E1 Exam Training Practice Tests (CIMA Managing Finance in a Digital World)]

Question 1

Bright Idea Co. specialises in manufacturing light bulb filaments. It is considering outsourcing some of it activities in order to reduce costs and improve customer service.
Which of the following is an example of asset specificity that is likely to be an important consideration in their decision?

A. An R&D manager who has been in the business for 18 years and has specialist knowledge of the formulations. B. High tech and expensive filling machines in the factory. C. A sales director who is well known and popular throughout the industry. D. A building that has been designed specifically for manufacturing light bulb filaments.

Correct Answer: A

Question 2

Karl runs a factory. He wants his employs to feel that their role in the company has meaning.
Which of the following would help to make his employees feel this way?

A. Ensure employees can see the results of their work. B. Ensure each task has a clear identity, with it being made clear how that task fits into the overall operation. C. Ensure each employee has a degree of independence and flexibility. D. Ensure that all employees have a variety of jobs to do. E. Ensure each task is significant in some way.

Correct Answer: B,D,E

Question 3

AB Company is planning to produce a new product which will require an extra shift to be worked in its factory, and needs to know if the sales expected will cover the extra cost of manufacture. Which of the following financial processes will be used to calculate this?

A. Key factor analysis B. Pricing analysis C. Investment appraisal D. Break even analysis

Correct Answer: D

Question 4

Having the right assets and making the best use of them is crucial if an organisation is to achieve its strategies on a sustainable basis. Which of the following best describes the row of the finance function in relation to an organisation's assets?

A. Deciding on which new machinery to buy for the production facility. B. Collating and providing information to enable efficient asset management C. Ensuring that assets are used to their optimum capacity on an on-going basis. D. Setting asset lifetimes that are in keeping with shareholders' requirements.

Correct Answer: B

Question 5

Offshoring may be successful when which of the following applies?

A. There are high task complexities B. There are low transaction volumes C. There are high cost transactions D. There are fewer cultural differences

Correct Answer: D

Question 6

AB Company has recently produced a very successful brand of washing powder which has achieved high market growth and a high market share. According to the Boston Consulting Group (BCG) matrix what is the product's next stage of development?

A. Dog B. Question mark C. Cash cow D. Star

Correct Answer: C

Question 7

N works in the Finance Department of a frozen food distribution company. His role includes analysing how long it takes for customers to settle their accounts and, in turn, when the company's payables are cleared.
Which of the following is described above?

A. Working capital control B. Cost reporting C. Performance reporting D. Preparation of forecasts

Correct Answer: A

Question 8

More and more organisations are developing their supply chain networks by building closer links with suppliers. Which THREE of the following are considered to be features of this trend?

A. In-house resolution of design problems B. Computer systems linked to customers C. Early supplier involvement D. Price and inventory co-ordination E. Supplier representative on site

Correct Answer: C,D,E

Question 9

When implementing a new IT system and according to the theory of Kotter, Schlesinger and Sache, which of the following is a benefit of using participation as a way of overcoming resistance to change?

A. Involving user expertise will encourage commitment. B. Conflict is dealt with in an orderly fashion. C. Understanding the benefits will lead to acceptance. D. Compromise will overcome resistance.

Correct Answer: A

Question 10

It is important to assess the contribution made by the finance function. If a balanced scorecard approach is used, which of the following categories would utilise the measure of staff turnover?

A. Financial B. Enhancement of internal processes C. Customer satisfaction D. Learning and growth

Correct Answer: D

Question 11

Level one of the contemporary shape of the finance function involves strategic leadership of the finance team.
The head of the finance function is.

A. The Finance Treasurer B. The Financial Accountant C. The Chief Financial Officer D. The Chief Executive Officer

Correct Answer: C

Question 12

Which TWO of the following are non-incorporated organisations?

A. XY, an organisation whose owners can trade their shares publicly B. K, who runs a business alone and is entitled to all profits C. The British Red Cross Society, a well known charity D. P and Q who share joint responsibility for their business and all its debts E. MN, a family-owned business sharing profits by means of dividends

Correct Answer: B,D

Question 13

T is the head of the marketing department in company Z. There have been several new recruits into the department recently and T is introducing them to the marketing mix. T explains that the original marketing mix had only 4 Ps. However, this was focused primarily around the manufacturing industry. The mix was later extended to include an extra 3 Ps for use in the service industry. Which THREE of the following are the extra
3 Ps?

A. Processes B. Price C. Place D. Physical evidence E. People F. Promotion

Correct Answer: A,D,E

Question 14

The finance function of Company E are considering using blockchain technology for its ledger systems Which of the following will be an advantage of introducing this technology?

A. Records can be easily changed and amended B. It will be easy to understand and work with. C. Transactions are recorded by a sole participant D. Costs of maintaining and reconciling ledgers can be reduced

Correct Answer: D

CIMA Managing Finance in a Digital World - E1 Exam Practice Test