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CIMA BA4 Exam
BA4 - Fundamentals of Ethics, Corporate Governance and Business Law (Page 32 )

Updated On: 7-Feb-2026
Page 20 of 102
PDF with 661 Questions

According to the CIMA code of ethics, if appropriate safeguards cannot be identified to address threats to compliance with fundamental principles, a professional accountant should:

  1. Proceed unless the situation will involve breaking the law
  2. Proceed with necessary caution
  3. Identify the situation to superiors before continuing with the professional service involved
  4. Refuse to remain associated with the matter creating the conflict, where possible

Answer(s): D



Which of the following statements is correct in relation to the "maintenance of capital" principle?

  1. A company cannot use its share capital which must be set aside as a fund for creditors.
  2. In general, a company can use its share capital for any reason whatsoever, as long as it ensures that there is sufficient remaining to meet the company's debts.
  3. In general, a company is not able to freely return its share capital to its members.
  4. A company cannot use its share capital, and may only return it to its members with the permission of the court.

Answer(s): C



Section 12 of the Sale of Goods Act 1979 implies a condition into contracts for the sale of goods that the person selling the goods has the right to sell them. Which of the following is correct?

(i) The contracting parties may agree to exclude Section 12 from their contract

(ii) Section 12 applies to both consumer and non-consumer contracts for the sale of goods.

(iii) A breach of Section 12 entitles the purchaser of the goods to cancel the contract.

  1. (i) only
  2. (i) and (ii) only
  3. (ii) only
  4. (ii) and (iii) only

Answer(s): D



Evidence suggests that during a recession, companies with a clear sense of ethical direction will:

  1. Continue to be profitable
  2. Lose business to unethical companies
  3. Be more expensive to run
  4. Be a poor investment

Answer(s): A



Which of the following is CORRECT?

(i) A company limited by shares is a legal person separate and distinct from those who own and manage the company

(ii) If the company structure is used as a mere façade for fraudulent purposes the company but not the directors or shareholders can be held liable

(iii) If the company has carried on business despite the fact that insolvency appeared inevitable the directors may be personally liable for the debts contracted.

  1. (i) only
  2. (i) and (ii) only
  3. (i) and (iii) only
  4. (ii) and (iii) only

Answer(s): C






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