Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

134 A 
The acronym ‘HOTTER’ can be used to remember these – honesty, openness, transparency, 
trust, empowerment and respect. 
135 C 
This is the definition of respect. Empowerment is getting employees involved in making 
their own decisions. 
136 A – TRUE 
Deontological ethics is linked to the concept of absolutism – things are inherently wrong or 
right, regardless of the consequences. 
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P AP E R F 1 ( F A B )
: A CCOU N TAN T IN B US INES S
 
140 
KA P LA N P UBL I SH IN G 
GOVERNANCE AND SOCIAL RESPONSIBILITY IN BUSINESS 
137 D 
Reasons for the separation of ownership and control include the suggestion that specialist 
management can run the business better than those who own the business.
138 D 
Directors, who are placed in control of resources that they do not own and are effectively 
agents of the shareholders, should be working in the best interests of the shareholders. 
However, they may be tempted to act in their own interests, for example by voting 
themselves huge salaries. The background to the agency problem is the separation of 
ownership and control – in many large companies the people who own the company (the 
shareholders) are not the same people as those who control the company (the board of 
directors). 
139 B 
As this will serve as a financial motivator and will align directors’ interests with those of the 
shareholders. 
140 B 
The stakeholders are all those influenced by, or those who can influence the company’s 
decisions and actions. 
141 B 
Sustainable development focuses on the future, making sure that our actions today do not 
jeopardise the future of the planet. 
142 A 
Many customers are choosing to buy Fairtrade products and shareholders are investing in 
environmentally-friendly companies as people are becoming more aware of the impact 
their actions have on the environment and society as a whole. 
143 B – FALSE 
Shareholders can become directors. The agency problem refers to the problem of directors 
acting in their own personal best interests rather than those of the company and its 
owners. 
 
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ANSWERS TO PRA C TICE O BJECTIVE TEST QUESTIONS :