Exam

Valerie is a Finance Manager with Watford plc. She has made the following statements regarding fundamental accounting principles which have surprised some of her colleagues. Statement (1): Watford plc can change its accounting policies. Statement (2): The principles must be strictly followed at all times. Identify whether each statement is accurate

1 true, 2 false

Under the terms of the UK Corporate Governance Code, the minimum number of independent non-executive directors required to sit on the remuneration committee of a listed company outside the FTSE 350 is

2

The process of collecting, preparing, managing, analysing, interpreting and visualising large complex datasets is known as what?

Data science

Branti plc has a standby procedure at one of its solar-power stations. This ensures that some level of electricity generation will still occur if a breakdown leads to disruption of normal levels of activity. This is part of Branti plc's:

Disaster recovery planning

The managing director of Wendle Ltd wants to understand the links between technical competence and professional responsibility in the accounting profession. Which areas should be considered?

Disciplinary proceedings and accounting principles only

The City Code on Takeovers and Mergers consists of a non-statutory set of general principles and rules designed to ensure that takeover and merger activity:

Does not undermine competition in the UK

The principal factor affecting the nature of business ethics over time is:

Expectations of society

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

FRC

Which of the following is an organisation least likely to achieve as a result of using big data and data analytics?

Faster processing of high volume, routine transactions

Portway Ltd manufactures and sells fabric roller blinds for use in domestic homes. Parsimus Ltd manufactures and sells wooden venetian blinds for use in domestic homes. Portway Ltd and Parsimus Ltd are:

Form competitors

The ICAEW Code of Ethics is an example of which of the following theoretical approaches to ethical codes?

Framework-based approach

Which of the following trading risks faced by a business is the inability to finance the credit given to customers?

Liquidity risk

Marchmount plc is a diversified manufacturing company divided into a number of divisions containing an autonomous product business, each with its own profit and capital investment responsibilities, delegated by the holding company's board of directors. Marchmount plc's key organisational building block will therefore be the:

Middle line

The government recently conducted a review of the electricity industry, the outcome of which was that it introduced a policy of price regulation. This particular form of business regulation is a means of addressing market failure by:

influencing supply and demand

Marcus Lintel is employed in the finance function of Everard Ltd. His duties involve determining the precise unit cost of a range of products manufactured in the company's horticultural division. From time to time, he also prepares reports on variances from the standard cost per unit that he has calculated. It is clear, therefore, that Marcus is employed by Everard Ltd in its:

management accounting section

An economist working for Darwin plc has constructed a supply curve for one of the company's major products, the Xenia. The curve is actually a horizontal straight line. This indicates that the price elasticity of supply for the Xenia is:

perfectly elastic

Princeton Ltd is a large, multi-site business. There is a small head office function based just outside London, with authority for day-to-day decision-making delegated to local site managers based at numerous locations throughout the UK. The company is, therefore, likely to experience which TWO of the following disadvantages? ✓Greater development of skill levels in junior management ✓Greater levels of functional co-ordination ✓Greater customer orientation ✓Greater potential for cost savings ✓Greater levels of responsiveness

✓Greater levels of functional co-ordination ✓Greater potential for cost savings

Which three of the following are components of the COSO internal control framework? A Information and communication B Control environment C Internal audit D Project management E Monitoring activities

A Information and communication B Control environment E Monitoring activities

The government may place an additional tax on cigarettes to raise revenue for healthcare spending. The demand for cigarettes is price inelastic. Which of the following statements is true? A The tax on cigarettes may not raise as much additional revenue as anticipated because the demand for cigarettes is likely to become more elastic over time. B The tax will not raise much additional revenue in the short term or the long term because demand is price inelastic. C No additional tax revenue will be raised because sellers of cigarettes will lower their price by the amount of the tax so the price of cigarettes to consumers will not change. D This will raise additional revenue in the short term and the long term because there are no substitutes for cigarettes.

A The tax on cigarettes may not raise as much additional revenue as anticipated because the demand for cigarettes is likely to become more elastic over time.

The finance director of ABC wants to specify the levels of performance that underpin the company's control system. Which of these help? A measurement of actual performance and comparison against targets B identification of deviations from the plan C establishment of standards or targets to express planned performance D follow up action to correct adverse results or to exploit favourable variances E measurement of ideal performance F devising the plan

A measurement of actual performance and comparison against targets C establishment of standards or targets to express planned performance D follow up action to correct adverse results or to exploit favourable variances

Intervention by the government legally to enforce standards of hygiene in the food industry is an example of business regulation motivated by the wish to address market failure caused by:

Asymmetric info

In the production of a company's financial statements, the accounting principle that works to ensure that users reading the financial statements are informed about both past transactions and future obligations to pay and rights to receive cash is the:

Accruals principle

The following statements concern the functions of corporate code of ethics for business. State if each statement is accurate or inaccurate. Statement (1) One function of a corporate code of ethics is to tell the world at large what the company is striving to achieve in terms of ethical conduct Statement (2) One function of a corporate code of ethics is to set out the penalties for employees who do not act ethically

Accurate Inaccurate

Webcraft plc has a dominant position in its markets. It has received notice that it is being investigated under Chapter 1 of the Competition Act 1998. The following activities have been colluded in by Webcraft plc. Activity 1: Limiting production markets Activity 2: Agreeing with another organisation to limit competition Activity 3: Restricting technical developments Which of the activities may, individually, have given rise to such a notice?

Activity 2

Meryl Ltd is a relatively new company operating in a complex and ever-changing environment. It offers high technology project management expertise to the construction industry. The company has five senior managers who are functional specialists, alongside whom work project managers, each responsible at any one time for a specific contract. In terms of organisational structure, Meryl Ltd would be classified as:

Adhocracy

In both bank-based and market-based financial systems, financial intermediation is of increased importance because of its ability to address the market imperfection of:

Asymmetric info

The ability of markets to allocate resources efficiently within a financial system is often restricted by market imperfections. Which three of the following are market imperfections associated with financial markets? A Lack of codes of practice B Information asymmetry C Transaction costs D Lack of regulation E Insider dealing

B Information asymmetry C Transaction costs D Lack of regulation

The Wates Principles include six principles and provide guidance for each principle Which of the following statements is true of companies that adopt the Wates principles? A They must apply the principles and explain any departure from the guidance. B They must apply the principles and explain how they have applied them. They do not need to follow the guidance. C They must apply the principles or explain any departure from them. They do not need to follow the guidance. D They must apply the principles and explain how they have applied them. They must explain any departure from the guidance.

B They must apply the principles and explain how they have applied them. They do not need to follow the guidance.

The Laslo product has experienced a rise in factor costs during the last quarter. Against this background, it can be expected that there will be:

a contraction in demand and a shift to the left of the supply curve

Which of the following is an example of government intervention to correct a market failure? A An increase in corporation tax during an economic boom B An increase in the rate of value added tax (VAT) on all goods and services C The taxation of goods with negative externalities D The taxation of Giffen goods

C The taxation of goods with negative externalities

In the car market, sports utility vehicles are an example of a:

Product form

The body responsible for ensuring that self-regulation of the accountancy profession in the UK is effective is the:

Professional Oversight Board

Stewardship of the organisation's financial resources is part of which of its finance function's tasks?

Recording financial transactions

Which of the following is one of the five OECD Principles of Corporate Governance?

Support the rights of stakeholders

A shareholder in Acton plc, a FTSE 100 company, is concerned that, in his opinion, the company appears to have departed from the requirements for the financial statements of large companies established in the Companies Act 2006. In such circumstances, which arm of the Financial Reporting Council would be called upon to make enquiries into the matter?

The Financial Reporting Review Panel

Which of the following statements regarding limited companies is true?

The company has unlimited liability for its own unpaid debts

To qualify for appointment by a company as the external (statutory) auditor of its financial statements, a person must comply with which THREE of the following requirements?

They must be independent They must be a member of a recognised supervisory body They must hold an appropriate qualification.