Accountant in Business (FAB) December 2014
Time allowed 2 hours Answer all questions
Do not open this paper until instructed by the supervisor This question paper must not be removed from the examination hall
Kaplan Publishing/Kaplan Financial
Paper F1 and FAB
ACCA FINAL ASSESSMENT
ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
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F INA L A SSESSME N T : QUESTIONS
SECTION A – OBJECTIVE TEST QUESTIONS ANSWER ALL 46 QUESTIONS (30 × 2 marks, 16 × 1 marks) 1
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3
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5
Which of the following statements regarding conflict is correct? A
Any conflict within an organisation will impair its efficiency
B
Conflict is any personal divergence of interest between individuals
C
Vertical conflict occurs between individuals and groups at the same level of the organisation
D
Conflict suppression involves negotiating an agreement between the conflicting parties (2 marks)
Which of the following is the role of the secretary of a committee? A
Keeping the meeting to schedule
B
Determining the agenda of the meeting
C
Taking and circulating minutes of the meeting
(1 mark)
According to Porter’s Value Chain model, which of the following is a ‘primary’ activity? A
Procurement
B
Service
C
Infrastructure
D
Information technology
(2 marks)
Which of the following was one of the main features of the approach of Fayol and Taylor? A
Workers are encouraged to switch from one role to another
B
They recommended decentralisation
C
Minimum pay and basic working conditions
D
A belief that there is one ‘best’ way of doing a particular job
(2 marks)
‘The manipulation of money supply, rate of interest, exchange rates or credit controls’ accurately describes which type of economic policy? A
Supply side policy
B
Classical policy
C
Monetary policy
D
Demand side policy
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(2 marks)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
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Which of the following is a role of the audit committee? A
To give the executive directors advice on strategy
B
To liaise with the external auditors
C
To select board members and make recommendations to the board
D
To carry out internal audit work
(2 marks)
John has worked in the factory at Stripe Ltd for 10 years and risen through the ranks to be a supervisor. He is dedicated to his job and can’t remember taking a day off through illness. He is very proud of working at Stripe Ltd but recently he has heard that some younger, new supervisors (who were hired from a competitor) are being paid more than him. This has led to him feeling unhappy with his remuneration for the first time in 10 years. John tends to speak to his managers often, asking them for feedback on his performance. Which of the factors described above would be classed as a motivator by Herzberg?
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4
A
The desire for feedback
B
Rarely absent from work on grounds of illness
C
Takes pride in belonging to the company
D
Not content with his remuneration
(2 marks)
Which of the following is a characteristic of a limited company? A
It has a separate legal personality from its owners
B
It must employ fewer than 20 people
C
The directors must hold at least 50% of the shares
D
The public must own the vast majority of the shares, the remaining shares being owned by the directors (2 marks)
Which of the following statements regarding supply and demand are correct? A
If a company increases the price of the units it sells, it will usually sell more units
B
Equilibrium is the point where the selling price of a unit exactly equals its manufacturing cost
C
If the selling price of an item increases, the number of units supplied will increase
D
Equilibrium can only be reached in a perfect market
(2 marks)
Who out of the following list is responsible for performing an independent check on whether the financial statements give a true and fair view? A
The Executive Directors
B
The External Auditors
C
The Non-Executive Directors
(1 mark)
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F INA L A SSESSME N T : QUESTIONS
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AWW plc is a large company that employs (amongst others) three members of staff within its accounts function. Employee A prepares costs schedules and budgets for AWW and its divisions. Employee B is responsible for the production of the income statement and statement of financial position for AWW, while Employee C focuses on monitoring AWW’s working capital levels. Within AWW’s accounts function, which role is each of these employees most likely to be filling? Employee A
Employee B
Employee C
A
Treasurer
Financial accountant
Management accountant
B
Management accountant
Treasurer
Financial accountant
C
Financial accountant
Management accountant
Treasurer
D
Management accountant
Financial accountant
Treasurer (2 marks)
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‘Window dressing’ may involve which of the following? A
Diverting small amounts from a large number of business transactions, believing that no-one will investigate each individual small difference
B
Entering transactions before the year-end that are often reversed out after the year end, primarily to improve the appearance of the accounts
C
Recording sales accidentally when goods have not actually been despatched to customers
D
Deliberate suppression of relevant information
(2 marks)
Which of the following would be described as an internal control? A
A computerised accounts package
B
Checking the additions on a purchase invoice before recording the transaction
C
The annual audit
(1 mark)
Poorer families and pensioners on fixed incomes will typically be among the groups most adversely affected by high inflation. Is this statement TRUE or FALSE? A
True
B
False
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(1 mark)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
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16
A requirement that no one person should have the ability to change payroll standing data (i.e. add employee’s or change bank details) and process the monthly payroll is an example of the general principle known as: A
Dual control
B
Duty control
C
Segregation of duties
D
Controlled record access
(2 marks)
Baker Training is a small entrepreneurial organisation led by Max Robinson who started the business two years ago. Max is central to all the key decisions made in the firm. His knowledge and business awareness is critical to the firm’s success. Which of Handy’s cultural types is present in Baker Training?
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A
Power
B
Role
C
Task
D
Person
(2 marks)
L is an investment manager in a large multinational bank. He has recently been asked by a client to use a large amount of cash to buy a number of shares in a multinational company. L is unsure where his client could have obtained such a large amount of money. If he proceeds with the transaction, could L be breaching typical money laundering legislation? A
No, as there is no firm evidence that the money has been illegally obtained
B
No, because even if the money has been illegally obtained, L is not benefitting from it
C
Yes, because he may be handling and investing money that was obtained illegally
D
Yes, because he failed to immediately report his concerns to the police (2 marks)
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Adair’s action-centred leadership suggests that leadership depends on three interrelated needs: task needs, group needs and individual needs. Which of the following roles is an ‘individual needs’ role?
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A
Counselling
B
Decision-making
C
Peace-keeping
(1 mark)
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F INA L A SSESSME N T : QUESTIONS
19
A new department has been set up at Pools Inc in order to carry out research. The departmental staff have been told that they should try to anticipate customer needs, that is work out what customers are likely to want and need in the future so that Pools Inc can work towards meeting those future customer requirements. The directors hope that by adopting this approach they will increase sales. Which function of the organisation is this department carrying out?
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A
Improving product quality
B
Marketing
C
Sales
D
Research and development
(2 marks)
In the typical hierarchical organisation, the requirement of a lower-level manager to answer to a higher-level manager in the chain of command is referred to as: A
Authority
B
Empowerment
C
Accountability
(1 mark)
According to Douglas McGregor: 1
‘Theory X’ people dislike work, need direction and avoid responsibility
2
Managers should motivate people solely through payment of high wages
3
Theory Y’ people dislike work, need direction and avoid responsibility
4
Theory Y people can be motivated to seek challenge and responsibility at work
Which of the above statements are correct?
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A
1 and 4
B
1 and 2
C
1 and 3
D
All of them
(2 marks)
G plc is a multinational company that has just installed a new information system. This allows them to scan the company’s sales transactions and identify the total sales that have been made in each country they operate in. Which type of information system have G installed? A
Transaction processing system
B
Expert system
C
Decision support system
D
Management information system
KAPLAN PUBLISHING
(2 marks)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
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JHJ is planning on expanding into a new market. It has discovered that within this new market, customers find it easy to switch between different suppliers. According to Porter’s Five Forces model, which of the following could this indicate about the industry? A
It has high barriers to entry
B
It has high supplier power
C
It has a high threat of substitutes
D
It has high competitive rivalry
(2 marks)
The board of directors of Leather Inc (a furniture manufacturer) have just met for a board meeting. At this meeting they discussed an overseas expansion plan which they wish to commence within the next 24 months. The plan involves significant capital investment and both staff recruitment and redeployment. This is an example of a tactical plan. Is this statement TRUE or FALSE?
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A
True
B
False
(1 mark)
Cyclical unemployment is unemployment which: A
Occurs because of the seasonal nature of some industries, for example fruit picking
B
Refers to those people who are short term unemployed as they move from one job to another
C
Is caused by structural change in the economy, leading to a change in the skills required and the location where economic activity takes place
D
Occurs as a result of aggregate demand in the economy being too small to create employment opportunities for all those willing and able to work (2 marks)
To whom is the external auditor primarily accountable? A
The directors of the company
B
The company as a separate entity
C
The shareholders of the company
(1 mark)
Belbin defined nine roles within a team. ‘Listens, builds, prevents friction and calms the waters’ could be a description of which role? A
Shaper
B
Plant
C
Resource investigator
D
Team worker
(2 marks)
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F INA L A SSESSME N T : QUESTIONS
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K is an accountant who is auditing the accounts of OPL plc, a company whose CEO is one of her best friends. K previously gave advice to OPL, recommending the purchase of another company, GHJ Ltd. The directors of OPL are keen for K to report to them how GHJ has performed since its acquisition. Which two of the following key threats to ethical behaviour is K most likely to be facing?
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(i)
Professional competence
(ii)
Self-interest
(iii)
Self-review
(iv)
Familiarity
A
(i) and (ii)
B
(i) and (iv)
C
(ii) and (iv)
D
(iii) and (iv)
(2 marks)
‘Maximisation of the ability to take advantage of economies of scale’ is an advantage of the divisional structure. Is this statement TRUE or FALSE?
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A
True
B
False
(1 mark)
Hofstede developed an influential model of the dimensions on which national cultures differ. In the Hofstede model, a national culture where there is a strong emphasis on initiative and achievement, and people are expected to be selfsufficient, would be categorised as which of the following? A
Masculine
B
Individualistic
C
High uncertainty avoidance
D
Low power distance
(2 marks)
Stakeholders are individuals or groups who have a legitimate interest in the activities of an organisation. They can be categorised as internal, connected or external stakeholders. Which of the following is a connected stakeholder? A
Central government
B
Pressure groups
C
Bankers
KAPLAN PUBLISHING
(1 mark)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
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Honey and Mumford identifies four learning styles. Which of the following is one of the names they gave to these styles? A
Reviewer
B
Analyst
C
Reflector
D
Thinker
(2 marks)
Which of the following are implications of Taylor’s scientific management? 1
Workers should be set high targets but should be well rewarded for achieving them
2
Workers can often be motivated by other methods than tight control and financial reward
3
Management should plan and control all the workers efforts, leaving little discretion for individual control over working methods
4
Working methods should be analysed ‘scientifically’, including the timing of tasks
A
1 and 2
B
4 only
C
1, 3 and 4
D
2 and 3
(2 marks)
Patterns of communication exist between group members. These patterns can be either centralised or decentralised. Which of the following are centralised patterns of communication? A
Wheel, chain, circle
B
Wheel, chain, Y
C
Wheel, Y, circle
(1 mark)
An effective appraisal system involves a participative, problem-solving process between the manager and appraisee. Is this statement TRUE or FALSE?
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10
A
True
B
False
(1 mark)
Which of the following is a stage in Kolb’s learning cycle? A
Positive experience
B
Concrete experience
C
Active experience
(1 mark)
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F INA L A SSESSME N T : QUESTIONS
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Herzberg defines three ways that management can attempt to improve staff satisfaction and motivation. One such way is ‘a deliberate and planned process to improve the responsibility, challenge and creativity of a job’ what term did Herzberg use to describe this process? A
Job enlargement
B
Job enlightenment
C
Job enrichment
D
Job rotation
(2 marks)
Which of the following is a characteristic of a matrix structure? A
Built around the owner manager, who makes all the decisions
B
Appropriate to small companies which have few products and locations and which exist in a relatively stable environment
C
Structured in accordance with product lines or divisions or departments
D
Requires dual reporting to managers, for example reporting to both subject and department heads in a school (2 marks)
In many countries a child is unable to enter into legally binding contracts. What feature of a simple contract is usually considered to be missing if a child attempts to enter a legally binding contract?
40
A
Capacity
B
Legality
C
Agreement
(1 mark)
A budget surplus occurs when the money supply within the economy is rising faster than the national income. Is this statement TRUE or FALSE?
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A
True
B
False
(1 mark)
Which one of the following statements regarding health and safety is correct? A
Health and safety is concerned with eliminating all risks
B
Typical health and safety legislation only looks at the responsibilities of employers
C
Employees must comply with instructions from anyone carrying out duties under the health and safety legislation
D
Employers do not need to investigate accidents if no members of staff were injured (2 marks)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
42
Harry works in a large organisation which has both suppliers and customers all over the world. Harry is an ACCA qualified accountant and is responsible for managing foreign currency. In particular, Harry tries to minimise the company’s exposure to foreign exchange losses. What is Harrys’ role?
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A
Treasurer
B
Management accountant
C
Financial accountant
D
Finance director
(2 marks)
Tuckman described four stages which a group may pass through. Which of the four is described by the following passage? ‘Most groups go through this stage in which norms of attitude and behaviour are challenged and rejected. Members may compete for chosen roles within the group. If successful, this stage will have forged a stronger team with greater knowledge of each other and the groups’ objectives’.
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A
Forming
B
Storming
C
Norming
D
Performing
(2 marks)
In the context of selection, which of the following involves a candidate being interviewed by several people at once? A
Group interview
B
Stress interview
C
Panel interview
(1 mark)
In the regulatory framework surrounding financial accounting, which body has the key objective of developing a single set of enforceable global accounting standards? A
The International Accounting Standards Board
B
The International Accounting Standards Committee
C
The International Financial Reporting Interpretations Committee
D
The European Union
(2 marks)
Margaret is a widow with a grown up family who have moved away. She works as an accountant in a small company on a part time basis. Which of Maslow’s hierarchy of needs is most likely to be motivating Margaret? A
Basic
B
Safety
C
Social
D
Ego
(2 marks) KA PLAN PUBLISHING
F INA L A SSESSME N T : QUESTIONS
SECTION B – MULTI-STAGE QUESTIONS ANSWER ALL 6 QUESTIONS 1
(a)
An organisation can adopt one of a number of different boundaryless structures in order to improve efficiency and reduce costs, including: A
Hollow
B
Virtual
C
Modular
Required: Classify the following as relating to either A (Hollow), B (Virtual) or C (Modular): (i)
Company U has recently outsourced many of its activities to third party suppliers. However, it has kept customer services in-house as it feels that this is a core business area.
(ii)
Company H only has a small, central staff who co-ordinate the company’s outsourcing functions.
(iii)
Company G makes computers, but outsources the production of their screens to third party suppliers based in a lower-labour cost country.
(iv)
Company B has outsourced all of its major functions – including IT, which the directors believe give the company competitive advantage. (0.5 marks each = 2 marks total)
(b)
The structure of an organisation can be described using a number of key terms: A
Scalar chain
B
Span of control
C
Tall
D
Flat
The following sentences contain gaps which specify a particular structural term. J’s business is _1_ as all his employees report directly to him. There are no other managers within the business. Required: (i)
Select the impact that best fills gap 1 above; i.e. select A, B, C or D.
Q plc is divided into divisions. Each division is controlled by three managers, each of whom have large numbers of staff reporting to them. These managers have complained that the wide _2_ means that they have too little time to look after individual staff members. Required: (ii)
Select the impact that best fills gap 2 above; i.e. select A, B, C or D. (1 mark each = 2 marks in total) (4 marks)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
2
(a)
Professional accountants must follow a number of fundamental ethical principles when undertaking their work. These include: A
Objectivity
B
Confidentiality
C
Integrity
D
Professional competence
Required: Identify the principle above which is associated with each of the following, by writing A, B, C or D. (i)
Information obtained through an accountant’s work should not be used for personal advantage.
(ii)
An accountant must follow all applicable technical and professional standards.
(iii)
Accountants must not produce or be associated with misleading statements.
(iv)
Professional judgement must not be compromised by bias. (0.5 marks each, total = 2 marks)
(b)
Below are a number of statements regarding approaches to ethics. A
An egoist considers only themselves when making an ethical judgement.
B
Making decisions based on the individual circumstances you find yourself in is referred to as consequentialism.
C
Egoism and utilitarianism are both ‘consequentialist’ approaches to ethics.
D
If a person only makes decisions that are for ‘the greater good’ they are a pluralist.
E
A company that tries to make decisions that avoid harm to any one stakeholder group is taking a pluralist approach to ethics.
F
Utilitarians believe that ethical decisions are those that are the most practical.
G
Absolutists only consider their own needs when making an ethical choice.
H
Following an approach to ethics that sees every decision as either right or wrong, regardless of the circumstances, is known as absolutism.
