ACCA Accountant in Business 5 — Questions and Answers
Question 1: Which of the following is a key feature of a 'limited liability company' (LLC / Ltd)?
- Shareholders are personally liable for all company debts
- The company has a legal identity separate from its owners (Correct answer)
- The company cannot enter into contracts in its own name
- Ownership cannot be transferred to third parties
Correct answer: The company has a legal identity separate from its owners
Incorporation creates a separate legal entity, meaning shareholders' liability is limited to their investment.
Question 2: What is the purpose of a 'code of ethics' in a professional accounting body such as ACCA?
- To set mandatory pricing for accounting services
- To provide guidance on technical accounting standards only
- To establish principles and rules governing professional behavior and integrity (Correct answer)
- To replace national legal requirements for accountants
Correct answer: To establish principles and rules governing professional behavior and integrity
A code of ethics defines the values and conduct expected of members, including integrity, objectivity, and professional competence.
Question 3: Which motivation theory identifies 'hygiene factors' (e.g., salary, working conditions) that prevent dissatisfaction but do not motivate on their own?
- Maslow's hierarchy of needs
- Vroom's expectancy theory
- Herzberg's two-factor theory (Correct answer)
- McGregor's Theory X and Y
Correct answer: Herzberg's two-factor theory
Herzberg distinguished between hygiene factors (which cause dissatisfaction if absent) and motivators (which actively drive performance).
Question 4: Which of the following describes a 'matrix' organizational structure?
- Employees report to a single line manager only
- Employees report to both a functional manager and a project manager simultaneously (Correct answer)
- The organization has no formal reporting lines
- All authority rests with a central head office
Correct answer: Employees report to both a functional manager and a project manager simultaneously
A matrix structure overlays project or product teams on functional departments, creating dual reporting lines.
Question 5: An organization experiences a flood that destroys its server room. Which type of risk does this represent?
- Strategic risk
- Compliance risk
- Operational risk (Correct answer)
- Financial risk
Correct answer: Operational risk
Operational risk includes losses from failed internal processes, systems, or external events such as natural disasters.
Question 6: Which of the following best describes 'outsourcing' as a business strategy?
- Bringing previously external functions in-house
- Contracting a third party to perform functions previously done internally (Correct answer)
- Expanding operations into overseas markets
- Reducing the number of product lines offered
Correct answer: Contracting a third party to perform functions previously done internally
Outsourcing transfers specific business activities to an external provider, often to reduce costs or access specialist expertise.
Question 7: Which document sets out the rules governing a company's internal management and decision-making procedures?
- Memorandum of association
- Articles of association (Correct answer)
- Prospectus
- Annual report
Correct answer: Articles of association
The articles of association (bylaws) contain the regulations for a company's internal governance, including director powers and shareholder rights.
ACCA Accountant in Business 5
Which of the following is a key feature of a 'limited liability company' (LLC / Ltd)?