ad-hoc committee?

1. It deals with a particular crisis / situation

2. Once that particular purpose is served it gets dissolved permanently
3. It serves a particular function of the organization on an on-going basis
4. None of the above

22. The set of policies and procedures that determine how an

organization is directed administrated and controlled is called ……
…………………..

A. Corporate governance
B. Social responsibility statement
C. Corporate responsibility statement
D. Social governance

23. Which of the following structures is best placed to address the

need for co-ordination in very complex situations?

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

24. The staff of Lively Ltd share a lot of common interests and often
meet socially both inside and outside work. The grapevine is regarded
by many staff as the most reliable source of company information and
 staff have developed their two approaches to many aspects of their
work. This form of organisational arrangement I characteristic of which
of the following?

A. Decentralisation
B. Divorce of ownership and control
C. Wide span of control
D. The informal organisation

25. Which of the following is a disadvantage of a functional structure

A. Lack of economies of scale

B. Absence of standardisation
C. Specialists feel isolated
D. Poor horizontal communication

26. Information is data that has been processed in such a way that it
has a ………. to the person who receives it, who may then use it to
improve the quality of decision-making

Which word correctly completes this definition?

A. Meaning
B. Usefulness
C. Significance

27. Which of the following four system types found within most
management information systems would provide reports on activities
such as output levels, sales ledger and credit accounts in arrears:

A. Database systems
B. Direct control systems
C. Enquiry systems
D. Support systems

28.The ski resort John works at has closed down with the onset of spring.
What type of unemployment does this result in for John?

A. Demand deficient
B. Seasonal
C. Frictional
D. Structural

29.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

30.The government has announced a large public works program to create a

network of interlinking highways. This is an example of:

A. Fiscal policy
B. Monetary policy
C. Neither of the above

31.The ‘agency problem’ refers to which of the following situations?

A. Shareholders acting in their own short tem interests rather than the long
term interests of the company
B. A vocal minority of shareholders expecting the directors to act as their
agents and pay substantial dividends
C. Companies reliant upon substantial government contracts such that they
are effectively agents of the government
D. The directors acting in their own interests rather than the shareholders’
interests

32.An audit committee should:

A. Comprise at least three NEDs
B. Include at least one senior member of the internal audit team.
C. Include one member from the external audit firm.
D. Carry out a detailed review of critical elements of the Balance Sheet.

33.The predominant form of business entity is:

A. Quoted companies
B. Sole traders and partnerships
C. Limited liability partnerships
D. Limited liability companies

34.Working capital is calculated as:

A. The excess of current assets over current liabilities
B. The excess of bank borrowings over current assets
C. The excess of long term liabilities over short term liabilities
D. The excess of Fixed Assets over current assets

35.Which of the following pricing strategies is aimed at gaining market

share?
A. Penetration pricing
B. Going rate pricing
C. Price skimming
D. Loss leaders

36.A company with a marketing orientation believes that:

A. Products should be sold actively and aggressively
B. Meeting customer needs better than competitors is the key to corporate
success
C. The level of sales, advertising and sales promotion is key to corporate
success
D. Producing goods and services of optimum quality is the key to corporate
success

37.Which of the following pricing strategies is designed to achieve the

highest possible profit margin?

A. Opportunistic pricing
B. Product life cycle skimming
C. Predatory pricing
D. Reference pricing

38.A sharp increase in commercial bank lending in a country might lead to

which of the following?

A. Appreciation
B. Inflation

39.Which of the following is not an advantage of having accounting reports

presented in a predetermined format?

A. Information recorded is easier to read and understand

B. Comparisons between different organisations become easier to make
C. Information recorded becomes more accurate

40.One factor that might influence a company to flatten its organizational

structure could be:

A. Increased complexity of transactions

B. An improved management information system
C. A commitment to increase mentoring and training of junior staff
D. A decision to follow geographic departmentation
41.Which of the following is not an advantage of centralisation
A. Promotes greater consistency and uniformity across the organisation
B. Provides opportunities for cost savings and economies of scale
C. Promotes greater efficiency across the organisation
D. Promotes innovation and innovative thinking amongst employees

42.Changes in the number of unemployed is:

A. A leading indicator
B. A current indicator
C. A lagging indicator

43.The highest level of interest rates is associated with which phase of the
business cycle?

A. Recovery
B. Growth
C. Peak
D. Recession

44.What government action would be most effective in reducing inflation?

A. Increasing civil servant wages
B. Increasing exports of goods
C. Requiring market vendors to lower selling prices
D. Increasing required commercial bank reserves

45.Human resource management plays which role in Mintzberg’s basic

organization structure?

A. Technostructure
B. Strategic apex
C. Support staff
D. Operating core

46.Public limited companies differ from limited companies in that:

A.Public limited companies have greater liability to the general public
B.Limited companies can only be owned by individuals
C.Public limited companies may raise funds through the stock market
D.Limited companies are limited by capital invested
47.Which of the following might be an advantage of a Shamrock
organization?

A. Flexibility in scaling operations up or down

B. Coordination in managing functions that cover more than one department
C. Increased control over production
D. Focus on the needs of a niche market
48.A system that pools data from internal and external sources and makes
information available to senior managers in an easy to use form is known
as a:

A. Transaction Processing System

B. Decision Support System
C. Management Information System
D. Executive Support System

49.Company culture can be used to achieve:

i. Improved internal control
ii. Improved customer service
iii. Lower staff turnover
iv. Economies of scale

A. ii, iii
B. ii, iv
C. i, ii, iii
D. I, ii, iii, iv

50.The five fundamental principles of the ACCA code of ethics are:

i. Integrity
ii. Responsibility
iii. Objectivity
iv. Professional competence and due care
v. Courtesy
vi. Confidentiality
vii. Skepticism
viii. Professional behavior

A. i, ii, iii, iv, viii

B. i, iii, iv, vi, viii
C. i, ii, iii, vi, viii
D. i, iii, iv, v, vi