Law For Accounting

Question 1

Which of the following types of contract must be in writing or evidenced in writing?

Answer 1

A. A contract of employment
B. A contract of service
C. Partnership agreement
D. AGREEMENT TO TRANSFER LAND

Question 2

Which of the following terms describe a contract where one party may set it aside, but property transferred before avoidance is usually irrecoverable from a third party?

Answer 2

A. Unenforceable
B. Valid
C. VOIDABLE
D. Void

Question 3

A promised B that she will pay C debt if she fails to pay them.
Which of the following is true with regard to Mary’s proposed guarantee so that it can enforceable in a court of law?

Answer 3

A. It must be in writing
B. It can be oral only
C. IT CAN BE ORAL PROVIDED THAT IT IS EVIDENCED IN WRITING
D. It must be by deed

Question 4

On 15th September A offered to sell her violin to B for the price of £200 stating her offer had to be accepted by notice in writing.
B posted a letter of acceptance on 16th September, but it never arrived.

1. Does the postal rule apply?
2. Is there a contract?

Answer 4

1. NO- A specifically requested for communication to be made in notice of writing.
   So only accepted when letter received not when it is posted.
2. NO- No contract because the agreement (offer and acceptance) was not completed.

Question 5

A employed B to build an extension to her house.
B completes the extension except to put a window in the extension.
Which of the following best describes the legal position?

Answer 5

A. B is entitled to full payment under the doctrine of substantial performance.
B. A is not obliged to pay B until he completes the job exactly as required.
C. B IS ENTITLED TO PAYMENT OF CONTRACT PRICE LESS A REASONABLE AMOUNT IN RESPECT OF THE OMISSION MADE.
D. A should seek an order of specific performance to ensure that the contract is completed.

Question 6

True or false

1. Anticipatory breach may be implied from conduct and need not be be explicit.
2. When a party to a contract decides or elects to treat the contract as discharged, he waives the right to claim damages from the party in default.

Answer 6

1. True
   Anticipatory breach is where one party decides not to perform their part of the contract implicitly or explicitly in advance.
2. False
   The party treating the contract as discharged can sue for damages.

Question 7

Unfair contract terms act 1977

1. In a contract between the buyer and the seller of goods and services, is a clause limiting liability for breach of the condition relating to the description void?
2. Where there is the result of negligence in a contract between two private individuals, is a clause limiting liability for personal injury subject to the reasonableness test?

Answer 7

1. Yes
   One of the provisions of UCTA states that no clause or notice for supplies and goods can enable or restrict liability from breach of conditions to purpose, quality and fitness.
2. No
   A contract between two private individuals is not subject to UCTA.

Question 8

Which of the following is NOT Correct in relation to a contract made by an agent acting within his authority?

Answer 8

A. The principal can be sued on contract
B. The principal can sue on contract
C. THE AGENT CAN BE SUED ON CONTRACT
D. The third party can sue on contract.

Question 9

A entered into a contract with B catering company.
A was authorised agent of C restaurant.
Not knowing A worked there B send the invoice to C restaurant for settlement.

1. Is there an agency by holding out or estoppels?
2. Can B catering company demand money from C restaurant?

Answer 9

1. Yes
   It would prevent C from saying he is not liable.
   The catering company should have been informed that the agency service was terminated.
2. Yes
   Company not aware agent not working for c anymore.

Question 10

A purchased a famous clock for B who is an antique dealer so she got it at a discounted price
When C found out A was keeping it he demanded a return or for the full price to be paid.
B paid for the full price and kept the clock.

1. Does the antique dealers action amount to ratification of contract?
2. Can seller demand for return of item?

Answer 10

1. Yes
   The item was bought by the antique dealer and ratification was done in deed
2. No
   The item was purchased by the dealer for full price.

Question 11

True or false

1. The interest of an agent should not take priority over that of the principals interest.
2. An agent should provide to the principal a level of care and skill expected of his profession.

Answer 11

1. True
   The role of the agent is to represent the principals interest, not their own.
2. True
   The agent should behave in a professional manner and skills to perform well.

Question 12

Which of the following is NOT a source of actual authority?

Answer 12

A. APPARENT AUTHORITY
B. Express oral authority
C. Implied incidental authority
D. Implied usual authority

Question 13

Photographic business
A and b give C a budget which he exceeds so they refuse to pay the extra cost.
Which of the following best describe whether the advertising company can enforce the contract?

Answer 13

Sam had no authority and the advertising company was not aware of the fact but knew that he was a partner.

Question 14

Which of the following does NOT need to be shown by the claimant in order to succeed in an action for negligence?

Answer 14

A. Defendant was in breach of contract
B. Claimant had suffered loss, damage or injury as a result of breach of duty of care
C. That the defendant owed him a duty of care
D. THE DAMAGE WAS NOT TOO REMOTE

Question 15

A policeman was responding to an emergency situation. He drove through a red light and injured a woman.
True or false

A. Beckford was responding as normal to an emergency and this will be considered by the courts in their assessment of the standard of care owed by him.

B. There are lots of cases to support he acted properly in response to such an emergency call.

Answer 15

A. True
In this profession when reacting to an emergency situation it is normal to go through red light.

B. True
There are recorded reported evidence available to support this practice.

Question 16

Which of the following is NOT one of the factors to be taken into account in determining a duty of care exists in cases of professional misstatement?

Answer 16

A. The size and class to which recipient belongs
B. Whether it is just or equitable to impose a duty of care.
C. THE STATE OF KNOWLEDGE OF RECIPIENT
D. The purpose for which statement is made.

Question 17

True or false

1. The acts of an agent not performing on behalf of the principal can become a liability of the principal
2. An employer will become vicariously liable for the negligent act of an employee who did not perform his task effectively

Answer 17

1. False
   An agents actions who is not performing on behalf of an principal will be his liability not the principals
2. True
   Vicarious liability is when an employer is responsible for his employees actions in relation to their job.

Question 18

Junior audit Malik made an error in one of the audit tests of a client.
It showed a loss instead of profit on clients income statement so he lost an extended bank overdraft.

Which of it is true?

Answer 18

A. The client could sue Malik for the error made in the audit of the inventory.
B. The client could sue company of Malik for negligence
C. The client cant sue neither since loss was financial.
D. THE CLIENT CAN SUE COMPANY FOR THE ERROR MADE IN THE AUDIT OF THE INVENTORY.

Question 19

Can the courts lift the corporate veil in the following situations?
1. Director is disqualified for five years but becomes major shareholder of a company after 4 years. The company went into liquidation and unable to pay its creditors.

2. A public limited company commenced trading before obtaining a trading certificate

Answer 19

1. Yes
   Because he did not serve his full disqualification, therefore director is personally liable for debts of the new company’s creditors.
2. Yes
   The directors will be held personally liable for any debt that arises before obtaining a trading certificate.

Question 20

Directors of a very successful private limited company want to re- register as a private limited company. Company has a share capital of £65,000

1. Will the company need to appoint a company secretary?
2. Has the company met the minimum share capital requirement?

Answer 20

1.Yes
Every public limited company needs a company secretary

2. Yes
   All public companies need to have a statutory minimum of £50,000 of share capital.

Question 21

Within what time period following the end of the relevant accounting reference period must a private limited company file its accounts and reports?

Answer 21

A. 12 months
B. 8 months
C. 18 months
D. 9 MONTHS

Question 22

True or false

1. A company may choose to alter its name by passing an ordinary resolution
2. Disadvantages of buying a company off-the-shelf is the transfer of subscriber shares.

Answer 22

1. False
   A company needs a special resolution to alter its name not an ordinary one.
2. True
   Documents need to be completes in order to transfer shares from subscribers who are persons associated with company formation

Question 23

Solicitor employed by a company owns 3% of shares and receives 12,500 remuneration per annum as per company’s article.
Six months later company will pass a resolution altering the articles to reduces solicitors remuneration to 10,750 per annum
True or false

1. Alteration of article to reduce solicitors remuneration is effective
2. Copy of amended articles should be send to register of companies within 21 days.

Answer 23

1. True
   Company has right to alter its articles providing it does not affect say, services rendered prior to the alterations
2. False
   Must be sent within 15 days

Question 24

True or false

1. De factor directors are the same as properly appointed directors.
2. A director can be removed from office by special resolution by abusing his authority.

Answer 24

1. True
   Although they are not appointed they become directors by virtue of their conduct and have the same power as appointed directors.
2. False
   A director can be remove from office by a ordinary resolution with a special notice.

