Foundations in
Accountancy/
p
R
A
C
T
I
C
E
ACCA
ACCOUNTANT IN
BUSINESS (FAB/AB)
&
R
E
V
I
s
I
0
N
Welcome to BPP learning Media's Practice & Revision Krt for AB. Jn this Practice &
Revision Kit, which has been reviewed by the ACCA examining team, we:
•
Include Do you know? Checklists to test your knowledge and understanding
of topics
..
Provide you with two mock exams including the Specimen Exam
K
I
T
FOR EXAMS FROM 1 SEPTEMBER 2019 TO 31 AUGUST 2020
c ,;oWIC
•'�E�I�
0
First edition May 2011
Seventh edition February 2018
ISBN 9781 5097 1753 8
Previous ISBN 9781 5097 1136 9
e-lSBM 9781 5097 1902 0
British Library Cataloguing-in-Publication Data
A catalogue record for this book
is available from the Enhsh Library
Published b y
BPP Learning Media Ltd
BPP House, Aldine Place
London W 12 BAA
www.bpp.com/learningmedia
Printed in the United Kingdom
'' -Your
-·---·learning
·---·-------------�
materials, published by BPP
Learning Media Ltd, are printed on paper
obtained from traceable sustainable sources.
All our rights reserved. No part of this publication
may be reproduced, stored in a retrieval system
or transrrntted, in any form or by any means,
electronic, mechanical, photocopying, recording
or otherwise, without the prior written permission
of BPP Learning Media.
We are grateful to the Association of Chartered
Certified Accountants for permission to reproduce
past examination questions. The suggested
solutions in the exam answer bank have been
prepared by BPP Learning Media Ltd, except
where othe1wise stated.
'�·
BPP Learning Media Ltd
2019
u
A note about copyright
Dear Customer
What does the little © mean and why does it matter'?
Your market-leading BPP books, course materials and
e-learning materials do not write and update themselves.
People write them: on their own behalf or as employees
of an organisation that invests in this activity. Copyright
law protects their livelihoods. It does so by crealin!?
rights over the use of the cont<?nt.
Breach of copyright is a form of theft - as well being a
criminal offence in some jurisdictions, it is potentially a
serious breach of professional ethics.
With current technology, things might seem a bit hazy
but, basically, without the express permission of BPP
Learning Media:
•
Photocopying our materials is a breach of copyright
•
Scanning, ripcasting or conversion of our digital
materials into different file formats, uploading them
to Facebook or emailing them to your friends 1s a
breach of copyright
You can, of course, sell your books, m the iorm in which
you have bought thein - once you have finished with
them. (Is this fair to your fellow students? We update for
a reason.) Please note the e-products are sold on a
single user licence basis: we do not supply 'unlock' codes
to people who have bought them secondhand.
And what about outside the UK? BPP Learning Media
strives to make our matenals available at prices students
can afford by local printing arrangements, pricing
policies and partnerships which are clearly listed on our
website. A tiny minority ignore this and indulge in
criminal activity by illegally photocopying our material or
supporting organisations that do. If they act illegally and
unethically in one area, can you really trust 1111:m?
I ---···--
Leading and managing people
Questions 14.1 to 14.21
35
42
50
139
30
36
53
141
16
19
56
143
28
34
57
144
30
36
60
146
28
34
63
148
22
26
66
150
Recruitment and selection
Questions 15.1 to 15.18
Diversity and equal opportunities
Questions 16.1 to 16.10
Individuals, groups and teams
Questions 17 .1 to 17 .17
Motivating individuals and groups
Questions 18.1 to 18.18
Training and development
Questions 19.1 to 19.17
I
I
I
Performance appraisal
Questions 20.1 to 20.13
Section D MTQs
Questions 21.1 to 21.6
! Part E: Personal effectiveness and com�n m
I business
1.
I
68
24
151
I
�,.�_.....,..._.,.........J aw1r,;r;r re,�
Personal effectiveness and communication
31
Questions 22.1 to 22.19
Section E MTQs
I
I
37
152
75
I
I
24 j......2;_=-- -�.l_,._........,,
, s__l___1_s_4__,
Questions 23.1 to 23.6
Ethical considerations
Questions 24.1 to 24.21
41
34
Section F MTQs
----=-�,_,....,.._________
Questions 25.1 to 25.6
vi
24
1
29
I
I
I
__,....,.�w-.....,..----.,,,..,-,�-a!l...,n�-,._........__
..,.,,,J,Ji-1--.
83
86
155
156
l'tr:ft9op:w
-...-,.__,__r_.d
esp
'tH' �
w
Questions
1
Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach
the exam.
•
•
•
•
•
i
•
•
•
•
•
•
•
•
•
•
Organisations can achieve results which individuals cannot achieve by themselves.
A non-governmental organisation (NGO) is an independent voluntary association of people acting
together for some common purpose (other than achieving government office or making money).
Stakeholders are those individuals or groups that, potentially, have an interest in what the organisation
does. These stakeholders can be within the organisation, connected to the organisation or external to
the organisation.
Government policy influences the economic environment, the framework of laws, industry structure and
certain operational issues. Political instability is a cause of risk.
Privacy is the right of the individual not to suffer unauthorised disclosure of information.
A contract is a legally binding agreement.
Outsourcing is the contracting.out of specified operations or services to an external vendor .
The value chain describes those activities of the organisation that add value to purchased inputs.
The competitive environment is structured by five forces: barriers to entry; substitute products; the
bargaining·power of customers; the bargaining power of suppliers; competitive rivalry.
Equilibrium national income is determined using aggregate supply and aggregate demand analysis.
Demand pull inflation arises from an excess of aggregate demand over the productive capacity of the
economy.
Cost push inflation arises from increases in the costs of production .
Economic growth may be measured by increases in the real gross national product (GNP) per head of
the population.
Macroeconomic policy objectives relate to economic growth, inflation, unemployment and the balance
of payments.
If a government decides to use fiscal policy to influence demand in the economy, it can choose either
expenditure changes or tax changes as its policy instrument.
Monetary policy uses money supply, interest rates or credit controls to influence aggregate demand .
A surplus or deficit on the balance of payments usually means a surplus or deficit on the current
account.
•
•
•
•
4
The micro environment refers to the immediate operational environment including suppliers,
competitors, customers, stakeholders and intermediaries.
Elasticity, in general, refers to the relationship between two variables. Price elasticity of demand explains
the relationship between change in quantity demanded and changes in price.
Income elasticity of demand measures the responsiveness of demand to changes in household income .
Cross elasticity of demand is determined by the availability of substitute (competitors') products.
The effects of demand and supply conditions on markets can be analysed by studying the behaviour of
both demand and supply curves.
QUESTIONS
1.1
'An organisation is a social arrangement which pursues collective........................................, which
controls its own pertormance and which has a boundary separating it from its environment.'
Which of the following words best completes this sentence?
Picklist:
Profits
Stakeholders
Goals
Tactics
1.2
What is the term given to the idea that the combined output of a number of individuals working together
will exceed that of the same individuals working separately?
A
B
C
D
1.3
1.4
Sympathy
Specialisation
Synergy
Systems thinking
A
limited company status means that a company is only allowed to trade up to a predetermined
turnover level in any one year.
8
For organisations that have limited company status, ownership and control are legally separate.
C
The benefit of being a sole trader is that you have no personal liability for the debts of your
business.
D
Ordinary partnerships offer the same benefits as limited companies but are usually formed by
(2 marks)
professionals such as doctors and solicitors.
An organisation is owned and run by central government agencies. The organisation is best described as
which of the following statements?
A voluntary sector organisation
A private sector organisation
A public sector organisation
-�-----------------------
(1 mark)
Which of the following groups may be considered to be stakeholders in the activities of a nuclear power
station?
(iv)
The government
Environmental pressure groups
Employees
Local residents
A
B
C
D
(iii) and (iv)
(i), (ii}, (iii) and (iv)
(iii) only
(i) and (iii) only
(i)
(ii)
(iii)
1.6
(2 marks)
Which one of the following statements is true?
A
B
C
1. 5
(2 marks)
(i),
(2 marks)
The term secondary stakeholders describes which group of stakeholders?
A
B
C
Stakeholders who conduct transactions with the organisation
Stakeholders who have a contractual relationship with the organisation
Stakeholders who do not have a contractual relationship with the organisation
(1 mark)
5
QUESTIONS
2.5
The stationery and printing company S Co, has recently upgraded its computers and printers so that
more production has become automated. Many middle managers will now be made redundant. This is
known as;
A
B
C
2.6
2.8
mark)
Selection for redundancy on the basis of age
Misconduct
Marriage to an employee of a key competitor
Incompetence
(2 marks)
Which of the following socio-cultural trends will have a direct impact on most business organisations?
(i)
(ii)
Wi)
(iv)
Increasing ethnic and religious diversity in populations
Falling birthrates
Focus on 'green' issues
Increase in single-member households
A
B
C
D
(iii) only
(i) and (iii) only
(i), (ii) and (iii) only
(i), {ii), (iii) and (iv)
(2 marks)
Porter's five forces model identifies factors which determine the nature and strength of competition in an
industry. Which of the following is NOT one of the five forces identified in Porter's model?
A
B
C
D
2.9
(1
In the context of 'best practice' employment protection law, in which of the following circumstances is
dismissal of an employee automatically considered unfair?
A
B
C
D
2.7
Downsizing
Delayering
Outsourcing
Substitute products or services
New entrants to the industry
Bargaining power of customers
Government regulation of the industry
(2 marks)
For what function in an organisation would demographic information about social class be most
relevant?
Human Resources
A
B
Marketing
C
Purchasing
(1 mark)
2.10 Which of the following is a SUPPORT activity in Porter's value chain model?
A
B
C
D
Procurement
Operations
Marketing and sales
Inbound logistics
2.11 Which of the following statements about the impact of technological developments is
A
B
C
D
-
(2 marks)
not true?
Technology developments have supported corporate delayering
Technology developments tend to adversely affect employee relations
Technology developments creates risk for long-range product/market planning
Technology developments offer significant advantages for corporate communications
(2 marks)
7
QUESTIONS
3.2
Which of the following is associated with a negative Public Sector Net Cash Requirement?
A
B
C
D
3.3
The government is running a budget deficit.
The government's expenditure exceeds its income.
The government is running a budget surplus.
Public Sector Debt Repayment (PSDR) is high.
(2 marks)
........................................ taxes are collected by the Revenue authority from a business, which
attempts to pass on the tax to consumers in the price of goods.
Which word correctly completes this statement?
Picklist:
Progressive
Direct
Indirect
3.4
If a government has a macro-economic policy objective of expanding the overall level of economic
activity, which of the following measures would NOT be consistent with such an objective?
A
B
C
3.5
D
A stimulus to exports in Country Y
An increase in the costs of imports from Country X
Reducing demand for imports from Country X
A reduction in the rate of cost push inflation
Import quotas
Subsidies for exporters
Customs procedures
Tariffs
(2 marks)
(2 marks)
Are the following statements true or false?
Frictional unemployment will be short term
Governments can encourage labour mobility if they want to reduce unemployment
3.8
(1 mark}
The following, WITH ONE EXCEPTION, are 'protectionist measures' in international trade. Which is the
exception?
A
B
C
3.7
Increasing public expenditure
Lowering interest rates
Increasing taxation
The currency in country Xis the Krone while country Y uses the Euro. Country Y has recently
experienced an increase in its exchange rate with Country X. Which of the following effects is likely to
result in Country Y?
A
B
C
D
3.6
(1 mark)
True
0
0
(2 marks)
False
0
0
Monetary policy is a government economic policy relating to:
1
2
3
4
Interest rates
Taxation
Public borrowing and spending
Exchange rates
Which of the above are correct?
A
B
C
D
land 4
2 and 3
2 and 4
3 and 4
(2 marks}
9
Answers
-
119
Mock Exams
-
171
Answers to Mock Exam 1
DO NOT TURN THIS PAGE UNTIL YOU HAVE
COMPLETED THE MOCK EXAM
I
S.: 1
ur•,w
�
1•.•c,
187
Answers to Mock Exam 2
DO NOT TURN THIS PAGE UNTIL YOU HAVE
COMPLETED THE MOCK EXAM
-