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CIMA Fundamentals of Ethics - Corporate Governance and Business Law Sample Questions:

1. On 1st October X Ltd wrote to Y Ltd offering to sell a machine at a price of £5,000. The letter stated that Y Ltd must give X Ltd "notice in writing" of its acceptance of the offer by 8th October. Y Ltd posted its acceptance on 5th October and this reached X Ltd on 7th October. In the meantime X Ltd sent a letter to Y Ltd on 4th October revoking its offer, and this reached Y Ltd on 8th October.
Which of the following is correct?

A) There is no contract between X Ltd and Y Ltd because the offer was withdrawn on 8th October when the revocation was received by Y Ltd.
B) There is no contract between X Ltd and Y Ltd because the offer was withdrawn on 4th October when the revocation was sent to Y Ltd.
C) X Ltd and Y Ltd contracted on 7th October.
D) X Ltd and Y Ltd contracted on 5th October.

2. Which of the following statements is correct in relation to private and public companies limited by shares?

A) A public company is required to have at least one director
B) A private and public company are required to hold an AGM
C) A private company must have a qualified company secretary
D) A public company cannot commence trading until it has satisfied minimum share capital requirements

3. Being offered gifts and hospitality can give rise to threats to compliance with fundamental principles.
Which of the following statements is NOT in accordance with the CIMA Code of Ethics?

A) If a professional accountant accepts a substantial gift, the possibility of that offer being made public could result in intimidation threats
B) Accepting a gift may create self-interest threats to objectivity
C) If a professional accountant believes that a gift of significant value is designed to influence his or her actions, then it is acceptable for him or her to accept the gift without disclosing details of the gift to colleagues or superiors
D) The significance of threats will depend on the nature, value and intent behind the offer

4. 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) Only women are promoted in the employee counseling department
C) Employee X is not considered for an excellence award because she raised a complaint about sexist comments on the factory floor
D) All employees in the sales departments are required to be smartly dressed and clean shaven

5. Abel has just completed an audit on a large law firm. He has decided to issue a modified audit report with a qualified opinion due to the issues he discovered regarding misstatements in the company's financial records.
Why has Abel decided to issue the report with a qualified opinion as opposed a different kind?

A) Because he was unable to find enough suitable evidence to determine whether or not the misstatements were both material and pervasive.
B) Because he has come to the conclusion that the misstatements aren't an issue, but should be noted in the report.
C) Because even though he has discovered material statements, he has not deemed them to be pervasive.
D) Because he has found the misstatements to be both material and pervasive.

Solutions: