March Special Sale - Limited Time 70% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: mxmas70

Home > CIMA > CIMA Certificate > BA4

BA4 Fundamentals of Ethics - Corporate Governance and Business Law Question and Answers

Question # 4

Which of the following is NOT one of the main requirements of the UK Corporate Governance Code?

A.

The separation of the roles of Chairman and Chief Executive

B.

The appointment of independent non-executive directors to the Board

C.

The establishment of an audit committee

D.

The appointment of a senior external auditor to the Board

Full Access
Question # 5

Which of the following are not owed duties by the directors? 

(i) The company as whole.

(ii) Individual shareholders.

(iii) All the present and future shareholders.

A.

(i) and (ii) only

B.

(ii) only

C.

(ii) and (iii) only

D.

(iii) only

Full Access
Question # 6

Which of the following is normally not an implied term of a contract of employment?

A.

The duty to provide work.

B.

The duty to obey the employer's lawful instructions.

C.

The duty to maintain mutual trust and confidence.

D.

The duty not to disclose confidential information.    

Full Access
Question # 7

Which of the following entitles the innocent party to cancel the contract?

(i) A breach of a warranty.

(ii) A breach of a condition.

(iii) An express term authorizing termination of the contract.

A.

(i) only

B.

(i) and (ii) only

C.

(ii) and (iii) only

D.

(i), (ii) and (iii).

Full Access
Question # 8

While working as an accountant, you are asked to overlook certain irregularities in your company's accounts. This is likely to result in tensions described by which TWO of the following four options:

A.

Personal and societal values

B.

Personal and corporate values

C.

Professional and corporate values

D.

Professional and societal values

Full Access
Question # 9

Steve manages the accounts for a large software company. He's good at his job, though it has recently emerged that he is going through quite a messy divorce.

Why should the company's senior management be most concerned?

A.

Because Steve could be motivated to steal from the company.

B.

Because Steve might not work as hard.

C.

Because there is a risk Steve could get aggressive with other employees within the company.

D.

Because Steve might start to be untruthful and not disclose information that he should.

Full Access
Question # 10

Which of the following is the responsibility of the Chairman, according to the UK Corporate Governance Code?

A.

Authorizing major investments

B.

Controlling the workings of the Board

C.

Operational control

D.

Carrying out the policies of the Board

Full Access
Question # 11

One of the fellow accountants in your office thinks that she is intellectually superior to the rest of you. This has made her complacent and she refuses to attend training courses or ongoing professional development. As a result, she may be failing to adhere to the CIMA Code of Ethics fundamental principle of:

A.

Courtesy

B.

Integrity

C.

Responsibility

D.

Professional competence and due care

Full Access
Question # 12

Pablo and Paula are in discussions with a potential buyer over the sale of their house. They tell the potential buyer that if they want to purchase the house for the full amount of £200,000, they'll need to send a letter that

confirms their offer by Friday. If they don't receive such a letter by then, they'll withdraw the house from the market.

Friday comes and no letter arrives. However, it turned out the potential buyer actually posted the letter on the Monday before, and it simply got lost in the post. The letter eventually turns up on the following Monday.

Baring this in mind, are Pablo and Paula legally obliged to sell their house?

A.

Yes - Because the potential buyer sent the letter before the closing date.

B.

Yes - The potential buyer can choose to accept Pablo and Paulo's price whenever he wants, providing that he hasn't already declined it.

C.

No - Because they received the letter after the closing date they do not have to accept the potential buyer's offer.

D.

No - They can decline the potential buyer's request at any time, regardless of when they received the letter.

Full Access
Question # 13

Which ONE of the following is NOT contained within form IN01 which must be submitted to the Registrar of Companies in order to register a company limited by shares?

A.

The name of the company

B.

The objects of the company

C.

The location of the company’s registered office

D.

The names of the first directors

Full Access
Question # 14

Mr X's wife is gravely ill.  He accepts money from a client to falsify some accounts. The client is a contractor, being paid by the Government to build a bridge over a river. The accounts now state that more expensive materials were used to build the bridge. The money helps Mr X pay for his wife's medical treatment. Is this an example of a 'victimless crime'?

A.

No. The contractor is being paid to build a bridge with tax payers' money.  If it is built with poor quality materials it may collapse, wasting money, and potentially causing an accident

B.

Yes. Mr X used the money to get help for his wife. The bridge was built anyway

C.

Yes. Mr X needed the money to help his wife - family is more important

D.

Yes. Mr X has a duty to do as his client asked

Full Access
Question # 15

Corporate governance codes may either be rules-based or principles-based

Which of the following statements correctly describes a rules-based approach to corporate governance?

A.

A rules-based approach requires that a company complies with the rules or explains why it has not.

B.

A rules-based approach instils the code into law but leaves the sanctions for non-compliance to be decided and enforced by the shareholders.

C.

A rules-based approach instils the code into law but encourages compliance with the spirit of the law.

D.

A rules-based approach instils the code into law with appropriate penalties for transgression.

Full Access
Question # 16

Which of the following is incorrect in relation to shareholder meetings held by a public company?

A.

A failure by a public company to hold an AGM is an offence by every officer of the company who is in default

B.

A public company must hold an AGM within six months of the end of its accounting reference date

C.

A public company must give at least 14 days notice of the AGM to its members

D.

Short notice of an AGM by a public company must be given by all the members

Full Access
Question # 17

The majority of developed countries require publicly quoted companies and large companies to produce annual financial statements which are then audited by an external auditor.

Which of the following statements regarding the requirement for external audit is Incorrect?

A.

Independent external audit gives confidence in the financial statements which is required as the directors have incentives to manipulate the financial statements presented to the shareholders

B.

As the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and this needs to be guaranteed by independent external audit.

C.

Independent external audit gives confidence in the financial statements by including the auditor's opinion on whether or not they show a true and fair view.

D.

As the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and there is a need for this to be assured by independent external audit

Full Access
Question # 18

In relation to the law of misrepresentation, which of the following statements is incorrect?

A.

Damages are available for innocent misrepresentation under the Misrepresentation Act.

B.

Misrepresentation renders a contract voidable.

C.

A victim of fraudulent misrepresentation may seek rescission and damages.  

D.

A false statement of fact may give rise to remedies in both contract and tort.

Full Access
Question # 19

Which of the following does the IFAC Code of Ethics establish?

A.

Legal requirements for professional accountants

B.

Standards of behavior for professional accountants

C.

Judicial requirements for professional accountants

D.

Standards of commitment for professional accountants

Full Access
Question # 20

Seller Ltd is a wholesaler of electrical goods which it sells to retailers only Which one of the following statements is correct in relation to the exclusion of the conditions which are implied into contracts for the sale of goods by sections 12 to 15 of the Sale of Goods Act 1979?

A.

As Seller Ltd is only involved in non-consumer sales it may exclude all the conditions implied by sections 12 to 15 of the Sale of Goods Act 1979

B.

Seller Ltd cannot exclude section 12 but can exclude sections 13 to 15 where reasonable

C.

Seller Ltd may exclude section 12 where reasonable but not sections 13 to 15

D.

Sections 12 to 15 of the Sale of Goods Act cannot be excluded in any non-consumer sales

Full Access
Question # 21

Agency theory is often cited as an explanation for the development of corporate governance Which TWO of the following statements are correct?

A.

Agency theory assumes that the goals of the managers of the company are the same as the owners of the company

B.

Agency theory requires that the managers of the company act in the interests of the owners of the company

C.

Agency theory assumes that the goals of the managers of the company are different from the owners of the company

D.

Agency theory explains the issues which arise from the separation between the owners of the company and those who control it

E.

Agency theory defines the problems that arise from the dependency of an organisation on resources

Full Access
Question # 22

Which of the following is incorrect?     

A.

A ratio decidendi of the Supreme Court is binding on the Court of Appeal.

B.

The Supreme Court is bound by a previous House of Lords ratio decidendi.

C.

A ratio decidendi of the Court of Appeal is binding on the High Court.

D.

A ratio decidendi of the Supreme Court is binding on the High Court.

Full Access
Question # 23

Y has an opening at his company for a trainee accountant. His nephew is just about to leave school, and Y receives a call from his sister suggesting that her son should get the job. Y's firm has a strict policy with regards to the employment of family members, especially in finance departments. But for Y, looking after his family is very important, and he is sure he will be an excellent staff member.  Y has an ethical dilemma because there is tension between:

A.

His personal and corporate values

B.

His personal and societal values

C.

His professional and corporate values

D.

His personal and professional values

Full Access
Question # 24

Which of the following is incorrect?

A.

A private company must have at least two directors.

B.

The board usually has the power to appoint a managing director.

C.

A board usually reaches its decisions by majority vote.

D.

The first directors of the company are those persons who are named as directors on Form IN01.

Full Access
Question # 25

Section 172 of the Companies Act 2006 provides that directors must promote the success of the company for the benefit of its members. Which of the following factors must be taken account of in complying with this duty? 

(i) The interests of the company's employees

(ii) The likely consequence of any decision in the long term

(iii) The impact of the company's operations on the community and the environment

A.

(i) only

B.

(i) and (ii) only

C.

(ii) and (iii) only

D.

(i), (ii) and (iii)

Full Access
Question # 26

When preparing financial statements, you are extremely careful not to omit relevant information, mislead readers or misstate facts. This demonstrates the CIMA Code of Ethics fundamental principle of:

A.

Professional behavior

B.

Confidentiality

C.

Objectivity

D.

Integrity

Full Access
Question # 27

A professional accountant is NOT accountable to:

A.

The public

B.

His or her clients

C.

His or her employer

D.

His or her company's competitors

Full Access
Question # 28

A company's sales team has been told that all planned salary increases and bonuses will be stopped if any member of the team fails to achieve his or her sales target. The team achieves targets but management is surprised by the number of customers who contact the company to complain about aggressive or misleading sales practices. Is this an ethical issue and why?

A.

Yes - the sales team are entirely at fault and should be dismissed

B.

Yes - management has put the sales team under a lot of pressure and members of the team appear to have engaged in unethical sales practices

C.

No - meeting sales targets is a business, not an ethical issue

D.

No - the management has behaved unfairly so the way that the sales team has responded is justified

Full Access
Question # 29

SuperSole is a large shoe company that sells its products all over the world. It has many factories and stores in many different countries, and its yearly revenues often exceed £100 million. The company is also listen on

the stock exchange.

Should SuperSole have its own internal auditing department?

A.

Yes - Its large size and complexity increases the need for an internal auditing department.

B.

Yes - All companies should have their own internal auditing department.

C.

No - Only small companies need an internal auditing department.

D.

No - All companies should be externally audited.

Full Access
Question # 30

Which of the following statements would amount to indirect discrimination in the workplace?

A.

Applicants for a motor mechanic s position are only considered if they are male

B.

All employees in the sales departments are required to be smartly dressed and clean shaven

C.

Only women are promoted in the employee counseling department

D.

Employee X is not considered for an excellence award because she raised a complaint about sexist comments on the factory floor

Full Access
Question # 31

DGH is a company operating in the oil and gas industry, which is heavily regulated. The government is considering introducing a new law which is likely to result in a dramatic cut in profitability for DGH.

Which of the following is NOT a legitimate method for DGH to influence government policy in its own best interests?

A.

Employing lobbyists to put DGH's case to ministers or civil servants.

B.

Offering financial incentives to public officials to use their influence on DGH's behalf

C.

Attempting to influence public opinion in order to put pressure on the legislative agenda

D.

Inviting government ministers to attend the next board meeting of DGH to allow the directors to put forward their view

Full Access
Question # 32

In Germany the two-tier board structure is used by many limited liability companies. A two-tier board structure is made up of a Management Board and which other organ?

A.

A Supervisory Board

B.

A Nominations Committee

C.

A Quality Assurance Board

D.

A Remuneration Committee

Full Access
Question # 33

In the UK, the body responsible for promoting confidence in corporate reporting and governance is:

A.

The Professional Oversight Board for Accountancy

B.

The International Federation of Accountants

C.

The Financial Reporting Council

D.

The Financial Review Board

Full Access
Question # 34

Which of the following are cases where the veil should be lifted? Select ALL that apply.

A.

The pink company - Failed to disclose the full company name on official documents.

B.

The orange company - Continues to trade even though it knows it is in irrevocable debt

C.

The white company - An investigative journalist reveals that the company has been deliberately avoiding tax.

D.

The red company - Continues to trade despite being having small debts.

E.

The black company - Trades with a company based in a country experiencing civil war.

Full Access
Question # 35

Which of the following statements is correct?

(i) A wrongful dismissal cannot also be an unfair dismissal.

(ii) An unfair dismissal can also be a wrongful dismissal.

(iii) An unfair dismissal must also be a wrongful dismissal.

A.

(i)

B.

(ii) and (iii)

C.

(iii)

D.

(ii)

Full Access
Question # 36

Which of the following is incorrect?

(i) Legal title cannot pass on a contract induced by misrepresentation.

(ii) Misrepresentation renders a contract voidable.

(iii) A victim of negligent misrepresentation may seek rescission and damages. 

A.

(i) only

B.

(ii) only

C.

(i) and (iii) only

D.

(ii) and (iii) only

Full Access
Question # 37

Which of the following causes a charge to be void?

(i) A failure to register the charge at Companies House within 21 days of its creation.

