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Fundamentals of Ethics, Corporate Governance and Business Law

Last Update 5 hours ago Total Questions : 661

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Question # 136

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

Question # 137

Independence of mind allows a professional accountant to:

A.

Act with integrity

B.

Exercise objectivity

C.

Exercise professional skepticism

D.

All of the above

Question # 138

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

Question # 139

The directors of Zed Ltd issued a number of shares to their supporters, so that they would vote against a takeover bid by Exe Ltd.

 

Which of the following statements is INCORRECT?

A.

If the shares were issued for cash, they should have first been offered to the existing members in proportion to their current shareholding unless statutory pre-emption rights have been dis-applied.

B.

If the shares were issued for a non-cash consideration, they were not subject to the statutory pre-emption rights of shareholders unless the articles of association so provided.

C.

If the directors had the legal authority to issue shares, the issue cannot be challenged by the shareholders.

D.

The share issue is voidable and the original shareholders may ratify or cancel the issue by ordinary resolution.

Question # 140

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

Question # 141

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.

Question # 142

Which of the following are guilty of skimming? Select ALL that apply.

A.

Barry - An accountant for a large law firm who sometimes redirects incoming company funds to his own private account.

B.

Gina - A senior manager at an investment firm who often redirects company funds to a fake account that she ' s created.

C.

Simon - An owner of a medium-sized business who sometimes understates his company ' s profits by a small amount in order to pay less tax.

D.

Phil - An owner of a large business who often understates his company ' s profits by huge amounts in order to pay significantly less tax.

Question # 143

Which of the ' fundamental principles ' of CIMA ' s Code of Ethics is defined as follows?

 

" A professional accountant should be straightforward and honest in all professional and business relationships "

A.

Integrity

B.

Objectivity

C.

Professional competence and due care

D.

Professional behavior

Question # 144

Anne, Bill, Chris and Diane are the only directors of ABCD Ltd. Bill is the Chairman of the board and has a casting vote. A board meeting was called to consider a proposal to enter into a contract with EFG Ltd. Which of the following is INCORRECT?

A.

The board has validly resolved to contract with EFG Ltd if any three of the directors vote in favor

B.

As Bill is the Chairman, the board cannot validly resolve to contract with EFG Ltd without Bill ' s consent

C.

The proposal is lost if only two of Anne, Chris and Diane vote in favor

D.

If Bill and one other director votes in favor, Bill can use his casting vote to carry the proposal

Question # 145

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

Question # 146

Section 2 of the Health and Safety at Work Act 1974 provides that: “It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees.”  

 

Which of the following is correct?

 

A breach of this duty gives rise to  

i. a civil action

ii. a tortuous action.

iii. a criminal offence.

A.

(i) only

B.

(i) and (ii) only

C.

(iii) only

D.

(ii) and (iii) only

Question # 147

Which TWO of the following are true of the CIMA Code of Ethics?

A.

It covers every possible dilemma that an accountant might face

B.

It is based on values rather than compliance

C.

It is a financial requirement of accountants

D.

It establishes the fundamental principles of professional ethics for professional accountants

Question # 148

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 International Federation of Accountants

C.

The Financial Reporting Council

D.

The Auditing Practices Board

Question # 149

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

Question # 150

Which of the following is correct?

A.

A fixed charge is a charge over a specific asset of the company which it is unable to deal with freely in the ordinary course of business.

B.

A fixed charge is a charge over a specific asset of the company which it is able to deal with freely in the ordinary course of business.

C.

A fixed charge is a charge over a class of company assets which the company can deal with freely in the ordinary course of business.

D.

A fixed charge is a charge over a class of company assets which the company is unable to deal with freely in the ordinary course of business.

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