PRACTICE TEST 3

NAME……………………………………………………..

1. You were dancing on your desk in your office yesterday in lunch time and tripped, injuring yourself.
Who is responsible for the accident? 1 MARK

A. Your employee
B. You yourself
C. Both you and your employee
D. Your FAB teacher at CCA

2. Which of the following is a responsibility of the employee when it comes to safety and health at work? 1
MARK

A. To take reasonable care of this own health and safety.

B. To report any injuries, strains or illnesses he suffers as a result of doing his job
C. To tell the employer if something happens that might affect his ability to work
D. All of the above

3. Key social and demographic issues include (except one) 1 MARK

A. Technology
B. Population
C. Education and training
D. Health

4. The following are the drawbacks of outsourcing except one: 1 mark

A. Confidentiality at stake
B. Cost cutting
C. Locked into unsatisfactory contract

5. Delayering is a process where the scalar chain is stretched. Is this statement true or false? 1 Mark

A. True
B. False

6. An individual who is the subject of personal data is a data _______________ 1 Mark

A. Subject
B. Mining
C. Figure

7 Which of the following is true with regards to security and safety in the workplace? 1 Mark

A. The security of the workers is the sole responsibility of the employer.

B. Employees should take reasonable care of their own safety.
 C. Employees need not take reasonable care to put other people at risk.
D. Employees need not cooperate with the employer to get the proper training on safety
measures.

8 Which of the following is not true about Unfair Contract Terms Act 1977? 1 Mark

A. They are intended to provide broad protection for consumers.

B. Contracts need to be written.
C. For a contract to take place, there must be agreement between the parties.
D. When one party makes a misrepresentation to the other, the contract is void.

9 The following are the principles of Data Protection Act 1998 except: 1 Mark

A. Personal data shall be accurate and where necessary, kept up to date.

B. Personal data shall be obtained only for one or more specified and lawful purpose.
C. Personal data shall be processed in accordance with the rights of data subjects under the
act.
D. Personal data shall be relevant but excessive in relation to the purpose.

10 Which of the following is one of Porter's five forces? 1 Mark

A. Absence of economies of scale

B. High capital requirements
C. High switching costs
D. Barriers to entry

11. The mission of this international body is to develop the high standards of professional accountants
and enhance the quality of services they provide. 1 Mark

A. International Federation of Accountants

B. Association of Chartered Certified Accountants
C. Institute of Certified Public Accountants
D. None of the choices.

12. Which of the following statements is false? 1 Mark

A. A manager does not need to know the company's possible threats.

B. Strength is really meaningful only when it is useful in satisfying the needs of a customer.
C. Delaying the discovery of weaknesses that already exist within a company will only
further hurt the firm.
D. None of the above statements is false.

13 . The ageing population trend in many European countries is caused by an increasing birth rate and an
increasing mortality rate. 1 Mark

A. True
B. False

14. Which of the following would not fall under the political environment affecting the businesses? 1 Mark

A. Technology
B. Taxation
C. Local council
 D. Authorities

15. Which of the following is true about IT and Information Systems' effect on business processes? 1
Mark

A. New systems require new ways of working.

B. Organisations have had to look upon information as a commodity and to look more
closely at how this affects their business.
C. Voice mails allow flexibility.
D. All of the above statements are correct.

16. When an organisation carries out an environmental scan, it analyses which of the following? 1 Mark

A. Strengths, weaknesses, opportunities and threats

B. Political, economic, social and technological factors
C. Strategic options and choice
D. Inbound and outbound logistics

17. Environmental analysis is relevant when undertaking the strategy making process. Is it true or false?
1 Mark

A. True
B. False

18. Health and safety regulations cover a range of workplace health and safety issues. Which of the
following is covered by regulations? 1 Mark

A. Handling of chemicals
B. Computers
C. Pregnancy
D. All of the above

19. True or false. If a member body of IFAC is prohibited from complying with certain parts of the Code of
Ethics, they should comply with all other parts of this Code. 1 Mark

A. True
B. False

20. 2 Marks

1. No regulation can be truly effective unless it is accompanied by ethical behavior.

2. Regulatory systems should be truly effective unless it is accompanied by ethical behavior.

A. Both statements are true.

B. Both statements are false.
C. Statement 1 is false.
D. Statement 2 is false.

21. Jack started a new job today. He is 16 years of age and has no intention to continue his
studies. This is his first job with a building contractor. At 7am sharp he was at the plant hoping to have
some explanation regarding this job. None of the sort happened, he found himself at a construction site
with some other older colleagues in less than half an hour. At around 3.30pm his boss arrived on site and
started shouting at him since he was not wearing neither a safety shoes nor a helmet. To make it worse,
none of the other employees were wearing such equipment though they had been instructed by the
company in various occasions.

As regards to Jack's case – who is the one to be blamed? 1 Mark

A. The other employees

B. Jack
C. The employer
D. Helmet

22. True or false. Professional accountants need not be aware of the differences in some jurisdictions. 1
Mark

A. False
B. True

23. Peter buys an electronic keyboard from his local catalogue store. He pays €199 for it. He returns to
the store the next day complaining that, although the main keys work, none of the pre-set rhythm bottoms
seem to function. He demands an immediate refund. The sales assistant refuses to give him a refund or
take back the goods, and instead gives him a card with the name and address of the manufacturer,
suggesting that Peter contacts them to obtain a refund or a replacement. 2 Marks

Was the sales assistant legally justified in refusing to give a refund?

Give briefly a reason for your answer.

A. Yes
B. No

24. Competitive advantage occurs when an organisation acquires or develops an attribute that allows it to
outperform its competitors.

Which of the following could be a source of competitive advantage? 1 Mark

A. Synergy
B. Effective leadership
C. Teamwork
D. Economies of scale
E. ALL

25. value chain describes the activities of the organization that add value to purchased input. Is this
statement true or false? 1 Mark

A. True
B. False

26. Employing lobbyists to put the organisation's case to ministers or civil servants is a legitimate method
of influencing governmental policy in the interests of a business.
Is this statement true or false? 1 Mark

A. True
B. False
27. One of the sources of legal authority is supra national? Which of the following would not be
considered supra national? 1 Mark

A. Local council
B. UN resolutions
C. European parliament
D. International court of justice

28. A focus strategy concentrates on a narrow segment and within that segment seeks to achieve either a
cost advantage or which one of the following? 1 Mark

A. Cost leadership
B. Differentiation
C. Price leadership
D. Quality leadership

29. Which of the following social trends will have a direct impact on businesses? 1 Mark

a. increase in single member households

b. falling birth rates
c. increasingly diverse populations
d. increasing attention paid by the general public to environmental issues

A. a and b only

B. a and d only

C. b, c and d only

D. a, b, c and d

30. A fundamental principle where members should not allow bias, conflicts of interest or undue influence
of others to override professional or business judgments. 1 Mark

A. Due care
B. Objectivity
C. Professional competence
D. Confidentiality

31. Sources of external information include: 1 Mark

A. The government
B. Annual reports
C. Market research
D. Intranet

32. The bargaining power of customers in an industry will be greater in which of the following
circumstances? 1 Mark

A. There are one or two dominant suppliers in the industry

B. The product is highly important to the customer’s business
C. There are many customers in the industry
D. Switching costs are low
33. An organisation’s opportunities in SWOT means: 1 Mark

A. potential favorable conditions for an organisation

B. what an organisation can do
C. what an organisation cannot do

34. The following can be considered as a disadvantage of outsourcing: 1 Mark

A. Expertise of outsourcing company

B. Objectivity of outsourcing company
C. Use of special equipment of outsourcing company
D. Confidentiality of outsourcer is lost

35. Porter's five forces model identifies external factors that determine the potential profitability and
therefore attractiveness of a particular industry. Which of the following is one of these forces? 1 Mark

A. Government regulation of the industry

B. Bargaining power of buyers
C. Fiscal policy

36. Which of the following are ALL primary activities in the value chain? 1 Mark

A. Inbound logistics, operations, service

B. Procurement, operation, marketing and sales
C. Inbound logistics, outbound logistics, infrastructure
D. Outbound logistics, technology development, service

37. Taarak Mehta’s company is considering the introduction of a code of ethics following media criticism
of its selling practices. 1 Mark

Which of the following is most important when deciding on the content of the proposed code of ethics?

A. The minimum acceptable standards of behavior and conduct of employees (KEY)

B. The legal requirements affecting the sales of core products and services.
C. The main issues of concern to customers who have made complaints.
D. The generally accepted standards by other companies operating in the same sector.

38.Which of the following type of new legislation would provide greater employment opportunities in large
companies? 1 Mark

A. New laws on health and safety

B. New laws to prevent discrimination in the workplace.
C. New laws making it more difficult to dismiss employees unfairly.
D. New laws on higher compensation for employer breaches of employment contracts.

39. Professional accountants must demonstrate integrity all the times.

Which of the following best describes the meaning of integrity? 1 Mark

A. Applying consistently high moral values.

B. Maintaining a neutral and unbiased view on all business decisions.
C. Providing timely and accurate information free from errors.
40.Which of the following is data protection legislation primarily designed to protect? 1 Mark

A. All private individuals and corporate entities on whom only regulated data is held.
B. All private individuals on whom only regulated data is held
C. All private individuals on whom any data is held.

41.Which of the following is a purpose of the International Federation of Accountant? 1 Mark

A. Agreement of legally binding financial reporting standards across all member accountancy
organisations.
B. Prevention of international financial crimes, such as money laundering and insider trading.
C. Promotion of ethical standards in all member organisations
D. Development of universally applicable detailed rules to deter inappropriate behaviours.

42.In order to discharge their duties ethically, finance directors must ensure that the information published
by their organisations provides a complete and precise view of the position of the business ,without
concealing negative aspects that may distort the readers perception of its position.

This duty describes which of the following ethical principles? 1 Mark

A. Probity
B. Honesty
C. Independence
D. Objectivity

43 Accounting bodies set out a to code of ethics to establish ethical behaviour requirements for
professional accountant

a) The following are qualities you might see in professionals at work. 2marks

A. Integrity
B. Honesty
C. Trustworthiness
D. Expertise
E. Professional behavior
F. Confidentiality
G. Respectfulness
H. Objectivity

Tick the correct FOUR from (A-H) contain fundamental principles of ethical behavior from IFAC (IESBA)
and ACCA code of ethics.

b) The following are desirable characteristics of professions and vocations. 2 marks

A. Acting in the public interests.

 B. Highly skilled

C. Ethical codes of conduct

D. Governance by association

E. Highly valued services

F. Training requirements

G. Process of certification

H. Qualification by examination.

Required:

Select FOUR of the characteristics from the list above, which distinguishes a profession from
occupation.

44. In order to ensure that the policies of an organization are consistent with the public interest, on which
of the following should the directors of company focus? 1 Mark

A. The long -term welfare of the shareholders.

B. Companies with legal requirements and codes of governance.

C. The collective wellbeing of stakeholders.

45. Ethics is a crucial part of operating as an accountancy professional.

a) Which of the FOUR of the following ethical safeguards are typically put in place by professional
accountancy bodies? 2 marks

A. Setting of professional standards

B. Creation of internal business complaints procedures.

C. Professional monitoring and disciplinary procedures.

D. Ethics training for all professional accountants

E. Creation of ethical cultures in organisations

F. Ensuring openness and transparency between organisations and their stakeholders.

G. Creation of corporate governance requirements.

 H. Creation of corporate codes of ethics

b) Which FOUR of the following benefits would typically be expected to arise from an organization
adopting strong business ethics? 2 Marks

A. Reassuring to investors

B. Improved motivation of employees

C. Significant time and costs savings for management

D. Less reporting needed to external stakeholders

E. Reduced need for external audit.

F. Attractive to customers

G. Lower production costs

H. Reduced risk of onerous government legislation

46. Porter’s value chain examines the various activities that make up an organisation’s operations.

a) Which activity from Porters value chain is being described below?

A The transformation of inputs into outputs

B Purchasing of materials as well as other resources.

C How the firm is organized

D Any activities that occur after the point of sales. 2marks

i) Service Select ONE OF A,B,C or D

ii) Operation . Select ONE OF A,B,C or D
iii) Procurement . Select ONE OF A,B,C or D
iv) Infrastructure . Select ONE OF A,B, Cor D

b) According to Porter’s Five forces model which two of the following indicate there is a low threat of new
entrants to the market? 2marks

A. Low capital requirements

B. Patents exists on major product lines.

C. Access to distribution channel is not restricted.

D. large number of suppliers of raw materials

E. Low switching costs for customers

F. Existing firms in the market are large

G. Rapidly expanding markets.

47. Ooltah Chasma Ltd manufactures a product which is made of four components which are then bolted
together. Ooltah Chasma is considering outsourcing the production of two of the components to an
external Company, though Ooltah Chasma would still assemble the final product itself.

Which of the following boundaryless structures will G most closely match if it proceeds with this
arrangement? 1mark

A. Hollow
B. Virtual
C. Modular

48.Which of the following factors would tend to allow an organization to develop a wide span of control?
1mark

A. Highly skilled, motivated employees

B. Employees spread over a wide -geographical areas.

C. Employees undertake complex, changing tasks

49. John is asked to sign a contract by his employers which would, amongst other things, prevent him
from reporting any fraud he discovers in the course of his duties.

Which key feature of a binding simple contract is missing? 1 mark

A. Capacity
B. Legality
C. Agreement
D. Consideration.

50. K is an accountant working in a large company. She has just been asked by her manager to not put
through a number of inaccurate invoices in order to improve the accounts.

What should K’S first course of action be? 1 mark

A. Report this to senior management / head of ethics in her company

B. Report to the ACCA
C. Report to the authorities
D. Resign

51. Competency framework are the critical skills, knowledge and attitudes that a jobholder must have in
order to perform effectively.

Is this statement true or false? 1 Mark

 A. True
B. False

52.Porter’s five Forces model identifies external factors that determine the potential profitability and
therefore attractiveness of a particular industry. Which of the following is one of these forces?
1mark

A. Bargaining power of buyers

B. Government Regulation of the industry.
C. Fiscal policy
D. Technological innovation

53. Country Banana Republic has a large number of service industries. It has recently decided to
implement minimum wage legislation ,meaning that all workers are guaranteed a certain level of pay .This
level has been set slightly higher than the current average wage(salary).

Which of the following is a likely consequences of this legislation? 2MARKS

A. A reduction in the supply of labour within the country.

B. An excess of labour supply (increased unemployment) within the country.
C. A reduction in prices charged to consumers, benefiting those of low incomes
D. An increase in quality of services offered within country.

54……………... Systems pool data from internal and external sources and make information available to
senior managers for unstructured decisions. 1 Mark

Which words or phrase correctly completes the above sentence?

Expert/Executive information/management information/decision support *

*delete as appropriate

55.A Profession does not need to have a distinct ethical code unless this is required by statue.

Is this statement true or false?1mark

A. True
B. False

56. Jethalal Ltd is planning to sell a range of products that are tailored specifically to women between
ages of 20 and 30 who have children. Which of the porter’s generic strategies has Jethalal adopted?
1mark

A. Cost leadership
B. Focus
C. Differentiation

57. Professional accountants can face a number of different ethical threats 2MARKS.
The following sentence contains gaps relating to type of ethical threat faced.

An accountant previously suggested a new strategy to an organization she prepares the accounts for.
She has since been asked to examine the strategy to see if it has been success. She therefore faces a
major ---Gap 1---- threat to her professional ethics.

i) Select the ethical threat that appropriately fills gap 1 above. 1mark

Self-interest/familiarity/advocacy/self-review

An accountant has been asked to work on the accounts for an organization that is currently managed by
his wife, exposing him to threat of ---- Gap 2----

ii) Select the ethical threat that appropriately fills gap 2 above. 1mark

Self -interest/Familiarity/advocacy/self-review

58. There are a number of differing approaches to ethics.

The following sentences contain gaps relating to the approach to ethics being used.

Company W has decided to press ahead with plans to open a new factory. It will have
a detrimental effect on the environment and the local residents, but will make the
company a significant profit. The company has therefore adopted a _Gap1_ approach to
ethics

(i) Select the ethical approach that appropriately fills gap 1 above. 1 Mark

egoism/utilitarianism/pluralism/absolutism

If company W decided to redesign the factory in order to minimise the impact on the
residents and environment, but still make an overall (though less) profit than
before, its approach to ethics would now be _Gap 2_

(ii) Select the ethical approach that appropriately fills gap 2 above. 1 Mark
egoism/utilitarianism/pluralism/absolutism

(1 mark each = 2 marks in total)

59. Professional accountants have to abide by a number of ethical principles

The following sentences contain gaps relating to one of the above ethical principles

H is a qualified accountant. She has recently faced an ethical threat of self-review. If

she does nothing to deal with this, she will have breached her requirement to act
with ---Gap 1----
 i) Select the ethical principle that appropriately fills gap 1 above. 1mark

Integrity/objectivity/confidentiality/professional competence

H has recently been undertaking an audit on KIH Co and has discovered that the
company is paying its employees lower than the legal minimum wage. Reporting this
information is not a breach of 2 as there is a legal reason to do so,

ii) Select the ethical principle that appropriately fills gap 2 above. 1mark

integrity/objectivity/confidentiality/professional competence

60. PPR is a supermarket which is developing a new information system for its managers

a) Identify which of the following statements relate to the information that would
typically be produced by strategic information systems or operational information

systems. [ Tick ]

Information
Strategic Operational
Long-term focus
Highly detailed
Produced frequently
Mainly an internal focus

(0.5 marks each, total = 2 marks)

(b) PPR'S Information Manager (IM) has identified four major types of Information
system that the company may wish to adopt.
The following sentences from PPR's IM report contain gaps.
PPR has a system which records each sale made through the day. At the end of
the day, this ---Gap1---- summarises all the information on sales for the day and produces a
report.

Select the term that appropriately fills gap 1 above. 1mark

Management information system/expert system/transaction processing system/decision support system

c) PPR’s _Gap2_ enables us to quickly calculate your tax bill for the year. We have complex
rules we need to follow with this calculation and they are all pre-programmed into this system
(ii) Select the term that appropriately fills gap 2 above. 1mark

management information system/expert system/transaction processing system/decision support system

61. 4MARKS

G is a multinational company that provides IT support to its clients.

It is aware that there are significant cultural differences between its operations in different
countries. G's managers have decided to undertake an analysis of its corporate culture in
each of its countries of operations using Hofstede's cultural dimensions.

Level
 High Low

Individualism A B
Uncertainty avoidance C D
Power distance E F
Masculinity G H
Long-term orientation I J
Indulgence K L

For EACH of the following issues, identify which dimension they relate to and whether
they indicate that this dimension is high or low by selecting ONE letter from A to L.

(i) Staff members in country A expect to have significant input into the design of their
jobs, as well as the decision-making process.
A/B/C/D/E/F/G/H/1/J/K/L [Select one]

(ii) Employees in country B have very strict social norms on a range of issues such as
dress, behaviour and language.

A/B/C/D/E/F/G/H/1/J/K/L [Select two]

(iii) Staff in country C are motivated by pay rises and new job titles.

A/B/C/D/E/F/G/H/I/J//K/L [Select one]

(iv) Employees in country D prefer a bureaucratic management style with rules and
procedures to ensure mistakes are minimised.
A/B/C/D/E/F/G/H/I/J/K/L [Select one]

62. PASS is a small business which trains accountancy student in a number of small
offices across country C. Each office is headed by a manager.
PASS management team is considering the launch of several new strategies for the
organisation, but one of the managers has stated that he is unsure which of the three
levels of strategy each one relates to.

Classify each of the following strategies as relating to strategic, operational or

tactical planning levels. Tick the correct for each.

Strategic Operational Tactical

PASS's office managers have started
detailed planning of shift patterns for all
PASS tutors.
PASS is considering the acquisition of a
small, rival training company.

PASS's managers are considering offering

human resource management courses as
well as accountancy training.

PASS's managers have decided to increase

the number of staff in one particular PASS
office.

(0.5 marks each, total = 2 marks)

(b)PASS currently has an entrepreneurial structure, with one main owner-manager (Mr
F) to whom all of PASS's managers report directly. Mr F is considering restructuring the organisation and
moving to a functional structure

Which FOUR of the following statements are the most likely potential benefits of PASS moving to a
functional structure?

A. Strategic decisions will be made more quickly

B. Conflict between functions will be reduced
C. The new structure will lead to duplication of roles
D. It will increase PASS's ability to expand
E. It will enable PASS to maximise its access to economies of scale
F The new structure will increase standardisation of PASS's products
G. Increased local decision making
H. Career opportunities for staff will be enhanced

(0.5 marks each, total = 2 marks)

(Total: 4 marks)

63.POL bottles and sells natural spring water in country H. It is the best-selling brand of bottled water in
the country H and has a highly recognisable brand name. POL is long-established and has a very
experienced management team. Many years of high profits have enabled the company to build up
significant cash reserves.

The market for bottled water has been slow-growing for many years in country H with
consumers switching to flavoured waters, which are not offered by POL. Nearby country I
(Which POL does not currently operate in) is seeing significant growth in this market.

One of POL's managers has recently noted an article in a popular newspaper in country H
which suggested that bottled water may be harmful to health due to high levels of toxins
from the plastic bottles the water is sold in. POL is one of the few bottled water
manufacturers to sell its water in glass bottles, which the article suggests is safe for
consumption.
One of POL's successful smaller competitors, AQA, has recently been put up for sale by its
owners who wish to exit country H. POL's management team is considering making an offer
for the company in order to increase their market share in country H.

a) Below are some key issues which POL's managers have identified as part of a SWOT
analysis.
Which FOUR of the following are issues that are most likely to be classified as opportunities for POL,
based on the above information.

A. Expansion into bottled water sales in country I

B. Potential health risks from plastic bottles
C. Strong cash balances
D. Launch of new flavoured waters in country H
E. Experienced managers
F. Strong brand name
G. Potential purchase of AQA
H. Slow growth in the bottled water market in country H

(0.5 marks each, total = 2 marks)

(b) In order to improve margins, POL has decided to undertake a value chain analysis of
the company's existing water bottling operations.

Identify the activity from the value chain model which is associated with each of
the following descriptions. Tick the correct for each option.

Operations Outbound logistics Service Procurement

1.POL has a small call center

dedicated to dealing with
customer complaints.

2.Water is filtered through a

four-stage process before
being purified and bottled.

3.POL's purchasing department

regularly shops around to get
the lowest possible price for
POL's glass bottles from
suppliers

4.Bottled water is held in large

warehouses before being
transported to
retailers
across country H.
 (0.5 marks each, total = 2 marks)

(Total: 4 marks)

64. MBV is a manufacturer of fine furniture based in country G. MBV managers have
that the company's results for the past three years have been declining The that this is due to changes
in the external environment in particular within MBV industry.

The managers wish to use Porter's five forces model to understand the problem company is facing, but
are uncertain of its proper use. They have undertaken some analysis
and identified a number of key issues (summarized below) but cannot decide which of
five forces each issue relates to.

Level

High Low

New entrants A B
Power of buyers C D
Power of suppliers E F
Power of rivals G H
Substitutes I J

For EACH of the following issues, identify which force they relate to and whether the strength of the
force is high or low, by choosing ONE letter from A to J.

Issue
A B C D E F G H I J
MBV's employees are heavily unionized,
making it difficult for the company to
change their terms and conditions.

MBV's products are sold through two

main retail chains in country G. Each
retailer sells approximately equal
amounts of MBV's furniture.

MBV is much larger than any other fine

furniture manufacturers in country G,
which has given it an advantage due to
significant economies of scale. MBV still
retails its products at a similar
its rivals.

The market for fine furniture in country

G is growing very slowly

(1 mark each, total = 4 marks)

65. a) Y Co sells health and home insurance. Y does not have any physical stores - instead it
has a number of call centers Customers make contact with the company and
purchase insurance policies over the phone.
Y's call center management structure is extremely bureaucratic, with many levels of management. This
results in Y suffering high payroll costs, leading to it having to increase its prices to customers, reducing
its ability to compete in the insurance market.

However, Y has recently started to introduce new computerised systems for its call centre staff, which has
led to increased efficiency. Staff members are able to deal with significantly more calls than previously
and less skill is required by the employees, as much of the complex work is now undertaken by the new
system Y is now looking to see what changes it can make to the call centres as a result of introducing the
new IT system. It is considering three options.

Classify the following issues as relating to either delayering, downsizing or outsourcing. [Tick]

Issue
Delayering Downsizing Outsourcing
Could allow third party
organisations access to Y's
Information and processes, leading
to loss of competitive advantage.

Keeping the current management

structure, but reducing the number
of staff could lead to demotivation
among the remaining workers.

Eliminating several levels of

unnecessary management to reduce
Y's costs, leading to lower prices for
customers.

This is likely to lead to a more 'team-

working approach, where
employees take on different roles in
different teams, as necessary.

(0.5 marks each = 2 marks total)

Y has decided to examine the idea of outsourcing its functions in more detail. Y’s management team have
been told that there are four distinct of outsourcing.
The following sentences contain gaps which specify a particular type of outsourcing.

Y is considering outsourcing some of its call center activities to GH Co. GH will provide _Gap1_
outsourcing, with GH Operators taking calls from new customers looking to purchase a policy. Y's existing
staff will deal with existing customer renewals, queries and complaints.

(i) Select the type of outsourcing that appropriately fills gap 1 above.

total/project management/ad hoc/partial*

*delete as appropriate

Y has been approached by another company, HG Co, which has offered extra call centre staff in the
month of January - which is the busiest time of year for Y. This _Gap2_ outsourcing would help Y to avoid
losing customers due to the long delays customers can face on the phone during this month.

(ii) Select the type of outsourcing that appropriately fills gap 2 above.

total/project management/ad hoc/partial*

*Delete as appropriate

(1 mark each = 2 marks in total)

(Total: 4 marks)

66. 4 Marks

a) PH is a company that runs train services between several major cities in country B.
It is currently undertaking a strategic planning exercise for its future operations and has decided to
analyse its external environment using a PEST analysis.
This analysis has uncovered a number of major issues within Country B that PH needs
to plan for.
Which FOUR of the following statements would be most likely to be classified as
"Political factors” within a PEST analysis?

A. Country B's government has announced additional expenditure on motorways and roads

B. Residents of country 8 are becoming more environmentally conscious

C. New internet systems are available that will simplify the process of booking
train tickets

D. New health and safety regulations are being planned for all rail operators in country B

E. Increased congestion on the roads of country B as residents travel more

F. Additional one-off taxes on rail operators are being proposed in country B to

help pay for road upgrades

G. Rise in the cost of repairs to trains due to a shortage of skilled labour in

country B

H. New systems are to be introduced to help improve the efficiency of train

arrivals and departures
(0.5 marks each, total = 2 marks)

(b) PH has recently had a number of problems with employees taking the company to
court after leaving their jobs. To ensure that the company is not guilty of any
wrongdoing, it has investigated four recent leavers and discovered the following:

Employee 1 was employed as part of PH's IT department. The department was

recently reorganised and PH felt that this worker's role was no longer needed.
Employee 2 had originally been contracted to work 15 hours a week. Her manager at
PH had recently insisted that she had to work 25 hours a week, which led to the
employee resigning.
Employee 3 recently joined a trade union. Her manager stated that this made her 'a
troublemaker’ and dismissed her.

Employee 4 was dismissed for no longer having the technical competence for his job (which had recently
been significantly changed in a reorganisation of PH's operations). Employee 4 had a three month notice
period in his contract, but his manager told him he was only going to be given two weeks' notice.
PH is aware that employees may face various types of dismissal.

Identify which of the above types of dismissal applies to each employee.

Wrongful Constructive Redundancy Unfair

Employee 1
Employee 2
Employee 3
Employee 4

67. In strategic planning, what is the purpose of environmental scanning? 1 Mark

A. To monitor PEST factors

B. To appraise SWOT factors
C. To monitor competitive forces
D. To monitor organizations role in Global Warming

68. In which ONE of the following areas does a database system have significant advantages? 1 Mark

A. Data security
B. Data privacy
C. Development cost
D. Data management

69. The website of a university contains a dedicated site for academic researchers, giving them access to
the university’s archived material, if they register and obtain a password to enter the site.

Of which type of network is this an example? 1 Mark

A. Internet
B. Intranet
C. Extranet

70. In employment protection law, which of the following would constitute unfair dismissal? 1 Mark

A. Dismissal because the employer has ceased to carry on the business.

B. Dismissal because the employer has relocated the place of work
C. Dismissal because demand for the type of work done by the employee(s) is expected to decline
D. Dismissal because the employee is pregnant
71. ……………………………… is the study of aggregated effects of the decisions of individual economic
units (such as household or businesses)

Which word correctly completes this sentence? 1 Mark

A. Demographics
B. Globalisation
C. Macro-economics

72. Three of the following are recognized advantages of a framework-based approach to ethical codes.
Which is the EXCEPTION? 1 Mark

A. Encourages proactive discussion of issues?

B. Encourages consistent application of rules
C. Suits complex situations and evolving environments
D. Encourages professional development

73. In the short run, firms will continue to supply customers provided that they cover 1 Mark

A. Fixed costs
B. Marginal costs
C. Variable costs

74. 4 Marks
YRT Co is a firm of external auditors which has Company W, Company X, Company Y and Company Z
among its audit clients.

Company W is currently being sued by one of its suppliers. YRT Co has offered legal services and will
defend them in this legal case.

The audit partner of Company X has been a member of the external audit team for the past 15 years and
has good relationships with the senior management of Company X.

Company Z does not have an experienced financial department and so YRT Co helps to prepare the
financial statements of Company Z in advance of the external audit.

The following are types of conflicts of interest:

A. Familiarity threat
B. Advocacy threat
C. Self-review that
D Self-interest threat

(a) In the case of each of the following, which of the conflicts of interest exists? 2 Marks

A. Company W
B. Company X
C. Company Y
D. Company Z
(b) Which of the following would give rise to a threat of intimidation? 1 Mark

A. Litigation against the external auditor by an audit client

B. Provision of taxation service as well as audit services
C. An audit partner is on the board of a client.

(c ). Ethics are a set of …………………………… that guide behavior. 1 mark

A. Legal guidelines

B. Moral principles

C. Professional regulations

75. 4 Marks

(a) JKL Co is a small firm of external auditors with a small number of clients. Almost 20% of its revenue
comes from one client. The client still has not settled the invoice from the previous year’s audit in the
hope that this will strengthen their position in negotiating a lower price for this year’s audit.

Which two of the following conflicts of interests exist in this situation? 2 Marks
A. Self-review threat
B. Advocacy threat
C. Self Interest threat
D. Familiarity threat
E. Intimidation threat

b. Are the following statements true or false? 2 marks

i. When dealing with ethical dilemmas ACCA students must follow ACCA’s code of conduct.
ii. Professional ethics should not be followed at the expense of contractual obligations.
iii. There is a public expectation that accountants will act ethically.
iv. A prospective audit firm quoting a significantly lower fee for assurance work than the
current auditors charge does not raise a threat of a conflict of interest.

76. Which one of the following is not part of a corporate code of ethics? 1 mark

A. Professional ethics
B. Organisational culture
C. Organisational self-interest

77. Abner is the lead partner on the audit of DEF Inc. The client often gives Abner corporate hospitality at
major sporting events and small gifts such as a bottle of spirits on his birthday
Which threat does this represent? 1 mark
A. Self-interest
B. Self-review
C. Advocacy
D. Intimidation
78. XYZ caries out the audit of Delta Products Inc. Delta Products Inc is in financial trouble and XYZ has
had to qualify the audit report for the past two years. The managing director of Delta blames the qualified
audit reports for her firm’s continuing problems. She is threatening to sue XYZ for poor work if they qualify
the audit report for this year.

What threat does this represent? 1 mark

A. Familiarity
B. Intimidation
C. Self-interest
D. Self-review

79. Which of the following is not a conflict of interest? 1 Mark

A. An ACCA member is in direct competition with a client on a contract

B. An ACCA member is married to a director of the client
C. An ACCA member is an officer of the client company but does not deal with the client’s affairs
D. An ACCA member is part of a joint venture with a competitor of the client

80. You been asked to prepare management accounts while a colleague is on holiday. Your supervisor
tells you that the accounts should be printed out and left on each managers’ desk.
You query whether the accounts should be put in an envelope marked ‘Confidential’ but you are told not
to bother in order to save the costs. What problems does this cause you? 1 mark

A. Confidentiality
B. Unprofessional behaviour
C. Objectivity
D. Integrity

81. Which of the following statements reflects a relativist view of ethics? 1 mark

A. There is an unchanging set of ethical principles that apply in all situation

B. The subject to all ethical situation is the self
The ethics appropriate for a given situation will depend on the conditions at the time

82. Which one of the following statements is a criticism of absolutism? 1 mark

A. It is based on a fundamental contradiction
B. It takes no account of changing norms in society
C. It leads to a culture of anything goes
D. It promotes the pursuing of short term selfish desires.

83. Holders of public office should not put themselves under any financial or other obligation to outside
individuals or organizations that might influence them in the performance of their official duties?

This statement refers to which concept? 1 mark

A. Independence
B. Reputation
C. Integrity
84. Which of the following statements is the definition of probity? 1 mark

A. Open and clear disclosure of all relevant information

B. Telling the truth and not misleading the stakeholders
C. Accepting the credit or blame for decisions
D. Answerable in some way for the consequences of its actions

85. The director’s deliberations must be balanced by taking into account everyone who has legitimate
interest in the company and respecting their fights and views.

This statement describes which concept? 1 mark

A. Fairness
B. Openness
C. Probity

86. Of the three main sources of rules that regulate the behavior of businesses, the minimum level of
acceptable behavior is set by which? 1 mark

A. Non-legal rules and regulations

B. Ethics
C. The law
D. Society

87. Which of the following would not represent an ethical objective in relation to employment practices? 1
mark

A. Guarantee of minimum wages

B. Proactive health, safety and welfare promotion
C. Promotion of workforce diversity
D. Employability training

88. You have been asked to work on a major investment decision that your company will be making, and
discover that your brother-in-law is the managing director of a firm that may benefit from the outcome of
the decision. You have no intention of allowing this to influence the advice you give your firm, and you
know that your brother-in-law will not try to influence you in any way.

What professional quality would make you consider handing this task to a colleague or otherwise raising
questions with your superiors? 1 mark

A. Scepticism
B. Accountability
C. Independence of mind
D. Independence in appearance

89. Farrah works in the sales tax section of the accounts department of BCD Co. When the finance
director is on holiday, Farrah notices that BCD Co has not been paying the correct quarterly amounts to
the authorities. Farrah had suspected this for some time and decides to contact the authorities to tell them
about the fraud. This disclosure is known as …………………………………..

What correctly completes the sentence? 1 mark

 A. Confidentiality breach
B. Corporate conscience
C. Whistle blowing

90. What is the name given to the approach to ethical decision-making which considers the ‘right’
decision to be the one which results in the greatest good to the greatest number of people in a given
situation? 1 mark

A. Utilitarianism
B. Deontology
C. Virtue ethics

91. X Plc is trying to get a trading permit, for which it qualifies. Unfortunately there is a backlog, at the
issuing office. X Plc has been notified that there will be a delay in the processing of its permit. The
divisional manager offers a donation to the issuing office’s staff welfare fund, if the official concerned will
expedite the paperwork.

Which of the following statements is true? 1 mark

A. It is not unethical, because the money is offered for positive purpose

B. It is not unethical, because X Plc is legally entitled to the benefit it is claming.
C. It constitutes bribery
D. It constitutes grease money

92. Managers are said to have ……………………………. responsibility (or duty of faithful service) in
respect of the entities whose purposes they serve.

Which term correctly completes this sentence 1 mark?

A. Financial
B. Ethical
C. Fiduciary

93. Which of the following is an approach to ethics which combines a concern for the law with an
emphasis on managerial responsibility? 1 mark

A. Compliance based
B. Integrity based
C. Environmental based
D. Economic based