Which of the following is INCORRECT regarding the differences between a general partnership and a company limited by shares?
(i) Both a partnership and a company are formed by registration with the Registrar of Companies.
(ii) All partners are agents of the firm and all directors are agents of the company.
(iii) All partners are fully liable for the firm’s debts and the company is fully liable for its own debts.
Self regulation is based upon:
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?
Which TWO of the following are true of the CIMA Code of Ethics?
Why should accountants be up-to-date with developments in the profession?Choose TWO options.
You are the financial controller of SB Company, responsible for directing the budgeting process For the current year, you were instrumental in gaming approval of a particular manager's budget without modification. As a token of appreciation, the manager has given you a gift voucher for a local restaurant In considering whether or not to accept the gift, you should refer to which of the following fundamental ethical principles?
Danny holds 1%, Edward 2% and Fozia 3% of the issued share capital of Vee Ltd. Which of these shareholders, acting alone or together, hold the minimum percentage to entitle them to require the company to circulate a written statement of their views to all those entitled to receive notice of the forthcoming annual general meeting?
IFAC member firms or bodies:
You work for an accountancy firm and discover that a member of an assurance team has a significant conflict of interest. You take CIMA's Code of Ethics with you when you alert your board of directors as to why this is an important issue, but the board decides that the conflict of interest is not important. This is an example of tension between:
Exe Ltd was registered in 1980 and has an objects clause in its Memorandum of Association. What is the current status of Exe Ltd's objects clause?
Wye has borrowed £10,000 from Exe and the loan has now become repayable in full. Exe has received a cheque from Wye for £9,000 stated to be “in full and final settlement of the loan.” What is the position if Exe cashes the cheque?
(i) Exe will have accepted £9,000 in full and final settlement and will not be able to claim the other £1,000 from Wye.
(ii) Exe is legally entitled to cash the cheque and pursue Wye for the balance of £1,000.
(iii) Exe will have accepted £9,000, but at law payment of less than the amount due cannot satisfy the full debt.
The UK Corporate Governance Code is primarily directed at which type of business organization?
Which ONE of the following provides an example of circumstances that may create self-review threats for a professional accountant in public practice?
Which of the following groups is a non-financial as opposed to a financial stakeholder of a company?
Which of the following is incorrect in relation to Shari'ah law?
Being able to be trusted by others to be dependable reflects the personal quality identified by the CIMA Code of Ethics as:
Which of the following contracts might be specifically enforceable?
Which of the following is incorrect?
Badger has just been offered a job after completing a series of long interviews.
Which of the following would legally form the employment contract between him and his employer:
The Auditing Practices Board has an objective of establishing ethical standards in relation to which aspects of the work of external auditors and those providing assurance services?
In relation to registering a company limited by shares, which of the following is correct?
What is the public function of all accountants?
Timmy has just taken over as the managing director of a well-known manufacturing company.
He really wants to do a good job an ensure that the company maintains its positive reputation.
Baring in mind the five key principles of corporate governance, which of the following should Timmy do to ensure he does a good job?
Select ALL that apply.
Which of the following statements is correct in relation to the ability of a company to contract?
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.
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?
There are several different schools of ethics. Which of the following best represents the ethical approach adopted by the accountancy profession?
Which of the following is one of the fundamental principles identified in the CIMA Code of Ethics?
In the UK, the body responsible for taking an appropriate role in the development of statutes, regulations and accounting standards which affect the conduct of auditing and assurance services, both domestically and internationally is:
Which of the following is correct?
(i) A decision of the Supreme Court is binding on all lower courts which are called upon to decide a case based on similar material facts.
(ii) If there is a conflict between European Law and English law, European Law prevails.
(iii) Parliament may delegate authority to the government to make law.
Which of the following are listed among the IFAC's drivers for sustainable organisational success?
Select ALL that apply.
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.
Which of the following must an internal audit satisfy in order to be deemed independent? Select ALL that apply.
Which of the following statements is incorrect?
Which of the following is correct?
i. A company intending to issue new shares for cash must first offer them to the existing shareholders.
ii. A company may dispense with the requirement to offer new shares to existing shareholders by passing a special resolution.
iii. A company issuing shares for a non-cash consideration is not required to offer the shares to the existing members first.
In a situation where a professional accountant needs to choose in whose interest he or she is to behave and act, which of the following interests should he or she put first?
You are the manager of the finance function of a large engineering company According to IFAC's drivers of sustainable corporate success, which of the following would be a method by which you could improve the value of your department to the company?
The CIMA Code of Ethics relates to:
Kane is a management accountant for business in the City. When looking through the company's latest financial reports he finds that company has been paying far less tax than it should be.
After consulting the company's management, Kane discovers that the company had been deliberately paying less tax and are not interested in taking action to rectify it.
As Kane has done all he can to try and solve the issue himself, it's clear that he now needs to take steps to disassociate himself from the misleading information.
How might he do this?
Select ALL that apply.
R, S and T are the only shareholders in RST Ltd each holding 5,000 ordinary £1 shares. R is the only director of the company. The articles of association of RST contain the following provisions:
1. R is to be a director of RST Ltd for life.
2. In the event of any resolution to dismiss R by ordinary resolution his votes shall count three times.
Which of the following is CORRECT?
(i) Provision 1 is void as a director cannot be appointed for a period exceeding 3 years.
(ii) Provision 2 is valid and R may outvote any proposed resolution to dismiss him.
(iii) Provisions 1 and 2 are both unenforceable by R as they are not ordinary membership rights.
Zed Bank plc has agreed to allow Exe Ltd an overdraft of £50,000 subject to a fixed and floating charge over almost all of the company's assets. In addition, the directors of Exe Ltd have been required to personally guarantee the overdraft.
Which of the following is correct?
(i) The directors could face bankruptcy if they are called upon to honour the guarantee.
(ii) In this case the directors do not enjoy limited liability as they are liable on the guarantee if the company cannot pay.
(iii) The directors could only be required to honor the guarantee if the company's assets proved insufficient to meet the overdraft.
How many fundamental principles are identified by the CIMA Code of Ethics?
Which of the following is INCORRECT in relation to a claim for wrongful dismissal?
Which THREE of the following are disadvantages of rules-based approaches to ethical standards?
Rules-based approaches:
Articles of association regulate the relationship between:
An external auditor has concluded that the financial statements of a company fairly reflect the financial position of a company. The report which the auditor issues will include which of the following?
1. Details of the company's directors
2. Details of managements' responsibilities.
3. Details of the company's performance.
Wye Ltd has ordered goods from ABC plc and the directors of Wye Ltd have guaranteed that Wye Ltd will pay the agreed sum within one month of the delivery of the goods.
Which of the following is correct?
(i) The contract is between Wye Ltd and ABC plc and the directors cannot be forced to pay the amount due in any circumstances.
(ii) A contract of guarantee is only enforceable if it is evidenced in writing.
(iii) The directors of Wye Ltd can be forced to honor the guarantee in the event of Wye Ltd not paying the amount due.
Which of the following is NOT one of the main requirements of the UK Corporate Governance Code?
Which of the following is incorrect in relation to a reduction of capital by a private company?
Which of the following is correct?
(i) All courts below the Supreme Court may refer a case involving European Law to the European Court of Justice for a preliminary ruling.
(ii) The Supreme Court must refer a case involving European Law to the European Court of Justice for a preliminary ruling.
(iii) An English court is not bound to give effect to a preliminary ruling of the European Court of Justice.
Which of the following are TWO reasons why new legislation might be introduced in response to corporate scandals?
CIMA's Code of Ethics would be violated if a professional accountant accepted a fee for work which is:
Which of the following statements is correct in relation to the civil law?
ABC Accountants has taken out an advert in its local paper to promote its services. Mr B, an account manager, is uncomfortable, as the advert says that ABC is expert in charitable tax issues, and he knows that none of the partners have that expertise. However, Mr B does not want to be thought of as a 'trouble maker' by bringing the matter up with his manager. Which TWO things should Mr B do?
Which of the 'fundamental principles' of CIMA's Code of Ethics is defined as follows?
"A professional accountant should comply with the relevant laws and regulations and should avoid any action that discredits the profession"
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 manufacturing company has a policy of only buying raw materials which are produced within a 100 kilometer radius of its factory. This is an example of what aspect of CSR?
L is a senior management accountant in a large and respected firm. He has found out that two of the partners of the firm are working unethically for clients who operate on 'the wrong side of the law'. L would like to draw this matter to the attention of the third partner, but he is concerned that he will either lose his job, or, if the scandal gets out, the firm will lose its reputation and clients as a result. He decides to do nothing. Is this an unethical thing to do?
Compliance is
Which of the following are examples of an invitation to treat? Select ALL that apply.
Which of the following is correct?
(i) The provisions of the Memorandum of Association do not form a contract between the members and the company.
(ii) The provisions of the Articles of Association form a contract between the members and the company.
(iii) One member may sue another directly on the provisions in the Articles of Association which contain ordinary membership rights.
Which of the following is a civil action?
i. An action by a local authority against a restaurant for selling impure food.
ii. An action by a taxpayer against Her Majesty's Revenue and Customs (“HMRC”) in relation to an expenses claim which has been refused by the Inspector of Taxes.
iii. An action by Exe Ltd against Zed Ltd for supplying equipment which was found to be dangerous.
Which of the following cases of dismissal are likely to be deemed automatically fair by an employment tribunal?
B agreed in his contract that he would not work for a competitor of Gee Ltd for a period of 12 months after leaving the company's employment. On leaving Gee Ltd, B worked for Zed Ltd, a competitor of Gee Ltd. If the restriction in B's contract with Gee Ltd should be found to be reasonable, which of the following remedies is Gee Ltd entitled to?
(i) A decree of specific performance forcing B to comply with his contract with Gee Ltd.
(ii) Damages in respect of any loss caused by B's breach of contract.
(iii) An injunction to stop B working for Zed Ltd.
Which of the following is entitled to initiate court action on behalf of a company?
(i) The board.
(ii) The majority shareholders.
(iii) All the shareholders.
You work for an airline company and discover a series of regular payments made to a lobbying group that campaigns to allow people freedom to fly as and when they choose without being taxed for contributing to global warming. The group's website includes specific commentary that claims to 'expose the myth of global warming'. Neither your company nor the lobbying group (which describes itself as 'independent') mention the financial link between your organizations. Is this an ethical issue and why?
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'?
Which of the following is correct in relation to international relations?
(i) International regulations are voluntarily entered into by commercial and professional bodies to standardize practices and procedure to make it easier to enter into international trading agreements.
(ii) International regulations which have been agreed by the professional bodies of different states are only binding on the members of those bodies or those who choose to adopt them.
(iii) International regulations may attain the force of law by being adopted by the legislatures of individual states
When might an ethical dilemma occur?
Why are the principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior “fundamental”?
lohn works as a management accountant for a law firm. He only got the job because he lied about his qualifications: he told the interviewers that he the required accountancy qualifications to do the job when he actually
didn't.
Now John's boss has found that John lied during the interview. Which of the following will almost certainly happen as a result?
Select ALL that apply.
Which of the following is INCORRECT in relation to the Unfair Terms in Consumer Contracts Regulations 1999?
P is an accountant working in a business Which of the following circumstances might create a self-interest threat for P in her professional role?
In the UK, the body responsible for reviewing the regulatory activities of the professional accountancy bodies is:
Which of the following describes the aim of corporate governance initiatives?
Which of the following is normally not an implied term of a contract of employment?
Which of the following is correctly stated to be an advantage of carrying on business via a company limited by shares?
(i) The liability of the company is limited.
(ii) In general the directors are not liable for the debts of the company.
(iii) The liability of the shareholders is limited.
S is management accountant for a small retail company. S has discovered a possible fraud in the purchasing department. The manager of that department has told S that he is aware of the fraud and will 'deal with it'.
Which ONE of the following would it be appropriate for S to do?
Which ONE of the following resolutions is no longer legally effective?
Which of the following is incorrect?
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?
Regarding auditor remuneration, a self-interest threat to professional competence and due care is created if
Which of the following is INCORRECT in relation to Shari'ah law?
i. Shari'ah law is intended to provide for a person's spiritual well-being but is not concerned with secular matters.
ii. The Sunnah is one of the primary sources of Shar'iah law.
iii. The salat (daily prayers) is one of the Five Pillars of Islam.
Which THREE of the following may be external stakeholders in the activities of a nuclear power station?
You work for a company that designs and manufactures children's toys. Which of the following is NOT an example of social responsibility that your company might choose to address?
Adam, Brian, Charles and David each held 25% of the issued share capital of ABCD Ltd. Adam has recently issued further shares to himself in order to increase his voting power. Which of the following is incorrect?
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.
An auditor would trace copies of sales invoices lo shipping documents in order to check for which of the following errors?
Independence of mind allows a professional accountant to:
Wye Ltd is considering appointing Anne as a director of the company. Which of the following is incorrect?
(i) If Anne is an un-discharged bankrupt, she cannot act as a company director.
(ii) If Anne is the subject of a disqualification order, she cannot act as a company director.
(iii) If Anne has already been appointed a director of another company, she cannot also act as a director of Wye Ltd.
Which of the following type of committee is NOT required by the UK Combined Code?
Why does life-long learning require commitment? Choose TWO options.
You work for a company that is constructing a major football stadium. The day that the stadium is finished, large cracks appear in the supporting walls. It turns out that your company's purchasing director bought cement from a new and inexperienced company. You find out that the cement supplier was no cheaper than the other suppliers who had bid for the contract but that the son of your purchasing director happens to run the cement company. Is this an ethical issue and why?
Miss B is working closely with Mr L to deliver an important report on the efficiency of Mr L's department. They have had to work late together several times, and last night they went out to dinner afterwards. Miss B is starting to think she may have feelings for Mr L. Could her independence be called into question?
'Remuneration' is one of the main principles in the Corporate Governance Code. Which of the following is NOT best practice under the 'Remuneration' principle?
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?
Which of the following is CORRECT in relation to a Limited Liability Partnership (“LLP”)?
(i) An LLP is formed by registration with the Registrar of Companies
(ii) Unlike the articles of a company the internal rules of an LLP are not available for public inspection
(iii) An LLP is liable to pay corporation tax on its profits
In which of the following situations has a contract of employment arisen?
Which of the following is CORRECT in relation to the Sarbanes-Oxley Act passed in the United States of America in 2002?
i. The Act sought to protect investors by improving the accuracy of corporate disclosure and reporting procedures and increasing corporate openness.
ii. The Sarbanes-Oxley Act 2002 was passed in response to the high-profile Enron and WorldCom financial scandals.
iii. The Act provides that all auditors of public companies must register with the Public Company Accounting Oversight Board.
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