Ace Your BA4 CIMA Certificate Exam

Fundamentals of Ethics, Corporate Governance and Business Law Questions and Answers

Question 49

Which of the following is incorrect in relation to a reduction of capital by a private company?

The company must pass a special resolution to authorize the reduction of capital.

The reduction must be approved by the court.

It is not necessary for the company’s Articles of Association to authorize a reduction of capital.

The directors must make a solvency statement.

Question 50

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.

(i) and (ii) only

(ii) and (iii) only

(iii) only

(i) and (iii) only

Question 51

Which of the following are TWO reasons why new legislation might be introduced in response to corporate scandals?

To prevent this type of unethical behavior by making it illegal

To punish individuals for adhering to codes of ethics

To encourage companies to make their own decisions about ethical matters

To enforce minimum standards of behavior

Question 52

CIMA's Code of Ethics would be violated if a professional accountant accepted a fee for work which is:

fixed by a company's ethics committee

based on a quotation fixed in advance of the work being earned out

payable once a specified finding has been attained

based on a price quotation submitted in competitive bidding