Fundamentals of Ethics - Corporate Governance and Business Law (BA4) Free Practice Test

Question 1

Why are the principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior "fundamental"?

A. Because they are the foundations of human rights

B. Because they are the foundations of reasoning and professional practice

C. Because they are the foundations of management accounting

D. Because they are the foundations of corporate responsibility

Correct Answer: B

Question 2

To which of the following contracts does the Supply of Goods and Services Act 1982 apply?
(i) A contract with a joiner for the manufacture and supply of a cabinet.
(ii) A contract for the hire of a car.
(iii) A contract with a builder to construct an extension to a house.

A. (iii) only

B. (ii) only

C. (i) only

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

Correct Answer: D

Question 3

You work for a chain of coffee shops who are proud of their sustainable credentials and have used their claim to recycle all of their disposable cups as part of their brand identity. An audit has revealed that staff in one region (West) are mixing these cups into normal waste and sending them to landfill in spite of the ethical code of practice of the company Which TWO of the following might explain why the code has failed to promote the desired behavior?

A. A recent focus on staff efficiency in the West region failed to reflect the time needed to sort the recycle waste from normal waste at the end of the day West store managers and teams were rewarded on efficiency and not recycle rates.

B. The regional manager of the West branch has not been checking on the recycling reports which would have highlighted this issue and so there have been no adverse consequences to the staff concerned

C. A recent focus on staff efficiency in the West region failed to reflect the time needed to sort the recycle waste from the normal waste at the end of the day. West store managers were rewarded for their recycle rates and these are published in a district league table each quarter.

D. The regional manager has been actively promoting expanded green programs through a Green West is Best initiative which has involved all store managers and teams in the West region

E. The induction programmer for new staff has been recently updated and the section on recycling procedures has been inadvertently dropped. The initial staff training is done in the store through shadowing experienced staff for a month before any tasks are attempted unsupervised

Correct Answer: A,B

Question 4

The Global Reporting Initiative (GRI) has produced Sustamability Reporting Guidelines, setting out categories and aspects which should be addressed through sustainable reporting.
Place the GRI categories next to the appropriate aspect of sustamability below.

Correct Answer:

Question 5

What is the rule in Foss v Harbottle (1843)?

A. Where a wrong has been done to the company it is the directors who should sue.

B. Where a wrong has been done to the directors it is the company which should sue.

C. Where a wrong has been done to the company it is the company which should sue.

D. Where a wrong has been done to the shareholders it is the company which should sue.

Correct Answer: C

Question 6

Louis is the only director in MNO Ltd. Max, Nick and Olga each hold one third of the issued share capital of the company. Louis has proposed an amendment to the company's Articles of Association. Which of the following is correct?

A. The Articles may be changed if any one of the shareholders votes in favor of the proposal.

B. The Articles may only be changed if Max, Nick and Olga vote in favor of the proposal.

C. The Articles may be changed if Louis and any one of the shareholders vote in favor of the proposal.

D. The Articles may be changed if any two of the shareholders vote in favor of the proposal.

Correct Answer: B

Question 7

Which of the following are recommended by the UK Corporate Governance Code?
(i) The roles of Chairman and Managing Director should be separated
(ii) A senior independent director should be identified and available as a contact for shareholders (iii) At least one half of the board as a whole should be made up of independent non-executive directors

A. (i) only

B. (i) and (iii) only

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

D. (i) and (ii) only

Correct Answer: C

Question 8

Which of the following is a 'financial stakeholder' of an organization?

A. Non-governmental organizations

B. Competitor

C. Media

D. Employee

Correct Answer: D

Question 9

Which of the following statements is correct?
(i) In the event of a conflict between English Law and European Law, English Law prevails.
(ii) The Supreme Court is the highest court in the United Kingdom.
(iii) The High Court is bound by a ratio decidendi of the Supreme Court.

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

B. (i) and (iii) only

C. (ii) and (iii) only

D. (i) and (ii) only

Correct Answer: C

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CIMA Fundamentals of Ethics - Corporate Governance and Business Law (BA4) Free Practice Test