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

1. Which parties of a company form the agent/principal relationship?

A) The board and the business
B) Directors and the business
C) Shareholders and the board
D) Shareholders and the business
E) Directors and shareholders
F) Directors and the board


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

A) Gina - A senior manager at an investment firm who often redirects company funds to a fake account that she's created.
B) Barry - An accountant for a large law firm who sometimes redirects incoming company funds to his own private account.
C) Phil - An owner of a large business who often understates his company's profits by huge amounts in order to pay significantly less tax.
D) 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.


3. Which of the following statements suggests that A is an employee in relation to the work he carries out for BCD Ltd?
i. He is required to provide his own tools.
ii. He is required to carry out his work personally and is not free to send a substitute.
iii. He is in receipt of pay after income tax has been deducted under PAYE.

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


4. According to the CIMA code of ethics, if appropriate safeguards cannot be identified to address threats to compliance with fundamental principles, a professional accountant should:

A) Proceed with necessary caution
B) Proceed unless the situation will involve breaking the law
C) Refuse to remain associated with the matter creating the conflict, where possible
D) Identify the situation to superiors before continuing with the professional service involved


5. Which of the following is correct in relation to the purchase by a company of its own shares?
(i) If a company wishes to purchase its own shares it must have authority in its Articles of Association.
(ii) A private company may purchase its own shares out of capital.
(iii) It is not possible for a company to purchase all its own shares.

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


Solutions:

Question # 1
Answer: E
Question # 2
Answer: B
Question # 3
Answer: C
Question # 4
Answer: C
Question # 5
Answer: D

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