CIMA Updated BA4 Exam Questions and Answers by esa

Which of the following is correctly stated to be an advantage of carrying on business via a company limited by shares? 

(i) The liability of the company is limited.

(ii) In general the directors are not liable for the debts of the company.

(iii) The liability of the shareholders is limited.  

Jo is employed as management accountant of a large retailer. Jo has been asked to call a supplier and promise settlement of their account 'next week'. Jo is aware that her employer will definitely not have sufficient funds available to make the payment. If Jo accepts the request, which of the following 'fundamental principles' of CIMA's Code of Ethics will be compromised?

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.

Which of the following is one of the fundamental principles identified in the CIMA Code of Ethics?