ACCA Fundamentals Level

Paper F1
Accountant in Business

Course Test 1

Question Paper

Time allowed 2 hours

ALL FIFTY questions are compulsory and MUST be attempted

Instructions:
Please attempt this exam under test conditions and attach the frontsheet complete with your name and
address to your script. The completed package should be sent to BPP Professional Education.
Take a few moments to review the notes on the inside of this page titled, ‘Get into good exam habits now!’
before attempting this exam.

DO NOT OPEN THIS PAPER UNTIL YOU ARE READY TO START UNDER
EXAMINATION CONDITIONS

ACF1CT10(J)

AC110 – F1(1)
Get into good exam habits now!
Take a moment to focus on the right approach for this exam.

Effective exam technique

The following steps are recommended for answering multiple choice and objective test questions.

Step 1 Note down how long you should allocate to each question. For this paper you will be
answering 50 questions in 120 minutes, so you will be spending on average 2.4 minutes on
each question. Remember however that you will not be expected to spend an equal amount of
time on each of them and that some can be answered instantly but others will take time to
work out.
Step 2 Attempt each question. Read the question thoroughly.

Step 3 To answer a multiple choice question read through all of the options and see if one matches
your own answer. Be careful with numerical questions, as the distracters are designed to
match answers that incorporate common errors. If you are required to input an answer, check
that your calculation is correct. Have you followed the requirement exactly?
Step 4 If you are unsure of your answer.
• Re-read the question to ensure that you understand it and are answering the
requirement
• Eliminate any obviously wrong answers
• Consider which of the remaining answers is the most likely to be correct and select
the option

Step 5 If you are still unsure, continue to the next question. Likewise if you are nowhere near
working out which option is correct after a couple of minutes, leave the question and come
back to it later.

Step 6 Revisit questions you are uncertain about. When you come back to a question after a break
you often find you are able to answer it correctly straight away. If you are still unsure have a
guess. You are not penalised for incorrect answers, so never leave a question unanswered!

2 Test 1
ALL FIFTY questions are compulsory and MUST be
attempted
Please write your answer on lined paper with one answer per line
1 Which of the following provides an example of a ‘boundary’ separating an organisation from its
environment?
A A divisional structure
B Systems and procedures
C Factory gates
D Recruitment policy (2 marks)

2 John noticed at a recent project team meeting that Jane was a very good listener and was always
willing to accept other people’s opinions. As a result she was easily swayed when trying to decide on
the best course of action. Meanwhile Jalil goes to painstaking lengths to ensure that the agreed plan is
free from any errors or potential errors and is known as a worrier who is reluctant to delegate. John is
just happy to offer his IT skills on this project. When considering Belbin’s team roles, which one of the
following options is correct?

A Jane is a monitor-evaluator; John is a specialist; Jalil is a co-ordinator

B Jane is a team worker; John is a resource investigator; Jalil is an implementer
C Jane is a team worker; John is a specialist; Jalil is a complete-finisher
D Jane is a monitor-evaluator; John is a specialist; Jalil is an implementer (2 marks)

3 What kind of information would be found at the ‘tactical level’ in a finance information system?
A Sources of funds for borrowing
B Bank reconciliations
C Cash flow forecasts
D All of the above (2 marks)

4 What was the main conclusion of the Hawthorne studies?

A Job status is a strong motivator
B Informal groups exercise a powerful influence in the workplace
C Group psychology has a strong effect on establishing norms
D Informal networks indicate who people trust (2 marks)

5 What is Schein’s ‘third level’ in determining culture?

A Behaviour
B Attitudes
C Values and beliefs
D Assumptions (2 marks)

6 Which of the following is a connected stakeholder?

A Professional body
B Supplier
C Manager (1 mark)

Test 1 3
7 Danny Ltd has just appointed a new CEO who is keen to ensure that the company adopt an approach
to ethics which ensures the company acts within the letter of the law. What approach best describes
the new CEO’s attitude to ethics?
A Compliance-based
B Integrity-based
C Whistle-blowing (1 mark)

8 What is a possible symptom of board members losing touch with their shareholders?
A Concealment of problems or errors
B Manipulation of accounts
C Not carrying out necessary questioning of senior management
D Payment of excessive remuneration packages (2 marks)

9 Which of the following areas is covered by company law?

A Pollution control
B Directors and their duties
C Unfair dismissal
D Safety procedures (2 marks)

10 Why is the study of population relevant for all types of business?

A An ageing population is less likely to buy new products
B It affects demand for services
C It affects an organisation's supply of labour
D A declining population is a sign of a declining economy (2 marks)

11 What does the term ‘information market’ refer to?

A The transfer of information between networks and systems can be carried out
B Systems are likely to be superseded by newer ones
C Any user can share or exchange information
D Information is a commodity which can be bought, sold or exchanged (2 marks)

12 When a country is in deficit, it is ........................................ more goods and services that it is

........................................
Which words, in correct order, correctly complete this sentence?
A Exporting; importing
B Importing; exporting
C Buying; selling (1 mark)

4 Test 1
13 Bee is a successful coffee shop on the high street near the tube station. They run a loyalty points
scheme which has received good customer feedback. There are a couple of empty outlets on the high
street up for rent. Sally, the owner of Bee, buys the coffee from an organic local supplier and uses this
in her marketing campaign as a selling point.
Based on this information and using Porter’s five forces model, which of the following statements is
true about Bee’s competitive position?
A Buyer power is low, Supplier power is high, Threat of new entrants is high.
B Buyer power is low, Supplier power is low, Threat of new entrants is low.
C Competitive rivalry is high, Threat of new entrants is high, Supplier power is high
D Threat of new entrants is high, Threat of substitutes is high, Buyer power is low. (2 marks)

14 What is an ‘employee report’?

A An analysis of recruitment figures
B A productivity assessment
C A disciplinary procedure
D Financial information for issue to employees (2 marks)

15 Which of the following is NOT a key feature of the Accounting Standards Board?
A It is concerned with departures from accounting standards
B It issues Financial Reporting Standards
C It is supported by the Urgent Issues Task Force
D It is overseen by the Financial Reporting Council (2 marks)

16 Which of the following is output from a payables ledger system?

A A list of advances of employee pay
B An analysis of expenditure
C Aged receivables listing
D Those individuals who can authorise particular expenses (2 marks)

17 What is ‘the purchasing mix’?

A Quantity, price, supply, demand
B Quantity, quality, demand, cost
C Quantity, price, quality, delivery
D Quantity, cost, demand, delivery (2 marks)

18 Your friend is studying accountancy in his spare time while working full time in a factory. He has
recently come across Mintzberg’s organisation diagram and is fairly sure that he would fit in to the
Operating Core of the business however he does not know how Mintzberg would have described the
role of an employee in the Operating Core. Which of the following best describes this role?
A Turning inputs into outputs
B Standardising work processes or results across the business
C Ensuring the organisation follows its mission (1 mark)

Test 1 5
19 Which of the following best describes a ‘standing committee’?
A It is formed to deal with routine business delegated to it on a permanent basis
B One with the power to govern or administer
C Formed to co-ordinate the activities of two or more committees
D Appointed to relieve the parent committee of some of its routine work (2 marks)

20 A-Pod have designed a TV that meets all the functionality of the alternative televisions that are on the
market. However they have also added neon green lighting to the rear of the television plus finger
print recognition restricting the number of users who can operate the television. Having not done any
market research, they expect these features to increase sales of their television sets. What type of
orientation best applies to A-Pod?
A Production
B Sales
C Product
D Marketing (2 marks)

21 The term ........................................ is often used to describe the process of gathering external
information.
Which phrase correctly completes this sentence?
A Environmental scanning
B SWOT analysis
C Data capture (1 mark)

22 Predita Ltd operates in a slow moving market, employ a staff of 100 and have 3 departmental
managers reporting to the MD. Each member of staff knows what their job role is and how to achieve
it, beyond this they show little ambition. Which of Harrison’s organisational cultures do Predita Ltd
best demonstrate.
A Power culture
B Role culture
C Task culture
D Person culture (2 marks)

23 What does the ‘informal organisation’ consist of?

A Social relationships
B Casual communication networks
C Behavioural norms
D All of the above (2 marks)

24 Why can conflict between stakeholders be quite common?

A Different shareholders will have different risk/return profiles
B Managers do not need to take their views into account
C Their interests will generally be widely different
D All of the above (2 marks)

6 Test 1
25 What does ‘reliability’ specifically mean in the context of professional ethics for you as an accountant?
A Clients are confident that your work meets professional standards
B You produce work within a specified time frame
C You conduct yourself with consideration
D You develop constructive relationships (2 marks)

26 Most corporate governance reports acknowledge the importance of having a significant presence of
accountants on the board.
A True
B False (1 mark)

27 The government in country T is concerned that they are going into the boom phase of the business
cycle . They have therefore decided to increase the amount banks need to hold so that they can lend
out less. They have also increased interest rates to encourage consumers to save. Which of the
following covers the type of policy country T’s government is using?
A Credit control policy
B Interest rates control policy
C Monetary policy
D Fiscal policy (2 marks)

28 Which of the following is NOT a potential disadvantage of outsourcing?

A An organisation may find itself locked in to an unsatisfactory contract
B There is no onus upon internal management to keep up with new developments
C Certain functions may be too important to be contracted out
D There is often a long-term contract where services are specified for a fixed price (2 marks)

29 Which of the following could be found as a feature of an organisational health and safety policy?
A Employees’ medical assessments
B Detailed instructions on how to use equipment
C The company mission statement
D An analysis of employee benefits in kind, including private health care (2 marks)

30 Which of the following is NOT a factor when considering social class?

A Educational attainment
B Inherited wealth
C Number of children
D Status (2 marks)

31 Value ........................................ are the means by which a firm creates value in its products.
Which word correctly completes this sentence?
A Inputs
B Activities
C Promotions (1 mark)

Test 1 7
32 Why are the accounting statements drawn up by a management accountant often prepared and
presented very differently from those of the financial accountant?
A They are mainly interested in reporting to external parties
B They are not concerned with policy or decision making
C They do not need to comply with company law or accounting standards
D They do not need to be done on a regular basis (2 marks)

33 What does ‘GAAP’ stand for?

A Generally accepted accounting policy
B Generally accepted accounting procedure
C Generally accepted accounting practice
D Generally accepted accounting process (2 marks)

34 When there is an input to X Ltd’s invoicing module, authorising the despatch of an invoice to a
customer, there are automatic links to the receivables ledger which then updates the customer’s
account.
This is a feature of what type of system?
A Database management system
B Internal control system
C Executive information system
D Integrated accounting system (2 marks)

35 Delayering is the reduction in the number of management levels from bottom to top. As a result,
organisations are decreasing the average span of control.
Is this statement true or false?
A True
B False (1 mark)

36 What is the usual intention behind a research and development function?

A To improve products or processes
B To attract resources and funding
C To provide employee training
D To understand buyer behaviour (2 marks)

37 Which of the following is regarded as a primary stakeholder?

A One who is more strategically important than others
B The government
C One who has a contractual relationship with the organisation
D An external stakeholder (2 marks)

38 Committees are a key part of organisational ........................................ processes.

Which word best completes this sentence?
A Communication
B Payroll
C Training (1 mark)

8 Test 1
39 What is the mission of the International Federation of Accountants (IFAC)?
A To make all accountants responsible for their judgements and decisions
B To attract resources and funding for accountancy research
C To provide appropriate training for accountancy practitioners
D To develop high standards for professional accountants, and enhance the quality of their
services (2 marks)

40 Which of the following statements concerning directors’ remuneration is NOT accurate?

A The packages of individual directors need not be disclosed, for reasons of confidentiality
B Directors' remuneration should be set by a remuneration committee
C Remuneration should be dependent upon performance
D Accounts should disclose remuneration policy (2 marks)

41 In country P the government is keen to manage the economy to promote economic growth. Recently
however, there has been a difficulty in matching workers to the jobs available in the financial services
sector. Car manufacturers have also moved overseas to make use of cheaper labour sources. At the
same time country P imports a large volume of goods from country Q which has high inflation. A
recent government report showed that the increase in the PRI was relatively high.
What type of inflation does the above describe?
A Demand pull
B Cost push
C Stagflation
D Deflationary gap (2 marks)

42 What does Porter analyse the micro environment into?

A Generic competitive factors
B Five competitive forces
C PEST factors
D Product/market strategies (2 marks)

43 Buying behaviour is an important aspect of marketing. What is an inhibitor?

A An individual’s personality
B A factor that makes a person less likely to purchase something
C An individual’s social class
D An individual’s culture (2 marks)

44 For information to be cost beneficial, it should cost ........................................ to obtain it, when
compared with the benefit obtained from using it.
Which word best completes this sentence?
A The same
B More
C Less (1 mark)

Test 1 9
45 Which of the following provides an example of ‘ad-hoc’ outsourcing?
A Employing programmers on a short-term contract
B Ongoing website management
C A third party owns or is responsible for equipment and staff
D Contractual hardware maintenance (2 marks)

46 One of the activities carried out at company Po, a car company, deals with the receiving of car parts
into the warehouse, which a later activity assemble into the car. The parts are checked by the
warehouse manager on receipt and logged on to the inventory control system.
With reference to Porter’s Value Chain, which activity does the above describe?
A Service
B Inbound logistics
C Outbound logistics
D Procurement (2 marks)

47 ‘The usefulness of information is reduced if it does not appear until long after the period to which it
relates.’
To which feature of good accounting information does this sentence relate?
A Reliability
B Objectivity
C Timeliness
D Relevance (2 marks)

48 How is ‘true and fair view’ generally defined for practical purposes?
A Managers have promised that the accounts are correct
B The accounts have been produced with the best intentions
C All statements are honest and unlikely to deceive
D The accounts are accurate and not misleading (2 marks)

49 In order for the purchase of a non-current asset to be processed, what must the manager of the
department which requires the asset firstly fill out?
A Business case
B Purchase requisition
C Company cheque
D Order form (2 marks)

50 Country Hay had several successful large management consultancy companies based there. However,
recently there have been new consultancy companies setting up in other counties such as Tun, in
response to client demand. There has also been a shift of consultancy companies from Hay to Tun.
What type of unemployment will this have caused in Hay?
A Frictional
B Seasonal
C Technical
D Structural (2 marks)

End of Question Paper

10 Test 1
Student self-assessment
Having completed this exam, take a few minutes to consider what you did well and what you found difficult.
Use this as a basis to focus your future study on effectively improving your performance.

Common problems Future emphasis if you answer Yes

Timing and planning

Did you finish too early?
Did you overrun?
Y/N Go back and check your answers, especially those you were
unsure of.
Y/N Focus on allocating your time better.
Practise questions under strict timed conditions.
If you get behind move on.

Content
Did you struggle with:
Interpreting the questions?
Understanding the subject?
Remembering the notes/text?
Y/N Learn subject jargon (look at key terms in your Study Text).
Read questions carefully.
Practise as many questions as possible.
Y/N Review your notes/text.
Work through easier examples first.
Classroom students please contact your tutor for further help.
Home Study students please contact ACCA queries for further
help (accaqueries@bpp.com).
Y/N Quiz yourself constantly as you study. You need to develop
your memory as well as your understanding of a subject.

Note here any thoughts on your performance which could help you on the big day.

Test 1 11
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www.bpp.com/learningmedia Test 1
ACCA Fundamentals Level
Paper F1
Accountant in Business

Course Test 1

Suggested solutions and guidance

ACF1CT10(J)

AC110 – F1(1)
Guidance on improving your exam performance
To help improve your performance you should focus on these key areas.
1 Terminology
This paper tests your understanding of a large number of key terms and definitions. Learning as many
of these as you can will help save you time in the exam which you can use to answer questions that
require more thought. Your Study Text provides you with assistance by highlighting these terms and
definitions.
2 Question spotting
Avoid the temptation to question spot or to assume certain areas of the syllabus will be examined in a
particular way. Ensure you are able to answer questions across the syllabus in a number of question
styles as this will maximise the number of questions that you will be able to attempt successfully.
3 What went wrong?
OK, you're not going to get 100% correct, but pay attention when you consistently get certain areas of
the syllabus wrong. This is your cue to revise these areas fully, learn from your mistakes, AND NEVER
REPEAT THEM!

