ACCA Accountant in Business 3 — Questions and Answers
Question 1: Which of the following is a characteristic of a 'tall' organizational structure?
- Wide span of control with few management levels
- Narrow span of control with many management levels (Correct answer)
- No formal hierarchy
- Decision-making pushed to the lowest level
Correct answer: Narrow span of control with many management levels
Tall structures have many layers of management with each manager overseeing a small number of subordinates.
Question 2: According to the CIMA/ACCA ethical framework, which threat arises when an accountant audits financial statements they personally prepared?
- Advocacy threat
- Intimidation threat
- Self-review threat (Correct answer)
- Familiarity threat
Correct answer: Self-review threat
A self-review threat occurs when a professional must evaluate their own previous work, impairing objectivity.
Question 3: Which stakeholder group is typically classified as having HIGH power and HIGH interest in a company according to Mendelow's matrix?
- Minority shareholders with small holdings
- Key investors and major creditors (Correct answer)
- Local community members
- Government regulators with infrequent interaction
Correct answer: Key investors and major creditors
Key investors and major creditors have both significant power to influence decisions and high interest in outcomes, placing them in the 'manage closely' quadrant.
Question 4: What does the term 'principal-agent problem' describe in a corporate context?
- Conflict between two competing suppliers
- Conflict of interest between shareholders (principals) and managers (agents) (Correct answer)
- A legal dispute between the company and its auditor
- Disagreement between directors and regulators
Correct answer: Conflict of interest between shareholders (principals) and managers (agents)
The principal-agent problem arises because managers may pursue their own interests rather than maximizing shareholder value.
Question 5: Which of the following is an example of a macro-environmental factor in a PESTEL analysis?
- A competitor launching a new product
- A change in the national interest rate set by the central bank (Correct answer)
- A supplier increasing raw material prices
- An internal restructuring of the sales team
Correct answer: A change in the national interest rate set by the central bank
Interest rate changes are an economic (E) factor in PESTEL, representing the broader macro-environment beyond the organization's control.
Question 6: A business implements a mandatory two-week vacation policy for employees who handle cash. What internal control principle does this enforce?
- Authorization of transactions
- Forced holiday as a fraud detection tool (Correct answer)
- Physical access controls
- Supervisory review
Correct answer: Forced holiday as a fraud detection tool
Mandatory vacations force another employee to cover, which can expose fraud or irregularities that the original employee was concealing.
Question 7: In Maslow's hierarchy of needs, which level must be satisfied before an employee becomes motivated by 'esteem needs'?
- Self-actualization needs
- Physiological needs
- Social/belonging needs (Correct answer)
- Safety needs
Correct answer: Social/belonging needs
Maslow's hierarchy requires social needs (belonging, love) to be met before esteem needs (recognition, status) become motivating.
ACCA Accountant in Business 3
Which of the following is a characteristic of a 'tall' organizational structure?