CIMA CIMAPRA17-BA4-1 Exam Practice Test Instant Access

Question 1

Which THREE of the following statements are correct in relation to the essential elements of a contract?

AA conditional offer cannot be accepted until the condition has been satisfied

BA revocation of an offer is only valid when it is received by the offeree, unless it is sent by post in which case it is valid as soon as it is posted

CEven if the parties are fully in agreement, the agreement will be unenforceable unless at least one of the parties has provided consideration

DA request for further information in relation to an offer has the effect of cancelling the offer

EIf an offer is rejected it can only be revived by the person who made the offer

FOnce an offer has been made it does not exist forever but will lapse after a reasonable time

Answer : A, D, F

Question 2

Which THREE of the following are characteristics of Limited Liability Partnerships ("LLPs")?

ALLPs can enter into contracts in their own name

BLLPs have no perpetual succession

CAn LLPs partners are jointly and severally liable for the debts of the LLP

DLLPs can hold property in their own name

ELLPs are usually created by formal registration under statute

Answer : A, D, E

Question 3

The majority of developed countries require publicly quoted companies and large companies to produce annual financial statements which are then audited by an external auditor.

Which of the following statements regarding the requirement for external audit is Incorrect?

AIndependent external audit gives confidence in the financial statements which is required as the directors have incentives to manipulate the financial statements presented to the shareholders

BAs the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and this needs to be guaranteed by independent external audit.

CIndependent external audit gives confidence in the financial statements by including the auditor's opinion on whether or not they show a true and fair view.

DAs the directors are responsible for the day-to-day management of the company, they hold more detailed information which is resolved by the presentation of financial statements to the shareholders and there is a need for this to be assured by independent external audit

Answer : B

Question 4

An external auditor has concluded that the financial statements of a company fairly reflect the financial position of a company. The report which the auditor issues will include which of the following?

1. Details of the company's directors

2. Details of managements' responsibilities.

3. Details of the company's performance.

A1 and 3 only

B1,2 and 3

C2 only

D1 and 2 only

Answer : C

Question 5

Which of the following are correct in relation to supervisory and management boards of directors?

1 A supervisory board reports to the mangament board in respect of business policy and future strategy

2 A management board is usually made up entirely of executive directors

3 A supervisory board includes employee representatives.

A2 only

B1 and 2 only

C2 and 3 only

D1 only

Answer : C

Question 6

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?

AThere is no limitation on the scope of the department's work

BThe department has no operational responsibilities

CThe appointment process of the head of internal audit reduces the opportunity for management bias

DThe department is sufficiently resourced both financially and in terms of qualified, experienced staff.

EThe department is independent and objective.

Answer : A, D

Question 7

Which of the following describes a principles-based approach to ethical standards in an organisation?

The objective behind the approach is to:

Adetect ethical non-compliance It motivates through fear and its standards are implicit

Bprevent ethical non-compliance It motivates through values and its standards are explicit

Cdetect ethical non-compliance It focuses on the development of discipline and obedience and its standards are explicit

Dprevent ethical non-compliance It focuses on the development and application of individual judgment and standards are implicit

Answer : D

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