Problem questions Flashcards
B Ltd manufactures motorbikes. Which of the following would form part of the ‘threat of substitutes’ within Porter’s Five Forces model?
- V Ltd – a competing manufacturer of motorbikes
- F Ltd – a company that is considering entering the motorbike market for the first time in the near future
- S Ltd – a company that manufactures motor cars
- H Ltd – a company that supplies B with many of the components it uses in its motor bikes
S Ltd – a company that manufactures motor cars
Q is currently unemployed. He previously worked in a coal mine, which was a major employer in his home town. The mine has closed down due to a significant downturn in demand for coal within his country’s economy. Q is finding it hard to find new work as his mining skills are no longer needed.
What type of unemployment is Q experiencing?
- Frictional
- Cyclical
- Structural
- Real wage
Structural
A and B are currently in dispute over a contract. A is arguing that the contract is not valid as she received no value from B.
What aspect of a simple contract is A arguing that the contract is missing?
- Capacity
- Intent
- Agreement
- Consideration
Consideration
Peterson Supplies is a manufacturing organisation specialising in lights and fixtures operating in Europe. Which of the following decisions below would be categorised as tactical planning within the organisation?
- Relocating the main factory to the Far East to take advantage of cheaper labour
- Acquisition of a smaller manufacturing firm in South America
- Upgrade of machinery to include CAD/CAM techniques
- The decision to outsource its back office function (HR, payroll, sales) in one of its Eastern European subsidiaries
- Redundancy decisions for staff in the Eastern European subsidiary due to the outsourcing
The decision to outsource its back office function (HR, payroll, sales) in one of its Eastern European subsidiaries
Which of the following would be a typical advantage of a divisional structure?
- Clear responsibility for different products
- Improved goal congruence
- Improved control
- Rapid decision making
Clear responsibility for different products
Which of the following writers on culture suggested that the first leaders of a company create its culture?
- Handy
- Hofstede
- Kotter
- Schein
Schein
A purchase made on credit will be recorded by an organisation in several different places. These include:
(i) The general ledger
(ii) The financial statements
(iii) The purchase day book
what is the correct order of these steps?
(iii), (i), (ii)
Which of the following organisations gives guidance on topical issues that are not covered in an accounting standard or where the guidance is conflicting?
- Standards Advisory Council (SAC)
- International Accounting Standards Board (IASB)
- International Accounting Standards Committee Foundation (IASCF)
- International Financial Reporting Interpretations Committee (IFRIC)
International Financial Reporting Interpretations Committee (IFRIC)
Which of the following statements regarding companies are correct?
- (i) In most countries, companies only have to publish their accounts if it is in the public interest to do so.
- (ii) Companies usually have to retain their accounting records for a minimum period (often seven years) in case the authorities wish to verify information.
(ii) Companies usually have to retain their accounting records for a minimum period (often seven years) in case the authorities wish to verify information.
F Ltd’s managers have a poor attitude to internal controls and do not feel that they are important to their organisation.
Which component of internal control does this relate to?
- Information system
- Control environment
- Monitoring
- Control activities
Control environment
Question
A company is looking to raise new finance to launch a new product. It cannot decide between raising money through debt or equity. Which of the following statements regarding the two sources of finance is correct?
- Equity is typically cheaper to service than debt
- Equity can be secured on the company’s assets to reduce the cost
- Dividends to shareholders must be paid each year
- Interest payments on debt are tax deductable while dividend payments are not
Interest payments on debt are tax deductable while dividend payments are not
Which of the following is a typical feature of financial accounting?
- Predominantly for internal use
- Legally required by companies
- Both historical and forward-looking
- To aid planning, control and decision-making
Legally required by companies
Which of the following statements regarding internal and external audit is correct?
- Internal audit work is typically more flexible than that undertaken by external auditors
- Internal auditors are usually not employees of the company they audit
- An external audit is required by law for all organisations
- Internal audit concludes on whether the financial statements are true and fair
Internal audit work is typically more flexible than that undertaken by external auditors
Which of the following might indicate an increased risk of fraud or error within an organisation?
- Low numbers of unusual transactions
- Good staff morale
- Employees failing to take annual leave
- Simple corporate structure
Employees failing to take annual leave
F is a manager who expects his staff to follow his instructions simply because he is their manager. He says, ‘the company has put me in my position and that means that what I say is what staff need to do.’
What source of power is F using?
- Referent
- Legitimate
- Coercive
- Expert
Legitimate
