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

1. Which of the following statements is correct in relation to a misrepresentation?

A) If a person can show that he or she was induced to contract by a misrepresentation then a court must grant a remedy, irrespective of the time taken to commence the action against the misrepresents.
B) If one person attempts to persuade another to enter into a contract by misrepresenting the facts, the intended victim will have a remedy, unless the misrepresentation did not induce the intended victim to contract
C) A misrepresentation is a false statement of fact or opinion made by one person to another before a contract is formed and which causes the contract to be automatically cancelled
D) A person selling goods may be hekJ liable in misrepresentation if he or she remains silent during the negotiations and fails to correct any misunderstandings on the part of the buyer

2. X is in the process of setting up a private company limited by shares X is considering including certain provisions in the articles of association. Which of the following provisions would be enforceable by and against the company?
1 Dividend rights of the members
2. Terms relating to bonuses of directors
3. Payment terms of suppliers.

A) 1 and 2 only
B) 1,2 and 3
C) 1 only
D) 2 and 3 only

3. F knows from preparing the accounts that the company she works for is going to have to make redundancies due to the recession. She also knows that, despite the recession, the Managing Director continues to enjoy lavish perks and even uses a private jet. What should she do?

A) Go to the press: Mrs F has a duty to report this in the public interest and the interest of the staff who will be made redundant
B) Leak the information: that way F's conscience will be clear but the information won't be traced back to her
C) Do nothing: Professionally, Mrs F is bound to respect the confidentiality of the information she has received
D) Resign: F cannot carry on working at a company which is so unethical

4. 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?

A) P is required to review data after previously being involved in its preparation
B) A client is threatening P's dismissal over a disagreement about the review of accounting policies
C) The company is being threatened by litigation
D) P is concerned over her employment security

5. Which of the following statements is true?

A) The CIMA Code of Ethics is based on the IFAC Code of Ethics
B) The IFAC Code of Ethics is based on the CIMA Code of Ethics
C) The CIMA Code of Ethics is compliance based while the IFAC Code of Ethics is principles based
D) The CIMA and IFAC codes take a very different approach

Solutions: