Day: November 20, 2024

Accounting Multiple Choice Question – 20 November 2024

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Alex Ltd is a textiles company that developed a new product for use in the sporting market.

Tests on the product proved successful although in extreme conditions the product was shown to be very perishable and dissolved into dust.

After much deliberation, Alex Ltd decided not to launch the product.

In response to the risks highlighted in the product tests, this decision is an example of managing risk through?

Select ONE answer:

  1. Risk avoidance
  2. Risk reduction
  3. Risk transfer
  4. Risk acceptance

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct == > Risk reduction (2) would imply taking action to prevent any chance of the product perishing,(4) would imply doing nothing and proceeding to launch the product; and risk transfer (3) might imply taking out liability insurance or selling the product since there is no liability in the event of a perishable event. By not going ahead the company is simply avoiding the risk (1).
  2. Not correct
  3. Not correct
  4. Not correct

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