(ii) A failure to register the charge at the company's registered office.

(iii) The issue of a charge to secure borrowing which is outside the directors' authority 

A.

(i) only

B.

(i) and (ii) only

C.

(i) and (iii) only

D.

(i), (ii) and (iii).

Full Access
Question # 38

Completing work within established deadlines reflects the personal quality identified by the CIMA Code of Ethics as:

A.

Responsibility

B.

Accuracy

C.

Timeliness

D.

Tardiness

Full Access
Question # 39

Which of the following correctly describes the circumstances in which directors may be held liable to contribute to the assets of insolvent companies in respect of "wrongful trading"?

A.

Where the directors have the intention of defrauding creditors.

B.

Where directors knew or ought to have known that insolvency was inevitable.

C.

Whenever a company becomes insolvent.

D.

Whenever a company's liabilities exceed its assets.

Full Access
Question # 40

Which of the following statements is correct?

(i) An employer may rely on information discovered after an employee's dismissal to justify a wrongful dismissal.

(ii) An employer may rely on information discovered after an employee's dismissal to justify an unfair dismissal.

(iii) An employment tribunal will take into account the employee's conduct when determining how much compensation for unfair dismissal to award.   

A.

(i) only

B.

(i) and (ii)

C.

(i) and (iii)

D.

(iii) only

Full Access
Question # 41

Which of the following is incorrect in relation to Shari'ah law?

A.

Islamic law provides for matters spiritual and physical

B.

Eating pork is prohibited

C.

Criticism of the prophet Mohammad is accepted

D.

Apostasy is similar to the law of treason in the UK

Full Access
Question # 42

Which of the following is incorrect in relation to the memorandum of association when registering a company limited by shares?

A.

The memorandum must be in the prescribed form

B.

The memorandum must state the objects for which the company is being registered

C.

The memorandum must state that the subscribers agree to take at least one share each

D.

The memorandum must state that the subscribers wish to form a company under the Companies Act 2006

Full Access
Question # 43

Which of the following is NOT a 'financial stakeholder' of an organization?

A.

Customer

B.

Media

C.

Employee

D.

Government

Full Access
Question # 44

Which of the following is an example of a safeguard created by the profession, legislation or regulation as opposed to a safeguard in the work environment?

A.

Leadership of the organization which stresses the importance of compliance with the fundamental principles

B.

Leadership of the organization which establishes the expectation that members of an assurance team will act in the public interest

C.

Professional standards

D.

An organization having documented internal policies and procedures requiring compliance with the fundamental principles

Full Access
Question # 45

An investigation has been launched against Company G, a supermarket, after suspicions were raised about its treatment of certain employees.

It was later found that Company G were guilty of direct discrimination.

Which of the following are the ways in which Company G were found to be directly discriminating?

Select ALL that apply.

A.

Only offering pay rises to female employees if they were under a certain weight.

B.

Rejecting job applications if the applicant had a foreign-sounding name.

C.

Only offering senior managerial roles to male employees.

D.

Making it company policy that no one over 65 could be hired.

E.

Having a rule that no one under 5ft tall could be hired.

Full Access
Question # 46

A business has been registered under the name ABC Ltd. Which of the following types of business organization must this be?

A.

A partnership.

B.

A public limited company.

C.

A private limited company.

D.

Either a private limited company or a public limited company.

Full Access
Question # 47

Decklt is a skateboard manufacturer that is ethically run and has a good reputation.

However, it has just transpired that one of their suppliers - with whom they have a good relationship with due to their cheap prices - is involved in a serious fraud case.

What should Decklt do?

A.

Immediately cut all ties with the company and look for a different supplier.

B.

Stick with the supplier as they won't be able to find cheaper prices elsewhere.

C.

Stick with the supplier but let the relevant regulatory bodies know that Decklt had nothing to do with their illicit activity.

D.

Immediately cut all ties with the supplier and discontinue all products that are made using their materials.

Full Access
Question # 48

John is conducting an external audit on a biscuit factory. He wants to make sure that his audit is comprehensive and thorough. To do this, he aims to make full use of his powers and rights.

Which of the following is John allowed to do?

Select ALL that apply.

A.

Access the company's books and records.

B.

Ask responsible officers to produce relevant documents.

C.

Ask for explanations from officers of the company.

D.

Ask to be notified of any shareholder meetings.

E.

Present arguments at a meeting if there is a proposal to remove the auditors.

F.

Actively investigate fraudulent activity.

G.

Review and report on the performance of management.

Full Access
Question # 49

Which of the following automatically causes a contract to become unenforceable?

(i) Where the contract has become frustrated.

(ii) Where the buyer was induced to enter into the contract by a fraudulent misrepresentation.

(iii) Where one of the parties has acted in breach of a warranty in the contract.

A.

(i) only

B.

(i) and (ii) only

C.

(ii) only

D.

(i), (ii) and (iii)

Full Access
Question # 50

Which of the following is an 'interest stakeholder' in an organization?

A.

Customer

B.

Employee

C.

Government

D.

Competitor

Full Access
Question # 51

All policies for governance and social responsibility are ultimately rooted in an organization's:

A.

Values and code of ethics

B.

The Board

C.

Stakeholder relationships

D.

The Government

Full Access
Question # 52

Which of the following terms can be defined as follows?

 

"How an organization manages its relationships in the wider community"

A.

Ethics

B.

Social responsibility

C.

Corporate governance

D.

Professional behavior

Full Access
Question # 53

Paschal has just passed his CIMA certificate exams and on doing so joined Un-Ethi-Cal Ltd for his first accountancy role.

Upon arrival he was been asked to do his company's corporation tax return, and not wanting to seem as if he was not keen in his first week, tells them he knows what to do and so goes online to find out how to do it.

He's got to go to a party that night, so although he can't work it out properly he fills in the form as best he can so he can get out on time.

Unfortunately, Paschal has breached CIMA's five fundamental ethical principles.

Which of the following has Paschal breached?

Select ALL that apply.

A.

Integrity + Professional competence and due core

B.

Integrity + Objectivity

C.

Confidentiality + Professional competence and due care

D.

Professional behaviour + Objectivity

E.

Objectivity + Confidentiality

F.

Professional behaviour + Integrity

G.

Confidentiality + Professional competence and due care

Full Access
Question # 54

Which of the following statements is correct?

(i) As a general rule the acceptance of an offer is only effective when it has been communicated to the offeror.

(ii) A person must know of an offer before he or she can accept it.

(iii) A request for further information has the effect of destroying the original offer.

A.

(i) and (ii).

B.

(ii) and (iii).

C.

(i) and (iii).

D.

(i), (ii) and (iii).

Full Access
Question # 55

(i) In general a person is assumed to know of a clause of which he has been given reasonable notice at or before the time of the contract.

(ii) In general a person cannot rely on a clause brought to the other party's attention after the contract has been concluded.

(iii) In general a person cannot be bound by a clause written in small print.

 

Choose one of the following.

A.

Only (i) and (ii) are correct.

B.

Only (ii) and (iii) are correct.

C.

Only (i) and (iii) are correct.

D.

(i), (ii) and (iii) are correct.

Full Access
Question # 56

If a professional accountant believes that he or she will not be able to comply with all the legal frameworks, regulations and standards for business in a particular circumstance, what does he or she have a duty to do? Please select TWO of the following:

A.

Obey the law

B.

Disregard conflicting standards

C.

Act in the interests of his or her employer

D.

Raise his or her concerns by speaking up

Full Access
Question # 57

Why does life-long learning require commitment? Choose TWO options.

A.

Rapid advances in technology

B.

Evolving regulations

C.

Career progression

D.

Computer virus-protection

Full Access
Question # 58

Which of the following is correct?

A.

In England the government cannot make law without the authority of Parliament.

B.

In England the government can pass a law overruling any Act of Parliament.

C.

In England the government is not bound by the law.

D.

In England the government may delegate authority to a local authority to make law.

Full Access
Question # 59

Which of the following is NOT a personal quality expected of professional accountants by CIMA?

A.

Relativity

B.

Reliability

C.

Responsibility

D.

Respect

Full Access
Question # 60

Which of the following is the main legislature within the European Union?

A.

The Council of the European Union

B.

The European Parliament

C.

The European Court of Justice

D.

The European Commission

Full Access
Question # 61

In relation to directors, which of the following statements is incorrect?

A.

The Remuneration Committee usually consists entirely of non-executive directors

B.

The directors may be dismissed by the shareholders tor any reason

C.

The executive directors are bound to carry out only those duties which are stated in the director's contract of service

D.

The boards of listed companies commonly appoint sub-committees to enable them to comply with corporate governance requirements

Full Access
Question # 62

F knows from preparing the accounts that the company she works for is going to have to make redundancies due to the recession.  She also knows that, despite the recession, the Managing Director continues to enjoy lavish perks and even uses a private jet. What should she do?

A.

Do nothing: Professionally, Mrs F is bound to respect the confidentiality of the information she has received

B.

Go to the press: Mrs F has a duty to report this in the public interest and the interest of the staff who will be made redundant

C.

Resign: F cannot carry on working at a company which is so unethical

D.

Leak the information: that way F's conscience will be clear but the information won't be traced back to her

Full Access
Question # 63

Which of the following statements are correct regarding companies'?

1. Both public and private companies must have a minimum amount of share capital before they can commence trading.

2. The shareholders of both public and private companies cannot interfere in the management of the company.

3. The minimum number of directors for both public and private companies is two

A.

1 only

B.

2 and 3 only

C.

1 and 2 only

D.

2 only

Full Access
Question # 64

Which of the following is correct?

(i) A contract for the sale of land must be in writing.

(ii) A consumer credit agreement must be in writing.

(iii) A contract of employment must be in writing.

A.

(i) only

B.

(i) and (ii) only

C.

(i) and (iii) only

D.

(i), (ii) and (iii)

Full Access
Question # 65

ABC Ltd has contracted with DEF Ltd. If ABC Ltd acts in breach of a warranty, which of the following is correct? 

(i) DEF Ltd may terminate the contract and sue for damages.

(ii) DEF Ltd may sue for damages but may not terminate the contract.

(iii) DEF Ltd may ignore the breach and continue with the contract. 

A.

(i) only

B.

(i) and (iii) only

C.

(ii) and (iii) only

D.

(i), (ii) and (iii)

Full Access
Question # 66

C is a professional accountant He encounters an ethical dilemma in his role and wishes to seek help in resolving it. Which of the following would NOT be an appropriate source of advice?

A.

The CIMA ethics helpline

B.

Legal advisors.

C.

The external auditors.

D.

The internal whistle-blowing helpline

Full Access
Question # 67

ABC plc has acted in breach of its health and safety obligations and this has led to a number of employees and members of the public being injured.  

 

Which of the following is correct?  

The breach could give rise to:  

i. Civil claims on the part of the employees and members of the public

ii. Enforcement action by the Health and Safety Executive

iii. Criminal sanctions against ABC plc

A.

(i) only

B.

(i) and (ii) only

C.

(ii) and (iii) only

D.

(i), (ii) and (iii)

Full Access
Question # 68

AB Ltd contracted to deliver two desks and three filing cabinets to CD Ltd. On the day when delivery was due to take place AB Ltd did not have a vehicle with sufficient capacity to hold all the goods. As a result AB Ltd delivered the two desks only

 

Which of the following is correct?

A.

The contract between AB Ltd and CD Ltd is frustrated.

B.

CD Ltd is legally entitled to refuse delivery of the desks

C.

The failure to deliver the filing cabinets is a breach of a warranty which entitles CD Ltd to claim damages

D.

The delivery of the desks amounts to substantial performance of the contract and CD Ltd is obliged to pay the contract price less an amount for the defects in performance

Full Access
Question # 69

In relation to business names which of the following is CORRECT?

(i) Any business may trade under a business name.

(ii) If a business name is used the name of the owner of the business must be disclosed.

(iii) The business name of a private limited company must end with the word “Limited” or “Ltd”.

A.

(i) only

B.

(i) and (ii) only

C.

(ii) only

D.

(i) and (iii) only

Full Access
Question # 70

Who is entitled to sue the directors for a breach of statutory duty?

A.

The board.

B.

Any shareholder.

C.

The company.

D.

The holders of the majority of the company's shares.

Full Access
Question # 71

Which of the following is CORRECT?

(i) A company registered today may restrict its ability to contract by including a provision to that effect in its articles of association.

(ii) A company which was registered before the Companies Act 2006 came into force may pass a special resolution to remove its objects clause from its memorandum of association.

(iii) If the directors ignore any restriction on the company’s ability to contract they may be sued for breach of duty by the company.

A.

(i) only

B.

(ii) only

C.

(i) and (iii) only

D.

(i), (ii) and (iii)

Full Access
Question # 72

The code of ethics of the professional body to which M belongs is very clear about the importance of non-discrimination on the grounds of race, gender, sexual orientation and religion. But, because of her particular religious convictions, M believes that homosexuality is wrong. This is an example of a tension between:

A.

Corporate and professional values

B.

Personal and professional values

C.

Societal and professional values

D.

Personal and corporate values

Full Access
Question # 73

Who should check that a company's financial statements provide a true and fair view of its financial performance?

A.

The auditor and the company

B.

The auditor

C.

The company

D.

Shareholders

E.

The auditor and shareholders

F.

The company and shareholders

Full Access
Question # 74

The IFAC Code of Ethics applies:

A.

To accountants by law

B.

To accountants around the world

C.

To those accountants whose employers sign up to the principles of acting ethically

D.

To all professionals, including accountants

Full Access
Question # 75

C tends to be polite to colleagues when they are present, but very rude about them in their absence. She lacks the personal quality identified by CIMA as:

A.

Respect

B.

Responsibility

C.

Reliability

D.

Reserve

Full Access
Question # 76

Which of the following is NOT an advantage of establishing a company by purchasing “off the shelf”?

(i) The company is already registered so that in general business may be commenced more quickly.

(ii) The purchase off the shelf company can be cheaper than registration of a new company.

(iii) The articles of association are tailor-made to the requirements of the purchaser.

A.

(i) only

B.

(i) and (ii) only

C.

(ii) and (iii) only

D.

(iii) only

Full Access
Question # 77

Which of the following can consideration take the form of?

A.

Money + Goods + Services

B.

Money

C.

Goods

D.

Services

E.

Money + Goods

F.

Money + Services

Full Access
Question # 78

In 2011 Exe Bank plc granted a loan of £200,000 to Wye Ltd secured by a fixed charge over the company's land and a floating charge over all the company's other assets. Wye Ltd remains solvent but has now failed to meet its monthly repayments for three months.

 

Which of the following options are available to Exe Bank plc?

(i) Sue Wye Ltd for breach of contract.

(ii) Appoint an administrator

(iii) Petition for the compulsory winding up of Wye Ltd.

A.

(i) only

B.

(ii) only

C.

(i) and (ii) only

D.

(i), (ii) and (iii)

Full Access
Question # 79

Which of the following is INCORRECT?

A.

A company secretary may be dismissed by the board

B.

A person may be appointed company secretary for life

C.

A company secretary is an officer and not an employee of the company

D.

A company secretary of a public company must be appropriately qualified

Full Access
Question # 80

T, a Sales Representative of E plc, made an appointment to see you in the hope of persuading you to place a substantial order with E plc. During your discussions, T suggested that you could qualify for a cash bonus in the event of an order being placed.

 

Which of the following is correct? 

(i) Placing an order in these circumstances will place you in breach of your employment and professional obligations.

(ii) If the goods are what your company requires and are priced competitively, you are acting correctly in placing an order and qualifying for the cash bonus.

(iii) You have been placed in a conflict of interest situation and you should not proceed to place an order.

A.

(i) only

B.

(i) and (iii) only

C.

(ii) only

D.

(iii) only

Full Access
Question # 81

What is the purpose of the equitable remedy of rescission?

A.

To place the parties in their pre-contract position.

B.

To force the party in breach to carry out the contract.

C.

To prevent a party from acting in breach of contract.

D.

To ensure that the innocent party is adequately compensated.

Full Access
Question # 82

Which ONE of the following was NOT a recommendation of the Cadbury Committee Report 1992?

A.

Independent non-executive directors should be appointed to the boards of listed companies

B.

An audit committee consisting of a majority of non-executive directors should be established to oversee the company's finances

C.

Executive directors should not be offered service contracts for more than five years unless approved by the shareholders in a general meeting

D.

The remuneration packages of executive directors should be agreed by a remuneration committee wholly or mainly comprising non-executive directors

Full Access
Question # 83

S Ltd has an issued share capital of 1000 ordinary shares of £1 each.  Some of the shareholders would like to change the name of the company.  What is the minimum number of votes which must be cast in favor of the resolution to make it effective?

A.

501

B.

500

C.

750

D.

1,000

Full Access
Question # 84

T is a senior accountant, but knows he needs to update himself on recent changes in accounting practice. He has been too busy; his manager is off sick and T is taking responsibility for his work load. T decides to let his CPD slide.  Another year won't matter.  Is this an ethical issue?

A.

Yes. T has a duty to maintain his professional knowledge

B.

No. T has a contractual duty to his employer; he can't take time off for CPD at this time

C.

Yes. T should not be doing two people's work

D.

No. T is an experienced accountant and doesn't need training

Full Access
Question # 85

One of your colleagues is running an event to raise money for a local charity. One evening, you see her taking boxes of pens, notepads and post-it notes. When you challenge her, she says that she is taking them for her fundraising and, although she has not asked permission to take them, she is sure the company will not mind. Is this an ethical issue and why?

A.

Yes - she is using company property for other purposes without permission

B.

