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ACCA BT practice questions

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Question 1Business organisation structure, governance and management

Which feature distinguishes a sole trader from a limited company?

  1. Ownership is divided into shares that can be freely traded
  2. The owner carries unlimited personal liability for business debts Correct answer.
  3. Profits are subject to corporation tax rather than income tax
  4. The business must file audited accounts with the registrar

Explanation

A sole trader has no separate legal personality, so the owner and the business are the same legal person and the owner's personal assets stand behind business debts. Incorporation is what creates limited liability, share capital and separate filing and tax obligations.

Question 2Business organisation structure, governance and management

What is the usual position on liability in an ordinary (general) partnership?

  1. Liability is limited to each partner's agreed capital contribution
  2. The partnership entity alone is liable and the partners are protected
  3. Only the senior or managing partner bears personal liability for debts
  4. Partners are jointly and severally liable for the debts of the firm Correct answer.

Explanation

A general partnership is not a separate legal person, so the partners bear unlimited liability and creditors may pursue any one of them for the whole debt. Limited liability requires a different vehicle, such as a company or an LLP.

Question 3Business organisation structure, governance and management

Which feature is characteristic of a co-operative?

  1. Surpluses are always distributed to outside investors as dividends
  2. Members each have one vote regardless of capital contributed Correct answer.
  3. The entity is owned by government on behalf of the general public
  4. Control is exercised by shareholders in proportion to their shareholding

Explanation

Co-operatives operate on the principle of member control, usually one member one vote, rather than control in proportion to capital invested. Any surplus is typically shared among members according to their transactions with the co-operative rather than returned to outside investors.

Question 4Business organisation structure, governance and management

Which objective best describes a public sector organisation such as a state-funded health service?

  1. Meeting service targets within a budget set by government Correct answer.
  2. Maximising the financial return delivered to its shareholders
  3. Distributing any annual surplus among its members at year end
  4. Achieving sustained growth in the value of its traded shares

Explanation

Public sector bodies are funded from taxation or government grants and are accountable for delivering services and value for money rather than profit. Their performance is judged against service and financial targets set within a public budget.

Question 5Business organisation structure, governance and management

A wide span of control most directly results in which outcome?

  1. A flatter organisation with fewer levels of management Correct answer.
  2. A longer scalar chain running from the top to the bottom
  3. Closer supervision of each subordinate by the manager
  4. More promotion opportunities at every level of the hierarchy

Explanation

Span of control is the number of subordinates reporting to one manager, so a wide span means fewer managers and therefore fewer layers in the hierarchy. A tall structure is produced by narrow spans, which also lengthen the chain of command.

Question 6Business organisation structure, governance and management

When a manager delegates a task to a subordinate, which element remains with the manager?

  1. The day-to-day responsibility for carrying out the work
  2. Accountability for ensuring the task is completed properly Correct answer.
  3. The duty to report progress to more senior managers
  4. The authority to commit the resources needed for the task

Explanation

Delegation transfers authority and responsibility for doing the work, but accountability for the outcome cannot be passed on. The delegating manager remains answerable to superiors for how the task is performed.

Question 7Business organisation structure, governance and management

A listed company wishes to publish an integrated report explaining how it creates value over time. Which concept does this primarily reflect?

  1. The scalar chain of command within the organisation
  2. A stakeholder-inclusive approach to corporate reporting Correct answer.
  3. The principle of unity of command in the hierarchy
  4. The use of a narrow span of control in each department

Explanation

Integrated reporting explains how an organisation uses financial and non-financial resources to create value for providers of capital and for society, which reflects a stakeholder-inclusive view. Structural concepts such as the scalar chain, unity of command or span of control say nothing about external reporting.

Question 8Business organisation structure, governance and management

Which statement describes a centrally coordinated organisation?

  1. Strategy is set centrally but operations are fully devolved
  2. Decisions are taken by staff who are closest to the customer
  3. Business units are free to set their own local policies
  4. Common policies are applied uniformly across every unit Correct answer.

Explanation

Centralisation concentrates decision-making authority and standard setting at the top, so the same policies apply throughout. Local autonomy and decisions taken near the customer belong to decentralised arrangements.

Question 9Business organisation structure, governance and management

In a matrix structure, a team member reports to both a project manager and a functional head, who give conflicting priorities. Which feature of matrix working does this illustrate?

  1. A narrow span of control improves the quality of supervision
  2. Decentralisation removes the need for a formal hierarchy
  3. Dual reporting lines create the potential for role conflict Correct answer.
  4. Unity of command is preserved by detailed job descriptions

Explanation

Matrix structures overlay a project dimension on the functional one, so individuals have two bosses and can receive competing instructions. This dual authority produces ambiguity and conflict, which is the classic cost of matrix working.

Question 10Business organisation structure, governance and management

A retail group is organised into separate divisions for clothing, food and homeware, each with its own support staff. Why does this divisional structure suit the group?

  1. It guarantees economies of scale in group-wide purchasing
  2. It removes duplication of support services across the whole group
  3. It allows every division to share a single functional support team
  4. Each division responds to its own market and owns its profit result Correct answer.

Explanation

Divisionalisation groups activities by product, market or geography so that each division can tailor its offer and be held accountable for its own profit. The trade-off is that support functions are duplicated across divisions, which can raise costs.

Question 11Business organisation structure, governance and management

In Mintzberg's model of organisational components, which part designs the planning and control systems that standardise the work of others?

  1. The support staff
  2. The strategic apex
  3. The technostructure Correct answer.
  4. The operating core

Explanation

Mintzberg's technostructure consists of analysts who design systems, procedures and controls that standardise work without directly supervising it. The strategic apex sets direction, the operating core does the basic work, and support staff provide services outside the operating workflow.

Question 12Business organisation structure, governance and management

Which issue arises from the separation of ownership from control in a listed company?

  1. Shareholders can no longer sell their shares to other investors
  2. The company ceases to have a separate legal personality
  3. Directors are required to hold a majority of the company's shares
  4. Directors may pursue their own interests ahead of shareholders Correct answer.

Explanation

Where owners are dispersed and managers run the business, managers may act in their own interest rather than that of shareholders. This agency problem is the reason governance mechanisms such as boards, audit and disclosure exist.

Question 13Business organisation structure, governance and management

What is the principal contribution of independent non-executive directors to a board?

  1. They represent employees' interests in board discussions
  2. They guarantee the accuracy of the published financial statements
  3. They take day-to-day responsibility for implementing the strategy
  4. They scrutinise and challenge executive performance for shareholders Correct answer.

Explanation

Non-executive directors bring independent judgement to the board, constructively challenging strategy and holding executives to account on behalf of shareholders. They do not manage the business and cannot guarantee the accuracy of financial statements, which remains an executive and audit responsibility.

Question 14Business organisation structure, governance and management

Which task would normally fall to a company's audit committee?

  1. Approving the annual marketing and sales budget
  2. Setting the remuneration of the chief executive officer
  3. Selecting and appointing new members of the board
  4. Reviewing the scope and findings of the external audit Correct answer.

Explanation

The audit committee oversees financial reporting, internal control and the relationship with internal and external auditors. Remuneration and board appointments are handled by separate remuneration and nomination committees.

Question 15Business organisation structure, governance and management

Under Mendelow's stakeholder matrix, how should an organisation treat a stakeholder group with high power but low interest?

  1. Treat them as a key player and engage them closely
  2. Keep them satisfied, since they can influence the organisation Correct answer.
  3. Keep them informed through regular communication
  4. Apply minimal effort and simply monitor them from time to time

Explanation

Mendelow's matrix maps stakeholders by power and interest: high power with low interest calls for keeping the stakeholder satisfied so that it does not exercise its power against the organisation. Close engagement is reserved for high power, high interest key players.

Question 16Business organisation structure, governance and management

Which problem is most closely associated with a tall organisational structure?

  1. Managers have an excessively wide span of control
  2. Employees receive too little supervision and support
  3. Decisions are taken too quickly and without adequate review
  4. Messages are distorted as they pass through many levels Correct answer.

Explanation

A tall structure has many hierarchical layers and a long chain of command, so information is passed through many people and can be delayed or distorted. Narrow spans at each level also increase management cost and can slow decision-making.

Question 17Business organisation structure, governance and management

The shareholder value approach to corporate governance holds that the board's primary duty is to:

  1. Balance the interests of all stakeholder groups equally
  2. Protect the job security of the existing workforce first
  3. Maximise long-term returns to the suppliers of equity capital Correct answer.
  4. Comply with regulation regardless of the effect on returns

Explanation

The shareholder value model treats shareholders as the residual owners of the company and sees the board's purpose as maximising long-term shareholder wealth within the law. The stakeholder model, by contrast, requires directors to weigh the interests of several groups.

Question 18Business organisation structure, governance and management

Which arrangement best demonstrates the internal control principle of segregation of duties?

  1. Bank reconciliations are prepared by the cashier who records receipts
  2. A single clerk records supplier invoices and authorises their payment
  3. The clerk who records goods received does not pay the supplier Correct answer.
  4. All payments are made by the managing director without review

Explanation

Segregation of duties means that no single person should control a transaction from start to finish, so recording and payment are split between different people. This reduces the risk of error and fraud going undetected.

Question 19Business organisation structure, governance and management

A firm places heavy emphasis on written procedures, job descriptions and formal hierarchy. Which of Handy's cultural types does this describe?

  1. A task culture
  2. A power culture
  3. A person culture
  4. A role culture Correct answer.

Explanation

Handy's role culture is built on rules, procedures, position and logic rather than personalities, so it suits stable, bureaucratic organisations. Power culture centres on a dominant individual, task culture on project teams, and person culture on individual expertise.

Question 20Business organisation structure, governance and management

Which statement reflects the core belief of Taylor's scientific management?

  1. Workers are motivated chiefly by social relationships in their group
  2. There is no single best way to organise work in all situations
  3. Authority should rest on formal rules and a legal hierarchy
  4. Jobs should be measured and standardised to find the best method Correct answer.

Explanation

Taylor sought to replace rule-of-thumb working with scientific study of tasks, standardising methods and using financial incentives to raise efficiency. The other statements belong to the human relations, contingency and bureaucratic schools respectively.

Question 21Business organisation structure, governance and management

On what ground is Weber's ideal-type bureaucracy most often criticised?

  1. Rigid rule-following can make the organisation slow to adapt Correct answer.
  2. It prevents any division of labour from being established
  3. It leaves managers with no formal authority over their staff
  4. It depends on personal loyalty rather than written procedures

Explanation

Bureaucracy delivers consistency and predictability through rules and hierarchy, but the same features can produce inertia and a poor response to change. It is also criticised for stifling initiative and for the displacement of goals towards rule compliance.

Question 22Business organisation structure, governance and management

Which item is an agency cost arising from the separation of ownership and control?

  1. The cost of monitoring management through audit and board oversight Correct answer.
  2. The interest paid on the company's long-term borrowings
  3. The depreciation charged on the company's factory machinery
  4. The cost of goods purchased from external suppliers

Explanation

Agency costs are the costs of aligning managers' interests with those of shareholders, including monitoring, bonding and incentive arrangements such as audit fees, board committees and share-based pay. Operating, financing and depreciation costs arise from running the business rather than from the principal-agent relationship.

Question 23Business organisation structure, governance and management

A company listed on a stock exchange departs from a provision of the applicable corporate governance code. Under a 'comply or explain' regime, what must it do?

  1. Refer the matter to the relevant government minister for approval
  2. Suspend its listing until it has achieved full compliance
  3. Obtain prior written consent from its largest shareholders
  4. Disclose the departure and give reasons in its annual report Correct answer.

Explanation

'Comply or explain' allows flexibility: a company may deviate from a code provision provided it explains the reasons for doing so and, where relevant, describes the alternative arrangements adopted. This transparency lets investors judge whether the governance is appropriate.

Question 24Business organisation structure, governance and management

A contingency approach to organisational structure suggests that the most appropriate structure depends on:

  1. A fixed set of principles that apply to every organisation
  2. The size of the organisation's annual marketing budget
  3. The personal preference of the original founder of the business
  4. The environment, technology and size of the organisation Correct answer.

Explanation

Contingency theory holds that there is no one best structure; the fit between structure and contextual factors such as uncertainty, technology and scale determines performance. Classical theory, by contrast, sought universal principles of organisation.

Question 25Business organisation structure, governance and management

Which statement best reflects the concept of corporate social responsibility?

  1. A business maximises profit while remaining within the law
  2. A business considers its impact on society beyond its legal obligations Correct answer.
  3. A business donates a fixed share of its profit to charity every year
  4. A business publishes its financial statements for public scrutiny

Explanation

Corporate social responsibility describes a business accepting a duty towards stakeholders and society that goes beyond minimum legal requirements. Philanthropy may be one expression of it, but CSR is a broader commitment covering environmental, ethical and community impacts.

Question 26Business organisation structure, governance and management

A manager has a narrow span of control. What does this mean?

  1. The manager has no direct reports at all.
  2. The manager has few direct reports. Correct answer.
  3. The manager supervises several departments at once.
  4. The manager reports to two supervisors.

Explanation

Span of control is the number of subordinates who report directly to a manager. A narrow span means few direct reports, which allows close supervision but tends to create a taller hierarchy.

Question 27Business organisation structure, governance and management

The unbroken line of authority running from the board down to the lowest operative level is known as:

  1. the scalar chain Correct answer.
  2. the informal organisation
  3. the span of control
  4. the staff function

Explanation

The scalar chain, or chain of command, is the hierarchy of authority through which instructions pass from top to bottom. It gives employees a clear reporting route and helps maintain order.

Question 28Business organisation structure, governance and management

Which benefit is most closely associated with decentralising operational decisions?

  1. Quicker responses to local conditions Correct answer.
  2. Reduced need for manager training
  3. Elimination of the need for performance measurement
  4. Consistency of decisions across all locations

Explanation

Decentralisation pushes decision-making authority lower in the organisation, allowing local managers to respond faster to local circumstances. The trade-off is that consistency across the organisation may become harder to maintain.

Question 29Business organisation structure, governance and management

Which matter is normally reserved for a company's remuneration committee?

  1. Approving the annual financial statements
  2. Reviewing internal audit effectiveness
  3. Setting executive director pay Correct answer.
  4. Recommending board candidates

Explanation

The remuneration committee determines the pay, incentives and contracts of executive directors, helping to manage conflicts of interest. It normally consists of independent non-executive directors.

Question 30Business organisation structure, governance and management

Corporate governance is best described as:

  1. the process by which annual financial statements are prepared and audited
  2. the daily supervision of operational staff by junior managers
  3. the system by which companies are directed and controlled Correct answer.
  4. the marketing strategy used by a company to attract new investors

Explanation

Corporate governance concerns the structures, processes and relationships through which companies are directed, controlled and held accountable. It addresses board responsibilities, shareholder rights and stakeholder interests.

Question 31Business organisation structure, governance and management

In Maslow's hierarchy of needs, which need sits at the highest level?

  1. Safety needs
  2. Self-actualisation Correct answer.
  3. Physiological needs
  4. Social needs

Explanation

Maslow places self-actualisation at the top of the hierarchy, representing the drive to reach one's full potential. Lower levels include physiological, safety, social and esteem needs.

Question 32Business organisation structure, governance and management

What is the main purpose of a whistleblowing policy?

  1. To give a protected route for reporting wrongdoing Correct answer.
  2. To replace the need for an external audit
  3. To encourage employees to compete more actively for promotion
  4. To allow managers to dismiss staff without giving notice

Explanation

A whistleblowing policy provides protected channels through which employees can raise concerns about suspected wrongdoing. It supports ethical governance and can help detect problems before they escalate.

Question 33Business organisation structure, governance and management

A corporate code of ethics primarily serves to:

  1. set out the company's marketing budget
  2. guide employee behaviour and decision-making Correct answer.
  3. replace all legal requirements
  4. guarantee that no employee will ever act improperly

Explanation

A code of ethics states the values and standards expected of employees and provides guidance for decisions where ethical issues arise. It supports culture and accountability but cannot guarantee good behaviour or replace the law.

Question 34Business organisation structure, governance and management

A company groups all its engineers in one department, all accountants in another, and all marketers in a third. Which structure is this?

  1. Virtual network structure
  2. Matrix structure
  3. Functional structure Correct answer.
  4. Geographical divisional structure

Explanation

A functional structure groups employees by specialised function or skill, such as engineering, finance and marketing. This supports specialist expertise and clear functional reporting lines.

Question 35Business organisation structure, governance and management

What is a main advantage of a matrix structure?

  1. Specialist expertise can be shared across projects Correct answer.
  2. It guarantees faster decisions than any other structure
  3. Each employee has only one clear reporting line
  4. It removes the need for project managers

Explanation

A matrix structure combines functional and project dimensions so that specialist staff can be deployed across different projects. This can improve resource flexibility and knowledge sharing.

Question 36Business organisation structure, governance and management

Delayering an organisation most directly involves:

  1. adding more management layers to improve control
  2. outsourcing all support functions
  3. increasing the number of direct reports to zero
  4. removing levels of management from the hierarchy Correct answer.

Explanation

Delayering reduces the number of management levels in the hierarchy, often widening spans of control and reducing overhead cost. It can also speed communication but may reduce promotion opportunities.

Question 37Business organisation structure, governance and management

A production worker asks an HR adviser for guidance on a grievance procedure. The HR adviser can advise but cannot order the worker's line manager to act. This illustrates:

  1. staff authority Correct answer.
  2. delegated authority
  3. line authority
  4. board authority

Explanation

Staff authority belongs to specialist support functions that advise and assist line managers but do not have command authority over line operations. Line authority, by contrast, carries the right to issue instructions.

Question 38Business organisation structure, governance and management

Which is a common disadvantage of making significant decisions by committee?

  1. Decisions may be slower and responsibility diffused Correct answer.
  2. It always prevents consultation with specialists
  3. It makes decisions less consistent than individual decisions
  4. It removes any need to record minutes

Explanation

Committees can pool expertise and improve consultation, but they often take longer to decide and can blur individual accountability. Clear terms of reference and minutes help mitigate these weaknesses.

Question 39Business organisation structure, governance and management

Separating the roles of chairman and chief executive officer primarily helps to:

  1. reduce the number of board meetings
  2. prevent one person from dominating the board Correct answer.
  3. eliminate the need for non-executive directors
  4. increase the CEO's operational authority

Explanation

Separating the chairman and CEO roles creates a check on the concentration of power, allowing the board to challenge management more effectively. The chairman leads the board while the CEO leads the executive team.

Question 40Business organisation structure, governance and management

Which task normally belongs to the nomination committee?

  1. Setting directors' salaries
  2. Reviewing the company's risk register
  3. Recommending candidates for board positions Correct answer.
  4. Approving the audit plan

Explanation

The nomination committee leads the process of identifying, assessing and recommending candidates for board appointment and succession. It helps ensure the board has the right mix of skills and independence.

Question 41Business organisation structure, governance and management

The risk committee of a board is mainly responsible for:

  1. Overseeing risk appetite and the risk framework Correct answer.
  2. Setting individual sales targets for regional managers
  3. Preparing the company's annual tax return for filing
  4. Hiring the external auditor and agreeing the audit fee

Explanation

A risk committee oversees the organisation's risk management framework and advises the board on risk appetite and tolerance. It focuses on identifying, assessing and monitoring significant risks.

Question 42Business organisation structure, governance and management

A manager believes that staff naturally seek responsibility and will exercise self-direction if committed to goals. This manager is applying:

  1. scientific management
  2. Theory X
  3. bureaucratic management
  4. Theory Y Correct answer.

Explanation

McGregor's Theory Y assumes employees are motivated, responsible and capable of self-direction when committed to objectives. Theory X, by contrast, assumes employees avoid work and need close control.

Question 43Business organisation structure, governance and management

According to Herzberg's two-factor theory, which factor is a motivator that can create job satisfaction?

  1. Recognition for achievement Correct answer.
  2. Company salary and benefits policy
  3. Job security
  4. Working conditions and facilities

Explanation

Herzberg's motivators include achievement, recognition, responsibility, advancement and the work itself, which can create satisfaction. Hygiene factors such as pay, working conditions and security mainly prevent dissatisfaction.

Question 44Business organisation structure, governance and management

Which component of an internal control system is described as setting the tone at the top of an organisation?

  1. Control activities
  2. Information and communication
  3. Control environment Correct answer.
  4. Monitoring activities

Explanation

The control environment reflects the integrity, ethical values, governance and management attitude that shape how controls operate. It provides the foundation for the other components of internal control.

Question 45Business organisation structure, governance and management

Stakeholder theory holds that a company should:

  1. ignore groups that do not own shares
  2. focus solely on complying with minimum legal duties
  3. consider the interests of all groups affected by its actions Correct answer.
  4. maximise short-term profit for shareholders only

Explanation

Stakeholder theory argues that a company should balance the interests of shareholders, employees, customers, suppliers, communities and other affected groups. This contrasts with a narrow shareholder-primacy view.

Question 46Business organisation structure, governance and management

Stewardship theory of corporate governance assumes that managers:

  1. are motivated only by financial incentives
  2. act as trustworthy stewards of the organisation Correct answer.
  3. should be controlled mainly through hostile takeovers
  4. will always act opportunistically unless monitored

Explanation

Stewardship theory assumes managers are intrinsically motivated to act in the organisation's best interests and can be trusted as stewards. It therefore places more emphasis on empowerment and shared goals than on tight monitoring.

Question 47Business organisation structure, governance and management

Transaction cost economics suggests that a firm will perform an activity internally rather than through the market when:

  1. the activity is unrelated to its core business
  2. the firm has no management hierarchy
  3. market suppliers always offer lower prices
  4. market contracting costs are high Correct answer.

Explanation

Transaction cost economics compares the cost of using the market, such as searching, negotiating and enforcing contracts, with the cost of internal coordination. When market transaction costs are high, internalising the activity can be more efficient.

Question 48Business organisation structure, governance and management

In Schein's model of organisational culture, visible elements such as office layout, dress codes and formal rituals are examples of:

  1. cultural webs
  2. espoused values
  3. artefacts Correct answer.
  4. basic underlying assumptions

Explanation

Schein's model distinguishes artefacts, espoused values and basic underlying assumptions. Artefacts are the visible, observable structures, processes and behaviours of an organisation.

Question 49Business organisation structure, governance and management

To protect the independence of the internal audit function, its head should report functionally to:

  1. the audit committee Correct answer.
  2. the external auditor
  3. the finance director
  4. the chief executive officer

Explanation

Functional reporting to the audit committee helps internal audit remain independent of management and able to report concerns objectively. Administrative reporting may still run through senior management for day-to-day matters.

Question 50Business organisation structure, governance and management

Risk appetite is best described as:

  1. the risk an organisation is willing to accept Correct answer.
  2. the maximum loss that has already occurred
  3. the process of transferring every risk to an insurer
  4. the complete elimination of all business risk

Explanation

Risk appetite is the amount and type of risk an organisation is willing to accept in pursuit of its objectives. It is set by the board and guides risk-taking and control decisions.