2 Test 1
Answers
1 C Boundaries might be physical or social (Chapter 1)
2 C (Chapter 12)
3 C Information at this level is for the purpose of helping middle managers to ‘monitor and control’
(Chapter 2)
4 B This study is part of the human relations school of management theory, and describes the
importance of groups within an organisation (Chapter 3)
5 D These are the unspoken rules which 'programme' ways of thinking and behaving, without
being consciously recognised (Chapter 3)
6 B A is external and C is internal (Chapter 3)
7 A A Compliance-based approach means meeting legal obligations, but not going any further.
(Chapter 4)
8 D The other options reflect either an emphasis on short term results, or a lack of independent
scrutiny (Chapter 5)
9 B All of the other options are covered by other areas of the law or other forms of regulation
(Chapter 5)
10 C The other options are either inaccurate or not necessarily applicable to all businesses (Chapter 6)
11 D There has been a growing realisation that information is a resource and that it has many of the
characteristics of any other resource (Chapter 7)
12 B Answer A is the wrong way round and C is not specific enough. (Chapter 6)
13 A Buyer power is low due to loyalty scheme and location. Supplier power is high as rely on one
supplier for point of differentiation, Threat of new entrants is high due to vacant locations and
Bee being successful will attract competition.. (Chapter 7)
14 D These reports are entirely voluntary (Chapter 8)
15 A This is the role of the Financial Reporting Review Panel (FRRP) (Chapter 8)
16 B This may be produced every time the system is run or at the end of each month. The other
options relate to other systems or controls (Chapter 8)
17 C Purchasing is defined as 'the acquisition of material resources and business services for use
by the organisation' (Chapter 1)
18 A The Operating Core turn inputs into outputs. Option B describes the technostructure and
option C is The Strategic Apex (Chapter 1)
19 A The other options describe executive committees (B); joint committees (C) and sub-
committees (D) (Chapter 1)
20 C Product orientation (Chapter 1)
21 A Such information is available from a wide range of sources in the external environment
(Chapter 2)
22 B Role culture is typical in bureaucratic organisations. Authority is based on function and
position and the business operates in a stable environment (Chapter 3)
23 D When people work together, they establish social relationships and customary ways of doing
things (Chapter 3)

Test 1 3
24 C Option A refers only to shareholders, & option B is inaccurate (Chapter 3)
25 A Option B relates to ‘timeliness’; Option C to ‘courtesy’; Option D to ‘respect’ (Chapter 4)
26 B Most reports want to see a significant number of non-executive directors on the board
(Chapter 5)
27 C Monetary policy includes using credit control, interest rates and exchange rates to manage the
economy. Country T is using BOTH of the first two. Therefore the answer is C, not A or B.
Fiscal policy is where a expenditure and revenue are used. (Chapter 6)
28 D This feature is more likely to be an advantage, particularly from the point of view of cost
control (Chapter 7)
29 B The other options are not suitable for inclusion in such a policy, either because they are
confidential or not relevant (Chapter 7)
30 C Some classes have advantage over others in certain areas. Option C does not specifically
reflect social class (Chapter 7)
31 B Activities incur costs, and, in combination with other activities, provide a product or service
which earns revenue (Chapter 7)
32 C The other options are plainly inaccurate (Chapter 8)
33 C The other options are plainly inaccurate (Chapter 8)
34 D In such a system, each module may be integrated with others, so that data entered in one
module will be passed automatically (or by simple operator request) into any other module
where the data is of some relevance (Chapter 8)
35 B A lower number of management levels will mean that spans of control will have to increase as
organisations become flatter (Chapter 1)
36 A R&D should support the organisation's strategy, and be closely co-ordinated with marketing
(Chapter 1)
37 C The primary stakeholder category thus includes internal and connected stakeholders (Chapter 3)
38 A They can be used to exchange ideas and get feedback before a decision is taken, or to inform
managers (Chapter 1)
39 D IFAC is an international body representing all the major accountancy bodies across the world
(Chapter 4)
40 A There should be full transparency of directors' remuneration, including pension rights, in the
annual accounts (Chapter 5)
41 C Stagflation is where a country has BOTH high unemployment (here frictional and structural)
and high inflation (here imported and seen from government statistics) at the same
time.(Chapter 6)
42 B The micro (or task) environment includes those areas which have a direct impact on the
organisation, such as its ability to acquire raw materials, its competitors and its customers
(Chapter 7)
43 B The others are behavioural determinants (Chapter 7)
44 C The other options are plainly inaccurate (Chapter 2)
45 A Ad-hoc outsourcing will occur when the organisation has a short-term requirement for
increased skills (Chapter 7)

4 Test 1
46 B Outbound logistics is the storage and distribution of finished goods (in this case it would be a
car). Service is after sales service to the customer. Procurement is the buying activity.
(Chapter 7)
47 C Information must be produced at regular intervals and in sufficient time for it to be useful for
management (Chapter 2)
48 D While true and fair view is not defined in company law or accounting standards, this is
generally taken to be its meaning (Chapter 8)
49 B As most non-current assets are relatively expensive, this will probably have to be authorised by
more senior management. Once the requisition has been authorised the purchasing function
will then find the most appropriate supplier for the asset (Chapter 8)
50 D Structural unemployment is where long-term changes occur in the conditions of an industry.
(Chapter 6)

Test 1 5
6 Test 1
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Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
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