HKDSE

BAFS

All short questions

1
HKDSE BAFS Syllabus

Financial accounting
Chapter 1 Double Entries: A, C and L A+B 3
Chapter 2 Double Entries: E and R A+B 3
Chapter 3 Trial balance A+B 4
Chapter 4 Final accounts: Income Statement and Statement of financial position A+B 5
Chapter 5 Two column cash book and Three column cash book B 7
Chapter 6 Accruals and Prepayments B 8
Chapter 7 Depreciation of non-current assets B 9
Chapter 8 Bad debts and allowance for doubtful debts B 11
Chapter 9 Inventory valuation B 13
Chapter 10 Bank Reconciliation B 14
Chapter 11 Accounting concepts B 15
Chapter 12 Partnership: Final accounts B 27
Chapter 13 Partnership: Goodwill B 28
Chapter 14 Partnership: Revaluation B 29
Chapter 15 Partnership: Realization B 30
Chapter 16 Limited company: Final accounts B 31
Chapter 17 Journal & Ledger B 33
Chapter 18 Correction of errors B 34
Chapter 19 Accounting ratios B 35
Chapter 20 Incomplete record B 41

Cost accounting
Chapter 1 Cost Classification B 43
Chapter 2 Absorption costing and Marginal costing B 47
Chapter 3 Cost-volume-profit (CVP) analysis B 49
Chapter 4 Cost Accounting for Decision-making B 50

Management and Finance

Chapter 1 Business environment A 51
Chapter 2 Introduction to management A 61
Chapter 3 Basics of Personal Financial Management A 75

2
 Financial Accounting 1 and 2: Double Entries

Q.1
What is accounting?

Accounting is the information system that records, classifies, summarises business transactions data,
processes the data into financial reports and communicates the financial reports to decision maker.

Q.2
Describe the functions of accounting.

The functions of accounting including

1. Recording, classifying and summarizing data,
2. Processing data into useful information,
3. Communicating the information to the internal and external users of the financial statements.

Q.3
Describe the accounting equation.

Accounting equation refers to Assets = Capital + Liabilities

Assets refer to resources owned by a firm.

Capital refers to resources that are provided / contributed by the owner to the firm.
Liabilities refer to resources that are borrowed from people other than the owner.

The accounting equation describes that total resources of a firm are either provided by the owner or
borrowed from people other than the owner.

3
 Financial Accounting 3: Trial balance

Q.1 2016_P2_Q.1

Q.2
Explain the steps to balance off an account.

1. Sum up the debit side and the credit side separately.

2. The difference between total debit balance and total credit balance is the balance of the account.
3. Put this balance on the side with the smaller total. This balance is called balance carried down
(abbreviated as balance c/d).
4. The closing balance of the current month is the opening balance of the next month. This is called
balance brought down (abbreviated as balance b/d).

Q.3
State 2 functions / uses of a trial balance

❖ As a basis for preparing the final accounts.

❖ To check whether the total debit balances and the total credit balances are equal.

Q.4
What is a trial balance?

A trial balance is a list of all account balances. It is used to check whether the total debit balances and the
total credit balances are equal. Besides, it is used as a basis for preparing the final accounts.

4
 Financial Accounting 4: Final accounts

Q.1 2012_P1_Q.1

Q.2
Why companies need to prepare financial statements (i.e. Income statement and Balance sheet)?

❖ to comply with legal requirements

❖ for external user: e.g. investors, to make investment decision
❖ for internal users: e.g. managers, to formulate financial plans

Q.3
Explain the uses of financial statements for external user and internal users.

❖ for external users: e.g. investors, to make investment decision

❖ for internal users: e.g. managers, to formulate financial plans

Q.4
What is income statement?

Income statement is a statement showing all the revenues and expenses of a company in a financial year to
measure the company’s operating performance, i.e. to calculate gross profit and net profit.

5
Q.5
What is a balance sheet / statement of financial position?

A balance sheet is a statement showing the financial position, i.e. assets, capital and liabilities, of a
business at a particular date, usually at the year-end date.

Q.6
Identify the users of financial statements and state their information needs. / Explain how information in
financial statements can assist decision-making.

Managers of the Managers need financial information to help them in setting goals, controlling and
company: evaluating the company’s performance and discovering the operation problems.
Government: Government uses the financial statement for tax calculation and check whether the
company has fulfilled the requirements generally accepted accounting principles.
Investors or They use the financial statement to evaluate the performance of the company to
potential investors: decide whether to invest in the company.
Creditors: Creditors use the financial statement to check the payment ability of the company.

Suppliers: Suppliers use to financial information to help them determine the credit period
allowed to the company.

Q.7
Describe the major items of financial statements.

In income statement, the major items include Sales, Cost of goods sold, other income and expenses.
Sales – Cost of goods sold = Gross profit.
Sales – Cost of goods sold + Other income – Expenses = Net profit.

In balance sheet, the major items include Non-current assets, Current assets, Capital, Non-current
liabilities and Current liabilities.
Total assets = Capital + Total liabilities

6
 Financial Accounting 5: Cash book

Q.1
Under what situation will a supplier give a trade discount to a customer?

❖ regular customers.
❖ customers who buy in large quantities.
❖ new customers.

Q.2
Under what situation will a supplier give a cash discount to a customer?

A cash discount is given to credit customers (debtors) who settle their debts within discount period.

Q.3
What is the difference between “Credit period” and “Discount period”?

Credit period is the period that debtors are required to settle their debts. Trade debtors who fail to settle
their outstanding balance within credit period may be charged an interest on outstanding balance.

If customers settle their account within discount period, then they will be given cash discount.

7
 Financial Accounting 6: Accruals & Prepayments

Q.1
What is/are the differences between cash accounting and accrual accounting?

Under cash accounting, revenues and expenses are recognised when money is paid or received.

Under accrual accounting, revenues and expenses are recognised when they are earned or incurred but
NOT when money is paid or received.

Q.2 2014_P1_Q.9

8
 Financial Accounting 7: Depreciation

Q.1
State the causes of depreciation of non-current assets.

❖ Wear and tear

❖ Obsolescence
❖ Inadequacy
❖ Depletion

Q.2
What is the assumption behind straight line depreciation method and reducing balance depreciation method?

Straight line method assumes a non-current asset depreciates at the same rate over its life time or the
contribution of the asset to each financial year is more or less the same. Because of this reason, the
amount of depreciation for each financial year under straight line method is the same.

Reducing balance method assumes a non-current assets will depreciate faster in the first few years and
depreciate slower as time go on or the contribution of the asset will decline as time go on. Therefore, the
amount of depreciation will be higher in the first year and decline as time go on.

Q.3
State the meaning of depreciation in accounting.

Depreciation is a systematic way used to allocate of the cost of a tangible non-current asset as
depreciation expense over the periods in which the asset is expected to be used.

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Q.4
State the objectives of providing depreciation in accounting. / Why don’t depreciate the whole cost of a non-
current asset in the year of purchase (i.e. first year) but amortize it throughout its useful life?

According to Matching concept, the expenses recognized in each accounting period have to be matched
with the revenues or benefits that they generate in the same period.

A non-current asset provides long-term benefits and therefore its cost should not be wholly recognized as
an expense in the period of acquisition. Instead, it should be allocated over its useful life.

The amount allocated to each accounting period should be matched with the amount of benefits generated
in that period.

Q.5
Explain what capital expenditure and revenue expenditure is and the accounting treatment for capital
expenditures and revenue expenditures.

Capital expenditures refer to expenditures that generate benefits for more than 1 financial period.
❖ Capital expenditures will be capitalized as non-current assets and then will be written off as expenses
(i.e. depreciation expenses) over the useful life of the non-current assets.

Revenue expenditures refer to expenditures that generate benefits for only the financial year that the
expenditure incurred.
❖ It will be wholly written off as expenses in the period that it is incurred.

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 Financial Accounting 8: Bad debts & allowance for DD

Q.1
What is meant by bad debts? And what is accounting treatment for a bad debt?

Bad debts refer to the trade receivables that have been proved to be uncollectible.

Accounting treatment for a bad debt

Once a bad debt arises, it should be immediately written off from the relevant trade receivable’s account.
At the end of each accounting period, the total amount of bad debts for the period would be transferred to
the profit and loss account (i.e. income statement) as an expense.

Q.2
What is meant by allowance for doubtful debts? And what is accounting treatment for it?

The allowance for doubtful accounts represents management’s best estimate of the amount of trade
receivables that may be uncollectible. It does not necessarily reflect subsequent actual experience, which
could differ largely from expectations. If actual experience differs, then management adjusts its estimation
in the next accounting period to align with actual results.

Accounting treatment for allowance for doubtful debts

The allowance for doubtful accounts is a reduction of the total amount of trade receivables appearing on a
company’s balance sheet, and is listed as a deduction immediately below the trade receivables. This
deduction is classified as a contra asset account.

11
Q.3
What is meant by bad debts recovered? And what is accounting treatment for it?

“Bad debts recovered” refers to a debt that is paid (either in whole or in part) after it has been written off
as a bad debt. At the end of an accounting period, the total of bad debts recovered would be transferred to
the profit and loss account as other revenue / other income.

For bad debts that were written off and recovered in the same period, the double entries are

Dr. Trade debtors XXXX

Cr. Bad debts XXXX
Dr. Bank XXXX
Cr. Trade debtors. XXXX

For bad debts that were written off in previous period and recovered in later period, the double entries are

Dr. Trade debtors XXXX

Cr. Bad debts recovered XXXX
Dr. Bank XXXX
Cr. Trade debtors. XXXX

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 Financial Accounting: Inventory valuation

Q.1
“Inventory are valued at lower of cost or net realizable value.” Explain the statement,

Prudence concept states that in case of doubts, bookkeepers should choose an accounting treatment such
that revenues and assets are not overstated and expenses and liabilities are not understated.

