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CIPS L4M2 Exam Questions and Answers verified 100% Correct
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CIPS L4M2 Exam Questions andAnswers verified 100% Correct
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 organisations 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 organisation - ✔✔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 organisation 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
Tertiary activities
Identify the 3 strategies identifies by M Porter for competing in an industry. - ✔✔1. Cost leadership
2. Differentiation
3. Focus on a narrow niche
What are the 2 variables which can lead to the creation of a different segment? -
✔✔Distribution Channel
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