BTF MCQ 2021 v3 EDC

BTF Questions 2021 (Chapters 1-2) BTF Questions 2021 (Chapters 1-2)
1. Which of the following is NOT a secondary objectives of a business of the following Peter Drucker’s multiple objectives has Pheng Ltd neglected
A. Growth Of Sales first?
B. Improve Productivity A. Market standing
C. Reduce labour turnover B. Productivity
D. Increase shareholder wealth C. Physical and financial resources
Chapter 1 D. Profitability
Chapter 1
2. Peter Drucker suggested 8 multiple objectives companies may adopt which of the
following is not one of the multiple objectives 7. A company director writes a statement stating he wishes to spend or invest more
A. Innovation in its Research and Development programme in order to improve its technology.
B. Profitability Which statement is it referring to?
C. Technology A. Mission
D. Social Responsibility B. Goal
Chapter 1 C. Primary objective
D. Secondary objective
3. Mr. Boula-Constantino buys stuff often from Mayor and Dolce’s Groceria. What Chapter 1
do you think he expects from the store every time he comes to buy their products?
A. Fair Terms Of Trade 8. The management of Omnicorp Inc. has unanimously agreed that there are some
B. Prompt Payment significant risks in placing robots in the country, After the President's intervention
C. Pension to uphold the Dreyfus Act, Omnicorp has been more inclined towards reviewing
D. Safe Working Environment its robots effectiveness in "securing order and stability" especially after the much
Chapter 1 publicized killing of a child, as telecasted live by the Novak Element. This has
resulted in Omnicorp increasing spending for Research and Development so that
4. Madame Salmona likes to eat salmon. She ate it everyday in fact. In her youth, her
such an event is unlikely to occur again, which would be capable of shutting down
father ran a small bakery in the middle of town. Each day, she would go out and their operations. This move has also led to a fall in profits recently. The decision
catch salmon for her father so that her father can make his famous Salmon Au Pan
undertaken by the management of Omnicorp is on the basis of:
Rustic, a special French baguette with salmon as its filling. As she grew up, she
A. Profit satisficing
found fishing salmon to be pretty fun and so she set up a company to fish salmon
B. Constraints Theory
in large quantities. As this was her business, she would frequently take a small
C. Revenue Maximisation
batch of salmon back to her house out of the ones which were caught to can for
D. Profit Maximisation
her personal use. One day, one of her friends came for tea and tried it and Chapter 1
suggested to Madame Salmona to sell some of canned salmon around the
neighborhood as they were very good. In which Madame Salmona did over the 9. The Commercial Banking Manager of HSBC Petaling Jaya has communicated to
next three years. The question now is, what industry does her organization its direct operational staff to improve on the time taken to serve customers. The
specialize in? manager has set a Key Performance Indicator (KPI) of 5 minutes per customer as
A. Manufacturing a target to be achieved. What kind of standard has the manager of HSBC Petaling
B. Service Industry Jaya implemented?
C. Agriculture A. Quality Standard
D. Retailing B. Cost Standard
Chapter 1 C. Physical Standard
D. None of the above
5. The following are one of Peter Drucker's eight objectives except Chapter 1
A. Social Responsibility
B. Market Standing 10. A statement about what an organization wants to become, which sets out an
C. Worker Performance and Attitude organization's long term future, is referred to as:
D. Product Development A. Mission
Chapter 1 B. Vision
C. Primary objective
6. Jemm Ltd is currently maintaining a high market share in the food and beverages
industry. However, the company is facing unnecessary high costs due to defaults Chapter 1
on its research and development despite the high demand on its products. Which
11. A statement that sets out what the organization purpose is and wishes to achieve D. We intend to produce handbags in newest design.
in the long term is referred to as: E. We will reduce producing leather handbags up to 30%.
A. Mission F. We intend to join venture with Gucci.
B. Vision Chapter 1
C. Primary objective
18. The operational goal for Hi-Technology plc. is to lower the cost of production of
Chapter 1 the smartphones by 5% by 2016 which last year was 4%. Which of the following
characteristics of SMART is the goal lacking of?
12. Organisations differ in many ways. Which two of the following ways does a A. Specific
public company in the fast food industry differ from a general partnership in the B. Measurable
same industry? C. Achievable
A. Activity D. Relevant
B. Legal status E. Time-bounded
C. Sources of finance F. None of the above
D. Profit or non-profit orientation Chapter 1
Chapter 1
19. Removed
13. Two of Moonlight Tours plc.'s stakeholder groups are putting the company under
pressure to show more concern for the welfare of their employees. These are most
20. In the past 3 years, directors of Squek Plc. have run the company in a way that is
likely to comprise which TWO of the following groups?
structured to solely increase their prestige in the business. According to Baumol,
A. Customers
this is often referred to as:
B. The public at large
C. The government A. Wealth maximisation
B. Maximisation of sales revenue
D. Lenders
Chapter 1 C. Cost minimisation
D. Minimisation of social impact
14. Which two of the following is the element of mission? Chapter 1
A. Purpose
B. Vision 21. To see whether an organisation is a business or not, it would be necessary to
enquire as to the nature of its:
C. Policies and standards of behaviour
A. Primary objective
D. Aim
Chapter 1 B. Mission
C. Vision
15. Objectives set should have which of the following characteristics? D. Secondary objective
A. Time-bound Chapter 1
B. Measurable
C. Sustainable 22. A manager always take decision with managerial objectives rather than the
D. Suitable primary objective that maximise wealth of shareholder. However, the shareholders
E. None of the above do not show dissatisfaction, instead they are currently satisfy with the profit
Chapter 1 retained in the business. This is called?
A. Wealth maximisation
16. What is the common expectation of customers, suppliers and business partners? B. Revenue maximisation
A. Fair terms of trade C. Satisficing
B. Prompt Payment D. Constraints theory
C. Continuity of Custom Chapter 1
D. Interest
Chapter 1 23. How do managers benefit personally from revenue maximisation? (Choose two
answers)
17. Which THREE of the following are mission statements of a business produces A. Increase of company's market share.
handbags? B. Increase of salaries.
A. We will be the most popular brand among ladies in the world. C. Decrease of intensity of rivalry.
B. We aim to increase 20% revenue in five year. D. Prestige of running a successful company.
C. We will use the latest technology in production systems. Chapter 1
24. Some business areas decisions are taken without reference to the wealth objective 29. Jacqueline is the managing director of Wongaline Plc. As a risk averse person, she
at all due to some other business constraints. What theory is this called? always prioritizes the minimisation of risks. Due to recent relaxation of
A. Profit maximisation government regulations, there has been a sharp increase in the number of new
B. Profit satisfying. entrants into the industry. In response to this, Jacqueline and the other directors
C. Constraints theory. decide to reduce the prices of Wongaline Plc’s products to retain market share.
D. Limiting factor. They believe this is the best strategy to protect Wongaline Plc’s prestige in the
Chapter 1 industry, and hence protect the prestige of their jobs. What is most likely
Wongaline Plc.’s current objective?
25. The chief executive of Summerbay Travel is currently involved in preparing a
A. Profit maximisation
brochure outlining the services provided by the travel agency. In that document
B. Wealth maximisation
the chief executive hopes to see the agency become the largest travel agency in
C. Revenue maximisation
Malaysia by 2020. The executive is stressing the agency's:
D. Satisficing profits
A. Vision Chapter 1
B. Mission
C. Primary objective 30. BF Inc. is a company where they place importance on where they stand in relation
D. Secondary objective to their competitors. They also try to be more creative and unique in all aspects of
E. Aim their business. Moreover, they focus on worker effectiveness in meeting
F. Strategy objectives and creating a positive environment. They also focus on manager
Chapter 1 productivity, stability, motivation and morale. What objectives of Peter Drucker
do they follow?
26. Cashewnut plc's objective for its marketing department is 'increasing sales within A. Market Standing
a year'. On which of the SMART criteria for objectives does this objective fail?
B. Innovation
A. Specific
C. Manager performance and attitude
B. Measurable
D. Worker performance and development
C. Relevant Chapter 1
D. Time-bounded
Chapter 1 31. In a high-competition and slow-growth industry, a company has a mission of
increasing the company's sales by 30% within one year. Which two of the
27. ABC Aid is a charity providing medical services in cities in UK. The chief
following criteria are not satisfied by this mission?
executive is currently involved in preparing an information document outlining
A. Specific
the services provided by the charity. In that document, the chief executive hopes
B. Measurable
to stress that in providing its services the charity is always seeking to operate at
C. Achievable
maximum efficiency. In stressing this aspect of the charity's operation, the chief
D. Relevant
executive is highlighting the charity's?
E. Time Bounded
A. Vision Chapter 1
B. Mission
C. Primary Objective 32. “Our priority will be focused on generating the revenue effectively instead of
D. Secondary Objective increasing the wealth of shareholders.”, said Mr. Bingsu. However, it was
Chapter 1 reported that the shareholders were pleased and satisfied with the company’s
generated profit. This demonstrates that the top managerial staff practices. . .
A. Profit satisficing
B. Wealth maximisation
28. For each of the following statements, select the one with the operational objective. C. Revenue maximisation
A. Customers expect good quality of products or services from business. Banana D. Profit maximisation
Chapter 1
Car Rental Ltd aims to satisfy all their customers by giving flexible services
based on their requirement. 33. What do employees typically expect of a business? Choose TWO.
B. Banana Car Rental Ltd plan to increase their revenue by 20% in the next two A. Fair terms of trade
years. B. Repayment of capital
C. Banana Car Rental Ltd provides training to their workers for better skill C. Career progression
development. D. Reasonable environmental and other business practices
Chapter 1 Chapter 1
34. Which one is included in the wide areas of social responsibilities? Chapter 1
A. Product development
39. X is a new manager and he wishes the company to reach a desired level of
B. Management of risk
performance. Therefore, he went to the company’s factory and observed the
C. Profit maximisation
workers. He realized some of the workers are redundant and he needs to dismiss
D. Impact on the natural environment
Chapter 1 some of the workers. What standard is X trying to achieve?
A. Physical standard
35. Select the correct sequence of planning and control system B. Cost standard
(1) Objectives C. Quality standard
(2) Actual performance D. Quantity standard
(3) Comparison of performance with plans/standard Chapter 1
(4) Setting of plans and standard
40. XXX plc only sells their products to some certain specialty stores and charges at a
A. 1,2,3,4
slightly higher price than its competitors. What objective is XXX plc trying to
B. 1,4,2,3
achieve?
C. 2,1,3,4
A. Maximise profit
D. 4,3,2,1
Chapter 1 B. Market position
C. Compliance
36. Determine which of the following examples meet the requirement for an D. Minimise risk
operational objective (SMART) for a T-shirt company that has an annual output Chapter 1
of 8 million T-shirts in the previous year:
41. The chiefs of Cong Ltd have selected three individuals of its unionised workforce
A. Achieve sales of $80 million
B. Achieve production goal of 5 million shoes in 3 months to an inner board of trustees. The council makes proposals to the organisation’s
fundamental directorate about all parts of the organisation’s procedures and
C. Make more shoes than Adidas during the year
D. Produce 9 million T-shirts over the course of 2018 strategies. These arrangements show the organisation’s concern towards which
Chapter 1 stakeholder?
A. Customers
37. Kevin Ltd is a company that makes chocolate bars, its goal for the year is to B. Trade Unions
achieve a sale of 100000 chocolate bars, to achieve this goal Kevin Ltd must focus C. Suppliers
all its financial resource on marketing and distributing its chocolate bars, what is D. Shareholders
Kevin Ltd trying to achieve: Chapter 1
A. Profit maximisation
42. The actions, obligations and activities of an organisation in achieving
B. Revenue maximisation
sustainability is known as
C. Wealth maximisation
A. Business ethics
D. Satisficing
Chapter 1 B. Sustainability
C. Corporate responsibility
D. Reversibility
Chapter 1
43. The secondary objective for Jake Clothes Ltd is: ‘To increase sales of the clothes
38. Albert Ltd is a company that produces paper, it is known that he pays his suppliers up to 40%’. On which of the SMART criteria of objective does this secondary
on time, provides good quality goods to his customers, pays his loans before they objective fail?
are due and provides shareholders of the company with a reasonable profit. A. Relevant
However, it is also known that environmental specialist claims that the production B. Specific
process in Albert Ltd produces a lot of chemical waste and is polluting the C. Time-bounded
surrounding environment. Albert Ltd is a company that is responsible for all its D. Measurable
stakeholders: Chapter 1
A. TRUE
B. FALSE 44. In a company, which party is not considered as secondary stakeholders?
A. Directors/Managers and individuals. Lilith Plc is a car manufacturing company owned by a group of
B. Government and its agencies foreign investors which aims to make as much profit as they can from the
C. Shareholders/partners/proprietor industry. They fund their business operations by issuing shares to the public and
D. The natural environment obtaining loans from banks. In what ways do Sunshine Education and Lilith Plc
Chapter 1 differ?
A. Ownership, size and legal factor
45. Which of the following is not an element of mission in a business?
B. Activity, profit or non-profit organisation and technology
A. Policies and standards of behaviour
C. Activity, sources of finance and size
B. Values
D. Activity, profit or non-profit organisation and sources of finance
C. Technology Chapter 1
D. Strategy
E. Purpose 50. ABC College is an organization that is limited by guarantee, thus the organization
Chapter 1 does not aim to maximize profit or wealth for its owners. However, ABC College
focuses on providing goods and services to their beneficiaries at minimized cost.
46. The goal of AXA Ltd for year 2017 is to increase the sales by 7% which is an
Based on the description above, which type of organization is ABC College?
increment of 2% compared to last year’s. Which type of goals is described?
A. Profit-oriented organization
A. Aim
B. Non-profit organization
B. Objective
C. Limited liability organization
C. Purpose
D. Unlimited liability organization
D. Plan Chapter 1
Chapter 1
51. Puffy is a local cosmetics company located in the urban area. The company
47. What is the correct sequence for the planning and control system? complies with the United Kingdom's laws on animal testing. The business also
I. Actual performance
takes into account that it needs to constantly research and improve the quality of
II. Objectives its products. What expectations would this company provide for its community?
III. Comparison of performance with plans/standards
i. Product development
IV. Plans and standards
ii. Welfare of customers
A. IV,III,II,I
iii. Jobs
B. II,IV,I,III
iv. Compliance with regulations
C. II,III,I,IV
A. i,ii
D. IV,II,I,III
Chapter 1
B. ii,iii
C. i,iv
48. After 5 years since Alibaba Ltd commenced its business, Alibaba plans to expand D. All of the above
their business to East Malaysia. After discussing at the Board, they decided to Chapter 1
maximize the revenue regardless of the cost, as long as they do not make a loss.
52. ABC, a newly incorporated company produces tennis rackets and sells them at the
The most effective way is to give discounts. All the Alibaba outlets in East
price of $50, where the market price is $55. The directors hope that this could
Malaysia will be having sales to attract more customers so that people in East
increase their market share. The situation above explains revenue maximization.
Malaysia is aware of their brand. Besides, they plan to spend more money to
A. True
advertise their brand in all the big cities of East Malaysia. Which priority is
B. False
Alibaba focusing? Chapter 1
A. Wealth maximization
B. Profit satisficing 53. In 2017, the Association of KFC Franchisee Inc. has introduced its new strategy
C. Revenue maximization plan. A group of investors who are interested in setting up a franchise in their
D. Sustainability town had looked into the strategy plan. "The Association of KFC Franchisee Inc.
Chapter 1 is united to protect, promote and advance the mutual interests of all member
franchisees and the Kentucky Fried Chicken system." The statement is a:
49. Sunshine Education is owned by a group of volunteers from various backgrounds,
A. Goal
which strives to end education inequality in the country. They recruit young
B. Mission
undergraduates and professionals from all over the country to teach in schools in C. Standard
need, especially the ones in rural areas, which do not have sufficient resources for
D. Plan
education like teachers. They fund their operations from donations from public Chapter 1
54. Lily is a primary stakeholder of A Ltd. She has invested money into A Ltd, and 60. The government established a lot of kindergartens in small villages because they
management of A Ltd will inform her regularly about the current position of the want to provide education to the poor who cannot afford to send their children to
company as she does not manage the company. Lily is? kindergarten. The question now is, what sector and industry does the organization
A. Shareholders engage in?
B. Partners A. Private Sector, Service Industry
C. Proprietor B. Private Sector, Retail Industry
D. Customer C. Public sector, Service Industry
Chapter 1 D. Public sector, Retail Industry
Chapter 1
55. For a business which aims to maximise profit as much as possible. Which of the
following is not one of its secondary objectives to support its primary objective? 61. Charles constantly reminds his teammates to complete their respective task
A. Technology punctually. Which team role does he play?
B. Profitability A. Shaper
C. Productivity B. Finisher
D. Market position C. Evaluator
Chapter 1 D. Company Worker
Chapter 2
56. In the system of planning and control, if there are deviations identified in the
comparison of actual performance with plans. What action(s) should be done to 62. In Petra Ltd, employees are often afraid to approach their manager, Mr. Sam
correct the difference? Jones because he is well-known for being hot tempered. What leadership style
A. Adjust the plan does Mr. Sam Jones exhibit?
B. Adjust how the plan is performed A. Exploitative - Authoritative
C. Adjust the plan or adjust how the plan is performed B. Benevolent - Authoritative
D. None of the above C. Consultative
Chapter 1 D. Participative
Chapter 2
57. Removed
63. Which of the following are not one of the four P's of the marketing mix for
58. CW plc is a manufacturer of clothes. It manufactures different type and colour of products?
clothes to a huge range of customers across Malaysia. It has a very good A. Price
reputation in producing quality shirts with reasonable prices. It obtains raw B. Place
material of their clothes from their own source. Which of the following is their C. Promotion
primary and secondary stakeholders? D. Process
A. Primary: Shareholders; Secondary: Lenders, Public, Suppliers Chapter 2
B. Primary: Shareholders; Secondary: Customers, Lenders, Public
64. An example of a segmented market would be:
C. Primary: Shareholders; Secondary: Suppliers, Customers, Lenders, Public
A. Phillips markets its product to all residents of the European Union with one
D. Primary: Shareholders; Secondary: Government, Customers, Suppliers,
marketing mix based on the concept 'Sense and Sensibility'.
Lenders, Public
Chapter 1 B. High-income and low-income consumers being treated the same at Marks and
Spencer (M&S).
59. Summer Holiday Ltd is a company offering vacation packages, it has been C. A garden nursery seeing residents of urban areas and rural areas as one market
running the business for a few years now. Due to economic downfall, its sales needing trees.
hasn't been growing since 2016. Summer Holiday Ltd has just proposed a new D. Honda separating its potential customers into economy car buyers and luxury
objective: "Our company aims to increase sales by 10% by 2017". Which car buyers.
characteristic is this objective lacking based on the SMART criteria? Chapter 2
A. Specific
65. A manufacturer of children's clothing offers retailers substantial financial rebates
B. Measurable
if their monthly sales exceed agreed values. Which type of power can be
C. Achievable
described?
D. Time-bound
Chapter 1 A. Reward power
B. Legitimate power
C. Coercive power
D. Expert power 70. Which of the followings is condition of benevolent-authoritative leaders in an

Chapter 2 organisation?
A. Motivated by rewards
66. Christina's team leader has a role that as a member of the team she makes helpful
B. Increasing degree of delegation
interventions to avert potential friction and tends to keep team spirit up and allow
C. Little communication
other members to contribute effectively. Her diplomatic skills together with her
D. Moderate amount of teamwork
sense of humour are assets to their team. She's good in listening, coping with Chapter 2
awkward people and to be sociable, sensitive and people oriented. What is
Christina's team role in terms of Belbin's team role theory? 71. Removed
A. Evaluator
B. Team Worker
72. Browny is a manager managing subordinates' doing renovation in the small
C. Company Worker
partnership. He gives advice to his line manager on technical things based on his
D. Resource Investigator
Chapter 2 experiences. However, sometimes Browny's advices seem to be ignored by his
superior which causes many problems to the organisation. Which of the following
67. Group is a collection of people with: is the possible solution to the dilemma that can be done by the partners?
1. common sense A. Clear differentiation of line and staff authority
2. common sense of identity B. Should be involved in implementing his advices
3. common sense of purpose C. Communicate regularly with the line manager.
4. communication between them D. Use functional authority
A. 1, 2 and 3 Chapter 2
B. 1, 2, and 4
C. 1, 3 and 4 73. Hightech Plc. is a company which has strict control over their staff and
production; they aim to be the IT leader in the world, so they decided to an IT
D. 2, 3 and 4
Chapter 2 product such as a smart phone which can turn into invisible phone by tapping the
phone screen twice. What types of business culture the company has and it is
68. Michelle is a manager in the marketing department of her company. She does not orientated towards?
have any academic qualifications in marketing however many of her colleagues A. Human relations culture; Marketing orientation
describe her as charismatic and she is often able to negotiate with her seniors to B. Internal process culture; Sales orientation
get the appropriate resources. She also has 21 staff reporting to her. What type(s) C. Open systems culture; Production orientation
of power can Michelle exert as a manager to ensure a project is completed on D. Rational goal culture; Product orientation
time? Chapter 2
A. Coercive power
74. Which of the following statement is false?
B. Reward power
A. R&D function is a part of operations function
C. Position power
B. One of the purpose of HRM is to maintain the effective workforce which
D. Expert power
matches the requirement of the business.
E. Personal power
C. Procurement may be part of operation function or it can be a function on its
F. Negative power
Chapter 2 own.
D. The suitability of product for its stated purpose must be taken into account
69. Which of the following statements about authority, responsibility and when dealing with the marketing mix
accountability are true: Chapter 2
A. When a manager delegates work to his subordinates, he also delegates
75. Superiors of Lucas Ltd company consult their subordinates for decision making
authority, responsibility and accountability
but does the final decision. Their motivation is by rewards and there is a moderate
B. In a management hierarchy, those at the bottom are accountable to those who
amount of teamwork in this company. According to Likert's authoritative-
have a higher position than them
participative continuum, which of the following is the best description for its
C. As the direct operational staff are the people who are doing the work, hence
leadership style?
they have the most position power
A. Exploitative-authoritative
D. The manager at the very apex which is the Chief Executive has the ultimate
authority but does not bear any responsibility to the shareholders B. Benevolent-authoritative
Chapter 2 C. Consultative
D. Participative
Chapter 2 Chapter 2
76. Which two of the following qualities represent a human relations culture? 82. George is working as a human resource manager in Ramly plc. The company is
A. Inward-looking identifying the motivation that is affecting George's working performance. Which
B. Control THREE of the following is classified as motivating factors?
C. Flexibility A. George's annual salary
D. Outward-looking B. George's recognition in the company.
Chapter 2 C. George's working condition
D. Responsibility
77. Jeffery a manager in Moonway plc., has to re-arrange a staff rota after a staff
E. The challenging task and work given to George
member fell ill. According to Mintzberg, this would form part of Jeffery's:
F. Ramly plc.'s policy and administration
A. Decisional role Chapter 2
B. Interpersonal role
C. Disseminator role 83. What is the possible solution for staff manager's lack of seniority?
D. Informational role A. Clear demarcations for line and staff managers.
Chapter 2 B. Use functional authority.
C. Communicate regularly with the line managers.
78. Granny plc. has decided to support the launch of its latest product by means of a
D. Staff managers should be involved in implementing their suggestions.
major television advertising campaign. This is an example of: Chapter 2
A. Pull promotion
B. Push promotion 84. "Onasis massage chairs with 0% installment payment and extra 3 years warranty".
C. Combination of push and pull promotion Which element of product mix is in terms of marketing?
D. Personal selling A. Augmented product
Chapter 2 B. Functional product
C. Basic product
D. Actual product
Chapter 2
79. Original research into products to obtain new scientific or technical knowledge or
understand in is called? 85. Hubert is a general manager with Tapster Ltd. He and his team decided to use the
A. Pure research pull promotion. Which activities promotes pull promotion?
B. Market research A. Advertising
C. Product research B. Direct Selling
D. Applied research C. Encourage distributors to stock
Chapter 2
D. Budgeting
Chapter 2
80. Fiona is the general manager of A Plc. She generates effort and commitment
amongst her staff, towards meeting objectives of the company. In terms of 86. Coke plc has sponsored a national taekwondo tournament with soft drinks but has
management process, Fiona is requested to print out their brand name on the tournament's banners as the
A. Planning condition of their sponsorship. What form of promotion in the marketing mix has
B. Organising Coke plc performed?
C. Controlling A. Advertising
D. Leading B. Direct Marketing
Chapter 2
C. Public Relations
81. Cecilia is working under Bob plc. She is a necessary individual that ensures that D. Sales Promotion
Chapter 2
the timetables are met and also acts as a progress chaser. What role is Cecilia
playing in Bob plc. 87. Lowa plc operates in a fast moving consumer goods market, where it is a medium-
A. Finisher sized player. During bad economic times, when determining how much to charge
B. Leader its customers for one of its established products, the TWO influences on Lowa plc
C. Company worker will be its...?
D. Team worker A. Customers
B. Corporate Objectives amount of work by Chong. What are the two types of powers can Chong exert as a
C. Competitors manager?
D. Costs A. Referent power
Chapter 2 B. Position power
C. Expert power
88. Sam is a manager in Steward plc. He trains his subordinates by giving some
D. Negative power
degree of responsibility delegation and rewarded them to motivate them in Chapter 2
completing the tasks. However, he has a master-servant relationship with his
subordinates where there is little communication between them. According to 93. Hard and soft approaches to HRM have been identified. Hard approach involves
Rensis Likert's, what form of leadership style would this be categorised in? the functions of HRM to maximize employee effectiveness and control staff costs.
A. Consultative Which of the followings is not the features of hard approach?
B. Exploitative-authoritative A. High rate of labour turnover
C. Participative B. Employees are paid sufficient wages
D. Benevolent-authoritative C. Authoritative leadership style
Chapter 2 D. Delegation of authority to lower level staff
Chapter 2
89. Sarah is the manager of Bestro plc and she wishes to purchase tickets to a concert
for her business associates. She has the authority to purchase tickets up to $600 94. Verywordy Plc. is facing some operational issues, and its directors have brought
but she convinces her manager, Abigail to authorise the purchase of VVIP zone in a group of management consultants to offer solutions. The team of consultants,
tickets which costs $1000. This is an example of Sarah exercising ... with reference to the industry’s practices, instantly identified the root cause of the
A. Authority without power problem, and then coordinated among themselves on the areas each should focus
B. Power without authority on. However, despite coming up with detailed action plans for the directors to
C. Power with authority choose from and implement in a very short period of time, the directors felt even
D. Delegation of authority more confused. They thought there was an overload of information, with some
Chapter 2 strategies being not that competitive or relevant to the business. To solve this
problem, more of which of Belbin’s team roles should be brought into the team?
90. Cheesy and Wedges went for the movie, Beauty and The Beast in TGV cinema.
A. Resource-investigator
They bought couple seat tickets and were given popcorns and soft drinks for free.
B. Evaluator
Which TWO of the following are the actual products they get?
C. Finisher
A. Popcorns and soft drinks
D. Company worker
B. Couple seat Chapter 2
C. The movie
D. Entertainment 95. Benjamin is a marketing manager in Charles Plc. and is currently planning to
Chapter 2 create a new product. Benjamin performed a survey and analysed the preferences
of potential customers. This analysis is the main concern for the Research &
91. There are 6 people in a team, Jeannie, Jannie, Juddie, Jackie, Jimmie and Joshie.
Development (R&D) department. Charles plc can be described as having
They are assigned to invent a product which will be useful to the public by their
A. A marketing orientation
supervisor. Which of the following will result in an ineffective team?
B. A sales orientation
A. Both Jeannie and Jackie are a perfectionists but Jeannie likes Jackie so she
C. A product orientation
always follows Jackie’s instructions.
D. A production orientation
B. Jeannie, Jannie and Juddie always invite the team members to have lunch Chapter 2
together as a bonding session within the team while Jackie, Jimmie and Joshie
will work in accordance with the plan. 96. Recently, Jackie got promoted as a senior manager, hence he started to be more
C. Juddie are able to give ideas to improve the functions of the product but arrogant and sarcastic. He often uses sarcasm towards his subordinates and they
Jimmie, Jannie and Joshie always criticise her ideas. get offended by it sometimes, but they still refer to him as he is superior to them.
D. Jannie makes sure that everyone completes their tasks before the deadline. Which power does Jackie possess?
A. Expert power
Chapter 2 B. Coercive power
C. Referent power
92. Chong is a manager in the accounting department of his firm. He has a D. Legitimate power
professional qualification in ACCA as a chartered accountant. Moreover, he has Chapter 2
five subordinates reporting to him. The subordinates are delegated with proper
97. Jack and Jill was shopping online and they decided to buy a couple T-shirt. They D. Forecast the requirement
have already chosen the designs and now all its left is the delivery services. They Chapter 2
want a decent lead time and one which also includes package tracking. What V of
102. IKEA launched a catalogue campaign a few years ago. It is now a digital book
the operation management are Jack and Jill looking for in the courier service?
or an e-book. Bacon Tan has been receiving the catalogue through e-mails from
A. Variety
IKEA annually. Based on to the communication mix, what is the type of
B. Visibility
promotion that IKEA is doing?
C. Variation in demand
A. Advertising
D. Volume
Chapter 2 B. Sales promotion
C. Public relations
98. Which of the combination would most likely result in a successful organisation in D. Direct marketing
a changing environment? E. Personal Selling
A. High level of product research, hard approach on human resource Chapter 2
management, work oriented manager
103. Which of the following is best to produce a lowest unit cost in operation?
B. High level of product research, soft approach on human resource management
A. High Volume, High Variety, High Variation in demand, High Visibility
, participative manager
B. Low Volume, Low Variety, High variation in demand, High visibility
C. High level of process research, theory X employees, salary as reward for extra
C. Low Volume, Low Variety, Low Variation in demand, Low Visibility
work done
D. High Volume, Low Variety, Low Variation in demand, Low visibility
D. High level of process research, fair advancement opportunity for every Chapter 2
employee, exploitative manager
Chapter 2 104. An organisational culture which is inward-looking and flexibility is identified
99. Determine whether the following statements are true or false. as?
A. Internal process culture
1. Businesses that show characteristics of rational goal culture have to be very
flexible in dealing with its environment. B. Human relations culture
C. Open systems culture
2. Businesses that show characteristics of both rational goal and internal process
D. Rational goal culture
culture have a high degree of control. Chapter 2
3. Businesses that show characteristics of internal process culture will normally
adopt both the scientific model and the internal process model in order to deal
with its environment effectively
A. Statement 1 is True 105. According to Henry Mintzberg, managers' three key roles are?
B. Statement 1 is False A. Interpersonal role
C. Statement 2 is True B. Information
D. Statement 2 is False C. Motivator
E. Statement 3 is True D. Decision
F. Statement 3 is False E. Technostructure
Chapter 2 F. Direct Supervision
Chapter 2
100. Erica is a project manager in Petronas. She brings her project team members
to lunch at Shangri-La Hotel after obtaining a great achievement on the project. 106. Zhi Yan is a person who is thoughtful and full of ideas in a company but her
What kind of power is she exercising? ideas are always are not practical in terms of financial aspect and he does not like
A. Referent power to participate in the implementation of the ideas. What role does she act as in the
B. Expert power company?
C. Coercive power A. The company worker
D. Reward power B. The team worker
Chapter 2 C. The leader
D. The plant
101. What two of the following are included in the planning process as part of a Chapter 2
manager's role?
A. Motivation of staff 107. Ellen is doing what she enjoys the most which is being a journalist and she is
B. Looking at potential resources grateful that she can be working in one of the top magazine companies in the
C. Allocation and coordination of work
world. Therefore, she is determine to become a well-known journalist one day and C. production orientation
is willing to work hard for it. What kind of need is Ellen achieving? D. product orientation
A. Physiological needs Chapter 2
B. Safety needs
113. Alicia is responsible to identify the processes, technology and allocates the
C. Self-actualisation needs
work and co-ordinate it. In the management process, Alicia is doing is,
D. Social needs
Chapter 2 A. Leading
B. Controlling
108. Toya is a car company which recently decided to give an extra 5 year warranty C. Organising
to new customers. What kind of product is this? D. Planning
A. Actual product Chapter 2
B. Augmented product
114. Different business applies different culture. A business which applies internal
C. Basic product
process culture tends to look inwards, aiming to make its internal environment
D. Core product
Chapter 2 stable and controlled. Which of the following would most likely apply this
culture?
109. Lynne is always rushing her team members to complete their task before the A. Large established business
due date. What role does Lynne play in her team? B. Public sector organizations
A. Team worker C. Support service units
B. Company worker D. New business unit working with fast-changing technology
C. Plant Chapter 2
D. Finisher
Chapter 2 115. There are 4 elements in marketing mix which we commonly present it as
‘4Ps’. Place is one of those elements which focuses on ways to distribute the
products to customers. What are the advantages of distributing via selling direct?
Choose TWO.
A. Profits are not shared
B. Customers can choose at point of sale
110. Kai is a manager in Banana Ltd, he turned down the request of an employee
C. More efficient logistically
asking for vacation next month due to his hectic schedule. What type of power is
D. Control over ultimate sale
found above? Chapter 2
A. Coercive power
B. Reward power 116. Alex is the production manager of Atexi Ltd. He is the ‘spokesperson’ for his
C. Referent power team. What type of managerial role is he playing?
D. Legitimate power A. Decisional
Chapter 2 B. Interpersonal
C. Informational
111. Jone is a manager at Castle Ltd. His responsibility is to deal with awkward
D. Coordinator
clients and solve problems that arise. Besides, he acts as entrepreneur and spotting Chapter 2
gaps in the market. According to Henry Mintzberg’s managerial roles, Jone is
describing his 117. Garlic Chicken is a famous restaurant in Sunway. They offer chicken rice to
A. Interpersonal role the students who study in Sunway. The rice is sold out very fast every day. As a
B. Decisional role result, the owner is facing a shortage of staff. He needs more staff to clean and
C. Informational role roast the chicken due to high demand of it. The owner runs his business based on
D. Disseminator role ______.
Chapter 2 A. Marketing orientation
B. Sales Orientation
112. The management of Banana plc puts a lot of effort in promotion and
C. Production Orientation
distribution skills to sell more of their products. However, there is no systematic
D. Product orientation
attempt to identify customer needs or products and services which will satisfy Chapter 2
them. From this information, it is clear that Banana plc has a
A. marketing orientation 118. A business’s pricing policy is based on the ‘4Cs’ which include corporate
B. sales orientation objectives. Which of the followings is not a possible pricing objective?
A. To maximize profits D. Currency

B. To obtain a tax reduction E. Competitors
C. To drive competitors out of the market F. Corporate responsibility
D. To achieve a target market figure Chapter 2
E. To attract investor for the expansion of the business
Chapter 2 124. In order to produce goods or services in the lowest possible unit costs. Which
2 of the combinations will be the best options to manage an operation?
119. Adam is a newly promoted finance director. He would like to ask for some A. Volume: high
advice on annual leave. Who should he refer to? B. Volume: low
A. Line Manager C. Variety: low
B. Staff Manager D. Visibility: high
C. Functional Manager Chapter 2
D. Plan Manager
Chapter 2 125. There are 2 approaches to Human Resource Management - hard and soft
approach. Which type of approach represents the resources element of HRM?
120. According to John French and Bertram Raven, which of the following TWO (A/B). Select 2 answers from C/D/E/F that help evaluating the effectiveness of
could be the powers of a manager? HRM.
A. Positive power A. Hard approach
B. Compensating B. Soft approach
C. Legitimate power C. Compliance
D. Referent power D. Competence
Chapter 2 E. Cost-efficiency
F. Congruence
Chapter 2
121. Jessie is the manager of the Finance Department. She prefers to carry out the 126. Arnold works for CY enterprise. He has a lot of working experience and has
task on her own, with minimum delegation and consultation with her subordinate. worked for a few large companies in the past. Once he became the manager of the
Therefore, to motivate her subordinates she provides them with extended holidays company, a lot of his subordinates are motivated by his attitude and presence. He
and bonuses only. generates strong feelings of commitment and achieving objectives for the
A. Exploitative authoritative company amongst them. Many of the workers in the company sees him as the role
B. Benevolent authoritative model and want to be just like him. Arnold appears to exhibit which kind of
C. Consultative power?
D. Participative A. Referent power
Chapter 2
B. Expert power
122. Zhao works as the HR manager at G Ltd and she has control over valuable C. Coercive power
resources relating to the future employees' background. She can also influence D. Legitimate power
other managers' decision while recruiting new workers. What is the power of E. Reward power
Zhao is using? F. Negative power
Chapter 2
A. Reward power
B. Legitimate power 127. Apple plc, a large established business produces product effectively to meet
C. Negative power the demands of customers in dynamically changing environment, meanwhile
D. Referent power adhering to few rules and principles which are laid down by Apple plc. Which
Chapter 2
culture applies to Apple plc.?
123. Is price the only P that can generates income in marketing mix? (A/B). Which A. Rational goal
of the following can affect business's pricing policy? (Select 2 answers from B. Internal process
C/D/E/F) C. Open system
A. Yes D. Human Relation
Chapter 2
B. No
C. Costs
128. Shonda sells clothing online via her Instagram account. Her customers order 134. When an organisation sets out to determine what customers want, and adapts
the products from her through WhatsApp, she then packs the items on her own itself to meet and, if possible, exceed their expectations, then it said to have a
and sends them off in parcels. What is a definite advantage of this method of A. Sales orientation towards its customers.
distribution, Shonda is using? B. Product orientation towards its customers.
A. Speed of delivery C. Production orientation towards its customers.
B. Profit margin is not shared D. Marketing orientation towards its customers.
C. Costs are lower Chapter 2
D. Revenue is higher
Chapter 2 135. Which TWO of the following is not the element of products marketing?
A. Processes
129. Which is NOT a formal aspect of the organisational iceberg? B. Physical Evidence
A. Formal goals C. Price
B. Attitudes D. Promotion
C. Technology Chapter 2
D. Rules and regulations
Chapter 2 136. Which of the following is not the responsibility of the Human Resource
function?
130. Which of the following is the main function of marketing? A. Recruitment and Selection
A. To maximise sales volume B. Industrial Relations
B. To identify and anticipate customer needs C. Payroll
C. To persuade potential consumers to convert latent demand into expenditure D. Training and Development
D. To identify suitable outlets for goods and services supplied Chapter 2
Chapter 2
137. U Ltd produces a portfolio of products and focuses its efforts and resources on
persuading customers to buy them. This is an example of which type of
‘orientation’?
131. Which of the following correctly describes the meaning of Mintzberg's term: A. Production
"technostructure"? B. Sales
A. Analysts such as accountants and work planners, whose objective is to effect C. Marketing
standardisation in the organisation D. Purchasing
B. The range of technology needed for effective organisational performance Chapter 2
C. The organisation of shop floor workers and their supervisors in a
manufacturing environment 138. Which of the following is part of the research and development function of a
D. The central strategy-setting component of organisation structure business?
Chapter 2 A. The analysis of survey data on consumer behaviour, produced under contract
by an independent market research company
132. A company with a product orientation believes that: B. Organising exhibitions and sales promotions
A. Products should be sold actively and aggressively C. Creating new products and improving existing ones
B. Meeting customer needs better than competitors is the key to corporate D. Contracting independent advertising agencies to promote the products being
success sold by the company
C. The levels of sales, advertising and sales promotion is key to corporate success Chapter 2
D. Producing goods and services at the best quality is the key to corporate
success 139. What is delegated by a superior to a subordinate?
Chapter 2 A. Authority
B. Power
133. Deciding what promotional strategy to target the customers is usually part of: C. Responsibility
A. Operational planning D. Accountability
B. Tactical planning Chapter 2
C. Resource planning
D. Strategic planning
Chapter 2
140. Leaders may be distinguished from managers by the fact that they do not 146. Siva is a valuable member of his team. He is enthusiastic and curious, highly
depend on____________ in the organisation. Which of the following types of communicative and has a capacity for contacting people and exploring anything
power correctly completes this statement? new. Which of Belbin's team roles does Siva fulfil?
A. Person power A. Monitor-evaluator
B. Expert power B. Plant
C. Position power C. Resource-investigator
D. Physical power D. Company worker
Chapter 2 Chapter 2
141. Ted is the production manager of an organisation. He has studied the jobs of 147. Michael leads an established team of six workers. In the last month, two have
all his subordinates and developed a standardised way for doing each. Which left to pursue alternative jobs and one has commenced maternity leave. Three new
theory of management is he implementing? staff members have joined Michael's team. Which one of Tuckman's group stages
A. Scientific theory of management will now occur?
B. Classical theory of management A. Norming
C. Organisational theory of management B. Forming
D. Macro theory of management C. Performing
Chapter 2 D. Storming
Chapter 2
142. Which of the followings an "interpersonal" role of management, in
Mintzberg's classification of nine managerial roles? 148. Jennie is one of those people who is dynamic and thrives on pressure. She
A. Spokesperson tends to be the one who challenges and pushes other team members, sometimes
B. Figurehead annoying or upsetting them - but also getting the team past difficult periods.
C. Negotiator Which of Belbin's team roles does Jennie exercise?
D. Resource allocator A. Shaper
Chapter 2 B. Co-ordinator (chair)
C. Implementer
D. Plant
Chapter 2
143. Which of the following is not a technique of scientific management or
Taylorism? 149. In Maslow's "hierarchy of needs" which is the highest need?
A. Micro-design of jobs A. Self actualisation
B. Work study techniques to establish efficient methods B. Esteem
C. Multi-skilled teamworking C. Belonging
D. Financial incentives D. Safety
Chapter 2 Chapter 2
144. Which of the following is a feature of ineffective delegation by a manager?
A. Specifying performance levels and the results expected of the subordinate
B. Obtaining the subordinate's agreement with the task and expected results
C. Ensuring that all the subordinate's decisions are confirmed or authorised by
the supervisor
D. Ensuring that the subordinate reports the results of her decisions to the
superior
Chapter 2
145. Fayol and Taylor shared the belief that:

A. Employees work better if they are given a wide range of tasks to complete
B. Management must gain trust and persuade others to follow
C. Changing the corporate culture is the most important avenue of change
D. Individuals must subordinate themselves to the needs of the organisation
Chapter 2
BF Questions 2021 (Chapters 3-4) BF Questions 2021 (Chapters 3-4)
1. Which of the following are disadvantages of a tall business? 5. An organisation is running a business with the following characteristics. The
A. Managers have superficial idea of what is going on. assets belong to the organisation, it can create a floating charge over its asset and
B. The same work passes through too many hands. members cannot transfer their interest to others. What type of organisation is it?
C. Small groups are formed for discussions A. Limited company
D. Sacrifices control B. General partnership
Chapter 3 C. Limited Liability Partnership
Chapter 3
2. Mr. Kimishima thinks that its great to have a machine bureaucracy, but now plans
to upgrade his company to that of a higher level. After roughly 30 years in the 6. Which of the following are NOT ways that mechanistic and organic structures
making, he had created an empire for himself. Now, his company has spread out differ?
all over the world, with branches spanning all the way from America to Japan. He A. For mechanistic businesses, tasks are specialized and broken into sub-tasks for
now lives in Russia which is also the central office of his company which, is a fast the sake of efficiency and for easy delegation to subordinates; whereas in
food business which serves up tasty fried chicken. Once a year, a bunch of organic businesses, specialist knowledge and expertise of individuals mutual
managers from the regional offices from all over the world who manages the adjustments
small retail stores at their respective regions are to assemble in Russia for a B. Hierarchy and uniformity are common in mechanistic structures, whereas
meeting about their expectations for the year ahead and to also voice out any corporate culture and the common status of employees are characteristics of
opinions they may have about the company. The retail stores managed by the organic organizations.
respective regional offices only report their condition once a year to the regional C. Mechanistic structures are impersonal in nature where procedures are set forth
offices. The central office and regional offices however, does not play a for employees to follow, whereas organic structures are replaced by the
significant part in the running of the retail stores. Therefore what type of development of shared beliefs and values.
organizational structure do you think takes place in the small retail outlet of Mr. D. Mechanistic structures have same levels of efficiency as compared to organic
Kimishima’s company in Tokyo? structures.
A. Simple Structure Chapter 3
B. Machine bureaucracy
7. Which are NOT features of partnerships?
C. Divisionalised
A. Partners take drawings from the business.
D. Adhocracy
Chapter 3 B. There is perpetual succession.
C. Partners can choose the flexibility of "being their own boss", making all the
3. Garreth Ltd.'s owner, Garreth Smith, is a mr-know-it-all and does not care about decisions and getting things done their way; or choose to take the backseat.
ideas given by his employees. His endless projects and decisions are D. Partners can sell shares for a profit.
unquestionable and must be done in order to escape his wrath. Sometimes, he Chapter 3
allows his employees to voice out their opinions but he later comes out with the
8. Which THREE of the following are classical principles of organisational structure
same ideas and credits himself for it. What kind of organizational structure is
suggested by Henri Fayol?
Garreth Ltd. likely to be?
A. Discipline
A. Simple structure
B. Ideology
B. Professional bureaucracy
C. Espirit de Corps
C. Machine bureaucracy
D. Personal interests above all
D. Divisionalised
Chapter 3 E. Scalar chain
F. Unity of communication
4. Ern Ltd is an automobile company that has been set up for more than 30 years. It Chapter 3
operates in a sector which productivity is essential. During the 30 years, the
9. The management of Company A and B has decided to meet up to discuss about
company faced significant competition and decided to diversify into several
combining their resources to market a new product which is said to be better than
strategic business unit (SBU) where individual division managers are given power
what both of them can achieve individually. They intend to form a new company,
and authority to make certain decisions without reference to managers above
Company C, in which both former companies will own a percentage of shares in
them. Ern Ltd would be expected to have_____
accordance with the amount of capital contributed towards the new company. The
A. Simple Structure
B. Divisionalised new company will not be brought under any of Company A or B's existing
corporate structure. What kind of alliance between Company A and B intended to
C. Adhocracy Structure
form?
D. Professional Bureaucracy
Chapter 3 A. Group of companies
B. Joint Venture
C. Agents
D. Licenses
Chapter 3 15. The chief executive of Action plc. has recently been discussing problems caused
by the decentralised nature of the company's decision-making processes. The
10. What are the two factors affecting the amount of decentralisation in a business? chief executive is keen to increase the amount of centralisation decision-making
A. Leadership style over the next year. Which THREE of the following are likely to increase the
B. Extent of international knowledge acquired amount of centralisation that is possible in Action plc.?
C. Ability of management A. The company's authoritarian management style
D. Organisation's attitude B. The company's large size
Chapter 3 C. The ineffectiveness of communication across the company
11. Which of the following is the correct type of organsation? D. The slow pace of technological change in the company's markets
A. Professional Innovative E. The well-skilled workforce
Chapter 3
B. Divisional bureaucracy
C. Simple Machine 16. Which of the following are the disadvantages of organisation chart?
D. Divisionalised A. Frequent updating as people leave
Chapter 3 B. Need not analyse organisation detail
12. Edward Tan is a part of the security staff in his company. His job is to ensure the C. Informal relationships not shown
security of the employees, customers and goods. According to Mintzberg, what D. Provides concise information
role does he play in the company? E. May encourage bureaucracy
Chapter 3
A. Operating core
B. Middle line 17. According to Henri Fayol, all organisations should follow the classical principles.
C. Strategic apex However nowadays, there are modern approaches to organisation structure. Which
D. Support staff TWO of the following values contradicts Fayol's theory?
E. Technostructure A. Hierarchy of roles
Chapter 3 B. Multi skilling
13. The business of Red Moon plc. is split into many divisions around the world. C. Flexibility
Each division is given the responsibility for their profits and are assessed in terms D. Continuity of personnel
of profit. Which THREE of the following are the advantages of this structure? E. Teamwork
Chapter 3
A. Reduces the number of levels of management
B. Easy to identify completely independent products and markets for which 18. Which of the following descriptions are true regarding partnership？
separate divisions can be set up A. A partnership gives floating charges on assets.
C. Flexible in adapting to growth and diversifications B. A general partner can transfer his interest to his wife who is also a partner.
D. Exploits specialist functional skills C. A limited partnership has limited liability on its own debts.
E. Encourages a greater attention to efficiency, lower costs and higher profits D. General partners can participate in management.
F. Allocation of central costs is easily done and without any problems Chapter 3
Chapter 3
19. Organisation ABC has an external environment which is static and complex. Its
14. Anita is a human resources manager with Woodman Ltd. She is currently working key building block is made up of Theory Y people and highly trained
on a project designed to decrease the spans of control of the managers employed professionals who demand control of their own work. While there's a high degree
by the company's largest subsidiary. She has been asked to identify any factors of specialization of skills, decision making is decentralized. According to
about the subsidiary that might suggest that decreases in spans of control are Mintzberg's Organisational Structure, which of the following structures is most
possible. Which of the following four factors identified by Martin could result in a probably adapted by Organisation ABC?
decreased span of control? A. Entrepreneurial structure
A. Subordinates carry out very similar tasks B. Machine bureaucracy
B. Managers tend to be engaged in small amounts of non-supervisory work C. Professional bureaucracy
C. Subordinates are geographically dispersed D. Divisionalised
D. Subordinates do simple tasks E. Matrix structure
Chapter 3 Chapter 3
20. In terms of structure, Merdeka plc. is a tall, narrow organisation. Which THREE 25. JackJack plc. is a adhocracy that has complex and dynamic external environment.
of the following characteristics is the company most likely to exhibit? Which of the TWO following characteristics is the company most likely to
A. Small groups enable team members to participate in decisions exhibit?
B. Large span of control A. Coordinated by standardisation of outputs
C. Many opportunities for promotion B. Coordinated by standardisation of skills
D. Slow decision making C. Coordinated by mutual adjustment
E. Lower administration and overhead costs D. Technostructure building block
Chapter 3 E. Operating Core building block as its most important block
Chapter 3
21. Which THREE of the following are the 14 principles of organisational structure
by Henri Fayol? 26. Mintzberg's building blocks and coordinating mechanism are generally combined
A. Scalar chain in one of five different types of organisational structure. What are the five?
B. Initiative A. Simple, machine bureaucracy, transnational, multidivisionalised and
C. Innovative adhocracy
D. Appropriate centralisation B. Simple, divisionalised, machine bureaucracy, adhocracy and matrix
E. Security C. Simple, machine bureaucracy, professional bureaucracy, divisionalised and
F. Stability adhocracy
Chapter 3 D. Team based, transnational, functional, multidivisionalised, holding company
and matrix
22. Bonnie has specialist knowledge of audit, taxation, and finance. She starts up an Chapter 3
accounting firm and hired many employees all by herself. She sets up rules and
regulations of the firm and has total control over running of the business. What 27. Which are THREE of Mintzberg's building blocks of an organisation?
types of organisational structure is most likely to be? A. Support staff
A. Machine bureaucracy B. Middle line
B. Entrepreneurial structure C. Functional division
C. Matrix structure D. Scalar chain
D. Divisionalised E. Ideology
Chapter 3 F. Matrix structure
Chapter 3
23. James is the top manager of GG.COM ltd which is a big-sized company that sells
smartphones in a rapid changing market. James tends to imply high delegation and 28. According to Fayol, which two of the following are the classical principles of
autonomy at the lower levels of business as he believes it will support managerial organisational structure?
succession. Which aspect of organisation structure is GG.COM ltd having? A. Division of work
A. Centralisation B. Scalar chain
B. Decentralisation C. support staff
C. Wide span of control D. Ideology
D. Narrow span of control E. Unity of communication
Chapter 3 F. Decentralisation as the core
Chapter 3
24. Which of the coordinating mechanisms specifies the results such as the setting of
targets of company? 29. A Ltd operates in a sector in which laying down standard operating procedures is
A. Mutual adjustment key and there are clear lines of reporting and authority exist. A Ltd.'s staff
B. Standardisation of work members have good career opportunities as they can progress 'up through the
C. Standardisation of skills ranks'. A Ltd would be expected to have
D. Standardisation of outputs A. A simple structure.
E. Direct supervision B. A machine bureaucracy structure.
Chapter 3 C. An adhocracy structure.
D. A divisionalised structure.
Chapter 3
30. Which of the following are characteristics of decentralisation? Choose THREE 35. Calvin plc is a company that was set up by Daniel Calvin 3 years ago. It operates
answers. in a sector in which innovation is key and it changes very quickly. There are a
A. Senior managers keep control great many factors that drive both supply and demand. The employees are
B. Decision making seems to be easier. together engaged in varying and complex tasks which require a high degree of
C. Quality of decisions is better. intelligence, flexibility and self-direction. Calvin plc is exercising the....
D. Decision can be made in shorter time. A. Simple structure
E. Separate spheres of responsibility can be identified B. Adhocracy structure
F. Improves motivation of junior managers. C. Machine bureaucracy structure
Chapter 3 D. Divisionalised structure
Chapter 3
31. Bata plc. is considering an option to market their new Frozen brand shoe products
that target the children's' market with Disney plc. Project managers of both Bata 36. Jamie plc. is a company with employees who are majority Theory X based
plc. and Disney plc. decided to form a project team and market the project through (McGregor). The company functions according to the rules and standard operating
this team. Which of the following best suits the business structure suggested for procedures that have been previously set and follow them carefully. All decisions
each option. of the company are made by the superiors and followed through by the
A. Group Structure employees. Which TWO of Mintzberg's building blocks are most important in
B. Joint Venture Jamie Plc.
C. Strategic Alliance A. Operating core
D. Licenses B. middle line
Chapter 3 C. strategic apex
D. support staff
32. Which of the following statements about the organisation chart is incorrect?
E. technostructure
A. It includes standard principles and working practices. Chapter 3
B. It provides at-a-glance information.
C. It may encourage bureaucracy. 37. Choose THREE of the following statements which are associated to the
D. It requires frequent updates as people leave. characteristics of bureaucracy.
Chapter 3 A. The business rarely changes in response to environmental pressures.
B. Employees have high commitment to the goals of the business.
33. A Plc. focuses on specialisation, which works are divided into parts and to be
C. Duties are established and measures of performance set.
allocated rationally. Which classical principle of organisational structure does A
D. Specialisation of labour is high.
Plc. comply with?
E. Differences in status are determined by people's expertise and experience.
A. Scalar chain. Chapter 3
B. Appropriate centralisation.
C. Division of work. 38. Jacky is an engineer. Recently, he had been assigned to Banana Ltd to complete a
D. Correspondence of authority and responsibility. project. He worked under multiple managers in his job role and might need to
Chapter 3 report to different managers on his work progress. Which of the following
organisation structures best described the situation above?
34. Mr.Ted is one of the newly appointed functional managers of Chart plc, a
A. Entrepreneurial structure
company which is fresh in the industry and also small in size So, in order to
B. Functional structure
minimise error conducted by his staff, Mr.Ted decided to come up with a Standard
C. Divisional structure
Operating Procedures handlet which has all the information about handling any
D. Matrix structure
sort of issues regarding their work. Besides, he also took the initiative to review Chapter 3
all of his subordinate's work just to make sure there were no mistakes. Which two
of the following coordinating mechanisms are related to this situation? 39. Pasta plc is a decentralized organisation that focuses more on organizational
A. Direct supervision effectiveness than task efficiency. Pasta plc adapts to fast-moving technology and
B. Standardization of work manufactures a variety of products to target various markets. What are the control
C. Standardization of skills mechanisms of this organisation? Choose THREE
D. Standardization of outputs A. Commitment
E. Mutual adjustments B. Rationality
Chapter 3 C. Status
D. Shared values and culture
Chapter 3
40. Select the true statement D. There is goal congruence.

A. An unlimited company has unlimited liability. A limited company has limited Chapter 3
liability.
45. The following illustrates a type of alliance. “I am an alliance formed for engaging
B. The limited liability partnership (LLP) must have at least one member whose
in a specific business enterprise for profit. I help reduce fixed costs, increase
liability is unlimited.
productivity, and allow innovation by sharing everyone’s expertise. I am often
C. All are false
used to shield the parent companies from the risk of a new alliance being
D. All are true
Chapter 3 unsuccessful.” What am I ?
A. Strategic Alliance
41. Banane Ltd. is a business selling fresh bananas to customers and consumers. B. Group
Recently, the directors of the company want to expand their business to sell C. Joint Venture
banana desserts such as banana milkshake. However, they do not have the skill of D. Limited Liability Partnership
food processing so they intend to collaborate with Le Cordon Cleu culinary arts Chapter 3
company. Since the focus of Banane Ltd. is on supplying the fresh bananas, they
46. In the situations below, which of the following does NOT show the guiding
do not really care about the profit of banana desserts business as long as there’s an
principles of an organisation by Henri Fayol?
increase in sales of their bananas. Which of the following alliances describe
A. Employees work together in achieving the business’s objectives and goals.
Banane Ltd and Le Cordon Bleu culinary arts department?
B. Managers hold the authority and responsibility in managing their employees.
A. Licenses
C. Employers focus on their employees’ interest in the business.
B. Strategic alliances
D. Tasks are divided equally among the employees based on one’s strengths and
C. Groups
D. Joint Venture weaknesses.
Chapter 3
E. Agents
Chapter 3 47. Does an organization that values standardisation of work and has a
42. Which of the following is the least important principle for employees in a technostructure as its key building block typically practices decentralisation ?
A. Yes
company which requires high standardisation of work?
B. No
A. Unity of command Chapter 3
B. Discipline
C. Initiative 48. Jasmine plc is a professional bureaucracy which provides tax, assurance and
D. Order advisory services. Which of the following building blocks is the key to Jasmine
Chapter 3 plc?
A. Technostructure
43. Mr. Bankrutsky and Mr. Failurez are the two partners of a firm providing
B. Operating core
accounting services to small businesses. Five chartered accountants report to
C. Middle line
them. Due to the size of the firm and the lower level of complexity of their clients’
D. Support staff
accounts, the chartered accountants do not use any sophisticated IT systems when Chapter 3
providing their professional accounting services. Which of the options best
describes Bankrutsky & Failurez LLP.’s organisational structure and key 49. Which of the following is/are the typical advantages of bureaucracies?
coordinating mechanism, according to Mintzberg? A. Easy to learn from mistakes
A. Simple; direct supervision B. Flexible to the change of environment
B. Simple; standardization of skills C. Promotes the personal development of staff
C. Professional bureaucracy; standardization of skills D. Technically incompetent
D. Professional bureaucracy; direct supervision E. None of the above
Chapter 3 Chapter 3
44. Jerry started a new business recently. Since the business is still small, with only 50. Q, W, Z, C want to form a business together in view to earn a profit for
two products in its product range, Jerry only hired a few employees to help out themselves in the long run. Unfortunately, Q has a terminal illness but insists on
with the business. This allows him to have total control over the business. What joining the business. They are seeking to fund the business using floating charges
are the three advantages of such an organizational structure? too, and prefer less administrative work if only it is possible. Suggest to them a
A. Most decisions can be made quickly and efficiently. business structure that they should take on.
B. High flexibility towards changes. A. Partnership
C. Can easily cope with high demand. B. Limited partnership
C. Limited company Chapter 3

D. Sole trader
Chapter 3 56. The company decided to group all the elites to implement a large project. Who do
you think is the most important for the success of this project?
51. Avon and Mary Kay plan to work together through a shareholding, creating a A. The Strategic Apex
organization, utilising their existing brand to break into a new market through B. The Support Staff
their conventional method of trading which is, direct sales. Which two of the C. The Technostructure
following best describes the type of alliance Avon and Mary Kay have? D. The Operating Core
A. Joint venture Chapter 3
B. Licensing
57. Beauty is a functional manager that works in Beast ltd. She determines and
C. Strategic alliance
standardizes work processes and techniques. According to Mintzberg’s building
D. Agents
blocks, which building block is she in?
E. Groups
Chapter 3 A. Strategic apex
B. Middle line
52. Henri Fayol, an early management theorist, suggested that all organisations should C. Technostructure
follow some principles in order to function effectively and efficiently. Which D. Operating Core
THREE of the following are the principles stated by Henri Fayol? Chapter 3
A. Scalar chain
58. The management structure in Cinderella plc emphasizes high degree of
B. Standardisation of work
formalization on the operating work processes, and the decisions are normally
C. Order
made at the top level and carried out at the lower level. What is the key
D. Equity
E. Mutual adjustment coordinating mechanism for Cinderella Company?
A. Direct supervision
F. Direct supervision
Chapter 3 B. Standardization of work
C. Standardization of skills
53. Berlin Ltd and French Ltd have recently agreed to co-operate to exploit the D. Mutual Adjustments
possibilities that both companies have in a particular overseas market. A limited Chapter 3
company is formed in which the businesses take a financial stake and
59. Rapunzel ltd is an advertising company that encourages creativity and flexibility
management is provided as agreed. The arrangement is an example of a
to its employees. The management departments are spread at different locations
A. Strategic alliance
and communications between the managers and subordinates are important.
B. Licensing agreement
Which organizational structure is more suited for Rapunzel ltd?
C. Joint venture
A. Machine Bureaucracy
D. Group structure
Chapter 3 B. Divisionalised
C. Simple Structure
54. Ares wants to start a new business in country Z. Ares is a person who is lack of D. Adhocracy
innovation and wishes to minimise his risks. Therefore, he wishes to start a Chapter 3
business which is already well-known. This type of business structure is known
60. Classical theories of organizational structure may be outdated and no longer
as?
suitable for the current organization structures. What modern approaches can be
A. Partnership
done to make sure that an organization can run well in this modern days?
B. Licensing
A. Form multi-skilled teams
C. Joint venture
B. Ensure that there is a unity of command
D. Limited company
Chapter 3 C. Fair remuneration
D. Fixed working schedule
55. Kong wishes to start a business but he does not have a large capital. He started the Chapter 3
business using his own savings. What are the advantages of doing so?
A. Kong can make all the decisions.
B. Kong can share load with other partners.
C. Kong does not need to prepare financial statements
D. Kong will not be affected even if the business goes bankrupt.
61. In Mintzberg’s building blocks, the building block that portrays the values, beliefs Chapter 3
as well as the traditions is the
67. Company A, a fast food company which operates as a franchisor, was interested in
A. Technostructure
getting involved in the food packaging industry. It was not willing to invest in
B. Middle line
diversifying within itself as the cost of entering the market was too great, and so
C. Operating Core
approached Company B, another food-related business, to start a separate business
D. Ideology
Chapter 3 together producing packaged food, named Company C. Two years later, Company
A acquired all of Company B's shares. What kind of alliance does Company B
62. OBCB plc is organised in a structure that all the jobs are grouped by common have with Company A now?
feature and clear line of reporting as well as authority exists. What is the A. Joint Venture
organisation structure used by OBCB plc? B. License
A. Entrepreneurial structure C. Agency
B. Functional structure D. Group
C. Divisional structure Chapter 3
D. Matrix structure
Chapter 3 68. Company A entered into a contractual relationship with company B to form a
strategic alliance to share telecommunication services. Which of the following is
63. Shanny is a human resource manager with Munchie Ltd. She has identified that not a reason why strategic alliances are desirable?
the span of control of the managers in the company is too narrow. What influences A. Relatively cheaper
the span of control to be too narrow (2 answers)? B. Less commitment
A. There are more non-supervisory work in a manager’s workload. C. Recommended by competition law
B. The teams under the manager are dispersed. D. Informal arrangement
C. All the subordinates are given similar tasks. Chapter 3
D. There are close interactions between subordinates.
Chapter 3 69. Which of the following is NOT one of the coordinating mechanisms?
A. Standardisation of work
64. According to Henry Mintzberg, an organisation's structure can be broken down B. Standardisation of inputs
into six 'building blocks'. Which of the following roles represent the support staff C. Direct Supervision
of a business? D. Mutual adjustment
A. Analysts specializing in designing employee skill development programmes Chapter 3
B. Research assistants in the Research and Development Department
70. Henri Fayol, a classical management theorist suggests that all organisations
C. Logistic managers in planning the transportation of products to customers
should follow the 14 guiding principles for the organisation to function effectively
D. Assistant managers in handling operational matters
Chapter 3 and efficiently . Which one of the following principles is not one of Henri Fayol's
principle :-
65. Which of the following is an effect of decentralisation? A. Order
A. Greater awareness of local problems which leads to better decisions made in B. Equity
response C. Salary
B. More efficient allocation of resources by senior management D. Discipline
C. Avoids overburdening top managers in relation to workload Chapter 3
D. Greater efficiency in making crisis decisions
Chapter 3 71. Mintzberg's building blocks and coordinating mechanisms are generally combined
in one of five different types of organisational structure. Which of the following
66. Dave has been telling Steve about how accomplished he feels having received would be an key building block for machine bureaucracy?
multiple promotions over the last few years in Company X, but also about how A. Operating core
unmotivated he feels in receiving work that is less challenging. Which of the B. Technostructure
following would NOT be evident in Company X if it is said to be a tall C. Middle Line
organisation? D. Mutual adjustment
A. High administration and overhead cost E. Middle line
B. Rigid supervision may be imposed Chapter 3
C. Fast decision making and response
D. Jobs are routine and mundane
D. Limited liability companies can offer a fixed and floating charge.

Chapter 3
72. Which of the following is the requirement to form a Limited Liability Partnership
(LLP)? 78. Uniqla is a business selling clothes to consumers. Recently, the marketing manger
A. One of the partner must have unlimited liability of Uniqla discovered that the consumer's demand for their Marvel and Disney
B. It is an informal agreement between partner Uniqla T-shirt (UT) is dropping as consumers get bored with those designs. They
C. There is a max limit of members of 50 decide then to have a collaboration line for UT and the artist KAWS to produce a
D. Accounts of an LLP is subjected to audit well-known cartoon design UT, Snoopy. Which of the types alliance would
Chapter 3 Uniqlo most likely adopt?
A. Franchising
73. Which TWO of the following, are NOT advantages of divisional structure? B. Licenses
A. Good for developing managers as they are given responsibility for divisional C. Joint venture
profit D. Group structure
B. Increases the number of levels of management Chapter 3
C. Reduces the likelihood of profitable products and activities being continued
D. Releases top management to concentrate on strategic issues 79. Which of the following is one of the 14 classical principles by Henri Fayol?
Chapter 3 A. Appropriate decentralisation
B. Subordination of company interests
74. Annabelle is a part of the reception staff at Sunway TES. Her job is to welcome C. Unity of control
visitors by greeting them in person, or on the telephone; answering or referring D. Sense of success
inquiries. According to Mintzberg's building blocks, what role does she play in E. Stability of personnel
her workplace? Chapter 3
A. Middle line
B. Operating core 80. The subordinates of Tim, a manager in XYZ Ltd, feels dissatisfied as they have
C. Support staff too little challenge and responsibility in their work. They are complaining that
D. Technostructure. Tim often keeps too much routine work to himself. What do you think constitutes
E. Strategic apex to this situation?
Chapter 3 A. Span of control is too wide
B. Decentralised decision making in the organisation
75. Infinite Plc is an organisation that has simple and static external environment. It is C. Subordinates work on similar tasks
a continuous organization of official functions bound by rules. Which TWO of the D. Span of control is too narrow
following disadvantages is the company going to encounter? Chapter 3
A. More likely to produce congruent decision.
B. Slow decision making process passing to along a line of authority. 81. Jane is thinking of converting her sole trader business into a company. She is now
C. Argument over allocation of central costs can occur. researching the disadvantages of companies. Which of the following would Jane
D. They suppress innovation discover?
Chapter 3 A. No perpetual succession
B. Third parties may obtain information about the company's financial position
76. QQ Ltd.'s Board of Directors recently found out that their company's costs of C. No separate legal entity
supervision is unnecessarily high and many junior subordinates resign. What is D. Large amount of investors needed
the 'shape' of the organisation and what causes the juniors to resign from their Chapter 3
post.
A. Flat, wide; slow decision-making and responses. 82. Company A and company B has decided to discuss about doing a project together.
B. Flat, narrow; Same work passes through too any hands They agreed an informal contractual agreement and no separate company is
C. Tall, narrow; Junior subordinates do not get enough supervision and formed at the point. The only thing they are concern about is that, they may
communication they required contravene with the competition laws which will be viewed as illegal cartel. What
D. Tall, narrow; Rigid supervision blocking initiative. kind of alliance do they intended to form?
Chapter 3 A. Joint Venture
B. Agents
77. Which statements below is not true? C. Groups
A. Public companies may have their shares listed on a public stock exchange. D. Strategies alliances
B. Private companies must have a written constitution. Chapter 3
C. Limited Liability Partnership may not need a partnership agreement.
83. Two people are the only shareholders in a limited liability company. This means C. The bureaucratic obstacles are removed, hence reducing concentration of
that: power of individual department heads.
A. They must meet all the debts of the company D. It is less stressful for an individual to report to a number of bosses or
B. The company cannot become bankrupt managers.
C. They cannot be asked to meet the debts of the company Chapter 3
D. The business has a turnover of less than 10,000 pounds
Chapter 3 90. Which of the following terms is not used by Mintzberg in his description of
organisational structure?
84. Two friends planned to go into a business together. They would like to start a A. Strategic apex
supermarket in a new residential area. However, they do not have enough funds, B. Support base
so they decide to sell a percentage of the business to an investor. What type of C. Technostructure
commercial organisation fits the situation above? D. Operating core
A. Sole trader. Chapter 3
B. Partnership.
91. Which one of the following is not a recognised means of achieving coordination:
C. Private limited company.
A. standardised work processes
D. Public limited company.
Chapter 3 B. standardised outputs
C. standardised payments
85. Which of the following is a disadvantage of a limited company? D. standardised skills and knowledge
A. No limit to size of company Chapter 3
B. Increased compliance costs
92. The entrepreneurial structure is typical of which of the following?
C. Managers run the company on behalf of owners
D. Company is seen as a separate legal entity. A. Large, successful, companies dominated by a powerful individual?
Chapter 3 B. Small companies in their early days
C. Risk taking companies of all sizes
86. Which of the following principles of classic management is challenged by matrix D. Fast growing companies
management? Chapter 3
A. Structuring the organisation on functional lines
B. Structuring the organisation on geographical lines 93. The following are advantages of centralisation, EXCEPT:
A. Greater awareness of local problems by decision makers as solutions can be
C. Unity of command
offered closer to the issues
D. Decentralisation of decision-making
Chapter 3 B. Better control of the various functions and allocates resources more effectively
C. Quality of decisions are better as managers are better skilled and experienced
87. Robert has a span of control of two. This means that he has D. Policies, procedures and documentations can be standardised organisation-
A. Two main responsibilities wide
B. Two employees who report directly to him Chapter 3
C. Two bosses whom he directly reports to
D. Two different department that he has been attached to 94. SoftStance is an organisation that manufactures tissue paper. The business is
Chapter 3 organized in four main departments: finance, marketing, production and
administration. What type of organisation structure does this company follow?
88. A narrow span of control would be suitable where. A. Functional
A. The team is not dispersed across a wide area B. Matrix
B. The work is routine C. Product
C. There is little similarity between members' work D. Geographical
D. The team is very experienced Chapter 3
Chapter 3
95. Decentralisation is often preferred by most large organisations because:
89. One of the disadvantages of matrix organisation is that: A. They are able to respond quickly to issues.
A. The decision making processes may be lengthy as many work divisions need B. It is cheaper in terms of overheads.
to be consulted. C. Procedures and policies can be easily applied.
B. The organisation tends to get more focused on customer and quality of D. It avoids burden on junior managers and subordinates.
products provided. Chapter 3
96. The line of authority relates to what? Chapter 3

A. scalar chain
103. Which one of the following statements is false with regard to the
B. span of control
entrepreneurial structure?
C. number of managerial levels
A. There may be succession problems/crises as expertise and control are in the
D. ownership VS control
Chapter 3 hands of one individual.
B. Management dominates and exercises direct control over the operating core.
97. Which one of the following is a potential advantage of decentralisation? C. Co-ordination is not flexible because one person controls everything.
A. Greater control by senior management D. It is a centralised organisation where there is hardly any autonomy or power in
B. Risk reduction in relation to operational decision-making lower level managers.
C. More accountability at lower levels Chapter 3
D. Consistency of decision-making across the organisation
Chapter 3 104. Johnny is currently working for a firm making bath towels in a city known as
Atlanta. Looking at the bath towel market, he can see that the growth of the bath
98. One of the disadvantages of a matrix organisation is that the existence of towel market has become somewhat stagnant. To overcome this, Johnny decided
____________ which might give rise to conflict between functional managers and to create a new generation of towels. He calls it the 'Adhesive Towel'. The towel
product managers. is designed so that after wiping, with just a whip of the towel, the water will
A. Market awareness. disperse and the towel will be dry again. This means, less cleaning time and more
B. Dual authority. reusability. He also decides just to market it in Atlanta, just to test out the product
C. Inter-disciplinary co-operation. first. About eight months later, their competitor, De Alaxandro Michales
Chapter 3 Albuquerque Inc. comes out with the exact same product however changing the
name to 'Dry Towel' selling to consumers in Atlanta at the same price, a name that
99. Y plc is a growing organisation, which has recently diversified into a number of was much more marketable. Johnny feels bad as his sales had dropped, but he is
significant new product markets. What would be the most appropriate form of
unable to do anything. At this point in time, what do you think led to his ultimate
organisation for Y plc. downfall?
A. Geographical Departmentation
A. His competitor had used competitive pricing and a better promotion strategy
B. Divisionalisation
as a means to beat Johnny Mc John John in the race to gaining more sales
C. Functional Departmentation
B. His competitor had created a new market segment for the industry and used
D. Matrix Departmentalisation
Chapter 3
this as an advantage when selling its product
C. His competitors had undergone extensive product research and development
100. Orange Ltd is a very large multinational computer technology organisation that he had forced Johnny Mc John John's product to become obsolete
that offers products in many countries. Which organisation structure would D. His competitor had entered a new geographical area and started sales there
Orange Ltd most likely adopt? first before Johnny Mc John John
A. Geographic Chapter 4
B. Matrix
105. Jerry, is a man who finds that his job as the CEO of Tommy Tom Inc. a
C. Functional
company who owns close to half of the total shares of Sinclair Inc. quite dull and
D. Product
Chapter 3
he doesn't want to get involved in too much of the inner workings of Sinclair Inc.
itself. Sinclair Inc. deals with the production of computer processors and on one
101. Which of the following results in a potential loss of control over key operating fine Tuesday afternoon in the board meeting, its board of directors decided to
decisions? manufacture old computer chips because "you know, retro man. Its cool or
A. Matrix something" thats what the marketing director said. And everyone was like "Yea,
B. Entrepreneurial good idea!" So, with the decision in place and knowing they'd have to tell their
C. Functional shareholders somehow, here is the question. What is the best way to deal with
D. Geographic Jerry?
Chapter 3 A. Use minimal effort
B. Keep him informed
102. Which of the following is a potential advantage of centralisation? C. Keep him satisfied
A. Greater innovation and innovative thinking amongst employees D. Treat him as a key player
B. A flexible and fast moving organisation Chapter 4
C. Cost savings and economies of scale
D. More accountability at lower levels of the organisation
106. Mr. Boxin is always present for meetings. He always offers suggestions on 112. This area focuses on the design of the product according to specifications,
ways to improve the company’s products but his ideas usually falls on deaf ears. processes improvement and efficiency of resources usage. Which supporting
According to Mendelow’s power matrix, Mr. Boxin has activity does this represent in the value chain?
A. low interest, low power A. Firm infrastructure
B. low interest, high power B. Inbound Logistics
C. high interest, low power C. Marketing and Sales
D. high interest, high power D. Service
Chapter 4 E. Human Resource Management
F. Technology Development
107. Which two of the following hold a bargaining power in a particular industry? Chapter 4
A. New Entrants
B. Customers 113. McDonalds is deciding whether to expand into manufacturing kitchen
C. Industry Competitors equipment in China. At what level is this decision likely to be made
D. Suppliers A. Business
Chapter 4 B. Corporate
C. Operational
108. Which of the following two will discourage a new entrant into a particular
D. International
industry? Chapter 4
A. Intermediaries which have contracts with existing incumbents
B. Low exit barriers 114. In the value chain, primary activities are:
C. Industry life cycle is approaching the maturity stage A. Directly involved in the production, marketing and delivery of the product or
D. Uncertainty towards the strategy of an existing supplier service
Chapter 4 B. Those activities that are all undertaken in-house
C. Those activities that support the production, marketing and delivery of the
109. Gnome Ltd is supplying high quality business accounting education services product or service
to highly intelligent students specifically from international schools. Which of the
D. Directly involved in the production and delivery of the product or service
following Porter’s generic competitive strategies is Gnome Ltd based on? Chapter 4
A. Differentiation
B. Cost leadership 115. Research has shown that the toothbrush head influences the amount of
C. Cost focus toothpaste that one will use. Thus Colgate plc. increased the size of the toothbrush
D. Differentiation focus head so that more toothpaste will be used thus promoting the usage of the
Chapter 4 toothpaste and eventually leads to more purchase of the toothpaste. Which of the
following indicates the correct product/market strategy in Ansoff's matrix?
110. The interest of the stakeholders involve consideration of TWO factors:
A. Market penetration
A. What interests they receive?
B. Market development
B. Where their interests met?
C. Product development
C. Who they have interests with?
D. Diversification
D. Why do they have the interest? Chapter 4
E. How interested they are?
Chapter 4 116. It is a useful strategic management tool. It works by breaking an organisation's
activities down into strategically relevant pieces, so that people can see a fuller
111. What are the characteristics of strategic decisions?
picture of the cost drivers and sources of differentiation, and then make changes
A. They do not help decide business decisions
appropriately. This statement refers to
B. They lead to change in the business
A. Porter's five forces analysis
C. They match a businesses' activities to its capabilities and the environment in
B. Porter's value chain
which it operates.
C. Porter's generic strategies
D. They dictate the short-term direction that the business takes.
Chapter 4
D. PESTEL analysis
Chapter 4
117. The strategic development director of BlackCat Ltd believes that the most 122. Which of the following statement is true?
important factor in a business is examining its own strengths and weaknesses. A. Strategic plan sets out the general direction in detailed.
Which models are likely to be used? B. Business plan sets out the methods of business/ SBU serve the markets.
A. PESTLE analysis C. Operational plan specifies what is expected of each function in the business as
B. Porter's five forces a whole or an SBU based on the business strategy.
C. Product life cycle D. None of the above
D. Gap analysis Chapter 4
E. Value chain
123. Delicious Food plc. is now planning to expand its market by distributing its
F. Resource audit
Chapter 4 products into Asia region where UK was the main focus of the company before
that. In order to achieve a success in that strategy, Delicious Food plc. designs
118. Green Ltd is a company that sells car accessories from a chain of retail outlets. different packages sizes for its products with various pricing policies to create
Maple Ltd sells a variety of designer shoes. Green Ltd and Maple Ltd are: new market segments. The company also sets up new distribution channels to
A. Brand competitors attract new customers. Based on the information provided, which of the Ansoff's
B. Industry competitors matrix: product/market strategies is used by Delicious Food plc.?
C. Generic competitors A. Market penetration
D. Form competitors B. Market development
Chapter 4 C. Product development
D. Diversification
119. Beau Ltd operates a large chain of beauty salons. Pippa Stone, a management Chapter 4
consultant, has been asked to undertake a review of the company's activities in
providing its services to customers. In terms of Porter's Value Chain, Pippa has 124. Are the following statement true of false?
been asked to focus on the support activities of the company. Pippa will, i) PESTLE analysis is used to analyse the macro environment. (A/B)
therefore, be analysing which THREE of the following? ii) Porter's 5 forces analysis is used to analyse the general environment. (C/D)
A. Outbound logistics iii) Porter's 5 forces determines the future profit of the industry as a whole. (E/F)
B. Human resource management A. TRUE
C. Procurement B. FALSE
D. Service C. TRUE
E. Technology development D. FALSE
Chapter 4 E. TRUE
F. FALSE
120. A Ltd is a company that is considering to venture into a new product market. Chapter 4
Its director uses Porter's Five forces to analyse whether it should actually venture
into this new business. Which of the following is a positive factor that the 125. Which of the followings are the primary activities of Porter's value chain?
company should venture into the business? A. Firm infrastructure
A. There is a significant scale of economies present in the incumbents B. Service
B. The new product mainly focuses on a single large customer C. Marketing & Sales
C. The customers are not loyal to incumbents D. Technology development
D. There is a significant exit barrier Chapter 4
Chapter 4
126. Rubber Ltd wishes to have some changes on market and product when it has
121. Johnson and Scholes set three criteria for evaluating and choosing strategies to surplus funds in hand. Which product/market strategy is suitable for Rubber Ltd?
be applied in a process, Which are the three criteria? A. Diversification
A. Acceptability B. Market penetration
B. Capability C. Market development
C. Feasibility D. Product development
D. Sustainability Chapter 4
E. Suitability
F. Accountability
Chapter 4
127. Which THREE of the followings are the external analysis of the strategic
analysis?
A. PESTLE analysis
B. Value chain B. Competing strategies.

