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

1. Which of the following is INCORRECT?

A) If the company has appointed a managing director, he or she is able to contract on behalf of the company.
B) The board is the agent of the company.
C) The board is appointed to act as the agent of the shareholders.
D) Individual directors cannot contract on behalf of the company unless they are authorized by the board.

2. You have been charged with the task of reviewing the CSR report for your company, GHI. Which of the following aspects of the report represent a lack of compliance with the Global Reporting Initiative G4 Sustainability Reporting Guidelines?

A) The CSR report includes both positive and negative aspects of GHI's performance for the year
B) The CSR report is compiled and published only when material developments within GHI policies and achievements become available to warrant the expense of producing a new report
C) The CSR report presents information using visual aids that improve the accessibility and understand ability of the information for stakeholders.
D) The CSR report reflects GHI's significant economic, environmental and social impact

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

4. Exe Ltd was under contract to deliver goods by road to London for Wye Ltd for £2,000. After part of the journey was completed the lorry broke down and Wye Ltd was forced to arrange for Zed Ltd to complete the delivery. Subject to the contract not providing for this situation, which of the following is correct?

A) Exe Ltd is entitled to the full £2,000.
B) Exe Ltd is entitled to nothing.
C) Exe Ltd is entitled to part of the delivery fee.
D) Exe Ltd is entitled to a reasonable sum for the work done.

5. A is about to register a new company limited by shares, "A Ltd", in order to carry on a retail business. A has ordered a quantity of goods from a supplier "for and on behalf of A Ltd". Which of the following is correct?

A) The contract is void.
B) A Ltd can ratify the contract following registration.
C) A Ltd is liable to pay for the order as soon as it is registered.
D) A is personally liable for the order.

Solutions: