CIMA CIMAPRO19-P03-1 Exam Practice Test Instant Access

Question 1

UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products.

One of the factors that is being considered in a stress test requested by UJK's Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK's products

Which of the following are correct?

AThe motor manufacturer should be contacted and told that a substantial increase in selling prices would have a drastic impact on UJK

BThe possibility of an increase in selling prices due to increased costs should be noted in the stress test report

CUJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.

DThe impact of absorbing the increased cost of motors on UJK's profits should be calculated.

EUJK should identify an alternative vendor of suitable motors as part of its stress test

Answer : C, D

Question 2

CW is a large company in the food production industry. It has grown over the years by the acquisition of several smaller rivals CW 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 the following changes would be most likely to improve the overall control system?

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

BEstablishing an internal audit department

CExcess 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

DPurchase 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

EA 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

Answer : B, D

Question 3

WTW is a global company which produces high-tech equipment such as smart televisions and mobile phones The CFO has just resigned, having been offered a post at a competitor The CFO was well regarded and WTWs share price has fallen in response to the announcement

At a board meeting the production director commented that the share price fall is the fault of the nomination committee

Which THREE of the following statements are correct?

AThe nomination committee should prepare a description of the role and capabilities required for the CFO's replacement

BIf the nomination committee had been working effectively the CFO would not have resigned

CWhen planning the CFO's replacement the nominations committee should consider the diversity of the board

DThe nomination committee should have considered succession planning for directors before the CFO resigned

EMost of the members of the nomination committee should be executive directors as they are responsible for ensuring the share price recovers quickly.

Answer : A, C, D

Question 4

With regard to the rote of the audit committee which of the following statements are correct? Select ALL that apply

AThe audit committee should design the system of internal controls

BThe audit committee should decide annually whether it needs an internal audit function

CThe audit committee should decide annually whether it needs an external audit function

DThe audit committee should review and monitor the effectiveness of the company's internal audit function

EThe audit committee should provide arrangements for whistle blowing

FThe audit committee should engage consultants to carry out business reviews

Answer : D, E, F

Question 5

The acronym VPN stands for.

AVerified Private Network

BVirtual Private Network

CVery Personal Network

DVirtual Personal Network

Answer : B

Question 6

You are the management accountant for YY a food manufacturing company with an annual sales revenue of $6 million

You discover that the production manager's records are inconsistent Raw materials purchased do not agree with the total recorded for transfers to production plus wastage There is an average shortfall of 2% of purchases

You have investigated and discovered that there are often errors made during manufacturing that results in food that is safe to eat but. because of visual flaws, cannot be sold

The production manager is supposed to scrap all such damaged products and write all such losses off as waste You have discovered however 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

Which of the following actions should you take? Select ALL that apply

AInstigate disciplinary action this is both theft and poor management

BDo nothing; this is a good cause and the amount is insignificant

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

DInstigate a confidential but documented review with the production manager and tell him to stop

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

Answer : A, C, E

Question 7

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

CIMAPRO19-P03-1 P3 Risk Management Exam Practice Test