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

1. Completing work within established deadlines reflects the personal quality identified by the CIMA Code of Ethics as:

A) Responsibility
B) Timeliness
C) Accuracy
D) Tardiness

2. Zed Bank plc has agreed to allow Exe Ltd an overdraft of £50,000 subject to a fixed and floating charge over almost all of the company's assets. In addition, the directors of Exe Ltd have been required to personally guarantee the overdraft.
Which of the following is correct?
(i) The directors could face bankruptcy if they are called upon to honour the guarantee.
(ii) In this case the directors do not enjoy limited liability as they are liable on the guarantee if the company cannot pay.
(iii) The directors could only be required to honor the guarantee if the company's assets proved insufficient to meet the overdraft.

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

3. Company F is a new business that prides itself on being green and ethical. It uses renewable energy to run its factories, abides by all the rules and regulations and regularly donates money to sustainable development charities around the world, despite occasionally being unable to fully pay its workers.
Why is Company F in violation of Carroll's CSR pyramid?

A) Because it is not profitable.
B) Because using renewable energy to run factories generally isn't advised as it can be unreliable.
C) Because it should be donating to charities based in their own country.
D) It is not in violation of Carroll's pyramid.

4. Which of the following courses of action is NOT part of the process that the CIMA Code of Ethics expects of professional accountants in resolving an ethical conflict?

A) Consult with other appropriate persons within the firm or employing organization for help if the matter remains unresolved
B) Evaluate the consequences of each possible course of action
C) Determine the appropriate course of action that is consistent with the fundamental principles identified
D) Proceed with the course of action that would do least damage to a professional accountant's career prospects

5. Which of the following describes a principles-based approach to ethical standards in an organisation?
The objective behind the approach is to:

A) prevent ethical non-compliance It motivates through values and its standards are explicit
B) detect ethical non-compliance It focuses on the development of discipline and obedience and its standards are explicit
C) detect ethical non-compliance It motivates through fear and its standards are implicit
D) prevent ethical non-compliance It focuses on the development and application of individual judgment and standards are implicit

Solutions: