CIMA CIMAPRO19-P03-1 Exam Practice Test Instant Access

Question 1

K is a large mining company. Initsrisk reportitstates that there is a risk of accidents and injury because of the nature of the industry. Itstates thatithasstaff training in place and complieswith allHealth and Safety regulations but in spite of this there will still be a residual risk that accidents and injuries may occur.

Which of the followingstatements are correct?

AThe shareholders should not invest because there is still a residualrisk.

BThe directors are avoiding their responsibilities by saying there is a residual risk.

CSome risks cannot be eliminated.

DAccepting a residual risk does not imply the company is reckless.

EMost companies in this industry will say something similar in their risk report.

Answer : C, D, E

Question 2

Which of the following is the major advantage of Cloud storage for an enterprise?

AIt provides unlimited free use for the enterprise

BThe enterprise has complete control over it

Cin-house staff are not required to maintain the infrastructure

DSharing storage space with others

Answer : C

Question 3

Division A of X plc produced the following results in the last financial year.

Net profit $200,000 Gross capital employed$1,000,000

For evaluation purposes all divisional assets are valued at original cost.

The division is considering a project that has a positive NPV, will increase annual net profit by $15,000, but will require average inventory levels to increase by $50,000 and non-current assets to increase by $50,000.

Xplc imposes a 16% capital charge on its divisions. Given these circumstances, will the evaluation criteria of return on investment (ROI) and residual income (RI) motivate divisionAmanagers to accept the project?

AROI Yes RI Yes

BROI Yes RI No

CROI No RI Yes

DROI No RI No

Answer : D

Question 4

You are theManagementAccountant for P, a food manufacturing company with an annual sales revenueof $5 million.

You discover that theProductionManager's records are inconsistent. Raw materials purchased do notagree to the total recorded for transfers to productionplus wastage.There isan averageshortfall of 2% of purchases.

You investigated and discovered that there are often mistakes made during manufacturing that results in food that is safe to eat, but cannot be sold because of visual flaws. TheProductionManager is supposed to scrap all such damaged product and write all such losses off as waste, but you discovered that he has been giving the damaged food to a charity that assists homeless people. No records are made of such gifts in order to conceal the losses due to manufacturing errors.

What should you do?

ADo nothing, this is a good cause and the amount is insignificant.

BInstigate disciplinary action, this is both theft and poor management.

CInstigatea confidential, but documented,review with the Production Manager andtell him to stop.

DInstigate a review of the production process to potentially reduce the amount of wastage.

EInstigate a process whereby edible but unsellable items can be given to the charity officially.

Answer : C, D, E

Question 5

UIO sells mobile phones through a cham of 100 shops spread across the country Shop managers have considerable discretion over pncmg and the incentives offered to sales staff Shop managers are evaluated on the monthly contribution from completed sales. Those who exceed targets by more than 10% for three successive months are promoted Those who fail to achieve monthly targets in two successive months lose their jobs

Which of the following statements are true of the performance management of UIO's shop managers?

Select ALL that apply

ALHO's shop managers have an incentive to offer excellent customer service

BUIO's shop managers are encouraged to take risks that may harm UIO

CUIO's shop managers have an incentive to develop attractive sates promotions for their shops

DUIO's shop managers are encouraged to sell phones at a loss

EUIO's shop managers may have very little sense of loyalty to the company

Answer : B, D, E

Question 6

Which of the following represents the greatest risk associated with introducing a system of post-completion audit for investment projects?

ADecision makers may be deterred from taking responsible risks.

BThe entity will realise that its approach to project appraisal is flawed.

CThe audit itself will waste time.

DThe entity may withdraw from a project without good cause.

Answer : A

Question 7

You have just been employed as a management accountant in a small business with an annual turnover of $0.5 million.

You have a wide range of duties because the business is small.

Which of the followingis an ethical risk?

ABeing asked to buy very small gifts for key clients.

BBeing asked to work weekends, playing golf with clients.

CBeing asked to work weekends, taking clients to night clubs making sure they haveas much alcoholic drink as they want so that they will sign contracts.

DBeing asked to work weekends working out tenders for new contracts.

Answer : C

CIMA P3 Risk Management CIMAPRO19-P03-1 Exam Practice Test