Question 1

WhichTHREEof the following are principles of good corporate governance according to the UK Corporate Governance Code?

Options :

A : Leadership

B : Reliability

C : Remuneration

D : Honesty

E : Accountability

Answer: A,C

Question 2

Company M has lost 25% of its revenue in the last three months due to bad debts. One of thereceivables written offwasfroma long standing customer and the other three werefromnew customers. The management accountant has warned the sales team that the company cannot survive any more substantial bad debts.

Which of the following internal controls should be put in place to try and prevent further bad debts?

Options :

A : A credit check should be carried out on each new customer.

B : Credit limits should be set for all customers. However, if the credit limit will cost a sale then sales staff can override this limit.

C : Two sales staff must authorise new customers and sign a form stating that they have done so.

D : An aged analysis of customer balances must be reviewed every month.

E : As soon as a customer payment is overdue they should not be allowed to purchase more until their balance has been reduced.

Answer: A,D

Question 3

FGT is evaluating the political risks associated with its operations around the world.

Which of the following would indicate that a particular subsidiary has a high level ofpolitical risk?

Options :

A : Forthcoming elections in the subsidiary-s host country.

B : The subsidiary-s host country requires the active participation of local partners before the subsidiary can operate.

C : Company law in the subsidiary host country is lax.

D : The subsidiary islocated a considerable distance from FGT-s home country.

E : Thesubsidiary employs a large number of nationals from the host country.

Answer: A,B,C

Question 4

A UK manufacturing company has simultaneously:

* purchased a put option to sell USD 1million at an exercise price of GBP1.00 = USD1.65

* sold a call option that grants the option holder the right to buy USD 1million at a price of GBP1.00 = USD1.61(this option has the same maturity date as the put).

Which of the following is a valid explanation for entering into these option positions?

Options :

A : The company expects to receive USD 1million from a customer and wishes to offset the cost of the put option by the premium on the call option

B : The company expects to pay USD 1million to a supplier and wishes to offset the premium from the call option against the cost of the put option.

C : The company expects to receive USD 1million from a customer and wishes to obtain an additional benefit if the USD strengthens beyond GBP 1.00 = USD 1.61

D : The company expects to pay USD 1million to a supplier and wishes to obtain additional protection against the USD strengthening beyond GBP 1.00 = USD 1.65.

Answer: A

Question 5

You are theManagementAccountant for a company which supplies baked food to a string of retail outlets; biscuits, cakes, savoury snacks etc.

You discover that a trainee employee, who is responsible for cleaning out the delivery vans has been taking damaged goods and packets which have reached their sales expiry date and has been selling them to friends. These products would otherwise have been discarded as waste.

The trainee in question is the nephew of one of the senior managers.

What is the correct course of action?

Options :

A : Have a quiet word with the trainee and ask him to stop.

B : Have a quiet word with the senior manager, the trainee-s relative and askthem to deal with it.

C : Document the facts and escalate to the trainee-s manager.

D : Do nothing, the product was designated as waste anyway.

Answer: C

Free CIMAPRO19-P03-1-ENG Mock Exam – Practice Online Confidently

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