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Free CIMA BA4 Fundamentals of Ethics, Corporate Governance and Business Law Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the CIMA BA4 Fundamentals of Ethics, Corporate Governance and Business Law practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1Which ethical approach judges an action by the greatest overall benefit it produces for the greatest number?

    1. A.Virtue ethics
    2. B.Deontology
    3. C.UtilitarianismCorrect answer: C
    4. D.Ethical egoism

    Explanation: The source states: "the greatest happiness or benefit of the greatest number." Utilitarianism evaluates collective consequences. Virtue ethics focuses on character, deontology on duty, and ethical egoism on the decision maker’s own interests.

    Reference: CIMA BA4 Official Study Text — publisher’s public sample — Chapter 1, p. 3, Schools of ethics

  2. 2In a company, what does corporate governance principally concern?

    1. A.The procedures for calculating the cost of individual products
    2. B.The systems through which a company is directed and controlledCorrect answer: B
    3. C.The timetable for collecting overdue trade receivables
    4. D.The methods used to forecast short-term sales volumes

    Explanation: The source states: "the system by which companies are directed and controlled." Governance concerns direction and control of the company. Costing, collection and sales forecasting are management activities rather than the definition of governance.

    Reference: FRC UK Corporate Governance Code 2024 — p. 3, Introduction

  3. 3Two businesses in England orally agree clear terms for an ordinary cleaning service, with payment in exchange for the work and an intention to be bound. No special statutory formality applies. Does the lack of a signed document alone prevent a contract?

    1. A.No; an ordinary contract can be made by word of mouthCorrect answer: A
    2. B.Yes; every business contract must be signed by both parties
    3. C.Yes; consideration is ineffective unless recorded in writing
    4. D.No; because intention and consideration are never required

    Explanation: The source states: "Generally speaking, it is possible under English law to make a contract without any formality, simply by word of mouth." The facts provide agreement, consideration and intention, and exclude a special formality. The oral form alone does not invalidate the contract, although proving its terms may be harder.

    Reference: High Court — Blue v Ashley [2017] EWHC 1928 (Comm) — Paragraph 49

  4. 4What is the legal relationship between a UK limited company and the people who own it?

    1. A.The company is legally separate from its ownersCorrect answer: A
    2. B.The company and every owner are the same legal person
    3. C.The company is merely the directors' trading nickname
    4. D.The company has legal identity only while every original owner remains

    Explanation: The source states: "It is legally separate from the people who own it." Separate corporate personality distinguishes the company from its shareholders. It is not a nickname or an identity dependent on retaining all original owners.

    Reference: UK Government — Set up a private limited company — Limited companies

  5. 5An accountant argues that a promise should be honoured because keeping it is a moral duty, even when breaking it would produce a larger gain. Which ethical school most directly supports this reasoning?

    1. A.DeontologyCorrect answer: A
    2. B.Utilitarianism
    3. C.Ethical egoism
    4. D.Ethical relativism

    Explanation: The source states: "makes the concept of duty central to morality" The reasoning rests on duty, which characterises deontology. Aggregate gain, personal gain and variation with context are different bases for moral judgment.

    Reference: CIMA BA4 Official Study Text — publisher’s public sample — Chapter 1, p. 3, Schools of ethics

  6. 6Which action is a shareholder’s governance role as described in the UK Corporate Governance Code’s introduction?

    1. A.Preparing the company’s daily management accounts
    2. B.Selecting each supplier used by the operations department
    3. C.Appointing directors and auditors to support appropriate governanceCorrect answer: C
    4. D.Performing the independent auditor’s examination of transactions

    Explanation: The source states: "The shareholders’ role in governance is to appoint the directors and the auditors" Shareholders exercise governance through appointments and satisfying themselves about the structure. They do not thereby perform management’s daily tasks or the auditor’s examination.

    Reference: FRC UK Corporate Governance Code 2024 — p. 3, Introduction

  7. 7For a privately negotiated sale of a freehold interest in land in England, outside any statutory exception, which formality is required by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989?

    1. A.An oral agreement witnessed by an estate agent
    2. B.A deposit payment without any written terms
    3. C.Signed written documentation incorporating all expressly agreed termsCorrect answer: C
    4. D.A written price quotation signed only by the estate agent

    Explanation: The source states: "A contract for the sale or other disposition of an interest in land can only be made in writing" Unlike an ordinary informal contract, this transaction requires writing incorporating the expressly agreed terms. Section 2(3) also requires signature by or on behalf of each party; a witness, deposit or agent's price quotation alone is insufficient.

    Reference: Law of Property (Miscellaneous Provisions) Act 1989 — Section 2 — Section 2(1) and (3)

  8. 8A person operates a UK sole trader business. What does unlimited liability mean for that owner?

    1. A.Liability is limited to the amount invested at start-up
    2. B.Only business assets can ever be used to settle business debts
    3. C.The owner is personally responsible for all business debtsCorrect answer: C
    4. D.Creditors must claim from a separate incorporated company

    Explanation: The source states: "Sole trader businesses have ‘unlimited liability’ which means owners are personally responsible for all of the debts of the business." A sole trader has personal liability rather than a shareholder-style limit or a separate corporate debtor. Insurance may mitigate risk but does not change this legal form.

    Reference: UK Government — Become a sole trader — Legal risks or ‘liability’

  9. 9A professional-development programme aims to cultivate enduring qualities such as justice and generosity so that good conduct becomes part of a person’s character. Which ethical approach underlies that aim?

    1. A.Ethical egoism
    2. B.Ethical relativism
    3. C.Deontology
    4. D.Virtue ethicsCorrect answer: D

    Explanation: The source states: "the virtues (such as justice, charity, and generosity) are dispositions to act". Virtue ethics develops character and dispositions. Egoism centres on personal interest, relativism on context-dependent moral judgments, and deontology on duties.

    Reference: CIMA BA4 Official Study Text — publisher’s public sample — Chapter 1, p. 3, Schools of ethics

  10. 10Under the UK Corporate Governance Code 2024, how should a board connect corporate purpose, values and strategy with organisational culture?

    1. A.Treat culture as an employee matter separate from strategic direction
    2. B.Allow commercial strategy to replace the need for stated corporate values
    3. C.Assess culture solely by whether the business has avoided prosecution
    4. D.Establish purpose, values and strategy and satisfy itself that culture aligns with themCorrect answer: D

    Explanation: The source states: "The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are all aligned." The board should align culture with purpose, values and strategy. Culture is not detached from governance, and absence of prosecution alone does not establish that alignment.

    Reference: FRC UK Corporate Governance Code 2024 — p. 6, Principle B

Exam Review

About CIMA BA4 Fundamentals of Ethics, Corporate Governance and Business Law

CIMA BA4 Fundamentals of Ethics, Corporate Governance and Business Law · GB

Key exam facts

Provider
The Chartered Institute of Management Accountants (CIMA) develops the syllabus and designs/administers the examinations. Pearson VUE is the computer-based assessment delivery partner, not the examination owner.
Format
An on-demand computer-based Objective Test, available at Pearson VUE test centres and online subject to local availability. Official possible styles include multiple-choice, multiple-response, select all that apply, number entry, hotspot and drag and drop; no type percentages are stated.
Exam questions
Total questions: 85.
Time limit
120 minutes (two hours) for the BA4 assessment; this is the assessment time, not arrival or check-in time.
Passing score
A scaled score of 100 or above on the 0–150 scale is a pass; 100 is not a raw percentage.
Exam fee
UK (Tier 1): GBP 123 per Certificate in Business Accounting Objective Test under prices from 1 January 2026; GBP 128 per exam from 1 January 2027. These are per-exam fees, separate from student registration/subscription and tuition. No separate resit tariff is listed in these tables.

Topics covered

  • Business Ethics and Ethical Conflict (30%)

    • Demonstrate an understanding of the importance of ethics to society, business and the professional accountant.
    • Explain the need and requirements for candidates and members in adopting the highest standards of ethical behaviour.
    • Explain the various means of regulating ethical behaviour, recognising different parties’ perspectives towards ethical dilemmas.
    • Identify ethical dilemmas and how they may be resolved.
    • Explain the nature of ethics and its application to society, business and the accountancy profession.
    • Apply the values and attitudes that provide professional accountants with a commitment to act in the public interest and with social responsibility.
    • Explain the need for a framework of laws, regulations and standards in business and their application and why CIMA and IFAC each have ethical codes.
    • Distinguish between detailed rules-based and framework/principles approaches to ethics.
    • Identify the ethical issues significant to organisations and how CIMA partners with strategic bodies to assist its members with ethical tensions/synergies.
    • Describe how personal and organisational policies and values promote behaviour.
    • Explain the need to develop the virtues of reliability, responsibility, timeliness, courtesy and respect.
    • Explain the fundamental ethical principles.
    • Identify concepts of independence, scepticism, accountability and social responsibility.
    • Illustrate the threats and safeguards to the fundamental ethical principles.
    • Explain the relationship between the CIMA Code of Ethics and the law.
    • Describe the consequences of ethical behaviour to society, business, the profession and the professional accountant.
    • Identify conflicting perspectives of interest when dealing with stakeholders in society, business and the values of professional accountants.
    • Identify situations where ethical dilemmas and conflicts of interest occur, based on CIMA’s ethical checklist.

  • Corporate Governance, Controls and Corporate Social Responsibility (45%)

    • Explain the role of corporate governance in meeting the concerns of society and investors over the management of corporations.
    • Explain the impact of corporate governance on the directors and management structures of corporations.
    • Explain the role of external and internal audit.
    • Explain the nature of errors and frauds.
    • Explain Corporate Social Responsibility (CSR) – a political and corporate perspective.
    • Explain the role of CSR within company reporting.
    • Describe corporate governance.
    • Explain the interaction of corporate governance with business ethics and company law.
    • Explain the purpose, definition of the Organisation for Economic Co-operation and Development (OECD) principles of Corporate Governance.
    • Describe IFAC’s main drivers of sustainable corporate success.
    • Illustrate CIMA’s practical proposals for better corporate governance.
    • Distinguish between detailed rules-based and principles-based approaches to governance.
    • Describe the role of the board and different board structures.
    • Explain the effects of corporate governance on directors’ powers and duties.
    • Describe the types of policies and procedures that constitute ‘best practice’.
    • Describe the respective committees and their roles and responsibilities with regards monitoring and controlling the actions of the Executive.
    • Identify the requirements for external audit and the basic processes undertaken.
    • Explain the meaning of fair presentation.
    • Distinguish between external and internal audit.
    • Explain the purpose and basic procedures of internal audit; the need for financial controls and the purpose of audit checks and audit trails.
    • Explain the role of internal audit in nonfinancial monitoring and control activities.
    • Explain the nature of errors.
    • Explain the nature of fraud.
    • Describe the different methods of fraud prevention and detection.
    • Describe the OECD general policies.
    • Explain the role of national and international laws and regulations.
    • Describe conflicting demands of stakeholders.
    • Identify issues with CSR and the supply chain.
    • Describe the guidelines of reporting CSR within annual reports.
    • Explain the role of national and international laws and regulations.

  • General Principles of the Legal System, Contract and Employment Law (15%)

    • Explain how the law determines the point at which a contract is formed and the legal status of contractual terms.
    • Explain the essential elements of an employment contract and the remedies available following termination of the contract.
    • Identify the essential elements of a valid contract and situations where the law requires the contract to be in a particular form.
    • Explain how the law determines whether negotiating parties have reached agreement and the role of consideration in making that agreement enforceable.
    • Explain when the parties will be regarded as intending the agreement to be legally binding and how an agreement may be avoided because of misrepresentations.
    • Explain how the terms of a contract are established and their status determined.
    • Explain the ability of a company to contract.
    • Explain how the contents of a contract of employment are established.
    • Explain what policies and procedures may be present in the workplace.
    • Explain the distinction between unfair and wrongful dismissal and the consequences.

  • Company Administration (10%)

    • Explain the nature, legal status and administration of business organisations.
    • Describe the essential characteristics of the different forms of business organisations and the implications of corporate personality.
    • Explain the differences between public and private companies.
    • Explain the purpose and legal status of the Articles of Association.
    • Explain the main advantages and disadvantages of carrying on business through the medium of a company limited by shares.

How to prepare

Work through the topics, read the explanation after each answer, and revisit the areas where you miss questions. Use the official outline and reference materials below to guide your study.

These independent practice questions are not actual exam items and do not guarantee a passing result.

Frequently asked questions

What is the exam format?

An on-demand computer-based Objective Test, available at Pearson VUE test centres and online subject to local availability. Official possible styles include multiple-choice, multiple-response, select all that apply, number entry, hotspot and drag and drop; no type percentages are stated.

How many questions are on the exam?

Total questions: 85.

How long is the exam?

120 minutes (two hours) for the BA4 assessment; this is the assessment time, not arrival or check-in time.

What is the passing score?

A scaled score of 100 or above on the 0–150 scale is a pass; 100 is not a raw percentage.

How much does the exam cost?

UK (Tier 1): GBP 123 per Certificate in Business Accounting Objective Test under prices from 1 January 2026; GBP 128 per exam from 1 January 2027. These are per-exam fees, separate from student registration/subscription and tuition. No separate resit tariff is listed in these tables.

Official sources and references

Confirm current exam arrangements with the exam provider.