Mock Exam Three
3 AAT L3 Business Awareness
Assessment information:
You have 2 hours and 30 minutes to complete this practice assessment.
• This assessment contains 7 tasks and you should attempt to complete every
task.
• Each task is independent. You will not need to refer to your answers to previous
tasks.
• The total number of marks for this assessment is 100.
• Read every task carefully to make sure you understand what is required.
• Where the date is relevant, it is given in the task data.
• Both minus signs and brackets can be used to indicate negative numbers unless
task instructions state otherwise.
• You must use a full stop to indicate a decimal point. For example, write 100.57
not 100,57 or 10057.
• You may use a comma to indicate a number in the thousands, but you don’t have
to. For example, 10000 and 10,000 are both acceptable.
• You will need to double click to enter values into a gapfill or cell within a table.
Exam Note: Task 2, Task 4 and Task 6 of your AAT exam assessment is human (not
computer) marked, therefore assessment results are not released immediately.
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Task 1 (20 marks)
This task is about organisations and ethics for accountants.
(a) Identify whether the following statements about general partnerships are true
or false.
(4 marks)
TRUE FALSE
A statutory maximum of 20 partners are allowed in a partnership.
The net assets of a partnership business is also called equity.
Salaries paid to each partner is subject to the Pay As You Earn (PAYE) system.
Partners have limited liability for the business debts.
Mike is an AAT student. He faces a tight deadline to prepare and submit a sales invoice
report. Mike does not feel he has adequate time to complete the task by the deadline
agreed with his line manager.
(b) Which ONE of the following is the most likely action that Mike should take.
(1 mark)
Continue with the work assignment and take no further action.
Speak to his line manager to request more time.
Take the work assignment home and finish it over the weekend.
A colleague at work has asked Burt how a certain VAT transaction should be accounted
for. Burt knows little about VAT matters and is certainly no expert.
(c) Which one of the following fundamental ethical principles would be breached,
if Burt advised the colleague how the VAT matter should be dealt with.
(1 mark)
Integrity
Professional competence and due care
Confidentiality
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(d) Identify which business stakeholder most likely matches each explanation of
their interest below and whether each is an internal, or external stakeholder.
(6 marks)
Interest Stakeholder Internal/External
Interested in training and development to enhance their skills.
Interested in the amount of tax the business pays.
Interested in regular orders and prompt payment.
Picklist: Employees, Suppliers, Customers, HMRC, Banks, Shareholders, Internal,
External.
(e) Complete the following sentence.
(1 mark)
The fundamental principle of ethics for accountants that includes ‘not to allow bias,
conflict of interest or undue influence of others to override a members professional or
business judgement’ would be the ethical principle of .
Picklist: Confidentiality, Objectivity, Integrity, Professional competence and due care,
Professional behaviour.
(f) Identify which business function is most likely responsible for each activity
described below.
(4 marks)
Activity Function
Designs the ‘package of benefits’ for the customer such as the
product design, appearance, packaging and distinctive branding.
Performing services such as cashiers and shelf fillers in a retail
shop.
Facilitates the sharing of information by integrating technology and
networks.
Manages funds effectively such as producing cash budgets and
planning for business borrowing requirements.
Picklist: Finance, Marketing, IT, Sales, Operations.
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(g) Identify the most likely element of organisational structure for each statement
shown below.
(3 marks)
Decision-making and goal setting is concentrated in the hands of a senior
board of directors for the company.
Employees undertaking different job tasks are grouped together to
specialise and focus on business processes.
The number of subordinates managed by each manager.
Picklist: departmentalisation, chain of command, span of control, centralisation,
decentralisation.
End of Task
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Task 2 (18 marks)
This task is about analysing the external environment.
The Chief Executive Officer (CEO) of BB, a major global car manufacturer, has
presented the following strategic information at the annual general meeting for its
shareholders.
Key information about the car industry:
• Significant pollutants and carbon emissions are generated by the car industry.
• The popularity of car ownership has been fast growing around the world.
• Growing disposable incomes in most developing countries around the world.
• Self-driving cars and electric technology are the present and the future.
• The brand and technology of BB is protected by trademarks and patents.
Using the key information presented by the CEO.
(a) Identify one example of each PESTLE factor shown below and explain how
each example provided could be a threat or an opportunity for BB. (10 marks)
Economic
Social
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Technological
Legal
Environmental
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(b) Identify TWO key elements of company legislation.
(2 marks)
The definition of goodwill and its relevance to a limited partnership.
Types of funding used by a company.
The rights and roles of shareholders.
Regulation of company formation and reporting.
(c) Identify whether each statement about unlimited liability partnerships are true
or false.
(2 marks)
TRUE FALSE
The self-employed individuals who run a partnership and the partnership
business are treated as the same legal person.
There is no definitive presentation or specific accounting legislation that
governs how partnership accounts are presented.
(d) Identify the most likely effect of each technology on the role of the accountant
and the finance function.
(4 marks)
Accounting information accessed at anytime and anywhere in the world.
Takes care of repetitive tasks by automating data gathering and processing
tasks for professionals who use professional judgment to review.
Reduces time and effort to upload data, reduces the number of errors and
helps process data more accurately.
The cost of maintaining and reconciling financial ledgers is reduced, it also
provides absolute certainty over the ownership and history of assets.
Picklist: blockchain, e-filing, cloud software, artificial intelligence.
End of Task
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Task 3 (17 marks)
This task is about business structures, technology and data security.
(a) Identify TWO key principles of GDPR. (2 marks)
Professional behaviour
Accuracy
Storage limitation
Professional competence
(b) Identify for each statement below, if there is likely to be a beach or no breach
of data protection. (3 marks)
Breach No breach
Data subjects are misled about the reasons why their personal data is being kept.
Incorrect data is rectified (but not erased) when data subjects have reported it.
Personal data is collected and processed without any specified purpose.
(c) Identify TWO controls that assist with compliance to data protection. (2 marks)
Outsourcing the IT department
Policies for strong password protection
Regular auditing of personal data
Training employees about social engineering
(d) Identify which of the following is not a cybersecurity objective. (1 mark)
Deletion of data
Integrity of data
Confidentiality of data
Availability of data
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(e) Identify the most likely type of cyberattack for each example below. (2 marks)
A hacker has encrypted and blocked access to data held on a computer system,
the victim has to pay a fee using bitcoin for the hacker to send an access code.
A malicious attempt to disrupt the normal traffic flow of a webserver by
overwhelming it with a flood of internet traffic.
Picklist: hijacking, ransomware, phishing, DDoS.
(f) Identify TWO differences between goods and services. (2 marks)
Services are difficult to return if they are faulty.
Services cannot be stored in a warehouse.
Goods aim to fulfil the needs, wants and values of customers.
Goods can be standardised or customised to the individual needs of a customer.
(g) Identify TWO common features of a business organisation. (2 marks)
Co-operative relationships
Intangibility of work processes
Division of work
Non-profit making motive
(h) Identify the most appropriate type of funding for each company below.
(3 marks)
A company wants to raise money to invest in new product
development. This will be a high risk project for the company
and may not produce a positive cash-flow.
A company has a short-term liquidity problem, caused by rising
inventory levels and extending credit terms for customers to
drive higher sales and profitability.
A company wants to purchase a new office building and wants
to finance the building over a 25 year period of time.
Picklist: hire purchase, long-term bank loan, new share issue, overdraft facility.
End of Task
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Task 4 (10 marks)
This task is about ethical and legal compliance.
Maryam is an AAT member, working self-employed in public practice. Maryam has one
partner and three full-time employees who work for her accountancy practice.
Maryam has been preparing financial accounts and tax returns for many years for client
A who operates a business in the local area. Maryam has recently been contacted by
client B to provide accountancy and tax services. Client B is a direct competitor of client
A and operates a business in the same local area.
(a)(i) Explain TWO ethical principles that could be breached, if Maryam were to
provide accountancy services to clients A and B. (2 marks)
(a)(ii) Explain TWO safeguards that could help resolve any ethical conflict.
(2 marks)
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(a)(iii) Advise what Maryam should do to resolve any ethical conflict.
(2 marks)
Susan works as a full-time accountant in accountancy practice. Susan has been
preparing accounts for a well-known restaurant business in the local area. There are
rumours that the business is strictly cash based and is owned by a criminal
organisation. Susan believes that daily cash receipts have been significantly
overdeclared by the business and there is large cash transactions and other suspicious
activities that the restaurant owner cannot explain. Susan believes she has reasonable
grounds for suspecting the restaurant is involved in money laundering.
(b)(i) Explain the consequences for Susan of failing to act appropriately in
response to her suspicion of money laundering, including the potential for the
offences of ‘tipping off’ and ‘failure to disclose’ money laundering.
(3 marks)
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(b)(ii) Explain the consequences of Susan ‘prejudicing an investigation’.
(1 mark)
End of Task
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Task 5 (10 marks)
This task is about the microeconomic environment and sustainability.
A business owner requires the following actions to implemented by her business.
(a) Identify FOUR sustainability initiatives. (4 marks)
Improving staff welfare by increasing annual holiday entitlement.
Setting reduction targets to reduce disposable plastic waste.
Recruiting staff from within the local community where the business is based.
Switching to an energy supplier that supplies 100% renewable energy.
Improving the employee culture of volunteering and giving to charities.
Purchasing fair trade products from suppliers.
Measuring the businesses carbon footprint.
Long-term investment into recycling and elimination of waste.
(b) Identify for each of the following statements what is most likely to happen to
supply in the farming industry. (3 marks)
Statement Supply
Climate change causing severe drought in some parts of the country,
has created much poorer harvests of wheat by farmers, the supply of
wheat is most likely to.
The cost of wages has risen and tighter regulations exist that restrict
the use foreign workers in the beef farming industry, the supply of
beef is most likely to.
Demand for leather increases in the clothing and footwear industry,
the supply of beef is most likely to.
Picklist: Increase, Decrease, Stay the same.
(c) Identify whether the following statements are true or false. (3 marks)
TRUE FALSE
Milk, bread, fruit and vegetables are normally categorised as necessity goods.
Assuming tea and coffee are substitutes, if the price of tea increases and the
price of coffee remains the same, then demand for coffee would decrease.
Milk, bread, fruit and vegetables are normally categorised as inferior goods.
End of Task
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Task 6 (13 marks)
This task is about communication and visualisation.
You work as an assistant accountant at Garden Furniture Land (GFL) and your role is to
assist the management accountant. GFL makes three types of garden furniture and two
types of children’s leisure equipment, it sells all five products on its own website and
sells directly to retail stores across the country. The management accountant is
currently assisting the new production manager make sense of GFL’s dashboard report
for production workers in the last four weeks.
Production workers are contracted full-time to work 40 hours a week, any additional
time worked is paid as overtime. The production manager allocates the five different
types of product to be made to each production worker, depending on what needs to be
made to meet future sales orders. Plants A, B and C are equal in size and production
workers can be requested to work in any of the three plants.
Dashboard (production) report:
Quantity Benches Chairs Picnic benches Slides Swings Grand Total
A. Haste 190 180 370
A. Kawinski 339 339
A. Zelinski 122 292 414
G. White 298 100 398
S. Haque 127 204 331
S. May 399 155 554
S. Yasin 617 617
Grand Total 651 1494 419 155 304 3023
Quantity Benches Chairs Picnic benches Slides Swings Grand Total
Plant A 461 797 304 1562
Plant B 190 298 155 643
Plant C 399 419 818
Grand Total 651 1494 419 155 304 3023
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Non-productive time Hours
Sickness 72
Holiday 21
Training 14
Other 5
112
Quantity Target
Worker Product
(per hour) (per hour)
A. Haste Benches 1.9 2.0
A. Haste Chairs 3.6 4.0
A. Kawinski Benches 2.4 2.0
A. Zelinski Benches 2.3 2.0
A. Zelinski Picnic benches 2.3 2.0
G. White Chairs 2.7 4.0
G. White Swings 2.0 2.5
S. Haque Picnic benches 2.5 2.0
S. Haque Swings 1.9 2.5
S. May Chairs 3.6 4.0
S. May Slides 3.1 3.0
S. Yasin Chairs 3.9 4.0
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(a)(i) Explain THREE pieces of key information reported by the dashboard and
provide one reason for each, how this may assist the production manager.
(6 marks)
(a)(ii) Explain TWO pieces of key information (or charts) you would like the
dashboard to show and provide one reason for each example, how this may
assist the production manager.
(4 marks)
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(b) Identify TWO useful improvements to the dashboard shown above for the
management accountant at Garden Furniture Land (GFL).
(2 marks)
Statutory financial accounts.
Cash-flow statements.
Taxation information.
Inventory control reports.
Product costing information.
(c) Identify the most likely type of data that would assist the new production
manager at Garden Furniture Land (GFL) with better production planning.
(1 mark)
Customer remittance advices.
Bank statements.
VAT return information.
Sales orders from customers.
End of Task
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Task 7 (12 marks)
This task is about risk and big data.
(a) Identify which of the following is not a characteristic of big data.
(1 mark)
Velocity
Veracity
Volatility
Value
(b) Identify THREE operational risks.
(3 marks)
Mergers and acquisitions that prove unsuccessful.
Poorly trained employees that may lose sales opportunities.
A company’s reputation may suffer due to poor customer service.
A breach of private data resulting from a cybersecurity attack.
Introduction of a new product or service to the market.
Strategic decisions that are unclear and poorly made by senior management.
(c) Identify the most likely meaning of the term ‘governance’ in a business
context.
(1 mark)
A system that directs and controls a board of directors of a company.
A philosophy that improves social accountability to stakeholders and the general public.
Policies and procedures relating to fraud, bribery and discrimination.
Moral principles that govern employee behaviour and conduct.
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(d) Identify the most likely characteristics of strategic information.
(1 mark)
Information is long-term, mainly qualitative and external.
Information is derived mainly from internal data sources.
Information is mainly quantitative and task specific.
Information is prepared constantly, routinely and regularly.
(e) Identify whether the following statements about business A are true or false.
(2 marks)
Statement TRUE FALSE
There is an 80% chance a competitor will increase advertising expenditure and the loss to
business A, would be 30% of its sales. This is a measure of uncertainty.
Uncertainty means the same as risk, it can be measured and controlled by business A.
(f) Identify the most likely function a finance department would contact for each
requirement shown below.
(4 marks)
Handling customer complaints and product repairs under warranty.
Shop staff replenishing goods on display and serving customers.
Installation of technologies to help reduce customer queuing times.
Developing new product ideas that satisfy customers.
Picklist: Information Technology, Human Resources, Marketing, Operations.
End of Task
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