BA4 Exam Dumps : Fundamentals of Ethics, Corporate Governance and Business Law

Which ONE of the following provides an example of circumstances that may create self-review threats for a professional accountant in public practice?

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.

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.