Summer Special 60% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: bestdeal

Free CIMA P3 Practice Exam with Questions & Answers | Set: 6

Questions 51

N, a large company in the food production industry, has grown over the years by the acquisition of several smaller rivals. The company has ten branches located in its home country and has just opened a foreign branch for the first time. It has recently made some changes to the structure and implementation of its control system.

 Which TWO of these would be most likely to improve the overall control system?

Options:
A.

Establishing an Internal Audit department.

B.

Purchase invoices are now approved for payment at branches and a list of approved invoices are sent to head office for payment. The invoices, supporting documentation and suppliers' statements are retained at the branches.

C.

Excess funds are now invested, by the Finance Director, in short-term securities. The Finance Director initiates buy and sell transactions and she also receives and retains all correspondence relating to the investments.

D.

A policy has been initiated to complete a physical inventory of all non-current assets at least annually. This is then reconciled with the non-current asset register.

E.

N has just opened a bank account in the currency in which the newly opened branch is now operating.

CIMA P3 Premium Access
Questions 52

The managers of a company are agents for the shareholders tasked with increasing shareholders' wealth. Which of the following will usually increase shareholders' wealth?

Options:
A.

Investing in projects with the shortest payback period.

B.

Investing in projects with positive net present value.

C.

Investing in projects with the greatest level of risk.

D.

Not paying a dividend for several years in order to invest in new projects.

Questions 53

FBK produces motorbikes for the high end sports market. The company has recently developed a bike that uses a powerful electric motor instead of a petrol engine.

Which of the following are product risks?

Select ALL that apply.

Options:
A.

The risk that the silent running of the bike will create a hazard to pedestrians.

B.

The risk that a bike powered by a quiet electric motor will not create the thrilling engine noise that is prized by traditional riders.

C.

The risk that demand for the bike will exceed production capacity

D.

The risk that the different characteristics of an electric engine will make the bike difficult to control

E.

The risk that FBK cannot afford to finance the working capital associated with the launch

Questions 54

Achieving the budget is often used as a good performance measure. However, there are problems with budgets which may mean they are not always good measures of performance.

Which TWO of the following statements about budgets suggest that they should not always be used to measure performance?

Options:
A.

Budgets may deliberately be set too low by managers so they are easily achieved and make the manager look good.

B.

Budgets are a commitment. They therefore act as a constraint on doing anything different.

C.

Budgets can be used to motivate staff if they are set correctly.

D.

Budgets can give people goals to achieve and if everyone strives to achieve these goals the whole organisation will benefit.

Questions 55

XYZ is unhappy with the way it decides on the likelihood and impact of risks when it completes the TARA matrix XYZ has decided to try other ways to get more consensus over the evaluation of risks as high, medium and low impact and likelihood

Which of the following methods is likely to be most successful?

Options:
A.

Searching online to see how the risks are evaluated in other companies

B.

Sending questionaires to all employees

C.

Using the Delphi method

D.

Allowing the risk manager to decide.

Questions 56

E purchases parts for one of the machines it manufactures from Country X Place the risk classification next to the risk it relates to:

P3 Question 56

Options:
Questions 57

R is a manufacturer of biscuits. The market for biscuits is extremely competitive with many companies competing for contracts with large supermarkets. The intensity of the competition means that prices are kept low; and the buyers can demand higher levels of quality, and greater flexibility in supply arrangements.

Which of the following represent ways that the use of an Information System could help R to win and retain supermarket contracts in such a competitive market?

Options:
A.

It could facilitate product ordering and selection by the use of Electronic Data Interchange.

B.

If R's system is integrated with that of a particular supermarket, then this will make it more expensive for the supermarket to change to a different supplier.

C.

It would mean that R's products would be more prominently displayed on the supermarket shelves.

D.

It could be used to facilitate more timely and accurate delivery which would minimising waste.

E.

If R's system is integrated to that of a particular supermarket then other supplier's systems cannot also be integrated to that supermarket system.

Questions 58

K has several subsidiary companies. The directors of K's subsidiaries are paid an annual bonus based upon their particular subsidiary's reported profits.

The directors of one of K's subsidiaries are considering the choice between two models of a machine.

Which of the following is most likely to explain the decision to choose model X over model Y?

Options:
A.

Model X has a better combination of investment and running costs.

B.

Model X is the less risky investment.

C.

Investing in model X will mean the subsidiary will show a higher profit.

D.

Investing in model X will lead to a higher share price.

Questions 59

C Ltd is a private, family-owned company which is hoping to become listed on a recognised Stock Exchange within the next two years. At the moment, the Board of Directors comprises five directors; four of whom are from the founding family and all of whom are involved in the day-to-day running of the business. The remaining director obtained a seat on the Board three years ago as a condition of an investment by a venture capital fund.

The Board meets in half-day sessions once a fortnight and the Board meetings are reasonably well run. All decisions are taken by the Board as a whole. There are no sub-committees.

Which of the following steps would it be appropriate for C Ltd to take in the light of the proposed listing?

Options:
A.

Appoint enough independent non-executive directors (NEDs) that they make up at least 50% of the Board.

B.

Appoint one of the NEDs as Chair of the Board.

C.

Insist that the venture capital company director be removed as he is not necessarily motivated to act in the best interests of C Ltd.

D.

Set up at least three sub-committees namely remuneration, nomination, and audit committees.

E.

Ensure that the current executive directors are given 10 year contracts starting on the day the company is floated, to ensure consistency and continuity in the management of the company.

F.

Set up an "agenda setting" sub-committee consisting of the current executive directors to decide the agenda for each Board meeting.

Questions 60

TTO is seeking to recruit a new non-executive director TTO produces high quality women's clothing, which it sells to retailers Some clothing is sold under the retailer's own brand names, some is made on behalf of recognised clothing designers TTO is a well regarded company and its products are of a very high quality.

Several applications have been received, and the Board is seeking to make a shortlist by eliminating unsuitable candidates

Which THREE of the following would make a candidate unsuitable for appointment to the post?

Options:
A.

Having been employed by TTO as a senior sales manager until two years ago.

B.

Being the brother of the finance director

C.

Holding the view that business is over regulated and company directors too heavily constrained by legislation

D.

Not having experience in fashion retail

E.

Being an executive director of a company where TTO's CEO is a non-executive director.