Under prudence concept, we adopt lower-of-cost or- net realizable value in the valuation of inventory.
❖ If market value (or net realizable value) of the inventory is higher than the cost, we should still value
the inventory at cost instead of market price to avoid overstating the value of assets as the inventory
had not been sold.
❖ If market value (or net realizable value) of the inventory is lower than the cost, we will write off the
stock to net realization value to avoid overstating the value of assets.

13
 Financial Accounting: Bank Reconciliation

Q.1 2012_P2_Q.5

Q.2 2012_PP_P2_Q.1

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 Financial Accounting 11: Accounting Concepts

Business entity concept states that a business is treated as an entity separated from its
Business entity owner(s).
1.
concept ❖ Owners’ personal assets and liabilities and personal income and expenditure
should not be included in the business accounting records.

Historical cost principle states that assets should be recorded at historical cost /
acquisition cost (less accumulated depreciation, if any) rather than the market value.
Historical cost
2.
concept
Popularly tested item:
❖ Non-current assets

Going Concern concept states that

➢ If a business will continue its operation in the foreseeable future and there is no
intention or necessity either to liquidate the entity or to curtail significantly its
Going concern
3. scale of operations, then assets should be valued at historical cost (less
concept
accumulated depreciation, if any) instead of their market value.
➢ However, if a business will discontinue its operation in the foreseeable future,
then assets should be valued at current market value instead of histrical cost.

Accrual concept states that revenues and expenses are recognized (確認, i.e.
recorded) in the financial statements when they are earned or incurred, not when they
are received or paid in cash.
4. Accrual concept

Popularly tested item:

❖ Prepayments and accruals of expenses

Matching concept links revenue with its relevant expenses or costs. Only expense
incurred that relates to the revenue earned should be recorded.

5. Matching concept Popularly tested item:

❖ Cost of goods sold (why inventory is deducted from cost of goods sold)
❖ Depreciation expenses (why don’t expense the whole amount of non-current
assets in the year of purchase)

15
 Realization concept states that revenue is recognized only when the goods are
delivered or services are provided (or rendered) to customers, and not when the
monies / cash are received.
6. Realization concept

Popularly tested item:

❖ Sales recognition (Should revenue be recognized when money is received?)

Consistency principle states that the accounting treatment of similar items within
each accounting period (横一致) and from one period to the next (縱一致) should be
Consistency consistent / the same.
7.
principle
Popularly tested item:
❖ Depreciation method

Prudence concept states that in case of doubts, bookkeepers should choose an

accounting treatment such that revenues and assets are not overstated and expenses
and liabilities are not understated.

8. Prudence concept Popularly tested item:

❖ Allowance for doubtful debts (why provide allowance)
❖ Lower of cost and NRV (why write off inventory value when NRV < COST)
❖ Goodwill / intangible assets (why don’t recognize / record goodwill / intangible
assets in balance sheet )

The materiality principle states that if an item would not make a difference to the
users’ decision making, then it can be directly charged as expenses (rather than
capitalizing it as a non-current asset) even if it can last for more than one year.
9. Materiality concept

Popularly tested item:

❖ Stationary / items with small value relative to the company’s revenue

The objectivity principle states that accounting information must be objective and
reliable. Therefore, accounting information should be based on facts and be
10. Objectivity concept verifiable.

Popularly tested item: Goodwill / intangible assets

Timeliness concept states that accounting information must be timely and relevant.
11. Timeliness concept Therefore, accounting information should be prepared and provided soon after the
occurrence of an event.

Money measurement concept states that accounting records only record transactions
Money measurement and events that can be quantified and expressed in monetary terms.
12.
concept
Popularly tested item: Goodwill / intangible assets

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Q.1 2017_P1_Q.3

Q.2 2017_P2_Q.1

17
Q.3 2016_P1_Q.1

Q.4 2016_P2_Q.4

18
Q.5 2016_P2_Q.4

Q.6 2015_P1_Q.2

19
Q.7 2015_P2_Q.6

Q.8 2015_P2_Q.8

20
Q.9 2015_P2_Q.9

Q.10 2014_P2_Q.8

21
Q.11 2014_P2_Q.9

22
Q.12 2013_P1_Q.3

23
Q.13 2013_P2_Q.1

Q.14 2013_P2_Q.2

24
Q.15 2013_P1_Q.6

Q.16 2012_P2_Q.9

Q.17 2012_PP_P2_Q.3

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Q.18 2012_PP_P2_Q.6

Q.4 2012_P2_Q.2

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 Financial Accounting 12: Partnership final account

Q.1 2012_P2_Q.7
Explain one advantage of maintaining both current accounts and capital accounts in a partnership. (2 marks)

27
 Financial Accounting 13: Partnership Goodwill

Q.1
Define goodwill.

Goodwill is commonly defined as the excess of the value of an entire business over the fair value of its
separable net assets.

Q.2 2016_P2_Q.5

Q.3
Under what circumstances will goodwill be recorded in a partnership? How is it recorded?

It is recorded in a partnership when there is / are

❖ a change in the profit and loss sharing ratio
❖ admission of new partner(s)
❖ withdrawal, death or retirement of old partner(s)

Goodwill should be classified as an “intangible asset 無形資產” in a company’s balance sheet under non-
current assets.

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 Financial Accounting 14: Partnership revaluation

Q.1
Under what circumstances will assets and liabilities of the partnership be revalued to reflect their fair value?

A partnership should revalue its assets and liabilities when there is / are
❖ a change in the profit and loss sharing ratio
❖ admission of new partner(s)
❖ withdrawal, death or retirement of old partner(s)

Q.2 2013_P2_Q.4

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 Financial Accounting 15: Partnership realization

Q.1
Analyze the factors leading to the dissolution / realisation of a partnership.

❖ The partnership has been making substantial losses.

❖ There are serious conflicts among the partners.
❖ The partnership is converted into a limited company.
❖ The partnership is taken over by another business.

Q.2
What are the actions required for dissolution?

❖ The firm needs to dispose its assets: sold to external parties, or taken over by existing partners at
agreed value.
❖ The firm needs to repay liabilities to external parties.
❖ The firm needs to repay the final balances in their capital accounts to its partners.

Q.3
What is meant by capital deficiency?

When a partner’s capital account ends up with a debit balance, he is said to have a capital deficiency. He
is indebted (負債的) to the partnership and is required to repay the amount owed to the partnership.

However, if the partner is unable to pay (i.e., being insolvent), his capital deficiency would have to be
shared by the other solvent partners in their profit and loss sharing ratio or other agreed ratio.

30
 Financial Accounting 16: Limited company

Q.1
State three differences between debenture and ordinary shares.

Debenture / bond Ordinary shares

1. Nature A loan to the company A proof of ownership
2. Returns Interest, which is fixed. Dividend, which is variable.
3. Priority in receiving return Prior After bondholders
4. Priority in claiming back assets Prior After bondholders
when the company liquidates
5. Redemption obligation Yes No
6. Voting rights No Yes

Q.2
State ONE similarity and ONE difference between debenture and preference shares.

Similarity ❖ The return of debenture holders and preference shareholders are both fixed.
❖ Both debenture holders and preference shareholders do not have voting right in
annual general meeting.
Differences In terms of nature,
❖ Debenture / bond represents a loan to the company while preference shares
represents a proof of ownership.

In terms of priority in receiving return,

❖ The return (i.e. interest) debenture holders will be given before preference shares
dividend.

In terms of priority in claiming back assets when the company liquidates

❖ When the company liquidates, debenture holders can claim back assets before
preference shareholders.

In terms of redemption obligation,

❖ The company needs to redeem debenture at maturity date while the company does
not have the obligation to redeem preference shares.

31
Q.3
Explain TWO differences in terms of the right to dividends for ordinary shareholders and preference
shareholders. (2 marks)

1. Preference shareholders have the right to receive dividend before ordinary shareholders.
2. The dividend return of preference shareholders is fixed while the dividend return for ordinary
shareholders is variable.
3. The company has to distribute dividend to preference shareholders no matter the company make
profit or loss while the company does not have the obligation to pay dividend to ordinary
shareholders.

Q.4
What are the difference between reserve and provision?

Reserves are the amounts set aside from profits which are not used to meet any liability. They are the
undistributed profits of the business and belong to shareholders. Therefore, they are capital of the
company.

A provision (e.g. allowance for doubtful debts, allowance for other possible loss) is a liability of uncertain
timing or uncertain amount. Provisions are different from other liabilities such as trade payables and
accruals. The amount or timing of the settlement of a provision is uncertain. On the contrary, the amount
and timing of the settlement of a trade payable and an accrual are certain or can be estimated with
reasonable certainty.

32
 Financial Accounting 17: Journal & Ledger

Q.1
Explain why a company prepares both books of original entry and ledgers.

Two sets of records are prepared by two different groups of people. They can cross-check to see whether
there are any errors.

Two sets of records are prepared by two different groups of people. This can detect, avoid and prevent
fraud and misstatement.

Q.2
What are the differences between real accounts and nominal accounts?

Real accounts are those reported in the balance sheet, which is a record of the amount of asset, liability, or
owners’ equity (i.e. capital) at a particular moment in time.

Nominal accounts are those reported in the income statement, which is a record of the amount of
business’s revenue and expenses over a period of time, i.e. a financial year.

Q.3
What are the difference between permanent accounts and temporary accounts?

Permanent accounts are accounts that are reported in the balance sheet, which is a record of the amount of
asset, liability, or owners’ equity (i.e. capital). They are active from the first day of business to the last day
(liquidate). A permanent account could have a temporary zero balance, in such case it’s not reported in the
balance sheet.

Temporary accounts are accounts that are reported in the income statement, which is a record of the
amount of business’s revenue and expenses over a period of time. They are called “Temporary accounts”
because they are closed at the end of each financial year. Their balances are reset to zero to start the new
financial year.

Points to note:
❖ Real accounts = Permanent accounts
❖ Nominal accounts = Temporary accounts

33
 Financial Accounting 18: Correction of errors

Q.1
What are the 6 errors that do not affect trial balance agreement?
1. Error of commission 4. Error of original entry
2. Error of principle 5. Complete reversal of entries
3. Error of omission 6. Compensating errors

Q.2
What are the errors that affect trial balance agreement?
1. Casting error in a book of original entry
2. Single entry
3. Double entry of unequal amounts
4. Incorrect listing of balances in the trial balance

Q.3
What is meant by suspense account? When will a suspense account be opened and closed?
Meaning
A suspense account is a temporary account used to record the difference between the debit totals (2)
and credit totals of the trial balance.

When will a suspense account be opened and closed? (1)

❖ A suspense account will be opened when the trial balance does not agree. (1)
❖ It will be closed once all the errors are found and corrected.

Q.4 2015_P2_Q.6

34
 Financial Accounting 19: Accounting ratios

Q.1 2017_P2_Q.4

Q.2 2017_P2_Q.5

35
Q.3 2016_P2_Q.8

Q.4 2016_P2_Q.9

Q.5 2015_P2_Q.9

36
Q.6 2015_P2_Q.9

Q.7 2014_P2_Q.8

37
Q.8 2013_P2_Q.7

Q.9 2012_PP_P1_Q.1

38
 Q.10 2012_PP_P2_Q.9

Q.11
State the general functions of accounting ratios.

1. To evaluate the financial performance and position of a business

2. To make inter-period comparisons of a company
3. To make inter-company comparison among different companies

Q.12
Suggest THREE possible ways to improve the liquidity of Able Company.

1. Better control over the level of inventory / Maintain inventories at a level consistent with sales
2. Grant credit only to reliable customers and enforce the credit policy strictly
3. Ensure all accounts payable are settled on time
4. Always set aside sufficient cash to meet short-term obligations
5. Increase cash discounts to attract early settlement from customers
6. Issue shares to raise capital instead of making loans and bank overdraft

Q.13
Suggest THREE possible ways to improve profitability.

1. Increase sales by lowering prices, improving quality of goods and services, spending on promotion
2. Develop new sources of revenue, develop new products, expand markets…
3. Reduce the cost of sales from cheaper suppliers or reduce the cost of production by mechanizing.
4. Reduce operating expenses

39
Q.14
Suggest THREE possible to reduce financial leverage. = 債務佔總 Assets 的比例, i.e. L/A or L/(C+L)

1. Repay loans as quickly as possible

2. Make full use of the credit granted by suppliers
3. Rely more on equity financing instead of debt financing
4. Retain more profits as a source of internal financing

40
 Financial Accounting 20: Incomplete record

Q.1 2017_P2_Q.7

Normal loss: Meaning

❖ Normal inventory loss refers to loss that are expected and unavoidable in the
production process such as obsolete, broken or damaged.
❖ Besides, the amount of normal loss is usually small and hence not significant
enough to receive special attention from the managers and investors.

Accounting treatment
❖ The cost of the normal inventory loss will included in cost of goods sold and is
not to be recorded as a separate expenses item in the income statement.
Abnormal loss Meaning
❖ Abnormal inventory loss refers to loss that are due to abnormal reasons like fire,
burglary and theft.
❖ The amount of the abnormal inventory loss is usually significant enough to
receive special attention from the managers and investors.

Accounting treatment
❖ The amount of abnormal loss will be recorded as a separate expense item in
income statement.

41
Q.2
What is the difference between “statement of affairs” and “balance sheet / statement of financial position”

Statement of Affairs is a statement showing assets, liabilities and capital of the entity prepared on the basis
of a single entry system of bookkeeping.

Balance Sheet is a statement showing assets, liabilities and equity of the company prepared on the basis of
the double entry system of bookkeeping.

There are some noteworthy differences between statement of affairs and balance sheet, in the sense that
the former is prepared from incomplete records (i.e. capital is a balancing figure) whereas the latter is
prepared from proper records maintained on the basis of double entry system.

42
 Cost Accounting 1: Cost Classification

Q.1 2017_P2_Q.3b

43
Q.2 2017_P2_Q.6

44
Q.3 2016_P2_Q.3

Q.4 2012_P2_Q.6

Q.5 2012_PP_P2_Q.8

45
46
 Cost Accounting 2: Absorption VS Marginal

Q.1 2016_P2_Q.3

Q.2 2016_P2_Q.7

Q.3 2012_PP_P2_Q.3

47
 Q.4 2012_PP_P2_Q.7c

• The actual overhead absorption rate (OAR) cannot be calculated until the end of the period, (2)
while pre-determined OAR can be calculated before the accounting period using budgeted
figures for overheads and units of the absorption base chosen.

• As pre-determined OAR can be obtained before the accounting period (using budgeted figures (2)
for overheads and units of the absorption base chosen), it could provide more information
for decision making on pricing (協助定價) and cost control (作為指標協助控制生產成本).

• Using pre-determined OAR is less volatile than the use of the actual OAR as actual overheads (2)
are subjected to fluctuations.

Q.5
State the accounting treatment for the under-absorbed or over-absorbed manufacturing overheads and its
impact on the net profit for the current year.
Under-absorbed manufacturing overheads
❖ Under-absorbed manufacturing overheads should be debited to the profit and loss account to increase
cost of goods sold.
❖ This would reduce the net profit of the current year.

Over-absorbed manufacturing overheads

❖ Over-absorbed manufacturing overheads should be credited to the profit and loss account to reduce
cost of goods sold.
❖ This would increase the net profit of the current year.

Q.6
Explain why the value of inventory under absorption costing is larger than the value of inventory under
marginal costing.
❖ Under marginal costing system, the value of inventory includes only variable production cost and
hence fixed manufacturing overheads are treated as period cost, i.e. inventory value does not include
fixed manufacturing overheads.
❖ Under absorption costing system, the value of inventory includes all production cost and hence fixed
manufacturing overheads are treated as product cost, i.e. inventory value includes fixed manufacturing
overheads.
❖ Therefore, per unit inventory value under absorption costing is larger than that under marginal costing
by an amount equal to fixed manufacturing overheads absorbed per unit.

48
 Cost Accounting 3: Cost-volume-profit / break-even analysis

Q.1 2013_P2_Q.6
Why is a decline in the margin of safety an issue of concern to the management of a company? (2 marks)

49
 Cost Accounting 4: Decision-making

Q.1 2013_P2_Q.8
Briefly explain TWO non-financial factors that a company should consider when deciding whether to close
an unprofitable shop.

Q.2 2012_P2_Q.8

50
 Management & Finance 1: Hong Kong Business environment

Q.1
States the roles / importance / contributions of business in the Hong Kong Economy.
1. To provide job opportunities to Hong Kong economy
2. To provide revenue for the Hong Kong government
3. To earn foreign exchange for Hong Kong to pay for imports
4. To produce income for Hong Kong people
5. To help the Mainland business to raise capital and manage their assets

Q.2
What is the benefits that Hong Kong obtains under Closer Economic Partnership Arrangement (CEPA)?
1. Trade in Goods
❖ Mainland China implements zero tariff on imported goods of Hong Kong.

2. Trade in Services
❖ Mainland China gives the service suppliers in Hong Kong a preferential treatment when they setting up
business in the Mainland.
o reducing registered capital requirements (降低註冊資本 / 降低初始資金)
o relaxing restrictions over geographical location and business scope (放寬管制)

3. Mutual Recognition of Professional Qualification (專業資格互認)

4. Trade and Investment Facilitation (貿易投資便利化)

Q.2.5
What is purposes of the Closer Economic Partnership Arrangement (CEPA)? (HKDSE 2012 MC Q.11)
1. To reduce barriers on the trade of goods between Hong Kong and the Mainland.
2. To promote free trade in services between Hong Kong and the Mainland.
3. To facilitate cross-border business investment between Hong Kong and the Mainland.

Q.3
States the major impacts of globalisation on Hong Kong business.
1. Intensified global competition / keen global competition
2. Increasing international flow of capital and information 環球資金及資訊流動增加
3. Increasing global sourcing and outsourcing which lowers production cost of goods
4. Increasing technology transfer among countries

51
Q.4
States the major characteristics of Hong Kong economy

1. Lack of primary industries (很少初級工業)

2. Concentration on tertiary industry (重視服務業)
3. Dependence on external trade (依賴對外貿易 / 出入口)
4. Pursue free trade and maintains no trade barriers (主張自由貿易)
5. Simple tax system and low tax rate (簡單稅制且低稅)
6. Minimum government intervention (政府較少干預市場)

Q.5
For MC

The WTO was set up in 1995. It is an international body whose purpose is to promote free trade
by persuading countries to abolish import tariffs and other barriers.

1. It provides a forum for negotiations aimed at reducing obstacles to international trade.

World Trade
2. It deals with the rules of trade between countries and enforces these rules and arbitrates (仲
Organization
裁) in trade disputes among its members regarding the interpretation of trade agreements.
(WTO)
3. It monitors and reviews the trade policies of its members.
世界貿易組織
4. It has the power to impose trade sanctions (貿易制裁) if members fail to comply with the
rules and decisions of the WTO.
5. WTO helps developing countries develop the skills and infrastructure needed to expand
their trade.

Asia-Pacific Economic Cooperation (APEC) was founded in November 1989 as an informal

consultative forum to promote economic cooperation. APEC has 21 members.
1. APEC is a forum for high-level government-to-government dialogue and cooperation on
trade, investment, economic growth and other economic issues in the Asia-Pacific region.
2. APEC is a forum that seeks to promote free trade, investment and economic cooperation in
Asia-Pacific
the Asia-Pacific region.
Economic
3. Commitments made in the decision will be taken by member on a voluntary basis.
Cooperation
(APEC)
APEC aims to build a dynamic and harmonious Asia-Pacific community by
亞洲太平洋經
❖ championing (支持, 捍衛) free and open trade and investment, 支持亞太區內自由開放
濟合作組織
貿易及投資
❖ promoting and accelerating regional economic integration, 促進亞太區內經濟融合
❖ encouraging economic and technical cooperation, 鼓勵亞太區內經濟及技術合作
❖ enhancing human security, and
❖ facilitating a favorable and sustainable business environment.

52
Q.6
Explain factors affecting business decision.

1. Economic factors:
❖ Labour wage level, Income level / Consumption level of people, Rental cost, Tax rate, Flucturation of
Exchange rate etc.

2. Technological factors:
❖ Level of technological skill possessed by labour, Level of telecommunication technology, etc

3. Physical factors:
❖ Infrastructure and transport networks, Physical location / Geographical dispersion

4. Social factors:
❖ Population size & structure, Language ability of people, Education level of people, etc

5. Cultural factors:
❖ Taste and preference of customers, Religion of the majority people, etc

6. Political factors:
❖ Political stability, Govt policies towards business, political relationship among countries

7. Legal factors:
❖ Sound legal system, regulation related to licensing of a business, Minimum wage Ordinance, etc

Q.7
State the features of different business ownership.

1. Sole 1. There is only one owner.

proprietorship 2. The firm is not a legal entity. The firm does not have an independent legal status.
3. The owner bears unlimited liability: The owner is fully liable for the firm’s debts.
4. The owner of the firm can make quick and flexible decision.
5. The firm is easy to set up and dissolve.
6. The firm does not need to disclose its accounting information to the public.
7. The firm lack business continuity. Retirement, death or bankruptcy of the owner
will lead to dissolution of the sole proprietorship.

53
2. Partnership 1. The firm is not a legal entity. The firm does not have an independent legal status.
2. Owners bear unlimited liability: Each partner is fully liable for the firm’s debts.
3. All partners are legally bound by business decisions made by any one of the
partners in the name of the firm.
4. It is difficult to admit or withdraw partners as it needs the consent of all partners.
5. A partner cannot transfer his/her shares of ownership without the consent of other
partners.
6. The firm is easy to set up and dissolve.
7. The firm does not need to disclose its accounting information to the public.
8. The firm lack business continuity. Retirement, death or bankruptcy of a partner
will lead to dissolution of the partnership.

3. Private limited 1. Number of shareholders range from 1 to 50.

company 2. The company is a legal entity. It has an independent legal status.
❖ The firm can act as a legal person to make contracts, to own properties, to
sue and be sued / profit or loss belongs to the firm, not the owners.
3. Shareholders bear limited liability.
❖ Loss of shareholders is limited to the amount he invested in the firm.
4. The firm does not need to disclose its financial statements to the public.
5. The company has lasting business continuity.
❖ The firm’s existence will not be affected by any investor’s death, withdrawal,
bankruptcy or retirement.

4. Public limited 1. There is no upper limit on the number of shareholders.

company 2. The company is a legal entity. It has an independent legal status.
/ listed company 3. Shareholders bear limited liability.
❖ Loss of shareholders is limited to the amount he invested in the firm.
4. The company has lasting business continuity.
❖ The firm’s existence will not be affected by any investor’s death, withdrawal,
bankruptcy or retirement.
5. Shares (i.e. ownership) are freely transferrable.
6. The company needs to disclose its financial status to the public.
7. The company can issue shares to the public to raise capital / can invite the public
to subscribe its shares. / can invite the public to be shareholders.

54
Q.8
Sole proprietorship Partnership
1. Faster and more flexible decision making 1. Wider source of capital
2. No collective responsibility 2. Better division of labour among owners
Advantages
3. Easy to transfer of ownership (wider scope of specialization)
(Pros)
3. Risk and cost can be shared among
partners
1. Narrower source of capital 1. Slower and less flexible decision making
2. The sole proprietor needs to bear all the 2. Partners are legally bound by business
risk and cost of the business decisions made by other partners in the
Disadvantages
name of the firm.
(Cons)
3. Partners cannot transfer the ownership
freely as the consent of other partners is
required

Q.9
Sole proprietorship Private limited company
1. Lower profit tax rate 1. Wider source of capital
2. Easy to set up and dissolve / lower set up 2. The owner (shareholders) enjoy limited
Advantages
cost liability.
(Pros)
3. Faster and more flexible decision making 3. Long-lasting business continuity
4. Easy to transfer of ownership
1. Narrower source of capital 1. Higher profits tax rate
2. The owner (sole proprietor) bears 2. Difficult to set up and dissolve / higher
unlimited liabilities. set up cost
Disadvantages
3. Lack of business continuity 3. Difficult to transfer the ownership/shares
(Cons)
as the consent of other shareholders is
required
4. Slower and less flexible decision making

55
Q.10
Sole proprietorship Public limited company / Listed company
1. Lower profit tax rate 1. Wider source of capital
2. The firm does not need to disclose its 2. Shareholders enjoy limited liability
Advantages accounting information to the public. 3. Long-lasting business continuity
(Pros) 3. Lower risk of being taken over
4. Easy to set up and dissolve / lower set up
cost
1. Narrower source of capital 1. Higher profits tax rate
2. A sole proprietor bears unlimited 2. The firm needs to disclose its accounting
Disadvantages liabilities information to the public
(Cons) 3. Lack of business continuity 3. Higher risk of being taken over
4. Difficult to set up and dissolve / higher
set up cost

Q.11

Partnership Private limited company

1. Lower profit tax rate 1. Wider source of capital

Advantages 2. Easy to set up and dissolve / lower set up 2. Shareholders enjoy limited liabilities
(Pros) cost 3. Long-lasting business continuity
4. The firm is a legal entity

1. Narrower source of capital 1. Higher profits tax rate

Disadvantages 2. Partners bear unlimited liability 2. Difficult to set up and dissolve / higher
(Cons) 3. Lack of business continuity set up cost
4. The firm is not a legal entity.

Q.12
Partnership Public limited company / Listed company
1. Lower profits tax rate 1. Wider source of capital
2. The firm does not need to disclose its 2. Shareholders enjoy limited liabilities
Advantages
accounting information to the public 3. Long-lasting business continuity
(Pros)
3. Easy to set up and dissolve / lower set up 4. Shares (i.e. ownership) are freely
cost transferrable
1. Narrower source of capital 1. Higher profits tax rate
2. Partners bear unlimited liabilities 2. The firm needs to disclose its accounting
Disadvantages
3. Lack of business continuity information to the public
(Cons)
4. Difficult to transfer the ownership as the 3. Difficult to set up and dissolve / higher
consent of other partners is required set up cost

56
Q.13

Private limited company Public limited company / Listed company

1. The firm does not need to disclose its 1. Shares (i.e. ownership) are freely
Advantages accounting information to the public. transferrable
(Pros) 2. Lower risk of being taken over 2. Wider source of capital as it can raise
capital by issuing shares to the public

1. Difficult to transfer the ownership as the 1. The firm needs to disclose its accounting
Disadvantages consent of other shareholders is required information to the public
(Cons) 2. Narrower source of capital as it cannot 2. Higher risk of being taken over
issue shares to the public

Q.14

To franchisor (e.g. 特許授權方 / 賣品牌名) To franchisee (e.g. 加盟者 / 買品牌名)

1. Lower cost of expansion 1. Franchisees can obtain wide range of

2. Enjoy stable income: franchisor can support from the franchisor.
receive franchise fees regularly and share 2. Lower average cost of inventory as
franchisees’ profits. buying inventory in bulk may enjoy larger
Advantages 3. Easy access to a new / overseas market as discount.
franchisees are more familiar with the 3. Lower business risk: the franchised stores
local business environment. have built up goodwill and their products
4. Franchisors can share the promotional and are well accepted by customers.
management fees with the franchisee
1. Franchisees may set up his own business 1. Franchisees need to share the promotion
to become a competitor. fees with franchisor.
2. If a franchisee manages his business 2. Franchisees need to share the profit with
poorly, reputation of the whole franchise franchisor.
business will be adversely affected. 3. Less autonomy in daily operation as
Disadvantages
3. It is difficult to wholly control the franchisees have to follow the standard
operation style of franchisees. operation mode of the franchisor.
4. Reputation may be adversely affected if
other franchisees do something that harm
the image of the franchise business.

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Q.15
What is meant by franchise? States the characteristics of a franchise.

A franchise is a business arrangement in which the franchisor allows the franchisee to sell its goods and services, in
return for a franchise fee.

Characteristics of a franchise
1. Franchisor (特許授權方) receives franchise fees regularly and share franchisees’ profit.
2. Franchisees (加盟者) can obtain wide range of support from the franchisor.
3. Franchisees’ operations are standardized and controlled by the franchisor.
4. Franchisees need to share promotional expenses with franchisor.
5. Most franchises have built up a good reputation and good brand name for their products or services.

Q.16
What is meant by joint venture? State the characteristics of a joint venture.

Two or more businesses form a new business entity to carry out joint project(s).
❖ They pool their resources (e.g. different assets, technologies, knowledge and expertise) together to carry out
joint project(s).

Characteristics of a joint venture

1. A joint venture is an entity independent from all its partners.
2. Joint venture partners usually bring in different types of assets, technology, knowledge and expertise.
3. Joint venture partners are usually involved in managing the business.
4. A joint venture can be terminated with the consent of all the joint venture partners.

Q.17
State the advantages of forming a joint venture.

1. More capital can be contributed by joint venture partners.

2. Business risks can be shared among joint venture partners.
3. Joint venture partners can share with each other their expertise.
4. Joint venture partners can enjoy economies of scale.
5. It is easier for a firm to enter a new market if it forms a joint venture which local firms who know local
market well and have local connections.

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Q.18
State the disadvantaged of forming a joint venture.

1. There may be disagreement and dispute among partners which may adversely affect the joint venture’s
operation performance.
2. It may lead to a leakage of information.
3. It may lead to a loss of autonomy as a joint venture partner has to discuss matters related to the business with
other partners and seek their consent.

Q.19
State THREE ways that a company can use to enhance the awareness of business ethics.

1. Emphasizing the importance of business ethics in recruitment

2. Compiling a code of ethics for all staff to follow
3. Providing education and training courses on business ethics
4. Rewarding ethical practices and punishing unethical practices
5. Demonstrating commitment to ethical practices by senior management

Q.20: 2012_PP_Q.1
A business should be responsible to various stakeholders. List three types of stakeholders in a construction company
and explain how the company can ethically fulfill its social responsibilities to each of them.
• A safe and healthy working environment
1. To employees • A reasonable wage rate and welfares.
• Fair and transparent appraisal system
• Assure property quality, i.e. meets the standard set by the government.
2. To customers • Sell the product (e.g. housing property) at a reasonable price.
• Do not provide exaggerate information
• Honours the contract
3. To suppliers
• Make payment to suppliers timely.
• Provide true and fair financial information of the company when applying loan
4. To creditors (bank)
• Pay interest and principal to creditors on time.
• Pay taxes on time.
5. To the government • Do not evade tax
• Make business decision that fulfill legal requirement
Make efficient use of the capital from owner (i.e. shareholders) to generate reasonable
6. To the owner
returns to the owner (i.e. shareholders)
• Reduce the amount of pollution
To the Community
7. • Provide more job opportunities
and Society
• Active participation on voluntary work

59
Q.21: 2012_Q.6
When a business closes / terminates its operation, what are the adverse effects to its stakeholders?

1. To lenders Lenders may fail to collect part or all their money lent to the business.

2. To customers Customers may fail to receive products / services they paid for.

Suppliers may fail to collect all the payments for their goods sold or services
3. To suppliers
provided.

4. To the government The government may fail to collect the tax due.

Q.22
What benefits can a business get from being ethical and socially responsible?

1. Have better business reputation.

2. Attract customers who are also concerned about social responsibilities.
3. Raise staff loyalty, which can help to lower the staff turnover rate and maintain a stable team of staff.

Q.23
What are the possible loss to a business if it is not socially responsible to its stakeholders?

1. May lose customers → lower sales revenue → lower profit

2. May have conflicts with employees → lower morale → lower productivity
3. May reduce business reputation → lower sales revenue → lower profit
4. May have difficulties in raising capital → not enough money for expansion / capturing investment
opportunities
5. May face legal punishment / may be asked for compensation by customers

Q.24
How business ethics and social responsibilities affect business decision?

1. A business should look after interests of different stakeholders and take their concerns into consideration
when making a business decision
2. Don’t just follow government law when making a business decision.
3. Consider the possible effects or consequence of business decisions to different stakeholders

60
 Management & Finance 2: Managers and Management

Q.1
Explain the importance of management.

1. Enhance the efficiency use of resources of the business.

2. Help staff achieve the goal of the business effectively.

Q.2
What is the purpose of planning in management / what are the reasons for making plans?

1. To anticipate potential problems and take precautionary measures or make alternative arrangements
2. To provide direction to employees
3. To clarify roles and responsibilities

Q.3
What is the process of planning?

Step 1: Identify company’s goals / objectives.

Step 2: Figure out different possible alternatives to achieve the goal

Step 3: Evaluate the alternatives figure out in step 2

❖ Compare the advantages and disadvantages of each alternatives

Step 4: Make a decision on which alternative is to be used

Step 5: Implement the plans

❖ Put the plans into action, i.e. move to the second function of management, i.e. organizing

Q.4
What is the benefits of / reasons for setting a goal?

1. It provides clear directions to employees.

2. It helps control the progress of work and monitor the performance of employees.

61
Q.5
Dave is the CEO of a hotel. Recently, he has received a lot of complaints from customers. Dave then sets a goal for his
employees as follows:

“To decrease the number of complaints substantially in the near future.”

Briefly explain THREE characteristics of a SMART goal that are missing from the above goal. (3 marks)

Measurable: The goal does not specify a quantified number of decrease in complaints that is considered as
substantially.
Time-bound: The goal does not specify the required time to achieve the goal.
Attainable: The goal may not be achievable if the complaints are mainly about events that are not under
employees’ control.
Specific: The complaints may refer to oral complaints, written complaints, complaints about goods or
complaints about people, etc. The goal does not state clearly which type of complaints.

Q.6: 2015_Q.1
Annie operates a small guest house on Lamma Island for foreign traellers. She sets up an Internet booking system for
the guest house (渡假屋 / 賓館), with the following goal:

“To increase the number of Internet bookings substantially in the near future”

Briefly explain two characteristics of a SMART goal that are missing from the above goal. (4 marks)

Q.7: 2012_Q.7
Mary sets up an interior design firm on her own. List two criteria for setting good business goals for her. Explain each
with an example. (4 marks)

1. Measureable: e.g. achieve a 10% increase in profit

2. Attainable: e.g. earn a reasonable amount of profit
3. Time-bound: e.g. earn a certain amount of profits in the first year of operations

62
Q.8
What is the purpose of organizing in management?

To bring together physical, financial and human resources and develop productive relationship among them to
achieve organizational goals.

Q.9
What does an organisational structure show?

1. It specifies the responsibilities for each job position and their relationship
2. It shows how workers are grouped
3. It shows the position of each department or division in the organization
4. It shows how the lines of communication and authority flow

Q.10

Tall structure Flat structure

No. of levels / layers More levels / More layers Fewer levels / Fewer layers
Span of control Narrower span of control Wider span of control
Communication may take too long / Communication take shorter time /
Communication
poorer communication better communication
Longer decision-making process / Shorter decision-making process /
Decision making
Slower decision making Faster decision making
Management Lower flexibility in response to market Higher flexibility in response to market
flexibility changes changes
1. Narrow span of control allows for close 1. Improve communication
Pros of Tall supervision of employees. 2. Faster decision making
structures and Flat 2. Provide a clear line of responsibility, 3. Increase management flexibility in
structures line of authority, line of control and response to market changes
promotion structure.
1. Communication may take too long to 1. Managers may end up with a heavy
Cons of Tall travel through all the levels workload as too many people report to a
structures and Flat 2. Slower decision making single manager.
structures 3. Lower management flexibility in
response to market changes

63
Q.11: 2015_Q.4
Peter plans to expand the business and set up three departments to take care of the garment business in Hong Kong,
Macau and Shenzhen respectively. A business consultant reminds him that other forms of departmentalization may
be also considered.
(b) State the form of departmentalization planned by Peter. (1 mark)
(c) Briefly describe two other forms of departmentalization that could be adopted by Peter’s business. (4 marks)

Q.12
What is the purpose of leading in management?

To guide, direct, and motivate people to work towards achieving organizational goals.

64
Q.13
Autocratic Participative / Democratic Laissez-faire
Features 1. Little or no input from group 1. Leaders invite input (ideas, 1. Delegate authority to team
members opinion, suggestions and so members and allow them to
2. Leaders make almost all of on) from employees when make the decisions.
the decisions making decisions. 2. Leaders provide little or no
3. Group members are usually 2. The staff is given enough guidance to the subordinates.
not trusted with decisions or information about company
important tasks issues and a majority vote in Point to note:
4. Work tends to be highly decision making. Many researches show that
structured and very rigid 3. Participative leaders are laissez-faire leadership style
5. Creativity and out-of-the usually humble enough to leads to the lowest productivity.
box thinking are discouraged accept others ideas for
6. Rules are important and tend improvement.
to be clearly outlined and
communicated
Pros 1. Quick decisions can be 1. Widen managers’ exposure 1. This style gives workers a
made. (i.e. enhance to different ideas & sense of challenge,
operational efficiency) suggestions commitment and satisfaction
2. Obtain staff support for in their jobs.
business policies, i.e. lowers
the resistance from staff and
speeds up implement
process.
3. Improve mutual
understanding between
management and staff
4. Usually result in a variety of
solutions / creative solutions
Cons 1. Usually lower employees’ 1. Usually slow down the 1. Since team members receive
motivation, i.e. workers may process of making decisions little to no guidance, they
become passive and less and taking action. might not really know their
committed to their work role within the group.
2. May dilute the quality of 2. May lead to chaos when
2. Usually result in a lack of expertise involved in a workers just focus on their
creative solutions to decision-making process. own tasks and fail to
problems cooperate with others.
3. Leaders are uninvolved and
withdrawn, which may lead
to a lack of cohesiveness
within the group.