C. BCG Matrix C. Competitive strategies.
D. Porter's five forces analysis D. Product-market strategies.
E. Product life cycle Chapter 4
F. Competitor analysis
Chapter 4 133. At which stage of industry life cycle has the most intensified competition?
A. Introduction.
128. Simon Ltd is running a vehicle business making and selling cars. The B. Growth.
company produces a new car and advertise the new car through a PR company. It C. Maturity.
attracted people's attention and increases their revenue and profits greatly. Simon D. Decline.
Ltd is now experiencing high volume of order placement. Which stage is Simon Chapter 4
Ltd.'s new car standing now on the product lifecycle?
134. George is carrying out a PESTEL analysis for his employers, Jargon plc.
A. Introduction
During her research the new regulation of the UK has become apparent to George
B. Growth
as a potentially important strategic issue for the company. In which section of her
C. Maturity
analysis should George record this matter?
D. Decline
Chapter 4 A. Political
B. Economics
129. Jemp Ltd is a company that sells holiday packages from a chain of retail C. Social
outlets. Grant Ltd sells new and used cars from a chain of car dealerships. Jemp D. Technology
and Grant Ltd are: E. Ecological
A. Brand competitors F. Legal
B. Industry competitors Chapter 4
C. Generic competitors
D. Form competitors 135. Choose TWO of the options below which would relate to Social factors
Chapter 4 according to the PESTEL Analysis.
A. Income distribution
130. Melvin is a manager of Din plc. He wishes to undertake an internal analysis of B. Pollution
the company as part of a strategic planning review. Which two of the following C. Social welfare policy
will be useful? D. Business cycles
A. PESTLE E. Size of population
B. SWOT F. employment law
C. Product life cycle Chapter 4
D. BCG matrix
Chapter 4 136. Qwerty Co. has a high market share and loyal customers for its high quality
products. The company now wants to take actions to create a defendable position
131. NYK Ltd sells cosmetics and Brandeta Ltd is one of it's biggest competitors. in its industry. Which of the following Porter's generic competitive strategies
NYK Ltd have noticed that Brandeta Ltd launched a leaflet distribution campaign should Qwerty Co. implement?
to houses after NYK Ltd launched an advertising campaign a few days ago. A. Cost leadership
Recently, NYK Ltd decided to make a sales promotion of 'buy one, get one free' B. Focus strategy
to boost their sales amount. A day after the promotion is announced, Brandeta Ltd C. Diversification
also offers 50% off discount for selected Make up products. In terms of Kotler's D. Differentiation
competitor reaction profiles,, Brandeta Ltd is: Chapter 4
A. Laid back competitor
137. A new product has just been produced by Happy Co.. How would Happy Co.
B. Tiger competitor
market this product to the current market according to Ansoff's matrix?
C. Selective competitor
A. Happy Co. would pursue a market penetration strategy.
D. Stochastic competitor
Chapter 4 B. Happy Co. would focus on product development.
C. Happy Co. would focus on market development.
132. Sandra is the director of R Plc. and she has to come up with new ideas on how D. Happy Co. would try diversifying its product.
to compete in the market. Which type of strategy does she need to propose? Chapter 4
A. Marketing strategies.
138. Lovely Ltd. and Magic Ltd. are competitors. They both produce similar 143. P&N Ltd. is a company which sells sugar. Their customers incur nothing to
products but market these products in different ways to their customers. What type switch from P&N Ltd. to its competitor. Besides, there are only two suppliers
of competitors are Lovely Ltd. and Magic Ltd. ? which are selling the raw material of sugar. Which of the following TWO are
A. Brand Competitors threats faced by the competitor in the industry?
B. Form Competitors A. Threat of new entrants
C. Generic Competitors B. Bargaining power of customers
D. Industry Competitors C. Threat of substitute products or services
Chapter 4 D. Bargaining power of suppliers
Chapter 4
139. BCG developed a matrix that categorizes products or SBUs into four groups:
Stars, Question Marks, Cash Cows and Dogs. Which of the following is ideally a 144. Ah Beng purchased redeemable preference shares from Ah Lian Ltd. Ah Beng
successful route of a product or SBUs? attends every single annual shareholder meeting since he became a shareholder at
A. From star to cash cow to dog Ah Lian Ltd. It is after all the only time each year he has an opportunity to sit in
B. From question mark to cash cow to dog the same room as the representatives from Ah Lian Ltd. Based on Mendelow's
C. From question mark to star to cash cow power/interest matrix, what type of relationship should Ah Lian Ltd seek with Ah
D. From star to question mark to dog Beng?
Chapter 4 A. Key player
B. Keep Informed
140. A candle manufacturer has recently identified a number of competitors. One
C. Minimal effort
of the competitors is the virtual candle application on smartphones, which people
D. Keep satisfied
need to pay to install it. Which TWO of the following best describes the types of Chapter 4
competitors?
A. Brand competitor 145. Jazz plc is being used to finance John plc. John plc requires high capital
B. Industry competitor expenditure in excess of cash while Jazz plc requires very little investment and is
C. Generic competitor able to generate high levels of income. Which TWO of the following is correct
D. Form competitor based on the BCG Matrix?
Chapter 4 A. Jazz plc is a Star and the strategy for Jazz plc is to continue to build
B. John plc is a Dog and the strategy for John plc is build or hold
141. Dragon plc is a retailer of high end products. Recently, they have started to
C. Jazz plc is a Cash Cow and the strategy for Jazz is to hold or harvest
sell their products online and uses different pricing policy to attract price-elastic
D. Jazz plc is a Question Mark and the strategy for Jazz plc is to harvest or divest
customers. By repackaging their products, they aim to increase the sales by 20%.
E. John plc is a Star and the strategy for John plc is to continually build
In term of Ansoff’s matrix, this represents: Chapter 4
A. Market penetration
B. Market development 146. Which of the following statements are true?
C. Product development 1. The main objective of performing a position audit is to determine the limiting
D. Diversification factor of the organization and the critical success factor of the business.
Chapter 4 2. The main business functions, marketing, operations, human resources and
finance, form part of the primary activities in the Porter’s value chain.
142. There is intense rivalry between Me Plc. and You Plc. in the biscuit industry.
3. Using the BCG matrix, products with a high market share and high growth can
To counter Me Plc.'s strategy on lowering its price, You plc decided to lower its
either further build its market share or choose to harvest from the huge amount of
price even more. However, after a few weeks, Me Plc. suddenly increased its price
its existing market share, hence called the Star
to its all time highest level. You Plc., dumbfounded, also decided to increase its
A. Statement 1 is True
price to match Me Plc.'s. Another few weeks later, Me Plc. began to sell cakes as
B. Statement 1 is False
the market demand for biscuits dropped due to the sudden hike in prices. Not one
C. Statement 2 is True
to surrender, You Plc. too began to sell cakes. What competitor reactions do You
D. Statement 2 is False
Plc. and Me Plc. present?
E. Statement 3 is True
A. Me Plc. – tiger, You Plc. – selective
F. Statement 3 is False
B. Me Plc. – stochastic, You Plc. – laid back Chapter 4
C. Me Plc. – stochastic, You Plc. – tiger
D. Me Plc. – selective, You Plc. – tiger
Chapter 4
147. This strategy determines where it competes and the direction of growth. What Chapter 4
strategy is this?
152. ABC plc has a high market share in the fashion industry. Due to its size, ABC
A. Institutional strategy
plc is able to achieve economies of scale. According to Porter's generic
B. Competitive strategy
competitive strategies, what are the other two characteristics that ABC plc has?
C. Product market strategy
A. Good quality products
D. Investment strategy
Chapter 4 B. High productivity
C. The use of latest technology in manufacturing
148. Loh Ltd operates a large chain of cabinet industry. Kian Feng, a manager D. Positive brand image is established
consultant, has undertaken a review of the company's activities in providing its E. The price of the product is higher than the competitors
services to customers. In terms of Porter's Value Chain, Kian Feng has been asked Chapter 4
not only to focus on primary activities, but also consider other support activities.
153. J&C Plc is analysing its business to see whether it should develop a new
Well, therefore, which of the three following are the supporting activities?
product. The manager of the company analyses the type and the condition of the
A. Outbound Logistics
machinery that they have and also the skills of the workers. Which two resources
B. Service
are the manager looking at?
C. Procurement
A. Make-up and markets
D. Firm Infrastructure
B. Methods and machinery
E. Technology Development
C. Money and management information
F. Marketing and Sales
Chapter 4 D. Machinery and manpower
Chapter 4
149. OWS Cinema and WOD Cinema are brand competitors. Both of them located
near a school campus. What kind of strategy is the best for OWS Cinema? 154. The actions by which long term objectives will be achieved are
A. machines
A. Cost Leadership Strategy followed by reduction in prices
B. Focus Strategy targeting non-students B. strategies
C. visions
C. Differentiation Strategy followed by increase in prices
D. position
D. Cost Leadership followed by increase in quality of service and reduction of Chapter 4
prices
E. Differentiation followed by reduction of prices with free popcorn and buy 1 155. In which level does corporate strategy concern?
free one tickets A. all levels of organisations
Chapter 4 B. senior management level
C. certain organisations only
150. Yie Chern is a stakeholder of CJC Ltd. He has high interest in the company
D. private sectors only
but low power in the company. According to the matrix mapped by Mendelow, Chapter 4
how should the company build the relationship with Yie Chern?
A. Minimal Effort 156. What is the Ansoff matrix used for?
B. Keep Informed A. To devise growth strategies for organisation.
C. Keep Satisfied B. To do a detailed analysis for organisation
D. Key Players C. To identify company risks
Chapter 4 D. To access a business's product
Chapter 4
151. Wan Ching walked into Restaurant Zhi Yen. The waitress, Joan immediately
approached Wan Ching and offered her the menu once she was seated at the table. 157. What are the results of corporate appraisal?
When she was ordering the food, Wan Ching noticed the seafood is imported from A. direction and aim
Japan and they use a special cooking method different from other competitors. B. vision and mission
Based on the Porter’s Value Chain, which of the value chain activities are adding C. resources and competencies
value for Restaurant Zhi Yen? D. strength, weakness, opportunities and threats
A. Human Resource management, procurement, technology development Chapter 4
B. Marketing & Sales, technology development, firm infrastructure
C. Service, procurement, technology development
D. Technology development, Human Resource management and firm
infrastructure.
158. In the past one production facility was forced to close down due to a campaign market forward. Which of the following products should Mascote Ltd build or
carried out by a stakeholder. In term of Mendelow's matrix, which strategies harvest?
should be used on the stakeholder? A. Supreme Milk
A. keep informed B. Molly Yoghurt
B. keep satisfied C. Tardan Butter
C. take minimal effort D. Yummy Energy Spread
D. see him as a key player when formulating future strategies Chapter 4
Chapter 4
163. OCB Ltd manufactures sports shoes in a free market. Customers from all age
159. How to evaluate strategies used by a business? groups are able to customize or design their own shoes on the company’s website.
A. Ansoff matrix In terms of Michael Porter’s generic competitive strategies, this represents a
B. SFA analysis strategy of
C. Porter's five forces A. Cost leadership
D. BCG matrix B. Cost focus
Chapter 4 C. Differentiation
D. Differentiation focus
160. Kyo Ltd owns a retail store selling watches. Its competitor, Zouk Ltd has Chapter 4
recently offered price cuts and increased advertising expenditure to capture
customers attention. Kyo Ltd retaliated by increasing their advertising expenditure 164. Power is the means by which stakeholders can influence a business’s
by posting advertisements on social media platforms but offered no alteration in objectives. Which of the following is an external source of power?
terms of product price. In terms of Philip Kotler’s competitor reaction profile, A. Influence/Reputation
Kyo Ltd is B. Environmental control
A. laid back C. Legal rights
B. a tiger D. Hierarchy
C. selective Chapter 4
D. stochastic
Chapter 4 165. Montana Ltd manufactures a product, Zion. Zion is currently facing a period
of rapid expansion as the industry found a market to strive in. In which stage of
161. Which of the following TWO, are key tools or models used in analysing the the industry life cycle is Zion at right now?
environment of the business? A. Introduction
A. Porter’s five forces analysis B. Growth
B. SWOT analysis C. Maturity
C. Stakeholder analysis D. Decline
D. Competitor analysis Chapter 4
Chapter 4
166. There are three levels of strategy which are corporate, business, and functional
162. % share of the market segment each product sold is sold in. strategy. Which of the following is a corporate strategy?
Product/Year 2014 2015 2016 A. Deciding the products marketing mix
Supreme Milk 25% 26% 24% B. Acquiring another company
Molly Yoghurt - 7% 6% C. How to be more competitive in the industry
Tardan Butter 8% 6% 5% D. Determining the products price
Yummy Energy Spread 30% 28% 31% Chapter 4
167. Which of the following is NOT one of the 9Ms model in resource audit.
Supreme milk is the oldest established product. Sales have not risen greatly over
A. Management
the three years as it is in a mature market. Molly yoghurt was launched 2 years
B. Management Information
ago with a marketing campaign. Despite the great competition in this health
C. Make-up
segment of market, it is becoming one of the fastest growing segments in the ‘high
D. Muse
profit margin’ yoghurt market. Tardan butter sales were suffering because of Chapter 4
increasing health concerns regarding consumption of butter. Yummy Energy
spread was introduced to the market only five years ago. Sales took off
immediately due to competitive pricing and healthy eating habits driving the
168. Xenon Plc maintains a high market share and in a market that is slowing down
as it is fully saturated. In terms of the BCG matrix, for Xenon Plc the product is…
A. A star 173. Molly is the CEO of Yellow plc, she wishes to improve her company's
B. A cash cow position by moving towards market penetration. What actions should she take in
C. A question mark order to comply with the chosen strategy?
D. A dog A. Producing different package sizes and sending them to new areas
Chapter 4 B. Increase the market share and consolidate with other competitors in a mature
market
169. In relation to the Product Lifecycle, which of the following statements, is C. Using surplus funds to invest in diversification
NOT true? D. Innovate new products to the potential customers.
A. At the Maturity stage, companies that retain in the industry would probably be Chapter 4
the most preferred by the market.
B. Extension strategies usually takes place at the Growth Stage. 174. What is strategic plan about?
C. At the Introduction Stage, the company will usually not make profit as has to A. It roughly sets out the general direction
cover the cost of Research and Development (R&D). B. It sets out how the business will serve the market
D. At Decline Stage, the company will have to introduce a new product to C. It specifies what actions that will be taken to achieve corporate objectives
maintain the market share. D. It shows what finance is needed for the business
Chapter 4 Chapter 4
170. Basket Robert runs a business selling a famous ice-cream with a strong 175. JE ltd is a company that produces beauty products. One of the products which
reputation among its customers for many years. He realizes that his business is they introduced last year, which is Baby Cream3 have achieved a high market
experiencing a decline due to a major competitor whose ice-cream franchise is share and the market is growing rapidly. Based on the BCG matrix, which
located in the same area where there are many adolescents that the businesses category can the product categorised as? And what should the company react
target. What analysis has the business’s done? upon the product?
A. Gap analysis A. Cash Cow, Hold or Harvest
B. External analysis B. Stars, Build
C. Internal analysis C. Question mark, Build
D. SWOT analysis D. Dogs, Build or Harvest
Chapter 4 Chapter 4
171. Sunway Group is a company which is one of the most distinguished 176. JW Ltd is selling a lot of computers to its customers, Laptop computers are an
companies in Malaysia. It is involved in many other areas of businesses that example of a
include building materials, trading and manufacturing, education, information A. product form
technology, hospitality, healthcare as well as in the areas of civil engineering and B. product class
construction. Each section of these businesses in Sunway Group is responsible for C. generic product
their own planning and developing. Which level of strategy is determined by each D. brand
Chapter 4
section of Sunway Group?
A. Corporate Strategy 177. Which of the following are technology factors in an external environment?
B. Functional Strategy (i) government investment
C. Business Strategy (ii) R & D policy
D. Competitive Strategy (iii) social welfare policy
Chapter 4
(iv) taxation policy
172. Jamp Ltd is a company that sells tablet Vitamin C. Jommy Ltd is a company A. i and iv
which sells fresh oranges. Jamp and Jommy Ltd are: B. iv
A. Brand competitors C. ii and iv
B. Industry competitors D. i and ii
Chapter 4
C. Generic competitors
D. Form competitors
Chapter 4
178. Which of the following is NOT a threat for new entrants ? 183. What set of environmental factors is most directly influenced by birth and
A. Demand of product is slow mortality rates?
B. Scale of operations is high A. Political
C. ABC Ltd is an amateur in the industry B. Economic
D. There are abundance of suppliers C. Social
Chapter 4 D. Technological
Chapter 4
179. John is a furniture manufacturer. His company is the best manufacturer in the
industry. He uses the latest technology to manufacture furniture and keeps 184. Which of the following would a haulage company monitor under the Political
improving on the productivity in order to lower all of the costs. Which Porter's heading as part of a PEST analysis?
generic competitive strategies is John based on? A. Tracking systems to monitor driver hours/ Anti-theft devices/ developments in
A. Cost leadership tyre technology
B. Differentiation B. State of the economy/ oil price movements/ a rise in interest rates
C. Cost-focus C. Fuel tax/ congestion charges in cities/ plans to build new roads
D. Differentiation-focus D. Predicted car numbers and usage/ public concerns over safety
Chapter 4 Chapter 4
180. According to Mendelow, companies must pay most attention to the needs of 185. Changing consumer tastes represent what type of environment factor?
which group of stakeholders? A. Political
A. Those with little power and little interest in the company B. Technological
B. Those with a high level of power but little interest in the company C. Social
C. Those with little power but high level of interest in the company D. Economic
D. Those with a high level of power and a high level of interest in the company Chapter 4
186. Organisations should use resources in such a way that they do not compromise
Chapter 4 the needs of future generations. What is this a definition of?
A. Environmentalism
181. Anita is a student of St Michael Institution. Her parents, Maria and Steve have
B. Sustainability
recently raised a concern over the teaching style of the teachers in the Institution. C. Future-focus redesign
Nina, Anita’s classmate attends extra tuition classes and performs better than
D. Redesign
Anita in tests. Nina’s parents, Rachel and Ray are committee members of the Chapter 4
Teachers-Parents Association which is an active committee in the Institution as
they channel majority of the funds to the institution. Bob, the principal of 187. Porter's five forces collectively determine which of the following:
VillaMary Institution constantly monitors tutors and liase with parents on a A. The degree of competition new entrants will face
regular basis. Lucas has been appointed as the independent reviewer to analyse B. The profitability of existing firms in the industry
and report on complaints from parents and reports to Bob. Based on Mendelow’s C. The overall growth of the industry
stakeholder mapping, who are the key players in this scenario? D. The overall profit potential of the industry
A. Lucas, Maria, Steve Chapter 4
B. Bob, Lucas, Nina
188. Which TWO of the following are support activities in Porter's value chain?
C. Nina, Bob, Anita
A. Procurement
D. Bob, Rachel, Ray
Chapter 4 B. Service
C. Technology development
182. A is a large company whose shares are owned by a large number of individual D. Logistics
investors, who do not wish to engage with company's decision making despite Chapter 4
having full rights to do so. When using Mendelow's matrix this stakeholder group
would be classed as: 189. One of the following is not a support activity in Porter’s value chain.
A. Informing customers about a product and persuading them to purchase it.
A. minimal effort
B. keep informed B. Recruitment, training and development of employees.
C. Purchase of materials, subcomponents and equipment.
C. keep satisfied
D. key players D. Planning, finance and quality control.
Chapter 4
Chapter 4
BF Questions 2021 (Chapters 3-4)
190. A plc is performing a SWOT analysis and discovers that it has a large cash
balance. Which of the SWOT headings would this be most likely to fall under?
A. Strengths
B. Weaknesses
C. Opportunities
D. Threats
Chapter 4
191. Which primary value chain activity relates to storing of products and
managing distribution to customers?
A. Inbound logistics.
B. Outbound logistics.
C. Operations.
D. Marketing and sales.
Chapter 4
192. When assessing an organisation's ability to compete the main issues to

consider are whether:
A. The industry is growing or in decline
B. The profitability of the industry is sufficient to sustain new entrants
C. New entrants outnumber those leaving the industry
D. The firm has a sustainable competitive advantage
Chapter 4
193. In Porter's five forces model, which of the following would not constitute a
"barrier to entry"?
A. Scale economies available to existing competitors
B. High capital investment requirements
C. Low switching costs in the market
Chapter 4
194. Sango Ltd provides exclusive scuba diving holidays for people over 60 yeas of
age. In terms of Porter's generic competitive strategies, this represents a strategy
of
A. Differentiation
B. Cost leadership
C. Cost focus
D. Differentiation focus
Chapter 4
195. Which of the following is one of the three distinct steps in the strategic
planning process?
A. Organic growth vs Acquisition strategy
B. Stakeholder analysis
C. Production of plans for all key functions
D. Strategic choice
Chapter 4
1. Pheng ltd. Is currently in the process of launching Hair Wax and Hair Gel. The above 40 degrees Celsius and suggests that they should put a warning so that
production manager has informed Pheng, the CEO, that the Hair Wax is highly people who were having fevers were aware not to wear them in fears of sudden
flammable and might result in hair balding symptoms. In addition to that, this combustion. Mccarney however, being the CEO has to sit down and think long
situation will also create trust and safety issues with the Hair Gel's sales. On the and hard for an answer to this burning question. How should he handle the risk of
other hand, the Hair Gel is only criticised for its foul smell when it is exposed to this problem?
the sun. Pheng has expressed that he is not concerned on these matters. Which of A. Avoidance
the following process is Pheng Ltd. undergoing? B. Sharing
A. Risk awareness And identification C. Reduction
B. Risk analysis: assessment and measurement D. Acceptance
C. Response and Control Chapter 5
D. Monitoring and reporting
Chapter 5 6. Yorkshire Orlando, the CEO of a huge bookstore in South Hampton recently had
some bad luck. The largest bookstore he owned had recently been burned down
2. Pheng ltd. Is currently in the process of launching Hair Wax and Hair Gel. The by a fire caused by a mouse which ate an electrical wire and left the live wire
production manager has informed Pheng, the CEO, that the Hair Wax is highly exposed to some highly flammable curtains next to which were shoes given to him
flammable and might result in hair balding symptoms. In addition to that, this by Jarrod Mccarney which EXPLODED under very delicate circumstances. And
situation will also create trust and safety issues with the Hair Gel's sales. On the thus, he had lost out over a few hundred thousands of books since he also kept all
other hand, the Hair Gel is only criticised for its foul smell when it is exposed to the books he was going to sell there in storage before being delivered to their
the sun. The company then prepares to launch its Hair Wax but not the Hair Gel. respective smaller retail stores. And also to note, recently, he was given the task to
In the meantime, the company outsources it's Finance department to reduce its handle and deliver a very expensive old book from the early 900 A.D. to the
financial risk. What is the company's response to the product's risks? queen of England from the governor of France. Which also, had been burnt away
A. Avoidance, reduction and acceptance by the fire. Also, to mention, his store collapsed on the other building next to it
B. Avoidance, sharing and acceptance which was a casino and luxury spa resort owned by famous billionaire, Ball
C. Sharing and acceptance Gaytes. His insurance agent had ensured him that his insurance policy would only
D. Acceptance and avoidance cover about 10% of the damage, cause he bought the cheapest one. In this sort of
Chapter 5 crisis, what do you call the method to manage it?
A. Crisis Prevention
3. Due to power supply failure at Dholwani Factory, the products were unable to be
B. Disaster Recovery
completed on time and delivered as promise. What type of risk is this?
C. Contingency Plan
A. Operating environmental risk
D. Financial Control
B. Disaster risk Chapter 5
C. Systemic risk
D. Reputation risk 7. Which of the following is not under financial risk?
Chapter 5 A. Foreign exchange risk
B. Pricing risk
4. In terms of risk management, which of the following is a continuous process?
C. Default risk
A. Risk awareness
D. Legal risk
B. Risk analysis Chapter 5
C. Risk response
D. Risk monitoring 8. If a risk has a low impact but high probability of happening, what decision is best
Chapter 5 made about it
A. Sharing
B. Accept
5.
C. Reduce
Jarrod Mccarney the CEO of Shoey Ltd, a company manufacturing shoes. The
D. Avoid
new line of shoes he was going to release next week undergone some testing Chapter 5
during the week and they had found out that the shoes are flammable when it
comes into contact with heat. This was due to the material used which provided 9. Toyota implements a Just-In-Time (JIT) system for the production of their
the nice padding and also much lowered the production costs for the shoes. Jarrod vehicles. As a result of a catastrophic tsunami, the only supplier for its brake pads
is worried that if he releases the shoes, some ‘unfortunate’ accidents may happen suffered a complete destruction of its production facilities. To ensure its continued
and people may be hurt of even left limbless from it. His production manager ability to meet consumer demands, Toyota seeked to temporarily share the same
ensures him that it will only happen when the temperature reaches somewhere
supplier of brake pads that supplies for rival brand Honda. What kind of risk was Chapter 5
faced by Toyota?
15. Jenna White is a risk manager working for Popular Ltd. At the present time she is
A. Strategy Risk
investigating the potential gross risk arising from a recent decision to incorporate
B. Default Risk
higher quality materials into the production process for one of the company's key
C. Systemic Risk
products. In assessing potential gross risk Jenna needs to take account of the:
D. Product Risk
Chapter 5 A. Level of exposure and likelihood of occurrence
B. Consequence and likelihood of occurrence
10. Doge has recently started his own business selling dog food. As he is aware of the C. Consequence and level of volatility
adverse consequences of accidentally selling dog food to cats. Doge erected a sign D. Level of volatility and level of exposure
stating "Dogs Only", as well as installing a laser system whereby when a cat is Chapter 5
detected walking into the premise, a laser beam will guide the cat away from the
16. A Ltd employs B to manage the company's risk. The purpose of employing B is to
premise. In addition to these measures, Doge has also taken up insurance to secure
understand and minimise cost effectively, the business's exposure to risk and the
against such risk. What kind of response has Doge taken in respect to the risk
adverse effect of risk by which two ways
described above?
A. Reducing the probability
A. Risk acceptance
B. Limiting the impact
B. Risk avoidance and reduction
C. Reducing the volatility
C. Risk appetite
D. Limiting the exposure
D. Risk reduction and sharing Chapter 5
Chapter 5
17. A long-term disaster recovery plan will typically provide for :
11. When is risk management necessary?
A. By the law A. Compensation
B. Standby procedures
B. Financial organizations may require insurance to protect its security
C. When companies have to protect employees in the event of personal accidents C. Personnel management
D. Recovery procedures
D. To aid the credibility of the business
Chapter 5 E. Prevention procedures
Chapter 5
12. Which two of the following are categories of losses
18. Mr. Kors is a manager of a big and successful private limited company. He will
A. Personnel loss
not undertake any investment if there is an alternative offering a higher return.
B. Interruption loss
What risk attitude is most probably found on Mr. Kors?
C. Debtor loss
A. Risk averse
D. Damage loss
Chapter 5 B. Risk neutral
C. Risk seeking
13. Which three of the following are upside risks? D. Risk lowering
A. That costs may decrease Chapter 5
B. That revenue may decrease
C. That controls may fail 19. Risk of a particular business will be reduced when:
i) measure of the way in which a business is faced by risks (A/B)
D. That a product is successful
ii) The measures of the amount of the loss if the undesired outcome occurs (C/D)
E. That the credit rating is upgraded
Chapter 5 iii) how the factor to which a business is likely to alter (E/F)
A. High
14. The directors of a certain company often chose an investment on the basis that it B. Low
offers a higher level of risk even though the expected return is lower than an C. Severe
alternative no-risk investment with a higher expected return as they get the thrill D. Less severe
from choosing a riskier investment and seeing whether it would succeed. The E. Non volatile
directors of the company show a: F. Volatile
A. Risk averse attitude Chapter 5
B. Risk neutral attitude
C. Risk seeking attitude 20. KH plc. is currently under consideration whether to sign a contract of construction
project with a condominium developer, KH plc. had found out that there will be
certain probability of accident happening at the construction site and they will be
doing all the necessary safety precautions against it. However, accident is D. Risk retention
unpredictable and when accident happens at the construction site, it will no doubt Chapter 5
bring high impact. In terms of these, KH plc. is indecisive. Which of the
26. The size of the gross risk is measured as?
followings describe the best option?
A. Probability X Impact
A. Ignore the risk
B. Volatility X Exposure
B. Give up on the project
C. Volatility X Probability
C. Share the risk, for instance, take out insurance against the risk
D. Impact X Exposure
D. Accept the risk as the it is low probability Chapter 5
Chapter 5
27. Z Ltd has analysed a particular risk on a risk map. It has come to a decision to
21. Crazyman Ltd is a small company running an entertainment business, the
accept the risk as its risk response. Which of the following best describes Z Ltd.'s
company is now having a project, which is making a horror film and the
risk response?
probability of failure risks are high. Crazyman Ltd continue the risky project and
A. Low impact, high responsibility
luckily the project successfully completed and surprise get a return which is
B. High impact, low responsibility
higher than expected. What types of attitudes to risk that Crazyman Ltd is having
C. High impact, high probability
now?
D. Low impact, low probability
A. Risk averse attitude
E. None of the above
B. Risk neutral attitude Chapter 5
C. Risk seeking attitude
D. Risk avoidance attitude 28. A Ltd has identified that the customers may not buy the company's new products
Chapter 5 in the expected quantities. This business risk could be identified as
22. The size of gross risk facing a business is measured as A. Demand risk.
B. Market risk.
A. Volatility X exposure
B. Probability X exposure C. Product risk.
D. Customer risk.
C. Probability X Impact Chapter 5
D. Volatility X Impact
Chapter 5 29. In terms of risk management, considering the implications the risk might have for
the business and an initial judgment is then made about the seriousness of the risk
23. Mr. Swing is the managing director of Bungeee Ltd. He has always had his
are part of
employees to do all the risk assessment and measurement before he decides to
A. Risk identification.
take a particular project, so that he can avoid risk. Bungeee Ltd is a
B. Risk assessment.
A. Risk neutral attitude
C. Risk measurement.
B. Risk averse attitude
D. Risk response.
C. Risk negative attitude Chapter 5
D. Risk seeking attitude
Chapter 5 30. An organisation responds to an identified risk by procedure and policy. Which
24. Which of the types of risks best describe the possibility that something could go category of control has it used?
A. Physical controls
better than expected?
B. System controls
A. Speculative risk
C. Management controls
B. Downside risk
D. Financial controls
C. Pure risk Chapter 5
Chapter 5 31. Mr. Peanut is a sole trader who sells computers to firms and companies. Eighty
25. XOXO plc. is a company which acts as a broker for chattering a private jet. The percent of his customers make purchases by credit and tend to prolong the
payment. What is the risk which he will face?
company knows that there is a high risk providing such service so it takes out
insurance against the risk. This action would be a form of: A. Enterprise risk
B. Liquidity risk
A. Risk reduction
B. Risk transfer C. Credit risk
D. People risk
C. Risk avoidance Chapter 5
32. Cipher Inc. produces high quality wearable gadgets such as smartwatch and E. Palm oil prices, which stayed at a 6-month low, now see the strongest daily
fitness band. However, there is possibility of its product to overheat and cause gain in 5 months.
burn to the users. In historical records, there was only one case of overheated Chapter 5
smartwatch reported over the pass five years. Which of the following can be
37. Banana Plc. whose main line of business is to sell banana food products has
considered as the best response(s) to this risk?
decided to venture into the business of producing socks with the company's
A. Avoidance
famous banana logo printed on it. After much research was done, they found out
B. Reduction
that most of the customers of their targeted market group would rather buy socks
C. Sharing
with their Kpop idol's pictures printed on it. The Finance Director of the company
D. Acceptance
Chapter 5 also concluded that in the event of the failure of the sock producing business, the
loss suffered would still be acceptable to the company. Which of the following
33. Which of the following best define(s) 'risk'? responses to risk and control will most likely be adopted by Banana Plc.?
A. The possibility that an event will occur and adversely affect the achievement A. Avoidance
of objectives B. Reduction
B. The possible variation in an outcome from what is expected to happen. C. Sharing
C. The inability to predict the outcome from an activity due to lack of D. Acceptance
information Chapter 5
D. The possibility that an event will occur and positively affect the achievement
38. Vish plc is originally the sole bakery at Taman Sahabat. Starting from 1st
of objectives.
Chapter 5 February 2017, instead of selling bread and cakes, Vish plc started selling bubble
tea too. At the same area, there are a few shops which are into the Taiwanese
34. BankFail Ltd is potentially facing insolvency issues. To rescue the company, the bubble milk tea business too. What risk does Vish plc face?
directors accepted a high profit project which is out of their ordinary course of A. Product risk
business. After assessing the risk, which of the following TWO responses can be B. Enterprise risk
taken to handle the risk? C. Operational risk
A. Avoidance D. Systemic risk
B. Reduction Chapter 5
C. Sharing
D. Acceptance 39. Pocky had just introduced a new flavor (durian) but the sales of this flavor is not
Chapter 5
as good as expected, this business risk could be identified as
35. Cheesy Weezy Ltd sells potato wedges as its sole product. It always buy local A. Operational risk
potatoes to produce the potato wedges. Unfortunately, potato blight strikes and the B. Financial risk
supply of potatoes stop completely. Cheesy Weezy Ltd then imports potatoes C. Product risk
from Australia to continue its production. This is a disaster recovery plan provides D. Strategy risk
for: Chapter 5
A. Personnel management 40. Which of the following statements are true?
B. Recovery procedures 1. There is a legal requirement for ICAEW members in public practice to have
C. Standby procedures professional indemnity insurance (PII) in order to exercise risk management.
D. Public Relations 2. When identifying risks, the bottom-up approach is better than the top-down
Chapter 5
approach as the employees are closer to the operations and hence able to provide a
36. Which two of the following CANNOT be classified as an adverse event risk to a better identification of risks than the upper management.
large palm oil producer in Malaysia? A. Statement 1 is True
A. A proposed EU resolution that only environmentally-sustainable palm oil can B. Statement 1 is False
be imported into EU. C. Statement 2 is True
B. Depreciation of the Malaysian currency, the ringgit, against many major D. Statement 2 is False
currencies, making Malaysian exports more competitive. Chapter 5
C. A whistleblower revealing the widespread use of child labour on Malaysian
palm oil plantations to the media.
D. An announcement by the Malaysian Palm Oil Board to offer more financial
assistance to palm oil producers with fewer than 2.5 hectares of land.
41. Cong has a business as a distributor selling stationary. He is favoured by most of 46. Company Y is short of cash to repay bank loans and the managing director
his customers due to his trust towards his customers. However, his wife is worried identified the problem arises from inefficient collection of money from debtors.
that his customers might take advantage of him, by not paying the debts. His The managing director believes this problem will cause a long-term effect as the
business risk is classified as bank has authority to take over their assets which are pledged to the bank and the
A. credit risk image of company will be jeopardized. What can managing director from
B. gearing risk company Y do?
C. liquidity risk A. Include the debtors into irrecoverable debts expense.
D. market risk B. Call the bank to negotiate for longer credit terms.
Chapter 5 C. Do not pay the supplier at all because repaying loan is the priority.
D. Grants more discount to the good pay master /customers to accelerate the
42. Ooi is a rich businessman who sells second-hand cars. One day, after watching a payment.
Chapter 5
legal tv series, he decides to open a law firm along with a few close friends of his.
His thought contains 47. One of the employees from risk management department has identified a risk of
A. both uncertainty and risk involving in pecuniary loss. He reports this to his manager and suggests some
B. neither uncertainty nor risk ways to response to the risk. However, the manager does not take this risk
C. uncertainty only seriously. Why would this happen?
D. risk only A. The employee used the wrong method to approach the manager.
Chapter 5 B. The employee should have reported this risk via a formal letter.
C. The employee should have given a detailed assessment to prove that this risk
43. XXY Ltd is a company that produces newspapers. The Board of Director is likely to happen.
requested the department of risk management to identify the risk they may D. The employee should have work together with his colleagues to figure out
encounter. Which of the following is the correct steps to identify risk? ways to solve this risk.
A. Awareness and identification, Response and control, Monitoring and Chapter 5
Reporting, Analysis 48. DEF Plc is a company which manufactures chocolate bars. Recently, there is a
B. Awareness and identification, Monitoring and Reporting, Analysis, Response news report which identified that the process of manufacturing is not hygienic.
and control When the news spreads out, there is a drastic drop in the demand of the product.
C. Awareness and identification, Analysis, Monitoring and Reporting, Response What should DEF Plc should do to solve this incident?
and control A. Ignore the incident
D. Awareness and identification, Analysis, Response and control, Monitoring and B. Evade the responsibility and push it to the workers
Reporting C. Focus resources on activities that mitigate or eliminate this incident
Chapter 5
D. Cease the production of chocolate bars
44. Wezley's small boutique has an operational risk of producing a shirt with the Chapter 5
wrong size. He accepts and does not seem to give attention to it. The potential 49. Marmite plc has identified a high risk of a fire disaster in the company. The
gross risk might be company decides to buy insurance that covers for fire and also installs a sprinkler
A. low impact, low probability system. The risk responses that Marmite plc has installed is
B. high impact, low probability A. Transfer
C. low impact, high probability B. Reduction
D. high impact, high probability C. Transfer and Reduction
Chapter 5
D. Avoidance and Transfer
45. Chern's shoes business is considering an investment in a production company that Chapter 5
organises singing competitions. The business risk is 50. Nano plc is at a time when its business has a small overdraft and very little money
A. enterprise risk expected in shortly. It is faced with a large demand from a government body
B. financial risk which requires settlement in a month. Which of these actions should Nano plc
C. operational risk NOT take?
D. event risk A. Accelerate receipts from customers even if it means granting discounts
Chapter 5
B. Reduce expenses
C. Wait for further evidence before acting
D. Increase short-term sales but maintain margin of profit if possible
Chapter 5 Chapter 5
51. In 2013, Flowers plc experiences a sudden strike from workforce. It faces severe 57. Steve operates a business selling ice cream in the Arctic. In the past, similar ice
loss of reputation and a shortfall in demands from customers. Which is the type of cream parlors operating in the area had shut down due to poor business. Steve had
crisis faced by Flowers plc? to shut down his business because his shop was destroyed in a fire. What risk had
A. Management crisis ultimately led to the cessation of Steve's business?
B. Public Relations Disaster A. Strategy risk
C. Legal crisis B. Enterprise risk
D. Business crisis C. Product risk
Chapter 5 D. Operational risk
Chapter 5
52. What is considered a disaster is not relative to the size of the business and the
significance of the item that breaks down. 58. A window cleaning company specialises in cleaning the external panels of
A. TRUE skyscrapers, exposing its employees to high levels of risk to perform their work.
B. FALSE One day, a couple of employees were inspecting a building in a city when they
Chapter 5 discover wild birds' nest, which led to them being attacked and sent to the
hospital. These birds are thought to nest in the wild and rarely appear in the city.
53. Blabla plc is considering an investment on selling mobile phones. However, all
How should management best respond in light of this incident?
these while, Blabla plc has only involved in the food industry and is new to the
A. Accept the full cost of the incident and take no further action
mobile phone market. This business risk could be identified as
B. Take measures to reduce the probability and impact of future occurrences
A. Strategy risk
C. Share the consequences of future related risks by taking out insurance
B. Enterprise risk
D. Avoid performance of the activity in the future
C. Financial risk Chapter 5
D. Operation risk
Chapter 5 59. Risk can be defined or derived in various way. Which of the following are the
issues to do with risk?
54. Mark is the manager of a Thai Food Restaurant. He has received a complaint A. Inability
lodged by their customer regarding the unsatisfying cleanliness of their restaurant.
B. Variability
Mark has then set up strict measures to make sure that the restaurant reaches a C. Uncertainty
certain cleanliness standard. The risk response by Mark is
D. Outcomes
A. sharing Chapter 5
B. avoidance
C. acceptance 60. Slytherin Ltd is a business selling special hybrid of snakes. Slytherin Ltd realizes
D. reduction that there is a high market for the snakes due to quality of the snakes. Therefore to
Chapter 5 increase sales of the snakes, he decides to invest more into making snake food.
What risk is this?
55. Lucas Ltd has identified a risk faced by them on a risk map which has a low A. Business risk
impact but high probability of its occurrence . Which of the following risk B. Strategy risk
responses is most appropriate ? C. Enterprise risk
A. Risk avoidance
D. Operational risk
B. Risk sharing Chapter 5
C. Risk acceptance
D. Risk reduction 61. Restaurant ABC purchased an insurance premium worth $50,000 in order to cover
Chapter 5 up losses of accidents. Last month, a fire took place in the restaurant, and the
insurance company had to pay for the losses. The insurance is what type of risk
56. Tom had recently inherited his father's shoe-making business and incorporated it,
response?
stating that the company will 'dominate the international market for affordable A. Transfer
consumer footwear, no matter the cost'. Board minutes over the following few
B. Accept
months has shown preference in investing in high return investments. What risk C. Reduce
appetite is portrayed?
D. Avoid
A. Risk Seeking Chapter 5
B. Risk Neutral
C. Risk Averse
62. Sassy Ltd is a retail company. Recently it was discovered that three of their 66. The owners of NP ltd like the feeling of nervousness and anxiety but they choose
employees had teamed up and stole some inventory. After a detailed investigation, their investment according to the expected return. What is their attitude towards
it was found that the employees managed to steal the inventories because there is risk?
lack of control. Which of the following controls may be lacking? A. Risk adverse
A. Physical control B. Risk seeking
B. Cyber control C. Risk neutral
C. IT Control D. risk lover
D. Organisation control Chapter 5
Chapter 5
67. Samsung plc, in a high-technological industry satisfy demands of customers by
63. Jacob is a sole trader who just started up an interior design business. He will not analysing information obtained concerning behaviour of customers. However,
undertake any projects that is less certain, even though it has potential to get there is a probability of exposure to data corruption which might result in data
higher returns. He will always do credit check before accepting any new client. losses tarnishing it's brand in the industry. Which is the most significant risk that
What risk attitude is mostly found on Jacob and what time of risk is he more Samsung Ltd might be facing?
concern with? A. System risk
A. Risk seeking; Operational risk B. Technology risk
B. Risk averse; Controllable financial risk C. Process risk
C. Risk lowering; Strategy risk D. Reputation risk
D. Risk neutral; Finance risk Chapter 5
Chapter 5
68. Sweet Tofu Ltd manufactures and distributes handmade tofu to the market.
64. CanCan Plc whose main line of business is to produce can food and have a Everything was running smoothly until one day, an infamous magazine covered
number of subsidiaries being set in Japan which lies on the pacific ring of fire, an article saying that Sweet Tofu Ltd uses expired soy beans to produce their tofu.
where a large number of earthquakes and volcanic eruptions occur. Rules and The business's sales volume then dropped drastically. Recommend TWO methods
regulations related to food production industry is relatively strict and many that Sweet Tofu Ltd can take to manage this crisis.
requirements need to be meet by the government. They always need to be aware A. Prevent a crisis by planning ahead
of whether any scandal that could adversely affect the reputation of their business B. Prepare a contingency plan
being spread as Japan has a fast changing IT and technology environment. What C. Act immediately to counter the spread of negative information
types of crisis would CanCan Plc most likely face? (Choose two best answers) D. Use media to question the credibility of the original negative publicity
A. Regulatory and financial crisis Chapter 5
B. Management crisis
69. The production manager of Samsung found out Samsung Galaxy Note 7 is a
C. Public relations crisis
dangerous item which has a high possibility of exploding. What is the company's
D. Legal and environmental crisis
most likely response to the product's risks?
E. Environmental crisis
Chapter 5 A. Avoidance
B. Reduction
65. Enfagrow Ltd is a company which manufactures milk powder for kids. Recently C. Sharing
they have introduced a new milk product formula for antenatal care. Tests on the D. Acceptance
product proved successful but one of the composition in the milk powder will Chapter 5
cause severe complication if a pregnant women who is allergic to this composition
70. Russell Peters is an accountant working for Fifi plc. In conversation with a client,
drinks it although there are only 4% of people in the world who is allergic towards
Russell has made the following points concerning financial statements? Which of
this composition. The company decided not to launch the product. In response to
the following is NOT true?
the risk highlighted in the product tests, the decision is an example of managing
A. Financial statements are used by parties which are internal and external to the
risk through:
business
A. Risk avoidance
B. Financial statements are used only by the management
B. Risk reduction
C. Financial statements are used by investors, payables (creditors) and
C. Risk transfer
D. Risk Retention management
Chapter 5 D. Financial statements are used by suppliers to assess the likelihood of being
paid when due
Chapter 6
not generating revenue. What kind of information is the accountant of Red Ticks
requested to prepare?
71. The senior managers of Staying-in Ltd have filed a complaint with the Financial A. Planning information
Accountant regarding the information that they have received. The contents of the B. Strategic information
complaint state that the information provided are too excessive and mind-bogging. C. Operational information
Which quality of good information has the Financial Accountant omitted? D. Useful information
A. Accurate E. Tactical information
B. Relevant Chapter 6
C. User-targeted
D. Easy to use 78. Which THREE of the following are significant qualities of secure information?
Chapter 6 A. Authenticity
B. Complete
72. Which of the following integrity controls is not part of data validation? C. Confidentiality
A. Check digits D. Accurate
B. Hash totals E. Authoritative
C. Data matching F. Integrity
D. Range checks Chapter 6
Chapter 6
79. Knowledge Work Systems (KWS) facilitate the creation and integration of new
73. In the Chairman’s Statement and the Directors’ Report, which non-financial knowledge into an organisation. Hence, knowledge workers need:
information is not presented? A. Analytical tool
A. Discussion of risk and opportunities B. A user-friendly interface
B. Management policies C. Non-powerful graphics
C. Narrative analysis of the business’s performance and prospects D. Communications and document management tools
D. Discussion on the presentation policies during budget reviews Chapter 6
Chapter 6
80. Who is the primary user of financial information?
74. The following are qualities of good information, except A. Suppliers
A. Cost-beneficial B. Authorities
B. Timely C. Payables
C. User-targeted D. Customers
D. Assessability Chapter 6
Chapter 6
81. The government recently made a change to the tax law and this would have an
75. Which two of the following are why governments need financial information effect on many businesses. This information is gathered from …. (A or B) through
A. Assist on regulating activities …. (C or D) by the tax specialists in a company.
B. Assess trends and recent business developments A. External data sources
C. Help direct policy on health and safety issues B. Internal data sources
D. Assess whether the business will continue in existence C. Informal collection of data
Chapter 6
D. Formal collection of data
Chapter 6
76. Which of the following information management systems tie in with the
Operational tier of companies? 82. Which of the following is the quality of secure information?
A. Executive support systems A. Everything needs to be processed should be processed
B. Management information systems B. Information can always be accessed
C. Decision support systems C. The needs of users should be borne in mind
D. Transaction Processing Systems D. Information should be clearly presented
Chapter 6 Chapter 6
77. The manager of the newly opened Red Ticks supermarket has requested its
accountant to prepare monthly performance reports including budgeted and actual
performance with accompanying variance reports. The manager would like to use
this information mainly for control purposes so as to not spend on areas where it is
83. According to the Conceptual Framework for Financial Reporting to support the B. Timely
effective working of capital markets for the benefit of businesses, financial C. Relevant
statements must have which TWO fundamental qualitative characteristics? D. Authoritative
A. Verifiability E. Easy to use
B. Timeliness Chapter 6
C. Comparability
89. The information should be available anytime when it is needed. Which of the
D. Faithfulness of representation
following is the characteristic of the above statement?
E. Relevance
A. Accurate
F. Understandability
Chapter 6 B. Accessibility
C. Timely
84. Anson has to make a decision about how the A Ltd.'s resources can be made D. Complete
available to maximise the profitability of A Ltd. The type of information she Chapter 6
needs to make decision is
90. When determining whether information is both of good quality and valuable, the
A. Planning information.
characteristic that it must have is:
B. Operational information.
A. Accuracy
C. Tactical information.
B. Accessibility
D. Strategic information.
Chapter 6 C. Timeliness
D. Relevance
85. Which of the following system help senior managers make strategic, unstructured Chapter 6
decisions?
A. Executive support system 91. Which 2 of the following are essential qualities of good information?
A. Cost-beneficial
B. Decision support system
C. Knowledge work systems B. Timely
C. Assessability
D. Expert system
Chapter 6 D. Immediate
Chapter 6
86. Which of the following information is not about the entity's economic
92. Mr.Benecky is a doctor. Every time he consults a patient he inputs the symptoms
phenomena?
that the patient experienced and the previous medication the patient has received
A. The resources of the entity.
into his laptop. Within few minutes the software he uses, analyses the possible
B. The market position of the entity.
sickness the patient is facing which makes the task easier for him. This is an
C. Claims against the entity.
example of
D. The effects of events that change the resources of entity.
Chapter 6 A. A management information system
B. A transaction processing system
87. Financial statements are generally useful to investors, lenders and other payables. C. An expert system
However, their use for other interested parties, especially regulators, may be more D. A human resource system
limited. Which of the following is not a limitation of financial information in Chapter 6
meeting users' needs?
93. Mr. Roger has to decide whether to allow his employee, Hans Smith to take half
A. Non-financial information are omitted.
of the day off due to certain problems and he wants information related to staff
B. Financial statements are highly aggregated.
schedules. The information he needs to answer this problem is categorised as:
C. The financial statement are both inherently historical and forward-looking.
A. Tactical Information
D. The financial statements are usually highly standardised.
Chapter 6 B. Operational Information
C. Planning Information
88. Kamal presents a report to his manager which includes some information which D. Strategic Information
he thinks they might be interesting. In the report, there are many typographical Chapter 6
errors and the source of the information is not stated clearly. Based on the
statement above, which THREE qualities of a good information are probably
lacking in the report?
A. Accurate
94. The manager of Alan plc. noticed that the scheduling and purchasing of certain client's receivables to check the account balances and existence of the
products in the company was not on time. Which transaction processing system is receivables. Which quality of good information has been fulfilled by Jacky?
responsible for these tasks? A. Time
A. Marketing system B. Relevant
B. Manufacturing system C. Authoritative
C. Finance System D. Complete
D. Human Resources system Chapter 6
Chapter 6
100. Aimer, the senior manager of STD Plc. , is responsible to analyse operational
95. Based on the report by the management consultants McKinsey, big data can create reports and highlight important figures to bring to top management's attention. To
value for a business which analyses it. Which of the following ways is NOT do so, she analyses all the reports thoroughly and passes these summarized reports
highlighted in its report? to the directors before every meeting is commenced. In order to protect the
A. Decision-making confidentiality of the data, Aimer is the only one who is allowed to analyse the
B. Market segmentation and customisation reports. What criteria is missing from STD Plc.'s data processing method?
C. Transparency A. Assessability
D. Human Resource quantification B. Completeness
E. Performance improvement C. Verifiability
Chapter 6 D. Timeliness
Chapter 6
96. Data once collected is converted into information for communicating more widely
within the business. This process should meet certain criteria to ensure the 101. Eren was given the task by his senior manager to find information regarding
effectiveness. This includes the methods of differentiating his company's product. In a social occasion, Eren
A. Accuracy, authoritative, integrity, timeliness managed to find out about the details of their close competitors' production
B. Availability, assessability, integrity, timeliness methods which had allowed them to significantly cut costs and dominate the
C. Availability, authoritative, inalterability, timeliness market. Following this trail, he did research, including a cost-benefit analysis.
D. Accuracy, assessability, inalterability, timeliness From this, he also estimated the enormous sum needed to hire professionals if the
Chapter 6 company chooses to invest heavily into R&D to achieve product differentiation -
this cost is likely to be irrecoverable. Which of the following qualities of good
97. Siri is a virtual assistant in Apple Inc.'s operating systems. The feature uses a
information has not been fulfilled?
natural language user interface with sequential inference engine to answer
A. Accurate
questions, make recommendations and perform actions. Siri is an example of
B. Cost-beneficial
which of the following system?
C. User-targeted
A. Executive support system
D. Relevant
B. Decision support system
E. Timely
C. Knowledge work system
F. Authoritative
D. Expert system Chapter 6
Chapter 6
102. Morsmorde Ltd. plans to launch a new product, and its information system has
98. The manager of Banana Ltd generated a system to ensure that the data entered is
generated a report on its forecasted profitability. Top management, most of which
complete and reasonable. The data in several fields are added, including fields not
are made up of chartered accountants, got into a fierce debate in a board meeting
normally used in calculation, such as account number and the total is marked as
after reading through the report. Some were skeptical about the underlying
‘P’. Later, ‘P’ is recalculated and compared with the original. A mismatch in ‘P’
assumptions which drive these forecasted figures - and believed they did not
indicates an error. What is ‘P’ ?
reflect current market conditions enough, due to lack of objective, informed
A. Limit checks
research. Which enhancing qualitative characteristic of financial information,
B. Control totals
according to the IFRS Framework, has been breached?
C. Hash totals
A. Faithful representation
D. Range checks
Chapter 6
B. Verifiability
C. Relevance
99. Jacky is an auditor. He checks the receivables of Karex plc. Besides matching the D. Understandability
sales invoices to the dispatch notes, he also sends the positive confirmation to the Chapter 6
103. TOG Ltd. is now considering forward vertical integration - top management is B. Expert System
looking into the potential costs and benefits. One main concern is the availability C. Transaction Processing System
of competitive resources held by the company for this to be a success. What type D. Executive Support System
of information (A/B) and which type of system (C/D) would be most suitable? Chapter 6
A. Planning information
108. Which of the following is not included in the financial statements?
B. Strategic information
A. Financial position
C. Decision support system
B. Financial performance
D. Executive support system
Chapter 6 C. Changes in the financial position
D. Narrative analysis of the business's performance and prospects
104. The management of Berry Plc. Is planning to improve their information Chapter 6
system in order to increase the quality of the information. Which of the following
109. What is the definition of financial information given by the IFRS Conceptual
TWO are characteristics needed in the process?
Framework? Choose TWO.
A. Cost beneficial
A. Information about an entity's activities in quantitative terms.
B. Relevant
B. Information contained in an entity's financial report.
C. Completeness
C. Only includes the information about an entity's assets and liabilities.
D. Authoritative
D. Info about the entity's assets, liabilities, equity, revenues and expenses.
E. Timeliness Chapter 6
Chapter 6
110. Which of the following are characteristics of a good information?
105. A meeting was held in RM plc whereby the company is making a decision on
A. Accurate, Relevant, Authoritative, Timely
establishing a new computer-based information system within its branch. Director
A: This new information system will be a big help for the decision makers in the B. Reliable source, Ease of assimilation, Accessibility, Relevance
C. Accounting records, Human resources and payroll record, Machine logs, Staff
process of compiling information from a combination of raw data, documents, and
personal knowledge or business models. Director B: It will also help in serving
the company’s management, operations and planning levels. Director C: I truly Chapter 6
agree with both directors’ opinions. However, we must be conscious that this
branch operations will be mainly structured by these decisions. Based on the 111. Identify whether the following statement are true or false.
conversation between the directors above, which of the information system is 1) Data verification involves ensuring that data entered is not incomplete or
stated by them and which type of decisions will be made? unreasonable.
A. Executive support system, unstructured decisions 2)Management information system is a system which performs, records and
B. Management information system, structured decisions process routine transactions.
C. Decision support system, semi-structured and unstructured decisions A. Statement 1 is true
D. Knowledge work system, structured decisions B. Statement 1 is false
Chapter 6 C. Statement 2 is true
106. Sunnyside Ltd is issuing a bonus of 100,000 shares to its employees. Henry Chapter 6
just happens to be an employee at Sunnyside Ltd. Why would Henry need the
financial information of Sunnyside Ltd? 112. Which of the following are NOT the limitations of financial information?
A. To assess the ability of Sunnyside Ltd to pay dividends. A. Standardized and aggregated representation
B. To assess the risk and return of investment B. Backward-looking
C. To assess his employer’s stability and profitability. C. Omission of non- financial information
D. To assess the activities of Sunnyside Ltd. D. Fails to serve public interest
Chapter 6 Chapter 6
107. You are the Senior Executive Officer of a large company and your company is 113. Company B is creating a medical system that can be used to diagnose illness
geographically dispersed to 25 locations in 12 different countries with over 21,000 through the input of symptom by user this system will compare the symptoms
employees. To be a good leader and to keep track of everything that is going on with the data stored in its data bank, what kind of system is this
within the company, you need information. But, do you have the time to go A. office automation system
through tons of reports or listen to a string of presentations? The system which B. executive support system
will be of use to you in making decisions is C. transaction processing system
A. Knowledge Work System D. expert system
Chapter 6 the company’s shares. Which financial statement would you recommend him to
check on?
114. What are the two C's in ACCURATE
A. SOFP
A. complete
B. SOPL
B. confidential
C. SOCIE
C. cost-beneficial
D. SOCF
D. coverage Chapter 6
Chapter 6
120. Groundnut provides information for MixedNuts plc. The information provided
115. What is a limitation of financial information?
by Groundnut is not open to being rejected on the grounds of faults in the system.
A. vague
Which of the following is the quality of secure information system displayed
B. backward looking
above?
C. untrue
A. Confidentiality
D. non-cost beneficial
Chapter 6
B. Non-repudiation
C. Verifiability
116. The management of an education institution has implemented a system which D. Authenticity
helps to process the results of students who apply for the scholarships and Chapter 6
shortlists them in order to plan an interview for each of them who is eligible for
121. Darren from Select Ltd wants to do a data validation for orders amount below
the scholarships. Which information system is this institution using?
$50000. What kind of check should he use to ensure that the orders do not exceed
A. Executive Support System (ESS)
the stated amount?
B. Decision Support System (DSS)
A. Check digits
C. Transaction Processing System (TPS) B. Control totals
D. Office Automation System (OAS)
Chapter 6
C. Range check
D. Limit check
117. John, a senior management director of Pineapple plc has downloaded a Chapter 6
simplified power point document with bar charts and graphs done by a professor
122. Amber has to produce the monthly variance report for their company. The
from Harvard University about the ways to reduce the production risk in the type of information that she needs is
company. Upon presentation, the directors have agreed and John passed the power
A. Planning information
point document to the newly hired accountant to implement it. The
B. Operational information
implementation has failed to solve the problem. Information passed on to the
C. Tactical information
accountant is lacking in which element of 'good information' as based on the
D. Strategic information
acronym ACCURATE? Chapter 6
A. Relevant
B. Authoritative 123. Senior managers may often require a summary, whereas juniors may require
C. Easy to use more detail. What quality of a good information is showed?
D. User-targeted A. Accurate
Chapter 6 B. User-targeted
C. Time bounded
118. Company Tracy gives every worker a RFID tag. It allows the company system
D. Authoritative
to track the worker's whereabouts and the time spent in a certain place. What is Chapter 6
this control?
A. Physical access control 124. Kindness plc needs to ensure that the receiving and shipping of the goods sold
B. Security control are well organised for customers. To effect this, it needs a system in the
C. Integrity control transaction processing system to ensure that the activity goes on smoothly. What
D. Segregation of duty is the system involved?
Chapter 6 A. Marketing and sales system
B. Manufacturing system
C. Finance system
119. NJHL, as a potential investor, is interested in knowing the company’s D. Human resource system
Chapter 6
adaptability to the dynamic environment before making decisions about buying
130. Which 2 of the following are not a quality of a secure information system ?
A. Availability
125. Which TWO of the following makes an information valuable? B. Accurate
A. Ease of assimilation C. Integrity
B. Verifiability D. Authorisation
C. Its source E. Inalterability
D. Cost of entry test Chapter 6
Chapter 6
131. The underlying assumptions of financial information is that it needs to meet
126. A consultant has told Mary Jane Plc’s board that information can be classified which TWO objectives?
according to the use which it is put. The consultant gave the board two definitions. A. Going concern
Definition 1: An operational information helps people deal with short term issues B. Prudence accounting
and an opportunity. C. Accrual Basis
Definition 2: Strategic information supports short-term decision making. Are D. Double Entry
these definitions accurate or inaccurate? Chapter 6
A. Only definition 1 is accurate.
B. Both are accurate. 132. Which of the following is correct?
C. Both are inaccurate. A. Operational information helps people in the planning stage
D. Only definition 2 is accurate. B. Strategic information aids people to carry out day-to-day activities
Chapter 6 C. Tactical information helps people in dealing with short-term issues
D. Planning information relates to decision-making for the long term
127. Which of the following system helps senior managers make semi-structured Chapter 6
decisions?
A. Executive support system 133. Vee considers that the information she got is valuable, which of the following
B. Knowledge work system supports her opinion?
C. Decision-support system A. The information affects the decision that she made earlier to buy the shares of
D. Office automation system Pink plc
Chapter 6 B. The source of information cannot be relied upon fully
C. She spent much time and effort to access to the information
D. The display of information makes Vee hard to interpret and understand
128. There are a few qualities we would be concern of while determining if an Chapter 6
information system is secured. Decide if the definition is correct.
A. Integrity- Data provided is straight-forward and the person who provides it 134. Information processing should include which criteria?
must be honest. A. Cost-beneficial, timeliness, accuracy
B. Authenticity- Data are taken from sources that are profitable B. Completeness, accuracy, assessability
C. Authorisation - Only specific person can make amendments C. Verifiability, inalterability, confidentiality
D. None of the above D. Timeliness, integrity, authorisation
Chapter 6 Chapter 6
135. Blue plc is a huge company with subsidiaries all over the world. The top
managers wish to install a system to help them in making unstructured decisions
129. The original input of data must be controlled to ensure the results are complete only, which system is more suitable for them?
and correct so that the data will maintain its integrity. Input controls should ensure A. TPS
the accuracy, completeness and validity of input. Which of the following controls B. Expert system
is NOT used for checking of completeness? C. DSS
A. Hash Totals D. EIS
B. Control totals Chapter 6
C. Check Digits
Chapter 6
136. Yuri is the manager of the finance department. She always investigates the
error reports before passing on the information to another department. Her action
is a kind of
A. Data control 142. Carrie wants to assess the potential changes in the economic resources the
B. Processing control business is likely to control in the future. Which financial statement would you
C. Output control recommend Carrie to look at?
D. Physical control A. Statement of Cash Flow
Chapter 6 B. Statement of Financial Position
C. Statement of Profit and Loss
137. Which of the following is NOT the limitation of financial statements?
D. Statement of Equity
A. The figures in financial statements are added up, causing evaluation of the Chapter 6
business components to be not easy
B. They relate to the previous period 143. The accountant found out a figure in the financial report is wrong after
C. They only has financial information comparing it with the original document. Which quality of good information that
D. They show how the business performed over the year has been omitted?
Chapter 6 A. Complete
B. Relevant
138. The information system includes information technology. It has a system
C. Easy to use
boundary that separates them from the environment. The system will go through a
D. Accurate
process. What is the input and the output of the Information system? Chapter 6
A. input: data, output: information
B. input: information, output: data
C. input: data, output: decision
D. input: information, output: sources from environment 144. Samantha works in a car engineering company. Her job requires her to use the
Chapter 6 Computer Aided Design (CAD) and Computer Aided Manufacturing (CAM)
software. She is using the company’s:
139. Which of the following is equality of a secure information system? A. Executive support system (ESS).
A. Accountability B. Decision support system (DSS).
B. Comparability C. Knowledge work system (KWS).
C. Intensity D. Transaction processing system (TPS).
D. Authenticity Chapter 6
E. Repudiation
F. Applicability
Chapter 6
145. Office Automation Systems are designed mainly to increase the
140. Financial information produced by ABC plc. is neutral, free from error, and ____________ of data and information workers. Which word correctly
complete. All difficult and complex information are set aside to ensure the users completes this sentence?
fully comprehend its financial report. The information given is agreed upon by A. Expertise
independent observers, meanwhile it is also used to identify and assess trends. Is B. Productivity
this Financial Information good or poor based on the scenario given above? C. Flexibility
A. Yes D. Decision-making capability
B. No Chapter 6
Chapter 6
141. For financial information to be useful, it must first be faithfully represented,

therefore it should be: (choose 2) 146. Which one of the following provides incorrect explanation of the stated
A. Complete qualities of good accounting information?
B. Material A. Timeliness – the value of information is reduced if the information is not
C. Relevant produced at the time of decision-making.
D. Free from bias B. Relevance – information produced must be related to its need and necessary to
Chapter 6 the decision-making process, and its users.
C. Completeness – gaps or missing data in the information produced cannot give
a clear picture of the financial health of the organisation.
D. Understandable – information must be as detailed as possible, with inclusion
of jargons, so that users can get an all-rounded idea of the information.
Chapter 6
147. The accounting departments have produced some information on the quantity D. It is the most basic building block of the other higher-level systems.
of goods sold at different prices. For which other department would this Chapter 6
information be most useful?
154. Which statement is false with regard to a decision support system (DSS)?
A. production
A. It has the capability to analyse data and information submitted to it.
B. marketing
B. It provides tools to make semi-structured decisions.
C. purchasing
C. It is used in medical diagnosis, credit approvals at banks and weather
D. human resources
Chapter 6 forecasting.
D. It is usually flexible and user-friendly.
148. A knowledge work system (KWS): Chapter 6
A. Helps knowledge workers create new knowledge.
155. Management information systems are used extensively by :
B. Is designed to report on on-going business operations.
A. Operational users
C. Uses knowledge workers to support decisions at operational level.
B. Senior management
D. Summarises and tracks critical information obtained from DSS
Chapter 6 C. Information system specialists
D. Middle management
149. Information on the macroeconomic factors as well as demographic patterns Chapter 6
would be used for what type of decision making?
156. A transaction processing system (TPS):
A. Strategic
A. Directly supports structured decisions at all levels of management.
B. Managerial
B. Focuses on internal and external affairs of the organisation.
C. Operational
C. Has a database of facts and rules to which are referred to when making
D. Functional
Chapter 6 decisions.
D. Is used for routine, common data and information processing that provide
150. A hospital manager is considering the use of temporary nursing staff to fill output that serves as input to MIS.
shortages due to sickness. Which level of planning is involved here? Chapter 6
A. Strategic
157. Which of the following is widely used in the fields of law, taxation, banking
B. Tactical
C. Operational and medicine to facilitate analysis and decision making?
A. Decision support systems
D. Functional
Chapter 6 B. Executive information systems
C. Expert systems
151. An executive support system (ESS) does not: D. Management information systems
A. Help senior managers make informed, strategic decisions. Chapter 6
B. Gather data from internal and also external sources.
C. Make processed data available in a more understandable and easily usable 158. Microsoft Office is an example of a(n):
format. A. Transaction Processing Systems
D. Cater to the needs of data entry clerks. B. Management Information Systems
Chapter 6 C. Decision Support Systems
D. Office Automation Systems
152. Cost and profitability analyses, and production planning are examples of: Chapter 6
A. ESS.
B. DSS.
C. KWS.
D. OAS.
Chapter 6
153. Transaction Processing System is used for the following EXCEPT

A. The primary goal of TPS is to provide all the information needed to keep the
business running properly and efficiently
B. It is the highest and most complicated level of information systems.
C. It records historic information and it is a simple automation of manual
systems.
1. In measuring performance, there are three points of reference for measurement. A. Customer
They are? B. Internal business processes
A. Qualitative C. Innovation and Learning
B. Quantitative D. Financial
C. Activity Chapter 7
D. Profitability
7. The master budget will comprise:
E. Productivity
A. The cash budget.
F. Financial measures
Chapter 7 B. The budgeted profit and loss account and the budgeted balance sheet.
C. The cash budget, the budgeted profit and loss account and the budgeted
balance sheet.
2. The primary focus of suppliers and shareholders is on _____ and _____ D. All the production, selling and cost budgets for the organisation.
respectively. Chapter 7
A. Solvency; Risk/return
8. Balanced scorecards are a means of control through:
B. Liquidity; Solvency
A. Performance targets
C. Liquidity; Risk/return
B. Portfolio management
D. Risk/return; Solvency
Chapter 7 C. Qualitative measures
D. Quantitative measures
Chapter 7
3. Which of the following is not true about internal control?
A. Internal control is a process.
B. Internal control is effected by people 9. Which one of the following is the area covered by Management Information
C. Internal control can be expected to provide absolute assurance (MI)?
D. Internal control is geared to the achievement of objectives A. Ledgers
Chapter 7
B. Provision of information to external regulators
C. Pricing
D. Raising investment finance
Chapter 7
4. Which two is a real purpose of having a budget?
A. Allocation of Resources
B. Helping to compel planning
C. Setting missions and visions 10. Which three of the following is a type of capital investment appraisal?
D. Helping to transfer credit terms A. Payback Method
Chapter 7 B. Accounting Rate of return (ARR)
C. Net present Value (NPV)
D. CVP Analysis
5. Which are not purposes of a budget? Chapter 7
A. To guide managers in the best way in allocating limited resources
B. Budgets allow regular and timely comparison of actual performance against
the budget to help evaluate performance
C. To calculate possible return of investments for convincing new shareholders 11. Which of the following are the factors that affect the business's finance function?
D. Employees are given a target and direction to follow A. Size of the organisation
Chapter 7 B. Stewardship of managers
C. Background
D. Expert knowledge possessed by employees
6. The management of X Ltd has recently adopted the balanced scorecard approach E. Ownership
to identify and focus on factors that are significant in achieving long term control F. Efficiency of performing tasks
and direction of the company. It has thus discovered that they have not been Chapter 7
directing enough effort towards obtaining better quality input and thus there was a
high rate of wastage of materials in the production process. Which perspective of
the balance scorecard is the management of X Ltd looking at?
D. Limiting factor analysis.

Chapter 7
12. What are two basic issues at stake when making decisions for the long term? 17. How do the directors of company make use of the information on performance
A. Marginal costing measurement?
B. Capital budgeting A. To make control and planning decisions.
C. Contribution B. To make operational decisions.
D. Capital investment appraisal C. To assess whether corporate governance is effective.
Chapter 7 D. To assess whether corporate strategy is effective.
Chapter 7
13. A balanced scorecard is used in achieving long term control and the direction a
business should be taking. Silver plc. excels in three out of the four objectives but 18. Which THREE of the following are the tasks of financial reporting?
is weak in innovation and learning. Which of the following is the measure for A. Preparing financial information for external users
innovation and learning? B. Preparing financial information for internal users
A. Return rates C. Tax reporting to HM Revenue and Customs (HMRC)
B. Failure rate D. Preparing performance measures and identifying reasons for good and bad
C. Employee retention rate performance
D. Gearing E. Regulatory reporting
Chapter 7 Chapter 7
14. The recent performance measurement conducted by the sales department manager
has found that the employees in the department spend a lot of time on the
19. According to COSO, internal control consists of five interrelated components.
company phones and computer compared to the previous month. However, the
Which of the following is NOT a component of the five interrelated components?
sales for that month have suffered a substantial decrease which has been attributed
A. Control environment
in the failure of the sales department in performing. From this statement it can be
said that the employees have a: B. Risk management
C. Review of operating performance
A. High activity level and high productivity level
B. High activity level and low productivity level D. Control activities
E. Information and communication
C. Low activity level and high productivity level
F. Monitoring activities
D. Low activity level and low productivity level Chapter 7
Chapter 7
15. Sally is an accountant for A Ltd. She has been asked to manage the investments
and foreign exchange of A Ltd. It would appear that Sally is employed by A Ltd.'s
finance function's
A. Financial reporting section. 20. Sabrina is employed in the finance function of Blackcat plc. Her duties involves
B. Treasury management section. managing working capital from day to day so as to optimise cash flow. Moreover,
C. Management accounting section. she is analysing short-term and long-term financing decisions. Therefore, Sabrina
D. Recording financial transactions section. is working in which section of the finance function in the Blackcat plc.?
Chapter 7 A. Financial reporting section
B. Management accounting section
C. Treasury management section
D. Transaction processing system
Chapter 7
16. Shimi makes decisions for A Plc. based on the product which makes the most
contribution per unit of the limiting factor. Which of the following analytical 21. Removed
techniques is relied by Shimi to make decisions?
A. CVP analysis. Chapter 7
B. Breakeven analysis.
C. Contribution analysis.
22. Which THREE of the followings will decide the financial structure of a company? Chapter 7
A. Its suppliers
28. Amin started off his photostating business by renting 3 photostating machines that
B. Its legal form
can produce 500 copies per hour. The rent that he has to pay for one machine is
C. Markets
£200. However, after two years Amin decided to replace the three machines with
D. Ownership
a single machine which can produce 3000 copies per hour. The rent for the new
E. Employees
Chapter 7 machine is £400. He has developed his business in terms of
A. Effectiveness
23. Which two characteristics are true regarding the qualitative measure? B. Efficiency
A. Subjective C. Sustainability
B. Objective D. Productivity
C. Judgmental Chapter 7
D. Reliable
29. Productivity is the quantity of service or product produced in relation to the
E. Numerical term
Chapter 7 resources put in. Therefore, productivity is basically trying to achieve
maximisation of:
A. Output ÷ input
B. Input ÷ output
24. Time value of money is a matter to be considered in which of the following C. Output + input
activities undertaken by finance function D. Output - input
A. Capital investment appraisal Chapter 7
B. Capital budgeting
C. Pricing 30. Lindsey is an accountant for Steward plc, which is in charge of a substantial new
D. Forecasting project. She has been asked to help in determining whether it should be financed
Chapter 7 by retained earnings, equity, loans or a mix of all sources. It would appear that
Lindsey is employed by Steward plc's finance function's
A. Management accounting system
B. Financial reporting system
25. Which aspects of an organisation's performance with respect to sustainability are
C. Transaction recording system
measured using 'triple bottom line' measures?
D. Treasury management system
A. Economy, effectiveness, efficiency Chapter 7
B. Economic, social, environment
C. Profitability, liquidity, investment 31. Sarah works in her company's finance function under the Management
D. Productivity, activity, profitability Accounting Department. Which of the following tasks fall under her scope of
Chapter 7 work? Choose THREE
A. Preparing performance measures
B. Determining unit cost of goods
26. According to the balance scorecard, measures of retention rates and return rates is: C. Preparing and monitoring cash budgets
A. Customer perspective D. Regulatory reporting
B. Internal business processes perspective E. Planning ahead by preparing forecasts and budgets
C. Innovation and learning perspective F. Managing financial risk
D. Financial perspective Chapter 7
Chapter 7
32. In terms of the internal control in a company, which of the following duties are
the responsibilities of the board of directors as a whole? Choose THREE.
27. When a company's accounting and finance function prepares financial statements A. Policy-making
in accordance with legal rules and accounting standards, it is engaged in the B. Monitoring
support activity of: C. Implementing
A. Record-keeping and stewardship D. Reviewing
B. External reporting E. Reporting
C. Internal reporting Chapter 7
D. Planning and control
33. Steven is employed in the finance function of Sea Ltd. His duties involve the senior managers focuses mainly on achieving the targeted objectives by any
determining the precise unit cost of a range of products manufactured in the means. The directors of ZZZ Plc finds that certain parts of their internal control is
company's horticultural division. From time to time, he also prepares reports on lacking and which part according to COSO should they focus more on?
variances from the standard cost per unit that he has calculated. It is clear, A. Control environment
therefore, that Steven is employed by Sea Ltd. in its B. Risk assessment
A. Financial transaction recording section C. Control activities
B. Financial reporting section D. Information and communication
C. Management accounting section E. Monitoring activities
D. Treasury management section Chapter 7
Chapter 7
38. The managing director of Mirkwood Plc. places great emphasis on compliance to
34. Customer Relationship Management (CRM) is an information system which its established system of internal controls, with personnel responsible for the
refers to the practices, strategies and technologies that companies use to manage identification of key risks and then suggesting specific processes or organization
and analyse customers interactions and data throughout the customer lifecycle of resources, via specific reporting channels, to reduce identified risks. Due to the
with the goal of improving business relationships with customers, assisting in many internal controls in place, the managing director demands frequent review
customer retention and driving sales growth. Under the balance scorecard of these activities by the relevant managers to ensure their effectiveness. Which
perspectives, which of the following is satisfied by CRM specifically related to component of internal control, according to COSO, is most heavily represented
analysis of customer data for new product development? here?
A. Customer A. control environment
B. Innovation and learning B. risk assessment
C. Finance C. control activities
D. Internal business processes D. information and communication
Chapter 7 E. monitoring activities
Chapter 7
35. Banana Fashion Shop sells clothes that are imported from Korea. The main
employees in Banana Fashion Shop are Jack, Janny and Jimmy. Which of the 39. Kite Plc. uses a few performance measures, one of which involves measuring the
following statement reflects the most effective segregation of duties with regards number of orders received from the customer in relation to the amount of money
of purchase ordering? they invested in advertising the product. The point of reference for the
A. The purchase orders are processed by Jack and recorded by Janny, without the measurement is:
authorisation of Jimmy. A. Activity
B. The purchase orders are processed by Jack and recorded by Jimmy, with the B. Profitability
authorisation of Janny. C. Effectiveness
C. The purchase orders are processed and recorded by Jack, with the D. Productivity
authorisation of Janny and Jimmy. Chapter 7
D. The purchase orders are processed by Jack and Janny, recorded and authorised
40. YYY Ltd.'s long term goal is to get listed on the Bursa Malaysia. Their
by Jimmy.
Chapter 7 performance so far is outstanding and this has been reflected in their financial
statements. This is due to the high quality of their product which has gained high
36. Who is wholly responsible for policy-making, reviewing and reporting on an customers' satisfaction. However, the company has high staff turnover rate. Apart
effective system of internal control in the company? from the traditional financial performance measures, the company plans to use the
A. Shareholders balanced scorecard to measure the performance of their company. Which part of
B. Managers the balanced scorecard should they pay more attention to?
C. Board of Directors A. Customer
D. Auditors B. Internal business processes
Chapter 7 C. Innovation and learning
D. Financial
Chapter 7
37. ZZZ Plc adopts adequate risk management in their company. They also carry out 41. Which of the following is true?
segregation of duties between employees and has a structured and clear A. The job scope of a management accountant is to analyse short term and long
communication process. The quality of internal controls are monitored and term financing decisions.
reviewed regularly. The ethical values of business are not highly emphasized and
B. The financial measure has no limitations, thus giving a complete picture to the 46. The finance director of Andrea plc sets target and compare it against actual
management to set the company's long term goal. performance. Therefore, the director is
C. Reconciliation is an example of monitoring activities, a component of internal A. Planning and controlling
control. B. Organizing and leading
D. Qualitative measures are not expressed in numerical terms. C. Planning and organizing
Chapter 7 D. Controlling and leading
Chapter 7
42. Hope uses the balanced scorecard technique in helping to prepare a performance
report for the company. Hope is currently looking on the measures to developed 47. What areas are included in the management accounting?
their product in reaching the maturity stage of the product life cycle. These A. Transaction Recording
measures done by Hope will be counted in which part of the balanced scorecard? B. Foreign exchange
A. Financial perspective C. Stewardship
B. Innovation and learning perspective D. Cost accounting
C. Internal business process perspective Chapter 7
D. Customer perspective
Chapter 7
48. Management Accounting is responsible of?
A. Long term finance decisions
B. Management of working capital
43. A group of friends participated in a competition, where they had to design a C. Cost accounting
product or service, with its costs and risks calculated and pitch it to the judges. In D. Preparing Financial Statements
which area of the finance function were they most active in? Chapter 7
A. Management accounting
B. Recording financial statements
49. Which of the following is not a limitation of financial measures?
C. Treasury management
A. Analysis of financial measures only identifies causes, not symptoms, thus is of
D. Financial Reporting
Chapter 7
limited use on its own.
B. Different firms using different accounting policies makes comparison between
businesses difficult.
44. According to COSO, which of the following is not the integrated component of C. Changes in accounting policies can affect the reported results.
internal control? D. The changing environment affects the results reflected in the accounting
A. Planning activities information.
B. Monitoring activities Chapter 7
C. Control activities
D. Control environment
Chapter 7
50. John and his team is working to reduce the companies' production cost by 15%,
which concept of utilising resource are they proposing?
45. Customers of Zeta plc constantly complained about their dissatisfaction to the A. Economy
service department about the increase of price of their product. Therefore, the B. Effectiveness
marketing manager is ordered to regulate the price of that product. The marketing C. Efficiency
manager should get the information from which part of the finance function? D. Ecology
A. Treasury management Chapter 7
B. Marketing department
51. Tim's job is to manage financial resources of the company and carry out
C. Management accounting
predictions for the companies' possible expenditures, what are the skills that Tim
D. Research & development
Chapter 7 possess?
A. Management accounting
B. Treasury management
C. Financial reporting
D. Auditing
Chapter 7 measures of gross margin and gearing. The measures calculated by her are under
the perspectives of:
52. Which statement about critical success factors (CSFs) for a business is true?
A. Customers
A. Low costs will always be a CSF; high sales revenue will always be a CSF
B. Innovation and learning
B. Low costs will always be a CSF; high sales revenue will not always be a CSF
C. Financial
C. Low costs will not always be a CSF; high sales revenue will always be a CSF
D. Internal business processes
D. Low costs will not always be a CSF; high sales revenue will not always be a Chapter 7
CSF
Chapter 7
53. Which following part is carried out by management accounting?

A. Tax reporting to HM Revenue and Customs (HMRC)
B. Preparing and monitoring cash budgets 58. Mark Ltd has set a target for the company to achieve in 2017 which is increase in
C. Entering summaries of transactions in the permanent records from the book of sales by 20%. What objective did the company meet when they hit their target?
original entry A. Effectiveness
D. Planning ahead by preparing forecasts and budgets B. Economy
Chapter 7 C. Productivity
D. Efficiency
54. The headings which under sustainability and corporate responsibility can perhaps Chapter 7
be measured are those of what is known as triple bottom line. Which of the
following three are NOT the triple bottom line? 59. WOW Ltd wants to prevent employees from having too much power in the
A. Social company when handling a transaction or assets from the start to the end. What
B. Sustainability type of control activity should the company introduce?
C. Economic A. Security assets
D. Environmental B. Review of operating performance
E. Safety C. Segregation of duties
F. Effectiveness D. Reconciliation
Chapter 7 Chapter 7
55. A company is currently investing in a new project. The manager of the company 60. Kai works for the finance function in Zoom Ltd, he analyses short term and long
assigned Zayne to get short-term and long-term loans and plan future cash flows term investment for the company. Kai is under which section in the finance
of the company. Which section of finance function has he been employed by the function?
company to work in? A. Financial reporting
A. Recording financial transactions section B. Management accounting
B. Management accounting section C. Treasury Management
C. Financial reporting section D. Financial transection recording
D. Treasury management section Chapter 7
Chapter 7
61. Which three of the following is NOT points of reference for measurement in a
56. Terry, the director of Dom Plc, is currently considering whether to centralise its business?
finance function. What is the two advantages of centralising of the finance A. Activity
function? B. Social
A. It is helpful for the regional operation managers to gather all the information C. Authenticity
and support that they need. D. Profitability
B. It is easier to prepare financial statement E. Productivity
C. It is helpful for managing and monitoring cash F. Cost
D. It is easier when dealing with foreign exchange Chapter 7
E. It is more flexible to respond to changing events.
Chapter 7
62. Melissa from BAM Ltd is measuring the employee retention rate for the year
using balance score card technique. The measures calculated by Melissa will be
57. Tracy, a management accountant in Potato Plc is currently preparing a included in the final balance scorecard’s
performance report which uses the technique of integrating a set of performance A. Innovation and learning perspective
measures which links to the achievement of strategic objectives. She is calculating B. Financial perspective
C. Customer perspective 69. What are the TWO responsibilities of the board of directors for internal control?
D. Internal business process perspective A. Policy-making on an effective system of internal control in the company.
Chapter 7 B. Implementing internal control
C. Monitoring the internal control system on a day-to-day basis.
63. Larvae plc’s finance function requires information to the management about the
D. Reporting on the internal control system to shareholders each year.
return rates of their customers. This role is undertaken as part of Larvae plc’s : Chapter 7
A. Performance measurement system
B. Statutory audit requirement 70. SpongeBob Ltd has a new objective for 2017 and that is to increase sales by 10%
C. Financial reporting function compared to the previous year. Achieving this objective is a measure of?
D. Treasury management process A. Effectiveness
Chapter 7 B. Economy
C. Productivity
64. Preparing and monitoring cash budgets is part of which of its finance function
D. Efficiency
task? Chapter 7
A. Recording financial transactions
B. Management accounting 71. Abu, a management accountant in Mangkok Plc is currently helping to prepare a
C. Financial reporting performance report which uses the balanced scorecard. He is calculating the
D. Treasury management measures of net margin and gearing. The measures calculated by her are under the
Chapter 7 perspectives of:
A. Customers
65. Mamac plc is striving to reduce their cost on producing their new product. The
B. Innovation and learning
point of reference for this performance measure is:
C. Financial
A. Profitability D. Internal business processes
B. Productivity Chapter 7
C. Economy
D. Effectiveness 72. The Finance Director of Dog Plc uses feedback from measuring performance that
Chapter 7 was done by employees to make necessary amendments to the plan. Therefore, the
director is
66. In a balanced scorecard, measures of how to continue to improve and create value A. Organising and leading
for the company would be included in :
B. Planning and organising
A. Financial perspective measures
C. Controlling and leading
B. Innovation and learning perspective measures
D. Planning and controlling
C. Customer perspective measures Chapter 7
D. Internal business process perspective measures
Chapter 7 73. Which TWO characteristics are true regarding quantitative measures?
A. Objective
67. According to COSO, internal control consists of five integrated components. B. Subjective
What components is to produce reports, including operational, financial and C. Judgmental
compliance related information, that make it possible to run and control the D. Numerical term
business?
E. Relevant
A. Control environment Chapter 7
B. Risk assessment
C. Monitoring activities 74. Which of the following is not one of the Ps of the ‘ triple bottom line’ reporting?
D. Information and communication A. Planet
Chapter 7 B. Profit
C. People
68. In the balanced scorecard, measures of product quality and failure rates would be D. Productivity
included in Chapter 7
A. Customer perspective measures
B. Innovation and learning perspective measures
C. Internal business processes perspective measures 75. Potato Ltd operates a chain of shops selling its own branded bags. The company
D. Financial perspective measures has analysed that if its new line of “weightless” autumn bags continue being the
Chapter 7
top traveling bag in People’s magazine, it will outperform its rival, NoBag Ltd. A. Financial reporting section
This represents Potato Ltd B. Management accounting section
A. Key performance indicators C. Treasury management section
B. Critical success factor D. Recording financial transactions
C. Goal Chapter 7
D. Target
Chapter 7 81. In terms of performance measure, the balanced scorecard measures:
A. are neither qualitative or quantitative
76. Select two statements which are true. B. should be quantitative only
A. Board of directors review how effectively the internal control system C. should be qualitative only
addresses the risks that the company faces. D. none of the above
B. Board of directors monitors the system on a daily basis. Chapter 7
C. Managers are responsible for implementing internal controls.
82. Steven, a management accountant, is currently helping to prepare a performance
D. Senior managers report to the shareholder regarding the internal control
report which uses the balanced scorecard technique. Before that, Steven had
system each year.
Chapter 7 received a survey report consisting of the feedback from customers towards the
products of company, from that he calculated retention rates and return rates. The
77. State whether the following statements are true or false. measures calculated by Steven will be included in the final balanced scorecard's
Statement 1: Qualitative measures are expressed in numerical term which is A. Financial perspective
financial measures only. B. Inter business process perspective
Statement 2: An example of financial measure is based on data as to number of C. Innovation and learning perspective
items produced. D. Customer perspective
A. Both statements are true Chapter 7
B. Both statements are false
C. Only statement 1 is true 83. Which limitation of financial measures is not caused by information problems?
A. Historical cost information
D. Only statement 2 is true
Chapter 7 B. Outdated data
C. Changes in accounting policies
78. According to COSO, which of the following two is not one of the five integrated D. Summarised information
components which provide an effective framework : - Chapter 7
A. Control environment
84. Which of the following activities would most likely have to be segregated in order
B. Control activities
to prevent abuse of power by one individual?
C. Risk assessment
A. Custody of Asset
D. Information and commercialisation
B. Authorisation
E. Monitoring control
Chapter 7 C. Verification
D. Recording Transaction
79. The balanced scorecard looks at the business from four important perspectives and E. Performance Review
answers four basic questions when establishing the business' vision of itself and Chapter 7
its future strategy. Choose the correct perspectives for the following questions.
85. Honda plc sells cars. The company has identified that its innovation in creating
Question 1: What must we excel at?
something new is the reason it can outperform its rivals. Ability of creating
Question 2: How do we look to our shareholders?
something new is Honda plc's
A. Question 1 and 2: Financial
A. Key performance indicator
B. Question 1 and 2: Internal business processes
B. Core competence
C. Question 1: Internal business process; Question 2: Financial
C. Target
D. Question 1: Financial; Question 2: Internal business processes
Chapter 7 D. Critical success factor
Chapter 7
80. Jimin is employed in the finance function of Bighit plc. His duties involves
86. Efficiency means effective at minimal cost or controlling costs without losing
preparing performance measures and also preparing financial information for
internal users. Jimin is working in which section of the finance function in the operational effectiveness. Which of the following equation can express
efficiency?
Bighit plc?
A. effectiveness/efficiency
B. effectiveness/commodity C. Reporting
C. effectiveness/economy D. Implementing
D. effectiveness/economist Chapter 7
Chapter 7
92. Jane works in the accounting department of ABC Ltd. She spends her days
87. Which of the following functions are the responsibilities of management researching interest rates at different banks. In which section does Jane work?
accounting function? A. Cashier
(i) Recording transaction, processing into information for the use of those charged B. Management accounting
with governance. C. Treasury
(ii) Recording transaction, processing into information to enhance good corporate D. Credit control
governance Chapter 7
(iii) Making decisions for capital budgeting
(iv) Manage investments
A. i and iv
B. i and iii
C. iii and iv 93. Which of the following is not a component of the Balanced Scorecard Approach?
D. ii and iii A. The External Perspective
Chapter 7 B. The Customer Perspective
C. The Financial Perspective
88. 1) Develop plan, goals, missions, standards 2) Forecast 3) Assess and monitor
D. The Innovation and Learning Perspective
results and progress 4) evaluate available resources 5) control action to correct Chapter 7
deviation.
Arrange the statements in the correct order depicting the overall direction of 94. Stewardship of the organisation's financial resources is part of which of its finance
financial function's work function's tasks?
A. 1>2>3>5>4 A. Financial Reporting
B. 2>4>1>3>5 B. Recording financial transactions
C. 2>1>4>3>5 C. Treasury management
D. 2>4>1>5>3 D. Finance Management
Chapter 7 Chapter 7
89. Select whether the following statements are true/false. 95. Which of the following statement is incorrect with regards to Financial
Statement 1: Economy is the reduction or containment of cost. Accounting?
Statement 2: Effectiveness means being effective at minimum cost or controlling A. The users are not limited to internal stakeholders
costs without losing operational effectiveness. B. The nature of the reports are general and it captures historic information
A. Both statements are true C. The reports produced are subject to regulations
B. Both statements are false D. The reports produced are subjective and may have an element of management
C. Only statement 1 is true discretion
D. Only statement 2 is true Chapter 7
Chapter 7
96. In a very large company working capital would probably be the responsibility of
90. The manager reviews the bank reconciliation that has been prepared by an the:
accountant. What is the component in this internal control? A. Finance director
A. Control environment B. Chief accountant
B. Risk assessment C. Treasurer
C. Control activities D. Management accountant
D. Monitoring activities Chapter 7
Chapter 7
97. Which of the following is a responsibility of management accountants?
91. The Board of Directors is very important in a company. Which is not the A. Providing information for shareholders, banks and creditors
responsibility of the Board of Directors? B. Providing information for directors and staff
A. Policy-making C. Producing the annual accounts
B. Reviewing D. Recording financial performance
Chapter 7 A. Receivable/payable relationship

B. Baylor/bailed relationship
98. In a typical financial function, budgets and budgetary control would usually be the
C. Principal/agent relationship
responsibility of which of the following roles?
D. Mortgagor/mortgagee relationship
A. The financial controller Chapter 8
B. The management accountant
C. The treasurer 104. Why is it important to invest surplus cash in the short term to diversify
D. The accounts manager investments?
Chapter 7 A. Less capital needed
B. Ensure flexibility
99. Which of the following may be regarded as a disadvantage to shareholders of a
C. Spread risks
company obtaining a quotation on the London Stock Exchange?
D. Lower cost
A. Shares become less marketable
E. Higher return
B. Possibility of being taken over Chapter 8
C. Standing of the company deteriorates
D. Access to large source of finance is limited 105. Which of the following two, are the rights of the bank?
Chapter 8 A. To use the customer's money in any way provided it is legal and morally
acceptable.
100. Which TWO of the following are methods of raising equity?
B. To cease to do business with the customer without reasonable notice.
A. Debt factoring
C. To charge reasonable bank charges.
B. Leasing
D. Not to inform the customer if there has been an attempt to forge the customer's
C. Overdraft
signature.
D. Rights issues of shares Chapter 8
E. New issues of shares
Chapter 8 106. The Bank of England is banker to the banks, lending money to the banking
sector through its financial market operations at the (A/B) set by its (C/D).
101. Jack is a businessman. He runs a big business selling bicycles to people from A. Interest rate
all walks of life. His business even spreads to other country as the quality and
B. Base rate
variety of bicycles he sells are really awesome and good. Often, he sells his C. Financial Policy Committee (FPC)
products on credit and needs to export them to the foreigners from other country.
D. Monetary Policy Committee (MPC)
However, he is worried that his business could not finance all the credit given to Chapter 8
customers. What type of risk is Jack worried about?
A. Trade risk 107. Which THREE of the followings are the rights of the bank?
B. Liquidity risk A. To charge reasonable bank charges
C. Physical risk B. To use the customer's money legally and morally acceptable
D. Credit risk C. To indemnified customers against possible losses when acting on the
E. Credit risk customer's behalf
F. Payment risk D. To be repaid overdrawn balances on demand
Chapter 8 Chapter 8
102. Which of the following is not the benefit of financial intermediation? 108. Balala Plc. is a new listing company. The company raised capital by issuing
A. Risk is reduced as an individual's savings are not tied up with one individual shares to the public through a bank.
borrower directly A. Rights issue
B. Short term savings cannot be transferred into long term loans B. Placing's
C. Small amounts deposited by savers can be combined to provide larger loan C. Offer for sale
packages to businesses D. Direct offer
D. Search costs reduced as companies can approach a bank directly Chapter 8
Chapter 8
109. It has been a part of Financial Services Authority(FSA) before. It secures
103. ABC Bank borrows deposits from Brandy and the bank undertakes to repay appropriate degree of protection for customers using financial services. It is
them. Also, ABC Bank must have reasonable notice if it wants to cease to do A. Chancellor of Exchequer
business with Brandy. Which of the following contractual relationships represents B. Financial Policy Committee
the relationship between ABC Bank and Brandy? C. Financial Conduct Authority
D. Prudential Regulation Authority D. Floating charge relationship

Chapter 8 Chapter 8
110. There are variety of different financial instruments that are traded in the 116. The ‘twin peaks’ regulatory regime which originated from the Financial
money markets. Which two of the following are issued by the Debt Management Conduct Authority consists of the Prudential Regulation Authority and the
Office? Financial Services Authority.
A. Deposits A. TRUE
B. Bonds B. FALSE
C. Treasury bills Chapter 8
D. Certificates of deposit
117. There are different financial instruments that are traded in the money markets.
E. Gilts
The main types are:
F. Commercial paper
Chapter 8 A. Bond markets
B. Commercial paper
111. Which among the following is not a duty of the bank to the customer? C. International markets
A. Credit cash/cheques into a customer’s account D. Certificates of deposit
B. To inform the customer if there has been an attempt to forge a cheque of a E. Gilts
customer F. Debt factoring
C. To comply to customer’s social satisfaction factor during bank visits Chapter 8
D. To provide a statement showing transactions of the customer frequently
Chapter 8 118. Which of the following is a source of finance for households?
A. Commercial paper
B. Hire purchase
C. Bank overdraft
112. Which of the following ways can a business access finance through? D. Credit card
A. The Banking System Chapter 8
B. Bond Markets
C. Debt Factoring 119. Which of the following are not financial intermediaries?
D. International Trade Agencies And Bureaus A. Pension funds
Chapter 8 B. Merchant banks
C. Government
D. Building societies
E. Retail banks
113. Which of the following is not part of trading risk?
F. Insurance companies
A. physical risk Chapter 8
B. credit risk
C. liquidity risk
D. market risk
Chapter 8 120. The aim of the Monetary Policy Committee setting base rate is to achieve...?
A. Monetary Stability
114. Which of the following is secured borrowing? B. Monetary Policy
A. current account overdraft C. Monetary Strength
B. personal loan D. Low Inflation
C. hire purchase Chapter 8
D. interest only mortgage
Chapter 8 121. The primary purpose for the existence of Bank of England is:
A. To ensure the stability of the trading system
115. The bank asks the customer to secure a loan with a charge over its assets. If B. To control the availability of money and credit to ensue low inflation, high
the customer does not repay the loan, then the bank has the right to sell the assets growth and the stability of the financial system
to pay off the loan. What kind of relationship is this? C. To ensure that the economy sees high growth
A. Bailor/Bailee relationship D. The availability of money and to ensure low inflation
B. Bank/Customer relationship Chapter 8
C. Mortgagor/mortgagee relationship
(i) Banana Ltd (the lessee) recently signed a contract with Elephant Ltd (the
lessor) to rent a photocopy machine. This allowed Banana Ltd to use the
122. Identify whether the following statements about the venture capital are likely photocopy machine, but not covey the rights of ownership of the photocopy
to be true or false. machine.
1. Venture capital firms reduce risk by investing in only a few companies which (ii) Gorilla Ltd (the lessor) will recover a large part of all the cost of the asset plus
can be carefully monitored and nurtured. earn interest from the rental paid by the Mozilla Ltd (the lessee) and the
2. Investors in venture capital firms expect to profit quickly from their investment ownership passes to Mozilla Ltd at the end of the lease.
A. Statement 1: TRUE A. (i) Buying Asset Outright (ii) Buying Asset Outright
B. Statement 1: FALSE B. (i) Leasing Asset (ii) Buying Asset Outright
C. Statement 2: TRUE C. (i) Buying Asset Outright (ii) Leasing Asset
D. Statement 2: FALSE D. (i) Leasing Asset (ii) Leasing Asset
Chapter 8 Chapter 8
128. Which of the following are the responsibilities of Financial Conduct Authority
123. Which of the following is the order in which sources of equity finance is more
(FCA)?
widely used in companies starting from the most used to the least used?
(i) Promoting effective competition.
A. Retained earnings, Rights issue, Issuing new shares
(ii) Promote the safety and soundness of firms.
B. Issuing new shares, rights issue, Retained earnings
(iii) Ensuring relevant markets function well.
C. Rights issue, Retained earnings, Issuing new shares
(iv) Regulating the conduct of all financial services firm.
D. Retained Earnings, Issuing new shares, Rights issue
Chapter 8 A. i, ii and iii
B. i, ii and iv
124. Letters of credit provide a method of payment in international trade which C. ii, iii and iv
gives the exporter a ________. D. i, iii and iv
A. Risk free method of obtaining the payment Chapter 8
B. An averagely risky method of obtaining the product
C. A risky method of obtaining the payment
D. A risk free method of obtaining the payment and product 129. Which of the following is false about venture capital?
Chapter 8 A. It is provided with regard more for the short term than the long term.
B. It is high risk so venture capitalists expect high return.
125. The Prudential Regulation Authority (PRA) are responsible for which of the
C. The investor provides advise and is able to influence management.
following TWO activities ?
D. A venture capitalist is more participative in management
A. Ensuring relevant markets function well Chapter 8
B. Securing an appropriate level of protection for policyholders
C. Promoting safety and soundness of firms 130. LLL Plc. is deciding on how to finance their new operations. They want to
D. Provide clearing system services to the public issue shares without incurring enormous advertising and administration costs.
E. Regulate the conduct of all financial services firms However, they are worried about a hostile takeover that might occur due to the
Chapter 8 fact that a huge rival has been keen on their shares lately. What is the best option
for LLL Plc.?
126. Issued by the Debt Management Office, which are longer term government
A. Offer of sales at lower price
debts that offer a large range of maturities (5 to 50 years) and rates based on
B. Placing
money market rates. This statement refers to which financial instrument?
C. Through direct offer
A. Treasury Bill
D. Rights issue
B. Deposits Chapter 8
C. Bonds
D. Gilts 131. Henry, who has launched a few successful start-ups in the past, is interested in
E. Commercial Paper the clean energy sector. This industry requires a lot of funding and Henry is
F. Certificate of Deposits (CDs) currently finding a suitable method to finance his new start-up. Which would be
Chapter 8 the best source for Henry?
A. Venture Capital
127. Identify whether the following statement is “Buying Asset Outright” or
B. Loan from bank
“Leasing Asset”. Choose the correct answer.
C. Business angel 137. Jackson plc wishes to let existing shareholders maintain their existing
D. Issue shares percentage holding in the company. Which method of raising equity should
Chapter 8 Jackson plc opt for?
A. Placings
132. Padimi Bhd is facing short-term liquidity problems. They have a high amount
B. Right issue
of trade debtors due to the fact that they allow a longer credit period - one of their
C. Offer for sale
main attractions to get more customers. Padimi's credit control history is good and
D. Direct offer
so far they do not have a bad history concerning any borrowings from banks. Chapter 8
Which of the following is the best short term financing method for Padimi to
sought after? 138. Which two of the following are trading risks faced by exporters?
A. Bills of exchange A. Credit risk
B. Debt factoring B. Liquidity risk
C. Term loans C. Capital risk
D. Loan stocks D. Inflation risk
Chapter 8 Chapter 8
139. A company has a financial problem and needs an injection of funds. From the
following list identify which would be classified as a source of short-term finance
133. Which financial instrument would be the most feasible option for a first-year for this company.
undergraduate student seeking to grow her teenage savings for the down payment A. Factoring
on her first car before she starts work 4 years later? B. Term loan
A. Deposits C. Commercial mortgage
B. Certificates of deposit D. Share capital
C. Treasury bills Chapter 8
D. Gilts
E. Shares 140. The following is the characteristic of financial instrument in the money
Chapter 8 market? ‘Issued by the Debt Management Office, which are longer-term
government debt that offers a large range of maturities (five to fifty years) and
134. Yoojung wants to start up her own entertainment company, Produce 101 Ltd. rates based on money market rates’
She has not started any businesses before. Which of the following options is not a A. Gilts
possible source of funds for her? B. Commercial paper
A. Savings C. Bonds
B. Mortgage on second apartment D. Certificate of deposit (CDs)
C. Borrow from friends & family Chapter 8
D. Borrow from bank
Chapter 8 141. Any person who brings together providers and users of finance, whether as
broker or principal, is known as
135. Any individual who helps a business grow by offering finance and support A. A business angel
especially during their difficult early stages is known as B. A venture capitalist
A. Business angels C. A merchant banker
B. Crowdfunding D. A financial intermediary
C. Financial intermediary Chapter 8
D. Venture capitalist
Chapter 8 142. Kendy is a sales manager of ABC Plc in UK. He is currently dealing with
James, a foreign buyer from China. To mitigate risks, James requests a bank in
136. Which two of the following are financial instruments offered by the China to issue a letter of credit in favour of Kendy. What type of the bank is this
government? known as?
A. Treasury bills A. Clearing bank
B. Commercial papers B. Merchant bank
C. Bonds C. Advising bank
D. Gilts D. Issuing bank
Chapter 8 Chapter 8
143. Walnut plc has not received payment from a particular customer. It has been B. Deposits
decided that Walnut plc would offer credit to the customer. However, because it is C. Certificates of deposit
a small business, credit offering may create cash flow problems. Which of the D. Gilts
following can help manage this risk? Chapter 8
A. Term loans
150. Which of the following is true regarding a company that has gone public?
B. Leasing
A. Improved company standing leading to increased profitability
C. Debt Factoring
B. Higher public trust earned leading to less scrutiny of company affairs required
D. Loan Stock
C. Required to trade for three years from date of going public
E. Mortgage
Chapter 8 D. Up to 75% of the company may be owned by its directors
Chapter 8
144. Pecan Ltd started a business a few years ago and has grown to a business
earning $500,000 revenue a year. Which of the following are the possible sources
151. Ron invested in some shares in ABC plc as part of his personal investment
of finance that Pecan Ltd is using?
plan. Which of the following describes an interest risk he may face?
A. Business Angels
A. The company goes into liquidation and is unable to repay all its stakeholders
B. Issue of shares
B. A financial scandal that results in a drop in share prices, missing the current
C. Loans
year's target
D. Borrowing from bank secured by lease or premises
Chapter 8 C. The monetary policy committee sets up a policy to address inflation
D. Prices of supplies are increasing
Chapter 8
145. Removed 152. Which of the following is a role of a corporate broker in terms of a company
going public?
146. With regard of the “Buying Asset Outright”, which of the following A. Co-ordinates all advisors
statements is true? B. Assesses whether flotation is appropriate
A. The lease period is less than the asset’s useful life C. Advices on market conditions and likely demand of shares
B. Ownership remains with the lessor D. Assists in drafting the prospectus
C. It is only possible to cancel the agreement during the term at significant cost Chapter 8
D. It is a short-term lease that can easily be cancelled 153. XYZ Ltd has just began trading, the director, Henry is worried that the capital
Chapter 8
brought into the business by him would be insufficient for the medium to long
147. Which money market financial instrument, requires a minimum investment of run, he would like to seek for your advice regarding source of funds to finance its
£500,000, has a duration for one month to six months, and is highly liquid and operations. On a side note, he is a risk seeker as he demands the highest return on
secure? its investment.
A. Bonds A. He shall apply for a 20 year term loan from the bank
B. Gilts B. He shall sell his treasury bills on the money market
C. Treasury bills C. He shall list his company
D. Commercial paper D. He shall get a non-recourse factoring
Chapter 8 Chapter 8
148. Which of the following is least likely to be an implication of a business facing 154. Select the one which is not a right of a primary bank.
cash shortages? A. Require the customer to pay up the overdrawn amount on demand
A. Poor industrial relations B. Act as a financial intermediation by giving out loans with the money deposited
B. Banks petitioning for winding up of business by the public
C. Loss of settlement discounts C. Decides on LIBOR
D. Loss of supplier goodwill D. Charge interest and bank charges
Chapter 8 Chapter 8
149. ABC Ltd is currently in possession of £1,000,000 cash, which it intends to use 155. ANC Ltd is going public. It would like to issue its new shares by offer for sale
to purchase machinery within a month's time. How should ABC Ltd invest this by tender. Which are procedures involved?
fund to minimise opportunity cost? I. Receive tenders by investing public.
A. Treasury bills II. Select the tender with the highest price.
III. Select the tender with the price nearest to the par value. B. It will take up more short-term finance
IV. Select the tender with the price that all shares would be sold. C. It matches its maturities before deciding to finance them short-term or long-
A. I, II term
B. II, III D. It will finance its assets using long-term debt
C. III, IV Chapter 8
D. I, IV
Chapter 8
156. 160. Choose the clearing system that matches its explanation.
I. Adam, a sole trader has purchased a car worth $120,000, he paid 20% as A. General clearing is used to pay salaries, standing orders and direct debits
deposit, and applied for hire purchase for the remaining. B. Electronic Funds Transfer is an electronic bank-to-bank same-day value
II. Adam has also brought in a washing machine into the business which requires payment system made within the UK in sterling
him to pay monthly instalments. He will not be responsible for any breakdowns of C. Faster Payments Scheme deals with amounts from $1 to $100,000 using either
the machine. the phone or the internet to make the instruction
D. CHAPS covers transfers of any size but there is a delay of 3 to 4 days
Chapter 8
Decide the source of finance described.
A. Both are “Leasing Asset”s 161. Natalie is the manager of Joy plc. She now wants to invest the cash surplus of
B. Both are “Buying Asset Outright” $600,000 into the money market but she is worried of the liquidity of her
C. Financing method (I) is “Leasing Asset” and method (II) is “Buying Asset company at the same time, which financial instrument should she get for her
Outright” company?
D. Financing method (I) is “Buying Asset Outright” and method (II) is “Leasing A. Treasury bills
Asset” B. Gilts
Chapter 8
C. Commercial paper
157. Lisa, who is a sole trader, makes soap bars out of the produce from her own D. Certificates of deposit
Chapter 8
olive plantations. She intends to expand her business to Australia. Her husband
disagrees as he thinks it would be too risky to do so. The customers will first order 162. Bobby, the anti-theft backpack by XD Design was first launched on the
from Lisa online and make online transfer before they ship the goods. There is a Internet via KickStarter in 2016. During their earlier stages, they do not have
30-days money back guarantee clause when buying from her. Yet, her husband is enough funds to start up this new project. From the information given above,
worried that the soap bars which arrive overseas would not be in the best which method did XD Design use to finance its business?
condition and not being able to arrive safely to the customer. But Lisa has a A. Business angels
relative in Australia who will help her deal with missing parcels. Which trading B. Crowdfunding
risk is her husband worried about? C. Venture Capital
A. Physical risk D. Alternative Investment Market (AIM)
B. Credit risk Chapter 8
C. Trade risk
D. Liquidity risk 163. Daniel is a sole trader who sells shirts. One day, he received an order worth
Chapter 8 RM50,000 from Sri Lanka. He is worried about the customer would fail to pay
him in the future. However, the accountant in the company advised him that there
158. Adam wants to trade with XYZ Ltd in Singapore. He is worried that the is one method he could use to reduce the risk if customer fails to pay, which
customer would not pay for the amount owed. What document would be useful? involves an issuing bank and an advising bank. What risk is Daniel facing and
A. Bill of exchange what method can he use to reduce the risk?
B. Letters of debit A. Credit risk; Bills of exchange
C. Treasury bill B. Trade risk; Letters of Credit
D. Cheque C. Credit risk; Letters of Credit
Chapter 8
D. Trade Risk; Bills of exchange
Chapter 8
159. Which of the following is true about an aggressive company from the risk 164. Which of the following is secured borrowing?
approach perspective? A. Hire purchases
A. It prefers to finance its assets by issuing new shares to the public B. Personal loans
C. Mortgages
D. Current account overdrafts

Chapter 8
165. Jamey plc are considering what method to raise equity for the company. After
having discussions for several weeks, they did not choose the retained earnings of
the company as their method because the company have limited retained earnings.
So, they chose another option. What is the most appropriate option that Jamey plc
would choose? And what is the factor to be considered when the company
chooses the particular option?
A. Option: Right issue, Factors: Fixed cost, variable cost and control
B. Option: Bonus issue, Factors: Issue costs, shareholder reaction, control
C. Option: New issues to public, Factors: Issue costs, public companies, staff
reaction
D. Option: Rights issues, Factors: Unlisted companies, control, shareholder
reactions
Chapter 8
166. Lazada received an order from Shirley, who lives in Singapore. Shirley
ordered a blue thermal lunchbox. Upon receiving the delivery, she opened the
parcel and came to realize that it was a green lunchbox with scratches on the
surface instead. Shirley refused to accept the product. What risk is Lazada facing?
A. Physical risk
B. Product risk
C. Trade risk
D. Export risk
Chapter 8
167. Ali is a sole trader of a small business. He is currently running out of cash to
finance his business due to all the debts that is owed by the customers. Which
source of finance is suitable for Ali to finance his business?
A. Primary markets
B. International markets
C. Bond markets
D. Debt factoring
Chapter 8
168. What is the right of the bank?

A. To charge reasonable bank charges and commissions over and above interest.
B. To use the customer's money in any way no matter what.
C. To be repaid overdrawn balances every month.
D. Cannot be indemnified against possible losses when acting on the customer's
behalf.
Chapter 8
1. What are the three basic aspects of the professional accountant’s work? 6. A professional accountant in public practice is in a firm providing professional
A. Financial management services that require accountancy or related skills. Which of the following services
B. Financial presentation require specific additional requirements for professional accountants?
C. Maintaining control and safeguarding assets A. Taxation
D. Financial reporting B. Assurance
Chapter 9 C. Forensic accounting
D. Insolvency
E. Corporate finance
2. ICAEW follows which type of code of ethics for its members?
F. Information and communication technology
A. Compliance-based approach Chapter 9
B. Rules-based
C. Ethics-based
D. Fundamental-based
Chapter 9 7. Which of the TWO following types of information will cause the confidence in
the capital market to erode?
A. Open information.
3. Which THREE of the following are principal requirements for initial admission to B. Inadequate information.
membership of the ICAEW? C. Asymmetric information.
A. Payment of the admission and subscription fees D. Accurate information.
B. Completion of at 400 days of training with an approved training organisation Chapter 9
C. Passing the ICAEW's professional examinations
D. Completion of a course of theoretical instruction 8. Which of the TWO followings are the principles that form the bedrock of
E. At least one pass at A level or the equivalent professional judgements, decisions, reasoning and practice?
F. Submission of a certified certificate of completion of training from an A. Congruence
institution of theorectical instruction B. Discipline
Chapter 9 C. Integrity
D. Objectivity
Chapter 9
4. Financial statements are prepared on the basis that the business will continue in
operation for the foreseeable future unless there is a clear intention or need for the 9. What is the objective of continuing professional development (CPD)
business to liquidate or scale back its operations. This is in line with which requirements?
accounting principle? A. To maintain expertise in a professional environment and individual career.
A. Accrual basis B. To maintain commitment in a professional environment and individual career.
B. Going concern C. To maintain integrity in a professional environment and individual career.
C. Materiality D. To maintain objectivity in a professional environment and individual career.
Chapter 9
D. Prudence
E. Consistency
Chapter 9 10. Coby makes use of his accounting skills to investigate fraud or embezzlement and
to analyse financial information for use in legal proceedings. Which of the
following roles of professional accountant in public practice is Coby playing?
5. Jack is an accountant in Kobe plc. Jack's job scope includes acquisition,
A. Forensic accounting
refurbishment and disposal of property. In a case, Jack needs to value the
B. Management consulting
property that need to be disposed. However, he thinks that he is not sophisticated
C. Information and communications technology
in valuation of property. Which of the following is true?
D. Financial management
A. Jack should leave the job to other professionals. Chapter 9
B. Jack should value the property himself because it is in his job scope.
C. Due to professional behaviour, Jack needs to value the property himself. 11. What is the objective of accrual basis of accounting?
D. Jack should value the property himself due to his responsibility. A. Match cash inflow with cash outflow
E. Non of the above B. Match revenue with profit
Chapter 9 C. Match revenue with expenses
D. Match profit and loss
Chapter 9
12. Which of the following is not the principal requirements for initial admission to 18. The Institute is a recognised professional regulator for each of the three reserved
membership of the ICAEW? areas which include the Audit Regulations, DPB handbook and Insolvency
A. Two passes at A level plus 3 GCSE passes or the equivalent. Licensing Regulation. Which of the following is not covered in the content of
B. Completion of at least three years' training with an approved training each set of regulation?
organisation. A. Eligibility
C. Payment of the admission and subscription fees. B. Codes and Standards
D. Passing the ICAEW's certificate level examinations. C. Conduct
Chapter 9 D. Competence
Chapter 9
19. Ethical issues are a matter of _______ (A/B) and the profession's _____________
13. Which of the following standards are produced by International Accounting (C/D) are protected, by upholding professional standards.
Standard Board (IASB)? A. Law and Regulation
A. Statements of Standard Accounting Practice (SSAPs) B. Law and Principle
B. International Financial Regulatory Standards (IFRSs) C. Reputation and Standing
C. International Financial Reporting Standards (IFRSs) D. Reputation and Competence
D. Financial Reporting Standards (FRSs) Chapter 9
Chapter 9
20. Which contents are covered in the 3 reserved areas of practice?
14. To ensure technical competence, ICAEW requires rigorous entry for their A. Eligibility
members. Which of the followings is correct? B. Professionalism
A. Submission of certificate of education C. Due Care
B. Completion of exactly three years training D. Competence
C. Completion of a course of theoretical instruction E. Objectivity
D. Three passes at A level only F. Conduct
Chapter 9 Chapter 9
15. To continue in membership, all professional accountants who do not engage in 21. Professional regulation of the accountancy profession by the ICAEW includes:
public practice must…. A. A requirement to hold Professional Indemnity Insurance (PII) in public
A. Implement the ICAEW Code of Ethics practice.
B. Be covered by professional indemnity insurance (PII) B. Specific additional requirements for accountants working in the reserved areas
C. Hold a Practising Certificate C. Rigorous education and entry requirements
D. Undertake continuing professional development (CPD) D. A requirement to uphold a high level of proficiency in the English language
Chapter 9 Chapter 9
16. The accounting principle that states a company should use the same accounting 22. Which THREE of the following are the reserved area of accountancy public
methods and procedures from one accounting period to the next is: practice?
A. Materiality principle A. Auditing and assurance
B. Consistency principle B. Investment business
C. Prudence principle C. Insolvency
D. Faithful representation principle D. Forensic Accounting
Chapter 9 Chapter 9
17. The accounting principle that states that unless there is a clear intention or need 23. The 'Code of Ethics for Professional Accountants', Section 8 discusses
for the business to liquidate or materially scale back to its operations, it will independence in assurance services in terms of a principles-based approach that
continue in operation for the foreseeable future is takes into account:
A. The going concern principle A. Audit firm financial safeguards
B. The accrual principle B. The public interest
C. The materiality principle C. Knowledge of the audit client's industry
D. The cost versus benefit principle D. Threats to competence
Chapter 9 Chapter 9
24. Stanley does not hold an accounting degree but he provides accounting services A. The fact that an accountant can provide absolute guarantee in helping the
for companies. He has many years of accounting experience. Which of the public make the right decisions
following THREE areas that Stanley is not allowed to provide his accounting B. Accountancy is technically complex, so accountants are necessary to provide
services in? advice to others
A. Taxation C. Accurate and open information can completely overcome the problem of
B. Statutory Auditing asymmetric information
C. Management Consulting D. Accountants possess the ability to detect and correct all fraud
D. Investment Business Chapter 9
E. Insolvency
29. Which TWO of the following are TRUE regarding the payment requirements for
F. Corporate Finance
Chapter 9 the initial admission to membership of ICAEW?
A. Admission fees
25. Identifying ethical dilemmas, understanding the implications and behaving B. Renewal fees
appropriately in line with a code of behaviour that is widely accepted by fellow C. Subscription fees
white-collars as being correct. This is the definition of : D. Registration fees
A. Ethics Chapter 9
B. Ethical behaviour
30. Which of the following will reduce the quality of financial reporting?
C. Professional Ethics
A. Revenue is matched with expenditure
D. Professional Scepticism
Chapter 9 B. Disclosure of the nature and extent of uncertainty
C. Overstate Asset, Understate Income
D. Take into account the substance and economic reality
Chapter 9
26. Which of the following best describes assurance?
A. The expression of an opinion or conclusion by a professional accountant in 31. Which of the following are the principal requirements for initial admission to
public practice which is designed to give absolute assurance to shareholders. membership of icaew? Choose TWO.
B. The expression of an opinion or a conclusion by a professional accountant in A. At least two passes at A level plus 3 GCSE passes or the equivalent
public practice which is designed to enhance the confidence of intended users. B. Completion of 450 days of training with an authorised employer
C. The expression of an opinion or a conclusion by a professional accountant in C. Passing at least half of the icaew professional examinations
public practice which is designed to enhance the corporate governance by D. Completion of a course of practical instruction
those charged with governance. Chapter 9
D. The work done by a professional accountant in public practice which is 32. Ned graduated from Pristine University with a Bachelor Accounting and Finance.
designed to detect every fraud and error in the financial statement. Which area can Ned be involved in without a professional qualification such as
Chapter 9
ICAEW?
A. Procurement
B. Probate
27. In order for a professional accountant to continue his/her membership, they must C. Investment Business
i. Obey institute's rules and regulations D. Insolvency
ii. Pay the subscription fee annually Chapter 9
iii. Undertake continuing professional development (CPD)
iv. Be covered by professional indemnity insurance (PII)
A. i,ii and iii 33. What is meant by assurance ?
B. i,ii and iv A. Expression of an opinion by a professional accountant to enhance the
C. ii,iii and iv confidence of the intended users
D. I,iii and iv B. Profession concerned with the measurement, disclosure and provision of the
Chapter 9
assurance to help managers to make resource allocation decisions
28. A professional accountant should maintain his integrity and expertise in order to C. Provision of the financial info about an entity to the external users to make
produce high quality and accurate financial reporting. Why is this necessary for decisions and for assessing the stewardship
the public interest and to support effective working in capital market? D. Comprises of the measurement, disclosure, preparation, and provision of the
assurance and advisory services
Chapter 9
34. The ICAEW Code of Ethics is an example of which of the following theoretical Statement 2: The approach taken by the ICAEW Code of Ethics is compliance-
approaches to ethical codes. based
A. A rules-based approach A. Both statements true
B. A compliance-based approach B. Statement 1 is true; Statement 2 is false
C. A framework-based approach C. Both statements false
D. A tick-box approach D. Statement 1 is false; Statement 2 is true
Chapter 9 Chapter 9
35. Legislation requires certain activities to be carried out by members of bodies that 40. There are 4 activities known as the reserved areas, which legislations requires to
are 'recognised professional regulators'. Which three of the following activities are be carried out by members of certain bodies which are 'recognised professional
included in such requirements? regulatory'. Which one of the following are included in such requirements?
A. Insolvency A. Management consultancy
B. Management consultancy B. Forensic Accounting
C. Investment business C. Taxation
D. Taxation D. Investment business
E. Payroll Chapter 9
F. Statutory audit
Chapter 9 41. Which THREE of the following are included in the ICAEW's entry and
educational requirements?
36. ICAEW Code of Ethics states out the fundamental principle of professional ethics A. Payment of admission and subscription fees
for professional accountants. Which of the following is stated as fundamental B. Completion of 400 days of training
principles in the ICAEW Code of Ethics? C. Submission of a certificate of suitability for membership signed by the
A. Transparency member responsible for training.
B. Confidentiality D. A minimum of 1 pass at A level or the equivalent
C. Independence E. Completion of a course of theoretical instruction.
D. Reliability Chapter 9
Chapter 9
42. “A person who: accepts a responsibility to operate in the public interest;
37. Which of the following is the reserved area in public practice? ‘professes’ to have skill resulting from a coherent course of study and training
A. Forensic accounting based on professional values; and continues to develop and enhance those skills
B. Probate by experience and continuing professional education." This definition, defines,
C. Taxation A. Professional
D. Financial management B. Accountancy
Chapter 9 C. Accountancy profession
D. Professor
38. Jinnie wishes to become a member of ICAEW. In relation to that, she is required Chapter 9
to
i. complete a course of theoretical instruction and passing all ICAEW’s 43. If there is (A or B), or if the information is available to some people and not
professional examinations others (C or D), then some or all investors are at a disadvantage thus confidence in
ii. complete 450 days of training with authorised training employer or training capital markets will erode.
principle A. Inconsistent information
iii. have 3A Level passes or equivalent B. Inadequate information
A. i and ii only C. Symmetric information
B. ii and iii only D. Asymmetric information
C. i and iii only Chapter 9
D. All of above
Chapter 9 44. Mr. Hamid works at an accounting firm called the BlueRed Ltd. BlueRed Ltd is
dedicated to high moral and ethical standards of conduct and will conduct its
39. Identify whether the following statements are true or false business with honesty, integrity and a strong commitment to compliance with all
Statement 1: The objective of the accruals basis of accounting is to match applicable laws. This Code of Ethics is based on the commitment to meet its
expenses with revenue earned obligations to all who have a personal, professional or financial stake in what the
company does, including the Board of Directors, shareholders, employees,
suppliers and host communities. Some obligations are direct and obvious, such as A. Completion of a course of physical fitness tests; Reserved areas: Statutory
striving to increase value for its shareholders. Other obligations stem from the audit, Investment business, probate and insolvency
BlueRed’s commitment to comply with all applicable laws. The Code summarizes B. Passing University Internal regulated tests; Reserved areas: Statutory audit,
the ethical principles that should guide all the employees and directors in their Investment business, probate and insolvency
daily work. Which of the following fits the description:- C. Payment of the admission and subscription fees; Reserved areas: Statutory
A. Compliance-based approach audit, Investment business, insolvency and probate
B. Complaisance-based approach D. Completion of a course of physiological examinations; Reserved areas:
C. Structure-based approach Statutory inspection of fraud, investment business, insolvency and probate
D. Ethics-based approach Chapter 9
Chapter 9
45. Which of the following is not required for ICAEW’s members who are engaged in
public practice :- 50. Which of the following is not a characteristic of the ICAEW code of ethics?
A. Pay the subscription fee annually A. It consists of principles
B. Implement the ICAEW code of ethics B. Flexible
C. Be covered by professional indiscretion insurance (PII) C. Encourages compliance
D. Hold a Practising Certificate D. General guidelines would not be developed
Chapter 9 Chapter 9
46. Zhao is one of the primary stakeholders of Blue plc. Which of the following will
help Zhao in decision making whether to continue to invest in the company?
51. Which of the tasks listed are performed by a company secretary?
A. Financial reporting
i) share registration
B. Management accounting
ii) chair meetings
C. Treasury management
iii) submitting management accounts to the registrar of companies
Chapter 9
iv) draft resolution for meeting
A. i and ii
47. ICAEW follows the ethics-based approach. Ethics-based approach encourages B. I and iii
compliances or ensures compliances? (A/B) Which two of the following are C. ii and iii
ICAEW's entry and education requirements? (C/D/E/F) D. i and iv
A. Ensures compliances Chapter 9
B. Encourages compliances
52. What is the purpose of professional indemnity insurance( PII )?
C. 2 passes at A level plus 3 GCSE passes or the equivalent
A. to protect accountants from non – payment of fees by clients
D. 3 passes at A level plus 3 GCSE passes or the equivalent
B. to protect clients from accountants’ negligence
E. Pay subscription fees annually only
C. to protect accountants from being liable for misdeeds by their employees
F. Passing ICAEW's professional examinations
Chapter 9
D. to protect accountants if partners become personally bankrupt
Chapter 9
48. ICAEW members who engage in public practice must apply additional
requirements. What is the additional requirements? (Select 2)
A. Obey the Institute's rules and obligations 53. What are the 3 actions that the investigation committee can carry out after the case
B. Implement the ICAEW Code of Ethics is valid but the member does not agree to the decision by the committee?
C. Undertake CPD A. Offer a publicised caution
D. Hold a Practising Certificate B. Consent order
E. Be covered by professional international insurance C. Formal Complaint to Disciplinary Committee
Chapter 9 D. Take no further Action
Chapter 10
49. Which of the following principal requirements for initial admission to
membership of ICAEW are correct? And which of the following are the reserved
areas of practice that can only be carried out professional accountants of certain
bodies which are recognised professional regulators? 54. Anyone is free to advertise as an accountant except in which two where statute
demands specific levels of competence?
A. Insolvency
B. Financial Audit B. professional conduct requirement

C. Investment Business C. dealing with professional misconduct by members
D. Funds Audit D. continuing responsibility for system's effectiveness
E. Treasury Chapter 10
F. Taxation
Chapter 10 61. Which of the following does not make up part of the Appeal Committee(AC)?
A. Chartered Accountants
B. Non Accountant ember
C. Non-accountant
55. Which THREE of the following are the three main roles of The Financial D. Lay person
Reporting Council (FRC) regarding the oversight of audit and accountancy? Chapter 10
A. Statutory oversight of the professional accountancy bodies.
B. Independent monitoring of the quality of the auditing function. 62. Which of the following represents the global organisation for the accountancy
C. Statutory oversight of the regulation of statutory auditors. professions
D. Non-statutory oversight of the professional accountancy bodies. A. CCAB
Chapter 10 B. IESBA
C. IFAC
D. ICAEW
Chapter 10
56. To be an effective part of the oversight of self-regulation, the FRC as the
independent disciplinary organ is: (choose 3) 63. Which of the following is the key participant of an effective oversight
A. Transparent mechanism?
B. Successful A. Any companies
C. Prospective B. Anyone from the public
D. Fair C. Regulators in any sector
E. Independent D. The government
Chapter 10 Chapter 10
57. Which TWO of the following are the key participants in an effective oversight 64. Statutory monitoring of the quality of audit is effected by
mechanism? A. The FCA
A. Government B. The FPA
B. Corporation's management C. The FRC
C. Professionals D. The ICAEW
D. Lawyers Chapter 10
Chapter 10
65. In relation to its membership the ICAEW has direct responsibility for the
58. The forum for discussion of matters affecting all the accountancy bodies in the following EXCEPT:
UK is called A. Professional conduct requirements
A. CCAB B. Statutory oversight of the regulation of statutory auditors
B. FRC C. Eligibility to engage in public practice
C. IFAC D. Dealing with professional misconduct by its members
D. FCA Chapter 10
Chapter 10
66. In breach of regulations relating to reserved areas, which of the following
59. Which of the following is FRC not engaged in? committees may be involved?
A. Setting standards for corporate governance A. ARC
B. Statutory Regulation of the accounting profession B. IC
C. Overseeing self-regulation C. DC
D. Monitoring and reviewing quality of audit D. FRC
Chapter 10 E. ILC
F. AC
60. Which of the following is not the role of the ICAEW? Chapter 10
A. entry and education requirement
67. Lillian always calls herself as an accountant in England and Wales. Is it legal for C. Overseeing self regulation
her to do so? D. Eligibility in reserved areas
A. Yes E. Acting as ultimate disciplinary body
B. No Chapter 10
C. Yes, provided she is a member of ICAEW.
74. When the complainant does not agree to the decision of Investigation Committee,
D. Yes, only in the reserved areas.
Chapter 10 the case will be referred to Reviewer of Complaints. Which of the followings is
correct about Reviewer of Complaints?
68. What approach should a member take if the member does not agree with the A. The member or firm need to pay a fixed sum of costs
Investigation Committee? B. It consists of five people
A. Make a formal complaint to the Disciplinary Committee. C. It consists of three people
B. Make a formal complaint to the Appeal Committee. D. It is an independent non accountant
C. Make a formal appeal to the court. Chapter 10
D. Make a formal announcement to the mass media.
Chapter 10 75. Which of the following is not the responsibility of FRC Conduct Division?
A. Professional oversight
69. Which of the following is not part of the conduct divisions? B. Professional disciplinary
A. Professional oversight C. Corporate actuarial review
B. Professional discipline D. Audit quality review
C. Corporate reporting review Chapter 10
D. Audit and assurance standards
Chapter 10 76. The Appeal Committee consists of five people. Which of the following
combination is correct?
70. Which of the following THREE are the aims of regulation of the accountancy A. 2 chartered accountants, 2 non accountant members and a chairman who holds
profession? a legal qualification
A. To satisfy prurient interest B. 3 chartered accountants, 1 non accountant member and a chairman who holds
B. Provide public interest with protection a legal qualification
C. Be transparent in its setting and enforcement C. 1 chartered accountant, 3 non accountant members and a chairman who holds
D. To delegates certain statutory powers to FRC a legal qualification
E. To ensure technical, educational and ethical standards are maintained D. 3 chartered accountants and 2 non accountant members
F. To protect vested interests from competition Chapter 10
Chapter 10
71. Which of the following is the FRC engagement?

A. Regulating audit profession 77. Which of the followings is the 'remedial action' that can be sought by The FRC?
B. Setting attendance for corporate governance, financial forecasting and A. Correction of the comparative figure in the next set of annual financial
financial behavior statements.
C. Acting as disciplinary body for accountancy profession only B. Sue for misrepresentation.
D. Outline new law and regulation C. Issue a reprimand.
Chapter 10 D. Fine the member or firm.
E. Take no further action.
72. The FRC consist of: F. Issue a consent order
A. Conduct Division Chapter 10
B. Code and Standards Division
C. Accountancy Division 78. Which accountancy bodies can provide a forum in which matters affecting the
D. Professional Practice Division profession as a whole in UK can be discussed and coordinated?
E. Reporting Division A. CCAB
F. Examination Division B. IFAC
Chapter 10 C. AAT
D. IESBA
73. Which TWO of the followings are the responsibility of FRC? E. FRC
A. Entry and education requirements Chapter 10
B. Dealing with complaints
85. Regulation of the accountancy profession (as well as other professions) can be
done via:
79. In relation to which of the following does the Financial Reporting Council have A. Directly by the Government through legislation
statutory powers? B. Self Regulation by the Institute
A. The supervision of the auditing profession by recognised supervisory bodies C. Delegated Legislation through setting of agencies by the Government
B. Professional discipline D. By a combination of methods.
C. Registration within the accountancy profession Chapter 10
D. Continuing professional education and development
Chapter 10
86. The Financial Reporting Council (FRC), through its Codes and Standards
Division, holds the code and standards in relation to audit and assurance as one of
80. In addition to its functions in relation to audit and accountancy, the FRC its responsibilities. What does it seek to develop? (Choose 2)
Professional Oversight Team also oversees regulation of: A. Develop specific rules that assurance providers must check with in every
A. The actuarial profession engagement
B. The insolvency profession B. Develop ethical standards for auditing and assurance services and their
C. The financial advisory profession effective application
D. The investment management profession C. Develop ethical standards for auditors in relation to their integrity, objectivity
Chapter 10
and independence.
Chapter 10
81. The body which monitors and acts on departures from requirements for financial
statements is 87. Mr. Lun, a chartered accountant was reported by one of his clients that he has
A. The FRRP failed to produce an accurate financial statement of the company. He is found to
B. The FPA be not guilty after he explained his motives and after the investigation on his
C. The MPC actions were done thoroughly. This stage of the complaint and disciplinary
D. The FCA procedure is referred as
Chapter 10
A. Arbitration
B. Consideration
C. Conciliation
82. The FRC has statutory responsibility for D. Investigation
A. Protecting ICAEW members from unqualified accountants Chapter 10
B. Monitoring the quality of investment business profession
C. Monitoring the quality of audit and financial reporting
D. Protecting the profession from competition
Chapter 10
88. Mr. Goldman has some problems with ABC Capital & Consultancy, his provider
of financial services of 5 years. Which of the financial regulators should he
83. Which of the following is not the function of IFAC? consult to settle this dispute?
A. Protect public interests and public policy issues A. Financial Conduct Authority
B. Provide guidance to those who work in public practice B. Prudential Regulation Authority
C. Converge worldwide's professional standards C. UK Listing Authority
D. Maintain the high quality of professional standards D. Financial Ombudsman
Chapter 10 E. Financial Reporting Council
F. Pensions Regulator
84. The "remedial action" sought by the FRC towards directors who do not Chapter 10
sufficiently explain apparent departures from the requirements are: (choose 2)
A. Voluntary withdrawal and replacement of revised financial statements
B. A fine followed by replacement of revised financial statements
C. Correction of the comparative figures in the next annual financial statements
D. Can apply to the court for an appeal
Chapter 10
89. John is an accountant from the XYZ accounting firm. He has a complaint against 93. Which TWO of the following is the responsibility of the conduct division of the
him and the Investigation Committee(IC) has found that there is a case to answer Financial Reporting Council (FRC)?
against John. They have decided to invite John to accept an unpublicised caution. A. Corporate reporting review
What is the difference between a consent order (CO) and an unpublicised caution B. Actuarial policy
(UC)? C. Professional oversight
A. Consent Order has no fine but Unpublicised Caution has a fine D. Corporate governance
B. Consent Order is a serious matter that will exclude the member(s) from Chapter 10
membership or suspend their practicing certificate and for the Unpublicised
94. On audit, FRC has statutory powers in relation to recognised supervisory bodies
Caution, the caution has to be included in the firm's or member's records.
(RSBs) and recognised qualification bodies (RQBs). Which of the following is
C. Consent Order has publicity but Unpublicised Caution does not have any
FALSE?
publicity
A. It can recognise and de-recognise them.
D. Consent Order has to pay a fixed cost but Unpublicised Caution does not have
B. It can require information from them.
to pay a fixed cost
Chapter 10 C. It can fine them for failing to meet their statutory responsibilities.
D. It can serve an enforcement order on them that they are failing to meet the
90. Which of the following TWO statements regarding the FRC Professional ethical principles.
Oversight team are true? Chapter 10
A. On accountancy, the FRC has statutory powers and it can investigate and
make recommendations on continuing professional education and
development. 95. Under ICAEW's complaint and disciplinary procedures, after the Disciplinary
B. On audit, the FRC does not have statutory powers but it can require Committee dismisses the case, members do have the right to appeal to the Appeal
information from the supervisory and qualifying bodies. Committee against the decision or order of the Disciplinary Committee as long as
C. On audit, the FRC has statutory powers and it can fine recognised supervisory they do this in writing within how many days of the DC's decision?
bodies (RSBs) and recognised qualification bodies (RQBs) for failing to meet A. 21 days
their statutory responsibilities. B. 20 days
D. On accountancy, the FRC does not have statutory powers but it can make C. 25 days
recommendations on professional conduct. D. 28 days
91. The financial statements of Billy plc, a listed company, departed from relevant 96. Choose whether the statements are true or false.
accounting standards and the provisions of the Companies Act 2006. The (i) The names of third parties are usually published after the results of hearings.
company is likely to be referred to which of the following regulatory bodies? (ii) At a DC hearing, Legal Assessor as an independent solicitor or barrister gives
A. The Financial Reporting Council the DC advice on law and procedures and involves in taking decisions.
B. The Financial Conduct Authority A. (i) is TRUE (ii) is FALSE
C. ICAEW B. (i) is FALSE (ii) is TRUE
D. The Prudential Regulation Authority C. Both statements are TRUE
Chapter 10
D. Both statements are FALSE
Chapter 10
92. What is the biggest difference between FRC's Accountancy Scheme and ICAEW's 97. In a scenario, the Appeal Committee already shortlisted 2 chartered accountants to
complaints and disciplinary procedures? be on the committee. Which of the combinations below, in addition to the 2
A. FRC's Accountancy Scheme is more transparent than ICAEW's complaints chartered accountants, will allow the AC to be fully formed?
and disciplinary procedures A. one ICAEW chartered accountant, one non-accountant member and a
B. FRC's Accountancy Scheme promotes independence more than ICAEW's Chairman
complaints and disciplinary procedures. B. one non-accountant member
C. one Chairman who is a barrister, one lay person and one ICAEW chartered
C. FRC's Accountancy Scheme is more expensive than ICAEW's complaints and
disciplinary procedures accountant
D. two non-accountants and a Chairman who is a solicitor
D. FRC's Accountancy Scheme is more formal than ICAEW's complaints and Chapter 10
disciplinary procedures.
Chapter 10
103. Which of the following statements are true, regarding the disciplinary
procedures against accountants?
98. Jack is an Executive Counsel. Which of the following is the NOT a power Jack A. The Investigation Committee (IC) has the authority to order a member or firm
has? to pay compensation.
A. Decide whether or not any accountant or accountancy firm should be subject B. Legal Assessor are allowed to be involved in taking decisions on behalf of the
to disciplinary proceedings. Disciplinary Committee (DC).
B. Seek information and documents from accountants and accountancy firm C. Members are allowed to appeal to the Appeal Committee (AC) against the
C. To fine the accountant or accountancy firm. order of Disciplinary Committee (DC) by writing in within 30 days of the
D. To file a complaint with the FRC’s Conduct Committee. DC’s decision.
Chapter 10
D. The names of third parties are usually not published on the ICAEW’s website
99. Lemon Brothers is a major investment firm. Due to the financial boom in the and magazine economia concerning about the details of IC consent orders.
Chapter 10
clean energy sector, Lemon Brother provided large loans to many clean energy
start-ups, without much consideration of risks. They were motivated by potential
enormous earnings from the boom. However recently, this action has been halted
by a regulatory body. Which one of the following is the regulatory body? 104. In theory, self-regulation provides a common sense, flexible approach because
A. Prudential Regulation Authority there is detailed knowledge within the profession of the issues facing it which
B. Financial Reporting Council should therefore result in a more efficient and effective result. However, self-
C. ICAEW regulation will not work if,
D. Financial Conduct Authority A. The regime does not seem to act against public interest
Chapter 10 B. Members of the profession ‘buy in’ to the process
C. There is unjustifiable self-protecting regulation
100. On accountancy, FRC can make recommendations but does not have statutory
D. Oversight mechanism contribute to the effective functioning of self-regulation
power and cannot investigate on matters such as education, training, continuing Chapter 10
professional education and development, standards, ethical matters, professional
discipline, registration and monitoring. 105. Which two of the following are responsibilities of the Conduct Committee
A. TRUE under FRC?
B. FALSE A. Audit and assurance
Chapter 10 B. Audit quality review
C. Accounting and reporting policy
101. Which of the following is INCORRECT about the roles of the Disciplinary D. Corporate reporting review
Tribunal ? Chapter 10
A. Order compensation to be paid
B. If complaint is upheld, Tribunal can fine the accountant or the firm and order 106. Identify whether the following statement is true or false.
them to pay all of the costs of the investigation and hearing 1) In relation to the FRC’s recommendations ICAEW must be committed to
C. If the complaint is upheld the Tribunal can fine the accountant or the firm and consider carefully and implement them within a reasonable period only.
order them to pay part of the costs of the investigation and the hearing 2)Financial Reporting Council (FRC) has statutory powers on regulation of
D. If the complaint is dismissed the Tribunal can order the FRC to pay legal costs auditing profession.
A. Statement 1 is true
Chapter 10 B. Statement 1 is false
C. Statement 2 is true
102. Who, in the FRC, makes the decision on whether an appeal against findings D. Statement 2 is false
from the complainant can reach the Appeal Tribunal? Chapter 10
A. Executive Counsel
B. Chairman of Disciplinary Tribunal 107. Which of the following financial services is not regulated by FCA?
C. Enforcement Division Officer A. Prospectus Rules
D. Senior Barrister B. UKLA
Chapter 10 C. UK Corporate Governance Code
D. Personal Pension
Chapter 10
108. In order to protect the public interest, the FRC's independent disciplinary 114. In the event of the FRC investigating cases on accountancy to make
mechanism is established with an aim to promote recommendations, the FRC has powers on all below, except
A. Responsibility A. Education
B. Fairness B. Professional discipline
C. Openness C. Removing accountants by law
D. Honesty D. Registration
109. Which of the following is under the section of the Codes and Standards 115. How many members are there in the Consultative Committee of Accountancy
Committee in the Financial Reporting Council? Bodies?
A. corporate governance A. 5
B. professional oversight B. 4
C. professional discipline C. 14
D. corporate reporting review D. 15
110. The Financial Reporting Council has statutory responsibility for monitoring 116. Bee plc isn't satisfied with the penalty imposed by the Disciplinary
the quality of Committee, in how many days must Bee plc appeal to the Appeal Committee?
A. the audit profession A. 10
B. the accountancy profession B. 28
C. the actuarial profession C. 30
D. corporate governance D. 60
111. If a member is invited to consent to an order by the ICAEW's Investigation 117. Which of the below are regulations issued by FCA that affect accountants in
Committee, this means that the course of their work for listed companies? Choose 3.
A. member is not excluded from membership A. Listing Rules
B. there is no case to answer B. Designated Professional Body Handbook
C. there is no publicity C. Disclosure and Transparency Rules
D. there are no financial penalties D. Prospectus Rules
Chapter 10 E. Prudential Regulation Authority
F. Financial Conduct Authority
112. Which of the TWO following accountancy profession is a member of the Chapter 10
Association of Accounting Technicians (AAT)?
A. ICAS
B. CIPFA
C. ACCA 118. Which of the below is not the key participant in an effective oversight
D. CAI mechanism?
Chapter 10 A. Members of the profession
B. Regulators
113. A recent money laundering case of MMM Plc has raised the awareness of the C. Accountants
public and strongly affected the public interest. FRC has decided to investigate the D. Members of the public
matter and appointed a Disciplinary Tribunal to decide on this matter. Which Chapter 10
combination do you think will be the most suitable one to appoint as the members
of the Disciplinary Tribunal? 119. A complaint against Vernon & Co has just been brought to the attention of
A. A teacher, an employee of FRC and an accountant ICAEW's Professional Standards department. The complaint is already in the
B. A lawyer, a doctor, and an accountant. public domain and is so serious that it might affect the reputation of the
C. A company secretary, a member of FRC, and an accountant accountancy profession in general. In such circumstances, the department may
D. A lawyer, an actuary, and a doctor. refer the matter straight to
Chapter 10 A. the FRC's Professional Discipline team within its Conduct Committee,
running the Accountancy Scheme
B. the FRC's Professional Oversight team 125. Which TWO of the following accountancy professions are sponsors of the
C. the FRC's Audit Quality Review Committee within its Conduct Committee Association of Accounting Technicians (AAT)?
D. the Financial Conduct Authority A. CIPFA
Chapter 10 B. ACCA
C. CAI
120. One of his clients has complained about Bill, a chartered accountant. The
D. ICAS
initial stage of ICAEW's complaints and disciplinary procedure will involve trying Chapter 10
to find a practical solution such as giving an explanation or providing information
to solve the problem. This stage of the process is referred to as 126. Which of the following is the correct sequence regarding the procedure for
A. consideration complaints at ICAEW?
B. arbitration A. Investigation, Conciliation, Disciplinary proceedings
C. investigation B. Conciliation, Disciplinary proceedings, Investigation
D. conciliation C. Conciliation, Investigation, Disciplinary proceedings
Chapter 10 D. Arbitration, Investigation, Disciplinary proceedings
Chapter 10
121. Through its IESBA Code of Ethics, the International Federation of
Accountants (IFAC) encourages accountants worldwide to adhere to five core
professional principles. Which of the following is among those principles?
127. The Appeal Committee consists of 5 people in their committee. Which of the
A. Expertise
following combination is correct?
B. Confidentiality
A. 3 chartered accountants and 2 non-accountant member
C. Reliability
B. 2 chartered accountants and 3 non-accountant member
D. Courtesy
Chapter 10 C. 2 chartered accountants, 2 non accountant members and a chairman who holds
a legal qualification.
122. The financial statements of Aaron plc, a listed company, depart from relevant D. 3 chartered accountants, 1 non accountant member and a chairman who holds
accounting standards and the provisions of the companies Act 2006. The company a legal qualification
is likely to be referred to which of the following regulatory bodies? Chapter 10
A. The Prudential Regulation Authority
B. The Financial Conduct Authority
C. ICAEW 128. In the FRC, who makes the decision on whether an appeal against findings
D. The Financial Reporting Council from the complainant can reach the Appeal Tribunal?
Chapter 10
A. Senior Barrister
B. Chairman of Disciplinary Tribunal
C. Enforcement Division Officer
123. The Finance Director of Run plc is a chartered accountant. She has been told D. Executive Counsel
that, in respect of Run plc's financial statements, she could be subject to Chapter 10
disciplinary proceeding by the Professional Standards departments of ICAEW, or
129. Which of the following bodies does NOT sponsor the association of
by the FRC's Professional Discipline team. The latter will only be involved if the
accounting technicians (AAT)
matter raises issues affecting
A. CAI
A. the public interest
B. CIMA
B. the independence of the statutory auditors
C. ICAEW
C. corporate governance
D. CIPFA
D. international accounting standards Chapter 10
Chapter 10
130. FRC has statutory powers over:
124. Which TWO of the following, are part of the conduct committee under FRC?
A. Both Accounting Training and Professional Conduct Requirement.
A. Corporate governance
B. Audit quality review B. Neither of Accounting Training not Professional Conduct Requirement.
C. Only on Accounting Training.
C. Accounting and reporting policy
D. Professional Discipline D. Only on Professional Conduct Requirement.
Chapter 10
E. Audit and assurance standards
Chapter 10
131. Arrange the ICAEW complaints and disciplinary procedures in the correct Chapter 10
order.
I. conciliation
II. review of complaints 136. Who can bring complaint against ICAEW's accountants? (A/B/C). What is the
III. investigation committee most common procedure to handle ICAEW complaints and disciplinary
IV. initial investigation procedure? (D/E/F).
A. I, IV,III,II A. Firms, clients, other accountants
B. IV, I,III,II B. Anyone
C. I, III, IV, II C. Firms, clients, other accountants, other regulators, members of the public and
D. III,I,IV,II ICAEW itself
Chapter 10 D. Conciliation, IC, AC
E. Conciliation, IC, DC
132. Which of the following are not powers of the Executive Counsel?
F. Conciliation, DC, AC
A. To require participating accountants professional bodies to provide all Chapter 10
documents
B. Seek information from accountants & accounting firms
C. To require accountants and accountancy firms to give evidence to a tribunal
D. To search documents from accounts and accountancy firms 137. ICAEW's members can appeal against DC's decision to the AC. However,
Chapter 10 what is the maximum days they can take to do so after DC's decision? (A/B).
What are the 2 ways that FRC can take on a disciplinary case? (D/E/F).
133. Which TWO of the following, does the FRC uphold as the independent A. Must do in writing within 28 days
disciplinary body? B. Must do in writing within 30 days
A. Hearing of the tribunal are normally open to the public. C. Self-referral
B. One officer of the FRC can be appointed to a tribunal but the tribunal must D. Receive complaints
consists of at least 50% non chartered accountant E. Referrals from an accountancy body
C. Firms under investigation are entitled to be legally represented by it's firm's Chapter 10
professional standards department.
D. Legal representatives of the firms under investigation are entitled to present
evidence on the firms behalf. 138. Are these following statements true? Tribunal hearings are normally open to
Chapter 10
public except in exceptional circumstances. (A/B). When a complaint is dismissed
134. Which of the following enables the profession to speak with a unified voice to the Disciplinary Tribunal can order ICAEW to pay legal costs. (C/D).
the government? (A/B). Which of the following provides a forum in which A. TRUE
matters affecting the profession as a whole can be discussed and coordinated? B. FALSE
(C/D). Anyone is free to advertise as an 'accountant' and offer the full range of C. TRUE
accountancy services, except in the reserved areas. Anyone or anyone in reserved D. FALSE
Chapter 10
areas offers accounting services in the UK must be supervised for money
laundering purposes? (E/F) 139. To be an effective part of the oversight of self regulation, the FRC as the
A. IFAC independent oganisation must be :
B. CCAB A. Transparent, Dependent and Honest
C. IFAC B. Repellant, Independent and fair
D. CCAB C. Just and fair, Honest, translucent
E. Anyone D. Fair, independent and transparent
F. Anyone in reserved areas Chapter 10
Chapter 10
140. Giant & Co, a firm of chartered accountants, is the subject of an ICAEW
135. Which 3 main roles are played by FRC's Professional Oversight team? disciplinary procedure. Its senior partner has been told by a colleague that if the
A. Non-statutory oversight of the professional accountancy bodies DC, which is the Disciplinary Committee decides a penalty should be imposed on
B. Statutory oversight of the professional accountancy bodies the firm it has the power to
C. Statutory oversight of the regulation of statutory auditors 1) fine the firm
D. Non-statutory oversight of the regulation of statutory auditors 2) take away the firm's practising certificate
E. Independent monitoring of the quality of the auditing function
3) offer an unpublished caution

4) exclude the firm from membership of ICAEW.
A. 1,2,4
B. 1,2,3
C. 2,3,4
D. 1,3,4
Chapter 10
141. In relation to the FRC's recommendations, ICAEW:

A. Must implement them
B. Must consider them superficially
C. Should give reasons in writing for not doing so
D. May implement them within any period
Chapter 10
142. Which of the following are the responsibilities of the Codes and Standards
Committee?
i) professional oversight
ii) corporate governance
iii) audit and assurance standards
iv) professional discipline
A. i and ii
B. ii and iii
C. iii and iv
D. i and iv
Chapter 10
1. Which is the stewardship perspective of corporate governance? 7. Which Two of the following are the types of financial systems?
A. Directors should balance the interests of shareholders and other stakeholders A. Bank-based systems
B. Directors to act in the best interest of the company. B. Economic-based system
C. Directors should aim to achieve long term sustained value for shareholders C. Market-based systems
D. Directors should encourage the efficient use of resources D. Customer-based system
2. Which THREE of the following are the reasons of organisation for introducing 8. Which of the following is true about corporate governance?
ethical codes? A. It is to ensure the company meets objectives of its owners only.
A. Communication B. Based on stewardship perspective on corporate governance, directors must act
B. Sustainable success can be achieved in the best interests of the company when using company's resources.
C. Risk Reduction C. There is a shareholder perspective on corporate governance.
D. Higher standard in the eye of public D. According to corporate perspective on corporate governance, company should
E. Compliance with UK corporate governance rules balance the interests of stakeholders and shareholders to achieve short-term
Chapter 11 sustained value for shareholders.
Chapter 11
3. Bank-based financial systems are commonly seen in France, Germany and Japan.
The bank-based financial system be charactirised as follow 9. Paper plc. is a medium sized public company that sells books. The board of
A. Bank lending is the most important source of business finance directors meet irregularly and are often cannot be contacted by the shareholders as
B. Bank will often have seats in the board they are frequently playing golf. The board often fails to consider the
C. There is less regulation compared to market-based system organisation’s risk and activities and make decisions merely based on their
D. Household prefer to bear little risk and so they will often invest in physical instinct. Which of the following two are the corporate governance issues at Paper
asset which is more secure plc.?
Chapter 11 A. Domination of the board
B. No involvement by the board
C. Lack of supervision of employees
4. Which are the five key elements of good corporate governance?
D. Misleading financial statements and information
A. Leadership, Effectiveness, Accountability, Remuneration, Relations with
E. Lack of contact with shareholders
Shareholders Chapter 11
B. Professional competence and due care, Integrity, Confidentiality, Objectivity,
Professional behaviour 10. Which THREE of the following are key elements of good corporate governance:
C. BOD, Senior Management, Shareholders, External and Internal Auditors A. Senior management
D. Openness, Accountability, Reducing potential for conflict, Reconciling B. Customers
stakeholders'/directors' interests, Good business ethics C. Suppliers
Chapter 11 D. Shareholders
E. The government
5. The OECD argues that corporate governance problems arise because
F. External auditors
A. Ownership and control is separated Chapter 11
B. Managers always act in their own self interest
C. Profit maximization is the main objective of organizations 11. Josephine works in A Ltd and often stamps out on poor behavior. This is an
D. Stakeholders have differing levels of power example of which of the following attribute?
Chapter 11 A. Openness
B. Courage
6. Where an organization takes into account the effect its strategic decisions have on
C. Honesty
society, this is known as:
D. Fair mindedness
A. Corporate governance
E. Integrity
B. Business policy
F. Transparency
C. Business ethics Chapter 11
D. Corporate social responsibility
Chapter 11 12. A Ltd is a medium sized limited company that produces a range of water bottles.
The board of directors consists of executive directors and non-executive directors.
All directors receive bonuses based on sales. What are the corporate governance 18. The OECD Principles ensure that timely and accurate disclosure is made on all
issues at A Ltd? material matters, which two are the principles emphasis on?
A. Lack of contact with shareholders. A. External audit
B. Inadequate control B. Internal audit
C. Lack of transparency C. Provision of advise and analysis
D. Short-term view. D. Avoidance of insider trading
13. Simon is one the executive directors of A Ltd. He is always aware of what is 19. Which of the following is not a characteristic of bank-based financial system?
going on and knows that doing the right thing is the right thing to do. Which of A. The population has risk-adverse attitude towards financial matter.
the following attribute of ethical director is shown by Simon? B. Markets are volatile and speculative.
A. Openness C. Households have greater access to investments in physical assets.
B. Fair mindedness D. Bank and businesses are highly integrated.
C. Ability to listen Chapter 11
D. Courage
Chapter 11 20. UK and US systems have traditionally been (A or B). One of the characteristics of
this financial systems is markets are less important than banks for long-term
14. Which of the following two are the objectives for a code of ethics that a company finance (C or D).
should have in mind? A. Bank-based financial systems
A. To improve behaviour B. Market-based financial systems
B. To improve performance C. TRUE
C. To improve efficiency D. FALSE
D. To improve productivity Chapter 11
Chapter 11
21. Which of the following three characteristic that an ethical leader should have?
15. Which of the following THREE are part of the Nolan principles established by the A. Objectivity
Committee for Standards in Public Life? B. Responsibility
A. Integrity C. Fair-minded
B. Responsibility D. Openness
C. Honesty E. Honesty
D. Objectivity Chapter 11
E. Fairness
22. Which of the following element of structure for the board of directors is elected
F. Trust
Chapter 11 by shareholders and employees, often comprising a series of committees with
delegated powers?
16. Governance incorporates all of the following EXCEPT A. Supervisory board
A. concepts of ethics B. Management board
B. risk management C. Unitary board
C. performance review Chapter 11
D. stakeholder protection
Chapter 11
23. Which of the following is not one of the five OECD Principles of Corporate
17. Which of the following are not the symptoms of poor corporate governance? Governance?
A. Domination of the board A. Recognise the rights of stakeholders and shareholders
B. Inadequate control function B. The equitable treatment of all shareholders
C. Emphasis on long-term profitability C. Timely, accurate disclosure of material matters
D. Misleading financial statements and information D. Promote transparent and efficient financial reporting
E. Lack of contact with shareholders Chapter 11
Chapter 11
24. In United States, the population has a risk seeking attitude towards financial E. Objectivity
matters. United States' financial system is: F. Responsibility
A. A bank-based system Chapter 11
B. A market-based system
30. How can a management identify when there is a SERIOUS conflict of interest in
C. A shareholder system
relation to corporate governance?
D. A stakeholder system
Chapter 11 A. Domination by a small group
B. Financial collapse without warning
25. The body responsible for promoting high standards of corporate governance in the C. Lack of supervision
UK is the: D. Lack of contact with shareholders
A. FRC Chapter 11
B. OECD
31. The ability of markets to allocate resources efficiently within a financial system is
C. CCAB
often restricted by market imperfection. Which TWO of the following are the
D. Bank of England
Chapter 11 examples of market imperfection associated with financial markets?
A. Jimmy is a fund manager with Banana Ltd. He knows that Banana Ltd is about
26. The board of directors of GGWP Inc. encourages the efficient use of resources to announce a successful takeover and that its share price will rise
through efficient investment and requires accountability from the company's significantly as a result. He buys 1,000 shares in Banana Ltd in his mother’s
senior management to shareholders for the way it has managed and taken care of name so he can make a profit.
those resources. There are four broad perspectives on what the objectives of B. Janny is the CEO of Elephant Ltd. She sells stock after discovering that the
corporate governance should be. Which of the followings is the perspective taken company will be losing a big government contract next month.
by the board of directors of GGWP Inc.? C. Jacky is a businessman. He deliberately understated his income to reduce his
A. Public policy perspective tax liability.
B. Stakeholder perspective D. John is a new junior accountant in Banana Ltd. Banana Ltd offers different
C. Corporate perspective types of courses. John discovered that there’s a few payment received in
D. Stewardship perspective advance is bank in into the Banana Ltd.'s account but is transferred out to
Chapter 11 another account in oversea. The
Chapter 11
27. Mr. Gomez, a member of a supervisory board of a German based automobile
company found that Mr. Muller from the management board has failed to 32. Thristan plc is a FTSE 350 company. As a consequence, the company
complete his delegated task several times. Without hesitation, Mr. Gomez decided A. must comply with all the requirements of the UK Corporate Governance Code
to suspend Mr. Muller and appoint a substitute for him as he has already warned B. may in particular circumstances, depart from the supporting principles and
Mr. Muller regarding this issue several times in the past. Has Mr. Gomez acted provisions of the UK Corporate Governance Code
within his region of authority? C. can be flexible in how it applies the UK Corporate Governance Code
A. Yes D. is not affected by the requirements of the UK Corporate Governance Code
B. No Chapter 11
Chapter 11
33. Which of the following statements is TRUE?
28. In both bank-based and market based financial systems, financial intermediation is A. No discrimination on certain grounds is one of the statutory requirements of
of increased importance because of its ability to address the market imperfection all companies.
of B. Social responsibility is how far a company exceeds the minimum obligations it
A. Monopoly owes to shareholders by virtue of regulations and corporate governance.
B. Asymmetric Information C. Employee will normally only do whistle-blowing once they have tried but
C. Trade Barriers failed to get the problems addressed internally
D. Tariffs and quotas D. It is a legal requirement for ICAEW’s members in business to implement the
Chapter 11 ethical audit.
Chapter 11
29. Which of the following TWO are the ethical leadership qualities of leaders ?
A. Honesty 34. Nice Plc. has a very low employee turnover rate due to their healthy working
B. Accountability culture. The Board of Directors also decided to upgrade the factory's emission
C. Transparency system to reduce the amount of carbon dioxide being released, and at the same
D. Openness time, increase production levels in order to compete with their rival. Nice Plc.'s
extensive retail network also stretches beyond cities to less-urban, rural areas, 39. All of the four perspectives on corporate governance emphasise on the company’s
distributing not just their products, but also recruiting talents from these areas. shareholders.
What objective does the corporate governance of Nice plc take? A. TRUE
A. Public policy perspective B. FALSE
B. Stakeholder perspective Chapter 11
C. Corporate perspective
40. Market-based financial systems are said to be for the risk seekers, daring
D. Stewardship perspective
Chapter 11 individuals and individuals that are actively involved in the stock market. Identify
the following source of funds for market-based financial systems in order of
35. Country Country X is a small country that does not have much land for importance.
development. Most of the households are in the middle income segment and A. Markets > Retained Earnings > Banks
prefer to save the money since there is not much investment that can be done. The B. Markets > Assets > Retained Earnings
market is volatile, even though strict regulations are implemented to control the C. Retained Earnings > Markets > Banks
market. What kind of financial system would apply to Country X? D. Retained Earnings > Markets > Assets
A. Market-Based system Chapter 11
B. Shareholder system
41. In the country of The United States, the population has greater access to
C. Bank- based system
investment in physical assets such as property. Their financial system is likely to
D. Corporate system
Chapter 11 be
A. A market- based system
36. The board of directors of King Plc. are always aware of the company's situation B. A agency system
and take the right decisions to improve the company. They also encourage C. An investment system
employees to give out suggestions regarding ideas to improve the company via an D. A bank- based system
Employee Suggestion Scheme, which rewards the best idea with Tasco coupons. Chapter 11
Which two characteristics of ethical leadership, according to Philippa, are being
42. Which of the following is NOT the underlying principle of the good corporate
shown?
governance?
A. Courage
A. Probity
B. Openness
B. Transparency
C. Ability to listen
C. Sustainability
D. Fair mindedness
Chapter 11 D. Resilience
Chapter 11
37. Bryan is the manager of the marketing department. He is known to be independent
43. In a country which banks have a long term relationship with the businesses they
and does things the unorthodox way. He does not hold back in pointing out the
lend to, holding equity and being involved in decision making, the financial
faults of his employees and often ignore the thoughts voiced out by fellow
system and the households’ attitude to risk is likely to be
employees in achieving the targets set. Which of the TWO ethical leadership
A. Market-based & less risk averse
qualities does Bryan lack?
B. Bank-based & risk averse
A. Fair mindness
C. Market-based & risk averse
B. Openness
D. Bank-based & less risk averse
C. Courage Chapter 11
D. Ability to listen
E. Honesty 44. Determine whether the following statements are true of false.
Chapter 11 1. The shareholder-led approach is a governance structure consist of only codes of
practice as seen in the UK's Corporate Governance Code.
38. The board of directors in HJ Inc., a German company, at the supervisory board are
2. In a dual board structure, the role of the management board is to create formal
confused with their power. Which of the following is not the characteristic of a
reports on policy, financial performance, and the state of company's affairs.
supervisory board?
A. Statement 1 is True
A. Perform independent reviews
B. Convene shareholder meetings
C. Elected by shareholders only C. Statement 2 is True
D. Inspect books and records Chapter 11
Chapter 11
45. Which TWO of the following definitions correctly identify the attributes of ethical premium product at high price using substandard materials. Which of the
leadership by Phillippa Foster Back? following poor corporate governance symptoms are NOT shown in the situation
A. Openness: Willing to learn and encourage others to learn above?
B. Openness: Considerate and cautious in managing expectations A. Domination of the board
C. Courage: Determined and direct B. Lack of contact with shareholders
D. Courage: Independent and have the courage to challenge the status quo C. Misleading financial statements and information
Chapter 11 D. Emphasis on short-term profitability
Chapter 11
46. Which of the following act protects employees that make the decision for whistle- 51. Wan Chying is a senior manager working in ZuoAnNi's plc. One day, she walked
blowing? past the CEO's office and overheard the conversation between the CEO and Dr.
A. the Public Interest Disclosure Act Zhi Yan about manipulating financial information on purpose. What should Wan
B. the Companies Act Chying do?
C. the Freedom of Information Act A. Pretend she heard nothing and walk away
D. the Data Protection Act B. Check with the audit committee
Chapter 11 C. Investigate it secretly and tell it to her parents
47. Which of the following is not considered in the Nolan principles of business D. Whistle blow to the other directors/ shareholders
Chapter 11
values?
A. Authorisation 52. Mango Plc is a public limited company which produces biscuits. The board of
B. Objectivity directors seldom have meetings and recently the director of the Mango Plc has
C. Openness introduced a new flavour of biscuits to the market. However, the director is
D. Accountability unaware that there is an intense competition in the market with a few closed
Chapter 11 competitors of Mango Plc are dominating it. What symptom of Mango plc has
48. Different corporate governance systems reflect different ways in which companies shown which indicates that there is a poor corporate governance?
are managed and controlled by different board structures. The following A. Domination of the board
statements have been made about the structure of a board of directors. B. Lack of contact with shareholders
Statement 1: In the dual board structure, the supervisory board is elected by C. Misleading financial statements and information
shareholders only. D. No involvement by the board.
Chapter 11
Statement 2: A unitary board is only responsible for management of the company.
Are these statements true or false? 53. Hazel is a manager in Pretzel ltd, she is honest in what she does, and is always
A. True False considerate to others by listening to their opinions. She notices that there is a fraud
B. False True in her company's operating system, but she decided not to take any actions as she
C. True True is afraid that she may be retaliated. According to Philippa Foster Back, what
D. False False attributes and behaviours of ethical leaders had Hazel disobey?
49. Yie Chern is one of the board of director in BF Company. According to Philippa B. Fair-mindedness
Foster Back, which THREE is NOT the key element of ethical leadership? C. Accountability
A. Fairness D. Integrity
Chapter 11
B. Ability to listen
C. Courage 54. Institutional shareholders are influential in both bank-based financial system
D. Objectivity countries and market-based financial system countries, why?
E. Honesty A. Intermediaries are widely used
F. Responsibility B. There is more government regulation
Chapter 11 C. Households prefer less risk
50. Deer plc’s board of directors consist of 6 members. Mary, Jane and Peter are D. Households invest more on physical assets.
Chapter 11
relatives who hold most of the power in the board of directors. All of the members
of board of directors agreed to change their company’s financial statements to
show to the public that the company is worth investing. Deer plc is now selling a
55. In countries like the US and UK, what approach do they emphasize on in their 61. Which if the following two indicates that XYZ Ltd has poor corporate governance
governance structure? in the organisation?
A. Dual Board A. External auditors given independence on scrutinizing company records
B. Shareholder-led approach B. Lack of contact with shareholders
C. Principles-based approach C. Regular involvement by the board on organisation activities
D. Supervisory Board D. Major emphasis on short term profitability
Chapter 11 E. Internal auditors given independence on scrutinizing company records
Chapter 11
56. The body responsible for promoting high standards of corporate governance in
UK is 62. A company should have three objectives for a code of ethics in mind :
A. FRC A. To improve the immediate profitability of company
B. IFRS B. To improve behaviour
C. IFAC C. To improve performance and build value
D. OECD D. To reduce market imperfections such as cost of transaction
Chapter 11 E. To build the company's reputation and trust of stakeholder
Chapter 11
57. How can an ethical culture be promoted in a business?
A. ethical leadership 63. John is the senior manager of Jack Ltd and is an ethical leader. John is always
B. code of ethics aware of what is going on and know that doing the right thing is the right thing to
C. policies and procedures do. Besides that, he is always considerate and cautious in managing expectations
D. All of the options of his employees. The attributes that are displayed by John by his behaviours are:
B. Courage
58. In both bank-based and market-based financial system, financial intermediation is
C. Ability to listen
important to address D. Honesty
A. monopoly
E. fair mindedness
B. trade barriers Chapter 11
C. duopoly
D. asymmetric info 64. There is no standard way in which a 'serious' conflict of interest becomes
Chapter 11 apparent. It may become most evident by:
A. Disputes over director's remuneration.
59. The members of the supervisory board are elected by the shareholders to
B. Employee accepts free gifts from company who is a customer.
supervise
C. Recommending shareholders to accept certain takeover bids and offers.
A. executive director
D. Male manager dates a female employee who reports to him.
B. non executive director Chapter 11
C. employees
D. external auditor 65. Caution Ltd is a large manufacturing company which produces chemical products
Chapter 11 for cosmetic companies. Their factories are situated at the outskirts which is
inhabited by a large population of people. Caution Ltd.'s management board
60. The following statements have been made about objectives of corporate
decided to offer job opportunities to the community since they needed a huge
governance.
number of workers and the communities there need jobs to support themselves.
Statement I: The corporate perspective on corporate governance is the view that
Also, Caution Ltd is very strict with their procedures of getting rid of their factory
law requires directors to act in the best interest of the company.
waste to ensure that they do not pollute the water source in the area. Caution Ltd
Statement II: Corporate governance is a structured system for direction and
also has strict internal control regarding to their raw materials which is a key part
control of a company that has established rules and procedures for making
in their operations. Their shareholders are satisfied with their decisions and fully
decisions about the company's affairs.
supported it. Decide which two are relevant to Caution Ltd.'s corporate objectives.
A. Statement I : True. Statement II : False
A. Stakeholder perspective
B. Statement I : False. Statement II : True.
B. Corporate perspective
C. Statement I : True. Statement II : True.
C. Stewardship perspective
D. Statement I : False. Statement II : False D. Public policy perspective
Chapter 11
Chapter 11
66. According to the Stewardship Theory, principal and who is the agent? structure for the board of directors that Mr. Rowen is in, and identify the attribute
A. Shareholders = Agent; Managers and directors= Principal that Mr. Rowen has?
B. Shareholders = Principal; Managers and directors = Agent A. Dual board, openness
C. Both are Principal B. Supervisory board, ability to listen
D. Both are Agent C. Management board, honesty
E. There is no correct answer D. Unitary board, ability to listen
67. What concepts are incorporated in governance? Choose three. 72. The following statements have been made about code of ethics and ethical audits.
A. Ethics Statement 1: Code of ethics can be used to describe what the company aims to do
B. Risk management if an employee highlights unethical behaviour and abuse within the company.
C. Shareholder protection Statement 2: Ethical profile can be used to identify specific problem areas within
D. Stakeholder protection the company and provide guidance for individuals within the company as to how
E. Risk assessment to act .
Chapter 11 A. Both statements are True
B. Only first statement is True
68. In a far away country Analia, the residents are investing their money via
C. Both statements are False
intermediaries as the markets in the country are very volatile and speculative.
D. Only the second statement is True
I. Decide if Analia is a (A, B, or C) Chapter 11
II. The government regulation in Analia is (D, E, or F).
A. Bank-based system 73. Infinite Plc is a medium sized public company that produces a range of
B. Shareholder-based system components used in the manufacture of cars. The board of directors of the
C. Market-based system company aims to align the interest of shareholders and companies with those of
D. Comparatively more regulated than market-based system other stakeholders and act in the best interest of the company required by law.
E. Comparatively more regulated than shareholder-based system Which pairs of followings are the objectives of corporate governance taken by the
F. Comparatively more unregulated than bank-based system board of directors of Infinite Plc?
Chapter 11 A. Public and stewardship perspective
B. Stakeholder and corporate perspective
69. In the Germany, a supervisory board structure is used. The supervisory board has
C. Public and corporate perspective
powers to (Choose 2) :-
D. Stakeholder and stewardship perspective
A. Request information from members of the unitary board. Chapter 11
B. Receive formal reports on policy, financial performance, the state of
company’s affairs and exceptional occurrence. 74. Governance extends beyond management to take explicit account of stakeholders
C. Convene stakeholder meetings. but stakeholders' interests can often be in conflict. Which of the following are the
D. Perform independent reviews. symptoms of a serious conflict of interests? And what are the stakeholders'
Chapter 11 governance needs?
A. Symptoms: financial collapse without warning, directors' remuneration;
70. Rock Ltd is a medium sized limited company that produces bricks for building. Its
Governance needs: for the company to adhere to good practice in corporate
business function can be easily influence by government regulation. Most of its
governance, for the scope of conflicts to be increased.
business finance is also financed by long-term finance which bears lower risk but
B. Symptoms: Directors trying to disguise the true financial performance of the
has lower profit return, although retained earnings remain the most important
company, Financial collapse without warning; Governance needs: interest and
source of funds.
expectations reflected in the company's objectives, scope for conflicts to be
A. Bank-based system
reduced
B. Market-based system
C. Symptoms: BOD satisfy the shareholders' wish for power and rewards,
C. Economic-based system
discussion over directors' remuneration to be fair; Governance needs: for
D. Customer-based system
Chapter 11
company to adhere to good practice in corporate governance, and for company
to adhere to good business ethics.
71. Mr. Rowen is a member of the board of directors of VAV Plc. He has the power D. Symptoms: Directors trying to reflect true and fair financial performance of
to inspect books and record and also to convene shareholder meetings. He is the company, Financial performance booming steadily and drastically;
always aware of what is going on around the company and knows what is the right Governance needs: interest and expectation to be reflected in the company's
thing to be done before performing any independent review. What is the possible objectives, for the company to ad
Chapter 11
75. The senior manager of Ruth Plc is looking to balance the interests of shareholders C. The amount and type of financing an organisation receives
with those of other shareholders in order to achieve long-term sustained value for D. The ownership structure of the organisation
shareholders. Considering this as an objective, which perspective on corporate Chapter 11
governance does the manager adopt?
80. Which of the following is a feature of poor corporate governance?
A. Stakeholder
A. Domination of the board by a single individual
B. Corporate
B. Critical questioning of senior managers by external auditors
C. Stewardship
C. Supervision of staff in key roles
D. Public policy
Chapter 11 D. Lack of focus on short-term profitability
Chapter 11
76. Angel Ltd. Is a company which processes noodles. Although it provides a clean
81. Which of the following is an underlying principle of the UK Corporate
environment for workers in the factory, it produces wastages which cannot be
Governance Code?
renewed. It never fails to pay promptly for its purchases. However, they do not
A. Productivity
meet the minimum wages requirement of HMRC. Angel Ltd did not comply with
B. Probity
which of the following business ethics.
C. Profitability
i) providing good working conditions.
D. Prudence
ii) pay decent wages Chapter 11
iii) pay supplier in line with agreed terms
iv) Using sustainable or renewable resources 82. Which of the following best describes business ethics?
A. i and iii A. Strict compliance with company policies and procedures.
B. ii and iii B. Impact of organization’s decisions on the society.
C. ii and iv C. Moral rules and principles within business context.
D. i and iv D. Meeting public expectations of professional conduct.
77. Which of the following is NOT a Nolan's principle? 83. Preventing fraud and error in financial statements are the responsibilities of ?
A. Integrity A. Internal Auditors
B. Objectivity B. Directors
C. Openness C. External Auditors
D. Responsibility D. Company Secretary
78. Unframed plc is a medium sized public company. The board of directors always 84. The Turnbull Guidance on internal control states that the board of directors as a
has meetings to discuss with each other in order to make decisions for the whole has responsibility for: (Choose 1)
company. They settle all the issues without informing the shareholders. All A. Policy making on an effective internal control in the company covering
directors receives bonuses based on sales. This performance-based remuneration financial, operational and compliance controls.
leads to the concealment of problems and errors, they manipulated the information B. Reviewing the effective of internal control
to protect their bonuses. What is the main corporate governance issues for the C. Reporting on the internal control to shareholders
company? D. All of the above.
(I) No involvement by the board Chapter 12
(II) Lack of contact with shareholders
(III) Emphasis on short-term profitability 85. Which TWO of the following statements best describe the external audit?
(IV) Lack of supervision of employees A. It conducts an independent examination
A. I & II B. It leads to a certification of the correctness of the financial statements
B. II & III C. It may be carried out by both external and internal auditor.
C. I & IV D. It is an opinion on the truth and fairness of the financial statement
Chapter 12
D. III & IV
Chapter 11
86. External audit of the accounts of a limited company is required
79. Corporate governance represents the set of policies and procedures that determine: A. At the discretion of the shareholders
A. How an organisation is directed, administered and controlled B. To detect fraud
B. The type of goods and services an organisation will produce C. By the Companies Act 2006
D. Because it is demanded by the company’s bankers 93. Which of the following party has responsibility for policy-making on an effective
Chapter 12 system of internal control?
A. Board of directors
87. The audit committee should comprise
B. Management board
A. Only independent non-executive directors, at least one of whom should have
C. Operation
recent and relevant financial experience
B. Both independent and non-independent non-executive directors Chapter 12
C. A balance of non-executive and executive directors
D. Both non-executive and executive directors, at least one of them whom should 94. Which of the following code contains principle for all companies to treat
have recent and relevant financial experience shareholders equally?
Chapter 12 A. UK Corporate Governance Code
B. Stewardship Code
88. The financial controller's responsibilities are primarily __________ in nature,
C. FCA Disclosure Rules and Transparency Rules
while the treasurer's responsibilities are primarily related to __________.
D. None
A. operational; financial management Chapter 12
B. financial management; accounting
C. accounting; financial management 95. The Chairman should do the performance evaluation, considering the balance of
D. financial management; operations skills, experience, knowledge and independence (A or B). The performance
Chapter 12 evaluation of Chairman is evaluated by non executive directors, led by the senior
independent director without considering the views of executive directors (C or D)
89. A director in A Ltd is deemed not being independent by the stakeholders of the
A. TRUE
company. On which of the following circumstances is true?
B. FALSE
A. Have served the board for a decade C. TRUE
B. Involved in the nomination committee last three years
D. FALSE
C. Was appointed as a Chairman for the last 2 years Chapter 12
D. He is independent in character and judgment
Chapter 12 96. The Chairman has responsible to lead the board. Which of the followings is the
responsibility of Chairman?
90. Pound plc. is a FTSE 350 company while Pence ltd is a small limited company. A. Ensure effective communication with shareholders
How many independent non-executive directors does the companies require to be
B. Monitor the reporting of performance
on the audit committee?
C. Ensure that risk management are defensible
A. At least three for Pound plc. and Pence ltd
D. Provide a fair interim reports
B. At least three for Pound plc. and two for Pence ltd Chapter 12
C. At least two for Pound plc. and three for Pence ltd
D. At least two for Pound plc. and Pence ltd 97. Determine whether the following statements are true or false.
Chapter 12 i) The board's Chairman may chair the nomination committee when it is dealing
with the appointment of a non-executive director. (A or B)
91. External auditors of listed companies have to report on: ii) The UK Corporate Governance Code states that the directors' service contracts
A. The directors' remuneration report should not exceed three years. (C or D)
B. The company's annual sales report
A. TRUE
C. The company's financial statements
B. FALSE
D. The company's compliance with the UK Corporate Governance Code
C. TRUE
E. The company's articles of association
D. FALSE
F. The directors' statement Chapter 12
Chapter 12
98. Lily plc. is currently listed on FTSE 350 but it's operation is likely to reduce its
92. Which of the following is NOT a task to be carried out by internal auditors? size over the next year so it will no longer qualify as a FTSE 350 company.
A. Assessing how risks are identified, analysed and managed
Currently it has 9 board members, excluding the chairman. How many
B. Ensuring that laws and regulations are complied with independent directors should Lily plc. have now and in one year's time?
C. Ensuring that debts are paid of
A. Now: 2, One year's time: 5
D. Ensuring that assets are being safeguarded B. Now: 3, One year's time: 5
Chapter 12
C. Now: 5, One year's time: 5
D. Now: 5, One year's time: 2 C. She used to be the supplier of the company's raw materials five years ago
Chapter 12 D. She owns a great number of shares in a few mobile applications companies
Chapter 12
99. What is the percentage of the board(excluding chairman) should comprise
independent non-executive directors? (A or B). A smaller company should have at 105. Which of the following is the role of INTERNAL audit ?
least___ independent non-executive directors. (C or D) A. Issuing an opinion on whether the financial statements are complying with the
A. At least 50% appropriate laws
B. Over 50% B. Reporting on the directors' remuneration report
C. At least two C. Ensuring that there are systems where assets are being safeguarded
D. At least one D. Ensure the proper concealment of fraudulent information
100. The appointment of independent auditors is the responsibility of: 106. Who is responsible for the internal control systems in a company, under the
A. Audit committee UK Corporate Governance Code?
B. Board of directors A. The Audit Committee
C. Executive director B. The Senior Independent Director
D. Shareholders C. The Executive Directors
Chapter 12 D. The Non-Executive Directors
E. The Chairman
101. Under the requirements of the UK Corporate Governance Code, who is
F. The Entire board of directors
responsible for maintenance of sound risk management and internal control Chapter 12
system?
A. The entire board of directors 107. Which of the following statement is true?
B. The shareholders A. Jeannie is the non-executive director of JJ plc, she meets with the other non-
C. The executive directors executive directors at least yearly to appraise Chief Executive's performance
D. The non-executive directors which is led by the senior independent director.
Chapter 12 B. The nominee committee of Banana plc acts as a whole to challenge
constructively and help develop proposals on strategy.
102. UK Corporate Governance Code requires that percentage of the board of C. On resignation, the Chairman should provide a written statement to the
directors of a listed company (excluding the chairman) who should be
executive director, for circulation to the board.
independent non executive directors is:
D. Jacelyn who is the Chairman of Janitor plc meets regularly with the
A. Between 10% and 24%
shareholders to make sure the communication is not broken down.
B. Between 25% and 39% Chapter 12
C. Between 40% and 49%
D. 50% or over 108. State whether the following statements are true or false.
Chapter 12 (i). The appointment and removal of the company secretary is a matter to the
board as a whole.
103. Azwraithe plc. is a small listed company outside the FTSE 350. This means (ii) The appointment, re-appointment and removal of external auditors is a matter
that, according to the UK Corporate Governance Code, the minimum number of to the board as a whole.
independent non-executive directors that should sit on the company's board is:
A. (i) is TRUE (ii) is FALSE
A. One
B. (i) is FALSE (ii) is TRUE
B. Two
C. Both statements are TRUE
C. Three
D. Both statements are FALSE
D. Variable as it depends on the total number of people on the board Chapter 12
Chapter 12
109. Which of the following directors may not be independent?
104. Mrs. Baker was nominated as one of the nominees to replace one of the A. Arthur has family ties with his younger brother who is working as a junior
independent non-executive director of Munkins Plc, a automobile manufacturing
executive in the company
company. But, Mrs. Baker was not selected as she was determined as being not B. Brenda has served on the board for 9 years from the first date of election
independent. Which one of the situations would have caused her to be not
C. Calvin was the major shareholder of one of the company's main supplier for
independent? the past 5 years
A. Her sister Mrs. Nancy is known to be the largest shareholder of the company.
D. Chee Yoong holds 1.60 % of the company's shares
B. She was an employee of the company nine years ago
Chapter 12
115. Financial statements of larger companies are subject to external audit each
year by an auditor carrying out an independent and objective investigation unless
110. In order to maintain the company's competency, Ruler Plc. intends to make an they are exempted. Which of the following is false regarding the roles of external
evaluation on the current Chairman to judge whether he is good enough or not for auditors in relation to corporate governance?
the position. Which of the following is the party responsible for the valuation? A. External auditor issues an opinion and judgement in an audit report to
A. Non-Executive Directors determine if the financial statement produced by the directors give a ‘true and
B. Shareholder fair’ view
C. Board of directors B. External auditor does not possess the responsibility for detecting fraud and
D. Audit committee error
Chapter 12
C. To act as an external auditor, an individual must be from a member of a
111. Jem Plc is a FTSE 350 company with 7 members of the board including the recognised supervisory body
chairman. How many independent directors should there at least be in the board D. Shareholders appoints external auditors by vote without recommendations
(Choose A/B/C)? The nomination committee consist of 7 members. How many from the board but with recommendations from the audit committee.
Chapter 12
independent should there at least be in the nomination committee (Choose
D/E/F)? 116. Which of the following is an independent director?
A. 2 A. Ashley has been an employee of the company for the last five years.
B. 3 B. Jason has been in the board for three years.
C. 4 C. Ricky has a brother who is also one of the directors in the board.
D. 2 D. Tim has a material business relationship with the company within the last
E. 3 three years.
F. 4 Chapter 12
Chapter 12
117. Drake is a member of a recognised supervisory body and works as an external
112. Which TWO of the following should be done by a chairman? auditor for an audit firm. Which of the following tasks is he responsible for?
A. Ensure the directors continually update their skills A. Detect fraud and error
B. Conduct a review of the effectiveness of company's risk management and B. Address an issue of the management’s financial reporting processes
internal control system C. Report on the directors’ remuneration report
C. Chairman should ensure the directors receive information are accurate, timely, D. Ensure laws and regulations are complied with
and clear information. Chapter 12
D. Represent a significant shareholder
Chapter 12 118. Which of the following statement relating to internal audit is true?
A. The purpose of internal audit is to issue an opinion or a conclusion on the
113. Blanc plc is listed but not inside the FTSE 350. Currently they have 7 board financial statement regarding its true and fair view.
members including chairman. According to UK Corporate Governance Code, B. It is not a legal requirement for a company to have an internal audit function.
what is the minimum number of independent directors should sit on the board? C. The role of internal audit is to implement the internal controls of the
A. 3 company's operation.
B. 2 D. The internal auditor should report directly to the board of directors as they are
C. 4 an employer of the company.
D. 5 Chapter 12
Chapter 12
119. Peter is a shareholder of ABC Company. He is concern which contact through
114. Jensen Plc’s board of directors consist of Sharon, Becky, Rebecca, and Felicia, the normal channels of Chairman, Chief Executive or other executive directors
all of whom are non-executive directors. They are the founders of Jensen Plc. have failed to resolve. Which people in the board of director should he contact
There are five other executive directors. Jensen Plc has been very profitable for with?
the past 4 year and has great human resource management, and uphold corporate A. The company chairman
social responsibility. They hope to one day be one of the FTSE 350 companies. B. The audit committee
Does Jensen Plc have good corporate governance? C. The senior independent director
A. Yes D. Chief Executive
B. No Chapter 12
Chapter 12
120. The board of directors of CDE plc is considering the membership of its audit C. three
committee. In this regard, which statement is true? D. variable, as it depends on the total number of people in the board
A. The chairman cannot be a member of the audit committee. Chapter 12
B. The chairman may be a member but cannot chair the audit committee
126. Under the requirements of the UK Corporate Governance Code, who is
C. The chairman must be one of the members of the audit committee
responsible for maintenance of sound risk management and internal control
D. The chairman may be both a member and chair of the audit committee
Chapter 12 systems?
A. Just the executive directors
121. Ahmad is the employee of ABC Company. He found that some of the board of B. Just the non-executive directors
directors involved in bribery. Which role of non-executive director in charge of C. The entire board of directors
whistle-blowing and which Act did protect Ahmad from breaking ethics. D. The audit committee
A. Audit Committee, The Public Interest Disclosure Act Chapter 12
B. Remuneration Committee, The Human Rights Act
127. What is the purpose of external audit?
C. Audit Committee, The Data Protection Act
A. to issue an opinion on the financial report
D. Remuneration Committee, The Public Interest Disclosure Act
Chapter 12 B. to detect frauds and errors
C. to improve internal controls
122. Janet, the director of J&J Plc. is advised by the company's risk management D. all the above
consultant that Janet should always disclose an ongoing process in place to Chapter 12
identify, evaluate and manage significant risks facing the company. Which
128. Companies listed in the FTSE 350 are required to follow and apply the UK
guidance Janet is adhering to?
Corporate Governance Code. This is stated in the FCA Disclosure Rules
A. FSA's guidance on risk management and internal control
B. PRA's guidance on risk management and internal control implemented by the UKLA. Are small and unlisted companies required to follow
as well, and why?
C. FCA's guidance on risk management and internal control
D. FRC's guidance on risk management and internal control A. No. but they are encouraged to follow as this is an example of 'best practice".
Chapter 12 B. No, The UK Corporate Governance Code is unrelated to them.
C. Yes, It is a legal requirement in UK.
123. Each non-executive director including Chairman of a board must be D. Yes, It is a requirement stated in the FCA Disclosure Rules and Transparency
independent in character and judgement. Which of the following is the Rules.
characteristic of a non-independent non-executive director? Chapter 12
A. Have been the employee of the company within last 8 years
B. Have served on the board for more than 7 years from the date of their first
129. Joseph is one of the directors of ATT Ltd. Which of the following may
election
indicate that he may be considered as being not independent?
C. Represent a significant shareholder
A. He is an employee of ATT Ltd 10 years ago, which he then resigned after 2
D. Have or had a material business relationship with the company within the last
years.
4 years
Chapter 12 B. He is the husband of Lisa who is the ATT Ltd.'s investment advisor.
C. He has served on the board for 6 years.
124. Martin is the director of Blueberry ltd, which is one of the FTSE 350 D. He rejects to receive the offer of an additional remuneration which is beyond
companies in the UK, he is subject to be elected by the shareholders how many his director's salary.
times in a year? Chapter 12
A. 3
130. Who has the responsibility to monitor the effectiveness of the internal audit
B. 9
activities? If a company does not have any internal audit function. They are the
C. 2
one who should consider annually whether there is a need to set up one.
D. 1
Chapter 12 A. Board of director
B. Audit committee
125. Slothwaist plc is listed but is outside the FTSE 350. According to the UK C. Shareholder
Corporate Governance Code, this means that the minimum number of independent D. Chairman
non-executive directors who should sit on the company's board is Chapter 12
A. one
B. two
131. Are the statements true or false? I. The chairman must advice the board via the A. TRUE
company secretary on all the corporate governance issues. II. A director should B. FALSE
seek clarification or amplification where necessary. C. TRUE
A. Both statements are true D. FALSE
B. Both statements are false Chapter 12
C. Only statement 1 is true
137. Which of the following are the roles and responsibilities of the audit
Chapter 12 committee? (Choose 2)
A. Monitoring the objectivity of the financial statement
132. The board should present a fair, balanced and understandable assessment of B. Monitoring and reviewing the effectiveness of the company's internal audit
the company's position and prospect to preserve: function
A. Sustainability C. Reviewing the company's internal financial controls
B. Accountability D. Reviewing and monitoring the external auditor's independence and integrity
C. Effectiveness Chapter 12
D. Probity
Chapter 12 138. On resignation, a written statement prepared by the non-executive director
should be provided to who, for circulation to the board, if they have any such
133. Are the statements true or false? concerns?
I. External auditor are appointed by audit committee, following recommendations A. Senior independent director
by the board and chairmen. B. Chairman
II. To act as an external auditor a body corporate, partnership or individual must C. Major shareholder
hold an appropriate only UK qualifications. D. Executive director
A. Both statements are true Chapter 12
B. Both statements are false
C. Only statement 1 is true 139. In general, which party determines the remuneration of the non-executive
directors?
Chapter 12 A. Chairman
B. The board itself
134. Statement 1: Corporate Governance Committee of the FRC is responsible in C. Shareholders
the UK for promoting high standards of corporate governance. (A/B) D. Chief Executive
Statement 2: Some contents in the UK Corporate Governance Code overrides the Chapter 12
general statutory requirement of companies to treat shareholders equally. (C/D)
140. All external auditors of all companies have to carry out which of the following
A. TRUE
duties?
B. FALSE
(i) issue an opinion on Financial Performance
C. TRUE
(ii) report on company's compliance with UK Corporate Governance Code
D. FALSE
Chapter 12 (iii) carrying out independent and objective investigation
(iv) detect and prevent fraud and error
135. Which of the following is correct? (Choose 2) A director may be determined A. i and ii
as being not independent if they: B. ii and iii
A. Have close family ties with any of the company's employee C. iii and iv
B. Represent a significant shareholder D. i and iii
C. Have been a major customer of the company 5 years ago Chapter 12
D. Have served on the board for 10 years
141. Which is NOT the responsibility for audit committee?
E. Have been an employee of the company 8 years ago
Chapter 12 A. Monitoring the integrity of the financial statements of the company
B. Operating the internal audit function
136. Statement 1: It is the executive directors, led by the senior independent C. Making recommendations to the board regarding the appointment of external
director, who are responsible for performance evaluation of the Chairman, taking auditors
into account the views of non-executive directors. (A/B) D. Implementing policy on the engagement of the external auditor to supply non-
Statement 2: All directors of FTSE 350 companies should be subject to annual audit services
election by shareholders. (C/D) Chapter 12
142. Which of the following is not true of remuneration committees? Chapter 12

A. They should have 3 or 2 independent non-executive directors.
149. Who should set directors' reward and incentives packages, according to
B. The chairman of the board of directors must also chair the remuneration
corporate governance provisions?
committee.
A. The board of directors
C. They are responsible for the remunerations of all the executive directors and
B. The nomination committee
chairman.
C. A remuneration committee made up of independent non-executive directors
D. They are responsible for monitoring the remuneration and benefits of senior
D. A remuneration committee made up of a balance of executive and non-
management.
Chapter 12 executive directors
Chapter 12
143. Which of the following are not true for independent non-executive directors?
150. Which of the following most accurately describes the “non-executive”
A. They are not financially associated with the company.
director?
B. They are retired from the company for more than 5 years.
A. A member of the board of directors who does not take an active role in
C. They are paid with a performance-related remuneration.
managing the organization.
D. They do not have any blood relations in the company.
Chapter 12 B. A member of the board of directors who takes an active role in managing the
company.
144. Which of the following is not a responsibility of the audit committee? C. A former director who is associated with the company after his retirement.
A. Appoint the external auditors D. A member of the board of directors who takes no part in the company’s
B. Review the external auditors’ independence affairs.
C. Review the integrity of the financial statements Chapter 12
D. Monitor the company’s internal financial controls
Chapter 12 151. To whom is the external auditor primarily accountable?
A. The government
145. The responsibilities of the Audit Committee include the following, except; B. The shareholders
A. Monitor the independence and objectivity of the external auditor. C. The board of directors
B. Decide on the appointment and removal of the external auditor. D. The audit committee
C. Operate as a liaison between the external auditor and executive management. Chapter 12
D. Review effectiveness of the internal control system.
Chapter 12 152. The external auditor does not:
A. Provide an evaluation and expression of opinion on the financial statement
146. Which one of the following would be identified as a problem with the role of presented by the management of an enterprise
non-executive director? B. Prepare accounts
A. External stakeholder security C. Evaluates the work an internal auditor
B. Time available to devote to the role D. Have the authority to question the actions of the executive directors
C. Objective viewpoint Chapter 12
D. Dual nature as full board members and strong, independent element
Chapter 12 153. What is the primary responsibility of the external auditor?
A. To verify all the financial transactions and supporting documentation of the
147. Which of the following statements is incorrect? client
A. The Board of Directors are charged with the responsibility of stewardship of a B. To report that the client's financial statements are reasonably accurate and free
company from bias
B. The shareholders are owners of a limited company C. To report all financial irregularities to the shareholders of the client
C. Non-Executive Directors are directly involved in managing the company D. To ensure that all the client's financial statements are prepared and submitted
D. Non-Executive Directors can be shareholders of a company to the relevant authorities on time
148. Corporate social responsibility refers to the idea that a company should
A. Play an active part in the social life of the local neighbourhood
B. Be sensitive to the needs of all stakeholders
C. Be alert to the social needs of all employees
D. Act responsibly in relation to shareholders' overall needs - not just their
financial needs
1. Which THREE of the following are determinants of demand? D. Social benefit

A. Price Chapter 13
B. Cost of production
8. Which of the following is the characteristic of monopolistic competition?
C. Income levels
A. Having one dominant supplier and many buyers
D. Fashion
Chapter 13 B. Having many buyers and sellers and product differentiated
C. Having a few large sellers and many buyers, and product differentiated
2. Which is not a form of negative externality? D. Having many buyers and sellers and product undifferentiated
A. Smoking Chapter 13
B. Oil spillage
9. Which of the following demand of goods fall as income increases?
C. Food waste
A. Inferior goods
D. Maintenance of post-office network
Chapter 13 B. Geffen goods
C. Normal goods
3. Perfect competition is described as: (Choose 2) D. Veblen goods
A. The existence of cartels between buyers and sellers E. Luxury goods
B. No barriers to entry or exit Chapter 13
C. Perfect information
10. How does a rise in household income affect the demand curve?
D. Few buyers and sellers
Chapter 13 A. Move from a lower point to a higher point along the curve
B. Move from a higher point to a lower point along the curve
4. A shift of the demand curve to the left could be caused by which of the following C. shift from left to right
conditions? D. Shift from right to left.
A. A negative change in tastes for the goods Chapter 13
B. A rise in the price of a substitute
11. What will happen to the current demand, if consumers expect that prices will rise
C. An increase in household income
D. A fall in the price of a complement in the future?
Chapter 13 A. Demand increases
B. Demand decreases
5. An analyst with Looney plc. has constructed a supply curve for one of the C. Demand will remain the same
company's major products, the Lego. The curve is actually a horizontal straight D. None of the above
line. This indicates that supply of the Lego is: Chapter 13
A. Perfectly inelastic
B. Of unitary elasticity 12. Which two types of the following goods have positive price elasticity of demand?
C. Perfectly elastic A. Geffen goods
D. One B. Veblen goods
E. None of the above C. Inferior goods
Chapter 13 D. Superior goods
Chapter 13
6. TNB in Malaysia is a utility provider. In this context, TNB is said to be most
relevant in which of the following types of monopoly? 13. What factors determine demand outside the control of the business? (choose 3)
A. Pure monopoly A. Price of substitute goods
B. Actual monopoly B. Price of complementary goods
C. Changes in technology
C. Government franchise monopoly
D. Natural monopoly D. Consumer's income
Chapter 13 E. Cost of making the goods
Chapter 13
7. A Ltd produces cars. The factory that produces the cars are currently in a lawsuit.
14. Which of these situations are most likely to occur when a country has high rate of
It is claimed that they have a significant amount of carbon dioxide emission that is
price inflation? Choose THREE.
polluting the environment. This is said to be
A. Redistribution of wealth and income.
A. Private cost
B. Exports will increase.
B. Private benefit
C. Imports are cheaper.
C. Social cost
D. Wage bargaining. 21. The government may try to prevent prices of goods rising by establishing a
Chapter 13 maximum price. If the maximum price is lower than what the equilibrium price
would be, there will be :
15. The price of a good is £1.50 per unit and annual demand is 800,000 units. Market
A. An excess demand over supply
research indicates that an increase in price of 30 pence per unit will result in a fall
B. No effect at all
in annual demand of 50000 units. Calculate the elasticity of demand when the
C. An excess of supply over demand
price is Chapter 13
A. 0.3125 (Elastic)
B. 0.3152 (Inelastic) 22. The cross elasticity of demand between products X and Y is 0. It can, therefore,
C. 0.3125 (Inelastic) be deduced that the two products are:
D. 0.3152 (Elastic) A. Complements
Chapter 13 B. Substitutes
C. Veblen goods
16. The cross elasticity of demand between the Venice product and the L&N product
D. Giffen goods
is positive. It can, therefore, be deduced that two products are:
E. Unrelated
A. Complements Chapter 13
B. Substitutes
C. Unrelated goods 23. National Power Company is the only company that provides electricity in X
D. Geffen goods country. What is the problem for its users?
Chapter 13 A. Quality of the service will be low, price will not be reasonable.
B. Customers do not have a choice to choose for the provider.
17. Which THREE of the following will shift the demand curve of Product A from
C. Does not have enough job opportunity.
left to right? D. Some customers do not have access to the electricity.
A. A rise in household income Chapter 13
B. A rise in price of substitutes
C. A rise in the price of complements
D. A fall in price of substitutes
24. TBM plc. is a utility company that supplies electricity to a state in Switzerland.
E. A fall in the price of complements
F. An increase in price of product A There are no other competitors in the market due to the high barrier of entry
Chapter 13 because of the high levels of fixed costs and the low levels of marginal costs in
the market.
18. Which of the following is not an internal economies of scale? A. pure monopoly
A. Division of labour B. actual monopoly
B. Creation of labour force C. natural monopoly
C. Buying economies D. government franchise monopoly
D. Holding inventories Chapter 13
Chapter 13
25. Sheila operates a tuition centre since 2013. Her tuition centre is increasingly
19. Which of the following is the characteristic of monopolistic competition? popular among students as she offers a wide range of subject packages and uses
A. Some differentiation between product high tech devices in teaching. Even so, there has been an intense competition in
B. Homogeneous products the market recently due to the increased barriers of entry. In order to maintain the
C. No barrier to entry market position, Sheila had to carry out more advertising and increased branding.
D. Advertising is an important issue to promote its brand She also had to be aware of the price changes of her subject packages as an
E. Three to four large sellers increase in price will cause loss of some customers. The market is characterised
Chapter 13 as.
A. Monopolistic competition
20. If the goods are complements, such as cups and saucers, cross elasticity will be: B. Oligopoly
A. Positive
C. Monopoly
B. Negative D. Perfect competition
C. Zero Chapter 13
D. Infinity
Chapter 13
26. Which of the following situations will NOT cause the demand curve to shift to the D. Unemployment falls
left? Choose TWO. Chapter 13
A. A rise in the price of complements
32. How does the government influences overall supply in the economy via supply
B. An expected rise in the price of the good
side macroeconomic policies? Choose the incorrect method.
C. A negative change in tastes towards this good
A. Decrease in taxes
D. A fall in the price of substitutes
B. Increase competition
E. A fall in the costs of making the good
C. More involvement of public sector
F. A fall in household income
Chapter 13 D. Increase flexibility in the labour market
Chapter 13
27. The government has recently decided to carry out price regulation on certain
33. Due to a bullish, optimistic economic outlook recently, Mr. CY who is a junior
products in the market. They have imposed a maximum price on Tenxy which is
executive has decided to change his spending patterns. Which one of the
set at a lower level than its equilibrium price. In future, it can be expected that
following products is most likely to have an income elasticity of demand which is
there will be ...
greater than 1 for Mr. CY?
A. excess supply of the product
A. Lamborghini
B. excess demand for the product
B. Salt
C. no effect on demand but a decrease in supply
C. Haircut at APT
D. no effect on supply but an increase in demand
Chapter 13 D. Newspaper
E. Expensive meal at Sushi Zanmai
F. Hash-brown sandwich
28. Demand push inflation is asserted when the aggregate demand exceeds the Chapter 13
aggregate supply
A. TRUE 34. Country L has decided to increase its interest rate. As a result, in what way will
B. FALSE the exchange rate be affected? [a/b/c] Sam is a manufacturer of steel in Country L.
Chapter 13 He imports raw materials from the Country S - what would be impact of the
higher interest rate on his firm's costs? [d/e/f]
29. If the price of a particular product is $6.00 per unit, on average 110 units of the A. Increase
product are sold per month. At a price of $8.00 per unit, on average 90 units per B. Decrease
month are sold. The price elasticity of demand for the product is C. Unchanged
A. -0.88 D. Costs go down
B. 0.88 E. Costs go up
C. -0.55 F. Costs are unchanged
D. 0.55 Chapter 13
Chapter 13
35. Heath decided to start his own online business on Instagram selling button badges,
30. Apple iOS and Google Android are dominating smartphone operating systems. with the handle @heathsbadges. He starts off by hand-making them, and as the
Both of them have a major share of the market. They are the price makers instead years pass, and his business grew significantly, he eventually bought a button-
of the price takers. There are high barriers of entry for new entrants to compete making machine which significantly increases his output, and has also found a
with existing players. Apple iOS and Google Android compete with each other supplier that is willing to supply him raw materials at a lower cost. Heath's
through product differentiation rather than price cut. Which type of market business is an example of which of the following?
structure do they belong to? A. Internal economics of scale
A. Monopoly B. External economics of scale
B. Monopolistic competition C. Monopoly
C. Oligopoly D. Oligopoly
D. Perfect competition Chapter 13
Chapter 13
36. When it comes to investing on personal items such as clothes, Mr. Kwan tends to
31. Which of the following is not the feature of recession? look for items of quality as he is an affluent individual. What kind of goods would
A. Decrease in consumption Mr. Kwan's Rolex wristwatch which costs USD10,000 categorised as and what
B. Government tends to borrow more money category of customer is he labelled as?
C. Interest rate drops A. Veblen goods // Price insensitive customer
B. Normal goods // Price sensitive customer D. Statement 2 is False

C. Giffen goods // Price insensitive customer Chapter 13
D. Veblen goods // Price sensitive customer
Chapter 13 42. Big Bang group, of YG Entertainment is a form of product, where the group
creates music and provides entertainment through concerts. Which TWO of the
37. When the price of product A decreases, the demand for product A and product B following will cause an decrease in the price elasticity of demand for Big Bang's
will increase. What are the examples of product A and B? entertainment?
A. Sugar and salt A. There is an increase in subscribers of Big Bang VIP, the fan club of Big Bang,
B. Coffee and tea who view Big Bang as a necessity in their life.
C. Car and petrol B. G-Dragon, a member of the group, was caught consuming drugs while seeking
D. Toothpaste and shaving cream inspiration for his newest song.
Chapter 13 C. There are more group debuting in the recent years, hence the trend for K-Pop
was caught on by the public, with more substitute available.
38. The government just announced that the price of car petrol has increased. What
D. Big Bang is one of the unique 'product' of YG Entertainment as the members
will be the effect of this action?
portrays the 'Bad Boys" vibe, and are very appealing to females and males
A. The demand curve of the car petrol shifts to left side of the graph.
who aspire to be like them.
B. The demand curve of the car petrol shifts to right side of the graph. Chapter 13
C. No change to the demand curve
D. The demand curve will be a horizontal straight line 43. Which of the following factors contributes to the failure of perfectly competitive
E. The demand curve will be a vertical straight line market?
Chapter 13 A. Existence of public goods.
B. Suppliers are only price takers.
39. What could cause the demand curve of kimchi to shift to the right? C. There are no barriers to entry.
A. An increase in price of kimchi
D. Lack of economies of scale.
B. A fall in household income Chapter 13
C. A decrease in price of radishes
D. A positive change in tastes towards kimchi 44. Company J produces bananas. It's main banana farm is located in the Philippines.
Chapter 13 Due to a recent storm, a lot of company J's banana trees were destroyed, leaving
company J with a low supply of bananas for the season. What would be the effect
40. Which of the following will not result in an increase in the level of inflation?
of company J's supply curve?
A. There is an increased in the interest rate of banks due to the increase in the
A. A shift to the left
base rate set by MPC.
B. A shift to the right
B. The profit margin in the oil refining industry becomes lower due to an increase
C. Remain unchanged
in cost of extracting oil. Chapter 13
C. There is increased competition for labour at the national level in the tertiary
sector. 45. The price of a good is £2.00 and annual demand is 50,000 units. Research has
D. Government wants to reduce its national currency exchange rate by selling shown that increasing the price by £0.10 will reduce demand by 5,000 units. The
them for foreign currency. price elasticity of demand of the good at £2.00 is
Chapter 13 A. -0.80
B. -1.00
41. The government of WAKAKA nation wants to employ a contractionary monetary
C. -2.00
policy in order to curb the increasing rate of inflation. llaollao, the Minister of
D. -1.80
Finance, made 2 comments. Assess the correctness of these comments. Chapter 13
Statement 1: A contractionary monetary policy, which means adopting a higher
interest rates, will result in companies investing more due to the higher rate of 46. In terms of the economic environment, the business cycle is part of
return. A. national influences in the macroeconomic environment
Statement 2: This policy also indicates future growth in trade as the higher B. global influences in the macroeconomic environment
exchange rate of our currency will mean the more exports and the cost from C. the microeconomic environment of the firm
imports will reduce. D. the price mechanism in the microeconomic environment of the firm
A. Statement 1 is True Chapter 13
C. Statement 2 is True
47. An economist working for DOLM plc has constructed a supply curve for one of D. The rise in the price of cigarettes is not sufficient to affect the income level of
the company’s major products, the FOXY. The curve is actually a vertical straight the public.
line. This indicates that the price elasticity of supply for the FOXY is Chapter 13
A. perfectly inelastic
53. Jane's income is 10 % higher than her last year's income, due to the extra money
B. perfectly elastic
she has on her hands, she changes her Proton Saga to BMW. What type of good is
C. zero
Proton Saga considered in this situation?
D. unitary elastic
Chapter 13 A. Normal Goods
B. Veblen Goods
48. Recently, the government has fixed a maximum price on bread. The maximum C. Inferior Goods
price is imposed below the equilibrium price. What is the likely result of this? D. Giffen Good
A. A movement of the demand curve to the right Chapter 13
B. A movement of the supply curve to the right
54. Which of the following is not one of the fiscal policies to achieve economic
C. A shortage of bread
growth and control inflation?
D. A surplus of bread
Chapter 13 A. Public spending
B. Public borrowing
49. The inflation rate in X country has increased. The government decided to reduce C. Exchange rates
inflation. What can the government do? D. Taxation
A. Enforce regulations so that the companies should pay a higher wage to the Chapter 13
workers.
55. In the market for the Olympia product, competitors do not compete with price.
B. Sell government bonds to the public.
C. Increase spending by building more infrastructures. However, there is a high degree of mutual interdependency and some
differentiation between products. There are a few large sellers but many small
D. Reduce the interest rates.
Chapter 13 buyers in the market for the product. The market for the Olympia product is
characterised as
50. South African companies are planning to undertake major investment in A. oligopoly
Zimbabwe in order to mine platinum. If this investment occurs, what would B. monopolistic competition
happen in the short term to the supply of platinum, the price of platinum and the C. monopoly
profits of the companies? D. duopoly
A. No change in supply curve, a rise in the price and a rise in the profit Chapter 13
B. the supply curve shift to the left, no change in price, a fall in the profit
56. Gourmet plc has been able to achieve significant external economies of scale. This
C. supply curve shift to the right, a fall in the price, a rise in the profit
indicates that the market for the company's only product has been
D. supply curve shift to the right, a fall in the price, the profit is uncertain
Chapter 13 A. static, so forcing the company to achieve economies of scale in production
B. growing, so enabling the economies of scale to be achieved
51. Tracy plc is selling handbags to the public. Which of the following will NOT C. contracting, so enabling the company to cut costs in distribution
cause its demand curve shifts to the right? D. volatile, meaning that internal economies of scale were unattainable
A. A positive change in tastes of public towards its handbags Chapter 13
B. A rise in the price of substitutes
57. Which is the following is not the consequences after an increase of the interest
C. A rise of the price of complements
rates in a country?
D. A rise in household income
Chapter 13 A. Capital inflows into the country
B. Cost of borrowing in the country will increase
52. The government has been raising the price of cigarettes and organizing many C. Rise in consumption of the consumers in the country
campaigns regarding to anti-smoking recently, but the demand for cigarettes still D. Exchange rate of the said country would increase
remains high (provided there is no substitute for cigarettes). Why is this so? Chapter 13
Choose the best answer.
A. The awareness on the effects of smoking is not sufficient on the public. 58. If the price of goods increases; what will actually happen in the market? Choose
two.
B. There are individuals who are addicted to smoking.
C. The campaigns are not effective to educate the public. A. Demand increases
B. Demand decreases
C. Supply increases
D. Supply decreases 65. There will be no perfect competition in practice due to the following except:-
Chapter 13 A. Collusion
B. Differentiation of goods
59. Which of the following would cause the demand curve shifting to the right?
C. Symmetric information
(Choose three)
D. Barriers to entry
A. Effective marketing tactic Chapter 13
B. Price of complements increases
C. Price of goods on demand is expected to go up in the future. 66. Government imposes a minimum price on a market below the equilibrium price.
D. Income of customers increase What will be the impact of this ?
E. Price of substitutes decrease. A. An excess demand over supply
Chapter 13 B. An excess of supply over demand
C. An increase in price
60. There are a few types of fiscal stance. Which of the following correctly describes
D. Price will be at equilibrium
expansionary fiscal stance? Chapter 13
A. Increased borrowing and spending
B. Increased taxation but no increase in spending 67. Country X has decided to increase it's interest rates. What would be the impact of
C. Decreased borrowing and decreased spending. the higher interest rates? Choose 3.
D. Increased taxation and spending. A. Consumption would increase
Chapter 13 B. Exchange rate may rise
C. Spending would decrease
61. Demand of which goods is positively income elastic?
D. Exports may be cheaper
A. Normal goods
E. Imports may be cheaper
B. Inferior goods F. Cost of capital would be lower
C. Necessities Chapter 13
D. Luxury goods
Chapter 13 68. Company A and B are suppliers who collude on the output and prices of their
product in the market. Literally they act as the price makers. What type of market
62. Banking industry is an example of which kind of market structure?
structure is this ?
A. Monopoly A. Monopoly
B. Perfect competition
B. Monopolistic competition
C. Duopoly
C. Oligopoly
D. Oligopoly
Chapter 13
D. Duopoly
Chapter 13
63. A multipurpose sports centre has been built by a private company in the city of 69. Company Z increases the price of its product significantly. Due to this, the
Ipoh. This sports centre is becoming a popular place for teenagers in Ipoh to spend company chooses to use more tactics to promote the product using the marketing
their free time after school. Which of the following is an external benefit of the mix in the market. What will be the impact on the demand or supply curve?
project? A. Demand curve moves to right.
A. Increased of disposals of rubbish at that area from students. B. Demand curve moves to left.
B. Increased profit and reputation of the private company due to high quality of
C. Supply curve moves to right.
facilities provided.
D. Supply curve moves to left.
C. Increased sales of local shops nearby it. Chapter 13
D. Increased traffic in the neighbourhood
Chapter 13 70. India is currently undergoing boom. Which of the following would help to control
inflation?
64. The government tries to reduce taxes and increase government spending. Which
A. Citizens are having higher levels of disposable income
phase in the business cycle is most unlikely being described by the statement B. Government is spending on infrastructure for the public
above?
C. The cost of credit is relatively low
A. Recession D. Government is imposing higher income tax rates
B. Depression Chapter 13
C. Recovery
D. Boom 71. Which of the following is not the effect of a rise in interest rates?
Chapter 13 A. Companies will be less participative in investments.
B. The exchange rate for sterling becomes higher 78. Which of the following is an argument put forwarded by advocates of the free
C. It will boost the aggregate demand in the economy market?
D. There will be more capital inflows from foreign investors A. Free markets are inefficient
Chapter 13 B. Efficient allocation of economic resources
C. Consists of asymmetric information
72. Which of the following will cause the demand curve to shift to the left?
D. Non-competitive market
A. The goods are becoming more expensive Chapter 13
B. The consumers' income have increased
C. The price of complementary goods are cheaper 79. Which of the following are global influences of macroeconomic environment?
D. There is a fall in trend to use the goods (i) internationalisation of trade
Chapter 13 (ii) government policies
(iii) influence of regional economic groups
73. Which of the following will cause the demand curve to remain and supply curve
(iv) inflation
to move right?
A. i and ii
A. An expectation that the goods will be costly in future; Profitability of the
B. ii and iii
goods become higher
C. iii and iv
B. A rise in the price of goods; A huge improvement in technology
D. i and iii
C. Price of complementary goods remain the same; Price of related goods Chapter 13
decrease
D. Price of substitute goods become lower; Price of other goods fall 80. The government increased it's tax but no increase in spending. Which is the
Chapter 13 government's ' fiscal stance' ?
A. Expansionary
74. Which of the following is correct regarding the elasticity of demand? B. Contractionary
A. A figure of -0.99 shows that the customers are inelastic
C. Neutral
B. A figure of 1 represents that the customers are perfectly elastic D. Inflationary
C. 0 has a meaning that customers demand are changing proportionately to price Chapter 13
change
D. A figure of -1.8 shows that the customers are inelastic 81. Product A currently sells for £6 per unit, and the demand at this price is 2,500
Chapter 13 units. Later on, the price for product A decreased by 20 pence per unit which
results the demand to increase to 3,000 units. What is the price elasticity of
75. All of the following fall under the category of internal economies of scale except
demand for Produc
for
A. 6
A. Specialisation of labour
B. -6
B. Division of labour
C. 5
C. Efficient way of holding inventory
D. -5
D. Large skilled labour force is created Chapter 13
Chapter 13
82. A balance of payments deficit exist when:
76. What causes the shift of the demand curve of a goods to the left side? A. The value of a country's imports equals the value of its exports
A. A rise in the price of substitutes
B. The value of a country's imports is greater than the value of its exports
B. A rise in household income
C. The value of a country's imports is less than the value of its exports
C. A rise in the price of complements Chapter 13
D. A positive change in taste towards this good
Chapter 13
77. Which two of the following are characteristics of public goods? 83. The Gross Domestic Product (GDP) of a country represents:
A. Non-rivalry A. The quality of goods and services produced by a country
B. Free-rider problems do not exist B. The total value of goods and services produced by a country
C. Consumers must pay to use the goods C. The total income earned by citizens of a country
D. Non-excludability D. The average income earned by citizens of a country
84. In the UK who is responsible for setting interest rates?

A. The Chancellor of the Exchequer C. Land, Entrepreneurship, Labour, Capital

B. The Bank of England D. Land, Entrepreneurship, Supply, Capital
C. The Prime Minister Chapter 13
D. The European Central Bank
Chapter 13 92. Cost push inflation is a result of:
A. Excess aggregate demand.
85. In terms of the economic environment, the business cycle is part of B. Increase in production costs.
A. National influences in the macroeconomic environment C. Decrease in production costs.
B. Global influences in the macroeconomic environment D. Shortage in aggregate demand.
C. The microeconomic environment of the firm Chapter 13
D. The price mechanism in the microeconomic environment of the firm
Chapter 13 93. Which of the following best defines the income of the factors of production?
A. Salaries, Rents, Dividends, Profits
86. Inflation is said to have the impact of “the poor gets poorer and the rich gets richer B. Wages, Interests, Profits, Rents
because” C. Companies , Buildings ,Interest, Wages
A. The rich have reserves they can rely on during inflation D. Labour , Land, Capital , Entrepreneurship
B. Those on fixed income have lower purchasing power Chapter 13
C. The interest rates decrease and thus straining the poor
94. Increases in unemployment, reduced demand, falling household incomes and low
D. There is limitation to money supply
Chapter 13 business confidence and investment are associated most strongly with which of
the following?
87. Which of the following is not an element of fiscal policy? A. High interest rates
A. Government spending B. Increase in the money supply
B. Government borrowing C. A budget deficit
C. Taxation D. Recession
D. Exchange rates Chapter 13
Chapter 13
95. If a government increased its expenditure and reduced levels of taxation, the effect
88. A government’s fiscal policy usually does not encompass: would be to (i) …….demand in the economy and will (ii) ………the size of the
A. Expenditure. Public Sector Net Cash Requirement. Which words correctly complete this
B. Borrowing. statement?
C. Revenue. A. (i) stimulate, (ii) reduce
D. Lending. B. (i) reduce, (ii) reduce
Chapter 13 C. (i) stimulate, (ii) raise
D. (i) reduce, (ii) raise
89. In a free market economy, the price mechanism: Chapter 13
A. Aids government control
B. Allocates resources 96. Product X and product Y are substitutes. The cross elasticity of demand between
C. Reduces unfair competition the two products will, therefore, be
D. Measures national wealth A. positive
Chapter 13 B. negative
C. zero
90. Which of the following statement is true with regard to government policies to D. intermediate
increase entry barriers? Chapter 13
A. Encourage research and development.
B. Prohibition of dominant player. 97. Consider the price and demand for flower vases. The price of cut flowers goes up
C. Reduce taxes and provide incentives. sharply. Which of the following would you expect to happen?
D. Increase tariffs and import quotas. A. The demand curve for flower vases will shift to the left and their price will rise
Chapter 13 B. The demand curve for flower vases will shift to the right and their price will
rise
91. Gross domestic product (GDP) is created by:
C. There will be a movement along the demand curve for flower vases and their
A. Land, Entrepreneurship, Labour, Demand
price will go down
B. Land, Entrepreneurship, Labour, Supply
D. The demand curve for flower vases will shift to the left and their price will go 104. An economist has constructed a supply curve for one of the company’s major
down products, Xen. The curve is actually a vertical straight line. This indicates that the
Chapter 13 price elasticity of supply for the Xen is
A. perfectly inelastic
98. Which of the following is not a characteristic of a perfect market?
B. of unitary elasticity
A. Large numbers of customers and suppliers
C. perfectly elastic
B. All suppliers provide a wide range of products and services
D. zero
C. There is perfect information for customers and suppliers Chapter 13
D. There are no entry or exit barriers to the market
Chapter 13 105. A market is seen to be imperfect if;
A. Suppliers are price takers
99. Which of the following is not a factor that affects price elasticity of demand?
B. Suppliers earn normal profits
A. The amount of customer income spent on item
C. One selling price
B. Duration of the price change
D. Interference from government
C. The necessity of the item to consumers Chapter 13
D. The initial number of units demanded
Chapter 13 106. Which of the following is not a feature of oligopoly competition?
A. Product differentiation is used
100. Consider the price and demand for tickets to travel by sea ferry. The price of
B. Competitors compete on branding and not on price
travelling by hovercraft (a substitute form of travel) goes up. Which of the
C. No barriers to entry and firms are free to enter and exit
following would you expect to happen?
D. Production differentiation is used
A. The demand curve for sea ferry tickets will shift to the left, and their price will Chapter 13
go down. More sea ferry tickets will be sold.
B. The demand curve for sea ferry tickets will shift to the right, and their price 107. Which of the following is not a complement to cars?
will go up. More ferry tickets will be sold. A. Petrol
C. The demand curve for sea ferry tickets will shift to the right and their price B. Tyres
will go down. More sea ferry tickets will be sold. C. Holidays
D. The demand curve for sea ferry tickets will shift to the right and their price D. Satellite navigation systems
will go up. Fewer sea ferry tickets will be sold. Chapter 13
Chapter 13
108. Which of the following changes will cause the demand curve for chocolate to
101. Cross elasticity between two products is ZERO. The relationship between the shift to the left?
two products are: (1) A fall in the price of chocolate
A. Complements (2) A health campaign which claims that chocolate makes you fat
B. Unrelated (3) A rise in the price of chocolate substitutes
C. Substitutes (4) A fall in consumers’ income
D. Veblen goods A. Change 1 only
Chapter 13 B. Changes 2 and 3 only
C. Changes 2 and 4 only
102. The income elasticity of demand for a product is high. This means that:
D. Changes 3 and 4 only
A. Sales will increase sharply if the price is reduced Chapter 13
B. Sales will fall only slightly when incomes of households fall
C. Sales will rise sharply when incomes of households rise 109. A legal minimum price is set which is below the equilibrium price. What will
D. The good is inferior good be the impact of this?
Chapter 13 A. Excess demand over supply
B. Excess of supply over demand
103. Price elasticity of supply is said to be zero when the measure is C. An increase in price
A. Perfectly elastic
D. Nothing
B. Perfectly inelastic Chapter 13
C. Perfectly related
D. Perfectly unrelated 110. Which of the following is not a condition for perfect competition?
Chapter 13 A. Suppliers earn a normal profit
B. Consumers lack influence over market price
C. A single selling price 117. Which of the following is the correct calculation to find the price elasticity of
D. Customer Loyalty demand of a product?
Chapter 13 A. % change in units demanded ÷ % change in sales price
B. % change in sales price ÷ % change in units demanded
111. Which one of the following would not cause a supply curve to shift to the left?
C. % change in units sold ÷ % change in units demanded
A. A rise in the cost of factors of production
D. % change in units demanded ÷ % change in units sold
B. A rise in household income Chapter 13
C. A rise in indirect taxes imposed on the good or service being supplied
D. A rise in the price of other goods 118. Why is the Competition Tribunal more likely to be worried about a horizontal
Chapter 13 merger than a vertical merger?
A. Because one business takes over a competitor thereby lessening the amount of
112. Which one of the following would normally cause a rightward shift in the
competition in an industry.
demand curve for a product?
B. Because one business takes over a subsidiary thereby consolidating its market
A. A fall in the price of a substitute product
share.
B. A reduction in direct taxation on incomes
C. Because one business takes over a subsidiary thereby expanding its market
C. A reduction in price of the product
share.
D. An increase in the price of a complementary product
Chapter 13
D. Because one business takes over a company in another industry thereby
diversifying its operations.
113. If the absolute value of the price elasticity of demand for dry white wine is Chapter 14
greater than one, a decrease in the price of all wine would result in:
119. Monopolies are not in public interest as ______
A. A more than proportional decrease in the quantity of dry white wine purchased
A. there is productive efficiency.
B. A less than proportional decrease in the quantity of dry white wine purchased B. They take into account more of stakeholders' interest than consumers' interest
C. A less than proportional increase in the quantity of dry white wine purchased
C. There is allocative inefficiency
D. A more than proportional increase in the quantity of dry white wine purchased D. They exert market competition
Chapter 13
Chapter 14
114. What is an inferior good?
120. Which TWO of the following will result in the disqualification of directors?
A. A good of such poor quality that demand for it is very weak A. Insider dealing
B. A good of lesser quality than a substitute good, so that the price of the
B. Bring profit to the company
substitute is higher
C. Causing company to be insolvent
C. A good for which the cross elasticity of demand with a substitute product is
D. Complying law
greater than 1 Chapter 14
D. A good for which demand will fall as household income rises
Chapter 13 121. The government recently issued a new legislation to prevent the
discrimination of women in the hiring process as well as harassment of any kind
115. Grumts and Vands are substitutes. Which of the following statements will be towards a woman in the workplace. Which of the following market failures is the
true? government seeking to address?
A. A rise in the price of Grumts will lead to a rise in demand for Vands A. Market imperfection
B. A rise in the price of Vands will lead to a rise in demand for Vands
B. Externalities
C. A fall in the price of Grumts will lead to a rise in demand for Vands
C. Asymmetric information
D. A fall in the price of Vands will lead to a fall in demand for Vands
Chapter 13
D. Equity
Chapter 14
116. Which one of the following would not lead directly to a shift in the demand 122. What is the factor that determine whether there is dominance by a business?
curve for overseas holidays?
A. Reputation of a business
A. An advertising campaign by holiday tour operators B. Quality of products
B. An increase in the disposable incomes of consumers
C. Having ethical behaviour
C. A fall in the price of domestic holidays D. Number of competitors
D. A rise in the price of overseas holidays Chapter 14
Chapter 13
123. The Code of Market Conduct covers:
A. Insider dealing
B. Dissemination 130. Which THREE of the following are the outcomes of regulation?
C. Fraudulent trading A. Enhance opportunities
D. Manipulating transactions B. Address market failures
E. Money laundering C. Increase or reduce the social standing of various social groups
F. Wrongful trading D. Get better knowledge of the market
Chapter 14 E. Perform well and sustain success business
Chapter 14
124. A director who is charged with an offence of insider dealing may be
disqualified under: 131. Which of the followings is true?
A. Proceeds of Crime Act 2002 A. Market abuse included insider dealing, dissemination, distortion and
B. Company Directors Disqualification Act 1986 misleading behavior, manipulating transaction, and manipulating devices.
C. Money Laundering Regulations 2007 B. Directors can only be disqualified by committing fraudulent trading, but not
D. Financial Services and Markets Act 2000 wrongful trading.
Chapter 14 C. Direct regulation of externalities included price regulation, direct or indirect
taxation or tariffs and subsidies only.
125. The emergence of global regulation must happen at the same time as the Chapter 14
globalization of either markets or business organizations (A or B). The US has a
huge influence over globalization of regulations followed by the EU (C or D) 132. Which of the following are the reasons under the Company Directors
A. TRUE Disqualification Ac 1986? Choose THREE.
B. FALSE A. Insider trading
C. TRUE B. Fraudulent or wrongful trading
D. FALSE C. Fail to pay wages on time
Chapter 14 D. Absence from meetings for three consecutives times.
E. Making loans from company funds that were unlikely to be repaid.
126. Government uses which of the following to encourage exports? F. Employing family members or people with chose relationship into the
A. Price regulations
company.
B. Direct taxation Chapter 14
C. Standards
D. Subsidies to suppliers 133. Legally enforced product quality or safety standards and consumer protection
Chapter 14 legislation are examples of intervention in order to alleviate market failure caused
by
127. Which of two of the following are taxes on imported goods?
A. Market imperfection
A. Embargo
B. Externalities
B. Tariffs
C. Customs duties
D. Lack of equity
D. Import quotas Chapter 14
Chapter 14
134. Anti-monopoly legislation is an example of government intervention to market
128. A Plc. has 39% of market share of a market. Is A Plc. considered dominant in failure caused by:
the market?
A. Inequity
A. Yes
B. Asymmetric information
B. No
C. Externality
C. Unsure, a business's market share cannot define whether there is dominance.
D. Market imperfection
D. None of the above Chapter 14
Chapter 14
135. What is the purpose of implementing direct taxation of income?
129. The provision of providing public goods is one of the alternative ways of A. To create demand
intervention to address market failure caused by:
B. To create supply
A. Market imperfection C. To provide public goods
B. Externalities
D. To redistribute wealth
C. Asymmetric information Chapter 14
D. Lack of equity
Chapter 14
136. People 'in the know' commit a crime under the __________ if they use 140. What is the fine that can be imposed by CMA for failure to comply with an
knowledge they have as business 'insiders' to make profit or avoid a loss when interim measure in respect of a merger?
buying or selling shares on the back of that knowledge and at the expense of open A. 5% of annual revenue
dealings in the market. Which of the following is the most accurate answer to fill B. 10% of annual revenue
in the blank? C. 15% of annual revenue
A. Code of Market Conduct D. 20% of annual revenue
B. Insolvency Act 1986 Chapter 14
C. Companies Act 2006
141. The United States has implemented some barriers to international trade to a
D. Money Laundering Regulations 2007
country, named Cuba. No goods are allowed to be imported or exported to or from
E. Criminal Justice Act 1993
Cuba. What is the protectionism that is practised by US?
F. Enterprise Act 2002
Chapter 14 A. Tariff
B. Quotas
137. Government intervention in the form of price/profit control is to inhibit market C. Embargo
failure regarding (A OR B), while minimal wage regulations is an act to inhibit D. Devaluation
the market failure regarding (C OR D). Chapter 14
A. Market Imperfection
142. John is the managing director of JohnJohn Plc., a company which is only
B. Externalities
known to him to be on the verge of insolvency. Paranoid, John is determined to
C. Asymmetric Information
take all steps necessary to save the company, which included approaching
D. Equity
Chapter 14 JohnJohn Plc.’s key competitor, Sauron Plc. (the only other player in the
industry), to come to a formal agreement to share their supply sources in an
138. Phoenix has recently been investigated by the Competition and Markets attempt to push down JohnJohn Plc.’s mounting costs. Thanks to this agreement,
Authority (CMA) regarding several breaches in competition regulations. Upon JohnJohn Plc.’s financial situation stabilized and John is now a very happy man,
further investigation, it was revealed that they had broken one of the premises until one day when the authorities arrived. What happened?
contained within Chapter II and Article 102 of the Treaty of the Functioning of A. John is charged with a criminal offence, and disqualified due to fraudulent
the EU (TFEU). As a result, the company was fined 10% of their annual trading
worldwide revenue. Which of the following relates to the competition regulation B. John is charged with a civil offence, and disqualified due to wrongful trading
breached by Phoenix plc.? C. John is charged with a criminal offence, and disqualified due to sanctioning an
A. Anti-Competitive Agreements anti-competitive agreement
B. Abuse of a Dominant Position D. John is charged with a criminal offence, and disqualified due to insider trading
C. Cartel Activity Chapter 14
D. Insider Dealing
143. For a company to be considered to be dominant, the company must have a
E. Fraudulent Trading
market share of more than 40% (choose A/B). CMA can impose a fine for failure
F. Wrongful Trading of an Insolvent Company
Chapter 14 to comply with interim measure in respect of a merger of up to 10% of annual
revenue (choose C/D).
139. Identify whether the following statement is True or False. A. TRUE
(I) Indirect taxation and subsidies are means of addressing market failure by B. FALSE
influencing demand and supply. C. TRUE
(II) Indirect taxation on the expenditure on some goods and services will cause the D. FALSE
supply curve shifts to the right. Chapter 14
(III) Subsidies paid by the government to suppliers will cause the demand curve
144. The president of Populisn believes that protecting Populisn's home industries
shift to the right.
is a good strategy to make Populisn great again. Which of the following would
A. (I) True
NOT be a possible strategy that can be implemented?
B. (I) False
A. import quotas
C. (II) True
D. (II) False B. import restrictions
C. government action to appreciate the nation's currency
E. (III) True
D. hidden subsidies for exporters and domestic producers
F. (III) False Chapter 14
Chapter 14
145. Which of the following situations might fall within Chapter II prohibition and D. FCA
Article 102 of TFEO? Chapter 14
A. PPP Plc. is involved in razor production and dominates 30% of the market
151. Spiderman plc has a dominant position in its markets. It has received notice
share
that it is being investigated under Chapter 2 of the Competition Act 1998. Activity
B. B Plc. is an aeroplane manufacturing company that owns 41 % of the market
1: Imposing unfair selling price.
share and the rest are owned by both A Plc. and C Plc. evenly
Activity 2: Share markets with competitor.
C. Q Plc. decided to fix the price of watermelon and urged L Plc. to do the same
Activity 3: Attach unrelated supplementary conditions to contracts. Which of the
so that a higher price is charged to customers.
following activities may, have given rise to such a notice?
D. AAA Plc. has imposed the policy that whoever buys their main product must
A. Activity 1 and 2
also purchase a supplementary product.
Chapter 14 B. Activity 1 and 3
C. Activity 2 and 3
146. Pepe is a statutory auditor at Memes plc. He often gathers information from D. Activity 1, 2, 3
auditing his clients and uses this information to help him in investing in stocks Chapter 14
and shares in the market. In what way is Pepe abusing the market?
152. XXX is being investigated under the Criminal Justice Act 1993. What is the
A. Manipulating transactions
possible wrongdoings conducted by XXX?
B. Dissemination
A. He misused an information obtained from the company he is working at to
C. Insider dealing
avoid a loss.
D. Distortion and misleading behavior
Chapter 14 B. He as the director of the company made the company insolvent.
C. He is consistently in default regarding the company law requirements.
147. The government wants to prevent the supplier from setting a selling price. D. He fixed the selling prices of the company’s products together with the other
This is an example of regulation designed to address market failure caused by major competitors in that industry.
A. Externalities Chapter 14
B. Equity
153. Lulu plc is a company which sells cigarettes. The government decided to
charge Lulu plc taxes for that. Which of the following market failure is addressed
D. Market imperfection
Chapter 14 by the government?
A. Asymmetric information
148. Based on the Company Directors Disqualification Act 1986, a person may be B. Equity
disqualified from acting as a manager or director of companies for some reasons. C. Externalities
Which of the following managers below will show a possibility of them being D. Market imperfection
disqualified? There may be more than one answer. Chapter 14
A. Manager A fails to read the company’s accounts.
154. Which of the followings is true about the Competition and Market Authority
B. Manager B does not keep a proper accounting records of the company.
(CMA)?
C. Manager C makes a loan from the bank even though he knew the fact that the
A. The CMA is an independent public body which encourages competition in
company is unable to return the money.
markets across the UK economy.
D. Manager D discloses information of the company for personal gain.
Chapter 14 B. The CMA could bring criminal sanctions on those individuals who are against
the anti-competitive agreements.
149. The CMA can impose a fine for failure to comply with the interim measure in C. The CMA enforce the Takeover Code to govern the planning and day-to-day
respect of a merger. How much is the fine? conduct of a takeover offer.
A. 5% of monthly revenue D. None of the above.
B. 10% of annual revenue Chapter 14
C. 15% of annual revenue
155. Joe is a an employee of ZEN Ltd, he knows that a merger is going to be
D. 5% of annual revenue
Chapter 14 announced next week therefore he buys 500 shares under his uncle’s name
because he know that the share price would increase. Which act did he just
150. Who issue the Code of Market Conduct? violated?
A. FRC A. Proceeds of Crime Act 2002
B. FSA B. Criminal Justice Act 1993
C. PRA C. Financial Services and Markets Act 2000
D. Company Directors Disqualification Act 1986 Chapter 14

Chapter 14
162. Henry is the auditor of Bazingaa Plc. He is aware that the company is about to
156. Mahogany plc comes up with new cleaner technology to reduce pollution and announce huge profits and tells his close friend, Jeff what he knows. Jeff later
boost environmental improvement. The reason for this innovation was triggered proceeds to buy further 200 shares in Bazinga Plc. What offence is Henry guilty
by recent strict environmental regulations. Which of the following explains the of?
above effect by Mohagan? A. Fraudulent trading
A. The Porter Hypothesis B. Insider dealing
B. The Sustainable Hypothesis C. Wrongful trading
C. The Green Hypothesis D. Money laundering
D. The Drucker Hypothesis Chapter 14
Chapter 14
163. The Competition and Markets Authority (CMA) is responsible for :
157. In which of the following situations would a cartel be most unlikely to A. Conducting market studies and investigations in markets where there may be
operate? competition and consumer problems.
A. The market only have a few competitors B. Reducing taxes in order to increase incentives to compete and supply
B. The market with products which are similar in characteristics C. Considering regulatory references and appeal
C. The market where there is economic recession D. Co-operating with sector regulators and encouraging them to use their
D. The market where communication channels are not well established yet competition powers
Chapter 14 E. Regulating market by means of quotas
F. Providing subsidies to deserving suppliers
158. Rosewood plc and Oaky plc are two large companies producing a rare wood Chapter 14
product. The two companies recently decided to collude with each other to fix the
prices of the product they sell in the market. What are the conditions that could 164. Carlton is a member of the board of directors in Wills Ltd. Which of the
NOT have encouraged this event? following would not result in him being disqualified as a director?
A. Similar characteristics of the products A. Violating competition laws
B. Few competitors in the industry B. Making loans from company funds that were unlikely to be repaid
C. Industry with limited supply of products C. Compliance with instructions from the Official Receiver or appointed
D. Established communication channels insolvency practitioner
Chapter 14 D. Consistently in default of failing to keep company records
Chapter 14
159. Collusive behaviour can be fined up to
A. 10% of annual worldwide revenues 165. Salamander Ltd increases their product selling price from $15 to $20 recently.
B. 20% of annual worldwide revenues This increase in selling price happens after the government introduced an
C. 10% of annual revenues in the particular country environmental regulation to their industry. The customers of Salamander Ltd are
D. 20% of annual revenues in the particular country not happy with the increase in pricing. Which of the following is Salamander
E. 25% of annual worldwide revenues Ltd.'s response to regulation?
F. 25% of annual revenues in the particular country A. Entrenchment of a particular practice
Chapter 14 B. Mere compliance
C. Full compliance
160. Redistribution of wealth using taxes is aimed to solve
D. Innovation
A. externalities Chapter 14
B. lack of equity
C. market imperfection 166. One of the streetlamps in town B is faulty. No local authorities has been
D. asymmetric information willing to solve the problem but it has caused accidents due to poor lighting. Why
Chapter 14 would the authorities refuse to fix it? (A, B). Why is merit good provided by
government beneficial to the society?
161. Country X has banned all imports from Zimbabwe from entering its country.
A. Free rider problem
The protectionism measure adopted by country X is: B. High cost
A. Tariffs
C. social benefit > private benefit
B. Quota D. social benefit > private cost
C. Embargo Chapter 14
D. Custom duties
167. The Competition Act 1998 aims to prohibit anti-competition between B. They can be fined up to 10% of its annual revenue due to breach of Chapter ll
businesses. Which is NOT the reason of such regulations? and Article 102
A. Consumers have few choices C. They can be fined up to 10% of its annual revenue and individuals responsible
B. Businesses who form cartels will have too strong bargaining power for those agreements may be expose to criminal sanction due to breach of
C. Businesses might exploit consumers by increasing prices. Enterprise Act 2002.
D. Governments want to raise more taxes D. They can be fined maximum 10% of its annual revenue due to breach of
Chapter 14 Chapter l prohibition and Article 101
Chapter 14
168. Under the Enterprise Act 2002, individuals in businesses found to be in an
informal cartel is subjected to which of the following ? 173. The government often seeks to intervene in the case of market failure and
A. Fine doing so by providing public goods, providing merit goods, influencing supply
B. Penalty and demand through regulations and taxations. Unfortunately, there will be still
C. Criminal sanction market failure, and it is impossible for the government to make the market perfect.
D. Publicity Which of the following are the causes of market failure?
Chapter 14 A. Market imperfection, Internalities, symmetric information, inequity
B. Equity, externalities, market imperfections, asymmetric information
169. Which of the following is true regarding the protection imposed by the
C. Externalities, Global economy, equity, rules and regulations
government as a barrier to free trade?
D. Market composition, externalities, asymmetric information, probity
A. High import quotas will cause domestic supplier to produce more as a result of Chapter 14
fewer imports in volume
B. Specific tariff is a applied as a percentage of the value of goods imported 174. Which of the following organisations, does not have extensive power to
C. Government action to devalue the nation's currency increases the import rate influent the development of regulations?
of a country. A. World Trade Organisation (WTO)
D. Value added tax is a form of direct taxes B. International Monetary Fund (IMF)
Chapter 14 C. International Chamber of Commerce (ICC)
170. The government has issued a legislation to limit the carbon emission of any Chapter 14
company or industry by imposing a fine on those who break the limit of emission.
Which of the market failures is the government seeking to address? 175. To intervene in the level of supply in a market, the government can use which
A. Market Imperfection of the following ways?
B. Externalities (i) min and max selling prices
C. Asymmetric information (ii) VAT, excise duty, income tax
D. Equity (iii) subsidies to encourage exports
Chapter 14 (iv) standards that must be complied with
A. None of the above
171. According to the Code of Market Conduct, giving out information that
B. ii and iii
conveys a false or misleading impressions where the person know the information
C. i, ii and iii
provided to be false or misleading is covered by which sections?
D. All of the above
A. Fraudulent trading Chapter 14
B. Insider dealing
C. Dissemination
D. Distortion and misleading behaviour
Chapter 14
172. Paxis and X-mobile are communication services providers in the UK. Both of
the providers have recently have agreed to fix the selling process of their data plan
and agreed to offer the same discounts to customer who purchase their data plan at
the same rate. They also agreed to divide up their markets into Scotland and
England. As a result they do not compete for each other's allotted market. What is
the result of these agreement?
A. They can be fined up to 10% of its annual revenue due to breach of Chapter l
prohibition and Article 101

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BTF Questions 2021 (Chapters 1-2) BTF Questions 2021 (Chapters 1-2)

D. Expert power 70. Which of the followings is condition of benevolent-authoritative leaders in an

A. To maximize profits D. Currency

145. Fayol and Taylor shared the belief that:

40. Select the true statement D. There is goal congruence.

C. Limited company Chapter 3

D. Limited liability companies can offer a fixed and floating charge.

96. The line of authority relates to what? Chapter 3

B. Value chain B. Competing strategies.

192. When assessing an organisation's ability to compete the main issues to

141. For financial information to be useful, it must first be faithfully represented,

153. Transaction Processing System is used for the following EXCEPT

D. Limiting factor analysis.

53. Which following part is carried out by management accounting?

Chapter 7 A. Receivable/payable relationship

D. Prudential Regulation Authority D. Floating charge relationship

D. Current account overdrafts

168. What is the right of the bank?

B. Financial Audit B. professional conduct requirement

71. Which of the following is the FRC engagement?

3) offer an unpublished caution

141. In relation to the FRC's recommendations, ICAEW:

142. Which of the following is not true of remuneration committees? Chapter 12

1. Which THREE of the following are determinants of demand? D. Social benefit

B. Normal goods // Price sensitive customer D. Statement 2 is False

84. In the UK who is responsible for setting interest rates?

A. The Chancellor of the Exchequer C. Land, Entrepreneurship, Labour, Capital

D. Company Directors Disqualification Act 1986 Chapter 14

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