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

P AP E R F 1 ( F A B ) :
AC COU N TAN T IN B US INES S
 
190 
KA P LA N P UBL I SH IN G 
 
 
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KAPLAN PUBLISHING
191 
Section 6 
ANSWERS TO PRACTICE SIMULATION 
QUESTIONS 
SECTION A 
1 C 
A limited liability company is classed as a separate legal entity from its owners. The owners 
(shareholders) may be different to the managers (Board of Directors). A shareholder’s 
liability is limited to their investment. 
A partnership is different to a limited company in that there is no separate legal entity. 
Sole traders have unlimited liability for business debts as they are classed as the same legal 
entity as the business. 
There is no restriction on the number of partners in a partnership agreement. 
2 B 
The company is targeting its goods and services to a distinct group of people. This would be 
classified as a focus, or niche market, strategy. 
3 B 
Psychologically close managers tend to adopt close relations with their subordinates and 
therefore are people-orientated and prefer informal contact rather than more formal 
communication methods. 
4 C 
The disseminator transmits factual and value based information to subordinates. 
The liaison develops and maintains a network of external contacts. 
The monitor gathers internal and external information relevant to the organisation. 
The spokesperson communicates to the outside world on the performance and policies of 
the organisation. 
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P AP E R F 1 ( F A B ) :
AC COU N TAN T IN B US INES S