Question 25

Managing director of a company is appointed by fellow directors and shareholders he can purchase equipment for £1000. But he exceeds this limit and purchases goods for £1300.
The co- director was not impressed when invoice came to company for settlement and refused to pay as he believe he exceeded his authority.

Which of the following best describes the legal position?

Answer 25

A. The company that sold goods cant enforce the contract although it acted in good faith.

B. The company is bound because basil implied authority to enter into a contract.

C. THE COMPANY THAT SOLD GOOD CAN ENFORCE THE CONTRACT BECAUSE IT DEALT WITH GOOD FAITH

D. The company is not bound because basil has acted beyond his authority.

Question 26

Ravel and Maurice owned 60% of the share capital of swift ltd. they were informed the director was plotting a takeover by another company.
Although disagreements between directors and shareholders the directors decided to go ahead with the plan takeover.
The aim was to allot shares to the takeover company and reduce the shares of ravel and Maurice

The legal position?

Answer 26

The allotment is INVALID because the directors have exercised their powers for a collateral purpose of eliminating the existing majority shareholdings.

Question 27

True or false.

1. Only a majority of directors who act in ways considered good faith would be likely to promote the success of the company
2. All directors must declare interest to other directors, unless it cant be regarded as likely to give rise to a conflict of interest.

Answer 27

1. False.
   All directors must act in a way considered as good faith for benefit of company
   This is their duty.
2. True
   Duty to disclose interest to avoid conflict from opportunities, property and information

Question 28

Karl is director of Gayle plc with net asset of £600,000
Assuming none of the particular statutory exceptions apply, which of the following does NOT require the approval of members in general meeting to be valid?

Answer 28

That karl has a contract of service with Gayle plc for 20 months in

Question 29

Dickson plc held a general meeting 9 months ago. Who can call a general meeting of the company?

Answer 29

A. Company secretary
B. Internal auditor
C. A consultant to the company
D. THE- NON EXECUTIVE DIRECTORS

Question 30

How much notice is required to give to a plc for holding of its general meeting ?

Answer 30

A. 3 months
B. 21 DAYS
C. 7 days
D. 30 days

Question 31

Which type of shares carries the right to demand payment of a dividend?

i) ordinary share
ii) preference share

Answer 31

A. NEITHER
B. i only
C. ii only
D. Both i and ii

You can not demand you can request.

Question 32

1. Is it right that to receive more that 8% dividend a class right if there is a surplus if earnings after paying dividends to the ordinary shareholders?
2. Is it right to appoint a representative a class right?

Answer 32

1. False
   Preference shareholders only receive fixed dividends as stated in the article.
2. True
   Yes if the appoint a representative is given in the articles

Question 33

True or false

1. For transfer of unlisted shares, once the transferor and transferee have reached agreement, the transferor holds the share as a trustee for transferee until registration.
2. Under the CREST system shareholders cannot hold and transfer their shares without the need for a written instrument of transfer.

Answer 33

1. True
   This is stated in the articles.
2. False
   It is not stated in articles that a need for a written instrument of transfer is required.

Question 34

A private limited company has shares with 200 shares of 25p each and 100 shares at 50p each

1. Is the company allowed to consolidate 4 25p shares into £1 shares?
2. Subdivide each of the 50p into 10p shares?

Answer 34

1. Yes
   They need to pass an ordinary resolution and are subject to any restriction in its articles.
2. Yes
   They need to pass an ordinary resolution and are subject to any restriction in its articles.

Question 35

Which of the following best defines a debenture? Yeah

Answer 35

A. A DOCUMENT THAT RECORDS TO TERMS OF ANY SECURED AND NON SECURED LOAN

B. A fixed charge over the company’s non current assets

C. A floating charge over the company’s net assets

D. A document that records the terms of any secured loan

Question 36

1. Can a company place a court application for the appointment of an administrator although it is in liquidation?
2. Can the company appoint an administrator out of court?

Answer 36

1. Yes
   They need to prove that have floating charges in assets that are enforceable and need to inform other floating charge holders.
2. No
   A company that is in liquidation cant request an administrator as stated in the articles.

Question 37

True or false

1. Where insufficient funds remain after paying secured creditors unsecured creditors are ranked equally
2. Two years after bankruptcy order, a bankrupt person is discharged from its debts to creditors.

Answer 37

1. True
   All unsecured creditors are paid equally unless there is a distribution more that £10,000
2. False
   They are discharged after one year.

Question 38

True or false

1. An LLP has a separate legal position from that of its members who have limited liability
2. An LLP must have a maximum number of members before it commences trading

Answer 38

1. True
   Because the limited liability partnership act 2010 separates them from their members.
2. It must have a minimum of 2 people to be formed.

Question 39

Which one is NOT a qualifying disclosure?

Answer 39

Employee fails to carry out his tasks with due skill and care

Question 40

Which of the following is NOT one of the specified ways in which the statutory offence to fraud may be committed under the fraud act 2006?

Answer 40

A. Fraud by failing to disclose information.

B. FRAUD BY AN EMPLOYEE APPROPRIATING PROPERTY OF THE COMPANY

C. Fraud by abuse of position

D. Fraud by false representation

Question 41

Is there an offence of bribery committed in following situations

1. A partner of a company is invited to a social event put on by a client, the partner is going to review the partner of the client
2. Finance director offers HMRC a small financial reward for not charging various penalties for irregularities found in the records.

Answer 41

1. No
   There is no exchange of financial gain or advantage in the performance of the partner
2. Yes
   There is an exchange of financial gain or advantage in the performance of the HMRC

Question 42

The money laundering regulations 2007 came into act on 15 December 2007 and applied to relevant persons

Which of the following does not apply to relevant persons?

Answer 42

A. Estate agents

B. RETAILERS

C. high value dealers

D. Accountants and registered auditors

Question 43

1. Is offering registered auditor money or other favours to turn a loss into a profit an offence
2. The offence is punishable with imprisonments and fine

Answer 43

1. Yes
   Because money or other favours have been exchanged for doing something illegal.
2. Yes
   Maximum imprisonment of 10 years and unlimited fine

Question 44

Which three of the factors are not consistent when there is a contact of service between employee and company.

Answer 44

A. NOEL CAN WORK AT HOME AND OFFICE AT HIS OWN PACE

B. HE CAN WEAR A SUIT TO WORK

C. HE CAN BRING HIS OWN CALCULATOR

D. The days his paid when he is ill and on holiday.

Question 45

True or false

1. A contract of service must always be evidenced orally
2. A contract of service must include all terms implied or expressed

Answer 45

1. False
   It can be in writing
2. False
   Implied terms are provided by the legislation so don’t need to be included in the contract of service

Question 46

Which THREE Constitute a duty of care to employer by employee in relation to work

Answer 46

1. A DUTY TO EXERCISE REASONABLE CARE AND SKILL
2. A DUTY NOT TO DELEGATE HIS DUTY WITH THE EMPLOYERS IMPLIED OR EXPRESSED CONSENT
3. THE DUTY OF TRUST AND CONFIDENCE.
4. The duty to maximise profit of his employer

Question 47

Which of the following does an employee NOT need to establish in order to claim that he has been constructively dismissed for the purpose of his unfair dismissal claim?

Answer 47

A. That his employer has committed a serious breach of contract.

B. That the employee left the employment because of the breach

C. That he has not waived the breach, thereby affirming the contract.

D. THAT HIS BEHAVIOUR DID NOT CONTRIBUTE TO HIS DISMISSAL

Question 48

True or false

Under the employment rights act 1996, can an employee claim for statutory redundancy payment in the following situations?

1. An employee must be continuously employed for at least 3 years
2. An employer must have been dismissed laid off or put on long time working in order to be able to claim.

Answer 48

1. False
   Must be employed for at least two years
2. False
   This is not stated in the act

Question 49

Data protection act 1998

1. Can non compliance with the act result in civil offence?
2. Can an employee demand to see a companies pay roll?

Answer 49

1. No
   Because criminal liability is an penalty of the non compliance act which will result in fine or imprisonment.
2. No
   They can only see their own data

Question 50

True or false

1. Failure to notify the information commissioner on research work carried out by the company is a criminal offence
2. The register maintain by the information commissioner is not accessible by public

Answer 50

1. False
   This type of data is not related to data subject
2. False

The information is available by data subject.