Free CIPS L4M7 Exam Questions

Become CIPS Certified with updated L4M7 exam questions and correct answers

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Total 380 Questions | Updated On: Apr 03, 2026

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Question 1

XYZ Ltd is looking for new office space overseas. To keep the overhead expense minimal, it chooses leasing rather than purchasing new office. In leasing contract, which of the following costs are most likely to be attributable to the lessee?

1. Disposal costs

2. Rentals

3. Operating costs

4. Vendor selection costs

A : 1, 3 and 4

B : 1, 2 and 3

C : 2, 3 and 4

D : 1, 2 and 4

Answer: C

Question 2

A manufacturing company warehouse manager has recently decided to adopt across-docking system for some of the components held in storage. Which of thefollowing is associated with goods in cross-docking?

A : Cross-docking eliminates any inventory losses

B : Cross-docking leads to increased finished goods delivery costs

C : Cross-docking significantly increases delivery lead times

D : Cross-docking reduces or eliminates storage requirements

Answer: B

Question 3

Amanda is the purchasing manager for AB Construction based in France. She is considering purchasing an asset from overseas but knows she must account for fluctuations in exchange rates in the contract. Is Amanda correct?

A : No, as it will be better to purchase the asset in AB Construction's local currency as it would be efficient and more stable

B : Yes, as AB Construction could pay more for the asset than intended and Amanda should include a currency fluctuation clause

C : No, as the price can be re-negotiated post-contract sign-off by AB Construction and the supplier

D : Yes, as Amanda will be able to decide the currency exchange rates to be used

Answer: B

Question 4

Which ONE of the following correctly differentiates between obsolescent and redundant stock?

A : Obsolescent stock is in short supply, redundant stock has no current supplier with stock available

B : Obsolescent stock is damaged goods that need returning to suppliers, redundant stock is no longer stocked by the organization

C : Obsolescent stock has been updated by another item but can still be used, redundant stock is no longer used by an organization

D : Obsolescent stock has been supplied by a failed supplier, redundant stock requires quality testing before use

Answer: C

Question 5

An organization might find it more beneficial to lease and use an asset over a predetermined period. After this period, the lessee has the right to secure outright ownership of the asset by paying an agreed amount; otherwise, the asset would be repossessed by the lessor. Which of the following is an advantage of leasing?

A : Long-term commitment to pay installments even if not using the asset

B : Costs are known and agreed in advance

C : The usage of the asset is usually capped

D : The total cost of ownership is not applicable as the asset is leased

Answer: B

Page: 1 / 76

Total 380 Questions | Updated On: Apr 03, 2026

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