Yes - she should not be undertaking charitable initiatives

C.

No - it is just stationery and nothing valuable

D.

No - the company would undoubtedly not mind her using the stationery for charitable purposes, so there is nothing wrong with her taking it

Full Access
Question # 86

Which ONE of the following might NOT be the consequence of unethical behavior by a professional body?

A.

Loss of reputation

B.

Loss of Chartered Institute status

C.

Undermined credibility

D.

Systematic widespread fraud

Full Access
Question # 87

A business that has an internal ethical code is likely to experience which of the following benefits? Select ALL that apply.

A.

Better communication with staff

B.

Consistency of conduct

C.

Reduced risk

D.

Improved reputation

E.

Competitive advantage

Full Access
Question # 88

Which of the following might a company experience if they were to implement internal control measures?

Select ALL that apply.

A.

Reduced risk

B.

More control

C.

A requirement to hire external auditors

D.

Less paper work

E.

Less bureaucracy

Full Access
Question # 89

Articles of association regulate the relationship between:

A.

the company and its directors

B.

the company and its customers

C.

the company and its members

D.

the company and its creditors

Full Access
Question # 90

Which of the following statements regarding companies limited by shares and general partnerships is correct?

A.

Unlike a general partnership, a private company limited by shares may create a floating charge as security for a loan

B.

Private companies limited by shares and general partnerships are required to disclose financial information regarding the operation of the business to the general public

C.

In the event of insolvency both a private company limited by shares and a general partnership may be placed in insolvent liquidation

D.

Both a private company limited by shares and a general partnership are established by registration

Full Access
Question # 91

Which of the following statements are correct in relation to the purpose of the OECD principles of corporate governance?

1. The principles are regarded by OECD members as representing a common basis essential for the development of good corporate governance practice

2. The principles are intended to be a substitute for individual government's proposals for governance best practice.

3. The principles are intended for the use of OECD members only.

A.

2 only

B.

1only

C.

1 and 2 only

D.

2 and 3 only

Full Access
Question # 92

According to CIMA, governance and social responsibility policies are:

A.

Not related to an organization's code of ethics

B.

In conflict with an organization's values

C.

Rooted in an organization's values and code of ethics

D.

Not related to each other

Full Access
Question # 93

You are happy to be held accountable for your actions and hope that others can trust and depend upon you. Which TWO of the personal qualities identified by the CIMA Code of Ethics does this demonstrate?

A.

Respect

B.

Responsibility

C.

Reliability

D.

Timeliness

Full Access
Question # 94

An independent audit is important to readers of financial statements because it

A.

assures the readers of financial statements that any fraudulent activity has been corrected

B.

confirms the accuracy of management's financial representations.

C.

measures and communicates the data included in financial statements

D.

objectively examines and reports on management's financial statements

Full Access
Question # 95

You work for an international mining company. Which of the following corporate issues is NOT related to ethics or social responsibility?

A.

The impact of your operations on the environment

B.

Your company's response to HIV/Aids among workers in sub-Saharan Africa

C.

Deciding whether to approve a planned refurbishment of head office

D.

Whether employees are paid a fair wage

Full Access
Question # 96

James works for a large company in the City. He likes working there, though he has just identified an issue of fraud within the company.

He has double-checked the facts, deduced that the fraudulent activity is both unethical and illegal, identified a number of ethical principles that have been breached and identified who is involved and who could be

affected.

What should he do next?

A.

Inform his manager or a colleague.

B.

Quit his job and move to a different department.

C.

Quit his job straight away and find a new job within the profession.

D.

Inform an external body - e.g. an auditor or regulatory body.

E.

Do nothing - some fraudulent activity is to be expected in large companies.

Full Access
Question # 97

Intimidation threats to compliance with fundamental principles are described as threats that may occur

A.

as a result of the financial or other interests of a professional accountant or of an immediate or close family member

B.

when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment

C.

when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised

D.

when a professional accountant may be deterred from acting objectively by threats, actual or perceived

Full Access
Question # 98

According to the CIMA code of ethics, if appropriate safeguards cannot be identified to address threats to compliance with fundamental principles, a professional accountant should:

A.

Proceed unless the situation will involve breaking the law

B.

Proceed with necessary caution

C.

Identify the situation to superiors before continuing with the professional service involved

D.

Refuse to remain associated with the matter creating the conflict, where possible

Full Access
Question # 99

According to the UK Corporate Governance Code, who is responsible for setting the company's values and standards?

A.

The Chairman

B.

The Board

C.

The Managing Director

D.

The shareholders

Full Access