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PAPER F1
ACCOUNTANT IN BUSINESS

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2012
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CR5 2HR
CONTENTS iii
Contents

Page
Finding questions
Question index v

Helping you with your revision – the ONLY FAB/F1 Practice and Revision
Kit to be reviewed by the examiner
vii

Using your BPP Practice and Revision Kit viii
Passing the FAB/F1 exam ix
Approach to examining the syllabus ix
The Computer Based Examination x
Tackling Multiple Choice Questions xi
Using your BPP products xii
Questions and answers
Questions 3
Answers 113
Exam practice
Mock exam 1 (Pilot paper)
 Questions 161
 Answers 173
Mock exam 2


Questions 3.1 to 3.14 28 34 9 115
Micro economic factors

Questions 4.1 to 4.25 50 60 11 117
Part B: Business organisation, functions and governance
Business organisation, structure and strategy

Questions 5.1 to 5.8 16 20 19 118
Organisational culture and committees

Questions 6.1 to 6.20 40 48 20 119
Corporate governance and social responsibility

Questions 7.1 to 7.13 26 32 23 121
Part C: Accounting and reporting systems, controls and
compliance
The role of accountingQuestions 8.1 to 8.26
52 62 29 122
Control, security and audit

Questions 9.1 to 9.14
28 34 34 124
Identifying and preventing fraud

Questions 10.1 to 10.16
32 38 36 126


Questions 14.1 to 14.17 34 40 49 132
Motivating individuals and groups

Questions 15.1 to 15.17 34 41 52 134
Training and development

Questions 16.1 to 16.17 34 40 55 136
Performance appraisal

Questions 17.1 to 17.13 26 32 58 138
Part E: Personal effectiveness and communication in
business
Personal effectiveness and communication

Questions 18.1 to 18.19 38 46 63 139
Part F: Professional ethics in accounting and business
Ethical considerationsQuestions 19.1 to 19.18
36 44 69 141
Mixed banks

Mixed bank 1: Questions 20.1 to 20.23
46 56 72 142
Mixed bank 2: Questions 21.1 to 21.24
48 58 76 144
Mixed bank 3: Questions 22.1 to 22.24
48 58 81 147

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 1 is the Pilot Paper.
Mock exam 2 reflects the question styles and syllabus coverage of the exam.
FAB/F1 ACCOUNTANT IN BUSINESS

viii

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.

under exam conditions. Allow yourself just the number of minutes shown next to the questions in the
index and don’t look at the answers until you have finished. Then correct your answer and go back to
the Interactive Text for any topic you are really having trouble with. Try the same question again a week
later – you will be surprised how much better you are getting. Doing the questions like this will really
show you what you know, and will make the exam experience less worrying.
Doing the exam
If you have honestly done your revision you can pass this exam. There are certain points which you
must bear in mind:
 Read the question properly.
 Don’t spend more than the allotted time on each question. If you are having trouble with a
question leave it and carry on. You can come back to it at the end.
Approach to examining the syllabus
FAB/F1 is a two-hour paper. It can be taken as a paper based or a computer based examination.
The exam is structured as follows:

No of marks
50 compulsory multiple choice questions of 2 marks each

100

FAB/F1 ACCOUNTANT IN BUSINESS

x

The Computer Based Examination
Computer based examinations (CBEs) are available for the first seven FIA papers (not papers FAU, FTM
or FFM), in addition to the conventional paper based examination.
Computer based examinations must be taken at an ACCA CBE Licensed Centre.
How does CBE work?


Number entry – key in a numerical response to a question

Multiple response – select more than one response by clicking the appropriate tick boxes

Multiple response matching – select a response to a number of related part questions by
choosing one option from a number of drop down menus
The January 2012 issue of ACCA Student Accountant magazine contains an article on CBEs. Ensure
that you are familiar with this article.
/>
For more information on computer-based exams, visit the ACCA website.
/> TACKLING MULTIPLE CHOICE QUESTIONS xi

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 exam is made up entirely of MCQs.
The MCQs in your exam contain four possible answers. You have to choose the option that best
answers the question. The three incorrect options are called distracters. There is a skill in answering
MCQs quickly and correctly. By practising MCQs you can develop this skill, giving you a better chance of
passing the exam.
You may wish to follow the approach outlined below, or you may prefer to adapt it.
Step 1
Skim read all the MCQs and identify what appear to be the easier questions.
Step 2
Attempt each question – starting with the easier questions identified in Step 1. Read the

xii

Using your BPP products
This Kit gives you the question practice and guidance you need in the exam. Our other products can also help
you pass:
 Passcards provide you with clear topic summaries and exam tips
 Interactive Passcards contain audio tutorials and plenty of exam-standard questions to
test your understanding
 i-Pass CDs are a vital revision tool for anyone taking FIA/ACCA CBEs and offer tests of
knowledge against the clock in an environment similar to that encountered in a computer
based exam

You can purchase these products by visiting www.bpp.com/learningmedia

1 Questions
FAB/F1 ACCOUNTANT IN BUSINESS
2QUESTIONS

3

Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,


The m… e………… 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 q… demanded and changes in p…
 I…… e…… of demand measures the responsiveness of demand to changes in household income.
C… 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 c……
Do you know? – The business organisation, its stakeholders and the external environment
FAB/F1 ACCOUNTANT IN BUSINESS
4Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach
the exam.
 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.
 The (UK) Data Protection Act 1998 protects individuals about whom data is held. Both manual and
computerised information must comply with the Act.
 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.

20 mins

1.1 ‘An organisation is a social arrangement which pursues collective , which
controls its own performance and which has a boundary separating it from its environment.’
Which of the following words best completes this sentence?
A Profits
B Stakeholders
C Goals
D Tactics (2 marks)

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 Sympathy
B Specialisation
C Synergy
D Systems thinking (2 marks)

1.3 Which of the following statements is true?
A Limited company status means that a company is only allowed to trade up to a predetermined
turnover level in any one year.
B 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
professionals such as doctors and solicitors. (2 marks)

1.4 An organisation is owned and run by central government agencies. The organisation is best described as
which of the following statements?
A A voluntary sector organisation
B A private sector organisation

1.8 ADB is a business which is owned by its workers. The workers share the profits and they each have a
vote on how the business is run.
Which of the following best describes ADB?
A Public sector
B Private sector
C Not-for-profit
D Co-operative (2 marks)

(Total = 16 marks)

2 The business environment
41 mins

2.1 What is an acronym used to describe the key elements of an organisation’s external environment?
A SWOT
B SMART
C PEST
D ABCD (2 marks)

2.2 Which of the following is not a legitimate method of influencing government policy in the interests of a
business?
A Employing lobbyists to put the organisation’s case to ministers or civil servants
B Giving lawmakers non-executive directorships
C Offering financial incentives to public officials to use their influence on the organisation’s behalf
D Attempting to influence public opinion, to put pressure on the legislative agenda
(2 marks)

2.3 is an analysis of statistics on birth and death rates, age structures of people
and ethnic groups within a community.
Which word correctly completes the sentence?

2.7 Which of the following socio-cultural trends will have a direct impact on most business organisations?
(i) Increasing ethnic and religious diversity in populations
(ii) Falling birthrates
(iii) Focus on ‘green’ issues
(iv) Increase in single-member households
A (iii) only
B (i) and (iii) only
C (i), (ii) and (iii) only
D (i), (ii), (iii) and (iv) (2 marks)

2.8 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 Substitute products or services
B New entrants to the industry
C Bargaining power of customers
D Government regulation of the industry (2 marks)

2.9 For what function in an organisation would demographic information about social class be most
relevant?
A Finance
B Human Resources
C Marketing
D Purchasing (2 marks)

2.10 Which of the following is a support activity in Porter’s value chain model?
A Procurement
B Operations
C Marketing and sales
D Inbound logistics (2 marks)


2.14 In Porter’s five forces model, which of the following would not constitute a ‘barrier to entry’?
A Scale economies available to existing competitors
B High capital investment requirements
C Low switching costs in the market
D Loyalty to existing brands (2 marks)

2.15 Three of the following strategies are closely related. Which is the exception?
A Downsizing
B Delegating
C Delayering
D Outsourcing (2 marks)

2.16 Which of the following would be identified as a cultural trend?
A Health and safety legislation
B Concern with health and diet
C Data protection legislation
D Increasing age of the population (2 marks)

2.17 For demographic purposes, which of the following is not a variable in the identification of social class?
A Income level
B Lifestyle
C Occupation
D Education (2 marks)

(Total = 34 marks)

QUESTIONS

9
3 The macro-economic environment

experienced an increase in its exchange rate with Country X. Which of the following effects is likely to
result in Country Y?
A A stimulus to exports in Country Y
B An increase in the costs of imports from Country X
C Reducing demand for imports from Country X
D A reduction in the rate of cost push inflation (2 marks)

3.6 The following, with one exception, are ‘protectionist measures’ in international trade. Which is the
exception?
A Import quotas
B Harmonisation of technical standards
C Customs procedures
D Tariffs (2 marks)

3.7 Are the following statements true or false?
1 Frictional unemployment will be short term
2 Governments can encourage labour mobility if they want to reduce unemployment
A Both statements are true
B Statement 1 is true and statement 2 is false.
C Statement 1 is false and statement 2 is true.
D Both statements are false. (2 marks)

FAB/F1 ACCOUNTANT IN BUSINESS
10

3.8 Monetary policy is a government economic policy relating to:
1 Interest rates
2 Taxation
3 Public borrowing and spending
4 Exchange rates

3.12 A surplus on the balance of payments usually refers to a surplus or deficit on the
account.
Which word correctly complete this statement?
A Current
B Capital
C Financial
D Income statement (2 marks)

QUESTIONS

11
3.13 Northland, Southland, Eastland and Westland are four countries of Asia. The following economic
statistics have been produced for the year 2007.
Country Northland Southland Eastland Westland
Change in GDP (%) –0.30 +2.51 –0.55 +2.12
Balance of payments current account ($m) +5550.83 –350.47 –150.90 +220.39
Change in consumer prices (%) +27.50 +15.37 +2.25 +2.15
Change in working population employed (%) –4.76 +3.78 +1.76 –8.76
Which country experienced stagflation in the relevant period?
A Northland
B Southland
C Eastland
D Westland (2 marks)

3.14 economic growth is determined by supply-side rather than by demand side
factors.
Which word correctly completes this statement?
A Actual
B Potential
C National

D The imposition of a minimum price (2 marks)

FAB/F1 ACCOUNTANT IN BUSINESS
12

4.5 When the price of a good is held above the equilibrium price, the result will be
A Excess demand
B A shortage of the good
C A surplus of the good
D An increase in demand (2 marks)

4.6 Which one of the following would not lead directly to a shift in the demand curve for overseas holidays?
A An advertising campaign by holiday tour operators
B A fall in the disposable incomes of consumers
C A rise in the price of domestic holidays
D A rise in the price of overseas holidays (2 marks)

4.7 Which of the following is likely to lead to a fall in the price of good Q which is a normal good?
A A rise in the price of good P, a substitute for good Q
B A fall in the level of household incomes generally
C A fall in the price of good T, a complement to good Q
D A belief that the price of good Q is likely to double in the next 3 months (2 marks)

4.8 According to the theory of the firm, which of the following statements describes an oligopoly?
A There are no barriers to entry into or exit from the market
B There is only one producer in the market
C There are four producers exerting considerable influence in the market
D There are many producers but they each use product differentiation to distinguish themselves
from each other (2 marks)