CIMA CIMAPRA17-BA4-1 Exam Practice Test Instant Access

Question 1

Which of the following statements are correct regarding companies'?

1. Both public and private companies must have a minimum amount of share capital before they can commence trading.

2. The shareholders of both public and private companies cannot interfere in the management of the company.

3. The minimum number of directors for both public and private companies is two

A1 only

B2 and 3 only

C1 and 2 only

D2 only

Answer : A

Question 2

Which of the following does NOT describe the responsibilities of the audit committee?

AThe review of the internal audit programme and significant findings of the auditors. The review of the company's systems of internal control. The review of the company's system to facilitate whistle blowing

BThe review of the company's financial statements and any interim reports produced. The review of the structure, size and composition of the board. The review of the company's internal control and risk management system

CThe discussion with auditors on any significant matters that arose during the audit. The recommendations on the appointment and removal of auditors. The setting of the audit fee in discussion with the auditors.

DThe review of the company's financial statements and any interim reports produced. The review of the company's systems of internal controls. The review of the audit report and any management letter provided by the external auditor

Answer : B

Question 3

In relation to conditions and warranties, which of the following statements is correct?

AA breach of a condition entitles the party not in breach to claim damages only

BTo be effective a condition must be expressed in the contract

CA warranty may be implied into a contract on the basis of a trade custom.

DA breach of a warranty entitles the party not in breach to cancel the contract

Answer : B

Question 4

'Remuneration' is one of the main principles in the Corporate Governance Code. Which of the following is NOT best practice under the 'Remuneration' principle?

ARemuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but should not be excessive

BRemuneration should be structured in order to link a significant proportion of the rewards to corporate and individual performance

CThere should be a formal and transparent procedure for developing policy on executive remuneration

DThe board of directors are able to set the remuneration of non-executive directors

Answer : D

Question 5

Articles of association regulate the relationship between:

Athe company and its directors

Bthe company and its customers

Cthe company and its members

Dthe company and its creditors

Answer : C

Question 6

Which of the following statements is TRUE in relation to ethical dilemmas?

AThey can be difficult to spot, since they are not always obvious

BInaction or silence is often the best way of dealing with them

CProfessional accountants can be disciplined for encountering them

DThey can relate to someone's personal life, or professional life, but not both at the same time

Answer : D

Question 7

Which of the following statements regarding companies limited by shares and general partnerships is correct?

AUnlike a general partnership, a private company limited by shares may create a floating charge as security for a loan

BPrivate companies limited by shares and general partnerships are required to disclose financial information regarding the operation of the business to the general public

CIn the event of insolvency both a private company limited by shares and a general partnership may be placed in insolvent liquidation

DBoth a private company limited by shares and a general partnership are established by registration

Answer : A

CIMAPRA17-BA4-1 BA4 - Fundamentals of Ethics, Corporate Governance and Business Law Exam Practice Test