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

1. B has been employed by Wye Ltd for 10 years. His contract of employment states that, if either Wye Ltd or B wishes to terminate the contract, each party must give the statutory minimum period of notice.
Which of the following statements is correct?

A) Both B and Wye Ltd are entitled to 10 weeks' notice.
B) Both B and Wye Ltd are entitled to 1 week's notice.
C) B is entitled to 10 weeks' notice but Wye Ltd is entitled to only 1 week's notice.
D) B is entitled to 1 month's notice and Wye Ltd is entitled to 10 weeks' notice.

2. A business has been registered under the name ABC Ltd. Which of the following types of business organization must this be?

A) Either a private limited company or a public limited company.
B) A public limited company.
C) A private limited company.
D) A partnership.

3. On 1st May Wye Ltd wrote to Zed Ltd offering to sell a machine for £20,000, and allowing Zed Ltd 7 days to consider the offer.
Which of the following statements is incorrect?

A) If Wye Ltd posts a revocation of the offer on 2nd of May which is received by Zed Ltd on 3rd May then the offer is withdrawn with effect from the 3rd May.
B) Wye Ltd is contractually obliged to keep the offer to Zed Ltd open for 7 days.
C) If Zed Ltd accepts the offer by post on 4th of May, then there is a contract from 4th May.
D) Wye Ltd can withdraw the offer at any time before Zed Ltd has accepted.

4. AD company has recently appointed you as the head of their internal audit department and the head of the risk management committee. The internal audit department consists of a team of ten full time staff and other finance and IT staff are appointed into the internal audit team on an ad hoc basis as required.
The rail time staff are all qualified accountants, some with CIMA and some with other professional bodies.
The company prefers to keep the full time staff complement to ten to manage the costs and the team have told you that they are often under considerable pressure to perform their operational and financial audit work and feel short staffed. The team therefore relies on the support of key members of the finance department and IT department, who are experts in their areas You were appointed to the role by the audit committee and have been given authority to investigate all aspects of the business.
From your initial understanding of the internal audit function which TWO statements describe the strengths of the department?

A) The department is independent and objective.
B) The department is sufficiently resourced both financially and in terms of qualified, experienced staff.
C) There is no limitation on the scope of the department's work
D) The appointment process of the head of internal audit reduces the opportunity for management bias
E) The department has no operational responsibilities

5. 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.

A) (i) only
B) (i) and (iii) only
C) (iii) only
D) (ii) only

Solutions: