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

1. When might an ethical dilemma occur?

A) When the boundaries between right and wrong are unclear
B) When an individual is under pressure to do something that does not feel right
C) All of the above
D) When the code of ethics does not specify what action to take

2. Agency theory is often cited as an explanation for the development of corporate governance Which TWO of the following statements are correct?

A) Agency theory assumes that the goals of the managers of the company are the same as the owners of the company
B) Agency theory assumes that the goals of the managers of the company are different from the owners of the company
C) Agency theory defines the problems that arise from the dependency of an organisation on resources
D) Agency theory requires that the managers of the company act in the interests of the owners of the company
E) Agency theory explains the issues which arise from the separation between the owners of the company and those who control it

3. Which TWO of the following are NOT directly relevant to a system of professional ethics?

A) Political morality
B) Career development
C) Personal friendships
D) Family commitments
E) Religious morality

4. Which of the following is correct?
(i) A public company must hold an AGM.
(ii) A public company must give at least 14 days' notice of its AGM.
(iii) One of the purposes of an AGM is to provide an annual opportunity for the shareholders to question the directors regarding their management of the company.

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

5. B Ltd has an issued share capital of 1,000 ordinary £1 shares. The board of B Ltd has resolved to alter the company's articles of association. Which of the following is correct?
(i) The articles may be altered by board resolution.
(ii) The articles may be altered by a written resolution of the shareholders.
(iii) The articles may be altered by a special resolution of the directors.

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

Solutions: