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CIPS L4M2 QUESTIONS AND ANSWERS COMPLETE AND RATED A.
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CIPS L4M2 QUESTIONS AND ANSWERS COMPLETE AND RATED A.
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CIPS L4M2 QUESTIONS AND ANSWERS COMPLETEAND RATED A.
What is Functional Benchmarking? Identify 2 Pros and 2 Cons of this.
✔✔Comparing similar or identical practices with an organization outside
the immediate sector
Pros - provides industry trend information, increases improvement rates
Cons - more time consuming, requires detailed information to be
provided
What is Generic Benchmarking? Identify 2 Pros and 2 Cons of this.
✔✔Comparing unrelated business processes that can be carried out in a
similar way
Pros - non-competitive process, allows for global comparisons
Cons - difficult to compare, lengthy process
What is a financial budget?
✔✔A plan for a defined period of time (usually 12 months) to show costs,
revenue or both
What is cash flow?
✔✔The net amount of cash received and spent by an organisation within
a specific time period
,Identify the 3 main activities involved in managing financial budgets
✔✔Planning
Controlling
Decision-Making
How are service and product-based organizations similar?
✔✔They can both be considered to be generating products and
delivering products using processes
What is an Accrual?
✔✔An adjustment made to financial accounts to reflect activity that has
occurred but where the cash hasn't yet been received/paid.
When budgeting, what is the purpose of the controlling activity?
✔✔It gathers and analyses data to show how money is spent against the
budget
Identify 3 characteristics of a service-based organization
✔✔Intangible
Production and consumption happen at the same time
They can't be stored to be sold at a later date
What is the formula for calculating the value of sales in a cash flow
analysis? (AKA: accounts receivable at the end of the year)
✔✔Accounts receivable at the start of the year + Sales made in the year -
Cash received from customers throughout the year = Accounts receivable
at the end of the year
,What are direct costs?
✔✔The cost of items used to make the product or deliver the service
How is depreciation calculated?
✔✔As the asset won't retain it's value, a part of the original cost is
apportioned to each year it's expected to last
What are dividends and how are they paid?
✔✔Payments made to shareholders in return for investment of shares.
Usually paid in 2 instalments - 6 monthly
What does Cash Flow show?
✔✔Every detail of the incomings and outgoings in a company
What do profit & loss accounts show?
✔✔sources of income vs outgoings over a certain period
What is a mission statement?
✔✔written statement of the purpose of an organisation which doesn't
change over time
What is a vision statement?
✔✔sets out rules that the organization will follow to conduct its affairs
and achieve its mission
, List 4 pros of budget control?
✔✔1. Promotes communication
2. Improves resource allocation
3. Improves time management
4. Helps management to think about future plans
What is a zero-based budget?
✔✔A method whereby every expenditure from 0 must be justified
Identify 1 pro and 1 con of zero-based budgeting
✔✔Pro = identifies alternative ways to effectively deliver objectives
Con = time consuming
Define the term 'Variance'.
✔✔The difference between the actual figures and those budgeted
What do price/quantity variances consider?
✔✔The quantity that was purchased and the price of this
What is a tendering process?
✔✔A request to invite suppliers to formally quote on a large value project
List the 3 main categories that industries are sectioned into.
✔✔Primary activities
Secondary activities
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