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

1. After the enactment of the Companies Act 2006, which of the following is incorrect in relation to a reduction of capital by a private company?

A) It is not necessary for the company's Articles of Association to authorize a reduction
B) The reduction must be approved by the court
C) The shareholders must pass a special resolution
D) The directors must make a statement as to the company's solvency

2. 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) and (ii) only
B) (i) only
C) (ii) and (iii) only
D) (i), (ii) and (iii)

3. In the UK the body responsible for establishing ethical standards relating to the independence, objectivity and integrity of those providing assurance services is:

A) The Professional Oversight Board for Accountancy
B) The Auditing Practices Board
C) The Financial Reporting Council
D) The International Federation of Accountants

4. Which of the following does a professional accountant NOT have a duty to stay up to date on?

A) New legislation
B) Ethical issues relating to his or her work
C) Emerging issues that could affect public interest
D) Who's who in the industry

5. Which of the following are likely advantages of being a sole trader? Select ALL that apply.

A) They have limited personal responsibility in regards to the debts of the business.
B) Expansion is likely to be fast.
C) Working hours will be relatively short.
D) They retain all profits.
E) Greater degree of independence.
F) No formal procedures required to set up the business.

Solutions: