CIMA E1 flashcards

What is a ‘digital mindset’ in respect of accountants? A digital mindset is simply one where accountants are continually aware of and alert to how digital technology will affect both them and the organisations they work for.

CGMA’s briefing paper, “Changing competencies and mindsets”, suggests that accountants will require four sets of skills. What are these?

• Technical skills
• Business skills
• People skills
• Leadership skills

What are the four levels of the hexagonal structure of the finance function?

• Leading the finance team
• Partnering for value to influence and shape how the organisation creates and preserves value
• Specialists generating further insights in their areas of specialism
• Assembling and extracting data and providing limited insight

 

Which component of the finance function carries out tasks such the following?

• Company finance. Does the company need to raise a loan or issue more shares?
• Where to deposit temporary surpluses of funds so that they can earn some interest.
• Where to arrange temporary borrowing.
• How to reduce the risk from currency movements when importing or exporting. ? How to reduce the risk from interest rate movements on borrowing or deposits.
• Taxation management eg one subsidiary making losses available to another.

The treasury department  

What finance function does the following define? “..an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.” Internal audit

Items of expense reduce profits whilst capital expenditure does not. An accountant could come under pressure to deal with expenditure incorrectly to boost profits (ie to treat expenses as capital expenditure). This is an example of what?   A conflict of interest.

What are the four industrial revolutions?

• Mechanisation
• Mass production
• Computers and automation
• Digital assets such as big data and artificial intelligence.

What are the two types of knowledge?  

• Explicit
• Tacit

What is the difference between data and information? Data is raw fact. Information = data with meaning eg through summary, statistical analysis, presentation or the highlighting of significant items.

What are the ACCURATE elements of good information?

• Accurate
• Complete
• Cost-beneficial
• User-targeted
• Relevant
• Authoritative
• Easy-to-use

Which level of an organisation (operational, tactical or top management) has the greatest need for external and forward-looking information?   Top management

Describe a LAN Local area networks (LANs): operate over a restricted area such as an office, hospital or university campus. There is usually a special machine called a file server where shared information is held and there might be a print server which allows a printer to be shared between many users.

Describe a WAN Wide area networks (WANs): operate over national and international distances, linking users in different cities and countries. They rely on public networks to transmit information from one local area network to another.

Which of the following primarily use mobile phone technology?

• WiFi
• 3G
• 4G

3G and 4G

Is the following statement true or false? Cloud technology primarily uses data and programs stored locally.   False: cloud-based systems store data and programs remotely

What is an intranet? Intranet = internal internet which access and presents data through a browser such as Chrome or Internet Explorer

What is an extranet? Extranet = an intranet which can also access external data and other intranets.

What are the four Vs of big data?

• Velocity
• Variety
• Volume
• Veracity (added later)

What are the processes of extraction, transformation and loading? Extraction: extracting data from a variety of sources where it might well have been held in many different formats. Transformation: converting the diverse data into standard formats. Loading: storing the converted data into a new database for future use.

What is meant by ‘monetising data’? Using data to increase an organisation’s profitability, efficiency and sustainability.

What are the primary activities of Porter’s value chain?  

• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• Service

What are the support (or secondary) activities of Porter’s value chain?

• Firm infrastructure
• Technology development
• Human resource management
• Procurement

What is the difference between push and pull models of supply chains? Push: make goods for inventory usually according to historical demand. Pull: make goods to order. Sales orders pull production through the manufacturing process.

What are the two axes of the supply portfolio matrix?  

• Profit impact
• Supply difficulty

What is the correct label for the blank quadrant in the diagram below? Critical/bottleneck

What is ‘lean synchronisation’? Lean synchronisation means that products and services are always delivered to exactly match what customers want, in exact quantities and at the required time and place for delivery. Lean synchronisation should achieve these objectives at the lowest possible cost and it should result in items flowing rapidly and smoothly through manufacturing processes and supply networks.

What are the five types of supply chain relationship management?

• Transactional
• Contractual
• Value added
• Collaborative
• Partnership

What are MRPI and MRPII?   MRPI = material resource planning MRPII = manufacturing resource planning

What is CNC in process technology?   Computer numerical control

Flexible manufacturing arises from two sources. What are these?

• Machine flexibility
• Route flexibility

What is additive manufacturing (3D printing)? In additive manufacturing or 3D printing material is extruded to form complex shapes which harden to produce sophisticated components that can be difficult or expensive to make in any other way.  

What is meant by Quality control? Quality control: processes (such as sampling and testing) that used to check on quality.

What is meant by Quality assurance? Quality assurance: the management steps that allow an organisation to dependably achieve a stated level of quality.

What is meant by Quality management? Quality management: overseeing all the activities needed to achieve and maintain the required quality. It includes establishing the required quality level, setting quality control procedures and also considering quality improvement.

In quality management, what are the two costs of conformance?

• Prevention costs
• Appraisal costs

In quality management, what are the two costs of non-conformance?

• Internal failure costs
• External failure costs

What is ‘kaizen’? The process of improving quality through a continuous series of small changes

What is DMAIC? DMAIC stands for: define, measure, analyse, improve and control. It is part of the 6sigma approach to improving quality.

What is meant by ‘reverse logistics’? Reverse logistics refers to all operations related to the reuse of products and materials. Its purpose is to recapture value or to achieve proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics.

What are the elements of the PESTEL model? Lists potential macro-environmental influences:

• Political
• Economic
• Social
• Technological
• Environment/ecology
• Legal

What is market segmentation? Breaking down the market into different sections or segments to decide what type of products or services buyers in each might want.

What are the three types of market targeting?

• Undifferentiated
• Differentiated
• Concentrated

What are the 7Ps of product positioning?

• Product
• Price
• Promotion
• Place
• People
• Process
• Physical evidence

What is price skimming? A very high initial price is set for a new product as there will be some consumers willing to pay that. The price is then gradually lowered to attract less wealthy or less desperate consumers.

What are the four influences on a product’s price? (4 Cs)

• Costs
• Consumers
• Competitors
• Controls

What are the four types of competition?

• Perfect competition
• Oligopoly
• Perfect competition
• Monopolistic competition

What is meant by ‘the price elasticity of demand’? This describes how demand changes as prices change. A high elasticity of demand means that the product is very price sensitive.  

What are the 6Is of e-business?

• Intelligence
• Individualisation
• Interactivity
• Integration
• Independence of location
• Industry (structural change)

What are the three categories of market research?

• Desk research
• Field research
• Test markets

The marketing of products and services differ in five respects. What are these?

• Heterogeneity
• Perishability
• Intangibility
• Simultaneity
• No transfer of ownership

In order, what are the four (or five) stages of a product life cycle?

• Introduction
• Growth
• Maturity
• Decline
• (Senility)

What is life cycle costing? The concept of life cycle costing recognises that, if a profit is going to be made, revenue has to cover all costs, not just the production costs.

• Initial costs - before production
• Operating costs - during production
• Disposal costs - after production

What are the two axes on a Boston Consulting Group matrix?

• Market growth rate
• Relative market share

 

What headings should go into the blank boxes?

Why is a planning stage necessary in human resource management? Human resource planning should be based on the strategic plan of the organisation and there has to be a human resources budget based on future estimated needs

What is meant by an ‘open appraisal’? Initially, the appraisal form is blank and the manager and employee go through it together discussing what the mark should be.

Lockett suggested six barriers to human performance appraisal. What are these?

• Confrontation
• Judgement
• Chat
• Bureaucracy
• Event
• Unfinished business

What is a competency framework? A method of describing the values, skills and abilities that are required to perform given roles. They also provide clear focus to for recruitment and to support the development of staff in order to deliver the best possible performance. To define a framework for a given role there will be a general description of the competency followed by a list of attitudes, behaviours, skills and abilities that would indicate competence in the relevant area.

What is the difference between ‘training’ and ‘development’?

• Training: very specific and dealing with current employees needs for their current job.
• Development: less specific and more aimed at equipping employees for future jobs.

 

Who developed the hygiene theory of motivation?   Herzberg

What are intrinsic and extrinsic rewards?

• Extrinsic: rewards that arise outside the employee and include pay, praise by a manager and promotion.
• Intrinsic: rewards that arise from psychological enjoyment and the satisfaction of challenge and a feeling of having done well.

What is meant by the consequentialist approach to ethics? Whether something is right or wrong depends on the consequences, or outcome, of the act.

What are CIMA’s five fundamental principles?

• Integrity
• Objectivity
• Professional competence and due care
• Confidentiality
• Professional behaviour