Required: Write down which four of the above statements are correct by selecting FOUR of the letters from A-H. (0.5 marks each, total = 2 marks) (4 marks)
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F INA L A SSESSME N T : QUESTIONS
3
(a)
Within an economy, aggregate demand refers to the total demand for a country’s output. The Government of country G is attempting to calculate this and has identified a number of factors that might be included: A
Imports
B
Government spending
C
Government taxation
D
Disposable income
E
Consumer spending
F
Inflation
G
Money supply
H
Investment by firms
Required: Identify which FOUR of the above factors are included in the calculation of aggregate demand by writing down FOUR letters from A-H. (0.5 marks each, total = 2 marks) (b)
The Government of country G has recently taken office and is keen to identify the best approach to managing the economy. They have been informed of three main approaches. A
Classical
B
Demand side
C
Supply side
Required: Identify which of the following policies relates to each approach to managing the economy, by writing A, B or C. Note – the same letter may be used more than once. (i)
Increase spending and run a budget deficit in order to stimulate growth.
(ii)
Eliminating the previous Government’s legislation which created a minimum wage.
(iii)
Provision of information to workers about job opportunities in their area.
(iv)
Adopt a hands-off approach and allow the economy to naturally reach its equilibrium point. (0.5 marks each, total = 2 marks) (4 marks)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
4
According to Mendelow, stakeholders can be categorised using the following matrix: Power
Interest
High
Low
High
A
B
Low
C
D
Required: For each of the following statements relating to company W, identify which quadrant of the matrix is being referred to by writing the letter A, B, C or D for each. Note – the same letter may be used more than once. (i)
W’s major shareholder has stated that he is ‘happy as long as he gets his dividends at the end of each year’.
(ii)
W feels that one of its customers should be ‘kept informed’ about future strategies.
(iii)
W has adopted a ‘keep satisfied’ approach to the Government of country J.
(iv)
W’s employees are concerned about possible redundancies at the company. However, they are not unionised and it looks unlikely that they will be able to act collectively against W. (1 mark each, total = 4 marks) (4 marks)
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F INA L A SSESSME N T : QUESTIONS
5
(a)
According to the Higgs report, non-executive directors have four key roles within a company. A
Strategy
B
Evaluation
C
Monitoring
D
Performance
E
Fraud
F
Risk
G
People
H
Independence
Required: Write down which FOUR of the above are non-executive roles according to the Higgs report by selecting FOUR from A-H. (0.5 marks each, total = 2 marks) (b)
Corporate governance requires the creation of a number of committees, including: A
Audit committee
B
Remuneration committee
C
Nomination committee
D
Public oversight board
The following sentences contain gaps relating to the relevant role from the list above. Company V is a large organisation and wishes to monitor its impact on wider society. Obtaining information and feedback from key external stakeholders would be the responsibility of the _1_. Required: (i)
Select the role that appropriately fills gap 1 above; i.e. select A, B, or C.
Company H’s _2_ is currently assessing the size and composition of the Board of Directors to ensure it is appropriate for the organisation. Required: (ii)
Select the role that appropriately fills gap 2 above; i.e. select A, B or C. (1 mark each = 2 marks in total) (4 marks)
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ACCA F1 AND FAB : A CCO UN TAN T IN B USINESS
6
(a)
Two types of reward that can be offered to motivate employees are: A
Intrinsic
B
Extrinsic
Required: For each of the following rewards, identify whether they relate to intrinsic or extrinsic rewards by writing down either A or B. (i)
Sense of enjoyment and accomplishment
(ii)
Basic pay
(iii)
Company car
(iv)
Making higher level decisions (0.5 marks each, total = 2 marks)
(b)
Herzberg argued that employees could be motivated by the way their job was designed. He suggested three possible approaches to job design: A
Job enrichment
B
Job enlargement
C
Job rotation
Required: For each of the following statements, identify which approach to job design they relate to by writing down either A, B or C. (i)
M works as an accountant in a large accountancy firm. He usually only prepares the accounts, but has recently been told that he will start undertaking client meetings, a role usually undertaken by his manager.
(ii)
K is well respected by her other team members. Her manager has therefore asked her to temporarily take charge of the team while he is away on holiday.
(iii)
L works in the accounts preparation department of a large accountancy firm. Next month she has been told she will be seconded to the tax department to help her develop skills in this area.
(iv)
J has recently completed a large amount of data processing. His manager has therefore given him additional data processing to do, believing that this will make him feel motivated. (0.5 marks each, total = 2 marks) (4 marks)
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