F1 Worst Answered Questions

F1 – Worst Answered Questions

Question 1

Which type of unemployment arises from a permanent reduction in demand for the products
supplied by a single industry or group of industries with traditionally large workforces?

A Frictional
B Structural
C Cyclical
D Seasonal

Question 2

In relation to fraud prevention, what objective should external auditors have in designing and
implementing their audit procedures?

A A reasonable prospect of detecting irregular statements or records

B The identification of every inconsistency or error within the records
C To provide a systematic check of every recorded transaction
D To verify pre-determined samples of all types of records

Question 3

Which of the following best defines coaching?

A Developing the individual by helping to build on skills and overcome weaknesses

B Provision of one-way instruction on formal tasks required to carry out the immediate job
C Offering career guidance in order to maximise the individual’s potential
D Provision of objective advice to overcome the individual’s personal problems

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Question 4

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) +550.83 -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

Question 5

Which of the following organisations would reply most heavily on value for money
indicators and efficiency rather than information on performance and profitability?

A A private accountancy college

B A local authority
C A small retailer
D A pension fund

Question 6

Are the following statements true or false?

1 Adair’s leadership model focuses on what leaders do and not what they are
2 The Ashridge leadership model proposes a democratic approach to leadership

A Both statements are true

B Statement 1 is true; statement 2 is false
C Statement 1 is false; statement 2 is true
D Both statements are false

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Question 7

In most countries, what is the usual purpose of codes of practice on corporate governance?

A To establish legally binding requirements to which all companies must adhere

B To set down detailed rules to regulate the ways in which companies must operate
C To provide guidance on the standards of best practice that companies should adopt
D To provide a comprehensive framework for management and administration

Question 8

Research has indicated that workers in country A display characteristics such as toughness
and the desire for material wealth and possessions, while workers in country B value personal
relationships, belonging and the quality of life.

According to Hofstede’s theory, these distinctions relate to which of the following

cultural dimensions?

A Masculinity-femininity
B Power-distance
C Individualism-collectivism
D Uncertainty avoidance

Question 9

BCD Co is a large trading company. Steve is the administration manager and is also
responsible for legal and compliance functions. Sheila is responsible for after sales service
and has responsibility for ensuring that customers who have purchased goods from BCD Co
are fully satisfied. Sunny deals with suppliers and negotiates on the price and quality of
inventory. He is also responsible for identifying the most appropriate suppliers of plant and
machinery for the factory. Sam is the information technology manager and is responsible for
all information systems within the company.

According to Porter’s value chain, which of the managers is involved in a primary

activity as opposed to a support activity?

A Steve
B Sheila
C Sunny
D Sam

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Question 10

The preparation and filing of accounts by limited companies each year is required by which
of the following?

A Codes of corporate governance

B National legislation
C International Accounting Standards

Question 11

Grant is a member of a project team. His colleagues in the team rely on him to read and check
complex project documentation. Grant has a keen eye for detail and often identifies minor
details in documents that others miss but may be of significance. Despite this diligent
approach, Grant always meets his deadlines. However, Some of Grant’s colleagues feel
frustrated when he refuses to involve others. He can hold up progress as he will not agree to
the team signing off project documents until all of his concerns are fully discussed.

According to Belbin’s team roles theory, Grant is an example of which of the following?

A Implementer
B Completer-finisher
C Monitor-evaluator
D Shaper

Question 12

What is the latest stage at which a new recruit to a company should first be issued with a
copy of the company’s health and safety policy statement?

A On accepting the position with the company

B As early as possible after employment
C After the first few weeks of employment
D During the final selection interview

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Question 13

Janet is a member of a project group. She is highly knowledgeable and considered by her
colleagues to be rather intellectual and strategic in her approach. Janet demonstrates great
intuition when dealing with problems, sometimes adopting unorthodox but effective methods.
However, some of the team regards her as detached and uncommunicative, and she can
sometimes disregard practical details without explanation.

According to Belbin’s team roles theory, Janet is an example of which of the following?

A Monitor-evaluator
B Plant
C Shaper
D Resource investigator

Question 14

In order to promote proper and complete dialogue between the company registration body
and a company, and to ensure that essential administrative requirements laid down by the
company registration body come to the attention of the board, which of the following
positions should be segregated?

A Company Secretary and Chief Executive Officer

B Chief Executive Officer and Chairman
C Company Secretary and Chairman
D Director and Company Secretary

Question 15

Which of the following is an example of a substantive test?

A Asking the procurement manager to confirm the underlying purpose of a purchase of raw
materials
B Asking a senior manager for evidence that an account receivable is collectible to ensure
that the stated valuation of the account is correct
C Checking that the technical quality of inventory is consistent with the order specification
D Confirming that an order for goods placed by the production manager is consistent with the
manager’s authorisation limit

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Question 16

Joseph’s preferred way of learning is to assimilate information in a logical and systematic

manner. He can understand problems most readily when he can apply a pre-determined
framework in order to consider real life issues. He dislikes being put on the spot by having to
perform tasks as part of his training, as he feels unprepared without first being fully
instructed.

According to the Honey and Mumford learning styles model, which of the following
would best describe Joseph’s learning style?

A Pragmatist
B Activist
C Reflector
D Theorist

Question 17

As a longstanding customer, Walter has been highly critical of Fly Co, an airline which he
claims has provided him with bad service and poor value for money for many years. He has
written many letters and has made numerous telephone calls, all expressing his concerns.

Having now inherited a large block of voting shares in Fly Co, Walter can now voice his
complaints at the annual shareholders’ meeting for the first time.

With reference to Mendelow’s theory, what is the implication of this development?

A Fly Co could previously have expended minimal effort on Walter’s concerns, but it must
now keep him informed
B Fly Co should previously have kept Walter informed, but it must now treat him as a key
player
C Fly Co should previously have kept Walter satisfied, but it must now regard him as a key
player

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Question 18

HIJ Co is a large company whose shares are listed on the national stock exchange. The
company is compliant with generally accepted standards of corporate governance. The
finance department of HIJ Co has completed the preparation of the draft financial statements.

To which of the following will these statements be submitted initially for scrutiny?

A The external auditors

B The audit committee
C The board of directors
D The internal auditors

Question 19

Analysis of costs and revenues of different products would assist the marketing department in
respect of which activity?

A Differentiating the technical features of products from those of competitors

B Calculating the maximum discounts that sales personnel are permitted to offer
C Targeting sales efforts towards the most appropriate socio-economic groups
D Determining production bonuses to be paid

Question 20

Which of the following principles is usually recommended for inclusion in legislation on data
protection?

A The data user should provide the data subject with regular and detailed information on the
data held
B All personal data held by data users should be updated by checking this data with the
subject at regular intervals
C All personal data held by data users should be adequate for the purposes of the data user
but not excessive
D All personal data held by data users should be reviewed regularly and automatically
deleted after a specified period of time

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Question 21

DEF Co has decided to include in each customer’s account number a check digit which will
have an arithmetical relationship to other digits in the account number.

This is an example of which of the following types of control?

A Input control
B Back-up control
C Output control
D Contingency control

Question 22

Which of the following is a characteristic of a team but not of a group?

A The sense of identity brought about by common objectives

B The bonding and loyalty of the members to one another
C The emergence of one particular individual as a leader
D The organisation of work through strictly formal processes

Question 23

Kolb’s learning cycle comprises active experimentation, experience, observation and

reflection, and which other element?

A Assimilation
B Application
C Abstract conceptualisation
D Positive reinforcement

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Question 24

Eatkleen is a pressure group that seeks to encourage food producers to eliminate harmful
preservatives from food and make the public aware of the potential dangers of these
additives. Frustrated with the government’s explicit policy not to act on this in the near
future, Eatkleen is campaigning for consumers to boycott certain products.

What combination of environmental factors is Eatkleen bringing to bear on food

producers?

A Political and social

B Social and economic
C Political and technological
D Economic and technological

Question 25

VTP Company has introduced a new budgetary control system. Managers have been asked to
prepare budgets for their areas of responsibility and have agreed these formally with senior
executives.

What is the next stage of the process?

A Reviewing outcomes in order to plan for the next period

B Measurement of actual business outcomes
C Analysis of variances between actual and budgeted performance
D Agreement on action to be taken on significant variances

Question 26

A recent report commissioned by the government of Arkana has concluded that the national
birth rate has fallen from an average of 2·1 children per household to 1·7 children per
household. This decline is expected to continue, as families face a period of prolonged
financial pressure. The report also found that the life expectancy of the citizens of Arkana has
increased from an average of 74 years to 79 years. Again, this trend is expected to continue as
citizens choose healthier lifestyles. Numerous policy measures have been proposed by
ministers to reduce the long-term pressure on national finances.

Which of the following measures is most appropriate in order to achieve this objective?

A A reduction in income tax rates and an increase in personal tax-free allowances

B The provision of targeted support for elderly low income families
C The introduction of tax incentives to invest in personal pension arrangements
D Maintenance of low interest rates in order to increase the money supply

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Question 27

The remuneration committee of RDC Company has prepared a report to the board proposing
major changes to the structure of executive remuneration packages. The recommendations
include the following:

1. Enhanced bonuses linked to performance over 1–2 years will be paid, linked to
performance, with the result that bonuses will now comprise about 80% of ‘on target
earnings’

2. As the output of individual directors is impossible to measure, the fairest system of

remuneration is to reward executive directors with across-the-board increases on an annual
basis

3. A significant proportion of executive pay will be made up of shares in the company, which
will be allotted subject to the achievement of objectives over a rolling five year period

4. Acknowledging the contribution of all board members, share options will be made
available to all executive and non-executive directors

5. As the company pays its executives less than its main competitors, basic pay and fringe
benefits will be increased with immediate effect, which means that the average director’s
remuneration will be made up of approximately 50% ‘on target earnings’
Which of the above recommendations are consistent with best practices in corporate
governance in respect of remuneration of directors?

A 1 and 4
B 2 and 3
C 3 and 4
D 3 and 5

Question 28

The board of directors of TBF Company has decided to establish an audit committee for the
first time. The committee will be made up of three independent non-executive directors. As
the company has six nonexecutive directors, three will serve on the committee in the first
year and the other three will then serve for the next year. Of the six non-executive directors,
only one has a comprehensive knowledge of financial operations.

The committee will meet every two months. One of the non-executive directors will also
serve as the chairman of the company for the next year and it has been decided that he will
also be the chairman of the audit committee for this period.

According to best practice in corporate governance, which of the following statements is

correct in relation to the above arrangements?

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A It is inappropriate for the chairman of the company to be chairman of the audit committee
at the same time
B Whilst the audit committee should be made up of a majority of non-executive directors, it
is undesirable that there will be no executive directors serving on it
C The audit committee will not have the necessary competences to discharge its
responsibilities over the full two year period
D The non-executive directors should retire annually, so no arrangements should be put in
place in relation to the composition of the audit committee for the second year

Question 29

Which of the following reports prepared by the finance department would enable the
organisation to assess the effectiveness of an increase in expenditure on after sales service?

A Costs of defects reworked or written off due to failures in quality control

B Revenues from cross-selling activities focused on existing customers
C Costs of servicing, repairing and running vehicles driven by customer-facing engineers
D Revenues from sales of imperfect inventory and returned goods

Question 30

Jens has prepared a report detailing the sales, revenues and costs attributable to his
company’s products, broken down by cities, towns and regions, for the last 12 quarters. He
already has figures for the estimated total market size for the same period. The company sells
fast moving consumer goods and adopts an undifferentiated marketing strategy.

Jens’ report will enable the marketing department to complete which of the following?

A Carrying out a comprehensive analysis of the marketing environment

B Analysing buyer behaviour according to product features and benefits
C Identifying the position of the products on the product lifecycle
D Understanding which promotional methods have been most effective

Question 31

Which of the following actions would be permissible for an organisation, assuming it has
adopted a diversity policy?

A Allowing only male staff to take large amounts of cash to the bank
B Advertising for staff over 60 years of age to work in a residential care home
C Preventing female armed service personnel from participating in hazardous missions
D Recruiting male actors only to play specific roles in a production of a play

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Question 32

LJP Company operates train and bus services throughout its home country, as well as some
overseas services.

LJP Company dominates the market, but has one major competitor.

In the context of Porter’s five forces model, which of the following is an example of the
threat of substitutes to LJP Company?

A A decision by GVS Company, an airline, to diversify into land transport systems, with bus
and train services targeted at business users
B A large increase in the costs of inventory for the bus division, imposed by a company that
manufactured all of LJP Company’s fleet of buses
C The launch of new, high speed train services on all major domestic and overseas routes by
JVM Company, LJP’s main competitor

D The launch of a free, user-friendly and easily downloadable video conferencing package by
ITX Company, a multinational software producer

Question 33

Which of the following describes a pluralist approach to ethical decision taking?

A The decision taker will seek to satisfy some of the demands of all those affected
B Actions will be determined by the personal preferences of the decision taker
C Decisions will be taken in order to satisfy all the needs and desires of the majority of those
affected
D The decision will optimise the demands of the majority and the minority of those affected

Question 34

Which of the following is a role of the Chairman of a company?

A To issue the agenda in advance of board meetings

B To manage the operations of the company
C To lead the executive team
D To sign the minutes of board meetings

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Question 35

As part of its commitment to corporate social responsibility, TTC Company has decided to
pursue a policy of sustainability in relation to its purchasing policies in order to maximise the
welfare of stakeholders.

What does the term ‘sustainability’ mean in this context?

A Maintaining long-term relationships with suppliers

B Ensuring that prices paid for raw materials enable the company to maintain appropriate
margins
C Minimising the prospect of depleting future supplies of natural resources
D Eliminating any detrimental effects of procurement decisions on the physical environment

Question 36

Which of the following is a feature of a competence framework?

A Detailed learning outcomes setting out minimum occupational standards

B The required level of academic achievement
C Anticipated medium to long-term career milestones
D Personal qualities and attributes of the individual

Question 37

Which of the following describes a GAAP?

A A collection of accounting rules assembled from different sources

B An internationally agreed accounting standard
C A legally binding protocol governing the preparation of financial statements
D An advisory document issued by a body responsible for accounting standards

Question 38

Which of the following is the best definition of acting in the public interest?

A Showing concern for the collective well-being of the stakeholders served by the
organisation
B Complying with all laws and voluntary codes to which the organisation is committed
C Maximising the welfare of all stakeholders at all times
D Placing a greater emphasis on external, rather than internal, stakeholders’ needs

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