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Business And Finance Flashcards

1
Q

Organisations can be defined or described in various ways.

Which three of the following are the key characteristic that are shared by all organisations?

A 
A. Synergy
B. SOCIAL ARRANGEMENT
C. COLLECTIVE GOALS 
D. Specialisation 
E. CONTROLLED PERFORMANCE 
F. Exchange of goods and services
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2
Q

At the AGM of Vortex Plc a major shareholder claimed that the company was suffering from the symptoms of ‘SATISFICING’. In the context of corporate objectives ‘satisficing’ means that

A

A. MANAGERS SEEK TO MAKE SATISFACTORY PROFIT RATHER THAN MAXIMISE WEALTH

B. Managers seek to keep all stakeholders satisfied

C. Owners seek to meet a satisfactory level of corporate responsibility obligations

D. Owners seek to make satisfactory profits

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3
Q

The primary objective of ABC Car rental is as follows:
We aim to be the fastest growing company with the highest profit margin in the global vehicle rental and leasing business.

One of its secondary objectives is to increase our market share for global family car rentals to 20% within 3 years.

Which 3 components of the SMART acronym are present in the company’s secondary objective?

A 
A. SPECIFIC
B. MEASURABLE 
C. Achievable 
D. Reliable
E. TIME BOUND
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4
Q

Amanda is a regional leading manager with a major international bank. She has authority to lend up to £1M on an unsecured basis to any single corporate customer without reference to the bank’s head office.
What sort of power does Amanda have?

A

A. Referent power
B. Expert power
C. LEGITIMATE POWER
D. Reward power

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5
Q

Two of sunshine tours Plc’s stakeholders are putting the company under pressure to improve its return on investment.
These are most likely to compromise which 2 of the following groups?

A 
A. SHAREHOLDER
B. Customers 
C. BANKERS 
D. Suppliers
E. Employees
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6
Q

For many years Manley Plc’s main source of revenue was the sale of 8mm colour firms for cameras.
The source of revenue fell sharply after the introduction of digital cameras. In relation to the success of digital cameras Manley Plc was a victim of:

A

A. Operational risk
B. Financial risk
C. BUSINESS RISK
D. Market risk

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7
Q

Ranger Plc’s information system manager wants all data on the company’s database to be the same as their sources and not to have been accidentally or deliberately altered, destroyed or disclosed. His concern therefore is with

A

A. Data accuracy
B. DATA INTEGRITY
C. Data authenticity
D. Data completeness

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8
Q

Legislation requires certain activities to be carried out by members of bodies that are recognised professional regulators.
Which three of the following activities are included in such requirement?

A 
A. INSOLVENCY
B. Management consultancy
C. INVESTMENT BANKING
D. Taxation 
E. Payroll 
F. STATUTORY AUDIT
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9
Q

Which three of the following attributes are identified by the institute of business ethics as being typical of ethical business leaders?

A 
A. FAIR MINDEDNESS 
B. HONESTY 
C. ABILITY TO LEARN
D. Empathy 
E. Accountability
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10
Q

Maureen is employed in the finance function of Gralam Plc.
Her duties are to ensure that the company always has sufficient funds available to meet both its short term and long term financial requirements.
It is clear that Maureen is employed by Gralam plc in its

A

A. Financial reporting sections
B. Management accounting section
C. TREASURY MANAGEMENT SECTION
D. Transaction process section

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11
Q

Which of the following is a source of long term finance?

A

A. Trade credit from suppliers
B. Bank overdraft
C. Factoring of trade debts
D.MORTGAGE ON PROPERTY

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12
Q

Which accounting principle states that an item in the financial statements would make a difference if its omissions or misstatement would lead the reader of those financial statement?

A

A. The going concern principle
B. THE MATERIALITY PRINCIPLE
C. The cost-benefit principle
D. The substance over form principle

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13
Q

The financial systems of Anson Plc a listed company depart from relevant accounting statements and provisions of accounting act 2006. The company is likely to be referred to which of the following regulatory bodies?

A

A. The prudential regulation authority
B. The financial conduct authority
C. ICAEW
D. THE FINANCIAL REPORTING COUNCIL

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14
Q

Which of the following are examples of complementary goods?

A

A. Milk and orange juice
B. Pepsi and coca cola
C. FRENCH FRIES AND TOMATO SAUCE
D. Lamb and beef

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15
Q

A market trader has noticed that when the price of cakes rise, consumer tends to buy more biscuit instead. The effect operating here is

A

A. Income effect
B. The diminishing marginal effect
C. THE SUBSTITUTION EFFECT
D. The price elasticity of demand

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16
Q

A UK industry has been lobbying parliament to require goods from 3 Asian countries for sale in the UK to be subject to additional safety checks.
From the perspective of supporting free trade the UK government may be reluctant to agree as this would be an example of

A

A. A tariff
B. A quota
C. Dumping
D. AN IMPORT RESTRICTION

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17
Q

Identify which 3 of the following are Henry Mintzberg’s building blocks of an organisation

A 
A. SUPPORT STAFF
B. MIDDLE LINE
C. Functional division
D. Scalar chain
E. IDEOLOGY 
F. Matrix structure
18
Q

Imperial ltd wishes to expand abroad it has agreed with a foreign manufacturer of a complementary product to market both products jointly in both countries.
What method of expansion has imperial ltd adopted?

A

A. Group structure
B. A joint venture
C. A STRATEGIC ALLIANCE
D. A licensing agreement

19
Q

Romulus ltd and remus ltd have recently agreed to cooperate to exploit the possibilities that both companies have in particular overseas market. No separate company has been established for this purpose because the companies chief executives who have known each other for many years have agreed matters informally
This agreement is a form of:

A

A. Group structure
B. A joint venture
C. A STRATEGIC ALLIANCE
D. A licensing agreement

20
Q

Three factors affect the motivation of employees in Ramble Plc’s accounting department
I. Working conditions
Ii. Each employees relationship with Reeta, the manager
Iii. Challenging work

Reeta wants to classify the factors according to Frederick Herzberg’s theory of hygiene and motivating factors.

Which of the following are hygiene factors?

A

A. I AND II ONLY
B. II and iii only
C. I and iii only
D. I , ii and iii

21
Q

Alain is a manager with Glasnow Ltd. He always looks for opportunities to praise his subordinates and takes great pleasure in promoting staff who perform well. As far as his subordinates are concerned, Alain’s actions meet their

A

A. Self-actualisation needs
B. STATUS/EGO NEEDS
C. Social needs
D. Safety needs

22
Q

Which 3 of the following are characteristics of limited company?

A

A. PERPETUAL SUCCESSION
B. SEPARATE LEGAL IDENTITY
C. Financial statements can remain private
D. Simple withdrawal of capital
E. The company’s liability is limited
F. The company regulates under the companies act 2006

23
Q

The marketing director of Birstall Plc is formulating whether one of the company’s product which is aimed at a small niche market should be differentiated from its close competitors. At this stage she is unsure how much differentiation would be achieved in practice. The decision on whether to differentiate or not is a decision concerning the company’s

A

A. Functional strategy
B. Business strategy
C. COMPETITIVE ADVANTAGE
D. Product/ market strategy

24
Q

Seago Plc provides excessive scuba diving holidays for people over 60 years of age. In terms of Michael Porter’s generic competitive strategies, this represents a strategy of

A

A. Differentiation
B. Cost leadership
C. Cost focus
D. DIFFERENTIATION FOCUS

25
Q

A company correctly records and analyses all its sales transactions. At the end of each month a report is produced for sales directors listing details of every sales transaction: customers, products, quantities and prices.

Which of the following describes the quality of the reports data and information?

A

A.GOOD QUALITY DATA BUT POOR QUALITY OF INFORMATION
B. Good quality of both data and information
C. Poor quality of data but good quality of information
D. Both poor quality of data and information

Data accurate and complete but too much information which is irrelevant

26
Q

The IASB’s conceptual framework for financial reporting states that to support the effective working capital markets for the benefit of businesses financial statement must have which two fundamental qualitative characteristics?

A 
A. Understandability 
B. RELEVANCE
C. FAITHFULNESS OF REPRESENTATION
D. Comparability 
E. Timeliness 
F. Verifiability
27
Q

A consultant has made 2 statements about the primary focus of the users of financial statements on entity.

Statement 1: The primary focus of suppliers is on the entity’s risk and return

Statement 2: The primary focus of shareholders is on the entity’s solvency.

Are the statements true or false ?

A

A. True false
B. False true
C. True true
D. FALSE FALSE

The suppliers primary focus is liquidity
Shareholders main concern is risk and return

28
Q

A consultant has made the following statements concerning each possible relationship between a bank and its customer.

Statement 1: In the fiduciary relationship the bank is expected to act with good faith towards the customers

Statement 2: In the mortgagor/ mortgagee relationship the bank asks the customer to secure a loan with a charge over the customer’s liability.

Statement 3: In the bailor/ bailee relationship the bank accepts the customers property for storage and undertakes to take reasonable care to safeguard it against loss or damage

Identify which of the statements about these relationships are true.

A

A. Statements 1 + 2 only
B. Statements 2 + 3 only
C. STATEMENTS 1 + 3 ONLY
D. Statements 1, 2 + 3

29
Q

Ken Plc’s new building programme is likely to start within the next 90 days, but the precise start date and timing of cash flows are still uncertain. The company has £150,000 available in cash in anticipation of the investment.

Which of the following is the least appropriate use of funds in the intern period?

A

A. INVESTMENTS IN EQUITY
B. Treasury bills
C. Bank deposits
D. Local authority deposits

Briefly explain why:

Short term surpluses will not normally invest in equities due to the risk of not achieving a return over a short period of time

30
Q

Nextron Plc manufactures washing machines. It has 20% share of the UK market. The company wants to increase its revenue so has decided to add tumble dryers to its range of products. In terms of Ansoff’ matrix this represents a growth strategy of:

A

A. Market penetration
B. Market development
C. PRODUCT DEVELOPMENT
D. Diversification

31
Q

Anti-monopoly laws are based on the proposition that the best way to achieve efficiency and avoid excessive prices is through

A

A. Regulation
B. INCREASED COMPETITION
C. Public ownership
D. Oligopoly

TENDING TOWARDS A PERFECT MARKET THROUGH INCREASED COMPETITION SHOULD LEAD TO ALLOCATIVE EFFICIENCY AND LOWER PRICES

32
Q

Which of the following would lead to demand pull inflation?

A

A. Rising import prices
B. Increase in indirect taxation
C. Increase in wages
D. HIGH CONSUMER EXPENDITURE SUCH THAT AGGREGATE DEMAND EXCEEDS AGGREGATE SUPPLY

BRIEFLY EXPLAIN YOUR ANSWER:

Aggregate demand exceeding aggregate supply is an example of demand pull inflation

33
Q

The government has intervened to impose a limit on businesses carbon emissions. This is an example of regulation designed to address market failure caused by:

A

A. Asymmetric information
B. Equity
C. Market imperfection
D. EXTERNALITIES

34
Q

Which of the following is regarded by economists as a factor of production?

A

A. Demand
B. ENTERPRISE
C. Supply
D. Innovation

Enterprise is one of the 4 factors of productions along with:
Labour
Land
Capital

35
Q

Under the requirements of the UK corporate governance code, who is responsible for maintenance of sound risk management and internal control systems?

A

A. Just the executive directors
B. Just the non- executive directors
C. THE ENTIRE BOARD OF DIRECTORS
D. The audit committee

Briefly explain answer:

The whole board is responsible it is a principle of the code.

36
Q

Merton Plc is a small LISTED COMPANY outside the FTSE 350.

As a consequence, the company:

A

A. Must comply with all the requirements of the UK corporate governance code.
B. Is governed by other corporate governance regulations than the UK corporate governance code.
C. CAN BE FLEXIBLE IN HOW IT APPLIES THE UL GOVERNANCE CODE
D. Is not affected by the requirements of the UK corporate governance code.

37
Q

In seeking to address the problem of the separation of ownership and control, corporate governance attempts to align the interests of which 2 of the following stakeholders?

A 
A. INVESTORS
B. Employees
C. Regulations 
D. MANAGERS
E. Auditors

Investors who own the company delegate business to managers so they can run it for ultimate benefit of owners

38
Q

The body responsible for promoting high standards of corporate governance in the UK is the:

A

A. FINANCIAL REPORTING COUNCIL
B. Organisations for economic cooperation and development (OECD)
C. Consultative committee of accounting bodies (CCAB)
D. Bank of England

39
Q

Under a unitary board structure, a company’s board of directors is responsible for both management of the business and reporting to:

A

A. The non-executive directors
B. The supervisory board
C. The company’s employees
D. THE COMPANY’S SHAREHOLDERS

UNDER A UNITARY BOARD STRUCTURE THERE IS NO SUPERVISORY BOARD
REPORTING RESPONSIBILITY IS TO SHAREHOLDERS NOT TO DIRECTORS OR EMPLOYEES

40
Q

In a market based financial system, the financial system will be characterised by:

A

A. Comparatively more government regulations that a bank- based system.
B. COMPARATIVELY LESS CLOSE RELATIONSHIPS BETWEEN BANKS AND BUSINESSES THAN IN A BANK BASED SYSTEM.
C. Comparatively more risk averse households than in a bank based system
D. Households with less access to investments in physical assets than in a bank based system.

A,C and D are all characteristics of bank based financial systems.

41
Q

Raymon and co a firm of chartered accountants is the subject of ICAEW disciplinary procedure. Its senior partners has been told by a colleague that if the disciplinary committee decides a penalty should be imposed on the firm, it has the power to:

  1. Fine the firm
  2. Exclude the firm from membership of ICAEW
  3. Offer an unpublicised caution
  4. Take away the firm’s practicing certificate

Which of the following penalties may in fact be imposed on Raymond and co?

A

A. 1, 2 and 3 only
B. 2 ,3 and 4 only
C. 1. 2 AND 4 ONLY
D. 1, 3 and 4 only

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