ACCA. Paper F1 and FAB. Accountant in Business. December 2014 to June Interim Assessment Answers

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1 ACCA Paper F and FAB Accountant in Business December 204 to June 205 Interim Assessment Answers To gain maximum benefit, do not refer to these answers until you have completed the interim assessment questions and submitted them for marking.

2 ACCA F AND FAB: ACCOUNTANT IN BUSINESS Kaplan Financial Limited, 204 The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such. No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties. Please consult your appropriate professional adviser as necessary. Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, and consequential or otherwise arising in relation to the use of such materials. All rights reserved. No part of this examination may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without prior permission from Kaplan Publishing. 2 KAPLAN PUBLISHING

3 INTERIM ASSESSMENT ANSWERS SECTION A OBJECTIVE TEST ANSWERS A 2 D 3 A 4 A A non-governmental organisation is an organisation that does not have profit as its primary goal and is not directly linked to the national government. Most charities are likely to fall into this category. Police forces are likely to be provided by the government, while accountancy partnerships and public limited companies usually have a profit objective. PEST analysis provides four key factors against which to review how the environment will affect a business. In a matrix structure individuals will have dual command, a functional manager and a divisional manager. This can cause conflict between departments and stress for the individual. The three levels of control are strategic, tactical and operational. 5 B 6 A 7 B 8 B 9 B J Ltd has chosen a matrix structure. Note that this is the only structure that involves having two sets of management. This is supposed to provide the benefits of both the divisional and matrix structures. RPZ has a large number of levels of management, indicating a long scalar chain. This means each manager only looks after a small number of staff, meaning that there is a narrow span of control. Hofstede s 5 dimensions are individualism v collectivism, uncertainty avoidance, power distance, masculinity v femininity, Confucianism v dynamism. U has failed to consider what its customers are able to afford. The pricing strategy is in line with its existing corporate objectives of charging a premium for its products and (if it is being sold at a premium) U should be covering its costs. No mention is made of U s competitors. While the other three factors would influence corporate culture, Schein argued that it is the first leaders that tend to create the organisation s culture. KAPLAN PUBLISHING 3

4 ACCA F AND FAB: ACCOUNTANT IN BUSINESS 0 C B 2 D Data subjects have the right to make a written request and pay a fee to access personal information held about them. They can also request erasure of data held about them through the courts, which is unlikely to be immediate. The primary activities are inbound logistics, operations, outbound logistics, marketing and sales and service. Support activities are procurement, technology development, human resources and infrastructure. A and C refer to seasonal unemployment. B describes structural unemployment. 3 B 4 D The inflationary gap is a Keynesian concept which describes a situation where demand exceeds the level required to bring about full employment. The other three options are incorrect. 5 A 6 D 7 A 8 C 9 B Power culture is characterised by one central source of power, few procedures and rules. In an entrepreneurial structure the owner/manager takes all the decisions therefore they are made quickly and ensure they are congruent with the organisations goals. This is a classic example of price discrimination, with different prices set for the same product in different markets. Self-managed team working would tend to indicate a low power distance employees expect to have control over their own jobs. The definition given is that of an expenditure-switching strategy. 4 KAPLAN PUBLISHING

5 INTERIM ASSESSMENT ANSWERS 20 C The other attributes are advantages of a decentralised management structure. 2 C 22 C 23 B SWOT looks at a company s strengths, weaknesses, opportunities and threats which covers both internal and external issues. PEST and Five forces look externally, while the value chain looks at internal issues. The manager takes a relativist view of ethics (rather than absolutist) as she does not feel that there is a universal code to follow in this instance. The fact that she only cares about herself would also indicate and egoist approach, as opposed to pluralism, which examines how an action would affect others. By definition. 24 B 25 A 26 B A lack of previous experience as a NED would not necessarily prevent an individual from becoming a NED. The other options would all indicate a lack of independence and should prevent the individual from being selected as a NED. An ad hoc committee is formed to complete a particular task and is likely to be temporary. Standing committees are permanent while executive committees have administrative powers and run the affairs of the organisation. Audit committees are a sub-committee of the board of directors that provides an interface between the auditors and the board. A management information system provides summarised information to assist decision making. An expert system applies expert knowledge to the solving of problems but not all decision support systems are expert systems. An executive information system is designed for executives and provides summaries of the organisation and its performance, information for monitoring and control, access to more detailed information behind the summaries and information for identifying problems and opportunities. KAPLAN PUBLISHING 5

6 ACCA F AND FAB: ACCOUNTANT IN BUSINESS 27 A 28 B 29 D 30 A 3 A 32 B 33 D 34 A 35 A They must be free from material or significant misstatement. Immaterial frauds would not prevent the accounts from being considered true and fair. Other ethical safeguards include ethics training and professional and regulatory monitoring and disciplinary procedures. A PED of.5 means that the proportion of units sold changes.5 times as fast as the change in selling price. This makes the product relatively elastic (note: unit elastic would mean that the product had a PED of ). Necessities tend to be inelastic. Be careful with statement the PED measures the percentage movements in the demand and selling price. We can say that the units sold will rise by 5% if the price falls by 0%, but we do not know for certain if this correlates to 0 and 5 units. This is a classic example of an expert system, which hold specialist knowledge and allow users to interrogate the system for information, advice and recommended decisions. By hiring non-executive directors, management costs are likely to rise. This is due to additional administration as well as wage costs for the NEDs. The other three are all benefits of strong corporate governance. Structural unemployment relates to the decline of particular industries often creating high regional unemployment. The company may find it has fewer suppliers to choose from as a company that is trying to be environmentally friendly will only be able to deal with other environmentally friendly businesses. Delayering means reducing the number of layers of management in the organisation. A contract cannot be formed for the purposes of illegal acts. Remember that the fact that the contract is verbal is irrelevant a verbal contract can be legally binding (although difficult to prove). 6 KAPLAN PUBLISHING

7 INTERIM ASSESSMENT ANSWERS 36 C 37 B 38 A 39 A 40 C 4 D 42 C 43 B 44 B A new supplier to the industry will lead to lower costs as the suppliers have to become more competitive to maintain market share. This in turn will increase the profitability for the industry to which it supplies. Supply side policies are based on enabling markets to function freely with government intervention restricted to improving the supply of factors of production in an economy. Budgets are primarily for internal use (as part of the management accounting function). They do not have to be prepared by law and are forward looking. Connected stakeholders can be viewed as having a contractual relationship with the organisation and includes shareholders, lending bankers, suppliers and customers. Mendelow s matrix helps to identify the relationships that should be built with different stakeholders. Remember that debt repayments are fixed and must be made, whereas equity dividends can be suspended if the project fails and the company cannot afford to make them. The other statements are all false. ACCA s ethical code requires members to act in a way that does not bring the institute into disrepute therefore A and B would both be incorrect as an individual s or other accountant s or organisation s standards of ethics may still bring ACCA into disrepute. Connected stakeholders can be viewed as having a contractual relationship with the organisation and includes shareholders, lending bankers, suppliers and customers. An automated accountancy package would be likely to improve the speed of inputting transactions. However, as with all computerised systems, it is only as good as the information it is given. It would still be possible for incorrect information to be entered into the system. An IT system will still be likely to require staff training in its use and will require capital expenditure to purchase the system in the first place. KAPLAN PUBLISHING 7

8 ACCA F AND FAB: ACCOUNTANT IN BUSINESS 45 C A and B would be part of the management accounting function. 46 D The non-executive directors are not responsible for all key business decisions. This is the role of the executive directors. 8 KAPLAN PUBLISHING

9 INTERIM ASSESSMENT ANSWERS SECTION B MULTI-STAGE ANSWERS ORGANISATIONS (a) B C (iii) A (iv) D (Note that this is the definition of a shared services approach.) (b) C D (a) (b) (iii) (iv) Marking scheme Marks Total 4 KAPLAN PUBLISHING 9

10 ACCA F AND FAB: ACCOUNTANT IN BUSINESS 2 CULTURE (a) C B (iii) D (iv) A (b) A, B, E and H are the correct answers. (a) (b) (iii) (iv) for each correct letter Marking scheme Marks 2 Total 4 0 KAPLAN PUBLISHING

11 INTERIM ASSESSMENT ANSWERS 3 MARKETING MIX (a) The correct order is: B, D, C, A. (b) B C (iii) A (iv) D (a) (b) Marking scheme marks for each letter in the correct order (iii) (iv) Marks 2 Total 4 KAPLAN PUBLISHING

12 ACCA F AND FAB: ACCOUNTANT IN BUSINESS 4 STAKEHOLDERS (iii) (iv) D D A B (iii) (iv) Marking scheme Marks Total 4 2 KAPLAN PUBLISHING

13 INTERIM ASSESSMENT ANSWERS 5 ETHICS (a) The correct answers are: D, E, F and H. (b) A D (a) (b) marks per correct letter Marking scheme Marks 2 Total 4 KAPLAN PUBLISHING 3

14 ACCA F AND FAB: ACCOUNTANT IN BUSINESS 6 PORTER (a) D C (iii) B (iv) A (b) D C (iii) A (iv) B (a) (b) (iii) (iv) (iii) (iv) Marking scheme Marks Total 4 4 KAPLAN PUBLISHING