CIMA E1 Technology in a digital world: practice questions with answers

Question 1

Fenwright Ltd now uses a cloud accounting package. Staff log in through a web browser, the vendor hosts and maintains the application, and the vendor applies all upgrades and security patches. Fenwright pays a monthly fee per user. Which cloud service model is this?

1. A Infrastructure as a service (IaaS)
2. B On-premise licensed software
3. C Software as a service (SaaS)
4. D Platform as a service (PaaS)

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Answer: C. Cloud service models differ in how much the provider manages. IaaS supplies computing infrastructure; PaaS adds the operating system, middleware and development tools; SaaS supplies a finished application that the provider runs and updates. A browser-based accounting package that the vendor hosts, upgrades and patches, paid for per user, is SaaS.

Question 2

Harcourt Insurance has built a model that learns from five years of expense claims, each labelled by investigators as 'fraudulent' or 'genuine', and now gives every new claim a fraud-risk score. The model's accuracy improves as more investigated claims are added. Which technology is being used?

1. A Descriptive analytics dashboard
2. B Supervised machine learning
3. C Distributed ledger technology
4. D Robotic process automation

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Answer: B. Machine learning is a branch of AI in which systems learn patterns from data rather than being explicitly programmed with rules. In supervised learning, the training data is labelled with known outcomes (here 'fraudulent' or 'genuine'), and the model learns to predict the label for new cases. Its predictions are probabilistic, so flagged claims still need investigation by people.

Question 3

Trevanna Tickets sells concert tickets online. Its transaction volumes are usually low, but they rise about 40-fold for a few hours whenever tickets for a major tour go on sale. Trevanna has moved its website to a public cloud platform. Which characteristic of cloud computing is most valuable to Trevanna?

1. A Data sovereignty: a public cloud provider guarantees that all customer data stays in Trevanna's own country
2. B Ownership: Trevanna owns the provider's servers and can therefore record them as its own non-current assets
3. C Elasticity: computing capacity can be scaled up automatically for peak demand and scaled down afterwards, with Trevanna paying mainly for what it uses
4. D Isolation: the cloud platform is not connected to the internet, which removes all cyber-security risk

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Answer: C. A key feature of cloud computing is elasticity (rapid, on-demand scalability): resources can be added automatically when demand rises and released when it falls, with charges based mainly on use. For a business with short, extreme peaks like Trevanna, this avoids the cost of owning enough servers for the peak, most of which would be idle for the rest of the year.

Question 4

Halvard Agricultural Machinery holds about $3.2 million of slow-moving spare parts at its regional depots so that it can repair customers' tractors quickly. It is considering installing additive manufacturing (3D printing) equipment at each depot. Which is the main benefit to Halvard?

1. A All spare parts can then be made with no material, energy or design costs once the printers have been bought
2. B Many parts can be printed on demand from digital design files, reducing the inventory of spare parts that must be held and the risk of it becoming obsolete
3. C Each customer's tractor will report its own faults automatically to the nearest depot over the internet
4. D The history of each spare part will be recorded on a shared, tamper-resistant ledger that suppliers can also see

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Answer: B. Additive manufacturing (3D printing) builds objects layer by layer from a digital design file. Its main business benefits include producing items on demand and close to where they are needed, lower inventory of spare parts (and less working capital tied up), less obsolescence and easier customisation. Materials, energy, printers and design work still cost money, and not every part may be suitable for printing.

Question 5

Mertz Group's 14 subsidiaries trade extensively with each other. At each month-end their intercompany balances often disagree and take days to reconcile. The group plans to record all intercompany transactions on a single permissioned distributed ledger shared by the subsidiaries. What is the main benefit for the finance function?

1. A Each transaction is recorded once on a shared ledger that both parties see, so balances agree and reconciliation work largely disappears
2. B Transactions on the ledger are anonymous, so subsidiaries no longer need to identify which group company they are trading with
3. C Once transactions are on the ledger, intercompany balances no longer need to be eliminated when the group accounts are consolidated
4. D A distributed ledger operates without any access controls, so any member of staff can post corrections to speed up the month-end close

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Answer: A. With traditional systems each subsidiary records its own side of an intercompany transaction, so differences in timing, amount or coding have to be reconciled at month-end. A shared distributed ledger holds one agreed record of each transaction, visible to both parties and very hard to alter, so the balances match by design. This speeds up the close and frees finance time. Consolidation adjustments are still needed, and a permissioned ledger restricts access to approved participants.

Question 6

Torridge Water uses a robotic process automation (RPA) bot to copy meter-reading totals from a supplier's web portal into its billing system each morning. The bot stops working on the day the supplier redesigns the portal's screens. What does this best illustrate about RPA?

1. A Bots learn from their errors and will adapt automatically to the new screens within a few days
2. B Bots follow fixed rules for the screens they were configured on, so changes to those applications can make them fail
3. C Bots can work only with data held on a blockchain, so the portal must first move to a distributed ledger
4. D Bots need the supplier's written permission each time they run, and the supplier has now withdrawn it

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Answer: B. RPA is well suited to high-volume, rules-based tasks, but it is brittle: bots depend on the exact screens, fields and steps they were built for. Changes to source applications, unexpected data formats or exceptions can stop them. Organisations therefore need monitoring, exception handling, change management with system owners and staff able to maintain the bots.