65
Q.14
State the process of “Controlling”.

1. Setting performance standards

2. Measuring actual performance
3. Comparing actual performance with standards
4. Taking corrective actions

Q.15
Suggest two performance standards / performance indicators used for measuring the production department (生產部).

1. Quantity of goods produced per labour hour

2. Number of defective goods produced (quality)
3. Average cost of goods produced

Q.16
Apart from increases in sales, list three performance standards that Best Insurance International Ltd should use to
monitor / measure its “marketing performance”.

1. Number of new customers

2. Number of customers who terminate the accounts
3. Number of customer complaints
4. Number of service awards
5. Positive media coverage

Q.17: 2012_MC_Q.6
State the process of controlling in a sales department (銷售部的檢討程序) of a business.

1. Set sales targets

2. Record sales of each salesperson
3. Compare the actual sales result with the sales target
4. Take corrective actions if falls outside the acceptable range, e.g. Adjust sales targets

66
Q.18: 2016_Q.5
John runs a supermarket. A business consultant advises John to improve the controlling functions of his supermarket.
(c) (i) What is the purpose of controlling in management? (1 mark)
(ii) List the steps in the controlling process. (4 marks)

Q.19
State the advantages and disadvantages of practising division of work / division of labour.

Advantages Disadvantages
1. Assign the right person to do the right job. 1. Workers may have low job satisfaction as repeating
2. Practice make perfect the same task is boring.
3. Save time in job rotation 2. If one production stage has a problem, the entire
4. Facilitates the use of machines production process may be disrupted.
5. Facilitates supervision 3. Workers with specialized skills cannot perform
other tasks.

Q.20
Define unity of command and state the advantages of practising unity of command and problems that might arise if
unity of command is violated.

Unity of command states that each worker should take orders from and report to only one superior.

Advantages Problems that might arise if it is violated.

1. Avoid contradictory instructions from different 1. Contradictory instruction will cause confusion to the
managers. subordinates.
2. Subordinates have appropriate workload. 2. Subordinates may be overloaded if different
3. Clear chain-of-command / line of authority managers assign work at the same time.
facilitates supervision since no need to check what 3. Unclear chain-of-command / line of authority will
orders had been given by other managers cause conflicts between the managers.
4. Increase the accountability of both superior and
subordinates

67
Q.21
Define unity of direction and state the advantages of practising unity of direction.

Employees working on the same project have the same goal, i.e. there should only be “One leader and One plan”.

Advantages:
1. Employees working on the same project have the same goal so it improves coordination and team spirit
among team members.
2. There is only one leader/manager for each project and hence can avoid team members from receiving
contradictory instructions from different managers.
3. The plan will not go sidetrack because team members just need to focus on the only goal and method decided
by one manager.

Q.22
State the advantages of delegation and barriers of delegation.
Barriers of delegation
Advantages of delegation
(Sometimes, it is not suitable to delegate)
1. Managers can concentrate on more critical matters. 1. Supervisors do not know how to assign
2. Delegation can train and improve subordinates’ responsibility with appropriate authority.
ability and skills. 2. Supervisors are lack of confidence on
3. Subordinates will be more motivated and confident subordinates.
when more power are given to them. 3. Supervisors are too busy ➔ no time to monitor
subordinates.

Q.23
Define management by objectives and state the advantages and disadvantages of practising management by objectives.

Under management by objectives, managers at all levels meet their subordinates regularly to jointly set goal, choose
course of actions, discuss problems encountered and make decision.

Advantage / Benefits Disadvantage

1. Subordinates are more committed as they have 1. It is time consuming.
better understanding of firm’s objectives 2. It increases the workload of both superiors and
2. Subordinates have a better understanding of the subordinates.
objectives
3. Improved communication between manager and
subordinates
4. Better motivation to subordinates
5. Better control on subordinates’ progress

68
Q.24: 2013_Q.6
Explain THREE ways in which division of work could enhance the efficiency of a manufacturing company. (6 marks)

Q.25: 2014_Q.6b
Two managers of the same rank, David and Ellen, together supervise all the shop assistant. One day, an assistant in the
sportswear section took sick leave and David assigned a newly employed assistant to take her place. He asked her to
serve customers in the section for the rest of the day. At noon, Ellen asked his assistant to deliver a document to a
supplier.
(i) What principle of effective management has been violated in the above case? (1 mark)
(ii) Suggest two problems that might arise when the principle in (i) is violated. (4 marks)

(i) Unity of command

(ii) Problem:
❖ Contradictory instruction will cause confusion to the subordinates
❖ Unclear chain-of-command / line of authority will cause conflicts between the managers.

Q.26
State the tasks / functions / roles performed by human resources management department and its importance.
Tasks of human resources management
1. To ensure the company has right number and right kinds of workers (for different departments)
2. To recruit and select (i.e. screening 甄選) the most appropriate staff
3. To provide training to managers and workers to improve their performance, productivity and capability
4. To conduct employees’ performance appraisal, i.e. to evaluate workers’ performance with reference to
performance standard
5. To provide a fair and competitive compensation and benefits to attract and keep capable employees
6. To handle grievances of employees and promote good relationships among different parties
7. To ensure the company has observed all the labour regulations

Importance of effective human resources management

1. attract sufficient manpower with good qualifications or relevant experience to join the business
2. keep quality employees to work for the business and maintain the quality of goods or services the business
produces
3. motivate employees, increase their morale and enhance their commitment to the business

69
Q.27
State the tasks / functions / roles performed by finance management department and its importance.

Tasks of finance management

1. To develop financial plans and budgets to forecast short-term and long-term financial needs of a firm.
2. To monitor the actual cash inflow and outflow against the plan and taking remedial action when there is
shortage of fund.
3. To determine sources of financing and acquire enough fund to meet financial needs of the company, e.g.
Equity financing (issue shares) or Debt financing (e.g. issuing bonds, obtaining loans from bank).
4. To assess different investment projects and determine which projects are worth investing.
5. To provide periodic reports on financial performance and financial position of the company.
6. To formulate debt collection policy of the company.

Importance of effective finance management

1. acquire enough cash flow to meet the firm’s short-term and long-term financial needs.
2. use money effectively, i.e. invest the money on the most profitable projects.
3. avoid cash shortage problem and cash idle problem.

Q.28
State the tasks / functions / roles performed by operation management department and its importance.

Tasks of operation management

1. To plan for production capacity to meet the market demand.
2. To determine facility location (that can minimise production costs and increase operational efficiency.)
3. To design the production process and layout.
4. To schedule work, i.e. to determine how long each production task takes to complete and set starting and
ending times for each task.
5. To manage inventory
6. To conduct quality control and set standards to ensure goods are of high quality.

Importance of effective operation management

1. produce and distribute goods and services at a lower cost.
2. increase productivity of workers and utilize resources better.
3. keep inventory at a reasonable level to reduce storage cost and lower the risk of inventory shortage.
4. maintain the quality of goods and services at a standard to retain existing customers and attract new
customers.

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Q.29: 2012_Q.2
Mr Ho is a toy manufacturer. Recently, he has received a number of complaints from his customers about paint peeling
off from his toys. A management consultant tells Mr Ho that having good operation management can reduce the
number of defective items.

In what ways could operations management help Mr Ho to reduce the number of defective items? Give two ways. (4
marks)

1. Revision of design of the production process: to locate and correct the problem that leads to the defect
2. Inventory management: ensure a reasonable stock level to avoid wear and tear from over-storage
3. Quality control: set standards to ensure goods provided are of high quality

Q.30
State the tasks / functions / roles performed by marketing management department and its importance.

Tasks of marketing management

1. To identify and/or create market opportunities (4P → Product)
2. To determine market position (4P → Price)
3. To select target market
4. To formulate and evaluate marketing strategies
5. To implement marketing strategy and monitor marketing activities
6. To manage customer relationship

Importance of effective marketing management

1. introduce products that meet customers’ taste
2. set a competitive and profitable market price for its products
3. response to the market change timely
4. promote its products to its customers in various channels
5. generate more sales and a greater market share
6. build up and maintain groups of loyal customers of the business

71
Q.31
State the tasks / functions / roles performed by information management department and its importance.

Tasks of information management

1. To collect internal and external data which is useful to the company
2. To process data into meaningful information (to facilitate company’s operations and decision making).
3. To store and protect information, i.e. to strengthen the capacity of storing and improve the security of
information storage
4. To distribute reliable and timely information to decision makers
5. To develop a good information system to facilitate the flow of information among people in the company

Importance of effective information management

1. store and protect useful information for later use
2. facilitate the flow of information between people of different departments
3. save time in using information to make business decision

Q.32: 2013_Q.4
Information management can support the human resources department of a company in different ways. List three of
them. (3 marks)

1. Store personnel data (員工個人資料)

2. Handle payroll (薪水帳冊；發薪名單)
3. Take attendance
4. Facilitate staff placement (安置 / 安排職位 / 安排工作)

Q.33
State the tasks / functions / roles performed by risk management department and its importance.

Tasks of risk management

1. To identify the possible risks the business exposes to, e.g. fire, burglary, flooding
2. To formulate risk management strategies to manage the risks, e.g. minimize the loss through risk transfer, risk
reduction, risk assumption, risk avoidance.
3. To monitor how well the risks are controlled

Importance of effective risk management

1. identify the possible risk that the business may face
2. minimize the loss of a business when a risk occurs

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Q.34
There are risk of food poisoning when hotels offers buffet dinner. In order to manage the risk of food poisoning, hotel
adopts the following risk management strategies.

1. Risk avoidance Not to offer high risk food like oyster

When food poisoning really occurs, give the customer some free coupons / gifts as
2. Risk assumption
compensation
3. Risk reduction Offer high risk food in small quantity each time like 4 pieces of sasimi each time
4. Risk transfer Buy insurance

Q.35
State the characteristics of Small and Medium Enterprises (SMEs) in Hong Kong.

1. SMEs are usually owned and managed by single individuals.

2. SMEs usually have limited capital and limited resources.
3. SMEs are usually small in production scale.
4. Family members of the owner are usually involved in managing the business.
5. SMEs usually provides products and services that complement large companies.
1. SMEs provide unique products to satisfy the needs of the Hong Kong market.
2. SMEs are more willing to provide specialized and tailor-made goods and services to cater for the needs
of a particular group of customers.
3. SMEs usually cover market segments which are not served by large companies.
4. SMEs provide materials and services to large businesses.
6. SMEs are usually innovative, eager to explore new opportunities and are more receptive to new ideas.
7. SMEs usually have greater flexibility in responsive to market changes.

Q.36
State the importance of SMEs to the local economy / Hong Kong economy.

1. Providing unique, specialized and tailor-made goods and services

2. Providing jobs opportunities
3. Introducing new products and services
4. Supporting large companies
5. Promote competition

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Q.37
State the importance of entrepreneurship in business development (企業家精神 = 創業精神)

1. Entrepreneurship brings innovative products, new products and creates new business to the market.
2. Entrepreneurship promotes economic growth.
Entrepreneurship brings new products, new idea and new ways of using resources which promotes
3.
competition in the market.

Q.38
Compare the characteristics of SMEs VS MNCs.

SMEs MNCs
(Small and medium enterprises) (Multinational Corporations)
中小型企業 跨國公司
SMEs are usually relatively small in MNCs are usually larger in production
1. Business scale
business scale. scale.
SMEs in HK are usually private limited MNCs are usually listed companies (or
2. Business ownership
companies. public limited companies).
SMEs are usually managed by the MNCs are usually managed by
3. Management owners and their family members. professional managers (employed by the
owners / shareholders).
SMEs are usually labour-intensive
MNCs are usually capital-intensive and
4. Operations operations and use relatively simply
technology-based.
technology.
SMEs are usually financed by the
Finance / MNCs usually raise capital by issuing
5. owners’ personal savings and family’s
source of capital shares and bonds.
financial support.
SMEs usually have simple organization MNCs usually have more complex
structures and hence are more flexible in organization structures and hence are
6. Flexibility
decision making and can response to slow in decision-making and loss
market change quickly. flexible in response to market change.

74
 Management & Finance 3: Personal Financial Management

Q.1
Define the following terms
Time value of money means that a dollar received today is worth more than a dollar
1. Time value of money
received in the future.
2. Present value (PV) Present value is the current value of a future sum of money.
3. Future value (FV) The value of a present amount of money at some point in the future.
4. Compounding Compounding means that the interest return is reinvested to make further return.
5. Discounting Discounting is the process of finding the present value of future cash flow(s).
The effective rate of return is the actual rate of return (or actual interest rate) on an
Effective rate of
6. investment annually when compounding occurs more than once. It is also called the
return (ERR)
effective annual rate (EAR) or effective interest rate.
Net present value NPV is the present value of future cash inflows, less initial outlay.
7.
(NPV) ❖ NPV = PV of Inflow (收入現在值) – PV of Outflow (支出現在值)

Q.2
State the advantages and disadvantages of buying bonds and shares.
Buying shares over buying bond Buying bonds over buying shares
Advantages 1. May receive more dividend when the 1. Can receive fixed and stable interest
company makes a great profit income
2. May earn capital gain when share price 2. Can get back the principal when the bond
increases a lot due to good operating matured
performance of the company 3. Higher priority of getting paid than
3. Can get voting right in annual general shareholders if the company is liquidated.
meeting to affect company’s policies 4. Dividends of ordinary shares are not
obligatory and may vary.
5. Share prices are more fluctuated and may
incur capital loss when share price goes
down.
Disadvantages 1. May receive no dividend if the company 1. Bondholders do NOT have voting rights
decides not to distribute dividend in annual general meetings.
2. May suffer from capital loss when share 2. Cannot receive more interest income
price goes downwards due to poor when the company makes a great profit
operating performance of the company
3. Lower priority of getting paid than
bondholders if the company is liquidated.

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Q.3
(a) Give examples of revolving loan and non-revolving loan.
(b) State the advantages and disadvantages of revolving loan and non-revolving loan respectively.

Revolving loan Example: Credit card and overdraft

❖ Adv: higher flexibility than non-revolving loan
❖ Disadv: higher interest rate than non-revolving loan
Non-revolving Examples: Personal loan, mortgage loan
loan ❖ Adv: lower interest rate than revolving loan
❖ Disadv: lower flexibility than revolving loan

Q.4
State the advantages and disadvantages of using bank overdraft.

Advantages: Disadvantages:
1. Prevent a cheque from being dishonoured 1. Higher interest rate when compared to non-
revolving consumer credit

Q.5
State the advantages and disadvantages of using credit card.

Advantages: Disadvantages:
1. High interest rate charged on unpaid balance.
1. Safe e.g. do not need to carry a 2. Risk of credit card abuse
large amount of cash 3. Rejected by certain shops
2. Convenience e.g. Worldwide acceptable 4. Risk of being used by another person with a forged
3. Defer payment e.g. can purchase goods or signature to make payment
services without paying cash
instantly
4. Privileges e.g. can enjoy discount or
special gifts

Q.6
State the advantages and disadvantages of personal loan.

Advantages: Disadvantages:
Interest rate is lower than that of credit card, bank The repayment amount and schedule is less flexible.
overdraft.

76
Q.7
State the ways to improve or maintain a high credit score / credit rating.

1. Make loan repayments on time and for the correct amount.

2. Limit your number of loan applications.
3. Keep your outstanding debt as low as you can. Continually extending your credit close to your credit limit will
badly affect you credit rating.
4. Never ignore overdue bills. If you encounter any problems repaying your debt, call your creditor to make
repayment arrangements.

Q.8
State the importance / benefits of maintaining a good personal credit record / credit history

1. Lower cost of loans Interest rate charged by banks will be lower.

Increase the chance of
2. Banks are willing to lend money to people of good personal credit record.
getting loans
Can obtain a higher credit limit than people with similar level of income but
3. Higher credit limit
lower credit rating.

Q.9: 2013_Q.1
(a) Many people are using credit cards to purchases goods and services. Explain two benefits for customers of using
credit card. (4 marks)
(b) Explain one reason why credit card companies are more willing to issue credit cards to applicants with good
personal credit records. (2 marks)

(a) Benefits:
1. Defer payment: e.g. can purchase goods or services without paying cash instantly
2. Safety: e.g. do not need to carry large amounts of cash
3. Convenience: e.g. worldwide acceptance
4. Privileges: e.g. can enjoy discount or special gifts
(b) Reasons:
1. Higher chance of collecting debt on time
2. Lower default risk

77
Q.10
Define firm-specific risk and market risk.

Firm-specific risk refers to risks that are associated with the unique features of a particular
business.
Firm-specific risk /
e.g., a strike or bankruptcy of a particular firm
Un-systematic risk/
diversifiable risk
Investors can diversify such risk by adding more securities of different types of different
firms into the investment portfolio.

Market risk refers to the possibility that market fluctuation affects the value of an
investment
Market risk /
e.g., change in interest rate, stock crisis, economic downturn
systematic risk /
non-diversifiable risk
Investors CANNOT diversify such risk by adding more securities of different types of
different firms into the investment portfolio.

Q.11: 2012_PP_Q.4
Mr Lam plans to use all of his savings to buy ‘third-liners’ listed on the Growth Enterprise Market. His friend suggests
him to diversify risk by switching some of his investment to ‘blue-chips’ listed on the Main Board.
(a) Give two differences between ‘third-liners’ and ‘blue-chips’ from the investors’ perspective. (4 marks)
(b) Which type of financial risk cannot be avoided even if Mr Lam shifts part of his investment to ‘blue-chips’?
Explain. (2 marks)

(a) Third liners Blue Chips

Volatility of stock prices larger smaller
Turnover of stock trading smaller larger
Risk associated higher lower
Expected Return higher lower

(b) Market risk

It is affected by overall financial market which is uncontrollable.

78
Q.12: 2015 Q.3
Calvin is a retail investor. He invest $200,000 to buy shares listed on the Hong Kong Stock Exchange through a
licensed stockbroker in Hong Kong. Explain two ways in which investing in shares might benefit an investor. (4
marks)

Q.13: Sample paper_Q.4

Mr. Lee retired two years ago and has kept the $1,000,000 retirement fund in the form of a fixed deposit at an interest
rate of 4.5% per annum. His friend suggests that investment in other financial products may yield a higher return.
(i) Name TWO types of financial products available in the Hong Kong securities market that Mr. Lee might
consider.
(ii) Explain TWO factors Mr. Lee should consider in deciding whether to invest in other financial products
instead of keeping the entire amount in a fixed deposit.

(i) 1. Shares
2. Bonds
(ii) Factors to consider:
1. Expected return, e.g. dividend or interest rate of the financial product
2. Risk-tolerance level of the investor
3. Liquidity of the financial products
4. Time and effort involved in monitoring the investment

Q.14: 2014_Q.4
Tom plans to get married and buy a flat three years later. The budgeted price of the flat is $3,000,000. The down
payment will be 30% of the flat’s price. To save up for the down payment, Tom decides to make a time deposit in a
bank. A friend of Tom advises him to invest the sum of money in securities for higher return. Given that Tom needs
the amount three years later for the down payment on the flat, would you advise him to invest in government bonds or
ordinary shares? Explain why.

Government Bond (1m)

Investment risk is lower (1m) because

❖ A fixed periodic income will be received in the coming 3 years (1m) OR
❖ It is guaranteed that he must be able to get back the principal 3 years later (1m)

79
Q.15
State features of the following three finance products.

Ordinary shares / common Preference shares /

Debentures / Bonds
stock preferred stocks

Holder’s role Owner Owner Creditor

Voting right in annual

Yes No No
general meeting

Regular return /
Dividend return Dividend return Interest return
Investment income

Capital gain when share Capital gain when share Capital gain when bond
Other return: Capital gain
price increases price increases price increases

Fluctuation of price More More Less

Amount of return Variable Fixed Fixed

Yes
Redemption obligation of
No No The issuer needs to
issuer
redeem at maturity date.

Order of return receipt 3 2 1

Higher risk Even lower risk

Lower risk
Because price are more Because price are less
Risk Because dividend return is
fluctuated and dividend fluctuated and interest
fixed.
return is variable. return is fixed.

80
Q.16
Explain the importance of personal financial planning at different life stages.

1. Young single Possible financial needs / financial objectives:

1. Payment for settling student loan
2. Payment for further education / career training
3. Payment for insuring on earning ability
4. Create and accumulate wealth

2. Just married Possible financial needs / financial objectives:

1. Payment for insuring on earning ability
2. Plan for larger family
3. Create and accumulate wealth

3. Married with Possible financial needs / financial objectives:

young children 1. Payment for stronger insurance coverage, e.g. medical insurance
2. Payment for children’s educational fees (kindergarten & primary education)

4. Married with Possible financial needs / financial objectives:

older children 1. Payment for children’s educational fees (secondary & tertiary education)
2. Payment for stronger insurance coverage, e.g. medical insurance
3. Plan for daily living expense of preferred lifestyle after retirement
4. Plan for medical expenses / adequate health insurance after retirement

5. Pre-retirement Possible financial needs / financial objectives:

1. Payment for stronger insurance coverage, e.g. medical insurance
2. Plan for daily living expense of preferred lifestyle after retirement
3. Plan for medical expenses / adequate health insurance after retirement

6. Retirement 1. Possible financial needs / financial objectives:

2. Payment for daily expenses to maintain her desired lifestyle
3. Payment for medical expenses
4. Payment for contingencies, e.g. urgent medical expenses
5. Estate planning

81
Q.17: For MC
Basic information about Monthly Contributions.

Monthly mandatory contributions (強制供款)

Mandatory Contributions
Monthly Relevant Income
Employer Portion Employee Portion
Less than $7,100 Relevant income x 5% No contributions required
$7,100 to $30,000 Relevant income x 5% Relevant income x 5%
More than $30,000 $1,500 $1,500

The current minimum relevant income level of $7,100 per month applies to contribution periods commencing on or
after 1 November 2013 while the current maximum relevant income level of $30,000 per month applies to
contribution periods commencing on or after 1 June 2014.

Voluntary contributions (自願性供款)

In addition to mandatory contributions, both the employer and the employee can choose to make extra voluntary
contributions. There is no restriction on the amount of voluntary contributions.

Tax concessions (稅務減免)

Employees can claim tax deductions for their employee’s mandatory contributions made to an MPF scheme, subject
to the maximum amount as follows:
(i) $15,000 for the year of assessment 2013-14;
(ii) $17,500 for the year of assessment 2014-15; and
(iii) $18,000 for the year of assessment 2015-16 and each subsequent year of assessment.

Any voluntary contributions made by employees are NOT tax deductible.

82
Q.18
Who needs to be enrolled in MPF?

1. All full-time and part-time employees who are aged 18 to aged below 65 and employed under a continuous
contract for at least 60 days
2. Casual employees (散工) in the catering (飲食業) or the construction (建築業) industries are required to join
an MPF scheme regardless of the employment period.
3. All self-employed persons aged 18 to aged below 65

The 60 days rule

❖ It is counted by calendar days (including holidays). The number of the employee’s actual working days or
hours is irrelevant.

Q.19
Who can be exempted (豁免) from MPF?

1. Domestic helpers / Domestic employees

2. Self-employed hawkers
3. Persons covered by statutory pension and provident fund schemes, such as civil servants and teachers 公積
金;
4. A person (外國人) who has been granted an working visa for permission to work in Hong Kong for a period
of 13 months or less, or who are covered under a retirement scheme in their home country
5. Members of occupational retirement schemes which are granted MPF exemption certificates
6. Employees who are employed for less than 60 days (except the casual employees of construction and catering
industries)
7. Employees employed in the European Union Office of the European Commission in Hong Kong SAR

Q.20
State the condition of early withdrawal of total amount of money in MPF accounts.

1. Early retirement at the age of 60

2. Permanent departure from Hong Kong
3. Total incapacity (無工作能力)
4. Terminal illness: likely to reduce your life expectancy to 12 months or less.
5. Death
6. Small balance: $5,000 or less, and no contributions have been made to an MPF scheme for 12 months

83
Q.21
State the rights and responsibilities of employees and self-employed persons under MPF scheme

Rights 1. If you are aged 18 to 64 and employed for 60 days or more, your employer must enroll
you in an MPF scheme and make timely contributions.
2. You can claim tax deductions for your mandatory contributions made to an MPF scheme.
3. You can apply for withdrawal of accrued benefits when you reach 65 or meet the
circumstances stipulated in the Mandatory Provident Fund Schemes Ordinance.
4. You can be exempted from MPF if you meet the circumstances stipulated in the
Mandatory Provident Fund Schemes Ordinance.
5. You can choose to make extra voluntary contribution in addition to the regular mandatory
contributions.
6. You can, ONCE a year, transfer your portion of mandatory contributions and investment
returns in your contribution accounts to an MPF trustee and scheme of your own choice.
7. You can choose funds provided by the trustee according to your risk tolerance level.

Responsibilities 1. Make MPF contribution every month

2. Read Mandatory Provident Fund Schemes Ordinance carefully
3. Pay close attention to own MPF account

Q.22
State the rights and responsibilities of of individual investors and consumers of financial services.

1. Investors have the right to ask for rationale behind an investment recommendation made
Right by a broker or bank
2. Investors have the right to file a complaint against a broker or bank
1. Investors have the Duty / Responsibilities to understand the terms of a contract before
Responsibilities signing it
2. Investors have the Duty / Responsibilities to monitor activities on own account by
checking account statements, transaction documents from time to time
3. Investors have the Duty / Responsibilities to understand the characteristics and risks of
the financial instruments

84
Q.23: 2016 Q.2
Explain how the share price of a property development company in Hong Kong changes in a booming local economy.
(3 marks)

Q.24
State the factors that affect the share price of a company.

1. General economic condition is good or bad

2. Political condition is stable or not
3. Market interest rate raises or falls
4. Industry prospects is good or bad
5. Speculation: whether there is upside speculation (買升) or downside speculation (買跌/沽空) on the shares
6. Company performance is good or bad
7. Dividend policy of the company
8. Frequency of change in management
9. Market atmosphere is good or bad
10. Appearance of new / strong competitors
11. Production cost raises or falls

Q.25

Why buy stocks listed in Main Board? Why buy stocks listed GEM?
The companies has a sounder and stronger
financial status as they have passed a The companies has a higher expected
Companies
profit or revenue test and higher capital growth rate in future return.
requirement.
The companies has a higher expected
The companies has a more stable return.
Return and risk return.
• lower risk and lower expected return.
• Higher risk, higher expected return.
Turnover (交易額) is usually higher. That
Turnover / liquidity means they have higher liquidity, i.e. easy
to sell the stocks (套現).
Fluctuation in stock price Stock prices is generally more stable.

85
Q.26
What are four sub-indexes of Hang Seng Index (HSI).

Sub-indexes Examples
1. Finance HSBC Holdings (匯豐銀行)
(金融分類指數) Hang Seng Bank (恆生銀行)
2. Utilities China Light and Power Holdings (中電控股)
(公用事業分類指數) HK & China Gas (香港中華煤氣)
3. Properties SHK Properties (新鴻基地產)
(地產分類指數) Sino Land (信和置業)
4. Commerce and Industry MTR Corporation (港鐵公司)
(工商業分類指數) Cathay Pacific Airline (國泰航空)

Q.27
State the importance / functions of Hang Seng Index.

1. Investors can use HSI to assess the general performance of shares listed in Hong Kong.

2. Investors can use HSI to compare performance of the Hong Kong stock market over time
(比較香港 現在與過去 股票市場的表現)

3. Investors can use HSI to compare performance among different stock markets
(比較香港股票市場及其他國家股票市場同時期的表現)

4. HSI reflects market atmosphere towards stock market

5. HSI serves as benchmark for evaluating performance of investment portfolio / different financial products

86