CIMA CBA Trial Exam July 2011.

1. (a) (b) (A) (B) (C) (D)

Which of the following statements is correct? In the event of a conflict between equity and the common law, the common law prevails. An Act of Parliament can overrule any common law or equitable rule. (i) only. (ii) only. (c) Neither (i) nor (ii). Both (i) and (ii).

2. All criminal cases commence in (A) The County Court. (B) The Crown Court. (C) The court of Appeal. (D) The Magistrates Court. 3. Which one of the following does not provide codified law? (A) A constitution (B) Regulations (C) Case Laws (D) Legislation. 4. Which one of the following countries has a legal system on English Common Law, Islamic Law and Napoleonic codes? (A) Nigeria (B) Egypt (C) Pakistan 5. While taking driving lessons James drove negligently and injured his instructor. James duty of care in this case will be A. the same as that owed by every driver B. that of any unqualified driver C. assessed on the basis of James specific experience and skill D. that which might reasonably be expected of a similarly inexperienced driver. 6. What is the effect of the maximum Res Ipsa Loquitur (the thing speaks for itself) in connection with the tort of negligence? A. There is no need to prove damage B. The plaintiff contribute to his own misfortunes C. The plaintiff impliedly assented to the act which caused the injury 1

D. The burden of proof is placed on the defendant 7. P offers to sell his car to A for 10,000 cash. At what point in time does the contract come into being? (A) When A accepts the offer. (B) When A pays P the 10,000. (C) When the agreement is written down. (D) When the agreement is signed.

8. Magpie Ltd placed the following advertisement in a local newspaper. We are offering to sale fully imported shoes at a specially reduced price of 35 a pair. Order now while stocks last. The advertisement contained a mistake in that the shoes should have been price at 45 a pair. Weasel & Sons Ltd has placed an order for 100 pairs of shoes. Which one of the following statements is correct? (A) Weasel & Sons Ltd has accepted an offer and is contractually entitled to the 100 pairs of boots. (B) Magpie Ltd can refuse to supply Weasel & Sons Ltd as the advertisement is not an offer, but an invitation to treat. (C) Magpie Ltd can only refuse to sell the boots to Weasel & Sons Ltd if it has sold all its stock. (D) As Weasel & Sons Ltd has not yet paid for the shoes, the company has no contractual right to them. 9. (E) (F) (G) (H) 10. (A) (B) (C) (D) In relation to a valid enforceable contract, which one of the following statements is untrue? (A) Consideration must not be past. (B) Consideration must move from the promisee. (C) In certain circumstances, a promise may be binding without consideration. (D) Consideration must be adequate. What is the consequence if a contract is void at law? It is the destitute of legal effect Further performance is excused The innocent party may repudiate Either party may repudiate

11. The equitable remedy of rescission will (A) Order that the parties terminate their actions under the contract (B) Force the parties for any reasonable acts they have undertaken. (C) Remunerate the parties for any reasonable acts they have undertaken.

(D) Order that the parties are places in their exact pre-contractual position. 12. B Ltd makes an offer by post to R Ltd, sending B Ltd s standard written terms. R Ltd agrees to it, sending B Ltd s standard terms (which are different from B s). B Ltd starts to perform the contract without writing back to R Ltd. Which one of the following statements is correct? (A) There is a contract on R Ltd s terms. (B) There is no contract. (C) There is a contract on B Ltd s terms. (D) There is a contract on reasonable terms to be settled by the courts.

13. Which of the following statements is correct? (A) Misrepresentation always gives the party deceived an absolute rights to damages. (B) The contract is only voidable if the party deceived can prove that the misrepresentation was negligent. (C) The contract only gives a right to damages if the party deceived can prove that the misrepresentation was negligent. (D) Misrepresentation always renders the contract voidable.

14. Which one of the following is incorrect? (A) A term may be implied into a contract by statute. (B) A term may be implied into a contract by a court on the ground that it would make the contract more equitable. (C) A term may be implied into a contract by a court on the ground of business efficacy. (D) A term may be implied into a contract by a court on the ground that it would make the contract more equitable.

15. All the following statements relating to contract terms are correct, except one. Which one is wrong? (A) A breach of warranty gives the injured party a right to claim damages.

(B) A breach of condition only gives the injured party the right to terminate the contract. (C) A breach of condition gives the injured party the right to terminate the contract and claim damages. (D) A breach of warranty gives

16. Which one of the following is not true? (A) An exclusion clause must be incorporated into a contract at or before the time when the contract is made. (B) An exclusion clause may be invalidated by the Unfair Contract Terms Act 1977, in a case to which the Act applies. (C) A contracting party can be bound by an exclusion clause which is incorporated into the contract by reference to an earlier course of dealing. (D) To be bound by an exclusion clause, the contracting party must have read it.

17. Builder Ltd was under contract to build an extension for Land Ltd at a price of 40,000. Builder Ltd completed three-quarters of the extension, stopped work, and was then placed in creditors voluntary liquidation, and failed to complete the extension. Which of the following is correct? (A) Builder Ltd has completed three-quarters of the work and is, therefore, entitled to 30,000. (B) Builder Ltd has substantially performed the contract and is entitled to a reasonable sum in respect of the work done. (C) The contract between Builder Ltd and Land Ltd is frustrated. (D) Builder Ltd is entitled to nothing.

18. In the event of a breach of contract, what is the purpose of damages? (i) To punish the contract breaker. (ii) To compensate the innocent party. (iii) To put the innocent party in the same position as if the contract had been carried out correctly. (A) (i) only. (B) (ii) and (iii) only. 4

(C) (ii) only. (D) (i), (ii) and (iii).

19. In an action for breach of contract, the court will never award (A) Unliquidated damages. (B) Nominal damages. (C) Liquidated damages. (D) Exemplary damages.

20. Promissory estoppel can only be used as a 21. Without this statutory protection the rule of buyer beware would apply.

(1 word) and not as a sword. (2 words) which means let the

22. Which one of the following is correct? A. A professional adviser can be liable to both the client who employs them and any other parties who they know will rely on information provided. B. A professional adviser can be liable to anyone who relies on information they provide. C. A professional adviser will be liable in negligence but not contract for any negligent advice provided. D. A professional adviser cannot be liable where the only form of damage resulting from negligent advice given is financial loss. 23. Volenti non fit injuria means: A. No body is perfect. B. No injury can be done to a willing person. C. No injury can be done to an able person. D. Consent be expressed or implied. 24. Remoteness of damage means: A. The damage is unreasonable. B. The damage must be of reasonably foreseeable type. C. The damage must be of unreasonably foreseeable. D. The damage is the defendant s fault. 25. Whilst an employee has a contract of service, an independent contractor has a contract (2 words).

26. Employers can be vicariously liable for the

. (1 words) of employees.

27. Which ONE of the following is an area of discrimination that is not prohibited by an Act of Parliament? A. B. C. D. Disability B. Race C. Age D. Sex

28. Diana works for Virgin Plc under a 4-year fixed term contract of employment. At the end of the 4 years, Virgin Plc fails to renew the contract because Diana is getting married. Which of the following statements is/are correct? (i) Diana will succeed in an action against Virgin Plc for wrongful dismissal. (ii) Diana will succeed in an action against Virgin Plc for unfair dismissal. A. (i) only. B. (ii) only. C. Both (i) and (ii). D. Neither (i) nor (ii). 29. A. B. C. D. 30. (i) (ii) A. B. C. D. Which of the following statements is incorrect about wrongful dismissal? It is a breach of contract. It can be heard in both civil courts and employment tribunals. It is a statutory right. Liability is limited to the net pay for the maximum contractual statutory notice period. Which of the following statements is/are correct? An employer has an implied duty to behave reasonably and responsibly towards employees. An employer has an implied duty to provide a reference. (i) only (ii) only Both (i) and (ii) D. Neither (i) nor (ii)

31. All the following statements about the formation of a company in the UK are true except one. The exception is (i) The company comes into existence when the Registrar of Companies issues a Certificate of Incorporation. (ii) The company comes into existence when granted a listing by the Stock Exchange. (iii) The Memorandum of Association must be sent to the Registrar of Companies prior to incorporation.

(iv)

A public company must have a certificate of incorporation and a trading certificate before it can commence business.

32. Which one the following is not an example of an artificial legal person? (A) The company secretary of a public company. (B) The BBC. (C) A company limited by guarantee. (D) A private company with only two shareholders.

33. The Partnership Act 1980 sec 1 defines a partnership as the relation which subsists between a person carrying on a business in common with a view to profit. T/F 34. Partnership property does not belong to the partners jointly. If more than four partners own or lease partnership land, legal title to the land must be vested in not more than two trustees. T/F

35. If the shareholders wish to change the company s Articles of Association they will need to pass a (1 word) resolution. 36. The procedure at board meetings and the voting rights of directors are set down in the company s . (3 words). 37. A company wishing to be incorporated must send all except one of the following to the Registrar. The exception is (i) A memorandum of Association. (ii) Separate articles of Association. (iii) Separate particulars of the first directors. (iv) A separate statutory declaration that the requirements of the Companies Act have been satisfied. 38. Which of the followings is incorrect in relation to company names. (i) In general, the name of a private or public company must end in limited , Ltd , public limited company or plc as appropriate. (ii) The name must not be the same as that of an existing company. (iii) The name cannot be changed without the unanimous approval of the shareholders. (iv) The name of the company may be registered as a trade mark. 39. Identify the one statement relating to Annual General Meetings which is inaccurate. (i) A private company can elect not to hold an Annual General Meeting.

(ii) (iii) (iv)

An annual General Meeting in a public company must be held with one year of incorporation. Accounts of a public company must be laid before members for approval at an Annual General Meeting. Articles of Association can be altered at an Annual General Meeting.

40. Which one of the following statements is inaccurate? (i) An ordinary resolution is one which can be passed by a simple majority of votes cast. (ii) A special resolution can only be passed by a 75 per cent majority of votes cast. (iii) An extraordinary resolution can only be passed by a 75 per cent majority of those entitled to vote. (iv) A written resolution can only be passed by 100 per cent of those entitled to vote. 41. Which one of the following statements is inaccurate in relation to a shareholders agreement? (i) The agreement need not be open to public inspection. (ii) It can validly provide that a particular director will remain a director for life. (iii) It can be enforced simply by means of an action by one shareholder against another. (iv) It can be changed by a simple majority of members. 42. What is the quorum for a general meeting of a registered company? (i) Two persons being members of proxies for members. (ii) Three persons being members of proxies for members. (iii) Two person being members. (iv) Three persons being members. 43. Which one of the following statements is incorrect? (i) A director can be an employee of the company. (ii) A director can be an independent contractor of the company. (iii) A shareholder can be an employee of the company. (iv) A partner can be an employee of the firm.

44. To what extent is a member of a company limited by guarantee personally liable for the company s debts. (i) He is personally liable for all the company s debts at any time. (ii) He is personally liable for all the company s debts on a winding up. (iii) His personal liability is limited to the amount stated in the memorandum upon a winding up. (iv) His personal liability is limited to the amount stated in the memorandum at any time. 45. Under the Companies Act 2006, what is the consequence of the number of members of a public company falling below two? 8

(i) (ii) (iii) (iv)

The company must cease trading within six months. The remaining member becomes jointly and severally liable with the company for the company s debts after six months. The company must notify the Registrar, but otherwise can continue trading as normal. The remaining member automatically takes over personal liability for the company s debts incurred while he is the sole member.

46. What type of resolution is required at a general meeting to remove a director from office? (i) An ordinary resolution. (ii) An ordinary resolution with special notice. (iii) A special resolution. (iv) A special resolution with special notice.

47. How may a company (i) ratify an ultra vires contract entered into by directors and (ii) agree to relieve those directors from liability? Is it (a) (b) (c) (d) (i) and (ii) by separate resolution (i) and (ii) by one special resolution (i) by special resolution and (ii) by ordinary resolution (i) cannot be rectified and (ii) by special resolution.

48. Where a member or debenture holder receives information from the company electronically, on request for a hard copy of the document which ONE of the following is correct? The company (i) Must provide a hard copy of the relevant information at a nominal charge. (ii) Must provide a hard copy of the relevant information at no charge (iii) Can refuse to provide a hard copy (i) Must provide a hard copy to members free of charge but to debenture holders at a nominal charge

49. A veil of incorporation is recognized when a company is registered. However, this veil will be lifted under sec 213 Insolvency Act 1986 due to any . (1 word) trading being found and sec 214 Insolvency Act 1986 where .. (1 word) trading is found. 9

50. Sometimes the law will require the shareholders to support the board s proposals. In that event the board may call a .. (2 words) on 14 days notice.

51. Directors must exercise their powers in . (2 words), and must not deliberately make it difficult for members who oppose them to attend. 52. Which of following statements is true? a. A share is a bundle of rights and duties. b. A share is a bundle of rights and monies. c. A share is a right and duties. d. A share is a bundle of rights and resolution. 53. New issues of shares may be by: a. Prospectus. b. Public offer. c. A placing. d. An (3 words). e. A right issue. 54. If the Articles so permit, shareholders have a general power to reduce the company s share capital subject to confirmation by the shareholders . True/False. 55. If a company needs to raise more cash then it has three main possibilities: a. .. (2 words). b. Issue further shares. c. Borrow the money. 56. Which of this is the most accurate statement of when an accountant should act, having identified a threat to ethical conduct: A. When there is a substantial threat to the profession or their firm? B. When there is a possibility of some professional liability? C. When there is anything other than an insignificant consequence? 57. A. B. C. Which of the following statements are true? An accountant is under nor duty to disclose the limitations of their expertise to the client. An accountant is only responsible for his or her own professional qualifications and training. An accountant may need to compromise the most precise attention to detail in preparing work in order to meet a reasonable deadline. 58. Which of the following is true? 10

A. It is acceptable to discuss client information with a person who knows nothing about your job or business B. Prospective or past clients are owed a lesser duty of confidentiality than current clients. C. Nothing learned as a consequence of working for one client may be used in relation to another. 59. A. B. C. Which of these is not a Principle of Standards in Public life? Transparency Honesty Accountability

60. When might it be appropriate for an accountant to disclose information, provided in confidence? A. At the request of the client. B. At the request of the regulator C. At the request of a solicitor D. At the request of the employer 61. Which of the following statements are true: A. An accountant will not be in breach of the CIMA Code of Ethics where the accountant has inadvertently compromised an ethical principle, so long as he remedies his mistake as soon as possible, following the appropriate safeguards. B. An accountant is not obliged to evaluate threats that might compromise ethical principles if he has no actual knowledge of the problem. C. An accountant should consider non-financial circumstances known about a situation, aw well as the financial data presented when considering a threat to ethical standards. D. An accountant should refuse to work for a client or resign his job if he is unable to apply appropriate ethical standards. 62. Where there is no safeguard provided by professional standards, but an accountant has encountered a threat, should the accountant: A. Weigh up the likelihood of harm and cautiously applying good sense? Or B. Take legal advice before proceeding? Or C. Avoid the activity altogether? 63. When an accountant encounters a fraud the disclosure of which would be a breach of professional confidence, should the accountant: A. Maintain their duty of confidence? B. Disclose the fraud immediately? C. Take legal advice or consult CIMA? 64. Which of the following would be of use when trying to find a resolution to a serious ethical breach? 11

A. B. C. D. E. F. 65. A. B. C. D.

CIMA Board of your organization Audit Committee of your organization Legal and Compliance Department Your solicitors Your line-manager What is the most important first step when dealing with a potential ethical problem? Tell your boss Read the CIMA Code of Practice Make a thorough and rapid check of the facts Ask a colleague their opinion

66. Which of the following is correct? A. It is criminal offence for listed companies to fail to comply with the Revised Combined Code B. A listed public company has complied with the Combined Code if it produces a report explaining why it has not implemented its recommendations C. The Combined Code has no status and may be ignored by all companies D. A public company may be sued for breach of statutory duty if it fails to comply with the Combined Code. 67. A. B. C. D. Corporate governance is not concerned with which one of the following? Effective control Business efficacy Fiduciary duties Accountability

68. A. B. C. (A) (B) (C) (D)

To which of the following does a director owe duties of care and skill? The public at large The company s creditors The shareholders. (i) only (ii) only (i) and (ii) only (ii) only

69. Fiduciary duties were created by which one of the following? A. The European Union 12

B. The Common Law C. The Courts of Equity D. The Combined Code

70. In the scandal involving Enron information relating to which one of the following was withheld in order to maintain confidence in its stocks? A. Corporate losses B. Corporate borrowing C. Director remuneration D. Company reorganisation

71. (i) (ii) (iii) (A) (B) (C) (D)

Which of the following are not represented at board level in the United Kingdom? Creditors Shareholders Employees (i) only (i) and (ii) only (iii) only (i) and (iii) only

72. In which one of the following committees reports was it recommended that executive directors should have service contracts of no longer than three years? A. The Cadbury Committee Report B. The Greenbury Committee Report C. The Hampel Committee Report D. The Higgs Committee Report

73. The Cadbury Committee defined corporate governance as the system by which companies are (3 words).

74. A. B. C. D.

Which of the following types of committee are not recommended by the Combined Code? Planning Committee Nominations Committee Remuneration Committee Audit Committee

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75. Under the Combined Code a the Code being

. (1 word) obligation exists with compliance with .. (1 word).

14