FI31RK14 (POL)_Layout 20/11/2013 15:22 Page About BPP Learning Media BPP Learning Media is dedicated to supporting aspiring business professionals with top quality learning material as they study for demanding professional exams, often whilst working full time BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials BPP Learning Media’s study materials are written by professionally-qualified specialists who know from personal experience the importance of top quality materials for exam success FAB ACCOUNTANT IN BUSINESS PAPER F1 ACCOUNTANT IN BUSINESS FAB ACCOUNTANT IN BUSINESS PAPER F1 ACCOUNTANT IN BUSINESS BPP Learning Media is the sole ACCA Platinum Approved Learning Partner - content FIA & ACCA FIA &ACCA FIA FAB ACCOUNTANT IN BUSINESS ACCA PAPER F1 ACCOUNTANT IN BUSINESS This Practice & Revision Kit has been reviewed by the examiner to ensure that it provides full coverage of the syllabus and study guide for FIA FAB Accountant in Business and ACCA Paper F1 Accountant in Business of the ACCA’s Foundations in Accountancy qualifications When you have worked through it you will be ready to tackle the mock exams at the end of the Kit and compare your answers with ours Targeted at FIA exams from February 2014, it contains: n DO YOU KNOW? Checklists to test your knowledge of Accountant in Business topics n A bank of exam-standard MCQs with answers, covering the syllabus n Two mock exams including the FAB/F1 pilot paper For more details about this or any other BPP Learning Media products, please call our customer services team on 0845 0751 100 (within the UK) or +44 (0)20 8740 2211 (from overseas), email learningmedia@bpp.com or visit our website www.bpp.com/learningmedia BPP House, Aldine Place, London W12 8AA Tel: 0845 0751 100 (for orders within the UK) Tel: +44 (0)20 8740 2211 Fax: +44 (0)20 8740 1184 www.bpp.com/learningmedia FOR EXAMS FROM FEBRUARY 2014 NOVEMBER 2013 UK £15.00 PRACTICE & REVISION KIT At BPP Learning Media, we specialise in helping people pass professional exams Your exam success is our business PRACTICE & REVISION KIT FOR EXAMS FROM FEBRUARY 2014 FAB PAPER F1 P R A C T I C E & ACCOUNTANT IN BUSINESS Welcome to BPP Learning Media's Practice and Revision Kit for FAB In this, the only FAB/F1 Practice and Revision Kit to be reviewed by the examiner:  We include Do you know? Checklists to test your knowledge and understanding of topics  We provide you with two mock exams including the Specimen exam  We provide the ACCA examiner’s answers as well as our own to the Specimen exam as an additional revision aid BPP's i-Pass product also supports this paper and is a vital tool if you are taking the computer based exam Note FIA FAB and ACCA Paper F1 are examined under the same syllabus and study guide FOR EXAMS FROM FEBRUARY 2014 TO AUGUST 2015 R E V I S I O N K I T FAB/F1 ACCOUNTANT IN BUSINESS First edition May 2011 Third edition November 2013 ISBN 9781 4453 7033 (Previous ISBN 9781 4453 9976 8) e-ISBN 9781 4453 7068 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA Dear Customer What does the little © mean and why does it matter? Your market-leading BPP books, course materials and e-learning materials 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 creating rights over the use of the content 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 www.bpp.com/learningmedia With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media: Printed in the United Kingdom by Polestar Wheatons  Photocopying our materials is a breach of copyright Hennock Road Marsh Barton Exeter EX2 8RP  Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to facebook or emailing them to your friends is a breach of copyright 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 transmitted, 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 otherwise stated © BPP Learning Media Ltd 2013 ii A note about copyright You can, of course, sell your books, in the form in which you have bought them – once you have finished with them (Is this fair to your fellow students? 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CONTENTS Contents Page Finding questions Question index v Helping you with your revision viii Using your BPP Practice and Revision Kit ix Passing the FAB/F1 exam x Approach to examining the syllabus x The Computer Based Examination xi Tackling Multiple Choice Questions xii Using your BPP products xiii Questions and answers Questions Answers 113 Exam practice Mock exam (Specimen exam)  Questions 163  Answers 179  ACCA examiner’s answers 185 Mock exam  Questions 193  Answers 207 Review form iii FAB/F1 ACCOUNTANT IN BUSINESS iv QUESTION INDEX Question index Time allocation Page Marks Mins Questions Answers 13 16 113 29 35 114 23 28 115 42 50 11 117 20 24 14 118 16 19 19 119 33 40 20 120 19 25 24 122 20 24 26 123 43 52 31 124 23 28 35 126 27 32 37 128 20 24 40 129 Part A: The business organisation, its stakeholders and the external environment Business organisations and their stakeholders Questions 1.1 to 1.8 The business environment Questions 2.1 to 2.17 The macro-economic environment Questions 3.1 to 3.14 Micro-economic factors Questions 4.1 to 4.25 Section A MTQs Questions 5.1 to 5.5 Part B: Business organisation, functions and governance Business organisation, structure and strategy Questions 6.1 to 6.10 Organisational culture and committees Questions 7.1 to 7.20 Corporate governance and social responsibility Questions 8.1 to 8.12 Section B MTQs Questions 9.1 to 9.5 Part C: Accounting and reporting systems, controls and compliance The role of accounting Questions 10.1 to 10.26 Control, security and audit Questions 11.1 to 11.14 Identifying and preventing fraud Questions 12.1 to 12.16 Section C MTQs Questions 13.1 to 13.5 v v FAB/F1 ACCOUNTANT IN BUSINESS Time allocation Page Marks Mins Questions Answers 33 40 45 130 30 36 48 132 16 19 50 133 28 34 52 134 28 34 55 136 28 34 57 138 22 26 60 140 20 24 63 141 31 37 69 142 20 24 71 144 33 40 76 145 20 24 79 146 Mixed bank 1: Questions 26.1 to 26.23 38 46 81 147 Mixed bank 2: Questions 27.1 to 27.24 40 48 85 149 Mixed bank 3: Questions 28.1 to 28.24 40 48 89 152 Mixed bank 4: Questions 29.1 to 29.24 40 48 93 153 Mixed bank 5: Questions 30.1 to 30.24 40 48 97 154 Part D: Leading and managing individuals and teams Leading and managing people Questions 14.1 to 14.20 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 18.17 Training and development Questions 19.1 to 19.17 Performance appraisal Questions 20.1 to 20.13 Section D MTQs Questions 21.1 to 21.5 Part E: Personal effectiveness and communication in business Personal effectiveness and communication Questions 22.1 to 22.19 Section E MTQs Questions 23.1 to 23.5 Part F: Professional ethics in accounting and business Ethical considerations Questions 24.1 to 24.20 Section F MTQs Questions 25.1 to 25.5 Mixed banks vi QUESTION INDEX Time allocation Page Marks Mins Questions Answers Mixed bank 6: Questions 31.1 to 31.23 38 46 101 155 Mixed bank 7: Questions 32.1 to 32.25 42 50 106 157 Mock exam (Specimen exam) 100 120 163 179 Mock exam 100 120 193 207 Mock exams vii vii FAB/F1 ACCOUNTANT IN BUSINESS Helping you with your revision BPP Learning Media – Approved Learning Partner – content As ACCA’s Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use examiner-reviewed revision materials for exams from February 2014 to August 2015 By incorporating the examiner’s comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA-approved support for your revision Selecting questions We provide signposts to help you plan your revision  A full question index listing questions that cover each part of the syllabus, so that you can locate the questions that provide practice on key topics, and see the different ways in which they might be tested Attempting mock exams There are two mock exams that provide practice at coping with the pressures of the exam day We strongly recommend that you attempt them under exam conditions Mock exam is the Specimen exam Mock exam reflects the question styles and syllabus coverage of the exam viii USING YOUR PRACTICE AND REVISION KIT Using your BPP Practice and Revision Kit Aim of this Practice and Revision Kit To provide the practice to help you succeed in both the paper based and computer based examinations for Paper FAB/F1 Accountant in Business To pass the examination you need a thorough understanding in all areas covered by the syllabus and teaching guide Recommended approach  Make sure you are able to answer questions on everything specified by the syllabus and teaching guide You cannot make any assumptions about what questions may come up on your paper The examiners aim to discourage 'question spotting'  Learning is an active process Use the DO YOU KNOW? Checklists to test your knowledge and understanding of the topics covered in FAB/F1 Accountant in Business by filling in the blank spaces Then check your answers against the DID YOU KNOW? Checklists Do not attempt any questions if you are unable to fill in any of the blanks - go back to your BPP Interactive Text and revise first  When you are revising a topic, think about the mistakes that you know that you should avoid by writing down POSSIBLE PITFALLS at the end of each DO YOU KNOW? Checklist  Once you have completed the checklists successfully, you should attempt the questions on that topic Each question is worth 1, or marks and carries with it a time allocation of 1.2 minutes per mark  Once you have completed all of the questions in the body of this Practice & Revision Kit, you should attempt the MOCK EXAMS under examination conditions Check your answers against our answers to find out how well you did ix FAB/F1 ACCOUNTANT IN BUSINESS (a) (b) 212 (i) C A report is usually a comprehensive written record, often used for communicating findings to the board (ii) A As a physical signature is required, this needs to be sent by postal service (iii) D A video conference allows geographically distant people to have a visual meeting where non-verbal messages will be received (iv) B E-mail allows all staff members to be contacted with one communication B, C Staff turnover is not affected by ineffectiveness and customers are more likely to be dissatisfied NOTES FAB/F1 ACCOUNTANT IN BUSINESS NOTES FAB/F1 ACCOUNTANT IN BUSINESS NOTES FAB/F1 ACCOUNTANT IN BUSINESS NOTES FAB/F1 ACCOUNTANT IN BUSINESS NOTES FAB/F1 ACCOUNTANT IN BUSINESS NOTES FAB/F1 ACCOUNTANT IN BUSINESS FAB/F1 ACCOUNTANT IN BUSINESS (11/13) REVIEW FORM Name: Address: Date: How have you used this Practice & Revision Kit? (Tick one box only) Distance learning (book only) Our advertisement in ACCA Student Accountant Our advertisement in Teach Accounting Other advertisement On a course: college Our brochure As a tutor ACCA email With 'correspondence' package BPP email Other Our website www.bpp.com Why did you decide to purchase this Practice & Revision Kit? (Tick one box only) Have used complementary Interactive Text Which (if any) aspects of our advertising you find useful? (Tick as many boxes as are relevant) Have used BPP Texts in the past Prices and publication dates of new editions Recommendation by friend/colleague Information on Practice & Revision Kit content Recommendation by a lecturer at college Saw advertising Facility to order books off-the-page None of the above Other During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) Have you used the companion Interactive Text for this subject? Yes No Your ratings, comments and suggestions would be appreciated on the following areas Very useful Useful Not useful Good Adequate Poor Introductory section (How to use this Practice & Revision Kit) 'Do You Know' checklists 'Did You Know' checklists Possible pitfalls Questions Answers Mock exams Structure & presentation Icons Excellent Overall opinion of this Kit Do you intend to continue using BPP Interactive Texts/Kits? Yes Please note any further comments and suggestions/errors on the reverse of this page Please return to: Barry Walsh, BPP Learning Media Ltd, FREEPOST, London, W12 8BR No FAB/F1 ACCOUNTANT IN BUSINESS (11/13) REVIEW FORM (continued) Please note any further comments and suggestions/errors below [...]... C D The demand curve for flower vases will shift to the left and their price will rise The demand curve for flower vases will shift to the right and their price will rise There will be a movement along the demand curve for flower vases and their price will go down The demand curve for flower vases will shift to the left and their price will go down (2 marks) 4.15 Consider the price and demand for tickets... Northland, Southland, Eastland and Westland are four countries of Asia The following economic statistics have been produced for the year 2007 Country Change in GDP (%) Balance of payments current account ($m) Change in consumer prices (%) Change in working population employed (%) Northland –0.30 +5550.83 +27.50 –4.76 Southland +2.51 –350.47 +15.37 +3.78 Eastland –0.55 –150.90 +2.25 +1.76 Westland +2.12...FAB /F1 ACCOUNTANT IN BUSINESS Passing the FAB /F1 exam Paper FAB /F1 introduces students (who may not have a business background) to the business entity made up of people and systems which interact with each other There is a lot to learn, but none of it is particularly difficult and a good grasp of these topics will help you in higher-level business papers (ACCA papers P1 and P3) To access FIA and ACCA. .. After extensive practice and revision of MCQs, you may find that you recognise a question when you sit the exam Be aware that the detail and/ or requirement may be different If the question seems familiar read the requirement and options carefully – do not assume that it is identical xii TACKLING MULTIPLE CHOICE QUESTIONS Using your BPP products This Kit gives you the question practice and guidance you... demanded A rise in the price of tea A fall in the demand for drinking cups A fall in the demand for tea (2 marks) 4.13 What is an inferior good? A B C A good of such poor quality that demand for it is very weak A good for which the cross elasticity of demand with a substitute product is greater than 1 A good for which demand will fall as household income rises (1 mark) 4.14 Consider the price and demand... statements are true Statement 1 is true and statement 2 is false Statement 1 is false and statement 2 is true Both statements are false (2 marks) 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 1 and 4 2 and 3 2 and 4 3 and 4 (2 marks) 9 FAB /F1 ACCOUNTANT IN BUSINESS 3.9 Which... organisation A B C Statement (i) and (iii) only Statements (i) and (ii) only Statements (ii) and (iii) only (1 mark) (Total = 16 marks) 7 Organisational culture and committees 7.1 40 mins BZ Ness Ltd is an organisation with a strongly traditional outlook It is structured and managed according to classical principles: specialisation, the scalar chain of command, unity of command and direction Personnel tend... 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... the candidate has completed their examination, the final percentage score is calculated and displayed on screen  Candidates are provided with a Provisional Result Notification showing their results before leaving the examination room  The CBE Licensed Centre uploads the results to the ACCA (as proof of the candidate's performance) within 72 hours  Candidates can check their exam status on the ACCA. .. option from a number of drop down menus For more information on computer-based exams, visit the ACCA website http://www.accaglobal.com/en/student/Exams/Computer-based-exams.html xi FAB /F1 ACCOUNTANT IN BUSINESS Tackling Multiple Choice Questions MCQs are part of all FIA exams and the first three ACCA exams (F1, F2 and F3) MCQs may feature in the CBE, along with other types of question, while the paper based ... question styles and syllabus coverage of the exam viii USING YOUR PRACTICE AND REVISION KIT Using your BPP Practice and Revision Kit Aim of this Practice and Revision Kit To provide the practice to...FAB PAPER F1 P R A C T I C E & ACCOUNTANT IN BUSINESS Welcome to BPP Learning Media's Practice and Revision Kit for FAB In this, the only FAB /F1 Practice and Revision Kit to be reviewed... classified in various ways including administrative and accounting; p……, detect and correct; discretionary and non-discretionary; v…… and mandated; manual and automated  Internal auditors are e…… of